Fubon Financial : Securities Financial Statements(Consolidated) 2022 Q2

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Stock Code:000960

FUBON SECURITIES CO., LTD. AND

SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Report

For the Six Months Ended June 30, 2022 and 2021

The independent auditors' report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' report and consolidated financial statements, the Chinese version shall prevail.

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Table of contents

		Contents		Page
1.	Cover Page	1
2.	Table of Contents	2
3.	Independent Auditors' Report	3
4.	Consolidated Balance Sheets	4
5.	Consolidated Statements of Comprehensive Income	5
6.	Consolidated Statements of Changes in Equity	6
7.	Consolidated Statements of Cash Flows	7
8.	Notes to the Consolidated Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted	9～10
	(4)	Summary of significant accounting policies	11～29
	(5)	Significant accounting assumptions and judgments, and major sources	29～30
		of estimation uncertainty
	(6)	Explanation of significant accounts	30～115
	(7)	Related-party transactions	115～132
	(8)	Pledged assets	133
	(9)	Commitments and contingencies	133
	(10)	Losses Due to Major Disasters	133
	(11)	Subsequent Events	133
	(12)	Other	134～137
	(13)	Other disclosures
		(a) Information on significant transactions	137～138
		(b) Information on investees	139
		(c) Information on overseas branches and representative offices	139
		(d) Information on investment in mainland China	139
		(e) Disclosures required for securities firm investing in countries or regions	140～141
		without securities authority
	(14)	Segment information	141～142

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Independent Auditors' Report

To the Board of Directors

Fubon Securities Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Fubon Securities Co., Ltd. and its subsidiaries ("the Group"), which comprise the consolidated statements of financial position as of June 30, 2022, December 31 and June 30, 2021, and the consolidated statements of comprehensive income for the three months and six months ended June 30, 2022 and 2021, as well as the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2022 and 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2022, December 31 and June 30, 2021, and its consolidated financial performance for the three months and six months ended June 30, 2022 and 2021, as well as its consolidated cash flows for the six months ended June 30, 2022 and 2021, in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Firms", "Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants", and International Accounting Standard 34, "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the " Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants" and the auditing standards generally accepted in 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 Group in accordance with the Certified Public Accountants Code of Professional Ethics in the Republic of China ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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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 six months ended June 30, 2022. 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.

1. The valuation of financial instruments
   Please refer to Note 4 (g) "Financial instruments" for related accounting policy, Note 5 (a) for accounting assumptions and estimates, and Note 6 (ah) "Disclosure of financial instruments" for details of valuation on financial instruments.
   The valuation of several financial instruments of the Group are measured using the valuation models, which involved the exercise of professional judgments on valuation techniques and important parameters. Therefore, the valuation on financial instruments has been identified as a key audit matter in our audit.
   We performed our audit procedures by:
2. • Inspecting the internal control procedures for fair value measurement performed by the management.
   • Selecting samples to evaluate whether the quoted prices in active markets for financial assets are appropriate.
   • Appointing our valuation specialists to assess the reasonableness of valuation techniques and to test the key parameters of financial assets without active market prices, wherein valuation models are used to ensure that the applied valuation techniques are in accordance with IFRS 13 "Fair Value Measurement".
   • Verifying whether the presentation and disclosure of financial instruments are in accordance with the International Financial Reporting Standards.
3. The valuation of investment property
   Please refer to Note 4 (m) "Investment property" for related accounting policy, Note 5 (b) for accounting assumptions and estimates, and Note 6 (m) "Investment property" for details of the valuation of investment properties.
   The Group holds several investment properties. The investment property appraisals are performed by appraisers from professional valuation agencies using the valuation techniques provided by the "Regulations on Real Estate Appraisal" and market evidences in accordance with the " Regulations Governing the Preparation of Financial Reports by Securities Firms" . The selection of appraising methods involved the exercise of significant professional judgments. Therefore, the valuation of investment properties has been identified as a key audit matter in our audit.
   We performed our audit procedures by:
4. • Inspecting whether the internal control procedure of investment property appraisals performed by professional evaluation agencies is in accordance with the " Regulations Governing the Preparation of Financial Reports by Securities Issuers".
   • Verifying whether the presentation and disclosure of investment property are in accordance with IFRSs and the "Regulations Governing the Preparation of Financial Reports by Securities Firms".
   • Evaluating the reasonableness of the management's assessment on the valuation of investment property based on the evidences obtained from the audit team and the external estate appraiser joint firms, as well as appraisal reports and observable market evidences.

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Other Matter

Fubon Securities Co., Ltd. has prepared its parent company only financial statements as of and for the six months ended June 30, 2022 and 2021, on which we have issued an unmodified opinion.

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

The 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 Firms" ,

• Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants" and International Accounting Standard 34, "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as the 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, the 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 (including the Audit Committee) are responsible for overseeing the Group's 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 auditing standards generally accepted in 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.

As part of an audit in accordance with auditing standards generally accepted in 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 Group's internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.