Report of Foreign Issuer (6-k)

1934 Act Registration No. 1-31731

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

Dated August 12, 2015

Chunghwa Telecom Co., Ltd.

(Translation of Registrant’s Name into English)

21-3 Hsinyi Road Sec. 1,

Taipei, Taiwan, 100 R.O.C.

(Address of Principal Executive Office)

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

Form 20-F x Form 40-F ¨

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

Yes ¨ No x

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

SIGNATURE

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

Date: August 12, 2015



				Chunghwa Telecom Co., Ltd.

				By:		/s/ Bo Yung Chen
				Name:		Bo Yung Chen
				Title:		Chief Financial Officer

Exhibit


Exhibit		Description

99.1		To announce the differences between the second quarter of 2015 financial statements under Taiwan-IFRSs and IFRSs

99.2		Consolidated Financial Statements for the Six Months Ended June 30, 2015 pursuant to International Financial Reporting Standards adopted by ROC (“Taiwan-IFRSs’) and Independent Auditors’ Report

99.3		Consolidated Financial Statements for the Six Months Ended June 30, 2015 in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IFRSs”)

Exhibit 99.1


Subject:		To announce the differences between the second quarter of 2015 financial statements under Taiwan-IFRSs and IFRSs

To which item it meets: Article 4.1.(47)

Statement:

1.	Date of occurrence of the event: 2015/8/12

2.	Cause of occurrence: To announce the differences between the second quarter of 2015 financial statements under International Financial Reporting Standards as adopted by ROC (“Taiwan-IFRSs’) and International Financial Reporting Standards as issued by the IASB (“IFRSs”)

3.	Contents of overseas financial report required to be adjusted due to inconsistency in the accounting principles applied in the two places for:

(1)

Under Taiwan-IFRSs, Chunghwa Telecom Co., Ltd. and its subsidiaries (or the “Company”) reported consolidated net income of NT$11,362,612 thousand and NT$21,930,405 thousand, consolidated net income attributable to shareholders of the parent of NT$11,133,809 thousand and NT$21,552,234 thousand, and basic earnings per share of NT$1.44 and NT$2.78 for the second quarter of 2015 and the first half of 2015, respectively. The Company also reported total assets of NT$462,115,285 thousand, total liabilities of NT$109,081,951 thousand, and total equity of NT$353,033,334 thousand as of June 30, 2015.

(2)

Under IFRSs, the Company reported consolidated net income of NT$13,862 million and NT$23,344 million, consolidated net income attributable to shareholders of the parent of NT$13,597 million and NT$22,955 million, and basic earnings per share of NT$1.75 and NT$2.96 for the second quarter of 2015 and the first half of 2015, respectively. The Company also reported total assets of NT$461,930 million, total liabilities of NT$111,307 million, and total equity of NT$350,623 million as of June 30, 2015.

(3)

The differences in consolidated net income between under Taiwan-IFRSs and IFRSs followed by the Company mainly come from the timing of the recognition of 10% income tax on unappropriated earnings. In addition, prior to incorporation, the Company was subject to the laws and regulations applicable to state-owned enterprises in Taiwan which differed from ROC GAAP as applicable to commercial companies. As such, revenue from providing fixed line connection service and selling prepaid phone cards was recognized at the time the service was performed or the card was sold by the Company. Upon incorporation, net assets greater than the capital stock was credited as additional paid-in-capital and part of the additional paid-in-capital was from the unearned revenues generated from connection fees and prepaid cards as of that day. Under IFRSs, revenue from connection fees and prepaid cards was deferred at the time of the service performed or sale and recognized as revenue over time as the service is continuously performed or as consumed. This reclassification from additional paid-in capital to unappropriated earnings did not affect total equity.

4.	Any other matters that need to be specified: Chunghwa Telecom’s earnings distribution and stockholders’ equity are in accordance with Taiwan-IFRSs.

Exhibit 99.2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 30, 2015 and 2014 and

Independent Auditors’ Review Report

- 1 -

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders

Chunghwa Telecom Co., Ltd.

We have reviewed the accompanying consolidated balance sheets of Chunghwa Telecom Co., Ltd. and subsidiaries (“the Company”) as of June 30, 2015 and 2014, and the related consolidated statements of comprehensive income for the three months ended June 30, 2015 and 2014, and for the six months ended June 30, 2015 and 2014, as well as the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2015 and 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated financial statements based on our review.

We conducted our reviews in accordance with the Statement of Auditing Standards No. 36, “Review of Financial Statements”, issued by the Auditing Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an audit opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed by the Financial Supervisory Commission of the Republic of China.

/s/ DELOITTE & TOUCHE

Deloitte & Touche

Taipei, Taiwan

The Republic of China

August 11, 2015

Notice to Readers

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

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollar)


	June 30, 2015 (Reviewed)				December 31, 2014 (Adjusted and Audited) (Note 5)				June 30, 2014 (Adjusted and Reviewed) (Note 5)					January 1, 2014 (Adjusted and Audited) (Note 5)
	Amount		%		Amount		%		Amount			%		Amount			%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)	$	34,284,519		7	$	23,559,603		5	$	28,141,343			6	$	14,585,105			3
Financial assets at fair value through profit or loss (Note 7)		1,216		—		1,163		—		—			—		337			—
Available-for-sale financial assets (Note 8)		—		—		—		—		—			—		24,267			—
Held-to-maturity financial assets (Note 9)		2,903,450		1		3,456,747		1		4,467,343			1		4,264,104			1
Hedging derivative assets (Note 21)		—		—		—		—		24			—		—			—
Trade notes and accounts receivable, net (Note 10)		27,551,809		6		26,227,999		6		23,610,397			5		22,900,902			5
Accounts receivable from related parties (Note 39)		21,638		—		81,008		—		69,680			—		69,304			—
Inventories (Notes 11 and 40)		6,712,831		1		7,096,509		2		8,193,599			2		7,848,087			2
Prepayments (Notes 12 and 39)		5,791,572		1		2,444,458		—		5,594,815			2		2,224,130			1
Other current monetary assets (Notes 13 and 28)		14,879,526		3		3,325,354		1		5,183,291			1		4,636,305			1
Other current assets (Note 20)		2,493,865		1		3,219,399		1		5,266,805			1		3,960,798			1

Total current assets		94,640,426		20		69,412,240		16		80,527,297			18		60,513,339			14

NONCURRENT ASSETS
Available-for-sale financial assets (Note 8)		3,554,836		1		3,914,212		1		2,802,406			1		3,046,182			1
Held-to-maturity financial assets (Note 9)		3,799,162		1		4,027,522		1		5,715,227			1		7,501,743			2
Financial assets carried at cost (Note 14)		2,386,928		—		2,366,530		—		2,412,507			—		2,423,646			—
Investments accounted for using equity method (Notes 3 and 16)		2,862,920		1		2,953,625		1		2,506,021			—		2,562,293			—
Property, plant and equipment (Notes 17, 39 and 40)		295,149,385		64		302,650,343		68		298,533,250			66		302,714,116			69
Investment properties (Note 18)		7,665,842		2		7,620,854		2		8,009,747			2		8,018,031			2
Intangible assets (Note 19)		41,411,701		9		42,824,626		9		43,763,380			10		44,398,888			10
Deferred income tax assets		1,907,745		—		1,828,586		—		1,781,380			—		1,509,305			—
Prepayments (Notes 12 and 39)		3,484,321		1		3,504,338		1		3,409,603			1		3,608,487			1
Other noncurrent assets (Notes 20, 28 and 40)		5,252,019		1		5,601,736		1		5,212,094			1		4,882,974			1

Total noncurrent assets		367,474,859		80		377,292,372		84		374,145,615			82		380,665,665			86

TOTAL	$	462,115,285		100	$	446,704,612		100	$	454,672,912			100	$	441,179,004			100

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans (Note 22)	$	860,000		—	$	564,400		—	$	1,085,000			—	$	254,357			—
Financial liabilities at fair value through profit or loss (Note 7)		2,218		—		21		—		456			—		246			—
Hedging derivative liabilities (Note 21)		—		—		283		—		287			—		—			—
Trade notes and accounts payable (Note 24)		15,318,154		3		18,518,977		4		12,386,753			3		15,589,108			4
Payables to related parties (Note 39)		431,842		—		407,965		—		639,736			—		556,809			—
Current tax liabilities		4,419,564		1		3,361,907		1		4,448,390			1		4,144,076			1
Dividends payables (Note 29)		37,673,263		8		—		—		18,525,558			4		—			—
Other payables (Note 25)		20,181,807		5		24,334,992		6		38,862,229			9		26,791,769			6
Provisions (Note 26)		253,430		—		179,374		—		118,904			—		129,341			—
Advance receipts (Note 27)		9,616,451		2		9,912,864		2		9,060,245			2		9,463,535			2
Current portion of long-term loans (Notes 23 and 40)		2,564		—		—		—		300,000			—		300,000			—
Other current liabilities		1,488,911		1		1,618,957		—		1,606,491			—		1,598,017			—

Total current liabilities		90,248,204		20		58,899,740		13		87,034,049			19		58,827,258			13

NONCURRENT LIABILITIES
Long-term loans (Notes 23 and 40)		1,797,436		—		1,900,000		—		1,748,000			1		1,400,000			1
Deferred income taxes liabilities		108,050		—		132,406		—		110,501			—		101,379			—
Provisions (Note 26)		49,175		—		92,660		—		120,935			—		123,464			—
Customers’ deposits (Note 39)		4,654,717		1		4,757,547		1		4,774,790			1		4,834,580			1
Net defined benefit liabilities (Notes 3 and 28)		6,671,082		2		6,469,890		2		5,679,496			1		5,483,205			1
Deferred revenue		3,571,946		1		3,398,087		1		3,566,075			1		3,700,949			1
Other noncurrent liabilities		1,981,341		—		1,514,947		—		1,329,481			—		1,334,220			—

Total noncurrent liabilities		18,833,747		4		18,265,537		4		17,329,278			4		16,977,797			4

Total liabilities		109,081,951		24		77,165,277		17		104,363,327			23		75,805,055			17

EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 15 and 29)
Common stock		77,574,465		17		77,574,465		17		77,574,465			17		77,574,465			18

Additional paid-in capital		168,064,890		36		168,047,935		38		168,040,721			37		184,620,065			42

Retained earnings
Legal reserve		77,574,465		17		76,893,722		17		76,893,722			17		74,819,380			17
Special reserve		2,675,419		—		2,819,899		1		2,819,899			1		2,675,894			—
Unappropriated earnings		21,574,425		5		38,231,982		9		20,842,862			4		20,770,064			5

Total retained earnings		101,824,309		22		117,945,603		27		100,556,483			22		98,265,338			22

Other adjustments		478,092		—		886,147		—		(412,430	)		—		(144,005	)		—

Total equity attributable to stockholders of the parent		347,941,756		75		364,454,150		82		345,759,239			76		360,315,863			82
NONCONTROLLING INTERESTS (Notes 15 and 29)		5,091,578		1		5,085,185		1		4,550,346			1		5,058,086			1

Total equity		353,033,334		76		369,539,335		83		350,309,585			77		365,373,949			83

TOTAL	$	462,115,285		100	$	446,704,612		100	$	454,672,912			100	$	441,179,004			100

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Reviewed, Not Audited)


	For the Three Months Ended June 30										For the Six Months Ended June 30
	2015					2014 (Adjusted) (Note 5)					2015					2014 (Adjusted) (Note 5)
	Amount			%		Amount			%		Amount			%		Amount			%
REVENUES (Notes 30 and 39)	$	56,920,593			100	$	55,784,235			100	$	113,393,400			100	$	110,834,147			100
OPERATING COSTS (Notes 11 and 39)		35,710,904			63		35,062,259			63		72,406,785			64		70,084,484			63

GROSS PROFIT		21,209,689			37		20,721,976			37		40,986,615			36		40,749,663			37

OPERATING EXPENSES (Note 39)
Marketing		6,026,364			11		6,428,766			11		12,008,969			11		12,596,707			11
General and administrative		1,104,653			2		1,083,515			2		2,249,777			2		2,166,827			2
Research and development		866,651			1		871,130			2		1,701,778			1		1,742,984			2

Total operating expenses		7,997,668			14		8,383,411			15		15,960,524			14		16,506,518			15

OTHER INCOME AND EXPENSES (Note 31)		(14,662	)		—		(10,995	)		—		(43,782	)		—		(19,505	)		—

INCOME FROM OPERATIONS		13,197,359			23		12,327,570			22		24,982,309			22		24,223,640			22

NON-OPERATING INCOME AND EXPENSES
Interest income		94,805			—		83,609			—		162,102			—		142,732			—
Other income (Notes 31 and 39)		270,707			1		142,342			—		523,391			1		395,409			1
Other gains and losses (Notes 31 and 39)		(194,512	)		—		24,654			—		(68,254	)		—		(6,368	)		—
Interest expenses		(6,845	)		—		(10,559	)		—		(15,502	)		—		(19,285	)		—
Share of the profit of associates and joint ventures accounted for using equity method (Note 16)		188,364			—		219,616			1		488,890			—		391,722			—

Total non-operating income and expenses		352,519			1		459,662			1		1,090,627			1		904,210			1

INCOME BEFORE INCOME TAX		13,549,878			24		12,787,232			23		26,072,936			23		25,127,850			23
INCOME TAX EXPENSE (Notes 3 and 32)		2,187,266			4		2,091,762			4		4,142,531			4		4,047,610			4

NET INCOME		11,362,612			20		10,695,470			19		21,930,405			19		21,080,240			19

TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAX
Items that will not be reclassified to profit or loss:
Share of remeasurements of defined benefit pension plans of associates and joint ventures (Note 16)		—			—		—			—		(265	)		—		—			—

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Reviewed, Not Audited)


	For the Three Months Ended June 30											For the Six Months Ended June 30
	2015						2014 (Adjusted) (Note 5)					2015					2014 (Adjusted) (Note 5)
	Amount			%			Amount			%		Amount			%		Amount			%
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from the translation of the foreign operations	$	(55,626	)		—		$	(51,248	)		—	$	(85,028	)		—	$	(36,731	)		—
Unrealized gain (loss) on available-for-sale financial assets (Note 31)		(761,656	)		(1	)		26,162			—		(333,466	)		—		(233,805	)		—
Cash flow hedges (Notes 21 and 31)		—			—			(263	)		—		283			—		(263	)		—
Share of exchange differences arising from the translation of the foreign operations of associates joint ventures (Note 16)		(426	)		—			(32,245	)		—		449			—		(24,641	)		—
Income tax benefit (expense) relating to items that may be reclassified subsequently (Note 32)		(484	)		—			846			—		(3,812	)		—		1,882			—

Total other comprehensive income (loss), net of income tax		(818,192	)		(1	)		(56,748	)		—		(421,839	)		—		(293,558	)		—

TOTAL COMPREHENSIVE INCOME	$	10,544,420			19		$	10,638,722			19	$	21,508,566			19	$	20,786,682			19

NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	11,133,809			20		$	10,582,138			19	$	21,552,234			19	$	20,816,703			19
Noncontrolling interest (Note 15)		228,803			—			113,332			—		378,171			—		263,537			—

	$	11,362,612			20		$	10,695,470			19	$	21,930,405			19	$	21,080,240			19

COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	10,323,518			18		$	10,541,457			19	$	21,143,914			19	$	20,548,278			19
Noncontrolling interest		220,902			1			97,265			—		364,652			—		238,404			—

	$	10,544,420			19		$	10,638,722			19	$	21,508,566			19	$	20,786,682			19

EARNINGS PER SHARE (Note 33)
Basic	$	1.44					$	1.36				$	2.78				$	2.68

Diluted	$	1.43					$	1.36				$	2.77				$	2.68

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

(Concluded)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)


	Equity Attributable to Stockholders of the Parent (Notes 15 and 29)
														Other Adjustments
						Retained Earnings								Exchange Differences Arising from the Translation			Unrealized Gain (Loss) on Available-
	Common Stock		Additional Paid-in Capital			Legal Reserve		Special Reserve			Unappropriated Earnings			of the Foreign Operations			for-sale Financial Assets			Cash Flow Hedges			Total			Noncontrolling Interests (Notes 15 and 29)			Total Equity
BALANCE AT JANUARY 1, 2014	$	77,574,465	$	184,620,065		$	74,819,380	$	2,675,894		$	20,744,024		$	5,742		$	(149,747	)	$	—		$	360,289,823		$	5,054,331		$	365,344,154
Effect of retrospective application		—		—			—		—			26,040			—			—			—			26,040			3,755			29,795

BALANCE, JANUARY 1, 2014 AS ADJUSTED		77,574,465		184,620,065			74,819,380		2,675,894			20,770,064			5,742			(149,747	)		—			360,315,863			5,058,086			365,373,949
Appropriation of 2013 earnings
Legal reserve		—		—			2,074,342		—			(2,074,342	)		—			—			—			—			—			—
Special reserve		—		—			—		144,005			(144,005	)		—			—			—			—			—			—
Cash dividends distributed by Chunghwa		—		—			—		—			(18,525,558	)		—			—			—			(18,525,558	)		—			(18,525,558	)
Cash dividends distributed by subsidiaries		—		—			—		—			—			—			—			—			—			(796,789	)		(796,789	)
Other changes in additional paid-in capital:
Cash distributed from additional paid-in capital		—		(16,577,663	)		—		—			—			—			—			—			(16,577,663	)		—			(16,577,663	)
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—		(1,681	)		—		—			—			—			—			—			(1,681	)		(2,486	)		(4,167	)
Net income for the six months ended June 30, 2014		—		—			—		—			20,816,703			—			—			—			20,816,703			263,537			21,080,240
Other comprehensive income (loss) for the six months ended June 30, 2014		—		—			—		—			—			(43,791	)		(224,371	)		(263	)		(268,425	)		(25,133	)		(293,558	)

Total comprehensive income for the six months ended June 30, 2014		—		—			—		—			20,816,703			(43,791	)		(224,371	)		(263	)		20,548,278			238,404			20,786,682

Compensation cost of employee stock option of a subsidiary		—		—			—		—			—			—			—			—			—			53,131			53,131

BALANCE, JUNE 30, 2014	$	77,574,465	$	168,040,721		$	76,893,722	$	2,819,899		$	20,842,862		$	(38,049	)	$	(374,118	)	$	(263	)	$	345,759,239		$	4,550,346		$	350,309,585

BALANCE, JANUARY 1, 2015	$	77,574,465	$	168,047,935		$	76,893,722	$	2,819,899		$	38,210,062		$	146,442		$	739,988		$	(283	)	$	364,432,230		$	5,081,617		$	369,513,847
Effect of retrospective application		—		—			—		—			21,920			—			—			—			21,920			3,568			25,488

BALANCE, JANUARY 1, 2015 AS ADJUSTED		77,574,465		168,047,935			76,893,722		2,819,899			38,231,982			146,442			739,988			(283	)		364,454,150			5,085,185			369,539,335
Appropriation of 2014 earnings
Legal reserve		—		—			680,743		—			(680,743	)		—			—			—			—			—			—
Special reserve		—		—			—		(144,005	)		144,005			—			—			—			—			—			—
Cash dividends distributed by Chunghwa		—		—			—		—			(37,673,263	)		—			—			—			(37,673,263	)		—			(37,673,263	)
Cash dividends distributed by subsidiaries		—		—			—		—			—			—			—			—			—			(354,400	)		(354,400	)
Reversal of special reserve recognized from land disposal		—		—			—		(475	)		475			—			—			—			—			—			—
Other change in additional paid-in capital:
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—		(908	)		—		—			—			—			—			—			(908	)		(2,007	)		(2,915	)
Partial disposal of interests in subsidiaries		—		26,644			—		—			—			—			—			—			26,644			18,484			45,128
Net income for the six months ended June 30, 2015		—		—			—		—			21,552,234			—			—			—			21,552,234			378,171			21,930,405
Other comprehensive income (loss) for the six months ended June 30, 2015		—		—			—		—			(265	)		(69,012	)		(339,326	)		283			(408,320	)		(13,519	)		(421,839	)

Total comprehensive income for the six months ended June 30, 2015		—		—			—		—			21,551,969			(69,012	)		(339,326	)		283			21,143,914			364,652			21,508,566

Compensation cost of employee stock option of a subsidiary		—		—			—		—			—			—			—			—			—			28,962			28,962
Subsidiary purchases its treasury stock		—		(8,781	)		—		—			—			—			—			—			(8,781	)		(49,298	)		(58,079	)

BALANCE, JUNE 30, 2015	$	77,574,465	$	168,064,890		$	77,574,465	$	2,675,419		$	21,574,425		$	77,430		$	400,662		$	—		$	347,941,756		$	5,091,578		$	353,033,334

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)


	For The Six Months Ended June 30
	2015			2014 (Adjusted)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	26,072,936		$	25,127,850
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation		15,414,664			16,105,591
Amortization		1,539,430			784,700
Provision for doubtful accounts		189,959			148,370
Interest expenses		15,502			19,285
Interest income		(162,102	)		(142,732	)
Dividend income		(218,172	)		(76,998	)
Compensation cost of employee stock options		28,962			53,131
Gain on disposal of associates accounted for using equity method		(8,058	)		—
Share of the profit of associates and joint ventures accounted for using equity method		(488,890	)		(391,722	)
Impairment loss on available-for-sale financial assets		25,910			—
Impairment loss on financial assets carried at cost		—			8,976
Provision for inventory and obsolescence		91,356			247,684
Loss (gain) on disposal of financial instruments		240			(44,377	)
Loss on disposal of property, plant and equipment		43,762			19,505
Loss on disposal of intangible assets		20			—
Valuation loss on financial instruments at fair value through profit or loss, net		1,002			456
Loss (gain) on foreign exchange, net		(5,874	)		107,722
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		1,142			91
Trade notes and accounts receivable		(1,494,289	)		(855,279	)
Receivables from related parties		59,370			(376	)
Inventories		292,322			(593,196	)
Other current monetary assets		(254,280	)		(274,231	)
Prepayments		(3,327,097	)		(3,171,800	)
Other current assets		725,534			(1,306,006	)
Increase (decrease) in:
Trade notes and accounts payable		(3,191,146	)		(3,255,927	)
Payables to related parties		23,877			82,927
Other payables		(2,233,733	)		(4,187,853	)
Provisions		30,571			(12,966	)
Advance receipts		(296,413	)		(403,290	)
Other current liabilities		(125,674	)		6,328

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)


	For The Six Months Ended June 30
	2015			2014 (Adjusted)
Deferred revenue	$	173,859		$	(134,874	)
Net defined benefit liabilities		201,192			196,291

Cash generated from operations		33,125,882			28,057,280
Interest paid		(15,569	)		(19,270	)
Income tax paid		(3,195,027	)		(4,005,213	)

Net cash provided by operating activities		29,915,286			24,032,797

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial assets		—			81,229
Acquisition of time deposits and negotiable certificate of deposits with maturities of more than three months		(11,448,339	)		(411,000	)
Proceeds from disposal of time deposits and negotiable certificate of deposits with maturities of more than three months		553,677			434,607
Acquisition of held-to-maturity financial assets		(1,002,167	)		—
Proceeds from disposal of held-to-maturity financial assets		1,775,000			1,570,000
Acquisition of financial assets carried at cost		(22,338	)		(47,078	)
Proceeds from disposal of financial assets carried at cost		966			3,489
Capital reduction of financial assets carried at cost		—			43,740
Acquisition of investments accounted for using equity method		(5,607	)		(133,485	)
Proceeds from disposal of investments accounted for using equity method		10,847			—
Acquisition of property, plant and equipment		(10,320,391	)		(13,089,921	)
Proceeds from disposal of property, plant and equipment		1,286			3,808
Acquisition of intangible assets		(126,593	)		(149,163	)
Decrease (increase) in other noncurrent assets		361,789			(340,956	)
Interest received		138,565			21,857
Cash dividends received		405,702			451,807

Net cash used in investing activities		(19,677,603	)		(11,561,066	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		2,750,000			830,643
Repayment of short-term loans		(2,454,400	)		—
Proceeds from long-term loans		—			348,000
Repayment of long-term loans		(100,000	)		—
Decrease in customers’ deposits		(107,203	)		(58,707	)
Increase (decrease) in other noncurrent liabilities		466,393			(4,739	)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)


	For The Six Months Ended June 30
	2015			2014 (Adjusted)
Proceeds from disposal of interest in subsidiaries without losing control	$	45,128		$	—
Other change in noncontrolling interests		(35,254	)		—

Net cash provided by financing activities		564,664			1,115,197

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(77,431	)		(30,690	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		10,724,916			13,556,238
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		23,559,603			14,585,105

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	34,284,519		$	28,141,343

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

(Concluded)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

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

(Reviewed, Not Audited)

1.	GENERAL

Chunghwa Telecom Co., Ltd. (“Chunghwa”) was incorporated on July 1, 1996 in the Republic of China (“ROC”) pursuant to the Article 30 of the Telecommunications Act. Chunghwa is a company limited by shares and, prior to August 2000, was wholly owned by the Ministry of Transportation and Communications (“MOTC”). Prior to July 1, 1996, the current operations of Chunghwa were carried out under the Directorate General of Telecommunications (“DGT”). The DGT was established by the MOTC in June 1943 to take primary responsibility in the development of telecommunications infrastructure and to formulate policies related to telecommunications. On July 1, 1996, the telecom operations of the DGT were spun-off to as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

As the dominant telecommunications service provider of domestic and international fixed-line, Global System for Mobile Communications (“GSM”), and Third Generation (“3G”) in the ROC, Chunghwa is subject to additional regulations imposed by the ROC.

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

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

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

2.	APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorized for issue by the Board of Directors on August 11, 2015.

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3.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The accompany consolidated financial statements have been prepared in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting,” endorsed by the Financial Supervisory Commission (the “FSC”). The consolidated financial statements do not present full disclosures required for a complete set of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and the Interpretations as well as related guidance translated by Accounting Research and Development Foundation (ARDF) endorsed by the FSC (collectively, “Taiwan-IFRSs”) annual consolidated financial statements.

Basis of Consolidation

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


			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	June 30, 2015		December 31, 2014		June 30, 2014		Note
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd. (“SENAO”)	Selling and maintaining mobile phones and its peripheral products		28		28		28		1	)
	Light Era Development Co., Ltd. (“LED”)	Housing, office building development, rent and sale services		100		100		100
	Donghwa Telecom Co., Ltd. (“DHT”)	International telecommunications IP fictitious internet and internet transfer services		100		100		100
	Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)	Telecommunication wholesale, internet transfer services international data and long distance call wholesales to carriers		100		100		100
	Chunghwa System Integration Co., Ltd. (“CHSI”)	Providing communication and information aggregative services		100		100		100
	Chunghwa Investment Co., Ltd. (“CHI”)	Investment		89		89		89
	CHIEF Telecom Inc. (“CHIEF”)	Internet communication and internet data center (“IDC”) service		69		69		69		2	)
	Chunghwa International Yellow Pages Co., Ltd. (“CHYP”)	Yellow pages sales and advertisement services		100		100		100
	Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)	Investment		100		100		100
	Spring House Entertainment Tech. Inc. (“SHE”)	Network services, producing digital entertainment contents and broadband visual sound terrace development		56		56		56
	Chunghwa Telecom Global, Inc. (“CHTG”)	International data and internet services and long distance call wholesales to carriers		100		100		100
	Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)	Information and communications technology, international circuit, and intelligent energy network service		100		100		100
	Smartfun Digital Co., Ltd. (“SFD”)	Software retail		65		65		65
	Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)	Telecom business, information process and information provide service, development and sale of software and consulting services in telecommunication		100		100		100
	Chunghwa Sochamp Technology Inc. (“CHST”)	License plate recognition system		51		51		51
	Honghwa International Co., Ltd. (“HHI”)	Human resources service		100		100		100		3	)
	New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)	Investment		100		100		100
Senao International Co., Ltd.	Senao International (Samoa) Holding Ltd. (“SIS”)	International investment		100		100		100
CHIEF Telecom Inc.	Unigate Telecom Inc. (“Unigate”)	Telecommunication and internet service		100		100		100
	Chief International Corp. (“CIC”)	Investment		100		100		100
Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd. (“Concord”)	Investment		100		100		100
Spring House Entertainment Tech. Inc.	Ceylon Innovation Ltd. (“CEI”)	International trading, general advertisement and book publishment service		100		100		100
Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd. (“YYRP”)	Real estate management and leasing business		—		—		100		4	)
Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech Co., Ltd. (“CHPT”)	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		46		48		51		5	)
	Chunghwa Investment Holding Co., Ltd. (“CIHC”)	Investment		100		100		100
Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd. (“GNSS (Shanghai)”)	Planning and design of software and hardware system services and integration of information system		100		100		100

(Continued)

- 11 -


			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	June 30, 2015		December 31, 2014		June 30, 2014		Note
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		100		100		100
	CHPT Japan Co., Ltd. (“CHPT (JP)”)	Sale and maintenance of electronic parts and machinery processed products, and design of printed circuit board		100		100		100
	Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)	Electronic materials wholesale and retail and investment		100		100		100
Senao International (Samoa) Holding Ltd.	Senao International HK Limited (“SIHK”)	International investment		100		100		100
Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited (“COI”)	Investment		100		100		100
Senao International HK Limited	Senao Trading (Fujian) Co., Ltd. (“STF”)	Information technology services and sale of communication products		100		100		100
	Senao International Trading (Shanghai) Co., Ltd. (“SITS”)	Information technology services and sale of communication products		100		100		100
	Senao International Trading (Shanghai) Co., Ltd. (“SEITS”)	Information technology services and maintenance of communication products		100		100		100
	Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”)	Information technology services and sale of communication products		100		100		100
Prime Asia Investments Group Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd. (“CHC”)	Investment		100		100		100
Chunghwa Hsingta Company Ltd.	Chunghwa Telecom (China) Co., Ltd. (“CTC”)	Planning and design of energy conservation and software and hardware system services, and integration of information system		100		100		100
	Jiangsu Zhenhua Information Technology Company, LLC. (“JZIT”)	Intelligent energy conserving and intelligent building services		75		75		75
	Hua-Xiong Information Technology Co., Ltd. (“HXIT”)	Intelligent system and energy saving system services in buildings		51		51		51
Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)	Shanghai Taihua Electronic Technology Limited (“STET”)	Design of printed circuit board and related consultation service		100		100		100

(Concluded)

The Company owns 28% equity shares of SENAO. However, the Company has four out of seven seats of the board of directors of SENAO through the support of large beneficial shareholders. Therefore, the Company has control over SENAO and the accounts of SENAO are included in the consolidated financial statements.

The Company’s equity ownership of CHIEF decreased due to CHIEF issued employee stock bonus in July 2014. The Company owned 73.02%, 72.51% and 72.51% equity shares of CHIFF as of June 30, 2014, December 31, 2014 and June 30, 2015, respectively.

Chunghwa established 100% owned subsidiary of Honghwa Human Resources in January 2013. Honghwa Human Resources changed its name to Honghwa International from July 4, 2014.

LED merged YYRP by absorption in October 2014.

The Company did not participate in the capital increase of CHPT in August and September 2014 and CHI disposed of some shares in January 2015, so the ownership interest of CHI decreased. The Company owned 50.62%, 47.65% and 45.68% equity shares of CHPT as of June 30, 2014, December 31, 2014 and June 30, 2015, respectively. In addition, considering Company’s absolute size, the relative size and dispersion of the shareholdings owned by the other shareholders, the management concluded that the Company has a sufficiently dominant voting interest to direct the relevant activities; hence, CHPT is deemed as a subsidiary of the Company.

- 12 -

The following diagram presents information regarding the relationship and ownership percentages between Chunghwa and its subsidiaries as of June 30, 2015:

LOGO

Other Significant Accounting Policies

The accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2014, except for those described below:

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. Joint venture arrangements that involve the establishment of a separate entity in which venturers have joint control over the economic activity of the entity are referred to as joint venture.

The operating results and identifiable net assets of associates and joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in an associate and joint venture is initially recognized in the consolidated balance sheet at cost and adjusted thereafter to recognize the Company’s share of the profit or loss, any impairment losses, and other comprehensive income of the associate and joint venture. The Company also recognizes the changes in the Company’s share of equity of associates and joint venture attributable to the Company.

When the Company reduces its ownership interest in an associate or a joint venture but the Company continues to use the equity method, the Company reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

- 13 -

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

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized 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.

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

Defined retirement benefit costs

For defined benefit retirement benefit plans, the cost (including service cost, net interest expense or income and remeasurement) of providing benefits is determined using the Projected Unit Credit Method. Service cost (including current service cost, as well as gains and losses on settlements) and net interest expense or income is recognized in profit or loss when occurs, amendments to pension plans and settlement occurs. Remeasurement (comprising actuarial gains and losses and the return on plan assets excluding interest) recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

The retirement benefit obligation (asset) recognized in the consolidated balance sheet represents the actual deficit or surplus in the Company’s defined retirement benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

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

Taxation

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

Deferred tax liabilities and assets 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 liabilities and assets 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.

4.	CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, the managements are 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.

- 14 -

The estimates and underlying assumptions are reviewed 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.

The same critical accounting judgments and key sources of estimation uncertainty of consolidated financial statements have been followed in these consolidated financial statements as were applied in the preparation of the consolidated financial statements for the year ended December 31, 2014, except for those described below:

Control over subsidiaries

Note 3 describes that several companies are subsidiaries of the Company although the Company only owns less than 50% ownership interest. After considering the Company’s absolute size of holding and the relative size of and dispersion of the shareholdings owned by the other shareholders, and the contractual arrangements between the Company and other investors, the management concluded that the Company has a sufficiently dominant voting interest to direct the relevant activities and therefore the Company has control over several companies.

5.	APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

Initial application of the revised Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the 2013 version of the IFRS, IAS, IFRIC, and SIC endorsed by the FSC (collectively, “2013 Taiwan-IFRSs version”) in issue.

According to Rule No. 1030029342 and Rule No. 1030010325 issued by the FSC, the following 2013 IFRS version endorsed by the FSC and the related amendments to the Guidelines Governing the Preparation of Financial Reports by Securities Issuers should be adopted by the Company starting 2015.

The Company believes that as a result of the adoption of aforementioned 2013 Taiwan-IFRSs version and the related amendments to the revised Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the following items have impacted the Company’s consolidated financial statements:

IFRS 12 “Disclosure of Interests in Other Entities”

IFRS 12 is a new disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than in the previous standards. Refer to Notes 15 and 16 for related disclosures.

IFRS 13 “Fair Value Measurement”

IFRS 13 establishes a single source of guidance for fair value measurements. It defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The disclosure requirements in IFRS 13 are more extensive than those required by the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only is extended by IFRS 13 to cover all assets and liabilities within its scope. Refer to Notes 18 and 38 for related disclosures.

- 15 -

Amendments to IAS 1 “Presentation of Items of Other Comprehensive Income”

The amendments to IAS 1 requires items of other comprehensive income to be grouped into those items that (1) will not be reclassified subsequently to profit or loss; and (2) may be reclassified subsequently to profit or loss. Income taxes on related items of other comprehensive income are grouped on the same basis. Under current IAS 1, there were no such requirements.

The Company retrospectively applied the above amendments starting in 2015. The items that will not be reclassified subsequently to profit or loss include remeasurements of defined benefit pension plans, the share of remeasurements of defined benefit pension plans of associates and joint ventures as well as the related income tax on such items. Items that will be reclassified subsequently to profit or loss include exchange differences arising on translation of foreign operations, changes in fair value of available-for-sale financial assets, cash flow hedges, the share of other comprehensive income of associates and joint ventures as well as the related income tax on items of other comprehensive income (except for the share of remeasurements of defined benefit pension plans of associates and joint ventures). However, the application of the above amendments did not have any impact on the net income, other comprehensive income (net of income tax), and total comprehensive income.

Revision to IAS 19 “Employee Benefits”

The amendments to IAS 19 change the accounting for defined benefit plans, which require the Company to recognize changes in defined benefit obligations or assets and to disclose the components of the defined benefit costs. According to the amendments, the past service cost, is expensed immediately when incurred and no longer amortized over the average period before becoming vested on a straight-line basis. In addition, the revised IAS 19 introduces certain changes in the presentation of the defined benefit cost, and also includes more extensive disclosures.

On initial application of the revised IAS 19, the changes in cumulative employee benefit costs as of January 1, 2014 resulting from the retrospective application are adjusted to net defined benefit liabilities, deferred tax assets, retained earnings, and noncontrolling interests as of January 1, 2014. In addition, in preparing the consolidated financial statements for the year ending December 31, 2015, the Company elects not to present 2014 comparative information about the sensitivity analysis of the defined benefit obligation.

On initial application of the revised IAS 19, the Company’s deferred tax assets increased by $441 thousand, net defined benefit liabilities increased by $2,596 thousand as of June 30, 2015. For the three months ended June 30, 2015, and six months ended June 30, 2015, pension cost increased by $1,298 thousand and $2,596 thousand, respectively; which caused an increase in operating expenses, and income tax expenses decreased by $220 thousand and $441 thousand, respectively.

As a result of the retrospective application of the revised IAS 19, the Company’s deferred tax asset decreased by $5,220 thousand, $5,734 thousand and $6,103 thousand as of December 31, 2014, June 30, 2014, and January 1, 2014, respectively. Net defined benefit liabilities decreased by $30,708 thousand, $33,731 thousand and $35,898 thousand. Retained earnings increased by $21,920 thousand, $24,335 thousand and $26,040 thousand, respectively; noncontrolling interests increased by $3,568 thousand, $3,662 thousand and $3,755 thousand as of December 31, 2014, June 30, 2014, and January 1, 2014, respectively. For the three months ended June 30, 2014, and six months ended June 30, 2014, pension cost increased by $1,083 thousand and 2,167 thousand, respectively, which caused an increase in operating expenses and income tax expenses decreased by $184 thousand and $369 thousand, respectively.

- 16 -

The IFRSs issued by International Accounting Standard Board (“IASB”) but not endorsed by FSC

The Company has not applied the following IFRSs issued by the IASB but not endorsed by the FSC. As of the date that the consolidated financial statements were authorized for issue, the initial adoption to the following standards and interpretations is still subject to the effective date to be published by the FSC.


New, Revised or Amended Standards and Interpretations		Effective Date Issued by IASB (Note 1)

Amendments to IFRSs	Annual Improvements to IFRSs 2010-2012 Cycle	July 1, 2014 (Note 2)

Amendments to IFRSs	Annual Improvements to IFRSs 2011-2013 Cycle	July 1, 2014

Amendments to IFRSs	Annual Improvements to IFRSs 2012-2014 Cycle	January 1, 2016 (Note 3)

IFRS 9	Financial Instruments	January 1, 2018

Amendments to IFRS 9 and IFRS 7	Mandatory Effective Date of IFRS 9 and Transition Disclosures	January 1, 2018

Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	January 1, 2016 (Note 4)

Amendments to IFRS 10, IFRS 12 and IAS 28	Investment Entities: Applying the Consolidation Exception	January 1, 2016

Amendment to IFRS 11	Acquisitions of Interests in Joint Operations	January 1, 2016

IFRS 14	Regulatory Deferral Accounts	January 1, 2016

IFRS 15	Revenue from Contracts with Customers	January 1, 2017

Amendment to IAS 1	Disclosure Initiative	January 1, 2016

Amendments to IAS 16 and IAS 38	Clarification of Acceptable Methods of Depreciation and Amortization	January 1, 2016

Amendments to IAS 16 and IAS 41	Agriculture: Bearer Plants	January 1, 2016

Amendment to IAS 19	Defined Benefit Plans: Employee Contributions	July 1, 2014

Amendment to IAS 36	Impairment of Assets: Recoverable Amount Disclosures for Non-financial Assets	January 1, 2014

Amendment to IAS 39	Novation of Derivatives and Continuation of Hedge Accounting	January 1, 2014

IFRIC 21	Levies	January 1, 2014

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 amendment to IFRS 2 applies to share-based payment transactions with grant date on or after July 1, 2014; the amendment to IFRS 3 applies to business combinations with acquisition date on or after July 1, 2014; the amendment to IFRS 13 is effective immediately; the remaining amendments are effective for annual periods beginning on or after July 1, 2014.

Note 3:

The amendment to IFRS 5 is applied prospectively to changes in a method of disposal that occur in annual periods beginning on or after January 1, 2016; the remaining amendments are effective for annual periods beginning on or after January 1, 2016.

Note 4:

Prospectively applicable to transactions occurring in annual periods beginning on or after January 1, 2016.

- 17 -

Except for the following, the initial application of the above new standards and interpretations have not had any material impact on the Company’s consolidated financial statements:

IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers, and will supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations.

When applying IFRS 15, an entity shall recognize revenue by applying the following steps:

•

Identify the contract with the customer;

•

Identify the performance obligations in the contract;

•

Determine the transaction price;

•

Allocate the transaction price to the performance obligations in the contracts; and

•

Recognize revenue when the entity satisfies a performance obligation.

When IFRS 15 is effective, the Company may elect to apply this Standard either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Standard recognized at the date of initial application.

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

6.	CASH AND CASH EQUIVALENTS


	June 30, 2015		December 31, 2014		June 30, 2014
Cash
Cash on hand	$	317,378	$	310,189	$	302,808
Bank deposits		6,604,583		5,588,970		6,495,599

		6,921,961		5,899,159		6,798,407

Cash equivalents
Commercial paper		21,828,344		13,999,986		12,887,906
Negotiable certificate of deposit with maturities of less than three months		4,500,000		3,100,000		8,062,195
Time deposits with maturities of less than three months		1,034,214		560,458		392,835

		27,362,558		17,660,444		21,342,936

	$	34,284,519	$	23,559,603	$	28,141,343

- 18 -

The annual yield rates of bank deposits, commercial paper, negotiable certificate of deposit, and time deposits with maturities of less than three months were as follows:


	June 30, 2015	December 31, 2014	June 30, 2014
Bank deposits	0.00%-0.95%	0.00%-0.95%	0.00%-0.39%
Commercial paper	0.53%-0.61%	0.58%-0.65%	0.56%-0.63%
Negotiable certificate of deposit with maturities of less than three months	0.48%-0.58%	0.50%-0.80%	0.60%-1.35%
Time deposits with maturities of less than three months	0.50%-5.30%	0.38%-5.45%	0.30%-5.55%

7.	FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS


	June 30, 2015		December 31, 2014		June 30, 2014
Financial assets held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	1,216	$	1,163	$	—

Financial liabilities held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	2,218	$	21	$	456

Outstanding forward exchange contracts as of balance sheet dates were as follows:

Contract Amount

Currency

Maturity Period

(In Thousands)

June 30, 2015

Forward exchange contracts—buy

NT$

/US$

2015.07

NT$

352,693/US$11,399

NT$

/EUR

2015.09

NT$

188,444/EUR5,387

December 31, 2014

Forward exchange contracts—buy

NT$

/US$

2015.01

NT$

218,993/US$6,948

June 30, 2014

Forward exchange contracts—buy

NT$

/US$

2014.07

NT$

122,962/US$4,100

The Company entered into 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 and were classified as financial assets or financial liabilities held for trading.

- 19 -

8.	AVAILABLE-FOR-SALE FINANCIAL ASSETS


	June 30, 2015		December 31, 2014		June 30, 2014
Equity securities
Domestic and foreign listed stocks	$	3,554,836	$	3,914,212	$	2,802,406

Current	$	—	$	—	$	—
Noncurrent		3,554,836		3,914,212		2,802,406

	$	3,554,836	$	3,914,212	$	2,802,406

CHI evaluated and concluded its available-for-sale financial assets were partially impaired, and recorded an impairment loss of $25,910 thousand for the six months ended June 30, 2015.

9.	HELD-TO-MATURITY FINANCIAL ASSETS


	June 30, 2015		December 31, 2014		June 30, 2014
Corporate bonds	$	6,552,612	$	6,533,527	$	8,930,702
Bank debentures		150,000		950,742		1,251,868

	$	6,702,612	$	7,484,269	$	10,182,570

Current	$	2,903,450	$	3,456,747	$	4,467,343
Noncurrent		3,799,162		4,027,522		5,715,227

	$	6,702,612	$	7,484,269	$	10,182,570

The related information of corporate bonds and bank debentures as of balance sheet dates were as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Corporate bonds
Par value	$	6,540,000	$	6,515,000	$	8,902,500

Nominal interest rate		1.18%-2.49%		1.15%-2.49%		1.15%-2.49%
Effective interest rate		0.60%-1.58%		1.15%-1.58%		1.00%-1.65%
Average expiry date		4 years		4 years		4 years
Bank debentures
Par value	$	150,000	$	950,000	$	1,250,000

Nominal interest rate		1.25%		1.25%-1.60%		1.25%-1.60%
Effective interest rate		1.25%		1.15%-1.40%		1.15%-1.40%
Average expiry date		5 years		4 years		4 years

- 20 -

10.

TRADE NOTES AND ACCOUNTS RECEIVABLE, NET


	June 30, 2015			December 31, 2014			June 30, 2014
Trade notes and accounts receivable	$	28,684,835		$	27,277,401		$	24,602,153
Less: Allowance doubtful accounts		(1,133,026	)		(1,049,402	)		(991,756	)

	$	27,551,809		$	26,227,999		$	23,610,397

The average credit terms range from 30 to 90 days. In determining the recoverability of trade notes and accounts receivable, the Company considers significant change in the credit quality of the trade notes and accounts receivable from the date credit was initially granted up to the end of the reporting period. In general, with few exceptional cases, it is unlikely for the notes and accounts receivable due longer than 180 days to be collected, therefore the Company recognized 100% allowance of notes and accounts receivable overdue longer than 180 days. For the notes and accounts receivable less than 180 days, the allowance for doubtful accounts was estimated based on the Company’s historical recovery experience.

The Company serves a large consumer base; therefore, the concentration of credit risk is limited.

The aging analysis for trade notes and accounts receivable as of balance sheet dates were as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Non-overdue	$	26,984,627	$	26,102,669	$	23,359,827
Less than 30 days		960,556		680,131		636,394
31-60 days		271,928		171,167		270,892
61-90 days		98,768		90,564		131,547
91-120 days		191,285		75,839		87,396
121-180 days		117,320		63,966		57,086
More than 181 days		60,351		93,065		59,011

	$	28,684,835	$	27,277,401	$	24,602,153

The above aging analysis was based on days overdue.

The aging of estimated recoverable amounts of receivables that were past due but not impaired as of balance sheet dates were as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Less than 30 days	$	347,008	$	114,155	$	120,659
31-60 days		89,314		20,282		14,133
61-90 days		6,355		19,656		19,511
91-120 days		53,854		19,084		13,866
121-180 days		12,658		634		913
More than 181 days		24,452		16,768		19,510

	$	533,641	$	190,579	$	188,592

The above aging analysis was based on days overdue.

- 21 -

Movements of the allowance for doubtful accounts were as follows:


	Individually Assessed for Impairment		Collectively Assessed for Impairment			Total
Balance on January 1, 2014	$	221,164	$	700,938		$	922,102
Add: Provision for doubtful accounts		35,793		104,735			140,528
Deduct: Amounts written off		—		(70,874	)		(70,874	)

Balance on June 30, 2014	$	256,957	$	734,799		$	991,756

Balance on January 1, 2015	$	276,659	$	772,743		$	1,049,402
Add: Provision for doubtful accounts		10,962		162,574			173,536
Deduct: Amounts written off		—		(89,912	)		(89,912	)

Balance on June 30, 2015	$	287,621	$	845,405		$	1,133,026

11.

INVENTORIES


	June 30, 2015		December 31, 2014		June 30, 2014
Merchandise	$	3,744,099	$	4,163,434	$	5,044,476
Project in process		819,638		821,644		1,028,685
Work in process		39,807		13,307		16,451
Raw materials		63,177		52,165		54,829

		4,666,721		5,050,550		6,144,441
Land held under development		1,998,733		1,998,733		1,998,733
Construction in progress		47,377		47,226		46,509
Land held for development		—		—		3,916

	$	6,712,831	$	7,096,509	$	8,193,599

The operating costs related to inventories were $11,967,166 thousand (including the valuation loss on inventories of $37,970 thousand) and $24,999,182 thousand (including the valuation loss on inventories of $91,356 thousand) for the three months and six months ended June 30, 2015, respectively. The operating costs related to inventories were $10,347,161 thousand (including the valuation loss on inventories of $90,836 thousand) and $21,596,618 thousand (including the valuation loss on inventories of $247,684 thousand) for the three months and six months ended June 30, 2014, respectively.

As of June 30, 2015, December 31, 2014 and June 30, 2014, inventories of $2,046,110 thousand, $2,061,297 thousand and $2,068,471 thousand, respectively, were expected to be recovered after more than twelve months. The aforementioned amount of inventories is mainly related to property development owned by LED.

Land held under development and construction in progress on June 30, 2015, December 31, 2014 and June 30, 2014, was for Qingshan Sec., Dayuan Township, Taoyuan County project.

- 22 -

12.

PREPAYMENTS


	June 30, 2015		December 31, 2014		June 30, 2014
Prepaid rents	$	3,248,086	$	3,330,118	$	3,282,462
Prepaid salary and bonus		3,160,214		4,746		3,278,767
Others		2,867,593		2,613,932		2,443,189

	$	9,275,893	$	5,948,796	$	9,004,418

Current
Prepaid salary and bonus	$	3,160,214	$	4,746	$	3,278,767
Prepaid rents		1,123,722		1,104,778		1,156,915
Others		1,507,636		1,334,934		1,159,133

	$	5,791,572	$	2,444,458	$	5,594,815

Noncurrent
Prepaid rents	$	2,124,364	$	2,225,340	$	2,125,547
Others		1,359,957		1,278,998		1,284,056

	$	3,484,321	$	3,504,338	$	3,409,603

13.

OTHER CURRENT MONETARY ASSETS


	June 30, 2015		December 31, 2014		June 30, 2014
Time deposits and negotiable certificate of deposit with maturities of more than three months	$	13,509,629	$	2,616,192	$	2,511,093
Receivables from the Fund for Privatization of Government—owned Enterprises under the Executive Yuan (Note 28)		28,396		19,527		1,339,107
Others		1,341,501		689,635		1,333,091

	$	14,879,526	$	3,325,354	$	5,183,291

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


	June 30, 2015	December 31, 2014	June 30, 2014
Time deposits and negotiable certificate of deposit with maturities of more than three months	0.11%-3.30%	0.11%-4.95%	0.11%-3.20%

- 23 -

14.

FINANCIAL ASSETS CARRIED AT COST


	June 30, 2015		December 31, 2014		June 30, 2014
Non-listed stocks
Domestic	$	2,116,029	$	2,105,235	$	2,165,244
Foreign		270,899		261,295		247,263

	$	2,386,928	$	2,366,530	$	2,412,507

The above non-listed stocks are classified as available-for-sale financial assets based on financial assets categories (see Note 38). Since the range of fair values measurement is significant and difficult to reasonably evaluate the possibilities of the estimations, the fair values of the investments cannot be reliably measured, thus the above non-listed stocks investments owned by the Company were carried at costs less any impairment losses at the balance sheet date.

The Company evaluated and concluded there was no impairment indication for its financial assets carried at cost, thus the Company did not recognize any impairment loss for the six months ended June 30, 2015.

CHI evaluated and concluded its financial assets carried at cost were partially impaired, and recorded an impairment loss of $8,347 thousand for the three months ended June 30, 2014, and $8,976 thousand for the six months ended June 30, 2014.

15.

NON-WHOLLY OWNED SUBSIDIARIES THAT HAVE NONCONTROLLING MATERIAL INTERESTS


	Place of Incorporation and Principal		Proportion of Ownership Interests and Voting Rights Held by Noncontrolling Interests
Subsidiaries	Place of Business		June 30, 2015		December 31, 2014		June 30, 2014
SENAO		Taiwan		72%		72%		72%

	Profit Allocated to Noncontrolling Interests
	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
SENAO	$	168,923	$	75,085	$	274,956	$	206,504
Individually immaterial subsidiaries with noncontrolling interests		59,880		38,247		103,215		57,033

	$	228,803	$	113,332	$	378,171	$	263,537


	Accumulated Noncontrolling Interests
	June 30, 2015		December 31, 2014		June 30, 2014
SENAO	$	4,126,743	$	4,165,910	$	3,901,726
Individually immaterial subsidiaries with noncontrolling interests		964,835		919,275		648,620

	$	5,091,578	$	5,085,185	$	4,550,346

- 24 -

Summarized financial information in respect of SENAO that has material noncontrolling interests is set out below. The summarized financial information below represents amounts before intracompany eliminations.


SENAO	June 30, 2015			December 31, 2014			June 30, 2014
Current assets	$	8,551,422		$	7,943,537		$	9,202,892
Noncurrent assets		2,369,198			2,497,896			2,426,025
Current liabilities		(5,133,052	)		(4,594,998	)		(6,121,335	)
Noncurrent liabilities		(90,931	)		(93,597	)		(90,279	)

Equity	$	5,696,637		$	5,752,838		$	5,417,303

Equity attributable to the parent	$	1,569,894		$	1,586,928		$	1,515,577
Equity attributable to noncontrolling interests		4,126,743			4,165,910			3,901,726

	$	5,696,637		$	5,752,838		$	5,417,303


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
Revenues	$	9,187,840		$	11,030,809		$	18,407,946		$	21,668,990
Expenses		8,953,698			10,926,765			18,026,672			21,382,082

Profit for the period	$	234,142		$	104,044		$	381,274		$	286,908

Profit attributable to the parent	$	65,219		$	28,959		$	106,318		$	80,404
Profit attributable to the noncontrolling interests		168,923			75,085			274,956			206,504

Profit for the period	$	234,142		$	104,044		$	381,274		$	286,908

Other comprehensive loss attributable to the parent	$	(2,607	)	$	(4,771	)	$	(5,054	)	$	(6,755	)
Other comprehensive loss attributable to the noncontrolling interests		(6,689	)		(12,399	)		(13,046	)		(17,553	)

Other comprehensive loss for the period	$	(9,296	)	$	(17,170	)	$	(18,100	)	$	(24,308	)

Total comprehensive income attributable to the parent	$	62,612		$	24,188		$	101,264		$	73,649
Total comprehensive income attributable to the noncontrolling interests		162,234			62,686			261,910			188,951

Total comprehensive income for the period	$	224,846		$	86,874		$	363,174		$	262,600

(Continued)

- 25 -


	For the Three Months Ended June 30					For the Six Months Ended June 30
	2015		2014			2015		2014
Net cash inflow (outflow) from operating activities	$	430,697	$	(640,478	)	$	638,619	$	(391,100	)
Net cash inflow (outflow) from investing activities		11,895		(52,160	)		12,035		(99,322	)
Net cash inflow from financing activities		266,207		802,713			263,697		799,857

Net cash inflow	$	708,799	$	110,075		$	914,351	$	309,345

Dividends paid to noncontrolling interest	$	278,218	$	741,929		$	278,218	$	741,929

(Concluded)

SENAO purchased its treasury stock in June 2015, and the ownership interest of SENAO increased from 28.18% to 28.32%.

CHI disposed of partial shares of CHPT in January 2015, and the ownership interest of CHPT decreased from 47.65% to 45.68%.

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


	CHPT			SENAO
Proceeds from disposal (consideration paid)	$	45,128		$	(58,079	)
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests		(18,484	)		49,298

Differences arising from equity transaction	$	26,644		$	(8,781	)

Line items for equity transaction adjustment
Capital surplus—difference between consideration received and the carrying amount of the subsidiaries’ net assets upon disposal	$	26,644		$	—

Capital surplus—movements of paid-in capital arising from changes in equities of subsidiaries	$	—		$	(8,781	)

16.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD


	June 30, 2015		December 31, 2014		June 30, 2014
Investments in associates	$	2,624,892	$	2,696,959	$	2,238,178
Joint ventures		238,028		256,666		267,843

	$	2,862,920	$	2,953,625	$	2,506,021

- 26 -

Investments in associates

Investments in associates were as follows:


	Carrying Amount
	June 30, 2015		December 31, 2014		June 30, 2014
Listed
Senao Networks, Inc. (“SNI”)	$	718,510	$	750,918	$	636,048
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		585,525		558,379		579,064
Viettel-CHT Co., Ltd.		288,223		277,700		256,685
International Integrated System, Inc. (“IISI”)		283,554		293,809		283,740
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		215,182		237,097		62,258
Skysoft Co., Ltd. (“SKYSOFT”)		134,003		138,868		118,480
So-net Entertainment Taiwan Limited (“So-net”)		96,526		99,525		97,524
Taiwan International Ports Logistics Corporation (“TIPL”)		76,340		78,981		—
Kingwaytek Technology Co., Ltd. (“KWT”)		71,656		89,527		64,491
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)		56,661		67,352		71,696
ClickForce Co., Ltd.		41,938		39,028		—
HopeTech Technologies Limited (“HopeTech”)		32,058		31,211		27,749
Alliance Digital Tech Co., Ltd. (“ADT”)		17,346		20,290		25,350
MeWorks LIMITED (HK) (“Meworks”)		7,370		8,965		10,029
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		—		5,309		5,064
Panda Monium Company Ltd.		—		—		—

	$	2,624,892	$	2,696,959	$	2,238,178

At the end of the reporting period, the percentage of ownership and voting rights in associates held by the Company were as follows:


	% of Ownership and Voting Right
	June 30, 2015		December 31, 2014		June 30, 2014
Senao Networks, Inc. (“SNI”)		34		34		34
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		38		38		38
Viettel-CHT Co., Ltd.		30		30		30
International Integrated System, Inc. (“IISI”)		33		33		33
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		40		40		40
Skysoft Co., Ltd. (“SKYSOFT”)		30		30		30
So-net Entertainment Taiwan Limited (“So-net”)		30		30		30

(Continued)

- 27 -


	% of Ownership and Voting Right
	June 30, 2015		December 31, 2014		June 30, 2014
Taiwan International Ports Logistics Corporation (“TIPL”)		27		27		—
Kingwaytek Technology Co., Ltd. (“KWT”)		26		27		33
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)		26		26		26
ClickForce Co., Ltd.		49		49		—
HopeTech Technologies Limited (“HopeTech”)		45		45		45
Alliance Digital Tech Co., Ltd. (“ADT”)		13		13		17
MeWorks LIMITED (HK) (“MeWorks”)		20		20		20
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		—		49		49
Panda Monium Company Ltd.		43		43		43

(Concluded)

None of the above associates is considered individually material to the Company. Aggregate information of associates that are not individually material was as follows:


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015		2014
The Company’s share of the profit	$	198,252		$	224,864		$	507,528	$	401,383
The Company’s share of other comprehensive income		(426	)		(32,245	)		184		(24,641	)

The Company’s share of total comprehensive income	$	197,826		$	192,619		$	507,712	$	376,742

The fair values based on the closing market price of SNI as of the balance sheet dates were as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
SNI	$	4,534,366	$	2,868,173	$	2,926,199

Chunghwa and Taiwan International Ports Corporation, Ltd. established TIPL in October 2014. Chunghwa invested $80,000 thousand cash and held 27% ownership of TIPL. TIPL engages mainly in logistics service of increasing cargo movement efficiency.

Chunghwa did not participate in the capital increase of KWT in August and November 2014 and the ownership interest decreased from 33% to 27% after the capital increase of KWT. Chunghwa sold of its partial interest in KWT in January 2015. The gain on disposal of KWT was $7,409 thousand and the ownership interest decreased to 26% after the disposal.

Chunghwa, President Chain Store Corporation and EasyCard Corporation established DZIM in May 2011. Chunghwa participated in the capital increase of DZIM by investing $49,485 thousand in April and June 2014. SENAO participated in the capital increase of DZIM by investing $24,000 thousand in April 2014. As of June 30, 2015, the Company held 26% ownership of DZIM. DZIM engages mainly in information technology service and general advertisement service.

- 28 -

Chunghwa International Yellow Pages Co., Ltd. participated in the capital increase of ClickForce Co., Ltd. by investing $39,000 thousand and $5,607 thousand in December 2014 and June 2015, respectively. CHYP held 49% ownership in December 2014. ClickForce Co., Ltd. engages mainly in advertisement services.

Chunghwa, Taiwan Mobile Corporation, Asia Pacific Telecom, Vibo Telecom, EasyCard Corporation and Far EasTone Telecommunications established an associate, ADT, in November 2013. Chunghwa invested $30,000 thousand cash and held 19% ownership of ADT. Based on the share of capital commitments, Chunghwa has one seat out of five seats in the board of directors; therefore it has significant influence over ADT. Chunghwa did not participate in the capital increase of ADT in April 2014 and the ownership interest decreased to 13% after the capital increase of ADT. Chunghwa still has one seat out of five seats in the board of directors; therefore it remains an investor with significant influence over ADT. ADT engages mainly in the development of mobile payments and information processing service.

Prime Asia participated in the capital increase of MeWorks by investing $10,000 thousand and held 20% ownership in May 2014. Based on the share of capital commitments, Prime Asia has two seats out of five seats in the board of directors; therefore it has significant influence over MeWorks. MeWorks engages mainly in investment business.

Sertec was liquidated in May 2015. CHI recognized the gain on disposal of Sertec of $649 thousand, and received the proceeds from disposal in July 2015.

The Company’s share of profit (loss) and other comprehensive income (loss) of investees was recorded based on the reviewed financial statements for the three months and six months ended June 30, 2015 and 2014.

Investments in joint ventures

Investments in joint ventures were as follows:


	Carrying Amount						% of Ownership and Voting Rights
	June 30, 2015		December 31, 2014		June 30, 2014		June 30, 2015		December 31, 2014		June 30, 2014
Non-listed
Huada Digital Corporation (“HDD”)	$	212,104	$	218,825	$	222,582		50		50		50
Chunghwa Benefit One Co., Ltd. (“CBO”)		25,924		37,841		45,261		50		50		50

	$	238,028	$	256,666	$	267,843

Chunghwa invested in CBO in February 2014 at $50,000 thousand cash to acquire 50% of its shares and the rest of 50% ownership interest was held by Benefit One Asia Pte, Ltd. (“BOA”), and each obtained half of director seats. Thus, neither Chunghwa nor BOA obtained control over CBO. CBO engages mainly in e-commerce business for employees of corporate members.

Summarized financial information of joint ventures that was not material to the Company was as follows:


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
The Company’s share of the loss	$	(9,888	)	$	(5,248	)	$	(18,638	)	$	(9,661	)

- 29 -

The Company’s share of profits of the joint ventures was recorded based on the reviewed financial statements for the three months and six months ended June 30, 2015 and 2014.

17.

PROPERTY, PLANT AND EQUIPMENT


	Land		Land Improvements			Buildings			Computer Equipment			Telecommuni- cations Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Advances Related to Acquisition of Equipment			Total
Cost
Balance on January 1, 2014	$	102,263,330	$	1,546,906		$	67,557,865		$	15,995,696		$	683,118,379		$	3,745,148		$	8,415,325		$	22,852,887		$	905,495,536
Additions		—		—			860			13,136			84,757			932			91,645			11,744,017			11,935,347
Disposal		—		(9,645	)		(10,787	)		(1,230,855	)		(10,326,300	)		(30,890	)		(268,055	)		—			(11,876,532	)
Effect of foreign exchange differences		—		—			—			(1,296	)		3,434			16			(4,686	)		—			(2,532	)
Other		408,400		4,314			134,137			256,267			14,329,754			51,405			201,745			(15,371,162	)		14,860

Balance on June 30, 2014	$	102,671,730	$	1,541,575		$	67,682,075		$	15,032,948		$	687,210,024		$	3,766,611		$	8,435,974		$	19,225,742		$	905,566,679

Accumulated depreciation and impairment
Balance on January 1, 2014	$	—	$	(1,104,400	)	$	(21,971,843	)	$	(11,600,999	)	$	(560,313,927	)	$	(1,671,798	)	$	(6,118,453	)	$	—		$	(602,781,420	)
Depreciation Expenses		—		(26,797	)		(624,013	)		(727,827	)		(14,003,235	)		(296,157	)		(419,278	)		—			(16,097,307	)
Disposal		—		9,645			9,491			1,227,433			10,320,406			30,837			255,407			—			11,853,219
Effect of foreign exchange differences		—		—			—			576			215			(4	)		2,250			—			3,037
Other		—		(11	)		(8,975	)		(6,486	)		(13,134	)		(6,551	)		24,199			—			(10,958	)

Balance on June 30, 2014	$	—	$	(1,121,563	)	$	(22,595,340	)	$	(11,107,303	)	$	(564,009,675	)	$	(1,943,673	)	$	(6,255,875	)	$	—		$	(607,033,429	)

Balance on January 1, 2014, net	$	102,263,330	$	442,506		$	45,586,022		$	4,394,697		$	122,804,452		$	2,073,350		$	2,296,872		$	22,852,887		$	302,714,116

Balance on June 30, 2014, net	$	102,671,730	$	420,012		$	45,086,735		$	3,925,645		$	123,200,349		$	1,822,938		$	2,180,099		$	19,225,742		$	298,533,250

(Continued)

- 30 -


	Land		Land Improvements			Buildings			Computer Equipment			Telecommuni- cations Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Advances Related to Acquisition of Equipment			Total
Cost
Balance on January 1, 2015	$	102,773,786	$	1,557,544		$	67,600,416		$	15,318,187		$	695,075,672		$	3,824,783		$	8,643,904		$	20,929,731		$	915,724,023
Additions		—		—			9,261			8,051			27,335			—			67,556			7,942,848			8,055,051
Disposal		—		—			—			(414,509	)		(7,045,085	)		(32,930	)		(186,881	)		—			(7,679,405	)
Effect of foreign exchange differences		—		—			—			(1,106	)		(43,681	)		(47	)		(3,557	)		—			(48,391	)
Other		11,514		3,085			83,796			130,198			12,088,431			1,491			71,771			(12,408,099	)		(17,813	)

Balance on June 30, 2015	$	102,785,300	$	1,560,629		$	67,693,473		$	15,040,821		$	700,102,672		$	3,793,297		$	8,592,793		$	16,464,480		$	916,033,465

Accumulated depreciation and impairment
Balance on January 1, 2015	$	—	$	(1,145,434	)	$	(23,202,169	)	$	(11,307,939	)	$	(568,767,123	)	$	(2,207,400	)	$	(6,443,615	)	$	—		$	(613,073,680	)
Depreciation Expenses		—		(26,866	)		(629,098	)		(741,223	)		(13,361,068	)		(302,573	)		(344,876	)		—			(15,405,704	)
Disposal		—		—			—			410,441			7,034,988			32,885			156,043			—			7,634,357
Effect of foreign exchange differences		—		—			—			673			7,810			39			1,808			—			10,330
Other		—		2			7,686			(437	)		(48,508	)		(6,663	)		(1,463	)		—			(49,383	)

Balance on June 30, 2015	$	—	$	(1,172,298	)	$	(23,823,581	)	$	(11,638,485	)	$	(575,133,901	)	$	(2,483,712	)	$	(6,632,103	)	$	—		$	(620,884,080	)

Balance on January 1, 2015, net	$	102,773,786	$	412,110		$	44,398,247		$	4,010,248		$	126,308,549		$	1,617,383		$	2,200,289		$	20,929,731		$	302,650,343

Balance on June 30, 2015, net	$	102,785,300	$	388,331		$	43,869,892		$	3,402,336		$	124,968,771		$	1,309,585		$	1,960,690		$	16,464,480		$	295,149,385

(Concluded)

- 31 -

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


Land improvement			8-30 years
Buildings
Main building			35-60 years
Other building facilities			2-20 years
Computer equipment			2-8 years
Telecommunications equipment
Telecommunication circuits			2-30 years
Telecommunication machinery and antennas equipment			2-30 years
Transportation equipment			3-10 years
Miscellaneous equipment
Leasehold improvements			2-6 years
Mechanical and air conditioner equipment			3-16 years
Others			3-10 years

18.

INVESTMENT PROPERTIES


Cost
Balance on January 1 and June 30, 2014	$	9,260,015

Accumulated depreciation and impairment
Balance on January 1, 2014	$	(1,241,984	)
Depreciation expense		(8,284	)

Balance on June 30, 2014	$	(1,250,268	)

Balance on January 1, 2014, net	$	8,018,031

Balance on June 30, 2014, net	$	8,009,747

Cost
Balance on January 1, 2015	$	8,883,051
Reclassification		54,103

Balance on June 30, 2015	$	8,937,154

Accumulated depreciation and impairment
Balance on January 1, 2015	$	(1,262,197	)
Depreciation expense		(8,960	)
Reclassification		(155	)

Balance on June 30, 2015	$	(1,271,312	)

Balance on January 1, 2015, net	$	7,620,854

Balance on June 30, 2015, net	$	7,665,842

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


Land improvements			8-30 years
Buildings
Main buildings			35-60 years
Other building facilities			4-10 years

The fair value of the Company’s investment properties as of December 31, 2014 and 2013 was determined by Level 3 fair value measurements inputs based on the appraisal reports conducted by independent appraisers. The Company used the above mentioned appraisal reports as the basis to determine the fair value as of June 30, 2015 and 2014 because there was no material change in the economic environment and the market transaction price. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

- 32 -


	June 30, 2015		December 31, 2014		June 30, 2014
Fair value	$	17,257,051	$	17,179,780	$	17,501,195

Overall capital interest rate		1.54%-2.36%		1.54%-2.36%		1.46%-2.20%
Profit margin ratio		10%-20%		10%-20%		12%-20%
Discount rate		1.36%		1.36%		1.36%
Capitalization rate		0.44%-1.65%		0.44%-1.65%		0.68%-2.02%

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

19.

INTANGIBLE ASSETS


	3G and 4G Concession			Computer Software			Goodwill			Others			Total
Cost
Balance on January 1, 2014	$	49,254,000		$	2,637,454		$	180,631		$	117,887		$	52,189,972
Additions-acquired separately		—			148,673			—			490			149,163
Disposal		—			(24,046	)		—			(9	)		(24,055	)
Effect of foreign exchange difference		—			19			—			—			19

Balance on June 30, 2014	$	49,254,000		$	2,762,100		$	180,631		$	118,368		$	52,315,099

Accumulated amortization and impairment
Balance on January 1, 2014	$	(6,435,956	)	$	(1,306,473	)	$	(18,055	)	$	(30,600	)	$	(7,791,084	)
Amortization expenses		(511,933	)		(269,117	)		—			(3,650	)		(784,700	)
Disposal		—			24,046			—			9			24,055
Effect of foreign exchange difference		—			10			—			—			10

Balance on June 30, 2014	$	(6,947,889	)	$	(1,551,534	)	$	(18,055	)	$	(34,241	)	$	(8,551,719	)

Balance on January 1, 2014, net	$	42,818,044		$	1,330,981		$	162,576		$	87,287		$	44,398,888

Balance on June 30, 2014, net	$	42,306,111		$	1,210,566		$	162,576		$	84,127		$	43,763,380

Cost
Balance on January 1, 2015	$	49,254,000		$	3,192,652		$	180,631		$	150,565		$	52,777,848
Additions-acquired separately		—			125,877			—			716			126,593
Disposal		—			(308,770	)		—			—			(308,770	)
Effect of foreign exchange difference		—			(352	)		—			—			(352	)

Balance on June 30, 2015	$	49,254,000		$	3,009,407		$	180,631		$	151,281		$	52,595,319

Accumulated amortization and impairment
Balance on January 1, 2015	$	(8,103,833	)	$	(1,793,470	)	$	(18,055	)	$	(37,864	)	$	(9,953,222	)
Amortization expenses		(1,251,983	)		(283,792	)		—			(3,655	)		(1,539,430	)
Disposal		—			308,750			—			—			308,750
Effect of foreign exchange difference		—			284			—			—			284

Balance on June 30, 2015	$	(9,355,816	)	$	(1,768,228	)	$	(18,055	)	$	(41,519	)	$	(11,183,618	)

Balance on January 1, 2015, net	$	41,150,167		$	1,399,182		$	162,576		$	112,701		$	42,824,626

Balance on June 30, 2015, net	$	39,898,184		$	1,241,179		$	162,576		$	109,762		$	41,411,701

- 33 -

The concessions are granted and issued by the NCC. The concession fees are amortized using the straight-line method from the date operations commence through the date the license expires. The carrying amount of 3G concession fee will be fully amortized by December 2018, and 4G concession fee will be fully amortized by December 2030.

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 3 to 20 years. Goodwill is not amortized.

20.

OTHER ASSETS


	June 30, 2015		December 31, 2014		June 30, 2014
Refundable deposits	$	2,371,254	$	2,738,789	$	2,435,920
Spare parts		2,222,508		2,977,585		4,785,489
Other financial assets		1,000,000		1,000,000		1,000,000
Others		2,152,122		2,104,761		2,257,490

	$	7,745,884	$	8,821,135	$	10,478,899

Current
Spare parts	$	2,222,508	$	2,977,585	$	4,785,489
Others		271,357		241,814		481,316

	$	2,493,865	$	3,219,399	$	5,266,805

Noncurrent
Refundable deposits	$	2,371,254	$	2,738,789	$	2,435,920
Other financial assets		1,000,000		1,000,000		1,000,000
Others		1,880,765		1,862,947		1,776,174

	$	5,252,019	$	5,601,736	$	5,212,094

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

21.

HEDGING DERIVATIVE INSTRUMENTS


	June 30, 2015		December 31, 2014		June 30, 2014
Hedge on derivative financial asset
Cash flow hedge—forward exchange contracts	$	—	$	—	$	24

Hedge on derivative financial liabilities
Cash flow hedge—forward exchange contracts	$	—	$	283	$	287

The Company’s hedge strategy is to enter forward exchange contracts—buy to avoid its foreign currency exposure to certain foreign currency denominated 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.

- 34 -

The Company signed equipment purchase contracts with suppliers, and entered into foreign exchange forward contracts to avoid foreign currency risk exposure to Euro-denominated purchase commitments. Those foreign exchange forward contracts were designated as cash flow hedges. For the three months and six months ended June 30, 2015, gain arising from changes in fair value of the hedged items recognized in other comprehensive income was nil, and $283 thousand, respectively. For the three months and six months ended June 30, 2014, loss arising from changes in fair value of the hedged items recognized in other comprehensive income was $263 thousand, and $263 thousand, respectively. Upon the completion of the purchase transaction, the amount deferred and recognized in equity initially will be reclassified into equipment as its carrying value.

The outstanding foreign exchange forward contracts at the balance sheet dates were as follows:

Contract Amount

Currency

Maturity Period

(Thousands)

December 31, 2014

Forward exchange contracts—buy

EUR/NT$

2015.03

EUR2,341/NT$

90,509

June 30, 2014

Forward exchange contracts—buy

EUR/NT$

2014.09

EUR2,795/NT$

114,027

2014.09

EUR1,573/NT$

64,172

The Company did not have any outstanding forward exchange contracts applied to hedge accounting for the six months ended June 30, 2015.

Losses arising from the hedging derivative instruments that have been reclassified from equity to initial cost of the property, plant and equipment were as follows:


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Construction in progress and advances related to acquisition of equipment	$	—	$	3,554	$	6,638	$	3,554

22.

SHORT-TERM LOANS


	June 30, 2015		December 31, 2014		June 30, 2014
Unsecured loans	$	860,000	$	564,400	$	1,085,000

Annual interest rate		1.20%-2.40%		1.25%-2.40%		1.18%-2.40%

23.

LONG-TERM LOANS (INCLUDING LONG-TERM LOANS—CURRENT PORTION)


	June 30, 2015			December 31, 2014		June 30, 2014
Secured loans (Note 40)	$	1,800,000		$	1,900,000	$	2,048,000
Less: Current portion of long-term loans		(2,564	)		—		(300,000	)

	$	1,797,436		$	1,900,000	$	1,748,000

- 35 -

The annual interest rates of loans were as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Secured loans		1.14%-1.50%		1.13%-2.35%		1.13%-2.10%

LED obtained a secured loan from Chang Hwa Bank in September 2010. Interest is paid monthly. $300,000 thousand and $1,350,000 thousand were originally due in December 2014 and September 2015, respectively. In October 2014, the bank borrowing mentioned above was extended to September 2018 for one time repayment. LED has made an early repayment of $50,000 thousand in April 2015. LED obtained another secured loan from Chang Hwa Bank in December 2012 in the amount of $400,000 thousand which will be due in December 2017; LED has made an early repayment of $350,000 thousand and $50,000 thousand in 2013 and January 2015, respectively.

CHPT entered into a secured loan contract of $348,000 thousand with Bank of Taiwan in April 2014, interest will be paid monthly, amortization of principle will begin in June 2016, and the contract will expire in April 2029. The Company made early repayment of $148,000 thousand from September to December 2014.

24.

TRADE NOTES AND ACCOUNTS PAYABLE


	June 30, 2015		December 31, 2014		June 30, 2014
Trade notes and accounts payable	$	15,318,154	$	18,518,977	$	12,386,753

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

25.

OTHER PAYABLES


	June 30, 2015		December 31, 2014		June 30, 2014
Accrued salary and compensation	$	5,928,006	$	9,122,156	$	6,376,014
Accrued remuneration to employees, bonus to employee and remuneration to directors and supervisors		2,642,405		1,679,756		1,763,026
Amounts collected for others		1,151,659		1,330,695		1,360,376
Accrued maintenance costs		926,516		867,708		1,083,976
Payables to contrators		780,418		2,628,892		1,507,144
Accrued franchise fees		709,202		1,585,174		948,234
Payables to equipment suppliers		685,049		1,181,777		1,934,174
Amounts of cash distributed from additional paid-in capital		—		—		16,577,663
Others		7,358,552		5,938,834		7,311,622

	$	20,181,807	$	24,334,992	$	38,862,229

- 36 -

26.

PROVISIONS


	June 30, 2015		December 31, 2014		June 30, 2014
Warranties	$	238,393	$	211,633	$	184,329
Employee benefits		59,380		55,569		50,998
Others		4,832		4,832		4,512

	$	302,605	$	272,034	$	239,839

Current	$	253,430	$	179,374	$	118,904
Noncurrent		49,175		92,660		120,935

	$	302,605	$	272,034	$	239,839


	Warranties			Employee Benefits		Others			Total
Balance on January 1, 2014	$	201,494		$	47,265	$	4,046		$	252,805
Additional provisions recognized		63,755			3,733		470			67,958
Used during the period		(80,615	)		—		(4	)		(80,619	)
Reversed during the period		(305	)		—		—			(305	)

Balance on June 30, 2014	$	184,329		$	50,998	$	4,512		$	239,839

Balance on January 1, 2015	$	211,633		$	55,569	$	4,832		$	272,034
Additional provisions recognized		112,933			3,811		—			116,744
Used during the period		(86,173	)		—		—			(86,173	)

Balance on June 30, 2015	$	238,393		$	59,380	$	4,832		$	302,605

The provision for warranties 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.

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

27.

ADVANCE RECEIPTS

Advance receipts are mainly from advance telecommunication charges. In accordance with NCC’s regulation named “Mandatory and Prohibitory Provisions to Be Included in Standard Contracts for Telecommunication Goods (Services) Coupons”, the Company entered into a contract with Bank of Taiwan to provide a performance guarantee for advance receipts from selling prepaid cards, as of June 30, 2015 amounting to $1,204,605 thousand.

- 37 -

28.

RETIREMENT BENEFIT PLANS

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, Chunghwa and its domestic subsidiaries make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. Its foreign subsidiaries would make monthly contributions based on the local pension requirements.

Defined benefit plans

Chunghwa completed privatization plans on August 12, 2005. Chunghwa 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 Chunghwa should be transferred to the Fund for Privatization of Government-owned Enterprises (the “Privatization Fund”) under the Executive Yuan. On August 7, 2006, Chunghwa transferred the remaining balance of fund to the Privatization Fund. However, according to the instructions of MOTC, Chunghwa 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.

Chunghwa and the following subsidiaries SENAO, CHIEF, CHSI, and SHE are regulated by the pension act under the Labor Standards Law, which are considered as defined benefit plans. The pension plans provide benefits based on an employee’s length of service and average six-month salary prior to retirement. Chunghwa and its subsidiaries contribute 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.

The amount included in the consolidated balance sheet arising from the Company’s obligation in respect of its defined benefit plans was as follows:


	December 31, 2014 (Adjusted)
Present value of funded defined benefit obligation	$	27,958,086
Fair value of plan assets		(21,496,222	)

Funded status	$	6,461,864

Net defined benefit liabilities	$	6,469,890
Net defined benefit assets (included in other noncurrent assets—others)		(8,026	)

	$	6,461,864

- 38 -

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


	Present value of Funded Defined Benefit Obligation			Fair Value of Plan Assets			Accrued Pension Liabilities
Balance on January 1, 2014	$	25,458,306		$	19,981,837		$	5,476,469

Service cost
Current service cost		2,919,397			—			2,919,397
Loss recognized from settlements		75,668			—			75,668
Net interest expense/income		509,518			416,079			93,439

Components of defined benefit costs recognized in profit or loss		3,504,583			416,079			3,088,504

Remeasurement on the net defined benefit liability:
Return on plan assets		—			52,441			(52,441	)
Actuarial losses recognized from changes in demographic assumptions		4,138			—			4,138
Actuarial gains recognized from changes in financial assumptions		(5,216	)		—			(5,216	)
Actuarial losses recognized from experience adjustments		545,877			—			545,877

Components of defined benefit costs recognized in other comprehensive income		544,799			52,441			492,358

Contributions from employer		—			2,486,497			(2,486,497	)
Benefits paid		(455,421	)		(455,421	)		—
Settlements		(993,911	)		(985,211	)		(8,700	)
Benefits paid directly by the Company		(100,270	)		—			(100,270	)

Balance on December 31, 2014	$	27,958,086		$	21,496,222		$	6,461,864

Relevant pension costs for defined benefit plans for the three months and the six months ended June 30, 2015 and 2014 were as follows:


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Operating costs	$	448,163	$	451,654	$	897,053	$	902,974
Marketing expenses		214,383		217,943		426,710		436,165
General and administrative expenses		40,496		41,152		82,051		82,566
Research and development expenses		25,448		26,073		51,089		52,149

	$	728,490	$	736,822	$	1,456,903	$	1,473,854

- 39 -

The Company is exposed to following risks under the Labor Standards Law:

Investment risk

Under the Labor Standards Law, the rate of return on assets shall not be less 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 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.

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.

Salary risk

The calculation of the present value of defined benefit obligation is referred to the plan member’s future salary. Hence, the increase in plan member’s 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, 2014
Discount rates		2.00%
Expected rates of salary increase		1.00%-2.00%

The average duration of the benefit obligation at December 31, 2014 is from 8 to 14 years.

The Company’s maturity analysis of the benefit payments was as follows:


Year	Amount
2015	$	1,395,390
2016		2,365,944
2017		3,751,245
2018		5,145,180
2019 and thereafter		36,387,643

	$	49,045,402

- 40 -

29.

EQUITY

Share capital

Common stock


	June 30, 2015		December 31, 2014		June 30, 2014
Number of authorized shares (thousand)		12,000,000		12,000,000		12,000,000

Authorized shares	$	120,000,000	$	120,000,000	$	120,000,000

Number of shares issued and collected proceeds (thousand)		7,757,447		7,757,447		7,757,447

Issued shares	$	77,574,465	$	77,574,465	$	77,574,465

The issued common stock of a par value at $10 per share entitled the right to vote and receive dividends.

Global depositary receipts

For the purpose of privatizing Chunghwa, the MOTC sold 1,109,750 thousand common shares of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) amounting to 110,975 thousand units (one ADS represents 10 common shares) on the New York Stock Exchange on July 17, 2003. Afterwards, the MOTC sold 1,350,682 thousand common shares in the form of ADS amounting to 135,068 thousand units on August 10, 2005. Subsequently, the MOTC and Taiwan Mobile Co., Ltd. sold 505,389 thousand and 58,959 thousand common shares of Chunghwa, respectively, in the form of ADS totally amounting to 56,435 thousand units on September 29, 2006. The MOTC and Taiwan Mobile Co., Ltd. have sold 3,024,780 thousand common shares in the form of ADS amounting to 302,478 thousand units. As of June 30, 2015, the outstanding ADSs were 264,105 thousand common shares, which equaled 26,410 thousand units and represented 3.40 % of Chunghwa’s total outstanding common shares.

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 can, through deposit agents:

Exercise their voting rights,

Sell their ADSs, and

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

Additional paid-in capital

The adjustment of additional paid-in capital for the six months ended June 30, 2015 and 2014 were as follows:


	Share Premium			Movements of Paid-in Capital for Associates and Joint Ventures Accounted for Using Equity Method			Movements of Paid-in Capital Arising from Changes in Equities of Subsidiaries		Difference between Consideration Received and the Carrying Amount of the Subsidiaries’ Net Assets upon Disposal		Donated Capital		Stockholders’ Contribution Due to Privatization		Total
Balance on January 1, 2014	$	163,907,049		$	41,396		$	10,372	$	—	$	13,170	$	20,648,078	$	184,620,065
Cash distributed from additional paid-in capital		(16,577,663	)		—			—		—		—		—		(16,577,663	)
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—			(1,681	)		—		—		—		—		(1,681	)

Balance on June 30, 2014	$	147,329,386		$	39,715		$	10,372	$	—	$	13,170	$	20,648,078	$	168,040,721

(Continued)

- 41 -


	Share Premium		Movements of Paid-in Capital for Associates and Joint Ventures Accounted for Using Equity Method			Movements of Paid-in Capital Arising from Changes in Equities of Subsidiaries			Difference between Consideration Received and the Carrying Amount of the Subsidiaries’ Net Assets upon Disposal		Donated Capital		Stockholders’ Contribution Due to Privatization		Total
Balance on January 1, 2015	$	147,329,386	$	43,648		$	13,653		$	—	$	13,170	$	20,648,078	$	168,047,935
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method		—		(908	)		—			—		—		—		(908	)
Actual disposal of interests in subsidiaries		—		—			—			26,644		—		—		26,644
Subsidiary purchased its treasury stock		—		—			(8,781	)		—		—		—		(8,781	)

Balance on June 30, 2015	$	147,329,386	$	42,740		$	4,872		$	26,644	$	13,170	$	20,648,078	$	168,064,890

(Concluded)

Additional paid-in capital may only be utilized to offset deficits. However, the 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 distributed in cash or capitalized when a company has no deficit, which however is limited to a certain percentage of Chunghwa’s paid-in capital.

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. Change in additional paid-in capital from associates and joint ventures accounted for using equity method may not be used for any purpose.

Retained earnings and dividends policy

Before distributing a dividend or making any other distribution to stockholders, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income, except when the accumulated amount of such legal reserve equals to the Company’s total authorized capital, and depending on its business needs or requirements, may also set aside or reverse special reserves. In accordance with Chunghwa’s Articles of Incorporation, no less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors as remuneration; and (c) 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 shares.

According to the revised Company Act in May 2015, dividend and bonus distribution are limited to stockholder, and are not applicable to employees. Based on the above regulation, Chunghwa plans to revise the Article of Incorporation during the 2016 stockholder’s meeting. Information on the employee remuneration, employee bonus, and remuneration for the directors and supervisors for the six months ended June 30, 2015, and 2014, and the actual distribution for 2014, and 2013, please refer to note 31.a.7 employee benefit expenses.

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 Chunghwa. This reserve can only be used to offset a deficit, or, when the legal reserve has exceeded 25% of the Chunghwa’s paid-in capital, the excess may be transferred to capital or distributed in cash.

- 42 -

Except for non-ROC resident shareholders, all shareholders receiving the dividends are entitled a tax credit equal to their proportionate share of the income tax paid by the Chunghwa.

The appropriations of the 2014 earnings of Chunghwa have been approved by the stockholders’ meeting on June 26, 2015 and the appropriations of the 2013 earnings of Chunghwa approved by the stockholders’ meeting on June 24, 2014 were as follows:


	Appropriation of Earnings					Dividends Per Share (NT$)
	For Fiscal Year 2014			For Fiscal Year 2013		For Fiscal Year 2014		For Fiscal Year 2013
Legal reserve	$	680,743		$	2,074,342
Special reserve		(144,005	)		144,005
Cash dividends		37,673,263			18,525,558	$	4.86	$	2.39

In addition, the stockholders of Chunghwa resolved to distribute cash of $2.14 per share and the total amount of $16,577,663 thousand from additional paid-in capital on June 24, 2014.

Information of the appropriation of Chunghwa’s earnings approved by the board of directors and stockholders is available on the Market Observation Post System website.

Other equity items

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.

Unrealized gain (loss) on available-for-sale financial assets


	For the Six Months Ended June 30
	2015			2014
Beginning balance	$	739,988		$	(149,747	)
Unrealized gain (loss) on available-for-sale financial assets		(358,993	)		(191,088	)
Income tax relating to unrealized gain (loss) on available- for-sale financial assets		(3,393	)		1,675
Amount reclassified from equity to profit or loss on disposal		—			(34,958	)
Amount reclassified from equity to profit or loss on impairment		23,060			—

Ending balance	$	400,662		$	(374,118	)

- 43 -

Noncontrolling interests


	For the Six Months Ended June 30
	2015			2014
Beginning balance	$	5,085,185		$	5,058,086
Shares attributed to noncontrolling interests
Cash dividends distributed by subsidiaries		(354,400	)		(796,789	)
Net income of current period		378,171			263,537
Exchange differences arising from the translation of the net investment in foreign operations		(14,037	)		(17,581	)
Unrealized gain (loss) on available-for-sale financial assets		2,467			(7,759	)
Income tax relating to unrealized gain (loss) on available- for-sale financial assets		(419	)		207
Share in other comprehensive income (loss) of associates accounted for using equity method		(1,530	)		—
Changes in additional paid-in capital from investments in associates accounted for using equity method		(2,007	)		(2,486	)
Compensation cost of employee stock options of a subsidiary		28,962			53,131
Actual disposal of interests in subsidiaries		18,484			—
Subsidiary purchased its treasury stock		(49,298	)		—

Ending balance	$	5,091,578		$	4,550,346

30.

REVENUES

The main source of revenue of the Company includes various telecommunications services in many different streams, and the related information were as discussed in Note 44.

31.

NET INCOME AND OTHER COMPREHENSIVE INCOME (LOSS)

Net income

Other income and expenses


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
Loss on disposal of property, plant and equipment	$	(14,662	)	$	(10,995	)	$	(43,762	)	$	(19,505	)
Loss on disposal of intangible assets		—			—			(20	)		—

	$	(14,662	)	$	(10,995	)	$	(43,782	)	$	(19,505	)

- 44 -

Other income


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Dividend income	$	218,172	$	76,998	$	218,172	$	76,998
Income from Piping Fund		—		—		200,000		200,000
Rental income		11,199		11,467		21,016		22,386
Others		41,336		53,877		84,203		96,025

	$	270,707	$	142,342	$	523,391	$	395,409

Other gains and losses


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
Gain (loss) on disposal of financial instruments, net	$	—		$	28,715		$	(240	)	$	44,377
Net foreign currency exchange gains (losses)		(59,196	)		29,946			107,935			2,293
Gain on disposal of associates		649			—			8,058			—
Impairment losses on financial assets carried at cost		—			(8,347	)		—			(8,976	)
Impairment losses on available-for-sale financial assets		—			—			(25,910	)		—
Valuation gain (loss) on financial assets and liabilities at fair value through profit or loss, net		(714	)		257			(1,002	)		(456	)
Others		(135,251	)		(25,917	)		(157,095	)		(43,606	)

	$	(194,512	)	$	24,654		$	(68,254	)	$	(6,368	)

Impairment loss on financial instruments


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Notes and accounts receivables	$	311	$	91,870	$	173,536	$	140,528

Other receivables	$	9,384	$	5,208	$	16,423	$	7,842

Available-for-sale financial assets	$	—	$	—	$	25,910	$	—

Financial assets carried at cost	$	—	$	8,347	$	—	$	8,976

- 45 -

Impairment loss on non-financial assets


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Inventories	$	37,970	$	90,836	$	91,356	$	247,684

Depreciation and amortization expenses


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Property, plant and equipment	$	7,626,646	$	8,057,544	$	15,405,704	$	16,097,307
Investment property		4,480		4,142		8,960		8,284
Intangible assets		769,135		461,204		1,539,430		784,700

Total depreciation and amortization expenses	$	8,400,261	$	8,522,890	$	16,954,094	$	16,890,291

Depreciation expenses summarized by functions
Operating costs	$	7,106,763	$	7,500,664	$	14,356,459	$	14,990,841
Operating expenses		524,363		561,022		1,058,205		1,114,750

	$	7,631,126	$	8,061,686	$	15,414,664	$	16,105,591

Amortization expenses summarized by functions
Operating costs	$	685,640	$	386,009	$	1,372,132	$	635,312
Operating expenses		83,495		75,195		167,298		149,388

	$	769,135	$	461,204	$	1,539,430	$	784,700

Employee benefit expenses


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Post-employment benefit
Defined contribution plans	$	119,921	$	117,508	$	238,259	$	212,248
Defined benefit plans		728,490		736,822		1,456,903		1,473,854

		848,411		854,330		1,695,162		1,686,102

Share-based payment
Equity-settled share-based payment		14,481		26,565		28,962		53,131

(Continued)

- 46 -


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Other employee benefit
Salaries	$	6,429,917	$	6,424,846	$	12,687,614	$	12,608,131
Insurance		656,945		661,512		1,309,599		1,281,477
Others		3,893,542		3,873,675		7,573,553		7,261,576

		10,980,404		10,960,033		21,570,766		21,151,184

Total employee benefit expenses	$	11,843,296	$	11,840,928	$	23,294,890	$	22,890,417

Summary by functions
Operating costs	$	5,928,137	$	6,761,481	$	12,520,634	$	12,770,895
Operating expenses		5,915,159		5,079,447		10,774,256		10,119,522

	$	11,843,296	$	11,840,928	$	23,294,890	$	22,890,417

(Concluded)

The revised Company Act in May 2015 regulates corporations should distribute a fixed amount or a proportional annual earning as employee remuneration. Chunghwa has not revised employee remuneration distribution policy. Hence, the employee remuneration, employee bonus, and remuneration for the directors as of June 2015 and 2014 were accrued based on past experiences and the probable amount to be paid in accordance with Chunghwa’s Articles of Incorporation and Implementation Guidance for the Employee’s Bonus Distribution of Chunghwa Telecom Co., Ltd. which are established prior to the revised Company Act mentioned above.

Material differences between such estimated amounts and the amounts proposed by the board of directors on or before the annual consolidated financial statements are authorized for issue are adjusted in the year the bonus and remuneration were recognized. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.

The appropriations of the 2014 bonuses to employees and remuneration to directors of Chunghwa have been approved by the stockholder’s meeting on June 26, 2015 and the appropriations of the 2013 bonuses to employees and remuneration to directors of Chunghwa approved by the stockholders’ meeting on June 24, 2014 were as follows:


	2014		2013
	Cash Bonus		Cash Bonus
Bonus distributed to the employees	$	1,510,068	$	758,627
Remuneration paid to the directors		39,223		19,304

There was no difference between the initial accrual amounts and the amounts resolved in shareholders’ meeting on June 26, 2015 and June 24, 2014 of the aforementioned bonuses to employees and the remuneration to directors.

Information of the appropriation of Chunghwa’s employees bonuses and remuneration to directors and approved by the board of directors and stockholders is available on the Market Observation Post System website.

- 47 -

Components of other comprehensive income


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
Unrealized gain (loss) on available-for-sale financial assets
Arising during the current period	$	(761,656	)	$	52,724		$	(359,376	)	$	(191,581	)
Reclassification adjustments
Upon disposal		—			(26,562	)		—			(42,224	)
Upon impairment		—			—			25,910			—

	$	(761,656	)	$	26,162		$	(333,466	)	$	(233,805	)

Cash flow hedges
Losses arising during the current period	$	—		$	(3,817	)	$	(6,355	)	$	(3,817	)
Adjusted against the carrying amount of hedged items		—			3,554			6,638			3,554

	$	—		$	(263	)	$	283		$	(263	)

32.

INCOME TAX

Income tax recognized in profit or loss

The major components of income tax expense are as follows:


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
Current tax
Current tax expenses recognized for the current period	$	2,236,882		$	2,115,165		$	4,313,463		$	4,271,917
Tax on unappropriated earnings		21,627			29,530			21,627			29,530
Income tax adjustments on prior years		(11,964	)		(453	)		(84,374	)		(453	)
Others		610			1,886			740			7,524

		2,247,155			2,146,128			4,251,456			4,308,518
Deferred tax
Deferred tax expenses recognized for the current period		(59,889	)		(54,366	)		(108,925	)		(260,908	)

Income tax recognised in profit or loss	$	2,187,266		$	2,091,762		$	4,142,531		$	4,047,610

- 48 -

Income tax recognized in other comprehensive income


	For the Three Months Ended June 30					For the Six Months Ended June 30
	2015		2014			2015		2014
Deferred tax expense (benefit)
Unrealized gain/loss on available-for-sale financial assets	$	484	$	(846	)	$	3,812	$	(1,882	)

The related information under the Integrated Income Tax System is as follows:

Unappropriated earnings information

All Chunghwa’s earnings generated prior to June 30, 1988 have been appropriated.

Imputation credit account


	June 30, 2015		December 31, 2014		June 30, 2014
Balance of Imputation Credit Account (“ICA”)	$	11,432,417	$	8,269,010	$	7,748,948

The creditable ratios for distribution of earnings of 2014 and 2013 were 20.48%, respectively.

Effective from January 1, 2015, the creditable ratio for individual shareholders residing in the Republic of China is half of the original creditable ratio according to the revised Article 66-6 of the Income Tax Law.

Income tax examinations

Chunghwa and the following subsidiaries income tax returns have been examined by the tax authorities through 2012: SENAO, CHIEF, and CHSI. SHE, CEI, CHPT, CHI, CHYP, CHST, Unigate, LED, SFD and HHR’s income tax returns have been examined by the tax authorities through 2013.

33.

EARNINGS PER SHARE

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

Net Income


	For the Three Months Ended June 30						For the Six Months Ended June 30
	2015			2014			2015			2014
Net income used to compute the basic earnings per share
Net income attributable to the parent	$	11,133,809		$	10,582,138		$	21,552,234		$	20,816,703
Assumed conversion of all dilutive potential common stock
Employee stock options, bonus and remunerations of subsidiaries		(88	)		(224	)		(174	)		(823	)

Net income used to compute the diluted earnings per share	$	11,133,721		$	10,581,914		$	21,552,060		$	20,815,880

- 49 -

Weighted Average Number of Common Stock


	(Thousand Shares)
	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Weighted average number of common stock used to compute the basic earnings per share		7,757,447		7,757,447		7,757,447		7,757,447
Assumed conversion of all dilutive potential common stock
Employee bonus or employee remuneration		18,385		9,950		21,181		12,084

Weighted average number of common stock used to compute the diluted earnings per share		7,775,832		7,767,397		7,778,628		7,769,531

If Chunghwa may settle the employee bonus or employee remuneration in shares or cash, Chunghwa shall presume that it will be settled in shares and takes 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 stockholders or the board of directors approve the number of shares to be distributed to employees in their meeting in the following year.

34.

SHARE-BASED PAYMENT ARRANGEMENT

SENAO share-based compensation plans (“SENAO Plans”) described as follows:

Effective Date for

Plan Registration

Resolution
Date by
SENAO’s
Board of
Directors

Stock
Options
Units
(Thousand)

Exercise Price

(NT$)

2012.05.28

2013.04.29

10,000

$84.30

(Original price $93.00)

Each option is eligible to subscribe for one common share when exercisable. Under the terms of SENAO Plans, the options are granted at an exercise price equal to the closing price of the SENAO’s common shares listed on the TSE on the higher of closing price or par value. The SENAO Plans have exercise price adjustment formula upon the issuance of new common shares, capitalization of retained earnings and/or capital reserves, stock split as well as distribution of cash dividends, except (i) in the case of issuance of new shares in connection with mergers and in the case of cancellation of outstanding shares in connection with capital reduction, and (ii) except if the exercise price after adjustment exceeds the exercise price before adjustment. The options of all the Plans are valid for six years and the graded vesting schedule is that 50% of option granted will vest two years after the grant date and another two tranches of 25%, each will vest three and four years after the grant date respectively.

Stock options granted on May 7, 2013 applied IFRS 2. The recognized compensation cost was $28,962 thousand and $53,131 thousand for the six months ended June 30, 2015 and 2014, respectively.

SENAO modified the plan terms of the outstanding stock options in July 2014 for 2013 Plan, the exercise price changed from $89.40 to $84.30 per share. The modification did not cause any incremental fair value.

- 50 -

Information about SENAO’s outstanding stock options for the six months ended June 30, 2015 and 2014 were as follows:


	For the Six Months Ended June 30
	2015					2014
	Granted on May 7, 2013					Granted on May 7, 2013
	Number of Options (Thousand)			Weighted- average Exercise Price (NT$)		Number of Options (Thousand)			Weighted- average Exercise Price (NT$)
Employee stock options
Balance on January 1		9,027		$	84.30		9,872		$	89.40
Options exercised		—			—		—			—
Options forfeited		(592	)		—		(602	)		—

Balance on June 30		8,435			84.30		9,270			84.30

Options exercisable at end of the period		4,218			84.30		—			—

As of June 30, 2015, information about employee stock options outstanding are as follows:


	Options Outstanding						Options Exercisable
Range of Exercise Price (NT$)	Number of Options (Thousand)		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options (Thousand)		Weighted Average Exercise Price (NT$)
$84.30		8,435		3.85	$	84.30		4,218	$	84.30

As of June 30, 2014, information about employee stock options outstanding are as follows:


	Options Outstanding						Options Exercisable
Range of Exercise Price (NT$)	Number of Options (Thousand)		Weighted- average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options (Thousand)		Weighted Average Exercise Price (NT$)
$84.30		9,270		4.85	$	84.30		—	$	—

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


	Stock Options Granted as of May 7, 2013
Dividends yield		—
Risk-free interest rate		0.91	%
Expected life		4.375 years
Expected volatility		36.22	%
Weighted-average fair value of grants (NT$)	$	28.72

- 51 -

35.

NON-CASH TRANSACTIONS

For the six months ended June 30, 2015 and 2014, the Company entered into the following non-cash investing activities:


	For the Six Months Ended June 30
	2015		2014
Increase in property, plant and equipment	$	8,055,051	$	11,935,347
Other payables		2,265,340		1,154,574

	$	10,320,391	$	13,089,921

36.

OPERATING LEASE ARRANGEMENTS

The Company as lessee

Except for the ST-2 satellite referred in Note 39 to the consolidated financial statement, the Company entered into several lease agreements for base stations located all over in Taiwan. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Within one year	$	2,860,990	$	3,050,119	$	3,061,611
Longer than one year but within five years		5,761,701		5,807,675		6,467,826
Longer than five years		1,334,333		1,513,894		1,619,127

	$	9,957,024	$	10,371,688	$	11,148,564

The Company as lessor

The Company leases out some land and buildings. The future aggregate minimum lease collection under non-cancellable operating leases are as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Within one year	$	384,347	$	410,921	$	439,383
Longer than one year but within five years		549,066		524,697		630,478
Longer than five years		406,300		395,675		174,474

	$	1,339,713	$	1,331,293	$	1,244,335

37.

CAPITAL MANAGEMENT

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

- 52 -

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

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 treasury stock, proceeds from new debt or repayment of debt.

38.

FINANCIAL INSTRUMENTS

Fair Value Information

The fair value guidance requires disclosure that 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).

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

Except for what disclosed in the following table, the Company considers that their carrying amounts approximate their fair values or the fair values cannot be reliable estimated:

June 30, 2015


	Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
Held-to-maturity financial assets
Corporate bonds	$	6,552,612	$	—	$	6,573,187	$	—
Bank debentures		150,000		—		150,000		—

	$	6,702,612	$	—	$	6,723,187	$	—

December 31, 2014


	Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
Held-to-maturity financial assets
Corporate bonds	$	6,533,527	$	—	$	6,564,145	$	—
Bank debentures		950,742		—		951,385		—

	$	7,484,269	$	—	$	7,515,530	$	—

- 53 -

June 30, 2014


	Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3
Held-to-maturity financial assets
Corporate bonds	$	8,930,702	$	—	$	8,973,057	$	—
Bank debentures		1,251,868		—		1,254,628		—

	$	10,182,570	$	—	$	10,227,685	$	—

The Level 2 fair value are estimated using discounted cash flow model. The model uses market-based observable inputs including duration, yield rate and credit rating.

Financial instruments measured at fair value

June 30, 2015


	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	1,216	$	—	$	1,216

Available-for-sale financial assets
Domestic and foreign listed securities
Equity investments	$	3,554,836	$	—	$	—	$	3,554,836

Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	2,218	$	—	$	2,218

December 31, 2014


	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	1,163	$	—	$	1,163

Available-for-sale financial assets
Domestic and foreign listed securities
Equity investments	$	3,914,212	$	—	$	—	$	3,914,212

Hedging derivative financial liabilities
Derivative financial liabilities	$	—	$	283	$	—	$	283

Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	21	$	—	$	21

- 54 -

June 30, 2014


	Level 1		Level 2		Level 3		Total
Hedging derivative financial assets
Derivative financial assets	$	—	$	24	$	—	$	24

Available-for-sale financial assets
Domestic and foreign listed securities
Equity investments	$	2,802,406	$	—	$	—	$	2,802,406

Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	456	$	—	$	456

Hedging derivative financial liabilities
Derivative financial liabilities	$	—	$	287	$	—	$	287

There were no transfers between Levels 1 and 2 for the six months ended June 30, 2015 and 2014.

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

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

For derivative financial assets and liabilities forward exchange contracts, fair values are estimated using discounted cash flow model. The model uses market-based observable inputs including foreign exchange rates, and forward and spot prices for currencies to project fair value.

Categories of Financial Instruments


	June 30, 2015		December 31, 2014		June 30, 2014
Financial assets
Measured at FVTPL
Held for trading	$	1,216	$	1,163	$	—
Hedging derivatives financial assets		—		—		24
Held-to-maturity financial assets		6,702,612		7,484,269		10,182,570
Loans and receivables (Note a)		80,108,746		56,932,753		60,440,631
Available-for-sale financial assets (Note b)		5,941,764		6,280,742		5,214,913
Financial liabilities
Measured at FVTPL
Held for trading		2,218		21		456
Hedging derivatives financial liabilities		—		283		287
Measured at amortized cost (Note c)		72,349,372		39,681,969		70,183,026

- 55 -

Note a:

The balances included cash and cash equivalents, trade notes and accounts receivable, accounts receivable from related parties, other current monetary assets, other financial assets and refundable deposits (classified as other assets) which were loans and receivables.

Note b:

The balances included financial assets carried at cost which were classified as available-for-sale financial assets.

Note c:

The balances included short-term loans, trade notes and accounts payable, payables to related parties, dividend payables, partial other payables, customer’s deposits and long-term loans which were financial liabilities carried at amortized cost.

Financial Risk Management Objectives

The main financial instruments of the Company include equity and debt investments, accounts receivable, accounts payables and loans. 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 and interest 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.

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.

Foreign currency risk

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting periods are as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Assets
USD	$	6,317,087	$	5,308,244	$	4,537,837
EUR		18,637		16,579		19,212
SGD		7,786		77,349		16,612
RMB		227,868		112,158		19,660
JPY		181,863		2,783		3,313

(Continued)

- 56 -


	June 30, 2015		December 31, 2014		June 30, 2014
Liabilities
USD	$	6,581,257	$	5,365,620	$	4,202,074
EUR		556,634		766,955		1,244,222
SGD		2,294		1,976		585
JPY		9,854		5,555		7,183

(Concluded)

The carrying amount of the Company’s derivatives with exchange rate risk exposures at the end of the reporting periods are as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Assets
USD	$	1,216	$	1,163	$	—
EUR		—		—		24
Liabilities
USD		329		21		456
EUR		1,889		283		287

Foreign currency sensitivity analysis

The Company is mainly exposed to the fluctuations of the currencies 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 change 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.


	For the Six Months Ended June 30
	2015			2014
Profit or loss
Monetary assets and liabilities (a)
USD	$	(13,209	)	$	16,788
EUR		(26,900	)		(61,251	)
SGD		275			801
RMB		11,393			983
JPY		8,600			(194	)
Derivatives (b)
USD		17,588			6,122
EUR		(9,281	)		—
Equity
Derivatives (c)
EUR		—			(218	)

This is mainly attributable to the exposure to foreign currency denominated receivables and payables of the Company outstanding at the end of the reporting period.

- 57 -

This is mainly attributable to the forward exchange contracts.

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 a comparable impact on the pre-tax profit or equity, and the balances above would be negative.

Interest rate risk

The carrying amount of the Company’s exposures to interest rates on financial assets and financial liabilities are as follows:


	June 30, 2015		December 31, 2014		June 30, 2014
Fair value interest rate risk
Financial assets	$	42,097,596	$	21,270,570	$	24,325,923
Financial liabilities		860,000		564,400		990,000
Cash flow interest rate risk
Financial assets		5,343,645		4,625,384		5,554,651
Financial liabilities		1,800,000		1,900,000		2,143,000

Interest rate sensitivity analysis

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

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s profit before tax for the six months ended June 30, 2015 would increase/decrease by $8,859 thousand. This is mainly attributable to the Company’s exposure to floating rates on its financial assets and short-term and long-term loans.

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s profit before tax for the six months ended June 30, 2014 would increase/decrease by $8,529 thousand. This is mainly attributable to the Company’s exposure to floating rates on its financial assets and short-term and long-term loans.

Other price risks

The Company is exposed to equity price risks arising from equity investments. 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.

- 58 -

If equity prices of listed equity securities had been 5% higher/lower:

Other comprehensive income would increase/decrease by $177,742 thousand and $140,120 thousand as a result of the changes in fair value of available-for-sale financial assets for the six months ended June 30, 2015 and 2014, respectively.

Credit risk management

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 consolidated balance sheet as of the balance sheet date.

The Company serves a large consumer base, and the concentration of credit risk was limited.

Liquidity risk management

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

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 have 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
June 30, 2015
Non-derivative financial liabilities
Non-interest bearing		—	$	34,614,754	$	38,027,663	$	962,649	$	4,654,717	$	—	$	78,259,783
Floating interest rate instruments		1.18		—		—		2,564		1,652,564		144,872		1,800,000
Fixed interest rate instruments		1.27		800,000		30,000		30,000		—		—		860,000

			$	35,414,754	$	38,057,663	$	995,213	$	6,307,281	$	144,872	$	80,919,783

December 31, 2014
Non-derivative financial liabilities
Non-interest bearing		—	$	41,582,178	$	—	$	1,679,756	$	4,757,547	$	—	$	48,019,481
Floating interest rate instruments		1.22		—		—		—		1,755,128		144,872		1,900,000
Fixed interest rate instruments		1.37		—		500,000		64,400		—		—		564,400

			$	41,582,178	$	500,000	$	1,744,156	$	6,512,675	$	144,872	$	50,483,881

June 30, 2014
Non-derivative financial liabilities
Non-interest bearing		—	$	35,311,055	$	35,103,221	$	—	$	4,774,790	$	—	$	75,189,066
Floating interest rate instruments		1.23		10,000		85,000		300,000		1,748,000		—		2,143,000
Fixed interest rate instruments		1.35		115,000		865,000		10,000		—		—		990,000

			$	35,436,055	$	36,053,221	$	310,000	$	6,522,790	$	—	$	78,322,066

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

- 59 -


	Less Than 1 Month			1-3 Months			3 Months to 1 Year		1-5 Years		Total
June 30, 2015
Gross settled
Forward exchange contracts
Inflow	$	353,580		$	186,591		$	—	$	—	$	540,171
Outflow		352,693			188,480			—		—		541,173

	$	887		$	(1,889	)	$	—	$	—	$	(1,002	)

December 31, 2014
Gross settled
Forward exchange contracts
Inflow	$	220,135		$	90,226		$	—	$	—	$	310,361
Outflow		218,993			90,509			—		—		309,502

	$	1,142		$	(283	)	$	—	$	—	$	859

June 30, 2014
Gross settled
Forward exchange contracts
Inflow	$	122,506		$	177,936		$	—	$	—	$	300,442
Outflow		122,962			178,199			—		—		301,161

	$	(456	)	$	(263	)	$	—	$	—	$	(719	)

Financing facilities


	June 30, 2015		December 31, 2014		June 30, 2014
Unsecured bank loan facility
Amount used	$	860,000	$	564,400	$	1,085,000
Amount unused		43,989,280		35,314,880		29,524,280

	$	44,849,280	$	35,879,280	$	30,609,280

Secured bank loan facility
Amount used	$	1,800,000	$	1,900,000	$	2,048,000
Amount unused		748,000		818,000		600,000

	$	2,548,000	$	2,718,000	$	2,648,000

- 60 -

39.

RELATED PARTIES TRANSACTIONS

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

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


Company		Relationship
Taiwan International Standard Electronics Co., Ltd.		Associate

So-net Entertainment Taiwan Co., Ltd.		Associate

Skysoft Co., Ltd.		Associate

KingWaytek Technology Co., Ltd.		Associate

Dian Zuan Integrating Marketing Co., Ltd.		Associate

Viettel-CHT Co., Ltd.		Associate

Taiwan International Ports Logistics Corporation		Associate

Huada Digital Corporation		Joint ventures

Chunghwa Benefit One Co., Ltd.		Joint ventures

International Integrated System, Inc.		Associate

Senao Networks, Inc.		Associate

HopeTech Technologies Limited		Associate

ST-2 Satellite Ventures Pte., Ltd.		Associate

Xiamen Sertec Business Technology Co., Ltd.		Associate

ClickForce Co., Ltd.		Associate

Other related parties

Chunghwa Telecom Foundation		A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds

Senao Technical and Cultural Foundation		A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds

Sochamp Technology Co., Ltd.		Investor of significant influence over CHST

E-Life Mall Co., Ltd.		One of the directors of E-Life Mall and a director of SENAO are members of an immediate family

United Daily News Co., Ltd.		Investor of significant influence over SFD

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 related parties are disclosed below:

Operating transactions


	Revenues
	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Associates	$	80,837	$	84,045	$	142,999	$	168,154

Joint ventures	$	2,061	$	1,747	$	3,822	$	3,243

Others	$	19,479	$	17,034	$	48,243	$	32,592

- 61 -


	Purchases
	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Associates	$	303,649	$	346,048	$	582,821	$	731,264

Joint ventures	$	238	$	—	$	397	$	—

Others	$	4,471	$	16,581	$	53,913	$	69,638

Non-operating transactions


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Associates	$	8,996	$	16,974	$	18,476	$	16,974

Receivables


	June 30, 2015		December 31, 2014		June 30, 2014
Associates	$	13,606	$	61,964	$	55,905
Joint ventures		177		80		574
Others		7,855		18,964		13,201

	$	21,638	$	81,008	$	69,680

Payables


	June 30, 2015		December 31, 2014		June 30, 2014
Associates	$	417,881	$	402,372	$	586,692
Joint ventures		9,486		12		36,263
Others		4,475		5,581		16,781

	$	431,842	$	407,965	$	639,736

Customers’ deposits


	June 30, 2015		December 31, 2014		June 30, 2014
Associates	$	6,609	$	9,419	$	6,048
Others		—		247		—

	$	6,609	$	9,666	$	6,048

- 62 -

Acquisition of property, plant and equipment


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Associates	$	158,723	$	279,964	$	158,723	$	450,750
Joint ventures		8,572		—		8,572		—

	$	167,295	$	279,964	$	167,295	$	450,750

The above amount is mainly attributable to telecommunications equipment bought from TISE and HDD.

Prepayments

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 (SGD260,723 thousand), including a prepayment of $3,067,711 thousand, 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 total rental expense for the three months ended June 30, 2015 was $100,639 thousand, which consisted of an offsetting credit of the prepayment of $51,099 thousand and an additional accrual of $49,540 thousand. The total rental expense for the six months ended June 30, 2015 was $199,540 thousand, which consisted of an offsetting credit of the prepayment of $102,199 thousand and an additional accrual of $97,341 thousand. The prepayment was $2,265,414 thousand (classified as prepaid rents-current $204,399 thousand, and prepaid rents—noncurrent $2,061,015 thousand) as of June 30, 2015.

Compensation of key management personnel

The remuneration of directors and members of key management personnel for the three months and six months ended June 30, 2015 and 2014 were as follows:


	For the Three Months Ended June 30				For the Six Months Ended June 30
	2015		2014		2015		2014
Short-term benefits	$	42,735	$	52,237	$	113,899	$	125,989
Post-employment benefits		2,327		2,158		4,468		4,258
Share-based payment		1,332		2,444		2,664		4,888

	$	46,394	$	56,839	$	121,031	$	135,135

The remuneration of directors and key executives is determined by the compensation committee having regard to the performance of individual and market trends.

- 63 -

40.

PLEDGED ASSETS

The following assets are pledged as collaterals for long-term loans and contract deposits and the custom duties of the imported materials.


	June 30, 2015		December 31, 2014		June 30, 2014
Property, plant and equipment, net	$	3,065,223	$	3,079,179	$	3,093,786
Land held under development (included in inventories)		1,998,733		1,998,733		1,998,733
Restricted assets (included in other assets—others)		1,041		1,041		1,041

	$	5,064,997	$	5,078,953	$	5,093,560

41.

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

At the balance sheet date, the Company’s remaining commitments under non-cancelable contracts with various parties, excluding those disclosed in other notes, were as follows:

Acquisitions of land and buildings of $1,717,678 thousand.

Acquisitions of telecommunications equipment of $19,740,608 thousand.

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

42.

EXCHANGE RATE INFORMATION OF FOREIGN FINANCIAL ASSETS AND LIABILITIES

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


	June 30, 2015
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	6,240		30.86	$	192,568
EUR		443		34.46		15,276
SGD		272		22.96		6,255
RMB		45,821		4.97		227,868
JPY		713,562		0.252		179,818

(Continued)

- 64 -


	June 30, 2015
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Accounts receivable
USD	$	198,461		30.86	$	6,124,519
EUR		98		34.46		3,361
SGD		67		22.96		1,531
JPY		8,115		0.252		2,045
Non-monetary items
Investments accounted for using equity method
USD		1,032		30.86		32,058
SGD		25,502		22.96		585,525
Financial liabilities
Monetary items
Accounts payable
USD		213,262		30.86		6,581,257
EUR		16,153		34.46		556,634
SGD		100		22.96		2,294
JPY		39,102		0.252		9,854

(Concluded)


	December 31, 2014
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	5,076		31.65	$	160,666
EUR		344		38.47		13,221
SGD		3,175		23.94		76,019
RMB		22,035		5.09		112,158
JPY		1,571		0.265		416
Accounts receivable
USD		162,641		31.65		5,147,578
EUR		87		38.47		3,358
SGD		56		23.94		1,330
JPY		8,933		0.265		2,367
Non-monetary items
Investments accounted for using equity method
USD		986		31.65		31,211
SGD		23,324		23.94		558,379

(Continued)

- 65 -


	December 31, 2014
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial liabilities
Monetary items
Accounts payable
USD	$	169,530		31.65	$	5,365,620
EUR		19,936		38.47		766,955
SGD		83		23.94		1,976
JPY		20,963		0.265		5,555

(Concluded)


	June 30, 2014
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	9,167		29.87	$	273,764
EUR		394		40.78		16,081
SGD		646		23.93		15,455
RMB		4,087		4.81		19,660
JPY		7,342		0.295		2,166
Accounts receivable
USD		142,778		29.87		4,264,073
EUR		77		40.78		3,131
SGD		48		23.93		1,157
JPY		3,887		0.295		1,147
Non-monetary items
Investments accounted for using equity method
USD		929		29.87		27,749
SGD		24,198		23.93		579,064
Financial liabilities
Monetary items
Accounts payable
USD		140,702		29.87		4,202,074
EUR		30,511		40.78		1,244,222
SGD		24		23.93		585
JPY		24,348		0.295		7,183

The unrealized foreign currency exchange gains and losses were loss of $78,057 thousand and gain of $20,106 thousand for the three months ended June 30, 2015 and 2014, respectively. The unrealized foreign currency exchange gains were $36,316 thousand and $46,988 thousand for the six months ended June 30, 2015 and 2014, respectively. Due to the various foreign currency transaction and the functional currency of each individual entity of the Company, foreign currency exchange gains and losses on each significant foreign currency is not disclosed.

- 66 -

43.

ADDITIONAL DISCLOSURES

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

Financing provided: None.

Endorsement/guarantee provided: None.

Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): Please see Table 1.

Marketable securities acquired and disposed of at costs or prices at least $300 million or 20% of the paid-in capital: Please see Table 2.

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

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

Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 3.

Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 4.

Names, locations, and other information of investees on which the Company exercises significant influence (excluding investment in Mainland China): Please see Table 5.

Financial transactions: Please see Notes 7, 21 and 38.

Investment in Mainland China: Please see Table 6.

Intercompany relationships and significant intercompany transaction: Please see Table 7.

44.

SEGMENT INFORMATION

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

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

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

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

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

- 67 -

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

There was no material differences between the accounting policies of the operating segments and the accounting policies 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 Communi- cations Business		Mobile Communi- cations Business		Internet Business		International Fixed Communi- cations Business		Others			Total
For the three months ended June 30, 2015
Revenues
From external customers	$	17,761,244	$	28,511,931	$	6,323,423	$	3,669,165	$	654,830		$	56,920,593
Intersegment revenues		5,381,749		793,160		1,200,834		514,832		790,500			8,681,075

Segment revenues	$	23,142,993	$	29,305,091	$	7,524,257	$	4,183,997	$	1,445,330			65,601,668

Intersegment elimination													(8,681,075	)

Consolidated revenues												$	56,920,593

Segment income (loss) before income tax	$	5,887,720	$	5,173,750	$	2,404,198	$	297,373	$	(213,163	)	$	13,549,878

For the six months ended June 30, 2015
Revenues
From external customers	$	35,296,963	$	56,510,079	$	12,541,466	$	7,728,675	$	1,316,217		$	113,393,400
Intersegment revenues		10,967,140		1,769,643		2,309,002		991,921		1,539,602			17,577,308

Segment revenues	$	46,264,103	$	58,279,722	$	14,850,468	$	8,720,596	$	2,855,819			130,970,708

Intersegment elimination													(17,577,308	)

Consolidated revenues												$	113,393,400

Segment income (loss) before income tax	$	12,127,815	$	9,363,387	$	4,703,518	$	377,580	$	(499,364	)	$	26,072,936

For the three months ended June 30, 2014
Revenues
From external customers	$	17,233,714	$	27,779,522	$	6,295,404	$	3,929,697	$	545,898		$	55,784,235
Intersegment revenues		5,032,807		1,239,059		1,364,125		550,703		794,138			8,980,832

Segment revenues	$	22,266,521	$	29,018,581	$	7,659,529	$	4,480,400	$	1,340,036			64,765,067

Intersegment elimination													(8,980,832	)

Consolidated revenues												$	55,784,235

Segment income (loss) before income tax	$	4,964,296	$	5,632,115	$	2,502,879	$	140,816	$	(452,874	)	$	12,787,232

For the six months ended June 30, 2014
Revenues
From external customers	$	34,384,448	$	55,287,580	$	12,429,451	$	7,727,894	$	1,004,774		$	110,834,147
Intersegment revenues		10,065,512		2,733,810		2,560,939		1,037,470		967,512			17,365,243

Segment revenues	$	44,449,960	$	58,021,390	$	14,990,390	$	8,765,364	$	1,972,286			128,199,390

Intersegment elimination													(17,365,243	)

Consolidated revenues												$	110,834,147

Segment income (loss) before income tax	$	10,207,084	$	11,107,749	$	4,777,972	$	154,452	$	(1,119,407	)	$	25,127,850

- 68 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)


Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2015								Note
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value		Note
Chunghwa Telecom Co., Ltd.	Stocks
	Taipei Financial Center Corp.	—	Financial assets carried at cost - noncurrent		172,927	$	1,789,530		12	$	—	—
	Innovation Works Development Fund, L.P.	—	Financial assets carried at cost - noncurrent		—		212,802		4		—	—
	Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)	—	Financial assets carried at cost - noncurrent		9,461		94,608		17		—	—
	Global Mobile Corp.	—	Financial assets carried at cost - noncurrent		7,617		77,018		3		—	—
	iD Branding Ventures	—	Financial assets carried at cost - noncurrent		2,625		26,250		8		—	—
	Innovation Works Limited	—	Financial assets carried at cost - noncurrent		1,000		31,390		2		—	—
	CQi Energy Infocom Inc.	—	Financial assets carried at cost - noncurrent		2,000		—		18		—	—
	RPTI Intergroup International Ltd.	—	Financial assets carried at cost - noncurrent		4,765		—		10		—	—
	Essence Technology Solution, Inc.	—	Financial assets carried at cost - noncurrent		200		—		7		—	—
	Taiwan mobile payment Co., Ltd.	—	Financial assets carried at cost - noncurrent		1,200		12,000		2		—	—
	China Airlines Ltd.	—	Available-for-sale financial assets - noncurrent		263,622		3,466,631		5		3,466,631	Note 2

	Bond
	Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		150,083		—		150,070	Note 3
	Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		100,051		—		100,046	Note 3
	China Petroleum Corporation 1st Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		100,927		—		101,216	Note 3
	China Petroleum Corporation 1st Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		201,892		—		202,432	Note 3
	Taiwan Power Co. 2nd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		202,573		—		203,121	Note 3
	Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		203,283		—		203,533	Note 3
	China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		100,440		—		100,813	Note 3
	China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		150,778		—		151,219	Note 3

(Continued)

- 69 -


Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2015								Note
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value		Note
	FRFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—	$	100,012		—	$	100,068	Note 3
	FRFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		50,004		—		50,034	Note 3
	Taiwan Power Company 3rd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		100,014		—		100,033	Note 3
	Taiwan Power Company 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		99,996		—		100,111	Note 3
	Taiwan Power Company 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		49,998		—		50,055	Note 3
	Taiwan Power Company 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		150,013		—		150,166	Note 3
	NAN YA Company 2nd Unsecured Corporate Bond Issue in 2010	—	Held-to-maturity financial assets		—		25,012		—		25,034	Note 3
	Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		149,997		—		150,043	Note 3
	Fubon Financial Holding Co., Ltd. 3rd Unsecured Corporate Bond Issue in 2010	—	Held-to-maturity financial assets		—		1,001,404		—		1,001,336	Note 3
	China Steel Corporation 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		100,085		—		100,327	Note 3
	China Steel Corporation 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		300,496		—		300,980	Note 3
	FRFC 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		149,930		—		149,999	Note 3
	TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		299,921		—		301,914	Note 3
	TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		100,244		—		100,638	Note 3
	Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond Issue in 2011	—	Held-to-maturity financial assets		—		300,605		—		302,794	Note 3
	Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond Issue in 2011	—	Held-to-maturity financial assets		—		100,188		—		100,931	Note 3
	Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		74,969		—		75,345	Note 3
	Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		199,942		—		200,672	Note 3
	Chinese Petroleum Corporation 2nd unsecured Corporate Bonds-A Issue in 2012	—	Held-to-maturity financial assets		—		199,911		—		200,794	Note 3
	Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,963		—		100,491	Note 3
	Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		39,986		—		40,196	Note 3

(Continued)

- 70 -


Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	June 30, 2015								Note
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value		Note
	Taiwan Power Co. 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—	$	99,961		—	$	100,655	Note 3
	TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,936		—		201,119	Note 3
	TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,968		—		100,560	Note 3
	TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		200,117		—		201,119	Note 3
	TSMC 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,917		—		201,046	Note 3
	TSMC 3rd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,909		—		201,141	Note 3
	Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		300,000		—		302,360	Note 3
	China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		150,023		—		150,332	Note 3
	China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,032		—		100,222	Note 3
	China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,032		—		100,222	Note 3
	Eximbank 19-2nd unsecured Financial Debenture	—	Held-to-maturity financial assets		—		150,000		—		150,000	Note 3
Senao International Co., Ltd	N.T.U. Innovation Incubation Corporation	—	Financial assets carried at cost - noncurrent		1,200		12,000		9		—	—
CHIEF Telecom Inc.	Stocks
	3 Link Information Service Co., Ltd.	—	Financial assets carried at cost - noncurrent		374		3,450		10		—	—
	21 Vianet Group, Inc.	—	Available-for-sale financial assets		—		—		—		—	Note 2
Chunghwa Investment Co., Ltd.	Stocks
	Tatung Technology Inc.	—	Financial assets carried at cost - noncurrent		4,571		73,964		11		—	—
	iD Branding Ventures	—	Financial assets carried at cost - noncurrent		875		8,750		3		—	—
	Uni Display Inc.	—	Financial assets carried at cost - noncurrent		500		498		—		—	—
	A2 peak Power Co., Ltd.	—	Financial assets carried at cost - noncurrent		990		—		3		—	—
	VisEra Technologies Company Ltd.	—	Financial assets carried at cost - noncurrent		649		18,175		—		—	—
	Ultra Fine Optical Technology Co., Ltd.	—	Financial assets carried at cost - noncurrent		441		—		8		—	—
	PChome Store Inc.	—	Available-for-sale financial assets - noncurrent		254		41,631		2		41,631	Note 2
	Tons Lightology Inc.	—	Available-for-sale financial assets - noncurrent		1,280		46,574		3		46,574	Note 2
Chunghwa Hsingta Co., Ltd.	Stocks
	Cotech Engineering Fuzhou Corp.	—	Financial assets carried at cost - noncurrent		—		26,707		5		—	—

(Continued)

- 71 -

Note 1:

Showing at carrying amounts with adjustments for fair value and deducted accumulated impairment loss; otherwise, showing at their original carrying amounts on amortized cost deducted the accumulated impairment loss.

Note 2:

Market value was based on the closing price of June 30, 2015.

Note 3:

Market value of was based on the average trading price on June 30, 2015.

(Concluded)

- 72 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

SIX MONTHS ENDED JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)

Company
Name

Marketable
Securities
Type and
Name

Financial
Statement
Account

Counter-
party

Nature of
Relationship

Beginning Balance

Acquisition

Disposal

Ending Balance

Shares
(Thousands/
Thousand
Units)

Amount
(Note 1)

Shares
(Thousands/
Thousand
Units)

Amount

Shares
(Thousands/
Thousand
Units)

Amount

Carrying
Value
(Note 1)

Gain
(Loss)
on
Disposal

Shares
(Thousands/
Thousand
Units)

Amount
(Note 1)

Chunghwa Telecom Co., Ltd.

Bonds

KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2012

Held-to-maturity financial assets

—

300,000

(Note 2

)

—

300,000

(Note 2

)

—

TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010

Held-to-maturity financial assets

—

600,000

(Note 2

)

—

600,000

(Note 2

)

—

Fubon Financial Holding Co., Ltd. 3rd Unsecured Corporate Bond Issue in 2010

Held-to-maturity financial assets

—

1,000,000

(Note 2

)

—

1,000,000

(Note 2

)

Note 1:

Showing at their original investing amounts without adjustments for fair values.

Note 2:

Showing at their nominal amounts.

- 73 -

TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

SIX MONTHS ENDED JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)


Company Name	Related Party	Nature of Relationship	Transaction Details							Abnormal Transaction				Notes/Accounts Payable or Receivable
Company Name	Related Party	Nature of Relationship	Purchase/Sale (Note 1)	Amount (Notes 2 and 5)		% to Total		Payment Terms		Units Price		Payment Terms		Ending Balance (Notes 3 and 5)			% to Total
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Sales	$	377,588		—		30 days		—		—	$	23,960			—
			Purchase		5,523,655		9		30-90 days		—		—		(1,363,409	)		(9	)
	Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		307,331		1		30 days		—		—		(172,925	)		(1	)
	CHIEF Telecom Inc.	Subsidiary	Sales		116,778		—		60 days		—		—		24,215			—
			Purchase		165,889		—		30 days		—		—		(42,352	)		—
	Chunghwa Telecom Global, Inc.	Subsidiary	Purchase		169,511		—		90 days		—		—		(61,251	)		—
	Honghwa International Co., Ltd.	Subsidiary	Purchase		1,545,990		3		30-60 days		—		—		(631,422	)		(4	)
	ST-2 Satellite Ventures Pte. Ltd.	Associate	Purchase		199,540		—		30 days		—		—		(48,748	)		—
	Taiwan International Standard Electronics Co., Ltd.	Associate	Purchase		208,196		—		30-90 days		—		—		(228,489	)		(1	)
	So-net Entertainment Taiwan Ltd	Associate	Sales		101,023		—		60 days		—		—		49			—
Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		5,526,813		30		30-90 days		—		—		1,374,387			67
			Purchase		217,917		1		30 days		—		—		(18,085	)		(1	)
	HopeTech Technologies Limited	Associate	Purchase		103,641		1		30 days		—		—		(17,566	)		(1	)
Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		370,757		75		30 days		—		—		172,925			70
CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		165,889		20		30 days		—		—		42,352			28
			Purchase		116,778		20		60 days		—		—		(24,215	)		(24	)
Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		169,511		52		90 days		—		—		61,251			74
Honghwa International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		1,545,990		100		30-60 days		—		—		631,422			100

Note 1:

Purchase included acquisition of services cost.

Note 2:

The differences were because Chunghwa Telecom Co., Ltd. and subsidiaries classified the amount as inventories, property, plant and equipment, intangible assets, and operating expenses.

Note 3:

Notes and accounts receivable did not include the amount as amounts collected for others and other receivables.

Note 4:

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

Note 5:

All intra-company transactions, balances, income and expenses are eliminated in full upon consolidation.

- 74 -

TABLE 4

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)


Company Name	Related Party	Nature of Relationship	Ending Balance			Turnover Rate (Note 1)		Overdue				Amounts Received in Subsequent Period		Allowance for Bad Debts
Company Name	Related Party	Nature of Relationship	Ending Balance			Turnover Rate (Note 1)		Amounts		Action Taken		Amounts Received in Subsequent Period		Allowance for Bad Debts
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	321,852 (Note 2	)		13.53	$	—		—	$	256,806	$	—
Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,853,971 (Note 2	)		7.99		—		—		300,495		—
Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		172,925 (Note 2	)		2.38		—		—		20,269		—
Honghwa International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		631,422 (Note 2	)		5.62		—		—		216,053		—

Note 1:

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

Note 2:

The amount was eliminated upon consolidation.

- 75 -

TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

SIX MONTHS ENDED JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)


Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of June 30, 2015						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2015		December 31, 2014		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value		Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products	$	1,065,813	$	1,065,813		71,773		28	$	1,613,883	$	381,274		$	103,052			Subsidiary (Note 5	)
	Light Era Development Co., Ltd.	Taiwan	Housing, office building development, rent and sale services		3,000,000		3,000,000		300,000		100		3,846,533		2,686			2,722			Subsidiary (Note 5	)
	Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		1,567,453		1,567,453		402,590		100		1,519,239		(13,076	)		(13,076	)		Subsidiary (Note 5	)
	Chunghwa Telecom Singapore Pte., Ltd.	Singapore	International telecommunications IP fictitious internet and internet transfer services		574,112		574,112		26,383		100		808,365		42,870			42,870			Subsidiary (Note 5	)
	Chunghwa System Integration Co., Ltd.	Taiwan	Providing communication and information aggregative services		838,506		838,506		60,000		100		695,935		(6,856	)		12,741			Subsidiary (Note 5	)
	CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		482,165		482,165		37,942		69		651,942		129,329			90,335			Subsidiary (Note 5	)
	Chunghwa Investment Co., Ltd.	Taiwan	Investment		639,559		639,559		68,085		89		662,274		59,134			52,629			Subsidiary (Note 5	)
	Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		385,274		385,274		1		100		265,950		(6,669	)		(6,668	)		Subsidiary (Note 5	)
	Honghwa International Co., Ltd.	Taiwan	Telecommunication constructions, telecommunication service agencies and other services		180,000		180,000		18,000		100		289,130		88,832			88,832			Subsidiary (Note 5	)
	Chunghwa International Yellow Pages Co., Ltd.	Taiwan	Yellow pages sales and advertisement services		150,000		150,000		15,000		100		176,904		10,477			10,411			Subsidiary (Note 5	)
	Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service		148,275		148,275		—		100		135,233		3,268			3,268			Subsidiary (Note 5	)
	Chunghwa Telecom Global, Inc.	United States	International data and internet services and long distance call wholesales to carriers		70,429		70,429		6,000		100		137,077		3,988			5,116			Subsidiary (Note 5	)

(Continued)

- 76 -


Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of June 30, 2015						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2015		December 31, 2014		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value		Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
	Spring House Entertainment Tech. Inc.	Taiwan	Network services, producing digital entertainment contents and broadband visual sound terrace development	$	62,209	$	62,209		10,277		56	$	104,851	$	(33,696	)	$	(18,673	)		Subsidiary (Note 5	)
	Smartfun Digital Co., Ltd.	Taiwan	Software retail		65,000		65,000		6,500		65		58,818		(3,002	)		(1,951	)		Subsidiary (Note 5	)
	Chunghwa Telecom Japan Co., Ltd.	Japan	International telecommunications IP fictitious internet and internet transfer services		17,291		17,291		1		100		32,536		3,365			3,365			Subsidiary (Note 5	)
	Chunghwa Sochamp Technology Inc.	Taiwan	License plate recognition system		20,400		20,400		2,040		51		3,503		(10,650	)		(5,890	)		Subsidiary (Note 5	)
	New Prospect Investments Holdings Ltd. (B.V.I.)	British Virgin Islands	Investment		—		—		—		100		—		—			—			Subsidiary (Notes 3 and 5	)
	International Integrated System, Inc.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		283,500		283,500		22,498		33		283,554		(11,055	)		(1,792	)		Associate
	Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327		288,327		—		30		288,223		72,382			21,725			Associate
	Taiwan International Standard Electronics Co., Ltd.	Taiwan	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000		164,000		1,760		40		215,182		833,689			339,933			Associate
	Skysoft Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025		67,025		4,438		30		134,003		53,031			16,684			Associate
	So-net Entertainment Taiwan	Taiwan	Online service and sale of computer hardware		120,008		120,008		9,429		30		96,526		(9,996	)		(2,999	)		Associate
	KingWay Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		69,013		71,770		3,405		26		71,656		(51,766	)		(13,411	)		Associate
	Taiwan International Ports Logistics Corporation	Taiwan	Import and export storage, logistic warehouse, and ocean shipping service		80,000		80,000		8,000		27		76,340		(9,202	)		(2,641	)		Associate
	Dian Zuan Integrating Marketing Co., Ltd.	Taiwan	Information technology service and general advertisement service		97,598		97,598		5,400		18		37,545		(41,091	)		(7,396	)		Associate
	Alliance Digital Tech Co., Ltd.	Taiwan	Development of mobile payments and information processing service		30,000		30,000		3,000		13		17,346		(22,087	)		(2,944	)		Associate
	Huada Digital Corporation	Taiwan	Providing software service		250,000		250,000		25,000		50		212,104		(12,098	)		(6,721	)		Joint venture
	Chunghwa Benefit One Co., Ltd.	Taiwan	E-commerce of employee benefits		50,000		50,000		5,000		50		25,924		(23,833	)		(11,917	)		Joint venture

(Continued)

- 77 -


Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of June 30, 2015						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2015		December 31, 2014		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value		Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales	$	202,758	$	202,758		16,579		34	$	718,510	$	383,854		$	130,088			Associate
	Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment		2,416,645		2,416,645		81,175		100		724,488		(195,298	)		(194,799	)		Subsidiary (Note 5	)
	Dian Zuan Integrating Marketing Co., Ltd.	Taiwan	Information technology service and general advertisement service		24,000		24,000		2,400		8		19,116		(41,091	)		(3,295	)		Associate
CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunication and internet service.		2,000		2,000		200		100		1,360		(68	)		(68	)		Subsidiary (Note 5	)
	Chief International Corp.	Samoa Islands	Investment		6,068		6,068		200		100		29,346		3,883			3,883			Subsidiary (Note 5	)
Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Investment		47,321		47,321		1,500		100		19,620		(77	)		(77	)		Subsidiary (Note 5	)
Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taiwan	International trading, general advertisement and book publishment service		10,000		10,000		—		100		10,202		159			159			Subsidiary (Note 5	)
Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite		409,061		409,061		18,102		38		585,525		37,397			37,397			Associate
Chunghwa Investment Co., Ltd.	Chunghwa Precision Test Tech Co., Ltd.	Taiwan	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		203,443		212,226		12,791		46		393,736		156,450			71,467			Subsidiary (Note 5	)
	Chunghwa Investment Holding Co., Ltd.	Brunei	Investment		46,035		46,035		1,432		100		13,872		(1,360	)		(1,360	)		Subsidiary (Note 5	)
	Panda Monium Company Ltd.	Cayman	The production of animation		20,000		20,000		602		43		—		—			—			Associate
	CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		20,000		20,000		2,000		4		31,009		129,329			4,721			Associate (Note 5	)
	Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731		49,731		1,001		—		43,912		381,274			633			Associate (Note 5	)
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation	United States	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		12,636		12,636		400		100		14,540		819			819			Subsidiary (Note 5	)
	CHPT Japan Co., Ltd.	Japan	Sale and maintenance of electronic parts and machinery processed products, and design of printed circuit board		2,008		2,008		1		100		1,675		65			65			Subsidiary (Note 5	)
	Chunghwa Precision Test Tech. International, Ltd.	Samoa Islands	Electronic materials wholesale and retail and investments		2,970		2,970		100		100		2,765		673			673			Subsidiary (Note 5	)
Prime Asia Investments Group,	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		375,274		375,274		1		100		258,577		(6,047	)		(6,047	)		Subsidiary (Note 5	)

(Continued)

- 78 -


Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of June 30, 2015						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Investor Company	Investee Company	Location	Main Businesses and Products	June 30, 2015		December 31, 2014		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value		Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
Ltd. (B.V.I.)	MeWorks Limited (HK)	Hong Kong	Investment	$	10,000	$	10,000		—		20	$	7,370	$	(3,116	)	$	(624	)		Associate
Senao International (Samoa)	Senao International HK Limited	Hong Kong	International investment		2,393,646		2,393,646		80,440		100		690,835		(196,295	)		(196,295	)		Subsidiary (Note 5	)
Holding Ltd.	HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales.		21,177		21,177		5,240		45		33,285		2,246			1,011			Associate
Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	Investment		26,035		26,035		6,520		100		3,570		(1,362	)		(1,362	)		Subsidiary (Note 5	)
Chunghwa International Yellow Pages Co., Ltd.	Click Force Marketing Company	Taiwan	Advertising services		44,607		39,000		1,078		49		41,938		(1,996	)		(2,696	)		Associate

Note 1:

The equity in net income (loss) of investees was based on reviewed financial statements.

Note 2:

The equity in net income (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.

Note 3:

New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but have not yet begun operation as of June 30, 2015.

Note 4:

Investment in mainland China is included in Table 6.

Note 5:

The amount was eliminated upon consolidation.

(Concluded)

- 79 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

SIX MONTHS ENDED JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)


Investee	Main Businesses and Products	Total Amount of Paid- in Capital		Investment Type (Note 1)		Accumulated Outflow of Investment from Taiwan as of January 1, 2015		Investment Flows				Accumulated Outflow of Investment from Taiwan as of June 30, 2015		Net Income (Loss) of the Investee			% Ownership of Direct or Indirect Investment		Investment Gain (Loss) (Note 2)			Carrying Value as of June 30, 2015		Accumulated Inward Remittance of Earnings as of June 30, 2015		Note
Investee	Main Businesses and Products	Total Amount of Paid- in Capital		Investment Type (Note 1)				Outflow		Inflow				Net Income (Loss) of the Investee			% Ownership of Direct or Indirect Investment		Investment Gain (Loss) (Note 2)			Carrying Value as of June 30, 2015				Note
Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	47,321		2	$	47,321	$	—	$	—	$	47,321	$	(77	)		100	$	(77	)	$	19,620	$	—		Note 7
Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		51,552		2		25,414		—		—		25,414		(2,779	)		49		(2,011	)		—		—		Note 4
Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		1,073,170		2		1,073,170		—		—		1,073,170		(143,909	)		100		(143,909	)		253,768		—		Note 7
Senao International Trading (Shanghai) Co., Ltd. (Note 7)	Information technology services and sale of communication products		955,838		2		955,838		—		—		955,838		(53,329	)		100		(53,329	)		267,832		—		Note 7
Senao International Trading (Shanghai) Co., Ltd. (Note 7)	Information technology services and maintenance of communication products		87,540		2		87,540		—		—		87,540		(249	)		100		(249	)		74,671		—		Note 7
Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		263,736		2		263,736		—		—		263,736		1,192			100		1,192			91,228		—		Note 7
Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176		2		177,176		—		—		177,176		(2,385	)		100		(2,385	)		77,856		—		Note 7
Jiangsu Zhenghua Information Technology Company, LLC	Intelligent energy serving and intelligent building services		189,410		2		142,057		—		—		142,057		(2,524	)		75		(1,891	)		131,830		—		Note 7
Hua-Xiong Information Technology Co., Ltd.	Intelligent system and energy saving system services in buildings		56,386		2		28,855		—		—		28,855		(3,467	)		51		(1,771	)		22,184		—		Note 7
Shanghai Taihua Electronic Technology Limited (“STET”)	Design of printed circuit board and related consultation service		2,970		2		2,970		—		—		2,970		673			100		673			2,767		—		Note 7

(Continued)

- 80 -


Investee	Accumulated Investment in Mainland China as of June 30, 2015		Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on Investment Stipulated by Investment Commission, MOEA
Glory Network System Service (Shanghai) Co., Ltd. (Note 3)	$	47,321	$	47,321	$	387,419
Xiamen Sertec Business Technology Co., Ltd. (Notes 4 and 5)		25,414		79,882		779,071
Senao and its subsidiaries (Note 6)		2,380,284		2,380,284		—
Chunghwa Telecom (China) Co., Ltd. (Note 6)		177,176		177,176		—
Jiangsu Zhenghua Information Technology Company, LLC (Note 6)		142,057		142,057		—
Hua-Xiong Information Technology Co., Ltd. (Note 6)		28,855		44,653		—
Shanghai Taihua Electronic Technology Limited (Note 5)		2,970		2,970		779,071


Note 1:		Investments were through a holding company registered in a third region.
Note 2:		Recognition of investment gains (losses) was calculated based on the investee’s reviewed financial statements.
Note 3:		The amount was calculated based on the net assets value of Chunghwa System Integration Co., Ltd.
Note 4:		Xiamen Sertec Business Technology Co., Ltd was liquidated in May 2015. Chunghwa Investment Holding Co., Ltd. received the proceeds from disposal in July 3, 2015.
Note 5:		Xiamen Sertec Business Technology Co., Ltd and Shanghai Taihua Electronic Technology Limited were calculated based on the consolidated net assets value of Chunghwa Investment Co., Ltd.
Note 6:		Based on “Principle of investment or Technical Cooperation in Mainland China”, Chunghwa and Senao are not subjective to the limited amount due to the operating headquarters documents issued by Industrial Development Bureau.
Note 7:		The amount was eliminated upon consolidation.

(Concluded)

- 81 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

SIX MONTHS ENDED JUNE 30, 2015

(Amounts in Thousands of New Taiwan Dollars)


Year	No. (Note 1)		Company Name	Related Party	Nature of Relationship (Note 2)		Transaction Details
Year	No. (Note 1)		Company Name	Related Party	Nature of Relationship (Note 2)		Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
2015		0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.		a	Accounts receivable	$	23,960		—		—
							Accrued custodial receipts		297,892		—		—
							Accounts payable		1,363,409		—		—
							Amounts collected for others		490,794		—		—
							Revenues		377,588		—		—
							Operating costs and expenses		5,523,655		—		5
				CHIEF Telecom Inc.		a	Accounts receivable		24,215		—		—
							Accounts payable		42,352		—		—
							Revenues		116,778		—		—
							Operating costs and expenses		165,889		—		—
				Chunghwa International Yellow Pages Co., Ltd.		a	Accounts payable		10,761		—		—
							Amounts collected for others		31,398		—		—
							Revenues		13,869		—		—
							Operating costs and expenses		23,569		—		—
				Chunghwa System Integration Co., Ltd.		a	Accounts receivable		37,005		—		—
							Accounts payable		172,925		—		—
							Operating costs and expenses		307,331		—		—
							Property, plant, and equipment		33,783		—		—
							Intangible assets		27,613		—		—
				Chunghwa Telecom Global Inc.		a	Accounts receivable		10,109		—		—
							Accounts payable		61,251		—		—
							Revenues		27,965		—		—
							Operating costs and expenses		169,511		—		—
				Donghwa Telecom Co., Ltd.		a	Accounts receivable		63,843		—		—
							Accounts payable		60,161		—		—
							Revenues		71,382		—		—
							Operating costs and expenses		96,548		—		—
				Spring House Entertainment Inc.		a	Operating costs and expenses		13,146		—		—
				Chunghwa Telecom Japan Co., Ltd.		a	Revenues		17,024		—		—
							Operating costs and expenses		30,870		—		—
				Light Era Development Co., Ltd.		a	Operating costs and expenses		18,715		—		—
							Work in process		29,778		—		—
				Chunghwa Telecom Singapore Pte., Ltd.		a	Accounts receivable		26,594		—		—
							Accounts payable		59,815		—		—
							Revenues		64,718		—		—
							Operating costs and expenses		39,797		—		—
				Chunghwa Sochamp Technology Inc.		a	Accounts payable		35,519		—		—

(Continued)

- 82 -

Year

No.
(Note 1)

Company Name

Related Party

Nature of
Relationship
(Note 2)

Transaction Details

Financial Statement Account

Amount
(Note 5)

Payment
Terms
(Note 3)

% to Total
Sales or
Assets
(Note 4)

Honghwa International Co., Ltd.

Accounts payable

631,422

—

Revenues

11,768

—

Operating costs and expenses

1,545,990

—

Light Era Development Co., Ltd.

CHIEF Telecom Inc.

Revenues

45,876

—

Note 1:

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

“0” for the Company.

Subsidiaries are numbered from “1”.

Note 2:

Related party transactions are divided into three categories as follows:

The Company to subsidiaries.

Subsidiaries to the Company.

Subsidiaries to subsidiaries.

Note 3:

Note 4:

For assets and liabilities, amount is shown as a percentage to consolidated total assets as of June 30, 2015, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the six months ended June 30, 2015.

Note 5:

The amount was eliminated upon consolidation.

(Concluded)

- 83 -

Exhibit 99.3

Chunghwa Telecom Co., Ltd. and

Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 30, 2015 and 2014

- 1 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)


	June 30, 2015 (Unaudited)				December 31, 2014 (Audited)				June 30, 2014 (Unaudited)
	Amount		%		Amount		%		Amount		%
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	34,285		7	$	23,560		5	$	28,141		6
Financial assets at fair value through profit or loss		1		—		1		—		—		—
Available-for-sale financial assets		—		—		—		—		—		—
Held-to-maturity financial assets		2,903		1		3,457		1		4,467		1
Hedging derivative assets		—		—		—		—		—		—
Trade notes and accounts receivable, net		27,552		6		26,228		6		23,610		5
Accounts receivable from related parties		22		—		81		—		70		—
Inventories		6,713		1		7,097		2		8,194		2
Prepayments		5,791		1		2,444		—		5,595		2
Other current monetary assets		14,879		3		3,325		1		5,182		1
Other current assets		2,494		1		3,219		1		5,267		1

Total current assets		94,640		20		69,412		16		80,526		18

NONCURRENT ASSETS
Available-for-sale financial assets		5,942		1		6,281		1		5,215		1
Held-to-maturity financial assets		3,799		1		4,028		1		5,715		1
Investments accounted for using equity method		2,678		1		2,750		1		2,328		—
Property, plant and equipment		295,149		64		302,650		68		298,533		66
Investment properties		7,666		2		7,621		2		8,010		2
Intangible assets		41,412		9		42,825		9		43,763		10
Deferred income tax assets		1,908		—		1,826		—		1,778		—
Prepayments		3,484		1		3,504		1		3,410		1
Other noncurrent assets		5,252		1		5,601		1		5,212		1

Total noncurrent assets		367,290		80		377,086		84		373,964		82

TOTAL	$	461,930		100	$	446,498		100	$	454,490		100

(Continued)

- 2 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)


	June 30, 2015 (Unaudited)				December 31, 2014 (Audited)				June 30, 2014 (Unaudited)
	Amount		%		Amount		%		Amount			%
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans	$	860		—	$	564		—	$	1,085			—
Financial liabilities at fair value through profit or loss		2		—		—		—		—			—
Hedging derivative liabilities		—		—		—		—		—			—
Trade notes and accounts payable		15,318		3		18,519		4		12,387			3
Payables to related parties		432		—		408		—		640			—
Current tax liabilities		6,644		2		6,982		2		6,368			1
Dividends payable		37,673		8		—		—		18,526			4
Other payables		20,182		5		24,335		6		38,862			9
Provisions		253		—		179		—		119			—
Advance receipts		9,616		2		9,913		2		9,060			2
Current portion of long-term loans		3		—		—		—		300			—
Other current liabilities		1,489		—		1,619		—		1,607			—

Total current liabilities		92,472		20		62,519		14		88,954			19

NONCURRENT LIABILITIES
Long-term loans		1,797		—		1,900		—		1,748			1
Deferred income taxes liabilities		108		—		132		—		111			—
Provisions		49		—		93		—		121			—
Customers’ deposits		4,655		1		4,759		1		4,775			1
Net defined benefit liabilities		6,671		2		6,470		2		5,679			1
Deferred revenue		3,572		1		3,398		1		3,566			1
Other noncurrent liabilities		1,983		—		1,515		—		1,329			—

Total noncurrent liabilities		18,835		4		18,267		4		17,329			4

Total liabilities		111,307		24		80,786		18		106,283			23

EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT
Common stock		77,574		17		77,574		18		77,574			17

Additional paid-in capital		146,738		32		146,720		33		146,717			32

Retained earnings
Legal reserve		77,574		17		76,893		17		76,893			17
Special reserve		2,676		—		2,820		1		2,820			1
Unappropriated earnings		40,640		9		55,895		12		40,200			9

Total retained earnings		120,890		26		135,608		30		119,913			27

Other adjustments		478		—		886		—		(412	)		—

Total equity attributable to stockholders of the parent		345,680		75		360,788		81		343,792			76
NONCONTROLLING INTERESTS		4,943		1		4,924		1		4,415			1

Total equity		350,623		76		365,712		82		348,207			77

TOTAL	$	461,930		100	$	446,498		100	$	454,490			100

(Concluded)

- 3 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Unaudited)


	For the Three Months Ended June 30											For the Six Months Ended June 30
	2015						2014					2015					2014
	Amount			%			Amount			%		Amount			%		Amount			%
REVENUES	$	56,920			100		$	55,784			100	$	113,393			100	$	110,834			100
OPERATING COSTS		35,711			63			35,037			63		72,407			64		70,037			63

GROSS PROFIT		21,209			37			20,747			37		40,986			36		40,797			37

OPERATING EXPENSES
Marketing		6,026			11			6,428			11		12,009			11		12,596			11
General and administrative		1,105			2			1,084			2		2,250			2		2,167			2
Research and development		866			1			897			2		1,701			1		1,791			2

Total operating expenses		7,997			14			8,409			15		15,960			14		16,554			15

OTHER INCOME AND EXPENSES		(15	)		—			(11	)		—		(44	)		—		(20	)		—

INCOME FROM OPERATIONS		13,197			23			12,327			22		24,982			22		24,223			22

NON-OPERATING INCOME AND EXPENSES
Interest income		95			—			84			—		162			—		143			—
Other revenue		270			1			142			—		523			1		395			—
Other gains and losses		(196	)		—			23			—		(71	)		—		(10	)		—
Interest expenses		(6	)		—			(10	)		—		(15	)		—		(19	)		—
Share of the profit of associates and joint ventures accounted for using equity method		223			—			256			1		507			—		417			1

Total non-operating income and expenses		386			1			495			1		1,106			1		926			1

INCOME BEFORE INCOME TAX		13,583			24			12,822			23		26,088			23		25,149			23
INCOME TAX EXPENSE (BENEFIT)		(279	)		—			1,039			2		2,744			3		3,942			4

NET INCOME		13,862			24			11,783			21		23,344			20		21,207			19

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to profit or loss:
Share of remeasurements of defined benefit pension plans of associates		—			—			—			—		—			—		—			—

Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from the translation of the foreign operations		(56	)		—			(51	)		—		(85	)		—		(37	)		—
Unrealized gain (loss) on available-for-sale financial assets		(761	)		(1	)		26			—		(333	)		—		(234	)		—
Cash flow hedges		—			—			—			—		—			—		—			—
Share of exchange differences arising from the translation of the foreign operations of associates		(1	)		—			(32	)		—		—			—		(24	)		—
Income tax benefit (expense) relating to items that may be reclassified subsequently		(1	)		—			1			—		(4	)		—		2			—

		(819	)		(1	)		(56	)		—		(422	)		—		(293	)		—

Total other comprehensive loss, net	$	(819	)		(1	)	$	(56	)		—	$	(422	)		—	$	(293	)		—

(Continued)

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Unaudited)


	For the Three Months Ended June 30								For the Six Months Ended June 30
	2015				2014				2015				2014
	Amount		%		Amount		%		Amount		%		Amount		%
TOTAL COMPREHENSIVE INCOME	$	13,043		23	$	11,727		21	$	22,922		20	$	20,914		19

NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	13,597		24	$	11,576		21	$	22,955		20	$	20,869		19
Noncontrolling interests		265		—		207		—		389		1		338		—

	$	13,862		24	$	11,783		21	$	23,344		21	$	21,207		19

COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	12,787		23	$	11,536		21	$	22,547		20	$	20,601		19
Noncontrolling interests		256		—		191		—		375		—		313		—

	$	13,043		23	$	11,727		21	$	22,922		20	$	20,914		19

EARNINGS PER SHARE
Basic	$	1.75			$	1.49			$	2.96			$	2.69

Diluted	$	1.75			$	1.49			$	2.95			$	2.69

(Concluded)

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In Millions of New Taiwan Dollars)

(Unaudited)


	Equity Attributable to Stockholders of the Parent
																	Other Adjustments
																	Exchange Differences Arising from the Translation of the Foreign			Unrealized Gain (Loss) on Available-for- sale Financial								Total Equity Attributable to Stockholders
						Retained Earnings
	Common		Additional			Legal Reserve		Special			Unappropriated			Total Retained									Cash Flow		Total Other						Noncontrolling			Total Equity
	Stock		Paid-in Capital			Legal Reserve		Reserve			Earnings			Earnings			Operations			Assets			Hedges		Adjustments			of the Parent			Interests			Total Equity
BALANCE, JANUARY 1, 2014	$	77,574	$	163,294		$	74,819	$	2,676		$	40,075		$	117,570		$	6		$	(150	)	$	—	$	(144	)	$	358,294		$	4,846		$	363,140
Appropriation of 2013 earnings
Legal reserve		—		—			2,074		—			(2,074	)		—			—			—			—		—			—			—			—
Special reserve		—		—			—		144			(144	)		—			—			—			—		—			—			—			—
Cash dividends distributed by Chunghwa		—		—			—		—			(18,526	)		(18,526	)		—			—			—		—			(18,526	)		—			(18,526	)
Cash dividends distributed by subsidiaries		—		—			—		—			—			—			—			—			—		—			—			(797	)		(797	)
Cash distributed from additional paid-in capital		—		(16,577	)		—		—			—			—			—			—			—		—			(16,577	)		—			(16,577	)
Net income for the six months ended June 30, 2014		—		—			—		—			20,869			20,869			—			—			—		—			20,869			338			21,207
Other comprehensive loss for the six months ended June 30, 2014		—		—			—		—			—			—			(44	)		(224	)		—		(268	)		(268	)		(25	)		(293	)

Total comprehensive income (loss) for the six months ended June 30, 2014		—		—			—		—			20,869			20,869			(44	)		(224	)		—		(268	)		20,601			313			20,914

Compensation cost of employee stock option of a subsidiary		—		—			—		—			—			—			—			—			—		—			—			53			53

BALANCE, JUNE 30, 2014	$	77,574	$	146,717		$	76,893	$	2,820		$	40,200		$	119,913		$	(38	)	$	(374	)	$	—	$	(412	)	$	343,792		$	4,415		$	348,207

BALANCE, JANUARY 1, 2015	$	77,574	$	146,720		$	76,893	$	2,820		$	55,895		$	135,608		$	146		$	740		$	—	$	886		$	360,788		$	4,924		$	365,712
Appropriation of 2014 earnings
Legal reserve		—		—			681		—			(681	)		—			—			—			—		—			—			—			—
Special reserve		—		—			—		(144	)		144			—			—			—			—		—			—			—			—
Cash dividends distributed by Chunghwa		—		—			—		—			(37,673	)		(37,673	)		—			—			—		—			(37,673	)		—			(37,673	)
Cash dividends distributed by subsidiaries		—		—			—		—			—			—			—			—			—		—			—			(354	)		(354	)
Reversal of special reserve recognized from land disposal		—		—			—		—			—			—			—			—			—		—			—			—			—
Partial disposal of interests in subsidiaries		—		27			—		—			—			—			—			—			—		—			27			18			45
Net income for the six months ended June 30, 2015		—		—			—		—			22,955			22,955			—			—			—		—			22,955			389			23,344
Other comprehensive loss for the six months ended June 30, 2015		—		—			—		—			—			—			(69	)		(339	)		—		(408	)		(408	)		(14	)		(422	)

Total comprehensive income (loss) for the six months ended June 30, 2015		—		—			—		—			22,955			22,955			(69	)		(339	)		—		(408	)		22,547			375			22,922

Compensation cost of employee stock option of a subsidiary		—		—			—		—			—			—			—			—			—		—			—			29			29
Purchase of treasury stocks by a subsidiary		—		(9	)		—		—			—			—			—			—			—		—			(9	)		(49	)		(58	)

BALANCE, JUNE 30, 2015	$	77,574	$	146,738		$	77,574	$	2,676		$	40,640		$	120,890		$	77		$	401		$	—	$	478		$	345,680		$	4,943		$	350,623

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)


	For the Six Months Ended June 30
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	26,088		$	25,149
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation		15,415			16,106
Amortization		1,539			785
Provision for doubtful accounts		190			148
Interest expenses		15			19
Interest income		(162	)		(143	)
Dividend income		(218	)		(77	)
Compensation cost of employee share options		29			53
Share of the profit of associates and joint ventures accounted for using equity method		(507	)		(417	)
Impairment loss on available-for-sale financial assets		26			9
Provision for inventory and obsolescence		91			248
Gain on disposal of financial instruments		—			(44	)
Loss on disposal of property, plant and equipment		44			20
Loss on disposal of intangible assets		—			—
Loss (gain) on disposal of investments accounted for using equity method		(5	)		4
Valuation loss on financial instruments at fair value through profit or loss, net		1			—
Loss (gain) on foreign exchange		(6	)		107
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		1			—
Trade notes and accounts receivable		(1,494	)		(855	)
Receivables from related parties		59			—
Inventories		292			(593	)
Other current monetary assets		(254	)		(274	)
Prepayments		(3,327	)		(3,172	)
Other current assets		726			(1,306	)
Increase (decrease) in:
Trade notes and accounts payable		(3,191	)		(3,256	)
Payables to related parties		24			83
Other payables		(2,234	)		(4,188	)
Provisions		31			(13	)
Advance receipts		(296	)		(403	)
Other current liabilities		(127	)		6
Deferred revenue		174			(135	)
Net defined benefit liabilities		201			195

Cash generated from operations		33,125			28,056

(Continued)

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)


	For the Six Months Ended June 30
	2015			2014
Interest paid	$	(16	)	$	(19	)
Income tax paid		(3,195	)		(4,005	)

Net cash provided by operating activities		29,914			24,032

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets		(22	)		(47	)
Proceeds from disposal of available-for-sale financial assets		1			84
Capital reduction of available-for-sale financial assets		—			44
Acquisition of time deposits and negotiable certificate of deposits with maturities of more than three months		(11,448	)		(411	)
Proceeds from disposal of time deposits and negotiable certificate of deposits with maturities of more than three months		554			435
Acquisition of held-to-maturity financial assets		(1,002	)		—
Proceeds from disposal of held-to-maturity financial assets		1,775			1,570
Acquisition of investments accounted for using equity method		(6	)		(133	)
Proceeds from disposal of investments accounted for using equity method		11			—
Acquisition of property, plant and equipment		(10,321	)		(13,090	)
Proceeds from disposal of property, plant and equipment		1			4
Acquisition of intangible assets		(127	)		(149	)
Decrease (increase) in other noncurrent assets		362			(341	)
Interest received		139			22
Cash dividends received		406			452

Net cash used in investing activities		(19,677	)		(11,560	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		2,750			831
Repayment of short-term loans		(2,454	)		—
Proceeds from long-term loans		—			348
Repayment of long-term loans		(100	)		—
Customers’ deposits refunded		(107	)		(59	)
Increase (decrease) in other noncurrent liabilities		466			(5	)
Proceeds from disposal of interest in subsidiaries without losing control		45			—
Other change in noncontrolling interests		(35	)		—

Net cash provided by financing activities		565			1,115

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(77	)		(31	)

(Continued)

- 8 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)


	For the Six Months Ended June 30
	2015		2014
NET INCREASE IN CASH AND CASH EQUIVALENTS	$	10,725	$	13,556
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		23,560		14,585

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	34,285	$	28,141

(Concluded)

- 9 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(Unaudited)

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of June 30, 2015 and 2014, the related consolidated statements of comprehensive income for the three months ended June 30, 2015 and 2014 and for the six months ended June 30, 2015 and 2014, as well as the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2015 and 2014 in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standard Board. The consolidated financial statements are incomplete as they omit the related footnote disclosures as required under IFRSs.

- 10 -

Chunghwa Telecom (NYSE:CHT)
과거 데이터 주식 차트
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