金融壹账通(06638) - 2024 - 中期业绩

Financial Performance Summary Key Financial Highlights The company's revenue from continuing operations declined, but net loss narrowed significantly, achieving overall net profit due to a one-time gain from a disposal Key Financial Highlights for H1 2024 (Continuing Operations) | Metric | H1 2024 (RMB in millions) | H1 2023 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 1,415.8 | 1,833.0 | -22.8% | | Gross Profit Margin | 37.1% | 37.5% | -0.4pp | | Non-IFRS Gross Profit Margin | 39.4% | 40.1% | -0.7pp | | Operating Loss | (105.5) | (116.4) | -9.3% (Narrowed) | | Operating Profit Margin | -7.5% | -6.3% | -1.2pp | | Net Loss from Continuing Operations Attributable to Owners of the Company | (70.5) | (113.6) | -38.0% (Narrowed) | | Net Profit Margin from Continuing Operations Attributable to Owners of the Company | -5.0% | -6.2% | +1.2pp | | Net Loss per ADS from Continuing Operations (RMB) | (1.94) | (3.13) | -38.0% (Narrowed) | Key Financial Highlights for H1 2024 (Continuing and Discontinued Operations) | Metric | H1 2024 (RMB in millions) | H1 2023 (RMB in millions) | YoY Change | | :--- | :--- | :--- | :--- | | Net Profit Attributable to Owners of the Company | 139.0 | (190.5) | Turned from loss to profit | | Net Profit Margin Attributable to Owners of the Company | 9.8% | -10.4% | +20.2pp | | Earnings/(Loss) per ADS (RMB) | 3.83 | (5.24) | Turned from loss to profit | - The turnaround to net profit was primarily driven by a one-time gain from the disposal of the virtual bank business[2] Use of Unaudited Non-IFRS Financial Measures Explanation of Non-IFRS Financial Measures The company utilizes Non-IFRS measures to evaluate performance by excluding non-cash items, providing clearer insight into cash gross profit conversion - Non-IFRS financial measures are used to assess business performance by excluding non-cash items like amortization of intangible assets, depreciation, and share-based compensation expenses to reflect cash gross profit conversion[5] - These measures assist management in internal planning, forecasting, and comparing performance against past results and peers[5] - The company emphasizes that Non-IFRS data is supplementary, should not replace IFRS data, and provides reconciliations to the most comparable IFRS measures[5] Reconciliation of IFRS to Non-IFRS Gross Profit for Continuing Operations | Metric | H1 2024 (RMB in thousands) | H1 2023 (RMB in thousands) | | :--- | :--- | :--- | | Gross Profit from Continuing Operations (IFRS) | 525,782 | 687,042 | | Gross Profit Margin from Continuing Operations (IFRS) | 37.1% | 37.5% | | Non-IFRS Adjustments: | | | | - Amortization of intangible assets in cost of revenue | 29,228 | 43,583 | | - Depreciation of property and equipment in cost of revenue | 2,208 | 2,823 | | - Share-based compensation expenses in cost of revenue | 562 | 1,330 | | Non-IFRS Gross Profit from Continuing Operations | 557,780 | 734,778 | | Non-IFRS Gross Profit Margin from Continuing Operations | 39.4% | 40.1% | Business Review and Outlook Business Review The company advanced its strategy toward profitability by optimizing its product mix, deepening client relationships, and expanding its international footprint - The company is a technology-as-a-service provider for China's financial services industry, offering digital banking, digital insurance, and digital infrastructure solutions while actively expanding internationally[8] - The company has served 100% of state-owned banks and joint-stock banks, 98% of city commercial banks, 66% of property and casualty insurance companies, and 48% of life insurance companies in China[8] - China's fintech market is projected to exceed RMB 580 billion by 2027, with a CAGR of 12% from 2023 to 2027[9] - In H1 2024, the company achieved profitability with a net profit of RMB 139.0 million from continuing and discontinued operations, mainly due to a one-time gain of RMB 260.1 million from the disposal of its virtual bank business[10] - Excluding the one-time gain, the net loss from continuing operations attributable to owners of the Company narrowed by 38.0% YoY to RMB 70.5 million, primarily due to effective cost reduction measures[10] - Total revenue from continuing operations decreased by 22.8% YoY to RMB 1,415.8 million, mainly due to a strategic shift focusing on high-value products[10] - The number of premium+ customers (customers contributing at least RMB 1 million in revenue, excluding Ping An Group) decreased from 121 in H1 2023 to 93 in H1 2024, mainly due to a slower-than-expected recovery in the banking business[10][11] Digital Banking The digital banking business empowers banks' digital transformation through solutions in retail, credit, and operations, enhanced by AI technology - Digital banking provides three major solutions—digital retail, digital credit, and digital operations—to help banks boost business growth, reduce risks, and improve management efficiency[11][12] - The AI-powered mortgage loan solution "Jin Jie Ying" increased relationship manager productivity by approximately sixfold and shortened loan approval times to about one day[12] - The 3E series products (Employee E, Marketing E, Wealth E) increased client AUM by over 20%, boosted business opportunity reach rates by 2 to 3 times, and drove a 38% growth in private banking clients[12] - The smart credit solution, now exported to overseas markets, can improve loan processing efficiency by over 40%, enhance AI-driven risk control capabilities by 50%, and increase modular configuration and iteration efficiency by 30%[13] Digital Insurance Digital insurance solutions cover the entire insurance process, helping insurers manage marketing, customer relations, and claims with AI-enhanced tools - The end-to-end digital property and casualty insurance solution leverages AI and advanced analytics to digitize and automate underwriting, simplify claims processing, and effectively enhance risk control and customer experience[14] - The smart life insurance solution upgraded its "Omni-channel Agent Solution" with an AI-enhanced member screening model and a multi-functional OCR tool, improving sales, policy issuance, claims processing, and customer service efficiency[14] Gamma Platform The Gamma Platform provides AI customer service and technical infrastructure, but the company has decided to gradually terminate its cloud services - The Gamma Platform offers AI customer service and technical infrastructure, with its smart voice service integrating AI engines and robot platforms to enhance efficiency and reduce operational costs for financial institutions[15] - Starting from May 2024, certain subsidiaries and associates of Ping An Group terminated their use of cloud services provided by the Gamma Financial Cloud Platform due to adjustments in procurement strategies[15] - The Board has decided to gradually terminate the operation of cloud services starting from July 2024[15] Expansion into Overseas Markets The company has achieved strong growth in overseas business, particularly in Hong Kong and Southeast Asia, expanding its global client base - Overseas business has shown strong growth in recent years, especially in Hong Kong and Southeast Asia, with revenue from third-party overseas clients highlighting product advantages[16] - The company has expanded its overseas business to 20 countries and regions, serving up to 186 clients[17] - Signed contracts to upgrade the Smart Lending Platform (SLP) with SB Finance in the Philippines and a top-tier bank in Vietnam[17] 2023 ESG Report The company released its 2023 ESG report, detailing its commitment to environmental protection, social responsibility, and corporate governance - The company published its "2023 Environmental, Social and Governance Report" on April 23, 2024, detailing its ESG management efforts and progress[18] - The company is committed to integrating its strategy of "empowering with fintech and building a sustainable industry ecosystem" into daily operations to drive sustainable growth[18] Recent Developments After the Reporting Period The company decided to gradually terminate its cloud services due to changes in a major client's procurement strategy, impacting future revenue from this segment - On July 11, 2024, the Board decided to gradually terminate the operation of cloud services starting from July 2024, expecting a significant decrease in cloud service revenue for H2 2024 and the full year[19] - The company will continue to enhance product competitiveness and advance its "customer-deepening" strategy, prioritizing revenue growth from third-party customers[19] Business Outlook The company will continue its customer-deepening strategy, focusing on premium clients, product optimization, and overseas expansion to achieve sustainable profitability - In H2 2024, the company will continue its second-stage strategy of deepening customer engagement, focusing on premium+ customers, product optimization, and integration[19] - It will adhere to the "one body, two wings" strategy, focusing on financial institution clients while expanding its ecosystem and overseas footprint[19] - While maintaining a solid strategic relationship with Ping An Group, the focus will be on driving third-party revenue growth, especially from overseas clients[19] - The company is committed to achieving sustainable profitability through overseas market expansion, third-party revenue growth, and operational efficiency improvements[19] Management Discussion and Analysis Revenue from Continuing Operations Total revenue from continuing operations decreased by 22.8% YoY due to a strategic adjustment focusing on high-value products Revenue Breakdown from Continuing Operations (RMB in thousands) | Revenue Category | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Implementation | 326,086 | 443,023 | -26.4% | | Customer acquisition services | 22,775 | 81,127 | -71.9% | | Risk management services | 126,514 | 150,317 | -15.8% | | Operation support services | 265,391 | 471,585 | -43.7% | | Cloud services platform | 607,416 | 614,620 | -1.2% | | Post-implementation maintenance services | 29,348 | 25,649 | 14.4% | | Others | 38,239 | 46,664 | -18.1% | | Total | 1,415,769 | 1,832,985 | -22.8% | - The decrease in revenue was primarily due to strategic adjustments to the revenue mix as the company focused on high-value products[20] - Customer acquisition services revenue decreased significantly by 71.9%, mainly due to reduced transaction volumes from the marketing management platform in digital retail solutions and the loan origination system in digital credit solutions[21] - Operation support services revenue decreased by 43.7%, mainly due to a shift in the business model of certain auto ecosystem service providers[21] Cost of Revenue from Continuing Operations The cost of revenue from continuing operations decreased by 22.3% YoY, in line with the decline in revenue Cost of Revenue from Continuing Operations (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of Revenue | 890.0 | 1,145.9 | -22.3% | - The decrease in cost of revenue was consistent with the trend of revenue reduction[22] Gross Profit and Gross Profit Margin from Continuing Operations Gross profit from continuing operations decreased by 23.5% YoY, while the gross profit margin remained relatively stable at 37.1% Gross Profit and Gross Profit Margin from Continuing Operations (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Gross Profit | 525.8 | 687.0 | -23.5% | | Gross Profit Margin | 37.1% | 37.5% | -0.4pp | | Non-IFRS Gross Profit Margin | 39.4% | 40.1% | -0.7pp | Operating Expenses from Continuing Operations All operating expense categories from continuing operations decreased due to effective cost control measures across the company - All operating expense categories saw a decline, primarily driven by reduced labor costs, investment-oriented management of R&D projects, improved sales efficiency, and savings from labor outsourcing[22][23][24] Research and Development Expenses R&D expenses from continuing operations decreased by 24.3% YoY, driven by lower labor costs and an investment-oriented approach to project management Research and Development Expenses (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | R&D Expenses | 399.6 | 528.0 | -24.3% | - The decrease in R&D expenses was mainly due to reduced labor costs and the adoption of an investment-oriented approach to managing R&D projects[22] Selling and Marketing Expenses Selling and marketing expenses from continuing operations decreased by 20.2% YoY, reflecting lower labor costs and improved sales efficiency Selling and Marketing Expenses (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Selling and Marketing Expenses | 92.6 | 116.0 | -20.2% | - The decrease in selling and marketing expenses was primarily due to lower labor costs and improved sales capabilities and efficiency[23] General and Administrative Expenses General and administrative expenses from continuing operations decreased by 15.6% YoY, mainly due to reduced labor costs and savings from outsourcing General and Administrative Expenses (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | General and Administrative Expenses | 146.0 | 173.1 | -15.6% | - The decrease in general and administrative expenses was mainly attributed to lower labor costs and cost savings achieved through labor outsourcing[24] Net Impairment Losses on Financial and Contract Assets from Continuing Operations Net impairment losses from continuing operations decreased, reflecting a smaller increase in the accounts receivable balance since year-end 2023 Net Impairment Losses on Financial and Contract Assets (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Net Impairment Losses | 23.2 | 32.8 | -29.3% | - The decrease in impairment losses was mainly due to a smaller increase in the accounts receivable balance since the end of December 2023[24] Other Income, Gains or Losses, Net from Continuing Operations Net other income from continuing operations decreased primarily due to a reduction in government grants and tax refunds Other Income, Gains or Losses, Net (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Net Other Income and Gains | 30.2 | 46.6 | -35.2% | - The decrease was mainly due to a reduction in the amount of government grants and tax refunds[25] Finance Income from Continuing Operations Finance income from continuing operations increased significantly by 157.8% YoY, driven by higher yields on US dollar-denominated deposits Finance Income (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Finance Income | 29.7 | 11.5 | 157.8% | - The increase in finance income was primarily due to higher yields on US dollar-denominated deposits[25] Finance Costs from Continuing Operations Finance costs from continuing operations decreased by 30.3% YoY as a result of a lower average loan balance Finance Costs (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Finance Costs | 8.0 | 11.5 | -30.3% | - The decrease in finance costs was mainly due to a lower average loan balance[26] Share of Profits of Associates and Joint Ventures from Continuing Operations The share of profits from associates and joint ventures was zero, following the disposal of Puhui Lixin Share of Profits of Associates and Joint Ventures (RMB in millions) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Share of Profits | 0 | 7.2 | - The reduction to zero was due to the absence of profit sharing from Puhui Lixin following its disposal[26] Impairment Loss on Associates from Continuing Operations There was no impairment loss on associates, attributed to the prior-year disposal of Puhui Lixin Impairment Loss on Associates (RMB in millions) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Impairment Loss | 0 | 7.2 | - The absence of impairment loss was attributed to the disposal of Puhui Lixin in a prior period[26] Loss Before Income Tax from Continuing Operations The pre-tax loss from continuing operations narrowed to RMB 83.8 million, showing an improvement from the prior year Loss Before Income Tax (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Loss Before Income Tax | (83.8) | (116.3) | -27.9% (Narrowed) | Income Tax Benefit/(Expense) from Continuing Operations The company recorded an income tax benefit from continuing operations, a reversal from an expense in the prior year Income Tax Benefit/(Expense) (RMB in millions) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Income Tax Benefit/(Expense) | 2.3 | (5.4) | - The shift to a benefit was mainly due to a decrease in assessable profit and differences in the final settlement of prior-year income tax[27] Loss for the Period from Continuing Operations The loss for the period from continuing operations narrowed to RMB 81.5 million, an improvement from the prior year Loss for the Period (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Loss for the Period | (81.5) | (121.7) | -33.0% (Narrowed) | Profit/(Loss) for the Period from Continuing and Discontinued Operations The company achieved a profit of RMB 128.0 million, a significant turnaround from a loss, driven by gains from the disposal of the virtual bank business Profit/(Loss) for the Period from Continuing and Discontinued Operations (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Profit/(Loss) | 128.0 | (198.5) | Turned from loss to profit | - The turnaround to profit was primarily due to the gain from the disposal of the virtual bank business[28] Cash Flow Data Net cash used in operating activities decreased significantly, while net cash from investing activities was positive due to proceeds from disposals Cash Flow Data (RMB in millions) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | (298.0) | (632.9) | | Net cash generated from investing activities | 480.3 | 298.1 | | Net cash used in financing activities | (129.8) | (88.9) | - Net cash from investing activities was mainly from proceeds from the disposal of financial assets at FVTPL and RMB 723.2 million from the disposal of a subsidiary[29] Liquidity and Capital Resources The company manages liquidity through various measures, maintaining substantial cash, restricted cash, and financial assets - The company manages liquidity through multiple measures, including assessing treasury account positions, planning cash flows, reviewing asset risks and liquidity, and monitoring market conditions[30] Key Sources of Liquidity (RMB in millions) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | 1,438.9 | 1,379.5 | | Restricted cash and time deposits with maturity over three months | 469.6 | 452.9 | | Financial assets at fair value through profit or loss | 640.4 | 925.2 | Borrowings Short-term borrowings decreased, and the weighted average annual interest rate on outstanding borrowings declined Borrowings (RMB in millions) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Short-term borrowings | 142.8 | 251.7 | | Total committed credit facilities | 395 | N/A | | Weighted average annual interest rate on outstanding borrowings | 4.15% | 4.48% | Pledge of Assets The Group had no other material pledge of assets beyond those for currency swaps and business guarantees - As of June 30, 2024, approximately RMB 22.7 million was pledged for currency swaps and approximately RMB 8.9 million was pledged for business guarantees[32] Gearing Ratio The company's gearing ratio decreased significantly, indicating lower financial leverage Gearing Ratio | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing Ratio | 6.0% | 10.3% | Material Investments The company held no material investments during the six months ended June 30, 2024 - For the six months ended June 30, 2024, the company did not hold any material investments[34] Material Acquisitions and Disposals The company completed the disposal of Ping An OneConnect Bank (Hong Kong) Limited, generating a significant after-tax gain - On April 2, 2024, the company completed the disposal of Ping An OneConnect Bank (Hong Kong) Limited to Lufax for a cash consideration of HK$933 million[35] - The disposal generated an after-tax gain of RMB 260.1 million[35] - Following the disposal, Ping An OneConnect Bank and its subsidiaries are no longer consolidated into the Group's financial statements[35] Future Plans for Material Investments or Capital Assets The company had no detailed future plans for material investments or capital assets as of June 30, 2024 - As of June 30, 2024, the company had no detailed future plans for material investments or capital assets[36] Contingent Liabilities The company had no material contingent liabilities as of June 30, 2024 - As of June 30, 2024, the company had no material contingent liabilities[36] Capital Expenditures and Capital Commitments from Continuing Operations Capital expenditures from continuing operations increased significantly, while there were no capital commitments at the end of the period Capital Expenditures (RMB in millions) | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Capital Expenditures | 14.7 | 4.5 | 226.7% | - Capital expenditures mainly included purchases of property and equipment, intangible assets, and other long-term assets[37] - As of June 30, 2024, the company had no capital commitments[37] Risk Management The company's primary financial risks are currency risk and interest rate risk, which are managed through hedging and matching strategies - The company's main financial risks include currency risk (USD/RMB exchange rate fluctuations) and interest rate risk (related to deposits and short-term borrowings)[37][38] Currency Risk The company manages foreign exchange risk, primarily from USD/RMB fluctuations, using spot-forward currency swap contracts - Foreign exchange risk mainly arises from USD/RMB exchange rate movements, and the company uses spot-forward USD/RMB currency swap contracts to hedge part of this risk[37] Interest Rate Risk Interest rate risk is managed by matching the interest rate terms of deposits and short-term borrowings - Interest rate risk is primarily related to the company's deposits and short-term borrowings, and it is managed by matching their interest rate terms[38] Employees and Remuneration The company maintained a workforce of 2,078 employees, with R&D staff forming the largest group, and upheld a healthy corporate culture Number of Employees by Function (as of June 30, 2024) | Function | Number of Employees | | :--- | :--- | | R&D | 1,255 | | Business Operations | 240 | | Sales and Marketing | 411 | | General and Administrative | 172 | | Total | 2,078 | Employee Benefit Expenses (RMB in millions) | Metric | H1 2024 | | :--- | :--- | | Employee Benefit Expenses | 508.0 | - The company maintains a healthy corporate culture through an employee handbook, a code of business conduct and ethics, and regular compliance training[39] Interim Condensed Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income The company turned to a profit of RMB 128.0 million, driven by a significant gain from discontinued operations, despite a narrowed loss from continuing operations Interim Condensed Consolidated Statement of Comprehensive Income Summary (RMB in thousands) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue from continuing operations | 1,415,769 | 1,832,985 | | Gross profit | 525,782 | 687,042 | | Operating loss | (105,502) | (116,368) | | Loss from continuing operations | (81,458) | (121,707) | | Profit/(loss) from discontinued operations | 209,499 | (76,816) | | Profit/(loss) for the period | 128,041 | (198,523) | | Profit/(loss) for the period attributable to owners of the Company | 139,014 | (190,465) | | Total comprehensive income/(loss) for the period | 163,674 | (135,905) | | Total comprehensive income/(loss) attributable to owners of the Company | 174,647 | (127,847) | Earnings/(Loss) per ADS (RMB Yuan) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss per ADS from continuing operations | (1.94) | (3.13) | | Total earnings/(loss) per ADS | 3.83 | (5.24) | Interim Condensed Consolidated Balance Sheet Consolidated Balance Sheet Total assets and liabilities decreased significantly following the disposal of the virtual bank business, while equity attributable to owners increased Interim Condensed Consolidated Balance Sheet Summary (RMB in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | 5,695,046 | 8,068,358 | | Total non-current assets | 1,185,079 | 2,709,390 | | Total current assets | 4,509,967 | 5,358,968 | | Equity attributable to owners of the Company | 3,143,623 | 2,966,771 | | Total equity | 3,113,671 | 2,947,792 | | Total liabilities | 2,581,375 | 5,120,566 | | Total current liabilities | 2,553,575 | 5,073,078 | - The significant decrease in total assets and liabilities was primarily due to the disposal of the virtual bank business, leading to the de-consolidation of its related financial assets and customer deposits[42][43] - Trade receivables increased to RMB 930.3 million as of June 30, 2024, from RMB 710.7 million as of December 31, 2023[42] Notes to the Condensed Consolidated Interim Financial Information 1 General Information and Basis of Presentation The company provides cloud-based fintech solutions in China and is listed on both the NYSE and HKEX, with financial data prepared under IAS 34 - The company was incorporated in the Cayman Islands on October 30, 2017, listed on the NYSE in 2019, and on the Main Board of the Hong Kong Stock Exchange in 2022[43] - The Group is principally engaged in providing cloud-based fintech solutions, online information services, and operation support services to financial institutions in China[44] - The interim financial information is unaudited, prepared in accordance with IAS 34 "Interim Financial Reporting," and presented in RMB[44][45] 1.1 General Information OneConnect Financial Technology Co., Ltd. is a Cayman Islands-incorporated company providing fintech solutions primarily in China - The ratio of American Depositary Shares (ADSs) to ordinary shares was changed to 1 ADS representing 30 ordinary shares on December 12, 2022[44] - The Group is principally engaged in providing cloud-based fintech solutions, online information services, and operation support services to financial institutions in China[44] 1.2 Basis of Preparation and Presentation The interim financial information is prepared under IAS 34 and should be read in conjunction with the 2023 annual report - The interim financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[45] - This report should be read in conjunction with the annual consolidated financial statements included in the company's 2023 annual report[46] 2 Summary of Significant Accounting Policies The accounting policies used for this interim report are consistent with the annual financial statements and reflect newly adopted IFRS standards - The accounting policies for the interim financial information are consistent with the annual financial statements, prepared under the historical cost convention as modified by the revaluation of financial assets at fair value[47] - The company adopted several new and amended standards and interpretations on January 1, 2024, which did not have a material impact on amounts recognized in prior periods[48] - The company is assessing the potential impact of new standards not yet adopted (such as IAS 21, IFRS 9 & 7, IFRS 18, IFRS 19) and does not expect a significant impact[49] 3 Revenue Total revenue for the first half of 2024 was RMB 1,415.8 million, primarily generated from services transferred over time Revenue by Timing of Service Transfer (RMB in thousands) | Revenue Category | H1 2024 (At a point in time) | H1 2024 (Over time) | H1 2024 (Total) | H1 2023 (At a point in time) | H1 2023 (Over time) | H1 2023 (Total) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Implementation | 15,665 | 310,421 | 326,086 | 29,442 | 413,581 | 443,023 | | Operation support services | 265,391 | - | 265,391 | 158,730 | 312,855 | 471,585 | | Customer acquisition services | 22,775 | - | 22,775 | 81,127 | - | 81,127 | | Risk management services | 126,514 | - | 126,514 | 150,317 | - | 150,317 | | Cloud services platform | - | 607,416 | 607,416 | - | 614,620 | 614,620 | | Post-implementation maintenance services | - | 29,348 | 29,348 | - | 25,649 | 25,649 | | Others | 38,239 | - | 38,239 | 46,572 | 92 | 46,664 | | Total | 468,584 | 947,185 | 1,415,769 | 466,188 | 1,366,797 | 1,832,985 | - The Group primarily operates in China, and the majority of its revenue is generated in China[51] 4 Income Tax Benefit/(Expense) The company recorded an income tax benefit in H1 2024, a reversal from an expense in the prior year, with various subsidiaries enjoying preferential tax rates Analysis of Income Tax Benefit/(Expense) (RMB in thousands) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Current income tax | 665 | (9,279) | | Deferred income tax | 1,681 | 3,877 | | Income tax benefit/(expense) | 2,346 | (5,402) | - Income tax provisions for mainland China operations are calculated at a 25% rate, but "High and New Technology Enterprises" and "Small and Micro-sized Enterprises" benefit from preferential rates of 15% and 20%, respectively[53] - Hong Kong profits tax is provided at 16.5%, while tax rates in other jurisdictions do not exceed 25%[55][56] - No withholding tax was provided for the six months ended June 30, 2024 and 2023, as the Group had accumulated losses in its retained earnings[57] 5 Earnings/(Loss) per Share The loss per share from continuing operations narrowed, while overall earnings per share turned positive due to gains from discontinued operations Earnings/(Loss) per Share Overview (RMB Yuan) | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Basic loss per share attributable to owners of the Company from continuing operations | (0.06) | (0.10) | | Basic loss per ADS attributable to owners of the Company from continuing operations | (1.94) | (3.13) | | Total basic earnings/(loss) per share attributable to owners of the Company | 0.13 | (0.17) | | Total basic earnings/(loss) per ADS attributable to owners of the Company | 3.83 | (5.24) | - Each American Depositary Share represents thirty ordinary shares of the Company[58] - For the six months ended June 30, 2024 and 2023, the effects of all outstanding share options were not included in the calculation of diluted earnings/(loss) per share, making diluted EPS the same as basic EPS[60] 6 Discontinued Operations The company completed the disposal of Ping An OneConnect Bank (Hong Kong) Limited, resulting in a significant profit from discontinued operations - On April 2, 2024, the company completed the disposal of Ping An OneConnect Bank (Hong Kong) Limited to Lufax for a cash consideration of HK$933 million[61] - The disposal generated an after-tax gain of RMB 260.1 million[64] - Discontinued operations recorded a profit of RMB 209.5 million in H1 2024, compared to a loss of RMB 76.8 million in the prior year period[63] (a) Financial Performance and Cash Flow Information The discontinued operations recorded a profit of RMB 209.5 million, including the gain on disposal, after generating a loss from its operations until the sale date Financial Performance and Cash Flow of Discontinued Operations (RMB in thousands) | Metric | 2024 (Jan 1 to disposal date) | H1 2023 | | :--- | :--- | :--- | | Revenue | 44,295 | 66,361 | | Loss after income tax from discontinued operations | (50,638) | (76,816) | | Gain on disposal of a subsidiary after income tax | 260,137 | – | | Profit/(loss) from discontinued operations | 209,499 | (76,816) | | Net cash used in operating activities | (3,286) | (107,546) | | Net cash (used in)/generated from investing activities | (112,210) | 6,124 | | Net cash used in financing activities | (1,417) | (2,807) | (b) Details of the Disposal of a Subsidiary The disposal of the subsidiary resulted in a net cash inflow of RMB 723.2 million and an after-tax gain of RMB 260.1 million Details of the Disposal of a Subsidiary (RMB in thousands) | Metric | 2024 | | :--- | :--- | | Net cash inflow arising from disposal | 723,171 | | Gain on disposal after income tax | 260,137 | 7 Trade Receivables Net trade receivables increased, with the majority of balances aged within one year Aging Analysis of Trade Receivables (RMB in thousands) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 1 year | 913,144 | 694,157 | | 1 to 2 years | 61,397 | 55,187 | | 2 to 3 years | 5,615 | 21,103 | | Over 3 years | 14,530 | 9,011 | | Total | 994,686 | 779,458 | Net Trade Receivables (RMB in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade receivables | 994,686 | 779,458 | | Less: provision for impairment loss | (64,428) | (68,789) | | Net | 930,258 | 710,669 | 8 Trade and Other Payables Total trade and other payables remained stable, with a significant increase in amounts due to related parties Breakdown of Trade and Other Payables (RMB in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade payables (i) | | | | Due to related parties | 259,340 | 119,434 | | Due to third parties | 100,395 | 127,125 | | Redemption liabilities (ii) | 232,951 | 232,951 | | Accrued expenses | 263,657 | 436,846 | | Other payables due to related parties | 828,531 | 744,604 | | Total | 2,023,098 | 2,009,571 | | Less: non-current portion | (14,379) | (28,283) | | Total current portion | 2,008,719 | 1,981,288 | - The aging of trade payables is mainly within one year[66] - The redemption liability of RMB 232.951 million is related to the put option for Pan-China Financial's equity, with terms and conditions still under negotiation[67] 9 Dividends No dividends were paid or declared during the six months ended June 30, 2024 and 2023 - No dividends were paid or declared by the company for the six months ended June 30, 2024 and 2023[68] 10 Events After the Reporting Period The company decided to terminate its cloud services, and Lufax became a related party of the Group following a change in Ping An Group's shareholding - On July 11, 2024, the Board decided to gradually terminate the operation of cloud services starting from July 2024, due to procurement strategy adjustments by related clients of Ping An Group[69] - Following a special dividend distribution by Lufax on July 30, 2024, Ping An Group's shareholding in Lufax increased to 56.82%, making Lufax an indirect non-wholly-owned subsidiary of Ping An Group and a related party of the Group[69] Other Information Purchase, Sale or Redemption of the Company's Listed Securities Neither the company nor its subsidiaries engaged in any purchase, sale, or redemption of the company's listed securities during the period - During the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's securities listed on the Stock Exchange[70] Compliance with the Corporate Governance Code The company complied with the Corporate Governance Code, with deviations related to the combined role of Chairman and CEO and the company secretary's appointment process - The company has complied with all applicable code provisions of the Corporate Governance Code, except for deviations from code provision C.2.1 (separation of chairman and chief executive roles) and C.6.2 (appointment/removal of company secretary)[71] - The company believes that the concurrent roles of Chairman and CEO provide consistent leadership and facilitate strategy execution, which is in the company's best interest[71] - The appointment of Mr. Chen Zifeng as company secretary was handled via written resolution, as the Board deemed his qualifications sufficient without needing a physical meeting[71] Compliance with the Model Code for Securities Transactions by Directors All directors confirmed full compliance with the Model Code for Securities Transactions by Directors during the reporting period - All directors of the company have confirmed full compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules for the six months ended June 30, 2024[72] Audit Committee The Audit Committee has reviewed the unaudited interim financial statements, which were also reviewed by the independent auditor - The Audit Committee, comprising three members, has reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2024[73] - The independent auditor, PricewaterhouseCoopers, has conducted a review of the interim financial information[73] Interim Dividend The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2024[73] Publication of Interim Results and Interim Report The interim results announcement is available on the HKEX and company websites, with the interim report to follow - This interim results announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the company (https://irhk.ocft.com)[73](index=73&type=chunk) - The interim report for the six months ended June 30, 2024 will be made available on the above websites in due course[73] Safe Harbor Statement This announcement contains forward-looking statements based on current expectations that are subject to various risks and uncertainties - This announcement contains "forward-looking" statements based on management's current expectations, involving known and unknown risks, uncertainties, and other factors[74] - Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including limited operating history, profitability, regulatory changes, customer base, relationship with Ping An Group, technology effectiveness, IP protection, and market conditions[74] - The company undertakes no obligation to update any forward-looking statement, except as required under applicable law[74]