China Development Financial : CDIB Capital Group

CDIB Capital Group and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022 and Independent Auditors' Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" for the year ended December 31, 2023 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 "Consolidated Financial Statements". Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

CDIB CAPITAL GROUP

March 8, 2024

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INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder

CDIB Capital Group

Opinion

We have audited the accompanying consolidated financial statements of CDIB Capital Group (the "Corporation") and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2023 and 2022, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the "consolidated financial statements").

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Corporation and its subsidiaries as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Corporation and its subsidiaries in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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The key audit matter for the Corporation and its subsidiaries' consolidated financial statements for the year ended December 31, 2023 is stated as follows:

Fair Value Measurement of Financial Instruments with No Quoted Market Prices in An Active Market

Management uses a valuation model to calculate the fair value of financial instruments with no quoted market prices in an active market. Parameters used in the valuation model are unobservable inputs. Due to the fact that the inputs involve material managerial estimation and judgment, we identified the valuation as a key audit matter for the year ended December 31, 2023.

Refer to Notes 4, 5 and 31 for the relevant accounting policies, material accounting judgments, estimation uncertainty, and disclosures of fair value measurement of financial instruments with no quoted market prices in an active market.

We obtained an understanding of and assessed the Corporation's internal control related to the evaluation of financial assets with no quoted market prices in an active market and its operation effectiveness. We selected samples from the financial assets with no quoted market prices in an active market, and we evaluated and re-performed the appropriateness of the parameters, such as the selection of comparable companies and the reasonableness of the financial multipliers used in the valuation models.

Other Matter

We have also audited the financial statements of the Corporation as of and for the years ended December 31, 2023 and 2022 on which we have issued an unmodified opinion thereon, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, IFRS, IAS, and International Financial Reporting Interpretations endorsed by the FSC of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Corporation and its subsidiaries' ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Corporation and its subsidiaries' financial reporting process.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation and its subsidiaries' internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation and its subsidiaries' ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Corporation and its subsidiaries to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Corporation and its subsidiaries to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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The engagement partners on the audits resulting in this independent auditors' report are Yi-Chun Wu and Jr-Shian Ke.

Deloitte & Touche

Taipei, Taiwan

Republic of China

March 8, 2024

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors' report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors' report and consolidated financial statements shall prevail.

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CDIB CAPITAL GROUP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 AND 2022

(In Thousands of New Taiwan Dollars)

			2023							2022
ASSETS			Amount	%					Amount	%
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6, 29 and 31)	$	3,436,317	9		$	4,813,833	13
Financial assets at amortized cost - current (Notes 4 and 31)			1,182,668	3					-		-
Other receivables (Notes 7 and 31)			73,787	-					39,204	-
Current tax assets (Notes 4, 27 and 29)			226,421	1					239,891	1
Other current assets			46,047		-					47,161	-
Total current assets			4,965,240		13					5,140,089	14
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Notes 4, 8, 10, 29 and 31)			22,295,602	58					19,599,059	55
Financial assets at amortized cost - non-current (Notes 4 and 31)			877,726	2					1,424,049	4
Investments accounted for using the equity method (Notes 4, 9, 10 and 29)			9,390,269	24					8,543,715	24
Property and equipment (Notes 4, 11 and 29)			252,178	1					260,852	1
Right-of-use assets (Notes 4, 12 and 29)			675,938	2					765,186	2
Investment properties (Notes 4 and 13)			3,502	-					79,350	-
Other non-current assets (Notes 4, 14, 29 and 31)			88,973		-					107,668	-
Total non-current assets			33,584,188		87					30,779,879	86
TOTAL	$	38,549,428	100		$	35,919,968	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 15 and 31)	$	4,125,948	11		$	3,940,762	11
Short-term bills payable (Note 31)			219,979	-					-		-
Other payables (Notes 16, 29 and 31)			1,852,509	5					1,570,602	5
Current tax liabilities (Notes 4, 27 and 29)			654,361	2					686,936	2
Lease liabilities - current (Notes 4, 12 and 29)			94,420	-					96,142	-
Other current liabilities (Note 29)			73,903	-					97,402	-
Current portion of bonds payable (Notes 17 and 31)			222,289		1					-		-
Total current liabilities			7,243,409	19					6,391,844	18
NON-CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss - non-current (Notes 4, 8, 29 and 31)			7,349	-					-		-
Bonds payable (Notes 17 and 31)			117,333	-					-		-
Provisions - non-current (Notes 4, 18 and 19)			62,477	-					64,682	-
Deferred tax liabilities (Notes 4 and 27)			286,203	1					245,418	1
Lease liabilities - non-current (Notes 4, 12 and 29)			629,636	2					710,639	2
Other non-current liabilities (Notes 20 and 31)			8,314		-					7,787	-
Total non-current liabilities			1,111,312		3					1,028,526	3
Total liabilities			8,354,721		22					7,420,370	21
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 21)
Capital			20,411,159	53					20,411,159	57
Capital surplus (Note 22)			722,753	2					661,702	2
Retained earnings
Legal reserve			6,212,141	16					6,212,141	17
Special reserve			7,450	-					495,961	2
Unappropriated earnings			2,075,722	5					449,296	1
Other equity			654,116		2					166,539	-
Total equity attributable to owners of the parent			30,083,341		78					28,396,798	79
NON-CONTROLLING INTERESTS			111,366		-					102,800	-
Total equity			30,194,707		78					28,499,598	79
TOTAL	$	38,549,428	100		$	35,919,968	100

The accompanying notes are an integral part of the consolidated financial statements.

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CDIB CAPITAL GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

												Percentage
												Increase
	2023			2022			(Decrease)
		Amount	%				Amount	%		%
OPERATING REVENUE
Share of profit or loss of associates
and joint ventures (Notes 4 and 9)	$ 750,126		22		$ (669,819)	(101)	212
Gain on financial assets and liabilities
measured at fair value through profit
or loss (Notes 4 and 23)	2,183,537		62		767,252	116		185
Consulting service revenue (Note 29)	562,992		16		611,258	92		(8)
Other operating revenue and loss
(Note 29)		-		-			(45,226)	(7)	100
Total operating revenue		3,496,655		100			663,465	100		427
OPERATING COSTS
Expected credit loss		73,229		2			81,186	12		(10)
GROSS PROFIT		3,423,426		98			582,279	88		488
OPERATING EXPENSES (Notes 4, 19,
22, 24, 25 and 29)	(1,578,388)	(45)	(1,332,770)	(201)	18
PROFIT (LOSS) FROM OPERATIONS	1,845,038		53		(750,491)	(113)	346
NON-OPERATING INCOME AND
EXPENSES
Foreign exchange loss, net	(26,830)	(1)	(114,010)	(17)	(76)
Interest income (Notes 4 and 29)	446,714		13		321,191	48		39
Finance costs (Note 29)	(118,311)	(4)	(54,117)	(8)	119
Gain on disposal of property and
equipment (Notes 13 and 29)	-		-		50,273	8		(100)
Gain on disposal of investment
properties (Note 13)	58,737		2		153,315	23		(62)
Other gains and losses	24,402		1		65,546	10		(63)
Total non-operating income and
expenses	384,712		11		422,198	64		(9)
												(Continued)

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CDIB CAPITAL GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

														Percentage
														Increase
			2023						2022			(Decrease)
			Amount	%					Amount	%		%
PROFIT (LOSS) BEFORE INCOME
TAX FROM CONTINUING
OPERATIONS	$	2,229,750		64		$	(328,293)	(49)	779
INCOME TAX BENEFIT (EXPENSE)
(Notes 4 and 27)			(71,850)	(2)				13,876	2		(618)
NET PROFIT (LOSS) FOR THE YEAR			2,157,900		62					(314,417)	(47)	786
OTHER COMPREHENSIVE INCOME
(LOSS)
Items that will not be reclassified
subsequently to profit or loss, net of
income tax
Remeasurement of defined benefit
plans			(4,530)	-					50,776	8		(109)
Share of the other comprehensive
income (loss) of associates and
joint ventures			460,815		13					(822,284)	(124)	156
Items that will be reclassified
subsequently to profit or loss, net of
income tax
Exchange differences on translation
of financial statements of foreign
operations			(39,379)	(1)				1,715,821	258		(102)
Loss on debt instruments measured
at fair value through other
comprehensive income			-		-					(160)	-		100
Share of the other comprehensive
income (loss) of associates and
joint ventures			(10,954)	(1)				521,618	79		(102)
Other comprehensive income
(loss) for the year, net of
income tax			405,952		11					1,465,771	221		(72)
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR	$	2,563,852		73		$	1,151,354	174		123
														(Continued)

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CDIB CAPITAL GROUP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

														Percentage
														Increase
			2023						2022			(Decrease)
			Amount	%					Amount	%		%
NET PROFIT (LOSS)
ATTRIBUTABLE TO:
Shareholder of parent company	$	2,155,387		62		$	(320,336)	(48)	773
Non-controlling interests			2,513		-					5,919	1		(58)
		$	2,157,900		62			$	(314,417)	(47)	786
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Shareholder of parent company	$	2,563,299		73		$	1,144,089	173		124
Non-controlling interests			553		-					7,265	1		(92)
		$	2,563,852		73			$	1,151,354	174		123
EARNINGS (LOSS) PER SHARE
(Note 27)
Basic			$1.06							$(0.16)

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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