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 November 1, 2013

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: November 1, 2013

Chunghwa Telecom Co., Ltd.
By:	/s/ Shu Yeh
Name:	Shu Yeh
Title:	Senior Executive Vice President CFO

2

Exhibit

Exhibit	Description
99.1	Press Release to Report Operating Results for the third quarter of 2013
99.2	To announce the differences for the third quarter of 2013 financial statements between Taiwan-IFRSs and IFRSs
99.3	Consolidated Financial Statements for the Nine Months Ended September 30, 2013 pursuant to International Financial Reporting Standards adopted by ROC (“Taiwan-IFRSs’) and Independent Auditors’ Report
99.4	Consolidated Financial Statements for the Nine Months Ended September 30, 2013 in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IFRSs”)

3

EX-99.1

Exhibit 99.1

Chunghwa Telecom Reports Un-audited Consolidated Operating Results

for the Third Quarter of 2013

TAIPEI, Taiwan, R.O.C. November 1, 2013 - Chunghwa Telecom Co., Ltd. (TAIEX: 2412, NYSE: CHT) (“Chunghwa” or “the Company”) today reported its un-audited operating results for the third quarter of 2013. All figures were prepared in accordance with Taiwan-International Financial Reporting Standards (“T-IFRSs”) on a consolidated basis.

(Comparisons, unless otherwise stated, are to the prior year period)

Third Quarter 2013 Financial Highlights

• Total revenue increased by 2.6% to NT$56.72 billion

• Mobile communications revenue increased by 10.6% to NT$27.53 billion

• Mobile value-added services (VAS) revenue increased by 37.4% to NT$7.37 billion

• Handset sales revenue increased by 24.8% to NT$7.74 billion

• Internet revenue increased by 11.2% to NT$6.73 billion

• Internet VAS revenue increased by 4.2% to NT$0.67 billion

• Domestic fixed communications revenue decreased by 5.7% to NT$17.97 billion

• International fixed communications revenue increased by 2.8% to NT$3.97 billion

• Total operating costs and expenses increased by 3.5% to NT$44.12 billion

• Net income totaled NT$10.65 billion, representing a 0.5% decrease

• Basic earnings per share (EPS) was NT$1.37

First Nine Months of 2013 Financial Highlights

• Total revenue increased by 2.4% to NT$169.18 billion, reaching 77.7% of the full year guidance

• Mobile communications revenue increased by 9.4% to NT$82.3 billion

• Mobile VAS revenue increased by 38.3% to NT$20.71 billion

• Handset sales revenue increased by 19.0% to NT$24.40 billion

• Internet revenue increased by 3.8% to NT$18.94 billion

• Internet VAS revenue increased by 4.8% to NT$2.03 billion

• Domestic fixed communications revenue decreased by 4.6% to NT$54.21 billion

1

• International fixed communications revenue increased by 3.8% to NT$11.81 billion

• Total operating costs and expenses increased by 5.0% to NT$132.67 billion

• Net income totaled NT$30.48 billion, representing a 3.9% decrease and reaching 81.1% of the full year guidance

• Basic EPS was NT$3.93

“Dr. Yen-Sung Lee, Chairman and CEO of Chunghwa Telecom, commented, “We are proud of the success we were able to achieve in the third quarter and very excited with the results of the recent 4G auction. Having secured 35 MHz of spectrum, the largest amount in the auction, including the highly-sought-after deployment-ready 1800 MHz spectrum, we believe we have the potential to be the first-to-market in offering 4G services throughout Taiwan in the second half of 2014. Through attraction of new users and vertical migration of existing users to higher tier data plans, mobile internet subscriber growth continued to exceed our guidance. We further extended our market leadership in mobile, growing our mobile internet subscriber market share to 34.1%. In the smart phone segment, through the successful implementation of our promotional initiatives, we grew our smartphone penetration to 50%, necessitating we revise our year-end guidance upward. For our broadband business, we continued our initiatives for retaining customers as well as facilitating customer upgrades. In the third quarter, we were able to double revenues for our cloud business year over year, and secure several high-profile ICT projects. Our success in this young business line is a testament to our ability to leverage our core telecom infrastructure and services to expand into new markets. Going forward, we aim to quickly build out our 4G offering, deploy data centers for our cloud business, and seek innovative ways to expand market share and increase monetization of our large subscriber base.”

Revenue

Chunghwa’s total revenue for the third quarter of 2013 increased by 2.6% to NT$56.72 billion. This total was comprised of 48.5% mobile, 11.9% internet, 31.7% domestic fixed, 7.0% international fixed, and the remainder was from other businesses.

Total revenue for the mobile business increased to NT$27.53 billion for the third quarter 2013, representing 10.6% growth. The increase was primarily due to growth in mobile VAS revenue and handset sales from smartphone promotions. This increase offset a decline in mobile voice revenue due to market competition and the National Communication Committee’s (“NCC”) tariff reductions.

Chunghwa’s internet business revenue increased by 11.2% to NT$6.73 billion in the third quarter of 2013. The increase was primarily attributable to the growth of ICT project revenue.

2

For the third quarter of 2013, domestic fixed revenue totaled NT$17.97 billion, representing a 5.7% decrease. Local and DLD service revenue decreased by 8.1% and 7.3% respectively mainly due to mobile and VoIP substitution.

Broadband access revenue decreased by 0.8% to NT$4.77 billion, demonstrating the impact of the mandated tariff reductions for both ADSL and fiber services.

International fixed revenue increased by 2.8% to NT$3.97 billion, mainly due to the growth of ICT project revenue.

Other revenue decreased by 63.1%, primarily due to less construction revenue from the property development subsidiary, Light Era.

For the first nine months of 2013, total revenue was NT$169.18 billion, a 2.4% increase compared to the same period in 2012. This total was comprised of 48.7% mobile, 11.2% Internet, 32.0% domestic fixed, 7.0% international fixed, and the remainder was from other businesses.

Operating Costs and Expenses

Total operating costs and expenses for the third quarter of 2013 increased 3.5% to NT$44.12 billion. The increase was mainly from the rising cost of handsets sold, resulting from a strong mobile internet and handset sales during the quarter.

Total operating costs and expenses for the first nine months of 2013 increased by 5.0% year-over-year to NT$132.67 billion, mainly due to the same reason for the third quarter as previously mentioned.

Income Tax

Income tax expense for the third quarter of 2013 increased by 4.4% to NT$2.18 billion.

Operating Income and Net Income

Income from operations decreased by 0.4% to NT$12.59 billion for the third quarter. The operating margin was 22.2%, compared to 22.9% in the same period of 2012. Net income decreased by 0.5% to NT$10.65 billion. Basic earnings per share was NT$1.37.

Cash Flow and EBITDA

Cash flow from operating activities for the third quarter of 2013 increased by 13.4% to NT$17.10 billion, mainly due to the decrease in payment to equipment contractors this year and less mobile deposits last year due to favorable offering for VIP subscribers.

3

EBITDA for the third quarter of 2013 decreased by 0.4% to NT$20.65 billion. The EBITDA margin was 36.4% compared to 37.5% in the same period of 2012. The lower EBITDA margin was primarily due to tariff cuts and the higher handset sales, of which the EBITDA margin is lower than traditional telecom services.

Capital Expenditure (“Capex”)

Total capex for the third quarter of 2013 decreased by 7.3% to NT$7.72 billion. Total capex was comprised of: 66.5% domestic fixed communications, 12.8% mobile, 13.9% internet, 5.5% international fixed communications, and the remainder was for other uses.

Business and Operational Highlights

Broadband/HiNet

• This year, the Company is continuing to execute its strategy of encouraging FTTx migration. As of September 30^th, the number of FTTx subscribers reached 2.90 million, accounting for 63.7% of total broadband users. Moreover, the number of subscribers signing up for 60Mbps and higher speed connections increased by 32.7%, reaching 1.09 million.

• HiNet broadband subscribers increased 0.4%, totaling 3.78 million at the end of September 2013.

Mobile

• As of September 30^th, 2013, Chunghwa had 10.55 million mobile subscribers, representing a 3.4% year-over-year increase.

• In the third quarter of 2013, the Company increased the number of mobile internet subscribers by 60.7% year on year or 1.35 million, reaching 3.57 million and growing its market share to 34.1%.

• Mobile VAS revenue for the third quarter of 2013 increased by 37.4% to NT$ 7.37billion, with mobile internet revenue, the largest contributor to VAS revenue, increasing 58.5%.

Fixed-line

• As of September 30^th, 2013, the Company maintained its leading position in the fixed-line market, with total 11.62 million subscribers.

Financial Statements

Financial statements and additional operational data can be found on the Company’s website

at http://www.cht.com.tw/en/ir/stockit-earningsit.html.

4

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Statements that are not historical facts, including statements about Chunghwa’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to the risks outlined in Chunghwa’s filings with the U.S. Securities and Exchange Commission on Forms F-1, F-3, 6-K and 20-F, in each case as amended. The forward-looking statements in this press release reflect the current belief of Chunghwa as of the date of this press release and Chunghwa undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date, except as required under applicable law.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

NON-GAAP FINANCIAL MEASURES

To supplement the Company’s consolidated financial statements presented in accordance with International Financial Reporting Standards pursuant to the requirements of the Financial Supervisory Commission, or T-IFRSs, Chunghwa Telecom also provides EBITDA, which is a “non-GAAP financial measure”. EBITDA is defined as consolidated net income (loss) excluding (i) depreciation and amortization, (ii) total net comprehensive financing cost (which is comprised of net interest expense, exchange gain or loss, monetary position gain or loss and other financing costs and derivative transactions), (iii) other income, net, (iv) income tax, (v) (income) loss from discontinued operations.

In managing the Company’s business, Chunghwa Telecom relies on EBITDA as a means of assessing its operating performance because it excludes the effect of (i) depreciation and amortization, which represents a non-cash charge to earnings, (ii) certain financing costs, which are significantly affected by external factors, including interest rates, foreign currency exchange rates and inflation rates, which have little or no bearing on our operating performance, (iii) income tax (iv) other expenses or income not related to the operation of the business.

5

CAUTIONS ON USE OF NON-GAAP FINANCIAL MEASURES

In addition to the consolidated financial results prepared under T-IFRSs, Chunghwa Telecom also provide non-GAAP financial measures, including “EBITDA”. The Company believes that the non-GAAP financial measures provide investors with another method for assessing its operating results in a manner that is focused on the performance of its ongoing operations.

Chunghwa Telecom’s management believes investors will benefit from greater transparency in referring to these non-GAAP financial measures when assessing the Company’s operating results, as well as when forecasting and analyzing future periods. However, the Company recognizes that:

• these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company’s T-IFRSs financial measures;

• these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company’s T-IFRSs financial measures;

• these non-GAAP financial measures should not be considered to be superior to the Company’s T-IFRSs financial measures; and

• these non-GAAP financial measures were not prepared in accordance with T-IFRSs and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.

Further, these non-GAAP financial measures may be unique to Chunghwa Telecom, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company’s results to the results of other companies. Readers are cautioned not to view non-GAAP results as a substitute for results under T-IFRSs, or as being comparable to results reported or forecasted by other companies.

About Chunghwa Telecom

Chunghwa Telecom (TAIEX: 2412, NYSE: CHT) is Taiwan’s leading telecom service provider. The Company provides fixed-line, mobile and Internet and data services to residential and business customers in Taiwan.

Contact:	Fu-fu Shen
Phone:	+886 2 2344 5488
Email:	chtir@cht.com.tw

6

EX-99.2

Exhibit 99.2

Subject:	To announce the differences for the third quarter of 2013 financial statements between Taiwan-IFRSs and IFRSs
To which item it meets: Article 2 paragraph 47
Statement:	1.	Date of occurrence of the event: 2013/11/1
	2.	Reasons of occurrence of the event: To announce the differences for the third quarter of 2013 financial statements between International Financial Reporting Standards as adopted by ROC (“Taiwan-IFRSs’) and International Financial Reporting Standards as issued by the IASB (“IFRSs”)
	3.	Contents of differences due to the adaptation of accounting principles in two locations:
		(1)	Under Taiwan-IFRSs, Chunghwa Telecom Co., Ltd. and Subsidiaries (or the “Company”) reported consolidated net income of NT$10,892,987 thousand and NT$31,393,616 thousand, basic earnings per share of NT$1.37 and NT$3.93 for the third quarter of 2013 and the first three quarters of 2013, respectively; total assets of NT$422,954,398 thousand, total liabilities of NT$66,896,590 thousand, and total stockholders’ equity of NT$356,057,808 thousand as of September 30, 2013.
		(2)	Under IFRSs, the Company reported consolidated net income of NT$9,880,854 thousand and NT$32,347,604 thousand, basic earnings per share of NT$1.25 and NT$4.05 for the third quarter of 2013 and the first three quarters of 2013, respectively; total assets of NT$422,907,584 thousand, total liabilities of NT$69,745,000 thousand, and total stockholders’ equity of NT$353,162,584 thousand as of September 30, 2013.

	(3)	The differences in consolidated net income between Taiwan-IFRSs and IFRSs followed by the Company mainly come from the provision for 10% undistributed retained earning tax. 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 is 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. The amount of reclassification from additional paid-in capital to unappropriated earnings was $21,285,150 thousand. This reclassification did not affect total stockholders’ equity.
4.	Any other matters that need to be specified: Chunghwa Telecom’s earnings distribution and stockholders’ equity are in accordance with Taiwan-IFRSs.

EX-99.3

Exhibit 99.3

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2013 and 2012 and

Independent Accountants’ Review Report

1

INDEPENDENT ACCOUNTANTS’ 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 September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012, the related consolidated statements of comprehensive income for the three months ended September 30, 2013 and 2012 and nine months ended September 30, 2013 and 2012, change in stockholders’ equity and cash flows for the nine months ended September 30, 2013 and 2012. 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 reviews.

We conducted our reviews in accordance with the Statement of Auditing Standards No. 36, “Review of Financial Statements”, issued by the Auditing Standards 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 consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers issued by the Financial Supervisory Commission of the Republic of China, and International Financial Reporting Standard 1, “First-time adoption of International Financial Reporting Standards” 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

October 31, 2013

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 accepted and applied in the Republic of China.

For the convenience of readers, the accountants’ 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 accountants’ review report and consolidated financial statements shall prevail.

2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	September 30, 2013				December 31, 2012				September 30, 2012				January 1, 2012
ASSETS	Amount		%		Amount		%		Amount		%		Amount		%
CURRENT ASSETS
Cash and cash equivalents (Notes 3 and 6)	$	34,749,913		8	$	30,938,472		7	$	31,488,277		7	$	26,407,196		6
Financial assets at fair value through profit or loss (Notes 3 and 7)		363		—		2,994		—		32,678		—		45,750		—
Available-for-sale financial assets (Notes 3 and 8)		16,880		—		2,250,260		—		2,390,784		1		2,498,712		1
Held-to-maturity financial assets (Notes 3 and 9)		4,689,694		1		4,250,146		1		2,981,338		1		1,201,301		—
Trade notes and accounts receivable, net (Notes 3, 4 and 10)		24,344,606		6		24,354,817		6		24,400,896		6		22,396,071		5
Accounts receivable from related parties (Note 37)		48,365		—		43,937		—		28,215		—		34,064		—
Inventories (Notes 3, 4, 11 and 38)		8,087,099		2		7,196,101		2		4,059,109		1		4,822,154		1
Prepayments (Notes 12 and 37)		5,071,640		1		1,985,706		—		4,942,974		1		1,888,643		—
Other current monetary assets (Note 13)		4,775,749		1		24,449,195		6		9,103,345		2		43,050,748		10
Other current assets (Notes 7 and 19)		3,987,212		1		4,474,595		1		4,641,999		1		3,039,836		1
Total current assets		85,771,521		20		99,946,223		23		84,069,615		20		105,384,475		24
NONCURRENT ASSETS
Available-for-sale financial assets (Notes 3 and 8)		3,042,355		1		3,278,315		1		3,352,337		1		242,934		—
Financial assets carried at cost (Notes 3 and 14)		2,454,954		1		2,467,861		1		2,525,618		1		2,575,030		1
Held-to-maturity financial assets (Notes 3 and 9)		8,923,153		2		11,796,144		3		14,005,461		3		13,494,891		3
Investments accounted for using equity method (Notes 3 and 15)		2,367,447		1		2,240,292		—		2,678,337		1		2,556,017		—
Property, plant and equipment (Notes 3, 4, 16, 37 and 38)		296,810,800		70		297,342,349		67		293,482,780		69		295,031,831		67
Investment properties (Notes 3, 4 and 17)		7,776,464		2		7,788,898		2		7,812,704		2		9,060,081		2
Intangible assets (Notes 3, 4 and 18)		5,361,802		1		5,781,803		1		5,844,043		1		6,278,175		1
Deferred income tax assets (Notes 3 and 30)		1,385,251		—		1,319,878		—		1,013,748		—		1,071,574		—
Prepayments (Notes 12 and 37)		3,555,222		1		3,554,235		1		3,517,822		1		3,546,976		1
Other noncurrent assets (Notes 19, 26 and 38)		5,505,429		1		4,596,529		1		3,996,637		1		3,858,165		1
Total noncurrent assets		337,182,877		80		340,166,304		77		338,229,487		80		337,715,674		76
TOTAL	$	422,954,398		100	$	440,112,527		100	$	422,299,102		100	$	443,100,149		100

3

	September 30, 2013					December 31, 2012				September 30, 2012				January 1, 2012
LIABILITIES AND STOCKHOLDERS’ EQUITY	Amount			%		Amount		%		Amount		%		Amount		%
CURRENT LIABILITIES
Short-term loans (Note 20)	$	1,075,222			—	$	111,473		—	$	130,000		—	$	75,000		—
Financial liabilities at fair value through profit or loss (Notes 3 and 7)		671			—		1,959		—		222		—		3,987		—
Trade notes and accounts payable (Note 22)		12,376,159			3		13,513,437		3		12,346,431		3		14,264,769		3
Payables to related parties (Note 37)		466,268			—		837,330		—		477,043		—		788,147		—
Current tax liabilities (Notes 3 and 30)		2,194,950			1		3,320,329		1		1,474,128		—		3,538,742		1
Other payables (Note 23)		22,664,934			5		26,101,780		6		21,977,541		5		26,302,261		6
Provisions (Notes 3 and 24)		114,242			—		221,245		—		128,800		—		148,050		—
Advance receipts (Note 25)		9,748,057			2		10,193,988		2		10,030,294		3		11,501,721		3
Current portion of long-term loans (Note 21)		—			—		8,372		—		33,489		—		701,887		—
Other current liabilities		1,577,680			1		1,597,476		1		1,799,254		1		1,954,963		1
Total current liabilities		50,218,183			12		55,907,389		13		48,397,202		12		59,279,527		14
NONCURRENT LIABILITIES
Long-term loans (Note 21)		1,700,000			1		2,050,000		1		1,650,000		—		1,058,372		—
Deferred income taxes liabilities (Notes 3 and 30)		99,069			—		102,396		—		134,413		—		115,068		—
Provisions (Notes 3 and 24)		135,301			—		44,909		—		39,810		—		34,002		—
Customers’ deposits (Note 37)		4,831,012			1		4,911,010		1		4,870,073		1		5,013,981		1
Accrued pension liabilities (Notes 3 and 26)		4,830,259			1		4,616,803		1		3,078,114		1		2,994,079		1
Deferred revenue		3,767,384			1		3,838,854		1		3,538,846		1		3,887,813		1
Other noncurrent liabilities		1,315,382			—		1,312,630		—		1,257,487		—		865,644		—
Total noncurrent liabilities		16,678,407			4		16,876,602		4		14,568,743		3		13,968,959		3
Total liabilities		66,896,590			16		72,783,991		17		62,965,945		15		73,248,486		17
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Note 27)
Common stock		77,574,465			18		77,574,465		18		77,574,465		18		77,574,465		17
Additional paid-in capital		184,579,878			44		190,162,430		43		190,161,168		45		190,157,537		43
Retained earnings
Legal reserve		74,819,380			18		70,828,983		16		70,828,983		17		66,122,145		15
Special reserve		2,675,894			—		2,675,894		—		2,675,894		1		2,675,894		1
Unappropriated earnings		12,025,094			3		21,483,854		5		13,679,696		3		29,016,482		6
Total retained earnings		89,520,368			21		94,988,731		21		87,184,573		21		97,814,521		22
Other adjustments		(245,168	)		—		161,061		—		239,707		—		28,756		—
Total equity attributable to stockholders of the parent		351,429,543			83		362,886,687		82		355,159,913		84		365,575,279		82
NONCONTROLLING INTERESTS		4,628,265			1		4,441,849		1		4,173,244		1		4,276,384		1
Total stockholders’ equity		356,057,808			84		367,328,536		83		359,333,157		85		369,851,663		83
TOTAL	$	422,954,398			100	$	440,112,527		100	$	422,299,102		100	$	443,100,149		100

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

4

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Reviewed, Not Audited)

	Three Months Ended September 30										Nine Months Ended September 30
	2013					2012					2013					2012
	Amount			%		Amount			%		Amount			%		Amount			%
REVENUES (Notes 28 and 37)	$	56,723,304			100	$	55,284,607			100	$	169,178,253			100	$	165,168,978			100
OPERATING COSTS (Notes 11 and 37)		35,789,479			63		34,607,909			63		108,519,223			64		104,702,702			63
GROSS PROFIT		20,933,825			37		20,676,698			37		60,659,030			36		60,466,276			37
OPERATING EXPENSES (Note 37)
Marketing		6,373,601			11		6,129,760			11		18,323,572			11		15,975,919			10
General and administrative		1,039,520			2		945,695			1		3,099,503			2		2,969,952			2
Research and development		922,176			2		957,458			2		2,724,972			2		2,743,066			1
Total operating expenses		8,335,297			15		8,032,913			14		24,148,047			15		21,688,937			13
OTHER INCOME AND EXPENSE (Note 29)		(12,005	)		—		(9,457	)		—		(24,176	)		—		(1,266,280	)		(1	)
INCOME FROM OPERATIONS		12,586,523			22		12,634,328			23		36,486,807			21		37,511,059			23
NON-OPERATING INCOME AND EXPENSES
Interest income		146,630			—		183,333			1		471,040			—		586,191			1
Other income (Notes 29 and 37)		127,762			—		108,662			—		266,637			—		281,351			—
Other gains and losses (Notes 29 and 37)		(3,497	)		—		(42,038	)		—		(52,208	)		—		(38,048	)		—
Finance costs (Note 29)		(9,573	)		—		(5,204	)		—		(23,920	)		—		(16,030	)		—
Share of the profit of associates and jointly controlled entities accounted for using equity method (Note 15)		222,821			1		178,656			—		525,180			1		461,938			—
Total non-operating income and expenses		484,143			1		423,409			1		1,186,729			1		1,275,402			1
INCOME BEFORE INCOME TAX		13,070,666			23		13,057,737			24		37,673,536			22		38,786,461			24
INCOME TAX EXPENSE (Notes 3 and 30)		2,177,679			4		2,085,532			4		6,279,920			4		6,192,723			4
NET INCOME		10,892,987			19		10,972,205			20		31,393,616			18		32,593,738			20
OTHER COMPREHENSIVE INCOME (LOSS), NET
Exchange differences arising from the translation of the foreign operations		(72,259	)		—		(21,253	)		—		17,553			—		(41,282	)		—

(Continued)

5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Reviewed, Not Audited)

	Three Months Ended September 30											Nine Months Ended September 30
	2013					2012						2013					2012
	Amount			%		Amount			%			Amount			%		Amount		%
Unrealized gain (loss) on available-for-sale financial assets		(70,853	)		—		(306,033	)		(1	)		(404,170	)		—		246,505		—
Share of other comprehensive income of associates accounted for using equity method		(305	)		—		(1,886	)		—			(36,605	)		—		13		—
Income tax relating to each component of other comprehensive income (Note 30)		(3,493	)		—		—			—			(3,382	)		—		—		—
Total other comprehensive income (loss), net of income tax		(146,910	)		—		(329,172	)		(1	)		(426,604	)		—		205,236		—
TOTAL COMPREHENSIVE INCOME	$	10,746,077			19	$	10,643,033			19		$	30,967,012			18	$	32,798,974		20
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	10,648,268			19	$	10,698,297			19		$	30,484,334			18	$	31,731,916		19
Noncontrolling interests		244,719			—		273,908			1			909,282			1		861,822		1
	$	10,892,987			19	$	10,972,205			20		$	31,393,616			19	$	32,593,738		20
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	10,506,098			19	$	10,376,114			19		$	30,038,507			18	$	31,942,867		19
Noncontrolling interests		239,979			—		266,919			—			928,505			—		856,107		1
	$	10,746,077			19	$	10,643,033			19		$	30,967,012			18	$	32,798,974		20
EARNINGS PER SHARE (Note 31)
Basic	$	1.37				$	1.38					$	3.93				$	4.09
Diluted	$	1.37				$	1.38					$	3.92				$	4.08

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

6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Equity Attributable to Stockholders of the Parent
												Other Adjustments
												Exchange Differences Arising from the Translation of the Foreign Operations			Unrealized Gain (Loss) on Available-for-sale Financial Assets		Total Equity Attributable to Stockholders of the Parent
					Retained Earnings
	Common Stock		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings											Noncontrolling Interests			Total Stockholders’ Equity
BALANCE, JANUARY 1, 2012	$	77,574,465	$	190,157,537	$	66,122,145	$	2,675,894	$	29,016,482		$	(38,918	)	$	67,674	$	365,575,279		$	4,276,384		$	369,851,663
Appropriation of 2011 earnings
Legal reserve		—		—		4,706,838		—		(4,706,838	)		—			—		—			—			—
Cash dividends paid by Chunghwa		—		—		—		—		(42,361,864	)		—			—		(42,361,864	)		—			(42,361,864	)
Cash dividends paid by subsidiaries to noncontrolling interests		—		—		—		—		—			—			—		—			(887,457	)		(887,457	)
Net income for the nine months ended September 30, 2012		—		—		—		—		31,731,916			—			—		31,731,916			861,822			32,593,738
Other comprehensive income for the nine months ended September 30, 2012		—		—		—		—		—			(33,254	)		244,205		210,951			(5,715	)		205,236
Total comprehensive income for the nine months ended September 30, 2012		—		—		—		—		31,731,916			(33,254	)		244,205		31,942,867			856,107			32,798,974
Exercise of employee stock option of subsidiaries		—		3,631		—		—		—			—			—		3,631			35,481			39,112
Decrease in noncontrolling interests		—		—		—		—		—			—			—		—			(107,271	)		(107,271	)
BALANCE, SEPTEMBER 30, 2012	$	77,574,465	$	190,161,168	$	70,828,983	$	2,675,894	$	13,679,696		$	(72,172	)	$	311,879	$	355,159,913		$	4,173,244		$	359,333,157

7

	Equity Attributable to Stockholders of the Parent
													Other Adjustments
													Exchange Differences Arising from the Translation of the Foreign Operations			Unrealized Gain (Loss) on Available-for-sale Financial Assets			Total Equity Attributable to Stockholders of the Parent
						Retained Earnings
	Common Stock		Additional Paid-in Capital			Legal Reserve		Special Reserve		Unappropriated Earnings												Noncontrolling Interests			Total Stockholders’ Equity
BALANCE, JANUARY 1, 2013	$	77,574,465	$	190,162,430		$	70,828,983	$	2,675,894	$	21,483,854		$	(96,930	)	$	257,991		$	362,886,687		$	4,441,849		$	367,328,536
Appropriation of 2012 earnings
Legal reserve		—		—			3,990,397		—		(3,990,397	)		—			—			—			—			—
Cash dividends paid by Chunghwa		—		—			—		—		(35,913,099	)		—			—			(35,913,099	)		—			(35,913,099	)
Cash dividends paid by subsidiaries to noncontrolling interests		—		—			—		—		—			—			—			—			(811,296	)		(811,296	)
Other changes in capital surplus
Cash distributed from capital surplus		—		(5,589,240	)		—		—		—			—			—			(5,589,240	)		—			(5,589,240	)
Change in capital surplus from investments in associates accounted for using equity method		—		3,049			—		—		—			—			—			3,049			3,794			6,843
Net income for the nine months ended September 30, 2013		—		—			—		—		30,484,334			—			—			30,484,334			909,282			31,393,616
Other comprehensive income for the nine months ended September 30, 2013		—		—			—		—		(39,598	)		3,305			(409,534	)		(445,827	)		19,223			(426,604	)
Total comprehensive income for the nine months ended September 30, 2013		—		—			—		—		30,444,736			3,305			(409,534	)		30,038,507			928,505			30,967,012
Exercise of employee stock option of subsidiaries		—		3,658			—		—		—			—			—			3,658			32,878			36,536
Compensation cost of employee stock options of a subsidiary		—		—			—		—		—			—			—			—			45,303			45,303
Employee stock bonus issued by a subsidiary		—		(19	)		—		—		—			—			—			(19	)		2,468			2,449
Decrease in noncontrolling interests		—		—			—		—		—			—			—			—			(15,236	)		(15,236	)
BALANCE, SEPTEMBER 30, 2013	$	77,574,465	$	184,579,878		$	74,819,380	$	2,675,894	$	12,025,094		$	(93,625	)	$	(151,543	)	$	351,429,543		$	4,628,265		$	356,057,808

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

8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Nine Months Ended September 30
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	37,673,536		$	38,786,461
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation		23,110,206			23,338,746
Amortization		914,917			833,504
Provision for (reversal of) doubtful accounts		173,374			(1,450,406	)
Interest expenses		23,920			16,030
Interest income		(471,040	)		(586,191	)
Dividend income		(43,989	)		(18,883	)
Compensation cost of employee stock options		45,303			—
Share of the profit of associates and jointly controlled entities accounted for using equity method		(525,180	)		(461,938	)
Impairment loss on available-for-sale financial assets		—			26,779
Impairment loss on financial assets carried at cost		28,692			111,614
Impairment loss on goodwill		18,055			—
Provision for inventory and obsolescence		133,054			14,455
Impairment loss on property, plant and equipment		2,262			—
Impairment loss on investment properties		—			1,261,365
Gain on disposal of financial instruments		(76,291	)		(65,343	)
Loss on disposal or abandonment of property, plant and equipment		21,914			4,915
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net		1,075			(31,282	)
Gain on foreign exchange		(7,881	)		(18,491	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		9,361			27,689
Trade notes and accounts receivable		(155,459	)		(540,259	)
Receivables from related parties		(4,428	)		5,849
Inventories		(1,024,052	)		748,590
Other current monetary assets		(216,867	)		299,217
Prepayment		(3,086,921	)		(3,025,177	)
Other current assets		517,357			(1,588,255	)
Increase (decrease) in:
Trade notes and accounts payable		(1,137,278	)		(1,837,280	)
Payables to related parties		(371,062	)		(311,104	)
Other payables		(2,750,149	)		(4,332,435	)
Provisions		(16,611	)		(73,498	)
Advance receipts		(366,646	)		(1,097,699	)
Other current liabilities		(29,394	)		(89,872	)
Deferred revenue		(71,470	)		(348,967	)
Accrued pension liabilities		213,456			84,035
Cash generated from operations		52,531,764			49,682,169

(Continued)

9

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Nine Months Ended September 30
	2013			2012
Interest paid		(24,004	)		(22,988	)
Income tax paid		(7,503,973	)		(8,170,675	)
Net cash provided by operating activities		45,003,787			41,488,506
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of designated financial assets at fair value through profit or loss		—			(29,548	)
Proceeds from disposal of designated financial assets at fair value through profit or loss		—			81,997
Acquisition of available-for-sale financial assets		(1,762,132	)		(4,452,278	)
Proceeds from disposal of available-for-sale financial assets		3,984,458			1,577,095
Acquisition of time deposits and negotiable certificate of deposit with maturities of more than three months		(17,845,775	)		(13,890,427	)
Proceeds from disposal of time deposits and negotiable certificate of deposit with maturities of more than three months		37,724,255			47,537,609
Acquisition of held-to-maturity financial assets		—			(3,865,172	)
Proceeds from disposal of held-to-maturity financial assets		2,396,950			1,525,895
Acquisition of financial assets carried at cost		(35,785	)		(35,972	)
Proceeds from disposal of financial assets carried at cost		4,985			69,553
Capital reduction of financial assets carried at cost		18,000			20,000
Proceeds from disposal of hedging derivative assets		15,288			—
Derecognition of hedging derivative liabilities		(108,433	)		—
Acquisition of investments accounted for using equity method		(60,000	)		(25,912	)
Capital reduction of associates		16,387			—
Acquisition of property, plant and equipment		(23,307,270	)		(22,556,002	)
Proceeds from disposal of property, plant and equipment		35,847			33,025
Acquisition of intangible assets		(511,871	)		(399,376	)
Decrease (increase) in noncurrent assets		(910,676	)		241,724
Interest received		539,364			618,459
Cash dividends received		424,437			313,741
Net cash provided by investing activities		618,029			6,764,411
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		1,238,522			615,000
Repayment of short-term loans		(274,773	)		(560,000	)
Repayment of long-term loans		(358,372	)		(76,770	)
Customers’ deposits refunded		(70,400	)		(82,888	)
Increase (decrease) in other liabilities		(76,533	)		70,516
Cash dividends and cash distributed from additional paid-in capital		(41,502,339	)		(42,361,864	)
Proceeds from exercise of employee stock option granted by subsidiary		36,536			39,112
Cash dividends paid by subsidiaries to noncontrolling interests		(811,296	)		(887,457	)

(Continued)

10

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

	Nine Months Ended September 30
	2013			2012
Change in other noncontrolling interests		(14,850	)		—
Net cash used in financing activities		(41,833,505	)		(43,244,351	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		23,130			72,515
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,811,441			5,081,081
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		30,938,472			26,407,196
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	34,749,913		$	31,488,277

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

11

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(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 dominate 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 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 had been 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 had also been 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 Company use New Taiwan dollars as the functional currency. Since the Company is listed in Taiwan, the consolidated financial statements are presented in New Taiwan dollars in order to increase the comparability and consistency.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorized for issue by the Board of Directors on October 31, 2013.

12

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

On May 14, 2009, the Financial Supervisory Commission (FSC) announced the “Framework for Adoption of International Financial Reporting Standards by Companies in the ROC.” In this framework, starting 2013, companies with shares listed on the TWSE or traded on the Taiwan GreTai Securities Market or Emerging Stock Market should prepare their financial statements in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), the International Financial Reporting Interpretations Committee (IFRIC) and Interpretations Committee (SIC) Interpretations as well as related guidance translated by Accounting Research and Development Foundation (ARDF) endorsed by the FSC (collectively, “Taiwan-IFRSs”).

The Company’s date of transition to Taiwan-IFRSs is January 1, 2012, and the effect of the transition to Taiwan-IFRSs is disclosed in Note 43.

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, related laws and regulations, and IFRS 1, “First-time adoption of International Financial Reporting Standards,” (IFRS 1) and IAS 34, “Interim Financial Reporting,” endorsed by the FSC. The consolidated financial statements do not present full disclosures required for a complete set of Taiwan-IFRSs annual consolidated financial statements.

Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The opening balance sheet at the date of transition is prepared with the recognition and measurement required by IFRS 1. According to IFRS 1, the Company is required to apply each effective IFRS retrospectively in its opening balance sheet at the date of transition to Taiwan-IFRSs; except for optional exemptions and mandatory exceptions to such retrospective application provided under IFRS 1. The main optional exemptions the Company adopted are described in Note 43.

Current and Noncurrent Assets and Liabilities

Current assets include cash and cash equivalents, and those assets held primarily for trading purposes or to be realized, sold or consumed within one year from the balance sheet date. All other assets are classified as noncurrent. Current liabilities are obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other liabilities are classified as noncurrent.

Light Era Development Co., Ltd. (LED) engages mainly in development of property for rent and sale. The assets and liabilities of LED related to property development within its operating cycle, which is over one year, are classified as current items.

Basis of Consolidation

a. The basis for the consolidated financial statements

The consolidated financial statements incorporate the financial statements of Chunghwa and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by the Company.

13

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

The noncontrolling interests in the subsidiaries and the equity attributable to stockholders are presented separately.

Allocation of comprehensive income to the noncontrolling interests

Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the noncontrolling interests even if it results in the noncontrolling interests having a deficit balance.

Changes in the Company’s ownership interests in subsidiaries

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Company’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

b. The subsidiaries in the consolidated financial statements

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	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012		Note
Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd. (“SENAO”)	Selling and maintaining mobile phones and its peripheral products		28		28		28		28		1	)
	Light Era Development Co., Ltd. (“LED”)	Housing, office building development, rent and sale services		100		100		100		100
	Donghwa Telecom Co., Ltd. (“DHT”)	International telecommunications IP fictitious internet and internet transfer services		100		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		100
	Chunghwa System Integration Co., Ltd. (“CHSI”)	Providing communication and information aggregative services		100		100		100		100
	Chunghwa Investment Co., Ltd. (“CHI”)	Investment		89		89		89		89
	CHIEF Telecom Inc. (“CHIEF”)	Internet communication and internet data center (“IDC”) service		69		69		69		69
	Chunghwa International Yellow Pages Co., Ltd. (“CHYP”)	Yellow pages sales and advertisement services		100		100		100		100
	Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)	Investment		100		100		100		100
	Spring House Entertainment Tech. Inc. (“SHE”)	Network services, producing digital entertainment contents and broadband visual sound terrace development		56		56		56		56
	Chunghwa Telecom Global, Inc. (“CHTG”)	International data and internet services and long distance call wholesales to carriers		100		100		100		100
	Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)	Information and communications technology, international circuit, and intelligent energy network service		100		100		100		100

(Continued)

14

			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012		Note
	Smartfun Digital Co., Ltd. (“SFD”)	Software retail		65		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		100
	Chunghwa Sochamp Technology Inc. (“CHST”)	License plate recognition system		51		51		51		51
	Honghwa Human Resources Co., Ltd. (“HHR”)	Human resources service		100		—		—		—		2	)
	New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)	Investment		100		100		100		100
Senao International Co., Ltd.	Senao International (Samoa) Holding Ltd. (“SIS”)	International investment		100		100		100		100
CHIEF Telecom Inc.	Unigate Telecom Inc. (“Unigate”)	Telecommunication and internet service		100		100		100		100
	Chief International Corp. (“CIC”)	Internet communication and internet data center (“IDC”) service		100		100		100		100
Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd. (“Concord”)	Investment		100		100		100		100
Spring House Entertainment Tech. Inc.	Ceylon Innovation Ltd. (“CEI”)	International trading, general advertisement and book publishment service		100		100		100		100
Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd. (“YYRP”)	Real estate management and leasing business		100		100		100		100
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		51		53		53		53		3	)
	Chunghwa Investment Holding Co., Ltd. (“CIHC”)	Investment		100		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		100
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		100
	CHPT Japan Co., Ltd. (“CHPT (JP)”)	Sale and maintenance of electronic parts and machinery processed products, and design of printed circuit board		100		—		—		—		4	)
	Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)	Wholesale electronic materials, electronic materials and general retail investment industry		100		—		—		—		5	)
Senao International (Samoa) Holding Ltd.	Senao International HK Limited (“SIHK”)	International investment		100		100		100		100

(Continued)

15

			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012		Note
Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited (“COI”)	Investment		100		100		100		100
Senao International HK Limited	Senao Trading (Fujian) Co., Ltd. (“STF”)	Information technology services and sale of communication products		100		100		100		100
	Senao International Trading (Shanghai) Co., Ltd. (“SITS”)	Information technology services and sale of communication products		100		100		100		100
	Senao International Trading (Shanghai) Co., Ltd. (“SEITS”)	Information technology services and maintenance of communication products		100		100		100		100
	Senao International Trading (Jiangsu) Co., Ltd. (“SITJ”)	Information technology services and sale of communication products		100		100		100		100
Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd. (“CHC”)	Investment		100		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		100
	Jiangsu Zhenhua Information Technology Company, LLC. (“JZIT”)	Intelligent energy conserving and intelligent building services		75		75		75		—		6	)
	Hua-Xiong Information Technology Co., Ltd. (“HXIT”)	Intelligent system and energy saving system services in buildings		51		51		—		—		7	)

(Concluded)

1) The Company’s equity ownership of SENAO decreased from 28.44% as of January 1, 2012 to 28.30%, 28.30% and 28.22% as of September 30, 2012, December 31, 2012 and September 30, 2013, respectively, due to the exercise of options by employees that were granted before 2007.

2) Chunghwa established 100% owned subsidiary of HHR in January 2013.

3) The Company’s equity ownership of CHPT decreased to 50.62% as of September 30, 2013 due to the exercise of options by employees that were granted in 2008 and issue employee stock bonus.

16

4) CHPT established 100% owned subsidiary of CHPT (JP) in January 2013.

5) CHPT established 100% owned subsidiary of CHPT (International) in July 2013.

6) JZIT was established in January 2012 and CHC owns 75% ownership of JZIT.

7) HXIT was established in November 2012 and CHC owns 51% ownership of HXIT.

The following diagram presents information regarding the relationship and ownership percentages between Chunghwa and its subsidiaries as of September 30, 2013:

Business Combination

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.

Foreign Currencies

In preparing the financial statements of each individual entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

17

Exchange differences on monetary items denominated in foreign currencies are recognized in profit or loss when the transactions occur.

Foreign-currency nonmonetary assets or liabilities (such as equity instruments) that are carried at fair value are revalued using prevailing exchange rates at the balance sheet date and related exchange differences are recognized in profit or loss. Conversely, when the fair value changes were recognized in other comprehensive income, related exchange difference shall be recognized in other comprehensive income.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company’s foreign operations are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity attributed to noncontrolling interests as appropriate.

Cash Equivalents

Cash equivalents are short term investment with maturities of less than three months, including treasury bills, commercial paper, time deposits and negotiable certificate of deposit. The carrying amount approximates fair value.

Inventories

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

Buildings and Lands Consigned to Constructing Firm

Inventories of LED are stated at the lower of cost or net realizable value item by item, except for those that may be appropriate to group as similar items or related inventories. Land acquired before construction is classified as land held for development, and then reclassified as land held under development after LED begins its construction project. Prepayments for licensing and other miscellaneous costs have been capitalized as part of inventory.

When using the completed-contract method for its construction projects, LED recognizes the proceeds from customers as advances from customers for land and building before the construction project is completed. After completion of the construction project and ownership is transferred to the customers, LED recognizes the relevant revenues.

Investments in Associates

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. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

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

18

When the Company subscribes for additional associate’s new shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus, with the balance charged to retained earnings.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate 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.

When an indication of impairment is assessed with objective evidence, the impairment is recognized in profit or loss as incurred.

When a consolidated entity transacts with its associate, unrealized profits and losses resulting from the transactions with the associate are deferred in proportion to Chunghwa’s ownership percentage in the associates until they are realized through transactions with third parties.

Jointly Controlled Entities

A jointly controlled entity is a contractual arrangement to set up another entity whereby the Company and other parties undertake an economic activity that is subject to joint control.

The operating results and assets and liabilities of jointly controlled entities are incorporated in these consolidated financial statements using the equity method of accounting. Under the equity method, an investment in a jointly controlled entity is initially recognized in the consolidated balance sheet at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the jointly controlled entity. The Company also recognized the changes in the share of equity of jointly controlled entity.

Property, Plant and Equipment

When future economic benefits are expected to inflow to the Company and costs can be evaluated reliably, property, plant and equipment that are held for use in the production or supply of goods or services, or for administrative purposes for over one year are measured at costs. Subsequent to initial recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment.

Depreciation is recognized so as to write off the cost of the assets less their residual values over their useful lives, and it is computed using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at least at the end of each year, with the effect of any changes in estimates accounted for on a prospective basis.

Upon sale or disposal of property, plant and equipment, the related cost, accumulated depreciation and accumulated impairment losses are deducted from the corresponding accounts, and any gain or loss is recognized in profit or loss as incurred.

Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties also include land held for a currently undetermined future use as such land is regarded as held for capital appreciation.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment.

19

The Company uses the straight line method to depreciate the assets, that is, to evenly allocate the cost less residual value over the expected useful lives of the investment properties.

Upon disposal of investment properties, the related cost, accumulated depreciation and accumulated impairment losses are deducted from the corresponding accounts, and any gain or loss is recognized in profit or loss as incurred.

Goodwill

Goodwill arising on a business combination is initially carried at cost at the acquisition date. Subsequent to initial recognition, goodwill arising on a business combination is measured at cost less accumulated amortization and accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Company’s cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If goodwill that allocated to each of the Company’s cash-generating units or groups of cash-generating units is acquired from the synergies of business combination, impairment test on those units or groups of units should be performed before the end of the same year. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

When the Company disposes of an operation within a cash-generating unit (group of units) to which goodwill has been allocated, the goodwill associated with that operation should be included in the carrying amount of the operation when determining the gain or loss on disposal; and measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit (group of units) retained.

Intangible Assets Other Than Goodwill

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at least at the end of year, with the effect of any changes in estimate being accounted for on a prospective basis. Except for the intangible assets to be disposed by the Company before the end of the useful lives, the residual values of intangible assets with finite useful lives are expected to be zero.

Upon disposal of intangible assets, the related cost, accumulated amortization and accumulated impairment losses are deducted from the corresponding accounts, and any gain or loss is recognized in profit or loss as incurred.

Impairment of Tangible and Intangible Assets Other Than Goodwill

When an indication of impairment is identified for tangible and intangible assets other than goodwill, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, as if no impairment loss had been recognized.

20

Financial Instruments

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

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

a. Financial assets

Regular way purchases or sales of financial assets are accounted for using trade date accounting. The regular way of transaction means the purchase or sale of financial assets delivered within the time frame established by regulation or convention in the marketplace.

1) Measurement category

a) Financial assets at fair value through profit and loss (FVTPL)

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on measurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend or interest earned on the financial asset.

b) Held-to-maturity financial assets

Held-to-maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed maturity date that the Company has the positive intention and ability to hold to maturity other than those that are designated as at fair value through profit or loss or as available-for-sale and those that meet the definition of loans and receivables and on initial recognition. When the counterparties of the Company’s investments have good credit quality, all with certain credit rating or above and the Company has the positive intention and ability to hold to maturity, the investments are classified as held-to-maturity financial assets.

Subsequent to initial recognition, held-to-maturity financial assets are measured at amortized cost using the effective interest method less any impairment.

Effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

c) Available-for-sale financial assets (AFS financial assets)

AFS financial assets are non-derivatives that are either designated as AFS or are not classified as loans and receivables, held-to-maturity financial assets or financial assets at fair value through profit or loss.

21

Listed stocks, emerging market stocks, open-end mutual funds, unlisted stocks and corporate bonds held by the Company and classified as AFS in an active market are measured at fair value at the end of each reporting period. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period.

Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates, interest income calculated using the effective interest method and dividends on AFS equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously is recognized in other comprehensive income reclassified to profit or loss.

Dividends on AFS equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established.

d) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables including cash and cash equivalents, trade notes and accounts receivable, accounts receivable from related parties, other receivables, and debt investments without active market are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

2) Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets carried at amortized cost, such as held-to-maturity investments and accounts receivable, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. However, since the discounted effect of short-term receivables is immaterial, the impairment loss is recognized on the difference between carrying amount and estimated future cash flow.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of AFS equity securities, impairment losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income.

22

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables and other receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable and other receivables is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

3) Derecognition of financial assets

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

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

c. Financial liabilities

1) Subsequent measurement

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

2) Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable (includes the transfer of non-cash assets or assumption of liabilities) is recognized in profit or loss.

d. Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to risk of foreign exchange rate and the fluctuation on stock price, including foreign exchange forward contracts, cross currency swap contracts and index future contracts.

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

Hedge Accounting

The Company designates certain derivative instruments as fair value hedges.

23

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in the line of the consolidated statement of comprehensive income relating to the hedged item.

Hedge accounting is discontinued when the Company revokes the hedging relationship, when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting.

Provisions

Provisions for the expected cost of warranty obligations under sale of goods are recognized at the date of sale of the relevant products, at the management’s best estimate of the expenditure required to settle the Company’s obligation.

Revenue Recognition

Revenues are recognized when they are realized or realizable and earned. Revenues are realized or realizable and earned when the Company has persuasive evidence of an arrangement, the goods have been delivered or the services have been rendered to the customer, the sales price is fixed or determinable and collectability is reasonably assured.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts for goods sold in the normal course of business, net of sales discounts and volume rebates. For trade receivables due within one year from the balance sheet date, as the nominal value of the consideration to be received approximates its fair value and transactions are frequent, fair value of the consideration is not determined by discounting all future receipts using an imputed rate of interest.

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

Other revenues are recognized as follows: (a) one-time subscriber connection fees (on fixed-line services) are deferred and recognized over the average expected customer service periods, (b) monthly fees (on fixed-line services, mobile, Internet and data services) are accrued every month, and (c) prepaid services (fixed-line, mobile, Internet and data services) are recognized as income based upon actual usage by customers or when the right to use those services expires.

Where the Company enters into transactions which involve both the provision of air time bundled with products such as 3G data card and handset, total consideration received from handsets in these arrangements are allocated and measured using units of accounting within the arrangement based on relative fair values limited to the amount that is not contingent upon the delivery of other items or services.

Services revenue is recognized when service provided.

Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract.

24

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Leasing

a. The Company as lessor

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

b. The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

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

Retirement Benefit Costs

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

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method with actuarial valuations. Actuarial gain and loss arising from defined benefit retirement benefit plans is recognized in the other comprehensive income as incurred. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortized on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognized in the consolidated balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, and as reduced by the fair value of plan assets.

The cost of providing benefit at the interim period is determined using the pension cost rate derived from the actuarial valuation at the end of prior year, and determined the adjustment of significant market fluctuation, curtailment, settlement or other one-time events.

Share-based Payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.

25

The value of the stock options granted, which is equal to the best available estimate of the number of stock options expected to vest multiplied by the grant-date fair value, is expensed on a straight-line basis over the vesting period, with a corresponding adjustment to additional paid-in capital - employee stock options. Expenses are recognized at the grant date in profit or loss if vested immediately.

At the balance sheet date, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to additional paid-in capital - employee stock options.

Income Tax

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

Current and deferred taxes are recognized in profit or loss, except for those relate to items recognized in other comprehensive income or directly in equity; in which cases, the relevant tax effects (current and deferred taxes) are also recognized in other comprehensive income or directly in equity, respectively.

a. Current tax

The tax currently payable is based on taxable profit for currently taxable profit. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

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 total annual earnings.

Income taxes (10%) on undistributed earnings are recorded in the year of stockholders approval, which is the year subsequent to the year the earnings are generated.

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

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences, loss carryforwards, unused tax credits from purchases of machinery, equipment and technology, research and development expenditures, and personnel training expenditures can be utilized.

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

26

The carrying amount of deferred tax assets is reviewed at the balance sheet date, and reduced to the extent that it is no longer probable that sufficient taxable profits will be allowed for deduction. Unrecognized deferred tax is reviewed at the balance sheet date and raised to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized.

4. CRITICAL ACCOUNTING JUDGEMENTS, KEY SOURCES OF ESTIMATION AND ASSUMPTION 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.

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

a. Impairment of accounts receivable

When there is objective evidence showed indications of impairment, the Company will consider the estimation of future cash flows. The amount of impairment will be measured on the difference between the carrying amount and the present value of estimated future cash flows discounted by the original effective interest rates of the financial assets. However, given the impact from the discount of short-term receivables is not material, the impairment of short-term receivables is measured at the difference between the carrying amount and the estimated future cash flows. Where the actual future cash flows are less than expected, a material impairment loss may arise.

b. Provision for inventory valuation and obsolescence

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

c. Impairment of tangible and intangible assets

When an indication of impairment is assessed with objective evidence, the impairment is recognized in profit or loss as incurred. The estimate of recoverable amount would impact on the timing and the amount of impairment loss recognition.

d. Useful lives of property, plant and equipment

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

27

5. APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

The Company has not adopted the following new, revised or amended IFRSs, IASs, IFRICs, SICs and related guidance issued by the International Accounting Standards Board (IASB).

Up to date, the effective dates of the following new and amended of IFRSs have not been published by FSC.

New, Revised or Amended Standards and Interpretations		Effective Date Issued by IASB (Note)
Endorsed by the FSC
Amendments to IFRSs	Improvement to IFRSs 2009 - amendment to IAS 39	January 1, 2009 or January 1, 2010
IFRS 9 (2009)	Financial Instruments	January 1, 2015
Amendment to IAS 39	Embedded Derivative	Effective in fiscal year beginning on or after June 30, 2009
Not yet endorsed by the FSC
Amendment to IFRSs	Improvements to IFRSs 2010 - amendment to IAS 39	July 1, 2010 or January 1, 2011
Amendment to IFRSs	Annual Improvements (to IFRSs 2009-2011 Cycle)	January 1, 2013
Amendment to IFRS 1	Limited Exemption from Comparative IFRS 7 Disclosures of First-time Adopters	July 1, 2010
Amendment to IFRS 1	Government Loans	January 1, 2013
Amendment to IFRS 1	Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters	July 1, 2011
Amendment to IFRS 7	Disclosures - Offsetting Financial Assets and Financial Liabilities	January 1, 2013
Amendments to IFRS 9 and 7	Mandatory Effective Date and Transition Disclosures	January 1, 2015
Amendment to IFRS 7	Disclosures - Transfers of Financial Assets	July 1, 2011
Amendment to IFRS 9 (2010)	Financial Instruments	January 1, 2015
Amendment to IFRS 10	Consolidated Financial Statements	January 1, 2013
Amendment to IFRS 11	Joint Arrangements	January 1, 2013
Amendment to IFRS 12	Disclosure of Interests in Other Entities Published	January 1, 2013
Amendments to IFRS 10, 11 and 12	Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance	January 1, 2013
Amendments to IFRS 10, IFRS 12 and IAS 27	Investment Entities	January 1, 2014
Amendment to IFRS 13	Fair Value Measurement	January 1, 2013
Amendment to IAS 1	Presentation of Items of Other Comprehensive Income	July 1, 2012

(Continued)

28

New, Revised or Amended Standards and Interpretations		Effective Date Issued by IASB (Note)
Amendment to IAS 12	Deferred tax: Recovery of Underlying Assets	January 1, 2012
Amendment to IAS 19	Employee Benefits	January 1, 2013
Amendment to IAS 27	Separate Financial Statements	January 1, 2013
Amendment to IAS 28	Investments in Associates and Joint Ventures	January 1, 2013
Amendment to IAS 32	Offsetting of Financial Assets and Financial Liabilities	January 1, 2014
Amendment to IAS 36	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
Amendment to IFRIC 20	Stripping Costs in the production Phase of A Surface Mine	January 1, 2013
Amendment to IFRIC 21	Levies	January 1, 2014

(Concluded)

Note: The aforementioned new, revised or amended standards or interpretations are effective after fiscal year beginning on or after the effective dates, unless specified otherwise.

Except for the following, the Company does not anticipate the adoption of the above new, amended and revised standards and interpretations will have material impact on the Company’s accounting policies.

a. IFRS 9 “Financial Instruments”

With regards to financial assets, all recognized financial assets that are within the scope of IAS 39 “Financial Instruments: Recognition and Measurement” are to be subsequently measured at amortized cost or fair value. Specifically, financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. All other financial assets are measured at their fair values at the balance sheet date. However, the Company may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognized in profit or loss.

b. New and revised standards on consolidation, joint arrangement, and associates and related disclosure

1) IFRS 10 “Consolidated Financial Statements”

IFRS 10 replaces IAS 27 “Consolidated and Separate Financial Statements” and SIC 12 “Consolidation - Special Purpose Entities”. The Company considers its ability of control over other entities for consolidation. The Company has control over an investee if and only if it has all the following a) power over the investee; b) exposure, or rights, to variable returns from its involvement with the investee; and c) the ability to use its power over the investee to affect the amount of its returns.

2) 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 those in the current standards.

29

3) Revision to IAS 28 “Investments in Associates and Joint Ventures”

Revised IAS 28 requires when a portion of an investment in associates meets the criteria to be classified as held for sale, that portion is classified as held for sale. Any retained portion of its investment in associates that has not been classified as held for sale is accounted for using the equity method. Previously, when a portion of an investment in associates meets the criteria to be classified as held for sale, the entire investment is classified as held for sale and ceases to apply the equity method.

c. 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 in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only will be extended by IFRS 13 to cover all assets and liabilities within its scope.

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

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

e. Amendments 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, to disclose the components of the defined benefit costs, to eliminate the corridor approach and to accelerate the recognition of past service cost. According to the amendments, all actuarial gains and losses will be recognized immediately through other comprehensive income; the past service cost, on the other hand, will be expensed immediately when it incurs and no longer be amortized over the average period before vested on a straight-line basis. In addition, the amendment also requires a broader disclosure in defined benefit plans.

f. Amendments to IAS 36 “Recoverable Amount Disclosures for Non-financial Assets”

In issuing IFRS 13 “Fair Value Measurement”, the IASB made some consequential amendments to the disclosure requirements in IAS 36 “Impairment of Assets”, introducing a requirement to disclose in every reporting period the recoverable amount of an asset or each cash-generating unit. The amendment clarifies that the disclosure of such recoverable amount is required during the period when an impairment loss has been recognized or reversed. Furthermore, the Company is required to disclose the discount rate used in current and previous measurements of the recoverable amount based on fair value less costs of disposal measured using a present value technique.

The Company continuously evaluates the potential impact on the consolidated financial statements and will disclose the results after the evaluation is completed.

30

6. CASH AND CASH EQUIVALENTS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Cash
Cash on hand	$	223,031	$	447,399	$	228,679	$	238,850
Bank deposits		6,309,740		5,730,478		5,116,827		5,115,371
		6,532,771		6,177,877		5,345,506		5,354,221
Cash equivalents
Commercial paper		10,005,050		18,957,163		780,553		18,966,431
Negotiable certificate of deposit		16,800,000		4,590,000		23,600,000		1,177,037
Time deposits with maturities of less than three months		1,412,092		1,213,432		1,762,218		610,028
Treasury bills		—		—		—		299,479
		28,217,142		24,760,595		26,142,771		21,052,975
	$	34,749,913	$	30,938,472	$	31,488,277	$	26,407,196

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

	September 30, 2013	December 31, 2012	September 30, 2012	January 1, 2012
Bank deposits	0.00%-0.76%	0.00%-0.75%	0.00%-0.76%	0.00%-0.75%
Commercial paper	0.64%-0.68%	0.71%-0.74%	0.71%-0.80%	0.45%-0.80%
Negotiable certificate of deposit	0.77%-0.85%	0.83%-0.96%	0.70%-0.91%	0.63%-0.72%
Time deposits with maturities of less than three months	0.30%-5.10%	0.88%-4.70%	0.25%-5.50%	0.40%-5.50%
Treasury bills	—	—	—	0.70%

Cash equivalents are short term investments with maturities of less than three months or with high liquidities which can be readily convertible to cash, for the purpose of meeting short-term cash demand, including commercial paper, negotiable certificate of deposit, time deposits, and treasury bills.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Financial assets held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	363	$	292	$	285	$	—
Currency swap contracts		—		2,702		32,393		6,094
		363		2,994		32,678		6,094
Financial assets designated as at fair value through profit or loss
Convertible bonds		—		—		—		39,656
	$	363	$	2,994	$	32,678	$	45,750

(Continued)

31

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Financial liabilities held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	671	$	24	$	222	$	73
Currency swap contracts		—		1,935		—		3,665
Index future contracts		—		—		—		249
	$	671	$	1,959	$	222	$	3,987

(Concluded)

The Company did not apply hedge accounting on the aforementioned contracts at the balance sheet date.

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

	Currency	Maturity Period	Contract Amount (In Thousands)
September 30, 2013
Forward exchange contracts - buy	NT$/US$	2013.10	NT$509,869/US$17,200
December 31, 2012
Currency swap contracts	US$/NT$	2013.01-2013.03	US$34,000/NT$991,188
	US$/NT$	2013.01-2013.03	US$32,000/NT$929,280
Forward exchange contracts - buy	NT$/US$	2013.01	NT$154,304/US$5,310
September 30, 2012
Currency swap contracts	US$/NT$	2012.10-2012.11	US$66,000/NT$1,967,249
Forward exchange contracts - buy	NT$/US$	2012.10	NT$211,711/US$7,220
January 1, 2012
Currency swap contracts	US$/NT$	2012.01-2012.03	US$43,000/NT$1,306,834
	US$/NT$	2012.01-2012.02	US$19,000/NT$571,280
Forward exchange contracts - buy	NT$/US$	2012.01	NT$59,638/US$1,967

The Company did not have any outstanding index future contracts as of September 30, 2013, December 31, 2012 and September 30, 2012.

32

Outstanding index future contracts of subsidiaries on January 1, 2012 were as follows:

	Maturity Period		Units		Contract Amount (In Thousands)
January 1, 2012
TAIFEX futures
TX		2012.01		2	NT$	2,952
TX		2012.02		4	NT$	5,558
TX		2012.03		37	NT$	51,614
TE		2012.03		19	NT$	11,370
TF		2012.01		8	NT$	6,401
TF		2012.02		5	NT$	3,877
TF		2012.03		15	NT$	11,658

The deposits paid for outstanding index future contracts of subsidiaries (included in other current assets) were $5,408 thousand as of January 1, 2012.

The Company entered into above currency swap contracts, forward exchange contracts and index future contracts to manage its exposure to foreign currency risk and impacts in operating results due to fluctuations in exchange rates and stock prices. However, the aforementioned derivatives did not meet the criteria for hedge accounting and were classified as financial assets or financial liabilities held for trading.

The convertible bonds owned by subsidiaries were hybrid financial instruments that were financial assets designated as at fair value through profit or loss.

8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Equity securities
Domestic listed stocks and emerging stocks	$	3,042,355	$	3,278,315	$	3,352,337	$	528,236
Domestic and foreign open-end mutual funds		—		2,190,392		2,328,326		2,137,201
Foreign listed stocks		16,880		9,661		11,703		—
		3,059,235		5,478,368		5,692,366		2,665,437
Debt securities
Corporate bonds		—		50,207		50,755		76,209
	$	3,059,235	$	5,528,575	$	5,743,121	$	2,741,646
Current	$	16,880	$	2,250,260	$	2,390,784	$	2,498,712
Non-current		3,042,355		3,278,315		3,352,337		242,934
	$	3,059,235	$	5,528,575	$	5,743,121	$	2,741,646

CHI evaluated and concluded its available-for-sale financial assets were partially impaired, and recorded an impairment loss of $26,779 thousand for the nine months ended September 30, 2012.

33

9. HELD-TO-MATURITY FINANCIAL ASSETS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Corporate bonds	$	12,359,341	$	14,791,151	$	15,731,115	$	13,790,447
Bank debentures		1,253,506		1,255,139		1,255,684		905,745
	$	13,612,847	$	16,046,290	$	16,986,799	$	14,696,192
Current	$	4,689,694	$	4,250,146	$	2,981,338	$	1,201,301
Non-current		8,923,153		11,796,144		14,005,461		13,494,891
	$	13,612,847	$	16,046,290	$	16,986,799	$	14,696,192

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

	September 30, 2013	December 31, 2012	September 30, 2012	January 1, 2012
Corporate bonds
Par value	$12,310,000	$15,955,000	$15,955,000	$13,865,000
Nominal interest rate	1.15%-2.90%	1.15%-2.90%	1.15%-2.90%	1.20%-2.98%
Effective interest rate	1.00%-2.89%	1.00%-2.89%	1.00%-2.89%	0.83%-2.89%
Average expiry date	4 years	4 years	4 years	4 years
Bank debentures
Par value	$1,250,000	$1,250,000	$1,250,000	$900,000
Nominal interest rate	1.25%-1.60%	1.25%-1.60%	1.25%-1.60%	1.37%-1.60%
Effective interest rate	1.15%-1.40%	1.15%-1.40%	1.15%-1.40%	1.25%-1.40%
Average expiry date	4 years	4 years	4 years	4 years

10. TRADE NOTES AND ACCOUNTS RECEIVABLE

	September 30, 2013			December 31, 2012			September 30, 2012			January 1, 2012
Trade notes and accounts receivable	$	25,225,266		$	25,165,616		$	25,250,852		$	24,819,083
Less: Allowance doubtful debts		(880,660	)		(810,799	)		(849,956	)		(2,423,012	)
	$	24,344,606		$	24,354,817		$	24,400,896		$	22,396,071

The average credit terms range from 30 to 90 days. When determining the collectability of notes and accounts receivable, the Company considered if there is any change in the credit quality at the balance sheet date. In general, with few exceptional cases, it is unlikely for the notes and accounts receivable due longer than 180 days to be collected, the Company recognized 100% allowance of notes and accounts receivable longer than 180 days. For the notes and accounts receivable less than 180 days, the allowance for doubtful accounts was estimated based on historical recovery experience.

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

34

The aging of estimated recoverable amount of receivables that were past due but not impaired as of September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012 was as follows:

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Less than 30 days	$	510,273	$	504,545	$	358,150	$	882,410
31-60 days		171,320		137,574		641,104		169,191
61-90 days		77,054		49,962		488,034		581,760
91-120 days		77,593		11,332		265,833		13,329
121-180 days		58,620		4,119		21,239		10,229
More than 181 days		18,089		8,782		7,796		11,015
	$	912,949	$	716,314	$	1,782,156	$	1,667,934

The above aging analysis was based on days overdue.

Movements of the allowance for doubtful accounts were as follows:

	Nine Months Ended September 30
	2013			2012
Balance, beginning of period	$	810,799		$	2,423,012
Add: Provision for (reversal of) doubtful accounts		166,823			(1,462,798	)
Deduct: Amounts written off		(96,962	)		(110,258	)
Balance, end of period	$	880,660		$	849,956

The amount of allowance for bad debts assessed individually included the impairment loss of accounts receivable from certain companies in liquidation process or in significant financial difficulties, which were $207,048 thousand, $163,779 thousand, $139,886 thousand and $7,303 thousand as of September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012, respectively.

Chunghwa evaluated the results of procedures implemented in prior years to enhance the collection of accounts receivable as well as the experience of decreases in uncollected receivables, and decided to refine the estimates used in the allowance calculation which led to the reversal of allowance for doubtful accounts for the six months ended June 30, 2012.

11. INVENTORIES

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Merchandise	$	4,930,729	$	4,242,860	$	3,038,523	$	2,998,617
Project in process		1,054,735		795,260		684,281		769,764
Work in process		14,071		17,713		6,226		12,474
Raw materials		32,815		36,069		33,165		24,584
		6,032,350		5,091,902		3,762,195		3,805,439
Land held for sale		—		14,766		218,150		579,226
Land and building held for sale		42,183		54,884		42,948		—
Construction in progress		9,917		—		—		290,137
Land held under development		—		—		—		111,536
Land held for development		2,002,649		2,034,549		35,816		35,816
	$	8,087,099	$	7,196,101	$	4,059,109	$	4,822,154

35

The operating costs related to inventories were $11,898,357 thousand (including the valuation loss on inventories of $18,497 thousand) and $9,417,405 thousand (including the valuation loss on inventories of $3,216 thousand) for the three months ended September 30, 2013 and 2012, respectively. The operating costs related to inventories were $37,349,749 thousand (including the valuation loss on inventories of $133,054 thousand) and $30,744,697 thousand (including the valuation loss on inventories of $14,455 thousand) for the nine months ended September 30, 2013 and 2012, respectively

As of September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012, inventories of $2,016,208 thousand, $2,041,797 thousand, $43,428 thousand and $1,023,414 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 for sale on December 31, 2012 was for Wan-Xi and Li-Shui (A) projects. Land held for sale on September 30, 2012 and January 1, 2012 was for Wan-Xi, Li-Shui (A) and Covent projects.

Land and building held for sale on September 30, 2013, September 30 and December 31, 2012 was for Guang-Diang project.

Construction in process on September 30, 2013 was for Qingshan Sec., Dayuan Township, Taoyuan County project. Land held under development and construction in progress on January 1, 2012 was for Guang-Diang and Li-Shui (A) projects.

Land held for development on September 30, 2013 and December 31, 2012 was for Yucheng Sec., Nangang Dist., Taipei City and Qingshan Sec., Dayuan Township, Taoyuan County. Land held for development on September 30, 2012 and January 1, 2012 was for Subsection 2 Gongyuan Sec., Zhongzheng Dist., Taipei City and Yucheng Sec., Nangang Dist., Taipei City.

12. PREPAYMENTS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Prepaid rents	$	3,451,223	$	3,565,310	$	3,708,323	$	3,851,568
Prepaid salary and bonus		2,693,295		345		2,660,108		311
Others		2,482,344		1,974,286		2,092,365		1,583,740
	$	8,626,862	$	5,539,941	$	8,460,796	$	5,435,619
Current
Prepaid salary and bonus	$	2,693,295	$	345	$	2,660,108	$	311
Prepaid rents		963,047		917,975		1,007,069		993,848
Others		1,415,298		1,067,386		1,275,797		894,484
	$	5,071,640	$	1,985,706	$	4,942,974	$	1,888,643
Non-current
Prepaid rents	$	2,488,176	$	2,647,335	$	2,701,254	$	2,857,720
Others		1,067,046		906,900		816,568		689,256
	$	3,555,222	$	3,554,235	$	3,517,822	$	3,546,976

36

13. OTHER CURRENT MONETARY ASSETS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Time deposits and negotiable certificate of deposit with maturities of more than three months	$	2,385,360	$	22,263,840	$	7,335,178	$	40,982,360
Receivables from the Fund for Privatization of Government - owned Enterprises under the Executive Yuan		1,333,114		869,032		880,073		1,283,829
Others		1,057,275		1,316,323		888,094		784,559
	$	4,775,749	$	24,449,195	$	9,103,345	$	43,050,748

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

	September 30, 2013	December 31, 2012	September 30, 2012	January 1, 2012
Time deposits and negotiable certificate of deposit with maturities of more than three months	0.11%-3.30%	0.25%-3.30%	0.25%-4.40%	0.25%-3.30%

14. FINANCIAL ASSETS CARRIED AT COST

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Non-listed stocks
Domestic	$	2,279,302	$	2,327,994	$	2,385,751	$	2,470,485
Foreign		175,652		139,867		139,867		104,545
	$	2,454,954	$	2,467,861	$	2,525,618	$	2,575,030

The above non-listed stocks are classified as available-for-sale financial assets based on financial assets categories (see Note 36). 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 investment owned by the Company were carried at costs less any impairment losses at the balance sheet date.

CHI evaluated and concluded its financial assets carried at cost were partially impaired, and recorded an impairment loss of $1,920 thousand and $34,045 thousand for the three months ended September 30, 2013 and 2012, and $28,692 thousand and $111,614 thousand for the nine months ended September 30, 2013 and 2012, respectively.

37

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Investments in associates	$	2,135,104	$	1,998,983	$	2,433,123	$	2,305,328
Jointly controlled entity		232,343		241,309		245,214		250,689
	$	2,367,447	$	2,240,292	$	2,678,337	$	2,556,017

a. Investments in associates

Investments in associates were as follows:

	Carrying Amount
	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)	$	663,852	$	541,672	$	548,243	$	462,161
Senao Networks, Inc. (“SNI”)		468,379		403,154		382,979		337,886
International Integrated System, Inc. (“IISI”)		273,914		277,592		268,414		257,371
Viettle-CHT Co., Ltd.		271,259		265,052		262,852		255,121
Skysoft Co., Ltd. (“SKYSOFT”)		143,383		127,686		122,988		113,304
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		122,481		223,949		592,545		638,120
So-net Entertainment Taiwan Limited (“So-net”)		89,318		31,152		32,198		34,545
Kingwaytek Technology Co., Ltd. (“KWT”)		68,201		77,449		72,253		75,369
HopeTech Technologies Limited (“HopeTech”)		24,669		21,741		20,961		20,970
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		6,774		8,634		9,191		698
Dian Zuan Intergrating Marketing Co., Ltd. (“DZIM”)		2,874		20,902		120,499		109,783
Panda Monium Company Ltd.		—		—		—		—
	$	2,135,104	$	1,998,983	$	2,433,123	$	2,305,328

38

At the end of reporting period, the proportion of ownership in associates held by the Company were as follows:

	September 30, 2013			December 31, 2012			September 30, 2012			January 1, 2012
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		38	%		38	%		38	%		38	%
Senao Networks, Inc. (“SNI”)		40	%		40	%		41	%		41	%
International Integrated System, Inc. (“IISI”)		33	%		33	%		33	%		33	%
Viettle-CHT Co., Ltd.		30	%		30	%		30	%		30	%
Skysoft Co., Ltd. (“SKYSOFT”)		30	%		30	%		30	%		30	%
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		40	%		40	%		40	%		40	%
So-net Entertainment Taiwan Limited (“So-net”)		30	%		30	%		30	%		30	%
Kingwaytek Technology Co., Ltd. (“KWT”)		33	%		33	%		33	%		33	%
HopeTech Technologies Limited (“HopeTech”)		45	%		45	%		45	%		45	%
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		49	%		49	%		49	%		49	%
Dian Zuan Intergrating Marketing Co., Ltd. (“DZIM”)		13	%		33	%		40	%		40	%
Panda Monium Company Ltd.		43	%		43	%		43	%		43	%

Summarized financial information of associates were as follows:

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Total assets	$	20,512,732	$	20,013,969	$	21,438,321	$	20,020,401
Total liabilities	$	13,966,416	$	13,952,740	$	14,431,632	$	13,425,684

	Three Months Ended September 30					Nine Months Ended September 30
	2013			2012		2013			2012
Net revenues	$	3,141,696		$	5,389,325	$	9,539,239		$	11,171,295
Net income	$	460,779		$	475,737	$	1,330,490		$	1,200,071
Other comprehensive income	$	(39,324	)	$	149,402	$	(21,558	)	$	(11,163	)
The Company’s share of the profit or loss of associates accounted for using equity method	$	225,696		$	181,502	$	534,146		$	467,413

Chunghwa participated in the capital increase of So-net by investing $60,000 thousand in March 2013. The ownership interest remains 30% after the capital increase.

39

Chunghwa, President Chain Store Corporation and EasyCard Corporation established an associate, DZIM, in May 2011. Chunghwa invested $114,640 thousand cash and held 40% ownership of DZIM in May 2011. Chunghwa participated in the capital increase of DZIM by investing $14,360 thousand in May 2012 but did not subscribe the shares at its corresponding proportion. Thus, the ownership interest decreased from 40% to 33% after the capital increase of DZIM. DZIM reduced its capital by $193,490 thousand in December 2012; Chunghwa received $64,500 thousand capital distribution and the ownership interest remains at 33%. DZIM reduced its capital to offset the deficits amounted to $130,787 thousand and made capital reduction of $49,158 thousand during its stockholders’ meeting held in March 31, 2013. Chunghwa received $16,387 thousand from capital reduction. Chunghwa did not participate in the capital increase of DZIM in July 2013 and the ownership interest decreased from 33% to 13% after the capital increase of DZIM. The Company still has 2 members among 7 members to the board of directors; therefore it remains an investor with significant influence over DZIM. DZIM engages mainly in information technology service and general advertisement service.

COI participated in the capital increase of Sertec by investing $11,552 thousand in February 2012. COI retained 49% ownership of Sertec after the capital increase.

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 nine months ended September 30, 2013 and 2012.

b. Investments in jointly controlled entity

Investments in jointly controlled entity were as follows:

	Carrying Amount								% of Ownership and Voting Rights
	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012		September 30, 2013			December 31, 2012			September 30, 2012			January 1, 2012
Non-listed
Huada Digital Corporation (“HDD”)	$	232,343	$	241,309	$	245,214	$	250,689		50	%		50	%		50	%		50	%

Chunghwa invested in HDD in September 2011 at $250,000 thousand cash to acquire 50% of its shares and the rest of 50% ownership interest was held by HTC Corporation (“HTC”). After the stockholders’ meeting of HDD held on March 2, 2012, Chunghwa and HTC each obtained half of director seats. Thus, neither Chunghwa nor HTC obtained control over HDD. HDD engages mainly in providing software service.

Summarized financial information of jointly controlled entity was as follows:

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Current assets	$	228,732	$	238,663	$	242,456	$	250,774
Non-current assets	$	5,815	$	5,909	$	4,711	$	—
Current liabilities	$	2,204	$	3,263	$	1,953	$	85
Non-current liabilities	$	—	$	—	$	—	$	—

	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
Profit or loss
Revenues and income	$	2,141		$	1,545		$	5,882		$	2,537
Expenses and losses	$	(5,016	)	$	(4,391	)	$	(14,848	)	$	(8,012	)
The Company’s share of profits of the jointly controlled entity accounted for using equity method	$	(2,875	)	$	(2,846	)	$	(8,966	)	$	(5,475	)

The Company’s investments accounted for using entity method share of profits of the jointly controlled entity was recorded based on the reviewed financial statements for the three months and nine months ended September 30, 2013 and 2012.

40

16. PROPERTY, PLANT AND EQUIPMENT

	Land			Land Improvements			Buildings			Computer Equipment			Telecommunications Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Advances Related to Acquisition of Equipment			Total
Cost
Balance on January 1, 2012	$	102,122,004		$	1,521,126		$	67,288,565		$	14,808,361		$	655,542,989		$	2,526,674		$	7,220,343		$	13,688,548		$	864,718,610
Additions		—			—			—			34,111			32,657			631			180,181			21,723,588			21,971,168
Disposal		(14,140	)		—			(25,626	)		(740,725	)		(8,298,092	)		(355,644	)		(329,334	)		—			(9,763,561	)
Effect of foreign exchange differences		—			—			—			(1,088	)		545			(4	)		(2,481	)		(13,502	)		(16,530	)
Other		59,193			23,964			57,444			744,377			15,989,353			856,363			353,014			(18,199,800	)		(116,092	)
Balance on September 30, 2012	$	102,167,057		$	1,545,090		$	67,320,383		$	14,845,036		$	663,267,452		$	3,028,020		$	7,421,723		$	17,198,834		$	876,793,595
Accumulated depreciation and impairment
Balance on January 1, 2012	$	—		$	(1,016,500	)	$	(19,670,023	)	$	(10,919,241	)	$	(531,242,952	)	$	(1,254,273	)	$	(5,583,790	)	$	—		$	(569,686,779	)
Depreciation Expenses		—			(42,194	)		(913,974	)		(1,007,293	)		(20,686,294	)		(287,996	)		(388,735	)		—			(23,326,486	)
Disposal		—			—			25,626			732,628			8,284,794			355,644			319,871			—			9,718,563
Effect of foreign exchange differences		—			—			—			178			828			—			573			—			1,579
Other		—			442			(6,815	)		(4,222	)		40,411			(4,605	)		(42,903	)		—			(17,692	)
Balance on September 30, 2012	$	—		$	(1,058,252	)	$	(20,565,186	)	$	(11,197,950	)	$	(543,603,213	)	$	(1,191,230	)	$	(5,694,984	)	$	—		$	(583,310,815	)
Balance on January 1, 2012, net	$	102,122,004		$	504,626		$	47,618,542		$	3,889,120		$	124,300,037		$	1,272,401		$	1,636,553		$	13,688,548		$	295,031,831
Balance on September 30, 2012, net	$	102,167,057		$	486,838		$	46,755,197		$	3,647,086		$	119,664,239		$	1,836,790		$	1,726,739		$	17,198,834		$	293,482,780
Cost
Balance on January 1, 2013	$	102,196,615		$	1,548,184		$	67,428,504		$	15,233,816		$	669,375,712		$	3,315,452		$	7,588,449		$	18,683,121		$	885,369,853
Additions		—			—			4,058			48,118			34,842			1,145			221,083			22,271,534			22,580,780
Disposal		—			(8,971	)		(4,298	)		(623,384	)		(9,142,904	)		(131,015	)		(315,214	)		—			(10,225,786	)
Effect of foreign exchange differences		—			—			—			1,542			(25,939	)		23			3,211			21,029			(134	)
Other		24,772			9,870			(62,255	)		932,106			17,956,375			491,080			551,173			(19,772,413	)		130,708
Balance on September 30, 2013	$	102,221,387		$	1,549,083		$	67,366,009		$	15,592,198		$	678,198,086		$	3,676,685		$	8,048,702		$	21,203,271		$	897,855,421
Accumulated depreciation and impairment
Balance on January 1, 2013	$	—		$	(1,067,498	)	$	(20,824,621	)	$	(11,348,414	)	$	(547,845,695	)	$	(1,270,172	)	$	(5,671,104	)	$	—		$	(588,027,504	)
Depreciation Expenses		—			(40,812	)		(930,227	)		(1,018,811	)		(20,163,388	)		(403,868	)		(540,666	)		—			(23,097,772	)
Disposal		—			8,971			4,299			621,064			9,126,391			131,015			305,987			—			10,197,727
Impairment losses		—			—			—			—			(2,262	)		—			—			—			(2,262	)
Effect of foreign exchange differences		—			—			—			(453	)		2,119			(8	)		(1,852	)		—			(194	)
Other		—			321			59,624			(518	)		(1,333	)		(6,565	)		(166,145	)		—			(114,616	)
Balance on September 30, 2013	$	—		$	(1,099,018	)	$	(21,690,925	)	$	(11,747,132	)	$	(558,884,168	)	$	(1,549,598	)	$	(6,073,780	)	$	—		$	(601,044,621	)
Balance on January 1, 2013, net	$	102,196,615		$	480,686		$	46,603,883		$	3,885,402		$	121,530,017		$	2,045,280		$	1,917,345		$	18,683,121		$	297,342,349
Balance on September 30, 2013, net	$	102,221,387		$	450,065		$	45,675,084		$	3,845,066		$	119,313,918		$	2,127,087		$	1,974,922		$	21,203,271		$	296,810,800

41

At March 31, 2013, impairment indications for property, plant and equipment were noted, the Company performed the impairment assessment of telecommunications equipment and recorded an impairment loss of $2,262 thousands for the three months ended March 31, 2013. No impairment loss was recorded for the three month period ended September 30, 2013.

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	3-10 years
Computer equipment	3-8 years
Telecommunications equipment
Telecommunication circuits	9-15 years
Telecommunication machinery and antennas equipment	5-10 years
Transportation equipment	3-10 years
Miscellaneous equipment
Leasehold improvements	2-6 years
Mechanical and air conditioner equipment	8-16 years
Others	3-10 years

17. INVESTMENT PROPERTIES

	Investment Properties
Cost
Balance on January 1, 2012	$	9,248,604
Reclassification		26,295
Balance on September 30, 2012	$	9,274,899
Accumulated depreciation and impairment
Balance on January 1, 2012	$	(188,523	)
Depreciation expense		(12,260	)
Recognized impairment loss		(1,261,365	)
Reclassification		(47	)
Balance on September 30, 2012	$	(1,462,195	)
Balance on January 1, 2012, net	$	9,060,081
Balance on September 30, 2012, net	$	7,812,704
Cost
Balance on January 1, 2013 and September 30, 2013	$	9,260,015

(Continued)

42

	Investment Properties
Accumulated depreciation and impairment
Balance on January 1, 2013	$	(1,471,117	)
Depreciation expense		(12,434	)
Balance on September 30, 2013	$	(1,483,551	)
Balance on January 1, 2013, net	$	7,788,898
Balance on September 30, 2013, net	$	7,776,464

(Concluded)

There is no impairment indications noted for investment properties and the Company did not perform impairment assessment of investment properties for the three months ended September 30, 2013 and nine months ended September 30, 2013.

After evaluating the investment properties, the Company determined that some investments were impaired and recognized an impairment loss of $1,261,365 thousand for the three months ended June 30, 2012 and nine months ended September 30, 2012.

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	3-10 years

The fair value of the Company’s investment properties as of January 1, 2012 and December 31, 2012 was determined on the appraisal reports conducted by independent appraisers. The Company used the abovementioned appraisal reports as the basis to calculate fair value as of September 30, 2013 and 2012 because there was no material change in the economic environment and the market trading price. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

	September 30, 2013	December 31, 2012	September 30, 2012	January 1, 2012
Fair value	$15,510,857	$15,510,857	$15,058,328	$15,058,328
Capitalized interest rate	1.46%	1.46%	1.46%	1.46%
Profit margin ratio	12%-15%	12%-15%	12%-15%	12%-15%
Discount rate	1.36%	1.36%	1.36%	1.36%
Capitalization rate	1.5%-2.05%	1.5%-2.05%	1.5%-2.05%	1.5%-2.05%

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

43

18. INTANGIBLE ASSETS

	3G Concession			Computer Software			Goodwill			Others			Total
Cost
Balance on January 1, 2012	$	10,179,000		$	1,732,720		$	180,631		$	139,005		$	12,231,356
Additions-acquired separately		—			398,308			—			1,068			399,376
Disposal		—			(19,354	)		—			—			(19,354	)
Abandonment		—			(153,168	)		—			—			(153,168	)
Effect of foreign exchange difference		—			(6	)		—			—			(6	)
Balance on September 30, 2012	$	10,179,000		$	1,958,500		$	180,631		$	140,073		$	12,458,204
Accumulated amortization and impairment
Balance on January 1, 2012	$	(4,938,738	)	$	(981,580	)	$	—		$	(32,863	)	$	(5,953,181	)
Amortization expenses		(561,457	)		(265,224	)		—			(6,823	)		(833,504	)
Disposal		—			19,354			—			—			19,354
Abandonment		—			153,168			—			—			153,168
Effect of foreign exchange difference		—			2			—			—			2
Balance on September 30, 2012	$	(5,500,195	)	$	(1,074,280	)	$	—		$	(39,686	)	$	(6,614,161	)
Balance on January 1, 2012, net	$	5,240,262		$	751,140		$	180,631		$	106,142		$	6,278,175
Balance on September 30, 2012, net	$	4,678,805		$	884,220		$	180,631		$	100,387		$	5,844,043
Cost
Balance on January 1, 2013	$	10,179,000		$	2,065,542		$	180,631		$	116,650		$	12,541,823
Additions-acquired separately		—			511,195			—			676			511,871
Disposal		—			(739	)		—			—			(739	)
Abandonment		—			(168,892	)		—			—			(168,892	)
Effect of foreign exchange difference		—			880			—			279			1,159
Balance on September 30, 2013	$	10,179,000		$	2,407,986		$	180,631		$	117,605		$	12,885,222
Accumulated amortization and impairment
Balance on January 1, 2013	$	(5,687,347	)	$	(1,049,664	)	$	—		$	(23,009	)	$	(6,760,020	)
Amortization expenses		(561,457	)		(347,629	)		—			(5,831	)		(914,917	)
Disposal		—			739			—			—			739
Abandonment		—			168,892			—			—			168,892
Impairment loss		—			—			(18,055	)		—			(18,055	)
Effect of foreign exchange difference		—			(59	)		—			—			(59	)
Balance on September 30, 2013	$	(6,248,804	)	$	(1,227,721	)	$	(18,055	)	$	(28,840	)	$	(7,523,420	)
Balance on January 1, 2013, net	$	4,491,653		$	1,015,878		$	180,631		$	93,641		$	5,781,803
Balance on September 30, 2013, net	$	3,930,196		$	1,180,265		$	162,576		$	88,765		$	5,361,802

Except for goodwill, the amortization expense is computed using the straight-line method over the following estimated service lives:

The computer software is amortized using the straight-line method over the estimated useful lives of 2 to 10 years.

The 3G Concession fee is amortized on a straight-line basis from the date operations commence through the date the license expires.

Other intangible assets are amortized using the straight-line method over the estimated useful lives of 3 to 20 years. Goodwill is not subject to amortization.

44

The Company recognized an impairment loss of $18,055 thousand on the goodwill arising from the business combination of a subsidiary, CHI, due to CHI underwent organization downsizing for the three months ended March 31, 2013 and the nine months ended September 30, 2013.

The Company did not recognize any impairment loss on goodwill for the three months ended September 30, 2012 and 2013, and the nine months ended September 30, 2012.

19. OTHER ASSETS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Spare parts	$	3,182,763	$	4,046,050	$	4,171,910	$	2,305,655
Refundable deposits		2,039,264		2,087,034		1,901,688		1,760,149
Other financial assets		1,000,000		1,000,000		1,000,000		1,000,000
Telecom license bid bond		1,000,000		—		—		—
Others		2,270,614		1,938,040		1,565,038		1,832,197
	$	9,492,641	$	9,071,124	$	8,638,636	$	6,898,001
Current
Spare parts	$	3,182,763	$	4,046,050	$	4,171,910	$	2,305,655
Others		804,449		428,545		470,089		734,181
	$	3,987,212	$	4,474,595	$	4,641,999	$	3,039,836
Non-current
Refundable deposits	$	2,039,264	$	2,087,034	$	1,901,688	$	1,760,149
Other financial assets		1,000,000		1,000,000		1,000,000		1,000,000
Telecom license bid bond		1,000,000		—		—		—
Others		1,466,165		1,509,495		1,094,949		1,098,016
	$	5,505,429	$	4,596,529	$	3,996,637	$	3,858,165

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 would be returned proportionately after the project was completed.

For long-term business development, Chunghwa has submitted an application to National Communications Commission (“NCC”) for mobile broadband license (4G license) and has deposited $1,000,000 thousand as bid bond in June 2013.

20. SHORT-TERM LOANS

	September 30, 2013	December 31, 2012	September 30, 2012	January 1, 2012
Unsecured loans	$1,075,222	$111,473	$130,000	$75,000
Annual interest rate	1.18%-2.40%	1.25%-2.40%	1.25%-2.50%	1.25%-1.53%

45

21. LONG-TERM LOANS (INCLUDING LONG-TERM LOANS - CURRENT PORTION)

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Secured loans	$	1,700,000	$	2,050,000	$	1,650,000	$	1,651,419
Unsecured loans		—		8,372		33,489		108,840
		1,700,000		2,058,372		1,683,489		1,760,259
Less: Current portion of long-term loans		—		8,372		33,489		701,887
	$	1,700,000	$	2,050,000	$	1,650,000	$	1,058,372

The annual interest rates of loans were as follows:

	September 30, 2013	December 31, 2012	September 30, 2012	January 1, 2012
Secured loans	1.15%-2.10%	1.13%-2.10%	1.13%	1.10%-1.83%
Unsecured loans	—	2.01%	2.01%	2.01%-2.04%

LED obtained a secured loan from Chang Hwa Bank in September 2010. Interest is paid monthly. $300,000 thousand and $1,350,000 thousand will become due in December 2014 and September 2015, respectively. LED obtained another secured loan from Chang Hwa Bank in December 2012 at $400,000 thousand which will be due in December 2017; LED repaid $300,000 thousand and $50,000 thousand in February and May 2013, respectively.

CHIEF obtained an unsecured loan from Bank of Taiwan in January 2009. Interest and principal amount are paid monthly from January 2009 and all were repaid in January 2013.

CHPT obtained a secured loan from the E.SUN Commercial Bank in February 2009. Interest and the principal were paid monthly from March 2009 and all were repaid in February 2012.

22. TRADE NOTES AND ACCOUNTS PAYABLE

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Trade notes and accounts payable	$	12,376,159	$	13,513,437	$	12,346,431	$	14,264,769

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

46

23. OTHER PAYABLES

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Other payables
Accrued salary and compensation	$	7,752,420	$	9,838,182	$	7,514,546	$	10,505,866
Accrual amounts for bonuses to employees and remuneration to directors and supervisors		706,714		1,784,767		1,797,872		2,343,593
Payables to equipment suppliers		1,910,113		1,884,038		1,879,036		1,870,486
Payables to contrators		1,627,268		2,379,833		1,270,578		1,834,254
Amounts collected for others		1,313,612		1,326,777		1,367,982		1,200,618
Accrued franchise fees		1,583,694		2,164,220		1,679,264		2,246,265
Accrued maintenance costs		1,093,666		988,240		1,054,083		898,016
Others		6,677,447		5,735,723		5,414,180		5,403,163
	$	22,664,934	$	26,101,780	$	21,977,541	$	26,302,261

24. PROVISIONS

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Warranties	$	199,160	$	221,245	$	128,800	$	148,050
Employee benefits		47,353		41,949		37,650		32,822
Others		3,030		2,960		2,160		1,180
	$	249,543	$	266,154	$	168,610	$	182,052
Current	$	114,242	$	221,245	$	128,800	$	148,050
Noncurrent		135,301		44,909		39,810		34,002
	$	249,543	$	266,154	$	168,610	$	182,052

	Warranties			Employee Benefits		Others			Total
Balance on January 1, 2012	$	148,050		$	32,822	$	1,180		$	182,052
Additional provisions recognized		40,767			4,828		980			46,575
Reductions		(60,017	)		—		—			(60,017	)
Balance on September 30, 2012	$	128,800		$	37,650	$	2,160		$	168,610
Balance on January 1, 2013	$	221,245		$	41,949	$	2,960		$	266,154
Additional provisions recognized		80,445			5,404		170			86,019
Reductions		(102,530	)		—		(100	)		(102,630	)
Balance on September 30, 2013	$	199,160		$	47,353	$	3,030		$	249,543

a. The provision for warranty claims represents the present values of the management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligation for warranties in sales agreements. The estimate has been made based on the historical warranty experience.

b. The provision for employee benefits represents annual leave and vested long-term service leave entitlements accrued.

47

25. 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 September 30, 2013 amounting to $938,440 thousand.

26. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The pension plan under the Labor Pension Act of ROC (the “LPA”) is considered as a defined contribution plan. Based on the LPA, 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.

b. 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.

The Company’s pension plan is considered as a defined benefit plan under the Labor Standards Law that 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 most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out at December 31, 2012 by the independent actuary. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method. The recognized pension expenses for the nine months ended September 30, 2013 and 2012 were determined by the pension cost rates of actuarial valuation of December 31 and January 1, 2012.

48

The principal assumptions used for the purpose of the actuarial valuations were as follows:

	Measurement Date
	December 31, 2012	January 1, 2012
Discount rates	1.60%	1.75%
Expected return on plan assets	1.60%	1.50%
Expected rates of salary increase	1.00%-2.75%	1.00%-3.00%

Relevant pension costs for the three months ended and nine months ended September 30, 2013 and 2012 were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Operating costs	$	440,748	$	430,013	$	1,321,680	$	1,288,377
Marketing expenses	$	213,348	$	210,258	$	641,129	$	631,661
General and administrative expenses	$	40,950	$	39,279	$	122,109	$	118,268
Research and development expenses	$	25,106	$	26,163	$	75,418	$	78,571

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

	December 31, 2012			January 1, 2012
Present value of funded defined benefit obligation	$	22,100,285		$	18,697,051
Fair value of plan assets		(17,528,601	)		(15,750,859	)
Deficit		4,571,684			2,946,192
Past service cost not yet recognised		40,233			44,569
Net liability arising from defined benefit obligation	$	4,611,917		$	2,990,761
Accrued pension liabilities	$	4,616,803		$	2,994,079
Prepaid pension cost (included in other noncurrent assets - others)		(4,886	)		(3,318	)
	$	4,611,917		$	2,990,761

The major categories of plan assets and the fair value of plan assets at the end of the reporting period for each category, were as follows:

	Fair Value of Plan Assets (%)
	December 31, 2012		January 1, 2012
Stock and beneficiary certificates		38.09		40.75
Fixed income investments		36.61		35.25
Cash		24.51		23.87
Others		0.79		0.13
		100.00		100.00

49

The overall expected rate of return is based on historical return trends and analysts’ prediction of the market for the asset over the life of related obligation refer to the Labor Pension Fund Supervisory Committee about the usage of pension funds, and consideration for the effect that the minimum return shall not be less than the average interest rate on a two-year time deposit published by local banks.

The Company elected to disclose the historical information of experience adjustments from the date of the adoption of Taiwan-IFRSs.

	December 31, 2012			January 1, 2012
Present value of defined benefit obligation	$	(22,100,285	)	$	(18,697,051	)
Fair value of plan assets	$	17,528,601		$	15,750,859
Deficit	$	(4,571,684	)	$	(2,946,192	)
Experience adjustments on plan liabilities	$	545,960		$	—
Experience adjustments on plan assets	$	(89,792	)	$	—

27. EQUITY

a. Share capital

1) Common stock

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Number of authorized shares (thousand)		12,000,000		12,000,000		12,000,000		12,000,000
Authorized shares	$	120,000,000	$	120,000,000	$	120,000,000	$	120,000,000
Number of shares issued and collected proceeds		7,757,447		7,757,447		7,757,447		7,757,447
Issued shares	$	77,574,465	$	77,574,465	$	77,574,465	$	77,574,465

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

2) 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 ten 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 September 30, 2013, the outstanding ADSs were 308,321 thousand common shares, which equaled 30,832 thousand units and represented 3.97% of Chunghwa’s total outstanding common shares.

50

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:

a) Exercise their voting rights,

b) Sell their ADSs, and

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

b. Addition paid-in capital

The adjustment of capital surplus for the nine months ended September 30, 2013 and 2012 were as follows:

	Share Premium			Movements of Paid-in Capital for Associates Accounted for Using Equity Method		Share-based Payment Transactions			Donated Capital		Stockholders’ Contribution Due to Privatization		Total
Balance on January 1, 2012	$	169,496,289		$	—	$	—		$	13,170	$	20,648,078	$	190,157,537
Exercise of employee stock option of subsidiaries		—			—		3,631			—		—		3,631
Balance on September 30, 2012	$	169,496,289		$	—	$	3,631		$	13,170	$	20,648,078	$	190,161,168
Balance on January 1, 2013	$	169,496,289		$	—	$	4,893		$	13,170	$	20,648,078	$	190,162,430
Cash distributed from capital surplus		(5,589,240	)		—		—			—		—		(5,589,240	)
Change in capital surplus from investments in associates accounted for by using equity method		—			3,049		—			—		—		3,049
Exercise of employee stock option of subsidiaries		—			—		3,658			—		—		3,658
Employee stock bonus issued by a subsidiary		—			—		(19	)		—		—		(19	)
Balance on September 30, 2013	$	163,907,049		$	3,049	$	8,532		$	13,170	$	20,648,078	$	184,579,878

Additional paid-in capital may only be utilized to offset deficits. However, the additional paid-in capital from shares issued in excess of par and donations 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.

Additional paid-in capital from investments accounted for using equity method may not be used for any purpose.

The additional paid-in capital - privatization is the retrospective adjustment at the date of transition to Taiwan-IFRSs. Please refer to Note 43 to the consolidated financial statement for further details.

c. 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, 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.

For the nine months ended September 30, 2013 and 2012, the accrual amounts for bonuses to employees and remuneration to directors and supervisors 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.

51

If the initial accrual amounts of the aforementioned bonus are significantly different from the amounts proposed by the board of directors, the difference is charged to the earnings of the year making the initial estimate. Otherwise, the difference between initial accrual amount and the amount resolved in the shareholders’ meeting is charged to the earnings of the following year as a result of change in accounting estimate. If the shareholders’ meeting approved to distribute the employee bonus as stocks, the share number of the stock bonus were determined by the amount of bonus divided by the fair value of the stocks which was the closing market prices one day before shareholders’ meeting after taking into account the effects of ex-rights and ex-dividends.

When the Company appropriate the earnings generated before 2012, Rule 89 No. 100116 issued by the ministry of Finance, R.O.C. and Rule No. 0950000507 issued by the FSC were followed and the special reserve was appropriated from reserve of the accounts with debit balances under stockholder’s equity. If there were any decrease of the aforementioned accounts of shareholders’ equity, the decreased amount could be reversed from the special reserve to retained earnings.

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 Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

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 Company.

The appropriations and distributions of the 2012 and 2011 earnings of Chunghwa have been approved by the stockholders on June 25, 2013 and June 22, 2012 as follows:

	Appropriation of Earnings				Dividends Per Share
	For Fiscal Year 2012		For Fiscal Year 2011		For Fiscal Year 2012		For Fiscal Year 2011
Legal reserve	$	3,990,397	$	4,706,838
Cash dividends		35,913,099		42,361,864	$	4.63	$	5.46

The stockholders of Chunghwa resolved to distribute cash $0.72 per share and the total amount of $5,589,240 thousand from additional paid-in capital on June 25, 2013. Such amount was subsequently paid in August 2013.

The bonuses to the employees and remuneration to the directors and supervisors of the 2012 and 2011 approved by the board of directors and the stockholders on June 25, 2013 and June 22, 2012 were as follows:

	2012		2011
	Cash Bonus		Cash Bonus
Bonus distributed to the employees	$	1,533,082	$	2,040,090
Remuneration paid to the directors and supervisors		37,484		44,446

There was no difference between the initial accrual amounts and the amounts resolved in shareholders’ meeting of the aforementioned bonuses to employees and the remuneration to directors and supervisors.

The Company’s distributable earnings, bonus distributed to the employees and remuneration paid to the directors and supervisors as of the end of the period were based on the accompanying consolidated financial statements of 2012 prepared in conformity with the pre-revised Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the ROC (“ROC GAAP”).

52

The appropriations of earnings for 2012 were proposed according to the Chunghwa’s financial statements for the years ended December 31, 2012, which were prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards.

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

d. Special reserves to be recognized for the first-time adoption of IFRS

Under Rule No. 1010012865 issued by the FSC on April 6, 2012 and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, on the first-time adoption of IFRSs, a company should appropriate a special reserve of an amount the same as that of unrealized revaluation increment and cumulative translation differences (gain) transferred to retained earnings as a result of the Company’s use of exemptions under IFRS 1. However, at the date of transitions to IFRSs, if the increase in retained earnings that resulted from all IFRSs adjustments is not enough for this appropriation, only the increase in retained earnings that resulted from all IFRSs adjustments will be appropriated to special reserve. No appropriation of earnings shall be made until any shortage of the aforementioned special reserve is appropriated in subsequent years if the Company has earnings and the original need to appropriate a special reserve is not eliminated.

The adjustments of IFRSs adoption resulted in the decrease of retained earnings of the Company; therefore, the Company is not required to appropriate any amount to the special reserve.

e. Other equity items

1) Exchange differences arising from the translation of the foreign operations

The exchange differences arising from the translation of the foreign operations from their functional currency to New Taiwan dollars were recognized as exchange differences arising from the translation of the foreign operations in other comprehensive income.

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

	Nine Months Ended September 30
	2013			2012
Beginning balance	$	257,991		$	67,674
Unrealized gain (loss) on available-for-sale financial assets		(249,166	)		306,830
Income tax relating to unrealized gain (loss) on available-for-sale financial assets		(3,010	)		—
Amount reclassified from equity to profit or loss on disposal		(157,358	)		(62,625	)
Ending balance	$	(151,543	)	$	311,879

Unrealized gain (loss) on available-for-sale financial assets were accumulated gains and losses on the available-for-sale financial assets measured at fair value, which were recognized in other comprehensive income and were included in the calculation of the related disposal gain and loss or impairment loss of such financial assets upon reclassified to profits or losses.

53

f. Noncontrolling interests

	Nine Months Ended September 30
	2013			2012
Beginning balance	$	4,441,849		$	4,276,384
Shares attributed to noncontrolling interests
Cash dividends paid by subsidiaries to noncontrolling interests		(811,296	)		(887,457	)
Net income of current period		909,282			861,822
Exchange differences arising from the translation of the net investment in foreign operations		17,241			(8,015	)
Unrealized gain on available-for-sale financial assets		2,354			2,300
Income tax relating to unrealized loss on available-for-sale financial assets		(372	)		—
Changes in capital surplus from investments in associates accounted for using equity method		3,794			—
Exercise of employee stock option of subsidiaries		32,878			35,481
Compensation cost of employee stock options of a subsidiary		45,303			—
Employee stock bonus issued by a subsidiary		2,468			—
Decrease in noncontrolling interests		(15,236	)		(107,271	)
Ending balance	$	4,628,265		$	4,173,244

28. REVENUE

The main source of revenue of the Company includes various telecommunications services in many different streams, and the related information is discussed in Note 42.

29. INCOME

a. Other income and expenses

	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
Loss on disposal or abandoment of property, plant and equipment	$	(12,005	)	$	(9,457	)	$	(21,914	)	$	(4,915	)
Impairment loss on property, plant and equipment		—			—			(2,262	)		—
Impairment loss on investment properties		—			—			—			(1,261,365	)
	$	(12,005	)	$	(9,457	)	$	(24,176	)	$	(1,266,280	)

54

b. Other income

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Dividends income	$	9,538	$	13,509	$	43,989	$	18,883
Rental income		9,796		11,859		31,849		32,299
Others		108,428		83,294		190,799		230,169
	$	127,762	$	108,662	$	266,637	$	281,351

c. Other gains and losses

	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
Net foreign currency exchange gains (losses)	$	(34,714	)	$	(47,679	)	$	(45,628	)	$	48,094
Gain (loss) on disposal of financial instruments, net		83,242			(2,649	)		76,291			65,343
Valuation gain (loss) on financial assets and liabilities at fair value through profit or loss, net		(35,831	)		49,133			(1,075	)		31,282
Loss arising from derivatives as designated hedging instruments in fair value hedges, net		(29,579	)		—			(93,145	)		—
Gain arising from adjustments for hedged item attributable to the hedged risk in a designated fair value hedge accounting relationship		29,579			—			93,145			—
Impairment losses on financial assets carried at cost		(1,920	)		(34,045	)		(28,692	)		(111,614	)
Impairment losses on available-for-sale financial assets		—			—			—			(26,779	)
Impairment losses on goodwill		—			—			(18,055	)		—
Others		(14,274	)		(6,798	)		(35,049	)		(44,374	)
	$	(3,497	)	$	(42,038	)	$	(52,208	)	$	(38,048	)

d. Finance costs

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Interest on bank borrowings	$	9,269	$	5,139	$	21,659	$	15,659
Other interest expenses		304		65		2,261		371
	$	9,573	$	5,204	$	23,920	$	16,030

55

e. Impairment loss (reversal gain) on financial instruments

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Notes and accounts receivable	$	34,692	$	37,461	$	166,823	$	(1,462,798	)
Other receivables	$	420	$	5,984	$	6,551	$	12,392
Financial assets carried at cost	$	1,920	$	34,045	$	28,692	$	111,614
Available-for-sale financial assets	$	—	$	—	$	—	$	26,779

f. Impairment loss of non-finacial assets

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Inventories	$	18,497	$	3,216	$	133,054	$	14,455
Goodwill	$	—	$	—	$	18,055	$	—
Property, plant and equipment	$	—	$	—	$	2,262	$	—
Investment properties	$	—	$	—	$	—	$	1,261,365

g. Depreciation and amortization expenses

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Property, plant and equipment	$	7,745,206	$	7,808,653	$	23,097,772	$	23,326,486
Investment properties		4,144		4,070		12,434		12,260
Intangible assets		312,950		285,233		914,917		833,504
Total depreciation and amortization expenses	$	8,062,300	$	8,097,956	$	24,025,123	$	24,172,250
Depreciation expenses summarized by functions
Operating costs	$	7,210,497	$	7,284,053	$	21,514,401	$	21,811,693
Operating expenses		538,853		528,670		1,595,805		1,527,053
	$	7,749,350	$	7,812,723	$	23,110,206	$	23,338,746
Amortization expenses summarized by functions
Operating costs	$	247,295	$	239,706	$	735,606	$	707,987
Operating expenses		65,655		45,527		179,311		125,517
	$	312,950	$	285,233	$	914,917	$	833,504

56

h. Employee benefit expenses

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Post-employment benefit
Defined contribution plans	$	94,739	$	85,573	$	269,698	$	232,994
Defined benefit plans		720,152		705,713		2,160,336		2,116,877
		814,891		791,286		2,430,034		2,349,871
Share-based payment
Equity-settled share-based payment		28,353		—		45,303		—
Other employee benefit
Salaries		6,227,757		6,142,161		18,622,104		18,478,683
Insurance		610,686		535,350		1,821,650		1,584,276
Others		3,826,037		4,009,676		10,620,000		11,077,081
		10,664,480		10,687,187		31,063,754		31,140,040
Total employee benefit expenses	$	11,507,724	$	11,478,473	$	33,539,091	$	33,489,911
Summary by functions
Operating costs	$	6,345,017	$	6,445,051	$	18,542,067	$	18,641,754
Operating expenses		5,162,707		5,033,422		14,997,024		14,848,157
	$	11,507,724	$	11,478,473	$	33,539,091	$	33,489,911

30. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense are as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
Current tax
Current tax expenses recognized for the current period	$	2,184,269		$	2,055,048		$	6,290,985		$	6,082,030
Income tax expenses of unappropriated earnings		—			—			27,413			9,384
Income tax adjustments on prior years		27,878			(19,696	)		17,303			5,840
Others		12,561			(10,024	)		15,119			14,975
		2,224,708			2,025,328			6,350,820			6,112,229
Deferred tax
Deferred tax expenses recognized for the current period		(47,029	)		60,204			(70,900	)		80,494
Income tax recognized in profit or loss	$	2,177,679		$	2,085,532		$	6,279,920		$	6,192,723

57

Reconciliation between financial income and taxable income is as follows:

	Nine Months Ended September 30
	2013			2012
Profit before tax from continuing operations	$	37,673,536		$	38,786,461
Income tax expense calculated at the statutory rate (17%)		6,404,501			6,593,698
Nondeductible expenses in determining taxable income		8,068			241,000
Imputed income on tax		1,469			1,474
Temporary difference		68,118			(110,713	)
Tax-exempt income		(80,107	)		(298,504	)
Additional income tax under the Alternative Minimum Tax Act		—			443
Additional income tax on unappropriated earnings		27,413			9,384
Investment credits		(175,650	)		(278,016	)
Effect of different tax rates of group entities operating in other jurisdictions		(7,244	)		(12,513	)
Adjustments of tax expense on previous years		17,303			5,840
Others		16,049			40,630
Income tax expense recognized in profit or loss	$	6,279,920		$	6,192,723

The applicable tax rate used above is the corporate tax rate of 17% payable by the Company in R.O.C., while the applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

b. Income tax recognized in other comprehensive income

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Deferred tax
Unrealized gain on available-for-sale financial assets	$	3,493	$	—	$	3,382	$	—

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

Chunghwa’s cumulative undistributed earnings for as of September 30, 2013, December 31, 2012, September 30, 2012 and January 1, 2012 were arising from integrated Income Tax.

Imputation credit account

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Balance of Imputation Credit Account (“ICA”)	$	2,134,441	$	4,459,457	$	2,426,516	$	4,899,036

The actual creditable ratios for distribution of Chunghwa’s 2012 and 2011 earnings were 19.23% and 17.63%, respectively.

When the Company appropriated the earnings generated in and after 1998, the imputation credit allocated to local shareholders’ was based on the creditable rate as of the date of the dividends distribution date.

58

d. Income tax examination

Chunghwa’s income tax returns have been examined by tax authorities through 2011 except for 2008 and 2010. SENAO’s income tax returns have been examined by authorities through 2010. The following subsidiaries income tax returns have been examined by authorities through 2011: CHPT, CHSI, CHIEF, CHI, SHE, LED, CHIYP, YYRP, Unigate and CHST.

31. 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

	Three Months Ended September 30						Nine Months Ended September 30
	2013			2012			2013			2012
Net income used to compute the basic earnings per share
Net income attributable to the parent	$	10,648,268		$	10,698,297		$	30,484,334		$	31,731,916
Assumed conversion of all dilutive potential common stock
Employee stock options of subsidiaries		(227	)		(411	)		(2,521	)		(3,321	)
Net income used to compute the diluted earnings per share	$	10,648,041		$	10,697,886		$	30,481,813		$	31,728,595

Weighted average number of common stock

(Thousand Shares)

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
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 stock bonus		1,015		2,148		13,713		21,557
Weighted average number of common stock used to compute the diluted earnings per share		7,758,462		7,759,595		7,771,160		7,779,004

According to the Interpretation 97-169 issued by ARDF in May 2008, Chunghwa presumed that the employees bonuses to be paid 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 resolve the number of shares to be distributed to employees in their meeting in the following year.

59

32. SHARE-BASED PAYMENT ARRANGEMENT

a. SENAO share-based compensation plans

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

Effective Date	Grant Date		Stock Options Units (Thousand)		Exercise Price (NT$)
2005.09.30		2006.05.05		10,000	$ (Original price $	12.10 16.90	)
2007.10.16		2007.10.31		6,181	$ (Original price $	42.60 44.20	)
2012.05.28		2013.04.29		10,000	$	93.00

Each option is eligible to subscribe for one common share when exercisable. Under the terms of the 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 for 2007 Plan), 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 (2007 Plan is out of this exception), 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 for which 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.

SENAO elected not to apply IFRS 2 retrospectively for the share-based payment transactions which were granted and vested before the transition date.

Stock options granted on May 7, 2013 applied IFRS 2. The recognized compensation cost was $45,303 thousand for the period from May 7 to September 30, 2013.

Information about SENAO’s outstanding stock options for the nine months ended September 30, 2013 and 2012 were as follows:

	Nine Months Ended September 30, 2013
	Granted on May 7, 2013				Granted on October 31, 2007
	Number of Options (Thousand)		Weighted- average Exercise Price (NT$)		Number of Options (Thousand)			Weighted- average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		—	$	—		1,051		$	42.60
Options granted		10,000		93.00		—			—
Options exercised		—		—		(666	)		42.60
Options expired		—		—		—			—
Options outstanding at end of the period		10,000		93.00		385			42.60
Options exercisable at end of the period		—		—		385			42.60

60

	Nine Months Ended September 30, 2012
	Granted on October 31, 2007					Granted on May 5, 2006
	Number of Options (Thousand)			Weighted- average Exercise Price (NT$)		Number of Options (Thousand)			Weighted- average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		1,998		$	42.60		280		$	12.10
Options exercised		(840	)		42.60		(275	)		12.10
Options expired		—			—		(5	)		12.10
Options outstanding at end of the period		1,158			42.60		—			—
Options exercisable at end of the period		1,158			42.60		—			—

As of September 30, 2013, 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$)
$42.60		385		0.17	$	42.60		385	$	42.60
93.00		10,000		5.58		93.00		—		93.00

As of September 30, 2012, 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$)
$42.60		1,158		1.17	$	42.60		1,158	$	42.60

Had SENAO used the fair value to evaluate the options using the Black-Scholes model, the assumptions of SENAO would have been as follows:

	Stock Options Granted as of May 7, 2013			Stock Options Granted as of October 31, 2007			Stock Options Granted as of May 5, 2006
Dividends yield		—			1.49	%		—
Risk-free interest rate		0.91	%		2.00	%		1.75	%
Expected life		4.375 years			4.375 years			4.375 years
Expected volatility		36.22	%		39.82	%		39.63	%
Weighted-average fair value of grants (NT$)	$	28.72		$	13.69		$	5.88

61

b. CHPT share-based compensation plan

CHPT granted 1,000 options to some of its employees in December 2008. Under the terms of CHPT Plan, each option entitles the holder to subscribe for one thousand common shares at $12.6 per share when exercisable. The options are valid for 5 years and based on the graded vesting schedule, two tranches of 30% of option will vest two and three years after the grant date, respectively, and the rest of 40% will vest four years after the grant date. There is exercise price adjustment formula upon the issuance of new common shares, capitalization of retained earnings and/or capital reserves, stock split, issuance of new shares in connection with mergers, issuance of global depositary receipts as well as distribution of cash dividends, except if the exercise price after adjustment exceeds the exercise price before adjustment.

For the nine months ended September 30, 2013 and 2012 information about CHPT’s outstanding stock options were as follows:

	Nine Months Ended September 30
	2013					2012
	Number of Options			Weighted- average Exercise Price (NT$)		Number of Options		Weighted- average Exercise Price (NT$)
Employee stock options
Options outstanding at beginning of the period		920		$	10.00		920	$	10.10
Options exercised		(810	)		10.00		—		—
Options outstanding at end of the period		110			10.00		920		10.10
Options exercisable at end of the period		110			10.00		552		10.10

As of September 30, 2013, information about outstanding employee stock options is as follows:

Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted-average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$10.00		110		0.25	$	10.00		110	$	10.00

As of September 30, 2012, information about outstanding employee stock options is as follows:

Options Outstanding							Options Exercisable
Range of Exercise Price (NT$)	Number of Options		Weighted-average Remaining Contractual Life (Years)		Weighted Average Exercise Price (NT$)		Number of Options		Weighted Average Exercise Price (NT$)
$10.10		920		1.25	$	10.10		552	$	10.10

62

Had CHPT used the fair value to evaluate the options using the Black-Scholes model, the assumptions of CHPT would have been as follows:

	Stock Options Granted as of December 31, 2008
Dividends yield		—
Risk-free interest rate		2.00	%
Expected life		3.1 years
Expected volatility		20	%
Weighted-average fair value of grants	$	3.80

33. NON-CASH TRANSACTIONS

For the nine months ended September 30, 2013 and 2012, the Company entered into the following non-cash investing activities:

	Nine Months Ended September 30
	2013		2012
Acquisitions in property, plant and equipment	$	22,580,780	$	21,971,168
Other payables		726,490		584,834
	$	23,307,270	$	22,556,002

34. OPERATING LEASE ARRANGEMENTS

a. The Company as lessee

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Within one year	$	2,740,263	$	2,837,367	$	2,341,151	$	2,401,085
Longer than one year but within five years		6,365,531		5,842,087		6,386,332		5,749,923
Longer than five years		1,844,273		2,046,776		2,108,116		2,036,699
	$	10,950,067	$	10,726,230	$	10,835,599	$	10,187,707

63

b. The Company as lessor

The future aggregate minimum lease collection under non-cancellable operating leases are as follows:

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Within one year	$	365,690	$	429,893	$	422,448	$	453,561
Longer than one year but within five years		675,466		684,301		759,873		961,897
Longer than five years		171,055		99,635		91,173		117,543
	$	1,212,211	$	1,213,829	$	1,273,494	$	1,533,001

35. 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.

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

The Company is required to maintain minimum paid-in capital amounts as prescribed by the applicable laws.

The management reviews the capital structure of the Company as needed. As part of this review, the management considers the cost of capital and the risks associated with each class of capital.

According to the management’s suggestion, the Company maintains a balanced capital structure through paying cash dividends, increasing its share capital, purchasing treasury stock, proceeds from new debt or repayment of debt.

36. FINANCIAL INSTRUMENTS

Categories of Financial Instruments

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Financial assets
Measured at FVTPL
Held for trading	$	363	$	2,994	$	32,678	$	6,094
Designated as at FVTPL		—		—		—		39,656
Held-to-maturity financial assets		13,612,847		16,046,290		16,986,799		14,696,192
Loans and receivables (Note a)		64,918,633		79,786,421		65,020,733		91,888,079
Available-for-sale financial assets (Note b)		5,514,189		7,996,436		8,268,739		5,316,676
Other financial assets - noncurrent		1,000,000		1,000,000		1,000,000		1,000,000

(Continued)

64

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Financial liabilities
Measured at FVTPL
Held for trading	$	671	$	1,959	$	222	$	3,987
Measured at amortized cost (Note c)		29,823,449		30,999,443		27,302,086		30,340,977

(Concluded)

Note a: The balances included cash and cash equivalents, trade notes and accounts receivable, accounts receivable from related parties, other receivables (classified as other current monetary assets) and telecom license bid bond which were measured at amortised cost of 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, partial other payables and long-term loans which were financial liabilities carried at amortized cost.

Fair Value Information

a. Financial instruments that are not measured at fair value

Except for the following table, the management considered that the carrying amounts of financial instruments approximate fair values or fair values of those instruments cannot be reliably measured.

	September 30, 2013				December 31, 2012				September 30, 2012				January 1, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Held-to-maturity investments	$	13,612,847	$	13,657,268	$	16,046,290	$	17,388,425	$	16,986,799	$	17,388,801	$	14,696,192	$	14,948,770
Other financial assets - noncurrent		1,000,000		1,693,820		1,000,000		1,687,473		1,000,000		1,689,298		1,000,000		1,712,009

b. Financial instruments measured at fair value

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

2) Level 2 fair value 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).

3) Level 3 fair value 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).

65

September 30, 2013

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	363	$	—	$	363
Available-for-sale financial assets
Domestic listed securities and emerging market shares
Equity investments	$	3,042,355	$	—	$	—	$	3,042,355
Foreign listed stocks
Equity investments		16,880		—		—		16,880
	$	3,059,235	$	—	$	—	$	3,059,235
Financial liabilities at FVTPL
Derivative financial assets	$	—	$	671	$	—	$	671

December 31, 2012

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	2,994	$	—	$	2,994
Available-for-sale financial assets
Domestic listed securities and emerging market shares
Equity investments	$	3,278,315	$	—	$	—	$	3,278,315
Bond investments		—		50,207		—		50,207
Foreign listed stocks
Equity investments		9,661		—		—		9,661
Open-end mutual funds		2,190,392		—		—		2,190,392
	$	5,478,368	$	50,207	$	—	$	5,528,575
Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	1,959	$	—	$	1,959

September 30, 2012

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	32,678	$	—	$	32,678

(Continued)

66

	Level 1		Level 2		Level 3		Total
Available-for-sale financial assets
Domestic listed securities
Equity investments	$	3,352,337	$	—	$	—	$	3,352,337
Bond investment		—		50,755		—		50,755
Foreign listed stocks
Equity investments		11,703		—		—		11,703
Open-end mutual funds		2,328,326		—		—		2,328,326
	$	5,692,366	$	50,755	$	—	$	5,743,121
Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	222	$	—	$	222

(Concluded)

January 1, 2012

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	6,094	$	—	$	6,094
Convertible bonds		—		39,656		—		39,656
	$	—	$	45,750	$	—	$	45,750
Available-for-sale financial assets
Domestic listed securities
Equity investments	$	528,236	$	—	$	—	$	528,236
Bond investment		—		76,209		—		76,209
Open-end mutual funds		2,137,201		—		—		2,137,201
	$	2,665,437	$	76,209	$	—	$	2,741,646
Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	3,987	$	—	$	3,987

There were no transfers between Level 1 and 2 for the nine months ended September 30, 2013 and 2012.

c. Valuation techniques and assumptions applied for the purposes of measuring fair value.

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

1) 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 (includes listed stocks, emercing market stocks, convertible bonds, and open-end mutual funds). If such prices are not available, valuation techniques are adopted. Estimates and assumptions used in valuation techniques are consistent with the information used by market participants in determining the prices of financial instruments.

67

2) The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, the value of the forward exchange and swap contracts were calculated based on the forward exchange rate on the maturity date quoted by the financial institutions separately. Estimates and assumptions used in valuation techniques are consistent with the information used by market participants in determining the prices of financial instruments.

3) Other financial assets - noncurrent is a Piping Fund administered by the Taipei City Government. The fair values of the Piping fund are calculated using the proportion of the net assets held by the Company.

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 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 needs to report the significant risk exposures and related action plans for the risk regularly to the audit committee and the board of directors if needed.

a. Market risk

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

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

1) Foreign currency risk management

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

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Assets
USD	$	4,800,889	$	4,250,798	$	5,602,103	$	5,323,930
EUR		7,857		19,206		9,341		6,566
JPY		3,487		5,986		5,548		1,448
SGD		23,007		5,821		5,168		4,365
Liabilities
USD		4,935,275		3,560,547		4,645,265		4,051,055
EUR		1,358,384		1,310,892		1,350,376		1,098,504
JPY		8,224		4,838		5,148		5,156
SGD		1,908		21,055		238,825		83,416

68

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

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Assets
USD	$	363	$	2,994	$	32,678	$	6,094
Liabilities
USD		671		1,959		222		3,987

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, currency swaps and forward foreign exchange contracts, and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive/negative number below indicates an increase/decrease in profit where the functional currency weakens 5% against the relevant currency.

	Nine Months Ended September 30
	2013			2012
Profit or loss
Monetary assets and liabilities (a)
USD	$	(6,719	)	$	47,842
EUR		(67,526	)		(67,052	)
JPY		(237	)		20
SGD		1,055			(11,683	)
Derivatives (b)
USD		25,430			107,249

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

b) This is mainly attributable to the swaps and forward foreign exchange contracts.

For a 5% strengthening of the functional currency against the relevant currencies, there would be a comparable impact on the profit, and the balances above would be negative.

2) Interest rate risk

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

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Fair value interest rate risk
Financial assets	$	29,889,542	$	47,127,489	$	33,782,501	$	62,467,987
Financial liabilities		1,055,222		115,845		153,489		178,840
Cash flow interest rate risk
Financial assets		6,038,978		5,445,262		4,708,405		4,403,225
Financial liabilities		1,720,000		2,054,000		1,660,000		1,656,419

69

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 for the nine months ended September 30, 2013 would increase/decrease by $10,797 thousand. This is mainly attributable to the Company’s exposure to floating rates on its financial instruments 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 for the nine months ended September 30, 2012 would increase/decrease by $7,621 thousand. This is mainly attributable to the Company’s exposure to floating rates on its financial assets and short-term and long-term borrowings; and other comprehensive income for the nine months ended September 30, 2012 would decrease/increase by $92 thousand, mainly as a result of the changes in the fair value of available-for-sale fixed rate instruments.

3) 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 of listed equity securities at the end of the reporting period.

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

Other comprehensive income before tax would increase/decrease by $152,152 thousand as a result of the changes in fair value of available-for-sale assets for the nine months ended September 30, 2013.

Other comprehensive income before tax would increase/decrease by $280,372 thousand as a result of the changes in fair value of available-for-sale assets for the nine months ended September 30, 2012.

b. 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.

c. 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.

70

1) Liquidity and interest risk tables

The following tables detailed the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables 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			Less Than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		Total
September 30, 2013
Non-derivative financial liabilities
Non-interest bearing		—		$	35,507,361	$	—	$	—	$	—	$	35,507,361
Floating interest rate instruments		1.18	%		—		10,000		10,000		1,700,000		1,720,000
Fixed interest rate instruments		1.35	%		170,000		882,682		5,100		—		1,057,782
				$	35,677,361	$	892,682	$	15,100	$	1,700,000	$	38,285,143
December 31, 2012
Non-derivative financial liabilities
Non-interest bearing		—		$	40,444,663	$	—	$	7,884	$	—	$	40,452,547
Floating interest rate instruments		1.32	%		4,000		—		—		2,050,000		2,054,000
Fixed interest rate instruments		1.75	%		48,372		—		67,473		—		115,845
				$	40,497,035	$	—	$	75,357	$	2,050,000	$	42,622,392
September 30, 2012
Non-derivative financial liabilities
Non-interest bearing		—		$	34,801,015	$	—	$	—	$	—	$	34,801,015
Floating interest rate instruments		1.13	%		—		—		10,000		1,650,000		1,660,000
Fixed interest rate instruments		1.48	%		115,000		5,000		33,489		—		153,489
				$	34,916,015	$	5,000	$	43,489	$	1,650,000	$	36,614,504
January 1, 2012
Non-derivative financial liabilities
Non-interest bearing		—		$	41,352,592	$	—	$	2,585	$	—	$	41,355,177
Floating interest rate instruments		1.10	%		5,000		1,419		600,000		1,050,000		1,656,419
Fixed interest rate instruments		1.72	%		90,840		79,628		—		8,372		178,840
				$	41,448,432	$	81,047	$	602,585	$	1,058,372	$	43,190,436

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

71

	Less Than 1 Month			1-3 Months			3 Months to 1 Year		1-5 Years		Total
September 30, 2013
Gross settled
Forward exchange contracts
Inflow	$	509,561		$	—		$	—	$	—	$	509,561
Outflow		509,869			—			—		—		509,869
	$	(308	)	$	—		$	—	$	—	$	(308	)
December 31, 2012
Gross settled
Currency swap contracts
Inflow	$	726,370		$	1,194,098		$	—	$	—	$	1,920,468
Outflow		727,214			1,192,487			—		—		1,919,701
	$	(844	)	$	1,611		$	—	$	—	$	767
Forward exchange contracts
Inflow	$	154,572		$	—		$	—	$	—	$	154,572
Outflow		154,304			—			—		—		154,304
	$	268		$	—		$	—	$	—	$	268
September 30, 2012
Gross settled
Currency swap contracts
Inflow	$	1,308,313		$	658,936		$	—	$	—	$	1,967,249
Outflow		1,289,913			644,943			—		—		1,934,856
	$	18,400		$	13,993		$	—	$	—	$	32,393
Forward exchange contracts
Inflow	$	211,774		$	—		$	—	$	—	$	211,774
Outflow		211,711			—			—		—		211,711
	$	63		$	—		$	—	$	—	$	63
January 1, 2012
Net settled
Index future contracts	$	277		$	(526	)	$	—	$	—	$	(249	)
Gross settled
Currency swap contracts
Inflow	$	940,676		$	937,438		$	—	$	—	$	1,878,114
Outflow		938,492			937,193			—		—		1,875,685
	$	2,184		$	245		$	—	$	—	$	2,429
Forward exchange contracts
Inflow	$	59,565		$	—		$	—	$	—	$	59,565
Outflow		59,638			—			—		—		59,638
	$	(73	)	$	—		$	—	$	—	$	(73	)

72

2) Financing facilities

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Unsecured bank loan facility
Amount used	$	1,045,000	$	511,473	$	530,000	$	475,000
Amount unused		7,284,280		8,638,527		8,270,000		8,525,000
	$	8,329,280	$	9,150,000	$	8,800,000	$	9,000,000
Secured bank loan facility
Amount used	$	1,730,222	$	2,050,000	$	1,650,000	$	1,651,419
Amount unused		669,778		600,000		—		—
	$	2,400,000	$	2,650,000	$	1,650,000	$	1,651,419

37. RELATED PARTIES TRANSACTIONS

The ROC Government, one of Chunghwa’s customers held 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 and other state-owned enterprises in the normal course of business and at arm’s-length prices. The information on service revenues from government bodies and related organizations have not been provided because details of the type of transactions were not collected by Chunghwa. Chunghwa believes that all costs of doing business are reflected in the consolidated financial statements:

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

Company	Relationship
Taiwan International Standard Electronics Co., Ltd. (“TISE”)	Associate
So-net Entertainment Taiwan Co., Ltd. (“So-net”)	Associate
Skysoft Co., Ltd. (“SKYSOFT”)	Associate
KingWaytek Technology Co., Ltd. (“KWT”)	Associate
Dian Zuan Integrating Marketing Co., Ltd. (“DZIM”)	Associate
Viettel-CHT Co., Ltd. (“Viettel”)	Associate
Huada Digital Corporation (“HDD”)	Jointly controlled entity
International Integrated System, Inc. (“IISI”)	Associate
Senao Networks, Inc. (“SNI”)	Associate of SENAO
HopeTech Technologies Limited (“HopeTech”)	Associate of SIS
ST-2 Satellite Ventures Pte., Ltd. (“STS”)	Associate
Other related parties
Chunghwa Telecom Foundation (“CTF”)	A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds
Senao Technical and Cultural Foundation (“STCF”)	A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds
Sochamp Technology Co., Ltd. (“Sochamp”)	Investor of significant influence over CHST
United Daily News Co., Ltd. (“UDN)	Investor of significant influence over SFD

(Continued)

73

Company	Relationship
E-Life Mall Co., Ltd.	One of the directors of E-Life Mall and a director of SENAO are members of an immediate family
Cheng Fong Investment Co., Ltd.	The chairman of the board of directors of Cheng Fong is the general manager of SENAO.

(Concluded)

b. Terms of the foregoing transactions with related parties were not significantly different from transactions with non-related parties. When no similar transactions with non-related parties can be referenced, terms were determined in accordance with mutual agreements.

1) Operating transactions

	Sales
	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2012		2012
Associates	$	73,439	$	55,381	$	266,863	$	299,409
Jointly controlled entities	$	995	$	993	$	2,987	$	2,305
Others	$	29,285	$	1,741	$	40,389	$	2,436

	Purchases
	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2012		2012
Associates	$	350,958	$	274,850	$	1,022,966	$	897,452
Jointly controlled entities	$	—	$	—	$	571	$	—
Others	$	8,374	$	48,981	$	60,957	$	57,603

2) Non-operating transactions

	Three Months Ended September 30					Nine Months Ended September 30
	2013			2012		2012		2012
Associates	$	7,916		$	6,347	$	24,046	$	24,108
Others	$	(19	)	$	—	$	86	$	—

3) Receivables

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Associates	$	48,081	$	43,822	$	27,726	$	34,064
Jointly controlled entities		1		19		23		—
Others		283		96		466		—
	$	48,365	$	43,937	$	28,215	$	34,064

74

4) Payables

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Associates	$	460,588	$	832,957	$	471,623	$	783,688
Jointly controlled entities		—		—		—		—
Others		5,680		4,373		5,420		4,459
	$	466,268	$	837,330	$	477,043	$	788,147

5) Customers’ deposits

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Associates	$	1,863	$	2,695	$	2,448	$	2,005

6) Acquisition of property, plant and equipment

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Associates	$	181,706	$	61,724	$	951,550	$	442,754

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

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 (SG$260,723 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 September 30, 2013 was $100,379 thousand, which consisted of an offsetting credit of the prepayment of $51,099 thousand and an additional accrual of $49,280 thousand. The total rental expense for the nine months ended September 30, 2013 was $306,871 thousand, which consisted of an offsetting credit of the prepayment of $154,872 thousand and an additional accrual of $151,999 thousand. The prepayment was $2,623,111 thousand (classified as prepaid rents-current $204,398 thousand, and prepaid rents - noncurrent $2,418,713 thousand) as of September 30, 2013.

c. Compensation of key management personnel

The remuneration of directors and members of key management personnel for the nine months and three months ended September 30, 2013 were as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Short-term benefits	$	59,768	$	60,296	$	199,216	$	185,915
Post-employment benefits		1,724		837		2,870		2,711
Share-based payment		3,624		—		4,980		—
	$	65,116	$	61,133	$	207,066	$	188,626

75

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

38. PLEDGED ASSETS

The following assets are pledged as collaterals for long-term bank loans and contract deposits.

	September 30, 2013		December 31, 2012		September 30, 2012		January 1, 2012
Property, plant and equipment, net	$	2,675,787	$	2,693,863	$	2,705,302	$	2,736,212
Land held for development		1,998,733		1,998,733		—		—
Restricted assets		10,000		10,000		19,906		9,033
	$	4,684,520	$	4,702,596	$	2,725,208	$	2,745,245

39. 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:

a. Acquisitions of land and buildings of $4,069,411 thousand as of September 30, 2013.

b. Acquisitions of telecommunications equipment of $22,411,874 thousand as of September 30, 2013.

c. Unused letters of credit of $221,770 thousand as of September 30, 2013.

d. Contract to print billing, envelopes and marketing gifts of $45,360 thousand as of September 30, 2013.

e. 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.

40. EXCHANGE RATE INFORMATION OF FOREIGN FINANCIAL ASSETS AND LIABILITIES

The significant information of foreign-currency financial assets and liabilities as below:

	September 30, 2013						September 30, 2012
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)		Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	16,388		29.57	$	484,588	$	16,751		29.30	$	490,719
EUR		93		39.92		3,707		117		37.89		4,443
JPY		8,235		0.30		2,487		14,677		0.38		5,548
SGD		874		23.54		20,580		213		23.92		5,089
Accounts receivable
USD		145,969		29.57		4,316,301		174,480		29.30		5,111,384
EUR		106		39.92		4,150		129		37.89		4,898
JPY		3,310		0.30		1,000		—		0.38		—
SGD		103		23.54		2,427		3		23.92		79

(Continued)

76

	September 30, 2013						September 30, 2012
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)		Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Non-monetary items
Available-for-sale financial assets
USD	$	20,000		29.57	$	591,400	$	74,847		29.30	$	2,193,024
Investments accounted for using equity method
USD		607		29.57		17,943		1,029		29.30		30,152
SGD		28,201		23.54		663,852		22,920		23.92		548,243
Financial liabilities
Monetary items
Payable to suppliers
USD		166,901		29.57		4,935,275		158,568		29.30		4,645,265
EUR		34,028		39.92		1,358,384		35,639		37.89		1,350,376
JPY		27,233		0.30		8,224		13,620		0.38		5,148
SGD		81		23.54		1,908		9,984		23.92		238,825

(Concluded)

	December 31, 2012						January 1, 2012
	Foreign Currencies		Exchange Rate		New Taiwan Dollars		Foreign Currencies		Exchange Rate		New Taiwan Dollars
Financial assets
Monetary items
Cash
USD	$	9,675		29.04	$	280,968	$	12,156		30.28	$	368,034
EUR		366		38.49		14,073		78		39.18		3,075
JPY		15,647		0.34		5,257		188		0.39		73
SGD		233		23.76		5,539		183		23.31		4,261
Accounts receivable
USD		136,702		29.04		3,969,830		163,696		30.28		4,955,896
EUR		133		38.49		5,133		89		39.18		3,491
JPY		2,170		0.34		729		3,518		0.39		1,375
SGD		12		23.76		282		4		23.31		104
Non-monetary items
Available-for-sale financial assets
USD		75,517		29.04		2,193,024		68,243		30.28		2,066,398
Investments accounted for using equity method
USD		1,046		29.04		30,376		710		30.28		21,668
SGD		22,798		23.76		541,672		19,827		23.31		462,161
Financial liabilities
Monetary items
Accounts payable
USD		122,608		29.04		3,560,547		133,808		30.28		4,051,055
EUR		34,058		38.49		1,310,892		28,037		39.18		1,098,504
JPY		14,399		0.34		4,838		13,186		0.39		5,156
SGD		886		23.76		21,055		3,579		23.31		83,416

77

41. ADDITIONAL DISCLOSURES

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

a. Financing provided: None.

b. Endorsement/guarantee provided: Please see Table 1.

c. Marketable securities held: Please see Table 2.

d. Marketable securities acquired and disposed of at costs or prices at least $100 million or 20% of the paid-in capital: Please see Table 3.

e. Acquisition of individual real estate at costs of at least $100 million or 20% of the paid-in capital: None.

f. Disposal of individual real estate at prices of at least $100 million or 20% of the paid-in capital: None.

g. Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 4.

h. Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 5.

i. Names, locations, and other information of investees on which the Company exercises significant influence: Please see Table 6.

j. Financial transactions: Please see Notes 7 and 36.

k. Investment in Mainland China: Please see Table 7.

l. Intercompany relationships and significant intercompany transaction: Please see Table 8.

42. SEGMENT INFORMATION

The Company has five reportable segments that provide different products or services. Segment information is provided to the board of directors and CEO who allocate resources and assess segment performance. The Company’s reportable segments are as follows:

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

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

c. Internet business - the provision of HiNet services and related services;

d. International fixed communications business - the provision of international long distance telephone services and related services;

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

78

Segment Revenue and Operating Results

Analysis by reportable segment of revenue 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
Three months ended September 30, 2013
Revenue
From external customers	$	17,971,391	$	27,527,387	$	6,728,941	$	3,965,089	$	530,496		$	56,723,304
Intersegment revenues		4,412,930		1,406,005		1,112,389		537,384		321,884			7,790,592
Segment revenues	$	22,384,321	$	28,933,392	$	7,841,330	$	4,502,473	$	852,380			64,513,896
Intersegment elimination													(7,790,592	)
Consolidated revenues												$	56,723,304
Segment income before income tax	$	3,817,814	$	6,895,038	$	2,472,604	$	313,976	$	(428,766	)	$	13,070,666
Nine months ended September 30, 2013
Revenue
From external customers	$	54,205,670	$	82,299,153	$	18,938,311	$	11,806,430	$	1,928,689		$	169,178,253
Intersegment revenues		13,705,395		4,203,446		3,060,157		1,520,651		715,243			23,204,892
Segment revenues	$	67,911,065	$	86,502,599	$	21,998,468	$	13,327,081	$	2,643,932			192,383,145
Intersegment elimination													(23,204,892	)
Consolidated revenues												$	169,178,253
Segment income before income tax	$	13,137,625	$	18,218,308	$	7,077,564	$	823,005	$	(1,582,966	)	$	37,673,536
Three months ended September 30, 2012
Revenue
From external customers	$	19,060,240	$	24,878,807	$	6,050,957	$	3,857,108	$	1,437,495		$	55,284,607
Intersegment revenues		4,168,800		1,697,420		704,766		541,203		346,798			7,458,987
Segment revenues	$	23,229,040	$	26,576,227	$	6,755,723	$	4,398,311	$	1,784,293			62,743,594
Intersegment elimination													(7,458,987	)
Consolidated revenues												$	55,284,607
Segment income before income tax	$	3,661,759	$	7,018,696	$	2,069,987	$	341,683	$	(34,388	)	$	13,057,737
Nine months ended September 30, 2012
Revenue
From external customers	$	56,842,336	$	75,195,324	$	18,237,420	$	11,369,508	$	3,524,390		$	165,168,978
Intersegment revenues		12,343,819		4,943,328		2,137,568		1,690,932		818,008			21,933,655
Segment revenues	$	69,186,155	$	80,138,652	$	20,374,988	$	13,060,440	$	4,342,398			187,102,633
Intersegment elimination													(21,933,655	)
Consolidated revenues												$	165,168,978
Segment income before income tax	$	11,478,606	$	20,279,911	$	6,645,615	$	986,783	$	(604,454	)	$	38,786,461

43. DISCLOSURE FOR FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

a. Basis of the preparation of financial information under Taiwan-IFRSs

As the basis of the preparation, the Company complied with IFRS 1 “First-time adoption of International Financial Reporting Standards” in addition to the significant accounting policies stated in Note 3 to prepare the consolidated financial statements as of and for the nine months ended September 30, 2013.

79

b. Based on IFRS 1 “First-time adoption of International Financial Reporting Standards”, when the Company first adopts Taiwan-IFRSs, the Company should apply the Taiwan-IFRSs to establish its accounting policies, to prepare its financial statements and make required adjustments retroactively to the transition date (January 1, 2012). IFRS 1 provided several optional exemptions. The main exemptions adopted by the Company were discussed as follows:

1) Business combination

The Company elected not to apply IFRS 3 retrospectively to business combinations which occurred on or before December 31, 2011.

2) Share-based payment transactions

The Company elected not to apply IFRS 2 retrospectively to the share-based payment transactions which were granted and vested on or before December 31, 2011.

3) Deemed costs

The Company elected to measure its revalued land at the date of transition to Taiwan-IFRSs at its revalued amount determined under ROC GAAP as its deemed cost. The other property, plant and equipment, investment properties and intangible assets were measured under a cost model under Taiwan-IFRSs.

4) Employee benefits

The Company elected to recognize all unrecognized cumulative actuarial gains and losses as retained earnings as of January 1, 2012.

The impacts of the aforementioned optional exemptions were included in the following part d of “explanation for the adjustments of Taiwan-IFRSs transition”.

c. Impacts after transition to Taiwan-IFRSs

Except for the following tables, please refer to Note 43 to the consolidated financial statement as of and for the three months ended March 31, 2013 for impacts on the consolidated financial statements after transition to Taiwan-IFRSs.

The impacts on the consolidated balance sheet and the consolidated statements of comprehensive income after transition to Taiwan-IFRSs are as follows:

1) Reconciliation of consolidated balance sheet as of September 30, 2012

			Adjustments
ROC GAAP			Differences in Recognitions and Measurements			Differences in Presentations			IFRSs
Items	Amount								Amount		Items	Notes
Current assets	$	84,992,991	$	—		$	(923,376	)	$	84,069,615	Current assets	4), 13)
Investments accounted for using equity method		2,687,936		(9,599	)		—			2,678,337	Investments accounted for using equity method	10), 12)
Financial assets carried at cost		2,616,087		—			(90,469	)		2,525,618	Financial assets carried at cost	13)
Available-for-sale financial assets		3,261,868		—			90,469			3,352,337	Available-for-sale financial assets	13)
Held-to-maturity financial assets		14,005,461		—			—			14,005,461	Held-to-maturity financial assets
Other monetary assets		1,000,000		—			(1,000,000	)		—		13)
Property, plant and equipment		299,809,041		—			(6,326,261	)		293,482,780	Property, plant and equipment	1), 2), 13)
		—		—			7,812,704			7,812,704	Investment properties	1), 2)
Intangible assets		5,872,131		(64,553	)		36,465			5,844,043	Intangible assets	13)
Other assets		7,605,886		482,392			439,929			8,528,207	Other noncurrent assets	1), 2), 4), 5), 6), 13)
Total	$	421,851,401	$	408,240		$	39,461		$	422,299,102	Total

(Continued)

80

			Adjustments
ROC GAAP			Differences in Recognitions and Measurements			Differences in Presentations			IFRSs
Items	Amount								Amount		Items	Notes
Current liabilities	$	48,936,714	$	402,904		$	(942,416	)	$	48,397,202	Current liabilities	7), 8)
Noncurrent liabilities		11,068,608		2,423,272			1,076,863			14,568,743	Noncurrent liabilities	4), 5), 6), 7), 8)
Reserve for land value incremental tax		94,986		—			(94,986	)		—		4)
Total liabilities		60,100,308		2,826,176			39,461			62,965,945	Total liabilities
Common stock		77,574,465		—			—			77,574,465	Common stock
Additional paid-in capital		169,542,532		20,618,636			—			190,161,168	Additional paid-in capital	6), 11), 12)
Retained earnings		104,462,712		(17,278,139	)		—			87,184,573	Retained earnings	3), 5), 6), 7), 8), 10), 11), 12)
Other adjustments		5,964,503		(5,724,796	)		—			239,707	Other adjustments	3), 6), 10)
Total equity attributable to stockholders of the parent		357,544,212		(2,384,299	)		—			355,159,913	Total equity attributable to shareholders of the parent
Minority interests in subsidiaries		4,206,881		(33,637	)		—			4,173,244	Noncontrolling interests	5), 6), 10), 11)
Total stockholders’ equity		361,751,093		(2,417,936	)		—			359,333,157	Total shareholders’ equity
Total	$	421,851,401	$	408,240		$	39,461		$	422,299,102	Total

(Concluded)

2) Reconciliation of consolidated statement of comprehensive income for the nine months ended September 30, 2012

				Adjustments
ROC GAAP				Differences in Recognitions and Measurements			Differences in Presentations			IFRSs
Items	Amount									Amount			Items	Notes
Net revenues	$	164,008,760		$	1,160,218		$	—		$	165,168,978		Revenues	7), 8), 9)
Operating costs		(104,375,603	)		(326,247	)		(852	)		(104,702,702	)	Operating costs	6), 7), 9), 14)
Gross profits		59,633,157			833,971			(852	)		60,466,276		Gross profit
Operating expenses		(21,759,339	)		41,630			28,772			(21,688,937	)	Operating expenses	6), 7), 9), 11), 14)
		—			—			(1,266,280	)		(1,266,280	)	Other income and expense	14)
Income from operations		37,873,818			875,601			(1,238,360	)		37,511,059		Income from operations
Non-operating income and losses		9,421			(450	)		1,266,431			1,275,402		Non-operating income and expenses	3), 10), 12), 14)
Income before income tax		37,883,239			875,151			28,071			38,786,461		Income before income tax
Income tax expense		(6,066,681	)		(97,971	)		(28,071	)		(6,192,723	)	Income tax expenses	5), 14)
Consolidated net income	$	31,816,558		$	777,180		$	—			32,593,738		Net income
											(41,282	)	Exchange differences arising from the translation of the foreign operations
											246,505		Unrealized gain on available-for-sale financial assets
											13		Share of other comprehensive income of associates and jointly controlled entities accounted for using equity method
											205,236		Total other comprehensive income
										$	32,798,974		Total comprehensive income

3) Reconciliation of consolidated statement of comprehensive income for three months ended September 30, 2012

				Adjustments
ROC GAAP				Differences in Recognitions and Measurements			Differences in Presentations			IFRSs
Items	Amount									Amount			Items	Notes
Net revenues	$	54,402,889		$	881,718		$	—		$	55,284,607		Revenues	7), 8), 9)
Operating costs		(34,280,725	)		(326,889	)		(295	)		(34,607,909	)	Operating costs	6), 7), 9), 14)
Gross profits		20,122,164			554,829			(295	)		20,676,698		Gross profit
Operating expenses		(8,023,223	)		(18,253	)		8,563			(8,032,913	)	Operating expenses	6), 7), 9), 11) 14)
		—						(9,457	)		(9,457	)	Other income and expense	14)
Income from operations		12,098,941			536,576			(1,189	)		12,634,328		Income from operations
Non-operating income and losses		412,720			1,232			9,457			423,409		Non-operating income and expenses	3), 10), 12), 14)
Income before income tax		12,511,661			537,808			8,268			13,057,737		Income before income tax
Income tax expense		(2,042,946	)		(34,318	)		(8,268	)		(2,085,532	)	Income tax expenses	5), 14)
Consolidated net income	$	10,468,715		$	503,490		$	—			10,972,205		Net income

(Continued)

81

		Adjustments
ROC GAAP		Differences in Recognitions and Measurements	Differences in Presentations	IFRSs
Items	Amount			Amount			Items	Notes
				$	(21,253	)	Exchange differences arising from the translation of the foreign operations
					(306,033	)	Unrealized gain on available-for-sale financial assets
					(1,886	)	Share of other comprehensive income of associates and jointly controlled entities accounted for using equity method
					(329,172	)	Total other comprehensive income
				$	10,643,033		Total comprehensive income

(Concluded)

d. Explanation for the adjustments of Taiwan-IFRSs transition:

1) Classification of investment properties

Under ROC GAAP, properties for lease were classified as property, plant and equipment and other assets; after transitions to Taiwan-IFRSs, owned-property for either rental revenue or capital appreciation should be classified as investment properties.

On September 30, 2012, the assets that met definitions of investment properties under IAS 40 “Investment Property” were reclassified from property, plant and equipment of $7,353,602 thousand, and other assets - idle assets of $459,102 thousand, to investment properties. The total amount of reclassification was $7,812,704 thousand.

2) Classification of leased assets and idle assets

Under ROC GAAP, leased and idle assets were classified as other assets; after the transition to Taiwan-IFRSs, leased and idle assets were reclassified to property, plant and equipment or investment properties based on the nature of these assets.

The Company reclassified leased assets to property, plant and equipment and the amounts were $392,253 thousand as of September 30, 2012. Except for the abovementioned Item 1) which discussed the reclassification from idle assets to investment properties, the Company reclassified the remaining idle assets to property, plant and equipment amounting to $422,168 thousand as of September 30, 2012.

3) Deemed costs of property, plant and equipment

The Company elected to apply the optional exemption in IFRS 1. The management measured land (classified as property, plant and equipment and investment properties under Taiwan-IFRSs) at its revalued amount, which was the carrying value under ROC GAAP, as deemed costs. As such, on January 1, 2012, the Company reclassified the unrealized revaluation increment (classified as stockholders’ equity) to retained earnings at the amount of $5,762,753 thousand. This reclassification did not affect total equity amount. The unrealized revaluation increment costs reclassified to retained earnings decreased by nil and $117 thousand, due to the partial disposal on revalued land; and decreased by nil and $2,054 thousand due to impairment loss, for the three months and nine months ended September 30, 2012, respectively. As a result, the carrying value of property, plant and equipment was $5,760,582 thousand as of September 30, 2012. Gain on disposal decreased by nil and $117 thousand, and impairment loss increased by nil and $2,054 thousand, for the three months and nine months ended September 30, 2012, respectively.

82

4) Classification of deferred income tax asset and liability, and valuation allowance

Under ROC GAAP, a deferred income tax asset and liability should be classified as current and noncurrent in accordance with the classification of its related asset or liability. When a deferred income tax asset and liability does not relate to an asset or liability, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled. However, under Taiwan-IFRSs, a deferred income tax asset and liability should be classified as noncurrent, and could not be offset. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on the same entity.

Under ROC GAAP, if it is more likely than not that deferred income tax assets will not be realized, the valuation allowances are provided to the extent. However, under Taiwan-IFRSs, deferred income tax assets are only recognized when it is more likely than not to be realized, and the valuation allowance is not used under Taiwan-IFRSs.

Based on the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the reserve for land value incremental tax caused by revaluation of land is classified as long-term liabilities. Under Taiwan-IFRSs, if the Company elects to apply the IFRS 1 exemption and measure the revalued land using the carrying amount determined under ROC GAAP as its deemed cost, the related reserve for land value incremental tax should be classified as deferred income tax liabilities.

The Company reclassified its deferred income tax assets - current to noncurrent assets and the amounts was $106,808 thousand as of September 30, 2012. Further, deferred income tax liabilities, which were netted with deferred income tax assets under ROC GAAP, were reversed. As a result of such reversal, deferred income tax liabilities - noncurrent and deferred income tax assets - noncurrent increased by $39,461 thousand and reserve for land value incremental tax of $94,986 thousand was also reclassified as deferred income tax liabilities - noncurrent under Taiwan-IFRSs.

5) Income tax

Based on IAS 12 “Income Taxes”, the income tax adjustments as a result of the transition to Taiwan-IFRSs are as follows: Deferred income tax assets increased by $498,266 thousand as of September 30, 2012; retained earnings increased by $489,685 thousand as of September 30, 2012; noncontrolling interests increased by $8,615 thousand as of September 30, 2012. Deferred income tax liabilities decreased by $34 thousand as of September 30, 2012. For the three months ended September 30, 2012, due to the adjustment of deferred income tax assets and deferred income tax liabilities (decreased by $34,523 thousand in deferred tax assets and decreased by $205 thousand in deferred income tax liabilities), income tax expense increased by $34,318 thousand. For the nine months ended September 30, 2012, due to the adjustment of deferred income tax assets and deferred income tax liabilities (decreased by $98,005 thousand in deferred tax assets and decreased by $34 thousand in deferred income tax liabilities), income tax expense increased by $97,971 thousand.

6) Employee benefits

Under ROC GAAP, net transaction obligation that was resulted from the first time adoption of SFAS No. 18, “Pension” should be amortized on a straight-line basis over the average remaining service life of active plan participants and recognized as net periodic pension cost. After the transition to Taiwan-IFRSs, transitional rules in IAS 19, “Employee Benefits” was not applicable, thus the related amounts of net transaction obligation should be recognized at once and adjusted in retain earnings.

83

Under ROC GAAP, actuarial gains (losses) are recognized based on the corridor approach and the amounts are amortized over the average remaining service life of active plan participants. However, under Taiwan-IFRSs, the Company elected to recognize pension gains arising from defined benefit plans as other comprehensive income immediately and subsequent reclassification to earnings is not permitted.

As a result of the aforementioned adjustments, other liabilities increased by $1,545,852 thousand as of September 30, 2012; other noncurrent assets decreased by $15,874 thousand as of September 30, 2012; retained earnings decreased by $1,511,436 thousand as of September 30, 2012; unrecognized net losses of pension decreased by $215 thousand as of September 30, 2012; noncontrolling interests decreased by $50,505 thousand as of September 30, 2012. For the three months ended September 30, 2012, pension cost was decreased by $668 thousand which increased $42 thousand in operating costs and decreased $710 thousand in operating expenses. For the nine months ended September 30, 2012, pension cost was decreased by $2,003 thousand which increased $127 thousand in operating costs and decreased $2,130 thousand in operating expenses.

In addition, prior to Chunghwa’s privatization in 2005, the pension contributions were made according to the relevant regulations. After privatization, the pension obligations of retained employees that were civil employees and retired employees entitled to receive future monthly pension payments prior to privatization based on the “Labor Pension Act”, “Act of Privatization of Government-Owned Enterprises”, and “Enforcement Rules of Statute of Privatization of Government-Owned Enterprises” were borne by the government. The settlement impact upon privatization of $20,648,078 thousand derived according to the actuarial report under IAS 19 shall be retroactively adjusted from retained earnings to additional paid-in capital - privatization at the date of transition to Taiwan-IFRSs.

7) Award credits (often known as “points”)

Under ROC GAAP, there’s no relevant guidance regarding award credits. After the transition to Taiwan-IFRSs, Chunghwa applied IFRIC 13, “Customer Royalty Program” retroactively. The award credit should be measured at its fair value and defer the recognition of revenue. When the customers redeem the points, the related revenues and costs shall be recognized. Such guidance replaced Chunghwa’s accounting policy that Chunghwa used to accrue expenses when the award credits were granted.

Accrued award credits liabilities (classified as other current liabilities) decreased by $130,340 thousand as of September 30, 2012; deferred award credits revenue (classified as noncurrent liabilities - deferred revenue) increased by $67,471 thousand as of September 30, 2012; retained earnings increased by $62,869 thousand as of September 30, 2012. The revenue decreased by $14,514 thousand, the marketing expenses decreased by $27,647 thousand and the operating cost increased by $7,372 thousand for the three months ended September 30, 2012. The revenue decreased by $43,229 thousand, the marketing expenses decreased by $81,415 thousand and the operating cost increased by $21,111 thousand for the nine months ended September 30, 2012.

8) Recognition of revenue from providing fixed line connection service

Prior to privatization, 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, the Company recorded revenue from providing fixed line connection service upon the receipt of connection fees. Under Taiwan-IFRSs, following the revenue recognition guidance, the above service revenue should be treated as deferred income and recognized over the time when the service is continuously provided.

84

Chunghwa retrospectively adjusted the deferred income of $1,419,419 thousand as of September 30, 2012, by decreasing retained earnings and increasing the deferred revenue from providing fixed line connection service ($533,244 thousand was classified as other current liabilities; $886,175 thousand was classified as noncurrent liabilities - deferred revenue as of September 30, 2012). For the three months ended September 30, 2012, revenue from providing fixed line connection service increased by $133,311 thousand. For the nine months ended September 30, 2012, revenue from providing fixed line connection service increased by $506,397 thousand.

9) Recognition of construction contract revenue

The construction contracts did not meet the criteria in IFRIC 15 “Agreements for the construction of Real Estate”; therefore IAS 11 “Construction Contracts” does not apply. The Company could only recognize the revenues when the projects are completed and sold out based on IAS 18, “Revenue”. Due to the reasons mentioned above, the Company reversed the revenue that was recognized based on percentage completion method, and recognize the related revenue, cost and expense when the project is completed in 2012.

The construction revenue increased by $762,921 thousand, the construction cost increased by $319,475 thousand and the marketing expenses increased by $48,153 thousand for the three months ended September 30, 2012. The construction revenue increased by $697,050 thousand, the construction cost increased by $305,009 thousand and the marketing expenses increased by $44,516 thousand for the nine months ended September 30, 2012.

10) Equity method investments

Associates and jointly controlled entities are accounted for using equity method upon the Company’s transition to Taiwan-IFRSs, the main adjustment includes employee benefit and share-based payments, etc. As a result, long-term investments decreased by $9,330 thousand as of September 30, 2012; retained earnings decreased by $39,858 thousand as of September 30, 2012; unrecognized net loss of pension decreased by $35,571 thousand as of September 30, 2012; noncontrolling interests decreased by $5,043 thousand as of September 30, 2012. Investment income from associates and jointly controlled entities that accounted for using equity method increased by $1,232 thousand for the three months ended September 30, 2012 and increased by $609 thousand for the nine months ended September 30, 2012, respectively.

11) Share-based payment transactions

Part of the employee stock options granted by a subsidiary was not vested on the transition date. Therefore, the subsidiary should apply IFRS 2, “Share-based Payment” retroactively. Under Taiwan-IFRSs, paid-in capital - employee stock option recognized by subsidiary does not belong to the equity attributable to parent company, instead it should be accounted as noncontrolling interests. As of September 30, 2012, retained earnings decreased by $426 thousand, additional paid-in capital reported by equity-method investees decreased by $1,231 thousand and noncontrolling interests increased by $1,657 thousand. For the three months and nine months ended September 30, 2012, the compensation cost under general and administrative expense both decreased by $1,543 thousand and $2,601 thousand.

12) Subscription of associates/subsidiaries new shares and adjustments of paid-in capital reported related to equity-method investees

When an investee issues new shares and existing shareholders do not subscribe to the new shares at their respective proportion in share holdings, this would result in changes in the investor’s shareholdings of the equity method investee. According to SFAS No. 5 “Long-term Investments under Equity Method” under ROC GAAP, as there are changes in the net assets value of the equity method investee attributable to the investor, the investor shall reflect such changes by adjusting additional paid-in capital and long-term investments. However, under Taiwan-IFRSs, if the changes do not cause the investor to lose significant influence over associates, the change shall be treated as a deemed disposal with the related gain or loss recognized in earnings. If the changes do not cause the investor to lose control over subsidiaries, the change shall be treated as equity transactions. In addition, the Company complied with the Taiwan-IFRSs FAQs published by the Taiwan Stock Exchange, and reclassified the paid-in capital which did not meet the definitions under Taiwan-IFRSs or the Company Act and Regulations of Ministry of Economic Affairs to retained earnings. The Company reclassified such paid-in capital of $28,211 thousand to retained earnings, retained earnings increased by $27,942 thousand and long-term investment decreased by $269 thousand as of September 30, 2012. Gain on disposal of financial instruments increased by nil and $1,112 thousand for the three months and nine months ended September 30, 2012.

85

13) Presentation of consolidated balance sheets

a) Piping fund

As part of the government’s effort to upgrade the existing telecommunications infrastructure project, Chunghwa and other public utility companies were required by the ROC government to contribute a total of $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. Based on the terms of Construction Funding Agreement, if the Piping Fund project is considered to be no longer necessary by the ROC government, Chunghwa will receive back its proportionate share of the net equity of the Piping Fund upon its dissolution. In order to conform to the presentation of the financial statements under Taiwan-IFRSs, the fund was reclassified as other noncurrent assets.

b) Time deposits with maturities of more than three months

Under ROC GAAP, cash and cash equivalents includes time deposits that are cancellable but without any loss of principal. Under Taiwan-IFRSs, cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of three months or less from the date of acquisition.

Time deposits and negotiable certificate of deposits with maturities of more than three months held by the Company were $7,314,945 thousand as of September 30, 2012. In order to conform to the presentation of the financial statements under Taiwan-IFRSs, such amounts were reclassified from cash to other monetary assets - current.

c) Deferred expense

The deferred expense, which was classified as other assets under ROC GAAP, was reclassified based on its nature under Taiwan-IFRSs. Deferred expenses relating to decoration construction projects and advertisement signboard, etc. were reclassified as property, plant and equipment of $185,340 thousand as of September 30, 2012. Deferred expenses relating to computer software were reclassified as intangible assets of $36,465 thousand as of September 30, 2012.

d) Assets held of disposal

The property, plant and equipment classified as assets expected for disposal (included in other assets - others) under ROC GAAP, was reclassified based on its nature under Taiwan-IFRSs. Assets held for disposal were reclassified as property, plant and equipment of $27,580 thousand as of September 30, 2012.

86

e) Reclassification of financial assets carried at cost

Based on the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, stocks held by the Company which were not listed in Taiwan Stock Exchange or were not trading in the GreTai Securities Market and the Company did not have significant influence over these investees were classified as financial assets carried at cost. After transition to Taiwan-IFRSs, part of financial assets carried at cost were designated as available-for-sale financial assets. Financial assets carried at cost were reclassified as available-for-sale financial assets of $90,469 thousand as of September 30, 2012.

14) Presentation of consolidated statements of comprehensive income

After the transition to Taiwan-IFRSs, the consolidated statement of comprehensive income includes net income and other comprehensive income. Further, certain accounts were reclassified to conform to the presentation of the financial statements under Taiwan-IFRSs.

15) Summary of material adjustments of cash flow statements

Under ROC GAAP, collection and payment of interest and collection of dividends were classified as operating activity; payment of dividends was classified as financing activity. Further, for cash flow statement prepared using the indirect method, cash payment of interest expense is required for supplemental disclosure. Based on IAS 7 “Cash Flow Statement”, collection and payment of interest and dividends were disclosed separately with consistency for each period and classified as operating activity, investing activity or financing activity.

44. SIGNIFICANT SUBSEQUENT EVENTS

Chunghwa participated in 4G license bidding process in accordance with “Regulations for Administration of Mobile Broadband Business” announced by NCC. The bidding was completed on October 30, 2013. Chunghwa obtained certain spectrums and the total bid prices were amounting to $39,075,000 thousand.

87

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

NINE MONTHS ENDED SEPTEMBER 30, 2013

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

No.	Endorsement/ Guarantee Provider	Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party		Maximum Balance for the Period		Ending Balance		Amount of Endorsement/ Guarantee Collateralized by Properties		Ratio of Accumulated Endorsement/ Guarantee to Net Equity Per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowable		Notes
		Name	Nature of Relationship (Note 2)
0	Chunghwa Telecom Co., Ltd.	Donghwa Telecom Co., Ltd.	b	$	3,514,295	$	324,214	$	42,250	$	42,250	0.01	$	14,057,182	Notes 3 and 4
25	Yao Yong Real Property Co., Ltd.	Light Era Development Co., Ltd.	d		3,665,887		1,650,000		1,650,000		1,650,000	0.48		3,665,887	Note 5

Note 1: Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

a. “0” for the Company.

b. Subsidiaries are numbered from “1”.

Note 2: Relationships between the endorsement/guarantee provider and the guaranteed party:

a. Trading partner.

b. Majority owned subsidiary.

c. The Company and subsidiary owns over 50% ownership of the investee company.

d. A subsidiary jointly owned by the Company and the Company’s directly-owned subsidiary.

e. Guaranteed by the Company according to the construction contract.

f. An investee company. The guarantees were provided based on the Company’s proportionate share in the investee company.

Note 3: The maximum amount of endorsement or guarantee is up to 1% of the total stockholders’ equity of the latest financial statements of the Company.

Note 4: The maximum amount of endorsement or guarantee is up to 4% of the total stockholders’ equity of the latest financial statements of the Company.

Note 5: The maximum amount of endorsement or guarantee is up to 200% of the asset value of the latest financial statements of Yao Yong Real Property Co., Ltd.

88

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013									Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
0	Chunghwa Telecom Co., Ltd.	Stocks
		Senao International Co., Ltd.	Subsidiary	Investments accounted for using equity method		71,773	$	1,653,149 (Note 9	)		28	$	6,746,677	Note 4
		Light Era Development Co., Ltd.	Subsidiary	Investments accounted for using equity method		300,000		3,797,339 (Note 9	)		100		3,802,912	Note 1
		Donghwa Telecom Co., Ltd.	Subsidiary	Investments accounted for using equity method		374,510		1,441,438 (Note 9	)		100		1,441,438	Note 1
		Chunghwa Telecom Singapore Pte., Ltd.	Subsidiary	Investments accounted for using equity method		26,383		856,109 (Note 9	)		100		856,109	Note 1
		Chunghwa System Integration Co., Ltd.	Subsidiary	Investments accounted for using equity method		60,000		702,189 (Note 9	)		100		676,464	Note 1
		Chunghwa Investment Co., Ltd.	Subsidiary	Investments accounted for using equity method		68,085		475,238 (Note 9	)		89		551,700	Note 1
		CHIEF Telecom Inc.	Subsidiary	Investments accounted for using equity method		37,942		579,203 (Note 9	)		69		519,630	Note 1
		International Integrated System, Inc.	Associate	Investments accounted for using equity method		22,498		273,914			33		248,311	Note 1
		Viettel-CHT Co., Ltd.	Associate	Investments accounted for using equity method		—		271,259			30		271,259	Note 1
		Huada Digital Corporation	Jointly controlled entity	Investments accounted for using equity method		25,000		232,343			50		232,343	Note 1
		Taiwan International Standard Electronics Co., Ltd.	Associate	Investments accounted for using equity method		1,760		122,482			40		473,909	Note 1
		Chunghwa International Yellow Pages Co., Ltd.	Subsidiary	Investments accounted for using equity method		15,000		174,706 (Note 9	)		100		174,406	Note 1
		Honghwa Human Resources Co., Ltd.	Subsidiary	Investments accounted for using equity method		18,000		193,085 (Note 9	)		100		193,085	Note 1
		Prime Asia Investments Group Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		1		128,729 (Note 9	)		100		128,802	Note 1
		Skysoft Co., Ltd.	Associate	Investments accounted for using equity method		4,438		143,383			30		105,794	Note 1
		Spring House Entertainment Tech. Inc.	Subsidiary	Investments accounted for using equity method		7,015		132,062 (Note 9	)		56		117,726	Note 1
		Chunghwa Telecom Global, Inc.	Subsidiary	Investments accounted for using equity method		6,000		115,421 (Note 9	)		100		126,758	Note 1
		Kingwaytek Technology Co., Ltd.	Associate	Investments accounted for using equity method		2,879		68,201			33		34,483	Note 1
		Chunghwa Telecom Vietnam Co., Ltd.	Subsidiary	Investments accounted for using equity method		—		78,701 (Note 9	)		100		78,701	Note 1
		Smartfun Digital Co., Ltd.	Subsidiary	Investments accounted for using equity method		6,500		44,079 (Note 9	)		65		44,137	Note 1
		So-net Entertainment Taiwan Co., Ltd.	Associate	Investments accounted for using equity method		9,429		89,318			30		71,811	Note 1

(Continued)

89

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		Chunghwa Telecom Japan Co., Ltd.	Subsidiary	Investments accounted for using equity method		1	$	26,111 (Note 9	)		100	$	26,111		Note 1
		Dian Zuan Integrating Marketing Co., Ltd.	Associate	Investments accounted for using equity method		452		2,874			13		2,874		Note 1
		Chunghwa Sochamp Technology Inc.	Subsidiary	Investments accounted for using equity method		2,040		13,497 (Note 9	)		51		15,310		Note 1
		New Prospect Investments Holdings Ltd. (B.V.I.)	Subsidiary	Investments accounted for using equity method		—	(US$	—    1 dollar (Note 9	)  )		100	(US$	—    1 dollar	)	Note 8
		Taipei Financial Center Corp.	—	Financial assets carried at cost - noncurrent		172,927		1,789,530			12		1,763,871		Note 2
		Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)	—	Financial assets carried at cost - noncurrent		18,000		162,000			17		146,094		Note 2
		Innovation Works Development Fund, L.P.	—	Financial assets carried at cost - noncurrent		—		144,262			4		139,723		Note 2
		Global Mobile Corp.	—	Financial assets carried at cost - noncurrent		7,617		77,018			3		29,901		Note 2
		iD Branding Ventures	—	Financial assets carried at cost - noncurrent		5,625		56,250			8		50,496		Note 2
		Innovation Works Limited	—	Financial assets carried at cost - noncurrent		1,000		31,390			2		16,242		Note 2
		CQi Energy Infocom Inc.	—	Financial assets carried at cost - noncurrent		2,000		—			18		—		Note 2
		RPTI Intergroup International Ltd.	—	Financial assets carried at cost - noncurrent		4,765		—			10		—		Note 2
		Essence Technology Solution, Inc.	—	Financial assets carried at cost - noncurrent		200		—			7		—		Note 2
		Stocks
		China Airlines Ltd.	—	Available-for-sale financial assets - noncurrent		263,622		3,092,287			5		2,926,205		Note 4
		Bond
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		200,126			—		200,126		Note 6
		NAN YA Company 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		100,145			—		100,145		Note 6
		NAN YA Company 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		49,992			—		49,992		Note 6
		NAN YA Company 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		150,440			—		150,440		Note 6
		NAN YA Company 1st Unsecured Corporate Bond-s Issue in 2009	—	Held-to-maturity financial assets		—		100,313			—		100,313		Note 6
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		100,111			—		100,111		Note 6
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		25,063			—		25,063		Note 6
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		199,925			—		199,925		Note 6
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		300,689			—		300,689		Note 6
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		50,215			—		50,215		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,178			—		100,178		Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		301,061			—		301,061		Note 6

(Continued)

90

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—	$	299,825		—	$	299,825	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011	—	Held-to-maturity financial assets		—		100,585		—		100,585	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,934		—		99,934	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		200,252		—		200,252	Note 6
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,869		—		199,869	Note 6
		TSMC 2nd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,849		—		199,849	Note 6
		TSMC 3rd Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		199,845		—		199,845	Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,224		—		100,224	Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		175,374		—		175,374	Note 6
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009	—	Held-to-maturity financial assets		—		100,188		—		100,188	Note 6
		FCFC 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		125,313		—		125,313	Note 6
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		200,441		—		200,441	Note 6
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		100,155		—		100,155	Note 6
		FCFC 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		299,672		—		299,672	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		25,000		—		25,000	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		100,031		—		100,031	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		100,049		—		100,049	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		100,184		—		100,184	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		150,381		—		150,381	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010	—	Held-to-maturity financial assets		—		299,842		—		299,842	Note 6
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		149,846		—		149,846	Note 6
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2011	—	Held-to-maturity financial assets		—		199,770		—		199,770	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-B Issue in 2006	—	Held-to-maturity financial assets		—		200,344		—		200,344	Note 6

(Continued)

91

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-B Issue in 2006	—	Held-to-maturity financial assets		—	$	150,258		—	$	150,258	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-C Issue in 2006	—	Held-to-maturity financial assets		—		102,679		—		102,679	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-C Issue in 2006	—	Held-to-maturity financial assets		—		205,465		—		205,465	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		100,200		—		100,200	Note 6
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2009	—	Held-to-maturity financial assets		—		200,253		—		200,253	Note 6
		Chinese Petroleum Corporation 2nd Unsecured Corporate Bonds-A Issue in 2012	—	Held-to-maturity financial assets		—		199,845		—		199,845	Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds Issue in 2008	—	Held-to-maturity financial assets		—		50,098		—		50,098	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		49,999		—		49,999	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-A Issue in 2008	—	Held-to-maturity financial assets		—		50,124		—		50,124	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		305,422		—		305,422	Note 6
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008	—	Held-to-maturity financial assets		—		203,075		—		203,075	Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		100,274		—		100,274	Note 6
		China Steel Corporation 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		301,573		—		301,573	Note 6
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		303,625		—		303,625	Note 6
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005	—	Held-to-maturity financial assets		—		202,208		—		202,208	Note 6
		Taiwan Power Co. 2nd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		206,496		—		206,496	Note 6
		Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006	—	Held-to-maturity financial assets		—		207,369		—		207,369	Note 6
		Taiwan Power Co. 7th Unsecured Corporate Bond-A Issue in 2008	—	Held-to-maturity financial assets		—		150,407		—		150,407	Note 6
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		20,069		—		20,069	Note 6
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009	—	Held-to-maturity financial assets		—		100,151		—		100,151	Note 6
		Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		50,068		—		50,068	Note 6
		Taiwan Power Company 4th Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		349,753		—		349,753	Note 6
		Taiwan Power Company 5th Secured Corporate Bond-B Issue in 2009	—	Held-to-maturity financial assets		—		100,161		—		100,161	Note 6

(Continued)

92

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013								Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)		Percentage of Ownership		Market Value or Net Asset Value
		Taiwan Power Company 2nd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—	$	100,090		—	$	100,090	Note 6
		Taiwan Power Co 3rd Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		200,615		—		200,615	Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		300,284		—		300,284	Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		199,944		—		199,944	Note 6
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		99,972		—		99,972	Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		39,972		—		39,972	Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		99,929		—		99,929	Note 6
		Taiwan Power Co. 1st Unsecured Corporate Bond-2A Issue in 2012	—	Held-to-maturity financial assets		—		99,926		—		99,926	Note 6
		KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2012	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6
		MLPC 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		150,612		—		150,612	Note 6
		MLPC 1st Unsecured Corporate Bonds Issue in 2009	—	Held-to-maturity financial assets		—		49,987		—		49,987	Note 6
		MLPC 1st Unsecured Corporate Bond Issue in 2009	—	Held-to-maturity financial assets		—		49,987		—		49,987	Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2010	—	Held-to-maturity financial assets		—		201,248		—		201,248	Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		150,047		—		150,047	Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,065		—		100,065	Note 6
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		100,065		—		100,065	Note 6
		Yuanta FHC 1st Unsecured Corporate Bonds-A Issue in 2011	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011	—	Held-to-maturity financial assets		—		100,426		—		100,426	Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011	—	Held-to-maturity financial assets		—		301,368		—		301,368	Note 6
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond-A Issue in 2012	—	Held-to-maturity financial assets		—		300,000		—		300,000	Note 6
		TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010	—	Held-to-maturity financial assets		—		301,683		—		301,683	Note 6
		TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010	—	Held-to-maturity financial assets		—		200,799		—		200,799	Note 6
		TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010	—	Held-to-maturity financial assets		—		100,319		—		100,319	Note 6

(Continued)

93

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-C Issue in 2011	—	Held-to-maturity financial assets		—	$	200,707			—	$	200,707		Note 6
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011	—	Held-to-maturity financial assets		—		300,000			—		300,000		Note 6
		Eximbank 19-2nd Unsecured Financial Debentures	—	Held-to-maturity financial assets		—		150,000			—		150,000		Note 6
1	Senao International Co., Ltd.	Stocks
		Senao Networks, Inc.	Associate	Investments accounted for using equity method		16,824		468,379			40		468,379		Note 1
		Senao International (Samoa) Holding Ltd.	Subsidiary	Investments accounted for using equity method		54,975	(US$	852,433 28,730 (Note 9	)  )		100	(US$	854,749 28,809	)	Note 1
		N.T.U. Innovation Incubation Corporation	—	Financial assets carried at cost - noncurrent		1,200		12,000			9		12,675		Note 2
2	CHIEF Telecom Inc.	Stocks
		Unigate Telecom Inc.	Subsidiary	Investments accounted for using equity method		200		1,570 (Note 9	)		100		1,570		Note 1
		Chief International Corp.	Subsidiary	Investments accounted for using equity method		200	(US$	17,943 607 (Note 9	)  )		100	(US$	17,943 607	)	Note 1
		3 Link Information Service Co., Ltd.	—	Financial assets carried at cost - noncurrent		374		3,450			10		6,174		Note 2
		21 Vianet Group. Inc.	—	Available-for-sale financial assets		208	(US$	16,880 571	)		—	(US$	16,880 571	)	Note 4
3	Chunghwa System Integration Co., Ltd.	Stocks
		Concord Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		1,500	(RMB	19,391 4,033 (Note 9	)  )		100	(RMB	19,391 4,033	)	Note 1
7	Spring House Entertainment Tech. Inc.	Stocks
		Ceylon Innovation Co., Ltd.	Subsidiary	Investments accounted for using equity method		—		9,624 (Note 9	)		100		9,624		Note 1
8	Light Era Development Co., Ltd.	Stocks
		Yao Yong Real Property Co., Ltd.	Subsidiary	Investments accounted for using equity method		83,290		2,699,017 (Note 9	)		100		1,817,801		Note 1
9	Chunghwa Telecom Singapore Pte., Ltd.	Stocks
		ST-2 Satellite Ventures Pte., Ltd.	Associate	Investments accounted for using equity method		18,102	(US$	663,852 22,450	)		38	(US$	663,852 22,450	)	Note 1
14	Chunghwa Investment Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. Co., Ltd.	Subsidiary	Investments accounted for using equity method		10,936		146,140 (Note 9	)		51		146,140		Note 1
		Chunghwa Investment Holding Co., Ltd. (CIHC)	Subsidiary	Investments accounted for using equity method		1,432	(US$	17,137 580 (Note 9	)  )		100	(US$	17,137 580	)	Note 1

(Continued)

94

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	September 30, 2013										Note
					Shares (Thousands/ Thousand Units)		Carrying Value (Note 5)			Percentage of Ownership		Market Value or Net Asset Value
		PandaMonium Company Ltd.	Associate	Investments accounted for using equity method		602	$	—			43	$	—		Note 1
		CHIEF Telecom Inc.	Associate	Investments accounted for using equity method		2,000		27,559 (Note 9	)		4		27,559		Note 1
		Senao International Co., Ltd.	Associate	Investments accounted for using equity method		1,001		46,407 (Note 9	)		—		94,094		Note 4
		Tatung Technology Inc.	—	Financial assets carried at cost - noncurrent		4,571		73,964			11		81,635		Note 2
		Digimax Inc.	—	Financial assets carried at cost - noncurrent		1,203		10,928			3		9,332		Note 2
		iD Branding Ventures	—	Financial assets carried at cost - noncurrent		1,875		18,750			3		16,388		Note 2
		Uni Display Inc.	—	Financial assets carried at cost - noncurrent		2,445		16,578			1		14,915		Note 2
		A2 peak Power Co., Ltd.	—	Financial assets carried at cost - noncurrent		990		—			3		—		Note 2
		VisEra Technologies Company Ltd.	—	Financial assets carried at cost - noncurrent		649		29,371			—		14,175		Note 2
		Ultra Fine Optical Technology Co., Ltd.	—	Financial assets carried at cost - noncurrent		1,800		13,776			8		13,374		Note 2
		Alder Optomechanical Corp.	—	Financial assets carried at cost - noncurrent		666		7,326			1		6,660		Note 2
		Aide Energy (Cayman) Holding Co., Ltd.	—	Financial assets carried at cost - noncurrent		800		630			1		1,568		Note 2
		Mediapro Technology Ltd.	—	Financial assets carried at cost - noncurrent		55		8,177			—		2,873		Note 2
		PChome Store Inc.	—	Available-for-sale financial assets - noncurrent		405		14,073			2		66,782		Note 4
		Procrystal Technology Co., Ltd.	—	Available-for-sale financial assets - noncurrent		1,350		16,200			2		16,200		Note 7
		Tons Lightology Inc.	—	Available-for-sale financial assets - noncurrent		1,242		66,150			3		33,168		Note 4
18	Concord Technology Co., Ltd.	Stocks
		Glory Network System Service (Shanghai) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(RMB	19,391 4,033 (Note 9	)  )		100	(RMB	19,391 4,033	)	Note 1
20	Chunghwa Precision Test Tech. Co., Ltd.	Stocks
		Chunghwa Precision Test Tech. USA Corporation	Subsidiary	Investments accounted for using equity method		400	(US$	10,512 356 (Note 9	)  )		100	(US$	10,512 356	)	Note 1
		CHPT Japan Co., Ltd.	Subsidiary	Investments accounted for using equity method		600	(JPY	1,880 6,436 (Note 9	)  )		100	(JPY	1,880 6,436	)	Note 1
		Chunghwa Precision Test Tech International, Ltd.	Subsidiary	Investments accounted for using equity method		100	(US$	2,957 100 (Note 9	)  )		100	(US$	2,957 100	)	Note 1
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Subsidiary	Investments accounted for using equity method		54,260	(US$	826,744 27,865 (Note 9	)  )		100	(US$	826,744 27,865	)	Note 1
		HopeTech Technologies Limited	Associate	Investments accounted for using equity method		5,240	(US$	26,985 909	)		45	(US$	26,985 909	)	Note 1
23	Senao International HK Limited	Stocks
		Senao Trading (Fujian) Co., Ltd.	Subsidiary	Investments accounted for using equity method		—	(US$	400,679 13,505 (Note 9	)  )		100	(US$	400,679 13,505	)	Note 1

(Continued)

95

No.

Held Company Name

Marketable Securities Type and Name

Relationship with the Company

Financial Statement Account

September 30, 2013

Note

Shares (Thousands/ Thousand Units)

Carrying Value (Note 5)

Percentage of Ownership

Market Value or Net Asset Value

Senao International Trading (Shanghai) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

$ (US$

228,710 7,708 (Note 9

)  )

100

$ (US$

228,710 7,708

)

Notes 1 and 10

Senao International Trading (Shanghai) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(US$

80,568 2,715 (Note 9

)  )

100

(US$

80,568 2,715

)

Notes 1 and 10

Senao International Trading (Jiangsu) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(US$

116,171 3,915 (Note 9

)  )

100

(US$

116,171 3,915

)

Note 1

24

Chunghwa Investment Holding Co., Ltd.

Stocks

CHI One Investment Co., Limited

Subsidiary

Investments accounted for using equity method

6,520

(HK$

10,159 1,902 (Note 9

)  )

100

(HK$

10,159 1,902

)

Note 1

26

CHI One Investment Co., Limited

Stocks

Xiamen Sertec Business Technology Co., Ltd.

Associate

Investments accounted for using equity method

—

(RMB

6,774 1,402

)

49

(RMB

6,774 1,402

)

Note 1

27

Prime Asia Investments Group, Ltd. (B.V.I.)

Stocks

Chunghwa Hsingta Company Ltd.

Subsidiary

Investments accounted for using equity method

1

(RMB

128,799 26,783 (Note 9

)  )

100

(RMB

128,799 26,783

)

Note 1

29

Chunghwa Hsingta Company Ltd.

Stocks

Chunghwa Telecom (China) Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(RMB

102,172 21,246 (Note 9

)  )

100

(RMB

102,172 21,246

)

Note 1

Jiangsu Zhenhua Information Technology Company, LLC

Subsidiary

Investments accounted for using equity method

—

(RMB

19,861 4,130 (Note 9

)  )

75

(RMB

19,861 4,130

)

Note 1

Hua-Xiong Information Technology Co., Ltd.

Subsidiary

Investments accounted for using equity method

—

(RMB

6,766 1,407 (Note 9

)  )

51

(RMB

6,766 1,407

)

Note 1

Note 1: The net asset values of investees were based on reviewed financial statements.

Note 2: The net asset values of investees were based on unreviewed financial statements.

Note 3: The net asset values of beneficiary certificates (mutual fund) were based on the net asset values on September 30, 2013.

Note 4: Market value was based on the closing price of September 30, 2013.

Note 5: Showing at their original carrying amounts without adjustments for fair values, except for held-to-maturity financial assets.

(Continued)

96

Note 6: The net asset values of investees were based on amortized cost.

Note 7: Market value of emerging stock was based on the average trading price on September 30, 2013.

Note 8: New Prospect Investments Holdings Ltd. (B.V.I.) was incorporated in March 2006, but not yet begun operation as of September 30, 2013.

Note 9: The amount was eliminated upon consolidation.

Note 10: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

97

TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

NINE MONTHS ENDED SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relation- ship		Beginning Balance				Acquisition				Disposal									Ending Balance
								Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)		Shares (Thou- sands/ Thou- sand Units)		Amount		Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal			Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)
0	Chunghwa Telecom Co., Ltd.	Stocks
		Honghwa Human Resources Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		—	$	—		18,000	$	180,000		—	$	—	$	—	$	—			18,000	$	193,085 (Notes 3 and 5)
		Donghwa Telecom Co, Ltd	Investments accounted for using equity method		—		Subsidiary		305,090		1,168,032 (Note 3)		69,420		256,843		—		—		—		—			374,510		1,441,438 (Notes 3 and 5)
		Chunghwa Investment Co., Ltd.	Investments accounted for using equity method		—		Subsidiary		80,100		612,738 (Note 3)		—		—		12,015		12,150		12,150 (Note 4)		—			68,085		475,238 (Notes 3 and 5)
		Beneficiary certificates (mutual fund)
		Fidelity Funds - US High Yield Fund (Y-ACC-USD)	Available-for-sale financial assets		—		—		—		—		307		147,955		307		142,569		147,955		(5,386	)		—		—
		PIMCO GIS plc Global Investment Grade Credit Fund Class H Institutional (Acc)	Available-for-sale financial assets		—		—		1,071		456,118		597		295,890		1,668		797,099		752,008		45,091			—		—
		PIMCO GIS plc Total Return Bond Class H Institutional (Acc)	Available-for-sale financial assets		—		—		770		534,453		—		—		770		579,586		534,453		45,133			—		—
		Janus Flexible Income Bond Fund	Available-for-sale financial assets		—		—		671		230,472		318		116,280		989		372,472		346,752		25,720			—		—

(Continued)

98

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relation- ship		Beginning Balance				Acquisition				Disposal									Ending Balance
								Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)		Shares (Thou- sands/ Thou- sand Units)		Amount		Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal			Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)
		PIMCO GIS Diversified Income Fund Class H Institutional (Acc)	Available-for-sale financial assets		—		—		984		347,452		1,443		618,189		2,427		984,598		965,641		18,957			—		—
		Legg Mason Western Asset Global Multi Strategy Fund Class F USD Distributing (D)	Available-for-sale financial assets		—		—		—		—		47		148,080		47		138,696		148,080		(9,384	)		—		—
		Fidelity Funds - US Dollar Bond Fund (Y-ACC-USD)	Available-for-sale financial assets		—		—		778		297,283		—		—		778		314,074		297,283		16,791			—		—
		Eastpring Investments - US Corporation Bond Fund	Available-for-sale financial assets		—		—		433		149,190		426		145,298		859		303,961		294,488		9,473			—		—
		Schroder International Selection Fund - Global Corporate Bond	Available-for-sale financial assets		—		—		—		—		769		145,220		769		149,501		145,220		4,281			—		—
		JP Morgan Funds - Global Corporate Bond Fund	Available-for-sale financial assets		—		—		—		—		44		145,220		44		151,902		145,220		6,682			—		—
		Bonds
		NAN YA Company 1st Unsecured Corporate Bond-A Issue in 2009	Held-to-maturity financial assets		—		—		—		600,000 (Note 2)		—		—		—		300,000 (Note 2)		300,000 (Note 2)		—			—		300,000 (Note 2)
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009	Held-to-maturity financial assets		—		—		—		250,000 (Note 2)		—		—		—		125,000 (Note 2)		125,000 (Note 2)		—			—		125,000 (Note 2)
		FCFC 2nd Unsecured Corporate Bonds Issue in 2009	Held-to-maturity financial assets		—		—		—		250,000 (Note 2)		—		—		—		125,000 (Note 2)		125,000 (Note 2)		—			—		125,000 (Note 2)
		Formosa Petrochemical Corporation 2nd Unsecured Corporate Bonds Issue in 2008	Held-to-maturity financial assets		—		—		—		250,000 (Note 2)		—		—		—		250,000 (Note 2)		250,000 (Note 2)		—			—		—
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009	Held-to-maturity financial assets		—		—		—		700,000 (Note 2)		—		—		—		350,000 (Note 2)		350,000 (Note 2)		—			—		350,000 (Note 2)

(Continued)

99

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relation- ship		Beginning Balance					Acquisition					Disposal								Ending Balance
								Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)			Shares (Thou- sands/ Thou- sand Units)		Amount			Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)
		Taiwan Power Co. 2nd Secures Bond-B Issue in 2008	Held-to-maturity financial assets		—		—		—		150,000 (Note 2)			—		—			—		150,000 (Note 2)		150,000 (Note 2)		—		—		—
		Taiwan Power Co. 4th Secures Bond-B Issue in 2008	Held-to-maturity financial assets		—		—		—		200,000 (Note 2)			—		—			—		200,000 (Note 2)		200,000 (Note 2)		—		—		—
		Taiwan Power Co. 1st Secured Corporate Bond-A issue in 2009	Held-to-maturity financial assets		—		—		—		240,000 (Note 2)			—		—			—		120,000 (Note 2)		120,000 (Note 2)		—		—		120,000 (Note 2)
		MLPC 1st Unsecured Corporate Bonds Issue in 2009	Held-to-maturity financial assets		—		—		—		500,000 (Note 2)			—		—			—		250,000 (Note 2)		250,000 (Note 2)		—		—		250,000 (Note 2)
		China Development Holding Corporation 1st Unsecured Corporate Bonds-A Issue in 2008	Held-to-maturity financial assets		—		—		—		100,000 (Note 2)			—		—			—		100,000 (Note 2)		100,000 (Note 2)		—		—		—
		Mega Securities Co., Ltd. 1st Unsecured Corporate Bond Issue in 2010	Held-to-maturity financial assets		—		—		—		300,000 (Note 2)			—		—			—		300,000 (Note 2)		300,000 (Note 2)		—		—		—
1	Senao International Co., Ltd.	Stocks
		Senao International (Samoa) Holding Ltd.	Investments accounted for using equity method		—		Subsidiary		33,475	$ (US$	988,597 33,475	)		21,500	$ (US$	638,148 21,500	)		—	$	—	$	—	$	—		54,975	$ (US$	1,626,745 54,975 (Note 5)	)
22	Senao International (Samoa) Holding Ltd.	Stocks
		Senao International HK Limited	Investments accounted for using equity method		—		Subsidiary		32,760	(US$	966,186 32,760	)		21,500	(US$	638,148 21,500	)		—		—		—		—		54,260	(US$	1,604,334 54,260 (Note 5)	)

(Continued)

100

No.	Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party		Nature of Relation- ship	Beginning Balance					Acquisition					Disposal								Ending Balance
							Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)			Shares (Thou- sands/ Thou- sand Units)		Amount			Shares (Thou- sands/ Thou- sand Units)		Amount		Carrying Value (Note 1)		Gain (Loss) on Disposal		Shares (Thou- sands/ Thou- sand Units)		Amount (Note 1)
23	Senao International HK Limited	Stocks
		Senao Trading (Fujian) Co., Ltd.	Investments accounted for using equity method		—	Subsidiary		—	(US$	338,793 11,500	)		—	(US$	370,735 12,500	)		—		—		—		—		—	(US$	709,528 24,000 (Note 5)	)
		Senao International Trading (Shanghai) Co., Ltd.	Investments accounted for using equity method		—	Subsidiary		—	(US$	297,726 10,000	)		—	(US$	237,733 8,000	)		—		—		—		—		—	(US$	535,459 18,000 (Note 5)	)

Note 1: Showing at their original carrying amounts without adjustments for fair values.

Note 2: Stated at its nominal amounts.

Note 3: The ending balance includes equity in earnings or losses of jointly controlled entities accounted for using equity method and exchange differences arising from the translation of the foreign operations adjustments

Note 4: The decrease amount was arising from capital reduction.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

101

TABLE 4

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

NINE MONTHS ENDED SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Transaction Details						Abnormal Transaction (Note 4)				Notes/Accounts Payable or Receivable
				Purchase/Sale (Note 1)	Amount (Note 2)		% to Total		Payment Terms	Units Price		Payment Terms		Ending Balance (Note 3)			% to Total
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	Purchase	$	9,626,521 (Note 5)		8.8	30-90 days	$	—		—	$	(1,335,752 (Note 5)	)		(10	)
		Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		594,392 (Note 5)		—	30 days		—		—		(418,691 (Note 5)	)		(3	)
		ST-2 Satellite Ventures Pte. Ltd.	Equity-method investee	Purchase		306,870		—	30 days		—		—		(49,980	)		—
		Chunghwa Telecom Global, Inc.	Subsidiary	Purchase		250,851 (Note 5)		—	90 days		—		—		(92,788 (Note 5)	)		—
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Purchase		373,766		—	30-90 days		—		—		(247,779	)		(2	)
		CHIEF Telecom Inc.	Subsidiary	Purchase		237,660 (Note 5)		—	30 days		—		—		(44,908 (Note 5)	)		—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		9,633,846 (Note 5)		29.9	30-90 days		—		—		1,348,241 (Note 5)			68
				Purchase		112,606 (Note 5)		0.4	30 days		—		—		(2,782 (Note 5)	)		—
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		1,513,737 (Note 5)		77.0	30 days		—		—		418,691 (Note 5)			22

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: The amount was eliminated upon consolidation.

102

TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Ending Balance		Turnover Rate	Overdue				Amounts Received in Subsequent Period		Allowance for Bad Debts
							Amounts		Action Taken
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	169,318 (Note 2)	17.56	$	—		—	$	894	$	—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		1,916,241 (Note 2)	9.6		—		—		170,370		—
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		418,691 (Note 2)	5.42		—		—		290,485		—
4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		101,863 (Note 2)	4.33		—		—		56,488		—
36	Honghwa Human Resources Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		134,629 (Note 2)	5.44		—		—		50,453		—

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.

103

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE

NINE MONTHS ENDED SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of September 30, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					September 30, 2013		December 31, 2012		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
0	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	$	1,653,149	$	1,163,470		$	319,675		Subsidiary (Note 4)
		Light Era Development Co., Ltd.	Taiwan	Housing, office building development, rent and sale services		3,000,000		3,000,000		300,000		100		3,797,339		12,085			12,029		Subsidiary (Note 4)
		Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		1,461,361		1,195,518		374,510		100		1,441,438		(11,928	)		(11,928	)	Subsidiary (Note 4)
		Chunghwa Telecom Singapore Pte., Ltd.	Singapore	International telecommunications IP fictitious internet and internet transfer services		574,112		574,112		26,383		100		856,109		137,873			137,873		Subsidiary (Note 4)
		Chunghwa System Integration Co., Ltd.	Taiwan	Providing communication and information aggregative services		838,506		838,506		60,000		100		702,189		37,631			46,448		Subsidiary (Note 4)
		Chunghwa Investment Co., Ltd.	Taiwan	Investment		639,559		759,709		68,085		89		475,238		2,183			(16,277	)	Subsidiary (Note 4)
		CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		482,165		482,165		37,942		69		579,203		120,367			85,411		Subsidiary (Note 4)
		International Integrated System, Inc.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		283,500		283,500		22,498		33		273,914		5,537			3,101		Associate
		Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327		288,327		—		30		271,259		34,806			10,447		Associate
		Huada Digital Corporation	Taiwan	Providing software service		250,000		250,000		25,000		50		232,343		(17,932	)		(8,966	)	Jointly controlled entity

(Continued)

104

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of September 30, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					September 30, 2013		December 31, 2012		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
		Taiwan International Standard Electronics Co., Ltd.	Taiwan	Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment		164,000		164,000		1,760		40		122,482		673,306			217,144		Associate
		Chunghwa International Yellow Pages Co., Ltd.	Taiwan	Yellow pages sales and advertisement services		150,000		150,000		15,000		100		174,706		12,204			12,204		Subsidiary (Note 4)
		Honghwa Human Resources Co., Ltd.	Taiwan	Human Resources Service		180,000		—		18,000		100		193,085		13,085			13,085		Subsidiary (Note 4)
		Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		215,020		215,020		1		100		128,729		(31,677	)		(31,628	)	Subsidiary (Note 4)
		Skysoft Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025		67,025		4,438		30		143,383		172,482			52,790		Associate
		Spring House Entertainment Tech. Inc.	Taiwan	Network services, producing digital entertainment contents and broadband visual sound terrace development		62,209		62,209		7,015		56		132,062		74,763			42,944		Subsidiary (Note 4)
		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		115,421		15,201			16,892		Subsidiary (Note 4)
		KingWay Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		71,770		71,770		2,879		33		68,201		1,935			606		Associate
		Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service		103,027		73,157		—		100		78,701		(4,938	)		(4,938	)	Subsidiary (Note 4)
		Smartfun Digital Co., Ltd.	Taiwan	Software retail		65,000		65,000		6,500		65		44,079		(799	)		(470	)	Subsidiary (Note 4)
		So-net Entertainment Taiwan	Taiwan	Online service and sale of computer hardware		120,008		60,008		9,429		30		89,318		(172,482	)		(52,790	)	Associate

(Continued)

105

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of September 30, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					September 30, 2013			December 31, 2012			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
		Chunghwa Telecom Japan Co., Ltd.	Japan	International telecom-munications IP fictitious internet and internet transfer services		17,291			17,291			1		100		26,111		3,101			3,101		Subsidiary (Note 4)
		Dian Zuan Integrating Marketing Co., Ltd.	Taiwan	Information technology service and general advertisement service		48,113			64,500			452		13		2,874		(12,189	)		(3,256	)	Associate
		Chunghwa Sochamp Technology Inc.	Taiwan	License plate recognition system		20,400			20,400			2,040		51		13,497		(11,305	)		(3,917	)	Subsidiary (Note 4)
		New Prospect Investments Holdings Ltd. (B.V.I.)	British Virgin Islands	Investment	$	—		$	—			—		100	$	—	$	—		$	—		Subsidiary (Notes 3 and 4)
1	Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales		206,190			206,190			16,824		40		468,379		304,677			124,673		Associate
		Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment.	(US$	1,626,745 54,975	)	(US$	988,597 33,475	)		54,975		100		852,433		(349,150	)		(350,893	)	Subsidiary (Note 4)
2	CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunication and internet service.		2,000			2,000			200		100		1,570		(99	)		(99	)	Subsidiary (Note 4)
		Chief International Corp.	Samoa Islands	Investment	(US$	6,068 200	)	(US$	6,068 200	)		200		100		17,943		3,468			3,468		Subsidiary (Note 4)
3	Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Investment	(US$	47,321 1,500	)	(US$	47,321 1,500	)		1,500		100		19,931		(437	)		(437	)	Subsidiary (Note 4)
7	Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taiwan	International trading, general advertisement and book publishment service		10,000			1,000			—		100		9,624		(289	)		(289	)	Subsidiary (Note 4)
8	Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd.	Taiwan	Real estate trading and leasing business		2,793,667			2,793,667			83,290		100		2,699,017		38,271			26,091		Subsidiary (Note 4)
9	Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite	(SGD	409,061 18,102	)	(SGD	409,061 18,102	)		18,102		38		663,852		261,929			130,123		Associate

(Continued)

106

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of September 30, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					September 30, 2013			December 31, 2012			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
14	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		91,875			91,875			10,936		51		146,140		31,027			15,706		Subsidiary (Note 4)
		Chunghwa Investment Holding Co., Ltd.	Brunei	Investment	(US$	46,035 1,432	)	(US$	46,035 1,432	)		1,432		100		17,137		(2,210	)		(2,210	)	Subsidiary (Note 4)
		Panda Monium Company Ltd.	Cayman	The production of animation	(US$	20,000 602	)	(US$	20,000 602	)		602		43		—		—			—		Associate
		CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		20,000			20,000			2,000		4		27,559		120,367			4,405		Associate (Note 4)
		Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731			49,731			1,001		—		46,407		1,163,470			4,518		Associate (Note 4)
18	Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd.	China	Providing advanced business solutions to telecommunications	(US$	47,321 1,500	)	(US$	47,321 1,500	)		—		100		19,931		(437	)		(437	)	Subsidiary (Note 4)
20	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	(US$	12,504 400	)	(US$	12,504 400	)		400		100		10,512		(193	)		(193	)	Subsidiary (Note 4)
		CHPT Japan Co., Ltd.	Japan	Sale and maintenance of electronic parts and machinery processed products, and design of printed circuit board	(JPY	2,008 6,000	)		—			600		100		1,880		68			68		Subsidiary (Note 4)
		Chunghwa Precision Test Tech. International Co., Ltd.	Samoa Islands	Wholesale electronic materials, electronic materials and general retail investment industry		2,957			—			100		100		2,957		—			—		Subsidiary (Note 4)
22	Senao International (Samoa) Holding Ltd.	Senao International HK Limited.	Hong Kong	International investment.	(US$	1,604,334 54,260	)	(US$	966,186   32,760	)		54,280		100		826,744		(353,401	)		(353,401	)	Subsidiary (Note 4)
		HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales.	(US$	21,177 675	)	(US$	21,177 675	)		5,240		45		26,985		9,510			4,279		Associate

(Continued)

107

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount						Balance as of September 30, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					September 30, 2013			December 31, 2012			Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
24	Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	Investment	(HK$	26,035 6,520	)	(HK$	26,035 6,520	)		6,520		100		10,159		(2,185	)		(2,185	)	Subsidiary (Note 4)
26	CHI One Investment Co., Limited	Xiamen Sertec Business Technology Co., Ltd.	China	Customer Services and platform rental activities	$ (RMB	25,414  5,390	)	$ (RMB	25,414  5,390	)		—		49	$	6,774	$	(4,462	)	$	(2,186	)	Associate
23	Senao International HK Limited	Senao Trading (Fujian) Co., Ltd.	China	Information technology and telecommunication products sales.	(US$	709,528 24,000	)	(US$	338,793 11,500	)		—		100		400,679		(162,772	)		(162,772	)	Subsidiary (Note 4)
		Senao International Trading (Shanghai) Co., Ltd.	China	Information technology and telecommunication products sales.	(US$	535,459 18,000	)	(US$	297,726 10,000	)		—		100		228,710		(141,200	)		(141,200	)	Subsidiary (Note 4 and 5)
		Senao International Trading (Shanghai) Co., Ltd.	China	Information technology services and sale of communication products	(US$	87,540 3,000	)	(US$	57,860 2,000	)		—		100		80,568		(4,136	)		(4,136	)	Subsidiary (Note 4 and 5)
		Senao International Trading (Jiangsu) Co., Ltd.	China	Information technology and telecommunication products sales.	(US$	263,736 9,000	)	(US$	263,736 9,000	)		—		100		116,171		(45,220	)		(45,220	)	Subsidiary (Note 4)
27	Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd.	China	Investment	(RMB	215,019  47,373	)	(RMB	215,019  47,373	)		1		100		128,799		(31,677	)		(31,677	)	Subsidiary (Note 4)
29	Chunghwa Hsingta Company Ltd.	Chunghwa Telecom (China) Co., Ltd.	China	Planning and design of energy conservation and software and hardware system services, and integration of information system	(RMB	177,176  39,376	)	(RMB	177,176  39,376	)		—		100		102,172		(24,399	)		(24,399	)	Subsidiary (Note 4)
		Jiangsu Zhenhua Information Technology Company, LLC	China	Intelligent energy conserving and intelligent building services	(RMB	28,912  6,072	)	(RMB	28,912  6,072	)		—		75		19,861		(6,849	)		(5,136	)	Subsidiary (Note 4)
		Hua-Xiong Information Technology Co., Ltd.	China	Intelligent system and energy saving system services in buildings	(RMB	8,931  1,925	)	(RMB	8,931  1,925	)		—		51		6,766		(4,202	)		(2,142	)	Subsidiary (Note 4)

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 September 30, 2013.

Note 4: The amount was eliminated upon consolidation.

Note 5: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

108

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

NINE MONTHS ENDED SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars, in Thousands of U.S. Dollars)

Investee	Main Businesses and Products	Total Amount of Paid- in Capital		Investment Type	Accumulated Outflow of Investment from Taiwan as of January 1, 2013		Investment Flows				Accumulated Outflow of Investment from Taiwan as of September 30, 2013		% Ownership of Direct or Indirect Investment		Investment Gain (Loss) (Note 2)			Carrying Value as of September 30, 2013		Accumulated Inward Remittance of Earnings as of September 30, 2013		Note
							Outflow		Inflow
Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	47,321	Note 2	$	47,321	$	—	$	—	$	47,321		100	$	(437	)	$	19,931	$	—	Note 7
Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		51,552	Note 2		25,414		—		—		25,414		49		(2,186	)		7,327		—	Note 7
Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		709,528	Note 2		338,793		370,735		—		709,528		100		(162,772	)		400,679		—	Note 7
Senao International Trading (Shanghai) Co., Ltd. (Note 8)	Information technology services and sale of communication products		535,459	Note 2		297,726		237,733		—		535,459		100		(141,200	)		228,710		—	Note 7
Senao International Trading (Shanghai) Co., Ltd. (Note 8)	Information technology services and sale of communication products		87,540	Note 2		57,860		29,680		—		87,540		100		(4,136	)		80,568		—	Note 7
Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		263,736	Note 2		263,736		—		—		263,736		100		(45,220	)		116,171		—	Note 7
Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176	Note 2		177,176		—		—		177,176		100		(24,399	)		102,172		—	Note 7
Jiangsu Zhenghua Information Technology Company, LLC	Intelligent energy serving and intelligent building services		38,549	Note 2		28,912		—		—		28,912		75		(5,136	)		19,861		—	Note 7
Hua-Xiong Information Technology Co., Ltd.	Intelligent system and energy saving system services in buildings		17,511	Note 2		8,931		—		—		8,931		51		(2,142	)		6,766		—	Note 7

(Continued)

109

Investee	Accumulated Investment in Mainland China as of September 30, 2013		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	$	405,879
Xiamen Sertec Business Technology Co., Ltd. (Note 4)		25,414		79,882		457,736
Senao International Trading Co., Ltd. (Note 5)		1,596,263		1,596,263		3,404,611
Chunghwa Telecom (China) Co., Ltd. (Note 6)		177,176		177,176		213,634,685
Jiangsu Zhenghua Information Technology Company, LLC (Note 6)		28,912		141,077		213,634,685
Hua-Xiong Information Technology Co., Ltd. (Note 6)		8,931		44,653		213,634,685

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: The amount was calculated based on the consolidated net assets value of Chunghwa Investment Co., Ltd.

Note 5: The amount was calculated based on the consolidated net assets value of Senao International Co., Ltd.

Note 6: The amount was calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.

Note 7: The amount was eliminated upon consolidation.

Note 8: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

110

TABLE 8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

NINE MONTHS ENDED SEPTEMBER 30, 2013

(Amounts in Thousands of New Taiwan Dollars)

Year	No. (Note 1)	Company Name	Related Party	Nature of Relationship (Note 2)	Transaction Details
					Financial Statement Account	Amount (Note 5)		Payment Terms (Note 3)		% to Total Sales or Assets (Note 4)
2013	0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	a	Accounts receivable	$	7,845		—		—
					Accrued custodial receipts		160,669		—		—
					Accounts payable		1,334,947		—		—
					Amounts collected for others		581,294		—		—
					Revenues		241,654		—		—
					Non-operating income and gains		981		—		—
					Operating costs and expenses		9,612,495		—		4
					Non-operating expense and losses		9
					Property, plant and equipment		7,382		—		—
					Customer’s deposits		1,061		—		—
			CHIEF Telecom Inc.	a	Accounts receivable		29,038		—		—
					Accounts payable		44,908		—		—
					Amounts collected for others		3,254		—		—
					Revenues		186,366		—		—
					Operating costs and expenses		237,660		—		—
					Customer’s deposits		333		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	a	Accounts receivable		38		—		—
					Accounts payable		1		—		—
					Revenues		1,784		—		—
					Non-operating income and gains		347		—		—
			Chunghwa International Yellow Pages Co., Ltd.	a	Accounts receivable		3,016		—		—
					Accrued custodial payments		6,642		—		—
					Accounts payable		12,713		—		—
					Amounts collected for others		92,834		—		—
					Revenues		20,263		—		—
					Non-operating income and gains		5		—		—
					Operating costs and expenses		37,513		—		—
			Chunghwa System Integration Co., Ltd.	a	Accounts receivable		8,585		—		—
					Accrued custodial receipts		2,583		—		—
					Accounts payable		418,691		—		—
					Revenues		15,595		—		—
					Non-operating income and gains		1,172		—		—
					Operating costs and expenses		594,448		—		—
					Property, plant and equipment		604,936		—		—
					Office supplies		762		—		—
					Work in process		91,359		—		—

(Continued)

111

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)
					Spare parts	$	19,973		—		—
					Intangible assets		257,545		—		—
					Other deferred expenses		11,795		—		—
					Customer’s deposits		14,508		—		—
			Chunghwa Telecom Global Inc.	a	Accounts receivable		16,060		—		—
					Accounts payable		92,788		—		—
					Revenues		34,403		—		—
					Operating costs and expenses		250,851		—		—
					Customer’s deposits		14,510		—		—
			Donghwa Telecom Co., Ltd.	a	Accounts receivable		60,259		—		—
					Accounts payable		81,481		—		—
					Revenues		105,818		—		—
					Operating costs and expenses		68,412		—		—
			Spring House Entertainment Inc.	a	Accounts receivable		4,382		—		—
					Accounts payable		9,135		—		—
					Amounts collected for others		43,423		—		—
					Revenues		47,745		—		—
					Operating costs and expenses		28,172		—		—
					Customer’s deposits		5		—		—
			Chunghwa Telecom Japan Co., Ltd.	a	Accounts receivable		1,940		—		—
					Accounts payable		9,703		—		—
					Revenues		16,513		—		—
					Operating costs and expenses		53,292		—		—
			Light Era Development Co., Ltd.	a	Accounts receivable		5		—		—
					Accounts payable		313		—		—
					Revenues		2,181		—		—
					Work in process		470		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	a	Accounts receivable		5,444		—		—
					Accounts payable		3,813		—		—
					Revenues		46,567		—		—
					Operating costs and expenses		50,912		—		—
			Chunghwa Investment Co., Ltd.	a	Revenues		1,753		—		—
			Chunghwa Telecom (China) Co., Ltd.	a	Accounts receivable		586		—		—
					Accounts payable		770		—		—
					Revenues		150		—		—
					Operating costs and expenses		7,014		—		—
			Smartfun Digital Co., Ltd.	a	Accounts receivable		1,204		—		—
					Accounts payable		810		—		—
					Amounts collected for others		2,244		—		—
					Revenues		1,941		—		—
					Non-operating income and gains		182		—		—
					Operating costs and expenses		3,869		—		—
					Customer’s deposits		20		—		—
			Chunghwa Telecom Vietnam Co., Ltd.	a	Accounts receivable		2		—		—
					Accounts payable		148		—		—
					Revenues		35		—		—
					Operating costs and expenses		3,888		—		—

(Continued)

112

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)
			Chunghwa Sochamp Technology Inc.	a	Accounts payable	$	7,128		—		—
					Revenues		279		—		—
					Operating costs and expenses		4,027		—		—
					Work in process		45,415		—		—
					Customer’s deposits		95		—		—
			Chief International Corp	a	Accounts receivable		7,864		—		—
					Accounts payable		8,262		—		—
			Honghwa Human Resources Co., Ltd.	a	Accounts payable		134,647		—		—
					Revenues		424		—		—
					Operating costs and expenses		21,645		—		—
	1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		1,334,947		—		—
					Other receivables		581,294		—		—
					Accounts payable		7,827		—		—
					Note payable		18		—		—
					Other payables		160,669		—		—
					Advances from customers		14,027		—		—
					Revenues		9,633,846		—		4
					Non-operating income and gains		67		—		—
					Purchase		112,606		—		—
					Operating costs and expenses		129,911		—		—
					Non-operating expense and losses		118		—		—
					Refundable deposits		1,061		—		—
			CHIEF Telecom Inc.	c	Revenues		296		—		—
			Chunghwa System Integration Co., Ltd.	c	Revenues		163		—		—
					Operating costs and expenses		7,671		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Revenues		57		—		—
			Spring House Entertainment Inc.	c	Revenues		775		—		—
			Light Era Development Co., Ltd.	c	Revenues		76		—		—
			Chunghwa Telecom (China) Co., Ltd.	c	Operating costs and expenses		411		—		—
			Smartfun Digital Co., Ltd.	c	Accounts payable		1,050		—		—
					Revenues		522		—		—
	2	CHIEF Telecom Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		47,603		—		—
					Prepaid expenses		559		—		—
					Accounts payable		28,949		—		—
					Advances from customers		89		—		—
					Revenues		237,660		—		—
					Operating costs and expenses		186,366		—		—
					Refundable deposits		333		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		296		—		—
			Chunghwa System Integration Co., Ltd.	c	Accounts receivable		1		—		—
					Revenues		56		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts receivable		2,030		—		—
					Accounts payable		553		—		—
					Revenues		9,374		—		—
					Operating costs and expenses		11,625		—		—

(Continued)

113

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)
			Spring House Entertainment Inc.	c	Revenues	$	1,077		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		69		—		—
					Revenues		596		—		—
			Chunghwa Telecom Japan Co., Ltd.	c	Operating costs and expenses		413		—		—
			Yao Yong Real Property Co., Ltd	c	Operating costs and expenses		65,010		—		—
	3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		418,691		—		—
					Accounts payable		11,168		—		—
					Deferred revenue		67,081		—		—
					Revenues		1,513,737		—		1
					Operating costs and expenses		16,767		—		—
					Refundable deposits		14,508		—		—
			Senao International Co., Ltd.	c	Revenues		7,671		—		—
					Operating costs and expenses		163		—		—
			CHIEF Telecom Inc.	c	Accounts payable		1		—		—
					Operating costs and expenses		56		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Revenues		860		—		—
			Spring House Entertainment Inc.	c	Revenues		1,050		—		—
			Light Era Development Co., Ltd.	c	Revenues		151		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	c	Accounts receivable		75		—		—
				c	Revenues		1,144		—		—
			Chunghwa Sochamp Technology Inc.	c	Revenues		70		—		—
			Honghwa Human Resources Co., Ltd.	c	Revenues		281		—		—
	4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		9,028		—		—
					Accrued custodial receipts		92,834		—		—
					Prepaid expenses		3,685		—		—
					Accounts payable		2,247		—		—
					Amounts collected for others		6,642		—		—
					Advances from customers		769		—		—
					Revenues		37,513		—		—
					Operating costs and expenses		20,268		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		57		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		860		—		—
			Light Era Development Co., Ltd.	c	Revenues		271		—		—
	5	Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		92,756		—		—
					Prepaid expenses		32		—		—
					Accounts payable		14,517		—		—
					Advances from customers		1,543		—		—
					Revenues		250,851		—		—
					Operating costs and expenses		34,403		—		—
					Refundable deposits		14,510		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		270		—		—
					Revenues		2,443		—		—

(Continued)

114

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)
			Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts receivable	$	4,290		—		—
					Accounts payable		2,987		—		—
					Revenues		4,925		—		—
					Operating costs and expenses		3,153		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	c	Accounts receivable		68		—		—
					Revenues		312		—		—
	6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		30,782		—		—
					Prepaid expenses		50,699		—		—
					Accounts payable		32,529		—		—
					Advances from customers		27,730		—		—
					Revenues		68,412		—		—
					Operating costs and expenses		105,818		—		—
			CHIEF Telecom Inc.	c	Accounts payable		69		—		—
					Operating costs and expenses		596		—		—
			Chunghwa Telecom Global, Inc.	c	Accounts payable		270		—		—
					Operating costs and expenses		2,443		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts payable		2,066		—		—
					Prepaid expenses		21,778		—		—
					Operating costs and expenses		10,292		—		—
	7	Spring House Entertainment Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		9,099		—		—
					Accrued custodial receipts		43,423		—		—
					Prepaid expenses		36		—		—
					Accounts payable		4,382		—		—
					Revenues		28,172		—		—
					Operating costs and expenses		47,745		—		—
					Refundable deposits		5		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		775		—		—
			CHIEF Telecom Inc.	c	Operating costs and expenses		1,077		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		1,050		—		—
			Smartfun Digital Co., Ltd.	c	Prepaid expenses		4,275		—		—
					Operating costs and expenses		10,769		—		—
	8	Light Era Development Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		5		—		—
					Prepaid expenses		313		—		—
					Deferred revenue		60		—		—
					Revenues		410		—		—
					Operating costs and expenses		2,181		—		—
			Senao International Co., Ltd.	c	Operating costs and expenses		76		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		151		—		—
			Chunghwa International Yellow Pages Co., Ltd.	c	Operating costs and expenses		271		—		—
	9	Chunghwa Telecom Singapore Pte., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		3,767		—		—
					Prepaid expenses		46		—		—
					Accounts payable		5,444		—		—

(Continued)

115

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)
					Revenues	$	50,912		—		—
					Operating costs and expenses		46,567		—		—
			CHIEF Telecom Inc.	c	Accounts receivable		553		—		—
					Accounts payable		2,030		—		—
					Revenues		11,625		—		—
					Operating costs and expenses		9,374		—		—
			Chunghwa Telecom Global, Inc.	c	Accounts receivable		2,987		—		—
					Accounts payable		4,290		—		—
					Revenues		3,153		—		—
					Operating costs and expenses		4,925		—		—
			Donghwa Telecom Co., Ltd.	c	Accounts receivable		2,066		—		—
					Advances from customers		21,778		—		—
					Revenues		10,292		—		—
			Chunghwa Telecom Japan Co., Ltd.	c	Accounts receivable		761		—		—
					Accounts payable		394		—		—
					Revenues		10,012		—		—
					Operating costs and expenses		1,949		—		—
	10	Chunghwa Telecom Japan Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		9,563		—		—
					Prepaid expenses		140		—		—
					Accounts payable		1,429		—		—
					Advances from customers		511		—		—
					Revenues		53,292		—		—
					Operating costs and expenses		16,513		—		—
			CHIEF Telecom Inc.	c	Revenues		413		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	c	Accounts receivable		394		—		—
					Accounts payable		761		—		—
					Revenues		1,949		—		—
					Operating costs and expenses		10,012		—		—
	14	Chunghwa Investment Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Operating costs and expenses		1,753		—		—
	20	Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Prepaid expenses		1		—		—
					Accounts payable		38		—		—
					Operating costs and expenses		2,131		—		—
			Chunghwa Telecom Global, Inc.	c	Accounts payable		68		—		—
					Operating costs and expenses		312		—		—
			Chunghwa System Integration Co., Ltd.	c	Accounts payable		75		—		—
					Operating costs and expenses		1,144		—		—
									—		—
	25	Yao Yong Real Property Co., Ltd.	CHIEF Telecom Inc.	c	Revenues		65,010		—		—
	30	Chunghwa Telecom (China) Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		770		—		—
					Accounts payable		586		—		—
					Revenues		7,014		—		—
					Operating costs and expenses		150		—		—

(Continued)

116

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)
			Senao International Co., Ltd.	c	Revenues	$	411		—		—
			Chunghwa Sochamp Technology Inc.	c	Accounts payable		65		—		—
					Operating costs and expenses		130		—		—
	31	Smartfun Digital Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		810		—		—
					Accrued custodial receipts		2,244		—		—
					Accounts payable		305		—		—
					Advances from customers		899		—		—
					Revenues		3,869		—		—
					Operating costs and expenses		2,123		—		—
					Refundable deposits		20		—		—
			Senao International Co., Ltd.	c	Accounts receivable		1,050		—		—
			Spring House Entertainment Inc.	c	Operating costs and expenses		522		—		—
					Advances from customers		4,275		—		—
					Revenues		10,769		—		—
	32	Chunghwa Telecom Vietnam Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		148		—		—
					Accounts payable		2		—		—
					Revenues		3,888		—		—
					Operating costs and expenses		35		—		—
	33	Chunghwa Sochamp Technology Inc.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		7,128		—		—
					Advances from customers		27,016		—		—
					Revenues		22,426		—		—
					Operating costs and expenses		279		—		—
					Refundable deposits		95		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		70		—		—
			Chunghwa Telecom (China) Co., Ltd.	c	Accounts receivable		65		—		—
					Revenues		130		—		—
	35	Chief International Corp	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		8,262		—		—
					Accounts payable		7,864		—		—
	36	Honghwa Human Resources Co., Ltd.	Chunghwa Telecom Co., Ltd.	b	Accounts receivable		134,629		—		—
					Prepaid expenses		18		—		—
					Revenues		21,645		—		—
					Operating costs and expenses		424		—		—
			Chunghwa System Integration Co., Ltd.	c	Operating costs and expenses		281		—		—

Note 1: Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

a. “0” for the Company.

b. Subsidiaries are numbered from “1”.

(Continued)

117

Note 2: Related party transactions are divided into three categories as follows:

a. The Company to subsidiaries.

b. Subsidiaries to the Company.

c. Subsidiaries to subsidiaries.

Note 3: Transaction terms were determined in accordance with mutual agreements.

Note 4: For assets and liabilities, amount is shown as a percentage to consolidated total assets as of September 30, 2013, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the nine months ended September 30, 2013.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

118

EX-99.4

Exhibit 99.4

Chunghwa Telecom Co., Ltd. and

Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2013 and 2012

1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

	September 30, 2013				December 31, 2012				September 30, 2012				January 1, 2012
ASSETS	Amount		%		Amount		%		Amount		%		Amount		%
	(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	34,749,913		8	$	30,938,472		7	$	31,488,277		7	$	26,407,196		6
Financial assets at fair value through profit or loss		363		—		2,994		—		32,678		—		45,750		—
Available-for-sale financial assets		16,880		—		2,250,260		—		2,390,784		1		2,498,712		1
Held-to-maturity financial assets		4,689,694		1		4,250,146		1		2,981,338		1		1,201,301		—
Trade notes and accounts receivable, net		24,344,606		6		24,354,817		6		24,400,896		6		22,396,071		5
Accounts receivable from related parties, net		48,365		—		43,937		—		28,215		—		34,064		—
Inventories		8,087,099		2		7,196,101		2		4,059,109		1		4,822,154		1
Prepayment		5,071,640		1		1,985,706		—		4,942,974		1		1,888,643		—
Other current monetary assets		4,775,749		1		24,449,195		6		9,103,345		2		43,050,748		10
Other current assets		3,987,212		1		4,474,595		1		4,641,999		1		3,039,836		1
Total current assets		85,771,521		20		99,946,223		23		84,069,615		20		105,384,475		24
NONCURRENT ASSETS
Available-for-sale financial assets		5,497,309		1		5,746,176		1		5,877,955		1		2,817,964		1
Held-to-maturity financial assets		8,923,153		2		11,796,144		3		14,005,461		3		13,494,891		3
Investments accounted for using equity method		2,328,385		1		2,191,836		—		2,645,841		1		2,519,741		—
Property, plant and equipment		296,810,800		70		297,342,349		68		293,482,780		70		295,031,831		67
Investment properties		7,776,464		2		7,788,898		2		7,812,704		2		9,060,081		2
Intangible assets		5,361,802		1		5,781,803		1		5,844,043		1		6,278,175		1
Deferred income tax assets		1,377,499		1		1,311,363		—		996,989		—		1,062,042		—
Prepayments		3,555,222		1		3,554,235		1		3,517,822		1		3,546,976		1
Other noncurrent assets		5,505,429		1		4,596,529		1		3,996,637		1		3,858,165		1
Total noncurrent assets		337,136,063		80		340,109,333		77		338,180,232		80		337,669,866		76
TOTAL	$	422,907,584		100	$	440,055,556		100	$	422,249,847		100	$	443,054,341		100

2

	September 30, 2013					December 31, 2012				September 30, 2012				January 1, 2012
LIABILITIES AND STOCKHOLDERS’ EQUITY	Amount			%		Amount		%		Amount		%		Amount		%
	(Unaudited)					(Unaudited)				(Unaudited)				(Unaudited)
CURRENT LIABILITIES
Short-term loans	$	1,075,222			—	$	111,473		—	$	130,000		—	$	75,000		—
Financial liabilities at fair value through profit or loss		671			—		1,959		—		222		—		3,987		—
Trade notes and accounts payable		12,376,159			3		13,513,437		3		12,346,431		3		14,264,769		3
Payables to related parties		466,268			—		837,330		—		477,043		—		788,147		—
Current tax liabilities		5,073,998			1		7,139,382		2		4,438,208		1		8,043,530		2
Other payables		22,664,934			5		26,101,780		6		21,977,541		5		26,302,261		6
Provisions		114,242			—		221,245		—		128,800		—		148,050		—
Advance receipts		9,748,057			2		10,193,988		2		10,030,294		2		11,501,721		3
Current portion of long-term loans		—			—		8,372		—		33,489		—		701,887		—
Other current liabilities		1,577,680			1		1,597,476		—		1,799,254		1		1,954,963		1
Total current liabilities		53,097,231			12		59,726,442		13		51,361,282		12		63,784,315		15
NONCURRENT LIABILITIES
Long-term loans		1,700,000			1		2,050,000		1		1,650,000		1		1,058,372		—
Deferred income taxes liabilities		99,069			—		102,396		—		134,413		—		115,068		—
Provisions		135,301			—		44,909		—		39,810		—		34,002		—
Customers’ deposits		4,831,012			1		4,911,010		1		4,870,073		1		5,013,981		1
Accrued pension liabilities		4,799,621			1		4,583,148		1		3,011,873		1		2,956,402		1
Deferred revenue		3,767,384			1		3,838,854		1		3,538,846		1		3,887,813		1
Other noncurrent liabilities		1,315,382			—		1,312,630		—		1,257,487		—		865,644		—
Total noncurrent liabilities		16,647,769			4		16,842,947		4		14,502,502		4		13,931,282		3
Total liabilities		69,745,000			16		76,569,389		17		65,863,784		16		77,715,597		18
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT
Common stock		77,574,465			18		77,574,465		18		77,574,465		18		77,574,465		17
Additional paid-in capital		163,291,679			39		168,877,280		38		168,876,018		40		168,872,387		38
Retained earnings
Legal reserve		74,819,380			18		70,828,983		16		70,828,983		17		66,122,145		15
Special reserve		2,675,894			1		2,675,894		1		2,675,894		1		2,675,894		1
Unappropriated earnings		30,512,286			7		39,036,204		9		32,103,414		7		45,888,588		10
Total retained earnings		108,007,560			26		112,541,081		26		105,608,291		25		114,686,627		26
Other adjustments		(245,168	)		—		161,061		—		239,707		—		28,756		—
Total equity attributable to stockholders of the parent		348,628,536			83		359,153,887		82		352,298,481		83		361,162,235		81
NONCONTROLLING INTERESTS		4,534,048			1		4,332,280		1		4,087,582		1		4,176,509		1
Total stockholders’ equity		353,162,584			84		363,486,167		83		356,386,063		84		365,338,744		82
TOTAL	$	422,907,584			100	$	440,055,556		100	$	422,249,847		100	$	443,054,341		100

The accompanying note is an integral part of the consolidated financial statements.

3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

	For the Three Months Ended September 30											For the Nine Months Ended September 30
	2013					2012						2013					2012
	Amount			%		Amount			%			Amount			%		Amount			%
	(Unaudited)					(Unaudited)						(Unaudited)					(Unaudited)
REVENUES	$	56,723,304			100	$	55,284,607			100		$	169,178,253			100	$	165,168,978			100
OPERATING COSTS		35,789,479			63		34,607,909			63			108,519,223			64		104,702,702			63
GROSS PROFIT		20,933,825			37		20,676,698			37			60,659,030			36		60,466,276			37
OPERATING EXPENSES
Marketing		6,374,607			11		6,120,239			11			18,326,589			11		15,947,355			9
General and administrative		1,039,520			2		945,695			1			3,099,503			2		2,969,952			2
Research and development		922,176			2		957,458			2			2,724,972			2		2,743,066			2
Total operating expenses		8,336,303			15		8,023,392			14			24,151,064			15		21,660,373			13
OTHER INCOME AND EXPENSE		(12,005	)		—		(9,457	)		—			(24,176	)		—		(1,266,280	)		(1	)
INCOME FROM OPERATIONS		12,585,517			22		12,643,849			23			36,483,790			21		37,539,623			23
NON-OPERATING INCOME AND EXPENSES
Interest income		146,630			—		183,333			1			471,040			—		586,191			1
Other revenue		127,762			—		108,662			—			266,637			—		281,351			—
Other gains and losses		(3,497	)		—		(42,038	)		—			(52,208	)		—		(38,048	)		—
Finance costs		(9,573	)		—		(5,204	)		—			(23,920	)		—		(16,030	)		—
Share of the profit of associates and jointly controlled entities accounted for using the equity method		208,900			1		165,287			—			541,417			1		465,718			—
Total non-operating income and expenses		470,222			1		410,040			1			1,202,966			1		1,279,182			1
INCOME BEFORE INCOME TAX		13,055,739			23		13,053,889			24			37,686,756			22		38,818,805			24
INCOME TAX EXPENSE		3,174,885			6		3,052,853			6			5,339,152			3		4,659,242			3
NET INCOME		9,880,854			17		10,001,036			18			32,347,604			19		34,159,563			21
OTHER COMPREHENSIVE INCOME (LOSS), NET
Items that will not be reclassified to profit or loss:
Share of remeasurements of defined benefit pension plans of associates		—			—		—			—			(39,598	)		—		—			—
Items that may be reclassified subsequently to profit or loss:
Unrealized gain (loss) on available-for-sale financial assets		(70,853	)		—		(306,033	)		(1	)		(404,170	)		—		246,505			—
Exchange differences arising from the translation of the foreign operations		(72,259	)		—		(21,253	)		—			17,553			—		(41,282	)		—

(Continued)

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

	For the Three Months Ended September 30											For the Nine Months Ended September 30
	2013					2012						2013					2012
	Amount			%		Amount			%			Amount			%		Amount		%
	(Unaudited)					(Unaudited)						(Unaudited)					(Unaudited)
Share of exchange differences arising from the translation of the foreign operations of associates	$	(305	)		—	$	(1,886	)		—		$	2,993			—	$	13		—
Income tax relating to each component of other comprehensive income		(3,493	)		—		—			—			(3,382	)		—		—		—
		(146,910	)		—		(329,172	)		(1	)		(387,006	)		—		205,236		—
Total other comprehensive income (loss), net		(146,910	)		—		(329,172	)		(1	)		(426,604	)		—		205,236		—
TOTAL COMPREHENSIVE INCOME	$	9,733,944			17	$	9,671,864			17		$	31,921,000			19	$	34,364,799		21
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	9,661,538			17	$	9,754,208			18		$	31,419,176			19	$	33,283,528		20
Noncontrolling interests		219,316			—		246,828			—			928,428			—		876,035		1
	$	9,880,854			17	$	10,001,036			18		$	32,347,604			19	$	34,159,563		21
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	9,519,368			17	$	9,432,025			17		$	30,973,349			18	$	33,494,479		20
Noncontrolling interests		214,576			—		239,839			—			947,651			1		870,320		1
	$	9,733,944			17	$	9,671,864			17		$	31,921,000			19	$	34,364,799		21
EARNINGS PER SHARE
Basic	$	1.25				$	1.26					$	4.05				$	4.29
Diluted	$	1.25				$	1.26					$	4.04				$	4.28

The accompanying note is an integral part of the consolidated financial statements. (Concluded)

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In Thousands of New Taiwan Dollars)

	Equity Attributable to Stockholders of the Parent
	Common Stock		Additional Paid-in Capital									Other Adjustments								Noncontrolling Interests			Total Stockholders’ Equity
												Exchange Differences Arising from the Translation of the Foreign Operations			Unrealized Gain (Loss) on Available-for-sale Financial Assets		Total Equity Attributable to Stockholders’ Equity
					Retained Earnings
					Legal Reserve		Special Reserve		Unappropriated Earnings
BALANCE, JANUARY 1, 2012 (UNAUDITED)	$	77,574,465	$	168,872,387	$	66,122,145	$	2,675,894	$	45,888,588		$	(38,918	)	$	67,674	$	361,162,235		$	4,176,509		$	365,338,744
Appropriation of 2011 earnings
Legal reserve (unaudited)		—		—		4,706,838		—		(4,706,838	)		—			—		—			—			—
Cash dividends paid by Chunghwa (unaudited)		—		—		—		—		(42,361,864	)		—			—		(42,361,864	)		—			(42,361,864	)
Cash dividends paid by subsidiaries to noncontrolling interests (unaudited)		—		—		—		—		—			—			—		—			(887,457	)		(887,457	)
Net income for the nine months ended September 30, 2012 (unaudited)		—		—		—		—		33,283,528			—			—		33,283,528			876,035			34,159,563
Other comprehensive income for the nine months ended September 30, 2012 (unaudited)		—		—		—		—		—			(33,254	)		244,205		210,951			(5,715	)		205,236
Total comprehensive income for the nine months ended September 30, 2012 (unaudited)		—		—		—		—		33,283,528			(33,254	)		244,205		33,494,479			870,320			34,364,799
Exercise of employee stock option of subsidiaries (unaudited)		—		3,631		—		—		—			—			—		3,631			35,481			39,112
Decrease in noncontrolling interests (unaudited)		—		—		—		—		—			—			—		—			(107,271	)		(107,271	)
BALANCE, SEPTEMBER 30, 2012 (UNAUDITED)	$	77,574,465	$	168,876,018	$	70,828,983	$	2,675,894	$	32,103,414		$	(72,172	)	$	311,879	$	352,298,481		$	4,087,582		$	356,386,063

- 6 -

	Equity Attributable to Stockholders of the Parent
	Common Stock		Additional Paid-in Capital										Other Adjustments									Noncontrolling Interests			Total Stockholders’ Equity
													Exchange Differences Arising from the Translation of the Foreign Operations			Unrealized Gain (Loss) on Available-for-sale Financial Assets			Total Equity Attributable to Stockholders’ Equity
						Retained Earnings
						Legal Reserve		Special Reserve		Unappropriated Earnings
BALANCE, JANUARY 1, 2013 (UNAUDITED)	$	77,574,465	$	168,877,280		$	70,828,983	$	2,675,894	$	39,036,204		$	(96,930	)	$	257,991		$	359,153,887		$	4,332,280		$	363,486,167
Appropriation of 2012 earnings
Legal reserve (unaudited)		—		—			3,990,397		—		(3,990,397	)		—			—			—			—			—
Cash dividends paid by Chunghwa (unaudited)		—		—			—		—		(35,913,099	)		—			—			(35,913,099	)		—			(35,913,099	)
Cash dividends paid by subsidiaries to noncontrolling interests (unaudited)		—		—			—		—		—			—			—			—			(811,296	)		(811,296	)
Cash distributed from capital surplus (unaudited)		—		(5,589,240	)		—		—		—			—			—			(5,589,240	)		—			(5,589,240	)
Net income for the nine months ended September 30, 2013 (unaudited)		—		—			—		—		31,419,176			—			—			31,419,176			928,428			32,347,604
Other comprehensive income for the nine months ended September 30, 2013 (unaudited)		—		—			—		—		(39,598	)		3,305			(409,534	)		(445,827	)		19,223			(426,604	)
Total comprehensive income for the nine months ended September 30, 2013 (unaudited)		—		—			—		—		31,379,578			3,305			(409,534	)		30,973,349			947,651			31,921,000
Exercise of employee stock option of subsidiaries (unaudited)		—		3,658			—		—		—			—			—			3,658			32,878			36,536
Compensation cost of employee stock options of a subsidiary (unaudited)		—		—			—		—		—			—			—			—			45,303			45,303
Employee stock bonus issued by a subsidiary (unaudited)		—		(19	)		—		—		—			—			—			(19	)		2,468			2,449
Decrease in noncontrolling interests (unaudited)		—		—			—		—		—			—			—			—			(15,236	)		(15,236	)
BALANCE, SEPTEMBER 30, 2013 (UNAUDITED)	$	77,574,465	$	163,291,679		$	74,819,380	$	2,675,894	$	30,512,286		$	(93,625	)	$	(151,543	)	$	348,628,536		$	4,534,048		$	353,162,584

The accompanying note is an integral part of the consolidated financial statements.

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

	For the Nine Months Ended September 30
	2013			2012
	(Unaudited)			(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	37,686,756		$	38,818,805
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation		23,110,206			23,338,746
Amortization		914,917			833,504
Provision for (reversal of) doubtful accounts		173,374			(1,450,406	)
Interest expenses		23,920			16,030
Interest income		(471,040	)		(586,191	)
Dividend income		(43,989	)		(18,883	)
Compensation cost of employee share options		45,303			—
Share of the profit of associates and jointly controlled entities accounted for using equity method		(541,417	)		(465,718	)
Impairment loss on available-for-sale financial assets		28,692			138,393
Impairment loss on goodwill		18,055			—
Provision for inventory and obsolescence		133,054			14,455
Impairment loss on property, plant and equipment		2,262			—
Impairment loss on investment properties		—			1,261,365
Gain on disposal of financial instruments		(76,291	)		(65,343	)
Loss on disposal or abandonment of property, plant and equipment		21,914			4,915
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net		1,075			(31,282	)
Gain on foreign exchange		(7,881	)		(18,491	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		9,361			27,689
Trade notes and accounts receivable		(155,459	)		(540,259	)
Receivables from related parties		(4,428	)		5,849
Inventories		(1,024,052	)		748,590
Other current monetary assets		(216,867	)		299,217
Prepayments		(3,086,921	)		(3,025,177	)
Other current assets		517,357			(1,588,255	)
Increase (decrease) in:
Trade notes and accounts payable		(1,137,278	)		(1,837,280	)
Payables to related parties		(371,062	)		(311,104	)
Other payables		(2,750,149	)		(4,332,435	)
Provisions		(16,611	)		(73,498	)
Advance receipts		(366,646	)		(1,097,699	)
Other current liabilities		(29,394	)		(89,872	)
Deferred revenue		(71,470	)		(348,967	)
Accrued pension liabilities		216,473			55,471
Cash generated from operations		52,531,764			49,682,169

(Continued)

- 8 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

	For the Nine Months Ended September 30
	2013			2012
	(Unaudited)			(Unaudited)
Interest paid	$	(24,004	)	$	(22,988	)
Income tax paid		(7,503,973	)		(8,170,675	)
Net cash provided by operating activities		45,003,787			41,488,506
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of designated financial assets at fair value through profit or loss		—			(29,548	)
Proceeds from disposal of designated financial assets at fair value through profit or loss		—			81,997
Acquisition of available-for-sale financial assets		(1,797,917	)		(4,488,250	)
Proceeds from disposal of available-for-sale financial assets		3,989,443			1,646,648
Acquisition of time deposits and negotiable certificate of deposit with maturities of more than three months		(17,845,775	)		(13,890,427	)
Proceeds from disposal of time deposits and negotiable certificate of deposit with maturities of more than three months		37,724,255			47,537,609
Acquisition of held-to-maturity financial assets		—			(3,865,172	)
Proceeds from disposal of held-to-maturity financial assets		2,396,950			1,525,895
Capital reduction of available-for-sale financial assets		18,000			20,000
Proceeds from disposal of hedging derivative assets		15,288			—
Derecognition of hedging derivative liabilities		(108,433	)		—
Acquisition of investments accounted for using equity method		(60,000	)		(25,912	)
Capital reduction of associates		16,387			—
Acquisition of property, plant and equipment		(23,307,270	)		(22,556,002	)
Proceeds from disposal of property, plant and equipment		35,847			33,025
Acquisition of intangible assets		(511,871	)		(399,376	)
Decrease (increase) in noncurrent assets		(910,676	)		241,724
Interest received		539,364			618,459
Cash dividends received		424,437			313,741
Net cash provided by investing activities		618,029			6,764,411
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		1,238,522			615,000
Repayment of short-term loans		(274,773	)		(560,000	)
Repayment of long-term loans		(358,372	)		(76,770	)
Customers’ deposits refunded		(70,400	)		(82,888	)
Increase (decrease) in other noncurrent liabilities		(76,533	)		70,516
Cash dividends and cash distributed from additional paid-in capital		(41,502,339	)		(42,361,864	)
Proceeds from exercise of employee stock option granted by subsidiary		36,536			39,112

(Continued)

- 9 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

	For the Nine Months Ended September 30
	2013			2012
	(Unaudited)			(Unaudited)
Cash dividends paid by subsidiaries to noncontrolling interests	$	(811,296	)	$	(887,457	)
Change in other noncontrolling interests		(14,850	)		—
Net cash used in financing activities		(41,833,505	)		(43,244,351	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		23,130			72,515
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,811,441			5,081,081
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		30,938,472			26,407,196
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	34,749,913		$	31,488,277

The accompanying note is an integral part of the consolidated financial statements. (Concluded)

- 10 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

(In Thousands of New Taiwan Dollars)

1. DISCLOSURE FOR FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

a. Basis of the preparation of financial information under International Financial Reporting Standards

The consolidated financial statements for the nine months ended September 30, 2013 are reported under International Financial Reporting Standards (“IFRSs”) as issued by International Accounting Standards Board (“IASB”). As the basis of the preparation, the Company complied with IFRS 1 “First-time adoption of International Financial Reporting Standards”.

b. Based on IFRS 1 “First-time adoption of International Financial Reporting Standards”, when the Company first adopts IFRSs, the Company should apply the IFRSs to establish its accounting policies, to prepare its financial statements and make required adjustments retroactively to the transition date (January 1, 2012). IFRS 1 provided several optional exemptions. The main exemptions adopted by the Company were discussed as follows:

1) Business combination

The Company elected not to apply IFRS 3 retrospectively to business combinations which occurred on or before December 31, 2011.

2) Share-based payment transactions

The Company elected not to apply IFRS 2 retrospectively to the share-based payment transactions which were granted and vested on or before December 31, 2011.

3) Deemed costs

The Company elected to measure its revalued land at the date of transition to IFRSs at its revalued amount determined under accounting principles generally accepted in the Republic of China (“ROC GAAP”) as its deemed cost. The other property, plant and equipment, investment properties and intangible assets were measured under a cost model under IFRSs.

4) Employee benefits

The Company elected to recognize all unrecognized cumulative actuarial gains and losses as retained earnings as of January 1, 2012.

The impacts of the aforementioned optional exemptions were included in the following part d of “explanation for the adjustments of IFRSs transition”.

c. Impacts after transition to IFRSs

Except for the following tables, please refer to Note 1 to the consolidated financial statement as of and for the three months ended March 31, 2013 for impacts on the consolidated financial statements after transition to IFRSs.

- 11 -

The impacts on the consolidated balance sheet and the consolidated statements of comprehensive income after transition to IFRSs are as follows:

1) Reconciliation of consolidated balance sheet as of September 30, 2012

			Adjustments						IFRSs			Notes
ROC GAAP			Differences in Recognitions and			Differences in
Items	Amount		Measurements			Presentations			Amount		Items
Current assets	$	84,992,991	$	—		$	(923,376	)	$	84,069,615	Current assets	4), 15)
Investments accounted for using equity method		2,687,936		(42,095	)		—			2,645,841	Investments accounted for using equity method	10),12), 14)
Financial assets carried at cost		2,616,087		—			(2,616,087	)		—	Financial assets carried at cost	15)
Available-for-sale financial assets		3,261,868		—			2,616,087			5,877,955	Available-for-sale financial assets	15)
Held-to-maturity financial assets		14,005,461		—			—			14,005,461	Held-to-maturity financial assets
Other monetary assets		1,000,000		—			(1,000,000	)		—		15)
Property, plant and equipment		299,809,041		—			(6,326,261	)		293,482,780	Property, plant and equipment	1), 2), 15)
		—		—			7,812,704			7,812,704	Investment properties	1), 2)
Intangible assets		5,872,131		(64,553	)		36,465			5,844,043	Intangible assets	15)
Other assets		7,605,886		465,633			439,929			8,511,448	Other noncurrent assets	1), 2), 4), 5), 6), 15)
Total	$	421,851,401	$	358,985		$	39,461		$	422,249,847	Total
Current liabilities	$	48,936,714	$	3,366,984		$	(942,416	)	$	51,361,282	Current liabilities	7), 8), 14)
Noncurrent liabilities		11,068,608		2,357,031			1,076,863			14,502,502	Noncurrent liabilities	4), 5), 6), 7), 8)
Reserve for land value incremental tax		94,986		—			(94,986	)		—		4)
Total liabilities		60,100,308		5,724,015			39,461			65,863,784	Total liabilities
Common stock		77,574,465		—			—			77,574,465	Common stock
Additional paid-in capital		169,542,532		(666,514	)		—			168,876,018	Additional paid-in capital	6), 8), 11), 12), 13)
Retained earnings		104,462,712		1,145,579			—			105,608,291	Retained earnings	3), 5), 6), 7), 8), 10), 11), 12), 13), 14)
Other adjustments		5,964,503		(5,724,796	)		—			239,707	Other adjustments	3), 6), 10)
Total equity attributable to stockholders of the parent		357,544,212		(5,245,731	)		—			352,298,481	Total equity attributable to shareholders of the parent
Minority interests in subsidiaries		4,206,881		(119,299	)		—			4,087,582	Noncontrolling interests	5), 6), 10), 11), 14)
Total stockholders’ equity		361,751,093		(5,365,030	)		—			356,386,063	Total shareholders’ equity
Total	$	421,851,401	$	358,985		$	39,461		$	422,249,847	Total

- 12 -

2) Reconciliation of consolidated statement of comprehensive income for the nine months ended September 30, 2012

				Adjustments						IFRSs				Notes
ROC GAAP				Differences in Recognitions and			Differences in
Items	Amount			Measurements			Presentations			Amount			Items
Net revenues	$	164,008,760		$	1,160,218		$	—		$	165,168,978		Revenues	7), 8), 9)
Operating costs		(104,375,603	)		(326,247	)		(852	)		(104,702,702	)	Operating costs	6), 7), 9), 16)
Gross profits		59,633,157			833,971			(852	)		60,466,276		Gross profit
Operating expenses		(21,759,339	)		70,194			28,772			(21,660,373	)	Operating expenses	6), 7), 9), 11), 16)
		—			—			(1,266,280	)		(1,266,280	)	Other income and expense	16)
Income from operations		37,873,818			904,165			(1,238,360	)		37,539,623		Income from operations
Non-operating income and losses		9,421			3,330			1,266,431			1,279,182		Non-operating income and expenses	3), 10), 12), 14), 16)
Income before income tax		37,883,239			907,495			28,071			38,818,805		Income before income tax
Income tax expense		(6,066,681	)		1,435,510			(28,071	)		(4,659,242	)	Income tax expenses	5), 14), 16)
Consolidated net income	$	31,816,558		$	2,343,005		$	—			34,159,563		Net income
													Items that may be reclassified subsequently to profit or loss:
											246,505		Unrealized gain on available-for-sale financial assets
											(41,282	)	Exchange differences arising from the translation of the foreign operations
											13		Share of exchange differences arising from the translation of the foreign operations of associates
											205,236		Total other comprehensive income
										$	34,364,799		Total comprehensive income

- 13 -

3) Reconciliation of consolidated statement of comprehensive income for three months ended September 30, 2012

				Adjustments						IFRSs				Notes
ROC GAAP				Differences in Recognitions and			Differences in
Items	Amount			Measurements			Presentations			Amount			Items
Net revenues	$	54,402,889		$	881,718		$	—		$	55,284,607		Revenues	7), 8), 9)
Operating costs		(34,280,725	)		(326,889	)		(295	)		(34,607,909	)	Operating costs	6), 7), 9), 16)
Gross profits		20,122,164			554,829			(295	)		20,676,698		Gross profit
Operating expenses		(8,023,223	)		(8,732	)		8,563			(8,023,392	)	Operating expenses	6), 7), 9), 11), 16)
		—			—			(9,457	)		(9,457	)	Other income and expense	16)
Income from operations		12,098,941			546,097			(1,189	)		12,643,849		Income from operations
Non-operating income and losses		412,720			(12,137	)		9,457			410,040		Non-operating income and expenses	3), 10), 12), 14), 16)
Income before income tax		12,511,661			533,960			8,268			13,053,889		Income before income tax
Income tax expense		(2,042,946	)		(1,001,639	)		(8,268	)		(3,052,853	)	Income tax benefit	5), 14), 16)
Consolidated net income	$	10,468,715		$	(467,679	)	$	—			10,001,036		Net income
													Items that may be reclassified subsequently to profit or loss:
											(306,033	)	Unrealized loss on available-for-sale financial assets
											(21,253	)	Exchange differences arising from the translation of the foreign operations
											(1,886	)	Share of exchange differences arising from the translation of the foreign operations of associates
											(329,172	)	Total other comprehensive income
										$	9,671,864		Total comprehensive income

d. Explanation for the adjustments of IFRSs transition:

1) Classification of investment properties

Under ROC GAAP, properties for lease were classified as property, plant and equipment and other assets; after transitions to IFRSs, owned-property for either rental revenue or capital appreciation should be classified as investment properties.

On September 30, 2012, the assets that met definitions of investment properties under IAS 40 “Investment Property” were reclassified from property, plant and equipment of $7,353,602 thousand, and other assets - idle assets of $459,102 thousand, to investment properties. The total amount of reclassification was $7,812,704 thousand.

2) Classification of leased assets and idle assets

Under ROC GAAP, leased and idle assets were classified as other assets; after the transition to IFRSs, leased and idle assets were reclassified to property, plant and equipment or investment properties based on the nature of these assets.

The Company reclassified leased assets to property, plant and equipment and the amounts were $392,253 thousand as of September 30, 2012. Except for the abovementioned Item 1) which discussed the reclassification from idle assets to investment properties, the Company reclassified the remaining idle assets to property, plant and equipment amounting to $422,168 thousand as of September 30, 2012.

- 14 -

3) Deemed costs of property, plant and equipment

The Company elected to apply the optional exemption in IFRS 1. The management measured land (classified as property, plant and equipment and investment properties under IFRSs) at its revalued amount, which was the carrying value under ROC GAAP, as deemed costs. As such, on January 1, 2012, the Company reclassified the unrealized revaluation increment (classified as stockholders’ equity) to retained earnings at the amount of $5,762,753 thousand. This reclassification did not affect total equity amount. The unrealized revaluation increment costs reclassified to retained earnings decreased by nil and $117 thousand, due to the partial disposal on revalued land; and decreased by nil and $2,054 thousand due to impairment loss, for the three months and nine months ended September 30, 2012, respectively. As a result, the carrying value of property, plant and equipment was $5,760,582 thousand as of September 30, 2012. Gain on disposal decreased by nil and $117 thousand, and impairment loss increased by nil and $2,054 thousand, for the three months and nine months ended September 30, 2012, respectively.

4) Classification of deferred income tax asset and liability, and valuation allowance

Under ROC GAAP, a deferred income tax asset and liability should be classified as current and noncurrent in accordance with the classification of its related asset or liability. When a deferred income tax asset and liability does not relate to an asset or liability, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled. However, under IFRSs, a deferred income tax asset and liability should be classified as noncurrent, and could not be offset. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on the same entity.

Under ROC GAAP, if it is more likely than not that deferred income tax assets will not be realized, the valuation allowances are provided to the extent. However, under IFRSs, deferred income tax assets are only recognized when it is more likely than not to be realized, and the valuation allowance is not used under IFRSs.

Based on the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the reserve for land value incremental tax caused by revaluation of land is classified as long-term liabilities. Under IFRSs, if the Company elects to apply the IFRS 1 exemption and measure the revalued land using the carrying amount determined under ROC GAAP as its deemed cost, the related reserve for land value incremental tax should be classified as deferred income tax liabilities.

The Company reclassified its deferred income tax assets - current to noncurrent assets and the amounts was $106,808 thousand as of September 30, 2012. Further, deferred income tax liabilities, which were netted with deferred income tax assets under ROC GAAP, were reversed. As a result of such reversal, deferred income tax liabilities - noncurrent and deferred income tax assets - noncurrent increased by $39,461 thousand and reserve for land value incremental tax of $94,986 thousand was also reclassified as deferred income tax liabilities - noncurrent under IFRSs.

5) Income tax

Based on IAS 12 “Income Taxes”, the income tax adjustments as a result of the transition to IFRSs are as follows: Deferred income tax assets increased by $481,507 thousand as of September 30, 2012; retained earnings increased by $472,926 thousand as of September 30, 2012; noncontrolling interests increased by $8,615 thousand as of September 30, 2012. Deferred income tax liabilities decreased by $34 thousand as of September 30, 2012. For the three months ended September 30, 2012, due to the adjustment of deferred income tax assets and deferred income tax liabilities (decreased by $36,932 thousand in deferred tax assets and decreased by $205 thousand in deferred income tax liabilities), income tax expense increased by $36,727 thousand. For the nine months ended September 30, 2012, due to the adjustment of deferred income tax assets and deferred income tax liabilities (decreased by $105,232 thousand in deferred tax assets and decreased $34 thousand in deferred income tax liabilities), income tax expense increased by $105,198 thousand.

- 15 -

6) Employee benefits

Under ROC GAAP, net transaction obligation that was resulted from the first time adoption of SFAS No. 18, “Pension” should be amortized on a straight-line basis over the average remaining service life of active plan participants and recognized as net periodic pension cost. After the transition to IFRSs, the transitional rules in IAS 19, “Employee Benefits” was not applicable, thus the related amounts of net transaction obligation should be recognized at once and adjusted in retain earnings.

Under ROC GAAP, actuarial gains (losses) are recognized based on the corridor approach and the amounts are amortized over the average remaining service life of active plan participants. Under IFRSs, the Company elected to recognize pension gains (losses) arising from defined benefit plans as other comprehensive income immediately and subsequent reclassification to earnings is not permitted.

Furthermore, under ROC GAAP, the prior service costs should be recognized as an expense on a straight-line basis over the average remaining service life of active plan participants until the benefits become vested.

Under IFRSs, the newly-revised International Accounting Standard 19, “Employee Benefits” (“IAS 19”) required entities to accelerate the recognition of past service costs in profit or loss immediately. The Company earlier adopted the newly-revised IAS 19 from January 1, 2012

As a result of the aforementioned adjustments, other liabilities increased by $1,479,611 thousand as of September 30, 2012; other noncurrent assets decreased by $15,874 thousand as of September 30, 2012; retained earnings decreased by $1,445,195 thousand as of September 30, 2012; unrecognized net losses of pension decreased by $215 thousand as of September 30, 2012; noncontrolling interests decreased by $50,505 thousand as of September 30, 2012. For the three months ended September 30, 2012, pension cost decreased by $10,189 thousand which increased $42 thousand in operating costs and decreased $10,231 thousand in operating expenses. For the nine months ended September 30, 2012, pension cost decreased by $30,567 thousand which increased $127 thousand in operating costs and decreased $30,694 thousand in operating expenses.

In addition, prior to Chunghwa’s privatization in 2005, the pension contributions were made according to the relevant regulations. After privatization, the pension obligations of retained employees that were civil employees and retired employees entitled to receive future monthly pension payments prior to privatization based on the “Labor Pension Act”, “Act of Privatization of Government-Owned Enterprises”, and “Enforcement Rules of Statute of Privatization of Government-Owned Enterprises” were borne by the government. The settlement impact upon privatization of $20,648,078 thousand derived according to the actuarial report under IAS 19 shall be retroactively adjusted from retained earnings to additional paid-in capital - privatization at the date of transition to IFRSs.

7) Award credits (often known as “points”)

Under ROC GAAP, there’s no relevant guidance regarding award credits. After the transition to IFRSs, Chunghwa applied IFRIC 13, “Customer Royalty Program” retroactively. The award credit should be measured at its fair value and defer the recognition of revenue. When the customers redeem the points, the related revenues and costs shall be recognized. Such guidance replaced Chunghwa’s accounting policy that Chunghwa used to accrue expenses when the award credits were granted.

- 16 -

Accrued award credits liabilities (classified as other current liabilities) decreased by $130,340 thousand as of September 30, 2012; deferred award credits revenue (classified as noncurrent liabilities - deferred revenue) increased by $67,471 thousand as of September 30, 2012; retained earnings increased by $62,869 thousand as of September 30, 2012. The revenue decreased by $14,514 thousand, the marketing expenses decreased by $27,647 thousand and the operating cost increased by $7,372 thousand for the three months ended September 30, 2012. The revenue decreased by $43,229 thousand, the marketing expenses decreased by $81,415 thousand and the operating cost increased by $21,111 thousand for the nine months ended September 30, 2012.

8) Recognition of revenue from providing fixed line connection service

Prior to incorporation and privatization, Chunghwa 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, Chunghwa recorded revenue from providing fixed line connection service upon the receipt of connection fees. Upon incorporation, net assets greater than capital stock was credited as additional paid-in-capital. Part of additional paid-in-capital was from unearned revenues relating to connection fees as of that date. Upon privatization, unearned revenue generated from one-time connection fees was deferred at the time of service performed and recognized as revenue over time as the service is continuously performed in accordance with ROC GAAP.

Under IFRSs, following the revenue recognition guidance, the above service revenue should be treated as deferred income and recognized over the time when the service is continuously provided.

Chunghwa retrospectively adjusted the deferred income of $1,419,419 thousand as of September 30, 2012, by decreasing retained earnings and increasing the deferred revenue from providing fixed line connection service ($533,244 thousand was classified as other current liabilities; $886,175 thousand was classified as noncurrent liabilities - deferred revenue as of September 30, 2012). Unappropriated earnings increased and the additional paid-in-capital decreased by $18,486,974 thousand as of September 30, 2012. For the three months ended September 30, 2012, revenue from providing fixed line connection service increased by $133,311 thousand. For the nine months ended September 30, 2012, revenue from providing fixed line connection service increased by $506,397 thousand.

9) Recognition of construction contract revenue

The construction contracts did not meet the criteria in IFRIC 15 “Agreements for the Construction of Real Estate”; therefore IAS 11 “Construction Contracts” does not apply. The Company could only recognize the revenues when the projects are completed and sold out based on IAS 18, “Revenue”. Due to the reasons mentioned above, the Company reversed the revenue that was recognized based on percentage completion method, and recognize the related revenue, cost and expense when the project is completed in 2012.

The construction revenue increased by $762,921 thousand, the construction cost increased by $319,475 thousand and the marketing expenses increased by $48,153 thousand for the three months ended September 30, 2012. The construction revenue increased by $697,050 thousand, the construction cost increased by $305,009 thousand and the marketing expenses increased by $44,516 thousand for the nine months ended September 30, 2012.

- 17 -

10) Equity method investments

Associates and jointly controlled entities are accounted for using equity method upon the Company’s transition to IFRSs, the main adjustment includes employee benefit and share-based payments, etc. As a result, long-term investments decreased by $9,330 thousand as of September 30, 2012; retained earnings decreased by $39,858 thousand as of September 30, 2012; unrecognized net loss of pension decreased by $35,571 thousand as of September 30, 2012; noncontrolling interests decreased by $5,043 thousand as of September 30, 2012. Investment income from associates and jointly controlled entities that accounted for using equity method increased by $1,232 thousand for the three months ended September 30, 2012 and $609 thousand for the nine months ended September 30, 2012, respectively.

11) Share-based payment transactions

Part of the employee stock options granted by a subsidiary was not vested on the transition date. Therefore, the subsidiary should apply IFRS 2, “Share-based Payment” retroactively. Under IFRSs, paid-in capital - employee stock option recognized by subsidiary does not belong to the equity attributable to parent company, instead it should be accounted as noncontrolling interests. As of September 30, 2012, retained earnings decreased by $426 thousand, additional paid-in capital reported by equity-method investees decreased by $1,231 thousand and noncontrolling interests increased by $1,657 thousand. For the three months and nine months ended September 30, 2012, the compensation cost under general and administrative expense both decreased by $1,543 thousand and $2,601 thousand.

12) Subscription of associates/subsidiaries new shares and adjustments of paid-in capital reported related to equity-method investees

When an investee issues new shares and existing shareholders do not subscribe to the new shares at their respective proportion in share holdings, this would result in changes in the investor’s shareholdings of the equity method investee. According to the Statements of Financial Accounting Standards (“SFAS”) No. 5 “Long-term Investments under Equity Method” under ROC GAAP, as there are changes in the net assets value of the equity method investee attributable to the investor, the investor shall reflect such changes by adjusting additional paid-in capital and long-term investments. However, under IFRSs, if the changes do not cause the investor to lose significant influence over associates, the change shall be treated as a deemed disposal with the related gain or loss recognized in earnings. If the changes do not cause the investor to lose control over subsidiaries, the change shall be treated as equity transactions. In addition, the Company complied with the IFRSs FAQs published by the Taiwan Stock Exchange, and reclassified the paid-in capital which did not meet the definitions under IFRSs or the Company Act and Regulations of Ministry of Economic Affairs to retained earnings. The Company reclassified such paid-in capital of $28,211 thousand to retained earnings, retained earnings increased by $27,942 thousand and long-term investment decreased by $269 thousand as of September 30, 2012. Gain on disposal of financial instruments increased by nil and $1,112 thousand for the three months and nine months ended September 30, 2012.

13) Prepaid cards

Prior to incorporation and privatization, Chunghwa 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 selling prepaid phone cards was recognized at the time of sale by Chunghwa. 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 prepaid cards as of that day. Upon privatization, unearned revenue generated from prepaid cards was deferred at the time of sale and recognized as revenue as consumed in accordance with ROC GAAP.

- 18 -

Under IFRSs, revenue from prepaid cards is deferred at the time of sale and recognized as revenue as consumed.

The amount of reclassification from additional paid-in capital to unappropriated earnings was $2,798,176 thousand as of September 30, 2012.

14) 10% tax on unappropriated earnings

In the Republic of China (“ROC”), a 10% tax is imposed on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries). Under ROC GAAP, the Company records the 10% tax on unappropriated earnings upon the resolution of the following stockholders’ meeting.

Under IFRSs, the 10% tax on unappropriated earnings is accrued during the period the earnings arise and adjusted to the extent that distributions are approved by the stockholders in the following year.

Current tax liabilities increased by $2,964,080 thousand as of September 30, 2012; retained earnings decreased by $2,884,612 thousand as of September 30, 2012; noncontrolling interests decreased by $79,468 thousand as of September 30, 2012. Income tax expenses increased by $964,912 thousand for the three months ended September 30, 2012 and decreased by $1,540,708 thousand for the nine months ended September 30, 2012.

The aforementioned 10% tax on un-appropriate earnings is also applicable to the underlying investees whom the company invested and accounted for using equity method. And, as a result, investments accounted for using equity method decreased by $32,496 thousand as of September 30, 2012; retained earnings decreased by $26,302 thousand as of September 30, 2012; noncontrolling interests decreased by $6,194 thousand as of September 30, 2012. Share of the profit of associates and jointly controlled entities accounted for using the equity method decreased by $13,369 thousand for the three months ended September 30, 2012 and increased $3,780 thousand for the nine months ended September 30, 2012.

15) Presentation of consolidated balance sheets

a) Piping fund

As part of the government’s effort to upgrade the existing telecommunications infrastructure project, Chunghwa and other public utility companies were required by the ROC government to contribute a total of $1,000,000 thousand to a Piping Fund administered by the Taipei City Government. Based on the terms of Construction Funding Agreement, if the Piping Fund project is considered to be no longer necessary by the ROC government, Chunghwa will receive back its proportionate share of the net equity of the Piping Fund upon its dissolution. In order to conform to the presentation of the financial statements under IFRSs, the fund was reclassified as other noncurrent assets.

b) Time deposits with maturities of more than three months

Under ROC GAAP, cash and cash equivalents includes time deposits that are cancellable but without any loss of principal. Under IFRSs, cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of three months or less from the date of acquisition.

Time deposits and negotiable certificate of deposits with maturities of more than three months held by the Company were $7,314,945 thousand as of September 30, 2012. In order to conform to the presentation of the financial statements under IFRSs, such amounts were reclassified from cash to other monetary assets - current.

- 19 -

c) Deferred expense

The deferred expense, which was classified as other assets under ROC GAAP, was reclassified based on its nature under IFRSs. Deferred expenses relating to decoration construction projects and advertisement signboard, etc. were reclassified as property, plant and equipment of $185,340 thousand as of September 30, 2012. Deferred expenses relating to computer software were reclassified as intangible assets of $36,465 thousand as of September 30, 2012.

d) Assets held for disposal

The property, plant and equipment classified as held for disposal (included in other assets - others) under ROC GAAP, was reclassified based on its nature under IFRSs. Assets held for disposal were reclassified as property, plant and equipment of $27,580 thousand as of September 30, 2012.

e) Reclassification of financial assets carried at cost

Based on the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, stocks held by the Company which were not listed in Taiwan Stock Exchange or were not trading in the GreTai Securities Market and the Company did not have significant influence over these investees were classified as financial assets carried at cost. After transition to IFRSs, financial assets carried at cost were designated as available-for-sale financial assets. Financial assets carried at cost were reclassified as available-for-sale financial assets of $2,616,087 thousand as of September 30, 2012.

16) Presentation of consolidated statements of comprehensive income

After the transition to IFRSs, the consolidated statement of comprehensive income includes net income and other comprehensive income. Further, certain accounts were reclassified to conform to the presentation of the financial statements under IFRSs.

17) Summary of material adjustments of cash flow statements

Under ROC GAAP, collection and payment of interest and collection of dividends were classified as operating activity; payment of dividends was classified as financing activity. Further, for cash flow statement prepared using the indirect method, cash payment of interest expense is required for supplemental disclosure. Based on IAS 7 “Cash Flow Statement”, collection and payment of interest and dividends were disclosed separately with consistency for each period and classified as operating activity, investing activity or financing activity.

- 20 -