Goodwill

12 Months Ended

Dec. 31, 2025

27.

Goodwill


	As of January 1, 2024			Increase		Decrease			Foreign exchange adjustments		As of December 31, 2024
	RMB’000			RMB’000		RMB’000			RMB’000		RMB’000
Puhui (a)		8,911,445			—		—			—		8,911,445
Pingan Jixin		67,752			—		—			—		67,752
Lu International (Hong Kong) Limited		6,663			—		(6,663	)		—		—
PAObank (b)		—			258,592		—			5,502		264,094

		8,985,860			258,592		(6,663	)		5,502		9,243,291
Less: Impairment losses (c)		(74,415	)		—		6,663			—		(67,752	)

		8,911,445			258,592		—			5,502		9,175,539


	As of January 1, 2025			Increase		Decrease		Foreign exchange adjustments			As of December 31, 2025
	RMB’000			RMB’000		RMB’000		RMB’000			RMB’000
Puhui (a)		8,911,445			—		—		—			8,911,445
Pingan Jixin		67,752			—		—		—			67,752
PAObank (b)		264,094			—		—		(6,508	)		257,586

		9,243,291			—		—		(6,508	)		9,236,783
Less: Impairment losses (c)		(67,752	)		—		—		—			(67,752	)

		9,175,539			—		—		(6,508	)		9,169,031

As of December 31, 2025, the goodwill related to Pingan Jixin was fully impaired. The goodwill related to Lu International (Hong Kong) Limited was written off.

(a)

The Company acquired a 100% equity interest in Gem Alliance Limited (an investment holding company incorporated in the Cayman Islands and principally engaged in retail credit and enablement business in the PRC through its wholly-owned subsidiary, hereinafter “Puhui”) from China Ping An Insurance Overseas (Holdings) Limited (“PAOH”), which was completed in May 2016. Since then, the Company conducted the retail credit and enablement business primarily through Puhui.

(b)

The Company acquired a 100% equity interest in Jin Yi Tong Limited (a company with limited liability incorporated in the British Virgin Islands and indirectly holds 100% of the issued share capital of PAObank through its wholly-owned subsidiary, Jin Yi Rong Limited, which is a company with limited liability incorporated in Hong Kong) from OneConnect Financial Technology Co., Ltd., which was completed in April 2024.

(c)	Impairment testing for goodwill

The Group carries out its impairment testing on goodwill by comparing the recoverable amounts of CGUs to their carrying amounts. The recoverable amount of CGU is the higher of

value-in-use

and fair value less costs of sale. In respect of the recoverable amount using value in use, the calculation used discounted cash flow projections based on financial budgets approved by management. In respect of the recoverable amount based on fair value less costs of disposal, the amount is calculated using certain valuation assumptions including the selection of comparable companies, and liquidity discounts adopted for lack of marketability for unlisted investments.

Based on management’s assessment on the recoverable amounts of the CGUs, no impairment loss was recognized for the years ended December 31, 2023, 2024 and 2025, respectively. As of December 31, 2023, 2024 and 2025, the results of recoverable amount exceeded the carrying amount of each related CGU. However, subsequent impairment tests may be based on different assumptions and future cash flow projections, which may result in impairment losses of these assets in the foreseeable future.

The goodwill of the Group is primarily related to the goodwill of Puhui of RMB8,911 million. The recoverable amounts of the CGU related to the goodwill of Puhui were determined based on

value-in-use

calculations. 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 assumptions used for

value-in-use

calculations of the goodwill of Puhui are as follows:


	December 31, 2024		December 31, 2025
Revenue growth rates		-1.1% -16.1%		-16.4% -11.0%
Loan loss rates		2.9%-9.0%		3.8%-10.5%

Management has determined the values assigned to each of the above key assumptions as follows:


Assumption		Approach used to determine values
Revenue growth rates		Based on recent policy and industry factors, past performances and management’s expectations of business development.
Loan loss rates		Based on past performances and management’s expectations for the future.

The excess of the recoverable amount of Puhui over its carrying amount:


	December 31, 2024		December 31, 2025
	RMB’000		RMB’000
Excess of the recoverable amount of the CGU (or CGU group) over its carrying amount (“Headroom”)		4,583,304		4,497,688

As of December 31, 2024 and 2025, the

pre-tax

discount rates applied to the cash flow projections were 19% and 19%, respectively. As of December 31, 2024 and 2025, the long-term growth rates 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 reasonable possible scenarios in each of the key assumptions, with all other variables held constant, on Puhui’s impairment testing at the dates indicated. As shown below, the possible changes of key parameters would not cause the carrying amount of the CGU to exceed its recoverable amount at the dates indicated.


	Unfavorable change							Favorable change
	Change in assumption		Change in Headroom			Headroom		Change in assumption		Change in Headroom		Headroom
			RMB’000			RMB’000				RMB’000		RMB’000
As of December 31, 2024
Revenue growth rates (GAGR)		-230BP		(2,463,604	)		2,119,700		+230BP		2,673,028		7,256,332
Loan loss rates		+50BP		(3,906,215	)		677,089		-50BP		3,906,215		8,489,519

As of December 31, 2025
Revenue growth rates (GAGR)		-230BP		(1,931,203	)		2,566,485		+230BP		2,105,965		6,603,653
Loan loss rates		+50BP		(3,294,609	)		1,203,079		-50BP		3,294,609		7,792,297