EX-99.3 4 d390571dex993.htm EX-99.3

EX-99.3

Exhibit 99.3

Chunghwa Telecom Co., Ltd. and

Subsidiaries

Consolidated Financial Statements for the

Three Months Ended March 31, 2017 and 2016

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)

		March 31, 2017 (Unaudited)								December 31, 2016 (Audited)								March 31, 2016 (Unaudited)
		Amount				%				Amount				%				Amount				%
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	38,006				9			$	31,100				7			$	34,545				8
Financial assets at fair value through profit or loss			—				—				—				—				9				—
Hedging derivative financial assets			—				—				—				—				2				—
Held-to-maturity financial assets			1,290				—				2,140				—				2,729				—
Trade notes and accounts receivable, net			28,187				6				31,022				7				27,894				6
Receivables from related parties			31				—				14				—				35				—
Inventories			8,369				2				7,423				2				6,911				2
Prepayments			5,209				1				2,978				1				6,083				1
Other current monetary assets			4,710				1				4,821				1				3,373				1
Other current assets			1,825				—				2,122				—				2,530				—
Total current assets			87,627				19				81,620				18				84,111				18
NONCURRENT ASSETS
Available-for-sale financial assets			5,088				1				4,764				1				5,393				1
Held-to-maturity financial assets			—				—				—				—				1,290				—
Investments accounted for using equity method			2,470				1				2,386				1				2,938				1
Property, plant and equipment			285,915				64				291,170				65				291,630				64
Investment properties			8,109				2				8,115				2				7,898				2
Intangible assets			46,498				10				47,353				11				49,703				11
Deferred income tax assets			2,343				1				2,322				—				1,041				—
Net defined benefit assets			1,171				—				919				—				3,038				1
Prepayments			3,910				1				3,241				1				3,505				1
Other noncurrent assets			5,055				1				5,025				1				5,414				1
Total noncurrent assets			360,559				81				365,295				82				371,850				82
TOTAL		$	448,186				100			$	446,915				100			$	455,961				100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans		$	439				—			$	138				—			$	70				—
Financial liabilities at fair value through profit or loss			4				—				1				—				2				—
Hedging derivative financial liabilities			1				—				1				—				—				—
Trade notes and accounts payable			12,881				3				18,810				5				13,728				3
Payables to related parties			398				—				762				—				392				—
Current tax liabilities			9,439				2				6,522				1				11,196				3
Other payables			21,885				5				26,418				—				23,623				5
Provisions			123				—				119				6				143				—
Advance receipts			9,253				2				10,059				—				9,157				2
Current portion of long-term loans			—				—				—				3				4				—
Other current liabilities			1,233				—				1,330				—				1,373				—
Total current liabilities			55,656				12				64,160				15				59,688				13
NONCURRENT LIABILITIES
Long-term loans			1,600				—				1,600				—				1,646				—
Deferred income taxes liabilities			1,498				—				1,464				—				662				—
Provisions			67				—				66				—				59				—
Customers’ deposits			4,539				1				4,610				1				4,551				1
Net defined benefit liabilities			1,546				—				1,537				—				1,361				—
Deferred revenue			3,605				1				3,546				1				3,532				1
Other noncurrent liabilities			3,790				1				3,004				1				3,361				1
Total noncurrent liabilities			16,645				3				15,827				3				15,172				3
Total liabilities			72,301				15				79,987				18				74,860				16
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT
Common stocks			77,574				17				77,574				17				77,574				17
Additional paid-in capital			147,180				33				147,180				33				147,180				32
Retained earnings
Legal reserve			77,574				17				77,574				17				77,574				17
Special reserve			2,676				1				2,676				1				2,676				1
Unappropriated earnings			64,284				15				55,657				13				69,923				16
Total retained earnings			144,534				33				135,907				31				150,173				34
Other adjustments			133				—				(5	)			—				70				—
Total equity attributable to stockholders of the parent			369,421				83				360,656				81				374,997				83
NONCONTROLLING INTERESTS			6,464				2				6,272				1				6,104				1
Total equity			375,885				85				366,928				82				381,101				84
TOTAL		$	448,186				100			$	446,915				100			$	455,961				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)

		Three Months Ended March 31
		2017								2016
		Amount				%				Amount				%
REVENUES		$	54,533				100			$	56,944				100
OPERATING COSTS			34,621				63				35,106				62
GROSS PROFIT			19,912				37				21,838				38
OPERATING EXPENSES
Marketing			6,282				12				5,996				11
General and administrative			1,164				2				1,151				2
Research and development			921				1				902				2
Total operating expenses			8,367				15				8,049				15
OTHER INCOME AND EXPENSES			(12	)			—				(6	)			—
INCOME FROM OPERATIONS			11,533				22				13,783				23
NON-OPERATING INCOME AND EXPENSES
Interest income			44				—				49				—
Other income			60				—				365				1
Other gains and losses			44				—				4				—
Interest expenses			(6	)			—				(5	)			—
Share of the profits of associates and joint ventures accounted for using equity method			118				—				81				—
Total non-operating income and expenses			260				—				494				1
INCOME BEFORE INCOME TAX			11,793				22				14,277				24
INCOME TAX EXPENSE			2,939				6				3,571				6
NET INCOME			8,854				16				10,706				18
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising from the translation of the foreign operations			(214	)			—				(83	)			—
Unrealized gain (loss) on available-for-sale financial assets			327				—				(124	)			—

(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)

		Three Months Ended March 31
		2017								2016
		Amount				%				Amount				%
Cash flow hedges		$	(1	)			—			$	1				—
Share of exchange differences arising from the translation of the foreign operations of associates and joint ventures			(3	)			—				(1	)			—
Income tax benefit (expense) relating to items that may be reclassified subsequently			1				—				(1	)			—
			110				—				(208	)			—
Total other comprehensive income (loss), net of income tax			110				—				(208	)			—
TOTAL COMPREHENSIVE INCOME		$	8,964				16			$	10,498				18
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent		$	8,627				16			$	10,475				18
Noncontrolling interests			227				—				231				—
		$	8,854				16			$	10,706				18
COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent		$	8,765				16			$	10,276				18
Noncontrolling interests			199				—				222				—
		$	8,964				16			$	10,498				18
EARNINGS PER SHARE
Basic		$	1.11							$	1.35
Diluted		$	1.11							$	1.35

(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
										Retained Earnings
		Common Stocks				Additional Paid-in Capital				Legal Reserve				Special Reserve				Unappropriated Earnings				Total Retained Earnings																								Noncontrolling Interests				Total Equity
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
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 three months ended March 31, 2016			—				—				—				—				10,475				10,475				—				—				—				—				10,475				231				10,706
Other comprehensive income (loss) for the three months ended March 31, 2016			—				—				—				—				—				—				(74	)			(126	)			1				(199	)			(199	)			(9	)			(208	)
Total comprehensive income (loss) for the three months ended March 31, 2016			—				—				—				—				10,475				10,475				(74	)			(126	)			1				(199	)			10,276				222				10,498
Share-based payment transactions of subsidiaries			—				—				—				—				—				—				—				—				—				—				—				6				6
BALANCE, MARCH 31, 2016		$	77,574			$	147,180			$	77,574			$	2,676			$	69,923			$	150,173			$	103			$	(35	)		$	2			$	70			$	374,997			$	6,104			$	381,101
BALANCE, JANUARY 1, 2017		$	77,574			$	147,180			$	77,574			$	2,676			$	55,657			$	135,907			$	46			$	(51	)		$	—			$	(5	)		$	360,656			$	6,272			$	366,928
Cash dividends distributed by subsidiaries			—				—				—				—				—				—				—				—				—				—				—				(11	)			(11	)
Net income for the three months ended March 31, 2017			—				—				—				—				8,627				8,627				—				—				—				—				8,627				227				8,854
Other comprehensive income (loss) for the three months ended March 31, 2017			—				—				—				—				—				—				(189	)			328				(1	)			138				138				(28	)			110
Total comprehensive income (loss) for the three months ended March 31, 2017			—				—				—				—				8,627				8,627				(189	)			328				(1	)			138				8,765				199				8,964
Share-based payment transactions of subsidiaries			—				—				—				—				—				—				—				—				—				—				—				4				4
BALANCE, MARCH 31, 2017		$	77,574			$	147,180			$	77,574			$	2,676			$	64,284			$	144,534			$	(143	)		$	277			$	(1	)		$	133			$	369,421			$	6,464			$	375,885

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

		Three Months Ended March 31
		2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax		$	11,793			$	14,277
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation			7,176				7,345
Amortization			903				782
Provision for doubtful accounts			303				117
Interest expenses			6				5
Interest income			(44	)			(49	)
Dividend income			—				—
Compensation cost of share-based payment transactions			4				6
Share of the profits of associates and joint ventures accounted for using equity method			(118	)			(81	)
Provision for inventory and obsolescence			13				104
Gain on disposal of financial instruments			(1	)			—
Loss on disposal of property, plant and equipment			12				6
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net			3				(7	)
Loss (gain) on foreign exchange, net			(26	)			4
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading			—				—
Trade notes and accounts receivable			2,603				(1,087	)
Receivables from related parties			(18	)			7
Inventories			(959	)			1,765
Prepayments			(2,900	)			(3,307	)
Other current monetary assets			120				(185	)
Other current assets			297				(195	)
Increase (decrease) in:
Trade notes and accounts payable			(5,924	)			(2,565	)
Payables to related parties			(364	)			(219	)
Other payables			(1,945	)			(1,086	)
Provisions			5				(46	)
Advance receipts			(11	)			(222	)
Other current liabilities			(82	)			(1	)
Deferred revenue			59				(83	)
Net defined benefit plans			(243	)			(8,775	)
Cash generated from operations			10,662				6,510
Interest paid			(6	)			(5	)
Income tax paid			(8	)			(15	)
Net cash provided by operating activities			10,648				6,490

(Continued)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

		Three Months Ended March 31
		2017				2016
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of time deposits and negotiable certificate of deposit with maturities of more than three months		$	(2,188	)		$	(1,600	)
Proceeds from disposal of time deposits and negotiable certificate of deposit with maturities of more than three months			2,147				1,713
Proceeds from disposal of held-to-maturity financial assets			850				—
Acquisition of available-for-sale financial assets			—				(6	)
Proceeds from disposal of available-for-sale financial assets			2				—
Acquisition of property, plant and equipment			(4,612	)			(3,385	)
Proceeds from disposal of property, plant and equipment			1				4
Acquisition of intangible assets			(48	)			(39	)
Decrease (increase) in other noncurrent assets			(85	)			169
Interest received			54				49
Cash dividends received			—				—
Net cash used in investing activities			(3,879	)			(3,095	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans			2,259				—
Repayment of short-term loans			(1,958	)			(40	)
Repayment of long-term loans			—				(100	)
Decrease in customers’ deposits			(86	)			(303	)
Increase (decrease) in other noncurrent liabilities			(8	)			75
Partial disposal of interests in subsidiaries without losing control			—				84
Change in other noncontrolling interests			—				1,176
Net cash provided by financial activities			207				892
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS			(70	)			(13	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			6,906				4,274
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			31,100				30,271
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	38,006			$	34,545

(Concluded)

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CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 2017 and 2016

(Unaudited)

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of March 31, 2017 and 2016, the related consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2017 and 2016 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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