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 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of November 2018

 

Commission File Number 001-34873

 

ChinaCache International Holdings Ltd.

(Translation of registrant’s name into English)

 

Section A, Building 3, Dian Tong Creative Square

No. 7 Jiuxianqiao North Road, Chaoyang District

Beijing, 100015, China

(Address of 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 o

 

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): o

 

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): o

 

 

 

 

 

 

Other Information

 

Attached hereto as Exhibit 99.1 is press release dated November 29, 2018, announcing the Company’s unaudited financial and operating results for the six-month period ended June 30, 2018.

 

Exhibits

 

99.1 Press Release, dated November 29, 2018

 

 

 

 

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 29, 2018ChinaCache International Holdings Ltd.
    
    
 By: /s/ Song Wang
   Song Wang
   Chief Executive Officer

 

 

 

Exhibit 99.1

 

ChinaCache International Holdings Ltd. Announces
First Six Months of 2018 Financial Results

 

BEIJING — November 29, 2018 — ChinaCache International Holdings Ltd. (“ChinaCache” or the “Company”) (NASDAQ: CCIH), a leading total solutions provider of Internet content and application delivery services in China, today announced its unaudited condensed consolidated financial results for the first six months of 2018 ended June 30, 2018.

 

First Six Months of 2018 Financial Overview

 

·Net revenues were RMB418.2 million (US$63.2 million), compared with RMB409.4 million for the first six months of 2017.
·Gross profit was RMB104.0 million (US$15.7 million), compared with a gross profit of RMB31.8 million for the first six months of 2017.
·Net loss was RMB36.1 million (US$5.5 million), compared with a net loss of RMB125.9 million for the first six months of 2017.
·Adjusted EBITDA (non-GAAP) was a loss of RMB11.1 million (US$1.7 million), compared with adjusted EBITDA (non-GAAP) loss of RMB113.1 million for the first six months of 2017.

 

In the first half year of 2018, our strategy is focusing on core CDN services and related business, which is the main drive of the Company’s revenue. Especially, we received sales order from a major customer and led to an improvement in our revenue. In addition, we have an increase in gross margin, which mainly attributable to cost control measurement and efficiency improvement as we began to take the use of the public cloud server which is cost-efficient. We were also making progress in IDC services with multiple customers, such as Alibaba Group, China Minsheng Bank (CMBC) etc.

 

We disclosed the lawsuit against Beijing Federation of Supply and Marketing Cooperatives, or BFSMC, in the Company’s annual report for 2017 on Form 20-F filed on April 30, 2018, which arising from the agreement with BFSMC to sell two buildings to a subsidiary of BFSMC through transferring the equity interest of our subsidiary Beijing Zhao Du. There is no major update for the lawsuit as of June 30, 2018.

 

First Six Months of 2018 Financial Results

 

Net revenues for the first six months of 2018 were RMB418.2 million (US$63.2 million), a 2.1% increase from the first six months of 2017. The increase in net revenues was primarily attributable to the increased sales orders from major customer. The Company adopted Accounting Standards Codification (“ASC”) 606 Revenue from Contracts with Customers on January 1, 2018 using the cumulative effect method. The new standard does not have significant impact on our recognition of revenue, therefore, the comparative information was not adjusted.

 

 

 

 

Cost of revenues for the first six months of 2018 decreased by 17% year-over-year to RMB314.2 million (US$47.5 million). Gross margin for the first six months of 2018 was 24.9%, compared with7.8% for the same period in 2017.

 

Non-GAAP gross margin, which excludes share-based compensation, was 24.9% for the first six months of 2018, compared with 7.8% for the first six months of 2017. The increase in gross margin was mainly attributable to cost control measure and efficiency improvement.

 

Sales and marketing expenses for the first six months of 2018 were RMB20.4 million (US$3.1 million), or 4.9% of net revenues, a 39.9% decrease from the first six months of 2017. The decrease in sales and marketing expenses, was primarily attributable to the decrease in staff cost and cost control measure.

 

General and administrative expenses for the first six months of 2018 were RMB63.9 million (US$9.7 million), or 15.3% of net revenues, an 8.5% decrease from the first six months of 2017. The decrease in general and administrative expenses for the first six months of 2018, compared with the first six months of 2017, was primarily attributable to a decrease in staff cost.

 

Research and development (R&D) expenses for the first six months of 2018 were RMB36.1 million (US$5.5 million), or 8.6% of net revenues, a 12.5% decrease from the first six months of 2017, was primarily attributable to a decrease in staff cost.

 

Operating loss was RMB20.9 million (US$3.2 million) for the first six months of 2018, compared with an operating loss of RMB130.4 million for the same period of 2017. Non-GAAP operating loss, which excludes share-based compensation expenses, and impairment of long lived assets, was RMB20.3 million (US$3.1 million) for the first six months of 2018, an 83.5% decrease from the six month of 2017, which was RMB123.0 million.

 

Income tax expense was RMB0.01 million for the first six months of 2018, compared with income tax benefit of RMB9.5 million for the first six months of 2017. In first six months of 2017, Income tax benefit of RMB9.5 million was generated from the recognition of the deferred tax assets for the losses carried forward, which had been considered full valuation allowance at 31 December 2017, as it is more likely than not that the Group won’t generate enough taxable profit in foreseeable futures. The Group took the same position as of 30 June 2018.

 

Net loss was RMB36.1 million (US$5.5 million) for the first six months of 2018, compared with a net loss of RMB125.9 million for the first six months of 2017. Net loss per basic and diluted American depositary share (“ADS”) for the first six months of 2018 was RMB1.34 (US$0.2) each. Each ADS represents 16 ordinary shares of the Company.

 

Adjusted EBITDA (non-GAAP), defined as EBITDA excluding share-based compensation expenses, foreign exchange gain (loss) and impairment of long-lived assets, was a loss of RMB11.1 million (US$1.7 million) for the first six months of 2018. Adjusted EBITDA (non-GAAP) was a loss of RMB113.1 million for the first six months of 2017.

 

 

 

 

Adjusted net loss (non-GAAP), defined as net loss before share-based compensation expenses, foreign exchange gain (loss) and impairment of long-lived assets, was RMB26.3 million (US$4.0 million) for the first six months of 2018, compared with adjusted net loss (non-GAAP) of RMB111.5 million for the first six months of 2017. Non-GAAP net loss per basic and diluted ADS for the first six months of 2018 was RMB0.99 (US$0.15) each.

 

Balance Sheet

 

As of June 30, 2018, the Company had cash and cash equivalents of RMB103.6 million (US$15.7 million), compared with RMB106.7 million as of December 31, 2017. As of June 30, 2018, net current liability was RMB730.4 million (US$110.4 million), compared with net current liability of RMB822.9 million as of December 31, 2017. The net current liability of RMB730.4 million as of June 30, 2018, may raise substantial doubt about the Company’s ability to continue as a going concern. The Company has been implementing a comprehensive plan as described in Note 2 of the consolidated financial statements included in the Company’s annual report for 2017 on Form 20-F filed on April 30, 2018.

 

About ChinaCache International Holdings Ltd.

 

ChinaCache International Holdings Ltd. (Nasdaq: CCIH) is a major total solutions provider of Internet content and application delivery services in China. As a carrier-neutral service provider, ChinaCache’s network in China is interconnected with networks operated by all telecom carriers, major non-carriers and local Internet service providers. With more than a decade of experience in developing solutions tailored to China’s complex Internet infrastructure, ChinaCache is a partner of choice for businesses, government agencies and other enterprises to enhance the reliability and scalability of online services and applications and improve end-user experience. For more information on ChinaCache, please visit ir.chinacache.com.

 

Use of Non-GAAP Financial Measures

In evaluating its business, ChinaCache considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measures to review and assess its operating performance: non-GAAP gross profit, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP research and development expenses, non-GAAP operating income (loss), adjusted net income (loss) (non-GAAP), EBITDA and adjusted EBITDA (non-GAAP). 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 Non-GAAP to GAAP Financial Measures” set forth at the end of this press release.

 

To present non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP research and development expenses, the Company excludes share-based compensation expense.

 

 

 

 

To present non-GAAP gross profit (loss), the Company excludes share-based compensation expense.

 

To present non-GAAP operating income (loss), the Company excludes share-based compensation expense.

 

The Company defines adjusted net income (loss) as net income (loss) before share-based compensation expense and foreign exchange gain (loss).

 

The Company uses EBITDA to assist in reconciliation to adjusted EBITDA. The Company defines EBITDA as net income (loss) before interest expense, interest income, income tax expense and depreciation and amortization. The Company defines adjusted EBITDA as EBITDA before share-based compensation expense, foreign exchange gain (loss) and impairment of long lived assets that the Company does not consider reflective of its ongoing operations. The Company believes that the use of adjusted EBITDA facilitates investors’ use of operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in items such as capital structure (affecting relative interest expense and share-based compensation expense), the book amortization of intangibles (affecting relative amortization expense), the age and book value of facilities and equipment (affecting relative depreciation expense) and other non-cash expenses. The Company also presents adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of the financial performance of companies in its industry.

 

Those non-GAAP financial measures are not defined under U.S. GAAP and are not measures presented in accordance with U.S. GAAP. Those non-GAAP financial measures have limitations as analytical tools, and when assessing the Company’s operating performance, investors should not consider them in isolation, or as a substitute for net income or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

 

·Adjusted net income, EBITDA and adjusted EBITDA do not reflect the Company’s cash expenditures or future requirements for capital expenditures or contractual commitments;
·They do not reflect changes in, or cash requirements for, the Company’s working capital needs;
·They do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt;
·They do not reflect income taxes or the cash requirements for any tax payments;
·Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and adjusted net income, EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements;
·While share-based compensation is a component of cost of revenues and operating expenses, the impact on the Company’s financial statements compared to other companies can vary significantly due to such factors as assumed life of the options and assumed volatility of the Company’s ordinary shares; and
·Other companies may calculate adjusted net income, EBITDA and adjusted EBITDA differently than the Company does, limiting their usefulness as comparative measures.

 

 

 

 

Exchange Rate Information

 

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 RMB6.6171 to US$1.00, the noon buying rate in effect on June 29, 2018 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.

 

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, quotations from management in this announcement as well as ChinaCache’s strategic and operational plans contain forward-looking statements. ChinaCache 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 ChinaCache’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: ChinaCache’s goals and strategies; ChinaCache’s expansion plans; the expected growth of the data center services market; expectations regarding demand for, and market acceptance of, ChinaCache’s services; ChinaCache’s expectations regarding keeping and strengthening its relationships with customers; ChinaCache’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 ChinaCache provides solutions and services. Further information regarding these and other risks is included in ChinaCache’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 ChinaCache undertakes no duty to update such information, except as required under applicable law.

 

For investor and media inquiries please contact:

 

Investor Relations Department

ChinaCache International Holdings

Tel: +86 (10) 6408-5686

Email: ir@chinacache.com

 

 

 

 

Condensed Consolidated Balance Sheets

(amounts in thousands)            

 

   As of Dec 31   As of Jun 30   As of Jun 30 
   2017   2018   2018 
    RMB    RMB    US$ 
    (Audited)    (Unaudited)    (Unaudited) 
ASSETS               
Current assets               
Cash and cash equivalents   106,708    103,633    15,661 
Restricted Cash   -    -    - 
Accounts receivable, net   161,043    172,482    26,066 
Prepaid expenses and other current assets   212,984    245,927    37,165 
Amount due from subsidiary held for sale   2,025    3,027    457 
Assets held for sale   581,731    583,142    88,126 
Total current assets   1,064,491    1,108,211    167,475 
                
Non-current assets               
Restricted Cash   -    -    - 
Property and equipment, net   53,326    51,768    7,823 
Intangible assets, net   165    137    21 
Land use rights, net   32,902    32,537    4,917 
Long term investments   30,148    30,148    4,556 
Cloud infrastructure construction in progress   416,352    447,986    67,701 
Deferred tax assets, net   -    -    - 
Long term deposits and other non-current assets   8,651    6,759    1,021 
Total non-current assets   541,544    569,335    86,039 
                
Total Assets   1,606,035    1,677,546    253,514 
                
LIABILITIES AND SHAREHOLDERS’ DEFICIT               
Current Liabilities               
Short-term borrowings   9,960    9,960    1,505 
Accounts payable   367,924    380,638    57,523 
Accrued employee benefits   44,465    38,931    5,883 
Accrued expenses and other payable   1,293,657    1,243,854    187,976 
Income tax payable   34,087    33,786    5,106 
Liabilities for uncertain tax positions   44,250    44,250    6,687 
Amounts due to related parties   18    19    3 
Current portion of long term borrowings   32,642    50,676    7,658 
Current portion of capital lease obligations   42,735    17,176    2,595 
Deferred government grant   13,000    13,000    1,965 
Amounts due to subsidiaries held for sale   737    1,398    211 
Liabilities held for sale   3,888    4,960    750 
Total current liabilities   1,887,363    1,838,648    277,862 
                
Non-current liabilities               
Long-term borrowings   211,578    362,272    54,748 
Non-current portion of capital lease obligations   1,421    -    - 
Deferred government grant   6,580    4,813    727 
Total non-current liabilities   219,579    367,085    55,475 
                
Total Liabilities   2,106,942    2,205,733    333,337 
                
Total ChinaCache International Holdings Ltd. shareholders’ deficit   (498,587)   (525,331)   (79,391)
Noncontrolling interest   (2,320)   (2,856)   (432)
                
Total shareholder’s deficit   (500,907)   (528,187)   (79,823)
                
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT   1,606,035    1,677,546    253,514 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

(amounts in thousands, except for number of shares, per share and per ADS data)

             

   For the Six Months Ended 
   Jun 30, 2017   Jun 30, 2018 
   RMB   RMB   US$ 
   (Unaudited)   (Unaudited)   (Unaudited) 
Net revenues   409,428    418,209    63,201 
Cost of revenues   (377,652)   (314,218)   (47,486)
                
Gross (loss) profit   31,776    103,991    15,715 
Other operating income (loss)   (9,877)   (12,126)   (1,832)
Sales & marketing expenses   (33,961)   (20,414)   (3,085)
General & administrative expenses   (69,781)   (63,867)   (9,652)
Provision for doubtful accounts receivable and other receivable   -    8,530    1,289 
Research & development expenses   (41,269)   (36,118)   (5,458)
Impairment of long lived assets   (7,276)   (937)   (142)
                
Operating loss   (130,388)   (20,941)   (3,165)
Interest income   1,268    267    40 
Interest expense   (9,197)   (12,921)   (1,953)
Other income   9,876    6,624    1,001 
Foreign exchange gain (loss), net   (6,950)   (9,129)   (1,380)
                
Loss before income taxes   (135,391)   (36,100)   (5,457)
Income tax benefit   9,516    (10)   (2)
                
Net loss   (125,875)   (36,110)   (5,459)
                
Net loss attributable to the noncontrolling interest   (311)   (536)   (81)
                
Net loss attributable to the Company’s shareholders   (125,564)   (35,574)   (5,378)
                
Foreign currency translation   3,679    8,566    1,311 
Unrealized holding gain on available-for-sale investments   -    -    - 
                
Total other comprehensive income, net of tax   3,679    8,566    1,311 
                
Comprehensive loss   (122,196)   (27,544)   (4,148)
                
Comprehensive loss attributable to the noncontrolling interest   (311)   (536)   (81)
                
Comprehensive loss attributable to the Company’s shareholders   (121,885)   (27,008)   (4,067)
                
Loss per ordinary share:               
Basic   (0.30)   (0.08)   (0.01)
Diluted   (0.30)   (0.08)   (0.01)
                
Loss per ADS*:               
Basic   (4.80)   (1.34)   (0.20)
Diluted   (4.80)   (1.34)   (0.20)
                
Weighted average number of ordinary shares used in earnings per share computation:               
Basic   422,048,996    424,915,375    424,915,375 
Diluted   422,048,996    424,915,375    424,915,375 

 

 

 

 

Supplementary Metrics - Reconciliations of Non-GAAP to GAAP Financial Measures

(amounts in thousands, except for percentages, number of shares, per share and per ADS data)

(Unaudited)

             

   For the Six Months Ended 
   Jun 30, 2017   Jun 30, 2018   Jun 30, 2018 
   RMB   RMB   US$ 
Adjusted EBITDA — defined as EBITDA before share-based compensation expense, foreign exchange gain (loss), transaction tax on assets transfer, impairment of long lived assets and impairment of long term investments            
             
Net loss   (125,875)   (36,110)   (5,457)
Depreciation   -    2,566    388 
Amortization   -    -    - 
Interest expense   9,197    12,921    1,953 
Interest income   (1,268)   (267)   (40)
Income tax benefit   (9,516)   10    2 
Share-based compensation   103    (261)   (39)
Foreign exchange (gain) loss   6,950    9,129    1,380 
Impairment of long lived assets   7,276    937    142 
Adjusted EBITDA   (113,133)   (11,075)   (1,674)
Margin%   -27.6%   -2.6%   -2.6%
                
Adjusted net loss— defined as net loss before share-based compensation, foreign exchange gain (loss), penalties on uncertain tax positions, transaction tax on assets transfer, impairment of long-lived assets and impairment of long term investments               
                
Net loss   (125,875)   (36,110)   (5,457)
Share-based compensation   103    (261)   (39)
Foreign exchange (gain) loss   6,950    9,129    1,380 
Impairment of long lived assets   7,276    937    142 
Adjusted net loss   (111,546)   (26,305)   (3,975)
Margin%   -27.2%   -6.3%   -6.3%
Loss per ordinary share:               
Basic   (0.26)   (0.06)   (0.01)
Diluted   (0.26)   (0.06)   (0.01)
Loss per ADS:               
Basic   (4.16)   (0.99)   (0.15)
Diluted   (4.16)   (0.99)   (0.15)
                
Non-GAAP gross profit (loss) — defined as gross profit (loss) before share-based compensation expense               
                
Gross (loss) profit   31,776    103,991    15,715 
Plus: Share-based compensation   217    230    35 
Non-GAAP gross (loss) profit   31,993    104,221    15,750 
Margin%   7.8%   24.9%   24.9%
                
Non-GAAP operating expense — defined as operating expense before share-based compensation expense               
                
Sales & marketing expenses   33,961    20,414    3,085 
Minus: Share-based compensation   627    (59)   (9)
Non-GAAP sales & marketing expenses   34,588    20,355    3,076 
% of net revenues   8.4%   4.9%   4.9%
                
General & administrative expenses   69,781    63,867    9,652 
Minus: Share-based compensation   (475)   780    118 
Non-GAAP general & administrative expenses   69,306    64,647    9,770 
% of net revenues   16.9%   15.5%   15.5%
                
Research & development expenses   41,269    36,118    5,458 
Minus: Share-based compensation   (38)   (230)   (35)
Non-GAAP research & development expenses   41,231    35,888    5,424 
% of net revenues   10.1%   8.6%   8.6%
                
Non-GAAP operating loss — defined as GAAP operating loss before share-based compensation expense, transaction tax on assets transfer, impairment of long-lived assets and impairment of long term investments               
                
Operating loss   (130,388)   (20,941)   (3,165)
Share-based compensation   103    (261)   (39)
Impairment of long lived assets   7,276    937    142 
Non-GAAP operating loss   (123,009)   (20,265)   (3,063)
Margin%   -30.0%   -4.8%   -4.8%