Revenue Up by 42.3% and Net Margin
Improvement by 30.5ppt YoY for Full Year 2020
OneConnect Financial Technology Co., Ltd. (“OneConnect” or the
“Company”) (NYSE: OCFT), a leading technology-as-a-service platform
for financial institutions in China, today announced its unaudited
financial results for the fourth quarter and full year ended
December 31, 2020.
Fourth Quarter 2020 Financial Highlights
- Revenue increased 39.2% year-over-year to RMB1,076 million from
RMB773 million.
- Gross margin expanded year-over-year to 34.2% from 33.6%;
non-IFRS gross margin1 expanded year-over-year to 42.8% from
41.1%.
- Operating loss was RMB414 million, compared with RMB581 million
for the same period in the prior year.
- Net loss attributable to shareholders was RMB365 million,
versus RMB619 million for the same period in the prior year.
- Net loss per ADS, basic and diluted, was RMB0.99, against
RMB1.95 for the same period in the prior year.
Full Year 2020 Financial Highlights
- Revenue increased 42.3% year-over-year to RMB3,312 million from
RMB2,328 million.
- Gross margin expanded year-over-year to 37.5% from 32.9%;
non-IFRS gross margin1 expanded year-over-year to 46.7% from
46.4%.
- Operating loss was RMB1,470 million, compared with RMB1,701
million in the prior year.
- Net loss attributable to shareholders was RMB1,354 million,
compared with RMB1,661 million in the prior year.
- Net loss per ADS, basic and diluted, was RMB3.81, against
RMB5.30 for the prior year.
In RMB’000, except percentages and per ADS
amounts
Three Months Ended
December 31
YoY
Full Year Ended
December 31
YoY
2020
2019
2020
2019
Revenue
Revenue from Ping An Group
615,966
317,442
94.0%
1,726,807
994,733
73.6%
Revenue from Lufax
76,595
114,439
-33.1%
343,252
299,040
14.8%
Revenue from third-party
customers2
383,165
341,042
12.4%
1,242,231
1,034,072
20.1%
Total
1,075,726
772,923
39.2%
3,312,290
2,327,846
42.3%
Gross profit
368,370
259,845
41.8%
1,243,456
766,858
62.1%
Gross margin
34.2%
33.6%
37.5%
32.9%
Non-IFRS gross margin1
42.8%
41.1%
46.7%
46.4%
Operating loss
-413,837
-581,367
-1,470,326
-1,701,012
Operating margin
-38.5%
-75.2%
-44.4%
-73.1%
Net loss to shareholders
-364,922
-619,375
-1,353,608
-1,660,566
Net loss ratio
-33.9%
-80.1%
-40.9%
-71.3%
Net loss per ADS3, basic and diluted
-0.99
-1.95
-3.81
-5.30
1 For more details on this non-IFRS
financial measure, please see the section entitled “Use of
Unaudited Non-IFRS Financial Measures” and the table captioned
“Reconciliations of IFRS and Non-IFRS Results (Unaudited)” set
forth at the end of this press release.
2 Third-party customers refer to each
customer with revenue contribution of less than 5% of our total
revenue in the relevant period. These customers are a key focus of
the Company’s diversification strategy.
3 Each ADS represents three ordinary
shares
CEO and CFO Comments
“I am delighted to announce that, in spite of the difficult year
just gone, our revenue jumped 42.3% year-on-year, underscoring our
capability in execution, as well as our relentless commitment to
innovation and diversification,” said Mr. Ye Wangchun, Chairman of
the Board and Chief Executive Officer of OneConnect. “This focus is
critical to our success as we face a world in flux. OneConnect has
established a strong foothold in the TaaS market, where the
potential from digital transformation is immense. We will continue
to reinforce our products and sales in 2021, to further solidify
our position and fulfill our mission of supporting financial
institutions to grow efficiently.”
Mr. Jacky Lo, Chief Financial Officer, commented, “Our product
upgrades continued to bear fruit, evidenced by the 4.6ppt expansion
in gross margin for the full year. Net loss narrowed to RMB1,354
million from RMB1,661 million. As a percentage of revenue, the
improvement was 30.5ppt to 40.9%. Cashflow from operations also
significantly improved, with cashburn per month more than halving
on average. The results reflect solid revenue performance as well
as cost management, marking another milestone in the path to
profitability. We are ready to go further this year.”
Full Year 2020 Operational Highlights
- Retail loans processed amounted to RMB70.0 billion in 2020,
compared with RMB91.2 billion in 2019.
- SME loans processed amounted to RMB41.9 billion in 2020,
compared with RMB39.1 billion in 2019.
- Number of fast claims checks amounted to 5.9 million in 2020,
compared with 5.0 million in 2019.
- Number of premium customers increased to 594 in 2020, compared
with 473 in 2019.
Revenue Breakdown
In RMB’000, except percentages
Three Months Ended
December 31
YoY
Full Year Ended
December 31
YoY
2020
2019
2020
2019
Implementation revenue
279,421
234,820
19.0%
851,856
570,822
49.2%
Transaction-based and support
revenue
Business origination services
148,326
201,705
-26.5%
605,733
770,893
-21.4%
Risk management services
112,854
55,260
104.2%
362,530
327,120
10.8%
Operation support services
294,898
271,415
8.7%
1,061,445
582,968
82.1%
Cloud services platform
190,519
-
NA
314,338
-
NA
Post-implementation support services
20,606
587
3410.4%
55,678
36,000
54.7%
Others
29,102
9,136
218.5%
60,710
40,043
51.6%
Total
796,305
538,103
48.0%
2,460,434
1,757,024
40.0%
Total
1,075,726
772,923
39.2%
3,312,290
2,327,846
42.3%
Revenue in 2020 rose 42.3% to RMB3,312 million from RMB2,328
million in 2019. Operation support, cloud services platform and
implementation were the key drivers. Revenue from operation support
surged by 82.1% year-over-year due to the increase in demand for AI
customer service and roadside assistance. Cloud services platform
was launched in the second quarter of the year, so there is no
year-over-year comparison. Implementation revenue posted a 49.2%
increase for the full year to RMB852 million, following the
increase in number of customers.
Retail loan volume processed by the Company’s systems in 2020
amounted to RMB70.0 billion, compared with RMB91.2 billion in 2019,
due to the continuous phasing out of low-value solutions and
caution among financial institutions in response to regulatory
tightening. The amount of SME loans processed increased to RMB41.9
billion from RMB39.1 billion, reflecting the addition of new
customers. However, the increase in SME activities was not able to
offset the decline in retail activities, causing a drop in business
origination services revenue. Total fast claims checks carried out
rose to 5.9 million from 5.0 million, benefiting from an increase
in number of customers, and supporting revenue from risk management
services.
The number of premium customers rose to 594 for the year 2020
from 473 a year earlier, as the diverse solution sets continued to
gain traction. Revenue from premium customers was RMB1,517 million,
compared with RMB1,306 million in the previous year.
Full Year 2020 Financial Results
Revenue
Revenue increased by 42.3% to RMB3,312 million from RMB2,328
million in the prior year, primarily driven by more demand for
solutions in operation support and cloud services platform.
Cost of Revenue
Cost of revenue was RMB2,069 million, compared with RMB1,561
million in the prior year, primarily driven by higher technology
service fees and employee benefit expenses.
Gross Profit
Gross profit increased by 62.1% to RMB1,243 million from RMB767
million in the prior year. Gross margin expanded to 37.5% from
32.9% in the prior year, primarily due to lower channel fees from
changes in product mix and less amortization of intangible assets.
Non-IFRS gross margin was 46.7%, compared with 46.4% in the prior
year. For a reconciliation of the Company’s IFRS and non-IFRS gross
margin, please refer to “Reconciliation of IFRS and Non-IFRS
Results (Unaudited).”
Operating Loss and Expenses
Total operating expenses for the full year of 2020 amounted to
RMB2,772 million, compared with RMB2,394 million in the prior year.
As a percentage of revenue, total operating expenses decreased to
83.7% from 102.8%.
- Research and Development expenses for the full year of 2020
rose to RMB1,173 million from RMB956 million, reflecting investment
put into enhancing existing solutions and innovations. As a
percentage of revenue, R&D expenses amounted to 35.4%, compared
with 41.1% in the prior year.
- Sales and Marketing expenses for the full year of 2020 totaled
RMB629 million, compared with RMB636 million in the prior year, due
to a decrease in traveling and marketing expenses. As a percentage
of revenue, sales and marketing expenses decreased to 19.0% from
27.3%.
- General and Administrative expenses for the full year of 2020
amounted to RMB835 million, compared with RMB757 million in the
prior year, primarily because of increase in employee expenses,
which is in line with the increase in headcount, and professional
service fees, due mainly to business consulting. As a percentage of
revenue, general and administrative expenses decreased to 25.2%
from 32.5%.
- Net impairment losses on financial and contract assets for the
full year of 2020 totaled RMB135 million, compared with RMB45
million for the same period in the prior year, primarily due to
increased aging of trade receivables and contract assets. As a
percentage of revenue, net impairment losses were 4.1%, versus 1.9%
in the prior year.
Loss from operations for the full year of 2020 amounted to
RMB1,470 million, compared with RMB1,701 million in the prior year.
Operating loss margin decreased to 44.4% from 73.1% in the prior
year.
Net Loss
Net loss attributable to OneConnect’s shareholders totaled
RMB1,354 million in 2020, versus RMB1,661 million in the prior
year. Net loss attributable to OneConnect’s shareholders per basic
and diluted ADS amounted to RMB3.81, versus RMB5.30 in the prior
year. Weighted average number of ADSs for the full year was
354,903,350.
Cash Flow
For the full year of 2020, net cash used in operating activities
was RMB704 million. Net cash generated from in investing activities
was RMB1,316 million, as scale of onshore borrowing using offshore
pledges reduced and as a result restricted cash balance decreased.
Net cash generated from financing activities was RMB1,534 million,
which reflects the proceeds from the issuance of new shares.
Conference Call Information
Date/Time
Tuesday, February 2, 2020 at 8:00 p.m.,
U.S. Eastern Time
Wednesday, February 3, 2020 at 9:00 a.m.,
Beijing Time
Online registration
http://www.directeventreg.com/registration/event/2444799
An archived recording and the transcript of the conference call
will be available at OneConnect’s investor relations website at
ir.ocft.com.
About OneConnect
OneConnect is a leading technology-as-a-service platform for
financial institutions in China. The Company’s platform provides
cloud-native technology solutions that integrate extensive
financial services industry expertise with market-leading
technology. The Company’s solutions provide technology applications
and technology-enabled business services to financial institutions.
Together they enable the Company’s customers’ digital
transformations, which help them increase revenue, manage risks,
improve efficiency, enhance service quality and reduce costs.
Our technology-as-a-service platform strategically covers
multiple verticals in the financial services industry, including
banking, insurance and asset management, across the full scope of
their businesses – from sales and marketing and risk management to
customer services, as well as technology infrastructure such as
data management, program development, and cloud services.
For more information, please visit ir.ocft.com.
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements constitute “forward-looking” statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the U.S. Private Securities Litigation
Reform Act of 1995. These forward-looking statements can be
identified by terminology such as “will,” “expects,” “anticipates,”
“future,” “intends,” “plans,” “believes,” “estimates,” “confident”
and similar statements. Such statements are based upon management’s
current expectations and current market and operating conditions
and relate to events that involve known or unknown risks,
uncertainties and other factors, all of which are difficult to
predict and many of which are beyond the Company’s control.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to the following: the
Company’s limited operating history in the technology-as-a-service
for financial institutions industry; its ability to achieve or
sustain profitability; the tightening of laws, regulations or
standards in the financial services industry; the Company’s ability
to comply with the evolving regulatory requirements in the PRC and
other jurisdictions where it operates; its ability to maintain and
enlarge the customer base or strengthen customer engagement; its
ability to maintain its relationship with Ping An Group, which is
its strategic partner, most important customer and largest
supplier; its ability to compete effectively to serve China’s
financial institutions; the effectiveness of its technologies, its
ability to maintain and improve technology infrastructure and
security measures; its ability to protect its intellectual property
and proprietary rights; risks of defaults by borrowers under the
loans for which the Company provided credit enhancement under its
legacy credit management business; its ability to maintain or
expand relationship with its business partners and the failure of
its partners to perform in accordance with expectations; its
ability to protect or promote its brand and reputation; its ability
to timely implement and deploy its solutions; its ability to obtain
additional capital when desired; disruptions in the financial
markets and business and economic conditions; the Company’s ability
to pursue and achieve optimal results from acquisition or expansion
opportunities; the duration of the COVID-19 outbreak and its
potential impact on the Company’s business and financial
performance; and assumptions underlying or related to any of the
foregoing. Further information regarding these and other risks is
included in the Company’s filings with the SEC. All information
provided in this press release and in the attachments is as of the
date of this press release, and the Company undertakes no
obligation to update any forward-looking statement, except as
required under applicable law.
Use of Unaudited Non-IFRS Financial Measures
The unaudited consolidated financial information is prepared in
accordance with International Financial Reporting Standards (IFRS).
Non-IFRS measures are used in gross profit and gross margin,
adjusted to exclude non-cash items, which consist of amortization
of intangible assets recognized in cost of revenue, depreciation of
property and equipment recognized in cost of revenue, and
share-based compensation expenses recognized in cost of revenue.
OneConnect’s management regularly review non-IFRS gross profit and
non-IFRS gross margin to assess the performance of our business. By
excluding non-cash items, these financial metrics allow
OneConnect’s management to evaluate the cash conversion of one
dollar revenue on gross profit. OneConnect uses these non-IFRS
financial to evaluate our ongoing operations and for internal
planning and forecasting purposes. OneConnect believes that
non-IFRS financial information, when taken collectively, is helpful
to investors because it provides consistency and comparability with
past financial performance, facilitates period-to-period
comparisons of results of operations, and assists in comparisons
with other companies, many of which use similar financial
information. OneConnect also believes that presentation of the
non-IFRS financial measures provides useful information to its
investors regarding its results of operations because it allows
investors greater transparency to the information used by
OneConnect’s management in its financial and operational decision
making so that investors can see through the eyes of the
OneConnect’s management regarding important financial metrics that
the management uses to run the business as well as allowing
investors to better understand OneConnect’s performance. However,
non-IFRS financial information is presented for supplemental
informational purposes only, and should not be considered a
substitute for financial information presented in accordance with
IFRS, and may be different from similarly-titled non-IFRS measures
used by other companies. In light of the foregoing limitations, you
should not consider non-IFRS financial measure in isolation from or
as an alternative to the financial measure prepared in accordance
with IFRS. Whenever OneConnect uses a non-IFRS financial measure, a
reconciliation is provided to the most closely applicable financial
measure stated in accordance with IFRS. You are encouraged to
review the related IFRS financial measures and the reconciliation
of these non-IFRS financial measures to their most directly
comparable IFRS financial measures. For more information on
non-IFRS financial measures, please see the table captioned
“Reconciliations of IFRS and non-IFRS results (Unaudited)” set
forth at the end of this press release.
ONECONNECT CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (Unaudited)
Three Months Ended December
31
Full Year Ended December
31
2020
2019
2020
2019
RMB'000
RMB'000
RMB'000
RMB'000
Revenue
1,075,726
772,923
3,312,290
2,327,846
Cost of revenue
-707,356
-513,078
-2,068,834
-1,560,988
Gross profit
368,370
259,845
1,243,456
766,858
Research and development
expenses
-349,223
-314,597
-1,173,290
-956,095
Selling and marketing
expenses
-154,407
-163,591
-629,488
-635,673
General and administrative
expenses
-247,650
-316,578
-834,917
-756,681
Net impairment losses on
financial and contract assets
-63,121
-33,020
-134,519
-45,167
Other income, gains or
loss-net
32,194
-13,426
58,432
-74,254
Operating loss
-413,837
-581,367
-1,470,326
-1,701,012
Finance income
17,270
37,101
77,237
128,261
Finance costs
-32,612
-41,699
-150,363
-174,831
Finance costs – net
-15,342
-4,598
-73,126
-46,570
Share of losses of associate and
joint venture
-1,322
-2,689
-7,802
-14,854
Loss before income tax
-430,501
-588,654
-1,551,254
-1,762,436
Income tax benefit/(expense)
43,616
-49,884
137,131
74,924
Loss for the period
-386,885
-638,538
-1,414,123
-1,687,512
Loss attributable to:
- Owners of the Company
-364,922
-619,375
-1,353,608
-1,660,566
- Non-controlling interests
-21,963
-19,163
-60,515
-26,946
Other comprehensive income, net
of tax
Items that may be subsequently
reclassified to profit or loss
- Foreign currency translation
differences
-395,532
-65,883
-608,427
78,775
- Changes in the fair value of
debt instruments at fair value through other comprehensive
income
-3
40
-39
40
Total comprehensive loss for
the period
-782,420
-704,381
-2,022,589
-1,608,697
Total comprehensive loss
attributable to:
- Owners of the Company
-760,457
-685,218
-1,962,074
-1,581,751
- Non-controlling interests
-21,963
-19,163
-60,515
-26,946
Loss per ADS attributable to
owners of the Company
(expressed in RMB per
share)
- Basic and diluted
-0.99
-1.95
-3.81
-5.30
ONECONNECT CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31
December 31
2020
2019
RMB'000
RMB'000
ASSETS
Non-current assets
Property and equipment
224,284
314,505
Intangible assets
917,063
976,948
Deferred tax assets
564,562
423,786
Financial assets measured at
amortized cost from banking operations
25,283
-
Investments accounted for using
the equity method
175,733
118,829
Financial assets at fair value
through other comprehensive income
21,828
393,448
Contract assets
16,788
40,998
Total non-current
assets
1,945,541
2,268,514
Current assets
Trade receivables
838,690
710,123
Contract assets
257,830
211,276
Prepayments and other
receivables
443,328
528,277
Financial assets measured at
amortized cost from banking operations
576,305
-
Financial assets at fair value
through profit or loss
1,487,871
1,690,967
Restricted cash
2,280,499
3,440,289
Cash and cash equivalents
3,055,194
1,077,875
Total current assets
8,939,717
7,658,807
Total assets
10,885,258
9,927,321
EQUITY AND LIABILITIES
Equity
Share capital
78
73
Shares held for share option
scheme
-87,714
-88,280
Other reserves
10,639,931
8,461,637
Accumulated losses
-5,356,926
-4,003,318
Equity attributable to equity
owners of the Company
5,195,369
4,370,112
Non-controlling interests
89,914
150,429
Total equity
5,285,283
4,520,541
LIABILITIES
Non-current
liabilities
Trade and other payables
395,514
420,873
Contract liabilities
17,683
12,700
Deferred tax liabilities
20,080
33,291
Total non-current
liabilities
433,277
466,864
Current liabilities
Trade and other payables
1,547,781
1,075,576
Payroll and welfare payables
625,330
538,132
Contract liabilities
138,547
104,960
Short-term borrowings
2,283,307
3,218,566
Customer deposits
405,853
-
Derivative financial
liabilities
165,880
2,682
Total current
liabilities
5,166,698
4,939,916
Total liabilities
5,599,975
5,406,780
Total equity and
liabilities
10,885,258
9,927,321
ONECONNECT CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited)
Three Months Ended December
31
Full Year Ended December
31
2020
2019
2020
2019
RMB'000
RMB'000
RMB'000
RMB'000
Net cash generated from /
(used in) operating activities
727,558
-344,181
-704,145
-1,817,454
Net cash generated from /
(used in) investing activities
601,176
-1,716,686
1,315,725
570,839
Net cash generated from /
(used in) financing activities
-225,140
2,213,173
1,533,838
1,754,557
Net increase /(decrease) in
cash and cash equivalents
1,103,594
152,306
2,145,418
507,942
Cash and cash equivalents at the
beginning of the period
2,080,392
915,156
1,077,875
565,027
Effects of exchange rate changes
on cash and cash equivalents
-128,792
10,413
-168,099
4,906
Cash and cash equivalents at
the end of period
3,055,194
1,077,875
3,055,194
1,077,875
ONECONNECT RECONCILIATION OF IFRS AND
NON-IFRS RESULTS (Unaudited)
Three Months Ended December
31
Full Year Ended December
31
2020
2019
2020
2019
RMB'000
RMB'000
RMB'000
RMB'000
Gross profit
368,370
259,845
1,243,456
766,858
Gross margin
34.2%
33.6%
37.5%
32.9%
Non-IFRS adjustment
Amortization of intangible assets
recognized in cost of revenue
89,943
56,407
293,141
308,551
Depreciation of property and
equipment recognized in cost of revenue
305
941
2,978
2,362
Share-based compensation expenses
recognized in cost of revenue
1,569
604
6,904
2,294
Non-IFRS Gross profit
460,187
317,797
1,546,479
1,080,065
Non-IFRS Gross margin
42.8%
41.1%
46.7%
46.4%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210202005825/en/
Investor Relations: Patricia Cheng patricia.cheng@ocft.com
Media Relations: Ying Zhou zhouying150@ocft.com
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