EX-99.3

EX-99.3 4 d489030dex993.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, 2017 and 2016

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)


	September 30, 2017 (Unaudited)				December 31, 2016 (Audited)				September 30, 2016 (Unaudited)					September 30, 2017 (Unaudited)				December 31, 2016 (Audited)					September 30, 2016 (Unaudited)
	Amount		%		Amount		%		Amount		%			Amount		%		Amount			%		Amount			%
ASSETS													LIABILITIES AND EQUITY
CURRENT ASSETS													CURRENT LIABILITIES
Cash and cash equivalents	$	25,466		6	$	31,100		7	$	10,844		3	Short-term loans	$	423		—	$	138			—	$	138			—
Financial assets at fair value through profit or loss		2		—		—		—		—		—	Financial liabilities at fair value through profit or loss		—		—		1			—		10			—
Hedging derivative financial assets		1		—		—		—		—		—	Hedging derivative financial liabilities		—		—		1			—		—			—
Held-to-maturity financial assets		—		—		2,140		—		3,091		1	Trade notes and accounts payable		17,643		4		18,810			5		18,486			4
Trade notes and accounts receivable, net		29,833		7		31,022		7		35,714		8	Payables to related parties		586		—		762			—		528			—
Receivables from related parties		41		—		14		—		20		—	Current tax liabilities		6,090		2		6,522			1		4,078			1
Inventories		9,041		2		7,423		2		7,869		2	Other payables		20,332		5		26,418			—		21,134			5
Prepayments		5,143		1		2,978		1		6,040		1	Provisions		146		—		119			6		96			—
Other current monetary assets		5,447		1		4,821		1		4,149		1	Advance receipts		9,171		2		10,059			3		9,430			3
Other current assets		2,745		—		2,122		—		2,465		1	Current portion of long-term loans		1,600		—		—			—		—			—
													Other current liabilities		1,214		—		1,330			—		1,328			—

Total current assets		77,719		17		81,620		18		70,192		17	Total current liabilities		57,205		13		64,160			15		55,228			13

NONCURRENT ASSETS
Available-for-sale financial assets		5,274		1		4,764		1		4,782		1	NONCURRENT LIABILITIES
Investments accounted for using equity method		2,340		1		2,386		1		2,317		—	Long-term loans		—		—		1,600			—		1,600			—
Property, plant and equipment		283,501		65		291,170		65		285,350		66	Deferred income tax liabilities		1,446		—		1,464			—		667			—
Investment properties		8,094		2		8,115		2		7,888		2	Provisions		68		—		66			—		60			—
Intangible assets		44,792		10		47,353		11		48,044		11	Customers’ deposits		4,548		1		4,610			1		4,523			1
Deferred income tax assets		2,373		1		2,322		—		1,024		—	Net defined benefit liabilities		1,567		—		1,537			—		1,389			—
Net defined benefit assets		958		—		919		—		2,871		1	Deferred revenue		3,612		1		3,546			1		3,550			1
Prepayments		3,614		1		3,241		1		3,274		1	Other noncurrent liabilities		3,548		1		3,004			1		2,998			1

Other noncurrent assets		6,048		2		5,025		1		4,957		1	Total noncurrent liabilities		14,789		3		15,827			3		14,787			3

Total noncurrent assets		356,994		83		365,295		82		360,507		83	Total liabilities		71,994		16		79,987			18		70,015			16

													EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT
													Common stocks		77,574		18		77,574			17		77,574			18

													Additional paid-in capital		148,071		34		147,180			33		147,180			34

													Retained earnings
													Legal reserve		77,574		18		77,574			17		77,574			18
													Special reserve		2,681		1		2,676			1		2,676			1
													Unappropriated earnings		48,353		11		55,657			13		50,265			12

													Total retained earnings		128,608		30		135,907			31		130,515			31

													Other adjustments		351		—		(5	)		—		(613	)		—

													Total equity attributable to stockholders of the parent		354,604		82		360,656			81		354,656			83
													NONCONTROLLING INTERESTS		8,115		2		6,272			1		6,028			1

													Total equity		362,719		84		366,928			82		360,684			84

TOTAL	$	434,713		100	$	446,915		100	$	430,699		100	TOTAL	$	434,713		100	$	446,915			100	$	430,699			100

- 2 -

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 September 30										Nine Months Ended September 30
	2017					2016					2017					2016
	Amount			%		Amount			%		Amount			%		Amount			%
REVENUES	$	56,424			100	$	58,518			100	$	166,629			100	$	171,658			100

OPERATING COSTS		35,655			63		38,516			66		105,354			63		108,875			63

GROSS PROFIT		20,769			37		20,002			34		61,275			37		62,783			37

OPERATING EXPENSES
Marketing		6,270			11		6,451			11		18,705			11		18,456			11
General and administrative		1,121			2		1,108			2		3,443			2		3,362			2
Research and development		946			2		942			1		2,825			2		2,788			2

Total operating expenses		8,337			15		8,501			14		24,973			15		24,606			15

OTHER INCOME AND EXPENSES		(16	)		—		(10	)		—		(33	)		—		(27	)		—

INCOME FROM OPERATIONS		12,416			22		11,491			20		36,269			22		38,150			22

NON-OPERATING INCOME AND EXPENSES
Interest income		52			—		46			—		159			—		150			—
Other income		130			—		291			—		634			—		1,062			1
Other gains and losses		(85	)		—		13			—		(85	)		—		20			—
Interest expenses		(5	)		—		(5	)		—		(16	)		—		(15	)		—
Share of profits of associates and joint ventures accounted for using equity method		72			—		42			—		312			—		334			—

Total non-operating income and expenses		164			—		387			—		1,004			—		1,551			1

INCOME BEFORE INCOME TAX		12,580			22		11,878			20		37,273			22		39,701			23

INCOME TAX EXPENSE		3,165			5		2,987			5		5,279			3		5,452			3

NET INCOME		9,415			17		8,891			15		31,994			19		34,249			20

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		11			—		(131	)		—		(175	)		—		(220	)		—
Unrealized gain (loss) on available-for-sale financial assets		544			1		(91	)		—		515			—		(698	)		(1	)
Cash flow hedges		(1	)		—		3			—		1			—		(1	)		—
Share of exchange differences arising from the translation of the foreign operations of associates and joint ventures		—			—		(3	)		—		(3	)		—		(4	)		—
Income tax benefit (expense) relating to items that may be reclassified subsequently		—			—		—			—		2			—		—			—

Total other comprehensive income (loss), net of income tax		554			1		(222	)		—		340			—		(923	)		(1	)

TOTAL COMPREHENSIVE INCOME	$	9,969			18	$	8,669			15	$	32,334			19	$	33,326			19

(Continued)

- 3 -

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 September 30								Nine Months Ended September 30
	2017				2016				2017				2016
	Amount		%		Amount		%		Amount		%		Amount		%
NET INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	9,105		16	$	8,583		15	$	31,037		19	$	33,368		19
Noncontrolling interests		310		1		308		—		957		—		881		1

	$	9,415		17	$	8,891		15	$	31,994		19	$	34,249		20

COMPREHENSIVE INCOME ATTRIBUTABLE TO
Stockholders of the parent	$	9,653		17	$	8,379		15	$	31,393		19	$	32,486		18
Noncontrolling interests		316		1		290		—		941		—		840		1

	$	9,969		18	$	8,669		15	$	32,334		19	$	33,326		19

EARNINGS PER SHARE
Basic	$	1.17			$	1.11			$	4.00			$	4.30

Diluted	$	1.17			$	1.11			$	4.00			$	4.30

(Concluded)

- 4 -

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									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									Cash Flow Hedges			Total Other Adjustments						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
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 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 interests		—		—		—		—		—			—			—			—			—			—			—			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

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
Appropriation of 2016 earnings
Special Reserve		—		—		—		5		(5	)		—			—			—			—			—			—			—			—
Cash dividends distributed by Chunghwa		—		—		—		—		(38,336	)		(38,336	)		—			—			—			—			(38,336	)		—			(38,336	)
Cash dividends distributed by subsidiaries		—		—		—		—		—			—			—			—			—			—			—			(942	)		(942	)
Partial disposal of interests in subsidiaries		—		77		—		—		—			—			—			—			—			—			77			29			106
Change in additional paid-in capital for not participating in the capital increase of a subsidiary		—		803		—		—		—			—			—			—			—			—			803			1,754			2,557
Net income for the nine months ended September 30, 2017		—		—		—		—		31,037			31,037			—			—			—			—			31,037			957			31,994
Other comprehensive income (loss) for the nine months ended September 30, 2017		—		—		—		—		—			—			(163	)		518			1			356			356			(16	)		340

Total comprehensive income for the nine months ended September 30, 2017		—		—		—		—		31,037			31,037			(163	)		518			1			356			31,393			941			32,334

Share-based payment transactions of subsidiaries		—		2		—		—		—			—			—			—			—			—			2			16			18
Net increase in noncontrolling interests		—		9		—		—		—			—			—			—			—			—			9			45			54

BALANCE, SEPTEMBER 30, 2017	$	77,574	$	148,071	$	77,574	$	2,681	$	48,353		$	128,608		$	(117	)	$	467		$	1		$	351		$	354,604		$	8,115		$	362,719

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)


	Nine Months Ended September 30
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	37,273		$	39,701
Adjustments to reconcile income before income tax to net cash provided by operating activities:
Depreciation		21,225			21,827
Amortization		2,688			2,518
Provision for doubtful accounts		462			524
Interest expenses		16			15
Interest income		(159	)		(150	)
Dividend income		(328	)		(371	)
Compensation cost of share-based payment transactions		18			17
Share of profits of associates and joint ventures accounted for using equity method		(312	)		(334	)
Provision for inventory and obsolescence		23			168
Loss on disposal of investments accounted for using equity method		—			—
Gain on disposal of financial instruments		(3	)		—
Loss on disposal of property, plant and equipment		33			27
Valuation loss (gain) on financial assets and liabilities at fair value through profit or loss, net		(3	)		9
Loss (gain) on foreign exchange, net		74			(34	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets held for trading		—			—
Trade notes and accounts receivable		1,004			(9,021	)
Receivables from related parties		(27	)		22
Inventories		(1,642	)		743
Prepayments		(2,538	)		(3,033	)
Other current monetary assets		(394	)		(623	)
Other current assets		(623	)		(129	)
Increase (decrease) in:
Trade notes and accounts payable		(1,166	)		2,193
Payables to related parties		(176	)		(83	)
Other payables		(3,420	)		(2,851	)
Provisions		30			(91	)
Advance receipts		(310	)		(126	)
Other current liabilities		(78	)		5
Deferred revenue		65			(66	)
Net defined benefit plans		(10	)		(8,570	)

Cash generated from operations		51,722			42,287
Interest paid		(16	)		(15	)
Income tax paid		(5,777	)		(8,989	)

Net cash provided by operating activities		45,929			33,283

(Continued)

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)


	Nine Months Ended September 30
	2017			2016
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets	$	—		$	(40	)
Proceeds from disposal of available-for-sale financial assets		7			36
Proceeds from capital reduction of available-for-sale financial assets		1			33
Acquisition of time deposits and negotiable certificates of deposit with maturities of more than three months		(5,636	)		(2,698	)
Proceeds from disposal of time deposits and negotiable certificates of deposit with maturities of more than three months		5,334			2,463
Proceeds from disposal of held-to-maturity financial assets		2,140			925
Proceeds from disposal of investments accounted for using equity method		—			182
Acquisition of property, plant and equipment		(16,591	)		(12,312	)
Proceeds from disposal of property, plant and equipment		149			6
Acquisition of intangible assets		(127	)		(114	)
Decrease (increase) in other noncurrent assets		(1,258	)		310
Interest received		186			159
Cash dividends received		626			1,046

Net cash used in investing activities		(15,169	)		(10,004	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		5,352			585
Repayment of short-term loans		(5,067	)		(557	)
Repayment of long-term loans		—			(150	)
Decrease in customers’ deposits		(100	)		(381	)
Decrease in other noncurrent liabilities		(35	)		(111	)
Cash dividends		(38,336	)		(42,551	)
Partial disposal of interest in subsidiaries without losing control		106			83
Cash dividends distributed to noncontrolling interests		(942	)		(710	)
Other change in noncontrolling interests		2,611			1,180

Net cash used in financing activities		(36,411	)		(42,612	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		17			(94	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(5,634	)		(19,427	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		31,100			30,271

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	25,466		$	10,844

(Concluded)

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 and 2016

(Unaudited)

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of September 30, 2017 and 2016, the related consolidated statements of comprehensive income for the three months and nine months ended September 30, 2017 and 2016, as well as the consolidated statements of changes in equity and cash flows for the nine months ended September 30, 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.

- 8 -