stock code 2371 2019...email: [email protected] • motor business unit no. 352, his tung...

The date of publication: March 31, 2020Market Observation Post System: http://emops.twse.com.tw/server-java/t58query

Annual report of corporate website: http://www.tatung.com.tw/Content/annual-report.asp

S t o c k C o d e 2 3 7 1

2019Tatung

Annual Report

MANUFACTURING PLANTSHEADQUARTERSNo. 22, Sec. 3, Zhongshan N. Road, TaipeiTel: (02) 25925252 (100 lines)Fax: (02) 25915185 / 25921813www.tatung.com

■ POWER BUSINESS GROUP• Power Equipment Business Unit

* Industrial Appliance PlantNo. 102, Min Sheng Road, Neihai Village,Tayuan District, Taoyuan CityTel : (03) 3863123Email: [email protected]

* Cable PlantNo. 106, Min Sheng Road, Neihai Village,Tayuan District, Taoyuan CityTel : (03) 3863111Email: [email protected]

• Motor Business UnitNo. 352, His Tung Road, Sanhsia, New Taipei CityTel: (02) 86766888Email: [email protected]

■ CONSUMER BUSINESS GROUP• Advanced Electronics Business Unit

No. 22, Sec. 3, Zhongshan N. Road, TaipeiTel: (02) 25925252 / Email: [email protected]

• Appliance Business UnitNo. 38, Lane 1119, Takuan Road, Tayuan District,Taoyuan CityTel: (03) 3861111Email: [email protected]

■ SYSTEM BUSINESS GROUP• Smart Meter Business Unit

No. 22, Sec. 3, Zhongshan N. Road, TaipeiTel: (02)25925252Email: [email protected]* Meter Factory

No. 102, Min Sheng Road, Neihai Village, TayuanDistrict, Taoyuan CityTel: (03) 3863123Email: [email protected]

• Solar Energy Business UnitsNo. 22, Sec. 3, Chungshan N. Road, TaipeiTel: (02) 25925252 / Email: [email protected]

• System Integration Business UnitsNo. 22, Sec. 3, Chungshan N. Road, TaipeiTel: (02) 25984299 / Email: [email protected]

• Electrical Engineering DivisionNo. 22, Sec. 3, Chungshan N. Road, TaipeiTe l : (02) 25925252 / Email: [email protected]

• Smart Energy BUNo. 22, Sec. 3, Chungshan N. Road, TaipeiTe l : (02) 25925252 / Email: [email protected]

■ EXPORT DEPARTMENTNo. 22, Sec. 3, Zhongshan N. Road, TaipeiTel: (02) 25925252• Export Department of Industrial Appliance Plant

Email: [email protected]• Export Department of Cable Plant

Email: [email protected]• Export Department of Motor

Email: [email protected]• Export Department of Advanced Electronics

Email: [email protected]• Export Department of Appliance

Email: [email protected]• Export Department of Smart Meter

Email: [email protected]• Export Department of Smart Energy

Email: [email protected]

SPOKESPERSONMr. Wen-chieh PengExecutive Vice President & Chief Financial Officer(02)25925252 ext. [email protected]

DEPUTY SPOKESPERSONMr. Lung-chieh WangSenior General Manager of Stock Division(02)25925252 ext. [email protected]

SHARE REGISTRARSecurities Management Section of Tatung CompanyNo. 22, Sec. 3, Zhongshan N. Road, Taipei(02)25925252 ext. 3258 / 3259http://www.tatung.com

INDEPENDENT AUDITORSu-wen, LinHsuan-Hsuan, WangErnst & Young Taiwan9F, No. 333, Sec. 1, Keelung Road, Taipei(02)27578888http://www.ey.com/tw/zh_tw

OVERSEAS SECURITIES EXCHANGELuxembourg stock exchangeDisclosed information can be found at BLOOMBERG.

WEBSITE FOR REFERENCEMarket Observation Post Systemhttp://emops.twse.com.tw/server-java/t58query

CORPORATE WEBSITEhttp://www.tatung.com

• Notice to readersThis document is an Englishtranslation of a reportoriginally written in Chinese.If there is any differencebetween the two versions,the Chinese one shall prevail.

Published on March 31, 2020

TATUNG 2019 Annual Report

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Letter to ShareholdersCorporate Chronicle■ CorporateValue■ CompanyMilestones■ GlobalNetwork

Corporate Governance■ OrganizationChart■ Profile of board of directors and management■ Status of corporate governance■ Information on independent auditors■ Information on change of independent auditors■ Change of shareholding by directors, management, and major shareholders■ Information on the top 10 shareholders who are related parties to each other■ Long-term investments ownership

Financial Information■ Sourceofcapital■ Shareholderstructure■ Distributionprofileofshareholderownership■ Majorshareholders■ Marketprice,networth,earningsanddividendspercommonshare■ Dividendpolicyandimplementationstatus■ Employeeandremunerationtodirectors■ Issuanceofcorporatebonds■ Issuanceofpreferredshares■ Issuanceofglobaldepositoryreceipt■ Statusofemployeestockoptionplan(ESOP)■ Statusofnewrestrictedemployeesharesplan■ Statusofnewshareissuanceinconnectionwithmergersandacquisitions■ Financialplansandimplementation

Operation Overview ■ Powerbusinessgroup■ Consumerbusinessgroup■ Systembusinessgroup■ Operationsummary■ Workforcestructure■ Expenditureonenvironmentalprotection■ Laborrelations■ Importantcontracts

Financial Overview■ Condensedbalancesheetandincomestatement■ Financialanalysis■ AuditCommittee'sreviewreport■ Consolidatedstatements■ Parentcompanyonlystatements

Analysis on Financia Status and Financial Performance and Risk as Sessment■ Financialstatus■ Financialperformance■ Cashflow■ Long-terminvestmentpolicy,mainreasonsforprofitsorlosses,improvementplans

and the investment plan for the coming year■ Riskassessmentandanalysis

Special Disclosures■ InformationonInvestees■ Holdingsandsaleofsharesbysubsidiaries

Appendix ■ Consolidatedstatements■ Parentcompanyonlystatements

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CONTENTS

1 TATUNG 2019 Annual Report

Letter to Shareholders

Dear Fellow Shareholders, 2019 is the 101th anniversary of the founding of Tatung Company (the Company hereafter). Although affected by the huge losses of the two investment companies, Chunghwa Picture Tubes, Ltd. (CPT hereafter) and GreenEnergy Technology Inc.(GEThereafter), theoverall operation results of the Company have turned around with profits contributed from Shan Chih Asset Development Co., Ltd. (SCAD hereafter). Facing global business challenges, the Company will continue to engage in corporate transformations toward the development of green energy, energy saving, energy storage,and smart energy.Wehereby report theachievements of core businesses and investments for year 2019 as well as the future prospects of the Company.

I. Business OverviewThe Company’s 2019 consolidated revenue was NT$35.423 billion, consolidated operation loss was NT$6.265 billion; standalone revenue was NT$17.826 billion, core business operating loss was NT$0.864 billion; together with non-operating income from investments, the net profit after tax was NT$2.876 bil l ion which resulted in earning of NT$1.24 per share. 1. Reviewing as follows: The standalone revenue in 2019 was declined 6.9%

compared with 2018. The results combined with declined in consumer products sales and sales grown in industr ial products such as motors and power equipment.

The standalone operation losses were came from home appl iance and power equipment, which account for a relatively high proportion of the overall revenue, due to market competition with gross margin decreased. The Company has cut off low-margin rate product lines and adopted various cost reduction measures. Also we continuously invested resources in development of energy and smart management systems toboost theCompany's revenuegrowthand profitability, with a view to expanding its niche-oriented energy and systems business.

In the investments, CPT’s application for bankruptcy isbeing reviewedby thecourt,andGETwas ruledbankruptcy by the court in early 2020. The impact of the two investment companies on the Company in 2019 has gradually weakened. In addition, SCAD has begun delivering house units to buyers of project Tatung Manor first phase and recognized profits by portion in 2019. The net investment income in 2019 was about NT$5.29 billion which mainly came from the dispose of lands of SCAD and the continuous operation improvement of al l other investment companies.

2. The focus in 2020 Withgreenenergy,energy saving,energy storage

and smart energy as the development directions, the Company will continue to integrate IoT technology,

deepen the core technology of smar t energy management, complete cases with forward-looking indicators, and become the leading manufacturer with comprehensive products and service provision in the era of power liberalization.

• Consumer BG ExceptTaiwan's firstbrand in ricecooker, themain

products include commercial and household products are all with energy-saving and smart controll ing. Through sensing and IoT technology, all products can provide ser v ices such as consumer power management, remote control, scheduling control and personalized smart living. In recent years, Consumer BGhaswon iF IndustrialDesignAward (Germany),RedDotDesignAward (Germany),GoodDesign(Japan) and Excellence Awards (Taiwan). Moreover, its sub-brand "Yin-hsian in fresh" is conducts a smart agricultural monitoring system that can accurately control the greenhouse environment and help farmers to engage in high-efficiency, high-quality and high-capacity smart agriculture.

• System BG We installedover130MWsolarpowerplantsby the

end of 2019, and intend to acquire large-scale power plants inChi-Gu Solar and Fishery co-existencespecial zone, Tainan. This project is expected to start to installation in 2nd half of 2020 and get on grid beforetheendof2021.Withexcellentpower-relatedexperience and system integration capabilities, the Company are the only one authorized electricity demand and dispatching aggregator by Tai-Power Company,whichdemonstrating theCompany'stechnical capabilities with long term accumulated. Beyonddomesticmarket, SystemBG,with its totalsolutions of complete smart meters and systems, successfully penetrated to international markets such as Japan, Thailand, Malaysia, and the Middle East. There are great business opportunities to expand in ASEAN.

In2019,SystemBGparticipatedintheregionalenergystorage equipment technology demonstrat ion-verif ication program of the Energy Bureau of the Ministry of Economic Affairs, and successfully won project of Zhang-bin grid-connected verif ication system of the Industrial Technology Research Institute. Itwillintegratethe10MW/10MWhbatterysystemandwill become the first cross-brand energy management s y s tem i n Ta i wa n fo r hete rog eneous bat te r y integration. The move will strengthen the Company’s capabilities in smart energy management and power dispatching with very solid foundation in the coming liberalized electricity market.

• Power BG In recentyears,PowerBGhascontinued toadjust

its product por tfol io, and in response to market demand, has successively developed new smart products with environmental protection and low energy consumption traits. It has also developed

2TATUNG 2019 Annual Report

Letter to Shareholders

newproductssuchasGISandreactors,contributingto capture the business opportunities in the growing renewable energy market.

Withmorethan70yearscapabilitiesandexperiences,PowerBGproducevariousenergy-savingwithhigh-efficiency motors, including ultra-high-efficiency IE3 / IE4 motors, explosion-proof motors, TSMS, and TiMS in advanced the competitors. It also invested to develop high-voltage electric vehicle motors combined with controllers to capture opportunities of growing electric vehicle market.

II. Major Investment’s performance:◆ Major investments are described in the

following.1. Shan Chih Asset Development Co., Ltd. (SCAD)

“Tatung Manor f i rst phase” located in Tu Cheng D i s t r ict, New Ta ipe i Ci t y, begun the de l ive r y procedure in the first half of 2019. The second phase of Tatung Manor was launched in the third quarter of 2019. The design of this project is superior with very high popularities to the competitors around which bring up the stable grow of sales. Another project “the Zhonghe MRT joint development project” has obtained the investment rightof the LG07 stationof the f i r s t phase of theMRTWanda L ine. Theinvestment contract has been signed with Taipei City GovernmentonNovember18, 2019. It iscurrentlyunder the procedure in accordance with the relevant government review procedures. It is expected to apply for construction license in the fourth quarter of 2020 to gain the best interest for the company.

2. Tatung System Technologies Inc.(TSTI)TSTI has been profitable for 19 consecutive years by providing customers total solutions for digital transformation and achieved NT$ 4 billion revenue in 2019 for the first time. In 2020, TSTI will focus on providing services, such as artificial intelligence, big data platforms, cloud services, security and cloud monitoring and analysis to strive for continued growth in revenue and profit.

3. Chunghwa Pictures Tubes, Ltd (CPT)OnSeptember18,2019,duetocreditors filedclaimsforthecompulsoryexecutionofthecompany'sland,buildings, equipment and other assets by the court, the company could not carry on operation. The CPT board of directors decided to apply to the court for bankruptcy in accordance with the Company Act, so that employees and creditors can be fairly compensated in accordance with the law. Currently, the case is sti l l under tr ial in the court. A special shareholders’ meeting was held on December 30, 2019 to approve the disposal of the assets (movable properties and real estate) of the Long-tan and Yang-mei plants. Two broker firms have been commissioned toconductpublicbiddingmatters.Welookforwardto complete the disposal as soon as possible to pay laborers and creditors as well.

4. Green Energy Technology Inc. (GET)SinceAugust2019,GETchangedtonon-consolidatedentity of the company according to IFRS regulations. GETwas ruledbankruptby thecourt in February2020. Now it has been took over by the bankruptcy administrator selected by the court for following procedures.

III. Focusing on stabilizing core operations as the driving forces for further growth1. Continuing to dispose non-core investments: In 2019, the company sold parts of shares of Tatung

SM-Cyclo Co., Ltd. (TSC) to the joint venture partner. Compeletd liquidation procedures of Middle East PurificationofPotableWater L.L.C.. Tocompletedmerger of Tatung Information Technology (Jiangsu) Co.,Ltd.andWu-JiangTatungElectronicsTradingCo.,Ltd.

2. Future vision and strategy:1. Seeking strategic partnerships and driving the value

of Tatung brand and channel.2. Establishing the smart solutions of green energy,

energy creation and energy saving.(1) Continuing to develop solar power plants. At the end of 2019, the solar power system

instal ledover 130MW,and target toachieve200MWaccumulatedbytheendof2020.

(2) Integrate energy storage, smart meters and micro-grids to develop profitable business model.

(3) Seeking foreign strategic partners to accelerate and expand the installation of solar power plants.

3. To realize the implied value by developing land assets.

4. Focus on core businesses, and continuously dispose non-core or loss-making businesses to optimize company structure.

TatungCompany isapioneer inTaiwan'shomeappliancesand e lect romechanica l sys tems.We have excel lentcapabi l it ies and exper iences in integration of var ious advanced systems. In recent years, it has been under transformation of green energy combined with intelligence. SincetheoutbreakofCOVID-19 in2020,theworldeconomyfaces serious downturn and critical challenges from overall market. Even so, we are still full of confidence and enthusiasm. Withthecontinualsupportofshareholders,wewill strivetocreate greater value for the shareholders in return for your support.

Chairman & President

Corporate Chronicle - Corporate Value


Corporate ValueEstablished in 1918, Tatung Company (formerly known as Xie Chih Business Enterprise) has evolved and grown over the decades into one of Taiwan’s leading conglomerates.The foundation of the Company is built on four fundamental values—Integrity, Honesty, Industry, and Frugality. Developed by Tatung’s founder and former chairman, Mr. Shan-chih Lin, they represent the essence of the Company’s commitments to our customers, shareholders, and employees.

Mr. T. S. Lin, Chairman Emeritus of Tatung, further extended the precepts behind these core values to serve as the guidelines for the Company’s continued success and prosperity.

∆ Industry - education cooperationTo cultivate young engineering talent and to lend efforts to research and development through cooperation between the Company and Tatung High School as well as Tatung University. Realizing the importance of education in a society with a knowledge-based economy, Tatung sponsors the schools’ major projects while also contributing industrial experience to the teaching. As a responsible corporate citizen, Tatung regards its dedication to education as a manifestation of long-term commitment to social well being.

∆ Shareholder responsibilityTo pursue maximum returns for our shareholders and to maintain a stable dividend policy.

∆ Employee harmonyTo encourage self-motivation and cooperation amongst employees through the organization of profit centers to ensure fair compensation, incentives, welfare benefits, as well as to provide on-the-job training.

∆ Customer satisfactionTo re-invest profits in pursuit of better product quality so as to create value for our customers.

Company Milestones


Company Milestones1918

■ Establishment of Xie Chih Business Enterprise, the forerunner of Tatung Company, by Founder and Chairman, Mr. Shan-chih Lin Completed over 600 constructions, including the Sindian River embankment project and the Executive Yuan building

1942■ Mr. T. S. Lin succeeded as chairman of Tatung and also acted

as principal of both Tatung High School and Tatung University■ Establishment of Tatung High School

1949■ Pioneered production of electric fans under the name Tatung■ Mass production of electric fans & motors (Pioneering in Home Appliance & Motor industries)

1956■ Establishment of Tatung University

1960■ Mass production of Tatung rice cookers, a revolutionary step

for housewives in Taiwan

1962■ The Company became publicly listed on the Taiwan Stock

Exchange

1963■ Mass production of transformers & switchgears (Pioneering in

Industrial Appliance industry)

1964■ Mass production of black-and-white TVs

1966■ EstablishmentofWire&CablePlantinTaoyuanCounty

1968■ The Company renamed from Tatung Steel and Machinery

Company to Tatung Company and officially registered as so

1969■ Company mascot (Tatung Boy) and song were launched■ Mass production of coloured TVs

1970■ Revenues exceeded NT$2.2 billion, making Tatung Taiwan’s

foremost private company

■ Establishment of Forward Electronics Company

1972■ Mr.W.S.LinappointedaspresidentofTatung

1977■ Participated in the Ten Major Infrastructure Projects with the

construction of a slag treatment facility for China Steel Corp. and provision of the turnkey solution for the CKS International Airport’s power control station

1980■ Ranked as Taiwan’s No.1 exporter of electric and electronics

products ■ Recipientof the"Premier’sAwardforOutstandingExport

Performance"■ CRT plant by Chunghwa Picture Tubes ramped up

1990■ Constructed Communication Cable Plant and Power Cable

Plant

1994■ Establishing computerized system of household registration &

conscription for the Ministry of the Interior

1998■ Tatung (Shanghai) Co., Ltd. was established to manufacture

motors, generators, transformers, and switchgears

1999■ Tatung Institute of Technology renamed as Tatung University

2001■ Chunghwa Picture Tubes was listed on the Taiwan Stock

Exchange

2005■ Consol idated Tatung’s Desktop PC Business Unit with

Elitegroup Computer Systems (ECS), making Tatung the largest shareholder of ECS

■ The second housing project by Shan Chih Asset Development forurbanrenewalwasapprovedbyTaipeiCityGovernment,which contributed significantly to the urbanization of Datong district

2006■ Mr. T. S. Lin, Chairman Emeritus, passed away on 10 May and

aged 88■ Mr.W.S.LinwaselectedaschairmanandpresidentofTatung


Company Milestones

■ The Urban Renewal Project by Shan Chih Asset Development wasapprovedbyTaipeiCityGovernmentforitscontributiontowards Datong District, in which a community activity center would be built for the locals

2007■ The Industrial Appliance Business Unit was rewarded the

"Corporate Sustainability and Excellence Award" by Taoyuan CountyGovernment

2008■ Tatung Company celebrated its 90th anniversary of

establishment in November■ GreenEnergyTechnologywas listedontheTaiwanStock

Exchangeon25thJanuary■ Ranked No.1 in Taiwan by the Environmental Protection

Administration as the most proactive corporation for the promotion of green consumption

■ Shan Chih Asset Development Co. introduced its luxury condominium, "TatungTomorrowWorld",amasterpieceof green architecture, to commemorate Tatung’s 90th anniversary

2009■ Tatung Fine Chemicals started trading on the emerging stock

market in September■ Shan Chih Semiconductor Co. was listed on the Taiwan Stock

Exchange on 23th December

2010■ Tatung electric fan, a classic of its kind nationwide, is enjoying

its 60th anniversary ■ Tatung Boy, the mascot of Tatung Co., is celebrating its 40th

birthday■ Luxury condominium, "Tatung Noble Residences", the 2nd

project in Nangang by Shan Chih Asset Development, was under construction

■ Tatung 21.5" LED backlight display was awarded 2011 iF design award in audio and video category

2011■ Ms.W.Y.LinwasappointedPresidentofTatung■ 999 sets of designer limited edition rice cookers, winner of

IDEA"Gold"forpackagingandgraphics,wereintroducedtocommemorate its 50th anniversary. A series of rice cookers in colours of indigenous Taiwanese fruits, watermelon red (Siluo), banana yellow (Cishan), and guava green (Yenchao), were also introduced to celebrate the centenary foundation of the R.O.C.andastheCompany’sattempttorelatethetouchofTaiwan’s local specialities into CE product line

■ Winnerof"TopGreenBrand2011"and"Qualityaward"inthecategory of home appliance by Business Next magazine

■ Winnerof"Yahoo!EmotiveBrandAwards"■ Winnerof"Top100TaiwanBrand"bytheMinistryofEconomic

Affairs

2012■ Winnerof"TopGreenBrand2012"byBusinessNextmagazine

awarded "Advanced Award" in the category of home appliance

■ Winnerof TaiwanExcellenceAward2012 (SilverAward)&GoodDesignAward2012 for the ricecookerof50thanniversary l imited edition. Both the product and its packagingwereselectedas2012GoodDesignBest100.

■ New Energy BU won Taiwan Power Company’s first bid of Low Voltage AMI Pilot Project, a revolutionary milestone for the intelligent management system of electricity usage for households in Taiwan

■ WonthebidofHualien-TaitungRailwayElectrificationProjectby the Ministry of Transportation and Communications taking part in the national momentous infrastructure project for the green transportation of the East

■ Tatung3CobtainedGoldAwardinthecategoryof3Cretailchannel in the contest of the Best Service in Taiwan 2012

2013■ AwardedBestCorporateGovernance,Taiwan,2013byWorld

Finance,afinancialmagazinebyWorldNewsMediabasedinthe UK

■ Winner of the 13th "GoldenQual ityAward for Publ icConstruction" in design and construction

■ Tatung and Chunghwa Picture Tubes (CPT) were both awarded Honorable Mention in the 2013 Taiwan Top 50 CSR Awards in the category of manufacturing industry

■ Winnerof"TopGreenBrand2013"byBusinessNextMagazineawarded "Advanced Award" in the category of home appliance

■ WonthebidforNewTaipeiCity’sGreenCampusProject, inwhich solar panel system and intelligent energy management system are to be installed in 16 selected schools in New Taipei City

■ To celebrate its 95th anniversary of establishment, the Company held an open-air charity concert in Pinxi district where Tatung Boy Flying Lanterns made their debut

■ Tatung Consumer Products Co. (TCPC), Tatung’s brand channel, set up an official account on LINE along with the release of Tatung Boy character stickers and emoticons which, within 24 hours of online introduction, attracted more than one million active users and the download volume it created broke the record to become No.1 in the official account category of LINE

■ Chunghwa Picture Tubes(CPT) launched a public tender offer ofGiantplusTechnology’scommonsharestoenhance itscompetitive edge in small and medium-size mobile modules expending its business scale to total solution service

2014■ Winnerof2014TaiwanCorporateSustainabilityAward,bronze

medal, for large enterprises in technology and electronics manufacturing industry

■ Winnerof"TopGreenBrand2014"byBusinessNextMagazineawarded "Advanced Award" in the category of home appliance

■ As the only local brand winning Power Brands 2014 award in the category of home appliances, Tatung was awarded BronzeMedalAwardbythemagazineofMANAGERtoday

■ Unveiling "Tatung Boy Halley Rider" Lantern in the 2014 Taiwan Lantern Festival

■ Co-organizing "Smart City Summit and Expo" to promote Tatung’s unique total solution for smart energy saving system

■ WonthebidforNewTaipeiCity’sGreenMarketandCampusProject, in which smart meters and energy saving monitoring system are installed to the energy management system setting theprojectthebestexampletoPV-ESCOrooftopsolarsystemalike in Northern Taiwan


Company Milestones Corporate Chronicle

■ Accomplished microgrid system on Taiping Island, the southernmost territory of Taiwan, to set the benchmark for the application of microgrid system in offshore islands of Taiwan

■ Further to the winning of solar system roofing bids for government-owned buildings in New Taipei City, Nantou, Taichung, Pingtung, Tainan, and Kaohsiung, the Company againwonthebidforPenghuCountyGovernment’ssolarsystem roofing project making Tatung the most experienced PVenergyservicecompany(PV-ESCO)inTaiwan

■ The Company, as an important supplier of high efficiency motors and cables, was invited by Steel Asia Manufacturing Corporation, the largest steel company in the Philippines, to its new plant’s inauguration ceremony in Davao

■ Accomplishing Railway Electrification Project for Hualian–Taitung Line with the introduction of Tatung Boy EasyCard as a way of celebration

■ All new brand —"in fresh"— introduces hydroponic vegetables that are fresh, healthy, and pollution free to provide customers a new healthy choice by utilizing optoelectronic technology in agriculture

■ TatungGroupdonated12milliondollarstoKaohsiungCityGovernmenttohelpthevictimsinthedisasterofexplosion

■ AcquiredthecertificateofregistrationofISO/IEC27001:2013by British Standards Institution for the information security managementsystemofbothTatungandeTungGo,Tatung’sonline shop

2015■ The result of the Top 100 Influential Brand in Taiwan 2014

survey,carriedoutbyBusinessWeeklyand Ipsos,Taiwan,ranked Tatung No.4 in the category of electronics industry, No.24 in the main chart of mixed categories, and No.8 in the category of Taiwan native influential brand. The survey is the first of its kind to be conducted from the viewpoint of general consumers in respect of the most influential brand in their daily life

■ TatungBoylantern,GreetingDragonwithGoodLuck,madeits debut in the 2015 Taiwan Lantern Festival

■ EstablishingeTungGo,Tatung’sonlineshop, to involve ine-commerce business

■ Tatung Healthy Life Store began its official operation■ Applying cloud computing and Internet of Things technology

to come up with solutions for smart life, smart grid, and smart factory & building to showcase in 2015 Smart City Summit & Expo

■ EstablishingTaiwan'sfirstsmartmicrogriddemonstrationParkinLinbianforPingtungCountyGovernment.Theworkwon"Smart Energy Conservation" award in the 2015 Smart City Innovative Application Competition organized by the Board ofScienceandTechnology(BOST),theExecutiveYuan,andalso was awarded a silver medal in the microgrid category ofAPEC's2015EnergyandSmartCommunityApplicationCompetition

■ Shan-Chih Asset Development launched its flagship smart green community, "Tatung Smart Manor", which was awarded agoldmedalindesignofthe2015Taiwan'sExcellentSmartGreenBuildingandSystem

■ Tatung won the Bronze Medal in the category of electronics industry of Taiwan Corporate Sustainability Awards for 3 consecutive years

■ Tatung utilized the technology of Internet of Things on smart appliancesandcooperatedwithSIGMUtocreateall-roundedsmart living

■ Tatung won the bidding of solar PV roofing plan for the public buildings in Kinmen County. The project enables KinmenCountyGovernmenttogetthetrends inelectricityconsumption and gauge reportable events on real-time

power generation via Tatung’s smart meters and energy saving monitoring system so that electricity losses can be reduced and efficiency on power generation can be enhanced

■ Tatung rice cooker, an important cultural asset representing Taiwan'severydaylife,wasexhibitedanddemonstratedasacultural&creativeartifactinTsutayaBooks(Japan),oneofthetwenty most beautiful bookstores in the world

■ Tatung won the bidding of solar PV power generation system forPratasIsland.Theprojectincludes40kWpofsolarenergyand fuel control system to monitor the operation of generator and load status so that output of solar PV can be controlled and uninterrupted power supply in Pratas Island can be expected

■ Tatung cooperated with ITRI and Toshiba to promote microgrid within smart grid in Penghu. The project not only implements regional application of microgrid in Taiwan but also raises the proportion of renewable energy hoping to maintain stable power supply and optimize the regulation for demand and supply

2016■ Tatung won the bidding of solar PV roofing system for the

public buildings in New Taipei City. System of microgrid is introduced to the project to enable the emergency supply of electricity when without power supply from state grid in an event of natural disasters

■ The Company engaged in a multiple academia-industrial cooperation project with the Soochow University marking a new milestone for the Company’s cross-campus cooperation

■ Tatung Boy lantern, The Transformer and Earth Keeper, made its debut in the 2016 Taiwan Lantern Festival.

■ Tatung Fusion Skillet (waterless cooker) won 2016 iF Award■ Introducing 6 smart solutions including Smart Community,

Smart Energy, Smart Home, Smart Surveil lance, Smart Healthcare and Smart Factory in the 2016 Smart City Summit & Expo

■ TatungricecookerTAC-03DWandTatungMicrocomputerControlled Rice Cooker won Silver Awards in the competition of Taiwan Excellence Award 2016

■ TatungSmartPVAtmosphericWaterGeneratorwontheSystem Integration Award co-held by the Taiwan Smart City Solution Alliance and Taipei Computer Association

■ In response to the policy by the Council of Agriculture, Executive Yuan, transforming barren farmlands into Solar PhotovoltaicGreenZonefor thesubsidingareas inYunlinCounty, Tatung cooperated with local farmers to run ground–mounted solar power plants for the first time

■ The power system in the Railway Electrification Project for Hualian–Taitung Line won the 2016 Excellence in Engineering Project Award by the Chinese Institute of Engineers

■ Tatung won the bidding of the Fudekeng Restoration Park Solar PV System which will transform the ex-landfill into the Hill of Energy for Taipei city

■ Tatungwasawardedasilvermedalof theTTQSTrainingQualitySystembytheWorkforceDevelopmentAgency,theMinistry of Labor, Executive Yuan

■ Tatung was acknowledged by the Ministry of Economical Affairs for its effort in energy saving practice and thus being granted the prize of Energy Saving Model

■ Tatung won the Excellence Award for Leadership in Energy ConservationbyTaipeiCityGovernment

■ The Taiwan Corporate Sustainability Awards were bestowed toTatungCompany,ChunghwaPictureTubesLtd,andGreenEnergy Technology Inc.

■ Tatung won the bidding of 2016 Taipei City Public Premises Solar Photovoltaic Roofing Project, in which two innovative


Company Milestones

systems including particulate matter 2.5(PM2.5) measurement system and light-weighted solar modules would be installed

2017■ WonthebiddingofTaoyuanPublicLandfillSolarPVSystem,

the biggest of its kind in Taiwan. The project will be included into smart management system, via smart cloud platform, together with Taoyuan Public House Solar PV Roofing System and Ponds Floating Solar PV System.

■ TatungBoy"GrabYourBat"creativelanternmadeitsdebutinthe 2017 Taiwan Lantern Festival in Yunlin.

■ TatungFusionSkillet(waterlesscooker)wontheSilverQualityaward in the 2017 Taiwan Excellence Award.

■ Tatung attended the 2017 Smart City Summit & Expo showcasing the solutions for smart energy, smart community, smart industry and cloud service.

■ Taoyuan’s Ponds Floating Solar PV System came into operation, a project built by Tatung with concern to maintain the balance of nature and environmental sustainability.

■ Cooperating with ITRI to develop IE4 industrial induction motor with super high-efficiency.

■ Created by Tatung’s energy innovation technologies, three applications namely pond floating solar PV system, tree of life, and fountain pavilion were showcased in Taoyuan Agriculture Expo 2018 .

■ Allying with National Pingtung University of Science and Technology to develop smart greenhouse agricultural technology.

■ WonthebidofsolarPVroofingsystemforBanqiaoFruitandVegetableWholesaleMarketinNewTaipeiCity.

■ Tatung rice cookers were certified with EPA Carbon Emission Label.

■ To help with tourism in townships of Taiwan, the Company invitedJijiTownshipAdministrationto launcha jointeventturningJijiintoatownofgamesinthehopeofpromotinglocalprosperity. Tatung boy stamps and first-day covers were also issued for the first time.

■ Integrating the " Tatung Cloud" with Microsoft Azure International Cloud service to develop all-rounded smart life onTatungIOT.

■ WonthebidofsolarPVroofingsystemforsewagetreatmentplant in Benjhou, Kaohsiung.

■ Tatung Thailand signed contract with Thailand Eastern Technological College for industry-academic cooperation.

■ Tatung,ChunghwaPicture Tubes, andGreen EnergyTechnology won the Taiwan Corporate Sustainability Award.

2018■ Tatung celebrated its 100 years of establishment.■ Ms.W.Y.LinwaselectedaschairmanandpresidentofTatung.■ Tatung won the Taiwan Corporate Sustainability Award for 6

consecutive years.■ The Hill of Energy in Taipei city, the first landfill solar power plant

in Taiwan, was awarded "2018 Taiwan Real Estate Excellence Awards".

■ Wonthe"2018SmartCityInnovationApplicationAward"foritsachievementinsmartmicrogridsysteminQimeiisland.

■ No. 12-14 Ponds of Taoyuan Canal, the first Floating Solar PV plant in Taiwan, was awarded "Top Solar System Awards" by Bureau of Energy, Ministry of Economic Affairs.

■ Debuted limited collector edition of Tatung Boy, mounting withinlayof108crystalsbySWAROVSKI®incelebrationofthecentennial anniversary of Tatung.

■ Tatung smart home cloud service, Tatung fusion skil let (waterless cooker TRC-M61A), and stainless steel rice cooker won the "2018 Taiwan Excellence Award".

■ Attending the 2018 Smart City Summit & Expo and showcasing total solutions for smart microgrid, smart agriculture, smart building and smart agriculture.

■ CreativeLantern, "TatungBoyReturnswithGifts",madeitsdebut in the 2018 Taiwan Lantern Festival in Chiayi.

2019■ Showcasing field achievements in the applications of smart

energy, smart agriculture, smart healthcare, and Internet of vehicle at the 2019 Smart City Summit & Expo.

■ Tatung constructed an intelligent system to make the main bus station of Pisek, Czech Republic go smart. The project, winner of "2019 Smart City Systems Integration Award", utilized applications of solar energy system, smart meter, cloud-hosted energy management, and cloud-hosted environment monitoring system.

■ Completed1MW/1MWhstoragesysteminYong-An,Kaohsiungcity. It is the first reference site for Taiwan’s future plan of high voltageandMWgridscaleenergystoragesystem.

■ Tatung obtained the “Verification on Energy Storage Facilities Technologies", tender of ITRI, and integrated a total of 10MW/10MWhbatterysysteminChangbin IndustrialPark.It is the first reference site for Taiwan’s energy management system of cross-vendor and heterogeneous battery integration storage system.

■ Completed the second phase of PV roofing on Kanhai Park’s publicbuildings,the largestsinglePVfieldof1991.4kWpinHsinchu.

■ CooperatingwithNewTaipeiCityGovernmenttosetuptwodemonstration sites of citizen power plants whose operation involves the effort from industry, government, and locals.

■ Tatung Forever Energy won the “2019 Enterprise Project Management Benchmarking Award”.

■ Tung Yang Energy obtained a license for the renewable energy power generation industry and thus became officially an investor for the first type of solar power plant.

■ Tatung keeping abreast of international pace launched the large horsepower 60Hz IE4 induction motor series up to 200HP, the first in Taiwan.

■ Thericecookerofcentennialanniversaryedition(TAC-11V-MW)won a silver medal of the “2019 Taiwan Excellence Award”.

■ Creative Lantern, "Tatung Boy Racing Kart ", made its debut in the 2019 Taiwan Lantern Festival in Pingtung.

2020■ Completed the Highway Improvement Project for Hualian–

Taitung Line and was awarded the “Pioneer of carbon management for eco-friendly” award by Suhua Improvement EngineeringOffice,DirectorateGeneralofHighways,Ministryof Transportation and Communications.

■ Tatung became the sole aggregator of demand response in Taiwan, and the first case has been successfully completed in early 2020.

■ "HybridWirelessModuleCloudIoT IntelligentMotorSensor(TiMS)" won the 2020 Taiwan Excellence Award.

■ CreativeLantern,”TatungBoyOceanCarnival”,made itsdebut in the 2020 Taiwan Lantern Festival in Taichung.


Company Milestones Corporate Chronicle

▼KanhaiPark,HsinchuCity-ThelargestsinglePVfieldinHsinchu.


Global Network

Taiwan Tatung Co. Power Business Group Consumer Business Group System Business Group

Investments Chunghwa Picture Tubes, Ltd. Forward Electronics Co., Ltd. Shan Chih Semiconductor Co., Ltd. Shan Chih Asset Development Co., Ltd. Tatung Consumer Products (Taiwan) Co., Ltd. Chunghwa Electronics Development Co., Ltd. Tatung System Technologies Inc. Tatung Fine Chemicals Co., Ltd. Toes Opto-Mechatronics Co., Ltd. Tatung Medical & Healthcare Technologies Co., Ltd. Shan Chih Investment Co., Ltd. Chih Sheng Investment Co., Ltd. Tatung Forever Energy Co., Ltd. Tung Yang Energy Co., Ltd. Chih Kuang Energy Co., Ltd. Shang Shin Energy Co., Ltd. Yau Yang Energy Co., Ltd. Ting Shin Energy Co., Ltd. Zhi Shin Energy Co., Ltd. Others

U.S.A Tatung Co. of America, Inc.

Tatung Electric Co. of America, Inc.

Czech Tatung Czech s.r.o.

China Tatung Information Technology (Jiangsu) Co., Ltd.

Tatung (Shanghai) Co., Ltd.

Tatung Compressors (Zhongshan) Co., Ltd.

Japan Tatung Company of Japan, Inc.Thailand

Tatung (Thailand) Co., Ltd.

Singapore Tatung Information (Singapore) Pte. Ltd.

Tatung Electric (Singapore) Pte. Ltd.


Global Network Corporate Chronicle

Taiwan Tatung Co. Power Business Group Consumer Business Group System Business Group

Investments Chunghwa Picture Tubes, Ltd. Forward Electronics Co., Ltd. Shan Chih Semiconductor Co., Ltd. Shan Chih Asset Development Co., Ltd. Tatung Consumer Products (Taiwan) Co., Ltd. Chunghwa Electronics Development Co., Ltd. Tatung System Technologies Inc. Tatung Fine Chemicals Co., Ltd. Toes Opto-Mechatronics Co., Ltd. Tatung Medical & Healthcare Technologies Co., Ltd. Shan Chih Investment Co., Ltd. Chih Sheng Investment Co., Ltd. Tatung Forever Energy Co., Ltd. Tung Yang Energy Co., Ltd. Chih Kuang Energy Co., Ltd. Shang Shin Energy Co., Ltd. Yau Yang Energy Co., Ltd. Ting Shin Energy Co., Ltd. Zhi Shin Energy Co., Ltd. Others

U.S.A Tatung Co. of America, Inc.


Czech Tatung Czech s.r.o.

China Tatung Information Technology (Jiangsu) Co., Ltd.



Japan Tatung Company of Japan, Inc.Thailand


Singapore Tatung Information (Singapore) Pte. Ltd.



Corporate Governance - Organization Chart

Organization ChartTatung Company is dedicated to manufacturing energy-saving products, systems and services with three business groups working on smart grids, smart communities and smart households to produce a number of energy-saving and highly efficient electronic products, household appliances, high-efficiency smart motors, power supply facilities and automatic control products. They are fully integrated with information and communication systems as well as well-rounded and instant services in relation to their products and solutions. Oursmartgrids relyuponoursystemsolutionsandpower business groups for the supply of smart e lect r ic i t y meters, communicat ion modules, concentrators, F TU/FRTU, h igh-ef f iciency and energy-saving motors and transformers and switch/control gears, etc.Wealso provide such ful lyintegrated system solutions and technological services as AMI communication and system control stations, advanced power distribution automation, smart transformer stations and power plants. Insofar as our smart community is concerned, our business groups of system solutions have integrated solar power systems, energy-saving systems, other recyclable micro-grid systems, the SHMS system (for household energy saving, security, and health care), and the SBMS system (for corporate smart buildings to manage energy saving) into our well-rounded solutions and technological services. F o r s m a r t h o m e s , we h a ve i n te g ra te d t h e Company’s manufactured appliances and system solutions into an advanced solution for smart home applications which can be used on cellphones or tablets, together with our cloud services, in order to provide a energy-saving, convenient, safe and healthy smart life as we offer smart, energy-saving and environment-friendly household appliances, IP cameras, surveillance systems, smart gateways, energy-saving sensors, environmental sensors, etc. Ta t u n g C o m p a n y i s e q u i p p e d w i t h c o r e technologies to manufacture important products in the system solutions while working with strategic business partners to target the world market.

Shareholders' Meeting

Board of Directors

Chairman

President

Executive Vice President

Audit Committee

Remuneration Committee

Corporate Governauce Committee

Internal Audit Committee


Corporate Governance - Organization Chart Corporate Governance

Health & Safety Division

Administration HumanResources&GeneralAdministrationDivision,Finance&AccountingDivision,StockAffairsDivision,ProcurementDivision,ManagementInformationSystem Division, Legal Division, Product Verification and Customs Department

POWERBUSINESSGROUP

Power Equipment BU

Industrial Appliance: Researching, developing and manufacturing all kinds of transformers rated 345kV 1000MVA and under, all kinds of reactors rated 345kV 100MVAR and under, gas insulated switchgears and outdoor gas circuit breakers up to 161kV class, 36kV series of switchgear, power distribution equipment, and other industrial equipment.Cable:Withmorethanfiftyyearsoftechnicalexperience,thisbusinessunitisresponsibleformanufacturingandsaleofvariouswires,cables,opticalfiber cables and busway which are widely used in telecommunication, power transmission, power distribution, solar photovoltaic generation system and various industrial equipment, home appliance and IT network & electronic components.

Motor BU

Withmorethan70yearsoftechnologyandexperience,MotorBUresearchesandproducesallkindsofenergysavinghigh-efficiency,single-phase, and three phase high-low-voltage motor from 1/8~50,000 HP, including a variety of special motors and applications system such as premium efficiency motors, high temperature resistant motors, electric vehicle motors, explosion proof motors, new automatic brush lifting device equipped in wound rotor motor, vertical high thrust pump motors, gear reducer, inverter motors, aluminum frame motors, brake motors, oil well pump motors, water pump motors, immersible pump motors, built-in type spindle motors, rolling mill motors, elevator motors, crane motors, permanent magnet motors, IoT connected smart motor monitoring sensor and system, railway traction motors, inverters, control panels etc., as well as provides total solutions for electrical testing equipments and plant power equipments system engineering projects to serve a variety of industries.

CONSUMERBUSINESSGROUP

Advanced Electronics BU

TheAdvancedElectronicsBusinessUnit(AEBU)focusesonprovidingdesignandmanufacturingproducts&solutionstoglobalODM/OEMcustomers. The product lines include: digital entertainment and Internet-of-Things (IoT) products. The digital entertainment product line includes gaming headsets, smart & noise cancelation headsets, streaming microphone, and entertainment accessories.The IoT product line includes IP & streaming camera, smart energy management and sensing-&-control products. Tatung’s customers can benefit from Tatung’s fast reactions to accommodate market needs and flexibility in design customization. The on-going research and development will further enhance competitiveness in features and costs of customers’ products.

Appliance BU

Strengthenbrandoperation.Wecontinuedtoenhancebrandvaluewithinnovativedesign,superiorqualityandtechnicalservicesinbothdomesticandoverseasmarket.Weservedawiderangeofproductsincludingcommercialandresidentialenergy-savingair-conditioners;smartTFTdisplays,4KUHDLEDTFTdisplays;CentennialEditionSteamricecookers,Easycookerlite(simplifiedversionofFusioncooker).Welaunchedaseriesofco-brandingricecookers,anddevelopedthenewstylishjuicer,electricteapotsandothersmallappliances.Weactivelyparticipatedinproductdesigncompetitionsgloballytoimprovethebrand'sexposureinthemarket.Intherecentyears,wehaveconsecutivelyobtainedmajorinternationaldesignawardssuchastheGermaniFIndustrialDesignAward,theReddotDesignAward,theJapaneseGoodDesign,andtheTaiwanExcellenceAward.WehavealsoobtainedmultinationalsafetycertificationandTaiwanMITcertification.To make farm-to-table a reality, we persistently promote our health food brand "In Fresh" through careful selection of smallholding farmers, and committed to promoting Tatung Intelligent Agriculture Monitoring System, we can effectively control the greenhouse environment, provide high efficiency, high quality and high productive service.To pursue the blooming AIoT trend, we developed smart home appliances for smart energy saving and living applications. Through sensing and Internet of Things technology, a variety of terminal devices can be connected to provide smart living solutions according to user’s needs, such as consumer power management, remote control, scheduling control, and personalized scenario modes, etc. Consumers can also integrate voice-activated functional services to enjoy digitalize life experience.

SYSTEMBUSINESSGROUP

Smart Meter BU

Smart Meter BU provides various types of smart meters and AMI systems. Tatung has the ability of integrating the systems of smart meter infrastructureandintegratingdifferentcommunicationtechnologiessuchasRF,PLC,4GandNB-IoTcommunicationstodevelopsmartmeterapplication functions to meet customer needs and improve system performance. It also became the sole aggregator of demand response in Taiwan, and the first case has been successfully completed in early 2020.

System Integration BU

System Integration BU is committed to specializing in the fields of information and communication systems as well as electromechanical systems.Information and Communication Systems: For more than 30 years, we have been helping customers deal with the computerization and automation oftheirsystemsandhaveendeavoredtomeettheneedsoftheinformationmarketintheeraoftechnology.Wearealreadyarepresentativemanufacturerofhigh-qualitysystemintegrationinthecountry.Wespecializeininformationsystemintegration,networksecurityplanning&construction,andapplicationsoftwaredevelopment.Wehaverichlarge-scalesystemintegrationcapabilitiesandexperience.Theserviceteamhas owned a wide range of IT professional skills, certificates and services network throughout the Taiwan by 13 direct branch offices to provide customers fast services. In the future, we will continue to devote ourselves to deepening the fields of information and communication integration, cloud applications, information security, outsourcing services, business intelligence and system development, and then will become the leading manufacturer in those fields.Electromechanical Systems: As various infrastructure projects at Taiwan started between the 1960s and 1980s, this Company made an important contribution to the infrastructure construction such as power generation, power transmission as well as power supply. Electrical and mechanical systems related businesses are:

1. Provide power plants, large substations, transmission & distribution systems, solar power generation and motor related electromechanical integration services.

2. Residential and factory-built electromechanical engineering, including planning as well as construction for smart building. 3. Sewage (waste water) treatment, which has reached the industrial waste water Zero Discharge standard.4. Traffic mechanical and electrical engineering for Rails and roads as well as sign control systems.

Wehasownedcross-disciplinaryprofessionals,whichcoversvariousfunctionalitiessuchaspower,electronics,mechanics,smartcontrol,information, communications, transportation and project management. They are responsible for integrating cross-disciplinary professionals, coordinating cross-organizational interfaces, providing integrated design, project management and maintenance services.

Electrical Engineering Division

TocomplywithGovernmentRenewalEnergypolicy,TatungCompanyhasintegratedtheresourcesofthreeplantsofthePowerBGwithinTatungGroupandtheadvantageofourelectricalpowerproductsfortheexpandingofthebusinessscopeofelectricalpowersystemintegrationandproviding total solution services.Businessscope:1.PVpowersubstationsystem.2.SmallscaleHydroPowerPlantsystem.3.WindMillPowersubstationsystem.4.ElectricalPowerEngineering System.

Solar Energy BU

In order to cooperate with the professional team promoted by the government policy, the Solar Energy Division invested in domestic public buildings and various types of solar photovoltaic fields in the long term. Solar Energy BU provide renewable energy project development, design, construction and maintenance services.ThesolarteamleveragestheGroup'ssupplychain integrationadvantages,coupledwithrichdesignplanningandprojectmanagementexperience, the project performance is spread across Taiwan.At present, it is actively expanding ground-based landfill sites and water-based sites, and additionally take mechanics and electronics in advantage ability to enter the large-scale ground power station market.In terms of maintenance, we could through smart monitoring technology to develop business opportunities for maintenance of power plants, provide quality maintenance services, and promote renewable energy policy.

Smart Energy BU

Microgrid systems, regionally small power supply system integrated with the distributed energy sources (DERs) such as solar energy, wind power, traditional generators and energy storages systems (ESSs), can operate independently or with the main grid. Microgrid systems can immediately enter islanding operation mode while power outage occurs in main grid and could keep functioning by using DERs and ESSs to perform the role of emergent power supply for the local areas they support.WithAIoTarchitecture,thesystemprovidestotalsolutionfordatatransferfromend-devicestothecloud;edgecomputing,dataanalytics,datavisualization, and predictive maintenance by actively notifying users to perform maintenance in advance to reduce losses due to production and operation interruptions.


Corporate Governance

Profile of board of directors and management(I) Board of directors

As of March 31, 2020

TitleNationality

or corporate

seatName Male /

Female

Date of appointment

(assumption of post)

Term of office

Date of initial appointment

Shares held upon appointment Shares held currentlyShares held by

spouse and underage children currently

Shares held in another person’s name

Work/educationalexperience JobtitleassumedintheCompanyandanyothercompany

Otherhead,director,orsupervisorwho is his/her spouse or is within 2nd

degree of kinshipNotes

Number of shares

Shareholding percentage

(%)Number of

sharesShareholding percentage

(%)Number of


(%)Number of


(%)Jobtitle Name Relationship

Chairman Republic of China (Taiwan)

Wen-YenK.Lin Female 2018.02.01 3 years 1996.06.06 16,004,173 0.68 14,004,173 0.60 5,889,956 0.25 - - Master of Economics, Maryland UniversityAssistant Professor of Maryland UniversityLecturer of National Taiwan UniversityLecturer of Tatung UniversitySeniorGeneralManagerofTatungCompany'sInternationalSalesExecutive Vice President of Tatung Company

President of Tatung Company,Chairman of Elitegroup Computer Systems Co., Ltd.Chairman of Tatung Mexico S.A. de C.V,Chairman of Tatung Czech s.r.o.Chairman of Tatung Information (Singapore) Pte. Ltd.Director of Forward Electronics Co., Ltd.Director of Shan Chih Semiconductor Co., Ltd.Director of Tatung Fine Chemicals Co., Ltd.Director of Tatung System Technologies Inc.

None None None None 2

Director Republic of China (Taiwan)

Tatung University - 2017.05.11 3 years 1987.05.24 144,798,047 6.19 144,798,047 6.19 - - - - - - - - - -


Representative of Tatung UniversityI-Hua Chang

Male 2017.05.11 3 years 1997.07.17 227,615 0.01 227,615 0.01 6,353 - - - Bachelor of Mechanical Engineering, Tatung UniversityPresident of Tatung Consumer Products (Taiwan) CompanySecretary general of Tatung company’s Secretariat

Chairman & President of Shan Chih Asset Development Co., Ltd.Director of Tatung Industry CompanyDirector of Cheng Sheng Broadcasting Corp.Director of Chunghwa Electronics Development Co., Ltd.Chairman & President of Chih Sheng Realty Co., Ltd.Director of Tatung Consumer Products (Taiwan) Co., Ltd.Director of Kuender Co., Ltd.

None None None None


Shou-Huang Chen

Male 2017.05.11 3 years 2017.05.11 - - - - - - - - Master of Law, Chinese Culture UniversityDoctor of Philosophy, LLD Institute of the LawoftheSea,NationalTaiwanOceanUniversityPoliticalDeputyMinister,MinistryofJusticeChief Prosecutor, Taiwan High Prosecutors OfficeChairman of Taiwan After-Care Association & Association for Victims SupportJudgeofTaiwanChiayiDistrictCourtChief Prosecutor, Taiwan High Court Kaohsiung, and Hualien Branch CourtChief Prosecutor, Taiwan Taichung, Taoyuan, Yilan District Court

ManagingDirector&Attorneyat-law,Peace&GraceInternational Attorneys at Law

None None None None


Sheng-WenTsai

Male 2017.05.11 3 years 2017.05.11 - - - - - - - - BachelorofAccountingFu-JenUniversityExecutive Director, Ernst & Young

Practicing Accountant Fortune & Co., CPAsIndependent Director, A-SPINE Asia Co., Ltd.Supervisor, AliahanHouse Co., Ltd.

None None None None


Lung-Ta Lee Male 2017.05.11 3 years 2011.06.24 367 - 367 - - - - - Ph.D. of Chemical Engineering, Tatung UniversityR&D Section Manager of Tatung Fine Chemicals Co., Ltd.President of Shang Chih Chemical Industry Co., Ltd.

Chairman & President of Shan Chih Semiconductor Co., Ltd.Director of Tatung Fine Chemicals Co., Ltd.,ChairmanofGreaterPowerLtd.Chairman of Chih De Investment Co., Ltd.DirectorofUltraEnergy(Weifang)TechnologyCo.Ltd.Chairman of Shang Chih International Chemical Industry Co., Ltd.Chairman of Huaian Tatung Advanced Technology Materials Co., Ltd.Chairman of Dongguan Tongli Trading Co., Ltd.Director of Chih Sheng Investment Co., Ltd.Director of Chunghwa Electronics Development Co., Ltd.ChairmanofGintungEnergyCo.,Ltd.Chairman of Tatung Coaings (Kunshan) C0., Ltd.

None None None None


Corporate Governance Corporate Governance

Profile of board of directors and management(I) Board of directors


TitleNationality

or corporate

seatName Male /

Female

Date of appointment


Term of office








Number of shares


(%)Number of


(%)Number of


(%)Number of



Chairman Republic of China (Taiwan)

Wen-YenK.Lin Female 2018.02.01 3 years 1996.06.06 16,004,173 0.68 14,004,173 0.60 5,889,956 0.25 - - Master of Economics, Maryland UniversityAssistant Professor of Maryland UniversityLecturer of National Taiwan UniversityLecturer of Tatung UniversitySeniorGeneralManagerofTatungCompany'sInternationalSalesExecutive Vice President of Tatung Company

President of Tatung Company,Chairman of Elitegroup Computer Systems Co., Ltd.Chairman of Tatung Mexico S.A. de C.V,Chairman of Tatung Czech s.r.o.Chairman of Tatung Information (Singapore) Pte. Ltd.Director of Forward Electronics Co., Ltd.Director of Shan Chih Semiconductor Co., Ltd.Director of Tatung Fine Chemicals Co., Ltd.Director of Tatung System Technologies Inc.

None None None None 2


Tatung University - 2017.05.11 3 years 1987.05.24 144,798,047 6.19 144,798,047 6.19 - - - - - - - - - -


Representative of Tatung UniversityI-Hua Chang

Male 2017.05.11 3 years 1997.07.17 227,615 0.01 227,615 0.01 6,353 - - - Bachelor of Mechanical Engineering, Tatung UniversityPresident of Tatung Consumer Products (Taiwan) CompanySecretary general of Tatung company’s Secretariat

Chairman & President of Shan Chih Asset Development Co., Ltd.Director of Tatung Industry CompanyDirector of Cheng Sheng Broadcasting Corp.Director of Chunghwa Electronics Development Co., Ltd.Chairman & President of Chih Sheng Realty Co., Ltd.Director of Tatung Consumer Products (Taiwan) Co., Ltd.Director of Kuender Co., Ltd.

None None None None


Shou-Huang Chen

Male 2017.05.11 3 years 2017.05.11 - - - - - - - - Master of Law, Chinese Culture UniversityDoctor of Philosophy, LLD Institute of the LawoftheSea,NationalTaiwanOceanUniversityPoliticalDeputyMinister,MinistryofJusticeChief Prosecutor, Taiwan High Prosecutors OfficeChairman of Taiwan After-Care Association & Association for Victims SupportJudgeofTaiwanChiayiDistrictCourtChief Prosecutor, Taiwan High Court Kaohsiung, and Hualien Branch CourtChief Prosecutor, Taiwan Taichung, Taoyuan, Yilan District Court

ManagingDirector&Attorneyat-law,Peace&GraceInternational Attorneys at Law

None None None None


Sheng-WenTsai

Male 2017.05.11 3 years 2017.05.11 - - - - - - - - BachelorofAccountingFu-JenUniversityExecutive Director, Ernst & Young

Practicing Accountant Fortune & Co., CPAsIndependent Director, A-SPINE Asia Co., Ltd.Supervisor, AliahanHouse Co., Ltd.

None None None None


Lung-Ta Lee Male 2017.05.11 3 years 2011.06.24 367 - 367 - - - - - Ph.D. of Chemical Engineering, Tatung UniversityR&D Section Manager of Tatung Fine Chemicals Co., Ltd.President of Shang Chih Chemical Industry Co., Ltd.

Chairman & President of Shan Chih Semiconductor Co., Ltd.Director of Tatung Fine Chemicals Co., Ltd.,ChairmanofGreaterPowerLtd.Chairman of Chih De Investment Co., Ltd.DirectorofUltraEnergy(Weifang)TechnologyCo.Ltd.Chairman of Shang Chih International Chemical Industry Co., Ltd.Chairman of Huaian Tatung Advanced Technology Materials Co., Ltd.Chairman of Dongguan Tongli Trading Co., Ltd.Director of Chih Sheng Investment Co., Ltd.Director of Chunghwa Electronics Development Co., Ltd.ChairmanofGintungEnergyCo.,Ltd.Chairman of Tatung Coaings (Kunshan) C0., Ltd.

None None None None




TitleNationality

or corporate

seatName Male /

Female

Date of appointment


Term of office








Number of shares


(%)Number of


(%)Number of


(%)Number of



Independent Director

Republic of China (Taiwan)

Peng-Fei Su Male 2017.05.11 3 years 2011.06.24 - - - - - - - - B.S. in Department of Electrical and Control Engineering, National Chiao-Tung UniversityM.S.inGraduateInstituteofBusinessAdministration, National Chengchi UniversityDepartment of Enterprises and FinanceDirector of SUNNET Co., Ltd.AVP of Investment Department, Development Technology Consultant Co., Ltd.Independent Director, San Chih Semiconductor Co., Ltd.

SeniorViceGeneralManagerinInvestmentDepartment,Cheng Ye Assets Management Co., Ltd.

None None None None



Tzong-Der Liou Male 2017.05.11 3 years 2012.06.12 - - - - - - - - Ph.D.ofLaw,NagoyaUniversity,JapanChairProfessor,NagoyaUniversity,JapanChairperson, Department of Law, National Chengchi UniversityDean, College of Law, National Chengchi UniversityDean of Academic Affairs, National Chengchi UniversityIndependent Director, Taiwan Sugar CorporationDirector, Taiwan Administrative Law AssociationVice Chairperson, National Communications CommissionArbitrator, Chinese Arbitration Association, Taipei

Professor, College of Law, National Chengchi UniversityDirector,JinWenUniversityofScience&TechnologyChairman,TeacherGrievancesCommitteeofMinistryofEducationCommitteemember,TatungCompany'sauditcommittee&remuneration committeeCommitteeconvenor&member,TatungCompany'scorporate governance committee

None None None None



Chi-MingWu Male 2017.05.11 3 years 2013.06.13 - - - - - - - - BBA, Department of BusinessAdministration, National Chengchi UniversityMBA,GraduateInstituteofBusinessAdministration, National Taiwan UniversityPh.D. in Finance, University of Mississippi, U.S.A.Public Director, Securities Investment Trust & ConsultingAssociationoftheR.O.C.Member of Management Board, Public Service Pension FundChartered Financial Analyst, CFAChief of Training Section, Center of Public & Business Administration Education, National Chengchi UniversityIndependent Director, Ennoconn Corporation Co., Ltd.MemberofOmbudsmanCommittee,FinancialOmbudsmanInstitution

Associate Professor, Department of Finance, National Chengchi UniversityIndependent Director, TSC Auto ID Technology Co., Ltd.Independent Director, Masterlink Securities Corp.

None None None None

Note1: Please refer to pages 103~107 for the job assumed by the directors and supervisors in other investees concurrently.Note2: ChairmanWei-ShanLinresignedandtheboardelecteddirectorWen-YenK.LintotakeoverchairmanshiponFebruary1,2018. Tatung Company has been fully in compliance with law and regulations for corporate governance and business operation. To strengthen

corporategovernance,theBoardhassetupCorporateGovernanceCommitteetoassistcompanyoperationbeconductedundertherealm of professional managers.

(II) Major funder or donor of the institutional shareholdersAs of March 31, 2020

Institutional shareholder Funder or Donor

Tatung University Hsieh-Chih Industry Promotion Association 100%




TitleNationality

or corporate

seatName Male /

Female

Date of appointment


Term of office








Number of shares


(%)Number of


(%)Number of


(%)Number of





Peng-Fei Su Male 2017.05.11 3 years 2011.06.24 - - - - - - - - B.S. in Department of Electrical and Control Engineering, National Chiao-Tung UniversityM.S.inGraduateInstituteofBusinessAdministration, National Chengchi UniversityDepartment of Enterprises and FinanceDirector of SUNNET Co., Ltd.AVP of Investment Department, Development Technology Consultant Co., Ltd.Independent Director, San Chih Semiconductor Co., Ltd.

SeniorViceGeneralManagerinInvestmentDepartment,Cheng Ye Assets Management Co., Ltd.

None None None None



Tzong-Der Liou Male 2017.05.11 3 years 2012.06.12 - - - - - - - - Ph.D.ofLaw,NagoyaUniversity,JapanChairProfessor,NagoyaUniversity,JapanChairperson, Department of Law, National Chengchi UniversityDean, College of Law, National Chengchi UniversityDean of Academic Affairs, National Chengchi UniversityIndependent Director, Taiwan Sugar CorporationDirector, Taiwan Administrative Law AssociationVice Chairperson, National Communications CommissionArbitrator, Chinese Arbitration Association, Taipei

Professor, College of Law, National Chengchi UniversityDirector,JinWenUniversityofScience&TechnologyChairman,TeacherGrievancesCommitteeofMinistryofEducationCommitteemember,TatungCompany'sauditcommittee&remuneration committeeCommitteeconvenor&member,TatungCompany'scorporate governance committee

None None None None



Chi-MingWu Male 2017.05.11 3 years 2013.06.13 - - - - - - - - BBA, Department of BusinessAdministration, National Chengchi UniversityMBA,GraduateInstituteofBusinessAdministration, National Taiwan UniversityPh.D. in Finance, University of Mississippi, U.S.A.Public Director, Securities Investment Trust & ConsultingAssociationoftheR.O.C.Member of Management Board, Public Service Pension FundChartered Financial Analyst, CFAChief of Training Section, Center of Public & Business Administration Education, National Chengchi UniversityIndependent Director, Ennoconn Corporation Co., Ltd.MemberofOmbudsmanCommittee,FinancialOmbudsmanInstitution

Associate Professor, Department of Finance, National Chengchi UniversityIndependent Director, TSC Auto ID Technology Co., Ltd.Independent Director, Masterlink Securities Corp.

None None None None

Note1: Please refer to pages 103~107 for the job assumed by the directors and supervisors in other investees concurrently.Note2: ChairmanWei-ShanLinresignedandtheboardelecteddirectorWen-YenK.LintotakeoverchairmanshiponFebruary1,2018. Tatung Company has been fully in compliance with law and regulations for corporate governance and business operation. To strengthen

corporategovernance,theBoardhassetupCorporateGovernanceCommitteetoassistcompanyoperationbeconductedundertherealm of professional managers.

(II) Major funder or donor of the institutional shareholdersAs of March 31, 2020

Institutional shareholder Funder or Donor

Tatung University Hsieh-Chih Industry Promotion Association 100%

(III) Major funder or donor of the Non-corporate organizer major funder or donor.As of March 31, 2020

Institutional name Funder or Donor

Hsieh-Chih Industry Promotion Association Ti-Zao Lin 100%



(IV) Professional qualifications and independence analysis of directors As of March 31, 2020

Qualification

Name

Whethertheypossessworkexperienceofmorethanfiveyears and the following professional qualifications Independence criteria (Note 1)

Number of other public companies in which he/she serves

concurrentlyas

independent director

An instructor orhigher position in a department of commerce, law,

finance, accounting,or other academicdepartment related to company businessin a public or private

junior college, college, or university

A judge, public prosecutor, attorney,

certified public accountant, or

other professional or technical

specialist who has passed a national examination and

has been awarded a certificate in a

professionalcapacity necessary

for company business

Having workexperience in the

area of commerce,law, finance or accounting, or

otherwise necessary for

company business 1 2 3 4 5 6 7 8 9 10 11 12

Wen-YenK.Lin √ √ √ √ √ √ √ √ 0

I-Hua Chang √ √ √ √ √ √ √ √ 0

Shou-Huang Chen √ √ √ √ √ √ √ √ √ √ √ √ √ √ 0

Sheng-WenTsai √ √ √ √ √ √ √ √ √ √ √ √ √ √ 1

Lung-Ta Lee √ √ √ √ √ √ √ 0

Peng-Fei Su √ √ √ √ √ √ √ √ √ √ √ √ √ 0

Tzong-Der Liou √ √ √ √ √ √ √ √ √ √ √ √ √ √ 0

Chi-MingWu √ √ √ √ √ √ √ √ √ √ √ √ √ √ 2

Note 1: Please tick the corresponding boxes if directors have been any of the following during the two years prior to being elected or during the term of office: (1) Not an employee of the Company or any of its affiliates; (2) Not a director or supervisor of the Company or its affiliates (The same does not apply, however, in cases where the person is an

independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the same parentcompany,asappointed inaccordancewith theRegulationsGoverningAppointmentof IndependentDirectorsandCompliance Matters for Public Companies or with the laws of the country of the parent company or its subsidiary);

(3) Neither a shareholder who holds shares, together with those held by the person’s spouse or underage children, or held by the person under others’ name in an aggregate amount of 1% or more than the total number of issued shares of the Company, nor one of the Company’s top 10 individual shareholders;

(4) Not a manager as listed in (1) or a spouse, relative within the 2nd degree of kinship, or lineal relative within the 3th degree of kinship of any of the people specified in the preceding three subparagraphs as listed in (2), (3);

(5) Not a director, supervisor or an employee of the corporate shareholders directly holding more than 5% of the Company’s total issued shares; neither a director, supervisor or an employee of the Company’s top five corporate shareholders, nor a director, supervisor or an employee of the corporate shareholders who appoint a representative to be a director or supervisor of the Company in accordance with Article 27, paragraph 1 or 2 of the company law(The same does not apply, however, in cases where the person is an independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the sameparentcompany,asappointedinaccordancewiththeRegulationsGoverningAppointmentof IndependentDirectorsandCompliance Matters for Public Companies or with the laws of the country of the parent company or its subsidiary)

(6) Not a director, supervisor or an employee of other companies, the same person who controls more than half of the Company’s director seats or voting shares. (The same does not apply, however, in cases where the person is an independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the same parent company, as appointed in accordancewiththeRegulationsGoverningAppointmentofIndependentDirectorsandComplianceMattersforPublicCompaniesor with the laws of the country of the parent company or its subsidiary)

(7) Not a director, supervisor, or an employee of other companies, who is the same person or spouse as the Company’s chairman, general manager or equivalent. (The same does not apply, however, in cases where the person is an independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the same parent company, as appointed inaccordancewith theRegulationsGoverningAppointmentof IndependentDirectorsandComplianceMatters forPublicCompanies or with the laws of the country of the parent company or its subsidiary)

(8) Not a director, supervisor, manager or shareholder holding 5% or more of the shares of any specific companies or organizations which have financial or business relationship with the Company. (The same does not apply, however, if a specified company or organization holds more than 20%, but less than 50%, of the total issued shares of the Company, and is an independent director appointed by the Company and its parent company, any subsidiary, or a subsidiary of the same parent company in accordance withtheRegulationsGoverningAppointmentofIndependentDirectorsandComplianceMattersforPublicCompaniesorwiththelaws of the country of the parent company or its subsidiary.)

(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides audit services or have received cumulative remuneration in the past two years that do not exceed NT $ 500,000 in commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

(10) Not a spouse or relative within the 2nd degree of kinship to any other directors of the Company;(11) Not in contravention of Article 30 of the Company Law; (12) Not any governments, institutional shareholders or their representatives pursuant to Article 27 of the Company Law.



(V) The managementAs of March 31, 2020

Title Nationality NameMale /Female

Date of appointment (assumption

of post)

Shareholding

Shares held by his/her

spouse and minor children

currently

Shares held in

another person’s name Work/educational

experience (Note 1)

Jobtitleassumedinanyother company

Manager who is his/her spouse or is within 2nd

degree of kinship

Note

s

Num

ber o

f sh

ares

Shar

ehol

ding

pe

rcen

tage

(%)

Num

ber o

f sh

ares

Shar

ehol

ding

pe

rcen

tage

(%)

Num

ber o

f sh

ares

Shar

ehol

ding

pe

rcen

tage

(%)

Jobtitle

Nam

e

Rela

tions

hip

President Republic of China (Taiwan)

Wen-YenK. Lin

Female 2011.07.05 14,004,173 0.60 5,889,956 0.25 - - Master of Economics, Maryland UniversityAssistant Professor of Maryland UniversityLecturer of National Taiwan UniversityLecturer of Tatung UniversitySeniorGeneralManagerof Tatung Company’s international SalesExecutive Vice President of Tatung Company

Chairman of Tatung CompanyChairman of Elitegroup Computer Systems Co., Ltd.Chairman of Tatung Mexico S.A. de C.V.Chairman of Tatung Czech s.r.o.Chairman of Tatung Information (Singapore) Pte. Ltd.Director of Forward Electronics Co., Ltd.Director of Shan Chih Semiconductor Co., Ltd.Director of Tatung Fine Chemicals Co., Ltd.Director of Tatung System Technologies Inc.

None None None (Note 2)

Executive Vice President & Chief Financial Officer


Wen-Chieh Peng (Note 3)

Male 2013.06.24 10,000 - - - - - Master of insurance, Feng Chia UniversityGeneralManagerofTatung Company’sInvestment Division & President’s Special AssistanSeniorGeneralManagerof Tatung Company’s Finance & Accounting Division

Chairman of Chih Sheng Investment Co., Ltd.Director of Absolute Alpha LimitedDirector of Shan Chih Asset Development Co., Ltd.Chairman of Tatung Consumer Products (Taiwan) Co., Ltd.Director of Tatung Medical & Healthcare Technologies Co., Ltd.DirectorofOtisElevatorCompany (Taiwan) LimitedDirector of Tatung Company of Japan,Inc.

None None None None

CorporateGovernanceofficer


An Chao Male 2019.01.29 - - - - - - Bachelor of Law National Taiwan UniversitySenior Counsel of Liu & Partners Attorneys-At-LawGeneralManagerofLegal Division, Tatung Company

Director of HEDA Biotechnology Co.,Ltd.Director of Tatung (Shanghai) Co., Ltd.Direct of Tatung Industry Company.

None None None None

Financial Officer


Ruei-Kai Jhang

Male 2013.06.24 - - - - - - EMBA, Tamkang UniversityAssistant Manager of Chinfon BankManagerofJihSunBankSenior Manager of Tatung Company’s Accounting Division

Director & President of Chih Sheng Investment Co., Ltd.Chairman & President of Chunghwa Electronics Development Co., Ltd.

None None None None

Accounting Officer


Shu-Fen Chen

Female 2011.01.27 23,330 - - - - - Bachelor of Management, Tatung UniversitySenior Manager of Tatung Company’s Accounting Division

Director of Tatung Electronics (Singapore) Pte. Ltd.Director of Tatung Electrics(Singapore)Pte. Ltd.

None None None None

Note1: Please refer to pages 103~107 itemed (IV) Information about directors, supervisors and presidents of affiliates for the job assumed by the managers in other investees concurrent.

Note2: ChairmanWei-ShanLinresignedandtheboardelecteddirectorWen-YenK.LintotakeoverchairmanshiponFebruary1,2018. Tatung Company has been fully in compliance with law and regulations for corporate governance and business operation. To strengthen corporate

governance,theBoardhassetupCorporateGovernanceCommitteetoassistcompanyoperationbeconductedundertherealmofprofessionalmanagers.

Note3: ExecutiveVicePresidentofWen-ChiehPenghadnewly-appointedonNovember8,2019.

Otherinformationofimportantmanagement

Name Unit Educational background Workexperience

Hur-Lon Lin SystemBusinessGroup,TatungCompany

Master of Materials Science and Engineering, National Tsing Hua University

Associate Professor of Materials Engineering, Tatung UniversityPresident of San Chih Semiconductor Co., Ltd.President&CEOofGreenEnergyTechnologyInc.,Ltd.

Shueei-Tian Shiue

PowerBusinessGroup,TatungCompany

Bachelor of Electrical Engineering, Tatung University

Senior Plant Manager of Motor Business Unit, Tatung Company



(VI) Remuneration paid to directors and independent directors, president and vice presidents in 20191. Remuneration to directors and independent directors

Unit: NT$ Thousand

Jobtitle Name

Remuneration to directors Percentage of the total of

A, B, C and D to income

after tax (%)

Relevant remuneration received by directors who are also employeesPercentage of total of A,B,C,D,E,FandGto

income after tax (%)Whether

remuneration from any

reinvested companies other than subsidiaries or parent

company is received?

Remuneration (A) Retirement pension (B) Remuneration allocated from earnings (C)

Business execution expenses (D)

Salary, bonus and special allowance (E) Retirement pension (F) Employees’bonusallocatedfromearnings(G)

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts The Company All companies included in Financial statements

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

Cas

h di

vide

nd

Stoc

k di

vide

nd

Cas

h di

vide

nd

Stoc

k di

vide

nd

ChairmanWen-YenK.Lin

2,640 15,270 – – – 30 600 1,160 0.1127 0.5723 12,366 34,754 153 261 – – 8,000 – 0.5480 2.0681 –

DirectorLung-Ta Lee

DirectorI-Hua Chang

DirectorShou-Huang Chen

DirectorSheng-WenTsai

Independent-DirectorPeng-Fei Su

11,160 11,592 – – – – – – 0.3881 0.4031 – – – – – – – – 0.3881 0.4031 –Independent-DirectorTzong-Der Liou

Independent-Director Chi-MingWu

Note 1: Provision for expensed retirement pension: NT$153,000 by the Company (NT$261,000 by all companies under the consolidated financial statements).Note2: RemunerationallocatedfromearningsandEmployees'bonusallocatedfromearningsareaproposedfigure.Note 3: Please state the policy, system, standards and structure of independent directors ’compensation payment, and describe the relevance

to the amount of compensation according to the directors’ responsibilities, risks, and time invested: Tatung is a large-scale company, so the responsibilities and risks of independent directors have been given great attention, and it is

important to provide independent directors with reasonable fixed compensation to attract outstanding external professionals to enter

Bracket

Name of DirectorsTotal of (A+B+C+D) Totalof(A+B+C+D+E+F+G)

The Company Companies in the consolidated financial statements The Company Companies in the consolidated financial statements

Under NT$ 1,000,000 Wen-YenK.Lin,Lung-TaLee,I-HuaChang Lung-Ta Lee, I-Hua Chang Lung-Ta Lee, I-Hua Chang

NT$1,000,000 ~ NT$2,000,000 Shou-HuangChen,Sheng-WenTsai Shou-HuangChen,Sheng-WenTsai Shou-HuangChen,Sheng-WenTsai Shou-HuangChen,Sheng-WenTsai

NT$2,000,000 ~ NT$3,500,000

NT$3,500,000 ~ NT$5,000,000 Peng-FeiSu,Tzong-DerLiou,Chi-MingWu Peng-FeiSu,Tzong-DerLiou,Chi-MingWu Peng-FeiSu,Tzong-DerLiou,Chi-MingWu Peng-FeiSu,Tzong-DerLiou,Chi-MingWu

NT$5,000,000 ~ NT$10,000,000 Lung-Ta Lee

NT$10,000,000 ~ NT$15,000,000 Wen-YenK.Lin Wen-YenK.Lin

NT$15,000,000 ~ NT$30,000,000 Wen-YenK.Lin,I-HuaChang

NT$30,000,000 ~ NT$50,000,000

NT$50,000,000 ~ NT$100,000,000

OverNT$100,000,000

Total 8 8 8 8



(VI) Remuneration paid to directors and independent directors, president and vice presidents in 20191. Remuneration to directors and independent directors

Unit: NT$ Thousand

Jobtitle Name

Remuneration to directors Percentage of the total of

A, B, C and D to income

after tax (%)

Relevant remuneration received by directors who are also employeesPercentage of total of A,B,C,D,E,FandGto


remuneration from any

reinvested companies other than subsidiaries or parent

company is received?

Remuneration (A) Retirement pension (B) Remuneration allocated from earnings (C)

Business execution expenses (D)

Salary, bonus and special allowance (E) Retirement pension (F) Employees’bonusallocatedfromearnings(G)

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts The Company All companies included in Financial statements

The

Com

pany

All c

ompa

nies

in

clud

ed in

Fin

anci

al

state

men

ts

Cas

h di

vide

nd

Stoc

k di

vide

nd

Cas

h di

vide

nd

Stoc

k di

vide

nd

ChairmanWen-YenK.Lin

2,640 15,270 – – – 30 600 1,160 0.1127 0.5723 12,366 34,754 153 261 – – 8,000 – 0.5480 2.0681 –

DirectorLung-Ta Lee

DirectorI-Hua Chang

DirectorShou-Huang Chen

DirectorSheng-WenTsai

Independent-DirectorPeng-Fei Su

11,160 11,592 – – – – – – 0.3881 0.4031 – – – – – – – – 0.3881 0.4031 –Independent-DirectorTzong-Der Liou

Independent-Director Chi-MingWu

Note 1: Provision for expensed retirement pension: NT$153,000 by the Company (NT$261,000 by all companies under the consolidated financial statements).Note2: RemunerationallocatedfromearningsandEmployees'bonusallocatedfromearningsareaproposedfigure.Note 3: Please state the policy, system, standards and structure of independent directors ’compensation payment, and describe the relevance

to the amount of compensation according to the directors’ responsibilities, risks, and time invested: Tatung is a large-scale company, so the responsibilities and risks of independent directors have been given great attention, and it is

important to provide independent directors with reasonable fixed compensation to attract outstanding external professionals to enter

the board of directors and continue to enhance its functions. In 2019, the company’s independent directors participated in 47 meetings of the board of directors and functional committees. The

totalmeetingtimewas78.74hours.Afterexecutingthe individual's internalannualperformanceevaluation,andaccordingtotheevaluation results, reasonable variable pay and management contribution awards are rendered.

Note 4: Apart from what is listed in the table above, the company’s directors did not receive any pay for the services they provided in the previous year’s financial report (e.g., providing consultations as non-staff).

Bracket

Name of DirectorsTotal of (A+B+C+D) Totalof(A+B+C+D+E+F+G)

The Company Companies in the consolidated financial statements The Company Companies in the consolidated financial statements

Under NT$ 1,000,000 Wen-YenK.Lin,Lung-TaLee,I-HuaChang Lung-Ta Lee, I-Hua Chang Lung-Ta Lee, I-Hua Chang

NT$1,000,000 ~ NT$2,000,000 Shou-HuangChen,Sheng-WenTsai Shou-HuangChen,Sheng-WenTsai Shou-HuangChen,Sheng-WenTsai Shou-HuangChen,Sheng-WenTsai

NT$2,000,000 ~ NT$3,500,000

NT$3,500,000 ~ NT$5,000,000 Peng-FeiSu,Tzong-DerLiou,Chi-MingWu Peng-FeiSu,Tzong-DerLiou,Chi-MingWu Peng-FeiSu,Tzong-DerLiou,Chi-MingWu Peng-FeiSu,Tzong-DerLiou,Chi-MingWu

NT$5,000,000 ~ NT$10,000,000 Lung-Ta Lee


NT$15,000,000 ~ NT$30,000,000 Wen-YenK.Lin,I-HuaChang

NT$30,000,000 ~ NT$50,000,000

NT$50,000,000 ~ NT$100,000,000

OverNT$100,000,000

Total 8 8 8 8



2. Remuneration to the management teamUnit: NT$ Thousand

Jobtitle Name

Salary (A) Retirement pension (B)

Bonus and special allowance (C)

Employees’ bonus allocatedfrom earnings (D)

Percentage of total of A, B, C and D to


remuneration from any reinvested

companies other than subsidiaries

or parent company is

received?The C

ompa

ny

All c

ompa

nies in

clude

d in

Finan

cial st

atem

ents

The C

ompa

ny

All c

ompa

nies in

clude

d in

Finan

cial st

atem

ents

The C

ompa

ny

All c

ompa

nies in

clude

d in

Finan

cial st

atem

ents The Company

All companies included in Financial

statements

The C

ompa

ny

All c

ompa

nies in

clude

d in

Finan

cial st

atem

ents

Cash

divi

dend

Stock

divi

dend

Cash

divi

dend

Stock

divi

dend

President Wen-YenK.Lin

19,460 19,460 279 279 – – – – – – 0.6864 0.6864 –Executive Vice President

Wen-ChiehPeng

Corporate Governanceofficer

An Chao

Note 1: Provision for expensed retirement pension: NT$279,000 by the Company (NT$279,000 by all companies under the consolidated financial statements).

Note 2 : ExecutiveVicePresidentofWen-ChiehPenghadnewly-appointedonNovember8,2019.

Remuneration to individual presidents and vice presidents of the Company

Name of presidents and vice presidents

The Company All companies included in consolidated statements

Under NT$ 1,000,000 Wen-ChiehPeng Wen-ChiehPeng

NT$1,000,000 ~ NT$2,000,000

NT$2,000,000 ~ NT$3,500,000

NT$3,500,000 ~ NT$5,000,000

NT$5,000,000 ~ NT$10,000,000 An Chao An Chao


NT$15,000,000 ~ NT$30,000,000

NT$30,000,000 ~ NT$50,000,000

NT$50,000,000 ~ NT$100,000,000

OverNT$100,000,000

Total 3 3

Note : ExecutiveVicePresidentofWen-ChiehPenghadnewly-appointedonNovember8,2019.

3. Employee bonus granted to the management team: None.

4. The percentage of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the most recent two fiscal years to directors, presidents and vice presidents of the Company, to the income after tax, and the policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with business performance.

Jobtitle

Percentage of total remuneration, which is paid by the Company and by all companies included in the consolidated financial statements to directors, presidents and vice

presidents of the Company, to the income after tax

2018 2019Directors

(0.827%) 2.7222%President / Vice President

The Board of Directors is authorized to determine the transportation allowance and remuneration to directors of the Company based on their contribution to the Company’s operation and by taking into consideration the local and foreign standards as applied in the same industry. Presidents and vice presidents manage the Company’s business on the order of the Board of Directors. The appointment, dismissal and remuneration of presidents and vice presidents shall be subject to the Company Law. Furthermore, remuneration will also be allocated from the Company’s earnings, if any, in accordance with Article 24 of the Company Regulations.



Status of corporate governance(I) Status of Board of Directors’ meeting

The Board of Directors has held 16 meetings in 2019. The status for the attendance of directors is as follows:

Title Name Attendance in person

Attendance by proxy

Attendance rate (%) Notes

Chairman Wen-YenK.Lin 16 0 100Director Tatung University / I-Hua Chang 15 1 93.75Director Shou-Huang Chen 14 2 87.50Director Sheng-WenTsai 16 0 100Director Lung-Ta Lee 16 0 100Independent Director Peng-Fei Su 16 0 100Independent Director Tzong-Der Liou 16 0 100Independent Director Chi-MingWu 16 0 100

Othernotestobespecified:I. The Board of Directors’ meetings of independent directors shall specify the dates, terms, agendas, opinions of all

independent directors and how their opinions are responded by the Company if one of the subsequent conditions occurs. 1. WhatisindicatedinArticle14-3oftheSecuritiesandExchangeAct:

Board Meeting Content and the execution of the resolutions

Items listed under

14-3 of the Securities Exchange

Act

Objectionsraised or

reservation opinions of

independent director(s)

1stMeetingonJan.3,2019

1. The proposal for the subsidiary of Tatung Company, Shan Chih Asset Development Co., Ltd. to sell real estate in order to back up the capital for running Tatung Company.

√ None

Independent directors’ comments: None.

The Company’s execution of the independent director’s resolutions: None.

Resolution: approved by all attending Directors without objection.

3rd Meeting on Feb. 14, 2019

1. The discussion on the re-evaluations and resolutions on investment in solar power plants upon request by TSEC. √ None

2. The discussion on the re-evaluations and resolutions for Disposal of Assets upon request by TSEC. √ None

3. The discussion on the Company’s endorsement and guarantee of its subsidiaryTatungCompanyofJapan,Inc. √ None




4th Meeting on Mar. 27, 2019

1. The discussion on the Company’s commissioning of the auditing and professional fees for the auditing and attesting CPA in 2019. √ None


3. ThediscussiononthecapitalinjectiontoTatungCompanyofJapan,Inc.,a subsidiary by the Company. √ None

4. The discussion on the capital injection to Chunghwa Electronics Development Co., Ltd., a subsidiary by the Company. √ None

5. ProceduresforEndorsement&Guarantee--CurrentProceduresandProposed Amendments. √ None

6. Procedures for LendingFunds toOthers--CurrentProceduresandProposed Amendments. √ None

7. The discussion on the Company’s revising the operating procedures for the internal control system in relation to "the administration of shareholder services".

√ None







Items listed under


Act

Objectionsraised or

reservation opinions of

independent director(s)

5th Meeting on Apr. 11, 2019





6th Meeting on May 2, 2019

1. ThediscussiononbehalfofSCAD’sBOD,forpriorityinvestmentproject’sapplicationofMRTWanDalineLG07station. √ None




10thMeetingonJul.3,2019

1. The discussion on the capital injection to Tatung Forever Energy Co., Ltd., a subsidiary by the Company. √ None

2. The proposal for revising “the management of the procedures for preparation of financial statements” and its internal audit implementation rules in the company’s internal control system.

√ None




11th Meeting on Aug. 14, 2019(Subsequent meetings)

1. The discussion on the Company’s Lending Funds to its subsidiary Shan Chih Semiconductor Co., Ltd. √ None

2. The discussion on the Company’s endorsement and guarantee of its subsidiary Shan Chih Semiconductor Co., Ltd. √ None




12th Meeting on Sep. 2, 2019

1. The proposal for the company to apply to Shan Chih Asset Development Co. Ltd. for a loan. √ None




14th Meeting on Nov. 8, 2019

1. The proposal for revising “the management of liability commitments and contingencies” and its internal audit implementation rules in the company’s internal control system.

√ None

2. The proposal for lowering the endorsements and guarantees for the company’ssubsidiaryTatungCompanyofJapan,Inc. √ None




15th Meeting on Dec. 17, 2019

1. The discussion on articles in the Company’s implementation rules for its internal control system with the internal audit inclusive. √ None

2. ThediscussiononthecapitalinjectiontoTatungCompanyofJapan,Inc.,a subsidiary by the Company. √ None




2. Apart from the above-mentioned matter, any resolutions that were passed by the board of directors but independent directors had objection or reservations about in documented minutes or statements: None



II. Withreferencetodirectors’withdrawingfromanymotionduetoconflictof interest, thedirectors’names,contentsofmotions, causes for the withdrawal, and participation in voting shall be specified: the Board of Directors did not encounter any motions with conflicting interests against the Company in the year.1. Board meeting on Aug. 14,2019 (Subsequent meetings) Content of the proposal:

(1) The discussion on the Company’s Lending Funds to its subsidiary Shan Chih Semiconductor Co., Ltd.(2) The discussion on the Company’s endorsement and guarantee of its subsidiary Shan Chih Semiconductor Co., Ltd.

Interestavoidancedirectors:Wen-yenK.Lin,Lung-taLee,andPeng-feiSu Reasons for avoidance of interests and participation in voting: in accordance with Article206oftheCompanyLaw,exceptforDirectorWen-yenK.Lin,Lung-taLee,andPeng-feiSuwhoneedtoevade

and may not participate in voting, the other attending directors unanimously agreed to pass the case.III. Objectives to strengthen the functionsof theBoardofDirectors in thecurrentyearandmost recentyear (e.g.,

establishment of Audit Committee and upgrading information transparency) and evaluation of the execution thereof:1. Incompliancewiththecompetentauthority'spromotionofrobustcorporategovernancepolicies,theCompanyhad

established independent directors, Audit Committee, and Remuneration Committee.2. Upgrading information transparency, internet-based reporting system, and disclosure of information on corporate

governance:(1) TheCompanyperformsitsobligationsfaithfully inaccordancewiththerelevant lawsandtherelatedTWSErules.

Establishing an internet-based reporting system for public information that appoint personnel responsible for gathering and disclosing the information, and establishing a spokesperson system so as to ensure the proper and timely disclosure of information about policies that might affect the decisions of shareholders and stakeholders.

(2) In order to keep shareholders and stakeholders fully informed, the Company utilizes the convenience of the internet and set up a website containing the information regarding its finances, operations, and corporate governance. If necessary, furnish the financial, corporate governance, and other relevant information in English. To avoid misleading information, the aforesaid website shall be maintained by specified personnel, and the recorded information shall be accurate, detailed and updated on a timely basis.

(3) TheCompanyshallattendaninvestorconferenceincompliancewiththeregulationsoftheTWSE.Thefinancialand business information disclosed in the investor conference shall be disclosed on the designated internet informationpostingsystembyTWSEandprovidedforinquirythroughtheCompany’swebsite.

(4) The Company shall disclose the information regarding corporate governance in the fiscal year in accordance with lawsandregulationsandTWSErules.Accordingtotheactualperformanceofthecorporategovernancesystem,disclose the plans and measures to improve its corporate governance system through appropriate mechanisms.

(II) Implementation situation of Board of Directors’ evaluationEvaluation cycle 1. TheCompany'sboardofdirectorsshallconductaninternalboardperformanceevaluationevery

year.2. TheCompany'sboardperformanceevaluationshallbeconductedbyanexternalindependent

professional institution or a panel of external experts and scholars at least once every three years.

Evaluation period 2019/1/1~2019/12/31

Evaluation scope TheCompany'sboardandfunctionalcommitteesevaluationscopecoverstheevaluationoftheboard as a whole, individual directors, functional committees and individual committees.

Evaluation method Methods of evaluations include the internal evaluation of the board, self-evaluation by individual board members, internal evaluation of functional committees , self-evaluation by individual committee members and evaluation by appointed external professional institutions, experts, or other appropriate methods.

Evaluation content

The criteria for evaluating the performance of the board of directors

1. Participation in the operation of the company2. Improvementofthequalityoftheboardofdirectors'decisionmaking3. Composition and structure of the board of directors4. Election and continuing education of the directors5. Internal control 6. Participationinsustainableoperations(ESG)

The criteria for evaluating the performance of the board members (on themselves)

1. Alignment of the goals and missions of the company2. Awareness of the duties of a director3. Participation in the operation of the company4. Management of internal relationship and communication5. Thedirector'sprofessionalismandcontinuingeducation6. Internal control

The criteria for evaluating the performance of functional committees

1. Participation in the operation of the company2. Improvement of quality of decisions made by the functional committee 3. Composition and structure of functional committees 4. Thecommittee'selectionandcontinuingeducation5. Internal control



(III) Participation by Audit Committee(1) The focus of the work of the Audit Committee in the recent year (Year 2019) is as follows:

■ Review the quarterly report, semi-annual report, annual financial report and profit distribution table;■ Revise the internal control system and related policies and procedures;■ Material asset or derivatives transactions;■ Offeringorissuanceofanyequity-typesecurities;■ Material lending founds, endorsements or guarantees;■ Hiring or dismissal of an attesting CPA, or the compensation given thereto;■ Significant investment evaluation and management; and■ Corporate risk management, etc.

(2) A total of 20 Audit Committee meetings were held in the previous period (2019). Member attendance was as follows:

Title Name Attendance in person

Attendance by proxy

Attendance rate (%) Notes

Chair Peng-Fei Su 20 0 100 None

Member Tzong-Der Liou 20 0 100 None

Member Chi-MingWu 20 0 100 None

Othermentionableitems:1. The Audit Committee meetings of independent directors shall specify the dates, terms, agendas, opinions of Audit Committee and

how their opinions are responded by the Company if one of the subsequent conditions occurs. (1) WhatisindicatedinArticle14-5oftheSecuritiesandExchangeAct:


Items listed under


Act

Resolutions objected by audit

committee while approved

with the consent of two

thirds or more of the entire board

of directors

1stMeetingonJan.3,2019

1. The proposal for the subsidiary of Tatung Company, Shan Chih Asset Development Co., Ltd. to sell real estate in order to back up the capital for running Tatung Company.

√ None

Resolutions at the Committee meeting (01/03/2019): approved by the entire membership of the Committee.The Company’s execution of the audit committee’s resolutions: approved by all attending Directors without objection.

3rd Meeting on Feb. 14, 2019

1. The discussion on the re-evaluations and resolutions on investment in solar power plants upon request by TSEC. √ None

2. The discussion on the re-evaluations and resolutions for Disposal of Assets upon request by TSEC. √ None


Resolutions at the Committee meeting (02/14/2019): approved by the entire membership of the Committee.The Company’s execution of the audit committee’s resolutions: approved by all attendingDirectors without objection.

4th Meeting on Mar. 27, 2019

1. The discussion on the Company’s statement of the internal control system in 2018. √ None

2. The discussion on the Company’s financial statement in 2018. √ None

3. The discussion on the Company’s commissioning of the auditing and professional fees for the auditing and attesting CPA in 2019. √ None


5. Thediscussiononthecapital injectiontoTatungCompanyofJapan,Inc., a subsidiary by the Company. √ None

6. The discussion on the capital injection to Chunghwa Electronics Development Co., Ltd., a subsidiary by the Company. √ None

7. ProceduresforEndorsement&Guarantee--CurrentProceduresandProposed Amendments. √ None

8. Procedures forLendingFunds toOthers--CurrentProceduresandProposed Amendments. √ None


√ None

Resolutions at the Committee meeting (03/26/2019): approved by the entire membership of theCommittee.The Company’s execution of the audit committee’s resolutions: approved by all attendingDirectors without objection.




Items listed under


Act

Resolutions objected by audit

committee while

approved with the

consent of two thirds or more of the entire board of directors

5th Meeting on Apr. 11, 2019



6th Meeting on May 02, 2019

1. ThediscussiononbehalfofSCAD’sBOD,forpriorityinvestmentproject’sapplicationofMRTWanDalineLG07station. √ None


10thMeetingonJul.03,2019

1. The discussion on the capital injection to Tatung Forever Energy Co., Ltd., a subsidiary by the Company. √ None

2. The proposal for revising “the management of the procedures for preparation of f inancial statements” and its internal audit implementation rules in the company’s internal control system.

√ None

Resolutions at the Committee meeting (07/01/2019): approved by the entire membership of the Committee.

The Company’s execution of the audit committee’s resolutions: approved by all attending Directors without objection.

11th Meeting on Aug. 14, 2019(Subsequent meetings)

1. The discussion on the Company’s Lending Funds to its subsidiary Shan Chih Semiconductor Co., Ltd. √ None

2. The discussion on the Company’s endorsement and guarantee of its subsidiary Shan Chih Semiconductor Co., Ltd. √ None


12th Meeting on Sep. 02, 2019

1. The proposal for the company to apply to Shan Chih Asset Development Co., Ltd. for a loan. √ None

Resolutions at the Committee meeting (09/02/2019): approved by the entire membership of theCommittee.The Company’s execution of the audit committee’s resolutions: approved by all attendingDirectors without objection.

14th Meeting on Nov. 08, 2019


√ None

2. The proposal for lowering the endorsements and guarantees for the company’ssubsidiaryTatungCompanyofJapan,Inc. √ None


15th Meeting on Dec. 17, 2019

1. The discussion on articles in the Company’s implementation rules for its internal control system with the internal audit inclusive. √ None

2. Thediscussiononthecapital injectiontoTatungCompanyofJapan,Inc., a subsidiary by the Company. √ None


(2) In addition to the above-mentioned matter, any other resolutions agreed by the two-thirds of all the directors without having been agreed by the audit committee: None.

2. If there is Independent Directors’ avoidance of motions in conflict of interest, the Independent Directors’ names, contents of motions, causes for avoidance and voting should be specified:

Audit Committee meeting on Aug. 14,2019 (Subsequent meetings) Content of the proposal:

(1) The discussion on the Company’s Lending Funds to its subsidiary Shan Chih Semiconductor Co., Ltd.



(2) The discussion on the Company’s endorsement and guarantee of its subsidiary Shan Chih Semiconductor Co., Ltd. Interest avoidance independent director: Peng-fei Su Reasons for avoidance of interests and participation in voting: in accordance with Article 206 of the Company Law, except for Independent Director Peng-fei Su who need to evade and may not participate in

voting, the other attending independent directors unanimously agreed to pass the case.3. Communicationsbetweentheindependentdirectors,theCompany'sChiefInternalAuditorandCPAs(includingthematerial

items, methods and results of audits of corporate finance or operations, etc.): For the CAE (Chief Audit Executive): In addition to submitting the audit report to the Chairman, it is also needed to hand over the

audit report to the individual directors who can discuss and communicate with the CAE directly with regard to the contents of the audit report while needed. If the individual directors have any comments on the audit report, the internal audit unit has to follow up and reply to the individual directors with the countermeasures, moreover, if the individual directors have any instructions, the CAE has to report to the individual directors accordingly after the audit project is finalized.

For the CPA: After the quarter, half-year and annual financial statements are finalized, the individual directors call a Meeting of CommunicationwithManagementandGoverningbodyofAuditClientstoinvitetheCPAonlytothemeetingforfullydiscussionsand for interchanging opinions with regard to the issues which the CPA has discovered from the internal control systems or from the financial statements during the auditing period.

(IV) Corporate Governance Implementation Status and Deviations from "the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies"

Evaluation Item

Implementation StatusDeviations from "the Corporate GovernanceBest-Practice Principles for

TWSE/TPExListedCompanies" and

ReasonsYes No Abstract Illustration

(I) Does the Company establish and disclosetheCorporateGovernanceBest-Pract ice Pr inciples based on "CorporateGovernanceBest-PracticePrinciples for TWSE/TPExListed Companies"?

√ Inaccordancewith"CorporateGovernanceBestPrac-ticesPrinciples forTWSE/GTSMListedCompanies", theCompany has adopted and made public its corporate governance best practices principles at its official website andattheMarketObservationPost.

None

(II) Shareholding structure & shareholders’ rights

1. Does the Company establish an internal operating procedure to d ea l w i th s h a re h o l d e r s’ suggestions, doubts, disputes and litigations, and implement based on the procedure?

√ 1. Shareholders’ suggestions and questions are directly addressed to the departments held accountable as well as taken care of by the Company’s spokesman or deputy spokesman.

1. None



Evaluation Item




2. Does the Company possess the list of its major shareholders as well as the ultimate owners of those shares?

√ 2. Monthly applications of changes in the shareholdings of directors, supervisors, and shareholders with a greater than 10% share of the company’s total issued equity are submitted to keep track of and stay in contact with major shareholders who have controlling power so as to get hold of the persons with ultimate control over the company.

2. None

3. Does the Company establish and execute the risk management and f i rewal l system within its conglomerate structure?

√ 3. The Company has set up rules for supervising its subsidiaries and periodic reviews of their operations.

3. None

4. Does the Company establ ish internal rules against insiders t r a d i n g w i t h u n d i s c l o s e d information?

√ 4. The Company has established the Management Procedures for the Prevention of Insider Trading in Tatung Company to prohibit company insiders from trading securities using information not disclosed to the market.

4. None

(III) Composition and Responsibilities of the Board of Directors

1. Does the Board develop and implement a diversified policy for the composition of its members?

√ 1. The company has made a policy to diversify the board of directors in Article Number 20 of the Corporate GovernanceBest-PracticePrinciplesandmade itpublicintheMarketObservationPostSystem.

The proportion of the directors who are also employees of the company is 12.5%; female directors, 12.5%; independent directors, 37.5%. The specialties that the board of directors range from leadership, business management, crisis management, law, finance, and practical experience in the industry.

T h e c o m p a n y w o r k s a t s t r e n g t h e n i n g t h e independence and monitor ing of the board of directors with the aim of having the board of directors with outside directors as the majority in order to elevate the quality and monitoring mechanism of the board of directors. This year’s board of directors includes three independent directors and two new outside directors in the hope of monitoring the board of directors and bringing a fresh and independent perspective on the discussion in the board.

The policy to diversity the membershif of the Board. Please refer to note.

1. None



Evaluation Item




2. Does the Company voluntarily e s ta b l i s h o t h e r f u n c t i o n a l committees in addition to the Remuneration Committee and the Audit Committee?

√ 2. In order to have a sound corporate governance, th e Co m pa ny h a s es ta b l i s h ed a co r po rate governance commit tee with its organizational char ter in accordance with the resolutions made by the board of directors on March 15, 2018. The board of directors elected the following to be members of the Company’s corporate governance committee: Peng-Fei Su (Independent director), Tzong-Der Liou (Independentdirector),Chi-MingWu(Independentdirector), Shou-HuangChen(Director),Sheng-WenTsai (Director). who are responsible for corporate governance related matters (Director), and in the preparatory meeting on May 15, 2018, Tzong-Der Liou (Independent Director) was elected as the Convener. (1) According to the organization rules of the Corporate

GovernanceCommittee,itsdutiesareasfollows:(A) To give considerations to experience, expertise

and independence to formulate selection criteriaformembersofCorporateGovernanceCommittee and submit to the board of directors for resolution.

2. None

(B) Responsible for the research and analysis, implementation, planning proposals and regulations of the corporate governance system, regulations and procedures for corporate governance, and submit to the resolution of the board of directors.

(C) Tracking and suggestions the implementation situation of the relevant information disclosure.

(D) Review the governance relationship between the Company and its subsidiaries and other related companies, put forward suggestions for improvement and report to the board of directors.

(E) Review the effectiveness of the implementation of the corporate governance system.

(F) Otherduties inaccordance with theboardresolutions.

(2)Operationalstatus:Accordingtotheorganizationrulesof theCorporateGovernanceCommittee,meetings shall be held at least once every quarter, and the operating status in 2019 is as follows:

Title NameActual

(in person)attendance

Entrusted attendance

Actual(in person)

attendance rate%

Remarks

Chair Tzong-Der Liou 4 0 100

Member Peng-Fei Su 4 0 100

Member Chi-Ming Wu 4 0 100

MemberShou-Huang Chen

1 3 25

Member Sheng-WenTsai 4 0 100



Evaluation Item




3. Does the company establ ish a s tanda rd to measu re the performance of the Board and implement it annually, and report the results of the performance eva l uat ion to the boa rd of di rectors, and use them as a referenceforindividualdirectors'salary and remuneration?

√ 3. In order to strengthen corporate governance and enhance the functions of the board of directors and various functional committees of the Company, the Board of Directors passed the “Board and Functional CommitteePerformanceEvaluationGuidelines”onMarch 15, 2018, and was amended on December 27, 2018. The board of directors and functional committees of the company shall perform at least one internal performance evaluation each year. The results of internal performance evaluation shall be completed before the board of directors held within three months after the start of the second year and submitted to the board of directors on February 13, 2020.

The realm of the Board and Functional Committee Performance Evaluation of the Company shall include the performance evaluation of the overall board of directors, individual board members and functional committees and individual committee members. The measurement items and scoring standards of the evaluation indicators shall be based on the board of directors of the company and specification of functional committee performance evaluation guidelines.

The results of the internal evaluation of the performance of the company's 2019boardof di rectors andfunctional committees are as follows:

Evaluationperiod:fromJanuary1,2019toDecember31, 2019.

Evaluation results: The evaluation indicates that the performance of the board of directors and various functional committees and the performance of members were “good” during the evaluation period.

Theprocedures for theestablishmentofdirectors'remuneration of the Company, in addition to the provisions of the Articles of Association, are based on the above criteria and the relevant measures of the functional committees. The relevant performance appraisal and remuneration rationality are reviewed by the functional committees and the board of directors. Atanytime,thedirectors'remunerationsystemwillbereviewed in a timely manner depending on the actual operating conditions and relevant laws and regulations.

3. None

4. Does the Company regular ly evaluate the independence of CPAs?

√ 4. To ensure the reliability of financial statements and to implement corporate governance, the Company reviews the independence of the CPA in the annual BOD meeting. TheCompany ver if ies theCPA’sexperience and confirms that there is no additional financial or business relation other than the audit and tax fees. The family members of the CPA should also abide by the independence requirements. The Company evaluates the independence of the CPA according to the Certified Public Accountant Act and the 10th section of the Code of Conduct. The Company obtains the independence declaration and ensures the information stated is correct.

4. None



Evaluation Item




(IV) HastheTWSE/GTSMListedCompanyequipped competent and appropriate number of staff and designated corporate governance directors to be in charge of corporate governance affairs (which are inclusive of but not restricted to the following: offering the information needed for a director to perform his/her duties, assisting directors to comply with laws and regulations, handling matters relating to board meetings and shareholders meetings according to laws, handling corporate registration and amendment registration, producing minutes of board meetings and shareholders meetings, etc.)?

√ The Company appointed several appropriate corporate governance personnel. The general council in the company was approved by a resolution of the board ofdirectorsonJanuary29,2019asthechiefcorporategovernance officer, the company’s manager, who assumed to be the highest rank ing supervisor in corporate governance matters and met the professional qualification requirement of having worked as a supervisor in the Legal Division for more than three years in public companies.The implementation of corporate governance in the year 2019 was as follows:

1. Assisting independent directors and directors in executing their duties, providing the information they need, and arranging continued education for directors:(1) Examining the levels of classified information,

providing the information that directors need for them, and maintaining smooth and good communication between directors and business executives

(2) Assisting independent directors and the other di rectors in draft ing thei r annual continued education plans and courses in accordance with their educational background and work experience as well as the characteristics of the company’s industries

2. Ass ist ing the board of di rectors in the matters concerning the shareholders’ meeting:(1) Reminding the board of directors of the legal

regulations in relation to their execution of their duties and the resolutions that have been made

(2) Examining if the contents of the resolutions made should be publicly announced after the

None

shareholders’ meeting while reassuring the legality and accuracy of the information announced so as to guarantee trading information equally accessible to shareholders

3. To safeguard the interests of investors: Continually working on the communication channels between directors, major shareholders, institutional investors or the other shareholders to reassure investors can obtain sufficient information to assess the reasonable capital market value of the corporation so as to safeguard the interests of shareholders

4. Legally, the call for meeting together with the materials for the meeting should be sent to the board of directors seven days before the meeting, but the board of directors should convene in case of emergency. A reminder of acting on recusal due to conflicts of interest should be sent before the meeting. The meeting minutes for the board of directors should be completed within 20 days after the meeting.

5. The date for the shareholders’ meeting was legally registered before they convened. The meeting notice, the agenda handbook and the meeting minutes were produced under the statute of limitations.



Evaluation Item




(V) Does the Company establ ish a communication channel (This is inclusive of but not restr icted to shareholders, employees, clients and suppliers, etc.) and build a designated section on its website for stakeholders, as well as handle all the issues they care for in terms of corporate social responsibilities?

√ The Company has established a communication channelwith shareholders, set up an area for shareholders at theofficial website, and properly responded to the issues ofcorporate social responsibilities about which shareholders are concerned.

None

(VI) Does the Company appoint a professional shareholder service agency to deal with shareholder affairs?

√ The Company handles shareholders meeting matters by itself.

The Company handles shareholders meeting mat-ters by itself.

(VII) Information Disclosure

1. Does the Company have a corporate website to disclose both financial standings and the status of corporate governance?

√ 1. The Company and its subsidiaries have set up their websites for releasing their financial, business and corporate governance information.

1. None

2. Does the Company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and d i sc losu re, c reat ing a spokesman system, webcasting investor conferences)?

√ 2. ApartfromtheofficialEnglishWebsite,theCompanyhas also designated the personnel gathering, disclosing and updating the Company’s information while implementing the spokesman system. The information concerning the Company’s investor conference has been made available on its official website as well.

2. None

3. Does the company publish and report its annual financial report within two months after the end of a fiscal year, and publish and report its financial reports for the first, second and third quarters as well as its operating status for each month before the specified deadline.

√ 3. The company announced and submitted its annual financial report within the statutory period as well as announced and submitted its financial reports of the first three quarters and the monthly condition of the company within the designated time limit. None of the above has been done earlier than it should.

3. None



Evaluation Item




(VIII) I s t h e re a ny ot h e r i m p o r ta nt information to facilitate a better understanding of the Company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management p o l i c i e s a n d r i s k eva l u a t i o n measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?

√ 1. Rights and treatment of employees: All Tatung Company’s employees, applicants, and

contract workers are equally treated with dignity regardless of their races, religions, colors, genders, and nationalities. The Company has set up working regulations, welfare, salary, and subsidies according to the labor and gender equality related regulations promulgated by the government. The Company also reviews employees’ performance annually to ensure reasonable alignment between employees’ salary and labor, so that they will be contended with their jobs.

1. None

2. Investor relations: The Company has appointed Investor Relat ions

department to collect and disclose information and to communicate with stakeholders, investors and the public.

The Company also attends domestic and oversea investor forums sporadically to deliver information regarding corporate financials, business strategies and operation directions. Moreover, the Company has set up the investor service on the corporate website for stakeholders, investors and the public to download material information of monthly sales revenues, financial statements, annual reports and conference booklets, financial ratios and investor conference presentations, etc. Financial and business information of the Company would be released on Taiwan Stock ExchangeMarketObservationPostSystem.

2. None

3. Supplier management: Tatung is an environmentally friendly company with

a calling to uphold the global environmentalism, so that we request suppliers to sign contracts in which they would abide by the government’s environmental protection laws and regulations in reducing waste, preventing pollution, and disposing wastes. The suppliers will be audited upon Tatung’s request and Tatung has the right to suspend or terminate the partnership, should any matters violating the law be found. Besides, in order to comply with customers’ green procurement demand and international legal requirements such as RoHS directive, Tatung has been actively promoting the green supply chain. Through building up the green supply chain, we can review our suppliers’ performance and to strengthen the existing supply chain. As for the safety of suppliers’ working environment, Tatung has also implemented evaluation indicators in the suppl ier reviews/evaluations.

In addition, "Tatung health and safety management method for construction suppliers" has been established to reduce the probability of an accident.

3. None

4. R ights of investo r s : The Company has set up communication channels with investors and set aside an area at the official website specifically for investors.

4. None

5. The progress of training of directors and managerial officers: (1) The Company’s directors (including independent

directors) fulfilled of training in 2019. (2) The training of the Company’s managerial officers:

A.ExecutiveVicePresident&ChiefFinancialOfficer–Wen-chiehPeng:5.5hours.

B.CorporateGovernanceofficer–AnChao:21hours.

C.AccountingOfficer–Shu-fenChen:12hours.

5. None



Evaluation Item




6. Enforcement of consumers’ protection policies: The Company always strictly observes the contracts with our clients so as to sustain a steady and harmonious relationship, arriving at better profits as a result.

6. None

7. Coverage of l iabil ity insurance for directors and supervisors: The Company has purchased liability insurance for directors and supervisors.

7. None

(IX) Specify the Company’s improvements in accordance with the recently released evaluations of corporate governance by the CorporateGovernanceCenteroftheTaiwanStockExchangeCorporation(TWSE).Asforthoseyettobeimproved,accountforthe Company’s list of priorities and their implementation.

The Company has conducted an internal assessment of its corporate governance practices in order to gradually improve its governance and upgrade its corporate image.

Note: The policy to diversify the membership of the Board has been carried out as follow:

Name / Title

Basic requirements and values Professional background Professional knowledge and skills

Gender Nationality Educational backgroundAbility

to make operational judgments

Ability to perform

accounting and

financial analysis.

Ability to conduct

management administration

Ability to conduct crisis management

Knowledge of the

industry

An international

market perspective.

Ability to lead

Ability to make policy

decisions

Wen-YenK.LinChairman

Female R.O.C. Master of Economics, Maryland University

√ √ √ √ √ √ √ √

Representative of Tatung UniversityI-Hua Chang Director

Male R.O.C. Bachelor of Mechanical Engineering, Tatung University

√ √ √ √ √ √ √ √

Shou-Huang ChenDirector

Male R.O.C. Doctor of Philosophy, LLD Institute of the Law of the Sea National TaiwanOceanUniversity

√ √ √ √ √ √ √ √

Sheng-WenTsaiDirector

Male R.O.C. BachelorofAccountingFu-JenUniversity

√ √ √ √ √ √ √ √

Lung-Ta Lee Director

Male R.O.C. Ph.D. of Chemical Engineering, Tatung University

√ √ √ √ √ √ √ √

Peng-Fei SuIndependent Director

Male R.O.C. M.S.inGraduateInstituteofBusiness Administration, National Chengchi University

√ √ √ √ √ √ √ √

Tzong-Der Liou Independent Director

Male R.O.C. Ph. D., Nagoya University, JapanChairProfessor,NagoyaUniversity,Japan

√ √ √ √ √ √ √ √

Chi-MingWuIndependent Director

Male R.O.C. Ph.D. in Finance, University of Mississippi, U.S.A.

√ √ √ √ √ √ √ √



(V) The composition, duties, and operation of the Compensation Committee:(1) Members of the Compensation Committee


Title

Qualification

Name

Whethertheypossessworkexperienceof more than five years and the following

professional qualificationsIndependence criteria (Note 1)

Number ofother publiccompaniesin which he/she serves

concurrentlyas

Compensation Committee

Notes

An instructor orhigher position

in a department

of commerce,law, finance,

accounting, orother

academicdepartment

related tocompany business

in a public orprivate junior

college, college,

or university

A judge, publicprosecutor,attorney,

certified publicaccountant, or

other professionalor technical

specialist who has

passed a national

examination and

has been awarded

a certificate ina professional

capacitynecessary for

company business

Having workexperience in

thearea of

commerce,law, finance or

accounting,or otherwisenecessary for

company business

1 2 3 4 5 6 7 8 9 10

Chair Chi-MingWu √ √ √ √ √ √ √ √ √ √ √ √ 2

Member Tzong-Der Liou √ √ √ √ √ √ √ √ √ √ √ √ 0

Member Peng-Fei Su √ √ √ √ √ √ √ √ √ √ √ 0

Note 1: Please tick the corresponding boxes if directors have been any of the following during the two years prior to being elected or during the term of office: (1) Not an employee of the Company or any of its affiliates; (2) Not a director or supervisor of the Company or its affiliates (The same does not apply, however, in cases where the person is an

independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the same parentcompany,asappointed inaccordancewith theRegulationsGoverningAppointmentof IndependentDirectorsandCompliance Matters for Public Companies or with the laws of the country of the parent company or its subsidiary);

(3) Neither a shareholder who holds shares, together with those held by the person’s spouse or underage children, or held by the person under others’ name in an aggregate amount of 1% or more than the total number of issued shares of the Company, nor one of the Company’s top 10 individual shareholders;

(4) Not a manager as listed in (1) or a spouse, relative within the 2nd degree of kinship, or lineal relative within the 3th degree of kinship of any of the people specified in the preceding three subparagraphs as listed in (2), (3);

(5) Not a director, supervisor or an employee of the corporate shareholders directly holding more than 5% of the Company’s total issued shares; neither a director, supervisor or an employee of the Company’s top five corporate shareholders, nor a director, supervisor or an employee of the corporate shareholders who appoint a representative to be a director or supervisor of the Company in accordance with Article 27, paragraph 1 or 2 of the company law(The same does not apply, however, in cases where the person is an independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the sameparentcompany,asappointedinaccordancewiththeRegulationsGoverningAppointmentof IndependentDirectorsandCompliance Matters for Public Companies or with the laws of the country of the parent company or its subsidiary)

(6) Not a director, supervisor or an employee of other companies, the same person who controls more than half of the Company’s director seats or voting shares. (The same does not apply, however, in cases where the person is an independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the same parent company, as appointed in accordancewiththeRegulationsGoverningAppointmentofIndependentDirectorsandComplianceMattersforPublicCompaniesor with the laws of the country of the parent company or its subsidiary)

(7) Not a director, supervisor, or an employee of other companies, who is the same person or spouse as the Company’s chairman, general manager or equivalent. (The same does not apply, however, in cases where the person is an independent director of or serves concurrently at the Company, its parent company, any subsidiary, or a subsidiary of the same parent company, as appointed inaccordancewith theRegulationsGoverningAppointmentof IndependentDirectorsandComplianceMatters forPublicCompanies or with the laws of the country of the parent company or its subsidiary)

(8) Not a director, supervisor, manager or shareholder holding 5% or more of the shares of any specific companies or organizations which have financial or business relationship with the Company. (The same does not apply, however, if a specified company or organization holds more than 20%, but less than 50%, of the total issued shares of the Company, and is an independent director appointed by the Company and its parent company, any subsidiary, or a subsidiary of the same parent company in accordance withtheRegulationsGoverningAppointmentofIndependentDirectorsandComplianceMattersforPublicCompaniesorwiththelaws of the country of the parent company or its subsidiary.)

(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides audit services or have received cumulative remuneration in the past two years that do not exceed NT $ 500,000 in commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.

(10) Not in contravention of Article 30 of the Company Law.



(2) Operation of Compensation Committee1. The compensation committee composed of three members.2. The term of office of the third committee began from August 8, 2017 to May 10, 2020. The committee has convened the meetings two times last year (A); the qualifications and attendances of the members

are shown as follows:

Title Name Attendance in person (B)

Attendance by proxy

Attendance rate(%) (B/A) Notes

Chair Chi-MingWu 2 0 100

Member Tzong-Der Liou 2 0 100

Member Peng-Fei Su 2 0 100

Othernotableitems:1. If the board of directors decline to adopt or modify a recommendation of the compensation committee, it is

imperative to note down the board meeting’s date, session, motion, resolution as well as Tatung Company’s disposition of the compensation committee’s recommendation. (If the remuneration passed by the board exceeds the recommendation of the compensation committee, the circumstances and causes for the difference shall be specified): None.

2. As to a resolution of the compensation committee, if a committee member expresses any objection or reservation recorded or in a written statement, it is imperative to specify the committee’s date, session, disposition of the comments: None.

3. The Content and the execution of the resolutions of compensation committee:

Meeting The Contents of motions The Execution

The first meeting of 201901/15/2019

1. Regularly evaluate and determine the salary and compensation of directors and managers, and prepare the year-end bonus case for the company'schairmanandseniormanagersforthe year of 2018,

2. The 2018 internal per formance evaluation results of the committee have been audited and completed.

1. The resolution of all attending members: passed.

2. (1) The performance evaluation result of the Compensation Committee is good.

(2) The performance self-evaluation results of the members of the Compensation committee are all good.

The Second meeting of 201903/27/2019

Thecompany's2018year-endbonuscaseforseniormanagers was reviewed again.

All members attended the resolution to pass the year-end bonus adjustment.

Note 1: Scope of duties of Compensation Committee. (1) Prescribing and periodically reviewing the performance and the compensation policy, system, standards, and structure

for directors and managerial officers. (2) Periodically evaluating and prescribing the compensation of directors and managerial officers on the first quarter of each

year.



(VI) Corporate Social Responsibility and Deviations from “the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”

Evaluation Item

Implementation StatusDeviations from "the

Corporate Social Responsibility Best-Practice Principles for


Reasons

Yes No Abstract Explanation

1. Does the company conduct risk assessments of environmental, social and corporate governance issues relatedtothecompany'so p e rat i o n s i n a cco rd a n ce with the materiality principle, and fo r mu late re levant r i s k m a n a g e m e n t p o l i c i e s o r strategies.

√ 1. The company conducts risk assessments on environmental, social and corporate governance issues related to the company'soperations inaccordancewiththematerialityprinciple,andformulatesESGriskmanagementpolicieshaveshowed on the website.

None

2. Does the company establ ish exclus ively (or concur rent ly) dedicated first- l ine managers author i zed by the board to be in charge of proposing the corporate social responsibil ity pol icies and reporting to the board?

√ 2. The Company set up the Legal Division and the Health & Safety Division as two dedicated units for corporate social responsibility whose implementation was done by the other departments in the company. Health & Safety Division was in charge of environment management including drafting, promoting, and maintaining relevant environment management systems and concrete action plans, and held environment education courses for their managerial officers and other employees on a periodic basis.

The Legal Division was in charge of bringing forward and carrying out the policies, systems, management, and implementation programs for corporate social responsibility.

The Company reported to the board of directors the implementation of corporate social responsibility in the Year 2019 (from 1/1 to 12/31) on February 13, 2020.

The Company has long been showing concerns for and involved in issues about social welfare and environmental protection. Apart from holding blood donation events on a regular basis, the Company frequently works with institutes of social welfare and environmental protection to hold various activities annually (in summer or winter vacation) or non-periodically in order to contribute to the economic, environmental, and social development of the country while accomplishing the objective of sustainable management and development of the company. Meanwhi le, the Company has also continued to make improvements on the manufacturing process so as to meet the legal requirements and pass the certification of the energy management system as the goal by observing what is dictated in Chapter III, “Fostering a Sustainable Environment” in “the Corporate SocialResponsibilityBest-PracticePrinciplesforTWSE/TPExListed Companies.” For years, the Company has been awarded several times as a consequence from its efforts.

None

3. Environmental issues

(1) Does the company establish p r o p e r e n v i r o n m e n t a l management systems based on the characteristics of their industries?

√ (1) Tatunghas implemented ISO14001 in the factoriesandsubsidiar ies s ince 1996 to continual ly improve thei r environmental performances. So far, all the factories including the subsidiaries such as Forward Electronics, TatungFineChemicalsCo.etc.,haveestablished ISO14001 and certified by the third parties. In 2005 “Tatung E lectr ical and E lectronic Equipment Rest r ict ion of Hazardous Substance (RoHS) Test Laboratory” (testing and analyzing the hazardous substances in materials, parts andproducts)wasestablishedtoassistinbuilding“GreenSupply Chain” which contributes in exporting the products toEU,USA,Japanandothercountries.

(1) None



Evaluation Item




Reasons


(2) Does the company endeavor to utilize all resources more efficiently and use renewable mater ials which have low impact on the environment?

√ (2) Tatung has implemented the corporate-wide "Pollution Prevention Pays, 3P" program since 1993. 3P program helps the factories and subsidiaries with manufacturing function achieving the goals of clean production and producing green products by developing the innovated technologies, improving the manufactur ing processes, introducing concepts of green materials and product design, and reusing thewastes.Manyproductshavecertifiedwith"GreenMark","EnergyLabel","WaterLabel"or"ProductCarbonFootprint".

(2) None

(3) Does the company evaluate t h e p o t e n t i a l r i s k s a n d oppor tun i t ies of c l imate change for the company now and in the future, and take measures in response to climate-related issues?

√ (3)

Aspect Risk type Opportunitiesandcountermeasures.

Operation Changes in technologies on the financial position and operation of the company

1. Withthemassdemandforenergy efficiency & carbon reduction technique to cope with global warming, The Compnay has developed deep technical foundation, kept putting efforts on research & development, and expanded the business of key products as well as system aggressively in smart grid to ensure its technology and market leading position in domestic electricity generation, power transmission & distribution and energy management. Tatung marches into oversea market and aims at the energy technology industry leader.

2. Withthetrendofenergyefficiency and carbon reduction, the Company has strived to develop high-quality green home appliances with health, environment protection, energy-saving and high efficiency concepts to increase the sales performance and profit.

3. Establishing solar PV systems to minimize air pollution and greenhouse gases.

Lack of water resource

1. Promote water saving projects.

Mandatory Carbon cap control or carbon tax

1. EstablishISO50001inthefactories.

2. Promote energy saving projects.

Disclosure on carbon emission information

1. EstablishISO50001inthefactories.

2. Promote energy saving projects.

(3) None



Evaluation Item




Reasons


(4) Does the company count the greenhouse gas emissions, wate r consum pt ion and tota l we ight of was te i n the pas t t wo year s , and formulate policies on energy conservation and carbon reduction, greenhouse gas reduction, water consumption or other waste management?

√ (4) The company continually promotes energy saving projects, greenhouse gases reduction, and wastes management measures. The information is disclosed on the Company’s official website (Environmental Protection section) and Tatung Corporate Social Responsibility Report (Chapter 6).

The URL of Environmental Protection webpage: http://www.tatung.com/Content-EN/csr-protect-management.asp The downloading page of CSR report: http://www.tatung.com/Content-EN/csr-report.asp

(4) None

4. Social issues

(1) D o e s t h e C o m p a n y f o r m u l a t e a p p r o p r i a t e management policies and procedures according to relevant regulations and the International Bil l of Human Rights?

√ (1) All Tatung Company’s employees, applicants, and contract workers are equally treated with dignity regardless of their races, religions, colors, genders, and nationalities. The Company has set up working regulations, welfare, salary, and subsidies according to the labor and gender equality related regulations promulgated by the government. The Company also reviews employees’ performance annually to ensure reasonable alignment between employees’ salary and labor, so that they will be contended with their jobs.

(1) None

(2) Does the company formulate and implement reasonable employee welfare measures (including compensation, vacation and other benefits, etc.), and appropriately reflect o pe rat i n g pe r fo r m a n ce o r r e s u l t s i n e m p l o y e e compensation?

√ (2) The company protects the compensation and benefits for her employees and enacts its salary rules in compliance with regulations through the implementation of the internal control policies and the relevant salaries regulations. And Tatung Co. establishes performance management method and reward and punishment regulations. Every employee’s performance is reviewed regularly based on performance management method. Employees’ behavior with the inclusion of the performance appraisal standards, and according to their performance to give reward and punishment.

(2) None

(3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?

√ (3) 1. Tatung established the government and TAF certified “Tatung Environment Research Center” to carry out the sampling and testing from the operation sites regularly to evaluate the conditions of exposure and provide the recommendations to resolve the hazards to the employees.

2. Enhancing the management on the hazardous machines and equipments, as well as organizing trainings among the employees.

3. CarryingoutthetrainingofJobSafetyAnalysis inthefactories and subsidiaries in order to enhance each operationtocomplywithS.O.P.

4. Implement ingOccupat ional Health and SafetyManagement Systems to continually improve the health and safety performances.

5. Enforcing the employees’ ability and awareness on the prevention of fire accident and electricity safety by providing fire accident prevention and electricity safety courses and regular checks.

(3) None



Evaluation Item




Reasons


(4) Does the company provide its employees with career development and training sessions?

√ (4) The company’s employees w i th p rofess iona l and development advantages, to take the dual career development path of management and professional positions through various training and human resource measures to allow employees to choose a different career planning according to their interests and abilities thereby assisting the company and colleagues to pursue progress.

(4) None

(5) In te rms of the p roducts and services in relation to marketing, labeling and the health, security and privacy of customers, does the company observe related regulations and international standards while establishing the related policies for the protection of cus tomers’ r ights and grievance procedure?

√ (5) In accordance with the regulations and international protocols, the company taking into consideration the health, safety and privacy of consumers has established the policy of consumer rights protection as well as the procedure of filing complaints in the marketing and labeling of our products and services. Tatung Company’s Policies of Consumer Rights Protection have showed on the website.

(5) None

(6) Does the company establish the pol icy fo r managing providers, requiring them to stick to the criteria regarding such issues as environmental protection, occupational safety and health or labor r i g h t s a n d s e e t o t h e i r implementation?

√ (6) The Tatung’s qual if ied suppl ier should s ign “Master Contract” and “Suppl ier Commitment Letter”. The contents of both documents specified that products or services provided shall not only comply with the laws & regulations of safety and environmental protection but also international standards. Labor behavior shall comply with domestic and international laws, policies or regulations related to human labor rights. Furthermore, in response to international emphasis on the confl ict minerals, Tatung has been announced “Declaration of Minerals Conflict-Free" on the company website, updated into Supplier Commitment Letter and requested suppliers to sign back. After filing these documents and complete application, they become qualified suppliers of Tatung. Where it isprovenasafactthattheproductsorservicesprovided by the undersigned are l ikely to endanger the safety and health of consumers or other interested parties, Tatung can disqualify the supplier, terminate the AgreementandcancelPurchaseOrderimmediately.

(6) None

5. Does the company write such reports as the report of corporate social responsibility and many others to disclose its non-financial information by consulting the internationally circulated stipulations or guidelines?

√ TheCompanyprepares theCSR reportby followingGRIStandards and introduces third party verification. "2019 Tatung Corporate Social Responsibility Report” was prepared withGRI Standards (Coreoption)and thecontentswereverifiedbyTÜVAsiaPacificLtd.TaiwanBranch(TUVNORD)based on AA 1000AS:2018 (Type 2, high level assurance) and GRIStandards.

None



Evaluation Item




Reasons


6. If the Company has established the corporate social responsibil ity principles based on “the Corporate Social ResponsibilityBest-PracticePrinciplesforTWSE/TPExListedCompanies”,pleasedescribeanydiscrepancybetweenthePrinciples and their implementation:

The Company has promulgated the principles in accordance with the “Corporate Social Responsibility Best-Practice PrinciplesforTWSE/GTSMListedCompanies.”Thereisnomajordifferencebetweenthetwo.

7. Otherimportantinformationtofacilitatebetterunderstandingofthecompany’scorporatesocialresponsibilitypractices:(1) The corporate social responsibility best practice is developed by the board of directors of the Company on November 12,

2014, and it was amended in accordance with organization adjusting on May 15, 2018.(2) The company, through commercial activities, non - cash property endowments, volunteer service or other free professional

services, participates in community development and charities events.a. As the brand mascot, Tatung Boy participated in the 2019 year-end charitable celebration held in Presidential Palace

together with people with disability to support their potential development and craftsmanship learning.b. In support of preserving and promoting traditional arts, the Company invited native Taiwanese paper carving master

to design Tatung Boy small lanterns of 12 Chinese zodiac. As a token of celebrating the Year of Pig in 2019, the much-treasured small lanterns were widely utilized as a promotion gift for Tatung 3C to its customers.

c. In support of traditional folk arts, the Company invited Taiwan indigenous lantern artists to make Tatung Boy creative lanterns to display in the 2020 Taiwan Lantern Festival in Pingtung.

d. To support featured tourism with highlights in historical heritage and local customs in Taiwan’s township, Tatung Boy participated in"LukangDragonBoatFestival"heldbyChanghuaCountyGovernmentandactedasthetouristAmbassador.

e. In response to the shortage of blood supply, the Company initiates charitable blood donation every winter and summer vacations. A total of 268 units of blood were donated in 2019.

f. In an effort of bringing care and positive attitude towards life to the underprivileged children, the Company organized the Charity Soccer Summer Camp for the 9th consecutive year by utilizing its unique soccer resources. A total of 340 vulnerable children of grade 1-9 from 15 orphanages were invited to the summer camp. The Company aims to educate all participants the spirit of teamwork and sportsmanship through the playing of football game and hence have the spirit put into practice in their everyday life.

g. To support Taiwan’s performing art groups, the Company co-created the children’s drama, "Rescuing Power Kingdom", with Eyuan Puppet Theatre. The drama was performed to more than 5300 students in a tour nationwide. Concepts of energy saving, healthy living, and environmental protection were also incorporated in the play to better influence students on their daily habits.

(3) For other important information to facilitate better understanding of the company’s implementation of corporate social responsibility, please refer to the Company’s website (http://www.tatung.com).



(VII) Ethical Corporate Management and Deviations from “the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”

Evaluation Item

Implementation StatusDeviations from

"the Ethical Corporate

Management Best-Practice Principles for


Reasons

Yes No Abstract Illustration

1. Establishment of ethical corporate management policies and programs

(1) Does the company establish the policy of honest management that has been approved by the board of directors and declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies?

√ (1) The Company adopted and made public “Ethical Corporate Management Best Practice Principles” and “ProceduresforEthicalManagementandGuidelinesforConduct” approved by the Board at its official website, as well as the commitment from the board of directors and senior executive-level positions to implement the policies issued and announced internally the Company Rulesand“CorporateEthicsStatement forGroupEmployees,” and further requests its new colleagues to sign up the self-discipline convention. The Company continues to enhance core corporate philosophy – “Integrity, Honesty, Industry, and Frugality,” and states that the employees are prohibited to perform malpractices or accept gifts of others in regarding to their jobs.

(1) None

(2) Does the company establish a risk assessment mechanism against unethical conduct, analyze and assess business activities on a regular basis within their business scope which are at a higher risk of being involved in unethical conduct, and, accordingly, establish prevention programs in the scope stipulated in Paragraph II, Article VII of Ethical Corporate Management Best Practice Principles forTWSE/GTSMListedCompanies?

√ (2) The Company establishes r igorous and effective accounting system, internal control system, “Codes of Ethical Conduct,” and “Regulations for Handling WhistleblowingIllegalCases,andUnethicalorDishonestConduct Cases” made public at its official website, to prevent bribery and acceptance of bribes, illegal campaign contributions, and dishonest conduct cases listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles forTWSE/TPExListedCompanies.

(2) None

(3) Does the company es tab l i sh appropriate precautions against high-potential unethical conducts or listed activities and clearly stipulate related procedures, behavioral guidel ines, violation penalties, the grievance system, and their implementation in the prevention programs while regularly reviewing the afore-mentioned programs?

√ (3) To implement ethical corporate management policies and actively prevent unethical conducts, the Company adopts its management procedures, conduct guidelines, disciplinary, whistleblowing and appeal system for handling violations of the ethical corporate management rules in “Procedures for Ethical ManagementandGuidelines forConduct,”and“RegulationsforHandlingWhistleblowingIllegalCases,and Unethical or Dishonest Conduct Cases” which are included in the employee performance appraisal system and human resource policies, and reviewed on a regular basis.

(3) None

2. Fulfill operations integrity policy

(1) Does the Company eva luate business partners’ ethical records and include ethics-related clauses in business contracts?

√ (1) Upon establishing business relationships, the Company first evaluates the legality and the ethical corporate management principles of the suppliers, clients and other trading counterparties in accordance with Article 17 of“Procedures for Ethical Management and GuidelinesforConduct”.Allsuppliersarerequiredtosign “Supplier Commitment Letter”, which explicitly specif ies that the products or services provided by it shall comply with the laws & regulations and internat ional s tandards re lated to safety and environmental protection and its labor services

(1) None



Evaluation Item





Reasons


shall comply with domestic and international laws, policies or regulations related to human rights and labor services. The Supplier Commitment Letter is a necessary documentfortheestablishmentofthesupplier'sdata.Itwill become a qualified supplier of the Company upon the completion of documentation. After signing the supplier commitment letter, if the supplier violates the letter of commitment, the Company may terminate or cancel the contract or purchase order at any time, and simultaneously cancel the supplier qualification.

(2) Does the company es tab l i sh an exclus ively dedicated unit supervised by the Board to be in charge of corporate integrity and regularly (at least once a year) report to the board of directors about its honest management policies and prevention programs against unethical conduct as well as its monitoring their implementation?

√ (2) The Company is going to establish a dedicated unit that is supervised by the Board and avail itself of adequate resources and staff itself with competent personnel, responsible for establishing and supervising the implementation of the ethical corporate management policies and prevention programs against unethical conduct of the Company. Before that, HR Division is in charge of the ethical management policy, the “Ethical Corporate Management Best Practice Principles,” as well as the prevention programs against unethical conduct,the“RegulationsforHandlingWhistleblowingIllegal Cases, and Unethical or Dishonest Conduct Cases.” Legal Division is in charge of the revision, implementation, interpretation, consulting service, and notification of the contents of the “Procedures for Ethical ManagementandGuidelinesforConduct.”

The dedicated unit has reported the implementation of ethical management in 2019 (1/1 -12/31) on December 17, 2019 and its work plan for the following year to the board of directors. Each implementing unit will continue to conduct internal publicity and education training on issues related to solid ethical management, and will, in accordance with the legislation and the promulgation of the competent authorities, timely increase and amen the relevant internal management measures, content and system of the company.

(2) None

(3) Does the company es tab l i sh pol icies to prevent confl icts of interest and provide appropriate communication channels, and implement it?

√ (3) As ruled in Article 11 of the “Procedures for Ethical ManagementandGuidelines forConduct,” theCompany establ ishes the ”Confl icts of Interests Prevention Clause” on Company Rules and the Rules GoverningProcedureforBoardofDirectorsMeetings,and has stipulated and promulgated the “Internal Signif icant Information ProcessingOperationalProcedures” for directors, managers and employees in order to avoid insider trading.

(3) None

(4) Has the company establ i shed the ef fect ive systems for both accounting and internal control and assigned its internal audit unit to draw up pertaining audit p lans in l ight of the resu lt s of unethical conduct risk assessment and, acco rd ing ly, aud i t how t h e p r e v e n t i o n p r o g r a m s against unethical conduct have been observed or commiss ion accountants to do the auditing?

√ (4) In accordance with Article 20 of the “Procedures for EthicalManagementandGuidelinesforConduct,”thecompany has established effective accounting and internal control systems for ensuring the implementation of policies. The Audit Committee formulate annual audit plans based on the programs to prevent unethical conduct and the results of the risk assessment, and report its audit report to the board of directors on a regular basis.

(4) None



Evaluation Item





Reasons


(5) Does the Company regularly hold internal and external educational trainings on operational integrity?

√ (5) T he Company ' s t ra i n i ng de r i ved f rom co recorporate philosophy – “Integrity, Honesty, Industry, and F r uga l i t y,” and deve l ops “Hones t y and Integrity" core competencies as the design basis of orientation training, management training and professional training. The Company expects the ethical corporate management policies to achieve susta inable management and emphas ize the importance of “Integrity, Honesty, Industry, and Frugality,” in the internal and external website.

The Company requires all new employees to sign Tatung Company self-discipline convention upon their registration at work to make them fully aware of its ethical management policies, and it continues to promotetoallcolleaguesonthecompany's internalwebsite the ethical corporate management principles, procedures for ethical management and guidelines for conduct, and relevant systems for reporting illegal cases, and unethical or dishonest conduct cases; the Company'sofficialwebsitealsodisclosestheabove-mentioned relevant measures.

(5) None

3. Operationoftheintegritychannel

(1) Does the Company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?

√ (1) The Company establishes the “Regulations for Handling WhistleblowingIllegalCases,andUnethicalorDishonestConduct Cases” and a dedicated unit of processing employees’ complaints for employees’ feedback, found violations of lawlessness (including corruption), and reported unethical conducts.

(1) None

(2) Does the company es tab l i sh standard operating procedures fo r conf ident ia l repor t ing on investigating accusation cases, thei r fol low-up measures after the i r i nves t igat ions and the i r confidentiality protections?

√ (2) TheCompanyestablishesSOPs inArticle4of theaforesaid regulations for confidential reporting on investigating accusation cases to maintain secrecy and inspects the reported contents as well as protects informants’ rights and interests.

(2) None

(3) Does the Company provide proper whistleblower protection?

√ (3) The Company has obligation to maintain secrecy of informants and properly protects informants.

(3) None

4. Strengthening information disclosure

(1) Does the Company disclose its ethical corporate management po l ic ies and the resu l t s of i t s implementation on the Company’s websiteandMOPS?

√ (1) The Company has disclosed on its website and the MarketObservationPostSystemtheethicalcorporatemanagement best practice principles and results of its implementation.

(1) None



Evaluation Item





Reasons


5. If the company has established the ethical corporate management policies based on the “Ethical Corporate Management Best Practice Principles for

TWSE/TPExListedCompanies,”pleasedescribeanydiscrepancybetweenthepoliciesandtheirimplementation. The Company has promulgated the principles in accordance with the “Ethical Corporate Management Best Practice Principles

forTWSE/GTSMListedCompanies.”Thereisnomajordifferencebetweenthetwo

6. Otherimportantinformationtofacilitateabetterunderstandingofthecompany’sethicalcorporatemanagementpolicies(e.g.,to review and amend its policies).(1) The corporate ethical management best practice principles were developed by the board of directors of the Company on

November 12, 2014, and it was amended in accordance with organization adjusting on November 14, 2017.(2) The Company at all times takes notice of the development of relevant local and international regulations concerning

ethical corporate management so as to review and improve its ethical corporate management best practice principles and achieves better results from implementing the principles.

(3) The Company complies with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political DonationsAct,Anti-CorruptionAct,GovernmentProcurementAct,ActonRecusalofPublicServantsDuetoConflictsofInterest,TWSE/GTSM-listeningrules,orotherlawsorregulationsregardingcommercialactivities,astheunderlyingbasicpremise to facilitate ethical corporate management.

(VIII) Corporate Governance Guidelines and Regulations: 1. ApprovedbytheBoardofDirectors in2014,theCompanyhasadoptedCorporateGovernanceBestPracticePrinciples,

Corporate Social Responsibility Best Practice Principles, Ethical Corporate Management Best Practice Principles, and ProceduresforEthicalManagementandGuidelinesforConduct,CodesofEthicalConduct.TheCompanyhasdisclosedtheaforesaidrelevantcorporategovernanceregulationsontheMarketObservationPostSystemandits internalandexternalwebsites for stakeholders’ reference.

2. Pleaserefer tothewebsitesof the investmentcompanies for theirCorporateGovernanceBestPracticePrinciplesandrelevant regulations.

(IX) Other Important Information Regarding Corporate Governance: 1. ForinformationonTatung'scorporategovernance,pleaserefertotheTatungwebsiteathttp://www.tatung.com.2. TheSubsidiaryCompany's facilitateunderstandingofcorporategovernance,please refer to theSubsidiaryCompany

website.



(X) Execution of internal control system 1. Internal control statement

Tatung Company Limited by SharesInternal Control System Statement

Date: March 12, 2020The Company states the following with regard to its internal control system during fiscal year 2019, based on the findings of a self-assessment:I. The Company is ful ly aware that establishing, operating and maintaining an internal control system are the

responsibilities of its Board of Directors and management. The Company has established such a system to provide reasonable assurance of the effectiveness and efficiency of its operations (including profitability, performance and safeguarding of assets security), reliabilities, timeliness, transparency of reporting, and compliance with applicable laws and regulations.

II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may vary along with changes in the operating environment or circumstances. The Company’s internal control system features a self-monitoring mechanism, however, and the Company takes corrective actions as soon as a deficiency is identified.

III. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in theRegulationsGoverningtheEstablishmentof InternalControlSystemsbyPublicCompanies(hereinbelow, "theRegulations"). The internal control system judgment criteria adopted by the Regulations divide internal control into five key elements based on the process of management control: 1) control environment, 2) risk assessment, 3) control activities, 4) information and communications, and 5) monitoring activities, each of these elements in turn contains certain audit items. Please refer to the Regulations for details.

IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

V. Based on the aforementioned audit findings, the Company believes that on December 31, 2019, its internal control system (including supervision of subsidiaries), as well as internal controls to monitor the attainment of its objectives concerning operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable laws and regulations were effective in design and operation and reasonably assured the achievement of the above-stated objectives.

VI. This Statement will become a major part of the content of the Company’s Annual Report and Prospectus, and will be publicized. Any falsehood, concealment, or other illegality in the publicized content will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Act.

VII. This Statement has been unanimously approved by the 8 attending directors in the Board of Directors Meeting of the Company on March 12, 2020.

Tatung Co., Ltd.

Wen-yenK.Lin Chairman

Wen-YenK.Lin President

2. This statement is issued in accordance with the criteria for "Regulations Governing the Establishment of Internal Control Systems of Public Companies" promulgated by the Financial Supervisory Commission ("FSC").

3. Where CPAs are retained to audit the internal control systems, please disclose the CPAs' audit report: None.



(XI) If there has been any legal penalty against the company or its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None

(XII) Major resolutions of the Shareholders’ Meeting

Summary of major motions Resolution Subsequent development

1. Resolution on ratification of the 2018 Business Report and Financial Statements.

969,377,325 (53.48%) shares in favor.Approved.

Completed.

2. The Company’s 2018 statements of deficit compensation. 974,610,768 (53.76%) shares in favor.Approved.

Completed.

3. Amendment of the Articles of Incorporation. 843,361,705 (46.52%) shares in favor.Not approved.

NA

4. Procedures for Acquisition and Disposal of Assets—Current Procedures and Proposed Amendments.

843,363,694 (46.52%) shares in favor.Not approved.

NA

5. ProceduresforEndorsement&Guarantee--CurrentProceduresandProposed Amendments.


NA

6. Procedures forLendingFundstoOthers--CurrentProceduresandProposed Amendments


NA

7. San-Ya Investment Incorporation, in accordance with Article 172-1 of Company Act, proposed to discharge independent director Mr. PengFei Su; and the board of the Company proposed “To appoint external professional experts to conduct independent investigation to verify if the discharge is justified”


NA

8. Xin-Tatung Investment Consulting Ltd., in accordance with Article 172-1 of Company Act, proposed to discharge independent director Mr. Tzong Der Liou; and the board of the Company proposed “To appoint external professional experts to conduct independent investigation to verify if the discharge is justified”.


NA

9. Shareholder, Zheng,Feng-Yi, Xin-Tung Investment Consulting Ltd., and Jing-DianInvestmentIncorporation,inaccordancewithArticle172-1ofCompany Act, jointly proposed to discharge independent director Mr. Chi-MingWu;andtheboardoftheCompanyproposed“Toappointexternal professional experts to conduct independent investigation to verify if the discharge is justified”.


NA

(XIII) Major resolutions of the Board of Directors

Date Major resolutions

2019/01/03 1. The proposal for the subsidiary of Tatung Company, Shan Chih Asset Development Co. Ltd., to sell real estate in order to back up the capital for running Tatung Company.

2019/01/29

1. TatungappointmentofCorporateGovernanceofficerandReleaseofthenon-competitionrestrictionontheofficer by Tatung Board.

2. Tatung Board decides to take legal actions to protect corporate interest.

2019/02/14

1. The discussion on the re-evaluations and resolutions on investment in solar power plants.

2. The discussion on the re-evaluations and resolutions for Disposal of Assets upon request by TSEC.

3. ThediscussionontheCompany’sendorsementandguaranteeofitssubsidiaryJapan,Inco.



Date Major resolutions

2019/03/27

1. The discussion on the Company’s commissioning of the auditing and professional fees for the auditing and attesting CPA in 2018.

2. ThediscussionontheCompany’sendorsementandguaranteeofitssubsidiaryJapan,Inco.

3. ThediscussiononthecapitalinjectiontoTatungCompanyofJapan,Inc.,asubsidiarybytheCompany.

4. The discussion on the capital injection to Chunghwa Electronics Development Co., Ltd., a subsidiary by the Company.

5. ProceduresforEndorsement&Guarantee--CurrentProceduresandProposedAmendments.

6. ProceduresforLendingFundstoOthers--CurrentProceduresandProposedAmendments.


8. The Board of Directors resolved to convene the 2019 Regular Shareholder’s Meeting.

2019/04/11 1. ThediscussionontheCompany’sendorsementandguaranteeofitssubsidiaryJapan,Inco.

2019/05/02 1. ThediscussiononbehalfofSCAD’sBOD,forpriorityinvestmentproject’sapplicationofMRTWanDalineLG07station.

2019/05/061. TheBoardofDirectors'resolvednodividenddistributioninyear2019.

2. SupplementaryinformationontheCompany’s2018AnnualGeneralShareholder’sMeeting.

2019/06/14 1. Response to that three of our shareholders made a request to the Company’s Board of Directors to convene a special shareholders’ meeting in 15 days.

2019/07/031. The discussion on the capital injection to Tatung Forever Energy Co., Ltd., a subsidiary by the Company.

2. The proposal for revising “the management of the procedures for preparation of financial statements” and its internal audit implementation rules in the company’s internal control system.

2019/08/141. The discussion on the Company’s Lending Funds to its subsidiary San Chih Semiconductor Co.

2. The discussion on the Company’s endorsement and guarantee of its subsidiary San Chih Semiconductor Co.

2019/09/02 1. The proposal for the company to apply to Shan Chih Asset Development Co. Ltd. for a loan.

2019/11/08

1. Change of the Company’s Manager and release of managers’ non-competition restrictions.


3. The proposal for lowering the endorsements and guarantees for the company’s subsidiary Tatung Company of Japan,Inco.

2019/12/17

1. The discussion on articles in the Company’s implementation rules for its internal control system with the internal audit inclusive.

2. ThediscussiononthecapitalinjectiontoTatungCompanyofJapan,Inc.,asubsidiarybytheCompany.

2020/02/131. Donates to related party.

2. The company obtained the right-to-use assets of the real estate.

(XIV) Major issues of record or written statements made by any director dissenting to important resolutions passed by the Board of Directors: None.

(XV) Resignation or Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal Audit, Corporate Governance officer and R&D during the 2019 Calendar Year and as of the Date of this Annual Report: None.



Information on independent auditors Accounting firm CPA’s name CPA’s audit period Remark

Ernst & Young TaiwanSu-WenLin

2019Hsuan-Hsuan,Wang

Unit NT$ Thousand

TitleRange Audit fees Non-audit fees Total amount

1 Under NT$2,000 – – –

2 From NT$2,000 to NT$4,000 – – –

3 From NT$4,000 to NT$6,000 – 4,709 4,709

4 From NT$6,000 to NT$8,000 – – –

5 From NT$8,000 to NT$10,000 – – –

6 OverNT$10,000 15,680 – 15,680

1. The non-audit professional fees paid to CPAs, CPAs’ offices and affiliates accounting for more than one-quarter of total audit professional fees should be disclosed. The disclosure items should include the amounts of audit and non-audit professional fees as well as non-audit service content.

Unit NT$ Thousand

Accounting firm CPA’s name Audit fees

Non-audit fees CPA’s audit

periodRemarkManagement

system designCompany registration HR Others

(Note) Subtotal

Ernst & Young Taiwan

Su-WenLin

15,680 0 0 0 4,709 4,709 2019

Note: The item "non-audit fee-other" consists of consulting and service fee totaling NT$ 4,709 thousand dollars.

Hsuan-Hsuan, Wang

2. The audit professional fees of replacing CPAs’ firm within the current fiscal year less than that of the previous fiscal year should be disclosed. The disclosure items should include the reduction amount, percentage and reason for the replacement: None.

3. The audit professional fee within the current fiscal year that is 10% less than that of the previous fiscal year should be disclosed. The disclosure items should include the reduction amount, percentage and reason: None.



Information on change of independent auditors1. Regarding the former CPA: None.2. Regarding the successor CPA: None.3. The previous auditor’s reply to issues regarding Articles 10, Subsection 6, Item 1 and

Paragraph 3 of Item 2 of the Regulation: Not applicable.

Information on the Company’s chairman, president, financial or accounting managers holding positions in the auditor’s firm or its affiliates within the previous year: None.

Change of shareholding by directors, management, and major shareholders

Title Name

2019 As of 31 March 2020

Increase (decrease) in shares held

Increase (decrease) in

pledged sharesIncrease

(decrease) in shares held

Increase (decrease) in

pledged shares

Chairman & President Wen-YenK.Lin (2,000,000 shares) 9,931,000 shares -- --

Director RepresentativeOfTatungUniversity: I-Hua Chang -- -- -- --

Director Shou-Huang Chen -- -- -- --

Director Sheng-WenTsai -- -- -- --

Director Lung-Ta Lee -- -- -- --

Independent Director Tzong-Der Liou -- -- -- --

Independent Director Peng-Fei Su -- -- -- --

Independent Director Chi-MingWu -- -- -- --

Executive Vice President & Chief financial officer

Wen-ChiehPeng -- -- -- --

Corporate Governanceofficer An Chao -- -- -- --

FinancialOfficer Ruei-KaiJhang -- -- -- --

AccountingOfficer Shu-Fen Chen -- -- -- --

Note 1: ExecutiveVicePresidentofWen-ChiehPenghadnewly-appointedonNovember8,2019.Note 2: The Company has no major shareholders owning more than 10% of its total shares.Note 3: The directors, management, and major shareholgers owning more than 10% of the counterparts of transfer or pledge of the Company’s

equity are not related parties.



Information on the top 10 shareholders who are related parties to each other

NameShares held personally Shares held by spouse

and minor childrenTotal shares held in another

person’s name

Information on top 10 shareholders in proportion of shareholding and who are

related to one another under their names and Relationship. Remark

Share(s) Shareholding(%) Share(s) Shareholding

(%) Share(s) Shareholding(%) Name Relationship

Capital Securities Corporation Broking Capital Securities /Futures(HK) Ltd- A/C Clients

204,265,000 8.73 N/A N/A Not Available (Shareholders did not reply) -

Luo De Investment Co., Ltd.Representative:Ya-LinWang


Not Available (Shareholders did not reply) -

Tatung UniversityRepresentative: Liang-De Li

144,798,047 6.19 N/A N/A - - - - -

342 - 1,338 - - - - - -

HSBCBrokingINGAsiaPrivateBank Limited 137,321,000 5.87 N/A N/A Not Available (Shareholders did not reply) -

San Ya Investment Co., Ltd. Representative:Ya-FongWang



Wen-YiZheng 78,317,000 3.35 Not Available (Shareholders did not reply) -

China Trust Commercial Bank’s trust division in custody for Tatung Company’s employee stockholding trust account Representative:JessicaWang

77,335,163 3.31 N/A N/A - - - - -

- - - - - - - - -

Hsbc Broking Securities (Asia) Limited 56,189,000 2.40 N/A N/A Not Available (Shareholders did not reply) -

BeiJiInvestmentCo.,Ltd.Representative:Siao-JhenYe



Xin-Tatung Investment Consulting Ltd.Representative:Rong-GuangYang



Long-term investments ownershipUnit: share; %

Reinvested companies Invested by the Company

Direct / indirect investments by the Company’s

directors, supervisors, and management

Total ownership

Shares (%) Shares (%) Shares (%)

Chunghwa Picture Tubes, Ltd. 1,850,745,168 28.56 719,782,843 11.11 2,570,528,011 39.67

Note 1: The listed companies are important subsidiaries from equity-accounted investees of Tatung Company.Note 2: The book closure date of these company: Chunghwa Picture Tubes, Ltd. 2019/12/01.


Financial Information

Source of capital (I) Capitalization


Month / year

Par alue

Authorized capital Paid-in capital Remark

Share(s) Amount (NT$) Share(s) Amount (NT$) Sources of capital

Capital increase by assets

other than cash

Others

February 2011

NT$10 10,000,000,000 100,000,000,000 2,339,536,685 23,395,366,850 Conversion of shares by stock option NT$8,545,000capital reductionNT$32,134,271,970

No Officialletterunder Ching-Shou-Sheng-Tze No. 10001035060 dated February 22, 2011 of Ministry of Economic Affairs

(II) Type of stockAs of March 31, 2020

Type of stockAuthorized capital

RemarkOutstandingshares Un-issued shares Total

Common stock 2,339,536,685 shares 7,660,463,315 shares 10,000,000,000 shares Listed company’s stock

(III) Shelf registration: None.

Shareholder structureAs of May 1, 2020 (Note)

Type of shareholders

QuantityGovernment

agenciesDomestic financial

institutionsOtherdomestic

institutions Individuals Foreign

institutions and individuals

Total

Number of shareholders 1 6 371 169,535 514 170,427

Shareholding 1,976 77,450,606 621,211,054 695,525,907 945,347,142 2,339,536,685

Holding percentage (%) 0.00 3.31 26.55 29.73 40.41 100.00

Note : The information on the last day of the transfer period of 2020.



Distribution profile of shareholder ownership As of May 1, 2020 (Note1)

Range of shareholding(unit: share) Number of shareholders Ownership Holding percentage (%)

1 ~ 999 128,553 27,651,888 1.18

1,000 ~ 5,000 31,815 68,141,543 2.91

5,001 ~ 10,000 4,968 36,661,897 1.57

10,001 ~ 15,000 1,610 19,712,307 0.84

15,001 ~ 20,000 812 14,506,874 0.62

20,001 ~ 30,000 847 20,903,809 0.89

30,001 ~ 50,000 689 27,098,633 1.16

50,001 ~ 100,000 479 33,903,498 1.45

100,001 ~ 200,000 260 36,284,316 1.55

200,001 ~ 400,000 141 39,178,486 1.67

400,001 ~ 600,000 58 28,387,118 1.21

600,001 ~ 800,000 29 20,349,994 0.87

800,001 ~ 1,000,000 17 15,393,419 0.66

1,000,001 above 149 1,951,362,903 83.42

Total 170,427 2,339,536,685 100.00

Note 1: The information on the last day of the transfer period of 2020.Note 2: The Company does not issue preferred stock.

Major shareholdersAs of May 1, 2020 (Note)

SharesName Total shares owned Ownership(%)

Capital Securities Corporation Broking Capital Securities /Futures(HK) Ltd- A/C Clients 204,265,000 8.73

Luo De Investment Co., Ltd. 157,920,000 6.75

Tatung University 144,798,047 6.19

HSBCBrokingINGAsiaPrivateBankLimited 137,321,000 5.87

San Ya Investment Co., Ltd. 98,244,000 4.20

Wen-YiZheng 78,317,000 3.35

China Trust Commercial Bank’s trust division in custody for Tatung Company’s employee stockholding trust account 77,335,163 3.31

Hsbc Broking Securities (Asia) Limited 56,189,000 2.40

BeiJiInvestmentCo.,Ltd. 46,793,000 2.00

Xin-Tatung Investment Consulting Ltd. 43,462,000 1.86

Note : The information on the last day of the transfer period of 2020.


Financial Information Financial Information

Market price, net worth, earnings and dividends per common shareFiscal year

Item 2018 2019

Market price (Note 1)

High 42.40 31.05

Low 19.00 16.10

Average 30.31 21.49

Net worth per share (Note 2)

Before distribution 14.50 15.70

After distribution 14.50 15.70

Earnings per shareWeightedaverageofshares 2,238,595,303 2,310,335,495

Earnings per share (Note 3) (4.75) 1.24

Dividends per share

Cash dividends No No

Stock dividendsRetained earnings No No

Additional paid-in capital No No

Accumulated undistributed dividends (Note 4) No No

Return on investment

Price to earnings (P/E) ratio (Note 5) (6.38) 17.33

Price to dividend (P/D) ratio (Note 6) No No

Cash dividend yield (Note 7) No No

* Information on retroactive adjustments in market price and cash dividends shall be disclosed if any dividends were distributed due to an increase in retained earnings or capital surplus.

Note 1: Pertains to the highest and lowest market prices of each common share in the fiscal year specified. The average market price for each fiscal year is calculated based on the transaction value and volume for the year.

Note 2: Figures based on the number of shares issued at the end of the previous fiscal year and the resolution passed at the shareholders’ meeting in the following fiscal year.

Note 3: Earnings per share before and after adjustment shall be disclosed if stock dividends were distributed.Note 4: Regulations governing the issuance of securities provide that un-appropriated dividends in the current year may be accumulated and

distributed when the Company posts a profit, and only the accumulated amount of dividends needs to be disclosed.Note 5: P/E ratio = Average closing price per share/Earnings per share.Note 6: P/D ratio = Average closing price per share/Cash dividend per share. Note 7: Cash dividend yield = Cash dividend per share/Average closing price per share in the current year.Note8: ThefinancialstatementsforQ1of2020wereunderreviewbyindependentauditorswhenthisannualreportisprinted.



Dividend policy and implementation status(I) Dividend policy

1. If Tatung Company’ sannual financial report shows any earnings, the company must, first, in accordance with the laws, pay the tax, and balance former losses before setting aside 10 percent of such earnings as a legally required reserve. Nevertheless, this requirement shall no longer apply once the legally reserve equals or exceeds the authorized capital amount.

2. The company must, according to the regulations, set aside or reverse special capital reserve together with initial undistributed earnings as the distributable accumulated earnings for the shareholders except legal reserve provision. The board of directors meeting shall draft a proposal for the shareholders meeting to make a final decision on the distribution of the earnings.

(II) Implementation1. The Company suffered net loss and thus no dividends were distributed in 2018. 2. The Company had net income in 2019. However, there is still special reserve that need to be covered, hence, the Company

did not dividends were distributed in 2019. A breakdown on Earning in allocation in 2019 follows:

(III) Earning Allocation:Unit: NT$ Thousand

Fiscal yearItem 2019

The retained net profits at the beginning of the fiscal period 0

Add (minus): 2019 net income after tax 2,875,879

The special reserve reversed towards unappropriated earnings 345,792

Othercomprehensiveincome (26,842)

Treasury stock trading (a subsidiary disposing of its parent company’s shares) (762,403)

The ownership of its subsidiaries in relation to changes in equity (132,833)

Disposal of equity via other comprehensive income objectively measured 260,169

The retained net profits at the end of the fiscal period 2,559,762

Reserve

1. Legal reserve (287,588)

2. Special reserve (2,272,174)

The retained net profits for next year 0

Dividends distribution 0

Note:Inaccordancewiththerelevant lawsandregulationsprescribedbytheFinancialSupervisoryCommission,R.O.C., theCompanysetasidespecial reserves and the regular shareholders’ meetings held from 2014 to 2018 resolved to make up for its losses with the special reserves. As of this year, there is no deficit to be offset. However, to ensure that special reserve is set aside pursuant to law, the amount that is required to be brought back as special reserves amounted to NT$19,323,238 thousand.

Impact of stock dividend distribution on business performance and EPS: Not applicable.


Financial Information Financial Information

Employee and remuneration to directors(I) The percentage and scope of employee and remuneration to directors as contained in the

Company’s Articles of Incorporation.Tatung Company has surplus earnings each year, the company shall set aside no less than 1 percent of them as remuneration for the employees and no more than 2 percent of them as remuneration for directors. However, if the company still has accumulated losses, such earnings shall be reserved for balancing the books.As remuneration for the employees is distributed by stock dividend or cash, it shall need the concurrence of at least half of all the directors present at a board of directors meeting attended by at least two-thirds of the directors, and the decision must be announced in the shareholders meeting. Employees that receive remuneration by stock dividend or cash must meet specified criteria regulated by the company.

(II) The basis for estimating the amount of employee and director compensation, the basis for calculating the number of shares to be distributed as stock bonuses, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period.The Company had net income in 2019. However, there is still special reserve that need to be covered, hence, the Company did not dividends were distributed in 2019.

(III) Employee and remuneration to directors distributed from earnings of the previous year: 1. The amount of any employee compensation distributed in cash or stocks and compensation for directors and supervisors. If

there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed: None

2. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: None

(IV) The actual distribution of employee and director compensation for the previous fiscal year (with an indication of the number, dollar amount, and stock price, of the shares distributed), and, the cause and treatment of discrepancy, if any, between the actual distribution and the recognized employee and director compensation:The Company suffered net loss and thus no dividends were distributed in 2018.

Share buyback: None.

Issuance of corporate bonds: None.

Issuance of preferred shares: None.



Issuance of global depository receipt: Issuing Date 10/2/2009

Issuance & Listing Luxembourg Stock Exchange

Total Amount US$197,500,000

OfferingPricePerGDR US$3.95

Units Issued 50,000,000

Underlying Securities Capital increase for cash by isssuing new common shares

Common Shares Represented 1,000,000,000

Rights&ObligationofGDRHolders Same as those of common Share Holders

Trustee Not Applicable

Depositary Bank The bank of New York Mellon

Custodian Bank Mega International Commercial Bank

GDRsOutstanding 38,886

Apportionment of Expenses for Issuance & Maintenance Tatung

Terms and Conditions in the Deposit Agreement & Custody Agreement -

ClosingPricePerGDR

2019

Highest USD 19.300

Lowest USD 10.500

Average USD 14.279

1/1/2020-3/31/2020

Highest USD 14.90

Lowest USD 11.10

Average USD 13.59

Status of employee stock option plan (ESOP): None.ESOP granted to management team and to the top 10 employees: None.Status of new restricted employee shares plan: None.New restricted employee shares plan granted to management team and to the top 10 employees: None.Status of new share issuance in connection with mergers and acquisitions: None.

Financial plans and implementation: None.


Operation Overview

Revenue breakdownFor management purposes, the Group organized its business units based on their products and services and has four reportable operating segments as follows:(1) Optical department: This department is responsible for CRT, TFT-LCD backlight module manufacturing and production, development of liquid crystal

display modules, electronic switches and sensors and solar modules virus, manufacturing and sales.(2) Machinery and energy department: The department is responsible for the research, manufacture and sales of intelligent grid, smart-grid portal, photovoltaics, LED

lighting, motor and machinery and energy control system.(3) Consumer products department: This department is responsible for digital television, flat panel display manufacturing, digital media devices, digital audio-visual and

home appliances, etc.(4) Real estate development department: This department is responsible for the development of rale estate.

Nooperatingsegmentshavebeenaggregatedtoformtheabovereportableoperatingsegments.Otherbusinessactivitiesthatarenotreportedandtherelatedinformationoftheoperatingsegmentsaredisclosedunderthe“OtherOperatingSegments”section.

For the year ended December 31, 2019

Opticaldepartment

Machinery and energy department

Consumer products

department

Real estate development department

OtherOperatingSegments Total

Revenue $1,507,876 $19,446,163 $9,428,123 $3,614,369 $1,426,484 $35,423,015

Revenue distribution of TatungCategory %

POWER BUSINESS GROUP 46.55%

CONSUMER BUSINESS GROUP 29.56%

SYSTEM BUSINESS GROUP 23.77%

OTHER 0.12%


Operation Overview

POWER BUSINESS GROUP

Power Equipment Business Unit - Industrial appliance

(Transformers and switchgears)Business ActivitiesI. Business scope

(I) Main lines of business and sales breakdown

Category %

Transformers 70%

Switchgears 30%

(II) Current products1. Transformers

All kinds of power transformers, distribution transformers including Pad-Mounted type and pole-type, shunt reactors, transformer partial discharge diagnosis device and testing & certification services of transformers.

2. SwitchgearsSwitchgears including high voltage and low voltage ratings, Control panel, PV Box, mobile substation, gas insulatedswitchgears(GIS),underground2-wayand4-way switches, switchgear components, capacitors, potential transformers and current transformers.

II. Technology and R&D(I) Product development

Product SpecificationExpected time to hit the market

(Year)

Transformers

Pole-type Transformer with improved design 2020

Pad-mounted Transformer with improved Design 2020

Switchgears Polymer-Housed Surge Arrester 2020

(II) Research & development As for transformer products, the Company is developing main power transformers with 500kV & ultrahigh-capacity, high efficiency transformers for Solar system,

smart distribution cubicle and smart transformers, Compact Unit of PV Box and Inverter, Underground 4-way Automatic switches and Polymer-Housed Surge Arrester.

III. Industry overview(I) Current status and development 1. In year 2019, the global economy of industrial appliance

was almost the same as last year. The demand of transmission and distr ibution industr ial appliance products for Taiwan Power Company increased substantiallybecauseofits“PowerGridReinforcementProject” but the investments of private enterprises slowed down. The price of product increased because of slightly increased price of raw material such as copper conductor.

According to the study of TIER (Taiwan Institute of Economic Research), the production value and sales revenue of industrial appliance declined in 2019 at -5.61% and -3.95% respectively.

2. Lookinto2020,accordingtotheanalysisofDGBASofExecutive Yuan, the economic growth rate is about 2.37% in 2020, lower than that at 2.71% in 2019. The demand of industrial appliance products for Taiwan Power Company is expected to be prosperous owing to “PowerGridReinforcementProject”,“GenerationSetsExpansion Project of Existing Power Plants” and “First StageOffshoreWindFarmPowerGridReinforcementProject”. The private green energy firms are encouraged to increase investments in solar farm and offshore wind farm to stimulate the sales of relating industrial appliance products.

(II) Relationship between the upstream, midstream, and downstream sectors of the industry

Upstream

Important components / parts, insulating material, switchgear components and raw material of metal.

Midstream Design & manufacturing of the industrial appliance.

Downstream Governmentandprivateenterprises.

(III) Product development trend and competition statusDue to the improvement of Taipower’s financial status, the orders are expected to be released for “Power GridReinforcementProject”,replacementprojectsofexisting power plants and related government domestic stimulation policies. Ministry of Economic Affairs promotes the export of power plant EPC project. It will help the manufacturers to get more opportunities to expand overseas market accordingly.


Operation Overview Operation Overview

(IV) Important certifications

2306

China Compulsory Certification

CED TAFCertification

Environmental Protection Label

from the Environmental

Protection Department

ISO9001 ISO14001 OHSAS18001 CNS Mark

IV. Long-term and short-term business development plans(I) Short-term plan

To utilize the newly built electric plant to upgrade the manufacturing ability and the production capability of power transformers to win over the orders of extra-high voltage and capacity of power transformers.

(II) Long-term planBy taking Taiwan as an R&D base, Tatung will build its global marketing networks of the industrial appliance products by enhancing the innovation and upgrading the quality.

Market and product statusI. Market analysis

(I) Domestic market share, future supply & demand and potential growth in year 2019

1. Market share: Transformers accounted for 35%; Switchgears accounted for 10%.

2. Future supply & demand conditions and potential growth: Tatung’s industrial appliance products have been sold domestically and internationally and won an excellent reputation for the quality, performance and service. Since the demand of local market is slowing down, Tatung will be directly promoting overseas potentialmarketssuchasJapan,SoutheastAsiaandMiddle East continuously to increase the product sales.

(II) Favorable and unfavorable factors and countermeasures

1. Vision of Industrial Appliance SBUIn response to the trend of global environmental protection, we will continue to develop new products with high-efficiency, energy-saving, low noise level and meet RoHS-conscious to enhance its green product image.

2. Favorable factors(1) Tatung has an entire series of power products including

the industrial appliance of generations, transmission and distribution, power cables, electric motors, solar power plant, etc.

(2) Due to Taiwan Nuclear power plants will retire soon, Governmentwillaccelerate to replace thepowerplants. These will bring business opportunities of industrial appliance for local vendors in Taiwan.

(3) As Ministry of Economic Affairs promotes the export of Turnkey, we will expand the overseas market with government.

3. Unfavorable factors(1) Limited to Taiwan not join the International tariffs union,

the export sales is affected by custom duties. It is not conducive to expanding export business.

(2) Investment of Taiwan Power Company is still conservative. It limits the domestic sales.

4. Countermeasures(1) Technology Cooperates with overseas companies and

expands the market with the partners together.(2)CoordinatingwiththestrategyofMOE’s Industry4.0,

Tatung will promote customization and IoT products.

II. Purpose and manufacturing processes of main products(I) Purpose

Transformers and switchgears are mainly used for the government’s major infrastructure projects such as power plants, transmission and distribution systems and for private enterprises projects such as factory constructions, building constructions, traditional mechanical & electrical manufacturing industries, etc.

(II) Manufacturing processes Through the procurement system, raw materials and parts / components are purchased from well reputed local and overseas suppliers. Cost reduction and standardization of products have been developing continuously. Tatung industrial appliance products are widely and trustfully used by customers at home and abroad.

III. Procurement of major materials(I) Items of major materials

Silicon steel, Copper wires, Insulating oil, Bushing, Insulating material, Mild steel, Tap Changers, Radiators, Circuit breakers and Protection relays.

(II) Major suppliers (1)Overseas suppliers:ABB,NGK,MR, JFE, Siemens,

Kitashiba, Toshiba, Hitachi Metal, Mitsubishi, etc.(2) Domestic suppliers: China Steel Corporation, Yi Chiu

Chemical & Technical Co., Ltd., Minchali Metal Industry Co.,Ltd.,TatungWireandCable,etc.

(III) The suppliers provide the materials with reasonable prices, good quality and appropriate delivery time. Through B2B procurement, it improves the ability of both strains.


Operation Overview

Power Equipment Business Unit - Cable Business ActivitiesI. Business scope


Category Percentage of sales %

Enameled wire, tinned wire & bare copper wire, tailor-made copper wire 49%

Power cable & busway distribution system 34%

Communication cable, electronic cable, optical fiber cable 17%

(II) Current products 1. Enameled wire, tinned wire, bare copper wire

Enameled wire: Enameled copper wire, inverter duty motor wire (PEIV), compressor wire, enameled copper wire for 300°C & 400°C grade smoke and heat exhaust ventilators motor, enameled rectangular wire, fine enameled rectangular wire.Tinned copper wire: Highly solderable evenly-thick lead-free tinned copper wire. Bare copper wire: Bare copper wire, oxygen-free copper wire, tailor-made copper wire.

2. Power cable, busway distribution systemPower cable: 600V~161kV high & low-voltage XLPE cable, PVC wire and cable, rubber cable (EPR, Hypalon, Neoprene), fire-resistant cable, heat-resistant cable, low smoke halogen-free cable and photovoltaic cable for solar energy.Busway distribution system: Insulation type (IP66), fire resistant type busway distribution system.

3. Communication cable, electronic wire, optical fiber cableCommunication cable, electronic wire products: Communicationcable, PVcable, LANcable,RGtype, and high frequency coaxial cable according to standardsofCNS,JISetc.Optical fiber cable: Ribbon slot optical cable (4-600 cores), Bundle jelly-filled single mode optical cable (6-216 cores), optical fiber patch cord/pigtail, single loose tube optical fiber cable, jelly-filled optical drop cable, bend-insensitive optical fiber cable, micro bundle optical cable, flat optical cable, corrugated steel tape armoured optical cable.

II. Technology and R&D(I) Product development1. Power cable & busway distribution system

Fire-retardant low smoke halogen-free cable, BKS busway.

2. Communication cable & electronic wireWTROpticalCable,fire-retardantcable.

III. Industry overview

(I) Industry status and development1. Enameled wire :

The prospects for enameled wire fol low up with upgrades in the industry and the requirement for high frequency transmission, improvements in heat resistance, developments of inverter surge resistant magnet wire used in eco-friendly power efficient inverter-driven home appliances, and the diversification of enameled coils such as large & fine sized enameled rectangular wires.

2. Power cable: Wi re and Cable: The construction of the 161kV underground transmission line project of Taiwan Power Plant's"AdditionalGasTurbinecombinedcycleProject"and "OffshoreWind Power Enhancement PowerNetwork Project", the continuous demand of 25/69/161kV XLPE power cable in each power supply unit and the requirement of power transmission and transformation, mechanical and electrical engineering of the third terminal of Taoyuan International Airport, mechanical and electrical project of MRT, highway, public works, tunnel construction, state-owned enterprises China Steel Corporation, Chinese Petroleum Corporation, and Chunghwa Telecom. In addition, the plant will compete for the business opportunity of the Datan Power Plant No. 7 unit combined cycle project, and the No. 8 and No. 9 units of the Datan Power Plant.Busway: The projects for construction and renewal of ChunghwaTelecom'scomputer facilites, large-scaleconstruction and factory expansion projects, and so on.

3. Communication cable: Broadband optical fiber and indoor optical fiber have been adopted by Chunghwa Telecom Co., Ltd. to fulfill the policy of FTTH (Fiber To The Home). In addition, the plant will make efforts to win the orders of new fixed network including outdoors jelly-filled type, self-support type and LAN cable.


UpstreamSuppliers of raw materials which including plastic pellets, copper, aluminum, tin, optical fiber, steel wire etc.

Midstream Wire&Cablemanufacturers

DownstreamPower, electrical engineering, telecommunication, electronics and vehicle motor providers

(III) Product development trend and competition status1. Enameled wire:

The product trend of enameled wire is moving toward self-bonding, high heat resistant, high temperature rectangular wire, fine rectangular wire and surge resistant.

2. Power cable: The plant increases investment in equipment to achieve automation and intel l igence which signif icantly enhances the production efficiency, and continue to technically improve the manufacturing process on elevating product quality. For the trends of environmental protection, cables that are environmentally friendly, fire resistant cable and LSHF cable have all acquired cer t if ications. Regarding green energy, Tatung develops the PV solar cable and gets the third party certification successively, and will aggressively elevate the manufacturing techniques and quality of the above-mentioned products.



3. Communication cables: The fifth-generation mobile communication network (5G)requiresmorebandwidthandmorebasestations.The government will plan to release license in 2020, and the demand for fiber optical cable from various telecom operators will continue to grow.


EU network system verification

ETL verification JapanPSECertification UL Certification

2306

TAF Certification Product Safety of Electrical Appliance &

Materials

TÜV SÜD Certification


Chunghwa Telecom Co., Ltd. and Taipower have successively opened on tenders and we will try our best to get the awards, also cooperate with other distributors mutuallytowinOEMordersforbuswayandLANcable.Inaddition,thankstothewarmingofthegovernment'sgreen energy policy, solar PV cable that complies with the EN 50618 specification has been developed, and TÜV SÜD certification has been obtained. That will be helpful on expanding the market share with full efforts.

(II) Long-term planIn order to enforce the product competitiveness and increase the market share, the factory step to eliminate oldequipmentand installnewequipment.Wewillfocus on the solar cable business opportunities in future, and actively promote Tatung PV cable and wire for PV ribbon.Wewi l l st rengthenproduct qual ity and f lex iblefabrication to enhance marketing networks soundly for the Taoyuan plant with Thailand plant, so as to expand markets inJapan,SoutheastAsia, theUnitedStates,India, and Europe as well as constructing deeper and wider product application. The integrated operation of ''2sites,2plants''makesthemostprofitableinvestment.


1. Demand from updated works of Linkou, Dalin, Tunghsiao, Datan power plant units from Taipower, mass rapid transit railway projects and domestic various civil construction work.

2. Demand for bare copper wi re is stable in Asia. These products are operated and managed by Tatung Taoyuan plant, which also makes the most of competitiveness of the Tatung (Thailand) Co., Ltd. to reduce production costs of LAN cable, also beneficially on marketing worldwide.

II. Key application and manufacturing processes of main productsEnameled wire, tinned wire and bare copper wire1. Application of enameled wire: transformers, vehicle

electric products, motors, compressors, wireless charging coil, voice coils, smart card and choke coil etc.

Application of oxygen-free copper wire: solar ribbon wire, electronic flexible flat cable, rectangular copper wire, high-speed LAN cable, quality stereo wire, extreme fine-drawn wire copper materials, diode pins.

Application of tinned wire: resistor and capacitor wire.2. Manufacturing process: copper rod→drawing→annealing→varnish (or

tincoating)→finishedproducttest→packaging→delivery

Power cable 1. Various types of power cables, from 600V to 161kV,

supplied to TPC, military, the public and private sectors and exported to other countries around the world.

2. Manufacturing process: copperrod→drawing→stranding→insulatedextrusion

→wrapping→sheathextrusion→finishedproducttest→packaging→delivery

Communication cable 1. Application:

3C products for indoor voice and data communication, electronic device connection, signal transmission, power supply, (LAN) cable, broadband for high frequency data transmission, and cable for long distance high-capacity transmission.

2. Manufacturing process: Drawing→insulation→stranding→sheathextrusion→

inspection→packaging→delivery

III. Procurement of major materials1. Magnet wire, Tin-plated copper wire, bare copper

wire: (1) Main raw material: copper plate, copper rod, varnish,

tin ingot etc.(2) Main sources of suppliers: Domestic and overseas

suppliers.2. Power cable:

(1) Main raw material: copper, XLPE, rubber, PVC compound, LSHF compound, etc.

(2) Main sources of suppliers: Domestic and overseas suppliers.

3. Communication cable(1) Main raw material: copper wire, PE compound,

PVCcompound,LSHFcompound,Jellycompound,optical fiber, etc.

(2) Main sources of suppliers: Domestic and overseas suppliers

IV. Development strategy 1. Environmental protection is a responsibility for all. Tatung

is making an all-out effort to develop in the direction of being low-lead, cadmium-free, low-smoke, and halogen-free products.

2. In cooperate to TPC five years strengthen plan on power assembly and offshore wind power system, get the awards on expanding requirement for power cable.

3. Innovation and improvement continuously on busway, and develop aggressively the potential customers from state enterprise and private enterprise.

4. Followthetrendof5Gbroadbandnetwork,developingsuccessively on various Ethernet cable, cable for NB, cell phone and satellite, improving competitiveness effectively.

5. In response to worldwide green energy development popularly, aggressively expand the overseas market for PV cable.


Operation Overview

Motor Business UnitDescription of BusinessI. Business scope


Category %

MV and LV motors 57.5%

HV motors 31%

Generators 12%

Otherproducts 0.5%

(II) Current products1. Motors

Withmorethan70yearsoftechnologyandexperience,Motor BU researches and produces all kinds of energy saving high-efficiency, single-phase, and three phase high-low-voltage motor from 1/8~50,000 HP, including a variety of special motors and applications system such as premium efficiency motors, high temperature resistant motors, electric vehicle motors, explosion proof motors, new automatic brush lifting device equipped in wound rotor motor, vertical high thrust pump motors, gear reducer, inverter motors, aluminum frame motors, brake motors, oil well pump motors, water pump motors, immersible pump motors, built-in type spindle motors, roll ing mill motors, elevator motors, crane motors, permanent magnet motors, IoT connected smart motor monitoring sensor and system, railway traction motors, inverters, control panels etc., as well as provides total solutionsfor electrical testing equipments and plant power equipments system engineering projects to serve a variety of industries.

2. GeneratorsDiesel generator set for land and mar ine uses, hydroelectricpowergroup,motorgenerator(M-Gset)for special purposes.

3. Other products: A variety of castings, etc.

II. Technology and R&D(I) Product development

To cope with the increasing awareness of green energy and the development of industrial 4.0. The focus will be on less energy consumed material and less material usage of new product design concept with servo and smart function aided which could be adapted to industrial zone safety environmental monitoring system which related with petro-chemical industry; power station etc., of our explosion proof motors. Electric vehicle motor with controller which manage to electrify for the diesel and gasoline combustion engines for securing energy saving as well as reducing carbon emission. Larger output rating; higher efficiency ;energy saving; low noise level and low vibration level are of our developing target for our high voltage motors for having value added product lines with competitive sharp edge. Motors :1. Explosion Proof motors; Product lineofExe,Exn,ExdobtainedwithGB; ITRI;

IEC and ATEX certificates; larger power out motor ratings accredited with Exd IIB T4 certificate and under processing for Exd IIC T4 certificate.

2. IE4 Motors of Super Premium Efficiency 60Hz ; 50Hz to

be completed by 2020.3. EV traction motor ( for E- bus; Logistic usage van/car) +

controller.4. PM motor + controller.5. IOTsmartmotorsurveillancecomponentandsystem.6. Systematic product of larger capacity hydraulic

generation project.

III. Industry overview(I) Current status and development

Taiwan'seconomicgrowthat2019is2.9%.Motorindustryis continuously affected by the global economic cycle. Demand of motor industry remains constant, unchanged. Looking toward 2020, global economic recovery trend remain to be continued unaccountable, Taiwan'seconomicgrowthispessimisticallyexpectedto be 2.8% through 2021. However due to Sino-America tariff conflict, uncertainty of its policy, geopolitical inferences etc. And due to the adverse impacts of the COVID-19,theglobalboomwilldeclineseverelyin2020.Globalmotormarketdemandof2020tobeUSD$127billion which is increased from USD$ 100 billion based upon encouragement of global consensus of low carbon emission; energy saving and transformation of industrial manufacturing process upgrading.

(II) Relationship between the upstream, midstream and downstream sectors of the industry

UpstreamImportant parts, insulation materials, and metal raw materials, castings and power distribution equipment.

MidstreamMotor product design and manufacturing. B2B system, SAP system , PDM system and IoT Application.

Downstream

Government,privateenterprises. (Powerplant, Steel plant, Petrochemical, Mining, Watertreatment,ship,Cement,Paper,Transportation, Recycling, Printing, Freezing, Rubber,Machinery,Gas,Wood,FoodProcessing,Generators,Systems,etc.)

(III) Product development trend and competition statusEnergy saving and environmental protection, high- end manufacturing equipment, new energy, new material, new energy vehicle; products that pursuit energy saving has been the major business values nowadays. Energy saving products of IE4 super premium efficient motors; traction motors; steel mill motors and increasing the popularity will be the trend (such as electrification of injection molding industry, electric vehicle) Competitors they are focusing on the commercialization of product development and exploring potential market of green product. Motor BU will further enhance the investment in technical development, seeking parties to cooperate in technical advancement and global material sourcing for introducing our developed product in the market earlier than competitors.


Canadian Standards Association (CSA)


Europe CE Certificate America UL Certificate

2306

America UR Certificate TAF Certification IEC EX Explosion Proof Certification




TocounteractthenegativeeffectofCOVID-19diseasespreading and uncertainty of global economic situation; further new research to be speed up in IE4 motor, EV (E-Bus) tractionmotor, IOTsmartmotor surveillancecomponent and system. By reconfiguration of favorable product combination for sales strategy adjustment to achieve the sales target.

(II) Long-term plan1. To integrate global production, enhancing production

capability and align it with advanced global service network. Eventually to establish the global sales channels around the world.

2. Energy saving technologies advanced continuously to follow the MEPS policy of global trend on low energy and low material consumption motors. PM motors will be targeted on customized, precision, energy saving, compact; low noise and low vibration features of high value added motor to keep abreast of competitiveness.


(I) 2020 domestic market analysis:The global economy is in recession. Demand and price declined, competition is becoming fiercer. Base on the data collected from the Energy Bureau of the Ministry of Economic Affairs, eight major domestic manufacturers and the market, the estimated domestic market share: Motor30%&Generator25%.

1. Motor BU planningIn response to the trend of global environmental protection, motor BU will continue to develop super efficiency product- motor series that comply with RoHS toenhanceproduct'sgreenimage.

2. Favorable factorsDemand for energy saving, high efficiency motor increased. Customized products is still promising.

3. Unfavorable factors 2019 and 2020 domestic investment environment is still pessimistic and keep monitoring and counter react to thespreadingofCOVID-19disease.Large-scalemanufacturing facility investment would continue to shrink. High-voltage motor demand will be less. The rising prices of raw materials and getting more and more stringent environmental protection in the Mainland have brought tighter supply sources. The overall market situation will not be much different, business opportunity is still limited.

4. Countermeasure■ Domestic Market

To cope with the energy saving opportunity and fulfil the civil responsibilities, motor BU should focus on enhancement of high voltage motors market, maintenances and services demands, customize product to increase the profit amount. Medium- small power output low voltage motor: the focus will be on standardization of the motor module, reduce cost and improve delivery to hence competitiveness. Through enhance competitiveness to improve profit margin. Sales will be targeted on high profit margin product. High voltage motor: the focus will be on replacement and maintenancebusinessopportunities.Generator:Dueto request of power rationing from Taiwan Electricity. The target will be on demand for high- end and special customized generator.

■ Foreign MarketSearch for new customers, consolidate old customer relationship to expand business opportunities. Target onOEMcases,establishsalesanddistributionbase.Increase the sales ratio of medium-sized motors to increase profit margin.North America:A. Main Product: Inverter drive motor / High efficiency

motor / VHS high voltage motor / Customized motor B. OEMandOwnbrand,twowayssimultaneouslytosell

in North and South America market.Southeast Asia: A. Expand and manage the market through distributors.

Look for potential cooperative distributors through exhibitions / visits to expand business.

B. Formosa Petrochemical Corporation Vietnam Nanhe Static Steel Plant continuously replaces order for replacement motor.

Japan:A. Promote variable frequency / high efficiency and

customized motors. Look for opportunities to work collaboratively with global brand and large power system provider.

B. ContinuetrackSteelplantMill/ROTmotorbusinessopportunities. Tatung successfully obtained the Mexico Steel Mill project inverter drive motors early March 2019.

Australia:Target on large and special motors for mines and pumps. Motor BU will also focus on customized business opportunities such as shale oil explosion-proof motors.Europe (Include Middle East): Fully support demand of machinery factories in Europe and Middle East by strengthening the cooperation between sales agent and manufacturing facility in Taiwan and China for special motor orders.Competitive Advantage:Tatung has solid and experienced technical manpower with strong customize and maintenance capability. Tatung also has rich and stable sourcing team for example Tatung Shanghai/Nanjing; Tatung Electric USA and other sales office globally. "Human Resource" has always been the core competitive advantage of thecompany,TatungwillkeepexecutingregularOJTcourses to ensure the most competitive workforce.

II. Applications of main productsMotor products are main ly used in power plants, transmissions, distribution systems, private construction projects. Small and medium sized motor is mainly used in the mechanical industries, water pumps, liquid pumps, fans, air compressors, refrigerant compressors, elevators, forklifts, cranes, lifts, lift ladders. Large motor is mainly used for power plants, cement, chemical, and industrial equipment, etc.

III. Procurement of major materials(I) Main material for motor:1. Magnetic material and conductive material: silicon

steel, copper, wire & cable, insulating material, iron- steel material.

2. Cast iron motor parts 3. Motor peripheral: the control electronics, each kind of

accessories for temperature control and its peripherals.(II) In response to the rise of raw material cost and more

stringent environmental protection in Mainland China. TSA will strengthen the search and development of potential sources in other regions of the world to stabilize and balance sources of supply.


Operation Overview

CONSUMER BUSINESS GROUP

Advanced Electronics Business Unit

Business ActivitiesI. Business scope


Category %

Digital entertainment products 97.23%

Smart & IoT products 2.73%

(II) Current products1. Digital entertainment product lines

Wired&wirelessheadsetsforgaming&entertainment,streaming microphone & camera, smart & active noise cancelation headsets, head mounted devices, and entertainment accessories.

2. Smart & IoT product linesAI enabled audio products, USB camera, IoT service gateway, IoT smart controller & module, and sensing-and-control products.

II. Technology and R&D(I) Product development1. Digital entertainment products

Develop wi red and wi reless headset, wearable devices, and accessories for entertainments. The digital entertainment product lines are with smart features, stylish designs, active noise cancellation, clear voice reception, and high definition audio & video quality.

2. Streaming camerasStreaming cameras can support high compression rate for high definition video quality, and furtherly integrate temperature, l ight, sound, and motion sensors for environmental monitoring. Camera product lines are certified by global leading cloud service providers to provide best audio and video performance.

3. Smart & IoT devices and sensing-&-control productsEmbedded leading AI eco-systems & technologies, series of Tatung IoT smart devices include smart headset, speaker, IoT services gateway, IoT smart controller and module, and sensing-and-control products which innovate user experiences and are the core devices supporting smart home, office, factory, building, campus and city applications.

(II) Research & development 1. Headset product lines are designed with smart features,

ergonomic and modish form factors, and active noise cancellation, and equipped with wide band audio and ultimate sound quality.

2. Develop high definition built- in and add- on cameras for

smart TV. Products are certified by global leading service providers. Support leading features including high definition video shooting, high compressed video format, noise suppression, ease-of-use, and interoperability.

3. Develop streaming cameras with advanced features including night vision, environment monitoring, event detection, and easy installation.

4. Incorporated with leading AI & cloud services, IoT smart devices focus on energy-saving & efficiency management, security & safety, and wellness monitoring applications. Products are environmental friendly, low power consuming, and compliant to international standards.

(III) Important certifications

Compliance with the European

Directives

Compliance with American

safety standards


Compliance with U.S. Federal

Communications Commission

for telecommunications

WEEE

Compliance with German

& European safety requirements

Compliance with Japaneseemissions

control standards by VCCI

RoHS Energy Conservation

Label

Energy Star

III. Industry overview(I) Current status and development

As the penetration rate of connected devices going high, broad band Internet accesses becoming ubiquitous, cloud services and big data analytics and applications getting mature, these factors pull high the demands of connected products and IoT applications. New business models and application are innovated by alliances among branders, channels and operators for new applications. Foreseen emerging products & solutions include accessories for entertainments, IoT devices, sensors, energy saving & eff iciency management, environment monitor ing, security surveillance system and etc.


UpstreamSystem-on-a-chip, memory, communication IC/module, digital signal processor, sensor component, power IC/module, mechanical parts, and software venders.

Midstream Headset, streaming camera, IoT device designers and manufacturers.

DownstreamODM/OEMcustomersincludebranders,channels and operators. End users are home, office, corporate, and government users.

(III) Product development trend and competition status1. Digital entertainment products

To echo the trend of environmental protection, the on-going product development will enable wideband audio, HD video, RF technologies, fashion designs, noise cancelation, power saving and smart features for



digital entertainment product lines to provide customers best price/performance products in line with the most updated and standardized model required by the core cloud service clients.

2. Smart & IoT devices & solutionsProducts are designed with easy installation, bundled with AI & cloud services or private cloud projects, and incorporated with smart handheld devices, TV & PC for easy use. Their smart relevant applications can be extended from homes, offices, buildings, factories, campus, communities to cities.

(IV) Plans for developments1. Al l ied with global leading platform and solution

providers, Tatung engages its efforts on advanced technology research and development to provide new products with cutting edged features and enhanced competiveness.

2. To adapt the most updated technology and application, Tatung has long-term partnerships with key component venders for co-developing time-to-market products to boost profits and sales performance.

3. Advanced technologies are developed and applied to provide users smart, convenient, energy saving, safe, and environment friendly lifestyles.


(I) Future supply & demand conditions and growth potential

1. According to an international forecasting report, the global sales of IoT products & solutions is about US$98.9 billion in 2016, and will grow enormously to US$362 billion in 2020. Ministry of Economic Affairs also engages its efforts to support Taiwanese venders for developing IoT core technologies and products. It is estimated that the sales of IoT products & solutions by Taiwanese venders will be over US$14 billion in 2020.

2. The market research company estimates that there will be over 18 billion connected devices worldwide in 2021. Demands of cloud based devices with energy-saving features for IoT applications keep tremendous growth.

(II) Favorable & unfavorable factors and countermeasures

1. Favorable factorsWith in - houseexper iencedR&D teams, Tatungleverages global leading platforms for advanced solutions to deliver products with competitiveness and fulfill market needs.

2. Unfavorable factorsProducts suffer from the short lifecycle and intense price competition.

3. CountermeasuresEfforts & investments are continuously to be made to enhance product planning capability, development expertise, product quality, manufacturing efficiency, and global operating.

(III) Competitive niches and strategies for growthWitheffectiveandflexibledesigns,customizations,and manufacturing services on digital entertainment and smart application products, Tatung provides

customers fast reactions to accommodate market needs. Customers and Tatung benefit from this strategy and have tightly partnerships for continuous growth on business.

(IV) Mission, core values, and vision1. Mission: To facilitate work and enrich life with advanced

technologies.2. Core values: Innovation, teamwork, quality, and

humanity.3. Vision: To be customers’ best choice by integrating

products and solutions with value – added applications and services.


Product lines mainly focus on digital entertainment and smart living applications including video & audio entertainment, networking, automation, energy management, assisted living and security surveillance.

(II) Manufacturing processesTatung offers global customers competitive products and complete services through product research, design, validation, manufacturing, testing, packaging, warehousing, delivery, logistics and service.

III. Supply of main raw materialsTo assure product quality and delivery, Tatung has long-term partnership with raw material venders for timely supplies. Tatung mainly manufactures in-house, and also out-sources some components/parts from qualified venders.


Operation Overview

Appliance Business UnitBusiness ActivitiesI. Business scope


Category %

Air conditioners 38.47%

Major home appliances 13.76%

Small home appliances 39.89%

LED TVs 6.02%

Compressors 1.21%

Health Food 0.65%

(II) Current products1. Air conditioners:Window-typeairconditioners,Split

type air conditioners, Commercial air conditioners, Air conditioning facilities, Constant temperature and humiditypackageairconditioners,Watercooledsuspension air conditioners, Chillers for central air conditioning,Heatpump(Airsourceheatpump,Watersource heat pump, Multi Source Heat Pump, High temperature heat pump,) Atmospheric water generator, Dehumidifier, Commercial dehumidifier, Fan coil unit, Air handling unit, Hot air dryer, Air purifier.

2. Home appliances: Refrigerators, washers, coolers / freezers, vacuum cleaner, air purifier, electric fans, electric thermal kettles, hair dryers and electric kettles.

3. Kitchen appliances: Multi-functional cookers, fusion cooker, induction cookers, ovens, microwave ovens, blenders.

4. LED TVs: Digital TV with embedded Hi-HD tuner, LED backlight LCD TV, 4K UHD TV and smart TV.

5. Compressors: Compressors for various appliances such as refrigerators and dehumidifiers.

6. Smart Appliances: Smart air conditioners, smart air purifier, smart dehumidifier, smart fans, smart AI cooker.

II. Technology and R&D(I) Product development1. Ai r condit ioners: R&D of inver ter- control led ai r

conditioning driver modules, APP smart kit, remote monitor system.

2 . Home appl iances: R&D of inver ter – control ler technologies, development of environmental friendly coolant systems, plasma sterilization and deodorization systems.

3. Kitchen appliances: Develop a wide range of unique and multi-functional products based on energy- saving, environmental -friendly and healthy concepts.

4. LED TVs: Increase the ratio of energy-saving LED backlight product lines with innovative Ultra, HD, 4K,

2K, curved Display and smart TV technology, while adding superior crystal image technology to enhance the performance of display products. Featuring HDR technology (High Dynamic Range Imaging) for image quality enhancement.

III. Industry overview(I) Current status and development 1. Strengthen the function of brand operation; use

innovative product designs and quality products to enhance brand value.

2. Expand overseas sales and China marketing activities.3. Improve the manufacturing process capability, quality

capability and product competitiveness.(II) Relationship between the upstream, midstream,

and downstream sectors of the industry

UpstreamLCD, panels, software / hardware development, plastic resin, copper, aluminum, iron, packing materials, electronic substrates, motor, compressors.

Midstream Home appliance product manufacturers.

DownstreamRetailers, franchise stores, service stations, wholesalers, clients, businesses, public places, government agencies, medical, educational, financial and insurance institutions.

(III) Product development trend and competition statusAs home appliance field is a mature market, facing the severe competition from overseas and local vendors, Tatung needs to focus its product development on designing smart, innovative, multifunctional, refined, and energy saving products.Tatung Smart HEMS App creates a more efficient and effective way of managing the electrical appliances and devices without sacrificing current living comforts.Tatung Smart HEMS is useful for anyone who wants to reduce home energy consumption and save money; it offers users total management of home energy consumption with appliance control, energy consumption monitoring, and self-monitoring functions anytime, anywhere, through any internet enabled personal device.As a way of rejuvenating the brand, we offer our new home appliances in ivory color, expressing a life philosophy through positive energy. Each product has been renamed and features uncompromised build quality and aesthetic design, recognized by national as well as international awards, including the Taiwan ExcellenceAwards, iFDesignAward(Germany),andGoodDesignAward(Japan),amongothers.Asaleaderin the home appliance industry, our goal is to deliver a brand-new Tatung to consumers as we continue to create classic, enduring products.


Compliance with the European

Directives

Compliance with American & Canadian Safety

Standards

China Compulsory Product

Certification

ISO9001 ISO14001

R31001RoHS

TaiwanGreenMark represents for "recyclable,

low-polluting, and resource-saving"

Taiwan Recognizable

Label for Energy Efficient Products

Compliance with U.S. Federal Communications

Commission

Compliance with Bureau

of Standards, Metrology &

Inspection in Taiwan

WEEE



Taiwan Excellence Award from Ministry of

Economic Affairs


Economic Affairs


Economic Affairs


Economic Affairs

Taiwan Excellence Silver Award from

Ministry of Economic Affairs





iF product design award



GOODDESIGNAWARD

GOODDESIGNAWARD

Taiwan Saving Waterlabel

(ForGeneralLevel)

Taiwan Saving Waterlabel

(ForGoldenLevel)

RoHS

JapanPSECertification

AS/NZS Regulatory Compliance Mark

MIT(Made in Taiwan)

Reddot design award winner 2017

Taiwan Premium MITGoldMark

Taiwan CNS Mark SGSRetinalbluelight hazard

exposure(IEC/EN 62471) test

IV. Long-term and short-term business development plans(I) Tatung’s Innovation R&D Center recruits overseas

and local experts to provide technical assistance and guidance, and devotes itself to the in-depth development of forward looking technologies to distinguish features of forthcoming new products.

(II) Tatung will continue einforceits collaboration with major suppliers of key parts and components for raising the profits.

(III) LED TV and home appl iance industr y both are saturated and mature. Tatung wi l l improve the manufacturing process, reduce manufacturing cost, and develop innovative products to enhance its overall competitiveness.


(I) Domestic marketLED TVs and home appliances market in Taiwan in 2019: 886K units of LED TVs; 1150K units of air conditioners; 614K units of washers; 588K units of refrigerators; 847K of Multifunctional cookers.

(II) Overseas market Home appliances export sales record in 2019:

The major products are Commercial Air Conditioners and the Multifunctional Cookers, mainly sold to America, Australia,SoutheastAsiacountries,ChinaandJapan.Annual sales amount is around USD 5.5 million. The top 3 sales regions are Southeast Asia countries, America and Japan.

(III) Future demand and growth potentialThe expected growth rate will be more than about 3%~5% in 2020.

(IV) Competitive niches1. Goodbrandreputation,superblogisticsystem,fastand

excellent service network.2. Automated production, products with high stability and

reliability.3. OutstandingR&Dcapability.4. Tatung owns distribution channels and global supply

chain system.(V) Favorable / unfavorable factors and countermeasures1. Favorable factors: Withthesignofimprovingeconomy,

Tatung aggressively works on both domestic and overseas projects to seize business opportunities. Meanwhile, we keep improving the services of all distr ibution channels to fur ther enhance brand reputation.

2. Unfavorable factors: The short life cycle and intense price competition of consumer electronic products; traditional stores face fierce competition from IT shops, chain stores, discount stores, on-line shopping and television shopping channels.

3. Countermeasures: Efficient human resource planning, strengthening R&D and production capabil it ies, providing innovative and differentiated products to boost sales. Strategic alliances with major wholesalers to increase sales.

(VI) Mission, core values, and vision1. Mission: To enrich people’s work and life with cutting

edge technologies.2. Core values: Innovation, teamwork, quality, and

humanity.3. Vision: To become consumer’s best choice by delivering

quality products with value-added application and customer service.


Tatung offers convenient, healthy, comfortable, energy saving and environmental -friendly household electric appliances to customers. The products are used by businesses, public locations, government agencies, educational institutions for displaying, information transmitting, enhancing efficient working, and providing entertainment.

(II) Production processes From R&D, design, molding, manufacturing, testing, packaging, warehousing to transportation, Tatung provides customers complete product line and after-sales service through its nationwide sales / service network and logistics systems.

III. Supply of main raw materialsMain raw materials are purchased from and supplied by reputable overseas or domestic vendors. Tatung established steady supply-demand relationship with them to ensure product stability and, through the B2B system, to further lower its inventories and material costs.


Operation Overview

SYSTEM BUSINESS GROUP

Smart Meter BU, Solar System BU, Smart Energy BU, and Power Engineering DivisionBusiness ActivitiesI. Business scope


Category %

MajorscopeofSBGareEnergyInfrastructure,GreenEnergyandSmartSystems,suchasSmartMeters,MicroGridSystem,SolarSystem,Energy Storage System.

100%

(II) Current products■ Energy Infrastructure1. Smart Meter: The Advanced Metering Infrastructure

(AMI) consists mainly of the smart meter, communication network and the Meter Data Management System (MDMS). It equipped with communication capabilities and also provide real-time monitoring of various incidents, such as power outages and thefts of electricity.

2. Micro-grid System: Micro-grid system, a regionally small power supply system combined with the distr ibuted energy sources (DERs) such as solar energy, wind power, diesel generator and energy storage, can operate independently or with the traditional power grid. The system can immediately enter islanding operation when power outage occurs in main grid, and it can keep functioning using renewable energy sources (DERs) and energy storage systems (ESSs) to perform the role of emergency power supply.

3. Demand-side Dispatch Center: Demand response provides an opportunity for consumers to play a significant role in the operation of the electric grid by reducing or shifting their electricity usage during peak periods in response to certain forms of financial incentives.

■ Green Energy1. Solar System: Design and construction of the PV solar

system, energy monitoring system, microgrid system and energy storage system.

2. PV Generation Analysis: Visualize the data of power generation from each PV site, monitoring of the status of health of PV solar system with the forecast of the power through the PV modules.

■ Smart System1. IoT izat ion of Products/Devices: IoT izat ion enables

predictive maintenance by actively notifying users to perform maintenance in advance to reduce losses due to production interruptions.

2. IoT data analysis: The architecture of IoT provides total solution for data transmission from devices to cloud, edge computing, data analysis, and data visualization.

3. Energy Management System: Use smart electricity meters for remote power management and demand control to achieve energy conservation.

■ Power Engineering System PV power substation system, small scale hydro power plant

system, wind mill power substation system and electrical power engineering system.

II. Technology and R&D(I) Product development■ Smart Meter BU:IncompliancewithCNS/ANSI/IEC/MID/JIS

standards, the BU research and develop electronic meters, smart meters, communication modules, management software, system integration and meter reading software in the specialization of power monitoring, measurement technology, and communication protocol.

■ Solar System BU: The services of PV solar system construction of the rooftops of public facility, industry lands, landfills, farm ponds,fishingrod,enterprise’sprojects,ESCO,powerplantengineering management, operation and maintenance.

■ Smart Energy BU: IoT-based smart control and management systems, and data analysis services to provide smart system total solutions.

■ Power Engineering Division: The trend of PV power plant is developing toward those with large scale capacity. Hence voltage step up grid connection becomes a necessity. In addition to the traditional stationary power converting station design, the mobile power converting stations with multi-spot grid connection design is also essential. Tatung Company is dedicated in developing this mobile power converting station design.

III. Industry overview(I) Current status and development■ Energy Infrastructure1. Smart Meter: Taipower Start to promote new modular meter

in 2017, at present, 1.4 million tenders have been invited, with a target of 3 million units in Taiwan by 2025 and 6 millionunitsinTaiwanby2030.InJapan,duetothegradualliberalizationof theJapaneseelectricitymarket, thegovernment plans to fully import AMI construction in 2020. In Southeast Asia, the peak period of AMI deployment is 2016-2021, Tatung cooperated with local companies to enter Thailand, Malaysia and other countries to develop smart meter market. In the Middle East, the demands of AMI was increased in recent years, and will completely constructed in 2021.

2. Micro-grid System: Following Taipower’s exchange platform, ancillary service market and green energy policy of large demand consumer, energy storage market will have rapid development in the short-term, mid-term, and long term. Tatung have extensive experience in electromechanical design and manufacturing, integrated renewable energy, energy storage, distribution network construction and energy management systems, provided total solutions to users in different types, such as households, islands, villages and large scale.

■ Green Energy Tocooperatewith theMOEApolicy "2025Nuclear-

free Homeland", Tatung has invested in public premises and various types of PV system solutions, we’re offering renewable energy project development, design planning, professional construction and maintenance services.

■ IoTization of Products/Devices, Data Analysis Platform IoT should be value-added by data analysis. And artificial

intelligenceisalreadywidelyadoptedbyi ndus t r ie s . Ou rR&D develops core techniques of data analysis and artificial intelligence for applications in smart energy, smart agriculture, predictive maintenance, etc.

■ Power EngineeringAlternative Energy policy is one of the main focus of TaiwanGovernmentandthedomesticsuppliersaregivenpriority considerations. In addition to having extensive and comprehensive experience in the heavy power equipment production and integration needed for such policy, Tatung Company is the one and only domestic player with the ability in producing the complete set of equipment internally for the whole system.

(II) Product development trend and competition status■ Energy Infrastructure



1. Smart Meter(1) Tatung has the abil ity of integrating the systems of

smart meter infrastructure and integrating different communicationtechnologiessuchasRF,PLC,and4Gcommunications to develop smart meter application functions to meet customer needs and improve system performance.

(2) In response to the needs of international markets, Tatung developed smart meters that comply with international standards,suchasANSI, IEC,JISandother internationalstandards to enhance market competitiveness.

2. Micro-grid Systems: Tatung is one of the few domestic energy storage system integrators with high-voltage grid-connected case and can provide the complete solutions from planning, design, evaluation, construction, maintenance and warranty.

■ Green Energy: Tatung has integrated the internal technology and resources to match up country’s development policy and actively cooperate with local governments to provide the most professional consulting advises.

(III) Important certifications and awards■ "Czech,PisekBusStationGoSmart"won"Awardof2019

Smart City System Integration".■ "Taipei Energy Hill" was awarded the special award for

best environment culture, FIABCI (Taiwan Real Estate Excellence Awards).

■ Chimei, Smart Low-carbon Isle won “2018 Smart City Innovative Application Award”.

■ TATUNGForeverEnergywonthe2019EnterpriseProjectManagement Benchmarking Award, Preferred Award.

■ No.12-14 Pond, Taoyuan Reservoir won the 2018 Taiwan Top Solar Award.

IV. Long-term and short-term business development plans(I) Short-term plan1. Research and development various types of meters with

international standards certification. 2. Continuous development of the public facilities, private

enterprise’s projects, industry zones, factory rooftops of logistics, ground-mounted landfills and floating PV systems.

3. Continually develop domestic and international microgrid system projects, such as forward-looking infrastructure plan, large-scale energy storage project of Taipower, and hybrid island-based microgrid systems.

4. Participate ancillary service market of Taipower; for example, demand response and automatic frequency control service, and develop green energy policy market for the large demand consumer.

5. Aggressively bidding for Power Engineering System projects to establish the credibility and experiences.

(II) Long-term plan1. Strengthen the relationship with main customers, build

effective retail channel for domestic market, and develop overseas markets.

2. Strengthen and enhance the R & D capabilities of smart meter, meet customer needs, strategic alliances with foreign well-known companies, participate in domestic and international smart meter system project.

3. Exploitation and focus on mid-large scale ground mounted power plants, large floating systems, PV applications in Aquaculture and other new PV markets.

4. Micro-grid systems enhancing the R & D capabilities of micro-grid systems integration and energy management systems. Evaluate and verify the strategic alliances with the well-known companies to improve the system performance, reliability and cost strength.

5. For the PV and Small Scale Hydro Power Plants, since the construction and installation time needed for power converting station is lengthy, well defined standard operationplans (SOP’s)needed tobe setup for the

preparation work prior to bidding and the execution plan afterwinningthecontract.FortheWindMillPowerPlants,the development and manufacturing of power generators will be accomplished through technology collaboration.


(I) Domestic market1. Following the delivery and installation of three-phase type

low voltage smart meter in 2018, Tatung had won again the latest single-phase type and three-phase type low voltage smart meter tenders in the beginning of 2019.

2. The 1st-phase of Taiwan smart meters in 2008, the high-voltage sector, has now needed replacement. Tatung will definitely seize the business opportunities.

3. In 2018, Tatung acquired the Aggregated DR tender of TaiPower Company. As the only authorized aggregator by power company in Taiwan, we had executed and met the demand commands successfully.

4. In 2018, Tatung acqui red the "Demonstrat ion and Ver if ication on Regional Energy Storage Faci l it ies Technologies" tenderof ITRI,constructeda1MW/1MWhbattery system in the southern part of Taiwan. It is the first reference site for Taiwan’s future plan of high voltage and MWgridscaleenergystoragesystem.

5. In 2019, Tatung acquired the " Verification on Energy Storage Facilities Technologies" tender of ITRI, integrated total10MW/10MWhbatterysysteminChangbin.Itisthefirstreference site for Taiwan’s energy management system of cross-vendor and different material of energy storage system.

6. In compliance with the execution of governmental policy, alternative energy supporting measures has to be integrated with the market. However, the power generators forWindMill PowerPlantarehighendproducts, it isnecessary for our government to mandate system vendors to realize and expand the use of domestic products.

7. Major achievements in 2019 are government’s PV system projects,suchasTainancity13.5MWp,TaoyuangraveyardgroundPVsystem2.7MWp,CentralPoliceUniversity0.5MWp,andMiaolidetentionpond9.4MWp.

(II) Overseas market1. In 2018, Tatung won the contract of a island-based EMS/ESS

project in Philippines.2. In 2019, Tatung designed and commissioned the first

residential solar system in Palau.3. Constructed in 2019, the very first PV Sports Field combined

with thin film and single crystalline silicon solar cell module in Chung Hwa High School in Malaysia.

II. Purpose and manufacturing processes of main products1. Micro-grid systems provide the stable energy source,

regulation, ancillary service to increase the penetration of renewable energy in the hope that the overall power quality, safety and economic benefit could also be improved.

2. All equipment needed for alternative energy to replace nuclear energy and coal burning based power plants are made by Tatung.

3. Tatung Solar System BU integrate the resources of Tatung group, bringing the strength of Tatung electromechanical and system products, combining construction ability of the new-developed product of pre-loaded power station, 161kV transformer from Tatung electromechanical factory, creating leading advantages.

III. Supply of main raw materialsMaterials are manufactured either in-house or from qualified domestic or international suppliers to ensure product stability and reliability.


Operation Overview

System Integration Business UnitBusiness ActivitiesI. Business scope


Category %

ICT Applications 82.87%

Electro-Mechanical Systems 17.13%

(II) Current productsMain Product Categories

■ ICT ApplicationsDistribute major brands of IT products, IP/ PBX system and telecommunication equipment. Develop smart energy management system, official document management system, attendance system and a variety of government projects.

■ Electro-Mechanical SystemsThe scope is from the power generation, distribution, transmission, to the electricity, including the five major electromechanical pipelines and smart communities with smart grids, smart buildings, smart homes, smart security monitoring, and health care systems. Applying big data with the smart building management system enables buildings to operate in the most efficient situation, so that residential and commercial offices can provide a safe, convenient, energy-saving and sustainable environment.

II. Technology and R&D(I) Product development■ ICT applications

V i r t ua l i za t i on , c l oud comput i ng , WAN/LANimplementation, heterogeneous integrated systems, official document management system, social welfare management system, the BLI information management system, accounting system, logistic management system, and questionnaire survey system.

■ Electro-Mechanical SystemsResidence, factory management, energy, water treatment, rail, road traffic system and other mechanical and electrical engineering planning, design, and construction.

(II) Research & Development■ ICT applications

The official document system that has been in operation for more than a decade has been transformed into a streamlined, enterprise-oriented system. It provides contractual procurement to the public sector for procurement.Ontheotherhand,anassetmanagementsystem was developed to assist leasing businesses, maintenance systems, and integrated accounting systems.

■ Electro-Mechanical SystemsTaking electromechanical integration as the main direction, which contented power system, plumbing system, fire protection system, air-condition system, smart monitoring system design and construction with full experience, to focus electromechanical systems special ize in planning, construction and system integration of residence and plants, and cultivate the ability to plan and integrate smart building systems.

III. Industry overview(I) Current status and development■ ICT Applications

Knockout competition among industries is constantly

moving fast. Faced with the new era of competition, it is necessary to find patterns to integrate resources quickly in order to create new business opportunities.

■ Electro-Mechanical SystemsThe technology of intelligent building system is changing rapidly, and every year there are new application technologies listed. Therefore, in the integration of electromechanical system planning, it is necessary to consider the latest systems and technical applications so that the subsequent maintenance of the property management can allow the building to be maintained, operated and managed continuously to extend the life of the building.

(II) Relationship among the upstream, midstream, and downstream sectors of the industry

■ ICT applications

Upstream suppliers for PCs, mainframes, network facilities, and developing tools

Midstream agents / providers for network infrastructure, systems integration, application software

Downstream end users for government institutions, schools, public / private sectors ,etc.

■ Electro-Mechanical Systems

Upstream manufacturers for electro-mechanics, communications and IoT

Midstream five pipelines and system integrators

Downstream manufacturers, builders and owners

(III) Product development trend and competition status■ ICT Applications IDC predicts that the global digital transformation will enter

a new stage of "Transformation 2.0". It is expected that the Taiwan market will be affected by the following ten ICT trends in 2020:1. The Fusion AI generation: simplicity and transparency

become the mainstay of development.2. AI computing moves towards Edge/Cloud AI

Mutualism.3. Hybrid / multi-cloud architectures are key to corporate

innovation.4. Business transformation wil l be accelerated by

automation and IPA.5. Market competition rules will be changed by 5th

generation mobile networks.6. The next wave of digital transformation: SMEs

accelerate their transformation.7. Increased geopol it ical r isks continue to dr ive

localization of information security.8.Wearablesevolveintoanewera.9.Omni-Platformdisruptsthegamingindustry.10. Anything as a service.

■ Electro-Mechanical SystemsThe building planning of Intelligent City is the integration of architectural aesthetics, public art, intelligent green building and universal design accessibility. In terms of maintenance and management, smart property management is introduced for community safety and life services to create safe, healthy and comfortable smart communities.By integrating the industrial development advantages of Tatung’s ICT, electromechanical systems and IoT intelligent systems, realize the intelligent green vision of both human and technology.

IV. Development strategy■ ICT Applications1. Differentiate goods and services.



2. Strengthen the existing customer relationships, project services and technical guidance.

3. Bui ld up competitive advantage, enhance core competence and market operation.

4. Increase the high gross-profit portfolios.5. Improve the efficiency of operational management,

reduce operational costs and shorten product delivery schedules.

6. Strengthen cloud service and information security management related product sales and services.

7. Build up good relationships with suppliers to extend the product services.

■ Electro-Mechanical SystemsIntegrate and apply Tatung green products, systems and IoT technology to provide complete system and integration services from power generation, transmission, distribution, electricity to home appliances.


(I) Domestic market■ ICT Applications

The aforementioned IDC was released in 2020, predicting the top ten ICT trends in the Taiwan market. Named artificial intelligence has entered the converged generation and has appeared in various industries. In the future, terminal devices will move toward true edge computing, which can process complex data by themselves and integrate with the cloud. IDC bluntly states that the fifth generation of mobile communication network(5G)businessopportunitiescannotbemissedin 2020, and geopolitical contention has also become a big opportunity for Taiwan. IDC predicts that in 2021, 60%ofGDPinAsiawillcomefromdigitalization,andtheglobal industry will officially enter "Transformation 2.0"

■ Electro-Mechanical SystemsCreate differentiation between Tatung’s electromechanical systems and those of other companies. Due to the Forward-Looking Infrastructure Development Program, public construction will be the key project in the follow-up direction, and also try for the extend project of the in-build project.

(II) Factors for Development Visions and Response Strategies

■ ICT ApplicationsEnterpr i ses must more act ive ly reshape the I T organization and IT skills they need to achieve a fast-paced and diverse world of innovation. IDC predicts that by 2020, 50% of smartphones will be equipped with AI chips; by 2022, 25% of g lobal terminal devices will have AI edge computing capabilities. IDC expects that security management services willcontinue tobean importantdriverof Taiwan'ss e c u r i t y m a r ket g r o w t h , w i t h a c o m p o u n d annual g rowth rate of 14% f rom 2020 to 2022. Strong market demand will drive the adoption rate of conversational platforms, IDC estimates that as of 2020, more than 30% of Taiwanese companies will use a conversational platform to optimize operations and create new business models.

■ Electro-Mechanical Systems1. Advantages:

The gover nment fac i l i tates " Fo r wa rd - look ing Inf rast ructure Development Program -Rai lway Construction”, Tatung has own experience in professional electromechanical system integration to try for railway related project.

2. Disadvantages:Some project implement i ssues of the electro -mechanical engineering industry such as accident or disaster, construction interface has no enough coordination, the vendor is not qualified etc, which are impact the project schedule and account receivable

schedule. These kind issues normally couldn’t be recover in the short term, therefore it’s still a variable issue for the electromechanical engineering project.

3. Response Strategies:Strengthen the project by risk assessment to choose the project carefully, upgrade quality and efficiency to develop and integrate the project management team of project implement capabilities.

(III) Competitive niche and Growth Strategy■ ICT Applications1. Competitive niche• Be a well-known brand, be trusted by customers, and

provide nationwide services• Ownrichlarge-scalesystemintegrationexperiencesin

the public sector2. Growth Strategy• Growprofitrevenues• Lean customer services• Reinforce professional project technologies• Strengthen the brand image and take corporate

responsibilities■ Electro-Mechanical Systems1. Accumulate customer trust reputation by long-

term electromechanical equipment manufacturing experience.

2. Ownexperience inprofessionalelectromechanicalsystem integration.

(IV) Mission, Core Values and VisionMission: Provide comprehensive system integration solutions. Core Value: Suit the action to the word with cautious commitment. Vision: Be the most professional and largest system integration strategic partner for the public sector in the domestic market.

II. Development Direction and Processes Control(I) Development Direction1. Official Document System– Improve the efficiency

of official document management and meet the requirements of file verification.

2. Leasing Asset Management System– The system is developed based on the requirement of leasing business. The rent, amortization, and gross profits generated by the business leasing assets can be automatically calculated by the system and provide complete reporting functions.

3. Maintenance System– It is an on-line maintenance inquiry system, which provides inquiries for customer service contracts, renewal and expiration date, etc. And it can track maintenance status, analyze maintenance manpower information, and provide service records analysis, which offers detailed service records and analysisreportbycustomer'sname.

4. Integrated Accounting System– It is used to assist enterprise overall operation management, control costs and capital flows, construct sound audit system, and provide a total solution that meets the processes as well as operational management, etc.

(II) Processes ControlThrough the processes of requirement collection, system analysis, design, development, implementation and migration, deliver high-valued products and services to customers via national service network.

III. Supply OverviewIntegrate Tatung group’s complete product chain with high-quality products at home and abroad in order to ensure that the quality of products as well as production processes is in strict control. All products are provided with complete warranty and good after-sales services.


Operation Overview

Operation summary(I) Suppliers / customers accounting for 10% or more of the Company’s total purchase / sales

amount in 2018 and 20191. Key Supplies

Unit: NT$ Thousand2018 2019

Name Procurement amount

Percentage of total net procurement

Relationship with the Company Name Procurement

amountPercentage of total

net procurementRelationship with the

Company

Others 65,882,052 100% Inapplicable Others 30,376,904 100% Inapplicable

Net purchases 65,882,052 100% Inapplicable Net purchases 30,376,904 100% Inapplicable

Note 1: These customers purchase less than the current year as a result of its net purchase more than 10% of company, it will not be disclosed.Note2: ThefinancialstatementsforQ1of2020wereunderreviewbyindependentauditorswhenthisannualreportisprinted.

2. Key BuyersUnit: NT$ Thousand

2018 2019

Name Sales amount Percentage of total net sales

Relationship with the Company Name Sales amount Percentage of total

net salesRelationship with the

Company

Others 60,622,725 100% Inapplicable Others 35,423,015 100% Inapplicable

Net sales 60,622,725 100% Inapplicable Net sales 35,423,015 100% Inapplicable

Note 1: Net income for the year on these customers as a result of its net operating income less than 10% of the Company, it will not be disclosed.Note2: ThefinancialstatementsforQ1of2020wereunderreviewbyindependentauditorswhenthisannualreportisprinted.

(II) Production in 2018 and 2019Five operating segments Output:Set

[Unit]Amount: NT$ThousandFiscal year

OutputMajor products(or by departments)

2018 2019

Capacity Output Amount Capacity Output Amount

Opticaldepartment 221,321 224,992 28,448,673 12,997 18,470 5,040,286

Machinery and energy department 4,200 1,096,958 12,462,882 4,200 1,022,866 13,263,175

Consumer products department 0 8,104,530 12,893,479 2,570 4,792,147 8,023,436

Real estate development department 0 0 4,740 0 0 0

OtherOperatingSegments 345,917 291,538 1,601,336 312,942 268,738 1,147,237

Total 571,438 9,718,018 55,411,110 332,709 6,102,221 27,474,134



(III) Shipments and sales amount in 2018 and 2019Five operating segments [Unit]Amount: NT$Thousand

Fiscal year 2018 2019 Shipments & sales Domestic Export Domestic Export

Major products (or by departments) Quantity Amount Quantity Amount Quantity Amount Quantity Amount

Opticaldepartment 1,287 978,103 247,785 23,041,902 340 99,498 20,157 1,416,591

Machinery and energy department 720,745 25,266,665 176,218 4,409,731 581,595 15,916,997 199,750 6,491,023

Consumer products department 1,460,167 12,573,065 6,596,720 4,837,812 1,303,339 9,266,499 3,340,852 4,359,505

Real estate development department 0 966,800 0 0 0 4,108,390 0 0

OtherOperatingSegments 67,388 835,829 221,513 1,722,949 50,047 792,836 207,046 1,109,253

Total 2,249,587 40,620,462 7,242,236 34,012,394 1,935,321 30,184,220 3,767,805 13,376,372

Note: The above data are subject before consolidation.

(IV) Tatung and Subsidiaries, R&D expenses totaled NT$1,699,127 thousand dollars in 2020 up to the publishing date of the annual report

Workforce structureFiscal year 2018 2019 March 31, 2020

The Company

Number of employees

Management & staff 1384 1413 1385

Technicians 1574 1497 1451

Total 2958 2910 2836

Average age 42.06 43.04 43.06

Average years of service 14.10 14.02 14.03

Education level

Ph.D. 11 14 14

Master 360 356 348

Bachelor & other higher education 1550 1524 1493

Senior high school 652 600 579

Below senior high school 385 416 402

All companies included in Financial statements 12223 6866 6719


Operation Overview

Expenditure on environmental protectionTo cope with the trend of international environmental protection and government laws and regulations, the Company is dedicated to the prevention of pollution and environmental protection for the better working environment of employees, better living environment for the public and better fulfillment of social responsibilities.

(I) Environmental protection measures1. Actions:

ISO 14001

ISO 14064 Green Products

Green Mark/Energy Label/Water Label

EnvironmentalTest

Energy Auditing

Product CarbonFootprintRoHS Test

GreenSupply Chain

Eco-Efficiency

Disposal ofWaste

Design forthe Environment

(DfE)

CorporateSocial Responsibility

Report

EnvironmentalPerformance

Evaluation

Life CycleAssessment

Energy Saving

ImplementPollution

Prevention

ISO 50001

Promotion ofEducation and

Training

PollutionPreventionPays (3P)

2. Results:(1) AllthefactorieshaveimplementedISO14001andreceivedcertifications.(2) Promotesenergysavingprojectsinthefactories,aswellasimplementingISO50001.SofarMotorBU(San-HsiaFactory)

andPowerEquipmentBU(TayuanPlantandTaoyuanWiresandCablesPlant)have implemented ISO50001andreceived certifications.

(3) Devotes in environmental friendly products, Tatung has the following product categories being certified with:■ GreenMark:22modelswerecertified in2019. Productswithinthevalidityperiodarerangedfromhouseholdair

conditioners, refrigerators, dehumidifiers, amorphous transformer, cast resin dry type transformer, and amorphous cast-resin dry type transformer.

■ EnergyLabel:98modelswerecertifiedin2019.Productswithinthevalidityperiodarerangedfromairconditioners,dehumidifiers, washing machines, electric fans, refrigerators, monitors, electric ovens, and air purifiers.

■ WaterLabel:4modelswerecertifiedin2019.Productswithinthevalidityperiodarewashingmachines.■ Productcarbonfootprint:OnemodelofA.C.motors(3hp),onemodelof liquid immersedamorphousmetalcore

transformer (2,000kVA), one model of rice cooker (TAC-10L-SR). Besides, the company has also issued “Product Category Rule, PCR” for A.C. motors, Rice Cookers, and Electric Cookers thus the industry can follows the PCRs to calculate carbon footprint for such products.

(II) Losses incurred from environmental pollution in the recent year and up to the publishing date of the annual reportFrom 2019 and up to the publishing date of the annual report, Motor BU (San-Hsia Factory) was fined NTD$100,000 due to violating “Air Pollution Control Act”. The details are listed below:1. Disposition date: 2019.2.182. Dispositionreferencenumber:No.1080255648(NewTaipeiCityGovernment)3. The articles of laws or regulations breached: Paragraph 2, Article 24, Air Pollution Control Act (… shall submit verification

documents that demonstrate compliance with the regulations of the Act to the special municipality, county or city competent authority or other government agency commissioned by the central competent authority in order to apply for the issuance of operating permits, and shall perform operations pursuant to the permit contents).

4. Description of the violation: The pressure drop values of absorbers from two metal surface coating procedures were lower than the permit contents.

5. Disposition: Fined NTD$100,000 and attended environmental protection lecture for two hours.6. Corrective measures and possible disbursements to be made in the future:

(1) Requesting site supervisor to confirm that the pressure drop value is within the permitted range when replacing the activated carbon of the absorber.



(2) San-Hsia Factory then changed the pollutant treatment method from active carbon absorbing to thermal treatment (RTO)whichhashigherpollutantreductionefficiency.Theoperatingpermitforthischangehasbeengranted.

(3) The site supervisor checks whether the air pollutant control equipment functions well before daily operations

(III) Information about RoHSIn order to comply with the customers’ green procurement and EU’s RoHS requirements to ensure successful domestic and export markets, the Company’s factories, starting from the year 2004, have been dedicated to promoting a green supply chain which covers product design, procurement and production, and has also avoided using hazardous substances for making the Company a well-established green supply enterprise. In 2005, the Company established “Tatung Electrical and Electronic Equipment Restriction of Hazardous Substance (RoHS) Test Laboratory” to assist in the test and analysis of hazardous substances by various factories and related industry as well as to provide related professional technologies. The RoHS Test Laboratory successfully completed certification for both the Authenticated Chemical test Laboratory of the TAF and the Electrical and Electronic Equipment Test Laboratory of the Bureau of Standards, Metrology and Inspection of Ministry of Economic Affairs in 2007.On4thNovember2019,theLaboratorypassedtheannualauditconductedbytheTAF.


Operation Overview

Labor relations(I) Tatung pioneered the "labor and management united as one" concept to promote

operational autonomyTheCompanysetuptheTatungEmployees’WelfareCommitteein1947andthe"TatungUnitedWelfareCommittee"in1969aspart of the Company’s efforts to promote the delegation of responsibility to lower hierarchies in the organizations and to develop new management talent.

Employees’ welfare Implementation

1. Stock ownership The Company subsidized employees to buy corporate stocks since 1992 as part of their savings.

2. Subsidies Education subsidies for employees’ children in senior high school and college/university; funeral subsidies for colleagues or their spouses and immediate relatives; financial gifts for death of colleagues; subsidies for employees’ birthday, travel, and retirement; cash gifts for weddings of employees or their children as well as for birth of employees’ children.

3. Benefits Employees can purchase Company products via zero-interest installments and price discounts on groceries in corporate stores. Free movie shows and special trains in Spring Festival.

4. Club activities Education, recreation, physical education, languages, hiking/mountain climbing and photography

5. Health and safety plan Labor insurance, health insurance, group insurance, retirement pension, free annual health checkup

Education and training Implementation

Employee training Encouraging employees to study and to become a talent of "intelligence, integrity and ability".Offeringemployeediverse trainingcourses includinggeneral,professional,management, environmental, health and safety, information security courses and online e-learning. Constructing organizational and lifelong learning culture. Efficiently strengthening talent development by systematic management.A total of 16,006 trainees attended 36,270.5 hours of training, and each one attended 12.46 hoursofOff-joblearningin2019.

Retirement system Implementation

Retirement plans In accordance with the requirements by laws and ordinances concerned, appropriate 6% of their monthly pays into the individual account for newly employees newly hired starting fromJuly1,2005andemployeeswhohavechosennewsystemLaborPensionAct.Fortheexistent employees who continually choose the old pension system regulations and for the service seniority retained under the old system of employees who choose new pension regulations, we appropriate the pension reserve funds at the right amounts into the specially designated account in Bank of Taiwan based on the retirement regulations.

Management / labor relations Measures

Channel for employees to voice dissent or communicate with management

"Employees’ Suggestion Mail Box" is set up at company website, along with "Regulations of Processing Employees’ Complaints." Employees can voice out their opinions during training courses,orpresent theirproposalsduringQCactivities.Regularandspecialmeetingsbetween management and the labor unions are also held to facilitate communications.

Protection of employees’ interests and rights Measures

Safe and happy working environment

ImplementedinaccordancewiththeLaborLaw,GenderEqualityinEmploymentActandin some cases better than regulations for workers.

(II) Strategy and objective: Developing the Company’s most valuable asset - peopleLabor and management are committed to working together for the good of the Company and its workers. Both sides operate on the principle of promoting a harmonious, safe and happy working environment.



(III) Employees’ code of ethicsThe Company’s employees abide by Company rules which are designed to uphold the principles of "honesty, integrity and diligence." All employees follow a code of ethics and are dedicated to contributing to the stability, continuity and prosperity of the Company and workers alike. Management leads under the principle "Do not do unto others what you do not want others do unto you," treating workers like their own family and guiding them by personal example. (Please refer to Page 3 for detailed information.)

(IV) Losses incurred from Labor dispute in the recent year and up to the publishing date of the annual report.

Disposition date 2019.5.16 2019.5.16 2019.7.22 2019.7.22

Disposition reference number

No. 10842582931(New Taipei City government)

No. 1084258293 (New Taipei City government)

No. 10801765781 (Taoyuan City government)

No. 10801765782 (Taoyuan City government)

The articles of laws or regulations breached

Paragraph 2,Article 32,Labor Standards Act

Article 24,Labor Standards Act



Description of the violation

Extending working hours exceed legal requirements.

Extending working hours without paying correctly according to law.

Extending working hours exceed legal requirements.

Labors should have 2 days off every 7 day, one mandatory day and one flexible rest day.

Disposition Fined NTD$120,000 and the name of the person in charge has been announced.

Fined NTD$180,000 and the name of the person in charge has been announced.



Corrective measures and possible disbursements to be made in the future

The working hours have been extended according to law for no more than 46 hours.

TheWagesofextendingworking hours have been calculated according to law.

The working hours have been extended according to law for no more than 46 hours.

The cable industry can be exempted from mandatory vacation a day per week, application submission will be applied in advance in order to avoid punishment.

(V) The protection measures on the working environment and the health and safety of the employees1. Targets and Measures

Visitor Safety Guideline

Contractor management

Education and promotion on regulations

Tatung Health and Safety Guidebook

Disaster Prevention Pays

Working Condition Monitoring,Health Management and Promotion

Occupational Health andSafety Management System

Health andSafety Policy

DisasterFree

Tatung Health and Safety Structure

2. Action(1) Announces “Health and Safety Policy” and promotes

“Disaster Prevention Pays” program in the factories and subsidiaries, and looks forward to the target of “Disaster Free” by reviewing its performances and conducting the continual improvements.

(2) OccupationalHealthandSafetyManagementSystem AsISO45001wasreleasedin2018,Tatunghasputlot

ofeffortsandaimstograduallyswitchOHSAS18001toISO45001inthenextfewyears.Sofar,MotorBU(San-HsiaFactory)hasalreadyswitchedtoISO45001andpassed the certification in 2019.

(3) Education and promotion on regulations Tatung opens “Health and Safety Training Class” for

new recruits, employees and managers. Tatung also opens training courses for the needs of the business operationssuchasVOCs&DesignatedChemicalsclass,JobSafetyAnalysisclass,andForkliftersclasses,etc.

Regarding to regulation promotion, Tatung organizes “Health and Safety Seminar” every year to promote newly updated regulations and other concerned topics. In 2019 Health & Safety Division continued to assist the factories and subsidiaries to implement labor physical and mental health protection measures.

(4) WorkingConditionMonitoring,HealthManagementand Promotion

Tatung sets working environment monitoring plan and conducts monitoring on work sites. The results from monitoring are available to the employees.

Tatung believes that the health of the employees and their families is a kind of assets to the company. Tatung organizes numerous health speeches, seminars, health checks to let the employees understand the importance of their health and promote to their families.

(5) Contractor management Tatung promotes “Contractor health and safety

management method” and conducts irregular site inspection during the operation period and strickly implements the control application for the work which has fire accidendt potential.


Operation Overview

Important contractsImportant contracts up to the publishing date of the annual report

Nature Counterpart Duration Description Restriction clause

Investment cooperation Japan Sumitomo Heavy

Industries, Ltd. October13,1995Incorporation of Tatung SM-Cyclo Co., Ltd. under joint venture Production of gear-reducers

NO

Investment cooperation Japan Okuma December 12, 1996

Incorporation of Tatung OkumaCo.,Ltd.underjointventure Production of working machines

NO

Investment cooperation Japan Mitsui Mining &

Smelting Co., Ltd. October13,1975Incorporation of Tatung Die Casting Co. under joint venture Production of die casting products

NO

Technology cooperation Japan Toshiba Corporation March 26, 2018~

March 25, 2023

Design and production technology of 161kV (contain)~345kV (contain) Oil-typetransformers,andmanufacture above 66kV (contain)GasTransformer

1. Authorized to manufacture in Taiwan

2. Activities of sales except Japan

Technology cooperation Japan NissinElectricCO.,

Ltd.May 28, 2018~ May 28, 2023

Technology transfer of 25.8kV GIS

Activities of sales are limited to the Taiwan Power Company

Technology cooperation U.S.A. Hubbell Power

SystemsDecember 11, 2013~ December 11, 2023

Technology transfer of 9kV Lightning Arrester

Activities of sales are limited to the Taiwan Power Company

Patent License U.S.A.Rovi International Solutions SarlCorporation

December 07, 2008~September 24, 2023

Patent license of copy protection process NO

Patent License U.S.A.Rovi International Solutions SarlCorporation

December 07, 2008~September 24, 2023

Patent license of RTLA Products(1) Non-videoO/P(2) AnalogvideoO/Pwithout

copy protection processNO

Patent License U.S.A. MPEGLA,LLC January01,2016~December 31, 2020

Patent license of AVC/H.264 (MPEG-4Part10) NO

Patent License U.S.A. MPEGLA,LLC May 01, 2013~ December 31, 2020 Patent license of HEVC NO

Patent License U.S.A. HEVC Advance LLC January09,2019~December 31, 2025 Patent license of HEVC NO



Nature Counterpart Duration Description Restriction clause

Patent License Finland NOKIATECHNOLOGIESOY

January01,2019~December 31, 2023 Patentlicenseof2G/3G/4G NO

Medium and long-term loans contract

Cooperative Bank March 29, 2019~ March 29, 2023

Revolving limit (4 years) Limit of NT$1,100,000,000 NO


Far Eastern International Bank

January06,2020~January06,2023

Revolving limit (3 years) Limit of NT$800,000,000 NO


Bank of Taiwan(to sponsor)

December 23, 2016~December 23, 2021

Syndicated credit extension(5 years) Limit of NT$25,200,000,000

Non-consolidated financial statement of the issuing company:a. Current ratio shall be no

less than 100%.b. Percentage of liability 2015~2018 shall be no

more than 160%. 2019~ shall be no more

than 140%c. Tangible Net worth 2015~2018 shall be no

less than 26 billion NTD. 2019~ shall be no less

than 30 billion NTD.


Bank Sinopac July09,2014~ April 27, 2023

Non-revolving limit (Up to 9 years) Limit of NT$43,693,000 NO


Bank Sinopac April 27, 2015~ April 27, 2021



Bank Sinopac June27,2017~ June27,2022



Bank Sinopac June27,2017~July23,2024



OBank December 29, 2017~ December 29, 2020

Non-revolving limit (3 years) Limit of NT$220,000,000 NO


Bank of Taiwan April 25,2019~April 25,2023

Revolving limit (4 years) Limit of NT$860,000,000 NO


Financial Overview

Condensed balance sheet and income statement(I) Condensed balance sheet - IFRSs - Tatung And Subsidiaries

Unit: NT$ Thousand

YearItem

Most Recent 5-year Financial Information

2015 2016 2017 (Restatement)(Note 5) 2018 2019

Current assets 86,960,951 130,165,281 89,234,024 44,991,019 40,393,756

Property, plant and equipment (Note 2) 77,800,166 71,518,020 96,086,434 49,536,425 33,951,654

Intangible assets 1,792,921 1,091,100 907,082 91,198 60,798

Otherassets 35,364,580 35,624,952 57,866,989 44,543,272 44,585,109

Total assets 201,918,618 238,399,353 244,094,529 139,161,914 118,991,317

Current liabilitiesBefore distribution 104,017,444 103,081,497 88,860,214 68,367,706 54,827,731

After distribution 104,017,444 103,081,497 88,860,214 68,367,706 (Note 6)

Liabilities 48,989,315 49,434,531 56,381,149 39,868,297 35,507,680

Total liabilitiesBefore distribution 153,006,759 152,516,028 145,241,363 108,236,003 90,335,411


Equity attributable to shareholders of the parent 30,599,156 29,640,304 43,126,580 33,000,123 36,656,308

Capital stock 23,395,367 23,395,367 23,395,367 23,395,367 23,395,367

Capital surplus 785,376 2,864,841 3,273,505 3,283,032 3,363,085

Retained earningsBefore distribution 6,983,139 4,808,065 18,589,672 8,120,165 10,334,135


Unrealized gain or loss on financial instruments 242,144 (371,104) (502,065) (584,420) (405,425)

Treasury stock (806,870) (1,056,865) (1,629,899) (1,214,021) (30,854)

Non-controlling interests 18,312,703 56,243,021 55,726,586 (2,074,212) (8,000,402)

Total equityBefore distribution 48,911,859 85,883,325 98,853,166 30,925,911 28,655,906


Note1: TheCompany'sfinancialstatementsforthefiveyearshavebeendulyauditedbyindependentauditors.Note 2: The Company did not carry out land vale re-appraisal in 2019.Note3: ThefinancialstatementsforQ1of2020wereunderreviewbyindependentauditorswhenthisannualreportisprinted.Note4: Theappropriationproposalsaresubjecttoaresolutionoftheshareholders'meetinginthefollowingyear.Note5: TheCompanyhaschangedthemeasurementofinvestmentpropertyfromcostmodeltofairvaluemodelstartingfromJanuary1,2018.

As a result, the Company restated its parent company only statements of comprehensive income, changes in equity and cash flows for theyearendedDecember31,2017andparentcompanyonlybalancesheetsoftheCompanyasofJanuary1,2017andDecember31,2017.

Note 6: Not yet distributed.


Financial Overview Financial Overview

(II) Condensed balance sheet - IFRSs - TatungUnit: NT$ Thousand

YearItem


2015 2016 2017 (Restatement)(Note 4) 2018 2019

Current assets 17,089,003 16,930,430 16,302,241 14,384,387 15,153,267

Property, plant and equipment (Note 2) 3,060,707 3,626,622 4,388,024 4,307,522 3,816,411

Intangible assets 72,033 59,083 23,529 12,283 3,413

Otherassets 48,909,888 50,348,260 64,291,995 59,927,503 63,918,324

Total assets 69,131,631 70,964,395 85,005,789 78,631,695 82,891,415

Current liabilitiesBefore distribution 14,344,527 11,741,654 10,135,178 13,154,017 11,417,969


Liabilities 24,187,948 29,582,437 31,744,031 32,477,555 34,817,138

Total liabilitiesBefore distribution 38,532,475 41,324,091 41,879,209 45,631,572 46,235,107


Owners'equity 30,599,156 29,640,304 43,126,580 33,000,123 36,656,308

Capital stock 23,395,367 23,395,367 23,395,367 23,395,367 23,395,367

Capital surplus 785,376 2,864,841 3,273,505 3,283,032 3,363,085

Retained earningsBefore distribution 6,983,139 4,808,065 18,589,672 8,120,165 10,334,135


Unrealized gain or loss on financial instruments 242,144 (371,104) (502,065) (584,420) (405,425)

Treasury stock (806,870) (1,056,865) (1,629,899) (1,214,021) (30,854)

Non-controlling interests - - - - -

Total equityBefore distribution 30,599,156 29,640,304 43,126,580 33,000,123 36,656,308


Note1: TheCompany'sfinancialstatementsforthefiveyearshavebeendulyauditedbyindependentauditors.Note 2: The Company did not carry out land vale re-appraisal in 2019.Note3: Theappropriationproposalsaresubjecttoaresolutionoftheshareholders'meetinginthefollowingyear.Note4: TheCompanyhaschangedthemeasurementofinvestmentpropertyfromcostmodeltofairvaluemodelstartingfromJanuary1,2018.


Note 5: Not yet distributed.


Financial Overview

(III) Condensed income statement - IFRSs - Tatung And SubsidiariesUnit: NT$ Thousand

YearItem


2015 20162017

(Restatement)(Note 5)

2018 2019

Operatingrevenue 84,719,184 77,677,625 75,553,009 60,622,725 35,423,105

RealizedGrossprofit 4,939,189 10,586,566 11,817,697 (2,461,794) 2,356,937

Income from operations (9,558,471) (2,871,649) 1,161,971 (15,483,127) (6,265,315)

Non-operating income and expenses (524,399) 665,162 1,614,306 (16,354,898) (2,614,650)

Loss before income tax (10,082,870) (2,206,487) 2,776,277 (31,838,025) (8,879,965)

Net loss from operations of continued segments (11,211,037) (3,506,254) 2,116,003 (33,292,908) (9,155,461)

Income from discontinued departments 416,518 (33,648) 69,498 - -

Net loss (10,794,519) (3,539,902) 2,185,501 (33,292,908) (9,155,461)

Othercomprehensiveincome(netoftax) (1,333,044) (4,101,612) (1,242,123) (787,557) 6,368

Total comprehensive income (12,127,563) (7,641,514) 943,378 (34,080,465) (9,149,093)

Net loss attribute to equity attributable to owners of parent (3,075,015) (2,343,945) 140,317 (10,642,906) 2,875,879

Net loss attribute to non controlling interest (7,719,504) (1,195,957) 2,045,184 (22,650,002) (12,031,340)

Total comprehensive income attribute to equity attributable to owners of parent (3,750,958) (2,765,124) 16,859 (10,741,961) 3,288,201

Total comprehensive income attribute to non controlling interest (8,376,605) (4,876,390) 926,519 (23,338,504) (12,437,294)

Loss per share (Note 2) (1.35) (1.03) 0.06 (4.75) 1.24

Note1: TheCompany'sfinancialstatementsforthefiveyearshavebeendulyauditedbyindependentauditors.Note 2: All information of the earnings per share for the previous years is calculated on a fully diluted basis. Note3: ThefinancialstatementsforQ1of2020wereunderreviewbyindependentauditorswhenthisannualreportisprinted.Note 4: The Income (loss) from discontinued departments is shown by the net amount after deducting the income tax.Note5: TheCompanyhaschangedthemeasurementofinvestmentpropertyfromcostmodeltofairvaluemodelstartingfromJanuary1,2018.




(IV) Condensed income statement - IFRSs - TatungUnit: NT$ Thousand

YearItem


2015 20162017


2018 2019

Operatingrevenue 18,151,104 17,259,632 17,482,835 19,138,488 17,825,749

RealizedGrossprofit 1,581,503 2,404,376 2,164,903 2,064,017 1,789,027

Income from operations (966,334) (51,462) (177,326) (391,692) (863,857)

Non-operating income and expenses (2,107,282) (2,363,313) 280,968 (10,313,757) 3,466,194

Loss before income tax (3,073,616) (2,414,775) 103,642 (10,705,449) 2,602,337

Net loss from operations of continued segments (3,075,015) (2,343,945) 140,317 (10,642,906) 2,875,879

Income from discontinued departments - - - - -

Net loss (3,075,015) (2,343,945) 140,317 (10,642,906) 2,875,879

Othercomprehensiveincome(netoftax) (675,943) (421,179) (123,458) (99,055) 412,322

Total comprehensive income (3,750,958) (2,765,124) 16,859 (10,741,961) 3,288,201

Net loss attribute to equity attributable to owners of parent (3,075,015) (2,343,945) 140,317 (10,642,906) 2,875,879

Net loss attribute to non controlling interest - - - - -

Total comprehensive income attribute to equity attributable to owners of parent (3,750,958) (2,765,124) 16,859 (10,741,961) 3,288,201

Total comprehensive income attribute to non controlling interest - - - - -

Loss per share(Note 2) (1.35) (1.03) 0.06 (4.75) 1.24

Note1:TheCompany'sfinancialstatementsforthefiveyearshavebeendulyauditedbyindependentauditors.Note 2: All information of the earnings per share for the previous years is calculated on a fully diluted basis.Note3:TheCompanyhaschangedthemeasurementofinvestmentpropertyfromcostmodeltofairvaluemodelstartingfromJanuary1,2018.


(V) Auditors’ opinions from 2015 to 2019:

Year Firm CPA Opinion

2015 Ernst & Young Su-WenLin An unqualified opinion with

explanatoryLan-Ching Chang

2016 Ernst & Young Su-WenLin Unmodified opinion and other

matters paragraphHsuan-Hsuan,Wang

2017 Ernst & Young Su-WenLin Unmodified opinion and other

matters paragraphHsuan-Hsuan,Wang

2018 Ernst & Young Su-WenLin Unmodified opinion with emphasis

of matters including other matters paragraphHsuan-Hsuan,Wang

2019 Ernst & Young Su-WenLin Unmodified opinion with emphasis

of matters including other matters paragraphHsuan-Hsuan,Wang


Financial Overview

Financial analysisFinancial analysis - IFRSs - Tatung And Subsidiaries

YearItem (Note 2)


2015 20162017


2018 2019

Financial structure (%)

Debt ratio 75.78 63.98 59.50 77.78 75.92

Long-term funds to Property, plant and equipment ratio 125.84 189.21 161.56 142.91 188.99

Liquidity Analysis (%)

Current ratio 83.60 126.27 100.42 65.81 73.67

Quickratio 62.16 107.93 78.03 35.69 42.35

Times interest earned - 0.48 1.78 (7.04) (2.36)

Operatingperformance

Average collection turnover (times) 5.30 6.63 7.73 6.67 4.67

Days sales outstanding 69 55 47 55 78

Average inventory turnover (times) 3.91 3.72 3.87 3.63 1.89

Average payment turnover (times) 4.04 4.28 4.55 3.28 1.49

Average inventory turnover days 93 98 94 101 193

Property, plant and equipment turnover (times) 1.03 1.04 0.90 0.83 0.85

Total assets turnover (times) 0.41 0.35 0.30 0.32 0.27

Profitability

Return on total assets (%) (3.49) 0.01 2.09 (15.72) (5.46)

Return on equity (%) (19.49) (5.25) 2.20 (51.31) (30.73)

Incom before tax Percentage to paid-in capital (%) (43.10) (9.43) 11.87 (136.09) (37.96)

Net margin (%) (12.74) (4.56) 2.80 (54.92) (25.85)

Earnings per share (NT$) (1.35) (1.03) 0.06 (4.75) 1.24

Cash flow

Cash flow ratio (%) 1.00 4.07 10.30 (21.00) 1.51

Cash flow adequacy ratio (%) 43.74 61.46 38.36 7.84 1.16

Cash flow reinvestment ratio (%) 0.36 1.30 2.32 (6.85) 0.41

LeverageOperatingleverage (7.72) (23.82) 57.66 (3.39) (5.11)

Financial leverage 0.69 0.40 (0.47) 0.80 0.70

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)1. Intheyearof2019,duetotheimpairmentoftheassetslistedbytheCPTGroupincorporatedintheconsolidatedstatement,therealestate,

plant, and equipment decreased significantly; thus, the ratio of the long-term fund invested in property, plant and equipment was higher than those in 2018.

2. Intheyearof2019,duetothereinvestmentincorporatedintotheconsolidatedstatement,theoperationscaleoftheCPTGrouphasbeengreatlyreducedandtheGreenEnergyGrouphasbeenexcludedfromtheconsolidatedstatement.Therevenuehasdecreased,whereasthe cost has also been greatly reduced, resulting in the decrease in average collection turnover, average inventory turnover and average payment turnover compared with the year of 2018, and the increase in average days for sale of goods and average inventory turnover days compared with the year 2018.

3. Intheyearof2019,duetothereinvestmentincorporatedintotheconsolidatedstatement,theoperationscaleoftheCPTGrouphasbeengreatlyreducedandtheGreenEnergyGrouphasbeenexcludedfromtheconsolidatedstatement,andtheprofitfromthedisposalofassetsby San-chih Asset Development Company, the income before tax and net loss were significantly decreased compared with the year 2018. Times interest earned, return on total assets, return on equity, income before tax percentage to paid-in capital, net margin, and earnings per share were all better than those of the year 2018.

4. Intheyearof2019,duetothereinvestmentincorporatedintotheconsolidatedstatement,theoperationscaleoftheCPTGrouphasbeengreatlyreducedandtheGreenEnergyGrouphasbeenexcludedfromtheconsolidatedstatement.Asaresult,thenetcashusedinoperatingactivities decreased significantly compared with the year of 2018, and the cash flow ratio and cash reinvestment ratio improved compared with the year of 2018. The cash flow allowability ratio declined due to the increase in inventories in the last five years.



YearItem (Note 2)


2015 20162017


2018 2019

5. Intheyearof2019,duetothereinvestmentincorporatedintotheconsolidatedstatement,theoperationscaleoftheCPTGrouphasbeengreatlyreducedandtheGreenEnergyGrouphasbeenexcludedfromtheconsolidatedstatement,althoughtheoperatingincomehasdecreased, operating costs and operating expenses have also decreased significantly, resulting in a significant decrease in operating losses compared to fiscal year 2018, while operating leverage and financial leverage of leverage have both decreased compared to the year of 2018.

6. Due to the reclassified/business activities/cash flow ratioDue to the sale of the company’s subsidiaries reclassified from business into investment activities in 2018, there were slight differences in terms of the cash flow ratio if compared to that in 2018.

Note1: Otherfinancialreportshavebeenauditedbycertifiedpublicaccountants.Note 2: Formulas for the above table are specified as follows:

1. Capital structure analysis(1) Debts ratio = Total liabilities / Total assets(2) Long-term funds to Property, plant and equipment, net = (Shareholders’ equity + long-term liabilities) / Net Property, plant and equipment

2. Liquidity analysis (1) Current ratio = Current assets / Current liabilities(2) Quickratio=(Currentassets-inventories-prepayment)/Currentliabilities(3) Times interest earned = Earnings before interest and taxes / Interest expenses

3.Operatingperformanceanalysis(1) Average collection turnover (including account receivables and notes receivables from operation) = Net sales / Average trade

receivables (including accounts receivables and notes receivables from operation)(2) Days sales outstanding = 365 / Average collection turnover(3) Average inventory turnover = Cost of sales / Average inventory(4) Average payment turnover (including account payables and notes payables from operation) = Cost of sales / Average trade payables

(including account payables and notes payables from operation)(5) Average inventory turnover days = 365 / Average inventory turnover(6) Property, plant and equipment turnover = Net sales / Property, plant and equipment net.(7) Total assets turnover = Net sales / Total assets

4. Profitability analysis(1) Return on total assets = [Net income + interest expenses * (1 – effective tax rate)] / Average total assets (2) Return on equity = Net income / Average shareholders’ equity(3) Percentagetopaid-incapital~operatingincome=Operatingincome/Paid-incapital(4) Percentage to paid-in capital ~ income before tax = Income before tax / Paid-in capital (5) Net margin = Net income / Net sales(6) Earningspershare=(Netincome-preferredstockdividends)/Weightedaveragenumberofsharesoutstanding

5. Cash flow(1) Cash flow ratio = Net cash from operating activities / Current liabilities(2) Cash flow adequacy ratio = Five-year sum of cash from operation / Five-year sum of capital expenditures, inventory additions, and cash

dividends(3) Cashflowreinvestmentratio=(Cashfromoperatingactivities-cashdividends)/(Grossfixedassets+long-terminvestment+otherassets

+ working capital)6. Leverage

(1) Operatingleverage=(Netsales–variablecosts+expenses)/Operatingincome(2) Financialleverage=Operatingincome/(Operatingincome-interestexpenses)

Note3: TheCompanyhaschangedthemeasurementofinvestmentpropertyfromcostmodeltofairvaluemodelstartingfromJanuary1,2018.Asaresult, the Company restated its parent company only statements of comprehensive income, changes in equity and cash flows for the year endedDecember31,2017andparentcompanyonlybalancesheetsoftheCompanyasofJanuary1,2017andDecember31,2017.


Financial Overview

Financial analysis - IFRSs - Tatung

YearItem (Note 2)


2015 20162017


2018 2019

Financial structure (%)

Debt ratio 55.74 58.23 49.27 58.03 55.78

Long-term funds to Property, plant and equipment ratio 1,790.01 1,633.00 1,706.25 1,520.08 1,872.79

Liquidity Analysis (%)

Current ratio 119.13 144.19 160.85 109.35 132.71

Quickratio 88.51 109.40 120.33 69.65 94.03

Times interest earned - - 1.14 (13.92) 4.47

Operatingperformance

Average collection turnover (times) 2.76 3.30 3.56 4.04 4.30

Days sales outstanding 132 111 103 90 85

Average inventory turnover (times) 3.95 3.76 3.94 4.03 3.72

Average payment turnover (times) 4.17 4.97 5.37 5.44 5.27

Average inventory turnover days 92 97 93 91 98

Property, plant and equipment turnover (times) 6.30 5.16 4.36 4.40 4.39

Total assets turnover (times) 0.26 0.25 0.21 0.23 0.22

Profitability

Return on total assets (%) (3.67) (2.52) 0.87 (12.28) 4.33

Return on equity (%) (9.47) (7.78) 0.32 (27.96) 8.26

Incom before tax Percentage to paid-in capital (%) (13.14) (10.32) 0.44 (45.76) 11.12

Net margin (%) (16.94) (13.58) 0.80 (55.61) 16.13

Earnings per share (NT$) (1.35) (1.03) 0.06 (4.75) 1.24

Cash flow

Cash flow ratio (%) 9.42 7.77 (0.98) 2.11 70.75

Cash flow adequacy ratio (%) 209.30 164.24 64.62 35.82 84.84

Cash flow reinvestment ratio (%) 2.33 1.46 (0.13) 0.41 10.82

LeverageOperatingleverage (17.28) (309.53) (91.76) (45.17) (18.37)

Financial leverage 0.62 0.07 0.20 0.35 0.54

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)1. As a result of getting turned a loss into profit in the year of 2019, the equity has increased significantly, and the ratio of long-term funds to

property, plant and equipment has increased from 2018.2. Due to the repayment of short-term borrowings in 2019, the Company’s current liabilities became lower a great deal than those in 2018,

whereas the current ratio and quick ratio of its solvency were higher than those in 2018. 1n 2019, the Company turned into profit, making interest coverage ratio looked better.

3. Due to the equity method’s recognition of the loss of the investment in Chunghwa Picture Tubes that greatly decreased and the recognition of interests from the disposal of San-Chih Asset Development Company’s asset, the post-tax loss/profit in 2019, unlike that in 2018, was turned a loss into profit. This resulted in the significant increase in the return on total asset, the return on equity, the income before tax percentage to paid in capital, the net margin, and the earning per share when compared to those in 2018.

4. Due to the much more significant increase in cash used in operating activities in 2019 than in 2018, it led to more of the increase in such cash flow ration as cash flow adequacy ratio and cash flow reinvestment ratio in 2019 than in 2018.



YearItem (Note 2)


2015 20162017


2018 2019

5. Due to the lower number of operating revenues in 2019 than in 2018, it resulted in the increase in operating loss , operating leverage and financial leverage.

6. Due to the reclassified/business activities/cash flow ratioDue to the sale of the company’s subsidiaries reclassified from business into investment activities in 2018, there were slight differences in terms of the cash flow ratio if compared to that in 2018.

Note1: Otherfinancialreportshavebeenauditedbycertifiedpublicaccountants.Note 2: Formulas for the above table are specified as follows:

1. Capital structure analysis(1) Debts ratio = Total liabilities / Total assets(2) Long-term funds to Property, plant and equipment, net = (Shareholders’ equity + long-term liabilities) / Net Property, plant and equipment

2. Liquidity analysis (1) Current ratio = Current assets / Current liabilities(2) Quickratio=(Currentassets-inventories-prepayment)/Currentliabilities(3) Times interest earned = Earnings before interest and taxes / Interest expenses

3.Operatingperformanceanalysis(1) Average collection turnover (including account receivables and notes receivables from operation) = Net sales / Average trade

receivables (including accounts receivables and notes receivables from operation)(2) Days sales outstanding = 365 / Average collection turnover(3) Average inventory turnover = Cost of sales / Average inventory(4) Average payment turnover (including account payables and notes payables from operation) = Cost of sales / Average trade payables

(including account payables and notes payables from operation)(5) Average inventory turnover days = 365 / Average inventory turnover(6) Property, plant and equipment turnover = Net sales / Property, plant and equipment net.(7) Total assets turnover = Net sales / Total assets

4. Profitability analysis(1) Return on total assets = [Net income + interest expenses * (1 – effective tax rate)] / Average total assets (2) Return on equity = Net income / Average shareholders’ equity(3) Percentagetopaid-incapital~operatingincome=Operatingincome/Paid-incapital(4) Percentage to paid-in capital ~ income before tax = Income before tax / Paid-in capital (5) Net margin = Net income / Net sales(6) Earningspershare=(Netincome-preferredstockdividends)/Weightedaveragenumberofsharesoutstanding

5. Cash flow(1) Cash flow ratio = Net cash from operating activities / Current liabilities(2) Cash flow adequacy ratio = Five-year sum of cash from operation / Five-year sum of capital expenditures, inventory additions, and cash

dividends(3) Cashflowreinvestmentratio=(Cashfromoperatingactivities-cashdividends)/(Grossfixedassets+long-terminvestment+otherassets

+ working capital)6. Leverage

(1) Operatingleverage=(Netsales–variablecosts+expenses)/Operatingincome(2) Financialleverage=Operatingincome/(Operatingincome-interestexpenses)

Note3: TheCompanyhaschangedthemeasurementofinvestmentpropertyfromcostmodeltofairvaluemodelstartingfromJanuary1,2018.Asaresult, the Company restated its parent company only statements of comprehensive income, changes in equity and cash flows for the year endedDecember31,2017andparentcompanyonlybalancesheetsoftheCompanyasofJanuary1,2017andDecember31,2017.


Financial Overview

Audit Committee's review reportThe Board of Directors has prepared and submitted the Company’s 2019 Business Report, Financial Statements (including Consolidated Financial Statements), and the proposal for distribution of 2019 profits (Recognize legal and special reserve). The CPA firm, Ernst & Young, has audited the Financial Statements and issued an audit opinion report. The Business Report, Financial Statements (including Consolidated Financial Statements), and the proposal for distribution of 2019 profits (Recognize legal and special reserve) have been reviewedanddeterminedtobecorrectandaccuratebytheAuditCommitteemembersofTatungCo..Weherebysubmitthisreportaccording to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Sincerely,ToTatungCo.2020AnnualGeneralShareholders’Meeting

The convener of the Audit Committee13th May, 2020

Consolidated statements and report of Independent Auditor : Please refer to Page 109~340. Parent company only statements and report of Independent Auditor: Please refer to Page 341~479.

Occurrence of financial difficulties: ChunghwaPictureTubes,Ltd.(CPT)andGreenEnergyTechnologyInc.(GET)duetofinancialcrisis,CPTfiledforbankruptcyonSeptember18,2019,andisstillundertrialbythecourt.GEThasbeenruledBankruptcybycourtonFebruary21,2020,andthebankruptcyadministrator will hold a creditor meeting to ensure that employees, creditors can be fairly compensated in accordance with the law.


Analysis on Financia Status and Financial Performance and Risk as Sessment

Financial statusUnit: NT$ Thousand

YearItem 2019 2018 Difference

Amount %

Current assets 40,393,756 44,991,019 (4,597,263) (10.22)

Non-current assets 78,597,561 94,170,895 (15,573,334) (16.54)

Total assets 118,991,317 139,161,914 (20,170,597) (14.49)

Current liabilities 54,827,731 68,367,706 (13,539,975) (19.80)

Non-current liabilities 35,507,680 39,868,297 (4,360,617) (10.94)

Total liabilities 90,335,411 108,236,003 (17,900,592) (16.54)

Capital stock 23,395,367 23,395,367 0 0.00

Capital surplus 3,363,085 3,283,032 80,053 2.44

Retained earnings 10,334,135 8,120,165 2,213,970 27.27

Otherequities (405,425) (584,420) 178,995 30.63

Treasury stock (30,854) (1,214,021) 1,183,167 97.46

Non-controlling interests (8,000,402) (2,074,212) (5,926,190) (285.71)

Total shareholders’ equity 28,655,906 30,925,911 (2,270,005) (7.34)

Analysis of deviation over 20% and exceeding NT$10 million:1. Retained earnings: Since Tatung Company was turned a loss into profit in 2019, that led to a more significant increase in

retained earnings in 2019 than in 2018.2. Otherequities:Thevaluewasontheincreaseduetotherevaluationofthecompany’sinvestmentpropertyin2019.3. Treasury stocks: The treasury stocks decreased in 2019 mainly as a result from the disposal of the company’s stocks by its

subsidiaries.4. Non-controlling interests: The loss of the investment in Chunghwa Picture Tubes, Ltd. was still in the 2019 consolidated financial

statements with the recognition of the loss not made by Tatung Company, which already turned a loss into a profit in 2019.


Analysis on Financia Status and Financial Performanceand Risk as Sessment

Financial performanceUnit: NT$ Thousand

YearItem

2019 2018Difference Percentage

(%)Subtotal Total Subtotal Total

Sales revenue 35,830,085 61,484,530 (25,654,445) (41.73)

Less: sales returns 182,710 467,993 (285,283) (60.96)

Sale allowances 224,360 393,812 (169,452) (43.03)

Net sales revenues 35,423,015 60,622,725 (25,199,710) (41.57)

Cost of goods sold 33,066,078 63,084,519 (30,018,441) (47.58)

Grossprofits 2,356,937 (2,461,794) 4,818,731 195.74

Operatingexpenses 8,616,318 13,062,189 (4,445,871) (34.04)

Net other Income (5,934) 40,856 (46,790) (114.52)

Operatingprofits(losses) (6,265,315) (15,483,127) 9,217,812 59.53

Non-operating income and expense (2,614,650) (16,354,898) 13,740,248 84.01

Loss from continuing operating units before income tax (8,879,965) (31,838,025) 22,958,060 72.11

Income tax 275,496 1,454,883 (1,179,387) (81.06)

Net loss from continuing operations (9,155,461) (33,292,908) 24,137,447 72.50

Income(Loss) from discontinued departments 0 0 0 0

Net loss (9,155,461) (33,292,908) 24,137,447 72.50

Othercomprehensiveincome(loss),netofincometax 6,368 (787,557) 793,925 100.81

Total comprehensive loss (9,149,093) (34,080,465) 24,931,372 73.15

Analysis of changes in financial ratios:In 2019 the investment in Chunghwa Picture Tubes, Ltd. that was significantly downsized was included in the consolidated financialstatementsbutGreenEnergyTechnologyInc.wasnot.Despitethedecreaseintheoperatingincome,theoperatingcost and expense were significantly on the decrease. That resulted in the significant decrease in the total comprehensive income and the net income in 2019 than in 2018. In addition, due to the interests of Shan-Chi Asset Development Company’s disposal of asset, it led to the significant decrease in the non-operating income and expense, the income from continuing operation before tax, the profit/loss and total comprehensive income in 2019 than in 2018.




Cash flowUnit: NT$ Thousand

Balance of cash-beginning (1)

Net cash flow from operating activities in

the year (2)

Net cash flow from investing and

financing activities in the year (3)

Remaining (Shortfall) of cash (1)+(2)+(3)

Measures for covering the shortfall of cash

Investment plan Financing plan

8,973,572 829,691 526,378 10,329,641 - -

1. Analysis of change in cash flow in the current year:(1) Operatingactivities:Netcashoutflowfromoperatingactivities in2018wasNT$14,355,477thousand.Netcashinflowfrom

operating activities in 2019 was NT$829,691 thousand. The net cash inflow from operating activities in 2019 was the result of better net income than that of 2018.

(2) Investing activities: Net cash outflow from investing activities in 2018 was NT$9,717,497 thousand. Net cash inflow from investing activities in 2019 was NT$10,179,450 thousand. The net cash inflow from investing activities in 2019 was more than that of 2018 in disposal of proprety, plant and equipment.

(3) Financing activities: Net cash inflow from financing activities in 2018 was NT$1,009,538 thousand. Net cash outflow from financing activities in 2019 was NT$9,474,197 thousand. The net cash outflow from financing activities in 2019 was the result of decreasing in total loans than that of 2018.

2. Measures for covering the shortfall of cash: Not applicable3. Analysis of cash flow for the coming year:

Unit: NT$ Thousand

Balance of cash-beginning (1)

Net cash flow from operating activities in

the year (2)

Net cash flow from investing and

financing activities in the year (3)

Remaining (Shortfall) of cash (1)+(2)+(3)

Measures for covering the shortfall of cash

Investment plan Financing plan

10,329,641 (726,275) (3,623,785) 5,979,581 - -

Impacts of major capital expenditures on financial position and operations: None.

Long-term investment policy, main reasons for profits or losses, improvement plans and the investment plan for the coming year: The Company’s core investment strategy is energy conservation, carbon reduction, and service industry orientation, focusing on energy saving, environmental protection, healthcare, and green energy fields. The Company positively coordinates with the expansion of overseas sales and the development of the brand as complementary goals. To actively create value for the Company and all its shareholders, the investment proposals are all made and executed after the investment review committee carefully evaluates the investment returns. For investment companies with losses, we also require them to actively improve their operations. If unable to improve their operations, they will be dealt through downsizing, selling, or liquidation.



Risk assessment and analysis(I) Structure of risk management:

Risk management Bodies in charge Responsibilities

Strategy & operation risk

1. Board of Directors2. H igh - leve l management (Cha i r man,

president)3. Management of each plant and division

(Generalmanager,director,andcenter manager)

1. Stipulation & implementation of management policies

2. Assessment & analysis of operation performance

Market risk Sales unit of each plant and division Business & sales promotion as well as market research and evaluation

Financial & Liquidity risk Finance & Accounting Division Final accounting of cost, funds allocation and control, and hedging of interest and exchange rates

Legal risk Legal Division Process of litigation and non-litigation cases

(II) Impact of interest rate and exchange rate fluctuations and inflation on the Company’s earnings and countermeasures:1. Interest rate:

(1) Derivatives can been used as a hedge against interest rate fluctuations for the Company’s long-term debts.(2) Whenconsideringmidtolong-termbondissues,theCompanycarefullysets itstarget interestratetolower its interest

rate risks as much as possible. For example, the Company’s offshore exchangeable corporate bond issue offers a fixed interest rate, while its domestic secured convertible bond offers a zero coupon rate.

2. Exchange rate:The Company has a natural hedge against currency fluctuation as its business involves imports and exports. It also utilizes derivatives to hedge the remainder of its foreign exchange position that is exposed to currency exchange risks. The managementof risks involvingsuchderivativesareset forth in theCompany’s "OperationalProcedures forDerivativesTreading." The Company also has an internal control system to supervise the loss limit of foreign currency transactions.

3. Inflation:Inflation in the past year had no adverse impact on the Company’s operations and profitability.

(III) Investment policy and reasons for gains and losses on high-risk and high - leverage investments, loans to a third party, derivative trades, and countermeasures:The Company engages in derivative trades, such as operational hedging of foreign exchange, for the sole purpose of lowering its financial risk and conducts all transactions in accordance with the Company’s internal control procedure.TheCompany'soperatingprocedures for fundingandendorsementarebasedon"Guidelines forLendingofCapital",and"GuidelinesforEndorsementsandGuarantees",whichwereformulatedbyreferringtorelated lawsandregulationssetupbyFinancial Supervisory Commission.

(IV) R&D plans, development, expenditure, commercialization, and factors to success:The Company sets aside 3% of annual sales for investment in R&D to develop new products, technologies and markets to better serve customers around the world. The Company will continue to closely follow the progress, development and results of its various development projects.

(V) Major changes in domestic and foreign government policies and laws which may impact on the financial position and operation of the Company, and countermeasures:The Company carefully monitors any changes in local and foreign policies and makes appropriate adjustments in the Company’s internal control system and operations when necessary.




The Company’s R&D units and financial department continues to avail of and seek various investment incentives, such as tax credit, granted by the Ministry of Economic Affairs and other government agencies.

(VI) Impact of changes in technologies on the financial position and operation of the Company, and countermeasures:1. Withthemassdemandforenergyefficiency&carbonreductiontechniquetocopewithglobalwarming,PowerEquipment

BusinessUnitandSystemBusinessGroupoftheCompanyhavedevelopeddeeptechnicalfoundation,keptputtingeffortsonresearch & development, and expanded the business of key products as well as system aggressively in smart grid to ensure its technology and market leading position in domestic electricity generation, power transmission & distribution and energy management. The Company marches into oversea market and aims at the energy technology industry leader.

2.Withthetrendofenergyefficiencyandcarbonreduction,HomeApplianceBusinessUnithasstrivedtocarryonfinetradition,and reinforced to develop high-quality green home appliances with health, environment protection, energy-saving and high efficiency concepts to increase the sales performance and profit.

3.Withtheadventofthedigitalera,theCompany isaggressivelypursuingR&D,productionandmarketingofproductsthatintegrate information, communications and home appliance functions to cater to the demand of the digital-age family.

4. The Company’s focus is on developing visual products, such as LCD TVs and LCD monitors, which offer bright market prospects.5.Withthecomingofageofpersonalhigh-frequencyradiocommunication,theCompanyisactivelyexploringopportunitiesin

4th generation wireless communications business.

(VII) Impact by changes of corporate image on the Company’s risk management policies, and countermeasures:The Company was founded on philosophy that emphasizes "integrity, honesty, industry and frugality." These four core values are strictly followed by each and every individual in the Company and have won public recognition. The Company will strive to carry on this tradition, while, actively pursue new ideas to ensure better corporate governance.The Company has also appointed a special task force to respond to unforeseen situations in order to reduce uncertainties and ensure smooth business operations.

(VIII) Expected benefits and potential risks from mergers and acquisitions and countermeasures:The Company has no ongoing merger and acquisition activities. In considering future M&As, the Company will evaluate their efficiency, risks, vertical integration and other factors in accordance with its internal control system.

(IX) Expected benefits and risks related to plant expansion and countermeasures:Any expansion of the Company’s facilities shall be subject to careful evaluation by a special task force in accordance with the Company’s internal control system.

(X) Risk from concentration of purchase or sales, and countermeasures:The Company will arrange for alternative sources for purchase, and will diversify its customer base in order to reduce the concentration of sales.

(XI) Risk from major transfer or swap of stocks by Tatung’s directors or major shareholders with over 10% of Tatung’s total outstanding shares, and countermeasures:Financial Supervisory Commission (FSC) has repeatedly imposed penalties on violations by the same mainland China investment, 4.06%shareholdinginMay5,2017,8.78%inDecember5,2017and18.01%inJanuary17,2019respectively.There must be loopholes in the law enforcement that mainland China could take advantage of and that is why they could continue to violate the laws and regulations in Taiwan, even with repeated penalties. Therefore, we would like to pledge to the authorities to check into the loopholes in the enforcement in order to protect not only Tatung but also all companies in Taiwan.Tatung Board decides to take legal actions to protect corporate and shareholders’ interest:

(1) Regarding the Mainland China investment fined by the Financial Supervisory Commission, it is alleged to be against Article 157 of Securities and Exchange Act. Tatung Board made the resolution to

engagealawfirmtoclaimforthedisgorgementofanyprofitsrealizedfromthebuyandsaleonJanuary29,2019.(2) The attorneys representing the company filed a lawsuit in Taiwan Taipei District Court against the shareholder and designated persons to claim for the disgorgement of any profits realized from the buy

and sale plus interest.(3) The Board received a letter from the Securities and Futures Investors Protection Center (hereinafter referred to as the SFIPC)

onJune24,2019.The letterstatedthatashareholder,Longlife International(HongKong)CompanyLimited,purchasedTatung’s shares throughFINIaccounts fromJanuary11,2017 toApril24,2018.Theprofits realized fromthesaleandpurchase were alleged to be NTD 1,225,988,645 (according to the letter, a part of the amount of NTD 443,265,434 had beenovertheStatuteofLimitationsbyJune21,2019).TheSFIPCrequiredthecompanytorequesttheshareholdertoaddinterest at the legal interest rate.



The company had claimed for the disgorgement of any profits realized from the buy and sale. However, there is an issue about the commencement of term which led to the statement from SFIPC’s letter about a part of the amount had been over the Statute of Limitations. The company alleged that the commencement of term should start from the time Tatung filed the lawsuit and the company will make every effort to claim in the court for protecting Tatung’s and all shareholders’ interest.

(XII) Risk from the change in management of the Company, and countermeasures:The Company has a strong and stable management team, and there is no risk from the change in the management of the Company.

(XIII) Major litigations, non-contentious matters or administrative actions, concluded or pending, involving any of the directors, presidents, responsible persons in fact , shareholders holdings more than 10% of the outstanding shares and subsidiaries, the result of which may significantly affect shareholders’ equity or the stock price of the Company. Disclosure shall be made with the facts in dispute, course of action, commencing date of the legal proceeding, principal litigants and the status up to the publication date of the annual report:1. Xintong Investment Consulting Co., Ltd. applied for an injunctive relief with the Taiwan High Court on November 22,

2019, requesting that the chairman, directors and independent directors of the Company be prohibited from exercising the rights of the chairman, directors and company seal, and that three impartial professionals are appointed as temporary managers of the Company, to serve as chairman and board of directors. The Company received a notice fromtheTaipeiDistrictCourtonJanuary7,2020andhasappointedattorneystoworkwiththecourt.Subsequently,thecase was transferred to the Taipei District Court for adjudication by the Taiwan High Court due to jurisdictional errors and was rejected by the Taipei District Court on February 27, 2020.

2. With respect to thecase regardingNatureWorldwideTechnologyCo., the formerchairmanWei-ShanLinwassentencedto imprisonmentandpenaltiesbytheTaiwanHighCourtonAugust23,2017.Wei-ShanLinappealedtotheSupremeCourtoftheROC.TheSupremeCourtrejectedtheappealonMay29,2019andsustainedtheoriginaljudgement.

Wei-ShanLinresignedasthedirectorandchairmanoftheCompanyonFebruary1,2018.TheCompany'soperations,finance and business were not affected by the above personal cases and will continue as usual.

(XIV) Information security policy and specific management plan, information security risk assessment analysis1. Information security policy and specific management plan

In response to personal information protection and information security needs, Tatung Company established the Information SecurityandthePersonal InformationProtectionCommitteeasearlyas2014,passedthe ISO27001 informationsecuritymanagement systemverification,andensured the securityof thecompany'spersonnel,data, information systems,equipment and network in accordance with the requirements of the BS10012 personal data protection standard. To ensure thesafetyof thecompany'spersonnel,data, informationsystems,equipmentandnetwork,establishingan informationsecuritypolicyasthehighestguidingprincipleofthecompany's informationsecuritymanagementsystem,achievingthegoal of "uninterrupted service, no loss of information, personal information not leaked, and enterprise sustainable operation". The actual implementation method is based on the pre-emptive and risk reduction pre-existing issues. Through the discussion of the monthly meeting of the Information Security Monthly Meeting and the emergency response, the review of the new internal and external security issues will be carried out to the annual plan. In the activities of the planning, the annual budget andsecuritymanagementreviewmeetinghostedbyPresidentwillbeheldinOctobereachyear,andtheresultsofthisyear'simplementation and the budget plan for the next year will be reported. The annual activities include semi-annual external auditor'saudits , twooutsourcingconsultants'externalcounselingeveryyear,andanannual internalauditof theauditcommittee to determine the implementation status of the information security management system and whether to achieve the information security objectives of confidentiality, integrity, availability and compliance of each service.

2. Information security risk assessment analysisCommittee conducts risk assessments on a regular basis or in the event of major changes in the information technology environment. As a basis for the operation of the information security management system, the information security risk level related to various service operations of Tatung is defined. The Assessment Procedures regulates risk management plans and subsequent improvement measures to reduce the risk to an acceptable level.

(XV) Other major risks, and countermeasures: None.

Other significant matters: None.


Special Disclosures

Information on Investees(I) List of investees

Tatu

ng C

ompa

ny

Dom

estic

Sub

sidia

ries

Ove

rseas

Sub

sidia

ries

Opt

oele

ctro

nics

Chu

nghw

a Pi

ctur

e Tu

bes,

Ltd.

* For

war

d El

ectro

nics

Co.

, Ltd

.

Ener

gy So

lutio

ns B

usin

ess

Shan

Chi

h Se

mic

ondu

ctor

Co.

, Ltd

.Ta

tung

For

ever

Ene

rgy

Co.

, Ltd

.Tu

ng Y

ang

Ener

gy C

o., L

td.

Chi

h Ku

ang

Ener

gy C

o., L

td.

Shan

g Sh

in E

nerg

y C

o., L

td.

Yau

Yang

Ene

rgy

Co.

, Ltd

.Tin

g Sh

in E

nerg

y C

o., L

td.

Zhi S

hin

Ener

gy C

o., L

td.

Elect

roni

cs &

Info

rmat

ion

Bu

sines

s* T

atun

g Sy

stem

Tech

nolo

gies

Inc.

Cen

tral R

esea

rch

Tech

nolo

gy C

o.,

Ltd. Reta

il C

hann

el B

usin

ess

Tatu

ng C

onsu

mer

Pro

duct

s (T

aiw

an) C

o., L

td.

Indu

stria

l App

lianc

e Bu

sines

s and

Sy

stem

ToesOpto-Mec

hatro

nicsCo.Ltd.

Chem

ical

Engi

neer

ing

Busin

ess

* Tat

ung

Fine

Che

mic

als C

o., L

td.

Elec

troni

cs &

Info

rmat

ion

Busin

ess

Tatu

ng (T

haila

nd) C

o., L

td.

Tatung

Com

panyofJap

an,Inc

.

Oth

ers

Tatu

ng In

form

atio

n

(Sin

gapo

re) P

te. L

td.

Tatu

ng E

lect

ric (S

inga

pore

)Pt

e. Lt

d.Tatung

Mya

nmarJointVen

ture

Hold

ing

Co.

, Ltd

.A

bsol

ute

Alp

ha L

imite

d

Sale

s Loc

atio

nsTa

tung

Co.

of A

mer

ica,

Inc.

Tatu

ng E

lect

ric C

o. o

f Am

eric

a,

Inc.

Sale

s Loc

atio

nsTa

tung

Cze

ch s.

r.o.

Asia

Amer

ica

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pe

Mai

nlan

d C

hina

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t Dev

elop

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t Bus

ines

s

Shan

Chi

h A

sset

Dev

elop

men

t C

o., L

td.

Oth

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Chu

nghw

a El

ectro

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D

evel

opm

ent C

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td.

Shan

Chi

h In

vest

men

t Co.

, Ltd

.Ta

tung

Med

ical

& H

ealth

care

Te

chno

logi

es C

o., L

td.

Tatu

ng D

ie C

astin

g C

o., L

td.

Chi

h Sh

eng

Inve

stm

ent C

o., L

td.

Hom

e Ap

plia

nce

Busin

ess

Tatu

ng In

form

atio

n Te

chno

logy

(Jiang

su)C

o.,Ltd.

Tatu

ng C

ompr

esso

rs

(Zho

ngsh

an) C

o., L

td.

Mot

or B

usin

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Tatu

ng (S

hang

hai)

Co.

, Ltd

.

Note1:*Aso

f2019/12/31Listed/OTC

and

Emerging

com

panies.

Note2:Tatun

ginform

ationTech

nology

(Jiang

su)C

o.,Ltd.a

ndTa

tung

Com

pressors(Zho

ngshan

)Co.,Ltd.wereinve

stedby

Tatung

inform

ation(Singa

pore)P

te.Ltd.,Tatung

(Sha

ngha

i)C

o., L

td. w

as in

veste

d by

Tatu

ng E

lect

ric (S

inga

pore

) Pte

. Ltd

.


Special Disclosures

(II) Shareholdings, profile and operating highlights of investeesAs of 31 December 2019 Unit: NT$ Thousand

Name of investeesLong-term investment Indirect investment Total consolidated

shareholdings Date of incorporation Address Main business or products Capital Total assets Total

liabilities Net worth Sales revenue

Operatingincome Net income EPS

Share(s) % Share(s) % Share(s) % (Note 1) (Note 2)

Chunghwa PictureTubes, Ltd.

1,850,745,168 28.56 719,692,965 11.11 2,570,438,133 39.67 May, 1971 No.1, HuayingRoad, Longtan Dist., Taoyuan City

Manufacturing and selling CF and TFT-LCD

64,794,542 19,547,560 36,539,855 -16,992,295 1,507,877 -5,202,982 -11,955,010 -1.85

Tatung SystemTechnologies Inc.

37,819,027 42.70 567,651 0.64 38,386,678 43.34 May, 2000 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Providing computer software/hardware services, voice/networking equipment and system integration

885,600 2,825,781 1,513,886 1,311,895 3,363,405 135,706 102,702 1.16

Forward Electronics Co., Ltd.

18,955,623 12.05 10,114,750 6.43 29,070,373 18.48 August, 1970

No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Manufacturing and selling of backlight modules, switches, potentiometers, encoders, wireless devices and LED lightings

1,572,572 2,695,940 1,234,258 1,461,682 591,572 -122,624 -125,940 -0.80

Shan ChihSemiconductor Co., Ltd.

49,913,576 43.18 16,067,651 13.90 65,981,227 57.08 July,1995 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

3"~6" semiconductor -grade silicon ingot and wafers

1,155,973 383,862 259,547 124,315 180,690 -68,974 -193,969 -1.68

Central Research Technology Co., Ltd.

6,612,155 100 - - 6,612,155 100 August, 1997


OfferingEMC/RFtestingandcertification services

66,122 54,406 14,363 40,043 37,685 -9,890 -9,949 -1.50

Tatung Consumer Products (Taiwan) Co., Ltd.

49,650,000 99.10 - - 49,650,000 99.10 October,2000


Sales, installation, and service of home appliances and digital consumer products

501,000 2,206,008 3,440,639 -1,234,631 5,329,568 -72,426 -86,327 -1.72

Tatung Fine Chemicals Co., Ltd.

37,458,319 48.27 4,935,497 6.36 42,393,816 54.63 March, 1980 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Industrial coatings, electroposition coatings, resistor coatings,photocatalyst,ink,Jetink ABS plastic, color dyes

775,960 350,229 223,415 126,814 204,202 9,114 988 0.01

Shan Chih Asset Development Co., Ltd.

5,220,064 100 - - 5,220,064 100 June,1966 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Development of real estate 5,220,064 61,144,573 12,983,414 48,161,159 3,953,370 1,388,323 9,741,949 1,866.25

Chunghwa Electronics Development Co., Ltd.

297,626,267 94.01 18,946,832 5.98 316,573,099 99.99 February, 1970


Business investment 3,165,737 131,556 1,516,248 -1,384,692 - -1,974 -1,004,404 -3.17

Tatung Die Casting Co., Ltd.

153,000 51.00 - - 153,000 51.00 November, 1971


Die casting mould and parts 30,000 238,273 120,114 118,159 368,360 28,173 18,176 60.59

Tatung Medical & Healthcare Technologies Co., Ltd.

36,424,239 95.85 - - 36,424,239 95.85 July,2004 4F, No.136, Sec. 3, Ren’ai Road, Da’an Dist., Taipei

Medical healthcare information system integration development services. Design and trade of medical treatment facilities

380,013 313,652 99,825 213,826 227,995 15,374 12,126 0.32

ToesOpto-MechatronicsCo., Ltd.

17,000,000 85.00 - - 17,000,000 85.00 May, 2004 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Designing and manufacturing of various automatic equipment

200,000 187,082 158,267 28,815 106,411 10,144 10,628 0.53

Shan Chih Investment Co., Ltd.

77,627,119 95.83 3,376,213 4.17 81,003,332 100 November,1990


Business Investment 810,033 412,260 21,156 391,104 - -5,684 -25,517 -0.32


Special Disclosures Special Disclosures

(II) Shareholdings, profile and operating highlights of investeesAs of 31 December 2019 Unit: NT$ Thousand






Chunghwa PictureTubes, Ltd.

1,850,745,168 28.56 719,692,965 11.11 2,570,438,133 39.67 May, 1971 No.1, HuayingRoad, Longtan Dist., Taoyuan City

Manufacturing and selling CF and TFT-LCD

64,794,542 19,547,560 36,539,855 -16,992,295 1,507,877 -5,202,982 -11,955,010 -1.85

Tatung SystemTechnologies Inc.

37,819,027 42.70 567,651 0.64 38,386,678 43.34 May, 2000 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Providing computer software/hardware services, voice/networking equipment and system integration

885,600 2,825,781 1,513,886 1,311,895 3,363,405 135,706 102,702 1.16


18,955,623 12.05 10,114,750 6.43 29,070,373 18.48 August, 1970


Manufacturing and selling of backlight modules, switches, potentiometers, encoders, wireless devices and LED lightings

1,572,572 2,695,940 1,234,258 1,461,682 591,572 -122,624 -125,940 -0.80

Shan ChihSemiconductor Co., Ltd.

49,913,576 43.18 16,067,651 13.90 65,981,227 57.08 July,1995 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

3"~6" semiconductor -grade silicon ingot and wafers

1,155,973 383,862 259,547 124,315 180,690 -68,974 -193,969 -1.68


6,612,155 100 - - 6,612,155 100 August, 1997


OfferingEMC/RFtestingandcertification services

66,122 54,406 14,363 40,043 37,685 -9,890 -9,949 -1.50


49,650,000 99.10 - - 49,650,000 99.10 October,2000


Sales, installation, and service of home appliances and digital consumer products

501,000 2,206,008 3,440,639 -1,234,631 5,329,568 -72,426 -86,327 -1.72


37,458,319 48.27 4,935,497 6.36 42,393,816 54.63 March, 1980 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Industrial coatings, electroposition coatings, resistor coatings,photocatalyst,ink,Jetink ABS plastic, color dyes

775,960 350,229 223,415 126,814 204,202 9,114 988 0.01


5,220,064 100 - - 5,220,064 100 June,1966 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Development of real estate 5,220,064 61,144,573 12,983,414 48,161,159 3,953,370 1,388,323 9,741,949 1,866.25


297,626,267 94.01 18,946,832 5.98 316,573,099 99.99 February, 1970


Business investment 3,165,737 131,556 1,516,248 -1,384,692 - -1,974 -1,004,404 -3.17

Tatung Die Casting Co., Ltd.

153,000 51.00 - - 153,000 51.00 November, 1971


Die casting mould and parts 30,000 238,273 120,114 118,159 368,360 28,173 18,176 60.59


36,424,239 95.85 - - 36,424,239 95.85 July,2004 4F, No.136, Sec. 3, Ren’ai Road, Da’an Dist., Taipei

Medical healthcare information system integration development services. Design and trade of medical treatment facilities

380,013 313,652 99,825 213,826 227,995 15,374 12,126 0.32


17,000,000 85.00 - - 17,000,000 85.00 May, 2004 No. 22, Sec. 3, Zhongshan N. Road, Zhongshan Dist., Taipei City

Designing and manufacturing of various automatic equipment

200,000 187,082 158,267 28,815 106,411 10,144 10,628 0.53

Shan Chih Investment Co., Ltd.

77,627,119 95.83 3,376,213 4.17 81,003,332 100 November,1990


Business Investment 810,033 412,260 21,156 391,104 - -5,684 -25,517 -0.32


Special Disclosures

As of 31 December 2019 Unit: NT$ Thousand






Chih Sheng Investment Co., Ltd.

150,000,000 100 - - 150,000,000 100 June,2008 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City

Business Investment 1,500,000 199,314 31,469 167,845 - -4,979 170,995 1.14

Tatung Forever Energy Co., Ltd.

158,558,308 99.10 - - 158,558,308 99.10 February,2015

No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City

Solar power business (EPC-Engineering, Procurement, Construction)

1,600,000 2,029,522 507,203 1,522,319 1,575,739 -62,382 -37,691 -0.24

Tung Yang Energy Co., Ltd.

40,000,000 100 - - 40,000,000 100 November,2017

No.117, Sec. 2, JinhuaRoad,South Dist., Tainan City

Solar power business 400,000 401,760 1,555 400,205 15,015 777 839 0.02

Chih Kuang Energy Co., Ltd.

40,000,000 100 - - 40,000,000 100 November,2018


Solar power business 400,000 398,237 63 398,174 - -1,727 -1,693 -0.04

Shang Shin Energy Co., Ltd.

9,010,000 100 - - 9,010,000 100 November,2018


Solar power business 90,100 116,585 26,870 89,715 142 -382 -355 -0.04

Yau Yang Energy Co., Ltd. 500,000 100 - - 500,000 100 April, 2019 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City

Solar power business 5,000 4,939 2 4,937 - -83 -63 -0.13

Ting Shin Energy Co., Ltd. 3,010,000 100 - - 3,010,000 100 April, 2019 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City


Zhi Shin Energy Co., Ltd. 4,000,000 100 - - 4,000,000 100 April, 2019 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City



105,599,998 99.99 - - 105,599,998 99.99 October,1989

Amata CityChonburi. Bangna-Trad Road, KM.57,700/50,52,54, Moo 6, T. Nongmaidang, A.Muang,Chonburi 20000, Thailand

EMS, Industrial Appliances, WireandCable,Electronicsand Home Appliances, Air Conditioning product, Smart Meter, Solar Module, LED TV, LED lighting product assembly, Motors, Transformers Electric motorcycle, Advanced Electronic product, Renting

940,289 695,917 163,565 532,351 326,496 -50,169 -13,708 -0.13

Tatung Company of Japan,Inc.

15,000 100 - - 15,000 100 August, 1975 4F,VORTSuehirocho, 6-14-7, Soto-Kanda, Chiyoda-Ku, Tokyo, 101-0021,Japan

Sale and service of equipment and instruments, materials, electronics, home appliances and IT products

1,903 2,356,447 1,030,484 1,325,962 1,261,197 -108 140,469 9,364.6

Tatung Information (Singapore) Pte. Ltd.

86,049,842 100 - - 86,049,842 100 December, 1999

50, Raffles Place #32-01 Singapore Land Tower, Singapore 048623

Business Investment 1,625,465 317,898 268 317,630 - -387 8,552 0.10


33,098,675 100 - - 33,098,675 100 April, 1998 50, Raffles Place #32-01 Singapore Land Tower, Singapore 048623

Business Investment 676,331 615,486 411 615,075 - -267 -224,680 -6.79









Chih Sheng Investment Co., Ltd.

150,000,000 100 - - 150,000,000 100 June,2008 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City

Business Investment 1,500,000 199,314 31,469 167,845 - -4,979 170,995 1.14


158,558,308 99.10 - - 158,558,308 99.10 February,2015

No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City

Solar power business (EPC-Engineering, Procurement, Construction)

1,600,000 2,029,522 507,203 1,522,319 1,575,739 -62,382 -37,691 -0.24

Tung Yang Energy Co., Ltd.

40,000,000 100 - - 40,000,000 100 November,2017


Solar power business 400,000 401,760 1,555 400,205 15,015 777 839 0.02

Chih Kuang Energy Co., Ltd.

40,000,000 100 - - 40,000,000 100 November,2018


Solar power business 400,000 398,237 63 398,174 - -1,727 -1,693 -0.04

Shang Shin Energy Co., Ltd.

9,010,000 100 - - 9,010,000 100 November,2018


Solar power business 90,100 116,585 26,870 89,715 142 -382 -355 -0.04

Yau Yang Energy Co., Ltd. 500,000 100 - - 500,000 100 April, 2019 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City


Ting Shin Energy Co., Ltd. 3,010,000 100 - - 3,010,000 100 April, 2019 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City


Zhi Shin Energy Co., Ltd. 4,000,000 100 - - 4,000,000 100 April, 2019 No.160, Sec. 1, Fuxing S. Road, Da’an Dist., Taipei City



105,599,998 99.99 - - 105,599,998 99.99 October,1989

Amata CityChonburi. Bangna-Trad Road, KM.57,700/50,52,54, Moo 6, T. Nongmaidang, A.Muang,Chonburi 20000, Thailand

EMS, Industrial Appliances, WireandCable,Electronicsand Home Appliances, Air Conditioning product, Smart Meter, Solar Module, LED TV, LED lighting product assembly, Motors, Transformers Electric motorcycle, Advanced Electronic product, Renting

940,289 695,917 163,565 532,351 326,496 -50,169 -13,708 -0.13

Tatung Company of Japan,Inc.

15,000 100 - - 15,000 100 August, 1975 4F,VORTSuehirocho, 6-14-7, Soto-Kanda, Chiyoda-Ku, Tokyo, 101-0021,Japan

Sale and service of equipment and instruments, materials, electronics, home appliances and IT products

1,903 2,356,447 1,030,484 1,325,962 1,261,197 -108 140,469 9,364.6


86,049,842 100 - - 86,049,842 100 December, 1999

50, Raffles Place #32-01 Singapore Land Tower, Singapore 048623

Business Investment 1,625,465 317,898 268 317,630 - -387 8,552 0.10


33,098,675 100 - - 33,098,675 100 April, 1998 50, Raffles Place #32-01 Singapore Land Tower, Singapore 048623



Special Disclosures







Tatung Co. of America, Inc.

1,750,000 50.00 - - 1,750,000 50.00 September, 1972

2850 El Presidio Street, Long Beach, CA 90810, U.S.A.

Sale and service of electronic products and home appliances

135,225 368,474 1,417,110 -1,048,636 930,040 -101,636 -1,273,244 -363.78


1,000,000 100 - - 1,000,000 100 July,1988 14381 Chambers Road, Tustin, CA 92780, U.S.A.

Sale and service of heavy-industry products

121,184 206,163 44,455 161,708 269,006 2,658 3,859 3.86

Tatung Czech s.r.o. - 100 - - - 100 December, 2003

Na Radosti 184/59, 155 21 Prague 5, Czech Republic

EU Sales office for Smart meter, IoT and energy saving products

342,448 11,486 4,420 7,066 481 -2,189 -1,427 -

Absolute Alpha Limited 50,000 100 - - 50,000 100 December, 2009

Vistra Corporate Services Centre, WickhamsCayII,Road Town, Tortola, VG1110,BritishVirginIslands

Business Investment 3,190 20,525 - 20,525 - -39 25 0.50

TatungMyanmarJointVenture Holding Co., Ltd.

- - 150,000 100 150,000 100 January,2016 Vistra Corporate Services Centre, WickhamsCayII,Road Town, Tortola, VG1110,BritishVirginIslands


Tatung Information Technology(Jiangsu)Co., Ltd.

- - - 100 - 100 December, 1999

No.555,JiangxingE.Road,JingjiTechnology Development Area,WujiangCity,JiangsuP.R.C

Manufacturing and selling of electronics and home appliances

925,183 111,010 509,087 -398,077 107,300 4,869 -12,264 -


- - - 100 - 100 September, 2004

No.38, Sheng Hui N. Road, Nantou Town, Zhongshan City,Guangdong,P.R.C.

Manufacturing and selling of reciprocating refrigerating compressors and its components

341,472 514,677 140,826 373,851 441,323 10,708 11,933 -


- - - 100 - 100 December, 1995

Room 901, No. 605 Fangta N. Road, Songjiang Dist., Shanghai, P.R.C

Motors, generators, transformers 704,530 1,470,341 632,513 837,828 497,460 -227,002 -224,680 -

Note1: Exchangerateforbalancesheetitems(currentrate):USD(29.98000)SGD(22.28000)THB(1.00980)JPY(0.27600)CZK(1.32257)RMB(4.30500)MMK(0.02030)

Note2: Exchange rate for incomestatement items (average rate):USD(30.91269)SGD(22.66589) THB(1.00086)JPY(0.28367)CZK(1.34899)RMB(4.47261)MMK(0.02026)

(III) Business scope of Tatung and its investees and the correlation of their business activitiesThe Company and its affiliates are primarily engaged in electronic information, home appliances, and industrial appliance businesses. In general, the correlation of our business activities is formed by mutual support in production, sales, marketing and servicetomaximizethesynergyofTatungGroupensuringasuccessfuldeliveryofthebestandmostefficientservicetoourcustomers.









Tatung Co. of America, Inc.

1,750,000 50.00 - - 1,750,000 50.00 September, 1972

2850 El Presidio Street, Long Beach, CA 90810, U.S.A.

Sale and service of electronic products and home appliances

135,225 368,474 1,417,110 -1,048,636 930,040 -101,636 -1,273,244 -363.78


1,000,000 100 - - 1,000,000 100 July,1988 14381 Chambers Road, Tustin, CA 92780, U.S.A.

Sale and service of heavy-industry products

121,184 206,163 44,455 161,708 269,006 2,658 3,859 3.86

Tatung Czech s.r.o. - 100 - - - 100 December, 2003

Na Radosti 184/59, 155 21 Prague 5, Czech Republic

EU Sales office for Smart meter, IoT and energy saving products

342,448 11,486 4,420 7,066 481 -2,189 -1,427 -

Absolute Alpha Limited 50,000 100 - - 50,000 100 December, 2009

Vistra Corporate Services Centre, WickhamsCayII,Road Town, Tortola, VG1110,BritishVirginIslands

Business Investment 3,190 20,525 - 20,525 - -39 25 0.50


- - 150,000 100 150,000 100 January,2016 Vistra Corporate Services Centre, WickhamsCayII,Road Town, Tortola, VG1110,BritishVirginIslands


Tatung Information Technology(Jiangsu)Co., Ltd.

- - - 100 - 100 December, 1999

No.555,JiangxingE.Road,JingjiTechnology Development Area,WujiangCity,JiangsuP.R.C

Manufacturing and selling of electronics and home appliances

925,183 111,010 509,087 -398,077 107,300 4,869 -12,264 -


- - - 100 - 100 September, 2004

No.38, Sheng Hui N. Road, Nantou Town, Zhongshan City,Guangdong,P.R.C.

Manufacturing and selling of reciprocating refrigerating compressors and its components

341,472 514,677 140,826 373,851 441,323 10,708 11,933 -


- - - 100 - 100 December, 1995

Room 901, No. 605 Fangta N. Road, Songjiang Dist., Shanghai, P.R.C

Motors, generators, transformers 704,530 1,470,341 632,513 837,828 497,460 -227,002 -224,680 -

Note1: Exchangerateforbalancesheetitems(currentrate):USD(29.98000)SGD(22.28000)THB(1.00980)JPY(0.27600)CZK(1.32257)RMB(4.30500)MMK(0.02030)

Note2: Exchange rate for incomestatement items (average rate):USD(30.91269)SGD(22.66589) THB(1.00086)JPY(0.28367)CZK(1.34899)RMB(4.47261)MMK(0.02026)

(III) Business scope of Tatung and its investees and the correlation of their business activitiesThe Company and its affiliates are primarily engaged in electronic information, home appliances, and industrial appliance businesses. In general, the correlation of our business activities is formed by mutual support in production, sales, marketing and servicetomaximizethesynergyofTatungGroupensuringasuccessfuldeliveryofthebestandmostefficientservicetoourcustomers.


Special Disclosures

(IV) Directors, supervisors and presidents of investeesAs of 31 March 2020

Name of investees Title Name or representative ShareholdingShares %

Chunghwa Picture Tubes, Ltd.

Representatives of Tatung Company: 1,850,745,168 28.56%

Chairman Jiang–longTsay 20,000 -

Director Chi-Fang Huang - -

Representatives of Chunghwa Electronics Development Co., Ltd.:

577,821,932 8.92%

Director Ho-Long Lin - -Director Wen-JuiChen - -

Representatives of Chih Sheng Realty Co., Ltd. 141,871,033 2.19%Supervisor Yuan-Sun Tang - -Supervisor Chang-Chuan Lin - -

President Chun-Ming Liu - -Tatung System Technologies Inc.

Director Wen-YenK.Lin 3,049 -

Representatives of Tatung Company: 37,819,027 42.70%Chairman Bo-Yen Shen 648,623 0.73%Director Tzu-Te Chen - -

Director Shih-Kuang Tsai - -Director Chi-WeiChen - -

Independent Director Ho-Ping Yen - -Independent Director Pao-Chung Ho - -Independent Director Chao-TungWen - -

President Yin-Hsiu, Liu 248,654 0.28%Forward Electronics Co., Ltd. Representatives of Tatung Company: 18,955,623 12.05%

Chairman Tzu-Te Chen 4,404,000 2.80%Director Wen-YenK.Lin - -

Director and President Meng-Chi Hsu - -Director Chieh-Ming Tseng 90 -Director Jian-PyngHsu - -

Director Ju-PingYuan - -

Independent Director Yang-Ping Shen - -Independent Director Chia-NanWang - -Independent Director Danny-JLay - -

Shan Chih Semiconductor Co., Ltd.

Director Wen-YenK.Lin 40,645 0.04%

Representatives of Tatung Company: 49,913,576 43.18%Chairman and President Lung-Ta Lee 105,578 0.09%Director Chang-ping Lin 10,838 0.01%Director Lung-ChiehWang - -

Director Chia-Ying Ma - -


Representatives of Tatung Company: 6,612,155 100.00%Chairman and President Ke-Chi Chan - -Director Yin-Chih Chien - -Director Tsun-Yu Shih - -Director Chi-Fang Huang - -Director Hung-Ying Chang - -Supervisor Jui-KaiChang - -



As of 31 March 2020



Representatives of Tatung Company: 49,650,000 99.10%

Chairman Wen-ChiehPeng - -

Director Wen-YenK.Lin - -

Director and President Chung-Chi Chang - -

Director Shu-Li Chen - -

Director I-Hua Chang - -

Supervisor Chih-Hsin Cheng - -


Director Wen-YenK.Lin 153,102 0.20%


Chairman and President Yung-TsungWu - -

Director Lung-Ta Lee - -

Director Shu-Li Chen - -

Director Chia-Ying Ma - -

Independent Director Kuen-Chang Lee - -

Independent Director ChanJingChang - -

Independent Director Wu-HsunCheng - -



Chairman and President I-Hua Chang - -


Director Lung-ChiehWang - -

Director Wen-ChiehPeng - -

Supervisor Wen-KangHsu - -



Chairman and President Jui-KaiChang - -


Director I-Hua Chang - -

Director JungHuiWeng - -

Director Lung-Ta Lee - -

Representatives of Shan Chih Asset Development Co., Ltd.: 562,355 0.18%

Supervisor Yu-Sheng Su - -

Supervisor Yi-Chun Chen - -

Tatung Die Casting Co., Ltd. Representatives of Tatung Company: 153,000 51.00%

Chairman and President Jung-ChangHsieh - -

Director Chia-Tien Lin - -

Director Hsueh-shumr, Ho - -

Representatives of Mitsui Mining & Smelting Co., Ltd.: 147,000 49.00%

Director KenjiOkubo - -

Director Hiroyuki Nakazawa - -

Supervisor Chien-Cheng Yu - -

Supervisor Shoichi Komamura - -



Chairman and President Li-Min Chen - -



Director Hsiao-Ying Huang - -

Director Bo-Yen Shen - -

Supervisor Pei-Chun Hsieh - -


Special Disclosures

As of 31 March 2020



Representatives of Tatung Company: 18,500,000 86.05%Chairman Yuan-Sun Tang - -Director Wen-YenK.Lin - -Director and President Wen-JuiChen - -Director Chia-Tien Lin - -Director Yung-Yu Chen - -

Supervisor Shu-Li Chen - -Shan Chih Investment Co., Ltd.

Representatives of Tatung Company: 77,627,119 95.83%Chairman and President Shu-Li Chen - -Director Cheng-Chieh Yang - -Director Lung-ChiehWang - -

Representatives of Chunghwa Electronics Development Co., Ltd.

3,376,213 4.17%

Supervisor Jui-KaiChang - -Chih Sheng Investment Co., Ltd.

Representatives of Tatung Company: 150,000,000 100.00%Chairman Wen-ChiehPeng - -Director Shu-Li Chen - -Director Wen-YenK.Lin - -Director and President Jui-KaiChang - -Director Lung-Ta Lee - -Supervisor Chih-Hsin Cheng - -


Representatives of Tatung Company: 158,558,308 99.10%Chairman Ho-Long Lin - -Director Yu-Tzu, Chang - -Director Wen-YenK.Lin - -Director Jui-KaiChang - -Director Hsiao-Ying Huang - -

Supervisor Yi-Fang Chen - -

President Yun-WeiHuang - -Tung Yang Energy Co., Ltd. Representatives of Tatung Company: 40,000,000 100.00%

Chairman Ho-Long Lin - -Director Jui-KaiChang - -Director Hsiao-Ying Huang - -Supervisor Chih-Hsin Cheng - -

President Yun-WeiHuang - -Chih Kuang Energy Co., Ltd. Representatives of Tatung Company: 40,000,000 100.00%

Chairman Ho-Long Lin - -Director Wen-YenK.Lin - -Director Yu-Tzu Chang - -Director Jui-KaiChang - -Director Hsiao-Ying Huang - -Supervisor Chih-Hsin Cheng - -

President Yun-WeiHuang - -Shang Shih Energy Co., Ltd. Representatives of Tatung Company: 9,010,000 100.00%

Chairman Ho-Long Lin - -Director Wen-YenK.Lin - -Director Yu-Tzu Chang - -Director Jui-KaiChang - -Director Hsiao-Ying Huang - -Supervisor Chih-Hsin Cheng - -

President Yun-WeiHuang - -



As of 31 March 2020


Yau Yang Energy Co., Ltd. Representatives of Tatung Company: 500,000 100.00%Chairman Ho-Long Lin - -Director JungHuiWeng - -Director Yu-Chin Huang - -Director Shu-WenLinDirector Hsin-Yin HsiehSupervisor Yi-Chun Chen - -

President Yun-WeiHuang - -Ting Shin Energy Co., Ltd. Representatives of Tatung Company: 3,010,000 100.00%

Chairman Ho-Long Lin - -Director JungHuiWeng - -Director Shing-JyeTsai - -Director Feng-Chi HsuDirector Shao-Lien YeaSupervisor Sheng-Yuan Su - -

President Yun-WeiHuang - -Zhi Shin Energy Co., Ltd. Representatives of Tatung Company: 4,000,000 100.00%

Chairman Ho-Long Lin - -Director JungHuiWeng - -Director Yu-Ru Yeh - -Director Pei-Chun HsiehDirector Yi-Fang ChenSupervisor Pu-MingJian - -

President Yun-WeiHuang - -Tatung (Thailand)Co., Ltd. Representatives of Tatung Company: 110,999,998 99.99%

Chairman Ming-Yuan Hsieh - -Director Chieh-Ming Tseng - -Director Shueei-Tian Shiue - -Director Shu-Li Chen - -Director Chia-Tien Lin - -Director Chung-Chi Chang - -

President Chun-Rong Lu - -TatungCompanyofJapan,Inc.

Representatives of Tatung Company: 1,015,000 100.00%Chairman Hsieh-JangChang - -Director Wen-YenK.Lin - -Director Wen-ChiehPeng - -Director Chieh-Ming Tseng - -Director Kwo-Shun Chen - -Director Ming-Tse Hsu - -Director Ho-Long Lin - -

Supervisor Cheng-Chieh Yang - -Supervisor Shu-Li Chen - -

President Ming-Te Yu - -Tatung Information (Singapore) Pte. Ltd.


Chairman Wen-YenK.Lin - -

Director Chee-Cherng Yang - -Tatung Electric (Singapore) Pte. Ltd.


Chairman Chee-Cherng Yang - -

Director Shu-Fen Chen - -


Special Disclosures

As of 31 March 2020


Tatung Co. of America, Inc. Chairman Christina Sun 875,000 25.00%

Director Andrew L. Sun 875,000 25.00%

Director Ta-Kuan Huang Lin - -

Director Ching-Kuan Chan Lin - -

Tatung Electric Co., of America, Inc.


Chairman Shueei-Tian Shiue - -

Director Ming-Tse Hsu - -

Director Yung-FengWang - -

Director Kwo-Shun Chen - -

Director Chia-Tien Lin - -

President Chi-Hua Lan - -

Tatung Czech s.r.o. Representatives of Tatung Company: - 100.00%


Director Ho-Long Lin - -

Absolute Alpha Limited Representatives of Tatung Company: 50,000 100.00%



Director Cheng-Chieh Yang - -

Director Yi-Chun Chen - -


Representatives of Tatung Information (Singapore) Pte. Ltd.: 150,000 100.00%


Tatung Information Technology(Jiangsu)Co.,Ltd.

Representatives of Tatung Information (Singapore) Pte. Ltd.: - 78.40%

Representatives of Chih Sheng Holding HK Limited: - 21.60%

Chairman Chung-Chi Chang - -

Director Ssu-Kai Lin - -


Director Kao-Chung Chang - -

Director Tang-Ping Tu - -


Representatives of Tatung Information (Singapore) Pte. Ltd.: - 79.89%

Shan Chih Investment Co., Ltd.: - 20.11%

Chairman Kuo-Hua Chung - -

Director Chao-Ching Chen - -


Supervisor Yu-Sheng Su - -

Tatung (Shanghai) Co., Ltd. Representatives of Tatung Electric (Singapore) Pte. Ltd.: - 87.23%

Shan Chih Investment Co. Ltd.: - 12.77%

Chairman Shueei-Tian Shiue - -


Director Kwo-Shun Chen - -

Director Ho-Long Lin - -

Director An Chao - -

Supervisor Jui-KaiChang - -

President Tsun-Chih Tsou - -

Securities issuance through private placement: None.



Holdings and sale of shares by subsidiariesAs of March 31, 2020 Unit: NT$ Thousand, %

Name Paid-in capital

Source of funding


by the Company

Date of acquisition or disposal

Shares and amount of acquisition

Shares and amount of

disposalInvestment

income

Shares and amount held

up to the publishing

date of the annual

report(Note 2)

Balance of

pledged shares

Amount of endorsement/

guarantee made by the

Company

Amount of financing provided

by the Company


3,165,737 Owncapital

94.01% - - - - 586 shares 11

thousand NTD

- - -

Chunghwa P.T. (Bermuda) Ltd.


- Apr.-Jul.,2019

- 59,652,985 shares

1,267,063 thousand

NTD(Note 1)

- - - - -



12.05% - - - - 4,475,000 shares 87,710

thousand NTD

- - -

Note 1: The related disposal loss of Chunghwa P.T.(Bermuda) Ltd., with 1,902,277 thousand NTD recognized in Retained earnings didn’t related to current profit and loss.

Note 2: The amount held up to the publishing date of the annual report calculated with NT$19.6 which is the share price on March 31, 2020 of Tatung Co.

Other necessary supplementary information: None.

Any Events in 2019 and as of the Date of this Annual Report that Had Significant Impacts on Shareholders’ Right or Security Prices as Stated in Item 3 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None.

Appendix - Consolidated statements


1

TATUNG CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH INDEPENDENT AUDITORS’ REPORT

December 31, 2019 AND 2018

Address: 22, Sec. 3, Chung-shan N. Rd., Taipei city, Taiwan R.O.C. Telephone: 886-2-2592-5252

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.

Appendix - Consolidated statements Appendix - Consolidated statements


2

REPRESENTATION LETTER

The subsidiaries included in the consolidated financial statements as of December 31, 2019 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: Wen-Yen K. Lin

March 12, 2020



3

Independent Auditors’ Report

English Translation of a Report Originally Issued in Chinese The Board of Directors and Shareholders 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, 2019 and 2018, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2019 and 2018, and notes to the consolidated financial statements including a 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, 2019 and 2018, and their consolidated financial performance and cash flows for the years ended December 31, 2019 and 2018, 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 Certification of Financial Statements by Certified Public Accountants, No.1090360805 letter issued by the Financial Supervisory Commission on 25 February 2020, 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.



4

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, 2019 using liquidation assumption. Our conclusion is not modified in respect of this matter. Emphasis of Matter–Derecognition of certain subsidiaries As mentioned in Note 4(2) and Note 6(33) in the consolidated financial statements, Green Energy Technology Co., Ltd. (“GET”), was resolved for dissolution and liquidation by the provisional shareholders’ meeting on August 30, 2019. As the Group lost control of GET and its subsidiaries, the consolidated financial statements derecognized the assets and liabilities of GET and its subsidiaries and recognized the profits (losses) of derecognition. Our conclusion is not modified in respect of this matter. Emphasis of Matter – Application of New Accounting Standards As stated in Note 3 to the consolidated financial statements, the Company and its subsidiaries applied the International Financial Reporting Standard 16, “Leases” starting from January 1, 2019, and elected not to restate the consolidated financial statements for prior periods. 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 2019 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$ 35,423,015 thousand in 2019. 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.



5

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 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.

2. 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.

3. Assessment of fair value of investment property Investment property of the Group constituted 24% of consolidated total assets as of December 31, 2019. 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.



6

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; discussing with the appraiser about the professional judgement difference; 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.

4. Non-financial Assets Impairment As of December 31, 2019, the net value of property, plant and equipment accounted for 29% of the total consolidated asset of the Group, which is deemed material to the consolidated financial statements of the Group. The Company and its subsidiaries operated diversification business model, therefore some of the products experienced larger market fluctuation and adverse changes, which indicated a possibility of impairment of property, plant and equipment as of December 31, 2019. In addition, the assessment process of impairment of aforementioned non-financial assets relied highly on the subjective judgment and involves uncertainty in estimation. Therefore, we considered this a key audit matter. Our audit procedures included, but not limited to obtaining representation letter; examining the evaluation of the Group made on possibility of impairment of property, plant and equipment and cash generating unit; obtaining information on assessing the recoverable amount and assumptions. We also examined the historical and other business’ financial information to evaluate whether the assumptions such as sales growth rate, gross margin and operating profit margin applied in the cash flow forecast are reasonable and are in conformity. The recoverable amounts were calculated based on the external appraiser the Group appointed by deducting costs of disposal from fair value. We evaluated the objectivity, proficiency and reputation of the appraiser to confirm its reliability. Meanwhile, we relied on the internal expert to evaluate the relevance and reliability of methodology, assumptions, information and important parameters, such as discount rate used when assessing possibility of impairment of property, plant and equipment. Please refer to Notes 4, 5 and 6 to the consolidated financial statements for the disclosure of assets impairment assessment of the Group.

5. The Judgement of Consolidated Entities According to IFRS 10, an investor is the parent company of the investee when the investor has control over the investee regardless of how the investor participates in the investment. Since the Group holds less than 50% of the shares of some consolidated entities, and the judgment of whether the Company has control over the consolidated entities would directly affect the consolidated financial statements, we considered this a key audit matter.



7

Our audit procedures included, but not limited to, obtaining the group structure chart; investigating changes in group structure; inspecting the comprehensive shareholding percentage of each consolidated entity; analyzing the composition of the board of directors and management, the changes of board members over the years, shareholding percentages of the top ten shareholders, attendance rate in shareholders meetings, and related investment contracts to confirm whether the Company has identified all the consolidated entities and the appropriateness of the Company’s evaluation of the control over its consolidated entities. Please refer to Note 4,5 and 6 to the consolidated financial statements for the consolidation status of the Group as of December 31, 2019.

Other Matter – Making Reference to the Audits of Component Auditors We did not audit the financial statements of certain consolidated subsidiaries, which statements reflected total assets in the amount of NT$2,347,883 thousand and NT$2,748,141 thousand, constituting 2% and 2% of consolidated total assets as of December 31, 2019 and 2018, respectively; and total operating revenues in the amount of NT$2,035,476 thousand and NT$2,414,439 thousand, constituting 6% and 4% of consolidated operating revenues for the years ended December 31 2019 and 2018, respectively. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method whose statements are based solely on the reports of other auditors. The investment in these associates and joint ventures under equity method amounted to NT$3,585,213 thousand and NT$3,626,573 thousand, accounting for 3% and 3% of consolidated total assets as of December 31, 2019 and 2018, respectively. The related shares of profits (losses) recognized from the associates and joint ventures under the equity method amounted to NT$(12,009) thousand and NT$2,857 thousand, accounting for 0% and 0% of the consolidated net income (loss) before tax for the years ended December 31 2019 and 2018, respectively; and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$(37,900) thousand and NT$(16,607) thousand, accounting for (595)% and 2% of the consolidated other comprehensive income, net, for the years ended December 31, 2019 and 2018, respectively. 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, interpretation as well as related guidance endorsed 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.



8

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 (inclusive of the Audit Committee) are responsible for overseeing the Group’s financial reporting process. Auditor’s 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 auditor’s 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 auditing standards generally accepted in 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 auditing standards generally accepted in the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also: 1. Identified and assessed 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 result ing from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtained 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 Company’s internal control.

3. Evaluated the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management. 4. Concluded 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s 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 auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.



9

5. Evaluated 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. Obtained sufficient appropriate audit evidence regarding the financial information of the entities

or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit, and forming the group audit opinion.

We communicated 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 identified during our audit. We also provided those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicated 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 determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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. Other We have audited and expressed an unqualified opinion including emphasis matters paragraph and other matters paragraph on the parent company only financial statements of the Company as of and for the years ended December 31, 2019 and 2018. Su-Wen Lin Hsuan-Hsuan Wang Ernst & Young, Taiwan March 25, 2020 Notice to Readers The accompanying financial statements are intended only to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China on Taiwan and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China on Taiwan.



Amou

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Cash

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37

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480,

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45,4

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16,1

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1,06

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1,79

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2,28

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68,0

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20,2

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33,9

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1,36

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28,1

57,0

2824

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60,7

98-

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98-

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907,

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678,

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13,

545,

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able

87,8

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t 29

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78,5

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6166

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ets

$118

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100

$139

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100

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Tho

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f New

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f Dec

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201

9 an

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8

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10



Liab

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pay

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56

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2,80

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3,21

7,69

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pay

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43,0

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12,8

78,5

3411

13,2

02,3

379

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6,65

6,22

96

7,74

7,34

96

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- re

lated

par

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576,

255

- 11

8,46

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x lia

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,723

- 96

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6,45

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338,

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422,

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637,

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54,8

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s6,

236,

497

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58,7

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125,

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1,47

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s35

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3139

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3,08

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3,28

3,03

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36,3

54-

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120,

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er co

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sive i

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1,06

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266,

779

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- 30

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er eq

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s(4

05,4

25)

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20)

- Tr

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(30,

854)

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36,6

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0831

33,0

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2324

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)(7

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28,6

55,9

0624

30,9

25,9

1122

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18,9

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0$1

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201

9 an

d De

cem

ber 3

1, 2

018

(Exp

ress

ed in

Tho

usan

ds o

f New

Taiw

an D

ollar

s)

Dece

mbe

r 31,

201

9De

cem

ber 3

1, 2

018

Cont

ents

11



Contents Amount % Amount %Operating revenues $35,830,085 101 $61,484,530 101Less: Sales returns (182,710) - (467,993) (1)Less: Sales allowances (224,360) (1) (393,812) - Net operating revenues 35,423,015 100 60,622,725 100Operating costs (33,066,078) (94) (63,084,519) (104)Gross profit (loss) 2,356,937 6 (2,461,794) (4)

Operating expensesSales and marketing (3,133,910) (9) (3,819,556) (6)General and administrative (3,385,803) (9) (4,688,466) (8)Research and development (1,483,581) (4) (4,232,937) (7)Expected credit losses (613,024) (2) (321,230) (1)

Subtotal (8,616,318) (24) (13,062,189) (22)Net other income and expense (5,934) - 40,856 - Operating loss (6,265,315) (18) (15,483,127) (26)

Non-operating income and expensesOther income 1,511,779 4 2,109,224 3Other gains and (losses) (1,535,059) (4) (14,627,129) (24)Finance costs (2,639,818) (7) (3,961,963) (7)Expected credit (losses) gains (87,973) - 16,811 - Share of profit (losses) of associates and joint ventures accounted for using equity method 136,421 - 108,159 -

Subtotal (2,614,650) (7) (16,354,898) (28)

Loss before income tax (8,879,965) (25) (31,838,025) (54)Income tax expense (275,496) (1) (1,454,883) (2)Net Loss (9,155,461) (26) (33,292,908) (56)

Other comprehensive income (loss)Items that will not be reclassified subsequently to profit or loss:

Remeasurements of defined benefit plans (25,812) - 49,091 - Revaluation surplus of real estate 278,767 - - - Unrealized gains or losses from equity instruments investments measured at fair value (101,622) - (283,446) -

through other comprehensive income Share of other comprehensive income of associates and joint ventures which will 3,008 - 2,439 -

not be reclassified subsequently to profit or lossIncome tax related to items that will not to be reclassified subsequently (11,488) - (416,246) (1)

Items that may be reclassified subsequently to profit or loss:Exchange differences arising on translation of foreign operations (102,590) - 220,482 - Equity related to non-current assets classified as held for sale - - 30,955 - Share of other comprehensive income (loss) of associates and joint ventures which may be (41,835) - (21,561) -

reclassified subsequently to profit or lossIncome tax related to items that may be reclassified subequently 7,940 - (369,271) (1)

Total other comprehensive income (loss) , net of income tax 6,368 - (787,557) (2)Total comprehensive income (loss) $(9,149,093) (26) $(34,080,465) (58)

Net income (loss) attributable to:Shareholders of the parent $2,875,879 $(10,642,906)Non-controlling interests (12,031,340) (22,650,002)

$(9,155,461) $(33,292,908)Total comprehensive income (loss) attributable to:

Shareholders of the parent $3,288,201 $(10,741,961)Non-controlling interests (12,437,294) (23,338,504)

$(9,149,093) $(34,080,465)Earnings (loss) per share

Basic earnings (loss) per share (NT$) $1.24 $(4.75)

Diluted earnings (loss) per share (NT$) $1.24 $(4.75)

Amount2019 2018 2019For the years ended December 31 January 1 to September 30

English Translation of Consolidated Financial Statements Originally Issued in Chinese

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFor the Years Ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Share)

TATUNG CO., LTD. AND SUBSIDIARIES

12



Cont

ents

Com

mon

Sto

ckCa

pital

Res

erve

Lega

l Res

erve

Spec

ial R

eser

ve

Unap

prop

riated

Ea

rnin

gs(A

ccum

ulate

d De

ficits

)

Exch

ange

Di

ffere

nces

on

Tran

slatio

n of

Fo

reig

n Op

erati

ons

Gain

or L

oss

from

Inve

stmen

ts in

Equ

ity

Instr

umen

ts M

easu

red

at Fa

ir Va

lue t

hrou

gh

Othe

r Co

mpr

ehen

sive

Inco

me

Reva

luati

on

Surp

lus o

f Rea

l Es

tate

Equi

ty Re

lated

to

Non-

curre

nt

Asse

ts Cl

assif

ied

as H

eld fo

r Sale

Trea

sury

Sto

ckTo

tal

$23,

395,

367

$3,2

73,5

05$3

6,35

4$4

,753

,026

$13,

855,

398

$(1,

098,

677)

$617

,279

$-

$-

$(1,

629,

899)

$43,

202,

353

$55,

738,

737

$98,

941,

090

- -

- 13

,855

,398

(13,

855,

398)

- -

- -

- -

- -

Spec

ial re

serv

e use

d to

offs

et ac

cum

ulate

d de

ficits

- -

- (2

81,0

15)

281,

015

- -

- -

- -

- -

Net l

oss i

n 20

18-

- -

- (1

0,64

2,90

6)-

- -

- -

(10,

642,

906)

(22,

650,

002)

(33,

292,

908)

Othe

r com

preh

ensiv

e (lo

ss) i

ncom

e in

2018

- -

- -

(35,

631)

342,

240

(436

,618

)-

30,9

54-

(99,

055)

(688

,502

)(7

87,5

57)

- -

- -

(10,

678,

537)

342,

240

(436

,618

)-

30,9

54-

(10,

741,

961)

(23,

338,

504)

(34,

080,

465)

Disp

osal

of su

bsid

iaries

or i

nves

tmen

ts ac

coun

ted fo

r usin

g eq

uity

meth

od-

- -

- -

- -

- -

- -

(34,

778,

121)

(34,

778,

121)

Subs

idiar

y disp

osal

of p

aren

t com

pany

shar

es is

trea

ted as

trea

sury

shar

es-

115,

169

- -

- -

- -

- 41

5,87

853

1,04

782

7,78

41,

358,

831

Acqu

isitio

n or

disp

osal

of su

bsid

iaries

' sha

res

- -

- -

- -

- -

- -

- (1

06,0

90)

(106

,090

)

Chan

ges i

n ow

nersh

ip in

teres

ts in

subs

idiar

ies-

(105

,642

)-

- 11

4,32

6-

- -

- -

8,68

452

4,70

553

3,38

9

Chan

ges i

n no

n-co

ntro

lling

inter

ests

- -

- -

- -

- -

- -

- (9

42,7

23)

(942

,723

)

- -

- -

39,5

98-

(39,

598)

- -

- -

- -

Balan

ce as

of

Dece

mbe

r 31,

201

8$2

3,39

5,36

7$3

,283

,032

$36,

354

$18,

327,

409

$(10

,243

,598

)$(

756,

437)

$141

,063

$-

$30,

954

$(1,

214,

021)

$33,

000,

123

$(2,

074,

212)

$30,

925,

911

$23,

395,

367

$3,2

83,0

32$3

6,35

4$1

8,32

7,40

9$(

10,2

43,5

98)

$(75

6,43

7)$1

41,0

63$-

$3

0,95

4$(

1,21

4,02

1)$3

3,00

0,12

3$(

2,07

4,21

2)$3

0,92

5,91

1

Spec

ial re

serv

e use

d to

offs

et ac

cum

ulate

d de

ficits

- -

- (1

0,24

3,59

8)10

,243

,598

- -

- -

- -

- -

Reve

rsal o

f spe

cial r

eser

ve-

- -

(345

,792

)34

5,79

2-

- -

- -

- -

-

Net l

oss i

n 20

19-

- -

- 2,

875,

879

- -

- -

- 2,

875,

879

(12,

031,

340)

(9,1

55,4

61)

Othe

r com

preh

ensiv

e (lo

ss) i

ncom

e in

2019

- -

- -

(26,

842)

(22,

903)

195,

288

266,

779

- -

412,

322

(405

,954

)6,

368

- -

- -

2,84

9,03

7(2

2,90

3)19

5,28

826

6,77

9-

- 3,

288,

201

(12,

437,

294)

(9,1

49,0

93)

Subs

idiar

y disp

osal

of p

aren

t com

pany

shar

es is

trea

ted as

trea

sury

shar

es-

- -

- (7

62,4

03)

- -

- -

1,18

3,16

742

0,76

476

2,40

31,

183,

167

Disp

osal

of su

bsid

iaries

or i

nves

tmen

ts ac

coun

ted fo

r usin

g eq

uity

meth

od-

- -

- -

- -

- -

- -

5,45

4,83

05,

454,

830

Chan

ges i

n ow

nersh

ip in

teres

ts in

subs

idiar

ies-

80,0

53-

- (1

32,8

33)

- -

- -

- (5

2,78

0)31

5,02

726

2,24

7

Chan

ges i

n no

n-co

ntro

lling

inter

ests

- -

- -

- -

- -

- -

- (2

1,15

6)(2

1,15

6)

- -

- -

260,

169

- (2

60,1

69)

- -

- -

- -

Balan

ce as

of D

ecem

ber 3

1, 2

019

$23,

395,

367

$3,3

63,0

85$3

6,35

4$7

,738

,019

$2,5

59,7

62$(

779,

340)

$76,

182

$266

,779

$30,

954

$(30

,854

)$3

6,65

6,30

8$(

8,00

0,40

2)$2

8,65

5,90

6

Disp

osal

of eq

uity

instr

umen

ts m

easu

red

at fa

ir va

lue t

hrou

gh o

ther

com

preh

ensiv

e inc

ome

( Ex

pres

sed

in T

hous

ands

of N

ew T

aiwan

Dol

lars)

Engl

ish T

rans

latio

n of

Fin

ancia

l Stat

emen

t Orig

inall

y Iss

ued

in C

hine

se

TATU

NG C

O., L

TD.A

ND S

UBSI

DIAR

IES

CONS

OLID

ATED

STA

TEM

ENTS

OF

CHAN

GES

IN E

QUIT

Y

For t

he Y

ears

Ende

d De

cem

ber 3

1, 2

019

and

2018

Disp

osal

of eq

uity

instr

umen

ts m

easu

red

at fa

ir va

lue t

hrou

gh o

ther

com

preh

ensiv

e inc

ome

Equi

ty At

tribu

table

to E

quity

Hol

ders

of th

e Par

ent

Non-

cont

rolli

ng

Inter

ests

Total

Equ

ity

Retai

ned

Earn

ings

Total

com

preh

ensiv

e (lo

ss) i

ncom

e

Balan

ce as

of J

anua

ry 1

, 201

9

Total

com

preh

ensiv

e (lo

ss) i

ncom

e

Othe

r Cap

ital R

eser

ves

Balan

ce as

of J

anua

ry 1

, 201

8

Spec

ial re

serv

e app

ropr

iated

(Sec

uriti

es &

Fut

ures

Bur

eau,

Fin

ancia

l Sup

ervi

sory

Com

miss

ion

Lette

r No.

1030

0064

15)

13



Cash

flow

s fro

m o

pera

ting

activ

ities

:Ca

sh fl

ows f

rom

inve

sting

activ

ities：

Net

loss

bef

ore i

ncom

e tax

$(8,

879,

965)

$(31

,838

,025

)D

ispos

al of

fina

ncial

asse

ts at

fair

valu

e thr

ough

oth

er co

mpr

ehen

sive i

ncom

e31

3,07

684

,024

Acqu

isitio

n of

fina

ncial

asse

ts at

amor

tised

cost

(7,1

60,3

32)

(18,

008,

330)

Adju

stmen

ts to

reco

ncile

cons

olid

ated

net (

loss

) inc

ome t

o ne

t cas

h ge

nera

ted fr

om o

pera

ting

activ

ities

:D

ispos

al of

fina

ncial

asse

ts at

amor

tised

cost

6,60

2,27

331

,178

,829

Dep

recia

tion

expe

nse

3,71

5,40

38,

899,

090

Acqu

isitio

n o

f inv

estm

ents

acco

unted

for u

sing

equi

ty m

ethod

(5,0

00)

(2,5

62)

Amor

tizati

on ex

pens

e53

,523

303,

886

Proc

eeds

from

disp

osal

of su

bsid

iaries

181,

373

- Ex

pecte

d cr

edit

loss

es70

0,99

730

4,41

9Ca

sh re

fund

capi

tal re

ducti

on o

f inv

estm

ents

acco

unted

for u

nder

the e

quity

meth

od12

,000

- N

et ga

in fr

om fi

nanc

ial as

set o

r liab

ility

at fa

ir va

lue t

hrou

gh p

rofit

or l

oss

(4,4

95)

(117

,946

)D

ispos

al of

non

-cur

rent

asse

ts he

ld fo

r sale

- (2

66,4

08)

Inter

est e

xpen

se2,

639,

818

3,96

1,96

3Ac

quisi

tion

of p

rope

rty, p

lant a

nd eq

uipm

ent

(2,1

38,4

33)

(8,2

06,2

42)

Inter

est i

ncom

e(9

0,38

8)(6

36,9

96)

Disp

osal

of p

rope

rty, p

lant a

nd eq

uipm

ent

12,5

36,3

4034

8,63

9D

ivid

end

inco

me

(56,

166)

(80,

193)

Incr

ease

in re

ceip

ts in

adva

nce d

ue to

disp

osal

of as

sets

488,

718

100,

168

Shar

e of p

rofit

of a

ssoc

iates

and

join

t ven

ture

s (1

36,4

21)

(108

,159

)Ac

quisi

tion

of in

tangi

ble a

ssets

(40,

332)

(123

,256

)G

ain o

n di

spos

al of

pro

perty

, plan

t and

equi

pmen

t (9

,236

,597

)(1

89,3

15)

Disp

osal

of in

tangi

ble a

ssets

(29,

597)

273

Prop

erty

, plan

t and

equi

pmen

t of t

he tr

ansfe

r of e

xpen

ses

84,3

4814

6,97

7Ac

quisi

tion

of in

vestm

ent p

rope

rty-

(9,1

34)

Gain

on

disp

osal

of n

on-c

urre

nt as

sets

held

for s

ale-

(13,

535)

Dec

reas

e in

long

-term

rece

ivab

le35

,852

9,08

5(G

ain) L

oss o

n di

spos

al of

inve

stmen

ts(2

88,8

96)

6,53

1,54

2In

crea

se in

oth

er n

on-c

urre

nt as

set

(4,2

65)

(3,3

83,6

21)

Impa

irmen

t los

s on

non-

finan

cial a

ssets

9,

952,

036

3,13

0,44

4In

com

e tax

es p

aid(5

15,9

02)

- G

ain o

n fa

ir va

lue a

djus

tmen

t of i

nves

tmen

t pro

perty

(308

,972

)(5

04,5

96)

Oth

er in

vestm

ent a

ctivi

ties

(96,

321)

(11,

438,

962)

Loss

from

leas

e mod

ifica

tion

5,93

4-

Net

cash

pro

vide

d by

(use

d in

) inv

estin

g ac

tiviti

es10

,179

,450

(9,7

17,4

97)

Oth

er ad

justm

ents

(One

rous

cont

ract)

- 1,

493,

397

Chan

ges i

n as

sets

and

liabi

lities

from

ope

ratin

g ac

tiviti

es:

Cont

ract

asse

ts(5

9,83

0)(3

6,53

5)N

otes

rece

ivab

le22

0,06

968

,603

Acco

unts

rece

ivab

le1,

566,

361

335,

039

Acco

unts

rece

ivab

le - r

elated

par

ties

109,

546

(1,0

32,9

79)

Oth

er re

ceiv

ables

(8,9

61)

(515

,850

)O

ther

rece

ivab

les -

relat

ed p

artie

s(1

39,2

50)

- Ca

sh fl

ows f

rom

fina

ncin

g ac

tiviti

es ：

Inve

ntor

ies2,

923,

895

(1,1

75,3

12)

Incr

ease

in sh

ort-t

erm

loan

s17

,682

,709

50,9

83,5

13Pr

epay

men

ts28

1,85

5(3

81,6

27)

Dec

reas

e in

shor

t-ter

m lo

ans

(24,

704,

371)

(51,

442,

206)

Oth

er cu

rrent

asse

ts33

1,27

117

9,53

0In

crea

se in

shor

t-ter

m n

otes

and

bills

pay

able

854,

825

1,94

3,22

0Fi

nanc

e lea

se re

ceiv

able

(372

,643

)-

Dec

reas

e in

shor

t-ter

m n

otes

and

bills

pay

able

(731

,380

)(4

,080

,777

)O

pera

ting

lease

rece

ivab

le(1

1,59

6)-

Proc

eeds

from

long

-term

loan

s5,

089,

286

31,8

78,2

69Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh p

rofit

or l

oss

153,

131

(274

,455

)Re

paym

ent o

f lon

g-ter

m lo

ans

(8,3

22,9

34)

(28,

135,

698)

Oth

er n

on-c

urre

nt as

sets

(139

,069

)(3

54,9

61)

Incr

ease

(Dec

reas

e) in

gua

rant

ee d

epos

its8,

964

(14,

601)

Long

-term

Fin

ance

leas

e rec

eivab

le (2

9,31

7)-

Dec

reas

e in

long

-term

pay

ables

(46,

449)

(893

)Co

ntra

ct lia

bilit

ies69

2,72

157

6,75

3Pr

ocee

ds fr

om sa

le of

trea

sury

shar

es1,

120,

013

1,23

8,24

4N

otes

pay

able

163,

235

(1,9

26,0

14)

Paym

ents

of le

ase l

iabili

ties

(403

,704

)-

Acco

unts

paya

ble

(1,2

73,6

15)

928,

568

Chan

ge in

non

-con

trolli

ng in

teres

ts(2

1,15

6)(1

,359

,533

)Ac

coun

ts pa

yabl

e - re

lated

par

ties

(323

,934

)1,

117,

114

Net

cash

(use

d in

) pro

vide

d by

fina

ncin

g ac

tiviti

es(9

,474

,197

)1,

009,

538

Oth

er p

ayab

les1,

396,

425

2,08

1,76

6Pr

ovisi

on(3

07,3

88)

51,7

51Ad

vanc

ed re

ceip

ts41

,352

43,6

82O

ther

curre

nt li

abili

ties -

oth

ers

78,0

04(1

,098

,647

)N

et de

fined

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14


123 TATUNG 2019 Annual Report15

TATUNG CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars unless otherwise specified)

1. Organization Operations

Established in 1918, Tatung Company (the “Company”) was incorporated under the Company Act of the Republic of China (“R.O.C.”) and underwent reorganization in 1939. The total capital at that time was Taiwan Yuan $180,000, later increased to Taiwan Yuan $20,000,000 after several capital injections. After the reformation of monetary system in 1949, the total capital was converted to the equivalent of New Taiwan dollars (“NTD”) 200,000 thousand. As of December 31, 2019, the issued and registered capital was NTD23,395,367 thousand. The main activities of the Company are as follows: (1) The design, manufacture, sale, installation, network system, automation system, lease, service

maintenance, import and export as agency of the following products: ○1 Steel manufacturing machinery ○2 Industrial appliances ○3 Household appliances ○4 Refrigerators ○5 Air conditioners ○6 Metal processing machinery ○7 Electronic products ○8 Wire and cable ○9 Chemical industry ○10 Cookware ○11 Wood-made products ○12 Plastic products ○13 Office equipment ○14 Audio products ○15 Precision meters ○16 Transmission equipment ○17 Transportation facilities ○18 Healthcare products ○19 Microbe fermentation ○20 Construction ○21 Furniture ○22 Solar wafers ○23 Water treatment engineering ○24 Telecommunication equipment ○25 Parking facilities ○26 Automation machinery ○27 Semiconductors ○28 Real estate development and leasing

(2) Magazine publishing

(3) Customs brokerage

(4) General import/export (excluding permitted business)

(5) Development and leasing (excluding construction industry) of industrial parks on behalf of the competent authority.




(Expressed in Thousands of New Taiwan Dollars unless otherwise Specified)

16

The investment plans should be approved by the Board of Directors; however, the total investment amount is not limited to the amount provided by Article 13 of Company Act, which states that the total investment amount shall not exceed 40% of the amount of its own paid-in capital. The Company’s common shares were publicly listed on the Taiwan Stock Exchange (TWSE) on February 9, 1962. The Company’s registered office and the main business location locate at No. 22, Zhongshan North Road, Section 3, Taipei, Republic of China (R.O.C.).

2. Date and procedures of authorization of financial statements for issue The consolidated financial statements of the Company and its subsidiaries (“the Group”) for the year ended December 31, 2019 and 2018 were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on March 12, 2020.

3. Newly issued or revised standards and interpretations (1) Changes in accounting policies resulting from applying for the first-time certain standards and

amendments The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2019. The nature and the impact of each new standard and amendment that has a material effect on the Group is described below: (I) IFRS 16“Leases”

IFRS 16 “Leases” replaces IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC-15 “Operating Leases - Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”. The Group followed the transition provision in IFRS 16 and the date of initial application was January 1, 2019. The impacts arising from the adoption of IFRS 16 are summarized as follows: A. Please refer to Note 4 for the accounting policies before or after 1 January, 2019.





17

B. For the definition of a lease, the Group elected not to reassess whether a contract was,

or contained, a lease on January 1, 2019. The Group was permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4. That is, for contracts entered into (or changed) on or after January 1, 2019, the Group need to assess whether contacts are, or contain, leases applying IFRS 16. In comparing to IAS 17, IFRS 16 provides that a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group assessed most of the contracts are, or contain, leases and has no significant impact arose.

C. The Group is a lessee and elects not to restate comparative information in accordance

with the transition provision in IFRS 16. Instead, on January 1, 2019, the Group recognized the cumulative effect of initially applying IFRS 16 as an adjustment to the opening balance at the date of initial application. (a) Leases previously classified as operating leases

For leases that were previously classified as operating leases applying IAS 17, the Group measured and recognized those leases as lease liability on January 1, 2019 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019, and; the Group chose, amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet immediately before January 1, 2019, on a lease-by-lease basis, to measure the right-of-use asset at either. On January 1, 2019, the Group’s right-of-use asset and lease liability increased by NTD2,088,710 thousand and NTD1,812,646 thousand, respectively. Besides, on January 1, 2019, for leases that were previously classified as operating leases applying IAS 17 and those who have paid the rent in full, the Group reclassified the long-term rental prepayment of NTD276,064 thousand to the right-of-use asset. In accordance with the transition provision in IFRS 16, the Group used the following practical expedients on a lease-by-lease basis to leases previously classified as operating leases:





18

i. Apply a single discount rate to a portfolio of leases with reasonably similar

characteristics. ii. Rely on its assessment of whether leases are onerous immediately before

January 1, 2019 as an alternative to performing an impairment review. iii. Elect to account in the same way as short-term leases to leases for which the

lease term ends within 12 months of January 1, 2019. iv. Exclude initial direct costs from the measurement of the right-of-use asset

on January 1, 2019. v. Use hindsight, such as in determining the lease term if the contract contains

options to extend or terminate the lease.

(b) Leases previously classified as finance leases For leases that were previously classified as finance leases applying IAS 17, the Group reclassified the lease asset of NTD254,812 thousand and the lease payable of NTD121,170 thousand as measured by IAS 17 to the right-of-use asset of NTD254,812 thousand and the lease liability of NTD121,170 thousand, respectively, on January 1, 2019.

(c) Please refer to Note 4 and Note 6 for additional disclosure of lessee and lessor which required by IFRS 16.

(d) As at January 1, 2019, the impacts arising from the adoption of IFRS 16 are

summarized as follows: i. The weighted average lessee’s incremental borrowing rate applied to lease

liabilities recognized in the balance sheet on January 1, 2019 was 0.97% to 3.37%.

ii. The explanation for the difference of operating lease commitments disclosed applying IAS 17 as at December 31, 2018, discounted using the incremental borrowing rate on January 1, 2019; lease liabilities recognized in the balance sheet as at January 1, 2019, is summarized as follows:

Operating lease commitments disclosed applying IAS 17 as at

December 31, 2018

$1,575,614 Less: adjustment to leases that meet and elect to account in the

same way as short-term leases.

(8,607) Add: adjustments to the options to extend or terminate the lease

that is reasonably certain to exercise

613,898 Subtotal 2,180,905 Discounted using the incremental borrowing rate on January 1,

2019

1,812,646 Add: the carrying value of lease payables as at December 31,2018 121,170 The carrying value of lease liabilities recognized as at January 1,2019 $1,933,816





19

D. The Group is a lessor:

(a) Recognized as operating lease

On January 1, 2019, for leases that were previously classified as operating leases applying IAS 17 and the Group recognized invoiced items of operating lease as account receivables. After adopting IFRS 16, the Group reclassified account receivables in the amount of NTD11,596 thousand to operating lease receivables on December 31, 2019.

(b) Recognized as finance lease On January 1, 2019, for leases that were previously classified as finance leases applying IAS 17 and the Group recognized rest of lease term of finance lease as lease receivables. After adopting IFRS 16, the Group reclassified lease receivables and long-term lease receivables NTD372,643 thousand and NTD29,317 thousand to finance lease receivable and long-term Finance lease receivable, respectively, on December 31, 2019.

(c) The Group is a lessor and has not made any adjustments of IFRS 16. Please refer to Note 4, Note 5 and Note 6 for the information relating to the lessor

(2) Standards or interpretations issued, revised or amended, by International Accounting

Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items New, Revised or Amended Standards and Interpretations Effective Date issued by IASB

a Definition of a Business - Amendments to IFRS 3 January 1, 2020 b Definition of Material - Amendments to IAS 1 and 8 January 1, 2020 c Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39

and IFRS 7 January 1, 2020

(a) Definition of a Business - Amendments to IFRS 3

The amendments clarify the definition of a business in IFRS 3 Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition. IFRS 3 continues to adopt a market participant’s perspective to determine whether an acquired set of activities and assets is a business. The amendments clarify the minimum requirements for a business; add guidance to help entities assess whether an acquired process is substantive; and narrow the definitions of a business and of outputs; etc.





20

(b) Definition of a Material - Amendments to IAS 1 and 8

The main amendment is to clarify new definition of material. It states that “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements.

(c) Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7 The amendments include a number of exceptions, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is directly affected if the interest rate benchmark reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. Hence, the entity shall apply the exceptions to all hedging relationships directly affected by the interest rate benchmark reform. The amendments include: (1) highly probable requirement

When determining whether a forecast transaction is highly probable, an entity shall assume that the interest rate benchmark on which the hedged cash flows are based is not altered as a result of the interest rate benchmark reform.

(2) prospective assessments When performing prospective assessments, an entity shall assume that the interest rate benchmark on which the hedged item, hedged risk and/or hedging instrument are based is not altered as a result of the interest rate benchmark reform.

(3) IAS 39 retrospective assessment An entity is not required to undertake the IAS 39 retrospective assessment (i.e. the actual results of the hedge are within a range of 80–125%) for hedging relationships directly affected by the interest rate benchmark reform.





21

(4) separately identifiable risk components

For hedges of a non-contractually specified benchmark component of interest rate risk, an entity shall apply the separately identifiable requirement only at the inception of such hedging relationships.

The amendments also include the end of application of the exception’s requirements and the related disclosures requirements of the amendments.

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January, 2020. These standards and interpretations have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are not endorsed by FSC are listed below.

Items New, Revised or Amended Standards and Interpretations Effective Date issued by IASB

a IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

To be determined by IASB

b IFRS 17 Insurance Contracts January 1, 2021 c Classification of Liabilities as Current or Non-current –

Amendments to IAS 1 January 1, 2022

(a) IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and

Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full. IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture. The effective date of the amendments has been postponed indefinitely, but early adoption is allowed.





22

(b) IFRS 17 Insurance Contracts

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following: (1) estimates of future cash flows; (2) Discount rate: an adjustment to reflect the time value of money and the financial risks

related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and

(3) a risk adjustment for non-financial risk. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model: (1) the standard also provides a specific adaptation for contracts with direct participation

features (the Variable Fee Approach) and (2) a simplified approach (Premium Allocation Approach) mainly for short-duration

contracts.

(c) Classification of Liabilities as Current or Non-current – Amendments to IAS 1 These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The above-mentioned standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies (1) Statement of compliance

The consolidated financial statements of the Group for the years ended December 31, 2019 and 2018 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, and interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by the FSC. While certain subsidiaries prepared financial statements using liquidation assumption at December 31, 2019.





23

(2) Basis of preparation

During the reporting period, due to changes in the industry structure, Green Energy Technology Co., Ltd. (“GET”) was unable to generate positive operating cash flow and continued to suffer loss. GET was resolved for dissolution and liquidation by the meeting of the board of directors on July 15, 2019 and by the provisional meeting of shareholders’on August 30, 2019. The entity was dissolved and liquidated according to law and selected the liquidator on the same day following the shareholders’ meeting held on August 30, 2019. As the Group lost control of GET and its subsidiaries, GET and the subsidiaries were no longer consolidated in the financial statements. The Group has recognized the gain (loss) on the disposal of the subsidiaries. Please refer to Note 6 (33). During the reporting period, many creditors of Chunghwa Picture Tubes, Ltd. (“CPT”) and its subsidiaries filed to the court for compulsory enforcement of their assets, thus CPT could not continue its production and operation. CPT’s board meeting resolved to file bankruptcy to the court on September 18, 2019. After the court issues a ruling, CPT will proceed with the bankruptcy and liquidation procedures accordingly. CPT and its subsidiaries prepared financial statements using liquidation assumption. As mentioned in Note 6 (36), Tatung Co. of America Inc., a subsidiary of the Company, filed for financial restructuring in September 2019. Tatung Co. of America Inc. intends to continue operations through these procedures, thus the company did not prepare financial statements using liquidation assumption. The consolidated financial statements for the year 2019 have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NTD”) unless otherwise stated. Certain subsidiaries prepared financial statements using liquidation assumption. Please refer to Note 4 (28) for more details on liquidation assumption. The consolidated financial statements for the year 2018 have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NTD”) unless otherwise stated.





24

(3) Basis of consolidation

Preparation principle of consolidated financial statement Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: A. power over the investee (i.e. existing rights that give it the current ability to direct the

relevant activities of the investee) B. exposure, or rights, to variable returns from its involvement with the investee, and C. the ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: A. the contractual arrangement with the other vote holders of the investee B. rights arising from other contractual arrangements C. the Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.





25

If the Company loses control of a subsidiary, it: A. derecognizes the assets (including goodwill) and liabilities of the subsidiary; B. derecognizes the carrying amount of any non-controlling interest; C. recognizes the fair value of the consideration received; D. recognizes the fair value of any investment retained; E. recognizes any surplus or deficit in profit or loss; and F. reclassifies the parent’s share of components previously recognized in other comprehensive

income to profit or loss.

(a) The consolidated entities are listed as follows: Holding percentage

Investor Subsidiary Main businesses

December 31,

2019

December 31,

2018

The Company, Chunghwa Electronics

Investment Co., Ltd., Chih Sheng Realty

Co., Ltd.

Chunghwa Picture Tubes, Ltd.

(“CPT”) (Note1)

Manufacture, research and sale of

picture tubs and TFT-LCD

products

39.67% 41.16%

The Company, Shan-Chih Investment Co.,

Ltd. and Shan-Chih Asset Development

Co.

Tatung System Technologies Inc.

(“TSTI”)

Software and hardware service and

system integration

43.34% 54.40%

The Company, and Chunghwa Electronics

Investment Co., Ltd

Forward Electronics Co., Ltd. (“FD”) Manufacture and sale of electronics 18.48% 20.16%

The Company Taiwan Telecommunication Industry

Company Ltd.

Telecommunication devices. 100.00% 100.00%

The Company and Chunghwa Electronics

Investment Co., Ltd.

San-Chih Semiconductor Co.,

Ltd.(“SCSC”)

Manufacture and sales of

semiconductors and chips

57.08% 57.08%

The Company, SCSC, SCAD, Shan Chih

Investment Co., Ltd., and Chih Sheng


Green Energy Technology Inc.

(“GET”)

Manufacture of electrical parts and

retail sales and wholesale of

electrical materials

Note2 38.48%

The Company Central Research Technology Co. EMCIRF testing and certification

services

100.00% 100.00%

The Company Tatung Consumer Products (Taiwan)

Co., Ltd.

Sales of home appliances and digital

computer products

99.10% 99.10%

The Company Tatung SM-Cycle Co. Manufacture of speed reducers,

speed aviators

Note3 85.33%

The Company, Chunghwa Electronics

Investment Co., Ltd. and Chih-Sheng



(“TFC”)

Industrial coatings, electrocution

coatings resistor coatings, photo-

catalyst, inkjet ink

54.63% 54.63%

The Company Shan-Chih Asset Development Co.

(“SCAD”)

Development and leasing of real

estate

100.00% 100.00%

The Company, SCAD and Chih Sheng


Chunghwa Electronics


Professional investment holding 99.99% 99.99%





26

Holding percentage


December 31,

2019

December 31,

2018

The Company Tatung DIE Casting Co. Manufacturing and sales of casting

mold

51.00% 51.00%

The Company Tatung (Thailand) Co., Ltd. Manufacturing and sales of IT

products, home appliances and AI

meter

99.99% 99.99%

The Company Tatung Co. of Japan, Inc. Sales and purchase of electronic

parts, home appliances and IT

products

100.00% 100.00%

The Company Tatung Electronics(S) Pte. Ltd. Purchases, sales and services of raw

material

90.00% 90.00%

The Company Tatung Information (Singapore) Pte.

Ltd.

Professional investment holding 100.00% 100.00%

The Company Tatung Electric (Singapore) Pte. Ltd. Professional investment holding 100.00% 100.00%

The Company Tatung Co. of America Inc. Sales and service of IT and household

electronics products in the US

50.00% 50.00%

The Company Tatung Mexico S.A de C.V.

(“TMX”)

Manufacture of electronic products 99.99% 99.99%

The Company Tatung Science and Technology, Inc. Sale and purchase of IT products 100.00% 100.00%

The Company Tatung Electric Company of

America, Inc.

Manufacture and sales of motor

products in the U.S.

100.00% 100.00%

The Company Tatung Netherlands B.V. Sales of electronic products 100.00% 100.00%

The Company TATUNG CZECH s.r.o Manufacture of IT products 100.00% 100.00%

The Company Tatung Medical Healthcare

Technologies Co., Ltd.

Design and sales of medical

instruments.

95.85% 95.56%

The Company Toes Opto-Mechatronics Co. Manufacture of data storage and

process equipment

85.00% 85.00%

The Company Tatung Vietnam Co., Ltd. Manufacture and sales of home

appliances

100.00% 100.00%

The Company Tatung Electric Technology (VN)

Co., Ltd.

Manufacture and sales of wire and

cable

100.00% 100.00%

The Company Chih Sheng Investment Co., Ltd. Professional investment holding 100.00% 100.00%

The Company and Chunghwa Electronics


Shan Chih Investment Co., Ltd. Professional investment holding 100.00% 100.00%

The Company Absolute Alpha Limited Professional investment holding 100.00% 100.00%

The Company Tatung Forever Energy Co., Ltd. Solar energy related business 99.10% 97.12%

The Company Leap High Limited Professional investment holding 65.00% 65.00%

The Company Tungyang Energy Co., Ltd. Solar energy related business 100.00% 100.00%

The Company Chih Kuang energy Co., Ltd Solar energy related business 100.00% 100.00%





27

Holding percentage


December 31,

2019

December 31,

2018

The Company Shanshin energy Co., Ltd. Solar energy related business 100.00% 100.00%

The Company Yau Yang Energy Co., Ltd. Solar energy related business 100.00% -

The Company Ting Shin Engergy Co., Ltd. Solar energy related business 100.00% -

The Company Zhi Shin Energy Co., Ltd. Solar energy related business 100.00% -

CPT Chunghwa Picture Tubes (Bermuda)

Ltd. (“CPTB”) Investment holding and sales of

TFT-LCD

100.00% 100.00%

CPTB Chunghwa Picture Tubes (Malaysia)

Sdn. Bhd. (“CPTM”) Manufacture and sale of CRT 100.00% 100.00%

CPTB CPTF Optronics (Shen-Zhen) Co.,

Ltd. Investigation of market information 100.00% 100.00%

Forward Electronics Co., Ltd. Forward Development Co., Ltd. Investment holding 100.00% 100.00%

Forward Electronics Co., Ltd. and Toes

Opto-Mechatronics Co.

Gintung Energy Co., Ltd. Manufacture and sale of solar

module and related component

Note2 45.82%

Forward Development Co., Ltd. Forward Electronics Equipment

(Dong Guan) Co., Ltd Manufacture and sale of tuner,

keyboard, mouse, remote

controller, switch, socket and

potentiometer.

100.00% 100.00%

Forward Development Co., Ltd. Suzhou Forward Electronics

Technology Co., Ltd. Manufacture and sale of backlight

unit for TFT-LCD, driving board,

tuner, keyboard, mouse, switch,

socket and connector.

100.00% 100.00%

SCSC Greater Power Limited Investment holding 100.00% 100.00%

SCSC Chih De Investment Co., Ltd. Investment holding 100.00% 100.00%

GET Energy Well International Limited Investment holding Note2 100.00%

GET Green Energy Global Investment Investment holding Note2 100.00%

Greater Power Limited and Energy Well

International Limited

Ultra Energy Holdings Limited Investment holding Note2 100.00%

Energy Well International Limited Golden Sunny Limited Investment holding Note2 100.00%

Ultra Energy Holdings Limited Ultra Energy (WEIFANG)

Technology Co. Ltd Solar silicon wafer slicing. Note2 100.00%

Ultra Energy (WEIFANG) Technology Co. Ltd Weifang Jianeng Jingmao Co., Ltd. Sale of solar energy related

products

Note2 100.00%

Tatung Fine Chemicals Co. and Shang Chih

International Chemical Industry Co., Ltd.

Tatung Coatings (Kunshan) Co., Ltd. Manufacture and sale of industry

coating and electro-deposition

coating

100.00% 100.00%

Tatung Fine Chemicals Co. Huaian Tatung Advanced

Technology Materials Co., Ltd. Manufacture and sale of positive

material of lithium battery, printer

ink, electro-deposition high

performance coating.

100.00% 100.00%

Tatung Fine Chemicals Co. Shang Chih International Chemical

Industry Co., Ltd. Investment holding 100.00% 100.00%





28

Holding percentage


December 31,

2019

December 31,

2018

Shang Chih International Chemical Industry

Co., Ltd.

Wujiang Shanghua Material

Technology Co., Ltd

ABS plastic, color dyes - 100.00%

Shang Chih International Chemical Industry

Co., Ltd.

Dongguan Tongli Trading Co., Ltd. Wholesale of painting, coating and

chemical products.

100.00% 100.00%

Chih Sheng Holding HK Limited and


Tatung Information Technology

(Jiangsu) Co., Ltd.

Manufacture and sales of various

electrical products

100.00% 100.00%


and Shan-Chih International Holding

Corporation

Tatung Compressors

(ZHONGSHAN) Co., Ltd.

Manufacture and sales of

reciprocating compressors.

100.00% 100.00%

Tatung Electric (Singapore) Pte. Ltd. and

Shan-Chih International Holding

Corporation

Tatung (Shanghai) Co., Ltd Manufacture and sales of motors,

generators and transformers

100.00% 100.00%

TMX TMX Logistics, Inc. Hub service 100.00% 100.00%

TMX TMX Technologies Inc. Technologies & business

development

100.00% 100.00%

Shan Chin Investment Co. Ltd Shan-Chih International Holding

Corporation

Investment holding 100.00% 100.00%

TSTI Chyun Huei Business Technology

Inc.

Information software

Service

100.00% 100.00%

TSTI Tisnet Technology Inc. Software design and development 100.00% 100.00%

TSTI TSTI Technologies (Shanghai) Co.,

Ltd. Information software

Service

94.00% 94.00%

Chih Sheng Investment Co., Ltd. Chih Sheng Investment (BVI) Investment holding 100.00% 100.00%

Chih Sheng Investment Co., Ltd. HEDA Biotechnology Co., Ltd. Produce, food retail and wholesale

industry

52.17% 52.17%

Chih Sheng Investment (BVI) Co., Ltd Chih Sheng Holding Co., Ltd. Investment holding 100.00% 100.00%

Chih Sheng Holding Co., Ltd. and CPTB Goldmax Asia Pacific Ltd Investment holding 51.26% 51.26%

Chih Sheng Holding Co., Ltd. Chih Sheng Holding HK Limited Investment holding 100.00% 100.00%

Absolute Alpha Limited Tatung Information Technologies

Corp.

Sales of electronic products 100.00% 100.00%

Chih Sheng Holding HK Limited Wu-jiang Tatung Electronics Trading

Co. LTD

Sales of information products - 100.00%

Shan-Chih Asset Development Co. and

Taipei Industry Corporation

Tatung Forestry and Construction

Co.

Design and construction of structural

engineering.

99.87% 99.87%

The Company and Shan-Chih Asset

Development Co.

Taipei Industry Corporation Manufacturing sale of construction

related material and property rental

business.

50.61% 50.61%

Shan-Chih Asset Development Co. Chih Sheng Realty Co., Ltd. Realty management 100.00% 100.00%

Shan-Chih Asset Development Co. Shan-Chih Asset International

Holding Corporation

Investment Holding 100.00% 100.00%





29

Holding percentage


December 31,

2019

December 31,

2018

Shan-Chih Asset International Holding

Corporation

Tatung Management Consultant

(Shanghai) Co., Ltd.

Realty and Leasing Service 100.00% 100.00%

Shan-Chih Asset International Holding

Corporation

Shan-Chih Asset International (Hong

Kong) Holding Limited


Tatung Forever Energy Co., Ltd. Sheng Yang Energy Co., Ltd. Solar energy business 100.00% 100.00%

Tatung Information (Singapore) Pte. Ltd.,

and Tatung (Thailand) Co., Ltd.

Myanmar Tatung Co., Ltd. Sales and customer service of solar

energy, industrial motor, home

appliances, industrial air

conditioner

100.00%

100.00%

Tatung Information (Singapore) Pte. Ltd. Tatung Myanmar JV Holding Co.,

Ltd.


Tatung Medical Healthcare Technologies

Co., Ltd.

Tatung Medical & Healthcare

Technologies Inc.


Tatung Medical & Healthcare Technologies

Inc.

Elite Oxygen and Healthcare Co., Ltd. Sale of Oxygen generator - 100.00%

Tatung Medical Healthcare Technologies

Co., Ltd.

Insured Pharmaceuticals Co., Ltd. Pharmaceuticals and warehousing and

transportation service

100.00% 100.00%

Tatung (Shanghai) Co., Ltd Tatung Xinji (Guangdong)

Technology Co., Ltd.

Electrical engineering system

installation service

100.00% 100.00%

Note1: Chunghwa Picture Tubes, Ltd. filed bankruptcy to the court on September 18,

2019, however, the courts decision was pending as of December 31, 2019. Note2: Green Energy Technology Inc. resolved at its board meeting to disclaim listed

company role and proposal of liquidation was approved at the board meeting held on July 15, 2019 and the provisional shareholders’ meeting held on August 30 approved the proposal while the liquidators assumed their positions. The Group therefore lost control of Green Energy Technology Inc. and its subsidiaries.

Note3: In the third quarter of 2019, the Group resolved to sell 36.33% of its shares of

Tatung Sm-Cyclo Co., Ltd. and completed such transaction in the fourth quarter. The Group lost control of Tatung Sm-Cyclo Co., Ltd. and the shareholding percentage in the company decreased from 85.33% to 49%. However, the Company still has significant influence on the company, therefore Tatung Sm-Cyclo was recognized as investment accounted for using the equity method following derecognition. The profits (losses) from disposing of the investment or derecognition as mentioned above was NTD266,158 thousand.





30

Tatung Forever Energy Co., Ltd. held capital injections in March, June, July, September, October and November 2019. The Company subscribed to the shares proportionately and thus the Company’s holding percentage increased to 99.10%. Tatung Coatings (Kunshan) Co., Ltd, the Group’s subsidiary, acquired Wujiang Shanghua Material Technology Co., Ltd on January 1, 2019. Tatung Coatings (Kunshan) Co., Ltd is surviving company after the acquisition and Wujiang Shanghua Material Technology Co., Ltd is dissolved company after the acquisition which has completed the cancellation procedures in January 2019; Elite Oxygen and Healthcare Co., Ltd., one of the Group’s subsidiary, received liquidation certification on August 9, 2019. San Chih Semiconductor Co., Ltd.(“SCSC”), Chunghwa Picture Tubes, Ltd. (“CPT”), and Chunghwa Electronics Development Co., Ltd., subsidiaries of the Company, sold stocks of FD during the second half of 2018 and hence the Group’s direct and indirect holding percentage of FD decreased to 18.48%. Chunghwa Electronics Development Co., Ltd., a subsidiary of the Company, has started to sell shares of CPT in the fourth quarter of 2018 and the Group has lost control of GET, hence the Group’s direct and indirect holding percentage of CPT decreased to 39.67%. SCSC, a subsidiary of the Company, has started to sell shares of GET in the fourth quarter 2018 and hence the Group’s direct and indirect holding percentage of GET decreased to 36.81%. Tatung Information Technology (Jiangsu) Co., Ltd., a subsidiary of the Company, acquired Wu-jiang Tatung Electronics Trading Co. Ltd. on September, 2019. Tatung Information Technology (Jiangsu) Co., Ltd is a surviving company. To expend the solar energy business, in April 2019, the Company established Ting Shin Energy Co., Ltd., Zhi Shin Energy Co., Ltd. and YAU Yang Energy Co., Ltd. with NTD100 thousand、NTD200,000 thousand and NTD50,000 thousand, respectively. The holding shares percentages maintain 100%. Tungyang Energy Co., Ltd. held a capital injection with NTD400,000 thousand; Zhi shin Energy Co., Ltd.、Yau Yang Energy Co., Ltd. and Tungyang Energy Co., Ltd., held capital reductions in September 2019, with NTD160,000 thousand、NTD45,000 thousand and NTD150,000 thousand, respectively, and no change in holding percentage; Shang Shin Energy Co., Ltd. held a capital injection in June and September 2019. With total NTD90,000 thousand, and thus the Company’s holding percentage maintain 100% Chin kiang Energy Co., Ltd. held capital injections in August and December 2019 with total NTD250,000 thousand, and thus the Company’s holding percentage maintain 100%; Ting Shin Energy Co., Ltd. held a capital injection in December 2019 with NTD30,000 and thus the Company’s holding percentage maintain 100%.





31

Tatung System Technologies Inc.(“TSTI”), a subsidiary of the Group , approved at its shareholders’ meeting on June 18, 2019 to inject capital with surplus in the form of new shares in 33,600 thousand. The Company received 1,800,906 shares from TSTI as a result of earnings distribution. TSIT approved at its board meeting held on August 8, 2019 to increase capital with cash and issued 18,000 thousand shares of common shares at NTD14.2 per share with par value of NTD10. The Company did not subscribe the newly issued shares and thus the Company’s ownership in TSTI was reduced to 43.34% as of December 31, 2019. Tatung Medical Healthcare Technologies Co., Ltd. held a capital injection in May 2019. The Company subscribed to the shares proportionately and thus the Company’s holding percentage increased to 95.85%. Tatung Co. of Japan, Inc. issued 1,800,000 common shares for cash in June and August 2019 and proceeded with capital reduction of 1,800,000 common stocks to facilitate operation. After capital deduction, the outstanding shares was 15,000 shares. The Group held 100% of Tatung Co. of Japan, Inc. shares as of December 31,2019. The Company signed a share sale contract in the fourth quarter of 2018, to sell all of the shares of Tatung Electric Technology (VN) Co., Ltd. and Tatung Vietnam Co., Ltd. The Company recognized assets and liabilities of Tatung Electric Technology (VN) Co., Ltd. and Tatung Vietnam Co., Ltd. as non-current assets and liabilities held for sale as at December 31, 2018 according to IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations. Although the percentages of ownership interests in some companies, such as CPT, TSTI and FD were less than 50%, the Group determined that it has control over these companies. This is due to a combination of factors including the fact that the Group has been the single largest shareholder of these companies since the inception of the investment; the remaining shareholding percentage of other shareholders is dispersed; in the absence of contractual arrangement, the Group could obtain proxies to achieve relative majority and the Group is able to appoint or approve the key management personnel of these companies who have the ability to direct the related activities. Please refer to Note 8 for more details on stocks of subsidiary under pledge.





32

(b) Subsidiaries that are not included in the consolidated financial statement are as

follows:

Percentage of ownership

Investor Subsidiary Business nature

December 31,

2019

December 31,

2018

The Company, Shan-Chih Asset

Development Co., Tatung Forestry

and Construction Co. and Tatung

Fine Chemicals Co., Ltd.

Hsieh Chih Industrial Library

Publishing Co.

The publishing and sales of

Hsieh Chih Industrial

Library

98.80% 98.80%

The Company Lansong International Co., Ltd Forestry 98.33% 98.33%

All the above subsidiaries were of insignificant percentage to the Company’s total assets and operating revenue and therefore not consolidated by the Company.

(4) Foreign currency transactions

The Group’s consolidated financial statements are presented in NTD, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured by the functional currency. Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated by the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated by the exchange rates at the dates of its initial transactions. All exchange differences arising from the settlement or translation of monetary items are taken into profit or loss in the period which they arise except for the following: A. Exchange differences arising from foreign currency borrowings for an acquisition of a

qualifying asset. If the differences are regarded as an adjustment to interest costs, which will be capitalize and take as part of the cost of the borrowing.

B. Foreign currency items within the scope of IFRS 9 Financial Instruments: Recognition and Measurement are accounted for based on the accounting policy for financial instruments.

C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.





33

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(5) Translation of financial statements in foreign currency The assets and liabilities of foreign entities are translated into NTD at the closing exchange rate at the balance sheet date. Income and expenses are translated at an average rate within the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following are accounted for as disposals even if an interest in the foreign operation is retained by the Group: the loss of control over a foreign operation, the loss of significant influence over a foreign operation, or the loss of joint control over a foreign operation. On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss. Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6) Current and non-current distinction for assets and liabilities An asset is classified as current when: A. The Group expects to realize the asset, or intends to sell or consume it, in its normal

operating cycle B. The Group holds the asset primarily for the purpose of trading C. The Group expects to realize the asset within twelve months after the reporting period D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or

used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.





34

A liability is classified as current when: A. The Group expects to settle the liability in its normal operating cycle B. The Group holds the liability primarily for the purpose of trading C. The liability is due to be settled within twelve months after the reporting period D. The Group does not have an unconditional right to defer settlement of the liability for at

least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(7) Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within three months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(8) Financial instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

(1) Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date. The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below: (a) the Group’s business model for managing the financial assets and (b) the contractual cash flow characteristics of the financial asset.





35

Financial assets measured at amortized cost A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, accounts receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date: (a) the financial asset is held within a business model whose objective is to hold financial

assets in order to collect contractual cash flows and (b) the contractual terms of the financial asset give rise on specified dates to cash flows

that are solely payments of principal and interest on the principal amount outstanding. Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses. Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for: (a) purchased or originated credit-impaired financial assets. For those financial assets,

the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

(b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met: (a) the financial asset is held within a business model whose objective is achieved by

both collecting contractual cash flows and selling financial assets and (b) the contractual terms of the financial asset give rise on specified dates to cash flows

that are solely payments of principal and interest on the principal amount outstanding.





36

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below: (a) A gain or loss on a financial asset measured at fair value through other comprehensive

income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.

(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(i) Purchased or originated credit-impaired financial assets. For those financial

assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

(ii) Financial assets that are not purchased or originated credit-impaired financial

assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.





37

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

(2) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial asset measured at amortized cost. The Group measures expected credit losses of a financial instrument in a way that reflects: (a) an unbiased and probability-weighted amount that is determined by evaluating a

range of possible outcomes; (b) the time value of money; and (c) reasonable and supportable information that is available without undue cost or effort

at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measures as follow: (a) At an amount equal to 12-month expected credit losses: the credit risk on a financial

asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

(b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

(c) For accounts receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

(d) For lease receivables arising from transactions within the scope of IFRS 16 (before 1 January, 2019: IAS 17), the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.





38

(3) Derecognition of financial assets

A financial asset is derecognized when: (a) The rights to receive cash flows from the asset have expired (b) The Group has transferred the asset and substantially all the risks and rewards of the

asset have been transferred (c) The Group has neither transferred nor retained substantially all the risks and rewards

of the asset but has transferred control of the asset. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

(4) Financial liabilities and equity

Classification between liabilities or equity The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments The Group evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Group assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.





39

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled. For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. It carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments. Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized. On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity. Financial liabilities Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition. Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if: (a) it is acquired or incurred principally for the purpose of selling or repurchasing it in

the near term; (b) on initial recognition it is part of a portfolio of identified financial instruments that

are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).





40

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either: (a) it eliminates or significantly reduces a measurement or recognition inconsistency; or (b) a group of financial liabilities or financial assets and financial liabilities is managed,

and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss. Financial liabilities at amortized cost Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by considering any discount or premium on acquisition and fees or transaction costs. Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.





41

(5) Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(9) Derivative instrument

The Group uses derivative instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as financial assets or liabilities at fair value through profit or loss except for derivatives that are designated as and effective hedging instruments which are classified as financial assets or liabilities for hedging. Derivative instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. The changes in fair value of derivatives are taken directly to profit or loss, except for the effective portion of hedges, which is recognized in either profit or loss or equity according to types of hedges used. When the host contracts are either non-financial assets or liabilities, derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not designated at fair value though profit or loss.

(10) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: (a) In the principal market for the asset or liability, or (b) In the absence of a principal market, in the most advantageous market for the asset or

liability The principal or the most advantageous market must be accessible to by the Group.





42

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest. A fair value measurement of a non-financial asset considers a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(11) Inventories Inventories are valued at lower of cost and net realizable value item by item. Costs incurred in bringing each inventory to its present location and condition are accounted for as follows: Raw materials – purchase cost on weighted average cost formula. Work in progress and finished goods – cost of direct materials and labor and a proportion of

manufacturing overheads based on normal operating capacity on weighted average cost formula, but not including borrowing cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(12) Non-current assets held for sale and discontinued operations

Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction that is highly probable within one year from the date of classification and the asset or disposal group is available for immediate sale in its present condition. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.





43

In the consolidated statement of comprehensive income of the reporting period, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortized.

(13) Investments under equity method The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the Group’s related interest in the associate or joint venture. When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Group’s percentage of ownership interests in the associate or joint venture, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis. When the associate or joint venture issues new stock, and the Group’s interest in an associate or joint venture is reduced or increased as the Group fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in additional paid in capital and investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate or joint venture.





44

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and it is carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Group estimates: A. Its share of the present value of the estimated future cash flows expected to be generated

by the associate, including the cash flows from the operations of the associate or join venture and the proceeds on the ultimate disposal of the investment; or

B. The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets. Upon loss of significant influence over the associate or joint venture, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(14) Property, plant and equipment Property, plant and equipment are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.





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Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets: Buildings 3～50 year Machinery and equipment 1～36 year Transportation equipment 2～10 year Office equipment 2～10 year Right-of-use assets/leased assets (note) 3～20 year Leasehold improvements The shorter of lease terms or economic useful lives Other equipment 2～15 year Note: The Group reclassified the lease assets to right-of-use assets after the adoption of IFRS 16 from January 1, 2019. An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss. The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.

(15) Investment property Investment property for self-use should be initially measured at cost, including transaction costs. The cost of a purchased investment property includes the purchase price and any directly attributable expenses. Directly attributable expenses include legal service fees, property transfer taxes and other transaction costs. Investment property is measured by fair value model and the change of fair value is recognized as profit & loss in the current period in accordance with IAS 40 “Investment property”. However, those categorized held for sale and discontinued operations according to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” which met the criteria of non-current asset held for sale (including disposal group held for sale), and those met the criteria of the 53rd paragraph of IAS 40“Investment property” were excluded.





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If investment property for self use is converted into investment property reported at fair value, the difference between the carrying amount recognized in accordance with IAS 16 and its fair value on the date of change of use shall be treated in accordance with the revaluation approach under IAS 16. Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(16) Leases The accounting policy from January 1, 2019 as follow: For contracts entered on or after January 1, 2019, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether, throughout the period of use, has both of the following: (a) the right to obtain substantially all of the economic benefits from use of the identified

asset; and (b) the right to direct the use of the identified asset.

The Group elected not to reassess whether a contract is, or contains, a lease on January 1, 2019. The Group is permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4. For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximising the use of observable information.





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Group as a lessee Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts. At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date: (a) fixed payments (including in-substance fixed payments), less any lease incentives

receivable; (b) variable lease payments that depend on an index or a rate, initially measured using the

index or rate as at the commencement date; (c) amounts expected to be payable by the lessee under residual value guarantees; (d) the exercise price of a purchase option if the Group is reasonably certain to exercise that

option; and (e) payments of penalties for terminating the lease, if the lease term reflects the lessee

exercising an option to terminate the lease. After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made. At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises: (a) the amount of the initial measurement of the lease liability; (b) any lease payments made at or before the commencement date, less any lease incentives

received; (c) any initial direct costs incurred by the lessee; and (d) an estimate of costs to be incurred by the lessee in dismantling and removing the

underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.





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For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use applying a cost model. If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified. Except for those leases that the Group accounted for as short-term leases or leases of low-value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statement’s comprehensive income. For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis. Group as a lessor At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease. For a contract that contains lease components and non-lease components, the Group allocates the consideration in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.





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The accounting policy before January 1, 2019 as follow: Group as a lessee Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in profit or loss. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Group as a lessor Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Rental revenue generated from operating lease is recognized over the lease term using the straight-line method. Contingent rents are recognized as revenue in the period in which they are earned.

(17) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or indefinite.





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Intangible assets with finite live are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is disposed. Research and development costs Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Group can demonstrate: A. The technical feasibility of completing the intangible asset so that it will be available for

use or sale B. Its intention to complete and its ability to use or sell the asset C. How the asset will generate future economic benefits D. The availability of resources to complete the asset E. The ability to measure reliably the expenditure during development Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete, and the asset is available for use. It is amortized over the period of expected future benefit. Patents The patent is amortized over the period of useful life.





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Licenses and Technology cooperation costs Licenses have been granted the use of right 3 to 15 years depending on the shorter of contract period and period of expected future benefit and the cost is amortized on a straight-line basis. Computer software The cost of computer software is amortized on a straight-line basis over the estimated useful life (3 years). A summary of the policies applied to the Group’s intangible assets is as follows:

Patents Technology

Cooperation Costs Computer software Useful lives Finite Finite Finite Amortization method used Amortized on a straight-

line basis over the period of the patent

Amortized on a straight-line basis over the period of the technology cooperation terms

Amortized on a straight- line basis over the estimated useful life

Internally generated or acquired Acquired Acquired Acquired

(18) Impairment of non-financial assets The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.





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A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason. An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(19) Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Provision for decommissioning, restoration and rehabilitation costs The provision for decommissioning, restoration and rehabilitation costs arose on construction of a property, plant and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset. Maintenance warranties A provision is recognized for expected warranty claims on products sold, based on past experience, management’s judgment and other known factors.





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Sales returns and allowances Sales return and allowances are accounted in accordance with IFRS 15. Provisions for legal matters Provisions have been recognized for estimated legal obligations and relevant cost based on past experience. If the existing obligation is mostly likely to incur and the amount may be reasonably estimated, the provisions for legal matters is to be recognized. Long-term provision of onerous contract Onerous contract is a contract that the inevitable cost of fulfillment of the obligation exceeds the expected future benefit from the contract. The obligation of the contract should be recognized and measured as provision.

(20) Treasury shares

Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. Any difference between the carrying amount and the consideration is recognized in equity.

(21) Revenue recognition The Group’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows: Sale of goods The Group manufactures and sells products. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers (the customer has the right to use and gains almost all of the residual benefit). The main product of the Group is TFT-LCD, CF, wafer, cable wires, transformer, motors, house appliance and revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. The Group estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected volume discounts.





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The Group provides its customer with a warranty with the purchase of the products. The warranty provides assurance that the product will operate as expected by the customers. And the warranty is accounted in accordance with IAS 37. The credit period of the Group’s sale of goods is from 30 to 180 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as accounts receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Group has transferred the goods to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Group measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses. For some contracts, part of the consideration was received from customers upon signing the contract, and the Group has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities. Rendering of services The Group provides maintenance services for the sale of machinery and other professional services. Such services are separately priced or negotiated and provided based on contract periods. As the Group provides the maintenance services over the contract period, the customers simultaneously receive and consume the benefits provided by the Group. Accordingly, the performance obligations are satisfied over time, and the related revenue are recognized by straight -line method over the contract period. Most of the contractual considerations of the Group are collected evenly throughout the contract periods. When the Group has performed the services to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Group has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities. Construction contract When the outcome of the construction contract could be reasonably estimated, revenue and costs from the construction contract would be recognized by reference to the stage of completion which was measured by reference to the proportion that contract cost incurred for work performed to date bear to the estimated total contract costs at reporting date.





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When the outcome of the construction contract couldn’t be reasonably estimated, cost recovery method would be applied. Revenue could only be recognized to the same amount of costs incurred. When the estimated total cost of the contract is reasonably possible more than total revenue forms the contract, the expected loss should be recognized as expense immediately. The Group usually reclassifies the aforementioned contract liability to revenue within a year and hence doesn’t lead to a significant financial component.

(22) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(23) Government grants Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the Group receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(24) Post-employment benefits All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.





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For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees’ subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations. Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of: A. the date of the plan amendment or curtailment, and B. the date that the Group recognizes restructuring-related costs Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(25) Share-based payment transactions The cost of equity-settled transactions between the Group and its employees is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model. The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period. No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.





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Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Group recognized unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(26) Income taxes Income tax expense (benefit) is the aggregate amount of current and deferred taxes which included in the determination of current profit or loss. Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss. The surtax on undistributed retained earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.





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Deferred tax Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences, except: A. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset

or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

B. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except: A. Where the deferred tax asset relating to the deductible temporary difference arises from the

initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

B. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized, or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.





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Deferred tax assets and deferred tax liabilities offset, only if a legally enforceable right exists to offset current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(27) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired, and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses. When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity. Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.





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Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

(28) Liquidating assumption

The accounting treatment of liquidating assumption shall refer to managers measuring assets by the economic benefits recovered by disposing of assets. And liabilities are measured and recognized according to Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards.

5. Significant accounting judgments estimates and assumptions The preparation of the Group’s consolidated financial statements require management to make judgments, estimates and assumptions that affect the reporting amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the balance sheet date. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. (1) Judgment

In the process of applying the Group’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements: A. Investment properties

Certain properties of the Group comprise a portion that is held to earn rentals or for capital appreciation and another portion that is owner-occupied. If these portions could be sold separately, the Group accounts for the portions separately as investment properties and property, plant and equipment. If the portions could not be sold separately, the property is classified as investment property in its entirety only if the portion that is owner-occupied is under 10% of the total property.

B. Operating lease commitment-Group as the lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.





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C. De facto control without a majority of the voting rights in subsidiaries

The Company does not have majority of the voting rights in certain subsidiaries. However, after taking into consideration factors such as absolute size of the Company’s holding, relative size of the other shareholdings, how widely spread is the remaining shareholding, contractual arrangements between shareholders, potential voting rights, etc., the Company reached the conclusion that it has de facto control over these subsidiaries. Please refer to Note 4 for further details.

(2) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. A. Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

B. Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs that would be directly attributable to the disposal of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. Please refer to Note 6 for more details.





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C. Liquidation value of estimated discontinuing entities

If the management of a company consolidated has intention to dissolve and liquidate the company, it usually recovers the economic benefits of the accounted assets by disposing of the assets. Therefore, the assets of these estimated liquidation companies are evaluated and measured by the liquidation value method, but the liquidation value method are involved various assumptions (including: whether there is an orderly transaction, whether the company has sufficient transaction time and the number of market participants expected, etc.). When the occurrence of an evaluation due to the creditor ’s exercise of the right to request is subject to abnormalities such as forced sale or rapid realization, the estimated value would be different from the value of which the market participants can sell the assets in an orderly transaction which is to receive consideration or transfer the liabilities, after deducting the incremental costs attributable to the disposed assets or risk generation unit.

D. Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions.

E. Provisions and contingent liabilities

Provisions The Group regularly estimates the legal costs according to historical experience. If the obligation is highly likely to occur and the amount can be reasonably estimated, the Group recognizes related provisions for the legal matters. Please refer to Note 6. Contingent liabilities The Group needs to evaluate whether there is any obligation that will lead to economic benefit outflow if the Group doesn’t recognize provisions for contingent liabilities.

F. Revenue recognition - sales returns and allowance

The Group estimates sales returns, and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, revenue is recognized to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6 for more details.





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G. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group's domicile. Deferred tax assets are recognized for all carryforward of unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

H. Accounts receivables–estimation of impairment loss

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

I. Inventories

Estimates of net realizable value of inventories takes into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.





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J. Fair value of investment properties

Fair value of investment properties is decided by valuation models such as comparative method, cost method, land development analysis approach, and direct capitalization method of income approach. The fair value of investment properties may be affected when assumptions and judgements used in the valuation models were changed. Please refer to Note 6 for more details.

6. Contents of significant accounts

(1) Cash and cash equivalents

As of December 31, 2019 2018 Cash on hand & petty cash $131,422 $123,862 Cash in banks 8,415,034 8,030,202 Time deposits 1,781,848 755,962 Cash in transit 1,337 63,546 Total $10,329,641 $8,973,572

(2) Financial assets at fair value through profit or loss

As of December 31, 2019 2018 Mandatorily measured at fair value through profit or loss:

Stocks $138,131 $129,492 Funds 15,028 - Bonds 3,000 - Forward foreign exchange contracts - 2,023 Capital-guaranteed financial products 718,935 940,712

Total $875,094 $1,072,227

Current $875,094 $1,072,227

Please refer to Note 8 for more details on financial assets at fair value through profit or loss under pledge.





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(3) Financial assets at fair value through other comprehensive income

As of December 31,

2019 2018

Equity instrument investments measured at fair value through other comprehensive income: Listed companies stocks－CPTTG $5,653,976 $6,103,315 Listed companies stocks－Others 402,558 739,117 Unlisted companies’ stocks 634,595 449,809

Total $6,691,129 $7,292,241

Current $343,563 $399,417 Non-current 6,347,566 6,892,824

Total $6,691,129 $7,292,241

(1) As mentioned in Note 4(3), CPT lost control of CPTTG as of end of 2018. Although CPT

held more than 20% of CPTTG’s shares, it no longer had a representative in CPTTG’s board of directors as end of 2018. Moreover, CPT could not participate in the decision making after losing control, or involve in significant transaction, exchange of management personnel or provision of important technical information. It could not acquire information needed to measure the investment under equity method and hence the Company deemed that it did not have significant influence. Therefore, the equity was recognized as financial assets at fair value through other comprehensive income. Please refer to Note 6 (33) for more details.

(2) The Group’s financial assets at fair value through other comprehensive income- listed

companies stocks－CPTTG was measured at market price on December 31, 2019, and considered the liquidity discount and related assumptions. Liquidity discount was taken into consideration mainly because the 729,289,715 shares of the listed companies stocks－CPTTG were frozen by the Fujian High Court in January 2019 and sold 27,640,594 shares through securities transaction. The remaining 701,649,121 shares were frozen until January 28, 2022, and the Group recognized loss from investments in equity instruments measured at fair value through other comprehensive income in the amount of NTD(128,024) thousand.





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(3) 441,600,000 shares of the above shares of CPTTG were pledged to Bohaitrust Co. as

security. As mentioned in Note 6(19), Bohaitrust Co. sent debt performance verification letters for the first, second and third installments of the loan through Beijing Zhongxin Notary Public Office in January and March 2019 to notify Chunghwa Picture Tubes (Bermuda) Ltd. and CPTF Optronics (Shen-Zhen) Co., Ltd. that they did not pay back debt as schedule and, therefore the Beijing Zhongxin Notary Public Office approved Bohaitrust Co. to dispose of the pledged shares for repayment of loans. Fuzhou Intermediate Court sent the court ruling and notice of performance on July 29 and August 5, 2019, which stated that the second and third installments of the loan have entered compulsory enforcement. Also, 153 million shares were auctioned publicly in the judicial sale website from December 24, 2019 to December 25, but passed in, and second auction was held from February 11 to 12, 2020, which was also passed in. Furthermore, 27,640,594 shares were sold for the third installment of the loan of Bohaitrust Co. through secondary market and Huarong Securities Co., Ltd. will auction the remaining 14,359,406 shares on March 17, 2020; as a result, 129.6 million shares were listed in the judicial sale on Alibaba auction website on December 24 and 25, 2019 by Ningde Intermediate People’s Court. After that, Xing-Yu Lai, the successful tenderer, raised an objection to the court for the difference between the auction price and the closing price. Ningde Intermediate People’s Court cancelled the Notice letter No. (2019) Min- 09- Zhi- 152 it issued on January 20, 2020. The court will auction the shares again on Alibaba auction website from 10:00AM March 30, 2020 to 10:00 AM March 31, 2020 (unless extended).

Also, 180.8 million shares CPTTG were pledged to China Railway Group Limited for

secured loan as mentioned in Note 6 (19). China Railway Group Limited sent letters of advance maturity to inform CPT Group in December 2018 and January 2019 that CPTF Optronics (Shen-Zhen) Co., Ltd. did not pay debt interest on time and the market value of the pledged shares of CPTTG significantly declined following the substantial controller claiming restructure; as a result, the pledged share ratio was higher than the criteria stated in the contract and was not covered on time. As these circumstances constituted default, China Railway Group Limited declared the principal and interest matured in advance and froze the deposit of RMB148 million in China Structure Bank by CPTF Optronics (Shen-Zhen) Co., Ltd. Shen-Zhen Intermediate People’s court sent a letter of mediation in March 2019, stating that the disputes of loan contract between China Railway Group Limited and CPTF Optronics (Shen-Zhen) Co., Ltd. met the mediation criteria and a mediator will be assigned for mediation. Later the Shen-Zhen Intermediate Popole’s Court opened a court session on August 21, 2019, CPTF Optronics (Shen-Zhen) Co., Ltd. received civil ruling No. (2019) Yue-03-Min-Chu-832 issued by Shen-Zhen Intermediate People’s Court. CPTF Optronics (Shen-Zhen) Co., Ltd. filed an appeal to Guangdong High Court on November 12, 2019, and has not received a notice of court session so far.





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The Group classified certain of its financial assets as financial assets at fair value through other comprehensive income. Please refer to Note 8 for more details on financial assets at fair value through other comprehensive income under pledge. For equity instrument investments measured at fair value through other comprehensive income, the Group recognized dividends income in the amount of NTD56,166 thousand and NTD 80,193 thousand for 2019 and 2018, respectively. In consideration of the Group’s investment strategy, the Group disposed the listed stock which were reported under equity instrument investments measured at fair value through other comprehensive income in 2019 and 2018. Upon derecognition, the fair value of the investments was NTD307,304 thousand and NTD84,024 thousand as of December 31, 2019 and 2018, respectively, and the related cumulative unrealized evaluation gain was NTD260,169 thousand and NTD39,598 thousand, respectively, which were transferred from other components of equity to retained earnings.

(4) Financial assets measured at amortized cost

As of December 31, 2019 2018

Cash in banks－reserve account $511,943 $863,452 Cash in banks－trust account(Note 1) 8,092 903,852 Cash in banks－demand deposits and check deposits (Note 2) 673,616 19,627 Time deposits (contain pledge) 3,011,745 1,872,142 Subtotal (carrying amount) 4,205,396 3,659,073 Less: loss allowance - - Total $4,205,396 $3,659,073 Current $3,587,887 $3,074,450 Non-current 617,509 584,623 Total $4,205,396 $3,659,073 Note 1: To assure payment of salaries to the employees and of necessary operating expenses,

CPT, a subsidiary of the Group, signed two trust contracts with the lawyer with the consent of the board of directors.

Note 2: Cash in banks-demand deposits. The Group classified certain financial assets as financial assets measured at amortized cost. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge and Note 12 for more details on credit risk.





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(5) Notes receivables

As of December 31, 2019 2018 Notes receivables arising from operating activities $230,778 $464,079 Less: loss allowance (43) (64) Total $230,735 $464,015 Notes receivables were not pledged. The Group adopted IFRS 9 for impairment assessment. Please refer to Note 6(24) for more details on accumulated impairment. Please refer to Note 12 for more details on credit risk.

(6) Accounts receivable and Accounts receivable-related parties

As of December 31, 2019 2018 Accounts receivable $4,990,984 $6,912,240 Accounts receivable from instalment sales 7,223 496,102 Less: unrealized interest revenue – accounts receivable

from instalment sales (1,071)

(10,002)

Net 4,997,136 7,398,340 Less: loss allowance (972,970) (1,129,170) Subtotal 4,024,166 6,269,170 Accounts receivable-related parties 922,223 1,149,281 Less: loss allowance (1) (41,764) Net 922,222 1,107,517 Total $4,946,388 $7,376,687 The expected recovery of the accounts receivables from installment sales is as follows: As of December 31, 2019 2018 Not later than one year $7,223 $227,572 Later than one year and not later than two years (Note) 121,655 Later than two years (Note) 146,875 Total $7,223 $496,102 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS. Accounts receivable were not pledged.





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The Group’s credit terms are generally 30-180 day. The carrying amount is NTD5,919,359 thousand and NTD8,547,621 thousand as at December 31, 2019 and 2018. Please refer to Note 6(24) for more details on loss allowance of fade receivables in 2019 and 2018.Please refer to Note 12 for more details on credit risk management.

(7) Inventory

A. The details of inventories are as follows:

As of December 31, 2019 2018 Raw materials $902,468 $1,592,961 Work in progress 2,409,739 3,709,738 Finished good 3,561,507 3,629,089 Inventories in transit 46,861 82,880 Buildings and land held for sale 428,378 428,378 Property under construction 8,253,489 8,853,841 Property used for construction 506,255 500,984 Total $16,108,697 $18,797,871

B. Property under construction:

As of December 31, Name of developing projects 2019 2018

Project D $4,976,034 $5,597,709 Project H 3,173,415 3,152,092 Project I 104,040 104,040 Total $8,253,489 $8,853,841 December 31, 2019

Projects

Total selling price of

contracts sold

Total estimated

costs

Completed percentage

Scheduled year of

completion

Contract liabilities

Project D $7,501,500 $5,025,266 94.88% 109 $2,576,442 According to domestic regulations, the installments of advance receipts from buyers should be deposited in the trust accounts and be used following construction progress. Part of trust account was released during third quarter of 2019.





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Regarding Project H, Shan-Chih Asset Development Co., the Group’s subsidiary, have signed “Purchase agreement for land agreement price required for the development of the Mass Rapid Transit system in the Taipei metropolitan area” and “Purchase and sale agreement of land ownership”. According to the agreements, Shan-Chih Asset Development Co. should transfer 13 titles of Land Lot No 478, Jiankang Section, Zhonghe District, New Taipei City to Taipei City Government and obtain ownership assignment right by contractual agreement after the land development is completed by Taipei City Government. Later Shan-Chih Asset Development Co.’s board of directors approved on May 2, 2019 to deliver an application to the Department of Rapid Transit Systems of Taipei City Government for priority status of development and to seek a cooperator publicly on September 20, 2019. The company signed the “Construction cooperation contract of 13 titles of Land Lot No 478, Jiankang Section, Zhonghe District, New Taipei City” with DA CIN Construction Co., Ltd. on November 13, 2019. Moreover, Shan-Chih Asset Development Co. formally signed the “Investment Agreement” and won the land development tender of 3 MRT development zones of MRT Wanda Line Phase I－LG07 station with the Department of Rapid Transit Systems of Taipei City Government. For Project I, the Group is cooperating with Company A. The Group provides land and Company A provides construction.

C. The costs of inventories recognized in expenses are as follows:

For the years ended December 31,

2019 2018 Cost of inventories recognized in expenses $30,793,217 $57,627,565 Loss on allowance for inventory valuation 144,619 3,039,770 Total $30,937,836 $60,667,335

D. Please refer to Note 8 for pledged inventories. E. There are several ways to purchase silicon raw material. Aside from purchasing at market

value, the Group also purchased from suppliers with long-term contracts. The price is according to market conditions.

F. Please refer to Note 9 for contingent events arose from signing long-term purchasing

contracts of silion raw materials.

(8) Non-current assets held for sale or Disposal groups held for sale, net

Non-current assets held for

sale-shares 2018.12.31 $340,010 Effect of exchange rate changes (7,728) 2019.12.31 $332,282





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Note 1: In the fourth quarter of 2018, the Company signed an agreement to sell all of its

shares of Tatung Electric Technology (VN) Co., Ltd. and Tatung Vietnam Co., Ltd. According to IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations, the Company recognized assets and liabilities of Tatung Electric Technology (VN) Co., Ltd. and Tatung Vietnam Co., Ltd. as non-current assets and liabilities held for sale as at December 31, 2018. As of December 31, 2019, the Company has received the consideration of NTD588,924 thousand for above transactions and recognized the amount under advanced receipts as the share transferring procedures were still ongoing.

The assets, liabilities and equity related to the discontinued operations mentioned above are listed as follows: As of December 31, 2019 2018

Tatung Electric

Technology (VN) Co., Ltd.

Tatung Vietnam Co., Ltd.

Cash and cash equivalents $3,550 $60,935 Accounts receivable - related parties (Note) - 8,476 Prepayments 1,258 17,979 Property, plant and equipment 56,740 150,323 Others 11,708 37,517 Non-current assets held for sale 73,256 275,230 Elimination - (8,476) Non-current assets held for sale (net) $73,256 $266,754 As of December 31, 2019 2018 Accounts payable - related parties (Note) $55,454 $302 Accounts payable 884 4,591 Contract liabilities - 295 Contract liabilities– related parties (Note) - 3 Elimination (55,454) (305) Liabilities directly related to non-current assets

held for sale $884 $4,886 Equity directly related to non-current assets

held for sale $17 $30,937 Note: Transactions between consolidated entities would be eliminated when

preparing consolidated financial statements.





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(9) Investments under equity method

A. The following table lists the investments under equity method of the Group:

As of December 31,

2019 2018

Investees

Carrying

amount

Percentage of

ownership (%)

Carrying

amount

Percentage of

ownership (%)

Investments in associates:

Listed companies

Elitegroup Computer Systems Co., Ltd. $3,585,213 27.35 $3,626,573 27.35

Unlisted companies

Tatung Okuma Co., Ltd. 1,394,385 49.00 1,285,832 49.00

Kuender Co., Ltd. 62,192 50.00 63,880 50.00

Hsieh-Chih Industrial Library Publishing Co. 13,836 98.80 13,754 98.80

Chung-Tai Technology Development Engineering Co. 12,125 22.00 13,227 22.00

Lansong International Co., Ltd. - 98.33 - 98.33

Tatung Cranes (Shanghai) Co., Ltd 22,198 45.00 20,473 45.00

Ufeco (Wujiang) Technology Inc. 26,479 40.00 23,532 40.00

Nature Worldwide Technology Corp. (Note) (19,970) 85.36 (19,970) 85.36

Yunbao Co., Ltd 1,997 40.00 1,857 40.00

I Torch Technology Co., Ltd 4,644 20.00 - -

Gintung Energy Co., Ltd. - 15.77 - -

ULTRA ENERGY HOLDINGS LIMITED - 19.77 - -

Tatung SM-Cycle Co. 248,838 49.00 - -

Subtotal 1,766,724 1,402,585

Jointly Controlled Entity:

Lin Htet Lin Company Limited 2,158 49.00 3,070 49.00

Tatung Middle East Purification of Potable Water L.L.C - 49.00 579 49.00

Subtotal 2,158 3,649

Net of long-term investments accounted for under

equity method 5,354,095 5,032,807

Add: Long-term equity investments, credit balance 19,970 19,970

Total $5,374,065 $5,052,777

Note: San Chih Investment Co., Ltd., a subsidiary of the Company, did not intend to

support Nature Worldwide Technology Corp. from April 2010. Nature Worldwide Technology Corp. was still under liquidation process as of December 31, 2019.





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The Group’s ownership of Gintung Energy Co., Ltd. and ULTRA ENERGY HOLDINGS LIMITED decreased from 45.82% and 100% to 15.77% and 19.77%, respectively, due to loss of control of Green Energy Technology Inc. on August 30, 2019; as a result, the Group lost control of Gintung Energy Co., Ltd. and ULTRA ENERGY HOLDINGS LIMITED, thus the Group recognized losses on disposal of investments in the amount of NTD (27,776) thousand. After derecognizing those two subsidiaries, the Group recognized the related investments as investments under equity method because the Company still has significant influence on the two entities. As of July 2019, the Group invested I Torch Technology Co., with investment amount of NTD5,000 thousand and held 500 thousand shares. The Group holding percentage of I Torch Technology as 20%. The Group entered into a sale agreement in the third quarter of 2019 to sell 36.33% of its shares of Tatung Sm-Cyclo Co., Ltd. (“Tatung Sm-Cyclo”) and such transaction was completed in the fourth quarter. The Group’s shareholding percentage in Tatung Sm-Cyclo decreased from 85.33% to 49%, therefore the Group lost control of the entity. However, the Company still has significant influence on the entity, therefore Tatung Sm-Cyclo was recognized as investment accounted for using the equity method following derecognition.

B. Investments in associates:

(a) Information on the material associate of the Group:

Company name: Elitegroup Computer Systems Co., Ltd. Nature of the relationship with the associate: Elitegroup Computer Systems Co., Ltd. is engaged in manufacturing and selling related products in the Group’s industry chain. The Group invested in Elitegroup Computer Systems Co., Ltd. for the purpose of upstream/downstream integration. Principal place of business (country of incorporation): Taiwan Fair value of the investment in the associate when there is a quoted market price for the investment: Elitegroup Computer Systems Co., Ltd. is a listed entity on the Taiwan Stock Exchange (TWSE). The fair value of the investment in Elitegroup Computer Systems Co., Ltd. was NTD2,088,913 thousand and NTD1,883,071 thousand, as of December 31, 2019 and 2018, respectively.





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The summarized financial information of the associate is as follows: As of December 31, 2019 2018 Current assets $16,236,514 $16,896,467 Non-current assets 7,116,714 6,603,916 Current liabilities (11,572,898) (11,845,410) Non-current liabilities (761,566) (483,609) Equity 11,018,764 11,171,364

Proportion of the Group’s ownership 27.35% 27.35% Subtotal 3,013,632 3,055,368 Goodwill 614,638 614,638 Other adjustments (43,057) (43,433)

Carrying amount of the investment $3,585,213 $3,626,573


2019 2018 Operating revenue $28,291,303 $31,796,016 Profit (loss) from continuing operations 56,061 22,014 Other comprehensive income (loss), net of income

tax (142,324) (55,644)

Total comprehensive income (loss) (89,263) (33,630)

Please refer to Note 8 for material investments in associates under pledge. (b) Except the associate mentioned above, the other associates were not individually

material. As of December 31, 2019 and 2018, the aggregate carrying amount of the Group’s interests in the other associates was NTD1,766,724 thousand and NTD1,402,585 thousand, respectively. The aggregate financial information based on Group’s share of the other associates is as follows:

For the years ended

December 31, 2019 2018 Profit from continuing operations $145,731 $96,546 Other comprehensive income (loss) (post-tax) 921 230 Total comprehensive income (loss) $146,652 96,776 The associates had no contingent liabilities or capital commitments and weren’t pledged as at December 31, 2019 and 2018.





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(c) Investments in jointly controlled entities

Investments in jointly controlled entities were not individually material. The aggregate financial information of the Group’s investments in jointly controlled entities is as follows: For the years ended

December 31, 2019 2018 Profit (loss) from continuing operations $(1,514) $(5,002) Other comprehensive income (loss), net of income tax - - Total comprehensive income (loss) $(1,514) $(5,002) The joint venture had no contingent liabilities or capital commitments and weren’t pledged as at December 31, 2019 and 2018.

(d) The balances of certain investments accounted for under the equity method that were

audited by other independent accountants were NTD3,585,213 thousand and NTD3,626,573 thousand as of December 31, 2019 and 2018, respectively. The balances of share of profit of associates accounted for using equity method that were audited by other independent accountants were NTD (12,009) thousand and NTD2,857 thousand for the years ended December 31, 2019 and 2018, respectively. The balances of share of other comprehensive income (loss) of associates and joint ventures that were audited by other independent accountants were NTD (37,900) thousand and NTD (16,607) thousand as of December 31, 2019 and 2018, respectively.

(10) Property, plant and equipment

As of December 31, 2019 2018 (Note)

Owner occupied property, plant and equipment $33,884,314 $49,536,425 Property, plant and equipment leased out under

operating lease 67,340

Total $33,951,654 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS.





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A. Owner occupied property, plant and equipment (applicable to the disclosure requirement

under IFRS 16)

Land and land

Improvements Buildings

Machinery

and equipment

Office

equipment

Transportation

equipment Leased assets

Leasehold

improvements

Other

Equipment

Construction

in progress

and

equipment

awaiting

examination Total

Cost:

As of January 1, 2019 $18,739,627 $31,306,738 $141,233,492 $1,993,629 $284,971 $572,211 $4,228,262 $37,455,578 $2,426,727 $238,241,235

Additions 96,223 64,192 1,524,627 34,387 3,797 - 31,711 62,265 321,231 2,138,433

Disposals (2,575,514) (209,027) (7,830,213) (493,344) (70,846) (39,575) (66,197) (5,592,378) (156,151) (17,033,245)

The sale or contribution of

a subsidiary

(56,206) (2,732,406) (11,757,973) (84,808) (31,168) - (3,833,895) (205,295) (1,750) (18,703,501)

Other changes (Note 2) (1,748,792) 358,500 550,023 283,594 (14,189) (132,877) 155,246 266,624 (619,787) (901,658)

As of December 31, 2019 $14,455,338 $28,787,997 $123,719,956 $1,733,458 $172,565 $399,759 $515,127 $31,986,794 $1,970,270 $203,741,264

Depreciation and impairment:

As of January 1, 2019 $(9,237) $(13,776,745) $(133,373,040) $(1,905,530) $(251,870) $(358,830) $(3,118,224) $(35,462,660) $(448,674) $(188,704,810)

Depreciation (125) (853,752) (1,541,157) (50,142) (7,355) (34,560) (170,390) (678,281) - (3,335,762)

Amortization (1,901) - - - - - - - - (1,901)

Disposals 29 144,107 7,442,505 486,170 68,387 - - 5,592,304 - 13,733,502

Impairment (34,217) (4,869,299) (1,893,822) (320,903) (3,570) - (761,535) (900,220) (855,576) (9,639,142)

The sale or contribution of

a subsidiary

31,099 1,530,600 11,681,596 84,642 28,001 - 3,723,979 202,397 - 17,282,314

Other changes (Note 2) (420) 300,993 341,208 94,813 8,025 100,971 (57,105) 20,364 - 808,849

As of December 31, 2019 $(14,772) $(17,524,096) $(117,342,710) $(1,610,950) $(158,382) $(292,419) $(383,275) $(31,226,096) $(1,304,250) $(169,856,950)

Net carrying amount as at:

December 31, 2019 $14,440,566 $11,263,901 $6,377,246 $122,508 $14,183 $107,340 $131,852 $760,698 $666,020 $33,884,314

Note 1: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to

restate prior periods in accordance with the transition provision in IFRS. Note 2: Including transfer from advance payments of equipment, exchanges of rates,

reclassification and effects on the changes of consolidated entities.





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B. Property, plant and equipment leased out under operating lease applicable to the disclosure

requirement under IFRS 16)

Office

equipment Cost: As of January 1, 2019 $254,241 Additions - Disposals (39,575) Other changes 40,134 As of December 31, 2019 $254,800 Depreciation and impairment: As of January 1, 2019 $(197,433) Additions (34,561) Disposals 39,575 Other changes 4,959 As of December 31, 2019 $(187,460) Carry amount： Office equipment $67,340

C. Property, plant and equipment (applicable to the disclosure requirement under IFRS 16)

The details of property, plant and equipment are as follows:

Land and land

Improvements Buildings

Machinery

and equipment

Office

equipment

Transportation

equipment Leased assets

Leasehold

improvements

Other

Equipment

Construction

in progress

and

equipment

awaiting

examination Total

Cost:

As of January 1, 2018 $20,206,843 $43,109,169 $178,782,276 $2,649,970 $325,900 $536,425 $4,708,826 $48,645,989 $12,330,141 $311,295,539

Additions - 17,727 153,486 35,235 5,795 - 21,680 950,006 7,022,313 8,206,242

Disposals - - (972,866) (55,412) (8,094) (14,168) (16,068) (489,561) - (1,556,169)

Other changes (Note) (1,467,216) (11,820,158) (36,729,404) (636,164) (38,630) 49,954 (486,176) (11,650,856) (16,925,727) (79,704,377)

As of December 31, 2018 $18,739,627 $31,306,738 $141,233,492 $1,993,629 $284,971 $572,211 $4,228,262 $37,455,578 $2,426,727 $238,241,235

Depreciation and impairment:

As of January 1, 2018 $(6,703) $(16,632,669) $(147,309,475) $(2,362,900) $(282,626) $(293,883) $(3,056,986) $(45,263,863) $- $(215,209,105)

Depreciation - (1,501,393) (5,587,526) (89,620) (9,055) (79,115) (351,222) (1,281,159) - (8,899,090)

Amortization (2,534) - - - - - - - - (2,534)

Disposals - - 865,513 53,989 7,627 14,168 2,784 452,764 - 1,396,845

Other changes (Note) - 4,357,317 18,658,448 493,001 32,184 - 287,200 10,629,598 (448,674) 34,009,074

As of December 31, 2018 $(9,237) $(13,776,745) $(133,373,040) $(1,905,530) $(251,870) $(358,830) $(3,118,224) $(35,462,660) $(448,674) $(188,704,810)

Net carrying amount as at:

December 31, 2018 $18,730,390 $17,529,993 $7,860,452 $88,099 $33,101 $213,381 $1,110,038 $1,992,918 $1,978,053 $49,536,425





78

Note: Other changes included transfer from advance payments of equipment, changes in

exchange rates, reclassification, impairment losses and effects on the changes of consolidated entities.

A. The Group did not have capitalization of borrowing costs for property, plant and

equipment in 2019 and 2018. B. Components of buildings, including main building structure, air conditioning units,

electronic engineering and elevators were depreciated over 36 years, 5 years, 15 years and 20 years, respectively.

C. Leased assets under finance leases were pledged solely as security for the bank loans. D. Please refer to Note 8 for more details on property, plant and equipment under pledge. E. Assets related to Tatung University are described as follows:

The carrying amount of Hsin-She-Gong Building (“the Building”) was NTD106,288 thousand. The Company provided the fund fully for the building. The ownership registration was completed, and the Company has acquired building use permit and related licenses. As the state of construction and use of Hsin-She-Gong Building in 2019 has met the definition of investment property the Company reclassified it to the investment property from property, plant and equipment. Please refer to Note 6(11). On May 6, 2016, Shan-Chih Asset Development purchased the land of Hsin-She-Gong Building and completed the transfer of title. The development plans of this building will go with the overall plans of the whole factory area of the Company in the future. And the related issues, such as change of purpose of utilizing the land, urban planning and long-term plans, are still in the communication process between Tatung University and the Education ministry authority.

F. Part of the lands and land prepayments were held temporarily under third parties’ names

because of other reasons. The preservation measures have been taken to protect the assets.

G. In 2019, impairment loss amounted to NTD230,197 thousand was recongnized, which

is to write down the balance of certain property, plant and equipment of the Company to the recoverable amount. This has been recognized in the statement of comprehensive income.





79

H. The Group’s subsidiary, Shan-Chih Asset Development Co., disposed of certain real

estate to Heshuo Development Co., Ltd. in the amount of NTD7,078,000 thousand in the first quarter. After deducting land value increment tax and related expenses, the gains on disposal of property, plant and equipment of the transaction amounted to NTD5,532,273 thousand. Furthermore, Shan-Chih Asset Development Co. also disposed of its investment property to Highwealth Construction Co. in the amount of NTD4,150,871 thousand (pre-tax) and NTD914,729 thousand (pre-tax) in the third and fourth quarters, respectively. After deducting related expenses, the gains on disposal of property, plant and equipment of the transaction amounted to NTD3,294,486 thousand and NTD667,924 thousand, respectively.

I. The Group’s subsidiary, Shan-Chih Semiconductor Co., recognized impairment loss in

the amount of NTD139,672 thousand and NTD99 thousand following writing down certain property, plant and equipment and intangible assets to the recoverable amount. The impairment loss has been recognized in the statement of comprehensive income. The recoverable amount was based on value in use and was determined at the level of the cash generating unit. The cash flows forecast that were used to calculate value in use reflected the demand for products and services. In determining value in use for the cash-generating unit, the cash flows were discounted at a rate of 10.03% on a pre-tax basis.

J. The court dismissed the motion filed by the Group’s subsidiary, Chunghwa Picture Tubes, Ltd. (“CPT”), to restructure the entity on July 29, 2019 and the subsidiary could not apply for extension in accordance with the law. Since CPT’s non-financial assets were pledged to many creditors and most of the creditors received the right for compulsory execution who could sell CPT Group’s assets without CPT’s permission or at a short notice, CPT appointed an external appraiser to measure the recoverable amount of CPT and its subsidiary’s assets. According to the appraisal report, CPT recognized impairment loss in the amount of NTD6,372,119 thousand in 2019. Also, CPT and its subsidiary recognized impairment loss in the amount of NTD618,519 thousand in 2018.

K. Before the Group lost control of GET and its subsidiary, it recognized impairment loss

in the amount of NTD2,897,154 thousand following evaluation of its property, plant and equipment based on liquidation value. The assumption of liquidation value included whether the transaction was under stable trading order and whether there was sufficient trading time, the transaction model, number of market participants and auction market prices.





80

GET, a subsidiary of the Group, has written down the balance of part of its property, plant and equipment to recoverable amount (the higher of fair value less costs to sell and its value in use) before applying for debt settlement and resulted in impairment loss in the amount of NTD844,246 thousand, which was recognized in statement of comprehensive income. The recoverable amount is valued based on CGU’s value of use. The expected cash flow is based on estimates of GET’s expected purchase price from certain long-term contracts and demands of products and service. When determining the value of use of the cash generating unit, cash flow is discounted at 10.08%. Also, as mentioned in Note 6(23), GET valued some assets that were expected to be disposed of at fair value less cost of disposal when applying for debt settlement in 2018 as follows:

(a) Some of the property, plant and equipment in Taiwan has been written down to its

recoverable amount and resulted in impairment loss in the amount of NTD405,030 thousand, which was recognized in profit & loss. The recoverable amount is mainly based on cost method, supported by market method, categorized at fair value level 3, taking into consideration the usage rate of the target, useful life, economic life, technical life adjusted by salvage rate. Also, the reasonable present value was estimated by taking into consideration the current status of the target, marketability, original information when acquiring the target, information of comparable and deducting depreciation. If the market condition improves, and it’s possible that the value of the assets recovers, the impairment loss could be reversed.

(b) Some of the property, plant and equipment in China has been written down to its recoverable amount and resulted in an impairment loss in the amount of NTD707,792 thousand, which was recognized in profit & loss. The recoverable amount is measured at net fair value and the fair value is based on net asset method, categorized at fair value level 3. The impairment loss was recognized as the difference between net fair value and the carrying amount. GET has contacted the competent authority in Weifang, China to buy back the land. The buyback price was based on the price of non-industrial land. The application has been filed and would proceed when there is an exact price in the future. If the actual transaction price is higher than the appraised amount, the impairment loss would be reversed.

To support the Group’s operation, Ultra Energy (WEIFANG) Technology Co. Ltd, a subsidiary of GET, proposed to dispose of property and land in Weifang district, Shan-tung province as resolved by the board of directors. However, as GET couldn’t be sure whether the transaction could be completed within a year, therefore, the property and land were not reclassified as non-current asset held for sale in 2018.

L. Tatung Fine Chemicals Co., Ltd., a subsidiary of the Group, recognized impairment loss

of NTD35,455 thousand of property, plant, and equipment because of not able to generate future cash inflow from certain assets. Such impairment loss had been recognized in comprehensive income statement.





81

(11) Investment property

The Group’s investment properties include both owned investment properties and investment properties held by the Group as right-of-use assets. The Group has entered into commercial property leases on its owned investment properties with terms of between 1 and 13 years. These leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. The investment properties held by the Group as right-of-use assets with non-cancellable period of 3 years. Some of these contracts provide the Group options to extend the leases. The Group has changed the measurement of investment property from cost model to fair value model since 2018. For the years ended December 31, 2019

Land Buildings Right-of-use

assets (Note 1)

Total Cost: January 1, 2019 $24,859,212 $2,451,410 $- $27,310,622 Apply for IFRS 16 - - 19,395 19,395 Additions - - - - Gain/(loss) from

change of fair value

328,600 (19,628) - 308,972 Other (Note 2) 333,486 184,553 - 518,039 December 31, 2019 $25,521,298 $2,616,335 $19,395 $28,157,028

For the years ended December 31, 2018

Land Buildings Right-of-use

assets (Note 1)

Total Cost: January 1, 2018 (restated)

$27,090,759 $2,550,254

$29,641,013

Additions - 9,134 9,134 Gain/(loss) from

change of fair value

612,574 (107,978)

504,596

Other (Note 2) (2,844,121) - (2,844,121) December 31, 2018 $24,859,212 $2,451,410 $27,310,622 Note 1: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS. Note 2: Other including reclassification from inventory and PPE, transfers and changes in

exchange rates.





82

As the owner-occupancy rate of Hsin-She-Gong Building was reduced, the building was reclassified from property plant and equipment to investment property according to IAS 40 “Investment property”. As measured at fair value, the Company recognized gain (losses) on revaluation net of tax, which was transferred to investment property recognized under other comprehensive income in the amount of NTD56,942 thousand in 2019. The Group recognized investment property in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. the Group recognized the transaction as the prepayments for investments property are as follow: For the years ended December 31, 2019 2018 Self-assessment $- $315,390 Outsourcing valuation 28,157,028 26,995,232 Total $28,157,028 $27,310,622

The Group recognized investment property in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The dates of the appraise were December 31, 2019 and 2018, respectively.

108.12.31 A. Chonglian External real estate appraiser firm: Mr Liao B. Chunghua External real estate appraiser firm: Mr. Hsieh C. Huayuan External real estate appraiser firm: Mr Luo and Mr. Chen D. Honda External real estate appraiser firm: Mr. Chen and Ms. Chen E. Chen Lon External real estate appraiser firm: Mr Chen F. Colliers International External real estate appraiser firm: Mr. Ke. 107.12.31 A. Chonglian External real estate appraiser firm: Mr. Liao B. Chunghua External real estate appraiser firm: Mr. Hsieh C. Huayuan External real estate appraiser firm: Mr. Lee and Mr. Chen D. The valuation & consultants company limited: Kittikoon Sirichaiyakul The fair value of the investment property is assessed by the above mentioned external real estate appraiser firm based on current status and market evidence. The assessment methodologies include cash flow discount analysis method of income approach and land development analysis approach. However, the fair value is mostly based on income approach. As for undeveloped land, land development analysis approach would be applied.





83

If the assets are held mainly for rental income (such as land, living-office-mixed buildings, office buildings, factories, houses and warehouses), the assessment should take the signed contract and other comparable into consideration. Aside from income approach, the assessment should also be made with direct capitalization method or cash flow discount analysis method. Land development analysis approach should be applied for assets that might appraise in the future. Also, real estate appraiser firm examined comparable of our subject and took development schedule, liquidity, risk of disposal in the future into consideration to decide income capitalization rate and discount rate. The significant parameters involved in the assessment are as below: Contract rental fee and rental price on market As of December 31, 2019 2018 Contract rental fee (3.3 square meter/month/NTD) $60~$2,833 $60~$2,798 Market comparable (3.3 square meter/month/NTD) $72~$1,860 $72~$1,884 Mainly used parameters As of December 31, 2019 2018 Direct capitalization rate 0.22%~8.5% 0.23%~8.5% Income capitalization rate 0.18%~9.5% 0.19%~9.5% Discount rate of disposal at year-end 1.845%~3.350% 2.122%~2.595% Discount rate during analysis period 1.845%~3.350% 2.034%~2.595% For the years ended

December 31, 2019 2018 Rental income from investment property $461,753 $427,042 Less: Direct operating expenses from investment property

generating rental income (not including depreciation) (79,702) (103,193)

Direct operating expenses from investment property not generating rental income (not including depreciation)

- -

Total $382,051 $323,849 Please refer to Note 8 for more details on investment property under pledge. For those right-of-use assets leased by operating lease and presented in investment properties, please refer to Note 6(26) for relevant disposure which required by IFRS 16.





84

(12) Intangible assets

Goodwill Patents and

licenses Computer software

Others Intangible

asset Total Cost: January 1, 2019 $314,781 $1,537,467 $745,387 $218,903 $2,816,538 Addition-acquired separately - 5,170 35,162 - 40,332 Disposals - - (194,273) - (194,273) Loss of control of subsidiary - (14,661) (9,852) - (24,513) Other (Note) - 14,229 49,458 (9,281) 54,406 December 31, 2019 $314,781 $1,542,205 $625,882 $209,622 $2,692,490

Cost: January 1, 2018 $314,781 $4,179,205 $852,538 $207,580 $5,554,104 Addition-acquired separately - 26,980 96,276 - 123,256 Disposals - (2,632,919) (58,610) - (2,691,529) Other (Note) - (35,799) (144,817) 11,323 (169,293) December 31, 2018 $314,781 $1,537,467 $745,387 $218,903 $2,816,538

Amortization and impairment: January 1, 2019 $314,781 $1,517,853 $739,557 $153,149 $2,725,340 Amortization - 2,584 47,562 1,476 51,622 Disposals - - (194,273) - (194,273) Loss of control of subsidiary - (14,661) (9,852) - (24,513) Other (Note) - 28,495 32,712 12,309 73,516 December 31, 2019 $314,781 $1,534,271 $615,706 $166,934 $2,631,692

Amortization and impairment: January 1, 2018 $314,781 $3,507,972 $699,753 $124,516 $4,647,022 Amortization - 149,752 136,010 15,590 301,352 Disposals - (2,632,919) (58,337) - (2,691,256) Impairment - 517,092 39,534 3,043 559,669 Other (Note) - (24,044) (77,403) 10,000 (91,447) December 31, 2018 $314,781 $1,517,853 $739,557 $153,149 $2,725,340

Net carrying amount as at: December 31, 2019 $- $7,934 $10,176 $42,688 $60,798

December 31, 2018 $- $19,614 $5,830 $65,754 $91,198

Note: Other including changes in exchange rates, reclassification and the change of

consolidated entities.





85

The recognition of amortization for intangible assets are as blow: For the years ended

December 31, 2019 2018 Operating costs $6,685 $12,761 Operating expense (including research and development costs) 44,937 288,591 Total $51,622 $301,352 The recognition of impairment losses for intangible assets please refer to Note 6(10) for more details.

(13) Other non-current assets

As of December 31, 2019 2018 Long-term prepaid rent (Note) $237,644 Advance payments in equipment $235,643 84,736 Advance payments in materials 6,948 1,783,903 Refundable deposits 1,011,769 1,054,587 Net Input VAT - 70,503 Other non-current assets - other 424,441 314,043 Total $1,678,801 $3,545,416

Note: The Group adopted IFRS 16 since 1 January, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS 16.

As of December 31, 2018, long-term prepaid rents were for land use rights. Please refer to Note 9(6) for long-term prepayment of materials arose from signing long-term purchase contracts and prepayment from purchases reclassification to long-term prepayment of materials. With respect to the above mentioned other non-current assets – other, part of the lands and land prepayment, were held temporarily under third parties’ names because of regulatory requirements or other reasons. As of December 31, 2019 and 2018, land under third parties that had pledged to the Group were both NTD155,224 thousand, and land unsecured were NTD3,478 thousand and NTD4,669 thousand, respectively. For those lands that the Company has not secured its right over them, the Company continues handling the issue proactively. Please refer to Note 8 for more details on other non-current assets that were pledged as collateral.





86

(14) Long-term receivables-net

As of December 31, 2019 2018 Long-term receivables(including related parties) $2,117,684 $784,379 Less: loss allowance (2,029,831) (660,674) Total $87,853 $123,705 The Group derecognized GET and its subsidiary’s assets and liabilities from the consolidated financial statements due to loss of control of GET and its subsidiary. Since the Group could not eliminate the related receivable and payable through consolidation process, it recognized loss allowance in the amount of NTD1,728,471 thousand. Please refer to Note 6(24) for more details.

(15) Short-term loans

As of December 31, Interest Rates (%) 2019 2018 Unsecured bank loans 0.97%~7.40% $1,921,354 $9,433,395 Secured bank loans 1.55%~5.00% 3,614,687 4,612,157 Subtotal 5,536,041 14,045,552 Due to employees 0.12%~0.17% 14,773 15,805 Total $5,550,814 $14,061,357 The Group’s unused short-term lines of credits amounted to NTD1,189,423 thousand and NTD2,779,743 thousand, as of December 31, 2019 and 2018, respectively. Please refer to Note 8 for more details on financial assets.

(16) Short-term notes and bills payable

As of December 31, Guarantors Interest Rates (%) 2019 2018

Unsecured domestic bills payable 0.65%~3.09% $566,000 $442,180 Less: Unamortized discount (648) (273) Net $565,352 $441,907





87

(17) Financial liabilities at fair value through profit or loss

As of December 31, 2019 2018 Held for trading: Derivatives not designated as hedging Instruments

Foreign exchange forward contracts $2,808 $- Current $2,808 $-

(18) Long-term deferred revenue

A. Deferred revenue-current

Government grants

For the years ended

December 31, 2019 2018 Beginning balance $49,794 $544 Received during the period 2,558 52,366 Recognized in profit and loss (33,548) (3,116) Ending balance $18,804 $49,794 The government grants related to income are recognized as profit when the related cost is recognized as expenses in a systematic manner.

B. Deferred revenue-noncurrent

Government grants

For the years ended

December 31, 2019 2018 Beginning balance $71,699 $154,518 Received during the period 18,055 327,438 Recognized in profit and loss (25,257) (58,704) Reclassification (4,459) (20,476) Exchange difference (1,335) (6,710) Transfer out - (324,367) Ending balance $58,703 $71,699 The government grants related to acquiring assets are recognized as profit according to the amortization of the assets.



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ing

use,

used

in b

atch

es, e

ach

loan

use

up to

2 y

ears

, can

not e

xcee

d ex

piry

dat

e, in

tere

st pa

ymen

ts du

e m

onth

ly, o

nly

inte

rest

paym

ents

need

ed

in th

e gr

ace

perio

d of

12

mon

ths,

first

repa

ymen

t dat

e be

ing

the

15th

mon

ths

afte

r th

e gr

ante

d da

y,

quar

terly

rep

aym

ent

of t

he 2

5% o

f th

e am

ount

of

the

loan

agr

eem

ent,

bala

nce

bein

g re

duce

d if

no

prin

cipa

l, pr

inci

pal b

eing

repa

id u

pon

mat

urity

).

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

29,1

67

36

,944

2.51

E

ffect

ive

July

9, 2

014

to J

uly

9, 2

020.

Sin

ce t

he f

irst

use

date

, prin

cipa

l is

repa

id i

n 36

qua

rterly

paym

ents

.

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

17

,647

22,3

53

2.5

1~2.

57

Effe

ctiv

e Fe

brua

ry 2

6, 2

015

to J

uly

9, 2

020.

Sin

ce th

e fir

st us

e da

te, p

rinci

pal i

s rep

aid

in 3

6 qu

arte

rly

paym

ents

.

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

20

6,87

5

234,

458

2.5

1~2.

72

Effe

ctiv

e A

pril

27, 2

015

to A

pril

27, 2

021.

Sin

ce th

e fir

st us

e da

te, p

rinci

pal i

s rep

aid

in 4

8 qu

arte

rly

paym

ents

.

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

43

,542

48,1

25

2.

56

Effe

ctiv

e Ju

ne 2

7, 2

017

to J

une

27, 2

022.

Sin

ce th

e fir

st us

e da

te, p

rinci

pal i

s re

paid

in 4

8 qu

arte

rly

paym

ents

.

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

-

91

,875

2.56

E

ffect

ive J

une 2

7, 2

017

to N

ovem

ber 1

5, 2

019.

Sin

ce th

e firs

t use

dat

e, p

rinci

pal i

s rep

aid

in 4

8 qu

arte

rly

paym

ents

. Se

cure

d Lo

ng-te

rm lo

ans f

rom

Ban

k Si

noPa

c

83,1

25

-

2.

56

Effe

ctiv

e Ju

ne 2

7, 2

017

to J

uly

23, 2

024.

Sin

ce th

e fir

st us

e da

te, p

rinci

pal i

s re

paid

in 4

8 qu

arte

rly

paym

ents

.



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

90

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

2019

2018

Uns

ecur

ed lo

ng-te

rm lo

ans f

rom

Tai

wan

Coop

erat

ive

Bank

$-

$1,1

00,0

00

2.

09

Effe

ctiv

e D

ecem

ber 1

9, 2

017

to D

ecem

ber 2

9, 2

019.

The

prin

cipa

l will

be

repa

id u

pon

mat

urity

.

Secu

red

long

-term

loan

s fro

m T

aiw

an C

oope

rativ

e

Bank

1,

100,

000

-

2.

25

Effe

ctiv

e M

arch

29,

201

9 to

Mar

ch 2

9, 2

023.

Inte

rest

paym

ents

dur

mon

thly

sinc

e th

e 3rd

yea

r use

dat

e

prin

cipa

l in

8 qu

arte

rly p

aym

ents

.

Uns

ecur

ed lo

ng-te

rm lo

ans f

rom

Far

Eas

tern

Inte

rnat

iona

l Ban

k

-

29

4,17

2

2.02

E

ffect

ive

Sept

embe

r 12,

201

8 to

Jun

e 19

, 202

0. R

evol

ving

use

. Whe

neve

r ind

ivid

ual p

roje

ct b

ills

and

rece

ives

pay

men

t in

the

com

pens

atio

n ac

coun

t, 77

% o

f suc

h de

posit

will

be

used

to re

pay

the

prin

cipa

l.

Uns

ecur

ed lo

ng-te

rm lo

ans f

rom

Far

Eas

tern

Inte

rnat

iona

l Ban

k

60

0,44

9

700,

000

2.

02

Effe

ctiv

e D

ecem

ber 1

2, 2

018

to D

ecem

ber 5

, 202

0. R

evol

ving

use

. Whe

neve

r ind

ivid

ual p

roje

ct b

ills

and

rece

ives

pay

men

t in

the

com

pens

atio

n ac

coun

t, 77

% o

f su

ch d

epos

it w

ill b

e us

ed to

rep

ay t

he

prin

cipa

l.

Secu

red

Long

-term

loan

s fro

m O

-Ban

k

20,9

97

33

,099

2.28

~2.5

5 E

ffect

ive

Dec

embe

r 29

, 20

17 t

o D

ecem

ber

29,

2020

. Th

e pr

inci

pal

will

be

repa

id i

n 24

mon

thly

paym

ents

sta

rting

Jan

uary

31,

201

9. T

he 1

st p

aym

ent w

ill b

e N

TD75

0 th

ousa

nd a

nd th

e 2nd

to 2

3rd

paym

ents

will

be

NTD

1,03

2 th

ousa

nd a

nd th

e re

mai

ning

will

be

repa

id o

n D

ecem

ber 2

9, 2

020.

Secu

red

Long

-term

loan

s fro

m O

-Ban

k

10,0

43

16

,000

2.28

~2.5

5 E

ffect

ive

Sept

embe

r 26

, 20

18 t

o D

ecem

ber

29,

2020

. Th

e pr

inci

pal

will

be

repa

id i

n 24

mon

thly

paym

ents

sta

rting

Jan

uary

31,

201

9. T

he 1

st p

aym

ent w

ill b

e N

TD36

9 th

ousa

nd a

nd th

e 2nd

to 2

3rd

paym

ents

will

be

NTD

508

thou

sand

and

the

rem

aini

ng w

ill b

e re

paid

on

Dec

embe

r 29,

202

0.

Secu

red

Long

-term

loan

s fro

m T

aish

in In

tern

atio

nal

Bank

-

70

,000

2.51

E

ffect

ive

July

30,

201

8 to

Jul

y 28

, 202

3. S

ince

6 m

onth

s af

ter t

he fi

rst u

se d

ate,

prin

cipa

l is r

epai

d in

180

mon

thly

pay

men

ts.

Secu

red

Long

-term

loan

s fro

m T

aish

in In

tern

atio

nal

Bank

-

92

,000

2.51

E

ffect

ive

Sept

embe

r 12,

201

8 to

July

28,

202

3. S

ince

6 m

onth

s afte

r the

firs

t use

dat

e, pr

inci

pal i

s rep

aid

in 1

80 m

onth

ly p

aym

ents

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

15,3

90,0

00

16

,200

,000

1.93

~2.0

6 E

ffect

ive

Dec

embe

r 23,

201

6 to

Dec

embe

r 23,

202

1. T

he 1

st re

paym

ent o

f prin

cipa

l is i

n 3

year

s afte

r

first

draw

. The

rem

aini

ng p

rinci

pal i

s rep

aid

in 5

sem

i-ann

ually

repa

ymen

ts. T

he 1

st to

4th p

aym

ents

will

be 5

% a

nd th

e re

mai

ning

80%

will

be

repa

id in

the

5th re

paym

ent.



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

91

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

2019

2018

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

$8,3

40,0

00

$8

,600

,000

1.93

~2.0

6 E

ffect

ive

Dec

embe

r 23,

201

6 to

Dec

embe

r 23,

202

1. T

he c

ompa

ny c

ould

revo

lve

use

loan

s dur

ing

the

due d

ate .

The

Mat

urity

dat

e and

term

s of r

epay

men

t : T

he co

mpa

ny sh

ould

repa

ymen

t the

unp

aid a

mou

nt

durin

g th

e due

dat

e .Th

e 1st

repa

ymen

t of p

rinci

pal i

s in

3 ye

ars a

fter f

irst d

raw

. The

rem

aini

ng p

rinci

pal

is re

paid

in 5

sem

i-ann

ually

repa

ymen

ts. T

he 1

st to

4th

repa

ymen

ts w

ill d

ecre

ase

the

cred

it lim

it by

5%

ea

ch, a

nd th

e re

mai

ning

80%

will

be

repa

id in

the

5th

repa

ymen

t.

Two-

year

loan

s due

to st

ockh

olde

rs a

nd e

mpl

oyee

s

14,9

46

14

,946

0.17

Subt

otal

25,8

56,7

91

28

,678

,972

Less

: una

mor

tized

issu

ing

cost

(80,

052)

(1

23,3

24)

25,7

76,7

39

28

,555

,648

Less

: cur

rent

por

tion

(2

,250

,488

)

(3,2

65,3

30)

Tota

l $

23,5

26,2

51

$25

,290

,318

Shan

-Chi

h A

sset

Dev

elop

men

t Co.

gua

rant

eed

the

Com

pany

’s lo

ng-te

rm lo

ans.

As

of D

ecem

ber 3

1, 2

019

and

2018

, the

bal

ance

of g

uara

ntee

s w

as N

TD27

,960

,000

thou

sand

and

NTD

28,8

00,0

00 th

ousa

nd, r

espe

ctiv

ely;

the

Com

pany

’s C

hairm

an, W

en-Y

en L

in K

uo, g

uara

ntee

d pa

rt of

the

Com

pany

’s b

ank

loan

s. Fo

r the

secu

red

synd

icat

ed lo

ans

from

Ban

k of

Tai

wan

, the

Com

pany

bre

ache

d th

e de

bt c

oven

ant o

f lia

bilit

y to

equ

ity ra

tio a

s of J

une

30, 2

019

beca

use

the

Com

pany

rec

ogni

zed

the

inve

stm

ent

loss

of

CPT

and

GET

, whi

ch c

ause

d th

e sig

nific

ant

incr

ease

in

the

cred

it ba

lanc

e of

the

in

vest

men

t acc

ount

ed fo

r usin

g eq

uity

met

hod

(liab

ility

acc

ount

). Th

e Co

mpa

ny h

as o

btai

ned

wai

ver l

ette

r for

the

debt

cov

enan

t on

Oct

ober

18,

20

19, t

here

fore

ther

e w

as n

o im

med

iate

repa

ymen

t of t

he lo

ans t

rigge

red

by b

reac

h of

cov

enan

ts o

n D

ecem

ber 3

1, 2

019.

Pa

rt of

the

prop

erty

, pla

nt a

nd e

quip

men

t, fin

anci

al a

sset

s m

easu

red

at a

mor

tized

cos

t, an

d in

vest

men

ts a

ccou

nted

for u

sing

the

equi

ty m

etho

d w

ere

pled

ged

as c

olla

tera

l for

secu

red

loan

s. Pl

ease

refe

r to

Not

e 8

for m

ore

deta

ils.

(Not

e: In

tere

st ra

tes a

re ro

unde

d of

f to

the

seco

nd d

ecim

al p

lace

.)



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

92

B. C

PT a

nd it

s sub

sidia

ries

Le

nder

s

As o

f Dec

embe

r 31,

Inte

rest

rate

(%

) (N

ote1

)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

201

9 (N

ote3

) 2

018

(Not

e 3)

Adm

inis

tere

d by

Ban

k of

Tai

wan

(syn

dica

ted

loan

s)

$6,7

50,0

00

$6

,750

,000

3.05

T

he fi

rst r

epay

men

t dat

e is

six m

onth

s afte

r the

date

of t

his a

gree

men

t, an

d ea

ch o

f the

ten

succ

essiv

e se

mi-

annu

al d

ates t

here

afte

r. Fo

r Jul

y 15,

201

8 to

July

15,

202

3 th

e rep

aym

ent i

s NTD

750,

000

thou

sand

ever

y six

m

outh

. Se

cure

d Lo

ng-te

rm lo

ans f

rom

Kin

g’s T

own

bank

1,49

6,54

6

1,52

0,13

6

2.25

(N

ote 2

)

Secu

red

Long

-term

loan

s fro

m B

ohai

Inte

rnat

iona

l Tr

ust (

RMB1

,126

,590

thou

sand

)

1,95

1,19

8

2,29

6,91

3

6.60

T

he o

ne-ti

me

repa

ymen

t will

be

due

on M

arch

24,

201

9. (N

ote

6), (

Not

e 7)

Secu

red

Long

-term

loan

s fro

m B

ohai

Inte

rnat

iona

l Tr

ust (

RMB4

66,9

50 th

ousa

nd)

83

0,00

4

885,

218

6.

40

The

one

-tim

e re

paym

ent w

ill b

e du

e on

Dec

embe

r 27,

201

8. (N

ote

5), (

Not

e 7)

Secu

red

Long

-term

loan

s fro

m C

hina

Min

shen

g Ba

nk (R

MB4

20,0

00 th

ousa

nd)

-

40

,313

5.95

T

he o

ne-ti

me

repa

ymen

t will

be

due

on D

ecem

ber 2

7, 2

018.

Secu

red

Long

-term

loan

s fro

m C

hina

Rai

lway

Tru

st (R

MB3

88,0

00 th

ousa

nd)

75

7,68

0

787,

657

5.

65

The

one

-tim

e re

paym

ent w

ill b

e du

e on

Feb

ruar

y 13

, 201

9. (N

ote

4)

Subt

otal

11,7

85,4

28

12

,280

,237

Less

: una

mor

tized

issu

ing

cost

-

-

11,7

85,4

28

12

,280

,237

Less

: cur

rent

por

tion

(11

,785

,428

) (

12,2

80,2

37)

Tota

l

$-

$-

Not

e 1:

The

inte

rest

rate

are

rate

s bef

ore

appl

ying

fina

ncia

l res

truct

urin

g on

Dec

embe

r 13,

201

8.

Not

e 2:

CPT

ent

ered

3 lo

ng-te

rm lo

ans

with

Kin

g’s

Tow

n ba

nk o

n O

ctob

er 5

, 20

18 a

nd p

rovi

ded

10,9

44,7

73 s

hare

s of

the

Com

pany

and

24

,099

,974

shar

es o

f FD

as c

olla

tera

l to

secu

re th

e lo

ans.

How

ever

, afte

r CPT

app

lied

for f

inan

cial

rest

ruct

urin

g on

Dec

embe

r 13,

201

8,

Kin

g’s T

own

bank

sold

all

of th

e sh

ares

men

tione

d ab

ove

in D

ecem

ber 2

018.

The

pro

ceed

s offs

et w

ith th

e pr

inci

pal a

nd re

late

d ex

pens

e an

d he

nce

the

bala

nce

of th

e lo

an w

as th

e su

m o

f the

3 lo

ng-te

rm lo

ans.



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

93

Not

e 3:

CPT

has

appl

ied

for f

inan

cial

rest

ruct

urin

g an

d em

erge

nt in

junc

tion

to T

aoyu

an d

istric

t cou

rt be

caus

e of f

inan

cial

diff

icul

ty o

n D

ecem

ber

13, 2

018.

Suc

h ac

tion

has b

reac

hed

the

loan

con

tract

s and

hen

ce a

ll of

the

long

-term

loan

s wer

e re

clas

sifie

d to

long

-term

loan

s with

in a

ye

ar o

r lon

g-te

rm lo

ans w

ithin

an

oper

atin

g cy

cle.

N

ote

4: C

hina

Rai

lway

Gro

up L

imite

d se

nt le

tters

of a

dvan

ce m

atur

ity to

info

rm C

PT G

roup

in D

ecem

ber 2

018

and

Janu

ary

2019

that

CPT

F O

ptro

nics

(She

n-Zh

en) C

o., L

td. d

id n

ot p

ay d

ebt i

nter

est o

n tim

e an

d th

e m

arke

t val

ue o

f the

ple

dged

shar

es o

f list

ed c

ompa

nies

’ sto

cks

－CP

TTG

sign

ifica

ntly

dec

lined

follo

win

g th

e su

bsta

ntia

l con

trolle

r cla

imin

g re

stru

ctur

e; a

s a re

sult,

the

pled

ged

shar

e ra

tio w

as h

ighe

r th

an th

e cr

iteria

sta

ted

in th

e co

ntra

ct a

nd w

as n

ot c

over

ed o

n tim

e. A

s th

ese

circ

umst

ance

s co

nstit

uted

def

ault,

Chi

na R

ailw

ay G

roup

Li

mite

d de

clar

ed th

e pr

inci

pal a

nd in

tere

st m

atur

ed in

adv

ance

and

froz

e th

e de

posit

of R

MB1

48 m

illio

n in

Chi

na S

truct

ure

Bank

by

CPTF

Opt

roni

cs (S

hen-

Zhen

) Co.

, Ltd

. She

n-Zh

en In

term

edia

te P

eopl

e’s c

ourt

sent

a le

tter o

f med

iatio

n in

Mar

ch 2

019,

stat

ing

that

the

disp

utes

of l

oan

cont

ract

bet

wee

n Ch

ina

Railw

ay G

roup

Lim

ited

and

CPTF

Opt

roni

cs (S

hen-

Zhen

) Co.

, Ltd

. met

the

med

iatio

n cr

iteria

an

d a

med

iato

r will

be

assig

ned

for m

edia

tion.

Lat

er th

e Sh

en-Z

hen

Inte

rmed

iate

Pop

ole’

s Cou

rt op

ened

a c

ourt

sess

ion

on A

ugus

t 21,

20

19, C

PTF

Opt

roni

cs (S

hen-

Zhen

) Co.

, Ltd

. rec

eive

d ci

vil r

ulin

g N

o. (2

019)

Yue

-03-

Min

-Chu

-832

on

Oct

ober

29,

201

9, w

hich

issu

ed

by S

hen-

Zhen

Int

erm

edia

te P

eopl

e’s

Cour

t. CP

TF O

ptro

nics

(Sh

en-Z

hen)

Co.

, Ltd

. fil

ed a

n ap

peal

to

Gua

ngdo

ng H

igh

Cour

t on

N

ovem

ber 1

2, 2

019,

and

has

not

rece

ived

a n

otic

e of

cou

rt se

ssio

n so

far.

Not

e 5:

129

.6 m

illio

n sh

ares

wer

e lis

ted

in th

e ju

dici

al s

ale

on A

libab

a au

ctio

n w

ebsit

e on

Dec

embe

r 24

and

25, 2

019

by N

ingd

e In

term

edia

te

Peop

le’s

Cou

rt. A

fter t

hat,

Xin

g-Y

u La

i, th

e su

cces

sful

tend

erer

, rai

sed

an o

bjec

tion

to th

e co

urt f

or th

e di

ffere

nce

betw

een

the

auct

ion

pric

e and

the c

losin

g pr

ice.

Nin

gde I

nter

med

iate

Peo

ple’

s Cou

rt ca

ncel

led

the d

ecisi

on N

o. (2

019)

Min

- 09-

Zhi

- 152

it is

sued

on

Janu

ary

20, 2

020.

The

cou

rt w

ill a

uctio

n th

e sh

ares

aga

in o

n A

libab

a au

ctio

n w

ebsit

e fro

m 1

0:00

AM

Mar

ch 3

0, 2

020

to 1

0:00

AM

Mar

ch 3

1,

2020

(unl

ess e

xten

ded)

. N

ote

6: B

ohai

trust

Co.

sent

deb

t per

form

ance

ver

ifica

tion

lette

r of t

he fi

rst,

seco

nd a

nd th

ird in

stal

lmen

ts o

f the

loan

agr

eem

ent t

hrou

gh B

eijin

g Zh

ongx

in N

otar

y Pu

blic

Offi

ce in

Jan

uary

and

Mar

ch 2

019

to n

otify

Chu

nghw

a Pi

ctur

e Tu

bes

(Ber

mud

a) L

td. a

nd C

PTF

Opt

roni

cs

(She

n-Zh

en) C

o., L

td. t

hat t

hey

did

not p

ay b

ack

debt

on

time

and

the

Beiji

ng Z

hong

xin

Not

ary

Publ

ic O

ffice

app

rove

d Bo

haitr

ust C

o.

to d

ispos

e of

the

shar

es fo

r rep

ay m

ost o

f loa

ns. F

uzho

u In

term

edia

te C

ourt

sent

the

cour

t rul

ing

and

notic

e of

per

form

ance

on

July

29

and

Aug

ust 5

, 201

9, w

hich

sta

ted

that

the

seco

nd a

nd th

ird in

stal

lmen

ts o

f the

loan

hav

e en

tere

d co

mpu

lsory

enf

orce

men

t. A

lso, 1

53

mill

ion

shar

es w

ere

auct

ione

d pu

blic

ly in

the

judi

cial

sal

e w

ebsit

e fro

m D

ecem

ber 2

4, 2

019

to D

ecem

ber 2

5, b

ut p

asse

d in

, and

seco

nd

auct

ion

was

hel

d fro

m F

ebru

ary

11, 2

019

to F

ebru

ary

12 w

hich

was

also

pas

sed

in. F

urth

erm

ore,

27,

640,

594

shar

es w

ere

sold

for t

he

third

inst

allm

ent o

f the

loan

of B

ohai

trust

Co.

thro

ugh

seco

ndar

y m

arke

t and

Hua

rong

Sec

uriti

es C

o., L

td. w

ill a

uctio

n th

e re

mai

ning

14

,359

,406

shar

es o

n M

arch

17,

2020

. N

ote

7: T

he lo

ng-te

rm lo

an h

as b

een

secu

red

by s

hare

s of

list

ed c

ompa

nies

sto

cks－

CPTT

G a

s a

pled

ge. P

leas

e re

fer

to N

ote6

(3)

for

mor

e de

tails

.



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

94

C. S

CSC

and

its su

bsid

iarie

s

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Uns

ecur

ed lo

ng-te

rm lo

an fr

om K

ing’

s Tow

n Ba

nk

$-

$373

,182

2.52

S

tarte

d fro

m M

ay 5

, 201

8, p

rinci

pal i

s re

paid

in 2

6 m

onth

ly p

aym

ents

in th

e am

ount

of N

TD15

,000

thou

sand

per

pay

men

t. Th

e las

t pay

men

t will

be N

TD12

5,00

0 th

ousa

nd.

Uns

ecur

ed lo

ng-te

rm lo

an fr

om K

ing’

s Tow

n Ba

nk

-

46

,079

2.65

S

tarte

d fro

m Ja

nuar

y 21

, 201

7, p

rinci

pal i

s rep

aid

in 2

8 m

onth

ly p

aym

ents

in th

e am

ount

of N

TD11

,000

thou

sand

per

pay

men

t. Th

e las

t pay

men

t will

be N

TD3,

000

thou

sand

.

Secu

red

Long

-term

loan

s fro

m K

ing’

s Tow

n Ba

nk

-

10

0,70

3

2.65

S

tarte

d fro

m M

ay 2

7, 2

017,

prin

cipa

l is

repa

id in

26

mon

thly

pay

men

ts in

the

amou

nt o

f NTD

13,0

00

thou

sand

per

pay

men

t. Th

e las

t pay

men

t will

be N

TD25

,000

thou

sand

.

Secu

red

Long

-term

loan

s fro

m K

ing’

s Tow

n Ba

nk

-

1,

064,

910

2.

59

Sta

rted

from

Sep

tem

ber

13,

2018

, pr

inci

pal

is re

paid

in

20 q

uarte

rly p

aym

ents

in

the

amou

nt o

f

NTD

60,0

00 th

ousa

nd p

er p

aym

ent.

Secu

red

Long

-term

loan

s fro

m K

ing’

s Tow

n Ba

nk

-

75

4,84

0

2.59

S

tarte

d fro

m D

ecem

ber

27,

2018

, pr

inci

pal

is re

paid

in

20 q

uarte

rly p

aym

ents

in

the

amou

nt o

f

NTD

40,0

00 th

ousa

nd p

er p

aym

ent.

Sale

s with

Buy

back

Agr

eem

ents

Cha

ileas

e Fi

nanc

e

Co.,

Ltd.

-

41

,451

1.61

Star

ted

from

Apr

il 15

, 201

8, p

rinci

pal i

s rep

aid

in 8

qua

rterly

pay

men

ts in

the

amou

nt o

f NTD

9,50

0 pe

r

each

pay

men

t. N

TD5,

750

thou

sand

for t

he la

st pa

ymen

t.

Secu

red

long

-term

loan

from

Cha

ileas

e Fi

nanc

e Co

.,

Ltd.

-

33

,533

1.26

Star

ted

from

Sep

tem

ber

30,

2018

, pr

inci

pal

is re

paid

in

36 m

onth

ly p

aym

ents

in t

he a

mou

nt o

f

NTD

1,15

3 th

ousa

nd p

er e

ach

paym

ent.

Sale

s with

Buy

back

Agr

eem

ents

with

Rob

ina

Fina

nce

& L

easi

ng C

orp.

62

,310

2.53

Star

ted

from

Apr

il 21

, 201

8, p

rinci

pal i

s re

paid

in 2

4 m

onth

ly p

aym

ents.

NTD

4,90

0 th

ousa

nd w

ill b

e

repa

id f

or th

e 1st

to 9

th p

erio

ds, N

TD4,

425

thou

sand

will

be

repa

id f

or th

e 10

th to

17th

per

iods

, and

NTD

3,65

0 th

ousa

nd w

ill b

e re

paid

for t

he 1

8th to

24th

per

iods

.

Secu

red

Long

-term

loan

s fro

m S

unny

bank

fina

nce

leas

e (C

hina

) Ltd

.

-

20

,139

4.87

Star

ted

from

Feb

ruar

y 25

, 201

8, p

rinci

pal i

s rep

aid

in 2

4 m

onth

ly p

aym

ents.

RM

B500

thou

sand

will

be

repa

id f

or th

e 1s

t to

12th

per

iods

, RM

B350

thou

sand

will

be

repa

id f

or th

e 13

th to

23rd

per

iods

, and

RMB1

50 th

ousa

nd w

ill b

e re

paid

for l

ast p

erio

d.



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

95

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Secu

red

long

-term

loan

from

Sha

ngha

i com

mer

cial

& sa

ving

s ban

k, lt

d.

-

62

,198

3.35

Star

ted

from

Mar

ch 2

9, 2

018,

prin

cipa

l is

repa

id in

12

quar

terly

pay

men

ts o

f USD

225

thou

sand

. The

inte

rest

is b

ased

on

float

ing

rate

USD

LO

BOR(

6M) p

lus 0

.75%

.

Secu

red

long

-term

loan

from

Hot

al F

inan

ce C

o.,

Ltd.

-

28

,336

1.19

Star

ted

from

Jun

e 25

, 201

8, p

rinci

pal i

s re

paid

in 1

8 m

onth

ly p

aym

ents.

NTD

3,00

0 th

ousa

nd w

ill b

e

repa

id f

or t

he 1

st to

6th

per

iods

, NTD

2,80

0 th

ousa

nd w

ill b

e re

paid

for

the

7th

to 1

2nd p

erio

ds, a

nd

NTD

2,68

2 th

ousa

nd w

ill b

e re

paid

for t

he la

st 6

perio

ds.

Sale

s w

ith

Buyb

ack

Agr

eem

ents

with

Jih

Su

n

Inte

rnat

iona

l Lea

sing

and

Fina

nce

Co.,

Ltd

-

57

,188

3.40

Star

ted

from

May

30,

201

8, p

rinci

pal i

s rep

aid

in 2

4 m

onth

ly p

aym

ents

of N

TD3,

560

thou

sand

.

Secu

red

long

-term

loan

from

Jih

Sun

Inte

rnat

iona

l

Leas

ing

and

Fina

nce

Co.,

Ltd

-

36

,080

3.42

Star

ted

from

May

30,

201

8, p

rinci

pal i

s rep

aid

in 2

4 m

onth

ly p

aym

ents

of N

TD2,

226

thou

sand

.

Far E

aste

rn In

tern

atio

nal B

ank

-

67

,680

1.63

T

he o

ne-ti

me

repa

ymen

t will

be

due

on D

ecem

ber 2

1, 2

019.

Subt

otal

-

2,74

8,62

9

Less

: cur

rent

por

tion

-

(1

84,7

04)

Tota

l

$-

$2

,563

,925

Acc

ordi

ng to

Let

ter G

ong-

Zhi-Z

i-No.

107

0130

8360

issu

ed b

y th

e In

dust

rial D

evel

opm

ent B

urea

u, M

inist

ry o

f Eco

nom

ic A

ffairs

on

Dec

embe

r 24

, 201

8, K

ing’

s Tow

n Ba

nk h

eld

a de

bt n

egot

iatio

n m

eetin

g re

gard

ing

GET

’s o

pera

tion,

and

mor

e th

an tw

o-th

irds o

f the

cre

dito

r ban

ks re

ache

d an

agr

eem

ent i

n w

ritin

g on

Mar

ch 5

, 201

9. G

ET la

ter d

ecid

ed to

disc

ontin

ue o

pera

tion

due

to o

pera

ting

defic

it an

d on

goin

g lo

ss. G

ET re

solv

ed

to p

roce

ed w

ith li

quid

atio

n at

its b

oard

mee

ting

held

on

July

15,

201

9 an

d th

e re

solu

tion

was

pas

sed

at th

e pr

ovisi

onal

shar

ehol

ders

’ mee

ting

on

Aug

ust 3

0, 2

019.

The

refo

re, t

he G

roup

der

ecog

nize

d as

sets

and

liab

ilitie

s of G

ET a

nd it

s sub

sidia

ry f

rom

the

cons

olid

ated

fina

ncia

l sta

tem

ents

. A

s of D

ecem

ber 3

1, 2

018,

form

er C

hairm

an W

en-S

han

Lin

of S

CSC

was

a jo

int g

uara

ntor

of t

he a

bove

men

tione

d lo

ng-te

rm lo

ans.

Also

, for

the

long

-term

loan

secu

ritie

s pro

vide

d by

SCS

C, p

leas

e re

fer t

o N

ote

8 fo

r mor

e de

tails

. (N

ote:

Inte

rest

rate

s are

roun

ded

off t

o th

e se

cond

dec

imal

pla

ce.)



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

96

D. F

D a

nd it

s sub

sidia

ries

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Secu

red

loan

from

Ban

k of

Pan

hsin

$-

$5

20,0

00

1.80

E

ffect

ive

from

Oct

ober

30,

201

4 to

Oct

ober

30,

201

9. P

rinci

pal i

s rep

aid

in 1

0 se

mi-a

nnua

lly p

aym

ents

. NTD

10,0

00

thou

sand

will

be r

epai

d fo

r the

firs

t 19

paym

ents.

NTD

510,

000

thou

sand

will

be r

epai

d fo

r the

10th

pay

men

t. In

tere

st

is pa

id m

onth

ly.

Secu

red

loan

from

Ban

k of

Pan

hsin

-

200,

000

1.

80

Effe

ctiv

e fro

m O

ctob

er 2

2, 2

018

to A

pril

19, 2

019.

Prin

cipa

l is r

epai

d in

4 se

mi-a

nnua

lly p

aym

ents

afte

r firs

t dra

w.

Repa

y th

e pr

inci

pal a

fter t

he e

xpira

tion

to re

new

. Int

eres

t is p

aid

mon

thly

.

Secu

red

loan

from

Ban

k of

Pan

hsin

49,5

90

-

2.

25

Effe

ctiv

e Dec

embe

r 25,

201

9 to

Oct

ober

29,

202

4. P

rinci

pal i

s rep

aid

at m

atur

ity w

ith in

tere

st pa

ymen

ts d

ur m

onth

ly.

Secu

red

loan

from

Ban

k of

Pan

hsin

710,

000

-

2.25

Effe

ctiv

e fro

m O

ctob

er 2

9, 2

019

to O

ctob

er 2

9, 2

024.

Prin

cipa

l is r

epai

d in

10

sem

i-ann

ually

pay

men

ts N

TD10

,000

thou

sand

will

be

repa

id fo

r the

firs

t 19

paym

ent.

NTD

620,

000

thou

sand

will

be

repa

id fo

r the

10th

pay

men

t. In

tere

st

is pa

id m

onth

ly.

Subt

otal

759,

590

72

0,00

0

Less

: cur

rent

por

tion

(2

0,00

0)

(720

,000

)

Tota

l

$739

,590

$-

Certa

in la

nds a

nd b

uild

ings

wer

e pl

edge

d as

firs

t mor

tgag

e fo

r sec

ured

loan

s fro

m B

ank

of P

anhs

in. P

leas

e re

fer t

o N

ote

8 fo

r ass

ets p

ledg

ed a

s co

llate

ral f

or lo

ng-te

rm lo

ans.

(N

ote:

Inte

rest

rate

s are

roun

ded

off t

o th

e se

cond

dec

imal

pla

ce.)



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

97

E. C

hih-

Shen

g Re

alty

Co.

Lend

ers

A

s of D

ecem

ber 3

1,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Secu

red

long

-term

loan

from

O-B

ank

$-

$120

,000

1.93

E

ffect

ive

June

30,

201

6 to

Jun

e 30

, 201

9. P

rinci

pal i

s re

paid

at m

atur

ity w

ith i

nter

est

paym

ents

due

mon

thly

.

Secu

red

long

-term

loan

from

O-B

ank

-

10

0,00

0

1.93

E

ffect

ive

July

4, 2

016

to Ju

ly 4

, 201

9. P

rinci

pal i

s rep

aid

at m

atur

ity w

ith in

tere

st pa

ymen

ts d

ue m

onth

ly.

Uns

ecur

ed lo

ng-te

rm lo

an fr

om O

-Ban

k

-

30,0

00

1.

93

Effe

ctiv

e Ju

ly 4

, 201

6 to

July

4, 2

019.

Prin

cipa

l is r

epai

d at

mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Uns

ecur

ed lo

ng-te

rm lo

an fr

om O

-Ban

k

-

10,0

00

1.

93

Effe

ctiv

e M

ay 4

, 201

7 to

July

4, 2

019.

Prin

cipa

l is r

epai

d at

mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Uns

ecur

ed lo

ng-te

rm lo

an fr

om O

-Ban

k

-

40,0

00

1.

93

Effe

ctiv

e Ju

ly 1

7, 2

017

to Ju

ly 4

, 201

9. P

rinci

pal i

s rep

aid

at m

atur

ity w

ith in

tere

st pa

ymen

ts du

e mon

thly

.

Secu

red

long

-term

loan

s fro

m B

ank

of T

aiw

an

24

5,00

0

245,

000

2.

15

Effe

ctiv

e fro

m Ju

ly 2

0, 2

015

to Ju

ly 2

0, 2

023.

Prin

cipa

l is r

epai

d in

24

mon

thly

pay

men

ts st

arte

d fro

m th

e

4th y

ear.

NTD

5,00

0 th

ousa

nd w

ill b

e rep

aid

for 1

st to

24th

per

iods

. NTD

10,0

00 th

ousa

nd w

ill b

e rep

aid

for

25th

to 3

5th p

erio

ds, a

nd th

e rem

aini

ng w

ould

be

repa

id a

t mat

urity

.

Subt

otal

245,

000

54

5,00

0

Less

: cur

rent

por

tion

-

(3

00,0

00)

Tota

l

$245

,000

$245

,000

Plea

se re

fer t

o N

ote

8 fo

r ass

ets p

ledg

ed a

s col

late

ral f

or lo

ng-te

rm lo

ans.

(Not

e: In

tere

st ra

tes a

re ro

unde

d of

f to

the

seco

nd d

ecim

al p

lace

.)



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

98

F. T

atun

g D

ie C

astin

g Co

.

Lend

ers

A

s of D

ecem

ber 3

1,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Uns

ecur

ed lo

ng-te

rm lo

an fr

om H

ua n

an

com

mer

cial

ban

k

$-

$4,3

75

2.

20

Effe

ctiv

e N

ovem

ber

28, 2

014

to N

ovem

ber

28, 2

019.

Prin

cipa

l is

repa

id in

60

mon

thly

pay

men

ts o

f

NTD

417

thou

sand

with

inte

rest

paym

ents

due

mon

thly

U

nsec

ured

long

-term

loan

from

Hua

nan

com

mer

cial

ban

k

4,

792

7,

500

2.

20

Effe

ctiv

e N

ovem

ber

7, 2

016

to N

ovem

ber

7, 2

021.

Prin

cipa

l is

repa

id i

n 60

mon

thly

pay

men

ts o

f

NTD

208

thou

sand

with

inte

rest

paym

ents

due

mon

thly

Subt

otal

4,79

2

11,8

75

Le

ss: c

urre

nt p

ortio

n

(2,5

00)

(4

,584

)

Tota

l

$2,2

92

$7

,291

(Not

e: In

tere

st ra

tes a

re ro

unde

d of

f to

the

seco

nd d

ecim

al p

lace

.) G

. Chu

nghw

a El

ectro

nics

Inve

stm

ent C

o., L

td.

Lend

ers

A

s of D

ecem

ber 3

1,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Secu

red

long

-term

loan

from

Kin

g’s T

own

Bank

.

$-

$1

76,0

00

2.

52

Effe

ctiv

e fro

m S

epte

mbe

r 201

7 to

June

201

9. P

rinci

pal i

s rep

aid

in 2

1-m

onth

ly p

aym

ents

with

inte

rest

paym

ents

due

mon

thly

. Le

ss: c

urre

nt p

ortio

n

-

(176

,000

)

Tota

l

$-

$-

Plea

se re

fer t

o N

ote

8 fo

r ass

ets p

ledg

ed a

s col

late

ral f

or lo

ng-te

rm lo

ans.

(Not

e: In

tere

st ra

tes a

re ro

unde

d of

f to

the

seco

nd d

ecim

al p

lace

.)



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

99

H. S

han-

Chi

h A

sset

Dev

elop

men

t Co.

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

$-

$2

00,0

00

2.

15

Effe

ctiv

e Ju

ne 1

9, 2

018

to A

pril

1, 2

020.

Prin

cipa

l is

repa

id a

t mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

-

90,0

00

2.

15

Effe

ctiv

e O

ctob

er 1

8, 2

018

to A

pril

1, 2

020.

Prin

cipa

l is r

epai

d at

mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

-

190,

000

2.

15

Effe

ctiv

e N

ovem

ber 2

8, 2

018

to A

pril

1, 2

020.

Prin

cipa

l is r

epai

d at

mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

-

79,0

00

2.

15

Effe

ctiv

e D

ecem

ber 2

8, 2

018

to A

pril

1, 2

020.

Prin

cipa

l is r

epai

d at

mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

-

110,

000

2.

2 E

ffect

ive

Dec

embe

r 28,

201

8 to

Apr

il 1,

202

0. P

rinci

pal i

s rep

aid

at m

atur

ity w

ith in

tere

st pa

ymen

ts d

ue

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

-

50,0

00

2.

2 E

ffect

ive

Oct

ober

18,

201

8 to

Apr

il 1,

202

0. P

rinci

pal i

s rep

aid

at m

atur

ity w

ith in

tere

st pa

ymen

ts d

ue

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

-

190,

000

2.

2 E

ffect

ive

Dec

embe

r 28,

201

8 to

Apr

il 1,

202

0. P

rinci

pal i

s rep

aid

at m

atur

ity w

ith in

tere

st pa

ymen

ts d

ue

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Ban

k of

Tai

wan

210,

000

2.

2 E

ffecti

ve f

rom

Jun

e 24

, 201

6 to

Apr

il 1,

202

0. T

he p

rinci

pal

will

be

repa

id u

pon

mat

urity

. In

tere

st

paym

ents

due

mon

thly

.

Secu

red

Synd

icat

ed lo

ans f

rom

Yua

nta

Bank

350,

000

-

2.

0 E

ffecti

ve F

ebru

ary

25, 2

019

to F

ebru

ary

24, 2

024.

prin

cipa

l is r

epai

d at

mat

urity

with

inte

rest

paym

ents

dur a

nytim

e.



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

100

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

20

19

20

18

Secu

red

Synd

icat

ed lo

ans f

rom

Yua

nta

Bank

1,95

0,00

0

-

2.2

Effe

ctive

Feb

ruar

y 25,

201

9 to

Feb

ruar

y 24,

202

4. (i

nter

ests

are d

ue m

onth

ly. T

he p

rincip

al co

uld

be re

paid

at

any

time.

The

first

30 m

onth

s fro

m th

e date

of t

he fi

rst d

raw

dow

n is

the f

irst p

erio

d, a

nd ev

ery

6 m

onth

s tha

t fo

llow

are

dee

med

a pe

riod.

The

facil

ity is

div

ided

into

6 p

erio

ds. T

he cr

edit

line

for t

he fi

rst f

ive

perio

ds a

re

redu

ced

at in

crem

ents

of 2

.5%

and

the 6

th p

erio

d w

ill b

e red

uced

at 8

7.5%

. If a

t suc

h tim

e the

amou

nt d

raw

n do

wn

exce

eds t

he cr

edit

line a

fter t

otal

dec

rem

ents,

the b

orro

wer

shall

repa

y the

exce

ssiv

e am

ount

in ad

vanc

e.

Uns

ecur

ed lo

ans f

rom

Ban

k of

Tai

wan

-

53,0

00

1.

98

Effe

ctiv

e M

ay 3

0, 2

018

to J

une

30, 2

019.

Prin

cipa

l is

repa

id a

t mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Uns

ecur

ed lo

ans f

rom

Ban

k of

Tai

wan

-

81,0

00

1.

98

Effe

ctiv

e Ju

ne 1

1, 2

018

to J

une

30, 2

019.

Prin

cipa

l is

repa

id a

t mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Uns

ecur

ed lo

ans f

rom

Ban

k of

Tai

wan

-

185,

000

1.

98

Effe

ctiv

e Ju

ne 2

7, 2

018

to J

une

30, 2

019.

Prin

cipa

l is

repa

id a

t mat

urity

with

inte

rest

paym

ents

due

mon

thly

.

Uns

ecur

ed lo

ans f

rom

Ban

k of

Tai

wan

-

131,

000

1.

98

Effe

ctiv

e N

ovem

ber 2

9, 2

018

to J

une

30, 2

019.

Prin

cipa

l is

repa

id a

t mat

urity

with

inte

rest

paym

ents

du

e m

onth

ly.

Subt

otal

2,30

0,00

0

1,56

9,00

0

Less

: cur

rent

por

tion

(1

,150

,000

)

(450

,000

)

Tota

l

$1,1

50,0

00

$1

,119

,000

Certa

in la

nds w

ere

pled

ged

as fi

rst m

ortg

age

for s

ecur

ed lo

ans

from

Sec

ured

Syn

dica

ted

loan

s fro

m B

ank

of T

aiw

an. P

leas

e re

fer t

o N

ote

8 fo

r as

sets

ple

dged

as c

olla

tera

l for

long

-term

loan

s.

Yua

nta

Bank

-Cer

tain

land

s wer

e pl

edge

d as

firs

t mor

tgag

e fo

r sec

ured

loan

s. Pl

ease

refe

r to

Not

e 8

for a

sset

s pla

ced

as c

olla

tera

l for

long

-term

lo

ans.

(Not

e: In

tere

st ra

tes a

re ro

unde

d of

f to

the

seco

nd d

ecim

al p

lace

.)



TATU

NG

CO

., LT

D. A

ND

SU

BSID

IARI

ES

NO

TES

TO C

ON

SOLI

DA

TED

FIN

AN

CIA

L ST

ATE

MEN

TS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wise

Spe

cifie

d)

101

I. Sh

eng

Yan

g En

ergy

Co.

, Ltd

.

Lend

ers

A

s of D

ecem

ber 3

1,

In

tere

st ra

te

(%) (

Not

e)

M

atur

ity d

ate

and

term

s of r

epay

men

t

2019

2018

Se

cure

d Lo

ng-T

erm

lo

ans

from

Ca

thay

U

nite

d Co

mm

erci

al B

ank

Co.,

Ltd.

$42,

344

$4

6,72

5

2.90

T

he f

irst

repa

ymen

t da

te is

afte

r th

e dr

awdo

wn

(Sep

tem

ber

11, 2

018)

and

int

eres

t are

pai

d in

60

mon

thly

pay

men

ts w

ith th

e rem

aini

ng b

eing

repa

id in

the l

ast p

erio

d. T

he re

paym

ents

will

be

mad

e on

144

mon

thly

pay

men

ts.

Secu

red

Long

-Ter

m lo

ans f

rom

Tai

shin

Inte

rnat

iona

l Ba

nk

-

11

5,00

0

2.40

Th

e fir

st re

paym

ent d

ate i

s six

mon

ths a

fter t

he d

raw

dow

n da

te (S

eptem

ber 1

1, 2

018)

, and

the r

epay

men

ts w

ill b

e mad

e on

180

mon

thly

pay

men

ts. T

his l

oan

was

fully

repa

id o

n Ap

ril 2

6, 2

019.

Su

btot

al

42

,344

161,

725

Le

ss: c

urre

nt p

ortio

n

(4,3

80)

(1

1,40

8)

Tota

l

$37,

964

$1

50,3

17

Pl

ease

refe

r to

Not

e 8

for a

sset

s ple

dged

as c

olla

tera

l for

long

-term

loan

s. (N

ote:

Inte

rest

rate

s are

roun

ded

off t

o th

e se

cond

dec

imal

pla

ce.)

J.

Tatu

ng F

ine

Che

mic

als C

o., L

td. a

nd it

s sub

sidia

ries

A

s of D

ecem

ber 3

1,

In

tere

st ra

te

(%) (

Not

e)

Lend

ers

20

19

20

18

Mat

urity

dat

e an

d te

rms o

f rep

aym

ent

Land

Ban

k of

Tai

wan

$14,

100

$-

2.09

Ef

fecti

ve fr

om A

pril

2, 20

19 to

Apr

il 2,

2022

, prin

cipal

is re

paid

in 3

6 m

onth

ly p

aym

ent.

(non

-revo

lvin

g us

e)

The

Firs

t Com

mer

cial

Ban

k

11,9

00

-

2.

30

Effe

ctive

from

May

29,

201

9 to

May

29,

202

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103

(20) Post-employment benefits

Defined contribution plan The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts. Subsidiaries located in the People’s Republic of China will contribute social welfare benefits based on a certain percentage of employees’ salaries or wages to the employees’ individual pension accounts. Pension benefits for employees of overseas subsidiaries and branches are provided in accordance with the local regulations. Expenses under the defined contribution plan for the years ended December 31, 2019 and 2018 were NTD257,831 thousand and NTD488,929 thousand, respectively. Defined benefits plan The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 4% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company and its domestic subsidiaries will make up the difference in one appropriation before the end of March the following year.





104

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandates, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Group expects to contribute NTD299,401 thousand to its defined benefit plan during the 12 months beginning after December 31, 2019. As of December 31, 2019 and 2018, the durations of the defined benefits plan obligation of the subsidiaries under the Group were different. The latest years of maturity are 2033 and 2026, respectively. Pension costs recognized in profit or loss for the years ended December 31, 2019 and 2018: For the years ended

December 31, 2019 2018 Current period service costs $57,640 $71,137 Interest income or expense 24,153 64,871 Past service cost 45 6,507 Expected return on plan assets (14,931) (29,449) Total $66,907 $113,066 Changes in present value of defined benefit obligation and fair value of plan assets are as follows: As of 2019.12.31 2018.12.31 Present value of the defined benefit obligation $2,493,866 $4,214,858 Plan assets at fair value (1,600,664) (2,619,818) Subtotal 893,202 1,595,040 Other 2,622 2,622 Other non-current liabilities - net defined benefit liabilities

(assets) $895,824 $1,597,662





105

Reconciliation of net defined benefit liability (asset) is as follows:

Present value of Defined benefit

obligation Fair value of plan assets

Net defined benefit liability

(asset) As of January 1, 2018 $4,469,098 $(2,022,716) $2,446,382 Current period service costs 71,137 - 71,137 Net interest expense (income) 64,871 (29,449) 35,422 Past service cost and gains and losses

arising from settlements 6,507 - 6,507

Subtotal 4,611,613 (2,052,165) 2,559,448 Remeasurements of the net defined benefit

liability (asset): Actuarial gains and losses arising from

changes in demographic assumptions 4,778 - 4,778

Actuarial gains and losses arising from changes in financial assumptions 98,764 - 98,764

Experience adjustments (116,194) - (116,194) Return on plan assets - (36,439) (36,439) Subtotal (12,652) (36,439) (49,091)

Payments from the plan (292,835) 292,835 - Benefits paid (91,268) - (91,268) Contributions by employer - (824,049) (824,049) As of December 31, 2018 $4,214,858 $(2,619,818) $1,595,040 Current period service costs 57,640 - 57,640 Net interest expense (income) 24,153 (14,931) 9,222 Past service cost and gains and losses

arising from settlements 45 - 45

Subtotal 4,296,696 (2,634,749) 1,661,947 Remeasurements of the net defined benefit

liability (asset): Actuarial gains and losses arising from

changes in demographic assumptions (488)

-

(488)

Actuarial gains and losses arising from changes in financial assumptions 55,973 - 55,973

Experience adjustments 21,205 - 21,205 Return on plan assets 367 (51,245) (50,878) Subtotal 77,057 (51,245) 25,812

Payments from the plan (1,821,082) 1,821,082 - Benefits paid (42,407) - (42,407) Contributions by employer - (739,087) (739,087) Disposal of subsidiaries (16,398) 3,335 (13,063) As of December 31, 2019 $2,493,866 $(1,600,664) $893,202





106

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation: As of December 31, 2019 2018 Discount rate 0.66%~0.74% 0.84%~1.38% Expected rate of salary increases 1.00%~2.25% 1.00%~2.25% A sensitivity analysis for significant assumption as at December 31, 2019 and 2018 is, as shown below: Effect on the defined benefit obligation 2019 2018

Increase defined benefit

obligation

Decrease defined benefit

obligation

Increase defined benefit

obligation

Decrease defined benefit

obligation Discount rate increase by 0.5% $- $58,078 $- $119,957 Discount rate decrease by 0.5% 65,882 - 126,910 - The sensitivity analyses above are based on a change in the actuarial assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another. There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(21) Provisions

Sales returns

and allowances warranties Reserve for

lawsuit Decommissioning

reserve Onerous contract

Other short-term provisions

Total

As of January 1, 2019 $7,782 $157,924 $258,715 $80,404 $1,493,397 $- $1,998,222 Arising during the period - 32,772 71,999 19,547 6,919 65,003 196,240 Utilized during the period (315) (3,929) - - - (11,353) (15,597) Unused provision reversed (7,470) (12,802) - - (418,372) - (438,644) The sale or contribution of a

subsidiary - (36,316) (12,995) (99,951) - (16,656) (165,918)

Effect of exchange rate changes

3 (102) (5,880) - (32,644) (89) (38,712)

As of December 31, 2019 $- $137,547 $311,839 $- $1,049,300 $36,905 $1,535,591

Current-December 31, 2019 $- $137,547 $71,999 $- $- $36,905 $246,451 Non-current-December 31,

2019 - - 239,840 - 1,049,300 - 1,289,140

As of December 31, 2019 $- $137,547 $311,839 $- $1,049,300 $36,905 $1,535,591





107

Sales returns

and allowances warranties Reserve for

lawsuit Decommissioning

reserve Onerous contract

Other short-term provisions

Total

As of January 1, 2018 $- $131,570 $242,544 $78,960 $- $- $453,074

Arising during the period 7,782 70,748 12,995 1,444 1,493,397 - 1,586,366

Utilized during the period - (37,933) (3,015) - - - (40,948)

Unused provision reversed - (6,531) (1,507) - - - (8,038)

Effect of exchange rate

changes

- 70 7,698 - - - 7,768

As of December 31, 2018 $7,782 $157,924 $258,715 $80,404 $1,493,397 $- $1,998,222

Current-December 31, 2018 $7,782 $157,924 $12,995 $- $- $- $178,701

Non-current-December 31,

2018

- - 245,720 80,404 1,493,397 - 1,819,521

As of December 31, 2018 $7,782 $157,924 $258,715 $80,404 $1,493,397 $- $1,998,222

Sales returns and allowances Sales returns, and allowances are accounted in accordance with IFRS 15. Warranties A provision is recognized for expected warranty claims on products sold, based on past experience, management’s judgment and other known factors. Reserve for lawsuit Provisions have been recognized for estimated legal obligations and relevant cost based on past experience. If the existing obligation is mostly likely to incur and the amount may be reasonably estimated, the provisions for legal matters is to be recognized. Decommissioning, restoration and rehabilitation reserve A provision has been recognized for decommissioning costs associated with a factory owned by GET. The Group is committed to decommissioning the site as a result of the construction of the factory. Long-term provision of onerous contract Please refer to Note 9 for more details.





108

(22) Equities

A. Common stock

As of December 31, 2019 and 2018, the Company’s authorized capital and issued capital were NTD100,000,000 thousand and NTD23,395,367 thousand, with a par value of NTD10 dollar, totaling 10,000,000 thousand shares and 2,339,537 thousand shares, respectively. Each share is entitled to one voting right and the right to receive dividends. As of December 31, 2019 and 2018, 1,000,000 thousand shares of the Company were issued as 50,000 thousand units of global depositary receipts(“GDR”), each GDR equaling to 20 shares. The GDR were listed on Luxembourg Stock Exchange.

B. Capital reserve

As of December 31, 2019 2018 Subsidiaries disposed shares of parent company deemed as treasury stock transaction

$115,169 $115,169

Share of changes in net assets of associates and joint ventures accounted for using the equity method

3,142,781 3,062,728

Other 105,135 105,135 Total $3,363,085 $3,283,032 According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the Company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

C. Treasury stock

Chunghwa Picture Tubes Ltd., a subsidiary of the Company, applied for financial structuring, the bank sold 10,945 thousand pledged shares in 2018. Chunghwa Picture Tubes (Bermuda) Ltd. sold 59,653 thousand shares in 2019. As of December 31, 2019 and 2018, the Company’s subsidiaries, CPT and its subsidiaries, held 0 thousand shares and 59,653 thousand shares of the Company’s stock, respectively. As of December 31, 2019 and 2018, the Company’s subsidiaries, CPT and its subsidiaries, held 0 thousand shares and 59,653 thousand shares of the Company’s stock, respectively.





109

Chunghwa Electronics Investment Co., a subsidiary of the Company, sold 333 thousand shares in 2018. As of December 31, 2019, and 2018, Chunghwa Electronics Investment Co., held 0.5 thousand shares and 0.5 thousand shares of the Company, respectively. FD, a subsidiary of the Company, purchased shares of the Company for a total of 36,236 thousand shares in 2016, and sold 28,691 thousand shares and 3,070 thousand shares in 2018 and 2017, respectively. As of December 31, 2019 and 2018, FD held 4,475 thousand shares and 4,475 thousand shares of the Company’s stock, respectively. As of December 31, 2019, the Company’s treasury shares were NTD30,854 thousand, which Chunghwa Electronics Investment Co., held NTD10 thousand and FD held NTD30,844 thousand.

D. Retained earnings and dividend policies:

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order: (a) Payment of all taxes and dues (b) Offset prior years’ operation losses (c) Appropriate 10% of the remaining amount after deducting items (a) and (b) as a legal

reserve (d) Appropriate or reverse special reserve in accordance with relevant laws or regulations (e) After deducting items (a), (b), (c) and (d) above from the current year’s earnings, the

distribution of the remaining portion, if any, will be recommended by the board of directors and resolved in the stockholders’ meeting.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to offset the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders. Following the adoption of T-IFRS, the FSC on April 6, 2012, issued Order No. Jin-Guan-Zheng-Fa-Zi No. 1010012865, which sets out the following provisions for compliance:





110

On a public company's first-time adoption of the T-IFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company’s adoption of the T-IFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed. As of January 1, 2014, special reserve set aside for the first-time adoption of T-IFRS amounted to NTD15,894,690 thousand. Also, the Company disposed of related assets and reversed special reserves of NTD416,657 thousand to retained earnings. In 2018, the Company has changed the measurement of investment property from cost model to fair value model. The policy should be applied retrospectively to all subsidiaries of the Company based on the conformity of the Company accounting policy. As a result, the subsidiaries restated their financial statements and the Company recognized related adjustments and increase retained earnings as of January 1, 2018 according to equity method. Such retained earnings were set aside for special reserve in the amount of NTD 13,855,398 thousand according to Financial Supervisory Commission’s letter. In the shareholders’ meeting in prior years, the Company resolved to make up for its losses by special reserve of NTD21,719,645 thousand and to recover the special reserve amounted to NTD124,233 thousand. Unrecovered special reserve amounted to NTD21,595,412 thousand. Special reserve was amounted to NTD7,738,019 thousand as of December 31, 2019. Details of the 2018 deficits compensation as approved by the shareholders’ meeting on June 17, 2019 is as follows:

Deficits compensation 2018

Special reserve to compensate deficits $10,243,598 Please refer to Note 6(27) for more details about provision for employees’ bonuses and compensation for directors and supervisors.





111

E. Non-controlling interests:

For the years ended

December 31, 2019 2018 Balance as of January 1 $(2,074,212) $55,726,586 Impact from retrospective application and retrospective

restatement - 12,151 Income (loss) attributable to non-controlling interests (12,031,340) (22,650,002) Other comprehensive income, attributable to non-

controlling interests, net of tax: Actuarial gain (loss) from defined benefit plans 2,091 87,781 Exchange differences resulting from translating the

financial statements of a foreign operation (71,747) (494,633) Unrealized gains (losses) from financial assets at fair

value through other comprehensive income (297,471) (263,693) Other comprehensive income from investment of

associates and joint ventures under equity method (38,827) (17,957) Subsidiaries purchased (disposed) shares of parent

company deemed as treasury stock transaction

762,403 827,784 Actual acquisition or disposal of the shares of the

subsidiaries

- (106,090) Disposal of subsidiaries (losing control) 5,454,830 (34,778,121) Cash dividends distributed by the subsidiaries (21,156) (942,723) Subsidiaries equity change 315,027 524,705 Balance as of December 31 $(8,000,402) $(2,074,212)

(23) Operating revenue


2019 2018 Revenue from contracts with customers

Sale of goods $33,490,152 $57,897,690 Revenue arising from rendering of services 1,432,910 2,184,586 Other operating revenues 32,066 540,449 Subtotal 34,955,128 60,622,725

Leasing revenue 467,887 (Note) Total $35,423,015 $60,622,725 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS. Analysis of revenue from contracts with customers during 2019 and 2018 are as follows:





112

A. Disaggregation of revenue

From January 1, 2019 to December 31, 2019.

Optical

Machinery

and energy

Consumer

Products

Real Estate

Development

Other

operating

segments

Total

Sale of goods $1,507,876 $17,905,580 $9,419,794 $3,607,633 $1,049,269 $33,490,152

Rendering of services - 1,362,667 53 - 70,190 1,432,910

Others - 8,030 8,056 - 15,980 32,066

Total $1,507,876 $19,276,277 $9,427,903 $3,607,633 $1,135,439 $34,955,128

Timing of revenue

recognition:

At a point in time $1,507,876 $17,883,256 $9,427,903 $3,607,633 $1,135,439 $33,562,107

Over time - 1,393,021 - - - 1,393,021

Total $1,507,876 $19,276,277 $9,427,903 $3,607,633 $1,135,439 $34,955,128

From January 1, 2018 to December 31, 2018. (Restated)

Optical

Machinery

and energy

Consumer

Products

Real Estate

Development

Other

operating

segments

Total

Sale of goods $24,018,910 $21,857,844 $11,056,973 $533,340 $430,623 $57,897,690

Rendering of services - 1,495,276 1,785 - 687,525 2,184,586

Others - 141,467 918 53,125 344,939 540,449

Total $24,018,910 $23,494,587 $11,059,676 $ 586,465 $1,463,087 $60,622,725

Timing of revenue

recognition:

At a point in time $24,018,910 $22,186,133 $11,059,676 $586,465 $1,463,087 $59,314,271

Over time - 1,308,454 - - - 1,308,454

Total $24,018,910 $23,494,587 $11,059,676 $586,465 $1,463,087 $60,622,725





113

B. Contract balances

(a) Contract assets (include current and non-current)

As of December 31,

2019 December 31,

2018 January 1,

2018 Sale of goods $205,013 $72,762 $70,230 Rendering of services 14,064 18,331 3,332 Construction contracts 128,608 197,478 180,903 Energy contracts 3,145 2,429 - Less: loss allowance - - - Total $350,830 $291,000 $254,465 The significant changes in the Group’s balances of contract assets during the year ended December 31, 2019 and 2018 are as follows:

For the years ended December 31, 2019 2018 The opening balance transferred to trade

receivable $(184,431) $(186,700)

Change in the measure of progress 244,261 223,235 As of December 31,2019

Items (Note 2) Contract

proceeds Contract costs

incurred

Accumulated

recognized

total project

profit(loss)

Percentage of

completion

(Note 3)

Amounts

billed based

on

Construction

progress

Construction

contracts

receivable

Percentage of

completion method

Category A $52,115 $46,397 $2,850 40%~100% $35,836 $13,411

Category B 6,155,206 5,068,380 (109,309) 29%~100% 4,812,730 146,341

Category C 1,039,002 1,026,870 (125,912) 86%~100% 855,588 45,370

Reclassification

(Note 1) - - - - (76,514)

Total $7,246,323 $6,141,647 $(232,371) $5,704,154 $128,608





114

As of December 31,2018

Items (Note 2)

Contract

proceeds

Contract costs

incurred

Accumulated

recognized

total project

profit(loss)

Percentage of

completion

(Note 3)

Amounts

billed based

on

Construction

progress

Construction

contracts

receivable

Percentage of

completion method

Category A $77,122 $66,697 $2,134 0%~100% $56,228 $12,603

Category B 6,179,283 4,667,199 (120,017) 9%~100% 4,374,894 172,288

Category C 1,039,002 696,148 3,983 5%~73% 611,030 89,101

Reclassification

(Note 1)

- - - - (76,514)

Total $7,295,407 $5,430,044 $(113,900) $5,042,152 $197,478

(Note 1: Aging of part of construction receivables has reached an operating cycle,

hence, they are reclassified to long-term receivables.) (Note 2: Projects involving similar products have been combined as a single item.) (Note 3: The percentage of completion varied in each project, it is therefore presented

as a range.) As of December 31, 2019 and 2018, the above construction projects had not generated construction retainage of construction contracts.

(b) Contract liabilities (include current and non-current)

As of December 31,

2019 December 31,

2018 January 1,

2018 Sale of goods $3,207,443 $2,837,697 $2,405,409 Rendering of services and construction

contracts 10,252 6,981 1,063

Total $3,217,695 $2,844,678 $2,406,472





115

The significant changes in the Group’s balances of contract liabilities during the year ended December 31, 2019 and 2018 are as follows:


2019 2018

The opening balance transferred to trade receivable

$(1,306,387) $(586,738)

Increase in receipts in advance during the periods (excluding the amount incurred and transferred to revenue during the periods)

1,679,404 1,024,944

C. Transaction price allocated to unsatisfied performance obligations

The Group’s transaction price allocated to unsatisfied performance obligations amounted to NTD3,217,695 thousand as at December 31, 2019. Management expects that 7%~100% of the transaction price allocated to unsatisfied performance obligations will be recognized as revenue in 2020. The Group’s transaction price allocated to unsatisfied performance obligations amounted to NTD2,844,678 thousand as at December 31, 2018. Management expects that 48%~97% of the transaction price allocated to unsatisfied performance obligations will be recognized as revenue in 2019.

D. Assets recognized from costs to fulfil a contract

Beginning balance

Ending balance Difference

Incremental cost of obtaining contracts $438,520 $279,209 $(159,311)

The Group expected to collect expenditure paid to agency for selling construction Project D and hence recognized it as asset and amortize it when recognizing revenue from selling property. However, as construction Project D hasn’t been completed and hence the Group hasn’t amortized related expense.





116

(24) Expected credit losses/ (gains)


2019 2018 Operating expenses

Notes receivables $(21) $7 Accounts receivables 613,045 321,223

Non-operating income and expenses Other receivable (include long-term) 1,816,444 (16,811) Related to the gain and loss on disposal of subsidiary (Note) (1,728,471) -

Total $700,997 $304,419 Note: Please refer to Note 6(33) for the Group’s expected credit loss due to the disposal of

Green Energy Technology Inc. and its subsidiaries

Please refer to Note 12 for more details on credit risk. The credit risk for the Group’s financial assets measured at amortized cost are assessed as low (the same as the assessment result in the beginning of the period). Because the counterparties are banks and financial institutions with good credit rating, the loss allowance is measured at an amount of NTD0 thousand (loss ratio of 0 %). The Group measures the loss allowance of its contract assets and receivables (including notes receivables and accounts receivables) at an amount equal to lifetime expected credit losses. The assessment of the Group’s loss allowance as at December 31, 2019 and 2018 are as follows: A. The loss allowable of contract assets is measured at an amount equal to lifetime expected

credit losses details are as follows:

As of December 31,

2019 December 31,

2018 Total carrying amount $350,830 $291,000 Expected credit loss rates 0% 0% Loss allowance - - Carrying amount $350,830 $291,000





117

B. The Group considered the receivables by counterparties’ credit ratings, by geographical

regions and by industry sectors and its loss allowance is measured by using the expected credit loss ratio. The details are as follows: As of December 31, 2019

Optical: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount - - - 1,375,247 1,375,247 Loss ratio (Note 2) 0.00% 0.00% 0.00% 32.99% Lifetime expected credit losses - - - (453,713) (453,713) Subtotal - - - 921,534 921,534 Machinery and energy: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 2,767,364 190,775 56,386 95,533 3,110,058 Loss ratio (Note 2) 0.00%~19.31% 0.00%~28.33% 0.00%~93.88% 0.00%~96.68% Lifetime expected credit losses (79,290) (4,997) (18,491) (52,020) (154,798) Subtotal 2,688,074 185,778 37,895 43,513 2,955,260 Consumer products: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 883,426 58,465 6,133 74,639 1,022,663 Loss ratio (Note 2) 0.00%~47.76% 0.00%~100% 0.00% 0.00%~100% Lifetime expected credit losses (25,414) (12,143) - (68,795) (106,352) Subtotal 858,012 46,322 6,133 5,844 916,311 Real Estate Development Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 18,512 8,366 23,035 14,211 64,124 Loss ratio (Note 2) 0.00% 0.00%~99.02% 0.00%~100% 0.00%~100% Lifetime expected credit losses - (8,284) (23,035) (14,211) (45,530) Subtotal 18,512 82 - - 18,594 Other operating segments: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 344,956 19,747 3,175 210,167 578,045 Loss ratio (Note 2) 0.00%~0.25% 0.00%~17.67% 0.00%~20.00% 0.00%~100% Lifetime expected credit losses (236) (2,087) (369) (209,929) (212,621) Subtotal 344,720 17,660 2,806 238 365,424 Carrying amount $5,177,123





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As of December 31, 2018(Restated)

Optical: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 1,157,813 289,751 - 366,187 1,813,751 Loss ratio (Note 2) 0.00% 0%~0.5% 0.00% 0.5%~100% Lifetime expected credit losses - (288) - (366,187) (366,475) Subtotal 1,157,813 289,463 - - 1,447,276 Machinery and energy: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 3,828,452 483,797 490,566 400,298 5,203,113 Loss ratio (Note 2) 0%~14.22% 0.53%~84.35% 20.98%~34.55% 56.90%~100% Lifetime expected credit losses (8,488) (54,533) (107,567) (353,670) 524,258 Subtotal 3,819,964 429,264 382,999 46,628 4,678,855 Consumer products: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 1,020,521 77,589 5,169 92,892 1,196,171 Loss ratio (Note 2) 0.00% 0%~6.61% 0%~49.63% 0%~100% Lifetime expected credit losses - (1,702) (620) (56,570) (58,892) Subtotal 1,020,521 75,887 4,549 36,322 1,137,279 Real Estate Development Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 17,640 - - - 17,640 Loss ratio (Note 2) 0.00% 0.00% 0.00% 0.00% Lifetime expected credit losses - - - - - Subtotal 17,640 - - - 17,640 Other operating segments: Not yet due Overdue (Note 1) <=180 days 180-360 days >=360 days Total Gross carrying amount 516,396 33,500 11,567 219,562 781,025 Loss ratio (Note 2) 0%~0.25% 1.09%~11.26% 13.26%~14.64% 85.10%~100% Lifetime expected credit losses (285) (645) (1,610) (218,833) (221,373) Subtotal 516,111 32,855 9,957 729 559,652 Carrying amount $7,840,702

Note 1: The Group’s notes receivables are not overdue. Note 2: The loss ratio is measured by using a provision matrix. However, if the counterparty

has financial difficulty, the loss ratio would be assessed individually.





119

The movement in the provision for impairment of note receivables, accounts receivables, other receivables, and long-term receivables during 2019 and 2018 are as follows:

Note

receivables Accounts

receivables Others

(Note 2) As of January 1, 2019 $64 $1,170,934 $1,933,604 Addition/(reversal) for the current period (Note 3) (21) 613,045 1,816,444 Write off (note 1) - (25,496) (9,726) Change in subsidiaries due to disposal - (823,993) (71,556) Effect of exchange rate changes - 38,481 (32,072) As of December 31, 2019 $43 $972,971 $3,636,694

As of January 1, 2018 (in accordance with IAS 39) $57 $1,105,734 $1,955,543 Transition adjustment to retained earnings - - - As of January 1, 2018 (in accordance with IFRS 9) 57 1,105,734 1,955,543 Addition/(reversal) for the current period 7 321,223 (16,811) Write off (note 1) - (224,537) (1,532) Reclassification - (20,248) 3,637 Effect of exchange rate changes - (11,238) (7,233) As of December 31, 2018 $64 $1,170,934 $1,933,604

Note 1: The contract amount of the financial assets that were eliminated but still under

recourse during 2019 and 2018 was NTD 0 thousand and NTD173 thousand, respectively.

Note 2: Others include other receivables and long-term receivables. Note 3: Please refer to Note 6(33) for the loss allowance include in this period due to the

disposal of Green Energy Technology Inc. and its subsidiaries. (29) Net other income (expenses)

For the years ended

December 31, 2019 2018 Government grants $- $40,856 Lease modification loss (5,934) - Total $(5,934) $40,856





120

(26) Leases

(1) Group as a lessee (applicable to the disclosure requirement under IFRS 16) The Group leases various properties, including real estate such as land and buildings, machinery and equipment, transportation equipment, office equipment and other equipment. The lease terms range from one to fifty years. The Group’s leases effect on the financial position, financial performance and cash flows are as follow: A. Amounts recognized in the balance sheet

(a) Right-of-use assets

The carrying amount of right-of-use assets

As of December, 31 2019 2018(Note)

Land $24,393 Buildings 1,257,092 Machinery and equipment 9,778 Transportation equipment 48,939 Office equipment 23,881 Other equipment 1,280 Total $1,365,363

Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not

to restate prior periods in accordance with the transition provision in IFRS 16.

During the year ended December 31, 2019, the Group’s additions to right-of-use assets amounted to NTD155,730 thousand.

From January 1, 2019 to August 31, 2019, GET Group, a subsidiary group of the Group, valuated certain property, plant and equipment based on liquidation value and as a result generated valuation gain, which was recognized in the statement of comprehensive income.





121

(b) Lease liabilities

As of December, 31

2019 2018(Note)

Current $338,920 Non-current 1,126,621

Total $1,465,541

Please refer to Note 6 (28) for the interest on lease liabilities recognized during the year ended December 31, 2019 and refer to Note 12 (5) Liquidity Risk Management for the maturity analysis for lease liabilities as at December 31, 2019.

Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not

to restate prior periods in accordance with the transition provision in IFRS 16.

B. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

As of December, 31

2019 2018(Note)

Land $6,285 Buildings 271,847 Machinery and equipment 34,636 Transportation equipment 5,154 Office equipment 26,414 Other equipment 744

Total $345,080

Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to

restate prior periods in accordance with the transition provision in IFRS 16.





122

C. Income and costs relating to leasing activities

For the year end December 31

2019 2018(Note) The expenses relating to short-term leases $32,902 The expenses relating to leases of low-value assets

(Not including the expenses relating to short-term leases of low-value assets)

4,124

The expenses relating to variable lease payments not included in the measurement of lease liabilities

68,208

Income from subleasing right-of-use assets 36,198 Gains or losses arising from sale and leaseback

transactions 3,500



During the year ended December 31, 2019, the category of the Group’s short-term leases portfolio it commits to was similar to that of the underlying asset related to the short-term lease expenses disclosed above.

D. Cash outflow relating to leasing activities

During the year ended December 31, 2019, the Group’s total cash outflows for leases amounting to NTD469,240 thousand.

E. Other information relating to leasing activities

(a) Variable lease payments

Some of the Company’s Solar energy equipment construction and photocopier lease contract contain variable payment terms that are power generation and usage amount, which is very common in the industry of the Group. As such variable lease payments do not meet the definition of lease payments, those payments are not included in the measurement of the assets and liabilities.





123

(b) Extension and termination options

Some of the Group’s property rental agreement contain extension and termination options. In determining the lease terms, the non-cancellable period for which the Group has the right to use an underlying asset, together with both periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option and periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option. These options are used to maximize operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group. After the commencement date, the Group reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Group is reasonably certain to exercise an option not previously included in its determination of the lease term, or not to exercise an option previously included in its determination of the lease term.

(2) Group as a lessee - Operating lease commitments (applicable to the disclosure

requirement in IAS 17)

The Group has entered into commercial leases on certain motor vehicles and items of machinery. These leases have an average life of one to fifty years with no renewal option included in the contracts. There are no restrictions placed upon the Group by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as of December 31, 2019 and 2018 are as follows:

As of December, 31 2019 (Note) 2018

Not later than one year $641,142 Later than one year and not later than five years 708,804 Later than five years 225,668 Total $1,575,614





124

Operating lease expenses recognized are as follows:

For the year end December 31 2019 (Note) 2018

Minimum lease payments $436,088

Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate prior periods in accordance with the transition provision in IFRS 16.

(3) Group as a lessor (applicable to the disclosure requirement in IFRS 16)

Please refer to Note 6 (11) for details on the Group’s owned investment properties and investment properties held by the Group as right-of-use assets. Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

The Group has entered into leases on certain machinery and equipment with lease terms range from one to eight years. These leases are classified as finance leases as they transfer substantially all the risks and rewards incidental to ownership of underlying assets.

For the year end December 31 2019 2018(Note)

Lease income for operating leases Income relating to fixed lease payments and variable

lease payments that depend on an index or a rate $520,485

Income relating to variable lease payments that do not depend on an index or a rate

26,987

Subtotal 547,472 Lease income for finance leases

Selling profit or loss 35,220 Finance income on the net investment in the lease 6,768 Subtotal 41,988

Total $589,460







125

Please refer to Note 6 (10) for relevant disclosure of property, plant and equipment for operating leases under IFRS 16. For operating leases entered by the Group, the undiscounted lease payments to be received and a total of the amounts for the remaining years as at December 31, 2019 are as follows:


Not later than one year $527,923 Later than one year but not later than two years 208,643 Later than one year but not later than three years 143,210 Later than one year but not later than four years 103,561 Later than one year but not later than five years 486,801 Later than five years 456,164 Total $1,926,302


restate prior periods in accordance with the transition provision in IFRS 16 For finance leases entered by the Group, the undiscounted lease payments to be received and a total of the amounts for the remaining years as at December 31, 2019 are as follows:


Not later than one year $384,660 Later than one year but not later than two years 16,284 Later than one year but not later than three years 9,296 Later than one year but not later than four years 3,058 Later than one year but not later than five years 679 Later than five years - Total undiscounted lease payments 413,977 Less: Unearned finance income to finance leases (12,017) Less: loss allowance - Net investment in the lease (Finance lease receivables) $401,960 Current $372,643 Non-current $29,317 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to

restate prior periods in accordance with the transition provision in IFRS 16





126

(4) Group as a lessor - Operating lease commitments (applicable to the disclosure

requirement in IAS 17) The Group has entered into commercial property leases with remaining terms of between one and twenty years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Future minimum rentals receivable under non-cancellable operating leases as of December 31, 2019 and 2018 are as follows:

As of December, 31 2019(Note) 2018

Not later than one year $423,759 Later than one year and not later than five years 772,552 Later than five years 418,917 Total $1,615,228

There is no contingent rent recognized as income for the year ended December 31, 2019 and 2018, respectively. Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to


(27) Summary statement of employee benefits, depreciation and amortization expenses by function during the years ended December 31, 2019 and 2018:

By Function

By Nature,


2019 2018

Operating

costs

Operating

expenses

Total

amount

Operating

costs

Operating

expenses

Total

amount

Employee benefits expense

Salaries $2,379,182 $3,341,833 $5,721,015 $5,967,575 $4,820,202 $10,787,777

Labor and health insurance 281,531 342,167 623,698 462,419 394,083 856,502

Pension 134,704 190,022 324,726 338,151 263,844 601,995

Other employee benefits expense 88,048 70,606 158,654 246,846 82,086 328,932

Depreciation 2,680,808 1,034,595 3,715,403 7,812,448 1,086,642 8,899,090

Amortization 8,586 44,937 53,523 15,295 288,591 303,886





127

The Company’s Article of Incorporation states that if there is a profit, the Company should set aside employee compensation no less than 1% of the profit and board member compensation no more than 2%. When the Company suffers an accumulated deficit, the profit should be retained to recover the deficit. The employee compensation should be paid out by shares or cash and should be resolved in the board of directors’ meeting, with two thirds of the board members present and over half of the present members’ approval. Information of the board of directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE. The Company had net income in 2019. However, there is still accumulated deficits of Special reserve that need to be covered, hence, the Company did not estimate employees’ compensation and remuneration to directors and supervisors. The Company suffered net loss in 2018 and thus did not estimate employees’ compensation and remuneration to directors and supervisors.

(28) Non-operating income and expenses

A. Other income


2019 2018

Dividend income $56,166 $80,193

Interest income

Financial assets measured at amortized cost 59,231 607,189

Financial assets at fair value through profit or loss 28,869 28,742

Others 2,288 1,065

Patent licensing income 164,663 169,001

Overdue income 21,804 228,601

Bankrupted distribution income 95,877 69,506

Other income 1,082,881 924,927

Total $1,511,779 $2,109,224





128

B. Other gains and losses


2019 2018 Gains on disposal of property, plant and equipment $9,236,597 $189,315 Gains (losses) on disposal of investments 288,896 (6,531,542) Gains from disposal of held-for-sale non-current assets - 13,535 Foreign exchange gains (losses), net 560,854 (1,634,229)

Impairment losses from non-financial assets-property, plant and equipment

(9,639,142) (3,130,444)

Impairment losses from non-financial assets-other (Note 4)

(277,660) -

Impairment losses from non-financial assets-intangible assets

(35,234) -

Gains (losses) on financial assets at fair value through profit or loss (Note 1)

7,098 117,946

Gain (losses) on financial liabilities at fair value through profit or loss (Note 2)

(2,603) -

Gains on fair value adjustment of investment property 308,972 504,596 loss on long-term purchasing contracts (Note 3) (929,085) (1,493,397) Performance loss (379,212) (228,416) Others (674,540) (2,434,493) Total $(1,535,059) $(14,627,129) Note 1: Balance were arising from financial assets mandatorily measured at fair value

through profit or loss. Note 2: Balance were arising from held for trading financial liabilities. Note 3: GET entered into a long-term silicon supply contract with silicon supplier B in

2015. Since GET did not meet the minimum order quantity and pay on time, silicon supplier B calculated the accrued interest at USD29,913 thousand (equivalent to NTD929,085 thousand). GET recognized the expense loss for long-term purchase contacts in the third quarter of 2019. Because the Group derecognized GET on August 30, 2019, the loss on long-term purchase contacts was recognized in the comprehensive income.

Note 4: Because some subsidiaries prepared their financial statements according to the liquidation assumption, these subsidiaries recognized the impairment losses for their inventories based on the liquidation assumption.

The Group recognized gain on disposal of investment due to derecognizing GET. Please refer to Note 6 (33) for more details.





129

C. Finance costs


2019 2018 Interest on borrowings from bank $2,002,689 $3,769,609 Interest on lease liabilities 33,699 (Note) Others 603,430 192,354 Total finance costs $2,639,818 $3,961,963 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS. (29) Components of other comprehensive income

For the year ended December 31, 2019:

Arising during the

period

Reclassification

adjustments

during the period

Other

comprehensive

income

Income tax benefit

(expense)

Other

comprehensive

income, net of tax

Not to be reclassified to profit or loss in

subsequent periods:

Remeasurements of defined benefit plans $(25,812) $- $(25,812) $1,061 $(24,751)

Revaluation surplus of real estate 278,767 - 278,767 (11,988) 266,779

Unrealized gains (losses) from equity instruments

investments measured at fair value through

other comprehensive income

(101,622) - (101,622) (561) (102,183)

Share of other comprehensive income of

associates and joint ventures accounted for

using the equity method

3,008 - 3,008 - 3,008

To be reclassified to profit or loss in subsequent

periods:

Exchange differences resulting from translating

the financial statements of a foreign operation

(102,590) - (102,590) 7,940 (94,650)

Share of other comprehensive income of

associates and joint ventures accounted for

using the equity method

(41,835) - (41,835) - (41,835)

Total of other comprehensive income $9,916 $- $9,916 $(3,548) $6,368





130


Arising during the

period

Reclassification adjustments

during the period

Other comprehensive

income Income tax benefit

(expense)

Other comprehensive

income, net of tax Not to be reclassified to profit or loss in

subsequent periods: Remeasurements of defined benefit plans $49,091 $- $49,091 $48 $49,139 Unrealized gains (losses) from equity instruments

investments measured at fair value through other comprehensive income (283,446) - (283,446) (416,294) (699,740)

Share of other comprehensive income of associates and joint ventures accounted for using the equity method 2,439 - 2,439 - 2,439

To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating

the financial statements of a foreign operation 220,482 - 220,482 (351,315) (130,833) Equity related to non-current assets held-for-sale 30,955 - 30,955 - 30,955 Share of other comprehensive income of

associates and joint ventures accounted for using the equity method (21,561) - (21,561) (17,956) (39,517)

Total of other comprehensive income $(2,040) $- $(2,040) $(785,517) $(787,557)

(30) Income tax

Based on the amendments to the Income Tax Act announced on February 7, 2018, the Company’s applicable corporate income tax rate for the year ended December 31, 2018 has changed from 17% to 20%. The corporate income surtax on undistributed retained earnings has changed from 10% to 5%. The major components of income tax expense (income) are as follows: Income tax expense (income) recognized in profit or loss For the years ended

December 31, 2019 2018 Current income tax expense:

Current income tax charge $734,533 $953,654 Adjustments in respect of current income tax of prior periods (67,353) 40,324

Deferred tax expense (income): Deferred tax expense (income) relating to origination

and reversal of temporary differences (364,046) (329,827)

Deferred tax expense (income) relating to origination and reversal of tax loss and tax credit

(27,583) 783,731

Deferred tax expense (income) relating to changes in tax rate or the imposition of new taxes

- 7,386

Tax expense (income) recognized in the period for previously unrecognized tax loss, tax credit or temporary difference of prior periods

(27) (136)

Deferred tax liability write-off (28) (249) Total income tax expense $275,496 $1,454,883





131

Income tax relating to components of other comprehensive income For the years ended

December 31, 2019 2018 Deferred tax expense (income):

Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income

$561 $416,294

Exchange differences resulting from translating the financial statements of a foreign operation

(7,940) 351,315

Share of other comprehensive income of associates and joint ventures accounted for using the equity method

- 17,956

Actuarial (gains) losses on defined benefits plan (1,061) (48) Revaluation surplus of real estate 11,988 -

Income tax relating to components of other comprehensive income

$3,548 $785,517

Reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows: For the years ended

December 31, 2019 2018 Accounting income (loss) before tax from continuing operations $(8,879,965) $(31,838,025)

Tax at the domestic rates applicable to profits in the country concerned

$(734,216) $(9,259,902)

Tax effect of losses (revenues) exempt from taxation (1,954,529) (168,783) Tax effect of expenses not deductible for tax purposes (1,116,837) 2,263,929 Tax effect of deferred tax assets/liabilities 4,048,676 8,627,062 Adjustments in respect of current income tax of prior periods 2,203 52,940 Deferred tax expense (income) relating to changes in tax

rate or the imposition of new taxes

- (19,078)

Others 30,199 (41,285) Total income tax expense recognized in profit or loss $275,496 $1,454,883





132

Deferred tax assets (liabilities) relate to the following: For the year ended December 31, 2019:

Beginning

balance

Deferred tax

income (expense)

recognized in

profit or loss

Deferred tax

income (expense)

recognized in

other

comprehensive

income

Disposal of

subsidiary Ending balance

Temporary differences

Deferred tax assets

Loss from investments accounted for using the equity method $610,392 $(585,493) $- $- $24,899

Unrealised intragroup profits and losses 10,100 (296) - - 9,804

Provisions 2,125 (943) - - 1,182

Loss allowance 89,406 355,442 - - 444,848

Unrealized loss on market decline of inventories 392 1,499 - - 1,891

Employee benefits 2,262 (552) - - 1,710

Other 58,865 151,560 - - 210,425

Unused tax losses 232,664 (15,964) (561) (3,549) 212,590

Subtotal 1,006,206 (94,747) (561) (3,549) 907,349

Deferred tax liabilities

Profit from investments accounted for using the equity method (404,225) 303,454 - - (100,771)

Unrealized exchange gains (losses) (168,965) (2,228) - 149 (171,044)

Accrued pension liabilities (40,535) (25,702) 1,061 - (65,176)

Exchange differences resulting from translating the financial

statements of a foreign operation

(46,476) 3,023 7,940 - (35,513)

Reserve for land revaluation (5,978,814) 263,893 (11,988) - (5,726,909)

Other (81,075) (56,009) - - (137,084)

Subtotal (6,720,090) 486,431 (2,987) 149 (6,236,497)

Deferred tax (expense)/income 391,684 (3,548) (3,400)

Net deferred tax assets/(liabilities) $(5,713,884) $(5,329,148)

Reflected in balance sheet as follows:

Deferred tax assets $1,006,206 $907,349

Deferred tax liabilities $(6,720,090) $(6,236,497)





133


Beginning

balance (restated)

Deferred tax

income (expense)

recognized in

profit or loss

Deferred tax

income (expense)

recognized in

other

comprehensive

income

Transfer out from

non-consolidated

entity

Exchange

differences Ending balance

Temporary differences

Deferred tax assets

Revaluations of available-for-sale investments

to fair value

$344,346 $- $(344,346) $- $- $-

Impairment on property, plant and equipment 61,743 (61,827) - - 84 -

Loss from investments accounted for using the

equity method

462,453 147,939 - - - 610,392

Unrealised intragroup profits and losses 10,250 (150) - - - 10,100

Provisions 2,774 (649) - - - 2,125

Loss allowance 159,913 (70,589) - (40) 122 89,406

Unrealized loss on market decline of

inventories

213,493 (211,420) - (1,901) 220 392

Employee benefits 3,653 (1,391) - - - 2,262

Impairment on prepayments 14,034 (14,034) - - - -

Other 43,616 112,602 - (96,352) (1,001) 58,865

Unused tax losses 1,644,610 (1,413,002) (1,603) 1,150 1,509 232,664

Subtotal 2,960,885 (1,512,521) (345,949) (97,143) 934 1,006,206

Deferred tax liabilities

Profit from investments accounted for using

the equity method

(479,350) 75,125 - - - (404,225)

Unrealized exchange gains (losses) (266,434) 97,469 - - - (168,965)

Accrued pension liabilities 32,240 (72,775) - - - (40,535)

Exchange differences resulting from

translating the financial statements of a

foreign operation

(236,317) 628,580 (438,739) - - (46,476)

Reserve for land revaluation (6,316,720) 331,658 - - 6,248 (5,978,814)

Other (71,805) (8,441) (829) - - (81,075)

Subtotal (7,338,386) 1,051,616 (439,568) - 6,248 (6,720,090)

Deferred tax (expense)/income (460,905) (785,517) (97,143) 7,182

Net deferred tax assets/(liabilities) $(4,377,501) $(5,713,884)

Reflected in balance sheet as follows:

Deferred tax assets $2,960,885 $1,006,206

Deferred tax liabilities $(7,338,386) $(6,720,090)





134

The following table contains information of the unused tax losses of the Group:

Year Tax losses for the

period Unused tax losses as of December 31,

Expiration year 2019 2018 2019 $1,675,716 $484,048 $- 2029 2018 7,393,100 6,871,397 10,180,305 2028 2017 1,619,249 1,302,780 3,004,328 2027 2016 1,571,896 934,768 4,351,360 2026 2015 9,171,113 8,742,954 11,889,324 2025 2014 4,829,815 4,425,629 7,261,183 2024 2013 1,858,402 1,747,454 5,222,200 2023 2012 11,889,002 11,639,533 14,864,689 2022 2011 10,583,784 10,580,729 12,321,405 2021 2010 18,575,667 17,954,471 18,202,239 2020 2009 32,992,920 32,838,031 33,076,304 2019

$102,160,664 $97,521,794 $120,373,337

Unrecognized deferred tax assets As of December 31, 2019, and December 31, 2018, the Group’s unrecognized deferred tax assets amounted to NTD25,951,682 thousand and NTD30,738,024 thousand, respectively. The assessment of income tax returns As of December 31, 2019, the assessment of the income tax returns of the Company and its subsidiaries is as follows: The assessment of income tax returns by tax authorities Note The Company Assessed and approved up to 2016 Subsidiary-SCAD Assessed and approved up to 2016 Subsidiary-CPT Assessed and approved up to 2018 Subsidiary-SCSC Assessed and approved up to 2017 Subsidiary-FD Assessed and approved up to 2017 Subsidiary-TSTI Assessed and approved up to 2017 Subsidiary-TFC Assessed and approved up to 2017





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(31) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. For the years ended

December 31 2019 2018 Basic and diluted earnings (loss) per share: Income (loss) attributable to ordinary equity holders of the

Company (in thousands of NTD)

$2,875,879 $(10,642,906)

Weighted average number of ordinary shares outstanding for basic and diluted earnings per share (in thousands)

2,310,335 2,238,595

Basic and diluted income (loss) per share (in dollars of NTD) $1.24 $(4.75) There were no other transactions involving ordinary shares or potential ordinary shares between the balance sheet date and the issuance date of the financial statements. The Company did not estimate employee compensation and remuneration for the directors and supervisors and hence there is no dilution effect on earnings per share.

(32) Changes in parent’s interest in subsidiaries

Acquisition of shares issued by subsidiaries

New Kingston Enterprises Limited, a subsidiary of the Group transferred its 13.46% shares in FVD, subsidiary of CPT, to CPTF Optronics Co., Ltd., subsidiary of CPT in January 2018. Hence, the comprehensive holding percentage of CPT towards FVD decreased from 29.74% to 19.83%. The cash consideration received from non-controlling interest shareholders amounted to NTD40,026 thousand. The book value of net asset of FVD (the original cost without goodwill) amounted to NTD43,669 thousand. The difference between the actual acquisition or disposal price and the book value, amounting to NTD3,634 thousand, was recognized under the equity accounts.





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CPTF Optronics Co., Ltd., subsidiary of the Group, purchased 24.81% of shares of FVD, subsidiary of CPT, from Forward Development Co., Ltd. in March 2018. Hence, the comprehensive holding percentage of CPT towards FVD increased from 19.83% to 26.37%. The cash consideration paid amounted to NTD105,948 thousand. The book value of the acquired shares of FVD amounted to NTD120,303 thousand. The difference between the actual acquisition or disposal price and the book value, amounting to NTD14,355 thousand, was recognized under the equity accounts in proportion to ownership interest.

The above equity charges recognized by subsidiaries were then recognized by the Company according to its combined proportion of ownership interest over these subsidiaries.

(33) Disposal of subsidiaries CPT Upon CPT evaluated the current status, relationship and interaction with CPTTG comprehensively according to IFRS 10, it deemed that it no longer has control over CPTTG and no ability to direct the relevant activities of CPTTG. Therefore, CPTTG and its subsidiaries were no longer subsidiaries of the Company as of the end of 2018. A. Consideration of disposal

According to IFRS 3, when an acquirer obtains control of a business, such business combinations are accounted for using the acquisition method, which generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date. However, CPT did not receive the consideration actually because CPT lost control over CPTTG based on the specific situation mentioned above.

B. Analysis of assets and liabilities of CPTTG as of the date losing control

As of December 31,

2018 Current assets (including cash and cash equivalents NTD96,321 thousand) $43,733,663 Non-current asset 56,519,152 Total assets 100,252,815

Current liabilities (41,042,223) Non-current liabilities (11,316,279) Total liabilities (52,358,502) Net assets of CPTTG 47,894,313 Carrying value of non-controlling interest (333,121) Net disposal assets $47,561,192





137

C. Loss on disposal of subsidiary

For the years ended

December 31, 2018

Consideration collected $6,103,315 Net disposal assets (The Group calculates based the comprehensive

holding percentage)

(12,541,886) Cumulative exchange difference reclassified from equity to profit & loss

because the parent lost control of the subsidiary

(819,947)

Loss on disposal of subsidiary $(7,258,518)

D. Cash outflow of disposal of subsidiary

As of December 31,

2018 Consideration collected $- Balance of cash and cash equivalents of disposal (11,347,986) $(11,347,986)

GET According to IFRS 10 and related questions and answers issued, Green Energy Technology Co., Ltd. (“GET”), was resolved for dissolution and liquidation at the provisional shareholders’ meeting on August 30, 2019, and the liquidator took office on the same day, as the Group lost control of GET, therefore GET and its subsidiaries were no longer subsidiaries of the Group on the day.

A. Consideration collected

According to IFRS 3, when an acquirer obtains control of a business, such business combinations are accounted for using the acquisition method, which generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date. However, the Group did not receive the consideration actually.





138

B. Analysis of assets and liabilities of GET as of the date losing control

108.8.30 Current assets

(including cash and cash equivalents NTD96,321 thousand) $560,680

Non-current 3,251,462 Total assets 3,812,142 Current liabilities (7,623,655) Non-current liabilities (4,020,011) Total liabilities (11,643,666) Net assets of GET (7,831,524) Carrying value of non-controlling interest (97,039) Net disposal assets $(7,928,563)

C. Loss (Gain) on deposal of subsidiary

108.1.1~

108.8.30 Consideration collected $- Net disposal assets

(The Group calculates based the comprehensive holding percentage) 3,001,871

Other comprehensive income reclassified from equity to profit & loss because the parent lost control of the subsidiary

(196,723)

Total fain on disposal of investment 2,805,148 Expected credit losses (Note 1) (1,728,471) Expense loss for long-term purchase contacts (Note 2) (1,086,951) Net loss on disposal of investment $(10,274)

Note 1: According to the accounting standards of the Group, when disposal of subsidiary,

it is necessary to evaluate the claims of these excluded subsidiaries in the accounts of the Group and recognize the expected credit impairment losses.

Note 2: Since there are still other subsidiaries of the Group that may have obligations for these contracts, the liability is not excluded.





139

D. Cash outflow of disposal of subsidiary

108.8.30 Consideration collected $- Balance of cash and cash equivalents of disposal (96,321) $(96,321)

(34) Subsidiaries that have material non-controlling interests

Financial information of subsidiaries that have material non-controlling interests is provided below: A. Proportion of equity interest held by non-controlling interests:

Country of For the years ended

December 31, Name Incorporation and operation 2019 2018

CPT Group Taiwan 60.33% 59.88% SCSC Group Taiwan (Note) 42.92% The holding percentage mentioned above is disclosed as the comprehensive holding percentage. Both of the companies mentioned above own subsidiaries, and thus the financial information mentioned below is consolidated financial information. Green Energy Technology Co., Ltd. (“GET”), was resolved for dissolution and liquidation by the provisional shareholders’ meeting on August 30, 2019. As the SCSC Group lost control, for the Group, it no longer has significant non-controlling interests.

B. Accumulated balances of material non-controlling interest:

As of December 31, 2019 2018

CPT Group $(10,251,452) $(2,731,519) SCSC Group (Note) (1,727,373) Green Energy Technology Co., Ltd. (“GET”), was resolved for dissolution and liquidation by the provisional shareholders’ meeting on August 30, 2019. As the SCSC Group lost control, for the Group, it no longer has significant non-controlling interests.





140

C. Profit/(loss) allocated to material non-controlling interest:

For the years ended

December 31, 2019 2018

CPT Group $(7,212,458) $(1,727,373) SCSC Group (Note) (6,346,003) Green Energy Technology Co., Ltd. (“GET”), was resolved for dissolution and liquidation by the provisional shareholders’ meeting on August 30, 2019. As the SCSC Group lost control, for the Group, it no longer has significant non-controlling interests. The summarized financial information of these subsidiaries is provided below. This information is based on amounts before inter-company eliminations. Summarized information of profit or loss for the year ended December 31, 2019: CPT Group Operating revenue $1,507,877 Profit of (loss) for the period from continuing operations (11,955,010) Total comprehensive income for the period (12,431,924) Summarized information of profit or loss for the year ended December 31, 2018: CPT Group SCSC Group Operating revenue $24,020,005 $6,429,035 Profit of (loss) for the period from continuing operations (25,282,861) (7,502,124) Total comprehensive income for the period (25,098,165) (7,703,148)

D. Summarized information of financial position as of December 31, 2019: CPT Group Current assets $3,015,714 Non-current assets 17,787,206 Current liabilities 37,373,968 Non-current liabilities 421,247





141

Summarized information of financial position as of December 31, 2018: CPT Group SCSC Group Current assets $5,346,131 $2,333,748 Non-current assets 28,224,983 7,577,578 Current liabilities 37,123,282 7,374,991 Non-current liabilities 1,009,487 4,208,420 Summarized cash flow information for the year ended December 31, 2019: CPT Group Operating activities $(1,962,048) Investing activities 1,852,035 Financing activities (395,596) Net increase/(decrease) in cash and cash equivalents (701,609) Summarized cash flow information for the year ended December 31, 2018: CPT Group SCSC Group Operating activities $(9,079,822) $(615,391) Investing activities (12,511,542) 507,615 Financing activities (2,946,766) (302,168) Net increase/(decrease) in cash and cash equivalents (24,430,923) (399,481)

(35) Significant purchase agreements of technology and materials

Contracting party

The term of the contract The content of repayment

Technology agreement Samsung Display Co.,

Ltd. (SDC) January 2014

｜ December 2023

1. Authorized to use patent. 2. The Company is required to pay royalty fees

on installment basis during the effective period of the contract.

Mitsubishi Electric Corporation (MELCO)

July 2015 ｜

June 2020

1. Aauthorized to use patent. 2. The Company is required to pay royalty fees






142

Contracting party

The term of the contract The content of repayment

Japan Display Inc. January 2017 ｜

December 2021



LG. Display Co., Ltd.

March 2015 ｜

March 2022



Hydis Technology Co., Ltd.

November 2012 |

October 2022

1. Authorized to use the patent. 2. The Company is required to pay royalty fees


Vibrant Display Technology CO., Ltd.

July 2017 |

June 2022



Industrial Technology Research Institute

August 5, 2015 |

August 4, 2030



Purchase agreement of materials

Corning Display Technologies Taiwan Co., Ltd (Corning Taiwan)

January 2017 ｜

December 2021

1. Corning Taiwan will guarantee to supply materials of TFT-LCD to CPT.

2. Required to make prepayments on installment basis to Corning Taiwan to be deducted from subsequent purchase.

Please refer to Note 9 for other purchase agreements.

(36) The subsidiary, TUS, applied for company reorganization to the District Court for the Central District of California located in Los Angeles, and the court opened a court session on October 2, 2019. The reason TUS applied for reorganization was that TUS and GET signed a poly-silicon material supply contract for purchase assistance, however, the price of silicon material slumped and forced GET to apply for liquidation. For the content of the poly-silicon material supply contract, please refer to Note 9.6(3) for more details.





143

7. Related party transactions

Related parties that have transactions with the Group during the financial reporting period: Related parties and relationship

Name of related parties Relationship with the Company

Tatung University Significant influence over the Company Tatung Senior High School Significant influence over the Company Tatung Okuma Co., Ltd. Associates Elitegroup Computer Systems Co., Ltd. Associates Elitegroup Technology (Thailand) Co., Ltd. Associates Taiwan Nissei Display System Co., Ltd Associates (Note 2) Tatung Cranes (Shanghai) Co., Ltd Associates Kunde (wujiang) Plastic Technology Co., Ltd. Associates Kuender Co., Ltd. Associates Kuender (Wujiang) Electronic parts Co., Ltd. Associates Ufeco (Wujiang) Technology Inc Associates Nature Worldwide Technology Corp. Associates Hsieh-Chih Industrial Library Publishing Co. Associates Huai-Jie (Wujiang) Plastic Processing Technology Co., Ltd. Associates Chung-Tai Technology Development Engineering Co. Associates Gintung Energy Co., Ltd. Associates (Note 6) Weifang Great Energy Trading Co., Ltd. Associates (Note 6) Tatung SM-Cycle Co., Associates (Note 7) I-Torch Technology Corp. Associates LIN HTET LIN COMPANY LIMITED Joint venture Tatung Middle East Purification of Potable Water L.L.C. Joint venture The Employee Welfare Committee of Tatung System

Technologies Inc. (“TSTI”) Other related party

The United Employees’ Welfare Committee of Tatung Other related party Affiliate Union of Tatung Company Other related party The Employee Welfare Committee of Forward

Electronics Co., Ltd. (“FD”) Other related party

United Renewable Energy Co., Ltd. Other related party (Note 4) The Employee Welfare Committee of Tatung Company Other related party Association of GET (Taoyuan) Other related party





144

Name of related parties Relationship with the Company

Nanjin Global Technology Co., Ltd. Other related party Association of Tatung Consumes Produces (Taiwan)

Co., Ltd. Other related party

CPTF Optronics Co., Ltd. Other related party (Note 3) CPTF Visual Display (Fuzhou) Ltd. (“FVD”) Other related party (Note 3) Chunghwa Picture Tubes (Wujiang) Ltd. (“CPTW”) Other related party (Note 3) The Joint Welfare Committee of Tatung Other related party The Employee Welfare Committee of Tatung Fine

Chemicals Co., Ltd. Other related party

Association of Tatung Company (Taoyuan) Other related party The Employee Welfare Committee of Tatung Consumes

Produces (Taiwan) Co., Ltd. Other related party

Chunghwa Picture Tubes Technology (Group) Co., Ltd. (“CPTTG”)

Other related party (Note 3)

Vibrant Display Technology CO., Ltd. Other related party (Note 3) Fuzhou YingYuan Equity Investment Management Co., Ltd. Other related party (Note 3) Huallar Optronics (Fuzhou) Co. Ltd. Other related party (Note 3) DDD3Empire Other related party (Note 3) Huajiayuan Co., Ltd. Other related party (Note 3) CPT TPV Optical (Fujian) Co., Ltd. Other related party (Note 3) Kornerstone Materials Technology Co. Ltd. Other related party (Note 3) Chunghwa Picture Tubes Technology (Labuan) Ltd.

("CPTTG(L)”) Other related party (Note 3)

Lin, Wei-Shan Other related party (Note 5) Lin, Kuo Wen-Yen Director

Note 1: If the transaction amount of single related party doesn’t reach 10% of the transaction total

amount, it will be combined to present with others. Note 2: Chih Sheng Investment Co., Ltd., subsidiary of the Company, entered a shares transaction

contract in March 2018 and sold shares of Taiwan Nissei Display System Co., Ltd, investments accounted for under the equity method. The holding percentage of Taiwan Nissei Display System Co., Ltd was 0% as of December 31, 2018.

Note 3: CPTTG and its subsidiaries are no longer subsidiaries of the Group from December 31, 2018.

Note 4: Gintech Energy Corporation has changed its name to United Renewable Energy Co., Ltd. On December 10, 2018.

Note 5: Who is the spouse of the Group’s director. Note 6: Gintech Energy Corporation and Weifang Great Energy Trading Co., Ltd. are no longer

the subsidiaries of the Group from August 30, 2019 but are associates of the Group. Note 7: Tatung SM-Cycle Co. is no longer the subsidiaries of the Group since the fourth quarter

of 2019 but an associate of the Group.





145

Significant related party transactions (1) Sales

For the years ended

December 31,

2019 2018

Entity with joint control or significant influence over the Group

Tatung University $54,069 $44,849

Other 4,945 5,231

Associates

Tatung Okuma Co., Ltd. 50,007 75,364

Other 23,386 7,276

Joint venture 1,031 -

Other related parties

United Renewable Energy Co., Ltd. - 95,391

CPTF Visual Display (Fuzhou) Ltd. (“FVD”) 53,070 -

Other 33,018 3,497

Total $219,526 $231,608

A. The Company

The sales price to related parties was determined through mutual agreement based on market conditions. The collection terms for domestic related parties were 90 days, equivalent to those for domestic third parties; the collection terms for foreign related parties were 30-180 days, equivalent to these for foreign third parties.

B. Significant subsidiaries

There were no significant differences between selling prices to related parties and prices to arm’s length customers. The comparison of collection terms between related parties and arm’s length customers is summarized as follows:





146


2019 2018

Company Region Related parties General supplier Related parties General supplier

CPT and its

subsidiaries

Overseas O/A 30-180 days T/T in advance O/A 30-180 days T/T in advance

L/C 60 days at sight

O/A 30-90 days

Domestic (Note) T/T in advance O/A 30-180 days T/T in advance

SCSC and its

subsidiaries

Overseas O/A 60 days

T/T 45-90 days

O/A 30 days

Period closing date

30~45 days

T/T in advance

T/T 45~90 days

O/A 60 days

T/T 90 days

Period closing date 30-

45 days

T/T in advance

T/T 3-90 days

L/C at sight

L/C 30days

30% T/T in advance,

and 70% T/T 15-20

days after receipt

Domestic O/A 30-60 days

T/T in advance

Period closing date

30~120 days

T/T 45-90 days

T/T in advance

T/T 30 days , T/T 90

days

O/A 120 days

T/T in advance

T/T in advance

T/T 7~90 days

O/A 30-120 days

FD and its

subsidiaries

Overseas O/A 30-150 days O/A 60-150 days

Or L/C SIGHT

O/A 30-150 days O/A 60-150 days

Or L/C SIGHT

Domestic Cash collection at

period closing date

Or TT or O/A 30-150

days

O/A 30-120 days Cash collection at

period closing date

Or TT or O/A 30-150

days

O/A 30-120 days

Tatung System

Technologies

Inc. and its

subsidiaries

Overseas O/A 30-90 days O/A 30-120 days O/A 30-120 days O/A 30-120 days

Domestic O/A 30-90 days O/A 30-120 days O/A 30-120 days O/A 30-120 days

Note: CPT and its subsidiaries did not sell goods to domestic related parties for the years

ended December 31, 2019.





147

(2) Purchase

For the years ended

December 31, 2019 2018 Entity with joint control or significant influence over the Group $1,412 $- Associates

Elitegroup Computer Systems Co., Ltd. 453,278 492,497 Gintung Energy Co., 55,045 (Note) Other 15,287 22,694

Total $525,022 $515,191 Note: Gintung Energy Corporation was no longer a subsidiary of the Group on August 30,

2019; however, the Group recognized it as investments accounted for under the equity method on August 30, 2019 due to having significant control over Gintung Energy Corporation.

A. The Company

The purchase price from related parties was determined through mutual agreement based on market conditions. The payment terms to related parties and third parties for domestic purchases were both net 30-150 days, while the terms for overseas purchases were both net 30-120 days.

B. Significant subsidiaries

There are no significant differences between purchasing prices from related parties and prices to arm’s length suppliers. The comparison of payment terms between related parties and arm’s length suppliers is summarized as follows:

For the years ended December 31, 2019 2018

Company Region Related parties General supplier Related parties General supplier CPT and its subsidiaries

Overseas T/T in advance T/T in advance T/T 30-360 days L/C 30-180 days T/T 30-360 days

Domestic T/T in advance T/T in advance 30-90 days after QC 30-210 days after QC

FD and its subsidiaries

Overseas T/T 30-150 days after QC or DA 120 days

T/T 30-150 days after QC or L/C

T/T 30-150 days after QC or DA 120 days

T/T 30-150 days after QC or L/C

Domestic 30-120 days after QC 30-120 days after QC 30-120 days after QC 30-120 days after QC

Tatung System Technologies Inc. and its subsidiaries

Overseas 30-60 days after QC 30-60 days after QC 30-60 days after QC 30-60 days after QC

Domestic O/A 60-90 days O/A 30-60 days O/A 60-90 days O/A 30-90 days





148

(3) Accounts receivable – related parties

As of December 31, 2019 2018 Entity with joint control or significant influence over the Group $3,784 $1,614 Associates 13,774 11,529 Joint venture - 1,239 Other related party

CPTF Optronics Co., Ltd. 867,764 880,855 Vibrant Display Technology CO., Ltd. 35,252 134,081 Other 1,649 119,963

Subtotal (Total Book Value) 922,223 1,149,281 Less: loss allowance (1) (41,764) Net $922,222 $1,107,517

(4) Others receivable – related parties (include current and non-current)

As of December 31, 2019 2018 Entity with joint control or significant influence over the Group $283 $878 Associates 6,967 14,661 Joint venture - 152 Other related party

Chunghwa Picture Tubes Technology (Group) Co., Ltd. 317,215 329,082 Vibrant Display Technology CO., Ltd. 186,162 - Other 17,444 832

Subtotal (Total Book Value) 528,071 345,605 Less: loss allowance (40,683) (3,758) Net 487,388 341,847 Non-current portion (6,708) (417) Current portion $480,680 $341,430

(5) Accounts payable – related parties

As of December 31, 2019 2018 Entity with joint control or significant influence over the Group $1,012 $3 Associates 164,385 177,513 Other related party

CPTF Optronics Co., Ltd. 6,560,093 6,720,922 Chunghwa Picture Tubes Technology (Group) Co., Ltd. 6,149,911 6,300,689 Other 3,133 3,210

Total $12,878,534 $13,202,337





149

(6) Other payable related parties

As of December 31, 2019 2018 Entity with joint control or significant influence over the Group $585 $224 Associates 23,028 7,890 Other related parties

Chunghwa Picture Tubes Technology (Group) Co., Ltd. 258,310 39,581 CPTF Optronics Co., Ltd. 245,878 27,278 Chunghwa Picture Tubes (Wujiang) Ltd. 30,815 31,571 Other 17,639 11,924

Total $576,255 $118,468

(7) Prepayments

108.12.31 107.12.31 Entity with joint control or significant influence over the Group $- $20,893 Associates

Gintung Energy Co., 127,491 (Note) Total $127,491 $20,893

Note: Gintung Energy Corporation was no longer a subsidiary of the Group on August 30,

2019; however, the Group recognized it as investment accounted for under the equity method on August 30, 2019 due to having significant control over Gintung Energy Corporation.

(8) Transaction of property


Related Party Assets Amount Profit or loss on

sale of assets Basis of transaction

Acquisition

Tatung Okuma Co., Ltd. Other equipment $82 None Bargain

CPTF Visual Display (Fuzhou) Ltd. (“FVD”) Other

equipment 1,138 None Bargain

Elitegroup Computer Systems Co., Ltd. Other

equipment 22 None Bargain

Gintung Energy Co., Ltd. Other equipment 47,240 None Bargain

Disposal Elitegroup Technology

(Thailand) Co., Ltd. Mechanical equipment 443 $65 Bargain

Elitegroup Technology (Thailand) Co., Ltd. Office

equipment 879 $879 Bargain





150


Related Party Assets Amount Profit or loss on

sale of assets Basis of transaction

Acquisition Tatung Okuma Co., Ltd. Mechanical

equipment $619 None Bargain

(9) Lease—related parties

Rental income

December 31, 2019 2018(Note)

Associates Ufeco (Wujiang) Technology Inc. $417 Other related parties 60 Total $477 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS 16. Right-of-use As of December 31, 2019 2018(Note) Entity with joint control or significant influence over the Group

Tatung University $58,433 Other 3,735

Other related parties 375 Total $62,543 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate

prior periods in accordance with the transition provision in IFRS 16. Lease liabilities (current and non - current) As of December, 2019 2019 Entity with joint control or significant influence over the Group

Tatung University $39,030 Other 2,881

Other related parties 379 Net 42,290 Non-current portion - Current portion $42,290 Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate






151

Interest Expense

For the years ended

December 31, 2019 2018(Note) Entity with joint control or significant influence over the Group

Tatung University $1,581 Other 34

Other related parties 13

Total $1,628

Note: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate


(10) Compensation of key management personnel


2019 2018 Short-term employee benefits $146,403 $247,765 Post-employment benefits 1,735 1,964

Total $148,138 $249,729

(11) The Chairman of Tatung Company guaranteed part of the bank loans for the Company and its

subsidiaries. Please refer to Note 6 (19) for more details. (12) Other matters

CPT and Vibrant Display Technology CO., Ltd. entered into a licensing and cooperation contract in 2017. CPT granted the use of its TFT-LCD patent to Vibrant Display Technology CO., Ltd from July 1, 2017 to June 30, 2022, for a consideration of RMB183,000 thousand and would be repaid in 10 installments. As of December 31, 2019, the uncollected amount was RMB107,894 thousand (already deducting withholding taxes). CPT received a letter from Vibrant Display Technology CO., Ltd on January 11, 2019. Vibrant Display Technology CO., Ltd has signed an agreement with CPTF Optronics Co., Ltd. to transfer its claim against CPT in the amount of RMB107,894 thousand and hence offset the patent expense.





152

8. Assets pledged as collateral

The following table lists assets of the Group pledged as collateral:

Carrying amounts as of December 31,

2019 2018 Purpose of the pledge Prepayments (Note 3) $66,454 $- Loan seizure Others receivable (Note 4) 321,315 - Loan guarantee Land 12,335,654 10,260,992 Loan guarantee, financing loan Buildings 14,063,582 15,026,732 Loan guarantee, performance

guarantee, financing loan Lease improvement - 1,243,271 Loan guarantee, performance

guarantee, financing loan Machines, transportation equipment and

other Equipment (Note 2) 1,070,651 3,240,206 Loan guarantee, performance

guarantee, financing loan Investment property-land 11,886,837 - Loans Investment property-buildings 778,188 - Loans Financial assets at fair value through profit

or loss-current - 313,272 Loan guarantee letter of credit

Financial assets at fair value through other comprehensive income

5,671,550 6,151,037 Loans, performance guarantee, financing loan guarantee

Financial assets measured at amortized cost (including current and non-current)

3,391,261 2,154,897 Various guarantees, deposit, Bank savings

Investments accounted for under the equity method

1,685,100 1,296,750 Loans

Other non-current assets – deposit-out 4,671 48,671 Loans, financing loan Rent prepaid (current and non-current)

(Note 1) - 224,286 Loans

Inventory 779,508 988,555 Loans, lawsuits of constructions Total $52,054,771 $40,948,669

In addition to the pledged assets listed above, the Company pledged the property, plant and equipment of subsidiaries as collateral for loans. Note1: The Group adopted IFRS 16 since January 1, 2019. The Group elected not to restate prior

periods in accordance with the transition provision in IFRS 16. Note2: As of December 31, 2019, the carrying amount of CPT’s mechanical equipment amounted

to NTD683,422 thousand. Certain machines were pledged to the Company and the remaining machines were under provisional seizure by creditors for compulsory enforcement.

Note3: As CPT defaulted, banks seized CPT’s deposits pursuant to the loan agreements to offset the principal, interest and related expenses in the future.

Note4: From December 12, 2019 to December 17, 2019, Huarong Securities Co., Ltd. disposed of 27,640,594 shares of CPTTG held by Chunghwa Picture Tubes (Bermuda) Ltd. in the amount of RMB321,315 thousand (excluding tax), and recognized as other receivables as the amount was not yet collected.





153

9. Commitments and contingencies

(1) Promissory notes issued by the Group and subsidiaries to secure bank loans, construction

performance bond and tariff guarantee amounted to NTD 13,624,258 thousand and USD

13,000 thousand, Among then, Chunghwa Picture Tubes, Ltd. and the Bank of Taiwan signed

a short-term credit loan and provided a guarantee of NTD 1 billion in promissory notes,

Chunghwa Picture Tubes, Ltd. demanded a reorganization on December 13, 2018. The Bank

of Taiwan notified that the debts were due immediately and issued a promissory note. The

promissory notes received a refund notice on January 8, 2019.

(2) The Company and its subsidiaries’ unused letters of credit for importing raw materials and machinery amounted to NTD15,911 thousand, USD6,137 thousand, RMB1,624 thousand,

EUR3,183 thousand and JPY11,581 thousand.

(3) Performance bond issued by financial institutions amounted to NTD529,807 thousand as of

December 31, 2019.

(4) As of December 31, 2019, the significant contingencies and unrecognized contract

commitments of the Company are as follows:

I. The Company applied credit lines to Mega International Commercial Bank, Bank of

'Taiwan, Chang Hwa Bank, and First Commercial Bank on behalf of Tatung Co., of Japan,

Inc. by issuing the promissory notes amounted to NTD492,800 thousand, JPY1,200,000

thousand, JPY650,000 thousand and JPY420,000 thousand, respectively.

II. The Company applied for credit lines to Hua Nan Commercial Bank on behalf of San

Chih Semiconductor Co., Ltd. and posted guarantee in the amount of NTD60,000

thousand. As of December 31, 2019, the balance of the guarantee provided by the

Company amounted to NTD56,000 thousand.

III. As of December 31, 2019, the significant contingencies and unrecognized contract

commitments of the Company are as follows:





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(1) This trial is the merger of three trial into one case. The Company filed actions against

two contractors: King Pro Group (“King Pro”) and J Ka Hung Exhibition Co., Ltd. (“Ka Hung”) for failure to perform the engineering contract while King Pro and Ka Hung jointly filed an action against the Company for the repayment of construction funds. The company registration database from the Ministry of Economic Affairs showed that King Pro was closed and Ka Hung has been ordered to be dissolved and liquidated, and neither King Pro nor Ka Hung registered any asset. In addition, because King Pro and Ka Hung had disputes about the damages caused by the re-contracting of the Company, the Company then requested the court for an appraisal. The documents that the court demanded the Company to provide was not easy to find because it was old information and employees of the contractor changed. Furthermore, the appraisal fee and the cost of selecting a liquidator for Ka Hung are still required in the litigation process. Even if the Company wins all or part of the action, the defendant had no assets to carry out the compulsory enforcement, so the attorney proposed to withdraw the actions against King Pro and Ka Hung, to retrieve the provisional seizure security and withdraw the action to receive 2/3 refund the litigation fee. There would be no further cost from the appraisal and selection of a liquidator. So, the Company focused on defending the cases against King Pro and Ka Hung for the return of the project fee. At present, the attorney has filed to the court to change the date of the court session. After the Company has internal discussion on the case, they will report the conclusion to the court.

(2) The Company was engaged in a construction project with Taiwan Railways

Administration, MOTC (“Taiwan Railways”). There is still a dispute regarding the overdue fine charged by Taiwan Railways as the Company did not complete the project on time. The Company had engaged an attorney to file a mediation to the Public Construction Commission. The Company engaged in integration of logistics system (“Taiwan Railways- Case A”) and inspection of completion of the project was rejected by Taiwan Railways for more than 3 years because the requirements changed, and that Case A needed to be integrated with the accounting system (“Taiwan Railways- Case B”). The Company filed to the Taipei District Court on August 8, 2018 to claim inspection of Case A and the final payment. The Company was engaged in the integration of accounting system (“Taiwan Railways- Case B”). Because the requirements changed frequently and inspection of completion was rejected, so the Company filed to the Taipei District Court to request inspection of completion of Case B and the final payment. Both cases are undergoing the appraisal process and waiting for a result. No major development as of now.





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(3) The Company and Toshiba Electronics Components Taiwan Corporation

(“Toshiba”) signed a contract regarding “the purchase and the assembly of motor and fan of the Taiwan Railways TILTING train and EMU800 train”. The Company completely followed the blueprint of Toshiba, but Toshiba claimed that the products were faulty and claimed damages amounting to NTD58,125 thousand, requiring the Company to pay. The Chinese Arbitration Association, Taipei made a judgement that it wouldn’t handle this case because it had no jurisdiction. Toshiba also filed an arbitration in Tokyo. The Japan Commercial Arbitration Association issued the final arbitration award on June 14, 2019 and considered that there was no further investigation needed and made the final judgement. Both parties reached a settlement on November 11, 2019 and Toshiba withdrew the action.

(4) Hwang Chang General Contractor Co., LTD (“Hwang Chang”) was engaged in a

construction project led by the East District Project Office of the Department of Rapid Transit Systems, Taipei City Government: “Taipei Urban Metro System Circular Line Sections CF640 to CF641A Electricity, Plumbing and Environmental Control Construction.” Such project was outsourced to the Company on August 3, 2014. However, the Company deemed that Hwang Chang delayed in delivering the construction site for about a year during the contract period. The Company could not start the construction and collect payments following the delay. Hence, the construction cost was a lot higher than expected. The Company terminated the contract after giving notice to Hwang Chang. Afterwards, Hwang Chang claimed against the Company for damages of price differences between contract prices with other subcontractors. The Company lost in the first instance and appealed. Both parties reached a settlement on January 9, 2020.

(5) The Company outsourced the “Office relocation and expansion of Taiwan Taoyuan

District Court and new construction project of Dang Cheng Building” to Da Hong Chung Technical Engineering Co., Ltd (“Da Hong Chung”). The Company deemed that Da Hong Chung did not assign sufficient workers as contracted and hence delayed the construction progress. The Company notified Da Hong Chung to increase manpower for the project. However, Da Hong Chung refused to do so because it claimed that the Company had not paid the additional construction fee. The Company terminated the contract on October 19, 2017 and would claim damages against Da Hong Chung for the delay when the construction is completed. Da Hong Chung filed a legal action to the Taiwan Taipei District Court to claim its construction receivable in February 2018. The case was transferred to an appraisal and waiting for a response.





156

(6) United Aerotech System Corporation filed a legal action against the Company on

January 6, 2010, claiming payments of consultant fees amounting to NTD1,490 thousand. Both parties reached a settlement in 2017. However, on March 12, 2018, the Company received the indictment from United Aerotech System Corporation claiming consulting fee amounting to NTD32,643 thousand. The Company had appointed attorneys to handle the issue. The court has required United Aerotech System Corporation to present detailed evidence and to explain the reasons and necessity. The court declared the Company was the prevailing party on September 27, 2019 and United Aerotech System Corporation filed for a trial. Both parties could not reach a settlement on March 10, 2020. The judge urged if the trial could be concluded by mediation, so the next mediation court will be held on April 30, 2020.

(7) The Company was engaged in a smart electrical meter project with Taiwan Power

Company, (“Taiwan Power”). The Company delivered the products according to the purchase contracts signed and finished the inspection and acceptance, and payment collection. However, there is still a dispute regarding the warranty coverage of “Meter Interface Unit” of the smart electrical meter. The mediation Committee was held on July 27, 2018, the Company agreed with the mediation, but Taiwan Power did not. Hence, the Company turned to the Public Construction Commission and it was determined by members in the appeals committee that the Company was not responsible for the warranties. Therefore, the claim of Taiwan Power was groundless. Because Taiwan Power still requires the Company to perform its warranty obligations, the Company has filed an action. In this case, because the two parties could not reach a consensus on the mediation process on February 20, 2020, this case was transferred to the civil court, pending a court opening notice.

(8) Based on the “Related party transaction percentage of listed companies after the

completion of acquisition and the commitment of future sales of listed companies” signed on September 11, 2014 by Chunghwa Picture Tubes (Bermuda) Ltd. (“CPTB”) and Chunghwa Picture Tubes Technology (Labuan) Ltd.("CPTTG (L)”), CPTTG filed an action against Chunghwa Picture Tubes (Bermuda) Ltd. (“CPTB”) in December 2018 in the Higher People's Court of Fujian, claiming payment in the amount of RMB 1.914 billion. On March 28, 2019, the Company and Chunghwa Picture Tubes Ltd. (“CPT”) were added as defendants in the above-mentioned litigation. The Company received documents through EMS mail from the Higher People's Court of Fujian the following day, including the “Civil complaint”, “Notification of response”, “Notification of proof”, ”Evidence list”, “Supplemental evidence list”, “Notification of service address of the party”, “Return of service certificate”, “Summons”, “Notification of members of the panel of judges”. The above-mentioned "Civil Complaint" made the following claims:





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(1) CPTB, Defendant One, shall pay RMB 1.914 billion to CPTTG. (2) The Company, i.e. Defendant Two, and CPT, i.e. Defendant Three, shall be joint

liable for the above-mentioned compensation in the amount of RMB 1.914 billion.

(3) All court costs and expense shall be borne by the three defendants.

The above-mentioned documents showed that the exchange of evidence was made on May 21, 2019, and the court hearing time was set on May 22, 2019.

On May 10, 2019, the Company inquired about CPTTG's 2019-054 "Progress Announcement on the Filing of Litigation" and learned that CPTTG (L) has applied to the Higher People's Court of Fujian to increase the amount of the claim to RMB 3,029,027,800 based on its 2018 audit results. In addition, the content of CPTTG announcement also stated that due to the objection regarding jurisdictional raised by the Company and CPT, the original evidence exchange time set on May 21, 2019 and the hearing time set on May 22, 2019 will be postponed.

The Company re-checked CPTTG's 2019-114 “Progress Announcement on the Filing of Litigation” on July 19, 2019 and learned that Civil Ruling 2019-Min-Min-Chu No. 1-1 and Civil Ruling 2019-Min-Min-Chu No. 1-2 have been served by the Higher People's Court of Fujian.

According to CPTTG 2019-018 announcement, CPTTG filed property preservation to the court against CPTB on January 8, 2019, and submitted the supplement document on January 16, 2019.

The above-mentioned Civil Ruling 2019-Min-Min-Cchu No. 1-1 was the decision made by the court which approved CPTTG's application to preserve CPTB's property; Civil Ruling 2019-Min-Min-Chu No. 1-2 was the decision made by the court regarding the application for jurisdictional objections filed by CPT and the Company. The decision was as follows:

(a) The objection regarding jurisdiction raised by the Company and CPT was

dismissed. (b) The fee for the jurisdiction objections was RMB 100, which shall be borne by the

Company and CPT jointly at RMB 50 each.

The Company inquired about CPTTG’s Shenzhen Stock Exchange 2019-130 “Progress Announcement on the Filing of Litigation” and learned that the Company has been served the "Civil Appeal Brief" and CPT has been served the "Jurisdiction Objection Appeal Brief" sent by the court





158

On October 8, 2019, the Fujian New-Stone Law Firm which was retained by the Company and received the Notice of Acceptance of Appeal Case 2019-Zui-Gao-Yuan-Min-Xia-Zhong-No. 467 sent by the Higher People's Court of China. The Court accepted this appeal case following a review, and notified the Company to submit a copy of the business license and the legal representative's identity certificate; if any litigious agent was engaged, a power of attorney shall be submitted.

On October 11, 2019, the Company inquired about CPTTG 's Shenzhen Stock Exchange 2019-140 "Progress Announcement on the Filing of Litigation" and learned that the company received an Appeal Notification 2019-Zui-Gao-Fa-Min-Xia-Zhong No.467 to notify the company to respond.

With respect to whether the Company shall be held jointly liable, the Company deemed that: In 2009, the Company, CPT, CPTB and CPTTG (L) made various commitments to CPTTG following the asset reorganization as shown in the following table. However, the Company only signed the commitment letters from No. 7 to No. 12 and No. 19 in the table. In addition, in 2014, with approval from the shareholders' meeting, CPTTG changed the "Commitment about not reducing shareholding interest in the listed company." and " Commitment of the proportion of related party transactions of listed companies after the acquisition". The original commitments therefore expired and the amendment to the previous commitments in 2014 were only executed by CPTB and CPTTG (L). Neither the Company nor CPT were involved. So, the Company believed that this joint liability was no longer effective. Furthermore, CPTB has lost control of CPTTG.

CPTTG’s ground for the claim was the recognition of the loss allowance. The timing of the recognition was after CPT lost control, during which time the commitment already expired. The claim against CPTB remained doubtful, and CPT’s receivables were payables of CPTTG, which were not related to the Company. As a result, according to IAS 37, it is not sufficient for the Company to evaluate whether there is any obligation that will lead to economic benefit outflow, and thus the Company did not recognize provisions for contingent liabilities.

In addition, the Company was of the view that the Court of the People's Republic of China had no jurisdiction over this case. Therefore, according to Article 127 of the Civil Procedure, an application for jurisdiction objection has been filed. On January 20, 2020, the Company received Civil Ruling 2019-Zui-Gao-Fa-Min-Xia-Zhong-No. 467 served by the Higher People's Court of the People's Republic of China.

The Supreme People’s Court of the People’s Republic of China ruled that the decision of the original trial (namely Civil Ruling 2019-Min-Min-Chu No. 1-2 made by Fujian Higher People’s Court) shall be maintained as the facts were clear and laws were appropriately applied. The Company has made an announcement immediately and will discuss with the lawyer for the follow-up measures to protect the rights and interests of the Company, CPT and shareholders.

Since the case is at the procedural stage of determining jurisdiction, it has not entered into substantial litigation, and the counterparty has not fully proved the amount of claim, which currently has no impact on the Company.





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The contents, contracting parties, signed date, expiration and execution and current status of each commitment in 2009 are summarized below:

Commitments listed/Contents Contracting

parties Signed Date Expiration and

Execution 1. Commitment about not reducing shareholding interest

in the listed company. CPTB and CPTL made a commitment that from completing the acquisition to production of new next-generation LCD panel, CPTB and CPTTG(L) will not reduce their shareholding interests in Mindong Electric (Group) Co., Ltd.

CPTB and CPTTG(L)

December 31, 2008 On September 11, 2014, the special shareholders meeting of CPTTG approved by majority votes the revision to the commitments.This commitment was no longer valid. No commitment was breached.

2. Commitment of not transferring shares of Mindong Electric (Group) Co., Ltd. in 3 years CPTB and CPTTG(L) committed that they will not transfer shares of Mindong Electric (Group) Co., Ltd. in the 3 years following Mindong Electric (Group) Co., Ltd.’s end of private issue.

CPTB and CPTTG(L)

January 16, 2009 Expired upon 3 years following CPTTG’s public offering. This commitment was no longer valid. No commitment was breached.

3. Commitment of the performance after public issues CPTB and CPTTG (L) committed that as long as the legal and policy factors around the operating environment of the 4 LCM Companies remain unchanged, the ROE of Mindong Electric (Group) Co., Ltd. will not be less than 10% when the proportion of related party transactions of Mindong Electric (Group) Co., Ltd. had not been reduced to below (and not including) 30% after the acquisition within one accounting year. CPTB will make up the difference by cash if the ROE is less than 10%. If the proportion of related party transactions of Mindong Electric (Group) Co., Ltd. recovered to more than 30% (including 30%) of all transactions in the subsequent accounting year, CPTB and CPTTG (L) commit that the ROE will not be less than 10%. CPTB will also make up the difference by cash if the ROE is less than 10%.

CPTB and CPTTG(L)

January 16, 2009 On the September11, 2014, the CPTTG Annual Shareholder Meeting passed the revised commitments. This commitment was no longer valid. No commitment was breached.





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Execution 4. Commitment about the profitability of Mindong

Electric (Group) Co., Ltd. in the next 3 years CPTB and CPTTG (L) committed that after the asset settlement date of Mindong Electric (Group) Co., Ltd. in 2009, the consolidated net income attributable to owners of parent will not be less than the amount calculated below: RMB0.295 billion/ 12 * M (M: the numbers of months that the assets were acquired by the listed company.) In 2010, the consolidated net income attributable to owners of parent was not less than RMB0.346 billion; In 2011, the consolidated net income attributable to owners of parent was not less than RMB0.346 billion. If Mindong Electric (Group) Co., Ltd. could not meet the performance goal, CPTB will make up the shortfall by cash.

CPTB and CPTTG(L)

January 16, 2009 Expired on December 31, 2011. This commitment was no longer valid. No commitment was breached.

5. Commitment of the proportion of related party transactions of listed companies after the acquisition CPTB and CPTTG (L) committed that from the day the acquisition was completed until December 31, 2010, the proportion of related party transactions of Mindong Electric (Group) Co., Ltd. would be reduced to below 30% (not including 30%) and would maintain the same level in the subsequent years. If the proportion of related party transactions is not reduced to lower than 30% (not including 30%) by December 31, 2010, CPTB will give 4,546,719 shares to all shareholders (except for CPTB and CPTTG(L)) of Mindong Electric (Group) Co., Ltd.

CPTB and CPTTG(L)

January 16, 2009 Expired on December 31,2010. This commitment was no longer valid. No commitment was breached.

6. Supplementary commitment of the proportion of related party transactions after listed CPTB and CPTTG(L) committed that after the material asset restructuring, the proportion of related party transactions will be lower than 60% in December 2009; the proportion of related party transactions will be lower than 30% (not including 30%) in December 2010; the proportion of related party transactions will continue to be lower than 30% (not including 30%) from 2011.

CPTB and CPTTG(L)

On the September 11, 2014, the CPTTG Annual Shareholder Meeting passed the revised commitments. This commitment was no longer valid. No commitment was breached.





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Execution

7. Commitment letter regarding restriction and reduction

of related party transactions

(A) The Company, CPT, CPTB, CPTTG (L) and their

subsidiaries should strictly follow the fair and

reasonable standard and guarantee that they do not

harm the shareholders’ interest when making

transactions with Mindong Electric (Group) Co.,

Ltd.

(B) The Company, CPT, CPTB, CPTTG(L) and their

subsidiaries should strictly follow the “Stock

Listing Rules of the Shenzhen Stock Exchange”, “Articles of Association of Mindong Electric

(Group) Co., Ltd.”, and ”Decision system of related party transactions” when making


Ltd.

(C) As the business integration of Mindong Electric

(Group) Co., Ltd. continues, the Company, CPT,

CPTB, CPTTG (L) and their subsidiaries should

reduce the related party transactions with Mindong

Electric (Group) Co., Ltd.

(D) After the restructure, Mindong Electric (Group)

Co., Ltd. started to manufacture LCD panel for

CPT and its subsidiaries, as a result, there were

more related party transactions between Mindong

Electric (Group) Co., Ltd. and CPT Group. The

Company, CPT, CPTB and CPTTG(L)

committed that the intercompany OEM price

should refer to market price if the OEM rate is

available, or the price Mindong Electric (Group)

Co., Ltd. manufactures for other third parties or

cost mark-up if the OEM rate is not available to

make sure the OEM profit is generated reasonably.

CPTB,

CPTTG (L),

CPT and the

Company

January 16, 2009 If confirmed by the

China Securities

Regulatory

Commission or

Shenzhen Stock

Exchange that the

control of Mindong

Electric (Group)

Co., Ltd. has been

lost, the above

commitments shall

expire.

No commitment

was breached.





162



Execution

8. Commitment of non-competition with listed

companies in the industry

CPTB, CPTTG (L), CPT and the Company confirmed

that CPTF Optronics Co., Ltd. produced small and

medium size LCD module. The small and medium size

LCD module produced by CPTF Optronics Co., Ltd.

and the large size LCD modules produced by the 4

LCM Companies do not compete. Additionally, from

then on, the Company, CPT, CPTB, CPTTG (L) and

their subsidiaries cannot engage in similar business as

Minding Electric (Group) Co., Ltd. and its subsidiaries

within and outside China, including investment,

acquisition and combination with other entities that

engage in similar business as Mindong Electric (Group)

Co., Ltd. The Company, CPT, CPTB, CPTTG (L) and

their subsidiaries cannot engage in similar business that

Mindong Electric (Group) Co., Ltd. and its subsidiaries

newly invested in, including investment with de facto

control, acquisition and combination with other entities,

within China.

CPTB,

CPTTG (L),

CPT and the

Company


China Securities

Regulatory

Commission or

Shenzhen Stock

Exchange that the

control of Mindong

Electric (Group)

Co., Ltd. has been

lost, the above

commitments shall

expire.

No commitment

was breached.

9. Commitment about the operation independence of the

listed company

CPTB, CPTTG(L), CPT and the Company committed

to keep Mindong Electric (Group) Co., Ltd.’s assets, employees, finance, organization and business

independent. Specifically:

(A) Maintain Mindong Electric (Group) Co., Ltd.’s and its subsidiaries’ assets independent and intact: Mindong Electric (Group) Co., Ltd. and its

subsidiaries will have the abilities of production;

build operating systems; own property, plant and

equipment related to manufacture; have the right

to use trademark, patent and knowledge.

CPTB, CPTTG (L), CPT and the Company

January 16, 2009 No commitment was breached.





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Execution (B) Independence of employees:

All management, such as general manager, vice president, finance manager and board secretary of Mindong Electric (Group) Co., Ltd. do not serve other positions (except for directors or Supervisor) and receive payroll from other entities held by the undersigned of the commitment.

The finance personnel of Mindong Electric (Group) Co., Ltd. do not serve other positions in other entities held by the undersigned of the commitment.

(C) Independence of finance: Mindong Electric (Group) Co., Ltd. will

establish an independent financial system to make independent financial decisions, have a financial accounting system in place and a financial management system that governs the branches and subsidiaries.

Mindong Electric (Group) Co., Ltd. does not share bank accounts with the undersigned of the commitment and its subsidiaries.

(D) Independence of organization: Mindong Electric (Group) Co., Ltd. will establish a well-defined and structured internal division to exercise independently the managing capacity, which will not involve any division controlled by Mindong Electric (Group) Co., Ltd. and its subsidiaries.

(E) Independence of business: The undersigned of the commitment will strictly follow the “Commitment of non- competition in the industry” to keep the operation independent of Mindong Electric (Group) Co., Ltd. by avoiding the unfair related party transactions with the undersigned of the commitment.





164



Execution 10. Commitment about the information disclosure

CPTB, CPTTG (L), CPT and the Company committed that after Mindong Electric (Group) Co., Ltd. was approved of private issuance of shares, if the Company, CPT, CPTB and CPTTG(L) make any decisions related to business or any controls over Mindong Electric (Group) Co., Ltd., according to the responsibility of information disclosure under China regulations, they shall inform Mindong Electric (Group) Co., Ltd. and disclose the same content in R.O.C.


January 16, 2009 If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitments shall expire. No commitment was breached.

11. Supplementary commitment of changes in business model of Shenzhen Huaxianjing Technology Co., Ltd. CPTB, CPTTG(L), CPT and the Company committed that, to comply with the “Commitment of non-competition in the industry”, the changes in business model of Shenzhen Huaxianjing Technology Co., Ltd. would not cause competition. In addition, the “Commitment about the profitability of Mindong Electric (Group) Co., Ltd. in the next 3 years” and the “Commitment of the company’s performance after it is listed” state that the net income of Mindong Electric (Group) Co., Ltd. will not be affected by the changes in business model of Shenzhen Huaxianjing Technology Co., Ltd. The related party transactions of Shenzhen Huaxianjing Technology Co., Ltd. under the new business model also follow “Commitment letter for the regulation and reduce of related party transactions” and “Supplementary commitment of the proportion of related party transactions after listed”. CPT still grants patents based on “Commitment about the use of patent” after the changes in business model of Shenzhen Huaxianjing Technology Co., Ltd.


March 31, 2009 If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitments shall expire. In addition, on April 9, 2013, the CPTTG 2012 Annual Shareholder Meeting passed the resolution “Regarding the sale of shareholding in the subsidiary,” by which it sold its 75% shareholding in Shenzhen Huaxianjing Technology Co., Ltd. to China Star Optoelectronics International (HK) Limited. As such, this commitment was no longer valid. No commitment was breached.





165



Execution 12. Commitment and supplementary commitment about

CPTF Visual Display (Fuzhou) Ltd. (“FVD”) and Fujian Huaxianjing Technology Co., Ltd. providing entrusted loans and guarantee for Xiamen Overseas Chinese Electronic Co., Ltd. CPTB, CPTTG (L), CPT and the Company committed that the entrusted loans and guarantee FVD and Fujian Huaxianjing Technology Co., Ltd. provided for Xiamen Overseas Chinese Electronic Co., Ltd. before the restructure of Mindong Electric (Group) Co., Ltd. would not cause damage to FVD’s and Fujian Huaxianjing Technology Co., Ltd.’s interests or affect Mindong Electric (Group) Co., Ltd shareholders’ interests. If any loss incurs, CPTB will make up for the loss by cash.


March 31, 2009、 July 7, 2009

No commitment was breached

13. Commitment about composition of board of directors of listed companies. CPTB made a commitment that after the restructuring, Mindong Electric (Group) Co., Ltd. would modify its articles of incorporation. The board of directors would be composed of 9 directors, including 5 independent directors who are based in China. During the period serving as the controlling shareholders of Mindong Electric (Group) Co., Ltd., half of the directors of the board are independent and are based in China and the directors will not make any modification to the listed companies’ articles of incorporation that contradicts with the above commitment.

CPTB July 7, 2009 No commitment was breached.

14. Commitment about share repurchase CPTB made a commitment that if it fails to fulfill the obligation of sales reimbursement according to “Commitment about profitability of Mindong Electric (Group) Co., Ltd in the future 3 years.”, the board of directors of Mindong Electric (Group) Co., Ltd. are entitled to repurchase shares of CPTB to the extent permitted by applicable law to compensate the minority shareholders of Mindong Electric (Group) Co., Ltd. CPTB will recuse itself when discussing the share repurchase case during the board meeting of Mindong Electric (Group) Co., Ltd. to the extent permitted by applicable law and pursuant to the Articles of Incorporation of Mindong Electric (Group) Co., Ltd.

CPTB July 27, 2009 Expired as of December 31, 2011.This commitment was no longer valid. No commitment was breached.





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Execution 15. Commitment about patents licensing

CPT made a commitment that: A. It has already acquired the technology and patents required for manufacturing LCD module and has obtained necessary licensing. After restructuring of Mindong Electric (Group) Co., Ltd., CPT agreed to grant Mindong its patents related to the manufacturing of LCD module that it previously applied, gained approval or made public. Other related patents acquired later by CPT will also be granted to Mindong Electric (Group) Co., Ltd. The licensing is irrevocable and the effective period of the license is the effective period of the patent. B. If Mindong Electric (Group) Co., Ltd. utilized the patents mentioned above because of orders to manufacture LCD module from CPT or other entities controlled by CPT, CPT agreed to waive the patent fee. However, if the orders are from third parties, CPT would charge patent fee and the amount would be assessed by third party professional institution. Also, the amount would be approved by the board of directors of listed companies in China or shareholders meeting according to applicable law and the “Related transaction decision procedures” established by listed companies in China. C. After restructuring Mindong Electric (Group) Co., Ltd., with respect to orders to manufacture LCD module from CPT or other entities controlled by CPT, CPT represented that Mindong Electric (Group) Co., Ltd. will not infringe the patents CPT owned and acquired from third parties by performing the contracts. If Mindong Electric (Group) Co., Ltd. is accused of infringing the abovementioned patents by third parties because of performing the contract, CPT would be held jointly liable for the related legal responsibilities. Also, the damage caused by Mindong Electric (Group) Co., Ltd. would be indemnified by CPT.

CPT January 16, 2009 No commitment was breached.





167



Execution 16. Supplementary commitment about the patent licensing

CPT committed that for utilization of the applied, approved or public patents when Mindong Electric (Group) Co., Ltd. and its subsidiaries manufacture LCD module, CPT agreed to waive the patent fee. The supplementary commitment is effective from the day the restructuring of Mindong Electric (Group) Co., Ltd. took effect and will remain effective as long as CPT is the substantial controller of Mindong Electric (Group) Co., Ltd. However, if CPT is deemed to have lost control of Mindong Electric (Group) Co., Ltd. by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the supplementary commitment will expire immediately.

CPT If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitments shall expire. No commitment was breached.

17. Supplementary commitment about utilization of goodwill and patent licensing Contents: CPT committed that: A. After the restructuring of material assets of

Mindong Electric (Group) Co., Ltd. the company and its subsidiaries do not have to pay any charges from the impact of CPT’s goodwill. Mindong Electric (Group) Co., Ltd. and its subsidiaries will establish their own goodwill and gradually lessen the impact of CPT’s goodwill on Mindong Electric (Group) Co., Ltd. and its subsidiaries.

B. If CPT transfers its own patent registered in China, Mindong Electric (Group) Co., Ltd. will have the priority to buy it under the same terms. If such patent is transferred to any third party, CPT will assure Mindong Electric (Group) Co., Ltd. and its subsidiaries the effectiveness of the patent licensing. Also, per the transfer contracts, the transferee shall not interfere with the licensing of patents to Mindong Electric (Group) Co., Ltd. and its subsidiaries.

C. If CPT loses its patent and hence causes damage to Mindong Electric (Group) Co., Ltd. and its subsidiaries, CPT will be held accountable for the total cost for them to obtain legal right of use of such patent or alternative technology.

D. If Mindong Electric (Group) Co., Ltd. and its subsidiaries require patent licensing from third parties because of manufacturing needs in the future, CPT will help them obtain related patent licensing using its industry status and experience.

CPT If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitment shall expire. No commitment was breached.





168



Execution E. The supplementary commitment is effective from

the day the restructuring of Mindong Electric (Group) Co., Ltd. takes effect and will remain effective as long as CPT is the substantial controller of Mindong Electric (Group) Co., Ltd. However, if CPT is deemed to have lost control of Mindong Electric (Group) Co., Ltd. by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the supplementary commitment will expire immediately.

18. Commitment about CPT’s joint liability CPT committed that it assumes joint and several liability with respect to the commitment made by CPTB and CPTTG(L) about the shareholding interest of Mindong Electric (Group) Co., Ltd. sales performance and related party transactions. If CPTB and CPTTG(L) fail to adhere to the above commitment and need to make compensation, CPT would assume joint and several liability for such compensation.

CPT January 16, 2009 No commitment was breached.

19. ”Commitment letter” about assuming joint and several liability Tatung Co., Ltd and CPT committed that with respect to the written commitment submitted by CPTB and CPTTG(L) to the China Securities Regulatory Commission for the private issue of Mindong Electric (Group) Co., Ltd., Tatung Co., Ltd and CPT will assume joint and several liability.

CPT TATUNG

July 7, 2009 If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitment shall expire. Part of the commitment has been expired and replaced by new commitment approved in CTPTG’s shareholders’ meeting on September 11, 2014 The Company did not issue new commitment or undertaking to bear the joint and several liability for the new commitment. No commitment was breached.





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Execution 20. Commitment about the restructuring party not reducing

the shareholding interest of listed companies. CPTB、CPTTG(L) approved the revision of the commitments :CPTB and CPTTG(L) withdrew the commitment that during the period from the completion of acquisition and second generation (above 7G) of large size LCD panel product lines being injected to Mindong Electric (Group) Co., Ltd., CPTB and CPTTG(L) will not reduce their shareholding percentage of Mindong Electric (Group) Co., Ltd. The supplementary commitment of CPTB and CPTTG(L) “Motion of revising commitment of shareholders” was approved by at the shareholders meeting of CPTTG. After the completion of transfer of paid-in capital to share capital, shares of CPTB and CPTTG(L) will be listed and be entitled with the outstanding rights. Also, in the first 18 months after the “Motion of revising commitment of shareholders” is approved at the shareholders meeting of CPTTG, CPTB and CPTTG(L) will not decrease their shareholding of CPTTG.

CPTB CPTTG(L)

September 11, 2014 The revision expired on March 11, 2016 and is no longer applicable. No commitment was breached.

21. Related party transaction percentage of listed companies after the completion of acquisition and the commitment of future sales of listed companies. Revision of CPTB and CPTTG(L)’s commitment: Starting from 2014, during any account year, if the amount of related party transactions accounts for more than 30% of the sales during the same period and of the same transaction category (limited to materials purchase, sale of products and rendering of service involved in daily operations), the shareholders will need to assure that simulated consolidated calculation of rate of return of net assets of LCD module companies(please see below for specific scope) owned by CPTTG is not less than 10% (the calculation of rate of return of net assets does not include Kornerstone Materials Technology Co. Ltd., a subsidiary and other companies that are expected to be acquired and merged and invested in the future). Also, CPTB and CPTTG will make up for the insufficient portion by cash. The commitment will expire from the shareholders of CPTB and CPTTG(L) lost control of the company. The simulated consolidated scope for calculating net assets of LCD module companies’ rate of return of net assets is as follows:

CPTB CPTTG(L)

September 11, 2014 If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitment shall expire.





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Execution Net assets of CPTF Optronics Co., Ltd. and its

subsidiaries Net assets of CPTW Net assets of FDT Net assets of CPT TPV Optical (Fujian) Co., Ltd. Net assets of CPTTG(L) Net assets of CPTTG less net assets increased from

financing after this motion was approved at the shareholders meeting

When the above LCD module companies are no longer included in the consolidation because of being sold or shareholding percentage decrease, they will not be included in the calculation.

The simulated consolidated scope for calculating net income of LCD module companies’ rate of return of net assets is as follows: Net income of CPTF Optronics Co., Ltd. and its

subsidiaries Net income of CPTW Net income of FDT Net income of CPT TPV Optical (Fujian) Co., Ltd. Net income of CPTTG(L) Net income of CPTTG When LCD module companies are no longer

included in the consolidation because of being sold or shareholding percentage reduced, they will not be included in the calculation.

(5) As of December 31, 2019, CPT and its subsidiaries had commitments and contingencies as

follows: 1. Contingent

Business commitment to Chunghwa Picture Tubes Technology (Group) Co., Ltd. (“CPTTG”) On February 12, 2019, CPTTG released the “Announcement of litigation and property preservation” (Ref. No. 2019-018). The announcement stated that, on December 29, 2018, CPTTG filed a legal action against CPTB at the People's High Court of Fujian, claiming for payment in the amount of RMB 1.914 billion. On January 8, 2019, CPTTG took and filed property preservation measures against CPTB, as a result, the Higher People's Court of Fujian blocked the assets CPTB held below:





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(1) 729,289,715 shares of CPTTG (2) CPT TPV Optical (Fujian) Co., Ltd. equity of USD 1.125 million (3) CPT TPV Optical (Shenzhen) Co., Ltd. equity of RMB 2 million On March 28, 2019, CPTTG, creditor of CPT, released No. 2019-034 “Progress Announcement on the Filing of Litigation”, show that CPT were added as defendants(“Please refer to “Announce of litigation and property preservation” which were released by CPTTG on February 12, 2019, and changed defendant to CPTB and CPT, CPTB and CPT shall pay RMB 1.914 billion to CPTTG for joint compensation. As April 30, 2019, CPTTG, released the“2018 Annual Report” and show that CPTTG accrued loss allowance of the receivables from CPT ,which amount is RMB 2.791 billion, therefore CPTTG increase the amount of the claim to RMB 3.029 billion. On May 10, 2019, CPTTG, released No. 2019-054 “Progress Announcement on the Filing of Litigation” and CPTTG has applied to the Higher People's Court of Fujian to increase the amount of the claim to RMB 3.029 billion. On March 29, 2019, the Chunghwa Picture Tubes Ltd. (“CPT”) received documents through EMS mail from the Higher People's Court of Fujian the following day, including the “Civil complaint”, “Notification of response”, “Notification of proof”, ”Evidence list”, “Supplemental evidence list”, “Notification of service address of the party”, “Return of service certificate”, “Summons”, “Notification of members of the panel of judges”. The above-mentioned documents showed that the exchange of evidence was made on May 21, 2019, and the court hearing time was set on May 22, 2019. CPT filed application for jurisdictional objections, so the hearing time will be postponed. On April 24, 2019, the Chunghwa Picture Tubes Ltd. (“CPT” ) received CPTB’s notification through EMS mail from the Higher People's Court of Fujian, including the“Civil complaint”,“Notification of response”,“Notification of proof”, ”Evidence list”, “Supplemental evidence list”, “Notification of service address of the party”, “Return of service certificate”, “Summons”, “Notification of members of the panel of judges”. The above-mentioned documents showed that the exchange of evidence was made on May 21, 2019, and the court hearing time was set on May 22, 2019. CPT filed application for jurisdictional objections, so the hearing time will be postponed. On June 17, 2019, CPT received CPTB’s documents which recipient is CPTB and CPT is collector, through EMS mail from the Higher People's Court of Fujian, including the “Application”, “Supplemental evidence list”, “Return of service certificate”. The above-mentioned documents showed that CPTTG changed defendant amount from to RMB 1.914 billion to RMB 3.029 billion. CPTTG accrued loss allowance of the receivables from CPT, as well as the assets impairment, resulting in net loss and breaching the “Commitment of performance after acquisition” made by CPTB.





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While, CPTB lost control of CPTTG so the commitments expired. CPTTG’s ground for the claim was the recognition of the loss allowance. The timing of the recognition was after CPT lost control, during which time the commitment already expired. There is uncertainty about the claim against CPTB. In addition, CPT was of the view that the Court of the People's Republic of China had no jurisdiction over this case. Therefore, according to Article 127 of the Civil Procedure, an application for jurisdiction objection has been filed and the court dismiss the CPT’ Indictment. While, received the Civil Ruling 2019-Min-Min-Chu No. 1-1 and Civil Ruling 2019-Min-Min-Chu No. 1-2 have been served by the Higher People's Court of Fujian on July 22, 2019. The above-mentioned Civil Ruling 2019-Min-Min-Cchu No. 1-1 was the decision made by the court which approved CPTTG's application to preserve CPTB's property(Ref. No. 2019-018); Civil Ruling 2019-Min-Min-Chu No. 1-2 was the decision made by the court regarding the application for jurisdictional objections filed by CPT and the Company. The decision was as follows: “The objection regarding jurisdiction raised by the Company and CPT was dismissed and the fee for the jurisdiction objections was RMB 100, which shall be borne by the Company and CPT jointly at RMB 50 each. ”. On August 27, 2019, the Company inquired about CPTTG’s Shenzhen Stock Exchange 2019-130 “Progress Announcement on the Filing of Litigation” and learned that CPT has been served the "Jurisdiction Objection Appeal Brief" and the Company has been served the "Civil Appeal Brief" sent by the court. On October 8, 2019, the Fujian New-Stone Law Firm which was retained by the Company and received the Notice of Acceptance of Appeal Case 2019-Zui-Gao-Yuan-Min-Xia-Zhong-No. 467 sent by the Higher People's Court of China. The Court accepted this appeal case following a review, and notified the Company to submit a copy of the business license and the legal representative's identity certificate; if any litigious agent was engaged, a power of attorney shall be submitted. On October 11, 2019, the Company inquired about CPTTG 's Shenzhen Stock Exchange 2019-140 "Progress Announcement on the Filing of Litigation" and learned that the company received an Appeal Notification 2019-Zui-Gao-Fa-Min-Xia-Zhong No.467 to notify the company to respond. On January 20, 2020, CPT and The Company released the CPTTG No.2020-010 announcement “Progress Announcement on the Filing of Litigation ” 2019-Zui-Gao-Yuan-Min-Xia-Zhong-No. 467, Regarding the Supreme People’s Court of the People’s Republic of China ruled that the decision of the original trial (namely Civil Ruling 2019-Min-Min-Chu No. 1-2 made by Fujian Higher People’s Court) shall be maintained. The objection regarding jurisdiction raised by CPT and the Company, Since the case is at the procedural stage of determining jurisdiction, it has not entered into substantial litigation. The commitments are listed as below: (1) Commitment of restructuring Mindong Electric (Group) Co., Ltd. (i.e., current CPTTG)

in 2009

A. Commitment about not reducing shareholding interest in the listed company.

Contents: CPTB made a commitment that from completing the acquisition to production of new next-generation LCD panel, CPTB and CPTTG(L) will not reduce their shareholding interests in Mindong Electric (Group) Co., Ltd.





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Expiration and execution: On April 28, 2014, the board of directors of CPTTG

approved the revision to the commitments and agreed that the revised commitments will take effect from the day of the shareholders’ meeting and the original commitments will expire at the same time. On September 11, 2014, the special shareholders meeting approved by majority votes the revision to the commitments. No commitment was breached.

B. Commitment of not transferring shares of Mindong Electric (Group) Co., Ltd. in 3

years

Contents: CPTB and CPTTG(L) committed that they will not transfer shares of Mindong Electric (Group) Co., Ltd. in the 3 years following Mindong Electric (Group) Co., Ltd.’s end of private issue.

Expiration and execution: Expired upon 3 years following CPTTG’s public

offering (2012). No commitment was breached.

C. Commitment of the performance after public issues

Contents: CPTB and CPTTG (L) committed that as long as the legal and policy factors around the operating environment of the 4 LCM Companies remain unchanged, the ROE of Mindong Electric (Group) Co., Ltd. will not be less than 10% when the proportion of related party transactions of Mindong Electric (Group) Co., Ltd. had not been reduced to below 30% (and not including) after the acquisition within one accounting year. CPTB will make up the difference by cash if the ROE is less than 10%. If the proportion of related party transactions of Mindong Electric (Group) Co., Ltd. recovered to more than 30% (including 30%) of all transactions in the subsequent accounting year, CPTB and CPTTG (L) commit that the ROE will not be less than 10%. CPTB will also make up the difference by cash if the ROE is less than 10%.

Expiration and execution: On April 28, 2014, the board of directors of CPTTG approved the revision to the commitments and agreed that the revised commitments will take effect from the day of the shareholders’ meeting and the original commitments will expire at the same time. On September 11, 2014, the special shareholders meeting approved by majority votes the revision to the commitments. The commitment to related party transactions and business performance were changed to and revised as the changed to “Commitment to proportion of related party transactions of the listed company after completion of acquisition and future business performance of the listed company.” The commitments were not breached.

D. Commitment about the profitability of Mindong Electric (Group) Co., Ltd. in the

next 3 years





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Contents: CPTB and CPTTG (L) committed that after the asset settlement date of

Mindong Electric (Group) Co., Ltd. in 2009, the consolidated net income attributable to owners of parent will not be less than the amount calculated below: RMB0.295 billion/ 12 * M (M: the numbers of months that the assets were acquired by the listed company.) In 2010, the consolidated net income attributable to owners of parent was not less than RMB0.346 billion; In 2011, the consolidated net income attributable to owners of parent was not less than RMB0.346 billion. If Mindong Electric (Group) Co., Ltd. could not meet the performance goal, CPTB will make up the shortfall by cash.

Expiration and execution: Expired on December 31, 2011.

No commitment was breached.

E. Commitment of the proportion of related party transactions of listed companies after the acquisition

Contents: CPTB and CPTTG (L) committed that from the day the acquisition was

completed until December 31, 2010, the proportion of related party transactions of Mindong Electric (Group) Co., Ltd. would be reduced to below 30% (not including 30%) and would maintain the same level in the subsequent years. If the proportion of related party transactions is not reduced to lower than 30% (not including 30%) by December 31, 2010, CPTB will give 4,546,719 shares to all shareholders (except for CPTB and CPTTG(L)) of Mindong Electric (Group) Co., Ltd.

Expiration and execution: Expired on December 31, 2010.

The proportion of related party transactions was not reduced to lower than 30% before December 31, 2010. According to the “Commitment to proportion of related party transactions of the listed company after the acquisition” given and promised by CPTB and CPTTG (L) when restructuring, the gift of 4,546,723 shares (shareholder holding 10 shares received 0.267233 shares) to all shareholders (except for CPTB and CPTTG(L)) were given by CPTB on March 25, 2011.

F. Supplementary commitment of the proportion of related party transactions after listed

Contents: CPTB and CPTTG(L) committed that after the material asset restructuring, the proportion of related party transactions will be lower than 60% in December 2009; the proportion of related party transactions will be lower than 30% (not including 30%) in December 2010; the proportion of related party transactions will continue to be lower than 30% (not including 30%) from 2011.





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Expiration and execution: On April 28, 2014, the board of directors of CPTTG

approved the revision to the commitment and agreed that the revised commitment will take effect on the day of the shareholders’ meeting, the original commitment shall expire at the same time. On September 11, 2014, the revised commitment was approved at the special shareholders’ meeting. The original commitment to related party transactions and business performance were changed to and revised as the “Commitment to proportion of related party transactions of the listed company after completion of acquisition and future business performance of the listed company.” The commitments were not breached.

G. Commitment letter regarding restriction and reduction of related party transactions

Contents: CPTB, CPTTG (L), CPT and the Company committed that:

(1) The Company, CPT, CPTB, CPTTG (L) and their subsidiaries should strictly follow the fair and reasonable standard and guarantee that they do not harm the shareholders’ interest when making transactions with Mindong Electric (Group) Co., Ltd.

(2) The Company, CPT, CPTB, CPTTG(L) and their subsidiaries should strictly follow the “Stock Listing Rules of the Shenzhen Stock Exchange”, “Articles of Association of Mindong Electric (Group) Co., Ltd.”, and ”Decision system of related party transactions” when making transactions with Mindong Electric (Group) Co., Ltd.

(3) As the business integration of Mindong Electric (Group) Co., Ltd. continues, the Company, CPT, CPTB, CPTTG (L) and their subsidiaries should reduce the related party transactions with Mindong Electric (Group) Co., Ltd.

(4) After the restructure, Mindong Electric (Group) Co., Ltd. started to manufacture LCD panel for CPT and its subsidiaries, as a result, there were more related party transactions between Mindong Electric (Group) Co., Ltd. and CPT Group. The Company, CPT, CPTB and CPTTG(L) committed that the intercompany OEM price should refer to market price if the OEM rate is available, or the price Mindong Electric (Group) Co., Ltd. manufactures for other third parties or cost mark-up if the OEM rate is not available to make sure the OEM profit is generated reasonably. CPT committed that it will strictly follow the “Decision system of related party transactions” of Mindong Electric (Group) Co., Ltd. which has been commented by independent directors and has been passed by shareholders’ meeting. The above commitments took effect the day Mindong Electric (Group) Co., Ltd. issued private shares and will remain effective during the period when CPTB and CPTTG(L) still hold shares in Mindong Electric (Group) Co., Ltd. The commitment will expire when CPTB and CPTTG (L) lost the controlling shares. If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that CPTB, CPTTG (L), CPT and the Company had lost control of Mindong Electric (Group) Co., Ltd., the commitments above shall expire.





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Expiration and execution: If confirmed by the China Securities Regulatory

Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitments shall expire. No commitment was breached.

H. Commitment of non-competition with listed companies in the industry

Contents: CPTB, CPTTG (L), CPT and the Company confirmed that CPTF Optronics Co., Ltd. produced small and medium size LCD module. The small and medium size LCD module produced by CPTF Optronics Co., Ltd. and the large size LCD modules produced by the 4 LCM Companies do not compete. Additionally, from then on, the Company, CPT, CPTB, CPTTG (L) and their subsidiaries cannot engage in similar business as Mindong Electric (Group) Co., Ltd. and its subsidiaries within and outside China, including investment, acquisition and combination with other entities that engage in similar business as Mindong Electric (Group) Co., Ltd. The Company, CPT, CPTB, CPTTG (L) and their subsidiaries cannot engage in similar business that Mindong Electric (Group) Co., Ltd. and its subsidiaries newly invested in, including investment with de facto control, acquisition and combination with other entities, within China. The above commitments took effect on the day Mindong Electric (Group) Co., Ltd. delivered documentation to the China Securities Regulatory Commission with respect to shares purchased through private issue and will remain effective during the period when CPTB and CPTTG(L) still hold shares in Mindong Electric (Group) Co., Ltd. The commitment will expire when CPTB and CPTTG (L) lose the controlling shares. If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that CPTB, CPTTG (L), CPT and the Company lose control of Mindong Electric (Group) Co., Ltd., the above commitments will expire. CPTB, CPTTG (L), CPT and the Company are liable for any breach of above commitments that caused damages to Mindong Electric (Group) Co., Ltd.







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I. Commitment about the operation independence of the listed company

Contents: CPTB, CPTTG(L), CPT and the Company committed to keep Mindong Electric (Group) Co., Ltd.’s assets, employees, finance, organization and business independent. Specifically:

(1) Maintain Mindong Electric (Group) Co., Ltd.’s and its subsidiaries’

assets independent and intact: Mindong Electric (Group) Co., Ltd. and its subsidiaries will have the abilities of production; build operating systems; own property, plant and equipment related to manufacture; have the right to use trademark, patent and knowledge.

(2) Independence of employees: All management, such as general manager, vice president, finance

manager and board secretary of Mindong Electric (Group) Co., Ltd. do not serve other positions (except for directors or Supervisor) and receive payroll from other entities held by the undersigned of the commitment.

The finance personnel of Mindong Electric (Group) Co., Ltd. do not serve other positions in other entities held by the undersigned of the commitment.

(3) Independence of finance: Mindong Electric (Group) Co., Ltd. will establish an independent

financial system to make independent financial decisions, have a financial accounting system in place and a financial management system that governs the branches and subsidiaries.

Mindong Electric (Group) Co., Ltd. does not share bank accounts with the undersigned of the commitment and its subsidiaries.

(4) Independence of organization: Mindong Electric (Group) Co., Ltd. will establish a well-defined and structured internal division to exercise independently the managing capacity, which will not involve any division controlled by Mindong Electric (Group) Co., Ltd. and its subsidiaries.

(5) Independence of business: The undersigned of the commitment will strictly follow the “Commitment of non- competition in the industry” to keep the operation independent of Mindong Electric (Group) Co., Ltd. by avoiding the unfair related party transactions with the undersigned of the commitment.

Expiration and execution: No commitment was breached.





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J. Commitment about the information disclosure

Contents: CPTB, CPTTG (L), CPT and the Company committed that after Mindong Electric (Group) Co., Ltd. was approved of private issuance of shares, if the Company, CPT, CPTB and CPTTG(L) make any decisions related to business or any controls over Mindong Electric (Group) Co., Ltd., according to the responsibility of information disclosure under China regulations, they shall inform Mindong Electric (Group) Co., Ltd. and disclose the same content in R.O.C. Also, CPTB, CPTTG(L), CPT and the Company committed that the information disclosure will proceed simultaneously in China and R.O.C. The commitment took effect on the day Mindong Electric (Group) Co., Ltd. delivered documentation to the China Securities Regulatory Commission. The commitment remains effective when Mindong Electric (Group) Co., Ltd. remains listed on the Shenzhen Stock Exchange. If confirmed by the China Securities Regulatory Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. Has been lost, the above commitments shall expire. The expiration information will also follow the information disclosure commitment.



K. Supplementary commitment of changes in business model of Shenzhen Huaxianjing


Contents: CPTB, CPTTG(L), CPT and the Company committed that, to comply with the “Commitment of non-competition in the industry”, the changes in business model of Shenzhen Huaxianjing Technology Co., Ltd. would not cause competition. In addition, the “Commitment about the profitability of Mindong Electric (Group) Co., Ltd. in the next 3 years” and the “Commitment of the company’s performance after it is listed” state that the net income of Mindong Electric (Group) Co., Ltd. will not be affected by the changes in business model of Shenzhen Huaxianjing Technology Co., Ltd. The related party transactions of Shenzhen Huaxianjing Technology Co., Ltd. under the new business model also follow “Commitment letter for the regulation and reduce of related party transactions” and “Supplementary commitment of the proportion of related party transactions after listed”. CPT still grants patents based on “Commitment about the use of patent” after the changes in business model of Shenzhen Huaxianjing Technology Co., Ltd.





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Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitments shall expire. In addition, on April 9, 2013, the CPTTG 2012 Annual Shareholder Meeting passed the resolution “Regarding the sale of shareholding in the subsidiary,” by which it sold its 75% shareholding in Shenzhen Huaxianjing Technology Co., Ltd. to China Star Optoelectronics International (HK) Limited. As such, this commitment was no longer valid. No commitment was breached.

L. Commitment and supplementary commitment about CPTF Visual Display (Fuzhou)

Ltd. (“FVD”) and Fujian Huaxianjing Technology Co., Ltd. providing entrusted loans and guarantee for Xiamen Overseas Chinese Electronic Co., Ltd.

Contents: CPTB, CPTTG (L), CPT and the Company committed that the entrusted

loans and guarantee FVD and Fujian Huaxianjing Technology Co., Ltd. provided for Xiamen Overseas Chinese Electronic Co., Ltd. before the restructure of Mindong Electric (Group) Co., Ltd. would not cause damage to FVD’s and Fujian Huaxianjing Technology Co., Ltd.’s interests or affect Mindong Electric (Group) Co., Ltd shareholders’ interests. If any loss incurs, CPTB will make up for the loss by cash.


M. Commitment about composition of board of directors of listed companies.

Contents: CPTB made a commitment that after the restructuring, Mindong Electric (Group) Co., Ltd. would modify its articles of incorporation. The board of directors would be composed of 9 directors, including 5 independent directors who are based in China. During the period serving as the controlling shareholders of Mindong Electric (Group) Co., Ltd., half of the directors of the board are independent and are based in China and the directors will not make any modification to the listed companies’ articles of incorporation that contradicts with the above commitment.






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N. Commitment about share repurchase

Contents: CPTB made a commitment that if it fails to fulfill the obligation of sales reimbursement according to “Commitment about profitability of Mindong Electric (Group) Co., Ltd in the future 3 years.”, the board of directors of Mindong Electric (Group) Co., Ltd. are entitled to repurchase shares of CPTB to the extent permitted by applicable law to compensate the minority shareholders of Mindong Electric (Group) Co., Ltd. CPTB will recuse itself when discussing the share repurchase case during the board meeting of Mindong Electric (Group) Co., Ltd. to the extent permitted by applicable law and pursuant to the Articles of Incorporation of Mindong Electric (Group) Co., Ltd.

Expiration and execution: Expired as of December 31, 2011.

No commitment was breached. O. Commitment about patents licensing

Contents: CPT made a commitment that:

It has already acquired the technology and patents required for manufacturing LCD module and has obtained necessary licensing.

After restructuring of Mindong Electric (Group) Co., Ltd., CPT agreed to grant Mindong its patents related to the manufacturing of LCD module that it previously applied, gained approval or made public. Other related patents acquired later by CPT will also be granted to Mindong Electric (Group) Co., Ltd. The licensing is irrevocable and the effective period of the license is the effective period of the patent. If Mindong Electric (Group) Co., Ltd. utilized the patents mentioned above because of orders to manufacture LCD module from CPT or other entities controlled by CPT, CPT agreed to waive the patent fee. However, if the orders are from third parties, CPT would charge patent fee and the amount would be assessed by third party professional institution. Also, the amount would be approved by the board of directors of listed companies in China or shareholders meeting according to applicable law and the “Related transaction decision procedures” established by listed companies in China.

After restructuring Mindong Electric (Group) Co., Ltd., with respect

to orders to manufacture LCD module from CPT or other entities controlled by CPT, CPT represented that Mindong Electric (Group) Co., Ltd. will not infringe the patents CPT owned and acquired from third parties by performing the contracts. If Mindong Electric (Group) Co., Ltd. is accused of infringing the abovementioned patents by third parties because of performing the contract, CPT would be held jointly liable for the related legal responsibilities. Also, the damage caused by Mindong Electric (Group) Co., Ltd. would be indemnified by CPT.






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P. Supplementary commitment about the patent licensing

Contents: CPT committed that for utilization of the applied, approved or public patents when Mindong Electric (Group) Co., Ltd. and its subsidiaries manufacture LCD module, CPT agreed to waive the patent fee. The supplementary commitment is effective from the day the restructuring of Mindong Electric (Group) Co., Ltd. took effect and will remain effective as long as CPT is the substantial controller of Mindong Electric (Group) Co., Ltd. However, if CPT is deemed to have lost control of Mindong Electric (Group) Co., Ltd. by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the supplementary commitment will expire immediately.



Q. Supplementary commitment about utilization of goodwill and patent licensing

Contents: CPT committed that:

After the restructuring of material assets of Mindong Electric (Group) Co., Ltd., the company and its subsidiaries do not have to pay any charges from the impact of CPT’s goodwill. Mindong Electric (Group) Co., Ltd. and its subsidiaries will establish their own goodwill and gradually lessen the impact of CPT’s goodwill on Mindong Electric (Group) Co., Ltd. and its subsidiaries.

If CPT transfers its own patent registered in China, Mindong Electric

(Group) Co., Ltd. will have the priority to buy it under the same terms. If such patent is transferred to any third party, CPT will assure Mindong Electric (Group) Co., Ltd. and its subsidiaries the effectiveness of the patent licensing. Also, per the transfer contracts, the transferee shall not interfere with the licensing of patents to Mindong Electric (Group) Co., Ltd. and its subsidiaries.

If CPT loses its patent and hence causes damage to Mindong Electric (Group) Co., Ltd. and its subsidiaries, CPT will be held accountable for the total cost for them to obtain legal right of use of such patent or alternative technology.

If Mindong Electric (Group) Co., Ltd. and its subsidiaries require patent licensing from third parties because of manufacturing needs in the future, CPT will help them obtain related patent licensing using its industry status and experience.

The supplementary commitment is effective from the day the restructuring of Mindong Electric (Group) Co., Ltd. takes effect and will remain effective as long as CPT is the substantial controller of Mindong Electric (Group) Co., Ltd. However, if CPT is deemed to have lost control of Mindong Electric (Group) Co., Ltd. by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the supplementary commitment will expire immediately.





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R. Commitment to CPT’s joint and several liability

Contents: CPT committed that it assumes joint and several liability with respect to the commitment made by CPTB and CPTTG(L) about the shareholding interest of Mindong Electric (Group) Co., Ltd., sales performance and related party transactions. If CPTB and CPTTG(L) fail to adhere to the above commitment and need to make compensation, CPT would assume joint and several liability for such compensation.

Expiration and execution: On March 28, 2019, CPTTG, creditor of CPT, released

No. 2019-034 “Progress Announcement on the Filing of Litigation”, show that CPT were added as defendants and changed defendant to CPTB and CPT, CPTB and CPT shall pay RMB 1.914 billion to CPTTG for joint compensation. On May 10, 2019, CPTTG, released No. 2019-054 “Progress Announcement on the Filing of Litigation” and CPTTG has applied to the Higher People's Court of Fujian to increase the amount of the claim to RMB 3.029 billion. CPTTG’s ground for the claim was the recognition of the loss allowance. The timing of the recognition was after CPT lost control, during which time the commitment already expired. There is uncertainty about the claim against CPTB.

S. Commitment letter” about assuming joint and several liability

Contents: Tatung Co., Ltd and CPT committed that with respect to the written commitment submitted by CPTB and CPTTG(L) to the China Securities Regulatory Commission for the private issue of Mindong Electric (Group) Co., Ltd., Tatung Co., Ltd and CPT will assume joint and several liability. The above commitment is effective from the day Mindong Electric (Group) Co., Ltd. submitted the private issue application to the China Securities Regulatory Commission and will remain effective as long as Mindong Electric (Group) Co., Ltd. is listed on Shenzhen Stock Exchange. However, if Tatung Co., Ltd and CPT are deemed to have lost control of Mindong Electric (Group) Co., Ltd. by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the above commitment will expire immediately.





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Commission or Shenzhen Stock Exchange that the control of Mindong Electric (Group) Co., Ltd. has been lost, the above commitment shall expire. On March 28, 2019, CPTTG, creditor of CPT, released No. 2019-034 “Progress Announcement on the Filing of Litigation”, show that CPT were added as defendants, and changed defendant to CPTB and CPT, CPTB and CPT shall pay RMB 1.914 billion to CPTTG for joint compensation. On May 10, 2019, CPTTG, released No. 2019-054 “Progress Announcement on the Filing of Litigation” and CPTTG has applied to the Higher People's Court of Fujian to increase the amount of the claim to RMB 3.029 billion. CPTTG’s ground for the claim was the recognition of the loss allowance. The timing of the recognition was after CPT lost control, during which time the commitment already expired. There is uncertainty about the claim against CPTB.

(2) Revision of commitment of Mindong Electric (Group) Co., Ltd. following restructuring in 2014

A. Commitment about the restructuring party not reducing the shareholding interest of

listed companies.

Contents: Revision of commitment of CPTB and CPTTG(L): CPTB and CPTTG(L) withdrew the commitment that during the period from the completion of acquisition and second generation (above 7G) of large-size LCD panel product lines being injected to Mindong Electric (Group) Co., Ltd., CPTB and CPTTG(L) will not reduce their shareholding percentage of Mindong Electric (Group) Co., Ltd. The supplementary commitment of CPTB and CPTTG(L) is as follows: The “Motion of revising commitment of shareholders” was approved by at the shareholders meeting of CPTTG. After the completion of transfer of paid-in capital to share capital, shares of CPTB and CPTTG(L) will be listed and be entitled with the outstanding rights. Also, in the first 18 months after the “Motion of revising commitment of shareholders” is approved at the shareholders meeting of CPTTG, CPTB and CPTTG(L) will not decrease their shareholding of CPTTG.

Expiration and execution: The revision expired on March 11, 2016 and is no longer

applicable. No commitment was breached.





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B. Related party transaction percentage of listed companies after the completion of

acquisition and the commitment of future sales of listed companies

Contents: Revision of CPTB and CPTTG(L)’s commitment: Starting from 2014, during any account year, if the amount of related party transactions accounts for more than 30% of the sales during the same period and of the same transaction category (limited to materials purchase, sale of products and rendering of service involved in daily operations), the shareholders will need to assure that simulated consolidated calculation of rate of return of net assets of LCD module companies(please see below for specific scope) owned by CPTTG is not less than 10% (the calculation of rate of return of net assets does not include Kornerstone Materials Technology Co. Ltd., a subsidiary and other companies that are expected to be acquired and merged and invested in the future). Also, CPTB and CPTTG will make up for the insufficient portion by cash. The commitment will expire from the shareholders of CPTB and CPTTG(L) lost control of the company. The simulated consolidated scope for calculating net assets of LCD module companies’ rate of return of net assets is as follows: Net assets of CPTF Optronics Co., Ltd. and its subsidiaries Net assets of CPTW Net assets of FDT Net assets of CPT TPV Optical (Fujian) Co., Ltd. Net assets of CPTTG(L) Net assets of CPTTG less net assets increased from financing after this

motion was approved at the shareholders meeting When the above LCD module companies are no longer included in the

consolidation because of being sold or shareholding percentage decrease, they will not be included in the calculation.

The simulated consolidated scope for calculating net income of LCD module companies’ rate of return of net assets is as follows: Net income of CPTF Optronics Co., Ltd. and its subsidiaries Net income of CPTW Net income of FDT Net income of CPT TPV Optical (Fujian) Co., Ltd. Net income of CPTTG(L) Net income of CPTTG When LCD module companies are no longer included in the

consolidation because of being sold or shareholding percentage reduced, they will not be included in the calculation.





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Above mentioned as the “Motion of revising commitment of shareholders” was approved by at the shareholders meeting of CPTTG and took effect on the day. The shareholders’ meeting was held and the original commitment expired at the same time. The commitment is effective when CPTB and CPTTG(L) hold shares of CPTTG. However, if CPTB and CPTTG(L) are deemed to have lost control of CPTTG by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the abovementioned commitment will expire immediately.

Expiration and execution: When the China Securities Regulatory Commission or Shenzhen Stock Exchange deems that CPT had lost control of CPTTG, then, the commitment would be expired immediately. CPT has lost control of CPTTG and both parties no longer have transactions. They will not be bound by the commitment in the future. Because CPT had applied for restructuring, CPTTG had recognized receivables from CPT as loss allowance and impairment of related assets. Also, CPTTG had filed an action against CPTB for compensation. However, as of December 31, 2018, CPTTG had achieved its sales target. CPTTG’s ground for the claim was the recognition of the loss allowance. The timing of the recognition was after CPT lost control, during which time the commitment already expired. There is uncertainty about the claim against CPTB.

(3) Commitment about material asset restructuring of CPTF Optronics Co., Ltd. in 2013

A. Commitment about restriction and reducing related party transactions

Contents: (1) Tatung Co., Ltd., CPT, CPTB and CPTTG(L) committed that if Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled entities make related party transactions with CPTTG, such transactions will be conducted under fair and reasonable principle to assure the rights and interests of CPTTG and other minority shareholders.





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(2) If Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled entities make related party transactions with CPTTG, such transactions will be conducted strictly according to Shenzhen Stock Exchange, Shares Listing Rules, the Articles of Incorporation of CPTTG and the Related party transactions decision making policy of CPTTG.

(3) With further integration of CPTTG’s business, Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled entities will gradually decrease related party transactions with CPTTG. The commitment is effective when CPTB and CPTTG(L) hold shares of CPTTG. However, if Tatung Co., Ltd., CPT, CPTB and CPTTG(L) are deemed to have lost control of CPTTG by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the abovementioned commitment will expire immediately.


Commission or Shenzhen Stock Exchange that the control of CPTTG has been lost, the above commitments shall expire. No commitment was breached.

B. Commitment of CPTB for labor dispute of CPTF Optronics Co., Ltd.

Contents: The labor dispute of CPTF Optronics Co., Ltd. did not lead to administrative punishment. However, if CPTF Optronics Co., Ltd. is punished because of the abovementioned labor dispute, CPT will be liable for the loss. The commitment becomes effective when CPTTG’s restructuring plan of material assets is approved by related departments.

Expiration and execution: Twenty-two labor disputes (including labor arbitration

and litigation) of CPTF Optronics Co., Ltd., were closed and the claim amount involved was RMB2,220,494.91. No commitment was breached.

C. Commitment of CPTB about the lawsuits and arbitration CPTF Optronics Co., Ltd.

involved in

Contents: There is a total of 29 labor disputes (including labor arbitration and litigation and the amount involved was RMB3,246,737.49). If CPTTG’s restructuring plan of material assets is approved by related departments, the expenses associated with the above 29 labor disputes will be borne by CPT.

Expiration and execution: The cases the commitment involved with were all closed

and the related expenses of CPTF Optronics Co., Ltd. were borne by CPTB. No commitment was breached.





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D. Commitments of Tatung Co., Ltd., CPT, CPTB and CPTTG(L) about maintaining

the independence of operations of listed companies

Contents: (1) Maintain the independence and completeness of assets of CPTTG and its subsidiaries. CPTTG and its subsidiaries will be equipped with operation related production systems, auxiliary production systems and supporting facilities, own operations related lands, property, plant and equipment, trademarks, patents, right of non-patented technology or right of use of non-patented technology.

(2) Maintain the independence of personnel of CPTTG CPTTG’s senior managerial personnel, such as general manager,

vice general manager, financial supervisor and secretary of the board of directors cannot be employed by Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled business under the positions other than directors and supervisors. Also, they will not receive salary from Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled business.

CPTTG’s financial personnel will not be concurrently employed by Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled business.

(3) Maintain financial independence of CPTTG CPTTG will own an independent financial system and is able to

make financial decisions independently. Also, it will establish financial accounting policies and financial administrative policies to govern its branches and subsidiaries.

CPTTG will not share bank accounts with Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled business.

(4) Maintain CPTTG’s independence of institution CPTTG will set up a sound internal operating administrative institution that operates independently without being involved with the management of Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled business’s institutions.

(5) Maintain independence of CPTTG’s operation Tatung Co., Ltd., CPT, CPTB and CPTTG(L) will strictly follow the “Avoidance of competition commitment letter” so that CPTTG’s operation will be independent from that of Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and there won’t be any unfair related party transactions.






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E. Commitment of Tatung Co., Ltd., CPT, CPTB and CPTTG(L) about non-

competition with listed companies

Contents: (1) Tatung Co., Ltd., CPT, CPTB and CPTTG(L) have confirmed that the main activity of CPTF Visual Display (Fuzhou) Ltd. (“FVD”), a subsidiary of CPTF Optronics Co., Ltd., manufactures backlight modules. The activities of Forward Electronics Co., Ltd. (“FD”), a subsidiary of Tatung Co., Ltd., include manufacturing and sales of backlight modules. FVD is the subsidiary of CPTTG and fabrication plant of backlight modules of CPTF Optronics Co., Ltd. The backlight modules manufactured by FVD would all be sold to subsidiaries of CPTTG and CPTF Optronics Co., Ltd. There won’t be sales outside of CPT consolidated entities and CPTF Optronics Co., Ltd. Hence, FVD is essentially an internal product line of CPTTG and CPTF Optronics Co., Ltd., rather than an independent competitor in the market. As an individual seller and manufacturer of backlight modules company, FD has a wide range of customers. Therefore, there is no competition between FVD and FD in substance.

(2) Tatung Co., Ltd., CPT, CPTB and CPTTG(L) committed that except for the abovementioned matters, Tatung Co., Ltd., CPT, CPTB and CPTTG(L) and its controlled entities or other organizations will not take part in any sales, related products sales or any operating activities similar to those of CPTTG and its controlled entities in any manner. The sales activities include investment, acquisition and merger of entities or other organizations whose business and products are similar to those of CPTTG and its controlled entities.

(3) The above commitment remains effective when CPTB and CPTTG(L) hold shares of CPTTG. However, if Tatung Co., Ltd., CPT, CPTB and CPTTG(L) are deemed to have lost control of CPTTG by the China Securities Regulatory Commission or Shenzhen Stock Exchange, the abovementioned commitment will expire immediately.

(4) Tatung Co., Ltd., CPT, CPTB and CPTTG(L) committed that if Tatung Co., Ltd., CPT, CPTB, CPTTG(L) and its controlled entities or other organizations cause damage to CPTTG because the abovementioned commitment is breached, Tatung Co., Ltd., CPT, CPTB and CPTTG(L) will be liable for the related damage.


Commission or Shenzhen Stock Exchange that the control of CPTTG has been lost, the above commitments shall expire. No commitment was breached.





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(4) Commitment about non-public issues of CPTTG in 2016

Commitment letter about non-public issues of CPTTG Contents: (A) Tatung Co., Ltd., CPT and CPTB committed that CPT, entities directly

or indirectly controlled by CPT and related parties of CPT will not violate Article 17 of Measures for the Administration of Securities Issuance and Underwriting and related regulations. Also, they will not and have never directly or indirectly provide financial support or compensation to subscribers, subscribing partnership business and subscribing partners of the non-public issue of CPTTG’s shares.

(B) CPT will strictly follow announcement of the China Securities Regulatory Commission—Guiding Opinions on Matters concerning the Dilution of Immediate Return in Initial Public Offering, Refinancing and Material Asset Restructuring and committed that it will not intervene in the operations and harm the interest and benefits of CPTTG.

Expiration and execution: The issue of non-public shares was completed. The shares are

listed on the Shenzhen Stock Exchange. No commitment was breached.

Other litigations A. Regarding violation of antitrust laws, CPT paid fines with respect to the verdicts of the US

Department of Justice (DOJ), European Commission (EC) and the Korean Fair- Trade Commission (KFTC) from 2008 to 2012. Japan Fair Trade Commission (JFTC), Canadian Competition Bureau (CCB), and the Taiwan Fair Trade Commission terminated investigations after 2009. CPT settled with the Brazilian government in late September 2017. Regarding the civil actions, CPT settled with HP, Best Buy, Costco, Home Depot, Target, ViewSonic, AT&T, MetroPCS, Dell, Circuit City and TracFone. In addition, CPT also settled the civil class actions filed by state prosecutors in Oklahoma and South Carolina. As to the state government’s civil actions, CPT has settled several cases before litigations.





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B. Regarding the antitrust cases under the official investigations in various countries,

including those made by the US authorities, the Japanese Fair-Trade Commission, Korean Fair-Trade Commission (“KFTC”), European Commission and Canada authorities, CPT had been cooperative with the investigations. The Company was not subject to any fines. The Czech Republic had reached a final judgment and the fines were paid in 2010. The government of Hungary and Mexico had finished its investigation and concluded that CPT did not engaged in any illegal activities. CPT had reached a settlement with the Brazilian government for CRT-CDT and CRT-CPT investigation in late September and early October of 2017. Regarding the civil actions, CPT settled with the plaintiffs in the class actions in the U.S. and Canada. CPT has also settled with the plaintiffs, including Target, Sears and K-mart, Best Buy and ViewSonic. As to the state governments civil actions, CPT has settled several cases before litigations.

C. CPT had received legal action related document forwarded by the Taiwan Taoyuan District

Court in March 2017. Israel citizens filed a class action against CPT and many other CRT manufacturers to the Israeli District Court. CPT had retained professional attorneys to handle other litigations prudently, however the professional services has been terminated due to not paying the attorneys’ fees.

D. CPT had received legal action related document forwarded by the Taiwan Taoyuan District

Court in June 2018 regarding the antitrust cases. Three companies under liquidation procedures in UK had file antitrust lawsuit against CPT’s 11 CRT and CRT glass manufacturing companies to UK High Court. Granville Technology Group Limited、VMT Limited and OT Computers Limited sued CPT and other nine defendants. They advocated those defendants should be jointly liable due to suspected of CRT sales monopoly during 1996 to 2008. CPT had retained professional attorneys to handle other litigations prudently. CPT still cannot estimate approximate responsibilities and risk due to in the early stage. Besides, LG、Philips and Samsung also were main distributors in Europe or global at that time.

Furthermore, Granville Technology Group Limited、VMT Limited and OT Computers Limited sued CPT and other five defendants. They advocated those defendants should be jointly liable due to suspected of LCD sales monopoly during 2001 to 2006. CPT had retained professional attorneys to handle other litigations prudently. CPT still cannot estimate approximate responsibilities and risk due to in the early stage.

E. CPT received indictment on April,2019, mentioned Iiyama business of several plaintiffs

sued LG, Samsung and Phillip were suspected of CRT of sales monopoly in England during 1996 to 2008. LG requested if it has liability due to the lawsuit, CPT, CPTM and CPTF Optronics (Shen-Zhen) Co., Ltd. shall be jointly liable. CPT appointed England professional attorneys to handle other litigations prudently. CPT still cannot estimate approximate responsibilities and risk due to in the early stage. Besides, LG, Philips and Samsung also were main distributors in Europe or global at that time. CPT still cannot estimate approximate responsibilities and risk.





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F. CPT received two civil payment orders served by the Taiwan Taoyuan District Court on

January 9, 2019. King’s Town Bank requested CPT to pay the loan in the amount of NTD1,884,896,392 and JPY418,926,599. CPT objected on January 17, 2019. King’s Town Bank did not pay the court costs. CPT received civil rulings served by the Taiwan Taoyuan District Court on February 22, 2019 and March 5, 2019. King’s Town Bank’s request was revoked. Also, CPT received a civil payment order from the Taiwan Taoyuan District Court on March 4, 2019. King’s Town Bank requested CPT to pay the loan in the amount of NTD1,613,797,345. CPT did not object. Moreover, CPT received a civil ruling from the Taiwan Tainan District Court on January 4, 2019. CPT was ordered to provide King’s Town Bank with three signed promissory notes in the amount of NTD900,000,000, NTD555,000,000 and NTD145,064,591. The amounts and interests were under compulsory execution. CPT filed an interlocutory appeal on January 10, 2019 and was revoked on March 5, 2019. CPT didn’t file another interlocutory appeal. CPT received a notice from Taiwan Taoyuan District Court Summary Court on January 10, 2019. King’s Town Bank applied for an auction of CPT real property in plant II in Yang Mei, of which King’s Town Bank is the line of credit mortgagee, and received notice of auction by Taoyuan district court on April 11, 2019. Furthermore, CPT received ruling of provisional seizure from the Taiwan Tainan District Court on March 14, 2019. King’s Town Bank had applied for compulsory execution of provisional seizure however, CPT announced on February 1, 2019 that the application for an urgent disposal was approved. The court approved the application under which insolvency, reconciliation and enforcement procedures (including the preservation procedures such as provisional seizure and provisional disposition) against CPT shall be stayed for 90 days. CPT made an objection within the statutory period and the case is now pending in Taiwan Tainan District Court and extended urgent disposal for 90 days on May 1,2019. CPT filed an objection during judicial period, however, it received a notice of civil dismission by Taiwan Tainan district court on April 9, 2019. Then, CPT received a notice from Taiwan Tainan district court on June 14, 2019, which mentioned King’s Town Bank sued CPT should pay NTD 62,678,747 loan.

CPT received civil payment orders from the Taiwan Taipei District Court on January 10, 2019 and January 11, 2019. The Bank of Taiwan requested CPT to pay in the amount of NTD6,750,000,000 (syndicated loan), NTD896,174,927 and JPY202,577,349 (self-loan) and CPT did not object. Also, CPT received a civil ruling from the Taiwan Shilin District Court on January 17, 2019. CPT was ordered to provide Bank of Taiwan with signed promissory note in the amount of NTD1,000,000,000. The amount and interests that shall be delivered to the Bank of Taiwan were under compulsory execution. CPT filed an interlocutory appeal on January 25, 2019 which was revoked on February 26, 2019. CPT did not file another interlocutory appeal. Moreover, the Bank of Taiwan had applied for compulsory execution within NTD 30,000,000 of provisional seizure on May 6, 2019, CPT received an enforcement order from the Taiwan Taichung District Court on January 19, 2019. The Bank of Taiwan had applied for compulsory execution of provisional seizure. CPT was prohibited from receiving the proceeds from restructuring from Wintek Corporation, a third party, or proceed with any other disposals. Moreover, the third party can’t pay off their debts to CPT.





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CPT received a civil payment order from the Taiwan Taipei District Court on January 22, 2019. The Taiwan Cooperative Bank requested CPT to pay in the amount of NTD300,000,000 and JPY279,988,800 and CPT did not object. The Taiwan Cooperative Bank had applied for compulsory execution within NTD 120,000,000 of provisional seizure on May 15, 2019. Also, CPT received an enforcement order from the Taiwan Taichung District Court on January 19, 2019. Taiwan Cooperative Bank had applied for compulsory execution of provisional seizure. CPT was prohibited from receiving the proceeds from restructuring from Wintek Corporation, a third party, or proceeds from any other disposals. Moreover, the third party can’t pay off their debts to CPT. CPT received a civil payment order from the Taiwan Taipei District Court on January 24, 2019. The Taiwan Business Bank Co., Ltd. requested CPT to pay the loan in the amount of JPY474,054,489. CPT objected on February 11, 2019 and later withdrew the objection on February 14, 2019. Also, CPT received an enforcement order from the Taiwan Taipei District Court on January 11, 2019 and an enforcement order from the Taiwan Shilin District Court on January 17, 2019. The Taiwan Business Bank Co., Ltd. had applied for compulsory execution of provisional seizure. CPT was prohibited from receiving claims from numerous banks or making any other disposals. CPT received the letter from the Civil Execution Department of the Taiwan Taoyuan District Court on January 19, 2019. The Land Affairs Offices of Daxi District and Yang Mei District were assigned to conduct a boundary survey to seize the real property located in Long Tan and Yang Mei plants of CPT. However, CPT announced on February 1, 2019 that an urgent disposal was approved. The court approved the request under which insolvency, reconciliation and enforcement procedures (including the preservation procedures such as provisional seizure and provisional disposition) against CPT shall be stayed for 90 days. The compulsory execution of provisional seizure was stayed as of now and extended urgent disposal for 90 days on May 1, 2019. The compulsory execution of the real property provisional seizure is stayed as of now. Moreover, CPT received an enforcement order from the Taiwan Miaoli District Court on February 18, 2019. CPT was prohibited from receiving claims from Giantplus Technology, a third party, or any other disposals. Also, the third party cannot pay off their debts to CPT. CPT made an objection. CPT received the letter from the Civil Execution Department of the Taiwan Miaoli District Court on March 13, 2019. The Taiwan Business Bank Co., Ltd. did not file an action against CPT’s objection. Hence, the enforcement order was withdrawn, and the case was closed.

CPT received a civil payment order from the Taiwan Taoyuan District Court on February 27, 2019. The Land Bank of Taiwan requested CPT to pay the loan in the amount of NTD90,855,799 and CPT did not object. Also, CPT received the letter from the Civil Execution Department of the Taiwan Taoyuan District Court on February 21, 2019. The Land Bank of Taiwan had applied for compulsory execution within NTD81,000,000 of provisional seizure to seize CPT’s real property located in Long Tan District, Taoyuan on June 28, 2019. However, CPT announced on February 1, 2019 that an urgent disposal was approved. The court approved the request under which insolvency, reconciliation and enforcement procedures (including the preservation procedures such as provisional seizure and provisional disposition) against CPT shall be stayed for 90 days. The compulsory execution of provisional seizure was stayed as of now and extended urgent disposal for 90 days on May 1, 2019. CPT objected the application of compulsory execution of provisional seizure Land Bank of Taiwan made on March 21, 2019.





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CPT received a civil ruling of payment from the Taoyuan District Court on March 7, 2019, in which Mega International Commercial Bank claimed that CPT shall pay back a loan in the amount of JPY198,281,687, and CPT did not file an objection. Also, CPT received a civil ruling from the Taipei District Court on December 27, 2018 which ordered compulsory execution of the claim along with interest made by Mega International Commercial Bank with respect to the promissory note in the amount of USD 5,000,000 issued by CPT. CPT filed an objection on January 4, 2019 and delivered a statement on March 25, 2019, however, the objection was dismissed by the Taipei District Court on April 11, 2019. CPT received a civil ruling from the Taipei District Court on January 4, 2019. CPT was ordered to pay Taishin International Bank NTD85,000,000 with interest of the promissory note in the amount of NTD600,000,000, issued by CPT. CPT filed an interlocutory appeal on January 17, 2019 and was revoked by the Taiwan Taipei District Court on March 11, 2019. CPT did not file another interlocutory appeal. Also, CPT received a civil ruling from the Taipei District Court on June 28, 2019 and learned that Taishin International Bank requested provisional attachment of NTD10,000,000 of CPT’s deposit. Furthermore, CPT received the letter from the Civil Execution Department of the Taiwan Taoyuan District Court on January 30, 2019. Taishin International Bank had applied for compulsory execution of provisional seizure to seize CPT’s plants in Long Tan and Yang Mei Districts, Taoyuan. However, CPT announced on February 1, 2019 that an urgent disposal was approved. The court approved the request under which insolvency, reconciliation and enforcement procedures (including the preservation procedures such as provisional seizure and provisional disposition) against CPT shall be stayed for 90 days. The compulsory execution of provisional seizure was stayed as of now and extended urgent disposal for 90 days on May 1, 2019.

After CPT applied for financial structuring and requested urgent disposal to the Taoyuan District Court on December 13, 2018, many suppliers requested CPT to make the payment for goods and related interest by issuing payment orders or filing civil actions. CPT announced that an urgent disposal was approved by Taoyuan District Court on February 1, 2019. The court approved the request under which insolvency, reconciliation and enforcement procedures (including the preservation procedures such as provisional seizure and provisional disposition) against CPT shall be stayed for 90 days and extended urgent disposal for 90 days on May 1, 2019. Most of the creditors received legal title for compulsory enforcement, thus, 72 creditors, including ECSC Co., seized CPT’s Longtan plant, Yangmei plant and equipment on September 17, 18 and 24, 2019. Taishin International Bank seized land and building of Longtan plant and Yangmei plant. CPT has estimated the risks prudently on January 8, 2020.





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6. As of December 31, 2019, SCSC and its subsidiaries had commitments and contingencies

as follows:

(1) To secure an ample supply of silicon raw material to produce diodes, SCSC entered into a silicon raw material supply contract with Cargill in December 2007, which was amended in July 2017 with the contract term renewed from July 1, 2017 to March 31, 2023. Under the contract, Cargill has made commitment to providing certain quantity of silicon raw material to SCSC for the term of the contract at the total contract price of JPY4,268,592 thousand. In addition, SCSC is required to pay a minimum purchase amount of JPY368,280 thousand. As of December 31, 2019, the amount of prepayment was JPY36,180 thousand (or the equivalent of approx. NTD10,933 thousand), which was classified under prepayments and long-term prepayments - material.

(2) As of December 31, 2019, the significant unfinished or undelivered contracts of SCSC

were related to crystal growth furnace equipment. The total amount of purchasing price was NTD791,091 thousand, of which NTD479,131 thousand has been paid. Since the quality and the function of the equipment did not meet the required standards of SCSC, SCSC did not accept and use the equipment. SCSC did not pay the remaining balance of the price.

(3) Hemlock Semiconductor Corporation, a supplier of silicon raw material, filed an action

against GET and Tatung Co. of America Inc. (“TUS”). A settlement was reached on September 21, 2018. SUPPLY AGREEMENT, SETTLEMENT AGREEMENT, and LETTER AGREEMENT were signed upon settlement. GET would purchase raw material from Hemlock Semiconductor Corporation. Hemlock Semiconductor Corporation has withdrawn the action. GET and TUS entered into a long-term purchase contract for materials with supplier Hemlock in September 2018. Both parties agreed the minimum amount and purchase price from 2019 to 2029. The amount in 2019 was 5,000 tons. According to the contract, there is a non-cancellable prepayment in the amount of USD35,000 thousand in 10 years. The first payment of USD 5,000 thousand was due on January 31, 2019 and the second payment of USD2,500 thousand was due on July 31, 2019. GET and TUS did not make the payment to Hemlock on time. Hemlock may file a legal action against these two companies if the payments are not paid on time, with the maximum claim may be as high as USD463,401 thousand. In addition, GET recognized provision for liability with respect to irrevocable prepayment commitment in the amount of USD35,000 thousand (NTD 1,075,025 thousand). As Hemlock was aware that GET resolved to file for liquidation in Taiwan, Hemlock proposed settlement of USD35,000 thousand to GET and TUS but did not reach a conclusion. Thus, TUS filed reorganization (Chapter 11) to the bankruptcy court on September 30, 2019. Subsequently GET’s liquidators filed for bankruptcy to the Taipei District Court on February 21, 2020. As of now Hemlock has not made any claims against TUS or GET. When the Group derecognized the asset and liabilities of GET for losing control, said liability provision in the amount of USD35,000 thousand was reclassified under TUS as TUS may bear obligation for such contract.





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7. As of December 31, 2019, TSTI and its subsidiaries had commitments and contingencies as

follows:

TSTI’s subsidiary, TSTI Technologies (Shanghai) Co., Ltd., contracted Vibrant Display Technology CO., Ltd. to perform network cabinet power distribution engineering and power electrical engineering in 2017 and MES system hardware in 2018. TSTI Technologies (Shanghai) Co., Ltd. delivered equipment and services according to the contract and CPT TPV Optical (Fujian) Co., Ltd. agreed the project’s final acceptance and to issue invoice. However, CPT TPV Optical (Fujian) Co., Ltd. delayed paying for the network cabinet power distribution engineering, power electrical engineering and MES system hardware. Thus, on February 5, 2019, TSTI Technologies (Shanghai) Co., Ltd. filed to Hanjiang District People’s Court in Putian City, Fujian, P.R.C. to claim payment of RMB 6,163 thousand from CPT TPV Optical (Fujian) Co., Ltd., for which the jurisdiction was transferred to Shanghai District Court. Both parties settled in the court on December 25, 2019 and agreed to pay abovementioned payment by installment. CPT TPV Optical (Fujian) Co., Ltd. paid the first installment in the amount of RMB 1,000 thousand on January 20, 2019. TSTI Technologies (Shanghai) Co., Ltd. recognized RMB4,314 thousand of loss allowance as of December 31, 2019.

8. As of December 31, 2019, SCAD and its subsidiaries had commitments and contingencies as follows:

The Group’s subsidiary, SCAD, performed construction work under the pre-sale house contract, however, certain consumers argued or filed actions against SCAD. Thus, SCAD continued to communicate with those consumers and engaged attorney for litigation defense as of December 31, 2019. Furthermore, on September 26, 2019, a district court judgement related to the period of user license was unfavorable for SCAD. The attorney engaged by SCAD suggested to appeal to maintain the company’s rights and interest since he considered that the court may have misunderstood the case.

10. Significant disaster loss

None. 11. Significant subsequent events

1. Xintong Investment Consulting Co., Ltd. applied for an injunctive relief with the Taiwan High

Court on November 22, 2019, requesting before Taipei District court 106 NO.2349 case is finalized, that the chairman, directors and independent directors of the Company be prohibited from exercising the rights of the chairman, directors and company seal, and that three impartial professionals are appointed as temporary managers of the Company, to serve as chairman and board of directors. The Company received a notice from the Taipei District Court on January 7, 2020 and has appointed attorneys to work with the court. Subsequently, the case was transferred to the Taipei District Court for adjudication by the Taiwan High Court due to jurisdictional errors, and was rejected by the Taipei District Court on February 27, 2020.





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2. The Company has signed a contract to sell 100% shares of Tatung Mexico S.A de C.V. on

March 6, 2020. The buyer has paid 60% of the down payment according to the contract. Such transaction is expected to be completed within a year. The transaction was still ongoing as of the report date of the financial statement.

3. The Company’s subsidiary, CPT, resolved to withdraw public issuance of shares at board

meeting held on November 12, 2019 and was approved at the shareholders’ meeting held on December 30, 2019. Later CPT received Letter Jin-Guan-Zheng-Fa No. 1090131578 to approve withdrawal of public issuance of shares on February 17, 2010.

4. The Company’s subsidiary, CPT, planned to dispose of Yangmei No. 1 plant, No. 2 plant,

manufacturing equipment and Hsin-Cheng dormitory, and appointed REPro KnightFrank CO. to arrange the auction from January 16, 2020 to February 5, 2020.

5. The Company’s subsidiary, CPT, planned to dispose of the property and manufacturing

equipment in the plants in Yangmei and Langtan, and appointed REPro KnightFrank CO. and Savills Co. to arrange the auction from March 10, 2020 to April 13, 2020.

6. The Company’s subsidiary, CPT, learned that its shareholders filed a civil complaint to

Taoyuan District Court on January 22, 2020, which appealed the resolutions of CPT’s shareholders’ meeting was ineffective on December 30, 2019. However, CPT has not received the indictment. once CPT receives the formal notice from the court, it will engage legal counsel to protect CPT’s legal right.

7. The Group’s subsidiary CPTB of shares of CPTTG 129.6 million shares of were in judicial sale

on Alibaba auction website on December 24 and 25 2019 by order of Ningde high court. After that, Xing-Yu Lai, the successful tenderer, raised an objection to the court due to the difference between auction price and final price. Nide high court cancelled the verdict No.(2019)Ming(09)Zhi(152) issued by Nide high court on January 20,2020. The Nide high Court had conducted the online auction on the Alibaba judicial auction network platform against the CPTTG’s shares, totally 129,600,000 shares owned by CPTB for public auction again, at time from 10:00 on March 30, 2020 to 10:00 o March 31, 2020(except for postpone).

8. The shares held by the Group’s subsidiary Chunghwa Picture Tubes (Bermuda) Ltd., the shares

of listed company stocks－CPTTG, 153,000,000 shares were in judicial sale on Taobao website by the order of high court in Fuzhou city from December 24 to December 25, 2019, Fujian province, but bought-in. And then, the second auction was held from February 11 to February 12, but bought-in also. The Group will monitor the situation of the judicial sale of shares of listed company stocks－CPTTG continuously.

9. The 42,000,000 shares of listed company stocks－CPTTG held by the Group’s subsidiary

Chunghwa Picture Tubes (Bermuda) Ltd. were auctioned by the court ruling No (2019) Ming(01) Zhi(964-1) issued by the high court in Fuzhou city, Fujian province, and appointed Huarong Securities Co. for public sale. Huarong securities Co sold 27,640,594 shares, which was accounting for 0.999% of CPT's total share capital from December 12 to December 17, 2019 through second level of securities market. The remaining 14,359,406 shares will be auctioned by Huarong Securities Co. on March 17 2020.





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10. The Group’s subsidiary, Chunghwa Picture Tubes (Bermuda) Ltd., was informed that China

Railway Trust Limited sued CPTF Optronics (Shen-Zhen) Co., Ltd. and Chunghwa Picture Tubes (Bermuda) Ltd. to Shen-Zhen district court for financial loan contract on March 8, 2019 and then CPTF Optronics (Shen-Zhen) Co., Ltd. received civil ruling and notice of responding stamped on May 7,2019 on July 16, 2019. According to the civil ruling, China Railway Trust Limited changed defendant to CPTF Optronics (Shen-Zhen) Co., Ltd. and litigation was opened a court session in fifteenth court of Shen-Zhen high court. On August 21, 2019, after that, CPTF Optronics (Shen-Zhen) received the civil ruling (2019)YUE(03)MIN-CHU(832) issued by Shen-Zhen high court , mentioned the prosecution of Chunghwa Picture Tubes (Bermuda) Ltd. was cancelled and CPTF Optronics (Shen-Zhen) Co., Ltd. filed an appeal to Guangdong high court on November 12, 2019. Shen-Zhen district court verified the payment of appeal fee in January 2020, and did not received notice of court session. The Group will monitor the related situation continuously.

11. The Company’s subsidiary, SCSC, resolved to withdraw public issuance of shares considering

the overall operation planning at its board meeting held on January 8, 2020 and was approved at the shareholders’ meeting held on March 3, 2020.

12. Other

(1) Categories of financial instruments

Financial assets

As of December 31, 2019 2018 Financial assets at fair value through profit or loss:

Mandatorily measured at Fair value through profit or loss $875,094 $1,072,227 Subtotal 875,094 1,072,227

Financial assets at fair value through other comprehensive income (including non-current)

6,691,129 7,292,241

Financial assets measured at amortized cost: Cash and cash equivalents (without cash on hand) 10,198,218 8,849,710 Financial assets measured at amortized cost (including non-current)

4,205,396 3,659,073

Contract assets (including non-current) 350,830 291,000 Notes receivable (including related parties) 230,735 464,015 Accounts receivable (including related parties) 4,946,388 7,376,687 Operating lease receivable 11,596 (Note) Financial lease receivable (including non-current) 401,960 (Note) Other receivables (including related parties) (including non-current) 1,554,745 1,844,926 Other non-current assets－deposits-out 1,011,769 1,054,587 Subtotal 22,911,637 23,539,998

Total $30,477,860 $31,904,466 Note: The Group adopted IFRS is since January 1, 2019. The Group elected not to restate prior

periods in accordance with the transition provision in IFRS.





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Financial liabilities As of December 31, 2019 2018 Financial liabilities at amortized cost:

Short-term loan $5,550,814 $14,061,357 Short-term notes and bills payable 565,352 441,907 Payables (including related parties) (including non-current) 27,607,577 31,952,142 Long-term loans (including current portions) 40,940,840 46,768,114 Lease liability (including non-current) 1,465,541 (Note) Deposits in 125,498 116,534 Subtotal 76,255,622 93,340,054

Financial liabilities at fair value through profit or loss: Held for trading 2,808 -

Total $76,258,430 $93,340,054 Note: The Group adopted IFRS is since January 1, 2019. The Group elected not to restate prior

periods in accordance with the transition provision in IFRS. (2) Financial risk management objectives and policies

The Group’s risk management objectives are to manage market risk, credit risk and liquidity risk related to its operating activities. The Group identifies measures and manages the aforementioned risks based on policy and risk preference. The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant financial activities, due approval process by the board of directors and audit committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks comprise of currency risk, interest rate risk, and other price risk (such as equity price risk). In practice, it is rarely the case that a single risk variable will change independently from other risk variables. There are usually connections between risk variables. However, the sensitivity analysis disclosed below does not consider the interdependencies between risk variables.





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Foreign currency risk The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries. The Group’s certain foreign currency receivables are denominated in the same foreign currency with foreign currency payables, therefore natural hedge is received. The Group also uses forward contracts to hedge the foreign currency risk on items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group. The foreign currency sensitivity analysis is performed on significant monetary items denominated in foreign currencies at the end of the reporting period. The analysis mainly focuses on foreign currency’s appreciation and depreciation, which will affect the Group’s profit. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD, JPY and RMB. The information of the sensitivity analysis is as follows: (a) When NTD appreciates or depreciates against USD by 1%, the profit for the years ended

December 31, 2019 and 2018 will increase (decrease) by NTD139,227 thousand and NTD175,691 thousand, respectively.

(b) When NTD appreciates or depreciates against JPY by 1%, the profit for the years ended


(c) When NTD appreciates or depreciates against RMB by 1%, the profit for the years ended


Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s debt instrument investments at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.





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The Group manages its interest rate risk by having a balanced portfolio of fixed and variable loans and borrowings and entering into interest rate swaps. Hedge accounting does not apply to these swaps as they do not qualify for it. The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the balance sheet date, an increase/decrease of 10 basis points of interest rate could cause the profit for the years ended December 31, 2019 and 2018 to decrease/increase by NTD41,840 thousand and NTD56,558 thousand, respectively. Equity price risk The Group’s listed and unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s listed equity securities are classified under financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income, while unlisted equity securities are classified under measured at fair value through other comprehensive income. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s board of directors reviews and approves all equity investment decisions.

At the reporting date, a change of 1% in the price of the listed equity securities, mandatorily measured at fair value through profit or loss could increase/decrease the Group’s profit for 2019 and 2018 by NTD1,381 thousand and NTD1,295 thousand, respectively. At the reporting date, a change of 1% in the price of the listed companies’ stocks classified as equity instruments investments measured at fair value through other comprehensive income could have an impact of NTD4,026 thousand and NTD68,838 thousand on the equity attributable to be Group for 2019 and 2018, respectively. Please refer to Note 12(9) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.





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(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for contract assets, accounts and notes receivables and lease receivables) and financing activities, including bank deposits and other financial instruments. Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance. As of December 31, 2019 and 2018, contract assets and amounts receivables from top ten customers represent 34.68% and 25.76% of the total contract assets and accounts receivables of the Group, respectively. The credit concentration risk of other contract assets and accounts receivables is insignificant. Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Group’s treasury in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties. The Group adopted IFRS 9 to assess the expected credit losses. Except for contract assets and trade receivables, the remaining debt instrument investments which are not measured at fair value through profit or loss, low credit risk for these investments is a prerequisite upon acquisition and by using their credit risk as a basis for the distinction of categories. The Group makes an assessment at each reporting date as to whether the debt instrument investments are still considered low credit risk and then further determines the method of measuring the loss allowance and the loss rates. Financial assets are written off when there is no realistic prospect of future recovery (the issuer or the debtor is in financial difficulties or bankruptcy).





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(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period. Non-derivative financial liabilities

Less Than

1 Year 2-3 Years 4-5 Years

More than

5 Years Total

December 31, 2019

Loans $21,485,049 $24,242,622 $3,227,385 $49,242 $49,004,298

Short-term notes and bills payable 566,000 - - - 566,000

Payables (including relates

parties) (including non-current)

27,607,577 - - - 27,607,577

Deposit-in 118,523 5,995 - 980 125,498

Lease liabilities (Note 2) 372,860 495,793 315,300 597,637 1,781,590

December 31, 2018

Loans $32,296,391 $28,770,503 $1,103,581 $483,145 $62,653,620

Short-term notes and bills payable 442,180 - - - 442,180

Payables (including relates

parties) (including non-current)

31,917,412 34,523 207 - 31,952,142

Deposit-in 110,251 5,303 - 980 116,534

Lease liabilities (Note 1) - - - - -

Note: 1 The Group adopted IFRS 16 is since January 1, 2019. The Group elected not to restate prior

periods in accordance with the transition provision in IFRS. 2. Including cash flows resulted from short-term lease or leases of low-value assets.





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Derivative financial liabilities

Less Than

1 Year 2-3 Years 4-5 Years

More than

5 Years Total

December 31, 2019

Flow-in $- $- $- $- $-

Flow-out (2,808) - - - (2,808)

Net $(2,808) $- $- $- $(2,808)

December 31, 2018

Flow-in $2,023 $- $- $- $2,023

Flow-out - - - - -

Net $2,023 $- $- $- $2,023

Tables above about the disclosures of derivative financial liabilities were disclosed by the undiscounted net cash flow.

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for 2019:

Short-term notes

and bills payable

Short-term

borrowings

Long-term

borrowings

(including current

portion)

Lease liability

Long-term

payables

Total liabilities

from financing

activities

January 1, 2019 $441,907 $14,061,357 $46,768,114 $1,812,646 $87,800 $63,171,824

Cash flows 123,445 (7,021,662) (3,233,648) (403,704) (46,449) (10,582,018)

Other (Note) - (1,488,881) (2,593,626) 56,599 - (4,025,908)

December 31, 2019 $565,352 $5,550,814 $40,940,840 $1,465,541 $41,351 $48,563,898

(Note: Other are from effect of exchange rate changes, derecognized the subsidiary and non-

cash changes)





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Reconciliation of liabilities for 2018:

Short-term notes

and bills payable

Short-term

borrowings

Long-term

borrowings

(including current

portion) Long-term payables

Total liabilities

from financing

activities

January 1, 2018 $3,487,053 $41,552,640 $57,359,978 $88,693 $102,488,364

Cash flows (2,137,557) (458,693) 3,742,571 (893) 1,145,428

Deduction because of

de-consolidating

certain entities

(894,848)

(25,352,378) (14,290,940)

-

(40,538,166)

Other (Note) (12,741) (1,680,212) (43,495) - (1,736,448)

December 31, 2018 $441,907 $14,061,357 $46,768,114 $87,800 $61,359,178

(Note: Other are from effect of exchange rate changes and non-cash changes)

(7) Fair value of financial instruments

(a) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities: The carrying amount of cash and cash equivalents, receivables, payables and other

current liabilities approximate their fair value due to their short maturities. For financial assets and liabilities traded in an active market with standard terms and

conditions, their fair value is determined based on market quotation price (including listed equity securities, beneficiary certificates, bonds and futures, etc.) at the reporting date.

Fair value of equity instruments without market quotations (including private

placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).





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Fair value of debt instruments without market quotations, bank loans, lease liabilities

and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the Taipei Exchange, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

The fair value of derivatives which are not options and without market quotations, is

determined based on the counterparty prices or discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using on the counterparty prices or appropriate option pricing model (for example, Black-Scholes model) or other valuation method (for example, Monte Carlo Simulation).

(b) Fair value of financial instruments measured at amortized cost

The Group’s financial instruments measured at amortized cost include cash and cash equivalents, receivables, payables, financial assets measured at amortized cost, long-term and short-term loans, short-term notes and bills payable, deposit-in, deposit-out and lease liability whose carrying amount approximate their fair value.

(c) Fair value measurement hierarchy for financial instruments

Please refer to Note 12(9) for fair value measurement hierarchy for financial instruments of the Group.

(8) Derivative financial instruments

The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as at December 31, 2019 and 2018 are as follows: The Company Forward exchange contracts Forward foreign exchange contracts to manage exposure part partial transactions, but not designated as hedging instruments:





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December 31, 2019

Currency Period Buying currency exchange forward Buy USD7,000 thousand October 2019-April 2020 December 31, 2018

Currency Period Buying currency exchange forward Buy USD26,950 thousand July 2018-June 2019 Buying swaps Buy USD8,000 thousand July 2018-May 2019 Exchange options December 31, 2019 The following table refers to the related conditions with regard to the Company’s unsettled exchange options on December 31, 2019.

Counterparty bank

Foreign exchange rate

Foreign exchange rate on the date of settlement FX

(USD in thousands) Term of settlement (USD in thousand) A USD/NTD FX <30.85 Executing price at 30.85 to buy USD1,000 A USD/NTD FX <30.72 Executing price at 30.72 to buy USD1,000 A USD/NTD FX <30.40 Executing price at 30.40 to buy USD1,000

As of December 31, 2019, foreign exchange options contracts that had settled amounted to USD3, 000 thousand, with a fair value of NTD (205) thousand (including royalties amounted to NTD205 thousand unrealized gain amounted to NTD0 thousand), recognized as financial liabilities carried at fair value though profit or loss-current. December 31, 2018 There were no unsettled exchange options in 2018. The counterparties of the aforementioned derivative transactions are reputable financial institutions with satisfactory credit ratings; hence, credit risk is relatively low. The forward foreign exchange contracts aim at hedging exchange rate risk of net assets or net liabilities with cash inflows or outflows upon maturity. The Company also has sufficient working capital, and therefore there’s no significant cash flow risk.

(9) Fair value measurement hierarchy

(a) Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:





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Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or

liabilities that the entity can access at the measurement date Level 2 – Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly or indirectly Level 3 – Unobservable inputs for the asset or liability For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(b) Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows: December 31, 2019 Level 1 Level 2 Level 3 Total Financial assets at fair value

Financial assets at fair value through profit or loss:

Stocks $138,131 $- $- $138,131 Capital-guaranteed financial

products - - 718,935 718,935 Open-end funds 15,028 - - 15,028 Bonds 3,000 - - 3,000


Equity instrument measured at fair value through other comprehensive income

402,558 - 6,288,571

(Note) 6,691,129

Financial liabilities art fair value

through profit or loss Forward exchange contracts - 2,808 - 2,808

Note: CPT’s shares of listed company stocks－CPTTG were pledged and frozen by the

court on January, 2019, thus CPT appointed appraised company to release appraisal report for measuring its market value. The market value was considered liquidation discount which was measured by Protective Put Model. Therefore, listed company stocks－CPTTG were considered as level 3 of financial assets at fair value.





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December 31, 2018 Level 1 Level 2 Level 3 Total Financial assets at fair value

Financial assets at fair value through profit or loss:

Stocks $129,492 $- $- $129,492 Forward foreign exchange

contracts - 2,023 - 2,023

Capital-guaranteed financial products - - 940,712 940,712


Equity instrument measured at fair value through other comprehensive income

6,883,815 - 408,426 7,292,241

Transfers between Level 1 and Level 2 during the period There were no transfers between Levels 1 and 2 for the years ended December 31, 2019 and 2018. Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Assets

At fair value through profit/loss

At fair value through other

comprehensive income

Capital-guaranteed financial products

Capital guaranteed

Commodities Stocks Total January 1, 2019 $940,712 $- $408,426 $1,349,138 During 2019 Amount recognized in OCI

(presented in “Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income)

- - (234,809) (234,809)

Acquisition/Issuance, 2019 2,091,415 523,688 - 2,615,103 Disposal/Liquidation, 2019 (2,284,632) (523,688) (43,365) (2,851,685) Transfer to level 3 - - 6,103,315 6,103,315 Exchange differences (28,560) - 55,004 26,444 December 31, 2019 $718,935 $- $6,288,571 $7,007,506





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Assets

At fair value

through profit/loss

At fair value through other

comprehensive income

Capital-guaranteed financial products Stocks Total

January 1, 2019 $633,076 $274,919 $907,995 During 2018 Amount recognized in OCI

(presented in “Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income)

- 42,529 42,529

Acquisition/Issuance, 2018 1,949,687 - 1,949,687 Disposal/Liquidation, 2018 (1,624,966) - (1,624,966) Transfer to level 3 - 90,978 90,978 Exchange differences (17,085) - (17,085) December 31, 2018 $940,712 $408,426 $1,349,138 Information on significant unobservable inputs to valuation in Level 3 Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows: As at December 31, 2019:

Valuation techniques

Significant unobservable inputs

Quantitative information

Relationship between inputs and

fair value Sensitivity of the input to

fair value Financial assets: Financial assets at fair value through other comprehensive income

Stocks Market approach discount for lack of marketability

0%~30% The higher the discount for lack of marketability, the lower the fair value of the stocks

1% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NTD62,483 thousand

Stocks Asset approach discount for lack of marketability

10% The higher the discount for lack of marketability, the lower the fair value of the stocks

1% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NTD195 thousand

At fair value through profit or loss


Market approach Price of the financial products

- - Transactions involving financial products are currency transactions, and hence their value are equal to the fair value.





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As at December 31, 2018:

Valuation techniques

Significant unobservable inputs

Quantitative information

Relationship between inputs and

fair value Sensitivity of the input to

fair value

Financial assets: Financial assets at fair value through other comprehensive income

Stocks Market approach discount for lack of marketability

10% The higher the discount for lack of marketability, the lower the fair value of the stocks

1% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NTD828 thousand

At fair value through profit or loss


Market approach Price of the financial products

- - Transactions involving financial products are currency transactions, and hence their value are equal to the fair value.

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy The Group’s Accounting Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The Department analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies at each reporting date.

(c) Fair value measurement hierarchy of the Group’s assets and liabilities not measured at

fair value but for which the fair value is disclosed

As at December 31, 2019: Level 1 Level 2 Level 3 Total Financial assets not measured at fair

value but for which the fair value is disclosed:

Investments under the equity method (please refer to Note 6(9))

$2,088,913 $- $- $2,088,913





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As at December 31, 2018: Level 1 Level 2 Level 3 Total

Financial assets not measured at fair

value but for which the fair value is

disclosed:

Investments under the equity method

(please refer to Note 6(9))

$1,883,071 $- $- $1,883,071

(10) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

unit: thousands of foreign currencies, thousand of NTD As of December 31, 2019

Foreign currency Exchange rate NTD Financial Assets - Monetary items

USD $111,892 29.9800 $3,354,522 JPY 597,172 0.2760 164,819 RMB 279,747 4.3050 1,204,311 Financial assets at fair value through other comprehensive income

RMB 1,313,351 4.3050 5,653,976 Investments under equity method

RMB 11,307 4.3050 48,677 Non-current assets held for sale

VND 217,392,124 0.0013 287,750 Financial Liabilities - Monetary items

USD 549,773 29.9800 16,482,195 JPY 6,756,669 0.2760 1,864,841 RMB 915,692 4.3050 3,942,054





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As of December 31, 2018

Foreign currency Exchange rate NTD Financial Assets - Monetary items

USD $86,596 30.7150 $2,659,784 JPY 390,297 0.2782 108,581 RMB 501,023 4.4753 2,242,228 Financial assets at fair value through other comprehensive income

RMB 1,363,778 4.4753 6,103,315 Investments under equity method

RMB 15,091 4.4753 67,536 Non-current assets held for sale

VND 217,392,124 0.0013 287,750 Financial Liabilities - Monetary items

USD 658,603 30.7150 20,228,987 JPY 7,073,022 0.2782 1,967,715 RMB 1,065,510 4.4753 4,781,903 Because the subsidiaries used a wide range of functional currencies, the Group could not disclose the foreign exchange gain or loss of financial asset and liability by each foreign currency with significant effect. The net loss or net gain from foreign exchange currencies of the Group were NTD560,854 thousand and NTD (1,634,229) thousand for the years ended December 31, 2019 and 2018, respectively. The information above was presented in book value of foreign currency which has been translated to functional currency.

(11) Capital management

The primary purpose of the Group’s capital management is to ensure the Group can maintain a strong credit rating and healthy capital ratios in order to support its business and maximize equity value. The Group manages and adjusts its capital structure in accordance with changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment, return capital or issue new shares.





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(12) With respect to the case regarding Nature Worldwide Technology Co., the former chairman

Wei-Shan Lin was sentenced to imprisonment and penalties by the Taiwan High Court on August 23, 2017. Wei-Shan Lin appealed to the Supreme Court of the ROC. The Supreme Court rejected the appeal which was the 107th Annual Tai-shang-zi No.1831 on May 29, 2019 and sustained the original judgement.

Wei-Shan Lin resigned as the director and chairman of the Company on February 1, 2018. The Company's operations, finance and business were not affected by the above personal cases and will continue as usual.

(13) With respect to the controversies between the Company and shareholders, such as exercise of disgorgement, 2017 shareholders’ meeting resolution effectiveness, exercise of shareholders ‘voting right, appointment of inspector, injunctive relief, application for convening a special meeting of shareholders by minority shareholders etc., the Company has responded to the court and the Ministry of Economic Affairs separately. Before receiving any court, judgment and ruling of the Ministry of Economic Affairs, the Company shall exercise its rights in accordance with the law to protect the rights and interests of the Company and its shareholders. If there is any further development, it will be announced to the public as material information according to law. The Company's operations, finance and business were not affected by the above personal cases and will continue as usual.

13. Other disclosure

(1) Information at significant transactions:

(a) Financing provided to others: refer to Attachment 1. (b) Endorsement/Guarantee provided to others: refer to Attachment 2. (c) Securities held: refer to Attachment 3. (d) Individual securities acquired or disposed of with accumulated amount exceeding the

lower of NTD300 million or 20% of the capital stock: refer to Attachment 4. (e) Disposal of real estate up to the amount exceeding the lower of NTD300 million or 20%

of capital stock: Attachment 5. (f) Related party transactions for purchases and sales amounts exceeding the lower of

NTD100 million or 20% of capital stock: refer to Attachment 6.





214

(g) Receivables from related parties with amounts exceeding the lower of NTD100 million

or 20% of capital stock: refer to Attachment 7. (h) Engaging in derivative transactions: refer to Note 6 and Note 12 in the consolidated

financial statements. (i) Intercompany Relationships and Significant Intercompany Transactions: refer to

Attachment 10. (2) Information on investees:

Of the investee company directly or indirectly has significant influence or control over, their investee companies’ information: refer to Attachment 8.

(3) Information on investments in China:

(a) The investee company name, main business, paid-in capital, type of the investment, capital inflow and outflow, ownership, investment gains and losses, ending balance of investment, repatriation of investment income and the mainland investment limit scenario: refer to Attachment 9.

(b) Transactions with the investee companies directly or indirectly through a third country

following the occurrence of significant transactions, prices, payment terms and unrealized gains and losses were as below:

Ending balance and percentage of purchase and related payables: refer to Attachment

6. Ending balance and percentage of sales and related receivables: refer to Attachment 6. Gains and loss on the transaction of property: None. Ending balance and purpose of endorsement guarantees or collateral: refer to

Attachment 2. Ending balance, maximum limit, interest rates range and current interest amount of

financing: refer to Attachment 1. Other investments that have significant impact on current profit or financial condition,

such as the services provided or received: None.





215

14. Segment information

For management purposes, the Group organized its business units based on their products and services and has four reportable operating segments as follows: (1) Optical department: This department is responsible for CRT, TFT-LCD backlight module

manufacturing and production, development of liquid crystal display modules, electronic switches and sensors and solar modules virus, manufacturing and sales.

(2) Machinery and energy department: The department is responsible for the research,

manufacture and sales of intelligent grid, smart-grid portal, photovoltaics, LED lighting, motor and machinery and energy control system.

(3) Consumer products department: This department is responsible for digital television, flat

panel display manufacturing, digital media devices, digital audio-visual and home appliances, etc.

(4) Real estate development department: This department is responsible for the development of

rale estate. No operating segments have been aggregated to form the above reportable operating segments. Other business activities that are not reported and the related information of the operating segments are disclosed under the “Other Operating Segments” section. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured based on accounting policies consistent with those in the consolidated financial statements. The entity should disclose measurement of assets of reportable operating segments in accordance with IFRS 8 “Operating Segments.” However, the Group did not disclose such information because the measurement of the Company and the subsidiaries’ assets and liabilities were not provided to the operation decision maker. Transfer prices between operating segment are on an arm’s length basis in a manner similar to transactions with third parties.





216


Optical Machinery and energy

Consumer products

Real estate development

Other operating segments

Adjustment and

elimination Consolidated Revenue External customer $1,507,876 $19,446,163 $9,428,123 $3,614,369 $1,426,484 $- $35,423,015 Inter-segment 8,213 2,961,857 4,197,881 494,021 475,605 (8,137,577) - Total revenue $1,516,089 $22,408,020 $13,626,004 $4,108,390 $1,902,089 $(8,137,577) $35,423,015

Segment (loss) profit $(11,955,010) $(8,427,195) $(1,441,166) $10,391,005 $2,579,582 $(302,677) $(9,155,461)

For the year ended December 31, 2018 (restated)

Optical Machinery and energy

Consumer products

Real estate development

Other operating segments

Adjustment and

elimination Consolidated Revenue External customer $24,018,910 $23,494,587 $11,059,676 $586,465 $1,463,087 $- $60,622,725 Inter-segment 1,095 6,181,810 6,351,200 380,335 1,095,691 (14,010,131) - Total revenue $24,020,005 $29,676,397 $17,410,876 $966,800 $2,558,778 $(14,010,131) $60,622,725

Segment profit (loss) $(25,282,861) $(14,152,711) $106,021 $1,041,065 $(14,313,826) $19,309,404 $(33,292,908)

1 Revenue was from information software and real estate development that are operating

segments that did not meet the quantitative thresholds for reportable segments. 2 Inter-segment revenue are eliminated on consolidation and recorded under the “adjustment

and elimination” column, all other adjustments and eliminations are disclosed below. (2) Geographical information

Revenue from external customers For the years ended 2019 2018 Taiwan $31,674,107 $48,677,211 China 1,335,948 9,065,412 Asia 853,855 1,015,560 Europe 164,400 129,171 America 1,394,705 1,735,371 Total $35,423,015 $60,622,725 The revenue information above is based on the locations of the customers.





217

Non-current assets As of December 31, 2019 2018 Taiwan $63,925,933 $78,975,499 China 727,154 1,032,763 Asia 565,047 495,943 Europe - 2,623 America 132,938 127,637 Total $65,351,072 $80,634,465 The Group’s geographical revence is calculated based on the locations the receiving area. Non-current assets included property, plant and equipment, right-of-use asset, investment property, intangible assets, other non-current assets and long-term receivable.

(3) Information about major customers

The Company’s sales to any single customer did not account for more than 10% of its net consolidated sales of 2019 and 2018. Accordingly, no disclosure is required.



ATTA

CHM

ENT

1 Fi

nanc

ing pr

ovid

ed to

othe

rs(A

moun

ts in

Thou

sand

s of N

ew T

aiwan

Dol

lars,

Unles

s spe

cified

Othe

rwise

)

No.

Lend

erCo

unter

-par

tyFi

nanc

ial st

ateme

nt ac

coun

tM

axim

um ba

lance

for

the pe

riod

Endi

ng ba

lance

Actua

l amo

unt

prov

ided

Natur

e of f

inanc

ingAm

ount

of sa

les to

(p

urch

ases

from

) cou

nter-

party

Reas

on fo

r fina

ncing

Loss

allow

ance

(Not

e 1)

(Not

e 2)

(Not

e 18)

(Not

e 3)

(Not

e 8)

(Not

e 4)

(Not

e 5)

(Not

e 6)

Item

Value

(Not

e 7)

(Not

e 7)

0Ta

tung C

o., L

tdSa

n Chih

Sem

icond

ucto

r Co.,

Ltd

.Ot

her r

eceiv

ables

- re

lated

parti

esYe

s$2

0,000

$20,0

00$2

0,000

2.20%

2$-

Busin

ess t

urno

ver

$-

W

afer f

acto

ry ho

lding

by S

an

Chih

Semi

cond

ucto

r Co.,

Ltd

.24

6,895

14

,662,5

23

14,66

2,523

Equip

ment

0Ta

tung C

o., L

tdCh

ungh

wa P

ictur

e Tub

es, L

td.

Long

-term

rece

ivabl

es- r

elated

parti

esYe

s1,9

95,14

5

1,995

,145

1,995

,145

0.00%

2-

Lo

an re

paym

ent

-

Shar

es2,6

13,64

7

14,66

2,523

14

,662,5

23

(N

ote 9

)(N

ote 1

1)(N

ote 1

0)1

Shan

-Chih

Asse

t Dev

elopm

ent C

o.Ta

tung C

o., L

tdOt

her r

eceiv

ables

- re

lated

parti

esYe

s2,4

50,00

0

1,950

,000

1,950

,000

3.50%

2-

Bu

sines

s tur

nove

r-

No

ne-

5,805

,404

11,61

0,808

Natur

e Wor

ldwi

de T

echn

olog

y Cor

p.Ot

her r

eceiv

ables

- re

lated

parti

esYe

s68

,991

68,99

1

68

,991

3.0

0%2

-

Busin

ess t

urno

ver

68,99

1

No

ne-

5,805

,404

11,61

0,808

(Not

e 12)

Tatun

g Inf

oCom

m Co

., Ltd

.Lo

ng-te

rm re

ceiva

bles

No61

1,367

611,3

59

611,3

59

2.0

0%2

-

Busin

ess t

urno

ver

611,3

59

No

ne-

5,805

,404

11,61

0,808

(Not

e 13)

2Sh

an-C

hih In

vestm

ent C

o., L

tdNa

ture W

orld

wide

Tec

hnol

ogy C

orp.

Othe

r rec

eivab

les -

relat

ed pa

rties

Yes

929,5

77

92

9,577

92

9,577

3.10%

2-

Bu

sines

s tur

nove

r92

9,577

None

-

16

5,962

165,9

62

(Not

e 14)

3Ch

ih Sh

eng I

nves

tmen

t Co.,

Ltd

.HE

DA B

iotec

hnol

ogy C

o.,Lt

d.Ot

her r

eceiv

ables

- re

lated

parti

esYe

s20

,000

20,00

0

20

,000

2.0

0%2

-

Busin

ess t

urno

ver

20,00

0

No

ne-

12,58

5

50,33

8

(N

ote 1

5)

4Ta

ipei

Indu

stry C

orpo

ratio

nGr

een E

nerg

y Tec

hnol

ogy I

nc.

Othe

r rec

eivab

lesYe

s20

0,000

200,0

00

200,0

00

3.0

0%2

-

Busin

ess t

urno

ver

200,0

00

M

achin

ery,

equip

ment

289,6

73

308,4

58

30

8,458

(N

ote 1

6)

5Ta

tung C

oatin

gs (K

unsh

an) C

o., L

td.

Dong

guan

Ton

gli T

radi

ng C

o., L

td.

Othe

r rec

eivab

les -

relat

ed pa

rties

Yes

16,10

8

-

-

Kuns

han l

endi

ng

rates

+0.25

%2

-

Busin

ess t

urno

ver

-

None

-

77

,317

77

,317

(CNY

3,50

0)

6Hu

aian T

atung

Adv

ance

dDo

nggu

an T

ongli

Tra

ding

Co.,

Ltd

.Ot

her r

eceiv

ables

- re

lated

parti

esYe

s13

,563

6,458

6,458

Hu

aian l

endi

ng

rates

+0.25

%2

-

Busin

ess t

urno

ver

-

None

-

37

,132

37

,132

Tech

nolo

gy M

ateria

ls Co

., Ltd

.(C

NY 3,

000)

(CNY

1,50

0)(C

NY 1,

500)

6Hu

aian T

atung

Adv

ance

dTa

tung C

oatin

gs (K

unsh

an) C

o., L

td.

Othe

r rec

eivab

les -

relat

ed pa

rties

Yes

8,395

8,3

95

8,3

95

Huaia

n len

ding

ra

tes+0

.25%

2-

Bu

sines

s tur

nove

r-

No

ne-

37,13

2

37,13

2

Tech

nolo

gy M

ateria

ls Co

., Ltd

.(C

NY 1,

950)

(CNY

1,95

0)(C

NY 1,

950)

7Sh

ang C

hih In

terna

tiona

l Che

mica

l Ind

ustry

Co.

Ltd.

Tatun

g Fine

Che

mica

ls Co

., Ltd

.Ot

her r

eceiv

ables

- re

lated

parti

esYe

s2,0

74

2,039

2,039

Sh

angh

ua le

nding

ra

tes+0

.25%

2-

Bu

sines

s tur

nove

r-

No

ne-

47,56

0

47,56

0

(USD

68)

(USD

68)

(USD

68)

Note

1:

The C

ompa

ny an

d its

subs

idiar

ies ar

e cod

ed as

follo

ws:

(

i) Th

e Com

pany

is co

ded "

0".

(

ii) T

he su

bsid

iaries

are c

oded

cons

ecuti

vely

begin

ning f

rom

"1" i

n the

orde

r pre

sente

d in t

he ta

ble a

bove

.No

te 2:

If the

econ

omic

subs

tance

of tr

ansac

tions

are f

inanc

ing to

othe

rs, re

gard

less o

f whic

h com

pone

nt the

y are

recog

nized

as in

the f

inanc

ial st

ateme

nts, c

ertain

tran

sactio

ns su

ch as

the a

ccou

nt rec

eivab

les –r

elated

parti

es an

d adv

ance

s are

includ

ed he

rein.

Note

3:M

axim

um ba

lance

of fi

nanc

ing pr

ovid

ed to

othe

rs fo

r the

curre

nt ye

ar.

Note

4:Na

ture o

f fina

ncing

is co

ded a

s fol

lows

: ope

ratio

nal f

undi

ng is

code

d"1"

; sh

ort-t

erm

finan

cing i

s cod

ed "2

".No

te 5:

To

tal am

ount

of th

e fina

ncing

is di

sclo

sed h

erein

if th

e fina

ncing

is re

lated

to bu

sines

s tra

nsac

tions

. Tot

al am

ount

of fi

nanc

ing sh

all re

fer to

the a

moun

t the

lend

er pr

ovid

es to

the b

orro

wer w

ithin

the pa

st ye

ar.

Note

6:

The r

easo

ns an

d cou

nterp

artie

s of t

he fi

nanc

ing ar

e add

resse

d her

ein as

the f

inanc

ing w

as as

socia

ted w

ith sh

ort-t

erm

capi

tal ne

eds.

Note

7:

Fina

ncing

to in

divid

ual c

ounte

r-par

ty sh

all no

t exc

eed 2

5%~4

0% of

the n

et as

sets

value

s fro

m the

lates

t fina

ncial

state

ments

. Tot

al fin

ancin

g amo

unt s

hall

not e

xcee

d 40%

of th

e aud

ited/

revie

wed n

et as

sets

value

of th

e mos

t cur

rent

perio

d.No

te 8:

If a p

ublic

comp

any b

rings

the f

inanc

ing pr

opos

al to

the b

oard

of di

recto

rs ac

cord

ing to

Arti

cle 14

-1, t

he R

egula

tions

Gov

ernin

g Loa

ning o

f Fun

ds an

d Mak

ing of

End

orse

ments

/Gua

rante

es by

Pub

lic C

ompa

nies,t

he co

mpan

y stil

l nee

ds to

disc

lose

the

amou

nt re

solve

d by t

he bo

ard i

n the

balan

ce to

disc

lose

the r

isk, e

ven i

f the

fund

s are

not a

ppro

priat

ed ye

t. W

hen t

he fu

nds a

re re

paid

after

ward

s, the

comp

any s

hould

disc

lose

the a

moun

t retu

rned

to re

flect

the ri

sk ad

justm

ent.

If

a pub

lic co

mpan

y auth

orize

s the

chair

man o

f the

boar

d of d

irecto

rs to

appr

opria

te or

use c

ertai

n lim

its of

the f

unds

seve

ral t

imes

in th

e per

iod o

f a ye

ar ac

cord

ing to

Arti

cle 14

-2, R

egula

tions

Gov

ernin

g Loa

ning o

f Fun

ds an

d Mak

ing of

En

dorse

ments

/Gua

rante

es by

Pub

lic C

ompa

nies,

the co

mpan

y stil

l nee

ds to

disc

lose

the a

moun

t res

olve

d by t

he bo

ard i

n the

balan

ce.

Note

9:

As of

Nov

embe

r 30,

2018

, the

Com

pany

prov

ided

endo

rseme

nt in

the am

ount

of T

WD2

billi

on to

Chu

nghw

a Pict

ure T

ubes

, Ltd

. for

its b

ank l

oans

. As C

hung

hwa P

ictur

e Tub

es, L

td. a

pplie

d for

fina

ncial

stru

cturin

g on D

ecem

ber 1

3, 20

18, b

anks

claim

ed m

aturit

y of t

he lo

ans a

nd of

fset t

he T

WD2

billi

on se

curit

y aga

inst t

he lo

ans.

As

of D

ecem

ber 3

1, 20

18, t

he C

ompa

ny ha

d a cl

aim ag

ainst

Chu

nghw

a Pict

ure T

ubes

, Ltd

. in t

he am

ount

of T

WD1

,995,1

45 th

ousa

nd an

d suc

h amo

unt w

as re

cogn

ized a

s fina

ncing

prov

ided

to C

hung

hwa P

ictur

e Tub

es, L

td. a

ccor

ding

to th

e res

oluti

ons o

f the

boar

d of d

irecto

rs of

Tatu

ng C

o., L

td on

Dec

embe

r 27,

2018

.

Rega

rding

the l

ong-

term

rece

ivabl

e-Chu

nghw

a Pict

ure T

ubes

, Ltd

., the

Com

pany

rece

ived r

uling

s of o

rder

s of p

ayme

nt on

July

22, 2

019,

howe

ver,

Chun

ghwa

Pict

ure T

ubes

, Ltd

. rais

ed an

objec

tion o

n Sep

tembe

r 6, 2

019.

Thus

, the

Com

pany

refil

ed th

e pay

ment

orde

r on N

ovem

ber 1

, 201

9,

Af

ter th

e Taiw

an T

aoyu

an di

strict

cour

t deli

vere

d the

fina

l ruli

ng of

paym

ent o

rder

s, Ch

ungh

wa P

ictur

e Tub

es, L

td. d

id no

t pur

sue a

n app

eal,

and t

hen t

he C

ompa

ny re

ceive

d the

fina

lized

rulin

g of p

ayme

nt or

ders

on F

ebru

ary 1

3, 20

20 w

hich d

eman

ded C

hung

hwa P

ictur

e Tub

es, L

td. t

o pay

NTD

1,995

,145 t

hous

and w

ith in

teres

t at 5

% an

nuall

y to t

he C

ompa

ny.

Note

10:

The v

alue o

f col

later

als sh

all re

fer to

the v

alue o

f equ

ipme

nt, w

hich w

as lo

cated

in C

hung

hwa P

ictur

e Tub

es, L

td.'s

plan

ts in

Long

tan an

d Yan

g Mei,

and t

he 10

0% sh

ares

of C

hung

hwa P

ictur

e Tub

es (B

ermu

da) L

td. T

he ap

prais

al va

lue of

colla

terals

was

TW

D 2,5

17,39

2 tho

usan

d whic

h was

appr

aised

by G

rand

Elit

e Pro

perty

App

raisa

l Co.,

Ltd

.No

te 11

: Si

nce C

hung

hwa P

ictur

e Tub

es, L

td. ra

ised a

n obje

ction

again

st the

Com

pany

’s pe

tition

s for

orde

rs of

paym

ent o

n Sep

tembe

r 6, 2

019,

the in

terest

rate

could

not b

e dete

rmine

d as o

f Dec

embe

r 31,

2019

. Afte

ring r

eceiv

ing th

e fina

lized

rulin

g of o

rders

of pa

ymen

t on F

ebru

ary 13

, 202

0, the

Cco

mpan

y was

entit

led to

claim

TW

D1,99

5,145

thou

sand w

ith in

terest

at 5%

annu

ally.

Note

12:

Of th

e clai

m Sh

an-C

hih A

sset D

evelo

pmen

t Co.

has a

gains

t Natu

re W

orld

wide

Tec

hnol

ogy C

orp.,

TW

D120

,000 t

hous

and w

as re

ceive

d on J

une 1

0, 20

13 w

hile t

he re

maini

ng is

still

in li

tigati

on.

Note

13:

The f

inanc

ing pr

ovid

ed by

Sha

n-Ch

ih As

set D

evelo

pmen

t Co.

to T

atung

Info

Comm

Co.,

Ltd

. use

d to b

e the

the f

inanc

ing pr

ovid

ed by

Tatu

ng C

o., L

td to

Tatu

ng In

foCo

mm C

o., L

td. S

uch c

laim

was s

old t

o Sha

n-Ch

ih As

set D

evelo

pmen

t Co.

for T

WD5

3,000

thou

sand

on D

ecem

ber 2

9, 20

17.

Henc

e, the

fina

ncing

was

disc

lose

d und

er S

han-

Chih

Asse

t Dev

elopm

ent C

o. an

d Sha

n-Ch

ih As

set D

evelo

pmen

t Co.

is the

one c

ollec

ting p

ayme

nts. A

ccor

ding

the e

xecu

tion w

hich i

ssued

by T

aichu

ng D

istric

t cou

rt No

.9835

3 on O

ctobe

r 2, 2

019,

the co

mpan

y was

rece

ived N

TD8 t

hous

and o

n Nov

embe

r 22,

2019

.No

te 14

:Sh

an-C

hih In

vestm

ent C

o., L

td ha

s pro

vided

fina

ncing

to N

ature

Wor

ldwi

de T

echn

olog

y Cor

p. mo

re th

an th

e lim

it. N

ature

Wor

ldwi

de T

echn

olog

y Cor

p. is

curre

ntly u

nder

liqu

idati

on pr

oced

ures

and s

uch s

ituati

on w

ould

be re

medi

ated w

hen t

he li

quid

ation

is co

mplet

ed.

Shan

-Chih

Inve

stmen

t Co.,

Ltd

prov

ided

fina

ncing

to N

ature

Wor

ldwi

de T

echn

olog

y Cor

p. in

the am

ount

of T

WD9

48,72

2 tho

usan

d, inc

luding

princ

ipal

of T

WD6

90,80

0 tho

usan

d, ot

her r

eceiv

ables

and c

ompe

nsati

ons.

As of

Dec

embe

r 31,

2010

, Sha

n-Ch

ih In

vestm

ent C

o., L

td's o

ther r

eceiv

ables

from

Natu

re W

orld

wide

Tec

hnol

ogy C

orp.

were

netti

ng ag

ainst

its cr

edit

balan

ce of

inve

stmen

t. Ac

cord

ing to

the l

etter

from

New

Taip

ei Br

anch

, Adm

inistr

ative

Enf

orce

ment

Agen

cy, M

inistr

y of J

ustic

e, Sh

an-C

hih In

vestm

ent C

o., L

td re

ceive

d TW

D25,6

59 th

ousa

nd fr

om th

e dist

ributi

on ex

ecute

d by N

ew T

aipei

Bran

ch, A

dmini

strati

ve E

nfor

ceme

nt Ag

ency

, Mini

stry o

f Jus

tice.

Note

15:

Chih

Shen

g Inv

estm

ent C

o., L

td. h

as pr

ovid

ed fi

nanc

ing of

NTD

28,00

0 tho

usan

d to H

EDA

Biot

echn

olog

y Co.,

Ltd.

in Se

ptem

ber 2

011.

Howe

ver,

HEDA

Bio

techn

olog

y Co.,

Ltd.

failed

to re

pay o

n tim

e. Af

ter C

hih S

heng

Inve

stmen

t Co.,

Ltd

's not

ice, H

EDA

Biot

echn

olog

y Co.,

Ltd.

repa

id N

TD8,0

00 th

ousa

nd in

Octo

ber 2

012 w

hile H

EDA

Biot

echn

olog

y Co.,

Ltd.

was u

nabl

e to r

epay

the r

emain

ing T

WD2

0,000

thou

sand

. He

nce,

Chih

Shen

g Inv

estm

ent C

o., L

td. h

ad re

cogn

ized s

uch a

moun

t as l

oss a

llowa

nce i

n 201

4. Ch

ih Sh

eng I

nves

tmen

t Co.,

Ltd

. con

tinue

s to n

egot

iate w

ith ot

her s

hare

hold

ers t

o rea

ch a

cons

ensu

s to s

uppo

rt HE

DA B

iotec

hnol

ogy C

o.,Lt

d. wi

th liq

uidati

on pr

oced

ures

. Ho

weve

r, if

the li

quid

ation

fails

, Chih

She

ng In

vestm

ent C

o., L

td. w

ill co

ntinu

e to n

egot

iate w

ith ot

her s

hare

hold

ers f

or ot

her s

oluti

ons.

Note

16:

Taip

ei In

dustr

y Cor

pora

tion p

rovid

ed fi

nanc

ing of

NTD

200 m

illio

n to G

reen

Ene

rgy T

echn

olog

y Inc

. in A

pril

2018

, acq

uiring

equiv

alent

amou

nt of

mac

hiner

y and

equip

ment

as co

llater

al an

d cre

ated p

ledge

on th

e col

later

al. T

he fi

nanc

ing ex

pire

d on D

ecem

ber 2

5, 20

18. H

owev

er, G

reen

Ene

rgy T

echn

olog

y Inc

. fail

ed to

repa

y on t

ime.

Taip

ei In

dustr

y Cor

pora

tion h

ad se

nt leg

al att

est l

etter

s for

the r

epay

ments

on Ja

nuar

y 3, 2

019 a

nd w

ill fi

le an

actio

n to t

he C

ourt

for e

nfor

ceme

nt.No

te 17

: Th

e valu

e of c

ollat

erals

was

mea

sure

d whil

e acq

uired

.No

te 18

: As

Gre

en E

nerg

y Tec

hnol

ogy C

o., L

td's s

hare

hold

ers' m

eetin

g app

rove

d the

liqu

idati

on pr

opos

al, it

is no

long

er a

relat

ed pa

rty of

the G

roup

.Relat

ed

Party

Note

Limi

t of t

otal

finan

cing

amou

ntCo

llater

alIn

teres

t rate

Limi

t of f

inanc

ing am

ount

for

indivi

dual

coun

ter-p

arty

218



ATTA

CHM

ENT

2En

dors

emen

t/Gua

rant

ee p

rovi

ded

to o

ther

s(A

mou

nts i

n Th

ousa

nds o

f New

Taiw

an D

ollar

s, Un

less s

pecif

ied O

ther

wise

)

Com

pany

nam

eRe

latio

nshi

p (N

ote 2

)0

Tatu

ng C

o., L

tdTa

tung

Co.

of J

apan

, Inc

.2

$9,1

64,0

77$2

,188

,000

$1,1

19,3

20$8

26,6

20 $

- 3.

05%

$18,

328,

154

Y N

N

San

Chih

Sem

icond

ucto

r Co.

, Ltd

.2

9,16

4,07

760

,000

60,0

00

56,0

00

56

,000

0.16

%18

,328

,154

Y N

N

1Sh

an-C

hih

Asse

t Dev

elopm

ent C

o.Ch

ih S

heng

Rea

lty C

o., L

td.

27,

256,

755

80,0

0080

,000

80,0

00 -

0.28

%14

,513

,510

N N

N

Tatu

ng C

o., L

td3

72,5

67,5

5229

,900

,000

27,9

60,0

0025

,853

,311

41,7

79,2

7596

.32%

72,5

67,5

52N

Y

N

2

Huaia

n Ta

tung

Adv

ance

d Te

chno

logy

Mat

erial

s Co.

, Ltd

.Ta

tung

Fin

e Che

mica

ls Co

., Lt

d.3

55,6

9710

3,55

345

,203

37,0

0040

,898

73.0

4%55

,697

N N

N

(N

ote 1

0)

3Ta

tung

Coa

tings

(Kun

shan

) Co.

, Ltd

.Ta

tung

Fin

e Che

mica

ls Co

., Lt

d.3

115,

976

104,

544

43,0

50

18,0

00

21

,525

33.4

1%11

5,97

6

N

N

N

4Fo

rwar

d El

ectro

nics

Co.

, Ltd

.Fo

rwar

d De

velo

pmen

t Co.

, Ltd

.2

438,

505

94,8

00

-

-

-

-

73

0,84

1 N

N

N

(USD

3,00

0)(N

ote 9

)

5Su

zhou

For

ward

Elec

troni

cs T

echn

olog

y Co

., Lt

d.Fo

rwar

d El

ectro

nics

Co.

, Ltd

.3

349,

035

340,

000

-

-

-

-

581,

724

NN

N

6Ta

tung

Sys

tem T

echn

olog

ies In

c.Ch

yun

Huei

Com

mer

cial T

echn

olog

ies In

c.2

262,

379

127,

074

55,9

7655

,976

-

4.

27%

655,

948

NN

N

Tisn

et Te

chno

logy

Inc.

226

2,37

970

,000

-

-

-

-

655,

948

NN

N

TSTI

Tec

hnol

ogies

(Sha

ngha

i) Co

., Lt

d.2

262,

379

74,0

40

-

-

-

-

65

5,94

8N

NY

7Ch

yun

Huei

Com

mer

cial T

echn

olog

ies In

c.Ta

tung

Sys

tem T

echn

olog

ies In

c.3

22,8

338,

000

8,00

01,

346

- 7.

01%

57,0

83 N

N

N

Note

1: T

he C

ompa

ny an

d its

subs

idiar

ies ar

e cod

ed as

follo

ws:

1.Th

e Com

pany

is co

ded

"0".

2.Th

e sub

sidiar

ies ar

e cod

ed co

nsec

utiv

ely b

egin

ning

from

"1" i

n th

e ord

er p

rese

nted

in th

e tab

le ab

ove.

Note

2: A

ccor

ding

to th

e "Gu

ideli

nes G

over

ning

the P

repa

ratio

n of

Fin

ancia

l Rep

orts

by S

ecur

ities

Issu

ers"

issu

ed b

y th

e R.O

.C. S

ecur

ities

and

Futu

res B

urea

u, re

ceiv

ing

parti

es sh

ould

be d

isclo

sed

as o

ne o

f the

follo

wing

:1.

An in

veste

e com

pany

that

has

a bu

sines

s rela

tions

hip

with

Tat

ung

Co.,

Ltd

2.A

inve

stee i

n wh

ich T

atun

g ho

lds d

irectl

y an

d in

dire

ctly

over

50%

of v

otin

g sh

ares

.3.

An in

veste

e in

which

Tat

ung

and

its su

bsid

iaries

dire

ctly

and

indi

rectl

y ho

ld o

ver 5

0% o

f vot

ing

shar

es.

4.A

inve

stee i

n wh

ich T

atun

g ho

lds d

irectl

y an

d in

dire

ctly

over

90%

of v

otin

g sh

ares

.5.

An in

veste

e tha

t has

pro

vide

d gu

aran

tees t

o Ta

tung

Co.

,Ltd

, and

vice

ver

sa, d

ue to

cont

ractu

al re

quire

men

ts.6.

An in

veste

e in

which

Tat

ung

conj

unctl

y in

vests

with

oth

er sh

areh

olde

rs, a

nd fo

r whi

ch T

atun

g ha

s pro

vide

d en

dors

emen

t/gua

rant

ee in

pro

porti

on to

its s

hare

hold

ing

perc

enta

ge.

7.Co

mpa

nies

in th

e sam

e ind

ustry

pro

vide

amon

g th

emse

lves

join

t and

seve

ral s

ecur

ity fo

r a p

erfo

rman

ce g

uara

ntee

of a

sales

cont

ract

for p

re-c

onstr

uctio

n ho

mes

pur

suan

t to

the C

onsu

mer

Pro

tectio

n Ac

t for

each

oth

er.

Note

3: In

divi

dual

endo

rsem

ent o

r gua

rant

ee sh

all n

ot ex

ceed

20%

to 5

0% o

f the

pro

vide

r's n

et as

sets

valu

e, ho

weve

r, no

lim

its fo

r the

coun

ter-p

arty

who

is a

com

pany

100

% d

irectl

y or

indi

rectl

y ow

ned.

Tot

al en

dors

emen

t or g

uara

ntee

for o

ther

s sha

ll no

t exc

eed

50%

of t

he p

rovi

der's

net

asse

ts va

lue.

The G

roup

tota

l end

orse

men

t or g

uara

ntee

for o

ther

s sha

ll no

t exc

eed

50%

of t

he C

ompa

ny's

net a

ssets

valu

e.

Shan

-Chi

h As

set D

evelo

pmen

t Co:

End

orse

men

t or g

uara

ntee

pro

vide

d to

the C

ompa

ny sh

all n

ot ex

ceed

250

% o

f Sha

n-Ch

ih A

sset

Deve

lopm

ent C

o's n

et as

sets

valu

e in

the p

rior y

ear.

Endo

rsem

ent o

r gua

rant

ee p

rovi

ded

to in

veste

es sh

all n

ot ex

ceed

50%

of S

han-

Chih

Ass

et De

velo

pmen

t Co's

net

asse

ts va

lue.

Sh

an-C

hih

Asse

t Dev

elopm

ent C

o. is

a 10

0% o

wned

subs

idiar

y of

Tat

ung

Co.,

Ltd

inco

rpor

ated

by

the s

plit-

up o

f the

par

ent c

ompa

ny's

real

prop

erty

acco

rdin

g to

Bus

ines

s Mer

gers

And

Acq

uisit

ions

Act

in 2

003.

Henc

e, it's

reas

onab

le an

d ne

cess

ary

that

Sha

n-Ch

ih A

sset

Deve

lopm

ent C

o's re

al pr

oper

ties a

re p

ledge

d as

colla

teral

for l

oans

of T

atun

g Co

., Lt

d in

the a

mou

nt ex

ceed

ing

50%

of t

he C

ompa

ny's

net a

ssets

valu

e.No

te 4:

The

max

imum

amou

nt o

f en

dors

emen

t or g

uara

ntee

pro

vide

d to

oth

ers f

or cu

rrent

yea

r.No

te 5:

Sho

uld

be th

e am

ount

appr

oved

by

the b

oard

of d

irecto

rs, b

ut sh

ould

be t

he am

ount

appr

oved

by

the c

hairp

erso

n wh

en h

e/she

is au

thor

ized

by th

e boa

rd o

f dire

ctors

acco

rdin

g to

Arti

cle 1

2 (8

) of R

egul

atio

ns G

over

ning

Loa

ning

of F

unds

and

Mak

ing

of E

ndor

sem

ents/

Guar

antee

s by

Publ

ic Co

mpa

nies

.No

te 6:

Sho

uld

enter

actu

al am

ount

rece

ivin

g pa

rty p

rovi

ded

with

in th

e lim

it am

ount

of g

uara

ntee

/endo

rsem

ent.

Note

7: A

com

pany

is co

ded

"Y" w

hen

a sub

sidiar

y is

endo

rsed

by

the l

isted

par

ent c

ompa

ny, o

r a li

sted

pare

nt co

mpa

ny is

endo

rsed

by

a sub

sidiar

y, o

r a co

mpa

ny w

ith an

endo

rsem

ent i

n M

ainlan

d Ch

ina.

Note

8: C

alcul

ated

bas

ed o

n th

e end

ing

exch

ange

rate.

Note

9: E

xcha

nge r

ate i

s bas

ed o

n th

e day

whe

n th

e tra

sacti

on o

ccur

s.No

te 10

: Hua

ian T

atun

g Ad

vanc

ed T

echn

olog

y M

ater

ials C

o., L

td.

prov

ided

gua

rant

ee to

Tat

ung

Fine

Che

mica

ls Co

., Lt

d. w

hich

exce

eded

endo

rsem

ent/g

uara

ntee

lim

its d

ue to

the d

oubl

e ent

ry b

ecau

se th

e boa

rd m

eetin

g wa

s held

earli

er th

an th

e due

dat

e of p

revi

ous q

uara

ntee

. The

endo

rsem

ent q

uara

ntee

did

not

exce

ed th

e lim

its su

bsta

ntial

ly.

a.Pr

evio

us lo

an en

dors

emen

t cre

dit l

ine w

as R

MB1

2 m

illio

n, an

d it

was t

erm

inat

ed o

n Fe

brur

ary

14, 2

019.

b.

The r

enew

ed lo

an en

dors

emen

t cre

dit l

ine f

rom

Feb

ruar

y 15

, 201

9 wa

s RM

B 9

mill

ion,

and

the n

ews w

as re

lease

d on

Janu

ary

10, 2

019.

c.Th

e ren

ewed

loan

endo

rsem

ent c

redi

t lin

e was

RM

B1.5

mill

ion

from

Feb

ruar

y 15

, 201

9, w

hich

was

relea

sed

to th

e pub

lic o

n Ja

nuar

y 30

, 201

9.

No.

(Not

e 1)

Endo

rsor

/Gua

rant

orRe

ceiv

ing

party

Lim

it of

guar

antee

/endo

rsem

ent

amou

nt fo

r rec

eivin

g pa

rty (N

ote 3

)

Max

imum

balan

ce fo

r the

perio

d (N

ote 4

)

Guar

antee

pr

ovid

ed b

y pa

rent

co

mpa

ny(N

ote 7

)

Guar

antee

pr

ovid

ed b

y a

subs

idiar

y (N

ote 7

)

Guar

antee

pro

vide

d to

subs

idiar

ies in

M

ainlan

d Ch

ina

(Not

e 7)

Endi

ng b

alanc

e(N

ote 5

)

Actu

al am

ount

prov

ided

(Not

e 6)

Amou

nt o

f co

llater

algu

aran

tee/

endo

rsem

ent

Perc

enta

ge o

f acc

umul

ated

guar

antee

amou

nt to

net

asse

tsva

lue f

rom

the l

ates

t fin

ancia

lsta

temen

t

Lim

it of

tota

lgu

aran

tee/

endo

rsem

ent

amou

nt (N

ote 3

)

219



ATTA

CHM

ENT

3Se

curit

ies h

eld fo

r the

year

ende

d De

cem

ber 3

1, 20

19 (E

xclu

ding

subs

idiar

y, as

socia

tes an

d jo

intly

cont

rolle

d)(A

mou

nts i

n Tho

usan

ds o

f New

Taiw

an D

ollar

s, Un

less s

pecif

ied O

ther

wise

)

Tatu

ng C

o., L

tdSt

ock—

Taiw

an S

ugar

Co.,

Ltd

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

1,391

75 -

75

Stoc

k—Ta

iwan

Pow

er C

o.,Lt

d-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

othe

r com

preh

ensiv

e inc

ome,

curre

nt2,1

0414

-

14

St

ock—

Tong

ya T

eleco

mmun

icatio

n Ind

ustry

Co.,

Ltd

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

19,80

037

,457

9.90

37,45

7

Stoc

k—Ch

ung H

wa T

radi

ng D

evelo

pmen

t Co.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

49,98

450

00.0

850

0

Stoc

k—Ch

i Yeh

Che

mica

l Co.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

125,0

005,8

280.6

35,8

28

St

ock—

Unite

d Elec

tric I

ndus

try C

o.Ltd

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

1,615

,732

14,51

22.7

714

,512

St

ock—

Asia-

Pacif

ic Th

echn

olog

y & In

tellec

tual

Prop

erty

Ser

vices

Inc.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

140,0

00 -

-

-

Stoc

k—Sc

ientif

ic Ph

arma

ceut

ical E

lite C

o.Ltd

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

600,0

002,9

175.4

52,9

17

St

ock—

Taiw

an O

tis E

levato

r Co.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, cu

rrent

20,00

012

5,294

10.00

125,2

94St

ock—

Taiw

an C

ogen

erati

on C

o.-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

othe

r com

preh

ensiv

e inc

ome,

curre

nt4,7

27,92

014

1,365

0.80

141,3

65

Stoc

k—Re

chi P

recis

ion C

o., L

td-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

othe

r com

preh

ensiv

e inc

ome,

curre

nt67

9,761

15,60

10.1

315

,601

St

ock—

Tatu

ng T

echn

olog

y Inc

.-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt1,0

27,05

643

,458

2.51

43,45

8

Stoc

k—Yi

Chi

Ass

ociat

ed T

radi

ng C

o.-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt30

,000

300

6.67

300

St

ock—

Chih

Yi H

ealth

Co.L

td-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt20

0,000

2,000

20.00

2,000

Stoc

k—Gr

een E

nerg

y Tec

hnol

ogy I

nc.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

19,72

3,865

-

4.54

-

(N

ote7

)St

ock—

VOLT

AMP

POW

ER S

AOC

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh ot

her c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

1,366

,588

106,3

9018

.5510

6,390

Fu

nd—

FSIT

C Gl

obal

Wea

lthy N

ation

s Bon

d Fun

d Acc

TW

D N.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh pr

ofit

or lo

ss, c

urre

nt1,5

00,00

015

,004

-

15,00

4

Chih

De I

nves

tmen

t Co.,

Ltd

.St

ock－

Elite

Sem

icond

ucto

r Mem

ory

Tech

nolo

gy In

c.-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

prof

it or

loss

, cur

rent

2,000

78 -

78

Stoc

k－Ta

iwan

Sty

rene

Mon

omer

Cor

pora

tion

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh pr

ofit

or lo

ss, c

urre

nt5,0

0010

4 -

10

4St

ock－

Walt

on A

dvan

ced

Engi

neer

ing I

nc.

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh pr

ofit

or lo

ss, c

urre

nt10

,000

116

-

116

Stoc

k－Be

nQ M

ateria

ls Co

rpor

ation

-Fi

nanc

ial as

sets

at fa

ir va

lue t

hrou

gh pr

ofit

or lo

ss, c

urre

nt5,0

0094

-

94St

ock－

Nien

Hsin

g Tex

tile C

o., L

td-

Fina

ncial

asse

ts at

fair

valu

e thr

ough

prof

it or

loss

, cur

rent

2,475

52 -

52

Note

Units

(in t

hous

ands

)/bo

nds/s

hare

s(in

thou

sand

s)

Book

valu

e(N

ote 3

)M

arke

t valu

e/ne

t ass

ets va

lue

Hold

erTy

pe an

d na

me o

f sec

uriti

es (N

ote 1

)Re

latio

nshi

p(N

ote 2

)Fi

nanc

ial st

atem

ent a

ccou

nt

Endi

ng ba

lance

Perc

entag

e of

owne

rship

(%)

220



ATTA

CHM

ENT

3-1

Secu

rities

held

for t

he ye

ar en

ded D

ecem

ber 3

1, 20

19 (E

xclud

ing su

bsidi

ary,

asso

ciates

and j

ointly

contr

olled

)(A

moun

ts in

Thou

sand

s of N

ew T

aiwan

Doll

ars,

Unles

s spe

cified

Othe

rwise

)

San C

hih S

emico

nduc

tor C

o., L

td.St

ock─

Crys

tal A

pplie

d Tec

hnolo

gy In

c.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

70,89

7

$-

0.07

$-St

ock─

Phec

da T

echn

ology

Co.,

Ltd.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt1,0

00,00

0

-

3.51

-

St

ock—

Gree

n Ene

rgy T

echn

ology

Inc.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt91

,589,2

74

-

21.10

-

(N

ote7)

Forw

ard E

lectro

nics C

o., L

td.St

ock─

Laste

rtech

Co.,

Ltd.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h pro

fit or

loss

, cur

rent

4,484

,582

136,1

075.9

213

6,107

Stoc

k－Ta

tung C

o., L

tdPa

rent-

subs

idiar

yFi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt4,4

75,00

093

,975

0.19

93,97

5(N

ote6)

Suzh

ou F

orwa

rd E

lectro

nics T

echn

ology

Co.,

Ltd.

Stoc

k─Na

njing

Glob

al Di

splay

Tec

hnolo

gy C

o.,Lt

d.-

Fina

ncial

asse

ts at

fair

value

thro

ugh p

rofit

or lo

ss, n

on-c

urre

nt

-

-

17

.29

-

Capit

al-gu

aran

teed f

inanc

ial pr

oduc

t-

Fina

ncial

asse

ts at

fair

value

thro

ugh p

rofit

or lo

ss, c

urre

nt

-

210,9

45

-

210,9

45(R

MB

49,00

0)(R

MB

49,00

0)Ca

pital-

guar

antee

d fina

ncial

prod

uct

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h pro

fit or

loss

, cur

rent

-

27

1,215

-

27

1,215

(RM

B 63

,000)

(RM

B 63

,000)

Capit

al-gu

aran

teed f

inanc

ial pr

oduc

t-

Fina

ncial

asse

ts at

fair

value

thro

ugh p

rofit

or lo

ss, c

urre

nt

-

215,2

50

-

215,2

50(R

MB

50,00

0)(R

MB

50,00

0)Ca

pital-

guar

antee

d fina

ncial

prod

uct

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h pro

fit or

loss

, cur

rent

-

21

,525

-

21

,525

(RM

B 5,0

00)

(RM

B 5,0

00)

Chih

Shen

g Inv

estm

ent C

o., L

td.St

ock─

Tatun

g Tec

hnolo

gy In

c.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

2,727

,272

115,3

68

6.6

511

5,368

Stoc

k─La

sterte

ch C

o., L

td.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

804,0

00

24,40

1

1.0

624

,401

Stoc

k─Ta

tung A

therto

n Co.,

Ltd.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt1,0

00,00

0

35

,935

10.00

35,93

5

St

ock—

Gree

n Ene

rgy T

echn

ology

Inc.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt33

,960,6

10

-

7.83

-

(N

ote7)

Chih

Shen

g Hold

ing C

o., L

td.St

ock─

Can Y

ang I

nves

tmen

ts Lt

d.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

1,087

,235

15,44

3

1.4

315

,443

Shan

-Chih

Ass

et De

velop

ment

Co.

Stoc

k—Hu

a Nan

Fina

ncial

Hold

ings C

o., L

td.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

148,1

86

3,260

-

3,260

St

ock—

Catha

y Fina

ncial

Hold

ings C

o., L

td.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

42,99

7

1,8

30

-

1,8

30

Stoc

k─Yu

anta

Fina

ncial

Hold

ing C

o., L

td.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

3,887

78

-

78

St

ock—

CTBC

Fina

ncial

Hold

ing C

o., L

td.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

747,6

36

16,74

7

-

16,74

7

St

ock—

Gree

n Ene

rgy T

echn

ology

Inc.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt13

,253,9

36

-

3.05

-

(N

ote7)

Stoc

k─Ta

tung S

ystem

Tec

hnolo

gies I

nc.

Affil

iated

comp

any

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

179

3

-

3

(Note

6)St

ock—

Chun

ghwa

Elec

tronic

s Inv

estm

ent C

o., L

td.Af

filiat

ed co

mpan

yFi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt56

2,355

25

7

0.19

257

(N

ote6)

Claim－

Tatun

g Inf

oCom

m Co

., Ltd.

-Ot

her f

inanc

ial as

sets,

non-

curre

nt

-

53,00

0

-

53,00

0

(N

ote6)

Bond

—FS

ITC

Glob

al W

ealth

y Nati

ons B

ond F

und A

cc T

WD

N.-

Fina

ncial

asse

ts at

fair

value

thro

ugh p

rofit

or lo

ss, c

urre

nt

-

3,000

-

3,000

Chih

Shen

g Rea

lty C

o., L

td.St

ock─

Chun

ghwa

Pict

ure T

ubes

, Ltd.

Affil

iated

comp

any

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

141,8

71,03

3

-

2.1

9-

(Note

6)

Shan

Chih

Inve

stmen

t Co.,

Ltd.

Stoc

k─Ta

tung S

ystem

Tec

hnolo

gies I

nc.

Affil

iated

comp

any

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

567,4

72

9,732

0.8

09,7

32

(Note

6)St

ock─

Gree

n Ene

rgy T

echn

ology

Inc.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt1,2

78,17

3

-

0.29

- (N

ote7)

Stoc

k─Ta

tung T

echn

ology

Inc.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt1,0

27,05

6

43

,458

2.51

43,45

8

St

ock─

Laste

rtech

Co.,

Ltd.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt3,8

68,00

8

11

7,394

5.10

117,3

94

Tatun

g Com

pany

of Ja

pan,

Inc.

Stoc

k－Fa

nuc C

o.-

Fina

ncial

asse

ts at

fair

value

thro

ugh o

ther c

ompr

ehen

sive i

ncom

e, no

n-cu

rrent

1,000

5,611

-

5,611

Stoc

k－To

yota

Moto

r Co.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt1,5

00

3,1

94 -

3,1

94St

ock－

SONY

Co.

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt4,4

00

8,9

88 -

8,9

88St

ock－

Total

47 li

sted c

ompa

nies

-Fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h othe

r com

preh

ensiv

e inc

ome,

non-

curre

nt10

9,184

64,08

8 -

64

,088

Holde

rTy

pe an

d nam

e of s

ecur

ities

(Note

1)Re

lation

ship

(Note

2)Fi

nanc

ial st

ateme

nt ac

coun

t

Endin

g bala

nce

Note

Units

(in t

hous

ands

)/bo

nds/s

hare

s(in

thou

sand

s)

Book

value

(Note

3)Pe

rcen

tage o

f ow

nersh

ip (%

)M

arke

t valu

e/ne

t ass

ets va

lue

221



ATTA

CHME

NT 3-

2Se

curiti

es he

ld for

the y

ear en

ded D

ecemb

er 31

, 201

9 (Ex

cludin

g sub

sidiar

y, ass

ociat

es an

d join

tly co

ntroll

ed)

(Amo

unts

in Th

ousan

ds of

New

Taiw

an D

ollars

, Unle

ss spe

cified

Othe

rwise

)

Chun

ghwa

Elect

ronics

Inve

stmen

t Co.,

Ltd.

Stock－

Tatun

g Co.,

Ltd

Paren

t-sub

sidiar

yFin

ancia

l asse

ts at

fair v

alue t

hroug

h othe

r com

prehe

nsive

inco

me, n

on-cu

rrent

586

12

-

12

(N

ote6)

Stock－

Pega

tron C

orpora

tion

-Fin

ancia

l asse

ts at

fair v

alue t

hroug

h prof

it or lo

ss, cu

rrent

1,000

68

-

68

Stock－

E.SUN

Fina

ncial

Hold

ing C

o., Lt

d.-

Finan

cial a

ssets

at fai

r valu

e thro

ugh p

rofit o

r loss,

curre

nt15

,000

419

-

41

9

Stock－

Form

osa Pl

astics

Corp

oratio

n-

Finan

cial a

ssets

at fai

r valu

e thro

ugh p

rofit o

r loss,

curre

nt1,0

00

10

0

-

100

Sto

ck－

Taiw

an Se

mico

nduc

tor M

anufa

cturin

g Com

pany

Finan

cial a

ssets

at fai

r valu

e thro

ugh p

rofit o

r loss,

curre

nt3,0

00

99

3

-

993

Sto

ck－

Yuan

ta FT

SE4G

ood T

IP Ta

iwan

ESG

ETF

Finan

cial a

ssets

at fai

r valu

e thro

ugh p

rofit o

r loss,

curre

nt1,0

00

24

-

24

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

Stock－

Chun

ghwa

Pictu

re Tu

bes T

echno

logy (

Grou

p) Co

., Ltd.

Othe

r rela

ted pa

rtyFin

ancia

l asse

ts at

fair v

alue t

hroug

h othe

r com

prehe

nsive

inco

me, n

on-cu

rrent

701,6

49,12

15,6

53,97

625

.375,6

53,97

6(N

ote4)(

Note5

)CP

T TPV

Opti

cal (F

ujian

) Co.,

Ltd.

Othe

r rela

ted pa

rtyFin

ancia

l asse

ts at

fair v

alue t

hroug

h othe

r com

prehe

nsive

inco

me, n

on-cu

rrent

-17

,574

5.00

17,57

4

Chun

ghwa

Pictu

re Tu

bes (

Malay

sia) S

dn.B

hd.

Mine

s Golf

Reso

rt Berh

ad-

Finan

cial a

ssets

at fai

r valu

e thro

ugh o

ther c

ompre

hensi

ve in

come

, non

-curre

nt5,0

00,00

0

-

5.2

6 -

Tatun

g Fine

Che

mical

s Co.,

Ltd.

Stock－

Hsieh

Chih

Indu

strial

Libra

ry Pu

blishi

ng C

o.Af

filiate

d com

pany

Finan

cial a

ssets

at fai

r valu

e thro

ugh o

ther c

ompre

hensi

ve in

come

, non

-curre

nt1

- 0.0

3 -

Sto

ck－

Taiw

an Sm

ith In

dustr

ial C

o., Lt

d.-

Finan

cial a

ssets

at fai

r valu

e thro

ugh o

ther c

ompre

hensi

ve in

come

, non

-curre

nt40

0,000

-

4.43

-

Goldm

ax A

sia Pa

cific

LtdKo

rnerst

one M

ateria

ls Te

chno

logy C

o. Ltd

.Ot

her r

elated

party

Finan

cial a

ssets

at fai

r valu

e thro

ugh o

ther c

ompre

hensi

ve in

come

, non

-curre

nt-

68,07

33.3

568

,073

Note

1: Se

curiti

es are

stoc

ks, bo

nds, b

enefi

ciary

certifi

cates

and d

eriva

tive s

ecuriti

es of

the af

oreme

ntion

ed ite

ms w

ithin

the sc

ope o

f IFRS

9 Fin

ancia

l Instr

umen

ts.No

te 2:

Only

relate

d part

ies ar

e req

uired

to di

sclose

such

infor

matio

n.No

te 3:

For f

inanc

ial as

sets m

easure

d at fa

ir valu

e, the

book

value

shou

ld be

the f

air va

lue de

ducte

d by t

he ca

rrying

value

of ac

cumu

lated

impa

irmen

t loss.

For f

inanc

ial as

sets n

ot me

asured

at fa

ir valu

e, the

book

value

shou

ld be

the o

rigina

l cost

or am

ortize

d cost

dedu

cted b

y the

carry

ing va

lue of

accu

mulat

ed im

pairm

ent lo

ss.No

te 4:

If secu

rities

are re

strict

ed be

cause

of be

ing us

ed as

colla

terals

, bein

g pled

ged o

r othe

r reas

ons, s

uch r

estric

tion s

hould

be di

sclose

d. Ple

ase re

fer to

Note

6 an

d Note

8 for

more

detai

ls.

Note

5: Sh

ares o

f Chu

nghw

a Pict

ure Tu

bes T

echno

logy (

Grou

p) Co

., Ltd.

were

meas

ured b

y mark

et pri

ce on

Dece

mber

31, 2

019 w

ith co

nside

ration

of ce

rtain

assum

ption

s, suc

h as l

iquida

tion d

iscou

nt rat

e. Th

e liqu

idatio

n disc

ount

rate w

as co

nside

red as

the s

hares

of C

PTTG

have

been

forze

n by c

ourt.

Note

6: Al

l tran

sactio

ns are

elim

inated

in th

e con

solida

ted fin

ancia

l stat

emen

ts.No

te 7:

After

Gree

n Ene

rgy Te

chno

logy C

o., Lt

d's sh

areho

lders'

meet

ing ap

prove

d the

liquid

ation

prop

osal, t

he G

roup l

ost co

ntrol

of the

comp

any a

nd th

e sha

res w

ere re

classi

fied t

o fina

ncial

asset

s at fa

ir valu

e thro

ugh o

ther c

ompre

hensi

ve in

come

, non

-curre

nt.

Note

Book

value

(Note

3)Pe

rcenta

ge of

ow

nersh

ip (%

)Ma

rket v

alue/

net a

ssets

value

Holde

rTy

pe an

d nam

e of s

ecuriti

es (N

ote 1)

Relat

ionshi

p(N

ote 2)

Finan

cial s

tatem

ent a

ccoun

t

Endin

g bala

nce

Units

(in th

ousan

ds)/

bond

s/sha

res(in

thou

sands)

222



ATTA

CHM

ENT 4

Indivi

dual

securi

ties a

cquir

ed or

disp

osed o

f with

accu

mulat

ed am

ount

excee

ding t

he lo

wer o

f NT$

300 m

illion

or 20

perce

nt of

the ca

pital

stock

.

Note

Share

s/unit

sAm

ount

Share

s/unit

sAm

ount

Share

s/unit

sAm

ount

Cost

Gain

(Loss

)fro

m dis

posal

Share

s/unit

sAm

ount

Tatun

g Co.,

Ltd

Stock─T

ungy

ang E

nergy

Co.,

Ltd.

Invest

ments

acco

unted

for u

nder

the eq

uity m

ethod

Cash

incre

asePa

rent-s

ubsid

iary

15,00

0,000

$149

,431

40,00

0,000

$400

,000

15,00

0,000

$-$1

50,00

0$-

40,00

0,000

$400

,205

(Note

6)(N

ote3)

Stock─T

atung

Forev

er En

ergy C

o., Lt

d.Inv

estme

nts ac

coun

ted fo

r und

er the

equit

y meth

odCa

sh in

crease

Paren

t-sub

sidiar

y48

,558,3

0846

2,930

110,0

00,00

01,1

00,00

0-

- -

- 15

8,558

,308

1,508

,602

(Note

3)

Stock─T

atung

Co.

of Jap

an, In

c.Inv

estme

nts ac

coun

ted fo

r und

er the

equit

y meth

odCa

sh in

crease

Paren

t-sub

sidiar

y15

,000

657,4

011,8

00,00

052

9,470

1,800

,000

- -

- 15

,000

1,325

,962

(Note

7)(N

ote3)

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

Stock－

Tatun

g Co.,

Ltd

Finan

cial a

ssets

at fai

r valu

e thro

ugh o

ther c

ompre

hens

ive in

come

, non

-curre

nt-

-59

,652,9

851,5

45,01

3-

- 59

,652,9

851,2

67,06

33,1

69,34

0(1,

902,2

77)

- -

(Note

5)Ch

ungh

wa Pi

cture

Tube

s (Be

rmud

a) Ltd

.Ch

ungh

wa Pi

cture

Tube

s Tech

nolog

y(Grou

p) Co

., Ltd.

Finan

cial a

ssets

at fai

r valu

e thro

ugh o

ther c

ompre

hens

ive in

come

, non

-curre

nt-

-72

9,289

,715

6,103

,315,0

65-

- 27

,640,5

9432

1,315

287,7

8133

,534

701,6

49,12

15,6

53,97

6

Note

1: Se

curit

ies ar

e stoc

ks, b

onds

, ben

eficia

ry cer

tifica

tes an

d deri

vativ

e secu

rities

of th

e afor

emen

tione

d item

s with

in the

scop

e of IF

RS 9

Finan

cial I

nstru

ments

.No

te 2:

The b

eginn

ing ba

lance

of fin

ancia

l asse

ts at

fair v

alue t

hroug

h othe

r com

prehe

nsive

inco

me, n

on-cu

rrent

was m

easu

red by

fair

value

based

on th

e curr

ent p

eriod

and i

nvest

ments

acco

unted

for u

nder

the eq

uity m

ethod

was

measu

red un

der e

quity

meth

od.

Note

3: Al

l tran

sactio

ns ar

e elim

inated

in th

e con

solida

ted fin

ancia

l stat

emen

ts.No

te 4:

Only

securi

ties a

ccoun

ted fo

r usin

g the

equit

y meth

od ar

e req

uired

to di

sclose

such

infor

matio

n.No

te 5:

Chu

nghw

a Pict

ure Tu

bes (

Berm

uda)

Ltd. d

ispose

d of s

hares

of Ta

tung C

o., Lt

d an

d sho

uld be

deem

ed as

trea

sure

stock

trad

ing. G

ain(lo

ss) on

disp

osal o

f inve

stmen

ts sh

ould

be bo

oked

as re

taine

d earn

ings w

hile p

repari

ng th

e con

solida

ted fin

ancia

l stat

emen

t.No

te 6:

The d

isposa

l of in

vestm

ent a

ccoun

ted fo

r und

er the

equit

y meth

od w

as du

e to c

apita

l red

uctio

n on S

eptem

ber 3

, 201

9.No

te 7:

The d

isposa

l of in

vestm

ent a

ccoun

ted fo

r und

er the

equit

y meth

od w

as du

e to c

apita

l red

uctio

n on D

ecemb

er 17

, 201

9.

Begin

ning b

alanc

eAd

dition

(Note

4)Di

sposa

l(N

ote 4)

Endin

g bala

nce

Buye

r/sell

erTy

pe an

d nam

e of s

ecurit

ies (N

ote 1)

Finan

cial s

tatem

ent a

ccoun

t (No

te 2)

Coun

ter-pa

rty

(Note

3)Re

lation

ship

(Note

3)

223



ATTA

CHM

ENT

5Di

spos

al of

prop

erty a

t cos

ts of

at le

ast N

T$30

0 milli

on or

20%

of th

e paid

-in ca

pital

(Amo

unts

in Th

ousa

nds o

f New

Taiw

an D

ollars

, Unle

ss sp

ecifi

ed O

therw

ise)

Land、

Cons

tructi

on in

pr

ogres

s

Febr

uary

26,20

19Se

ptemb

er 20

03an

d Marc

h 201

0$1

,545,7

27$7

,078,0

00M

oney

rece

ived

$5,53

5,273

(Note

5)Pe

gatro

n Cor

porat

ionNo

n-rel

ation

ship

Asse

ts ac

tivati

on an

d su

ppor

ting p

arent

comp

any's

opera

ting

dema

nd

Refer

to th

e app

raisa

l res

ults f

rom

Savil

ls pr

opert

y ap

prais

al Co

. and

Hon

da re

al es

tate C

o. as

below

:Th

e app

raisa

l res

ults f

rom

Savil

ls pr

opert

y app

raisa

l Co

.：TW

D 4,3

77,57

1 tho

usan

d.

The a

pprai

sal r

esult

s fro

m Ho

nda r

eal e

state

Co.：

TWD

4,377

,571 t

hous

and.

NA

Land、

Build

ingM

arch 7

,2019

Dece

mber

2003

,Septe

mber

2011

and O

ctobe

r 20

11

1,103

,190

5,065

,600

Mon

ey re

ceive

d3,9

62,41

0(N

ote 5)

High

wealt

h Co

nstru

ction

Co.

Non-

relati

onsh

ipAs

sets

activ

ation

and

supp

ortin

g pare

nt co

mpan

y's op

eratin

g de

mand

Refer

to th

e app

raisa

l res

ults f

rom

REPR

O pr

opert

y ap

prais

al Co

. and

Lian

Bang

real

estat

e Co.

as be

low:

The a

pprai

sal r

esult

s fro

m Sa

vills

prop

erty a

pprai

sal

Co.：

TWD

4,766

,000 t

hous

and.

Th

e app

raisa

l res

ults f

rom

Lian

Bang

real

estat

e Co

.：TW

D 4,2

68,01

8 tho

usan

d.

NA

Note

1: If

asse

ts tha

t are

dispo

sed o

f are

requir

ed to

be ap

prais

ed pu

rsuan

t to th

e law

, the C

ompa

ny sh

ould

state

appr

aisal

result

in Pr

ice re

feren

ce co

lumn.

Note

2: Tr

ansa

ction

date

shall

refer

to th

e date

of co

ntrac

t exe

cutio

n sign

ed by

selle

r and

buye

r.No

te 3:

The p

aid-in

capit

al sh

all re

fer to

the p

aid-in

capit

al of

the p

arent

comp

any.

If se

curit

ies is

suers

issu

ed no

-par

value

stoc

ks or

stoc

ks w

ith pa

r valu

e tha

t are

not T

WD1

0 per

share

, the c

riteri

a sha

ll be 1

0% of

the a

moun

t attr

ibutab

le to

paren

t com

pany

's equ

ity.

Note

4: Th

e carr

ying a

moun

t inclu

ded p

rope

rty, p

lant a

nd eq

uipme

nt, co

nstru

ction

in pr

ogres

s and

relat

ed ex

pens

es.

Note

5: Th

e net

amou

nt of

gain

(Los

s) fro

m dis

posa

l hav

e bee

n elim

inated

land

value

incre

menta

l tax a

nd re

lated

expe

nses

.

Shan

-Chih

Asse

t De

velop

ment

Co.

Comp

any d

ispos

al of

pr

opert

yTy

pes o

f pr

opert

yTr

ansa

ction

date

Origi

nal

acqu

isitio

n date

Carry

ing

amou

nt(No

te 4)

Tran

sacti

on am

ount

Colle

ction

term

Gain

(Los

s)fro

m dis

posa

lCo

unter

-part

yRe

lation

ship

Disp

osal

purp

ose

Price

refer

ence

Othe

r term

224



Relat

ed pa

rty tr

ansa

ction

s for

purch

ases

and s

ales a

moun

ts ex

ceed

ing N

T$10

0 milli

on or

20%

of ca

pital

stock

Tatun

g Co.,

Ltd

Tatun

g Con

sume

r Pro

ducts

(Taiw

an) C

o., L

td.Pa

rent-s

ubsid

iary

Sales

$(2,8

77,50

3)(1

6.14)

-No

sign

ifican

t diff

erenc

eNo

te 7

$1,56

2,823

40.10

Tatun

g Co.

of Ja

pan,

Inc.

Paren

t-sub

sidiar

ySa

les(3

45,01

9)(1

.94)

-〃

〃65

,001

1.67

Tatun

g Elec

tric C

ompa

ny of

Ame

rica,

Inc.

Paren

t-sub

sidiar

ySa

les(1

90,83

9)(1

.07)

-〃

〃27

,936

0.72

Tatun

g Co.

of Ja

pan,

Inc.

Paren

t-sub

sidiar

yPu

rchas

es58

4,722

4.51

-〃

〃(4

,541)

(0.16

)Ta

tung (

Shan

ghai)

Co.,

Ltd

Paren

t-sub

sidiar

yPu

rchas

es12

9,994

1.00

-〃

〃(2

4,285

)(0

.86)

Tatun

g For

estry

and C

onstr

uctio

n Co.

Paren

t-sub

sidiar

yPu

rchas

es13

6,992

1.06

〃〃

(50,5

84)

(1.80

)El

itegr

oup C

ompu

ter S

ystem

s Co.,

Ltd.

Comp

any i

n asso

ciates

Purch

ases

446,7

323.4

4-

〃〃

(130

,504)

(4.65

)Gi

ntung

Ene

rgy C

o., L

td.Co

mpan

y in a

ssocia

tesPu

rchas

es43

5,821

3.36

-〃

〃(1

8,336

)(0

.65)

Tatun

g Co.

of Ja

pan,

Inc.

Tatun

g Co.,

Ltd

Paren

t-sub

sidiar

ySa

les(5

85,70

7)(4

6.44)

60〃

〃50

,050

3.53

Tatun

g Co.,

Ltd

Paren

t-sub

sidiar

yPu

rchas

es35

4,857

30.99

60〃

〃(5

8,270

)(7

0.03)

Tatun

g Elec

tric C

ompa

ny of

Ame

rica,

Inc.

Tatun

g Co.,

Ltd

Paren

t-sub

sidiar

yPu

rchas

es19

0,479

91.33

120

〃〃

(27,9

85)

(99.1

1)

Gintu

ng E

nerg

y Co.,

Ltd.

Tatun

g Co.,

Ltd

Comp

any i

n asso

ciates

Sales

(394

,908)

(37.2

4)60

〃〃

75,74

931

.52(N

ote2

)

Tatun

g Con

sume

r Pro

ducts

(Taiw

an) C

o., L

td.Ta

tung C

o., L

tdPa

rent-s

ubsid

iary

Purch

ases

2,901

,823

73.82

90〃

〃(1

,845,4

40)

(90.9

6)

Tatun

g (Sh

angh

ai) C

o.,Lt

dTa

tung C

o., L

tdPa

rent-s

ubsid

iary

Sales

(129

,011)

(25.9

3)60

〃〃

22,20

44.5

1

Tatun

g For

estry

and C

onstr

uctio

n Co.

Tatun

g Co.,

Ltd

Paren

t-sub

sidiar

ySa

les(1

36,99

2)(9

5.31)

-〃

〃50

,584

100.0

0

Tatun

g For

ever

Energ

y Co.,

Ltd.

Shen

g Yan

g Ene

rgy C

o., L

td.Pa

rent-s

ubsid

iary

Sales

(1,34

7,175

)(8

5.49)

-〃

〃56

0,998

85.82

Tatun

g Co.,

Ltd

Paren

t-sub

sidiar

yPu

rchas

es53

7,632

38.56

-〃

〃(1

75,16

8)(4

6.71)

Shan

-Chih

Asse

t Dev

elopm

ent C

o.Ta

tung C

o., L

tdPa

rent-s

ubsid

iary

Sales

(223

,829)

(5.66

) -

〃〃

2-

Tatun

g Sys

tem T

echn

ologie

s Inc

.Ta

tung C

o., L

tdPa

rent-s

ubsid

iary

Sales

118,0

173.5

130

-90

〃30

-120

36,72

44.3

0

Forw

ard D

evelo

pmen

t Co.,

Ltd.

Suzh

ou Fo

rward

Elec

tronic

s Tec

hnolo

gy C

o., L

td.Pa

rent-s

ubsid

iary

Purch

ases

153,7

0510

0.00

90〃

No si

gnific

ant d

iffere

nce

(13,7

08)

(100

.00)

Suzh

ou Fo

rward

Elec

tronic

s Tec

hnolo

gy C

o., L

td.Fo

rward

Dev

elopm

ent C

o., L

td.Pa

rent-s

ubsid

iary

Sales

(153

,705)

(36.7

5)12

0〃

No si

gnific

ant d

iffere

nce

13,70

819

.30

Note

1: Th

e tran

sacti

ons a

mong

the c

onso

ldiate

d enti

ties w

ere w

rited

-off

in the

cons

olida

ted fin

ancia

l stat

emen

ts.No

te 2:

The s

ales t

ransa

ction

s betw

een G

intun

g Ene

rgy C

o., L

td. an

d Ta

tung C

o., L

td we

re dis

close

d as o

f Aug

ust 3

0, 20

19, s

ince G

intun

g Ene

rgy C

o., L

td. w

as no

long

er a s

ubsid

iary o

f the

Gro

up on

Aug

ust 3

0 ,20

19.

ATTA

CHM

ENT

6 Purch

aser

(selle

r)Re

lated

party

Relat

ionsh

ipTr

ansa

ction

sDe

tails

of no

n-arm

'slen

gth tr

ansa

ction

Notes

and a

ccou

nts re

ceiva

ble (p

ayab

le)No

tePu

rchas

es(S

ales)

Perce

ntage

of to

talrec

eivab

les (p

ayab

le)Ba

lance

(Not

e 1)

Amou

nt(N

ote 1

)Pe

rcenta

ge of

total

pu

rchas

es (s

ales)

Cred

it Term

Unit p

rice

Cred

it Term

225



ATTA

CHM

ENT

7Re

ceiva

bles f

rom

relate

d part

ies w

ith am

ounts

exce

eding

NT$

100 m

illion

or 20

% of

capit

al sto

ck.

Amou

ntCo

llecti

on st

atus

Tatun

g Co.,

Ltd

Tatun

g Con

sume

r Pro

ducts

(Taiw

an) C

o., Lt

d.Pa

rent-s

ubsid

iary

$1,84

9,741

1.85

$- -

$-

$-Ta

tung I

nfor

matio

n Tec

hnolo

gy (J

iangs

u) C

o., Lt

d.Pa

rent-s

ubsid

iary

519,3

52-

516,9

59De

bt Co

llecti

on-

-

Tatun

g For

ever

Energ

y Co.,

Ltd.

Paren

t-sub

sidiar

y17

7,184

-

-

-

-

-

Sh

an-C

hih A

sset D

evelo

pmen

t Co.

Paren

t-sub

sidiar

y26

9,738

-

-

-

-

-

Tatun

g Co.

of Ja

pan,

Inc.

Chun

ghwa

Pictu

re Tu

bes,

Ltd.

Comp

any i

n asso

ciates

1,295

,772

0.03

1,295

,772

Tatun

g Co.

of Ja

pan,

Inc. h

as gi

ven

nume

rous

notic

e to C

hung

hwa P

ictur

e Tu

bes,

Ltd.

for i

ts cla

im of

acco

unts

receiv

able

and a

ccru

ed ex

pens

es as

of

Dece

mber

31, 2

019.

Sinc

e Apr

il 201

9, Ta

tung C

o. of

Japa

n, Inc

. has

appli

ed to

co

urt f

or ru

ling o

f ord

ers of

paym

ents,

an

d rec

eived

appo

val b

y the

cour

t on

Janu

ary 30

, 202

0.

-

-

Chun

ghwa

Pictu

re Tu

bes,

Ltd.

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

Paren

t-sub

sidiar

y88

3,828

-

88

3,828

-

-

-

Vi

bran

t Disp

lay T

echn

ology

CO.

, Ltd.

Ot

her r

elated

party

157,5

13-

157,5

13

-

-

-

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

CPTF

Optr

onics

(She

n-Zhe

n) C

o., Lt

d.Pa

rent-s

ubsid

iary

2,219

,565

-

2,219

,565

--

-

CPTF

Optr

onics

Co.,

Ltd.

Othe

r rela

ted pa

rty86

7,764

-

867,7

64 -

-

-

Ch

ungh

wa Pi

cture

Tube

s Tec

hnolo

gyOt

her r

elated

party

286,8

91 -

28

6,891

-

-

-

(G

roup

) Co.,

Ltd.

Chun

ghwa

Pictu

re Tu

bes (

Mala

ysia)

Sdn.B

hd.

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

Othe

r rela

ted pa

rty5,5

11,08

6 -

5,5

11,08

6 -

-

-

CPTF

Optr

onics

(She

n-Zhe

n) C

o., Lt

d.Ch

ungh

wa Pi

cture

Tube

s (Be

rmud

a) Lt

d.Pa

rent-s

ubsid

iary

1,583

,114

-

1,583

,114

-

-

-

Tatun

g For

ever

Energ

y Co.,

Ltd.

Shen

g Yan

g Ene

rgy C

o., Lt

d.Pa

rent-s

ubsid

iary

560,9

983.8

4-

--

-

Note

1: Al

l tran

sacti

ons a

re eli

mina

ted in

the c

onso

lidate

d fina

ncial

state

ments

. The

endin

g bala

nce i

nclud

ed ac

coun

t rec

eivab

le-rel

ated p

arties

, othe

r rec

eivab

les- r

elated

parti

es, lo

ng-te

rm re

ceiva

ble-re

lated

parti

ed an

d lon

g-term

fina

nce l

ease

rece

ivable

-relat

ed pa

rties

.No

te 2:

The n

ature

of lo

ng-te

rm re

ceiva

ble-C

hung

hwa P

ictur

e Tub

es, L

td. w

as fi

nanc

ing pr

ovide

d. It

was d

isclos

ed in

Atta

chme

nt 1.

Overd

ue re

ceiva

bles

Amou

nt rec

eived

insu

bseq

uent

perio

dLo

ss all

owan

ceCo

mpan

y rec

orde

d as r

eceiv

able

Relat

ed pa

rtyRe

lation

ship

Endin

g bala

nce

(Note

1)Tu

rnov

er ra

te

226



ATTA

CHM

ENT

8

Name

s, loc

ation

s and

relat

ed in

forma

tion o

f inv

estee

comp

anies

(exc

luding

inve

stmen

t in M

ainlan

d Chin

a)

Endin

g bala

nce

Begin

ning b

alanc

eNu

mber

ofsh

ares

(in th

ousan

ds)

Perce

ntage

of

owne

rship

(%)

Book

value

Tatun

g Co.,

Ltd

Chun

ghwa

Pictu

re Tu

bes,

Ltd.

Taoy

uan C

ity,T

aiwan

Man

ufactu

re, re

search

and s

ale of

pictu

re tub

s and

TFT

-LCD

prod

ucts

$6,99

2,774

$6,99

2,774

1,850

,745,1

6828

.56$(6

,421,7

54)

$(11,9

55,01

0)$(3

,414,5

94)

San C

hih Se

mico

nduc

tor C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Man

ufactu

re an

d sale

s of s

emico

nduc

tors a

nd ch

ips92

0,981

920,9

8149

,913,5

7643

.1854

,501

(193,9

69)

47,49

4(N

ote7)

Forw

ard E

lectro

nics C

o., Lt

d.Ne

w Ta

ipei C

ity, T

aiwan

Man

ufactu

re an

d sale

s of b

ackli

ght m

odule

s, va

riable

resis

tors,

enco

ders,

wire

less d

evice

s, LE

D lig

hting

314,0

9531

4,095

18,95

5,623

12.05

215,7

37(12

5,940

)(15

,168)

Tatun

g Syst

em T

echn

ologie

s Inc

.Ta

ipei C

ity, T

aiwan

Softw

are an

d hard

ware

servic

e and

syste

m int

egrat

ion24

7,655

247,6

5537

,819,0

2742

.7054

6,978

102,7

0253

,782

Tatun

g Fine

Che

mica

ls Co

., Ltd.

Taipe

i City

, Taiw

anTh

e man

ufactu

ring a

nd sa

le of

hous

ehold

coati

ngs,

indus

trial

coati

ngs a

nd ch

emica

l prod

ucts

392,3

1639

2,316

37,45

8,319

48.27

53,06

098

824

7Gr

een E

nergy

Tec

hnolo

gy In

c.Ta

oyua

n City

,Taiw

anM

anufa

cture

of ele

ctrica

l part

s and

retai

l sale

s and

who

lesale

of el

ectri

cal m

ateria

ls-

300,0

00-

-

- (5,

561,7

60)

(257,1

47)

(Note

4)(No

te5)(N

ote8)

Chih

Shen

g Inv

estme

nt Co

., Ltd.

Taipe

i City

, Taiw

anInv

estme

nt ho

lding

1,500

,000

1,500

,000

150,0

00,00

010

0.00

206,2

3517

0,995

102,1

98Sh

an C

hih In

vestm

ent C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Invest

ment

holdi

ng2,1

19,35

02,1

19,35

077

,627,1

1995

.8352

4,156

(25,52

4)(17

,236)

Chun

ghwa

Elec

tronic

s Dev

elopm

ent C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Invest

ment

holdi

ng2,5

67,44

72,3

97,44

729

7,626

,267

94.01

(1,09

5,307

)(1,

004,4

04)

(949,4

47)

Shan

-Chih

Asse

t Dev

elopm

ent C

o.Ta

ipei C

ity, T

aiwan

The d

evelo

pmen

t and

leasi

ng of

real

estate

14,84

0,192

14,84

0,192

5,220

,064

100.0

046

,394,4

709,7

41,94

910

,453,6

60Ta

iwan

Tele

comm

unica

tion I

ndus

try C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Telec

ommu

nicati

on de

vices.

2,462

,471

2,462

,471

675,0

0010

0.00

(854,5

84)

559

556

Tatun

g Info

rmati

on (S

ingap

ore) P

te. Lt

d.Sin

gapo

reInv

estme

nt ho

lding

1,625

,465

1,625

,465

86,04

9,842

100.0

0(56

,288)

8,552

(2,06

2)Ta

tung E

lectri

c (Sin

gapo

re) Pt

e. Lt

d.Sin

gapo

reInv

estme

nt ho

lding

676,3

3167

6,331

33,09

8,675

100.0

073

6,952

(224,6

80)

(195,9

88)

Tatun

g Mex

ico S.

A de

C.V

.M

exico

Man

ufactu

re of

electr

onic

produ

cts50

3,289

503,2

891,0

05,82

599

.9912

5,033

(35,04

1)(35

,041)

Tatun

g Co.

of Jap

an, In

c.Jap

anSa

les an

d purc

hase

of ele

ctron

ic pa

rts, h

ome a

pplia

nces

and I

T pro

ducts

531,3

731,9

0315

,000

100.0

01,3

52,96

214

0,469

140,4

69Ta

tung E

lectro

nics (

S) Pt

e. Lt

d.Sin

gapo

rePu

rchase

s, sal

es an

d serv

ices o

f raw

mate

rial

48,27

648

,276

3,600

,000

90.00

80,59

6(2,

075)

(1,82

1)Ta

tung (

Thail

and)

Co., L

td.Th

ailan

dM

anufa

cturin

g and

sales

of IT

prod

ucts,

home

appli

ance

s and

AI m

eter

974,2

8397

4,283

105,5

99,99

899

.9953

1,398

(13,70

8)(14

,172)

Tatun

g Con

sume

r Prod

ucts

(Taiw

an) C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Sales

of ho

me ap

plian

ces

1,145

,500

1,145

,500

49,65

0,000

99.10

(1,26

7,254

)(86

,327)

(85,57

5)To

es Op

to-M

echa

tronic

s Co.

Taipe

i City

, Taiw

anTh

e man

ufactu

ring o

f vari

ous a

utoma

tic eq

uipme

nt17

0,000

170,0

0017

,000,0

0085

.0024

,746

10,62

89,3

02Ta

tung S

M-C

ycle

Co.

New

Taipe

i City

, Taiw

anM

anufa

cture

of sp

eed r

educ

ers, s

peed

aviat

ors24

4,277

71,22

03,6

75,00

049

.0024

8,838

46,16

334

,807

(Note

6)Ta

tung D

ie Ca

sting

Co.

New

Taipe

i City

, Taiw

anM

anufa

cturin

g and

sales

of ca

sting

mold

7,880

7,880

153,0

0051

.0060

,316

18,17

69,3

19Ta

tung M

edica

l Hea

lthca

re Te

chno

logies

Co.,

Ltd.

Taipe

i City

, Taiw

anDe

sign a

nd sa

les of

med

ical in

strum

ents

432,1

7240

7,174

36,42

4,239

95.85

205,1

0712

,126

11,65

7Ce

ntral

Resea

rch T

echn

ology

Co.

Taipe

i City

, Taiw

anEM

CIRF

testi

ng an

d cert

ifica

tion s

ervice

s12

0,000

120,0

006,6

12,15

510

0.00

40,08

9(9,

949)

(9,78

7)TA

TUNG

CZE

CH s.

r.oCz

ech R

epub

licSa

les of

AI m

eters

and e

nergy

savin

g prod

ucts

in the

EU

342,4

4834

2,448

- 10

0.00

7,066

(1,42

7)(1,

427)

Abso

lute A

lpha L

imite

dBr

itish

Virg

in Isl

ands

Invest

ment

holdi

ng3,1

903,1

9050

,000

100.0

020

,525

2525

Tatun

g Co.

of Am

erica

Inc.

U.S.A

.Th

e sale

and s

ervici

ng of

IT an

d hou

sehold

elec

tronic

s prod

ucts

in the

US

45,11

545

,115

1,750

,000

50.00

(524,9

66)

(1,27

3,244

)(63

6,622

)Ta

tung E

lectri

c Com

pany

of A

meric

a, Inc

.U.

S.A.

Sales

and s

ervice

of m

otors

121,1

8412

1,184

1,000

,000

100.0

015

3,009

3,859

3,859

Tatun

g Scie

nce a

nd T

echn

ology

, Inc.

U.S.A

.Th

e sale

and p

urcha

se of

IT pr

oduc

ts63

2,934

632,9

346,8

72,00

010

0.00

7,877

465

465

Elite

group

Com

puter

Syste

ms C

o., Lt

d.Ta

ipei C

ity, T

aiwan

The m

anufa

cturin

g, de

sign a

nd sa

les of

IT pr

oduc

ts5,0

07,15

15,0

07,15

115

2,475

,397

27.35

3,609

,880

46,27

4(12

,009)

Tatun

g Oku

ma C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Sales

and p

roduc

tion o

f work

ing m

achin

e49

,000

49,00

08,4

28,00

049

.001,3

94,38

526

3,887

129,3

05Ku

ende

r Co.,

Ltd.

Taipe

i City

, Taiw

anCo

nvers

ion of

plast

ic mo

dule

26,50

038

,500

9,136

,000

50.00

37,52

5(1,

179)

12,30

0Hs

ieh-C

hih In

dustr

ial Li

brary

Publi

shing

Co.

Taipe

i City

, Taiw

anTh

e pub

lishin

g and

sales

of H

sieh C

hih In

dustr

ial Li

brary

2,420

2,420

242

6.91

981

151

10Ch

ung-T

ai Te

chno

logy D

evelo

pmen

t Eng

ineeri

ng C

o.Ne

w Ta

ipei C

ity, T

aiwan

Cons

tructi

on of

telec

om ca

ble88

,000

88,00

02,2

00,00

022

.0012

,125

(5,19

4)(1,

102)

Tatun

g Fore

ver E

nergy

Co.,

Ltd.

Taipe

i City

, Taiw

anSo

lar en

ergy r

elated

busin

ess1,5

85,58

348

5,583

158,5

58,30

899

.101,5

08,60

2(37

,691)

(53,37

1)Ta

ipei In

dustr

y Corp

oratio

nTa

ipei C

ity, T

aiwan

Prod

uctio

n and

sales

of m

ixing

conc

rete

1919

690.0

074

(136,7

28)

40LE

AP H

IGH

LTD

Samo

aInv

estme

nt ho

lding

12,49

812

,498

263,2

5065

.001,0

80(67

8)(44

0)Tu

ngya

ng E

nergy

Co.,

Ltd.

Taipe

i City

, Taiw

anSo

lar en

ergy r

elated

busin

ess40

0,000

150,0

0040

,000,0

0010

0.00

400,2

0583

977

4Sh

ang S

hin E

nergy

Co.,

Ltd.

Taina

n City

,Taiw

anSo

lar en

ergy r

elated

busin

ess90

,100

100

9,010

,000

100.0

089

,715

(355)

(355)

Chih

Kuan

g Ene

rgy C

o., Lt

d.Ta

inan C

ity,T

aiwan

Solar

energ

y rela

ted bu

siness

400,0

0015

0,000

40,00

0,000

100.0

039

8,174

(1,69

3)(1,

758)

Ting

Xin

Energ

y Co.,

Ltd.

Taipe

i City

, Taiw

anSo

lar en

ergy r

elated

busin

ess30

,100

- 3,0

10,00

010

0.00

30,05

8(42

)(42

)Zh

i Shin

Ene

rgy C

o.,Lt

d.Ta

ipei C

ity, T

aiwan

Solar

energ

y rela

ted bu

siness

40,00

0-

4,000

,000

100.0

039

,875

(125)

(125)

Yao Y

ang E

nergy

Co.,

Ltd.

Taipe

i City

, Taiw

anSo

lar en

ergy r

elated

busin

ess5,0

00-

500,0

0010

0.00

4,937

(63)

(63)

Lans

ong I

nterna

tiona

l Co.,

Ltd.

Camb

odia

Fores

try1,2

71,59

21,2

71,59

2-

98.33

- -

242

Tatun

g Neth

erlan

ds B

.V.

Nethe

rland

sTh

e sale

s of d

igital

prod

ucts

178,5

7917

8,579

11,03

010

0.00

(145,9

58)

- -

Invest

ment

incom

e (lo

ss) re

cogn

ized

(note

1)No

te

Initia

l Inve

stmen

tEn

ding b

alanc

eNe

t inco

me (l

oss)

ofinv

estee

comp

any

Invest

or co

mpan

yInv

estee

comp

any

Loca

tion

Main

busin

esses

and p

roduc

ts

227



ATTA

CHME

NT 8-

1Na

mes,

locati

ons a

nd re

lated

infor

matio

n of in

veste

e com

panie

s (ex

cludin

g inv

estme

nt in

Mainl

and C

hina)

Endin

g bala

nce

Begin

ning b

alanc

eNu

mber

ofsha

res(in

thou

sands)

Perce

ntage

of

owne

rship

(%)

Book

value

Forw

ard El

ectron

ics C

o., Lt

d. (“F

D”)

Forw

ard D

evelo

pmen

t Co.,

Ltd.

Britis

h Virg

in Isl

ands

Invest

ment

holdi

ng64

0,997

658,2

56-

100.0

01,3

13,26

011

,880

11,92

3(N

ote3)(

Note9

)(Note

10)

Gintu

ng En

ergy C

o., Lt

d.Ta

oyua

n City

,Taiw

anTh

e man

ufactu

ring a

nd sa

le of

solar

modu

le an

d rela

ted co

mpon

ent

355,2

9635

5,296

5,398

,269

14.59

- (26

1,889

)(18

,158)

(Note

2)

San C

hih Se

micon

ducto

r Co.,

Ltd.

Green

Energ

y Tech

nolog

y Inc

.Ta

oyua

n City

,Taiw

anMa

nufac

ture o

f elec

trical

parts

and r

etail s

ales a

nd w

holes

ale of

elect

rical

mater

ials

- 2,4

77,69

2-

-

- (5,

561,7

60)

(1,15

6,000

)(N

ote5)(

Note8

)GR

EATE

R PO

WER

LIMI

TED

Hong

Kon

gInv

estme

nt ho

lding

446,4

8244

6,482

13,76

0,000

100.0

0-

(148,7

66)

(148,7

66)

Chih

De In

vestm

ent C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Invest

ment

holdi

ng1,0

001,0

0010

0,000

100.0

01,0

1231

31

GREA

TER

POW

ER LI

MITE

DUL

TRA

ENER

GY H

OLDI

NGS L

IMITE

DHo

ng K

ong

Invest

ment

holdi

ng44

6,482

446,4

8213

,760,0

0019

.77-

(800,2

22)

(120,0

43)

Tatun

g Syst

em Te

chno

logies

Inc.

Chyu

n Hue

i Busi

ness

Tech

nolog

y Inc

.Ta

ipei C

ity, T

aiwan

Inform

ation

softw

are se

rvice

42,74

042

,740

8,000

,000

100.0

011

4,165

16,38

616

,386

Tisne

t Tech

nolog

y Inc

.Ta

ipei C

ity, T

aiwan

Softw

are de

sign a

nd de

velop

ment

62,59

062

,590

5,500

,000

100.0

060

,722

6,727

6,727

I Torc

h Tech

nolog

y Co.,

Ltd.

Taitu

ng C

ity, T

aiwan

The c

ompu

ter pa

ckag

e soft

ware,

equip

ment

mana

geme

nt an

d info

rmati

on te

chno

logy c

onsul

tant

5,000

- 50

0,000

20.00

4,644

(1,77

9)(35

6)

Chun

ghwa

Pictu

re Tu

bes,

Ltd.

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

Berm

uda

Invest

ment

holdi

ng3,7

79,72

73,7

79,72

713

1,900

,000

100.0

06,0

86,84

2(19

5,855

)(19

5,855

)

Chun

ghwa

Pictu

re Tu

bes (

Berm

uda)

Ltd.

Goldm

ax A

sia Pa

cific

Ltd.

Hong

Kon

g Inv

estme

nt ho

lding

18,63

618

,636

601,3

034.7

518

,636

(13,39

6)-

Tatun

g Fine

Che

mical

s Co.,

Ltd.

Shan

g Chih

Inter

natio

nal C

hemi

cal In

dustr

y Co.,

Ltd.

Britis

h Virg

in Isl

ands

Invest

ment

holdi

ng$8

4,647

$84,6

47-

100.0

0$6

3,168

$(1,30

7)$(1

,307)

Shan

-Chih

Asse

t Dev

elopm

ent C

o.Ta

tung F

orestr

y and

Con

struc

tion C

o.Ta

ipei C

ity, T

aiwan

The d

esign

and c

onstr

uctio

n of s

tructu

ral en

gineer

ing22

1,405

221,4

0522

,198,0

4099

.7727

4,154

8,125

6,710

Taipe

i Indu

stry C

orpora

tion

Taipe

i City

, Taiw

anPro

ducti

on an

d sale

s of m

ixing

conc

rete

1,058

,450

1,058

,450

1,362

,055

50.61

1,648

,255

(136,7

28)

(69,19

9)Sh

an-C

hih A

sset In

terna

tiona

l Hold

ing C

orp.

Samo

aInv

estme

nt ho

lding

2,261

,982

2,261

,982

72,90

0,000

100.0

083

3,332

(35,94

6)(35

,946)

Chih

Shen

g Real

ty Co

., Ltd.

Taipe

i City

, Taiw

anRe

alty m

anag

emen

t59

2,950

592,9

5059

,294,9

5010

0.00

260,1

5612

,013

12,01

3Hs

ieh-C

hih In

dustr

ial Li

brary

Publi

shing

Co.

Taipe

i City

, Taiw

anPu

blishi

ng an

d sale

s9,9

609,9

603,2

0191

.4612

,714

8872

Shan

-chih

Asset

Inter

natio

nal

San-C

hih A

sset In

terna

tiona

l(Hon

g Kon

g) Ho

lding

,.Ltd.

Hong

Kon

gInv

estme

nt ho

lding

1,200

,480

1,200

,480

40,00

0,000

100.0

056

6,492

(37,50

6)(37

,506)

Holdi

ng C

o.

Chih

Shen

g Inv

estme

nt Co

., Ltd.

HEDA

Biot

echno

logy C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Produ

ce, fo

od an

d groc

eries

retail

12,00

012

,000

12,00

0,000

52.17

- -

- Ch

ungh

wa El

ectron

ics D

evelo

pmen

t Co.,

Ltd.

Taipe

i City

, Taiw

anInv

estme

nt ho

lding

181,8

0018

1,800

18,38

4,477

5.81

(80,13

2)(1,

004,4

04)

(58,32

9)Ta

tung F

ine C

hemi

cals C

o., Lt

d.Ta

ipei C

ity, T

aiwan

The m

anufa

cturin

g and

sale

of ho

useho

ld coa

tings,

indu

strial

coati

ngs a

nd ch

emica

l prod

ucts

57,04

457

,044

3,796

,537

4.89

6,297

988

48Ch

ih Sh

eng I

nvest

ment

(BVI

) Co.,

Ltd.

Britis

h Virg

in Isl

ands

Invest

ment

holdi

ng50

8,337

508,3

3716

,862,5

9010

0.00

(10,00

4)55

55Gr

een En

ergy T

echno

logy I

nc.

Taoy

uan C

ity,Ta

iwan

Manu

factur

e of e

lectri

cal pa

rts an

d reta

il sale

s and

who

lesale

of el

ectric

al ma

terial

s-

881,5

01-

-

- (5,

561,7

60)

(428,6

29)

(Note

5)(No

te8)

Chih

Shen

g Inv

estme

nt (B

VI) C

o., Lt

d.Ch

ih Sh

eng H

olding

Co.,

Ltd.

Britis

h Virg

in Isl

ands

Invest

ment

holdi

ng54

2,219

542,2

1916

,812,5

9010

0.00

(297)

109

109

Initia

l Inve

stmen

tEn

ding b

alanc

eNe

t incom

e (los

s) of

invest

ee com

pany

Invest

ment

incom

e (lo

ss) re

cogniz

ed

(note

1)No

teInv

estor

compa

nyInv

estee

compa

nyLo

cation

Main

busin

esses

and p

roduc

ts

228



ATTA

CHM

ENT

8-2Na

mes,

locati

ons a

nd re

lated

infor

matio

n of i

nvest

ee co

mpan

ies (e

xclud

ing in

vestm

ent in

Main

land C

hina)

Endin

g bala

nce

Begin

ning b

alanc

eNu

mber

ofsh

ares

(in th

ousan

ds)

Perce

ntage

of

owne

rship

(%)

Book

value

Chih

Shen

g Hold

ing C

o, Lt

dCh

ih Sh

eng H

olding

HK

Limi

tedHo

ng K

ong

Invest

ment

holdi

ng20

0,111

200,1

116,2

05,31

010

0.00

(35,46

2)24

024

0Go

ldmax

Asia

Pacif

ic Lt

d.Ho

ng K

ong

Invest

ment

holdi

ng19

3,500

193,5

006,0

00,00

046

.5131

,477

(171)

(80)

Chun

ghwa

Elec

tronic

s Dev

elopm

ent C

o., Lt

d.Sh

an C

hih In

vestm

ent C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Man

ufactu

ring &

Inve

stmen

t hold

ing92

,918

92,91

83,3

76,21

34.1

716

,298

(25,51

7)(1,

064)

Forw

ard E

lectro

nics C

o., Lt

d.Ne

w Ta

ipei C

ity, T

aiwan

The m

anufa

cturin

g and

sale

of ele

ctron

ics36

,550

36,55

010

,114,7

506.4

394

,889

(131,6

26)

(8,37

8)Ch

ungh

wa Pi

cture

Tube

s, Lt

d.Ta

oyua

n City

,Taiw

anM

anufa

cture,

resea

rch an

d sale

of pi

cture

tubs a

nd T

FT-L

CD pr

oduc

ts3,9

77,93

53,9

91,70

357

7,821

,932

8.92

(1,51

5,331

)(11

,955,0

10)

(1,06

6,119

)Sa

n Chih

Semi

cond

uctor

Co.,

Ltd.

Taipe

i City

, Taiw

anM

anufa

cture

and s

ales o

f sem

icond

uctor

s and

chips

296,4

7929

6,479

16,06

7,651

13.90

17,27

9(19

6,668

)(27

,336)

Tatun

g Fine

Che

mica

ls Co

., Ltd.

Taipe

i City

, Taiw

anTh

e man

ufactu

ring a

nd sa

le of

hous

ehold

coati

ngs,

indus

trial

coati

ngs a

nd ch

emica

l prod

ucts

17,33

817

,338

1,138

,960

1.47

1,889

988

15

Toes

Opto-

Mec

hatro

nics C

o.Gi

ntung

Ene

rgy C

o., Lt

d.Ta

oyua

n City

,Taiw

anTh

e man

ufactu

ring a

nd sa

le of

solar

mod

ule an

d rela

ted co

mpon

ent

28,60

028

,600

438,6

001.1

8-

(261,8

89)

(1,46

9)

Shan

Chih

Inve

stmen

t Co.,

Ltd.

Shan

-Chih

Inter

natio

nal H

olding

Co.

Samo

aInv

estme

nt ho

lding

247,1

1824

7,118

7,500

,000

100.0

023

2,469

(26,80

5)(26

,805)

Tatun

g Med

ical H

ealth

care

Clou

d Care

Tec

hnolo

gies C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Servi

ce of

infor

matio

n soft

ware

1,600

1,600

160,0

0040

.001,9

9748

919

6Te

chno

logies

Co.,

Ltd.

Tatun

g Med

ical&

Healt

hcare

Tec

hnolo

gies I

nc.

Samo

aInv

estme

nt ho

lding

-

2,993

100,0

0010

0.00

-

(168)

(168)

Insure

d Pha

rmac

eutic

als C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Pharm

aceu

ticals

and w

areho

using

and t

ransp

ortati

on se

rvice

35,00

035

,000

3,500

,000

100.0

029

,950

(114)

(1,08

0)

Tatun

g Fore

ver E

nergy

Co.,

Ltd.

Shen

g Yan

g Ene

rgy C

o., Lt

d.Ta

ipei C

ity, T

aiwan

Solar

energ

y rela

ted bu

siness

1,200

,000

400,0

0012

0,000

,000

100.0

01,2

15,50

817

,042

17,04

2

Tatun

g Mex

ico S.

A de

C.V

.TM

X Lo

gistic

s, Inc

.U.

S.AHu

b Serv

ice83

,160

83,16

02,6

94,40

310

0.00

(30,44

2)(39

,729)

(39,72

9)TM

X Te

chno

logies

, Inc.

U.S.A

Tech

nolog

ies &

Bus

iness

70,19

170

,191

2,250

100.0

04,6

612,1

182,1

18

Abso

lute A

lpha L

imite

dTa

tung I

nform

ation

Tec

hnolo

gies C

orp.

U.S.A

The s

ale of

elec

tronic

prod

ucts

1,595

1,595

50,00

010

0.00

19,49

148

48

Tatun

g Info

rmati

on (S

ingap

ore) P

te. Lt

d.M

yanm

ar Ta

tung C

o., Lt

d.M

yanm

arSa

les an

d cus

tomer

servic

e of s

olar e

nergy

, indu

strial

moto

r, ho

me ap

plian

ces,

indus

trial

air co

nditi

oner

13,13

313

,133

425,0

9910

0.00

1,974

(923)

(923)

Tatun

g Mya

nmar

JV H

olding

Co.,

Ltd.

Briti

sh V

irgin

Islan

dsInv

estme

nt ho

lding

4,841

4,841

150,0

0010

0.00

1,983

(1087

)(10

87)

Tatun

g Mya

nmar

JV H

olding

Co.,

Ltd.

LIN

HTET

LIN

Co., L

td.M

yanm

arSo

lar en

ergy r

elated

busin

ess4,8

414,8

4173

,500

49.00

2,158

(1,86

4)(91

2)

Tatun

g (Th

ailan

d) Co

., Ltd.

Mya

nmar

Tatun

g Co.,

Ltd.

Mya

nmar

Sales

and c

ustom

er ser

vice o

f sola

r ene

rgy, in

dustr

ial m

otor,

home

appli

ance

s, ind

ustri

al air

cond

ition

er

-

- 1

-

-

(923)

-

Leap

High

Limi

tedTa

tung M

iddle

East

Purif

icatio

n of P

otable

Wate

r L.L.

C.Du

bai

Sales

of w

ater g

enera

tors i

n Midd

le Ea

st

- 11

,716

-

-

-

(1,23

1)(60

2)(N

ote11

)

Note

1: Th

e tran

sactio

ns am

ong t

he co

nsold

iated

entit

ies w

ere w

ritten

off i

n the

cons

olida

ted fi

nanc

ial st

ateme

nts.

Note

2: Th

e equ

ity at

tribu

able

to sh

areho

lders

of Gi

ntung

Ene

rgy C

o., Lt

d. wa

s neg

tive,

thus,

the C

ompa

ny re

cogn

ized s

hares

of lo

ss of

assoc

iates

acco

unted

for u

sing e

quity

meth

od of

TW

D18,1

58 th

ousan

d, he

nce,

the en

ding b

alanc

e of i

nvest

ments

acco

unted

for u

nder

the eq

uity m

entho

d was

zero.

Note

3: Inc

luding

equip

ment

price

d as i

nvest

ment

of TW

D75,1

15 th

ousan

d (US

D2,28

2 tho

usan

d).

Note

4: Th

e Com

pany

reco

gnize

d sha

res of

loss

of Gr

een E

nergy

Tec

hnolo

gy C

o., Lt

d acco

unted

for u

sing e

quity

meth

od as

of en

d of A

ugus

t, bec

ause

its st

ockh

olders

appro

ved t

he liq

uidati

on pr

opos

al the

refore

the C

ompa

ny lo

st co

ntrol.

Note5

: The

share

of lo

ss of

assoc

iates

acco

unted

for u

sing e

quity

meth

od ex

clude

d los

s on d

ispos

al of

invest

ments

.

Note

6: Sin

ce th

e Com

pany

sold

36.33

% of

its sh

ares i

n the

third

quart

er an

d com

pleted

share

tran

sfer i

n the

fourt

h qua

rter,

the C

ompa

ny's o

wners

hip in

Tatu

ng SM

-Cyc

le Co

. red

uced

from

85.33

% to

49%.

How

ever

the C

ompa

ny st

ill ex

ercise

s sign

ifica

nt co

ntrol

over

the en

tity t

heref

ore th

e inv

estme

nt wa

s acco

unted

for u

sing t

he eq

uity m

ethod

.No

te 7:

Since

Gree

n Ene

rgy T

echn

ology

Co.,

Ltd's

share

holde

rs' m

eetin

g app

roved

the l

iquida

tion p

ropos

al, Sa

n Chih

Semi

cond

uctor

Co.,

Ltd.

recog

nized

gain

on di

spos

al of

invest

ments

beca

use i

ts eq

uity a

ttribu

table

to sh

areho

lders

turne

d pos

itive

due t

o los

ing co

ntrol.

The

endin

g bala

nce o

f inv

estme

nts ac

coun

ted fo

r und

er the

equit

y meth

od of

the c

ompa

ny al

so tu

rned p

ositi

ve.

Note

8: Af

ter G

reen E

nergy

Tec

hnolo

gy C

o., Lt

d's sh

areho

lders'

mee

ting a

pprov

ed th

e liqu

idatio

n prop

osal,

the c

ompa

ny's s

hares

were

recla

ssifie

d as f

inanc

ial as

sets a

t fair

value

throu

gh ot

her c

ompre

hens

ive in

come

, non

-curre

nt du

e to l

oss o

f con

trol.

Note

9: Fo

rward

Dev

elopm

ent C

o.,Lt

d. rep

atriat

ed fu

nds o

f NTD

17,25

9thou

sand (

USD5

57 th

ousan

d) as

of De

cemb

er 31

, 201

9.

Note

10: T

he di

feren

ce of

NTD

43 th

ousan

d betw

een n

et inc

ome (

loss)

of inv

estee

comp

any a

nd in

vestm

ent in

come

(los

s) rec

ogniz

ed fr

om Fo

rward

Dev

elopm

ent C

o.,Lt

d. wa

s the

resu

lt of d

owns

tream

tran

sancti

ons.

Note

11: T

atung

Midd

le Ea

st Pu

rifica

tion o

f Pota

ble W

ater L

.L.C.

comp

leted

the l

iquida

tion p

roced

ures w

hich c

aused

Leap

High

Ltd.'

s sha

rehold

ing ra

tio to

decre

ase fr

om 49

% to

zero.

The

refore

the i

nvest

ment

incom

e (los

s) rec

ogniz

ed fr

om T

atung

Midd

le Ea

st Pu

rifica

tion o

f Pota

ble W

ater L

.L.C.

was

recog

nized

as of

Octo

ber 1

7, 20

19.

Endin

g bala

nce

Net in

come

(los

s) of

invest

ee co

mpan

y

Invest

ment

incom

e (lo

ss) re

cogn

ized

(note

1)No

teInv

estor

comp

any

Invest

ee co

mpan

yLo

catio

nM

ain bu

siness

es an

d prod

ucts

Initia

l Inve

stmen

t

229



ATTA

CHM

ENT

9

Inve

stmen

t in M

ainlan

d Chin

a

Outfl

owIn

flow

Tatun

g Elec

tric (

Sing

apor

e) Pt

e. Lt

d.Ta

tung (

Shan

ghai)

Co.,

Ltd

Man

ufac

ture a

nd sa

les of

AC

motor

, DC

moto

rs, A

C ge

nerat

ors,

$704

,530

(2)

$614

,590

$-$-

$614

,590

($22

4,680

)87

.23%

($19

5,988

)$7

36,95

2$-

diese

l eng

ine ge

nerat

ors, v

ariab

lespe

ed m

otors,

inve

rters

and P

LCs,

USD

23,50

0(N

ote6)

USD

20,50

0US

D 20

,500

(2) B

.tra

nsfor

mers,

switc

hboa

rds

Tatun

g Inf

orma

tion (

Sing

apore

) Pte.

Ltd.

Tatun

g Inf

orma

tion T

echn

ology

Prod

uce a

nd sa

les of

appli

ance

s and

elec

tronic

prod

uctio

n92

5,183

(2)

761,4

92

-

- 76

1,492

(12,2

64)

78.40

%(9

,614)

(317

,291)

-

(Jian

gsu)

Co.,

Ltd.

USD

30,86

0(N

ote6)

USD

25,40

0US

D 25

,400

(2) B

.(N

ote16

)

Tatun

g Com

pres

sors

The m

anuf

actur

ing an

d sale

s of r

ecipr

ocati

ng

341,4

72(2

)27

2,818

-

-

272,8

1811

,933

79.89

%9,5

3329

8,669

-

(ZHO

NGSH

AN) C

o., L

td.co

mpres

sors

for fr

eezin

g and

refri

gerat

ionUS

D 11

,390

(Note

6)US

D 9,1

00US

D 9,1

00(2

) B.

Forw

ard D

evelo

pmen

tFo

rward

Elec

tronic

s Equ

ipmen

tM

anuf

actur

e and

sales

of tu

ner,

keyb

oard

, mou

se,

137,9

08(2

)12

2,788

-

-

122,7

888,9

4910

0.00%

8,949

149,8

7025

,163

Co

.,Ltd

(Don

g Gua

n) C

o., L

td re

mote

contr

oller,

switc

h, so

cket,

poten

tiome

ter an

d gam

ing m

ouse

USD

4,600

(Note

5)(2

) B.

USD

814

Suzh

ou F

orwa

rd E

lectro

nics

The m

anuf

actur

ing an

d sale

of ba

cklig

ht un

it for

TFT

-LCD

,81

5,456

(2)

145,1

75-

-

14

5,175

4,494

100.0

0%4,4

941,1

63,44

826

0,316

Tech

nolog

y Co.,

Ltd.

drivi

ng bo

ard, tu

ner,

keyb

oard

, mou

se,sw

itch,

sock

et an

d con

necto

rUS

D 27

,200

(Note

5)(2

) B.

USD

8,421

Ufec

o (W

ujian

g) T

echn

ology

Inc

The m

anuf

actur

ing an

d sale

of li

ght-e

mitti

ng di

ode

70,76

6(3

)-

-

-

-

9,9

8140

.00%

3,992

26,47

9-

RM

B 16

,438

(2) B

.

Tatun

g Sys

tem T

echn

ologie

s Inc

.TS

TI T

echn

ologie

s (Sh

angh

ai) C

o., L

td.In

forma

tion s

oftwa

re se

rvice

144,8

88(1

)13

6,308

-

-

136,3

08(3

7,934

)94

.00%

(35,0

84)

8,624

-

RMB

30,00

0US

D 4,5

69US

D 4,5

69(R

MB8

,481)

(2) B

.

Tatun

g Fine

Che

mica

ls Co

., Ltd.

Tatun

g Coa

tings

(Kun

shan

) Co.,

Ltd.

Man

ufac

ture a

nd sa

les of

indu

stry c

oatin

g and

12

2,437

(1)

33,15

6-

-

33

,156

(9,31

8)82

.35%

(7,65

5)10

3,245

87,35

4ele

ctro-

depo

sition

coati

ng.

USD

4,067

USD

1,060

USD

1,060

(2) B

.US

D 2,7

84(N

ote10

)

Huaia

n Tatu

ng A

dvan

ced

The m

anuf

actur

ing an

d sale

s of p

ositi

ve m

ateria

l of l

ithium

batte

ry,US

D 16

2,429

(1)

147,9

87-

-

14

7,987

(404

)10

0.00%

(404

)61

,886

-

Tech

nolog

y Mate

rials

Co., L

td. pr

inter

ink, e

lectro

-dep

ositi

on hi

gh pe

rform

ance

coati

ng.

USD

5,000

USD

4,550

USD

4,550

(2) B

.(N

ote11

)

Shan

g Chih

Inter

natio

nal C

hemi

cal

Dong

guan

Ton

gli T

rading

Co.,

Ltd.

Who

lesale

of pa

inting

, coa

ting a

nd ch

emica

l pro

ducts

32,23

6(2

)32

,236

-

-

32,23

62,8

1910

0%2,8

1946

,420

23,15

3In

dustr

y Co.,

Ltd.

USD

1,000

(Note

9)US

D 1,0

00US

D 1,0

00(2

) B.

USD

767

Tatun

g Coa

tings

(Kun

shan

) Co.,

Ltd.

Man

ufac

ture a

nd sa

les of

indu

stry c

oatin

g and

12

2,437

(2)

-

-

-

52,41

1(9

,318)

17.65

%(1

,663)

22,12

8

- ele

ctro-

depo

sition

coati

ng.

4,067

(Note

9)US

D 1,6

00(2

) B.

(Note

10)

(Note

12)

Wuji

ang S

hang

hua M

ateria

lM

anuf

actur

e and

sales

of A

BS pl

astic

-

(2)

52,41

1-

-

-

-

-

-

- 8,7

26Te

chno

logy C

o., L

td(N

ote12

)(N

ote9)

USD

1,600

(Note

12)

(2) B

.US

D 27

0

Chun

ghwa

Pict

ure T

ubes

, Ltd.

CPTF

Optr

onics

(She

n-Zh

en) C

o., L

td.M

arket

resea

rch se

rvice

8,610

.00(3

)

- -

-

- (2

0,061

)10

0%(2

0,061

)(7

,257)

-

RMB

2,000

(Note

13)

(2) B

.

Shan

-Chih

Ass

et In

terna

tiona

l Hold

ingTa

tung M

anag

emen

t Con

sulta

ntRe

alty a

nd L

easin

g Serv

ice23

9,840

(2)

256,6

08-

-

23

9,840

1,594

100%

1,594

214,5

24

- (S

hang

hai)

Co., L

td.US

D 8,0

00(N

ote6)

USD

8,000

USD

8,000

(2) B

.

Accu

mulat

edOu

tflow

ofIn

vestm

ent f

rom

Taiw

an as

ofJa

nuary

1, 20

19

Accu

mulat

ed O

utflow

of

Inve

stmen

t fro

m Ta

iwan

as of

Dec

embe

r 31,

2019

Perce

ntage

ofOw

nersh

ip

Net i

ncom

e (lo

ss) of

inve

stee

comp

any

Inve

stor c

ompa

ny((N

ote 7)

Inve

stee c

ompa

nyM

ain B

usine

sses a

nd P

rodu

ctsTo

tal A

moun

t of

Paid-

in Ca

pital

Meth

od of

In

vestm

ent

((N

ote 1)

Carry

ing V

alue a

s of

Dece

mber

31, 2

019

((Note

4)

Inve

stmen

t Flow

sAc

cumu

lated

Inwa

rdRe

mitta

nce o

f Earn

ings

as of

Outf

low

Dece

mber

31, 2

019

Inve

stmen

t inc

ome

(loss)

reco

gnize

d(N

ote 2

and 4

)

230



ATTA

CHM

ENT 9

-1 In

vestm

ent in

Main

land C

hina

Outflo

wInf

lowCh

ih Sh

eng H

olding

HK

Limite

dW

u-jian

g Tatu

ng El

ectron

icsSa

les of

appli

ances

and e

lectro

nic pr

oduc

tion

$-(2)

163,6

91

-

- $-

($453

)0.0

0%($4

53)

$-$-

Trad

ing C

o. Ltd

(Note

16)

(Note

6)US

D 5,4

60(N

ote16

)RM

B(10

0)(2)

B.

Tatun

g Info

rmati

on Te

chno

logy

Prod

uce a

nd sa

les of

appli

ances

and e

lectro

nic pr

oduc

tion

925,1

83(2)

-

-

-

163,6

911,2

9021

.60%

$279

(38,10

2)-

(Jian

gsu)

Co., L

td.RM

B 30

,860

(Note

6)US

D 5,4

60(2)

B.

(Note

17)

(Note

16)

(Note

16)

Shan

-Chih

Inter

natio

nal H

olding

Co.

Tatun

g (Sh

angh

ai) C

o.,Ltd

The m

anufa

cturin

g and

sales

of A

C mo

tor, D

C m

otors,

AC

gene

rators

, RM

B 70

4,530

(2)89

,940

-

-

89,94

0(22

4,680

)12

.77%

(28,68

3)87

,911

-

die

sel en

gine g

enera

tors,

varia

blesp

eed m

otors,

inve

rters

and P

LCs,

USD

23,50

0(N

ote6)

USD

3,000

USD

3,000

(2) B

.tra

nsfor

mers,

switc

hboa

rds

Tatun

g Com

presso

rsTh

e man

ufactu

ring a

nd sa

les of

recip

rocati

ng co

mpres

sors

341,4

72(2)

68,65

4

-

-

68,65

4

11

,933

20.11

%2,3

9986

,212

-

(ZHO

NGSH

AN) C

o., Lt

d. fo

r free

zing a

nd re

frige

ration

USD

11,39

0(N

ote6)

USD

2,290

USD

2,290

(2) B

.

Tatun

g (Sh

angh

ai) C

o.,Ltd

Tatun

g Cran

es (S

hang

hai) C

o., Lt

dTh

e man

ufactu

ring a

nd sa

les of

cran

es40

,243

(2)-

-

-

-

(11

,875)

45.00

%(5,

345)

22,19

7

-

RMB

9,348

(Note

6)RM

B(2,6

55)

(2) B

.RM

B 5,1

56

Tatun

g Xinj

i (Gua

ngdo

ng)

Elect

rical

engin

eering

syste

m ins

tallat

ion se

rvice

8,610

(2)-

-

-

-

(1,

601)

100%

(1,60

1)8,8

68

- Te

chno

logy C

o., Lt

d.RM

B 2,0

00(N

ote6)

RMB(

358)

(2) B

.RM

B 2,0

60

Tatun

g Med

ical&

Healt

hcare

Elite

Oxy

gen A

nd H

ealthc

are C

o., Lt

dSa

les of

Oxy

gen g

enera

tor

- (2)

2,998

-

2,219

-

(168)

-

(168)

-

-

Tech

nolog

ies In

c.(N

ote15

)(N

ote6)

USD

100

USD

74(N

ote15

)(2)

B.

(Note

15)

Invest

ment

Amou

nts A

uthori

zed by

Invest

ment

Comm

ission

, MOE

A

$5,92

0,385

Note

1: Th

e meth

ods f

or en

gagin

g in i

nvest

ment

in M

ainlan

d Chin

a inc

lude t

he fo

llowi

ng:

(

1) Di

rect in

vestm

ent in

Main

land C

hina.

(

2) Ind

irectl

y inv

estme

nt in

Main

land C

hina t

hroug

h com

panie

s reg

istere

d in a

third

regio

n. (P

lease

speci

fy the

name

of th

e com

pany

in th

ird re

gion).

(

3) Re

invest

ed by

the s

urplus

from

a ma

inlan

d com

pany

estab

lishe

d thro

ugh a

third

regio

n.

(4)

Othe

r meth

ods

Note

2: Th

e inv

estme

nt inc

ome (

loss)

recog

nized

in cu

rrent

perio

d:

(

1)Plea

se sp

ecify

if no i

nvest

ment

incom

e (los

s) ha

s been

reco

gnize

d as s

till in

the p

repara

tion s

tage.

(

2)The

inve

stmen

t inco

me (lo

ss) w

ere de

termi

ned b

ased o

n the

follo

wing

:A.

The f

inanc

ial re

port w

as au

dited

and c

ertifie

d by a

n inte

rnatio

nal a

ccoun

ting f

irm in

coop

eratio

n with

an R

.O.C

. acco

untin

g firm

.B.

The f

inanc

ial st

ateme

nts ce

rtific

ated b

y the

CPA

of th

e pare

nt co

mpan

y in T

aiwan

.C.

Othe

rs.No

te 3:

Initia

l inve

stmen

t amo

unts

deno

mina

ted in

forei

gn cu

rrenc

ies ar

e tran

slated

into

New

Taiw

an D

ollars

using

the s

pot ra

tes at

the f

inanc

ial re

port d

ate.

US d

ollars

exch

ange

rate

on D

ecemb

er 31

, 201

9: 29

.9800

0

R

MB

exch

ange

rate

on D

ecemb

er 31

, 201

9: 4.3

0500

Note

4: Th

e tran

sactio

ns am

ong t

he co

nsold

iated

entiti

es we

re eli

mina

ted in

the c

onsol

idated

finan

cial s

tatem

ents.

Note

5: R

einve

sted t

hroug

h Forw

ard D

evelo

pmen

t Co.,

Ltd.

by re

mittin

g the

ivest

ment

fundin

g and

equip

ment

invest

ment.

No

te 6:

Refer

to th

e inv

estme

nt co

mpan

y nam

e colu

mn fo

r third

regio

n inv

estme

nt co

mpan

ies.

Note

7: Re

fer to

Atta

chme

nt 8 f

or inv

estme

nt pe

rcenta

ges i

n all i

nvest

ees of

the C

ompa

ny.

Note

8: Ca

lculat

ed by

the n

et wo

rth of

the c

onsol

idated

finan

cial s

tatem

ent o

f the C

ompa

ny.

Note

9: Ta

tung F

ine C

hemi

cals C

o., Lt

d. inv

ested

in su

bsidi

aries

in Ch

ina th

rough

its su

bsidi

ary Sh

ang C

hih In

terna

tiona

l Che

mical

Indu

stry C

o., Lt

d.No

te 10

: Inclu

ding s

tock d

ivide

nd of

USD

1,267

thou

sand,

equip

ments

inve

stmen

t of U

SD14

0 tho

usan

d and

incre

ase in

paid

in cap

ital o

f USD

1,600

thou

sand d

ue to

the m

erger

of W

ujian

g Sha

nghu

a Mate

rial T

echno

logy C

o., Lt

d and

Tatun

g Coa

tings

(Kun

shan

) Co.,

Ltd.

Note

11: T

otal a

moun

t of p

aid-in

capit

al inc

luded

cash

capit

al inc

rease

of US

D450

thou

sand t

o Hua

ian Ta

tung A

dvan

ced Te

chno

logy M

ateria

ls Co

., Ltd.

Note

12: S

ince T

atung

Coa

tings

(Kun

shan

) Co.,

Ltd.

acquir

ed W

ujian

g Sha

nghu

a Mate

rial T

echno

logy C

o., Lt

d, the

total

amou

nt of

paid-

in cap

ital o

f Tatu

ng C

oatin

gs (K

unsh

an) C

o., Lt

d. inc

luded

Wuji

ang S

hang

hua M

ateria

l Tech

nolog

y Co.,

Ltd,'

s paid

-in-ca

pital.

Note

13: C

hung

hwa P

icture

Tube

s, Ltd

. Inve

sted i

n sub

sidiar

ies in

Chin

a thro

ugh i

ts su

bsidi

ary: C

hung

hwa P

icture

Tube

s (Be

rmud

a) Ltd

. No

te 14

: The

accu

mulat

ed In

vestm

ent in

Main

land C

hina i

nclud

ed in

vestm

ent fu

nd as

a res

ult of

Forw

ard D

evelo

pmen

t Co.,

Ltd.

sellin

g CPT

F Visu

al Di

splay

(Fuz

hou)

Ltd. T

he ca

sh co

nside

ration

was

NTD1

2,999

not re

mitte

d.No

te 15

: Elite

Oxy

gen A

nd H

ealthc

are C

o., Lt

d fini

shed

liquid

ation

proc

ess on

Aug

ust 2

019 a

nd ca

pital

repatr

iation

on O

ctorbe

r 201

9. In

addit

ion, a

fter th

e liqu

idatio

n proc

ess w

as fin

ished

, it w

ill ap

ply to

the I

nvest

ment

Comm

ission

, MOE

A to

cancel

the i

nvest

ment

amou

nt au

thoriz

ation

.

The r

emain

ing ca

pital

of US

D26 t

hous

and c

an no

t be r

emitte

d back

, thus

it wa

s reco

gnize

d as

invest

ment

loss.

Note

16: T

atung

Infor

matio

n Tech

nolog

y (Jia

ngsu

) Co.,

Ltd.

acquir

ed W

u-jian

g Tatu

ng El

ectron

ics Tr

ading

Co.

Ltd, th

us th

e inv

estme

nt inc

luded

Wu-j

iang T

atung

Elect

ronics

Trad

ing C

o. Ltd

,'s pa

id-in-

capita

l.No

te 17

: Tatu

ng In

forma

tion T

echno

logy (

Jiang

su) C

o., Lt

d. acq

uired

Wu-j

iang T

atung

Elect

ronics

Trad

ing C

o. Ltd

, thus

the c

arryin

g valu

e as o

f Dece

mber

31, 2

019 i

nclud

ed W

u-jian

g Tatu

ng El

ectron

ics Tr

ading

Co.

Ltd.'s

value

.

$2,84

1,674

$17,1

93,54

4

Accu

mulat

ed In

vestm

ent in

Main

land C

hina

Uppe

r Lim

it on I

nvest

ment

((Note

8)De

cembe

r 31,2

019 (

Note1

4)

Invest

or co

mpan

y((N

ote 7)

Invest

ee co

mpan

yM

ain B

usine

sses a

nd Pr

oduc

tsTo

tal A

moun

t of

Paid-

in Ca

pital

Meth

od of

Inv

estme

nt

((Note

1)

Invest

ment

incom

e(lo

ss) re

cogn

ized

(Note

2 an

d 4)

Carry

ing V

alue a

s of

Decem

ber 3

1, 20

19((N

ote 4)

Accu

mulat

ed In

ward

Remi

ttanc

e of E

arning

sas

of Ou

tflow

Decem

ber 3

1, 20

19Inv

estme

nt Flo

ws

Accu

mulat

edOu

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231



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,877

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, Ltd

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ATTA

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ENT

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otal

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ts (N

ote 3

)

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1:

The C

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d its

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idiar

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rans

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ount

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ulate

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g ba

lance

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tal co

nsol

idate

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d "0

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oded

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ting

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n th

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le ab

ove.

Note

2:

Tran

sacti

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re ca

tegor

ized

as fo

llows

:

1 Pa

rent

com

pany

to su

bsid

iary

2

Subs

idiar

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pare

nt co

mpa

ny

3 Su

bsid

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o su

bsid

iary

4

Pare

nt co

mpa

ny to

asso

ciates

232

Appendix - Parent company only statements


TATUNG CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS

WITH

INDEPENDENT AUDITORS’ REPORT

December 31, 2019 AND 2018

Address: 22, Sec. 3, Chung-shan N. Rd., Taipei city, Taiwan R.O.C.Telephone: 886-2-2592-5252

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

Appendix - Parent company only statements Appendix - Parent company only statements

342TATUNG 2019 Annual Report2

Independent Auditors’ Report

English Translation of a Report Originally Issued in Chinese

The Board of Directors and ShareholdersTatung Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Tatung Co., Ltd. (“theCompany”) as of December 31, 2019 and 2018, and the related parent company only statements ofcomprehensive income, changes in equity and cash flows for the years ended December 31, 2019 and2018, and notes to the financial statements including a 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 parent companyonly financial statements referred to above present fairly, in all material respects, the parent companyonly financial position of the Company as of December 31, 2019 and 2018, and their parent companyonly financial performance and its cash flows for the years ended December 31, 2019 and 2018, inconformity with the requirements of the Regulations Governing the Preparation of Financial Reportsby Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certificationof Financial Statements by Certified Public Accountants, No.1090360805 letter issued by theFinancial Supervisory Commission on 25 February 2020, and the auditing standards generallyaccepted in the Republic of China. Our responsibilities under those standards are further described inthe Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements sectionof our report. We are independent of the Company in accordance with the Norm of ProfessionalEthics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilledour other ethical responsibilities in accordance with the Norm. Based on our audits and the reports ofother auditors, we believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Emphasis of Matter–Derecognition of certain subsidiaries

As mentioned in Notes 6(9) and 6(25) in the parent company only financial statements, Green EnergyTechnology Co., Ltd. (“GET”), was resolved for dissolution and liquidation by the provisionalshareholders’ meeting on August 30, 2019. As the Company lost control of GET and its subsidiaries,the parent company only financial statements recognized the profits (losses) of derecognition. Ourconclusion is not modified in respect of this matter.

Emphasis of Matter – Application of New Accounting Standards

As stated in Note 3 to the parent company only financial statements, the Company applied theInternational Financial Reporting Standard 16, “Leases” starting from January 1, 2019, and electednot to restate the parent company only financial statements for prior periods. Our conclusion is notmodified in respect of this matter.



Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of 2019 the parent company only financial statements. These matters were addressed in thecontext of our audit of the parent company only financial statements as a whole, and in forming ouropinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue Recognition

The Company recognized net sales in the amount of NT$17,825,749 thousand in 2019. TheCompany operated in various industries and the sales amount was relatively large. The sales termsvaried accordingly, that the appropriateness of timing of revenue recognition on when performanceobligation is satisfied would affect revenue recognized. Therefore, we considered this a key auditmatter.

Our audit procedures included, but not limited to, assessing the appropriateness of the accountingpolicy of revenue recognition; evaluating and testing the design and operating effectiveness ofinternal controls in the sales cycle; selecting samples to perform tests of details, examiningcontracts 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 vouchingthem to supporting evidences to ensure the reasonableness of revenue cut-off; performinganalytical procedures on gross margin and sales from major customers; reviewing significantsubsequent sales returns and discounts to verify the occurrence of sales transactions andreasonableness of the timing of revenue recognition.

Please refer to Notes 4, 5 and 6 to the parent company only financial statements for the disclosureof the matter of operating revenues.

2. Contingent liabilities

Chunghwa Picture Tubes Technology (Group) Co., Ltd. (“CPTTG”) filed an action in FujianHigher People's Court against Chunghwa Picture Tubes (Bermuda) Ltd.(“CPTB”) for RMB 1.914billion 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 areliable for joint liabilities, and increased the amount of claim to RMB 3.029 billion on May 10,2019. As the Company holds 39.67% shares of comprehensive shareholding percentage of CPT.And CPT has 100% ownership in CPTB according to equity method, and that whether theCompany is jointly liable, are material to the parent only financial statements. The Company andCPT 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 beconfirmed by uncertain future events that are not wholly within the control of the entity or theamount of the obligation could not be measured reliably, therefore the Company could notrecognize the liability. The assertion involved significant judgement and assessment of themanagement. Therefore, we considered this a key audit matter.



Our audit procedures included, but not limited to, obtaining and examining the supportingdocuments of the assertion; examining board of directors meeting minutes and legal documents;inquiring the management, the internal legal team and the external legal counsel; obtaining legalopinion from the external legal counsel to confirm the reasonableness and conformity of theaccounting judgment and assessment.

Please refer to Note 9 to the parent company only financial statements for the disclosure ofsignificant contingent liability of the Company.

3. Investment in equity method

As of December 31, 2019, the Company’s investment measured with equity method is NT$59,090,267 thousand and was accounted for 72% of the total asset of the Company, which isdeemed material to the parent company only financial statements of the Company. To examinewhether the Company has substantial control over these investee companies, if it has, to confirmwhether they have been treated as subsidiaries according to regulations, and been included in theconsolidated financial statements. Furthermore, for the long-term equity investments that havesignificant influence on the invested companies, to confirm whether they were evaluated by theequity method that the above accounting treatment has a significant impact on the parent companyonly financial statements, therefore, we considered this a key audit matter.

Our audit procedures included, but not limited to, obtaining the latest investment structure chartregularly, querying related changes, and understanding the appropriateness of the accounting andclassification of the investment measured with equity method of the Company. Evaluate theholding shares in each investment, analyze the structures of board of directors and management,and the shareholders and related investments contracts to evaluate whether the Company hascomplied with TIFRS for its investments.

Moreover, when confirming the investment income and loss and other comprehensive incomemeasured with equity method, we confirmed whether the related financial statements have beencertified by accountants and whether the impact of significant items of the financial statements ofthe investee company in the financial statements have been evaluated and whether suchinvestments measured with equity method have been in compliance with IFRS and IAS. Inaddition, we sent confirmations or performed physical count to verify the existence and ownershipof the investment in equity method.

Please refer to Notes 4 and 6 to the parent company only financial statements for the disclosure ofthe investments in equity method.



4. Non-financial Assets Impairment

As of December 31, 2019, the net value of property, plant and equipment accounted for 5% of the totalasset of the Company, which is deemed material to the parent company only financial statements ofthe Company. The Company occurred operating loss in recent years, which indicated a possibility ofimpairment of property, plant and equipment as of December 31, 2019. In addition, the assessmentprocess of impairment of aforementioned non-financial assets relied highly on the subjective judgmentand involves uncertainty in estimation. Therefore, we considered this a key audit matter.

Our audit procedures included, but not limited to obtaining representation letter; examining theevaluation that the Company made on impairment of property, plant and equipment and cashgenerating unit; obtaining information on assessing the recoverable amount and assumptions. Wealso examined the Company’s historical information and other business’ financial information toevaluate whether the assumptions such as sales growth rate, gross margin and operating profitmargin applied in the cash flow forecast are reasonable, and that whether assumptions for variousdata are consistent. The recoverable amounts, which deducted costs of disposal from fair value,were evaluated the relevance and reliability with respect to the methodology, assumptions, sourceof information and significant parameters (such as market price), to confirm the reasonableness ofthe result of the impairment test.

Please refer to Notes 5 and 6 to the parent company only financial statements for the disclosure ofproperty, plant and equipment of the Company as of December 31, 2019.

Other Matter – Making Reference to the Audit(s) of (a) Component Auditor(s)

We did not audit the financial statements of certain invested companies, and were audited by otherauditors, whose reports thereon have been furnished to us, and our opinions expressed herein are basedsolely on the audit reports of the other auditors. The investment in these invested companies under equitymethod amounted to NT$5,220,316 thousand and NT$5,222,643 thousand, accounting for 6% and 7% oftotal assets as of December 31, 2019 and 2018, respectively. The related shares of profits (losses)recognized from subsidiaries, the associates and joint ventures under the equity method amounted toNT$107,773 thousand and NT$145,727 thousand, accounting for 4% and (1)% of the net income (loss)before tax for the years ended December 31 2019 and 2018, respectively; and the related shares of othercomprehensive income from the subsidiaries, associates and joint ventures under the equity methodamounted to NT$48,004 thousand and NT$(3,344) thousand, accounting for 12% and 3% of the othercomprehensive income, net, for the years ended December 31, 2019 and 2018, respectively.

Responsibilities of Management and Those Charged with Governance for the Parent CompanyOnly Financial Statements

Management is responsible for the preparation and fair presentation of the parent company onlyfinancial statements in accordance with Regulations Governing the Preparation of Financial Reportsby Securities Issuers, and for such internal control as management determines is necessary to enablethe preparation of parent company only financial statements that are free from material misstatement,whether due to fraud or error.



In preparing the parent company only financial statements, management is responsible for assessingthe Company’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern, and using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (inclusive of the Audit Committee) are responsible for overseeingthe Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financialstatements as a whole are free from material misstatement, whether due to fraud or error, and to issuean auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, butis not a guarantee that an audit conducted in accordance with the auditing standards generallyaccepted in 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 theaggregate, they could reasonably be expected to influence the economic decisions of users taken onthe basis of these parent company only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, weexercised professional judgment and maintained professional skepticism throughout the audit. We also:

1. Identified and assessed the risks of material misstatement of the parent company only financialstatements, whether due to fraud or error, design and perform audit procedures responsive to thoserisks, 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 oneresulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

2. Obtained an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control.

3. Evaluated the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

4. Concluded on the appropriateness of management’s use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the Company’s ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the parent company only financial statements or, ifsuch disclosures are inadequate, to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor’s report. However, future events or conditions maycause the Company to cease to continue as a going concern.



5. Evaluated the overall presentation, structure and content of the parent company only financialstatements, including the disclosures, and whether the parent company only financial statementsrepresent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtained sufficient appropriate audit evidence regarding the financial information of the entitiesor business activities within the Company to express an opinion on the parent company onlyfinancial statements. We are responsible for the direction, supervision and performance of thegroup audit.

We communicated with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identified during our audit.

We also provided those charged with governance with a statement that we have complied withrelevant ethical requirements regarding independence, and communicated with them all relationshipsand 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 determined those mattersthat were of most significance in the audit of the parent company only financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in our auditor’sreport unless laws or regulations preclude public disclosure about the matter or when, in extremelyrare circumstances, we determine that a matter should not be communicated in our report because theadverse consequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

Su-Wen Lin

Hsuan-Hsuan Wang

Ernst & Young, TaiwanMarch 25, 2020

Notice to ReadersThe accompanying financial statements are intended only to present the financial position and results of operations and cash flows inaccordance with accounting principles and practices generally accepted in the Republic of China on Taiwan and not those of any otherjurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally acceptedand applied in the Republic of China on Taiwan.



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SHEE

TSAs

of D

ecem

ber 3

1, 2

019

and

Dece

mbe

r 31,

201

8(E

xpre

ssed

in T

hous

ands

of N

ew T

aiwan

Dol

lars)

8



Liab

ilitie

s and

Equ

ityAm

ount

％Am

ount

％Cu

rrent

liab

ilitie

sSh

ort-t

erm

loan

s$1

,528

,691

2$4

,601

,696

6Sh

ort-t

erm

not

es an

d bi

lls pa

yabl

e15

1,79

4-

251,

911

-Fi

nanc

ial li

abili

ties a

t fair

valu

e thr

ough

pro

fit o

r los

s, cu

rrent

2,80

8-

--

Cont

ract

liabi

lities

, cur

rent

364,

576

-40

2,96

71

Acco

unts

paya

ble

2,46

1,38

03

2,82

7,96

34

Acco

unts

paya

ble -

relat

ed p

artie

s34

7,39

8-

450,

407

1Ot

her p

ayab

les1,

115,

091

11,

012,

242

1Ot

her p

ayab

les- r

elated

par

ties

2,09

7,67

13

80,5

13-

Prov

ision

, cur

rent

181,

225

-84

,912

-Le

ase l

iabili

ty, c

urre

nt26

2,26

7-

--

Adva

nced

rece

ipts

588,

899

110

0,18

1-

Defe

rred

reve

nue

18,8

04-

49,7

94-

Curre

nt p

ortio

n of

long

-term

loan

s2,

250,

488

33,

265,

330

4Ot

her c

urre

nt li

abili

ties -

oth

ers

46,8

77-

26,1

01-

Total

curre

nt li

abili

ties

11,4

17,9

6913

13,1

54,0

1717

Non-

curre

nt li

abili

ties

Long

-term

loan

s23

,526

,251

2825

,290

,318

32De

ferre

d tax

liab

ilitie

s34

1,91

1-

539,

335

1Le

ase l

iabili

ty, n

on-c

urre

nt35

,932

--

-Lo

ng-te

rm p

ayab

les-

-23

,526

-Ne

t def

ined

ben

efit

liabi

lity

545,

854

165

4,14

91

Guar

antee

dep

osits

1,07

9-

1,05

0-

Defe

rred

cred

it fo

r inv

estm

ents

acco

unted

for u

nder

the e

quity

meth

od10

,366

,111

135,

969,

177

7To

tal n

on-c

urre

nt li

abili

ties

34,8

17,1

3842

32,4

77,5

5541

Total

liab

ilitie

s46

,235

,107

5545

,631

,572

58Eq

uity

Capi

tal st

ock

Com

mon

stoc

k23

,395

,367

2823

,395

,367

30Ca

pital

rese

rve

3,36

3,08

54

3,28

3,03

24

Retai

ned

earn

ings

Lega

l res

erve

36,3

54-

36,3

54-

Spec

ial re

serv

e7,

738,

019

1018

,327

,409

23Un

appr

opria

ted ea

rnin

g(ac

cum

ulate

d de

ficit)

2,55

9,76

24

(10,

243,

598)

(13)

　To

tal re

taine

d ea

rnin

gs10

,334

,135

148,

120,

165

10Ot

her e

quiti

esEx

chan

ge d

iffer

ence

s on

trans

latio

n of

fore

ign

oper

ation

s(7

79,3

40)

(1)

(756

,437

)(1

)Un

reali

zed

gain

s or l

osse

s on

finan

cial a

ssets

mea

sure

d at

fair

valu

e thr

ough

oth

er co

mpr

ehen

sive i

ncom

e76

,182

-14

1,06

3-

Reva

luati

on su

rplu

s of r

eal e

state

266,

779

--

-Eq

uity

relat

ed to

non-

curre

nt as

sets

class

ified

as h

eld fo

r sale

30,9

54-

30,9

54-

　To

tal o

ther

equi

ties

(405

,425

)(1

)(5

84,4

20)

(1)

Trea

sury

stoc

k(3

0,85

4)-

(1,2

14,0

21)

(1)

Equi

ty at

tribu

table

to sh

areh

olde

rs of

the p

aren

t36

,656

,308

4533

,000

,123

42To

tal li

abili

ties a

nd eq

uity

$82,

891,

415

100

$78,

631,

695

100

Engl

ish T

rans

latio

n of

Par

ent C

ompa

ny o

nly F

inan

cial S

tatem

ents

Orig

inall

y Iss

ued

in C

hine

se

TATU

NG C

O., L

TD.

PARE

NT C

OMPA

NY O

NLY

BALA

NCE

SHEE

TSAs

of D

ecem

ber 3

1, 2

019

and

Dece

mbe

r 31,

201

8(E

xpre

ssed

in T

hous

ands

of N

ew T

aiwan

Dol

lars)

Dece

mbe

r 31,

201

9De

cem

ber 3

1, 2

018

Cont

ents

9



Contents Amount % Amount %Operating revenues $17,940,959 101 $19,348,846 100Less: Sales returns (19,583) - (88,135) -Less: Sales allowances (95,627) (1) (122,223) -Net operating revenues 17,825,749 100 19,138,488 100Operating costs (16,036,722) (90) (17,074,471) (89)Net gross profit 1,789,027 10 2,064,017 11Unrealized gross profit (58,855) - (60,493) -Realized gross profit 70,623 - 80,105 -Gross profit 1,800,795 10 2,083,629 11

Operating expensesSales and marketing (905,937) (5) (1,125,838) (6)General and administrative (1,085,563) (6) (698,265) (4)Research and development (654,565) (4) (642,046) (3)Expected credit losses (18,669) - (9,172) -

Subtotal (2,664,734) (15) (2,475,321) (13)Net other income and expense 82 - - -Operating loss (863,857) (5) (391,692) (2)

Non-operating income and expenseOther income 396,614 2 283,862 2Other gains and (losses) (99,746) - (330,921) (2)Finance costs (749,022) (4) (717,637) (4)Expected credit (losses) gains (1,372,670) (8) 13,189 -Share of profit (losses) of subsidiaries, associates and joint ventures accounted for using equity method 5,291,018 30 (9,562,250) (50)

Subtotal 3,466,194 20 (10,313,757) (54)

Income (loss) before income tax 2,602,337 15 (10,705,449) (56)Income tax benefit 273,542 2 62,543 -Net Income (loss) 2,875,879 17 (10,642,906) (56)

Other comprehensive income (loss)Items that will not be reclassified subsequently to profit or loss:

Remeasurements of defined benefit plans (15,699) - (37,736) -Revaluation surplus of real estate 56,942 - - -Unrealized gains or losses from equity instruments investments measured at fair value 67,705 - (22,580) -

through other comprehensive income

Share of other comprehensive income of associates and joint ventures which will 326,277 2 (411,934) (2)not be reclassified subsequently to profit or loss

Items that may be reclassified subsequently to profit or loss:Equity related to non-current assets classified as held for sale - - 30,955 -Share of other comprehensive income (loss) of associates and joint ventures which may be (22,903) - 342,240 2

reclassified subsequently to profit or lossTotal other comprehensive income (loss) , net of income tax 412,322 2 (99,055) -Total comprehensive income (loss) $3,288,201 19 $(10,741,961) (56)

Earnings (loss) per shareBasic earnings (loss) per share (NT$) $1.24 $(4.75)

Diluted earnings (loss) per share (NT$) $1.24 $(4.75)

2019 2018For the years ended December 31

English Translation of Parent Company only Financial Statements Originally Issued in Chinese

TATUNG CO., LTD.PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2019 and 2018(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Share)

10



Cont

ents

Comm

on S

tock

Capi

tal R

eser

veLe

gal R

eser

veSp

ecial

Res

erve

Unap

prop

riated

Earn

ings

(Acc

umul

ated

Defic

its)

Exch

ange

Diffe

renc

es o

nTr

ansla

tion o

fFo

reign

Oper

ation

s

Gain

or L

oss f

rom

Inve

stmen

ts in

Equit

yIn

strum

ents

Mea

sure

d at F

airVa

lue t

hrou

gh O

ther

Comp

rehe

nsive

Inco

me

Reva

luati

onSu

rplu

s of R

eal

Estat

e

Equi

ty R

elated

toNo

n-cu

rrent

Asse

ts Cl

assif

iedas

Held

for S

aleTr

easu

ry S

tock

Total

$23,

395,

367

$3,2

73,5

05$3

6,35

4$4

,753

,026

$13,

855,

398

$(1,

098,

677)

$617

,279

$-$-

$(1,

629,

899)

$43,

202,

353

--

-13

,855

,398

(13,

855,

398)

--

--

--

Spec

ial re

serv

e use

d to o

ffset

accu

mulat

ed d

eficit

s-

--

(281

,015

)28

1,01

5-

--

--

-

Net l

oss i

n 201

8-

--

-(1

0,64

2,90

6)-

--

--

(10,

642,

906)

Othe

r com

preh

ensiv

e (los

s) inc

ome i

n 201

8-

--

-(3

5,63

1)34

2,24

0(4

36,6

18)

-30

,954

-(9

9,05

5)

--

--

(10,

678,

537)

342,

240

(436

,618

)-

30,9

54-

(10,

741,

961)

Subs

idiar

y disp

osal

of p

aren

t com

pany

shar

es is

trea

ted as

trea

sury

shar

es-

115,

169

--

--

--

-41

5,87

853

1,04

7

Chan

ges i

n own

ersh

ip in

teres

ts in

subs

idiar

ies-

(105

,642

)-

-11

4,32

6-

--

--

8,68

4

--

--

39,5

98-

(39,

598)

--

--

Balan

ce as

of

Dece

mber

31,

201

8$2

3,39

5,36

7$3

,283

,032

$36,

354

$18,

327,

409

$(10

,243

,598

)$(

756,

437)

$141

,063

$-$3

0,95

4$(

1,21

4,02

1)$3

3,00

0,12

3

$23,

395,

367

$3,2

83,0

32$3

6,35

4$1

8,32

7,40

9$(

10,2

43,5

98)

$(75

6,43

7)$1

41,0

63$-

$30,

954

$(1,

214,

021)

$33,

000,

123

Spec

ial re

serv

e use

d to o

ffset

accu

mulat

ed d

eficit

s-

--

(10,

243,

598)

10,2

43,5

98-

--

--

-

Reve

rsal o

f spe

cial r

eser

ve-

--

(345

,792

)34

5,79

2-

--

--

-

Net i

ncom

e in 2

019

--

--

2,87

5,87

9-

--

--

2,87

5,87

9

Othe

r com

preh

ensiv

e inc

ome (

loss)

in 20

19-

--

-(2

6,84

2)(2

2,90

3)19

5,28

826

6,77

9-

-41

2,32

2

--

--

2,84

9,03

7(2

2,90

3)19

5,28

826

6,77

9-

-3,

288,

201

Subs

idiar

y disp

osal

of p

aren

t com

pany

shar

es is

trea

ted as

trea

sury

shar

es-

--

-(7

62,4

03)

--

--

1,18

3,16

742

0,76

4

Chan

ges i

n own

ersh

ip in

teres

ts in

subs

idiar

ies-

80,0

53-

-(1

32,8

33)

--

--

-(5

2,78

0)

--

--

260,

169

-(2

60,1

69)

--

--

Balan

ce as

of D

ecem

ber 3

1, 2

019

$23,

395,

367

$3,3

63,0

85$3

6,35

4$7

,738

,019

$2,5

59,7

62$(

779,

340)

$76,

182

$266

,779

$30,

954

$(30

,854

)$3

6,65

6,30

8

Engli

sh T

rans

lation

of P

aren

t Com

pany

only

Fina

ncial

Stat

emen

ts Or

igina

lly Is

sued

in C

hines

e

TATU

NG C

O., L

TD.A

ND S

UBSI

DIAR

IES

PARE

NT C

OMPA

NY O

NLY

STAT

EMEN

TS O

F CH

ANGE

S IN

EQU

ITY

Disp

osal

of eq

uity

instr

umen

ts me

asur

ed at

fair

valu

e thr

ough

oth

er co

mpre

hens

ive in

come

For t

he Y

ears

End

ed D

ecem

ber 3

1, 2

019

and 2

018

( Ex

pres

sed i

n Tho

usan

ds o

f New

Taiw

an D

ollar

s)

Balan

ce as

of J

anua

ry 1

, 201

8

Spec

ial re

serv

e app

ropr

iated

(Sec

uriti

es &

Fut

ures

Bur

eau,

Fina

ncial

Sup

ervis

ory

Comm

ission

Lett

er N

o.103

0006

415)

Total

comp

rehe

nsive

(los

s) inc

ome

Disp

osal

of eq

uity

instr

umen

ts me

asur

ed at

fair

valu

e thr

ough

oth

er co

mpre

hens

ive in

come

Balan

ce as

of J

anua

ry 1

, 201

9

Equi

ty A

ttrib

utab

le to

Equ

ity H

older

s of t

he P

aren

t

Retai

ned E

arnin

gsOt

her C

apita

l Res

erve

s

Total

comp

rehe

nsive

inco

me (l

oss)

11



Cash

flow

s fro

m op

erati

ng ac

tiviti

es:

Cash

flow

s fro

m inv

estin

g acti

vities

：

Net i

ncom

e (lo

ss) b

efore

inco

me ta

x$2

,602,

337

$(10

,705

,449)

Disp

osal

of fi

nanc

ial as

sets

at fa

ir va

lue th

roug

h oth

er co

mpre

hens

ive in

come

95,12

555

,471

Adjus

tmen

ts to

reco

ncile

net i

ncom

e (lo

ss) t

o ne

t cas

h gen

erate

d fro

m op

erati

ng ac

tiviti

es:

Acqu

isitio

n of f

inanc

ial as

sets

at am

ortis

ed co

st(2

,996

,594)

(162

,795

)De

prec

iatio

n exp

ense

766,9

4158

7,687

Disp

osal

of fi

nanc

ial as

sets

at am

ortis

ed co

st2,0

96,2

891,0

36,7

12Am

ortiz

ation

expe

nse

9,111

15,93

9Ac

quisi

tion o

f inv

estm

ents

acco

unted

for u

sing e

quity

meth

od(2

,844

,569)

(657

,790

)Ex

pecte

d cre

dit lo

sses

(gain

)1,3

91,3

39(4

,017

)Di

spos

al of

inve

stmen

ts ac

coun

ted fo

r usin

g equ

ity m

ethod

181,3

7329

8,216

Net g

ain fr

om fi

nanc

ial as

set o

r liab

ility a

t fair

value

thro

ugh p

rofit

or l

oss

(19,

936)

(25,

785)

Cash

refu

nd ca

pital

redu

ction

of i

nves

tmen

ts ac

coun

ted fo

r und

er th

e equ

ity m

ethod

367,0

00-

Inter

est e

xpen

ses

749,0

2271

7,637

Acqu

isitio

n of p

rope

rty, p

lant a

nd eq

uipme

nt(3

26,0

03)

(419

,498

)In

teres

t inc

ome

(6,3

24)

(17,

515)

Disp

osal

of pr

oper

ty, p

lant a

nd eq

uipme

nt1,4

383,3

00Di

viden

d inc

ome

(31,

046)

(41,

753)

Incr

ease

in re

ceipt

s in a

dvan

ce du

e to

dispo

sal o

f ass

ets48

8,756

100,1

68Sh

are o

f (pr

ofit)

loss

of s

ubsid

iaries

, ass

ociat

es an

d joi

nt ve

ntur

es ac

coun

ted fo

r usin

g equ

ity m

ethod

(5,2

91,01

8)9,5

62,2

51In

crea

se in

depo

sit-o

ut-

(233

,859

)Lo

ss (g

ain) o

n disp

osal

of pr

oper

ty, p

lant a

nd eq

uipme

nt1,8

36(1

,017

)De

crea

se in

depo

sits-o

ut13

4,299

-(G

ain) l

oss o

n disp

osal

of in

vestm

ents

(607

,137

)19

8,688

Acqu

isitio

n of i

ntan

gible

asse

ts(2

41)

(4,6

93)

Impa

irmen

t los

s on n

on-fi

nanc

ial as

sets

230,1

974,7

82In

crea

se in

long

-term

rece

ivable

-15

Unre

alize

d los

s fro

m sa

les(1

1,76

8)(1

9,61

2)Ne

t cas

h (us

ed in

) pro

vided

by in

vesti

ng ac

tiviti

es(2

,803

,127)

15,24

7Lo

ss fr

om le

ase m

odifi

catio

n82

-Ch

ange

s in a

ssets

and l

iabilit

ies fr

om o

pera

ting a

ctivit

ies:

Cont

ract

asse

ts74

,406

(2,4

85)

Notes

rece

ivable

77,61

258

,339

Acco

unts

rece

ivable

69,31

4(4

8,08

0)Ac

coun

ts re

ceiva

ble -

relat

ed pa

rties

144,7

4937

6,067

Cash

flow

s fro

m fin

ancin

g asti

vities

：

Othe

r rec

eivab

les(4

0,41

5)34

5In

crea

se (d

ecre

ase)

in sh

ort-t

erm

loan

s(3

,073

,005)

(273

,742

)Ot

her r

eceiv

ables

- re

lated

parti

es37

9,194

72,15

9In

crea

se in

shor

t-ter

m no

tes a

nd bi

lls pa

yable

-14

9,904

Inve

ntor

ies47

4,365

(748

,359

)De

crea

se in

shor

t-ter

m no

tes a

nd bi

lls pa

yable

(100

,117

)(2

00,0

00)

Prep

ayme

nts

292,1

81(4

63,0

21)

Proc

eeds

from

long

-term

loan

s1,1

43,2

7310

,021,

330

Fina

nce l

ease

rece

ivable

(136

,391

)-

Repa

ymen

t of l

ong-

term

loan

s(3

,922

,182)

(9,7

04,05

2)Op

erati

ng le

ase r

eceiv

able

(132

)-

Incr

ease

(Dec

reas

e) in

guar

antee

depo

sits

29(7

05)

Fina

ncial

asse

ts at

fair

value

thro

ugh p

rofit

or l

oss

9,616

21,59

7De

crea

se in

long

-term

paya

bles

-(2

4,13

7)Ot

her n

on-c

urre

nt as

sets

(127

,487

)14

1,061

Incr

ease

in o

ther

paya

bles -

relat

ed pa

rties

1,950

,000

-Lo

ng-te

rm re

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12



TATUNG CO., LTD.NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2019 and 2018(Expressed in Thousands of New Taiwan Dollars unless otherwise specified)

1. Organization operations

Established in 1918, Tatung Company (the “Company”) was incorporated under the Company Actof the Republic of China (“R.O.C.”) and underwent reorganization in 1939. The total capital atthat time was Taiwan Yuan $180,000, later increased to Taiwan Yuan $20,000,000 after severalcapital injections. After the reformation of monetary system in 1949, the total capital wasconverted to the equivalent of New Taiwan dollars (“NTD”) 200,000. As of December 31, 2019,the issued and registered capital was NTD23,395,367 thousand. The main activities of theCompany are as follows:

(1) The design, manufacture, sale, installation, network system, automation system, lease,maintenance service, import, export and agency of the following products:

○1 Steel manufacturing machinery ○2 Industrial appliances○3 Household appliances ○4 Refrigerators○5 Air conditioners ○6 Metal processing machinery○7 Electronic products ○8 Wire and cable○9 Chemical industry ○10 Cookware○11 Wood-made products ○12 Plastic products○13 Office equipment ○14 Audio products○15 Precision meters ○16 Transmission equipment○17 Transportation facilities ○18 Healthcare products○19 Microbe fermentation ○20 Construction○21 Furniture ○22 Solar wafers○23 Water treatment engineering ○24 Telecommunication equipment○25 Parking facilities ○26 Automation machinery○27 Semiconductors ○28 Real estate development and leasing

(2) Magazine publishing

(3) Customs brokerage

(4) General import/export (excluding permitted business)

(5) Development and leasing (excluding construction industry) of industrial parks on behalf ofthe competent authority.




(Expressed in Thousands of New Taiwan Dollars unless otherwise specified)

14

The investment plans should be approved by the Board of Directors; however, the investmentamount is not limited to the amount provided by Article 13 of Company Act, which states that thetotal investment amount shall not exceed 40% of the amount of its own paid-in capital.

The Company’s common shares were publicly listed on the Taiwan Stock Exchange (TWSE) onFebruary 9, 1962. The Company’s registered office and the main business location is at No. 22,Zhongshan North Road, Section 3, Taipei, Republic of China (R.O.C.).

2. Date and procedures of authorization of financial statements for issue

The parent company only financial statements of the Company for the years ended December 31,2019 and 2018 were authorized for issue in accordance with a resolution of the Board of Directors’meeting on March 12, 2020.

3. Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first-time certain standards andamendments

The Company applied for the first time International Financial Reporting Standards,International Accounting Standards, and Interpretations issued, revised or amended which arerecognized by Financial Supervisory Commission (“FSC”) and become effective for annualperiods beginning on or after January 1, 2019. The nature and the impact of each new standardand amendment that has a material effect on the Company is described below:

A. IFRS 16“Leases”

IFRS 16 “Leases” replaces IAS 17 “Leases”, IFRIC 4 “Determining whether anArrangement contains a Lease”, SIC-15 “Operating Leases - Incentives” and SIC-27“Evaluating the Substance of Transactions Involving the Legal Form of a Lease”.

The Company followed the transition provision in IFRS 16 and the date of initialapplication was January 1, 2019. The impacts arising from the adoption of IFRS 16 aresummarized as follows:





15

a. Please refer to Note 4 for the accounting policies before or after January 1, 2019.

b. For the definition of a lease, the Company elected not to reassess whether a contract was,

or contained, a lease on January 1, 2019. The Company was permitted to apply IFRS 16

to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but

not to apply IFRS 16 to contracts that were not previously identified as containing a

lease applying IAS 17 and IFRIC 4. That is, for contracts entered into (or changed) on

or after January 1, 2019, the Company need to assess whether contracts are, or contain,

leases applying IFRS 16. In comparing to IAS 17, IFRS 16 provides that a contract is,

or contains, a lease if the contract conveys the right to control the use of an identified

asset for a period of time in exchange for consideration. The Company assessed most of

the contracts are, or contain, leases and no significant impact arose.

c. The Company is a lessee and elects not to restate comparative information in accordance

with the transition provision in IFRS 16. Instead, the Company recognized the

cumulative effect of initially applying IFRS 16 as an adjustment to the opening balance

of retained earnings (or other component of equity, as appropriate) at the date of initial

application.

(a) Leases previously classified as operating leases

For leases that were previously classified as operating leases applying IAS 17, the

Company measured and recognized those leases as lease liability on January 1,

2019 at the present value of the remaining lease payments, discounted using the

lessee’s incremental borrowing rate on January 1, 2019, and; the Company chose,

amount equal to the lease liability adjusted by the amount of any prepaid or accrued

lease payments relating to that lease recognized in the balance sheet immediately

before January 1, 2019, on a lease-by-lease basis, to measure the right-of-use asset

at either:

On January 1, 2019, the Company’s right-of-use asset and lease liability increased

by NT$534,365 thousand and NT$534,365 thousand, respectively.





16

In accordance with the transition provision in IFRS 16, the Company used thefollowing practical expedients on a lease-by-lease basis to leases previouslyclassified as operating leases:

i. Apply a single discount rate to a portfolio of leases with reasonably similarcharacteristics.

ii. Rely on its assessment of whether leases are onerous immediately beforeJanuary 1, 2019 as an alternative to performing an impairment review.

iii. Elect to account in the same way as short-term leases to leases for which thelease term ends within 12 months of January 1, 2019.

iv. Exclude initial direct costs from the measurement of the right-of-use asset onJanuary 1, 2019.

v. Use hindsight, such as in determining the lease term if the contract containsoptions to extend or terminate the lease.

(b) Please refer to Note 4 and Note 6 for additional disclosure of lessee and lessor whichrequired by IFRS 16.

(c) As at January 1, 2019, the impacts arising from the adoption of IFRS 16 aresummarized as follows:

i. The weighted average lessee’s incremental borrowing rate applied to leaseliabilities recognized in the balance sheet on January 1, 2019 was 2.06%.

ii. The explanation for the difference between: 1) operating lease commitmentsdisclosed applying IAS 17 as at December 31, 2018, discounted using theincremental borrowing rate on January 1, 2019; and 2) lease liabilitiesrecognized in the balance sheet as at January 1, 2019 is summarized as follows:

Operating lease commitments disclosed applying IAS 17 as at December 31, 2018 $315,232Add: adjustments to the options to extend or terminate the lease that is

reasonably certain to exercise 233,083Subtotal 548,315Discounted using the incremental borrowing rate on January 1, 2019 534,365Add: the carrying value of lease payables as at December 31, 2018 -The carrying value of lease liabilities recognized as at January 1, 2019 $534,365





17

(2) Standards or interpretations issued, revised or amended, by International AccountingStandards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Companyas at the end of the reporting period are listed below.

Items New, Revised or Amended Standards and Interpretations Effective Date issuedby IASB

a Definition of a Business - Amendments to IFRS 3 January 1, 2020b Definition of Material - Amendments to IAS 1 and 8 January 1, 2020c Interest Rate Benchmark Reform - Amendments to IFRS

9, IAS 39 and IFRS 7January 1, 2020

A. Definition of a Business - Amendments to IFRS 3

The amendments clarify the definition of a business in IFRS 3 Business Combinations. Theamendments are intended to assist entities to determine whether a transaction should beaccounted for as a business combination or as an asset acquisition.

IFRS 3 continues to adopt a market participant’s perspective to determine whether anacquired set of activities and assets is a business. The amendments clarify the minimumrequirements for a business; add guidance to help entities assess whether an acquiredprocess is substantive; and narrow the definitions of a business and of outputs; etc.

B. Definition of a Material - Amendments to IAS 1 and 8

The main amendment is to clarify new definition of material. It states that “information ismaterial if omitting, misstating or obscuring it could reasonably be expected to influencedecisions that the primary users of general-purpose financial statements make on the basisof those financial statements, which provide financial information about a specificreporting entity.” The amendments clarify that materiality will depend on the nature ormagnitude of information. An entity will need to assess whether the information, eitherindividually or in combination with other information, is material in the context of thefinancial statements.

C. Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7

The amendments include a number of exceptions, which apply to all hedging relationshipsthat are directly affected by interest rate benchmark reform. A hedging relationship isdirectly affected if the interest rate benchmark reform gives rise to uncertainties about thetiming and or amount of benchmark-based cash flows of the hedged item or the hedginginstrument. Hence, the entity shall apply the exceptions to all hedging relationships directlyaffected by the interest rate benchmark reform.





18

The amendments include:

a. highly probable requirementWhen determining whether a forecast transaction is highly probable, an entity shallassume that the interest rate benchmark on which the hedged cash flows are based is notaltered as a result of the interest rate benchmark reform.

b. prospective assessmentsWhen performing prospective assessments, an entity shall assume that the interest ratebenchmark on which the hedged item, hedged risk and/or hedging instrument are basedis not altered as a result of the interest rate benchmark reform.

c. IAS 39 retrospective assessmentAn entity is not required to undertake the IAS 39 retrospective assessment (i.e. the actualresults of the hedge are within a range of 80–125%) for hedging relationships directlyaffected by the interest rate benchmark reform.

d. separately identifiable risk componentsFor hedges of a non-contractually specified benchmark component of interest rate risk,an entity shall apply the separately identifiable requirement only at the inception of suchhedging relationships.

The amendments also include the end of application of the exception’s requirements andthe related disclosures requirements of the amendments.

The abovementioned standards and interpretations were issued by IASB and endorsed by FSCso that they are applicable for annual periods beginning on or after January 1, 2020. Thesestandards and interpretations have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by International AccountingStandards Board (“IASB”) which are not endorsed by FSC are listed below.

Items New, Revised or Amended Standards and Interpretations Effective Date issuedby IASB

a IFRS 10 Consolidated Financial Statements and IAS 28Investments in Associates and Joint Ventures - Sale orContribution of Assets between an Investor and itsAssociate or Joint Ventures

To be determinedby IASB

b IFRS 17 Insurance Contracts January 1, 2021c Classification of Liabilities as Current or Non-current –

Amendments to IAS 1January 1, 2022





19

A. IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates andJoint Ventures - Sale or Contribution of Assets between an Investor and its Associate orJoint Ventures

The amendments address the inconsistency between the requirements in IFRS 10Consolidated Financial Statements and IAS 28 Investments in Associates and JointVentures, in dealing with the loss of control of a subsidiary that is contributed to anassociate or a joint venture. IAS 28 restricts gains and losses arising from contributions ofnon-monetary assets to an associate or a joint venture to the extent of the interestattributable to the other equity holders in the associate or joint ventures. IFRS 10 requiresfull profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amendedso that the gain or loss resulting from the sale or contribution of assets that constitute abusiness as defined in IFRS 3 between an investor and its associate or joint venture isrecognized in full. IFRS 10 was also amended so that the gains or loss resulting from thesale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3between an investor and its associate or joint venture is recognized only to the extent of theunrelated investors’ interests in the associate or joint venture. The effective date of theamendments has been postponed indefinitely, but early adoption is allowed.

B. IFRS 17 Insurance Contracts

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevantaccounting aspects (including recognition, measurement, presentation and disclosurerequirements). The core of IFRS 17 is the General (building block) Model, under thismodel, on initial recognition, an entity shall measure a group of insurance contracts at thetotal of the fulfilment cash flows and the contractual service margin. The fulfilment cashflows comprise of the following:

a. estimates of future cash flows;b. Discount rate: an adjustment to reflect the time value of money and the financial risks

related to the future cash flows, to the extent that the financial risks are not included inthe estimates of the future cash flows; and

c. a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting periodshall be the sum of the liability for remaining coverage and the liability for incurred claims.Other than the General Model, the standard also provides a specific adaptation for contractswith direct participation features (the Variable Fee Approach) and a simplified approach(Premium Allocation Approach) mainly for short-duration contracts.





20

C. Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financialstatements and the amended paragraphs related to the classification of liabilities as currentor non-current.

The abovementioned standards and interpretations issued by IASB have not yet endorsed byFSC at the date when the Company’s financial statements were authorized for issue, the localeffective dates are to be determined by FSC. The abovementioned standards andinterpretations have no material impact on the Company.

4. Summary of significant accounting policies

(1) Statement of compliance

The parent company only financial statements of the Company for the years ended December31, 2019 and 2018 have been prepared in accordance with the Regulations Governing thePreparation of Financial Reports by Securities Issuers (“the Regulations”).

(2) Basis of preparation

The Company prepared parent company only financial statements in accordance with Article21 of the Regulations, which provided that the profit or loss and other comprehensive incomefor the period presented in the parent company only financial statements shall be the same asthe profit or loss and other comprehensive income attributable to stockholders of the parentpresented in the consolidated financial statements for the period, and the total equity presentedin the parent company only financial statements shall be the same as the equity attributable tothe parent company presented in the consolidated financial statements. Therefore, theCompany accounted for its investments in subsidiaries using equity method and, accordingly,made necessary adjustments.

The parent company only financial statements have been prepared on a historical cost basis,except for financial instruments that have been measured at fair value. The parent companyonly financial statements are expressed in thousands of New Taiwan Dollars (“NTD”) unlessotherwise stated.

(3) Foreign currency transactions

The Company’s parent company only financial statements are presented in its functionalcurrency, New Taiwan Dollars (NTD).





21

Transactions in foreign currencies are initially recorded by the Company at functionalcurrency rates prevailing at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are translated at the functional currency closing rate ofexchange ruling at the reporting date. Non-monetary items measured at fair value in aforeign currency are translated by the exchange rates at the date when the fair value isdetermined. Non-monetary items that are measured at historical cost in a foreign currencyare translated using the exchange rates at the dates of its initial transactions.

All exchange differences arising from the settlement or translation of monetary items are takeninto profit or loss in the period which they arise except for the following:

A. Exchange differences arising from foreign currency borrowings for an acquisition of aqualifying asset. If the differences are regarded as an adjustment to interest costs, whichwill be capitalized and take as part of the cost of the borrowing.

B. Foreign currency items within the scope of IAS 39 Financial Instruments: Recognition andMeasurement are accounted for based on the accounting policy for financial instruments.

C. Exchange differences arising on a monetary item that forms part of a reporting entity’s netinvestment in a foreign operation is recognized initially in other comprehensive incomeand reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income,any exchange component of that gain or loss is recognized in other comprehensive income.When a gain or loss on a non-monetary item is recognized in profit or loss, any exchangecomponent of that gain or loss is recognized in profit or loss.

(4) Translation of financial statements in foreign currency

The assets and liabilities of foreign entities are translated into NTD at the closing exchangerate at the balance sheet date. Income and expenses are translated at an average rate withinthe period. The exchange differences arising on the translation are recognized in othercomprehensive income. On the disposal of a foreign operation, the cumulative amount of theexchange differences relating to that foreign operation, recognized in other comprehensiveincome and accumulated in the separate component of equity, is reclassified from equity toprofit or loss when the gain or loss on disposal is recognized.

The following are accounted for as disposals even if an interest in the foreign operation isretained by the Company: the loss of control over a foreign operation, the loss of significantinfluence over a foreign operation, or the loss of joint control over a foreign operation.





22

On the partial disposal of a subsidiary that includes a foreign operation that does not result ina loss of control, the proportionate share of the cumulative amount of the exchange differencesrecognized in other comprehensive income is re-attributed to the non-controlling interests inthat foreign operation. In partial disposal of an associate or jointly controlled entity thatincludes a foreign operation that does not result in a loss of significant influence or jointcontrol, only the proportionate share of the cumulative amount of the exchange differencesrecognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilitiesarising on the acquisition of a foreign operation are treated as assets and liabilities of theforeign operation and expressed in its functional currency.

(5) Current and non-current distinction for assets and liabilities

An asset is classified as current when:

A. The Company expects to realize the asset, or intends to sell or consume it, in its normaloperating cycle;

B. The Company holds the asset primarily for the purpose of trading;C. The Company expects to realize the asset within twelve months after the reporting period;D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or

used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

A. The Company expects to settle the liability in its normal operating cycleB. The Company holds the liability primarily for the purpose of tradingC. The liability is due to be settled within twelve months after the reporting periodD. The Company does not have an unconditional right to defer settlement of the liability for

at least twelve months after the reporting period. Terms of a liability that could, at theoption of the counterparty, result in its settlement by the issue of equity instruments do notaffect its classification.

All other liabilities are classified as non-current.


Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highlyliquid time deposits (including ones that have maturity within 12 months) or investments thatare readily convertible to known amounts of cash and which are subject to an insignificantrisk of changes in value.





23

(7) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a partyto the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instrumentsare recognized initially at fair value plus or minus, in the case of investments not at fair valuethrough profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the tradedate.

The Company classified financial assets as subsequently measured at amortized cost, fairvalue through other comprehensive income or fair value through profit or loss consideringboth factors below:

(a) the Company’s business model for managing the financial assets and(b) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are metand presented as note receivables, accounts receivables financial assets measured atamortized cost and other receivables etc., on balance sheet as at the reporting date:

(a) the financial asset is held within a business model whose objective is to hold financialassets in order to collect contractual cash flows and

(b) the contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at whichthe financial asset is measured at initial recognition minus the principal repayments, plusor minus the cumulative amortization using the effective interest method of any differencebetween the initial amount and the maturity amount and adjusted for any loss allowance)and is not part of a hedging relationship. A gain or loss is recognized in profit or loss whenthe financial asset is derecognized, through the amortization process or in order torecognize the impairment gains or losses.





24

Interest revenue is calculated by using the effective interest method. This is calculated byapplying the effective interest rate to the gross carrying amount of a financial asset exceptfor:

(a) purchased or originated credit-impaired financial assets. For those financial assets, theCompany applies the credit-adjusted effective interest rate to the amortized cost of thefinancial asset from initial recognition.

(b) financial assets that are not purchased or originated credit-impaired financial assets butsubsequently have become credit-impaired financial assets. For those financial assets,the Company applies the effective interest rate to the amortized cost of the financialasset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both ofthe following conditions are met:

(a) the financial asset is held within a business model whose objective is achieved by bothcollecting contractual cash flows and selling financial assets and

(b) the contractual terms of the financial asset give rise on specified dates to cash flowsthat are solely payments of principal and interest on the principal amount outstanding.

Recignition of gain or loss on a financial asset measured at fair value through othercomprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensiveincome recognized in other comprehensive income, except for impairment gains orlosses and foreign exchange gains and losses, until the financial asset is derecognizedor reclassified.

(b) When the financial asset is derecognized the cumulative gain or loss previouslyrecognized in other comprehensive income is reclassified from equity to profit or lossas a reclassification adjustment.

(c) Interest revenue is calculated by using the effective interest method. This is calculatedby applying the effective interest rate to the gross carrying amount of a financial assetexcept for:i. Purchased or originated credit-impaired financial assets. For those financial assets,

the Company applies the credit-adjusted effective interest rate to the amortized costof the financial asset from initial recognition.

ii. Financial assets that are not purchased or originated credit-impaired financial assetsbut subsequently have become credit-impaired financial assets. For those financialassets, the Company applies the effective interest rate to the amortized cost of thefinancial asset in subsequent reporting periods.





25

Besides, for certain equity investments within the scope of IFRS 9 that is neither held fortrading nor contingent consideration recognized by an acquirer in a business combinationto which IFRS 3 applies, the Company made an irrevocable election to present the changesof the fair value in other comprehensive income at initial recognition. Amounts presentedin other comprehensive income shall not be subsequently transferred to profit or loss (whendisposal of such equity instrument, its cumulated amount included in other components ofequity is transferred directly to the retained earnings) and these investments should bepresented as financial assets measured at fair value through other comprehensive incomeon the balance sheet. Dividends on such investment are recognized in profit or loss unlessthe dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair valuethrough other comprehensive income based on aforementioned criteria. All other financialassets were measured at fair value through profit or loss and presented on the balance sheetas financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting fromremeasurement is recognized in profit or loss which includes any dividend or interestreceived on such financial assets.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assetmeasured at amortized cost.

The Company measures expected credit losses of a financial instrument in a way thatreflects:

(a) an unbiased and probability-weighted amount that is determined by evaluating a rangeof possible outcomes;

(b) the time value of money; and(c) reasonable and supportable information that is available without undue cost or effort

at the reporting date about past events, current conditions and forecasts of futureeconomic conditions.





26

The loss allowance is measures as follows:

(a) At an amount equal to 12-month expected credit losses: the credit risk on a financialasset has not increased significantly since initial recognition or the financial asset isdetermined to have low credit risk at the reporting date. In addition, the Companymeasures the loss allowance at an amount equal to lifetime expected credit losses inthe previous reporting period but determines at the current reporting date that the creditrisk on a financial asset has increased significantly since initial recognition is no longermet.

(b) At an amount equal to the lifetime expected credit losses: the credit risk on a financialasset has increased significantly since initial recognition or financial asset that ispurchased or originated credit-impaired financial asset.

(c) For accounts receivables or contract assets arising from transactions within the scopeof IFRS 15, the Company measures the loss allowance at an amount equal to lifetimeexpected credit losses.

(d) For lease receivables arising from transactions within the scope of IFRS 16 (beforeJanuary 1, 2019: IAS 17), the Company measures the loss allowance at an amountequal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financialasset has increased significantly since initial recognition by comparing the risk of a defaultoccurring at the reporting date and the risk of default occurring at initial recognition. Pleaserefer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

(a) The rights to receive cash flows from the asset have expired(b) The Company has transferred the asset and substantially all the risks and rewards of

the asset have been transferred(c) The Company has neither transferred nor retained substantially all the risks and

rewards of the asset but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carryingamount and the consideration received or receivable including any cumulative gain or lossthat had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrumentin accordance with the substance of the contractual arrangement and the definitions of afinancial liability, and an equity instrument.





27

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of anentity after deducting all of its liabilities. The transaction costs of an equity transactionare accounted for as a deduction from equity (net of any related income tax benefit) to theextent they are incremental costs directly attributable to the equity transaction thatotherwise would have been avoided.

Compound instruments

The Company evaluates the terms of the convertible bonds issued to determine whether itcontains both a liability and an equity component. Furthermore, the Company assesses ifthe economic characteristics and risks of the put and call options contained in theconvertible bonds are closely related to the economic characteristics and risk of the hostcontract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based onthe rate of interest applied at that time by the market to instruments of comparable creditstatus. The liability component is classified as a financial liability measured at amortizedcost before the instrument is converted or settled.

For the embedded derivative that is not closely related to the host contract (for example, ifthe exercise price of the embedded call or put option is not approximately equal on eachexercise date to the amortized cost of the host debt instrument), it is classified as a liabilitycomponent and subsequently measured at fair value through profit or loss unless it qualifiesfor an equity component. The equity component is assigned the residual amount afterdeducting from the fair value of the instrument as a whole the amount separatelydetermined for the liability component. Its carrying amount is not remeasured in thesubsequent accounting periods. If the convertible bond issued does not have an equitycomponent, it is accounted for as a hybrid instrument in accordance with the requirementsunder IFRS 9 Financial Instruments (before January 1, 2019: IAS 39 FinancialInstruments: Recognition and Measurement).

Transaction costs are apportioned between the liability and equity components of theconvertible bond based on the allocation of proceeds to the liability and equity componentswhen the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liabilitycomponent being the amortized cost at the date of conversion is transferred to equity.





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Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified asfinancial liabilities at fair value through profit or loss or financial liabilities measured atamortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held fortrading and financial liabilities designated as at fair value through profit or loss.

A financial liability is classified as held for trading if:

(a) it is acquired or incurred principally for the purpose of selling or repurchasing it in thenear term;

(b) on initial recognition it is part of a portfolio of identified financial instruments that aremanaged together and for which there is evidence of a recent actual pattern of short-term profit-taking; or

(c) it is a derivative (except for a derivative that is a financial guarantee contract or adesignated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined)contract may be designated as a financial liability at fair value through profit or loss; or afinancial liability may be designated as at fair value through profit or loss when doing soresults in more relevant information, because either:

(a) it eliminates or significantly reduces a measurement or recognition inconsistency; or(b) a group of financial assets, financial liabilities or both is managed, and its performance

is evaluated on a fair value basis, in accordance with a documented risk managementor investment strategy, and information about the Company is provided internally onthat basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit orloss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans andborrowings that are subsequently measured using the effective interest rate method afterinitial recognition. Gains and losses are recognized in profit or loss when the liabilities arederecognized as well as through the effective interest rate method amortization process.





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Amortized cost is calculated by considering any discount or premium on acquisition andfees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is dischargedor cancelled or expires.

When an existing financial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability are substantially modified(whether or not attributable to the financial difficulty of the debtor), such an exchange ormodification is treated as a derecognition of the original liability and the recognition of anew liability, and the difference in the respective carrying amounts and the considerationpaid, including any non-cash assets transferred or liabilities assumed, is recognized in profitor loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the net amount reported in thebalance sheet if, and only if, there is a currently enforceable legal right to offset therecognized amounts and there is an intention to settle on a net basis, or to realize the assetsand settle the liabilities simultaneously.

(8) Derivative instrument

The Company uses derivative instruments to hedge its foreign currency risks and interest raterisks. A derivative is classified in the balance sheet as assets or liabilities at fair valuethrough profit or loss except for derivatives that are designated effective hedging instrumentswhich are classified as derivative financial assets or liabilities for hedging.

Derivative instruments are initially recognized at fair value on the date on which a derivativecontract is entered into and are subsequently remeasured at fair value. Derivatives are carriedas financial assets when the fair value is positive and as financial liabilities when the fair valueis negative. Any gains or losses arising from changes in the fair value of derivatives are takendirectly to profit or loss, except for the effective portion of cash flow hedges, which isrecognized in equity.

When the host contracts are either non-financial assets or liabilities, derivatives embedded inhost contracts are accounted for as separate derivatives and recorded at fair value if theireconomic characteristics and risks are not closely related to those of the host contracts and thehost contracts are not designated at fair value though profit or loss.





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(9) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability inan orderly transaction between market participants at the measurement date. The fair valuemeasurement is based on the presumption that the transaction to sell the asset or transfer theliability takes place either:

A. In the principal market for the asset or liability, orB. In the absence of a principal market, in the most advantageous market for the asset or

liability

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that marketparticipants would use when pricing the asset or liability, assuming that market participantsin their economic best interest.

A fair value measurement of a non-financial asset considers a market participant’s ability togenerate economic benefits by using the asset in its highest and best use or by selling it toanother market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and forwhich sufficient data are available to measure fair value, maximizing the use of relevantobservable inputs and minimizing the use of unobservable inputs.

(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accountedfor as follows:

Raw materials - purchase cost on weighted average cost formula

Work in progress and finished goods - cost of direct materials and labor and a proportion ofmanufacturing overheads based on normal operating capacity on weighted average costformula, but not including borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, lessestimated costs of completion and the estimated costs necessary to make the sale.





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Rendering of services is accounted in accordance with IFRS 15 and not within the scope ofinventories

(11) Non-current assets held for sale and discontinued operations

Non-current assets and disposal groups are classified as held for sale if their carrying amountswill be recovered through a sale transaction that is highly probable within one year from thedate of classification and the asset or disposal group is available for immediate sale in itspresent condition. Non-current assets and disposal groups classified as held for sale aremeasured at the lower of their carrying amount and fair value less costs to sell.

In the parent company only statement of comprehensive income of the reporting period, andof the comparable period of the previous year, income and expenses from discontinuedoperations are reported separately from income and expenses from continuing operations,down to the level of profit after taxes, even when the Company retains a non-controllinginterest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reportedseparately in the statement of comprehensive income.

Property, plant and equipment and intangible assets once classified as held for sale are notdepreciated or amortized.

(12) Investments under equity method

The Company’s investment in its subsidiaries is presented as investments accounted for usingthe equity method and adjusted by necessary measurements in accordance with Article 21 ofthe Regulations, which provided that the profit or loss and other comprehensive income forthe period presented in the parent company only financial statements shall be the same as theprofit or loss and other comprehensive income attributable to stockholders of the parentpresented in the consolidated financial statements for the period, and the total equity presentedin the parent company only financial statements shall be the same as the equity attributable tothe parent company presented in the consolidated financial statements.

These adjustments resulted from considering the different treatments of investments insubsidiaries under IFRS 10 Consolidated Financial Statements and under IFRS applied todifferent entity level. These investments may be debited or credited using the equity method,as share of profits (losses) of subsidiaries, associates and joint ventures, or share of othercomprehensive income (loss) of subsidiaries, associates and joint ventures.

The Company’s investment in its associate is accounted for using the equity method otherthan those that meet the criteria to be classified as held for sale. An associate is an entityover which the Company has significant influence.





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Under the equity method, the investment in the associate is carried in the balance sheet at costand adjusted thereafter for the post-acquisition change in the Company’s share of net assetsof the associate. After the interest in the associate is reduced to zero, additional losses areprovided for, and a liability is recognized, only to the extent that the Company has incurredlegal or constructive obligations or made payments on behalf of the associate. Unrealizedgains and losses resulting from transactions between the Company and the associate areeliminated to the extent of the Company’s related interest in the associate.

When changes in the net assets of an associate occur and not those that are recognized in profitor loss or other comprehensive income and do not affects the Company’s percentage ofownership interests in the associate, the Company recognizes such changes in equity based onits percentage of ownership interests. The resulting capital surplus recognized will bereclassified to profit or loss at the time of disposing the associate on a pro-rata basis.

When the associate issues new stock, and the Company’s interest in an associate is reducedor increased as the Company fails to acquire shares newly issued in the associateproportionately to its original ownership interest, the increase or decrease in the interest in theassociate is recognized in additional paid in capital and investment in associate. When theinterest in the associate is reduced, the cumulative amounts previously recognized in othercomprehensive income are reclassified to profit or loss or other appropriate items. Theaforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basiswhen the Company disposes the associate.

The financial statements of the associate are prepared for the same reporting period as theCompany. Where necessary, adjustments are made to bring the accounting policies in linewith those of the Company.

The Company determines at each reporting date whether there is any objective evidence thatthe investment in the associate is impaired in accordance with IAS 39 Financial Instruments:Recognition and Measurement. If this is the case the Company calculates the amount ofimpairment as the difference between the recoverable amount of the associate and it carryingvalue and recognizes the amount in the ‘share of profit or loss of an associate’ in the statementof comprehensive income in accordance with IAS 36 Impairment of Assets. In determiningthe value in use of the investment, the Company estimates:

A. Its share of the present value of the estimated future cash flows expected to be generatedby the associate, including the cash flows from the operations of the associate and theproceeds on the ultimate disposal of the investment.

B. The present value of the estimated future cash flows expected to arise from dividends to bereceived from the investment and from its ultimate disposal.





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Because goodwill that forms part of the carrying amount of an investment in an associate isnot separately recognized, it is not tested for impairment separately by applying therequirements for impairment testing goodwill in IAS 36 Impairment of Assets.

Upon loss of significant influence over the associate, the Company measures and recognizesany retaining investment at its fair value. Any difference between the carrying amount ofthe associate upon loss of significant influence and the fair value of the retaining investmentand proceeds from disposal is recognized in profit or loss.


Property, plant and equipment is stated at acquisition cost, net of accumulated depreciationand accumulated impairment losses, if any. Such cost includes the cost of dismantling andremoving the item and restoring the site on which it is located and borrowing costs forconstruction in progress if the recognition criteria are met. Each part of an item of property,plant and equipment with a cost that is significant in relation to the total cost of the item isdepreciated separately. When significant parts of property, plant and equipment are requiredto be replaced in intervals, the Company recognized such parts as individual assets withspecific useful lives and depreciation, respectively. The carrying amount of those parts thatare replaced is derecognized in accordance with the derecognition provisions of IAS 16Property, plant and equipment. When a major inspection is performed, its cost is recognizedin the carrying amount of the plant and equipment as a replacement if the recognition criteriaare satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of thefollowing assets:

Buildings 3〜50 yearMachinery and equipment 5〜20 yearTransportation equipment 2〜10 yearOffice equipment 2〜10 yearLeasehold improvements The shorter of lease terms or economic useful livesOther equipment 2〜15 year

Note: The Company reclassified the lease assets to right-of-use assets after the adoption ofIFRS 16 from January 1, 2019.

An item of property, plant and equipment and any significant part initially recognized isderecognized upon disposal or when no future economic benefits are expected from its use ordisposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at eachfinancial year end and adjusted prospectively, if appropriate.





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Investment property for self-use should be initially measured at cost, including transactioncosts. The cost of a purchased investment property includes the purchase price and any directlyattributable expenses. Directly attributable expenses include legal service fees, propertytransfer taxes and other transaction costs.

Investment properties are measured initially at cost, including transaction costs. Thecarrying amount includes the cost of replacing part of an existing investment property at thetime that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property.

Starting from January 1, 2019, investment property is measured by fair value model and thechange of fair value is recognized as profit & loss in the current period in accordance withIAS 40 “Investment property”. However, those categorized held for sale and discontinuedoperations according to IFRS 5 “Non-current Assets Held for Sale and DiscontinuedOperations” which met the criteria of non-current asset held for sale (including disposal groupheld for sale), and those met the criteria of the 53rd paragraph of IAS 40“Investment property”were excluded.

If investment property for self use is converted into investment property reported at fair value,the difference between the carrying amount recognized in accordance with IAS 16 and its fairvalue on the date of change of use shall be treated in accordance with the revaluation approachunder IAS 16.

Investment properties are derecognized when either they have been disposed of or when theinvestment property is permanently withdrawn from use and no future economic benefit isexpected from its disposal. The difference between the net disposal proceeds and the carryingamount of the asset is recognized in profit or loss in the period of derecognition.

Properties are transferred to or from investment properties when the properties meet, or ceaseto meet, the definition of investment property and there is evidence of the change in use.

(15) Leases

The accounting policy from January 1, 2019 as follow:

For contracts entered on or after January 1, 2019, the Company assesses whether the contractis, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right tocontrol the use of an identified asset for a period of time in exchange for consideration. Toassess whether a contract conveys the right to control the use of an identified asset for a periodof time, the Group assesses whether, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identifiedasset; and

(b) the right to direct the use of the identified asset.





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The Company elected not to reassess whether a contract is, or contains, a lease on 1 January2019. The Company is permitted to apply IFRS 16 to contracts that were previously identifiedas leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were notpreviously identified as containing a lease applying IAS 17 and IFRIC 4.

For a contract that is, or contains, a lease, the Company accounts for each lease componentwithin the contract as a lease separately from non-lease components of the contract. For acontract that contains a lease component and one or more additional lease or non-leasecomponents, the Company allocates the consideration in the contract to each lease componenton the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-leasecomponents shall be determined on the basis of the price the lessor, or a similar supplier,would charge the Company for that component, or a similar component, separately. If anobservable stand-alone price is not readily available, the Company estimates the stand-aloneprice, maximising the use of observable information.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, theCompany recognizes right-of-use asset and lease liability for all leases which the Company isthe lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value ofthe lease payments that are not paid at that date. The lease payments are discounted using theinterest rate implicit in the lease, if that rate can be readily determined. If that rate cannot bereadily determined, the Company uses its incremental borrowing rate. At the commencementdate, the lease payments included in the measurement of the lease liability comprise thefollowing payments for the right to use the underlying asset during the lease term that are notpaid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentivesreceivable;

(b) variable lease payments that depend on an index or a rate, initially measured using theindex or rate as at the commencement date;

(c) amounts expected to be payable by the lessee under residual value guarantees;(d) the exercise price of a purchase option if the Group is reasonably certain to exercise that

option; and(e) payments of penalties for terminating the lease, if the lease term reflects the lessee

exercising an option to terminate the lease.





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After the commencement date, the Company measures the lease liability on an amortised costbasis, which increases the carrying amount to reflect interest on the lease liability by using aneffective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost ofthe right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;(b) any lease payments made at or before the commencement date, less any lease incentives

received;(c) any initial direct costs incurred by the lessee; and(d) an estimate of costs to be incurred by the lessee in dismantling and removing the

underlying asset, restoring the site on which it is located or restoring the underlying assetto the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the right-of-useasset at cost less any accumulated depreciation and any accumulated impairment losses. Thatis, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the leaseterm or if the cost of the right-of-use asset reflects that the Company will exercise a purchaseoption, the Company depreciates the right-of-use asset from the commencement date to theend of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of theright-of-use asset or the end of the lease term.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-useasset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheetand separately presents lease-related interest expense and depreciation charge in thestatement’s comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the leasepayments associated with those leases as an expense on either a straight-line basis over thelease term or another systematic basis.





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Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operatinglease or a finance lease. A lease is classified as a finance lease if it transfers substantially allthe risks and rewards incidental to ownership of an underlying asset. A lease is classified asan operating lease if it does not transfer substantially all the risks and rewards incidental toownership of an underlying asset. At the commencement date, the Company recognizes assetsheld under a finance lease in its balance sheet and present them as a receivable at an amountequal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Companyallocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either astraight-line basis or another systematic basis. Variable lease payments for operating leasesthat do not depend on an index or a rate are recognized as rental income when incurred.

The accounting policy before January 1, 2019 as follow:

Company as a lessee

Finance leases which transfer to the Company substantially all the risks and benefits incidentalto ownership of the leased item, are capitalized at the commencement of the lease at the fairvalue of the leased property or, if lower, at the present value of the minimum lease payments.Lease payments are apportioned between finance charges and reduction of the lease liabilityso as to achieve a constant rate of interest on the remaining balance of the liability. Financecharges are recognized in profit or loss.

A leased asset is depreciated over the useful life of the asset. However, if there is noreasonable certainty that the Company will obtain ownership by the end of the lease term, theasset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense on a straight-line basis over the leaseterm.

Company as a lessor

Leases in which the Company does not transfer substantially all the risks and benefits ofownership of the asset are classified as operating leases. Initial direct costs incurred innegotiating an operating lease are added to the carrying amount of the leased asset andrecognized over the lease term on the same basis as rental income. Contingent rents arerecognized as revenue in the period in which they are earned.





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Intangible assets acquired separately are measured on initial recognition at cost. The cost ofintangible assets acquired in a business combination is its fair value as of the date ofacquisition. Following initial recognition, intangible assets are carried at cost less anyaccumulated amortization and accumulated impairment losses, if any. Internally generatedintangible assets, excluding capitalized development costs, are not capitalized and expenditureis reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite live are amortized over the useful economic life and assessed forimpairment whenever there is an indication that the intangible asset may be impaired. Theamortization period and the amortization method for an intangible asset with a finite usefullife is reviewed at least at the end of each financial year. Changes in the expected useful lifeor the expected pattern of consumption of future economic benefits embodied in the asset isaccounted for by changing the amortization period or method, as appropriate, and are treatedas changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairmentannually, either individually or at the cash-generating unit level. The assessment ofindefinite life is reviewed annually to determine whether the indefinite life continues to besupportable. If not, the change in useful life from indefinite to finite is made on a prospectivebasis.

Gains or losses arising from derecognition of an intangible asset are measured as thedifference between the net disposal proceeds and the carrying amount of the asset and arerecognized in profit or loss when the asset is disposed.

Research and development costs

Research costs are expensed as incurred. Development expenditures, on an individualproject, are recognized as an intangible asset when the Company can demonstrate:

A. The technical feasibility of completing the intangible asset so that it will be available foruse or sale

B. Its intention to complete and its ability to use or sell the assetC. How the asset will generate future economic benefitsD. The availability of resources to complete the assetE. The ability to measure reliably the expenditure during development





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Following initial recognition of the development expenditure as an asset, the cost model is

applied requiring the asset to be carried at cost less any accumulated amortization and

accumulated impairment losses. During the period of development, the asset is tested for

impairment annually. Amortization of the asset begins when development is complete, and

the asset is available for use. It is amortized over the period of expected future benefit.

Patents

Patents are amortized over the period of useful life.

Technical cooperation costs

The technical cooperation has been granted 3~10 years of using right depends on different

items.

Computer software

The cost of computer software is amortized on a straight-line basis over the estimated useful

life (3 years).

A summary of the policies applied to the Company’s intangible assets is as follows:

Patents

Technology

Cooperation Costs Computer software

Useful lives Finite Finite Finite

Amortization method

used

Amortized on a

straight-line basis

over the period of

the patent

Amortized on a

straight-line basis

over the period of

the technology

cooperation terms

Amortized on a

straight- line basis

over the estimated

useful life

Internally generated or

acquired

Acquired Acquired Acquired





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(17) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication thatan asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indicationexists, or when annual impairment testing for an asset is required, the Company estimates theasset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s orcash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and isdetermined for an individual asset, unless the asset does not generate cash inflows that arelargely independent of those from other assets or groups of assets. Where the carryingamount of an asset or CGU exceeds its recoverable amount, the asset is considered impairedand is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whetherthere is any indication that previously recognized impairment losses may no longer exist ormay have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversedonly if there has been an increase in the estimated service potential of an asset which in turnincreases the recoverable amount. However, the reversal is limited so that the carryingamount of the asset does not exceed its recoverable amount, nor exceed the carrying amountthat would have been determined, net of depreciation, had no impairment loss been recognizedfor the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has beenallocated is tested for impairment annually at the same time, irrespective of whether there isany indication of impairment. If an impairment loss is to be recognized, it is first allocatedto reduce the carrying amount of any goodwill allocated to the cash generating unit (group ofunits), then to the other assets of the unit (group of units) pro rata on the basis of the carryingamount of each asset in the unit (group of units). Impairment losses relating to goodwillcannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss isrecognized in profit or loss.

(18) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive)as a result of a past event, it is probably that an outflow of resources embodying economicbenefits will be required to settle the obligation and a reliable estimate can be made of theamount of the obligation. Where the Company expects some or all of a provision to bereimbursed, the reimbursement is recognized as a separate asset but only when thereimbursement is virtually certain. If the effect of the time value of money is material,provisions are discounted using a current pre-tax rate that reflects the risks specific to theliability. Where discounting is used, the increase in the provision due to the passage of timeis recognized as a finance cost.





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Maintenance warranties

A provision is recognized for expected warranty claims on products sold, based on pastexperience, management’s judgment and other known factors.

Legal provisions

The Group regularly estimates the legal costs according to historical experience. If theobligation is highly likely to occur and the amount can be reasonably estimated, the Grouprecognizes related provisions for the legal matters

(19) Treasury shares

Own equity instruments which are reacquired (treasury shares) are recognized at cost anddeducted from equity. Any difference between the carrying amount and the consideration isrecognized in equity.

(20) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale ofgoods and rendering of services. The accounting policies are explained as follow:

Sale of goods

The Company manufactures and sells products. Sales are recognized when control of thegoods is transferred to the customer and the goods are delivered to the customers (the customerhas the right to use and gains almost all of the residual benefit). The main products of theCompany are cable, voltage transformer, motors and house appliances, and revenue isrecognized based on the consideration stated in the contract. For certain sales of goodstransactions, they are usually accompanied by volume discounts (based on the accumulatedtotal sales amount for a specified period). Therefore, revenue from these sales is recognizedbased on the price specified in the contract, net of the estimated volume discounts. TheCompany estimates the discounts using the expected value method based on historicalexperiences. Revenue is only recognized to the extent that it is highly probable that asignificant reversal in the amount of cumulative revenue recognized will not occur and whenthe uncertainty associated with the variable consideration is subsequently resolved. Duringthe period specified in the contract, refund liability is recognized for the expected volumediscounts.

The Company provides its customer with a warranty with the purchase of the products. Thewarranty provides assurance that the product will operate as expected by the customers. Andthe warranty is accounted in accordance with IAS 37.





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The credit period of the Company’s sale of goods is from 30 to 180 days. For most of thecontracts, when the Company transfers the goods to customers and has a right to an amountof consideration that is unconditional, these contracts are recognized as accounts receivables.The Company usually collects the payments shortly after transfer of goods to customers;therefore, there is no significant financing component to the contract. For some of thecontracts, the Company has transferred the goods to customers but does not has a right to anamount of consideration that is unconditional, these contacts should be presented as contractassets. Besides, in accordance with IFRS 9, the Company measures the loss allowance for acontract asset at an amount equal to the lifetime expected credit losses. For some contracts,part of the consideration was received from customers upon signing the contract, and theCompany has the obligation to provide the services subsequently; accordingly, these amountsare recognized as contract liabilities.

Rendering of services

The Company provides maintenance services for the sale of products and other professionalservices. Such services are separately priced or negotiated and provided based on contractperiods. As the Company provides the maintenance services over the contract period, thecustomers simultaneously receive and consume the benefits provided by the Company.Accordingly, the performance obligations are satisfied over time, and the related revenue arerecognized by straight-line method over the contract period.

Most of the contractual considerations of the Company are collected evenly throughout thecontract periods. When the Company has performed the services to customers but does nothas a right to an amount of consideration that is unconditional, these contacts should bepresented as contract assets. However, for some rendering of services contracts, part of theconsideration was received from customers upon signing the contract, and the Company hasthe obligation to provide the services subsequently; accordingly, these amounts are recognizedas contract liabilities.

Construction contract

When the outcome of the construction contract could be reasonably estimated, revenue andcosts from the construction contract would be recognized by reference to the stage ofcompletion which was measured by reference to the proportion that contract cost incurred forwork performed to date bear to the estimated total contract costs at reporting date.

When the outcome of the construction contract couldn’t be reasonably estimated, costrecovery method would be applied. Revenue could only be recognized to the same amount ofcosts incurred.





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When the estimated total cost of the contract is reasonably possible more than total revenueforms the contract, the expected loss should be recognized as expense immediately.

The Company usually reclassifies the aforementioned contract liability to revenue within ayear and hence does not lead to a significant financial component.

(21) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an assetthat necessarily takes a substantial period of time to get ready for its intended use or sale arecapitalized as part of the cost of the respective assets. All other borrowing costs are expensedin the period they occur. Borrowing costs consist of interest and other costs that an entityincurs in connection with the borrowing of funds.

(22) Government grants

Government grants are recognized where there is reasonable assurance that the grant will bereceived, and all attached conditions will be complied with. Where the grant relates to anasset, it is recognized as deferred income and released to income in equal amounts over theexpected useful life of the related asset. When the grant relates to an expense item, it isrecognized as income over the period necessary to match the grant on a systematic basis tothe costs that it is intended to compensate.

Where the Company receives non-monetary grants, the asset and the grant are recorded grossat nominal amounts and released to the statement of comprehensive income over the expecteduseful life and pattern of consumption of the benefit of the underlying asset by equal annualinstallments. Where loans or similar assistance are provided by governments or relatedinstitutions with an interest rate below the current applicable market rate, the effect of thisfavorable interest is regarded as additional government grant.


All regular employees of the Company are entitled to a pension plan that is managed by anindependently administered pension fund committee. Fund assets are deposited under thecommittee’s name in the specific bank account and hence, not associated with the Company.Therefore, fund assets are not included in the Company’s consolidated financial statements.Pension benefits for employees of the overseas subsidiaries and the branches are provided inaccordance with the respective local regulations.





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For the defined contribution plan, the Company will make a monthly contribution of no lessthan 6% of the monthly wages of the employee’s subject to the plan. The Companyrecognizes expenses for the defined contribution plan in the period in which the contributionbecomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the ProjectedUnit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the assetceiling (excluding net interest) and the return on plan assets, excluding net interest, arerecognized as other comprehensive income with a corresponding debit or credit to retainedearnings in the period in which they occur. Past service costs are recognized in profit or losson the earlier of:

A. the date of the plan amendment or curtailment, andB. the date that the Company recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability orasset, both as determined at the start of the annual reporting period, taking account of anychanges in the net defined benefit liability (asset) during the period as a result of contributionand benefit payment.

(24) Income taxes

Income tax expense (benefit) is the aggregate amount of current and deferred taxes whichincluded in the determination of current profit or loss.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at theamount expected to be recovered from or paid to the taxation authorities, using the tax ratesand tax laws that have been enacted or substantively enacted by the end of the reporting period.Current income tax relating to items recognized in other comprehensive income or directly inequity is recognized in other comprehensive income or equity and not in profit or loss.

The surtax on undistributed retained earnings is recognized as income tax expense in thesubsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax basesof assets and liabilities and their carrying amounts for financial reporting purposes.





45

Deferred tax liabilities are recognized for all taxable temporary differences, except:

A. Where the deferred tax liability arises from the initial recognition of goodwill or of an assetor liability in a transaction that is not a business combination and, at the time of thetransaction, affects neither the accounting profit nor taxable profit or loss;

B. In respect of taxable temporary differences associated with investments in subsidiaries,associates and interests in joint ventures, where the timing of the reversal of the temporarydifferences ccan be controlled and it is probable that the temporary differences will notreverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward ofunused tax credits and unused tax losses, to the extent that it is probable that taxable profitwill be available against which the deductible temporary differences, and the carry forward ofunused tax credits and unused tax losses can be utilized, except:

A. Where the deferred tax asset relating to the deductible temporary difference arises from theinitial recognition of an asset or liability in a transaction that is not a business combinationand, at the time of the transaction, affects neither the accounting profit nor taxable profitor loss

B. In respect of deductible temporary differences associated with investments in subsidiaries,associates and interests in joint ventures, deferred tax assets are recognized only to theextent that it is probable that the temporary differences will reverse in the foreseeable futureand taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply inthe year when the asset is realized, or the liability is settled, based on tax rates and tax lawsthat have been enacted or substantively enacted at the reporting date. The measurement ofdeferred tax assets and deferred tax liabilities reflects the tax consequences that would followfrom the manner in which the Company expects, at the end of the reporting period, to recoveror settle the carrying amount of its assets and liabilities.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit orloss. Deferred tax items are recognized in correlation to the underlying transaction either inother comprehensive income or directly in equity. Deferred tax assets are reassessed at eachreporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities offset, only if a legally enforceable right existsto offset current income tax assets against current income tax liabilities and the deferred taxesrelate to the same taxable entity and the same taxation authority.





46

5. Significant accounting judgments estimates and assumptions

The preparation of the Company’s parent only financial statements require management to makejudgments, estimates and assumptions that affect the reported amounts of revenues, expenses,assets and liabilities, and the disclosure of contingent liabilities, at balance sheet date. However,uncertainty about these assumption and estimate could result in outcomes that require a materialadjustment to the carrying amount of the asset or liability affected in future periods.

(1) Judgement

In the process of applying the Company’s accounting policies, management has made thefollowing judgements, which have the most significant effect on the amounts recognized inthe consolidated financial statements:

(a) Investment properties

Certain properties of the Company comprise a portion that is held to earn rentals or forcapital appreciation and another portion that is owner-occupied. If these portions couldbe sold separately, the Company accounts for the portions separately as investmentproperties and property, plant and equipment. If the portions could not be soldseparately, the property is classified as investment property in its entirety only if theportion that is owner-occupied is under 10% of the total property.

(b) Operating lease commitment－Company as the lessor

The Company has entered into commercial property leases on its investment propertyportfolio. The Company has determined, based on an evaluation of the terms andconditions of the arrangements, that it retains all the significant risks and rewards ofownership of these properties and accounts for the contracts as operating leases.

(c) De facto control without a majority of the voting rights in subsidiaries

The Company does not have majority of the voting rights in certain subsidiaries.However, after taking into consideration factors such as absolute size of the Company’sholding, relative size of the other shareholdings, how widely spread are the remainingshareholders, contractual arrangements between shareholders, potential voting rights,etc., the Company reached the conclusion that it has de facto control over thesesubsidiaries.





47

(2) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty atthe reporting date, that have a significant risk of causing a material adjustment to the carryingamounts of assets and liabilities within the next financial year are discussed below.

(a) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balancesheet cannot be derived from active markets, they are determined using valuationtechniques including the income approach (for example the discounted cash flows model)or market approach. Changes in assumptions about these factors could affect thereported fair value of the financial instruments. Please refer to Note 12 for more details.

(b) Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds itsrecoverable amount, which is the higher of its fair value less costs to sell and its value inuse. The fair value less costs to sell calculation is based on available data from bindingsales transactions in an arm’s length transaction of similar assets or observable marketprices less incremental costs that would be directly attributable to the disposal of the asset.The value in use calculation is based on a discounted cash flow model. The cash flowsprojections are derived from the budget for the next five years and do not includerestructuring activities that the Company is not yet committed to or significant futureinvestments that will enhance the asset’s performance of the cash generating unit beingtested. The recoverable amount is most sensitive to the discount rate used for thediscounted cash flow model as well as the expected future cash-inflows and the growthrate used for extrapolation purposes. Please refer to Note 6 for more details.

(c) Pension benefits

The cost of post-employment benefit and the present value of the pension obligation underdefined benefit pension plans are determined using actuarial valuations. An actuarialvaluation involves making various assumptions. These include the determination of thediscount rate and future salary increases. Please refer to Note 6 for more details.





48

(d) Provisions

The Company regularly estimates the legal costs according to historical experience. If theobligation is highly likely to occur and the amount can be reasonably estimated, theCompany recognizes related provisions for the legal. Please refer to Note 6 for moredetails.

(e) Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and theamount and timing of future taxable income. Given the wide range of internationalbusiness relationships and the long-term nature and complexity of existing contractualagreements, differences arising between the actual results and the assumptions made, orfuture changes to such assumptions, could necessitate future adjustments to tax incomeand expense already recorded. The Company establishes provisions, based onreasonable estimates, for possible consequences of audits by the tax authorities of therespective counties in which it operates. The amount of such provisions is based onvarious factors, such as experience of previous tax audits and differing interpretations oftax regulations by the taxable entity and the responsible tax authority. Such differencesof interpretation may arise on a wide variety of issues depending on the conditionsprevailing in the respective Company’s domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses, unused taxcredits and deductible temporary differences to the extent that it is probable that futuretaxable profit will be available or there are sufficient taxable temporary differencesagainst which the unused tax losses, unused tax credits or deductible temporarydifferences can be utilized. The amount of deferred tax assets determined to berecognized is based upon the likely timing and the level of future taxable profits andtaxable temporary differences together with future tax planning strategies. Please referto Note 6 for more details on unrecognized deferred tax assets as of December 31, 2019.

(f) Accounts receivables–estimation of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equalto lifetime expected credit losses. The credit loss is the present value of the differencebetween the contractual cash flows that are due under the contract (carrying amount) andthe cash flows that expects to receive (evaluate forward looking information). However,as the impact from the discounting of short-term receivables is not material, the creditloss is measured by the undiscounted cash flows. Where the actual future cash flows arelower than expected, a material impairment loss may arise. Please refer to Note 6 for moredetails.





49

(g) Inventories

Estimates of net realizable value of inventories take into consideration that inventoriesmay be damaged, become wholly or partially obsolete, or their selling prices havedeclined. The estimates are based on the most reliable evidence available at the time theestimates are made. Please refer to Note 6 for more details.

(h) Fair value of investment properties

Fair value of investment properties is decided by valuation models such as comparativemethod, cost method, land development analysis approach, and direct capitalizationmethod of income approach. The fair value of investment properties may be affectedwhen assumptions and judgements used in the valuation models were changed. Pleaserefer to Note 6.

6. Contents of significant accounts


As of December 31,2019 2018

Cash on hand & petty cash $75,645 $40,523Cash in banks 2,993,936 2,027,439Time deposits 5,261 200Cash in transit 1,329 7,944Total $3,076,171 $2,076,106

(2) Financial assets at fair value through profit or loss


Mandatorily measured at fair value through profit or loss:Forward foreign exchange contracts $- $2,023Open ended funds 15,004 -Total $15,004 $2,023Current $15,004 $2,023

Financial assets at fair value through profit or loss were not pledged.





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(3) Financial assets at fair value through other comprehensive income


Equity instrument investments measured at fair valuethrough other comprehensive income:Listed companies’ stocks $156,966 $214,266Unlisted companies’ stocks 338,745 202,475

Total $495,711 $416,741

Current $343,563 $399,417Non-current 152,148 17,324Total $495,711 $416,741

Financial assets at fair value through other comprehensive income were not pledged.

For equity instrument investments measured at fair value through other comprehensiveincome, the Company recognized dividends income in the amount of NTD31,046 thousand.

In consideration of the Company’s investment strategy, the Company disposed the listed stockwhich were reported under equity instrument investments measured at fair value through othercomprehensive income during the years. Upon derecognition, the fair value of the investmentswere NTD95,548 thousand and NTD55,471 thousand as of December 31, 2019 and 2018,respectively, and the related cumulative unrealized evaluation gain were NTD76,584 thousandand NTD39,598 thousand, respectively, which were transferred from other components ofequity to retained earnings.

(4) Financial assets measured at amortized cost


Cash in banks－reserve account $401,391 $357,761Pledged time deposit 1,669,564 828,127Time deposit 16,539 1,301Total $2,087,494 $1,187,189

Current $1,741,451 $829,428Non-current 346,043 357,761Total $2,087,494 $1,187,189





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The Company classified certain financial assets as financial assets measured at amortized cost.Please refer to Note 8 for more details on financial assets measured at amortized cost underpledge and refer to Note 12 for more details on credit risk.

(5) Notes receivable


Notes receivables arising from operating activities $126,322 $203,934Less: loss allowance - -Total $126,322 $203,934

Notes receivables were not pledged.

The Company adopted IFRS 9 for impairment assessment. Please refer to Note 6(25) for moredetails on accumulated impairment. Please refer to Note 12 for more details on credit risk.

(6) Accounts receivable and accounts receivable-related parties


Accounts receivable $2,075,847 $1,945,143Installment accounts receivable (Note) 417,326Less: unrealized interest revenue – accounts receivables

from installment sales (Note) (5,753)Subtotal 2,075,847 2,356,716Less: loss allowance (48,200) (30,900)Subtotal 2,027,647 2,325,816Accounts receivable-related parties 1,695,431 1,843,253Less: Allowance for Sales Returns and Discounts – related

parties - (3,315)Subtotal 1,695,431 1,839,938Less: loss allowance (1,023) (781)Subtotal 1,694,408 1,839,157Total $3,722,055 $4,164,973





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The expected recovery of the accounts receivables from installment sales is as follows:

As of December 31,2019(Note) 2018

Not later than one year $148,796Later than one year and not later than two years 121,655Later than two years 146,875Total $417,326

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected not torestate prior periods in accordance with the transition provision in IFRS 16.

Accounts receivables were not pledged.

The Company’s credit terms are generally 30-180 day. The carrying amount areNTD3,771,278 thousand and NTD4,196,654 thousand as of December 31, 2019 and 2018,respectively, please refer to Note 6(25) for more details on impairment of accounts receivablesfor 2019 and 2018, please refer to Note 12 for more details on credit risk.

(7) Inventory

A. The details of inventories are as follows:


Raw materials $656,755 $718,745Work in progress 1,792,360 1,897,303Finished good 1,406,364 1,640,783Inventories in transit 45,936 71,663Property under construction 150,414 236,570Total $4,051,829 $4,565,064

B. The cost of inventories recognized in expenses are as follows:

For the years endedDecember 31,

2019 2018Cost of inventories recognized in expenses (including

gain and loss from inventory valuation)$15,110,031 $16,078,237

Loss on allowance for inventory valuation (gain fromprice recovery of inventory)

11,945 (3,206)

Total $15,121,976 $16,075,031





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The gain from price recovery of inventory in 2018 is resulted from selling stock on handand prices were recovered of certain products, therefore the cause for the net realizablevalue of inventory to be lower than the cost no longer existed.

C. Inventories were not pledged.

(8) Non-current assets held for sale or Disposal groups held for sale, net


Investments accounted for using Equity method $287,750 $287,750

In the fourth quarter of 2018, the board of directors of the Company has resolved to sell all ofits shares of Tatung Electric Technology (VN) Co., Ltd. and Tatung Vietnam Co., Ltd.According to IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations, theCompany recognized assets and liabilities of Tatung Electric Technology (VN) Co., Ltd. andTatung Vietnam Co., Ltd. as non-current assets held for sale, net. As of December 31, 2019,the Company has received the consideration of NTD588,924 thousand for above transactionsand recognized the amount under advanced receipts as the share transferring procedures werestill ongoing.

Non-current assets held for sale were not pledged.

(9) Investments accounted for using the equity method

A. The following table lists the investments accounted for using the equity method of theCompany:

As of December 31,

2019 2018

Name of investee company

Carrying

amount

Percentage of

ownership

Carrying

amount

Percentage of

ownershipInvestment in subsidiaries:Public entitiesChunghwa Picture Tubes, Ltd. (Note 5) $- - $(2,978,206) 28.56Tatung System Technologies Inc. (Note 8) 546,978 42.70 509,819 53.60Forward Electronics Co., Ltd. 215,737 12.05 237,586 12.05San Chih Semiconductor Co., Ltd. 54,501 43.18 (88,660) 43.18Tatung Fine Chemicals Co. 53,060 48.27 56,885 48.27Green Energy Technology Inc. (Note 6) - - (84,478) 4.54Subtotal 870,276 (2,347,054)





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As of December 31,

2019 2018


Carrying

amount

Percentage of

ownership

Carrying

amount

Percentage of

ownershipNon-public entitiesChunghwa picture tubes, Ltd. (Note 5) $(6,421,754) 28.56 $- -Taiwan Telecommunication Industry Co., Ltd. (854,584) 100.00 (855,140) 100.00Central Research Technology Co. 40,089 100.00 49,876 100.00Tatung Consumer Products (Taiwan) Co., Ltd. (1,267,254) 99.10 (1,181,768) 99.10Tatung Sm-Cyclo Co., Ltd. (Note 7) - - 171,223 85.33Shang-Chih Asset Development Co. 46,394,470 100.00 43,788,755 100.00Chunghwa Electronic Investment Co., Ltd.

(Note 1)(1,095,307) 94.01 (579,043) 93.68

Tatung Die Casting Co. 60,316 51.00 56,246 51.00Tatung (Thailand) Co., Ltd. 531,398 99.99 515,387 99.99Tatung Company of Japan, Inc. 1,325,962 100.00 657,401 100.00Tatung Electronics(S) Pte. Ltd. 80,596 90.00 83,125 90.00Tatung Singapore Information Co., Ltd. (56,288) 100.00 (55,924) 100.00Tatung Electric (Singapore) Pte. Ltd. 736,952 100.00 962,215 100.00Tatung Co. of America Inc. (524,966) 50.00 94,751 50.00Tatung Mexico S.A de C.V. 125,033 99.99 153,528 99.99Tatung Science and Technology Inc. 7,877 100.00 7,612 100.00Tatung Electric Company of America, Inc. 153,009 100.00 175,002 100.00Tatung Netherlands B.V. (145,958) 100.00 (145,958) 100.00TATUNG CZECH s.r.o 7,066 100.00 8,728 100.00Tatung Medical Healthcare Technologies

Co., Ltd. (Note 2)205,107 95.85 168,971 95.56

Toes Opto-Mechatronics Co. 24,746 85.00 15,444 85.00Shang Chih Investment Co., Ltd. 524,156 95.83 515,296 95.83Chih Sheng Investment Co., Ltd. 206,235 100.00 19,143 100.00Taipei Industry Corporation 74 0.00 34 0.00Tatung Forever Energy Co., Ltd. (Note 3) 1,508,602 99.10 462,930 97.12Absolute Alpha Limited 20,525 100.00 20,500 100.00Leap High Limited 1,080 65.00 1,520 65.00Tungyang Energy Co., Ltd. (Note 4) 400,205 100.00 149,431 100.00Hsieh-Chih Industrial Library Publishing Co. 981 6.91 972 6.91Lansong International Co., Ltd. - 98.33 - 98.33Shang Shin Energy Co., Ltd. (Note 4) 89,715 100.00 70 100.00Chih Kuang Energy Co., Ltd. (Note 4) 398,174 100.00 149,932 100.00Yau Yang Energy Co., Ltd. (Note 4) 4,937 100.00 - -Ting Shin Engergy Co., Ltd. (Note 4) 30,058 100.00 - -Zhi Shin Energy Co., Ltd. (Note 4) 39,875 100.00 - -Subtotal 42,551,127 45,410,259





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As of December 31,

2019 2018


Carrying

amount

Percentage of

ownership

Carrying

amount

Percentage of

ownership

Investment in associates:

Listed companies

Elitegroup Computer System Co., Ltd. $3,585,213 27.35 $3,626,573 27.35

Non-listed companies

Tatung-Okuma Co., Ltd. 1,394,385 49.00 1,285,832 49.00

Kuender & Co., Ltd. 62,192 50.00 63,880 50.00

Chung-Tai Technology Development

Engineering Co.

12,125 22.00 13,227 22.00

Tatung Sm-Cyclo Co., Ltd. (Note 7) 248,838 49.00 - -

Subtotal 5,302,753 4,989,512

The balance of the investment accounted

for using equity method

48,724,156 48,052,717

Add: the credit balance of the investment

accounted for using equity method

10,366,111 5,969,177

Total $59,090,267 $54,021,894

B. Investments in subsidiaries:

Investments in subsidiaries were presented as investments accounted for using the equitymethod and adjusted by necessary measurements.

Note 1: Chunghwa Electronics Investment Co., Ltd. held a capital injection in April 2019.The Company subscribed the shares proportionately and thus the Company’sholding percentage increased to 94.01%.

Note 2: Tatung Medical Healthcare Technologies Co., Ltd. held a capital injection in May2019. The Company subscribed to the shares proportionately and thus theCompany’s holding percentage increased to 95.85%.

Note 3: Tatung Forever Energy Co., Ltd. Held capital injections in March、June、July、September、October and November 2019. The Company subscribed to the sharesproportionately and thus the Company’s holding percentage increased to 99.10%.





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Note 4: To expend the solar energy business, in April 2019, the Company established TingShin Energy Co., Ltd., Zhi Shin Energy Co., Ltd. and YAU Yang Energy Co., Ltd.with NTD100 thousand、NTD200,000 thousand and NTD50,000 thousand,respectively. The holding share percentages maintain 100%. Tungyang EnergyCo., Ltd. Held a capital injection with NTD400,000 thousand; Zhi shin Energy Co., Ltd.、Yau Yang Energy Co., Ltd. and Tungyang Energy Co., Ltd., held capitalreductions in September 2019, with NTD160,000 thousand、NTD45,000 thousandand NTD150,000 thousand, respectively, and no change in holding percentage; Shang Shin Energy Co., Ltd. held a capital injection in June and September 2019.With total NTD90,000 thousand, and thus the Company’s holding percentagemaintain 100% Chin kiang Energy Co., Ltd. held capital injections in August andDecember 2019 with total NTD250,000 thousand, and thus the Company’sholding percentage maintain 100%; Ting Shin Energy Co., Ltd. held a capital injection in December 2019 with NTD30,000 and thus the Company’s holdingpercentage maintain 100%.

Note 5: Chuang Picture Tubes, Ltd. resolved at its board meeting on September 18, 2019to file bankruptcy to the court. As of December 31, 2019 the court has notannounced the result of the ruling. CPT resolved to withdraw its public issuancein a provisional shareholders’ meeting on December 30, 2019. The FinancialSupervisory Commission issued letter No. Jin-Guan-Cheng-Fa-Zi -1090131578on February 17, 2020 to approve the company’s application to cease its statusas a public company. Since the management’s intention to discontinue operationwas clear, CPT prepared the financial statements as of December 31, 2019 usingliquidation assumption.

Note 6: Green Energy Technology Co., Ltd. (“GET”) resolved at its board meeting onJuly 15, 2019 to withdraw its public issuance and to proceed dissolution andliquidation. At the provisional shareholders’ meeting held on August 30, 2019, theCompany lost control of GET. The Company recognized the gain on disposal inthe amount of NTD340,922 thousand, reclassified the investment as financialassets measured at fair value through comprehensive income.

Note 7: The Company entered into a sale agreement in the third quarter of 2019 to sell36.33% of its shares of Tatung Sm-Cyclo Co., Ltd. (“Tatung Sm-Cyclo”) and suchtransaction was completed in the fourth quarter. The Company’s shareholdingpercentage in Tatung Sm-Cyclo decreased from 85.33% to 49%, therefore theCompany lost control of this subsidiary. However, the Company still hassignificant influence on the company, therefore Tatung Sm-Cyclo was recognizedas investment accounted for using the equity method following derecognition. Theprofits (losses) from disposing of the investment or derecognition as mentionedabove was NTD266,158 thousand.





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Note 8: Tatung System Technologies Inc.(“TSTI”) approved at its shareholders’ meetingon June 18, 2019 to inject capital with surplus in the form of new shares in 33,600thousand. The Company received 1,800,906 shares from TSTI as a result ofearnings distribution.TSIT approved at its board meeting held on August 8, 2019 to increase capitalwith cash and issued 18,000 thousand shares of common shares at NTD14.2 pershare with par value of NTD10.The Company did not subscribe the newly issued shares and thus the Company’sownership in TSTI was reduced to 42.70%.

For the years ended December 31, 2019 and 2018, the Company received dividends frominvesting in subsidiaries and associates using the equity method amounting toNTD8,220,122 thousand and NTD2,098,784 thousand, respectively.

Please refer to Note 8 for investment in subsidiaries that were pledged as collateral.

C. Investments in associates:

(a) Information on the material associate of the Company:

Company name: Elitegroup Computer Systems Co., Ltd.

Nature of the relationship with the associate: Elitegroup Computer Systems Co., Ltd.is engaged in manufacturing and selling related products in the Company’s industrychain. The Company invested in Elitegroup Computer Systems Co., Ltd. for thepurpose of upstream/downstream integration.

Principal place of business (country of incorporation): Taiwan

Fair value of the investment in the associate when there is a quoted market price forthe investment: Elitegroup Computer Systems Co., Ltd. is a listed entity on the TaiwanStock Exchange (TWSE). The fair value of the investment in Elitegroup ComputerSystems Co., Ltd. was NTD2,088,913 thousand and NTD1,883,071 thousand, as ofDecember 31, 2019 and 2018, respectively.

Reconciliation of the associate’s summarized financial information presented to thecarrying amount of the Company’s interest in the associate:





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The summarized financial information of the associate is as follows:


Current assets $16,236,514 $16,896,467Non-current assets 7,116,714 6,603,916Current liabilities (11,572,898) (11,845,410)Non-current liabilities (761,566) (483,609)Equity 11,018,764 11,171,364

Proportion of the Company’s ownership 27.35% 27.35%Subtotal 3,013,632 3,055,368Goodwill 614,638 614,638Other adjustments (43,057) (43,433)

Carrying amount of the investment $3,585,213 $3,626,573


2019 2018Operating revenue $28,291,303 $31,796,016Profit (loss) from continuing operations 53,061 22,014Other comprehensive income(loss), net of incometax

(142,324) (55,644)

Total comprehensive income (loss) (89,263) (33,630)

Please refer to Note 8 for more details on investments in associates under pledged.

(b) Except the associate mentioned above, other associates were not individually material.The aggregate financial information based on Company’s share of other associates wasas follows:


2019 2018Profit from continuing operations $150,341 $105,076Other comprehensive income, net of income tax 921 230Total comprehensive income 151,262 105,306

(c) The associates had no contingent liabilities or capital commitments as of December31, 2019 and 2018. Investments in associates in (b) were not pledged.





59

D. The balances of certain investments accounted for under the equity method that wereaudited by other auditors were NTD5,220,316 thousand and NTD5,222,643 thousand as ofDecember 31, 2019 and 2018, respectively. The shares of profit (loss) of associatesaccounted for using equity method and joint ventures that were audited by other auditorswere NTD107,773 thousand and NTD145,727 thousand for the years ended December 31,2019 and 2018, respectively. The shares of other comprehensive income (loss) of associatesaccounted for using equity method and joint ventures that were audited by other auditorswere NTD48,004 thousand and NTD (3,344) thousand as of December 31, 2019 and 2018,respectively.


A. The details of property, plant and equipment are as follows (Apply for IFRS 16):

Buildings

Machineryand

equipmentOffice

equipmentTransportation equipment

Leaseholdimprovements

Otherequipment

Constructionin progress

andequipmentawaiting

examination TotalCost:As of January 1, 2019 $550,148 $8,855,249 $395,221 $54,414 $513,436 $1,408,798 $51,383 $11,828,649Additions - 6,165 16,592 759 28,895 39,428 218,046 309,885Disposals - (53,106) (8,848) (6,149) (2,277) (46,079) - (116,459)Other changes (Note) (518,691) 126,122 889 - 2,237 9,019 (99,520) (479,944)As of December 31, 2019 $31,457 $8,934,430 $403,854 $49,024 $542,291 $1,411,166 $169,909 $11,542,131

Depreciation and impairment:As of January 1, 2019 $(420,571) $(5,037,479) $(361,866) $(49,141) $(390,674) $(1,261,396) $- $(7,521,127)Depreciation (7,217) (355,626) (18,271) (1,907) (52,551) (64,535) - (500,107)Impairment - (202,466) - - (24,181) (3,550) - (230,197)Disposals - 50,046 8,634 6,149 2,277 46,079 - 113,185Other changes (Note) 412,403 - 123 - - - - 412,526As of December 31, 2019 $(15,385) $(5,545,525) $(371,380) $(44,899) $(465,129) $(1,283,402) $- $(7,725,720)

Net carrying amount as of:December 31, 2019 $16,072 $3,388,905 $32,474 $4,125 $77,162 $127,764 $169,909 $3,816,411

Note 1: Including transfer from advance payments of equipment, changes of exchangerates and reclassification.

Note 2: The Company adopted IFRS 16 since January 1, 2019. The Company elected notto restate prior periods in accordance with the transition provision in IFRS.





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B. Property, plant and equipment (Applicable to requirements fedora IFRS 16)

The details of property, plant and equipment are as follows:

Buildings

Machineryand

equipmentOffice

equipmentTransportation equipment

Leaseholdimprovements

Otherequipment

Constructionin progress

andequipmentawaiting

examination TotalCost:As of January 1, 2018 $549,999 $8,110,201 $396,328 $57,872 $486,329 $1,467,013 $548,197 $11,615,939Additions 149 69,118 14,521 1,344 15,251 53,172 265,943 419,498Disposals - (135,614) (23,258) (4,802) (8,023) (129,740) - (301,437)Other changes (Note) - 811,544 7,630 - 19,879 18,353 (762,757) 94,649As of December 31, 2018 $550,148 $8,855,249 $395,221 $54,414 $513,436 $1,408,798 $51,383 $11,828,649

Depreciation and impairment:As of January 1, 2018 $(406,389) $(4,748,696) $(363,019) $(52,157) $(340,633) $(1,317,021) $- $(7,227,915)Depreciation (14,182) (419,650) (22,078) (1,775) (57,255) (72,747) - (587,687)Impairment - (4,782) - - - - - (4,782)Disposals - 135,581 23,196 4,791 7,214 128,372 - 299,154Other changes (Note) - 68 35 - - - - 103As of December 31, 2018 $(420,571) $(5,037,479) $(361,866) $(49,141) $(390,674) $(1,261,396) $- $(7,521,127)

Net carrying amount as of:December 31, 2018 $129,577 $3,817,770 $33,355 $5,273 $122,762 $147,402 $51,383 $4,307,522

Note 1: Including transfer from advance payments of equipment, changes of exchangerates and reclassification)

A. Components of buildings, including main building structure, electronic engineering,electrical engineering, fire engineering, air conditioning units and elevators, aredepreciated by their useful lives 3~50 year.

B. Please refer to Note 8 for more details on property, plant and equipment that were pledgedas collateral.

C. Assets related to Tatung University are described as follows:

The carrying amount of Hsin-She-Gong Building (“the Building”) was NTD106,288thousand. The Company provided the fund fully for the building. The ownershipregistration was completed, and the Company has acquired building use permit and relatedlicenses. As the state of construction and use of Hsin-She-Gong Building on June 30, 2019has met the definition of investment property the Company reclassified it to the investmentproperty from property, plant and equipment. Please refer to Note 6(11).





61

On May 6, 2016, Shan-Chih Asset Development purchased the land of Hsin-She-GongBuilding and completed the transfer of title. The development plans of this building willgo with the overall plans of the whole factory area of the Company in the future. And therelated issues, such as change of purpose of utilizing the land, urban planning and longterm plans are still in the communication process between Tatung University and theEducation ministry authority.

D. Part of the lands and land prepayments were held temporarily under third parties’ namesbecause of other reasons. The preservation measures have been taken to protect the assets.

E. The Company has reduced the balance of its property, plant and equipment to recoverableamount, which resulted in impairment loss in the amount of NTD230,197 thousand,recognized in the parent company only statements of comprehensive income.

F. There was no borrowing cost capitalized for property, plant and equipment in 2019 and2018.


For the year endedDecember 31,

2019Buildings

Cost:As of January 1, 2019 $-Transfer from property, plant and equipment 106,288Gain on fair value adjustment 56,942As of December 31, 2019 $163,230

As the owner-occupancy rate of Hsin-She-Gong Building was reduced, the building wasreclassified from property plant and equipment to investment property according to IAS 40“Investment property”. Upon reclassification, the Company remeasured the building by usingfair value model and recognized an amount of NTD56,942 thousand as gain on revaluation,net of tax, under other comprehensive income.

The Company entered into commercial property lease with respect to its investment propertywith terms between one to ten years. All leases include a clause to enable upward revision ofthe rental charge on an annual basis according to prevailing market conditions.

The Company recognized its investment property in accordance with the RegulationsGoverning the Preparation of Financial Reports by Securities Issuers. As of December 31,2019 , the fair value of the investment property is as below:





62


External appraisal $163,230

The fair value of the above investment property is estimated by external real estate appraiser.The date of the appraise is on December 31, 2019, and appraise by Chonglian External realestate appraiser.

The fair value of the investment property was assessed by the abovementioned external realestate appraiser firm based on current status and market evidence. The assessmentmethodologies included discounted cash flow analysis method of income approach.

(1) Chonglian External real estate appraise firm: Mr Liao.

If the assets are held mainly for rental income, the assessment should take into considerationthe contract signed and other comparable property in the neighboring region. In addition toincome approach, the assessment should also be made with direct capitalization method ordiscounted cash flow analysis method.

Also, real estate appraiser firm examined comparable of our subject and took intoconsideration the development schedule, liquidity, risk premium of disposal in the future todecide income capitalization rate and discount rate. The significant parameters involved in theassessment are as follows:

Contract rental fee and rental price on market:As of December 31,

2019Contract rental fee (3.3 square meter/month/NTD) $1,200Market comparable (3.3 square meter/month/NTD) $1,196

Main parameters:As of December 31,

2019Discount rate of disposal at year-end 2.5048%Discount rate during analysis period 2.2996%


2019Rental income from investment property $5,555Less: Direct operating expenses from investment property generating

rental income (not including depreciation)(3,271)

Total $2,284

Note: Rental fee considered the lease term and market conditions.





63


Computer software costComputer software

Cost:As of January 1, 2019 $212,273Addition 241Disposal -As of December 31, 2019 $212,514As of January 1, 2018 $275,883Addition 4,693Disposal (68,303)As of December 31, 2018 $212,273

Amortization and impairment:As of January 1, 2019 $(199,990)Amortization (9,111)Disposal -As of December 31, 2019 $(209,101)As of January 1, 2018 $(252,354)Amortization (15,939)Disposal 68,303As of December 31, 2018 $(199,990)

Net book value:As December 31, 2019 $3,413As December 31, 2018 $12,283

Amortization expense of intangible assets under the statement of comprehensive income:


2019 2018Operating costs $2,149 $2,210Operating expense $6,962 $13,729

(13) Other non-current assetsAs of December 31,2019 2018

Advance payments in equipment $158,859 $19,739Other non-current assets - other 140,401 152,034Total $299,260 $171,773





64

With respect to the above mentioned other non-current assets – other, part of the lands andland prepayments were held temporarily under third parties’ names because of regulatoryrequirements or other reasons. As of December 31, 2019, and 2018, land under third partiesthat had pledged to the Company were both NTD66,367 thousand and land unsecured wereNTD3,478 thousand and NTD4,669 thousand, respectively. For those lands that the Companyhas not secured its right over them, the Company continues handling the issue proactively.

Other non-current assets were not pledged.

(14) Long-term receivables-net


Long-term receivables $1,430,964 $78,106Less: loss allowance (1,352,858) -Net $78,106 $78,106

(15) Prepayments for investments


Prepayments for investments $- $106,390

Prepayments for investments of 2019 is resulted from the expected transfer of shares ofVoltamp Power from royalty receivables. Such transaction has been completed in the fourthquarter of 2019, and the Company recognized the investment as financial assets at fair valuethrough other comprehensive income.

(16) Short-term loans

Interest RatesAs of December 31,2019 2018

Unsecured bank loans 1.77%~2.30% $100,000 $550,000Secured bank loans 1.63%~2.02% 800,000 2,500,000L/C loans 1.06%~5.20% 613,918 1,322,140Short-term loans in foreign currency 1.15%~4.72% - 213,751Subtotal $1,513,918 4,585,891Due to employees 0.12%~0.17% 14,773 15,805Total $1,528,691 $4,601,696





65

The Company’s unused short-term lines of credits amounted to NTD427,969 thousand andNTD628,017 thousand as of December 31, 2019 and 2018, respectively.

Certain investments accounted for using the equity method and certain property, plant andequipment were pledged as collaterals for secured bank loans. Please refer to Note 8 for moredetails.

(17) Short-term notes and bills payable

Guarantors Interest RatesAs of December 31,2019 2018

Unsecured domestic bills payable 0.75%~1.00% $152,000 $252,000Less: Unamortized discount (206) (89)Net $151,794 $251,911

(18) Financial liabilities at fair value through profit or loss


Held for trading:Derivatives not designated as hedging Instruments

Forward foreign exchange contracts $2,808 $-Current $2,808 $-

(19) Deferred revenue

Government grants


Beginning balance $49,794 $544Received during the period 2,558 52,366Released to the statement of comprehensive income (33,548) (3,116)Ending Balance $18,804 $49,794

The government grants related to income are recognized according to the period that therelated cost was recognized as expenses in a systematic manner.



TATU

NG

CO

., LT

D.

NO

TES

TO P

ARE

NT

COM

PAN

Y O

NLY

FIN

AN

CIA

L ST

ATE

MEN

TS(E

xpre

ssed

in T

hous

ands

of N

ew T

aiw

an D

olla

rs u

nles

s oth

erw

ise S

peci

fied)

66

(20)

Lon

g-te

rm lo

ans

Det

ails

of lo

ng-te

rm lo

ans a

s of D

ecem

ber 3

1, 2

019

and

2018

are

as f

ollo

ws:

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)M

atur

ity d

ate a

nd te

rms o

f rep

aym

ent

2019

2018

Secu

red

Long

-term

loan

s fro

m K

ing’

s Tow

nBa

nk$-

$375

,000

2.07

Effe

ctiv

e fro

m S

epte

mbe

r 28,

201

7 to

Sep

tem

ber 2

8, 2

019.

(non

-revo

lvin

g us

e, us

ed in

bat

ches

,ea

ch lo

an u

se up

to 2

year

s, ca

nnot

exce

ed ex

piry

date

, int

eres

t pay

men

ts du

e mon

thly

, onl

y int

eres

tpa

ymen

ts ne

eded

in th

e gr

ace

perio

d of

12

mon

ths,

first

repa

ymen

t dat

e be

ing

the

15th

mon

ths

afte

r the

gran

ted d

ay, q

uarte

rly re

paym

ent o

f the

25%

of t

he am

ount

of t

he lo

an ag

reem

ent,

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nce

bein

g re

duce

d if

no p

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pal,

prin

cipa

l bei

ng re

paid

upo

n m

atur

ity).

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ecur

ed lo

ng-te

rm lo

ans f

rom

Kin

g’s T

own

Bank

-11

2,50

02.

07Ef

fect

ive

from

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tem

ber 2

8, 2

017

to S

epte

mbe

r 28,

201

9. (n

on-re

volv

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use,

used

in b

atch

es,

each

loan

use

up to

2 ye

ars,

cann

ot ex

ceed

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ry da

te, i

nter

est p

aym

ents

due m

onth

ly, o

nly i

nter

est

paym

ents

need

ed in

the

grac

e pe

riod

of 1

2 m

onth

s, fir

st re

paym

ent d

ate

bein

g th

e 15

th m

onth

saf

ter t

he g

rant

ed da

y, qu

arte

rly re

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ent o

f the

25%

of t

he am

ount

of t

he lo

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reem

ent,

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nce

bein

g re

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d if

no p

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prin

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l bei

ng re

paid

upo

n m

atur

ity).

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ecur

ed lo

ng-te

rm lo

ans f

rom

Kin

g’s T

own

Bank

-26

2,50

02.

07Ef

fect

ive

from

Nov

embe

r 27,

201

7 to

Sep

tem

ber 2

8, 2

019.

(non

- revo

lvin

g us

e, us

ed in

bat

ches

,ea

ch lo

an u

se up

to 2

year

s, ca

nnot

exce

ed ex

piry

date

, int

eres

t pay

men

ts du

e mon

thly

, onl

y int

eres

tpa

ymen

ts ne

eded

in th

e gr

ace

perio

d of

12

mon

ths,

first

repa

ymen

t dat

e be

ing

the

15th

mon

ths

afte

r the

gra

nted

day,

quar

terly

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f the

amou

nt o

f the

loan

agre

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t, ba

lanc

ebe

ing

redu

ced

if no

prin

cipa

l, pr

inci

pal b

eing

repa

id u

pon

mat

urity

).U

nsec

ured

long

-term

loan

s fro

m K

ing’

s Tow

nBa

nk-

225,

000

2.07

Effe

ctiv

e fro

m D

ecem

ber 2

9, 20

17 to

Sep

tem

ber 2

8, 20

19. (

non-

revo

lvin

g use

, use

d in

batc

hes,

each

loan

use

up

to 2

yea

rs, c

anno

t exc

eed

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ry d

ate,

inte

rest

paym

ents

due

mon

thly

, onl

y in

tere

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eded

in th

e gra

ce pe

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onth

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st re

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of t

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-15

0,00

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to S

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25%

of t

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of t

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nce

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d if

no p

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pal,

prin

cipa

l bei

ng re

paid

upo

n m

atur

ity).

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

29,1

6736

,944

2.51

Effe

ctiv

e Ju

ly 9

, 201

4 to

July

9, 2

020.

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ce th

e fir

st us

e da

te, p

rinci

pal i

s rep

aid

in 3

6 qu

arte

rlypa

ymen

ts.



TATU

NG

CO

., LT

D.

NO

TES

TO P

AR

ENT

CO

MPA

NY

ON

LY F

INA

NC

IAL

STA

TEM

ENTS

(Exp

ress

ed in

Tho

usan

ds o

f New

Tai

wan

Dol

lars

unl

ess o

ther

wis

e Sp

ecifi

ed)

67

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Not

e)M

atur

ity d

ate

and

term

s of r

epay

men

t20

1920

18Se

cure

d Lo

ng-te

rm lo

ans f

rom

Ban

k Si

noPa

c$1

7,64

7$2

2,35

32.

51~2

.57

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ctiv

e Fe

brua

ry 2

6, 2

015

to J

uly

9, 2

020.

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ce th

e fir

st us

eda

te, p

rinci

pal i

s re

paid

in 3

6qu

arte

rly p

aym

ents

.Se

cure

d Lo

ng-te

rm lo

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k Si

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c20

6,87

523

4,45

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ctiv

e A

pril

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015

to A

pril

27, 2

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ce th

e fir

st us

e da

te, p

rinci

pal i

s re

paid

in

48qu

arte

rly p

aym

ents

.Se

cure

d Lo

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rm lo

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rom

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k Si

noPa

c43

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48,1

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fect

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une 2

7, 2

017

to Ju

ne 2

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ce th

e firs

t use

dat

e, p

rinci

pal i

s rep

aid

in 4

8 qu

arte

rlypa

ymen

ts.

Secu

red

Long

-term

loan

s fro

m B

ank

Sino

Pac

-91

,875

2.56

Effe

ctiv

e Ju

ne 2

7, 2

017

to N

ovem

ber 1

5, 2

019.

Sin

ce th

e fir

st u

se d

ate,

prin

cipa

l is r

epai

d in

48

quar

terly

pay

men

ts.

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red

Long

-term

loan

s fro

m B

ank

Sino

Pac

83,1

25-

2.56

Effe

ctiv

e Jun

e 27,

201

7 to

July

23,

202

4. S

ince

the f

irst u

se d

ate.

Prin

cipa

l is r

epai

d in

48

quar

terly

paym

ents

.U

nsec

ured

long

-term

loan

s fro

m T

aiw

anC

oope

rativ

e B

ank

-1,

100,

000

2.09

Effe

ctiv

e D

ecem

ber 2

9, 2

017

to D

ecem

ber 2

9, 2

019.

The

prin

cipa

l will

be

repa

id u

pon

mat

urity

.

Uns

ecur

ed lo

ng-te

rm lo

ans f

rom

Tai

wan

Coo

pera

tive

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k1,

100,

000

-2.

25Ef

fect

ive

Mar

ch 2

9, 2

019

to M

arch

29,

202

3. In

tere

st pa

ymen

ts du

e m

onth

ly a

nd p

rinci

pal i

s re

paid

form

the

third

yea

r in

8 eq

ual i

nsta

llmen

ts p

er q

uarte

r.U

nsec

ured

long

-term

loan

s fro

m F

ar E

aste

rnIn

tern

atio

nal B

ank

--

2.02

Effe

ctiv

e D

ecem

ber 1

0, 2

015

to D

ecem

ber 2

2, 2

020.

Rev

olvi

ng u

se. W

hene

ver i

ndiv

idua

l pro

ject

bills

and

rece

ives

pay

men

t in

the

com

pens

atio

n ac

coun

t, 77

% o

f suc

h de

posit

will

be

used

tore

pay

the

prin

cipa

l.U

nsec

ured

long

-term

loan

s fro

m F

ar E

aste

rnIn

tern

atio

nal B

ank

-29

4,17

22.

02Ef

fect

ive

Sept

embe

r 12,

201

8to

June

19,

202

0. R

evol

ving

use

. Whe

neve

r ind

ivid

ual p

roje

ct b

ills

and

rece

ives

pay

men

t in

the

com

pens

atio

n ac

coun

t, 77

% o

f suc

h de

posit

will

be

used

to re

pay

the

prin

cipa

l.U

nsec

ured

long

-term

loan

s fro

m F

ar E

aste

rnIn

tern

atio

nal B

ank

600,

449

700,

000

2.02

Effe

ctiv

e D

ecem

ber 1

2, 2

018

to D

ecem

ber 5

, 202

0. R

evol

ving

use

. Whe

neve

r ind

ivid

ual p

roje

ctbi

lls a

nd re

ceiv

es p

aym

ent i

n th

e co

mpe

nsat

ion

acco

unt,

77%

of s

uch

depo

sit w

ill b

e us

ed to

repa

y th

e pr

inci

pal.

Secu

red

Long

-term

loan

s fro

m O

-Ban

k20

,997

33,0

992.

28~2

.55

Effe

ctiv

e D

ecem

ber 2

9, 2

017

to D

ecem

ber 2

9, 2

020.

The

prin

cipa

l will

be

repa

id in

24

mon

thly

paym

ents

at t

he e

nd o

f eac

h m

onth

star

ting

Janu

ary

31, 2

019.

The

1st

paym

ent w

ill b

e N

TD75

0th

ousa

nd a

nd th

e 2nd

to 2

3rdpa

ymen

ts w

ill b

e N

TD1,

032

thou

sand

and

the

rem

aini

ng w

ill b

ere

paid

on

Dec

embe

r 29,

202

0.Se

cure

d Lo

ng-te

rm lo

ans f

rom

O-B

ank

10,0

4316

,000

2.28

~2.5

5Ef

fect

ive

Sept

embe

r 26,

201

8to

Dec

embe

r 29,

202

0. T

he p

rinci

pal w

ill b

e re

paid

in 2

4 m

onth

lypa

ymen

ts a

t the

end

of e

ach

mon

th st

artin

g Ja

nuar

y 31

, 201

9. T

he 1

stpa

ymen

t will

be

NTD

369

thou

sand

and

the 2

nd to

23rd

paym

ents

will

be N

TD50

8 tho

usan

d an

d th

e rem

aini

ng w

ill b

e rep

aid

on D

ecem

ber 2

9, 2

020.



TATU

NG C

O., L

TD.

NOTE

S TO

PAR

ENT

COM

PANY

ONL

Y FI

NANC

IAL

STAT

EMEN

TS(E

xpre

ssed

in T

hous

ands

of N

ew T

aiwan

Dol

lars u

nles

s oth

erwi

se S

pecif

ied)

68

Lend

ers

As o

f Dec

embe

r 31,

Inte

rest

rate

(%) (

Note

)M

aturit

y da

te an

d ter

ms o

f rep

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ent

2019

2018

Secu

red

Long

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loan

s fro

mTa

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rnati

onal

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$-$7

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ve Ju

ly 3

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ly 2

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first

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t will

be

on th

e da

te fir

st six

mon

ths

ende

d, an

d ev

ery

paym

ent w

ill b

e on

ever

y en

d of

mon

th, t

he p

rinci

pal w

ill b

e pai

d ev

enly

for

180

paym

ents.

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-term

loan

s fro

m T

aishi

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tern

ation

al Ba

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92,0

002.

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ve S

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ly 2

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se d

ate p

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al is

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id in

180

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thly

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ts.Se

cure

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ans f

rom

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k of

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an15

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001.

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.06

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ctive

Dec

embe

r 23,

201

6 to

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mbe

r 23,

202

1. T

he 1

st re

paym

ent o

f prin

cipa

l is i

n 3 y

ears

after

first

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main

ing

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cipa

l is r

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d in

5 se

mi-a

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lly re

paym

ents.

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1st

to 4

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ts wi

ll be

5%

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in th

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repa

ymen

t.Se

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ter fi

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raw.

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rem

ainin

g pr

inci

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s rep

aid

in 5

sem

i-ann

ually

repa

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ts. T

he 1

st to

4th

repa

ymen

ts wi

ll de

crea

se th

e cre

dit l

imit

by 5

% ea

ch, a

nd th

e rem

ainin

g 80

% w

ill b

e rep

aid in

the 5

th re

paym

ent.

Two-

year

loan

s due

to st

ockh

olde

rs an

dem

ploy

ees

14,9

4614

,946

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otal

25,8

56,7

9128

,678

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: una

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ng co

st(8

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24)

25,7

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3928

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rent

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tion

(2,2

50,4

88)

(3,2

65,3

30)

Total

$23,

526,

251

$25,

290,

318

(Not

e: In

teres

t rate

s are

roun

ded

off t

o th

e sec

ond

decim

al pl

ace.)

Shan

-Chi

h As

set D

evelo

pmen

t Co.

gua

rant

eed

the C

ompa

ny’s

long

-term

loan

s. As

of D

ecem

ber 3

1, 2

019,

and 2

018,

the b

alanc

e of g

uara

ntee

swa

s NTD

27,9

60,0

00 th

ousa

nd a

nd N

TD28

,800

,000

thou

sand

, res

pecti

vely

; the

Com

pany

’s Ch

airm

an, W

en-Y

en L

in K

uo, g

uara

ntee

d pa

rt of

the C

ompa

ny’s

bank

loan

s.

For t

he se

cure

d sy

ndica

ted lo

ans f

rom

Ban

k of

Taiw

an, t

he C

ompa

ny b

reac

hed

the d

ebt c

oven

ant o

f liab

ility

to eq

uity

ratio

as o

f Jun

e 30,

201

9be

caus

e th

e Co

mpa

ny re

cogn

ized

the

inve

stmen

t los

s of

CPT

and

GET

, whi

ch c

ause

d th

e sig

nific

ant i

ncre

ase

in th

e cr

edit

balan

ce o

f the

inve

stmen

t acc

ount

ed fo

r usin

g eq

uity

meth

od(li

abili

ty ac

coun

t). T

he C

ompa

ny h

as o

btain

ed w

aiver

lette

r for

the d

ebt c

oven

ant o

n Oc

tobe

r 18,

2019

, the

refo

re th

ere w

as n

o im

med

iate r

epay

men

t of t

he lo

ans t

rigge

red

by b

reac

h of

cove

nant

s.

Part

of th

e pro

perty

, plan

t and

equi

pmen

t, fin

ancia

l ass

ets m

easu

red

at am

ortiz

ed co

st, an

d in

vestm

ents

acco

unted

for u

sing

the e

quity

meth

odwe

re p

ledge

d as

colla

teral

for s

ecur

ed lo

ans.

Plea

se re

fer t

o No

te 8

for m

ore d

etails

.





69


Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Actof the R.O.C. Under the Labor Pension Act, the Company will make monthly contributionsof no less than 6% of the employees’ monthly wages to the employees’ individual pensionaccounts. The Company has made monthly contributions of 6% of each individual employee’ssalaries or wages to employees’ pension accounts.

Expenses under the defined contribution plan for the years ended December 31, 2019 and2018 were NTD68,473 thousand and NTD69,331 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act ofthe R.O.C. The pension benefits are disbursed based on the units of service years and theaverage salaries in the last month of the service year. Two units per year are awarded for thefirst 15 years of services while one unit per year is awarded after the completion of the 15th

year. The total units shall not exceed 45 units. Under the Labor Standards Act, theCompany contributes an amount equivalent to 4% of the employees’ total salaries and wageson a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of theadministered pension fund committee. Before the end of each year, the Company assessesthe balance in the designated labor pension fund. If the amount is inadequate to pay pensionscalculated for workers retiring in the same year, the Company will make up the difference inone appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan inaccordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of theLabor Retirement Fund. The pension fund is invested in-house or under mandates, based on apassive-aggressive investment strategy for long-term profitability. The Ministry of Laborestablishes checks and risk management mechanism based on the assessment of risk factorsincluding market risk, credit risk and liquidity risk, in order to maintain adequate managerflexibility to achieve targeted return without over-exposure of risk. With regard to utilizationof the pension fund, the minimum earnings in the annual distributions on the final financialstatement shall not be less than the earnings attainable from the amounts accrued from two-yeartime deposits with the interest rates offered by local banks. Treasury Funds can be used tocover the deficits after the approval of the competent authority. As the Company does notparticipate in the operation and management of the pension fund, no disclosure on the fair valueof the plan assets categorized in different classes could be made in accordance with paragraph142 of IAS 19. The Company expects to contribute NTD293,600 thousand to its definedbenefit plan during the 12 months beginning after December 31, 2019.





70

As of December 31, 2019, and 2018, the durations of the defined benefits plan are 2029.

Pension costs recognized in profit or loss for the years ended December 31, 2019 and 2018:

For the years ended

December 31,

2019 2018

Current period service costs $16,349 $18,986

Past service costs 45 2,489

Interest income or expense 18,937 26,786

Expected return on plan assets (13,118) (12,584)

Total $22,213 $35,677

Changes in present value of defined benefit obligation and fair value of plan assets are as

follows:

As of

2019.12.31 2018.12.31 2018.01.01

Present value of the defined benefit

obligation

$1,922,952 $2,014,580 $2,145,834

Plan assets at fair value (1,379,720) (1,363,053) (973,695)

Subtotal 543,232 651,527 1,172,139

Other 2,622 2,622 2,622

Other non-current liabilities - net defined

benefit liabilities(assets) $545,854 $654,149 $1,174,761





71

Reconciliation of net defined benefit liability (asset) is as follows:

Present value ofDefined benefit

obligationFair value ofplan assets

Net definedbenefit liability

(asset)As of January 1, 2018 $2,145,834 $(973,695) $1,172,139Current period service costs 18,986 - 18,986Past service costs 2,489 - 2,489Net interest expense (income) 26,786 (12,584) 14,202Subtotal 2,194,095 (986,279) 1,207,816Remeasurements of the net defined benefit

liability (asset):Actuarial gains and losses arising from

changes in financial assumptions 62,470 - 62,470Experience adjustments (3,267) - (3,267)Return on plan assets - (21,466) (21,466)Subtotal 59,203 (21,466) 37,737

Payments from the plan (160,182) 160,182 -Benefits paid (78,536) - (78,536)Contributions by employer - (515,490) (515,490)As of December 31, 2018 2,014,580 (1,363,053) 651,527Current period service costs 16,349 - 16,349Past service cost 45 - 45Net interest expense (income) 18,937 (13,118) 5,819Subtotal 2,049,911 (1,376,171) 673,740Remeasurements of the net defined benefit

liability (asset):Actuarial gains and losses arising from

changes in financial assumptions 47,085 - 47,085Experience adjustments 13,014 - 13,013Return on plan assets - (44,400) (44,400)Subtotal 60,099 (44,400) 15,699

Payments from the plan (144,651) 144,651 -Benefits paid (42,407) - (42,407)Contributions by employer - (103,800) (103,800)As of December 31, 2019 $1,922,952 $(1,379,720) $543,232





72

The following significant actuarial assumptions are used to determine the present value of thedefined benefit obligation:


Discount rate 0.690% 0.940%Expected rate of salary increases 2.250% 2.250%

A sensitivity analysis for significant assumption as at December 31, 2019 and 2018 is, asshown below:

Effect on the defined benefit obligation2019 2018

Increasedefinedbenefit

obligation

Decreasedefinedbenefit

obligation

Increasedefinedbenefit

obligation

Decreasedefinedbenefit

obligationDiscount rate increase by 0.25% $- $47,085 $- $50,612Discount rate decrease by 0.25% 48,917 - - 52,624 -

The sensitivity analyses above are based on a change in the actuarial assumption (for example:change in discount rate or future salary), keeping all other assumptions constant. Thesensitivity analyses may not be representative of an actual change in the defined benefitobligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivityanalyses compared to the previous period.

(22) Provisions, current

Reserve forlawsuit

Maintenancewarranties Total

As of January 1, 2019 $- $84,912 $84,912Arising during the period 71,999 27,639 99,638Utilized - (3,325) (3,325)As of December 31, 2019 $71,999 $109,226 $181,225As of December 31, 2018 $- $84,912 $84,912





73

Maintenance warranties

A provision is recognized for expected warranty claims on products sold, based on pastexperience, management’s judgment and other known factors.

Provisions for legal matters

Provisions have been recognized for estimated legal obligations and relevant cost based onpast experience. If the existing obligation is mostly likely to incur and the amount may bereasonably estimated, the provisions for legal matters is to be recognized.

(23) Equities

A. Common stock

As of December 31, 2019 and 2018, the Company’s authorized capital and issued capitalwere NTD100,000,000 thousand and NTD23,395,367 thousand, with a par value ofNTD10 dollar, totaling 10,000,000 thousand shares and 2,339,537 thousand shares,respectively. Each share is entitled to one voting right and the right to receive dividends.

As of December 31, 2019 and 2018, 1,000,000 thousand shares of the Company wereissued as 50,000 thousand units of global depositary receipts (“GDR”), each GDR equalingto 20 shares. The GDR were listed on Luxembourg Stock Exchange.

B. Capital reserve


Subsidiaries disposed shares of Parent Company deemedas treasury stock transaction

$115,169 $115,169

Share of changes in net assets of subsidiaries, associatesand joint ventures accounted for using the equitymethod

3,142,781 3,062,728

Other 105,135 105,135Total $3,363,085 $3,283,032

According to the Company Act, the capital reserve shall not be used except for offsettingthe deficit of the company. When a company incurs no loss, it may distribute the capitalreserves related to the income derived from the issuance of new shares at a premium orincome from endowments received by the Company. The distribution could be made incash or in the form of dividend shares to its shareholders in proportion to the number ofshares being held by each of them.





74

C. Treasury stock

As of December 31, 2019, and 2018 the Company’s subsidiaries, CPT and its subsidiaries,held 0 thousand shares and 59,653 thousand shares of the Company’s stock, respectively.Chunghwa Electronics Investment Co., a subsidiary of the Company, held 0.5 thousandshares and 0.5 thousand shares of the Company’s stock, respectively. The stocks mentionedabove were held for financing purpose before the amendments of the Company Act onNovember 12, 2001.

FD, a subsidiary of the Company, purchased shares of the Company for a total of 36,236thousand shares in 2016, and sold 28,691 thousand shares and 3,070 thousand shares in2018 and 2017, respectively. As of December 31, 2019 and 2018 the Company’ssubsidiaries, FD held 4,475 thousand shares and 4,475 thousand shares of the Company’sstock, respectively.

Chunghwa Electronics Investment Co., a subsidiary of the Company, sold 333 thousandshares in 2018.

CPT, a subsidiary of the Company, applied for financial structuring in December, 2018 andpledged shares of the Company, Ltd. to a bank after applying for financial structuring. Thebank sold the 10,945 thousand shares pledged in 2018.

Chunghwa Picture Tubes (Bermuda) Ltd., a subsidiary of the Company, sold 59,653thousand shares in the first three quarters of 2019.

As of December 31, 2019, the Company’s treasury shares were NTD30,854 thousand,which Chunghwa Electronics Investment Co., held NTD10 thousand and FD heldNTD30,844 thousand.

D. Retained earnings and dividend policies:

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shallbe distributed in the following order:

(a) Payment of all taxes and dues(b) Offset prior years’ operation losses(c) Appropriate 10% of the remaining amount after deducting items (a) and (b) as a legal

reserve(d) Appropriate or reverse special reserve in accordance with relevant laws or regulations(e) After deducting items (a), (b), (c) and (d) above from the current year’s earnings, the

distribution of the remaining portion, if any, will be recommended by the board ofdirectors and resolved in the stockholders’ meeting.





75

According to the Company Act, the Company needs to set aside amount to legal reserveunless where such legal reserve amounts to the total authorized capital. The legal reservecan be used to offset the deficit of the Company. When the Company incurs no loss, it maydistribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuingnew shares or by cash in proportion to the number of shares being held by each of theshareholders.

Following the adoption of T-IFRS, the FSC on April 6, 2012 issued Order No. Jin-Guan-Zheng-Fa-Zi No. 1010012865, which sets out the following provisions for compliance:

On a public company's first-time adoption of the T-IFRS, for any unrealized revaluationgains and cumulative translation adjustments (gains) recorded to shareholders’ equity thatthe company elects to transfer to retained earnings by application of the exemption underIFRS 1, the company shall set aside an equal amount of special reserve. Following acompany’s adoption of the T-IFRS for the preparation of its financial reports, whendistributing distributable earnings, it shall set aside special reserve, from the profit/loss ofthe current period and the undistributed earnings from the previous period, an amount equalto “other net deductions from shareholders’ equity for the current fiscal year, provided thatthe company has already set aside special reserve according to the requirements in thepreceding point, it shall set aside supplemental special reserve based on the differencebetween the amount already set aside and other net deductions from shareholders’ equity.For any subsequent reversal of other net deductions from shareholders’ equity, the amountreversed may be distributed.

As of January 1, 2014, special reserve set aside for the first-time adoption of T-IFRSamounted to NTD15,894,690 thousand. Also, the Company disposed of related assets andreversed special reserves of NTD416,657 thousand to retained earnings. In 2018, theCompany has changed the measurement of investment property from cost model to fairvalue model. The policy should be applied retrospectively to all subsidiaries of theCompany based on the conformity of the Company accounting policy. As a result, thesubsidiaries restated their financial statements and the Company recognized relatedadjustments and increase retained earnings as of January 1, 2018 according to equitymethod. Such retained earnings were set aside for special reserve in the amount of NTD13,855,398 thousand according to Financial Supervisory Commission’s letter. In theshareholders’ meeting in prior years, the Company resolved to make up for its losses byspecial reserve of NTD21,719,645 thousand and to recover the special reserve amountedto NTD124,233 thousand. Unrecovered special reserve amounted to NTD21,595,412thousand. To sum up, special reserve set aside for the first-time adoption of T-IFRSamounted to NTD7,738,019 thousand as of December 31, 2019.





76

Details of the 2018 deficits compensation as approved by the shareholders’ meeting onJune 27, 2019 is as follows:

Deficits compensation2018

Special reserve to compensate deficits $10,243,598

Please refer to Note 6(27) for more details about provision for employees’ bonuses andcompensation for directors and supervisors.

(24) Operating revenue


2019 2018Revenue from contracts with customers

Sale of goods $16,053,377 $17,310,546Revenue arising from rendering of services 1,435,445 1,390,239Other operating revenues 31,234 437,703

Subtotal $17,520,056 $19,138,488Leasing revenue 305,693 (Note)Total $17,825,749 $19,138,488

Note: The Company has adopted IFRS 16 since January 1, 2019. The Company elected not torestate prior periods in accordance with the transition provision in IFRS 16.

Analysis of revenue from contracts with customers during the year is as follows:

A. Disaggregation of revenue

For the year 2019Electromechan

ical EnergyBusiness Dept

ConsumerProducts Dept

Other BusinessDept Total

Sale of goods $10,810,145 $5,235,844 $7,388 $16,053,377Rendering of services 1,405,166 30,279 - 1,435,445Others 28,120 2,872 242 31,234Total $12,243,431 $5,268,995 $7,630 $17,520,056

Timing of revenuerecognition:At a point in time $11,528,987 $5,268,995 $7,630 $16,805,612Over time 714,444 - - 714,444

Total $12,243,431 $5,268,995 $7,630 $17,520,056





77

For the year 2018Electromechanical EnergyBusiness Dept

ConsumerProducts Dept

Other BusinessDept Total

Sale of goods $10,969,057 $6,337,438 $4,051 $17,310,546Rendering of services 1,358,363 31,876 - 1,390,239Others 429,304 1,908 6,491 437,703Total $12,756,724 $6,371,222 $10,542 $19,138,488

Timing of revenuerecognition:At a point in time $12,061,064 $6,371,222 $10,542 $18,442,828Over time 695,660 - - 695,660

Total $12,756,724 $6,371,222 $10,542 $19,138,488

B. Contract balances

(a) Contract assetsAs of December 31,2019 2018

Construction contracts $133,394 $207,800

The significant changes in the Company’s balances of contract assets during the yearsended December 31, 2019 and 2018 are as follows:


2019 2018The opening balance transferred to trade receivables $(86,984) $(113,138)Change in measure of progress 161,390 115,623

2019.12.31

Items (Note 2)Contractproceeds

Contractcosts

incurred

Accumulatedrecognizedtotal projectprofit(loss)

Percentage ofcompletion

(Note 3)

Amountsbilled based onconstruction

progress

Constructioncontractsreceivable

Percentage ofcompletionmethod

Category A $52,115 $46,397 $2,850 40%~100% $35,836 $13,411Category B 7,392,031 6,200,379 (4,483) 29%~100% 6,049,555 146,341Category C 1,089,102 1,080,067 (135,078) 86%~100% 894,833 50,156Reclassifications

(Note 1)- - - - (76,514)

Total $8,533,248 $7,326,843 $(136,711) $6,980,224 $133,394





78

2018.12.31

Items (Note 2)Contractproceeds

Contractcosts

incurred

Accumulatedrecognizedtotal projectprofit(loss)

Percentage ofcompletion

(Note 3)

Amountsbilled based onconstruction

progress

Constructioncontractsreceivable

Percentage ofcompletionmethod

Category A $77,122 $66,697 $2,134 91%~100% $56,228 $12,603Category B 7,416,108 5,802,588 (20,707) 9%~100% 5,609,593 172,288Category C 1,089,102 736,011 3,666 61%~89% 640,255 99,423Reclassifications

(Note 1)- - - - (76,514)

Total $8,582,332 $6,605,296 $(14,907) $6,306,076 $207,800

(Note 1: Aging of part of construction receivables has reached an operating cycle,hence, they are reclassified to long-term receivables.)

(Note 2: Projects involving similar products have been combined as a single item.)(Note 3: The percentage of completion varied in each project, it is therefore presented

as a range)

As of December 31, 2019, the above construction projects had not generatedconstruction retainage of construction contracts.

(b) Contract liabilities - current


Sales of goods, rendering of services andconstruction contracts $364,576 $402,967

The significant changes in the Company’s balances of contact liabilities for the yearsended December 31, 2019 and 2018 are as follows:


2019 2018The opening balance transferred to revenue $(311,705) $(182,671)Increase in receipts in advance during the periods

(excluding the amount incurred and transferred torevenue during the periods)

273,374 355,281





79

C. Transaction price allocated to unsatisfied performance obligations

The Company’s transaction price allocated to unsatisfied performance obligationsamounted to NTD364,576 thousand as at December 31, 2019. Management expects that7.20%~93.72% of the transaction price allocated to unsatisfied performance obligationswill be recognized as revenue in 2020.

The Company’s transaction price allocated to unsatisfied performance obligationsamounted to NTD402,967 thousand as at December 31, 2018. Management expects that97% of the transaction price allocated to unsatisfied performance obligations will berecognized as revenue in 2019.

(25) Expected credit losses/ (gains)


2019 2018Operating expenses – Expected credit losses/(gains)

Accounts receivable $18,669 $9,172Non-operating income and expenses - expected credit

losses/(gains)Other receivable 1,372,670

(Note1)(13,189)

Total $1,391,339 $(4,017)

Note1: According to accounting standards, when derecognizing subsidiaries, the Companyshould assess and recognize the expected credit impairment losses when consideringthe loss of claim from derecognizing subsidiaries. The effect of expected creditimpairment losses from derecognizing GET and its subsidiaries are as follows:

For the years ended December 31,2019

Company

Oherconsolidated

entities TotalConsideration collected $- $- $-Reverse of differed credit for investments

accounted for under the equity method341,388 2,660,483 3,001,871

Reclassified from equity to OCI because theparent lost control of the subsidiary

(466) (196,257) (196,723)

Gains (losses) on disposal of investments 340,922 2,464,226 2,805,148Expected credit losses－Account receivable

of GET(1,371,012) (357,459) (1,728,471)

Default loss of long-term purchase contracts - (1,086,951) (1,086,951)Gains (losses) on disposal of Investments, net $(1,030,090) $1,019,816

(Note2)$(10,274)

Note2: Recognized as share of profit of subsidiaries associates and joint ventures accountedfor using equity method.





80

Please refer to Note 12 for more details on credit risk.

The credit risk for the Company’s financial assets measured at amortized cost are assessed aslow (the same as the assessment result in the beginning of the period). Because thecounterparties are banks and financial institutions with good credit rating, the loss allowanceis measured at an amount of NTD0 thousand (loss ratio of 0 %).

The Company measures the loss allowance of its contract assets and receivables (includingnotes receivables and accounts receivables) at an amount equal to lifetime expected creditlosses. The assessment of the Company’s loss allowance as at December 31, 2019 and 2018is as follows:

A. The gross carrying amount of contract asset is NTD133,394 thousand, and its lossallowance amounting to NTD0 thousand which is measured at expected credit loss ratio of0%.

B. The Company considered the receivables by counterparties’ credit ratings, by geographicalregions, and by industry sectors and its loss allowance is measured by using the expectedcredit loss ratio. The details are as follows:

2019.12.31

Optical: Not yet due Overdue

(Note 1) 1-6 months 6 months -1 year 1 year above Total

Gross carrying amount $1,677,334 $144,412 $45,546 $37,315 $1,904,607

Loss ratio (Note 2) - 1.45% 20.00% 79.93% -

Lifetime expected credit losses - (2,098) (9,109) (29,827) (41,034)

Subtotal 1,677,334 142,314 36,437 7,488 1,863,573

Consumer products: Not yet due Overdue

(Note 1) 1-6 months 6 months -1 year 1 year above Total

Gross carrying amount $1,404,833 $580,887 - $7,273 $1,992,993

Loss ratio (Note 2) - 0.16% - 100% -

Lifetime expected credit losses - (916) - (7,273) (8,189)

Subtotal 1,404,833 579,971 - - 1,984,804

Carrying amount of accounts receivables $3,848,377





81

2018.12.31Optical: Not yet due Overdue

(Note 1) 1-6 months 6 months -1 year 1 year above TotalGross carrying amount $2,704,136 $240,332 $21,286 $73,161 $3,038,915Loss ratio (Note 2) - 0.45% 34.55% 20.94%Lifetime expected credit losses - (1,077) (7,354) (15,318) (23,749)Subtotal 2,704,136 239,255 13,932 57,843 3,015,166

Consumer products: Not yet due Overdue(Note 1) 1-6 months 6 months -1 year 1 year above Total

Gross carrying amount 770,863 582,722 - 8,088 1,361,673Loss ratio (Note 2) - 0.01% - 97.31%Lifetime expected credit losses - (61) - (7,871) (7,932)Subtotal 770,863 582,661 - 217 1,353,741Carrying amount of accounts receivables $4,368,907

Note 1 : The Company’s notes receivables are not overdue.Note 2 : The loss ratio is measured by using provision matrix. However, if the counterparty

has occurred financial difficulties, the loss ratio would be assessed individually.

The movement in the provision for impairment of accounts receivables and others during2019 and 2018 is as follows:

2019.12.31Accountsreceivable

Others(Note)

Beginning balance $31,681 $1,232,104Addition/(reversal) for the current periods 18,669 1,372,670Write off (1,574) -Exchange rate 447 (447)Ending balance $49,223 $2,604,327

2018.12.31Accountsreceivable

Others(Note)

Beginning balance (in accordance with IAS 39) $22,847 $1,244,985Transition adjustment to retained earnings - -Beginning balance (in accordance with IFRS 9) $22,847 $1,244,985Addition/(reversal) for the current period 9,172 (13,189)Write off (30) -Exchange rate (308) 308Ending balance $31,681 $1,232,104

Note: Others include other receivables and long-term receivable.





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(26) Leases

(A) Company as a lessee (applicable to the disclosure requirement under IFRS 16)

The Company leases various properties, including real estate such as land and buildings,machinery and equipment, transportation equipment, office equipment and otherequipment. The lease terms range from 1 to 20 years.

The Company’s leases effect on the financial position, financial performance and cashflows are as follows:

A. Amounts recognized in the balance sheet

a. Right-of-use assets

The carrying amount of right-of-use assets

As of December 31,2019 2018 (Note)

Land $2,885Buildings 248,153Machinery and equipment 8,287Transportation equipment 21,073Office equipment 14,844Other equipment 263Total $295,505

Note: The Company adopted IFRS 16 since January 1, 2019. The Company electednot to restate prior periods in accordance with the transition provision in IFRS16.

During the year ended December 31, 2019, the Company’s additions to right-of-useassets amounted to NTD36,390 thousand.

b. Lease liabilities

As of December 31,2019 2018 (Note)

Current $262,267Non-current 35,932Total $298,199





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Please refer to Note 6 (28) for the interest on lease liabilities recognized during theyear ended December 31, 2019 and refer to Note 12 (5) Liquidity Risk Managementfor the maturity analysis for lease liabilities as at December 31, 2019.


B. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

For the year endedDecember 31.

2019 2018 (Note)Land $1,717Buildings 235,999Machinery and equipment 5,313Transportation equipment 14,040Office equipment 9,370Other equipment 395Total $266,834


C. Income and costs relating to leasing activities

For the year endedDecember 31.

2019 2018 (Note)The expenses relating to short-term leases $1,751The expenses relating to leases of low-value assets

(Not including the expenses relating to short-termleases of low-value assets)

3,474

The expenses relating to variable lease paymentsnot included in the measurement of leaseliabilities

68,936

Income from subleasing right-of-use assets -Gains or losses arising from sale and leaseback

transactions-






84

The portfolio of short-term leases of the Company to which it is committed at the endof the reporting period is similar to the portfolio of short-term leases to which the short-term lease expenses disclosed above.

D. Cash outflow relating to leasing activities

During the year ended December 31, 2019, the Company’s total cash outflows forleases amounting to NTD346,845 thousand.

E. Other information relating to leasing activities

(i) Variable lease paymentsSome of the Company’s lease agreements (e.g. leases of construction places forsolar energy equipments, and of copy machines including clouds and virtual motherboard property rental agreement) contain variable payment terms that are linked tocertain percentages of electricity generated and usage from the leased properties,which is very common in the industry of the Company.

As such variable lease payments do not meet the definition of lease payments, thosepayments are not included in the measurement of the assets and liabilities.

(ii)Extension and termination optionsSome of the Company’s property rental agreement contain extension andtermination options. In determining the lease terms, the non-cancellable period forwhich the Company has the right to use an underlying asset, together with bothperiods covered by an option to extend the lease if the Company is reasonablycertain to exercise that option and periods covered by an option to terminate thelease if the Company is reasonably certain not to exercise that option. Theseoptions are used to maximize operational flexibility in terms of managingcontracts. The majority of extension and termination options held are exercisableonly by the Company.

After the commencement date, the Company reassesses the lease term upon theoccurrence of a significant event or a significant change in circumstances that iswithin the control of the lessee and affects whether the Company is reasonablycertain to exercise an option not previously included in its determination of thelease term, or not to exercise an option previously included in its determination ofthe lease term.

(B) Company as a lessee - Operating lease commitments (applicable to the disclosurerequirement in IAS 17)

The Company has entered into commercial leases on lands and plants. These leaseshave an average life of one to twenty years with no renewal option included in thecontracts. There are no restrictions placed upon the Company by entering into theseleases.





85

Future minimum rentals payable under non-cancellable operating leases as at December31, 2019 and 2018 are as follows:

As of December 31,2019 (Note) 2018

Not later than one year $262,995Later than one year and not later than five years 44,760Later than five years 7,477Total $315,232

Operating lease expenses recognized are as follows:

For the year endedDecember 31

2019 (Note) 2018Minimum lease payments $256,185

Note: The Company adopted IFRS 16 since January 1, 2019. The Company elected notto restate prior periods in accordance with the transition provision in IFRS 16.

(27) Summary statement of employee benefits, depreciation and amortization expenses by functionduring the years ended December 31, 2019 and 2018:

By Function

By Nature

For the years ended December 31,2019 2018

Operatingcosts

Operatingexpenses

Totalamount

Operatingcosts

Operatingexpenses

Totalamount

Employee benefits expenseSalaries $850,004 $1,086,255 $1,936,259 $853,416 $1,099,730 $1,953,146Labor and health insurance 78,231 100,944 179,175 77,649 100,597 178,246Pension 35,326 55,360 90,686 39,832 65,176 105,008Director's remuneration - 14,400 14,400 - 23,215 23,215Other employee benefits expense 39,324 9,776 49,100 36,441 9,847 46,288

Depreciation 548,156 218,785 766,941 502,876 84,811 587,687Amortization 2,149 6,962 9,111 2,210 13,729 15,939

Note: (1) For the years ended December 31, 2019 and 2018, the Company employed 2,889and 3,003 employees, respectively. Besides, 7 directors do not have adjunct positionin the Company in 2019 and 2018.

(2) For the years ended December 31, 2019, and 2018, the average of employee benefitsexpense were NTD783 thousand and NTD762 thousand, respectively.

(3) For the years ended December 31, 2019, and 2018, the average of salaries wereNTD672 thousand and NTD652 thousand, respectively.

(4) The average change rate of salaries is 3.1%





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The Company’s Article of Incorporation states that if there is a profit, the Company shouldset aside employee compensation no less than 1% of the profit and board membercompensation no more than 2%. When the Company suffers an accumulated deficit, the profitshould be retained to recover the deficit. The employee compensation should be paid out byshares or cash and should be resolved in the board of directors’ meeting, with two thirds ofthe board members present and over half of the present members’ approval. Information ofthe board of directors’ resolution regarding the employees’ compensation and remunerationto directors and supervisors can be obtained from the “Market Observation Post System” onthe website of the TWSE.

The Company had net income in 2019. However, there is still accumulated deficits that needto be covered, hence, the Company did not estimate employees’ compensation andremuneration to directors and supervisors.

The Company suffered net loss in 2018 and thus did not estimate employees’ compensationand remuneration to directors and supervisors.

(28) Non-operating income and expenses

A. Other income


2019 2018Dividend income $31,046 $41,753Interest income

Financial assets measured at amortized cost 6,324 17,515Others 359,244 224,594Total $396,614 $283,862

B. Other gains and losses


2019 2018Gains (losses) on disposal of property, plant and

equipment $(1,836) $1,017Impairment loss on non-financial assets-property, plant

and equipment (230,197) (4,782)Gains (losses) on disposal of investments 607,137 (198,688)Foreign exchange gains (losses), net (2,793) (32,558)Gains (losses) on financial assets / financial liabilities at

fair value through profit or loss 19,936 25,785Other gains and losses (491,993) (121,695)Total $(99,746) $(330,921)





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C. Finance costs


2019 2018Interest on borrowings from bank $676,223 $717,361Interest on lease liabilities 8,462 (Note)Other 64,337 276Total finance costs $749,022 $717,637


(29) Components of other comprehensive income


Arising duringthe period

Reclassificationadjustmentsduring the

period

Othercomprehensiveincome, before

tax

Income taxbenefit

(expense)relating to

components ofother

comprehensiveincome

Othercomprehensiveincome, net of

taxNot to be reclassified to profit or

loss in subsequent periods:Remeasurements of defined

benefit plans $(15,699) $- $(15,699) $- $(15,699)Revaluation surplus 56,942 - 56,942 - 56,942Unrealized gains (losses) from

equity instrumentsinvestments measured at fairvalue through othercomprehensive income 67,705 - 67,705 - 67,705

Share of other comprehensiveincome of subsidiaries,associates and joint venturesaccounted for using theequity method 326,277 - 326,277 - 326,277

To be reclassified to profit or lossin subsequent periods:Share of other comprehensive

income (loss) of subsidiaries,associates and joint venturesaccounted for using theequity method (22,903) - (22,903) - (22,903)

Total of other comprehensiveincome (loss) $412,322 $- $412,322 $- $412,322)





88


Arising duringthe period

Reclassificationadjustmentsduring the

period

Othercomprehensiveincome, before

tax

Income taxbenefit (expense)

relating tocomponents of

othercomprehensive

income

Othercomprehensiveincome, net of

taxNot to be reclassified to profit or

loss in subsequent periods:Remeasurements of defined

benefit plans $(37,736) $- $(37,736) $- $(37,736)Unrealized gain (losses) from equity

instruments investment measuredat fair value through othercomprehensive income (22,580) - (22,580) - (22,580)

Share of other comprehensiveincome of subsidiaries,associates and joint venturesaccounted for using theequity method (411,934) - (411,934) - (411,934)

To be reclassified to profit or lossin subsequent periods:

Non-current asset held for sale(including disposal group)directly related to equity 30,955 - 30,955 - 30,955

Share of other comprehensiveincome (loss) of subsidiaries,associates and joint venturesaccounted for using the equitymethod 342,240 - 342,240 - 342,240

Total of other comprehensiveincome (loss) $(99,055) $- $(99,055) $- $(99,055)

The Company has accumulated a large amount of loss carry forward. Therefore, there was notsignificant deferred income tax effect resulted from other comprehensive income and changesin equity in 2019 and 2018, and thus the Company did not record related income tax.

(30) Income tax

Based on the amendments to the Income Tax Act announced on February 7, 2018, theCompany’s applicable corporate income tax rate for the year ended December 31, 2018 haschanged from 17% to 20%. The corporate income surtax on undistributed retained earningshas changed from 10% to 5%.





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The major components of income tax expense (income) are as follows:

Income tax expense (income) recognized in profit or loss


2019 2018Current income tax expense (income):

Current income tax charge $(224,273) $(82,543)Adjustment in respect of current income tax of prior

period (69,269) -Deferred tax expense (income):

Deferred tax expense (income) relating to originationand reversal of temporary differences 20,000 20,000

Total income tax (income) expense $(273,542) $(62,543)

Income tax expenses (income) recognized in other comprehensive income

There was not significant deferred income tax effect resulted from other comprehensiveincome and changes in equity in 2019 and 2018, and thus the Company did not record relatedincome tax.

A reconciliation between tax expense and the product of accounting profit multiplied byapplicable tax rates is as follows:


2019 2018Accounting income (loss) before tax from continuing operations $2,602,337 $(10,705,449)Tax at the domestic rates applicable to profits in the

country concerned $520,467 $(2,141,090)Tax effect of revenues exempt from taxation (6,209) (8,379)Tax effect of expenses not deductible for tax purposes (1,193,905) 2,100,505Other 15,207 9,190Tax effect of deferred tax assets/liabilities 615,171 91,771Deferred tax expense (income) relating to changes in tax

rate or the imposition of new taxes - (31,997)Income tax benefit from consolidated return system (224,273) (82,543)Total income tax expense (income) recognized in profit or loss $(273,542) $(62,543)





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Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2019Beginning

balanceRecognized inprofit or loss

Endingbalance

Temporary differencesDeferred tax assets

Investments accounted for using theequity method

$592,510 $(592,510) $-

Unrealized intragroup profits and losses 12,099 (328) 11,771Loss allowance 79,061 355,929 434,990Others 16,982 19,485 36,467Subtotal 700,652 (217,424) 483,228

Deferred tax liabilitiesInvestments accounted for using the

equity method(291,818) 291,818 -

Provision for net defined liability (74,794) (24,691) (99,485)Unrealized gain on foreign exchange (169,306) (2,844) (172,150)Reserve for land revaluation (3,417) - (3,417)Others - (66,859) (66,859)

Subtotal (539,335) 197,424 (341,911)Deferred tax (expense)/ income $(20,000)Net deferred tax assets/(liabilities) $161,317 $141,317Reflected in balance sheet as follows:Deferred tax assets $700,652 $483,228Deferred tax liabilities $(539,335) $(341,911)

For the year ended December 31, 2018Beginning

balanceRecognized inprofit or loss

Endingbalance

Temporary differencesDeferred tax assets

Investments accounted for using theequity method

$452,876 $139,634 $592,510

Unrealized intragroup profits and losses 12,659 (560) 12,099Allowance for doubtful accounts 66,892 12,169 79,061Others 10,033 6,949 16,982Subtotal 542,460 158,192 700,652

Deferred tax liabilitiesInvestments accounted for using the

equity method(184,940) (106,878) (291,818)

Provision for net defined liability - (74,794) (74,794)Unrealized gain on foreign exchange (172,786) 3,480 (169,306)Reserve for land revaluation (3,417) - (3,417)

Subtotal (361,143) (178,192) (539,335)Deferred tax (expense)/ income $(20,000)Net deferred tax assets/(liabilities) $181,317 $161,317Reflected in balance sheet as follows:Deferred tax assets $542,460 $700,652Deferred tax liabilities $(361,143) $(539,335)





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The following table contains information of the unused tax losses of the Company:

Tax losses for Unused tax losses as of December 31, ExpirationYear the period 2019 2018 year2018 $754,142 $323,481 $323,481 20282017 816,341 515,737 480,197 20272016 846,523 212,169 325,961 20262015 426,620 - - 20252014 688,016 284,856 371,121 20242013 1,246,937 1,136,989 1,136,989 20232012 247,968 - - 20222010 2,041,023 1,781,104 1,781,104 20202009 1,782,046 1,627,157 1,627,157 2019

$8,849,616 $5,881,493 $6,046,010

Unrecognized deferred tax assets

As of December 31, 2019, and 2018, the Company’s unrecognized deferred tax assetsamounted to NTD3,976,168 thousand, and NTD4,013,880 thousand, respectively.

The assessment of income tax returns

As of December 31, 2019, the assessment of the income tax returns of the Company through2016.

(31) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributableto ordinary equity holders of the parent entity by the weighted average number of ordinaryshares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable toordinary equity holders of the Company (after adjusting for interest on the convertiblepreference shares) by the weighted average number of ordinary shares outstanding during theyear plus the weighted average number of ordinary shares that would be issued on conversionof all the dilutive potential ordinary shares into ordinary shares.





92


2019 2018Basic and diluted earnings (loss) per share:Net income (loss) (in thousands of NTD) $2,875,879 $(10,642,906)

Weighted average number of ordinary shares outstandingfor basic and diluted earnings per share (in thousands) 2,310,335 2,238,595

Basic and diluted earnings (loss) per share $1.24 $(4.75)

There were no other transactions involving ordinary shares or potential ordinary sharesbetween the balance sheet date and the issuance date of the financial statements.

7. Related party transactions

Related parties and relationship

Name of related parties Relationship with the CompanyTatung University Significant influence over the

CompanyTatung Senior High School Significant influence over the

CompanyChunghwa Picture Tubes, Ltd. (“CPT”) SubsidiariesTatung System Technologies Inc. (“TSTI”) SubsidiariesForward Electronics Co., Ltd. (“FD”) SubsidiariesSan Chih Semiconductor Co., Ltd.(“SCSC”) SubsidiariesTatung Fine Chemicals Co., Ltd. SubsidiariesCentral Research Technology Co. SubsidiariesTatung Consumer Products (Taiwan) Co., Ltd. SubsidiariesShan-Chih Asset Development Co. (“SCAD”) SubsidiariesTatung Die Casting Co. SubsidiariesTatung (Thailand) Co., Ltd. SubsidiariesTatung Co. of Japan Inc. SubsidiariesTatung Electronics (S) Pte. Ltd. SubsidiariesTatung Co. of America Inc. SubsidiariesTMX Logistics, Inc SubsidiariesTatung Electric Company of America, Inc. Subsidiaries





93

Name of related parties Relationship with the CompanyTATUNG CZECH S.R.O SubsidiariesTatung Medical Healthcare Technologies Co., Ltd. SubsidiariesToes Opto-Mechatronics Co. SubsidiariesTatung Vietnam Co. Ltd. SubsidiariesTatung Electric Technology (VN) Co., Ltd. SubsidiariesShan Chih Investment Co., Ltd. SubsidiariesChih Sheng Investment Co., Ltd. SubsidiariesTaipei Industry Corporation SubsidiariesTatung Forever Energy Co., Ltd. SubsidiariesTatung Forestry and Construction Co. SubsidiariesSheng Yang Energy Co., Ltd. SubsidiariesTungyang Energy Co., Ltd. SubsidiariesTatung (Shanghai) Co., Ltd SubsidiariesTatung Information Technology (Jiangsu) Co., Ltd. SubsidiariesHEDA Biotechnology Co., Ltd. SubsidiariesTisnet Technology Inc. SubsidiariesChyun Huei Commercial Technologies Inc. SubsidiariesTatung Compressors (ZHONGSHAN) Co., Ltd. SubsidiariesChunghwa Electronics Development Co., Ltd. SubsidiariesTatung Science and Technology, Inc. SubsidiariesGreen Energy Technology Inc. (“GET”) Note 1Hsieh-Chih Industrial Library Publishing Co. AssociatesGintung Energy Co., Ltd. AssociatesWeifang Great Energy Trading Co., Ltd. AssociatesTatung SM-Cyclo Co. AssociatesTatung Okuma Co., Ltd. AssociatesElitegroup Computer Systems Co., Ltd. AssociatesKuender Co., Ltd. AssociatesNature Worldwide Technology Corp. AssociatesThe United Employees’ Welfare Committee of Tatung Other related partyThe Employee Welfare Committee of Tatung Company Other related partyThe Employee Welfare Committee of Tatung Consumer

Products (Taiwan) Co., Ltd.Other related party

Association of Tatung Company (Taoyuan) Other related party





94

If the transaction amount of single related party doesn’t reach 10% of the transaction total amount,it will be combined to present with others.

Note 1: Green Energy Technology Co., Ltd. (“GET”) resolved at its board meeting to withdrawits public issuance and passed the liquidation proposal on July 15, 2019. The dissolutionand liquidation proposal was approved by the provisional shareholders’ meeting on August30, 2019. The liquidator assumed office on August 30, 2019. As the Company lost controlof GET and its subsidiaries, they were no longer related parties to the Company.

Note 2: Gintung Energy Co., Ltd. and Weifang Great Energy Trading Co., Ltd. were no longer thesubsidiaries of the Group since August 30, 2019. However, the Company had significantinfluence on Gintung Energy Co., Ltd. and Weifang Great Energy Trading Co., Ltd. Theystill were associates accounted for using equity method.

Note3: The Company entered into a contract to sell 36.33% shares of Tatung Sm-Cyclo Co., Ltd.in the third quarter of 2019 and such transaction was completed in the fourth quarter of2019. The Company’s shareholding percentage decreased from 85.33% to 49%,therefore the Company lost control of Tatung Sm-Cyclo Co., Ltd. However, the Companyhad significant influence on Tatung Sm-Cyclo Co., Ltd. so they still were associatesaccounted for using equity method.

(1) Sales (including leasing revenue)


2019 2018Entity with joint control or significant influence over the

Company$1,274 $1,887

SubsidiariesTatung Consumer Products (Taiwan) Co., Ltd. 2,877,503 3,178,567Others 670,610 1,246,700

Associates 58,444 67,497Other related parties 4,449 398Total $3,612,280 $4,495,049

The sales price to related parties was determined through mutual agreement based on marketconditions. The collection terms for domestic related parties were 90 days, equivalent to thosefor domestic third parties; the collection terms for foreign related parties were 30-180 days,equivalent to these for foreign third parties.





95

(2) Purchase

For the years ended

December 31,

2019 2018

Subsidiaries

Tatung Co. of Japan, Inc. $584,722 $439,552

Gintung Solar Energy Co., Ltd. (Note) 385,051 235,005

Other 874,584 908,308

Associates

Elitegroup Computer Systems Co., Ltd. 446,732 492,473

Gintung Solar Energy Co., Ltd. (Note) 50,770 -

Other 13,637 -

Total $2,355,496 $2,075,338

Note: Gintung Energy Co., Ltd. and Weifang Great Energy Trading Co., Ltd. were no longersubsidiaries of the Group since August 30, 2019. However, the Company had significant

influence on Gintung Energy Co., Ltd. and Weifang Great Energy Trading Co., Ltd.They still were associates accounted for using equity method.

The purchase price from related parties was determined through mutual agreement based on

market conditions. The payment terms to related parties and third parties for domesticpurchases were both net 30-150 days, while the terms for overseas purchases were both net

30-120 days.

(3) Contract assets - current

As of December 31,

2019 2018

Subsidiaries $4,786 $10,321

Less: loss allowance - -

Net $4,786 $10,321





96

(4) Accounts receivable – related parties


Entity with joint control or significant influence over theCompany

$46 $13

SubsidiariesTatung Consumer Products (Taiwan) Co., Ltd. 1,562,795 1,543,886Others 118,993 288,816

Associates 13,597 10,538Total 1,695,431 1,843,253Less: loss allowance (1,023) (781)

Sales returns and allowances - (3,315)

Net $1,694,408 $1,839,157

(5) Others receivable – related parties (current and non-current)


Reclassified from accounts receivable due to over-due:Entity with joint control or significant influence over the

Company$281 $876

Subsidiaries (Note 3)Chunghwa Picture Tubes, Ltd. (Note 2) 2,064,595 2,067,050Tatung Information Technology (Jiangsu) Co., Ltd 518,235 540,816Green Energy Technology Inc. (Note 1) 1,330,440Shan-Chih Asset Development Co. 269,724 483,104Others 668,955 532,376

Associates 5,295 6,057

Total 3,527,085 4,960,719Less: loss allowance (71,122) (52,472)

Net 3,455,963 4,908,247Non-current portion (Reclassified as non-current assets) (2,585,354) (3,951,987)Current portion $870,609 $956,260





97

Note 1: Green Energy Technology Co., Ltd. (“GET”) resolved to withdraw its publicissuance and passed the proposal to liquidate the company at the board meetingheld on July 15, 2019. The proposal for dissolution and liquidation of the companywas passed by the provisional shareholders’ meeting held on August 30, 2019. Theliquidator assumed office on August 30, 2019. As the Company lost control of GETand its subsidiaries, they were no longer the related parties to the Company.

Note 2: The Company provided an endorsement in the amount of NTD2 billion to ChunghwaPicture Tubes, Ltd. for its bank loans. As Chunghwa Picture Tubes, Ltd. applied forfinancial structuring, banks offset the NTD2 billion endorsement against the loans.Hence, the endorsement provided by the Company had become a claim againstChunghwa Picture Tubes, Ltd. and was recognized as financing provided toChunghwa Picture Tubes, Ltd.

Note 3: In accordance with IFRS, the receivables and payables from subsidiaries were allwritten off when preparing the consolidated financial statements and therefore theCompany recognized the investment losses in accordance with accounting standardsfor the allowance loss if any when preparing the parent company only financialstatements.

(6) Prepayments


SubsidiariesTatung (Shanghai) Co., Ltd $37,073 $-Gintung Energy Co., Ltd. (Note) 285,839Other 51,711 7,067

AssociatesGintung Solar Energy Co., Ltd. 105,193 (Note)

Total $193,977 $292,906

Note: Gintung Energy Co., Ltd. and Weifang Great Energy Trading Co., Ltd. were no longerthe subsidiaries of the Group since August 30, 2019. However, the Company hadsignificant influence on Gintung Energy Co., Ltd. and Weifang Great Energy TradingCo., Ltd, therefore they still were associates accounted for using equity method.





98

(7) Prepayments for business facilities


SubsidiariesGintung Solar Energy Co., Ltd. (Note) $15,597Other $5,800 -

AssociatesGintung Solar Energy Co., Ltd. 123,666 (Note)

Total $129,466 $15,597


(8) Contract liabilities - current


Subsidiaries $- $16

(9) Accounts payable – related parties


SubsidiariesTatung System Technologies Ltd. $17,495 $133,376Tatung Information Technology (Jiangsu) Co., Ltd. 41,168 47,027Tatung Co. of Japan, Inc. 4,541 5,305Tatung Forestry and Construction Co. 50,584 -Others 74,484 93,669

AssociatesElitegroup Computer Systems Co., Ltd. 130,504 171,030Other 28,622 -

Total $347,398 $450,407





99

(10) Other payable– related parties (Non-financial provided)


Entity with joint control or significant influence over theCompany

$573 $207

SubsidiariesTisnet Technology Inc. 10,555 20,570Tatung System Technologies Inc. 18,717 18,291Tatung Consumer Products (Taiwan) Co., Ltd. 21,591 15,756Tatung Forever Energy Co., Ltd. 63,662 9,442Others 9,758 8,780

Associates 22,765 7,417Other related parties 50 50Total $147,671 $80,513

(11) Other payables (Financing provided)

As of December 31,2019Maximum

balanceEndingbalance

Interestpayable

Interestexpense

Interestrate

SubsidiariesShan-Chih Asset

Development Co. $2,450,000 $1,950,000 $- $64,160 3.5%


None.

(12) Acquisition of property, plant and equipment and intangible assets

Acquisition proceeds2019 2018

SubsidiariesTatung Forever Energy Co., Ltd. $64,721 $87,200Gintung Solar Energy Co., Ltd. 22,283 16,788Others 33,381 19,589

AssociatesGintung Solar Energy Co., Ltd. 47,240 (Note)Other 227 619

Total $167,852 $124,196





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(13) Lease

Right-of-use

As of December 31,

2019 2018 (Note)

SubsidiariesShan-Chih Asset Development Co. $219,439Other 30,640


Total $250,454


Lease liabilities (current and non-current)

As of December, 31

2019 2018 (Note)

SubsidiariesShan-Chih Asset Development Co. $221,700Other 31,073


Net 253,152Non-current portion (9,442)

Current portion $243,710






101

Interest expense

As of December, 312019 2018 (Note)

SubsidiariesShan-Chih Asset Development Co. $6,624Other 784

Other related parties 13Total $7,421


(14) Compensation of key management personnel


2019 2018Short-term employee benefits $33,861 $37,066Post-employment benefits 280 154Total $34,141 $37,220

(15) Operating expense－rent expenditure


2019 2018Entity with joint control or significant influence over the

Company$30 $30

SubsidiariesTatung System Technology Inc. 402 1,024Chyun Huei Commercial Technology Inc. 385 204Tisnet Technology Inc. 702 2,449Shan-Chih Asset Development Co. - 125,815Others - 53

Total $1,519 $129,575

There were no significant differences in terms of rental between related parties and arm’slength transactions. The rent was decided by the local market, location, floor, and size.





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(16) Notes endorsement and guarantee

The balances of guarantees that the Company provided for related parties as of December 31,2019 and 2018 were as follows:

Name of related parties Purpose December 31, 2019Tatung Company of Japan, Inc. Pledged for financing NTD 1,119,320 thousandSan Chin Semiconductor Co., Ltd. Pledged for financing NTD 60,000 thousand

Name of related parties Purpose December 31, 2018Tatung Company of Japan, Inc. Pledged for financing NTD 1,553,200 thousand

The chairman of the Company guaranteed part of the bank loans for the Company.

Please refer to Note 6 (20) for more details

8. Assets pledged as security

The following table lists assets of the Company pledged as collateral:

Carrying amounts as ofDecember 31,

2019 2018 Purpose of pledgeMachines and other Equipment $936,751 $1,004,494 LoansFinancial assets measured at

amortized cost2,070,955 1,185,888 Construction security deposit

and loansInvestments accounted for under

the equity method1,685,100 1,998,052 Loans and commodity tax

controversyTotal $4,629,806 $4,188,434

In addition to the pledged assets listed above, the Company pledged the property, plant andequipments of subsidiaries as collateral for loans.

9. Commitments and contingencies

(1) The promissory notes issued by the Company to secure bank loans, construction performancebond and tariff guarantee amounted to NTD1,667,798 thousand.





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(2) The Company’s unused letters of credit for importing raw materials and machinery amountedto NTD15,911 thousand, USD6,137 thousand, EUR3,183 thousand, JPY11,581 thousand, andRMB1,624 thousand.

(3) Performance bond issued by financial institutions amounted to NTD423,931 thousand.

(4) The Company applied credit lines to Mega International Commercial Bank, Bank of 'Taiwan,Chang Hwa Bank, and First Commercial Bank on behalf of Tatung Co., of Japan, Inc. byissuing the promissory notes amounted to NTD492,800 thousand, JPY1,200,000 thousand,JPY650,000 thousand and JPY420,000 thousand, respectively.

(5) The Company applied for credit lines to Hua Nan Commercial Bank on behalf of San ChihSemiconductor Co., Ltd. and posted guarantee in the amount of NTD60,000 thousand. As ofDecember 31, 2019, the balance of the guarantee provided by the Company amounted toNTD56,000 thousand. As the same time, the guarantee amount decrease to NTD56,000thousand.

(6) As of December 31, 2019, the significant contingencies and unrecognized contractcommitments of the Company are as follows:

A. This trial is the merger of three trial into one case. The Company filed actions againsttwo contractors: King Pro Group (“King Pro”) and J Ka Hung Exhibition Co., Ltd. (“KaHung”) for failure to perform the engineering contract while King Pro and Ka Hungjointly filed an action against the Company for the repayment of construction funds. Thecompany registration database from the Ministry of Economic Affairs showed that KingPro was closed and Ka Hung has been ordered to be dissolved and liquidated, and neitherKing Pro nor Ka Hung registered any asset. In addition, because King Pro and Ka Hunghad disputes about the damages caused by the re-contracting of the Company, theCompany then requested the court for an appraisal. The documents that the courtdemanded the Company to provide was not easy to find because it was old informationand employees of the contractor changed. Furthermore, the appraisal fee and the cost ofselecting a liquidator for Ka Hung are still required in the litigation process. Even if theCompany wins all or part of the action, the defendant had no assets to carry out thecompulsory enforcement, so the attorney proposed to withdraw the actions against KingPro and Ka Hung, to retrieve the provisional seizure security and withdraw the action toreceive 2/3 refund the litigation fee. There would be no further cost from the appraisaland selection of a liquidator. So the Company focused on defending the cases againstKing Pro and Ka Hung for the return of the project fee. At present, the attorney has filedto the court to change the date of the court session. After the Company has internaldiscussion on the case, they will report the conclusion to the court.





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B. The Company was engaged in a construction project with Taiwan RailwaysAdministration, MOTC (“Taiwan Railways”). There is still a dispute regarding theoverdue fine charged by Taiwan Railways as the Company did not complete the projecton time. The Company had engaged an attorney to file a mediation to the PublicConstruction Commission. The Company engaged in integration of logistics system(“Taiwan Railways- Case A”) and inspection of completion of the project was rejectedby Taiwan Railways for more than 3 years because the requirements changed and thatCase A needed to be integrated with the accounting system (“Taiwan Railways- Case B”).The Company filed to the Taipei District Court on August 8, 2018 to claim inspectionof Case A and the final payment. The Company was engaged in the integration ofaccounting system (“Taiwan Railways- Case B”). Because the requirements changedfrequently and inspection of completion was rejected, so the Company filed to the TaipeiDistrict Court to request inspection of completion of Case B and the final payment.Both cases are undergoing the appraisal process and waiting for a result. No majordevelopment as of now.

C. The Company and Toshiba Electronics Components Taiwan Corporation (“Toshiba”)signed a contract regarding “the purchase and the assembly of motor and fan of theTaiwan Railways TILTING train and EMU800 train”. The Company completelyfollowed the blueprint of Toshiba, but Toshiba claimed that the products were faulty andclaimed damages amounting to NTD58,125 thousand, requiring the Company to pay. TheChinese Arbitration Association, Taipei made a judgement that it wouldn’t handle thiscase because it had no jurisdiction. Toshiba also filed an arbitration in Tokyo. The JapanCommercial Arbitration Association issued the final arbitration award on June 14, 2019and considered that there was no further investigation needed and made the finaljudgement. Both parties reached a settlement on November 11, 2019 and Toshibawithdrew the action.

D. Hwang Chang General Contractor Co., LTD (“Hwang Chang”) was engaged in aconstruction project led by the East District Project Office of the Department of RapidTransit Systems, Taipei City Government: “Taipei Urban Metro System Circular LineSections CF640 to CF641A Electricity, Plumbing and Environmental ControlConstruction.” Such project was outsourced to the Company on August 3, 2014. However,the Company deemed that Hwang Chang delayed in delivering the construction site forabout a year during the contract period. The Company could not start the construction andcollect payments following the delay. Hence, the construction cost was a lot higher thanexpected. The Company terminated the contract after giving notice to Hwang Chang.Afterwards, Hwang Chang claimed against the Company for damages of price differencesbetween contract prices with other subcontractors. The Company lost in the first instanceand appealed. Both parties reached a settlement on January 9, 2020.





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E. On March 31, 2015, the Company outsourced the “Office relocation and expansion ofTaiwan Taoyuan District Court and new construction project of Dang Cheng Building”to Da Hong Chung Technical Engineering Co., Ltd (“Da Hong Chung”). The Companydeemed that Da Hong Chung did not assign sufficient workers as contracted and hencedelayed the construction progress. The Company notified Da Hong Chung to increasemanpower for the project. However, Da Hong Chung refused to do so because it claimedthat the Company had not paid the additional construction fee. The Company terminatedthe contract on October 19, 2017 and would claim damages against Da Hong Chung forthe delay when the construction is completed. Da Hong Chung filed a legal action to theTaiwan Taipei District Court to claim its construction receivable in February 2018. Thecase was transferred to an appraisal and waiting for a response.

F. United Aerotech System Corporation filed a legal action against the Company on January6, 2010, claiming payments of consultant fees amounting to NTD1,490 thousand. Bothparties reached a settlement in 2017. However, on March 12, 2018, the Company receivedthe indictment from United Aerotech System Corporation claiming consulting feeamounting to NTD32,643 thousand. The Company had appointed attorneys to handle theissue. The court has required United Aerotech System Corporation to present detailedevidence and to explain the reasons and necessity. The court declared the Company wasthe prevailing party on September 27, 2019 and United Aerotech System Corporationfiled for a trial. Both parties could not reach a settlement on March 10, 2020. The judgeurged if the trial could be concluded by mediation, so the next mediation court will beheld on April 30, 2020.

G. The Company was engaged in a smart electrical meter project with Taiwan PowerCompany, (“Taiwan Power”). The Company delivered the products according to thepurchase contracts signed and finished the inspection and acceptance, and paymentcollection. However, there is still a dispute regarding the warranty coverage of “MeterInterface Unit” of the smart electrical meter. The mediation Committee was held on July27, 2018, the Company agreed with the mediation, but Taiwan Power did not. Hence, theCompany turned to the Public Construction Commission and it was determined bymembers in the appeals committee that the Company was not responsible for thewarranties. Therefore, the claim of Taiwan Power was groundless. Because TaiwanPower still requires the Company to perform its warranty obligations, the Company hasfiled an action. In this case, because the two parties could not reach a consensus on themediation process on February 20, 2020, this case was transferred to the civil court,pending a court opening notice.





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H. Based on the “Related party transaction percentage of listed companies after thecompletion of acquisition and the commitment of future sales of listed companies” signedon September 11, 2014 by Chunghwa Picture Tubes (Bermuda) Ltd. (“CPTB”) andChunghwa Picture Tubes Technology (Labuan) Ltd.("CPTTG (L)”), CPTTG filed anaction against Chunghwa Picture Tubes (Bermuda) Ltd. (“CPTB”) in December 2018 inthe Higher People's Court of Fujian, claiming payment in the amount of RMB 1.914billion. On March 28, 2019, the Company and Chunghwa Picture Tubes Ltd. (“CPT”)were added as defendants in the above-mentioned litigation. The Company receiveddocuments through EMS mail from the Higher People's Court of Fujian the following day,including the “Civil complaint”, “Notification of response”, “Notification ofproof”, ”Evidence list”, “Supplemental evidence list”, “Notification of service address ofthe party”, “Return of service certificate”, “Summons”, “Notification of members of thepanel of judges”. The above-mentioned "Civil Complaint" made the following claims:

(1) CPTB, Defendant One, shall pay RMB 1.914 billion to CPTTG.(2) The Company, i.e. Defendant Two, and CPT, i.e. Defendant Three, shall be joint liablefor the above-mentioned compensation in the amount of RMB 1.914 billion.(3) All court costs and expense shall be borne by the three defendants.

The above-mentioned documents showed that the exchange of evidence was made onMay 21, 2019, and the court hearing time was set on May 22, 2019.

On May 10, 2019, the Company inquired about CPTTG's 2019-054 "ProgressAnnouncement on the Filing of Litigation" and learned that CPTTG (L) has applied tothe Higher People's Court of Fujian to increase the amount of the claim to RMB3,029,027,800 based on its 2018 audit results. In addition, the content of CPTTGannouncement also stated that due to the objection regarding jurisdictional raised by theCompany and CPT, the original evidence exchange time set on May 21, 2019 and thehearing time set on May 22, 2019 will be postponed.

The Company re-checked CPTTG's 2019-114 “Progress Announcement on the Filing ofLitigation” on July 19, 2019 and learned that Civil Ruling 2019-Min-Min-Chu No. 1-1and Civil Ruling 2019-Min-Min-Chu No. 1-2 have been served by the Higher People'sCourt of Fujian.

According to CPTTG 2019-018 announcement, CPTTG filed property preservation tothe court against CPTB on January 8, 2019, and submitted the supplement document onJanuary 16, 2019.

The above-mentioned Civil Ruling 2019-Min-Min-Cchu No. 1-1 was the decision madeby the court which approved CPTTG's application to preserve CPTB's property; CivilRuling 2019-Min-Min-Chu No. 1-2 was the decision made by the court regarding theapplication for jurisdictional objections filed by CPT and the Company. The decisionwas as follows:

(a) The objection regarding jurisdiction raised by the Company and CPT wasdismissed.

(b) The fee for the jurisdiction objections was RMB 100, which shall be borne by theCompany and CPT jointly at RMB 50 each.





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On August 27, 2019, the Company inquired about CPTTG’s Shenzhen Stock Exchange2019-130 “Progress Announcement on the Filing of Litigation” and learned that theCompany has been served the "Civil Appeal Brief" and CPT has been served the"Jurisdiction Objection Appeal Brief" sent by the court

On October 8, 2019, the Fujian New-Stone Law Firm which was retained by theCompany and received the Notice of Acceptance of Appeal Case 2019-Zui-Gao-Yuan-Min-Xia-Zhong-No. 467 sent by the Higher People's Court of China. The Court acceptedthis appeal case following a review and notified the Company to submit a copy of thebusiness license and the legal representative's identity certificate; if any litigious agentwas engaged, a power of attorney shall be submitted.

On October 11, 2019, the Company inquired about CPTTG 's Shenzhen Stock Exchange2019-140 "Progress Announcement on the Filing of Litigation" and learned that thecompany received an Appeal Notification 2019-Zui-Gao-Fa-Min-Xia-Zhong No.467 tonotify the company to respond.

With respect to whether the Company shall be held jointly liable, the Company deemedthat: In 2009, the Company, CPT, CPTB and CPTTG (L) made various commitments toCPTTG following the asset reorganization as shown in the following table. However, theCompany only signed the commitment letters from No. 7 to No. 12 and No. 19 in thetable. In addition, in 2014, with approval from the shareholders' meeting, CPTTGchanged the "Commitment about not reducing shareholding interest in the listedcompany." and " Commitment of the proportion of related party transactions of listedcompanies after the acquisition". The original commitments therefore expired and theamendment to the previous commitments in 2014 were only executed by CPTB andCPTTG (L). Neither the Company nor CPT were involved. So, the Company believedthat this joint liability was no longer effective. Furthermore, CPTB has lost control ofCPTTG.

CPTTG’s ground for the claim was the recognition of the loss allowance. The timing ofthe recognition was after CPT lost control, during which time the commitment alreadyexpired. The claim against CPTB remained doubtful, and CPT’s receivables werepayables of CPTTG, which were not related to the Company. As a result, according toIAS 37, it is not sufficient for the Company to evaluate whether there is any obligationthat will lead to economic benefit outflow, and thus the Company did not recognizeprovisions for contingent liabilities.

In addition, the Company was of the view that the Court of the People's Republic ofChina had no jurisdiction over this case. Therefore, according to Article 127 of the CivilProcedure, an application for jurisdiction objection has been filed. On January 20, 2020,the Company received Civil Ruling 2019-Zui-Gao-Fa-Min-Xia-Zhong-No. 467 servedby the Higher People's Court of the People's Republic of China.

The Supreme People’s Court of the People’s Republic of China ruled that the decisionof the original trial (namely Civil Ruling 2019-Min-Min-Chu No. 1-2 made by FujianHigher People’s Court) shall be maintained as the facts were clear and laws wereappropriately applied. The Company has made an announcement immediately and willdiscuss with the lawyer for the follow-up measures to protect the rights and interests ofthe Company, CPT and shareholders.

Since the case is at the procedural stage of determining jurisdiction, it has not enteredinto substantial litigation, and the counterparty has not fully proved the amount of claim,which currently has no impact on the Company.

The contents, contracting parties, signed date, expiration and execution and current statusof each commitment in 2009 are summarized below:





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Commitments listed/ContentsContractingparties Signed Date

Expiration andExecution

1. Commitment about not reducing shareholding interestin the listed company. CPTB and CPTL made acommitment that from completing the acquisition toproduction of new next-generation LCD panel, CPTBand CPTTG(L) will not reduce their shareholdinginterests in Mindong Electric (Group) Co., Ltd.

CPTB andCPTTG(L)

December 31, 2008 On September 11,2014, the specialshareholders meetingof CPTTG approvedby majority votes therevision to thecommitments. Thiscommitment was nolonger vaild.No commitment wasbreached.

2. Commitment of not transferring shares of MindongElectric (Group) Co., Ltd. in 3 yearsCPTB and CPTTG(L) committed that they will nottransfer shares of Mindong Electric (Group) Co., Ltd.in the 3 years following Mindong Electric (Group) Co.,Ltd.’s end of private issue.

CPTB andCPTTG(L)

January 16, 2009 Expired upon 3 yearsfollowing CPTTG’spublic offering(2012). Thiscommitment was nolonger vaild.No commitment wasbreached.

3. Commitment of the performance after public issuesCPTB and CPTTG (L) committed that as long as thelegal and policy factors around the operatingenvironment of the 4 LCM Companies remainunchanged, the ROE of Mindong Electric (Group) Co.,Ltd. will not be less than 10% when the proportion ofrelated party transactions of Mindong Electric (Group)Co., Ltd. had not been reduced to below (and notincluding) 30% after the acquisition within oneaccounting year. CPTB will make up the difference bycash if the ROE is less than 10%. If the proportion ofrelated party transactions of Mindong Electric (Group)Co., Ltd. recovered to more than 30% (including 30%)of all transactions in the subsequent accounting year,CPTB and CPTTG (L) commit that the ROE will notbe less than 10%. CPTB will also make up thedifference by cash if the ROE is less than 10%.

CPTB andCPTTG(L)

January 16, 2009 On the September11,2014, the CPTTGAnnual ShareholderMeeting passed therevisedcommitments. Thiscommitment was nolonger vaild.No commitment wasbreached.





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4. Commitment about the profitability of MindongElectric (Group) Co., Ltd. in the next 3 yearsCPTB and CPTTG (L) committed that after the assetsettlement date of Mindong Electric (Group) Co., Ltd.in 2009, the consolidated net income attributable toowners of parent will not be less than the amountcalculated below:RMB0.295 billion/ 12 * M (M: the numbers of monthsthat the assets were acquired by the listed company.)In 2010, the consolidated net income attributable toowners of parent was not less than RMB0.346 billion;In 2011, the consolidated net income attributable toowners of parent was not less than RMB0.346 billion.If Mindong Electric (Group) Co., Ltd. could not meetthe performance goal, CPTB will make up the shortfallby cash.

CPTB andCPTTG(L)

January 16, 2009 Expired onDecember 31, 2011.This commitmentwas no longer vaild.No commitment wasbreached.

5. Commitment of the proportion of related partytransactions of listed companies after the acquisitionCPTB and CPTTG (L) committed that from the day theacquisition was completed until December 31, 2010,the proportion of related party transactions of MindongElectric (Group) Co., Ltd. would be reduced to below30% (not including 30%) and would maintain the samelevel in the subsequent years. If the proportion ofrelated party transactions is not reduced to lower than30% (not including 30%) by December 31, 2010,CPTB will give 4,546,719 shares to all shareholders(except for CPTB and CPTTG(L)) of Mindong Electric(Group) Co., Ltd.

CPTB andCPTTG(L)

January 16, 2009 Expired onDecember 31,2010.This commitmentwas no longer vaild.No commitment wasbreached.

6. Supplementary commitment of the proportion ofrelated party transactions after listedCPTB and CPTTG(L) committed that after the materialasset restructuring, the proportion of related partytransactions will be lower than 60% in December 2009;the proportion of related party transactions will belower than 30% (not including 30%) in December2010; the proportion of related party transactions willcontinue to be lower than 30% (not including 30%)from 2011.

CPTB andCPTTG(L)

On the September11,2014, the CPTTGAnnual ShareholderMeeting passed therevisedcommitments. Thiscommitment was nolonger vaild.No commitment wasbreached.





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7. Commitment letter regarding restriction and reduction

of related party transactions

(A) The Company, CPT, CPTB, CPTTG (L) and their

subsidiaries should strictly follow the fair and

reasonable standard and guarantee that they do not

harm the shareholders’ interest when making


Ltd.

(B) The Company, CPT, CPTB, CPTTG(L) and their

subsidiaries should strictly follow the “Stock

Listing Rules of the Shenzhen Stock Exchange”,

“Articles of Association of Mindong Electric

(Group) Co., Ltd.”, and ”Decision system of

related party transactions” when making


Ltd.

(C) As the business integration of Mindong Electric

(Group) Co., Ltd. continues, the Company, CPT,

CPTB, CPTTG (L) and their subsidiaries should

reduce the related party transactions with Mindong

Electric (Group) Co., Ltd.

(D) After the restructure, Mindong Electric (Group)

Co., Ltd. started to manufacture LCD panel for

CPT and its subsidiaries, as a result, there were

more related party transactions between Mindong

Electric (Group) Co., Ltd. and CPT Group. The

Company, CPT, CPTB and CPTTG(L)

committed that the intercompany OEM price

should refer to market price if the OEM rate is

available, or the price Mindong Electric (Group)

Co., Ltd. manufactures for other third parties or

cost mark-up if the OEM rate is not available to

make sure the OEM profit is generated reasonably.

CPTB,

CPTTG (L),

CPT and the

Company


China Securities

Regulatory

Commission or

Shenzhen Stock

Exchange that the

control of Mindong

Electric (Group) Co.,

Ltd. has been lost,

the above

commitments shall

expire.

No commitment was

breached.





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8. Commitment of non-competition with listedcompanies in the industryCPTB, CPTTG (L), CPT and the Company confirmedthat CPTF Optronics Co., Ltd. produced small andmedium size LCD module. The small and medium sizeLCD moduleproduced by CPTF Optronics Co., Ltd.and the large size LCD modulesproduced by the 4LCM Companies do not compete. Additionally, fromthen on, the Company, CPT, CPTB, CPTTG (L) andtheir subsidiaries cannot engage in similar business asMindong Electric (Group) Co., Ltd. and its subsidiarieswithin and outside China, including investment,acquisition and combination with other entities thatengage in similar business as Mindong Electric(Group) Co., Ltd. The Company, CPT, CPTB, CPTTG(L) and their subsidiaries cannot engage in similarbusiness that Mindong Electric (Group) Co., Ltd. andits subsidiaries newly invested in, including investmentwith de facto control, acquisition and combination withother entities, within China.

CPTB,CPTTG (L),CPT and theCompany

January 16, 2009 If confirmed by theChina SecuritiesRegulatoryCommission orShenzhen StockExchange that thecontrol of MindongElectric (Group) Co.,Ltd. has been lost,the abovecommitments shallexpire.No commitment wasbreached.

9. Commitment about the operation independence of thelisted companyCPTB, CPTTG(L), CPT and the Company committedto keep Mindong Electric (Group) Co., Ltd.’s assets,employees, finance, organization and businessindependent. Specifically:(A) Maintain Mindong Electric (Group) Co., Ltd.’s and

its subsidiaries’ assets independent and intact:Mindong Electric (Group) Co., Ltd. and itssubsidiaries will have the abilities of production;build operating systems; own property, plant andequipment related to manufacture; have the right touse trademark, patent and knowledge.

(B) Independence of employees:j All management, such as general manager, vice

president, finance manager and board secretaryof Mindong Electric (Group) Co., Ltd. do notserve other positions (except for directors orSupervisor) and receive payroll from otherentities held by the undersigned of thecommitment.


January 16, 2009 No commitment wasbreached.





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k The finance personnel of Mindong Electric(Group) Co., Ltd. do not serve other positionsin other entities held by the undersigned of thecommitment.

(C) Independence of finance:j Mindong Electric (Group) Co., Ltd. will

establish an independent financial system tomake independent financial decisions, have afinancial accounting system in place and afinancial management system that governs thebranches and subsidiaries.

k Mindong Electric (Group) Co., Ltd. does notshare bank accounts with the undersigned ofthe commitment and its subsidiaries.

(D) Independence of organization:Mindong Electric (Group) Co., Ltd. will establisha well-defined and structured internal division toexercise independently the managing capacity,which will not involve any division controlled byMindong Electric (Group) Co., Ltd. and itssubsidiaries.

(E) Independence of business:The undersigned of thecommitment will strictly follow the“ Commitment of non- competition in theindustry” to keep the operation independent ofMindong Electric (Group) Co., Ltd. by avoidingthe unfair related party transactions with theundersigned of the commitment.

10. Commitment about the information disclosureCPTB, CPTTG (L), CPT and the Company committedthat after Mindong Electric (Group) Co., Ltd. wasapproved of private issuance of shares, if the Company,CPT, CPTB and CPTTG(L) make any decisionsrelated to business or any controls over MindongElectric (Group) Co., Ltd., according to theresponsibility of information disclosure under Chinaregulations, they shall inform Mindong Electric(Group) Co., Ltd. and disclose the same content inR.O.C.


January 16, 2009 If confirmed by theChina SecuritiesRegulatoryCommission orShenzhen StockExchange that thecontrol of MindongElectric (Group) Co.,Ltd. has been lost,the abovecommitments shallexpire.No commitment wasbreached.





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11. Supplementary commitment of changes in businessmodel of Shenzhen Huaxianjing Technology Co., Ltd.CPTB, CPTTG(L), CPT and the Company committedthat, to comply with the “Commitment of non-competition in the industry”, the changes in businessmodel of Shenzhen Huaxianjing Technology Co., Ltd.would not cause competition. In addition, the“Commitment about the profitability of MindongElectric (Group) Co., Ltd. in the next 3 years” and the“Commitment of the company’s performance after it islisted” state that the net income of Mindong Electric(Group) Co., Ltd. will not be affected by the changes inbusiness model of Shenzhen Huaxianjing TechnologyCo., Ltd. The related party transactions of ShenzhenHuaxianjing Technology Co., Ltd. under the newbusiness model also follow “Commitment letter for theregulation and reduce of related party transactions” and“Supplementary commitment of the proportion ofrelated party transactions after listed”. CPT still grantspatents based on “Commitment about the use of patent”after the changes in business model of ShenzhenHuaxianjing Technology Co., Ltd.


March 31, 2009 If confirmed by the

China Securities

Regulatory

Commission or

Shenzhen Stock

Exchange that the

control of Mindong


Ltd. has been lost,

the above

commitments shall

expire. In addition,

on April 9, 2013, the

CPTTG 2012

Annual Shareholder

Meeting passed the

resolution

“Regarding the sale

of shareholding in

the subsidiary,” by

which it sold its 75%

shareholding in

Shenzhen

Huaxianjing


to China Star

Optoelectronics

International (HK)

Limited. As such,

this commitment was

no longer valid.

No commitment was

breached.





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12. Commitment and supplementary commitment aboutCPTF Visual Display (Fuzhou) Ltd. (“FVD”) andFujian Huaxianjing Technology Co., Ltd. providingentrusted loans and guarantee for Xiamen OverseasChinese Electronic Co., Ltd.CPTB, CPTTG (L), CPTand the Company committed that the entrusted loansand guarantee FVD and Fujian HuaxianjingTechnology Co., Ltd. provided for Xiamen OverseasChinese Electronic Co., Ltd. before the restructure ofMindong Electric (Group) Co., Ltd. would not causedamage to FVD’s and Fujian Huaxianjing TechnologyCo., Ltd.’s interests or affect Mindong Electric (Group)Co., Ltd shareholders’ interests. If any loss incurs,CPTB will make up for the loss by cash.


March 31, 2009、July 7, 2009

No commitment wasbreached

13. Commitment about composition of board of directorsof listed companies.CPTB made a commitment that after the restructuring,Mindong Electric (Group) Co., Ltd. would modify itsarticles of incorporation. The board of directors wouldbe composed of 9 directors, including 5 independentdirectors who are based in China. During the periodserving as the controlling shareholders of MindongElectric (Group) Co., Ltd., half of the directors of theboard are independent and are based in China and thedirectors will not make any modification to the listedcompanies’ articles of incorporation that contradictswith the above commitment.

CPTB July 7, 2009 No commitment wasbreached.

14. Commitment about share repurchaseCPTB made a commitment that if it fails to fulfill theobligation of sales reimbursement according to“Commitment about profitability of Mindong Electric(Group) Co., Ltd in the future 3 years.”, the board ofdirectors of Mindong Electric (Group) Co., Ltd. areentitled to repurchase shares of CPTB to the extentpermitted by applicable law to compensate the minorityshareholders of Mindong Electric (Group) Co., Ltd.CPTB will recuse itself when discussing the sharerepurchase case during the board meeting of MindongElectric (Group) Co., Ltd. to the extent permitted byapplicable law and pursuant to the Articles ofIncorporation of Mindong Electric (Group) Co., Ltd.

CPTB July 27, 2009 Expired as ofDecember 31, 2011.This commitmentwas no longer vaild.No commitment wasbreached.





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15. Commitment about patents licensingCPT made a commitment that:A. It has alreadyacquired the technology and patents required formanufacturing LCD module and has obtainednecessary licensing. After restructuring of MindongElectric (Group) Co., Ltd., CPT agreed to grantMindong its patents related to the manufacturing ofLCD module that it previously applied, gainedapproval or made public. Other related patents acquiredlater by CPT will also be granted to Mindong Electric(Group) Co., Ltd. The licensing is irrevocable and theeffective period of the license is the effective period ofthe patent. If Mindong Electric (Group) Co., Ltd.utilized the patents mentioned above because of ordersto manufacture LCD module from CPT or other entitiescontrolled by CPT, CPT agreed to waive the patent fee.However, if the orders are from third parties, CPTwould charge patent fee and the amount would beassessed by third party professional institution. Also,the amount would be approved by the board ofdirectors of listed companies in China or shareholdersmeeting according to applicable law and the “Relatedtransaction decision procedures ” established by listedcompanies in China. C. After restructuring MindongElectric (Group) Co., Ltd., with respect to orders tomanufacture LCD module from CPT or other entitiescontrolled by CPT, CPT represented that MindongElectric (Group) Co., Ltd. will not infringe the patentsCPT owned and acquired from third parties byperforming the contracts. If Mindong Electric (Group)Co., Ltd. is accused of infringing the abovementionedpatents by third parties because of performing thecontract, CPT would be held jointly liable for therelated legal responsibilities. Also, the damage causedby Mindong Electric (Group) Co., Ltd. would beindemnified by CPT.

CPT January 16, 2009 No commitment wasbreached.





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16. Supplementary commitment about the patent licensingCPT committed that for utilization of the applied,approved or public patents when Mindong Electric(Group) Co., Ltd. and its subsidiaries manufactureLCD module, CPT agreed to waive the patent fee. Thesupplementary commitment is effective from the daythe restructuring of Mindong Electric (Group) Co., Ltd.took effect and will remain effective as long as CPT isthe substantial controller of Mindong Electric (Group)Co., Ltd. However, if CPT is deemed to have lostcontrol of Mindong Electric (Group) Co., Ltd. by theChina Securities Regulatory Commission or ShenzhenStock Exchange, the supplementary commitment willexpire immediately.

CPT If confirmed by theChina SecuritiesRegulatoryCommission orShenzhen StockExchange that thecontrol of MindongElectric (Group) Co.,Ltd. has been lost,the abovecommitments shallexpire.No commitment wasbreached.

17. Supplementary commitment about utilization ofgoodwill and patent licensingContents: CPT committed that:

A. After the restructuring of material assets ofMindong Electric (Group) Co., Ltd. the companyand its subsidiaries do not have to pay anycharges from the impact of CPT’s goodwill.Mindong Electric (Group) Co., Ltd. and itssubsidiaries will establish their own goodwilland gradually lessen the impact of CPT’sgoodwill on Mindong Electric (Group) Co., Ltd.and its subsidiaries.

B. If CPT transfers its own patent registered inChina, Mindong Electric (Group) Co., Ltd. willhave the priority to buy it under the sameterms. If such patent is transferred to anythird party, CPT will assure Mindong Electric(Group) Co., Ltd. and its subsidiaries theeffectiveness of the patent licensing. Also,per the transfer contracts, the transferee shallnot interfere with the licensing of patents toMindong Electric (Group) Co., Ltd. and itssubsidiaries.

CPT If confirmed bythe ChinaSecuritiesRegulatoryCommission orShenzhen StockExchange that thecontrol ofMindong Electric(Group) Co., Ltd.has been lost, theabovecommitment shallexpire. Nocommitment wasbreached.





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C. If CPT loses its patent and hence causesdamage to Mindong Electric (Group) Co., Ltd. andits subsidiaries, CPT will be held accountablefor the total cost for them to obtain legal rightof use of such patent or alternativetechnology.

D. If Mindong Electric (Group) Co., Ltd. and itssubsidiaries require patent licensing fromthird parties because of manufacturing needsin the future, CPT will help them obtainrelated patent licensing using its industrystatus and experience.

E. The supplementary commitment is effectivefrom the day the restructuring of MindongElectric (Group) Co., Ltd. takes effect and willremain effective as long as CPT is thesubstantial controller of Mindong Electric(Group) Co., Ltd. However, if CPT is deemedto have lost control of Mindong Electric (Group)Co., Ltd. by the China Securities RegulatoryCommission or Shenzhen Stock Exchange,the supplementary commitment will expireimmediately.

18. Commitment about CPT’s joint liability

CPT committed that it assumes joint and

several liability with respect to the commitment

made by CPTB and CPTTG(L) about the

shareholding interest of Mindong Electric (Group)

Co., Ltd. sales performance and related party

transactions. If CPTB and CPTTG(L) fail to

adhere to the above commitment and need to

make compensation, CPT would assume joint

and several liability for such compensation.

CPT January 16, 2009 No commitmentwas breached.





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19. ”Commitment letter” about assuming joint andseveral liabilityTatung Co., Ltd and CPT committed that withrespect to the written commitment submitted byCPTB and CPTTG(L) to the China SecuritiesRegulatory Commission for the private issue ofMindong Electric (Group) Co., Ltd., Tatung Co., Ltdand CPT will assume joint and several liability.

CPTTATUNG

July 7, 2009 If confirmed bythe ChinaSecuritiesRegulatoryCommission orShenzhen StockExchange that thecontrol of Mindong


Ltd. has been lost,the abovecommitment shallexpire. Part of thecommitment hasbeen expired andreplaced by newcommitmentapproved inCTPTG’sshareholders’meeting onSeptember 11,2014 TheCompany did notissue newcommitment orundertaking tobear the joint andseveral liabilityfor the newcommitment. Nocommitment wasbreached.





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20. Commitment about the restructuring party notreducing the shareholding interest of listedcompanies.CPTB 、 CPTTG(L) approved the revision of thecommitments :CPTB and CPTTG(L) withdrewthe commitment that during the period from thecompletion of acquisition and second generation(above 7G) of largesize LCD panel product linesbeing injected to Mindong Electric (Group) Co.,Ltd., CPTB and CPTTG(L) will not reduce theirshareholding percentage of Mindong Electric(Group) Co., Ltd. The supplementary commitmentof CPTB and CPTTG(L) “Motion of revisingcommitment of shareholders” was approved byat the shareholders meeting of CPTTG. After thecompletion of transfer of paid-in capital to sharecapital, shares of CPTB and CPTTG(L) will belisted and be entitled with the outstanding rights.Also, in the first 18 months after the “Motion ofrevising commitment of shareholders” isapproved at the shareholders meeting ofCPTTG, CPTB and CPTTG(L) will notdecrease their shareholding of CPTTG.

CPTBCPTTG(L)

September 11, 2014 The revisionexpired on March11, 2016 and is nolonger applicable.No commitmentwas breached.

21. Related party transaction percentage of listedcompanies after the completion of acquisitionand the commitment of future sales of listedcompanies.Revision of CPTB and CPTTG(L)’scommitment: Starting from 2014, during anyaccount year, if the amount of related partytransactions accounts for more than 30% of thesales during the same period and of the sametransaction category (limited to materialspurchase, sale of products and rendering ofservice involved in daily operations), theshareholders will need to assure that simulatedconsolidated calculation of rate of return of netassets of LCD module companies(please seebelow for specific scope) owned by CPTTG isnot less than 10% (the calculation of rate of

CPTBCPTTG(L)

September 11, 2014 If confirmed bythe ChinaSecuritiesRegulatoryCommission orShenzhen StockExchange that thecontrol ofMindong Electric(Group) Co., Ltd.has been lost, theabovecommitment shallexpire.





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return of net assets does not includeKornerstone Materials Technology Co. Ltd., asubsidiary and other companies that areexpected to be acquired and merged andinvested in the future). Also, CPTB andCPTTG will make up for the insufficientportion by cash. The commitment will expirefrom the shareholders of CPTB and CPTTG(L)lost control of the company. The simulatedconsolidated scope for calculating net assets ofLCD module companies’ rate of return of netassets is as follows:j Net assets of CPTF Optronics Co., Ltd. and

its subsidiariesk Net assets of CPTWl Net assets of FDTm Net assets of CPT TPV Optical (Fujian) Co.,

Ltd.n Net assets of CPTTG(L)o Net assets of CPTTG less net assets

increased from financing after this motionwas approved at the shareholders meeting

pWhen the above LCD module companies areno longer included in the consolidationbecause of being sold or shareholdingpercentage decrease, they will not beincluded in the calculation.

The simulated consolidated scope forcalculating net income of LCD modulecompanies’ rate of return of net assets is asfollows:jNet income of CPTF Optronics Co., Ltd. and

its subsidiariesk Net income of CPTWl Net income of FDTm Net income of CPT TPV Optical (Fujian)

Co., Ltd.n Net income of CPTTG(L)o Net income of CPTTGpWhen LCD module companies are no longer

included in the consolidation because ofbeing sold or shareholding percentagereduced, they will not be included in thecalculation.





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I. Hemlock Semiconductor Corporation (“Hemlock”), a supplier of silicon raw material,filed an action against Green Energy Technology Inc. (“GET”) and Tatung Co. ofAmerica Inc. (“TUS”). A settlement was reached on September 21, 2018. The SUPPLYAGREEMENT, SETTLEMENT AGREEMENT, and LETTER AGREEMENT weresigned upon settlement. GET would purchase raw material from HemlockSemiconductor Corporation. Hemlock Semiconductor Corporation has withdrawn theaction.

GET Group and TUS entered into a long-term purchase contract for materials withHemlock in September 2018. Both parties agreed the minimum amount and purchaseprice from 2019 to 2029. The purchase quantity in 2019 was 5,000 tons. According to thecontract, there is a non-cancellable installed prepayment in the amount of USD35,000thousand in 10 years. The first payment of USD5,000 thousand was due on January 31,2019, the second of USD 2,500 thousand was due on July 31, 2019. GET and TUS didnot make the payment as scheduled. If failing to make the prepayments according to thecontract, they could possibly face a claim as much as USD463,401 thousand. GET Grouphas recognized provisional loss in the amount of USD35,000 thousand (NTD1,075,025thousand) under provision-noncurrent. As Hemlock was aware that GET had decided tofile for liquidation to close down business in Taiwan, Hemlock still proposed a settlementof USD35,000 thousand to GET and TUS, but there was no conclusion. TUS filed anapplication for bankruptcy reorganization with the bankruptcy court on September 30,2019 (Chapter 11). GET was ruled bankrupt by Taipei District Court on February 21,2020. As of today, Hemlock did not make any claim against GET and TUS. Because TUShas a possible obligation to a long-term purchase contract for materials, the Grouptransferred USD35,000 of provision to TUS when assets and liabilities of GET areexcluded due to loss of control over GET.

10. Significant disaster loss

None.

11. Significant subsequent events

(1) Xintong Investment Consulting Co., Ltd. applied for an injunctive relief with the Taiwan HighCourt on November 22, 2019, requesting that the chairman, directors and independent directorsof the Company be prohibited from exercising the rights of the chairman, directors andcompany seal, and that three impartial professionals are appointed as temporary managers ofthe Company, to serve as chairman and board of directors. The Company received a noticefrom the Taipei District Court on January 7, 2020 and has appointed attorneys to work withthe court. Subsequently, the case was transferred to the Taipei District Court for adjudicationby the Taiwan High Court due to jurisdictional errors and was rejected by the Taipei DistrictCourt on February 27, 2020.





122

(2) Because of operation needs, the Company entered into a real estate lease contract (including landand buildings) with Shan-Chih Asset Development Co. with approval from the board of directorson February 13, 2020. The leased area increased by 12,334 square meters. The use-right-asset ofreal estate was adjusted to NTD224,050 thousand.

(3) The Company has signed a contract to sell 100% shares of Tatung Mexico S.A de C.V. onMarch 6, 2020. The buyer has paid 60% of the down payment according to the contract. Suchtransaction is expected to be completed within a year. The transaction was still ongoing as ofthe report date of the financial statement.

12. Others

(1) Categories of financial instruments

Financial assetsAs of December 31,2019 2018

Financial assets at fair value through profit or loss:Mandatorily measured at Fair value through profit or loss $15,004 $2,023

Financial assets at fair value through other comprehensiveincome (including non-current) 495,711 416,741

Financial asset amortized at cost:Cash and cash equivalents (excluding cash on hand and

petty cash) 3,000,526 2,035,583Financial asset amortized at cost (including non-current) 2,087,494 1,187,189Contract asset 133,394 207,800Notes receivable (including related parties) 126,322 203,934Accounts receivable (including related parties) 3,722,055 4,164,973Other receivables (including related parties) (including

non-current) 3,594,349 5,006,218Operating lease receivable (including related parties) 132 (Note)Finance lease receivable (including related parties)

(including non-current) 384,443 (Note)Deposits out 387,317 521,616

Subtotal 13,436,032 13,327,313Total $13,946,747 $13,746,077





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Financial liabilitiesAs of December 31,2019 2018

Financial liabilities at amortized cost:Short-term loans $1,528,691 $4,601,696Short-term notes and bills payable 151,794 251,911Payables (including related parties) (including non-

current) 6,021,540 4,394,651

Long-term loans (including the current portion) 25,776,739 28,555,648Lease liability (including non-current) 298,199 (Note)Deposits in 1,079 1,050Subtotal 33,778,042 37,804,956

Financial liabilities at fair value through profit or loss:Held-for-trading 2,808 -Total $33,780,850 $37,804,956


(2) Financial risk management objectives and policies

The Company’s risk management objectives are to manage market risk, credit risk andliquidity risk related to its operating activities. The Company identifies measures and managesthe aforementioned risks based on policy and risk preference.

The Company has established appropriate policies, procedures and internal controls forfinancial risk management. Before entering into significant financial activities, due approvalprocess by the board of directors and audit committee must be carried out based on relatedprotocols and internal control procedures. The Company complies with its financial riskmanagement policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market prices. Market risks comprise of currency risk, interestrate risk, and other price risk (such as equity price risk).

In practice, it is rarely the case that a single risk variable will change independently from otherrisk variables, there is usually interdependencies between risk variables. However, thesensitivity analysis disclosed below does not consider the interdependencies between riskvariables.





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Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily tothe Company’s operating activities (when revenue or expense are denominated in a differentcurrency from the Company’s functional currency) and the Company’s net investments inforeign subsidiaries.

The Company has certain foreign currency receivables to be denominated in the same foreigncurrency with certain foreign currency payables, therefore natural hedge is received. TheCompany also uses forward contracts to hedge the foreign currency risk on certain itemsdenominated in foreign currencies. Hedge accounting is not applied as they did not qualify forhedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are forstrategic purposes, they are not hedged by the Company.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates onthe Company’s profit is performed on significant monetary items denominated in foreigncurrencies as of the end of the reporting period. The Company’s foreign currency risk ismainly related to the volatility in the exchange rates for USD, JPY and RMB.

The information of the sensitivity analysis is as follows:

A. When NTD appreciates or depreciates against USD by 1%, the profit for the years endedDecember 31, 2019 and 2018 will decrease (increase) by NTD11,434 thousand andNTD9,629 thousand respectively.

B. When NTD appreciates or depreciates against JPY by 1%, the profit for the years endedDecember 31, 2019 and 2018 would will decrease (increase) by NTD1,899 thousand andNTD710 thousand respectively.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrumentwill fluctuate because of changes in market interest rates. The Company’s exposure to the riskof changes in market interest rates relates primarily to the Company’s debt instrumentinvestments at variable interest rates, bank borrowings with fixed interest rates and variableinterest rates.

The Company manages its interest rate risk by having a balanced portfolio of fixed andvariable loans and borrowings and entering into interest rate swaps. Hedge accounting doesnot apply to these swaps as they do not qualify for it.





125

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as ofthe end of the reporting period, including investments and borrowings with variable interestrates and interest rate swaps. At the balance sheet date, a change of 10 basis points of interestrate could cause the profit for the years ended December 31, 2019 and 2018 to increase(decrease) by NTD26,536 thousand and NTD32,654 thousand, respectively.

Equity price risk

The Company’s listed and unlisted equity securities are susceptible to market price risk arisingfrom uncertainties about future values of the investment securities. The Company’s listedequity securities are classified under financial assets measured at fair value through profit orloss and financial assets measured at fair value through other comprehensive income, whileunlisted equity securities are classified under measured at fair value through othercomprehensive income. The Company manages the equity price risk through diversificationand placing limits on individual and total equity instruments. Reports on the equity portfolioare submitted to the Company’s senior management on a regular basis. The Company’s boardof directors reviews and approves all equity investment decisions.

For 2019, a change of 1% in the price of the listed companies’ stocks classified as equityinstruments investments measured at fair value through other comprehensive income couldhave an impact of NTD1,570 thousand and NTD2,143 thousand on the equity attributable tothe Company.

Please refer to Note 12(9) for sensitivity analysis information of other equity instruments orderivatives that are linked to such equity instruments whose fair value measurement iscategorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leadingto a financial loss. The Company is exposed to credit risk from operating activities (primarilyfor contract assets, accounts receivables and notes receivables) and from its financingactivities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company’s established policy,procedures and control relating to credit risk management. Credit limits are established for allcounter parties based on their financial position, rating from credit rating agencies, historicalexperience, prevailing economic condition and the Company’s internal rating criteria etc.Certain counter parties’ credit risk will also be managed by taking credit enhancingprocedures, such as requesting for prepayment or insurance.





126

As of December 31, 2019 and 2018, top ten customers’ receivables represented 81.17% and

81.23% of the total account’s receivables of the Company, respectively. The credit

concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments

is managed by the Company’s treasury in accordance with the Company’s policy. The

Company only transacts with counterparties approved by the internal control procedures,

which are banks and financial institutions, companies and government entities with good

credit rating and with no significant default risk. Consequently, there is no significant credit

risk for these counter parties.

The Company adopted IFRS 9 to assess the expected credit losses. Except for contract assets

and trade receivables, the remaining debt instrument investments which are not measured at

fair value through profit or loss, low credit risk for these investments is a prerequisite upon

acquisition and by using their credit risk as a basis for the distinction of categories. The

Company makes an assessment at each reporting date as to whether the debt instrument

investments are still considered low credit risk, and then further determines the method of

measuring the loss allowance and the loss rates.

Financial assets are written off when there is no realistic prospect of future recovery (the issuer

or the debtor is in financial difficulties or bankruptcy).

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and

flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank

borrowings and finance leases. The table below summarizes the maturity profile of the

Company’s financial liabilities based on the contractual undiscounted payments and

contractual maturity. The payment amount includes the contractual interest. The undiscounted

payment relating to borrowings with variable interest rates is extrapolated based on the

estimated interest rate yield curve as of the end of the reporting period.





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Non-derivative financial liabilities

Less Than1 Year 2-3 Years 4-5 Years

More than5 Years Total

December 31, 2019Loans (including contracted

interests) $4,413,156 $23,878,108 $150,763 $49,242 $28,491,269

Short-term notes and billspayable 152,000 - - - 152,000

Payables (including relatedparties) (including non-current portion)

6,021,540 - - - 6,021,540

Deposit-in 1,079 - - - 1,079Lease liabilities (Note 1) 269,206 25,112 6,257 6,642 307,217

December 31, 2018Loans (including contracted

interests) $8,638,339 $25,838,654 $48,975 $121,553 $34,647,521

Short-term notes and billspayable 252,000 - - - 252,000

Payables (including relatedparties) (including non-current portion) (Note 2)

4,381,207 13,444 - - 4,394,651

Deposit-in 1,050 - - - 1,050

Note:1. The Company adopted IFRS 16 since January 1, 2019. The Company elected not to

restate prior periods in accordance with the transition provision in IFRS 16.2. Including cash flows resulted from short-term leases or leases of low-value assets.

Derivative financial liabilities

Less Than1 Year 2-3 Years 4-5 Years

More than5 Years Total

December 31, 2019Flow-in $- $- $- $- $-Flow-out (2,808) - - - (2,808)

Net $(2,808) $- $- $- $(2,808)

December 31, 2018Flow-in $2,023 $- $- $- $2,023Flow-out - - - - -

Net $2,023 $- $- $- $2,023

The above tables about the disclosures of derivative financial instruments used theundiscounted net cash flow.





128

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for 2019

Other payables-

related parties

Short-term notes

and bills payable

Short-term

borrowings

Long-term

borrowings

(including current

portion) Lease liabilities

Total liabilities

from financing

activities

January 1, 2019 $- $251,911 $4,601,696 $28,555,648 $534,365 $33,943,620

Cash flows 1,950,000 (100,117) (3,073,005) (2,778,909) (272,684) (4,274,715)

Other (Note) - - - - 36,518 36,518

December 31, 2019 $1,950,000 $151,794 $1,528,691 $25,776,739 $298,199 $29,705,423

(Note: Others are from the changes of the exchange rates and changes from non-cash)

Reconciliation of liabilities of 2018:

Short-term notesand bills payable

Short-termborrowings

Long-termborrowings(including

current portion)

Total liabilitiesfrom financing

activitiesJanuary 1, 2018 $301,848 $4,875,438 $28,238,370 $33,415,656Cash flows (50,096) (284,670) 317,278 (17,488)Other (Note) 159 10,928 - 11,087December 31, 2018 $251,911 $4,601,696 $28,555,648 $33,409,255

(Note: Others are from the changes of the exchange rates and changes from non-cash)

(7) Fair value of financial instruments

A. the methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liabilityin an orderly transaction between market participants at the measurement date. Thefollowing methods and assumptions were used by the Company to measure or disclose thefair values of financial assets and financial liabilities:

(a) The carrying amount of cash and cash equivalents, receivables, payables and othercurrent liabilities approximate their fair value due to their short maturities.





129

(b) For financial assets and liabilities traded in an active market with standard terms andconditions, their fair value is determined based on market quotation price (includinglisted equity securities, beneficiary certificates, bonds and futures etc.) at the reportingdate.

(c) Fair value of equity instruments without market quotations (including privateplacement of listed equity securities, unquoted public company and private companyequity securities) are estimated using the market method valuation techniques basedon parameters such as prices based on market transactions of equity instruments ofidentical or comparable entities and other relevant information (for example, inputssuch as discount for lack of marketability, P/E ratio of similar entities and Price-Bookratio of similar entities).

(d) Fair value of debt instruments without market quotations, bank loans, lease liabilitiesand other non-current liabilities are determined based on the counterparty prices orvaluation method. The valuation method uses DCF method as a basis, and theassumptions such as the interest rate and discount rate are primarily based on relevantinformation of similar instrument (such as yield curves published by the TaipeiExchange, average prices for Fixed Rate Commercial Paper published by Reuters andcredit risk, etc.)

(e) The fair value of derivatives which are not options and without market quotations, isdetermined based on the counterparty prices or discounted cash flow analysis usinginterest rate yield curve for the contract period. Fair value of option-based derivativefinancial instruments is obtained using on the counterparty prices or appropriate optionpricing model (for example, Black-Scholes model) or other valuation method (forexample, Monte Carlo Simulation).

B. The carrying amount of the Company’s financial instruments measured at amortized costsuch as cash and cash equivalents, receivables, financial assets at amortized cost, payables,long-term and short-term loans, short-term notes and bills payable, deposits-out, deposits-in and lease liabilities approximate their fair value.

C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12(9) for fair value measurement hierarchy for financial instrumentsof the Company.





130

(8) Derivative financial instruments

The related information for derivative financial instruments not qualified for hedge accountingand not yet settled as at December 31, 2019 and 2018 is as follows:

Forward exchange contracts

Forward foreign exchange contracts to manage exposure part partial transactions, but notdesignated as hedging instruments:

December 31, 2019

Currency PeriodAmount

(thousands)Buying currencyexchange forward Buy USD Sell NTD 2019.10~2020.04 USD7,000

December 31, 2018

Currency PeriodAmount

(thousands)Buying currencyexchange forward Buy USD Sell NTD 2018.07~2019.06 USD26,950

Buy USD Sell NTD 2018.07~2019.05 USD8,000

Exchange options

December 31, 2019

The following table refers to the related conditions with regard to the Company’s unsettledexchange options on December 31, 2019.

Counterpartybank

Foreignexchange rate

Foreign exchange rate onthe date of settlement FX Term of settlement (USD in thousands)

A USD/TWD FX <30.85 Executing price at 30.85 to buy USD 1,000A USD/TWD FX <30.72 Executing price at 30.72 to buy USD 1,000A USD/TWD FX <30.40 Executing price at 30.40 to buy USD 1,000

As of December 31, 2019, the unsettled foreign exchange options contracts amounted toUSD3,000 thousand, with a fair value of NTD (205) thousand (including royalties amountedto NTD205 thousand and unrealized gain amounted to NTD0 thousand), recognized asfinancial liabilities carried at fair value through profit or loss - current.

December 31, 2018

There was no unsettled exchange option in 2018, and the settled amount were USD 100,100thousand and EUR 3,500 thousand.





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(9) Fair value measurement hierarchy

A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financialstatements are categorized within the fair value hierarchy, based on the lowest level inputthat is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs aredescribed as follows:

Level 1– Quoted (unadjusted) market prices in active markets for identical assets orliabilities that the entity can access at the measurement date

Level 2 – Inputs other than quoted prices included within Level 1 that are observable forthe asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis,the Company determines whether transfers have occurred between Levels in the hierarchyby re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis.Fair value measurement hierarchy of the Company’s assets and liabilities measured at fairvalue on a recurring basis is as follows:

December 31, 2019

Level 1 Level 2 Level 3 TotalFinancial assetsFinancial assets at fair value

through profit or loss:Open-end funds $15,004 $- $- $15,004

Financial assets at fair valuethrough other comprehensiveincome:Equity instrument measured at

fair value through othercomprehensive income 156,965 - 338,746 495,711

Financial liabilitiesFinancial liabilities at fair value

through profit or loss:Forward exchange contracts - (2,808) - (2,808)





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December 31, 2018

Level 1 Level 2 Level 3 TotalFinancial assets

Financial assets at fair valuethrough profit or loss:Forward exchange contracts $- $2,023 $- $2,023

Financial assets at fair valuethrough other comprehensiveincome:Equity instrument measured at

fair value through othercomprehensive income 214,266 - 202,475 416,741

Transfers between Level 1 and Level 2 during the period

There were no transfers between Level 1 and 2 for the years ended December 31, 2019 and2018.

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy formovements during the period is as follows:

AssetAt fair valuethrough other

comprehensiveincomeStocks

January 1, 2019 $202,475During 2019During 2018 Amount recognized in OCI:

(presented in “Unrealized gains (losses) from equity instrumentsinvestments measured at fair value through othercomprehensive income)

29,881

Acquisition/issuance, 2019 106,390Disposal/liquidation, 2019 -Exchange differences -December 31, 2019 $338,746





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AssetAt fair valuethrough other

comprehensiveincomeStocks

January 1, 2018 $190,613During 2018 Amount recognized in OCI:Amount recognized in OCI:

(presented in “Unrealized gains (losses) from equity instrumentsinvestments measured at fair value through othercomprehensive income)

11,862

Acquisition/issuance, 2018 -Disposal/liquidation, 2018 -Exchange differences -December 31, 2018 $202,475

Information on significant unobservable inputs to valuation in Level 3

Description of significant unobservable inputs to valuation of recurring fair valuemeasurements categorized within Level 3 of the fair value hierarchy is as follows:


Valuation

techniques

Significant

unobservable inputs

Quantitative

information

Relationship

between inputs

and fair value

Sensitivity of the input

to fair value

Financial assets:

Financial assets measured at fair value through other comprehensive income

Stocks Market approach discount for lack of

marketability

25%~30% The higher the

discount for lack

of marketability,

the lower the fair

value of the stocks

1% increase (decrease)

in the discount for lack

of marketability would

result in (decrease)

increase in the

Company’s equity by

NTD3,387 thousand





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Valuation

techniques

Significant

unobservable inputs

Quantitative

information

Relationship

between inputs

and fair value

Sensitivity of the input

to fair value

Financial assets:

Financial assets measured at fair value through other comprehensive income

Stocks Market approach discount for lack of

marketability

25%~30% The higher the

discount for lack

of marketability,

the lower the fair

value of the stocks

1% increase (decrease)

in the discount for lack

of marketability would

result in (decrease)

increase in the

Company’s equity by

NTD2,001 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fairvalue hierarchy

The Company’s investment and accounting department is responsible for validating thefair value measurements and ensuring that the results of the valuation are in line withmarket conditions, based on independent and reliable inputs which are consistent with otherinformation, and represent exercisable prices. The Department analyzes the movements inthe values of assets and liabilities which are required to be re-measured or re-assessed asper the Company’s accounting policies at each reporting date to ensure that the valuationresult is reasonable.

C. Fair value measurement hierarchy of the Company’s assets and liabilities not measured atfair value but for which the fair value is disclosed

As at December 31, 2019:Level 1 Level 2 Level 3 Total

Investments accounted for using the equity

method (please refer to Note 6 (9)) $2,088,913 $- $- $2,088,913

As at December 31, 2018:Level 1 Level 2 Level 3 Total

Investments accounted for using the equity

method (please refer to Note 6 (13)) $2,607,329 $- $- $2,607,329





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(10) Significant assets and liabilities denominated in foreign currencies

The exchange rates used to translate assets and liabilities denominated in foreign currenciesare disclosed as follows:

Foreign currency-dollar, NTD-thousandsAs of December 31, 2019

Foreign currency Exchange rate NTDFinancial Assets -Monetary items

USD $76,541,469 29.98000 $2,292,015JPY 716,813,025 0.27600 197,840EUR 512,025 33.5900 17,199HKD 1,446,203 3.84900 5,566THB 6,319,937 1.00980 6,382

Non-Monetary itemsUSD (11,077,120) 29.98000 (332,092)RMB 161,469,090 4.30500 695,124THB 527,184,908 1.00980 532,351JPY 4,804,211,102 0.27600 1,325,962SGD 3,617,406 22.28000 80,596MXN 78,859,777 1.58551 125,033VND 217,392,123,852 0.00132 287,750

Financial Liabilities -Monetary items

USD 38,312,103 29.9800 1,148,597THB 12,666,849 1.00980 12,791JPY 28,846,452 0.27600 7,962EUR 1,312,162 33.59000 47,030RMB 115,426 4.30500 497

As of December 31, 2018Foreign currency Exchange rate NTD

Financial Assets -Monetary items

USD $43,160,604 30.1750 $1,325,678JPY 282,723,818 0.27820 78,654EUR 501,529 35.2000 17,654RMB 1,596,628 4.47532 7,145





136

As of December 31, 2018Foreign currency Exchange rate NTD

Non-Monetary itemsUSD 9,377,204 30.1750 288,021RMB 203,865,367 4.47532 912,362THB 540,880,985 0.95320 515,568JPY 2,363,052,019 0.27820 657,401SGD 3,697,742 22.4800 83,125MXN 98,457,011 1.55934 153,528VND 217,392,123,852 0.00132 287,750

Financial Liabilities -Monetary items

USD 74,508,870 30.1750 2,288,540THB 10,437,198 0.95320 9,949JPY 27,336,462 0.27820 7,605EUR 174,353 35.2000 6,137RMB 1,452,028 4.47532 6,498

The Company has various kinds of foreign currency transactions, and hence it’s impracticalto disclose the foreign exchange information of monetary financial assets and liabilities byeach significant foreign currency. For the years ended 2019 and 2018, the foreign currencyexchange losses were NTD2,793 thousand and NTD32,558 thousand, respectively.

The above information is disclosed based on the carrying amount of foreign currency (afterconversion to functional currency).

(11) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains astrong credit rating and healthy capital ratios in order to support its business and maximizeshareholder value. The Company manages its capital structure and adjusts it, in light ofchanges in economic conditions. To maintain or adjust the capital structure, the Company mayadjust dividend payment to shareholders, return capital to shareholders or issue new shares.

(12) With respect to the case regarding Nature Worldwide Technology Co., the former chairmanWei-Shan Lin was sentenced to imprisonment and penalties by the Taiwan High Court onAugust 23, 2017. Wei-Shan Lin appealed to the Supreme Court of the ROC. The SupremeCourt rejected the appeal on May 29, 2019 and on 2018 No.1831 sustained the originaljudgement.

Wei-Shan Lin resigned as the director and chairman of the Company on February 1, 2018.The Company's operations, finance and business were not affected by the above personal casesand will continue as usual.





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(13) With respect to the controversies between the Company and shareholders, such as exercise ofdisgorgement, 2017 shareholders’ meeting resolution effectiveness, exercise of shareholders‘voting right, appointment of inspector, injunctive relief, application for convening a specialmeeting of shareholders by minority shareholders etc., the Company has responded to thecourt and the Ministry of Economic Affairs separately. Before receiving any court, judgmentand ruling of the Ministry of Economic Affairs, the Company shall exercise its rights inaccordance with the law to protect the rights and interests of the Company and its shareholders.If there is any further development, it will be announced to the public as material informationaccording to law. The Company's operations, finance and business were not affected by theabove personal cases and will continue as usual.

13. Other disclosure

(1) Information at significant transactions:

A. Financing provided to others: refer to Attachment 1.

B. Endorsement/Guarantee provided to others: refer to Attachment 2.

C. Securities held: refer to Attachment 3.

D. Individual securities acquired or disposed of with accumulated amount exceeding the lowerof NTD300 million or 20% of the capital stock: refer to Attachment 4.

E. Acquisition of real estate in the amount exceeding the lower of NTD300 million or 20% ofcapital stock: None.

F. Disposal of real estate up to the amount exceeding the lower of NTD300 million or 20%of capital stock: None.

G. Related party transactions for purchases and sales amounts exceeding the lower of NTD100million or 20% of capital stock: refer to Attachment 6.

H. Receivables from related parties with amounts exceeding the lower of NTD100 million or20% of capital stock: refer to Attachment 7.

I. Engaging in derivative transactions: refer to Note 6 and Note 12 in the parent companyonly financial statements.

J. Intercompany Relationships and Significant Intercompany Transactions: refer toAttachment 10.





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(2) Information on investees:

A. Of the investee company directly or indirectly has significant influence or control over,their investee companies’ information: refer to Attachment 8.

B. Of the investee company who directly or indirectly has control, the following informationis disclosed:

(a) Financing provided to others: refer to Attachment 1.

(b) Endorsement/Guarantee provided to others: refer to Attachment 2.

(c) Securities held: refer to Attachment 3.

(d) Individual securities acquired or disposed of with accumulated amount exceeding thelower of NTD300 million or 20% of the capital stock: refer to Attachment 4.

(e) Acquisition of real estate in the amount exceeding the lower of NTD300 million or20% of capital stock: None.

(f) Disposal of real estate up to the amount exceeding the lower of NTD300 million or20% of capital stock: refer to Attachment 5.

(g) Related party transactions for purchases and sales amounts exceeding the lower ofNTD100 million or 20% of capital stock: refer to Attachment 6.

(h) Receivables from related parties with amounts exceeding the lower of NTD100 millionor 20% of capital stock: refer to Attachment 7.

C. Information on investments in mainland China:

(a) The investee company name, main business, paid-in capital, investment, capitaloutflow, ownership, investment gains and losses, ending balance of investment,repatriation of investment income and have to go to the mainland investment limitscenario: refer to Attachment 9.

(b) With the investee companies directly or indirectly through a third country followingthe occurrence of significant transactions, prices, payment terms and unrealized gainsand losses were as follows:





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i. Ending balance and percentage, purchase amount and percentage of relatedpayables: refer to Attachment 6.

ii. Sales amount and percentage of the balance and percentage of the relatedreceivables: refer to Attachment 6.

iii. Gains and loss on the transaction amount of property: None.iv. Endorsement guarantees or collateral ending balance and purpose: refer to

Attachment 2.v. The highest balance of financing, the total ending balance, and interest rate range

and current total interest: refer to Attachment 1.vi. Other transactions that have a significant impact on the profit or loss or financial

position of the current period, such as the provision of services or received, etc.:None.

Please refer to page 326 to 340 in the consolidated financial statements for the Attachment 1 to 10 to the parent company only financial statements, which are the Attachment 1 to 10 to the consolidated financial statements.

TATUNGCOMPANY Chairman

stock code 2371 2019...email: [email protected] • motor business unit no. 352, his tung...

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