DGB Financial : FY2022 Audit Report(Consolidated)

DGB FINANCIAL GROUP CO., LTD. and its subsidiaries

Consolidated Financial Statements

For the years ended December 31, 2022 and 2021 (With Independent Auditor's Report Thereon)

DGB FINANCIAL GROUP CO., LTD. and its subsidiaries

Table of contents

Page

Independent Auditor's Report

Consolidated Financial statements
Consolidated statements of financial position	1
Consolidated statements of comprehensive income	2
Consolidated statements of changes in equity	4
Consolidated statements of cash flows	5
Notes to the consolidated financial statements	9

Ernst & Young Han Young

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Independent Auditor's Report

(English Translation of a Report Originally Issued in Korean)

The Shareholders and Board of Directors

DGB Financial Group Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of DGB Financial Group Co., Ltd. and its subsidiaries (collectively referred to as the "Group"), which comprise the consolidated statements of financial position as of December 31, 2022 and 2021, and the consolidated statements of other comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021 and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as adopted by the Republic of Korea ("KIFRS").

Basis for opinion

We conducted our audit in accordance with Korean Standards on Auditing ("KSA"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Republic of Korea, 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 of the current period. 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. For each matter below, our description of how our audit addressed the matter is provided in that context.

(1) The assessment of allowance for doubtful account and loans at amortized cost

As mentioned in Note 3 (Significant accounting policy) to the consolidated financial statements, the Group recognizes an allowance for doubtful account by assessing the expected credit loss impairment model for loans at amortized cost.

The expected credit loss model requires that the allowance for doubtful account be measured in an amount equivalent to 12-month expected credit loss or lifetime expected credit loss, depending on the degree of increase in credit risk after initial recognition of a financial asset.

The management has significant judgment on determination of the degree of increase in credit risk for allowance for doubtful account assessment, estimation of risk factors such as Probability of Default, Loss Given Default, estimation of future prospect information, future cash flow and discount rate related to

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individual assessment. Therefore, it was determined that the auditor's significant attention was required, and it was decided as a key audit matter.

As of the end of the reporting period in Note 11 to the consolidated financial statements, the loans at amortized cost to which the Group applies the expected credit loss model are KRW 60,737,885 million, and the related allowance for doubtful account is KRW 648,675 million. The main audit procedures we performed in response to the management's claim on the assessment of allowance for doubtful account and loans at amortized cost are as follows.

• We performed analytical procedures, inspected the methodological document and tested the adequacy of the Stage classification.
• We involved our specialist to assist in document inspection and testing of the estimation methodologies of PD (Probability of Default) and LGD (loss Given Default).
• We involved our specialist to assist in document inspection on the method for estimating future prospect information.
• We performed inquiries about the adequacy of future cash flow estimation and the discount rate used in relation with the calculation of allowances for individual evaluation andinspected and tested the relevant documents.
• We evaluated the appropriateness of the method of reflecting future economic forecast scenarios for COVID-19 and their calculation process.

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 KIFRS, 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 Group's 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 Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's 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 auditor's 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 KSA 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.

As part of an audit in accordance with KSA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• 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.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

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are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• 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 Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's 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 auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group 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 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 of the current period and are therefore the key audit matters. We describe these matters in our auditor's 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.

Other matter

The consolidated statements of cash flows for the year ended December 31, 2021, attached for comparison, were restated after reflecting changes in restricted deposits including reserve deposits, described in Note 2-

5. The restatement had no impact on the Group's net assets as of December 31, 2021 and its net income for the reporting period ended thereon.

The engagement partner on the audit resulting in this independent auditor's report is Kwan-Cheol Oh.

March 14, 2023

This audit report is effective as of March 14, 2023, the independent auditor's report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of the independent auditor's report to the time this report is used. Such events and circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to this report.

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