Exhibit 99.2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Years Ended December 31, 2013 and 2012 and

Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2013 are all the same as the companies required to be included in the consolidated financial statements of Chunghwa Telecom Co., Ltd. and its subsidiaries as provided in International Accounting Standard 27 “Consolidated and Separate Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of Chunghwa Telecom Co., Ltd. and its subsidiaries. Hence, we do not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

CHUNGHWA TELECOM CO., LTD.

By

RICK L. TSAI

Chairman

March 25, 2014

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders

Chunghwa Telecom Co., Ltd.

We have audited the accompanying consolidated balance sheets of Chunghwa Telecom Co., Ltd. and its subsidiaries (“the Company”) as of December 31, 2013, December 31, 2012 and January 1, 2012, the related consolidated statements of comprehensive income and change in stockholders’ equity and cash flows for the years ended December 31, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2013, December 31, 2012 and January 1, 2012, and their consolidated financial performance and their consolidated cash flows for the years ended December 31, 2013 and 2012, in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed by the Financial Supervisory Commission of the Republic of China.

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We have also audited the parent company only financial statements of Chunghwa Telecom Co., Ltd. as of and for the years ended December 31, 2013 and 2012 on which we have issued an unqualified report.

/S/ DELOITTE & TOUCHE

Deloitte & Touche

Taipei, Taiwan

The Republic of China

March 25, 2014

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 audit such consolidated financial statements are those generally applied in the Republic of China.

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

	December 31, 2013				December 31, 2012				January 1, 2012
	Amount		%		Amount		%		Amount		%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 3 and 6)	$	14,585,105		3	$	30,938,472		7	$	26,407,196		6
Financial assets at fair value through profit or loss (Notes 3 and 7)		337		—		2,994		—		45,750		—
Available-for-sale financial assets (Notes 3 and 8)		24,267		—		2,250,260		—		2,498,712		1
Held-to-maturity financial assets (Notes 3 and 9)		4,264,104		1		4,250,146		1		1,201,301		—
Trade notes and accounts receivable, net (Notes 3, 4 and 10)		22,900,902		5		24,354,817		6		22,396,071		5
Accounts receivable from related parties (Note 37)		69,304		—		43,937		—		34,064		—
Inventories (Notes 3, 4, 11 and 38)		7,848,087		2		7,196,101		2		4,822,154		1
Prepayments (Notes 12 and 37)		2,224,130		1		1,985,706		—		1,888,643		—
Other current monetary assets (Notes 13 and 26)		4,636,305		1		24,449,195		6		43,050,748		10
Other current assets (Notes 7 and 19)		3,960,798		1		4,474,595		1		3,039,836		1
Total current assets		60,513,339		14		99,946,223		23		105,384,475		24
NONCURRENT ASSETS
Available-for-sale financial assets (Notes 3 and 8)		3,046,182		1		3,278,315		1		242,934		—
Financial assets carried at cost (Notes 3 and 14)		2,423,646		—		2,467,861		—		2,575,030		1
Held-to-maturity financial assets (Notes 3 and 9)		7,501,743		2		11,796,144		3		13,494,891		3
Investments accounted for using equity method (Notes 3 and 15)		2,562,293		—		2,240,292		—		2,556,017		—
Property, plant and equipment (Notes 3, 4, 16, 37 and 38)		302,714,116		69		297,342,349		68		295,031,831		67
Investment properties (Notes 3, 4 and 17)		8,018,031		2		7,788,898		2		9,060,081		2
Intangible assets (Notes 3, 4 and 18)		44,398,888		10		5,781,803		1		6,278,175		1
Deferred income tax assets (Notes 3 and 30)		1,515,408		—		1,315,874		—		1,067,871		—
Prepayments (Notes 12 and 37)		3,608,487		1		3,554,235		1		3,546,976		1
Other noncurrent assets (Notes 19, 26 and 38)		4,882,974		1		4,596,529		1		3,858,165		1
Total noncurrent assets		380,671,768		86		340,162,300		77		337,711,971		76
TOTAL	$	441,185,107		100	$	440,108,523		100	$	443,096,446		100

(Continued)

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	December 31, 2013					December 31, 2012				January 1, 2012
	Amount			%		Amount		%		Amount		%
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans (Note 20)	$	254,357			—	$	111,473		—	$	75,000		—
Financial liabilities at fair value through profit or loss (Notes 3 and 7)		246			—		1,959		—		3,987		—
Trade notes and accounts payable (Note 22)		15,589,108			4		13,513,437		3		14,264,769		3
Payables to related parties (Note 37)		556,809			—		837,330		—		788,147		—
Current tax liabilities (Notes 3 and 30)		4,144,076			1		3,320,329		1		3,538,742		1
Other payables (Note 23)		26,791,769			6		26,101,780		6		26,302,261		6
Provisions (Notes 3 and 24)		129,341			—		221,245		—		148,050		—
Advance receipts (Note 25)		9,463,535			2		10,193,988		2		11,501,721		3
Current portion of long-term loans (Note 21)		300,000			—		8,372		—		701,887		—
Other current liabilities		1,598,017			—		1,597,476		1		1,954,963		1
Total current liabilities		58,827,258			13		55,907,389		13		59,279,527		14
NONCURRENT LIABILITIES
Long-term loans (Note 21)		1,400,000			1		2,050,000		1		1,058,372		—
Deferred income tax liabilities (Notes 3 and 30)		101,379			—		98,392		—		111,365		—
Provisions (Notes 3 and 24)		123,464			—		44,909		—		34,002		—
Customers’ deposits (Note 37)		4,834,580			1		4,911,010		1		5,013,981		1
Accrued pension liabilities (Notes 3, 4 and 26)		5,519,103			1		4,616,803		1		2,994,079		1
Deferred revenue		3,700,949			1		3,838,854		1		3,887,813		1
Other noncurrent liabilities		1,334,220			—		1,312,630		—		865,644		—
Total noncurrent liabilities		17,013,695			4		16,872,598		4		13,965,256		3
Total liabilities		75,840,953			17		72,779,987		17		73,244,783		17
EQUITY ATTRIBUTABLE TO OF THE PARENT (Note 27)
Common stock		77,574,465			18		77,574,465		18		77,574,465		17
Additional paid-in capital		184,620,065			42		190,162,430		43		190,157,537		43
Retained earnings
Legal reserve		74,819,380			17		70,828,983		16		66,122,145		15
Special reserve		2,675,894			—		2,675,894		—		2,675,894		1
Unappropriated earnings		20,744,024			5		21,483,854		5		29,016,482		6
Total retained earnings		98,239,298			22		94,988,731		21		97,814,521		22
Other adjustments		(144,005	)		—		161,061		—		28,756		—
Total equity attributable to of the parent		360,289,823			82		362,886,687		82		365,575,279		82
NONCONTROLLING INTERESTS		5,054,331			1		4,441,849		1		4,276,384		1
Total equity		365,344,154			83		367,328,536		83		369,851,663		83
TOTAL	$	441,185,107			100	$	440,108,523		100	$	443,096,446		100

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

	Years Ended December 31
	2013					2012
	Amount			%		Amount			%
REVENUES (Notes 28 and 37)	$	227,981,307			100	$	221,419,829			100
OPERATING COSTS (Notes 11 and 37)		147,289,195			65		141,512,808			64
GROSS PROFIT		80,692,112			35		79,907,021			36
OPERATING EXPENSES (Note 37)
Marketing		25,160,434			11		22,246,206			10
General and administrative		4,190,347			2		4,021,184			2
Research and development		3,724,903			1		3,698,110			1
Total operating expenses		33,075,684			14		29,965,500			13
OTHER INCOME AND EXPENSES (Note 29)		58,955			—		(1,569,217	)		(1	)
INCOME FROM OPERATIONS		47,675,383			21		48,372,304			22
NON-OPERATING INCOME AND EXPENSES
Interest income		562,808			—		741,937			1
Other income (Notes 29 and 37)		356,528			—		440,609			—
Other gains and losses (Notes 29 and 37)		(122,911	)		—		(138,524	)		—
Finance costs (Note 29)		(36,412	)		—		(22,033	)		—
Share of the profit of associates and jointly controlled entities accounted for by equity method (Note 15)		674,977			1		533,358			—
Total non-operating income and expenses		1,434,990			1		1,555,347			1
INCOME BEFORE INCOME TAX		49,110,373			22		49,927,651			23
INCOME TAX EXPENSE (Notes 3 and 30)		8,270,746			4		8,011,771			4
NET INCOME		40,839,627			18		41,915,880			19
OTHER COMPREHENSIVE INCOME (LOSS), NET
Exchange differences arising from the translation of the foreign operations		129,318			—		(57,959	)		—
Unrealized gain (loss) on available-for-sale financial assets		(392,685	)		—		192,114			—
Actuarial loss arising from defined benefit plan		(617,049	)		—		(1,496,742	)		(1	)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

	Years Ended December 31
	2013					2012
	Amount			%		Amount			%
Share of other comprehensive income of associates and jointly controlled entities accounted for by equity method	$	(34,566	)		—	$	(26,373	)		—
Income tax relating to each component of other comprehensive income (Note 30)		98,567			—		254,446			—
Total other comprehensive income (loss), net of income tax		(816,415	)		—		(1,134,514	)		(1	)
TOTAL COMPREHENSIVE INCOME	$	40,023,212			18	$	40,781,366			18
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	39,715,693			17	$	40,779,726			18
Noncontrolling interests		1,123,934			1		1,136,154			1
	$	40,839,627			18	$	41,915,880			19
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	38,858,600			17	$	39,668,379			18
Noncontrolling interests		1,164,612			1		1,112,987			—
	$	40,023,212			18	$	40,781,366			18
EARNINGS PER SHARE (Note 31)
Basic	$	5.12				$	5.26
Diluted	$	5.11				$	5.24

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

	Equity Attributable to of the Parent (Note 27)
												Other Adjustments
					Retained Earnings							Exchange Differences Arising from the Translation			Unrealized Gain (Loss) on		Total Equity
	Common Stock		Additional Paid-in Capital		Legal Reserve		Special Reserve		Unappropriated Earnings			of the Foreign Operations			Available-for-sale Financial Assets		Attributable to Stockholders of the Parent			Noncontrolling Interests (Note 27)			Total 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		—		—		—		—		—			—			—		—			(892,904	)		(892,904	)
Net income for the year ended December 31, 2012		—		—		—		—		40,779,726			—			—		40,779,726			1,136,154			41,915,880
Other comprehensive income for the year ended December 31, 2012		—		—		—		—		(1,243,652	)		(58,012	)		190,317		(1,111,347	)		(23,167	)		(1,134,514	)
Total comprehensive income for the year ended December 31, 2012		—		—		—		—		39,536,074			(58,012	)		190,317		39,668,379			1,112,987			40,781,366
Exercise of employee stock option of subsidiaries		—		4,893		—		—		—			—			—		4,893			38,767			43,660
Decrease in noncontrolling interests		—		—		—		—		—			—			—		—			(93,385	)		(93,385	)
BALANCE, DECEMBER 31, 2012		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

(Continued)

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	Equity Attributable to of the Parent (Note 27)
													Other Adjustments
						Retained Earnings							Exchange Differences Arising from the Translation		Unrealized Gain (Loss) on			Total Equity
	Common Stock		Additional Paid-in Capital			Legal Reserve		Special Reserve		Unappropriated Earnings			of the Foreign Operations		Available-for-sale Financial Assets			Attributable to Stockholders of the Parent			Noncontrolling Interests (Note 27)			Total Equity
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		—		41,973			—		—		—			—		—			41,973			103,320			145,293
Disposal of investments accounted for by equity method using subsidiaries		—		(577	)		—		—		—			—		—			(577	)		(1,501	)		(2,078	)
Net income for the year ended December 31, 2013		—		—			—		—		39,715,693			—		—			39,715,693			1,123,934			40,839,627
Other comprehensive income for the year ended December 31, 2013		—		—			—		—		(552,027	)		102,672		(407,738	)		(857,093	)		40,678			(816,415	)
Total comprehensive income for the year ended December 31, 2013		—		—			—		—		39,163,666			102,672		(407,738	)		38,858,600			1,164,612			40,023,212
Exercise of employee stock option of subsidiaries		—		5,498			—		—		—			—		—			5,498			44,438			49,936
Compensation cost of employee stock options of a subsidiary		—		—			—		—		—			—		—			—			69,579			69,579
Employee stock bonus issued by a subsidiary		—		(19	)		—		—		—			—		—			(19	)		2,468			2,449
Increase in noncontrolling interests		—		—			—		—		—			—		—			—			40,862			40,862
BALANCE, DECEMBER 31, 2013	$	77,574,465	$	184,620,065		$	74,819,380	$	2,675,894	$	20,744,024		$	5,742	$	(149,747	)	$	360,289,823		$	5,054,331		$	365,344,154

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

	Years Ended December 31
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	49,110,373		$	49,927,651
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation		30,954,469			31,037,506
Amortization		1,237,820			1,123,962
Provision for (reversal of) doubtful accounts		253,090			(1,451,384	)
Interest expenses		36,412			22,033
Interest income		(562,808	)		(741,937	)
Dividend income		(78,612	)		(20,606	)
Compensation cost of employee stock options		69,579			—
Share of the profit of associates and jointly controlled entities accounted for by equity method		(674,977	)		(533,358	)
Impairment loss on available-for-sale financial assets		—			26,779
Impairment loss on financial assets carried at cost		66,342			176,374
Provision for inventory and obsolescence		202,707			112,562
Impairment loss on property, plant and equipment		254,210			300,989
Impairment loss on (reversal of) investment properties		(245,708	)		1,261,365
Impairment loss on intangible assets		18,055			4,770
Gain on disposal of financial instruments		(76,291	)		(113,100	)
Loss (gain) on disposal of property, plant and equipment		(85,512	)		2,093
Gain on disposal of investments accounted for using equity method		(15,425	)		—
Valuation loss on financial assets and liabilities at fair value through profit or loss, net		676			1,394
Loss (gain) on foreign exchange		20,728			(20,720	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		9,097			73,638
Trade notes and accounts receivable		1,219,112			(508,973	)
Receivables from related parties		(25,366	)		(9,873	)
Inventories		(854,692	)		(2,486,509	)
Other current monetary assets		(1,283	)		(117,967	)
Prepayment		(286,905	)		(104,322	)
Other current assets		589,110			(1,516,291	)
Increase (decrease) in:
Trade notes and accounts payable		2,075,671			(803,959	)
Payables to related parties		(280,521	)		49,183
Other payables		447,383			(262,870	)
Provisions		(13,349	)		84,102
Advance receipts		(730,453	)		(1,307,733	)
Other current liabilities		88,473			(383,014	)
Deferred revenue		(137,905	)		(48,959	)
Accrued pension liabilities		285,251			125,982
Cash generated from operations		82,868,751			73,898,808

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

	Years Ended December 31
	2013			2012
Interest paid	$	(36,361	)	$	(28,759	)
Income tax paid		(7,544,166	)		(8,212,990	)
Net cash provided by operating activities		75,288,224			65,657,059
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		—			57,362
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			1,792,612
Acquisition of time deposits and negotiable certificate of deposit with maturities of more than three months		(18,198,714	)		(32,933,663	)
Proceeds from disposal of time deposits and negotiable certificate of deposit with maturities of more than three months		37,927,854			51,653,183
Acquisition of held-to-maturity financial assets		—			(3,865,173	)
Proceeds from disposal of held-to-maturity financial assets		4,236,182			2,450,896
Acquisition of financial assets carried at cost		(60,127	)		(49,856	)
Proceeds from disposal of financial assets carried at cost		4,985			31,162
Capital reduction of financial assets carried at cost		36,000			35,000
Proceeds from disposal of hedging derivative assets		15,288			—
Derecognition of hedging derivative liabilities		(108,433	)		—
Acquisition of investments accounted for using equity method		(90,000	)		(25,912	)
Proceeds from disposal of investments accounted for using equity method		24,182			—
Capital reduction of investments accounted for using equity method		16,387			64,500
Acquisition of property, plant and equipment		(36,381,555	)		(33,280,278	)
Proceeds from disposal of property, plant and equipment		204,519			32,968
Acquisition of intangible assets		(39,871,850	)		(632,420	)
Increase in noncurrent assets		(290,818	)		(623,565	)
Interest received		672,249			853,220
Cash dividends received		474,905			315,464
Net cash used in investing activities		(49,166,620	)		(18,606,326	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		1,398,522			857,473
Repayment of short-term loans		(1,255,638	)		(821,000	)
Proceeds from long-term loans		—			400,000
Repayment of long-term loans		(358,372	)		(101,887	)
Increase (decrease) in customers’ deposits		(49,979	)		62,582
Increase in other liabilities		21,590			446,986

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

	Years Ended December 31
	2013			2012
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 subsidiaries		49,936			43,660
Dividends paid into noncontrolling interests		(811,296	)		(892,904	)
Other change in noncontrolling interests		41,764			(102,782	)
Net cash used in financing activities		(42,465,812	)		(42,469,736	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(9,159	)		(49,721	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(16,353,367	)		4,531,276
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		30,938,472			26,407,196
CASH AND CASH EQUIVALENTS, END OF YEAR	$	14,585,105		$	30,938,472

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

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2013 AND 2012

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

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 were sold, in connection with the foregoing privatization plan, in domestic public offerings at various dates from August 2000 to July 2003. Certain of Chunghwa’s common shares were also sold in an international offering of securities in the form of American Depository Shares (“ADS”) on July 17, 2003 and were listed and traded on the New York Stock Exchange (the “NYSE”). The MOTC sold common shares of Chunghwa by auction in the ROC on August 9, 2005 and completed the second international offering on August 10, 2005. Upon completion of the share transfers associated with these offerings on August 12, 2005, the MOTC owned less than 50% of the outstanding shares of Chunghwa and completed the privatization plan.

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

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorized for issue by the Board of Directors on March 25, 2014.

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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 consolidated financial statements in accordance with the Regulations 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 SIC Interpretations (SIC) (the “IFRS”) endorsed by the FSC.

The Company’s consolidated financial statements for the year ended December 31, 2013 is its first IFRS consolidated financial statements. The Company’s date of transition to IFRSs is January 1, 2012, and the effect of the transition to IFRSs is disclosed in Note 43.

Statement of Compliance

The accompany consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed by the FSC.

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 “First-time Adoption of International Financial Reporting Standards”. 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 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:

a. assets held primarily for the purpose of trading;

b. assets expected to be realized within twelve months after the reporting period; and

c. cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

a. liabilities held primarily for the purpose of trading;

b. liabilities due to be settled within twelve months after the reporting period; and

c. liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

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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. Principles for preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of Chunghwa and entities controlled by the Company (its subsidiaries).

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

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

Attribution of total comprehensive income to noncontrolling interests

Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling 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	December 31, 2013		December 31, 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	1)
	Light Era Development Co., Ltd. (“LED”)	Housing, office building development, rent and sale services		100		100		100
	Donghwa Telecom Co., Ltd. (“DHT”)	International telecommunications IP fictitious internet and internet transfer services		100		100		100
	Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)	Telecommunication wholesale, internet transfer services international data and long distance call wholesales to carriers		100		100		100
	Chunghwa System Integration Co., Ltd. (“CHSI”)	Providing communication and information aggregative services		100		100		100
	Chunghwa Investment Co., Ltd. (“CHI”)	Investment		89		89		89
	CHIEF Telecom Inc. (“CHIEF”)	Internet communication and internet data center (“IDC”) service		69		69		69
	Chunghwa International Yellow Pages Co., Ltd. (“CHYP”)	Yellow pages sales and advertisement services		100		100		100
	Prime Asia Investments Group Ltd. (B.V.I.) (“Prime Asia”)	Investment		100		100		100
	Spring House Entertainment Tech. Inc. (“SHE”)	Network services, producing digital entertainment contents and broadband visual sound terrace development		56		56		56

(Continued)

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			Percentage of Ownership
Name of Investor	Name of Investee	Main Businesses and Products	December 31, 2013		December 31, 2012		January 1, 2012		Note
	Chunghwa Telecom Global, Inc. (“CHTG”)	International data and internet services and long distance call wholesales to carriers		100		100		100
	Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)	Information and communications technology, international circuit, and intelligent energy network service		100		100		100
	Smartfun Digital Co., Ltd. (“SFD”)	Software retail		65		65		65
	Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)	Telecom business, information process and information provide service, development and sale of software and consulting services in telecommunication		100		100		100
	Chunghwa Sochamp Technology Inc. (“CHST”)	License plate recognition system		51		51		51
	Honghwa Human Resources Co., Ltd. (“HHR”)	Human resources service		100		—		—	2)
	New Prospect Investments Holdings Ltd. (B.V.I.) (“New Prospect”)	Investment		100		100		100
Senao International Co., Ltd.	Senao International (Samoa) Holding Ltd. (“SIS”)	International investment		100		100		100
CHIEF Telecom Inc.	Unigate Telecom Inc. (“Unigate”)	Telecommunication internet service		100		100		100
	Chief International Corp. (“CIC”)	Internet communication and internet data center (“IDC”) service		100		100		100
Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd. (“Concord”)	Investment		100		100		100
Spring House Entertainment Tech. Inc.	Ceylon Innovation Ltd. (“CEI”)	International trading, general advertisement and book publishment service		100		100		100
Light Era Development Co., Ltd.	Yao Yong Real Property Co., Ltd. (“YYRP”)	Real estate management and leasing business		100		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	3)
	Chunghwa Investment Holding Co., Ltd. (“CIHC”)	Investment		100		100		100
Concord Technology Co., Ltd.	Glory Network System Service (Shanghai) Co., Ltd. (“GNSS (Shanghai)”)	Planning and design of software and hardware system services and integration of information system		100		100		100
Chunghwa Precision Test Tech. Co., Ltd.	Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)	Semiconductor testing components and printed circuit board industry production and marketing of electronic products		100		100		100
	CHPT Japan Co., Ltd. (“CHPT (JP)”)	Sale and maintenance of electronic parts and machinery processed products, and design of printed circuit board		100		—		—	4)
	Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)	Wholesale electronic materials, electronic materials and general retail investment industry		100		—		—	5)

(Continued)

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

(Concluded)

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1) Chunghwa owns less than 50% equity shares of SENAO. However, Chunghwa has more than 50% seats of the board of directors of SENAO. Therefore, Chunghwa has control over SENAO and the accounts of SENAO are included in the consolidated financial statements. Chunghwa’s equity ownership of SENAO decreased from 28.44% as of January 1, 2012 to 28.30% and 28.18% as of December 31, 2013 and 2012, respectively, due to the exercise of options by SENAO’s employees.

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 December 31, 2013 due to the exercise of options by CHPT’s employees and CHPT issued employee stock bonus.

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 December 31, 2013:

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Business Combination

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are recognized in profit or loss as incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

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. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

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

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

For the purposes of presenting financial statements, the assets and liabilities of the Company’s foreign operations (including of the subsidiaries in other countries or currencies used different with Chunghwa) 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 equivalent includes treasury bills, commercial paper, time deposits and negotiable certificate of deposit with original maturities within three months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

Inventories

Inventories are stated at the lower of cost (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.

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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 and Jointly controlled entity

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Joint venture arrangements that involve the establishment of a separate entity in which ventures have joint control over the economic activity of the entity are referred to as jointly controlled entities.

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

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

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

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

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

Property, Plant and Equipment

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

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Any gain or loss arising on the disposal of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

- 20 -

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.

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

Any gain or loss arising on derecognition of the investment properties is calculated as the difference between the net disposal proceeds and the carrying amount of the asset and is included in profit or loss in the period in which the property is derecognized.

Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

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, by comparing its carrying amount, including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. 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 is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

Intangible Assets Other Than Goodwill

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

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

Impairment of Tangible and Intangible Assets Other Than Goodwill

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

- 21 -

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

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

Financial Instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition 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

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

1) Measurement category

a) Financial assets at fair value through profit 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 remeasurement 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

The Company invests in bank debentures and corporate bonds over specific credit ratings and the Company has positive intent and ability to hold to maturity, are classified as held-to-maturity investments.

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

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.

- 22 -

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 carried at cost less any identified impairment losses at the end of each reporting period.

AFS financial assets are measured at fair value. Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency exchange 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 AFS financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

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 (including cash and cash equivalent, trade receivables, accounts receivable from related parties, other receivables and debt investments with no active market) are measured at amortized cost using the effective interest method, less any impairment, except for short-term receivables when the effect of discounting is 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 financial assets and trade receivables, assets are assessed for impairment on a collective basis and individual.

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.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, 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.

For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

In respect of AFS equity securities, impairment loss 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. In respect of AFS debt securities, the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

For financial assets that are 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.

- 23 -

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 are 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 except for uncollectible trade receivables and other receivables that are written off against the allowance account.

3) Derecognition of financial assets

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

On derecognition of a financial asset 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 is recognized in profit or loss.

b. Financial liabilities

1) Subsequent measurement

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

2) Derecognition of financial liabilities

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

c. Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate and the fluctuation on stock price risks, 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 derivative financial instruments is positive, the derivative is recognized as a financial asset; when the fair value of derivative financial instruments is negative, the derivative is recognized as a financial liability.

Hedge Accounting

The Company designates certain derivatives instruments as fair value hedges.

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 profit or loss in line item relating to the hedged item.

- 24 -

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

Provisions

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

Revenue Recognition

Revenues are recognized when they 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 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.

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.

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b. The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Other than stated above, 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 service entitling them to the contributions.

For defined benefit retirement benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method. All actuarial gains and losses on the defined benefit obligation are recognized immediately in other comprehensive income. 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 sheets 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. Any asset resulting from this calculation is limited to the unrecognized past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

Share-based Payment Arrangements - Employee Stock Options

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

The share-based payment transactions which were granted after transitions to IFRSs should apply IFRS 2.

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

The fair value determined at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of employee share options that will eventually vest, with a corresponding increase in additional paid-in capital - employee share options. The fair value determined at the grant date of the employee share options is recognized as an expense in full at the grate date when the share options granted vest immediately.

At the end of each reporting period, the Company reviews its estimate of the number of employee share options expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the capital surplus - employee stock options.

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Income Tax

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

a. Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

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

b. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the 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.

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

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

c. Current and deferred tax for the year

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

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

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.

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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 considered 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, 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. Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made at the end of reporting period. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period. Estimates of net realizable value also take which into consideration. Inventories write-downs are determined on an item by item basis, except 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 reviewed estimated useful lives of property, plant and equipment at the end of each year.

e. Recognition and measurement of defined benefit plans

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

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5. APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

a. New, amended and revised standards and interpretations (the “New IFRSs”) in issue but not yet effective

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

On January 28, 2014, the Financial Supervisory Commission (FSC) announced the framework for the adoption of updated IFRSs version in the ROC. Under this framework, starting January 1, 2015, the previous version of IFRSs endorsed by the FSC (the 2010 IFRSs version) currently applied by companies with shares listed on the Taiwan Stock Exchange or traded on the Taiwan GreTai Securities Market or Emerging Stock Market will be replaced by the updated IFRSs without IFRS 9 (the 2013 IFRSs version). However, as of the date that the consolidated financial statements were authorized for issue, the FSC has not endorsed the following new, amended and revised standards and interpretations issued by the IASB (the “New IFRSs”) included in the 2013 IFRSs version. Furthermore, the FSC has not announced the effective date for the following New IFRSs that are not included in the 2013 IFRSs version.

New, Revised or Amended Standards and Interpretations		Effective Date Issued by IASB (Note 1)
The New IFRSs included in the 2013 IFRSs version not yet endorsed by the FSC
Amendments to IFRSs	Improvement to IFRSs 2009 - amendment to IAS 39	January 1, 2009 and January 1, 2010, as appropriate
Amendment to IAS 39	Embedded Derivative	Effective for annual periods ending on or after June 30, 2009
Amendments to IFRSs	Improvements to IFRSs 2010	July 1, 2010 or January 1, 2011, as appropriate
Amendments 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	Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters	July 1, 2011
Amendment to IFRS 1	Government Loans	January 1, 2013
Amendment to IFRS 7	Disclosures - Offsetting Financial Assets and Financial Liabilities	January 1, 2013
Amendment to IFRS 7	Disclosures - Transfers of Financial Assets	July 1, 2011
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	January 1, 2013

(Continued)

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New, Revised or Amended Standards and Interpretations		Effective Date Issued by IASB (Note 1)
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
Amendment to IAS 12	Deferred tax: Recovery of Underlying Assets	January 1, 2012
Amendment to IAS 19 (Revised 2011)	Employee Benefits	January 1, 2013
Amendment to IAS 27 (Revised 2011)	Separate Financial Statements	January 1, 2013
Amendment to IAS 28 (Revised 2011)	Investments in Associates and Joint Ventures	January 1, 2013
Amendment to IAS 32	Offsetting of Financial Assets and Financial Liabilities	January 1, 2014
IFRIC 20	Stripping Costs in Production Phase of a Surface Mine	January 1, 2013
The New IFRSs not included in the 2013 IFRSs version
Amendments to IFRSs	Annual Improvements to IFRSs 2010-2012 Cycle	July 1, 2014 (Note 2)
Amendments to IFRSs	Annual Improvements to IFRSs 2011-2013 Cycle	July 1, 2014
IFRS 9	Financial Instruments	Effective date not determined
Amendments to IFRS 9 and IFRS 7	Mandatory Effective Date of IFRS 9 and Transition Disclosures	Effective date not determined
IFRS 14	“Regulatory Deferral Accounts”	January 1, 2016
Amendment to IAS 19	Defined Benefit Plans: Employee Contributions	July 1, 2014
Amendment to IAS 36	Impairment of Assets: Recoverable Amount Disclosures for Non-Financial Assets	January 1, 2014
Amendment to IAS 39	Novation of Derivatives and Continuation of Hedge Accounting	January 1, 2014
IFRIC 21	Levies	January 1, 2014

(Concluded)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after the respective effective dates.

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

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b. Significant impending changes in accounting policy resulted from New IFRSs in issue but not yet effective

Except for the following, the initial application of the above New IFRSs has not had any material impact on the Company’s consolidated financial statements:

1) IFRS 9 “Financial Instruments”

Recognition and measurement of financial assets

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.

Hedge accounting

The main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entity’s risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions eligible for hedge accounting, specifically broadening the risk eligible for hedge accounting of non-financial items; (2) changing the way hedging derivative instruments are accounted for to reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item.

The mandatory effective date of IFRS 9, which was previously set on January 1, 2015, was removed and will be reconsidered once the standard is complete with a new impairment model and finalization of any limited amendments to classification and measurement.

2) 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.

3) 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 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.

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4) 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 and to disclose the components of the defined benefit costs. According to the amendments, the past service cost, 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.

5) 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.

c. Significant impending changes in accounting policy resulted from the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”) in issue but not yet effective

On December 30, 2013, FSC announced the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers. One of the main amendments is to permit fair value model for subsequent measurement of investment properties. This amendment is effective for annual periods beginning on or after January 1, 2014.

d. The impact of the application of New IFRSs and the Regulations in issue but not yet effective on the Company’s consolidated financial statements is as follows:

When the Company applies IAS 19 (Revised 2011) in 2015, employee benefits will be recognized based on actuarial calculations in accordance with IAS 19 (Revised 2011). The Company anticipates that retained earnings as of January 1, 2014 will be retrospectively restated to increase by $23,472 thousand, noncontrolling interests will be retrospectively restated to increase by $3,344 thousand, accrued pension liabilities will decrease by $35,898 thousand, and deferred tax assets will decrease by $9,082 thousand, respectively.

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

6. CASH AND CASH EQUIVALENTS

	December 31, 2013		December 31, 2012		January 1, 2012
Cash
Cash on hand	$	235,955	$	447,399	$	238,850
Bank deposits		10,591,681		5,730,478		5,115,371
		10,827,636		6,177,877		5,354,221

(Continued)

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	December 31, 2013		December 31, 2012		January 1, 2012
Cash equivalents
Commercial paper	$	2,375,419	$	18,957,163	$	18,966,431
Time deposits with maturities of less than three months		1,382,050		1,213,432		610,028
Negotiable certificate of deposit		—		4,590,000		1,177,037
Treasury bills		—		—		299,479
		3,757,469		24,760,595		21,052,975
	$	14,585,105	$	30,938,472	$	26,407,196

(Concluded)

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

	December 31, 2013	December 31, 2012	January 1, 2012
Bank deposits	0.00%-0.76%	0.00%-0.75%	0.00%-0.75%
Commercial paper	0.60%-0.65%	0.71%-0.74%	0.45%-0.80%
Time deposits with maturities of less than three months	0.05%-5.10%	0.88%-4.70%	0.40%-5.50%
Negotiable certificate of deposit	—	0.83%-0.96%	0.63%-0.72%
Treasury bills	—	—	0.70%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	December 31, 2013		December 31, 2012		January 1, 2012
Financial assets held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	337	$	292	$	—
Currency swap contracts		—		2,702		6,094
		337		2,994		6,094
Financial assets designated as at fair value through profit or loss
Convertible bonds		—		—		39,656
	$	337	$	2,994	$	45,750
Financial liabilities held for trading
Derivatives (not designated for hedge)
Forward exchange contracts	$	246	$	24	$	73
Currency swap contracts		—		1,935		3,665
Index future contracts		—		—		249
	$	246	$	1,959	$	3,987

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

	Currency	Maturity Period	Contract Amount (In Thousands)
December 31, 2013
Forward exchange contracts - buy	NT$/US$	2014.01	NT$90,092/US$3,021
December 31, 2012
Currency swap contracts	US$/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$5,310
January 1, 2012
Currency swap contracts	US$/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 December 31, 2013 and 2012.

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 forward exchange contracts, currency swap 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.

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8. AVAILABLE-FOR-SALE FINANCIAL ASSETS

	December 31, 2013		December 31, 2012		January 1, 2012
Equity securities
Domestic listed and emerging stocks	$	3,046,182	$	3,278,315	$	528,236
Foreign listed stocks		24,267		9,661		—
Domestic and foreign open-end mutual funds		—		2,190,392		2,137,201
		3,070,449		5,478,368		2,665,437
Debt securities
Corporate bonds		—		50,207		76,209
	$	3,070,449	$	5,528,575	$	2,741,646
Current	$	24,267	$	2,250,260	$	2,498,712
Non-current		3,046,182		3,278,315		242,934
	$	3,070,449	$	5,528,575	$	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 year ended December 31, 2012.

9. HELD-TO-MATURITY FINANCIAL ASSETS

	December 31, 2013		December 31, 2012		January 1, 2012
Corporate bonds	$	10,512,893	$	14,791,151	$	13,790,447
Bank debentures		1,252,954		1,255,139		905,745
	$	11,765,847	$	16,046,290	$	14,696,192
Current	$	4,264,104	$	4,250,146	$	1,201,301
Non-current		7,501,743		11,796,144		13,494,891
	$	11,765,847	$	16,046,290	$	14,696,192

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

	December 31, 2013		December 31, 2012		January 1, 2012
Corporate bonds
Par value	$	10,472,500	$	15,955,000	$	13,865,000
Nominal interest rate		1.15%-2.49%		1.15%-2.90%		1.20%-2.98%
Effective interest rate		1.00%-1.95%		1.00%-2.89%		0.83%-2.89%
Average expiry date		4 years		4 years		4 years
Bank debentures
Par value	$	1,250,000	$	1,250,000	$	900,000
Nominal interest rate		1.25%-1.60%		1.25%-1.60%		1.37%-1.60%
Effective interest rate		1.15%-1.40%		1.15%-1.40%		1.25%-1.40%
Average expiry date		4 years		4 years		4 years

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10. TRADE NOTES AND ACCOUNTS RECEIVABLE

	December 31, 2013			December 31, 2012			January 1, 2012
Trade notes and accounts receivable	$	23,823,004		$	25,165,616		$	24,819,083
Less: Allowance doubtful debts		(922,102	)		(810,799	)		(2,423,012	)
	$	22,900,902		$	24,354,817		$	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 material 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.

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

	December 31, 2013		December 31, 2012		January 1, 2012
Less than 30 days	$	132,130	$	188,153	$	178,037
31-60 days		40,492		48,786		83,427
61-90 days		14,377		36,334		59,055
91-120 days		85,210		8,012		9,189
121-180 days		2,091		—		—
More than 181 days		11,617		8,782		11,015
	$	285,917	$	290,067	$	340,723

The above aging analysis was based on days overdue.

Movements of the allowance for doubtful accounts were as follows:

	Year Ended December 31
	2013			2012
Balance, beginning of year	$	810,799		$	2,423,012
Add: Provision for (reversal of) doubtful accounts		239,200			(1,473,042	)
Deduct: Amounts written off		(127,897	)		(139,171	)
Balance, end of year	$	922,102		$	810,799

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 $221,164 thousand, $163,779 thousand and $7,303 thousand as of December 31, 2013, December 31, 2012 and January 1, 2012, respectively.

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11. INVENTORIES

	December 31, 2013		December 31, 2012		January 1, 2012
Merchandise	$	5,220,654	$	4,242,860	$	2,998,617
Project in process		520,238		795,260		769,764
Work in process		26,100		17,713		12,474
Raw materials		26,266		36,069		24,584
		5,793,258		5,091,902		3,805,439
Land held for sale		—		14,766		579,226
Land and building held for sale		8,166		54,884		—
Construction in progress		44,014		—		290,137
Land held under development		1,998,733		—		111,536
Land held for development		3,916		2,034,549		35,816
	$	7,848,087	$	7,196,101	$	4,822,154

The operating costs related to inventories were $50,860,224 thousand (including the valuation loss on inventories of $202,707 thousand) and $44,149,782 thousand (including the valuation loss on inventories of $112,562 thousand) for the years ended December 31, 2013 and 2012, respectively.

As of December 31, 2013, December 31, 2012 and January 1, 2012, inventories of $2,057,191 thousand, $2,041,797 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 January 1, 2012 was for Wan-Xi, Li-Shui (A) and Covent projects.

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

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

Subsection 2 Gongyuan Sec., Zhongzheng Dist, Taipei City was sold in July 2013.

12. PREPAYMENTS

	December 31, 2013		December 31, 2012		January 1, 2012
Prepaid rents	$	3,388,938	$	3,565,310	$	3,851,568
Others		2,443,679		1,974,631		1,584,051
	$	5,832,617	$	5,539,941	$	5,435,619

(Continued)

- 37 -

	December 31, 2013		December 31, 2012		January 1, 2012
Current
Prepaid rents	$	953,329	$	917,975	$	993,848
Others		1,270,801		1,067,731		894,795
	$	2,224,130	$	1,985,706	$	1,888,643
Non-current
Prepaid rents	$	2,435,609	$	2,647,335	$	2,857,720
Others		1,172,878		906,900		689,256
	$	3,608,487	$	3,554,235	$	3,546,976

(Concluded)

13. OTHER CURRENT MONETARY ASSETS

	December 31, 2013		December 31, 2012		January 1, 2012
Time deposits and negotiable certificate of deposit with maturities of more than three months	$	2,534,700	$	22,263,840	$	40,982,360
Receivables from the Fund for Privatization of Government - owned Enterprises under the Executive Yuan (Note 26)		1,317,887		869,032		1,283,829
Others		783,718		1,316,323		784,559
	$	4,636,305	$	24,449,195	$	43,050,748

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

	December 31, 2013	December 31, 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%-3.30%

14. FINANCIAL ASSETS CARRIED AT COST

	December 31, 2013		December 31, 2012		January 1, 2012
Non-listed stocks
Domestic	$	2,223,651	$	2,327,994	$	2,470,485
Foreign		199,995		139,867		104,545
	$	2,423,646	$	2,467,861	$	2,575,030

- 38 -

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 investments 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 $66,342 thousand and $176,374 thousand for the years ended December 31, 2013 and 2012, respectively.

15. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

	December 31, 2013		December 31, 2012		January 1, 2012
Investments in associates	$	2,334,789	$	1,998,983	$	2,305,328
Jointly controlled entity		227,504		241,309		250,689
	$	2,562,293	$	2,240,292	$	2,556,017

a. Investments in associates

Investments in associates were as follows:

	Carrying Amount
	December 31, 2013		December 31, 2012		January 1, 2012
Listed
Senao Networks, Inc. (“SNI”)	$	642,671	$	403,153	$	337,886
Non-listed
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		519,839		541,672		462,161
International Integrated System, Inc. (“IISI”)		292,239		277,592		257,371
Viettle-CHT Co., Ltd. (“Viettle-CHT”)		278,044		265,052		255,121
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		214,201		223,949		638,120
Skysoft Co., Ltd. (“SKYSOFT”)		158,218		127,686		113,304
So-net Entertainment Taiwan Limited (“So-net”)		92,325		31,152		34,545
Kingwaytek Technology Co., Ltd. (“KWT”)		74,838		77,449		75,369
Alliance Digital Tech Co., Ltd. (“ADT”)		28,757		—		—
HopeTech Technologies Limited (“HopeTech”)		25,564		21,742		20,970
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		6,255		8,634		698
Dian Zuan Intergrating Marketing Co., Ltd. (“DZIM”)		1,838		20,902		109,783
Panda Monium Company Ltd.		—		—		—
	$	2,334,789	$	1,998,983	$	2,305,328

- 39 -

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

	December 31, 2013			December 31, 2012			January 1, 2012
Senao Networks, Inc. (“SNI”)		34	%		40	%		41	%
ST-2 Satellite Ventures Pte., Ltd. (“STS”)		38	%		38	%		38	%
International Integrated System, Inc. (“IISI”)		33	%		33	%		33	%
Viettle-CHT Co., Ltd. (“Viettle-CHT”)		30	%		30	%		30	%
Taiwan International Standard Electronics Co., Ltd. (“TISE”)		40	%		40	%		40	%
Skysoft Co., Ltd. (“SKYSOFT”)		30	%		30	%		30	%
So-net Entertainment Taiwan Limited (“So-net”)		30	%		30	%		30	%
Kingwaytek Technology Co., Ltd. (“KWT”)		33	%		33	%		33	%
Alliance Digital Tech Co., Ltd. (“ADT”)		19	%		—			—
HopeTech Technologies Limited (“HopeTech”)		45	%		45	%		45	%
Xiamen Sertec Business Technology Co., Ltd. (“Sertec”)		49	%		49	%		49	%
Dian Zuan Intergrating Marketing Co., Ltd. (“DZIM”)		13	%		33	%		40	%
Panda Monium Company Ltd.		43	%		43	%		43	%

The fair value based on the closing market price of investments in associates which are listed stocks as of the balance sheet date is as follows:

	December 31, 2013		December 31, 2012		January 1, 2012
SNI	$	7,378,573	$	—	$	—

Summarized financial information of associates were as follows:

	December 31, 2013		December 31, 2012		January 1, 2012
Total assets	$	20,794,575	$	20,013,969	$	20,020,401
Total liabilities	$	13,267,905	$	13,952,740	$	13,425,684

	Year Ended December 31
	2013		2012
Net revenues	$	14,260,037	$	14,995,550
Net income	$	1,532,811	$	1,499,819
Other comprehensive income (loss)	$	15,798	$	(61,767	)
The Company’s share of the profit or loss of associates accounted for using equity method	$	688,782	$	542,738

- 40 -

SENAO disposed 245 thousand shares of SNI in December 2013, and the amount of profit and loss recognized were as follows:

	Year Ended December 31, 2013
Proceeds from disposal	$	24,182
Carrying amount of the disposed investment		(9,482	)
Change in capital surplus from investments in associates accounted for using equity method		577
Share of other comprehensive income of associates accounted for using equity method		(36	)
Effect of noncontrolling interests		1,407
Profit recognized of the disposed investment	$	16,648

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.

Chunghwa, Taiwan Mobile Corporation, Asia Pacific Telecom, Vibo Telecom, EasyCard Corporation and Far EasTone Telecommunications established an associate, ADT, in November 2013. Chunghwa invested $30,000 thousand cash and held 19% ownership of ADT. Based on the share of capital commitments, Chunghwa has one seat out of five seats in the board of directors; therefore it has significant influence over ADT. ADT engages mainly in the development of mobile payments and information processing service.

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 the 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 two seats out of five seats in 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 the associates was recorded based on the audited financial statements for the years ended December 31, 2013 and 2012.

b. Investments in jointly controlled entity

Investments in jointly controlled entity were as follows:

	Carrying Amount						% of Ownership and Voting Rights
	December 31, 2013		December 31, 2012		January 1, 2012		December 31, 2013		December 31, 2012		January 1, 2012
Non-listed
Huada Digital Corporation (“HDD”)	$	227,504	$	241,309	$	250,689		50		50		50

- 41 -

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:

	December 31, 2013		December 31, 2012		January 1, 2012
Current assets	$	223,037	$	238,663	$	250,774
Non-current assets	$	9,270	$	5,909	$	—
Current liabilities	$	4,803	$	3,263	$	85

	Year Ended December 31
	2013			2012
Profit or loss
Revenues and income	$	8,677		$	3,987
Expenses and losses	$	(22,482	)	$	(13,367	)
The Company’s share of profits (loss) of the jointly controlled entity accounted for using equity method	$	(13,805	)	$	(9,380	)

The Company’s share of profits (loss) of the jointly controlled entity was recorded based on the audited financial statements for the years ended December 31, 2013 and 2012.

- 42 -

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		—			—			—			51,039			29,808			1,515			108,075			33,530,436			33,720,873
Disposal		(17,053	)		(5,437	)		(47,400	)		(921,131	)		(11,203,403	)		(398,388	)		(416,682	)		—			(13,009,494	)
Effect of foreign exchange differences		—			—			—			(927	)		(1,362	)		(41	)		(1,621	)		(20,674	)		(24,625	)
Other		91,664			32,495			187,339			1,296,474			25,007,680			1,185,692			678,334			(28,515,189	)		(35,511	)
Balance on December 31, 2012	$	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
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		—			(56,099	)		(1,219,992	)		(1,342,300	)		(27,533,334	)		(408,387	)		(461,035	)		—			(31,021,147	)
Disposal		—			4,659			46,940			917,814			11,191,119			398,226			415,675			—			12,974,433
Impairment losses		—			—			—			—			(280,595	)		—			(20,394	)		—			(300,989	)
Effect of foreign exchange differences		—			—			—			114			1,560			1			286			—			1,961
Other		—			442			18,454			(4,801	)		18,507			(5,739	)		(21,846	)		—			5,017
Balance on December 31, 2012	$	—		$	(1,067,498	)	$	(20,824,621	)	$	(11,348,414	)	$	(547,845,695	)	$	(1,270,172	)	$	(5,671,104	)	$	—		$	(588,027,504	)
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 December 31, 2012, 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
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		—			—			6,073			67,523			71,817			1,112			285,237			36,294,642			36,726,404
Disposal		(56,216	)		(8,971	)		(17,858	)		(1,132,288	)		(14,778,453	)		(158,242	)		(437,896	)		—			(16,589,924	)
Effect of foreign exchange differences		—			—			—			2,458			7,957			36			(9,627	)		1			825
Other		122,931			7,693			141,146			1,824,187			28,441,346			586,790			989,162			(32,124,877	)		(11,622	)
Balance on December 31, 2013	$	102,263,330		$	1,546,906		$	67,557,865		$	15,995,696		$	683,118,379		$	3,745,148		$	8,415,325		$	22,852,887		$	905,495,536

(Continued)

- 43 -

	Land		Land Improvements			Buildings			Computer Equipment			Telecommunications Equipment			Transportation Equipment			Miscellaneous Equipment			Construction in Progress and Advances Related to Acquisition of Equipment		Total
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		—		(56,685	)		(1,245,245	)		(1,380,216	)		(26,977,590	)		(550,264	)		(727,894	)		—		(30,937,894	)
Disposal		—		8,971			17,858			1,129,208			14,734,508			158,237			422,135			—		16,470,917
Impairment losses		—		—			—			—			(254,210	)		—			—			—		(254,210	)
Effect of foreign exchange differences		—		—			—			(879	)		22,050			(7	)		(27,389	)		—		(6,225	)
Other		—		10,812			80,165			(698	)		7,010			(9,592	)		(114,201	)		—		(26,504	)
Balance on December 31, 2013	$	—	$	(1,104,400	)	$	(21,971,843	)	$	(11,600,999	)	$	(560,313,927	)	$	(1,671,798	)	$	(6,118,453	)	$	—	$	(602,781,420	)
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 December 31, 2013, net	$	102,263,330	$	442,506		$	45,586,022		$	4,394,697		$	122,804,452		$	2,073,350		$	2,296,872		$	22,852,887	$	302,714,116

(Concluded)

- 44 -

The Company performed the impairment assessment of telecommunications equipment and miscellaneous equipment and recorded an impairment loss of $254,210 thousand and $300,989 thousand for the years ended December 31, 2013 and 2012, respectively.

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		11,411
Balance on December 31, 2012	$	9,260,015
Accumulated depreciation and impairment
Balance on January 1, 2012	$	(188,523	)
Depreciation expense		(16,359	)
Recognized impairment loss		(1,261,365	)
Reclassification		(4,870	)
Balance on December 31, 2012	$	(1,471,117	)

(Continued)

- 45 -

	Investment Properties
Balance on January 1, 2012, net	$	9,060,081
Balance on December 31, 2012, net	$	7,788,898
Cost
Balance on January 1, 2013 and December 31, 2013	$	9,260,015
Accumulated depreciation and impairment
Balance on January 1, 2013	$	(1,471,117	)
Depreciation expense		(16,575	)
Reversal of impairment losses		245,708
Balance on December 31, 2013	$	(1,241,984	)
Balance on January 1, 2013, net	$	7,788,898
Balance on December 31, 2013, net	$	8,018,031

(Concluded)

After evaluating the investment properties, the Company determined that some land and buildings were impaired and recognized an impairment loss of $1,261,365 thousand for the year ended December 31, 2012.

Based on the appraisal reports, the fair value associated with certain properties increased during 2013 and therefore the Company reversed a portion of previously recognized impairment losses amounting to $245,708 thousand for the year ended December 31, 2013.

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 December 31, 2013 and 2012 and January 1, 2012 was determined on the appraisal reports conducted by independent appraisers. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

	December 31, 2013		December 31, 2012		January 1, 2012
Fair value	$	17,501,195	$	15,510,857	$	15,058,328
Overall capital interest rate		1.46%-2.20%		1.46%		1.46%
Profit margin ratio		12%-20%		12%-15%		12%-15%
Discount rate		1.36%		1.36%		1.36%
Capitalization rate		0.68%-2.02%		1.5%-2.05%		1.5%-2.05%

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

- 46 -

18. INTANGIBLE ASSETS

	3G and 4G 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		—			631,139			—			1,281			632,420
Disposal		—			(298,241	)		—			(23,636	)		(321,877	)
Effect of foreign exchange difference		—			(76	)		—			—			(76	)
Balance on December 31, 2012	$	10,179,000		$	2,065,542		$	180,631		$	116,650		$	12,541,823
Accumulated amortization and impairment
Balance on January 1, 2012	$	(4,938,738	)	$	(981,580	)	$	—		$	(32,863	)	$	(5,953,181	)
Amortization expenses		(748,609	)		(366,341	)		—			(9,012	)		(1,123,962	)
Disposal		—			298,241			—			23,636			321,877
Impairment loss		—			—			—			(4,770	)		(4,770	)
Effect of foreign exchange difference		—			16			—			—			16
Balance on December 31, 2012	$	(5,687,347	)	$	(1,049,664	)	$	—		$	(23,009	)	$	(6,760,020	)
Balance on January 1, 2012, net	$	5,240,262		$	751,140		$	180,631		$	106,142		$	6,278,175
Balance on December 31, 2012, net	$	4,491,653		$	1,015,878		$	180,631		$	93,641		$	5,781,803
Cost
Balance on January 1, 2013	$	10,179,000		$	2,065,542		$	180,631		$	116,650		$	12,541,823
Additions-acquired separately		39,075,000			795,894			—			956			39,871,850
Disposal		—			(224,890	)		—			—			(224,890	)
Effect of foreign exchange difference		—			908			—			281			1,189
Balance on December 31, 2013	$	49,254,000		$	2,637,454		$	180,631		$	117,887		$	52,189,972
Accumulated amortization and impairment
Balance on January 1, 2013	$	(5,687,347	)	$	(1,049,664	)	$	—		$	(23,009	)	$	(6,760,020	)
Amortization expenses		(748,609	)		(481,619	)		—			(7,592	)		(1,237,820	)
Disposal		—			224,890			—			—			224,890
Impairment loss		—			—			(18,055	)		—			(18,055	)
Effect of foreign exchange difference		—			(80	)		—			1			(79	)
Balance on December 31, 2013	$	(6,435,956	)	$	(1,306,473	)	$	(18,055	)	$	(30,600	)	$	(7,791,084	)
Balance on January 1, 2013, net	$	4,491,653		$	1,015,878		$	180,631		$	93,641		$	5,781,803
Balance on December 31, 2013, net	$	42,818,044		$	1,330,981		$	162,576		$	87,287		$	44,398,888

For long-term business development, Chunghwa participated in mobile broadband license (4G license) bidding process announced by NCC and obtained certain spectrums. Chunghwa paid the 4G concession fee amounting to $39,075,000 thousand in November 2013.

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 concession fee is amortized on a straight-line basis from the date operations commence through the date the license expires.

- 47 -

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

CHPT recognized an impairment loss of $4,770 thousand on the patent for the year ended December 31, 2012.

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 year ended December 31, 2013.

The Company did not recognize any impairment loss on goodwill for the year ended December 31, 2012.

19. OTHER ASSETS

	December 31, 2013		December 31, 2012		January 1, 2012
Spare parts	$	3,008,145	$	4,046,050	$	2,305,655
Refundable deposits		2,209,566		2,087,034		1,760,149
Other financial assets		1,000,000		1,000,000		1,000,000
Others		2,626,061		1,938,040		1,832,197
	$	8,843,772	$	9,071,124	$	6,898,001
Current
Spare parts	$	3,008,145	$	4,046,050	$	2,305,655
Others		952,653		428,545		734,181
	$	3,960,798	$	4,474,595	$	3,039,836
Non-current
Refundable deposits	$	2,209,566	$	2,087,034	$	1,760,149
Other financial assets		1,000,000		1,000,000		1,000,000
Others		1,673,408		1,509,495		1,098,016
	$	4,882,974	$	4,596,529	$	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.

20. SHORT-TERM LOANS

	December 31, 2013		December 31, 2012		January 1, 2012
Unsecured loans	$	254,357	$	111,473	$	75,000
Annual interest rate		1.18%-2.40%		1.25%-2.40%		1.25%-1.53%

- 48 -

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

	December 31, 2013		December 31, 2012		January 1, 2012
Secured loans (Note 38)	$	1,700,000	$	2,050,000	$	1,651,419
Unsecured loans		—		8,372		108,840
		1,700,000		2,058,372		1,760,259
Less: Current portion of long-term loans		300,000		8,372		701,887
	$	1,400,000	$	2,050,000	$	1,058,372

The annual interest rates of loans were as follows:

	December 31, 2013	December 31, 2012	January 1, 2012
Secured loans	1.15%-2.10%	1.13%-2.10%	1.10%-1.83%
Unsecured loans	—	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 $350,000 thousand in 2013.

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

	December 31, 2013		December 31, 2012		January 1, 2012
Trade notes and accounts payable	$	15,589,108	$	13,513,437	$	14,264,769

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

23. OTHER PAYABLES

	December 31, 2013		December 31, 2012		January 1, 2012
Accrued salary and compensation	$	10,336,141	$	9,838,182	$	10,505,866
Payables to contractors		2,732,518		2,379,833		1,834,254
Accrued franchise fees		2,009,009		2,164,220		2,246,265
Payables to equipment suppliers		1,819,604		1,884,038		1,870,486
Amounts collected for others		1,325,918		1,326,777		1,200,618

(Continued)

- 49 -

	December 31, 2013		December 31, 2012		January 1, 2012
Accrual amounts for bonuses to employees and remuneration to directors and supervisors	$	980,363	$	1,784,767	$	2,343,593
Accrued maintenance costs		990,655		988,240		898,016
Others		6,597,561		5,735,723		5,403,163
	$	26,791,769	$	26,101,780	$	26,302,261

(Concluded)

24. PROVISIONS

	December 31, 2013		December 31, 2012		January 1, 2012
Warranties	$	201,494	$	221,245	$	148,050
Employee benefits		47,265		41,949		32,822
Others		4,046		2,960		1,180
	$	252,805	$	266,154	$	182,052
Current	$	129,341	$	221,245	$	148,050
Noncurrent		123,464		44,909		34,002
	$	252,805	$	266,154	$	182,052

	Warranties			Employee Benefits		Others			Total
Balance on January 1, 2012	$	148,050		$	32,822	$	1,180		$	182,052
Additional provisions recognized		165,701			9,127		1,780			176,608
Used during the period		(91,799	)		—		—			(91,799	)
Reversing un-usage balances		(707	)		—		—			(707	)
Balance on December 31, 2012	$	221,245		$	41,949	$	2,960		$	266,154
Balance on January 1, 2013	$	221,245		$	41,949	$	2,960		$	266,154
Additional provisions recognized		153,166			5,316		1,252			159,734
Used during the period		(172,917	)		—		(166	)		(173,083	)
Balance on December 31, 2013	$	201,494		$	47,265	$	4,046		$	252,805

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 vested long-term service leave entitlements accrued.

- 50 -

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 December 31, 2013 amounting to $1,058,337 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 plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with Enforcement Rules of the Labor Pension Act, the return generated by employees’ pension contribution should not be below the interest rate for a 2-year time deposit published by the local banks.

The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation were carried out by the independent actuary.

- 51 -

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

	Measurement Date
	December 31, 2013	December 31, 2012	January 1, 2012
Discount rates	2.00%	1.60%	1.75%
Expected return on plan assets	2.00%	1.60%	1.50%
Expected rates of salary increase	1.00%-2.75%	1.00%-2.75%	1.00%-3.00%

The expected rate of return was based on historical return trends and analysts’ predictions of the market where the plan assets located over the life of the related obligation, by reference to the aforementioned use of the plan assets and the impact of the related minimum return.

Amounts recognized in profit or loss in respect of these defined benefit plans were as follows:

	Year Ended December 31
	2013			2012
Current service cost	$	2,905,985		$	2,836,036
Interest cost		347,899			321,500
Expected return on plan assets		(296,682	)		(255,080	)
Past service cost		(4,336	)		(4,336	)
	$	2,952,866		$	2,898,120
An analysis by function
Operating cost	$	1,762,718		$	1,718,568
Marketing expenses		854,471			841,144
Administration expenses		162,928			157,648
Research and development expenses		100,401			104,686
	$	2,880,518		$	2,822,046

Actuarial losses recognized in other comprehensive income for the years ended December 31, 2013 and 2012 was $512,151 thousand (which was actuarial losses amounting to $617,049 thousand net of the income tax effect of $104,898 thousand) and $1,242,296 thousand (which was actuarial losses amounting to $1,496,742 thousand net of the income tax effect of $254,446 thousand), respectively. The cumulative amount of actuarial losses recognized in other comprehensive income as of December 31, 2013 and 2012 was $1,754,447 thousand and $1,242,296 thousand, respectively.

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

	December 31, 2013			December 31, 2012			January 1, 2012
Present value of funded defined benefit obligation	$	25,458,306		$	22,100,285		$	18,697,050
Fair value of plan assets		(19,981,837	)		(17,528,601	)		(15,750,858	)
Funded status		5,476,469			4,571,684			2,946,192
Unrecognized past service cost		35,898			40,234			44,570
	$	5,512,367		$	4,611,918		$	2,990,762

(Continued)

- 52 -

	December 31, 2013			December 31, 2012			January 1, 2012
Accrued pension liabilities	$	5,519,103		$	4,616,803		$	2,994,079
Prepaid pension cost (included in other noncurrent assets - others)		(6,736	)		(4,885	)		(3,317	)
	$	5,512,367		$	4,611,918		$	2,990,762

(Concluded)

Movements in the present value of the defined benefit obligations were as follows:

	Year Ended December 31
	2013			2012
Balance, beginning of the year	$	22,100,285		$	18,697,050
Current service cost		2,905,985			2,836,036
Interest cost		347,899			321,500
Actuarial losses		842,842			1,405,216
Benefits paid		(738,705	)		(1,159,517	)
Balance, end of the year	$	25,458,306		$	22,100,285

Movements in the fair value of the plan assets were as follows:

	Year Ended December 31
	2013			2012
Balance, beginning of the year	$	17,528,601		$	15,750,858
Expected return on plan assets		296,682			255,080
Actuarial gains (losses)		225,793			(91,526	)
Contributions from the employer		2,564,906			2,640,736
Benefits from plan assets		(634,145	)		(1,026,547	)
Balance, end of the year	$	19,981,837		$	17,528,601

The percentage of major categories of plan assets at the end of the reporting period were disclosed based on the information announced by Labor Pension Fund Supervisory Committee:

	Fair Value of Plan Assets (%)
	December 31, 2013		December 31, 2012		January 1, 2012
Stock and beneficiary certificates		44.77		38.09		40.75
Fixed income investments		31.58		36.61		35.25
Cash		22.86		24.51		23.87
Others		0.79		0.79		0.13
		100.00		100.00		100.00

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

- 53 -

	December 31, 2013			December 31, 2012			January 1, 2012
Present value of defined benefit obligation	$	(25,458,306	)	$	(22,100,285	)	$	(18,697,050	)
Fair value of plan assets	$	19,981,837		$	17,528,601		$	15,750,858
Deficit	$	(5,476,469	)	$	(4,571,684	)	$	(2,946,192	)
Experience adjustments on plan liabilities	$	1,692,273		$	545,960		$	—
Experience adjustments on plan assets	$	60,207		$	91,526		$	—

The Company expects to make a contribution of $2,590,303 thousand to the defined benefits plans in the next twelve months starting from December 31, 2013.

27. EQUITY

a. Share capital

1) Common stock

	December 31, 2013		December 31, 2012		January 1, 2012
Number of authorized shares (thousand)		12,000,000		12,000,000		12,000,000
Authorized shares	$	120,000,000	$	120,000,000	$	120,000,000
Number of shares issued and collected proceeds		7,757,447		7,757,447		7,757,447
Issued shares	$	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 December 31, 2013, the outstanding ADSs were 282,700 thousand common shares, which equaled 28,270 thousand units and represented 3.64% of Chunghwa’s total outstanding common shares.

The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders can, through deposit agents:

a) Exercise their voting rights,

b) Sell their ADSs, and

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

- 54 -

b. Addition paid-in capital

The adjustment of capital surplus for the years ended December 31, 2013 and 2012 were as follows:

	Share Premium			Donated Capital		Movements of Paid-in Capital for Associates Accounted for Using Equity Method			Share-based Payment Transactions			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 a subsidiary		—			—		—			4,893			—		4,893
Balance on December 31, 2012	$	169,496,289		$	13,170	$	—		$	4,893		$	20,648,078	$	190,162,430
Balance on January 1, 2013	$	169,496,289		$	13,170	$	—		$	4,893		$	20,648,078	$	190,162,430
Cash distributed from additional paid-in capital		(5,589,240	)		—		—			—			—		(5,589,240	)
Change in additional paid-in capital from investments in associates accounted for using equity method		—			—		41,973			—			—		41,973
Disposal of investments accounted for using equity method by subsidiary		—			—		(577	)		—			—		(577	)
Exercise of employee stock option of subsidiaries		—			—		—			5,498			—		5,498
Employee stock bonus issued by a subsidiary		—			—		—			(19	)		—		(19	)
Balance on December 31, 2013	$	163,907,049		$	13,170	$	41,396		$	10,372		$	20,648,078	$	184,620,065

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 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, except when the accumulated amount of such legal reserve equals to the Company’s total authorized capital, and depending on its business needs or requirements, may also set aside or reverse special reserves. In accordance with Chunghwa’s Articles of Incorporation, no less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors as remuneration; and (c) cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividend to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common shares.

For the years ended December 31, 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.

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 common stocks which was the closing market prices one day before shareholders’ meeting after taking into account the effects of ex-rights and ex-dividends.

- 55 -

Under Rule No. 1010012865 issued by the FSC on April 6, 2012, the Company is required to set aside additional special reserve equivalent to debit balances under stockholder’s equity. For subsequent decrease in the deduction amount to stockholder’s 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 Chunghwa’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 Chunghwa.

The appropriations of earnings for 2012 and 2011 had been approved in the stockholders’ meetings on June 25, 2013 and June 22, 2012 were as follows:

	Appropriation of Earnings				Dividends Per Share (NT$)
	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 bonuses to the employees and remuneration to the directors and supervisors for 2012 and 2011 approved in the stockholders’ meetings on June 25, 2013 and June 22, 2012 were as follows:

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

The appropriations of earnings for 2012 were proposed according to the Company’s financial statements for the year ended December 31, 2012, which were prepared in accordance with the pre-revised Guidelines Governing the Preparation of Financial Reports by Securities Issuers and the Generally Accepted Accounting Standard in the Republic of China (“ROC GAAP”), and by reference to the balance sheet for the year ended December 31, 2012, which was prepared in accordance with the revised Guidelines Governing the Preparation of Financial Reports by Securities Issuers (revised).

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 stockholders of Chunhwa resolved to distribute cash dividends from capital surplus of $5,589,240 thousand in the stockholders’ meeting on June 25, 2013.

The appropriations of earnings for 2013 had been proposed by the Chunghwa’s board of directors on March 25, 2014. The appropriations and dividends per share were as follows:

	Appropriation of Earnings		Dividends Per Share (NT$)
Legal reserve	$	2,074,342
Special reserve		144,005
Cash dividends		18,525,558	$	2.39

- 56 -

In addition, Chunghwa’s board of directors resolved to distribute cash from additional paid-in capital of $16,577,663 thousand, $2.14 per share, on March 25, 2014.

Information of the appropriation of Chunghwa’s earnings, employees bonuses and remuneration to directors and supervisors proposed 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 under Rule No. 1010012865 issued by the FSC

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 available-for-sale financial assets

	Year Ended December 31
	2013			2012
Beginning balance	$	257,991		$	67,674
Unrealized gain (loss) on available-for-sale financial assets		(559,730	)		192,856
Income tax relating to unrealized gain (loss) on available-for-sale financial assets		(5,635	)		—
Amount reclassified from equity to profit or loss on disposal		157,627			(26,372	)
Amount reclassified from equity to impairment loss		—			23,833
Ending balance	$	(149,747	)	$	257,991

f. Noncontrolling interests

	Year Ended December 31
	2013			2012
Beginning balance	$	4,441,849		$	4,276,384
Attributable to noncontrolling interests
Cash dividends paid by subsidiaries to noncontrolling interests		(811,296	)		(892,904	)
Net income of current period		1,123,934			1,136,154
Exchange differences arising from the translation of the net investment in foreign operations		28,323			(7,694	)
Unrealized gain on available-for-sale financial assets		9,418			1,797
Income tax relating to unrealized loss on available-for-sale financial assets		(696	)		—
Actuarial gains (loss) on the defined benefit plans		2,498			(19,052	)
Income tax related to actuarial gains and losses		(425	)		3,238
Share of other comprehensive income of associates accounted for using equity method		1,560			(1,456	)

(Continued)

- 57 -

	Year Ended December 31
	2013			2012
Changes in capital surplus from investments in associates accounted for using equity method	$	103,320		$	—
Disposal of investments accounted for using equity method		(1,501	)		—
Exercise of employee stock option of subsidiaries		44,438			38,767
Compensation cost of employee stock options of a subsidiary		69,579			—
Employee stock bonus issued by a subsidiary		2,468			—
Increase (decrease) in noncontrolling interests		40,862			(93,385	)
Ending balance	$	5,054,331		$	4,441,849

(Concluded)

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. NET PROFIT (LOSS) AND OTHER COMPREHENSIVE INCOME (LOSS)

a. Income

1) Other income and expenses

	Year Ended December 31
	2013			2012
Gain (loss) on disposal of property, plant and equipment, net	$	85,512		$	(2,093	)
Impairment loss on property, plant and equipment		(254,210	)		(300,989	)
Reversal gain (impairment loss) on investment properties		245,708			(1,261,365	)
Impairment loss on intangible assets		(18,055	)		(4,770	)
	$	58,955		$	(1,569,217	)

2) Other income

	Year Ended December 31
	2013		2012
Dividends income	$	78,612	$	20,606
Rental income		43,200		42,637
Others		234,716		377,366
	$	356,528	$	440,609

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3) Other gains and losses

	Year Ended December 31
	2013			2012
Net foreign currency exchange gains (losses)	$	(100,195	)	$	33,852
Gain on disposal of financial instruments, net		76,291			113,100
Gain on disposal of investments accounted for using equity method		15,425			—
Valuation loss on financial assets and liabilities at fair value through profit or loss, net		(676	)		(1,394	)
Loss arising from derivatives as designated hedging instruments in fair value hedges, net		(93,145	)		—
Gain arising from adjustments for hedged item attributable to the hedged risk in a designated fair value hedge accounting relationship, net		93,145			—
Impairment losses on financial assets carried at cost		(66,342	)		(176,374	)
Impairment losses on available-for-sale financial assets		—			(26,779	)
Others		(47,414	)		(80,929	)
	$	(122,911	)	$	(138,524	)

4) Finance costs

	Year Ended December 31
	2013		2012
Interest on bank borrowings	$	32,939	$	19,931
Other interest expenses		3,473		2,102
	$	36,412	$	22,033

5) Impairment loss (reversal gain) on financial instruments

	Year Ended December 31
	2013		2012
Notes and accounts receivable	$	239,200	$	(1,473,042	)
Other receivables	$	13,890	$	21,658
Financial assets carried at cost	$	66,342	$	176,374
Available-for-sale financial assets	$	—	$	26,779

6) Impairment loss (reversal gain) on non-financial assets

	Year Ended December 31
	2013			2012
Inventories	$	202,707		$	112,562
Intangible assets	$	18,055		$	4,770
Property, plant and equipment	$	254,210		$	300,989
Investment properties	$	(245,708	)	$	1,261,365

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7) Depreciation and amortization expenses

	Year Ended December 31
	2013		2012
Property, plant and equipment	$	30,937,894	$	31,021,147
Investment properties		16,575		16,359
Intangible assets		1,237,820		1,123,962
Total depreciation and amortization expenses	$	32,192,289	$	32,161,468
Depreciation expenses summarized by functions
Operating costs	$	28,813,449	$	29,089,285
Operating expenses		2,141,020		1,948,221
	$	30,954,469	$	31,037,506
Amortization expenses summarized by functions
Operating costs	$	986,570	$	865,051
Operating expenses		251,250		258,911
	$	1,237,820	$	1,123,962

8) Employee benefit expenses

	Year Ended December 31
	2013		2012
Post-employment benefit
Defined contribution plans	$	374,911	$	310,894
Defined benefit plans		2,880,518		2,822,046
		3,255,429		3,132,940
Share-based payment
Equity-settled share-based payment		69,579		—
Other employee benefit
Salaries		24,942,491		24,332,803
Insurance		2,449,831		2,288,257
Others		14,410,923		14,679,180
		41,803,245		41,300,240
Total employee benefit expenses	$	45,128,253	$	44,433,180
Summary by functions
Operating costs	$	25,038,246	$	24,928,462
Operating expenses		20,090,007		19,504,718
	$	45,128,253	$	44,433,180

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b. Components of others comprehensive income - unrealized gain (loss) on available-for-sale financial assets

	Year Ended December 31
	2013			2012
Gains (losses) arising during the year	$	(549,774	)	$	208,931
Reclassification adjustments
Upon disposal		157,089			(43,596	)
Upon impairment		—			26,779
	$	(392,685	)	$	192,114

30. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

	Year Ended December 31
	2013			2012
Current tax
Current tax expenses recognized for the current period	$	8,138,294		$	7,955,030
Income tax expenses of unappropriated earnings		88,799			9,406
Income tax adjustments on previous years		123,267			27,000
Others		21,149			24,303
		8,371,509			8,015,739
Deferred tax
Deferred tax expenses recognized for the current period		(100,763	)		(3,968	)
Income tax recognized in profit or loss	$	8,270,746		$	8,011,771

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

	Year Ended December 31
	2013			2012
Profit before tax	$	49,110,373		$	49,927,651
Income tax expense calculated at the statutory rate (17%)		8,348,764			8,487,701
Nondeductible revenues and expenses in determining taxable income		(2,411	)		221,214
Imputed income on tax		1,964			1,964
Unrecognized deductible temporary differences		67,260			(176,844	)
Unrecognized loss carryforwards		128,568			107,582
Unrecognized investment credits		—			(3,536	)
Tax-exempt income		(265,147	)		(321,411	)
Income tax on unappropriated earnings		88,799			9,406
Investment credits		(232,735	)		(396,166	)
Effect of different tax rates of group entities operating in other jurisdictions		(10,215	)		(1,391	)
Adjustments of tax expense on previous years		123,267			27,000
Others		22,632			56,252
Income tax expense recognized in profit or loss	$	8,270,746		$	8,011,771

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

As the status of appropriations of earnings in 2014 is uncertain, the potential income tax consequences of 2013 unappropriated earnings cannot be reliably determinable.

b. Income tax recognized in other comprehensive income

	Year Ended December 31
	2013			2012
Unrealized gain (loss) on available-for-sale financial assets	$	6,331		$	—
Actuarial gains and losses on defined benefit plan		(104,898	)		(254,446	)
Total income tax recognized in other comprehensive income	$	(98,567	)	$	(254,446	)

c. Current tax assets and liabilities

	December 31, 2013		December 31, 2012		January 1, 2012
Current tax assets
Tax refund receivable (classified as other current monetary assets)	$	726	$	1,313	$	662
Current tax liabilities
Income tax payable	$	4,144,076	$	3,320,329	$	3,538,742

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2013

	January 1, 2013		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2013
Deferred tax assets
Temporary differences
Defined benefit obligation	$	783,291	$	49,172		$	104,898	$	937,361
Deferred revenue		232,236		(45,110	)		—		187,126
Share of the profit of associates and jointly controlled entities accounted for using equity method		89,396		85,611			—		175,007
Impairment loss on property, plant and equipment		58,671		344			—		59,015
Valuation loss on inventory		44,288		12,265			—		56,553
Estimated warranty liabilities		25,779		(2,015	)		—		23,764
Accrued award credits liabilities		12,032		8,791			—		20,823
Unrealized foreign exchange loss (gain), net		18,573		(7,704	)		—		10,869
Others		16,702		1,066			—		17,768
		1,280,968		102,420			104,898		1,488,286

(Continued)

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	January 1, 2013		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2013
Loss carryforwards	$	31,668	$	(4,546	)	$	—	$	27,122
Investment credits		3,238		(3,238	)		—		—
	$	1,315,874	$	94,636		$	104,898	$	1,515,408
Deferred tax liabilities
Temporary differences
Land value incremental tax	$	94,986	$	—		$	—	$	94,986
Valuation gain on financial instruments, net		180		(123	)		6,331		6,388
Unrealized foreign exchange gain (loss), net		20		(15	)		—		5
Others		3,206		(3,206	)		—		—
	$	98,392	$	(3,344	)	$	6,331	$	101,379

(Concluded)

For the year ended December 31, 2012

	January 1, 2012		Recognized in Profit or Loss			Recognized in Other Comprehensive Income		December 31, 2012
Deferred tax assets
Temporary differences
Defined benefit obligation	$	507,043	$	21,802		$	254,446	$	783,291
Deferred revenue		333,571		(101,335	)		—		232,236
Share of the profit of associates and jointly controlled entities accounted for using equity method		41,150		48,246			—		89,396
Impairment loss on property, plant and equipment		11,546		47,125			—		58,671
Valuation loss on inventory		62,174		(17,886	)		—		44,288
Estimated warranty liabilities		8,138		17,641			—		25,779
Accrued award credits liabilities		13		18,560			—		18,573
Unrealized foreign exchange loss (gain), net		13,880		(1,848	)		—		12,032
Others		13,346		3,356			—		16,702
		990,861		35,661			254,446		1,280,968
Loss carryforwards		73,657		(41,989	)		—		31,668
Investment credits		3,353		(115	)		—		3,238
	$	1,067,871	$	(6,443	)	$	254,446	$	1,315,874
Deferred tax liabilities
Temporary differences
Land value incremental tax	$	94,986	$	—		$	—	$	94,986
Valuation gain on financial instruments, net		413		(233	)		—		180
Unrealized foreign exchange gain (loss), net		13,208		(13,188	)		—		20
Others		2,758		448			—		3,206
	$	111,365	$	(12,973	)	$	—	$	98,392

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e. Deductible temporary differences, unused loss carryforwards and unused investment credits for which no deferred tax assets have been recognized in the consolidated balance sheets

	December 31, 2013		December 31, 2012		January 1, 2012
Loss carryforwards
Expire in 2016	$	38,393	$	38,393	$	—
Expire in 2017		65,142		65,142		13
Expire in 2018		130,053		6		6
Expire in 2019		—		—		—
Expire in 2020		8		8		8
Expire in 2021		23		1,281		1,281
Expire in 2022		3,818		4,060		—
Expire in 2023		21		—		—
	$	237,458	$	108,890	$	1,308
Investment credits
Purchase of machinery and equipment	$	—	$	—	$	202
Research and development		—		—		3,276
Personnel training expenditures		—		—		58
	$	—	$	—	$	3,536
Deductible temporary differences	$	67,260	$	—	$	176,844

f. Information about unused loss carryforwards

As of December 31, 2013, loss carryforwards was comprised of:

Remaining Creditable Amount		Expiry Year
$	38,393	2016
	65,142	2017
	130,053	2018
	6,577	2019
	7,965	2020
	10,490	2021
	3,827	2022
	2,133	2023
$	264,580

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

Undistributed earnings information

All Chunghwa’s earnings generated prior to June 30, 1998 have been appropriated.

Imputation credit account

	December 31, 2013		December 31, 2012		January 1, 2012
Balance of Imputation Credit Account (“ICA”)	$	4,038,480	$	4,553,263	$	4,899,036

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The creditable ratio for distribution of earnings of 2013 and 2012 was 20.48% (expected ratio) and 19.23%, respectively.

Under the Income Tax Law, for distribution of earnings generated after January 1, 1998, the imputation credits allocated to R.O.C. resident shareholders of Chunghwa was calculated based on the creditable ratio as of the date of dividend distribution. The actual imputation credits allocated to shareholders of Chunghwa was based on the balance of the Imputation Credit Accounts (ICA) as of the date of dividend distribution. Therefore, the expected creditable ratio for the 2013 earnings may differ from the actual creditable ratio to be used in allocating imputation credits to the shareholders.

According to legal interpretation No. 10204562810 announced by the Taxation Administration of the Ministry of Finance, when calculating imputation credits in the year of first-time adoption of IFRSs, the cumulative retained earnings include the net decrease in retained earnings arising from first-time adoption of IFRSs.

h. Income tax examinations

Chunghwa’s income tax returns have been examined by the tax authorities through 2011 except for 2008. The following subsidiaries income tax returns have been examined by the tax authorities through 2011: SENAO, CHPT, CHSI, CHIEF, CHI, SHE, LED, CHIYP, YYRP, CEI and CHST. Unigate and SFDs’ income tax returns have been assessed by the tax authorities through 2012.

Chunghwa’s income tax returns for 2008 is still under discussion with the tax authorities; however, based on conservative principle, the related income tax expense of $84,151 thousand was accrued for the year ended December 31 2013.

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

	Year Ended December 31
	2013			2012
Net income used to compute the basic earnings per share
Net income attributable to the parent	$	39,715,693		$	40,779,726
Assumed conversion of all dilutive potential common stock
Employee stock options of subsidiaries		(2,560	)		(4,242	)
Net income used to compute the diluted earnings per share	$	39,713,133		$	40,775,484

Weighted average number of common stock

	(Thousand Shares)
	Year Ended December 31
	2013		2012
Weighted average number of common stock used to compute the basic earnings per share	$	7,757,447	$	7,757,447
Assumed conversion of all dilutive potential common stock
Employee stock bonus		12,459		19,791
Weighted average number of common stock used to compute the diluted earnings per share	$	7,769,906	$	7,777,238

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If Chunghwa may settle the employee bonus in shares or cash at the entity’s option, the entity shall presume that it will be settled in shares and takes those shares into consideration when calculating the weighted average number of outstanding shares used in the calculation of diluted EPS if the shares have a dilutive effect. The dilutive effect of the shares needs to be considered until the stockholders resolve the number of shares to be distributed to employees in their meeting in the following year.

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	$	12.10
						(Original price $16.90	)
2007.10.16		2007.10.31		6,181	$	42.60
						(Original price $44.20	)
2012.05.28		2013.04.29		10,000	$	89.40
						(Original price $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 (i) in the case of issuance of new shares in connection with mergers and in the case of cancellation of outstanding shares in connection with capital reduction, and (ii) except if the exercise price after adjustment exceeds the exercise price before adjustment. The options of all the Plans are valid for six years and the graded vesting schedule 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 $69,579 thousand for the period from May 7 to December 31, 2013.

SENAO modified the plan terms of the outstanding stock options in December 2013 for 2013 Plan. The exercise price was changed from $93 to $89.4 per share. The modification did not cause any incremental fair value.

- 66 -

Information about SENAO’s outstanding stock options for the years ended December 31, 2013 and 2012 were as follows:

	Year Ended December 31, 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
Balance at January 1		—		$	—		1,051		$	42.60
Options granted		10,000			93.00		—			—
Options exercised		—			—		(980	)		42.60
Options forfeited		(128	)		—		(71	)		—
Balance at December 31		9,872			89.40		—			—
Options exercisable at end of the year		—			—		—			—

	Year Ended December 31, 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
Balance at January 1		1,998		$	42.60		280		$	12.10
Options exercised		(947	)		42.60		(275	)		12.10
Options forfeited		—			—		(5	)		—
Balance at December 31		1,051			42.60		—			—
Options exercisable at end of the year		1,051			42.60		—			—

As of December 31, 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$)
$	89.40		9,872		5.35	$	89.40		—	$	—

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As of December 31, 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		1,051		0.92	$	42.60		1,051	$	42.60

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

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 years ended December 31, 2013 and 2012 information about CHPT’s outstanding stock options were as follows:

	Year Ended December 31
	2013					2012
	Number of Options			Weighted- average Exercise Price (NT$)		Number of Options		Weighted- average Exercise Price (NT$)
Employee stock options
Balance at January 1		920		$	10.10		920	$	10.10
Options exercised		(810	)		10.10		—		—
Options expired		(110	)		10.10		—		—
Balance at December 31		—			—		920		10.10
Options exercisable at end of the year		—			—		920		10.10

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The share registration of 810 thousand of employee stock options exercised in 2013 has been completed. As of December 31, 2013, CHPT has no outstanding employee stock options.

As of December 31, 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	$	10.10		920	$	10.10

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 years ended December 31, 2013 and 2012, the Company entered into the following non-cash investing activities:

	Year Ended December 31
	2013			2012
Increase in property, plant and equipment	$	36,726,404		$	33,720,873
Other payables		(344,849	)		(440,595	)
	$	36,381,555		$	33,280,278

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34. OPERATING LEASE ARRANGEMENTS

a. The Company as lessee

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

	December 31, 2013		December 31, 2012		January 1, 2012
Within one year	$	3,061,204	$	2,837,367	$	2,401,085
Longer than one year but within five years		6,389,468		5,842,087		5,749,923
Longer than five years		1,719,931		2,046,776		2,036,699
	$	11,170,603	$	10,726,230	$	10,187,707

b. The Company as lessor

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

	December 31, 2013		December 31, 2012		January 1, 2012
Within one year	$	444,919	$	429,893	$	453,561
Longer than one year but within five years		659,080		684,301		961,897
Longer than five years		165,260		99,635		117,543
	$	1,269,259	$	1,213,829	$	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 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.

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36. FINANCIAL INSTRUMENTS

Categories of Financial Instruments

	December 31, 2013		December 31, 2012		January 1, 2012
Financial assets
Measured at FVTPL
Held for trading	$	337	$	2,994	$	6,094
Designated as at FVTPL		—		—		39,656
Held-to-maturity financial assets		11,765,847		16,046,290		14,696,192
Loans and receivables (Note a)		43,191,616		80,786,421		92,888,079
Available-for-sale financial assets (Note b)		5,494,095		7,996,436		5,316,676
Financial liabilities
Measured at FVTPL
Held for trading		246		1,959		3,987
Measured at amortized cost (Note c)		33,575,539		30,999,443		30,340,977

Note a: The balances included cash and cash equivalents, trade notes and accounts receivable, accounts receivable from related parties and other financial assets which were loans and receivables.

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

Note c: The balances included short-term loans, trade notes and accounts payable, payables to related parties, 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 what disclosed in the following table, the fair values of financial instruments not measured at fair value are considered approximately to their carrying amounts or the fair values cannot not be reliable estimated

	December 31, 2013				December 31, 2012				January 1, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Held-to-maturity investments	$	11,765,847	$	11,807,972	$	16,046,290	$	17,388,425	$	14,696,192	$	14,948,770

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.

- 71 -

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).

December 31, 2013

	Level 1		Level 2		Level 3		Total
Financial assets at FVTPL
Derivative financial assets	$	—	$	337	$	—	$	337
Available-for-sale financial assets
Domestic listed securities and emerging market shares
Equity investments	$	3,046,182	$	—	$	—	$	3,046,182
Foreign listed stocks
Equity investments		24,267		—		—		24,267
	$	3,070,449	$	—	$	—	$	3,070,449
Financial liabilities at FVTPL
Derivative financial liabilities	$	—	$	246	$	—	$	246

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

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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 years ended December 31, 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.

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

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 audited 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.

- 73 -

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

a. Market risk

The Company is exposed to market risks of changes in foreign currency exchange rates and interest rates. The Company uses 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

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:

	December 31, 2013		December 31, 2012		January 1, 2012
Assets
USD	$	4,233,525	$	4,250,798	$	5,323,930
EUR		5,366		19,206		6,566
JPY		1,844		5,986		1,448
SGD		141,832		5,821		4,365
Liabilities
USD		3,612,179		3,560,547		4,051,055
EUR		1,297,617		1,310,892		1,098,504
JPY		11,286		4,838		5,156
SGD		519		21,055		83,416

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

	December 31, 2013		December 31, 2012		January 1, 2012
Assets
USD	$	337	$	2,994	$	6,094
Liabilities
USD		246		1,959		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, forward foreign exchange and currency swaps 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 before tax where the functional currency weakens 5% against the relevant currency.

- 74 -

	Year Ended December 31
	2013			2012
Profit or loss
Monetary assets and liabilities (a)
USD	$	31,067		$	34,513
EUR		(64,613	)		(64,584	)
JPY		(472	)		57
SGD		7,066			(762	)
Derivatives (b)
USD		4,502			103,543

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

b) This is mainly attributable to the forward exchange and currency swaps 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:

	December 31, 2013		December 31, 2012		January 1, 2012
Fair value interest rate risk
Financial assets	$	5,682,095	$	47,127,489	$	62,467,987
Financial liabilities		224,357		115,845		178,840
Cash flow interest rate risk
Financial assets		10,609,392		5,445,262		4,403,225
Financial liabilities		1,730,000		2,054,000		1,656,419

Interest rate sensitivity analysis

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

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s profit before tax for the year ended December 31, 2013 would increase/decrease by $22,223 thousand. This is mainly attributable to the Company’s exposure to floating rates on its financial assets and short-term and long-term loans.

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s profit before tax for the year ended December 31, 2012 would increase/decrease by $8,478 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 before tax for the year ended December 31, 2012 would decrease/increase by $61 thousand, mainly as a result of the changes in the fair value of available-for-sale instruments with fixed rate.

- 75 -

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 $152,712 thousand and $269,801 thousand as a result of the changes in fair value of available-for-sale assets for the years ended December 31, 2013 and 2012, respectively.

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.

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 Rate (%)			Less Than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		Total
December 31, 2013
Non-derivative financial liabilities
Non-interest bearing		—		$	41,957,323	$	—	$	980,363	$	—	$	42,937,686
Floating interest rate instruments		1.18	%		—		20,000		310,000		1,400,000		1,730,000
Fixed interest rate instruments		1.53	%		175,000		35,000		14,357		—		224,357
				$	42,132,323	$	55,000	$	1,304,720	$	1,400,000	$	44,892,043

(Continued)

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	Weighted Average Effective Interest Rate (%)			Less Than 1 Month		1-3 Months		3 Months to 1 Year		1-5 Years		Total
December 31, 2012
Non-derivative financial liabilities
Non-interest bearing		—		$	38,659,896	$	—	$	1,792,651	$	—	$	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
				$	38,712,268	$	—	$	1,860,124	$	2,050,000	$	42,622,392
January 1, 2012
Non-derivative financial liabilities
Non-interest bearing		—		$	39,008,999	$	—	$	2,346,178	$	—	$	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
				$	39,104,839	$	81,047	$	2,946,178	$	1,058,372	$	43,190,436

(Concluded)

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.

	Less Than 1 Month			1-3 Months			3 Months to 1 Year		1-5 Years		Total
December 31, 2013
Gross settled
Forward exchange contracts
Inflow	$	90,183		$	—		$	—	$	—	$	90,183
Outflow		90,092			—			—		—		90,092
	$	91		$	—		$	—	$	—	$	91
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
January 1, 2012
Net settled
Index future contracts	$	277		$	(526	)	$	—	$	—	$	(249	)

(Continued)

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	Less Than 1 Month			1-3 Months		3 Months to 1 Year		1-5 Years		Total
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	)

(Concluded)

2) Financing facilities

	December 31, 2013		December 31, 2012		January 1, 2012
Unsecured bank loan facility
Amount used	$	254,357	$	511,473	$	475,000
Amount unused		8,474,923		8,638,527		8,525,000
	$	8,729,280	$	9,150,000	$	9,000,000
Secured bank loan facility
Amount used	$	1,700,000	$	2,050,000	$	1,651,419
Amount unused		600,000		600,000		—
	$	2,300,000	$	2,650,000	$	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 revenues and 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

(Continued)

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Company	Relationship
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
Huada Digital Corporation (“HDD”)	Jointly controlled entity
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
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. Details of transactions between the Company and related parties are disclosed below:

1) Operating transactions

	Sales
	Year Ended December 31
	2013		2012
Associates	$	366,802	$	416,309
Jointly controlled entities	$	3,981	$	4,196
Others	$	69,319	$	4,318

	Purchases
	Year Ended December 31
	2013		2012
Associates	$	1,485,632	$	1,471,236
Jointly controlled entities	$	571	$	—
Others	$	74,205	$	64,920

2) Non-operating transactions

	Year Ended December 31
	2013		2012
Associates	$	32,623	$	32,090
Others	$	38	$	58

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3) Receivables

	December 31, 2013		December 31, 2012		January 1, 2012
Associates	$	59,875	$	43,822	$	34,064
Jointly controlled entities		1		19		—
Others		9,428		96		—
	$	69,304	$	43,937	$	34,064

4) Payables

	December 31, 2013		December 31, 2012		January 1, 2012
Associates	$	549,012	$	832,957	$	783,688
Others		7,797		4,373		4,459
	$	556,809	$	837,330	$	788,147

5) Customers’ deposits

	December 31, 2013		December 31, 2012		January 1, 2012
Associates	$	994	$	2,695	$	2,005

6) Acquisition of property, plant and equipment

	Year Ended December 31
	2013		2012
Associates	$	1,269,730	$	746,926

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

7) Prepayments

Chunghwa entered into a contract with ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. This lease term is for 15 years which should start from the official operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (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 year ended December 31, 2013 was $409,856 thousand, which consisted of an offsetting credit of the prepayment of $211,211 thousand and an additional accrual of $198,645 thousand. The prepayment was $2,566,722 thousand (classified as prepaid rents - current $204,395 thousand, and prepaid rents - noncurrent $2,362,377 thousand) as of December 31, 2013.

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c. Compensation of key management personnel

The remuneration of directors and members of key management personnel for the years ended December 31, 2013 and 2012 were as follows:

	Year Ended December 31
	2013		2012
Short-term benefits	$	256,818	$	277,209
Post-employment benefits		10,049		9,004
Share-based payment		5,892		—
	$	272,759	$	286,213

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.

	December 31, 2013		December 31, 2012		January 1, 2012
Property, plant and equipment, net	$	2,668,409	$	2,693,863	$	2,736,212
Land held under development and land held for development (included in inventories)		1,998,733		1,998,733		—
Restricted assets (included in other noncurrent assets - others)		10,000		10,000		9,033
	$	4,677,142	$	4,702,596	$	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 $3,649,855 thousand as of December 31, 2013.

b. Acquisitions of telecommunications equipment of $31,266,813 thousand as of December 31, 2013.

c. Unused letters of credit of $202,156 thousand as of December 31, 2013.

d. Contract to print billing, envelopes and marketing gifts of $28,587 thousand as of December 31, 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.

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40. EXCHANGE RATE INFORMATION OF FOREIGN FINANCIAL ASSETS AND LIABILITIES

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

	December 31, 2013
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	6,446		29.805	$	192,118
EUR		96		41.090		3,947
JPY		1,483		0.284		421
SGD		5,912		23.580		139,416
Accounts receivable
USD		135,595		29.805		4,041,407
EUR		35		41.090		1,419
JPY		5,012		0.284		1,423
SGD		102		23.580		2,416
Non-monetary items
Available-for-sale financial assets
USD		200		29.805		5,961
Investments accounted for using equity method
USD		854		29.805		25,563
SGD		22,046		23.580		519,839
Financial liabilities
Monetary items
Accounts payable
USD		121,194		29.805		3,612,179
EUR		31,580		41.090		1,297,617
JPY		39,738		0.284		11,286
SGD		22		23.580		519

	December 31, 2012
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	9,675		29.04	$	280,968
EUR		366		38.49		14,073
JPY		15,647		0.34		5,257
SGD		233		23.76		5,539
Accounts receivable
USD		136,702		29.04		3,969,830
EUR		133		38.49		5,133
JPY		2,170		0.34		729
SGD		12		23.76		282

(Continued)

- 82 -

	December 31, 2012
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Non-monetary items
Available-for-sale financial assets
USD	$	75,517		29.04	$	2,193,024
Investments accounted for using equity method
USD		1,046		29.04		30,376
SGD		22,798		23.76		541,672
Financial liabilities
Monetary items
Accounts payable
USD		122,608		29.04		3,560,547
EUR		34,058		38.49		1,310,892
JPY		14,399		0.34		4,838
SGD		886		23.76		21,055

(Concluded)

	January 1, 2012
	Foreign Currencies (Thousands)		Exchange Rate		New Taiwan Dollars (Thousands)
Financial assets
Monetary items
Cash
USD	$	12,156		30.28	$	368,034
EUR		78		39.18		3,075
JPY		188		0.39		73
SGD		183		23.31		4,261
Accounts receivable
USD		163,696		30.28		4,955,896
EUR		89		39.18		3,491
JPY		3,518		0.39		1,375
SGD		4		23.31		104
Non-monetary items
Available-for-sale financial assets
USD		68,243		30.28		2,066,398
Investments accounted for using equity method
USD		710		30.28		21,668
SGD		19,827		23.31		462,161
Financial liabilities
Monetary items
Accounts payable
USD		133,808		30.28		4,051,055
EUR		28,037		39.18		1,098,504
JPY		13,186		0.39		5,156
SGD		3,579		23.31		83,416

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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 (excluding investments in subsidiaries and associates and jointly controlled entity): Please see Table 2.

d. Marketable securities acquired and disposed of at costs or prices at least $300 million or 20% of the paid-in capital: Please see Table 3.

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

f. Disposal of individual real estate at prices of at least $300 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 (excluding investment in Mainland China): 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.

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Segment Revenues and Operating Results

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

	Domestic Fixed Communications Business		Mobile Communications Business		Internet Business		International Fixed Communications Business		Others			Total
Year ended December 31, 2013
Revenue
From external customers	$	73,502,031	$	110,589,850	$	25,446,792	$	15,749,968	$	2,692,666		$	227,981,307
Intersegment revenues		18,446,818		5,702,284		4,354,398		2,107,016		1,231,254			31,841,770
Segment revenues	$	91,948,849	$	116,292,134	$	29,801,190	$	17,856,984	$	3,923,920
Intersegment elimination													(31,841,770	)
Consolidated revenues												$	227,981,307
Segment income before income tax	$	17,338,606	$	23,676,221	$	9,432,414	$	892,251	$	(2,229,119	)	$	49,110,373
Year ended December 31, 2012
Revenue
From external customers	$	76,132,715	$	100,793,986	$	24,766,553	$	15,318,567	$	4,408,008		$	221,419,829
Intersegment revenues		16,990,920		6,580,870		2,876,919		2,231,235		1,035,325			29,715,269
Segment revenues	$	93,123,635	$	107,374,856	$	27,643,472	$	17,549,802	$	5,443,333
Intersegment elimination													(29,715,269	)
Consolidated revenues												$	221,419,829
Segment income before income tax	$	15,674,584	$	25,827,362	$	8,578,736	$	1,316,427	$	(1,469,458	)	$	49,927,651

Other Segment Information

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

	Domestic Fixed Communications Business		Mobile Communications Business		Internet Business		International Fixed Communications Business		Others		Total
Year ended December 31, 2013
Interest revenue	$	11,817	$	9,265	$	5,611	$	2,185	$	533,930	$	562,808
Interest expense	$	1,432	$	9,308	$	558	$	—	$	25,114	$	36,412
Depreciation and amortization	$	19,005,060	$	8,147,299	$	3,121,848	$	1,548,609	$	369,473	$	32,192,289
Capital expenditure	$	20,361,717	$	9,245,371	$	4,621,260	$	1,559,415	$	593,792	$	36,381,555
Year ended December 31, 2012
Interest revenue	$	6,045	$	11,543	$	2,056	$	3,993	$	718,300	$	741,937
Interest expense	$	—	$	44	$	2,251	$	—	$	19,738	$	22,033
Depreciation and amortization	$	19,230,346	$	8,477,857	$	2,684,680	$	1,433,960	$	334,625	$	32,161,468
Capital expenditure	$	19,550,852	$	7,232,110	$	3,441,150	$	2,379,225	$	676,941	$	33,280,278

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Main Products and Service Revenues from External Customer Information

	Year Ended December 31
	2013		2012
Mobile services revenue	$	76,708,830	$	72,540,443
Local telephone and domestic long distance telephone services revenue		41,278,348		44,628,593
Broadband access and domestic leased line services revenue		24,183,252		24,605,902
Internet services revenue		17,191,163		16,938,046
International network and leased telephone services revenue		12,674,982		12,748,466
Others		55,944,732		49,958,379
	$	227,981,307	$	221,419,829

Geographic Information

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

	Year Ended December 31
	2013		2012
Taiwan, R.O.C.	$	217,986,355	$	213,837,402
Overseas		9,994,952		7,582,427
	$	227,981,307	$	221,419,829

The Company has long-lived assets in U.S., Singapore, Hong Kong, China, Vietnam, and Japan and except for $3,309,999 thousand and $1,415,148 thousand at December 31, 2013 and 2012, respectively, in the aforementioned areas, the other long-lived assets are located in Taiwan, ROC.

Major Customers

For the years ended December 31, 2013 and 2012, the Company did not have any single customer whose revenue exceeded 10% of the total revenue.

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

a. Basis of the preparation of financial information under 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 year ended December 31, 2013.

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 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.

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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 of “explanation for the adjustments of IFRSs transition”.

c. Impacts after transition to IFRSs

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 January 1, 2012

			Adjustments
ROC GAAP			Differences in Recognitions and			Differences in			IFRSs
Items	Amount		Measurements			Presentations			Amount		Items	Notes
Current assets	$	106,538,985	($	349,790	)	($	804,720	)	$	105,384,475	Current assets	4), 9), 13)
Investments accounted for using equity method		2,563,636		(7,619	)		—			2,556,017	Investments accounted for using equity method	10)
Financial assets carried at cost		2,760,225		—			(185,195	)		2,575,030	Financial assets carried at cost	13)
Available-for-sale financial assets		57,739		—			185,195			242,934	Available-for-sale financial assets	13)
Held-to-maturity financial assets		13,494,891		—			—			13,494,891	Held-to-maturity financial assets
Other monetary assets		1,000,000		—			(1,000,000	)		—		13)
Property, plant and equipment		302,612,014		—			(7,580,183	)		295,031,831	Property, plant and equipment	1), 2), 13)
				—			9,060,081			9,060,081	Investment properties	1), 2)
Intangible assets		6,330,253		(64,553	)		12,475			6,278,175	Intangible assets	13)
Other assets		7,562,539		581,747			328,726			8,473,012	Other noncurrent assets	1), 2), 4), 5), 6), 13)
Total	$	442,920,282	$	159,785		$	16,379		$	443,096,446	Total
Current liabilities	$	59,280,808	$	567,407		$	(568,688	)	$	59,279,527	Current liabilities	7), 8), 9)
Noncurrent liabilities		10,501,840		2,783,363			680,053			13,965,256	Noncurrent liabilities	4), 6), 7), 8)
Reserve for land value incremental tax		94,986		—			(94,986	)		—		4)
Total liabilities		69,877,634		3,350,770			16,379			73,244,783	Total liabilities
Common stock		77,574,465		—			—			77,574,465	Common stock
Additional paid-in capital		169,536,289		20,621,248			—			190,157,537	Additional paid-in capital	6), 12)
Retained earnings		115,866,869		(18,052,348	)		—			97,814,521	Retained earnings	3), 5), 6), 7), 8), 9) 10), 11), 12)
Other adjustments		5,753,403		(5,724,647	)		—			28,756	Other adjustments	3), 6), 10)
Total equity attributable to stockholders of the parent		368,731,026		(3,155,747	)		—			365,575,279	Total equity attributable to shareholders of the parent
Minority interests in subsidiaries		4,311,622		(35,238	)		—			4,276,384	Noncontrolling interests	5), 6), 10), 11)
Total stockholders’ equity		373,042,648		(3,190,985	)		—			369,851,663	Total shareholders’ equity
Total	$	442,920,282	$	159,785		$	16,379		$	443,096,446	Total

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2) Reconciliation of consolidated balance sheet as of December 31, 2012

			Adjustments
ROC GAAP			Differences in Recognitions and			Differences in			IFRSs
Items	Amount		Measurements			Presentations			Amount		Items	Notes
Current assets	$	100,995,487	$	—		$	(1,049,264	)	$	99,946,223	Current assets	4), 13)
Investments accounted for using equity method		2,249,955		(9,663	)		—			2,240,292	Investments accounted for using equity method	10), 12)
Financial assets carried at cost		2,550,211		—			(82,350	)		2,467,861	Financial assets carried at cost	13)
Available-for-sale financial assets		3,195,965		—			82,350			3,278,315	Available-for-sale financial assets	13)
Held-to-maturity financial assets		11,796,144		—			—			11,796,144	Held-to-maturity financial assets
Other monetary assets		1,000,000		—			(1,000,000	)		—		13)
Property, plant and equipment		303,650,145		—			(6,307,796	)		297,342,349	Property, plant and equipment	1), 2), 13)
				—			7,788,898			7,788,898	Investment properties	1), 2)
Intangible assets		5,812,709		(64,553	)		33,647			5,781,803	Intangible assets	13)
Other assets		8,196,205		732,491			537,942			9,466,638	Other noncurrent assets	1), 2), 4), 5), 6), 13)
Total	$	439,446,821	$	658,275		$	3,427		$	440,108,523	Total
Current liabilities	$	56,783,972	$	64,503		$	(941,086	)	$	55,907,389	Current liabilities	7), 8)
Noncurrent liabilities		12,657,649		3,175,450			1,039,499			16,872,598	Noncurrent liabilities	4), 5), 6), 7), 8)
Reserve for land value incremental tax		94,986		—			(94,986	)		—		4)
Total liabilities		69,536,607		3,239,953			3,427			72,779,987	Total liabilities
Common stock	$	77,574,465	$	—		$	—		$	77,574,465	Common stock
Additional paid-in capital		169,544,058		20,618,372			—			190,162,430	Additional paid-in capital	6), 11), 12)
Retained earnings		113,408,979		(18,420,248	)		—			94,988,731	Retained earnings	3), 5), 6), 7), 8), 10), 11), 12)
Other adjustments		4,914,892		(4,753,831	)		—			161,061	Other adjustments	3), 6), 10)
Total equity attributable to stockholders of the parent		365,442,394		(2,555,707	)		—			362,886,687	Total equity attributable to shareholders of the parent
Minority interests in subsidiaries		4,467,820		(25,971	)		—			4,441,849	Noncontrolling interests	5), 6), 10), 11)
Total stockholders’ equity		369,910,214		(2,581,678	)		—			367,328,536	Total shareholders’ equity
Total	$	439,446,821	$	658,275		$	3,427		$	440,108,523	Total

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3) Reconciliation of consolidated statement of comprehensive income for the year ended December 31, 2012

				Adjustments
ROC GAAP				Differences in Recognitions and			Differences in			IFRSs
Items	Amount			Measurements			Presentations			Amount			Items	Notes
Net revenues	$	220,130,888		$	1,288,941		$	—		$	221,419,829		Revenues	7), 8), 9)
Operating costs		(141,177,220	)		(334,456	)		(1,132	)		(141,512,808	)	Operating costs	6), 7), 9), 14)
Gross profits		78,953,668			954,485			(1,132	)		79,907,021		Gross profit
Operating expenses		(30,040,263	)		39,568			35,195			(29,965,500	)	Operating expenses	6), 7), 9), 11), 14)
		—			—			(1,569,217	)		(1,569,217	)	Other income and expense	14)
Income from operations		48,913,405			994,053			(1,535,154	)		48,372,304		Income from operations
Non-operating income and losses		(17,242	)		3,221			1,569,368			1,555,347		Non-operating income and expenses	3), 10), 12), 14)
Income before income tax		48,896,163			997,274			34,214			49,927,651		Income before income tax
Income tax expense		(7,858,421	)		(119,136	)		(34,214	)		(8,011,771	)	Income tax expenses	5), 14)
Consolidated net income	$	41,037,742		$	878,138		$	—			41,915,880		Net income
											(57,959	)	Exchange differences arising from the translation of the foreign operations
											192,114		Unrealized gain on available-for-sale financial assets
											(1,496,742	)	Actuarial loss arising from defined benefit plan	6)
											254,446		Income tax relating to components of other comprehensive income	5)
											(26,373	)	Share of other comprehensive income of associates and jointly controlled entities accounted for using equity method
											(1,134,514	)	Total other comprehensive income
										$	40,781,366		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 - idle assets; after transitions to IFRSs, owned-property for either rental revenue or capital appreciation should be classified as investment properties.

On January 1, 2012, the assets that met definitions of investment properties under IAS 40 “Investment Property” were reclassified from property, plant and equipment of $8,596,664 thousand, and other assets - idle assets of $463,417 thousand, to investment properties. The total amount of reclassification was $9,060,081 thousand.

On December 31, 2012, the assets that met definitions of investment properties under IAS 40 “Investment Property” were reclassified from property, plant and equipment of $7,329,796 thousand, and other assets - idle assets of $459,102 thousand, to investment properties. The total amount of reclassification was $7,788,898 thousand.

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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 $400,453 thousand and $389,521 thousand as of January 1 and December 31, 2012, respectively. 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 $436,619 thousand and $415,479 thousand as of January 1 and December 31, 2012, respectively.

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 $350 thousand, due to the partial disposal on revalued land; and decreased by $2,054 thousand due to impairment loss for the year ended December 31, 2012. As a result, the revaluation increment was $5,760,349 thousand as of December 31, 2012. Gain on disposal decreased by $350 thousand, and impairment loss increased by $2,054 thousand for the year ended December 31, 2012.

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 Regulations 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 were $115,464 thousand and $142,929 thousand as of January 1 and December 31, 2012, respectively. 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 $16,379 thousand and $3,427 thousand, respectively; reserve for land value incremental tax of $94,986 thousand was also reclassified as deferred income tax liabilities - noncurrent under IFRSs.

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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 $596,271 thousand and $731,560 thousand as of January 1 and December 31, 2012, respectively (including the tax adjustments arising from the actuarial gain on defined benefit plan of $254,446 thousand); retained earnings increased by $587,418 thousand and $719,807 thousand as of January 1 and December 31, 2012, respectively; noncontrolling interests increased by $8,853 thousand and $11,774 thousand as of January 1 and December 31, 2012, respectively. Deferred income tax liabilities decreased by $21 thousand as of December 31, 2012. For the year ended December 31, 2012, due to the adjustment of deferred income tax assets and deferred income tax liabilities (decreased by $119,157 thousand in deferred tax assets and decreased by $21 thousand in deferred income tax liabilities), income tax expense increased by $119,136 thousand and other comprehensive income-income tax relating to components of other comprehensive income increased by $254,446 thousand, respectively.

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, 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. However, under 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 $1,549,205 thousand and $2,078,862 thousand as of January 1 and December 31, 2012, respectively; other noncurrent assets decreased by $14,524 thousand as of January 1, 2012 and increased by $931 thousand as of December 31, 2012, respectively; retained earnings decreased by $1,512,039 thousand and $2,990,802 thousand as of January 1 and December 31, 2012, respectively; unrecognized net losses of pension decreased by $215 thousand and $957,202 thousand as of January 1 and December 31, 2012, respectively; noncontrolling interests decreased by $51,905 thousand and $44,331 thousand as of January 1 and December 31, 2012, respectively. For the year ended December 31, 2012, pension cost was decreased by $793 thousand which increased $169 thousand in operating costs and decreased $962 thousand in operating expenses and loss of other comprehensive income-actuarial benefits plan was of $1,496,742 thousand.

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.

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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.

Accrued award credits liabilities (classified as other current liabilities) decreased by $70,036 thousand and $120,863 thousand as of January 1 and December 31, 2012, respectively; deferred award credits revenue (classified as noncurrent liabilities - deferred revenue) increased by $24,242 thousand and $72,059 thousand as of January 1 and December 31, 2012, respectively; retained earnings increased by $45,794 thousand and $48,804 thousand as of January 1 and December 31, 2012, respectively. The revenue decreased by $47,817 thousand, the marketing expenses decreased by $80,105 thousand and the operating cost increased by $29,278 thousand for the year ended December 31, 2012, respectively.

8) Recognition of revenue from providing fixed line connection service

Prior to 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, the Company recorded revenue from providing fixed line connection service upon the receipt of connection fees. 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 $1,925,816 thousand and $1,286,108 thousand as of January 1 and December 31, 2012, respectively, by decreasing retained earnings and increasing the deferred revenue from providing fixed line connection service ($639,708 thousand was classified as other current liabilities; $1,286,108 thousand was classified as noncurrent liabilities - deferred revenue as of January 1, 2012. $185,366 thousand was classified as other current liabilities; $1,100,742 thousand was classified as noncurrent liabilities - deferred revenue as of December 31, 2012). For the year ended December 31, 2012, revenue from providing fixed line connection service increased by $639,708 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.

Inventories decreased by $392,040 thousand as of January 1, 2012; deferred marketing expenses (classified as other current assets) increased by $42,250 thousand as of January 1, 2012; accrued expenses (classified as other current liabilities - accrued expense) decreased by $2,265 thousand as of January 1, 2012; retained earnings decreased by $347,525 thousand as of January 1, 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 year ended December 31, 2012.

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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 and the related effects of tax adjustment, etc. As a result, long-term investments decreased by $7,619 thousand and $9,394 thousand as of January 1 and December 31, 2012, respectively; retained earnings decreased by $40,028 thousand and $52,057 thousand as of January 1 and December 31, 2012, respectively; unrecognized net loss of pension decreased by $37,891 thousand and $49,316 thousand as of January 1 and December 31, 2012, respectively; noncontrolling interests decreased by $5,482 thousand and $6,653 thousand as of January 1 and December 31, 2012, respectively. Share of the profit of associates and jointly controlled entities that accounted for using equity method increased by $4,389 thousand and share of other comprehensive income of associates and joint ventures accounted for using equity method decreased by $17,589 thousand for the year ended December 31, 2012.

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.

Retained earnings decreased by $1,657 thousand and $229 thousand as of January 1 and December 31, 2012, respectively. Noncontrolling interests increased by $1,657 thousand and 1,600 thousand as of January 1 and December 31, 2012, respectively. Additional paid-in capital reported by equity-method investees decreased by $1,371 as of December 31, 2012. The compensation cost under general and administrative expense decreased by $3,017 thousand for the year ended December 31, 2012.

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 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 $26,830 thousand to retained earnings as of January 1, 2012. The Company reclassified such paid-in capital of $28,335 thousand to retained earnings, retained earnings increased by $28,066 thousand and long-term investment decreased by $269 thousand as of December 31, 2012. Gain on disposal of financial instruments increased by $1,236 thousand for the year ended December 31, 2012.

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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 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 $40,982,360 thousand and $22,263,840 thousand as of January 1 and December 31, 2012, respectively. In order to conform to the presentation of the financial statements under 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 IFRSs. Deferred expenses relating to prepaid expenses were reclassified of nil and $565 thousand as of January 1 and December 31, 2012, respectively. Deferred expenses relating to decoration construction projects and advertisement signboard, etc. were reclassified as property, plant and equipment of $157,529 thousand and $215,646 thousand as of January 1 and December 31, 2012. Deferred expenses relating to computer software were reclassified as intangible assets of $12,475 thousand and $33,647 thousand as of January 1 and December 31, 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 IFRSs. Assets held for disposal were reclassified as property, plant and equipment of $21,880 and $1,354 thousand as of January 1 and December 31, 2012, respectively.

e) Reclassification of financial assets carried at cost

Based on the Regulations 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, 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 $185,195 thousand and $82,350 thousand as of January 1 and December 31, 2012, respectively.

- 94 -

14) 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.

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.

- 95 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

YEAR ENDED DECEMBER 31, 2013

(In Thousands of New Taiwan Dollars)

No.	Endorsement/ Guarantee Provider	Guaranteed Party		Limits on Endorsement/ Guarantee Amount Provided to Each Guaranteed Party		Maximum Balance for the Period		Ending Balance		Actual Borrowing Amount		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	$	3,602,898	$	1,350,000	$	1,341,225	$	42,585	$	—		0.37	$	14,411,593	Notes 3 and 4
25	Yao Yong Real Property Co., Ltd.	Light Era Development Co., Ltd.	d		3,674,330		3,300,000		3,300,000		1,650,000		3,300,000		0.92		3,674,330	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 limits on endorsement or guarantee amount provided to each guaranteed party is up to 1% of the total stockholders’ equity of the latest financial statements of Chunghwa.

Note 4: The total amount of endorsement or guarantee that the Company is allowed to provide shall not exceed 4% of the total stockholders’ equity of the latest financial statements of Chunghwa.

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.

- 96 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

DECEMBER 31, 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	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
0	Chunghwa Telecom Co., Ltd.	Stocks
		Taipei Financial Center Corp.		—	Financial assets carried at cost - noncurrent		172,927	$	1,789,530		12	$	—	—
		Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)		—	Financial assets carried at cost - noncurrent		16,200		162,000		17		—	—
		Innovation Works Development Fund, L.P.		—	Financial assets carried at cost - noncurrent		—		168,605		4		—	—
		Global Mobile Corp.		—	Financial assets carried at cost - noncurrent		7,617		77,018		3		—	—
		iD Branding Ventures		—	Financial assets carried at cost - noncurrent		4,275		42,750		8		—	—
		Innovation Works Limited		—	Financial assets carried at cost - noncurrent		1,000		31,390		2		—	—
		CQi Energy Infocom Inc.		—	Financial assets carried at cost - noncurrent		2,000		—		18		—	—
		RPTI Intergroup International Ltd.		—	Financial assets carried at cost - noncurrent		4,765		—		10		—	—
		Essence Technology Solution, Inc.		—	Financial assets carried at cost - noncurrent		200		—		7		—	—
		Stocks
		China Airlines Ltd.		—	Available-for-sale financial assets - noncurrent		263,622		2,886,662		5		2,886,662	Note 2

(Continued)

- 97 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
		Bond
		NAN YA Company 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		49,996		—		50,103	Note 3
		NAN YA Company 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		150,167		—		150,308	Note 3
		NAN YA Company 1st Unsecured Corporate Bond-s Issue in 2009		—	Held-to-maturity financial assets		—		100,120		—		100,205	Note 3
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		25,046		—		25,198	Note 3
		NAN YA Company 3rd Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		100,079		—		100,792	Note 3
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		150,474		—		151,334	Note 3
		NAN YA Company 4th Unsecured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		99,950		—		100,889	Note 3
		NAN YA Company 2nd Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		50,176		—		50,408	Note 3
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		100,141		—		100,474	Note 3
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		300,840		—		301,424	Note 3

(Continued)

- 98 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011		—	Held-to-maturity financial assets		—	$	299,834		—	$	301,143	Note 3
		TSMC 1st Unsecured Corporate Bond-A Issue in 2011		—	Held-to-maturity financial assets		—		100,535		—		100,381	Note 3
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		200,236		—		200,829	Note 3
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		99,941		—		100,414	Note 3
		TSMC 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		199,881		—		200,829	Note 3
		TSMC 2nd Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		199,857		—		200,218	Note 3
		TSMC 3rd Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		199,852		—		199,273	Note 3
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009		—	Held-to-maturity financial assets		—		87,776		—		88,246	Note 3
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009		—	Held-to-maturity financial assets		—		50,139		—		50,426	Note 3
		Hon Hai Precision Industry Co., Ltd. First Debenture Issuing of 2009		—	Held-to-maturity financial assets		—		50,166		—		50,426	Note 3
		FCFC 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		125,224		—		126,088	Note 3
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		200,355		—		201,102	Note 3

(Continued)

- 99 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
		FCFC 2nd Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		100,124		—		100,552	Note 3
		FCFC 1st Unsecured Corporate Bonds Issue in 2011		—	Held-to-maturity financial assets		—		299,708		—		301,242	Note 3
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		100,008		—		100,084	Note 3
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		150,065		—		150,126	Note 3
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		100,031		—		100,084	Note 3
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2010		—	Held-to-maturity financial assets		—		299,868		—		302,112	Note 3
		Formosa Petrochemical Corporation 1st Unsecured Corporate Bonds Issue in 2011		—	Held-to-maturity financial assets		—		149,864		—		150,842	Note 3
		Formosa Petrochemical Corporation 3rd Unsecured Corporate Bonds Issue in 2011		—	Held-to-maturity financial assets		—		199,792		—		201,216	Note 3
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-C Issue in 2006		—	Held-to-maturity financial assets		—		204,956		—		205,434	Note 3
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-C Issue in 2006		—	Held-to-maturity financial assets		—		102,430		—		102,716	Note 3
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-A Issue in 2009		—	Held-to-maturity financial assets		—		200,200		—		201,458	Note 3

(Continued)

- 100 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
		Chinese Petroleum Corporation 2nd Unsecured Corporate Bonds-A Issue in 2012		—	Held-to-maturity financial assets		—	$	199,853		—	$	200,573	Note 3
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008		—	Held-to-maturity financial assets		—		304,653		—		306,646	Note 3
		China Steel Corporation 2nd Unsecured Corporate Bonds-B Issue in 2008		—	Held-to-maturity financial assets		—		202,640		—		204,432	Note 3
		China Steel Corporation 1st Unsecured Corporate Bonds-A Issue in 2011		—	Held-to-maturity financial assets		—		301,417		—		300,756	Note 3
		China Steel Corporation 1st Unsecured Corporate Bonds-A Issue in 2011		—	Held-to-maturity financial assets		—		100,246		—		100,252	Note 3
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005		—	Held-to-maturity financial assets		—		201,782		—		201,782	Note 3
		Taiwan Power Co. 2nd Unsecured Bond-EB Issue in 2005		—	Held-to-maturity financial assets		—		302,925		—		302,672	Note 3
		Taiwan Power Co. 2nd Unsecured Corporate Bond-C Issue in 2006		—	Held-to-maturity financial assets		—		205,931		—		207,425	Note 3
		Taiwan Power Co. 3rd Unsecured Corporate Bond-C Issue in 2006		—	Held-to-maturity financial assets		—		206,785		—		205,952	Note 3
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		20,039		—		20,064	Note 3
		Taiwan Power Co. 1st Secured Corporate Bond-A Issue in 2009		—	Held-to-maturity financial assets		—		100,085		—		100,322	Note 3

(Continued)

- 101 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
		Taiwan Power Co. 2nd Secured Corporate Bond-B Issue in 2009		—	Held-to-maturity financial assets		—		50,048		—		50,303	Note 3
		Taiwan Power Company 4th Secured Corporate Bond-B Issue in 2009		—	Held-to-maturity financial assets		—		174,830		—		176,066	Note 3
		Taiwan Power Company 5th Secured Corporate Bond-B Issue in 2009		—	Held-to-maturity financial assets		—		50,108		—		50,297	Note 3
		Taiwan Power Company 2nd Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		100,070		—		100,733	Note 3
		Taiwan Power Co 3rd Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		200,495		—		201,742	Note 3
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		99,975		—		100,916	Note 3
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		199,951		—		201,834	Note 3
		Taiwan Power Co. 4th Secured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		300,229		—		302,750	Note 3
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		39,974		—		39,733	Note 3
		Taiwan Power Co. 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		99,934		—		99,332	Note 3
		Taiwan Power Co. 1st Unsecured Corporate Bond-2A Issue in 2012		—	Held-to-maturity financial assets		—		99,931		—		99,960	Note 3
		KGI Securities Co., Ltd. 1st Unsecured Corporate Bonds in 2012		—	Held-to-maturity financial assets		—		300,000		—		300,845	Note 3
		MLPC 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—		49,992		—		50,144	Note 3

(Continued)

- 102 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
		MLPC 1st Unsecured Corporate Bonds Issue in 2009		—	Held-to-maturity financial assets		—	$	49,992		—	$	50,144	Note 3
		MLPC 1st Unsecured Corporate Bond Issue in 2009		—	Held-to-maturity financial assets		—		150,328		—		150,433	Note 3
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2010		—	Held-to-maturity financial assets		—		201,030		—		201,539	Note 3
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		100,061		—		100,059	Note 3
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		150,045		—		150,088	Note 3
		China Development Holding Corporation 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		100,061		—		100,059	Note 3
		Yuanta FHC 1st Unsecured Corporate Bonds-A Issue in 2011		—	Held-to-maturity financial assets		—		300,000		—		300,810	Note 3
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011		—	Held-to-maturity financial assets		—		100,392		—		101,941	Note 3
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond issued in 2011		—	Held-to-maturity financial assets		—		301,260		—		305,823	Note 3
		Fubon Financial Holding Co., Ltd. 1st Unsecured Corporate Bond-A Issue in 2012		—	Held-to-maturity financial assets		—		300,000		—		299,836	Note 3

(Continued)

- 103 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013										Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)			Percentage of Ownership		Market Value or Net Asset Value
		TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010		—	Held-to-maturity financial assets		—		200,676			—		201,265		Note 3
		TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010		—	Held-to-maturity financial assets		—		100,269			—		100,633		Note 3
		TaipeiFubon Bank 5th Financial Debentures-A Issue in 2010		—	Held-to-maturity financial assets		—		301,425			—		301,898		Note 3
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-C Issue in 2011		—	Held-to-maturity financial assets		—		200,584			—		201,900		Note 3
		HSBC Bank (Taiwan) Limited 1st Financial Debenture-D Issue in 2011		—	Held-to-maturity financial assets		—		300,000			—		300,000		Note 3
		Eximbank 19-2nd Unsecured Financial Debentures		—	Held-to-maturity financial assets		—		150,000			—		149,997		Note 3
1	Senao International Co.	Stocks
		N.T.U. Innovation Incubation Corporation		—	Financial assets carried at cost - noncurrent		1,200		12,000			9		—		—
2	CHIEF Telecom Inc.	Stocks
		3 Link Information Service Co., Ltd.		—	Financial assets carried at cost - noncurrent		374		3,450			10		—		—
		21 Vianet Group. Inc.		—	Available-for-sale financial assets		35		24,267			—		24,267		Note 2
								(US$	814	)			(US$	814	)

(Continued)

- 104 -

No.	Held Company Name	Marketable Securities Type and Name	Relationship with the Company		Financial Statement Account	December 31, 2013								Note
						Shares (Thousands/ Thousand Units)		Carrying Value (Note 1)		Percentage of Ownership		Market Value or Net Asset Value
14	Chunghwa Investment Co.	Stocks
		Tatung Technology Inc.		—	Financial assets carried at cost - noncurrent		4,571	$	73,964		11	$	—		—
		Digimax Inc.		—	Financial assets carried at cost - noncurrent		1,203		2,641		3		—		—
		iD Branding Ventures		—	Financial assets carried at cost - noncurrent		1,875		14,250		3		—		—
		Uni Display Inc.		—	Financial assets carried at cost - noncurrent		2,445		4,867		1		—		—
		A2 peak Power Co., Ltd.		—	Financial assets carried at cost - noncurrent		990		—		3		—		—
		VisEra Technologies Company Ltd.		—	Financial assets carried at cost - noncurrent		649		29,371		—		—		—
		Ultra Fine Optical Technology Co., Ltd.		—	Financial assets carried at cost - noncurrent		1,800		4,070		8		—		—
		Alder Optomechanical Corp.		—	Financial assets carried at cost - noncurrent		666		7,326		1		—		—
		Aide Energy (Cayman) Holding Co., Ltd.		—	Financial assets carried at cost - noncurrent		800		630		1		—		—
		Mediapro Technology Ltd.		—	Financial assets carried at cost - noncurrent		55		230		—		—		—
		PChome Store Inc.		—	Available-for-sale financial assets - noncurrent		1,350		16,200		2		16,200		—
		Procrystal Technology Co., Ltd.		—	Available-for-sale financial assets - noncurrent		405		98,351		2		98,351		Note 2
		Tons Lightology Inc.		—	Available-for-sale financial assets - noncurrent		1,242		44,969		3		44,969		Note 2

Note 1: Showing at carrying amounts with adjustments for fair value and deducted accumulated amortization; otherwise, showing at their original carrying amounts on amortized cost deducted the accumulated amortization.

Note 2: Market value was based on the closing price of December 31, 2013.

Note 3: Market value of was based on the average trading price on December 31, 2013.

(Concluded)

- 105 -

TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

YEAR ENDED DECEMBER 31, 2013

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

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 (Thousands/ Thousand 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.	Stock
		Donghwa Telecom Co., Ltd.	Investments accounted for using equity method	—	Subsidiary		305,090	$	1,168,032 (Note 3)		97,500	$	371,935		—	$	—	$	—	$	—		402,590	$	1,540,147 (Notes 3 and 4)
		Beneficiary certificates (mutual fund)					1,071		456,118		597		295,890		1,668		797,099		752,008		45,091		—		—
		PIMCO GIS plc Global Investment Grade Credit Fund Class H Institutional (Acc)	Available-for-sale financial assets	—	—		770		534,453		—		—		770		579,586		534,453		45,133		—		—
		PIMCO GIS plc Total Return Bond Class H Institutional (Acc)	Available-for-sale financial assets	—	—		671		230,472		318		116,280		989		372,472		346,752		25,720		—		—
		Janus Flexible Income Bond Fund	Available-for-sale financial assets	—	—		984		347,452		1,443		618,189		2,427		984,598		965,641		18,957		—		—
		PIMCO GIS Diversified Income Fund Class H Institutional (Acc)	Available-for-sale financial assets	—	—		778		297,283		—		—		778		314,074		297,283		16,791		—		—

(Continued)

- 106 -

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)
		Fidelity Funds - US Dollar Bond Fund (Y-ACC-USD)	Available-for-sale financial assets	—	—		433		149,190			426		145,298			859		303,961			294,488		9,473		—
		Eastpring Investments - US Corporation Bond Fund	Available-for-sale financial assets	—	—
		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)
		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)
		Chinese Petroleum Corporation 1st Unsecured Corporate Bonds-B Issue in 2006	Held-to-maturity financial assets	—	—		—		350,000 (Note 2)			—		—			—		350,000 (Note 2)			350,000 (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	)		25,700	(US$	761,623 25,700	)		—		—			—		—		59,175	(US$	1,750,220 59,175 (Note 4)	)

(Continued)

- 107 -

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)
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	)		25,680	(US$	761,035 25,680	)		—		—		—		—		58,440	(US$	1,727,221 58,440 (Note 4)	)
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 4)	)
		Senao International Trading (Shanghai) Co., Ltd.	Investments accounted for using equity method	—	Subsidiary		—	(US$	297,726 10,000	)		—	(US$	355,329 12,000	)		—		—		—		—		—	(US$	653,055 22,000) (Note 4)

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 amount was eliminated upon consolidation.

(Concluded)

- 108 -

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

YEAR ENDED DECEMBER 31, 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	Sales	$	361,000 (Note 5)		—	30 days	$	—		—	$	35,389 (Note 5)			—
				Purchase		12,394,511 (Note 5)		11	30-90 days						(1,402,499 (Note 5)	)		(9	)
		Chunghwa System Integration Co., Ltd.	Subsidiary	Purchase		885,385 (Note 5)		1	30 days		—		—		(697,538 (Note 5)	)		—
		ST-2 Satellite Ventures Pte. Ltd.	Equity-method investee	Purchase		409,856		—	30 days		—		—		(50,065	)		—
		Chunghwa Telecom Global, Inc.	Subsidiary	Purchase		369,340 (Note 5)		—	90 days		—		—		(79,043 (Note 5)	)		—
		Taiwan International Standard Electronics Co., Ltd.	Equity-method investee	Purchase		541,058		—	30-90 days		—		—		(334,402	)		(2	)
		CHIEF Telecom Inc.	Subsidiary	Purchase		254,306 (Note 5)		—	60 days		—		—		33,787 (Note 5)			—
				Sales		317,519 (Note 5)		—	30 days		—		—		(44,469 (Note 5)	)		—
		Donghwa Telecom Co., Ltd.	Subsidiary	Sales		143,465 (Note 5)		—	30 days		—		—		41,374 (Note 5)			—
		Chunghwa Sochamp Technology Inc.	Subsidiary	Purchase		161,114 (Note 5)		—	30 days		—		—		(151,660 (Note 5)	)		(1	)
		So-net Entertainment Taiwan	Equity-method investee	Sales		278,863		—	60 days		—		—		19,683			—
		Honghwa Human Resources Co., Ltd.	Subsidiary	Purchase		562,320 (Note 5)		—	30 days		—		—		(195,319 (Note 5)	)		(1	)

(Continued)

- 109 -

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
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		12,416,976 (Note 5)			29	30-90 days		—		—		1,430,026 (Note 5)			67
				Purchase		213,131 (Note 5)			1	30 days		—		—		(27,499 (Note 5)	)		(1	)
		Alliance Digital Tech Co., Ltd.	Equity-method investee	Purchase		317,662			1	30 days		—		—		(30,468	)		(2	)
2	CHIEF Telcom Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		317,356 (Note 5)			22	30 days		—		—		44,469 (Note 5)			32
				Purchase		254,306 (Note 5)			23	60 days		—		—		(33,787 (Note 5)	)		(39	)
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales	$	2,448,695 (Note 5	)		81	30 days	$	—		—	$	697,538 (Note 5	)		96
5	Chunghwa Telecom Global, Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		396,340 (Note 5	)		2	90 days		—		—		79,043 (Note 5	)		66
6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Purchase		143,465 (Note 5	)		—	30 days		—		—		(41,374 (Note 5	)  )		(70	)
33	Chunghwa Sochamp Technology Inc.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		204,476 (Note 5	)		—	30 days		—		—		161,377 (Note 5	)		86
36	Honghwa Human Resources Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company	Sales		622,358 (Note 5	)		—	30 days		—		—		195,319 (Note 5	)		100

Note 1: Purchase included acquisition of services cost.

Note 2: The differences were because Chunghwa Telecom Co., Ltd. and subsidiaries classified the amount as inventories, property, plant and equipment, intangible assets, and operating expenses.

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

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

Note 5: The amount was eliminated upon consolidation.

(Concluded)

- 110 -

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

DECEMBER 31, 2013

(Amounts in Thousands of New Taiwan Dollars)

No.	Company Name	Related Party	Nature of Relationship	Ending Balance		Turnover Rate (Note 1)		Overdue				Amounts Received in Subsequent Period		Allowance for Bad Debts
								Amounts		Action Taken
0	Chunghwa Telecom Co., Ltd.	Senao International Co., Ltd.	Subsidiary	$	488,533 (Note 2)		14.68	$	—		—	$	488,515	$	—
1	Senao International Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		2,042,565 (Note 2)		9.01		—		—		1,377,853		—
3	Chunghwa System Integration Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		697,538 (Note 2)		3.08		—		—		570,082		—
4	Chunghwa International Yellow Pages Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		110,581 (Note 2)		7.77		—		—		92,178		—
33	Chunghwa Sochamp Technology Inc.	Chunghwa Telecom Co., Ltd.	Parent company		161,377 (Note 2)		3.45		—		—		73,729		—
36	Honghwa Human Resources Co., Ltd.	Chunghwa Telecom Co., Ltd.	Parent company		195,319 (Note 2)		5.28		—		—		137,297		—

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.

- 111 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

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

YEAR ENDED DECEMBER 31, 2013

(Amounts in Thousands of New Taiwan Dollars)

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of December 31, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 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	$	1,770,346	$	1,429,968		$	392,185		Subsidiary (Note 5)
		Light Era Development Co., Ltd.	Taiwan	Housing, office building development, rent and sale services		3,000,000		3,000,000		300,000		100		3,802,394		16,932			17,084		Subsidiary (Note 5)
		Donghwa Telecom Co., Ltd.	Hong Kong	International telecommunications IP fictitious internet and internet transfer services		1,567,453		1,195,518		402,590		100		1,540,147		(32,370	)		(32,370	)	Subsidiary (Note 5)
		Chunghwa Telecom Singapore Pte., Ltd.	Singapore	International telecommunications IP fictitious internet and internet transfer services		574,112		574,112		26,383		100		719,695		105,232			105,232		Subsidiary (Note 5)
		Chunghwa System Integration Co., Ltd.	Taiwan	Providing communication and information aggregative services		838,506		838,506		60,000		100		712,963		60,373			56,950		Subsidiary (Note 5)
		CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		482,165		482,165		37,942		69		621,027		173,107			122,631		Subsidiary (Note 5)
		Chunghwa Investment Co., Ltd.	Taiwan	Investment		639,559		759,709		68,085		89		491,879		(20,261	)		(18,149	)	Subsidiary (Note 5)
		Prime Asia Investments Group Ltd. (B.V.I.)	British Virgin Islands	Investment		348,089		215,020		1		100		264,015		(34,433	)		(34,368	)	Subsidiary (Note 5)
		Honghwa Human Resources Co., Ltd.	Taiwan	Human Resources Service		180,000		—		18,000		100		191,428		11,428			11,428		Subsidiary (Note 5)
		Chunghwa International Yellow Pages Co., Ltd.	Taiwan	Yellow pages sales and advertisement services		150,000		150,000		15,000		100		179,816		17,314			17,314		Subsidiary (Note 5)

(Continued)

- 112 -

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of December 31, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2013		December 31, 2012		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
		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		126,748		64,835			37,353		Subsidiary (Note 5)
		Chunghwa Telecom Global, Inc.	United States	International data and internet services and long distance call wholesales to carriers		70,429		70,429		6,000		100		115,051		13,273			15,528		Subsidiary (Note 5)
		Chunghwa Telecom Vietnam Co., Ltd.	Vietnam	Information and communications technology, international circuit, and intelligent energy network service		103,027		73,157		—		100		85,224		420			420		Subsidiary (Note 5)
		Smartfun Digital Co., Ltd.	Taiwan	Software retail		65,000		65,000		6,500		65		50,336		8,802			5,787		Subsidiary (Note 5)
		Chunghwa Telecom Japan Co., Ltd.	Japan	International telecommunications IP fictitious internet and internet transfer services		17,291		17,291		1		100		25,184		3,761			3,761		Subsidiary (Note 5)
		Chunghwa Sochamp Technology Inc.	Taiwan	License plate recognition system		20,400		20,400		2,040		51		14,319		(10,466	)		(3,095	)	Subsidiary (Note 5)
		New Prospect Investments Holdings Ltd. (B.V.I.)	British Virgin Islands	Investment		—		—		—		100		—		—			—		Subsidiary (Notes 3 and 5)
		International Integrated System, Inc.	Taiwan	IT solution provider, IT application consultation, system integration and package solution		283,500		283,500		22,498		33		292,239		48,822			20,344		Associate
		Viettel-CHT Co., Ltd.	Vietnam	IDC services		288,327		288,327		—		30		278,044		45,535			13,667		Associate

(Continued)

- 113 -

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of December 31, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 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		214,201		947,038			306,554		Associate
		Skysoft Co., Ltd.	Taiwan	Providing of music on-line, software, electronic information, and advertisement services		67,025		67,025		4,438		30		158,218		235,117			67,766		Associate
		So-net Entertainment Taiwan	Taiwan	Online service and sale of computer hardware		120,008		60,008		9,429		30		92,325		3,826			1,173		Associate
		KingWay Technology Co., Ltd.	Taiwan	Publishing books, data processing and software services		71,770		71,770		2,879		33		74,838		22,272			7,243		Associate
		Alliance Digital Tech Co., Ltd.	Taiwan	Development of mobile payments and information processing service		30,000		—		3,000		19		28,757		(6,464	)		(1,243	)	Associate

(Continued)

- 114 -

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of December 31, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2013		December 31, 2012		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
		Dian Zuan Integrating Marketing Co., Ltd.	Taiwan	Information technology service and general advertisement service	$	48,113	$	64,500		452		13	$	1,838	$	(19,888	)	$	(4,292	)	Associate
		Huada Digital Corporation	Taiwan	Providing software service		250,000		250,000		25,000		50		227,504		(27,609	)		(13,805	)	Jointly controlled entity
1	Senao International Co., Ltd.	Senao Networks, Inc.	Taiwan	Telecommunication facilities manufactures and sales		202,758		206,190		16,579		34		642,671		421,792			172,102		Associate
		Senao International (Samoa) Holding Ltd.	Samoa Islands	International investment.		1,750,220		988,597		59,175		100		840,520		(500,125	)		(502,006	)	Subsidiary (Note 5)
2	CHIEF Telecom Inc.	Unigate Telecom Inc.	Taiwan	Telecommunication and internet service.		2,000		2,000		200		100		1,545		(124	)		(124	)	Subsidiary (Note 5)
		Chief International Corp.	Samoa Islands	Investment		6,068		6,068		200		100		19,739		5,111			5,111		Subsidiary (Note 5)
3	Chunghwa System Integrated Co., Ltd.	Concord Technology Co., Ltd.	Brunei	Investment		47,321		47,321		1,500		100		19,613		(536	)		(536	)	Subsidiary (Note 5)
7	Spring House Entertainment Tech. Inc.	Ceylon Innovation Co., Ltd.	Taiwan	International trading, general advertisement and book publishment service		10,000		1,000		—		100		9,751		(161	)		(161	)	Subsidiary (Note 5)
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		2,707,242		50,556			34,316		Subsidiary (Note 5)
9	Chunghwa Telecom Singapore Pte., Ltd.	ST-2 Satellite Ventures Pte., Ltd.	Singapore	Operation of ST-2 telecommunication satellite		409,061		409,061		18,102		38		519,839		275,760			105,148		Associate
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		159,159		55,951			28,696		Subsidiary (Note 5)
		Chunghwa Investment Holding Co., Ltd.	Brunei	Investment		46,035		46,035		1,432		100		16,669		(2,870	)		(2,870	)	Subsidiary (Note 5)

(Continued)

- 115 -

No.	Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount				Balance as of December 31, 2013						Net Income (Loss) of the Investee			Recognized Gain (Loss) (Notes 1 and 2)			Note
					December 31, 2013		December 31, 2012		Shares (Thousands)		Percentage of Ownership (%)		Carrying Value
		Panda Monium Company Ltd.	Cayman	The production of animation		20,000		20,000		602		43		—		—			—		Associate
		CHIEF Telecom Inc.	Taiwan	Internet communication and internet data center (“IDC”) service		20,000		20,000		2,000		4		29,719		173,107			6,289		Associate (Note 5)
		Senao International Co., Ltd.	Taiwan	Selling and maintaining mobile phones and its peripheral products		49,731		49,731		1,001		—		47,793		1,429,968			4,353		Associate (Note 5)
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		12,504		12,504		400		100		12,569		1,770			1,770		Subsidiary (Note 5)
		CHPT Japan Co., Ltd.	Japan	Sale and maintenance of electronic parts and machinery processed products, and design of printed circuit board		2,008		—		600		100		1,742		42			42		Subsidiary (Note 5)
		Chunghwa Precision Test Tech. International Co., Ltd.	Samoa Islands	Wholesale electronic materials, electronic materials and general retail investment industry		2,957		—		100		100		2,981		—			—		Subsidiary (Note 5)
22	Senao International (Samoa) Holding Ltd.	Senao International HK Limited.	Hong Kong	International investment.		1,727,221		966,186		58,440		100		813,367		(505,074	)		(505,074	)	Subsidiary (Note 5)
		HopeTech Technologies Limited	Hong Kong	Information technology and telecommunication products sales.		21,177		21,177		5,240		45		28,018		11,236			5,016		Associate
24	Chunghwa Investment Holding Co., Ltd.	CHI One Investment Co., Limited	Hong Kong	Investment		26,035		26,035		6,520		100		9,496		(2,848)			(2,848)		Subsidiary (Note 5)
27	Prime Asia Investments Group, Ltd. (B.V.I.)	Chunghwa Hsingta Co., Ltd.	Hong Kong	Investment		348,088		215,019		1		100		264,056		(34,432	)		(34,432	)	Subsidiary (Note 5)

(Continued)

- 116 -

Note 1: The equity in net income (loss) of investees was based on audited 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 December 31, 2013.

Note 4: Investment in mainland China is included in Table 7.

Note 5: The amount was eliminated upon consolidation.

Note 6: The English name is the same as the above entity; however, the Chinese names included in the respective Articles of Incorporations are different.

(Concluded)

- 117 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENT IN MAINLAND CHINA

YEAR ENDED DECEMBER 31, 2013

(Amounts in Thousands of New Taiwan Dollars)

Investee	Main Businesses	Total Amount of Paid- in		Investment Type	Accumulated Outflow of Investment from Taiwan as of January 1,		Investment Flows				Accumulated Outflow of Investment from Taiwan as of December 31,		Net Income (Loss) of the			% Ownership of Direct or Indirect		Investment Gain (Loss)			Carrying Value as of December 31,		Accumulated Inward Remittance of Earnings as of December 31,		Note
	and Products	Capital		(Note 1)	2013		Outflow		Inflow		2013		Investee			Investment		(Note 2)			2013		2013
Glory Network System Service (Shanghai) Co., Ltd.	Providing advanced business solutions to telecommunications	$	47,321	2	$	47,321	$	—	$	—	$	47,321	$	(536	)		100	$	(536	)	$	19,613	$	—	Note 7
Xiamen Sertec Business Technology Co., Ltd.	Customer services and platform rental activities		51,552	2		25,414		—		—		25,414		(5,747	)		49		(2,816	)		6,255		—	Note 7
Senao Trading (Fujian) Co., Ltd.	Information technology services and sale of communication products		709,528	2		338,793		370,735		—		709,528		(236,391	)		100		(236,391	)		333,213		—	Note 7
Senao International Trading (Shanghai) Co., Ltd. (Note 8)	Information technology services and sale of communication products		635,055	2		297,726		355,329		—		635,055		(202,899	)		100		(202,899	)		291,442		—	Note 7
Senao International Trading (Shanghai) Co., Ltd. (Note 8)	Information technology services and sale of communication products		87,540	2		57,860		29,680		—		87,540		(5,994	)		100		(5,994	)		80,309		—	Note 7
Senao International Trading (Jiangsu) Co., Ltd.	Information technology services and sale of communication products		263,736	2		263,736		—		—		263,736		(59,633	)		100		(59,633	)		103,762		—	Note 7
Chunghwa Telecom (China) Co., Ltd.	Energy conserving and providing installation, design and maintenance services		177,176	2		177,176		—		—		177,176		(27,819	)		100		(27,819	)		100,738		—	Note 7
Jiangsu Zhenghua Information Technology Company, LLC	Intelligent energy serving and intelligent building services		189,410	2		28,912		113,145		—		142,057		(5,104	)		75		(3,828	)		137,268		—	Note 7
Hua-Xiong Information Technology Co., Ltd.	Intelligent system and energy saving system services in buildings		56,386	2		8,931		19,924		—		28,855		(5,461	)		51		(2,785	)		26,050		—	Note 7

(Continued)

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Investee	Accumulated Investment in Mainland China as of December 31, 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	$	419,686
Xiamen Sertec Business Technology Co., Ltd. (Note 4)		25,414		79,882		476,101
Senao International Trading Co., Ltd. (Note 5)		1,713,859		2,431,971		—
Chunghwa Telecom (China) Co., Ltd. (Note 6)		177,176		177,176		219,206,493
Jiangsu Zhenghua Information Technology Company, LLC (Note 6)		142,057		142,057		219,206,493
Hua-Xiong Information Technology Co., Ltd. (Note 6)		28,855		44,653		219,206,493

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 audited 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: Based on “Principle of investment or Technical Cooperation in Mainland China”, Senao is not subjective to the limited amount due to the operating headquarters documents issued by Industrial Development Bureau.

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)

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TABLE 8

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

YEAR ENDED DECEMBER 31, 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.	1	Accounts receivable	$	35,389		—		—
					Accrued custodial receipts		453,145		—		—
					Accounts payable		1,399,507		—		—
					Amounts collected for others		643,288		—		—
					Revenues		361,000		—		—
					Non-operating income and gains		981		—		—
					Operating costs and expenses		12,394,511		—		4
					Non-operating expense and losses		10		—		—
					Property, plant and equipment		14,019		—		—
					Customer’s deposits		1,296		—		—
			CHIEF Telecom Inc.	1	Accounts receivable		33,787		—		—
					Accounts payable		44,469		—		—
					Amounts collected for others		2,957		—		—
					Revenues		254,306		—		—
					Operating costs and expenses		317,356		—		—
					Customer’s deposits		333		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	1	Accounts receivable		76		—		—
					Advances from customers		1		—		—
					Revenues		2,376		—		—
					Non-operating income and gains		466		—		—
			Chunghwa International Yellow Pages Co., Ltd.	1	Accounts receivable		2,251		—		—
					Amounts collected for others		5,562		—		—
					Accounts payable		21,491		—		—
					Amounts collected for others		90,560		—		—
					Revenues		27,812		—		—
					Non-operating income and gains		5		—		—
					Operating costs and expenses		67,206		—		—
			Chunghwa System Integration Co., Ltd.	1	Accounts receivable		5,849		—		—
					Accrued custodial receipts		3,951		—		—
					Prepaid expenses		17,630		—		—
					Accounts payable		692,548		—		—
					Payables to contractors		4,990		—		—
					Revenues		17,789		—		—
					Non-operating income and gains		1,413		—		—
					Operating costs and expenses		885,385		—		—
					Property, plant and equipment		1,117,108		—		—

(Continued)

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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)
					Office supplies	$	272		—		—
					Work in process		94,227		—		—
					Spare parts		22,526		—		—
					Intangible assets		371,704		—		—
					Other deferred expenses		375		—		—
					Customer’s deposits		39,798		—		—
			Chunghwa Telecom Global Inc.	1	Accounts receivable		30,203		—		—
					Prepaid expenses		673		—		—
					Accounts payable		79,043		—		—
					Advances from customers		32		—		—
					Revenues		74,475		—		—
					Operating costs and expenses		369,340		—		—
					Property, plant and equipment		45,336		—		—
					Customer’s deposits		14,622		—		—
			Donghwa Telecom Co., Ltd.	1	Accounts receivable		41,374		—		—
					Accounts payable		21,208		—		—
					Advances from customers		47,709		—		—
					Revenues		143,465		—		—
					Operating costs and expenses		93,589		—		—
					Property, plant and equipment		37,793		—		—
			Spring House Entertainment Inc.	1	Accounts receivable		4,924		—		—
					Accounts payable		17,573		—		—
					Amounts collected for others		25,314		—		—
					Revenues		62,063		—		—
					Operating costs and expenses		45,357		—		—
					Intangible assets		3,238		—		—
					Customer’s deposits		5		—		—
			Chunghwa Telecom Japan Co., Ltd.	1	Accounts receivable		745		—		—
					Prepaid expenses		619		—		—
					Accounts payable		9,697		—		—
					Revenues		19,051		—		—
					Operating costs and expenses		68,423		—		—
			Light Era Development Co., Ltd.	1	Accounts payable		1,299		—		—
					Revenues		2,905		—		—
					Operating costs and expenses		1,524		—		—
					Work in process		3,235		—		—
					Customer’s deposits		80		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	1	Accounts receivable		4,129		—		—
					Accounts payable		3,221		—		—
					Advances from customers		46		—		—
					Revenues		58,985		—		—
					Operating costs and expenses		62,618		—		—
			Chunghwa Investment Co., Ltd.	1	Revenues		2,052		—		—
			Chunghwa Telecom (China) Co., Ltd.	1	Accounts receivable		150		—		—
					Accounts payable		747		—		—
					Revenues		150		—		—
					Operating costs and expenses		9,333		—		—

(Continued)

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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)
			Smartfun Digital Co., Ltd.	1	Accounts receivable	$	331		—		—
					Accounts payable		754		—		—
					Amounts collected for others		4,213		—		—
					Revenues		2,972		—		—
					Non-operating income and gains		459		—		—
					Operating costs and expenses		7,220		—		—
					Customer’s deposits		20		—		—
			Chunghwa Telecom Vietnam Co., Ltd.	1	Accounts receivable		1		—		—
					Accounts payable		151		—		—
					Revenues		551		—		—
					Operating costs and expenses		4,373		—		—
			Chunghwa Sochamp Technology Inc.	1	Accounts payable		151,660		—		—
					Revenues		373		—		—
					Operating costs and expenses		161,114		—		—
					Work in process		18,284		—		—
					Spare parts		30,096		—		—
					Customer’s deposits		95		—		—
			Chief International Corp	1	Accounts receivable		6,357		—		—
					Accounts payable		6,410		—		—
			Honghwa Human Resources Co., Ltd.	1	Accounts payable		195,323		—		—
					Revenues		1,560		—		—
					Operating costs and expenses		37,076		—		—
	1	Senao International Co., Ltd.	CHIEF Telecom Inc.	3	Revenues		297		—		—
			Chunghwa System Integration Co., Ltd.	3	Revenues		255		—		—
			Chunghwa International Yellow Pages Co., Ltd.	3	Revenues		57		—		—
			Spring House Entertainment Inc.	3	Revenues		813		—		—
			Light Era Development Co., Ltd.	3	Revenues		80		—		—
			Smartfun Digital Co., Ltd.	3	Revenues		815		—		—
	2	CHIEF Telecom Inc.	Chunghwa System Integration Co., Ltd.	3	Accounts receivable		2		—		—
				3	Revenues		60		—		—
			Chunghwa Telecom Singapore Pte., Ltd.	3	Accounts receivable		520		—		—
					Revenues		11,559		—		—
			Spring House Entertainment Inc.	3	Revenues		1,583		—		—
			Donghwa Telecom Co., Ltd.	3	Accounts receivable		140		—		—
					Revenues		794		—		—

(Continued)

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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)
	3	Chunghwa System Integration Co., Ltd.	Senao International Co., Ltd.	3	Revenues		7,671		—		—
			Spring House Entertainment Inc.	3	Accounts receivable		25		—		—
					Revenues		1,074		—		—
			Light Era Development Co., Ltd.	3	Revenues		347		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	3	Revenues		1,237		—		—
			Chunghwa Sochamp Technology Inc.	3	Revenues		70		—		—
			Honghwa Human Resources Co., Ltd.	3	Accounts receivable		143		—		—
					Revenues		480		—		—
			Chunghwa International Yellow Pages Co., Ltd.	3	Revenues		860		—		—
	4	Chunghwa International Yellow Pages Co., Ltd.	Senao International Co., Ltd.	3	Revenues	$	10		—		—
			Chunghwa System Integration Co., Ltd.	3	Accounts receivable		87		—		—
					Revenues		161		—		—
			Light Era Development Co., Ltd.	3	Revenues		433		—		—
			Chunghwa Telecom Japan Co., Ltd.	3	Revenues		5		—		—
			Chunghwa Telecom Global, Inc.	3	Revenues		184		—		—
	5	Chunghwa Telecom Global, Inc.	Donghwa Telecom Co., Ltd.	3	Accounts receivable		283		—		—
					Revenues		3,311		—		—
			Chunghwa Telecom Singapore	3	Accounts receivable		39,640		—		—
					Revenues		40,864		—		—
			Chunghwa Precision Test Tech. Co., Ltd.	3	Accounts receivable		68		—		—
					Amounts collected for others		996		—		—
					Revenues		373		—		—
	6	Donghwa Telecom Co., Ltd.	Chunghwa Telecom Singapore Pte., Ltd.	3	Prepaid expenses		21,686		—		—
	9	Chunghwa Telecom Singapore Pte., Ltd.	CHIEF Telecom Inc.	3	Accounts receivable		911		—		—
					Revenues		15,835		—		—
			Chunghwa Telecom Global, Inc.	3	Accounts receivable		30,891		—		—
					Revenues		30,919		—		—
			Donghwa Telecom Co., Ltd.	3	Accounts receivable		1,316		—		—
					Revenues		14,688		—		—
			Chunghwa Telecom Japan Co., Ltd.	3	Accounts receivable		1		—		—
					Revenues		11,402		—		—
	10	Chunghwa Telecom Japan Co., Ltd.	CHIEF Telecom Inc.	3	Revenues		414		—		—
			Chunghwa Telecom Singapore	3	Revenues		2,017		—		—
		Yao Yong Real Property Co., Ltd.	CHIEF Telecom Inc.	3	Revenues		86,667		—		—

(Continued)

- 123 -

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)
	30	Chunghwa Telecom (China) Co., Ltd.	Senao International Co., Ltd.	3	Revenues		411		—		—
	31	Smartfun Digital Co., Ltd.	Spring House Entertainment Inc.	3	Advances from customers		2,316		—		—
					Revenues		12,729		—		—
	33	Chunghwa Sochamp Technology Inc.	Chunghwa Telecom (China) Co., Ltd.	3	Accounts receivable		65		—		—
					Revenues		130		—		—

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: 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 December 31, 2013, while revenues, costs and expenses are shown as a percentage to consolidated total operating revenues for the year ended December 31, 2013.

Note 5: The amount was eliminated upon consolidation.

(Concluded)

- 124 -