YFY : 2022Q2 Consolidated Financial Statements

YFY Inc. and Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 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 June 30, 2022 and 2021, the related consolidated statements of comprehensive income for the three and six months ended June 30, 2022 and 2021, the consolidated statements of changes in equity and cash flows for the six months ended June 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 13 and 14 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 June 30, 2022 and 2021, the combined total assets of these non-significant subsidiaries were NT$26,212,765 thousand and NT$22,746,920 thousand, respectively, representing 19% and 17%, respectively, of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$8,396,842 thousand and NT$6,834,865 thousand, respectively, representing 12% and 10%, respectively, of the consolidated total liabilities; for the three and six months ended June 30, 2022 and 2021, the amounts of combined comprehensive income of these non-significant subsidiaries were a loss of NT$263,225 thousand, a gain of NT$74,162 thousand, a gain of NT$680,741 thousand and a gain of NT$476,770 thousand, respectively, representing 22%, 3%, 16% and 8%, respectively, of the consolidated total comprehensive income. As of June 30, 2022 and 2021, the carrying amounts of the above mentioned investments accounted for using the equity method were NT$147,621 thousand and NT$165,408 thousand, respectively; for the three and six months ended June 30, 2022 and 2021,

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the amounts of comprehensive income (loss) of investments accounted for using the equity method were a loss of NT$2,508 thousand, a gain of NT$30,798 thousand, a loss of NT$15,517 thousand and a gain of NT$35,707 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 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 June 30, 2022 and 2021, its consolidated financial performance for the three months ended June 30, 2022 and 2021, and of its consolidated financial performance and 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 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 Hui-Min Huang and Ya-Ling Wong.

Deloitte & Touche

Taipei, Taiwan

Republic of China

August 12, 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)

			June 30, 2022						December 31, 2021				June 30, 2021
			(Reviewed)						(Audited)						(Reviewed)
ASSETS			Amount	%					Amount	%					Amount	%
CURRENT ASSETS (Note 4)
Cash and cash equivalents (Note 6)	$	8,228,185		6		$	6,534,090	5		$	6,378,336		5
Current financial assets at fair value through profit or loss (Note 7)			2,686,764		2					3,026,461	2					3,186,634		2
Current financial assets at fair value through other comprehensive income (Notes 8
and 30)			7,935,052		6					7,675,476	6					6,615,716		5
Current financial assets at amortized cost (Note 9)			3,612,150		3					4,352,267	3					4,245,482		3
Notes receivable, net (Notes 10, 21 and 31)			2,825,550		2					4,431,191	3					4,576,096		4
Accounts receivable, net (Notes 10 and 21)			12,643,351		9					13,092,096	10				12,346,969		9
Accounts receivable due from related parties, net (Notes 21 and 30)			59,257	-					71,403	-					69,048	-
Current inventories (Note 11)			11,482,125		8					11,705,050		9					10,365,271		8
Current biological assets (Note 12)			3,291,734	2					3,193,535	2					3,247,952	3
Prepayments			1,537,081		1					1,504,008	1					1,595,051		1
Other current financial assets (Note 31)			675,657	1					345,076	-					174,030	-
Other current assets, others (Note 30)			1,480,769		1					692,009	1					1,209,824	1
Total current assets			56,457,675	41					56,622,662		42				54,010,409		41
NON-CURRENT ASSETS (Note 4)
Non-current financial assets at fair value through other comprehensive income (Notes 8
and 30)			17,405,853		13					15,919,513	12				14,542,018		11
Non-current financial assets at amortized cost (Note 9)			819,233	1					434,148	-					431,263	-
Investments accounted for using equity method (Note 14)			6,203,015		4					6,102,801	4					6,151,744	5
Property, plant and equipment (Notes 15 and 31)			49,466,397		36					48,402,268		35				47,057,043		36
Right-of-use assets (Notes 16 and 31)			2,076,973	1					2,037,520	2					1,924,876		2
Investment property, net (Notes 17 and 30)			3,491,584		2					3,532,991	3					3,545,529		3
Goodwill			504,722	-					470,573	-					473,622	-
Deferred tax assets			331,093	-					351,334	-					363,707	-
Prepayments for business facilities (Notes 15 and 17)			1,097,729		1					1,519,458	1					2,189,021		2
Net defined benefit asset, non-current (Note 19)			789,936	1					710,988	1					450,425	-
Other non-current assets, others (Note 31)			324,407	-					330,008	-					354,828	-
Total non-current assets			82,510,942		59					79,811,602		58				77,484,076		59
TOTAL ASSETS	$	138,968,617		100		$	136,434,264		100	$	131,494,485		100
LIABILITIES AND EQUITY
CURRENT LIABILITIES (Note 4)
Current borrowings (Notes 18 and 31)	$	12,998,808	9		$	10,079,552		8		$	10,079,104		8
Short-term notes and bills payable (Note 18)			9,515,175		7					9,296,157	7					12,031,586		9
Current financial liabilities at fair value through profit or loss (Note 7)			44,995	-					69,687	-					33,583	-
Current contract liabilities (Note 21)			554,246	1					516,177	-					740,497	1
Notes and accounts payable			11,257,621		8					12,225,726		9					11,134,935		8
Accounts payable to related parties (Note 30)			79,924	-					57,012	-					66,716	-
Other payables, others (Note 15)			7,497,678		5					4,377,129	3					7,116,290		5
Current tax liabilities			657,268	1					1,437,612	1					1,418,439		1
Current lease liabilities (Note 16)			182,221	-					177,846	-					148,108	-
Long-term liabilities, current portion (Notes 18 and 31)			300,000	-					57,933	-					-		-
Other current liabilities, others (Note 30)			1,389,942		1					1,221,889	1					1,091,710		1
Total current liabilities			44,477,878		32					39,516,720		29				43,860,968		33
NON-CURRENT LIABILITIES (Note 4)
Non-current portion of non-current borrowings (Notes 18 and 31)			23,693,464		17					26,519,989		20				22,062,768		17
Deferred tax liabilities			3,608,057		3					3,603,758	3					3,586,165		3
Non-current lease liabilities (Note 16)			496,602	-					471,777	-					372,958	-
Net defined benefit liability, non-current (Note 19)			41,421	-					37,233	-					43,744	-
Other non-current liabilities, others			416,423	-					478,655	-					332,742	-
Total non-current liabilities			28,255,967		20					31,111,412		23				26,398,377	20
Total liabilities			72,733,845		52					70,628,132		52				70,259,345		53
EQUITY ATTRIBUTABLE TO OWNERS OF PARENT (Notes 4, 20, 25 and 27)
Share capital			16,603,715		12					16,603,715		12				16,603,715		13
Capital surplus			3,348,899		3					3,288,518	2					2,621,630		2
Retained earnings			21,385,016		15					22,919,766		17				21,534,667		16
Other equity interest			11,126,320		8					8,389,401	6					6,205,760		5
Total equity attributable to owners of parent			52,463,950		38					51,201,400	37				46,965,772		36
NON-CONTROLLING INTERESTS			13,770,822		10					14,604,732		11				14,269,368		11
Total equity			66,234,772		48					65,806,132		48				61,235,140		47
TOTAL LIABILITIES AND EQUITY	$	138,968,617		100		$	136,434,264		100	$	131,494,485		100

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche review report dated August 12, 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 June 30					For the Six Months Ended June 30
	2022			2021			2022			2021
		Amount	%				Amount	%				Amount	%				Amount	%
OPERATING REVENUE
(Notes 4, 21 and 30)
Net sales revenue	$ 17,556,109	87	$ 17,745,444	79	$ 34,594,099	87	$ 34,874,973	80
Other operating revenue, net		2,509,978		13	4,804,998		21	5,287,666	13	8,989,734	20
Total operating revenue		20,066,087	100	22,550,442	100	39,881,765	100	43,864,707	100
OPERATING COSTS (Notes 11,
22 and 30)
Cost of sales	15,053,990	75	14,153,342	63	29,856,035	75	27,897,448	64
Other operating costs		1,950,754		10	2,651,364	12	4,023,622	10	4,909,765	11
Total operating costs		17,004,744	85	16,804,706	75	33,879,657	85	32,807,213	75
GAIN (LOSS) ON CHANGES
IN FAIR VALUE LESS
COSTS TO SELL OF
BIOLOGICAL ASSETS
(Notes 4 and 12)	(1,070)	-	25	-	(956)	-	2,150	-
GROSS PROFIT FROM
OPERATIONS	3,060,273		15	5,745,761		25	6,001,152	15	11,059,644	25
OPERATING EXPENSES
(Notes 22 and 30)
Selling expenses	1,430,604		7	1,458,124		6	2,858,495	7	2,905,747	7
Administrative expenses	911,581	4	939,801	4	1,841,208	4	1,904,145	4
Research and development
expenses		148,719	1	184,297	1	300,679	1	347,446	1
Total operating expenses		2,490,904		12	2,582,222		11	5,000,382	12	5,157,338	12
NET OPERATING INCOME		569,369	3	3,163,539		14	1,000,770	3	5,902,306	13
NON-OPERATING INCOME
AND EXPENSES
Finance costs, net (Notes 4
and 22)	(194,642)	(1)	(130,850)	(1)	(328,809)	(1)	(262,166)	(1)
Share of profit of associates
accounted for using equity
method, net (Notes 4 and 14)	382,185	2	332,595	2	606,507	2	552,606	1
Interest income	52,637	-	27,245	-	84,954	-	54,705	-
Rent income (Notes 17 and 30)	12,880	-	25,935	-	25,527	-	49,133	-
Dividend income	48,396	-	36,525	-	48,406	-	36,525	-
Other income, others (Note 26)	109,099	1	140,402	1	167,434	-	241,947	1
Gains on disposals of property,
plant and equipment	4,762	-	18,695	-	4,436	-	18,777	-
Gains on disposals of
investment property	133,414	1	-	-	133,414	-	-	-
Gains (losses) on financial
assets or liabilities at fair
value through profit or loss
(Note 4)	482,755	2	(96,436)	-	407,580	1	(66,110)	-
Miscellaneous disbursements	(5,807)	-	(10,081)	-	(19,661)	-	(17,962)	-
Foreign exchange gains (losses)
(Note 34)	(616,060)	(3)	29,021	-	(532,366)	(1)	(103,825)	-
Total non-operating
income and expenses		409,619	2	373,051	2	597,422	1	503,630	1
																				(Continued)

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