Tatung : Consolidated Statement

TATUNG CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH INDEPENDENT AUDITORS' REPORT

DECEMBER 31, 2020 AND 2019

Address: 22, Sec. 3, Chung-shan N. Rd., Taipei city, Taiwan R.O.C.

Telephone: [phone]

The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

1

REPRESENTATION LETTER

The subsidiaries included in the consolidated financial statements as of December 31, 2020 and for the year then ended prepared under the International Financial Reporting Standard No. 10 (referred to as "Consolidated Financial Statements") are the same as the affiliated entities to be included in the combined financial statements of the Company, if any to be prepared, pursuant to the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises (referred to as "Combined Financial Statements"). Also, the footnotes disclosed in the Consolidated Financial Statements have fully covered the required information in such Combined Financial Statements. Accordingly, the Company did not prepare any other set of Combined Financial Statements than the Consolidated Financial Statements.

Very truly yours,

Tatung Co., Ltd.

Chairman: Ming-Kuang Lu

March 25, 2021

2

Independent Auditors' Report

English Translation of a Report Originally Issued in Chinese

To Tatung Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Tatung Co., Ltd. ("the Company") and its subsidiaries ("the Group") as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements, including the summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter

• Making Reference to the Audits of Component Auditors section of our report), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and their consolidated financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing 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 Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3

Emphasis Matters - Certain subsidiaries prepared financial statements using liquidation assumption

As mentioned in Note 4(2) to the consolidated financial statements, Chunghwa Picture Tubes, Ltd. ("CPT"), a subsidiary of the Group, resolved at its board meeting on September 18, 2019 to file bankruptcy to the court. Since the management's intention to discontinue operation was clear, CPT prepared the consolidated financial statements of CPT and its subsidiaries as at December 31, 2020 and 2019 using liquidation assumption. Our conclusion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 consolidated financial statements. 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. Revenue Recognition

The Group recognized net sales in the amount of NT$ 31,641,555 thousand in 2020. The Company and its subsidiaries operated in various industries and the sales amount was relatively large. The sales terms varied accordingly, that the appropriateness of timing of revenue recognition on when performance obligation is satisfied would affect revenue recognized. Therefore, we considered this a key audit matter.

Our audit procedures included, but not limited to, assessing the appropriateness of the accounting policy of revenue recognition; evaluating and testing the design and operating effectiveness of internal controls in the sales cycle; selecting samples to perform tests of details, examining contracts or sales orders; reviewing significant terms and condition of contracts; performing cut- off testing by selecting a set of samples of transactions from either side of year-end and vouching them to supporting evidences to ensure the reasonableness of revenue cut-off; performing reasonableness analytical procedures on gross margin and sales from major customers; reviewing significant subsequent sales returns and discounts to verify the occurrence of sales transactions and reasonableness of the timing of revenue recognition.

Please refer to Notes 4, 5 and 6 to the consolidated financial statements for the disclosure of the matter of operating revenues.

4

1. Contingent liabilities
   Chunghwa Picture Tubes Technology (Group) Co., Ltd. ("CPTTG") filed an action in Fujian Higher People's Court against Chunghwa Picture Tubes (Bermuda) Ltd. ("CPTB") for RMB 1.914 billion on December 29, 2018 and applied for property preservation against CPTB on January 8, 2019. On March 28, 2019, CPTTG filed an action against Tatung Co., Ltd. and CPT, which are liable for joint liabilities, and increased the amount of claim to RMB 3.029 billion on May 10, 2019. The Company and CPT claimed that the amount mentioned above could possibly be solved by litigation proceedings. According to IAS 37, contingent liabilities are possible obligations whose existence will be confirmed by uncertain future events that are not wholly within the control of the entity or the amount of the obligation could not be measured reliably, therefore the Group could not recognize the liability. The assertion involved significant judgement and assessment of the management. Therefore, we considered this a key audit matter.
   Our audit procedures included, but not limited to, obtaining and examining the supporting documents of the assertion; examining board meeting minutes and legal documents; inquiring the management, the internal legal team and the external legal counsel; obtaining legal opinion from the external legal counsel to confirm the reasonableness and conformity of the accounting judgement and assessment.
   Please refer to Note 9 to the consolidated financial statements for the disclosure of significant contingent liability of the Group.
2. Assessment of fair value of investment property
   Investment property of the Group constituted 26% of consolidated total assets as of December 31, 2020. The amount is material to the consolidated financial statements. Also, the investment property is valued at fair value. The measurement involves material professional judgement, estimates and assumptions. Hence, when such judgement estimates and assumptions are changed, the fair value of the investment property will be affected. Therefore, we considered this a key audit matter.
   Our audit procedures included, but not limited to, evaluating the objectivity, proficiency and reputation of the external real estate appraiser to confirm its reliability; examining the fair value assessment report with the assistance from the internal expert to understand the assessment methodology and assumptions; evaluating the relevance and reliability of the information source and significant parameters such as rate of return and discount rate in the assessment report; confirming the reasonableness; making inquiries and recalculations to verify the correctness of the recorded amount.
   Please refer to Notes 4, 5 and 6 to the consolidated financial statements for the disclosure of investment property measured at fair value of the Group.

5