Regulatory Environment - The company operates primarily in China, relying on complex contractual arrangements to control its VIE operations due to foreign investment restrictions[6]. - There is significant uncertainty regarding the interpretation and application of current and future Chinese laws affecting the company's contractual rights[6]. - The company faces various risks related to operating in China, including regulatory approvals and data security regulations, which could adversely impact its operations and the value of its American Depositary Shares[7]. - The potential for severe penalties exists if the company's contractual arrangements are found to violate any current or future Chinese laws or regulations[8]. - The company may face significant compliance costs due to changes in policies or regulations imposed by the Chinese government[7]. - The company is subject to various legal and operational risks due to its primary operations being based in China, which may lead to significant uncertainties[8]. - The company must obtain necessary licenses and permits from Chinese authorities to operate its business, which includes value-added telecommunications business licenses[12]. - The company is subject to restrictions under Chinese laws regarding the payment of dividends and transfer of net assets from its subsidiaries and VIE[9]. - The company’s ability to issue securities may be severely restricted by the Chinese government's regulatory powers[7]. - The company is actively adapting to the evolving regulatory landscape to ensure compliance and operational continuity[93]. - The company is subject to evolving regulations in China, which may require obtaining additional licenses and permits for its operations[82]. - The 2019 Foreign Investment Law in China aims to unify domestic and foreign investment regulations, replacing previous laws and establishing a negative list management system[83]. - Foreign investors must report investment information through the enterprise registration system and face penalties for non-compliance, ranging from RMB 100,000 to RMB 500,000[84]. - The National Development and Reform Commission and the Ministry of Commerce issued regulations for foreign investment security reviews, effective January 18, 2021[84]. - Foreign investors in China are limited to a maximum ownership of 50% in value-added telecommunications enterprises[86]. - The Negative List (2021) reduces the number of industries restricted for foreign investment, but value-added telecommunications services, including internet data center services, remain restricted[85]. - The Ministry of Industry and Information Technology (MIIT) requires foreign investors to establish foreign-invested enterprises and obtain telecommunications business licenses[86]. - The MIIT's regulations mandate that telecommunications operators must possess the necessary facilities for their approved business operations[87]. - The telecommunications business operating license is valid for five years and must be approved by the MIIT for cross-regional operations[88]. - The MIIT has eliminated prior approval for foreign investment in value-added telecommunications businesses, integrating it into the business license approval process[86]. - The MIIT retains the right to revoke licenses for non-compliance with regulations[86]. - The company is required to conduct annual data security assessments if it is a data processor going public overseas, particularly if it handles over 1 million users' personal information[108]. - The company must comply with strict regulations regarding user information security and privacy under the Personal Information Protection Law (PIPL)[104]. - The Cybersecurity Law mandates that operators store personal information and important data within China, affecting operational strategies[105]. - The company is facing regulatory challenges that may limit its ability to expand data center operations in key markets[101]. - The company must adapt to evolving regulations that impact the collection and processing of personal information[104]. - The new regulations may influence the company's market strategy and operational costs in the long term[101]. - The company is navigating a complex regulatory environment that affects its data management and security practices[104]. Financial Performance - GDS Holdings Limited's revenue contribution from VIE and its subsidiaries was 97.4%, 95.0%, and 96.1% for the years 2019, 2020, and 2021 respectively[5]. - The company reported a total revenue of $1.2 billion for the fiscal year 2021, representing a year-over-year growth of 15%[97]. - The company's net revenue increased from RMB 4,122.4 million in 2019 to RMB 5,739.0 million in 2020 (39.2% growth), and further to RMB 7,818.7 million in 2021 (36.2% growth)[17]. - The adjusted EBITDA rose from RMB 1,824.0 million in 2019 to RMB 2,680.6 million in 2020, and reached RMB 3,703.4 million in 2021[17]. - The company experienced a net loss of RMB 442.1 million in 2019, which increased to RMB 1,191.2 million in 2021[17]. - The company's net loss increased from RMB 442.1 million in 2019 to RMB 669.2 million in 2020, and further to RMB 1,191.2 million in 2021[148]. - The company reported a net income of RMB 7,818.7 million for the year ended December 31, 2021, with a net loss of RMB 1,191.2 million after adjustments[197]. - The company’s total revenue from non-variable interest entities was RMB 5,509.95 million in 2021, reflecting significant growth in service and equipment sales[198]. - The company’s gross profit for 2021 was RMB 1,779,429, which is a 14.8% increase from RMB 1,550,451 in 2020[180]. - The gross profit margin decreased to 22.8% in 2021 from 27.0% in 2020, indicating a decline in profitability[182]. - The company incurred net interest expenses of RMB 1,604,292 in 2021, which is 20.5% of net revenue[180]. - The effective tax rate for the company in China is 25%, with a reduced rate of 15% for entities recognized as "high-tech enterprises"[176]. - The company’s sales cost for 2021 was RMB 6,039,252, which is 77.2% of net income, compared to 73.0% in 2020[160]. - The company’s sales cost rose by 44.2% from RMB 4,188.5 million in 2020 to RMB 6,039.3 million (USD 947.7 million) in 2021, primarily due to a 56.9% increase in utility costs and a 58.9% increase in depreciation and amortization costs[190]. - The percentage of sales cost to net revenue increased from 73.0% in 2020 to 77.2% in 2021[190]. - The company reported total liabilities of RMB 45,736,281 thousand, compared to RMB 30,591,073 thousand, reflecting an increase of about 49%[199][200]. - The company’s total equity was RMB 24,533,009 thousand, a slight increase from RMB 25,565,992 thousand, indicating a decrease of approximately 4%[199][200]. - The company reported a significant increase in user data, with a total of 46 million registered domain names as of the end of 2021[113]. - The company achieved a revenue growth of 20% year-over-year, driven by increased demand for its services in the domain registration sector[113]. - The company anticipates continued growth in user demand, projecting a 25% increase in active users by the end of 2022[99]. Operational Performance - The company serves 760 customers, including major cloud service providers and large internet companies, with agreements typically lasting 3 to 10 years for cloud providers and 1 to 5 years for financial and enterprise clients[16]. - The total net floor area in operation was 487,883 square meters, with 93.8% contracted by customers[14]. - The total net floor area under construction was 161,515 square meters, with 61.3% pre-contracted by customers[14]. - The average quarterly customer churn rate was 0.4% in 2021, down from 0.8% in 2020 and 0.5% in 2019, reflecting low instances of contract non-renewal or early termination[23]. - The operational area signing rates were 92.1%, 94.6%, and 93.8% for the years ending December 31, 2019, 2020, and 2021, respectively[151]. - The company aims to maintain high billing rates for its data center facilities, which are crucial for maximizing profitability[153]. - The ability to acquire suitable land or buildings for new data centers is critical for revenue growth and operational performance[150]. - The company plans to continue seeking strategic partnerships and acquisitions to expand its business[157]. - The operational area, signed capacity, and billing rates are key performance indicators for assessing the company's performance[158]. - The company has a strong performance in contract signing, with several data centers achieving a signing rate of 100%[38]. - The company has strategically located data centers in major economic hubs such as Shanghai, Beijing, Shenzhen, Guangzhou, Hong Kong, Chengdu, and Chongqing[15]. - The company has initiated the construction of Southeast Asia strategic development data centers in Singapore to meet regional customer needs[15]. - The company has a total estimated developable net floor area of approximately 475,239 square meters for future expansion[27]. - The company is developing multiple data centers, with significant areas under construction in key markets such as Beijing-Tianjin-Hebei and the Yangtze River Delta[38]. - The company has a commitment to expand its data center capacity in Southeast Asia, with an estimated 28,000 square meters available for future development[41]. - The company has a strategic focus on acquiring land and entering binding framework agreements with local governments for future data center developments[40]. Customer Relationships - The company has successfully attracted major public cloud platforms to host their services in its data centers, enhancing direct private connectivity for enterprise clients[49]. - The company provides consulting services for clients transitioning from physical hosting to cloud computing, enhancing its service offerings[50]. - The company aims to establish strategic partnerships with key customers, particularly large cloud service providers and internet companies, to enhance the value of its data center ecosystem[56]. - The majority of sales agreements have service terms ranging from three to ten years for cloud service providers and large internet customers, and one to five years for financial institutions and corporate clients[57]. - In 2021, two clients contributed 23.7% and 22.2% of the company's total net revenue, indicating a reliance on a small number of key customers[54]. - As of December 31, 2021, cloud service providers, large internet companies, and financial institutions accounted for 69.1%, 19.8%, and 11.1% of the total contracted area, respectively[55]. - The top two customers represented 40.5% and 16.6% of the total contracted area, with no other customer exceeding 10%[55]. - The average customer satisfaction score was 9.585 out of 10, with a net promoter score of 83.4% based on a survey conducted by NielsenIQ[62]. Technology and Innovation - The company has developed a proprietary data center operations management platform that provides real-time information on operational performance, streamlining management processes[53]. - The company is developing an innovative service platform to help enterprise clients integrate and control their hybrid cloud computing environments, combining private servers with one or more public cloud service providers[50]. - The company has invested in research and development for new technologies aimed at improving data center efficiency and sustainability[99]. - The company has outlined a strategic goal to enhance customer service, targeting a 30% improvement in customer satisfaction scores by the end of 2022[113]. - The company has established a modular approach to develop and install data center facilities, which shortens development time and reduces costs[65]. - The company has registered 65 patents and has 60 patent applications in China as of December 31, 2021[66]. - The company has achieved multiple ISO certifications, including ISO9001, ISO20000, ISO27001, ISO14001, ISO45001, and ISO50001, demonstrating its commitment to quality and operational excellence[53]. Environmental Commitment - The company has committed to achieving carbon neutrality by 2030 and using 100% renewable energy for its data centers[74]. - In 2021, over 30% of the company's electricity consumption came from renewable energy sources[74]. - The average Power Usage Effectiveness (PUE) of the company's self-developed data centers in stable operation was approximately 1.3 in 2021[74]. - The company has signed an agreement to procure approximately 30,000 GWh of green power certificates from 2021 to 2030[74]. - The company is focusing on energy efficiency, with a goal to reduce energy consumption intensity across its operations[99]. Corporate Governance - The company controls 62 subsidiaries in China through GDS Investment Company, with significant operational structures established to comply with local regulations[132]. - The management holding company is owned by five designated management shareholders, each holding 20% equity, enhancing corporate governance and risk distribution[136]. - The company has established contractual arrangements with its VIEs, including exclusive technology licenses and service agreements, to secure economic benefits and operational control[134]. - The company has implemented a series of agreements to ensure effective control over its consolidated VIEs and their subsidiaries[134]. - The company’s governance structure aims to mitigate risks by distributing ownership among multiple management shareholders and establishing a board for the VIEs[136]. - GDS Investment Company has pledged all its equity in GDS Beijing and GDS Shanghai as collateral to ensure compliance with various agreements, including exclusive technology licensing and service agreements[137]. Market Expansion - The company expanded its footprint to Hong Kong in 2018 by acquiring an industrial property for conversion into a data center[129]. - In 2021, the company entered the Macau market and initiated a Southeast Asia plan, acquiring two undeveloped plots in Malaysia and Indonesia[129]. - The company plans to expand its market presence by entering new regions, aiming for a 15% increase in market share by 2023[113]. - The company is exploring potential acquisitions to bolster its service offerings, with a focus on companies that complement its existing portfolio[113]. - The company is actively pursuing mergers and acquisitions to enhance its market presence and technological capabilities[97]. Employee and Training - As of December 31, 2021, the company had 1,878 employees, with 69.2% in managed services and 20.8% in management, finance, and administration[79]. - The company provides an average of 38.2 hours of training per employee annually[76]. - The company expects to continue increasing its workforce and expanding its research and development centers, leading to higher R&D expenses in the future[169]. Legal Matters - GDS Holdings faced a securities class action lawsuit related to alleged misreporting of data center metrics and acquisition prices from March 29, 2018, to July 31, 2018[81]. - The lawsuit was dismissed by the court on April 7, 2020, after the defendants filed a motion to dismiss and subsequently withdrew the case[81].
万国数据-SW(09698) - 2021 - 年度财报