Tatung : Parent Company Statements 2022

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Stock Code:2371

TATUNG CO.

Parent Company Only Financial Statements

With Independent Auditors' Report

For the Years Ended December 31, 2022 and 2021

Address:	No. 22, Sec. 3, Zhongshan N. Rd., Zhongshan Dist., Taipei City 104427,
	Taiwan (R.O.C.)
Telephone:	[phone]

The independent auditors' report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' report and parent company only financial statements, the Chinese version shall prevail.

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Table of contents

		Contents		Page
1.	Cover Page	1
2.	Table of Contents	2
3.	Independent Auditors' Report	3
4.	Balance Sheets	4
5.	Statements of Comprehensive Income	5
6.	Statements of Changes in Equity	6
7.	Statements of Cash Flows	7
8.	Notes to the Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the financial statements	8
	(3)	New standards, amendments and interpretations adopted	9
	(4)	Summary of significant accounting policies		10～35
	(5)	Significant accounting assumptions and judgments, and major sources		36～37
		of estimation uncertainty
	(6)	Explanation of significant accounts		37～87
	(7)	Related-party transactions		87～96
	(8)	Pledged assets	96
	(9)	Significant commitments and contingencies		97～120
	(10)	Losses due to major disasters	120
	(11)	Subsequent events	120
	(12)	Others		120～121
	(13)	Other disclosures
		(a) Information on significant transactions	122
		(b) Information on investees	122
		(c) Information on investment in mainland China	122
		(d) Major shareholders	122
	(14)	Segment information	122
9.	Appendix	123~141
10.	List of major account titles		142～148

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Independent Auditors' Report

To the Board of Directors of Tatung Co.:

Opinion

We have audited the financial statements of Tatung Co.("the Company"), which comprise the balance sheets as of December 31, 2022 and 2021, the statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2022 and 2021, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Account of Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter- Derecognition of Some Subsidiaries

As stated in 6(j), Chunghwa Picture Tubes, Ltd. ("CPT"), a subsidiary of Tatung Co., was adjudicated bankrupt by the Taiwan Taoyuan District Court on August 29, 2022. The bankruptcy registration was approved by the Department of Commerce, Ministry of Economic Affairs, through Letter No. 11101187410 dated September 28, 2022. As a result, Tatung Co. evaluated that it lost control of CPT and its subsidiaries on September 30, 2022, and derecognized the assets and liabilities of these subsidiaries in the consolidated financial statements of September 30, 2022, and recognized the related derecognition gain or loss. Therefore, our conclusion is not modified in respect of this matter.

Emphasis of Matter- Contingent Liabilities

As stated in Note 9(d)(ii) 11), in December 2018, Chunghwa Picture Tubes Technology (Group) Co., Ltd. (" CPTTG" ) filed a civil lawsuit against Chunghwa Picture Tubes (Bermuda) Ltd. (" CPTB" ) for non performance of a payment. Later on March 28, 2019, Tatung Co. and Chunghwa Picture Tubes, Ltd. ("CPT") were added as defendants in the lawsuit. CPTTG claimed that Tatung Co. and CPTTG were jointly and severally liable for the claimed payment. Tatung Co. stated that it is difficult to determine whether the above requests should be compensated and the amount of compensation. The content and amount of the above requests may be resolved through lawsuits in the future, and therefore are not recognized as a liability in accordance with IAS 37 as a contingent liability (Because the existence of a present obligation that would result in an outflow of economic resources has not been confirmed, or the amount of the obligation cannot be estimated reliably). Therefore, our conclusion is not modified in respect of this matter.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2022 of Tatung Co. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

1. Revenue recognition
   Please refer to Note 4(q) for the accounting principles on revenue recognition and Note 6(ac) for the description on revenue recognition.
2. 1. Description of key audit matter:
      The timing for the transfer of commodity control is more complicated not only because of the diversity of income sources and huge transaction volume of the Company, but also the transaction terms vary with each client. These factors expose the Company to a significant risk of untimely recognition of revenue. Therefore, the test of revenue recognition is one of our key audit matters.
      Therefore, the test of revenue recognition is one of our key audit matters.
   2. Auditing procedures performed:
      The main audit procedures of the key audit matter mentioned above include:

• Understanding and testing the internal control design and implementation of the sales cycle.

‧Sampling the original order or contract and reviewing the transaction terms in order to evaluate the accuracy of the timing for revenue recognition.

1. • Performing cut off test for revenues during the periods before and after the balance sheet date and reviewing whether there are significant sales returns and discounts after the period to confirm the reasonableness of revenue recognition.
2. Contingent Liabilities
   Please refer to Note 9(d)(ii) 11) of non-consolidated financial report for the disclosure of contingent liabilities.
3. 1. Description of key audit matter:
      Chunghwa Picture Tubes Technology (Group) Co., Ltd. ("CPTTG") filed an action in Fujian High People's Court against Chunghwa Picture Tubes (Bermuda) Ltd. ("CPTB") on December 29, 2018. On May 10, 2019, CPTTG amended their compliant and added Tatung Co. and CPT to the case as new defendants, claiming that the defendants were jointly and severally liable for the claimed payment. 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. Since Tatung Co. and CPT claimed the amount mentioned above would possibly be solved through litigation procedures and the assertion involved significant judgement, assessment and estimation of the management.
      Therefore, the assessment of contingent liabilities is one of our key audit matters.

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1. 1. Auditing procedures performed:
      The main audit procedures of the key audit matter mentioned above include:
   2. • Obtaining the assertion and statement of the Company for the contingent liability.
      • Interviewing with the Company' s management and internal legal personnel, and reviewing documents related to legal cases.
      • Obtaining the legal opinion from lawyers appointed by the Company concerning the case.
      • Assessing whether the accounting judgments and estimations are consistent and reasonable in accordance with the accounting standards.
2. Investment using the equity method

Please refer to Notes 4(i) and (j) for accounting policies for investing in affiliated enterprises and subsidiaries; Note 5 for the judgment of control; and Note 6(h) and (i) for details on the investment using the equity method.

1. Description of key audit matter:
   As of December 31, 2022, the investment of the Company using the equity method was $58,000,560 thousand, representing 72% of the total assets, which is significant for the financial statements. We evaluate whether each invested enterprise has substantial control ability, and every time the aforementioned statement applies, we evaluate further on whether it has been regarded as a subsidiary in accordance with the regulations and included in the preparation of the consolidated financial statements. We also examine whether the long-term equity investments that have a significant influence over the invested enterprise are evaluated using the equity method. Furthermore, we assess the accuracy of the aforementioned accounting treatment, which has a significant impact on the financial statements.
   Therefore, the use of the equity method to assess the control or significant influence of the investment individual is one of our key audit matters.
2. Auditing procedures performed:
   The main audit procedures of the key audit matter mentioned above include:
3. • Obtaining the latest investment structure chart of the Company, inquiring the reasons for relevant changes, and understanding the accounting basis and the appropriateness of the classification of the Company's investment using the equity method.
   • Evaluating the shareholding status of the Company in each reinvested enterprise, understanding the composition of the board of directors, management, shareholder structure, and related investment contracts, to evaluate whether the Company's identification of each reinvested enterprise is handled in accordance with the relevant standards.
   • Examining whether the financial statements audited by an accountant have been obtained in accordance with the regulations when recognizing investment gains and losses and other comprehensive gains and losses for investments using the equity method and understanding the impact of major events in the investee company's financial statements on the non-consolidated financial statements.
   • Requesting confirmation or taking physical count to verify the existence and ownership of equity method investments on the books.