Chunghwa Telecom : ★ Q2 2020 Consolidated Financial Statements (Fully IFRSs)

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2020 and 2019

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Millions of New Taiwan Dollars)

			June 30, 2020					December 31, 2019				June 30, 2019						June 30, 2020					December 31, 2019				June 30, 2019
			(Unaudited)						(Audited)						(Unaudited)						(Unaudited)						(Audited)						(Unaudited)
ASSETS		Amount	%				Amount	%				Amount	%		LIABILITIES AND EQUITY		Amount	%				Amount	%				Amount	%
CURRENT ASSETS																							CURRENT LIABILITIES
Cash and cash equivalents	$	19,150		4		$	34,050	7		$	36,551		7		Short-term loans	$	60		-		$	90	-		$	95		-
Financial assets at fair value through profit or loss			8			-					1		-					3			-		Short-term bills payable			15,990		3					-		-					-			-
Hedging financial assets			2			-					-		-					2			-		Financial liabilities at fair value through profit or loss			-			-					-		-					1			-
Contract assets			4,519		1					4,441	1					4,667		1		Contract liabilities			18,191		4					16,840	3					14,724		3
Trade notes and accounts receivable, net			26,711		5					26,408	6					27,704		6		Trade notes and accounts payable			12,478		3					15,312	3					15,321		3
Receivables from related parties			25		-					17	-					22		-		Payables to related parties			377		-					654	-					399		-
Inventories			18,140		4					17,344	4					15,257		3		Current tax liabilities			5,380		1					5,812	1					5,232		1
Prepayments			4,877		1					1,883	-					4,938		1		Lease liabilities			3,235		1					3,291	1					3,393		1
Other current monetary assets			6,665		1					7,498	2					18,684		4		Dividends payable			32,783		6					-		-					34,746		7
Other current assets			2,088		-					2,430	-					2,634		1		Other payables			20,643		4					22,953	5					20,990		5
																							Provisions			200		-					207	-					145		-
Total current assets			82,185		16					94,072	20				110,462		23	Other current liabilities			956		-					984	-					998		-
NONCURRENT ASSETS																							Total current liabilities			110,293			22					66,143	13				96,044		20
Financial assets at fair value through profit or loss			709		-					778	-					508		-
Financial assets at fair value through other																							NONCURRENT LIABILITIES
comprehensive income			6,900		2					7,154	1					6,649		1		Contract liabilities			6,766		2					6,841	2					6,370		2
Investments accounted for using equity method			7,042		1					7,139	1					2,829		1		Long-term loans			1,600		-					1,600	-					1,600		-
Contract assets			2,456		-					2,601	1					2,406		-		Deferred income taxes liabilities			1,947		-					1,912	-					1,955		-
Property, plant and equipment			279,608			55					283,694	60				283,594		58	Provisions			101		-					97	-					83		-
Right-of-use assets			11,332		3					11,364	2					11,530		2		Lease liabilities			6,381		1					6,467	2					6,341		1
Investment properties			8,214		2					8,169	2					8,272		2		Customers' deposits			4,634		1					4,748	1					4,647		1
Intangible assets			93,390		19					47,047	10				48,934		10	Net defined benefit liabilities			3,566		1					3,505	1					3,613		1
Deferred income tax assets			3,260		1					3,259	1					3,546		1		Other noncurrent liabilities			1,833		-					1,543	-					1,447		-
Incremental costs of obtaining contracts			956		-					943	-					1,010		-
Net defined benefit assets			2,253		-					2,128	-					966		-		Total noncurrent liabilities			26,828		5					26,713	6					26,056		5
Prepayments			2,496		-					2,679	1					2,844		1
Other noncurrent assets			4,996		1					6,101	1					5,709		1		Total liabilities			137,121			27					92,856	19				122,100		25
Total noncurrent assets			423,612			84					383,056	80				378,797		77	EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF
																							THE PARENT
																							Common stocks			77,574		15					77,574	16				77,574		16
																							Additional paid-in capital			149,786			30					149,762	31				149,761		30
																							Retained earnings
																							Legal reserve			77,574		15					77,574	16				77,574		16
																							Special reserve			2,676		1					2,676	1					2,676		1
																							Unappropriated earnings			50,932		10					65,984	14				49,802		10
																							Total retained earnings			131,182			26					146,234	31				130,052		27
																							Others			188		-					587	-					226		-
																							Total equity attributable to stockholders of the
																							parent			358,730			71					374,157	78				357,613		73
																							NONCONTROLLING INTERESTS			9,946		2					10,115	3					9,546		2
																							Total equity			368,676			73					384,272	81				367,159		75
TOTAL	$	505,797			100		$	477,128	100	$	489,259		100	TOTAL	$	505,797			100		$	477,128	100	$	489,259		100

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions of New Taiwan Dollars, Except Earnings Per Share) (Unaudited)

			Three Months Ended June 30							Six Months Ended June 30
			2020						2019						2020						2019
		Amount	%				Amount	%				Amount	%				Amount	%
REVENUES	$	47,808		100		$	50,108	100	$	95,958	100	$	101,439	100
OPERATING COSTS			29,801		63					32,267	64				60,192	63				65,748	65
GROSS PROFIT			18,007		37					17,841	36				35,766	37				35,691	35
OPERATING EXPENSES
Marketing			5,177		11					5,483	11				10,250	11				10,891	11
General and administrative			1,149		2					1,141	2				2,362	2				2,312	2
Research and development			961		2					954	2				1,897	2				1,875	1
Expected credit loss (reversal of credit
loss)			98		-					(46)	-				104	-				(102)	-
Total operating expenses			7,385		15					7,532	15				14,613	15				14,976	14
OTHER INCOME AND EXPENSES			(11)	-					(5)	-				(12)	-				(9)	-
INCOME FROM OPERATIONS			10,611		22					10,304	21				21,141	22				20,706	21
NON-OPERATING INCOME AND
EXPENSES
Interest income			33	-					77	-				72	-				130	-
Other income			287		1					279	1				330	-				335	-
Other gains and losses			(68)	-					116	-				(29)	-				97	-
Interest expenses			(48)	-					(26)	-				(90)	-				(52)	-
Share of profits of associates accounted
for using equity method			139		-					148	-				174	-				225	-
Total non-operating income and
expenses			343		1					594	1				457	-				735	-
INCOME BEFORE INCOME TAX			10,954		23					10,898	22				21,598	22				21,441	21
INCOME TAX EXPENSE			758		2					628	2				3,302	3				3,080	3
NET INCOME			10,196		21					10,270	20				18,296	19				18,361	18
TOTAL OTHER COMPREHENSIVE
INCOME (LOSS)
Items that will not be reclassified to
profit or loss:
Unrealized gain or loss on
investments in equity instruments
at fair value through other
comprehensive income			956		2					(124)	-				(330)	-				(283)	-
Gain or loss on hedging instruments
subject to basis adjustment			2	-					5	-				2	-				1	-
Share of remeasurements of defined
benefit pension plans of associates			-		-					-	-				-	-				-	-
			958		2					(119)	-				(328)	-				(282)	-
Items that may be reclassified
subsequently to profit or loss:
Exchange differences arising from
the translation of the foreign
operations			(68)	-					39	-				(80)	-				63	-
Share of exchange differences
arising from the translation of the
foreign operations of associates			(1)	-					-	-				(1)	-				-	-
			(69)	-					39	-				(81)	-				63	-
Total other comprehensive income
(loss), net of income tax			889		2					(80)	-				(409)	-				(219)	-
TOTAL COMPREHENSIVE INCOME		$	11,085		23			$	10,190	20	$	17,887	19	$	18,142	18

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Millions of New Taiwan Dollars, Except Earnings Per Share) (Unaudited)

				Three Months Ended June 30								Six Months Ended June 30
				2020							2019							2020							2019
		Amount	%				Amount	%				Amount	%				Amount	%
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$		9,881		20	$	10,044	20	$	17,731	18	$	17,973	18
Noncontrolling interests				315		1					226	-					565	1					388	-
		$	10,196		21	$	10,270	20	$	18,296	19	$	18,361	18
COMPREHENSIVE INCOME
ATTRIBUTABLE TO
Stockholders of the parent	$	10,778		22	$		9,961	20	$	17,332	18	$	17,739	18
Noncontrolling interests				307		1					229	-					555	1					403	-
		$	11,085	23	$	10,190	20	$	17,887	19	$	18,142	18
EARNINGS PER SHARE
Basic			$	1.28							$	1.29						$	2.29						$	2.32
Diluted			$	1.27							$	1.29						$	2.28						$	2.31

(Concluded)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Millions of New Taiwan Dollars)

(Unaudited)

																		Equity Attributable to Stockholders of the Parent
																																Others
																											Exchange
																										Differences
																											Arising		Unrealized
																											from the	Gain or Loss								Total Equity
														Retained Earnings						Translation of		on Financial		Gain on					Attributable to
						Additional						Special	Unappropriated	Total Retained		the Foreign			Assets at		Hedging					Stockholders	Noncontrolling
	Common Stocks	Paid-in Capital	Legal Reserve		Reserve			Earnings			Earnings		Operations			FVOCI	Instruments	Total Others	of the Parent			Interests	Total Equity
BALANCE, JANUARY 1, 2019	$	77,574		$	149,762	$	77,574	$	2,676	$	66,575	$	146,825		$	(79)	$	538	$	1	$	460	$	374,621	$	9,837	$	384,458
Appropriation of 2018 earnings
Cash dividends distributed by Chunghwa			-				-			-		-			(34,746)			(34,746)				-			-		-			-			(34,746)			-			(34,746)
Cash dividends distributed by subsidiaries			-				-			-		-			-			-				-			-		-			-			-			(710)			(710)
Net income for the six months ended June 30, 2019			-				-			-		-			17,973			17,973				-			-		-			-			17,973			388			18,361
Other comprehensive income (loss) for the six months ended June
30, 2019			-				-			-		-			-			-				41			(276)		1			(234)			(234)			15			(219)
Total comprehensive income (loss) for the six months ended June
30, 2019			-				-			-		-			17,973			17,973				41			(276)		1			(234)			17,739			403			18,142
Share-based payment transactions of subsidiaries			-				(1)			-		-			-			-				-			-		-			-			(1)			16			15
BALANCE, JUNE 30, 2019		$	77,574			$	149,761	$	77,574	$	2,676	$	49,802	$	130,052		$	(38)	$	262	$	2	$	226	$	357,613	$	9,546	$	367,159
BALANCE, JANUARY 1, 2020		$	77,574			$	149,762	$	77,574	$	2,676	$	65,984	$	146,234		$	(148)	$	735	$	-	$	587	$	374,157	$	10,115	$	384,272
Appropriation of 2019 earnings
Cash dividends distributed by Chunghwa			-				-			-		-			(32,783)			(32,783)				-			-		-			-			(32,783)			-			(32,783)
Cash dividends distributed by subsidiaries			-				-			-		-			-			-				-			-		-			-			-			(775)			(775)
Change in additional paid-in capital for not proportionately
participating in the capital increase of subsidiaries			-				-			-		-			-			-				-			-		-			-			-			-			-
Net income for the six months ended June 30, 2020			-				-			-		-			17,731			17,731				-			-		-			-			17,731			565			18,296
Other comprehensive income (loss) for the six months ended June
30, 2020			-				-			-		-			-			-				(73)			(328)		2			(399)			(399)			(10)			(409)
Total comprehensive income (loss) for the six months ended June
30, 2020			-				-			-		-			17,731			17,731				(73)			(328)		2			(399)			17,332			555			17,887
Share-based payment transactions of subsidiaries			-				24			-		-			-			-				-			-		-			-			24			51			75
BALANCE, JUNE 30, 2020		$	77,574			$	149,786	$	77,574	$	2,676	$	50,932	$	131,182		$	(221)	$	407	$	2	$	188	$	358,730	$	9,946	$	368,676

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions of New Taiwan Dollars)

(Unaudited)

		Six Months Ended June 30
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$ 21,598		$ 21,441
Adjustments to reconcile income before income tax to net cash
provided by operating activities:
Depreciation	15,449		15,432
Amortization	2,124		2,129
Amortization of incremental costs of obtaining contracts	390		691
Expected credit loss (reversal of credit loss)	104		(102)
Interest expenses	90		52
Interest income	(72)	(130)
Dividend income	(236)	(241)
Compensation cost of share-based payment transactions	3		1
Share of profits of associates accounted for using equity method	(174)	(225)
Loss on disposal of property, plant and equipment	12		9
Loss on disposal of intangible assets	-		-
Loss on disposal of financial instruments	2		-
Loss (gain) on disposal of investments accounted for using equity
method	6		(151)
Provision for inventory and obsolescence	196		241
Valuation loss on financial assets and liabilities at fair value
through profit or loss, net	68		6
Others	(54)	8
Changes in operating assets and liabilities:
Decrease (increase) in:
Contract assets	67		140
Trade notes and accounts receivable	(344)	2,464
Receivables from related parties	(8)	2
Inventories	(991)	(377)
Prepayments	(2,793)	(3,104)
Other current monetary assets	117		(1,033)
Other current assets	342		(58)
Incremental cost of obtaining contracts	(403)	(366)
Increase (decrease) in:
Contract liabilities	1,276		4,114
Trade notes and accounts payable	(2,833)	(5,144)
Payables to related parties	(277)	(519)
Other payables	(3,302)	(2,127)
Provisions	(3)	22
Other current liabilities	(18)	(154)
Net defined benefit plans		(64)	277
Cash generated from operations		30,272		33,298

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions of New Taiwan Dollars)

(Unaudited)

		Six Months Ended June 30
			2020			2019
Interest paid	$	(100)	$	(51)
Income tax paid			(3,701)		(4,073)
Net cash provided by operating activities			26,471		29,174
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through other
comprehensive income			(77)		-
Purchase of financial assets at fair value through profit or loss			(39)		-
Proceeds from disposal of financial assets at fair value through
profit or loss			30			-
Acquisition of time deposits and negotiable certificates of deposit
with maturities of more than three months			(2,693)		(12,308)
Proceeds from disposal of time deposits and negotiable certificates
of deposit with maturities of more than three months			3,801		4,654
Proceeds from disposal of agreements collateralized by bonds with
maturities of more than three months			15			-
Proceeds from disposal of investments accounted for using equity
method			-			32
Acquisition of property, plant and equipment			(9,244)		(10,315)
Proceeds from disposal of property, plant and equipment			25			24
Acquisition of intangible assets			(47,467)		(119)
Acquisition of investment properties			(54)		-
Decrease (increase) in other noncurrent assets			42			(504)
Interest received			78			125
Dividends received			38			18
Net cash used in investing activities			(55,545)		(18,393)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans			70			305
Repayment of short-term loans			(100)		(310)
Proceeds from short-term bills payable			29,000		-
Repayment of short-term bills payable			(13,000)		-
Decrease in customers' deposits			(124)		(85)
Payments for the principal of lease liabilities			(2,006)		(1,962)
Increase in other noncurrent liabilities			289			137
Dividends distributed to noncontrolling interests			(7)		-
Change in other noncontrolling interests			72			14
Net cash provided by (used in) financing activities			14,194		(1,901)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions of New Taiwan Dollars)

(Unaudited)

		Six Months Ended June 30
			2020			2019
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS	$	(20)	$	26
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS			(14,900)		8,906
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			34,050		27,645
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	19,150	$	36,551

(Concluded)

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2020 and 2019 (Unaudited)

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of June 30, 2020 and 2019, the related consolidated statements of comprehensive income for the three months ended June 30, 2020 and 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the six months ended June 30, 2020 and 2019 in accordance with IAS 34 "Interim Financial Reporting" as issued by the International Accounting Standard Board (IASB). The consolidated financial statements are incomplete as they omit the related footnote disclosures as required under International Financial Reporting Standards as issued by IASB.

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