OSL : ANNUAL REPORT

CONTENTS

Chief Executive

Officer's Statement

Biographical Details of Directors and Senior Management

Report of the

Directors

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement

of Changes in Equity

Notes to the Consolidated

Financial Statements

2	Corporate
Information
4
6	Management Discussion
	and Analysis
20
23	Corporate Governance
	Report

43

65 Independent

Auditor's Report

73

75	Consolidated Statement
of Financial Position
77
79	Consolidated Statement
	of Cash Flows
80
189	Five Year
	Financial Summary

CORPORATE INFORMATION

OSL Group Limited

OSL 集團有限公司

(Formerly known as "BC TECHNOLOGY GROUP LIMITED  BC 科技集團有限公司")

STOCK CODE: 863

BOARD OF DIRECTORS

Executive Directors

Mr. Pan Zhiyong (Chairman and Chief Executive Officer)  (appointed on 12 January 2024)

Mr. Ko Chun Shun, Johnson

Ms. Xu Kang (appointed on 12 January 2024) Mr. Yang Chao (appointed on 12 January 2024) Mr. Tiu Ka Chun, Gary

Mr. Madden Hugh Douglas (resigned on 12 January 2024) Mr. Lo Ken Bon (resigned on 12 January 2024)

Mr. Chapman David James (resigned on 12 January 2024)

Independent Non-Executive Directors

Mr. Chau Shing Yim, David

Dr. Yang Yu (appointed on 12 January 2024) Mr. Xu Biao (appointed on 12 January 2024) Mr. Chia Kee Loong, Lawrence (resigned on 12 January 2024)

Mr. Tai Benedict (resigned on 12 January 2024)

BOARD COMMITTEES

Audit Committee

Mr. Chau Shing Yim, David (Chairman)

Dr. Yang Yu (appointed on 12 January 2024) Mr. Xu Biao (appointed on 12 January 2024) Mr. Chia Kee Loong, Lawrence (resigned on 12 January 2024)

Mr. Tai Benedict (resigned on 12 January 2024)

Remuneration Committee

Mr. Chau Shing Yim, David (Chairman)

Mr. Pan Zhiyong (appointed on 12 January 2024) Mr. Yang Chao (appointed on 12 January 2024) Dr. Yang Yu (appointed on 12 January 2024)

Mr. Xu Biao (appointed on 12 January 2024) Mr. Lo Ken Bon (resigned on 12 January 2024) Mr. Chia Kee Loong, Lawrence (resigned on 12 January 2024)

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Nomination Committee

Mr. Pan Zhiyong (Chairman) (appointed on 12 January 2024) Mr. Yang Chao (appointed on 12 January 2024)

Mr. Chau Shing Yim, David

Dr. Yang Yu (appointed on 12 January 2024) Mr. Xu Biao (appointed on 12 January 2024) Mr. Lo Ken Bon (resigned on 12 January 2024) Mr. Chia Kee Loong, Lawrence (resigned on 12 January 2024)

Risk Management Committee

Mr. Pan Zhiyong (Chairman) (appointed on 12 January 2024) Mr. Yang Chao (appointed on 12 January 2024)

Mr. Tiu Ka Chun, Gary (appointed on 12 January 2024) Mr. Xu Biao (appointed on 12 January 2024)

Mr. Lo Ken Bon (resigned on 12 January 2024)

Mr. Chau Shing Yim, David (resigned on 12 January 2024) Mr. Tai Benedict (resigned on 12 January 2024)

Mr. Sikora Marek (resigned on 12 January 2024)

AUTHORISED REPRESENTATIVES

Mr. Yang Chao (appointed on 12 January 2024)

Mr. Wu Chun Pong (Davin) (appointed on 15 September 2023) Mr. Lo Ken Bon (resigned on 12 January 2024)

Ms. Chau Wing Kei (resigned on 15 September 2023)

COMPANY SECRETARY

Mr. Wu Chun Pong (Davin) (appointed on 15 September 2023) Ms. Chau Wing Kei (resigned on 15 September 2023)

PRINCIPAL BANKERS

Bank of China (Hong Kong)

CMB Wing Lung Bank

Bank of Communications Co., Limited

Chiyu Banking Corporation Limited

DBS Bank Ltd

INDEPENDENT AUDITOR

PricewaterhouseCoopers

Certified Public Accountants and Registered Public Interest Entity Auditor

LEGAL ADVISERS

Baker & McKenzie

CORPORATE INFORMATION

REGISTERED OFFICE

Cricket Square, Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

PRINCIPAL PLACE OF BUSINESS IN HONG

KONG

39/F, Lee Garden One

33 Hysan Avenue

Causeway Bay

Hong Kong

SHARE REGISTRAR AND TRANSFER OFFICE

Principal Registrars

Conyers Trust Company (Cayman) Limited

Cricket Square, Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

Hong Kong Branch Share Registrar and

Transfer Office

Tricor Investor Services Limited 17/F

Far East Finance Centre 16 Harcourt Road Hong Kong

INVESTOR RELATIONS

Investor Relations Department

Telephone: [phone]

Website: osl.group

Email: [e-mail]

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CHIEF EXECUTIVE OFFICER'S STATEMENT

    As we embark on the journey into 2024, we are thrilled and

invigorated by the positive sentiment surrounding the

digital asset market.

DEAR SHAREHOLDERS AND PARTNERS,

As the newly appointed CEO of OSL, I am immensely proud to have the opportunity to lead this innovative and forward- thinking organization. My appointment comes at a time of strategic realignment, with a focus on maximizing our strengths in the digital assets sector. This pivotal shift is aimed at enhancing our core competencies. I am excited to steer OSL through this transformative period, embracing challenges and opportunities with a commitment to regulation, operational excellence, and innovation.

LOOKING BACK AT 2023

As we reflect on the past year, it is clear that the digital asset landscape has undergone transformative changes, heralding a new era of maturity and acceptance within the global financial ecosystem. The landmark approval of the first Spot Bitcoin ETF in the United States stands as a testament to the evolving regulatory environment and the growing embrace of cryptocurrencies by institutional players. This pivotal development has not only affirmed the legitimacy of digital assets on a global scale but also catalyzed a wave of positive momentum across markets, including Hong Kong, highlighting the critical role of progressive regulation in propelling market expansion.

Amidst this backdrop, the remarkable ascent in the prices of Bitcoin and Ethereum has underscored a renewed surge in investor confidence and market vitality. This upward trajectory has greatly enhanced the appeal of our digital asset services.

In tandem with these global shifts, Hong Kong's proactive steps towards Spot Bitcoin and Ether ETFs mark a monumental progression for the region's digital asset sector. At OSL Group, we have been at the vanguard of adapting to and capitalizing on these regulatory innovations, ensuring that we remain well-positioned to expand our service offerings and strengthen our market presence.

These macro developments in the digital asset domain underscore a year of significant achievement and opportunity for our Group, laying a solid foundation for innovation in 2024.

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OSL'S NEW ERA AND ACKNOWLEDGEMENTS

As we embark on the journey into 2024, we are thrilled and invigorated by the positive sentiment surrounding the digital asset market. This new year presents us with boundless opportunities, and we couldn't be more excited. With the robust support from our strategic investments, OSL is exceptionally well-positioned to seize these opportunities in the ever- evolving landscape of digital assets.

I would like to extend my deepest gratitude to all our investors for their unwavering support and trust. Your confidence in our vision and leadership has been a pivotal element of our journey. As we move forward, I am thrilled to share that we are positioning OSL for unprecedented growth. With our strategic initiatives and expansion into new services, I am confident that 2024 will mark a successful year in OSL's history. Your continued support fuels our commitment to excellence and innovation. Thank you for being an integral part of our journey towards a remarkable future.

Pan Zhiyong

Chairman and Chief Executive Officer

OSL Group Limited

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MANAGEMENT DISCUSSION AND ANALYSIS

The board (the "Board") of directors (the "Directors") of OSL Group Limited (the "Company") present the audited consolidated financial results of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 31 December 2023 ("FY2023" or the "Year").

BUSINESS OVERVIEW

OSL Group, previously known as BC Technology Group, has demonstrated its resilience and innovation in the digital asset space throughout 2023, marking a year of strategic advancements and operational excellence. As a leading digital asset platform in Hong Kong, OSL has capitalized on the evolving regulatory landscape and emerging market opportunities to solidify its leadership position. Its core focus areas this year have included securing strategic funding, expanding its services to retail clients, solidifying partnerships and relations with banks and financial institutions, and pioneering the Security Token Offerings (STOs).

Strategic Investment from BGX

One of the most exciting news in 2023 is the strategic investment received by OSL from BGX. This investment is not just a testament of OSL's strong market position but also represents a pivotal moment in the Group's development. The strategic investment from BGX, a progressive leader in digital asset services, equips OSL with ample resources to accelerate its growth strategies, strengthen technological capabilities, and expand its market presence in Asia Pacific markets.

This investment signifies a profound vote of confidence in OSL's vision and strategic direction beyond a financial transaction. It aligns OSL with a partner that not only shares its aspirations for regulated digital asset innovation but also brings to the table expertise and a network that could unlock new business synergies.

The successful completion of the deal was a landmark event for OSL Group, propelling the Group towards global expansion with renewed enthusiasm. This capital contribution underpins OSL's strategic goals, including technological progress and market extension, reinforcing its ambition to lead the regulated digital asset landscape.

Enabling Retail Investors to Trade Bitcoin and Ethereum

In an unprecedented move that marks a significant shift in the regulatory landscape for digital assets, the Hong Kong Securities and Futures Commission ("SFC") has, in June 2023, officially approved retail trading of Bitcoin (BTC) and Ethereum (ETH). This groundbreaking decision underscores Hong Kong's commitment to fostering innovation within its financial services sector, while also ensuring a robust regulatory framework that protects investors.

In August 2023, OSL announced that it has received an uplift to its existing license from the SFC. OSL offers retail investors the ability to register on its platform and buy/sell digital asset products, starting with the popular cryptocurrencies Bitcoin and Ethereum. This momentous development is a testament to OSL's unwavering commitment to compliance, regulation, and excellence in the digital asset space.

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MANAGEMENT DISCUSSION AND ANALYSIS

OSL's expansion into retail services was timely, coinciding with a global surge in interest towards digital assets among individual investors. By launching its retail trading services, OSL not only capitalized on this trend but also broadened its customer base, tapping into the increasing demand for accessible and secure digital asset trading platforms.

With this development, OSL is now well-positioned to lead the transformation of the digital asset market. As it welcomes retail investors, it remains steadfast in its commitment to excellence, compliance, and regulation, setting the stage for a more robust and secure digital asset environment.

B2B2C Business Expansion: Strong Relationships with Financial Institutions

In 2023, OSL has continuously strengthened its position as a leader in its B2B2C business. OSL's steadfast commitment to innovation and strategic partnerships has been instrumental in its continued growth and success. Throughout the year, OSL has not only deepened its collaboration with existing partners but has also expanded its network by forging new alliances.

Furthermore, OSL continued to strengthen its relationship with its existing clients as it expanded services with Interactive Brokers, Victory Securities and Solomon Securities. In a significant development for the local Hong Kong market, Interactive Brokers and Victory Securities' retail investors in Hong Kong now have access to digital asset trading through a single unified platform powered by OSL.

These partnerships stand as a hallmark of OSL's ability to deliver comprehensive, secure, and compliant trading solutions that cater to the needs of both institutional and retail investors. This collaboration not only enhances OSL's product offering but also solidifies its position as a leader in the digital asset space, capable of bridging the gap between traditional financial markets and the burgeoning world of cryptocurrencies.

Pioneering the STO Space

In 2023, OSL made tremendous progress in the STO space through strategic partnerships and pioneering transactions. First, OSL executed Hong Kong's inaugural investment-grade tokenized warrant transaction in collaboration with UBS, showcasing the potential for traditional financial instruments within the digital asset framework. Secondly, OSL and Harvest Global announced a strategic partnership to accelerate the accessibility of security tokens in Hong Kong. This collaboration aims to explore tokenization opportunities, leveraging OSL's licensed digital asset platform and Harvest Global's asset management expertise to introduce innovative products for retail investors. These initiatives mark OSL's commitment to advancing tokenization and digital asset solutions in the financial ecosystem.

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MANAGEMENT DISCUSSION AND ANALYSIS

REVIEW OF RESULTS

Overall Performance

The Group's IFRS income for the year surged to HK$209.8 million, representing a substantial year-over-year ("YoY") growth of 193.6% from HK$71.5 million for the year ended 31 December 2022 ("FY2022"). The surge in income was primarily driven by a net gain of digital assets used in facilitating the OSL prime brokerage business, which contributed HK$72.1 million (FY2022: net loss of digital assets used in facilitation of the OSL prime brokerage business of HK$108.3 million) and net fair value gain on digital assets of HK$2.8 million (FY2022: net fair value loss on digital assets of HK$3.4 million), which are treated as part of trading gain/loss from the Group's principal activities. The overall Group's adjusted non-IFRS income as identified in "Non-IFRS Measures" below was HK$134.9 million for the Year, showing a decline of HK$48.3 million from HK$183.2 million in FY2022.

Loss per share of the Group from continuing operations for the Year was HK$0.58 (FY2022: HK$1.30).

Non-IFRS Measures

To supplement the Group's consolidated financial statements which are presented in accordance with IFRS, the Group has provided adjusted non-IFRS income as additional financial measures, which are not required by, or presented in accordance with IFRS.

Income from digital assets and blockchain platform business principally represents (i) margin from trading digital assets;

1. net gain/loss of digital assets used in facilitation of prime brokerage business; (iii) net fair value gain/loss on digital assets; (iv) service fee from SaaS; (v) income from custodian services; (vi) income from sales of intellectual property to an associate; and (vii) trading fee from automated trading service.

The volatility and uncertainty generally characterizes the digital assets market, the Group recognises net gain of digital assets used in facilitation of prime brokerage business of HK$72.1 million for the Year (FY2022: net loss of HK$108.3 million) and net fair value gain on digital assets of HK$2.8 million for the Year (FY2022: net fair value loss of HK$3.4 million). As the price volatility of digital assets may cause significant impact to the Group's operating performance, the Group considers it appropriate to supplement the consolidated financial statements by presenting income from digital assets and blockchain platform business into (i) margin from trading digital assets and others; (ii) net gain/loss of digital assets used in facilitation of prime brokerage business; and (iii) net fair value gain/loss on digital assets. The Group considers that margin from trading digital assets and other, i.e., adjusted non-IFRS income, can better reflect volumes of the Group's digital assets trading business.

The Group defines margin from trading digital assets and others, i.e. adjusted non-IFRS income from digital assets and blockchain platform business (unaudited), as the realised net gain/loss with reference to the transaction price of the daily trade transactions executed to facilitate the prime brokerage business before considering the fair value movements of the digital assets held. Net gain/loss of digital assets used in facilitation of prime brokerage business is a realized gain/loss from the fair value movement of the digital assets held. Net fair value gain/loss on digital assets is an unrealized gain/loss in nature and it is determined as the fair value movement of the Group's proprietary digital assets on hand which was remeasured at year-end market price as at 31 December 2023.

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MANAGEMENT DISCUSSION AND ANALYSIS

The Group believes that the addition of the non-IFRS measures facilitates comparisons of operating performance from period to period by providing more relevant financial information that management considers to be more illustrative of the Group's operating performance to the public, and that the non-IFRS measures provides useful information to its shareholders, investors and others in understanding and evaluating the consolidated results of operations in the same manner as it helps management. However, presentation of the non-IFRS measures may not be comparable to similarly titled measures presented by other companies. The use of the non-IFRS measures has limitations as analytical tools, and shareholders, investors and others should not consider it in isolation from, or as a substitute for analysis of, results of operations or financial condition as reported under IFRS.

The table below sets forth a reconciliation of the Group's IFRS income to the Group's adjusted non-IFRS income for the Year and FY2022:

	Audited
	For the years ended 31 December
	2023	2022
	HK$'000	HK$'000
		(Represented)
Group's IFRS income from digital assets and blockchain platform business	209,837	71,480
	For the years ended 31 December
	2023	2022
	HK$'000	HK$'000
		(Represented)
Income from digital assets and blockchain platform business in
accordance with IFRS (per above)	209,837	71,480
Add back:
Net fair value (gain)/loss on digital assets	(2,841)	3,401
Net (gain)/loss of digital assets used in facilitation of
prime brokerage business (unaudited)	(72,056)	108,309
Group's adjusted non-IFRS income from digital assets
and blockchain platform business (unaudited)	134,940	183,190

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