Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. (CHT) is dated March 10, 2021. The report summarizes corporate actions and financial results for the full year ended December 31, 2020, and provides specific operating data for February 2021 and the first two months of 2021.
Key Financial Metrics
Full Year 2020 Results (Consolidated)
- Operating Revenue: NT$207,608,998 thousand
- Gross Profit: NT$70,580,146 thousand
- Net Operating Income: NT$42,361,726 thousand
- Profit Before Tax: NT$42,830,971 thousand
- Net Profit (Attributable to Owners of Parent): NT$33,406,130 thousand
- Basic Earnings Per Share (EPS): NT$4.31
- Total Assets: NT$506,377,992 thousand
- Total Liabilities: NT$117,119,535 thousand
- Equity Attributable to Owners of Parent: NT$377,931,016 thousand
February 2021 Operating Results
- Net Sales: NT$16,757,265 thousand (Year-over-Year increase of 5.54%)
- Operating Costs and Expenses: NT$13,010,000 thousand (approximate based on text)
- Operating Income: NT$3,750,000 thousand
- Income Before Tax: NT$3,780,000 thousand
- Net Income (Attributable to Parent): NT$2,980,000 thousand
- EPS: NT$0.38
January-February 2021 Cumulative Sales
- Net Sales: NT$33,876,583 thousand (Year-over-Year increase of 4.00%)
Material Changes and Corporate Actions
Dividend Distribution
The Board of Directors resolved on February 23, 2021, to distribute a cash dividend of NT$4.306 per share for the 2020 fiscal year. The total cash distribution amounts to NT$33,403,564,823. No stock dividends were declared.
Disposal of China Airlines Ltd. Shares
CHT executed a series of disposals of common shares in China Airlines Ltd. between January 4 and February 25, 2021, to raise operating funds. Key transactions included:
- Jan 4 - Feb 22: Sold 106,074,000 units for NT$1,256.9 million, realizing a gain of NT$8.8 million.
- Feb 23 - Feb 24: Sold 53,000,000 units for NT$649.7 million, realizing a gain of NT$26.0 million.
- Feb 25: Sold 57,565,000 units for NT$737.1 million, realizing a gain of NT$59.6 million.
- Remaining Holdings: Post-transaction holdings stood at 57,565,116 units (1.06% stake), valued at NT$762.7 million.
Annual General Meeting
The Board resolved to convene the Annual General Meeting on May 28, 2021. Agenda items include ratification of 2020 financial statements, earnings distribution, and amendments to corporate governance documents.
Guidance, Outlook, and Risks
Performance vs. Guidance
Management reported that February 2021 revenue, operating income, pretax income, and EPS all exceeded the first-quarter guidance previously announced by the company.
Operational Drivers
The increase in February 2021 revenue was primarily driven by higher ICT project revenue and handset sales revenue. Mobile service revenue remained flat. Operating costs increased due to higher cost of goods sold and project costs associated with the revenue growth.
Financial Derivatives
As of February 2021, the company held forward contracts for non-trading purposes. The total contract amount for outstanding positions was NT$176,940 thousand with a fair value of NT$432 thousand. Unrealized losses recognized for the year totaled NT$1,840 thousand for non-hedge accounting positions and NT$1,752 thousand for hedge accounting positions.
Investor Verification Checklist
- Verify the exact payout date for the NT$4.306 per share cash dividend announced for 2020.
- Confirm the final shareholding percentage in China Airlines Ltd. following the February 25 disposal.
- Review the full text of the proposed amendments to the Articles of Incorporation and governance rules to be voted on at the May 28, 2021 meeting.
- Monitor the sustainability of ICT project revenue growth, which was the primary driver of the recent sales increase.
- Check for any updates on the working capital position, which showed a negative value (NT$-8,431.1 million) in the context of the securities investment ratio calculation in Exhibit 99.06 and 99.07.