Far EasTone Telecommunications : Financial Summary Document

Far EasTone Telecommunications Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Six Months Ended June 30, 2021 and 2020 and Independent Auditors' Review Report

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Stockholders

Far EasTone Telecommunications Co., Ltd.

Introduction

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

Scope of Review

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

Conclusion

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

- 1 -

The engagement partners on the reviews resulting in this independent auditors' review report are An-Hwei Lin and Yung-Hsiang Chao.

Deloitte & Touche

Taipei, Taiwan

Republic of China

July 30, 2021

Notice to Readers

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

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

- 2 -

FAR EASTONE TELECOMMUNICATIONS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

			June 30, 2021						December 31, 2020						June 30, 2020
			(Reviewed)						(Audited)						(Reviewed)
ASSETS			Amount	%					Amount	%					Amount	%
CURRENT ASSETS
Cash and cash equivalents (Notes 6 and 32)	$	8,461,805		5		$	5,713,875			3		$	15,046,225	8
Financial assets at fair value through profit or loss - current (Note 31)			704,539		-					690,639			-					621,771	-
Financial assets at amortized cost - current (Notes 8 and 32)			796,123		1					856,480			1					496,814	-
Contract assets - current (Note 25)			4,842,190		3					4,840,684			3					4,774,787	3
Notes receivable, net (Note 9)			9,676	-					20,446		-					53,576	-
Accounts receivable, net (Note 9)			8,014,341		5					7,752,189			5					7,365,505	4
Accounts receivable - related parties (Notes 9 and 32)			158,319		-					329,612			-					173,365	-
Inventories (Note 10)			1,819,584		1					3,116,812			2					1,587,723	1
Prepaid expenses			750,496		-					823,266			-					900,594	1
Noncurrent assets held for sale, net (Notes 4 and 11)			1,857,022		1					-		-					-		-
Other financial assets - current (Notes 32 and 33)			723,526		-					760,953			-					1,134,653	1
Other current assets (Notes 25 and 32)			254,514		-					247,501			-					275,535	-
Total current assets			28,392,135	16					25,152,457			14				32,430,548	18
NONCURRENT ASSETS
Financial assets at fair value through other comprehensive income - noncurrent
(Notes 7 and 31)			846,867		1					809,560			-					871,111	-
Investments accounted for using the equity method (Note 13)			1,970,441		1					1,681,518			1					1,573,686	1
Contract assets - noncurrent (Note 25)			3,267,114		2					3,221,916			2					2,950,401	2
Property, plant and equipment, net (Notes 14, 32 and 33)			39,013,355		22					38,205,535			22				34,655,961	19
Right-of-use assets (Notes 15 and 32)			8,505,336		5					8,633,704			5					8,307,733	5
Investment properties (Note 16)			641,246		-					838,564		1					983,635	1
Concessions, net (Notes 1 and 17)			72,489,481		41					75,032,771			43				77,398,570	43
Goodwill (Note 17)			11,176,831		6					11,176,831			6					11,176,831	6
Other intangible assets (Note 17)			2,920,725	2					3,180,169			2					3,269,416	2
Deferred income tax assets (Note 4)			830,351		1					835,461			1					756,485	-
Incremental costs of obtaining a contract - noncurrent (Note 25)			3,632,344		2					3,490,644			2					3,355,876	2
Other noncurrent assets (Notes 4, 9, 18, 32 and 33)			1,149,521		1					1,170,190			1					1,248,608	1
Total noncurrent assets			146,443,612		84					148,276,863			86				146,548,313	82
TOTAL	$	174,835,747		100		$	173,429,320			100	$	178,978,861	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 19)	$	350,000		-		$	377,764			-		$	568,770	-
Short-term bills payable (Note 19)			332,192		-					389,715			-					404,702	-
Contract liabilities - current (Note 25)			2,648,655		2					2,190,246			1					1,974,754	1
Notes payable			7,212	-					12,561		-					15,488	-
Accounts payable (Note 32)			6,036,263		3					6,366,459			4					5,556,259	3
Other payables (Note 21)			17,723,790		10					6,136,912			4					16,561,991	9
Current tax liabilities (Note 4)			1,521,178		1					2,630,252			1					1,871,687	1
Provisions - current (Note 22)			188,153		-					184,512			-					180,348	-
Lease liabilities - current (Notes 15 and 32)			2,984,403		2					2,758,815			2					2,908,101	2
Current portion of long-term borrowings (Notes 19 and 20)			9,707,680		6					-		-					-		-
Other current liabilities (Note 32)			1,294,774		1					1,032,311			1					1,229,764	1
Total current liabilities			42,794,300		25					22,079,547			13				31,271,864	17
NONCURRENT LIABILITIES
Contract liabilities - noncurrent (Note 25)			200,663		-					189,322			-					199,510	-
Bonds payable (Note 20)			25,275,714		14					33,771,854			20				33,767,558	19
Long-term borrowings (Note 19)			35,816,910		21					39,734,159			23				40,345,830	23
Provisions - noncurrent (Note 22)			1,114,794		1					1,049,170			1					988,881	1
Deferred income tax liabilities (Note 4)			2,177,310		1					2,173,850			1					2,173,417	1
Lease liabilities - noncurrent (Notes 15 and 32)			5,218,461		3					5,397,645			3					5,170,630	3
Net defined benefit liabilities - noncurrent (Note 4)			498,981		-					509,089			-					477,344	-
Guarantee deposits received - noncurrent			257,422		-					269,462			-					271,927	-
Other noncurrent liabilities			5		-					8,013		-					-		-
Total noncurrent liabilities			70,560,260		40					83,102,564			48				83,395,097	47
Total liabilities			113,354,560		65					105,182,111			61				114,666,961	64
EQUITY ATTRIBUTABLE TO OWNERS OF FAR EASTONE
Capital stock
Common stock			32,585,008		19					32,585,008			19				32,585,008	18
Capital surplus			2,390,814		1					5,701,421			3					5,686,442	3
Retained earnings
Legal reserve			21,122,282		12					20,299,484			11				20,299,484	12
Special reserve			723,516		-					598,988			-					598,988	-
Unappropriated earnings			3,785,954		2					8,228,676			5					4,326,470	2
Total retained earnings			25,631,752		14					29,127,148			16				25,224,942	14
Other equity			(104,305)	-					(99,883)		-					(58,026)	-
Total equity attributable to owners of Far EasTone			60,503,269		34					67,313,694			38				63,438,366	35
NONCONTROLLING INTERESTS			977,918		1					933,515			1					873,534	1
Total equity			61,481,187		35					68,247,209			39				64,311,900	36
TOTAL	$	174,835,747		100		$	173,429,320			100	$	178,978,861	100

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

- 3 -

FAR EASTONE TELECOMMUNICATIONS 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
	2021			2020			2021			2020
		Amount	%				Amount	%				Amount	%				Amount	%
OPERATING REVENUE
(Notes 25 and 32)	$ 19,497,981		100		$ 18,674,739	100	$ 40,333,756	100	$ 38,063,579	100
OPERATING COSTS (Notes 10,
26 and 32)	13,260,078		68		12,078,850	65	27,921,855	69	24,758,170	65
GROSS PROFIT	6,237,903		32		6,595,889		35	12,411,901	31	13,305,409	35
OPERATING EXPENSES
(Notes 26 and 32)
Marketing	2,480,776		13		2,405,708		13	5,011,212	13	4,893,854	13
General and administrative	1,113,011		6		1,151,659		6	2,301,382	6	2,336,815	6
Expected credit losses		73,079	-		68,951	-	142,384	-	137,527	-
Total operating expenses		3,666,866		19			3,626,318		19	7,454,978	19	7,368,196	19
OPERATING INCOME		2,571,037		13			2,969,571		16	4,956,923	12	5,937,213	16
NONOPERATING INCOME
AND EXPENSES (Notes 26
and 32)
Other income	38,137	-		92,070	-	61,404	-	130,071	-
Other gains and losses	23,522	-		90,408	-	26,665	-	54,328	-
Financial costs	(173,406)	(1)	(184,033)	-	(350,958)	(1)	(336,499)	-
Share of the gains of associates	7,019		-		35,376	-	51,068	-	52,860	-
Losses on disposal of property,
plant and equipment and
intangible assets	(68,382)	-		(218,081)	(1)	(130,462)	-	(354,868)	(1)
Total nonoperating
income and expenses	(173,110)	(1)	(184,260)	(1)	(342,283)	(1)	(454,108)	(1)
INCOME BEFORE INCOME
TAX	2,397,927		12		2,785,311		15	4,614,640	11	5,483,105	15
INCOME TAX (Notes 4 and 27)		408,453		2			529,209	3	786,069	2	1,041,790	3
NET INCOME		1,989,474		10			2,256,102		12	3,828,571	9	4,441,315	12
OTHER COMPREHENSIVE
INCOME (LOSS) (Note 24)
Items that will not be
reclassified subsequently to
profit or loss:
Unrealized gains (losses) on
investments in equity
instruments designated as
at fair value through other
comprehensive income	965	-		(48,529)	-	4,666	-	(56,338)	-
Share of the other
comprehensive income
(loss) of associates
accounted for using the
equity method		545	-		(1,096)	-	578	-	(590)	-
		1,510		-			(49,625)	-	5,244	-	(56,928)	-
																				(Continued)

- 4 -