Exhibit 99.3
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD
INTERIM FINANCIAL INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 2021 and 2022
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| | | Note | | | Three months ended March 31, | | |||||||||
| | | | | | 2021 | | | 2022 | | ||||||
| | | | | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | (Unaudited) | | | (Unaudited) | | ||||||
Revenue | | | 5 | | | | | 819,765 | | | | | | 1,018,938 | | |
Cost of revenue | | | 6 | | | | | (541,210) | | | | | | (669,907) | | |
Gross profit | | | | | | | | 278,555 | | | | | | 349,031 | | |
Research and development expenses | | | 6 | | | | | (281,299) | | | | | | (363,013) | | |
Selling and marketing expenses | | | 6 | | | | | (167,054) | | | | | | (108,907) | | |
General and administrative expenses | | | 6 | | | | | (180,457) | | | | | | (211,301) | | |
Net impairment losses on financial and contract assets | | | | | | | | (7,104) | | | | | | (17,214) | | |
Other income, gains or loss-net | | | 7 | | | | | 11,229 | | | | | | (3,491) | | |
Operating loss | | | | | | | | (346,130) | | | | | | (354,895) | | |
Finance income | | | 8 | | | | | 18,157 | | | | | | 2,446 | | |
Finance costs | | | 8 | | | | | (26,235) | | | | | | (12,124) | | |
Finance costs – net | | | 8 | | | | | (8,078) | | | | | | (9,678) | | |
Share of gain of associate and joint venture | | | 13 | | | | | 4,547 | | | | | | 11,537 | | |
Loss before income tax | | | | | | | | (349,661) | | | | | | (353,036) | | |
Income tax benefit | | | 9 | | | | | 26,871 | | | | | | 20,728 | | |
Loss for the period | | | | | | | | (322,790) | | | | | | (332,308) | | |
Loss attributable to: | | | | | | | | | | | | | | | | |
– Owners of the Company | | | | | | | | (304,732) | | | | | | (317,585) | | |
– Non-controlling interests | | | | | | | | (18,058) | | | | | | (14,723) | | |
| | | | | | | | (322,790) | | | | | | (332,308) | | |
Other comprehensive income, net of tax | | | | | | | | | | | | | | | | |
Items that may be subsequently reclassified to profit or loss | | | | | | | | | | | | | | | | |
– Foreign currency translation differences | | | | | | | | 50,099 | | | | | | (23,193) | | |
– Changes in the fair value of debt instruments measured at fair value through other comprehensive income | | | | | | | | 1 | | | | | | 12,523 | | |
| | | | | | | | 50,100 | | | | | | (10,670) | | |
Total comprehensive loss for the period | | | | | | | | (272,690) | | | | | | (342,978) | | |
Total comprehensive loss attributable to: | | | | | | | | | | | | | | | | |
– Owners of the Company | | | | | | | | (254,632) | | | | | | (328,255) | | |
– Non-controlling interests | | | | | | | | (18,058) | | | | | | (14,723) | | |
| | | | | | | | (272,690) | | | | | | (342,978) | | |
Loss per share attributable to owners of the Company (expressed in RMB per share) | | | | | | | | | | | | | | | | |
– Basic and diluted | | | 10 | | | | | (0.28) | | | | | | (0.29) | | |
Loss per ADS attributable to owners of the Company (expressed in RMB per share) | | | | | | | | | | | | | | | | |
– Basic and diluted | | | 10 | | | | | (0.83) | | | | | | (0.86) | | |
-1-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| | | Note | | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | | | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | | | | (Unaudited) | | |||
ASSETS | | | | | | | | | | | | | | | | |
Non-current assets | | | | | | | | | | | | | | | | |
Property and equipment | | | 11 | | | | | 244,412 | | | | | | 259,506 | | |
Intangible assets | | | 12 | | | | | 687,194 | | | | | | 653,232 | | |
Deferred tax assets | | | | | | | | 683,218 | | | | | | 707,342 | | |
Financial assets measured at amortized cost from virtual bank | | | 19 | | | | | 674 | | | | | | — | | |
Investments accounted for using the equity method | | | 13 | | | | | 185,346 | | | | | | 196,883 | | |
Financial assets measured at fair value through other comprehensive income | | | 15 | | | | | 640,501 | | | | | | 735,926 | | |
Contract assets | | | 5 | | | | | 868 | | | | | | 145 | | |
Restricted cash | | | 21 | | | | | — | | | | | | 9,000 | | |
Total non-current assets | | | | | | | | 2,442,213 | | | | | | 2,562,034 | | |
Current assets | | | | | | | | | | | | | | | | |
Trade receivables | | | 17 | | | | | 891,174 | | | | | | 1,274,817 | | |
Contract assets | | | 5 | | | | | 227,895 | | | | | | 198,986 | | |
Prepayments and other receivables | | | 18 | | | | | 752,667 | | | | | | 890,640 | | |
Financial assets measured at amortized cost from virtual bank | | | 19 | | | | | 12,711 | | | | | | 9,307 | | |
Financial assets measured at fair value through other comprehensive income | | | 15 | | | | | 482,497 | | | | | | 782,730 | | |
Financial assets at fair value through profit or loss | | | 20 | | | | | 2,071,653 | | | | | | 917,561 | | |
Restricted cash | | | 21 | | | | | 1,060,427 | | | | | | 475,314 | | |
Cash and cash equivalents | | | 22 | | | | | 1,399,370 | | | | | | 1,270,695 | | |
Total current assets | | | | | | | | 6,898,394 | | | | | | 5,820,050 | | |
Total assets | | | | | | | | 9,340,607 | | | | | | 8,382,084 | | |
EQUITY AND LIABILITIES | | | | | | | | | | | | | | | | |
Equity | | | | | | | | | | | | | | | | |
Share capital | | | 23 | | | | | 78 | | | | | | 78 | | |
Shares held for share incentive scheme | | | 25 | | | | | (80,102) | | | | | | (79,752) | | |
Other reserves | | | 24 | | | | | 10,512,631 | | | | | | 10,513,082 | | |
Accumulated losses | | | | | | | | (6,638,625) | | | | | | (6,956,210) | | |
Equity attributable to equity owners of the Company | | | | | | | | 3,793,982 | | | | | | 3,477,198 | | |
Non-controlling interests | | | | | | | | 41,100 | | | | | | 26,377 | | |
Total equity | | | | | | | | 3,835,082 | | | | | | 3,503,575 | | |
LIABILITIES | | | | | | | | | | | | | | | | |
Non-current liabilities | | | | | | | | | | | | | | | | |
Trade and other payables | | | 26 | | | | | 313,834 | | | | | | 323,322 | | |
Contract liabilities | | | | | | | | 19,418 | | | | | | 19,041 | | |
Deferred tax liabilities | | | | | | | | 9,861 | | | | | | 8,347 | | |
Total non-current liabilities | | | | | | | | 343,113 | | | | | | 350,710 | | |
Current liabilities | | | | | | | | | | | | | | | | |
Trade and other payables | | | 26 | | | | | 2,137,099 | | | | | | 2,107,183 | | |
Payroll and welfare payables | | | | | | | | 515,067 | | | | | | 314,429 | | |
Contract liabilities | | | | | | | | 153,844 | | | | | | 164,269 | | |
Short-term borrowings | | | 27 | | | | | 815,260 | | | | | | 294,829 | | |
Customer deposits | | | 28 | | | | | 1,350,171 | | | | | | 1,424,078 | | |
Derivative financial liabilities | | | 29 | | | | | 190,971 | | | | | | 223,011 | | |
Total current liabilities | | | | | | | | 5,162,412 | | | | | | 4,527,799 | | |
Total liabilities | | | | | | | | 5,505,525 | | | | | | 4,878,509 | | |
Total equity and liabilities | | | | | | | | 9,340,607 | | | | | | 8,382,084 | | |
-2-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| | | | | | Attributable to owners of the Company | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | | Note | | | Share capital | | | Shares held for share incentive scheme | | | Other reserves | | | Accumulated losses | | | Total | | | Non- controlling interest | | | Total equity | | |||||||||||||||||||||
| | | | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | |||||||||||||||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As at January 1, 2021 | | | | | | | | 78 | | | | | | (87,714) | | | | | | 10,639,931 | | | | | | (5,356,926) | | | | | | 5,195,369 | | | | | | 89,914 | | | | | | 5,285,283 | | |
Loss for the period | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (304,732) | | | | | | (304,732) | | | | | | (18,058) | | | | | | (322,790) | | |
Other comprehensive income, net of tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
– Foreign currency translation differences | | | 24 | | | | | — | | | | | | — | | | | | | 50,099 | | | | | | — | | | | | | 50,099 | | | | | | — | | | | | | 50,099 | | |
– Fair value changes on financial assets measured at fair value through other comprehensive income | | | 24 | | | | | — | | | | | | — | | | | | | 1 | | | | | | — | | | | | | 1 | | | | | | — | | | | | | 1 | | |
Total comprehensive loss for the period | | | | | | | | — | | | | | | — | | | | | | 50,100 | | | | | | (304,732) | | | | | | (254,632) | | | | | | (18,058) | | | | | | (272,690) | | |
Transactions with equity holders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share-based payments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
– Value of employee services | | | 25 | | | | | — | | | | | | — | | | | | | 6,643 | | | | | | — | | | | | | 6,643 | | | | | | — | | | | | | 6,643 | | |
– Exercise of shares under Share Option Scheme | | | 25 | | | | | — | | | | | | 3,236 | | | | | | 1,113 | | | | | | — | | | | | | 4,349 | | | | | | — | | | | | | 4,349 | | |
Total transactions with equity holders at their capacity as equity holders for the period | | | | | | | | — | | | | | | 3,236 | | | | | | 7,756 | | | | | | — | | | | | | 10,992 | | | | | | — | | | | | | 10,992 | | |
As at March 31, 2021 | | | | | | | | 78 | | | | | | (84,478) | | | | | | 10,697,787 | | | | | | (5,661,658) | | | | | | 4,951,729 | | | | | | 71,856 | | | | | | 5,023,585 | | |
| | | | | | Attributable to owners of the Company | | | | | | | | | | | | | | |||||||||||||||||||||||||||
| | | Note | | | Share capital RMB’000 | | | Shares held for share incentive scheme RMB’000 | | | Other reserves RMB’000 | | | Accumulated losses RMB’000 | | | Total RMB’000 | | | Non- controlling interest RMB’000 | | | Total equity RMB’000 | | |||||||||||||||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As at January 1, 2022 | | | | | | | | 78 | | | | | | (80,102) | | | | | | 10,512,631 | | | | | | (6,638,625) | | | | | | 3,793,982 | | | | | | 41,100 | | | | | | 3,835,082 | | |
Loss for the period | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (317,585) | | | | | | (317,585) | | | | | | (14,723) | | | | | | (332,308) | | |
Other comprehensive income, net of tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
– Foreign currency translation differences | | | 24 | | | | | — | | | | | | — | | | | | | (23,193) | | | | | | — | | | | | | (23,193) | | | | | | — | | | | | | (23,193) | | |
– Fair value changes on financial assets measured at fair value through other comprehensive income | | | 24 | | | | | — | | | | | | — | | | | | | 12,523 | | | | | | — | | | | | | 12,523 | | | | | | — | | | | | | 12,523 | | |
Total comprehensive loss for the period | | | | | | | | — | | | | | | — | | | | | | (10,670) | | | | | | (317,585) | | | | | | (328,255) | | | | | | (14,723) | | | | | | (342,978) | | |
Transactions with equity holders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share-based payments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
– Value of employee services | | | 25 | | | | | — | | | | | | — | | | | | | 11,589 | | | | | | — | | | | | | 11,589 | | | | | | — | | | | | | 11,589 | | |
– Vesting of shares under Restricted Share Unit Scheme | | | 25 | | | | | — | | | | | | 142 | | | | | | (142) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
– Exercise of shares under Share Option Scheme | | | 25 | | | | | — | | | | | | 208 | | | | | | 71 | | | | | | — | | | | | | 279 | | | | | | — | | | | | | 279 | | |
Others | | | | | | | | — | | | | | | — | | | | | | (397) | | | | | | — | | | | | | (397) | | | | | | — | | | | | | (397) | | |
Total transactions with equity holders at their capacity as equity holders for the period | | | | | | | | — | | | | | | 350 | | | | | | 11,121 | | | | | | — | | | | | | 11,471 | | | | | | — | | | | | | 11,471 | | |
As at March 31, 2022 | | | | | | | | 78 | | | | | | (79,752) | | | | | | 10,513,082 | | | | | | (6,956,210) | | | | | | 3,477,198 | | | | | | 26,377 | | | | | | 3,503,575 | | |
-3-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Cash used in operations | | | | | (457,528) | | | | | | (1,115,120) | | |
Income tax paid | | | | | (3,255) | | | | | | (3,574) | | |
Net cash used in operating activities | | | | | (460,783) | | | | | | (1,118,694) | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Payments for property and equipment | | | | | (7,007) | | | | | | (5,066) | | |
Payments for intangible assets | | | | | (33,640) | | | | | | (13,847) | | |
Payments for financial assets measured at fair value through other comprehensive income | | | | | — | | | | | | (216,713) | | |
Payments for financial assets at fair value through profit or loss | | | | | (1,364,115) | | | | | | (488,280) | | |
Payments for settlement of derivatives | | | | | — | | | | | | (9,417) | | |
Release of restricted cash, net | | | | | 1,189,446 | | | | | | 629,674 | | |
Proceeds from sales of property and equipment | | | | | 13 | | | | | | 11 | | |
Proceeds from sales of financial assets at fair value through profit or loss | | | | | 1,229,007 | | | | | | 1,651,391 | | |
Interest received on financial assets at fair value through profit or loss | | | | | 14,743 | | | | | | 2,514 | | |
Net cash generated from investing activities | | | | | 1,028,447 | | | | | | 1,550,267 | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Proceeds from short-term borrowings | | | | | 697,400 | | | | | | 138,000 | | |
Proceeds from exercise of shares under share incentive scheme | | | | | 4,349 | | | | | | 279 | | |
Payments for lease liabilities | | | | | (22,941) | | | | | | (17,267) | | |
Repayments of short-term borrowings | | | | | (1,908,900) | | | | | | (656,129) | | |
Interest paid | | | | | (34,567) | | | | | | (9,225) | | |
Prepayments for shares repurchase | | | | | — | | | | | | (12,696) | | |
Net cash used in financing activities | | | | | (1,264,659) | | | | | | (557,038) | | |
Net decrease in cash and cash equivalents | | | | | (696,995) | | | | | | (125,465) | | |
Cash and cash equivalents at beginning of period | | | | | 3,055,194 | | | | | | 1,399,370 | | |
Effects of exchange rate changes on cash and cash equivalents | | | | | 2,681 | | | | | | (3,210) | | |
Cash and cash equivalents at the end of period | | | | | 2,360,880 | | | | | | 1,270,695 | | |
-4-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
1 General information and basis of presentation
1.1 General information
OneConnect Financial Technology Co., Ltd. (the “Company”) was incorporated in the Cayman Islands on October 30, 2017 as an exempted company with limited liability under the Companies Law (Cap. 22, Law 3 of 1961 as consolidated and revised) of the Cayman Islands. The address of the Company’s registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company completed its initial public offering (“IPO”) on December 13, 2019 on the New York Stock Exchange. Each American Depositary Shares (“ADSs”) of the Company represents three ordinary shares.
The Company, its subsidiaries, its controlled structured entities (“Structured Entities”, “Variable Interest Entities” or “VIEs”) and their subsidiaries (“Subsidiaries of VIEs”) are collectively referred to as the “Group”. The Group is principally engaged in providing cloud-platform-based Fintech solutions, online information service and operating support service to financial institutions (the “Listing Business”) mainly in the People’s Republic of China (the “PRC”). The Company does not conduct any substantive operations of its own but conducts its primary business operations through its subsidiaries, VIEs and subsidiaries of VIEs in the PRC.
The condensed consolidated financial statements comprise the condensed consolidated statements of financial position as of March 31, 2022, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the three-month period then ended, and a summary of significant accounting policies and other explanatory notes (the “Interim Financial Information”). The Interim Financial Information are presented in Renminbi (“RMB”), unless otherwise stated. The Interim Financial Information have not been audited.
1.2 Basis of preparation and presentation
The Interim Financial Information has been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting” issued by the International Accounting Standards Board and should be read in conjunction with the audited consolidated financial statements for the three years ended December 31, 2021 of the Group (“Financial Statements”), which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by International Accounting Standards Board.
2 Summary of significant accounting policies
Except as described below, the accounting policies and method of computation used in the preparation of the Interim Financial Information are generally consistent with those used in the Financial Statements in all material aspects, which have been prepared in accordance with IFRS under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit of loss (“FVPL”), financial assets at fair value through other comprehensive income (“FVOCI”), certain other financial liabilities, which are carried at fair values.
Taxes on income for the interim period are accrued using the estimated tax rates that would be applicable to expected total annual assessable profit.
(a)
New and amended standards and interpretations adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period commencing January 1, 2022:
•
Amendments to IAS 16 — Property, Plant and Equipment: Proceeds before intended use
•
Amendments to IFRS 3 — Reference to the Conceptual Framework
•
Cost of Fulfilling a Contract Amendments to IAS 37 — Onerous Contracts
•
Annual Improvements to IFRS Standards 2018-2020
-5-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
2 Summary of significant accounting policies (Continued)
(a)
New and amended standards and interpretations adopted by the Group (Continued)
The amendments listed above did not have material impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.
(b)
New standards and amendments to standards and interpretations not yet adopted
Several new standards and amendments to standards and interpretations have been issued but not effective during the three months ended March 31, 2022 and have not been early adopted by the Group in preparing this historical financial information:
| | | Effective for annual periods beginning on or after | |
IFRS 17 – Insurance Contracts | | | January 1, 2023 | |
Amendments to IAS 1 – Classification of Liabilities as Current or Non-current | | | January 1, 2023 | |
Amendments to IAS 1 – Disclosure of accounting policies | | | January 1, 2023 | |
Amendments to IAS 8 – Definition of accounting estimates | | | January 1, 2023 | |
Amendments to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction | | | January 1, 2023 | |
Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture | | | To be determined | |
The above new standards, new interpretations and amended standards are not expected to have a material impact on the historical financial information of the Group.
3 Critical accounting estimates and judgments
The preparation of the Interim Financial Information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing the Interim Financial Information, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty are the same as those applied to the Financial Statements.
4 Management of financial risk
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk.
The Interim Financial Information do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Financial Statements.
There were no changes in any material risk management policies during the three months ended March 31, 2022.
Since December 2019 COVID-19 has become widespread in China and many other countries. Although China’s economy is reopening, the Group’s operations have been negatively affected by delays in project implementation, on-site work, business development, client interaction and general uncertainties surrounding the effective and timely constraint of COVID-19. The outbreak of COVID-19 and the resulting widespread health crisis have also adversely affected the economies and financial markets, which could result in an economic downturn. As a result, customer usage of the Group’s solutions and the revenue growth have been and will continue to be adversely affected.
-6-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
4 Management of financial risk (Continued)
The extent to which this outbreak impacts the Group’s financial position and results of operations will depend on future developments, which are highly uncertain and unpredictable, including new information which may emerge concerning the severity of this outbreak and future actions, if any, to contain this outbreak or treat its impact, among others.
The Group has been proactively working with existing and new customers to provide operation support services and assist their shift to cloud-based solutions amid the interruptions. The Group will keep continuous attention on the situation of the COVID-19, assess and react actively to its impacts on the financial position and operating results of the Group.
The Group manages liquidity risk by maintaining adequate cash and cash equivalents and borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Management believes that the Group’s current cash and cash equivalents and anticipated cash flows from operations, investment and financing activities will be sufficient to meet the Group’s anticipated working capital requirements and capital expenditures for the next 12 months from March 31, 2022.
4.1 Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to enhance shareholders’ value in the long-term.
The Group monitors capital (including share capital and reserves) by regularly reviewing the capital structure. As a part of this review, the Company considers the cost of capital and the risks associated with the issued share capital. The Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or repurchase the Company’s shares. In the opinion of the Directors of the Company, the Group’s capital risk was low as at March 31, 2022.
4.2 Fair value estimation
Fair value estimates are made at a specific point in time based on relevant market information and information about financial instruments. When an active market exists, such as an authorized securities exchange, the market value is the best reflection of the fair values of financial instruments. For financial instruments where there is no active market, fair value is determined using valuation techniques.
The Group’s financial assets measured at fair value mainly include financial assets at fair value through profit or loss and financial assets measured at fair value through other comprehensive income.
Determination of fair value and fair value hierarchy
All assets and liabilities for which fair value is measured or disclosed in the historical financial information are categorized within the fair value hierarchies. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.
The levels of the fair value hierarchy are as follows:
(a)
Fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities (“Level 1”);
(b)
Fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (“Level 2”); and
-7-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
4 Management of financial risk (Continued)
4.2 Fair value estimation (Continued)
Determination of fair value and fair value hierarchy (Continued)
(c)
Fair value is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs) (“Level 3”).
The level of fair value calculation is determined by the lowest level input that is significant in the overall calculation. As such, the significance of the input should be considered from an overall perspective in the calculation of fair value.
For Level 2 financial instruments, valuations are generally obtained from third party pricing services for identical or comparable assets, or through the use of valuation methodologies using observable market inputs, or recent quoted market prices. Valuation service providers typically gather, analyse and interpret information related to market transactions and other key valuation model inputs from multiple sources, and through the use of widely accepted internal valuation models, provide a theoretical quote on various securities.
For Level 3 financial instruments, prices are determined using valuation methodologies such as discounted cash flow models and other similar techniques. Determinations to classify fair value measurement within Level 3 of the valuation hierarchy are generally based on the significance of the unobservable factors to the overall fair value measurement, and valuation methodologies such as discounted cash flow models and other similar techniques. To determine the fair value of loans and advances to customers from Virtual Bank, loans are segregated into portfolios of similar characteristics. Fair values are estimated using discounted cash flow methodology incorporating a range of input assumptions including expected customer prepayment rates, new business interest rate estimates for similar loans. The fair value of loans reflects uncertainty in expectations about future defaults at the balance sheet date and the fair value effect of repricing between origination and the reporting date. For credit impaired loans, fair value is estimated by discounting the future cash flows over the period they are expected to be recovered.
For assets and liabilities that are recognized at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The following tables provide the fair value measurement hierarchy of the Group’s financial assets and liabilities:
| | | As at December 31, 2021 | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||
Assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial assets at fair value through profit or loss (Note 20) | | | | | — | | | | | | 2,070,977 | | | | | | 676 | | | | | | 2,071,653 | | |
Financial assets measured at fair value through other comprehensive income (Note 15) | | | | | 16,334 | | | | | | — | | | | | | 1,106,664 | | | | | | 1,122,998 | | |
Financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative financial liabilities (Note 29) | | | | | — | | | | | | 190,971 | | | | | | — | | | | | | 190,971 | | |
-8-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
4 Management of financial risk (Continued)
4.2 Fair value estimation (Continued)
Determination of fair value and fair value hierarchy (Continued)
| | | As at March 31, 2022 | | |||||||||||||||||||||
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | ||||||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets measured at fair value | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial assets at fair value through profit or loss (Note 20) | | | | | — | | | | | | 916,885 | | | | | | 676 | | | | | | 917,561 | | |
Financial assets measured at fair value through other comprehensive income (Note 15) | | | | | 201,435 | | | | | | 30,181 | | | | | | 1,287,040 | | | | | | 1,518,656 | | |
Financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative financial liabilities (Note 29) | | | | | — | | | | | | 223,011 | | | | | | — | | | | | | 223,011 | | |
For the year ended December 31, 2021 and three months ended March 31, 2022, there were no transfers among different levels of fair values measurement.
Movements of Level 3 financial instruments measured at fair value are as follows:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
At beginning of period | | | | | 5,676 | | | | | | 1,107,340 | | |
Additions | | | | | — | | | | | | 180,376 | | |
At end of the period | | | | | 5,676 | | | | | | 1,287,716 | | |
Valuation inputs and relationships to fair value
The significant unobservable inputs used in level 3 fair value measurements for loans and advances to customers from virtual bank measured at fair value through other comprehensive income are discount rate and prepayment rate, and the range of inputs are 31, March 2022 are 5.73% – 8.27% (31 December 2021: 5.22% – 10.05%) and 0.35% – 0.39% (31 December 2021: 0.35% – 0.39%).
If the discount rate increase or decrease by 5%, with all other variables held constant, the assets and other comprehensive income would decrease RMB 5,160,000 or increase RMB 5,192,000 as at 31 March, 2022 (31 December 2021: decrease RMB 4,579,000 or increase RMB 4,608,000), If the prepayment ratio increase or decrease by 5%, with all other variables held constant, the assets and other comprehensive income would decrease or increase RMB 235,000 as at 31 March, 2022 (31 December 2021: decrease or increase RMB 195,000).
-9-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
5 Segment information and revenue
5.1 Description of segments and principal activities
The chief operating decision-makers and management personnel review the Group’s internal reporting in order to assess performance, allocate resources, and determine the operating segments based on these reports.
The Group has the following reportable segments for the three months ended March 31, 2022:
•
Technology Solutions
•
Virtual Bank Business
As the Group’s assets and liabilities are substantially located in the PRC, substantially all revenues are earned and substantially all expenses incurred in the PRC, no geographical segments are presented.
| | | Three months ended March 31, 2021 | | |||||||||||||||||||||
| | | Virtual Bank Business | | | Technology Solutions | | | Intersegment eliminations and adjustments | | | Consolidated | | ||||||||||||
(Unaudited) | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||
Revenue | | | | | 2,365 | | | | | | 817,407 | | | | | | (7) | | | | | | 819,765 | | |
Cost of revenue | | | | | (6,581) | | | | | | (534,636) | | | | | | 7 | | | | | | (541,210) | | |
Gross profit | | | | | (4,216) | | | | | | 282,771 | | | | | | — | | | | | | 278,555 | | |
Operating loss | | | | | (43,657) | | | | | | (302,473) | | | | | | — | | | | | | (346,130) | | |
Loss before income tax | | | | | (43,757) | | | | | | (305,904) | | | | | | — | | | | | | (349,661) | | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Assets | | | | | 1,006,405 | | | | | | 8,088,988 | | | | | | (820,728) | | | | | | 8,274,665 | | |
Goodwill | | | | | — | | | | | | 289,161 | | | | | | — | | | | | | 289,161 | | |
Deferred income tax assets | | | | | — | | | | | | 591,384 | | | | | | — | | | | | | 591,384 | | |
Total assets | | | | | 1,006,405 | | | | | | 8,969,533 | | | | | | (820,728) | | | | | | 9,155,210 | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Liabilities | | | | | 533,470 | | | | | | 3,641,446 | | | | | | (60,067) | | | | | | 4,114,849 | | |
Deferred income tax liabilities | | | | | — | | | | | | 16,776 | | | | | | — | | | | | | 16,776 | | |
Total Liabilities | | | | | 533,470 | | | | | | 3,658,222 | | | | | | (60,067) | | | | | | 4,131,625 | | |
Other segment information | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation of property and equipment | | | | | 2,239 | | | | | | 33,735 | | | | | | — | | | | | | 35,974 | | |
Amortization of intangible assets | | | | | 4,271 | | | | | | 74,508 | | | | | | — | | | | | | 78,779 | | |
Additions of non-current assets except for goodwill and deferred income tax assets | | | | | 9,217 | | | | | | 31,430 | | | | | | — | | | | | | 40,647 | | |
-10-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
5 Segment information and revenue (Continued)
5.1 Description of segments and principal activities (Continued)
| | | Three months ended March 31, 2022 | | |||||||||||||||||||||
| | | Virtual Bank Business | | | Technology Solutions | | | Intersegment eliminations and adjustments | | | Consolidated | | ||||||||||||
(Unaudited) | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||
Revenue | | | | | 21,193 | | | | | | 997,974 | | | | | | (229) | | | | | | 1,018,938 | | |
Cost of revenue | | | | | (11,188) | | | | | | (658,948) | | | | | | 229 | | | | | | (669,907) | | |
Gross profit | | | | | 10,005 | | | | | | 339,026 | | | | | | — | | | | | | 349,031 | | |
Operating loss | | | | | (30,306) | | | | | | (324,589) | | | | | | — | | | | | | (354,895) | | |
Loss before income tax | | | | | (30,348) | | | | | | (322,688) | | | | | | — | | | | | | (353,036) | | |
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Assets | | | | | 2,062,787 | | | | | | 6,355,861 | | | | | | (1,033,067) | | | | | | 7,385,581 | | |
Goodwill | | | | | — | | | | | | 289,161 | | | | | | — | | | | | | 289,161 | | |
Deferred income tax assets | | | | | — | | | | | | 707,342 | | | | | | — | | | | | | 707,342 | | |
Total assets | | | | | 2,062,787 | | | | | | 7,352,364 | | | | | | (1,033,067) | | | | | | 8,382,084 | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | | | | | | |
Segment Liabilities | | | | | 1,530,839 | | | | | | 3,399,089 | | | | | | (59,766) | | | | | | 4,870,162 | | |
Deferred income tax liabilities | | | | | — | | | | | | 8,347 | | | | | | — | | | | | | 8,347 | | |
Total Liabilities | | | | | 1,530,839 | | | | | | 3,407,436 | | | | | | (59,766) | | | | | | 4,878,509 | | |
Other segment information | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation of property and equipment | | | | | 3,424 | | | | | | 28,210 | | | | | | — | | | | | | 31,634 | | |
Amortization of intangible assets | | | | | 6,126 | | | | | | 36,717 | | | | | | — | | | | | | 42,843 | | |
Additions of non-current assets except for goodwill and deferred income tax assets | | | | | 8,826 | | | | | | 61,107 | | | | | | — | | | | | | 69,933 | | |
-11-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
5 Segment information and revenue (Continued)
5.2 Revenue
(a)
Disaggregation of revenue from contracts with customers
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
– Technology Solutions | | | | | | | | | | | | | |
Implementation | | | | | 168,567 | | | | | | 171,678 | | |
Transaction based and support revenue | | | | | | | | | | | | | |
– Operation support services | | | | | 212,237 | | | | | | 255,208 | | |
– Business origination services | | | | | 118,499 | | | | | | 114,793 | | |
– Risk management services | | | | | 99,290 | | | | | | 106,951 | | |
– Cloud services platform | | | | | 180,512 | | | | | | 295,834 | | |
– Post-implementation support services | | | | | 13,236 | | | | | | 11,427 | | |
– Others | | | | | 25,059 | | | | | | 41,854 | | |
– Virtual Bank Business | | | | | | | | | | | | | |
Interest and commission | | | | | 2,365 | | | | | | 21,193 | | |
| | | | | 819,765 | | | | | | 1,018,938 | | |
Disaggregation of revenue by timing of transfer of services over time or at a point in time is set out below:
| | | At a point in time | | | Over time | | | Total | | |||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2021 | | | | | | | | | | | | | | | | | | | |
Implementation | | | | | — | | | | | | 168,567 | | | | | | 168,567 | | |
Transaction based and support revenue | | | | | | | | | | | | | | | | | | | |
– Operation support services | | | | | 97,861 | | | | | | 114,376 | | | | | | 212,237 | | |
– Business origination services | | | | | 118,499 | | | | | | — | | | | | | 118,499 | | |
– Risk management services | | | | | 99,290 | | | | | | — | | | | | | 99,290 | | |
– Cloud services platform | | | | | — | | | | | | 180,512 | | | | | | 180,512 | | |
– Post-implementation support services | | | | | — | | | | | | 13,236 | | | | | | 13,236 | | |
– Others | | | | | 24,742 | | | | | | 2,682 | | | | | | 27,424 | | |
| | | | | 340,392 | | | | | | 479,373 | | | | | | 819,765 | | |
-12-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
5 Segment information and revenue (Continued)
5.2 Revenue (Continued)
(a)
Disaggregation of revenue from contracts with customers (Continued)
| | | At a point in time | | | Over time | | | Total | | |||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2022 | | | | | | | | | | | | | | | | | | | |
Implementation | | | | | — | | | | | | 171,678 | | | | | | 171,678 | | |
Transaction based and support revenue | | | | | | | | | | | | | | | | | | | |
– Operation support services | | | | | 89,879 | | | | | | 165,329 | | | | | | 255,208 | | |
– Business origination services | | | | | 114,793 | | | | | | — | | | | | | 114,793 | | |
– Risk management services | | | | | 106,951 | | | | | | — | | | | | | 106,951 | | |
– Cloud services platform | | | | | — | | | | | | 295,834 | | | | | | 295,834 | | |
– Post-implementation support services | | | | | — | | | | | | 11,427 | | | | | | 11,427 | | |
– Others | | | | | 41,778 | | | | | | 21,269 | | | | | | 63,047 | | |
| | | | | 353,401 | | | | | | 665,537 | | | | | | 1,018,938 | | |
During the three months ended March 31, 2021 and 2022, the Group mainly operated in PRC and most of the revenue were generated in PRC.
(b)
Contract assets and liabilities
The Group has recognized the following revenue-related contract assets and liabilities:
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Contract assets | | | | | | | | | | | | | |
– Implementation | | | | | 271,521 | | | | | | 252,709 | | |
– Transaction based and support | | | | | 39,582 | | | | | | 33,880 | | |
– Business origination services | | | | | 9,976 | | | | | | 11,318 | | |
– Operation support services | | | | | 17,449 | | | | | | 13,028 | | |
– Post implementation support services | | | | | 12,157 | | | | | | 9,534 | | |
| | | | | 311,103 | | | | | | 286,589 | | |
Less: Impairment loss allowance | | | | | | | | | | | | | |
– Implementation | | | | | (72,266) | | | | | | (80,923) | | |
– Transaction based and support | | | | | (10,074) | | | | | | (6,535) | | |
– Operation support services | | | | | (4,771) | | | | | | (3,038) | | |
– Post implementation support services | | | | | (5,303) | | | | | | (3,497) | | |
| | | | | (82,340) | | | | | | (87,458) | | |
| | | | | 228,763 | | | | | | 199,131 | | |
Less: Non-current contract assets | | | | | (868) | | | | | | (145) | | |
| | | | | 227,895 | | | | | | 198,986 | | |
-13-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
5 Segment information and revenue (Continued)
5.2 Revenue (Continued)
(b)
Contract assets and liabilities (Continued)
Revenue recognized in relation to contract liabilities
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Revenue recognized that was included in the contract liability balance at beginning of period | | | | | 74,737 | | | | | | 112,362 | | |
6 Expenses by nature
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Employee benefit expenses (a) | | | | | 422,137 | | | | | | 450,888 | | |
Technology service fees | | | | | 372,447 | | | | | | 531,654 | | |
Outsourcing labor costs | | | | | 71,019 | | | | | | 86,586 | | |
Amortization of intangible assets (Note 12) | | | | | 78,779 | | | | | | 42,843 | | |
Business origination fees to channel partners | | | | | 63,345 | | | | | | 77,362 | | |
Purchase costs of products | | | | | 24,722 | | | | | | 41,741 | | |
Depreciation of property and equipment (Note 11) | | | | | 35,974 | | | | | | 31,634 | | |
Marketing and advertising fees | | | | | 27,542 | | | | | | 14,054 | | |
Professional service fees | | | | | 5,196 | | | | | | 2,083 | | |
Listing expenses | | | | | — | | | | | | 36,486 | | |
Travelling expenses | | | | | 12,193 | | | | | | 10,349 | | |
Impairment loss of intangible assets (Note 12) | | | | | — | | | | | | 4,036 | | |
Others | | | | | 56,666 | | | | | | 23,412 | | |
Total cost of revenue, research and development expenses, selling and marketing expenses, general and administrative expenses | | | | | 1,170,020 | | | | | | 1,353,128 | | |
-14-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
6 Expenses by nature (Continued)
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Research and development costs | | | | | | | | | | | | | |
– Employee benefit expenses | | | | | 131,593 | | | | | | 150,374 | | |
– Technology service fees | | | | | 171,739 | | | | | | 216,025 | | |
– Amortization of intangible assets | | | | | 1,333 | | | | | | 1,267 | | |
– Depreciation of property and equipment | | | | | 2,443 | | | | | | 4,674 | | |
– Others | | | | | 4,738 | | | | | | 4,352 | | |
Amounts incurred | | | | | 311,846 | | | | | | 376,692 | | |
Less: capitalized | | | | | | | | | | | | | |
– Employee benefit expenses | | | | | (25,895) | | | | | | (13,559) | | |
– Technology service fees | | | | | (4,652) | | | | | | (120) | | |
| | | | | (30,547) | | | | | | (13,679) | | |
| | | | | 281,299 | | | | | | 363,013 | | |
(a)
Employee benefit expenses are as follows:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Wages and salaries | | | | | 339,551 | | | | | | 348,285 | | |
Welfare and other benefits | | | | | 77,636 | | | | | | 91,014 | | |
Share-based payments (Note 25) | | | | | 4,950 | | | | | | 11,589 | | |
| | | | | 422,137 | | | | | | 450,888 | | |
7 Other income, gains or loss — net
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Net foreign exchange (loss)/gain | | | | | (25,851) | | | | | | 14,238 | | |
Government grants and tax rebates | | | | | 20,066 | | | | | | 12,600 | | |
Net gain on financial assets at fair value through profit or loss | | | | | 11,201 | | | | | | 11,534 | | |
Guarantee loss, net | | | | | 5,519 | | | | | | 93 | | |
Net loss on derivatives | | | | | (235) | | | | | | (43,174) | | |
Others | | | | | 529 | | | | | | 1,218 | | |
| | | | | 11,229 | | | | | | (3,491) | | |
-15-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
8 Finance costs — net
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Finance income | | | | | | | | | | | | | |
Interest income on bank deposits | | | | | 18,157 | | | | | | 2,446 | | |
Finance costs | | | | | | | | | | | | | |
Interest expense on borrowings | | | | | (21,073) | | | | | | (6,922) | | |
Interest expense on lease liabilities (Note 16(b)) | | | | | (1,171) | | | | | | (1,894) | | |
Interest expense on redemption liability | | | | | (3,701) | | | | | | (2,511) | | |
Bank charges | | | | | (290) | | | | | | (797) | | |
| | | | | (26,235) | | | | | | (12,124) | | |
| | | | | (8,078) | | | | | | (9,678) | | |
9 Income tax benefits
The income tax benefits of the Group for the three months ended December 31, 2021 and 2022 are analyzed as follows:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Current income tax | | | | | (3,256) | | | | | | (4,910) | | |
Deferred income tax | | | | | 30,127 | | | | | | 25,638 | | |
Income tax benefit | | | | | 26,871 | | | | | | 20,728 | | |
(a)
PRC Enterprise Income Tax (“EIT”)
The income tax provision of the Group in respect of operations in Mainland China has been calculated at the tax rate of 25%, unless preferential tax rates were applicable.
Shenzhen OneConnect, Vantage Point Technology, BER Technology and Shenzhen CA as subsidiaries of the Group, were established in mainland China. They were eligible for preferential tax policies such as the policies applicable for the qualification of “High and New Technology Enterprise” and were entitled to a preferential income tax rate of 15%.
(b)
Cayman Islands Income Tax
The Company is incorporated under the laws of the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands and is not subject to Cayman Islands income tax.
(c)
Hong Kong Income Tax
The Hong Kong income tax rate is 16.5%. No Hong Kong profits tax was provided for as there was no estimated assessable profit that was subject to Hong Kong profits tax for the three months ended March 31, 2021 and 2022.
(d)
Singapore Income Tax
The Singapore income tax rate is 17%. No Singapore profits tax was provided for as there was no estimated taxable profit that was subject to Singapore profits tax for the three months ended March 31, 2021 and 2022.
-16-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
9 Income tax benefits (Continued)
(e)
Indonesia Income Tax
The income tax provision in respect of the Group’s operations in Indonesia was calculated at the tax rate of 22% on the taxable profits for the three months ended March 31, 2021 and 2022.
(f)
PRC Withholding Tax (“WHT”)
According to the EIT Law, distribution of profits earned by PRC companies since January 1, 2008 to overseas investors is subject to withholding tax of 5% or 10%, depending on the region of incorporation of the overseas investor, upon the distribution of profits to overseas-incorporated immediate holding companies.
For the three months ended March 31, 2021 and 2022, no deferred income tax liability on WHT was accrued because the subsidiaries of the Group were loss making.
10 Loss per share
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Net loss for the period attributable to owners of the Company | | | | | (304,732) | | | | | | (317,585) | | |
Weighted average number of ordinary shares in issue (in’000 shares) | | | | | 1,104,667 | | | | | | 1,110,039 | | |
Basic loss per share (RMB yuan) | | | | | (0.28) | | | | | | (0.29) | | |
Diluted loss per share (RMB yuan) | | | | | (0.28) | | | | | | (0.29) | | |
Basic loss per ADS (RMB yuan) (Note) | | | | | (0.83) | | | | | | (0.86) | | |
Diluted loss per ADS (RMB yuan) (Note) | | | | | (0.83) | | | | | | (0.86) | | |
Note: One ADS represented three ordinary shares of the Company.
Basic loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the three months ended March 31, 2021 and 2022.
Shares held for share incentive scheme purpose have been treated as treasury shares. Accordingly, for purpose of calculation of loss per share, the issued and outstanding number of ordinary shares as at March 31, 2021 and 2022 has taking into account the shares held for share incentive scheme purpose.
The effects of all outstanding share options granted under the Share Option Scheme and Restricted Share Units Scheme (Note 25) for three months ended March 31, 2021 and 2022 have been excluded from the computation of diluted loss per share as their effects would be anti-dilutive. Accordingly, dilutive loss per share for the three months ended March 31, 2021 and 2022 were the same as basic loss per share for the period.
-17-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
11 Property and equipment
| | | Office and telecommunication equipment | | | Right-of-use properties | | | Leasehold improvements | | | Total | | ||||||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | |
Opening net book amount | | | | | 51,039 | | | | | | 120,941 | | | | | | 52,304 | | | | | | 224,284 | | |
Additions | | | | | 1,825 | | | | | | — | | | | | | 5,182 | | | | | | 7,007 | | |
Disposals, net | | | | | (13) | | | | | | (4,676) | | | | | | — | | | | | | (4,689) | | |
Depreciation charge | | | | | (5,092) | | | | | | (25,773) | | | | | | (5,109) | | | | | | (35,974) | | |
Exchange difference | | | | | 25 | | | | | | (63) | | | | | | 37 | | | | | | (1) | | |
Closing net book amount | | | | | 47,784 | | | | | | 90,429 | | | | | | 52,414 | | | | | | 190,627 | | |
As at March 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost | | | | | 105,193 | | | | | | 301,446 | | | | | | 98,918 | | | | | | 505,557 | | |
Accumulated depreciation | | | | | (54,465) | | | | | | (209,890) | | | | | | (45,415) | | | | | | (309,770) | | |
Exchange difference | | | | | (2,944) | | | | | | (1,127) | | | | | | (1,089) | | | | | | (5,160) | | |
Net book amount | | | | | 47,784 | | | | | | 90,429 | | | | | | 52,414 | | | | | | 190,627 | | |
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | |
Opening net book amount | | | | | 58,448 | | | | | | 144,001 | | | | | | 41,963 | | | | | | 244,412 | | |
Additions | | | | | 3,182 | | | | | | 51,019 | | | | | | 1,884 | | | | | | 56,085 | | |
Disposals, net | | | | | (11) | | | | | | (9,136) | | | | | | — | | | | | | (9,147) | | |
Depreciation charge | | | | | (6,276) | | | | | | (18,808) | | | | | | (6,550) | | | | | | (31,634) | | |
Exchange difference | | | | | (33) | | | | | | (128) | | | | | | (49) | | | | | | (210) | | |
Closing net book amount | | | | | 55,310 | | | | | | 166,948 | | | | | | 37,248 | | | | | | 259,506 | | |
As at March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost | | | | | 129,715 | | | | | | 449,879 | | | | | | 110,689 | | | | | | 690,283 | | |
Accumulated depreciation | | | | | (71,296) | | | | | | (281,466) | | | | | | (72,175) | | | | | | (424,937) | | |
Exchange difference | | | | | (3,109) | | | | | | (1,465) | | | | | | (1,266) | | | | | | (5,840) | | |
Net book amount | | | | | 55,310 | | | | | | 166,948 | | | | | | 37,248 | | | | | | 259,506 | | |
During the different periods, the approximate depreciation which were charged to cost of revenue, research and development expenses, selling and marketing expenses and general and administrative expenses were as follows:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Cost of revenue | | | | | 600 | | | | | | 812 | | |
Research and development expenses | | | | | 2,443 | | | | | | 4,674 | | |
Selling and marketing expenses | | | | | 1,101 | | | | | | 1,345 | | |
General and administrative expenses | | | | | 31,830 | | | | | | 24,803 | | |
| | | | | 35,974 | | | | | | 31,634 | | |
Depreciation of office and telecommunication equipment is allocated to different functional expenses based on usage of equipment by different functional divisions. Right-of-use properties and leasehold improvement are primarily related to business office buildings leased by the Group and used as corporate headquarters. For leased business office buildings which are for general and administrative use, the depreciation of the related right-of-use properties and leasehold improvement is charged to general and administrative expense.
-18-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
12 Intangible assets
| | | Application and platform | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
| | | Contributed by Ping An Group | | | Developed internally | | | Acquired | | | Purchased Software | | | Development costs in progress | | | Goodwill | | | | | | Business license | | | | | | Others | | | | | | Total | | |||||||||||||||||||||||||||
(Unaudited) | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | | | | RMB’000 | | | | | | RMB’000 | | | | | | RMB’000 | | |||||||||||||||||||||||||||
Three months ended March 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Opening net book amount | | | | | — | | | | | | 287,674 | | | | | | 29,709 | | | | | | 44,758 | | | | | | 121,122 | | | | | | 289,161 | | | | | | | | | 124,145 | | | | | | | | | 20,494 | | | | | | | | | 917,063 | | |
Additions | | | | | — | | | | | | — | | | | | | 570 | | | | | | 2,522 | | | | | | 30,548 | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | 33,640 | | |
Transfer | | | | | — | | | | | | 60,972 | | | | | | — | | | | | | — | | | | | | (60,972) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | — | | |
Amortization | | | | | — | | | | | | (46,405) | | | | | | (6,458) | | | | | | (11,420) | | | | | | — | | | | | | — | | | | | | | | | (8,011) | | | | | | | | | (6,485) | | | | | | | | | (78,779) | | |
Exchange differences | | | | | — | | | | | | 295 | | | | | | — | | | | | | 26 | | | | | | 107 | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | 428 | | |
Closing net book amount | | | | | — | | | | | | 302,536 | | | | | | 23,821 | | | | | | 35,886 | | | | | | 90,805 | | | | | | 289,161 | | | | | | | | | 116,134 | | | | | | | | | 14,009 | | | | | | | | | 872,352 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As at March 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost | | | | | 690,910 | | | | | | 650,498 | | | | | | 61,078 | | | | | | 132,826 | | | | | | 90,698 | | | | | | 289,161 | | | | | | | | | 155,492 | | | | | | | | | 80,263 | | | | | | | | | 2,150,926 | | |
Accumulated amortization | | | | | (690,910) | | | | | | (347,166) | | | | | | (37,257) | | | | | | (96,563) | | | | | | — | | | | | | — | | | | | | | | | (39,358) | | | | | | | | | (66,254) | | | | | | | | | (1,277,508) | | |
Exchange differences | | | | | — | | | | | | (796) | | | | | | — | | | | | | (377) | | | | | | 107 | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | (1,066) | | |
Net book amount | | | | | — | | | | | | 302,536 | | | | | | 23,821 | | | | | | 35,886 | | | | | | 90,805 | | | | | | 289,161 | | | | | | | | | 116,134 | | | | | | | | | 14,009 | | | | | | | | | 872,352 | | |
Three months ended March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Opening net book amount | | | | | — | | | | | | 226,943 | | | | | | 2,231 | | | | | | 27,041 | | | | | | 45,389 | | | | | | 289,161 | | | | | | | | | 92,341 | | | | | | | | | 4,088 | | | | | | | | | 687,194 | | |
Additions | | | | | — | | | | | | — | | | | | | — | | | | | | 169 | | | | | | 13,678 | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | 13,847 | | |
Write-off | | | | | — | | | | | | (4,036) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | (4,036) | | |
Transfer | | | | | — | | | | | | 51 | | | | | | — | | | | | | — | | | | | | (51) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | — | | |
Amortization | | | | | — | | | | | | (27,773) | | | | | | (2,231) | | | | | | (4,141) | | | | | | — | | | | | | — | | | | | | | | | (7,931) | | | | | | | | | (767) | | | | | | | | | (42,843) | | |
Exchange differences | | | | | — | | | | | | (743) | | | | | | — | | | | | | (82) | | | | | | (105) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | (930) | | |
Closing net book amount | | | | | — | | | | | | 194,442 | | | | | | — | | | | | | 22,987 | | | | | | 58,911 | | | | | | 289,161 | | | | | | | | | 84,410 | | | | | | | | | 3,321 | | | | | | | | | 653,232 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As at March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost | | | | | 690,910 | | | | | | 717,190 | | | | | | 61,078 | | | | | | 148,977 | | | | | | 59,741 | | | | | | 289,161 | | | | | | | | | 155,492 | | | | | | | | | 80,263 | | | | | | | | | 2,202,812 | | |
Accumulated amortization | | | | | (690,910) | | | | | | (519,037) | | | | | | (61,078) | | | | | | (125,298) | | | | | | — | | | | | | — | | | | | | | | | (71,082) | | | | | | | | | (76,942) | | | | | | | | | (1,544,347) | | |
Exchange differences | | | | | — | | | | | | (3,711) | | | | | | — | | | | | | (692) | | | | | | (830) | | | | | | — | | | | | | | | | — | | | | | | | | | — | | | | | | | | | (5,233) | | |
Net book amount | | | | | — | | | | | | 194,442 | | | | | | — | | | | | | 22,987 | | | | | | 58,911 | | | | | | 289,161 | | | | | | | | | 84,410 | | | | | | | | | 3,321 | | | | | | | | | 653,232 | | |
The Group assesses at each reporting date whether there is an indication that intangible assets may be impaired. During the three months ended March 31, 2022, impairment charge of RMB4,036,000 has been charged to cost of revenue. The impairment charge was charged against development costs which were in progress for certain application and platform developed internally following a decision to reduce the output of certain products.
-19-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
12 Intangible assets (Continued)
During the three months ended March 31, 2021 and 2022, the amount of amortization charged to cost of revenue, research and development expenses and general and administrative expenses are as follows:
| | | Three months ended March 31, | | |||||||||
Amortization of intangible assets | | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Cost of revenue | | | | | 76,746 | | | | | | 40,400 | | |
Research and development expenses | | | | | 1,333 | | | | | | 1,267 | | |
General and administrative expenses | | | | | 700 | | | | | | 1,176 | | |
| | | | | 78,779 | | | | | | 42,843 | | |
13 Investments accounted for using the equity method
(a)
Investment in associate
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
At beginning of period | | | | | 172,757 | | | | | | 184,907 | | |
Share of gains of associate | | | | | 6,461 | | | | | | 11,976 | | |
At end of period | | | | | 179,218 | | | | | | 196,883 | | |
On March 28, 2017, Shanghai OneConnect set up Pingan Puhui Lixin Asset Management Co., Ltd. (“Puhui Lixin”) with Pingan Puhui Enterprise Management Co., Ltd. (“Puhui Management”), a subsidiary of Lufax. The Group’s equity interests in Puhui Lixin was 40% for the three months ended March 31, 2021 and 2022.
(b)
Investment in joint venture
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
At beginning of period | | | | | 2,976 | | | | | | 439 | | |
Share of losses of joint venture | | | | | (1,914) | | | | | | (439) | | |
At end of period | | | | | 1,062 | | | | | | — | | |
On August 23, 2019, the Group entered into an investment in SBI OneConnect Japan Co., Ltd. (“SBI Japan”) with SBI Holdings, Inc., (“SBI”) and disposed of the investment in October 2021.
The Group entered into an agreement of setting up Financial Open Portal (Guangxi) Cross-border Financial Digital Co., Ltd. (“Open Portal Guangxi”) with Digital Guangxi Group Co., Ltd. (“Digital Guangxi”) on April 10, 2020. The Group and Digital Guangxi owned the equity interest in Open Portal Guangxi as to 51% and shares control with Digital Guangxi so that accounts for the investment as a joint venture. The joint ventures accounted for using the equity method are individually immaterial.
-20-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
14 Financial instruments by category
The Group holds the following financial instruments:
| | | | | | As at December 31, | | | As at March 31, | | ||||||
| | | | | | 2021 | | | 2022 | | ||||||
| | | | | | RMB’000 | | | RMB’000 | | ||||||
| | | Note | | | | | | | | | (Unaudited) | | |||
Financial assets | | | | | | | | | | | | | | | | |
Financial assets at amortized cost | | | | | | | | | | | | | | | | |
– Trade receivables | | | 17 | | | | | 891,174 | | | | | | 1,274,817 | | |
– Prepayments and other receivables (excluding non-financial asset items) | | | 18 | | | | | 543,538 | | | | | | 640,157 | | |
– Financial assets measured at amortized cost from virtual bank | | | 19 | | | | | 13,385 | | | | | | 9,307 | | |
– Restricted cash | | | 21 | | | | | 1,060,427 | | | | | | 484,314 | | |
– Cash and cash equivalents | | | 22 | | | | | 1,399,370 | | | | | | 1,270,695 | | |
Financial assets measured at fair value through other comprehensive income (FVOCI) | | | 15 | | | | | 1,122,998 | | | | | | 1,518,656 | | |
Financial assets at fair value through profit or loss (FVPL) | | | 20 | | | | | 2,071,653 | | | | | | 917,561 | | |
Total | | | | | | | | 7,102,545 | | | | | | 6,115,507 | | |
Financial liabilities | | | | | | | | | | | | | | | | |
Liabilities at amortized cost | | | | | | | | | | | | | | | | |
– Trade and other payables (excluding non-financial liability items) | | | 26 | | | | | 1,464,750 | | | | | | 1,471,096 | | |
– Short-term borrowings | | | 27 | | | | | 815,260 | | | | | | 294,829 | | |
– Customer deposits | | | 28 | | | | | 1,350,171 | | | | | | 1,424,078 | | |
Derivative financial liability | | | | | | | | | | | | | | | | |
– Held at FVPL | | | 29 | | | | | 190,971 | | | | | | 223,011 | | |
Total | | | | | | | | 3,821,152 | | | | | | 3,413,014 | | |
15 Financial assets measured at fair value through other comprehensive income
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Loans and advances to customers from virtual bank | | | | | 1,103,460 | | | | | | 1,283,836 | | |
Equity securities (Note a) | | | | | 3,204 | | | | | | 3,204 | | |
Debt securities | | | | | 16,334 | | | | | | 231,616 | | |
| | | | | 1,122,998 | | | | | | 1,518,656 | | |
Less: Non-current financial asset measured at fair value through other comprehensive income | | | | | (640,501) | | | | | | (735,926) | | |
| | | | | 482,497 | | | | | | 782,730 | | |
(a)
On August 4, 2016, the Group acquired 5% equity interest in Fujian Exchange Settlement Centre Co., Ltd. (福建交易場所清算中心股份有限公司)at a consideration of RMB5,000,000.
-21-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
16 Leases
(a)
Amounts recognized in the consolidated statement of financial position
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Right-of-use assets (Note 11) | | | | | | | | | | | | | |
– Properties | | | | | 144,001 | | | | | | 166,948 | | |
Lease liabilities (Note 26) | | | | | | | | | | | | | |
– Non current | | | | | 97,473 | | | | | | 105,081 | | |
– Current | | | | | 57,417 | | | | | | 65,948 | | |
| | | | | 154,890 | | | | | | 171,029 | | |
(b)
Amounts recognized in the consolidated statement of comprehensive income
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Depreciation charge of right-of-use assets | | | | | 25,773 | | | | | | 18,808 | | |
Interest expenses (included in finance cost) | | | | | 1,171 | | | | | | 1,894 | | |
| | | | | 26,944 | | | | | | 20,702 | | |
The total cash outflow for leases for the three months ended March 31, 2021 and 2022 were RMB 23,510,000 and RMB 18,285,000 respectively.
Expenses recognized in relation to short-term leases for the three months ended March 31, 2021 and 2022 amounted to RMB 569,000 and RMB 1,018,000 respectively.
17 Trade receivables
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Trade receivables | | | | | 934,152 | | | | | | 1,323,816 | | |
Less: impairment loss allowance | | | | | (42,978) | | | | | | (48,999) | | |
| | | | | 891,174 | | | | | | 1,274,817 | | |
-22-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
17 Trade receivables (Continued)
Trade receivables and their aging analysis, based on recognition date, are as follows:
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Up to 1 year | | | | | 897,114 | | | | | | 1,263,140 | | |
1 to 2 years | | | | | 22,920 | | | | | | 44,904 | | |
2 to 3 years | | | | | 8,026 | | | | | | 8,417 | | |
Above 3 years | | | | | 6,092 | | | | | | 7,355 | | |
| | | | | 934,152 | | | | | | 1,323,816 | | |
18 Prepayments and other receivables
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Deposit receivable* | | | | | 539,625 | | | | | | 636,138 | | |
Value-added-tax deductible | | | | | 53,437 | | | | | | 86,412 | | |
Advance to suppliers | | | | | 93,230 | | | | | | 93,354 | | |
Advance to staffs | | | | | 42,343 | | | | | | 45,745 | | |
Receivables for value-added-tax paid on behalf of wealth management products | | | | | 6,881 | | | | | | 6,987 | | |
Others | | | | | 20,119 | | | | | | 24,972 | | |
Less: impairment loss allowance | | | | | (2,968) | | | | | | (2,968) | | |
| | | | | 752,667 | | | | | | 890,640 | | |
*
Deposit receivable mainly represents deposit paid to related parties and other suppliers according to the contract terms and receivable within one year.
(a)
Movements in the impairment loss allowance of prepayments and other receivables are as follows:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
At beginning of period | | | | | (3,349) | | | | | | (2,968) | | |
Reversals | | | | | 2 | | | | | | — | | |
Exchange differences | | | | | 9 | | | | | | — | | |
At end of period | | | | | (3,338) | | | | | | (2,968) | | |
-23-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
19 Financial assets measured at amortized cost from virtual bank
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Loans and advances to customers | | | | | 13,575 | | | | | | 9,359 | | |
Less: impairment loss allowance | | | | | (190) | | | | | | (52) | | |
| | | | | 13,385 | | | | | | 9,307 | | |
Less: non-current portion | | | | | (674) | | | | | | — | | |
| | | | | 12,711 | | | | | | 9,307 | | |
The balance represents financial assets measured at amortized cost carried from Virtual Bank, a wholly owned subsidiary of the Group since 2020.
20 Financial assets at fair value through profit or loss
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Contingent refundable consideration | | | | | 676 | | | | | | 676 | | |
Wealth management products | | | | | 2,070,977 | | | | | | 916,885 | | |
| | | | | 2,071,653 | | | | | | 917,561 | | |
As at December 31, 2021 and March 31, 2022, out of the wealth management products which the Group invested in, RMB2,070,977,000 and RMB916,885,000 were issued by subsidiaries of Ping An Group which are redeemable upon request by the holders, respectively.
21 Restricted cash
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Pledged bank deposits | | | | | 1,043,718 | | | | | | 416,461 | | |
Accrued interests | | | | | 6,444 | | | | | | 817 | | |
Time deposits with initial terms over three months | | | | | 10,265 | | | | | | 67,036 | | |
| | | | | 1,060,427 | | | | | | 484,314 | | |
Less: non-current portion | | | | | — | | | | | | (9,000) | | |
| | | | | 1,060,427 | | | | | | 475,314 | | |
As at December 31, 2021, RMB670,022,000 (USD105,090,000) of the bank deposits had been pledged for short-term borrowings of the Group with weighted average interest rate of 0.94% per annum, RMB368,866,000 (USD57,855,000) were pledged for currency swaps, and RMB4,830,000 , which pledged for business guarantees.
As at March 31, 2022, RMB410,824,000 (USD64,715,000) were pledged for currency swaps, and RMB5,637,000, which pledged for business guarantees.
-24-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
22 Cash and cash equivalents
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Cash on hand | | | | | 12 | | | | | | 12 | | |
Cash at central bank | | | | | 575,044 | | | | | | 121,313 | | |
Cash at banks | | | | | 824,314 | | | | | | 1,149,370 | | |
| | | | | 1,399,370 | | | | | | 1,270,695 | | |
23 Share capital
| | | Number of shares | | | USD | | ||||||
Authorized Ordinary shares of USD0.00001 at December 31, 2021 and March 31, 2022 | | | | | 5,000,000,000 | | | | | | 50,000 | | |
Issued | | | Number of shares | | | USD | | | Equivalent to RMB | | |||||||||
Ordinary shares of USD0.00001 on December 31, 2020 and March 31, 2021 | | | | | 1,169,980,661 | | | | | | 11,700 | | | | | | 78,008 | | |
Surrendered ordinary shares (Note) | | | | | (8) | | | | | | — | | | | | | — | | |
Ordinary shares of USD0.00001 on December 31, 2021 and March 31, 2022 | | | | | 1,169,980,653 | | | | | | 11,700 | | | | | | 78,008 | | |
Note: On April 1, 2021 and April 2, 2021, the Company bought back and cancelled 8 ordinary shares from Round A Investors.
24 Other reserves
| | | Recapitalization reserve | | | Share premium | | | Share-based compensation reserve | | | Foreign currency translation differences | | | Others | | | Total | | ||||||||||||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As at January 1, 2021 | | | | | 1,200,000 | | | | | | 9,627,159 | | | | | | 173,577 | | | | | | (133,132) | | | | | | (227,673) | | | | | | 10,639,931 | | |
– Foreign currency translation differences | | | | | — | | | | | | — | | | | | | — | | | | | | 50,099 | | | | | | — | | | | | | 50,099 | | |
– Fair value changes on financial assets at fair value through other comprehensive income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1 | | | | | | 1 | | |
Share-based payments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
– Value of employee services (Note 25) | | | | | — | | | | | | — | | | | | | 6,643 | | | | | | — | | | | | | — | | | | | | 6,643 | | |
– Exercise of shares under share option Scheme | | | | | — | | | | | | — | | | | | | 1,113 | | | | | | — | | | | | | — | | | | | | 1,113 | | |
– Vesting of shares under Restricted Share Unit Scheme | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
As at March 31, 2021 | | | | | 1,200,000 | | | | | | 9,627,159 | | | | | | 181,333 | | | | | | (83,033) | | | | | | (227,672) | | | | | | 10,697,787 | | |
-25-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
24 Other reserves (Continued)
| | | Recapitalization reserve | | | Share premium | | | Share-based compensation reserve | | | Foreign currency translation differences | | | Others | | | Total | | ||||||||||||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | | RMB’000 | | ||||||||||||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As at January 1, 2022 | | | | | 1,200,000 | | | | | | 9,627,159 | | | | | | 200,631 | | | | | | (285,674) | | | | | | (229,485) | | | | | | 10,512,631 | | |
– Foreign currency translation differences | | | | | — | | | | | | — | | | | | | — | | | | | | (23,193) | | | | | | — | | | | | | (23,193) | | |
– Fair value changes on financial assets at fair value through other comprehensive income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,523 | | | | | | 12,523 | | |
Share-based payments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
– Value of employee services (Note 25) | | | | | — | | | | | | — | | | | | | 11,589 | | | | | | — | | | | | | — | | | | | | 11,589 | | |
– Exercise of shares under share option Scheme | | | | | — | | | | | | — | | | | | | 71 | | | | | | — | | | | | | — | | | | | | 71 | | |
– Vesting of shares under Restricted Share Unit Scheme | | | | | — | | | | | | — | | | | | | (142) | | | | | | — | | | | | | — | | | | | | (142) | | |
Repurchase of shares | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (397) | | | | | | (397) | | |
As at March 31, 2022 | | | | | 1,200,000 | | | | | | 9,627,159 | | | | | | 212,149 | | | | | | (308,867) | | | | | | (217,359) | | | | | | 10,513,082 | | |
|
25 Share-based payments
For the purpose of establishing the Group’s share incentive scheme, Xin Ding Heng Limited (“Xin Ding Heng”) was set up in 2017 as a special purpose vehicle to indirectly hold 66,171,600 ordinary shares of the Company. As the Company has the power to govern the relevant activities of Xin Ding Heng and can derive benefits from the services to be rendered by the grantees, the directors of the Company consider that it is appropriate to consolidate Xin Ding Heng. In September 2020, the Company purchased at par value of the 66,171,600 ordinary shares indirectly held by Xin Ding Heng and deposited these shares to the depositary of its ADS program. The aggregate consideration of RMB88,280,000 for 66,171,600 shares had been recognized as “shares held for share incentive scheme” before the respective shares were effectively transferred to guarantees under share incentive scheme.
On November 7, 2017, equity-settled share-based compensation plan (“the Share Option Scheme”) was set up with the objective to recognize and reward the contribution of eligible directors, employees and other persons (collectively, the “Grantees”) for the growth and developments of the Group. On September 10, 2019, the Board of Directors of the company approved to amend and restate the equity-settled share-based compensation plan to supplement the Share Option Scheme with performance-based shares to grant to the Grantees (“the Restricted Share Units Scheme”). The 66,171,600 shares reserved for the share incentive scheme comprise the options previously granted under the Share Option Scheme and the remaining shares for grant under the Restricted Share Units Scheme. Both the Share Option Scheme and the Restricted Share Units Scheme are valid and effective for 10 years from the grant date.
-26-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
25 Share-based payments (Continued)
Share-based compensation expenses for the three months ended March 31, 2021 and 2022 were allocated as follows:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
– Cost of revenue | | | | | 921 | | | | | | 880 | | |
– Research and development expenses | | | | | 2,320 | | | | | | 870 | | |
– Selling and marketing expenses | | | | | 1,177 | | | | | | 1,313 | | |
– General and administrative expenses | | | | | 2,225 | | | | | | 8,526 | | |
Total | | | | | 6,643 | | | | | | 11,589 | | |
Value of employee’s services (Note 6) | | | | | 4,950 | | | | | | 11,589 | | |
Value of non-employee’s services | | | | | 1,693 | | | | | | — | | |
Total | | | | | 6,643 | | | | | | 11,589 | | |
(a)
Share Option Scheme
Subject to the Grantee continuing to be a service provider, 100% of these options will be vested over 4 years upon fulfilling the non-market performance conditions prescribed in the grantee agreement.
The exercisable period of options starts no earlier than 12 months after the Company successfully completes an initial public offering and the Company’s shares get listed in the stock exchange (“IPO and Listing”) and no later than 8 years from the grant date. The vesting date is determined by the Board of Directors of the Company.
Movements in the number of share options granted to employees are as follows:
| | | Number of share options | | |||||||||
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
At beginning of period | | | | | 19,459,994 | | | | | | 12,725,995 | | |
Exercised | | | | | (3,889,578) | | | | | | (156,048) | | |
Forfeited | | | | | (205,275) | | | | | | (1,216,559) | | |
At end of period | | | | | 15,365,141 | | | | | | 11,353,388 | | |
For the outstanding share options, the weighted-average exercise price was RMB19.84, and RMB24.92 per share and the weighted-average remaining contractual life was 5.01 and 4.12 years, respectively, as at March 31, 2021 and 2022, respectively.
-27-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
25 Share-based payments (Continued)
(a)
Share Option Scheme (Continued)
Share options outstanding at the balance sheet dates have the following expiry dates and exercise prices.
| | | | | | | | | | | | | | | | | | | | | Number of share options | | |||||||||
Grant Year | | | Expiry Year | | | Exercise price RMB | | | Fair value of options RMB | | | As at December 31, 2021 | | | As at March 31, 2022 | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | (Unaudited) | | |||
2017 | | | | | 2027 | | | | | | 1.33 | | | | | | 0.62 | | | | | | 1,109,682 | | | | | | 1,077,905 | | |
2017 | | | | | 2027 | | | | | | 2.00 | | | | | | 0.52 | | | | | | 5,785,221 | | | | | | 5,660,949 | | |
2018 | | | | | 2028 | | | | | | 52.00 | | | | | | 26.00 | | | | | | 4,704,219 | | | | | | 3,747,124 | | |
2019 | | | | | 2029 | | | | | | 52.00 | | | | | | 23.42 | | | | | | 1,126,873 | | | | | | 867,410 | | |
| | | | | | | | | | | | | | | | | | | | | | | 12,725,995 | | | | | | 11,353,388 | | |
The Company have used the discounted cash flow method to determine the underlying equity fair value of the Company to determine the fair value of the underlying ordinary share before its IPO. Key assumptions, such as discount rate and projections of future performance, are required to be determined by the Company with best estimate.
Based on fair value of the underlying ordinary share, the Company have used Binomial option-pricing model to determine the fair value of the share option as at the grant date. Key assumptions are set as below:
Date of grant | | | November 7, 2017 | | | November 8, 2018 | | | June 1, 2019 | | |||||||||
Discount rate | | | | | 24.0% | | | | | | 17.0% | | | | | | 17.0% | | |
Risk-free interest rate | | | | | 4.0% | | | | | | 4.0% | | | | | | 3.0% | | |
Volatility | | | | | 52.0% | | | | | | 51.0% | | | | | | 46.0% | | |
Dividend yield | | | | | 0.0% | | | | | | 0.0% | | | | | | 0.0% | | |
The Binomial Model requires the input of highly subjective assumptions. The risk-free rate for periods within the contractual life of the option is based on the China Treasury yield curve in effect at the time of grant. The expected dividend yield was estimated based on the Company’s expected dividend policy over the expected life of the options. The Company estimates the volatility of its ordinary shares at the respective dates of grant based on the historical volatility of similar U.S. public companies for a period equal to the expected life preceding the grant date.
(b)
Restricted Share Units Scheme
Subject to the Grantee continuing to be a service provider, 100% of these restricted share units will be vested over 4 years upon fulfilling the service conditions and non-market performance conditions prescribed in the grantee agreement.
-28-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
25 Share-based payments (Continued)
(b)
Restricted Share Units Scheme (Continued)
Movements in the number of restricted share units granted to employees are as follows:
| | | Number of restricted share units | | |||||||||
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
At beginning of period | | | | | 1,751,702 | | | | | | 16,552,829 | | |
Granted | | | | | — | | | | | | 3,895,900 | | |
Vested | | | | | — | | | | | | (106,167) | | |
Forfeited | | | | | (82,702) | | | | | | (532,463) | | |
At end of period | | | | | 1,669,000 | | | | | | 19,810,099 | | |
Restricted share units outstanding at the balance sheet dates have the following expiry dates and fair value prices.
| | | | | | | | | Number of restricted share units | | |||||||||
Grant Year | | | Fair value of restricted share units | | | As at December 31, 2021 | | | As at March 31, 2022 | | |||||||||
| | | RMB | | | | | | | | | (Unaudited) | | ||||||
September 2019 | | | | | 35.22 | | | | | | 545,383 | | | | | | 521,612 | | |
January 2020 | | | | | 16.18 | | | | | | 18,000 | | | | | | 17,500 | | |
April 2020 | | | | | 16.98 | | | | | | 82,500 | | | | | | 82,500 | | |
July 2020 | | | | | 38.67 | | | | | | 17,250 | | | | | | 17,250 | | |
June 2021 | | | | | 13.69 | | | | | | 503,076 | | | | | | 377,672 | | |
June 2021 | | | | | 14.31 | | | | | | 226,000 | | | | | | 226,000 | | |
June 2021 | | | | | 14.93 | | | | | | 1,279,800 | | | | | | 1,279,800 | | |
July 2021 | | | | | 15.16 | | | | | | 252,000 | | | | | | 197,000 | | |
September 2021 | | | | | 5.53 | | | | | | 7,346,000 | | | | | | 7,017,000 | | |
October 2021 | | | | | 5.25 | | | | | | 448,000 | | | | | | 353,000 | | |
October 2021 | | | | | 3.91 | | | | | | 2,820 | | | | | | 2,820 | | |
October 2021 | | | | | 4.68 | | | | | | 5,832,000 | | | | | | 5,832,000 | | |
Jaunary 2022 | | | | | 2.40 | | | | | | — | | | | | | 218,845 | | |
Jaunary 2022 | | | | | 2.41 | | | | | | — | | | | | | 2,320,000 | | |
Jaunary 2022 | | | | | 3.29 | | | | | | — | | | | | | 947,100 | | |
Jaunary 2022 | | | | | 2.64 | | | | | | — | | | | | | 400,000 | | |
| | | | | | | | | | | 16,552,829 | | | | | | 19,810,099 | | |
-29-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
25 Share-based payments (Continued)
(b)
Restricted Share Units Scheme (Continued)
The Company have used the discounted cash flow method to determine the underlying equity fair value of the Company to determine the fair value of the underlying ordinary share before its IPO. Key assumptions, such as discount rate and projections of future performance, are required to be determined by the Company with best estimate.
Based on fair value of the underlying ordinary share, the Company have used the Monte Carlo model to determine the fair value of the restricted share units as at the grant date. Key assumptions are set as below:
| | | Three months ended March 31, | | |||
| | | 2021 | | | 2022 | |
| | | (Unaudited) | | | (Unaudited) | |
Discount rate* | | | 15.0% | | | 15.0% | |
Risk-free interest rate | | | 2.0% ~ 3.0% | | | 2.0% ~ 3.0% | |
Volatility | | | 43.0% ~ 49.0% | | | 43.0% ~ 49.0% | |
Dividend yield | | | 0.0% | | | 0.0% | |
*
Applicable for the restricted share units granted in September 2019.
The Monte Carlo model requires the input of highly subjective assumptions. The risk-free rate for periods within the contractual life of the restricted share units is based on the China Treasury Bond Yield Curve in effect at the time of grant. The expected dividend yield was estimated based on the Company’s expected dividend policy over the expected life of the restricted share units. The Company estimates the volatility of its ordinary shares at the date of grant based on the historical volatility of similar US public companies for a period equal to the expected life preceding the grant date.
26 Trade and other payables
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Trade payables | | | | | | | | | | | | | |
Due to related parties | | | | | 747,449 | | | | | | 524,262 | | |
Due to third parties | | | | | 354,279 | | | | | | 305,425 | | |
| | | | | 1,101,728 | | | | | | 829,687 | | |
Redemption liability | | | | | 271,525 | | | | | | 274,035 | | |
Accrued expenses | | | | | 209,676 | | | | | | 283,271 | | |
Security deposits | | | | | 56,236 | | | | | | 56,491 | | |
Lease liabilities (Note 16(a)) | | | | | 154,890 | | | | | | 171,029 | | |
Amounts payable for purchase of shares held for share incentive scheme (Note 25) | | | | | 88,280 | | | | | | 88,280 | | |
Other tax payables | | | | | 44,716 | | | | | | 35,615 | | |
Amounts due to related parties | | | | | 431,351 | | | | | | 612,975 | | |
Service fees refundable | | | | | 9,809 | | | | | | 6,632 | | |
Others | | | | | 82,722 | | | | | | 72,490 | | |
| | | | | 2,450,933 | | | | | | 2,430,505 | | |
-30-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
26 Trade and other payables (Continued)
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Less: non-current portion | | | | | | | | | | | | | |
Redemption liability | | | | | (128,081) | | | | | | (129,961) | | |
Lease liabilities | | | | | (97,473) | | | | | | (105,081) | | |
Amounts payable for purchase of shares held for share incentive scheme (Note 25) | | | | | (88,280) | | | | | | (88,280) | | |
| | | | | (313,834) | | | | | | (323,322) | | |
| | | | | 2,137,099 | | | | | | 2,107,183 | | |
|
As at December 31, 2021 and March 31, 2022, the aging of the trade payables are mainly within one year.
27 Short-term borrowings
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
Secured | | | | | 663,136 | | | | | | 55,206 | | |
Unsecured | | | | | 152,124 | | | | | | 239,623 | | |
| | | | | 815,260 | | | | | | 294,829 | | |
As at December 31, 2021, out of the secured borrowings, RMB597,400,000 were secured by restricted cash of RMB670,022,000 (Note 21), RMB9,014,000 was guaranteed by Haidian Financing Guarantee RMB53,722,000 was guaranteed by Shenzhen HTI Financing Guarantee Co., Ltd., and RMB3,000,000 was secured by the accounts receivable that BER Technology could claim from Guilin Bank Co., Ltd. in the following two years. The weighted average interest rate of short-term borrowings was 3.93% per annum as at December 31, 2021.
As at March 31, 2022, out of the secured borrowings, RMB5,000,000 was guaranteed by Haidian Financing Guarantee RMB 50,000,000 was guaranteed by Shenzhen HTI Financing Guarantee Co., Ltd.,. The weighted average interest rate of short-term borrowings was 4.30% per annum as at March 31, 2022.
28 Customer deposits
| | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Current and savings accounts | | | | | 1,350,171 | | | | | | 1,424,078 | | |
It represented customer deposits held by Virtual Bank.
-31-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
29 Derivative financial liabilities
| | | As at December 31, | | | As at March 31, | | ||||||||||||||||||
| | | 2021 | | | 2022 | | ||||||||||||||||||
| | | Nominal amount | | | Fair value | | | Nominal amount | | | Fair value | | ||||||||||||
| | | RMB’000 | | | RMB’000 | | ||||||||||||||||||
| | | | | | | | | | | | | | | (Unaudited) | | |||||||||
Foreign exchange swaps | | | | | 2,186,865 | | | | | | 152,005 | | | | | | 2,177,432 | | | | | | 179,039 | | |
Currency forwards | | | | | 1,095,958 | | | | | | 38,966 | | | | | | 1,097,032 | | | | | | 43,972 | | |
| | | | | 3,282,823 | | | | | | 190,971 | | | | | | 3,274,464 | | | | | | 223,011 | | |
30 Dividends
No dividends had been paid or declared by the Company for the three months ended March 31, 2021 and 2022.
31 Related party transactions
The following significant transactions were carried out between the Group and its related parties for the three months ended March 31, 2021 and 2022. In the opinion of the Directors of the Company, the related party transactions were carried out in the normal course of business and at terms negotiated between the Group and the respective related parties.
(a)
Names and relationships with related parties
The following companies are related parties of the Group that had balances and/or transactions with the Group for the three months ended March 31, 2021 and 2022.
Name of related parties | | | Relationship with the Group | |
Sen Rong Limited(i) | | | A shareholder that has significant influence over the Group | |
Rong Chang Limited(i) | | | A shareholder that has significant influence over the Group | |
Bo Yu | | | A shareholder that has significant influence over the Group | |
Ping An Group | | | Ultimate parent company of Bo Yu | |
Subsidiaries of Ping An Group | | | Controlled by Ping An Group | |
Puhui Lixin | | | Significant influenced by the Group | |
SBI Japan(ii) | | | Significant influenced by the Group | |
Open Portal Guangxi | | | Significant influenced by the Group | |
(i)
As a result of the acting-in-concert agreement entered into between Sen Rong and Rong Chang, pursuant to which Sen Rong has agreed to act together with Rong Chang for the purpose of exercising Sen Rong’s shareholders’ rights in the Company, Rong Chang and Sen Rong have significant influence over the Group as a concert group .
(ii)
On October of 2021, the Group disposed the investment of SBI Japan(Note 13) and no longer have significant influence over it.
-32-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
31 Related party transactions (Continued)
(b)
Key management personnel compensations
Key management includes directors (executive and non-executive) and senior officers. The compensations paid or payable by the Group to key management for employee services are shown below:
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Wages and salaries | | | | | 5,725 | | | | | | 7,727 | | |
Welfare and other benefits | | | | | 181 | | | | | | 156 | | |
Share-based payments | | | | | 762 | | | | | | 3,280 | | |
| | | | | 6,668 | | | | | | 11,163 | | |
(c)
Significant transactions with related parties
| | | Three months ended March 31, | | |||||||||
| | | 2021 | | | 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | (Unaudited) | | | (Unaudited) | | ||||||
Revenue | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 438,238 | | | | | | 548,682 | | |
Revenue generated by providing implementation and support service jointly with Ping An Technology (Shenzhen) Co., Ltd, a related party, for the three months ended March 31, 2021 and 2022 amounted to RMB983,358 and RMB Nil, respectively.
| Purchase of services | | | | | | | | | | | | | |
| Ping An Group and its subsidiaries | | | | | 330,932 | | | | | | 402,303 | | |
| | | | | | | | | | | | | | |
| Net gain from wealth management products consolidated by related parties | | | | | | | | | | | | | |
| Ping An Group and its subsidiaries | | | | | 5,280 | | | | | | 5,011 | | |
| | | | | | | | | | | | | | |
| Net loss on derivatives | | | | | | | | | | | | | |
| Ping An Group and its subsidiaries | | | | | (235) | | | | | | (43,174) | | |
| | | | | | | | | | | | | | |
| Interest income on bank deposits | | | | | | | | | | | | | |
| Ping An Group and its subsidiaries | | | | | 4,258 | | | | | | 2,294 | | |
| Leasing payment | | | | | | | | | | | | | |
| Ping An Group and its subsidiaries | | | | | 3,715 | | | | | | 3,688 | | |
| Interest expenses | | | | | | | | | | | | | |
| Ping An Group and its subsidiaries | | | | | 6,728 | | | | | | 2,672 | | |
-33-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
31 Related party transactions (Continued)
(d)
Balances with related parties
Trade related | | | As at December 31, 2021 | | | As at March 31, 2022 | | ||||||
| | | RMB’000 | | | RMB’000 | | ||||||
| | | | | | | | | (Unaudited) | | |||
Trade receivables | | | | | | | | | | | | | |
Ping An Group and its subsidiaries(i) | | | | | 442,694 | | | | | | 738,727 | | |
Contract assets | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 17,746 | | | | | | 20,345 | | |
Prepayment and other receivables | | | | | | | | | | | | | |
Ping An Group and its subsidiaries(i) | | | | | 531,327 | | | | | | 629,416 | | |
Cash and cash equivalents | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 429,527 | | | | | | 565,339 | | |
Trade and other payables | | | | | | | | | | | | | |
Ping An Group and its subsidiaries(i) | | | | | 1,178,438 | | | | | | 1,137,237 | | |
Open Portal Guangxi(i) | | | | | 362 | | | | | | — | | |
| | | | | 1,178,800 | | | | | | 1,137,237 | | |
Contract liabilities | | | | | | | | | | | | | |
Ping An Group and its subsidiaries(i) | | | | | 19,018 | | | | | | 22,686 | | |
Open Portal Guangxi(i) | | | | | — | | | | | | 1,608 | | |
| | | | | 19,018 | | | | | | 24,294 | | |
Non-trade related(ii) | | | | | | | | | | | | | |
Financial assets at fair value through profit or loss (Note 20) | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 599,540 | | | | | | 558,816 | | |
Prepayment and other receivables | | | | | | | | | | | | | |
Open Portal Guangxi(i) | | | | | 3,515 | | | | | | 3,567 | | |
Restricted cash | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 702,058 | | | | | | 413,413 | | |
Short-term borrowings | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 300,805 | | | | | | — | | |
Derivative financial liabilities | | | | | | | | | | | | | |
Ping An Group and its subsidiaries | | | | | 190,971 | | | | | | 223,011 | | |
(i)
The balances with related parties were unsecured, interest-free and repayable on demand.
(ii)
The balances were mainly for treasury management purpose which are collectable or repayable on demand or within one year.
-34-
ONECONNECT FINANCIAL TECHNOLOGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL INFORMATION
32 The Group’s maximum exposure to unconsolidated structured entities
The Group has determined that all of assets management products managed by the Group and its investments in wealth management products, which are not controlled by the Group, are unconsolidated structured entities.
The Group invests in wealth management products managed by related parties for treasury management purposes. The Group also managed some assets management fund products as fund manager to generate fees from managing assets on behalf of other investors, mainly Ping An Group and its subsidiaries. The assets management fund products are financed by capital contribution from investors.
The following table shows the Group’s maximum exposure to the unconsolidated structured entities which represents the Group’s maximum possible risk exposure that could occur as a result of the Group’s arrangements with structured entities. The maximum exposure is contingent in nature and approximates the sum of direct investments made by the Group. The direct investments made by the Group are classified as FVPL.
The size of unconsolidated structured entities and the Group’s funding and maximum exposure are shown below:
| | | Unconsolidated structured entities | | ||||||||||||||||||
December 31,2021 | | | Size | | | Carrying amount | | | The Group’s maximum exposure | | | Interest held by the Group | | |||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | | | |||||||||
Asset management products managed by the Group | | | | | 1,329,453 | | | | | | — | | | | | | — | | | | Service fee | |
Wealth management products managed by related parties | | | | | Note a | | | | | | 2,070,977 | | | | | | 2,070,977 | | | | Investment income | |
| | | Unconsolidated structured entities | | ||||||||||||||||||
March 31, 2022 | | | Size | | | Carrying amount | | | The Group’s maximum exposure | | | Interest held by the Group | | |||||||||
| | | RMB’000 | | | RMB’000 | | | RMB’000 | | | | | |||||||||
(Unaudited) | | | | | | | | | | | | | | | | | | | | | | |
Asset management products managed by the Group | | | | | 831,462 | | | | | | — | | | | | | — | | | | Service fee | |
Wealth management products managed by related parties | | | | | Note a | | | | | | 916,885 | | | | | | 916,885 | | | | Investment income | |
Note a: The asset management and wealth management products are sponsored by related financial institutions and the information related to size of these structured entities were not publicly available. The carrying amount is recorded in financial assets at fair value through profit or loss.
33 Contingencies
The Group did not have any material contingent liabilities as at December 31, 2021 and March 31, 2022.
34 Subsequent events
There were no material subsequent events since March 31, 2022 to the date of this report.
-35-