Chunghwa Telecom (CHT) 6-K Current report (foreign)

Exhibit 99.2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 30, 2021 and 2020 and

Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders

Chunghwa Telecom Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Chunghwa Telecom Co., Ltd. and its subsidiaries (the “Company”) as of June 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended June 30, 2021 and 2020 and for the six months ended June 30, 2021 and 2020, the consolidated statements of changes in equity and cash flows for the six months then ended, and related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2021 and 2020, its consolidated financial performance for the three months ended June 30, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

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The engagement partners on the reviews resulting in this independent auditors’ review report are Dien Sheng Chang and Cheng Hung Kuo.

/s/ Dien Sheng Chang	/s/ Cheng Hung Kuo
Deloitte & Touche
Taipei, Taiwan
Republic of China

August 5, 2021

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

	June 30, 2021 (Reviewed)					December 31, 2020 (Audited)				June 30, 2020 (Reviewed)
ASSETS	Amount			%		Amount		%		Amount		%
CURRENT ASSETS
Cash and cash equivalents (Note 6)	$	32,139,010			6	$	30,419,655		6	$	19,150,169		4
Financial assets at fair value through profit or loss (Note 7)		2,326			—		9,897		—		8,490		—
Hedging financial assets (Note 20)		—			—		1,752		—		2,358		—
Contract assets (Note 30)		5,354,120			1		5,331,246		1		4,518,827		1
Trade notes and accounts receivable, net (Notes 9 and 30)		21,952,194			4		22,621,902		5		26,710,646		5
Receivables from related parties (Note 38)		43,943			—		230,696		—		24,575		—
Inventories (Notes 10 and 39)		11,520,609			2		12,408,903		3		18,139,775		4
Prepayments (Note 11)		5,464,420			1		2,306,246		—		4,876,590		1
Other current monetary assets (Notes 12 and 35)		18,888,589			4		6,123,665		1		6,665,163		1
Other current assets (Notes 19 and 39)		3,503,214			1		2,349,097		—		2,088,318		—
Total current assets		98,868,425			19		81,803,059		16		82,184,911		16
NONCURRENT ASSETS
Financial assets at fair value through profit or loss (Note 7)		903,625			—		677,202		—		709,137		—
Financial assets at fair value through other comprehensive income (Notes 8 and 35)		3,635,963			1		7,193,174		2		6,899,935		1
Investments accounted for using equity method (Note 14)		7,269,489			1		6,893,001		1		7,248,984		1
Contract assets (Note 30)		2,382,592			—		2,495,302		—		2,456,073		—
Property, plant and equipment (Notes 15, 35, 38 and 39)		282,692,466			55		281,415,943		56		279,607,696		55
Right-of-use assets (Note 16)		10,695,635			2		11,009,206		2		11,331,980		3
Investment properties (Note 17)		9,600,186			2		9,621,322		2		8,213,568		2
Intangible assets (Notes 18 and 35)		87,071,016			17		90,284,560		18		93,390,023		19
Deferred income tax assets (Note 3)		3,066,359			1		3,132,713		1		3,260,000		1
Incremental costs of obtaining contracts (Note 30)		944,972			—		999,593		—		955,755		—
Net defined benefit assets (Note 3)		3,753,935			1		3,372,555		1		2,253,023		—
Prepayments (Note 11)		1,993,835			—		2,213,521		—		2,495,825		1
Other noncurrent assets (Notes 19, 35, 39 and 40)		4,881,441			1		5,266,841		1		4,996,357		1
Total noncurrent assets		418,891,514			81		424,574,933		84		423,818,356		84
TOTAL	$	517,759,939			100	$	506,377,992		100	$	506,003,267		100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans (Note 21)	$	60,000			—	$	67,000		—	$	60,000		—
Short-term bills payable (Note 22)		—			—		6,999,198		1		15,989,896		3
Financial liabilities at fair value through profit or loss (Note 7)		967			—		143		—		—		—
Hedging financial liabilities (Note 20)		14,013			—		—		—		—		—
Contract liabilities (Notes 30 and 38)		13,578,360			3		13,436,706		3		18,190,895		4
Trade notes and accounts payable (Note 25)		12,943,927			3		15,590,814		3		12,478,030		3
Payables to related parties (Note 38)		344,203			—		645,944		—		377,082		—
Current tax liabilities (Note 3)		4,666,649			1		4,369,241		1		4,481,301		1
Lease liabilities (Notes 16, 35 and 38)		3,310,790			1		3,381,571		1		3,234,958		1
Dividends payable (Note 29)		33,403,565			6		—		—		32,782,969		7
Other payables (Notes 26 and 35)		21,424,715			4		23,987,962		5		20,643,141		4
Provisions (Note 27)		317,774			—		313,555		—		199,592		—
Current portion of long-term loans (Notes 23 and 39)		1,600,000			—		1,600,000		—		—		—
Other current liabilities		954,422			—		1,042,977		—		955,771		—
Total current liabilities		92,619,385			18		71,435,111		14		109,393,635		23
NONCURRENT LIABILITIES
Long-term loans (Notes 23 and 39)		—			—		—		—		1,600,000		—
Bonds payable (Note 24)		26,974,488			6		19,980,272		4		—		—
Contract liabilities (Note 30)		7,023,467			1		7,289,087		2		6,766,426		1
Deferred income tax liabilities (Note 3)		2,077,365			—		1,966,538		—		1,946,820		—
Provisions (Note 27)		131,922			—		100,616		—		101,240		—
Lease liabilities (Notes 16, 35 and 38)		6,025,595			1		6,215,096		1		6,381,335		1
Customers’ deposits (Note 38)		4,815,242			1		4,826,679		1		4,633,829		1
Net defined benefit liabilities (Note 3)		3,415,386			1		3,415,331		1		3,565,979		1
Other noncurrent liabilities		2,018,042			—		1,890,805		—		1,832,489		—
Total noncurrent liabilities		52,481,507			10		45,684,424		9		26,828,118		4
Total liabilities		145,100,892			28		117,119,535		23		136,221,753		27
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 13 and 29)
Common stocks		77,574,465			15		77,574,465		15		77,574,465		15
Additional paid-in capital		171,276,947			33		171,261,379		34		171,274,191		34
Retained earnings
Legal reserve		77,574,465			15		77,574,465		15		77,574,465		15
Special reserve		2,675,419			1		2,675,419		1		2,675,419		1
Unappropriated earnings		32,362,223			6		47,918,166		10		30,416,491		6
Total retained earnings		112,612,107			22		128,168,050		26		110,666,375		22
Others		(241,105	)		—		927,122		—		187,475		—
Total equity attributable to stockholders of the parent		361,222,414			70		377,931,016		75		359,702,506		71
NONCONTROLLING INTERESTS (Notes 13 and 29)		11,436,633			2		11,327,441		2		10,079,008		2
Total equity		372,659,047			72		389,258,457		77		369,781,514		73
TOTAL	$	517,759,939			100	$	506,377,992		100	$	506,003,267		100

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

	Three Months Ended June 30										Six Months Ended June 30
	2021					2020					2021						2020
	Amount			%		Amount			%		Amount			%			Amount			%
REVENUES (Notes 30, 38 and 44)	$	49,601,135			100	$	47,807,864			100	$	99,702,130			100		$	95,957,863			100
OPERATING COSTS (Notes 10, 28, 30, 31, 38 and 44)		31,058,232			63		29,801,214			62		62,951,147			63			60,192,014			63
GROSS PROFIT		18,542,903			37		18,006,650			38		36,750,983			37			35,765,849			37
OPERATING EXPENSES (Notes 9, 28, 31, 38 and 44)
Marketing		5,044,209			10		5,177,839			12		9,929,385			10			10,250,395			11
General and administrative		1,279,988			2		1,147,680			2		2,582,580			2			2,361,180			2
Research and development		892,844			2		961,020			2		1,768,245			2			1,897,196			2
Expected credit loss		43,326			—		97,841			—		86,895			—			103,978			—
Total operating expenses		7,260,367			14		7,384,380			16		14,367,105			14			14,612,749			15
OTHER INCOME AND EXPENSES (Note 31)		221			—		(11,154	)		—		2,790			—			(11,834	)		—
INCOME FROM OPERATIONS		11,282,757			23		10,611,116			22		22,386,668			23			21,141,266			22
NON-OPERATING INCOME AND EXPENSES
Interest income		28,474			—		32,789			—		46,354			—			72,175			—
Other income (Notes 31 and 38)		48,878			—		286,426			1		90,849			—			329,618			—
Other gains and losses (Notes 31, 37 and 38)		94,722			—		(66,940	)		—		258,843			—			(22,951	)		—
Interest expenses (Notes 16, 31 and 38)		(55,016	)		—		(48,008	)		—		(105,742	)		—			(90,395	)		—
Share of profits of associates and joint ventures accounted for using equity method (Note 14)		65,127			—		127,846			—		108,318			—			164,920			—
Total non-operating income and expenses		182,185			—		332,113			1		398,622			—			453,367			—
INCOME BEFORE INCOME TAX		11,464,942			23		10,943,229			23		22,785,290			23			21,594,633			22
INCOME TAX EXPENSE (Notes 3 and 32)		2,195,481			4		2,090,243			4		4,394,199			4			4,194,283			4
NET INCOME		9,269,461			19		8,852,986			19		18,391,091			19			17,400,350			18
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to profit or loss:
Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income (Notes 29 and 37)		(65,061	)		—		955,207			2		(1,010,410	)		(1	)		(445,709	)		—
Gain or loss on hedging instruments subject to basis adjustment (Note 20)		(12,149	)		—		2,358			—		(15,765	)		—			2,031			—
Share of remeasurements of defined benefit pension plans of associates and joint ventures (Note 14)		—			—		—			—		758			—			725			—
		(77,210	)		—		957,565			2		(1,025,417	)		(1	)		(442,953	)		—

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

	Three Months Ended June 30										Six Months Ended June 30
	2021					2020					2021						2020
	Amount			%		Amount			%		Amount			%			Amount			%
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from the translation of the foreign operations	$	(9,227	)		—	$	(67,533	)		—	$	(47,555	)		—		$	(79,309	)		—
Share of exchange differences arising from the translation of the foreign operations of associates and joint ventures (Note 14)		(1,602	)		—		(1,047	)		—		(1,143	)		—			(1,235	)		—
		(10,829	)		—		(68,580	)		—		(48,698	)		—			(80,544	)		—
Total other comprehensive income (loss), net of income tax		(88,039	)		—		888,985			2		(1,074,115	)		(1	)		(523,497	)		—
TOTAL COMPREHENSIVE INCOME	$	9,181,422			19	$	9,741,971			21	$	17,316,976			18		$	16,876,853			18
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	8,947,528			18	$	8,574,040			18	$	17,752,472			18		$	16,857,374			18
Noncontrolling interests		321,933			1		278,946			1		638,619			1			542,976			—
	$	9,269,461			19	$	8,852,986			19	$	18,391,091			19		$	17,400,350			18
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	8,858,990			18	$	9,470,213			20	$	16,679,395			17		$	16,357,026			17
Noncontrolling interests		322,432			1		271,758			1		637,581			1			519,827			1
	$	9,181,422			19	$	9,741,971			21	$	17,316,976			18		$	16,876,853			18
EARNINGS PER SHARE (Note 33)
Basic	$	1.15				$	1.11				$	2.29					$	2.17
Diluted	$	1.15				$	1.11				$	2.29					$	2.17

(Concluded)

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Equity Attributable to Stockholders of the Parent (Notes 13, 20 and 29)
													Others
																Unrealized Gain
													Exchange			or Loss on
													Differences			Financial Assets
													Arising from the			at Fair Value
			Additional Paid-in Capital			Retained Earnings							Translation of			Through Other			Gain or Loss						Noncontrolling
	Common Stocks					Legal Reserve		Special Reserve		Unappropriated Earnings			the Foreign			Comprehensive			on Hedging						Interests
													Operations			Income			Instruments			Total			(Notes 13 and 29)			Total Equity
BALANCE, JANUARY 1, 2020	$	77,574,465	$	171,255,985		$	77,574,465	$	2,675,419	$	46,341,361		$	(148,377	)	$	836,598		$	327		$	376,110,243		$	10,283,522		$	386,393,765
Appropriation of 2019 earnings
Cash dividends declared by Chunghwa		—		—			—		—		(32,782,969	)		—			—			—			(32,782,969	)		—			(32,782,969	)
Cash dividends distributed by subsidiaries		—		—			—		—		—			—			—			—			—			(775,420	)		(775,420	)
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—		(5,680	)		—		—		—			—			—			—			(5,680	)		47			(5,633	)
Change in additional paid-in capital for not proportionately participating in the capital increase of subsidiaries		—		(103	)		—		—		—			—			—			—			(103	)		103			—
Net income for the six months ended June 30, 2020		—		—			—		—		16,857,374			—			—			—			16,857,374			542,976			17,400,350
Other comprehensive income (loss) for the six months ended June 30, 2020		—		—			—		—		725			(72,813	)		(430,291	)		2,031			(500,348	)		(23,149	)		(523,497	)
Total comprehensive income (loss) for the six months ended June 30, 2020		—		—			—		—		16,858,099			(72,813	)		(430,291	)		2,031			16,357,026			519,827			16,876,853
Share-based payment transactions of subsidiaries		—		23,989			—		—		—			—			—			—			23,989			50,929			74,918
BALANCE, JUNE 30, 2020	$	77,574,465	$	171,274,191		$	77,574,465	$	2,675,419	$	30,416,491		$	(221,190	)	$	406,307		$	2,358		$	359,702,506		$	10,079,008		$	369,781,514
BALANCE, JANUARY 1, 2021	$	77,574,465	$	171,261,379		$	77,574,465	$	2,675,419	$	47,918,166		$	(314,531	)	$	1,239,901		$	1,752		$	377,931,016		$	11,327,441		$	389,258,457
Appropriation of 2020 earnings
Cash dividends recognized by Chunghwa		—		—			—		—		(33,403,565	)		—			—			—			(33,403,565	)		—			(33,403,565	)
Cash dividends distributed by subsidiaries		—		—			—		—		—			—			—			—			—			(574,732	)		(574,732	)
Net income for the six months ended June 30, 2021		—		—			—		—		17,752,472			—			—			—			17,752,472			638,619			18,391,091
Other comprehensive income (loss) for the six months ended June 30, 2021		—		—			—		—		758			(50,544	)		(1,007,526	)		(15,765	)		(1,073,077	)		(1,038	)		(1,074,115	)
Total comprehensive income (loss) for the six months ended June 30, 2021		—		—			—		—		17,753,230			(50,544	)		(1,007,526	)		(15,765	)		16,679,395			637,581			17,316,976
Disposal of investments in equity instruments at fair value through other comprehensive income		—		—			—		—		94,392			—			(94,392	)		—			—			—			—
Share-based payment transactions of subsidiaries		—		15,568			—		—		—			—			—			—			15,568			46,343			61,911
BALANCE, JUNE 30, 2021	$	77,574,465	$	171,276,947		$	77,574,465	$	2,675,419	$	32,362,223		$	(365,075	)	$	137,983		$	(14,013	)	$	361,222,414		$	11,436,633		$	372,659,047

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Six Months Ended June 30
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	22,785,290		$	21,594,633
Adjustments for:
Depreciation		15,760,497			15,449,012
Amortization		3,282,838			2,123,708
Amortization of incremental costs of obtaining contracts		395,410			390,281
Expected credit loss		86,895			103,978
Interest expenses		105,742			90,395
Interest income		(46,354	)		(72,175	)
Dividend income		—			(236,296	)
Compensation cost of share-based payment transactions		9,243			3,291
Share of profits of associates and joint ventures accounted for using equity method		(108,318	)		(164,920	)
Loss (gain) on disposal of property, plant and equipment		(2,790	)		11,834
Loss (gain) on disposal of financial instruments		(300	)		1,788
Provision for impairment loss and obsolescence of inventory		32,483			195,690
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net		(223,869	)		68,170
Others		(89,958	)		(52,142	)
Changes in operating assets and liabilities
Decrease (increase) in:
Contract assets		90,096			67,414
Trade notes and accounts receivable		644,154			(343,907	)
Receivables from related parties		186,753			(7,741	)
Inventories		855,811			(991,189	)
Prepayments		(2,938,488	)		(2,793,263	)
Other current monetary assets		(985,870	)		116,838
Other current assets		(1,154,117	)		341,346
Incremental cost of obtaining contracts		(340,789	)		(403,384	)
Increase (decrease) in:
Contract liabilities		(123,966	)		1,276,006
Trade notes and accounts payable		(2,647,149	)		(2,832,771	)
Payables to related parties		(301,741	)		(276,901	)
Other payables		(3,200,854	)		(3,302,263	)
Provisions		35,525			(3,492	)
Other current liabilities		(66,241	)		(17,632	)
Net defined benefit plans		(381,325	)		(64,326	)
Cash generated from operations		31,658,608			30,271,982
Interest paid		(44,577	)		(100,499	)
Income tax paid		(3,919,610	)		(3,700,530	)
Net cash provided by operating activities		27,694,421			26,470,953

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Six Months Ended June 30
	2021			2020
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through other comprehensive income	$	(88,767	)	$	(77,360	)
Proceeds from disposal of financial assets at fair value through other comprehensive income		2,905,889			—
Acquisition of financial assets at fair value through profit or loss		(11,868	)		(38,944	)
Proceeds from disposal of financial assets at fair value through profit or loss		18,009			29,741
Acquisition of time deposits and negotiable certificates of deposit with maturities of more than three months		(15,131,187	)		(2,693,369	)
Proceeds from disposal of time deposits and negotiable certificates of deposit with maturities of more than three months		3,027,153			3,800,695
Proceeds from disposal of repurchase agreements collateralized by bonds with maturities of more than three months		—			15,335
Acquisition of investments accounted for using equity method		(329,520	)		—
Acquisition of property, plant and equipment		(14,995,723	)		(9,243,623	)
Proceeds from disposal of property, plant and equipment		17,486			24,749
Acquisition of intangible assets		(68,563	)		(47,467,328	)
Acquisition of investment properties		—			(54,435	)
Decrease in other noncurrent assets		313,393			42,453
Interest received		38,793			78,215
Dividends received		102,757			38,395
Net cash used in investing activities		(24,202,148	)		(55,545,476	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		173,000			70,000
Repayments of short-term loans		(180,000	)		(100,000	)
Proceeds from short-term bills payable		5,000,000			29,000,000
Repayments of short-term bills payable		(12,000,000	)		(13,000,000	)
Proceeds from issuance of bonds		7,000,000			—
Payments for transaction costs attributable to the issuance of bonds		(7,675	)		—
Decrease in customers’ deposits		(33,751	)		(124,201	)
Payments for the principal of lease liabilities		(1,899,726	)		(2,006,065	)
Increase in other noncurrent liabilities		127,237			289,802
Cash dividends distributed to noncontrolling interests		—			(6,796	)
Change in other noncontrolling interests		52,668			71,627
Net cash provided by (used in) financing activities		(1,768,247	)		14,194,367
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(4,671	)		(19,318	)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Six Months Ended June 30
	2021		2020
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	$	1,719,355	$	(14,899,474	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		30,419,655		34,049,643
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	32,139,010	$	19,150,169

(Concluded)

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

(Reviewed, Not Audited)

1. GENERAL

Chunghwa Telecom Co., Ltd. (“Chunghwa”) was incorporated on July 1, 1996 in the Republic of China (“ROC”). Chunghwa is a company limited by shares and, prior to August 2000, was wholly owned by the Ministry of Transportation and Communications (“MOTC”). Prior to July 1, 1996, the current operations of Chunghwa were carried out under the Directorate General of Telecommunications (“DGT”). The DGT was established by the MOTC in June 1943 to take primary responsibility in the development of telecommunications infrastructure and to formulate policies related to telecommunications. On July 1, 1996, the telecom operations of the DGT were spun-off as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

Effective August 12, 2005, the MOTC completed the process of privatizing Chunghwa by reducing the government ownership to below 50% in various stages. In July 2000, Chunghwa received approval from the Securities and Futures Commission (the “SFC”) for a domestic initial public offering and its common stocks were listed and traded on the Taiwan Stock Exchange (the “TWSE”) on October 27, 2000. Certain of Chunghwa’s common stocks were sold, in connection with the foregoing privatization plan, in domestic public offerings at various dates from August 2000 to July 2003. Certain of Chunghwa’s common stocks were also sold in an international offering of securities in the form of American Depository Shares (“ADS”) on July 17, 2003 and were listed and traded on the New York Stock Exchange (the “NYSE”). The MOTC sold common stocks of Chunghwa by auction in the ROC on August 9, 2005 and completed the second international offering on August 10, 2005. Upon completion of the share transfers associated with these offerings on August 12, 2005, the MOTC owned less than 50% of the outstanding shares of Chunghwa and completed the privatization plan.

Chunghwa together with its subsidiaries are hereinafter referred to collectively as the “Company”.

The consolidated financial statements are presented in Chunghwa’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Board of Directors on August 5, 2021.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the following items, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2020. Please refer to the consolidated financial statements for the year ended December 31, 2020 for the details.

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Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission (the “FSC”). The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements as required by International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financial Reporting Interpretations Committee (IFRIC) and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the FSC.

Basis of Consolidation

The detail information of the subsidiaries at the end of reporting period was as follows:

			Percentage of Ownership Interests
Name of Investor	Name of Investee	Main Businesses and Products	June 30, 2021		December 31, 2020		June 30, 2020		Note
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd. (“SENAO”)	Handset and peripherals retailer, sales of CHT mobile phone plans as an agent		28		28		28	a.
	Light Era Development Co., Ltd. (“LED”)	Planning and development of real estate and intelligent buildings, and property management		100		100		100
	Donghwa Telecom Co., Ltd. (“DHT”)	International private leased circuit, IP VPN service, and IP transit services		100		100		100	b.
	Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)	International private leased circuit, IP VPN service, and IP transit services		100		100		100
	Chunghwa System Integration Co., Ltd. (“CHSI”)	Providing system integration services and telecommunications equipment		100		100		100
	Chunghwa Investment Co., Ltd. (“CHI”)	Investment		89		89		89
	CHIEF Telecom Inc. (“CHIEF”)	Network integration, internet data center (“IDC”), communications integration and cloud application services		56		56		56	c.
	CHYP Multimedia Marketing & Communications Co., Ltd. (“CHYP”)	Digital information supply services and advertisement services		100		100		100
	Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)	Investment		100		100		100
	Spring House Entertainment Tech. Inc. (“SHE”)	Software design services, internet contents production and play, and motion picture production and distribution		56		56		56
	Chunghwa Telecom Global, Inc. (“CHTG”)	International private leased circuit, internet services, and transit services		100		100		100
	Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)	Intelligent energy saving solutions, international circuit, and information and communication technology (“ICT”) services.		100		100		100
	Smartfun Digital Co., Ltd. (“SFD”)	Providing diversified family education digital services		65		65		65
	Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)	International private leased circuit, IP VPN service, and IP transit services		100		100		100
	Chunghwa Sochamp Technology Inc. (“CHST”)	Design, development and production of Automatic License Plate Recognition software and hardware		51		51		51

(Continued)

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			Percentage of Ownership Interests
Name of Investor	Name of Investee	Main Businesses and Products	June 30, 2021		December 31, 2020		June 30, 2020		Note
	Honghwa International Co., Ltd. (“HHI”)	Telecommunications engineering, sales agent of mobile phone plan application and other business services, etc		100		100		100
	Chunghwa Leading Photonics Tech Co., Ltd. (“CLPT”)	Production and sale of electronic components and finished products		75		75		75
	Chunghwa Telecom (Thailand) Co., Ltd. (“CHTT”)	International private leased circuit, IP VPN service, ICT and cloud VAS services		100		100		100
	CHT Security Co., Ltd. (“CHTSC”)	Computing equipment installation, wholesale of computing and business machinery equipment and software, management consulting services, data processing services, digital information supply services and internet identify services		77		80		80	d.
	International Integrated Systems, Inc. (“IISI”)	IT solution provider, IT application consultation, system integration and package solution		51		51		—	e.
Senao International Co., Ltd.	Senao International (Samoa) Holding Ltd. (“SIS”)	International investment		100		100		100	f.
	Youth Co., Ltd. (“Youth”)	Sale of information and communication technologies products		96		96		96	g.
	Aval Technologies Co., Ltd. (“Aval”)	Sale of information and communication technologies products		100		100		100
	Senyoung Insurance Agent Co., Ltd. (“SENYOUNG”)	Property and liability insurance agency		100		100		100
Youth Co., Ltd.	ISPOT Co., Ltd. (“ISPOT”)	Sale of information and communication technologies products		100		100		100
	Youyi Co., Ltd. (“Youyi”)	Maintenance of information and communication technologies products		100		100		100
Aval Technologies Co., Ltd.	Wiin Technology Co., Ltd. (“Wiin”)	Sale of information and communication technologies products		100		100		100
Senyoung Insurance Agent Co., Ltd.	Senaolife Insurance Agent Co., Ltd. (“Senaolife”)	Life insurance services		100		100		100
CHIEF Telecom Inc.	Unigate Telecom Inc. (“Unigate”)	Telecommunications and internet service		100		100		100
	Chief International Corp. (“CIC”)	Telecommunications and internet service		100		100		100
	Shanghai Chief Telecom Co., Ltd. (“SCT”)	Telecommunications and internet service		49		49		49	h.
Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”)	Production and sale of semiconductor testing components and printed circuit board		34		34		34	i.
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)	Design and after-sale services of semiconductor testing components and printed circuit board		100		100		100
	CHPT Japan Co., Ltd. (“CHPT (JP)”)	Related services of electronic parts, machinery processed products and printed circuit board		100		100		100

(Continued)

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			Percentage of Ownership Interests
Name of Investor	Name of Investee	Main Businesses and Products	June 30, 2021		December 31, 2020		June 30, 2020		Note
	Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)	Wholesale and retail of electronic materials, and investment		100		100		100	j.
Senao International (Samoa) Holding Ltd.	Senao International HK Limited (“SIHK”)	International investment		100		100		100	k.
Senao International HK Limited	Senao International Trading (Shanghai) Co., Ltd. (“SITS”)	Sale of information and communication technologies products		—		100		100	l.
Prime Asia Investments Group Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd. (“CHC”)	Investment		100		100		100
Chunghwa Hsingta Co., Ltd.	Chunghwa Telecom (China) Co., Ltd. (“CTC”)	Integrated information and communication solution services for enterprise clients, and intelligent energy network service		100		100		100	m.
Chunghwa Precision Test Tech. International, Ltd.	Shanghai Taihua Electronic Technology Limited (“STET”)	Design of printed circuit board and related consultation service		100		100		100
	Su Zhou Precision Test Tech. Ltd. (“SZPT”)	Assembly processed of circuit board, design of printed circuit board and related consultation service		100		100		100	n.
International Integrated Systems, Inc.	Infoexplorer International Co., Ltd.(“IESA”)	Investment		100		100		—	o.
	IISI Investment Co., Ltd. (“IICL”)	Investment		100		100		—	o.
	Unitronics Technology Corp. (“UTC”)	Development and maintenance of information system		99.96		99.96		—	o.
Infoexplorer International Co., Ltd.	International Integrated Systems (Hong Kong) Limited (“IEHK”)	Investment and technical consulting service		100		100		—	o.
IISI Investment Co., Ltd.	Leading Tech Co., Ltd. (“LTCL”)	Investment		100		100		—	o.
Leading Tech Co., Ltd.	Leading Systems Co., Ltd. (“LSCL”)	Investment		100		100		—	o.
Leading Systems Co., Ltd.	International Integrated Systems Inc. (Shanghai) (“IISS”)	Development and maintenance of information system		100		100		—	o. p.
International Integrated Systems Inc. (Shanghai)	Huiyu Shanghai Management Consultancy Co., Ltd. (“HSMC”)	Development and maintenance of information system		—		—		—	o. q.

(Concluded)

a. Chunghwa continues to control six out of eleven seats of the Board of Directors of SENAO through the support of large beneficial stockholders. As a result, the Company treated SENAO as a subsidiary.

b. DHT reduced and returned its capital to its stakeholders in March 2021. The Company’s ownership interest in DHT remained the same.

c. CHIEF issued new shares in March, December 2020, and March 2021 as its employees exercised options. Therefore, the Company’s ownership interest in CHIEF decreased to 59.08% and 58.90% as of December 31, 2020 and June 30, 2021, respectively.

- 13 -

d. CHTSC issued new shares in February 2021 as its employees exercised options. Therefore, the Company’s ownership interest in CHTSC decreased to 77.46% as of June 30, 2021.

e. Chunghwa obtained 20.38% ownership interest in IISI in July 2020 and Chunghwa’s ownership interest in IISI increased to 51.54% by considering the previously held ownership interest in IISI. Chunghwa obtained over half of the seats of the Board of Directors of IISI; therefore, Chunghwa gained control over IISI and treated it as a subsidiary. IISI issued new shares in September 2020 and January 2021 as its employees exercised options; therefore, the Company’s ownership interest in IISI decreased to 51.20% and 51.02% as of December 31, 2020 and June 30, 2021, respectively.

f. SIS reduced and returned its capital to its stakeholders in November 2020. SIS reduced 8.14% of its capital to offset accumulated deficits in February 2021. Furthermore, SIS was approved for another capital reduction in July 2021. The Company’s ownership interest in SIS remained the same.

g. SENAO subscribed for all the shares in the capital increase of Youth in April 2020. Therefore, the Company’s ownership interest in Youth increased from 92.89% to 95.79%.

h. CHIEF has two out of three seats of the Board of Directors of SCT according to the mutual agreements among stockholders and gained control over SCT; hence, SCT is deemed as a subsidiary of the Company.

i. Though the Company’s ownership interest in CHPT is less than 50%, the management considered the absolute and relative size of ownership interest, and the dispersion of shares owned by the other stockholders and concluded that the Company has a sufficiently dominant voting interest to direct the relevant activities; hence, CHPT is deemed as a subsidiary of the Company.

j. CHPT increased its investment in CHPT (International) proportionally in April 2021 and the Company’s ownership interest in CHPT (International) remained the same.

k. SIHK reduced and returned its capital to its stakeholders in November 2020 and May 2021. SIHK reduced 8.15% of its capital to offset accumulated deficits in January 2021. Furthermore, SIHK was approved for another capital reduction in July 2021 to reduce 47.79% of its capital to offset accumulated deficits. The Company’s ownership interest in SIHK remained the same.

l. SITS completed its liquidation in April 2021.

m. CTC was approved to end and dissolve its business in August 2020. The liquidation of CTC is still in process.

n. CHPT (International) increased its investment in SZPT proportionally in June 2021. The procedure of capital increase had not been completed as of June 30, 2021; however, the aforementioned procedure was completed in July 2021. The Company’s ownership interest in SZPT remained the same.

o. It is a subsidiary of IISI.

p. IISS was approved to end and dissolve its business in June 2021. The liquidation of IISS is still in process.

q. HSMC completed its liquidation in December 2020.

- 14 -

The following diagram presented information regarding the relationship and percentages of ownership interests between Chunghwa and its subsidiaries as of June 30, 2021.

Other Significant Accounting Policies

a. Defined benefit retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for other significant one-off events.

b. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Income taxes for interim period are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects to recover or settle the carrying amount of its assets and liabilities at balance sheet date.

4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION, UNCERTAINTY AND ASSUMPTION

In the application of the Company’s accounting policies, the management is required to make judgments, estimates and assumptions which are based on historical experience and other factors that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed by the management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

- 15 -

For the critical accounting judgments and key sources of estimation, uncertainty and assumption applied in these consolidated financial statements, please refer to the consolidated financial statements for the year ended December 31, 2020.

5. APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC

The initial application of the amendments to the IFRSs issued by the International Accounting Standards Board and endorsed and issued into effect by the FSC does not have material impacts on the Company’s consolidated financial statements.

b. IFRSs issued by the IASB but not yet endorsed and issued into effect by the FSC

New, Revised or Amended Standards and Interpretations		Effective Date Announced by IASB (Note 1)
Amendments to IFRSs	Annual Improvements to IFRS Standards 2018-2020	January 1, 2022 (Note 2)
Amendments to IFRS 3	Reference to the Conceptual Framework	January 1, 2022 (Note 3)
Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture	To be determined by IASB
Amendments to IAS 1	Classification of liabilities as current or noncurrent	January 1, 2023
Amendments to IAS 1	Disclosure of Accounting Policies	January 1, 2023 (Note 4)
Amendments to IAS 8	Definition of Accounting Estimates	January 1, 2023 (Note 5)
Amendments to IAS 12	Deferred Tax related to Assets and Liabilities arising from a Single Transaction	January 1, 2023 (Note 6)
Amendments to IAS 16	Property, Plant and Equipment—Proceeds before Intended Use	January 1, 2022 (Note 7)
Amendments to IAS 37	Onerous Contracts—Cost of Fulfilling a Contract	January 1, 2022 (Note 8)

Note 1: Unless stated otherwise, the above new IFRSs are effective for annual periods beginning on or after their respective effective dates.

Note 2: The amendments to IFRS 9 are applied prospectively to financial liabilities that are exchanged or modified on or after the annual reporting periods beginning on or after January 1, 2022.

Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the annual reporting period beginning on or after January 1, 2022.

Note 4: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

Note 5: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

- 16 -

Note 6: Except that deferred taxes will be recognized for temporary differences associated with leases and decommissioning obligations on January 1, 2022, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

Note 7: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

Note 8: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the consolidated financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of above standards and interpretations will have on the Company’s financial position and operating result and will disclose the relevant impact when the assessment is completed.

6. CASH AND CASH EQUIVALENTS

	June 30, 2021		December 31, 2020		June 30, 2020
Cash
Cash on hand	$	346,042	$	486,989	$	338,300
Bank deposits		17,727,926		10,961,220		10,471,106
		18,073,968		11,448,209		10,809,406
Cash equivalents (investments with maturities of less than three months)
Commercial paper		10,542,368		14,060,568		5,555,831
Negotiable certificates of deposit		700,000		2,600,000		400,000
Time deposits		2,822,674		2,307,892		2,366,939
Repurchase agreements collateralized by bonds		—		—		17,993
Triple stimulus vouchers		—		2,986		—
		14,065,042		18,971,446		8,340,763
	$	32,139,010	$	30,419,655	$	19,150,169

The annual yield rates of bank deposits, commercial paper, negotiable certificates of deposit, time deposits and repurchase agreements collateralized by bonds as of balance sheet dates were as follows:

	June 30, 2021	December 31, 2020	June 30, 2020
Bank deposits	0.00%~0.40%	0.00%~0.40%	0.00%~0.35%
Commercial paper	0.19%~0.22%	0.14%~0.26%	0.28%~0.36%
Negotiable certificates of deposit	0.22%	0.24%~0.30%	0.36%
Time deposits	0.06%~3.60%	0.10%~3.60%	0.20%~3.60%
Repurchase agreements collateralized by bonds	—	—	0.80%

- 17 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	June 30, 2021		December 31, 2020		June 30, 2020
Financial assets-current
Mandatorily measured at FVTPL
Derivatives (not designated for hedge)
Forward exchange contracts	$	—	$	2,271	$	1,051
Non-derivatives
Listed stocks—domestic		2,326		7,626		7,439
	$	2,326	$	9,897	$	8,490
Financial assets-noncurrent
Mandatorily measured at FVTPL
Non-derivatives
Non-listed stocks—domestic	$	582,826	$	441,095	$	458,065
Non-listed stocks—foreign		320,799		236,107		251,072
	$	903,625	$	677,202	$	709,137
Financial liabilities-current
Held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	967	$	143	$	—

Outstanding forward exchange contracts not designated for hedge as of balance sheet dates were as follows:

					Contract Amount
	Currency		Maturity Period		(In Thousands)
June 30, 2021
Forward exchange contracts—buy		NT$/EUR		2021.09		NT$67,369 / EUR2,000
December 31, 2020
Forward exchange contracts—buy		NT$/EUR		2021.03		NT$50,435 / EUR1,500
Forward exchange contracts—sell		US$/NT$		2021.02-03		US$13,500 / NT$379,472
June 30, 2020
Forward exchange contracts—buy		NT$/EUR		2020.09		NT$59,242 / EUR1,800
Forward exchange contracts—sell		US$/NT$		2020.07-08		US$4,843 / NT$144,143

The Company entered into the above forward exchange contracts to manage its exposure to foreign currency risk due to fluctuations in exchange rates. However, the aforementioned derivatives did not meet the criteria for hedge accounting.

- 18 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT

	June 30, 2021		December 31, 2020		June 30, 2020
Domestic investments
Listed stocks	$	149,746	$	2,754,175	$	2,294,860
Non-listed stocks		3,384,963		4,324,592		4,478,820
Foreign investments
Non-listed stocks		101,254		114,407		126,255
	$	3,635,963	$	7,193,174	$	6,899,935

The Company holds the above foreign and domestic stocks for medium to long-term strategic purposes and expects to profit from long-term investment. Accordingly, the management elected to designate these investments in equity instruments at FVOCI as they believe that recognizing short-term fair value fluctuations of these investments in profit or loss is not consistent with the Company’s strategy of holding these investments for long-term purposes.

The Company holds Powtec Electro Chemical Corporation (“Powtec”) as financial assets at FVOCI. The Board of Directors of Powtec resolved in February 2020 to file a petition with court for the declaration of its bankruptcy which was adjudged by the court in April 2020. The Company evaluated and determined the fair value of such investment was nil after its declaration of bankruptcy.

The Company started to dispose of its investment in China Airlines, Ltd. from December 2020 and sold all its shares by February 2021. The fair value of the disposed investment was $2,635,568 thousand and the related unrealized gain on investments in equity instruments at fair value through other comprehensive income of $94,392 thousand was transferred from other equity to retained earnings upon the aforementioned disposal for the six months ended June 30, 2021.

9. TRADE NOTES AND ACCOUNTS RECEIVABLE, NET

	June 30, 2021			December 31, 2020			June 30, 2020
Trade notes and accounts receivable	$	23,983,661		$	24,776,266		$	29,115,685
Less: Loss allowance		(2,031,467	)		(2,154,364	)		(2,405,039	)
	$	21,952,194		$	22,621,902		$	26,710,646

The main credit terms range from 30 to 90 days.

The Company serves a large consumer base for telecommunications business; therefore, the concentration of credit risk is limited. When having transactions with customers, the Company considers the record of arrears in the past. In addition, the Company may also collect some telecommunication charges in advance to reduce the payment arrears in subsequent periods.

The Company adopted a policy of dealing with counterparties with certain credit ratings for project business and to obtain collateral where necessary to mitigate the risk of loss arising from defaults. Credit rating information is provided by independent rating agencies where available and, if such credit rating information is not available, the Company uses other publicly available financial information and its own historical transaction experience to rate its major customers. The Company continues to monitor the credit exposure and credit ratings of its counterparties and spread the credit risk amongst qualified counterparties.

- 19 -

In order to mitigate credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure the recoverability of receivables. In addition, the Company reviews the recoverable amount of receivables at balance sheet dates to ensure that adequate allowance is provided for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk could be reasonably reduced.

The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. The expected credit losses on receivables are estimated using a provision matrix by reference to past default experience of the customers and an analysis of the customers’ current financial positions, as well as the forward-looking indicators such as macroeconomic business indicator.

When there is evidence indicating that the counterparty is in evasion, bankruptcy, deregistration of its company or the accounts receivable are over two years past due and the recoverable amount cannot be reasonable estimated, the Company writes off the trade notes and accounts receivable. For accounts receivable that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

Except for receivables arising from telecommunications business and project business, the Company’s remaining accounts receivable are limited. Therefore, only Chunghwa’s provision matrix arising from telecommunications business and project business is disclosed below:

June 30, 2021

	Not Past Due			Past Due Less than 30 Days			Pass Due 31 to 60 Days			Pass Due 61 to 90 Days			Pass Due 91 to 120 Days			Pass Due 121 to 180 Days			Pass Due over 180 Days			Total
Telecommunications business
Expected credit loss rate (Note a)		0%~1%			2%~23%			3%~73%			11%~88%			26%~94%			53%~98%			100%
Gross carrying amount	$	15,211,220		$	718,018		$	184,787		$	53,831		$	41,846		$	26,521		$	629,891		$	16,866,114
Loss allowance (lifetime ECL)		(52,456	)		(37,859	)		(23,817	)		(26,491	)		(25,076	)		(21,422	)		(629,891	)		(817,012	)
Amortized cost	$	15,158,764		$	680,159		$	160,970		$	27,340		$	16,770		$	5,099		$	—		$	16,049,102
Project business
Expected credit loss rate (Note b)		0%~5%			5%			10%			30%			50%			80%			100%
Gross carrying amount	$	2,635,433		$	269,780		$	8,511		$	13,986		$	9,701		$	2,378		$	1,141,907		$	4,081,696
Loss allowance (lifetime ECL)		(5,102	)		(14,285	)		(851	)		(4,441	)		(6,049	)		(2,140	)		(1,141,907	)		(1,174,775	)
Amortized cost	$	2,630,331		$	255,495		$	7,660		$	9,545		$	3,652		$	238		$	—		$	2,906,921

December 31, 2020

	Not Past Due			Past Due Less than 30 Days			Pass Due 31 to 60 Days			Pass Due 61 to 90 Days			Pass Due 91 to 120 Days			Pass Due 121 to 180 Days			Pass Due over 180 Days			Total
Telecommunications business
Expected credit loss rate (Note a)		0%~2%			2%~24%			3%~68%			11%~83%			28%~90%			52%~96%			100%
Gross carrying amount	$	15,839,132		$	203,949		$	50,897		$	31,263		$	29,872		$	25,351		$	625,591		$	16,806,055
Loss allowance (lifetime ECL)		(56,249	)		(20,880	)		(23,483	)		(24,859	)		(24,319	)		(21,665	)		(625,591	)		(797,046	)
Amortized cost	$	15,782,883		$	183,069		$	27,414		$	6,404		$	5,553		$	3,686		$	—		$	16,009,009
Project business
Expected credit loss rate (Note b)		0%~5%			5%			10%			30%			50%			80%			100%
Gross carrying amount	$	3,472,738		$	64,372		$	26,810		$	8,963		$	2,163		$	2,691		$	1,287,567		$	4,865,304
Loss allowance (lifetime ECL)		(20,060	)		(3,219	)		(2,772	)		(2,760	)		(1,132	)		(2,160	)		(1,287,567	)		(1,319,670	)
Amortized cost	$	3,452,678		$	61,153		$	24,038		$	6,203		$	1,031		$	531		$	—		$	3,545,634

- 20 -

June 30, 2020

	Not Past Due			Past Due Less than 30 Days			Pass Due 31 to 60 Days			Pass Due 61 to 90 Days			Pass Due 91 to 120 Days			Pass Due 121 to 180 Days			Pass Due over 180 Days			Total
Telecommunications business
Expected credit loss rate (Note a)		0%~2%			0%~24%			0%~68%			0%~83%			31%~90%			31%~96%			100%
Gross carrying amount	$	21,436,247		$	292,224		$	79,754		$	50,155		$	32,297		$	29,229		$	684,330		$	22,604,236
Loss allowance (lifetime ECL)		(56,628	)		(22,392	)		(26,448	)		(29,337	)		(29,026	)		(25,463	)		(684,330	)		(873,624	)
Amortized cost	$	21,379,619		$	269,832		$	53,306		$	20,818		$	3,271		$	3,766		$	—		$	21,730,612
Project business
Expected credit loss rate (Note b)		0%~5%			5%			10%			30%			50%			80%			100%
Gross carrying amount	$	2,368,013		$	33,150		$	10,264		$	54,623		$	1,401		$	9,018		$	1,444,902		$	3,921,371
Loss allowance (lifetime ECL)		(387	)		(1,658	)		(1,026	)		(18,143	)		(769	)		(7,214	)		(1,444,902	)		(1,474,099	)
Amortized cost	$	2,367,626		$	31,492		$	9,238		$	36,480		$	632		$	1,804		$	—		$	2,447,272

Note a: Please refer to Notes 30 and 44 for the information of disaggregation of telecommunications service revenue. The expected credit loss rate applicable to different business revenue varies so as to reflect the risk level indicating by factors like historical experience.

Note b: The project business has different loss types according to the customer types. The expected credit loss rate listed above is for general customers. When the customer is a government-affiliated entity, it is anticipated that there will not be an instance of credit loss. Customers with past history of bounced checks or accounts receivable exceeding six months overdue are classified as high-risk customers, with an expected credit loss rate of 50%, increasing by period as the days overdue increase.

Movements of loss allowance for trade notes and accounts receivable were as follows:

	Six Months Ended June 30
	2021			2020
Beginning balance	$	2,154,364		$	2,359,756
Add: Provision for credit loss		79,732			105,127
Less: Amounts written off		(202,629	)		(59,844	)
Ending balance	$	2,031,467		$	2,405,039

10. INVENTORIES

	June 30, 2021			December 31, 2020		June 30, 2020
Merchandise	$	2,678,787		$	3,902,854	$	3,137,328
Project in process		6,369,180			6,166,583		12,620,912
Work in process		179,657			126,163		115,983
Raw materials		216,004			137,495		189,472
		9,443,628			10,333,095		16,063,695
Land held under development		1,998,733			1,998,733		1,998,733
Construction in progress		78,248	��		77,075		77,347
	$	11,520,609		$	12,408,903	$	18,139,775

- 21 -

The operating costs related to inventories were $10,038,223 thousand (including the reversal of valuation loss on inventories of $436 thousand) and $21,914,830 thousand (including the valuation loss on inventories of $32,483 thousand) for the three months and six months ended June 30, 2021, respectively. The operating costs related to inventories were $9,432,913 thousand (including the valuation loss on inventories of $172,089 thousand) and $19,587,157 thousand (including the valuation loss on inventories of $195,690 thousand) for the three months and six months ended June 30, 2020, respectively.

As of June 30, 2021, December 31, 2020 and June 30, 2020, inventories of $2,076,981 thousand, $2,075,808 thousand and $2,076,080 thousand, respectively, were expected to be recovered after more than twelve months. The aforementioned amount of inventories is related to property development owned by LED.

Land held under development and construction in progress was developed by LED for Qingshan Sec., Dayuan Dist., Taoyuan City project. The Board of Directors of LED resolved to sign a joint construction and separate sale contract with Farglory Land Development Co., Ltd. in June 2021.

11. PREPAYMENTS

	June 30, 2021		December 31, 2020		June 30, 2020
Prepaid salary and bonus	$	2,856,948	$	4,655	$	2,989,372
Prepaid rents		2,576,732		2,863,510		3,165,676
Others		2,024,575		1,651,602		1,217,367
	$	7,458,255	$	4,519,767	$	7,372,415
Current
Prepaid salary and bonus	$	2,856,948	$	4,655	$	2,989,372
Prepaid rents		596,892		651,510		669,861
Others		2,010,580		1,650,081		1,217,357
	$	5,464,420	$	2,306,246	$	4,876,590
Noncurrent
Prepaid rents	$	1,979,840	$	2,212,000	$	2,495,815
Others		13,995		1,521		10
	$	1,993,835	$	2,213,521	$	2,495,825

Prepaid rents comprised the prepayments from the lease agreements applying the recognition exemption and the prepayments for leases that do not meet the definition of leases under IFRS 16.

12. OTHER CURRENT MONETARY ASSETS

	June 30, 2021		December 31, 2020		June 30, 2020
Time deposits and negotiable certificates of deposit with maturities of more than three months	$	16,681,655	$	4,595,951	$	4,836,352

(Continued)

- 22 -

	June 30, 2021		December 31, 2020		June 30, 2020
Others	$	2,206,934	$	1,527,714	$	1,828,811
	$	18,888,589	$	6,123,665	$	6,665,163

(Concluded)

The annual yield rates of time deposits and negotiable certificates of deposit with maturities of more than three months at the balance sheet dates were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Time deposits and negotiable certificates of deposit with maturities of more than three months		0.03%~2.25%		0.07%~2.25%		0.03%~2.55%

13. SUBSIDIARIES

a. Information on subsidiaries with material noncontrolling interests

	Principal		Proportion of Ownership Interests and Voting Rights Held by Noncontrolling Interests
Subsidiaries	Place of Business		June 30, 2021	December 31, 2020	June 30, 2020
SENAO		Taiwan	72%	72%	72%
CHPT		Taiwan	66%	66%	66%

	Profit Allocated to Noncontrolling Interests
	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
SENAO	$	77,580	$	43,688	$	187,971	$	106,900
CHPT	$	142,319	$	153,355	$	252,565	$	271,039

	Accumulated Noncontrolling Interests
	June 30, 2021		December 31, 2020		June 30, 2020
SENAO	$	4,227,589	$	4,311,048	$	4,101,167
CHPT		4,627,028		4,635,240		4,290,617
Individually immaterial subsidiaries with noncontrolling interests		2,582,016		2,381,153		1,687,224
	$	11,436,633	$	11,327,441	$	10,079,008

- 23 -

Summarized financial information in respect of SENAO and its subsidiaries that has material noncontrolling interests is set out below. The summarized financial information below represented amounts before intercompany eliminations.

	June 30, 2021			December 31, 2020			June 30, 2020
Current assets	$	6,439,658		$	6,834,221		$	6,397,669
Noncurrent assets		3,121,092			3,340,983			3,231,968
Current liabilities		(3,324,335	)		(3,832,372	)		(3,466,337	)
Noncurrent liabilities		(424,696	)		(415,712	)		(528,836	)
Equity	$	5,811,719		$	5,927,120		$	5,634,464
Equity attributable to the parent	$	1,584,130		$	1,616,072		$	1,533,297
Equity attributable to noncontrolling interests		4,227,589			4,311,048			4,101,167
	$	5,811,719		$	5,927,120		$	5,634,464

	Three Months Ended June 30					Six Months Ended June 30
	2021		2020			2021		2020
Revenues and income	$	6,672,672	$	5,972,790		$	14,280,062	$	12,749,597
Costs and expenses		6,564,557		5,911,355			14,018,175		12,599,998
Profit for the period	$	108,115	$	61,435		$	261,887	$	149,599
Profit attributable to the parent	$	30,535	$	17,747		$	73,916	$	42,699
Profit attributable to noncontrolling interests		77,580		43,688			187,971		106,900
Profit for the period	$	108,115	$	61,435		$	261,887	$	149,599
Other comprehensive income (loss) attributable to the parent	$	2,888	$	(2,131	)	$	3,303	$	(1,870	)
Other comprehensive income (loss) attributable to noncontrolling interests		6,979		(5,318	)		6,788		(4,653	)
Other comprehensive income (loss) for the period	$	9,867	$	(7,449	)	$	10,091	$	(6,523	)
Total comprehensive income attributable to the parent	$	33,423	$	15,616		$	77,219	$	40,829
Total comprehensive income attributable to noncontrolling interests		84,559		38,370			194,759		102,247
Total comprehensive income for the period	$	117,982	$	53,986		$	271,978	$	143,076

- 24 -

	Six Months Ended June 30
	2021			2020
Net cash flow from operating activities	$	(272,388	)	$	(62,405	)
Net cash flow from investing activities		171,958			(25,433	)
Net cash flow from financing activities		(153,179	)		(160,555	)
Effect of exchange rate changes on cash and cash equivalents		(87	)		(276	)
Net cash outflow	$	(253,696	)	$	(248,669	)
Dividends paid to noncontrolling interests	$	—		$	—

Summarized financial information in respect of CHPT and its subsidiaries that has material noncontrolling interests is set out below. The summarized financial information below represented amounts before intercompany eliminations.

	June 30, 2021			December 31, 2020			June 30, 2020
Current assets	$	4,426,328		$	4,122,134		$	4,055,518
Noncurrent assets		4,117,424			4,012,654			3,995,886
Current liabilities		(1,496,627	)		(1,072,538	)		(1,509,245	)
Noncurrent liabilities		(9,813	)		(12,456	)		(16,505	)
Equity	$	7,037,312		$	7,049,794		$	6,525,654
Equity attributable to CHI	$	2,410,284		$	2,414,554		$	2,235,037
Equity attributable to noncontrolling interests		4,627,028			4,635,240			4,290,617
	$	7,037,312		$	7,049,794		$	6,525,654

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Revenues and income	$	1,051,761		$	1,054,916		$	1,865,728		$	1,964,211
Costs and expenses		835,306			821,681			1,481,599			1,551,990
Profit for the period	$	216,455		$	233,235		$	384,129		$	412,221
Profit attributable to CHI	$	74,136		$	79,880		$	131,564		$	141,182
Profit attributable to noncontrolling interests		142,319			153,355			252,565			271,039
Profit for the period	$	216,455		$	233,235		$	384,129		$	412,221
Other comprehensive loss attributable to CHI	$	(863	)	$	(776	)	$	(1,076	)	$	(886	)
Other comprehensive loss attributable to noncontrolling interests		(1,658	)		(1,489	)		(2,067	)		(1,702	)
Other comprehensive loss for the period	$	(2,521	)	$	(2,265	)	$	(3,143	)	$	(2,588	)

(Continued)

- 25 -

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Total comprehensive income attributable to CHI	$	73,273	$	79,104	$	130,488	$	140,296
Total comprehensive income attributable to noncontrolling interests		140,661		151,866		250,498		269,337
Total comprehensive income for the period	$	213,934	$	230,970	$	380,986	$	409,633

(Concluded)

	Six Months Ended June 30
	2021			2020
Net cash flow from operating activities	$	488,098		$	622,077
Net cash flow from investing activities		(361,234	)		(194,962	)
Net cash flow from financing activities		(10,270	)		(10,629	)
Effect of exchange rate changes on cash and cash equivalents		(2,958	)		481
Net cash inflow	$	113,636		$	416,967
Dividends paid to noncontrolling interests	$			$	—

b. Equity transactions with noncontrolling interests

CHIEF issued new shares in March, December 2020 and March 2021, as its employees exercised options. Therefore, the Company’s ownership interest in CHIEF decreased. See Note 34(a) for details.

CHTSC issued new shares in February 2021 as its employees exercised options. Therefore, the Company’s ownership interest in CHTSC decreased. See Note 34(b) for details.

IISI issued new shares in September 2020 and January 2021 as its employees exercised options. Therefore, the Company’s ownership interest in IISI decreased. See Note 34(c) for details.

The above transactions were accounted for as equity transactions since the Company did not cease to have control over these subsidiaries.

Information of the Company’s equity transactions with noncontrolling interests for the six months ended June 30, 2021 and 2020 were as follows:

	Six Months Ended June 30, 2021
	CHIEF Share-Based Payment		CHTSC Share-Based Payment		IISI Share-Based Payment
Cash consideration received from noncontrolling interests	$	28,364	$	20,650	$	3,654

(Continued)

- 26 -

	Six Months Ended June 30, 2021
	CHIEF Share-Based Payment			CHTSC Share-Based Payment			IISI Share-Based Payment
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests	$	(17,242	)	$	(19,066	)	$	(792	)
Differences arising from equity transactions	$	11,122		$	1,584		$	2,862
Line items for equity transaction adjustments
Additional paid-in capital—arising from changes in equities of subsidiaries	$	11,122		$	1,584		$	2,862

(Concluded)

	Six Months Ended June 30, 2020
	CHIEF Share-Based Payment			SENAO Not Proportionately Participating in the Capital Increase of Youth
Cash consideration received from noncontrolling interests	$	71,627		$	—
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests		(47,638	)		(103	)
Differences arising from equity transactions	$	23,989		$	(103	)
Line items for equity transaction adjustments
Additional paid-in capital—arising from changes in equities of subsidiaries	$	23,989		$	(103	)

14. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	June 30, 2021		December 31, 2020		June 30, 2020
Investments in associates	$	7,259,403	$	6,882,801	$	7,248,984
Investment in joint venture		10,086		10,200		—
	$	7,269,489	$	6,893,001	$	7,248,984

- 27 -

a. Investments in associates

Investments in associates were as follows:

	Carrying Amount
	June 30, 2021		December 31, 2020		June 30, 2020
Material associate
Next Commercial Bank Co., Ltd. (“NCB”)	$	3,616,769	$	3,776,876	$	3,991,563
Associates that are not individually material
Listed
Senao Networks, Inc. (“SNI”)		982,572		991,610		918,370
KingwayTek Technology Co., Ltd. (“KWT”)		256,377		249,044		242,402
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		548,166		488,257		522,161
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		421,710		363,522		327,051
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		419,500		330,031		236,322
WiAdvance Technology Corporation (“WATC”)		267,587		—		—
So-net Entertainment Taiwan Limited (“So-net”)		222,909		226,647		213,834
Chunghwa PChome Fund I Co., Ltd. (“CPFI”)		205,077		192,856		197,956
KKBOX Taiwan Co., Ltd. (“KKBOXTW”)		155,969		163,809		166,123
Taiwan International Ports Logistics Corporation (“TIPL”)		61,033		55,925		53,712
CHT Infinity Singapore Pte. Ltd. (“CISG”)		55,720		—		—
Click Force Co., Ltd. (“CF”)		34,513		33,086		36,029
Cornerstone Ventures Co., Ltd. (“CVC”)		6,421		6,058		5,766
Alliance Digital Tech Co., Ltd. (“ADT”)		5,080		5,080		5,080
International Integrated Systems, Inc. (“IISI”)		—		—		328,821
UUPON Inc. (“UUPON”)		—		—		3,794
MeWorks LIMITED (HK) (“MeWorks”)		—		—		—
		3,642,634		3,105,925		3,257,421
	$	7,259,403	$	6,882,801	$	7,248,984

- 28 -

The percentages of ownership interests and voting rights in associates held by the Company as of balance sheet dates were as follows:

	% of Ownership Interests and Voting Rights
	June 30, 2021		December 31, 2020		June 30, 2020
Material associate
Next Commercial Bank Co., Ltd. (“NCB”)		42		42		42
Associates that are not individually material
Senao Networks, Inc. (“SNI”)		34		34		34
KingwayTek Technology Co., Ltd. (“KWT”)		23		23		23
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		38		38		38
Viettel-CHT Co., Ltd. (“Viettel-CHT”)		30		30		30
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		40		40		40
WiAdvance Technology Corporation (“WATC”)		20		—		—
So-net Entertainment Taiwan Limited (“So-net”)		30		30		30
Chunghwa PChome Fund I Co., Ltd. (“CPFI”)		50		50		50
KKBOX Taiwan Co., Ltd. (“KKBOXTW”)		30		30		30
Taiwan International Ports Logistics Corporation (“TIPL”)		27		27		27
CHT Infinity Singapore Pte. Ltd. (“CISG”)		40		—		—
Click Force Co., Ltd. (“CF”)		49		49		49
Cornerstone Ventures Co., Ltd. (“CVC”)		49		49		49
Alliance Digital Tech Co., Ltd. (“ADT”)		14		14		14
International Integrated Systems, Inc. (“IISI”)		—		—		31
UUPON Inc. (“UUPON”)		—		—		22
MeWorks LIMITED (HK) (“MeWorks”)		—		—		20

Summarized financial information of NCB was set out below:

	June 30, 2021			December 31, 2020			June 30, 2020
Assets	$	9,257,389		$	9,906,945		$	10,123,125
Liabilities		(528,091	)		(788,813	)		(596,721	)
Equity	$	8,729,298		$	9,118,132		$	9,526,404

(Continued)

- 29 -

	June 30, 2021			December 31, 2020			June 30, 2020
The percentage of ownership interests held by the Company		41.90	%		41.90	%		41.90	%
Equity attributable to the Company	$	3,657,576		$	3,820,497		$	3,991,563
Unrealized loss from downstream transactions		(40,807	)		(43,621	)		—
The carrying amount of investment	$	3,616,769		$	3,776,876		$	3,991,563
					(Concluded)

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Revenues	$	—		$	—		$	—		$	—
Net loss for the period	$	(191,183	)	$	(117,259	)	$	(388,834	)	$	(197,147	)
Other comprehensive income		—			—			—			—
Total comprehensive loss for the period	$	(191,183	)	$	(117,259	)	$	(388,834	)	$	(197,147	)

Except for NCB, no associate is considered individually material to the Company. Summarized financial information of associates that are not individually material to the Company was as follows:

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
The Company’s share of profits	$	143,919		$	176,978		$	268,539		$	247,525
The Company’s share of other comprehensive loss		(1,602	)		(1,047	)		(385	)		(510	)
The Company’s share of total comprehensive income	$	142,317		$	175,931		$	268,154		$	247,015

The Level 1 fair values of associates based on the closing market prices as of the balance sheet dates were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
SNI	$	1,599,877	$	1,707,640	$	1,790,536
KWT	$	1,016,473	$	675,911	$	825,342

The Company invested $55,720 thousand in June 2021. The ownership interest in CISG is 40.00%. CISG mainly engages in investment business.

The Company invested $273,800 thousand and obtained 20.33% ownership interest by participating in the capital increase of WATC in March 2021. WATC mainly engages in software solution integration.

- 30 -

KWT repurchased its stock from January to February 2020. Therefore, the Company’s ownership interest in KWT increased to 22.72%.

Chunghwa’s Board of Directors approved the investment of 20.58% ownership interest in IISI in January 2020 and the equity transaction was completed on July 1, 2020 (“acquisition date”). The Company treated IISI as a subsidiary starting from the acquisition date and included IISI and its subsidiaries in the consolidated financial statements. Please refer to Note 3(b).

UUPON reduced 95.44% of its capital to offset accumulated deficits in September 2020 and the Company did not participate in the capital increase of UUPON in October 2020. Therefore, the Company’s ownership interest in UUPON decreased to 5.36% and lost its significant influence over UUPON. Hence the Company discontinued to treat UUPON as an associate. Instead, the Company treated it as a financial asset at fair value through other comprehensive income.

The Company disposed of all shares of MeWorks in September 2020.

The Company’s ownership interest in NCB is 41.90%. Although Chunghwa is the single largest stockholder of NCB, it only obtained six out of fifteen seats of the Board of Directors of NCB. In addition, the management considered the size of ownership interest and the dispersion of shares owned by the other stockholders, other holdings are not extremely dispersed. Chunghwa is not able to direct its relevant activities. Therefore, Chunghwa does not have control over NCB and merely has significant influence over NCB and treats it as an associate.

The Company invested and obtained 50% ownership interest in CPFI. However, as the Company has only two out of five seats of the Board of Directors of CPFI and has no control but significant influence over CPFI. Therefore, the Company recognized CPFI as an investment in associate.

The Company invested and obtained 49% ownership interest in CVC. However, as the Company has only two out of five seats of the Board of Directors of CVC and has no control but significant influence over CVC. Therefore, the Company recognized CVC as an investment in associate.

The Company owns 14% ownership interest in ADT. As the Company remains its seat in the Board of Directors of ADT and considers the relative size of ownership interest and the dispersion of shares owned by the other stockholders, the Company has significant influence over ADT. In June 2018, the stockholders of ADT approved to dissolve. The liquidation of ADT is still in process.

The Company’s share of profits and other comprehensive income (loss) of associates was recognized based on the reviewed financial statements.

b. Investment in joint venture

Investment in joint venture was as follows:

	Carrying Amount						% of Ownership Interests and Voting Rights
Name of Joint Venture	June 30, 2021		December 31, 2020		June 30, 2020		June 30, 2021			December 31, 2020			June 30, 2020
Non-listed
Chunghwa SEA Holdings (“CHT SEA”)	$	10,086	$	10,200	$	—		51	%		51	%		—

The Company invested $10,200 thousand to establish a joint venture, CHT SEA, with Delta Electronics, Inc. and Kwang Hsing Industrial Co., Ltd. in December 2020 and obtained 51% ownership interest of CHT SEA. However, according to the mutual agreements among stockholders, the Company does not individually direct CHT SEA’s relevant activities and has joint control with the other party; therefore, the Company treated CHT SEA as a joint venture.

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The joint venture is not considered individually material to the Company. Summarized financial information of CHT SEA was set out below:

	Three Months Ended June 30					Six Months Ended June 30
	2021			2020		2021			2020
The Company’s share of loss	$	(94	)	$	—	$	(114	)	$	—
The Company’s share of other comprehensive income		—			—		—			—
The Company’s share of total comprehensive loss	$	(94	)	$	—	$	(114	)	$	—

The Company’s share of loss and other comprehensive income of the joint venture was recognized based on the reviewed financial statements.

15. PROPERTY, PLANT AND EQUIPMENT

	June 30, 2021		December 31, 2020		June 30, 2020
Assets used by the Company	$	275,589,918	$	273,822,588	$	271,906,920
Assets subject to operating leases		7,102,548		7,593,355		7,700,776
	$	282,692,466	$	281,415,943	$	279,607,696

a. Assets used by the Company

	Land			Land Improvements			Buildings			Computer Equipment			Telecommuni- cations Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Equipment to be Accepted			Total
Cost
Balance on January 1, 2020	$	99,102,251		$	1,618,481		$	71,000,783		$	13,004,827		$	706,032,448		$	3,912,298		$	10,090,170		$	13,752,197		$	918,513,455
Additions		—			—			17,890			17,997			20,326			581			67,533			9,337,279			9,461,606
Disposal		(18,620	)		(567	)		(114	)		(641,164	)		(6,595,745	)		(16,966	)		(192,319	)		—			(7,465,495	)
Effect of foreign exchange differences		—			—			—			(61	)		(13,432	)		(55	)		(1,785	)		(1,543	)		(16,876	)
Others		3,196,601			9,330			(434,207	)		129,498			9,280,908			3,069			126,506			(12,865,373	)		(553,668	)
Balance on June 30, 2020	$	102,280,232		$	1,627,244		$	70,584,352		$	12,511,097		$	708,724,505		$	3,898,927		$	10,090,105		$	10,222,560		$	919,939,022
Accumulated depreciation and impairment
Balance on January 1, 2020	$	—		$	(1,374,602	)	$	(27,976,732	)	$	(11,068,245	)	$	(590,337,891	)	$	(3,694,325	)	$	(7,662,299	)	$	(29,358	)	$	(642,143,452	)
Depreciation expenses		—			(22,004	)		(681,178	)		(388,910	)		(11,978,140	)		(35,533	)		(329,934	)		—			(13,435,699	)
Disposal		—			567			114			640,497			6,586,955			16,960			183,819			—			7,428,912
Effect of foreign exchange differences		—			—			—			57			6,200			11			791			—			7,059
Others		—			—			106,962			(4,190	)		17,330			(662	)		(8,362	)		—			111,078
Balance on June 30, 2020	$	—		$	(1,396,039	)	$	(28,550,834	)	$	(10,820,791	)	$	(595,705,546	)	$	(3,713,549	)	$	(7,815,985	)	$	(29,358	)	$	(648,032,102	)
Balance on January 1, 2020, net	$	99,102,251		$	243,879		$	43,024,051		$	1,936,582		$	115,694,557		$	217,973		$	2,427,871		$	13,722,839		$	276,370,003
Balance on June 30, 2020, net	$	102,280,232		$	231,205		$	42,033,518		$	1,690,306		$	113,018,959		$	185,378		$	2,274,120		$	10,193,202		$	271,906,920
Cost
Balance on January 1, 2021	$	101,990,645		$	1,630,362		$	70,889,578		$	12,405,580		$	710,775,709		$	3,894,243		$	10,299,819		$	8,529,416		$	920,415,352
Additions		—			—			22,555			23,509			50,729			—			64,708			14,889,912			15,051,413
Disposal		—			(835	)		(29,357	)		(463,528	)		(9,118,293	)		(34,219	)		(166,834	)		—			(9,813,066	)
Effect of foreign exchange differences		—			—			—			131			(44,634	)		(253	)		(1,779	)		(3,748	)		(50,283	)
Others		377,138			1,603			204,848			93,368			14,412,807			2,600			181,816			(14,798,265	)		475,915
Balance on June 30, 2021	$	102,367,783		$	1,631,130		$	71,087,624		$	12,059,060		$	716,076,318		$	3,862,371		$	10,377,730		$	8,617,315		$	926,079,331
Accumulated depreciation and impairment
Balance on January 1, 2021	$	—		$	(1,399,204	)	$	(29,247,331	)	$	(10,638,967	)	$	(593,662,932	)	$	(3,718,392	)	$	(7,925,938	)	$	—		$	(646,592,764	)
Depreciation expenses		—			(22,223	)		(694,939	)		(362,308	)		(12,250,401	)		(31,427	)		(350,136	)		—			(13,711,434	)
Disposal		—			835			29,357			455,195			9,112,669			33,568			166,746			—			9,798,370
Effect of foreign exchange differences		—			—			—			(131	)		20,983			108			893			—			21,853
Others		—			—			4,107			(1,137	)		2,921			(110	)		(11,219	)		—			(5,438	)
Balance on June 30, 2021	$	—		$	(1,420,592	)	$	(29,908,806	)	$	(10,547,348	)	$	(596,776,760	)	$	(3,716,253	)	$	(8,119,654	)	$	—		$	(650,489,413	)
Balance on January 1, 2021, net	$	101,990,645		$	231,158		$	41,642,247		$	1,766,613		$	117,112,777		$	175,851		$	2,373,881		$	8,529,416		$	273,822,588
Balance on June 30, 2021, net	$	102,367,783		$	210,538		$	41,178,818		$	1,511,712		$	119,299,558		$	146,118		$	2,258,076		$	8,617,315		$	275,589,918

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There was no indication that property, plant and equipment was impaired, therefore, the Company did not recognize any impairment loss for the six months ended June 30, 2021 and 2020.

Chunghwa signed a joint development agreement with the MOTC previously which stated that the MOTC would provide the national land and Chunghwa would be in charge of the planning and construction for the MOTC’s office building, Chunghwa’s Renai office building, etc. According to the agreement, the MOTC and Chunghwa would each own a certain percentage of the buildings, and Chunghwa is to pay or get the reimbursement for the difference between the assessed value of the land and the construction cost paid by Chunghwa on behalf of the MOTC. The difference amounting to $1,056,680 thousand due to the MOTC was reported to Chunghwa’s Board of Directors in May 2020. Chunghwa paid the aforementioned amount in May 2021 and the property registration of the respective asset was completed in July 2021.

Depreciation expense for assets used by the Company is computed using the straight-line method over the following estimated service lives:

Land improvements	10~30 years
Buildings
Main buildings	20~60 years
Other building facilities	3~15 years
Computer equipment	2~8 years
Telecommunications equipment
Telecommunication circuits	2~30 years
Telecommunication machinery and antennas equipment	2~30 years
Transportation equipment	3~10 years
Miscellaneous equipment
Leasehold improvements	1~9 years
Mechanical and air conditioner equipment	2~16 years
Others	1~15 years

b. Assets subject to operating leases

	Land		Buildings			Total
Cost
Balance on January 1, 2020	$	4,979,650	$	3,841,560		$	8,821,210
Others		13,255		509,519			522,774
Balance on June 30, 2020	$	4,992,905	$	4,351,079		$	9,343,984
Accumulated depreciation and impairment
Balance on January 1, 2020	$	—	$	(1,496,998	)	$	(1,496,998	)
Depreciation expenses		—		(44,250	)		(44,250	)
Others		—		(101,960	)		(101,960	)
Balance on June 30, 2020	$	—	$	(1,643,208	)	$	(1,643,208	)
Balance on January 1, 2020, net	$	4,979,650	$	2,344,562		$	7,324,212
Balance on June 30, 2020, net	$	4,992,905	$	2,707,871		$	7,700,776

(Continued)

- 33 -

	Land			Buildings			Total
Cost
Balance on January 1, 2021	$	4,972,920		$	4,236,156		$	9,209,076
Others		(371,754	)		(86,374	)		(458,128	)
Balance on June 30, 2021	$	4,601,166		$	4,149,782		$	8,750,948
Accumulated depreciation and impairment
Balance on January 1, 2021	$	—		$	(1,615,721	)	$	(1,615,721	)
Depreciation expenses		—			(38,550	)		(38,550	)
Others		—			5,871			5,871
Balance on June 30, 2021	$	—		$	(1,648,400	)	$	(1,648,400	)
Balance on January 1, 2021, net	$	4,972,920		$	2,620,435		$	7,593,355
Balance on June 30, 2021, net	$	4,601,166		$	2,501,382		$	7,102,548

(Concluded)

The Company leases out land and buildings with lease terms between 1 to 20 years. The lessees do not have bargain purchase options to acquire the assets at the expiry of the lease periods.

The future aggregate lease collection under operating lease for the freehold plant, property and equipment was as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Year 1	$	367,619	$	347,229	$	329,682
Year 2		288,745		288,184		287,063
Year 3		229,388		230,984		224,991
Year 4		152,251		164,141		177,718
Year 5		130,076		124,845		111,056
Onwards		1,208,123		1,179,493		1,174,712
	$	2,376,202	$	2,334,876	$	2,305,222

The above items of property, plant and equipment subject to operating leases are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main buildings	35~60 years
Other building facilities	3~15 years

- 34 -

16. LEASE ARRANGEMENTS

a. Right-of-use assets

	June 30, 2021		December 31, 2020		June 30, 2020
Land and buildings
Handsets base stations	$	6,980,302	$	7,095,883	$	7,063,746
Others		1,699,722		1,708,593		1,863,982
Equipment		2,015,611		2,204,730		2,404,252
	$	10,695,635	$	11,009,206	$	11,331,980

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Additions to right-of-use assets					$	1,783,993	$	2,085,205
Depreciation charge for right-of-use assets
Land and buildings
Handsets base stations	$	694,706	$	680,343	$	1,383,250	$	1,357,719
Others		195,726		197,455		397,487		393,078
Equipment		103,635		101,070		208,640		208,006
	$	994,067	$	978,868	$	1,989,377	$	1,958,803

The Company did not have significant sublease or impairment of right-of-use assets for the six months ended June 30, 2021 and 2020.

b. Lease liabilities

	June 30, 2021		December 31, 2020		June 30, 2020
Lease liabilities
Current	$	3,310,790	$	3,381,571	$	3,234,958
Noncurrent		6,025,595		6,215,096		6,381,335
	$	9,336,385	$	9,596,667	$	9,616,293

Ranges of discount rates for lease liabilities were as follows:

	June 30, 2021	December 31, 2020	June 30, 2020
Land and buildings
Handsets base stations	0.37%~1.18%	0.46%~1.18%	0.53%~1.18%
Others	0.37%~9.00%	0.46%~9.00%	0.54%~9.00%
Equipment	0.37%~2.99%	0.46%~2.99%	0.53%~2.99%

- 35 -

c. Important lease-in activities and terms

The Company mainly enters into lease-in agreements of land and buildings for handsets base stations located throughout Taiwan with lease terms ranging from 1 to 20 years. The lease agreements do not contain bargain purchase options to acquire the assets at the expiration of the respective leases. For majority of the lease-in agreements on handsets base station, the Company has the right to terminate the agreement prior to the expiration date if the Company is unable to build the required telecommunication equipment, either due to legal restrictions, controversial events, or other events.

The Company also leases land and buildings for the use of offices, server rooms, and stores with lease terms from 1 to 30 years. Most of the lease agreements for national land adjust the lease payment according to the changes of the announced land values by the authority. At the expiry of the lease term, the Company does not have bargain purchase options to acquire the assets.

The lease agreements for equipment include a contract between Chunghwa and ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. For the information of lease agreements with related parties, please refer to Note 38 to the consolidated financial statements for details.

d. Other lease information

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Expenses relating to low-value asset leases	$	1,989	$	1,707	$	4,008	$	3,548
Expenses relating to variable lease payments not included in the measurement of lease liabilities	$	1,830	$	1,303	$	3,261	$	2,450
Total cash outflow for leases					$	1,942,323	$	2,054,083

The Company leases certain equipment which qualify as low-value asset leases. The Company has elected to apply the recognition exemption and, thus, not to recognize right-of-use assets and lease liabilities for these leases.

Lease-out arrangements under operating leases for freehold property, plant, and equipment and investment properties were set out in Notes 15 and 17 to the consolidated financial statements.

17. INVESTMENT PROPERTIES

Cost
Balance on January 1, 2020	$	9,213,979
Additions		54,435
Balance on June 30, 2020	$	9,268,414

(Continued)

- 36 -

Accumulated depreciation and impairment
Balance on January 1, 2020	$	(1,044,586	)
Depreciation expense		(10,260	)
Balance on June 30, 2020	$	(1,054,846	)
Balance on January 1, 2020, net	$	8,169,393
Balance on June 30, 2020, net	$	8,213,568
Cost
Balance on January 1 and June 30, 2021	$	10,662,450
Accumulated depreciation and impairment
Balance on January 1, 2021	$	(1,041,128	)
Depreciation expense		(21,136	)
Balance on June 30, 2021	$	(1,062,264	)
Balance on January 1, 2021, net	$	9,621,322
Balance on June 30, 2021, net	$	9,600,186

(Concluded)

Depreciation expense is computed using the straight-line method over the following estimated service lives:

Land improvements	10~30 years
Buildings
Main buildings	35~60 years
Other building facilities	4~10 years

The fair values of the Company’s investment properties as of December 31, 2020 and 2019 were determined by Level 3 fair value measurements inputs based on the appraisal reports conducted by independent appraisers. The Company used the aforementioned appraisal reports as the basis to determine the fair values as of June 30, 2021 and 2020 because there was no material change in the economic environment or the market transaction price. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

	June 30, 2021	December 31, 2020	June 30, 2020
Fair value	$    22,644,318	$    22,644,318	$    18,701,398
Overall capital interest rate	0.93%~3.03%	0.93%~3.03%	1.03%~4.04%
Profit margin ratio	12%~20%	12%~20%	12%~20%
Discount rate	—	—	—
Capitalization rate	0.73%~2.20%	0.73%~2.20%	0.79%~1.74%

All of the Company’s investment properties are held under freehold interest.

- 37 -

The future aggregate lease collection under operating lease for investment properties is as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Year 1	$	114,205	$	115,305	$	109,916
Year 2		89,739		95,223		89,525
Year 3		69,550		75,285		70,855
Year 4		44,873		52,544		53,793
Year 5		30,981		37,588		32,860
Onwards		45,499		57,773		82,602
	$	394,847	$	433,718	$	439,551

18. INTANGIBLE ASSETS

	Mobile Broadband Concession			Computer Software			Goodwill			Others			Total
Cost
Balance on January 1, 2020	$	59,965,000		$	3,428,609		$	236,200		$	378,063		$	64,007,872
Additions-acquired separately		48,373,000			91,642			—			2,686			48,467,328
Disposal		—			(310,370	)		—			(9	)		(310,379	)
Effect of foreign exchange differences		—			(65	)		—			(96	)		(161	)
Others		—			—			—			(45	)		(45	)
Balance on June 30, 2020	$	108,338,000		$	3,209,816		$	236,200		$	380,599		$	112,164,615
Accumulated amortization and impairment
Balance on January 1, 2020	$	(14,293,046	)	$	(2,498,825	)	$	(35,623	)	$	(133,853	)	$	(16,961,347	)
Amortization expenses		(1,926,340	)		(184,818	)		—			(12,550	)		(2,123,708	)
Disposal		—			310,370			—			9			310,379
Effect of foreign exchange differences		—			51			—			33			84
Balance on June 30, 2020	$	(16,219,386	)	$	(2,373,222	)	$	(35,623	)	$	(146,361	)	$	(18,774,592	)
Balance on January 1, 2020, net	$	45,671,954		$	929,784		$	200,577		$	244,210		$	47,046,525
Balance on June 30, 2020, net	$	92,118,614		$	836,594		$	200,577		$	234,238		$	93,390,023
Cost
Balance on January 1, 2021	$	108,338,000		$	3,319,223		$	291,206		$	392,326		$	112,340,755
Additions-acquired separately		—			65,748			—			2,815			68,563
Disposal		—			(223,163	)		—			—			(223,163	)
Effect of foreign exchange differences		—			(258	)		—			(15	)		(273	)
Others		—			779			—			—			779
Balance on June 30, 2021	$	108,338,000		$	3,162,329		$	291,206		$	395,126		$	112,186,661
Accumulated amortization and impairment
Balance on January 1, 2021	$	(19,318,842	)	$	(2,532,910	)	$	(44,926	)	$	(159,517	)	$	(22,056,195	)
Amortization expenses		(3,099,456	)		(168,885	)		—			(14,497	)		(3,282,838	)
Disposal		—			223,163			—			—			223,163
Effect of foreign exchange differences		—			247			—			4			251
Others		—			(26	)		—			—			(26	)
Balance on June 30, 2021	$	(22,418,298	)	$	(2,478,411	)	$	(44,926	)	$	(174,010	)	$	(25,115,645	)
Balance on January 1, 2021, net	$	89,019,158		$	786,313		$	246,280		$	232,809		$	90,284,560
Balance on June 30, 2021, net	$	85,919,702		$	683,918		$	246,280		$	221,116		$	87,071,016

- 38 -

For long-term business development, Chunghwa participated in the 5G mobile broadband license bidding hosted by the NCC and paid the deposit for 5G spectrum bidding amounting to $1,000,000 thousand in October 2019. Chunghwa paid $48,373,000 thousand, including the aforementioned deposit, in February 2020 for the aforementioned license to obtain 90MHz in the 3.5GHz spectrum and 600MHz in the 28GHz spectrum.

The concessions are granted and issued by the NCC. The concession fees are amortized using the straight-line method over the period from the date operations commence through the date the license expires or the useful life, whichever is shorter. The 4G concession fees will be fully amortized by December 2030 and December 2033 and 5G concession fees will be fully amortized by December 2040.

The computer software is amortized using the straight-line method over the estimated useful lives of 1 to 10 years. Other intangible assets are amortized using the straight-line method over the estimated useful lives of 1 to 20 years. Goodwill is not amortized.

19. OTHER ASSETS

	June 30, 2021		December 31, 2020		June 30, 2020
Spare parts	$	3,279,729	$	2,156,136	$	1,966,767
Refundable deposits		1,877,799		2,009,796		1,803,984
Other financial assets		1,000,000		1,000,000		1,000,000
Others		2,227,127		2,450,006		2,313,924
	$	8,384,655	$	7,615,938	$	7,084,675
Current
Spare parts	$	3,279,729	$	2,156,136	$	1,966,767
Others		223,485		192,961		121,551
	$	3,503,214	$	2,349,097	$	2,088,318
Noncurrent
Refundable deposits	$	1,877,799	$	2,009,796	$	1,803,984
Other financial assets		1,000,000		1,000,000		1,000,000
Others		2,003,642		2,257,045		2,192,373
	$	4,881,441	$	5,266,841	$	4,996,357

Other financial assets—noncurrent was Piping Fund. As part of the government’s effort to upgrade the existing telecommunications infrastructure, Chunghwa and other public utility companies were required by the ROC government to contribute to a Piping Fund administered by the Taipei City Government. This fund was used to finance various telecommunications infrastructure projects. Net assets of this fund will be returned proportionately after the project is completed.

20. HEDGING FINANCIAL INSTRUMENTS

Chunghwa’s hedge strategy is to enter into forward exchange contracts—buy to avoid its foreign currency exposure to certain foreign currency denominated equipment payments in the following six months. In addition, Chunghwa’s management considers the market condition to determine the hedge ratio and enters into forward exchange contracts with the banks to avoid the foreign currency risk.

- 39 -

Chunghwa signed equipment purchase contracts with suppliers and entered into forward exchange contracts to avoid foreign currency risk exposure to Euro-denominated purchase commitments. Those forward exchange contracts were designated as cash flow hedges. When forecast purchases actually take place, basis adjustments are made to the initial carrying amounts of hedged items.

For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and underlying) of the forward foreign exchange contracts and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and it is expected that the value of the forward contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates.

The main source of hedge ineffectiveness in these hedging relationships is the effect of credit risks of the Company and the counterparty on the fair value of the forward exchange contracts. Such credit risks do not impact the fair value of the hedged item attributable to changes in foreign exchange rates. No other sources of ineffectiveness emerged from these hedging relationships.

The following tables summarized the information relating to the hedges for foreign currency risk.

June 30, 2021

Notional Amount

Forward

Line Item in

Carrying Amount

Change in Fair Values of Hedging Instruments Used for Calculating Hedge

Hedging Instruments

Currency

(In Thousands)

Maturity

Rate

Balance Sheet

Asset

Liability

Ineffectiveness

Cash flow hedge

Forecast purchases—forward exchange contracts

NT$

/EUR

NT$

777,654/ EUR 23,000

2021.09

$

33.81

Hedging financial assets (liabilities)

$

—

$

14,013

$

(15,765

)

	Change in Value of Hedged Item Used for		Accumulated Gain or Loss on Hedging Instruments in Other Equity
Hedged Items	Calculating Hedge Ineffectiveness		Continuing Hedges			Hedge Accounting no Longer Applied
Cash flow hedge
Forecast equipment purchases	$	15,765	$	(14,013	)	$	—

December 31, 2020

Notional Amount

Forward

Line Item in

Carrying Amount

Change in Fair Values of Hedging Instruments Used for Calculating Hedge

Hedging Instruments

Currency

(In Thousands)

Maturity

Rate

Balance Sheet

Asset

Liability

Ineffectiveness

Cash flow hedge

Forecast purchases—forward exchange contracts

NT$

/EUR

NT$

200,867/ EUR 5,831

2021.03

$

34.45

Hedging financial assets (liabilities)

$

1,752

$

—

$

1,425

- 40 -

	Change in Value of Hedged Item Used for			Accumulated Gain or Loss on Hedging Instruments in Other Equity
Hedged Items	Calculating Hedge Ineffectiveness			Continuing Hedges		Hedge Accounting No Longer Applied
Cash flow hedge
Forecast equipment purchases	$	(1,425	)	$	1,752	$	—

June 30, 2020

Notional Amount

Forward

Line Item in

Carrying Amount

Change in Fair Values of Hedging Instruments Used for Calculating Hedge

Hedging Instruments

Currency

(In Thousands)

Maturity

Rate

Balance Sheet

Asset

Liability

Ineffectiveness

Cash flow hedge

Forecast purchases—forward exchange contracts

NT$

/EUR

NT$

180,934/ EUR5,500

2020.09

$

32.90

Hedging financial assets (liabilities)

$

2,358

$

—

$

2,031

	Change in Value of Hedged Item Used for			Accumulated Gain or Loss on Hedging Instruments in Other Equity
Hedged Items	Calculating Hedge Ineffectiveness			Continuing Hedges		Hedge Accounting no Longer Applied
Cash flow hedge
Forecast equipment purchases	$	(2,031	)	$	2,358	$	—

Six Months Ended June 30, 2021

	Comprehensive Income
								Reclassification from Equity to Profit or Loss and the Adjusted Line Item
Hedge Transaction	Hedging Gain or Loss Recognized in OCI			Amount of Hedge Ineffectiveness Recognized in Profit or Loss		Line Item in Which Hedge Ineffectiveness is Included		Amount Reclassified to P/ L and the Adjusted Line Item		Due to Hedged Future Cash Flows No Longer Expected to Occur
Cash flow hedge
Forecast equipment purchases	$	(15,765	)	$	—		—	$	3,722	$	—
									Construction in progress and equipment to be accepted		Other gains and losses

- 41 -

Six Months Ended June 30, 2020

	Comprehensive Income
							Reclassification from Equity to Profit or Loss and the Adjusted Line Item
Hedge Transaction	Hedging Gain or Loss Recognized in OCI		Amount of Hedge Ineffectiveness Recognized in Profit or Loss		Line Item in Which Hedge Ineffectiveness is Included		Amount Reclassified to P/L and the Adjusted Line Item		Due to Hedged Future Cash Flows No Longer Expected to Occur
Cash flow hedge
Forecast equipment purchases	$	2,031	$	—		—	$	385	$	—
								Construction in progress and equipment to be accepted		Other gains and losses

21. SHORT-TERM LOANS

	June 30, 2021		December 31, 2020		June 30, 2020
Unsecured bank loans	$	60,000	$	67,000	$	60,000

The annual interest rates of bank loans were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Unsecured bank loans		1.97%~2.43%		1.12%~2.33%		1.97%~2.23%

22. SHORT-TERM BILLS PAYABLE

	June 30, 2021		December 31, 2020			June 30, 2020
Commercial paper payable	$	—	$	7,000,000		$	16,000,000
Less: Discounts on commercial paper payable		—		(802	)		(10,104	)
	$	—	$	6,999,198		$	15,989,896

The annual interest rates of commercial paper payable were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Commercial paper payable		—		0.34%~0.36%		0.59%~0.69%

- 42 -

23. LONG-TERM LOANS

	June 30, 2021			December 31, 2020			June 30, 2020
Secured bank loans (Note 39)	$	1,600,000		$	1,600,000		$	1,600,000
Less: Current portion		(1,600,000	)		(1,600,000	)		—
	$	—		$	—		$	1,600,000

The annual interest rates of loans were as follows:

	June 30, 2021			December 31, 2020			June 30, 2020
Secured bank loans		0.72	%		0.72	%		0.72	%

LED obtained a secured loan from Chang Hwa Bank in September 2010. Interest is paid monthly. $300,000 thousand and $1,350,000 thousand were originally due in December 2014 and September 2015, respectively. In October 2014, the bank borrowing mentioned above was extended to September 2018 for one-time repayment. LED made an early repayment of $50,000 thousand in April 2015. LED entered into a contract with Chang Hwa Bank to renew the contract upon the maturity of the aforementioned contract in December 2017 and the due date of the renew contract is September 2021.

24. BONDS PAYABLE

	June 30, 2021			December 31, 2020			June 30, 2020
Unsecured domestic bonds	$	27,000,000		$	20,000,000		$	—
Less: Discounts on bonds payable		(25,512	)		(19,728	)		—
	$	26,974,488		$	19,980,272		$	—

The major terms of unsecured domestic bonds issued by Chunghwa were as follows:

Issuance	Tranche		Issuance Period	Total Amount		Coupon Rate			Repayment and Interest Payment
2020-1		A	July 2020 to July 2025	$	8,800,000		0.50	%	One-time repayment upon maturity; interest payable annually
		B	July 2020 to July 2027		7,500,000		0.54	%	The same as above
		C	July 2020 to July 2030		3,700,000		0.59	%	The same as above
2021-1		A	April 2021 to April 2026		1,900,000		0.42	%	The same as above
		B	April 2021 to April 2028		4,100,000		0.46	%	The same as above
		C	April 2021 to April 2031		1,000,000		0.50	%	The same as above

25. TRADE NOTES AND ACCOUNTS PAYABLE

	June 30, 2021		December 31, 2020		June 30, 2020
Trade notes and accounts payable	$	12,943,927	$	15,590,814	$	12,478,030

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Trade notes and accounts payable were attributable to operating activities and the trading conditions were agreed separately.

26. OTHER PAYABLES

	June 30, 2021		December 31, 2020		June 30, 2020
Accrued salary and compensation	$	5,840,446	$	9,449,659	$	5,744,531
Payables to contractors		3,186,184		1,778,735		1,026,080
Accrued compensation to employees and remuneration to directors and supervisors		2,507,483		1,690,796		2,170,193
Amounts collected for others		1,415,601		1,307,728		1,305,996
Accrued maintenance costs		1,004,573		1,039,689		880,356
Payables to equipment suppliers		748,644		1,049,008		326,231
Accrued franchise fees		4,379		785,352		524,056
Payable on land (Note 15)		—		1,056,680		1,056,680
Others		6,717,405		5,830,315		7,609,018
	$	21,424,715	$	23,987,962	$	20,643,141

27. PROVISIONS

	June 30, 2021		December 31, 2020		June 30, 2020
Warranties	$	208,390	$	182,431	$	167,099
Onerous contracts		177,474		170,433		66,371
Employee benefits		59,735		57,210		62,965
Others		4,097		4,097		4,397
	$	449,696	$	414,171	$	300,832
Current	$	317,774	$	313,555	$	199,592
Noncurrent		131,922		100,616		101,240
	$	449,696	$	414,171	$	300,832

	Warranties			Onerous Contracts			Employee Benefits			Others		Total
Balance on January 1, 2020	$	173,275		$	66,907		$	59,745		$	4,397	$	304,324
Additional / (reversal of) provisions recognized		51,624			(536	)		3,220			—		54,308
Used / forfeited during the period		(57,800	)		—			—			—		(57,800	)
Balance on June 30, 2020	$	167,099		$	66,371		$	62,965		$	4,397	$	300,832
Balance on January 1, 2021	$	182,431		$	170,433		$	57,210		$	4,097	$	414,171
Additional provisions recognized		58,272			7,041			2,921			—		68,234
Used / forfeited during the period		(32,306	)		—			(396	)		—		(32,702	)
Effect of foreign exchange differences		(7	)		—			—			—		(7	)
Balance on June 30, 2021	$	208,390		$	177,474		$	59,735		$	4,097	$	449,696

- 44 -

a. The provision for warranty claims represents the present value of the management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligation for warranties in sales agreements. The estimate has been made based on historical warranty experience.

b. The provision for employee benefits represents vested long-term service compensation accrued.

c. The provision for onerous contracts represents the present obligation resulting from the measurement for the unavoidable costs of meeting the Company’s contractual obligations exceed the economic benefits expected to be received from the contracts.

28. RETIREMENT BENEFIT PLANS

Relevant pension costs for defined benefit plans which were determined by the pension cost rates of actuarial valuation as of December 31, 2020 and 2019 were as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Operating costs	$	182,204	$	302,123	$	363,867	$	602,796
Marketing expenses		91,232		150,248		183,120		301,158
General and administrative expenses		19,729		29,996		39,388		59,973
Research and development expenses		10,950		17,972		21,855		36,008
	$	304,115	$	500,339	$	608,230	$	999,935

29. EQUITY

a. Share capital

1) Common stocks

	June 30, 2021		December 31, 2020		June 30, 2020
Number of authorized shares (thousand)		12,000,000		12,000,000		12,000,000
Authorized shares	$	120,000,000	$	120,000,000	$	120,000,000
Number of issued and paid shares (thousand)		7,757,447		7,757,447		7,757,447
Issued shares	$	77,574,465	$	77,574,465	$	77,574,465

Each issued common stock with par value of $10 is entitled the right to vote and receive dividends.

2) Global depositary receipts

The MOTC and some stockholders sold some common stocks of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) (one ADS represents 10 common stocks) in July 2003, August 2005, and September 2006. The ADSs were traded on the New York Stock Exchange since July 17, 2003. As of June 30, 2021, the outstanding ADSs were 225,375 thousand common stocks, which equaled 22,537 thousand units and represented 2.91% of Chunghwa’s total outstanding common stocks.

- 45 -

The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders are entitled to, through deposit agents:

a) Exercise their voting rights,

b) Sell their ADSs, and

c) Receive dividends declared and subscribe to the issuance of new shares.

b. Additional paid-in capital

The adjustments of additional paid-in capital for the six months ended June 30, 2021 and 2020 were as follows:

	Share Premium		Movements of Additional Paid-in Capital for Associates and Joint Ventures Accounted for Using Equity Method			Movements of Additional Paid-in Capital Arising from Changes in Equities of Subsidiaries			Difference between Consideration Received and Carrying Amount of the Subsidiaries’ Net Assets upon Disposal		Donated Capital		Stockholders’ Contribution due to Privatization		Total
Balance on January 1, 2020	$	147,329,386	$	208,746		$	2,062,250		$	987,611	$	19,914	$	20,648,078	$	171,255,985
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—		(5,680	)		—			—		—		—		(5,680	)
Change in additional paid-in capital for not proportionately participating in the capital increase of subsidiaries		—		—			(103	)		—		—		—		(103	)
Share-based payment transactions of subsidiaries		—		—			23,989			—		—		—		23,989
Balance on June 30, 2020	$	147,329,386	$	203,066		$	2,086,136		$	987,611	$	19,914	$	20,648,078	$	171,274,191
Balance on January 1, 2021	$	147,329,386	$	186,828		$	2,087,957		$	987,611	$	21,519	$	20,648,078	$	171,261,379
Share-based payment transactions of subsidiaries		—		—			15,568			—		—		—		15,568
Balance on June 30, 2021	$	147,329,386	$	186,828		$	2,103,525		$	987,611	$	21,519	$	20,648,078	$	171,276,947

Additional paid-in capital from share premium, donated capital and the difference between consideration received and the carrying amount of the subsidiaries’ net assets upon disposal may be utilized to offset deficits. Furthermore, when Chunghwa has no deficit, it may be distributed in cash or capitalized, which however is limited to a certain percentage of Chunghwa’s paid-in capital except the additional paid-in capital arising from unclaimed dividend can only be utilized to offset deficits.

The additional paid-in capital from movements of paid-in capital arising from changes in equities of subsidiaries may only be utilized to offset deficits.

Among additional paid-in capital from movements of investments in associates and joint ventures accounted for using equity method, the portion arising from the difference between consideration received and the carrying amount of the subsidiaries net assets upon disposal may be utilized to offset deficits; furthermore, when the Company has no deficit, it may be distributed in cash or capitalized. However, other additional paid-in capital recognized in proportion of share ownership may only be utilized to offset deficits.

- 46 -

c. Retained earnings and dividends policy

In accordance with the Chunghwa’s Articles of Incorporation, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income before distributing a dividend or making any other distribution to stockholders, except when the accumulated amount of such legal reserve equals to Chunghwa’s total issued capital, and depending on its business needs or requirements, may also set aside or reverse special reserves. No less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed as stockholders’ dividends, of which cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividend to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common stocks.

Chunghwa should appropriate or reverse a special reserve in accordance with Rule No. 1010012865 issued by the FSC and the directive entitled “Questions and Answers on Special Reserves Appropriated Following the Adoption of Taiwan-IFRSs”. Distributions can be made out of any subsequent reversal of the debit to other equity items.

The appropriation for legal reserve shall be made until the accumulated reserve equals the aggregate par value of the outstanding capital stock of Chunghwa. This reserve can only be used to offset a deficit, or, when the legal reserve has exceeded 25% of Chunghwa’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of the 2020 earnings of Chunghwa proposed by the Chunghwa’s Board of Directors on February 23, 2021 and the appropriations of the 2019 earnings of Chunghwa approved by the stockholders in their meetings on May 29, 2020 were as follows:

	Appropriation of Earnings				Dividends Per Share (NT$)
	For Fiscal Year 2020		For Fiscal Year 2019		For Fiscal Year 2020		For Fiscal Year 2019
Cash dividends	$	33,403,565	$	32,782,969	$	4.306	$	4.226

Chunghwa suspended the originally scheduled stockholder’s meeting in response to FSC’s announcement: “For pandemic prevention, the FSC demands public companies to postpone their shareholders’ meetings”. The stockholders’ meeting will be held on August 20, 2021. However, the voting result by way of electronic transmission regarding the appropriation of 2020 earnings reached the legal resolution threshold and Chunghwa adjusted the related amount accordingly. Information of the appropriation of Chunghwa’s earnings proposed by the Board of Directors and approved by the stockholders is available on the Market Observation Post System website.

d. Others

1) Exchange differences arising from the translation of the foreign operations

The exchange differences arising from the translation of the foreign operations from their functional currency to New Taiwan dollars were recognized as exchange differences arising from the translation of the foreign operations in other comprehensive income.

- 47 -

2) Unrealized gain or loss on financial assets at FVOCI

	Six Months Ended June 30
	2021			2020
Beginning balance	$	1,239,901		$	836,598
Unrealized gain or loss for the period
Equity instruments		(1,007,526	)		(430,291	)
Transferred accumulated gain or loss to unappropriated earnings resulting from the disposal of equity instruments (Note 8)		(94,392	)		—
Ending balance	$	137,983		$	406,307

e. Noncontrolling interests

	Six Months Ended June 30
	2021			2020
Beginning balance	$	11,327,441		$	10,283,522
Shares attributed to noncontrolling interests
Net income for the period		638,619			542,976
Exchange differences arising from the translation of the foreign operations		2,497			(7,313	)
Unrealized gain or loss on financial assets at FVOCI		(2,884	)		(15,418	)
Share of other comprehensive loss of associates and joint ventures accounted for using equity method		(651	)		(418	)
Cash dividends distributed by subsidiaries		(574,732	)		(775,420	)
Changes in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—			47
Change in additional paid-in capital for not proportionately participating in the capital increase of subsidiaries		—			103
Share-based payment transactions of subsidiaries		46,343			50,929
Ending balance	$	11,436,633		$	10,079,008

30. REVENUES

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Revenue from contracts with customers	$	49,288,821	$	47,493,326	$	99,103,657	$	95,365,088
Other revenues
Rental income		237,489		192,050		464,568		395,976
Others		74,825		122,488		133,905		196,799
		312,314		314,538		598,473		592,775
	$	49,601,135	$	47,807,864	$	99,702,130	$	95,957,863

For the information of performance obligations related to customer contracts, please refer to Note 3 Summary of Significant Accounting Policies to the consolidated financial statements for the year ended December 31, 2020 for details.

- 48 -

a. Disaggregation of revenue

Six months ended June 30, 2021

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others		Total
Main Products and Service Revenues
Mobile services revenue	$	—	$	28,482,692	$	—	$	—	$	—	$	28,482,692
Sales of products		1,053,681		16,139,308		32,002		5,093		2,510,766		19,740,850
Local telephone and domestic long distance telephone services revenue		12,798,271		—		—		—		—		12,798,271
Broadband access and domestic leased line services revenue		11,353,060		—		—		—		—		11,353,060
Data communications internet services revenue		—		—		10,991,222		—		—		10,991,222
International network and leased line services revenue		—		—		—		2,215,167		—		2,215,167
Others		5,423,976		547,190		4,288,895		2,115,079		1,147,255		13,522,395
	$	30,628,988	$	45,169,190	$	15,312,119	$	4,335,339	$	3,658,021	$	99,103,657

Six months ended June 30, 2020

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others		Total
Main Products and Service Revenues
Mobile services revenue	$	—	$	28,295,872	$	—	$	—	$	—	$	28,295,872
Sales of products		981,015		14,838,635		51,196		161,933		2,016,224		18,049,003
Local telephone and domestic long distance telephone services revenue		13,277,167		—		—		—		—		13,277,167
Broadband access and domestic leased line services revenue		11,146,045		—		—		—		—		11,146,045
Data communications internet services revenue		—		—		10,660,413		—		—		10,660,413
International network and leased line services revenue		—		—		—		2,098,628		—		2,098,628
Others		4,647,209		469,959		4,075,569		2,147,205		498,018		11,837,960
	$	30,051,436	$	43,604,466	$	14,787,178	$	4,407,766	$	2,514,242	$	95,365,088

b. Contract balances

	June 30, 2021			December 31, 2020			June 30, 2020			January 1, 2020
Trade notes and accounts receivable (Note 9)	$	21,952,194		$	22,621,902		$	26,710,646		$	26,407,783
Contract assets
Products and service bundling	$	6,988,139		$	7,232,134		$	6,864,176		$	6,942,974
Others		766,105			612,206			127,377			115,993
Less: Loss allowance		(17,532	)		(17,792	)		(16,653	)		(16,858	)
	$	7,736,712		$	7,826,548		$	6,974,900		$	7,042,109
Current	$	5,354,120		$	5,331,246		$	4,518,827		$	4,441,196
Noncurrent		2,382,592			2,495,302			2,456,073			2,600,913
	$	7,736,712		$	7,826,548		$	6,974,900		$	7,042,109

(Continued)

- 49 -

	June 30, 2021		December 31, 2020		June 30, 2020		January 1, 2020
Contract liabilities
Telecommunications business	$	13,021,233	$	13,601,662	$	12,601,083	$	12,771,621
Project business		7,038,570		6,686,561		11,913,132		10,360,428
Products and service bundling		9,487		16,404		26,114		38,570
Others		532,537		421,166		416,992		510,696
	$	20,601,827	$	20,725,793	$	24,957,321	$	23,681,315
Current	$	13,578,360	$	13,436,706	$	18,190,895	$	16,839,830
Noncurrent		7,023,467		7,289,087		6,766,426		6,841,485
	$	20,601,827	$	20,725,793	$	24,957,321	$	23,681,315

(Concluded)

The changes in the contract asset and the contract liability balances primarily result from the timing difference between the satisfaction of performance obligations and the payments collected from customers.

The Company applies the simplified approach to recognize expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. Contract assets will be reclassified to trade receivables when the corresponding invoice is billed to the client. Contract assets have substantially the same risk characteristics as the trade receivables of the same types of contracts. Therefore, the Company concluded that the expected loss rates for trade receivables can be applied to the contract assets.

c. Incremental costs of obtaining contracts

	June 30, 2021		December 31, 2020		June 30, 2020
Noncurrent
Incremental costs of obtaining contracts	$	944,972	$	999,593	$	955,755

The Company considered the past experience and the default clauses in the telecommunications service contracts and believes the commissions and equipment subsidies paid for obtaining such contracts are expected to be recoverable, therefore, such costs were capitalized. Amortization expenses for the three months and six months ended June 30, 2021 were $200,530 thousand and $395,410 thousand, respectively. Amortization expenses for the three months and six months ended June 30, 2020 were $193,622 thousand and $390,281 thousand, respectively.

31. NET INCOME

a. Other income and expenses

	Three Months Ended June 30					Six Months Ended June 30
	2021		2020			2021		2020
Gain (loss) on disposal of property, plant and equipment, net	$	221	$	(11,154	)	$	2,790	$	(11,834	)

- 50 -

b. Other income

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Rental income	$	16,317	$	17,171	$	32,389	$	35,144
Dividend income		—		236,296		—		236,296
Others		32,561		32,959		58,460		58,178
	$	48,878	$	286,426	$	90,849	$	329,618

c. Other gains and losses

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Valuation gain (loss) on financial assets and liabilities at fair value through profit or loss, net	$	90,028		$	(55,796	)	$	223,869		$	(68,170	)
Foreign currency exchange gain or loss, net		20,568			(10,276	)		58,772			60,794
Gain (loss) on disposal of financial instruments, net		114			—			300			(1,788	)
Others		(15,988	)		(868	)		(24,098	)		(13,787	)
	$	94,722		$	(66,940	)	$	258,843		$	(22,951	)

d. Interest expenses

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Interest on bonds payable	$	32,944	$	—	$	60,363	$	—
Interest on lease liabilities		17,368		20,548		35,328		42,020
Interest paid to financial institutions		3,760		27,460		9,082		48,094
Others		944		—		969		281
	$	55,016	$	48,008	$	105,742	$	90,395

e. Impairment loss (reversal of impairment loss)

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Contract assets	$	(367	)	$	(146	)	$	(260	)	$	(205	)
Trade notes and accounts receivable	$	36,981		$	99,197		$	79,732		$	105,127
Other receivables	$	6,712		$	(1,210	)	$	7,423		$	(944	)
Inventories	$	(436	)	$	172,089		$	32,483		$	195,690

- 51 -

f. Depreciation and amortization expenses

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Property, plant and equipment	$	6,907,714	$	6,705,732	$	13,749,984	$	13,479,949
Right-of-use assets		994,067		978,868		1,989,377		1,958,803
Investment properties		10,568		5,130		21,136		10,260
Intangible assets		1,641,801		1,064,685		3,282,838		2,123,708
Incremental costs of obtaining contracts		200,530		193,622		395,410		390,281
Total depreciation and amortization expenses	$	9,754,680	$	8,948,037	$	19,438,745	$	17,963,001
Depreciation expenses summarized by functions
Operating costs	$	7,462,422	$	7,212,208	$	14,846,673	$	14,490,102
Operating expenses		449,927		477,522		913,824		958,910
	$	7,912,349	$	7,689,730	$	15,760,497	$	15,449,012
Amortization expenses summarized by functions
Operating costs	$	1,790,341	$	1,203,739	$	3,574,977	$	2,403,012
Marketing expenses		23,419		23,346		47,075		46,380
General and administrative expenses		17,399		20,247		35,191		42,799
Research and development expenses		11,172		10,975		21,005		21,798
	$	1,842,331	$	1,258,307	$	3,678,248	$	2,513,989

g. Employee benefit expenses

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Post-employment benefit
Defined contribution plans	$	194,423	$	169,925	$	386,970	$	337,217
Defined benefit plans		304,115		500,339		608,230		999,935
		498,538		670,264		995,200		1,337,152
Share-based payment
Equity-settled share-based payment		5,182		1,645		9,243		3,291
Other employee benefit		10,712,083		10,538,597		21,261,184		21,082,665
Total employee benefit expenses	$	11,215,803	$	11,210,506	$	22,265,627	$	22,423,108

(Continued)

- 52 -

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Summary by functions
Operating costs	$	5,812,416	$	5,758,505	$	11,504,947	$	11,485,877
Operating expenses		5,403,387		5,452,001		10,760,680		10,937,231
	$	11,215,803	$	11,210,506	$	22,265,627	$	22,423,108

(Concluded)

Chunghwa distributes employees’ compensation at the rates from 1.7% to 4.3% and remuneration to directors not higher than 0.17%, respectively, of pre-tax income.

If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the difference is recorded as a change in accounting estimate.

The compensation to the employees and remuneration to the directors of 2020 and 2019 approved by the Board of Directors on February 23, 2021 and February 26, 2020, respectively, were as follows. The compensation to the employees and remuneration to the directors of 2020 will be reported to the stockholders in their meeting planned to be held on August 20, 2021:

	Cash
	2020		2019
Compensation distributed to the employees	$	1,202,448	$	1,126,194
Remuneration paid to the directors		35,803		35,210

There was no difference between the initial accrued amounts recognized in 2020 and 2019 and the amounts approved by the Board of Directors in 2021 and 2020 of the aforementioned compensation to employees and the remuneration to directors.

Information of the appropriation of Chunghwa’s employees compensation and remuneration to directors and those approved by the Board of Directors is available on the Market Observation Post System website.

32. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Current tax
Current tax expenses recognized for the period	$	2,164,804	$	2,070,289	$	4,282,592	$	4,158,240
Income tax on unappropriated earnings		31,245		11,527		31,245		11,527

(Continued)

- 53 -

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Income tax adjustments on prior years	$	(67,241	)	$	(17,606	)	$	(96,963	)	$	(17,606	)
Others		219			1,964			373			2,107
		2,129,027			2,066,174			4,217,247			4,154,268
Deferred tax
Deferred tax expenses recognized for the period		60,875			(3,670	)		173,858			12,276
Income tax adjustments on prior years		5,579			27,739			3,094			27,739
		66,454			24,069			176,952			40,015
Income tax recognized in profit or loss	$	2,195,481		$	2,090,243		$	4,394,199		$	4,194,283

(Concluded)

The applicable tax rate used by the entities subject to the Income Tax Act of the Republic of China is 20%, while the applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other entities of the Company operating in other jurisdictions are based on the tax laws in those jurisdictions.

In July 2019, the President of the ROC announced the amendments to the Statute of Industrial Innovation, which stipulate that the unappropriated earnings in 2018 and thereafter that are used to build or acquire certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Company has deducted the reinvested capital expenditure while calculating income tax on unappropriated earnings.

b. Income tax examinations

Income tax returns of Chunghwa, SENAO and HHI have been examined by the tax authorities through 2018. Income tax returns of ISPOT, Youth, Youyi, Aval, Wiin, SENYOUNG, Senaolife, CHYP, CHSI, LED, CHI, CHPT, SFD, CLPT, CHTSC, CHIEF, Unigate, SHE, CHST, IISI and UTC have been examined by the tax authorities through 2019.

33. EARNINGS PER SHARE (“EPS”)

Net income and weighted average number of common stocks used in the calculation of earnings per share were as follows:

Net Income

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Net income used to compute the basic earnings per share
Net income attributable to the parent	$	8,947,528	$	8,574,040	$	17,752,472	$	16,857,374

(Continued)

- 54 -

	Three Months Ended June 30						Six Months Ended June 30
	2021			2020			2021			2020
Assumed conversion of all dilutive potential common stocks
Employee stock options and employee compensation of subsidiaries	$	(776	)	$	(553	)	$	(1,816	)	$	(2,093	)
Net income used to compute the diluted earnings per share	$	8,946,752		$	8,573,487		$	17,750,656		$	16,855,281

(Concluded)

Weighted Average Number of Common Stocks

(Thousand Shares)

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Weighted average number of common stocks used to compute the basic earnings per share		7,757,447		7,757,447		7,757,447		7,757,447
Assumed conversion of all dilutive potential common stocks
Employee compensation		1,650		1,323		6,447		5,751
Weighted average number of common stocks used to compute the diluted earnings per share		7,759,097		7,758,770		7,763,894		7,763,198

As Chunghwa may settle the employee compensation in shares or cash, Chunghwa shall presume that it will be settled in shares and take those shares into consideration when calculating the weighted average number of outstanding shares used in the calculation of diluted EPS if the shares have a dilutive effect. The dilutive effect of the shares needs to be considered until the approval of the number of shares to be distributed to employees as compensation in the following year.

34. SHARE-BASED PAYMENT ARRANGEMENT

a. CHIEF share-based compensation plan (“CHIEF Plan”) described as follows:

Effective Date for Plan Registration	Resolution Date by CHIEF’s Board of Directors	Stock Options Units		Exercise Price (NT$)
2020.09.16	2020.10.26		200.00	$	206.00
2017.12.18	2018.10.31		50.00	$	138.70
				(Original price$	147.00	)
	2017.12.19		950.00	$	132.70
				(Original price$	147.00	)

(Continued)

- 55 -

Effective Date for Plan Registration	Resolution Date by CHIEF’s Board of Directors	Stock Options Units		Exercise Price (NT$)
2015.11.17	2015.10.22		2,000.00	$	34.40
				(Originalprice$	43.00	)

(Concluded)

Each option is eligible to subscribe for one thousand common stocks when exercisable. The options are granted to specific employees that meet the vesting conditions. The CHIEF Plan has an exercise price adjustment formula upon the changes in common stocks or distribution of cash dividends. The options of the CHIEF Plan are valid for five years and the graded vesting schedule will vest two years after the grant date.

The Board of Directors of CHIEF resolved to issue stock options on October 26, 2020 and authorized the chairman to decide the grant date. Afterwards, the grant date was decided as November 13, 2020.

The compensation costs for stock options for the three months and six months ended June 30, 2021 and 2020 were as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Granted on November 13, 2020	$	2,433	$	—	$	4,865	$	—
Granted on October 31, 2018		42		138		84		276
Granted on December 19, 2017		34		72		86		144
	$	2,509	$	210	$	5,035	$	420

Information about CHIEF’s outstanding stock options for the six months ended June 30, 2021 and 2020 was as follows:

	Six Months Ended June 30, 2021
	Granted on November 13, 2020					Granted on October 31, 2018				Granted on December 19, 2017
	Number of Options			Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		200.00		$	206.00		21.00	$	138.70		427.50		$	132.70
Options exercised		—			—		—		—		(213.75	)		132.70
Options forfeited		(6.00	)		—		—		—		(0.50	)		—
Options outstanding at end of the period		194.00			206.00		21.00		138.70		213.25			132.70
Options exercisable at end of the period		—			—		—		—		—			—

- 56 -

	Six Months Ended June 30, 2020
	Granted on October 31, 2018					Granted on December 19, 2017					Granted on October 22, 2015
	Number of Options			Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		46.00		$	141.70		897.00		$	135.60		314.25		$	34.40
Options exercised		—			—		(448.50	)		135.60		(314.25	)		34.40
Options forfeited		(4.00	)		—		(17.00	)		—		—			—
Options outstanding at end of the period		42.00			141.70		431.50			135.60		—			—
Options exercisable at end of the period		—			—		—			—		—			—

As of June 30, 2021, information about employee stock options outstanding was as follows:

Granted on November 13, 2020
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    206.00		194.00		4.37	$	206.00		—	$	—
Granted on October 31, 2018
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    138.70		21.00		2.33	$	138.70		—	$	—
Granted on December 19, 2017
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    132.70		213.25		1.46	$	132.70		—	$	—

As of June 30, 2021, all the stock options granted on October 22, 2015 were exercised or forefeited.

- 57 -

As of December 31, 2020, information about employee stock options outstanding was as follows:

Granted on November 13, 2020
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    206.00		200.00		4.87	$	206.00		—	$	—
Granted on October 31, 2018
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    138.70		21.00		2.83	$	138.70		—	$	—
Granted on December 19, 2017
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    132.70		427.50		1.96	$	132.70		213.75	$	132.70

As of December 31, 2020, all the stock options granted on October 22, 2015 were exercised or forfeited.

As of June 30, 2020, information about employee stock options outstanding was as follows:

Granted on October 31, 2018
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    141.70		42.00		3.33	$	141.70		—	$	—
Granted on December 19, 2017
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    135.60		431.50		2.46	$	135.60		—	$	—

- 58 -

As of June 30, 2020, all the stock options granted on October 22, 2015 were exercised or forfeited.

CHIEF used the fair value method to evaluate the options using the Black-Scholes model and binomial option pricing model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted on November 13, 2020			Stock Options Granted on October 31, 2018			Stock Options Granted on December 19, 2017			Stock Options Granted on October 22, 2015
Grant-date share price (NT$)	$	356.00		$	166.00		$	95.92		$	39.55
Exercise price (NT$)	$	206.00		$	147.00		$	147.00		$	43.00
Dividend yield		—			—			—			—
Risk-free interest rate		0.18	%		0.72	%		0.62	%		0.86	%
Expected life		5 years			5 years			5 years			5 years
Expected volatility		34.61	%		16.60	%		17.35	%		21.02	%
Weighted average fair value of grants (NT$)	$	173,893		$	33,540		$	2,318		$	4,863

The expected volatility for the options granted in 2020 was based on CHIEF’s average annualized historical share price volatility from June 5, 2018, CHIEF’s listing date on Taipei Exchange, to the grant date. The expected volatilities for the options granted from 2015 to 2018 were based on the average annualized historical share price volatility of CHIEF’s comparable companies before the grant date.

b. CHTSC share-based compensation plan (“CHTSC Plan”) described as follows:

The Board of Directors of CHTSC resolved to issue 4,500 and 3,500 stock options on December 20, 2019 and February 20, 2021, respectively. Each option is eligible to subscribe for one thousand common stocks when exercisable and the exercise price are both $19.085 per share. The options are granted to specific employees that meet the vesting conditions. The CHTSC Plan has an exercise price adjustment formula upon the changes in common stocks. The options of the CHTSC Plan are valid for five years and the graded vesting schedule will vest one year after the grant date.

The compensation costs for stock options for the three months and six months ended June 30, 2021 and 2020 were as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Granted on February 20, 2021	$	1,602	$	—	$	2,293	$	—
Granted on December 20, 2019		731		1,435		1,462		2,871
	$	2,333	$	1,435	$	3,755	$	2,871

- 59 -

Information about CHTSC’s outstanding stock options for the six months ended June 30, 2021 and 2020 were as follows:

	Six Months Ended June 30, 2021
	Granted on February 20, 2021					Granted on December 20, 2019
	Number of Options			Weighted Average Exercise Price (NT$)		Number of Options			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		—		$	—		4,328		$	19.085
Options granted		3,500			19.085		—			—
Options exercised		—			—		(1,082	)		19.085
Options forfeited		(56	)		—		(48	)		—
Options outstanding at end of the period		3,444			19.085		3,198			19.085
Options exercisable at end of the period		—			—		—			—

	Six Months Ended June 30, 2020
	Granted on December 20, 2019
	Number of Options		Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning and end of the period		4,500	$	19.085
Options exercisable at end of the period		—		—

As of June 30, 2021, information about employee stock options outstanding was as follows:

Granted on February 20, 2021
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    19.085		3,444		4.64	$	19.085		—	$	—

- 60 -

Granted on December 20, 2019
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
	$    19.085		3,198		3.47	$	19.085		—	$	—

As of December 31, 2020, information about employee stock options outstanding was as follows:

Granted on December 20, 2019
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
	$    19.085		4,328		3.97	$	19.085		1,082	$	19.085

As of June 30, 2020, information about employee stock options outstanding was as follows:

Granted on December 20, 2019
Options Outstanding								Options Exercisable
Range of Exercise Price (NT$)		Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
	$    19.085		4,500		4.47	$	19.085		—	$	—

CHTSC used the fair value method to evaluate the options using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted on Ferbuary 20, 2021			Stock Options Granted on December 20, 2019
Grant-date share price (NT$)	$	23.73		$	20.17
Exercise price (NT$)	$	19.085		$	19.085
Dividend yield		15.20	%		12.49	%
Risk-free interest rate		0.25	%		0.54	%
Expected life		5 years			5 years
Expected volatility		47.35	%		42.41	%
Weighted average fair value of grants (NT$)	$	3,332		$	2,470

Expected volatility was based on the average annualized historical share price volatility of CHTSC’s comparable companies before the grant date.

- 61 -

c. IISI share-based compensation plan (“IISI Plan”) described as follows:

IISI issued 1,665 and 1,335 stock options in January 2014 and August 2013, respectively. Each option is eligible to subscribe for one thousand common stocks when exercisable. The options are granted to specific employees of IISI and its subsidiaries that meet the vesting conditions. The options of the IISI Plan are valid for seven years and the graded vesting schedule will vest at certain percentages starting from two years after the grant date. The exercise price of the original options is $14 per share. After the options are issued, if the common stocks of IISI change, the exercise price of the options should be adjusted according to the prescribed formula.

No compensation cost of stock options granted was recognized for the six months ended June 30, 2021.

Information about IISI’s outstanding stock options for the six months ended June 30, 2021 was as follows:

	Six Months Ended June 30, 2021
	Granted in January 2014
	Number of Options			Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		530.00		$	14.00
Options exercised		(261.00	)		14.00
Options forfeited		(269.00	)		—
Options outstanding at end of the period		—			—
Options exercisable at end of the period		—			—

As of June 30, 2021, all the stock options granted in 2014 and 2013 were exercised or forfeited.

As of December 31, 2020, information about employee stock options outstanding was as follows:

Granted in January 2014
Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    14.00		530.00		0.04	$	14.00		530.00	$	14.00

As of December 31, 2020, all the stock options granted in 2013 were exercised or forfeited.

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IISI used the fair value method to evaluate the options using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted in January 2014		Stock Options Granted in August 2013
Grant-date share price (NT$)	$	14.51	$	12.51
Exercise price (NT$)	$	14.00	$	14.00
Dividend yield		6%		6%
Risk-free interest rate		1.16%-1.32%		1.20%-1.39%
Expected life		4.5-5.5 years		4.5-5.5 years
Expected volatility		35.28%-35.97%		36.01%-36.62%
Weighted average fair value of grants (NT$)	$	14.51	$	12.51

Expected volatility was based on the average annualized historical share price volatility of IISI’s comparable companies before the grant date.

d. CLPT share-based compensation plan (“CLPT Plan”) described as follows:

The Board of Directors of CLPT resolved to issue 690 stock options on February 26, 2021. Each option is eligible to subscribe for one thousand common stocks when exercisable and the exercise price is $16.87 per share. The options are granted to specific employees that meet the vesting conditions. The CLPT Plan has an exercise price adjustment formula upon the changes in common stocks or distribution of cash dividends. The options of the CLPT Plan are valid for four years and the graded vesting schedule will vest two years after the grant date.

The compensation costs were $340 thousand and $453 thousand for the three months and six months ended June 30, 2021, respectively.

Information about CLPT’s outstanding stock options for the six months ended June 30, 2021 was as follows:

	Six Months Ended June 30, 2021
	Granted on February 26, 2021
	Number of Options		Weighted Average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		—	$	—
Options granted		690		16.87
Options outstanding at end of the period		690		16.87
Options exercisable at end of the period		—		—

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As of June 30, 2021, information about employee stock options outstanding was as follows:

Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$    16.87		690		3.66	$	16.87		—	$	—

CLPT used the fair value method to evaluate the options using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

	Stock Options Granted on February 26, 2021
Grant-date share price (NT$)	$	17.63
Exercise price (NT$)	$	16.87
Dividend yield		—
Risk-free interest rate		0.31	%
Expected life		4 years
Expected volatility		35.22	%
Weighted average fair value of grants (NT$)	$	4,750

Expected volatility was based on the average annualized historical share price volatility of CLPT’s comparable companies before the grant date.

35. CASH FLOW INFORMATION

Except for those disclosed in other notes, the Company entered into the following non-cash investing and financing activities:

Investing activities	Six Months Ended June 30
	2021			2020
Increase in property, plant and equipment	$	15,051,413		$	9,461,606
Changes in other payables		(55,690	)		(217,983	)
Acquisition of property, plant and equipment	$	14,995,723		$	9,243,623
Increase in intangible assets	$	68,563		$	48,467,328
Changes in other assets		—			(1,000,000	)
Acquisition of intangible assets	$	68,563		$	47,467,328
Disposal of financial assets at fair value through other comprehensive income	$	2,635,568		$	—
Changes in other current monetary assets		270,321			—
Proceeds from disposal of financial assets at fair value through other comprehensive income	$	2,905,889		$	—

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Financing Activities

	Balance on January 1, 2021		Cash Flows From Financing Activities			Changes In Non-Cash Transactions					Cash Flows From Operation Activities— Interest Paid			Balance on June 30, 2021
						New Leases		Others
Lease liabilities	$	9,596,667	$	(1,899,726	)	$	1,783,993	$	(109,221	)	$	(35,328	)	$	9,336,385

	Balance on January 1, 2020		Cash Flows From Financing Activities			Changes In Non-Cash Transactions					Cash Flows From Operation Activities— Interest Paid			Balance on June 30, 2020
						New Leases		Others
Lease liabilities	$	9,758,138	$	(2,006,065	)	$	2,085,205	$	(178,965	)	$	(42,020	)	$	9,616,293

36. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of debt of the Company and the equity attributable to the parent.

Some consolidated entities are required to maintain minimum paid-in capital amount as prescribed by the applicable laws.

The management reviews the capital structure of the Company as needed. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. According to the management’s suggestions, the Company maintains a balanced capital structure through paying cash dividends, increasing its share capital, purchasing outstanding shares, and issuing new debt or repaying debt.

37. FINANCIAL INSTRUMENTS

Fair Value Information

The fair value measurement guidance establishes a framework for measuring fair value and expands disclosure about fair value measurements. The standard describes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. These levels are:

Level 1 fair value measurements: These measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements: These measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 fair value measurements: These measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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a. Financial instruments that are not measured at fair value but for which fair value is disclosed

Except those listed in the table below, the Company considers that the carrying amounts of financial assets and liabilities not measured at fair value approximate their fair values or the fair values cannot be reliable estimated.

	June 30, 2021				December 31, 2020				June 30, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Financial liabilities
Financial liabilities measured at amortized cost
Bonds payable	$	26,974,488	$	27,091,274	$	19,980,272	$	20,078,098	$	—	$	—

The fair value of bonds payable is measured using Level 2 inputs. The valuation of fair value is based on the quoted market prices provided by third party pricing services.

b. Financial instruments that are measured at fair value on a recurring basis

June 30, 2021

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Listed stocks	$	2,326	$	—	$	—	$	2,326
Non-listed stocks		—		—		903,625		903,625
	$	2,326	$	—	$	903,625	$	905,951
Financial assets at FVOCI
Listed stocks	$	149,746	$	—	$	—	$	149,746
Non-listed stocks		—		—		3,486,217		3,486,217
	$	149,746	$	—	$	3,486,217	$	3,635,963
Financial liabilities at FVTPL
Derivatives	$	—	$	967	$	—	$	967
Hedging financial liabilities	$	—	$	14,013	$	—	$	14,013

December 31, 2020

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivatives	$	—	$	2,271	$	—	$	2,271
Listed stocks		7,626		—		—		7,626
Non-listed stocks		—		—		677,202		677,202
	$	7,626	$	2,271	$	677,202	$	687,099
Hedging financial assets	$	—	$	1,752	$	—	$	1,752

(Continued)

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	Level 1		Level 2		Level 3		Total
Financial assets at FVOCI
Listed stocks	$	2,754,175	$	—	$	—	$	2,754,175
Non-listed stocks		—		—		4,438,999		4,438,999
	$	2,754,175	$	—	$	4,438,999	$	7,193,174
Financial liabilities at FVTPL
Derivatives	$	—	$	143	$	—	$	143

(Concluded)

June 30, 2020

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivatives	$	—	$	1,051	$	—	$	1,051
Listed stocks		7,439		—		—		7,439
Non-listed stocks		—		—		709,137		709,137
	$	7,439	$	1,051	$	709,137	$	717,627
Hedging financial assets	$	—	$	2,358	$	—	$	2,358
Financial assets at FVOCI
Listed stocks	$	2,294,860	$	—	$	—	$	2,294,860
Non-listed stocks		—		—		4,605,075		4,605,075
	$	2,294,860	$	—	$	4,605,075	$	6,899,935

There were no transfers between Levels 1 and 2 for the six months ended June 30, 2021 and 2020.

The reconciliations for financial assets measured at Level 3 were listed below:

Six months ended June 30, 2021

Financial Assets	Measured at Fair Value through Profit or Loss		Measured at Fair Value through Other Comprehensive Income			Total
Balance on January 1, 2021	$	677,202	$	4,438,999		$	5,116,201
Acquisition		—		81,000			81,000
Recognized in profit or loss under “Other gains and losses”		226,423		—			226,423
Recognized in other comprehensive income under “Unrealized gain or loss on financial assets at fair value through other comprehensive income”		—		(1,033,782	)		(1,033,782	)
Balance on June 30, 2021	$	903,625	$	3,486,217		$	4,389,842

(Continued)

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Financial Assets	Measured at Fair Value through Profit or Loss		Measured at Fair Value through Other Comprehensive Income	Total
Unrealized gain for the six months ended June 30, 2021
	$	226,423

(Concluded)

Six months ended June 30, 2020

Financial Assets	Measured at Fair Value through Profit or Loss			Measured at Fair Value through Other Comprehensive Income			Total
Balance on January 1, 2020	$	778,105		$	4,815,301		$	5,593,406
Recognized in profit or loss under “Other gains and losses”		(68,968	)		—			(68,968	)
Recognized in other comprehensive income under “Unrealized gain or loss on financial assets at fair value through other comprehensive income”		—			(210,226	)		(210,226	)
Balance on June 30, 2020	$	709,137		$	4,605,075		$	5,314,212
Unrealized loss for the six months ended June 30, 2020	$	(68,968	)

The fair values of financial assets and financial liabilities of Level 2 are determined as follows:

1) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices.

2) For derivatives, fair values are estimated using discounted cash flow model. Future cash flows are estimated based on observable inputs including forward exchange rates at the end of the reporting periods and the forward and spot exchange rates stated in the contracts, discounted at a rate that reflects the credit risk of various counterparties.

The fair values of non-listed domestic and foreign equity investments were Level 3 financial assets and determined using the market approach by reference the Price-to-Book ratios (P/B ratios) of peer companies that traded in active market, using the income approach, in which the discounted cashflow is used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees, or using assets approach. The Company originally used the market approach to measure the fair value of its investment in Taipei Financial Center Corp.; however, as the stock market was impacted by COVID-19 pandemic, the multiples of the referenced companies were changed significantly. With continuing impact of COVID-19 pandemic, the Company evaluated that the income approach, instead of the former market approach, would better reflect the future cash flows of Taipei Financial Center Corp. Therefore, the Company changed its valuation technique to the income approach starting from the second quarter 2021. The significant unobservable inputs used were listed in the table below. An increase in growth rate of long-term revenue, a decrease in discount for the lack of marketability or noncontrolling interests discount, or a decrease in the weighted average cost of capital (“WACC”) would result in increases in the fair values.

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	June 30, 2021		December 31, 2020		June 30, 2020
Discount for lack of marketability		14.73%-20.00%		14.73%-20.00%		13.73%-20.00%
Noncontrolling interests discount		17.29%-25.00%		17.29%-25.00%		21.45%-25.00%
Growth rate of long-term revenue		0.19%		-		-
WACC		7.60%		-		-

If the inputs to the valuation model were changed to reflect reasonably possible alternative assumptions while all the other variables were held constant, the fair values of equity investments would increase (decrease) as below table.

	June 30, 2021			June 30, 2020
Discount for lack of marketability
5% increase	$	(37,363	)	$	(332,134	)
5% decrease	$	37,363		$	332,134
Noncontrolling interests discount
5% increase	$	(23,131	)	$	(49,071	)
5% decrease	$	23,131		$	49,071
Long-term revenue growth rates
0.1% increase	$	29,354		$	—
0.1% decrease	$	(28,968	)	$	—
WACC
1% increase	$	(343,895	)	$	—
1% decrease	$	424,093		$	—

Categories of Financial Instruments

	June 30, 2021		December 31, 2020		June 30, 2020
Financial assets
Measured at FVTPL
Mandatorily measured at FVTPL	$	905,951	$	687,099	$	717,627
Hedging financial assets		—		1,752		2,358
Financial assets at amortized cost (Note a)		75,901,535		62,405,714		55,354,537
Financial assets at FVOCI		3,635,963		7,193,174		6,899,935
Financial liabilities
Measured at FVTPL
Held for trading		967		143		—
Hedging financial liabilities		14,013		—		—
Measured at amortized cost (Note b)		93,218,211		62,557,414		80,650,223

Note a: The balances included cash and cash equivalents, trade notes and accounts receivable, receivables from related parties, other current monetary assets and refundable deposits (classified as other noncurrent assets), which were financial assets measured at amortized cost.

Note b: The balances included short-term loans, short-term bills payable, trade notes and accounts payable, payables to related parties, dividends payable, partial other payables, customers’ deposits, bonds payable and long-term loans (included current portion) which were financial liabilities carried at amortized cost.

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Financial Risk Management Objectives

The main financial instruments of the Company include equity investments, trade notes and accounts receivable, trade notes and accounts payable, lease liabilities, loans, short-term bills payable and bonds payable. The Company’s Finance Department provides services to its business units, co-ordinates access to domestic and international capital markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, and liquidity risk.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors. Those derivatives are used to hedge the risks of exchange rate fluctuation arising from operating or investment activities. Compliance with policies and risk exposure limits is reviewed by the Company’s Finance Department on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Chunghwa reports the significant risk exposures and related action plans timely and actively to the audit committee and if needed to the Board of Directors.

a. Market risk

The Company is exposed to market risks of changes in foreign currency exchange rates and interest rates. The Company uses forward exchange contracts to hedge the exchange rate risk arising from assets and liabilities denominated in foreign currencies.

There were no changes to the Company’s exposure to market risks or the manner in which these risks are managed and measured.

1) Foreign currency risk

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the balance sheet dates were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Assets
USD	$	2,009,893	$	2,710,705	$	6,099,642
EUR		32,947		14,957		17,666
SGD		177,257		169,747		220,321
JPY		19,087		22,289		22,051
RMB		36,694		29,742		20,249
HKD		68,002		69,321		564
Liabilities
USD		680,387		767,553		3,944,543
EUR		429,981		957,257		179,650
SGD		927,026		1,049,225		1,072,201
JPY		9,527		9,683		9,335
RMB		18,531		201		—
HKD		8,074		7,665		9,375

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The carrying amounts of the Company’s derivatives with exchange rate risk exposures at the balance sheet dates were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Assets
USD	$	—	$	121	$	583
EUR		—		3,902		2,826
Liabilities
USD		—		143		—
EUR		14,980		—		—

Foreign currency sensitivity analysis

The Company is mainly exposed to the fluctuations of the currencies USD, EUR, SGD, JPY, RMB and HKD as listed above.

The following table details the Company’s sensitivity to a 5% increase and decrease in the functional currency against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and forward exchange contracts. A positive number below indicates an increase in pre-tax profit or equity where the functional currency weakens 5% against the relevant currency.

	Six Months Ended June 30
	2021			2020
Profit or loss
Monetary assets and liabilities (a)
USD	$	66,475		$	107,755
EUR		(19,852	)		(8,099	)
SGD		(37,488	)		(42,594	)
JPY		478			636
RMB		908			1,012
HKD		2,996			(441	)
Derivatives (b)
USD		—			(7,174	)
EUR		3,315			2,994
Equity
Derivatives (c)
EUR		38,123			9,149

a) This is mainly attributable to the exposure to foreign currency denominated receivables and payables of the Company outstanding at the balance sheet dates.

b) This is mainly attributable to forward exchange contracts.

c) This is mainly attributable to the changes in the fair value of derivatives that are designated as cash flow hedges.

For a 5% strengthening of the functional currency against the relevant currencies, there would be an equal and opposite effect on the pre-tax profit or equity for the amounts shown above.

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2) Interest rate risk

The carrying amounts of the Company’s exposures to interest rates on financial assets and financial liabilities at the balance sheet dates were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Fair value interest rate risk
Financial assets	$	31,314,501	$	24,217,959	$	13,744,471
Financial liabilities		36,310,873		36,576,137		25,606,189
Cash flow interest rate risk
Financial assets		16,164,161		9,306,397		9,305,447
Financial liabilities		1,660,000		1,667,000		1,660,000

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s pre-tax income would increase/decrease by $36,260 thousand and $19,114 thousand for the six months ended June 30, 2021 and 2020, respectively. This is mainly attributable to the Company’s exposure to floating interest rates on its financial assets and short-term and long-term loans.

3) Other price risk

The Company is exposed to equity price risks arising from holding other company’s equity. Equity investments are held for strategic rather than trading purposes. The management managed the risk through holding various risk portfolios. Further, the Company assigned finance and investment departments to monitor the price risk.

Equity price sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income would have increased/decreased by $45,298 thousand and $181,798 thousand as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI for the six months ended June 30, 2021. If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income would have increased/decreased by $35,829 thousand and $344,997 thousand as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI for the six months ended June 30, 2020.

b. Credit risk

Credit risk refers to the risk that a counterparty would default on its contractual obligations resulting in financial loss to the Company. The maximum credit exposure of the aforementioned financial instruments is equal to their carrying amounts recognized in the consolidated balance sheet as of the balance sheet date.

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The Company has large trade receivables outstanding with its customers. A substantial majority of the Company’s outstanding trade receivables are not covered by collateral or credit insurance. The Company has implemented ongoing measures including enhancing credit assessments and strengthening overall risk management to reduce its credit risk. While the Company has procedures to monitor and limit exposure to credit risk on trade receivables, there can be no assurance such procedures will effectively limit its credit risk and avoid losses. This risk is heightened during periods when economic conditions worsen.

As the Company serves a large number of unrelated consumers, the concentration of credit risk was limited.

c. Liquidity risk

The Company manages and maintains sufficient cash and cash equivalent position to support the operations and reduce the impact on fluctuation of cash flow.

1) Liquidity and interest risk tables

The following tables detailed the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company is required to pay.

June 30, 2021

	Weighted Average Effective Interest Rate (%)		Less than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		More than 5 Years		Total
Non-derivative financial liabilities
Non-interest bearing		—	$	33,443,613	$	33,403,565	$	1,269,232	$	4,815,242	$	—	$	72,931,652
Floating interest rate instruments		0.78		—		1,610,000		50,000		—		—		1,660,000
Fixed interest rate instruments		0.51		—		—		—		10,700,000		16,300,000		27,000,000
			$	33,443,613	$	35,013,565	$	1,319,232	$	15,515,242	$	16,300,000	$	101,591,652

Information about the maturity analysis for lease liabilities was as follows:

	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Lease liabilities	$	3,325,944	$	4,147,768	$	1,695,979	$	298,801	$	9,468,492

December 31, 2020

	Weighted Average Effective Interest Rate (%)		Less than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		More than 5 Years		Total
Non-derivative financial liabilities
Non-interest bearing		—	$	37,748,572	$	—	$	2,476,148	$	4,826,679	$	—	$	45,051,399
Floating interest rate instruments		0.78		—		7,000		1,660,000		—		—		1,667,000
Fixed interest rate instruments		0.50		7,000,000		—		—		8,800,000		11,200,000		27,000,000
			$	44,748,572	$	7,000	$	4,136,148	$	13,626,679	$	11,200,000	$	73,718,399

Information about the maturity analysis for lease liabilities was as follows:

	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Lease liabilities	$	3,396,908	$	4,239,587	$	1,691,426	$	409,067	$	9,736,988

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June 30, 2020

	Weighted Average Effective Interest Rate (%)		Less than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		More than 5 Years		Total
Non-derivative financial liabilities
Non-interest bearing		—	$	30,140,105	$	33,551,592	$	2,589,525	$	4,633,829	$	—	$	70,915,051
Floating interest rate instruments		0.77		10,000		—		50,000		1,600,000		—		1,660,000
Fixed interest rate instruments		0.63		—		—		16,000,000		—		—		16,000,000
			$	30,150,105	$	33,551,592	$	18,639,525	$	6,233,829	$	—	$	88,575,051

Information about the maturity analysis for lease liabilities was as follows:

	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Lease liabilities	$	3,252,439	$	4,305,632	$	1,664,807	$	564,111	$	9,786,989

The following table detailed the Company’s liquidity analysis for its derivative financial instruments. The table had been drawn up based on the undiscounted gross inflows and outflows on those derivatives that require gross settlement.

	Less than 1 Month		1-3 Months			3 Months to 1 Year		1-5 Years		Total
June 30, 2021
Gross settled
Forward exchange contracts
Inflow	$	—	$	830,043		$	—	$	—	$	830,043
Outflow		—		845,023			—		—		845,023
	$	—	$	(14,980	)	$	—	$	—	$	(14,980	)
December 31, 2020
Gross settled
Forward exchange contracts
Inflow	$	—	$	634,676		$	—	$	—	$	634,676
Outflow		—		630,796			—		—		630,796
	$	—	$	3,880		$	—	$	—	$	3,880
June 30, 2020
Gross settled
Forward exchange contracts
Inflow	$	135,609	$	252,119		$	—	$	—	$	387,728
Outflow		135,141		249,178			—		—		384,319
	$	468	$	2,941		$	—	$	—	$	3,409

- 74 -

2) Financing facilities

	June 30, 2021		December 31, 2020		June 30, 2020
Facilities of unsecured bank loan and commercial paper payable
Amount used	$	60,800	$	7,067,800	$	16,098,845
Amount unused		54,377,371		59,277,690		45,119,305
	$	54,438,171	$	66,345,490	$	61,218,150
Secured bank loan facility
Amount used	$	1,600,000	$	1,600,000	$	1,600,000
Amount unused		—		20,000		1,340,000
	$	1,600,000	$	1,620,000	$	2,940,000

38. RELATED PARTIES TRANSACTIONS

The ROC Government, one of Chunghwa’s customers, has significant equity interest in Chunghwa. Chunghwa provides fixed-line services, wireless services, internet and data and other services to the various departments and institutions of the ROC Government in the normal course of business and at arm’s-length prices. Except for those disclosed in other notes or this note, the transactions with the ROC government bodies have not been disclosed because the transactions are not individually or collectively significant. However, the related revenues and operating costs have been appropriately recorded.

a. The Company engages in business transactions with the following related parties:

Company	Relationship
Taiwan International Standard Electronics Co., Ltd.	Associate
So-net Entertainment Taiwan Limited	Associate
KKBOX Taiwan Co., Ltd.	Associate
KingwayTek Technology Co., Ltd.	Associate
UUPON Inc.	Associate (Note 2)
Taiwan International Ports Logistics Corporation	Associate
International Integrated Systems, Inc.	Subsidiary (Note 1)
Senao Networks, Inc.	Associate
EnRack Tech. Co., Ltd.	Subsidiary of the Company’s associate, Senao Networks, Inc.
Emplus Technologies, Inc.	Subsidiary of the Company’s associate, Senao Networks, Inc.
ST-2 Satellite Ventures Pte., Ltd.	Associate
CHT Infinity Singapore Pte. Ltd.	Associate
Viettel-CHT Co., Ltd.	Associate
Click Force Co., Ltd.	Associate
Alliance Digital Tech Co., Ltd.	Associate
Chunghwa PChome Fund I Co., Ltd.	Associate
Cornerstone Ventures Co., Ltd.	Associate
Next Commercial Bank Co., Ltd.	Associate
WiAdvance Technology Corporation	Associate
Chunghwa SEA Holdings	Joint venture

(Continued)

- 75 -

Company	Relationship
Other related parties
Chunghwa Telecom Foundation	A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds
Senao Technical and Cultural Foundation	A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds
Sochamp Technology Co., Ltd.	Investor of significant influence over CHST
E-Life Mall Co., Ltd.	One of the directors of E-Life Mall and a director of SENAO are members of an immediate family
Engenius Technologies Co., Ltd.	Chairman of Engenius Technologies Co., Ltd. is a member of SENAO’s management
Cheng Keng Investment Co., Ltd.	Chairman of Cheng Keng Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
Cheng Feng Investment Co., Ltd.	Chairman of Cheng Feng Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
All Oriented Investment Co., Ltd.	Chairman of All Oriented Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
Hwa Shun Investment Co., Ltd.	Chairman of Hwa Shun Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
Yu Yu Investment Co., Ltd.	Chairman of Yu Yu Investment Co., Ltd. and SENAO’s chief executive officer are members of an immediate family
United Daily News Co., Ltd.	Investor of significant influence over SFD
Shenzhen Century Communication Co., Ltd.	Investor of significant influence over SCT
Chunghwa Post Co., Ltd.	Government-related entity as Chunghwa Telecom

(Concluded)

Note 1: IISI was an associate and has become a subsidiary starting from July 1, 2020 (“acquisition date”). Please refer to Note 3 (b). All transactions between the Company were eliminated upon consolidation since the acquisition date.

Note 2: UUPON was previously an associate. As the Company did not participate in the capital increase of UUPON in October 2020; therefore, the Company lost its significant influence over UUPON. Since then, UUPON was no longer a related party of the Company. Please refer to Note 14.

b. Balances and transactions between Chunghwa and its subsidiaries, which are related parties of Chunghwa, have been eliminated on consolidation and are not disclosed in this note. Terms of the foregoing transactions with related parties were not significantly different from transactions with non-related parties. When no similar transactions with non-related parties can be referenced, terms were determined in accordance with mutual agreements. Details of transactions between the Company and other related parties are disclosed below:

- 76 -

1) Operating transactions

	Revenues
	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Associates	$	70,967	$	82,523	$	141,358	$	144,222
Others		12,788		17,836		25,566		34,828
	$	83,755	$	100,359	$	166,924	$	179,050

	Operating Costs and Expenses
	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Associates	$	109,226	$	153,715	$	247,513	$	327,665
Others		3,875		3,597		59,804		59,290
	$	113,101	$	157,312	$	307,317	$	386,955

2) Non-operating transactions

	Non-operating Income and Expenses
	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Associates	$	9,523	$	6,005	$	18,941	$	69,565
Others		201		455		552		466
	$	9,724	$	6,460	$	19,493	$	70,031

3) Receivables

	June 30, 2021		December 31, 2020		June 30, 2020
Associates	$	41,504	$	228,879	$	21,635
Others		2,439		1,817		2,940
	$	43,943	$	230,696	$	24,575

4) Contract liabilities-current

	June 30, 2021		December 31, 2020		June 30, 2020
Associates	$	182,857	$	182,857	$	304,762

- 77 -

5) Payables

	June 30, 2021		December 31, 2020		June 30, 2020
Associates	$	341,095	$	642,489	$	374,271
Others		3,108		3,455		2,811
	$	344,203	$	645,944	$	377,082

6) Customers’ deposits

	June 30, 2021		December 31, 2020		June 30, 2020
Associates	$	9,493	$	4,626	$	5,163

7) Acquisition of property, plant and equipment

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Associates	$	61,417	$	12,608	$	101,845	$	25,603

8) Disposal of property, plant and equipment

	Proceeds				Gain on Disposal
	Three Months Ended June 30				Three Months Ended June 30
	2021		2020		2021		2020
Associates	$	9,800	$	—	$	1,628	$	—
	Proceeds				Gain on Disposal
	Six Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Associates	$	9,800	$	—	$	1,628	$	—

9) Lease-in agreements

Chunghwa entered into a contract with ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. This lease term is for 15 years which should start from the official operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (SGD 260,723 thousand), including a prepayment of $3,067,711 thousand at the inception of the lease, and the rest of amount should be paid annually when ST-2 satellite starts its official operation. ST-2 satellite was launched in May 2011 and began its official operation in August 2011.

- 78 -

The lease liabilities of ST-2 Satellite Ventures Pte., Ltd. as of balance sheet dates were as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Lease liabilities—current	$	175,173	$	182,187	$	179,482
Lease liabilities—noncurrent		700,924		816,610		890,465
	$	876,097	$	998,797	$	1,069,947

The interest expense recognized for the aforementioned lease liabilities for the three months and six months ended June 30, 2021 were $1,877 thousand and $3,871 thousand, respectively. The interest expense recognized for the aforementioned lease liabilities for the three months and six months ended June 30, 2020 were $2,233 thousand and $4,645 thousand, respectively.

c. Compensation of key management personnel

The compensation of directors and key management personnel was as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Short-term employee benefits	$	73,307	$	64,713	$	164,087	$	137,079
Post-employment benefits		1,864		1,986		3,805		3,996
Share-based payment		423		21		827		41
	$	75,594	$	66,720	$	168,719	$	141,116

The compensation of directors and key management personnel was mainly determined by the compensation committee having regard to the performances and market trends.

39. PLEDGED ASSETS

The following assets are pledged as collaterals for bank loans, custom duties of the imported materials and warranties of contract performance.

	June 30, 2021		December 31, 2020		June 30, 2020
Property, plant and equipment	$	2,447,053	$	2,461,810	$	2,476,567
Land held under development (included in inventories)		1,998,733		1,998,733		1,998,733
Restricted assets (included in other assets - others)		193,844		209,638		2,850
	$	4,639,630	$	4,670,181	$	4,478,150

- 79 -

40. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Except for those disclosed in other notes, the Company’s significant commitments and contingent liabilities as of June 30, 2021 were as follows:

a. Acquisitions of land and buildings of $518,866 thousand.

b. Acquisitions of telecommunication-related inventory and equipment of $36,260,331 thousand.

c. Unused letters of credit amounting to $10,000 thousand.

d. A commitment to contribute $2,000,000 thousand to a Piping Fund administered by the Taipei City Government, of which $1,000,000 thousand was contributed by Chunghwa on August 15, 1996 (classified as other financial assets—noncurrent). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government.

e. Chunghwa committed that when its ownership interest in NCB is greater than 25% and NCB encounters financial difficulty or the capital adequacy ratio of NCB cannot meet the related regulation requirements, Chunghwa will provide financial support to assist NCB in maintaining a healthy financial condition.

41. OTHER MATTERS

The Company has assessed the economic impact of COVID-19 pandemic and determined that there were no significant impacts on the Company’s consolidated financial statements as of the date the consolidated financial statements were authorized for issue. The Company will continue to monitor developments of the pandemic and assess the related impacts.

42. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information summarizes the disclosure of foreign currencies other than the functional currency of Chunghwa and its subsidiaries. The following exchange rates are the exchange rates used to translate to the presentation currency of the consolidated financial statements, which is the NTD:

	June 30, 2021
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Assets denominated in foreign currencies
Monetary items
USD	$	72,143		27.86	$	2,009,893
EUR		994		33.15		32,947
SGD		8,551		20.73		177,257
JPY		75,713		0.252		19,087
RMB		8,516		4.309		36,694
HKD		18,958		3.587		68,002
Non-monetary items
Investments accounted for using equity method
SGD		26,443		20.73		548,166
VND		352,895,397		0.0012		421,710

(Continued)

- 80 -

	June 30, 2021
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Liabilities denominated in foreign currencies
Monetary items
USD	$	24,422		27.86	$	680,387
EUR		12,971		33.15		429,981
SGD		44,719		20.73		927,026
JPY		37,791		0.252		9,527
RMB		4,300		4.309		18,531
HKD		2,251		3.587		8,074

(Concluded)

	December 31, 2020
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Assets denominated in foreign currencies
Monetary items
USD	$	95,179		28.48	$	2,710,705
EUR		427		35.02		14,957
SGD		7,873		21.56		169,747
JPY		80,671		0.276		22,289
RMB		6,795		4.377		29,742
HKD		18,873		3.673		69,321
Non-monetary items
Investments accounted for using equity method
SGD		22,646		21.56		488,257
VND		327,497,036		0.0011		363,522
Liabilities denominated in foreign currencies
Monetary items
USD		26,951		28.48		767,553
EUR		27,335		35.02		957,257
SGD		48,665		21.56		1,049,225
JPY		35,044		0.276		9,683
RMB		46		4.377		201
HKD		2,087		3.673		7,665

- 81 -

	June 30, 2020
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Assets denominated in foreign currencies
Monetary items
USD	$	205,860		29.63	$	6,099,642
EUR		531		33.27		17,666
SGD		10,373		21.24		220,321
JPY		80,185		0.275		22,051
RMB		4,831		4.191		20,249
HKD		148		3.823		564
Non-monetary items
Investments accounted for using equity method
SGD		24,584		21.24		522,161
VND		284,392,174		0.0012		327,051
Liabilities denominated in foreign currencies
Monetary items
USD		133,127		29.63		3,944,543
EUR		5,400		33.27		179,650
SGD		50,480		21.24		1,072,201
JPY		33,946		0.275		9,335
HKD		2,452		3.823		9,375

The unrealized foreign currency exchange gains and losses were gain of $18,243 thousand and loss of $13,282 thousand for the three months ended June 30, 2021 and 2020, respectively. The unrealized foreign currency exchange gains were $79,268 thousand and $46,477 thousand for the six months ended June 30, 2021 and 2020, respectively. Due to the various foreign currency transactions and the functional currency of each individual entity of the Company, foreign exchange gains and losses cannot be disclosed by the respective significant foreign currency.

43. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the FSC for the Company:

a. Financing provided: None.

b. Endorsement/guarantee provided: Please see Table 1.

c. Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): Please see Table 2.

d. Marketable securities acquired or disposed of at costs or prices at least $300 million or 20% of the paid-in capital: Please see Table 3.

e. Acquisition of individual real estate at costs of at least $300 million or 20% of the paid-in capital: Please see Table 4.

- 82 -

f. Disposal of individual real estate at prices of at least $300 million or 20% of the paid-in capital: None.

g. Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 5.

h. Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 6.

i. Names, locations, and other information of investees on which the Company exercises significant influence (excluding investment in Mainland China): Please see Table 7.

j. Derivative instruments transactions: Please see Notes 7, 20 and 37.

k. Investments in Mainland China: Please see Table 8.

l. Intercompany relationships and significant intercompany transactions: Please see Table 9.

m. Information of main stakeholders: Please see Table 10.

44. SEGMENT INFORMATION

The Company has the following reportable segments that provide different products or services. The reportable segments are managed separately because each segment represents a strategic business unit that serves different markets. Segment information is provided to the CEO who allocates resources and assesses segment performance. The Company’s measure of segment performance is mainly based on revenues and income before income tax. The Company’s reportable segments are as follows:

a. Domestic fixed communications business—the provision of local telephone services, domestic long distance telephone services, broadband access, and related services;

b. Mobile communications business—the provision of mobile services, sales of mobile handsets and data cards, and related services;

c. Internet business—the provision of HiNet services and related services;

d. International fixed communications business—the provision of international long distance telephone services and related services;

e. Others—the provision of non-telecom services and the corporate related items not allocated to reportable segments.

Some operating segments have been aggregated into a single operating segment taking into account the following factors: (a) similar economic characteristics such as long-term gross profit margins; (b) the nature of the telecommunications products and services are similar; (c) the nature of production processes of the telecommunications products and services are similar; (d) the type or class of customer for the telecommunications products and services are similar; and (e) the methods used to provide the services to the customers are similar.

The accounting policies of the operating segments are the same as those described in Note 3.

- 83 -

Segment Revenues and Operating Results

Analysis by reportable segment of revenues and operating results of continuing operations are as follows:

	Domestic Fixed Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others			Total
For the three months ended June 30, 2021
Revenues
From external customers	$	15,605,422	$	21,772,880	$	7,787,022	$	2,171,619	$	2,264,192		$	49,601,135
Intersegment revenues		4,308,549		317,110		941,549		525,786		1,368,777			7,461,771
Segment revenues	$	19,913,971	$	22,089,990	$	8,728,571	$	2,697,405	$	3,632,969			57,062,906
Intersegment elimination													(7,461,771	)
Consolidated revenues												$	49,601,135
Segment operating costs and expenses	$	12,200,593	$	16,641,716	$	3,266,834	$	2,177,025	$	4,032,431		$	38,318,599
Segment income (loss) before income tax	$	6,584,882	$	1,619,130	$	3,434,404	$	260,630	$	(434,104	)	$	11,464,942
For the six months ended June 30, 2021
Revenues
From external customers	$	31,000,506	$	45,208,088	$	15,420,147	$	4,341,910	$	3,731,479		$	99,702,130
Intersegment revenues		8,611,246		778,452		1,874,472		1,029,506		2,959,247			15,252,923
Segment revenues	$	39,611,752	$	45,986,540	$	17,294,619	$	5,371,416	$	6,690,726			114,955,053
Intersegment elimination													(15,252,923	)
Consolidated revenues												$	99,702,130
Segment operating costs and expenses	$	23,874,239	$	35,173,348	$	6,327,853	$	4,276,773	$	7,666,039		$	77,318,252
Segment income (loss) before income tax	$	13,112,461	$	3,228,368	$	6,925,376	$	541,289	$	(1,022,204	)	$	22,785,290
For the three months ended June 30, 2020
Revenues
From external customers	$	15,691,493	$	21,101,099	$	7,429,377	$	2,178,993	$	1,406,902		$	47,807,864
Intersegment revenues		3,965,171		386,895		941,066		516,746		1,281,236			7,091,114
Segment revenues	$	19,656,664	$	21,487,994	$	8,370,443	$	2,695,739	$	2,688,138			54,898,978
Intersegment elimination													(7,091,114	)
Consolidated revenues												$	47,807,864
Segment operating costs and expenses	$	13,234,068	$	15,553,674	$	3,188,101	$	2,095,860	$	3,113,891		$	37,185,594
Segment income (loss) before income tax	$	5,257,494	$	2,565,956	$	3,199,255	$	281,687	$	(361,163	)	$	10,943,229
For the six months ended June 30, 2020
Revenues
From external customers	$	30,383,346	$	43,641,876	$	14,941,417	$	4,415,103	$	2,576,121		$	95,957,863
Intersegment revenues		7,917,380		767,090		1,864,470		1,004,563		2,543,789			14,097,292
Segment revenues	$	38,300,726	$	44,408,966	$	16,805,887	$	5,419,666	$	5,119,910			110,055,155
Intersegment elimination													(14,097,292	)
Consolidated revenues												$	95,957,863
Segment operating costs and expenses	$	25,467,257	$	32,249,775	$	6,668,235	$	4,315,469	$	6,104,027		$	74,804,763
Segment income (loss) before income tax	$	10,426,778	$	5,439,663	$	6,233,738	$	523,752	$	(1,029,298	)	$	21,594,633

Main Products and Service Revenues

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Mobile services revenue	$	14,330,646	$	14,011,222	$	28,482,692	$	28,295,872
Sales of products		9,182,902		8,535,480		19,740,850		18,049,003
Local telephone and domestic long distance telephone services revenue		6,456,719		6,665,427		12,798,271		13,277,167

(Continued)

- 84 -

	Three Months Ended June 30				Six Months Ended June 30
	2021		2020		2021		2020
Broadband access and domestic leased line services revenue	$	5,715,712	$	5,604,889	$	11,353,060	$	11,146,045
Data communications internet services revenue		5,535,401		5,355,155		10,991,222		10,660,413
International network and leased line services revenue		1,128,345		1,019,305		2,215,167		2,098,628
Others		7,251,410		6,616,386		14,120,868		12,430,735
	$	49,601,135	$	47,807,864	$	99,702,130	$	95,957,863

(Concluded)

- 85 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Endorsement/ Guarantee Provider	Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party		Maximum Balance for the Period		Ending Balance		Actual Borrowing Amount		Amount of Endorsement/ Guarantee Collateralized by Properties		Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements		Maximum Endorsement/ Guarantee Amount Allowable		Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Note
		Name	Nature of Relationship (Note 2)
1	Senao International Co., Ltd.	Aval Technologies Co., Ltd.	b	$	579,846	$	300,000	$	300,000	$	300,000	$	—		5.17	$	2,899,230	Yes	No	No	Notes 3 and 4
		Wiin Technology Co., Ltd.	b		579,846		200,000		200,000		200,000		—		3.45		2,899,230	Yes	No	No	Notes 3 and 4

Note 1: Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

a. “0” for the Company.

b. Subsidiaries are numbered from “1”.

Note 2: Relationships between the endorsement/guarantee provider and the guaranteed party:

a. A company with which it does business.

b. A company in which the Company directly and indirectly holds more than 50 percent of the voting shares.

c. A company that directly and indirectly holds more than 50 percent of the voting shares in the Company.

d. Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.

e. The Company fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

f. All capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.

g. Companies in the same industry provide among themselves jointly and severally guarantee for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

Note 3: The limits on endorsement or guarantee amount provided to each guaranteed party is up to 10% of the net assets value of the latest financial statements of Senao International Co., Ltd.

Note 4: The total amount of endorsement or guarantee that the Company is allowed to provide is up to 50% of the net assets value of the latest financial statements of Senao International Co., Ltd.

- 86 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	June 30, 2021								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Fair Value
Chunghwa Telecom Co., Ltd.	Stocks
	Taipei Financial Center Corp.		—	Financial assets at FVOCI		172,927	$	3,167,019		12	$	3,167,019	—
	Innovation Works Development Fund, L.P.		—	Financial assets at FVTPL - noncurrent		—		320,799		4		320,799	—
	Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)		—	Financial assets at FVOCI		5,252		15,475		17		15,475	—
	Global Mobile Corp.		—	Financial assets at FVOCI		7,617		—		3		—	—
	Innovation Works Limited		—	Financial assets at FVOCI		1,000		3,781		2		3,781	—
	RPTI Intergroup International Ltd.		—	Financial assets at FVOCI		4,765		—		10		—	—
	Taiwan mobile payment Co., Ltd.		—	Financial assets at FVOCI		1,200		4,241		2		4,241	—
	Taiwania Capital Buffalo Fund Co., Ltd.		—	Financial assets at FVTPL - noncurrent		600,000		582,826		13		582,826	—
	4 Gamers Entertainment Inc.		—	Financial assets at FVOCI		136		92,354		19.9		92,354	—
	UUPON Inc.		—	Financial assets at FVOCI		246		1,085		4		1,085	—
Senao International Co., Ltd.	Stocks
	N.T.U. Innovation Incubation Corporation		—	Financial assets at FVOCI		1,200		9,374		9		9,374	—
	UUPON Inc.		—	Financial assets at FVOCI		109		482		2		482	—
CHIEF Telecom Inc.	Stocks
	3 Link Information Service Co., Ltd.		—	Financial assets at FVOCI		374		1,220		10		1,220	—
	WPG Holdings Limited		—	Financial assets at FVTPL - current		9		452		—		452	Note 2
	WPG Holdings Limited		—	Financial assets at FVOCI		1,892		95,546		—		95,546	Note 2
	Taichung Commercial Bank Co., Ltd.		—	Financial assets at FVTPL - current		162		1,874		—		1,874	Note 2
Chunghwa Investment Co., Ltd.	Stocks
	Tatung Technology Inc.		—	Financial assets at FVOCI		4,571		109,237		11		109,237	—
	iSing99 Inc.		—	Financial assets at FVOCI		10,000		—		7		—	—
	Powtec ElectroChemical Corporation		—	Financial assets at FVOCI		20,000		—		2		—	—
	Bossdom Digiinnovation Co., Ltd.		—	Financial assets at FVOCI		2,000		54,200		7		54,200	Note 2
	AgriTalk Technology Inc.		—	Financial assets at FVOCI		1,650		34,711		17		34,711	—
	Imedtac Co., Ltd.		—	Financial assets at FVOCI		960		42,119		8		42,119	—
Chunghwa Hsingta Co., Ltd.	Stocks
	Cotech Engineering Fuzhou Corp.		—	Financial assets at FVOCI		—		5,119		5		5,119	—

Note 1: Showed at carrying amounts with fair value adjustments.

Note 2: Fair value was based on the closing price on June 30, 2021.

- 87 -

TABLE 3

CHUNGHWA TELECOM CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party		Nature of Relationship		Beginning Balance					Acquisition				Disposal									Ending Balance
							Shares (Thousands/ Thousand Units)		Amount			Shares (Thousands/ Thousand Units)		Amount		Shares (Thousands/ Thousand Units)		Amount		Carrying Value			Gain on Disposal		Shares (Thousands/ Thousand Units)		Amount
Chunghwa Telecom Co., Ltd.	Stocks China Airlines, Ltd.	Financial assets at FVOCI		—		—		216,639	$	2,541,176	(Note)		—	$	—		216,639	$	2,635,568	$	2,541,176	(Note)	$	94,392		—	$	—

Note:  Showing at their original investment amounts without adjustments for fair values.

- 88 -

TABLE 4

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Buyer

Property

Event Date

Transaction Amount

Payment Status

Counterparty

Relationship

Information on Previous Title Transfer If Counterparty is a Related Party

Pricing Reference

Purpose of Acquisition

Other Terms

Property Owner

Relationship

Transaction Date

Amount

Chunghwa Precision Test Tech. Co., Ltd.

Land

2021.01.18

$

534,030

The first installment $80,104 thousand was paid.

Taiwan Powder Technologies Co., Ltd.

—

Not applicable

Not applicable

Not applicable

Not applicable

According to appraisal report

Space requirements for future business expansion and operational considerations

—

- 89 -

TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Transaction Details						Abnormal Transaction				Notes / Accounts Payable or Receivable
			Purchases/Sales (Note 1)	Amount (Notes 2 and 5)		% to Total		Payment Terms	Unit Price		Payment Terms		Ending Balance (Notes 3 and 5)			% to Total
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Sales	$	1,972,565		2	30 days	$	—		—	$	53,579		—
			Purchase		263,882		1	30~90 days		—		—		(844,043	)	(8)
	Aval Technologies Co., Ltd.	Subsidiary	Purchase		244,982		—	30 days		—		—		(12,626	)	—
	CHIEF Telecom Inc.	Subsidiary	Sales		238,903		—	30 days		—		—		60,284		—
	Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		660,105		1	30 days		—		—		(310,034	)	(3)
	Honghwa International Co., Ltd.	Subsidiary	Purchase		2,929,474		6	30~60 days		—		—		(672,268	)	(6)
	Donghwa Telecom Co., Ltd.	Subsidiary	Purchase		233,955		—	90 days		—		—		(134,886	)	(1)
	Chunghwa Telecom Global, Inc.	Subsidiary	Purchase		147,146		—	90 days		—		—		(34,456	)	—
	CHT Security Co., Ltd.	Subsidiary	Purchase		155,929		—	30 days		—		—		(59,993	)	(1)
	Taiwan International Standard Electronics Co., Ltd.	Associate	Purchase		168,612		—	30~90 days		—		—		(187,291	)	(2)
	International Integrated Systems, Inc.	Subsidiary	Purchase		124,583		—	30 days		—		—		(22,155	)	—
Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		2,689,039		19	30~90 days		—		—		843,941		49
			Purchase		1,902,469		16	30 days		—		—		(50,678	)	(3)
	Aval Technologies Co., Ltd.	Subsidiary	Sales		177,614		1	60 days		—		—		55,561		3
			Purchase		135,333		1	30 days		—		—		(11,179	)	(1)
CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		130,213		10	60 days		—		—		69,613		24
			Purchase		238,172		32	30 days		—		—		(60,284	)	(45)
Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		759,951		83	30 days		—		—		307,434		71
Honghwa International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		2,990,235		99	30~60 days		—		—		670,952		99
Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		233,955		42	90 days		—		—		134,886		37
Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		147,146		54	90 days		—		—		34,456		61
CHT Security Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		129,806		27	30 days		—		—		59,976		28
International Integrated Systems, Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		124,583		8	30 days		—		—		22,155		8
Aval Technologies Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		244,982		2	30 days		—		—		12,626		1

Note 1: Purchases include costs to acquire services.

Note 2: The differences were because Chunghwa Telecom Co., Ltd. and subsidiaries classified the amount as incremental costs of obtaining contracts, property, plant and equipment, intangible assets, and operating expenses.

Note 3: Notes and accounts receivable did not include the amounts collected for others and other receivables.

Note 4: Transaction terms with related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

Note 5: All intercompany transactions, balances, income and expenses are eliminated upon consolidation.

- 90 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Ending Balance			Turnover Rate (Note 1)		Overdue				Amounts Received in Subsequent Period		Allowance for Bad Debts
								Amounts		Action Taken
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	123,309 (Note 2	)		11.21	$	—		—	$	91,716	$	—
Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		988,664 (Note 2	)		6.73		—		—		126,749		—
Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		307,434 (Note 2	)		4.68		—		—		129,989		—
Honghwa International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		670,952 (Note 2	)		8.85		—		—		96,124		—
Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		134,886 (Note 2	)		3.05		—		—		65,197		—

Note 1: Payments and receipts collected in trust for others are excluded from the accounts receivable in calculating the turnover rate.

Note 2: The amount was eliminated upon consolidation.

- 91 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

				Original Investment Amount				Balance as of June 30, 2021										Recognized
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2021		December 31, 2020		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value (Note 3)			Net Income (Loss) of the Investee			Gain (Loss) (Notes 1, 2 and 3)			Note
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Taiwan	Handset and peripherals retailer; sales of CHT mobile phone plans as an agent	$	1,065,813	$	1,065,813		71,773		28	$	1,594,687		$	262,368		$	69,312		Subsidiary (Note 5)
	Light Era Development Co., Ltd.	Taiwan	Planning and development of real estate and intelligent buildings, and property management		3,000,000		3,000,000		300,000		100		3,851,817			16,668			12,226		Subsidiary (Note 5)
	Donghwa Telecom Co., Ltd.	Hong Kong	International private leased circuit, IP VPN service, and IP transit services		691,163		1,567,453		178,590		100		598,852			(49,700	)		(49,700	)	Subsidiary (Note 5)
	Chunghwa Telecom Singapore Pte., Ltd.	Singapore	International private leased circuit, IP VPN service, and IP transit services		574,112		574,112		26,383		100		958,270			81,702			81,698		Subsidiary (Note 5)
	Chunghwa System Integration Co., Ltd.	Taiwan	Providing system integration services and telecommunications equipment		838,506		838,506		60,000		100		729,258			14,046			15,980		Subsidiary (Note 5)
	CHIEF Telecom Inc.	Taiwan	Network integration, internet data center (“IDC”), communications integration and cloud application services		459,652		459,652		39,426		56		1,982,338			324,389			186,430		Subsidiary (Note 5)
	Chunghwa Investment Co., Ltd.	Taiwan	Investment		639,559		639,559		68,085		89		3,004,718			125,564			111,827		Subsidiary (Note 5)
	Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		385,274		385,274		1		100		155,549			(3,146	)		(3,146	)	Subsidiary (Note 5)
	Honghwa International Co., Ltd.	Taiwan	Telecommunication engineering, sales agent of mobile phone plan application and other business services, etc.		180,000		180,000		18,000		100		536,269			252,737			250,801		Subsidiary (Note 5)
	CHYP Multimedia Marketing & Communications Co., Ltd.	Taiwan	Digital information supply services and advertisement services		150,000		150,000		15,000		100		188,202			9,239			9,424		Subsidiary (Note 5)
	Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Intelligent energy saving solutions, international circuit, and information and communication technology (“ICT”) services		148,275		148,275		—		100		97,535			(667	)		(667	)	Subsidiary (Note 5)
	Chunghwa Telecom Global, Inc.	United States	International private leased circuit, internet services, and transit services		70,429		70,429		6,000		100		428,908			35,098			35,292		Subsidiary (Note 5)
	CHT Security Co., Ltd.	Taiwan	Computing equipment installation, wholesale of computing and business machinery equipment and software, management consulting services, data processing services, digital information supply services and internet identify services		240,000		240,000		24,000		77		318,720			92,523			73,754		Subsidiary (Note 5)
	Chunghwa Telecom (Thailand) Co., Ltd.	Thailand	International private leased circuit, IP VPN service, ICT and cloud VAS services		119,624		119,624		1,300		100		101,902			1,157			1,157		Subsidiary (Note 5)
	Spring House Entertainment Tech. Inc.	Taiwan	Software design services, internet contents production and play, and motion picture production and distribution		62,209		62,209		8,251		56		141,616			26,179			14,671		Subsidiary (Note 5)
	Chunghwa leading Photonics Tech Co., Ltd.	Taiwan	Production and sale of electronic components and finished products		70,500		70,500		7,050		75		123,536			(3,634	)		(431	)	Subsidiary (Note 5)
	Smartfun Digital Co., Ltd.	Taiwan	Providing diversified family education digital services		65,000		65,000		6,500		65		77,211			4,848			3,156		Subsidiary (Note 5)
	Chunghwa Telecom Japan Co., Ltd.	Japan	International private leased circuit, IP VPN service, and IP transit services		17,291		17,291		1		100		92,660			10,854			10,854		Subsidiary (Note 5)
	Chunghwa Sochamp Technology Inc.	Taiwan	Design, development and production of Automatic License Plate Recognition software and hardware		20,400		20,400		2,040		51		(5,810	)		(3,802	)		(770	)	Subsidiary (Note 5)
	International Integrated Systems, Inc.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		517,423		517,423		37,211		51		615,585			57,476			20,137		Subsidiary (Note 5)

(Continued)

- 92 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

				Original Investment Amount				Balance as of June 30, 2021									Recognized
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2021		December 31, 2020		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value (Note 3)		Net Income (Loss) of the Investee			Gain (Loss) (Notes 1, 2 and 3)			Note
	Viettel-CHT Co., Ltd.	Vietnam	IDC services	$	288,327	$	288,327		—		30	$	421,710	$	93,368		$	28,023		Associate
	Taiwan International Standard Electronics Co., Ltd.	Taiwan	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000		164,000		1,760		40		419,500		212,907			88,645		Associate
	KKBOX Taiwan Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025		67,025		4,438		30		155,969		(24,178	)		(7,253	)	Associate
	So-net Entertainment Taiwan Limited	Taiwan	Online service and sale of computer hardware		120,008		120,008		9,429		30		222,909		(13,400	)		(4,020	)	Associate
	KingwayTek Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		66,684		66,684		8,688		23		256,377		29,289			7,333		Associate
	Taiwan International Ports Logistics Corporation	Taiwan	Import and export storage, logistic warehouse, and ocean shipping service		80,000		80,000		8,000		27		61,033		19,153			5,108		Associate
	Alliance Digital Tech Co., Ltd.	Taiwan	Development of mobile payments and information processing service		60,000		60,000		6,000		14		5,080		—			—		Associate
	Chunghwa PChome Fund I Co., Ltd.	Taiwan	Investment, venture capital, investment advisor, management consultant and other consultancy service		200,000		200,000		20,000		50		205,077		24,441			12,221		Associate
	Cornerstone Ventures Co., Ltd.	Taiwan	Investment, venture capital, investment advisor, management consultant and other consultancy service		4,900		4,900		490		49		6,421		739			362		Associate
	Next Commercial Bank Co., Ltd.	Taiwan	Online banking business		4,190,000		4,190,000		419,000		42		3,616,769		(388,834	)		(160,107	)	Associate
	Chunghwa SEA Holdings	Taiwan	Investment business		10,200		10,200		1,020		51		10,086		(223	)		(114	)	Joint venture
	WiAdvance Technology Corporation	Taiwan	Software solution integration		273,800		—		3,700		20		267,587		(20,467	)		(6,213	)	Associate
Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales		202,758		202,758		16,579		34		982,572		172,177			58,184		Associate
	Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment		2,253,828		2,253,828		68,875		100		240,796		(2,461	)		(2,461	)	Subsidiary (Note 5)
	Youth Co., Ltd.	Taiwan	Sale of information and communication technologies products		427,850		427,850		14,752		96		228,147		433			(3,829	)	Subsidiary (Note 5)
	Aval Technologies Co., Ltd.	Taiwan	Sale of information and communication technologies products		89,550		89,550		10,840		100		114,871		4,365			4,363		Subsidiary (Note 5)
	Senyoung Insurance Agent Co., Ltd.	Taiwan	Property and liability insurance agency		59,000		59,000		5,900		100		81,239		17,519			17,507		Subsidiary (Note 5)
CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunications and internet service		2,000		2,000		200		100		1,027		47			47		Subsidiary (Note 5)
	Chief International Corp.	Samoa Islands	Telecommunications and internet service		6,068		6,068		200		100		80,613		3,668			3,668		Subsidiary (Note 5)
Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunications satellite		409,061		409,061		18,102		38		548,166		222,952			84,722		Associate
	CHT Infinity Singapore Pte. Ltd.	Singapore	Investment business		55,720		—		2,000		40		55,720		—			—		Associate
Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech. Co., Ltd.	Taiwan	Production and sale of semiconductor testing components and printed circuit board		178,608		178,608		11,230		34		2,410,283		384,129			131,564		Subsidiary (Note 5)
	CHIEF Telecom Inc.	Taiwan	Network integration, internet data center (“IDC”), communications integration and cloud application services		19,064		19,064		2,078		3		98,327		324,389			9,567		Associate (Note 5)
	Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731		49,731		1,001		—		43,219		262,368			1,017		Associate (Note 5)
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech USA Corporation	United States	Design and after-sale services of semiconductor testing components and printed circuit board		12,636		12,636		400		100		22,276		(862	)		(1,061	)	Subsidiary (Note 5)
	CHPT Japan Co., Ltd.	Japan	Related services of electronic parts, machinery processed products and printed circuit board		2,008		2,008		1		100		2,312		58			58		Subsidiary (Note 5)

(Continued)

- 93 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

				Original Investment Amount				Balance as of June 30, 2021									Recognized
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2021		December 31, 2020		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value (Note 3)		Net Income (Loss) of the Investee			Gain (Loss) (Notes 1, 2 and 3)			Note
	Chunghwa Precision Test Tech. International, Ltd.	Samoa Islands	Wholesale and retail of electronic materials, and investment	$	173,649	$	116,790		5,700		100	$	150,425	$	2,642		$	3,000		Subsidiary (Note 5)
Prime Asia Investments Group,	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		375,274		375,274		1		100		155,549		(3,146	)		(3,146	)	Subsidiary (Note 5)
Ltd. (B.V.I.)
Senao International (Samoa) Holding Ltd.	Senao International HK Limited	Hong Kong	International investment		2,060,467		2,248,963		80,440		100		32,338		(2,551	)		(2,551	)	Subsidiary (Note 5)
Youth Co., Ltd.	ISPOT Co., Ltd.	Taiwan	Sale of information and communication technologies products		53,021		53,021		—		100		11,086		619			524		Subsidiary (Note 5)
	Youyi Co., Ltd.	Taiwan	Maintenance of information and communication technologies products		21,354		21,354		—		100		17,768		(220	)		(377	)	Subsidiary (Note 5)
Aval Technologies Co., Ltd.	Wiin Technology Co., Ltd.	Taiwan	Sale of information and communication technologies products		29,550		29,550		3,305		100		35,868		2,392			2,392		Subsidiary (Note 5)
Senyoung Insurance Agent Co., Ltd.	Senaolife Insurance Agent Co., Ltd.	Taiwan	Life insurance services		29,500		29,500		2,950		100		25,064		(1,122	)		(1,122	)	Subsidiary (Note 5)
CHYP Multimedia Marketing & Communications Co., Ltd	Click Force Marketing Company	Taiwan	Advertisement services		44,607		44,607		1,078		49		34,513		3,449			1,427		Associate
International Integrated Systems, Inc.	Infoexplorer International Co., Ltd.	Samoa	Investment		24,806		24,806		795		100		26,283		(148	)		(148	)	Subsidiary (Note 5)
	IISI Investment Co., Ltd.	Mauritius	Investment		81,302		81,302		244		100		24,042		(4,628	)		(4,628	)	Subsidiary (Note 5)
	Unitronics Technology Corp.	Taiwan	Development and maintenance of information system		55,569		55,569		5,065		99.96		75,522		5,658			5,656		Subsidiary (Note 5)
Infoexplorer International Co., Ltd.	International Integrated Systems (Hong Kong) Limited	Hong Kong	Investment and engaging in technical consulting service		24,336		24,336		780		100		26,277		(148	)		(148	)	Subsidiary (Note 5)
IISI Investment Co., Ltd.	Leading Tech Co., Ltd.	Mauritius	Investment		65,374		65,374		316		100		14,397		(3,971	)		(3,971	)	Subsidiary (Note 5)
Leading Tech Co., Ltd.	Leading Systems Co., Ltd.	Mauritius	Investment		100,693		100,693		300		100		9,651		(3,971	)		(3,971	)	Subsidiary (Note 5)

Note 1: The amounts were based on reviewed financial statements.

Note 2: Recognized gain (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.

Note 3: Recognized gain (loss) and carrying value of the investees did not include the adjustment of the difference between the accounting treatment on standalone basis and consolidated basis as a result of the application of IFRS 15.

Note 4: Investments in mainland China are included in Table 8.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

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TABLE 8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Investee	Main Businesses and Products	Total Amount of Paid-in Capital		Investment Type (Note 1)		Accumulated Outflow of Investment from Taiwan as of January  1, 2021		Investment Flows				Accumulated Outflow of Investment from Taiwan as of June 30, 2021		Net Income (Loss) of the Investee			% Ownership of Direct or Indirect Investment		Investment Gain (Loss) (Note 2)			Carrying Value as of June 30, 2021		Accumulated Inward Remittance of Earnings as of June 30, 2021		Note
								Outflow		Inflow
Senao Trading (Fujian) Co., Ltd.	Sale of information and communication technologies products	$	1,073,170		2	$	1,073,170	$	—	$	—	$	1,073,170	$	—			100	$	—		$	—	$	—	Notes 8 and 14
Senao International Trading (Shanghai) Co., Ltd.	Sale of information and communication technologies products		955,838		2		955,838		—		—		955,838		1,283			100		1,283			—		—	Notes 9 and 14
Chunghwa Telecom (China) Co., Ltd.	Integrated information and communication solution services for enterprise clients, and intelligent energy network service		177,176		2		177,176		—		—		177,176		(2,082	)		100		(2,082	)		29,662		—	Notes 11 and 14
Jiangsu Zhenghua Information Technology Company, LLC	Providing intelligent energy saving solution and intelligent buildings services		189,410		2		142,057		—		—		142,057		—			75		—			—		—	Notes 10 and 14
Shanghai Taihua Electronic Technology Limited	Design of printed circuit board and related consultation service		51,233		2		51,233		—		—		51,233		(2,602	)		100		(2,602	)		13,716		—	Note 14
Su Zhou Precision Test Tech. Ltd.	Assembly processed of circuit board, design of printed circuit board and related consultation service		62,340		2		62,340		56,859		—		119,199		5,287			100		5,287			138,286		—	Notes 12 and 14
Shanghai Chief Telecom Co., Ltd.	Telecommunications and internet service		10,150		1		4,973		—		—		4,973		458			49		224			13,572		—	Note 14
International Integrated Systems Inc. (Shanghai)	Development and maintenance of information system		48,753		2		39,923		—		—		39,923		(3,971	)		100		(3,971	)		14,478		—	Notes 13 and 14

(Continued)

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Investee	Accumulated Investment in Mainland China as of June 30, 2021		Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on Investment Stipulated by Investment Commission, MOEA
SENAO and its subsidiaries (Note 3)	$	2,029,008	$	2,239,005	$	3,487,031
Chunghwa Telecom (China) Co., Ltd. (Note 4)		177,176		177,176		223,595,428
Jiangsu Zhenghua Information Technology Company, LLC (Note 4)		142,057		142,057		223,595,428
Chunghwa Precision Test Tech Co., Ltd and its subsidiaries (Note 5)		170,432		216,185		4,222,387
Shanghai Chief Telecom Co., Ltd. (Note 6)		4,973		4,973		2,008,344
IISI and its subsidiaries (Note 7)		39,923		39,923		676,854

Note 1: Investments are divided into three categories as follows:

a. Direct investment.

b. Investments through a holding company registered in a third region.

c. Others.

Note 2: The amounts were calculated based on the investee’s reviewed financial statements.

Note 3: Senao International Co., Ltd. and its subsidiaries were calculated based on the consolidated net assets value of Senao International Co., Ltd.

Note 4: Chunghwa Telecom (China) Co., Ltd. and Jiangsu Zhenghua Information Technology Company, LLC were calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.

Note 5: Chunghwa Precision Test Tech. Co., Ltd. and its subsidiaries were calculated based on the consolidated net assets value of Chunghwa Precision Test Tech. Co., Ltd

Note 6: Shanghai Chief Telecom Co., Ltd. was calculated based on the consolidated net assets value of CHIEF Telecom Inc.

Note 7: IISI and its subsidiaries were calculated based on the consolidated net assets value of IISI.

Note 8: The liquidation of Senao Trading (Fujian) Co., Ltd. was completed in May 2019.

Note 9: Senao International Trading (Shanghai) Co., Ltd. completed its liquidation in April 2021.

Note 10: The liquidation of Jiangsu Zhenhua Information Technology Company, LLC. was completed in December 2018.

Note 11: Chunghwa Telecom (China) Co., Ltd. was approved to end and dissolve its business in August 2020. The liquidation of Chunghwa Telecom (China) Co., Ltd. is still in process.

Note 12: The difference between paid-in capital and cash invested of Su Zhou Precision Test Tech. Ltd. is due to the fact that the procedure of capital increase had not been completed as of June 30, 2021; however, the aforementioned procedure was completed in July 2021.

Note 13: International Integrated Systems Inc. (Shanghai) was approved to end and dissolve its business in June 2021. The liquidation of International Integrated Systems Inc. (Shanghai) is still in process.

Note 14: The amount was eliminated upon consolidation.

(Concluded)

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TABLE 9

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

SIX MONTHS ENDED JUNE 30, 2021

(Amounts in Thousands of New Taiwan Dollars)

Year	No. (Note 1)		Company Name	Related Party	Nature of Relationship (Note 2)		Transaction Details
							Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
2021		0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.		a	Accounts receivable	$	53,579		—		—
							Accrued custodial receipts		69,730		—		—
							Accounts payable		844,043		—		—
							Amounts collected for others		144,721		—		—
							Revenues		1,972,565		—		2
							Operating costs and expenses		241,299		—		—
							Inventories		22,583		—		—
				CHIEF Telecom Inc.		a	Accounts receivable		60,284		—		—
							Revenues		238,903		—		—
				Chunghwa System Integration Co., Ltd.		a	Accounts payable		310,034		—		—
							Operating costs and expenses		576,366		—		1
							Inventories		83,739		—		—
				Chunghwa Telecom Global Inc.		a	Accounts payable		34,456		—		—
							Operating costs and expenses		147,146		—		—
				Donghwa Telecom Co., Ltd.		a	Accounts payable		134,886		—		—
							Operating costs and expenses		233,955		—		—
				Honghwa International Co., Ltd.		a	Accounts payable		672,268		—		—
							Accrued custodial receipts		4,995		—		—
							Operating costs and expenses		2,929,474		—		3
				CHT Security Co., Ltd.		a	Accounts payable		59,993		—		—
							Operating costs and expenses		116,672		—		—
							Inventories		39,257		—		—
				International Integrated Systems, Inc.		a	Accounts payable		22,155		—		—
							Operating costs and expenses		104,251		—		—
							Inventories		20,332		—		—
				Aval Technologies Co., Ltd.		a	Accounts payable		12,626		—		—
							Operating costs and expenses		244,982		—		—

Note 1: Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

a. “0” for the Company.

b. Subsidiaries are numbered from “1”.

Note 2: Related party transactions are divided into three categories as follows:

a. The Company to subsidiaries.

b. Subsidiaries to the Company.

c. Subsidiaries to subsidiaries.

Note 3: Transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

Note 4: For assets and liabilities, amount is shown as a percentage to consolidated total assets as of June 30, 2021, while revenues, costs and expenses are shown as a percentage to consolidated revenues for the six months ended June 30, 2021.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

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TABLE 10

CHUNGHWA TELECOM CO., LTD.

INFORMATION OF MAJOR STOCKHOLDERS

JUNE 30, 2021

Name of Major Stockholders	Shares
	Number of Shares		Percentage of Ownership (%)
Ministry of Transportation and Communications		2,737,718,976		35.29
Shin Kong Life Insurance Co., Ltd.		488,964,184		6.30

Note: This table presents information provided by the Taiwan Depository & Clearing Corporation on stockholders holding greater than 5% of Chunghwa’s dematerialized securities that have completed the process of registration and delivery by book-entry transfer as of the last business day for the current quarter.

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