EX-99.3 4 d200817dex993.htm EX-99.3

EX-99.3

Exhibit 99.3

Chunghwa Telecom Co., Ltd. and

Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2016 and 2015

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)

		September 30, 2016 (Unaudited)								December 31, 2015 (Audited)								September 30, 2015 (Adjusted and Unaudited)
		Amount				%				Amount				%				Amount				%
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	10,844				3			$	30,271				7			$	20,608				5
Financial assets at fair value through profit or loss			—				—				—				—				26				—
Hedging derivative assets			—				—				1				—				15				—
Held-to-maturity financial assets			3,091				1				1,881				—				1,528				—
Trade notes and accounts receivable, net			35,714				8				26,926				6				27,822				6
Accounts receivable from related parties			20				—				42				—				64				—
Inventories			7,869				2				8,780				2				6,556				2
Prepayments			6,040				1				2,669				1				5,407				1
Other current monetary assets			4,149				1				3,301				1				3,957				1
Other current assets			2,465				1				2,336				1				2,880				1
Total current assets			70,192				17				76,207				18				68,863				16
NONCURRENT ASSETS
Available-for-sale financial assets			4,782				1				5,511				1				5,344				1
Held-to-maturity financial assets			—				—				2,140				—				3,095				1
Investments accounted for using equity method			2,317				—				2,895				1				2,897				1
Property, plant and equipment			285,350				66				296,399				65				292,937				68
Investment properties			7,888				2				7,902				2				7,800				2
Intangible assets			48,044				11				50,447				11				41,065				9
Deferred income tax assets			1,024				—				2,061				—				1,966				—
Net defined benefit assets			2,871				1				11				—				9				—
Prepayments			3,274				1				3,612				1				3,473				1
Other noncurrent assets			4,957				1				5,586				1				6,224				1
Total noncurrent assets			360,507				83				376,564				82				364,810				84
TOTAL		$	430,699				100			$	452,771				100			$	433,673				100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans		$	138				—			$	110				—			$	113				—
Financial liabilities at fair value through profit or loss			10				—				—				—				—				—
Trade notes and accounts payable			18,486				4				16,301				4				14,052				3
Payables to related parties			528				—				611				—				352				—
Current tax liabilities			4,078				1				9,171				2				6,254				2
Other payables			21,134				5				25,487				6				20,950				5
Provisions			96				—				190				—				150				—
Advance receipts			9,430				3				9,567				2				9,768				2
Current portion of long-term loans			—				—				8				—				61				—
Other current liabilities			1,328				—				1,501				—				1,489				—
Total current liabilities			55,228				13				62,946				14				53,189				12
NONCURRENT LIABILITIES
Long-term loans			1,600				—				1,742				—				1,831				—
Deferred income taxes liabilities			667				—				148				—				153				—
Provisions			60				—				58				—				51				—
Customers’ deposits			4,523				1				4,726				1				4,634				1
Net defined benefit liabilities			1,389				—				7,099				2				6,770				2
Deferred revenue			3,550				1				3,616				1				3,590				1
Other noncurrent liabilities			2,998				1				3,097				1				2,737				1
Total noncurrent liabilities			14,787				3				20,486				5				19,766				5
Total liabilities			70,015				16				83,432				19				72,955				17
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT
Common stock			77,574				18				77,574				17				77,574				18
Additional paid-in capital			147,180				34				146,733				32				146,732				34
Retained earnings
Legal reserve			77,574				18				77,574				17				77,574				18
Special reserve			2,676				1				2,676				1				2,676				—
Unappropriated earnings			50,265				12				59,448				13				51,175				12
Total retained earnings			130,515				31				139,698				31				131,425				30
Other adjustments			(613	)			—				269				—				180				—
Total equity attributable to stockholders of the parent			354,656				83				364,274				80				355,911				82
NONCONTROLLING INTERESTS			6,028				1				5,065				1				4,807				1
Total equity			360,684				84				369,339				81				360,718				83
TOTAL		$	430,699				100			$	452,771				100			$	433,673				100

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Unaudited)

		For the Three Months Ended September 30																For the Nine Months Ended September 30
		2016								2015								2016								2015
		Amount				%				Amount				%				Amount				%				Amount				%
REVENUES		$	58,518				100			$	56,178				100			$	171,658				100			$	169,571				100
OPERATING COSTS			38,516				66				33,895				60				108,875				63				106,302				63
GROSS PROFIT			20,002				34				22,283				40				62,783				37				63,269				37
OPERATING EXPENSES
Marketing			6,451				11				6,184				11				18,456				11				18,193				11
General and administrative			1,108				2				1,105				2				3,362				2				3,355				2
Research and development			942				1				915				2				2,788				2				2,616				1
Total operating expenses			8,501				14				8,204				15				24,606				15				24,164				14
OTHER INCOME AND EXPENSES			(10	)			—				(42	)			—				(27	)			—				(86	)			—
INCOME FROM OPERATIONS			11,491				20				14,037				25				38,150				22				39,019				23
NON-OPERATING INCOME AND EXPENSES
Interest income			46				—				82				—				150				—				244				—
Other income			291				—				52				—				1,062				1				575				—
Other gains and losses			13				—				(132	)			—				20				—				(203	)			—
Interest expenses			(5	)			—				(9	)			—				(15	)			—				(24	)			—
Share of the profit of associates and joint ventures accounted for using equity method			42				—				186				—				334				—				693				1
Total non-operating income and expenses			387				—				179				—				1,551				1				1,285				1
INCOME BEFORE INCOME TAX			11,878				20				14,216				25				39,701				23				40,304				24
INCOME TAX EXPENSE			2,987				5				3,476				6				5,452				3				6,220				4
NET INCOME			8,891				15				10,740				19				34,249				20				34,084				20
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to profit or loss:
Share of remeasurements of defined benefit pension plans of associates and joint ventures			—				—				—				—				—				—				—				—
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from the translation of the foreign operations			(131	)			—				213				1				(220	)			—				128				—
Unrealized loss on available-for-sale financial assets			(91	)			—				(506	)			(1	)			(698	)			(1	)			(839	)			—
Cash flow hedges			3				—				16				—				(1	)			—				16				—
Share of exchange differences arising from the translation of the foreign operations of associates and joint ventures			(3	)			—				7				—				(4	)			—				7				—
Income tax benefit (expense) relating to items that may be reclassified subsequently			—				—				1				—				—				—				(3	)			—
			(222	)			—				(269	)			—				(923	)			(1	)			(691	)			—
Total other comprehensive loss, net of income tax			(222	)			—				(269	)			—				(923	)			(1	)			(691	)			—
TOTAL COMPREHENSIVE INCOME		$	8,669				15			$	10,471				19			$	33,326				19			$	33,393				20

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(Unaudited)

		For the Three Months Ended September 30																For the Nine Months Ended September 30
		2016								2015								2016								2015
		Amount				%				Amount				%				Amount				%				Amount				%
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent		$	8,583				15			$	10,597				19			$	33,368				19			$	33,552				20
Noncontrolling interests			308				—				143				—				881				1				532				—
		$	8,891				15			$	10,740				19			$	34,249				20			$	34,084				20
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent		$	8,379				15			$	10,299				19			$	32,486				18			$	32,846				20
Noncontrolling interests			290				—				172				—				840				1				547				—
		$	8,669				15			$	10,471				19			$	33,326				19			$	33,393				20
EARNINGS PER SHARE
Basic		$	1.11							$	1.37							$	4.30							$	4.33
Diluted		$	1.11							$	1.37							$	4.30							$	4.31

(Concluded)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Millions of New Taiwan Dollars)

(Unaudited)

		Equity Attributable to Stockholders of the Parent
																										Other Adjustments
																										Exchange Differences Arising from the Translation of the Foreign Operations				Unrealized Gain (Loss) on Available-for- sale Financial Assets				Cash Flow Hedges				Total Other Adjustments				Total Equity Attributable to Stockholders of the Parent				Noncontrolling Interests				Total Equity
										Retained Earnings
		Common Stock				Additional Paid-in Capital				Legal Reserve				Special Reserve				Unappropriated Earnings				Total Retained Earnings
BALANCE, JANUARY 1, 2015		$	77,574			$	146,720			$	76,893			$	2,820			$	55,895			$	135,608			$	146			$	740			$	—			$	886			$	360,788			$	4,924			$	365,712
Appropriation of 2014 earnings
Legal reserve			—				—				681				—				(681	)			—				—				—				—				—				—				—				—
Special reserve			—				—				—				(144	)			144				—				—				—				—				—				—				—				—
Cash dividends distributed by Chunghwa			—				—				—				—				(37,673	)			(37,673	)			—				—				—				—				(37,673	)			—				(37,673	)
Cash dividends distributed by subsidiaries			—				—				—				—				—				—				—				—				—				—				—				(350	)			(350	)
Partial disposal of interests in subsidiaries			—				27				—				—				—				—				—				—				—				—				27				18				45
Change in additional paid-in capital from share subscription not based on original ownership of a subsidiary			—				—				—				—				—				—				—				—				—				—				—				1				1
Net income for the nine months ended September 30, 2015			—				—				—				—				33,552				33,552				—				—				—				—				33,552				532				34,084
Other comprehensive income (loss) for the nine months ended September 30, 2015			—				—				—				—				—				—				122				(843	)			15				(706	)			(706	)			15				(691	)
Total comprehensive income (loss) for the nine months ended September 30, 2015			—				—				—				—				33,552				33,552				122				(843	)			15				(706	)			32,846				547				33,393
Compensation cost of employee stock option of a subsidiary			—				—				—				—				—				—				—				—				—				—				—				44				44
Purchase of treasury stocks by a subsidiary			—				(15	)			—				—				(62	)			(62	)			—				—				—				—				(77	)			(416	)			(493	)
Net increase in noncontrolling interest			—				—				—				—				—				—				—				—				—				—				—				39				39
BALANCE, SEPTEMBER 30, 2015		$	77,574			$	146,732			$	77,574			$	2,676			$	51,175			$	131,425			$	268			$	(103	)		$	15			$	180			$	355,911			$	4,807			$	360,718
BALANCE, JANUARY 1, 2016		$	77,574			$	146,733			$	77,574			$	2,676			$	59,448			$	139,698			$	177			$	91			$	1			$	269			$	364,274			$	5,065			$	369,339
Appropriation of 2015 earnings
Cash dividends distributed by Chunghwa			—				—				—				—				(42,551	)			(42,551	)			—				—				—				—				(42,551	)			—				(42,551	)
Cash dividends distributed by subsidiaries			—				—				—				—				—				—				—				—				—				—				—				(710	)			(710	)
Partial disposal of interests in subsidiaries			—				58				—				—				—				—				—				—				—				—				58				25				83
Change in additional paid-in capital for not participating in the capital increase of a subsidiary			—				389				—				—				—				—				—				—				—				—				389				786				1,175
Net income for the nine months ended September 30, 2016			—				—				—				—				33,368				33,368				—				—				—				—				33,368				881				34,249
Other comprehensive income (loss) for the nine months ended September 30, 2016			—				—				—				—				—				—				(183	)			(698	)			(1	)			(882	)			(882	)			(41	)			(923	)
Total comprehensive income (loss) for the nine months ended September 30, 2016			—				—				—				—				33,368				33,368				(183	)			(698	)			(1	)			(882	)			32,486				840				33,326
Share-based payment transactions of subsidiaries			—				—				—				—				—				—				—				—				—				—				—				17				17
Net increase in noncontrolling interest			—				—				—				—				—				—				—				—				—				—				—				5				5
BALANCE, SEPTEMBER 30, 2016		$	77,574			$	147,180			$	77,574			$	2,676			$	50,265			$	130,515			$	(6	)		$	(607	)		$	—			$	(613	)		$	354,656			$	6,028			$	360,684

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

		For the Nine Months Ended September 30
		2016				2015
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax		$	39,701			$	40,304
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation			21,827				22,908
Amortization			2,518				2,308
Provision for doubtful accounts			524				356
Interest expenses			15				24
Interest income			(150	)			(244	)
Dividend income			(371	)			(218	)
Compensation cost of share-based payment transactions			17				44
Share of the profit of associates and joint ventures accounted for using equity method			(334	)			(693	)
Loss (gain) on disposal of investments accounted for using equity method			—				(5	)
Impairment loss on available-for-sale financial assets			—				107
Impairment loss on investments accounted for using equity method			—				8
Provision for inventory and obsolescence			168				137
Loss (gain) on disposal of financial instruments			—				—
Loss on disposal of property, plant and equipment			27				86
Loss on disposal of intangible assets			—				—
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net			9				(26	)
Loss (gain) on foreign exchange, net			(34	)			86
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading			—				1
Trade notes and accounts receivable			(9,021	)			(1,927	)
Accounts receivable from related parties			22				17
Inventories			743				433
Prepayments			(3,033	)			(2,888	)
Other current monetary assets			(623	)			(787	)
Other current assets			(129	)			346
Increase (decrease) in:
Trade notes and accounts payable			2,193				(4,591	)
Payables to related parties			(83	)			(56	)
Other payables			(2,851	)			(1,411	)
Provisions			(91	)			(71	)
Advance receipts			(126	)			(144	)
Other current liabilities			5				(125	)

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

		For the Nine Months Ended September 30
		2016				2015
Deferred revenue		$	(66	)		$	192
Net defined benefit liabilities			(8,570	)			300
Cash generated from operations			42,287				54,471
Interest paid			(15	)			(24	)
Income tax paid			(8,989	)			(7,114	)
Net cash provided by operating activities			33,283				47,333
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets			(40	)			(29	)
Proceeds from disposal of available-for-sale financial assets			36				1
Proceeds from capital reduction of available-for-sale financial assets			33				19
Acquisition of time deposits and negotiable certificate of deposits with maturities of more than three months			(2,698	)			(11,477	)
Proceeds from disposal of time deposits and negotiable certificate of deposits with maturities of more than three months			2,463				11,645
Acquisition of held-to-maturity financial assets			—				(1,002	)
Proceeds from disposal of held-to-maturity financial assets			925				3,850
Acquisition of investments accounted for using equity method			—				(6	)
Proceeds from disposal of investments accounted for using equity method			182				16
Net cash outflow on acquisition of subsidiaries			—				(114	)
Acquisition of property, plant and equipment			(12,312	)			(15,474	)
Proceeds from disposal of property, plant and equipment			6				1
Acquisition of intangible assets			(114	)			(226	)
Decrease (increase) in other noncurrent assets			310				(589	)
Interest received			159				265
Cash dividends received			1,046				759
Net cash used in investing activities			(10,004	)			(12,361	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans			585				2,750
Repayment of short-term loans			(557	)			(3,255	)
Repayment of long-term loans			(150	)			(104	)
Decrease in customers’ deposits			(381	)			(128	)
Increase (decrease) in other noncurrent liabilities			(111	)			1,221
Cash dividends			(42,551	)			(37,673	)
Partial disposal of interest in subsidiaries without losing control			83				45

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

		For the Nine Months Ended September 30
		2016				2015
Cash dividends paid to noncontrolling interests		$	(710	)		$	(350	)
Other change in noncontrolling interests			1,180				(488	)
Net cash used in financing activities			(42,612	)			(37,982	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			(94	)			58
NET DECREASE IN CASH AND CASH EQUIVALENTS			(19,427	)			(2,952	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			30,271				23,560
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	10,844			$	20,608

(Concluded)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 and 2015

(Unaudited)

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of September 30, 2016 and 2015, the related consolidated statements of comprehensive income for the three months ended September 30, 2016 and 2015 and for the nine months ended September 30, 2016 and 2015, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 2016 and 2015 in accordance with IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standard Board (IASB). The consolidated financial statements are incomplete as they omit the related footnote disclosures as required under International Financial Reporting Standards as issued by IASB.

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