Form 6-K 21Vianet Group, Inc. For: Nov 27

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the month of November 2015

 

 

Commission File Number: 001-35126

 

 

21Vianet Group, Inc.

 

 

M5, 1 Jiuxianqiao East Road,

Chaoyang District

Beijing 100016

The People’s Republic of China

(86 10) 8456 2121

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 27, 2015

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Exhibit Index

Exhibit 99.1 — Press Release

Exhibit 99.1

21Vianet Group, Inc. Reports Third Quarter 2015 Unaudited Financial Results

3Q15 Net Revenues Up 18.7% YOY to RMB924.1 Million

Live Conference Call to be Held at 8:00 PM U.S. Eastern Time, November 24, 2015

BEIJING, November 24, 2015 (GLOBE NEWSWIRE) — 21Vianet Group, Inc. (Nasdaq: VNET) (“21Vianet” or the “Company”), a leading carrier-neutral internet data center services provider in China, today announced its unaudited financial results for the third quarter of 2015. The Company will hold a conference call at 8:00 p.m. Eastern Time on November 24, 2015. Dial-in details are provided at the end of the release.

Third Quarter 2015 Financial Highlights

 

•

Net revenues increased by 18.7% to RMB924.1 million (US$145.4 million) from RMB778.5 million in the comparative period in 2014.

Mr. Steve Zhang, Chief Executive Officer of the Company, stated, “We are pleased with our top-line growth in the third quarter, which was driven by an increase in billable cabinets and additional revenue contribution from the Microsoft cloud business. Through our partnership with IBM, we gained a major deal with BlueMix in October to provide comprehensive datacenter services through 2018. In addition, we are focusing on restructuring our company into different business units in order to better serve the evolving and increasingly specialized market segments. We believe this greater level of autonomy will allow the various units to specialize and optimize in a way to further improve scale, profitability and operating efficiencies. As we expand our datacenter footprint, and leverage our strong partnerships with global tech companies, we remain confident in our ability to scale our business both financially and operationally.”

Mr. Terry Wang, Chief Financial Officer of the Company, commented, “The third quarter witnessed steady top-line growth with revenues increasing 18.7% year over year, which came in above the mid-point of our revenue guidance, despite the ongoing decline of bandwidth pricing in the market. We deployed nearly 600 cabinets in the third quarter, and will accelerate deployment as we close out 2015. We also further increased our data center utilization rate to 71.8% from 67.5% in the preceding quarter, while improving our already low hosting churn rate to 0.26% from 0.37%. On the other hand, EBITDA came in softer than expected, due to the higher spending on telecommunication costs and some lower margin equipment sales to certain broadband retail customers. We continue to face certain challenges in this market, but we are confident that as we restructure our business and invest in growth opportunities, we can reignite growth and solidify our position as a leading internet infrastructure services provider.”

Third Quarter 2015 Financial Results

REVENUES: Net revenues for the third quarter of 2015 increased by 18.7% to RMB924.1 million (US$145.4 million) from RMB778.5 million in the comparative period in 2014, primarily driven by the year-over-year growth in the IDC business, elevated demand for the Company’s cloud enabler services, as well as the contribution from Dermot Entities that the Company acquired in August, 2014. The increase in net revenues was partly offset by the continued softness in managed network services.

Net revenues from hosting and related services increased by 35.6% to RMB695.8 million (US$109.5 million) in the third quarter of 2015 from RMB513.2 million in the comparative period in 2014, primarily due to the increase in the total number of billable cabinets under management and strong growth in the Company’s cloud services. Net revenues from managed network services were RMB228.3 million (US$35.9 million) in the third quarter of 2015, compared with RMB265.3 million in the comparative period in 2014, primarily due to the continued decline of bandwidth selling prices and losses of certain customers.

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GROSS PROFIT: Gross profit for the third quarter of 2015 was RMB200.3 million (US$31.5 million), compared with RMB230.9 million in the comparative period in 2014. Gross margin for the third quarter of 2015 was 21.7%, compared with 29.7% in the comparative period in 2014. The decrease in gross margin was primarily due to higher spending on telecommunication services, lower selling bandwidth prices and some lower margin equipment sales to broadband retail customers.

Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, was RMB240.5 million (US$37.8 million), compared with RMB264.5 million in the comparative period in 2014. Adjusted gross margin was 26.0% in the third quarter of 2015, compared with 34.0% in the comparative period in 2014.

OPERATING EXPENSES: Total operating expenses increased to RMB263.9 million (US$41.5 million) from RMB142.9 million in the comparative period in 2014. Adjusted operating expenses, which exclude share-based compensation expenses and the changes in the fair value of contingent purchase consideration payable, increased to RMB230.9 million (US$36.3 million) from RMB198.4 million in the comparative period in 2014. As a percentage of net revenue, adjusted operating expenses were 25.0%, compared with 25.5% in the comparative period in 2014 and 24.2% in the second quarter of 2015.

Sales and marketing expenses increased by 3.8% to RMB89.2 million (US$14.0 million) from RMB85.9 million in the comparative period in 2014, primarily due to higher service fees, which were mostly offset by lower labor costs as the Company outsourced some functions to more cost-effective service providers.

General and administrative expenses increased by 53.5% to RMB138.8 million (US$21.8 million) from RMB90.4 million in the comparative period in 2014, primarily due to expenses associated with previously issued employee stock options and increased headcount associated with the growth in the Company’s overall business.

Research and development expenses increased by 11.9% to RMB35.2 million (US$5.5 million) from RMB31.4 million in the comparative period in 2014, which reflected the Company’s efforts to further strengthen its research and development capabilities and expand its cloud computing and CDN service offerings.

Change in the fair value of contingent purchase consideration payable was a loss of RMB0.7 million (US$0.1 million) in the third quarter of 2015, compared with a gain of RMB64.9 million in the comparative period in 2014.

ADJUSTED EBITDA: Adjusted EBITDA for the third quarter of 2015 was RMB122.0 million (US$19.2 million), compared with RMB153.9 million in the comparative period in 2014. Adjusted EBITDA margin for the quarter was 13.2% compared with 19.8% in the comparative period in 2014 and 17.2% in the second quarter of 2015. Adjusted EBITDA in the third quarter of 2015 excludes share-based compensation expenses of RMB33.7 million (US$5.3 million) and changes in the fair value of contingent purchase consideration payable of RMB0.7 million (US$0.1 million).

NET PROFIT/LOSS: Net loss for the third quarter of 2015 was RMB57.9 million (US$9.1 million), compared with a net income of RMB37.9 million in the comparative period in 2014.

Adjusted net profit for the third quarter of 2015 was RMB15.4 million (US$2.4 million) compared with an adjusted net profit of RMB16.0 million in the comparative period in 2014. Adjusted net profit in the third quarter of 2015 excludes share-based compensation expenses of RMB33.7 million (US$5.3 million), amortization of intangible assets derived from acquisitions of RMB38.9 million (US$6.1 million), changes in the fair value of contingent purchase consideration payable of RMB0.7 million (US$0.1 million) in the aggregate. Adjusted net margin was 1.7%, compared with 2.1% in the comparative period in 2014 and negative 1.8% in the second quarter of 2015.

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EARNING/LOSS PER SHARE: Diluted loss per ordinary share for the third quarter of 2015 was RMB0.12, which represents the equivalent of RMB0.72 (US$0.11) per American Depositary Share (“ADS”). Each ADS represents six ordinary shares. Adjusted diluted earnings per share for the third quarter of 2015 was RMB0.02, which represents the equivalent of RMB0.12 (US$0.02) per ADS. Adjusted earnings per share is calculated using adjusted net profit as discussed above divided by the weighted average number of shares.

As of September 30, 2015, the Company had a total of 522.5 million ordinary shares outstanding, or the equivalent of 87.1 million ADSs.

BALANCE SHEET: As of September 30, 2015, the Company’s cash and cash equivalents and short-term investment were RMB1.9 billion (US$296.1 million).

Third Quarter 2015 Operational Highlights

 

•

Monthly Recurring Revenues (“MRR”) per cabinet was RMB9,900 in the third quarter of 2015, compared with RMB9,872 in the second quarter of 2015.

 

•

Total cabinets under management increased to 22,827 as of September 30, 2015 from 22,238 as of June 30, 2015, with 15,400 cabinets in the Company’s self-built data centers and 7,427 cabinets in its partnered data centers.

 

•

Utilization rate was 71.8% in the third quarter of 2015, compared with 67.5% in the second quarter of 2015.

 

•

Hosting churn rate, which is based on the Company’s core IDC business, was 0.26% in the third quarter of 2015, compared with 0.37% in the second quarter of 2015.

Recent Developments

On September 23, 2015, at the 8^th US-China Internet Industry Forum, the Company, Unisplendour Corporation Limited (UNIS) and Microsoft signed an agreement to provide customized hybrid cloud computing solutions and related services to Chinese users. The three parties showed their cooperative accomplishments and innovations at Microsoft’s Ignite China Conference, which marked a new milestone in their business developments and cooperation.

On October 14, 2015, the Company signed an additional partnership agreement with IBM for the Bluemix China landing project. Under the terms of the agreement, the Company will provide infrastructure support and operational services to IBM for Bluemix’s entry into the China market.

On October 19, 2015, the Company’s board of directors appointed Mr. Steve Zhang as the Chief Executive Officer of the Company. Mr. Zhang replaces Mr. Josh Chen, founder of the Company, who continues to serve as the Executive Chairman of the Board.

Financial Outlook

For the fourth quarter of 2015, the Company expects net revenues to be in the range of RMB960 million to RMB1.0 billion, representing approximately 15% year-over-year growth at the mid-point. Adjusted EBITDA is expected to be in the range of RMB100 million to RMB120 million, representing approximately 31% year-over-year decline at the mid-point.

For the full year 2015, the Company now expects net revenues to be in the range of RMB3.61 billion to RMB3.65 billion (revised from prior guidance of RMB3.58 billion to RMB3.68 billion), representing approximately 26% growth over 2014 at the mid-point. Adjusted EBITDA for the full year 2015 is expected to be in the range of RMB538 million to RMB558 million (revised from prior guidance of RMB620 million to RMB660 million), representing approximately 2% decline over 2014 at the mid-point. These forecasts reflect the Company’s current and preliminary view, which may be subject to change.

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Conference Call

The Company will hold a conference call on Tuesday, November 24, 2015 at 8:00 pm Eastern Time, or Wednesday, November 25, 2015 at 9:00 am Beijing Time to discuss the financial results.

Participants may access the call by dialing the following numbers:

 

United States:		+1-845-675-0438
International Toll Free:		+1-855-500-8701
China Domestic:		400-1200654
Hong Kong:		+852-3018-6776
Conference ID:		# 69806683

The replay will be accessible through December 2, 2015 by dialing the following numbers:

 

United States Toll Free:		+1-855-452-5696
International:		+61-2-90034211
Conference ID:		# 69806683

A live and archived webcast of the conference call will be available through the Company’s investor relation website at http://ir.21vianet.com.

Non-GAAP Disclosure

In evaluating its business, 21Vianet considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measure to review and assess its operating performance: adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net profit, adjusted net margin, adjusted EBITDA, adjusted EBITDA margin, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted basic earnings per ADS and adjusted diluted earnings per ADS. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this press release.

The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of the Company’s current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company’s calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.3556 to US$1.00, the noon buying rate in effect on September 30, 2015 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

Statement Regarding Unaudited Condensed Financial Information

The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.

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About 21Vianet

21Vianet Group, Inc. is a leading carrier-neutral Internet data center services provider in China. 21Vianet provides hosting and related services, managed network services, cloud services, content delivery network services, last-mile wired broadband services and business VPN services, improving the reliability, security and speed of its customers’ Internet infrastructure. Customers may locate their servers and networking equipment in 21Vianet’s data centers and connect to China’s Internet backbone through 21Vianet’s extensive fiber optic network. In addition, 21Vianet’s proprietary smart routing technology enables customers’ data to be delivered across the Internet in a faster and more reliable manner. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of more than 2,000 hosting enterprise customers that span numerous industries ranging from Internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises

Safe Harbor Statement

This announcement contains forward-looking statements. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook for the second quarter and full year of 2015 and quotations from management in this announcement, as well as 21Vianet’s strategic and operational plans, contain forward-looking statements. 21Vianet may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about 21Vianet’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: 21Vianet’s goals and strategies; 21Vianet’s expansion plans; the expected growth of the data center services market; expectations regarding demand for, and market acceptance of, 21Vianet’s services; 21Vianet’s expectations regarding keeping and strengthening its relationships with customers; 21Vianet’s plans to invest in research and development to enhance its solution and service offerings; and general economic and business conditions in the regions where 21Vianet provides solutions and services. Further information regarding these and other risks is included in 21Vianet’s reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and 21Vianet undertakes no duty to update such information, except as required under applicable law.

Investor Relations Contacts:

21Vianet Group, Inc.

Eric Chu, CFA

+1 908 707 2062

[email protected]

Queenie Liu

+86 10 8456 2121

[email protected]

ICR, Inc.

Charles Eveslage

+1 (646) 405-4922

[email protected]

Source: 21Vianet Group, Inc.

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21VIANET GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

		As of				As of
		December 31, 2014				September 30, 2015
		RMB				RMB				US$
		(Audited)				(Unaudited)				(Unaudited)
Assets
Current assets:
Cash and cash equivalents			644,415				1,399,465				220,194
Restricted cash			161,649				141,715				22,298
Accounts and notes receivable, net			739,945				783,702				123,309
Short-term investments			911,242				482,545				75,924
Inventories			10,059				8,806				1,386
Prepaid expenses and other current assets			309,441				574,278				90,363
Deferred tax assets			35,002				31,461				4,950
Amount due from related parties			54,867				86,788				13,655
Total current assets			2,866,620				3,508,760				552,079
Non-current assets:
Property and equipment, net			3,036,707				3,519,219				553,719
Intangible assets, net			1,404,453				1,309,621				206,058
Land use right			66,175				65,056				10,236
Deferred tax assets			42,573				51,755				8,143
Goodwill			1,755,970				1,755,970				276,287
Long term investments			126,307				158,417				24,926
Restricted cash			121,415				125,913				19,811
Amount due from related parties			98,500				70,000				11,014
Other non-current assets			121,461				122,740				19,312
Total non-current assets			6,773,561				7,178,691				1,129,506
Total assets			9,640,181				10,687,451				1,681,585
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term bank borrowings			160,181				270,000				42,482
Accounts and notes payable			386,074				447,228				70,368
Accrued expenses and other payables			599,491				605,545				95,284
Deferred revenue			347,441				333,238				52,432
Advances from customers			97,679				177,238				27,887
Income taxes payable			35,013				56,820				8,940
Amounts due to related parties			326,804				401,066				63,104
Current portion of long-term bank borrowings			955,647				21,593				3,397
Current portion of capital lease obligations			71,939				92,619				14,573
Current portion of deferred government grant			6,150				5,776				909
Current portion of bonds payable			—				264,204				41,570
Deferred tax liabilities			2,696				43				7
Total current liabilities			2,989,115				2,675,370				420,953
Non-current liabilities:
Long-term bank borrowings			61,673				100,767				15,855
Deferred revenue			74,044				69,953				11,007
Amounts due to related parties			280,728				19,215				3,023
Unrecognized tax benefits			20,453				12,499				1,967
Deferred tax liabilities			310,340				288,851				45,448
Non-current portion of capital lease obligations			511,679				501,668				78,933
Non-current portion of deferred government grant			27,422				33,233				5,229
Bonds payable			2,264,064				2,000,000				314,683
Mandatorily redeemable noncontrolling interests			100,000				100,000				15,734
Total non-current liabilities			3,650,403				3,126,186				491,879
Redeemable noncontrolling interests			773,706				779,537				122,654
Shareholders’ equity
Treasury stock			(213,665	)			(193,142	)			(30,389	)
Ordinary shares			26				34				5
Additional paid-in capital			4,225,029				6,378,119				1,003,543
Accumulated other comprehensive income loss			(65,754	)			(50,836	)			(7,999	)
Statutory reserves			52,263				59,929				9,429
Accumulated deficit			(1,794,975	)			(2,106,656	)			(331,465	)
Total 21Vianet Group, Inc. shareholders’ equity			2,202,924				4,087,448				643,124
Non-controlling interest			24,033				18,910				2,975
Total shareholders’ equity			2,226,957				4,106,358				646,099
Total liabilities and shareholders’ equity			9,640,181				10,687,451				1,681,585

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21VIANET GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)

 

		Three months ended																Nine months ended
		Sept 30, 2014				June 30, 2015				September 30, 2015								September 30, 2014				September 30, 2015
		RMB				RMB				RMB				US$				RMB				RMB				US$
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Net revenues
Hosting and related services			513,212				643,709				695,802				109,479				1,384,467				1,952,739				307,247
Managed network services			265,313				223,078				228,293				35,920				638,070				698,250				109,864
Total net revenues			778,525				866,787				924,095				145,399				2,022,537				2,650,989				417,111
Cost of revenues			(547,666	)			(662,810	)			(723,828	)			(113,888	)			(1,450,427	)			(2,016,400	)			(317,264	)
Gross profit			230,859				203,977				200,267				31,511				572,110				634,589				99,847
Operating expenses
Sales and marketing			(85,947	)			(78,031	)			(89,232	)			(14,040	)			(187,154	)			(257,663	)			(40,541	)
General and administrative			(90,383	)			(166,885	)			(138,783	)			(21,836	)			(333,733	)			(434,876	)			(68,424	)
Research and development			(31,435	)			(32,059	)			(35,176	)			(5,535	)			(81,770	)			(101,266	)			(15,933	)
Changes in the fair value of contingent purchase consideration payable			64,895				(16,643	)			(676	)			(106	)			22,160				(38,265	)			(6,021	)
Total operating expenses			(142,870	)			(293,618	)			(263,867	)			(41,517	)			(580,497	)			(832,070	)			(130,919	)
Other operating income			—				8,569				—				—				—				8,569				1,348
Operating profit (loss)			87,989				(81,072	)			(63,600	)			(10,006	)			(8,387	)			(188,912	)			(29,724	)
Interest income			20,227				20,449				13,523				2,128				55,042				47,802				7,521
Interest expense			(67,950	)			(71,664	)			(69,690	)			(10,965	)			(165,489	)			(213,221	)			(33,549	)
Loss on debt extinguishment			—				—				—				—				(41,581	)			—				—
(Loss) Income from equity method investment			(509	)			123				706				111				(749	)			12,124				1,908
Other income			7,300				2,876				5,779				909				11,147				10,315				1,623
Other expense			(804	)			(183	)			(719	)			(113	)			(970	)			(1,853	)			(292	)
Foreign exchange (loss) gain			(1,861	)			(5,269	)			60,248				9,480				(7,500	)			65,146				10,250
Profit (Loss) before income taxes			44,392				(134,740	)			(53,753	)			(8,456	)			(158,487	)			(268,599	)			(42,263	)
Income tax expense			(6,493	)			(7,091	)			(4,132	)			(650	)			(14,505	)			(19,786	)			(3,113	)
Consolidated net profit (loss)			37,899				(141,831	)			(57,885	)			(9,106	)			(172,992	)			(288,385	)			(45,376	)
Net loss (profit) attributable to non-controlling interest			1,704				(3,315	)			(4,257	)			(670	)			(1,400	)			(15,630	)			(2,459	)
Net profit (loss) attributable to ordinary shareholders			39,603				(145,146	)			(62,142	)			(9,776	)			(174,392	)			(304,015	)			(47,835	)
Earnings (Loss) per share
Basic			0.10				(0.28	)			(0.12	)			(0.02	)			(0.43	)			(0.62	)			(0.10	)
Diluted			0.09				(0.28	)			(0.12	)			(0.02	)			(0.43	)			(0.62	)			(0.10	)
Shares used in earnings per share computation
Basic*			404,495,442				489,847,525				521,376,112				521,376,112				401,775,444				481,524,589				481,524,589
Diluted*			418,601,672				489,847,525				521,376,112				521,376,112				401,775,444				481,524,589				481,524,589
Earnings (Loss) per ADS (6 ordinary shares equal to 1 ADS)
Basic			0.60				(1.68	)			(0.72	)			(0.11	)			(2.58	)			(3.72	)			(0.59	)
Diluted			0.54				(1.68	)			(0.72	)			(0.11	)			(2.58	)			(3.72	)			(0.59	)

 

*	Shares used earnings per share/ADS computation were computed under weighted average method.

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21VIANET GROUP, INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)

 

		Three months ended																Nine months ended September 30
		September 30, 2014				June 30, 2015				September 30, 2015								September 30, 2014				September 30, 2015
		RMB				RMB				RMB				US$				RMB				RMB				US$
Gross profit			230,859				203,977				200,267				31,511				572,110				634,589				99,847
Plus: share-based compensation expense			-117				2,305				1,323				208				3,441				5,840				919
Plus: amortization of intangible assets derived from acquisitions			33,793				39,434				38,933				6,126				57,969				118,536				18,651
Adjusted gross profit			264,535				245,716				240,523				37,845				633,520				758,965				119,417
Adjusted gross margin			34.0	%			28.3	%			26.0	%			26.0	%			31.3	%			28.6	%			28.6	%
Operating expenses			(142,870	)			(293,618	)			(263,867	)			(41,517	)			(580,497	)			(832,070	)			(130,919	)
Plus: share-based compensation expense			9,348				67,496				32,328				5,087				161,428				144,068				22,668
Plus: changes in the fair value of contingent purchase consideration payable			(64,895	)			16,643				676				106				(22,160	)			38,265				6,021
Adjusted operating expenses			(198,417	)			(209,479	)			(230,863	)			(36,324	)			(441,229	)			(649,737	)			(102,230	)
Net profit (loss)			37,899				(141,831	)			(57,885	)			(9,106	)			(172,992	)			(288,385	)			(45,376	)
Plus: share-based compensation expense			9,231				69,801				33,651				5,295				164,869				149,908				23,587
Plus: amortization of intangible assets derived from acquisitions			33,793				39,434				38,933				6,126				57,969				118,536				18,651
Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact			(64,895	)			16,643				676				106				(19,176	)			38,265				6,021
Plus: loss on debt extinguishment			—				—				—				—				41,581				—				—
Adjusted net profit (loss)			16,028				(15,953	)			15,375				2,421				72,251				18,324				2,883
Adjusted net margin			2.1	%			-1.8	%			1.7	%			1.7	%			3.6	%			0.7	%			0.7	%
Net profit (loss)			37,899				(141,831	)			(57,885	)			(9,106	)			(172,992	)			(288,385	)			(45,376	)
Minus: Provision for income taxes			(6,493	)			(7,091	)			(4,132	)			(650	)			(14,505	)			(19,786	)			(3,113	)
Minus: Interest income			20,227				20,449				13,523				2,128				55,042				47,802				7,521
Minus: Interest expenses			(67,950	)			(71,664	)			(69,690	)			(10,965	)			(165,489	)			(213,221	)			(33,549	)
Minus: loss on debt extinguishment			—				—				—				—				(41,581	)			—				—
Minus: Exchange (loss) gain			(1,861	)			(5,269	)			60,248				9,480				(7,500	)			65,146				10,250
Minus: (Loss) Income from equity method investment			(509	)			123				706				111				(749	)			12,124				1,908
Minus: Other income			7,300				2,876				5,779				909				11,147				10,315				1,623
Minus: Other expenses			(804	)			(183	)			(719	)			(113	)			(970	)			(1,853	)			(292	)
Plus: depreciation			79,637				98,462				104,340				16,417				185,746				296,680				46,680
Plus: amortization			41,961				45,517				46,947				7,387				78,752				142,340				22,396
Plus: share-based compensation expense			9,231				69,801				33,651				5,295				164,869				149,908				23,587
Plus: changes in the fair value of contingent purchase consideration payable			(64,895	)			16,643				676				106				(22,160	)			38,265				6,021
Adjusted EBITDA			153,923				149,351				122,014				19,199				398,820				438,281				68,960
Adjusted EBITDA margin			19.8	%			17.2	%			13.2	%			13.2	%			19.7	%			16.5	%			16.5	%
Adjusted net profit (loss)			16,028				(15,953	)			15,375				2,421				72,251				18,324				2,883
Less: Net loss (profit) attributable to non-controlling interest			1,704				(3,315	)			(4,257	)			(670	)			(1,400	)			(15,630	)			(2,459	)
Adjusted net profit (loss) attributable to the Company’s ordinary shareholders			17,732				(19,268	)			11,118				1,751				70,851				2,694				424
Adjusted earnings (loss) per share
Basic			0.04				(0.02	)			0.02				0.00				0.18				0.02				0.00
Diluted			0.04				(0.02	)			0.02				0.00				0.17				0.02				0.00
Shares used in adjusted earnings per share computation:
Basic*			404,495,442				489,847,525				521,376,112				521,376,112				401,775,444				481,524,589				481,524,589
Diluted*			418,601,672				489,847,525				536,927,693				536,927,693				415,628,732				494,976,649				494,976,649
Earnings (loss) per ADS (6 ordinary shares equal to 1 ADS)
Basic			0.24				(0.12	)			0.12				0.02				1.08				0.12				0.02
Diluted			0.24				(0.12	)			0.12				0.02				1.02				0.12				0.02

 

*	Shares used in adjusted earnings/ADS per share computation were computed under weighted average method.

 

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21VIANET GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

		Three months ended
		June 30, 2015				September 30, 2015
		RMB				RMB				US$
		(Unaudited)				(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss			(141,831	)			(57,885	)			(9,108	)
Adjustments to reconcile net profit to net cash generated from operating activities:											—
Foreign exchange loss (gain)			5,269				(60,248	)			(9,480	)
Changes in the fair value of contingent purchase consideration payable			16,643				676				106
Depreciation of property and equipment			98,462				104,340				16,417
Amortization of intangible assets			44,086				46,016				7,240
Loss on disposal of property and equipment			30				167				26
Provision for doubtful accounts and other receivables			2,818				6,971				1,097
Share-based compensation expense			69,802				21,339				3,358
Deferred income taxes benefit			(7,493	)			(10,158	)			(1,598	)
Gain from equity method investment			(123	)			(706	)			(111	)
Changes in operating assets and liabilities
Restricted cash			(46,161	)			(9,933	)			(1,563	)
Inventories			(1,413	)			3,297				519
Accounts and notes receivable			213				(43,713	)			(6,878	)
Unrecognized tax expense			(9,842	)			602				95
Prepaid expenses and other current assets			(125,384	)			(40,330	)			(6,346	)
Amounts due from related parties			(667	)			(1,452	)			(228	)
Accounts and notes payable			(16,598	)			36,276				5,708
Accrued expenses and other payables			(17,548	)			42,118				6,627
Deferred revenue			(14,716	)			5,800				913
Advances from customers			27,048				43,978				6,920
Income taxes payable			(2,397	)			12,746				2,005
Amounts due to related parties			(950	)			3,777				594
Deferred government grants			(610	)			(1,553	)			(244	)
Net cash (used in) generated from operating activities			(121,361	)			102,125				16,069
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment			(232,069	)			(215,292	)			(33,874	)
Purchases of intangible assets			(12,258	)			(16,353	)			(2,573	)
Proceeds from disposal of property and equipment			137				(4,952	)			(779	)
Advances of loan to third parties			(3,760	)			(5,104	)			(803	)
Payments for short-term investments			(819,274	)			(88,145	)			(13,869	)
Proceeds received from maturity of short-term investments			94,000				1,090,577				171,593
Net cash (used in) generated from investing activities			(973,224	)			760,731				119,695
CASH FLOWS FROM FINANCING ACTIVITIES
Restricted cash			83,751				(31,176	)			(4,905	)
Proceeds from exercise of stock options			2,687				1,309				206
Proceeds from shareholders			1,181,825				—				—
Proceeds from long-term bank borrowings			31,710				—				—
Proceeds from short-term bank borrowings			109,000				40,000				6,294
Repayments of short-term bank borrowings			(60,000	)			(20,000	)			(3,147	)
Repayments of long-term bank borrowings			(63,310	)			(902,496	)			(142,000	)
Payments for acquisitions			—				(4,543	)			(715	)
Interest payment for 2016 Bond			—				(10,386	)			(1,634	)
Payments for capital leases			(24,023	)			(21,182	)			(3,333	)
Net cash generated from (used in) financing activities			1,261,640				(948,474	)			(149,234	)
Effect of foreign exchange rate changes on cash and short term investments			(2,835	)			43,448				6,836
Net increase (decrease) in cash and cash equivalents			164,220				(42,170	)			(6,635	)
Cash and cash equivalents at beginning of period			1,277,414				1,441,635				226,829
Cash and cash equivalents at end of period			1,441,635				1,399,465				220,194

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