The trademarks and licenses were intangible assets acquired in business combinations as part of the reorganization of the Group. Most of the trademarks and licenses acquired were determined to have indefinite useful lives as there is no foreseeable limit to the period over which these assets are expected to generate net cash inflows for the Group.

For the purposes of impairment assessment, the recoverable amount of the trademarks and licenses with indefinite life was determined based on the higher of the fair value less cost of disposal and calculations. Given there is no active market for the Group’s trademarks and licenses with indefinite life, management did the calculations to determine the recoverable amounts based on discounted cash flows projections.

Based on management’s assessment on the recoverable amounts of the intangible assets, impairment losses amounting to nil, nil and RMB28 million were recognized for the years ended December 31, 2023, 2024 and 2025, respectively. However, subsequent impairment tests may be based on different assumptions and future cash flow projections, which may result in impairment losses for these assets in the foreseeable future.

The trademarks and licenses of the Group are primarily related to trademark rights of Puhui of RMB801 million. As the contractual tenor of its loan products is generally 36 months, the cash flow forecast period of Puhui was eight years based on a financial budget covering a five-year period approved by management. The key assumption used for calculations of trademark rights of Puhui is as follows:

 

Management has determined the values assigned to the above key assumption as follows:

 

The excess of the recoverable amount of Puhui’s trademark over its carrying amount:

 

As of December 31, 2024 and 2025, the discount rates applied to the cash flow projections were 20% and 20%, respectively. As of December 31, 2024 and 2025, the long-term growth rate used to extrapolate cash flow projections beyond the budget period were 2% and 2%, respectively.

While it is impracticable for the Group to estimate the impact on future periods, the following table sets forth the impact of management judgement of reasonably possible scenarios in the above key assumption, with all other variables held constant, on the impairment testing of Puhui’s trademark rights impairment testing at the dates indicated. As shown below, the possible changes of the key parameter would not cause the carrying amount of trademark rights of Puhui to exceed its recoverable amount at the dates indicated.