BC Technology Group 2020 Annual Results: Group Revenues up 32% YoY to RMB217 mln, Posts Positive Adjusted EBITDA for Year OSL Digital Asset Platform Revenues Increase 111% YoY to RMB151 mln

OSL revenues comprise70%of all Group income and revenues in 2020

Hong Kong - 29 March 2021- 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 2020.

Summary

• Group revenuesup 32% year-on-year to RMB217 million, despite headwinds from COVID-19

• Group adjusted EBITDA positive for the Year at RMB5 million (2019: RMB-89 million)

• OSL digital asset platform revenue increases111% year-on-year (YoY) to 151 million

• OSL revenues at70%of all Group income and revenues in 2020, an increase from44%in 2019

• Total assets on platformfor OSL grew 487% YoY to RMB2.6 billion

• Active customers for the OSL digital asset platform also increased by130%YoY

• Overall digital asset platform trading volumes up228% YoY to RMB149 billion

• Institutions comprisedover 93% of trading volume in 2020

• SaaS revenues increased 132% YoY to RMB8.8 million

• Pro-forma selling and admin expenses (excluding share-based payment expenses and warrant expenses) were down 8% YoY to RMB226 million

• Group net loss wasRMB259 million for the Year

• OSL was the first firm to receive virtual asset automated trading and brokerage licensesfrom the SFC in Hong Kong, has applied for a license under the PSA in Singapore

• Group secured technology services partnership with DBS bank

Management Commentary

BC Group CEO Hugh Madden said: 'Despite the global headwinds as a result of COVID-19 and other geopolitical factors, 2020 was a banner year for BC Technology Group and its OSL digital asset platform business. With the SFC granting a type 1 and 7 license to OSL Digital Securities, rapid adoption of the asset class among the professional and institutional investor segment investors globally, the concurrent and repeated all-time-highs and market capitalization reached by Bitcoin and Ethereum, and the advent of regulated digital securities (e.g. STOs), our company is at the precipice of a new chapter of growth. As a first mover and a licensed operator in Hong Kong, we are confident that we can continue to build market share as the digital asset ecosystem expands exponentially to regulated players, particularly in the security token space.'

BC Group CFO Steve Zhang said: 'Boosted by regulatory progress and increased institutional participation in digital assets in 2020, we successfully built on our position as one of the world's preeminent providers of institutional-grade digital asset investment solutions and services to professional investors. The scalability of our platform and SaaS technology was also reinforced through our acquisition of top-tier financial services clients such as DBS, a testament to the inevitability of the wide-scale adoption of digital assets by traditional finance.'

Financial Performance

The OSL digital asset platform continued its pace of market outperformance in FY2020, with a 111% YoY increase in revenues to RMB151 million (2019: RMB72 million), bolstering the performance of the Group, which saw overall revenues increase 32% YoY to RMB217 million (2019: RMB165 million) and posted a positive adjusted EBITDA of approximately RMB5 million (2019: RMB-89 million). OSL continues to be the Group's best performing business and largest revenue contributor, and comprises 70% of all Group income and revenues, up from 44% in FY2019.

Total assets on platform (AOP) for OSL grew 487% YoY to RMB2.6 billion (2019: RMB447 million). Active customers for the OSL digital asset platform also increased by 130%compared to the previous year, with overall digital asset platform trading volumesup 228% YoY to RMB149 billion for the Year (2019: RMB46 billion). Institutions comprised over 93% of trading volume in 2020, up from approximately 90% in 2019.

Revenue from the OSL Software-as-a-Service (SaaS) business was up 132% for the Year to RMB8.8 million (2019: RMB3.8 million).

The Group's China business was met with mixed results during the Year as a result of the COVID-19 pandemic, a slowing economy and a softening China automotive sector, which also adversely impacted the ability of its advertising and marketing clients to spend on its services and overall revenues for this business were RMB65 million, a decrease of 30% YoY (2019: RMB93 million). While the business park management services business saw a 10% YoY increase in revenues to RMB39 million (2019: RMB35 million), the advertising business declined 54% to RMB27 million in FY 2020 (2019: RMB58 million).

In the year ended 31 December 2020, the Group's pro-forma selling and admin expenses (excluding share-based payment expenses and warrant expenses) were down 8% YoY to RMB 226 million (2019: RMB 246 million), and Group net loss for the Year was RMB259 million (2019: RMB245 million).

Key Business Milestones

On 15 December 2020, the Group's OSL Digital Securities unit became the first firm to receive a license from the Hong Kong Securities and Futures Commission (SFC) for licenses to conduct Types 1 (dealing in securities) and 7 (providing automated trading services) regulated activities under the SFC's regulatory framework for virtual asset trading platforms.

OSL now holds a significant first-mover advantage as the only SFC-licensed, Big Four-audited, listed and insured digital asset platform offering brokerage, exchange, custody and SaaS institutional counterparties.

In mid 2020, the Group also submitted an application to the Monetary Authority of Singapore ('MAS') to be licensed under the Payment Services Act 2019 (the 'PS Act') as a Major Payment Institution ('MPI') providing digital payment token ('DPT') services.

In August 2020, the Group acquired the core intellectual property assets of Hong Kong-based blockchain

engineering firm Enuma Technologies, further bolstering its engineering strength. Enuma CEO Antoine Cote was subsequently named Group CTO.

In the first half of 2020, the Group saw two important product launches, a comprehensive OSL SaaS product suite for digital asset trading; the OSL Exchange, its best-in-class digital asset exchange designed for professional traders.

Regarding the digital asset platform customer base, in 2H2020 OSL signed DBS Bank as a technology client.Other new customer highlights include being selected as the official digital asset custodian for Equities First Holdings LLC (EFH), a global investment firm headquartered in the United States.

In terms of geographic reach, the Group in 2020 opened an R&D center in Europe in 2H2020.

Post Period Updates

On 6 January 2021, the company successfully raised HKD897 million in a top-up share placement that included a significant investment from a blue-chip international financial institution and other institutional investors.

On 3 March 2021, BC Group announced that it had signed an MOU with Venture Smart Asia Limited (VSAL), a Hong Kong-licensed asset manager and investment advisory firm, to provide brokerage and related services for VSAL's Hong Kong-regulated digital asset funds (DigiTrackers Bitcoin and the Arrano Alpha Fund).

The agreement is the first collaboration between the first SFC-approved digital asset manager and BC Group, which is the parent of OSL, the first SFC-licensed brokerage and exchange in Hong Kong.

Under the MOU, OSL will provide brokerage services, including trade execution and capital introduction services to the Arrano Alpha Fund. OSL and VSAL's blockchain arm, known as Arrano Capital, will also explore opportunities to jointly create digital asset products.

In a Hong Kong-first on 15 March 2021, OSL DS announced its official go-live with the execution of the first customer trades via its licensed trading desk, breaking new ground for financial services in Asia. Trading and storing digital assets such as Bitcoin is now securely conducted in Hong Kong with the supervision of a world-leading regulator - a major milestone in the ongoing institutional adoption of digital assets globally.

About BC Group and the OSL Platform

BC Technology Group (stock code: HK 863) is Asia's leading public fintech and digital asset company. It is the parent company of OSL, the region's most comprehensive licensed digital asset platform.

OSL is the world's first and only insured and SFC-licensed digital asset platform, providing brokerage, custody, exchange and SaaS services for institutional clients and professional investors.

The company offers OTC, iRFQ and electronic trading services giving traders access to the world's deepest liquidity pools, as well as secure and insured wallets to ensure the safekeeping of digital assets with timely transaction settlement.

BC Group and the OSL platform are enabling institutional adoption of the digital asset class, setting standards for performance, security and compliance.

OSL's vision is to lead the regulated, institutional evolution of the digital asset market.

For more information:bc.groupandosl.com

Contact

[email protected]