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Subsidiaries | 12 Months Ended
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Dec. 31, 2020
Disclosure Of Significant Investments In Subsidiaries [Abstract] |
Subsidiaries |
1 4. | SUBSIDIARIES
| a. | Information on subsidiaries with material noncontrolling interests
The table below shows details of less than wholly owned subsidiaries of the Company that have material noncontrolling interests:
|  | Place of Incorporation |  | Proportion of Ownership Interests and Voting Rights Held by Noncontrolling Interests |
|  | and Principal |  | December 31 |
Subsidiaries |  | Place of Business |  | 2019 |  |  | 2020 |
SENAO |  | Taiwan |  | 72% |  |  | 72% |
CHPT |  | Taiwan |  | 66% |  |  | 66% |
|  | Profit Allocated to Noncontrolling Interests |  |  | Accumulated Noncontrolling Interests |
|  | Year Ended December 31 |  |  | December 31 |
|  | 2018 |  |  | 2019 |  |  | 2020 |  |  | 2019 |  |  | 2020 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  | (In Millions) |  |  |  |  |  |  |  |  |
SENAO |  | $ | 326 |  |  | $ | 291 |  |  | $ | 312 |  |  | $ | 4,146 |  |  | $ | 4,189 |
CHPT |  | $ | 477 |  |  | $ | 414 |  |  | $ | 604 |  |  |  | 4,217 |  |  |  | 4,606 |
Individually immaterial subsidiaries with noncontrolling interests |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,752 |  |  |  | 2,363 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 10,115 |  |  | $ | 11,158 |
Summarized financial information in respect of SENAO and its subsidiaries that has material noncontrolling interests is set out below. The summarized financial information below represented amounts before intercompany eliminations.
|  | December 31 |
|  | 2019 |  |  | 2020 |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |
Current assets |  | $ | 6,751 |  |  | $ | 6,834 |
Noncurrent assets |  | $ | 3,173 |  |  | $ | 3,194 |
Current liabilities |  | $ | 3,637 |  |  | $ | 3,854 |
Noncurrent liabilities |  | $ | 590 |  |  | $ | 416 |
Equity attributable to the parent |  | $ | 1,551 |  |  | $ | 1,569 |
Equity attributable to noncontrolling interests |  | $ | 4,146 |  |  | $ | 4,189 |
|  | Year Ended December 31 |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  | (In Millions) |  |  |  |  |
Revenues and income |  | $ | 31,540 |  |  | $ | 29,131 |  |  | $ | 27,232 |
Costs and expenses |  |  | 31,081 |  |  |  | 28,725 |  |  |  | 26,797 |
Profit for the year |  | $ | 459 |  |  | $ | 406 |  |  | $ | 435 |
Profit attributable to the parent |  | $ | 133 |  |  | $ | 115 |  |  | $ | 123 |
Profit attributable to noncontrolling interests |  |  | 326 |  |  |  | 291 |  |  |  | 312 |
Profit for the year |  | $ | 459 |  |  | $ | 406 |  |  | $ | 435 |
Other comprehensive income (loss) attributable to the parent |  | $ | (2 | ) |  | $ | (7 | ) |  | $ | 1 |
Other comprehensive income (loss) attributable to noncontrolling interests |  |  | (10 | ) |  |  | 22 |  |  |  | 2 |
Other comprehensive income (loss) for the year |  | $ | (12 | ) |  | $ | 15 |  |  | $ | 3 |
Total comprehensive income attributable to the parent |  | $ | 131 |  |  | $ | 108 |  |  | $ | 124 |
Total comprehensive income attributable to noncontrolling interests |  |  | 316 |  |  |  | 313 |  |  |  | 314 |
Total comprehensive income for the year |  | $ | 447 |  |  | $ | 421 |  |  | $ | 438 |
Net cash flow from operating activities |  | $ | 696 |  |  | $ | 538 |  |  | $ | 862 |
Net cash flow from investing activities |  |  | (13 | ) |  |  | 235 |  |  |  | 54 |
Net cash flow from financing activities |  |  | (491 | ) |  |  | (718 | ) |  |  | (687 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | 1 |  |  |  | — |  |  |  | — |
Net cash inflow |  | $ | 193 |  |  | $ | 55 |  |  | $ | 229 |
Dividends paid to noncontrolling interests |  | $ | 587 |  |  | $ | 269 |  |  | $ | 269 |
Summarized financial information in respect of CHPT and its subsidiaries that has material noncontrolling interests is set out below. The summarized financial information below represented amounts before intercompany eliminations.
|  | December 31 |
|  | 2019 |  |  | 2020 |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |
Current assets |  | $ | 3,710 |  |  | $ | 4,122 |
Noncurrent assets |  | $ | 4,044 |  |  | $ | 4,013 |
Current liabilities |  | $ | 1,316 |  |  | $ | 1,115 |
Noncurrent liabilities |  | $ | 22 |  |  | $ | 12 |
Equity attributable to CHI |  | $ | 2,199 |  |  | $ | 2,402 |
Equity attributable to noncontrolling interests |  | $ | 4,217 |  |  | $ | 4,606 |
|  | Year Ended December 31 |
|  | 2018 |  |  | 2019 |  |  | 2020 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  |  |  |  |  | (In Millions) |  |  |  |  |
Revenues and income |  | $ | 3,299 |  |  | $ | 3,404 |  |  | $ | 4,221 |
Costs and expenses |  |  | 2,549 |  |  |  | 2,775 |  |  |  | 3,301 |
Profit for the year |  | $ | 750 |  |  | $ | 629 |  |  | $ | 920 |
Profit attributable to CHI |  | $ | 273 |  |  | $ | 215 |  |  | $ | 316 |
Profit attributable to noncontrolling interests |  |  | 477 |  |  |  | 414 |  |  |  | 604 |
Profit for the year |  | $ | 750 |  |  | $ | 629 |  |  | $ | 920 |
Other comprehensive loss attributable to CHI |  | $ | — |  |  | $ | (1 | ) |  | $ | — |
Other comprehensive loss attributable to noncontrolling interests |  |  | — |  |  |  | (2 | ) |  |  | — |
Other comprehensive loss for the year |  | $ | — |  |  | $ | (3 | ) |  | $ | — |
Total comprehensive income attributable to CHI |  | $ | 273 |  |  | $ | 214 |  |  | $ | 316 |
Total comprehensive income attributable to noncontrolling interests |  |  | 477 |  |  |  | 412 |  |  |  | 604 |
Total comprehensive income for the year |  | $ | 750 |  |  | $ | 626 |  |  | $ | 920 |
Net cash flow from operating activities |  | $ | 862 |  |  | $ | 507 |  |  | $ | 1,483 |
Net cash flow from investing activities |  |  | (733 | ) |  |  | (1,426 | ) |  |  | (533 | )
Net cash flow from financing activities |  |  | (328 | ) |  |  | (349 | ) |  |  | (349 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | 1 |  |  |  | (5 | ) |  |  | 1 |
Net cash inflow (outflow) |  | $ | (198 | ) |  | $ | (1,273 | ) |  | $ | 602 |
Dividends paid to noncontrolling interests |  | $ | 210 |  |  | $ | 216 |  |  | $ | 216 |
| b. | Equity transactions with noncontrolling interests
CHI disposed some shares of CHPT from April to August 2018. Therefore, the Company’s ownership interest in CHPT decreased to 34.25% as of December 31, 2019 and 2020. Chunghwa and CHI disposed some shares of CHIEF in May 2018 before CHIEF traded its shares on the emerging stock market and the General Stock Market of the Taipei Exchange according to the local requirements. In addition, Chunghwa and CHI did not participate in the capital increase of CHIEF in June 2018. Furthermore, CHIEF issued new shares in March 2018, November 2018, March 2019, November 2019, March 2020 and December 2020, as its employees exercised options. Therefore, the Company’s ownership interest in CHIEF decreased to 59.75% and 59.08% as of December 31, 2019 and 2020. See Note 35(c)(d) for details. SENAO transferred its treasury stock to employees in June 2018; therefore, the Company’s ownership interest in SENAO decreased to 28.18% as of December 31, 2019 and 2020. See Note 35(b) for details. SENAO subscribed for all the shares in the capital increase of Youth in December 2018 and April 2020; therefore, the Company’s ownership interest in Youth increased to 93% and 96% as of December 31, 2019 and 2020, respectively. IISI issued new shares in September 2020 as its employees exercised options; therefore, the Company’s ownership interest in IISI decreased. See Note 35(f) for details. The above transactions were accounted for as equity transactions since the Company did not cease to have control over these subsidiaries. The detailed information of the equity transactions for the years ended December 31, 2018, 2019 and 2020 was as follows:
|  | Year Ended December 31, 2018 |
|  | SENAO not Proportionately participating in the Capital Increase of Youth |  |  | SENAO Transferred its Treasury Stock |  |  | CHI Disposed Some Shares of CHPT |  |  | Chunghwa and CHI Did Not Participate in the Capital Increase of CHIEF |  |  | Chunghwa and CHI Disposed Some Shares of CHIEF |  |  | Share-Based Payment of CHIEF |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Cash consideration received from noncontrolling interests |  | $ | — |  |  | $ | 327 |  |  | $ | 1,042 |  |  | $ | 1,477 |  |  | $ | 133 |  |  | $ | 35 |
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests |  |  | — |  |  |  | (272 | ) |  |  | (330 | ) |  |  | (700 | ) |  |  | (19 | ) |  |  | (24 | )
Differences arising from equity transactions |  | $ | — |  |  | $ | 55 |  |  | $ | 712 |  |  | $ | 777 |  |  | $ | 114 |  |  | $ | 11 |
Line items for equity transaction adjustments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Additional paid-in capital - difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets upon actual disposal or acquisition |  | $ | — |  |  | $ | — |  |  | $ | 712 |  |  | $ | — |  |  | $ | 114 |  |  | $ | — |
Additional paid-in capital - arising from changes in equities of subsidiaries |  | $ | — |  |  | $ | 55 |  |  | $ | — |  |  | $ | 777 |  |  | $ | — |  |  | $ | 11 |
|  | Year Ended December 31, 2019 |
|  | CHIEF Share-Based Payment |
|  | NT$ |
|  | (In Millions) |
Cash consideration received from noncontrolling interests |  | $ | 19 |
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests |  |  | (20 | )
Differences arising from equity transactions |  | $ | (1 | )
Line items for equity transaction adjustments |  |  |  |
Additional paid-in capital - arising from changes in equities of subsidiaries |  | $ | (1 | )
|  | Year Ended December 31, 2020 |
|  | CHIEF Share-Based Payment |  |  | SENAO Not Proportionately Participating in the Capital Increase of Youth |  |  | IISI Share-Based Payment |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Cash consideration received from noncontrolling interests |  | $ | 75 |  |  | $ | — |  |  | $ | 7 |
The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests |  |  | (49 | ) |  |  | — |  |  |  | (7 | )
Differences arising from equity transactions |  | $ | 26 |  |  | $ | — |  |  | $ | — |
Line items for equity transaction adjustments |  |  |  |  |  |  |  |  |  |  |  |
Additional paid-in capital - arising from changes in equities of subsidiaries |  | $ | 26 |  |  | $ | — |  |  | $ | — |
| c. | Business combinations
1) | Subsidiary acquired
In order to develop and cultivate the enterprise customer market, Chunghwa obtained 20.38% ownership interest in IISI by cash on July 1, 2020, the acquisition date. (Note) Chunghwa’s ownership interest in IISI increased to 51.54% by considering the previously held ownership interest in IISI. Chunghwa obtained over half of the seats of the Board of Directors of IISI; therefore, Chunghwa gained control over IISI and included IISI and its subsidiaries in the consolidated financial statements starting from the acquisition date. IISI mainly engages in information system development and maintenance service business, etc. Note:IISI issued new shares in April 2020 as its employees exercised options; therefore, the percentage of ownership interest in IISI obtained on the acquisition date is lower than that approved by Chunghwa’s Board of Directors in January 2020.
2) | Assets acquired and liabilities assumed at acquisition date
|  |  |  | IISI and Its Subsidiaries |
Current assets |  |  |  |  |  |
Cash and cash equivalents |  |  |  | $ | 588 |
Contract assets |  |  |  |  | 583 |
Trade notes and accounts receivable |  |  |  |  | 165 |
Inventories |  |  |  |  | 141 |
Prepayments |  |  |  |  | 114 |
Other current monetary assets |  |  |  |  | 114 |
Other current assets |  |  |  |  | 75 |
Noncurrent assets |  |  |  |  |  |
Property, plant and equipment |  |  |  |  | 48 |
Right-of-use assets |  |  |  |  | 70 |
Intangible assets |  |  |  |  | 12 |
Deferred income tax assets |  |  |  |  | 6 |
Other noncurrent assets |  |  |  |  | 102 |
Current liabilities |  |  |  |  |  |
Short-term loans |  |  |  |  | (4 | )
Contract liabilities |  |  |  |  | (334 | )
Trade notes and accounts payable |  |  |  |  | (257 | )
Current tax liabilities |  |  |  |  | (19 | )
Lease liabilities |  |  |  |  | (26 | )
Other payables |  |  |  |  | (266 | )
Provisions |  |  |  |  | (15 | )
Other current liabilities |  |  |  |  | (30 | )
Noncurrent liabilities |  |  |  |  |  |
Deferred income tax liabilities |  |  |  |  | (3 | )
Lease liabilities |  |  |  |  | (45 | )
Net defined benefit liabilities |  |  |  |  | (32 | )
Other noncurrent liabilities |  |  |  |  | (5 | )
|  |  |  | $ | 982 |
The trade notes and accounts receivable acquired in business combination transactions have a fair value of $165 million and a gross contractual amount of $167 million. The best estimates of the contractual cash flows not expected to be collected as of the acquisition date are $2 million.
3) | Goodwill arising from acquisition
|  |  |  | IISI and Its Subsidiaries |
Consideration transferred |  |  |  | $ | 234 |
Add: Fair value of equity interest held before the acquisition date |  |  |  |  | 327 |
Add: Noncontrolling interest (48.46% of the identifiable net assets of IISI and its subsidiaries) |  |  |  |  | 476 |
Less: Fair value of identifiable net assets acquired |  |  |  |  | (982 | )
Goodwill arising from acquisition |  |  |  | $ | 55 |
The goodwill arising from the acquisition of IISI mainly represents the control premium. In addition, the consideration paid for the combination included amounts attributed to the benefits of expected synergies and the assembled workforces of IISI. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. Goodwill arising from business combinations is not deductible for tax purposes.
4) | Net cash inflow on acquisition of subsidiaries
|  |  |  | IISI and Its Subsidiaries |
Cash and cash equivalents acquired |  |  |  | $ | 588 |
Less: Consideration paid in cash |  |  |  |  | (234 | )
|  |  |  | $ | 354 |
5) | Impact of acquisition on the financial results of the Company
The financial results of the acquiree since the acquisition date to December 31, 2020 included in the consolidated statements of comprehensive income are as follows:
|  |  |  | IISI and Its Subsidiaries |
Revenue |  |  |  | $ | 1,348 |
Profit |  |  |  | $ | 68 |
Had the business combination been in effect at the beginning of the annual reporting period, the Company’s revenue and profit would have been $208,605 million and $34,747 million for the year ended December 31, 2020, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Company that actually would have been achieved had the acquisition been completed on January 1, 2020, nor is it intended to be a projection of future results. In determining the pro-forma revenue and profit of the Company had IISI been acquired at the beginning of the financial year, the management calculated amortization of intangible assets acquired on the basis of the fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements.

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