1934 Act Registration No. 1-31731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Dated August 10, 2023

 

 

Chunghwa Telecom Co., Ltd.

(Translation of Registrant’s Name into English)

 

 

21-3 Xinyi Road Sec. 1,

Taipei, Taiwan, 100 R.O.C.

(Address of Principal Executive Office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of form 20-F or Form 40-F.)

Form 20-F  ☒            Form 40-F  ☐

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes  ☐            No   ☒

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable )

 

 

 

EXHIBIT INDEX

 

Exhibit   

Description

99.1    To announce the differences between consolidated financial statements for the six months ended June 30, 2023 under Taiwan-IFRSs and that under IFRSs
99.2    Consolidated Financial Statements for the Six Months Ended June 30, 2023 and 2022 and Independent Auditors’ Review Report pursuant to International Financial Reporting Standards adopted by ROC (“Taiwan-IFRSs”)
99.3    Consolidated Financial Statements for the Six Months Ended June 30, 2023 and 2022 pursuant to International Financial Reporting Standards issued by the International Accounting Standards Board (“IFRSs”)

 

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant Chunghwa Telecom Co., Ltd. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 10, 2023

 

Chunghwa Telecom Co., Ltd.
By:  

/s/ Yu-Shen Chen

Name:   Yu-Shen Chen
Title:   Chief Financial Officer

 

3

Exhibit 99.1

To announce the differences between consolidated financial statements for the six months ended June 30, 2023 under Taiwan-IFRSs and that under IFRSs

Date of events: 2023/8/10

Contents:

 

1.

Date of occurrence of the event: 2023/8/10

 

2.

Of which year/ quarter financial report required to be adjusted: The second quarter of 2023

 

3.

Accounting principles applied (domestic listing securities):

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 (“Taiwan-IFRSs”)

 

4.

Inconsistent items/ amounts (domestic listing securities):

Under Taiwan-IFRSs, Chunghwa Telecom Co., Ltd. and its subsidiaries (or the “Company”) reported consolidated net income of NT$10,206,689 thousand and NT$20,079,735 thousand, consolidated net income attributable to stockholders of the parent of NT$9,921,274 thousand and NT$19,564,529 thousand, and basic earnings per share of NT$1.28 and NT$2.52 for the three months and six months ended June 30, 2023, respectively. The Company also reported total consolidated assets of NT$533,027,459 thousand, total consolidated liabilities of NT$156,265,200 thousand, and total consolidated equity of NT$376,762,259 thousand as of June 30, 2023.

 

5.

Accounting principles applied (securities issued overseas):

IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IFRSs”)

 

6.

Inconsistent items/ amounts (securities issued overseas):

Under IFRSs, the Company reported consolidated net income of NT$11,670 million and NT$21,092 million, consolidated net income attributable to stockholders of the parent of NT$11,352 million and NT$20,522 million, and basic earnings per share of NT$1.46 and NT$2.64 for the three months and six months ended June 30, 2023, respectively. The Company also reported total consolidated assets of NT$532,833 million, total consolidated liabilities of NT$157,308 million, and total consolidated equity of NT$375,525 million as of June 30, 2023.

 

7.

Cause of the inconsistency:

The differences between consolidated net income under Taiwan-IFRSs and that under IFRSs followed by the Company mainly come from the timing of the recognition of income tax on unappropriated earnings. In addition, prior to incorporation, the Company was subject to the laws and regulations applicable to state-owned enterprises in Taiwan which differed from the generally accepted accounting principles as applicable to commercial companies. As such, revenue from providing fixed line connection service and selling prepaid phone cards was recognized at the time the service was performed or the card was sold by the Company. Upon incorporation, net assets greater than the capital stock was credited as additional paid-in-capital and part of the additional paid-in-capital was from the unearned revenues generated from connection fees and prepaid cards as of the date of incorporation. Under IFRSs, revenue from connection fees and prepaid phone cards was deferred at the time of the service performed or sale and recognized as revenue over time as the service is continuously performed or as consumed. This reclassification from additional paid-in capital to retained earnings did not affect total equity.

 

8.

Any other matters that need to be specified:

Chunghwa Telecom’s earnings distribution and stockholders’ equity matters are in accordance with Taiwan-IFRSs.

 

1

Exhibit 99.2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 30, 2023 and 2022 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, 2023 and 2022, the related consolidated statements of comprehensive income for the three months ended June 30, 2023 and 2022 and for the six months ended June 30, 2023 and 2022, the consolidated statements of changes in equity and cash flows for the six months then ended, and the 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 the Standards on Review Engagements of the Republic of China 2410 “Review of Interim 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, 2023 and 2022, its consolidated financial performance for the three months ended June 30, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2023 and 2022 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.

 

- 1 -

The engagement partners on the reviews resulting in this independent auditors’ review report are Yih-Shin Kao and Mei Yen Chiang.

 

/s/ Yih-Shin Kao

    

/s/ Mei Yen Chiang

Deloitte & Touche

Taipei, Taiwan

Republic of China

August 9, 2023

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.

 

- 2 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

 

 

     June 30, 2023      December 31, 2022      June 30, 2022  
     Amount      %      Amount     %      Amount     %  

ASSETS

                

CURRENT ASSETS

                

Cash and cash equivalents (Note 6)

    $ 49,754,425        10      $ 50,192,604       10      $ 54,262,419       10  

Financial assets at fair value through profit or loss (Note 7)

      3,878        —          3,953       —          447       —    

Hedging financial assets (Note 20)

      9,932        —          12,891       —          —         —    

Contract assets (Note 29)

      6,709,840        1        6,055,343       1        5,761,613       1  

Trade notes and accounts receivable, net (Notes 9 and 29)

      21,996,030        4        24,672,473       5        22,313,300       4  

Receivables from related parties (Note 37)

      100,950        —          75,061       —          74,128       —    

Inventories (Note 10)

      10,773,399        2        11,316,406       2        11,074,016       2  

Prepayments (Note 11)

      5,401,906        1        2,398,608       —          5,273,939       1  

Other current monetary assets (Note 12)

      18,633,936        3        3,618,902       1        7,187,664       2  

Other current assets (Notes 19 and 38)

      3,681,675        1        3,555,423       1        3,869,350       1  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total current assets

      117,065,971        22        101,901,664       20        109,816,876       21  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NONCURRENT ASSETS

                

Financial assets at fair value through profit or loss (Note 7)

      1,028,334        —          1,020,203       —          928,804       —    

Financial assets at fair value through other comprehensive income (Note 8)

      3,928,302        1        3,491,381       1        3,495,394       1  

Investments accounted for using equity method (Note 14)

      7,087,064        1        7,155,851       1        7,093,369       1  

Contract assets (Note 29)

      3,414,107        1        3,136,801       1        2,855,298       1  

Property, plant and equipment (Notes 15, 34, 37 and 38)

      287,487,367        54        291,527,910       56        285,065,653       54  

Right-of-use assets (Notes 16 and 37)

      11,159,864        2        11,102,549       2        11,143,348       2  

Investment properties (Note 17)

      10,157,560        2        9,803,861       2        9,735,148       2  

Intangible assets (Notes 18 and 37)

      75,901,595        14        79,187,087       15        80,746,075       15  

Deferred income tax assets (Note 3)

      2,138,550        —          2,196,645       —          2,587,101       1  

Incremental costs of obtaining contracts (Note 29)

      950,431        —          979,914       —          950,612       —    

Net defined benefit assets (Note 3)

      5,578,735        1        5,265,721       1        3,742,639       1  

Prepayments (Notes 11 and 39)

      2,749,674        1        1,728,277       —          1,854,622       —    

Other noncurrent assets (Notes 19, 38 and 39)

      4,379,905        1        4,705,624       1        6,591,608       1  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total noncurrent assets

      415,961,488        78        421,301,824       80        416,789,671       79  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

TOTAL

    $ 533,027,459        100      $ 523,203,488       100      $ 526,606,547       100  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

LIABILITIES AND EQUITY

                

CURRENT LIABILITIES

                

Short-term loans (Note 21)

    $ 654,000        —        $ 722,000       —        $ 442,000       —    

Financial liabilities at fair value through profit or loss (Note 7)

      —          —          —         —          1,606       —    

Hedging financial liabilities (Note 20)

      —          —          —         —          7,300       —    

Contract liabilities (Notes 29 and 39)

      12,763,432        2        13,390,439       3        12,683,708       2  

Trade notes and accounts payable (Note 24)

      10,518,881        2        16,428,856       3        10,996,777       2  

Payables to related parties (Note 37)

      265,966        —          539,194       —          186,732       —    

Current tax liabilities (Note 3)

      5,128,892        1        4,956,465       1        5,017,496       1  

Lease liabilities (Notes 16, 34 and 37)

      3,330,367        1        3,338,813       1        3,246,565       1  

Dividends payable (Note 28)

      36,475,514        7        —         —          35,746,314       7  

Other payables (Notes 25 and 34)

      22,348,519        4        25,079,960       5        21,880,170       4  

Provisions (Note 26)

      224,017        —          226,019       —          225,646       —    

Other current liabilities

      894,366        —          1,016,179       —          1,058,212       —    
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total current liabilities

      92,603,954        17        65,697,925       13        91,492,526       17  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NONCURRENT LIABILITIES

                

Long-term loans (Notes 22 and 38)

      1,600,000        —          1,600,000       —          1,600,000       —    

Bonds payable (Note 23)

      30,480,098        6        30,477,357       6        30,474,718       6  

Contract liabilities (Note 29)

      7,589,167        2        7,674,095       2        7,097,750       2  

Deferred income tax liabilities (Note 3)

      2,367,566        —          2,300,845       —          2,228,568       —    

Provisions (Note 26)

      473,529        —          173,033       —          152,664       —    

Lease liabilities (Notes 16, 34 and 37)

      7,326,764        2        7,333,694       2        7,215,157       2  

Customers’ deposits (Note 37)

      5,069,394        1        5,156,700       1        5,006,033       1  

Net defined benefit liabilities (Note 3)

      2,271,964        —          2,285,224       —          2,275,937       —    

Other noncurrent liabilities

      6,482,764        1        6,726,187       1        4,980,771       1  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total noncurrent liabilities

      63,661,246        12        63,727,135       12        61,031,598       12  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total liabilities

      156,265,200        29        129,425,060       25        152,524,124       29  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 13 and 28)

                

Common stocks

      77,574,465        15        77,574,465       15        77,574,465       15  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Additional paid-in capital

      171,302,354        32        171,300,898       32        171,294,054       32  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Retained earnings

                

Legal reserve

      77,574,465        15        77,574,465       15        77,574,465       15  

Special reserve

      2,898,503        1        3,083,569       1        3,083,569       1  

Unappropriated earnings

      35,152,768        6        51,868,574       10        33,202,503       6  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total retained earnings

      115,625,736        22        132,526,608       26        113,860,537       22  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Others

      217,854        —          (223,084 )      —          (376,983 )      —    
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total equity attributable to stockholders of the parent

      364,720,409        69        381,178,887       73        362,352,073       69  

NONCONTROLLING INTERESTS (Notes 13 and 28)

      12,041,850        2        12,599,541       2        11,730,350       2  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total equity

      376,762,259        71        393,778,428       75        374,082,423       71  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

TOTAL

    $ 533,027,459        100      $ 523,203,488       100      $ 526,606,547       100  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

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

 

- 3 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

 

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  
     Amount     %      Amount     %      Amount     %      Amount     %  

REVENUES (Notes 29, 37 and 42)

    $ 53,463,651       100      $ 52,435,710       100      $ 107,674,556       100      $ 103,730,449       100  

OPERATING COSTS (Notes 10, 27, 30 and 37)

      33,076,273       62        32,345,819       62        66,706,089       62        64,036,713       62  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

GROSS PROFIT

      20,387,378       38        20,089,891       38        40,968,467       38        39,693,736       38  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OPERATING EXPENSES (Notes 9, 27, 30 and 37)

                    

Marketing

      5,603,963       10        5,591,603       11        11,275,713       10        11,036,824       11  

General and administrative

      1,630,787       3        1,542,865       2        3,287,912       3        3,090,413       2  

Research and development

      923,220       2        954,127       2        1,901,258       2        1,802,579       2  

Expected credit loss (reversal of credit loss)

      (29,559 )      —          (27,801 )      —          70,809       —          73,585       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total operating expenses

      8,128,411       15        8,060,794       15        16,535,692       15        16,003,401       15  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OTHER INCOME AND EXPENSES (Note 30)

      1,671       —          (3,085 )      —          1,627       —          (4,442 )      —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME FROM OPERATIONS

      12,260,638       23        12,026,012       23        24,434,402       23        23,685,893       23  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NON-OPERATING INCOME AND EXPENSES

                    

Interest income

      200,832       —          63,883       —          318,543       —          88,281       —    

Other income (Notes 30 and 37)

      204,143       —          209,528       —          248,929       —          253,911       —    

Other gains and losses (Notes 30, 36 and 37)

      (48,797 )      —          62,731       —          (152,761 )      —          (45,595 )      —    

Interest expenses (Notes 16, 30 and 37)

      (77,661 )      —          (64,940 )      —          (153,073 )      —          (120,952 )      —    

Share of profits of associates and joint ventures accounted for using equity method (Note 14)

      120,505       —          205,684       —          223,613       —          315,753       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total non-operating income and expenses

      399,022       —          476,886       —          485,251       —          491,398       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME BEFORE INCOME TAX

      12,659,660       23        12,502,898       23        24,919,653       23        24,177,291       23  

INCOME TAX EXPENSE (Notes 3 and 31)

      2,452,971       4        2,467,406       4        4,839,918       4        4,750,822       4  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NET INCOME

      10,206,689       19        10,035,492       19        20,079,735       19        19,426,469       19  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

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 28 and 36)

      (111,911 )      —          (79,236 )      —          436,921       —          (123,796 )      —    

Gain or loss on hedging instruments subject to basis adjustment (Note 20)

      8,736       —          (15,355 )      —          (2,959 )      —          986       —    

Share of other comprehensive income (loss) of associates and joint ventures (Note 14)

      (2,461 )      —          —         —          7,652       —          1,524       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
     (105,636 )      —          (94,591 )      —          441,614       —          (121,286 )      —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

 

(Continued)

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

 

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  
     Amount     %      Amount     %      Amount      %      Amount      %  

Items that may be reclassified subsequently to profit or loss:

                      

Exchange differences arising from the translation of the foreign operations

    $ 54,038       —        $ 74,796       —        $ 6,815        —        $ 151,846        —    

Share of other comprehensive income of associates and joint ventures (Note 14)

      2,940       —          1,781       —          2,120        —          1,587        —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     56,978       —          76,577       —          8,935        —          153,433        —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total other comprehensive income (loss), net of income tax

      (48,658 )      —          (18,014 )      —          450,549        —          32,147        —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL COMPREHENSIVE INCOME

    $ 10,158,031       19      $ 10,017,478       19      $ 20,530,284        19      $ 19,458,616        19  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NET INCOME ATTRIBUTABLE TO

                      

Stockholders of the parent

    $ 9,921,274       18      $ 9,656,841       18      $ 19,564,529        19      $ 18,716,421        18  

Noncontrolling interests

      285,415       1        378,651       1        515,206        —          710,048        1  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,206,689       19      $ 10,035,492       19      $ 20,079,735        19      $ 19,426,469        19  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

COMPREHENSIVE INCOME ATTRIBUTABLE TO

                      

Stockholders of the parent

    $ 9,872,306       18      $ 9,642,689       18      $ 20,015,580        19      $ 18,749,112        18  

Noncontrolling interests

      285,725       1        374,789       1        514,704        —          709,504        1  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,158,031       19      $ 10,017,478       19      $ 20,530,284        19      $ 19,458,616        19  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

EARNINGS PER SHARE (Note 32)

                      

Basic

    $ 1.28        $ 1.24        $ 2.52         $ 2.41     
  

 

 

       

 

 

       

 

 

        

 

 

     

Diluted

    $ 1.28        $ 1.24        $ 2.52         $ 2.41     
  

 

 

       

 

 

       

 

 

        

 

 

     

 

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

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

 

 

    Equity Attributable to Stockholders of the Parent (Notes 13, 20 and 28)              
                                  Others                    
                                        Unrealized Gain                          
                                  Exchange     or Loss on                          
                                  Differences     Financial Assets                          
                                  Arising from the     at Fair Value                          
                Retained Earnings     Translation of     Through Other     Gain or Loss           Noncontrolling        
          Additional                 Unappropriated     the Foreign     Comprehensive     on Hedging           Interests        
    Common Stocks     Paid-in Capital     Legal Reserve     Special Reserve     Earnings     Operations     Income     Instruments     Total     (Notes 13 and 28)     Total Equity  

BALANCE, JANUARY 1, 2022

   $ 77,574,465     $ 171,279,625     $ 77,574,465     $ 2,675,419     $ 50,639,022     $ (392,276 )    $ (7,588 )    $ (8,286 )    $ 379,334,846     $ 11,927,604     $ 391,262,450  

Appropriation of 2021 earnings

                      

Special reserve

     —         —         —         408,150       (408,150 )      —         —         —         —         —         —    

Cash dividends recognized by Chunghwa

     —         —         —         —         (35,746,314 )      —         —         —         (35,746,314 )      —         (35,746,314 ) 

Cash dividends recognized by subsidiaries

     —         —         —         —         —         —         —         —         —         (1,053,240 )      (1,053,240 ) 

Reversal of unclaimed dividend

     —         (117 )      —         —         —         —         —         —         (117 )      —         (117 ) 

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

     —         (1,159 )      —         —         —         —         —         —         (1,159 )      (51 )      (1,210 ) 

Net income for the six months ended June 30, 2022

     —         —         —         —         18,716,421       —         —         —         18,716,421       710,048       19,426,469  

Other comprehensive income (loss) for the six months ended June 30, 2022

     —         —         —         —         1,524       139,524       (109,343 )      986       32,691       (544 )      32,147  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the six months ended June 30, 2022

     —         —         —         —         18,717,945       139,524       (109,343 )      986       18,749,112       709,504       19,458,616  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

     —         15,705       —         —         —         —         —         —         15,705       55,033       70,738  

Net increase in noncontrolling interests

     —         —         —         —         —         —         —         —         —         91,500       91,500  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JUNE 30, 2022

   $ 77,574,465     $ 171,294,054     $ 77,574,465     $ 3,083,569     $ 33,202,503     $ (252,752 )    $ (116,931 )    $ (7,300 )    $ 362,352,073     $ 11,730,350     $ 374,082,423  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JANUARY 1, 2023

   $ 77,574,465     $ 171,300,898     $ 77,574,465     $ 3,083,569     $ 51,868,574     $ (111,213 )    $ (124,762 )    $ 12,891     $ 381,178,887     $ 12,599,541     $ 393,778,428  

Appropriation of 2022 earnings

                      

Special reserve

     —         —         —         (185,066 )      185,066       —         —         —         —         —         —    

Cash dividends recognized by Chunghwa

     —         —         —         —         (36,475,514 )      —         —         —         (36,475,514 )      —         (36,475,514 ) 

Cash dividends recognized by subsidiaries

     —         —         —         —         —         —         —         —         —         (1,091,670 )      (1,091,670 ) 

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

     —         (134 )      —         —         —         —         —         —         (134 )      —         (134 ) 

Net income for the six months ended June 30, 2023

     —         —         —         —         19,564,529       —         —         —         19,564,529       515,206       20,079,735  

Other comprehensive income (loss) for the six months ended June 30, 2023

     —         —         —         —         10,113       8,128       435,769       (2,959 )      451,051       (502 )      450,549  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the six months ended June 30, 2023

     —         —         —         —         19,574,642       8,128       435,769       (2,959 )      20,015,580       514,704       20,530,284  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

     —         1,590       —         —         —         —         —         —         1,590       19,275       20,865  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JUNE 30, 2023

   $ 77,574,465     $ 171,302,354     $ 77,574,465     $ 2,898,503     $ 35,152,768     $ (103,085 )    $ 311,007     $ 9,932     $ 364,720,409     $ 12,041,850     $ 376,762,259  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

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

 

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

 

 

     Six Months Ended June 30  
     2023     2022  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Income before income tax

    $ 24,919,653     $ 24,177,291  

Adjustments for:

     

Depreciation

      16,456,255       16,354,468  

Amortization

      3,354,416       3,274,726  

Amortization of incremental costs of obtaining contracts

      427,702       418,252  

Expected credit loss

      70,809       73,585  

Interest expense

      153,073       120,952  

Interest income

      (318,543 )      (88,281 ) 

Dividend income

      (162,168 )      (153,229 ) 

Compensation cost of share-based payment transactions

      4,818       8,019  

Share of profits of associates and joint ventures accounted for using equity method

      (223,613 )      (315,753 ) 

Loss (gain) on disposal of property, plant and equipment

      (1,627 )      4,442  

Gain on disposal of financial instruments

      —         (717 ) 

Provision for impairment loss and obsolescence of inventory (reversal of impairment loss)

      (9,167 )      62,790  

Valuation loss on financial assets and liabilities at fair value through profit or loss, net

      88,349       63,323  

Others

      15,444       104,847  

Changes in operating assets and liabilities

     

Decrease (increase) in:

     

Contract assets

      (932,937 )      (455,758 ) 

Trade notes and accounts receivable

      2,595,197       1,567,161  

Receivables from related parties

      (25,889 )      (32,600 ) 

Inventories

      552,174       190,603  

Prepayments

      (3,007,786 )      (3,000,001 ) 

Other current monetary assets

      (476,342 )      (387,099 ) 

Other current assets

      (126,252 )      (890,570 ) 

Incremental cost of obtaining contracts

      (398,219 )      (381,208 ) 

Increase (decrease) in:

     

Contract liabilities

      (711,935 )      707,126  

Trade notes and accounts payable

      (5,909,874 )      (7,062,640 ) 

Payables to related parties

      (273,228 )      (204,626 ) 

Other payables

      (2,794,666 )      (2,245,578 ) 

Provisions

      298,494       (48,368 ) 

Other current liabilities

      (105,063 )      73,444  

Net defined benefit plans

      (326,274 )      (363,288 ) 
  

 

 

    

 

 

  

Cash generated from operations

      33,132,801       31,571,313  

Interests paid

      (125,179 )      (75,034 ) 

Income taxes paid

      (4,542,675 )      (4,089,722 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      28,464,947       27,406,557  
  

 

 

    

 

 

  

 

(Continued)

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

 

 

     Six Months Ended June 30  
     2023     2022  

CASH FLOWS FROM INVESTING ACTIVITIES

     

Acquisition of financial assets at fair value through other comprehensive income

    $ —       $ (3,302 ) 

Acquisition of financial assets at fair value through profit or loss

      (115,238 )      (115,785 ) 

Proceeds from disposal of financial assets at fair value through profit or loss

      —         9,128  

Proceeds from capital reduction and profit distribution of financial assets at fair value through profit or loss

      18,833       65,967  

Acquisition of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      (28,441,589 )      (4,938,066 ) 

Proceeds from disposal of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      14,405,783       3,599,350  

Acquisition of investments accounted for using equity method

      —         (20,000 ) 

Proceeds from capital reduction of investments accounted for using equity method

      —         340,182  

Acquisition of property, plant and equipment

      (11,774,179 )      (11,783,711 ) 

Proceeds from disposal of property, plant and equipment

      12,515       4,133  

Acquisition of intangible assets

      (67,864 )      (75,367 ) 

Acquisition of investment properties

      (48,103 )      (18,333 ) 

Decrease (increase) in other noncurrent assets

      331,941       (1,742,566 ) 

Increase in prepayments for leases

      (1,016,909 )      —    

Interests received

      282,257       77,768  

Dividends received

      8,983       4,737  
  

 

 

    

 

 

  

Net cash used in investing activities

      (26,403,570 )      (14,595,865 ) 
  

 

 

    

 

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

     

Proceeds from short-term loans

      1,974,800       420,000  

Repayments of short-term loans

      (2,042,800 )      (43,000 ) 

Proceeds from issuance of bonds

      —         3,500,000  

Payments for transaction costs attributable to the issuance of bonds

      —         (4,463 ) 

Decrease in customers’ deposits

      (104,056 )      (343,909 ) 

Payments for the principal of lease liabilities

      (2,083,857 )      (1,932,403 ) 

Decrease in other noncurrent liabilities

      (243,423 )      (101,139 ) 

Cash dividends distributed to noncontrolling interests

      (5,639 )      —    

Change in other noncontrolling interests

      16,047       154,219  

Payment of claimed dividend

      —         (117 ) 
  

 

 

    

 

 

  

Net cash provided by (used in) financing activities

      (2,488,928 )      1,649,188  
  

 

 

    

 

 

  

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

      (10,628 )      23,915  
  

 

 

    

 

 

  

 

(Continued)

- 8 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

 

 

     Six Months Ended June 30  
     2023     2022  

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

    $ (438,179 )    $ 14,483,795  

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

      50,192,604       39,778,624  
  

 

 

    

 

 

  

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $ 49,754,425     $ 54,262,419  
  

 

 

    

 

 

  

 

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

- 9 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

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

 

 

1.

GENERAL

Chunghwa Telecom Co., Ltd. (“Chunghwa”; Chunghwa together with its subsidiaries are hereinafter referred to collectively as the “Company”.) 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 launched its organizational transformation based on customer-centric structure effective from January 2022. Please refer to Note 42 Segment Information for details.

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 9, 2023.

 

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, 2022. Please refer to the consolidated financial statements for the year ended December 31, 2022 for the details.

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 the 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.

 

- 10 -

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,

2023

      December 31,
2022		     

June 30,

2022

      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     
  

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      b.
  

CHYP Multimedia Marketing & Communications Co., Ltd. (“CHYP”)

   

Digital information supply services and advertisement services

      100        100        100     
  

Prime Asia Investments Group Ltd. (“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

      37        37        51      c.
  

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      d.

 

(Continued)

- 11 -

               Percentage of Ownership Interests       
Name of Investor    Name of Investee    Main Businesses and Products   

June 30,

2023

      December 31,
2022		     

June 30,

2022

      Note
  

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 identity services

      69        73        73      e.
  

International Integrated Systems, Inc. (“IISI”)

   

IT solution provider, IT application consultation, system integration and package solution

      51        51        51     

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     
  

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      g.

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     
  

Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)

   

Wholesale and retail of electronic materials, and investment

      100        100        100     
  

TestPro Investment Co., Ltd. (“TestPro”)

   

Investment

      100        100        100      j.

 

(Continued)

- 12 -

               Percentage of Ownership Interests       
Name of Investor    Name of Investee    Main Businesses and Products   

June 30,

2023

      December 31,
2022		     

June 30,

2022

      Note

TestPro Investment Co., Ltd.

   

NavCore Tech. Co., Ltd (“NavCore”)

   

Sale and manufacturing of smart equipment, smart factory software and hardware integration and technical consulting service

      54        54        54      k.

Senao International (Samoa) Holding Ltd.

   

Senao International HK Limited (“SIHK”)

   

International investment

      100        100        100      l.

Prime Asia Investments Group Ltd.

   

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      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     

International Integrated Systems, Inc.

   

Infoexplorer International Co., Ltd.(“IESA”)

   

Investment

      100        100        100      n.
  

IISI Investment Co., Ltd. (“IICL”)

   

Investment

      —        —        100      o.
  

Unitronics Technology Corp. (“UTC”)

   

Development and maintenance of information system

      99.96        99.96        99.96     

Infoexplorer International Co., Ltd.

   

International Integrated Systems (Hong Kong) Limited (“IEHK”)

   

Investment and technical consulting service

      —        100        100      p.

IISI Investment Co., Ltd.

   

Leading Tech Co., Ltd. (“LTCL”)

   

Investment

      —        —        100      o.

Leading Tech Co., Ltd.

   

Leading Systems Co., Ltd. (“LSCL”)

   

Investment

      —        —        100      o.

(Concluded)

 

a.

Chunghwa continues to control seven out of thirteen 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.

CHIEF issued new shares in March 2022 and December 2022 as its employees exercised options. Therefore, the Company’s ownership interest in CHIEF decreased to 58.72%, 58.67% and 58.67% as of June 30, 2022, December 31, 2022 and June 30, 2023, respectively.

 

c.

Chunghwa did not participate in the capital increase of CHST in November 2022. Therefore, the Company’s ownership interest in CHST decreased to 37.09%. However, Chunghwa continues to control three out of five seats of the Board of Directors of CHST. As a result, the Company treated CHST as a subsidiary.

 

d.

CLPT issued new shares in May 2023 as its employees exercised options. Therefore, the Company’s ownership interest in CLPT decreased to 74.56% as of June 30, 2023.

 

e.

CHTSC issued new shares in February 2022, May 2022, February 2023 and May 2023 as its employees exercised options. Therefore, the Company’s ownership interest in CHTSC decreased to 73.09%, 73.09% and 69.28% as of June 30, 2022, December 31, 2022 and June 30, 2023, respectively.

 

- 13 -

f.

SIS reduced 96.26% of its capital to offset accumulated deficits in November 2022. The Company’s ownership interest in SIS remained the same.

 

g.

In order to coordinate with financial planning and adjustment of organizational resources, the Board of Directors of SENYOUNG approved the merger with Senaolife. Senaolife will be the dissolved company. The merger was completed on May 1, 2023.

 

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 invested and established TestPro in March 2022. CHPT obtained 100% ownership interest of TestPro.

 

k.

TestPro invested and established NavCore in May 2022. TestPro obtained 54.25% ownership interest of NavCore.

 

l.

SIHK completed its liquidation in July 2023.

 

m.

CTC completed its liquidation in October 2022.

 

n.

The Board of Directors of IISI approved to end and dissolve the business of IESA. The liquidation of IESA is still in process.

 

o.

IICL, LTCL and LSCL completed the cancellation of registration in September 2022.

 

p.

IEHK completed the cancellation of registration in June 2023.

The following diagram presented information regarding the relationship and percentages of ownership interests between Chunghwa and its subsidiaries as of June 30, 2023.

 

LOGO

 

- 14 -

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.

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, 2022.

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 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 IFRS 16   

Leases Liability in a Sale and Leaseback

    January 1, 2024 (Note 2)

 

(Continued)

- 15 -

New, Revised or Amended Standards and Interpretations

   

Effective Date

Announced by IASB

(Note 1)

Amendments to IAS 1   

Classification of Liabilities as Current or Non-current

    January 1, 2024
Amendments to IAS 1   

Non-current Liabilities with Covenants

    January 1, 2024
Amendments to IAS 7 and IFRS 7   

Supplier Finance Arrangements

    January 1, 2024
Amendments to IAS 12   

International Tax Reform - Pillar Two Model Rules

    Note 3

(Concluded)

 

  Note 1:

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

 

  Note 2:

A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

 

  Note 3:

The requirement that the Group applies the exception and the requirement to disclose that fact is applied immediately upon issuance of the amendments and retrospectively in accordance with IAS 8. The remaining disclosure requirements are applied for annual reporting periods beginning on or after January 1, 2023, but not for any interim period ending on or before December 31, 2023.

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,
2023		      December 31,
2022		      June 30,
2022		  

Cash

         

Cash on hand

    $ 337,483      $ 471,751      $ 329,537  

Bank deposits

      9,182,377        10,423,195        12,655,287  
  

 

 

     

 

 

     

 

 

  
     9,519,860        10,894,946        12,984,824  
  

 

 

     

 

 

     

 

 

  

Cash equivalents (with maturities of less than three months)

         

Commercial papers

      24,891,477        19,592,233        17,405,434  

Negotiable certificates of deposit

      11,200,000        15,500,000        20,500,000  

Time deposits

      4,142,902        4,205,425        3,371,579  

Stimulus vouchers

      186        —          582  
  

 

 

     

 

 

     

 

 

  
     40,234,565        39,297,658        41,277,595  
  

 

 

     

 

 

     

 

 

  
   $ 49,754,425      $ 50,192,604      $ 54,262,419  
  

 

 

     

 

 

     

 

 

  

 

- 16 -

The annual yield rates of bank deposits, commercial papers, negotiable certificates of deposit and time deposits as of balance sheet dates were as follows:

 

     June 30, 2023    December 31,
2022		    June 30, 2022

Bank deposits

    0.00%~2.97%    0.00%~2.62%    0.00%~0.82%

Commercial papers

    0.65%~1.30%    0.56%~1.30%    0.35%~0.60%

Negotiable certificates of deposit

    1.20%~1.30%    1.20%~1.45%    0.55%~0.73%

Time deposits

    0.01%~4.70%    0.01%~4.65%    0.01%~1.48%

 

7.

FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Financial assets-current

         

Mandatorily measured at FVTPL

         

Derivatives (not designated for hedge)

         

Forward exchange contracts

    $ 3,444      $ 3,514      $ —    

Non-derivatives

         

Listed stocks - domestic

      434        439        447  
  

 

 

     

 

 

     

 

 

  
   $ 3,878      $ 3,953      $ 447  
  

 

 

     

 

 

     

 

 

  

Financial assets-noncurrent

         

Mandatorily measured at FVTPL

         

Non-derivatives

         

Non-listed stocks - domestic

    $ 695,572      $ 758,312      $ 694,106  

Non-listed stocks - foreign

      80,953        102,648        108,667  

Limited partnership - domestic

      225,204        135,121        117,061  

Film and drama investing agreement

      26,605        24,122        8,970  
  

 

 

     

 

 

     

 

 

  
   $ 1,028,334      $ 1,020,203      $ 928,804  
  

 

 

     

 

 

     

 

 

  

Financial liabilities-current

         

Held for trading

         

Derivatives (not designated for hedge)

         

Forward exchange contracts

    $ —        $ —        $ 1,606  
  

 

 

     

 

 

     

 

 

  

Chunghwa’s Board of Directors approved an investment in Taiwania Capital Buffalo Fund VI, L.P. at the amount of $600,000 thousand in January 2022. As of June 30, 2023, Chunghwa invested $200,000 thousand.

 

- 17 -

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

 

     Currency      Maturity
Period		     

Contract Amount

(In Thousands)

  

June 30, 2023

         

Forward exchange contracts - buy

      NT$/EUR        2023.09        NT$164,675/EUR5,000  

December 31, 2022

         

Forward exchange contracts - buy

      NT$/EUR        2023.03        NT$61,746/EUR2,000  

June 30, 2022

         

Forward exchange contracts - buy

      NT$/EUR        2022.09        NT$92,107/EUR2,900  

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.

 

8.

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Domestic investments

         

Listed stocks

    $ 268,689      $ 272,802      $ 314,447  

Non-listed stocks

      3,495,100        3,084,670        3,044,849  

Foreign investments

         

Non-listed stocks

      164,513        133,909        136,098  
  

 

 

     

 

 

     

 

 

  
   $ 3,928,302      $ 3,491,381      $ 3,495,394  
  

 

 

     

 

 

     

 

 

  

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.

 

9.

TRADE NOTES AND ACCOUNTS RECEIVABLE, NET

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Trade notes and accounts receivable

    $ 23,141,710      $ 26,037,695      $ 23,712,337  

Less: Loss allowance

      (1,145,680 )       (1,365,222 )       (1,399,037 ) 
  

 

 

     

 

 

     

 

 

  
   $ 21,996,030      $ 24,672,473      $ 22,313,300  
  

 

 

     

 

 

     

 

 

  

The main credit terms range from 30 to 90 days.

 

- 18 -

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.

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 recognize 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 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, 2023

 

    

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%       1%~20%       3%~65%       10%~81%       19%~90%       42%~96%       100 %   

Gross carrying amount

    $ 16,643,393     $ 343,155     $ 145,394     $ 93,622     $ 34,310     $ 42,670     $ 625,648     $ 17,928,192  

Loss allowance (lifetime ECL)

      (47,308 )      (21,404 )      (25,698 )      (37,870 )      (24,531 )      (38,448 )      (625,648 )      (820,907 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

    $ 16,596,085     $ 321,751     $ 119,696     $ 55,752     $ 9,779     $ 4,222     $ —       $ 17,107,285  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Project business

                 

Expected credit loss rate (Note b)

      0%~5%       5 %      10 %      30 %      50 %      80 %      100 %   

Gross carrying amount

    $ 2,310,619     $ 34,090     $ 5,994     $ 3,351     $ 900     $ —       $ 293,627     $ 2,648,581  

Loss allowance (lifetime ECL)

      (1,451 )      (1,703 )      (599 )      (1,005 )      (450 )      —         (293,627 )      (298,835 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

    $ 2,309,168     $ 32,387     $ 5,395     $ 2,346     $ 450     $ —       $ —       $ 2,349,746  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

- 19 -

December 31, 2022

 

     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%       1%~20%       3%~64%       11%~80%       25%~90%       45%~96%       100 %   

Gross carrying amount

    $ 17,162,634     $ 310,392     $ 86,500     $ 32,826     $ 27,774     $ 34,127     $ 599,316     $ 18,253,569  

Loss allowance (lifetime ECL)

      (49,644 )      (22,309 )      (19,806 )      (20,927 )      (20,085 )      (29,244 )      (599,316 )      (761,331 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

    $ 17,112,990     $ 288,083     $ 66,694     $ 11,899     $ 7,689     $ 4,883     $ —       $ 17,492,238  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Project business

                 

Expected credit loss rate (Note b)

      0%~5%       5 %      10 %      30 %      50 %      80 %      100 %   

Gross carrying amount

    $ 3,797,905     $ 119,329     $ 11,424     $ 53,189     $ 1,360     $ 785     $ 547,269     $ 4,531,261  

Loss allowance (lifetime ECL)

      (2,604 )      (6,138 )      (1,142 )      (15,986 )      (680 )      (628 )      (547,269 )      (574,447 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

    $ 3,795,301     $ 113,191     $ 10,282     $ 37,203     $ 680     $ 157     $ —       $ 3,956,814  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

June 30, 2022

 

     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%       1%~21%       2%~62%       9%~79%       23%~90%       46%~96%       100 %   

Gross carrying amount

    $ 15,954,422     $ 336,359     $ 125,266     $ 48,750     $ 31,221     $ 23,376     $ 614,087     $ 17,133,481  

Loss allowance (lifetime ECL)

      (49,888 )      (20,984 )      (22,587 )      (20,841 )      (21,984 )      (21,660 )      (614,087 )      (772,031 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

    $ 15,904,534     $ 315,375     $ 102,679     $ 27,909     $ 9,237     $ 1,716     $ —       $ 16,361,450  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Project business

                 

Expected credit loss rate (Note b)

      0%~5%       5 %      10 %      30 %      50 %      80 %      100 %   

Gross carrying amount

    $ 2,800,641     $ 25,045     $ 41,226     $ 15,420     $ 2,690     $ 1,751     $ 578,378     $ 3,465,151  

Loss allowance (lifetime ECL)

      (3,224 )      (1,734 )      (4,324 )      (5,145 )      (2,089 )      (1,575 )      (578,378 )      (596,469 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

    $ 2,797,417     $ 23,311     $ 36,902     $ 10,275     $ 601     $ 176     $ —       $ 2,868,682  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

  Note a:

Please refer to Note 42 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  
     2023      2022  

Beginning balance

    $ 1,365,222      $ 1,604,835  

Add: Provision for credit loss

      77,380        71,734  

Less: Amounts written off

      (296,922 )       (277,532 ) 
  

 

 

     

 

 

  

Ending balance

    $ 1,145,680      $ 1,399,037  
  

 

 

     

 

 

  

 

- 20 -

10.

INVENTORIES

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Merchandise

    $ 3,375,788      $ 3,977,853      $ 3,426,374  

Project in process

      4,958,350        4,859,226        5,134,452  

Work in process

      90,293        98,712        167,516  

Raw materials

      247,108        279,022        257,658  
  

 

 

     

 

 

     

 

 

  
     8,671,539        9,214,813        8,986,000  

Land held under development

      1,998,733        1,998,733        1,998,733  

Construction in progress

      103,127        102,860        89,283  
  

 

 

     

 

 

     

 

 

  
   $ 10,773,399      $ 11,316,406      $ 11,074,016  
  

 

 

     

 

 

     

 

 

  

The operating costs related to inventories were $11,694,662 thousand (including the reversal of valuation loss on inventories of $14,441 thousand) and $24,195,528 thousand (including the reversal of valuation loss on inventories of $9,167 thousand) for the three months and six months ended June 30, 2023, respectively. The operating costs related to inventories were $11,224,527 thousand (including the valuation loss on inventories of $22,338 thousand) and $22,724,637 thousand (including the valuation loss on inventories of $62,790 thousand) for the three months and six months ended June 30, 2022, respectively.

As of June 30, 2023, December 31, 2022 and June 30, 2022, inventories of $2,101,860 thousand, $2,101,593 thousand and $2,088,016 thousand, respectively, were expected to be realized from the sale 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 mainly 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. LED entrusts Land Bank of Taiwan to execute fund control and property right management for the land held under development.

 

11.

PREPAYMENTS

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Prepaid salary and bonus

    $ 2,769,068      $ 4,159      $ 2,843,270  

Prepaid rents

      2,294,644        2,316,088        2,424,586  

Prepayments for leases - satellite (Note 39)

      1,016,909        —          —    

Others

      2,070,959        1,806,638        1,860,705  
  

 

 

     

 

 

     

 

 

  
   $ 8,151,580      $ 4,126,885      $ 7,128,561  
  

 

 

     

 

 

     

 

 

  

Current

         

Prepaid salary and bonus

    $ 2,769,068      $ 4,159      $ 2,843,270  

Prepaid rents

      567,744        589,506        585,461  

Others

      2,065,094        1,804,943        1,845,208  
  

 

 

     

 

 

     

 

 

  
   $ 5,401,906      $ 2,398,608      $ 5,273,939  
  

 

 

     

 

 

     

 

 

  

 

(Continued)

- 21 -

     June 30, 2023      December 31,
2022		      June 30, 2022  

Noncurrent

         

Prepaid rents

    $ 1,726,900      $ 1,726,582      $ 1,839,125  

Prepayments for leases - satellite (Note 39)

      1,016,909        —          —    

Others

      5,865        1,695        15,497  
  

 

 

     

 

 

     

 

 

  
   $ 2,749,674      $ 1,728,277      $ 1,854,622  
  

 

 

     

 

 

     

 

 

  

(Concluded)

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, 2023      December 31,
2022		      June 30, 2022  

Time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

    $ 15,961,472      $ 1,915,755      $ 4,879,382  

Accrued custodial receipts

      822,059        815,547        765,442  

Others

      1,850,405        887,600        1,542,840  
  

 

 

     

 

 

     

 

 

  
   $ 18,633,936      $ 3,618,902      $ 7,187,664  
  

 

 

     

 

 

     

 

 

  

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

 

     June 30, 2023    December 31,
2022		    June 30, 2022

Time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

    0.03%~4.75%    0.03%~3.00%    0.03%~2.70%

 

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,
2023		   December 31,
2022		   June 30,
2022

SENAO

      Taiwan      72%   72%   72%

CHPT

      Taiwan      66%   66%   66%

 

- 22 -

     Profit Allocated to Noncontrolling Interests  
     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

SENAO

    $ 121,353      $ 78,820      $ 262,551      $ 208,900  
  

 

 

     

 

 

     

 

 

     

 

 

  

CHPT

    $ 15,427      $ 163,286      $ (11,405 )     $ 237,203  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Accumulated Noncontrolling Interests  
     June 30, 2023      December 31,
2021		      June 30, 2022  

SENAO

    $ 4,447,611      $ 4,592,326      $ 4,308,418  

CHPT

      4,992,674        5,259,231        5,002,516  

Individually immaterial subsidiaries with noncontrolling interests

      2,601,565        2,747,984        2,419,416  
  

 

 

     

 

 

     

 

 

  
   $ 12,041,850      $ 12,599,541      $ 11,730,350  
  

 

 

     

 

 

     

 

 

  

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, 2023      December 31,
2022		      June 30, 2022  

Current assets

    $ 6,957,630      $ 7,249,222      $ 6,776,129  

Noncurrent assets

      3,314,764        3,211,081        3,166,231  

Current liabilities

      (3,652,273 )       (3,680,470 )       (3,532,028 ) 

Noncurrent liabilities

      (500,927 )       (459,666 )       (485,983 ) 
  

 

 

     

 

 

     

 

 

  

Equity

    $ 6,119,194      $ 6,320,167      $ 5,924,349  
  

 

 

     

 

 

     

 

 

  

Equity attributable to the parent

    $ 1,671,583      $ 1,727,841      $ 1,615,931  

Equity attributable to noncontrolling interests

      4,447,611        4,592,326        4,308,418  
  

 

 

     

 

 

     

 

 

  
   $ 6,119,194      $ 6,320,167      $ 5,924,349  
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Revenues and income

    $ 7,168,743      $ 7,059,947      $ 15,485,630      $ 15,230,849  

Costs and expenses

      6,999,658        6,950,100        15,119,866        14,939,790  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit for the period

    $ 169,085      $ 109,847      $ 365,764      $ 291,059  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit attributable to the parent

    $ 47,732      $ 31,027      $ 103,213      $ 82,159  

Profit attributable to noncontrolling interests

      121,353        78,820        262,551        208,900  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit for the period

    $ 169,085      $ 109,847      $ 365,764      $ 291,059  
  

 

 

     

 

 

     

 

 

     

 

 

  

(Continued)

 

- 23 -

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Other comprehensive income attributable to the parent

    $ 795      $ 1,000      $ 400      $ 1,874  

Other comprehensive income attributable to noncontrolling interests

      2,026        2,546        1,019        4,888  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other comprehensive income for the period

    $ 2,821      $ 3,546      $ 1,419      $ 6,762  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income attributable to the parent

    $ 48,527      $ 32,027      $ 103,613      $ 84,033  

Total comprehensive income attributable to noncontrolling interests

      123,379        81,366        263,570        213,788  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income for the period

    $ 171,906      $ 113,393      $ 367,183      $ 297,821  
  

 

 

     

 

 

     

 

 

     

 

 

  

(Concluded)

 

     Six Months Ended June 30  
     2023      2022  

Net cash flow from operating activities

    $ 814,833      $ (806,744 ) 

Net cash flow from investing activities

      (14,379 )       (18,628 ) 

Net cash flow from financing activities

      (154,095 )       (155,457 ) 

Effect of exchange rate changes on cash and cash equivalents

      8        467  
  

 

 

     

 

 

  

Net cash inflow (outflow)

    $ 646,367      $ (980,362 ) 
  

 

 

     

 

 

  

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, 2023      December 31,
2022		      June 30, 2022  

Current assets

    $ 4,092,226      $ 4,406,032      $ 4,498,744  

Noncurrent assets

      4,572,792        4,630,788        4,592,921  

Current liabilities

      (1,083,530 )       (1,051,544 )       (1,500,995 ) 

Noncurrent liabilities

      (20,199 )       (25,975 )       (29,045 ) 
  

 

 

     

 

 

     

 

 

  

Equity

    $ 7,561,289      $ 7,959,301      $ 7,561,625  
  

 

 

     

 

 

     

 

 

  

Equity attributable to CHI

    $ 2,568,615      $ 2,700,070      $ 2,559,109  

Equity attributable to noncontrolling interests

      4,992,674        5,259,231        5,002,516  
  

 

 

     

 

 

     

 

 

  
   $ 7,561,289      $ 7,959,301      $ 7,561,625  
  

 

 

     

 

 

     

 

 

  

 

- 24 -

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Revenues and income

    $ 754,737      $ 1,196,333      $ 1,461,596      $ 2,042,651  

Costs and expenses

      727,315        947,100        1,471,551        1,680,996  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit (loss) for the period

    $ 27,422      $ 249,233      $ (9,955 )     $ 361,655  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit attributable to CHI

    $ 11,995      $ 85,947      $ 1,450      $ 124,452  

Profit (loss) attributable to noncontrolling interests

      15,427        163,286        (11,405 )       237,203  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit (loss) for the period

    $ 27,422      $ 249,233      $ (9,955 )     $ 361,655  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) attributable to CHI

    $ (929 )     $ 126      $ (954 )     $ 3,148  

Other comprehensive income (loss) attributable to noncontrolling interests

      (1,784 )       238        (1,832 )       6,041  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) for the period

    $ (2,713 )     $ 364      $ (2,786 )     $ 9,189  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income attributable to CHI

    $ 11,066      $ 86,073      $ 496      $ 127,600  

Total comprehensive income (loss) attributable to noncontrolling interests

      13,643        163,524        (13,237 )       243,244  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income (loss) for the period

    $ 24,709      $ 249,597      $ (12,741 )     $ 370,844  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Six Months Ended June 30  
     2023      2022  

Net cash flow from operating activities

    $ 58,127      $ 589,886  

Net cash flow from investing activities

      (158,092 )       (784,515 ) 

Net cash flow from financing activities

      (10,814 )       79,949  

Effect of exchange rate changes on cash and cash equivalents

      1,346        9,650  
  

 

 

     

 

 

  

Net cash outflow

    $ (109,433 )     $ (105,030 ) 
  

 

 

     

 

 

  

Dividends paid to noncontrolling interests

    $ —        $ —    
  

 

 

     

 

 

  

 

- 25 -

  b.

Equity transactions with noncontrolling interests

CHIEF issued new shares in March 2022 and December 2022 as its employees exercised options. Therefore, the Company’s ownership interest in CHIEF decreased. See Note 33(a) for details.

CHTSC issued new shares in February 2022, May 2022, February 2023 and May 2023 as its employees exercised options. Therefore, the Company’s ownership interest in CHTSC decreased. See Note 33(b) for details.

CLPT issued new shares in May 2023 as its employees exercised options. Therefore, the Company’s ownership interest in CLPT decreased. See Note 33(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, 2023 and 2022 were as follows:

 

     Six Months Ended June 30, 2023  
     CHTSC
Share-Based
Payment		     

CLPT

Share-Based
Payment

  

Cash consideration received from noncontrolling interests

    $ 15,173      $ 874  

The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests

      (13,507 )       (950 ) 
  

 

 

     

 

 

  

Differences arising from equity transactions

    $ 1,666      $ (76 ) 
  

 

 

     

 

 

  

Line items for equity transaction adjustments

      

Additional paid-in capital - arising from changes in equities of subsidiaries

    $ 1,666      $ (76 ) 
  

 

 

     

 

 

  

Note: The proceeds from the new shares issued in February 2023 by CHTSC has been received in advance in December 2022.

 

     Six Months Ended June 30, 2022  
     CHIEF
Share-Based
Payment		     

CHTSC

Share-Based
Payment

  

Cash consideration received from noncontrolling interests

    $ 27,317      $ 35,402  

The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests

      (16,977 )       (30,037 ) 
  

 

 

     

 

 

  

Differences arising from equity transactions

    $ 10,340      $ 5,365  
  

 

 

     

 

 

  

Line items for equity transaction adjustments

      

Additional paid-in capital - arising from changes in equities of subsidiaries

    $ 10,340      $ 5,365  
  

 

 

     

 

 

  

 

- 26 -

14.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Investments in associates

    $ 7,077,477      $ 7,146,174      $ 7,083,529  

Investment in joint venture

      9,587        9,677        9,840  
  

 

 

     

 

 

     

 

 

  
   $ 7,087,064      $ 7,155,851      $ 7,093,369  
  

 

 

     

 

 

     

 

 

  

 

  a.

Investments in associates

Investments in associates were as follows:

 

     Carrying Amount  
     June 30, 2023      December 31,
2022		      June 30, 2022  

Material associate

         

Non-listed

         

Next Commercial Bank Co., Ltd. (“NCB”)

    $ 2,984,516      $ 3,173,309      $ 3,427,110  
  

 

 

     

 

 

     

 

 

  

Associates that are not individually material

         

Listed

         

Senao Networks, Inc. (“SNI”)

      1,483,677        1,395,858        1,177,335  

KingwayTek Technology Co., Ltd. (“KWT”)

      260,023        267,125        257,571  

Non-listed

         

Viettel-CHT Co., Ltd. (“Viettel-CHT”)

      507,341        558,532        477,560  

Taiwan International Standard Electronics Co., Ltd. (“TISE”)

      342,106        296,501        275,986  

ST-2 Satellite Ventures Pte., Ltd. (“STS”)

      321,009        246,815        264,544  

Chunghwa PChome Fund I Co., Ltd. (“CPFI”)

      263,296        277,776        303,018  

So-net Entertainment Taiwan Limited (“So-net”)

      230,692        228,184        225,944  

WiAdvance Technology Corporation (“WATC”)

      218,083        227,868        244,670  

KKBOX Taiwan Co., Ltd. (“KKBOXTW”)

      176,276        173,634        163,537  

Taiwan International Ports Logistics Corporation (“TIPL”)

      103,918        101,078        84,527  

CHT Infinity Singapore Pte. Ltd. (“CISG”)

      59,007        62,948        58,673  

Click Force Co., Ltd. (“CF”)

      42,424        40,932        40,963  

Imedtac Co., Ltd. (“IME”)

      37,775        40,866        40,323  

AgriTalk Technology Inc. (“ATT”)

      32,396        34,738        17,328  

 

(Continued)

- 27 -

     Carrying Amount  
     June 30, 2023      December 31,
2022		      June 30, 2022  

Baohwa Trust Co., Ltd. (“BHT”)

    $ 7,825      $ 13,267      $ 17,815  

Cornerstone Ventures Co., Ltd. (“CVC”)

      7,113        6,743        6,625  
  

 

 

     

 

 

     

 

 

  
     4,092,961        3,972,865        3,656,419  
  

 

 

     

 

 

     

 

 

  
   $ 7,077,477      $ 7,146,174      $ 7,083,529  
  

 

 

     

 

 

     

 

 

  

(Concluded)

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, 2023      December 31,
2022		      June 30, 2022  

Material associate

         

Non-listed

         

Next Commercial Bank Co., Ltd. (“NCB”)

      42        42        42  

Associates that are not individually material

         

Listed

         

Senao Networks, Inc. (“SNI”)

      34        34        34  

KingwayTek Technology Co., Ltd. (“KWT”)

      23        23        23  

Non-listed

         

Viettel-CHT Co., Ltd. (“Viettel-CHT”)

      30        30        30  

Taiwan International Standard Electronics Co., Ltd. (“TISE”)

      40        40        40  

ST-2 Satellite Ventures Pte., Ltd. (“STS”)

      38        38        38  

Chunghwa PChome Fund I Co., Ltd. (“CPFI”)

      50        50        50  

So-net Entertainment Taiwan Limited (“So-net”)

      30        30        30  

WiAdvance Technology Corporation (“WATC”)

      20        20        20  

KKBOX Taiwan Co., Ltd. (“KKBOXTW”)

      30        30        30  

Taiwan International Ports Logistics Corporation (“TIPL”)

      27        27        27  

CHT Infinity Singapore Pte. Ltd. (“CISG”)

      40        40        40  

Click Force Co., Ltd. (“CF”)

      49        49        49  

Imedtac Co., Ltd. (“IME”)

      7        7        7  

 

(Continued)

- 28 -

     % of Ownership Interests and Voting Rights  
     June 30, 2023      December 31,
2022		      June 30, 2022  

AgriTalk Technology Inc. (“ATT”)

      29        29        17  

Baohwa Trust Co., Ltd. (“BHT”)

      40        40        40  

Cornerstone Ventures Co., Ltd. (“CVC”)

      49        49        49  

(Concluded)

Summarized financial information of NCB was set out below:

 

     June 30, 2023     December 31,
2022		     June 30, 2022  

Assets

    $ 35,480,775     $ 33,540,595     $ 18,336,032  

Liabilities

      (28,280,404 )      (25,882,268 )      (10,064,600 ) 
  

 

 

    

 

 

    

 

 

  

Equity

    $ 7,200,371     $ 7,658,327     $ 8,271,432  
  

 

 

    

 

 

    

 

 

  

The percentage of ownership interest held by the Company

      41.90 %      41.90 %      41.90 % 

Equity attributable to the Company

    $ 3,016,955     $ 3,208,839     $ 3,465,730  

Unrealized gain or loss from downstream transactions

      (32,439 )      (35,530 )      (38,620 ) 
  

 

 

    

 

 

    

 

 

  

The carrying amount of investment

    $ 2,984,516     $ 3,173,309     $ 3,427,110  
  

 

 

    

 

 

    

 

 

  

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Net revenues (losses)

    $ 4,378      $ (12,081 )     $ (8,111 )     $ 16,025  
  

 

 

     

 

 

     

 

 

     

 

 

  

Net loss for the period

    $ (229,468 )     $ (243,520 )     $ (460,367 )     $ (391,399 ) 

Other comprehensive income (loss)

      2,805        (1,998 )       2,411        (9,636 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive loss for the period

    $ (226,663 )     $ (245,518 )     $ (457,956 )     $ (401,035 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

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  
     2023      2022      2023      2022  

The Company’s share of profits

    $ 215,121      $ 306,206      $ 413,506      $ 476,751  

The Company’s share of other comprehensive income (loss)

      (696 )       2,618        8,762        7,148  
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s share of total comprehensive income

    $ 214,425      $ 308,824      $ 422,268      $ 483,899  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 29 -

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

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

SNI

    $ 4,227,653      $ 3,299,228      $ 2,893,041  
  

 

 

     

 

 

     

 

 

  

KWT

    $ 1,098,529      $ 804,187      $ 783,640  
  

 

 

     

 

 

     

 

 

  

WATC issued new shares in March 2022, October 2022 and April 2023 as its employees exercised option. Therefore, the Company’s ownership interest in WATC decreased to 20.05% and 19.98% as of December 31, 2022 and June 30, 2023, respectively.

The Company subscribed for all the shares in the capital increase of ATT in November 2022. Therefore, the Company’s ownership interest in ATT increased to 29.33% as of December 31, 2022.

STS reduced its capital by $340,182 thousand in April 2022. The Company’s ownership interest in STS remained the same.

The Company invested $20,000 thousand and obtained 40.00% ownership interest in BHT in March 2022. BHT mainly engages in VR integration and AIoT security services.

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 invested and obtained 6.74% ownership interest in IME. However, as the Company continues to control one out of five seats of the Board of Directors of IME and has significant influence over IME. Therefore, the Company recognized IME as an investment in associate.

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, 2023      December 31,
2022		      June 30, 2022      June 30, 2023     December 31,
2022		     June 30, 2022  

Non-listed

                

Chunghwa SEA Holdings (“CHT SEA”)

    $ 9,587      $ 9,677      $ 9,840        51 %      51 %      51 % 
  

 

 

     

 

 

     

 

 

         

 

- 30 -

The Company invested and established a joint venture, CHT SEA, with Delta Electronics, Inc. and Kwang Hsing Industrial Co., Ltd. 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.

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  
     2023      2022      2023      2022  

The Company’s share of loss

    $ (15 )     $ (32 )     $ (90 )     $ (92 ) 

The Company’s share of other comprehensive income

      —          —          —          —    
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s share of total comprehensive loss

    $ (15 )     $ (32 )     $ (90 )     $ (92 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

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, 2023      December 31,
2022		      June 30, 2022  

Assets used by the Company

    $ 279,806,589      $ 285,328,919      $ 277,899,950  

Assets subject to operating leases

      7,680,778        6,198,991        7,165,703  
  

 

 

     

 

 

     

 

 

  
   $ 287,487,367      $ 291,527,910      $ 285,065,653  
  

 

 

     

 

 

     

 

 

  

 

  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, 2022

   $ 102,644,714     $ 1,661,628     $ 71,358,036     $ 11,217,048     $ 713,534,222     $ 3,927,337     $ 10,808,873     $ 10,786,149     $ 925,938,007  

Additions

     —         —         20,521       52,618       56,557       —         75,757       10,128,015       10,333,468  

Disposal

     —         (6,042 )      (287 )      (281,867 )      (10,139,400 )      (57,345 )      (115,153 )      —         (10,600,094 ) 

Effect of foreign exchange differences

     —         —         —         101       127,367       —         2,612       10,971       141,051  

Others

     (62,930 )      5,727       157,982       164,428       11,725,566       529       200,891       (12,135,804 )      56,389  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2022

   $ 102,581,784     $ 1,661,313     $ 71,536,252     $ 11,152,328     $ 715,304,312     $ 3,870,521     $ 10,972,980     $ 8,789,331     $ 925,868,821  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated depreciation and impairment

                  

Balance on January 1, 2022

   $ —       $ (1,441,612 )    $ (30,577,570 )    $ (9,632,046 )    $ (590,533,289 )    $ (3,698,978 )    $ (8,205,324 )    $ —       $ (644,088,819 ) 

Depreciation expenses

     —         (19,987 )      (715,119 )      (373,162 )      (12,802,929 )      (38,988 )      (364,628 )      —         (14,314,813 ) 

Disposal

     —         6,042       287       281,694       10,134,218       57,345       111,933       —         10,591,519  

Effect of foreign exchange differences

     —         —         —         (98 )      (67,072 )      5       (1,594 )      —         (68,759 ) 

Others

     —         —         (64,607 )      (3,571 )      (9,959 )      (191 )      (9,671 )      —         (87,999 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2022

   $ —       $ (1,455,557 )    $ (31,357,009 )    $ (9,727,183 )    $ (593,279,031 )    $ (3,680,807 )    $ (8,469,284 )    $ —       $ (647,968,871 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2022, net

   $ 102,644,714     $ 220,016     $ 40,780,466     $ 1,585,002     $ 123,000,933     $ 228,359     $ 2,603,549     $ 10,786,149     $ 281,849,188  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2022, net

   $ 102,581,784     $ 205,756     $ 40,179,243     $ 1,425,145     $ 122,025,281     $ 189,714     $ 2,503,696     $ 8,789,331     $ 277,899,950  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(Continued)

- 31 -

    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, 2023

   $ 103,663,528     $ 1,675,255     $ 72,529,774     $ 11,088,877     $ 720,068,323     $ 3,971,039     $ 11,467,527     $ 14,427,497     $ 938,891,820  

Additions

     95,567       —         12,302       45,157       36,184       1,248       80,714       10,435,377       10,706,549  

Disposal

     (1,672 )      —         —         (526,959 )      (12,522,117 )      (66,934 )      (174,843 )      —         (13,292,525 ) 

Effect of foreign exchange differences

     —         —         —         16       20,528       (48 )      (903 )      1,887       21,480  

Others

     (1,049,463 )      6,954       (1,329,846 )      150,293       13,023,182       8,176       405,990       (13,563,590 )      (2,348,304 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2023

   $ 102,707,960     $ 1,682,209     $ 71,212,230     $ 10,757,384     $ 720,626,100     $ 3,913,481     $ 11,778,485     $ 11,301,171     $ 933,979,020  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated depreciation and impairment

                  

Balance on January 1, 2023

   $ —       $ (1,474,085 )    $ (32,263,200 )    $ (9,553,580 )    $ (597,957,285 )    $ (3,672,728 )    $ (8,642,023 )    $ —       $ (653,562,901 ) 

Depreciation expenses

     —         (17,062 )      (717,346 )      (342,302 )      (12,849,896 )      (45,232 )      (395,488 )      —         (14,367,326 ) 

Disposal

     —         —         —         526,879       12,513,824       66,842       174,092       —         13,281,637  

Effect of foreign exchange differences

     —         —         —         (18 )      (12,586 )      51       1,235       —         (11,318 ) 

Others

     —         —         537,612       (17,470 )      (38,119 )      (247 )      5,701       —         487,477  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2023

   $ —       $ (1,491,147 )    $ (32,442,934 )    $ (9,386,491 )    $ (598,344,062 )    $ (3,651,314 )    $ (8,856,483 )    $ —       $ (654,172,431 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2023, net

   $ 103,663,528     $ 201,170     $ 40,266,574     $ 1,535,297     $ 122,111,038     $ 298,311     $ 2,825,504     $ 14,427,497     $ 285,328,919  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2023, net

   $ 102,707,960     $ 191,062     $ 38,769,296     $ 1,370,893     $ 122,282,038     $ 262,167     $ 2,922,002     $ 11,301,171     $ 279,806,589  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Concluded)

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, 2023 and 2022.

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

      2~10 years  

Miscellaneous equipment

   

Leasehold improvements

      1~9 years  

Mechanical and air conditioner equipment

      3~16 years  

Others

      1~15 years  

 

  b.

Assets subject to operating leases

 

     Land      Buildings      Total  

Cost

         

Balance on January 1, 2022

    $ 4,808,926      $ 4,133,989      $ 8,942,915  

Others

      80,901        (264,203 )       (183,302 ) 
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2022

    $ 4,889,827      $ 3,869,786      $ 8,759,613  
  

 

 

     

 

 

     

 

 

  

Accumulated depreciation and impairment

         

Balance on January 1, 2022

    $ —      $ (1,691,642 )     $ (1,691,642 ) 

Depreciation expenses

      —        (36,419 )       (36,419 ) 

Others

      —        134,151        134,151  
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2022

    $ —      $ (1,593,910 )     $ (1,593,910 ) 
  

 

 

     

 

 

     

 

 

  

 

(Continued)

- 32 -

     Land      Buildings      Total  

Balance on January 1, 2022, net

    $ 4,808,926      $ 2,442,347      $ 7,251,273  
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2022, net

    $ 4,889,827      $ 2,275,876      $ 7,165,703  
  

 

 

     

 

 

     

 

 

  

Cost

         

Balance on January 1, 2023

    $ 4,376,196      $ 3,185,097      $ 7,561,293  

Additions

      —          1,129        1,129  

Others

      722,806        1,287,717        2,010,523  
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2023

    $ 5,099,002      $ 4,473,943      $ 9,572,945  
  

 

 

     

 

 

     

 

 

  

Accumulated depreciation and impairment

         

Balance on January 1, 2023

    $ —        $ (1,362,302 )     $ (1,362,302 ) 

Depreciation expenses

      —          (40,071 )       (40,071 ) 

Others

      —          (489,794 )       (489,794 ) 
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2023

    $ —        $ (1,892,167 )     $ (1,892,167 ) 
  

 

 

     

 

 

     

 

 

  

Balance on January 1, 2023, net

    $ 4,376,196      $ 1,822,795      $ 6,198,991  
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2023, net

    $ 5,099,002      $ 2,581,776      $ 7,680,778  
  

 

 

     

 

 

     

 

 

  

(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, 2023      December 31,
2022		      June 30, 2022  

Year 1

    $ 407,421      $ 389,376      $ 375,805  

Year 2

      282,290        280,705        291,062  

Year 3

      213,401        211,059        196,064  

Year 4

      179,147        176,548        159,755  

Year 5

      150,400        149,434        139,322  

Onwards

      1,062,459        1,122,237        1,158,036  
  

 

 

     

 

 

     

 

 

  
   $ 2,295,118      $ 2,329,359      $ 2,320,044  
  

 

 

     

 

 

     

 

 

  

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  

 

- 33 -

16.

LEASE ARRANGEMENTS

 

  a.

Right-of-use assets

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Land and buildings

         

Handsets base stations

    $ 7,330,908      $ 7,175,277      $ 7,100,234  

Others

      1,772,217        1,726,510        1,680,612  

Equipment

      2,056,739        2,200,762        2,362,502  
  

 

 

     

 

 

     

 

 

  
   $ 11,159,864      $ 11,102,549      $ 11,143,348  
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Additions to right-of-use assets

          $ 2,199,782      $ 2,201,387  
        

 

 

     

 

 

  

Depreciation charge for right-of-use assets

            

Land and buildings

            

Handsets base stations

    $ 731,814      $ 720,279      $ 1,456,942      $ 1,422,462  

Others

      211,249        226,196        397,693        388,742  

Equipment

      86,275        85,258        172,095        170,269  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,029,338      $ 1,031,733      $ 2,026,730      $ 1,981,473  
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company did not have significant sublease or impairment of right-of-use assets for the six months ended June 30, 2023 and 2022.

 

  b.

Lease liabilities

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Lease liabilities

         

Current

    $ 3,330,367      $ 3,338,813      $ 3,246,565  

Noncurrent

      7,326,764        7,333,694        7,215,157  
  

 

 

     

 

 

     

 

 

  
   $ 10,657,131      $ 10,672,507      $ 10,461,722  
  

 

 

     

 

 

     

 

 

  

Ranges of discount rates for lease liabilities were as follows:

 

     June 30, 2023     December 31,
2022		     June 30, 2022  

Land and buildings

       

Handsets base stations

      0.37%~1.84%       0.37%~1.71%       0.37%~1.38%  

Others

      0.37%~9.00%       0.37%~9.00%       0.37%~9.00%  

Equipment

      0.37%~2.87%       0.37%~2.99%       0.37%~2.99%  

 

- 34 -

  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. to lease capacity on the ST-2 satellite. For the information of lease agreements with related parties, please refer to Note 37 to the consolidated financial statements for details.

 

  d.

Other lease information

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Expenses relating to low-value asset leases

    $ 2,134      $ 2,183      $ 4,467      $ 4,197  
  

 

 

     

 

 

     

 

 

     

 

 

  

Expenses relating to variable lease payments not included in the measurement of lease liabilities

    $ 1,541      $ 1,802      $ 3,240      $ 3,629  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash outflow for leases

          $ 2,140,451      $ 1,974,414  
        

 

 

     

 

 

  

The Company leases certain equipment which qualifies 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, 2022

    $ 10,662,596  

Additions

      18,333  

Reclassification

      127,132  
  

 

 

  

Balance on June 30, 2022

    $ 10,808,061  
  

 

 

  

 

(Continued)

- 35 -

Accumulated depreciation and impairment

   

Balance on January 1, 2022

    $ (999,958 ) 

Depreciation expense

      (21,763 ) 

Reclassification

      (51,192 ) 
  

 

 

  

Balance on June 30, 2022

    $ (1,072,913 ) 
  

 

 

  

Balance on January 1, 2022, net

    $ 9,662,638  
  

 

 

  

Balance on June 30, 2022, net

    $ 9,735,148  
  

 

 

  

Cost

   

Balance on January 1, 2023

    $ 10,780,029  

Additions

      48,103  

Reclassification

      327,724  
  

 

 

  

Balance on June 30, 2023

    $ 11,155,856  
  

 

 

  

Accumulated depreciation and impairment

   

Balance on January 1, 2023

    $ (976,168 ) 

Depreciation expense

      (22,128 ) 
  

 

 

  

Balance on June 30, 2023

    $ (998,296 ) 
  

 

 

  

Balance on January 1, 2023, net

    $ 9,803,861  
  

 

 

  

Balance on June 30, 2023, net

    $ 10,157,560  
  

 

 

  

(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, 2022 and 2021 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, 2023 and 2022 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, 2023     December 31,
2022		     June 30, 2022  

Fair value

    $ 25,032,987     $ 26,861,591     $ 25,547,766  
  

 

 

    

 

 

    

 

 

  

Overall capital interest rate

      1.31%~4.91 %      1.31%~4.91 %      0.91%~3.05 % 

Profit margin ratio

      8%~20 %      8%~20 %      8%~20 % 

Discount rate

      —         —         —    

Capitalization rate

      0.23%~2.16 %      0.23%~2.16 %      0.53%~2.11 % 

 

- 36 -

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

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

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Year 1

    $ 152,559      $ 118,370      $ 108,108  

Year 2

      157,994        99,077        86,725  

Year 3

      140,296        89,821        73,657  

Year 4

      116,004        69,934        56,928  

Year 5

      90,037        43,608        34,068  

Onwards

      475,433        149,168        108,379  
  

 

 

     

 

 

     

 

 

  
   $ 1,132,323      $ 569,978      $ 467,865  
  

 

 

     

 

 

     

 

 

  

 

18.

INTANGIBLE ASSETS

 

     Mobile
Broadband
Concession		     Computer
Software		     Goodwill     Others     Total  

Cost

           

Balance on January 1, 2022

    $ 108,338,000     $ 3,202,901     $ 291,206     $ 412,477     $ 112,244,584  

Additions-acquired separately

      —         67,870       —         7,497       75,367  

Disposal

      —         (202,634 )      —         (899 )      (203,533 ) 

Effect of foreign exchange differences

      —         2       —         6       8  

Others

      —         300       —         —         300  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2022

    $ 108,338,000     $ 3,068,439     $ 291,206     $ 419,081     $ 112,116,726  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated amortization and impairment

           

Balance on January 1, 2022

    $ (25,517,753 )    $ (2,529,941 )    $ (73,624 )    $ (178,183 )    $ (28,299,501 ) 

Amortization expenses

      (3,099,456 )      (155,104 )      —         (20,166 )      (3,274,726 ) 

Disposal

      —         202,634       —         899       203,533  

Effect of foreign exchange differences

      —         43       —         —         43  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2022

    $ (28,617,209 )    $ (2,482,368 )    $ (73,624 )    $ (197,450 )    $ (31,370,651 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2022, net

    $ 82,820,247     $ 672,960     $ 217,582     $ 234,294     $ 83,945,083  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2022, net

    $ 79,720,791     $ 586,071     $ 217,582     $ 221,631     $ 80,746,075  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Cost

           

Balance on January 1, 2023

    $ 109,963,431     $ 2,797,835     $ 291,206     $ 421,813     $ 113,474,285  

Additions-acquired separately

      —         66,106       —         1,758       67,864  

Disposal

      —         (125,607 )      —         (180 )      (125,787 ) 

Effect of foreign exchange differences

      —         (136 )      —         (7 )      (143 ) 

Others

      —         1,571       —         —         1,571  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2023

    $ 109,963,431     $ 2,739,769     $ 291,206     $ 423,384     $ 113,417,790  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated amortization and impairment

           

Balance on January 1, 2023

    $ (31,812,278 )    $ (2,176,234 )    $ (73,624 )    $ (225,062 )    $ (34,287,198 ) 

Amortization expenses

      (3,195,069 )      (141,765 )      —         (17,582 )      (3,354,416 ) 

Disposal

      —         125,607       —         180       125,787  

 

(Continued)

- 37 -

     Mobile
Broadband
Concession		     Computer
Software		     Goodwill     Others     Total  

Effect of foreign exchange differences

    $ —       $ 137     $ —       $ 3     $ 140  

Others

      —         (508 )      —         —         (508 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2023

    $ (35,007,347 )    $ (2,192,763 )    $ (73,624 )    $ (242,461 )    $ (37,516,195 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2023, net

    $ 78,151,153     $ 621,601     $ 217,582     $ 196,751     $ 79,187,087  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on June 30, 2023, net

    $ 74,956,084     $ 547,006     $ 217,582     $ 180,923     $ 75,901,595  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

(Concluded)

The concessions are granted and issued by the National Communications Commission (“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, 2023      December 31,
2022		      June 30, 2022  

Spare parts

    $ 3,334,167      $ 3,379,837      $ 3,661,486  

Refundable deposits

      1,885,309        1,964,648        1,920,100  

Prepayments for frequency band and equipment

      —          —          1,625,059  

Other financial assets

      1,000,000        1,000,000        1,000,000  

Others

      1,842,104        1,916,562        2,254,313  
  

 

 

     

 

 

     

 

 

  
   $ 8,061,580      $ 8,261,047      $ 10,460,958  
  

 

 

     

 

 

     

 

 

  

Current

         

Spare parts

    $ 3,334,167      $ 3,379,837      $ 3,661,486  

Others

      347,508        175,586        207,864  
  

 

 

     

 

 

     

 

 

  
   $ 3,681,675      $ 3,555,423      $ 3,869,350  
  

 

 

     

 

 

     

 

 

  

Noncurrent

         

Refundable deposits

    $ 1,885,309      $ 1,964,648      $ 1,920,100  

Prepayments for frequency band and equipment

      —          —          1,625,059  

Other financial assets

      1,000,000        1,000,000        1,000,000  

Others

      1,494,596        1,740,976        2,046,449  
  

 

 

     

 

 

     

 

 

  
   $ 4,379,905      $ 4,705,624      $ 6,591,608  
  

 

 

     

 

 

     

 

 

  

 

- 38 -

Chunghwa’s Board of Directors approved the acquisition of the 900MHz frequency band and equipment from Asia Pacific Telecom Co., Ltd. in November 2021, and the aforementioned tax-excluded transaction amount was $1,800,113 thousand. The transaction was approved by the related authority in May 2022. Chunghwa had paid the tax-excluded amount of $1,625,059 thousand as of June 30, 2022, and the remaining amount was paid in July 2022 to complete the transaction. The payment amount was included in intangible assets—mobile broadband concession and other assets—spare parts.

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.

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, 2023

 

            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       

 NTD 474,192

/EUR 14,400

  

 

      2023.09      $ 32.93       
 Hedging financial
assets (liabilities)		  
 		    $ 9,932      $ —        $ (2,959 ) 

 

- 39 -

     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

    $ 2,959      $ 9,932      $ —  

December 31, 2022

 

            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$ 423,024

/EUR 13,350

  

 

      2023.03      $ 31.69       
 Hedging financial
assets (liabilities)		  
 		    $ 12,891      $ —        $ 21,177  

 

     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

    $ (21,177 )     $ 12,891      $ —    

June 30, 2022

 

            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$/EUR       
 NT$ 444,100
/EUR 14,000		  
 		      2022.09      $ 31.72       
 Hedging financial
assets (liabilities)
 		    $ —        $ 7,300      $ 986  

 

     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

    $ (986 )     $ (7,300 )     $ —    

 

- 40 -

Six Months Ended June 30, 2023

 

     Comprehensive Income      Reclassification from Equity
to Assets 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
Assets and the
Adjusted Line
Item		      Due to Hedged
Future Cash
Flows No
Longer
Expected to
Occur		  

Cash flow hedge

              

Forecast equipment purchases

    $ (2,959 )    $ —          —        $ 17,011      $ —    
            



 Construction in
progress and
equipment
to be
accepted		  
 
 
 
 		     
 Other gains and
losses		  
 

Six Months Ended June 30, 2022

 

     Comprehensive Income      Reclassification from Equity
to Assets 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

Assets and the
Adjusted Line

Item

    

Due to Hedged
Future Cash

Flows No

Longer

Expected to

Occur

  

Cash flow hedge

              

Forecast equipment purchases

    $ 986      $ —          —        $ (2,915 )    $ —    
             



 Construction in
progress and
equipment
to be
accepted		  
 
 
 
 		    
 Other gains and
losses		  
 

 

21.

SHORT-TERM LOANS

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Unsecured bank loans

    $ 654,000      $ 722,000      $ 442,000  
  

 

 

     

 

 

     

 

 

  

The annual interest rates of bank loans were as follows:

 

     June 30, 2023   December 31,
2022		   June 30, 2022

Unsecured bank loans

    1.66%~3.36%   1.30%~3.19%   1.18%~2.84%

 

22.

LONG-TERM LOANS

 

     June 30, 2023    December 31,
2022		    June 30, 2022

Secured bank loans (Note 38)

    $1,600,000    $1,600,000    $1,600,000
  

 

   

 

   

 

 

- 41 -

The annual interest rates of bank loans were as follows:

 

     June 30, 2023     December 31,
2022		     June 30, 2022  

Secured bank loans

      1.91 %      1.80 %      1.30 % 

LED obtained a secured loan from Chang Hwa Bank with monthly interest payments. The contract will be due in September 2024.

 

23.

BONDS PAYABLE

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Unsecured domestic bonds

    $ 30,500,000      $ 30,500,000      $ 30,500,000  

Less: Discounts on bonds payable

      (19,902 )       (22,643 )       (25,282 ) 
  

 

 

     

 

 

     

 

 

  
   $ 30,480,098      $ 30,477,357      $ 30,474,718  
  

 

 

     

 

 

     

 

 

  

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

2022-1 (Sustainable Bond)

    —      March 2022 to March 2027    3,500,000    0.69%    The same as above

 

24.

TRADE NOTES AND ACCOUNTS PAYABLE

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Trade notes and accounts payable

    $ 10,518,881      $ 16,428,856      $ 10,996,777  
  

 

 

     

 

 

     

 

 

  

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

 

25.

OTHER PAYABLES

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Accrued salary and compensation

    $ 6,067,617      $ 10,409,299      $ 6,215,176  

Accrued compensation to employees and remuneration to directors and supervisors

      2,922,636        2,143,523        2,887,092  

 

(Continued)

- 42 -

     June 30,
2023		      December 31,
2022		      June 30,
2022		  

Amounts collected for others

    $ 1,670,773      $ 1,596,341      $ 1,589,190  

Payables to contractors

      1,517,691        2,571,376        1,949,821  

Payables to equipment suppliers

      1,230,866        1,278,738        782,204  

Accrued maintenance costs

      929,816        1,060,534        927,892  

Others

      8,009,120        6,020,149        7,528,795  
  

 

 

     

 

 

     

 

 

  
   $ 22,348,519      $ 25,079,960      $ 21,880,170  
  

 

 

     

 

 

     

 

 

  

(Concluded)

 

26.

PROVISIONS

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Employee benefits

    $ 372,554      $ 64,776      $ 65,797  

Warranties

      230,921        235,308        211,127  

Onerous contracts

      90,304        95,201        97,619  

Others

      3,767        3,767        3,767  
  

 

 

     

 

 

     

 

 

  
   $ 697,546      $ 399,052      $ 378,310  
  

 

 

     

 

 

     

 

 

  

Current

    $ 224,017      $ 226,019      $ 225,646  

Noncurrent

      473,529        173,033        152,664  
  

 

 

     

 

 

     

 

 

  
   $ 697,546      $ 399,052      $ 378,310  
  

 

 

     

 

 

     

 

 

  

 

     Employee
Benefits		     Warranties     Onerous
Contracts		     Others      Total  

Balance on January 1, 2022

    $ 62,833     $ 213,537     $ 146,541     $ 3,767      $ 426,678  

Additional / (reversal of) provisions recognized

      3,234       40,245       (48,922 )      —          (5,443 ) 

Used / forfeited during the period

      (270 )      (42,666 )      —         —          (42,936 ) 

Effect of foreign exchange differences

      —         11       —         —          11  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on June 30, 2022

    $ 65,797     $ 211,127     $ 97,619     $ 3,767      $ 378,310  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on January 1, 2023

    $ 64,776     $ 235,308     $ 95,201     $ 3,767      $ 399,052  

Additional / (reversal of) provisions recognized

      308,224       39,341       (4,897 )      —          342,668  

Used / forfeited during the period

      (446 )      (43,700 )      —         —          (44,146 ) 

Effect of foreign exchange differences

      —         (28 )      —         —          (28 ) 
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on June 30, 2023

    $ 372,554     $ 230,921     $ 90,304     $ 3,767      $ 697,546  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

 

  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.

 

- 43 -

  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.

 

27.

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, 2022 and 2021 were as follows:

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Operating costs

    $ 123,282      $ 142,106      $ 246,251      $ 284,218  

Marketing expenses

      82,170        89,733        164,199        179,606  

General and administrative expenses

      19,381        21,232        39,080        42,243  

Research and development expenses

      8,701        9,014        17,514        18,115  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 233,534      $ 262,085      $ 467,044      $ 524,182  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

28.

EQUITY

 

  a.

Share capital

 

  1)

Common stocks

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

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, 2023, the outstanding ADSs were 191,324 thousand common stocks, which equaled 19,132 thousand units and represented 2.47% of Chunghwa’s total outstanding common stocks.

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:

 

- 44 -

  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, 2023 and 2022 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, 2022

    $ 147,329,386      $ 186,391     $ 2,104,672      $ 987,611      $ 23,487     $ 20,648,078      $ 171,279,625  

Reversal of unclaimed dividend

      —          —         —          —          (117 )      —          (117 ) 

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —          (1,159 )      —          —          —         —          (1,159 ) 

Share-based payment transactions of subsidiaries

      —          —         15,705        —          —         —          15,705  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Balance on June 30, 2022

    $ 147,329,386      $ 185,232     $ 2,120,377      $ 987,611      $ 23,370     $ 20,648,078      $ 171,294,054  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Balance on January 1, 2023

    $ 147,329,386      $ 173,672     $ 2,137,032      $ 987,611      $ 25,119     $ 20,648,078      $ 171,300,898  

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —          (134 )      —          —          —         —          (134 ) 

Share-based payment transactions of subsidiaries

      —          —         1,590        —          —         —          1,590  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Balance on June 30, 2023

    $ 147,329,386      $ 173,538     $ 2,138,622      $ 987,611      $ 25,119     $ 20,648,078      $ 171,302,354  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

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.

 

  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.

 

- 45 -

The Company should appropriate a special reserve when the net amount of other equity items is negative at the end of reporting period upon the earnings distribution. 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 2022 and 2021 earnings of Chunghwa approved by the stockholders in their meetings on May 26, 2023 and May 27, 2022 were as follows:

 

     Appropriation of Earnings      Dividends Per Share
(NT$)		  
     For Fiscal
Year 2022		      For Fiscal
Year 2021		      For Fiscal
Year 2022		      For Fiscal
Year 2021		  

Provision for (reversal of) special reserve

    $ (185,066 )     $ 408,150        

Cash dividends

      36,475,514        35,746,314      $ 4.702      $ 4.608  

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.

 

  2)

Unrealized gain or loss on financial assets at FVOCI

 

     Six Months Ended June 30  
     2023      2022  

Beginning balance

    $ (124,762 )     $ (7,588 ) 

Unrealized gain or loss for the period

      

Equity instruments

      437,221        (105,306 ) 

Share of loss of associates and joint ventures accounted for using equity method

      (1,452 )       (4,037 ) 
  

 

 

     

 

 

  

Ending balance

    $ 311,007      $ (116,931 ) 
  

 

 

     

 

 

  

 

- 46 -

  e.

Noncontrolling interests

 

     Six Months Ended June 30  
     2023      2022  

Beginning balance

    $ 12,599,541      $ 11,927,604  

Shares attributed to noncontrolling interests

      

Net income for the period

      515,206        710,048  

Exchange differences arising from the translation of the foreign operations

      (949 )       14,806  

Unrealized gain or loss on financial assets at FVOCI

      (300 )       (18,490 ) 

Share of other comprehensive income of associates and joint ventures accounted for using equity method

      747        3,140  

Cash dividends recognized by subsidiaries

      (1,091,670 )       (1,053,240 ) 

Changes in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —          (51 ) 

Share-based payment transactions of subsidiaries

      19,275        55,033  

Net increase in noncontrolling interests

      —          91,500  
  

 

 

     

 

 

  

Ending balance

    $ 12,041,850      $ 11,730,350  
  

 

 

     

 

 

  

 

29.

REVENUES

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Revenue from contracts with customers

    $ 52,897,772      $ 52,000,296      $ 106,023,047      $ 102,871,417  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other revenues

            

Rental income

      278,396        241,018        553,920        485,664  

Government grants income

      241,256        150,380        1,004,483        275,579  

Others

      46,227        44,016        93,106        97,789  
  

 

 

     

 

 

     

 

 

     

 

 

  
     565,879        435,414        1,651,509        859,032  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 53,463,651      $ 52,435,710      $ 107,674,556      $ 103,730,449  
  

 

 

     

 

 

     

 

 

     

 

 

  

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, 2022 for details.

 

  a.

Disaggregation of revenue

Please refer to Note 42 Segment Information for details.

 

  b.

Contract balances

 

     June 30,
2023		      December 31,
2022		      June 30,
2022		     

January 1,

2022

  

Trade notes and accounts receivable (Note 9)

    $ 21,996,030      $ 24,672,473      $ 22,313,300      $ 23,947,107  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(Continued)

- 47 -

     June 30,
2023		      December 31,
2022		      June 30,
2022		     

January 1,

2022

  

Contract assets

            

Products and service bundling

    $ 8,531,371      $ 7,955,689      $ 7,470,251      $ 7,197,206  

Others

      1,612,839        1,255,584        1,165,401        982,688  

Less: Loss allowance

      (20,263 )       (19,129 )       (18,741 )       (18,080 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,123,947      $ 9,192,144      $ 8,616,911      $ 8,161,814  
  

 

 

     

 

 

     

 

 

     

 

 

  

Current

    $ 6,709,840      $ 6,055,343      $ 5,761,613      $ 5,554,070  

Noncurrent

      3,414,107        3,136,801        2,855,298        2,607,744  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,123,947      $ 9,192,144      $ 8,616,911      $ 8,161,814  
  

 

 

     

 

 

     

 

 

     

 

 

  

Contract liabilities

            

Telecommunications business

    $ 13,890,909      $ 14,081,316      $ 13,239,483      $ 13,143,598  

Project business

      5,705,841        6,586,384        6,080,808        5,435,268  

Advance land receipts (Note 39)

      187,141        —          —          —    

Others

      568,708        396,834        461,167        495,466  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 20,352,599      $ 21,064,534      $ 19,781,458      $ 19,074,332  
  

 

 

     

 

 

     

 

 

     

 

 

  

Current

    $ 12,763,432      $ 13,390,439      $ 12,683,708      $ 12,234,276  

Noncurrent

      7,589,167        7,674,095        7,097,750        6,840,056  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 20,352,599      $ 21,064,534      $ 19,781,458      $ 19,074,332  
  

 

 

     

 

 

     

 

 

     

 

 

  

(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, 2023      December 31,
2022		      June 30, 2022  

Noncurrent

         

Incremental costs of obtaining contracts

    $ 950,431      $ 979,914      $ 950,612  
  

 

 

     

 

 

     

 

 

  

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, 2023 were $213,500 thousand and $427,702 thousand, respectively. Amortization expenses for the three months and six months ended June 30, 2022 were $207,380 thousand and $418,252 thousand, respectively.

 

- 48 -

30.

NET INCOME

 

  a.

Other income and expenses

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Gain (loss) on disposal of property, plant and equipment, net

    $ 1,671      $ (3,085 )     $ 1,627      $ (4,442 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  b.

Other income

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Dividend income

    $ 162,168      $ 153,229      $ 162,168      $ 153,229  

Rental income

      18,927        19,718        37,831        39,167  

Others

      23,048        36,581        48,930        61,515  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 204,143      $ 209,528      $ 248,929      $ 253,911  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  c.

Other gains and losses

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Valuation gain (loss) on financial assets and liabilities at fair value through profit or loss, net

    $ (42,263 )     $ 30,753      $ (88,349 )     $ (63,323 ) 

Foreign currency exchange gain or loss, net

      (4,644 )       23,443        (59,635 )       (5,465 ) 

Gain (loss) on disposal of financial instruments, net

      —          (11 )       —          717  

Others

      (1,890 )       8,546        (4,777 )       22,476  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ (48,797 )     $ 62,731      $ (152,761 )     $ (45,595 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  d.

Interest expenses

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Interest on bonds payable

    $ 41,938      $ 41,945      $ 83,901      $ 77,628  

Interest on lease liabilities

      25,654        17,854        48,887        34,185  

Interest paid to financial institutions

      10,065        5,137        20,277        9,129  

Others

      4        4        8        10  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 77,661      $ 64,940      $ 153,073      $ 120,952  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 49 -

  e.

Impairment loss (reversal of impairment loss)

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Contract assets

    $ 352      $ 253      $ 1,134      $ 661  
  

 

 

     

 

 

     

 

 

     

 

 

  

Trade notes and accounts receivable

    $ (22,906 )     $ (14,787 )     $ 77,380      $ 71,734  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other receivables

    $ (7,005 )     $ (13,267 )     $ (7,705 )     $ 1,190  
  

 

 

     

 

 

     

 

 

     

 

 

  

Inventories

    $ (14,441 )     $ 22,338      $ (9,167 )     $ 62,790  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  f.

Depreciation and amortization expenses

 

     Three Months Ended
June 30		      Six Months Ended June 30  
     2023      2022      2023      2022  

Property, plant and equipment

    $ 7,211,911      $ 7,260,209      $ 14,407,397      $ 14,351,232  

Right-of-use assets

      1,029,338        1,031,733        2,026,730        1,981,473  

Investment properties

      11,064        11,216        22,128        21,763  

Intangible assets

      1,676,910        1,640,142        3,354,416        3,274,726  

Incremental costs of obtaining contracts

      213,500        207,380        427,702        418,252  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total depreciation and amortization expenses

    $ 10,142,723      $ 10,150,680      $ 20,238,373      $ 20,047,446  
  

 

 

     

 

 

     

 

 

     

 

 

  

Depreciation expenses summarized by functions

            

Operating costs

    $ 7,735,469      $ 7,778,250      $ 15,391,520      $ 15,343,572  

Operating expenses

      516,844        524,908        1,064,735        1,010,896  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 8,252,313      $ 8,303,158      $ 16,456,255      $ 16,354,468  
  

 

 

     

 

 

     

 

 

     

 

 

  

Amortization expenses summarized by functions

            

Operating costs

    $ 1,843,472      $ 1,798,015      $ 3,687,574      $ 3,595,536  

Marketing expenses

      17,651        19,573        35,048        39,549  

General and administrative expenses

      17,370        16,706        35,162        33,495  

Research and development expenses

      11,917        13,228        24,334        24,398  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,890,410      $ 1,847,522      $ 3,782,118      $ 3,692,978  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 50 -

  g.

Employee benefit expenses

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Post-employment benefit

            

Defined contribution plans

    $ 237,216      $ 210,365      $ 468,919      $ 417,173  

Defined benefit plans

      233,534        262,085        467,044        524,182  
  

 

 

     

 

 

     

 

 

     

 

 

  
     470,750        472,450        935,963        941,355  
  

 

 

     

 

 

     

 

 

     

 

 

  

Share-based payment

            

Equity-settled share-based payment

      2,346        4,016        4,818        8,019  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other employee benefit (Note)

      11,095,417        11,075,136        22,163,981        21,940,860  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total employee benefit expenses

    $ 11,568,513      $ 11,551,602      $ 23,104,762      $ 22,890,234  
  

 

 

     

 

 

     

 

 

     

 

 

  

Summary by functions

            

Operating costs

    $ 5,492,751      $ 5,573,411      $ 10,979,646      $ 11,080,028  

Operating expenses

      6,075,762        5,978,191        12,125,116        11,810,206  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 11,568,513      $ 11,551,602      $ 23,104,762      $ 22,890,234  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  Note:

Other employee benefit mainly includes salaries, compensation and labor and health insurance expenses, etc.

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 2022 and 2021 approved by the Board of Directors on February 24, 2023 and February 23, 2022, respectively, were as follows:

 

     Cash  
     2022      2021  

Compensation distributed to the employees

    $ 1,498,374      $ 1,429,000  

Remuneration paid to the directors

      39,480        38,552  

There was no difference between the initial accrued amounts recognized in 2022 and 2021 and the amounts approved by the Board of Directors in 2023 and 2022 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.

 

- 51 -

31.

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  
     2023      2022      2023      2022  

Current tax

            

Current tax expenses recognized for the period

    $ 2,401,892      $ 2,349,675      $ 4,739,187      $ 4,600,743  

Income tax on unappropriated earnings

      10,808        30,379        10,808        30,379  

Income tax adjustments on prior years

      (6,836 )       (118,607 )       (35,129 )       (118,607 ) 

Others

      403        593        767        984  
  

 

 

     

 

 

     

 

 

     

 

 

  
     2,406,267        2,262,040        4,715,633        4,513,499  
  

 

 

     

 

 

     

 

 

     

 

 

  

Deferred tax

            

Deferred tax expenses recognized for the period

      48,096        54,731        125,677        86,680  

Income tax adjustments on prior years

      (1,392 )       150,635        (1,392 )       150,643  
  

 

 

     

 

 

     

 

 

     

 

 

  
     46,704        205,366        124,285        237,323  
  

 

 

     

 

 

     

 

 

     

 

 

  

Income tax recognized in profit or loss

    $ 2,452,971      $ 2,467,406      $ 4,839,918      $ 4,750,822  
  

 

 

     

 

 

     

 

 

     

 

 

  

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.

 

  b.

Income tax examinations

Income tax returns of Chunghwa has been examined by the tax authorities through 2019. Income tax returns of SENAO and CHYP have been examined by the tax authorities through 2020. Income tax returns of CHSI, CHST, ISPOT, Youth, Youyi, Aval, Wiin, SENYOUNG, Senaolife, CHI, CHPT, CHIEF, Unigate, SFD, SHE, CLPT, CHTSC, LED, HHI, IISI and UTC have been examined by the tax authorities through 2021.

 

- 52 -

32.

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  
     2023      2022      2023      2022  

Net income used to compute the basic earnings per share

            

Net income attributable to the parent

    $ 9,921,274      $ 9,656,841      $ 19,564,529      $ 18,716,421  

Assumed conversion of all dilutive potential common stocks

            

Employee stock options and employee compensation of subsidiaries

      (649 )       (900 )       (1,494 )       (2,123 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net income used to compute the diluted earnings per share

    $ 9,920,625      $ 9,655,941      $ 19,563,035      $ 18,714,298  
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted Average Number of Common Stocks

(Thousand Shares)

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

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

      1,692        1,705        7,258        6,696  
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted average number of common stocks used to compute the diluted earnings per share

      7,759,139        7,759,152        7,764,705        7,764,143  
  

 

 

     

 

 

     

 

 

     

 

 

  

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.

 

- 53 -

33.

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      $193.50
         (Original price $206.00)

2017.12.18

      2018.10.31        50.00      $130.30
         (Original price $147.00)
     2017.12.19        950.00      $124.70
         (Original price $147.00)

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, 2023 and 2022 were as follows:

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Granted on November 13, 2020

    $ 1,393      $ 2,432      $ 2,788      $ 4,863  

Granted on October 31, 2018

      —          18        —          35  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,393      $ 2,450      $ 2,788      $ 4,898  
  

 

 

     

 

 

     

 

 

     

 

 

  

CHIEF modified the plan terms of stock options granted on November 13, 2020 in July 2022; therefore, the exercise price changed from $199.70 to $193.50 per share. The modification did not cause any incremental fair value granted.

CHIEF modified the plan terms of stock options granted on October 31, 2018 in July 2022; therefore, the exercise price changed from $134.50 to $130.30 per share. The modification did not cause any incremental fair value granted.

CHIEF modified the plan terms of stock options granted on December 19, 2017 in July 2022; therefore, the exercise price changed from $128.70 to $124.70 per share. The modification did not cause any incremental fair value granted.

 

- 54 -

Information about CHIEF’s outstanding stock options for the six months ended June 30, 2023 and 2022 was as follows:

 

     Six Months Ended
June 30, 2023		  
     Granted on November 13, 2020  
    

Number of

Options

     

Weighted
Average
Exercise
Price

(NT$)

  

Employee stock options

      

Options outstanding at beginning of the period

      142.25      $ 193.50  

Options forfeited

      (1.50 )       —    
  

 

 

     

Options outstanding at end of the period

      140.75        193.50  
  

 

 

     

Options exercisable at end of the period

      0.50        193.50  
  

 

 

     

Weighted average remaining contractual life (years)

      2.37     

 

     Six Months Ended June 30, 2022  
     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

      194.00      $ 199.70        10.50      $ 134.50        213.25     $ 128.70  

Options exercised

      —          —          —          —          (212.25 )      128.70  
  

 

 

        

 

 

        

 

 

    

Options outstanding at end of the period

      194.00        199.70        10.50        134.50        1.00       128.70  
  

 

 

        

 

 

        

 

 

    

Options exercisable at end of the period

      —          —          —          —          1.00       128.70  
  

 

 

        

 

 

        

 

 

    

Weighted average remaining contractual life (years)

      3.37           1.33           0.46    

 

- 55 -

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		  

Grant-date share price (NT$)

    $ 356.00     $ 166.00     $ 95.92  

Exercise price (NT$)

    $ 206.00     $ 147.00     $ 147.00  

Dividend yield

      —         —         —    

Risk-free interest rate

      0.18 %      0.72 %      0.62 % 

Expected life

      5 years       5 years       5 years  

Expected volatility

      34.61 %      16.60 %      17.35 % 

Weighted average fair value of grants (NT$)

    $ 173,893     $ 33,540     $ 2,318  

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 2017 and 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, 2023 and 2022 were as follows:

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Granted on February 20, 2021

    $ 449      $ 889      $ 896      $ 1,778  

Granted on December 20, 2019

      170        394        340        789  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 619      $ 1,283      $ 1,236      $ 2,567  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 56 -

Information about CHTSC’s outstanding stock options for the six months ended June 30, 2023 and 2022 was as follows:

 

     Six Months Ended June 30, 2023  
     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

      2,343      $ 19.085        1,083      $ 19.085  

Options exercised

      (764 )       19.085        (31 )       19.085  

Options forfeited

      (24 )       —          (31 )       —    
  

 

 

        

 

 

     

Options outstanding at end of the period

      1,555        19.085        1,021        19.085  
  

 

 

        

 

 

     

Options exercisable at end of the period

      14        19.085        —          —    
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      2.64           1.47     

 

     Six Months Ended June 30, 2022  
     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

      3,324      $ 19.085        3,174      $ 19.085  

Options exercised

      (797 )       19.085        (1,058 )       19.085  

Options forfeited

      (121 )       —          (36 )       —    
  

 

 

        

 

 

     

Options outstanding at end of the period

      2,406        19.085        2,080        19.085  
  

 

 

        

 

 

     

Options exercisable at end of the period

      20        19.085        —          —    
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      3.64           2.47     

 

- 57 -

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$)

    $ 23.76     $ 20.17  

Exercise price (NT$)

    $ 19.085     $ 19.085  

Dividend yield

      15.18 %      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$)

    $ 3,350     $ 2,470  

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

 

c.

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

The Board of Directors of CLPT resolved to issue 690 and 600 stock options on February 26, 2021 and May 31, 2022, respectively. Each option is eligible to subscribe for one thousand common stocks when exercisable and the exercise price are both $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 for stock options for the three months and six months ended June 30, 2023 and 2022 were as follows:

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Granted on May 31, 2022

    $ 259      $ 117      $ 517      $ 117  

Granted on February 26, 2021

      75        166        277        437  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 334      $ 283      $ 794      $ 554  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 58 -

Information about CLPT’s outstanding stock options for the six months ended June 30, 2023 and 2022 was as follows:

 

     Six Months Ended June 30, 2023  
     Granted on May 31, 2022      Granted on February 26,
2021		  
    

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

      440      $ 16.87        510      $ 15.90  

Options exercised

      —          —          (55 )       15.90  

Options forfeited

      —          —          (15 )       —    
  

 

 

        

 

 

     

Options outstanding at end of the period

      440        16.87        440        15.90  
  

 

 

        

 

 

     

Options exercisable at end of the period

      —          —          192        15.90  
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      2.92           1.66     

 

     Six Months Ended June 30, 2022  
     Granted on May 31, 2022      Granted on February 26,
2021		  
    

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

      —        $ —          550      $ 15.90  

Options granted

      600        16.87        —          —    

Options forfeited

      —          —          (40 )       —    
  

 

 

        

 

 

     

Options outstanding at end of the period

      600        16.87        510        15.90  
  

 

 

        

 

 

     

Options exercisable at end of the period

      —          —          —          —    
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      3.92           2.66     

 

- 59 -

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
May 31, 2022		     Stock Options
Granted on
February 26,
2021		  

Grant-date share price (NT$)

    $ 18.66     $ 17.63  

Exercise price (NT$)

    $ 16.87     $ 16.87  

Dividend yield

      —         —    

Risk-free interest rate

      0.98 %      0.31 % 

Expected life

      4 years       4 years  

Expected volatility

      35.76 %      35.22 % 

Weighted average fair value of grants (NT$)

    $ 5,665     $ 4,750  

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

 

34

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  
     2023      2022  

Additions of property, plant and equipment

    $ 10,707,678      $ 10,333,468  

Changes in other payables

      1,066,501        1,450,243  
  

 

 

     

 

 

  

Payments for acquisition of property, plant and equipment

    $ 11,774,179      $ 11,783,711  
  

 

 

     

 

 

  

Financing Activities

 

    

Balance on

January 1,

     

Cash Flows

From
Financing

     Changes in Non-Cash
Transactions		    

Cash Flows

From

Operation
Activities -

    

Balance on

June 30,

  
     2023      Activities     New Leases      Others     Interest Paid     2023  

Lease liabilities

    $ 10,672,507      $ (2,083,857 )    $ 2,199,782      $ (82,414 )    $ (48,887 )    $ 10,657,131  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

 

    

Balance on

January 1,

     

Cash Flows

From
Financing

     Changes in Non-Cash
Transactions		    

Cash Flows

From

Operation
Activities -

    

Balance on

June 30,

  
     2022      Activities     New Leases      Others     Interest Paid     2022  

Lease liabilities

    $ 10,272,253      $ (1,932,403 )    $ 2,201,387      $ (45,330 )    $ (34,185 )    $ 10,461,722  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

 

- 60 -

35. 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.

 

36.

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).

 

  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, 2023      December 31, 2022      June 30, 2022  
     Carrying Value      Fair Value      Carrying Value      Fair Value      Carrying Value      Fair Value  

Financial liabilities

                  

Financial liabilities measured at amortized cost

                  

Bonds payable

    $ 30,480,098      $ 30,460,538      $ 30,477,357      $ 30,452,475      $ 30,474,718      $ 30,444,402  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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.

 

- 61 -

  b.

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

June 30, 2023

 

     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

            

Derivatives

    $ —        $ 3,444      $ —        $ 3,444  

Listed stocks

      434        —          —          434  

Non-listed stocks

      —          —          776,525        776,525  

Limited partnership

      —          —          225,204        225,204  

Film and drama investing agreements

      —          —          26,605        26,605  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 434      $ 3,444      $ 1,028,334      $ 1,032,212  
  

 

 

     

 

 

     

 

 

     

 

 

  

Hedging financial assets

    $ —        $ 9,932      $ —        $ 9,932  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial assets at FVOCI

            

Listed stocks

    $ 268,689      $ —        $ —        $ 268,689  

Non-listed stocks

      —          —          3,659,613        3,659,613  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 268,689      $ —        $ 3,659,613      $ 3,928,302  
  

 

 

     

 

 

     

 

 

     

 

 

  

December 31, 2022

 

     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

            

Derivatives

    $ —        $ 3,514      $ —        $ 3,514  

Listed stocks

      439        —          —          439  

Non-listed stocks

      —          —          860,960        860,960  

Limited partnership

      —          —          135,121        135,121  

Film and drama investing agreements

      —          —          24,122        24,122  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 439      $ 3,514      $ 1,020,203      $ 1,024,156  
  

 

 

     

 

 

     

 

 

     

 

 

  

Hedging financial assets

    $ —        $ 12,891      $ —        $ 12,891  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial assets at FVOCI

            

Listed stocks

    $ 272,802      $ —        $ —        $ 272,802  

Non-listed stocks

      —          —          3,218,579        3,218,579  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 272,802      $ —        $ 3,218,579      $ 3,491,381  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 62 -

June 30, 2022

 

     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

            

Listed stocks

    $ 447      $ —        $ —        $ 447  

Non-listed stocks

      —          —          802,773        802,773  

Limited partnership

      —          —          117,061        117,061  

Film and drama investing agreement

      —          —          8,970        8,970  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 447      $ —        $ 928,804      $ 929,251  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial assets at FVOCI

            

Listed stocks

    $ 314,447      $ —        $ —        $ 314,447  

Non-listed stocks

      —          —          3,180,947        3,180,947  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 314,447      $ —        $ 3,180,947      $ 3,495,394  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial liabilities at FVTPL

            

Derivatives

    $ —        $ 1,606      $ —        $ 1,606  
  

 

 

     

 

 

     

 

 

     

 

 

  

Hedging financial liabilities

    $ —        $ 7,300      $ —        $ 7,300  
  

 

 

     

 

 

     

 

 

     

 

 

  

There were no transfers between Levels 1 and 2 for the six months ended June 30, 2023 and 2022.

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

Six months ended June 30, 2023

 

Financial Assets    Measured at
Fair Value
through Profit
or Loss		      Measured at
Fair Value
through Other
Comprehensive
Income		      Total  

Balance on January 1, 2023

    $ 1,020,203      $ 3,218,579      $ 4,238,782  

Acquisition

      115,238        —          115,238  

Recognized in profit or loss under “Other gains and losses”

      (88,274 )       —          (88,274 ) 

Recognized in other comprehensive income under “Unrealized gain or loss on financial assets at fair value through other comprehensive income”

      —          441,034        441,034  

Proceeds from capital reduction of the investee and profit distribution

      (18,833 )       —          (18,833 ) 
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2023

    $ 1,028,334      $ 3,659,613      $ 4,687,947  
  

 

 

     

 

 

     

 

 

  

Unrealized gain or loss for the six months ended June 30, 2023

    $ (87,891 )       
  

 

 

        

 

- 63 -

Six months ended June 30, 2022

 

Financial Assets    Measured at
Fair Value
through Profit
or Loss		      Measured at
Fair Value
through Other
Comprehensive
Income		      Total  

Balance on January 1, 2022

    $ 908,775      $ 3,157,306      $ 4,066,081  

Acquisition

      109,324        —          109,324  

Recognized in profit or loss under “Other gains and losses”

      (67,728 )       —          (67,728 ) 

Recognized in other comprehensive income under “Unrealized gain or loss on financial assets at fair value through other comprehensive income”

      —          23,641        23,641  

Proceeds from capital reduction of the investee

      (21,567 )       —          (21,567 ) 
  

 

 

     

 

 

     

 

 

  

Balance on June 30, 2022

    $ 928,804      $ 3,180,947      $ 4,109,751  
  

 

 

     

 

 

     

 

 

  

Unrealized gain or loss for the six months ended June 30, 2022

    $ (61,211 )       
  

 

 

        

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 and film and drama investing agreements 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 markets, using the income approach, in which the discounted cash flow is used to capture the present value of the expected future economic benefits to be derived from the investments, or using assets approach. The significant unobservable inputs used were listed in the below table. 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 discount rate would result in increases in the fair values.

 

     June 30, 2023     December 31,
2022		      June 30, 2022  

Discount for lack of marketability

      14.09%~20.00%       14.09%~20.00%        16.05%~20.00%  

Noncontrolling interests discount

      17.29%~25.00%       17.29%~20.00%        17.29%~25.00%  

Growth rate of long-term revenue

      0.19%       0.19%        0.19%  

Discount rate

      7.52%~7.80%       7.20%~8.80%        1.26%~7.31%  

 

- 64 -

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 Level 3 financial assets would increase (decrease) as below table.

 

     June 30,
2023		      June 30,
2022		  

Discount for lack of marketability

      

5% increase

    $ (34,019 )     $ (22,353 ) 
  

 

 

     

 

 

  

5% decrease

    $ 34,019      $ 22,353  
  

 

 

     

 

 

  

Noncontrolling interests discount

      

5% increase

    $ (22,850 )     $ (10,286 ) 
  

 

 

     

 

 

  

5% decrease

    $ 22,850      $ 10,286  
  

 

 

     

 

 

  

Long-term revenue growth rates

      

0.1% increase

    $ 31,144      $ 27,917  
  

 

 

     

 

 

  

0.1% decrease

    $ (30,564 )     $ (27,384 ) 
  

 

 

     

 

 

  

Discount rate

      

1% increase

    $ (365,952 )     $ (324,433 ) 
  

 

 

     

 

 

  

1% decrease

    $ 449,355      $ 400,610  
  

 

 

     

 

 

  

Categories of Financial Instruments

 

     June 30,
2023		      December 31,
2022		      June 30,
2022		  

Financial assets

         

Measured at FVTPL

         

Mandatorily measured at FVTPL

    $ 1,032,212      $ 1,024,156      $ 929,251  

Hedging financial assets

      9,932        12,891        —  

Financial assets at amortized cost (Note a)

      93,370,650        81,523,688        86,757,611  

Financial assets at FVOCI

      3,928,302        3,491,381        3,495,394  

Financial liabilities

         

Measured at FVTPL

         

Held for trading

      —          —          1,606  

Hedging financial liabilities

      —          —          7,300  

Measured at amortized cost (Note b)

      98,422,119        67,451,245        97,230,476  

 

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, trade notes and accounts payable, payables to related parties, dividends payable, partial other payables, customers’ deposits, bonds payable and long-term loans which were financial liabilities carried at amortized cost.

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 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.

 

- 65 -

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

For details about the carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the balance sheet dates, please refer to Note 40 Significant Assets and Liabilities Denominated in Foreign Currencies.

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

 

     June 30,
2023		      December 31,
2022		      June 30,
2022		  

Assets

         

EUR

    $ 13,376      $ 16,405      $ —    

Liabilities

         

EUR

      —          —          8,906  

Foreign currency sensitivity analysis

The Company is mainly exposed to the fluctuations of the currencies USD, EUR and SGD as listed in Note 40.

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.

 

- 66 -

     Six Months Ended June 30  
     2023     2022  

Profit or loss

     

Monetary assets and liabilities (a)

     

USD

    $ 65,631     $ 42,686  

EUR

      (35,608 )      (18,773 ) 

SGD

      (50,456 )      (74,655 ) 

Derivatives (b)

     

EUR

      8,453       4,502  

Equity

     

Derivatives (c)

     

EUR

      24,343       21,735  

 

  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.

 

  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,
2023		      December 31,
2022		      June 30,
2022		  

Fair value interest rate risk

         

Financial assets

    $ 56,675,613      $ 41,593,475      $ 46,561,701  

Financial liabilities

      41,137,229        41,149,864        40,936,440  

Cash flow interest rate risk

         

Financial assets

      8,799,687        9,631,079        11,860,943  

Financial liabilities

      2,254,000        2,322,000        2,042,000  

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 $16,364 thousand and $24,547 thousand for the six months ended June 30, 2023 and 2022, respectively. This is mainly attributable to the Company’s exposure to floating interest rates on its financial assets, short-term and long-term loans.

 

- 67 -

  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 $50,108 thousand and $196,415 thousand, respectively, 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, 2023. If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income would have increased/decreased by $46,014 thousand and $174,770 thousand, respectively, 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, 2022.

 

  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.

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.

 

- 68 -

June 30, 2023

 

     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

      —        $ 31,748,584      $ 36,475,514      $ —        $ 6,454,176      $ —        $ 74,678,274  

Floating interest rate instruments

      1.99        —          229,000        425,000        1,600,000        —          2,254,000  

Fixed interest rate instruments

      0.53        —          —          —          25,800,000        4,700,000        30,500,000  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
      $ 31,748,584      $ 36,704,514      $ 425,000      $ 33,854,176      $ 4,700,000      $ 107,432,274  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

    $ 3,346,803      $ 4,509,005      $ 2,301,071      $ 711,589      $ 10,868,468  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

December 31, 2022

 

    

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

      —        $ 39,904,488      $ —        $ 2,143,523      $ 5,156,700      $ —        $ 47,204,711  

Floating interest rate instruments

      1.79        —          300,000        422,000        1,600,000        —          2,322,000  

Fixed interest rate instruments

      0.53        —          —          —          21,700,000        8,800,000        30,500,000  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
      $ 39,904,488      $ 300,000      $ 2,565,523      $ 28,456,700      $ 8,800,000      $ 80,026,711  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

    $ 3,390,348      $ 4,445,772      $ 2,142,864      $ 869,994      $ 10,848,978  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

June 30, 2022

 

    

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

      —        $ 31,644,139      $ 35,746,314      $ —        $ 6,425,573      $ —        $ 73,816,026  

Floating interest rate instruments

      1.36        —          90,000        352,000        1,600,000        —          2,042,000  

Fixed interest rate instruments

      0.53        —          —          —          14,200,000        16,300,000        30,500,000  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
      $ 31,644,139      $ 35,836,314      $ 352,000      $ 22,225,573      $ 16,300,000      $ 106,358,026  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

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

    $ 3,302,453      $ 4,251,346      $ 2,001,740      $ 1,054,100      $ 10,609,639  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

- 69 -

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, 2023

              

Gross settled

              

Forward exchange contracts

              

Inflow

    $ —        $ 652,243     $ —        $ —        $ 652,243  

Outflow

      —          638,867       —          —          638,867  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  
   $ —        $ 13,376     $ —        $ —        $ 13,376  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

December 31, 2022

              

Gross settled

              

Forward exchange contracts

              

Inflow

    $ —        $ 501,175     $ —        $ —        $ 501,175  

Outflow

      —          484,770       —          —          484,770  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  
   $ —        $ 16,405     $ —        $ —        $ 16,405  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

June 30, 2022

              

Gross settled

              

Forward exchange contracts

              

Inflow

    $ —        $ 527,301     $ —        $ —        $ 527,301  

Outflow

      —          536,207       —          —          536,207  
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  
   $ —        $ (8,906 )    $ —        $ —        $ (8,906 ) 
  

 

 

     

 

 

    

 

 

     

 

 

     

 

 

  

 

  2)

Financing facilities

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Unsecured bank loan facilities

         

Amount used

    $ 654,000      $ 722,000      $ 442,000  

Amount unused

      56,448,290        56,861,505        61,372,694  
  

 

 

     

 

 

     

 

 

  
   $ 57,102,290      $ 57,583,505      $ 61,814,694  
  

 

 

     

 

 

     

 

 

  

Secured bank loan facilities

         

Amount used

    $ 1,600,000      $ 1,600,000      $ 1,600,000  

Amount unused

      20,000        —        —  
  

 

 

     

 

 

     

 

 

  
   $ 1,620,000      $ 1,600,000      $ 1,600,000  
  

 

 

     

 

 

     

 

 

  

 

- 70 -

37.

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
Taiwan International Ports Logistics Corporation    Associate
Senao Networks, Inc.    Associate
EnGenius Networks Inc.    Subsidiary of the Company’s associate, Senao Networks, Inc.
EnRack Technology Inc.    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
PT. CHT Infinity Indonesia    Associate
Click Force 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
AgriTalk Technology Inc.    Associate
Imedtac Co., Ltd.    Associate
Baohwa Trust Co., Ltd.    Associate
Chunghwa SEA Holdings    Joint venture
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

Tsann Kuen Enterprise Co., Ltd.

   

Substantial related party of SENAO

E-Life Mall Co., Ltd.

   

Substantial related party of SENAO

Engenius Technologies Co., Ltd.

   

Substantial related party of SENAO

Cheng Keng Investment Co., Ltd.

   

Substantial related party of SENAO

Cheng Feng Investment Co., Ltd.

   

Substantial related party of SENAO

All Oriented Investment Co., Ltd.

   

Substantial related party of SENAO

Hwa Shun Investment Co., Ltd.

   

Substantial related party of SENAO

Yu Yu Investment Co., Ltd.

   

Substantial related party of SENAO

 

(Continued)

- 71 -

Company

   

Relationship

Kangsin Co., Ltd.

   

Substantial related party of SENAO

United Daily News Co., Ltd.

   

Investor of significant influence over SFD

Shenzhen Century Communication Co., Ltd.

   

Investor of significant influence over SCT

Advantech Co., Ltd.

   

Investor of significant influence over IISI

Z-Com, Inc.

   

Investor of significant influence over CHST

(Concluded)

 

  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:

 

  1)

Operating transactions

 

     Revenues  
     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Associates

    $ 111,458      $ 79,828      $ 189,062      $ 150,416  

Others

      8,147        10,946        27,476        25,253  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 119,605      $ 90,774      $ 216,538      $ 175,669  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Operating Costs and Expenses  
     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Associates

    $ 210,176      $ 141,197      $ 493,007      $ 378,873  

Others

      5,288        6,647        61,667        69,465  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 215,464      $ 147,844      $ 554,674      $ 448,338  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  2)

Non-operating transactions

 

     Non-operating Income and Expenses  
     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Associates

    $ 9,397      $ 8,925      $ 18,823      $ 18,316  

Others

      485        192        677        479  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 9,882      $ 9,117      $ 19,500      $ 18,795  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 72 -

  3)

Receivables

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Associates

    $ 100,099      $ 70,091      $ 73,357  

Others

      851        4,970        771  
  

 

 

     

 

 

     

 

 

  
   $ 100,950      $ 75,061      $ 74,128  
  

 

 

     

 

 

     

 

 

  

 

  4)

Payables

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Associates

    $ 261,332      $ 534,515      $ 183,441  

Others

      4,634        4,679        3,291  
  

 

 

     

 

 

     

 

 

  
   $ 265,966      $ 539,194      $ 186,732  
  

 

 

     

 

 

     

 

 

  

 

  5)

Customers’ deposits

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Associates

    $ 20,310      $ 68,942      $ 25,646  

Others

      284        284        284  
  

 

 

     

 

 

     

 

 

  
   $ 20,594      $ 69,226      $ 25,930  
  

 

 

     

 

 

     

 

 

  

 

  6)

Acquisition of property, plant and equipment

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Associates

    $ 250      $ —        $ 53,983      $ —    
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  7)

Acquisition of intangible assets

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  

Associates

    $ —        $ —        $ —        $ 677  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  8)

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. As ST-2 satellite is in good operating condition, the useful life is extended for another 3 years and 3 months after evaluation in 2021. The Board of Directors of Chunghwa approved to extend the lease period accordingly with the original contract terms in December 2021; therefore, Chunghwa acquired right-of-use asset of $1,124,780 thousand from the aforementioned lease extension.

 

- 73 -

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

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Lease liabilities - current

    $ 194,482      $ 193,805      $ 181,015  

Lease liabilities - noncurrent

      1,673,546        1,760,815        1,731,380  
  

 

 

     

 

 

     

 

 

  
   $ 1,868,028      $ 1,954,620      $ 1,912,395  
  

 

 

     

 

 

     

 

 

  

The interest expense recognized for the aforementioned lease liabilities for the three months and six months ended June 30, 2023 were $2,003 thousand and $4,050 thousand, respectively. The interest expense recognized for the aforementioned lease liabilities for the three months and six months ended June 30, 2022 were $2,042 thousand and $4,063 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  
     2023      2022      2023      2022  

Short-term employee benefits

    $ 85,354      $ 119,289      $ 179,378      $ 213,313  

Post-employment benefits

      19,731        1,782        21,944        3,576  

Share-based payment

      240        401        475        802  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 105,325      $ 121,472      $ 201,797      $ 217,691  
  

 

 

     

 

 

     

 

 

     

 

 

  

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

 

38.

PLEDGED ASSETS

The following assets are pledged as collaterals for bank loans, customs duties of the imported materials, and warranties of contract performance, the bank deposits for the restricted purpose in accordance with The Management, Utilization, and Taxation of Repatriated Offshore Funds Act, or the trust account LED entrusts to Land Bank of Taiwan for fund control and property rights management.

 

     June 30, 2023      December 31,
2022		      June 30, 2022  

Property, plant and equipment

    $ 2,483,592      $ 2,402,781      $ 2,417,538  

Restricted assets (included in other assets - others)

      268,598        131,136        131,474  
  

 

 

     

 

 

     

 

 

  
   $ 2,752,190      $ 2,533,917      $ 2,549,012  
  

 

 

     

 

 

     

 

 

  

 

- 74 -

39.

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, 2023 were as follows:

 

  a.

Acquisitions of land and buildings of $61,214 thousand.

 

  b.

Acquisitions of telecommunications-related inventory and equipment of $21,511,939 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.

 

  f.

Chunghwa signed a contract, the ST-2 Satellite Succession Plan, with Singapore Telecommunications Limited, for a total transaction price of EUR 177,000 thousand and SGD 51,000 thousand. As of June 30, 2023, Chunghwa had paid the amount of EUR 30,975 thousand (classified as prepayments - noncurrent).

 

  g.

LED has signed the land presale contracts amounting to $1,915,760 thousand and has received $187,141 thousand in accordance with the contracts (classified as contract liabilities - current).

 

40.

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, 2023  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Assets denominated in foreign currencies

         

Monetary items

         

USD

    $ 84,433        31.14      $ 2,629,234  

EUR

      5,805        33.81        196,278  

SGD

      40,082        22.96        920,288  

Non-monetary items

         

Investments accounted for using equity method

         

SGD

      13,981        22.96        321,009  

VND

      388,767,156        0.0013        507,341  

(Continued)

 

- 75 -

     June 30, 2023  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Liabilities denominated in foreign currencies

         

Monetary items

         

USD

    $ 42,280        31.14      $ 1,316,613  

EUR

      26,869        33.81        908,435  

SGD

      84,033        22.96        1,929,409  

(Concluded)

 

     December 31, 2022  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Assets denominated in foreign currencies

         

Monetary items

         

USD

    $ 76,675        30.71      $ 2,354,691  

EUR

      2,740        32.72        89,645  

SGD

      27,384        22.88        626,538  

Non-monetary items

         

Investments accounted for using equity method

         

SGD

      10,787        22.88        246,815  

VND

      434,655,397        0.0013        558,532  

Liabilities denominated in foreign currencies

         

Monetary items

         

USD

      27,753        30.71        852,302  

EUR

      26,750        32.72        875,256  

SGD

      87,861        22.88        2,010,250  

 

     June 30, 2022  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Assets denominated in foreign currencies

         

Monetary items

         

USD

    $ 60,764        29.72      $ 1,805,898  

EUR

      2,505        31.05        77,782  

SGD

      22,107        21.37        472,435  

Non-monetary items

         

Investments accounted for using equity method

         

SGD

      12,379        21.37        264,544  

VND

      380,525,683        0.0013        477,560  

(Continued)

 

- 76 -

     June 30, 2022  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New
Taiwan
Dollars
(Thousands)		  

Liabilities denominated in foreign currencies

         

Monetary items

         

USD

    $ 32,038        29.72      $ 952,182  

EUR

      14,597        31.05        453,234  

SGD

      91,976        21.37        1,965,528  

(Concluded)

The unrealized foreign currency exchange gains were $28,754 thousand and $127,519 thousand for the three months ended June 30, 2023 and 2022, respectively. The unrealized foreign currency exchange gains were $24,940 thousand and $40,743 thousand for the six months ended June 30, 2023 and 2022, 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.

 

41.

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: None.

 

  e.

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

 

  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 3.

 

  h.

Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 4.

 

  i.

Names, locations, and other information of investees on which the Company exercises significant influence (excluding investments in Mainland China): Please see Table 5.

 

  j.

Derivative instruments transactions: Please see Notes 7, 20 and 36.

 

  k.

Investments in Mainland China: Please see Table 6.

 

- 77 -

  l.

Intercompany relationships and significant intercompany transactions: Please see Table 7.

 

  m.

Information of main stakeholders: Please see Table 8.

 

42.

SEGMENT INFORMATION

In response to changes in the operating environment and new business challenges, the Company launched its organizational transformation and redesigned the operational decision-making processes and the performance assessment under the new structure. The aforementioned organizational transformation was effective from January 1, 2022. The Company redefined the reportable segments as “Consumer Business”, “Enterprise Business”, “International Business” and “Others”. The reportable segments are managed separately because each segment represents a strategic business unit that serves different customers. 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.

Some operating segments have been aggregated into a single operating segment taking into account the following factors: (a) the type or class of customer for the telecommunications products and services are similar; (b) the nature of the telecommunications products and services are similar; and (c) 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.

Segment Revenues and Operating Results

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

 

     Consumer
Business		      Enterprise
Business		      International
Business		      Others      Total  

Three months ended June 30, 2023

               

Revenues

               

From external customers

    $ 32,759,794      $ 17,542,590      $ 2,166,160      $ 995,107      $ 53,463,651  

Intersegment revenues

      560,428        280,545        238,403        116,353        1,195,729  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 33,320,222      $ 17,823,135      $ 2,404,563      $ 1,111,460        54,659,380  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (1,195,729 ) 
              

 

 

  

Consolidated revenues

                $ 53,463,651  
              

 

 

  

Segment income before income tax

    $ 7,852,133      $ 3,479,864      $ 551,107      $ 776,556      $ 12,659,660  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Six months ended June 30, 2023

               

Revenues

               

From external customers

    $ 66,814,554      $ 34,647,321      $ 4,296,091      $ 1,916,590      $ 107,674,556  

Intersegment revenues

      1,206,527        487,730        459,962        182,705        2,336,924  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 68,021,081      $ 35,135,051      $ 4,756,053      $ 2,099,295        110,011,480  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (2,336,924 ) 
              

 

 

  

Consolidated revenues

                $ 107,674,556  
              

 

 

  

Segment income before income tax

    $ 15,322,995      $ 7,434,222      $ 1,063,880      $ 1,098,556      $ 24,919,653  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Three months ended June 30, 2022

               

Revenues

               

From external customers

    $ 31,524,624      $ 17,751,469      $ 1,758,344      $ 1,401,273      $ 52,435,710  

Intersegment revenues

      516,832        172,976        195,730        84,931        970,469  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 32,041,456      $ 17,924,445      $ 1,954,074      $ 1,486,204        53,406,179  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (970,469 ) 
              

 

 

  

Consolidated revenues

                $ 52,435,710  
              

 

 

  

(Continued)

 

- 78 -

     Consumer
Business		      Enterprise
Business		      International
Business		      Others      Total  

Segment income before income tax

    $ 7,101,111      $ 3,949,165      $ 613,610      $ 839,012      $ 12,502,898  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Six months ended June 30, 2022

               

Revenues

               

From external customers

    $ 64,240,113      $ 33,563,428      $ 3,472,570      $ 2,454,338      $ 103,730,449  

Intersegment revenues

      925,176        436,584        374,974        167,055        1,903,789  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 65,165,289      $ 34,000,012      $ 3,847,544      $ 2,621,393        105,634,238  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (1,903,789 ) 
              

 

 

  

Consolidated revenues

                $ 103,730,449  
              

 

 

  

Segment income before income tax

    $ 14,337,325      $ 7,755,072      $ 1,063,074      $ 1,021,820      $ 24,177,291  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

(Concluded)

Main Products and Service Revenues

 

     Three Months Ended June 30      Six Months Ended June 30  
  

 

 

     

 

 

  
     2023      2022      2023      2022  

Consumer Business

            

Mobile services

    $ 13,666,353      $ 12,844,345      $ 27,188,426      $ 25,462,540  

Fixed-line services

      10,645,002        10,707,861        21,242,723        21,326,235  

Sales

      7,838,128        7,480,291        17,219,914        16,468,578  

Others

      610,311        492,127        1,163,491        982,760  
  

 

 

     

 

 

     

 

 

     

 

 

  
     32,759,794        31,524,624        66,814,554        64,240,113  
  

 

 

     

 

 

     

 

 

     

 

 

  

Enterprise Business

            

Fixed-line services

      8,557,750        8,636,118        16,946,981        17,160,576  

ICT business

      5,501,944        6,009,148        10,641,430        10,068,353  

Mobile services

      2,319,806        2,281,744        4,492,750        4,451,752  

Others

      1,163,090        824,459        2,566,160        1,882,747  
  

 

 

     

 

 

     

 

 

     

 

 

  
     17,542,590        17,751,469        34,647,321        33,563,428  
  

 

 

     

 

 

     

 

 

     

 

 

  

International Business

            

Fixed-line services

      1,363,004        1,258,609        2,701,892        2,485,047  

ICT business

      564,467        379,430        1,109,966        747,759  

Others

      238,689        120,305        484,233        239,764  
  

 

 

     

 

 

     

 

 

     

 

 

  
     2,166,160        1,758,344        4,296,091        3,472,570  
  

 

 

     

 

 

     

 

 

     

 

 

  

Others

            

Sales

      776,567        1,223,565        1,481,977        2,086,755  

Others

      218,540        177,708        434,613        367,583  
  

 

 

     

 

 

     

 

 

     

 

 

  
     995,107        1,401,273        1,916,590        2,454,338  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 53,463,651      $ 52,435,710      $ 107,674,556      $ 103,730,449  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 79 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

SIX MONTHS ENDED JUNE 30, 2023

(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   $ 610,805     $ 300,000     $ 300,000     $ 300,000     $ —         4.91     $ 3,054,027     Yes   No   No   Notes 3
and 4
    Wiin Technology Co., Ltd.   b     610,805       200,000       200,000       200,000       —         3.27       3,054,027     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.

 

- 80 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

JUNE 30, 2023

(Amounts in Thousands of New Taiwan Dollars)

 

 

Held Company Name

  

Marketable Securities
Type and Name

   Relationship with
the Company		  

Financial Statement
Account

   June 30, 2023     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     $ 3,410,200       12     $ 3,410,200     —  
 

Innovation Works Development Fund, L.P.

   —     Financial assets at FVTPL - noncurrent     —         80,953       4       80,953     —  
 

Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)

   —     Financial assets at FVOCI     5,252       17,255       17       17,255     —  
 

Global Mobile Corp.

   —     Financial assets at FVOCI     7,617       —         3       —       —  
 

Innovation Works Limited

   —     Financial assets at FVOCI     1,000       9,052       2       9,052     —  
 

RPTI Intergroup International Ltd.

   —     Financial assets at FVOCI     4,765       —         10       —       —  
 

Taiwan mobile payment Co., Ltd.

   —     Financial assets at FVOCI     1,200       4,279       2       4,279     —  
 

Taiwania Capital Buffalo Fund Co., Ltd.

   —     Financial assets at FVTPL - noncurrent     555,600       503,426       13       503,426     —  
 

4 Gamers Entertainment Inc.

   —     Financial assets at FVOCI     136       139,369       19.9       139,369     —  
 

TOP TAIWAN XIV VENTURE CAPITAL CO., LTD.

   —     Financial assets at FVTPL - noncurrent     20,000       192,146       9       192,146     —  
 

Limited partnership

              
 

Taiwania Capital Buffalo Fund VI, L.P.

   —     Financial assets at FVTPL - noncurrent     —         187,230       10       187,230     —  

Senao International Co., Ltd.

  

Stocks

              
 

N.T.U. Innovation Incubation Corporation

   —     Financial assets at FVOCI     1,200       10,287       9       10,287     —  

CHIEF Telecom Inc.

  

Stocks

              
 

3 Link Information Service Co., Ltd.

   —     Financial assets at FVOCI     374       1,204       10       1,204     —  
 

WPG Holdings Limited

   —     Financial assets at FVTPL - current     9       434       —         434     Note 2
 

WPG Holdings Limited

   —     Financial assets at FVOCI     2,102       101,947       —         101,947     Note 2
 

WT Microelectronics Co., Ltd.

   —     Financial assets at FVOCI     361       17,364       —         17,364     Note 2

Chunghwa Investment Co., Ltd.

  

Stocks

              
 

Tatung Technology Inc.

   —     Financial assets at FVOCI     4,571       51,875       11       51,875     —  
 

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     2,200       52,800       6       52,800     Note 2
 

PChome Online Inc.

   —     Financial assets at FVOCI     1,875       96,578       1       96,578     Note 2
 

Limited partnership

              
 

Taiwania Capital Buffalo Fund V, L.P.

   —     Financial assets at FVTPL - noncurrent     —         37,974       3       37,974     —  

CHT Security Co., Ltd.

  

Stocks

              
 

TXOne Networks Inc.

   —     Financial assets at FVOCI     91       16,092       —         16,092     —  

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

Note 2: Fair value was based on the closing price on June 30, 2023.

 

- 81 -

TABLE 3

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, 2023

(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
(Note 4)		     % to Total     Payment Terms     Unit Price     Payment Terms     Ending Balance
(Notes 2 and 4)		     % to Total  

Chunghwa Telecom Co., Ltd.

   Senao International Co., Ltd.   Subsidiary   Sales   $ 1,675,420       2       30 days     $ —         —       $ 175,035       1  
      Purchase     447,581       1       30-90 days       —         —         (980,924 )      (10 ) 
  Aval Technologies Co., Ltd.   Subsidiary   Purchase     223,155       —         30 days       —         —         (4,209 )      —    
  CHIEF Telecom Inc.   Subsidiary   Sales     238,586       —         30 days       —         —         60,593       —    
  Chunghwa System Integration Co., Ltd.   Subsidiary   Purchase     647,667       1       30 days       —         —         (376,545 )      (4 ) 
  Honghwa International Co., Ltd.   Subsidiary   Sales     105,078       —         30-60 days       —         —         119,039       1  
      Purchase     3,455,022       6       30-60 days       —         —         (736,593 )      (7 ) 
  Donghwa Telecom Co., Ltd.   Subsidiary   Purchase     268,042       —         90 days       —         —         (129,131 )      (1 ) 
  Chunghwa Telecom Global, Inc.   Subsidiary   Purchase     158,542       —         90 days       —         —         (46,298 )      —    
  CHT Security Co., Ltd.   Subsidiary   Purchase     279,593       1       30 days       —         —         (68,752 )      (1 ) 
  International Integrated Systems, Inc.   Subsidiary   Purchase     233,582       —         30 days       —         —         (66,282 )      (1 ) 
  Taiwan International Standard Electronics Co., Ltd.   Associate   Purchase     353,156       1       30-90 days       —         —         (216,623 )      (2 ) 

Senao International Co., Ltd.

   Aval Technologies Co., Ltd.   Subsidiary   Sales     230,223       2       60 days       —         —         82,415       5  
      Purchase     101,651       1       30 days       —         —         (15,032 )      (1 ) 

Chunghwa Precision Test Tech. Co., Ltd.

   Su Zhou Precision Test Tech. Ltd.   Subsidiary   Sales     105,087       7       90 days       —         —         41,339       7  

Note 1: Purchases include costs to acquire services.

Note 2: Notes and accounts receivable did not include the amounts collected for others and other receivables.

Note 3: 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 4: All intercompany transactions, balances, income and expenses are eliminated upon consolidation.

 

- 82 -

TABLE 4

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, 2023

(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   $

 

 267,609

(Note 2

  

) 

     11.06     $ —         —       $ 43,231     $ —    

Chunghwa Telecom Co., Ltd.

   Honghwa International Co., Ltd.   Subsidiary    

 119,039

(Note 2

  

) 

     10.07       —         —         119,039       —    

Chunghwa Telecom Co., Ltd.

   Chunghwa System Integration Co., Ltd.   Subsidiary    

 168,101

(Note 2

  

) 

     2.02       —         —         130,973       —    

Senao International Co., Ltd.

   Chunghwa Telecom Co., Ltd.   Parent company    

 1,116,657

(Note 2

  

) 

     7.83       —         —         518,180       —    

Chunghwa System Integration Co., Ltd.

   Chunghwa Telecom Co., Ltd.   Parent company    

 376,533

(Note 2

  

) 

     3.21       —         —         129,492       —    

Honghwa International Co., Ltd.

   Chunghwa Telecom Co., Ltd.   Parent company    

 746,644

(Note 2

  

) 

     8.52       —         —         105,848       —    

Donghwa Telecom Co., Ltd.

   Chunghwa Telecom Co., Ltd.   Parent company    

 129,131

(Note 2

  

) 

     5.83       —         —         73,963       —    

Chunghwa Telecom Singapore Pte., Ltd.

   Chunghwa Telecom Co., Ltd.   Parent company    

 206,796

(Note 2

  

) 

     11.48       —         —         203,187       —    

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.

 

- 83 -

TABLE 5

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, 2023

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investor Company

  

Investee Company

  

Location

  

Main Businesses and Products

   Original Investment Amount     Balance as of June 30, 2023     Net Income
(Loss) of the
Investee		     Recognized
Gain (Loss)
(Notes 1 and 2)		    

Note

  June 30, 2023     December 31, 2022     Shares
(Thousands)		     Percentage of
Ownership (%)		     Carrying
Value		  

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     $ 1,668,640     $ 366,273     $ 99,092    

Subsidiary (Notes 3 and 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       3,827,006       3,803       6,160    

Subsidiary (Note 5)

 

Donghwa Telecom Co., Ltd.

  

Hong Kong

  

International private leased circuit, IP VPN service, and IP transit services

     691,163       691,163       178,590       100       746,430       31,614       31,614    

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       1,208,685       89,796       89,841    

Subsidiary (Note 5)

 

Chunghwa System Integration Co., Ltd.

  

Taiwan

  

Providing system integration services and telecommunications equipment

     838,506       838,506       60,000       100       703,815       10,114       16,797    

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       1,880,039       441,007       251,234    

Subsidiary (Note 5)

 

Chunghwa Investment Co., Ltd.

  

Taiwan

  

Investment

     639,559       639,559       68,085       89       3,075,994       (6,985 )      (6,136 )   

Subsidiary (Note 5)

 

Prime Asia Investments Group Ltd.

  

British Virgin Islands

  

Investment

     385,274       385,274       1       100       166,293       8,264       8,264    

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       614,845       319,508       323,215    

Subsidiary (Notes 3 and 5)

 

CHYP Multimedia Marketing & Communications Co., Ltd.

  

Taiwan

  

Digital information supply services and advertisement services

     150,000       150,000       15,000       100       193,351       9,057       9,230    

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       101,227       (3,826 )      (3,826 )   

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       660,027       53,568       53,643    

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       69       381,494       143,675       100,335    

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       117,222       4,294       4,294    

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       154,753       19,982       11,198    

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       145,076       12,262       9,181    

Subsidiary (Note 5)

 

Smartfun Digital Co., Ltd.

  

Taiwan

  

Providing diversified family education digital services

     65,000       65,000       6,500       65       77,288       10,248       6,919    

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       124,812       10,264       10,264    

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       37       (5,105 )      (7,866 )      (2,888 )   

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       601,521       62,169       33,015    

Subsidiary (Note 5)

 

Viettel-CHT Co., Ltd.

  

Vietnam

  

IDC services

     288,327       288,327       —         30       507,341       135,726       40,690    

Associate

 

(Continued)

- 84 -

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, 2023

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investor Company

  

Investee Company

  

Location

  

Main Businesses and Products

   Original Investment Amount     Balance as of June 30, 2023     Net Income
(Loss) of the
Investee		     Recognized
Gain (Loss)
(Notes 1 and 2)		    

Note

  June 30, 2023     December 31, 2022     Shares
(Thousands)		     Percentage of
Ownership (%)		     Carrying
Value		  
 

Taiwan International Standard Electronics Co., Ltd.

  

Taiwan

  

Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment

   $ 164,000     $ 164,000       1,760       40     $ 342,106     $ 273,597     $ 114,173    

Associate

 

KKBOX Taiwan Co., Ltd.

  

Taiwan

  

Providing of music on-line, software, electronic information, and advertisement services

     67,025       67,025       4,438       30       176,276       4,966       1,490    

Associate

 

So-net Entertainment Taiwan Limited

  

Taiwan

  

Online service and sale of computer hardware

     120,008       120,008       9,429       30       230,692       11,044       3,313    

Associate

 

KingwayTek Technology Co., Ltd.

  

Taiwan

  

Design and sale of digital map, technical support for computer peripherals device, design and development of system programming projects

     66,684       66,684       10,512       23       260,023       36,504       8,405    

Associate

 

Taiwan International Ports Logistics Corporation

  

Taiwan

  

Import and export storage, logistic warehouse, and ocean shipping service

     80,000       80,000       8,000       27       103,918       61,642       16,440    

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       263,296       (10,995 )      (5,497 )   

Associate

 

Cornerstone Ventures Co., Ltd.

  

Taiwan

  

Investment, venture capital, investment advisor, management consultant and other consultancy service

     4,900       4,900       490       49       7,113       755       370    

Associate

 

Next Commercial Bank Co., Ltd.

  

Taiwan

  

Online banking business

     4,190,000       4,190,000       419,000       42       2,984,516       (460,365 )      (189,803 )   

Associate

 

Chunghwa SEA Holdings

  

Taiwan

  

Investment business

     10,200       10,200       1,020       51       9,587       (177 )      (90 )   

Joint venture

 

WiAdvance Technology Corporation

  

Taiwan

  

Software solution integration

     273,800       273,800       3,700       20       218,083       (32,838 )      (9,652 )   

Associate

Senao International Co., Ltd.

  

Senao Networks, Inc.

  

Taiwan

  

Telecommunication facilities manufactures and sales

     202,758       202,758       16,579       34       1,483,677       502,119       169,680    

Associate

 

Senao International (Samoa) Holding Ltd.

  

Samoa Islands

  

International investment

     2,046,143       2,046,143       1,191       100       37,776       402       402    

Subsidiary (Note 5)

 

Youth Co., Ltd.

  

Taiwan

  

Sale of information and communication technologies products

     427,850       427,850       14,752       96       175,563       (756 )      (4,781 )   

Subsidiary (Note 5)

 

Aval Technologies Co., Ltd.

  

Taiwan

  

Sale of information and communication technologies products

     89,550       89,550       12,555       100       132,762       3,199       3,202    

Subsidiary (Note 5)

 

Senyoung Insurance Agent Co., Ltd.

  

Taiwan

  

Property and liability insurance agency

     59,000       59,000       5,900       100       112,969       12,152       12,152    

Subsidiary (Note 5)

CHIEF Telecom Inc.

  

Unigate Telecom Inc.

  

Taiwan

  

Telecommunications and internet service

     2,000       2,000       200       100       1,273       59       59    

Subsidiary (Note 5)

 

Chief International Corp.

  

Samoa Islands

  

Telecommunications and internet service

     6,068       6,068       200       100       108,127       4,948       4,948    

Subsidiary (Note 5)

Chunghwa Telecom Singapore Pte., Ltd.

  

ST-2 Satellite Ventures Pte., Ltd.

  

Singapore

  

Operation of ST-2 telecommunications satellite

     21,309       21,309       943       38       321,009       224,199       85,487    

Associate

 

CHT Infinity Singapore Pte. Ltd.

  

Singapore

  

Investment business

     55,720       55,720       2,000       40       59,007       (4,921 )      (1,968 )   

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       2,568,615       4,234       1,450    

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       91,650       441,007       12,954    

Associate (Note 5)

 

Senao International Co., Ltd.

  

Taiwan

  

Selling and maintaining mobile phones and its peripheral products

     49,731       49,731       1,001       —         44,419       366,273       1,420    

Associate (Note 5)

 

AgriTalk Technology Inc.

  

Taiwan

  

Providing smart agricultural solutions, scientific agricultural product, biological inhibitor, and biochips

     65,175       65,175       3,300       29       32,396       (8,740 )      (2,342 )   

Associate

 

Imedtac Co., Ltd.

  

Taiwan

  

Providing medical AIoT solution, biomedical engineering services, and sales of medical device as an agent

     48,000       48,000       960       7       37,775       (38,035 )      (3,134 )   

Associate

 

(Continued)

- 85 -

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, 2023

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investor Company

  

Investee Company

  

Location

  

Main Businesses and Products

   Original Investment Amount     Balance as of June 30, 2023     Net Income
(Loss) of the
Investee		     Recognized
Gain (Loss)
(Notes 1 and 2)		    

Note

  June 30, 2023     December 31, 2022     Shares
(Thousands)		     Percentage of
Ownership (%)		     Carrying
Value		  

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

   $ 74,192     $ 74,192       2,600       100     $ 102,913     $ 1,783     $ 1,783    

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       2,139       56       56    

Subsidiary (Note 5)

 

Chunghwa Precision Test Tech. International, Ltd.

  

Samoa Islands

  

Wholesale and retail of electronic materials, and investment

     173,649       173,649       5,700       100       154,233       8,446       8,805    

Subsidiary (Note 5)

 

TestPro Investment Co., Ltd.

  

Taiwan

  

Investment

     135,000       135,000       13,500       100       82,184       (16,881 )      (16,238 )   

Subsidiary (Note 5)

TestPro Investment Co., Ltd.

  

NavCore Tech. Co., Ltd

  

Taiwan

  

Sale and manufacturing of smart equipment, smart factory software and hardware integration and technical consulting service

     108,500       108,500       10,850       54       75,791       (31,153 )      (16,901 )   

Subsidiary (Note 5)

Prime Asia Investments Group, Ltd.

  

Chunghwa Hsingta Co., Ltd.

  

Hong Kong

  

Investment

     375,274       375,274       1       100       166,293       8,264       8,264    

Subsidiary (Note 5)

Senao International (Samoa) Holding Ltd.

  

Senao International HK Limited

  

Hong Kong

  

International investment

     2,060,467       2,060,467       80,440       100       33,924       —         —      

Subsidiary (Notes 5 and 6)

Youth Co., Ltd.

  

ISPOT Co., Ltd.

  

Taiwan

  

Sale of information and communication technologies products

     53,021       53,021       —         100       13,864       311       215    

Subsidiary (Note 5)

 

Youyi Co., Ltd.

  

Taiwan

  

Maintenance of information and communication technologies products

     21,354       21,354       —         100       4,523       (472 )      (627 )   

Subsidiary (Note 5)

Aval Technologies Co., Ltd.

  

Wiin Technology Co., Ltd.

  

Taiwan

  

Sale of information and communication technologies products

     29,550       29,550       4,418       100       46,748       938       938    

Subsidiary (Note 5)

Senyoung Insurance Agent Co., Ltd.

  

Senaolife Insurance Agent Co., Ltd.

  

Taiwan

  

Life insurance services

     —         29,500       —         —         —         (2,013 )      (2,013 )   

Subsidiary (Notes 5 and 7)

CHYP Multimedia Marketing & Communications Co., Ltd

  

Click Force Marketing Company

  

Taiwan

  

Advertisement services

     44,607       44,607       1,715       49       42,424       2,954       1,492    

Associate

International Integrated Systems, Inc.

  

Infoexplorer International Co., Ltd.

  

Samoa

  

Investment

     24,806       24,806       795       100       30,499       1,178       1,178    

Subsidiary (Note 5)

 

Unitronics Technology Corp.

  

Taiwan

  

Development and maintenance of information system

     55,569       55,569       5,065       99.96       84,943       1,909       1,908    

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       24    

Subsidiary (Notes 5 and 8)

CHT Security Co., Ltd.

  

Baohwa Trust Co., Ltd.

  

Taiwan

  

VR integration and AIoT security services

     20,000       20,000       2,000       40       7,825       (13,603 )      (5,441 )   

Associate

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 6.

Note 5: The amount was eliminated upon consolidation.

Note 6: SIHK completed its liquidation in July 2023.

Note 7: The merger between SENYOUNG and Senaolife was completed on May 1, 2023, the merger completion date, with SENYOUNG being the surviving company.

 

Note 8: IEHK completed the cancellation of registration in June 2023.    (Concluded)

 

- 86 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA

SIX MONTHS ENDED JUNE 30, 2023

(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,
2023		     Investment
Flows		     Accumulated
Outflow of
Investment
from Taiwan
as of
June 30, 2023		     Net Income
(Loss) of the
Investee		     % Ownership
of Direct or
Indirect
Investment		     Investment
Gain (Loss)
(Note 2)		     Carrying Value
as of
June 30, 2023		     Accumulated
Inward
Remittance
of Earnings
as of
June 30,
2023		     Note  
  Outflow     Inflow  

Senao International Trading (Shanghai) Co., Ltd.

      Sale of information and communication technologies products   $ 955,838       2     $ 955,838     $ —       $ —       $ 955,838     $ —         100     $ —       $ —       $ —        

 Notes
7 and
10		  
 
 

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       —         100       —         —         —        

 Notes
8 and
10		  
 
 

Jiangsu Zhenghua Information Technology Company, LLC

      Providing intelligent energy saving solution and intelligent buildings services     189,410       2       142,057       —         —         142,057       —         75       —         —         —        

 Notes
9 and
10		  
 
 

Shanghai Taihua Electronic Technology Limited

      Design of printed circuit board and related consultation service     51,233       2       51,233       —         —         51,233       (325 )      100       (325 )      8,704       —        
 Note
10		  
 

Su Zhou Precision Test Tech. Ltd.

      Assembly processed of circuit board, design of printed circuit board and related consultation service     119,199       2       119,199       —         —         119,199       8,709       100       8,709       167,736       —        
 Note
10		  
 

Shanghai Chief Telecom Co., Ltd.

      Telecommunications and internet service     10,150       1       4,973       —         —         4,973       (90 )      49       (44 )      8,757       5,418      
 Note
10		  
 

(Continued)

 

- 87 -

Investee

    Accumulated Investment in
Mainland China as of
June 30, 2023		      Investment Amounts
Authorized by Investment
Commission, MOEA		      Upper Limit on Investment
Stipulated by Investment
Commission, MOEA		  

SENAO and its subsidiaries (Note 3)

    $ 955,838      $ 2,047,858      $ 3,671,516  

Chunghwa Telecom (China) Co., Ltd. (Note 4)

      177,176        177,176        226,057,355  

Jiangsu Zhenghua Information Technology Company, LLC (Note 4)

      142,057        142,057        226,057,355  

Chunghwa Precision Test Tech Co., Ltd and its subsidiaries (Note 5)

      170,432        216,185        4,536,773  

Shanghai Chief Telecom Co., Ltd. (Note 6)

      4,973        4,973        1,877,593  

 

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:

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

 

Note 8:

Chunghwa Telecom (China) Co., Ltd. completed its liquidation in October 2022.

 

Note 9:

Jiangsu Zhenhua Information Technology Company, LLC. completed its liquidation in December 2018.

 

Note 10:

The amount was eliminated upon consolidation.

(Concluded)

 

- 88 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

SIX MONTHS ENDED JUNE 30, 2023

(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)		  
2023     0     Chunghwa Telecom Co., Ltd.   Senao International Co., Ltd.   a   Accounts receivable   $ 175,035       —         —    
          Accounts payable     980,924       —         —    
          Amounts collected for others     135,733       —         —    
          Revenues     1,675,420       —         2  
          Operating costs and expenses     447,401       —         —    
      CHIEF Telecom Inc.   a   Revenues     238,586       —         —    
      Chunghwa System Integration Co., Ltd.   a   Accounts receivable     165,884       —         —    
          Accounts payable     376,545       —         —    
          Operating costs and expenses     568,266       —         1  
          Property, plant and equipment     134,555       —         —    
      Chunghwa Telecom Global Inc.   a   Operating costs and expenses     158,542       —         —    
      Donghwa Telecom Co., Ltd.   a   Accounts payable     129,131       —         —    
          Operating costs and expenses     268,042       —         —    
      Honghwa International Co., Ltd.   a   Accounts receivable     119,039       —         —    
          Accounts payable     736,593       —         —    
          Revenues     105,078       —         —    
          Operating costs and expenses     3,455,022       —         3  
      CHT Security Co., Ltd.   a   Operating costs and expenses     208,663       —         —    
      International Integrated Systems, Inc.   a   Operating costs and expenses     229,782       —         —    
      Chunghwa Telecom Singapore Pte., Ltd.   a   Accounts payable     206,796       —         —    
      Aval Technologies Co., Ltd.   a   Operating costs and expenses     223,155       —         —    

 

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, 2023, while revenues, costs and expenses are shown as a percentage to consolidated revenues for the six months ended June 30, 2023.

 

Note 5:

The amount was eliminated upon consolidation.

 

- 89 -

TABLE 8

CHUNGHWA TELECOM CO., LTD.

INFORMATION OF MAJOR STOCKHOLDERS

JUNE 30, 2023

 

 

Name of Major Stockholders

    Shares  
   Number of
Shares		      Percentage of
Ownership (%)		  

Ministry of Transportation and Communications

      2,737,718,976        35.29  

 

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.

 

- 90 -

Exhibit 99.3

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 30, 2023 and 2022

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)

 

 

    June 30, 2023
(Unaudited)		     December 31, 2022
(Audited)		     June 30, 2022
(Unaudited)		  
ASSETS   Amount         %     Amount         %     Amount         %  

CURRENT ASSETS

            

Cash and cash equivalents

   $ 49,754       9     $ 50,193       10     $ 54,262       10  

Financial assets at fair value through profit or loss

     4       —         4       —         —         —    

Hedging financial assets

     10       —         13       —         —         —    

Contract assets

     6,710       1       6,056       1       5,762       1  

Trade notes and accounts receivable, net

     21,996       4       24,672       5       22,313       4  

Receivables from related parties

     101       —         75       —         74       —    

Inventories

     10,773       2       11,316       2       11,074       2  

Prepayments

     5,402       2       2,398       —         5,274       1  

Other current monetary assets

     18,634       3       3,619       1       7,188       2  

Other current assets

     3,682       1       3,555       1       3,870       1  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total current assets

     117,066       22       101,901       20       109,817       21  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

NONCURRENT ASSETS

            

Financial assets at fair value through profit or loss

     1,028       —         1,020       —         929       —    

Financial assets at fair value through other comprehensive income

     3,928       1       3,491       1       3,495       1  

Investments accounted for using equity method

     6,892       1       6,949       1       6,898       1  

Contract assets

     3,414       1       3,137       1       2,855       1  

Property, plant and equipment

     287,487       54       291,528       56       285,066       54  

Right-of-use assets

     11,160       2       11,103       2       11,143       2  

Investment properties

     10,158       2       9,804       2       9,735       2  

Intangible assets

     75,902       14       79,187       15       80,746       15  

Deferred income tax assets

     2,139       —         2,197       —         2,587       1  

Incremental costs of obtaining contracts

     950       —         980       —         951       —    

Net defined benefit assets

     5,579       1       5,266       1       3,743       1  

Prepayments

     2,750       1       1,728       —         1,854       —    

Other noncurrent assets

     4,380       1       4,705       1       6,592       1  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total noncurrent assets

     415,767       78       421,095       80       416,594       79  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL

   $ 532,833       100     $ 522,996       100     $ 526,411       100  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     June 30, 2023
(Unaudited)		      December 31, 2022
(Audited)		      June 30, 2022
(Unaudited)		  
LIABILITIES AND EQUITY    Amount          %      Amount         %      Amount         %  

CURRENT LIABILITIES

                

Short-term loans

    $ 654        —        $ 722       —        $ 442       —    

Financial liabilities at fair value through profit or loss

      —          —          —         —          2       —    

Hedging financial liabilities

      —          —          —         —          7       —    

Contract liabilities

      12,763        2        13,390       3        12,684       2  

Trade notes and accounts payable

      10,519        2        16,429       3        10,997       2  

Payables to related parties

      266        —          539       —          187       —    

Current tax liabilities

      6,171        1        6,999       1        6,032       1  

Lease liabilities

      3,330        1        3,339       1        3,247       1  

Dividends Payable

      36,476        7        —         —          35,746       7  

Other payables

      22,349        5        25,080       5        21,880       4  

Provisions

      224        —          226       —          226       —    

Other current liabilities

      894        —          1,016       —          1,057       —    
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total current liabilities

      93,646        18        67,740       13        92,507       17  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NONCURRENT LIABILITIES

                

Long-term loans

      1,600        —          1,600       —          1,600       —    

Bonds payable

      30,480        6        30,477       6        30,475       6  

Contract liabilities

      7,589        2        7,674       2        7,098       2  

Deferred income taxes liabilities

      2,368        —          2,301       —          2,229       —    

Provisions

      474        —          173       —          153       —    

Lease liabilities

      7,327        2        7,334       2        7,215       2  

Customers’ deposits

      5,069        1        5,157       1        5,006       1  

Net defined benefit liabilities

      2,272        —          2,285       —          2,276       —    

Other noncurrent liabilities

      6,483        1        6,726       1        4,980       1  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total noncurrent liabilities

      63,662        12        63,727       12        61,032       12  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total liabilities

      157,308        30        131,467       25        153,539       29  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT

                

Common stocks

      77,574        15        77,574       15        77,574       15  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Additional paid-in capital

      149,845        27        149,844       29        149,825       28  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Retained earnings

                

Legal reserve

      77,574        15        77,574       15        77,574       15  

Special reserve

      2,899        1        3,084       1        3,084       1  

Unappropriated earnings

      55,509        10        71,268       13        53,606       10  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total retained earnings

      135,982        26        151,926       29        134,264       26  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Others

      218        —          (223 )      —          (377 )      —    
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total equity attributable to stockholders of the parent

      363,619        68        379,121       73        361,286       69  

NONCONTROLLING INTERESTS

      11,906        2        12,408       2        11,586       2  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total equity

      375,525        70        391,529       75        372,872       71  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

TOTAL

    $ 532,833        100      $ 522,996       100      $ 526,411       100  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
 

 

- 1 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Unaudited)

 

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  
     Amount         %      Amount         %      Amount         %      Amount         %  

REVENUES

    $ 53,463       100      $ 52,435       100      $ 107,674       100      $ 103,730       100  

OPERATING COSTS

      33,076       62        32,346       62        66,706       62        64,037       62  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

GROSS PROFIT

      20,387       38        20,089       38        40,968       38        39,693       38  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OPERATING EXPENSES

                    

Marketing

      5,604       10        5,592       11        11,276       10        11,037       11  

General and administrative

      1,631       3        1,542       2        3,288       3        3,090       2  

Research and development

      923       2        953       2        1,901       2        1,802       2  

Expected credit loss (reversal of credit loss)

      (29 )      —          (27 )      —          71       —          74       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total operating expenses

      8,129       15        8,060       15        16,536       15        16,003       15  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OTHER INCOME AND EXPENSES

      2       —          (3 )      —          2       —          (4 )      —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME FROM OPERATIONS

      12,260       23        12,026       23        24,434       23        23,686       23  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NON-OPERATING INCOME AND EXPENSES

                    

Interest income

      201       —          64       —          319       —          88       —    

Other income

      204       —          210       —          249       —          254       —    

Other gains and losses

      (49 )      —          62       —          (153 )      —          (47 )      —    

Interest expenses

      (77 )      —          (65 )      —          (153 )      —          (121 )      —    

Share of profits of associates and joint ventures accounted for using equity method

      139       —          211       —          236       —          316       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total non-operating income and expenses

      418       —          482       —          498       —          490       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME BEFORE INCOME TAX

      12,678       23        12,508       23        24,932       23        24,176       23  

INCOME TAX EXPENSE

      1,008       1        1,054       1        3,840       3        3,829       3  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NET INCOME

      11,670       22        11,454       22        21,092       20        20,347       20  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

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

      (112 )      —          (79 )      —          437       —          (124 )      —    

Gain or loss on hedging instruments subject to basis adjustment

      9       —          (15 )      —          (3 )      —          1       —    

Share of other comprehensive income (loss) of associates and joint ventures

      (2 )      —          —         —          8       —          2       —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
     (105 )      —          (94 )      —          442       —          (121 )      —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

 

(Continued)

- 2 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Unaudited)

 

 

     Three Months Ended June 30      Six Months Ended June 30  
     2023      2022      2023      2022  
     Amount         %      Amount         %      Amount          %      Amount          %  

Items that may be reclassified subsequently to profit or loss:

                      

Exchange differences arising from the translation of the foreign operations

    $ 54       —        $ 75       —        $ 7        —        $ 152        —    

Share of other comprehensive income of associates and joint ventures

      3       —          1       —          2        —          1        —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     57       —          76       —          9        —          153        —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total other comprehensive income (loss), net of income tax

      (48 )      —          (18 )      —          451        —          32        —    
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL COMPREHENSIVE INCOME

    $ 11,622       22      $ 11,436       22      $ 21,543        20      $ 20,379        20  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NET INCOME ATTRIBUTABLE TO

                      

Stockholders of the parent

    $ 11,352       21      $ 11,021       21      $ 20,522        19      $ 19,601        19  

Noncontrolling interests

      318       1        433       1        570        1        746        1  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 11,670       22      $ 11,454       22      $ 21,092        20      $ 20,347        20  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

COMPREHENSIVE INCOME ATTRIBUTABLE TO

                      

Stockholders of the parent

    $ 11,303       21      $ 11,007       21      $ 20,973        19      $ 19,634        19  

Noncontrolling interests

      319       1        429       1        570        1        745        1  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 11,622       22      $ 11,436       22      $ 21,543        20      $ 20,379        20  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

EARNINGS PER SHARE

                      

Basic

    $ 1.46        $ 1.42        $ 2.64         $ 2.53     
  

 

 

       

 

 

       

 

 

        

 

 

     

Diluted

    $ 1.46        $ 1.42        $ 2.64         $ 2.52     
  

 

 

       

 

 

       

 

 

        

 

 

     

 

(Concluded)

- 3 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Millions of New Taiwan Dollars)

(Unaudited)

 

 

    Equity Attributable to Stockholders of the Parent              
                                        Others                    
                                        Exchange                                      
                                        Differences                                      
                                        Arising     Unrealized                                
                                        from the     Gain or Loss                 Total Equity              
                Retained Earnings     Translation of     on Financial     Gain or Loss           Attributable to              
          Additional           Special     Unappropriated     Total Retained     the Foreign     Assets at     on Hedging           Stockholders     Noncontrolling        
    Common Stocks     Paid-in Capital     Legal Reserve     Reserve     Earnings     Earnings     Operations     FVOCI     Instruments     Total Others     of the Parent     Interests     Total Equity  

BALANCE, JANUARY 1, 2022

   $ 77,574     $ 149,810     $ 77,574     $ 2,676     $ 70,157     $ 150,407     $ (392 )    $ (8 )    $ (8 )    $ (408 )    $ 377,383     $ 11,747     $ 389,130  

Appropriation of 2021 earnings

                          

Special reserve

     —         —         —         408       (408 )      —         —         —         —         —         —         —         —    

Cash dividends recognized by Chunghwa

     —         —         —         —         (35,746 )      (35,746 )      —         —         —         —         (35,746 )      —         (35,746 ) 

Cash dividends recognized by subsidiaries

     —         —         —         —         —         —         —         —         —         —         —         (1,053 )      (1,053 ) 

Reversal of unclaimed dividend

     —         —         —         —         —         —         —         —         —         —         —         —         —    

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

     —         —         —         —         —         —         —         —         —         —         —         —         —    

Net income for the six months ended June 30, 2022

     —         —         —         —         19,601       19,601       —         —         —         —         19,601       746       20,347  

Other comprehensive income (loss) for the six months ended June 30, 2022

     —         —         —         —         2       2       139       (109 )      1       31       33       (1 )      32  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the six months ended June 30, 2022

     —         —         —         —         19,603       19,603       139       (109 )      1       31       19,634       745       20,379  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

     —         15       —         —         —         —         —         —         —         —         15       55       70  

Net increase in noncontrolling interests

     —         —         —         —         —         —         —         —         —         —         —         92       92  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JUNE 30, 2022

   $ 77,574     $ 149,825     $ 77,574     $ 3,084     $ 53,606     $ 134,264     $ (253 )    $ (117 )    $ (7 )    $ (377 )    $ 361,286     $ 11,586     $ 372,872  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JANUARY 1, 2023

   $ 77,574     $ 149,844     $ 77,574     $ 3,084     $ 71,268     $ 151,926     $ (111 )    $ (125 )    $ 13     $ (223 )    $ 379,121     $ 12,408     $ 391,529  

Appropriation of 2022 earnings

                          

Special reserve

     —         —         —         (185 )      185       —         —         —         —         —         —         —         —    

Cash dividends recognized by Chunghwa

     —         —         —         —         (36,476 )      (36,476 )      —         —         —         —         (36,476 )      —         (36,476 ) 

Cash dividends recognized by subsidiaries

     —         —         —         —         —         —         —         —         —         —         —         (1,092 )      (1,092 ) 

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

     —         —         —         —         —         —         —         —         —         —         —         —         —    

Net income for the six months ended June 30, 2023

     —         —         —         —         20,522       20,522       —         —         —         —         20,522       570       21,092  

Other comprehensive income (loss) for the six months ended June 30, 2023

     —         —         —         —         10       10       8       436       (3 )      441       451       —         451  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the six months ended June 30, 2023

     —         —         —         —         20,532       20,532       8       436       (3 )      441       20,973       570       21,543  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

     —         1       —         —         —         —         —         —         —         —         1       20       21  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JUNE 30, 2023

   $ 77,574     $ 149,845     $ 77,574     $ 2,899     $ 55,509     $ 135,982     $ (103 )    $ 311     $ 10     $ 218     $ 363,619     $ 11,906     $ 375,525  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

 

 

     Six Months Ended June 30  
     2023     2022  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Income before income tax

    $ 24,932     $ 24,176  

Adjustments to reconcile income before income tax to net cash provided by operating activities:

     

Depreciation

      16,456       16,354  

Amortization

      3,354       3,275  

Amortization of incremental costs of obtaining contracts

      428       418  

Expected credit loss

      71       74  

Interest expense

      153       121  

Interest income

      (319 )      (88 ) 

Dividend income

      (162 )      (153 ) 

Compensation cost of share-based payment transactions

      5       8  

Share of profits of associates and joint ventures accounted for using equity method

      (236 )      (316 ) 

Loss (gain) on disposal of property, plant and equipment

      (2 )      4  

Gain on disposal of financial instruments

      —         (1 ) 

Loss on disposal of investments accounted for using equity method

      —         1  

Provision for impairment loss and obsolescence of inventory (reversal of impairment loss)

      (9 )      63  

Valuation loss on financial assets and liabilities at fair value through profit or loss, net

      88       63  

Others

      15       104  

Changes in operating assets and liabilities:

     

Decrease (increase) in:

     

Contract assets

      (932 )      (455 ) 

Trade notes and accounts receivable

      2,595       1,567  

Receivables from related parties

      (26 )      (33 ) 

Inventories

      552       190  

Prepayments

      (3,009 )      (3,000 ) 

Other current monetary assets

      (476 )      (387 ) 

Other current assets

      (127 )      (891 ) 

Incremental cost of obtaining contracts

      (398 )      (381 ) 

Increase (decrease) in:

     

Contract liabilities

      (712 )      708  

Trade notes and accounts payable

      (5,910 )      (7,062 ) 

Payables to related parties

      (273 )      (205 ) 

Other payables

      (2,794 )      (2,245 ) 

Provisions

      299       (48 ) 

Other current liabilities

      (104 )      73  

Net defined benefit plans

      (326 )      (363 ) 
  

 

 

    

 

 

  

Cash generated from operations

      33,133       31,571  

 

(Continued)

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

 

 

     Six Months Ended June 30  
     2023     2022  

Interests paid

    $ (125 )    $ (75 ) 

Income taxes paid

      (4,543 )      (4,090 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      28,465       27,406  
  

 

 

    

 

 

  

CASH FLOWS FROM INVESTING ACTIVITIES

     

Acquisition of financial assets at fair value through other comprehensive income

      —         (3 ) 

Acquisition of financial assets at fair value through profit or loss

      (115 )      (116 ) 

Proceeds from disposal of financial assets at fair value through profit or loss

      —         9  

Proceeds from capital reduction and profit distribution of financial assets at fair value through profit or loss

      19       66  

Acquisition of time deposits and negotiable certificates of deposit with maturities of more than three months

      (28,442 )      (4,938 ) 

Proceeds from disposal of time deposits and negotiable certificates of deposit with maturities of more than three months

      14,406       3,599  

Acquisition of investments accounted for using equity method

      —         (20 ) 

Proceeds from capital reduction of investments accounted for using equity method

      —         340  

Acquisition of property, plant and equipment

      (11,774 )      (11,784 ) 

Proceeds from disposal of property, plant and equipment

      13       4  

Acquisition of intangible assets

      (68 )      (75 ) 

Acquisition of investment properties

      (48 )      (18 ) 

Decrease (increase) in other noncurrent assets

      331       (1,743 ) 

Increase in prepayments for leases

      (1,017 )      —    

Interests received

      282       78  

Dividends received

      9       5  
  

 

 

    

 

 

  

Net cash used in investing activities

      (26,404 )      (14,596 ) 
  

 

 

    

 

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

     

Proceeds from short-term loans

      1,975       420  

Repayments of short-term loans

      (2,043 )      (43 ) 

Proceeds from issuance of bonds

      —         3,500  

Payments for transaction costs attributable to the issuance of bonds

      —         (4 ) 

Decrease in customers’ deposits

      (104 )      (344 ) 

Payments for the principal of lease liabilities

      (2,084 )      (1,932 ) 

Decrease in other noncurrent liabilities

      (243 )      (102 ) 

Cash dividends distributed to noncontrolling interests

      (6 )      —    

Change in other noncontrolling interests

      16       154  

Payment of claimed dividend

      —         —    
  

 

 

    

 

 

  

Net cash provided by (used in) financing activities

      (2,489 )      1,649  
  

 

 

    

 

 

  

 

(Continued)

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

 

 

     Six Months Ended June 30  
     2023     2022  

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

    $ (11 )    $ 24  

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

      (439 )      14,483  

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

      50,193       39,779  
  

 

 

    

 

 

  

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $  49,754     $  54,262  
  

 

 

    

 

 

  

(Concluded)

 

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2023 and 2022

(Unaudited)

 

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of June 30, 2023 and 2022, the related consolidated statements of comprehensive income for the three months ended June 30, 2023 and 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the six months ended June 30, 2023 and 2022 in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standard Board (IASB). The consolidated financial statements are incomplete as they omit the related footnote disclosures as required under International Financial Reporting Standards as issued by IASB.

 

- 8 -

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