YFY : 2022Q3 Consolidated Financial Statements

YFY Inc. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2022 and 2021 and Independent Auditors' Review Report

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders

YFY Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of YFY Inc. and its subsidiaries (collectively referred to as the "Group") as of September 30, 2022 and 2021, the related consolidated statements of comprehensive income for the three and nine months ended September 30, 2022 and 2021, the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2022 and 2021, and the related notes to the consolidated financial statements, including a summary of significant accounting policies. 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 and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As disclosed in Notes 14 and 15 to the consolidated financial statements, the financial statements of some non-significant subsidiaries and investments accounted for using the equity method included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of September 30, 2022 and 2021, the combined total assets of these non-significant subsidiaries were NT$34,054,389 thousand and NT$28,295,623 thousand, respectively, representing 24% and 21%, respectively, of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$10,045,139 thousand and NT$9,233,062 thousand, respectively, representing 14% and 13%, respectively, of the consolidated total liabilities; for the three and nine months ended September 30, 2022 and 2021, the amounts of combined comprehensive income of these non-significant subsidiaries were a gain of NT$953,590 thousand, a gain of NT$647,361 thousand, a gain of NT$1,634,331 thousand and a gain of NT$1,124,131 thousand, respectively, representing 27%, 31%, 21% and 14%, respectively, of the consolidated total comprehensive income. As of September 30, 2022 and 2021, the carrying amounts of the above mentioned investments accounted for using the equity method were NT$140,577 thousand and NT$168,309 thousand, respectively; for the three and nine months ended September 30, 2022

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and 2021, the amounts of comprehensive income (loss) of investments accounted for using the equity method were a loss of NT$3,821 thousand and a loss of NT$14,087 thousand, a loss of NT$19,338 thousand and a gain of NT$21,620 thousand, respectively.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and investments accounted for using the equity method as described in the preceding paragraph been reviewed, nothing has come to our attention that has caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of September 30, 2022 and 2021, its consolidated financial performance for the three months ended September 30, 2022 and 2021, and its consolidated financial performance and consolidated cash flows for the nine months ended September 30, 2022 and 2021 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors' review report are Chih-Ming Shao and Hui-Min Huang.

Deloitte & Touche

Taipei, Taiwan

Republic of China

November 11, 2022

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 review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors' review 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' review report and consolidated financial statements shall prevail.

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YFY INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

			September 30, 2022				December 31, 2021				September 30, 2021
			(Reviewed)						(Audited)						(Reviewed)
ASSETS			Amount	%					Amount	%					Amount	%
CURRENT ASSETS (Note 4)
Cash and cash equivalents (Note 6)	$	9,419,988		7		$	6,534,090	5		$	7,000,571		5
Current financial assets at fair value through profit or loss (Note 7)			1,167,703		1					3,026,461	2					2,731,412		2
Current financial assets at fair value through other comprehensive income (Notes 8
and 32)			8,228,024		6					7,675,476	6					6,596,574		5
Current financial assets at amortized cost (Note 9)			2,472,484		2					4,352,267	3					4,250,456	3
Notes receivable, net (Notes 10, 22 and 33)			2,777,214		2					4,431,191	3					4,498,784		3
Accounts receivable, net (Notes 10 and 22)			13,114,759		9					13,092,096	10				11,677,863		9
Accounts receivable due from related parties, net (Notes 22 and 32)			54,603	-					71,403	-					65,738	-
Current inventories (Note 11)			11,814,691		8					11,705,050		9					11,308,330		9
Current biological assets (Note 12)			3,353,409	2					3,193,535	2					3,222,758	2
Prepayments			1,874,953		1					1,504,008	1					1,997,752		2
Disposal group classified as held for sale (Note 13)			-		-					-		-					56,558	-
Other current financial assets (Note 33)			910,648		1					345,076	-					372,475	-
Other current assets, others (Note 32)			882,424		1					692,009	1					759,748	1
Total current assets			56,070,900		40					56,622,662		42				54,539,019		41
NON-CURRENT ASSETS (Note 4)
Non-current financial assets at fair value through other comprehensive income (Notes 8
and 32)			17,860,902		13					15,919,513		12				15,222,414		12
Non-current financial assets at amortized cost (Note 9)			1,542,825		1					434,148	-					429,426	-
Investments accounted for using equity method (Note 15)			7,014,549		5					6,102,801	4					5,617,689		4
Property, plant and equipment (Notes 16 and 33)			48,978,209	35					48,402,268		35				48,147,913		36
Right-of-use assets (Notes 17 and 33)			2,120,637		1					2,037,520	2					1,939,430		2
Investment property, net (Notes 18 and 32)			3,988,355		3					3,532,991	3					3,542,767		3
Goodwill			538,380		-					470,573	-					473,452	-
Deferred tax assets			316,870		-					351,334	-					320,322	-
Prepayments for business facilities (Note 16)			1,118,612		1					1,519,458	1					1,346,028		1
Net defined benefit asset, non-current (Note 20)			801,936		1					710,988	1					511,547	1
Other non-current assets, others (Note 33)			309,540		-					330,008	-					340,079	-
Total non-current assets			84,590,815	60					79,811,602		58				77,891,067		59
TOTAL ASSETS	$	140,661,715		100		$	136,434,264		100	$	132,430,086		100
LIABILITIES AND EQUITY
CURRENT LIABILITIES (Note 4)
Current borrowings (Notes 19 and 33)	$	9,639,792		7		$	10,079,552		8		$	11,113,775		8
Short-term notes and bills payable (Note 19)			11,018,218		8					9,296,157	7					13,865,010		11
Current financial liabilities at fair value through profit or loss (Notes 7 and 31)			23,664	-					69,687	-					46,116	-
Current contract liabilities (Note 22)			504,306		-					516,177	-					550,162	-
Notes and accounts payable			11,201,540	8					12,225,726		9					11,441,783		9
Accounts payable to related parties (Note 32)			112,819		-					57,012	-					70,693	-
Other payables, others (Note 16)			3,999,848		3					4,377,129	3					4,081,138		3
Current tax liabilities			609,496		1					1,437,612	1					1,244,494		1
Current lease liabilities (Note 17)			200,680		-					177,846	-					153,038	-
Liabilities related to disposal group classified as held for sale (Note 13)			-		-					-		-					4,331	-
Long-term liabilities, current portion (Notes 19 and 33)			300,000		-					57,933	-					800,000	1
Other current liabilities, others (Note 32)			1,458,974		1					1,221,889	1					1,172,539		1
Total current liabilities			39,069,337		28					39,516,720		29				44,543,079		34
NON-CURRENT LIABILITIES (Note 4)
Non-current portion of non-current borrowings (Notes 19 and 33)			26,401,705		19					26,519,989		20				20,647,973		16
Deferred tax liabilities			3,610,923		3					3,603,758	3					3,586,250		3
Non-current lease liabilities (Note 17)			509,894		-					471,777	-					397,310	-
Net defined benefit liability, non-current (Note 20)			39,662	-					37,233	-					44,292	-
Other non-current liabilities, others			434,331		-					478,655	-					387,600	-
Total non-current liabilities			30,996,515		22					31,111,412		23				25,063,425		19
Total liabilities			70,065,852		50					70,628,132		52				69,606,504		53
EQUITY ATTRIBUTABLE TO OWNERS OF PARENT (Notes 4, 13, 21, 26 and 29)
Share capital			16,603,715		12					16,603,715		12				16,603,715		12
Capital surplus			3,468,619		3					3,288,518	2					3,250,210		2
Retained earnings			22,842,352		16					22,919,766	17				22,162,476		17
Other equity interest			12,827,329		9					8,389,401	6					6,385,153		5
Total equity attributable to owners of parent			55,742,015		40					51,201,400		37				48,401,554	36
NON-CONTROLLING INTERESTS			14,853,848		10					14,604,732		11				14,422,028		11
Total equity			70,595,863		50					65,806,132		48				62,823,582		47
TOTAL LIABILITIES AND EQUITY	$	140,661,715		100		$	136,434,264		100	$	132,430,086		100

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated November 11, 2022)

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YFY INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

		For the Three Months Ended September 30					For the Nine Months Ended September 30
	2022			2021				2022			2021
		Amount	%				Amount	%				Amount	%				Amount	%
OPERATING REVENUE
(Notes 4, 22 and 32)
Net sales revenue	$ 17,847,395	87	$ 15,864,820		80	$ 52,441,494	87	$ 50,739,793	80
Other operating revenue, net		2,557,122		13	3,921,586			20	7,844,788	13	12,911,320	20
Total operating revenue		20,404,517	100	19,786,406		100	60,286,282	100	63,651,113	100
OPERATING COSTS (Notes 11,
23 and 32)
Cost of sales	15,761,569	77	13,596,902		69	45,617,604	75	41,494,350	65
Other operating costs		1,922,739		10	2,380,489			12	5,946,361	10	7,290,254	11
Total operating costs		17,684,308	87	15,977,391		81	51,563,965	85	48,784,604	76
GAIN (LOSS) ON CHANGES
IN FAIR VALUE LESS
COSTS TO SELL OF
BIOLOGICAL ASSETS
(Notes 4 and 12)	(14)	-	698		-	(970)	-	2,848	-
GROSS PROFIT FROM
OPERATIONS	2,720,195		13	3,809,713			19	8,721,347	15	14,869,357	24
OPERATING EXPENSES
(Notes 23 and 32)
Selling expenses	1,437,530		7	1,343,727			7	4,296,025	7	4,249,474	7
Administrative expenses	971,588	4	982,422		5	2,812,796	5	2,886,567	4
Research and development
expenses		159,159	1	135,263		1	459,838	1	482,709	1
Total operating expenses		2,568,277		12	2,461,412		13	7,568,659	13	7,618,750	12
NET OPERATING INCOME		151,918	1	1,348,301			6	1,152,688	2	7,250,607	12
NON-OPERATING INCOME
AND EXPENSES
Finance costs, net (Notes 4
and 23)	(249,769)	(1)	(142,314)		(1)	(578,578)	(1)	(404,480)	(1)
Share of profit of associates
accounted for using equity
method, net (Notes 4 and 15)	682,801	3	190,001		1	1,289,308	2	742,607	1
Interest income	80,640	-	27,917		-	165,594	-	82,622	-
Rent income (Notes 18 and 32)	15,411	-	16,205		-	40,938	-	65,338	-
Dividend income	941,973	5	872,739		4	990,379	2	909,264	1
Other income, others (Note 27)	137,500	1	129,738		1	304,934	1	371,685	1
Gains (losses) on disposal of
property, plant and
equipment	(1,946)	-	7,418		-	2,490	-	26,195	-
Gains on disposal of
investment property	28	-	-		-	133,442	-	-	-
Gains (losses) on financial
assets or liabilities at fair
value through profit or loss
(Note 4)	498,458	2	(27,160)		-	906,038	2	(93,270)	-
Miscellaneous disbursements	(9,917)	-	(21,313)		-	(29,578)	-	(39,275)	-
Foreign exchange losses
(Note 36)	(402,727)	(2)	(68,889)		-	(935,093)	(2)	(172,714)	-
Total non-operating
income and expenses		1,692,452		8	984,342		5	2,289,874	4	1,487,972	2
																					(Continued)

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