REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
US$0.00001 per share* |
* | listing on the New York Stock Exchange of American depositary shares. |
Accelerated filer ☐ | Non-accelerated filer ☐ |
Emerging growth company |
U.S. GAAP ☐ | Other ☐ | |||
International Accounting Standards Board ☒ |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 4A. |
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Item 5. |
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Item 6. |
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Item 7. |
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Item 14. |
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Item 15. |
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Item 16A. |
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Item 16B. |
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Item 16C. |
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Item 16D. |
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Item 16E. |
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Item 16F. |
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Item 16G. |
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Item 16H. |
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Item 16I. |
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Item 17. |
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Item 18. |
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Item 19. |
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223 |
• | “active investors” refer to investors who have made at least one investment through our wealth management platform or have had client assets with us above zero in the past twelve months; |
• | “ADSs” refer to our American depositary shares, with every two ADSs representing one ordinary share; |
• | “AI” refers to artificial intelligence; |
• | “APR” or “annualized percent rate” refers to the monthly all-in borrowing cost as a percentage of the outstanding balance annualized by a factor of 12, where all-in borrowing cost comprises the actual amount of (a) interest, (b) insurance premiums or guarantee fees and (c) retail credit facilitation service fees; |
• | “China” or the “PRC” refers to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan; |
• | “client assets” refer to the outstanding balance of client assets generated through our platforms, where an asset is counted towards the outstanding balance for so long as it continues to be held by the investor who acquired it through our platform; |
• | “consolidated affiliated entities” refers to entities in China with which we have contractual arrangements such that we have effective control over and are considered the primary beneficiary of those entities and we have consolidated their financial results in our consolidated financial statements; |
• | “cumulative borrowers” refer to the cumulative number of borrowers who had submitted their loan application request and successfully made drawdowns since our inception; |
• | “DPD 30+ delinquency rate” refers to the outstanding balance of loans for which any payment is 30 to 179 calendar days past due, divided by |
• | “IFRS” refers to International Financial Reporting Standards as issued by the International Accounting Standards Board; |
• | “legacy products” mainly include (1) a category of unsecured revolving credit lines in our retail credit facilitation business and peer-to-peer business-to-consumer |
• | “Lufax,” “we,” “us,” “our company” and “our” refer to Lufax Holding Ltd, a Cayman Islands exempted company, and its subsidiaries, and, in the context of describing our operations and consolidated financial information, also include the consolidated affiliated entities in China, including Shanghai Xiongguo Corporation Management Co., Ltd., Shanghai Lufax Information Technology Co., Ltd. (formerly known as Shanghai Lujiazui International Financial Asset Exchange Co., Ltd.) and Shenzhen Lufax Holding Enterprise Management Co., Ltd., and their subsidiaries; |
• | “non-traditional financial service providers” refers to fintech companies, online-only TechFin companies and online lending platforms; |
• | “ordinary shares” refer to our ordinary shares of par value US$0.00001 per share; |
• | “outstanding balance of loans facilitated” refers to the total principal amount outstanding at the end of the given period for loans we facilitated; |
• | “Ping An ecosystem” refers to Ping An Group and its subsidiaries, affiliates and associates, including but not limited to OneConnect Financial Technology Co., Ltd. (NYSE: OCFT), or OneConnect; |
• | “Ping An Group” refers to Ping An Insurance and its subsidiaries; |
• | “Ping An Insurance” refers to Ping An Insurance (Group) Company of China, Ltd.; |
• | “Ping An P&C” refers to Ping An Property & Casualty Insurance Company of China, Ltd.; |
• | “registered users” refer to individuals who have registered on our platform using their mobile phone number, without regard to whether they subsequently engage in any transactions on our platform; |
• | “RMB” and “Renminbi” refer to the legal currency of China; and |
• | “volume of new loans facilitated” refers to the principal amount of new loans we facilitated during the given period. |
• | Our industry is rapidly changing, and our business has evolved significantly in recent years, which makes it difficult to evaluate our future prospects. |
• | A credit crisis or a prolonged downturn in the credit markets may materially and adversely impact our reputation, business, results of operations and financial position. |
• | If the total fees we charge for our retail credit facilitation service are deemed to be in excess of interest rate limits imposed by laws or regulatory bodies, part of the interests and fees may not be valid or enforceable through the PRC judicial system. |
• | The wealth management products displayed on our platform involve various risks, and failure to identify or fully appreciate such risks will negatively affect our reputation, client relationships, operations and prospects. |
• | We may not have access to sufficient and sustainable funding at reasonable costs. |
• | Our business is heavily regulated, and those regulations are complex and rapidly evolving, which makes compliance challenging. |
• | Any failure to obtain, renew or retain requisite approvals, licenses or permits applicable to our business may have a material adverse effect on us. |
• | Even as we modify our business model and practices to remain in compliance with PRC laws and regulations, our legacy products and historical practices may be deemed to violate PRC laws and regulations. |
• | If our credit assessment and risk management model is flawed or ineffective, or if the data that we collect for credit analysis inaccurately reflects the borrower’s creditworthiness, or if we fail or are perceived to fail to effectively manage the default risks of loans facilitated through our platform for any other reason, our business and results of operations may be adversely affected. |
• | Information regarding individuals to whom we provide our financial services may not be complete, and our ability to perform due diligence, detect borrower fraud or manage our risks may be compromised as a result. |
• | We must attempt to collect delinquent loans while not engaging in misconduct or permitting third-party agents to engage in misconduct during the collection progress. |
• | Our business may be materially and adversely affected by the effects of the outbreak of COVID-19 in China. |
• | Our cooperation with various third parties is integral to the smooth operation of our business and platform, but these third parties may fail to perform or provide reliable or satisfactory services. |
• | If we are unable to maintain or increase the amount of loans or investments we facilitate or if we are unable to retain existing borrowers and platform investors, or attract new borrowers or platform investors, our business may decline or fail to grow. |
• | Our principal shareholders have significant influence over our company and their interests may not be aligned with the interests of our other shareholders. |
• | We are a Cayman Islands holding company with no equity ownership in the consolidated affiliated entities and we conduct our operations in China primarily through (i) our subsidiaries in China, (ii) the consolidated affiliated entities with which we have contractual arrangements, and (iii) the subsidiaries of the consolidated affiliated entities. Investors thus are not purchasing direct equity interests in our operating entities in China but instead are purchasing equity interests in a Cayman Islands holding company. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries, the consolidated affiliated entities and their subsidiaries, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of our contractual arrangements with the consolidated affiliated entities and, consequently, significantly affect the financial performance of the consolidated affiliated entities and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to the risks disclosed under “Risk Factors—Risks Relating to Our Corporate Structure.” |
• | The contractual arrangements between our PRC subsidiaries and the consolidated affiliated entities may not be as effective as direct ownership in giving us operational control over our business. |
• | The consolidated affiliated entities or their shareholders may fail to perform their obligations under our contractual arrangements. |
• | The shareholders of the consolidated affiliated entities may have conflicts of interest with us. |
• | PRC laws and regulations are developing and evolving, and PRC judicial and administrative authorities have significant discretion in interpreting and implementing statutory and contractual terms. |
• | The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the internet industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, internet businesses in China, including our business. |
• | The PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations of this nature may cause the value of such securities to significantly decline. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PRC government’s significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs.” |
• | The approval of and filings with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether we will be able to obtain such approval or complete such filings or how long they might take. |
• | Our ADSs will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or in 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. |
• | The trading price of our ADSs is likely to be volatile. |
• | The sale or availability for sale of substantial amounts of our ADSs, particularly after the expiration of lock-up agreements from our initial public offering beginning on April 28, 2021, could adversely affect their market price. |
• | You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law. |
• | Certain judgments obtained against us by our shareholders may not be enforceable. |
• | our goals and strategies; |
• | our future business development, financial condition and results of operations; |
• | the expected changes in our income, expenses or expenditures; |
• | the expected growth of the retail credit facilitation and wealth management markets; |
• | our expectations regarding demand for and market acceptance of our services; |
• | our expectations regarding our relationship with borrowers, platform investors, funding sources, product providers and other business partners; |
• | competition in our industry; |
• | general economic and business conditions in China and elsewhere; |
• | government policies and regulations relating to our industry; and |
• | the outcome of any current and future legal or administrative proceedings. |
Hypothetical pre-tax earnings in the consolidated affiliated entities(1) |
100.00 | |||
Tax on earnings at statutory rate of 25% at the level of the wholly foreign-owned enterprise, or WFOE (2) |
(25.00 | ) | ||
Net earnings available for distribution |
75.00 | |||
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Withholding tax at standard rate of 10% (3) |
(7.50 | ) | ||
Net distributions to Lufax Holding Ltd/Shareholders |
67.50 | |||
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(1) | For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount is assumed to equal Chinese taxable income. |
(2) | Certain of our subsidiaries and consolidated affiliated entities qualify for a 15% preferential income tax rate in China. However, such rate is subject to qualification, is temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. |
(3) | The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the foreign invested enterprise’s immediate holding company is a tax resident in Hong Kong, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax would be applied. |
For the Year Ended December 31, 2021 |
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Lufax Holding Ltd |
Subsidiaries That Are Not Primary Beneficiaries of Consolidated Affiliated Entities |
Primary Beneficiaries of Consolidated Affiliated Entities |
Consolidated Affiliated Entities and Consolidated Affiliated Entities’ Subsidiaries |
Elimination |
Consolidation |
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(RMB in thousands) |
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Technology platform-based income: |
— | 36,018,357 | 917,668 | 1,358,292 | — | 38,294,317 | ||||||||||||||||||
Retail credit facilitation service fees |
— | 35,990,339 | — | 96,635 | — | 36,086,974 | ||||||||||||||||||
Wealth management transaction and service fees |
— | 28,018 | 917,668 | 1,261,657 | — | 2,207,343 | ||||||||||||||||||
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