BC Technology Group 2021 Annual Results: overall Group Revenues Increased 44% in 2021 to HK$352 Million

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Hong Kong – 29 March 2022 – BC Technology Group, Asia’s leading listed (stock code: 863 HK) digital asset and fintech company and parent company of the SFC-licensed OSL digital asset platform, today reported its results for the year ended 31 December 2021.

Results Summary

• Group revenues increased 44% year-on-year (YoY) to HK$352 million

• Group gross profit increased 54% YoY to HK$303 million

• OSL digital asset platform revenues increased 63% YoY to HK$278 million

• OSL digital asset platform volume increased 73% YoY to HK$306 billion

• OSL Prime Brokerage revenue increased 58% YoY to HK$254.5 million

• Service fees from OSL SaaS increased 104% YoY to HK$10.1 million

• OSL revenues at 79% of all Group income and revenues in 2021, up 9% from FY2020

• Total assets-on-platform for OSL grew 44% YoY to HK$4 billion

• Active clients for the OSL digital asset platform increased by 424% YoY 

• Group selling and distribution expenses decreased 26% YoY to HK$88 million

Management Commentary

BC Group CEO Hugh Madden said: “As institutional and professional investors continued to accelerate their portfolio allocation to digital assets in 2021, BC Group and OSL experienced substantial growth in-line with core strategic objectives. OSL’s global presence increased dramatically as a result of an expansion of our products and services across North and Latin America, and the buildout of our JV with Standard Chartered Bank in the UK and Europe.

OSL Digital Securities, the Group’s Hong Kong SFC-licensed entity, also went live with the territory’s first-ever trades of regulated digital securities and digital assets in March of last year. Furthermore, we continued to expand our robust product offering, adding 20 top digital asset tokens to our global platform, and made significant strides in the ESG space, offsetting our carbon footprint for three years, conducting a thorough materiality assessment and making strategic investments with partners in the space. 

OSL is better positioned than ever before to capture rapidly increasing global institutional capital inflows into digital assets.”

BC Group CFO Davin Wu said: “In 2021, the Group further strengthened its position as a global leader in regulated digital assets, and this was reflected in significant increases in OSL’s digital asset revenue, trading revenue, trading volume and SaaS client acquisition. 

Globally, regulation of digital assets continues to gain momentum, as evidenced by recent guidance in tier-1 financial markets such as Hong Kong, Singapore and the United States. With a strong track record of success implementing digital asset SaaS for platforms and top financial institutions, and our specialist expertise in regulatory compliant digital asset trading and prime brokerage, OSL is primed to continue to scale in 2022 and beyond.”

Financial Performance

The OSL digital asset platform continued its rapid growth in FY2021, with a 63% YoY increase in revenues to HK$278 million (2020: HK$170 million), buttressing the performance of the Group, which experienced a 44% YoY increase in revenues to HK$352 million (2020: HK$244 million), and a YoY gross profit increase of 54% to HK$303 million (FY2020: HK$196 million). OSL remains the Group’s best performing business and largest revenue contributor, and comprises 79% of all Group income and revenues, up 9% from the previous year (FY2020: 70%).

OSL experienced significant revenue growth across all major business units, with OSL Prime Brokerage revenue, which is the combined revenue from OTC and iRFQ trading, up 58% YoY to HK$254.5 million (FY2020: HK$160.7 million) and service fees from OSL SaaS up 104% YoY to HK$10.1 million (FY2020: HK$5.0 million). OSL Exchange revenues were HK$8.3 million for 2021 (FY2020: HK$0.3 million) and revenue for custody and other services was HK$4.8 million (FY2020: HK$4.2 million).

OSL overall digital asset platform volumes were up by 73% YoY to HK$306 billion (2020: HK$177 billion). Brokerage trading volume was up 37% YoY in FY2021 to HK$236 billion (FY2020: HK$172 billion), exchange trading volume was HK$53 billion in FY2021 (FY2020: HK$4 billion), and SaaS trading volume was HK$17 billion in FY2021 (FY2020: HK$1 billion). Total assets-on-platform for OSL grew 44% YoY to HK$4 billion (2020: HK$2.8 billion). Active clients for the OSL digital asset platform also increased by 424% compared to the same period the previous year.

The Group’s China-based non-digital asset business, which is separate from OSL, was stable during the Year as China’s economy began a period of slower economic growth in the midst of an ongoing recovery from COVID-19 and associated restrictions. Overall revenues for this business, which comprises an automotive focused advertising business and a business park management services business were HK$74 million in 2021, a slight increase of 1% YoY (2020: HK$74 million). The business park management services business unit saw a 7% YoY increase in revenues to HK$47 million (2020: HK$44 million), and the advertising business declined 8% to HK$28 million in FY 2021  (2020: HK$30 million).

Group selling and distribution expenses decreased 26% YoY to HK$88 million (2020: HK$120 million), and Group net loss for the Year was HK$369 million (2020: HK$291 million).

Outlook

In FY2021, the Group strengthened its financial position through two share placements and further enhanced its leadership in the digital asset market via substantial investments in the OSL digital asset platform’s geographic reach, operational excellence, technology and products and services.  

The Group in FY2021 formed the Zodia Markets joint venture in the UK and Europe with Standard Chartered Bank’s SC Ventures, and expanded its OSL digital asset prime brokerage and exchange capabilities in the Americas. Further, OSL grew its global token universe to over 20 top-tier tokens across the platform,  added key senior staff across Hong Kong, Singapore, UK and the Americas, and secured a Money Services Business registration from the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) .

This resulted in a more robust service offering, further diversification of the Group’s customer base, and led to substantial YoY growth in digital asset revenue, platform volumes and trading volumes, as well as further expansion of an already robust global pipeline across all business units in FY2021. These growth trends are expected to continue in 2022.

The Group’s SaaS business saw major tier-one customers come online late in the Year, and significant new business wins in Asia and Latin America in Q1 2022. The Zodia Markets joint venture with Standard Chartered’s SC Ventures and a series of newly signed SaaS clients are expected to be fully launched and operational at around mid-year, and this is likely to generate increased revenues for the SaaS business unit in FY2022.

Prospects for the OSL prime brokerage and exchange businesses are also positive. OSL Prime Brokerage is an established industry leader as a result of its success working with traditional and digital asset hedge funds and asset managers and digital asset ETFs. These successes have resulted in a strong global pipeline as well as new clients and partners signing onto OSL Prime Brokerage and OSL Exchange in the post-results period.

Additionally, the Hong Kong SFC-regulated OSL Digital Securities Limited (OSLDS) business dramatically expanded its pipeline following the 28 January 2022 joint SFC-HKMA circular, which requires licensed brokers and banks in Hong Kong to partner with SFC-licensed digital asset platform operators to offer digital asset dealing services. OSLDS is currently the only SFC-licensed digital asset trading platform in Hong Kong. In Singapore, the result of the OSL’s MAS license application approval is expected in the coming months, and several new product launches are planned throughout FY2022.

In March 2021, OSLDS became the first entity in Hong Kong to offer security tokens on its licensed digital asset trading platform, with the Blockchain Capital token. The Group anticipates security token issuance and trading will form a significant portion of OSL’s overall business in the medium term, and OSLDS therefore plans to launch and distribute a security token within 2022. 

Looking ahead, the Group will continue to invest in operational excellence in terms of regulatory compliance, human capital, trading, technology, and platform efficiency to rapidly acquire customers, including major tier-1 financial institutions. A strategic investment in product development and global targeted marketing is also underway with the objective of further growing the OSL platform’s client base and broadening its reach. 

More specifically, the Group intends to direct resources to aggressively build and launch trading products, further automate and scale the platform and exponentially increase the OSL global token universe.