Daiyo-KY: Status of Receivables Recovery from Shenzhen Dama Hua Investment Co., Ltd.

1. Date of Event: 115/07/20

2. Company Name: Daiyo Commercial Group Holdings Co., Ltd.

3. Relationship with Company (please enter 'Company' or 'Subsidiary'): Company

4. Mutual Shareholding Ratio: Not applicable

5. Reason for Occurrence:

a. The outstanding receivable balance from Shenzhen Dama Hua Investment Co., Ltd. amounts to NT$285,256 thousand (RMB 61,000 thousand).

b. Regarding the receivable of RMB 324 million from Quanzhou Fengsheng Group, Fengsheng Group had repaid 10% of the total investment amount, i.e., RMB 32.4 million, by April 28, 2017, and 40% of the total investment amount, i.e., RMB 129.6 million, by November 13, 2017, in accordance with the contract. The remaining 50% of the total investment amount, i.e., RMB 162 million, is yet to be recovered. After Shenzhen Dama Hua Investment Co., Ltd. (hereinafter referred to as 'Dama Hua') agreed to assume this debt, it made the first debt transfer payment of RMB 30 million on February 9, 2021, RMB 25.5 million on December 30, 2021, RMB 25.5 million on March 11, 2022, and RMB 20 million on June 30, 2022, leaving a balance of RMB 61 million.

c. Daiyo's Audit Committee and Board of Directors discussed Dama Hua's deferred repayment plan on July 8, 2022, and approved in principle a phased payment plan: RMB 20 million paid on June 30, 2022, RMB 16 million on December 31, 2022, RMB 16 million on March 31, 2023, and RMB 29 million on June 30, 2023. The RMB 20 million payment on June 30, 2022, has already been recovered.

d. Regarding the adequacy of collateral value and related debt protection measures, to secure the receivable, the Company previously obtained a 100% equity pledge of Quanzhou Feng'an Real Estate Development Co., Ltd. According to a report issued by Fujian Junheng Real Estate Appraisal Co., Ltd. on July 11, 2022, the market value of the land parcel owned by Feng'an (after deducting estimated related taxes and fees) is approximately RMB 260.31 million. After audit by KPMG, a full provision for impairment of RMB 61 million has been recorded as of Q2 2023.

e. The receivable from Dama Hua arose from the assumption of the Quanzhou Citong Road land project. As the Quanzhou Citong Road project has been stalled for many years, significantly affecting the city's image and public interests, the Quanzhou Municipal Government has held meetings and原则上 agreed that Quanzhou State-owned Investment Asset Management Co., Ltd. and Fujian No.5 Construction Real Estate Development Co., Ltd. will take over the project's development through a cooperative approach. They will cooperate with existing developers to confirm respective rights, obligations, and risk control measures as soon as possible and draft relevant cooperation agreements, with the Fengze District Government responsible for implementation. Efforts are currently underway to coordinate and promote the resumption of construction. Based on the above, Dama Hua intends to negotiate with the Company as soon as possible regarding the subsequent project development taken over by the Quanzhou Municipal Government, aiming to repay the Company's receivable from project development proceeds and confirm each party's respective benefits, with the overarching goal of maximizing the Company's interests.

6. Response Measures:

The Company will negotiate with Dama Hua on subsequent project development to repay the Company's receivable.

7. Other Matters to be Disclosed (If the subject of the event or resolution is a publicly listed company or above, this material information also meets the criteria under Article 7, Paragraph 9 of the Enforcement Rules of the Securities and Exchange Act, which pertains to matters having a significant impact on shareholders' rights or securities prices): None

Keywords: Material Information