Concord Securities : Consolidated Financial Statements 2023

Concord Securities Co., Ltd. and Subsidiaries

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

The key audit matter of the Group's consolidated financial statements for the year ended December 31, 2023 is as follows:

Accuracy of Brokerage Handling Fee Revenue

The calculation of discounts on brokerage handling fee revenue is complicated since it varies based on counterparties, ways of placing orders and transaction volume, and any calculation errors in the discounts will affect the accuracy of brokerage handling fee revenue. Therefore, the accuracy of brokerage handling fee revenue is identified as a key audit matter.

Refer to Notes 4, 27 and 32 to the consolidated financial statements for accounting policies and disclosures related to brokerage handling fee revenue.

The control procedures for the input of discount rates have a significant impact on the calculation accuracy of brokerage handling fee revenue. We evaluated the design and implementation effectiveness of the recognition of discounts on brokerage handling fee revenue procedures and the related controls by performing tests of controls. Moreover, we verified the correctness of the recorded brokerage handling fee revenue by performing our own calculations on sampled transactions.

Other Matter

We did not audit the financial statements of some of the Group's subsidiaries and investments accounted for using the equity method included in the Group's consolidated financial statements for the years ended December 31, 2023 and 2022, but such financial statements were audited by other auditors. Therefore, our opinion, insofar as it relates to the amounts and other relevant information of the aforementioned investee companies as disclosed in the notes, is based solely on the reports of other auditors. As of December 31, 2023 and 2022, the total assets of these subsidiaries and investments in associates amounted to $580,106 thousand and $548,093 thousand, accounting for 1.44% and 1.53% of consolidated total assets, respectively; for the years ended December 31, 2023 and 2022, no operating revenue was recognized, and the share of the comprehensive income or loss of these associates accounted for using the equity method amounted to $25,575 thousand and $(18,032) thousand, which accounted for 2.47% and 16.72% of the consolidated total comprehensive income or loss, respectively.

We have also audited the parent company only financial statements of Concord Securities Co., Ltd. as of and for the years ended December 31, 2023 and 2022 on which we have issued an unmodified opinion with Other Matter paragraph.

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 Firms, Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants, and other regulations, IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the Financial Supervisory Commission 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.

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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, 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 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.

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 Group's 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 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 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 Group 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 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.
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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.

The engagement partners on the audits resulting in this independent auditors' report are Cheng-Hsiu Chang and Pi-Yu Chuang.

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 27, 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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CONCORD SECURITIES CO., LTD. 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 and 6)	$	1,740,731	4	$	4,588,277	13
Financial assets at fair value through profit or loss - current (Notes 4 and 7)			11,220,151	28				7,935,375	22
Financial assets at fair value through other comprehensive income - current (Notes 4 and 8)			498,471	1				177,633	1
Margin loans receivable (Notes 4, 11 and 32)			6,533,218		16				4,229,493	12
Refinancing margin (Notes 4 and 11)			525	-					40,461	-
Refinancing collateral receivable (Notes 4 and 11)			437	-					31,124	-
Customer margin account (Notes 4 and 9)			6,308,796		16				4,790,287	13
Futures exchanges margins receivable (Notes 4 and 10)			-	-					12	-
Security borrowing collateral price (Notes 4 and 11)			78,997	-					960,904	3
Security borrowing margin (Notes 4 and 11)			71,860	-					1,046,647	3
Notes and accounts receivable (Notes 4 and 11)			6,150,076		15				4,428,567	12
Prepayments			9,242	-					9,149	-
Other receivables (Notes 4 and 11)			116,465		-					54,615	-
Other financial assets - current (Notes 4 and 12)			664,620		2				646,120	2
Current tax assets (Notes 4 and 28)			-	-					1,263	-
Restricted assets - current (Note 33)			169,040	-					167,705	1
Amounts held for each customer in the account (Note 32)			187,534		1				-	-
Other current assets			205,070		1				160,577	-
Total current assets			33,955,233		84				29,268,209	82
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Notes 7 and 33)			10,041	-					-	-
Financial assets at fair value through other comprehensive income - non-current (Notes 4, 5 and 8)			3,305,210		8				3,535,019	10
Investments accounted for using equity method (Notes 4 and 14)			575,955		2				546,741	1
Property and equipment (Notes 4, 15 and 33)			1,055,970		3				1,051,657	3
Right-of-use assets (Notes 4, 16 and 32)			98,910	-					117,489	-
Investment property (Notes 4, 17 and 33)			318,400		1				319,975	1
Intangible assets (Notes 4 and 18)			60,377	-					65,137	-
Deferred tax assets (Notes 4 and 28)			38,443	-					29,090	-
Net defined benefit assets - non-current (Notes 4 and 25)			-	-					3,854	-
Other non-current assets (Notes 4 and 19)			896,474		2				909,856	3
Total non-current assets			6,359,780		16				6,578,818	18
TOTAL		$	40,315,013	100		$	35,847,027	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 20 and 33)	$	809,500		2	$	690,000	2
Commercial paper payable (Notes 20 and 33)			5,761,973		14				5,222,701	15
Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 32)			1,984,310	5				2,522,930	7
Liabilities for bonds with attached repurchase agreements (Notes 4, 21 and 32)			5,166,781		13				4,498,096	13
Securities financing refundable deposits (Note 4)			272,431		1				675,595	2
Deposits payable for securities financing (Note 4)			302,479		1				620,246	2
Refinancing borrowings (Note 4)			-	-					100,240	-
Securities lending refundable deposits (Note 4)			70,168	-					16,185	-
Futures traders' equity (Notes 4 and 9)			6,348,423		16				4,769,767	13
Equity for each customer in the account (Note 32)			187,803		1				-	-
Accounts payable (Note 22)			5,776,899		14				3,580,010	10
Other payables			543,264		1				277,062	1
Other financial liabilities - current (Note 23)			2,525,707		6				3,622,333	10
Current tax liabilities (Notes 4 and 28)			128,563		-					54,513	-
Provisions - current (Notes 4 and 24)			26,666	-					26,186	-
Lease liabilities - current (Notes 4, 16 and 32)			49,889	-					49,337	-
Other current liabilities			144,630		1				162,146	-
Total current liabilities			30,099,486		75				26,887,347	75
NON-CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss - non-current (Notes 4 and 7)			1,177,976		3				913,241	3
Provisions - non-current (Notes 4 and 24)			15,083	-					12,560	-
Lease liabilities - non-current (Notes 4, 16 and 32)			46,483	-					67,305	-
Deferred tax liabilities (Notes 4 and 28)			20,912	-					63,871	-
Guarantee deposits received (Note 32)			2,468	-					2,468	-
Net defined benefit liabilities - non-current (Notes 4 and 25)			24,410	-					2,464	-
Total non-current liabilities			1,287,332		3				1,061,909	3
Total liabilities			31,386,818	78				27,949,256	78
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Notes 4, 8, 14, 25, 26, 28 and 31)
Share capital			5,944,550		15				5,944,550	17
Capital surplus			175,331		-					175,320	-
Retained earnings
Legal reserve			239,393		1				265,503	1
Special reserve			1,087,890		3				1,087,890	3
Unappropriated retained earnings (accumulated deficits)			979,629		2				(26,110)	-
Total retained earnings			2,306,912		6				1,327,283	4
Other equity			441,856		1				391,181	1
Total equity attributable to owners of the Corporation			8,868,649		22				7,838,334	22
NON-CONTROLLING INTERESTS			59,546	-					59,437	-
Total equity			8,928,195		22				7,897,771	22
TOTAL		$	40,315,013	100		$	35,847,027	100

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors' report dated February 27, 2024)

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CONCORD SECURITIES CO., LTD. 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)

	2023			2022
		Amount	%				Amount	%
REVENUE (Notes 4 and 27)
Brokerage handling fee revenue (Note 32)	$ 1,541,164		45		$ 1,543,234	75
Income from securities lending	43,940		1		43,420	2
Revenue from underwriting commission	33,033		1		34,993	2
Gains (losses) on sale of operating securities, net	297,332		9		(1,827,681)	(89)
Revenue from providing agency service for stock
affairs	28,529		1		26,633	1
Interest income (Note 32)	350,093		10		349,939	17
Dividend income	1,632,764		48		1,448,951	71
Valuation gains (losses) on operating securities at
fair value through profit or loss, net	393,698		11		(650,731)	(32)
Gains (losses) on covering of borrowed securities
and bonds with resale agreements - short sales, net	(61,058)	(2)	16,012	1
Valuation gains (losses)on borrowed securities and
bonds with resale agreements - short sales at fair
value through profit or loss, net	(70,314)	(2)	140,680	7
Realized losses on investments in debt instruments
measured at fair value through other
comprehensive income, net	(5,506)	-		-		-
Gains (losses) on issuance of call (put) warrants, net	(97,412)	(3)	423,225	21
Losses on derivative instruments - futures, net	(148,135)	(4)	(15,172)	(1)
Gains (losses) on derivative instruments - OTC, net
(Note 32)	(585,419)	(17)	368,562	18
Futures administrative fee revenues	-		-		1	-
Impairment gain and reversal of impairment loss
(impairment loss) (Notes 8, 10 and 11)	(639)	-		3,707	-
Other operating income (Note 32)		72,121		2			151,005	7
Total revenue		3,424,191		100			2,056,778	100
COSTS AND EXPENSES (Notes 4 and 27)
Brokerage handling fee expenses	(195,570)	(6)	(199,517)	(10)
Proprietary handling fee expenses	(10,464)	-		(12,584)	(1)
Refinancing handling fee expenses	(350)	-		(737)	-
Finance costs (Note 32)	(210,147)	(6)	(96,734)	(5)
Loss from securities borrowing transactions	(7,415)	-		(4,558)	-
Futures commission expenses	(79,194)	(3)	(88,377)	(4)
Clearing and settlement expenses	(71,541)	(2)	(85,498)	(4)
Other operating costs	(36,919)	(1)	(25,542)	(1)
Employee benefits expenses (Notes 25 and 32)	(1,305,767)	(38)	(965,708)	(47)
								(Continued)

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CONCORD SECURITIES CO., LTD. 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)

	2023			2022
		Amount	%				Amount	%
Depreciation and amortization expenses (Notes 15,
16, 17 and 18)	$ (106,779)	(3)	$ (92,252)	(4)
Other operating expenses	(592,775)	(18)	(587,321)	(29)
Total costs and expenses	(2,616,921)	(77)	(2,158,828)	(105)
OPERATING PROFIT (LOSS)	807,270		23		(102,050)	(5)
NON-OPERATING INCOME AND EXPENSES
(Notes 4 and 27)
Share of profit or loss of associates accounted for
using equity method (Note 14)	25,425		1		(8,844)	-
Other gains and losses (Notes 32)		237,966		7			147,558	7
Total non-operating income and expenses		263,391		8			138,714	7
PROFIT BEFORE INCOME TAX		1,070,661		31			36,664	2
INCOME TAX EXPENSE (Notes 4 and 28)		(66,394)	(2)	(180,364)	(9)
NET PROFIT (LOSS) FOR THE YEAR		1,004,267		29		(143,700)	(7)
OTHER COMPREHENSIVE INCOME (Notes 4, 8,
14, 25, 26, 28 and 31)
Items that will not be reclassified subsequently to
profit or loss
Gains (losses) on remeasurement of defined
benefit plans	(25,198)	-		134,620	6
Unrealized gains (losses) on investments in equity
instruments measured at fair value through
other comprehensive income	(702)	-		25,910	1
Share of other comprehensive income or loss of
associates accounted for using equity method	3,789		-		(5,836)	-
Income tax relating to items that will not be
reclassified subsequently to profit or loss		5,040		-			(26,924)	(1)
		(17,071)	-		127,770	6
								(Continued)

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CONCORD SECURITIES CO., LTD. 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)

					2023							2022
			Amount	%					Amount	%
Items that may be reclassified subsequently to profit
or loss
Exchange differences on the translation of foreign
operations	$			(449)	-		$		9,046	1
Unrealized gains (losses) on investments in debt
instruments measured at fair value through
other comprehensive income					47,228		1					(100,992)	(5)
					46,779		1						(91,946)	(4)
Other comprehensive income for the year, net
of income tax					29,708		1						35,824	2
TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR	$	1,033,975		30		$	(107,876)	(5)
NET PROFIT (LOSS) ATTRIBUTABLE TO:
Owners of the Corporation	$			999,752		29		$	(148,735)	(7)
Non-controlling interests					4,515		-						5,035	-
		$	1,004,267		29			$	(143,700)	(7)
TOTAL COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO:
Owners of the Corporation	$	1,030,304		30		$	(115,256)	(5)
Non-controlling interests					3,671		-						7,380	-
		$	1,033,975		30			$	(107,876)	(5)
EARNINGS (LOSS) PER SHARE (Note 29)
Basic				$	1.68							$	(0.25)
Diluted			$	1.68							$	(0.25)

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

(With Deloitte & Touche auditors' report dated February 27, 2024)

(Concluded)

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CONCORD SECURITIES CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

							Equity Attributable to Owners of the Corporation (Notes 4, 8, 14, 25, 26, 28 and 31)
																								Other Equity
																											Unrealized
																										Gains (Losses)
																										on Financial
													Retained Earnings							Exchange			Assets
																	Unappropriated	Differences on	at Fair Value
																			Earnings	the Translation	Through Other
																	(Accumulated		of Foreign	Comprehensive					Non-controlling
	Share Capital	Capital Surplus	Legal Reserve	Special Reserve			Deficits)		Operations			Income			Total			Interests	Total Equity
BALANCE AT JANUARY 1, 2022	$	5,944,550		$	175,320	$	132,144	$	821,171	$	1,338,562			$	(7,432)	$	470,680	$	8,874,995		$	54,985	$	8,929,980
Appropriation of 2021 earnings
Legal reserve			-				-				133,359			-				(133,359)				-				-				-				-				-
Special reserve			-				-				-				266,719			(266,719)				-				-				-				-				-
Cash dividends of ordinary shares			-				-				-				-				(921,405)				-				-				(921,405)			-				(921,405)
Net loss for the year ended December 31, 2022			-				-				-				-				(148,735)				-				-				(148,735)			5,035			(143,700)
Other comprehensive income (loss) for the year ended December 31,
2022, net of income tax			-				-				-				-				107,646				9,046				(83,213)			33,479			2,345			35,824
Total comprehensive income (loss) for the year ended December 31, 2022			-				-				-				-				(41,089)				9,046				(83,213)			(115,256)			7,380			(107,876)
Disposal of investments in equity instruments designated at fair value
through other comprehensive income			-				-				-				-				(2,100)				-				2,100			-				-				-
Change in non-controlling interests			-				-				-				-				-					-				-				-				(2,928)			(2,928)
BALANCE AT DECEMBER 31, 2022			5,944,550				175,320			265,503			1,087,890				(26,110)				1,614				389,567			7,838,334				59,437			7,897,771
Compensation of 2022 deficits
Legal reserve used to offset accumulated deficits			-				-				(26,110)			-				26,110				-				-				-				-				-
Other changes in capital surplus
Unpaid dividends			-				11			-				-				-					-				-				11			-				11
Net profit for the year ended December 31, 2023			-				-				-				-				999,752				-				-				999,752			4,515			1,004,267
Other comprehensive income (loss) for the year ended December 31,
2023, net of income tax			-				-				-				-				(20,123)				(449)			51,124			30,552			(844)			29,708
Total comprehensive income (loss) for the year ended December 31, 2023			-				-				-				-				979,629				(449)			51,124			1,030,304				3,671			1,033,975
Change in non-controlling interests			-				-				-				-				-					-				-				-				(3,562)			(3,562)
BALANCE AT DECEMBER 31, 2023		$	5,944,550			$	175,331	$	239,393	$	1,087,890		$	979,629		$	1,165		$	440,691	$	8,868,649	$	59,546	$	8,928,195

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

(With Deloitte & Touche auditors' report dated February 27, 2024)

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