OCFT(OCFT) - 2019 Q4 - Annual Report

Foreign Exchange Risk - The company has a significant exposure to foreign exchange risk, primarily related to cash and cash equivalents denominated in U.S. dollars, while most revenues and expenses are in Renminbi [932]. - As of December 31, 2019, 81.2% of cash and cash equivalents were held in U.S. dollars, Singapore dollars, or Hong Kong dollars, with only 18.8% in Renminbi [934]. - A 10% appreciation or depreciation in the U.S. dollar to Renminbi exchange rate would impact profit and equity by approximately RMB43.1 million, RMB433.0 million, and RMB408.4 million (US$58.5 million) for the years 2017, 2018, and 2019 respectively [934]. - The company utilizes currency swaps to hedge foreign exchange risk, although it does not consider this risk to be significant at present [932]. Credit Risk - The company has not experienced significant credit risk due to its transactions primarily with state-owned or reputable financial institutions [936]. - Trade receivables and contract assets are assessed for credit quality, with measures in place to mitigate credit risk through shorter credit periods and prepayment methods [937]. - The company has established policies for monitoring and controlling credit risk associated with financial guarantee contracts [937]. Interest Rate Risk - Most borrowings were at fixed rates as of December 31, 2019, indicating limited exposure to interest rate fluctuations [939]. - Future results may be impacted by changes in market interest rates, although no material risks are anticipated [939]. Inflation Impact - The company has not been materially affected by inflation, with consumer price index increases of 1.6%, 2.1%, and 2.9% for the years 2017, 2018, and 2019 respectively [940]. Initial Public Offering (IPO) - The company completed its initial public offering (IPO) in December 2019, issuing 31,200,000 ADSs, equivalent to 93,600,000 ordinary shares [955]. - The underwriters partially exercised their over-allotment options, resulting in an additional 3,520,000 ADSs sold [955]. - The net proceeds from the IPO and the partial over-allotment totaled approximately US$311.0 million [955]. - From December 12, 2019, to December 31, 2019, the company did not utilize any of the net proceeds from the IPO [956]. - None of the net proceeds from the IPO have been paid to directors, officers, or their associates [956]. - The company intends to use the remaining proceeds from the IPO as disclosed in its registration statements [957].