Notes:
Basis of Preparation
The Directors of the Company are responsible for preparation of the Reconciliation Statement in accordance with the relevant requirements of the Hong Kong Listing Rules and relevant guidance in HKEX-GL111-22. The Reconciliation Statement was prepared based on the Group’s Unaudited Interim Financial Statements prepared under U.S. GAAP, with adjustments made (if any) thereto in arriving at the unaudited financial information of the Group prepared under IFRS. The adjustments reflect the differences between the Group’s accounting policies under U.S. GAAP and IFRS.
(i) Share-based compensation
Under U.S. GAAP, the Company has elected to recognize compensation expense using the straight-line method for all employee equity awards granted with graded vesting over the requisite service period.
Under IFRS, the graded vesting method is required to recognize compensation expense for all employee equity awards granted with graded vesting.
(ii) Leases
Under U.S. GAAP, for operating leases, the amortization of right-of-use assets and the interest expense element of lease liabilities are recorded together as lease expenses, which are measured on a straight-line basis and are recorded in the consolidated statements of income.
Under IFRS, the right-of-use assets are generally depreciated on a straight-line basis while the interest expense related to the lease liabilities are measured under the effective interest method, which results in higher expenses at the beginning of the lease term and lower expenses near the end of the lease term.
(iii) Equity securities without readily determinable fair values
Under U.S. GAAP, the Company elected to measure an equity security without a readily determinable fair value using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes reported in the profit or loss.
Under IFRS, the Company measured the investments in equity instruments at fair value through profit or loss (FVTPL). Fair value changes of these investments are recognized in the profit or loss.
(iv) Equity method investments
Under U.S. GAAP and IFRS, the investor should adjust the results of its associate or joint venture to align the investee’s accounting policies with its own policies. The reconciliation items mainly arise from different accounting the associate or joint venture applied under each GAAP.
(v) Available-for-sale debt investments
Under U.S. GAAP, the available-for-sale debt investments classified within Level 3 are valued based on a model utilizing unobservable inputs which require significant management judgment and estimation. The Company reports available-for-sale debt investments at fair value at each balance sheet date with the aggregate unrealized gains and losses, net of tax, reflected in “Accumulated other comprehensive profit or loss.” in the consolidated balance sheets.
Under IFRS, since those investments do not meet the definition of the equity instrument from the perspective of issuer, and the contractual cashflow could not pass the Solely Payments of Principal and Interest (the “SPPI”) test, thus they are required to be classified as financial assets measured at fair value with fair value changes recognized in the profit or loss.
Additionally, under both U.S. GAAP and IFRS, when an investor has other financial interests, like preferred stock, in an associate or a joint venture, that in substance form part of the net investment in the associate or the joint venture, after the investor’s basis of its common stock investment is reduced to zero by its equity method losses, the investor should continue to recognize equity method losses to the extent of, and as an adjustment to, the basis of preferred stock.
However, under U.S. GAAP, the preferred stock should state at fair value at all times requiring a write-up (or write-down) to fair value through income or through other comprehensive income, which is not applicable under IFRS.
(vi) Convertible senior notes
Under U.S. GAAP, the Company’s convertible notes are elected to be measured at amortized cost, with any difference between the initial carrying value and the repayment amount recognized as interest expense using effective interest method over the period from issuance date to maturity date.
