CHT — Annual Report 2020

Nov 9, 2020

Chunghwa Telecom Co., Ltd.

Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors' Report

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020		2019
ASSETS	Amount	%	Amount	%
CURRENT ASSETS Cash and cash equivalents (Notes 3 and 6)	\$ 20,090,053	4	\$ 25,081,712	5
Financial assets at fair value through profit or loss (Notes 3, 4 and 7)	2,271	-	-	-
Hedging financial assets (Notes 3 and 19)	1,752	-	327	-
Contract assets (Notes 3 and 27)	1,734,081	1	1,470,985	-
Trade notes and accounts receivable, net (Notes 3, 4, 9 and 27)	19,554,643	4	23,478,061	5
Receivables from related parties (Note 34)	1,340,550	-	785,570	-
Inventories (Notes 3, 4 and 10)	7,046,686	1	12,491,728	3
Prepayments (Note 11)	1,691,978	-	1,436,346	-
Other current monetary assets (Notes 12, 25 and 31) Other current assets (Note 18)	1,281,393 2,183,471	- 1	2,866,059 2,354,215	1 1
Total current assets	54,926,878	11	69,965,003	15
NONCURRENT ASSETS
Financial assets at fair value through profit or loss (Notes 3, 4 and 7)	677,202	-	778,105	-
Financial assets at fair value through other comprehensive income (Notes 3, 4 and 8)	6,903,679	1	6,923,315	2
Investments accounted for using equity method (Notes 3 and 13)	20,338,212	4	20,320,122	4
Contract assets (Notes 3 and 27) Property, plant and equipment (Notes 3, 4, 14, 31 and 34)	1,007,608 272,623,164	- 56	804,698 274,744,872	- 60
Right-of-use assets (Notes 3, 4, and 15)	10,028,227	2	10,292,025	2
Investment properties (Notes 3, 4, 16, 31 and 34)	9,546,547	2	8,094,618	2
Intangible assets (Notes 3, 4, 17 and 31)	89,723,406	19	46,519,457	10
Deferred income tax assets (Notes 3 and 29)	2,623,633	1	2,719,035	1
Incremental costs of obtaining contracts (Notes 3 and 27)	7,015,079	1	6,976,421	2
Net defined benefit assets (Notes 3, 4 and 25)	3,351,546	1	2,108,176	1
Prepayments (Note 11) Other noncurrent assets (Notes 18 and 35)	1,152,722 4,421,119	1 1	1,381,618 5,687,816	- 1
Total noncurrent assets	429,412,144	89	387,350,278	85
TOTAL	\$ 484,339,022	100	\$ 457,315,281	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term bills payable (Note 20)	\$ 6,999,198	1	\$ -	-
Financial liabilities at fair value through profit or loss (Notes 3, 4 and 7)	-	-	228	-
Contract liabilities (Notes 3, 27 and 34)	12,661,964	3	16,684,939	3
Trade notes and accounts payable (Note 22)	12,226,935	3	12,052,523	3
Payables to related parties (Note 34)	3,380,488	1	3,663,713	1
Current tax liabilities (Notes 3 and 29)	3,914,134	1	3,739,435	1
Lease liabilities (Notes 3, 4, 15, 31 and 34) Other payables (Notes 23 and 31)	2,938,305 20,046,085	1 4	2,939,410 19,270,583	1 4
Provisions (Notes 3 and 24)	214,266	-	107,902	-
Other current liabilities	976,630	-	923,457	-
Total current liabilities	63,358,005	14	59,382,190	13
NONCURRENT LIABILITIES
Bonds payable (Notes 21)	19,980,272	4	-	-
Contract liabilities (Notes 3 and 27)	5,341,114	1	4,414,979	1
Deferred income tax liabilities (Notes 3 and 29)	1,935,233	-	1,880,925	-
Provisions (Notes 3 and 24)	100,616	-	97,382	-
Lease liabilities (Notes 3, 4, 15, 31 and 34)	5,682,342	1	5,755,804	2
Customers' deposits (Note 34)	4,722,280	1	4,653,517	1
Net defined benefit liabilities (Notes 3, 4 and 25) Other noncurrent liabilities	3,316,932 1,971,212	1 -	3,412,740 1,607,501	1 -
Total noncurrent liabilities	43,050,001	8	21,822,848	5
Total liabilities	106,408,006	22	81,205,038	18
EQUITY (Note 26) Common stocks	77,574,465	16	77,574,465	17
Additional paid-in capital	171,261,379	35	171,255,985	37
Retained earnings
Legal reserve	77,574,465	16	77,574,465	17
Special reserve	2,675,419	1	2,675,419	1
Unappropriated earnings	47,918,166	10	46,341,361	10
Total retained earnings Others	128,168,050 927,122	27 -	126,591,245 688,548	28 -
Total equity	377,931,016	78	376,110,243	82
TOTAL	\$ 484,339,022	100	\$ 457,315,281	100

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

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2020		2019
	Amount	%	Amount	%
REVENUES (Notes 3, 27, 34 and 39)	\$ 178,622,827	100	\$ 179,321,838	100
OPERATING COSTS (Notes 3, 10, 25, 27, 28, 34 and 39)	117,206,244	66	116,056,276	65
GROSS PROFIT	61,416,583	34	63,265,562	35
OPERATING EXPENSES (Notes 3, 9, 25, 28, 34 and 39)
Marketing	16,596,096	9	18,130,247	10
General and administrative	3,720,192	2	3,558,580	2
Research and development	3,129,236	2	3,341,306	2
Expected credit loss (reversal of credit loss)	45,689	-	(127,019)	-
Total operating expenses	23,491,213	13	24,903,114	14
OTHER INCOME AND EXPENSES (Notes 14, 16, 18, 28 and 39)	1,614,287	1	(16,583)	-
INCOME FROM OPERATIONS	39,539,657	22	38,345,865	21
NON-OPERATING INCOME AND EXPENSES Interest income (Note 39) Other income (Notes 8, 28 and 34) Other gains and losses (Notes 13, 28, 33 and 34) Interest expenses (Notes 15, 28, 34 and 39) Share of profits of subsidiaries, associates and	52,889 346,745 (100,341) (171,658)	- - - -	157,099 386,747 (5,572) (61,873)	- - - -
joint ventures accounted for using equity method (Notes 13 and 39)	1,216,137	1	1,440,326	1
Total non-operating income and expenses	1,343,772	1	1,916,727	1
INCOME BEFORE INCOME TAX	40,883,429	23	40,262,592	22
INCOME TAX EXPENSE (Notes 3 and 29)	7,477,299	4	7,474,046	4
NET INCOME	33,406,130	19	32,788,546	18 (Continued)

STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2020		2019
	Amount	%	Amount	%
TOTAL OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension plans (Note 25) Unrealized gain or loss on investments in equity instruments at fair value through other	\$ 1,170,312	1	\$ 1,506,290	1
comprehensive income (Notes 3, 26 and 33) Gain or loss on hedging instruments subject to	546,879	-	399,429	-
basis adjustment (Notes 3 and 19) Share of unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income of subsidiaries, associates and joint ventures (Notes 3, 13	1,425	-	(742)	-
and 26) Share of remeasurements of defined benefit pension plans of subsidiaries, associates and	(126,890)	-	(101,103)	-
joint ventures (Note 13) Income tax relating to items that will not be	708	-	2,864	-
reclassified to profit or loss (Note 29)	(234,062)	-	(301,258)	-
	1,358,372	1	1,505,480	1
Items that may be reclassified subsequently to profit or loss: Exchange differences arising from the translation of the foreign operations	(156,990)	-	(71,056)	-
Share of exchange differences arising from the translation of the foreign operations of subsidiaries, associates and joint ventures (Note 13)	(9,164) (166,154)	- -	2,106 (68,950)	- -
Total other comprehensive income, net of income tax	1,192,218	1	1,436,530	1
TOTAL COMPREHENSIVE INCOME	\$ 34,598,348	20	\$ 34,225,076	19
EARNINGS PER SHARE (Note 30) Basic Diluted	\$ 4.31 \$ 4.30		\$ 4.23 \$ 4.22

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

STATEMENTS OF CHANGES IN EQUITYYEARS ENDED DECEMBER 31, 2020 AND ²⁰¹⁹ (In Thousands of New TaiwanDollars)

							Oth (No 19 and 26 ) tes ers
	Com n S toc ks mo	Ad diti l ona Pai d-in Ca ital p	Ret	ain nin (No ed Ear gs	te 2 6) ria Un ted app rop	Exc han ge Dif fer enc es Ari sin fro he m t g atio Tra nsl n of t eig he For n	Un lize d G ain rea Los or s on Fin ial Ass ets anc at F air Va lue h O thr the oug r Com sive hen pre	Ga in Los or s ing He dg on
	(No te 2 6)	(No te 2 6)	Leg al R ese rve	Spe cia l R ese rve	Ear nin gs	Op tion era s	Inc om e	Ins tru nts me	Tot al E ity qu
BA LA NC E, J AN UA RY 1, 201 9	\$ 77, 574 ,46 5	\$ 171 ,13 6,7 64	\$ 77, 574 ,46 5	\$ 2,6 75, 419	\$ 47, 090 ,52 2	\$ (79 ,42 7)	\$ 538 ,27 2	\$ 1,06 9	\$ 376 ,51 1,54 9
Ap iati of 2 018 nin pro pr on ear gs Cas h d ivid end s	-	-	-	-	( 34, 745 ,60 3)	-	-	-	( 34, 745 ,60 3)
clai d div ide nd Un me	-	1,26 6	-	-	-	-	-	-	1,26 6
Cha in add itio nal id-i ital fro m i s in sub sidi arie stm ent nge pa n c ap nve s, oci d jo int ted for usin ity tho d ates ture ass an ven s acc oun g equ me	-	117 ,95 5	-	-	-	-	-	-	117 ,95 5
Net inc e fo r th end ed D mb er 3 1, 2 019 om e y ear ece	-	-	-	-	32, 788 ,54 6	-	-	-	32, 788 ,54 6
Oth hen sive inc e ( los s) for the nde d D mb er 3 1, 2 019 er c om pre om ye ar e ece	-	-	-	-	1,20 7,8 96	(6 8,9 50)	298 ,32 6	(7 42)	1,43 6,5 30
al c hen sive inc e ( los s) for the nde d D mb er 3 1, 201 Tot 9 om pre om ye ar e ece	-	-	-	-	33, ,44 2 996	(6 8,9 50)	298 ,32 6	(7 42)	34, 225 ,07 6
BA LA NC E, D EC EM BE R 3 1, 2 019	77, 574 ,46 5	171 ,25 5,9 85	77, 574 ,46 5	2,6 75, 419	46, 341 ,36 1	( 148 ,37 7)	836 ,59 8	327	376 ,11 0,2 43
Ap iati of 2 019 nin pro pr on ear gs Cas h d ivid end s	-	-	-	-	( 32, 782 ,96 9)	-	-	-	( 32, 782 ,96 9)
Un clai d d ivid end me	-	1,60 5	-	-	-	-	-	-	1,60 5
Cha in add itio nal id-i ital fro m i s in sub sidi arie stm ent nge pa n c ap nve s, oci d jo int ted for usi ity tho d ates ture ass an ven s acc oun ng equ me	-	3,7 89	-	-	-	-	-	-	3,7 89
inc e fo the nde d D mb er 3 1, 2 020 Net om r ye ar e ece	-	-	-	-	33, 406 ,13 0	-	-	-	33, 406 ,13 0
Oth hen sive inc e ( los s) for the nde d D mb er 3 1, 2 020 er c om pre om ye ar e ece	-	-	-	-	936 ,95 8	( 166 ,15 4)	419 ,98 9	1,42 5	1,19 2,2 18
Tot al c hen sive inc ( los s) for the nde d D mb er 3 1, 2 020 om pre om e ye ar e ece	-	-	-	-	34, 343 ,08 8	( 166 ,15 4)	419 ,98 9	1,42 5	34, 598 ,34 8
Dis al o f in in e ity inst fai lue thr h o the tme nts ent s at pos ves qu rum r va oug r hen sive inc com pre om e	-	-	-	-	16,6 86	-	( 16,6 86)	-	-
BA LA NC EC R 3 1, 2 020 E, D EM BE	\$ 574 ,46 5 77,	\$ 171 ,26 1,37 9	\$ 574 ,46 5 77,	\$ 2,6 75, 419	\$ 47, 918 ,16 6	\$ ( 314 ,53 1)	\$ 1,2 39, 901	\$ 1,75 2	\$ 377 ,93 1,0 16

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

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020	2019
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	\$ 40,883,429	\$ 40,262,592
Adjustments for:
Depreciation	29,852,639	29,852,819
Amortization	5,335,650	4,168,630
Amortization of incremental costs of obtaining contracts	5,395,125	6,269,916
Expected credit loss (reversal of credit loss)	45,689	(127,019)
Interest expenses	171,658	61,873
Interest income	(52,889)	(157,099)
Dividend income	(240,821)	(292,450)
Share of profits of subsidiaries, associates and joint ventures
accounted for using equity method	(1,216,137)	(1,440,326)
Loss (gain) on disposal of property, plant and equipment	(1,435,864)	29,229
Gain on disposal of investment properties	(151,357)	-
Gain on disposal of investments accounted for using equity
method	(13,398)	(30,152)
Provision for impairment loss and obsolescence of inventory	1,124,350	475,024
Reversal of impairment loss on investment properties	(27,066)	(56,617)
Impairment loss on other assets	-	43,971
Valuation loss on financial assets and liabilities at fair value
through profit or loss, net	98,404	38,588
Others	8,473	(23,322)
Changes in operating assets and liabilities:
Decrease (increase) in:
Contract assets	(467,335)	46,157
Trade notes and accounts receivable	4,042,945	4,747,965
Receivables from related parties Inventories	(554,980) 4,320,692	32,304 (2,494,993)
Prepayments	(10,178)	(60,009)
Other current monetary assets	145,786	26,462
Other current assets	170,744	155,357
Incremental cost of obtaining contracts	(5,433,783)	(5,625,633)
Increase (decrease) in:
Contract liabilities	(3,096,840)	6,785,691
Trade notes and accounts payable	173,789	(4,720,176)
Payables to related parties	(283,225)	(779,499)
Other payables	(1,118,468)	297,078
Provisions	109,598	75,813
Other current liabilities	69,232	(49,362)
Net defined benefit plans	(168,867)	540,389
Cash generated from operations	77,676,995	78,053,201
Interest paid	(126,846)	(61,873)
Income tax paid	(7,386,952)	(7,846,879)
Net cash provided by operating activities	70,163,197	70,144,449
		(Continued)

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020	2019
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of financial assets at fair value through
other comprehensive income	\$ 297,476	\$ -
Proceeds from return of financial assets at fair value through other
comprehensive income	-	9,167
Acquisition of financial assets at fair value through profit or loss	-	(300,000)
Acquisition of time deposits and negotiable certificates of deposit
with maturities of more than three months	(11,803)	(9,700,000)
Proceeds from disposal of negotiable certificates of deposit with
maturities of more than three months	1,600,000	12,500,000
Acquisition of investments accounted for using equity method	(244,123)	(4,221,032)
Proceeds from disposal of investments accounted for using equity
method	-	32,470
Proceeds from capital reduction of investments accounted for using
equity method	-	12,932
Acquisition of property, plant and equipment	(22,740,612)	(22,427,073)
Proceeds from disposal of property, plant and equipment	316,940	50,991
Acquisition of intangible assets	(47,539,599)	(283,792)
Acquisition of investment properties	(54,435)	(523)
Proceeds from disposal of investment properties	188,300	-
Decrease (increase) in other noncurrent assets	96,334	(1,240,253)
Interest received	59,538	162,411
Cash dividends received from others	240,821	292,450
Cash dividends received from subsidiaries, associates and joint
ventures accounted for using equity method	1,309,769	939,221
Net cash used in investing activities	(66,481,394)	(24,173,031)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term bills payable	41,000,000	-
Repayment of short-term bills payable	(34,000,000)	-
Proceeds from issuance of bonds	20,000,000	-
Payments for transaction costs attributable to the issuance of bonds	(21,038)	-
Increase (decrease) in customers' deposits	52,704	(8,028)
Payments for the principal of lease liabilities	(3,287,475)	(3,306,322)
Increase in other noncurrent liabilities	363,711	246,130
Cash dividends paid	(32,782,969)	(34,745,603)
Unclaimed dividend	1,605	1,266
Net cash used in financing activities	(8,673,462)	(37,812,557)
		(Continued)

STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	2020	2019
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	\$ (4,991,659)	\$ 8,158,861
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR	25,081,712	16,922,851
CASH AND CASH EQUIVALENTS, END OF THE YEAR	\$ 20,090,053	\$ 25,081,712

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

NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL

Chunghwa Telecom Co., Ltd. ("the Company") was incorporated on July 1, 1996 in the Republic of China ("ROC"). The Company 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 the Company 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 the Company 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 the Company by reducing the government ownership to below 50% in various stages. In July 2000, the Company 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 the Company'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 the Company'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 the Company 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 the Company and completed the privatization plan.

The financial statements are presented in the Company's functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved and authorized for issue by the Board of Directors on February 23, 2021.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The accompanying financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of Preparation

The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values and net defined benefit liabilities (assets) which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

When preparing the accompanying financial statements, the Company used equity method to account for its investment in subsidiaries, associates and joint ventures. In order for the amounts of the net profit, other comprehensive income and total equity in the parent company only financial statements to be the same with those amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and consolidated basis were made to the captions of "investments accounted for using equity method", "share of profit (loss) of subsidiaries, associates and joint ventures accounted for using equity method", "share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method" and related equity items, as appropriate, in the parent company only financial statements.

Current and Noncurrent Assets and Liabilities

Current assets include:

• a. Assets held primarily for the purpose of trading;
• b. Assets expected to be realized within twelve months after the reporting period; and
• c. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

• a. Liabilities held primarily for the purpose of trading;
• b. Liabilities due to be settled within twelve months after the reporting period; and
• c. Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as noncurrent.

Foreign Currencies

In preparing the Company's financial statements, transactions in currencies other than the Company's functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined and related exchange differences are recognized in profit or loss. Conversely, when the fair value changes were recognized in other comprehensive income, related exchange difference shall be recognized in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting financial statements, the assets and liabilities of the Company's foreign operations (including of the subsidiaries, associates and joint ventures in other countries or currencies used different with the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income.

Cash Equivalents

Cash equivalents include commercial paper, negotiable certificates of deposit and triple stimulus vouchers with original maturities within three months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

Inventories

Inventories are stated at the lower of cost or net realizable value item by item, except for those that may be appropriate to group items of similar or related inventories. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. The calculation of the cost of inventory is derived using the weighted-average method.

Investments Accounted for Using Equity Method

Investments in subsidiaries, associates and joint ventures are accounted for using equity method.

a. Investment in subsidiaries

Subsidiaries are the entities controlled by the Company.

Under the equity method, the investment in subsidiaries is initially recognized at cost and the increase or decrease of carrying amount reflects the recognition of the Company's share of profit or loss and other comprehensive income of the subsidiaries after the date of acquisition. Besides, the Company also recognizes the Company's share of the change in other equity of the subsidiaries.

Changes in the Company's ownership interests in subsidiaries that do not result in the Company's loss of control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amounts of the investment of the subsidiaries and the fair value of the consideration paid or received is recognized directly in equity.

The acquisition cost in excess of the acquisition-date fair value of the identifiable net assets acquired is recognized as goodwill, which is included within the carrying amount of the investment and shall not be amortized. The acquisition-date fair value of the net identifiable assets acquired in excess of the acquisition cost is recognized immediately in profit or loss.

Unrealized profits and losses from downstream transactions with a subsidiary are eliminated in full. Profits and losses from upstream transactions with a subsidiary and sidestream transactions between subsidiaries are recognized in the Company's financial statements only to the extent of interests in the subsidiary that are not related to the Company.

b. Investments in associates and joint ventures

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby the Company and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

Under the equity method, an investment in an associate and a joint venture is initially recognized at cost and adjusted thereafter to recognize the Company's share of profit or loss and other comprehensive income of the associate and joint venture as well as the distribution received. The Company also recognizes its share in changes in the associates and joint ventures.

When the Company subscribes for new shares of an associate and a joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company's proportionate interest in the associate and joint venture. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to additional paid-in capital. When the adjustment should be debited to additional paid-in capital but the additional paid-in capital recognized from investments accounted for using equity method is insufficient, the shortage is debited to retained earnings.

Any excess of the cost of acquisition over the Company's share of the fair value of the identifiable net assets and liabilities of an associate and a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and shall not be amortized. Any excess of the Company's share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment's fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and joint venture. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required had that associate and joint venture directly disposed of the related assets or liabilities.

When the Company transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Company's financial statements only to the extent of interests in the associate and joint venture that are not related to the Company.

Property, Plant and Equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. Freehold land is not depreciated. The estimated useful lives, residual values and depreciation method are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period in which the property is derecognized.

Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

For a transfer from the investment properties to property, plant and equipment, the deemed cost of the property, plant and equipment for subsequent accounting is its carrying amount at the commencement of owner-occupation.

For a transfer from the property, plant and equipment to investment properties, the deemed cost of the investment properties for subsequent accounting is its carrying amount at the end of owner-occupation.

For a contract where a land owner provides land for the construction of buildings by a property developer in exchange for a certain percentage of the buildings, any exchange gain or loss is recognized when the exchange transaction occurs if the exchange transaction has commercial substance.

On derecognition of the investment properties, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period in which the property is derecognized.

Intangible Assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless the Company expects to dispose of the intangible asset before the end of its economic life.

Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss in the period in which the asset is derecognized.

Impairment of Property, Plant and Equipment, Right-of-use Assets, Intangible Assets and Incremental Costs of Obtaining Contracts

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

Impairment loss from the assets related to incremental cost of obtaining contracts is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Company expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

a. Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• 1) Measurement category
• a) Financial assets at fair value through profit or loss (FVTPL)

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at fair value through other comprehensive income (FVOCI).

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend earned on the financial asset. Fair value is determined in the manner described in Note 33.

b) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
• ii. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss, except for short-term receivables as the effect of discounting is immaterial. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such financial assets.

c) Investments in equity instruments at FVOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVOCI. Designation at FVOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments. Instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company's right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

2) Impairment of financial assets and contract assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable) and contract assets.

The Company recognizes lifetime Expected Credit Loss (ECL) for accounts receivable and contract assets. For all other financial instruments, the Company recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes an impairment loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

3) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset measured at amortized cost in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

On derecognition of investments in equity instruments at FVOCI in its entirety, the cumulative gain or loss is directly transferred to retained earnings, and it is not reclassified to profit or loss.

b. Financial liabilities

1) Subsequent measurement

Except for financial liabilities at FVTPL, all the financial liabilities are subsequently measured at amortized cost using the effective interest method.

2) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

c. Derivative financial instruments

The Company enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including forward exchange contracts.

Derivatives are initially measured at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship. When the fair value of derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

Hedge Accounting

The Company designates some derivatives instruments as cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and are included in the initial cost of the non-financial asset or non-financial liability.

The Company discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. The cumulative gain or loss on the hedging instrument that has been previously recognized in other comprehensive income from the period when the hedge was effective remains separately in equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognized immediately in profit or loss.

Provisions

Provisions are measured at the best estimate of the expenditure required to settle the Company's obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. The provisions for warranties claims are made by management according to the sales agreements which represent the management's best estimate of the future outflow of economic benefits. The provisions of warranties claims are recognized as operating cost in the period in which the goods are sold. 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.

Revenue Recognition

The Company identifies the performance obligations in the contract with the customers, allocates transaction price to each performance obligation and recognizes revenue when performance obligations are satisfied.

Sales of products are recognized as revenue when the Company delivers products and the customer accepts and controls the product. Except for the consumer electronic products such as mobile devices sold in channel stores which are usually in cash sale, the Company recognizes revenues for sale of other electronic devices and corresponding trade notes and accounts receivable.

Usage revenues from fixed-line services (including local, domestic long distance and international long distance telephone services), mobile services, internet and data services, and interconnection and call transfer fees from other telecommunications companies and carriers are billed in arrears and are recognized based upon seconds or minutes of traffic processed when the services are provided in accordance with contract terms. The usage revenues and corresponding trade notes and accounts receivable are recognized monthly.

Other revenues are recognized as follows: (a) one-time subscriber connection fees (on fixed-line services) are first recognized as contract liabilities and revenues are recognized subsequently over the average expected customer service periods, (b) monthly fees (on fixed-line services, mobile, internet and data services) and related receivables are accrued monthly, and (c) prepaid services (fixed-line, mobile, internet and data services) are recognized as contract liabilities upon collection considerations from customers and are recognized as revenues subsequently based upon actual usage by customers.

Where the Company enters into transactions which involve both the provision of telecommunications service bundled with products such as handsets, total consideration received from products and telecommunications service in these arrangements are allocated based on their relative stand-alone selling price. The amount of sales revenue recognized for products is not limited to the amount paid by the customer for the products. When the amount of sales revenue recognized for products exceeded the amount paid by the customer for the products, the difference is recognized as contract assets. Contract assets are reclassified to accounts receivable when the amounts become collectible from customers subsequently. When the amount of sales revenue recognized for products was less than the amount paid by the customer for the products, the difference is recognized as contract liabilities and revenues are recognized subsequently when the telecommunications service are provided.

For project business contracts, if a substantial part of the Company's promise to customers is to manage and coordinate the various tasks and assume the risks of those tasks to ensure the individual goods or services are incorporated into the combined output, they are treated as a single performance obligation since the Company provides a significant integration service. The Company recognizes revenues and corresponding accounts receivable when the project business contract is completed and accepted by customers.

For service contracts such as maintenance and warranties, customers simultaneously receive and consume the benefits provided by the Company; thus revenues and corresponding accounts receivable of service contracts are recognized over the related service period.

When another party is involved in providing goods or services to a customer, the Company is acting as a principal if it controls the specified good or service before that good or service is transferred to a customer; otherwise, the Company is acting as an agent. When the Company is acting as a principal, gross inflow of economic benefits arising from transactions is recognized as revenue. When the Company is acting as an agent, revenue is recognized as its share of transaction.

Incremental Costs of Obtaining Contracts

Commissions and equipment subsidy related to telecommunications service as a result of obtaining contracts are recognized as an asset under the incremental costs of obtaining contracts to the extent the costs are expected to be recovered, and are amortized over the contract period. However, the Company elects not to capitalize the incremental costs of obtaining contracts if the amortization period of the assets that the Company otherwise would have recognized is expected to be one year or less.

Leasing

At inception of a contract, the Company assesses whether the contract is, or contains, a lease.

a. The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

b. The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for lease payments for low-value assets are recognized as expenses on a straight-line basis over the lease terms accounted for applying recognition exemption.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities and for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and accumulated impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented separately on the balance sheets.

Right-of-use assets are depreciated using the straight-line basis from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities were initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If such rate cannot be readily determined, the lessee's incremental borrowing rate is used.

Lease liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. The Company accounts for the remeasurement of the lease liability as a result of the decrease of lease scope by decreasing the carrying amount of the right-of-use assets and recognizes in profit or loss any gain or loss on the partial or full termination of the lease. Lease liabilities are presented separately on the balance sheets.

Variable lease payments not depending on an index or a rate are recognized as expenses in the periods in which they are incurred.

Borrowing Costs

All borrowing costs are recognized in profit or loss in the period in which they are incurred.

Government Grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to government grants and that the grants will be received.

Government grants related to income are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes expenses of the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Company should construct noncurrent assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Employee Benefits

a. Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

b. Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and gains or losses on settlements) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising (a) actuarial gains and losses; and (b) the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company's defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

c. Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plan except that remeasurement is recognized in profit or loss.

Income Tax

Income tax expense represents the sum of the tax currently payable and deferred tax.

a. Current tax

According to the Income Tax Act in the ROC, an additional tax of unappropriated earnings is provided for in the year the stockholders approve to retain the earnings.

Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Company's financial statements and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused tax credits from purchases of machinery, equipment and technology and research, development expenditures, etc. to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and such temporary differences are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

c. Current and deferred tax

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income, in which case, the current and deferred tax are also recognized in other comprehensive income.

Where current tax or deferred tax arises from the initial accounting for the acquisition of a subsidiary, the tax effect is included in the accounting for the investments in a subsidiary.

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.

a. Critical accounting judgments

Revenue recognition

The Company's project agreements are mainly to provide one or more customized equipment or services to customers. In order to fulfill the agreements, another party may be involved in some agreements. The Company considers the following factors to determine whether the Company is a principal of the transaction: whether the Company is the primary obligation provider of the agreements, its exposures to inventory risks and the discretion in establishing prices, etc. The determination of whether the Company is a principal or an agent will affect the amount of revenue recognized by the Company. Only when the Company is acting as a principal, gross inflows of economic benefits arising from transactions is recognized as revenue.

Control over subsidiaries

As discussed in Note 13, some entities are subsidiaries of the Company although the Company only owns less than 50% ownership interests in these entities. After considering the Company's absolute size of holding in the entity and the relative size of and the dispersion of shares owned by the other stockholders, and the contractual arrangements between the Company and other investors, potential voting interests and the written agreement between stockholders, the management concluded that the Company has a sufficiently dominant voting interest to direct the relevant activities of the entity and therefore the Company has control over these entities.

b. Key sources of estimation uncertainty and assumption

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period. Actual results may differ from these estimates.

1) Impairment of trade notes and accounts receivable

The provision for impairment of trade notes and accounts receivable is based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company's past experience, current market conditions as well as forward looking information at the end of each reporting period. For details of the key assumptions and inputs used, see Note 9. Where the actual future cash flows are less than expected, a material impairment loss may arise.

2) Fair value measurements and valuation processes

For the assets and liabilities measured at fair value without quoted prices in active markets, the Company's management determines the appropriate valuation techniques for the fair value measurements and whether to engage third party qualified appraisers based on the related regulations and professional judgments.

Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities was disclosed in Note 33. If the actual changes of inputs in the future differ from expectation, the fair value may vary accordingly. The Company updates inputs periodically to monitor the appropriateness of the fair value measurement.

3) Provision for inventory valuation and obsolescence

Inventories are stated at the lower of cost or net realizable value. Net realizable value is calculated as the estimated selling price less the estimated selling costs. Comparison of net realizable value and cost is determined on an item by item basis, except for those similar items which could be categorized into the same groups. The Company uses the inventory holding period and turnover as the evaluation basis for inventory obsolescence losses.

4) Impairment of property, plant and equipment, right-of-use assets and intangible assets

When an indication of impairment is assessed with objective evidence, the Company considers whether the recoverable amount of an asset is less than its carrying amount and recognizes the impairment loss based on difference between the recoverable amount and its carrying amount. The estimate of recoverable amount would impact on the timing and the amount of impairment loss recognition.

5) Useful lives of property, plant and equipment

As discussed in Note 3, "Summary of Significant Accounting Policies - Property, Plant and Equipment", the Company reviews estimated useful lives of property, plant and equipment at the end of each year.

6) Recognition and measurement of defined benefit plans

Net defined benefit liabilities (assets) and the resulting pension expense under defined benefit pension plans are calculated using the Projected Unit Credit Method. Actuarial assumptions comprise the discount rate, employee turnover rate, average future salary increase and etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability.

7) Lessees' incremental borrowing rates

In determining a lessee's incremental borrowing rate used in discounting lease payments, a risk-free rate for relevant duration and the same currency is selected as a reference rate. The lessee's credit spread adjustments and lease specific adjustments are also taken into account.

5. APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financial Reporting Interpretations Committee Interpretations (IFRIC) and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

The initial application of the amendments to the IFRS, IAS, IFRIC and SIC issued by the International Accounting Standards Board and endorsed and issued into effect by the FSC (collectively, the "Taiwan-IFRSs") does not have material impacts on the Company's financial statements.

b. Amendments to IFRSs endorsed by the FSC for application starting from January 1, 2021

	New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16	Interest Rate Benchmark Reform - phase 2	January 1, 2021

The application of the above new, revised or amended standards and interpretations will not have material impact on the Company's financial statements.

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

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

• Note 1: Unless stated otherwise, the above new IFRSs are effective for annual periods beginning on or after their respective effective dates.
• Note 2: The amendments to IFRS 9 are applied prospectively to financial liabilities that are exchanged or modified on or after the annual reporting periods beginning on or after January 1, 2022.
• Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the annual reporting period beginning on or after January 1, 2022.
• Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
• Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the 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

		December 31
	2020		2019
Cash
Cash on hand	\$	125,611	\$ 137,811
Bank deposits	4,463,396		4,114,398
	4,589,007		4,252,209
			(Continued)

	December 31
	2020	2019
Cash equivalents (investments with maturities of less than three months)
Commercial paper Negotiable certificates of deposit Triple stimulus vouchers	\$ 12,899,702 2,600,000 1,344 15,501,046	\$ 19,129,503 1,700,000 - 20,829,503
	\$ 20,090,053	\$ 25,081,712 (Concluded)

The annual yield rates of bank deposits, commercial paper and negotiable certificates of deposit were as follows:

	December 31
	2020	2019
Bank deposits	0.00%-0.05%	0.00%-0.33%
Commercial paper	0.14%-0.26%	0.48%-0.54%
Negotiable certificates of deposit	0.24%-0.30%	0.58%-0.60%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	December 31
	2020	2019
Financial assets - current
Mandatorily measured at FVTPL Derivatives (not designated for hedge) Forward exchange contracts	\$ 2,271	\$ -
Financial assets - noncurrent
Mandatorily measured at FVTPL Non-derivatives
Non-listed stocks - domestic	\$441,095	\$510,801
Non-listed stocks - foreign	236,107	267,304
	\$677,202	\$778,105
Financial liabilities - current
Held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	\$ -	\$ 228

The Company increased its investment in Taiwania Capital Buffalo Fund Co., Ltd. proportionally for 300,000 thousand in October 2019 and the Company's ownership interest in Taiwania Capital Buffalo Fund Co., Ltd. remained at 12.90%.

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

	Currency	Maturity Period	Contract Amount (In Thousands)
December 31, 2020
Forward exchange contracts - buy Forward exchange contracts - sell	NT\$/EUR US\$/NT\$	2021.03 2021.02	NT\$50,435 / EUR1,500 US\$13,000 / NT\$365,375
December 31, 2019
Forward exchange contracts - buy	NT\$/EUR	2020.03	NT\$50,910 / EUR1,500

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

	December 31
	2020	2019
Domestic investments
Listed stocks	\$ 2,610,501	\$ 2,388,416
Non-listed stocks	4,185,924	4,410,578
Foreign investments
Non-listed stocks	107,254	124,321
	\$ 6,903,679	\$ 6,923,315

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

The Company disposed a portion of its investment in China Airlines, Ltd. at fair value of \$567,797 thousand in December 2020. As of December 31, 2020, the settlement of funds/securities amounting to \$270,321 thousand had not been completed. The related unrealized gain on investments in equity instruments at fair value through other comprehensive income of \$16,686 thousand was transferred from other equity to retained earnings upon the aforementioned disposal.

The Company recognized dividend income of \$240,821 thousand and \$292,450 thousand for the years ended December 31, 2020 and 2019, respectively, from the investments still held on December 31, 2020 and 2019.

9. TRADE NOTES AND ACCOUNTS RECEIVABLE, NET

	December 31
	2020	2019
Trade notes and accounts receivable Less: Loss allowance	\$ 21,671,359 (2,116,716)	\$ 25,778,712 (2,300,651)
	\$ 19,554,643	\$ 23,478,061

The main credit terms range from 30 to 90 days.

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

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

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

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

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

The Company's provision matrix arising from telecommunications business and project business is disclosed below.

December 31, 2020

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

December 31, 2019

	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) Gross carrying amount Loss allowance (lifetime ECL)	0%- 2% \$ 19,020,326 (55,903)	0%-25% \$ 267,902 (25,517)	0%-68% \$ 74,775 (27,630)	0%-83% \$ 46,782 (34,624)	11%-90% \$ 40,771 (26,281)	17%-96% \$ 28,021 (27,366)	100% \$ 600,985 (600,985)	\$ 20,079,562 (798,306)
Amortized cost	\$ 18,964,423	\$ 242,385	\$ 47,145	\$ 12,158	\$ 14,490	\$ 655	\$ -	\$ 19,281,256
Project business
Expected credit loss rate (Note b) Gross carrying amount Loss allowance (lifetime ECL)	0%-5% \$ 4,053,681 (2,637)	5% \$ 78,147 (4,892)	10% \$ 52,227 (5,223)	30% \$ 29,527 (10,577)	50% \$ 12,688 (6,344)	80% \$ 1,040 (832)	100% \$ 1,471,840 (1,471,840)	\$ 5,699,150 (1,502,345)
Amortized cost	\$ 4,051,044	\$ 73,255	\$ 47,004	\$ 18,950	\$ 6,344	\$ 208	\$ -	\$ 4,196,805

• Note a: Please refer to Notes 27 and 39 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:

	Year Ended December 31
	2020	2019
Beginning balance Add: Provision for (reversal of) credit loss Less: Amounts written off	\$ 2,300,651 49,108 (233,043)	\$ 2,544,687 (57,088) (186,948)
Ending balance	\$ 2,116,716	\$ 2,300,651

10. INVENTORIES

	December 31
	2020	2019
Merchandise Project in process	\$ 1,696,390 5,350,296	\$ 1,722,201 10,769,527
	\$ 7,046,686	\$ 12,491,728

The operating costs related to inventories were \$31,946,042 thousand (including the valuation loss on inventories of \$1,124,350 thousand) and \$25,510,905 thousand (including the valuation loss on inventories of \$475,024 thousand) for the years ended December 31, 2020 and 2019, respectively.

11. PREPAYMENTS

		December 31
	2020	2019
Prepaid rents	\$ 1,655,679	\$ 1,934,752
Others	1,189,021	883,212
	\$ 2,844,700	\$ 2,817,964
Current
Prepaid rents	\$ 502,957	\$ 553,134
Others	1,189,021	883,212
	\$ 1,691,978	\$ 1,436,346
Noncurrent
Prepaid rents	\$ 1,152,722	\$ 1,381,618

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

	December 31
	2020	2019
Receivable of receipts under custody Time deposits and negotiable certificates of deposit with	\$ 684,841	\$ 558,657
maturities of more than three months	11,803	1,600,000
Others	584,749	707,402
	\$ 1,281,393	\$ 2,866,059

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

	December 31
	2020	2019
Time deposits and negotiable certificates of deposit with maturities of more than three months	0.37%-1.07%	0.63%

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	December 31
	2020	2019
Investments in subsidiaries	\$ 14,958,164	\$ 14,460,961
Investments in associates	5,369,848	5,859,161
Investments in joint venture	10,200	-
	\$ 20,338,212	\$ 20,320,122

a. Investments in subsidiaries

Investments in subsidiaries were as follows:

	Carrying Amount
	December 31
		2020		2019
Listed
Senao International Co., Ltd. ("SENAO") CHIEF Telecom Inc. ("CHIEF")	\$	294,281 1,785,968	\$	456,545 1,729,189
Non-listed
Light Era Development Co., Ltd. ("LED") Chunghwa Investment Co., Ltd. ("CHI") Donghwa Telecom Co., Ltd. ("DHT") Chunghwa Telecom Singapore Pte., Ltd. ("CHTS") Chunghwa System Integration Co., Ltd. ("CHSI") International Integrated Systems, Inc. ("IISI") Honghwa International Co., Ltd. ("HHI")		3,853,234 3,017,569 1,486,252 1,013,529 725,213 593,049 487,904		3,850,095 3,130,389 1,627,491 935,228 717,883 - 411,291
				(Continued)

	Carrying Amount
	December 31
Chunghwa Telecom Global, Inc. ("CHTG")	2020			2019
	\$	402,623	\$	347,380
CHT Security Co., Ltd. ("CHTSC")		329,943		306,851
CHYP Multimedia Marketing & Communications Co., Ltd.
("CHYP")		194,399		190,972
Prime Asia Investments Group Ltd. (B.V.I.) ("Prime Asia")		163,121		182,989
Spring House Entertainment Tech. Inc. ("SHE")		126,947		110,357
Chunghwa Leading Photonics Tech. Co., Ltd. ("CLPT")		123,967		111,680
Chunghwa Telecom (Thailand) Co., Ltd. ("CHTT")		110,163		114,231
Chunghwa Telecom Vietnam Co., Ltd. ("CHTV")		90,887		98,221
Chunghwa Telecom Japan Co., Ltd. ("CHTJ")		90,099		76,567
Smartfun Digital Co., Ltd. ("SFD")		74,055		73,688
Chunghwa Sochamp Technology Inc. ("CHST")		(5,039)		(10,086)
	\$	14,958,164	\$	14,460,961
				(Concluded)

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

	% of Ownership and Voting Right December 31
	2020	2019
Senao International Co., Ltd. ("SENAO")	28	28
CHIEF Telecom Inc. ("CHIEF")	56	57
Light Era Development Co., Ltd. ("LED")	100	100
Chunghwa Investment Co., Ltd. ("CHI")	89	89
Donghwa Telecom Co., Ltd. ("DHT")	100	100
Chunghwa Telecom Singapore Pte., Ltd. ("CHTS")	100	100
Chunghwa System Integration Co., Ltd. ("CHSI")	100	100
International Integrated Systems, Inc. ("IISI")	51	-
Honghwa International Co., Ltd. ("HHI")	100	100
Chunghwa Telecom Global, Inc. ("CHTG")	100	100
CHT Security Co., Ltd. ("CHTSC")	80	80
CHYP Multimedia Marketing & Communications Co., Ltd.
("CHYP")	100	100
Prime Asia Investments Group Ltd. (B.V.I.) ("Prime Asia")	100	100
Spring House Entertainment Tech. Inc. ("SHE")	56	56
Chunghwa Leading Photonics Tech. Co., Ltd. ("CLPT")	75	75
Chunghwa Telecom (Thailand) Co., Ltd. ("CHTT")	100	100
Chunghwa Telecom Vietnam Co., Ltd. ("CHTV")	100	100
Chunghwa Telecom Japan Co., Ltd. ("CHTJ")	100	100
Smartfun Digital Co., Ltd. ("SFD")	65	65
Chunghwa Sochamp Technology Inc. ("CHST")	51	51

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

CHIEF issued new shares in March 2019, November 2019, March 2020 and December 2020 as its employees exercised options. Therefore, the Company's ownership interest in CHIEF decreased to 56.76% and 56.13% as of December 31, 2019 and 2020, respectively.

SHE reduced 19.72% of its capital to offset accumulated deficits in December 2019 and the Company's ownership interest in SHE remained the same.

The Company increased its investment in CHTT proportionally in October 2019 and the Company's ownership interest in CHTT remained the same.

In order to develop and cultivate the enterprise customer market, the Company obtained 20.38% ownership interest in IISI in July 2020. The Company's ownership interest in IISI increased to 51.54% by considering the previously held ownership interest in IISI. The Company obtained over half of the seats of the Board of Directors of IISI; therefore, the Company gained control over IISI and treated it as a subsidiary. IISI issued new shares in September 2020 as its employees exercised options; therefore, the Company's ownership interest in IISI decreased to 51.20% as of December 31, 2020.

For the details of the subsidiaries indirectly held by the Company, please refer to Note 38.

The Company's share of profit (loss) and other comprehensive income (loss) of the subsidiaries was recognized based on the audited financial statements.

b. Investments in associates

Investments in associates were as follows:

	Carrying Amount
	December 31
	2020	2019
Material associate
Next Commercial Bank Co., Ltd. ("NCB") (Note)	\$ 3,776,876	\$ 4,074,168
Associates that are not individually material
Listed
KingwayTek Technology Co., Ltd. ("KWT")	249,044	253,021
Non-listed
Viettel-CHT Co., Ltd. ("Viettel-CHT")	363,522	316,535
Taiwan International Standard Electronics Co., Ltd. ("TISE")	330,031	272,166
So-net Entertainment Taiwan Limited ("So-net")	226,647	189,396
Chunghwa PChome Fund I Co., Ltd. ("CPFI")	192,856	194,081
KKBOX Taiwan Co., Ltd. ("KKBOXTW")	163,809	150,789
Taiwan International Ports Logistics Corporation ("TIPL")	55,925	50,979
Cornerstone Ventures Co., Ltd. ("CVC")	6,058	5,507
Alliance Digital Tech Co., Ltd. ("ADT")	5,080	5,080
International Integrated System, Inc. ("IISI")	-	340,240
UUPON Inc. ("UUPON")	-	7,199
	1,592,972	1,784,993
	\$ 5,369,848	\$ 5,859,161

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 December 31
	2020	2019
Material associate
Next Commercial Bank Co., Ltd. ("NCB") (Note)	42	42
Associates that are not individually material
Listed
KingwayTek Technology Co., Ltd. ("KWT")	23	23
Non-listed
Viettel-CHT Co., Ltd. ("Viettel-CHT")	30	30
Taiwan International Standard Electronics Co., Ltd. ("TISE")	40	40
So-net Entertainment Taiwan Limited ("So-net")	30	30
Chunghwa PChome Fund I Co., Ltd. ("CPFI")	50	50
KKBOX Taiwan Co., Ltd. ("KKBOXTW")	30	30
Taiwan International Ports Logistics Corporation ("TIPL")	27	27
Cornerstone Ventures Co., Ltd. ("CVC")	49	49
Alliance Digital Tech Co., Ltd. ("ADT")	14	14
International Integrated System, Inc. ("IISI")	-	31
UUPON Inc. ("UUPON")	-	15

Note: NCB was a preparatory office on December 31, 2019.

Summarized financial information of NCB was set out below:

	December 31
	2020	2019
Assets Liabilities	\$ 9,906,945 (788,813)	\$ 10,451,925 (728,374)
Equity	\$ 9,118,132	\$ 9,723,551
The percentage of ownership interest held by the Company	41.90%	41.90%
Equity attributable to the Company Unrealized gain or loss from downstream transactions	\$ 3,820,497 (43,621)	\$ 4,074,168 -
The carrying amount of investment	\$ 3,776,876	\$ 4,074,168

	Year Ended December 31, 2020	Period from the Beginning of Preparation to December 31, 2019
Revenues	\$ -	\$ -
Net loss for the period Other comprehensive income	\$ (605,419) -	\$ (276,449) -
Total comprehensive loss for the period	\$ (605,419)	\$ (276,449)

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:

	Year Ended December 31
		2020		2019
The Company's share of profits The Company's share of other comprehensive loss	\$	309,305 (5,524)	\$	320,726 (1,201)
The Company's share of total comprehensive income	\$	303,781	\$	319,525

The Level 1 fair values of associate based on the closing market prices as of the balance sheet date was as follows:

		December 31
	2020	2019
KWT	\$ 675,911	\$ 872,729

The participation of establishing NCB was approved by the Company's Board of Directors in January 2019. The establishment of NCB was approved by the FSC in July 2019 and the incorporation of NCB was approved by the Ministry of Economic Affairs Department of Commerce in January 2020. The Company prepaid investment funds to NCB in February and November 2019 amounting to \$4,190,000 thousand, for ownership interest of 41.90%. Although the Company 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. The Company is not able to direct its relevant activities. Therefore, the Company does not have control over NCB and merely has significant influence over NCB and treats it as an associate. NCB mainly engages in online banking business in Taiwan.

The Company disposed some shares of KWT in April 2019 before KWT traded its shares on the General Stock Market of the Taipei Exchange according to the local requirements and recognized gain on disposal of \$30,152 thousand. In addition, the Company did not participate in the capital increase of KWT in May 2019 and KWT repurchased its stock from December 2019 to February 2020. Therefore, the Company's ownership interest in KWT changed to 22.52% and 22.72% as of December 31, 2019 and 2020, respectively.

IISI issued new shares in March, September 2019 and April 2020, as its employees exercised options; therefore, the Company's ownership interest in IISI decreased to 31.47% and 31.16% as of December 31, 2019 and June 30, 2020, respectively. The additional investment of 20.58% ownership interest in IISI was approved by Chunghwa's Board of Directors in January 2020 and the equity transaction was completed in July 2020. As the business combination was achieved in stages, the Company remeasured the previously held equity interest of IISI and recognized gain on disposal of \$1,412 thousand on July 1, 2020 ("acquisition date"). The Company treated IISI as a subsidiary rather than an associate starting from the acquisition date. For the related disclosures for the acquisition transaction, please refer to Note 13(c) of the Company's consolidated financial statements for the year ended December 31, 2020.

UUPON reduced 95.44% of its capital to offset accumulated deficits in September 2020 and the Company did not participate in the capital increase of UUPON in October 2020. Therefore, the Company's ownership interest in UUPON decreased to 3.71% and lost its significant influence over UUPON. Hence, the Company discontinued to treat UUPON as an associate. Instead, the Company treated it as a financial asset at fair value through other comprehensive income and recognized gain on disposal of \$11,986 thousand.

The aforementioned gains on disposal were included under "other gains and losses" in the statements of comprehensive income.

The Company invested and obtained 50% equity shares of 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, the Company recognized CPFI as an investment in associate.

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

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

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

c. Investment in joint venture

Investment in joint venture was as follows:

	Carrying Amount December 31		% of Ownership Voting Rights December 31	Interests and
Name of Joint Venture	2020	2019	2020	2019
Non-listed
Chunghwa SEA Holdings("CHT SEA")	\$ 10,200	\$ -	51	-

The Company invested \$10,200 thousand to establish a joint venture, CHT SEA, with Delta Electronics, Inc. and Kwang Hsing Industrial Co., Ltd. in December 2020 and obtained 51% equity shares 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.

14. PROPERTY, PLANT AND EQUIPMENT

	December 31
	2020	2019
Assets used by the Company Assets subject to operating leases	\$ 265,270,760 7,352,404	\$ 267,191,318 7,553,554
	\$ 272,623,164	\$ 274,744,872

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, 2019 Additions Disposal Others	\$ 97,480,516 - (37,951 ) (1,163,117 )	\$ 1,599,634 - (6,630 ) 25,477	\$ 67,334,983 - (3,101 ) (1,013,649 )	\$ 13,775,663 - (1,793,567 ) 615,900	\$ 708,097,585 18,306 (30,402,877 ) 24,505,869	\$ 3,877,366 - (50,467 ) 79,313	\$ 7,824,354 - (341,906 ) 411,603	\$ 17,945,874 21,291,955 - (25,782,590 )	\$ 917,935,975 21,310,261 (32,636,499 ) (2,321,194 )
Balance on December 31, 2019	\$ 96,279,448	\$ 1,618,481	\$ 66,318,233	\$ 12,597,996	\$ 702,218,883	\$ 3,906,212	\$ 7,894,051	\$ 13,455,239	\$ 904,288,543
Accumulated depreciation and impairment
Balance on January 1, 2019 Depreciation expenses Disposal Others	\$ - - - -	\$ (1,337,192 ) (43,481 ) 6,630 (559 )	\$ (26,291,676 ) (1,209,310 ) 3,101 440,300	\$ (11,783,362 ) (779,719 ) 1,788,404 (6,214 )	\$(594,695,565) (23,654,699 ) 30,367,337 16,527	\$ (3,647,334 ) (90,496 ) 50,441 (2,902 )	\$ (6,116,322 ) (428,874 ) 340,366 (22,626 )	\$ - - - -	\$(643,871,451) (26,206,579 ) 32,556,279 424,526
Balance on December 31, 2019	\$ -	\$ (1,374,602 )	\$ (27,057,585 )	\$ (10,780,891 )	\$(587,966,400)	\$ (3,690,291 )	\$ (6,227,456 )	\$ -	\$(637,097,225)
Balance on January 1, 2019, net Balance on December 31, 2019, net	\$ 97,480,516 \$ 96,279,448	\$ 262,442 \$ 243,879	\$ 41,043,307 \$ 39,260,648	\$ 1,992,301 \$ 1,817,105	\$ 113,402,020 \$ 114,252,483	\$ 230,032 \$ 215,921	\$ 1,708,032 \$ 1,666,595	\$ 17,945,874 \$ 13,455,239	\$ 274,064,524 \$ 267,191,318
Cost
Balance on January 1, 2020 Additions Disposal Others	\$ 96,279,448 66,712 (270,268 ) 3,091,950	\$ 1,618,481 - (19,306 ) 31,187	\$ 66,318,233 - (48,748 ) 537,345	\$ 12,597,996 - (1,234,262 ) 526,383	\$ 702,218,883 25,301 (20,590,420 ) 25,359,976	\$ 3,906,212 - (45,084 ) 26,011	\$ 7,894,051 - (350,182 ) 342,263	\$ 13,455,239 24,532,717 - (29,816,584 )	\$ 904,288,543 24,624,730 (22,558,270 ) 98,531
Balance on December 31, 2020	\$ 99,167,842	\$ 1,630,362	\$ 66,806,830	\$ 11,890,117	\$ 707,013,740	\$ 3,887,139	\$ 7,886,132	\$ 8,171,372	\$ 906,453,534
Accumulated depreciation and impairment
Balance on January 1, 2020 Depreciation expenses Disposal Others	\$ - - - -	\$ (1,374,602 ) (43,828 ) 19,213 13	\$ (27,057,585 ) (1,188,974 ) 48,748 (140,791 )	\$ (10,780,891 ) (710,903 ) 1,233,241 (242 )	\$(587,966,400) (23,792,693 ) 20,571,501 23,588	\$ (3,690,291 ) (67,502 ) 44,769 (938 )	\$ (6,227,456 ) (406,376 ) 343,637 (18,012 )	\$ - - - -	\$(637,097,225) (26,210,276 ) 22,261,109 (136,382 )
Balance on December 31, 2020	\$ -	\$ (1,399,204 )	\$ (28,338,602 )	\$ (10,258,795 )	\$(591,164,004)	\$ (3,713,962 )	\$ (6,308,207 )	\$ -	\$(641,182,774)
Balance on January 1, 2020, net	\$ 96,279,448	\$ 243,879	\$ 39,260,648	\$ 1,817,105	\$ 114,252,483	\$ 215,921	\$ 1,666,595	\$ 13,455,239	\$ 267,191,318
Balance on December 31, 2020, net	\$ 99,167,842	\$ 231,158	\$ 38,468,228	\$ 1,631,322	\$ 115,849,736	\$ 173,177	\$ 1,577,925	\$ 8,171,372	\$ 265,270,760

There was no indication that property, plant and equipment was impaired; therefore, the Company did not recognize any impairment loss for the years ended December 31, 2020 and 2019.

The Company signed a joint development agreement with the MOTC previously which stated that the MOTC would provide the national land and the Company would be in charge of the planning and construction for the MOTC's office building, the Company's Renai office building, etc. According to the agreement, the MOTC and the Company would each own a certain percentage of the buildings, and the Company is to pay or get the reimbursement for the difference between the assessed value of the land and the construction cost paid by the Company on behalf of the MOTC. The difference amounting to \$1,056,680 thousand due to the MOTC was reported to the Company's Board of Directors in May 2020 and the Company will complete the property registration of the respective asset once the payment is made. Please refer to Table 4 for the details.

The Company participated in the government-led urban renewal project in Xingzheng Section, Xindian District, New Taipei City. The Company provided land as a building lot while Kindom Development Corp., chosen through public selection by the New Taipei City Government, acted as the urban renewal developer. The property registration was completed in 2020. With respect to the Company's trade-in share of land and buildings, only the trade-in buildings had commercial substance. Therefore, the gain on the asset exchange transaction of \$1,267,980 thousand (included in" gains and losses on disposal of property, plant and equipment") was recognized at the difference between the carrying amount of the trade-out land of \$37,087 thousand and the fair value of trade-in buildings of \$1,305,067 thousand (included in "investment properties"). The aforementioned gain on disposal was included under "other income and expenses" in the statement of comprehensive income.

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

10-30 years
35-60 years
years
years
years
years
years
years
years
years

b. Assets subject to operating leases

	Land	Land Improvements	Buildings	Total
Cost
Balance on January 1, 2019 Others	\$ 3,496,689 1,310,917	\$ 689 (689)	\$ 3,190,018 1,141,811	\$ 6,687,396 2,452,039
Balance on December 31, 2019	\$ 4,807,606	\$ -	\$ 4,331,829	\$ 9,139,435
Accumulated depreciation and impairment
Balance on January 1, 2019 Depreciation expenses Others	\$ - - -	\$ (512) (47) 559	\$ (1,096,932) (73,882) (415,067)	\$ (1,097,444) (73,929) (414,508)
Balance on December 31, 2019	\$ -	\$ -	\$ (1,585,881)	\$ (1,585,881)
Balance on January 1, 2019, net Balance on December 31,	\$ 3,496,689	\$ 177	\$ 2,093,086	\$ 5,589,952
2019, net	\$ 4,807,606	\$ -	\$ 2,745,948	\$ 7,553,554 (Continued)

	Land	Land Improvements	Buildings	Total
Cost
Balance on January 1, 2020 Others	\$ 4,807,606 (6,730)	\$ - -	\$ 4,331,829 (248,203)	\$ 9,139,435 (254,933)
Balance on December 31, 2020	\$ 4,800,876	\$ -	\$ 4,083,626	\$ 8,884,502
Accumulated depreciation and impairment
Balance on January 1, 2020 Depreciation expenses Others	\$ - - -	\$ - - -	\$ (1,585,881) (97,786) 151,569	\$ (1,585,881) (97,786) 151,569
Balance on December 31, 2020	\$ -	\$ -	\$ (1,532,098)	\$ (1,532,098)
Balance on January 1, 2020, net Balance on December 31,	\$ 4,807,606	\$ -	\$ 2,745,948	\$ 7,553,554
2020, net	\$ 4,800,876	\$ -	\$ 2,551,528	\$ 7,352,404 (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:

	December 31
	2020		2019
Year 1	\$ 371,331	\$	346,425
Year 2	254,953		257,181
Year 3	192,741		194,524
Year 4	152,532		147,722
Year 5	125,366		116,375
Onwards	1,179,493		1,224,416
	\$ 2,276,416	\$	2,286,643

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:

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

15. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31
	2020	2019
Land and buildings
Handsets base stations	\$ 7,098,815	\$ 6,848,041
Others	738,850	857,552
Equipment	2,190,562	2,586,432
	\$ 10,028,227	\$ 10,292,025
	Year Ended	December 31
	2020	2019
Additions to right-of-use assets	\$ 3,468,664	\$ 3,324,178
Depreciation charge for right-of-use assets
Land and buildings
Handsets base stations	\$ 2,730,579	\$ 2,728,814
Others	388,528	414,295
Equipment	403,138	404,045
	\$ 3,522,245	\$ 3,547,154

The Company did not have significant sublease or impairment of right-of-use assets for the years ended December 31, 2020 and 2019.

b. Lease liabilities

	December 31
	2020	2019
Lease liabilities
Current	\$ 2,938,305	\$ 2,939,410
Noncurrent	5,682,342	5,755,804
	\$ 8,620,647	\$ 8,695,214

Ranges of discount rates for lease liabilities were as follows:

2019
0.58%-1.18% 0.58%-1.12%
	0.46%-1.18% 0.46%-1.12% 0.46%-0.82% 0.58%-0.82%

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 the Company and ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. For the information of lease agreements with related parties, please refer to Note 34 to the financial statements for details.

d. Other lease information

	Year Ended December 31
		2020		2019
Expenses relating to low-value asset leases Expenses relating to variable lease payments not included in	\$	1,130	\$	908
the measurement of lease liabilities	\$	18,508	\$	15,348
Total cash outflow for leases	\$	3,366,977	\$	3,382,739

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

Lease-out arrangements under operating leases for freehold property, plant, and equipment and investment properties were set out in Notes 14 and 16 to the financial statements.

16. INVESTMENT PROPERTIES

	Investment Properties
Cost
Balance on January 1, 2019	\$ 9,317,677
Additions	523
Disposal	(5,831)
Reclassification	(173,165)
Balance on December 31, 2019	\$ 9,139,204
	(Continued)

	Investment Properties
Accumulated depreciation and impairment
Balance on January 1, 2019 Depreciation expense Disposal Reclassification Reversal of impairment loss	\$ (1,105,240) (25,157) 5,831 23,363 56,617
Balance on December 31, 2019	\$ (1,044,586)
Balance on January 1, 2019, net Balance on December 31, 2019, net	\$ 8,212,437 \$ 8,094,618
Cost
Balance on January 1, 2020 Additions (Note 14) Disposal Reclassification	\$ 9,139,204 1,359,502 (36,943) 125,912
Balance on December 31, 2020	\$ 10,587,675
Accumulated depreciation and impairment
Balance on January 1, 2020 Depreciation expense Reclassification Reversal of impairment loss	\$ (1,044,586) (22,332) (1,276) 27,066
Balance on December 31, 2020	\$ (1,041,128)
Balance on January 1, 2020, net Balance on December 31, 2020, net	\$ 8,094,618 \$ 9,546,547 (Concluded)

After the evaluation of land and buildings, the Company concluded the recoverable amount which represented the fair value less costs to sell of some land and buildings was higher than the carrying amount. Therefore, the Company recognized reversal of impairment losses of \$27,066 thousand and \$56,617 thousand for the years ended December 31, 2020 and 2019, respectively, and the amounts were recognized only to the extent of impairment losses that had been recognized in prior years. The reversal of impairment loss was included in other income and expenses in the statements of comprehensive income.

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

10-30 years
35-60 years
4-10 years

The fair values of the Company's investment properties as of December 31, 2020 and 2019 were determined by Level 3 fair value measurements inputs based on the appraisal reports conducted by independent appraisers. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

	December 31
	2020	2019
Fair value	\$ 22,411,314	\$ 18,469,212
Overall capital interest rate	0.93%-3.03%	1.03%-4.04%
Profit margin ratio	12%-20%	12%-20%
Discount rate	-	-
Capitalization rate	0.73%-2.20%	0.79%-1.74%

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:

	December 31
	2020			2019
Year 1	\$	115,305	\$	112,884
Year 2		95,223		90,701
Year 3		75,285		70,794
Year 4		52,544		61,115
Year 5		37,588		39,386
Onwards		57,773		96,010
	\$	433,718	\$	470,890

17. INTANGIBLE ASSETS

	Mobile Broadband Concession	Computer Software	Others	Total
Cost
Balance on January 1, 2019 Additions - acquired separately Disposal	\$ 70,144,000 - (10,179,000)	\$ 3,024,206 281,691 (250,865)	\$ 17,910 2,101 -	\$ 73,186,116 283,792 (10,429,865)
Balance on December 31, 2019	\$ 59,965,000	\$ 3,055,032	\$ 20,011	\$ 63,040,043
Accumulated amortization and impairment
Balance on January 1, 2019 Amortization expenses Disposal	\$ (20,632,474) (3,839,572) 10,179,000	\$ (2,143,446) (326,157) 250,865	\$ (5,901) (2,901) -	\$ (22,781,821) (4,168,630) 10,429,865
Balance on December 31, 2019	\$ (14,293,046)	\$ (2,218,738)	\$ (8,802)	\$ (16,520,586) (Continued)

	Mobile Broadband Concession	Computer Software	Others	Total
Balance on January 1, 2019, net Balance on December 31, 2019,	\$ 49,511,526	\$ 880,760	\$ 12,009	\$ 50,404,295
net	\$ 45,671,954	\$ 836,294	\$ 11,209	\$ 46,519,457
Cost
Balance on January 1, 2020 Additions - acquired separately Disposal	\$ 59,965,000 48,373,000 -	\$ 3,055,032 165,024 (333,110)	\$ 20,011 1,575 (9)	\$ 63,040,043 48,539,599 (333,119)
Balance on December 31, 2020	\$ 108,338,000	\$ 2,886,946	\$ 21,577	\$ 111,246,523
Accumulated amortization and impairment
Balance on January 1, 2020 Amortization expenses Disposal	\$ (14,293,046) (5,025,796) -	\$ (2,218,738) (306,904) 333,110	\$ (8,802) (2,950) 9	\$ (16,520,586) (5,335,650) 333,119
Balance on December 31, 2020	\$ (19,318,842)	\$ (2,192,532)	\$ (11,743)	\$ (21,523,117)
Balance on January 1, 2020, net Balance on December 31, 2020,	\$ 45,671,954	\$ 836,294	\$ 11,209	\$ 46,519,457
net	\$ 89,019,158	\$ 694,414	\$ 9,834	\$ 89,723,406 (Concluded)

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

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

The computer software is amortized using the straight-line method over the estimated useful lives of 1 to 10 years. Other intangible assets are amortized using the straight-line method over the estimated useful lives of 1 to 11 years.

18. OTHER ASSETS

	December 31
	2020	2019
Spare parts	\$ 2,158,511	\$ 2,337,589
Refundable deposits	1,539,594	1,561,372
Other financial assets	1,000,000	1,000,000
Deposit for mobile broadband license bidding (Note 17)	-	1,000,000
Others	1,906,485	2,143,070
	\$ 6,604,590	\$ 8,042,031
Current
Spare parts	\$ 2,158,511	\$ 2,337,589
Others	24,960	16,626
	\$ 2,183,471	\$ 2,354,215
Noncurrent
Refundable deposits	\$ 1,539,594	\$ 1,561,372
Other financial assets	1,000,000	1,000,000
Deposit for mobile broadband license bidding	-	1,000,000
Others	1,881,525	2,126,444
	\$ 4,421,119	\$ 5,687,816

Other financial assets - noncurrent was Piping Fund. As part of the government's effort to upgrade the existing telecommunications infrastructure, the Company 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.

The Company evaluated that certain other assets will not be used in the future and there was no active market for sale; therefore, the Company determined that the recoverable amount of such assets was nil and recognized impairment losses of \$43,971 thousand for the year ended December 31, 2019. The aforementioned impairment loss was included in other income and expenses in the statements of comprehensive income.

19. HEDGING FINANCIAL INSTRUMENTS

The Company'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, the Company'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.

The Company 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.

December 31, 2020

Hedging Instruments	Currency	Notional Amount (In Thousands)	Maturity	Forward Rate	Line Item in Balance Sheet	Asset	Carrying Amount Liability	Change in Fair Values of Hedging Instruments Used for Calculating Hedge Ineffectiveness
Cash flow hedge Forecast purchases - forward exchange contracts	NT\$/EUR	NT\$200,867/ EUR5,831	2021.03	\$ 34.45	Hedging financial assets (liabilities)	\$1,752	\$ -	\$ 1,425
				Value Used	Change in of Hedged Item for		Accumulated Gain or Loss on Hedging Instruments in Other	Equity
	Hedged	Items			Calculating Hedge Ineffectiveness	Continuing Hedges		Hedge Accounting No Longer Applied
Cash flow hedge Forecast equipment purchases				\$	(1,425)	\$ 1,752		\$ -
December 31, 2019 Hedging Instruments	Currency	Notional Amount (In Thousands)	Maturity	Forward Rate	Line Item in Balance Sheet	Asset	Carrying Amount Liability	Change in Fair Values of Hedging Instruments Used for Calculating Hedge Ineffectiveness
Cash flow hedge Forecast purchases - forward exchange contracts	NT\$/EUR	NT\$ 84,066/ EUR 2,498	2020.03	\$ 33.66	Hedging financial assets (liabilities)	\$ 327	\$ -	\$ (742)
				Value	Change in of Hedged Item Used for	on	Accumulated Gain or Loss Hedging Instruments in Other Equity
	Hedged Items				Calculating Hedge Ineffectiveness	Continuing Hedges		Hedge Accounting No Longer Applied
Cash flow hedge Forecast equipment purchases				\$	742	\$ 327		\$ -

Year ended December 31, 2020

		Comprehensive Income
Hedge Transaction					Reclassification from Equity to Profit or Loss and the Adjusted Line Item
		Hedging Gain or Loss Recognized in OCI	Amount of Hedge Ineffectiveness Recognized in Profit or Loss		Line Item in Which Hedge Ineffectiveness is Included		Amount Reclassified to P/L and the Adjusted Line Item		Due to Hedged Future Cash Flows No Longer Expected to Occur
Cash flow hedge Forecast equipment purchases	\$	1,425	\$	-	-	\$	20,564 Construction in progress and equipment to be accepted	\$ Other gains and losses	-

Year ended December 31, 2019

		Comprehensive Income
Hedge Transaction						Reclassification from Equity to Profit or Loss and the Adjusted Line Item
		Hedging Gain or Loss Recognized in OCI		Amount of Hedge Line Item in Ineffectiveness Which Hedge Recognized in Ineffectiveness is Profit or Loss Included			Amount Reclassified to P/L and the Adjusted Line Item	Due to Hedged Future Cash Flows No Longer Expected to Occur
Cash flow hedge Forecast equipment purchases	\$	(742)	\$	-	-	\$	(2,026) Construction in progress and equipment to be accepted	\$ Other gains and losses	-

20. SHORT-TERM BILLS PAYABLE

	December 31
	2020	2019
Commercial paper payable Less: Discounts on commercial paper payable	\$ 7,000,000 (802)	\$ - -
	\$ 6,999,198	\$ -

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

	December 31
	2020	2019
Commercial paper payable	0.34%-0.36%	-

21. BONDS PAYABLE

	December 31
	2020	2019
Unsecured domestic bonds Less: Discounts on bonds payable	\$ 20,000,000 (19,728)	\$ - -
	\$ 19,980,272	\$ -

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

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

22. TRADE NOTES AND ACCOUNTS PAYABLE

	December 31
	2020	2019
Trade notes and accounts payable	\$ 12,226,935	\$ 12,052,523

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

23. OTHER PAYABLES

	December 31
		2020		2019
Accrued salary and compensation	\$	7,811,452	\$	8,084,105
Payables to contractors Accrued compensation to employees and remuneration to		1,667,666		1,602,855
directors		1,238,251		1,161,404
Amounts collected for others		1,222,144		1,139,049
Payable on land (Note 14)		1,056,680		-
Accrued maintenance costs		1,024,468		953,441
Payables to equipment suppliers Accrued franchise fees		992,114 782,597		220,650 1,088,333
Others		4,250,713		5,020,746
	\$	20,046,085	\$	19,270,583

24. PROVISIONS

			December 31
			2020	2019
Onerous contracts Warranties Employee benefits Others			\$ 169,986 83,589 57,210 4,097	\$ 66,907 74,235 59,745 4,397
			\$ 314,882	\$ 205,284
Current Noncurrent			\$ 214,266 100,616	\$ 107,902 97,382
			\$ 314,882	\$ 205,284
	Onerous Contracts	Warranties	Employee Benefits	Others Total

	Contracts	Warranties	Benefits	Others	Total
Balance on January 1, 2019 Additional provisions recognized Used / forfeited during the year	\$ 19,323 47,584 -	\$ 54,308 40,503 (20,576)	\$ 51,393 9,194 (842)	\$ 4,447 - (50)	\$ 129,471 97,281 (21,468)
Balance on December 31, 2019	\$ 66,907	\$ 74,235	\$ 59,745	\$ 4,397	\$ 205,284
Balance on January 1, 2020 Additional / (reversal of) provisions	\$ 66,907	\$ 74,235	\$ 59,745	\$ 4,397	\$ 205,284
recognized	106,801	31,301	(1,841)	(200)	136,061
Used / forfeited during the year	(3,722)	(21,947)	(694)	(100)	(26,463)
Balance on December 31, 2020	\$ 169,986	\$ 83,589	\$ 57,210	\$ 4,097	\$ 314,882

• 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 the historical warranty experience.
• b. The provision for employee benefits represents vested long-term service compensation accrued.
• c. The provision for onerous contracts represents the present obligation resulting from the measurement for the unavoidable costs of meeting the Company's contractual obligations exceed the economic benefits expected to be received from the contracts.

25. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The pension plan under the Labor Pension Act of ROC (the "LPA") is considered as a defined contribution plan. Based on the LPA, the Company makes monthly contributions to employees' individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The Company completed its privatization plans on August 12, 2005. The Company is required to pay all accrued pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization in accordance with the Statute Governing Privatization of Stated-owned Enterprises. After paying all pension obligations for privatization, the plan assets of the Company should be transferred to the Fund for Privatization of Government-owned Enterprises (the "Privatization Fund") under the Executive Yuan. On August 7, 2006, the Company transferred the remaining balance of fund to the Privatization Fund. However, according to the instructions of MOTC, the Company was requested to administer the distributions to employees for pension obligations including service clearance payment, lump sum payment under civil service plan, additional separation payments, etc. upon the completion of the privatization and recognized in other current monetary assets.

The Company with the pension mechanism under the Labor Standards Law in the ROC is considered as defined benefit plans. These pension plans provide benefits based on an employee's length of service and average six-month salary prior to retirement. The Company contributes an amount no more than 15% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the names of the Committees in the Bank of Taiwan. The plan assets are held in a commingled fund which is operated and managed by the government's designated authorities; as such, the Company does not have any right to intervene in the investments of the funds. According to the Article 56 of the Labor Standards Law, entities are required to contribute the difference in one appropriation to their pension funds before the end of next March when the balance of the Funds is insufficient to pay the eligible employees who meet the retirement criteria in the following year.

The amounts included in the balance sheets arising from the Company's obligation in respect of its defined benefit plans were as follows:

	December 31
	2020	2019
Present value of funded defined benefit obligation Fair value of plan assets	\$ 39,220,357 (39,254,971)	\$ 40,917,777 (39,613,213)
Funded status - deficit (surplus)	\$ (34,614)	\$ 1,304,564
Net defined benefit liabilities Net defined benefit assets	\$ 3,316,932 (3,351,546)	\$ 3,412,740 (2,108,176)
	\$ (34,614)	\$ 1,304,564

Movements in the defined benefit obligation and the fair value of plan assets were as follows:

	Present Value of Funded Defined Benefit Obligation	Fair Value of Plan Assets	Net Defined Benefit Liabilities (Assets)
Balance on January 1, 2019	\$ 41,088,052	\$ 38,817,587	\$ 2,270,465
Current service cost	2,925,862	-	2,925,862
Interest expense / interest income	397,224	388,140	9,084
Amounts recognized in profit or loss	3,323,086	388,140	2,934,946
			(Continued)

	Present Value of Funded Defined Benefit Obligation	Fair Value of Plan Assets	Net Defined Benefit Liabilities (Assets)
Remeasurement on the net defined benefit liability
Return on plan assets (excluding
amounts included in net interest)	\$ -	\$ 1,330,346	\$ (1,330,346)
Actuarial losses recognized from
changes in financial assumptions	639,398	-	639,398
Actuarial gains recognized from
experience adjustments	(815,342)	-	(815,342)
Amounts recognized in other
comprehensive income	(175,944)	1,330,346	(1,506,290)
Contributions from employer	-	2,091,936	(2,091,936)
Benefits paid	(3,014,796)	(3,014,796)	-
Benefits paid directly by the Company	(302,621)	-	(302,621)
Balance on December 31, 2019	40,917,777	39,613,213	1,304,564
Current service cost	2,051,349	-	2,051,349
Interest expense / interest income	295,819	295,626	193
Amounts recognized in profit or loss	2,347,168	295,626	2,051,542
Remeasurement on the net defined benefit liability
Return on plan assets (excluding
amounts included in net interest)	-	1,299,425	(1,299,425)
Actuarial losses recognized from
changes in financial assumptions	604,943	-	604,943
Actuarial gains recognized from
experience adjustments	(475,830)	-	(475,830)
Amounts recognized in other
comprehensive income	129,113	1,299,425	(1,170,312)
Contributions from employer	-	1,957,678	(1,957,678)
Benefits paid	(3,910,971)	(3,910,971)	-
Benefits paid directly by the Company	(262,730)	-	(262,730)
Balance on December 31, 2020	\$ 39,220,357	\$ 39,254,971	\$ (34,614) (Concluded)

Relevant pension costs recognized in profit and loss for defined benefit plans were as follows:

	Year Ended December 31
	2020	2019
Operating costs	\$ 1,205,306	\$ 1,725,459
Marketing expenses	601,609	864,796
General and administrative expenses	120,736	163,940
Research and development expenses	72,125	103,156
	\$ 1,999,776	\$ 2,857,351

The Company is exposed to following risks for the defined benefits plans under the Labor Standards Law:

a. Investment risk

Under the Labor Standards Law, the rate of return on assets shall not be lower than the average interest rate on a two-year time deposit published by the local banks and the government is responsible for any shortfall in the event that the rate of return is less than the required rate of return. The plan assets are held in a commingled fund mainly invested in foreign and domestic equity and debt securities and bank deposits which is operated and managed by the government's designated authorities; as such, the Company does not have any right to intervene in the investments of the funds.

b. Interest rate risk

The decline in government bond interest rate will increase the present value of the obligation on the defined benefit plan, while the return on plan assets will increase. The net effect on the present value of the obligation on defined benefit plan is partially offset by the return on plan assets.

c. Salary risk

The calculation of the present value of defined benefit obligation is referred to the plan participants' future salary. Hence, the increase in plan participants' salary will increase the present value of the defined benefit obligation.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out by the independent actuary. The principal assumptions used for the purpose of the actuarial valuations were as follows:

		Measurement Date
		December 31
	2020	2019
Discount rates	0.50%	0.75%
Expected rates of salary increase	1.20%	1.20%

If reasonably possible changes of the respective significant actuarial assumptions occur at the end of reporting periods, while holding all other assumptions constant, the present values of the defined benefit obligations would increase (decrease) as follows:

	December 31
	2020	2019
Discount rates
0.5% increase	\$ (1,191,982)	\$ (1,259,747)
0.5% decrease	\$ 1,266,625	\$ 1,339,198
Expected rates of salary increase
0.5% increase	\$ 1,355,750	\$ 1,431,825
0.5% decrease	\$ (1,287,413)	\$ (1,358,894)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. There is no change in the methods and assumptions used in preparing the sensitivity analysis from the previous period.

	December 31
	2020	2019
The expected contributions to the plan for the next year The average duration of the defined benefit obligation	\$ 1,924,715 6.4 years	\$ 2,069,215 6.5 years

As of December 31, 2020, the Company's maturity analysis of the undiscounted benefit payments was as follows:

Year	Amount
2021	\$ 3,277,097
2022	7,045,122
2023	10,630,768
2024	11,771,892
2025 and thereafter	39,413,041
	\$ 72,137,920

26. EQUITY

• a. Share capital
• 1) Common stocks

	December 31
	2020	2019
Number of authorized shares (thousand)	12,000,000	12,000,000
Authorized shares	\$ 120,000,000	\$ 120,000,000
Number of issued and paid shares (thousand)	7,757,447	7,757,447
Issued shares	\$ 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 the Company 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 December 31, 2020, the outstanding ADSs were 220,439 thousand common stocks, which equaled 22,044 thousand units and represented 2.84% of the Company'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:

• 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 years ended December 31, 2020 and 2019 were as follows:

	Share Premium	Movements of Additional Paid-in Capital for Associates 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, 2019 Unclaimed dividend Change in additional paid-in capital from investments in subsidiaries, associates and	\$ 147,329,386 -	\$ 89,893 -	\$ 2,063,148 -	\$ 987,611 -	\$ 18,648 1,266	\$ 20,648,078 -	\$ 171,136,764 1,266
joint ventures accounted for using equity method Share-based payment	-	118,853	-	-	-	-	118,853
transactions of subsidiaries	-	-	(898)	-	-	-	(898)
Balance on December 31, 2019	147,329,386	208,746	2,062,250	987,611	19,914	20,648,078	171,255,985
Unclaimed dividend Change in additional paid-in capital from investments in subsidiaries, associates and joint ventures accounted for	-	-	-	-	1,605	-	1,605
using equity method Change in additional paid-in capital for not proportionately participating in the capital increase of	-	(21,918)	-	-	-	-	(21,918)
subsidiaries	-	-	(103)	-	-	-	(103)
Share-based payment transactions of subsidiaries	-	-	25,810	-	-	-	25,810
Balance on December 31, 2020	\$ 147,329,386	\$ 186,828	\$ 2,087,957	\$ 987,611	\$ 21,519	\$ 20,648,078	\$ 171,261,379

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 the Company has no deficit, it may be distributed in cash or capitalized, which however is limited to a certain percentage of the Company'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 the Company's Articles of Incorporation, the Company 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 the Company'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.

The Company should appropriate or reverse a special reserve in accordance with Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive entitled "Questions and Answers on Special Reserves Appropriated Following the Adoption of Taiwan-IFRSs". Distributions can be made out of any subsequent reversal of the debit to other equity items.

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

The appropriations of the 2019 and 2018 earnings of the Company approved by the stockholders in their meetings on May 29, 2020 and June 21, 2019 were as follows:

	Appropriation of Earnings		Dividends Per Share (NT\$)
	For Fiscal	For Fiscal	For Fiscal	For Fiscal
	Year 2019	Year 2018	Year 2019	Year 2018
Cash	\$	\$	\$	\$
dividends	32,782,969	34,745,603	4.226	4.479

The appropriations of earnings for 2020 had been proposed by the Company's Board of Directors on February 23, 2021. The appropriations and dividends per share were as follows:

	Appropriation of Earnings	Dividends Per Share (NT\$)
Cash dividends	\$ 33,403,565	\$	4.306

The appropriations of earnings for 2020 are subject to the resolution of the stockholders' meeting planned to be held on May 28, 2021. Information of the appropriation of the Company'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

	Year Ended December 31
		2020		2019
Beginning balance	\$	836,598	\$	538,272
Recognized for the year
Unrealized gain or loss
Equity instruments		546,879		399,429
Share from subsidiaries, associates and joint ventures
accounted for using the equity method		(126,890)		(101,103)
				(Continued)

	Year Ended December 31
	2020	2019
Transferred accumulated gain or loss to retained earnings resulting from the disposal of equity instruments (Note 8)	\$ (16,686)	\$ -
Ending balance	\$1,239,901	\$ 836,598 (Concluded)

27. REVENUES

	Year Ended December 31
	2020	2019
Revenue from contracts with customers Other revenues Rental income Others	\$ 177,451,021	\$ 178,227,341
	801,580	752,622
	370,226	341,875
	1,171,806	1,094,497
	\$ 178,622,827	\$ 179,321,838

For the information of performance obligations related to customer contracts, please refer to Note 3 Summary of Significant Accounting Policies for details.

a. Disaggregation of revenue

2020

	Domestic Fixed Communi cations Business	Mobile Communi cations Business	Internet Business	International Fixed Communi cations Business	Others	Total
Main Products and Service Revenues
Mobile services revenue	\$ -	\$ 60,396,292	\$ -	\$ -	\$ -	\$ 60,396,292
Sales of products	2,214,874	11,026,699	59,395	9,814	-	13,310,782
Local telephone and domestic long distance telephone services
revenue	26,495,555	-	-	-	-	26,495,555
Broadband access and domestic
leased line services revenue	22,500,492	-	-	-	-	22,500,492
Data communications internet services revenue	-	-	20,017,339	-	-	20,017,339
International network and leased line services revenue	-	-	-	3,367,177	-	3,367,177
Others	17,791,674	620,070	9,406,670	3,440,055	104,915	31,363,384
	\$ 69,002,595	\$ 72,043,061	\$ 29,483,404	\$ 6,817,046	\$ 104,915	\$177,451,021

2019

	Domestic Fixed Communi cations Business	Mobile Communi cations Business	Internet Business	International Fixed Communi cations Business	Others	Total
Main Products and Service Revenues
Mobile services revenue	\$ -	\$ 62,808,959	\$ -	\$ -	\$ -	\$ 62,808,959
Sales of products	1,958,028	11,634,139	8,691	8,804	-	13,609,662
Local telephone and domestic long distance telephone services
revenue	27,949,534	-	-	-	-	27,949,534
Broadband access and domestic
leased line services revenue	22,180,256	-	-	-	-	22,180,256
Data communications internet services revenue	-	-	19,637,375	-	-	19,637,375
International network and leased line services revenue	-	-	-	6,513,830	-	6,513,830
Others	13,169,912	354,495	8,148,555	3,744,286	110,477	25,527,725
	\$ 65,257,730	\$ 74,797,593	\$ 27,794,621	\$ 10,266,920	\$ 110,477	\$178,227,341

b. Contract balances

	December 31, 2020	December 31, 2019	January 1, 2019
Trade notes and accounts receivable (Note 9)	\$ 19,554,643	\$ 23,478,061	\$ 27,851,879
Contract assets
Products and service bundling Others Less: Loss allowance	\$ 2,649,230 99,475 (7,016)	\$ 2,190,217 91,152 (5,686)	\$ 2,225,636 101,890 (6,381)
	\$ 2,741,689	\$ 2,275,683	\$ 2,321,145
Current Noncurrent	\$ 1,734,081 1,007,608	\$ 1,470,985 804,698	\$ 1,653,886 667,259
	\$ 2,741,689	\$ 2,275,683	\$ 2,321,145
Contract liabilities
Telecommunications business Project business Products and service bundling Others	\$ 11,677,075 6,012,181 12,455 301,367	\$ 10,559,858 10,265,409 23,319 251,332	\$ 8,443,296 4,439,286 28,689 231,812
	\$ 18,003,078	\$ 21,099,918	\$ 13,143,083
Current Noncurrent	\$ 12,661,964 5,341,114	\$ 16,684,939 4,414,979	\$ 10,686,892 2,456,191
	\$ 18,003,078	\$ 21,099,918	\$ 13,143,083

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. Significant changes of contract assets and liabilities recognized resulting from product and service bundling were as follows:

	Year Ended December 31
	2020	2019
Contract assets
Net increase of customer contracts	\$ 2,340,655	\$ 1,943,860
Reclassified to trade receivables	(1,851,682)	(2,078,331)
	\$ 488,973	\$ (134,471)
Contract liabilities
Net increase of customer contracts	\$ 7,179	\$ 16,289
Recognized as revenues	(18,043)	(21,659)
	\$ (10,864)	\$ (5,370)

The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. 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.

Revenue recognized for the period that was included in the contract liability at the beginning of the year was as follows:

	Year Ended December 31
	2020	2019
Telecommunications business Project business Others	\$ 5,479,115 6,078,181 222,364	\$ 6,176,801 3,989,780 180,839
	\$ 11,779,660	\$ 10,347,420

c. Incremental costs of obtaining contracts

	December 31
	2020	2019
Noncurrent
Incremental costs of obtaining contracts	\$ 7,015,079	\$ 6,976,421

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 years ended December 31, 2020 and 2019 were \$5,395,125 thousand and \$6,269,916 thousand, respectively.

d. Remaining Performance Obligations

As of December 31, 2020, the aggregate amount of transaction price allocated to performance obligations for non-cancellable telecommunications service contracts that are unsatisfied is \$34,201,806 thousand. The Company recognizes revenue when service is provided over contract terms. The Company expects to recognize such revenue of \$21,878,842 thousand, \$10,484,505 thousand and \$1,838,459 thousand in 2021, 2022 and 2023, respectively. The variable consideration collected from customers on nonrecurring basis resulting from exceeded usage from monthly fee and revenue recognized for contracts that the Company has a right to consideration from customers in the amount corresponding directly with the value to the customers of the Company's performance completed to date have been excluded from the disclosure of remaining performance obligations.

As of December 31, 2020, the aggregate amount of transaction price allocated to performance obligations for non-cancellable project business contracts that are unsatisfied is \$16,098,817 thousand. The Company recognizes revenues when the project business contract is completed and accepted by customers. The Company expects to recognize such revenue of \$6,282,801 thousand, \$5,536,110 thousand and \$4,279,906 thousand in 2021, 2022 and 2023, respectively. Project business contracts whose expected duration are less than a year have been excluded from the aforementioned disclosure.

28. NET INCOME

a. Other income and expenses

	Year Ended December 31
	2020	2019
Gain (loss) on disposal of property, plant and equipment Gain on disposal of investment properties Reversal of impairment loss on investment properties Impairment loss on other assets	\$1,435,864 151,357 27,066 -	\$ (29,229) - 56,617 (43,971)
	\$1,614,287	\$ (16,583)

b. Other income

	Year Ended December 31
	2020	2019
Dividend income Others	\$ 240,821 105,924	\$ 292,450 94,297
	\$ 346,745	\$ 386,747

c. Other gains and losses

	Year Ended December 31
		2020		2019
Gain on disposal of investments accounted for using equity method	\$	13,398	\$	30,152
Foreign currency exchange gain or loss, net		2,608		18,591 (Continued)

	Year Ended December 31
	2020	2019
Valuation loss on financial assets and liabilities at fair value
through profit or loss, net	\$ (98,404)	\$ (38,588)
Others	(17,943)	(15,727)
	\$ (100,341)	\$ (5,572) (Concluded)

d. Interest expenses

	Year Ended December 31
	2020	2019
Interest paid to financial institutions	\$ 64,470	\$ -
Interest on lease liabilities	59,864	60,161
Interest on bonds payable	45,614	-
Others	1,710	1,712
	\$ 171,658	\$ 61,873

e. Impairment loss (reversal of impairment loss)

	Year Ended December 31
	2020	2019
Contract assets	\$ 1,330	\$ (695)
Trade notes and accounts receivable	\$ 49,108	\$ (57,088)
Other receivables	\$ (4,749)	\$ (69,236)
Inventories	\$1,124,350	\$ 475,024
Investment properties	\$ (27,066)	\$ (56,617)
Others	\$ -	\$ 43,971

f. Depreciation and amortization expenses

	Year Ended December 31
	2020	2019
Property, plant and equipment	\$ 26,308,062	\$ 26,280,508
Right-of-use assets	3,522,245	3,547,154
Investment properties	22,332	25,157
Intangible assets	5,335,650	4,168,630
Incremental costs of obtaining contracts	5,395,125	6,269,916
Total depreciation and amortization expenses	\$ 40,583,414	\$ 40,291,365
Depreciation expenses summarized by functions
Operating costs	\$ 28,694,921	\$ 28,630,553
Operating expenses	1,157,718	1,222,266
	\$ 29,852,639	\$ 29,852,819 (Continued)

	Year Ended December 31
	2020	2019
Amortization expenses summarized by functions
Operating costs	\$ 10,578,714	\$ 10,281,841
Marketing expenses	81,035	81,492
General and administrative expenses	47,724	55,402
Research and development expenses	23,302	19,811
	\$ 10,730,775	\$ 10,438,546
		(Concluded)

g. Employee benefit expenses

	Year Ended December 31
	2020	2019
Post-employment benefit
Defined contribution plans	\$ 336,674	\$ 302,912
Defined benefit plans	1,999,776	2,857,351
	2,336,450	3,160,263
Other employee benefit
Salaries	19,366,322	19,887,957
Insurance	1,959,488	2,031,482
Others	11,970,883	12,247,172
	33,296,693	34,166,611
Total employee benefit expenses	\$ 35,633,143	\$ 37,326,874
Summary by functions
Operating costs	\$ 20,197,935	\$ 21,192,623
Operating expenses	15,435,208	16,134,251
	\$ 35,633,143	\$ 37,326,874

The Company 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. As of December 31, 2020, the payables of the employees' compensation and of the remuneration to directors were \$1,202,448 thousand and \$35,803 thousand, respectively. Such amounts have been approved by the Company's Board of Directors on February 23, 2021 and will be reported to the stockholders in their meeting planned to be held on May 28, 2021.

If there is a change in the proposed amounts after the annual 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 2019 and 2018 approved by the Board of Directors on February 26, 2020 and March 19, 2019, respectively, were as follows:

	2019	2018
	Cash	Cash
Compensation distributed to the employees	\$ 1,126,194	\$ 1,404,264
Remuneration paid to the directors	35,210	38,216

There was no difference between the initial accrued amounts recognized in 2019 and 2018 and the amounts approved by the Board of Directors in 2020 and 2019 of the aforementioned compensation to employees and the remuneration to directors.

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

29. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

	Year Ended December 31
	2020	2019
Current tax
Current tax expenses recognized for the year	\$ 7,542,030	\$ 7,590,104
Income tax adjustments on prior years	-	(85,360)
Others	19,621	10,660
	7,561,651	7,515,404
Deferred tax
Deferred tax benefits recognized for the year	(99,847)	(41,358)
Income tax adjustments on prior years	15,495	-
	(84,352)	(41,358)
Income tax recognized in profit or loss	\$ 7,477,299	\$ 7,474,046

Reconciliation of accounting profit and income tax expense was as follows:

	Year Ended December 31
	2020	2019
Income before income tax	\$ 40,883,429	\$ 40,262,592
Income tax expense calculated at the statutory rate	\$ 8,176,686	\$ 8,052,518
Nondeductible income and expenses in determining taxable
income	(466)	5,140
Tax-exempt income	(613,694)	(323,439)
Investment credits	(117,488)	(192,921)
Income tax adjustments on prior years	15,495	(85,360)
Others	16,766	18,108
Income tax expense recognized in profit or loss	\$ 7,477,299	\$ 7,474,046

The applicable tax rate used by the Company is 20%.

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

b. Income tax recognized in other comprehensive income

			Year Ended December 31
		2020	2019
	Deferred tax Remeasurement on defined benefit pension plan	\$ 234,062	\$ 301,258
c.	Current tax liabilities
			December 31
		2020	2019
	Current tax liabilities Income tax payable	\$3,914,134	\$ 3,739,435

d. Deferred income tax assets and liabilities

The movements of deferred income tax assets and liabilities were as follows:

For the year ended December 31, 2020

	Beginning Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Ending Balance
Deferred income tax assets
Temporary differences
Defined benefit pension plan Allowance for doubtful	\$ 2,017,230	\$ 19,949	\$ (234,062)	\$ 1,803,117
receivables over quota	400,067	(37,458)	-	362,609
Valuation loss on inventory	127,279	148,308	-	275,587
Deferred revenue	97,457	(24,390)	-	73,067
Accrued award credits
liabilities	17,318	1,091	-	18,409
Estimated warranty
liabilities	14,847	1,871	-	16,718
Others	44,837	29,289	-	74,126
	\$ 2,719,035	\$ 138,660	\$ (234,062)	\$ 2,623,633
Deferred income tax liabilities
Temporary differences
Defined benefit pension plan	\$ 1,756,317	\$ 53,723	\$ -	\$ 1,810,040
Land value incremental tax	94,986	-	-	94,986
Deferred revenue for award
credits	28,543	1,664	-	30,207
Unrealized foreign exchange
gain, net	1,079	(1,079)	-	-
	\$ 1,880,925	\$ 54,308	\$ -	\$ 1,935,233

For the year ended December 31, 2019

	Beginning Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Ending Balance
Deferred income tax assets
Temporary differences
Defined benefit pension plan Allowance for doubtful	\$ 2,285,421	\$ 33,067	\$ (301,258)	\$ 2,017,230
receivables over quota	431,538	(31,471)	-	400,067
Valuation loss on inventory	73,841	53,438	-	127,279
Deferred revenue Accrued award credits	110,929	(13,472)	-	97,457
liabilities	13,913	3,405	-	17,318
Estimated warranty
liabilities	10,861	3,986	-	14,847
Others	129,010	(84,173)	-	44,837
	\$ 3,055,513	\$ (35,220)	\$ (301,258)	\$ 2,719,035
Deferred income tax liabilities
Temporary differences
Defined benefit pension plan	\$ 1,831,328	\$ (75,011)	\$ -	\$ 1,756,317
Land value incremental tax Deferred revenue for award	94,986	-	-	94,986
credits Unrealized foreign exchange	30,690	(2,147)	-	28,543
gain, net	499	580	-	1,079
	\$ 1,957,503	\$ (76,578)	\$ -	\$ 1,880,925

e. All deductible temporary differences were recognized as deferred tax assets in the balance sheets.

f. Income tax examinations

Income tax returns of the Company have been examined by the tax authorities through 2017.

30. EARNINGS PER SHARE

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

Net Income

	Year Ended	December 31
	2020	2019
Net income used to compute the basic earnings per share Assumed conversion of all dilutive potential common stocks Employee stock options and employee compensation of	\$ 33,406,130	\$ 32,788,546
subsidiaries	(7,241)	(3,617)
Net income used to compute the diluted earnings per share	\$ 33,398,889	\$ 32,784,929

Weighted Average Number of Common Stocks

(Thousand Shares)

	Year Ended December 31
	2020	2019
Weighted average number of common stocks used to compute the
basic earnings per share	7,757,447	7,757,447
Assumed conversion of all dilutive potential common stocks Employee compensation	7,108	7,862
Weighted average number of common stocks used to compute the
diluted earnings per share	7,764,555	7,765,309

As the Company may settle the employee compensation in shares or cash, the Company 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.

31. NON-CASH TRANSACTIONS

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

	Year Ended December 31
Investing activities	2020	2019
Increase in property, plant and equipment Changes in other payables	\$ 24,624,730 (1,884,118)	\$ 21,310,261 1,116,812
Acquisition of property, plant and equipment	\$ 22,740,612	\$ 22,427,073
Increase in investment properties	\$ 1,359,502	\$ 523
Trade-in investment properties from asset exchange transaction (Note 14)	(1,305,067)	-
Acquisition of investment properties	\$ 54,435	\$ 523
Increase in intangible assets	\$ 48,539,599	\$ 283,792
Changes in other assets	(1,000,000)	-
Acquisition of intangible assets	\$ 47,539,599	\$ 283,792
Disposal of property, plant and equipment, net	\$ 297,161	\$ 80,220
Gain (loss) on disposal of property, plant and equipment	1,435,864	(29,229)
Trade-in investment properties from asset exchange transaction (Note 14)	(1,305,067)	-
Changes in other payables	(79,986)	-
Changes in other current monetary assets	(31,032)	-
Proceeds from disposal of property, plant and equipment	\$ 316,940	\$ 50,991

Financing Activities

	Balance on January 1,	Cash Flows from Financing	Transactions	Changes in Non-Cash	Cash Flows from Operation Activities -	Balance on December 31,
	2020	Activities	New Leases	Others	Interest Paid	2020
Lease liabilities	\$ 8,695,214	\$(3,287,475)	\$ 3,468,664	\$ (195,892 )	\$ (59,864 )	\$ 8,620,647
	Balance on January 1,	Cash Flows from Financing	Transactions	Changes in Non-Cash	Cash Flows from Operation Activities -	Balance on December 31,
	2019	Activities	New Leases	Others	Interest Paid	2019
Lease liabilities	\$ 9,181,564	\$(3,306,322)	\$ 3,324,178	\$ (444,045 )	\$ (60,161 )	\$ 8,695,214

32. CAPITAL MANAGEMENT

The Company manages its capital to ensure that 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 and the equity of the Company.

The Company is 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 suggestion, 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.

33. 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.

	December 31
		2020		2019
	Carrying Value	Fair Value	Carrying Value	Fair Value
Financial liabilities
Financial liabilities measured at amortized cost
Bonds payable	\$ 19,980,272	\$ 20,078,098	\$ -	\$ -

The fair value of bonds payable is measured using Level 2 inputs. The valuation of fair value is based on the weighted-average per-hundred price of Taipei Exchange at the end of reporting period.

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

December 31, 2020

	Level 1	Level 2	Level 3	Total
Hedging financial assets	\$ -	\$ 1,752	\$ -	\$ 1,752
Financial assets at FVTPL Derivatives Non-listed stocks	\$ - - \$ -	\$ 2,271 - \$ 2,271	\$ - 677,202 \$ 677,202	\$ 2,271 677,202 \$ 679,473
Financial assets at FVOCI Listed stocks Non-listed stocks	\$ 2,610,501 - \$ 2,610,501	\$ - - \$ -	\$ - 4,293,178 \$ 4,293,178	\$ 2,610,501 4,293,178 \$ 6,903,679
December 31, 2019
	Level 1	Level 2	Level 3	Total
Hedging financial assets	\$ -	\$ 327	\$ -	\$ 327
Financial assets at FVTPL Non-listed stocks	\$ -	\$ -	\$ 778,105	\$ 778,105
Financial assets at FVOCI Listed stocks Non-listed stocks	\$ 2,388,416 -	\$ - -	\$ - 4,534,899	\$ 2,388,416 4,534,899
	\$ 2,388,416	\$ -	\$ 4,534,899	\$ 6,923,315 (Continued)

	Level 1	Level 2	Level 3	Total
Financial liabilities at FVTPL Derivatives	\$ -	\$ 228	\$ -	\$ 228 (Concluded)

There were no transfers between Levels 1 and 2 for the years ended December 31, 2020 and 2019.

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

2020

Measured at Fair Value through Profit or Loss	Measured at Fair Value through Other Comprehensive Income	Total
\$ 778,105	\$ 4,534,899	\$ 5,313,004
-	1,282	1,282
		(100,903)
-	(243,003)	(243,003)
\$ 677,202	\$ 4,293,178	\$ 4,970,380
\$ (100,903)
	(100,903)	-

2019

Financial Assets	Measured at Fair Value through Profit or Loss	Measured at Fair Value through Other Comprehensive Income	Total
Balance on January 1, 2019	\$ 517,362	\$ 3,633,210	\$ 4,150,572
Acquisition	300,000	-	300,000
Recognized in profit or loss under "Other gains and losses"	(39,257)	-	(39,257)
Recognized in other comprehensive income under "Unrealized gain or loss on financial assets at fair value through
other comprehensive income"	-	910,856	910,856
Proceed from return of investments	-	(9,167)	(9,167)
Balance on December 31, 2019	\$ 778,105	\$ 4,534,899	\$ 5,313,004
Unrealized loss in 2019	\$ (39,257)

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

• 1) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices.
• 2) For derivatives, fair values are estimated using discounted cash flow model. Future cash flows are estimated based on observable inputs including forward exchange rates at the end of the reporting periods and the forward and spot exchange rates stated in the contracts, discounted at a rate that reflects the credit risk of various counterparties.

The fair values of non-listed domestic and foreign equity investments were Level 3 financial assets, and determined using the market approach by reference the Price-to-Book ratios (P/B ratios) of peer companies that traded in active market or using assets approach. The significant unobservable inputs used were listed in the table below. A decrease in discount for the lack of marketability or noncontrolling interests discount would result in increases in the fair values.

	December 31
	2020	2019
Discount for lack of marketability	20%	20%
Noncontrolling interests discount	25%	25%

If the inputs to the valuation model were changed to reflect reasonably possible alternative assumptions while all the other variables were held constant, the fair values of equity investments would increase as below table. When related discounts increase, the fair value of equity investments would be the negative amount of the same amount.

	December 31
	2020	2019
Discount for lack of marketability
5% decrease Noncontrolling interests discount	\$ 310,649	\$ 332,063
5% decrease	\$ 46,906	\$ 53,585

Categories of Financial Instruments

	December 31
	2020	2019
Financial assets
Measured at FVTPL
Mandatorily measured at FVTPL	\$ 679,473	\$ 778,105
Hedging financial assets	1,752	327
Financial assets at amortized cost (Note a)	44,806,233	55,772,774
Financial assets at FVOCI	6,903,679	6,923,315
Financial liabilities
Measured at FVTPL
Held for trading	-	228
Measured at amortized cost (Note b)	58,305,555	30,394,827

• 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 bills payable, trade notes and accounts payable, payables to related parties, partial other payables, customers' deposits and bonds payable 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, short-term bills payable and bonds payable. The Company's Finance Department provides services to its business units, co-ordinates access to domestic and international capital markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, and liquidity risk.

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

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

a. Market risk

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

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

1) Foreign currency risk

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

	December 31
		2020	2019
Assets
USD	\$	697,597	\$ 3,398,099
EUR		11,883	10,618
SGD		62	69
JPY		482	539
HKD		68,707	186
			(Continued)

		December 31
	2020	2019
Liabilities
USD	\$ 503,192	\$ 3,772,682
EUR	954,040	206,447
SGD	1,046,395	1,260,190
JPY	7,483	6,271
HKD	7,559	14,185
		(Concluded)

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

		December 31
	2020	2019
Assets
EUR	\$ 3,902	\$ 327
USD	121	-
Liabilities
EUR	-	228

Foreign currency sensitivity analysis

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

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

	Year Ended December 31
	2020	2019
Profit or loss
Monetary assets and liabilities (a)
USD	\$ 9,720	\$ (18,729)
EUR	(47,108)	(9,791)
SGD	(52,317)	(63,006)
JPY	(350)	(287)
HKD	3,057	(700)
Derivatives (b)
EUR	2,627	2,519
USD	(18,512)	-
Equity
Derivatives (c)
EUR	10,210	4,195

• 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:

	December 31
	2020		2019
Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk	\$	16,006,853 35,600,117	\$ 23,072,032 8,695,214
Financial assets		2,855,144	2,414,392

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 \$7,138 thousand and \$6,036 thousand for the years ended December 31, 2020 and 2019, respectively. This is mainly attributable to the Company's exposure to floating interest rates on its financial assets.

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 for the year ended December 31, 2020 would have increased/decreased by \$33,860 thousand and \$345,184 thousand as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI, respectively. If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income for the year ended December 31, 2019 would have increased/decreased by \$38,905 thousand and \$346,166 thousand as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI, respectively.

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 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.

	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
December 31, 2020
Non-derivative financial liabilities Non-interest bearing Fixed interest rate instruments	- 0.50	\$ 33,632,660 7,000,000	\$ - -	\$ 2,020,848 -	\$ 4,722,280 8,800,000	\$ - 11,200,000	\$ 40,375,788 27,000,000
		\$ 40,632,660	\$ -	\$ 2,020,848	\$ 13,522,280	\$ 11,200,000	\$ 67,375,788

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		\$ 2,946,519	\$ 3,799,518		\$ 1,603,147	\$ 391,240	\$ 8,740,424
	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
December 31, 2019
Non-derivative financial liabilities Non-interest bearing	-	\$ 32,737,082	\$ -	\$ 2,249,737	\$ 4,653,517	\$ -	\$ 39,640,336

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	\$ 2,948,276	\$ 3,815,757	\$ 1,456,469	\$ 614,828	\$ 8,835,330

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		3 Months to
	1 Month	1-3 Months	1 Year	1-5 Years	Total
December 31, 2020
Gross settled
Forward exchange contracts Inflow Outflow	\$ - - \$ -	\$620,579 616,556 \$ 4,023	\$ - - \$ -	\$ - - \$ -	\$620,579 616,556 \$ 4,023
December 31, 2019
Gross settled
Forward exchange contracts Inflow Outflow	\$ - -	\$135,075 134,976	\$ - -	\$ - -	\$135,075 134,976
	\$ -	\$ 99	\$ -	\$ -	\$ 99

2) Financing facilities

	December 31
	2020	2019
Facilities of unsecured bank loan and commercial paper payable Amount used Amount unused	\$ 7,000,000 53,000,000	\$ - 40,000,000
	\$ 60,000,000	\$ 40,000,000

34. RELATED PARTIES TRANSACTIONS

The ROC Government, one of the Company's customers, has significant equity interest in the Company. The Company 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
Senao International Co., Ltd. ("SENAO")	Subsidiary
Light Era Development Co., Ltd. ("LED")	Subsidiary
Donghwa Telecom Co., Ltd.	Subsidiary
Chunghwa Telecom Singapore Pte., Ltd. ("CHTS")	Subsidiary
Chunghwa System Integration Co., Ltd. ("CHSI")	Subsidiary
Chunghwa Investment Co., Ltd. ("CHI")	Subsidiary
CHIEF Telecom, Inc. ("CHIEF")	Subsidiary
CHYP Multimedia Marketing & Communications	Subsidiary
Co., Ltd. ("CHYP")
Prime Asia Investments Group Ltd. (B.V.I.) ("Prime	Subsidiary
Asia")
Spring House Entertainment Tech. Inc. ("SHE")	Subsidiary
Chunghwa Telecom Global, Inc.	Subsidiary
Chunghwa Telecom Vietnam Co., Ltd.	Subsidiary
Smartfun Digital Co., Ltd.	Subsidiary
Chunghwa Telecom Japan Co., Ltd.	Subsidiary
Chunghwa Sochamp Technology Inc.	Subsidiary
Honghwa International Co., Ltd.	Subsidiary
Chunghwa Leading Photonics Tech. Co., Ltd.	Subsidiary
("CLPT")
Chunghwa Telecom (Thailand) Co., Ltd. ("CHTT")	Subsidiary
CHT Security Co., Ltd.("CHTSC")	Subsidiary
International Integrated Systems, Inc. ("IISI")	Subsidiary (Note 1)
Senao International (Samoa) Holding Ltd. ("SIS") Youth Co., Ltd.	Subsidiary of SENAO Subsidiary of SENAO
Aval Technologies Co., Ltd.	Subsidiary of SENAO
ISPOT Co., Ltd.	Subsidiary of SENAO
Youyi Co., Ltd.	Subsidiary of SENAO
Senyoung Insurance Agent Co., Ltd.	Subsidiary of SENAO
Senaolife Insurance Agent Co., Ltd.	Subsidiary of SENAO
Wiin Technologies Co., Ltd.("Wiin")	Subsidiary of SENAO
Unigate Telecom Inc.	Subsidiary of CHIEF
Chief International Corp.	Subsidiary of CHIEF
Shanghai Chief Telecom Co., Ltd.	Subsidiary of CHIEF
Chunghwa Precision Test Tech. Co., Ltd. ("CHPT")	Subsidiary of CHI
Chunghwa Precision Test Tech. USA Corporation	Subsidiary of CHPT
CHPT Japan Co., Ltd.	Subsidiary of CHPT
Chunghwa Precision Test Tech. International, Ltd. ("CHPT (International)")	Subsidiary of CHPT
Senao International HK Limited ("SIHK")	Subsidiary of SIS
Senao Trading (Fujian) Co., Ltd.	Subsidiary of SIHK
Senao International Trading (Shanghai) Co., Ltd.	Subsidiary of SIHK
Senao International Trading (Jiangsu) Co., Ltd.	Subsidiary of SIHK
Chunghwa Hsingta Co., Ltd. ("CHC")	Subsidiary of Prime Asia
Chunghwa Telecom (China) Co., Ltd.	Subsidiary of CHC
Shanghai Taihua Electronic Technology Limited ("STET")	Subsidiary of CHPT (International)
Su Zhou Precision Test Tech. Ltd.	Subsidiary of CHPT (International)

(Continued)

Company	Relationship
Taoyuan Asia Silicon Valley Innovation Co, Ltd.	Subsidiary of LED
Infoexplorer International Co., Ltd. ("IESA")	Subsidiary of IISI
IISI Investment Co., Ltd. ("IICL")	Subsidiary of IISI
Unitronics Technology Corp.	Subsidiary of IISI
International Integrated Systems (Hong Kong) Limited	Subsidiary of IESA
Leading Tech Co., Ltd. ("LTCL")	Subsidiary of IICL
Leading Systems Co., Ltd. ("LSCL")	Subsidiary of LTCL
International Integrated Systems Inc. (Shanghai) ("IISS")	Subsidiary of LSCL
Huiyu Shanghai Management Consultancy Co., Ltd. ("HSMC")	Subsidiary of IISS
Taiwan International Standard Electronics Co., Ltd.	Associate
So-net Entertainment Taiwan Limited	Associate
KKBOX Taiwan Co., Ltd.	Associate
KingwayTek Technology Co., Ltd.	Associate
UUPON Inc.	Associate (Note 2)
Viettel-CHT Co., Ltd.	Associate
Alliance Digital Tech Co., Ltd.	Associate
Taiwan International Ports Logistics Corporation	Associate
Chunghwa PChome Fund I Co., Ltd.	Associate
Cornerstone Ventures Co., Ltd.	Associate
Next Commercial Bank Co., Ltd. ("NCB")	Associate
Chunghwa SEA Holdings	Joint venture
Click Force Co., Ltd.	Associate of CHYP
ST-2 Satellite Ventures Pte., Ltd.	Associate of CHTS
Other related parties
Chunghwa Telecom Foundation	A nonprofit organization of which the funds donated by the Company exceeds one third of its total funds
Chunghwa Post Co., Ltd.	Government-related entity as Chunghwa
	Telecom
	(Concluded)

• Note 1: IISI was an associate and has become a subsidiary starting from July 1, 2020. Please refer to Note 13.
• Note 2: UUPON was previously an associate. As the Company did not participate in the capital increase of UUPON in October 2020; therefore, the Company lost its significant influence over UUPON. Since then, UUPON was no longer a related party of the Company. Please refer to Note 13.
• b. 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
	Year Ended December 31
	2020	2019
Subsidiaries	\$ 4,460,961	\$ 3,587,663
Associates	1,385,767	201,078
Others	3,480	3,728
	\$ 5,850,208	\$ 3,792,469
	Operating Costs and Expenses
		Year Ended December 31
	2020	2019
Subsidiaries	\$ 9,164,958	\$ 9,070,165
Associates	708,563	924,410
Others	51,700	57,700
	\$ 9,925,221	\$ 10,052,275

2) Non-operating transactions

	Non-operating Income and (Expenses)
		Year Ended December 31
		2020		2019
Subsidiaries Associates	\$	825 (8,895)	\$	13,091 257
	\$	(8,070)	\$	13,348

3) Receivables

December 31
			2019
\$	204,845	\$	781,356 4,209
			5 785,570
	\$	2020 1,135,699 6 1,340,550	\$

4) Contract liabilities-current

		December 31
	2020	2019
Associates	\$ 182,857	\$ -

5) Payables

		December 31
	2020	2019
Subsidiaries Associates	\$ 2,743,831 636,657	\$ 3,021,896 641,817
	\$ 3,380,488	\$ 3,663,713

6) Customers' deposits

	December 31 2020 2019 \$ 30,729 \$ 10,477
Subsidiaries Associates	2,066		5,035
	\$ 32,795	\$	15,512

7) Acquisition of property, plant and equipment

	Year Ended December 31
	2020	2019
Subsidiaries Associates	\$ 515,718 375,469	\$ 874,373 241,626
	\$ 891,187	\$ 1,115,999

8) Disposal of property, plant and equipment and investment properties to Chunghwa Post Co., Ltd.

	Proceeds	Gain on Disposal
	Year	Ended December 31	Year Ended December 31
	2020	2019	2020
Others	\$ 385,760	\$ -	\$ 310,205	\$ -

9) Lease-in agreements

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

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

		December 31
	2020	2019
Lease liabilities - current Lease liabilities - noncurrent	\$ 182,187 816,610	\$ 188,271 1,023,889
	\$ 998,797	\$ 1,212,160

The interest expense recognized for the aforementioned lease liabilities were \$8,895 thousand and \$10,887 thousand for the years ended December 31, 2020 and 2019, respectively.

c. Compensation of key management personnel

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

Short-term employee benefits Post-employment benefits	Year Ended December 31
		2020		2019
	\$	67,048 4,613	\$	66,341 5,578
	\$	71,661	\$	71,919

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

35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Except for those disclosed in other notes, the Company's significant commitments and contingent liabilities as of December 31, 2020 were as follows:

• a. Acquisitions of telecommunications-related inventory and equipment of \$25,567,736 thousand.
• b. 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 the Company on August 15, 1996 (classified as other monetary assets - noncurrent). If the fund is not sufficient, the Company will contribute the remaining \$1,000,000 thousand upon notification from the Taipei City Government.
• c. The Company 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, the Company will provide financial support to assist NCB in maintaining a healthy financial condition.

36. OTHER MATTERS

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

37. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The information of significant assets and liabilities denominated in foreign currencies was as follows:

		December 31, 2020
	Foreign		New Taiwan
	Currencies		Dollars
	(Thousands)	Exchange Rate	(Thousands)
Assets denominated in foreign currencies
Monetary items
USD	\$ 24,494	28.48	\$ 697,597
EUR	339	35.02	11,883
SGD	3	21.56	62
JPY	1,744	0.276	482
HKD	18,706	3.673	68,707
Non-monetary items
Investments accounted for using equity
method
USD	49,724	28.48	1,416,152
HKD	404,643	3.673	1,486,252
JPY	326,093	0.276	90,099
VND	409,377,361	0.0011	454,409
RMB THB	37,268 115,281	4.377 0.9556	163,121 110,163
Liabilities denominated in foreign currencies
Monetary items
USD	17,668	28.48	503,192
EUR	27,243	35.02	954,040
SGD	48,534	21.56	1,046,395
JPY	27,083	0.276	7,483
HKD	2,058	3.673	7,559
	Foreign	December 31, 2019	New Taiwan
	Currencies		Dollars
	(Thousands)	Exchange Rate	(Thousands)
Assets denominated in foreign currencies
Monetary items USD	\$ 113,346	29.98	\$ 3,398,099
EUR	316	33.59	10,618
SGD	3	22.28	69
JPY	1,954	0.276	539
HKD	48	3.849	186
Non-monetary items
Investments accounted for using equity method
USD	42,782	29.98	1,282,608
HKD	422,835	3.849	1,627,491
JPY	277,417	0.276	76,567
			(Continued)

	December 31, 2019
	Foreign Currencies (Thousands)	Exchange Rate	New Taiwan Dollars (Thousands)
VND	\$ 354,492,164	0.0012	\$ 414,756
RMB	42,506	4.31	182,989
THB	113,123	1.0098	114,231
Liabilities denominated in foreign currencies
Monetary items
USD	125,840	29.98	3,772,682
EUR	6,146	33.59	206,447
SGD	56,561	22.28	1,260,190
JPY	22,720	0.276	6,271
HKD	3,685	3.849	14,185
			(Concluded)

The unrealized foreign currency exchange gains and losses were loss of \$15,703 thousand and gain of \$8,315 thousand for the years ended December 31, 2020 and 2019, respectively. Due to the various foreign currency transactions of the Company, foreign exchange gains and losses cannot be disclosed by the respective significant foreign currency.

38. ADDITIONAL DISCLOSURES

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

• a. Financing provided: None.
• b. Endorsement/guarantee provided: Please see Table 1.
• c. Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): Please see Table 2.
• d. Marketable securities acquired or disposed of at costs or prices at least \$300 million or 20% of the paid-in capital: Please see Table 3.
• e. Acquisition of individual real estate at costs of at least \$300 million or 20% of the paid-in capital: Please see Table 4.
• f. Disposal of individual real estate at prices of at least \$300 million or 20% of the paid-in capital: Please see Table 5.
• 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 6.
• h. Receivables from related parties amounting to \$100 million or 20% of the paid-in capital: Please see Table 7.

• i. Names, locations, and other information of investees on which the Company exercises significant influence (excluding investment in Mainland China): Please see Table 8.

• j. Derivative instruments transactions: Please see Notes 7, 19 and 33.

• k. Investment in Mainland China: Please see Table 9.
• l. Information of main stakeholders: Please see Table 10.

39. SEGMENT INFORMATION

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

• a. Domestic fixed communications business the provision of local telephone services, domestic long distance telephone services, broadband access, and related services;
• b. Mobile communications business the provision of mobile services, sales of mobile handsets and data cards, and related services;
• c. Internet business the provision of HiNet services and related services;
• d. International fixed communications business the provision of international long distance telephone services and related services;
• e. Others the provision of non-telecom services and the corporate related items not allocated to reportable segments.

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

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

Segment Revenues and Operating Results

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

	Domestic Fixed Communications Business	Mobile Communications Business	Internet Business	International Fixed Communications Business	Others	Total
Year ended December 31, 2020
Revenues From external customers Intersegment revenues Segment revenues Intersegment elimination	\$ 69,787,891 15,610,387 \$ 85,398,278	\$ 72,132,979 1,009,495 \$ 73,142,474	\$ 29,623,809 3,489,556 \$ 33,113,365	\$ 6,841,292 1,675,274 \$ 8,516,566	\$ 236,856 19,371 \$ 256,227	\$ 178,622,827 21,804,083 200,426,910 (21,804,083)
Revenues						\$ 178,622,827
Segments operating costs and expenses	\$ 63,452,258	\$ 52,242,328	\$ 14,043,381	\$ 6,843,254	\$ 4,116,236	\$ 140,697,457
Segment income (loss) before income tax	\$ 22,504,443	\$ 8,568,040	\$ 12,204,370	\$ 674,697	\$ (3,068,121)	\$ 40,883,429 (Continued)

	Domestic Fixed Communications Business	Mobile Communications Business	Internet Business	International Fixed Communications Business	Others	Total
Year ended December 31, 2019
Revenues From external customers Intersegment revenues Segment revenues Intersegment elimination	\$ 66,027,403 15,868,086 \$ 81,895,489	\$ 74,880,047 1,157,136 \$ 76,037,183	\$ 27,889,068 3,670,450 \$ 31,559,518	\$ 10,282,592 1,690,231 \$ 11,972,823	\$ 242,728 12,275 \$ 255,003	\$ 179,321,838 22,398,178 201,720,016 (22,398,178)
Revenues						\$ 179,321,838
Segments operating costs and expenses	\$ 59,888,575	\$ 53,854,703	\$ 13,057,785	\$ 10,154,672	\$ 4,003,655	\$ 140,959,390
Segment income (loss) before income tax	\$ 20,795,017	\$ 9,644,680	\$ 11,561,837	\$ 610,811	\$ (2,349,753)	\$ 40,262,592 (Concluded)

Other Segment Information

Other information reviewed by the chief operating decision maker or regularly provided to the chief operating decision maker was as follows:

	Domestic Fixed Communications Business	Mobile Communications Business	Internet Business	International Fixed Communications Business	Others	Total
Year ended December 31, 2020
Share of profits of subsidiaries, associates and joint ventures accounted for using equity method Interest income Interest expenses Depreciation and amortization Capital expenditure Gain on disposal of property, plant and equipment Gain on disposal of investment properties Reversal of impairment loss on investment properties	\$ - \$ 13,151 \$ 6,060 \$ 14,249,950 \$ 11,482,779 \$ 1,435,864 \$ 151,357 \$ 27,066	\$ - \$ 252 \$ 45,355 \$ 22,046,689 \$ 8,813,389 \$ - \$ - \$ -	\$ - \$ 1,283 \$ 892 \$ 2,680,473 \$ 1,319,687 \$ - \$ - \$ -	\$ - \$ 1,368 \$ 9,059 \$ 1,298,905 \$ 685,941 \$ - \$ - \$ -	\$ 1,216,137 \$ 36,835 \$ 110,292 \$ 307,397 \$ 438,816 \$ - \$ - \$ -	\$ 1,216,137 \$ 52,889 \$ 171,658 \$ 40,583,414 \$ 22,740,612 \$ 1,435,864 \$ 151,357 \$ 27,066
Year ended December 31, 2019
Share of profits of subsidiaries, associates and joint ventures accounted for using equity method Interest income Interest expenses Depreciation and amortization Capital expenditure Reversal of impairment loss on investment	\$ - \$ 15,156 \$ 5,076 \$ 14,841,890 \$ 12,070,922	\$ - \$ 429 \$ 44,058 \$ 20,924,992 \$ 7,755,829	\$ - \$ 1,305 \$ 1,638 \$ 2,915,995 \$ 1,263,403	\$ - \$ 3,384 \$ 10,927 \$ 1,389,964 \$ 982,893	\$ 1,440,326 \$ 136,825 \$ 174 \$ 218,524 \$ 354,026	\$ 1,440,326 \$ 157,099 \$ 61,873 \$ 40,291,365 \$ 22,427,073
properties Impairment loss on other assets	\$ 56,617 \$ 13,191	\$ - \$ -	\$ - \$ 13,191	\$ - \$ -	\$ - \$ 17,589	\$ 56,617 \$ 43,971

Main Products and Service Revenues

	Year Ended December	31
	2020	2019
Mobile services revenue	\$ 60,396,292	\$ 62,808,959
Local telephone and domestic long distance telephone services
revenue	26,495,555	27,949,534
Broadband access and domestic leased line services revenue	22,500,492	22,180,256
Data Communications internet services revenue	20,017,339	19,637,375
Sale of products	13,310,782	13,609,662
International network and leased line services revenue	3,367,177	6,513,830
Others	32,535,190	26,622,222
	\$ 178,622,827	\$ 179,321,838

Geographic Information

The users of the Company's services are mainly from Taiwan, ROC. The revenues it derived outside Taiwan are mainly revenues from international long distance telephone and leased line services. The geographic information for revenues was as follows:

	Year Ended December	31
	2020	2019
Taiwan, ROC Overseas	\$ 175,571,237 3,051,590	\$ 172,531,947 6,789,891
	\$ 178,622,827	\$ 179,321,838

The Company does not have material noncurrent assets in foreign operations.

Major Customers

As of December 31, 2020 and 2019, the Company did not have any single customer whose revenue exceeded 10% of the total revenues.

ENDORSEMENTS/GUARANTEES PROVIDEDYEAR ENDED DECEMBER 31, 2020(Amounts in Thousands of New Taiwan Dollars)

No En dor sem ( No te 1 ) Gu e P nte ara	Gu nte ara / ent ide Na rov r me	ed Pa rty Na f tur e o Re lat ion shi p ( 2) No te	Lim its on En dor / ent sem Gu nte ara e Am t oun Pro vid ed to Ea ch Gu ed nte ara	Ma xim um for Ba lan ce rio the Pe d	En din g Ba lan ce	Ac l tua win Bo rro g Am t oun	Am t of oun En dor ent sem Gu nte ara e Co lize llat era ties by Pro per	Ra tio of Ac ula ted cum En dor / ent sem / Gu nte e to ara Ne t E ity qu d Per La tes t Fin ial anc	Ma xim um En dor / ent sem Gu nte ara e Am t oun All abl ow e	En dor / ent sem Gu nte ara e Giv by en Pa t on ren Be hal f of Su bsi dia rie s	En dor / ent sem Gu nte ara e Giv by en Su bsi dia rie s Be hal f o f on Pa t ren	En dor / ent sem Gu nte ara e Giv en on f of Be hal Co ani es i mp n inl Ma and Ch ina	No te
			Pa rty					Sta tem ent s
1 Sen Int atio ao ern Co Ltd	nal Av al Tec hno log ies	b	\$ 59 1, 338	\$ 300 000 ,	\$ 300 000 ,	\$ 300 000 ,	\$ -	5.0 7	\$ 2, 956 690 ,	Ye s	No	No	No 3 a nd 4 tes
.,	Co Ltd .,
	Wi in T ech nol ogy Co Ltd .,	b	59 1, 338	100 000 ,	100 000 ,	100 000 ,	-	1.6 9	2, 956 690 ,	Ye s	No	No	3 a nd 4 No tes

Note 1: Significant transactions betweenthe 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 guaranteedparty:

• a. ^Acompany with which it does business.
• b. A companyin 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 whichthe 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 forpurposes 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 jointlyand 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.

Note4: 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.

MARKETABLE SECURITIES HELDDECEMBER 31, 2020(Amounts in Thousands of New Taiwan Dollars)

					De ber cem	31, 20 20
Co He ld Na mp any me	le S riti Ma rke tab Ty and Na ecu es pe me	Re lat ion shi ith p w the Co mp any	Fin ial Sta Ac tem ent nt anc cou	Sh are s ( Th and s/ ous Th and Un its) ous	Ca ing Va lue rry ( No te 1 )	Per f tag cen e o Ow shi ner p	Fa ir V alu e	No te
Ch hw ele Co Ltd a T ung com .,	Sto cks
	Tai i F ina nci al C er C ent pe orp	-	Fin ial OC FV I ets at anc ass	172 927 ,	\$ 4, 163 227 ,	12	\$ 4, 163 227 ,	-
	tion ork lop und Inn W s D nt F L.P ova eve me ,	-	Fin ial FV TP L ets at t anc ass non cur ren -	-	236 107 ,	4	236 107 ,	-
	Ind rial nk of T aiw ital Ba II V Ca Co ust ent an ure p ., Ltd . ( IBT II)	-	Fin ial FV OC I ets at anc ass	5, 252	17, 084	17	17, 084	-
	Glo bal M obi le C orp	-	Fin ial FV OC I ets at anc ass	7, 617	-	3	-	-
	Inn tion W ork s L imi ted ova	-	Fin ial FV OC I ets at anc ass	1, 000	3, 698	2	3, 698	-
	RP TI Int Int atio nal Lt d. erg rou p ern	-	Fin ial FV OC I ets at anc ass	4, 765	-	10	-	-
	Tai obi le p Co Ltd ent wa n m aym .,	-	Fin ial FV OC I ets at anc ass	1, 200	4, 324	2	4, 324	-
	Tai nia Ca ital Bu ffa lo Fun d C Ltd wa p o.,	-	Fin ial FV TP L ets at t anc ass non cur ren -	600 000 ,	44 1, 095	13	44 1, 095	-
	Ch ina Ai rlin Ltd es,	-	Fin ial FV OC I ets at anc ass	216 639 ,	2, 610 50 1 ,	4	2, 610 50 1 ,	No te 2
	4 G En ain nt I tert am ers me nc.	-	Fin ial FV OC I ets at anc ass	136	103 556 ,	19. 9	103 556 ,	-
	UU PO N I nc.	-	Fin ial FV OC I ets at anc ass	246	1, 289	4	1, 289	-
Sen atio nal Co Ltd Int ao ern .,	Sto cks
	tion uba tion Co rati N.T .U. Inn Inc ova rpo on	-	Fin ial OC FV I ets at anc ass	1, 200	9, 444	9	9, 444	-
	PO UU N I nc.	-	Fin ial VO CI at F ets anc ass	109	573	2	573	-
CH lec IEF Te In om c.	Sto cks
	ink for tion rvi Ltd 3 L In Se Co ma ce .,	-	Fin ial at F VO CI ets anc ass	374	1, 220	10	1, 220	-
	old ing imi ted WP G H s L	-	Fin ial FV TP L ets at t anc ass cur ren -	9	448	-	448	No te 2
	old ing Lim ited WP G H s	-	Fin ial FV OC I ets at anc ass	1, 736	86, 974	-	86, 974	No te 2
	Tai chu ial nk Ltd Co Ba Co ng mm erc .,	-	Fin ial FV TP L ets at t anc ass cur ren -	662	7, 178	-	7, 178	No te 2
Ch hw a In nt C Ltd tme ung ves o.,	Sto cks
	Tat Te chn olo Inc ung gy	-	Fin ial FV OC I ets at anc ass	4, 57 1	127 43 1 ,	11	127 43 1 ,	-
	iSi 99 Inc ng	-	Fin ial FV OC I ets at anc ass	10, 000	-	7	-	-
	Pow El roC hem ica l C tion tec ect orp ora	-	Fin ial FV OC I ets at anc ass	20, 000	-	2	-	-
	Bo ssd Di iinn tion Co Ltd om g ova .,	-	Fin ial FV OC I ets at anc ass	2, 000	56, 700	7	56, 700	No te 2
Ch hw a H sin ta C Ltd ung g o.,	Sto cks
	Co h E ine erin hou Co Fuz tec ng g rp.	-	Fin ial OC FV I ets at anc ass	-	153 7,	5	153 7,	-

Note 1: Showedat carrying amounts with fair value adjustments.

Note 2: Fair value was based on the closing price onDecember 31, 2020.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT\$300 MILLION OR 20% OF THE PAID-IN CAPITAL YEAR ENDED DECEMBER 31, 2020(Amounts in Thousands of NewTaiwan Dollars)

					Beg inn ing	Bal anc e	Acq	uisi tion		Dis	al pos		End ing	Bal anc e
Com y N pan am e	le S riti Ma rke tab es T and Na ecu ype me	Fin ial Sta Acc tem ent t anc oun	Cou nte arty r-p	of Nat ure Rel atio nsh ip	Sha res (Th and s/ ous Tho nd usa Uni ts)	Am t oun	Sha res (Th and s/ ous Tho nd usa Uni ts)	Am t oun	Sha res (Th and s/ ous Tho nd usa Uni ts)	Am t oun	Car ryin g Val ue	Gai n on Dis al pos	Sha res (Th and s/ ous Tho nd usa Uni ts)	Am t oun
Chu ngh Tel Co. wa eco m , L td.	Sto cks Chi na A irlin Ltd es,	Fin ial a FVO CI sset s at anc	-	-	263 ,622	\$ 3,09 2,28 7 (No te)	-	\$ -	46,9 83	\$ 567 ,797	\$ 551 ,111 (No te)	\$ 16,6 86	216 ,639	\$ 2,54 1,17 6 (No te)

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

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST \$300 MILLION OR 20% OF THE PAID-IN CAPITAL YEAR ENDED DECEMBER 31, ²⁰²⁰ (Amounts inThousands of New Taiwan Dollars)

			Tra ctio nsa n				Info tion Pre rma on	viou s Ti tle T ran	sfer If C terp arty oun	is a Re late d P arty		Pur of pos e
Buy er	Pro ty per	Eve nt D ate	Am t oun	t St Pay atu men s	Cou nte rty rpa	atio ip Rel nsh	Pro ty O per wne r	Rel atio nsh ip	Tra ctio n D ate nsa	Am t oun	rici Ref P ng eren ce	Acq uisi tion	Oth er T erm s
Chu ngh Tel m C Lan d th wa eco o., Ltd buil	ific offi at s pec ce ding is l ted oca on	202 0.05 .06	\$ 3,24 3,68 9	\$1,0 56,6 80 t o be paid	MO TC	Maj or S hare hold er	Non e	Non e	Non e	Non e	Ass d va lue esse from tion al Na Pro pert y	Ope rati ng p urp ose	-
Bui ldin	gs	202 0.10 .06	1,30 5,06 7	Not lica ble app (No te)	Kin dom Dev elop t men	-	Not lica ble app	Not lica ble app	Not lica ble app	Not lica ble app	Adm inis ion trat Ass d va lue esse from real est ate	Lea sing pur pos e	-
Chu ngh Pre cisi on T Ele ctri est wa Tec h. C Ltd o., eng con buil	cal d han ical an mec inee ring and fit- out ctio ns f stru or ding s	202 0.07 .03- 202 0.10 .05	173 ,120	Mo nthl ttlem ent y se bas ed o n th e ctio stru con n d pro gres s an ptan acce ce	d Co. , Lt Fu Tsu Con ctio stru n Co. , Lt d.	-	Not lica ble app	Not lica ble app	Not lica ble app	Not lica ble app	rais al re t app por Bid ding , pri ce pari and com son pric goti atio e ne n	Ma nuf ring actu pur pos e	-

Note: This is the urban renewal project for the asset exchange transaction for trade-in buildings. Please refer to Note14for details.

DISPOSAL OF INDIVIDUAL REAL ESTATE AT PRICES OF AT LEAST NT\$300 MILLION OR 20% OF THE PAID-IN CAPITALYEAR ENDED DECEMBER 31, ²⁰²⁰ (Amounts inThousands of New Taiwan Dollars)

Sel ler	Pro ty per	Ev Da ent te	Or ig ina l A isit ion cqu Da te	Ca ing rry Am t oun	Tr ion act ans Am t oun	Co tio llec n	Ga in on Dis al pos	Co ter ty un par	ion shi Re lat p	Pu of rpo se Dis al pos	Pri fer Re ce enc e	Ot her Te rm s
Ch hw Tel ung a eco m Co Ltd .,	d Lan Lan d	202 0.0 8.0 5 202 0.1 0.0 6	20 17. 12. 20, 20 04. 07. 07 and 20 04. 12. 16 200 0.0 7.2 4	\$ 75, 555 37, 087	\$ 385 760 , 1, 305 067 ,	llec ted Co No lica ble t ap p ( No te)	\$ 310 205 , 1, 267 980 ,	Ch hw a P ost ung Co Ltd ., Kin dom De vel ent opm Co Ltd .,	Oth ers -	iva tion As set act Par tici tion in pa le nt- gov ern me d urb an al ren ew jec t pro	al e ais al Re stat e a ppr ort rep Re al e ais al stat e a ppr ort rep	- -

Note: This is the urban renewal project for the asset exchange transaction for trade-in buildings.Please refer to Note14 for details.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT\$100 MILLION OR 20% OF THE PAID-IN CAPITAL YEAR ENDED DECEMBER 31, 2020(Amounts in Thousands of New Taiwan Dollars)

				tion Tra nsac	ails Det		Abn al T orm	ion sact ran	Not / Acc es oun or R ecei vab	ts P ble aya le
Com y Na pan me	Rela ted Par ty	Nat of R elat ions hip ure	Pur cha ses/ Sale s (No te 1 )	Am t oun (No 2) tes	% t o To tal	Pay t Te men rms	Uni ts P rice	Pay t Te men rms	End ing Bala nce (No tes 3 )	% t o To tal
Chu ngh elec Co., Ltd wa T om	Sen nati onal Co. , Ltd ao I nter	Sub sidia ry	Sale	3,16 4,85		30 d			642
			s hase Purc	\$ 4 ,125 676	2	ays 30-9 0 da	\$ -	-	\$ ,604 (753 ,706 )	3 (5)
	Ava l Te chno logi es C o., L td.	Sub sidia ry	Purc hase	224 ,122	1	ys 30 d ays	-	-	(37, 085 )
	Seny Insu e Ag ent C o., L td. oun g ranc	Sub sidia ry	Sale s	107, 879	- -	90 d ays	- -	- -	45,7 99	- -
	CHI EF T elec Inc. om	Sub sidia ry	Sale s	406 ,642	-	30 d ays	-	-	59,9 26	-
			Purc hase	122, 025	-	60 d ays	-	-	(22, 164)	-
	Chu ngh wa S m In ation Co. , Ltd yste tegr	Sub sidia ry	Purc hase	1,29 3,90 6	1	30 days	-	-	(345 ,168 )	(2)
	Mul time dia M arke ting unic ation d. CHY P & C s Co ., Lt omm	Sub sidia ry	hase Purc	110, 915	-	30 d ays	-	-	(36, 588 )	-
	Hon ghw a In ation al C o., L td. tern	Sub sidia ry	Sale s	268 ,779	-	30-6 0 da ys	-	-	49,5 55	-
		Sub sidia ry	Purc hase	5,53 6,30 3	5	30-6 0 da ys	-	-	(682 ,373 )	(4)
	Don ghw a Te leco m C o., L td.	Sub sidia ry	Sale s	178, 470	-	30 d ays	-	-	31,0 20	-
		Sub sidia ry	Purc hase	451 ,365	-	90 d ays	-	-	(144 ,874 )	(1)
	Chu ngh wa T elec Glob al, Inc om	Sub sidia ry	Purc hase	313 ,914	-	90 days	-	-	(35, 056 )	-
	Chu ngh wa T elec Sing e Pt e., L td. om apor	Sub sidia ry	Purc hase	157, 772	-	30 d ays	-	-	(66, 693 )	-
	CHT Sec urity Co. , Ltd	Sub sidia ry	hase Purc	338 ,666	-	30 days	-	-	(109 ,857 )	(1)
	iona l Int ted Syst Inte , Inc rnat egra ems	Sub sidia ry	hase Purc	400 ,195	-	30 d ays	-	-	(235 ,565 )	(2)
	Taiw nati onal Sta ndar d El onic s Co d. an I ., Lt nter ectr	Ass ocia te	hase Purc	591 ,195	1	30-9 0 da ys	-	-	(488 ,244 )	(3)
	Nex Com cial Ban k Co., Ltd t mer	Ass ocia te	Sale s	1,24 5,17 8	1	30-6 0 da ys	-	-	192, 000	1
Sen ao I nati onal Co. , Ltd nter	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	5,83 9,84 3	22	30-9 0 da ys	-	-	753 ,496	44
			Purc hase	2,99 8,44 2	13	30 days	-	-	(598 ,985 )	(31)
	Ava l Te chno logi es C o., L td.	Sub sidia ry	Sale s	312 ,968	1	60 d ays	-	-	136, 785	8
			hase Purc	286 ,553	1	30 d ays	-	-	(9,6 60)	(1)
	Seny Insu e Ag ent C o., L td. oun g ranc	Sub sidia ry	Sale s	124, 628	-	30 days	-	-	45,0 70	3
CHI EF T elec Inc. om	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	254 ,402	10	60 d ays	-	-	33,1 22	15
			Purc hase	406 ,101	29	30 d ays	-	-	(59, 926 )	(51)
Chu ngh wa S m In ation Co., Ltd. yste tegr	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	1,59 7,66 4	76	30 d ays	-	-	342 ,578	67
CHY ultim edia rket ing & C unic ation s Co P M Ma omm ., Ltd.	Chu ngh elec Co., Ltd wa T om	Pare nt co mpa ny	Sale s	110, 915	27	30 d ays	-	-	34,2 38	44
Hon ghw a In ation al C o., L td. tern	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	5,64 1,81 7	97	30-6 0 da ys	-	-	681 ,107	94
Don ghw a Te leco m C o., L td.	Chu ngh wa T elec Co., Ltd. om	Pare nt co mpa ny	Sale s	451 ,365	40	90 d ays	-	-	144, 874	39
			hase Purc	178, 470	16	30 d ays	-	-	(31, 020 )	(19)
Chu ngh wa T elec Glob al, I om nc.	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	313 ,914	53	90 d ays	-	-	35,0 56	67
Chu ngh wa T elec Sing Pte. , Ltd om apor e	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	157, 772	12	30 d ays	-	-	66,6 93	19
CHT Sec urity Co. , Ltd	Chu ngh wa T elec Co., Ltd om	Pare nt co mpa ny	Sale s	362 ,082	38	30 d ays	-	-	109, 813	33
iona l Int ted Syst Inte Inc. rnat egra em,	Chu ngh elec Co., Ltd wa T om	Pare nt co mpa ny	Sale s	400 ,195	15	30 d ays	-	-	235 ,565	47
Ava l Te chno logi es C o., L td.	Chu ngh wa T elec Co., Ltd om You th C o., L td.	Pare nt co mpa ny Fell subs idiar ow y	Sale s Sale s	224 ,122 131, 466	1 -	30 days 30 d ays	- -	- -	37,0 85 19,9 55	2 1

Note 1: Purchasesinclude costs to acquire services.

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

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

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

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT\$100 MILLION OR 20% OF THE PAID-IN CAPITALDECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

					Ov	erd ue	Am ts oun
Co Na mp any me	Re lat ed Pa rty	Na of R ela tio nsh ip tur e	En din Ba lan g ce	Tu Ra te rno ver ( te) No	Am ts oun	Ac tio n T ake n	cei in Re ved Su bse ent qu iod Per	All e fo ow anc r Ba d D ebt s
Ch hw a T ele Co Ltd ung com .,	Sen Int atio nal Co Ltd ao ern .,	Sub sid iary	\$ 816 927 ,	11. 18	\$ -	-	\$ 800 156 ,	\$ -
	Ne xt C rci al B ank Co Ltd om me .,	As iate soc	192 000 ,	6.2 5	-	-	-	-
Sen Int atio nal Co Ltd ao ern .,	Ch hw a T ele Co Ltd ung com .,	Par ent co mp any	891 312 ,	7.5 3	-	-	103 851 ,	-
	Av al T ech nol ies Co Ltd og .,	Sub sid iary	136 808 ,	3.5 2	-	-	77, 628	-
Ch hw a S In rati Co Ltd tem teg ung ys on .,	Ch hw a T ele Co Ltd ung com .,	Par ent co mp any	342 578 ,	3.1 9	-	-	208 487 ,	-
Ho hw a In atio nal Co Ltd tern ng .,	Ch hw a T ele Co Ltd ung com .,	Par ent co mp any	681 107 ,	7.6 8	-	-	202 685 ,	-
CH T S rity Co Ltd ecu .,	Ch hw a T ele Co Ltd ung com .,	Par ent co mp any	109 813 ,	1.0 8	-	-	103 935 ,	-
Int atio nal In d S Inc teg rate tem ern ys s,	Ch hw a T ele Co Ltd ung com .,	Par ent co mp any	216 269 ,	3.3 0	-	-	216 269 ,	-
Do hw Tel m C Ltd ng a eco o.,	Ch hw a T ele Co Ltd ung com .,	Par ent co mp any	144 874 ,	3.0 3	-	-	107 027 ,	-

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

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTEES IN MAINLAND CHINA) YEAR ENDED DECEMBER 31, 2020(Amounts in Thousands of New TaiwanDollars)

				Ori gin al I nve	Am stm ent t oun	Bal anc	of Dec emb e as er	31, 202 0	Net Inc om e	Rec ized ogn
Inv r C esto om pan y	Inv e C este om pan y	Loc atio n	Ma in B usin d P rod uct esse s an s	Dec emb 31, er	Dec emb 31, er	Sha res	Per e of tag cen	Car ryin g V alu e	(Lo ss) of t he	Gai n (L oss)	Not e
				202 0	201 9	(Th and s) ous	Ow ship (% ) ner	(No te 3 )	Inv este e	(No 1, 2 d 3) tes an
Chu ngh Tel m C o., L td. wa eco	Sen ao I nati l Co ., Lt d. nter ona	Tai wan	Han dset and iphe rals aile les of C HT ret per r; sa mob ile p hon e pl ent ans as a n ag	\$ 1,06 5,8 13	\$ 1,06 5,8 13	71,7 73	28	\$ 1,63 0,23 0	\$ 436 ,717	\$ 117 ,500	Sub sidi ary
	Lig ht E ra D lopm Co. , Lt d. ent eve	Tai wan	Plan ning and dev elop t of l es and tate men rea inte llig buil ding d pr ent rty s, an ope t man age men	3,00 0,00 0	3,00 0,00 0	300 ,000	100	3,85 3,23 4	15,1 60	9,67 3	Sub sidi ary
	Don ghw a Te leco m C o., L td.	Hon g K ong	Inte iona l pr ivat e le ased cir cuit , IP VP N rnat ice, and sit s ervi IP tran serv ces	1,56 7,45 3	1,56 7,45 3	402 ,590	100	1,48 6,25 2	7,37 9	7,37 9	Sub sidi ary
	Chu ngh Tel m S inga e Pt wa eco por e., Ltd	Sin gap ore	Inte iona l pr ivat e le ased cir cuit , IP VP N rnat ice, and IP sit s ervi tran serv ces	574 ,112	574 ,112	26,3 83	100	1,01 3,52 9	116 ,771	116 ,791	Sub sidi ary
	Chu ngh Sys Int tion Co tem wa egra ., Ltd	Tai wan	Pro vidi m in atio rvic nd yste tegr ng s n se es a tele icat ion ipm ent com mun s equ	838 ,506	838 ,506	60,0 00	100	725 ,213	12,8 40	13,2 54	Sub sidi ary
	CH leco IEF Te m I nc.	Tai wan	k in atio n, in et d Net tegr tern ata ter wor cen ("ID C") unic atio ns i rati nd nteg co mm on a , clou d ap plic atio rvic n se es	459 ,652	459 ,652	39,4 26	56	1,78 5,96 8	607 ,779	348 ,533	Sub sidi ary
	Chu ngh Co. d. Inv , Lt estm ent wa Prim e A sia Inv Gro up L td. estm ents (B.V .I.)	Tai wan Brit ish Vir gin Isla nds	Inv estm ent Inv estm ent	639 ,559 385 ,274	639 ,559 385 ,274	68,0 85 1	89 100	3,01 7,56 9 163 ,121	317 ,590 (19 ,434 )	282 ,776 (19 ,434 )	Sub sidi ary Sub sidi ary
	Hon ghw a In atio nal Co. , Lt d. tern	Tai wan	Tel unic atio gine erin ales nt eco mm n en g, s age of m obil e ph pla plic atio d ot her one n ap n an bus ines rvic etc. s se es,	180 ,000	180 ,000	18,0 00	100	491 ,985	229 ,464	213 ,346	Sub sidi ary
	CH YP Mu ltim edia Ma rket ing & Com icat ions Co d. ., Lt mun	Tai wan	Dig ital info tion ply ices and rma sup serv adv erti ices ent sem serv	150 ,000	150 ,000	15,0 00	100	194 ,399	17,3 58	17,0 64	Sub sidi ary
	Chu ngh Tel m V ietn Co. wa eco am , Ltd	Vie tnam	Inte llig ing solu tion ent ene rgy sav s, inte iona l cir cuit d in form atio d rnat , an n an icat ion tech nolo gy ( "IC T") com mun ices serv	148 ,275	148 ,275	-	100	90,8 87	(2,3 80)	(2,3 80)	Sub sidi ary
	Chu ngh Tel loba l, m G Inc. wa eco	Uni ted Stat es	iona l pr ivat e le ased cir cuit , int Inte rnat t erne ices d tr ansi rvic t se serv an es ,	70,4 29	70,4 29	6,00 0	100	402 ,623	73, 147	75,0 78	Sub sidi ary
	CH T S rity Co Ltd ecu .,	Tai wan	Com puti quip inst alla tion hole sale t ng e men , w of c utin d bu sine ach iner omp g an ss m y ipm and soft ent ent equ war e, m ana gem sult ing ices , da ssin ta p con serv roce g ices , dig ital info tion ply ices serv rma sup serv and inte ide ntif rvic rnet y se es	240 ,000	240 ,000	24,0 00	80	329 ,943	124 ,159	93,9 83	Sub sidi ary
	Chu ngh Tel m ( Tha ilan d) C wa eco o., Ltd	Tha ilan d	Inte iona l pr ivat e le ased cir cuit , IP VP N rnat ice, ICT and clo ud V AS ices serv serv	119 ,624	119 ,624	1,30 0	100	110 ,163	2,05 0	2,05 0	Sub sidi ary
	Spr ing tain ch. Hou se E t Te nter men Inc	Tai wan	Sof re d esig rvic es, i twa nter net tent n se con s duc tion and pla nd m otio n pi ctur pro y, a e duc tion and dis trib utio pro n	41,9 41	41,9 41	8,25 1	56	126 ,947	44,9 62	25, 197	Sub sidi ary
	Chu ngh lead ing Pho toni cs T ech wa Co. , Lt d.	Tai wan	Pro duc tion and sal e of elec ic c tron nts omp one and fin ishe d pr odu cts	70,5 00	70,5 00	7,05 0	75	123 ,967	10,2 64	12,2 87	Sub sidi ary
	Sm artf igit al C td. un D o., L	Tai wan	vidi ng d iver sifie d fa mil y ed tion dig ital Pro uca ices serv	65,0 00	65,0 00	6,50 0	65	74,0 55	9,80 4	6,36 9	Sub sidi ary
	Chu ngh Tel m J n C o., L td. wa eco apa	Jap an	Inte iona l pr ivat e le ased cir cuit , IP VP N rnat ice, and IP sit s ervi tran serv ces	17,2 91	17,2 91	1	100	90,0 99	13,4 78	13,4 78	Sub sidi ary
	Chu ngh Soc ham Tec hno logy Inc wa p	Tai wan	Des ign , de velo nd p rodu ctio n of nt a pme Aut tic L icen se P late Re niti oma cog on soft d ha rdw war e an are	20,4 00	20,4 00	2,04 0	51	(5,0 39)	(2,0 15)	5,04 7	Sub sidi ary
	iona l In ated Inte Sy s, In rnat tegr stem c.	Tai wan	olut ion vide lica tion IT s r, IT pro app sult atio m in atio d yste tegr con n, s n an kag solu tion pac e	517 ,423	283 ,500	37,2 11	51	593 ,049	169 ,948	49,6 33	Sub sidi ary

(Continued)

TABLE 8

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA) YEAR ENDED DECEMBER 31, 2020(Amounts in Thousands of New Taiwan Dollars)

				Ori gin al Inv	estm ent Am t oun	Bal anc	of Dec emb e as er	31, 202 0	Net Inc om e	Rec ized ogn
Inv r C esto om pan y	Inv e C este om pan y	Loc atio n	Ma in B usin d P rod uct esse s an s	Dec emb 31, er	Dec emb er 3 1,	Sha res	Per e of tag cen	Car ryin g V alu e	(Lo ss) of t he	Gai n (L oss)	Not e
				202 0	201 9	(Th and s) ous	Ow ship (% ) ner	(No te 3 )	Inv este e	(No 1, 2 d 3) tes an
	Vie ttel- CH T Co. , Lt d.	Vie tnam	IDC vice ser s	\$ 288 ,327	\$ 288 ,327	-	30	\$ 363 ,522	\$ 307 ,323	\$ 92,2 28	Ass ocia te
	Tai tion al S tand ard Int wan erna Ele nics Co ., Lt d. ctro	Tai wan	nuf ring , sel ling des igni and Ma actu ng, , mai ntai ning of t elec unic atio yste omm ns s ms and ipm ent equ	164 ,000	164 ,000	1,76 0	40	330 ,031	294 ,205	150 ,477	Ass ocia te
	KK BO X T aiw an C o., L td.	Tai wan	Pro vidi f m usic line ftw ng o on- , so are, elec ic in form atio nd a dve rtise tron t n, a men ices serv	67,0 25	67,0 25	4,43 8	30	163 ,809	46,9 87	14,0 38	Ass ocia te
	So- Ent inm Tai Lim ited net erta ent wan	Tai wan	Onl ine ice and sal e of r ha rdw pute serv com are	120 ,008	120 ,008	9,42 9	30	226 ,647	124 ,759	37,4 28	Ass ocia te
	Kin yTe k Tec hno logy Co ., Lt d. gwa	Tai wan	Pub lish ing boo ks, data ing and pro cess soft rvic war e se es	66,6 84	66,6 84	8,68 8	23	249 ,044	5,48 4	2,15 6	Ass ocia te
	Tai Int tion al P Lo gist ics orts wan erna Cor atio por n	Tai wan	Imp and , log istic reho ort ort stor exp age wa use , and hipp ing ice oce an s serv	80,0 00	80,0 00	8,00 0	27	55,9 25	18,5 14	4,94 6	Ass ocia te
	UU PON Inc	Tai wan	Info tion hno logy vice and eral tec rma ser gen adv erti ice ent sem serv	97,5 98	97,5 98	246	4	-	(40 ,580 )	(6,1 03)	Ass ocia (No te 5 ) te
	Alli e D igit al T ech Co Ltd anc .,	Tai wan	Dev elop t of bile nd ts a men mo pay men info tion ing ice rma pro cess serv	60,0 00	60,0 00	6,00 0	14	5,08 0	-	-	Ass ocia te
	Chu ngh PCh Fun d I Co. , Lt d. wa ome	Tai wan	Inv ital , inv estm ent, ture estm ent ven cap adv isor ulta d othe nt c nt , ma nag eme ons an r sult rvic con anc y se e	200 ,000	200 ,000	20,0 00	50	192 ,856	(2,4 50)	(1,2 25)	Ass ocia te
	Cor Ve es C o., L td. tone ntur ners	Tai wan	Inv ital, inv estm ent, ture estm ent ven cap adv isor ulta nd o ther nt c nt a , ma nag eme ons sult rvic con anc y se e	4,90 0	4,90 0	490	49	6,05 8	1,12 5	551	Ass ocia te
	Nex t Co erci al B ank Co ., Lt d. mm Chu ngh ldin SEA Ho wa gs	Tai wan Tai wan	Onl ine ban king bus ines s bus ines Inv estm ent s	4,19 0,00 0 10,2 00	4,19 0,00 0 -	419 ,000 1,02 0	42 51	3,77 6,87 6 10,2 00	(605 ,419 ) -	(297 ,292 ) -	Ass ocia te Join t ve ntur e
Sen ao I nati l Co ., Lt d. nter ona	Sen ao N ork s, In etw c.	Tai wan	Tel unic atio n fa cilit ies ufac ture eco mm man s and sal es	202 ,758	202 ,758	16,5 79	34	991 ,610	376 ,365	127 ,184	Ass ocia te
	Sen ao I nati l (S a) H oldi nter ona amo ng Ltd	Sam Isla nds oa	Inte iona l inv rnat estm ent	2,25 3,82 8	2,33 3,62 0	74,9 75	100	232 ,099	(24 ,526 )	(24 ,526 )	Sub sidi ary
	UU PON Inc	Tai wan	Info tion hno logy vice and eral tec rma ser gen adv erti ice ent sem serv	24,0 00	24,0 00	109	2	-	(40 ,580 )	(2,7 15)	Ass ocia (No te 5 ) te
	You th C o., L td.	Tai wan	Sale of info tion and icat ion rma com mun tech nolo gies duc ts pro	427 ,850	364 ,950	14,7 52	96	231 ,976	1,40 4	(16 ,418 )	Sub sidi ary
	l Te chn olog ies d. Ava Co. , Lt	Tai wan	Sale of info tion and icat ion rma com mun tech nolo gies duc ts pro	89,5 50	89,5 50	10,0 60	100	110 ,508	8,65 6	8,65 8	Sub sidi ary
	Sen Insu e A t Co ., Lt d. you ng ranc gen	Tai wan	Pro d li abil ity i pert y an nsu ranc e ag enc y	59,0 00	59,0 00	5,90 0	100	90,8 62	30,1 44	30,1 20	Sub sidi ary
CH leco IEF Te m I nc.	Uni Tel m I gate eco nc. Chi ef I nati l Cor nter ona p.	Tai wan Sam oa I slan ds	Tel unic atio and int rvic t se eco mm ns erne e Tel unic atio and int rvic t se eco mm ns erne e	2,00 0 6,06 8	2,00 0 6,06 8	200 200	100 100	980 78,6 99	94 9,33 8	94 9,33 8	Sub sidi ary Sub sidi ary
Chu ngh Tel m S inga wa eco por e Pte ., Lt d.	ST- 2 Sa telli te V Pte ., Lt d. entu res	Sin gap ore	Ope rati of ST- 2 te leco unic atio on mm ns llite sate	409 ,061	409 ,061	18,1 02	38	488 ,257	280 ,191	106 ,472	Ass ocia te
Chu ngh Inv Co. , Lt d. estm ent wa	Chu ngh Pre cisi on T Tec h. C est wa o., Ltd	Tai wan	Pro duc tion and sal e of icon duc ing tor test sem and pri nted cir cuit boa rd ents com pon	178 ,608	178 ,608	11,2 30	34	2,4 14,5 55	933 ,693	319 ,786	Sub sidi ary
	CH IEF Te leco m I nc.	Tai wan	Net k in atio n, in et d tegr tern ata ter wor cen ("ID C") unic atio ns i rati nd nteg co mm on a ,	19,0 64	19,0 64	2,07 8	3	88,1 04	607 ,779	18,0 51	Ass ocia te
	Sen ao I nati l Co ., Lt d. nter ona	Tai wan	clou d ap plic atio ices n serv Sell ing and inta inin obil e ph d it ma g m one s an s peri phe ral p rod ucts	49,7 31	49,7 31	1,00 1	-	43,6 64	436 ,717	1,69 3	Ass ocia te

(Continued)

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA) YEAR ENDED DECEMBER 31, 2020(Amounts in Thousands of New TaiwanDollars)

				Ori gin al I nve	Am stm ent t oun	Bal anc	of Dec emb e as er	31, 202 0	Net Inc om e	ized Rec ogn
Inv Com esto r pan y	Inv e C este om pan y	Loc atio n	Ma in B usin d P rod uct esse s an s	Dec emb 31, er 202 0	Dec emb 31, er 201 9	Sha res (Th and s) ous	Per tag e of cen Ow ship (% ) ner	Car ryin Val g ue (No te 3 )	(Lo ss) of t he Inv este e	Gai n (L oss) (No 1, 2 d 3) tes an	Not e
Chu ngh cisi h. Pre on T Tec est wa Co. , Lt d.	Chu ngh cisi h U SA Pre on T Tec est wa Cor atio por n	Uni ted Stat es	ign and aft ale ices of Des er-s serv icon duc ing and tor test ents sem com pon ted circ uit b	\$ 12,6 36	\$ 12,6 36	400	100	\$ 23,8 47	\$ 755	\$ 755	Sub sidi ary
	CH PT Jap an C o., L td.	Jap an	prin oard Rel ated vice s of ele nic ctro part ser s, hine ssed duc nd p rint ed ts a mac ry p roce pro circ uit b oard	2,00 8	2,00 8	1	100	2,47 2	89	89	Sub sidi ary
	Chu ngh Pre cisi on T Tec h. est wa iona l, L td. Inte rnat	Sam oa I slan ds	Wh oles ale and ail o f ele nic eria ls, ret ctro mat and inv estm ent	116 ,790	116 ,790	3,70 0	100	92,3 15	8,44 1	8,95 6	Sub sidi ary
Prim e A sia Inv Gr estm ents oup L td. ( B.V .I.)	, C hun ghw Hsi Co ., Lt d. ngta a Me Wo rks Lim ited (H K)	Hon g K ong Hon g K ong	Inv estm ent Inv estm ent	375 ,274 -	375 ,274 10,0 00	1 -	100 -	163 ,121 -	(19 ,434 ) -	(19 ,434 ) -	Sub sidi ary Ass ocia te
Sen ao I nati l (S a) nter ona amo Hol ding Ltd	Sen ao I nati l HK Lim ited nter ona	Hon g K ong	Inte iona l inv rnat estm ent	2,24 8,96 3	2,32 8,75 4	80,4 40	100	212 ,814	(24 ,766 )	(24 ,766 )	Sub sidi ary
You th C o., L td.	ISP OT Co. , Lt d.	Tai wan	Sale of info tion and icat ion rma com mun tech nolo gies duc ts pro	53,0 21	53,0 21	-	100	10,5 62	1,65 6	1,46 4	Sub sidi ary
	yi C td. You o., L	Tai wan	inte f in form atio d Ma nan ce o n an icat ion tech nolo gies duc ts com mun pro	21,3 54	21,3 54	-	100	18,1 45	1,23 4	993	Sub sidi ary
Ava l Te chn olog ies Co. , Lt d.	Wii n T ech nolo gy C Ltd o.,	Tai wan	Sale of info tion and icat ion rma com mun tech nolo gies duc ts pro	29,5 50	29,5 50	2,95 5	100	33,4 76	3,69 5	3,69 5	Sub sidi ary
Sen Age nt C ng I you nsu ranc e o., Ltd	Sen aoli fe I e A t Co d. ., Lt nsu ranc gen	Tai wan	Life ins ervi uran ce s ces	29,5 00	29,5 00	2,95 0	100	26, 186	(3,0 34)	(3,0 34)	Sub sidi ary
CH YP Mu ltim edia Ma rket ing & C unic atio ns C o., L td omm	Clic k F Ma rket ing Com orce pan y	Tai wan	Adv erti ices ent sem serv	44,6 07	44,6 07	1,07 8	49	33,0 86	3,99 8	(209 )	Ass ocia te
Inte iona l In ated rnat tegr Sys s, In tem c.	Info lore r In atio nal Co. , Lt d. tern exp	Sam oa	Inv estm ent	24,8 06	24,8 06	795	100	27,0 18	850	850	Sub sidi ary
	IISI Inv Co. , Lt d. estm ent Uni ics Tec hno logy Co tron rp.	Ma urit ius Tai wan	Inv estm ent Dev elop d m aint of info tion t an men ena nce rma syst em	81,3 02 55,5 69	81,3 02 55,5 69	244 5,06 5	100 99.9 6	28,9 90 69,8 67	(10 ,872 ) 7,78 3	(10 ,872 ) 7,78 0	Sub sidi ary Sub sidi ary
Info lore r In atio nal Co. tern exp , Ltd	Inte iona l In ated Sy rnat tegr stem s (Ho ng K ) Li mit ed ong	Hon g K ong	Inv and agin g in hnic al estm ent tec eng sult ing ice con serv	24,3 36	24,3 36	780	100	27,0 11	870	870	Sub sidi ary
IISI Co. d. Inv , Lt estm ent	ding ch C Ltd Lea Te o.,	urit ius Ma	Inv estm ent	65,3 74	65,3 74	316	100	18,4 66	(10 ,587 )	(10 ,587 )	Sub sidi ary
Lea ding Tec h Co. , Lt d.	Lea ding Sy s Co ., Lt d. stem	Ma urit ius	Inv estm ent	100 ,693	100 ,693	300	100	13,6 15	(10 ,588 )	(10 ,588 )	Sub sidi ary

Note 1: The amounts werebased on audited financial statements.

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

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

Note 4: Investments in mainland China areincluded in Table 9.

Note 5: UUPON Inc. was transferred to financial assets at fair valuethrough other comprehensive income.

INVESTMENT IN MAINLAND CHINAYEAR ENDED DECEMBER 31, 2020 (Amounts in Thousands of New Taiwan Dollars)

				Acc ula ted um	Inv estm	Flo ent ws	Acc ula ted um					Acc ula ted um
Inv este e	Ma in B usi d P rod uct nes ses an s	Tot al A unt mo of P aid -in Ca ital p	Inv estm ent Typ e (No te 1 )	Ou tflo f w o Inv estm ent fro m T aiw an f Jan as o uar y 1, 202 0	Ou tflo w	Inf low	Ou tflo f w o Inv estm ent fro m T aiw an f Dec ber as o em 31, 20 20	Net In com e (Lo ss) of t he Inv este e	% Ow shi ner p of D irec t or Ind irec t Inv estm ent	Inv estm ent Ga in ( Los s) (No te 2 )	Ca ing Va lue rry f as o Dec ber 31, em 202 0	Inw ard Rem itta of nce Ear nin s of gs a Dec ber 31, em 202 0	No te
Sen ao T rad ing (Fu j ian ) Co ., L td.	Sal f in form atio and e o n nic atio tech nol ies com mu n og duc ts pro	\$ 1,07 3,1 70	2	\$ 1,07 3,1 70	\$ -	\$ -	\$ 1,07 3,1 70	\$ -	100	\$ -	\$ -	\$ -	No 8 te
Sen tion al ao I nte rna Tra din ( Sha hai ) Co g ng Ltd	Sal f in form atio nd e o n a nic atio chn olo ies n te com mu g ., duc ts pro	955 ,83 8	2	955 ,83 8	-	-	955 ,83 8	( 21, 189 )	100	( 21, 189 )	29, 402	-	9 No te
tion al Sen ao I nte rna Tra din ( Sha hai ) Co g ng Ltd (No te 1 5)	inte f in form atio d Ma nan ce o n an nic atio chn olo ies n te com mu g ., duc ts pro	26, 053	2	26, 053	-	-	26, 053	-	100	-	-	-	No 10 te
Sen ao I tion al nte rna Tra din (J ian ) Co g gsu ., Ltd	Sal f in form atio nd e o n a nic atio chn olo ies n te com mu g duc ts pro	183 ,94 4	2	263 ,73 6	-	79, 792	183 ,94 4	-	100	-	-	-	No 11 te
Chu hw a T elec ng om ( Chi na) Co ., L td.	Inte ted inf atio nd gra orm n a nic atio luti ice com mu n so on serv for rise cli d ent ent erp s, an inte llig ork ent etw en erg y n ice serv	177 ,17 6 s	2	177 ,17 6	-	-	177 ,17 6	( 12,7 12)	100	( 12,7 12)	32, 224	-	No 13 te
Jian Zh hua gsu eng Info tion rma Tec hno log Com y pan y, LL C	Pro vid ing int elli vin t en gen erg y sa g solu tion d in tell ige nt an bui ldin ice gs s erv s	189 ,41 0	2	142 ,05 7	-	-	142 ,05 7	-	75	-	-	-	No 12 te
Sha hai Tai hua ng Ele nic Te chn olo ctro gy Lim ited	De sign of inte d c ircu it b d an d pr oar rela ted ltat ion ice co nsu serv	51, 233	2	51, 233	-	-	51, 233	(9,6 75)	100	(9,6 75)	16,4 90	-	-
Su Zho u P isio Tes t rec n h. L td. Tec	Ass bly sed of circ uit em pro ces boa rd, des ign of inte d ci it pr rcu boa rd a nd rela ted ltat ion co nsu ice serv	62, 340	2	62, 340	-	-	62, 340	18, 127	100	18, 127	78, 314	-	-
Sha hai Chi ef T elec ng om Co ., L td.	Tel uni cati and int et eco mm ons ern ice serv	10, 150	1	4,9 73	-	-	4,9 73	5,0 47	49	2,4 73	13,5 61	-	-
Inte tion al I ted nte rna gra Sys s In c. ( Sha hai tem ng	Dev elo d m ain f ent ten pm an anc e o ) info tion tem rma sys	48, 753	2	39, 923	-	-	39, 923	( 10,5 88)	100	( 10,5 88)	18,5 50	-	-
												(	tinu ed) Con

Inv este e	Ma in B usi d P rod uct nes ses an s	al A Tot unt mo of P aid -in Ca ital p	Inv estm ent Typ e (No te 1 )	Acc ula ted um Ou tflo f w o Inv estm ent fro aiw m T an f Jan as o uar y 1, 202 0	Inv estm Ou tflo w	ent Flo ws Inf low	Acc ula ted um Ou tflo f w o Inv estm ent fro aiw m T an f Dec ber as o em 31, 20 20	Net In com e (Lo ss) of t he Inv este e	% Ow shi ner p of D irec t or irec Ind t Inv estm ent	Inv estm ent Ga in ( Los s) (No te 2 )	Ca ing Va lue rry f as o 31 Dec ber em , 202 0	Acc ula ted um Inw ard Rem itta of nce nin s of Ear gs a Dec ber 31, em 202 0	No te
Hu iyu Sh hai ang Ma ent nag em Con sult Co td. ., L anc y	Dev elo d m ain f ent ten pm an anc e o info tion tem rma sys	\$ 13,6 70	3	\$ -	\$ -	\$ -	\$ -	\$ ( 4,0 93)	100	\$ ( 4,0 93)	\$ -	\$ -	No 14 te

Inv este e	Acc ula ted In in tme nt um ves Ma inla nd Ch ina of as Dec ber 31, 20 20 em	Inv Am estm ent ts oun Au tho rize d b Inv estm ent y Com mis sion MO EA ,	Up Li mit In tme nt per on ves Stip ula ted by In tme nt ves Com mis sion MO EA ,
SEN AO and its sub sidi arie s (N 3) ote	\$ 2,2 39, 005	\$ 2,2 39, 005	\$ 3,5 56, 272
Chu hw a T elec ( Chi na) Co ., L td. (No te 4 ) ng om	177 ,17 6	177 ,17 6	233 ,55 5,0 74
Jian Zh hua Inf atio ech nol n T Co , LL C ( No te 4 ) gsu eng orm ogy mp any	142 ,05 7	142 ,05 7	233 ,55 5,0 74
Chu hw a P isio n T Tec h C Ltd and its sub sidi arie (No te 5 ) est ng rec o., s	113 ,57 3	159 ,72 5	4,2 29, 876
Sha hai Ch ief Tel m C Ltd (No te 6 ) ng eco o.,	4,9 73	4,9 73	1,79 4,3 61
d it bsid iari IIS I an (No te 7 ) s su es	39, 923	39, 923	640 ,71 8

Note 1: Investments are dividedinto three categories as follows:

a.Direct investment.

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

c.Others.

Note 2:The amounts were calculated based on the investee's audited financial statements.

• Note 3: Senao International Co., Ltd. and its subsidiaries werecalculated 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, LLCwere calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.
• Note 5: Chunghwa Precision Test Tech. Co., Ltd. and its subsidiarieswere calculated based on the consolidated net assets value of Chunghwa Precision Test Tech. Co., Ltd
• Note 6: Shanghai Chief TelecomCo., Ltd. was calculated based on the consolidated net assets value of CHIEF Telecom Inc.
• Note 7: IISIand its subsidiaries were calculated based on the consolidated net assets value of IISI.
• Note 8: The liquidation of Senao Trading (Fujian) Co., Ltd. was completedin May 2019.
• Note 9: SenaoInternational Trading (Shanghai) Co., Ltd. was approved to end and dissolve its business in December 2020. The liquidation of Senao International Trading (Shanghai) Co., Ltd. is still in process.
• Note 10: The liquidationof Senao International Trading (Shanghai) Co., Ltd. was completed in March 2018.
• Note 11: The liquidation ofSenao International Trading (Jiangsu) Co., Ltd. was completed in March 2019.
• Note 12: The liquidationof Jiangsu Zhenhua Information Technology Company, LLC. was completed in December 2018.
• Note13: Chunghwa Telecom (China) Co., Ltd. was approved to end and dissolve its business in August 2020. The liquidation of Chunghwa Telecom (China) Co., Ltd. is still in process.
• Note 14: The liquidation of HuiyuShanghai Management Consultancy Co., Ltd. was completed in December 2020.
• Note 15: The English name is the same as the above entity; however, the Chinese name included in the respective Articles of Incorporation is different from theabove entity.

INFORMATION OF MAJOR STOCKHOLDERS DECEMBER 31, 2020

		Shares
Name of Major Stockholders	Number of Shares	Percentage of Ownership (%)
Ministry of Transportation and Communications	2,737,718,976	35.29
Shin Kong Life Insurance Co., Ltd.	551,639,184	7.11

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.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM	STATEMENT INDEX
MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND
EQUITY
STATEMENT OF CASH AND CASH EQUIVALENTS	1
STATEMENT OF FINANCIAL INSTRUMENTS AT FAIR
VALUE THROUGH PROFIT OR LOSS	Note 7 and 2
STATEMENT OF HEDGING FINANCIAL INSTRUMENTS	Note 19
STATEMENT OF TRADE NOTES AND ACCOUNTS
RECEIVABLE, NET	3
STATEMENT OF INVENTORIES	4
STATEMENT OF PREPAYMENTS	Note 11
STATEMENT OF OTHER CURRENT MONETARY ASSETS	Note 12
STATEMENT OF OTHER CURRENT ASSETS	Note 18
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT
FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME - NONCURRENT	5
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD	6
STATEMENT OF CHANGES IN PROPERTY, PLANT AND
EQUIPMENT	Note 14
STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS	7
STATEMENT OF CHANGES IN INVESTMENT PROPERTIES	Note 16
STATEMENT OF CHANGES IN INTANGIBLE ASSETS	Note 17
STATEMENT OF DEFERRED INCOME TAX ASSETS	Note 29
STATEMENT OF OTHER NONCURRENT ASSETS	Note 18
STATEMENT OF SHORT-TERM BILLS PAYABLE	8
STATEMENT OF TRADE NOTES AND ACCOUNTS
PAYABLE	9
STATEMENT OF OTHER PAYABLES	Note 23
STATEMENT OF PROVISIONS	Note 24
STATEMENT OF BONDS PAYABLE	10
STATEMENT OF LEASE LIABILITIES	11
STATEMENT OF DEFERRED INCOME TAX LIABILITIES	Note 29
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS	Note 39
STATEMENT OF REVENUES STATEMENT OF OPERATING COSTS	12
STATEMENT OF OPERATING EXPENSES	13
STATEMENT OF OTHER INCOME AND EXPENSES	Note 28
STATEMENT OF INTEREST EXPENSES	Note 28
STATEMENT OF EMPLOYEE BENEFIT, DEPRECIATION
AND AMORTIZATION BY FUNCTION	14

STATEMENT 1

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020

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

Item	Period	Annual Interest Rate / Earnings Rate	Amount
Cash
Cash on hand			\$ 125,611
Bank deposits
Checking deposits			1,608,252
Demand deposits			2,855,144
Cash equivalents			4,463,396
Commercial paper
Grand Bills Finance	2020.12.02-2021.01.25	0.21%-0.24%	2,747,622
Corporation
Ta Ching Bills Finance Corporation	2020.12.02-2021.01.15	0.21%-0.23%	2,198,905
Taiwan Cooperative Bills	2020.12.04-2021.01.15	0.21%-0.26%	1,847,866
Finance Corporation
Taishin International Bank	2020.12.02-2021.01.15	0.21%-0.24%	1,599,091
Co., Ltd.
Taiwan Finance Corporation	2020.12.01-2021.01.15	0.21%-0.24%	1,558,131
China Bills Finance	2020.12.07-2021.01.25	0.20%-0.26%	1,178,811
Corporation
Dah Chung Bills Finance Corp.	2020.12.30-2021.01.25	0.22%	499,748
Mega Bills Finance Co., Ltd.	2020.12.21-2021.01.11	0.22%	469,755
CTBC Bank Co., Ltd.	2020.12.31-2021.01.11	0.14%	399,924
International Bills Finance	2020.12.29-2021.01.15	0.22%-0.23%	399,849
Corporation
			12,899,702
Negotiable certificates of deposit	2020.11.27-2021.01.11	0.24%-0.30%	2,600,000
Triple stimulus vouchers			1,344
			15,501,046
			\$ 20,090,053

Note: Including USD7,268 thousand @28.48, EUR339 thousand @35.02, JPY1,744 thousand @0.276, SGD3 thousand @21.56 and HKD18,706 thousand @3.673.

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS-NONCURRENT FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Bal Jan anc e,	1, 202 0 uar y	Ad diti in ons	Inv estm ent	in I Dec rea se	stm ent nve	Bal	31 Dec ber anc e, em ,	202 0
Inv e C este om pan y	Sha res (In Th and ) ous	Am t oun	Sha res (In Th and ) ous	Am t oun	Sha res (In Th and ) ous	Am t oun	Sha res (In Th and ) ous	e of Per tag cen Ow shi (% ) ner p	Am t oun	No te
Fin ial at f air val thro h p rofi los ets t or anc ass ue ug s Tai ia C ital Bu ffal o F und Co ., L td. wan ap tion ork lop und Inn W s D nt F , L. P. ova eve me	600 ,00 0 -	\$ 510 ,80 1 267 ,30 4	- -	\$ - -	- -	\$ 69, 706 31, 197	600 ,00 0 -	12.9 0 3.5 5	\$ 441 ,09 5 236 ,10 7	No te No te
		\$ 778 ,10 5		\$ -		\$ 100 ,90 3			\$ 677 ,20 2

Note: Change ininvestment was fair value adjustments.

STATEMENT 3

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF TRADE NOTES AND ACCOUNTS RECEIVABLE, NET DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Amount
Mobile broadband services revenue	\$ 5,749,848
Project services revenue	4,865,304
Leased line services revenue	3,552,670
Internet and value-added services revenue	2,143,720
Local telephone services revenue	1,863,557
Others (Note)	3,496,260
	21,671,359
Less: Loss allowance	(2,116,716)
	\$ 19,554,643

Note: The amount of individual item included in others does not exceed 5% of the account balance.

STATEMENT 4

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

		Amount
Item	Cost	Market Price (Note)
Merchandise	\$ 1,696,390	\$ 2,221,925
Project in process	5,350,296	6,987,264
	\$ 7,046,686	\$ 9,209,189

Note: Amount of net realizable value.

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME-NONCURRENTFOR THE YEAR ENDED DECEMBER 31, 2020(In Thousands of New TaiwanDollars)

	Bal Jan anc e,	1, 202 0 uar y	Ad diti in ons	Inv Dec se i estm ent rea		n In tme nt ves	Bal	Dec ber 31 202 0 anc e, em ,
Inv e C este om pan y	Sha res (In Th and ) ous	Am t oun	Sha res (In Th and ) ous	Am t oun	Sha res (In Th and ) ous	Am t oun	Sha res (In Th and ) ous	Per e of tag cen Ow shi (% ) ner p	Am t oun	No te
Fin ial at f air val thro h o the reh ive inc ets anc ass ue ug r co mp ens om e
Lis ted cks sto
Chi Air line Ltd na s,	263 ,62 2	\$ 2,3 88, 416	-	\$ 789 ,88 2	46, 983	\$ 567 ,79 7	216 ,63 9	4.0 0	\$ 2,6 10,5 01	No te 2
No n-li sted cks sto
Tai i Fi cial Ce r C nte pe nan orp	172 ,92 7	4,3 88, 984	-	-	-	225 ,75 7	172 ,92 7	11.7 6	4,1 63, 227	No te 1
Ind ial Ban k o f T aiw II V Cap ital Co ., L td. (IB T I I) ustr ent an ure	5,2 52	17,0 84	-	-	-	-	5,2 52	16. 67	17,0 84	No te 1
Glo bal Mo bile Co rp.	7,6 17	-	-	-	-	-	7,6 17	2.7 6	-
tion ork imi ted Inn W s L ova	1,00 0	4,0 78	-	-	-	380	1,00 0	1.93	3,6 98	No te 1
RP TI Inte Int atio nal Ltd rgr oup ern	4,7 65	-	-	-	-	-	4,7 65	10. 19	-
Tai bile Co ., L td. ent wan mo pa ym	1,20 0	4,5 10	-	-	-	186	1,20 0	2.0 0	4,3 24	No te 1
4 G inm Ent Inc erta ent am ers	136	120 ,24 3	-	-	-	16,6 87	136	19.9 3	103 ,55 6	te 1 No
UU PO N I nc.	-	-	246	1,2 89	-	-	246	3.7 1	1,2 89	No te 3
		\$ 6,9 23, 315		\$ 791 ,17 1		\$ 810 ,80 7			\$ 6,9 03, 679

Note 1: Change in investment was fair value adjustments.

Note 2: Additionin investment was fair value adjustments. Decrease in investment was due to the disposal ^a portion of equity interests.

Note 3: Additionin investment was the reclassification from an associate to financial assets at fair value through other comprehensive income and fair value adjustments.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHODFOR THE YEAR ENDED DECEMBER 31, 2020(In Thousands of New Taiwan Dollars)

	Bala Jan nce,	1, 2 020 Add ition s in Inve stm ent uary			Incr ease Dec e in Inv (Dec e) estm ent reas reas			Bala	Dec emb er 3 1, 20 nce,
Com Inve stee pan y	Sha res (In d) Tho usan	Am t oun	Sha res (In d) Tho usan	Am t oun	Sha res (In d) Tho usan	Am t oun	in U sing the ity M Equ etho d	Sha res (In d) Tho usan	Per cent of age Own ip (% ) ersh	20 Am t oun	Mar ket Val ue / Ass Net et V alue	Not e
ted for u sing ity m etho d Inve stme nts ac coun equ
Sub sidia ries
List ed s tock s
Sen ao I nati onal Co. , Ltd nter	71,7 73	\$ 456 ,545	-	\$ -	-	\$ 104, 071	\$ (58, 193)	71,7 73	28	\$ 294 ,281	\$ 2,54 7,94 2	Not es 2 and 3
CHI EF T elec Inc. om	39,4 26	1,72 9,18 9	-	-	-	315 ,406	372 ,185	39,4 26	56	1,78 5,96 8	13,9 76,5 17	Not es 2 and 3
Non -list ed s tock s t Er a De velo nt C td.	300							300				Not es 1 and
Ligh o., L pme ghw leco m C td. Don a Te o., L	,000 402 ,590	3,85 0,09 5 1,62 7,49	-	-	-	6,53 4 76,5	9,67 3 (64, 646	,000 402	100	3,85 3,23 4 1,48 6,25	3,86 7,42 4 1,48 6,25	3 es 1 and Not
Chu ngh elec Sing td. wa T e Pt e., L om	26,3 83	1 935	-	-	-	93	) 78,3	,590 26,3	100	2 1,01 3,52	2 1,01 3,50	3 Not
apor Chu ngh wa S m In ation Co. , Ltd yste tegr	60,0 00	,228 717	-	-	-	- 6,34	01 13,6	83 60,0	100	9 725	0 657	e 1 Not es 1 and
Chu ngh wa I nt C o., L td. tme nves	68,0 85	,883 3,13 0,38	-	-	-	5 272	75 159,	00 68,0	100	,213 3,01 7,56	,522 3,09 3,29	3 Not
Prim e As ia In ts G Ltd . (B .V.I .) vest men roup	1	9 182,	-	-	-	,340	520 (19, 868 )	85	89	9 163,	8 163,	es 1 and 3 Not
Hon ghw a In ation al C o., L td. tern	18,0 00	989 411 ,291	-	-	-	- 143, 630	220 ,243	1 18,0 00	100 100	121 487 ,904	121 524 ,533	e 1 Not es 1 and 3
CHY P M ultim edia Ma rket ing & C unic ation s Co ., Lt d. omm	15,0 00	190, 972	- -	- -	- -	13,6 37	17,0 64	15,0 00	100	194, 399	194, 082	Not es 1 and 3
Spri tain ch. I Hou se E t Te nter ng men nc.	8,25 1	110, 357	-	-	-	8,66 3	25,2 53	8,25 1	56	126, 947	111, 211	and Not es 1 3
Chu ngh elec Glob al, I wa T om nc.	6,00 0	347 ,380	-	-	-	-	55,2 43	6,00 0	100	402 ,623	397 ,385	e 1 Not
Chu ngh wa T elec Viet Co. , Ltd om nam	-	98,2 21	-	-	-	-	(7,3 34)	-	100	90,8 87	90,8 87	Not e 1
Sma rtfun Dig ital Co., Ltd	6,50 0	73,6 88	-	-	-	6,00 2	6,36 9	6,50 0	65	74,0 55	74,2 42	Not es 1 and 3
Chu ngh wa T elec Japa n Co ., Lt d. om	1	76,5 67	-	-	-	-	13,5 32	1	100	90,0 99	90,0 99	Not e 1
Chu ngh wa S ocha Tec hno logy Inc mp	2,04 0	(10, 086 )	-	-	-	-	5,04 7	2,04 0	51	(5,0 39)	5,02 7	Not e 1
Chu ngh wa L eadi ng P hoto nics Tec h. C o., L td.	7,05 0	111, 680	-	-	-	-	12,2 87	7,05 0	75	123, 967	126, 645	Not e 1
Chu ngh wa T elec (Tha ilan d) C o., L td. om	1,30 0	114, 231	-	-	-	-	(4,0 68)	1,30 0	100	110, 163	110, 163	Not e 1
CHT Sec urity Co. , Ltd	24,0 00	306 ,851	-	-	-	70,8 91	93,9 83	24,0 00	80	329 ,943	352 ,683	es 1 and 3 Not
iona l Int ted Syst Inte , Inc rnat egra ems	-	- 14,4 60,9 61	37,2 11	561 ,210 561	-	- 1,02 4,11	31,8 39 960	37,2 11	51	593 ,049 14,9 58,1	546 ,732	es 1 and Not 7
Ass ocia tes				,210		2	,105			64
List ed s tock s
Kin yTe k Te chno logy Co. , Ltd gwa Non -list ed s tock s	7,89 8	253 ,021	790	-	-	553	(3,4 24)	8,68 8	23	249 ,044	675 ,911	Not es 2 , 3 a nd 4
iona l Int ted Inte Syst Inc rnat em,	22,4 98	340			22,4	353	13,4					and Not
egra Viet tel-C Co., Ltd HT	-	,240 316 ,535	-	-	98	,687 26,7	47 73,7	-	-	- 363	- 363	es 3 6 es 1 Not
Taiw an I nati onal Sta ndar d El onic s Co ., Lt d. nter ectr	1,76 0	272 ,166	- -	- -	- -	69 89,5 58	56 147, 423	- 1,76 0	30 40	,522 330 ,031	,522 403 ,593	and 3 Not es 1 and 3
KKB OX Taiw an C o., L td.	4,43 8	150, 789	-	-	-	-	13,0 20	4,43 8	30	163, 809	124, 568	Not e 1
So-n et E tain t Ta iwan Lim ited nter men	9,42 9	189, 396	-	-	-	-	37,2 51	9,42 9	30	226 ,647	208 ,792	Not e 1
Alli Dig ital Tec h Co ., Lt d. ance	6,00 0	5,08 0	-	-	-	-	-	6,00 0	14	5,08 0	5,08 0	Not e 1
UUP ON Inc.	5,40 0	7,19 9	-	-	5,40 0	1,09 6	(6,1 03)	-	-	-	-	Not es 1 and 8
Taiw an I nati onal Por ts L ogis tics Corp ion nter orat	8,00 0	50,9 79	-	-	-	-	4,94 6	8,00 0	27	55,9 25	55,9 25	Not e 1
Chu ngh Cho und I C td. wa P me F o., L	20,0 00	194, 081	-	-	-	-	(1,2 25)	20,0 00	50	192, 856	192, 856	e 1 Not
Corn ne V res C o., L td. ersto entu	490	5,50 7	-	-	-	-	551	490	49	6,05 8	6,05 8	Not e 1
Nex t Co erci al B ank Co., Ltd mm	419 ,000	4,07 4,16 8 5,85 9,16 1	-	-	-	- 471	(297 ,292 ) (17, 650	419 ,000	42	3,77 6,87 6 5,36 9,84	3,82 0,49 7	Not e 1
Join t Ve ntur es Non -list ed ks stoc				-		,663	)			8
Chu ngh wa S EA Hol ding s	-	-	1,02 0	10,2 00	-	-	-	1,02 0	51	10,2 00	10,2 00	Not 1 and 5 es
		\$ 20,3 20,1 22		\$ 571 ,410		\$ 1,49 5,77 5	\$ 942 ,455			\$ 20,3 38,2 12

Note 1: The amounts of net asset value were based on audited financial statements.

Note 2: Fair value wasbased on the closing price at the end of 2020.

Note3: Decrease in investment was cash dividends received.

Note 4: Additions in shares of investmentwas stock dividends received.

Note 5: Additions in investment was the investment in establishing a newcompany.

Note 6: Decreasein investment was the transfer from an associate to a subsidiary.

Note 7: Additions in investment was the fair value of equity heldbefore the acquisition of IISI, plus the cash consideration \$233,923 thousand paid for the acquisition.

Note 8: Decrease in investment was the reclassificationfrom an associate to financial assets at fair value through other comprehensive income.

STATEMENT 7

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Land and Buildings (Handsets Base Stations)	Land and Buildings (Others)	Equipment	Total
Cost
Balance on January 1, 2020 Additions Decreases	\$ 9,538,566 3,157,109 (303,190)	\$ 1,260,026 303,572 (72,199)	\$ 2,989,525 7,983 (4,283)	\$ 13,788,117 3,468,664 (379,672)
Balance on December 31, 2020	\$ 12,392,485	\$ 1,491,399	\$ 2,993,225	\$ 16,877,109
Accumulated depreciation and impairment
Balance on January 1, 2020 Depreciation expenses Decreases	\$ 2,690,525 2,730,579 (127,434)	\$ 402,474 388,528 (38,453)	\$ 403,093 403,138 (3,568)	\$ 3,496,092 3,522,245 (169,455)
Balance on December 31, 2020	\$ 5,293,670	\$ 752,549	\$ 802,663	\$ 6,848,882
Balance on January 1, 2020, net Balance on December 31,	\$ 6,848,041	\$ 857,552	\$ 2,586,432	\$ 10,292,025
2020, net	\$ 7,098,815	\$ 738,850	\$ 2,190,562	\$ 10,028,227

STATEMENT OF SHORT-TERM BILLS PAYABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Underwriting Agency	Period	Rate (%)	Issuance Amount	Unamortized Amount	Carrying Value
Commercial paper payable	Yuanta Commercial Bank Co., Ltd.	2020.08.05- 2021.01.12	0.35-0.36	\$ 1,425,000	\$ 165	\$ 1,424,835
	Cathay United Bank	2020.08.05- 2021.01.12	0.35-0.36	1,425,000	166	1,424,834
	Mega Bills Finance Co., Ltd.	2020.08.05- 2021.01.12	0.34-0.35	1,100,000	126	1,099,874
	Grand Bills Finance Corporation	2020.08.05- 2021.01.12	0.34-0.35	1,050,000	121	1,049,879
	CTBC Bank Co., Ltd.	2020.08.05- 2021.01.12	0.34	1,000,000	111	999,889
	China Bills Finance Corporation	2020.08.05- 2021.01.12	0.34-0.35	1,000,000	113	999,887
				\$ 7,000,000	\$ 802	\$ 6,999,198

STATEMENT 9

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF TRADE NOTES AND ACCOUNTS PAYABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Amount
Payable of spare parts for equipment	\$ 2,308,164
Payable of products	1,363,998
Other (Note)	8,554,773
	\$ 12,226,935

Note: The amount of each item in others does not exceed 5% of the account balance.

STATEMENT OF BONDS PAYABLEFOR THE YEAR ENDED DECEMBER 31, 2020(In Thousands of New Taiwan Dollars)

Bon d N am e	Tru stee	erio Issu e P d anc	Rep of the Pr inc ipa l an d ent aym Int st Pay nt Da te ere me	Cou Ra te pon (% )	al A Tot unt mo	Rep ent aym s Ma de	Bal t anc e a Dec ber 31 em , 202 0	Co of I sts ssu anc e	Ca ing Va lue rry	Gu nte ara e
d d esti c b ond Un sec ure om s	k o f T aiw Ban an	202 0.0 7-2 025 .07	ble in July lly and Inte rest pa ya an nua -tim turi nt u ty one e re pay me pon ma	0.5 0	\$ 8,8 00, 000	\$ -	\$ 8,8 00, 000	\$ ( 8,5 21 )	\$ 8,7 91, 479	No ne
	Ban k o f T aiw an	202 0.0 7-2 027 .07	Inte ble in July lly and rest pa ya an nua -tim turi nt u ty one e re pay me pon ma	0.5 4	7,5 00, 000	-	7,5 00, 000	(7, 455 )	7,4 92, 545	No ne
	k o f T aiw Ban an	202 0.0 7-2 030 .07	ble in July lly and Inte rest pa ya an nua -tim turi nt u ty one e re pay me pon ma	0.5 9	3,7 00, 000	-	3,7 00, 000	( 3,7 52 )	3,6 96, 248	No ne
					\$ 20, 000 ,00 0	\$ -	\$ 20, 000 ,00 0	\$ ( 19,7 28 )	\$ 19,9 80, 272

STATEMENT 11

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Period	Discount Rate (%)	Amount
Land and buildings
Handsets base stations	1-20 years	0.46-1.18	\$ 6,793,253
Others	1-30 years	0.46-1.12	802,547
Equipment	1-15 years	0.46-0.82	1,024,847
			8,620,647
Less: Lease Liabilities-current			(2,938,305)
Lease Liabilities-noncurrent			\$ 5,682,342

STATEMENT 12

CHUNGHWA TELECOM CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Amount
Depreciation	\$ 28,694,921
Cost of products	14,195,109
Salaries	10,961,990
Amortization	10,578,714
Repair, maintenance and warranty expenses	6,099,791
Compensation	5,885,908
Other (Note)	40,789,811
	\$ 117,206,244

Note: The amount of each item in others does not exceed 5% of the account balance.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Marketing	General and Administrative	Research and Development	Expected Credit Loss	Total
Salaries	\$ 5,702,880	\$ 1,300,941	\$ 1,400,511	\$ -	\$ 8,404,332
Compensation	3,104,800	649,068	757,642	-	4,511,510
Professional service fee	1,894,421	177,821	203,581	-	2,275,823
Depreciation	643,379	341,354	172,985	-	1,157,718
Welfare fee	996,969	211,674	229,426	-	1,438,069
Marketing and promotion expenses	797,113	-	-	-	797,113
Expected credit loss	-	-	-	45,689	45,689
Other (Note)	3,456,534	1,039,334	365,091	-	4,860,959
	\$ 16,596,096	\$ 3,720,192	\$ 3,129,236	\$ 45,689	\$ 23,491,213

Note: The amount of each item in others does not exceed 5% of the account balance.

STATEMENT OF EMPLOYEE BENEFIT, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2020 and 2019 (In Thousands of New Taiwan Dollars)

		Year Ended December 31, 2020			Year Ended December 31, 2019
	Classified as Operating Costs	Classified as Operating Expenses	Total	Classified as Operating Costs	Classified as Operating Expenses	Total
Employee benefit expenses
Salaries	\$ 10,961,990	\$ 8,404,332	\$ 19,366,322	\$ 11,218,855	\$ 8,669,102	\$ 19,887,957
Insurance	1,084,119	875,369	1,959,488	1,161,980	869,502	2,031,482
Pension	1,362,646	973,804	2,336,450	1,861,185	1,299,078	3,160,263
Remuneration to
directors	-	41,045	41,045	-	40,565	40,565
Others	6,789,180	5,140,658	11,929,838	6,950,603	5,256,004	12,206,607
	\$ 20,197,935	\$ 15,435,208	\$ 35,633,143	\$ 21,192,623	\$ 16,134,251	\$ 37,326,874
Depreciation	\$ 28,694,921	\$ 1,157,718	\$ 29,852,639	\$ 28,630,553	\$ 1,222,266	\$ 29,852,819
Amortization	\$ 10,578,714	\$ 152,061	\$ 10,730,775	\$ 10,281,841	\$ 156,705	\$ 10,438,546

Note 1: The average numbers of the Company's employees were 21,050 and 21,661, including 10 non-employee directors in 2020 and 2019, respectively.

• Note 2: The average employee benefits expense were \$1,692 thousand and \$1,721 thousand for the years ended December 31, 2020 and 2019, respectively. (Which refers to [total employee benefits-total directors' remuneration] divided by [number of employees-number of non-employee directors].)
• Note 3: The average salary expenses were \$920 thousand and \$918 thousand for the years ended December 31, 2020 and 2019, respectively. (Which refers to [salary expenses] divided by [number of employees-number of non-employee directors]). The adjustment on the average salary expenses in 2020 is approximately -0.2%.
• Note 4: The Company does not have supervisors; therefore, there is no remuneration to supervisors.
• Note 5: The remuneration policies for directors, management personnel, and employees were as follows:
• a. General directors and independent directors:
  • (i) Fixed remuneration is based on monthly basis resolved by the Board of Directors.
  • (ii) Floating remuneration is based on distribution stated in the Company's Articles of Incorporation. Please refer to Note 28(7) for details. Independent directors are excluded from the aforementioned distribution.
• b. The remuneration to management personnel is based on the executive performance management and guidelines which are linked to the Company's performance, business unit performance and personal performance. In addition, the result of corporate social responsibilities is a reference item taking into consideration for the floating remuneration.
• c. Compensation to employees is based on the Company's salary guidance.
• d. The remuneration to directors and management personnel are evaluated regularly and determined by the compensation committee of the Company.

Note 6: The Company's salary expenses refer to recurring grants such as base salary, job premiums, and overtime pay, etc.