1934 Act Registration No. 1-31731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Dated November 8, 2024

 

 

Chunghwa Telecom Co., Ltd.

(Translation of Registrant’s Name into English)

 

 

21-3 Xinyi Road Sec. 1,

Taipei, Taiwan, 100 R.O.C.

(Address of Principal Executive Office)

 

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of form 20-F or Form 40-F.)

Form 20-F ☒   Form 40-F ☐

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes ☐   No ☒

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable)

 

 

 

EXHIBIT INDEX

 

Exhibit

   

Description

99.1    To announce the differences between consolidated financial statements for the nine months ended September 30, 2024 under Taiwan-IFRSs and that under IFRSs
99.2    Consolidated Financial Statements for the Nine Months Ended September 30, 2024 and 2023 and Independent Auditors’ Review Report pursuant to International Financial Reporting Standards adopted by ROC (“Taiwan-IFRSs”)
99.3    Consolidated Financial Statements for the Nine Months Ended September 30, 2024 and 2023 pursuant to International Financial Reporting Standards issued by the International Accounting Standards Board (“IFRSs”)

 

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant Chunghwa Telecom Co., Ltd. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 8, 2024

      
   

Chunghwa Telecom Co., Ltd.

   

By:

  

/s/ Wen-Hsin Hsu

   

Name:

  

Wen-Hsin Hsu

   

Title:

  

Chief Financial Officer

 

3

Exhibit 99.1

To announce the differences between consolidated financial statements for the nine months ended September 30, 2024 under Taiwan-IFRSs and that under IFRSs

Date of events: 2024/11/08

Contents:

 

1.

Date of occurrence of the event: 2024/11/08

 

2.

Year/Quarter of the financial report: The third quarter of 2024

 

3.

Accounting principles applied for securities listed domestically:

Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China (“Taiwan-IFRSs”)

 

4.

Inconsistent items/amounts in financial reports for securities listed domestically:

Under Taiwan-IFRSs, Chunghwa Telecom Co., Ltd. and its subsidiaries (or the “Company”) reported consolidated net income of NT$9,285,286 thousand and NT$29,000,674 thousand, consolidated net income attributable to stockholders of the parent of NT$9,005,006 thousand and NT$28,216,292 thousand, and basic earnings per share of NT$1.16 and NT$3.64 for the three months and nine months ended September 30, 2024, respectively. The Company also reported total consolidated assets of NT$509,622,790 thousand, total consolidated liabilities of NT$122,935,189 thousand, and total consolidated equity of NT$386,687,601 thousand as of September 30, 2024.

 

5.

Accounting principles applied for securities issued overseas:

IAS 34 “Interim Financial Reporting” as issued by the International Accounting Standard Board (“IFRSs”)

 

6.

Inconsistent items/ amounts (securities issued overseas):

Under IFRSs, the Company reported consolidated net income of NT$8,800 million and NT$29,552 million, consolidated net income attributable to stockholders of the parent of NT$8,534 million and NT$28,751 million, and basic earnings per share of NT$1.11 and NT$3.71 for the three months and nine months ended September 30, 2024, respectively. The Company also reported total consolidated assets of NT$509,435 million, total consolidated liabilities of NT$124,441 million, and total consolidated equity of NT$384,994 million as of September 30, 2024

 

7.

Inconsistent items/amounts in financial information for securities issued overseas:

The differences between consolidated net income under Taiwan-IFRSs and that under IFRSs followed by the Company mainly come from the timing of the recognition of income tax on unappropriated earnings. In addition, prior to incorporation, the Company was subject to the laws and regulations applicable to state-owned enterprises in Taiwan which differed from the generally accepted accounting principles as applicable to commercial companies. As such, revenue from providing fixed line connection service and selling prepaid phone cards was recognized at the time the service was performed or the card was sold by the Company. Upon incorporation, net assets greater than the capital stock were credited as additional paid-in-capital and part of the additional paid-in-capital was from the unearned revenues generated from connection fees and prepaid cards as of the date of incorporation. Under IFRSs, revenue from connection fees and prepaid phone cards was deferred at the time of the service performed or sale and recognized as revenue over time as the service is continuously performed or as consumed. This reclassification from additional paid-in capital to retained earnings did not affect total equity.

 

- 1 -

8.

Any other matters that need to be specified:

Chunghwa Telecom’s earnings distribution and stockholders’ equity matters are in accordance with Taiwan-IFRSs.

 

- 2 -

Exhibit 99.2

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2024 and 2023 and

Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

PWCR24002088

To the Board of Directors and Shareholders of Chunghwa Telecom Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Chunghwa Telecom Co., Ltd. and its subsidiaries (the “Company”) as of September 30, 2024, and the related consolidated statements of comprehensive income for the three-month and nine-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the nine-month period then ended, and notes to the consolidated financial statements, including a summary of material accounting policy information. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting”, that came into effect as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with the Standards on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” of the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2024, and of its consolidated financial performance for the three-month and nine-month periods then ended and its consolidated cash flows for the nine-month period then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting”, that came into effect as endorsed by the Financial Supervisory Commission.

 

- 1 -

Other matter - Prior period financial statements reviewed by other independent auditors

The Company’s consolidated financial statements as of and for the nine-month period ended September 30, 2023 were reviewed by other independent auditors, whose review report dated November 8, 2023, expressed an unmodified conclusion on those consolidated financial statements.

 

/s/ Huang, Shih-Chun       /s/ Hsu, Chien-Yeh
For and on behalf of PricewaterhouseCoopers, Taiwan      
November 8, 2024      

Notice to Readers

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ review report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

 

- 2 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

 

 

     September 30, 2024      December 31, 2023      September 30, 2023  
     Amount      %      Amount      %      Amount      %  

ASSETS

                  

CURRENT ASSETS

                  

Cash and cash equivalents (Notes 6 and 37)

    $ 31,214,852        6      $ 33,823,884        6      $ 32,005,368        7  

Financial assets at fair value through profit or loss (Note 7)

      517        —         904        —         411        —   

Contract assets (Note 29)

      7,444,080        1        6,713,227        1        6,727,095        1  

Trade notes and accounts receivable, net (Notes 9 and 29)

      23,085,802        5        24,841,995        5        23,514,962        5  

Receivables from related parties (Note 37)

      182,085        —         78,089        —         111,194        —   

Inventories (Notes 10, 29 and 39)

      11,807,287        2        11,520,765        2        12,363,787        2  

Prepayments (Note 11)

      5,933,459        1        2,839,471        1        5,556,000        1  

Other current monetary assets (Notes 12 and 37)

      14,692,754        3        20,352,050        4        12,326,502        2  

Incremental costs of obtaining contracts (Note 29)

      339,055        —         210,923        —         95,066        —   

Other current assets (Notes 19 and 38)

      4,222,645        1        2,822,259        1        4,205,048        1  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total current assets

      98,922,536        19        103,203,567        20        96,905,433        19  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NONCURRENT ASSETS

                  

Financial assets at fair value through profit or loss (Note 7)

      1,032,819        —         1,035,701        —         1,052,332        —   

Financial assets at fair value through other comprehensive income (Note 8)

      4,808,272        1        4,412,343        1        4,054,015        1  

Investments accounted for using equity method (Note 14)

      8,745,273        2        8,450,199        2        7,218,915        1  

Contract assets (Note 29)

      4,243,524        1        3,768,645        1        3,526,053        1  

Property, plant and equipment (Notes 15, 34, 37 and 38)

      283,083,272        56        292,337,742        56        287,207,522        56  

Right-of-use assets (Notes 16 and 37)

      11,001,831        2        11,237,814        2        11,186,658        2  

Investment properties (Note 17)

      11,642,246        2        9,805,463        2        10,146,675        2  

Intangible assets (Notes 18 and 37)

      67,857,608        14        72,726,545        13        74,276,660        15  

Deferred income tax assets (Note 3)

      2,054,672        —         2,099,439        —         2,109,348        —   

Incremental costs of obtaining contracts (Note 29)

      1,125,205        —         939,409        —         936,516        —   

Net defined benefit assets (Note 3)

      6,416,911        1        5,963,259        1        5,720,111        1  

Prepayments (Notes 11 and 39)

      4,144,143        1        3,330,583        1        3,175,536        1  

Other noncurrent assets (Notes 19, 38 and 39)

      4,544,478        1        4,628,692        1        4,686,883        1  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total noncurrent assets

      410,700,254        81        420,735,834        80        415,297,224        81  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL

    $ 509,622,790        100      $ 523,939,401        100      $ 512,202,657        100  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

LIABILITIES AND EQUITY

                  

CURRENT LIABILITIES

                  

Short-term loans (Note 21)

    $ 430,000        —       $ 585,000        —       $ 820,000        —   

Financial liabilities at fair value through profit or loss (Note 7)

      1,080        —         —         —         2,485        —   

Hedging financial liabilities (Note 20)

      662        —         44        —         3,535        —   

Contract liabilities (Notes 29 and 39)

      16,238,717        3        14,088,416        3        14,287,322        3  

Trade notes and accounts payable (Note 24)

      12,379,605        2        14,395,740        3        13,177,439        3  

Payables to related parties (Note 37)

      196,470        —         385,089        —         167,646        —   

Current tax liabilities (Note 3)

      2,438,114        —         4,626,265        1        7,110,763        1  

Lease liabilities (Notes 16, 34 and 37)

      3,539,219        1        3,504,990        1        3,455,460        1  

Other payables (Notes 25 and 34)

      21,693,143        5        25,256,926        5        21,150,397        5  

Provisions (Note 26)

      308,999        —         337,406        —         324,368        —   

Current portion of long-term liabilities (Notes 22, 23 and 38)

      8,798,425        2        1,600,000        —         1,600,000        —   

Other current liabilities

      1,248,054        —         983,339        —         1,026,026        —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total current liabilities

      67,272,488        13        65,763,215        13        63,125,441        13  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NONCURRENT LIABILITIES

                  

Long-term loans (Notes 22 and 38)

      1,600,000        —         —         —         —         —   

Bonds payable (Note 23)

      21,688,442        5        30,482,766        6        30,481,435        7  

Contract liabilities (Note 29)

      7,638,614        2        7,560,352        2        7,879,578        2  

Deferred income tax liabilities (Note 3)

      2,596,198        1        2,460,509        —         2,390,346        —   

Provisions (Note 26)

      501,057        —         485,267        —         480,603        —   

Lease liabilities (Notes 16, 34 and 37)

      7,456,843        1        7,470,191        2        7,417,147        1  

Customers’ deposits (Note 37)

      5,114,595        1        5,309,097        1        5,198,556        1  

Net defined benefit liabilities (Note 3)

      2,133,807        —         2,098,106        —         2,278,892        —   

Other noncurrent liabilities

      6,933,145        1        7,405,558        1        6,601,102        1  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total noncurrent liabilities

      55,662,701        11        63,271,846        12        62,727,659        12  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

      122,935,189        24        129,035,061        25        125,853,100        25  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT (Notes 13 and 28)

                  

Common stocks

      77,574,465        15        77,574,465        15        77,574,465        15  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Additional paid-in capital

      171,572,234        34        171,289,086        32        171,309,325        33  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Retained earnings

                  

Legal reserve

      77,574,465        15        77,574,465        15        77,574,465        15  

Special reserve

      2,675,419        1        2,898,503        1        2,898,503        1  

Unappropriated earnings

      44,148,475        9        52,618,677        10        44,247,372        9  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total retained earnings

      124,398,359        25        133,091,645        26        124,720,340        25  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Others

      560,077        —         352,892        —         419,267        —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total equity attributable to stockholders of the parent

      374,105,135        74        382,308,088        73        374,023,397        73  

NONCONTROLLING INTERESTS (Notes 13 and 28)

      12,582,466        2        12,596,252        2        12,326,160        2  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total equity

      386,687,601        76        394,904,340        75        386,349,557        75  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL

    $ 509,622,790        100      $ 523,939,401        100      $ 512,202,657        100  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The accompanying notes are an integral part of the consolidated financial statements.

 

- 3 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

 

 

     Three Months Ended September 30      Nine Months Ended September 30  
     2024      2023      2024      2023  
     Amount     %      Amount     %      Amount     %      Amount     %  

REVENUES (Notes 29, 37 and 43)

    $ 55,613,476       100      $ 53,657,946       100      $ 164,672,680       100      $ 161,332,502       100  

OPERATING COSTS (Notes 10, 27, 30 and 37)

      35,207,760       63        33,842,100       63        102,948,193       63        100,548,189       62  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

GROSS PROFIT

      20,405,716       37        19,815,846       37        61,724,487       37        60,784,313       38  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OPERATING EXPENSES (Notes 9, 27, 30 and 37)

                    

Marketing

      6,294,507       11        5,874,113       11        18,416,022       11        17,149,826       11  

General and administrative

      1,662,723       3        1,509,781       3        4,979,880       3        4,797,693       3  

Research and development

      1,067,585       2        953,000       2        3,015,340       2        2,854,258       2  

Expected credit loss (reversal of credit loss)

      (4,385 )      —         14,338       —         75,556       —         85,147       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total operating expenses

      9,020,430       16        8,351,232       16        26,486,798       16        24,886,924       16  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OTHER INCOME AND EXPENSES (Note 30)

      (9,026 )      —         (165 )      —         (9,715 )      —         1,462       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME FROM OPERATIONS

      11,376,260       21        11,464,449       21        35,227,974       21        35,898,851       22  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NON-OPERATING INCOME AND EXPENSES

                    

Interest income (Note 37)

      173,554       —         136,526       —         568,319       1        455,069       —   

Other income (Notes 30 and 37)

      93,238       —         76,840       —         418,640       —         325,769       —   

Other gains and losses (Notes 30, 36 and 37)

      (108,599 )      —         (75,957 )      —         (202,750 )      —         (228,718 )      —   

Interest expenses (Notes 16, 30 and 37)

      (85,814 )      —         (80,237 )      —         (252,274 )      —         (233,310 )      —   

Share of profits of associates and joint ventures accounted for using equity method (Note 14)

      40,463       —         115,860       —         63,658       —         339,473       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total non-operating income and expenses

      112,842       —         173,032       —         595,593       1        658,283       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME BEFORE INCOME TAX

      11,489,102       21        11,637,481       21        35,823,567       22        36,557,134       22  

INCOME TAX EXPENSE (Notes 3 and 31)

      2,203,816       4        2,258,007       4        6,822,893       4        7,097,925       4  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NET INCOME

      9,285,286       17        9,379,474       17        29,000,674       18        29,459,209       18  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

                    

Items that will not be reclassified to profit or loss:

                    

Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income (Notes 28 and 36)

      (154,544 )      —         110,893       —         86,254       —         547,814       —   

Gain or loss on hedging instruments subject to basis adjustment (Note 20)

      (763 )      —         (13,467 )      —         (618 )      —         (16,426 )      —   

Share of other comprehensive income (loss) of associates and joint ventures (Note 14)

      (1,646 )      —         (164 )      —         (407 )      —         7,488       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
     (156,953 )      —         97,262       —         85,229       —         538,876       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

(Continued)

 

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

 

 

     Three Months Ended September 30      Nine Months Ended September 30  
     2024      2023      2024      2023  
     Amount     %      Amount      %      Amount      %      Amount      %  

Items that may be reclassified subsequently to profit or loss:

                       

Exchange differences arising from the translation of the foreign operations

    $ (21,603 )      —       $ 95,388        —       $ 115,246        —       $ 102,203        —   

Share of other comprehensive income of associates and joint ventures (Note 14)

      20,043       —         4,134        —         41,413        —         6,254        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     (1,560 )      —         99,522        —         156,659        —         108,457        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total other comprehensive income (loss), net of income tax

      (158,513 )      —         196,784        —         241,888        —         647,333        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL COMPREHENSIVE INCOME

    $ 9,126,773       17      $ 9,576,258        17      $ 29,242,562        18      $ 30,106,542        18  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NET INCOME ATTRIBUTABLE TO

                       

Stockholders of the parent

    $ 9,005,006       16      $ 9,094,604        16      $ 28,216,292        18      $ 28,659,133        18  

Noncontrolling interests

      280,280       1        284,870        1        784,382        —         800,076        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 9,285,286       17      $ 9,379,474        17      $ 29,000,674        18      $ 29,459,209        18  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

COMPREHENSIVE INCOME ATTRIBUTABLE TO

                       

Stockholders of the parent

    $ 8,843,774       16      $ 9,296,017        16      $ 28,423,830        18      $ 29,311,597        18  

Noncontrolling interests

      282,999       1        280,241        1        818,732        —         794,945        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 9,126,773       17      $ 9,576,258        17      $ 29,242,562        18      $ 30,106,542        18  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

EARNINGS PER SHARE (Note 32)

                       

Basic

    $ 1.16        $ 1.17         $ 3.64         $ 3.69     
  

 

 

       

 

 

        

 

 

        

 

 

     

Diluted

    $ 1.16        $ 1.17         $ 3.63         $ 3.69     
  

 

 

       

 

 

        

 

 

        

 

 

     

 

The accompanying notes are an integral part of the consolidated financial statements.    (Concluded)

 

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

 

 

     Equity Attributable to Stockholders of the Parent (Notes 13, 20 and 28)              
                                     Others                    
                                    

Exchange

Differences

Arising from the

Translation of

the Foreign
Operations

    

Unrealized Gain

or Loss on

Financial Assets

at Fair Value

Through Other

Comprehensive
Income

                          
                    
                    
                    
                  Retained Earnings    

Gain or Loss

on Hedging
Instruments

          

Noncontrolling

Interests
(Notes 13 and 28)

        
     Common Stocks      Additional
Paid-in Capital		     Legal
Reserve		      Special Reserve     Unappropriated
Earnings		     Total     Total Equity  

BALANCE, JANUARY 1, 2023

    $ 77,574,465      $ 171,300,898     $ 77,574,465      $ 3,083,569     $ 51,868,574     $ (111,213 )    $ (124,762 )    $ 12,891     $ 381,178,887     $ 12,599,541     $ 393,778,428  

Appropriation of 2022 earnings

                         

Special reserve

      —         —        —         (185,066 )      185,066       —        —        —        —        —        —   

Cash dividends distributed by Chunghwa

      —         —        —         —        (36,475,514 )      —        —        —        (36,475,514 )      —        (36,475,514 ) 

Cash dividends distributed by subsidiaries

      —         —        —         —        —        —        —        —        —        (1,091,670 )      (1,091,670 ) 

Unclaimed dividend

      —         2,217       —         —        —        —        —        —        2,217       —        2,217  

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —         4,624       —         —        —        —        —        —        4,624       1,588       6,212  

Actual acquisition of interests in subsidiaries

      —         (4 )      —         —        —        —        —        —        (4 )      (37 )      (41 ) 

Net income for the nine months ended September 30, 2023

      —         —        —         —        28,659,133       —        —        —        28,659,133       800,076       29,459,209  

Other comprehensive income (loss) for the nine months ended September 30, 2023

      —         —        —         —        10,113       108,634       550,143       (16,426 )      652,464       (5,131 )      647,333  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the nine months ended September 30, 2023

      —         —        —         —        28,669,246       108,634       550,143       (16,426 )      29,311,597       794,945       30,106,542  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

      —         1,590       —         —        —        —        —        —        1,590       21,793       23,383  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, SEPTEMBER 30, 2023

    $ 77,574,465      $ 171,309,325     $ 77,574,465      $ 2,898,503     $ 44,247,372     $ (2,579 )    $ 425,381     $ (3,535 )    $ 374,023,397     $ 12,326,160     $ 386,349,557  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JANUARY 1, 2024

    $ 77,574,465      $ 171,289,086     $ 77,574,465      $ 2,898,503     $ 52,618,677     $ (167,812 )    $ 520,748     $ (44 )    $ 382,308,088     $ 12,596,252     $ 394,904,340  

Appropriation of 2023 earnings

                         

Special reserve

      —         —        —         (223,084 )      223,084       —        —        —        —        —        —   

Cash dividends distributed by Chunghwa

      —         —        —         —        (36,909,931 )      —        —        —        (36,909,931 )      —        (36,909,931 ) 

Cash dividends distributed by subsidiaries

      —         —        —         —        —        —        —        —        —        (898,565 )      (898,565 ) 

Payment of unclaimed dividend

      —         (123 )      —         —        —        —        —        —        (123 )      —        (123 ) 

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —         62,904       —         —        —        —        —        —        62,904       (1,728 )      61,176  

Actual disposal of interests in subsidiaries

      —         224,293       —         —        —        —        —        —        224,293       34,480       258,773  

Net income for the nine months ended September 30, 2024

      —         —        —         —        28,216,292       —        —        —        28,216,292       784,382       29,000,674  

Other comprehensive income (loss) for the nine months ended September 30, 2024

      —         —        —         —        353       121,595       86,208       (618 )      207,538       34,350       241,888  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the nine months ended September 30, 2024

      —         —        —         —        28,216,645       121,595       86,208       (618 )      28,423,830       818,732       29,242,562  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

      —         (3,926 )      —         —        —        —        —        —        (3,926 )      33,295       29,369  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, SEPTEMBER 30, 2024

    $ 77,574,465      $ 171,572,234     $ 77,574,465      $ 2,675,419     $ 44,148,475     $ (46,217 )    $ 606,956     $ (662 )    $ 374,105,135     $ 12,582,466     $ 386,687,601  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The accompanying notes are an integral part of the consolidated financial statements.

 

- 6 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

 

 

     Nine Months Ended September 30  
     2024     2023  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Income before income tax

    $ 35,823,567     $ 36,557,134  

Adjustments for:

     

Depreciation

      24,658,206       24,696,640  

Amortization

      5,021,075       5,027,341  

Amortization of incremental costs of obtaining contracts

      670,972       641,027  

Expected credit loss

      75,556       85,147  

Interest expense

      252,274       233,310  

Interest income

      (568,319 )      (455,069 ) 

Dividend income

      (239,908 )      (167,112 ) 

Compensation cost of share-based payment transactions

      6,782       7,336  

Share of profits of associates and joint ventures accounted for using equity method

      (63,658 )      (339,473 ) 

Loss (gain) on disposal of property, plant and equipment

      9,715       (1,462 ) 

Gain on disposal of financial instruments

      (1,073 )      —   

Provision for impairment loss and obsolescence of inventory

      63,286       9,295  

Valuation loss on financial assets and liabilities at fair value through profit or loss, net

      125,526       84,184  

Others

      14,062       2,929  

Changes in operating assets and liabilities:

     

Decrease (increase) in:

     

Contract assets

      (1,207,484 )      (1,061,790 ) 

Trade notes and accounts receivable

      1,707,701       1,101,500  

Receivables from related parties

      (103,996 )      (36,133 ) 

Inventories

      (349,808 )      (1,006,676 ) 

Prepayments

      (2,864,919 )      (3,215,816 ) 

Other current monetary assets

      (11,322 )      (673,412 ) 

Other current assets

      (1,400,386 )      (649,625 ) 

Incremental cost of obtaining contracts

      (984,900 )      (692,695 ) 

Increase (decrease) in:

     

Contract liabilities

      2,228,563       1,102,366  

Trade notes and accounts payable

      (2,016,221 )      (3,251,354 ) 

Payables to related parties

      (188,619 )      (371,548 ) 

Other payables

      (1,625,974 )      (2,622,973 ) 

Provisions

      (12,617 )      355,919  

Other current liabilities

      275,702       27,628  

Net defined benefit plans

      (417,951 )      (460,722 ) 
  

 

 

    

 

 

  

Cash generated from operations

      58,875,832       54,925,896  

Interests paid

      (288,396 )      (269,784 ) 

Income taxes paid

      (8,830,588 )      (4,766,829 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      49,756,848       49,889,283  
  

 

 

    

 

 

  

(Continued)

 

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

 

 

     Nine Months Ended September 30  
     2024     2023  

CASH FLOWS FROM INVESTING ACTIVITIES

     

Acquisition of financial assets at fair value through other comprehensive income

    $ (312,780 )    $ (14,820 ) 

Proceeds from capital reduction of financial assets at fair value through other comprehensive income

      6,431       —   

Acquisition of financial assets at fair value through profit or loss

      (128,018 )      (130,476 ) 

Proceeds from disposal of financial assets at fair value through profit or loss

      4,468       —   

Proceeds from capital reduction and profit distribution of financial assets at fair value through profit or loss

      3,446       20,190  

Acquisition of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      (56,160,759 )      (35,425,062 ) 

Proceeds from disposal of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      61,787,927       27,638,864  

Acquisition of investments accounted for using equity method

      (400,319 )      —   

Acquisition of property, plant and equipment

      (16,015,567 )      (18,878,661 ) 

Proceeds from disposal of property, plant and equipment

      10,236       17,598  

Acquisition of intangible assets

      (137,447 )      (115,078 ) 

Acquisition of investment properties

      —        (48,283 ) 

Decrease in other noncurrent assets

      81,535       21,271  

Increase in prepayments for leases

      (1,042,629 )      (1,388,835 ) 

Interests received

      605,270       457,460  

Dividends received

      570,622       249,223  
  

 

 

    

 

 

  

Net cash used in investing activities

      (11,127,584 )      (27,596,609 ) 
  

 

 

    

 

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

     

Proceeds from short-term loans

      720,000       2,489,800  

Repayments of short-term loans

      (875,000 )      (2,391,800 ) 

Increase (decrease) in customers’ deposits

      (205,489 )      24,075  

Payments for the principal of lease liabilities

      (2,923,928 )      (2,937,622 ) 

Decrease in other noncurrent liabilities

      (472,413 )      (125,085 ) 

Cash dividends paid

      (36,909,931 )      (36,475,514 ) 

Acquisition of additional interests in subsidiaries

      —        (41 ) 

Partial disposal of interests in subsidiaries without a loss of control

      258,773       —   

Cash dividends distributed to noncontrolling interests

      (887,217 )      (1,085,534 ) 

Change in other noncontrolling interests

      22,587       16,047  

Unclaimed dividend (payment of unclaimed dividend)

      (123 )      2,217  
  

 

 

    

 

 

  

Net cash used in financing activities

      (41,272,741 )      (40,483,457 ) 
  

 

 

    

 

 

  

(Continued)

 

- 8 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

 

 

     Nine Months Ended September 30  
     2024     2023  

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

    $ 34,445     $ 3,547  
  

 

 

    

 

 

  

NET DECREASE IN CASH AND CASH EQUIVALENTS

      (2,609,032 )      (18,187,236 ) 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

      33,823,884       50,192,604  
  

 

 

    

 

 

  

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $ 31,214,852     $ 32,005,368  
  

 

 

    

 

 

  

 

The accompanying notes are an integral part of the consolidated financial statements.    (Concluded)

 

- 9 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

 

 

1.

GENERAL

Chunghwa Telecom Co., Ltd. (“Chunghwa”; Chunghwa together with its subsidiaries are hereinafter referred to collectively as the “Company”.) was incorporated on July 1, 1996 in the Republic of China (“ROC”). Chunghwa is a company limited by shares and, prior to August 2000, was wholly owned by the Ministry of Transportation and Communications (“MOTC”). Prior to July 1, 1996, the current operations of Chunghwa were carried out under the Directorate General of Telecommunications (“DGT”). The DGT was established by the MOTC in June 1943 to take primary responsibility in the development of telecommunications infrastructure and to formulate policies related to telecommunications. On July 1, 1996, the telecom operations of the DGT were spun-off as Chunghwa which continues to carry out the business and the DGT continues to be the industry regulator.

Effective August 12, 2005, the MOTC completed the process of privatizing Chunghwa by reducing the government ownership to below 50% in various stages. In July 2000, Chunghwa received approval from the Securities and Futures Commission (the “SFC”) for a domestic initial public offering and its common stocks were listed and traded on the Taiwan Stock Exchange (the “TWSE”) on October 27, 2000. Certain of Chunghwa’s common stocks were sold, in connection with the foregoing privatization plan, in domestic public offerings at various dates from August 2000 to July 2003. Certain of Chunghwa’s common stocks were also sold in an international offering of securities in the form of American Depository Shares (“ADS”) on July 17, 2003 and were listed and traded on the New York Stock Exchange (the “NYSE”). The MOTC sold common stocks of Chunghwa by auction in the ROC on August 9, 2005 and completed the second international offering on August 10, 2005. Upon completion of the share transfers associated with these offerings on August 12, 2005, the MOTC owned less than 50% of the outstanding shares of Chunghwa and completed the privatization plan.

The consolidated financial statements are presented in Chunghwa’s functional currency, New Taiwan dollars.

 

2.

APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Board of Directors on November 8, 2024.

 

3.

SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

Except for the following items, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2023. Please refer to the consolidated financial statements for the year ended December 31, 2023 for the details.

Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission (the “FSC”). The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements as required by International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financial Reporting Interpretations Committee (IFRIC) and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the FSC.

 

- 10 -

Basis of Consolidation

The detail information of the subsidiaries at the end of reporting period was as follows:

 

             Percentage of Ownership Interests    
Name of Investor   Name of Investee    Main Businesses and
Products		   September 30,
2024		   December 31,
2023		   September 30,
2023		   Note

Chunghwa Telecom Co., Ltd.

  

Senao International Co., Ltd. (“SENAO”)

   

Handset and peripherals retailer, sales of CHT mobile phone plans as an agent

   28   28   28   a.
 

Light Era Development Co., Ltd. (“LED”)

   

Planning and development of real estate and intelligent buildings, and property management

   100   100   100  
 

Donghwa Telecom Co., Ltd. (“DHT”)

   

International private leased circuit, IP VPN service, and IP transit services

   100   100   100  
 

Chunghwa Telecom Singapore Pte., Ltd. (“CHTS”)

   

International private leased circuit, IP VPN service, and IP transit services

   100   100   100  
 

Chunghwa System Integration Co., Ltd. (“CHSI”)

   

Providing system integration services and telecommunications equipment

   100   100   100  
 

Chunghwa Investment Co., Ltd. (“CHI”)

   

Investment

   89   89   89  
 

CHIEF Telecom Inc. (“CHIEF”)

   

Network integration, internet data center (“IDC”), communications integration and cloud application services

   56   56   56   b.
 

CHYP Multimedia Marketing & Communications Co., Ltd. (“CHYP”)

   

Digital information supply services and advertisement services

   100   100   100  
 

Prime Asia Investments Group Ltd. (“Prime Asia”)

   

Investment

   100   100   100  
 

Spring House Entertainment Tech. Inc. (“SHE”)

   

Software design services, internet contents production and play, and motion picture production and distribution

   56   56   56  
 

Chunghwa Telecom Global, Inc. (“CHTG”)

   

International private leased circuit, internet services, and transit services

   100   100   100  
 

Chunghwa Telecom Vietnam Co., Ltd. (“CHTV”)

   

Intelligent energy saving solutions, international circuit, and information and communication technology (“ICT”) services

   100   100   100  
 

Smartfun Digital Co., Ltd. (“SFD”)

   

Providing diversified family education digital services

   65   65   65  
 

Chunghwa Telecom Japan Co., Ltd. (“CHTJ”)

   

International private leased circuit, IP VPN service, and IP transit services

   100   100   100  
 

Chunghwa Sochamp Technology Inc. (“CHST”)

   

Design, development and production of Automatic License Plate Recognition software and hardware

   37   37   37   c.
 

Honghwa International Co., Ltd. (“HHI”)

   

Telecommunications engineering, sales agent of mobile phone plan application and other business services, etc.

   100   100   100  
 

Chunghwa Leading Photonics Tech Co., Ltd. (“CLPT”)

   

Production and sale of electronic components and finished products

   70   75   75   d.
 

Chunghwa Telecom (Thailand) Co., Ltd. (“CHTT”)

   

International private leased circuit, IP VPN service, ICT and cloud VAS services

   100   100   100  

(Continued)

 

- 11 -

             Percentage of Ownership Interests     
Name of Investor   Name of Investee    Main Businesses and
Products		   September 30,
2024		   December 31,
2023		   September 30,
2023		    Note
 

CHT Security Co., Ltd. (“CHTSC”)

   

Computing equipment installation, wholesale of computing and business machinery equipment and software, management consulting services, data processing services, digital information supply services and internet identity services

   63   69   69    e.
 

International Integrated Systems, Inc. (“IISI”)

   

IT solution provider, IT application consultation, system integration and package solution

   50   51   51    f.
 

Chunghwa Digital Cultural and Creative Capital Co., Ltd (“CDCC Capital”)

   

Investment and management consulting

   100   —    —     g.
 

Chunghwa Telecom Europe GmbH (“CHTEU”)

   

International private leased circuit, internet services, transit services and ICT services

   100   —    —     h.

Senao International Co., Ltd.

  

Senao International (Samoa) Holding Ltd. (“SIS”)

   

International investment

   —    —    —     i.
 

Youth Co., Ltd. (“Youth”)

   

Sale of information and communication technologies products

   96   96   96   
 

Aval Technologies Co., Ltd. (“Aval”)

   

Sale of information and communication technologies products

   100   100   100   
 

Senyoung Insurance Agent Co., Ltd. (“SENYOUNG”)

   

Property and liability insurance agency

   100   100   100   

Youth Co., Ltd.

  

ISPOT Co., Ltd. (“ISPOT”)

   

Sale of information and communication technologies products

   100   100   100   
 

Youyi Co., Ltd. (“Youyi”)

   

Maintenance of information and communication technologies products

   —    —    100    j.

Aval Technologies Co., Ltd.

  

Wiin Technology Co., Ltd. (“Wiin”)

   

Sale of information and communication technologies products

   100   100   100   

Senyoung Insurance Agent Co., Ltd.

  

Senaolife Insurance Agent Co., Ltd. (“Senaolife”)

   

Life insurance services

   —    —    —     k.

CHIEF Telecom Inc.

  

Unigate Telecom Inc. (“Unigate”)

   

Telecommunications and internet service

   100   100   100   
 

Chief International Corp. (“CIC”)

   

Telecommunications and internet service

   100   100   100   
 

Shanghai Chief Telecom Co., Ltd. (“SCT”)

   

Telecommunications and internet service

   49   49   49    l.

Chunghwa Investment Co., Ltd.

  

Chunghwa Precision Test Tech. Co., Ltd. (“CHPT”)

   

Production and sale of semiconductor testing components and printed circuit board

   34   34   34    m.

Chunghwa Precision Test Tech. Co., Ltd.

  

Chunghwa Precision Test Tech. USA Corporation (“CHPT (US)”)

   

Design and after-sale services of semiconductor testing components and printed circuit board

   100   100   100   
 

CHPT Japan Co., Ltd. (“CHPT (JP)”)

   

Related services of electronic parts, machinery processed products and printed circuit board

   100   100   100   
 

Chunghwa Precision Test Tech. International, Ltd. (“CHPT (International)”)

   

Wholesale and retail of electronic materials, and investment

   100   100   100   

(Continued)

 

- 12 -

              Percentage of Ownership Interests    
Name of Investor    Name of Investee    Main Businesses and
Products		   September 30,
2024		   December 31,
2023		   September 30,
2023		   Note
  

TestPro Investment Co., Ltd. (“TestPro”)

   

Investment

   100   100   100  

TestPro Investment Co., Ltd.

   

NavCore Tech. Co., Ltd (“NavCore”)

   

Sale and manufacturing of smart equipment, smart factory software and hardware integration and technical consulting service

   54   54   54  

Senao International (Samoa) Holding Ltd.

   

Senao International HK Limited (“SIHK”)

   

International investment

   —    —    —    n.

Prime Asia Investments Group Ltd.

   

Chunghwa Hsingta Co., Ltd. (“CHC”)

   

Investment

   100   100   100  

Chunghwa Precision Test Tech. International, Ltd.

   

Shanghai Taihua Electronic Technology Limited (“STET”)

   

Design of printed circuit board and related consultation service

   100   100   100  
  

Su Zhou Precision Test Tech. Ltd. (“SZPT”)

   

Assembly processed of circuit board, design of printed circuit board and related consultation service

   100   100   100  

International Integrated Systems, Inc.

   

Infoexplorer International Co., Ltd.(“IESA”)

   

Investment

   —    —    —    o.
  

Unitronics Technology Corp. (“UTC”)

   

Development and maintenance of information system

   100   100   100   p.

Infoexplorer International Co., Ltd.

   

International Integrated Systems (Hong Kong) Limited (“IEHK”)

   

Investment and technical consulting service

   —    —    —    q.

(Concluded)

 

  a.

Chunghwa continues to control more than half of seats of the Board of Directors of SENAO through the support of large beneficial stockholders. As a result, the Company treated SENAO as a subsidiary.

 

  b.

CHIEF issued new shares in December 2023 as its employees exercised options. Therefore, the Company’s ownership interest in CHIEF decreased to 58.63% as of December 31, 2023.

 

  c.

Chunghwa continues to control more than half of seats of the Board of Directors of CHST. As a result, the Company treated CHST as a subsidiary.

 

  d.

CLPT issued new shares in May 2023 and July 2024 as its employees exercised options. Therefore, the Company’s ownership interest in CLPT decreased to 74.56%, 74.56% and 69.87% as of September 30, 2023, December 31, 2023 and September 30, 2024, respectively.

 

  e.

CHTSC issued new shares in February 2023, May 2023, January 2024 and March 2024 as its employees exercised options. In addition, Chunghwa disposed of some shares of CHTSC in August 2024 before CHTSC traded its shares on the emerging stock market according to the local requirements. Therefore, the Company’s ownership interest in CHTSC decreased to 69.28%, 69.28% and 63.49% as of September 30, 2023, December 31, 2023 and September 30, 2024, respectively.

 

  f.

Chunghwa disposed of some shares of IISI in August 2024 before IISI traded its shares on the emerging stock market according to the local requirements. Therefore, the Company’s ownership interest in IISI decreased to 49.64% as of September 30, 2024. Chunghwa continues to control more than half of seats of the Board of Directors of IISI. As a result, the Company treated IISI as a subsidiary.

 

- 13 -

  g.

Chunghwa invested and established CDCC Capital in February 2024. Chunghwa obtained 100% ownership interest of CDCC Capital.

 

  h.

Chunghwa invested and established CHTEU in July 2024. Chunghwa obtained 100% ownership interest of CHTEU.

 

  i.

SIS completed its liquidation in September 2023.

 

  j.

Youyi completed its liquidation in November 2023.

 

  k.

In order to coordinate with financial planning and adjustment of organizational resources, the Board of Directors of SENYOUNG approved the merger with Senaolife. SENYOUNG was the surviving company. The merger was completed on May 1, 2023.

 

  l.

CHIEF has more than half of seats of the Board of Directors of SCT according to the mutual agreements among stockholders and gained control over SCT; hence, SCT is deemed as a subsidiary of the Company.

 

  m.

Though the Company’s ownership interest in CHPT is less than 50%, the management considered the absolute and relative size of ownership interest, and the dispersion of shares owned by the other stockholders and concluded that the Company has a sufficiently dominant voting interest to direct the relevant activities; hence, CHPT is deemed as a subsidiary of the Company.

 

  n.

SIHK completed its liquidation in July 2023.

 

  o.

IESA completed its liquidation in September 2023.

 

  p.

IISI purchased shares of UTC in August 2023. Therefore, the Company’s ownership interest in UTC increased to 100%.

 

  q.

IEHK completed its liquidation in June 2023.

The following diagram presented information regarding the relationship and percentages of ownership interests between Chunghwa and its subsidiaries as of September 30, 2024.

 

LOGO

 

- 14 -

Other Material Accounting Policies

 

  a.

Defined benefit retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for other significant one-off events.

 

  b.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Income taxes for interim period are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Company expects to recover or settle the carrying amount of its assets and liabilities at balance sheet date.

 

4.

MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION, UNCERTAINTY AND ASSUMPTION

In the application of the Company’s accounting policies, the management is required to make judgments, estimates and assumptions which are based on historical experience and other factors that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed by the management on an ongoing basis.

For the material accounting judgments and key sources of estimation, uncertainty and assumption applied in these consolidated financial statements, please refer to the consolidated financial statements for the year ended December 31, 2023.

 

5.

APPLICATION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS

 

  a.

Initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC

The initial application of the amendments to the IFRSs issued by the International Accounting Standards Board and endorsed and issued into effect by the FSC does not have a material impact on the Company’s consolidated financial statements.

 

  b.

The IFRSs endorsed by the FSC for application starting from 2025

 

New, Revised or Amended Standards and Interpretations        

   

Effective Date

Announced by IASB

Amendments to IAS 21    Lack of Exchangeability    January 1, 2025

The application of the above new, revised or amended standards and interpretations will not have a material impact on the Company’s consolidated financial statements.

 

- 15 -

  c.

IFRSs issued by the IASB but not yet endorsed and issued into effect by the FSC

 

New, Revised or Amended Standards and  Interpretations                

   

Effective Date

Announced by IASB

Amendments to IFRS 9 and IFRS 7   

Amendments to the classification and measurement of financial Instruments

    January 1, 2026
Amendments to IFRS 10 and IAS 28   

Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture

    To be determined by IASB
IFRS 18   

Presentation and Disclosure in Financial Statements

    January 1, 2027
IFRS 19   

Subsidiaries without public accountability: disclosures

    January 1, 2027
Amendments to IFRS Accounting Standards    Annual Improvements—Volume 11    January 1, 2026

As of the date the consolidated financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of above standards and interpretations will have on the Company’s financial position and operating result and will disclose the relevant impact when the assessment is completed.

 

6.

CASH AND CASH EQUIVALENTS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Cash

         

Cash on hand

    $ 446,732      $ 403,536      $ 430,338  

Bank deposits

      11,606,077        9,522,341        12,500,845  
  

 

 

     

 

 

     

 

 

  
     12,052,809        9,925,877        12,931,183  
  

 

 

     

 

 

     

 

 

  

Cash equivalents (with maturities of less than three months)

         

Commercial papers

      12,162,589        14,496,056        15,748,327  

Negotiable certificates of deposit

      4,100,000        5,900,000        —   

Time deposits

      2,896,506        3,501,671        3,324,729  

Stimulus vouchers

      2,948        280        1,129  
  

 

 

     

 

 

     

 

 

  
     19,162,043        23,898,007        19,074,185  
  

 

 

     

 

 

     

 

 

  
   $ 31,214,852      $ 33,823,884      $ 32,005,368  
  

 

 

     

 

 

     

 

 

  

The annual yield rates of bank deposits, commercial papers, negotiable certificates of deposit and time deposits as of balance sheet dates were as follows:

 

     September 30,
2024		    December 31,
2023		    September 30,
2023

Bank deposits

    0.00%~2.75%    0.00%~3.10%    0.00%~3.10%

Commercial papers

    0.95%~1.54%    0.72%~1.33%    0.70%~1.30%

Negotiable certificates of deposit

    1.50%~1.51%    1.38%    — 

Time deposits

    0.01%~5.56%    0.01%~5.50%    0.01%~5.40%

 

- 16 -

7.

FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Financial assets-current

         

Mandatorily measured at FVTPL

         

Derivatives (not designated for hedge)

         

Forward exchange contracts

    $ 65      $ 483      $ —   

Non-derivatives

         

Listed stocks - domestic

      452        421        411  
  

 

 

     

 

 

     

 

 

  
   $ 517      $ 904      $ 411  
  

 

 

     

 

 

     

 

 

  

Financial assets-noncurrent

         

Mandatorily measured at FVTPL

         

Non-derivatives

         

Non-listed stocks - domestic

    $ 617,728      $ 703,537      $ 715,528  

Non-listed stocks - foreign

      67,891        88,827        83,439  

Limited partnership - domestic

      308,063        219,032        225,123  

Other investing agreements

      39,137        24,305        28,242  
  

 

 

     

 

 

     

 

 

  
   $ 1,032,819      $ 1,035,701      $ 1,052,332  
  

 

 

     

 

 

     

 

 

  

Financial liabilities-current

         

Held for trading

         

Derivatives (not designated for hedge)

         

Forward exchange contracts

    $ 1,080      $ —       $ 2,485  
  

 

 

     

 

 

     

 

 

  

Chunghwa’s Board of Directors approved an investment in Taiwania Capital Buffalo Fund VI, L.P. at the amount of $600,000 thousand in January 2022. As of September 30, 2024, Chunghwa invested $300,000 thousand.

Outstanding forward exchange contracts not designated for hedge as of balance sheet dates were as follows:

 

     Currency      Maturity
Period		      Contract Amount
(In Thousands)

September 30, 2024

         

Forward exchange contracts—buy

    NT$ /EUR        December 2024      NT$70,581/EUR2,000 

Forward exchange contracts—buy

    NT$ /USD        October 2024      NT$71,940/USD2,245 

December 31, 2023

         

Forward exchange contracts—buy

    NT$ /EUR        March 2024      NT$144,936/EUR4,300

September 30, 2023

         

Forward exchange contracts—buy

    NT$ /EUR        December 2023      NT$238,665/EUR7,000

The Company entered into the above forward exchange contracts to manage its exposure to foreign currency risk due to fluctuations in exchange rates. However, the aforementioned derivatives did not meet the criteria for hedge accounting.

 

- 17 -

8.

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME—NONCURRENT

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Domestic investments

         

Listed stocks

    $ 208,063      $ 243,649      $ 244,762  

Non-listed stocks

      3,910,698        3,733,782        3,642,147  

Foreign investments

         

Non-listed stocks

      689,511        434,912        167,106  
  

 

 

     

 

 

     

 

 

  
   $ 4,808,272      $ 4,412,343      $ 4,054,015  
  

 

 

     

 

 

     

 

 

  

The Company holds the above foreign and domestic stocks for medium to long-term strategic purposes and expects to profit from long-term investment. Accordingly, the management elected to designate these investments in equity instruments at FVOCI as they believe that recognizing short-term fair value fluctuations of these investments in profit or loss is not consistent with the Company’s strategy of holding these investments for long-term purposes.

 

9.

TRADE NOTES AND ACCOUNTS RECEIVABLE, NET

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Trade notes and accounts receivable

    $ 24,160,818      $ 25,943,635      $ 24,645,268  

Less: Loss allowance

      (1,075,016 )       (1,101,640 )       (1,130,306 ) 
  

 

 

     

 

 

     

 

 

  
   $ 23,085,802      $ 24,841,995      $ 23,514,962  
  

 

 

     

 

 

     

 

 

  

The main credit terms range from 30 to 90 days.

The Company serves a large consumer base for telecommunications business; therefore, the concentration of credit risk is limited. When having transactions with customers, the Company considers the record of arrears in the past. In addition, the Company may also collect some telecommunication charges in advance to reduce the payment arrears in subsequent periods.

The Company adopted a policy of dealing with counterparties with certain credit ratings for project business and to obtain collateral where necessary to mitigate the risk of loss arising from defaults. Credit rating information is provided by independent rating agencies where available and, if such credit rating information is not available, the Company uses other publicly available financial information and its own historical transaction experience to rate its major customers. The Company continues to monitor the credit exposure and credit ratings of its counterparties and spread the credit risk amongst qualified counterparties.

In order to mitigate credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure the recoverability of receivables. In addition, the Company reviews the recoverable amount of receivables at balance sheet dates to ensure that adequate allowance is provided for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk could be reasonably reduced.

 

- 18 -

The Company applies the simplified approach to recognize expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. The expected credit losses on receivables are estimated using a provision matrix by reference to past default experience of the customers and an analysis of the customers’ current financial positions, as well as the forward-looking indicators such as macroeconomic business indicator.

When there is evidence indicating that the counterparty is in evasion, bankruptcy, deregistration or the accounts receivable are over two years past due and the recoverable amount cannot be reasonable estimated, the Company writes off the trade notes and accounts receivable. For accounts receivable that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

Except for receivables arising from telecommunications business and project business, the Company’s remaining accounts receivable are insignificant. Therefore, only Chunghwa’s provision matrix arising from telecommunications business and project business is disclosed below:

September 30, 2024

 

    Not Past Due     Past Due Less
than 30 Days		    

Past Due

31 to 60 Days

    

Past Due

61 to 90 Days

    

Past Due

91 to 120 Days

    

Past Due

121 to 180 Days

    

Past Due

over 180 Days

     Total  

Telecommunications business

                

Expected credit loss rate (Note a)

     0%~5 %      1%~20 %      3%~65 %      12%~82 %      23%~91 %      31%~96 %      100 %   

Gross carrying amount

   $ 16,583,773     $ 361,091     $ 211,070     $ 84,972     $ 54,171     $ 33,543     $ 576,460     $ 17,905,080  

Loss allowance (lifetime ECL)

     (50,791 )      (22,817 )      (29,922 )      (26,503 )      (30,430 )      (21,856 )      (576,460 )      (758,779 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

   $ 16,532,982     $ 338,274     $ 181,148     $ 58,469     $ 23,741     $ 11,687     $ —      $ 17,146,301  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Project business

                

Expected credit loss rate (Note b)

     0%~5 %      5 %      10 %      30 %      50 %      80 %      100 %   

Gross carrying amount

   $ 2,751,123     $ 149,094     $ 30,165     $ 19,931     $ 6,767     $ 298     $ 262,906     $ 3,220,284  

Loss allowance (lifetime ECL)

     (2,722 )      (7,455 )      (3,016 )      (7,751 )      (3,383 )      (239 )      (262,906 )      (287,472 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

   $ 2,748,401     $ 141,639     $ 27,149     $ 12,180     $ 3,384     $ 59     $ —      $ 2,932,812  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2023

 

    Not Past Due     Past Due Less
than 30 Days		    

Past Due

31 to 60 Days

    

Past Due

61 to 90 Days

    

Past Due

91 to 120 Days

    

Past Due

121 to 180 Days

    

Past Due

over 180 Days

     Total  

Telecommunications business

                

Expected credit loss rate (Note a)

     0%~1 %      1%~20 %      3%~65 %      12%~82 %      23%~91 %      40%~96 %      100 %   

Gross carrying amount

   $ 17,065,909     $ 346,172     $ 135,390     $ 69,909     $ 47,730     $ 48,827     $ 577,604     $ 18,291,541  

Loss allowance (lifetime ECL)

     (49,828 )      (21,667 )      (28,978 )      (29,154 )      (35,221 )      (21,848 )      (577,604 )      (764,300 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

   $ 17,016,081     $ 324,505     $ 106,412     $ 40,755     $ 12,509     $ 26,979     $ —      $ 17,527,241  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Project business

                

Expected credit loss rate (Note b)

     0%~5 %      5 %      10 %      30 %      50 %      80 %      100 %   

Gross carrying amount

   $ 3,868,984     $ 101,408     $ 11,954     $ 17,535     $ 1,353     $ 613     $ 287,368     $ 4,289,215  

Loss allowance (lifetime ECL)

     (2,812 )      (16,671 )      (1,195 )      (5,261 )      (676 )      (490 )      (287,368 )      (314,473 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

   $ 3,866,172     $ 84,737     $ 10,759     $ 12,274     $ 677     $ 123     $ —      $ 3,974,742  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

- 19 -

September 30, 2023

 

    Not Past Due     Past Due Less
than 30 Days		    

Past Due

31 to 60 Days

    

Past Due

61 to 90 Days

    

Past Due

91 to 120 Days

    

Past Due

121 to 180 Days

    

Past Due

over 180 Days

     Total  

Telecommunications business

                

Expected credit loss rate (Note a)

     0%~1 %      1%~20 %      3%~65 %      10%~81 %      18%~90 %      34%~96 %      100 %   

Gross carrying amount

   $ 17,024,142     $ 795,647     $ 189,245     $ 62,995     $ 44,288     $ 20,103     $ 620,426     $ 18,756,846  

Loss allowance (lifetime ECL)

     (47,891 )      (33,790 )      (29,579 )      (26,285 )      (31,439 )      (18,677 )      (620,426 )      (808,087 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

   $ 16,976,251     $ 761,857     $ 159,666     $ 36,710     $ 12,849     $ 1,426     $ —      $ 17,948,759  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Project business

                

Expected credit loss rate (Note b)

     0%~5 %      5 %      10 %      30 %      50 %      80 %      100 %   

Gross carrying amount

   $ 2,247,394     $ 46,676     $ 6,628     $ 875     $ 396     $ —      $ 289,560     $ 2,591,529  

Loss allowance (lifetime ECL)

     (2,075 )      (2,334 )      (679 )      (316 )      (198 )      —        (289,560 )      (295,162 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Amortized cost

   $ 2,245,319     $ 44,342     $ 5,949     $ 559     $ 198     $ —      $ —      $ 2,296,367  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

  Note a:    Please refer to Note 43 for the information of disaggregation of telecommunications service revenue. The expected credit loss rate applicable to different business revenue varies so as to reflect the risk level indicating by factors like historical experience.
       Note b:    The project business has different loss types according to the customer types. The expected credit loss rate listed above is for general customers. When the customer is a government-affiliated entity, it is anticipated that there will not be an instance of credit loss. Customers with past history of bounced checks or accounts receivable exceeding six months overdue are classified as high-risk customers, with an expected credit loss rate of 50%, increasing by period as the days overdue increase.

Movements of loss allowance for trade notes and accounts receivable were as follows:

 

     Nine Months Ended September 30  
     2024      2023  

Beginning balance

    $ 1,101,640      $ 1,365,222  

Add: Provision for credit loss

      76,101        81,721  

Less: Amounts written off

      (102,725 )       (316,637 ) 
  

 

 

     

 

 

  

Ending balance

    $ 1,075,016      $ 1,130,306  
  

 

 

     

 

 

  

 

10.

INVENTORIES

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Merchandise

    $ 3,992,057      $ 4,340,001      $ 4,389,627  

Project in process

      5,328,106        4,771,313        5,553,306  

Work in process

      152,083        73,622        78,856  

Raw materials

      192,899        221,314        227,573  
  

 

 

     

 

 

     

 

 

  
     9,665,145        9,406,250        10,249,362  

Land held under development

      1,998,733        1,998,733        1,998,733  

Construction in progress

      143,409        115,782        115,692  
  

 

 

     

 

 

     

 

 

  
   $ 11,807,287      $ 11,520,765      $ 12,363,787  
  

 

 

     

 

 

     

 

 

  

 

- 20 -

The operating costs related to inventories were $11,893,571 thousand (including the valuation loss on inventories of $27,565 thousand) and $35,100,378 thousand (including the valuation loss on inventories of $63,286 thousand) for the three months and nine months ended September 30, 2024, respectively. The operating costs related to inventories were $11,382,986 thousand (including the valuation loss on inventories of $18,462 thousand) and $35,578,514 thousand (including the valuation loss on inventories of $9,295 thousand) for the three months and nine months ended September 30, 2023, respectively.

As of September 30, 2024, December 31, 2023 and September 30, 2023, inventories of $2,142,142 thousand, $2,114,515 thousand and $2,114,425 thousand, respectively, were expected to be realized from the sale after more than twelve months. The aforementioned amount of inventories is related to property development owned by LED.

Land held under development and construction in progress was mainly developed by LED for Qingshan Sec., Dayuan Dist., Taoyuan City project. The Board of Directors of LED resolved to sign a joint construction and separate sale contract with Farglory Land Development Co., Ltd. in June 2021. LED entrusts Land Bank of Taiwan to execute fund control and property right management for the land held under development.

Construction in progress also included the Datong S. Sec., Sanchong Dist., New Taipei City project. The Board of Directors of Chunghwa resolved to sign a joint construction with separate sale and partition contract with LED in August 2021. Chunghwa classified the land of the project as investment properties.

Regarding the aforementioned two projects, the Company has signed the house and land presale contracts with customers and has received payments in accordance with the contracts. Please refer to Notes 29 and 39 for details.

 

11.

PREPAYMENTS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Prepayments for leases—satellite (Note 39)

    $ 2,771,747      $ 1,729,118      $ 1,388,835  

Prepaid salary and bonus

      2,479,090        4,736        2,377,054  

Prepaid rents

      1,839,597        2,143,336        2,294,405  

Others

      2,987,168        2,292,864        2,671,242  
  

 

 

     

 

 

     

 

 

  
   $ 10,077,602      $ 6,170,054      $ 8,731,536  
  

 

 

     

 

 

     

 

 

  

Current

         

Prepaid salary and bonus

    $ 2,479,090      $ 4,736      $ 2,377,054  

Prepaid rents

      522,180        580,930        554,472  

Others

      2,932,189        2,253,805        2,624,474  
  

 

 

     

 

 

     

 

 

  
   $ 5,933,459      $ 2,839,471      $ 5,556,000  
  

 

 

     

 

 

     

 

 

  

Noncurrent

         

Prepayments for leases—satellite (Note 39)

    $ 2,771,747      $ 1,729,118      $ 1,388,835  

Prepaid rents

      1,317,417        1,562,406        1,739,933  

Others

      54,979        39,059        46,768  
  

 

 

     

 

 

     

 

 

  
   $ 4,144,143      $ 3,330,583      $ 3,175,536  
  

 

 

     

 

 

     

 

 

  

Prepaid rents comprised the prepayments from the lease agreements applying the recognition exemption and the prepayments for leases that do not meet the definition of leases under IFRS 16.

 

- 21 -

12.

OTHER CURRENT MONETARY ASSETS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

    $ 12,998,224      $ 18,572,579      $ 9,737,879  

Accrued custodial receipts

      788,742        893,629        1,000,269  

Others

      905,788        885,842        1,588,354  
  

 

 

     

 

 

     

 

 

  
   $ 14,692,754      $ 20,352,050      $ 12,326,502  
  

 

 

     

 

 

     

 

 

  

The annual yield rates of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months at the balance sheet dates were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      0.03%~5.10%        0.03%~5.54%        0.03%~4.87%  

 

13.

SUBSIDIARIES

 

  a.

Information on subsidiaries with material noncontrolling interests

 

     Principal      Proportion of Ownership Interests and Voting
Rights Held by Noncontrolling Interests
Subsidiaries    Place of
Business		      September 30,
2024		    December 31,
2023		    September 30,
2023

SENAO

      Taiwan      72%    72%    72%

CHPT

      Taiwan      66%    66%    66%

 

     Profit Allocated to Noncontrolling Interests  
     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

SENAO

    $ 79,344      $ 152,399      $ 243,988      $ 414,950  
  

 

 

     

 

 

     

 

 

     

 

 

  

CHPT

    $ 62,092      $ (401 )     $ 99,347      $ (11,806 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Accumulated Noncontrolling Interests  
     September 30,
2024		      December 31,
2023		      September 30,
2023		  

SENAO

    $ 4,569,015      $ 4,666,876      $ 4,589,473  

CHPT

      5,090,657        4,995,300        4,999,693  

Individually immaterial subsidiaries with noncontrolling interests

      2,922,794        2,934,076        2,736,994  
  

 

 

     

 

 

     

 

 

  
   $ 12,582,466      $ 12,596,252      $ 12,326,160  
  

 

 

     

 

 

     

 

 

  

 

- 22 -

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.

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Current assets

    $ 7,391,993      $ 6,539,760      $ 7,779,068  

Noncurrent assets

      3,307,773        3,293,533        3,361,522  

Current liabilities

      (3,936,661 )       (2,949,548 )       (4,319,623 ) 

Noncurrent liabilities

      (474,930 )       (458,543 )       (503,930 ) 
  

 

 

     

 

 

     

 

 

  

Equity

    $ 6,288,175      $ 6,425,202      $ 6,317,037  
  

 

 

     

 

 

     

 

 

  

Equity attributable to the parent

    $ 1,719,160      $ 1,758,326      $ 1,727,564  

Equity attributable to noncontrolling interests

      4,569,015        4,666,876        4,589,473  
  

 

 

     

 

 

     

 

 

  
   $ 6,288,175      $ 6,425,202      $ 6,317,037  
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Revenues and income

    $ 7,866,235      $ 7,763,191      $ 23,491,166      $ 23,248,821  

Costs and expenses

      7,755,659        7,550,703        23,152,033        22,670,569  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit for the period

    $ 110,576      $ 212,488      $ 339,133      $ 578,252  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit attributable to the parent

    $ 31,232      $ 60,089      $ 95,145      $ 163,302  

Profit attributable to noncontrolling interests

      79,344        152,399        243,988        414,950  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit for the period

    $ 110,576      $ 212,488      $ 339,133      $ 578,252  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) attributable to the parent

    $ 3,185      $ (4,167 )     $ 11,369      $ (3,767 ) 

Other comprehensive income (loss) attributable to noncontrolling interests

      8,119        (10,621 )       28,976        (9,602 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) for the period

    $ 11,304      $ (14,788 )     $ 40,345      $ (13,369 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income attributable to the parent

    $ 34,417      $ 55,922      $ 106,514      $ 159,535  

Total comprehensive income attributable to noncontrolling interests

      87,463        141,778        272,964        405,348  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income for the period

    $ 121,880      $ 197,700      $ 379,478      $ 564,883  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 23 -

     Nine Months Ended September 30  
     2024      2023  

Net cash flow from operating activities

    $ 1,016,024      $ 1,460,396  

Net cash flow from investing activities

      (36,539 )       (39,220 ) 

Net cash flow from financing activities

      (742,936 )       (797,885 ) 

Effect of exchange rate changes on cash and cash equivalents

      50        69  
  

 

 

     

 

 

  

Net cash inflow

    $ 236,599      $ 623,360  
  

 

 

     

 

 

  

Dividends paid to noncontrolling interests

    $ 370,957      $ 408,053  
  

 

 

     

 

 

  

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.

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Current assets

    $ 4,166,549      $ 3,773,213      $ 3,716,185  

Noncurrent assets

      4,249,868        4,499,182        4,534,314  

Current liabilities

      (663,537 )       (675,326 )       (654,810 ) 

Noncurrent liabilities

      (21,804 )       (23,546 )       (19,782 ) 
  

 

 

     

 

 

     

 

 

  

Equity

    $ 7,731,076      $ 7,573,523      $ 7,575,907  
  

 

 

     

 

 

     

 

 

  

Equity attributable to CHI

    $ 2,640,419      $ 2,578,223      $ 2,576,214  

Equity attributable to noncontrolling interests

      5,090,657        4,995,300        4,999,693  
  

 

 

     

 

 

     

 

 

  
   $ 7,731,076      $ 7,573,523      $ 7,575,907  
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Revenues and income

    $ 905,402      $ 713,181      $ 2,355,499      $ 2,174,777  

Costs and expenses

      806,771        709,848        2,191,877        2,181,399  
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit (loss) for the period

    $ 98,631      $ 3,333      $ 163,622      $ (6,622 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit attributable to CHI

    $ 36,539      $ 3,734      $ 64,275      $ 5,184  

Profit (loss) attributable to noncontrolling interests

      62,092        (401 )       99,347        (11,806 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Profit (loss) for the period

    $ 98,631      $ 3,333      $ 163,622      $ (6,622 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

(Continued)

 

- 24 -

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Other comprehensive income (loss) attributable to CHI

    $ (1,268 )     $ 3,865      $ 3,536      $ 2,911  

Other comprehensive income (loss) attributable to noncontrolling interests

      (2,434 )       7,420        6,789        5,588  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other comprehensive income (loss) for the period

    $ (3,702 )     $ 11,285      $ 10,325      $ 8,499  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income attributable to CHI

    $ 35,271      $ 7,599      $ 67,811      $ 8,095  

Total comprehensive income (loss) attributable to noncontrolling interests

      59,658        7,019        106,136        (6,218 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive income for the period

    $ 94,929      $ 14,618      $ 173,947      $ 1,877  
  

 

 

     

 

 

     

 

 

     

 

 

  
              (Concluded ) 

 

     Nine Months Ended September 30  
     2024      2023  

Net cash flow from operating activities

    $ 316,055      $ 65,252  

Net cash flow from investing activities

      (64,659 )       (213,340 ) 

Net cash flow from financing activities

      (36,529 )       (401,873 ) 

Effect of exchange rate changes on cash and cash equivalents

      11,777        10,454  
  

 

 

     

 

 

  

Net cash inflow (outflow)

    $ 226,644      $ (539,507 ) 
  

 

 

     

 

 

  

Dividends paid to noncontrolling interests

    $ 10,780      $ 253,320  
  

 

 

     

 

 

  

 

  b.

Equity transactions with noncontrolling interests

IISI purchased shares of UTC in August 2023. Therefore, the Company’s ownership interest in UTC increased. Chunghwa disposed of some shares of IISI in August 2024 before IISI traded its shares on the emerging stock market according to the local requirements. Therefore, the Company’s ownership interest in IISI decreased.

CHTSC issued new shares in February 2023, May 2023, January 2024 and March 2024 as its employees exercised options. See Note 33(b) for details. In addition, Chunghwa disposed of some shares of CHTSC in August 2024 before CHTSC traded its shares on the emerging stock market according to the local requirements. Therefore, the Company’s ownership interest in CHTSC decreased.

CLPT issued new shares in May 2023 and July 2024 as its employees exercised options. Therefore, the Company’s ownership interest in CLPT decreased. See Note 33(c) for details.

 

- 25 -

The above transactions were accounted for as equity transactions since the Company did not cease to have control over these subsidiaries.

Information of the Company’s equity transactions with noncontrolling interests for the nine months ended September 30, 2024 and 2023 was as follows:

 

     Nine Months Ended September 30, 2024  
     CHTSC
Share-Based
Payment		     

CLPT

Share-Based
Payment

     

Disposal of

CHTSC

Shares

     

Disposal of

IISI

Shares

  

Cash consideration received from noncontrolling interests (Note)

    $ 13,245      $ 9,342      $ 206,618      $ 52,155  

The proportionate share of the carrying amount of the net assets of the subsidiary transferred to noncontrolling interests

      (13,650 )       (12,863 )       (19,150 )       (15,330 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Differences arising from equity transactions

    $ (405 )     $ (3,521 )     $ 187,468      $ 36,825  
  

 

 

     

 

 

     

 

 

     

 

 

  

Line items for equity transaction adjustments

            

Additional paid-in capital—arising from the difference between the consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition

    $ —       $ —       $ 187,076      $ 36,811  
  

 

 

     

 

 

     

 

 

     

 

 

  

Additional paid-in capital—arising from changes in equities of subsidiaries

    $ (405 )     $ (3,521 )     $ 392      $ 14  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Nine Months Ended September 30, 2023  
     CHTSC
Share-Based
Payment		     

CLPT

Share-Based
Payment

     

Purchasing

UTC

Shares

  

Cash consideration received from (paid to) noncontrolling interests (Note)

    $ 15,173      $ 874      $ (41 ) 

The proportionate share of the carrying amount of the net assets of the subsidiary transferred from (to) noncontrolling interests

      (13,507 )       (950 )       37  
  

 

 

     

 

 

     

 

 

  

Differences arising from equity transactions

    $ 1,666      $ (76 )     $ (4 ) 
  

 

 

     

 

 

     

 

 

  
           (Continued ) 

 

- 26 -

     Nine Months Ended September 30, 2023  
     CHTSC
Share-Based
Payment		     

CLPT

Share-Based
Payment

     

Purchasing

UTC

Shares

  

Line items for equity transaction adjustments

         

Additional paid-in capital—arising from the difference between the consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition

    $ —       $ —       $ (4 ) 
  

 

 

     

 

 

     

 

 

  

Additional paid-in capital—arising from changes in equities of subsidiaries

    $ 1,666      $ (76 )     $ —   
  

 

 

     

 

 

     

 

 

  
           (Concluded ) 

Note: The proceeds from the new shares issued in January 2024 and February 2023 by CHTSC have been received in advance in December 2023 and December 2022, respectively.

 

14.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Investments in associates

    $ 8,735,947      $ 8,440,736      $ 7,209,372  

Investment in joint venture

      9,326        9,463        9,543  
  

 

 

     

 

 

     

 

 

  
   $ 8,745,273      $ 8,450,199      $ 7,218,915  
  

 

 

     

 

 

     

 

 

  

 

  a.

Investments in associates

Investments in associates were as follows:

 

     Carrying Amount  
     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Material associate

         

Non-listed

         

Next Commercial Bank Co., Ltd. (“NCB”)

    $ 4,028,346      $ 4,293,338      $ 2,887,724  
  

 

 

     

 

 

     

 

 

  

Associates that are not individually material

         

Listed

         

Senao Networks, Inc. (“SNI”)

      1,583,693        1,564,311        1,561,134  

KingwayTek Technology Co., Ltd. (“KWT”)

      267,887        266,407        263,737  
           (Continued ) 

 

- 27 -

     Carrying Amount  
     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Non-listed

         

Viettel-CHT Co., Ltd. (“Viettel-CHT”)

    $ 547,601      $ 542,178      $ 535,735  

ST-2 Satellite Ventures Pte., Ltd. (“STS”)

      423,874        285,430        380,970  

Taiwan International Standard Electronics Co., Ltd. (“TISE”)

      297,362        312,800        398,753  

Taiwania Hive Technology Fund L.P. (“TWTF”)

      281,855        —         —   

WiAdvance Technology Corporation (“WATC”)

      281,579        212,101        215,414  

Chunghwa PChome Fund I Co., Ltd. (“CPFI”)

      253,519        257,657        260,978  

So-net Entertainment Taiwan Limited (“So-net”)

      200,625        225,697        233,296  

KKBOX Taiwan Co., Ltd. (“KKBOXTW”)

      157,526        163,999        172,696  

Taiwan International Ports Logistics Corporation (“TIPL”)

      122,309        121,948        112,570  

Porrima Inc. (“PORRIMA”)

      78,715        —         —   

Imedtac Co., Ltd. (“IME”)

      58,479        46,880        36,216  

CHT Infinity Singapore Pte. Ltd. (“CISG”)

      57,084        56,764        60,231  

Click Force Co., Ltd. (“CF”)

      52,133        42,637        40,458  

AgriTalk Technology Inc. (“ATT”)

      27,244        30,798        31,523  

Baohwa Trust Co., Ltd. (“BHT”)

      10,862        10,317        10,710  

Cornerstone Ventures Co., Ltd. (“CVC”)

      5,254        7,474        7,227  
  

 

 

     

 

 

     

 

 

  
     4,707,601        4,147,398        4,321,648  
  

 

 

     

 

 

     

 

 

  
   $ 8,735,947      $ 8,440,736      $ 7,209,372  
  

 

 

     

 

 

     

 

 

  
           (Concluded ) 

The percentages of ownership interests and voting rights in associates held by the Company as of balance sheet dates were as follows:

 

     % of Ownership Interests and Voting Rights  
     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Material associate

         

Non-listed

         

Next Commercial Bank Co., Ltd. (“NCB”)

      46        46        42  

Associates that are not individually material

         

Listed

         

Senao Networks, Inc. (“SNI”)

      34        34        34  
           (Continued ) 

 

- 28 -

     % of Ownership Interests and Voting Rights  
     September 30,
2024		      December 31,
2023		      September 30,
2023		  

KingwayTek Technology Co., Ltd. (“KWT”)

      23        23        23  

Non-listed

         

Viettel-CHT Co., Ltd. (“Viettel-CHT”)

      30        30        30  

ST-2 Satellite Ventures Pte., Ltd. (“STS”)

      38        38        38  

Taiwan International Standard Electronics Co., Ltd. (“TISE”)

      40        40        40  

Taiwania Hive Technology Fund L.P. (“TWTF”)

      42        —         —   

WiAdvance Technology Corporation (“WATC”)

      16        19        20  

Chunghwa PChome Fund I Co., Ltd. (“CPFI”)

      50        50        50  

So-net Entertainment Taiwan Limited (“So-net”)

      30        30        30  

KKBOX Taiwan Co., Ltd. (“KKBOXTW”)

      30        30        30  

Taiwan International Ports Logistics Corporation (“TIPL”)

      27        27        27  

Porrima Inc. (“PORRIMA”)

      10        —         —   

Imedtac Co., Ltd. (“IME”)

      10        7        7  

CHT Infinity Singapore Pte. Ltd. (“CISG”)

      40        40        40  

Click Force Co., Ltd. (“CF”)

      49        49        49  

AgriTalk Technology Inc. (“ATT”)

      29        29        29  

Baohwa Trust Co., Ltd. (“BHT”)

      25        25        25  

Cornerstone Ventures Co., Ltd. (“CVC”)

      49        49        49  
           (Concluded ) 

Summarized financial information of NCB was set out below:

 

     September 30,
2024		     December 31,
2023		     September 30,
2023		  

Assets

    $ 41,603,098     $ 37,431,036     $ 33,982,642  

Liabilities

      (32,838,872 )      (28,083,960 )      (27,016,961 ) 
  

 

 

    

 

 

    

 

 

  

Equity

    $ 8,764,226     $ 9,347,076     $ 6,965,681  
  

 

 

    

 

 

    

 

 

  

The percentage of ownership interest held by the Company

      46.26 %      46.26 %      41.90 % 

Equity attributable to the Company

    $ 4,054,331     $ 4,323,958     $ 2,918,620  

Unrealized gain or loss from downstream transactions

      (25,985 )      (30,620 )      (30,896 ) 
  

 

 

    

 

 

    

 

 

  

The carrying amount of investment

    $ 4,028,346     $ 4,293,338     $ 2,887,724  
  

 

 

    

 

 

    

 

 

  

 

- 29 -

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Net revenues

    $ 54,042      $ 29,381      $ 195,958      $ 21,270  
  

 

 

     

 

 

     

 

 

     

 

 

  

Net loss for the period

    $ (204,538 )     $ (234,830 )     $ (582,667 )     $ (695,197 ) 

Other comprehensive income (loss)

      18,445        140        (183 )       2,551  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total comprehensive loss for the period

    $ (186,093 )     $ (234,690 )     $ (582,850 )     $ (692,646 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Except for NCB, no associate is considered individually material to the Company. Summarized financial information of associates that are not individually material to the Company was as follows:

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

The Company’s share of profits

    $ 133,579      $ 212,754      $ 328,702      $ 626,260  

The Company’s share of other comprehensive income

      9,865        3,911        41,091        12,673  
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s share of total comprehensive income

    $ 143,444      $ 216,665      $ 369,793      $ 638,933  
  

 

 

     

 

 

     

 

 

     

 

 

  

The Level 1 fair values of associates based on the closing market prices as of the balance sheet dates were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

SNI

    $ 2,743,830      $ 4,061,863      $ 4,335,417  
  

 

 

     

 

 

     

 

 

  

KWT

    $ 873,851      $ 987,520      $ 1,001,396  
  

 

 

     

 

 

     

 

 

  

Chunghwa’s Board of Directors approved an investment in TWTF at the amount of USD 30,000 thousand in February 2024. The Company initially invested $288,405 thousand (USD 9,000 thousand) in August 2024 and obtained 41.75% ownership interest in TWTF. TWTF mainly engages in investment.

The Company participated in the capital increase of PORRIMA at the price of $80,000 thousand in May 2024 and obtained 10.00% ownership interest. PORRIMA mainly engages in designing and selling zero-emission ships. As the Company has one out of five seats of the Board of Directors of PORRIMA, the Company has significant influence over PORRIMA.

The Company increased its investment in IME in proportion to the original shareholder percentage in December 2023 and increased its investment in IME in higher proportion to the original shareholder percentage at the price of $31,914 thousand in April 2024. Therefore, the Company’s ownership interest in IME increased to 10.00% as of September 30, 2024. As the Company continues to control one out of five seats of the Board of Directors of IME, the Company has significant influence over IME.

 

- 30 -

The Company did not participate in the capital increase of WATC in January 2024. WATC issued new shares in April 2023, September 2023, December 2023, March 2024 and September 2024 as its employees exercised option. Therefore, the Company’s ownership interest in WATC decreased to 19.54%, 19.22% and 16.24% as of September 30, 2023, December 31, 2023, and September 30, 2024, respectively. However, as the Company continues to control one out of five seats of the Board of Directors of WATC, the Company has significant influence over WATC.

The Company’s ownership interest in NCB was originally 41.90%. NCB reduced 26.43% of its capital to offset accumulated deficits and increased its capital in December 2023. The Company increased its investment in NCB in higher proportion to the original shareholder percentage. Therefore, the Company’s ownership interest in NCB increased to 46.26% as of December 31, 2023. Although Chunghwa is the single largest stockholder of NCB, it only obtained six out of fifteen seats of the Board of Directors of NCB. In addition, the management considered the size of ownership interest and the dispersion of shares owned by the other stockholders, other holdings are not extremely dispersed. Chunghwa is not able to direct its relevant activities. Therefore, Chunghwa does not have control over NCB and merely has significant influence over NCB and treats it as an associate.

The Company did not participate in the capital increase of BHT in September 2023. Therefore, the Company’s ownership interest in BHT decreased to 25.00%.

The Company invested and obtained 50% ownership interest in CPFI. However, as the Company has only two out of five seats of the Board of Directors of CPFI, the Company has no control but significant influence over CPFI. Therefore, the Company recognized CPFI as an investment in associate.

The Company invested and obtained 49% ownership interest in CVC. However, as the Company has only two out of five seats of the Board of Directors of CVC, the Company has no control but significant influence over CVC. Therefore, the Company recognized CVC as an investment in associate.

The Company’s share of profits and other comprehensive income (loss) of associates was recognized based on the reviewed financial statements.

 

  b.

Investment in joint venture

Investment in joint venture was as follows:

 

     Carrying Amount      % of Ownership Interests and Voting Rights  
Name of Joint Venture    September 30,
2024		      December 31,
2023		      September 30,
2023		      September 30,
2024		     December 31,
2023		     September 30,
2023		  

Non-listed

                

Chunghwa SEA Holdings (“CHT SEA”)

    $ 9,326      $ 9,463      $ 9,543        51 %      51 %      51 % 
  

 

 

     

 

 

     

 

 

         

The Company invested and established a joint venture, CHT SEA, with Delta Electronics, Inc. and Kwang Hsing Industrial Co., Ltd. and obtained 51% ownership interest of CHT SEA. However, according to the mutual agreements among stockholders, the Company does not individually direct CHT SEA’s relevant activities and has joint control with the other party; therefore, the Company treated CHT SEA as a joint venture.

 

- 31 -

The joint venture is not considered individually material to the Company. Summarized financial information of CHT SEA was set out below:

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

The Company’s share of loss

    $ (41 )     $ (44 )     $ (137 )     $ (134 ) 

The Company’s share of other comprehensive income

      —         —         —         —   
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s share of total comprehensive loss

    $ (41 )     $ (44 )     $ (137 )     $ (134 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s share of loss and other comprehensive income of the joint venture was recognized based on the reviewed financial statements.

 

15.

PROPERTY, PLANT AND EQUIPMENT

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Assets used by the Company

    $ 276,930,430      $ 285,084,900      $ 280,630,726  

Assets subject to operating leases

      6,152,842        7,252,842        6,576,796  
  

 

 

     

 

 

     

 

 

  
   $ 283,083,272      $ 292,337,742      $ 287,207,522  
  

 

 

     

 

 

     

 

 

  

 

  a.

Assets used by the Company

 

     Land     Land
Improvements		     Buildings     Computer
Equipment		     Telecommuni-
cations
Equipment		     Transportation
Equipment		     Miscellaneous
Equipment		     Construction in
Progress and
Equipment to
be Accepted		     Total  

Cost

                   

Balance on January 1, 2023

    $ 103,663,528     $ 1,675,255     $ 72,529,774     $ 11,088,877     $ 720,068,323     $ 3,971,039     $ 11,467,527     $ 14,427,497     $ 938,891,820  

Additions

      98,577       —        23,022       79,627       73,310       2,848       140,109       17,181,507       17,599,000  

Disposal

      (1,672 )      —        —        (804,037 )      (17,349,675 )      (90,298 )      (273,799 )      —        (18,519,481 ) 

Effect of foreign exchange differences

      —        —        —        31       104,254       43       4,731       9,590       118,649  

Others

      (734,134 )      18,229       75,522       301,334       17,602,834       17,699       567,101       (18,522,819 )      (674,234 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023

    $ 103,026,299     $ 1,693,484     $ 72,628,318     $ 10,665,832     $ 720,499,046     $ 3,901,331     $ 11,905,669     $ 13,095,775     $ 937,415,754  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated depreciation

and impairment

                                                       

Balance on January 1, 2023

    $ —      $ (1,474,085 )    $ (32,263,200 )    $ (9,553,580 )    $ (597,957,285 )    $ (3,672,728 )    $ (8,642,023 )    $ —      $ (653,562,901 ) 

Depreciation expenses

      —        (25,513 )      (1,094,215 )      (511,935 )      (19,283,431 )      (66,801 )      (595,645 )      —        (21,577,540 ) 

Disposal

      —        —        —        803,617       17,340,152       90,206       269,370       —        18,503,345  

Effect of foreign exchange differences

      —        —        —        (31 )      (61,466 )      8       (1,858 )      —        (63,347 ) 

Others

      —        —        (29,600 )      (17,512 )      (44,027 )      (387 )      6,941       —        (84,585 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023

    $ —      $ (1,499,598 )    $ (33,387,015 )    $ (9,279,441 )    $ (600,006,057 )    $ (3,649,702 )    $ (8,963,215 )    $ —      $ (656,785,028 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2023, net

    $ 103,663,528     $ 201,170     $ 40,266,574     $ 1,535,297     $ 122,111,038     $ 298,311     $ 2,825,504     $ 14,427,497     $ 285,328,919  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023, net

    $ 103,026,299     $ 193,886     $ 39,241,303     $ 1,386,391     $ 120,492,989     $ 251,629     $ 2,942,454     $ 13,095,775     $ 280,630,726  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
Cost                                                       

Balance on January 1, 2024

    $ 102,885,454     $ 1,709,236     $ 71,754,783     $ 11,044,831     $ 721,434,979     $ 4,049,661     $ 12,091,029     $ 15,937,187     $ 940,907,160  

Additions

      —        —        17,018       24,045       79,698       2,939       75,026       13,916,345       14,115,071  

Disposal

      (222 )      —        (6,375 )      (884,712 )      (20,502,761 )      (103,467 )      (335,048 )      —        (21,832,585 ) 

Effect of foreign exchange differences

      —        —        —        56       83,036       230       6,268       7,293       96,883  

Others

      (700,841 )      11,066       75,487       387,805       13,133,152       86,405       661,836       (14,585,537 )      (930,627 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2024

    $ 102,184,391     $ 1,720,302     $ 71,840,913     $ 10,572,025     $ 714,228,104     $ 4,035,768     $ 12,499,111     $ 15,275,288     $ 932,355,902  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
                                                     (Continued)  

 

- 32 -

     Land      Land
Improvements		     Buildings     Computer
Equipment		     Telecommuni-
cations
Equipment		     Transportation
Equipment		     Miscellaneous
Equipment		     Construction in
Progress and
Equipment to
be Accepted		      Total  

Accumulated depreciation

and impairment

                                                         

Balance on January 1, 2024

    $ —       $ (1,507,932 )    $ (33,283,812 )    $ (9,221,060 )    $ (599,131,991 )    $ (3,654,724 )    $ (9,022,741 )    $ —       $ (655,822,260 ) 

Depreciation expenses

      —         (25,701 )      (1,082,713 )      (563,249 )      (19,070,430 )      (93,338 )      (617,266 )      —         (21,452,697 ) 

Disposal

      —         —        6,375       884,234       20,497,943       102,922       321,160       —         21,812,634  

Effect of foreign exchange differences

      —         —        —        (51 )      (48,985 )      (275 )      (3,768 )      —         (53,079 ) 

Others

      —         —        209,139       (298 )      (9,807 )      (383 )      (108,721 )      —         89,930  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on September 30, 2024

    $ —       $ (1,533,633 )    $ (34,151,011 )    $ (8,900,424 )    $ (597,763,270 )    $ (3,645,798 )    $ (9,431,336 )    $ —       $ (655,425,472 ) 
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on January 1, 2024, net

    $ 102,885,454      $ 201,304     $ 38,470,971     $ 1,823,771     $ 122,302,988     $ 394,937     $ 3,068,288     $ 15,937,187      $ 285,084,900  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on September 30, 2024, net

    $ 102,184,391      $ 186,669     $ 37,689,902     $ 1,671,601     $ 116,464,834     $ 389,970     $ 3,067,775     $ 15,275,288      $ 276,930,430  
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
                                                       (Concluded)  

There was no indication that property, plant and equipment was impaired; therefore, the Company did not recognize any impairment loss for the nine months ended September 30, 2024 and 2023.

Depreciation expense for assets used by the Company is computed using the straight-line method over the following estimated service lives:

 

Land improvements

    10~30 years

Buildings

   

Main buildings

    20~60 years

Other building facilities

    3~15 years

Computer equipment

    2~8 years

Telecommunications equipment

   

Telecommunication circuits

    2~30 years

Telecommunication machinery and antennas equipment

    2~30 years

Transportation equipment

    2~10 years

Miscellaneous equipment

   

Leasehold improvements

    1~18 years

Mechanical and air conditioner equipment

    3~16 years

Others

    1~15 years

 

  b.

Assets subject to operating leases

 

     Land      Buildings      Total  

Cost

         

Balance on January 1, 2023

    $ 4,376,196      $ 3,185,097      $ 7,561,293  

Additions

      —         3,979        3,979  

Others

      407,478        (74,287 )       333,191  
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2023

    $ 4,783,674      $ 3,114,789      $ 7,898,463  
  

 

 

     

 

 

     

 

 

  

Accumulated depreciation and impairment

         

Balance on January 1, 2023

    $ —       $ (1,362,302 )     $ (1,362,302 ) 

Depreciation expenses

      —         (40,201 )       (40,201 ) 

Others

      —         80,836        80,836  
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2023

    $ —       $ (1,321,667 )     $ (1,321,667 ) 
  

 

 

     

 

 

     

 

 

  

Balance on January 1, 2023, net

    $ 4,376,196      $ 1,822,795      $ 6,198,991  
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2023, net

    $ 4,783,674      $ 1,793,122      $ 6,576,796  
  

 

 

     

 

 

     

 

 

  
           (Continued ) 

 

- 33 -

     Land      Buildings      Total  
Cost         

Balance on January 1, 2024

    $ 4,924,387      $ 4,131,031      $ 9,055,418  

Additions

      —         138        138  

Others

      (1,128,922 )       150,389        (978,533 ) 
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2024

    $ 3,795,465      $ 4,281,558      $ 8,077,023  
  

 

 

     

 

 

     

 

 

  
Accumulated depreciation and impairment         

Balance on January 1, 2024

    $ —       $ (1,802,576 )     $ (1,802,576 ) 

Depreciation expenses

      —         (56,432 )       (56,432 ) 

Others

      —         (65,173 )       (65,173 ) 
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2024

    $ —       $ (1,924,181 )     $ (1,924,181 ) 
  

 

 

     

 

 

     

 

 

  

Balance on January 1, 2024, net

    $ 4,924,387      $ 2,328,455      $ 7,252,842  
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2024, net

    $ 3,795,465      $ 2,357,377      $ 6,152,842  
  

 

 

     

 

 

     

 

 

  
           (Concluded ) 

The Company leases out land and buildings with lease terms between 1 to 20 years. The lessees do not have bargain purchase options to acquire the assets at the expiry of the lease periods.

The future aggregate lease collection under operating lease for the freehold plant, property and equipment was as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Year 1

    $ 320,905      $ 381,357      $ 380,291  

Year 2

      216,091        278,903        273,068  

Year 3

      129,951        221,059        209,739  

Year 4

      94,032        175,747        175,873  

Year 5

      66,857        146,035        147,253  

Onwards

      173,110        1,025,127        1,044,067  
  

 

 

     

 

 

     

 

 

  
   $ 1,000,946      $ 2,228,228      $ 2,230,291  
  

 

 

     

 

 

     

 

 

  

The above items of property, plant and equipment subject to operating leases are depreciated on a straight-line basis over their estimated useful lives as follows:

 

Buildings

   

Main buildings

    35~60 years

Other building facilities

    3~15 years

 

- 34 -

16.

LEASE ARRANGEMENTS

 

  a.

Right-of-use assets

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Land and buildings

         

Handsets base stations

    $ 7,668,373      $ 7,576,685      $ 7,479,532  

Others

      1,665,320        1,754,335        1,726,000  

Equipment

      1,668,138        1,906,794        1,981,126  
  

 

 

     

 

 

     

 

 

  
   $ 11,001,831      $ 11,237,814      $ 11,186,658  
  

 

 

     

 

 

     

 

 

  

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Additions to right-of-use assets

          $ 3,068,649      $ 3,297,072  
        

 

 

     

 

 

  

Depreciation charge for right-of-use assets

            

Land and buildings

            

Handsets base stations

    $ 756,725      $ 738,223      $ 2,249,304      $ 2,195,165  

Others

      204,090        193,942        602,871        591,635  

Equipment

      87,755        86,811        263,371        258,906  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,048,570      $ 1,018,976      $ 3,115,546      $ 3,045,706  
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company did not have significant sublease or impairment of right-of-use assets for the nine months ended September 30, 2024 and 2023.

 

  b.

Lease liabilities

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Lease liabilities

         

Current

    $ 3,539,219      $ 3,504,990      $ 3,455,460  

Noncurrent

      7,456,843        7,470,191        7,417,147  
  

 

 

     

 

 

     

 

 

  
   $ 10,996,062      $ 10,975,181      $ 10,872,607  
  

 

 

     

 

 

     

 

 

  

Ranges of discount rates for lease liabilities were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Land and buildings

         

Handsets base stations

      0.37%~1.98%        0.37%~1.84%        0.37%~1.84%  

Others

      0.37%~9.00%        0.37%~9.00%        0.37%~9.00%  

Equipment

      0.37%~3.50%        0.37%~3.50%        0.37%~3.50%  

 

- 35 -

  c.

Important lease-in activities and terms

The Company mainly enters into lease-in agreements of land and buildings for handsets base stations located throughout Taiwan with lease terms ranging from 1 to 20 years. The lease agreements do not contain bargain purchase options to acquire the assets at the expiration of the respective leases. For majority of the lease-in agreements on handsets base station, the Company has the right to terminate the agreement prior to the expiration date if the Company is unable to build the required telecommunication equipment, either due to legal restrictions, controversial events, or other events.

The Company also leases land and buildings for the use of offices, server rooms, and stores with lease terms from 1 to 30 years. Most of the lease agreements for national land adjust the lease payment according to the changes of the announced land values by the authority. At the expiry of the lease term, the Company does not have bargain purchase options to acquire the assets.

The lease agreements for equipment include a contract between Chunghwa and ST-2 Satellite Ventures Pte., Ltd. to lease capacity on the ST-2 satellite. For the information of lease agreements with related parties, please refer to Note 37 for details.

 

  d.

Other lease information

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Expenses relating to low-value asset leases

    $ 2,846      $ 2,047      $ 7,235      $ 6,514  
  

 

 

     

 

 

     

 

 

     

 

 

  

Expenses relating to variable lease payments not included in the measurement of lease liabilities

    $ 1,653      $ 1,931      $ 4,719      $ 5,171  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total cash outflow for leases

          $ 3,030,014      $ 3,025,344  
        

 

 

     

 

 

  

The Company leases certain equipment which qualifies as low-value asset leases. The Company has elected to apply the recognition exemption and, thus, not to recognize right-of-use assets and lease liabilities for these leases.

Lease-out arrangements under operating leases for freehold property, plant, and equipment and investment properties were set out in Notes 15 and 17.

 

17.

INVESTMENT PROPERTIES

 

Cost

       

Balance on January 1, 2023

    $ 10,780,029  

Additions

      48,283  

Reclassification

      327,724  
  

 

 

  

Balance on September 30, 2023

    $ 11,156,036  
  

 

 

  
     (Continued ) 

 

- 36 -

Accumulated depreciation and impairment

   

Balance on January 1, 2023

    $ (976,168 ) 

Depreciation expense

      (33,193 ) 
  

 

 

  

Balance on September 30, 2023

    $ (1,009,361 ) 
  

 

 

  

Balance on January 1, 2023, net

    $ 9,803,861  
  

 

 

  

Balance on September 30, 2023, net

    $ 10,146,675  
  

 

 

  

Cost

   

Balance on January 1, 2024

    $ 11,161,834  

Reclassification

      1,894,977  
  

 

 

  

Balance on September 30, 2024

    $ 13,056,811  
  

 

 

  

Accumulated depreciation and impairment

   

Balance on January 1, 2024

    $ (1,356,371 ) 

Depreciation expense

      (33,531 ) 

Reclassification

      (24,663 ) 
  

 

 

  

Balance on September 30, 2024

    $ (1,414,565 ) 
  

 

 

  

Balance on January 1, 2024, net

    $ 9,805,463  
  

 

 

  

Balance on September 30, 2024, net

    $ 11,642,246  
  

 

 

  
     (Concluded ) 

Depreciation expense is computed using the straight-line method over the following estimated service lives:

 

Land improvements

    10~30 years

Buildings

   

Main buildings

    35~60 years

Other building facilities

    4~10 years

The fair values of the Company’s investment properties as of December 31, 2023 and 2022 were determined by Level 3 fair value measurements inputs based on the appraisal reports conducted by independent appraisers. The Company used the aforementioned appraisal reports as the basis to determine the fair values as of September 30, 2024 and 2023 because there was no material change in the economic environment or the market transaction price. Those appraisal reports are based on the comparison approach, income approach or cost approach. Key assumptions and the fair values were as follows:

 

     September 30,
2024		     December 31,
2023		     September 30,
2023		  

Fair value

    $ 35,492,590     $ 24,236,751     $ 25,033,169  
  

 

 

    

 

 

    

 

 

  

Overall capital interest rate

      1.43%~5.51 %      1.43%~5.51 %      1.31%~4.91 % 

Profit margin ratio

      10%~20 %      10%~20 %      8%~20 % 

Discount rate

      —        —        —   

Capitalization rate

      0.23%~2.28 %      0.23%~2.28 %      0.23%~2.16 % 

All of the Company’s investment properties are held under freehold interest.

 

- 37 -

The future aggregate lease collection under operating lease for investment properties is as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Year 1

    $ 273,976      $ 168,384      $ 165,412  

Year 2

      246,991        156,821        160,817  

Year 3

      215,571        134,231        138,828  

Year 4

      184,618        104,567        110,867  

Year 5

      179,463        82,732        84,328  

Onwards

      1,229,287        435,202        455,576  
  

 

 

     

 

 

     

 

 

  
   $ 2,329,906      $ 1,081,937      $ 1,115,828  
  

 

 

     

 

 

     

 

 

  

 

18.

INTANGIBLE ASSETS

 

     Mobile
Broadband
Concession		     Computer
Software		     Goodwill     Others     Total  

Cost

           

Balance on January 1, 2023

    $ 109,963,431     $ 2,797,835     $ 291,206     $ 421,813     $ 113,474,285  

Additions-acquired separately

      —        110,872       —        4,206       115,078  

Disposal

      —        (149,411 )      —        (5,964 )      (155,375 ) 

Effect of foreign exchange differences

      —        (42 )      —        (7 )      (49 ) 

Others

      —        2,318       —        —        2,318  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023

    $ 109,963,431     $ 2,761,572     $ 291,206     $ 420,048     $ 113,436,257  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated amortization and impairment

           

Balance on January 1, 2023

    $ (31,812,278 )    $ (2,176,234 )    $ (73,624 )    $ (225,062 )    $ (34,287,198 ) 

Amortization expenses

      (4,792,604 )      (209,195 )      —        (25,542 )      (5,027,341 ) 

Disposal

      —        149,411       —        5,964       155,375  

Effect of foreign exchange differences

      —        71       —        4       75  

Others

      —        (508 )      —        —        (508 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023

    $ (36,604,882 )    $ (2,236,455 )    $ (73,624 )    $ (244,636 )    $ (39,159,597 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2023, net

    $ 78,151,153     $ 621,601     $ 217,582     $ 196,751     $ 79,187,087  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023, net

    $ 73,358,549     $ 525,117     $ 217,582     $ 175,412     $ 74,276,660  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Cost

           

Balance on January 1, 2024

    $ 109,963,431     $ 2,532,249     $ 291,206     $ 421,835     $ 113,208,721  

Additions-acquired separately

      —        133,672       —        3,775       137,447  

Disposal

      —        (202,904 )      —        (7,440 )      (210,344 ) 

Effect of foreign exchange differences

      —        107       —        54       161  

Others

      —        14,255       —        —        14,255  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2024

    $ 109,963,431     $ 2,477,379     $ 291,206     $ 418,224     $ 113,150,240  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Accumulated amortization and impairment

           

Balance on January 1, 2024

    $ (38,202,416 )    $ (1,954,096 )    $ (73,624 )    $ (252,040 )    $ (40,482,176 ) 

Amortization expenses

      (4,792,604 )      (205,789 )      —        (22,682 )      (5,021,075 ) 

Disposal

      —        202,904       —        7,440       210,344  

Effect of foreign exchange differences

      —        (56 )      —        (33 )      (89 ) 

Others

      —        364       —        —        364  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2024

    $ (42,995,020 )    $ (1,956,673 )    $ (73,624 )    $ (267,315 )    $ (45,292,632 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2024, net

    $ 71,761,015     $ 578,153     $ 217,582     $ 169,795     $ 72,726,545  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2024, net

    $ 66,968,411     $ 520,706     $ 217,582     $ 150,909     $ 67,857,608  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

- 38 -

The concessions are granted and issued by the National Communications Commission (“NCC”). The concession fees are amortized using the straight-line method over the period from the date operations commence through the date the license expires or the useful life, whichever is shorter. The 4G concession fees will be fully amortized by December 2030 and December 2033 and 5G concession fees will be fully amortized by December 2040.

The computer software is amortized using the straight-line method over the estimated useful lives of 1 to 10 years. Other intangible assets, except for those assessed as having indefinite useful lives, are amortized using the straight-line method over the estimated useful lives of 3 to 20 years. Goodwill is not amortized.

 

19.

OTHER ASSETS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Spare parts

    $ 2,955,635      $ 2,232,800      $ 3,742,173  

Refundable deposits

      2,002,643        1,994,503        1,925,987  

Other financial assets

      1,000,000        1,000,000        1,000,000  

Others

      2,808,845        2,223,648        2,223,771  
  

 

 

     

 

 

     

 

 

  
   $ 8,767,123      $ 7,450,951      $ 8,891,931  
  

 

 

     

 

 

     

 

 

  

Current

         

Spare parts

    $ 2,955,635      $ 2,232,800      $ 3,742,173  

Others

      1,267,010        589,459        462,875  
  

 

 

     

 

 

     

 

 

  
   $ 4,222,645      $ 2,822,259      $ 4,205,048  
  

 

 

     

 

 

     

 

 

  

Noncurrent

         

Refundable deposits

    $ 2,002,643      $ 1,994,503      $ 1,925,987  

Other financial assets

      1,000,000        1,000,000        1,000,000  

Others

      1,541,835        1,634,189        1,760,896  
  

 

 

     

 

 

     

 

 

  
   $ 4,544,478      $ 4,628,692      $ 4,686,883  
  

 

 

     

 

 

     

 

 

  

Other financial assets - noncurrent was Piping Fund. As part of the government’s effort to upgrade the existing telecommunications infrastructure, Chunghwa and other public utility companies were required by the ROC government to contribute to a Piping Fund administered by the Taipei City Government. This fund was used to finance various telecommunications infrastructure projects. Net assets of this fund will be returned proportionately after the project is completed.

 

20.

HEDGING FINANCIAL INSTRUMENTS

Chunghwa’s hedge strategy is to enter into forward exchange contracts - buy to avoid its foreign currency exposure to certain foreign currency denominated equipment payments in the following six months. In addition, Chunghwa’s management considers the market condition to determine the hedge ratio and enters into forward exchange contracts with the banks to avoid the foreign currency risk.

Chunghwa signed equipment purchase contracts with suppliers and entered into forward exchange contracts to avoid foreign currency risk exposure to Euro-denominated purchase commitments. Those forward exchange contracts were designated as cash flow hedges. When forecast purchases actually take place, basis adjustments are made to the initial carrying amounts of hedged items.

 

- 39 -

For the hedges of highly probable forecast sales and purchases, as the critical terms (i.e. the notional amount, life and underlying) of the forward foreign exchange contracts and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and it is expected that the value of the forward contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates.

The main source of hedge ineffectiveness in these hedging relationships is the effect of credit risks of the Company and the counterparty on the fair value of the forward exchange contracts. Such credit risks do not impact the fair value of the hedged item attributable to changes in foreign exchange rates. No other sources of ineffectiveness emerged from these hedging relationships.

The following tables summarized the information relating to the hedges for foreign currency risk.

September 30, 2024

 

Hedging Instruments

           Notional
Amount		            

Forward

Rate

      Line Item in    Carrying Amount      Change in Fair
Values of
Hedging
Instruments Used
for Calculating
Hedge		  
   Currency      (In Thousands)      Maturity      (In Dollars)      Balance Sheet    Asset      Liability      Ineffectiveness  

Cash flow hedge

                        

Forecast purchases -
forward exchange
contracts

    NT$ /EUR       
 NT$ 141,607
/ EUR 4,000		  
 		      December 2024      $ 35.40     

Hedging financial
assets (liabilities)

    $ —       $ 662      $ (618 ) 

 

    

Change in
Value of
Hedged Item
Used for

Calculating
Hedge
Ineffectiveness

      Accumulated Gain or Loss on
Hedging Instruments
in Other Equity		  
Hedged Items    Continuing
Hedges		      Hedge
Accounting No
Longer Applied		  

Cash flow hedge

         

Forecast equipment purchases

    $ 618      $ (662 )     $ —   

December 31, 2023

 

Hedging Instruments

           Notional
Amount		            

Forward

Rate

      Line Item in    Carrying Amount     

Change in Fair
Values of

Hedging

Instruments Used
for Calculating

Hedge

  
   Currency      (In Thousands)      Maturity      (In Dollars)      Balance Sheet    Asset      Liability      Ineffectiveness  

Cash flow hedge

                        

Forecast purchases - forward exchange contracts

      NT$/EUR       
 NT$ 23,717
/EUR 700
 		      March 2024      $ 33.88     

Hedging financial assets (liabilities)

    $ —       $ 44      $ (12,935 ) 

 

    

Change in

Value of

Hedged Item

Used for

      Accumulated Gain or Loss
on Hedging Instruments
in Other Equity		  
Hedged Items    Calculating
Hedge
Ineffectiveness		      Continuing
Hedges		      Hedge
Accounting No
Longer Applied		  

Cash flow hedge

         

Forecast equipment purchases

    $ 12,935      $ (44 )     $ —   

 

- 40 -

September 30, 2023

 

Hedging Instruments

           Notional
Amount		            

Forward

Rate

      Line Item in    Carrying
Amount		      Change in Fair
Values of
Hedging
Instruments Used
for Calculating
Hedge		  
   Currency      (In Thousands)      Maturity      (In Dollars)      Balance Sheet    Asset      Liability      Ineffectiveness  

Cash flow hedge

                        

Forecast purchases -
forward exchange
contracts

    NT$ /EUR       
 NT$ 273,456
/ EUR 8,000		  
 		      December 2023      $ 34.18     

Hedging financial
assets (liabilities)

    $ —       $ 3,535      $ (16,426 ) 

 

     Change in
Value of
Hedged Item
Used for		      Accumulated Gain or Loss
on Hedging Instruments
in Other Equity		  
Hedged Items    Calculating
Hedge
Ineffectiveness		      Continuing
Hedges		      Hedge
Accounting No
Longer Applied		  

Cash flow hedge

         

Forecast equipment purchases

    $ 16,426      $ (3,535 )     $ —   

Nine months ended September 30, 2024

 

     Comprehensive Income      Reclassification from Equity
to Assets and the Adjusted Line Item		  
Hedge Transaction   

Hedging
Gain or Loss

Recognized
in OCI

    

Amount of

Hedge

Ineffectiveness

Recognized in

Profit or Loss

     

Line Item in

Which Hedge

Ineffectiveness is

Included

      Amount
Reclassified to
Assets and the
Adjusted Line
Item		     

Due to Hedged

Future Cash Flows

No Longer Expected

to Occur

  

Cash flow hedge

              

Forecast equipment purchases

    $ (618 )    $ —         —       $

 

 4,591

Construction in

progress and

equipment to

be accepted

  

 

 

 

 

    $

 

  — 

Other gains and losses

  

 

Nine months ended September 30, 2023

 

     Comprehensive Income      Reclassification from Equity
to Assets and the Adjusted Line Item		  
Hedge Transaction    Hedging
Gain or Loss
Recognized
in OCI		     Amount of
Hedge
Ineffectiveness
Recognized in
Profit or Loss		     

Line Item in
Which Hedge
Ineffectiveness is

Included

      Amount
Reclassified to
Assets and the
Adjusted Line
Item		      Due to Hedged
Future Cash Flows
No Longer Expected
to Occur		  

Cash flow hedge

              

Forecast equipment purchases

    $ (16,426 )    $ —         —       $

 

 35,437

Construction in

progress and

equipment to be

accepted

  

 

 

 

 

    $

 

 — 

Other gains and losses

  

 

 

- 41 -

21.

SHORT-TERM LOANS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Unsecured bank loans

    $ 430,000      $ 585,000      $ 820,000  
  

 

 

     

 

 

     

 

 

  

The annual interest rates of bank loans were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Unsecured bank loans

      1.82%~3.49%        2.16%~3.36%        1.76%~3.36%  

 

22.

LONG-TERM LOANS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Secured bank loans (Note 38)

    $ 1,600,000      $ 1,600,000      $ 1,600,000  

Less: Current portion

      —         (1,600,000 )       (1,600,000 ) 
  

 

 

     

 

 

     

 

 

  
   $ 1,600,000      $ —       $ —   
  

 

 

     

 

 

     

 

 

  

The annual interest rates of bank loans were as follows:

 

     September 30,
2024		     December 31,
2023		     September 30,
2023		  

Secured bank loans

      2.06 %      1.87 %      1.91 % 

LED obtained a secured loan from Chang Hwa Bank with monthly interest payments. LED entered into a contract with Chang Hwa Bank to renew the contract upon the maturity of the aforementioned contract in August 2024, and the due date of the renewed contract is September 2027.

 

23.

BONDS PAYABLE

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Unsecured domestic bonds

    $ 30,500,000      $ 30,500,000      $ 30,500,000  

Less: Discounts on bonds payable

      (13,133 )       (17,234 )       (18,565 ) 
  

 

 

     

 

 

     

 

 

  
     30,486,867        30,482,766        30,481,435  

Less: Current portion

      (8,798,425 )       —         —   
  

 

 

     

 

 

     

 

 

  
   $ 21,688,442      $ 30,482,766      $ 30,481,435  
  

 

 

     

 

 

     

 

 

  

 

- 42 -

The major terms of unsecured domestic bonds issued by Chunghwa were as follows:

 

Issuance    Tranche    Issuance Period   

Total

Amount

   

Coupon

Rate

    Repayment and Interest
Payment

2020-1

    A    July 2020 to July 2025    $8,800,000    0.50%    One-time repayment upon maturity; interest payable annually
   B    July 2020 to July 2027    7,500,000    0.54%    The same as above
   C    July 2020 to July 2030    3,700,000    0.59%    The same as above

2021-1

    A    April 2021 to April 2026    1,900,000    0.42%    The same as above
   B    April 2021 to April 2028    4,100,000    0.46%    The same as above
   C    April 2021 to April 2031    1,000,000    0.50%    The same as above

2022-1

(Sustainable Bond)

    —    March 2022 to March 2027    3,500,000    0.69%    The same as above

 

24.

TRADE NOTES AND ACCOUNTS PAYABLE

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Trade notes and accounts payable

    $ 12,379,605      $ 14,395,740      $ 13,177,439  
  

 

 

     

 

 

     

 

 

  

Trade notes and accounts payable were attributable to operating activities and the trading conditions were agreed separately.

 

25.

OTHER PAYABLES

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Accrued salary and compensation

    $ 8,269,073      $ 10,441,118      $ 8,008,614  

Accrued compensation to employees and remuneration to directors and supervisors

      1,946,960        2,107,392        1,749,740  

Amounts collected for others

      1,620,636        1,543,596        1,588,921  

Payables to contractors

      1,284,815        1,990,007        1,402,876  

Accrued maintenance costs

      1,104,841        1,316,233        1,064,133  

Payables to equipment suppliers

      215,647        1,311,426        1,127,154  

Others

      7,251,171        6,547,154        6,208,959  
  

 

 

     

 

 

     

 

 

  
   $ 21,693,143      $ 25,256,926      $ 21,150,397  
  

 

 

     

 

 

     

 

 

  

 

26.

PROVISIONS

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Employee benefits

    $ 409,081      $ 387,082      $ 381,034  

Warranties

      230,178        237,873        229,339  

Onerous contracts

      167,830        194,651        191,531  

Others

      2,967        3,067        3,067  
  

 

 

     

 

 

     

 

 

  
   $ 810,056      $ 822,673      $ 804,971  
  

 

 

     

 

 

     

 

 

  

(Continued)

 

- 43 -

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Current

    $ 308,999      $ 337,406      $ 324,368  

Noncurrent

      501,057        485,267        480,603  
  

 

 

     

 

 

     

 

 

  
   $ 810,056      $ 822,673      $ 804,971  
  

 

 

     

 

 

     

 

 

  

(Concluded)

 

     Employee
Benefits		     Warranties     Onerous
Contracts		     Others     Total  

Balance on January 1, 2023

    $ 64,776     $ 235,308     $ 95,201     $ 3,767     $ 399,052  

Additional / (reversal of) provisions recognized

      317,224       53,868       46,330       (700 )      416,722  

Used / forfeited during the period

      (966 )      (59,844 )      —        —        (60,810 ) 

Reclassification

      —        —        50,000       —        50,000  

Effect of foreign exchange differences

      —        7       —        —        7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2023

    $ 381,034     $ 229,339     $ 191,531     $ 3,067     $ 804,971  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on January 1, 2024

    $ 387,082     $ 237,873     $ 194,651     $ 3,067     $ 822,673  

Additional / (reversal of) provisions recognized

      27,394       41,260       (26,821 )      (100 )      41,733  

Used / forfeited during the period

      (5,395 )      (49,012 )      —        —        (54,407 ) 

Effect of foreign exchange differences

      —        57       —        —        57  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Balance on September 30, 2024

    $ 409,081     $ 230,178     $ 167,830     $ 2,967     $ 810,056  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

a.

The provision for warranty claims represents the present value of the management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligation for warranties in sales agreements. The estimate has been made based on historical warranty experience.

b.

The provision for employee benefits represents vested long-term service compensation accrued.

c.

The provision for onerous contracts represents the present obligation resulting from the measurement for the unavoidable costs of meeting the Company’s contractual obligations exceed the economic benefits expected to be received from the contracts.

 

27.

RETIREMENT BENEFIT PLANS

Relevant pension costs for defined benefit plans which were determined by the pension cost rates of actuarial valuation as of December 31, 2023 and 2022 were as follows:

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Operating costs

    $ 102,935      $ 120,931      $ 312,760      $ 367,182  

Marketing expenses

      79,082        85,043        234,666        249,242  

General and administrative expenses

      18,588        18,915        54,490        57,995  

(Continued)

 

- 44 -

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Research and development expenses

    $ 8,256      $ 8,930      $ 24,254      $ 26,444  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 208,861      $ 233,819      $ 626,170      $ 700,863  
  

 

 

     

 

 

     

 

 

     

 

 

  

(Concluded)

 

28.

EQUITY

 

  a.

Share capital

 

  1)

Common stocks

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Number of authorized shares (thousand)

      12,000,000        12,000,000        12,000,000  
  

 

 

     

 

 

     

 

 

  

Authorized shares

    $ 120,000,000      $ 120,000,000      $ 120,000,000  
  

 

 

     

 

 

     

 

 

  

Number of issued and paid shares (thousand)

      7,757,447        7,757,447        7,757,447  
  

 

 

     

 

 

     

 

 

  

Issued shares

    $ 77,574,465      $ 77,574,465      $ 77,574,465  
  

 

 

     

 

 

     

 

 

  

Each issued common stock with par value of $10 is entitled the right to vote and receive dividends.

 

  2)

Global depositary receipts

The MOTC and some stockholders sold some common stocks of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) (one ADS represents 10 common stocks) in July 2003, August 2005, and September 2006. The ADSs were traded on the New York Stock Exchange since July 17, 2003. As of September 30, 2024, the outstanding ADSs were 180,949 thousand common stocks, which equaled 18,095 thousand units and represented 2.33% of Chunghwa’s total outstanding common stocks.

The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders are entitled to, through deposit agents:

 

  a)

Exercise their voting rights,

 

  b)

Sell their ADSs, and

 

  c)

Receive dividends declared and subscribe to the issuance of new shares.

 

- 45 -

  b.

Additional paid-in capital

The adjustments of additional paid-in capital for the nine months ended September 30, 2024 and 2023 were as follows:

 

     Share Premium      Movements of
Additional
Paid-in Capital
for Associates
and Joint
Ventures
Accounted for
Using Equity
Method		      Movements of
Additional
Paid-in Capital
Arising from
Changes in
Equities of
Subsidiaries		     Difference
between
Consideration
Received or Paid
and Carrying
Amount of the
Subsidiaries’ Net
Assets during
Actual Disposal
or Acquisition		     Donated Capital     Stockholders’
Contribution due
to Privatization		      Total  

Balance on January 1, 2023

    $ 147,329,386      $ 173,672      $ 2,137,032     $ 987,611     $ 25,119     $ 20,648,078      $ 171,300,898  

Unclaimed dividend

      —         —         —        —        2,217       —         2,217  

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —         4,624        —        —        —        —         4,624  

Actual acquisition of interests in subsidiaries

      —         —         —        (4 )      —        —         (4 ) 

Share-based payment transactions of subsidiaries

      —         —         1,590       —        —        —         1,590  
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on September 30, 2023

    $ 147,329,386      $ 178,296      $ 2,138,622     $ 987,607     $ 27,336     $ 20,648,078      $ 171,309,325  
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on January 1, 2024

    $ 147,329,386      $ 151,952      $ 2,144,727     $ 987,607     $ 27,336     $ 20,648,078      $ 171,289,086  

Payment of unclaimed dividend

      —         —         —        —        (123 )      —         (123 ) 

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      —         62,904        —        —        —        —         62,904  

Actual disposal of interests in subsidiaries

      —         —         406       223,887       —        —         224,293  

Share-based payment transactions of subsidiaries

      —         —         (3,926 )      —        —        —         (3,926 ) 
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Balance on September 30, 2024

    $ 147,329,386      $ 214,856      $ 2,141,207     $ 1,211,494     $ 27,213     $ 20,648,078      $ 171,572,234  
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Additional paid-in capital from share premium, donated capital and the difference between the consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition may be utilized to offset deficits. Furthermore, when Chunghwa has no deficit, it may be distributed in cash or capitalized, which however is limited to a certain percentage of Chunghwa’s paid-in capital except the additional paid-in capital arising from unclaimed dividend can only be utilized to offset deficits.

The additional paid-in capital from movements of paid-in capital arising from changes in equities of subsidiaries may only be utilized to offset deficits.

Among additional paid-in capital from movements of investments in associates and joint ventures accounted for using equity method, the portion arising from the difference between the consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition may be utilized to offset deficits; furthermore, when the Company has no deficit, it may be distributed in cash or capitalized. However, other additional paid-in capital recognized in proportion of share ownership may only be utilized to offset deficits.

 

  c.

Retained earnings and dividends policy

In accordance with the Chunghwa’s Articles of Incorporation, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income before distributing a dividend or making any other distribution to stockholders, except when the accumulated amount of such legal reserve equals to Chunghwa’s total issued capital, and depending on its business needs or requirements, may also set aside or reverse special reserves. No less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed as stockholders’ dividends, of which cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividend to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common stocks.

 

- 46 -

The Company should appropriate a special reserve when the net amount of other equity items is negative at the end of reporting period upon the earnings distribution. Distributions can be made out of any subsequent reversal of the debit to other equity items.

The appropriation for legal reserve shall be made until the accumulated reserve equals the aggregate par value of the outstanding capital stock of Chunghwa. This reserve can only be used to offset a deficit, or, when the legal reserve has exceeded 25% of Chunghwa’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of the 2023 and 2022 earnings of Chunghwa approved by the stockholders in their meetings on May 31, 2024 and May 26, 2023 were as follows:

 

     Appropriation of Earnings      Dividends Per Share
(NT$)		  
     For Fiscal
Year 2023		      For Fiscal
Year 2022		      For Fiscal
Year 2023		      For Fiscal
Year 2022		  

Reversal of special reserve

    $ (223,084 )     $ (185,066 )       

Cash dividends

      36,909,931        36,475,514      $ 4.758      $ 4.702  

Information of the appropriation of Chunghwa’s earnings proposed by the Board of Directors and approved by the stockholders is available on the Market Observation Post System website.

 

  d.

Others

 

  1)

Exchange differences arising from the translation of the foreign operations

The exchange differences arising from the translation of the foreign operations from their functional currency to New Taiwan dollars were recognized as exchange differences arising from the translation of the foreign operations in other comprehensive income.

 

  2)

Unrealized gain or loss on financial assets at FVOCI

 

     Nine Months Ended September 30  
       2024          2023    

Beginning balance

    $ 520,748      $ (124,762 ) 

Recognized for the period

      

Unrealized gain or loss Equity instruments

      87,065        551,698  

Share of loss of associates and joint ventures accounted for using equity method

      (857 )       (1,555 ) 
  

 

 

     

 

 

  

Ending balance

    $ 606,956      $ 425,381  
  

 

 

     

 

 

  

 

  e.

Noncontrolling interests

 

     Nine Months Ended September 30  
       2024          2023    

Beginning balance

    $ 12,596,252      $ 12,599,541  

Shares attributed to noncontrolling interests

      

Net income for the period

      784,382        800,076  

Exchange differences arising from the translation of the foreign operations

      6,957        (3,908 ) 

Unrealized gain or loss on financial assets at FVOCI

      (811 )       (3,884 ) 
        (Continued ) 

 

- 47 -

     Nine Months Ended September 30  
       2024          2023    

Share of other comprehensive income of associates and joint ventures accounted for using equity method

    $ 28,204      $ 2,661  

Cash dividends distributed by subsidiaries

      (898,565 )       (1,091,670 ) 

Changes in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

      (1,728 )       1,588  

Actual acquisition or disposal of interests in subsidiaries

      34,480        (37 ) 

Share-based payment transactions of subsidiaries

      33,295        21,793  
  

 

 

     

 

 

  

Ending balance

    $ 12,582,466      $ 12,326,160  
  

 

 

     

 

 

  
        (Concluded ) 

 

29.

REVENUES

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Revenue from contracts with customers

    $ 55,001,703      $ 53,117,356      $ 162,820,518      $ 159,140,403  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other revenues

            

Rental income

      292,071        281,595        870,489        835,515  

Government grants income

      271,051        212,448        838,290        1,216,931  

Others

      48,651        46,547        143,383        139,653  
  

 

 

     

 

 

     

 

 

     

 

 

  
     611,773        540,590        1,852,162        2,192,099  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 55,613,476      $ 53,657,946      $ 164,672,680      $ 161,332,502  
  

 

 

     

 

 

     

 

 

     

 

 

  

For the information of performance obligations related to customer contracts, please refer to Note 3 Summary of Material Accounting Policy Information to the consolidated financial statements for the year ended December 31, 2023 for details.

 

  a.

Disaggregation of revenue

Please refer to Note 43 Segment Information for details.

 

  b.

Contract balances

 

     September 30,
2024		     December 31,
2023		     September 30,
2023		     January 1,
2023		  

Trade notes and accounts receivable (Note 9)

    $ 23,085,802     $ 24,841,995     $ 23,514,962     $ 24,672,473  
  

 

 

    

 

 

    

 

 

    

 

 

  

Contract assets

         

Products and service bundling

    $ 10,081,628     $ 9,297,181     $ 8,782,628     $ 7,955,689  

Others

      1,629,010       1,205,973       1,490,435       1,255,584  

Less: Loss allowance

      (23,034 )      (21,282 )      (19,915 )      (19,129 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
   $ 11,687,604     $ 10,481,872     $ 10,253,148     $ 9,192,144  
  

 

 

    

 

 

    

 

 

    

 

 

  
           (Continued ) 

 

- 48 -

     September 30,
2024		      December 31,
2023		      September 30,
2023		      January 1,
2023		  

Current

    $ 7,444,080      $ 6,713,227      $ 6,727,095      $ 6,055,343  

Noncurrent

      4,243,524        3,768,645        3,526,053        3,136,801  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 11,687,604      $ 10,481,872      $ 10,253,148      $ 9,192,144  
  

 

 

     

 

 

     

 

 

     

 

 

  

Contract liabilities

            

Telecommunications business

    $ 14,041,785      $ 14,015,949      $ 14,404,590      $ 14,081,316  

Project business

      7,958,963        6,654,364        6,918,616        6,586,384  

Advance house and land receipts (Notes 10 and 39)

      978,878        459,697        301,150        —   

Others

      897,705        518,758        542,544        396,834  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 23,877,331      $ 21,648,768      $ 22,166,900      $ 21,064,534  
  

 

 

     

 

 

     

 

 

     

 

 

  

Current

    $ 16,238,717      $ 14,088,416      $ 14,287,322      $ 13,390,439  

Noncurrent

      7,638,614        7,560,352        7,879,578        7,674,095  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 23,877,331      $ 21,648,768      $ 22,166,900      $ 21,064,534  
  

 

 

     

 

 

     

 

 

     

 

 

  
              (Concluded ) 

The changes in the contract asset and the contract liability balances primarily result from the timing difference between the satisfaction of performance obligations and the payments collected from customers.

The Company applies the simplified approach to recognize expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for receivables. Contract assets will be reclassified to trade receivables when the corresponding invoice is billed to the client. Contract assets have substantially the same risk characteristics as the trade receivables of the same types of contracts. Therefore, the Company concluded that the expected loss rates for trade receivables can be applied to the contract assets.

 

  c.

Incremental costs of obtaining contracts

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Current

         

Incremental costs of obtaining contracts

    $ 339,055      $ 210,923      $ 95,066  
  

 

 

     

 

 

     

 

 

  

Noncurrent

         

Incremental costs of obtaining contracts

    $ 1,125,205      $ 939,409      $ 936,516  
  

 

 

     

 

 

     

 

 

  

The Company considered the past experience and the default clauses in the telecommunications service contracts and believes the commissions and equipment subsidies paid for obtaining such contracts are expected to be recoverable; therefore, such costs were capitalized. LED also believes the commissions paid for obtaining real estate sale contracts are expected to be recoverable; therefore, such costs were capitalized and classified as current by the operating cycle.

Amortization expenses for the three months and nine months ended September 30, 2024 were $234,292 thousand and $670,972 thousand, respectively. Amortization expenses for the three months and nine months ended September 30, 2023 were $213,325 thousand and $641,027 thousand, respectively.

 

- 49 -

30.

NET INCOME

 

  a.

Other income and expenses

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Gain (loss) on disposal of property, plant and equipment, net

    $ (9,026 )     $ (165 )     $ (9,715 )     $ 1,462  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  b.

Other income

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Dividend income

    $ 4,943      $ 4,944      $ 239,908      $ 167,112  

Rental income

      19,491        18,941        56,067        56,772  

Others

      68,804        52,955        122,665        101,885  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 93,238      $ 76,840      $ 418,640      $ 325,769  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  c.

Other gains and losses

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Valuation gain (loss) on financial assets and liabilities at fair value through profit or loss, net

    $ (53,079 )     $ 4,165      $ (125,526 )     $ (84,184 ) 

Foreign currency exchange loss, net

      (51,593 )       (65,047 )       (76,225 )       (124,682 ) 

Gain on disposal of financial instruments, net

      —         —         1,073        —   

Others

      (3,927 )       (15,075 )       (2,072 )       (19,852 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ (108,599 )     $ (75,957 )     $ (202,750 )     $ (228,718 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 50 -

  d.

Interest expenses

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Interest on bonds payable

    $ 41,909      $ 41,917      $ 125,840      $ 125,818  

Interest on lease liabilities

      33,274        27,150        94,132        76,037  

Interest paid to financial institutions

      10,627        11,165        31,623        31,442  

Others

      4        5        679        13  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 85,814      $ 80,237      $ 252,274      $ 233,310  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  e.

Impairment loss (reversal of impairment loss)

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Contract assets

    $ (482 )     $ (348 )     $ 1,752      $ 786  
  

 

 

     

 

 

     

 

 

     

 

 

  

Trade notes and accounts receivable

    $ (6,501 )     $ 4,341      $ 76,101      $ 81,721  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other receivables

    $ 2,598      $ 10,345      $ (2,297 )     $ 2,640  
  

 

 

     

 

 

     

 

 

     

 

 

  

Inventories

    $ 27,565      $ 18,462      $ 63,286      $ 9,295  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  f.

Depreciation and amortization expenses

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Property, plant and equipment

    $ 7,148,174      $ 7,210,344      $ 21,509,129      $ 21,617,741  

Right-of-use assets

      1,048,570        1,018,976        3,115,546        3,045,706  

Investment properties

      11,212        11,065        33,531        33,193  

Intangible assets

      1,676,163        1,672,925        5,021,075        5,027,341  

Incremental costs of obtaining contracts

      234,292        213,325        670,972        641,027  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total depreciation and amortization expenses

    $ 10,118,411      $ 10,126,635      $ 30,350,253      $ 30,365,008  
  

 

 

     

 

 

     

 

 

     

 

 

  

Depreciation expenses summarized by functions

            

Operating costs

    $ 7,668,878      $ 7,729,353      $ 23,056,260      $ 23,120,873  

Operating expenses

      539,078        511,032        1,601,946        1,575,767  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 8,207,956      $ 8,240,385      $ 24,658,206      $ 24,696,640  
  

 

 

     

 

 

     

 

 

     

 

 

  
              (Continued ) 

 

- 51 -

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Amortization expenses summarized by functions

            

Operating costs

    $ 1,860,173      $ 1,841,393      $ 5,545,850      $ 5,528,967  

Marketing expenses

      24,236        16,893        67,002        51,941  

General and administrative expenses

      16,216        16,529        47,404        51,691  

Research and development expenses

      9,830        11,435        31,791        35,769  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,910,455      $ 1,886,250      $ 5,692,047      $ 5,668,368  
  

 

 

     

 

 

     

 

 

     

 

 

  
              (Concluded ) 

 

  g.

Employee benefit expenses

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Post-employment benefit

            

Defined contribution plans

    $ 270,872      $ 243,474      $ 790,731      $ 712,393  

Defined benefit plans

      208,861        233,819        626,170        700,863  
  

 

 

     

 

 

     

 

 

     

 

 

  
     479,733        477,293        1,416,901        1,413,256  
  

 

 

     

 

 

     

 

 

     

 

 

  

Share-based payment

            

Equity-settled share—based payment

      2,153        2,518        6,782        7,336  
  

 

 

     

 

 

     

 

 

     

 

 

  

Other employee benefit (Note)

      11,772,188        10,942,239        34,860,996        33,106,220  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total employee benefit expenses

    $ 12,254,074      $ 11,422,050      $ 36,284,679      $ 34,526,812  
  

 

 

     

 

 

     

 

 

     

 

 

  

Summary by functions

            

Operating costs

    $ 5,709,537      $ 5,384,045      $ 16,927,710      $ 16,363,691  

Operating expenses

      6,544,537        6,038,005        19,356,969        18,163,121  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 12,254,074      $ 11,422,050      $ 36,284,679      $ 34,526,812  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  Note: Other

employee benefit mainly includes salaries, compensation and labor and health insurance expenses, etc.

The amendments to the Chunghwa’s Articles of Incorporation were approved by the Chunghwa’s stockholders in their meeting on May 31, 2024. The distribution rate of employees’ compensation increased from 1.7% to 4.3% of pre-tax income to 2% to 5% of pre-tax income, while the distribution rate of directors’ remuneration remained at no higher than 0.17%.

If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the difference is recorded as a change in accounting estimate.

 

- 52 -

The compensation to the employees and remuneration to the directors of 2023 and 2022 approved by the Board of Directors on February 23, 2024 and February 24, 2023, respectively, were as follows:

 

     Cash  
     2023      2022  

Compensation distributed to the employees

    $ 1,522,481      $ 1,498,374  

Remuneration paid to the directors

      39,797        39,480  

There was no difference between the initial accrued amounts recognized in 2023 and 2022 and the amounts approved by the Board of Directors in 2024 and 2023 of the aforementioned compensation to employees and the remuneration to directors.

Information of the appropriation of Chunghwa’s employees compensation and remuneration to directors and those approved by the Board of Directors is available on the Market Observation Post System website.

 

31.

INCOME TAX

 

  a.

Income tax recognized in profit or loss

The major components of income tax expense were as follows:

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Current tax

            

Current tax expenses recognized for the period

    $ 2,217,676      $ 2,208,956      $ 6,832,853      $ 6,948,143  

Income tax on unappropriated earnings

      20        —         5,620        10,808  

Income tax adjustments on prior years

      (49,765 )       (7,142 )       (200,118 )       (42,271 ) 

Others

      3,549        4,324        3,518        5,091  
  

 

 

     

 

 

     

 

 

     

 

 

  
     2,171,480        2,206,138        6,641,873        6,921,771  
  

 

 

     

 

 

     

 

 

     

 

 

  

Deferred tax

            

Deferred tax expenses recognized for the period

      31,586        51,869        184,245        177,546  

Income tax adjustments on prior years

      750        —         (3,225 )       (1,392 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  
     32,336        51,869        181,020        176,154  
  

 

 

     

 

 

     

 

 

     

 

 

  

Income tax recognized in profit or loss

    $ 2,203,816      $ 2,258,007      $ 6,822,893      $ 7,097,925  
  

 

 

     

 

 

     

 

 

     

 

 

  

The applicable tax rate used by the entities subject to the Income Tax Act of the Republic of China is 20%, while the applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other entities of the Company operating in other jurisdictions are based on the tax laws in those jurisdictions.

 

- 53 -

  b.

Income tax examinations

Income tax returns of IISI have been examined by the tax authorities through 2021. Income tax returns of Chunghwa, SENAO, Youth, ISPOT, Aval, Wiin, SENYOUNG, CHYP, CHSI, LED, SHE, CHIEF, Unigate, CHI, CHPT, NavCore, TestPro, CHST, SFD, CLPT, CHTSC, HHI and UTC have been examined by the tax authorities through 2022.

 

  c.

Pillar Two Model Rules

The application of the Pillar Two rules does not have a material impact on the Company’s consolidated financial statements. The Company will continue to review the possible impact on the Company’s future financial performance.

 

32.

EARNINGS PER SHARE (“EPS”)

Net income and weighted average number of common stocks used in the calculation of earnings per share were as follows:

Net Income

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Net income used to compute the basic earnings per share

            

Net income attributable to the parent

    $ 9,005,006      $ 9,094,604      $ 28,216,292      $ 28,659,133  

Assumed conversion of all dilutive potential common stocks

            

Employee stock options and employee compensation of subsidiaries

      (294 )       (456 )       (1,713 )       (2,542 ) 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net income used to compute the diluted earnings per share

    $ 9,004,712      $ 9,094,148      $ 28,214,579      $ 28,656,591  
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted Average Number of Common Stocks

(Thousand Shares)

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Weighted average number of common stocks used to compute the basic earnings per share

      7,757,447        7,757,447        7,757,447        7,757,447  
              (Continued ) 

 

- 54 -

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Assumed conversion of all dilutive potential common stocks

            

Employee compensation

      3,716        1,596        13,915        7,539  
  

 

 

     

 

 

     

 

 

     

 

 

  

Weighted average number of common stocks used to compute the diluted earnings per share

      7,761,163        7,759,043        7,771,362        7,764,986  
  

 

 

     

 

 

     

 

 

     

 

 

  
              (Concluded ) 

As Chunghwa may settle the employee compensation in shares or cash, Chunghwa shall presume that it will be settled in shares and take those shares into consideration when calculating the weighted average number of outstanding shares used in the calculation of diluted EPS if the shares have a dilutive effect. The dilutive effect of the shares needs to be considered until the approval of the number of shares to be distributed to employees as compensation in the following year.

 

33.

SHARE-BASED PAYMENT ARRANGEMENT

 

  a.

CHIEF share-based compensation plan (“CHIEF Plan”) described as follows:

The Board of Directors of CHIEF resolved to issue 200 stock options on November 13, 2020. Each option is eligible to subscribe for one thousand common stocks when exercisable and the exercise price is $206 per share. The options are granted to specific employees that meet the vesting conditions. The CHIEF Plan has an exercise price adjustment formula upon the changes in common stocks or distribution of cash dividends. The options of the CHIEF Plan are valid for five years and the graded vesting schedule will vest two years after the grant date.

The compensation costs for stock options for the three months ended September 30, 2024 and 2023 were $816 thousand and $1,393 thousand, respectively. The compensation costs for stock options for the nine months ended September 30, 2024 and 2023 were $2,448 thousand and $4,181 thousand, respectively.

CHIEF modified the plan terms of stock options granted on November 13, 2020 in August 2023 and July 2024; therefore, the exercise price changed from $193.50 to $171.70 and to $166.50 per share. The modification did not cause any incremental fair value granted.

 

- 55 -

Information about CHIEF’s outstanding stock options for the nine months ended September 30, 2024 and 2023 was as follows:

 

     Nine Months Ended
September 30, 2024		      Nine Months Ended
September 30, 2023		  
     Granted on
November 13, 2020		      Granted on
November 13, 2020		  
    

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		  

Employee stock options

            

Options outstanding at beginning of the period

      93      $ 171.70        142.25      $ 193.50  

Options forfeited

      —         —         (1.50 )       —   
  

 

 

        

 

 

     

Options outstanding at end of the period

      93        166.50        140.75        171.70  
  

 

 

        

 

 

     

Options exercisable at end of the period

      —         —         0.50        171.70  
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      1.12           2.12     

CHIEF used the fair value method to evaluate the options using the Black-Scholes model and binomial option pricing model and the related assumptions and the fair value of the options were as follows:

 

     Stock Options
Granted on
November 13,
2020		  

Grant-date share price (NT$)

    $ 356.00  

Exercise price (NT$)

    $ 206.00  

Dividend yield

      —   

Risk-free interest rate

      0.18 % 

Expected life

      5 years  

Expected volatility

      34.61 % 

Weighted average fair value of grants (NT$)

    $ 173,893  

The expected volatility for the options granted in 2020 was based on CHIEF’s average annualized historical share price volatility from June 5, 2018, CHIEF’s listing date on Taipei Exchange, to the grant date.

 

  b.

CHTSC share-based compensation plan (“CHTSC Plan”) described as follows:

The Board of Directors of CHTSC resolved to issue 4,500 and 3,500 stock options on December 20, 2019 and February 20, 2021, respectively. Each option is eligible to subscribe for one thousand common stocks when exercisable and the exercise prices are both $19.085 per share. The options are granted to specific employees that meet the vesting conditions. The CHTSC Plan has an exercise price adjustment formula upon the changes in common stocks. The options of the CHTSC Plan are valid for five years and the graded vesting schedule will vest one year after the grant date.

 

- 56 -

The compensation costs for stock options for the three months ended September 30, 2024 and 2023 were $194 thousand and $619 thousand, respectively. The compensation costs for stock options for the nine months ended September 30, 2024 and 2023 were $583 thousand and $1,855 thousand, respectively.

Information about CHTSC’s outstanding stock options for the nine months ended September 30, 2024 and 2023 was as follows:

 

     Nine Months Ended September 30, 2024  
     Granted on
February 20, 2021		      Granted on
December 20, 2019		  
    

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		  

Employee stock options

            

Options outstanding at beginning of the period

      1,519      $ 19.085           40      $ 19.085  

Options exercised

      (694 )       19.085        (5 )       19.085  

Options forfeited

      (165 )       —         (5 )       —   
  

 

 

        

 

 

     

Options outstanding at end of the period

      660        19.085        30        19.085  
  

 

 

        

 

 

     

Options exercisable at end of the period

      10        19.085        15        19.085  
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      1.39           0.22     

 

     Nine Months Ended September 30, 2023  
     Granted on
February 20, 2021		      Granted on
December 20, 2019		  
    

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		  

Employee stock options

            

Options outstanding at beginning of the period

      2,343      $ 19.085        1,083      $ 19.085  

Options exercised

      (764 )       19.085        (31 )       19.085  

Options forfeited

      (46 )       —         (41 )       —   
  

 

 

        

 

 

     

Options outstanding at end of the period

      1,533        19.085        1,011        19.085  
  

 

 

        

 

 

     

(Continued)

 

- 57 -

     Nine Months Ended September 30, 2023  
     Granted on
February 20, 2021		      Granted on
December 20, 2019		  
    

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		  

Options exercisable at end of the period

      14      $ 19.085        —       $ —   
  

 

 

        

 

 

     

Weighted average remaining contractual life (years)

      2.39           1.22     

(Concluded)

CHTSC used the fair value method to evaluate the options using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

 

     Stock Options
Granted on
February 20,
2021		     Stock Options
Granted on
December 20,
2019		  

Grant-date share price (NT$)

    $ 23.76     $ 20.17  

Exercise price (NT$)

    $ 19.085     $ 19.085  

Dividend yield

      15.18 %      12.49 % 

Risk-free interest rate

      0.25 %      0.54 % 

Expected life

      5 years       5 years  

Expected volatility

      47.35 %      42.41 % 

Weighted average fair value of grants (NT$)

    $ 3,350     $ 2,470  

Expected volatility was based on the average annualized historical share price volatility of CHTSC’s comparable companies before the grant date.

 

c.

CLPT share-based compensation plan (“CLPT Plan”) described as follows:

The Board of Directors of CLPT resolved to issue 690, 600 and 755 stock options on February 26, 2021, May 31, 2022 and September 26, 2023, respectively. Each option is eligible to subscribe for one thousand common stocks when exercisable and the exercise prices are all $16.87 per share. The options are granted to specific employees that meet the vesting conditions. The CLPT Plan has an exercise price adjustment formula upon the changes in common stocks or distribution of cash dividends. The options of the CLPT Plan are valid for four years and the graded vesting schedule will vest two years after the grant date.

The compensation costs for stock options for the three months ended September 30, 2024 and 2023 were $1,143 thousand and $506 thousand, respectively. The compensation costs for stock options for the nine months ended September 30, 2024 and 2023 were $3,751 thousand and $1,300 thousand, respectively.

CLPT modified the plan terms of stock options granted on September 26, 2023 in September 2023; therefore, the exercise price changed from $16.87 to $15.30 per share. The modification did not cause any incremental fair value granted.

 

- 58 -

CLPT modified the plan terms of stock options granted on May 31, 2022 in September 2023; therefore, the exercise price changed from $16.87 to $15.30 per share. The modification did not cause any incremental fair value granted.

CLPT modified the plan terms of stock options granted on February 26, 2021 in September 2023; therefore, the exercise price changed from $15.90 to $14.40 per share. The modification did not cause any incremental fair value granted.

Information about CLPT’s outstanding stock options for the nine months ended September 30, 2024 and 2023 was as follows:

 

     Nine Months Ended September 30, 2024  
     Granted on
September 26, 2023		      Granted on
May 31, 2022		      Granted on
February 26, 2021		  
    

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

     Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

     Weighted
Average
Exercise
Price
(NT$)		  

Employee stock options

          

Options outstanding at beginning of the period

      755      $ 15.30        440     $ 15.30        440     $ 14.40  

Options exercised

      —         —         (220 )      15.30        (415 )      14.40  
  

 

 

        

 

 

       

 

 

    

Options outstanding at end of the period

      755        15.30        220       15.30        25       14.40  
  

 

 

        

 

 

       

 

 

    

Options exercisable at end of the period

      —         —         —        —         25       14.40  
  

 

 

        

 

 

       

 

 

    

Weighted average remaining contractual life (years)

      2.99           1.67          0.41    

 

     Nine Months Ended September 30, 2023  
     Granted on
September 26, 2023		      Granted on
May 31, 2022		      Granted on
February 26, 2021		  
    

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

      Weighted
Average
Exercise
Price
(NT$)		     

Number of

Options

     Weighted
Average
Exercise
Price
(NT$)		  

Employee stock options

           

Options outstanding at beginning of the period

      —       $ —         440      $ 16.87        510     $ 15.90  

Options granted

      755        16.87        —         —         —        —   

Options exercised

      —         —         —         —         (55 )      15.90  

Options forfeited

      —         —         —         —         (15 )      —   
  

 

 

        

 

 

        

 

 

    

Options outstanding at end of the period

      755        15.30        440        15.30        440       14.40  
  

 

 

        

 

 

        

 

 

    

Options exercisable at end of the period

      —         —         —         —         192       14.40  
  

 

 

        

 

 

        

 

 

    

Weighted average remaining contractual life (years)

      3.99           2.67           1.41    

 

- 59 -

CLPT used the fair value method to evaluate the options using the Black-Scholes model and the related assumptions and the fair value of the options were as follows:

 

     Stock Options
Granted on
September 26,
2023		    

Stock Options
Granted on
May 31,

2022

     Stock Options
Granted on
February 26,
2021		  

Grant-date share price (NT$)

    $ 28.43     $ 18.66     $ 17.63  

Exercise price (NT$)

    $ 16.87     $ 16.87     $ 16.87  

Dividend yield

      —        —        —   

Risk-free interest rate

      1.10 %      0.98 %      0.31 % 

Expected life

      4 years       4 years       4 years  

Expected volatility

      31.99 %      35.76 %      35.22 % 

Weighted average fair value of grants (NT$)

    $ 13,225     $ 5,665     $ 4,750  

Expected volatility was based on the average annualized historical share price volatility of CLPT’s comparable companies before the grant date.

 

34.

CASH FLOW INFORMATION

Except for those disclosed in other notes, the Company entered into the following non-cash investing and financing activities:

 

Investing activities    Nine Months Ended
September 30		  
     2024      2023  

Additions of property, plant and equipment

    $ 14,115,209      $ 17,602,979  

Changes in other payables

      1,900,358        1,275,682  
  

 

 

     

 

 

  

Payments for acquisition of property, plant and equipment

    $ 16,015,567      $ 18,878,661  
  

 

 

     

 

 

  

Financing Activities

 

    

Balance on

January 1,

     

Cash Flows

From
Financing

     Changes in Non-Cash
Transactions		    

Cash Flows

From

Operation
Activities —

    

Balance on

September 30,

  
     2024      Activities     New Leases      Others     Interest Paid     2024  

Lease liabilities

    $ 10,975,181      $ (2,923,928 )    $ 3,068,649      $ (29,708 )    $ (94,132 )    $ 10,996,062  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

 

    

Balance on

January 1,

2023

     

Cash Flows

From
Financing

Activities

     Changes in Non-Cash
Transactions		    

Cash Flows

From

Operation
Activities —

    

Balance on

September 30,
2023

  
    New Leases      Others     Interest Paid  

Lease liabilities

    $ 10,672,507      $ (2,937,622 )    $ 3,297,072      $ (83,313 )    $ (76,037 )    $ 10,872,607  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

 

- 60 -

35.

CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of debt of the Company and the equity attributable to the parent.

Some consolidated entities are required to maintain minimum paid-in capital amount as prescribed by the applicable laws.

The management reviews the capital structure of the Company as needed. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. According to the management’s suggestions, the Company maintains a balanced capital structure through paying cash dividends, increasing its share capital, purchasing outstanding shares, and issuing new debt or repaying debt.

 

36.

FINANCIAL INSTRUMENTS

Fair Value Information

The fair value measurement guidance establishes a framework for measuring fair value and expands disclosure about fair value measurements. The standard describes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. These levels are:

Level 1 fair value measurements: These measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements: These measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 fair value measurements: These measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 

  a.

Financial instruments that are not measured at fair value but for which fair value is disclosed

Except those listed in the table below, the Company considers that the carrying amounts of financial assets and liabilities not measured at fair value approximate their fair values or the fair values cannot be reliable estimated.

 

     September 30, 2024      December 31, 2023      September 30, 2023  
     Carrying Value      Fair Value      Carrying Value      Fair Value      Carrying Value      Fair Value  

Financial liabilities

                  

Financial liabilities measured at amortized cost

                  

Bonds payable

    $ 30,486,867      $ 30,480,904      $ 30,482,766      $ 30,468,634      $ 30,481,435      $ 30,464,554  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

The fair value of bonds payable is measured using Level 2 inputs. The valuation of fair value is based on the quoted market prices provided by third party pricing services.

 

- 61 -

  b.

Financial instruments that are measured at fair value on a recurring basis

September 30, 2024

 

     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

            

Derivatives

    $ —       $ 65      $ —       $ 65  

Listed stocks

      452        —         —         452  

Non-listed stocks

      —         —         685,619        685,619  

Limited partnership

      —         —         308,063        308,063  

Other investing agreements

      —         —         39,137        39,137  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 452      $ 65      $ 1,032,819      $ 1,033,336  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial assets at FVOCI

            

Listed stocks

    $ 208,063      $ —       $ —       $ 208,063  

Non-listed stocks

      —         —         4,600,209        4,600,209  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 208,063      $ —       $ 4,600,209      $ 4,808,272  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial liabilities at FVTPL

            

Derivatives

    $ —       $ 1,080      $ —       $ 1,080  
  

 

 

     

 

 

     

 

 

     

 

 

  

Hedging financial liabilities

    $ —       $ 662      $ —       $ 662  
  

 

 

     

 

 

     

 

 

     

 

 

  

December 31, 2023

 

     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

            

Derivatives

    $ —       $ 483      $ —       $ 483  

Listed stocks

      421        —         —         421  

Non-listed stocks

      —         —         792,364        792,364  

Limited partnership

      —         —         219,032        219,032  

Other investing agreements

      —         —         24,305        24,305  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 421      $ 483      $ 1,035,701      $ 1,036,605  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial assets at FVOCI

            

Listed stocks

    $ 243,649      $ —       $ —       $ 243,649  

Non-listed stocks

      —         —         4,168,694        4,168,694  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 243,649      $ —       $ 4,168,694      $ 4,412,343  
  

 

 

     

 

 

     

 

 

     

 

 

  

Hedging financial liabilities

    $ —       $ 44      $ —       $ 44  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 62 -

September 30, 2023

 

     Level 1      Level 2      Level 3      Total  

Financial assets at FVTPL

            

Listed stocks

    $ 411      $ —       $ —       $ 411  

Non-listed stocks

      —         —         798,967        798,967  

Limited partnership

      —         —         225,123        225,123  

Other investing agreements

      —         —         28,242        28,242  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 411      $ —       $ 1,052,332      $ 1,052,743  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial assets at FVOCI

            

Listed stocks

    $ 244,762      $ —       $ —       $ 244,762  

Non-listed stocks

      —         —         3,809,253        3,809,253  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 244,762      $ —       $ 3,809,253      $ 4,054,015  
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial liabilities at FVTPL

            

Derivatives

    $ —       $ 2,485      $ —       $ 2,485  
  

 

 

     

 

 

     

 

 

     

 

 

  

Hedging financial liabilities

    $ —       $ 3,535      $ —       $ 3,535  
  

 

 

     

 

 

     

 

 

     

 

 

  

There were no transfers between Levels 1 and 2 for the nine months ended September 30, 2024 and 2023.

The reconciliations for financial assets measured at Level 3 were listed below:

Nine months ended September 30, 2024

 

Financial Assets    Measured at
Fair Value
through Profit
or Loss		      Measured at
Fair Value
through Other
Comprehensive
Income		      Total  

Balance on January 1, 2024

    $ 1,035,701      $ 4,168,694      $ 5,204,395  

Acquisition

      124,623        312,780        437,403  

Recognized in profit or loss under “Other gains and losses”

      (124,059 )       —         (124,059 ) 

Recognized in other comprehensive income under “Unrealized gain or loss on financial assets at fair value through other comprehensive income”

      —         121,840        121,840  

Proceeds from capital reduction of the investees and profit distribution

      (3,446 )       (3,105 )       (6,551 ) 
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2024

    $ 1,032,819      $ 4,600,209      $ 5,633,028  
  

 

 

     

 

 

     

 

 

  

Unrealized gain or loss for the nine months ended September 30, 2024

    $ (124,059 )       
  

 

 

        

 

- 63 -

Nine months ended September 30, 2023

 

Financial Assets    Measured at
Fair Value
through Profit
or Loss		      Measured at
Fair Value
through Other
Comprehensive
Income		      Total  

Balance on January 1, 2023

    $ 1,020,203      $ 3,218,579      $ 4,238,782  

Acquisition

      130,476        14,820        145,296  

Recognized in profit or loss under “Other gains and losses”

      (78,157 )       —         (78,157 ) 

Recognized in other comprehensive income under “Unrealized gain or loss on financial assets at fair value through other comprehensive income”

      —         575,854        575,854  

Proceeds from capital reduction of the investees and profit distribution

      (20,190 )       —         (20,190 ) 
  

 

 

     

 

 

     

 

 

  

Balance on September 30, 2023

    $ 1,052,332      $ 3,809,253      $ 4,861,585  
  

 

 

     

 

 

     

 

 

  

Unrealized gain or loss for the nine months ended September 30, 2023

    $ (77,774 )       
  

 

 

        

The fair values of financial assets and financial liabilities of Level 2 are determined as follows:

 

  1)

The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices.

 

  2)

For derivatives, fair values are estimated using discounted cash flow model. Future cash flows are estimated based on observable inputs including forward exchange rates at the end of the reporting periods and the forward and spot exchange rates stated in the contracts, discounted at a rate that reflects the credit risk of various counterparties.

The fair values of non-listed domestic and foreign equity investments and other investing agreements were Level 3 financial assets and determined using the market approach by reference the Price-to-Book ratios (P/B ratios) of peer companies that traded in active markets, using the income approach, in which the discounted cash flow is used to capture the present value of the expected future economic benefits to be derived from the investments, or using assets approach. The significant unobservable inputs used were listed in the below table. An increase in growth rate of long-term revenue, a decrease in discount for the lack of marketability or noncontrolling interests discount, or a decrease in the discount rate would result in increases in the fair values.

 

     September 30,
2024		   December 31,
2023		   September 30,
2023

Discount for lack of marketability

    13.84%~20.00%   3.75%~20.00%   14.09%~20.00%

Noncontrolling interests discount

    15.00%~25.00%   17.01%~25.00%   17.29%~25.00%

Growth rate of long-term revenue

    0.12%   0.19%   0.19%

Discount rate

    8.18%~14.00%   7.11%~8.20%   7.24%~8.10%

 

- 64 -

If the inputs to the valuation model were changed to reflect reasonably possible alternative assumptions while all the other variables were held constant, the fair values of Level 3 financial assets would increase (decrease) as below table.

 

     September 30,
2024		      September 30,
2023		  

Discount for lack of marketability

      

5% increase

    $ (64,782 )     $ (34,793 ) 
  

 

 

     

 

 

  

5% decrease

    $ 64,782      $ 34,793  
  

 

 

     

 

 

  

Noncontrolling interests discount

      

5% increase

    $ (50,981 )     $ (22,858 ) 
  

 

 

     

 

 

  

5% decrease

    $ 50,981      $ 22,858  
  

 

 

     

 

 

  

Long-term revenue growth rates

      

0.1% increase

    $ 31,620      $ 33,733  
  

 

 

     

 

 

  

0.1% decrease

    $ (31,060 )     $ (33,097 ) 
  

 

 

     

 

 

  

Discount rate

      

1% increase

    $ (372,711 )     $ (386,464 ) 
  

 

 

     

 

 

  

1% decrease

    $ 452,054      $ 475,802  
  

 

 

     

 

 

  

Categories of Financial Instruments

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Financial assets

         

Measured at FVTPL

         

Mandatorily measured at FVTPL

    $ 1,033,336      $ 1,036,605      $ 1,052,743  

Financial assets at amortized cost (Note a)

      72,178,136        82,090,521        70,884,013  

Financial assets at FVOCI

      4,808,272        4,412,343        4,054,015  

Financial liabilities

         

Measured at FVTPL

         

Held for trading

      1,080        —         2,485  

Hedging financial liabilities

      662        44        3,535  

Measured at amortized cost (Note b)

      61,684,647        65,466,108        62,837,119  

 

Note a:    The balances included cash and cash equivalents, trade notes and accounts receivable, receivables from related parties, other current monetary assets and refundable deposits (classified as other noncurrent assets), which were financial assets measured at amortized cost.
Note b:    The balances included short-term loans, trade notes and accounts payable, payables to related parties, partial other payables, customers’ deposits, bonds payable (including the current portion) and long-term loans (including the current portion) which were financial liabilities carried at amortized cost.

Financial Risk Management Objectives

The main financial instruments of the Company include equity investments, trade notes and accounts receivable, trade notes and accounts payable, lease liabilities, loans and bonds payable. The Company’s Finance Department provides services to its business units, co-ordinates access to domestic and international capital markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk, and liquidity risk.

 

- 65 -

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors. Those derivatives are used to hedge the risks of exchange rate fluctuation arising from operating or investment activities. Compliance with policies and risk exposure limits is reviewed by the Company’s Finance Department on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Chunghwa reports the significant risk exposures and related action plans timely and actively to the audit committee and if needed to the Board of Directors.

 

  a.

Market risk

The Company is exposed to market risks of changes in foreign currency exchange rates and interest rates. The Company uses forward exchange contracts to hedge the exchange rate risk arising from assets and liabilities denominated in foreign currencies.

There were no changes to the Company’s exposure to market risks or the manner in which these risks are managed and measured.

 

  1)

Foreign currency risk

For details about the carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the balance sheet dates, please refer to Note 41 Significant Assets and Liabilities Denominated in Foreign Currencies.

The carrying amounts of the Company’s derivatives with exchange rate risk exposures at the balance sheet dates were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Assets

         

EUR

    $ 65      $ 483      $ —   

Liabilities

         

USD

      951        —         —   

EUR

      791        44        6,020  

Foreign currency sensitivity analysis

The Company is mainly exposed to the fluctuations of the currencies USD, EUR, SGD and RMB.

The following table details the Company’s sensitivity to a 5% increase and decrease in the functional currency against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible changes in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and forward exchange contracts. A positive number below indicates an increase in pre-tax profit or equity where the functional currency weakens 5% against the relevant currency.

 

- 66 -

     Nine Months Ended September 30  
     2024      2023  

Profit or loss

      

Monetary assets and liabilities (a)

      

USD

    $ 50,461      $ 67,311  

EUR

      (44,363 )       (37,286 ) 

SGD

      (37,515 )       (49,422 ) 

RMB

      8,389        776  

Derivatives (b)

      

USD

      3,552        —   

EUR

      3,538        11,869  

Equity

      

Derivatives (c)

      

EUR

      7,076        13,564  

 

  a)

This is mainly attributable to the exposure to foreign currency denominated receivables and payables of the Company outstanding at the balance sheet dates.

 

  b)

This is mainly attributable to forward exchange contracts.

 

  c)

This is mainly attributable to the changes in the fair value of derivatives that are designated as cash flow hedges.

For a 5% strengthening of the functional currency against the relevant currencies, there would be an equal and opposite effect on the pre-tax profit or equity for the amounts shown above.

 

  2)

Interest rate risk

The carrying amounts of the Company’s exposures to interest rates on financial assets and financial liabilities at the balance sheet dates were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Fair value interest rate risk

         

Financial assets

    $ 33,406,988      $ 43,156,022      $ 29,347,838  

Financial liabilities

      41,547,929        41,457,947        41,354,042  

Cash flow interest rate risk

         

Financial assets

      10,667,961        9,136,207        12,076,181  

Financial liabilities

      1,965,000        2,185,000        2,420,000  

Interest rate sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/lower and all other variables were held constant, the Company’s pre-tax income would increase/decrease by $21,757 thousand and $24,140 thousand for the nine months ended September 30, 2024 and 2023, respectively. This is mainly attributable to the Company’s exposure to floating interest rates on its financial assets, short-term and long-term loans.

 

- 67 -

  3)

Other price risk

The Company is exposed to equity price risks arising from holding other company’s equity. Equity investments are held for strategic rather than trading purposes. The management managed the risk through holding various risk portfolios. Further, the Company assigned finance and investment departments to monitor the price risk.

Equity price sensitivity analysis

The sensitivity analyses below have been determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income would have increased/decreased by $49,707 thousand and $240,414 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI for the nine months ended September 30, 2024. If equity prices had been 5% higher/lower, pre-tax profit and pre-tax other comprehensive income would have increased/decreased by $51,225 thousand and $202,701 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL and financial assets at FVOCI for the nine months ended September 30, 2023.

 

  b.

Credit risk

Credit risk refers to the risk that a counterparty would default on its contractual obligations resulting in financial loss to the Company. The maximum credit exposure of the aforementioned financial instruments is equal to their carrying amounts recognized in the consolidated balance sheet as of the balance sheet date.

The Company has large trade receivables outstanding with its customers. A substantial majority of the Company’s outstanding trade receivables are not covered by collateral or credit insurance. The Company has implemented ongoing measures including enhancing credit assessments and strengthening overall risk management to reduce its credit risk. While the Company has procedures to monitor and limit exposure to credit risk on trade receivables, there can be no assurance such procedures will effectively limit its credit risk and avoid losses. This risk is heightened during periods when economic conditions worsen.

As the Company serves a large number of unrelated consumers, the concentration of credit risk was limited.

 

  c.

Liquidity risk

The Company manages and maintains sufficient cash and cash equivalent position to support the operations and reduce the impact on fluctuation of cash flow.

 

  1)

Liquidity and interest risk tables

The following tables detailed the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company is required to pay.

 

- 68 -

September 30, 2024

 

     Weighted
Average
Effective
Interest
Rate (%)		      Less than
1 Month		      1-3 Months      3 Months to
1 Year		      1-5 Years      More than
5 Years		      Total  

Non-derivative financial liabilities

                     

Non-interest bearing

      —       $ 32,278,644      $ —       $ 1,946,960      $ 5,114,595      $ —       $ 39,340,199  

Floating interest rate instruments

      2.08        3,922        6,807        393,121        1,665,920        —         2,069,770  

Fixed interest rate instruments

      0.54        13,744        92,277        8,957,470        17,271,172        4,726,108        31,060,771  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
      $ 32,296,310      $ 99,084      $ 11,297,551      $ 24,051,687      $ 4,726,108      $ 72,470,740  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Information about the maturity analysis for lease liabilities was as follows:

 

     Less than
1 Year		      1-3 Years      3-5 Years      More than
5 Years		      Total  

Lease liabilities

    $ 3,561,370      $ 5,148,440      $ 2,329,210      $ 205,368      $ 11,244,388  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

December 31, 2023

 

     Weighted
Average
Effective
Interest
Rate (%)		      Less than
1 Month		      1-3 Months      3 Months to
1 Year		      1-5 Years      More than
5 Years		      Total  

Non-derivative financial liabilities

                     

Non-interest bearing

      —       $ 37,930,363      $ —       $ 2,107,392      $ 5,309,097      $ —       $ 45,346,852  

Floating interest rate instruments

      1.99        —         15,000        2,170,000        —         —         2,185,000  

Fixed interest rate instruments

      0.53        —         —         —         25,800,000        4,700,000        30,500,000  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
      $ 37,930,363      $ 15,000      $ 4,277,392      $ 31,109,097      $ 4,700,000      $ 78,031,852  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Information about the maturity analysis for lease liabilities was as follows:

 

     Less than
1 Year		      1-3 Years      3-5 Years      More than
5 Years		      Total  

Lease liabilities

    $ 3,518,419      $ 4,819,030      $ 2,356,754      $ 518,335      $ 11,212,538  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

September 30, 2023

 

     Weighted
Average
Effective
Interest
Rate (%)		      Less than
1 Month		      1-3 Months      3 Months to
1 Year		      1-5 Years      More than
5 Years		      Total  

Non-derivative financial liabilities

                     

Non-interest bearing

      —       $ 32,745,742      $ —       $ 1,749,740      $ 5,198,556      $ —       $ 39,694,038  

Floating interest rate instruments

      2.02        —         130,000        2,290,000        —         —         2,420,000  

Fixed interest rate instruments

      0.53        —         —         —         25,800,000        4,700,000        30,500,000  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
      $ 32,745,742      $ 130,000      $ 4,039,740      $ 30,998,556      $ 4,700,000      $ 72,614,038  
     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Information about the maturity analysis for lease liabilities was as follows:

 

     Less than
1 Year		      1-3 Years      3-5 Years      More than
5 Years		      Total  

Lease liabilities

    $ 3,461,372      $ 4,649,958      $ 2,364,475      $ 623,822      $ 11,099,627  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

- 69 -

The following table detailed the Company’s liquidity analysis for its derivative financial instruments. The table had been drawn up based on the undiscounted gross inflows and outflows on those derivatives that require gross settlement.

 

     Less than
1 Month		     1-3 Months    

3 Months to

1 Year

      1-5 Years      Total  

September 30, 2024

             

Gross settled

             

Forward exchange contracts

             

Inflow

    $ 70,989     $ 211,462     $ —       $ —       $ 282,451  

Outflow

      71,940       212,188       —         —         284,128  
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
   $ (951 )    $ (726 )    $ —       $ —       $ (1,677 ) 
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

December 31, 2023

             

Gross settled

             

Forward exchange contracts

             

Inflow

    $ —      $ 169,092     $ —       $ —       $ 169,092  

Outflow

      —        168,653       —         —         168,653  
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
   $ —      $ 439     $ —       $ —       $ 439  
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

September 30, 2023

             

Gross settled

             

Forward exchange contracts

             

Inflow

    $ —      $ 506,101     $ —       $ —       $ 506,101  

Outflow

      —        512,121       —         —         512,121  
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  
   $ —      $ (6,020 )    $ —       $ —       $ (6,020 ) 
  

 

 

    

 

 

    

 

 

     

 

 

     

 

 

  

2) Financing facilities

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Unsecured bank loan facilities

         

Amount used

    $ 430,000      $ 585,000      $ 820,000  

Amount unused

      56,858,684        56,191,331        56,152,849  
  

 

 

     

 

 

     

 

 

  
   $ 57,288,684      $ 56,776,331      $ 56,972,849  
  

 

 

     

 

 

     

 

 

  

Secured bank loan facilities

         

Amount used

    $ 1,600,000      $ 1,600,000      $ 1,600,000  

Amount unused

      15,000        20,000        20,000  
  

 

 

     

 

 

     

 

 

  
   $ 1,615,000      $ 1,620,000      $ 1,620,000  
  

 

 

     

 

 

     

 

 

  

 

- 70 -

37.

RELATED PARTIES TRANSACTIONS

The ROC Government has significant equity interest in Chunghwa. Chunghwa provides fixed-line services, mobile services, internet and data and other services to the various departments and institutions of the ROC Government in the normal course of business and at arm’s-length prices. Except for those disclosed in other notes or this note, the transactions with the ROC government bodies have not been disclosed because the transactions are not individually or collectively significant. However, the related revenues and operating costs have been appropriately recorded.

 

  a.

The Company engages in business transactions with the following related parties:

 

Company

   

Relationship

Taiwan International Standard Electronics Co., Ltd.    Associate
So-net Entertainment Taiwan Limited    Associate
KKBOX Taiwan Co., Ltd.    Associate
KingwayTek Technology Co., Ltd.    Associate
Taiwan International Ports Logistics Corporation    Associate
Senao Networks, Inc.    Associate
EnGenius Networks Inc.    Subsidiary of the Company’s associate, Senao Networks, Inc.
EnRack Technology Inc.    Subsidiary of the Company’s associate, Senao Networks, Inc.
Emplus Technologies, Inc.    Subsidiary of the Company’s associate, Senao Networks, Inc.
ST-2 Satellite Ventures Pte., Ltd.    Associate
CHT Infinity Singapore Pte. Ltd.    Associate
Viettel-CHT Co., Ltd.    Associate
PT. CHT Infinity Indonesia    Subsidiary of the Company’s associate, CHT Infinity Singapore Pte. Ltd.
Click Force Co., Ltd.    Associate
Chunghwa PChome Fund I Co., Ltd.    Associate
Cornerstone Ventures Co., Ltd.    Associate
Next Commercial Bank Co., Ltd.    Associate
WiAdvance Technology Corporation    Associate
AgriTalk Technology Inc.    Associate
Imedtac Co., Ltd.    Associate
Baohwa Trust Co., Ltd.    Associate
Porrima Inc.    Associate
Taiwania Hive Technology Fund L.P.    Associate
Chunghwa SEA Holdings    Joint venture
Other related parties   

Chunghwa Telecom Foundation

    A nonprofit organization of which the funds donated by Chunghwa exceeds one third of its total funds

Senao Technical and Cultural Foundation

    A nonprofit organization of which the funds donated by SENAO exceeds one third of its total funds

Sochamp Technology Co., Ltd.

    Investor of significant influence over CHST

Tsann Kuen Enterprise Co., Ltd.

    Substantial related party of SENAO

E-Life Mall Co., Ltd.

    Substantial related party of SENAO

Engenius Technologies Co., Ltd.

    Substantial related party of SENAO

Cheng Keng Investment Co., Ltd.

    Substantial related party of SENAO

Cheng Feng Investment Co., Ltd.

    Substantial related party of SENAO

All Oriented Investment Co., Ltd.

    Substantial related party of SENAO
   (Continued)

 

- 71 -

Company

   

Relationship

Hwa Shun Investment Co., Ltd.

    Substantial related party of SENAO

Yu Yu Investment Co., Ltd.

    Substantial related party of SENAO

Kangsin Co., Ltd.

    Substantial related party of SENAO

United Daily News Co., Ltd.

    Investor of significant influence over SFD

Shenzhen Century Communication Co., Ltd.

    Investor of significant influence over SCT

Advantech Co., Ltd.

    Investor of significant influence over IISI

Z-Com, Inc.

    Investor of significant influence over CHST
   (Concluded)

 

  b.

Balances and transactions between Chunghwa and its subsidiaries, which are related parties of Chunghwa, have been eliminated on consolidation and are not disclosed in this note. Terms of the foregoing transactions with related parties were not significantly different from transactions with non-related parties. When no similar transactions with non-related parties can be referenced, terms were determined in accordance with mutual agreements. Details of transactions between the Company and other related parties are disclosed below:

 

  1)

Operating transactions

 

     Revenues  
     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Associates

    $ 146,505      $ 82,609      $ 301,586      $ 271,671  

Others

      17,336        16,774        38,918        44,250  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 163,841      $ 99,383      $ 340,504      $ 315,921  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Operating Costs and Expenses  
     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Associates

    $ 225,305      $ 342,891      $ 599,047      $ 835,898  

Others

      5,827        6,201        76,883        67,868  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 231,132      $ 349,092      $ 675,930      $ 903,766  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  2)

Non-operating transactions

 

     Non-operating Income and Expenses  
     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Associates

    $ 10,319      $ 9,463      $ 29,905      $ 28,286  

Others

      (9 )       284        433        961  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 10,310      $ 9,747      $ 30,338      $ 29,247  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 72 -

  3)

Receivables

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Associates

    $ 174,358      $ 75,994      $ 102,692  

Others

      7,727        2,095        8,502  
  

 

 

     

 

 

     

 

 

  
   $ 182,085      $ 78,089      $ 111,194  
  

 

 

     

 

 

     

 

 

  

 

  4)

Payables

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Associates

    $ 192,322      $ 380,663      $ 162,229  

Others

      4,148        4,426        5,417  
  

 

 

     

 

 

     

 

 

  
   $ 196,470      $ 385,089      $ 167,646  
  

 

 

     

 

 

     

 

 

  

 

  5)

Customers’ deposits

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Associates

    $ 26,183      $ 19,432      $ 18,895  

Others

      —         284        284  
  

 

 

     

 

 

     

 

 

  
   $ 26,183      $ 19,716      $ 19,179  
  

 

 

     

 

 

     

 

 

  

 

  6)

Acquisition of property, plant and equipment

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Associates

    $ —       $ —       $ 63      $ 53,983  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  7)

Acquisition of intangible assets

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Associates

    $ —       $ —       $ 429      $ —   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

  8)

Lease-in agreements

Chunghwa entered into a contract with ST-2 Satellite Ventures Pte., Ltd. on March 12, 2010 to lease capacity on the ST-2 satellite. This lease term is for 15 years which should start from the official operation of ST-2 satellite and the total contract value is approximately $6,000,000 thousand (SGD 260,723 thousand), including a prepayment of $3,067,711 thousand at the inception of the lease, and the rest of amount should be paid annually when ST-2 satellite starts its official operation. ST-2 satellite was launched in May 2011 and began its official operation in August 2011. As ST-2 satellite is in good operating condition, the useful life is extended for another 3 years and 3 months after evaluation in 2021. The Board of Directors of Chunghwa approved to extend the lease period accordingly with the original contract terms in December 2021; therefore, Chunghwa acquired right-of-use asset of $1,124,780 thousand from the aforementioned lease extension.

 

- 73 -

The lease liabilities of ST-2 Satellite Ventures Pte., Ltd. as of balance sheet dates were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Lease liabilities—current

    $ 209,391      $ 197,278      $ 199,311  

Lease liabilities—noncurrent

      1,549,439        1,602,633        1,667,146  
  

 

 

     

 

 

     

 

 

  
   $ 1,758,830      $ 1,799,911      $ 1,866,457  
  

 

 

     

 

 

     

 

 

  

The interest expense recognized for the aforementioned lease liabilities for the three months and nine months ended September 30, 2024 were $1,870 thousand and $5,654 thousand, respectively. The interest expense recognized for the aforementioned lease liabilities for the three months and nine months ended September 30, 2023 were $1,999 thousand and $6,049 thousand, respectively.

 

  9)

Others

The bank deposits and other financial assets of NCB as of balance sheet dates were as follows:

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Bank deposits and other financial assets

    $ 1,635,069      $ 1,132,008      $ —   
  

 

 

     

 

 

     

 

 

  

The interest income recognized for the aforementioned bank deposits and other financial assets for the three months and nine months ended September 30, 2024 were $4,534 thousand and $12,640 thousand, respectively.

 

  c.

Compensation of key management personnel

The compensation of directors and key management personnel was as follows:

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Short-term employee benefits

    $ 82,552      $ 84,117      $ 267,025      $ 263,495  

Post-employment benefits

      3,404        2,130        6,808        24,074  

Share-based payment

      295        409        929        884  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 86,251      $ 86,656      $ 274,762      $ 288,453  
  

 

 

     

 

 

     

 

 

     

 

 

  

The compensation of directors and key management personnel was mainly determined by the compensation committee having regard to the performances and market trends.

 

- 74 -

38.

PLEDGED ASSETS

The following assets are mainly pledged as collaterals for bank loans, customs duties of the imported materials and warranties of contract performance, or the trust account the Company entrusts to Land Bank of Taiwan for fund control and property rights management.

 

     September 30,
2024		      December 31,
2023		      September 30,
2023		  

Property, plant and equipment

    $ 2,446,699      $ 2,468,835      $ 2,476,213  

Land held under development (included in inventories)

      1,998,733        1,998,733        1,998,733  

Restricted assets (included in other assets—others)

      1,116,193        546,022        386,723  
  

 

 

     

 

 

     

 

 

  
   $ 5,561,625      $ 5,013,590      $ 4,861,669  
  

 

 

     

 

 

     

 

 

  

 

39.

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Except for those disclosed in other notes, the Company’s significant commitments and contingent liabilities as of September 30, 2024 were as follows:

 

  a.

Acquisitions of property, plant and equipment of $19,508,983 thousand.

 

  b.

Acquisitions of telecommunications-related inventory of $16,016,748 thousand.

 

  c.

Unused letters of credit amounting to $10,000 thousand.

 

  d.

A commitment to contribute $2,000,000 thousand to a Piping Fund administered by the Taipei City Government, of which $1,000,000 thousand was contributed by Chunghwa on August 15, 1996 (classified as other financial assets—noncurrent). If the fund is not sufficient, Chunghwa will contribute the remaining $1,000,000 thousand upon notification from the Taipei City Government.

 

  e.

Chunghwa committed that when its ownership interest in NCB is greater than 25% and NCB encounters financial difficulty or the capital adequacy ratio of NCB cannot meet the related regulation requirements, Chunghwa will provide financial support to assist NCB in maintaining a healthy financial condition.

 

  f.

Chunghwa signed a contract, the ST-2 Satellite Succession Plan, with Singapore Telecommunications Limited, for a total transaction price of EUR 177,000 thousand and SGD 51,000 thousand. As of September 30, 2024, Chunghwa had paid the amount of EUR 79,650 thousand (classified as prepayments—noncurrent).

 

  g.

The Company has signed the house and land presale contracts amounting to $7,703,522 thousand and has received $978,878 thousand in accordance with the contracts (classified as contract liabilities).

 

  h.

Chunghwa’s Board of Directors approved an investment in Cultural Content Industry Fund in February 2024. The investment amount is capped at $1,200,000 thousand.

 

- 75 -

40.

SIGNIFICANT SUBSEQUENT EVENTS

Chunghwa acquired the 10-year unsecured cumulative subordinated corporate bond of Fubon Life Insurance Co., Ltd. at the price of $2,000,000 thousand in October 2024.

 

41.

SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information summarizes the disclosure of foreign currencies other than the functional currency of Chunghwa and its subsidiaries. The following exchange rates are the exchange rates used to translate to the presentation currency of the consolidated financial statements, which is the NTD:

 

     September 30, 2024  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Assets denominated in foreign currencies

         

Monetary items

         

USD

    $ 59,033        31.65      $ 1,868,410  

EUR

      687        35.38        24,291  

SGD

      43,762        24.72        1,081,791  

RMB

      45,979        4.523        207,964  

Non-monetary items

         

Investments accounted for using equity method

         

USD

      8,905        31.65        281,855  

SGD

      17,147        24.72        423,874  

VND

      431,182,269        0.0013        547,601  

Liabilities denominated in foreign currencies

         

Monetary items

         

USD

      27,146        31.65        859,183  

EUR

      25,765        35.38        911,549  

SGD

      74,114        24.72        1,832,091  

RMB

      8,882        4.523        40,175  

 

     December 31, 2023  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Assets denominated in foreign currencies

         

Monetary items

         

USD

    $ 66,564        30.71      $ 2,043,834  

EUR

      1,999        33.98        67,919  

SGD

      39,515        23.29        920,308  

RMB

      35,777        4.327        154,806  

Non-monetary items

         

Investments accounted for using equity method

         

SGD

      12,255        23.29        285,430  

VND

      435,484,544        0.0012        542,178  
           (Continued ) 

 

- 76 -

     December 31, 2023  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Liabilities denominated in foreign currencies

         

Monetary items

         

USD

    $ 33,534        30.71      $ 1,029,674  

EUR

      19,875        33.98        675,342  

SGD

      80,039        23.29        1,864,104  

RMB

      8,880        4.327        38,424  
           (Concluded ) 

 

     September 30, 2023  
     Foreign
Currencies
(Thousands)		      Exchange
Rate		      New Taiwan
Dollars
(Thousands)		  

Assets denominated in foreign currencies

         

Monetary items

         

USD

    $ 75,219        32.27      $ 2,427,312  

EUR

      7,419        33.91        251,579  

SGD

      40,064        23.53        942,704  

RMB

      11,700        4.415        51,657  

Non-monetary items

         

Investments accounted for using equity method

         

SGD

      16,191        23.53        380,970  

VND

      410,524,685        0.0013        535,735  

Liabilities denominated in foreign currencies

         

Monetary items

         

USD

      33,502        32.27        1,081,101  

EUR

      29,410        33.91        997,293  

SGD

      82,071        23.53        1,931,140  

RMB

      8,186        4.415        36,142  

The unrealized foreign currency exchange gains and losses were loss of $21,282 thousand and gain of $14,141 thousand for the three months ended September 30, 2024 and 2023, respectively. The unrealized foreign currency exchange gains and losses were loss of $30,111 thousand and gain of $39,081 thousand for the nine months ended September 30, 2024 and 2023, respectively. Due to the various foreign currency transactions and the functional currency of each individual entity of the Company, foreign exchange gains and losses cannot be disclosed by the respective significant foreign currency.

 

- 77 -

42.

ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the FSC for the Company:

 

  a.

Financing provided: None.

 

  b.

Endorsement/guarantee provided: Please see Table 1.

 

  c.

Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): Please see Table 2.

 

  d.

Marketable securities acquired or disposed of at costs or prices at least $300 million or 20% of the paid-in capital: None.

 

  e.

Acquisition of individual real estate at costs of at least $300 million or 20% of the paid-in capital: None.

 

  f.

Disposal of individual real estate at prices of at least $300 million or 20% of the paid-in capital: None.

 

  g.

Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paid-in capital: Please see Table 3.

 

  h.

Receivables from related parties amounting to $100 million or 20% of the paid-in capital: Please see Table 4.

 

  i.

Names, locations, and other information of investees on which the Company exercises significant influence (excluding investments in Mainland China): Please see Table 5.

 

  j.

Derivative instruments transactions: Please see Notes 7, 20 and 36.

 

  k.

Investments in Mainland China: Please see Table 6.

 

  l.

Intercompany relationships and significant intercompany transactions: Please see Table 7.

 

  m.

Information of main stakeholders: Please see Table 8.

 

43.

SEGMENT INFORMATION

The Company’s reportable segments are “Consumer Business”, “Enterprise Business”, “International Business” and “Others”, which are managed separately because each segment represents a strategic business unit that serves different customers. Segment information is provided to the chief operating decision maker who allocates resources and assesses segment performance. The Company’s measure of segment performance is mainly based on revenues and income before income tax.

Some operating segments have been aggregated into a single operating segment taking into account the following factors: (a) the type or class of customer for the telecommunications products and services are similar; (b) the nature of the telecommunications products and services are similar; and (c) the methods used to provide the services to the customers are similar.

The accounting policies of the operating segments are the same as those described in Note 3.

 

- 78 -

Segment Revenues and Operating Results

Analysis by reportable segment of revenues and operating results of continuing operations are as follows:

 

     Consumer
Business		      Enterprise
Business		      International
Business		      Others      Total  

Three months ended September 30, 2024

               

Revenues

               

From external customers

    $ 34,429,900      $ 17,595,361      $ 2,370,996      $ 1,217,219      $ 55,613,476  

Intersegment revenues

      665,558        251,136        279,212        94,497        1,290,403  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 35,095,458      $ 17,846,497      $ 2,650,208      $ 1,311,716        56,903,879  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (1,290,403 ) 
              

 

 

  

Consolidated revenues

                $ 55,613,476  
              

 

 

  

Segment income before income tax

    $ 7,194,787      $ 3,103,432      $ 610,543      $ 580,340      $ 11,489,102  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Nine months ended September 30, 2024

               

Revenues

               

From external customers

    $ 102,651,208      $ 51,437,172      $ 7,423,160      $ 3,161,140      $ 164,672,680  

Intersegment revenues

      1,787,826        567,598        816,975        279,809        3,452,208  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 104,439,034      $ 52,004,770      $ 8,240,135      $ 3,440,949        168,124,888  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (3,452,208 ) 
              

 

 

  

Consolidated revenues

                $ 164,672,680  
              

 

 

  

Segment income before income tax

    $ 22,662,543      $ 9,666,918      $ 1,829,235      $ 1,664,871      $ 35,823,567  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Three months ended September 30, 2023

               

Revenues

               

From external customers

    $ 33,737,840      $ 16,616,893      $ 2,337,773      $ 965,440      $ 53,657,946  

Intersegment revenues

      612,561        322,646        271,376        101,607        1,308,190  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 34,350,401      $ 16,939,539      $ 2,609,149      $ 1,067,047        54,966,136  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (1,308,190 ) 
              

 

 

  

Consolidated revenues

                $ 53,657,946  
              

 

 

  

Segment income before income tax

    $ 7,247,401      $ 3,434,184      $ 544,099      $ 411,797      $ 11,637,481  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Nine months ended September 30, 2023

               

Revenues

               

From external customers

    $ 100,552,394      $ 51,264,214      $ 6,633,864      $ 2,882,030      $ 161,332,502  

Intersegment revenues

      1,819,088        810,376        731,338        284,312        3,645,114  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Segment revenues

    $ 102,371,482      $ 52,074,590      $ 7,365,202      $ 3,166,342        164,977,616  
  

 

 

     

 

 

     

 

 

     

 

 

     

Intersegment elimination

                  (3,645,114 ) 
              

 

 

  

Consolidated revenues

                $ 161,332,502  
              

 

 

  

Segment income before income tax

    $ 22,570,396      $ 10,868,406      $ 1,607,979      $ 1,510,353      $ 36,557,134  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

- 79 -

Main Products and Service Revenues

 

     Three Months Ended
September 30		      Nine Months Ended
September 30		  
     2024      2023      2024      2023  

Consumer Business

            

Mobile services

    $ 14,358,410      $ 13,934,444      $ 42,638,330      $ 41,122,870  

Fixed-line services

      10,688,228        10,652,262        32,154,161        31,894,985  

Sales

      8,673,419        8,562,798        25,942,062        25,782,712  

Others

      709,843        588,336        1,916,655        1,751,827  
  

 

 

     

 

 

     

 

 

     

 

 

  
     34,429,900        33,737,840        102,651,208        100,552,394  
  

 

 

     

 

 

     

 

 

     

 

 

  

Enterprise Business

            

Fixed-line services

      8,427,314        8,492,662        25,248,393        25,439,643  

ICT business

      6,027,689        4,924,918        16,458,571        15,566,348  

Mobile services

      2,282,057        2,289,641        6,824,138        6,782,391  

Others

      858,301        909,672        2,906,070        3,475,832  
  

 

 

     

 

 

     

 

 

     

 

 

  
     17,595,361        16,616,893        51,437,172        51,264,214  
  

 

 

     

 

 

     

 

 

     

 

 

  

International Business

            

Fixed-line services

      1,283,400        1,294,655        3,874,562        3,996,547  

ICT business

      966,180        733,167        2,876,895        1,843,133  

Others

      121,416        309,951        671,703        794,184  
  

 

 

     

 

 

     

 

 

     

 

 

  
     2,370,996        2,337,773        7,423,160        6,633,864  
  

 

 

     

 

 

     

 

 

     

 

 

  

Others

            

Sales

      979,111        743,065        2,466,829        2,225,042  

Others

      238,108        222,375        694,311        656,988  
  

 

 

     

 

 

     

 

 

     

 

 

  
     1,217,219        965,440        3,161,140        2,882,030  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 55,613,476      $ 53,657,946      $ 164,672,680      $ 161,332,502  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

- 80 -

TABLE 1

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

No.

(Note 1)

   

Endorsement/
Guarantee
Provider

   

Guaranteed Party

    Limits on
Endorsement/
Guarantee
Amount
Provided
to Each
Guaranteed
Party		      Maximum
Balance
for the
Period		      Ending
Balance		      Actual
Borrowing
Amount		      Amount of
Endorsement/
Guarantee
Collateralized
by
Properties		      Ratio of
Accumulated
Endorsement/
Guarantee
to Net Equity
Per Latest
Financial
Statements		      Maximum
Endorsement/
Guarantee
Amount
Allowable		      Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries		      Endorsement/
Guarantee
Given by
Subsidiaries
on Behalf of
Parent		      Endorsement/
Guarantee
Given on
Behalf of
Companies
in Mainland
China		      Note  
  

Name

    Nature of
Relationship
(Note 2)

1

   

Senao International Co., Ltd.

   

Aval Technologies Co., Ltd.

    b    $ 627,837      $ 300,000      $ 300,000      $ 300,000      $ —         4.78      $ 3,139,183        Yes        No        No        Notes 3 and 4  
     

Wiin Technology Co., Ltd.

    b      627,837        200,000        200,000        200,000        —         3.19        3,139,183        Yes        No        No        Notes 3 and 4  

 

Note 1:

Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:

 

  a.

“0” for the Company.

 

  b.

Subsidiaries are numbered from “1”.

 

Note 2:

Relationships between the endorsement/guarantee provider and the guaranteed party:

 

  a.

A company with which it does business.

 

  b.

A company in which the Company directly and indirectly holds more than 50 percent of the voting shares.

 

  c.

A company that directly and indirectly holds more than 50 percent of the voting shares in the Company.

 

  d.

Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.

 

  e.

The Company fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

 

  f.

All capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.

 

  g.

Companies in the same industry provide among themselves jointly and severally guarantee for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

 

Note 3:

The limits on endorsement or guarantee amount provided to each guaranteed party is up to 10% of the net assets value of the latest financial statements of Senao International Co., Ltd.

 

Note 4:

The total amount of endorsement or guarantee that the Company is allowed to provide is up to 50% of the net assets value of the latest financial statements of Senao International Co., Ltd.

 

- 81 -

TABLE 2

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Held Company Name

   

Marketable Securities
Type and Name

    Relationship
with the
Company		     

Financial Statement
Account

    September 30, 2024      Note  
   Shares
(Thousands/
Thousand
Units)		      Carrying
Value
(Note 1)		      Percentage of
Ownership		      Fair
Value		  

Chunghwa Telecom Co., Ltd.

    Stocks                     
   Taipei Financial Center Corp.      —       Financial assets at FVOCI      172,927      $ 3,800,575        12      $ 3,800,575        —   
   iKala Global Online Corp.      —       Financial assets at FVOCI      112,500        282,687        8        282,687        —   
   KKCompany Technologies Inc.      —       Financial assets at FVOCI      2,762        241,955        2        241,955        —   
   4 Gamers Entertainment Inc.      —       Financial assets at FVOCI      136        162,364        19.9        162,364        —   
   Industrial Bank of Taiwan II Venture Capital Co., Ltd. (IBT II)      —       Financial assets at FVOCI      5,252        17,098        17        17,098        —   
   Taiwan mobile payment Co., Ltd.      —       Financial assets at FVOCI      1,200        4,488        2        4,488        —   
   Innovation Works Limited      —       Financial assets at FVOCI      1,000        2,505        2        2,505        —   
   RPTI Intergroup International Ltd.      —       Financial assets at FVOCI      4,765        —         10        —         —   
   Global Mobile Corp.      —       Financial assets at FVOCI      7,617        —         3        —         —   
   Taiwania Capital Buffalo Fund Co., Ltd.      —       Financial assets at FVTPL–noncurrent      555,600        439,055        13        439,055        —   
   TOP TAIWAN XIV VENTURE CAPITAL CO., LTD.      —       Financial assets at FVTPL–noncurrent      20,000        178,673        9        178,673        —   
   Innovation Works Development Fund, L.P.      —       Financial assets at FVTPL–noncurrent      —         52,066        4        52,066        —   
   Limited partnership                     
   Taiwania Capital Buffalo Fund VI, L.P.      —       Financial assets at FVTPL–noncurrent      —         276,786        10        276,786        —   

Senao International Co., Ltd.

    Stocks                     
   N.T.U. Innovation Incubation Corporation      —       Financial assets at FVOCI      1,200        11,076        9        11,076        —   

CHIEF Telecom Inc.

    Stocks                     
   WPG Holdings Limited      —       Financial assets at FVOCI      2,102        106,151        —         106,151        Note 2  
   WT Microelectronics Co., Ltd.      —       Financial assets at FVOCI      361        17,454        —         17,454        Note 2  
   3 Link Information Service Co., Ltd.      —       Financial assets at FVOCI      37        115        10        115        —   
   WPG Holdings Limited      —       Financial assets at FVTPL–current      9        452        —         452        Note 2  

Chunghwa Investment Co., Ltd.

    Stocks                     
   PChome Online Inc.      —       Financial assets at FVOCI      1,875        56,634        1        56,634        Note 2  
   Tatung Technology Inc.      —       Financial assets at FVOCI      4,571        37,450        11        37,450        —   
   Bossdom Digiinnovation Co., Ltd.      —       Financial assets at FVOCI      2,309        27,824        7        27,824        Note 2  
   KEYXENTIC INC.      —       Financial assets at FVOCI      600        26,734        11        26,734        —   
   ioNetworks Inc.      —       Financial assets at FVOCI      107        13,162        2        13,162        —   
   iSing99 Inc.      —       Financial assets at FVOCI      10,000        —         7        —         —   
   Powtec ElectroChemical Corporation      —       Financial assets at FVOCI      20,000        —         2        —         —   
   Limited partnership                     
   Taiwania Capital Buffalo Fund V, L.P.      —       Financial assets at FVTPL–noncurrent      —         31,277        3        31,277        —   

(Continued)

 

- 82 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Held Company Name

   

Marketable Securities
Type and Name

    Relationship
with the
Company		     

Financial Statement
Account

    September 30, 2024      Note  
   Shares
(Thousands/
Thousand
Units)		      Carrying
Value
(Note 1)		      Percentage
of
Ownership		      Fair
Value		  

CHT Security Co., Ltd.

    Stocks                     
   TXOne Networks Inc.      —       Financial assets at FVTPL–noncurrent      91      $ 15,825        —       $ 15,825        —   

(Concluded)

 

Note 1:

Showed at carrying amounts with fair value adjustments.

 

Note 2:

Fair value was based on the closing price on the last trading day of the reporting period.

 

- 83 -

TABLE 3

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Company
Name

   

Related
Party

   

Nature of
Relationship

   

Transaction Details

    Abnormal
Transaction		      Notes / Accounts
Payable
or Receivable		  
  

Purchases/Sales

(Note 1)

    Amount
(Note 4)		      % to
Total		      Payment
Terms		    Unit
Price		      Payment
Terms		      Ending
Balance
(Notes 2
and 4)		     % to
Total		  

Chunghwa Telecom Co., Ltd.

    Senao International Co., Ltd.    Subsidiary    Sales    $ 2,818,682        2      30 days    $ —         —       $ 650,610       3  
         Purchase      1,161,573        1      30~90 days      —         —         (1,065,727 )      (9 ) 
   CHIEF Telecom Inc.    Subsidiary    Sales      384,214        —       30 days      —         —         69,161       —   
   Chunghwa System Integration Co., Ltd.    Subsidiary    Purchase      793,688        1      30 days      —         —         (394,234 )      (3 ) 
   CHYP Multimedia Marketing & Communications Co., Ltd.    Subsidiary    Purchase      112,548        —       30 days      —         —         (32,620 )      —   
   Honghwa International Co., Ltd.    Subsidiary    Sales      157,504        —       30~60 days      —         —         1,317       —   
         Purchase      5,261,106        6      30~60 days      —         —         (1,086,102 )      (9 ) 
   Donghwa Telecom Co., Ltd.    Subsidiary    Sales      137,343        —       30 days      —         —         50,538       —   
         Purchase      433,151        1      90 days      —         —         (146,856 )      (1 ) 
   Chunghwa Telecom Global, Inc.    Subsidiary    Sales      122,489        —       30~90 days      —         —         28,174       —   
         Purchase      218,253        —       90 days      —         —         (78,200 )      (1 ) 
   Chunghwa Telecom Singapore Pte., Ltd.    Subsidiary    Purchase      197,257        —       30 days      —         —         (205,109 )      (2 ) 
   CHT Security Co., Ltd.    Subsidiary    Purchase      189,830        —       30 days      —         —         (74,752 )      (1 ) 
   International Integrated Systems, Inc.    Subsidiary    Purchase      467,310        1      30 days      —         —         (72,710 )      (1 ) 
   Senyoung Insurance Agent Co., Ltd.    Subsidiary    Sales      121,037        —       30 days      —         —         45,881       —   
   Taiwan International Standard Electronics Co., Ltd.    Associate    Purchase      336,306        —       30~90 days      —         —         (38,998 )      —   
   WiAdvance Technology Corporation    Associate    Purchase      105,689        —       60 days      —         —         (45,627 )      —   

CHIEF Telecom Inc.

    Chunghwa Telecom Co., Ltd.    Parent company    Sales      166,463        6      30 days      —         —         26,415       7  
   So-net Entertainment Taiwan Limited    Associate    Sales      108,586        4      30 days      —         —         25,098       8  

Chunghwa Precision Test Tech. Co., Ltd.

    Su Zhou Precision Test Tech. Ltd.    Subsidiary    Sales      251,773        11      90 days      —         —         156,702       28  

 

Note 1:

Purchases include costs to acquire services.

 

Note 2:

Notes and accounts receivable did not include the amounts collected for others and other receivables.

 

Note 3:

Transaction terms with related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.

 

Note 4:

All intercompany transactions, balances, income and expenses are eliminated upon consolidation.

 

- 84 -

TABLE 4

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Company Name

   

Related Party

   

Nature of Relationship

    Ending
Balance		     Turnover Rate
(Note 1)		      Overdue      Amounts
Received in
Subsequent
Period		      Allowance
for
Bad Debts		  
   Amounts      Action
Taken		  

Chunghwa Telecom Co., Ltd.

    Senao International Co., Ltd.    Subsidiary    $

 

 799,937

(Note 2

  

) 

     10.76      $ —         —       $ 55,084      $ —   

Senao International Co., Ltd.

    Chunghwa Telecom Co., Ltd.    Parent company     

 1,237,846

(Note 2

  

) 

     9.13        —         —         215,916        —   

Chunghwa System Integration Co., Ltd.

    Chunghwa Telecom Co., Ltd.    Parent company     

 394,234

(Note 2

  

) 

     3.07        —         —         158,925        —   

Honghwa International Co., Ltd.

    Chunghwa Telecom Co., Ltd.    Parent company     

 1,109,627

(Note 2

  

) 

     6.09        —         —         70,604        —   

Donghwa Telecom Co., Ltd.

    Chunghwa Telecom Co., Ltd.    Parent company     

 146,856

(Note 2

  

) 

     6.14        —         —         98,509        —   

Chunghwa Telecom Singapore Pte., Ltd.

    Chunghwa Telecom Co., Ltd.    Parent company     

 205,060

(Note 2

  

) 

     9.67        —         —         185,543        —   

Chunghwa Precision Test Tech. Co., Ltd.

    Su Zhou Precision Test Tech. Ltd.    Parent company     

 156,702

(Note 2

  

) 

     2.75        —         —         29,468        —   

 

Note 1:

Payments and receipts collected in trust for others are excluded from the accounts receivable in calculating the turnover rate.

 

Note 2:

The amount was eliminated upon consolidation.

 

- 85 -

TABLE 5

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investor Company

   

Investee Company

   

Location

   

Main Businesses and Products

   Original Investment Amount     Balance as of September 30, 2024     Net Income
(Loss) of the
Investee		     Recognized
Gain (Loss)
(Notes 1 and 2)		     Note  
  September 30,
2024		     December 31,
2023		     Shares
(Thousands)		     Percentage
of Ownership
(%)		     Carrying
Value		  

Chunghwa Telecom Co., Ltd.

    Senao International Co., Ltd.    Taiwan    Handset and peripherals retailer; sales of CHT mobile phone plans as an agent   $ 1,065,813     $ 1,065,813       71,773       28     $ 1,708,248     $ 339,894     $ 89,534      

 Subsidiary

(Notes 3 and 5

  

) 

   Light Era Development Co., Ltd.    Taiwan    Planning and development of real estate and intelligent buildings, and property management     3,000,000       3,000,000       300,000       100       3,834,048       12,595       11,132      

 Subsidiary

(Note 5

  

) 

   Donghwa Telecom Co., Ltd.    Hong Kong    International private leased circuit, IP VPN service, and IP transit services     691,163       691,163       178,590       100       866,867       72,862       72,862      

 Subsidiary

(Note 5

  

) 

   Chunghwa Telecom Singapore Pte., Ltd.    Singapore    International private leased circuit, IP VPN service, and IP transit services     574,112       574,112       26,383       100       1,364,250       156,413       156,442      

 Subsidiary

(Note 5

  

) 

   Chunghwa System Integration Co., Ltd.    Taiwan    Providing system integration services and telecommunications equipment     838,506       838,506       60,000       100       682,703       30,359       22,698      

 Subsidiary

(Note 5

  

) 

   CHIEF Telecom Inc.    Taiwan    Network integration, internet data center (“IDC”), communications integration and cloud application services     459,652       459,652       43,368       56       2,143,056       757,808       433,485      

 Subsidiary

(Note 5

  

) 

   Chunghwa Investment Co., Ltd.    Taiwan    Investment     639,559       639,559       68,085       89       3,047,091       55,814       49,772      

 Subsidiary

(Note 5

  

) 

   Prime Asia Investments Group Ltd.    British Virgin Islands    Investment     385,274       385,274       1       100       177,204       2,140       2,140      

 Subsidiary

(Note 5

  

) 

   Honghwa International Co., Ltd.    Taiwan    Telecommunication engineering, sales agent of mobile phone plan application and other business services, etc.     180,000       180,000       18,000       100       635,724       307,157       308,880      

 Subsidiary

(Notes 3 and 5

  

) 

   CHYP Multimedia Marketing & Communications Co., Ltd.    Taiwan    Digital information supply services and advertisement services     150,000       150,000       15,000       100       206,222       18,440       19,399      

 Subsidiary

(Note 5

  

) 

   Chunghwa Telecom Vietnam Co., Ltd.    Vietnam    Intelligent energy saving solutions, international circuit, and information and communication technology (“ICT”) services     148,275       148,275       —        100       76,275       1,041       1,041      

 Subsidiary

(Note 5

  

) 

   Chunghwa Telecom Global, Inc.    United States    International private leased circuit, internet services, and transit services     70,429       70,429       6,000       100       789,826       60,231       60,231      

 Subsidiary

(Note 5

  

) 

   CHT Security Co., Ltd.    Taiwan    Computing equipment installation, wholesale of computing and business machinery equipment and software, management consulting services, data processing services, digital information supply services and internet identify services     230,580       240,000       23,058       63       455,095       265,349       168,766      

 Subsidiary

(Note 5

  

) 

   Chunghwa Telecom (Thailand) Co., Ltd.    Thailand    International private leased circuit, IP VPN service, ICT and cloud VAS services     119,624       119,624       1,300       100       146,403       11,233       11,233      

 Subsidiary

(Note 5

  

) 

   Spring House Entertainment Tech. Inc.    Taiwan    Software design services, internet contents production and play, and motion picture production and distribution     62,209       62,209       8,251       56       161,629       28,363       15,895      

 Subsidiary

(Note 5

  

) 

   Chunghwa leading Photonics Tech Co., Ltd.    Taiwan    Production and sale of electronic components and finished products     70,500       70,500       7,050       70       187,239       49,529       36,344      

 Subsidiary

(Note 5

  

) 

   Smartfun Digital Co., Ltd.    Taiwan    Providing diversified family education digital services     65,000       65,000       6,500       65       77,971       9,901       6,151      

 Subsidiary

(Note 5

  

) 

   Chunghwa Telecom Japan Co., Ltd.    Japan    International private leased circuit, IP VPN service, and IP transit services     17,291       17,291       1       100       243,912       80,685       80,685      

 Subsidiary

(Note 5

  

) 

   Chunghwa Sochamp Technology Inc.    Taiwan    Design, development and production of Automatic License Plate Recognition software and hardware     20,400       20,400       2,040       37       (9,943 )      (3,818 )      (2,221 )     

 Subsidiary

(Note 5

  

) 

   International Integrated Systems, Inc.    Taiwan    IT solution provider, IT application consultation, system integration and package solution     507,363       517,423       36,205       50       601,116       24,306       18,499      

 Subsidiary

(Note 5

  

) 

   Chunghwa Digital Cultural and Creative Capital Co., Ltd    Taiwan    Investment and management consulting     50,000       —        5,000       100       43,301       (6,965 )      (6,699 )     

 Subsidiary

(Note 5

  

) 

                           (Continued ) 

 

- 86 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investor Company

   

Investee Company

   

Location

   

Main Businesses and Products

   Original Investment
Amount		     Balance as of September 30, 2024     Net Income
(Loss) of the
Investee		     Recognized
Gain (Loss)
(Notes 1 and 2)		     Note  
  September 30,
2024		     December 31,
2023		     Shares
(Thousands)		     Percentage
of Ownership
(%)		     Carrying
Value		  
   Chunghwa Telecom Europe GmbH    Germany    International private leased circuit, internet services, transit services and ICT services   $ 122,675     $ —        3,500       100     $ 122,675     $ —      $ —       

 Subsidiary

(Note 5

  

) 

   Viettel-CHT Co., Ltd.    Vietnam    IDC services     288,327       288,327       —        30       547,601       249,759       74,927       Associate  
   Taiwan International Standard Electronics Co., Ltd.    Taiwan    Manufacturing, selling, designing, and maintaining of telecommunications systems and equipment     164,000       164,000       1,760       40       297,362       170,348       76,747       Associate  
   KKBOX Taiwan Co., Ltd.    Taiwan    Providing of music on-line, software, electronic information, and advertisement services     67,025       67,025       4,438       30       157,526       (29,258 )      (8,778 )      Associate  
   So-net Entertainment Taiwan Limited    Taiwan    Online service and sale of computer hardware     120,008       120,008       9,429       30       200,625       (83,571 )      (25,071 )      Associate  
   KingwayTek Technology Co., Ltd.    Taiwan    Design and sale of digital map, technical support for computer peripherals device, design and development of system programming projects     66,684       66,684       12,720       23       267,887       59,151       13,439       Associate  
   Taiwan International Ports Logistics Corporation    Taiwan    Import and export storage, logistic warehouse, and ocean shipping service     80,000       80,000       8,000       27       122,309       106,341       28,361       Associate  
   Chunghwa PChome Fund I Co., Ltd.    Taiwan    Investment, venture capital, investment advisor, management consultant and other consultancy service     200,000       200,000       20,000       50       253,519       (8,278 )      (4,139 )      Associate  
   Cornerstone Ventures Co., Ltd.    Taiwan    Investment, venture capital, investment advisor, management consultant and other consultancy service     4,900       4,900       490       49       5,254       198       97       Associate  
   Next Commercial Bank Co., Ltd.    Taiwan    Online banking business     5,733,847       5,733,847       462,643       46       4,028,346       (582,667 )      (264,907 )      Associate  
   Chunghwa SEA Holdings    Taiwan    Investment business     10,200       10,200       1,020       51       9,326       (269 )      (137 )     
 Joint
venture		  
 
   WiAdvance Technology Corporation    Taiwan    Software solution integration     273,800       273,800       3,700       16       281,579       (6,764 )      (7,180 )      Associate  
   Taiwania Hive Technology Fund L.P.    Cayman Islands    Investment business     288,405       —        —        42       281,855       (15,690 )      (6,550 )      Associate  

Senao International Co., Ltd.

    Senao Networks, Inc.    Taiwan    Telecommunication facilities manufactures and sales     202,758       202,758       16,579       34       1,583,693       137,485       46,460       Associate  
   Youth Co., Ltd.    Taiwan    Sale of information and communication technologies products     427,850       427,850       14,752       96       162,264       (1,086 )      (7,126 )     

 Subsidiary

(Note 5

  

) 

   Aval Technologies Co., Ltd.    Taiwan    Sale of information and communication technologies products     89,550       89,550       13,266       100       140,440       2,979       2,978      

 Subsidiary

(Note 5

  

) 

   Senyoung Insurance Agent Co., Ltd.    Taiwan    Property and liability insurance agency     59,000       59,000       8,909       100       130,148       26,685       26,685      

 Subsidiary

(Note 5

  

) 

CHIEF Telecom Inc.

    Unigate Telecom Inc.    Taiwan    Telecommunications and internet service     2,000       2,000       200       100       1,410       76       76      

 Subsidiary

(Note 5

  

) 

   Chief International Corp.    Samoa Islands    Telecommunications and internet service     6,068       6,068       200       100       110,194       5,488       5,488      

 Subsidiary

(Note 5

  

) 

Chunghwa Telecom Singapore Pte., Ltd.

    ST-2 Satellite Ventures Pte., Ltd.    Singapore    Operation of ST-2 telecommunications satellite     21,309       21,309       943       38       423,874       365,344       139,307       Associate  
   CHT Infinity Singapore Pte. Ltd.    Singapore    Investment business     55,720       55,720       2,000       40       57,084       (3,988 )      (1,595 )      Associate  

Chunghwa Investment Co., Ltd.

    Chunghwa Precision Test Tech. Co., Ltd.    Taiwan    Production and sale of semiconductor testing components and printed circuit board     178,608       178,608       11,230       34       2,640,420       187,672       64,276      

 Subsidiary

(Note 5

  

) 

   CHIEF Telecom Inc.    Taiwan    Network integration, internet data center (“IDC”), communications integration and cloud application services     19,064       19,064       2,286       3       104,277       757,808       22,246      

 Associate

(Note 5

  

) 

   Senao International Co., Ltd.    Taiwan    Selling and maintaining mobile phones and its peripheral products     49,731       49,731       1,001       —        45,079       339,894       1,317      

 Associate

(Note 5

  

) 

   AgriTalk Technology Inc.    Taiwan    Providing smart agricultural solutions, scientific agricultural product, biological inhibitor, and biochips     65,175       65,175       3,300       29       27,244       (13,130 )      (3,554 )      Associate  
   Imedtac Co., Ltd.    Taiwan    Providing medical AIoT solution, biomedical engineering services, and sales of medical device as an agent     91,381       59,467       1,828       10       58,479       (43,220 )      (4,660 )      Associate  
   Porrima Inc.    Taiwan    Designing and selling zero-emission ships     80,000       —        8,000       10       78,715       (12,852 )      (1,285 )      Associate  
                           (Continued ) 

 

- 87 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND OTHER INFORMATION OF INVESTEES IN WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INVESTMENT IN MAINLAND CHINA)

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investor Company

   

Investee Company

   

Location

   

Main Businesses and Products

    Original Investment Amount      Balance as of September 30, 2024      Net Income
(Loss) of the
Investee		     Recognized
Gain (Loss)
(Notes 1 and 2)		     Note  
   September 30,
2024		      December 31,
2023		      Shares
(Thousands)		      Percentage
of Ownership
(%)		      Carrying
Value		  

Chunghwa Precision Test Tech. Co., Ltd.

    Chunghwa Precision Test Tech USA Corporation    United States    Design and after-sale services of semiconductor testing components and printed circuit board    $ 74,192      $ 74,192        2,600        100      $ 106,094      $ 1,942     $ 1,780      

 Subsidiary

(Note 5

  

) 

   CHPT Japan Co., Ltd.    Japan    Related services of electronic parts, machinery processed products and printed circuit board      2,008        2,008        1        100        2,347        73       73      

 Subsidiary

(Note 5

  

) 

   Chunghwa Precision Test Tech. International, Ltd.    Samoa Islands    Wholesale and retail of electronic materials, and investment      173,649        173,649        5,700        100        140,513        (16,197 )      (13,421 )     

 Subsidiary

(Note 5

  

) 

   TestPro Investment Co., Ltd.    Taiwan    Investment      135,000        135,000        13,500        100        36,421        (28,944 )      (27,609 )     

 Subsidiary

(Note 5

  

) 

TestPro Investment Co., Ltd.

    NavCore Tech. Co., Ltd    Taiwan    Sale and manufacturing of smart equipment, smart factory software and hardware integration and technical consulting service      108,500        108,500        10,850        54        28,607        (53,455 )      (29,000 )     

 Subsidiary

(Note 5

  

) 

Prime Asia Investments Group, Ltd.

    Chunghwa Hsingta Co., Ltd.    Hong Kong    Investment      375,274        375,274        1        100        177,204        2,140       2,140      

 Subsidiary

(Note 5

  

) 

Youth Co., Ltd.

    ISPOT Co., Ltd.    Taiwan    Sale of information and communication technologies products      53,021        53,021        —         100        13,616        191       47      

 Subsidiary

(Note 5

  

) 

Aval Technologies Co., Ltd.

    Wiin Technology Co., Ltd.    Taiwan    Sale of information and communication technologies products      29,550        29,550        4,728        100        51,023        1,773       1,773      

 Subsidiary

(Note 5

  

) 

CHYP Multimedia Marketing & Communications Co., Ltd

    Click Force Marketing Company    Taiwan    Advertisement services      44,607        44,607        1,960        49        52,133        23,712       11,631       Associate  

International Integrated Systems, Inc.

    Unitronics Technology Corp.    Taiwan    Development and maintenance of information system      55,610        55,610        5,067        100        77,510        1,257       1,257      

 Subsidiary

(Note 5

  

) 

CHT Security Co., Ltd.

    Baohwa Trust Co., Ltd.    Taiwan    VR integration and AIoT security services      20,000        20,000        2,000        25        10,862        2,385       545       Associate  

 

Note 1:

The amounts were based on reviewed financial statements.

 

Note 2:

Recognized gain (loss) of investees includes amortization of differences between the investment cost and net value and elimination of unrealized transactions.

 

Note 3:

Recognized gain (loss) and carrying value of the investees did not include the adjustment of the difference between the accounting treatment on standalone basis and consolidated basis as a result of the application of IFRS 15.

 

Note 4:

Investments in mainland China are included in Table 6.

 

Note 5:

The amount was eliminated upon consolidation.

(Concluded)

 

- 88 -

TABLE 6

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Investee

  

Main Businesses and Products

   Total Amount
of Paid-in
Capital		     Investment
Type
(Note 1)		     Accumulated
Outflow of
Investment
from Taiwan
as of
January 1, 2024		     Investment Flows     Accumulated
Outflow of
Investment
from Taiwan
as of
September
30, 2024		     Net Income
(Loss) of the
Investee		     % Ownership
of Direct or
Indirect
Investment		     Investment
Gain (Loss)
(Note 2)		     Carrying Value
as of
September 30,
2024		     Accumulated
Inward
Remittance of
Earnings
as of
September 30,
2024		     Note  
  Outflow     Inflow  

Chunghwa Telecom (China) Co., Ltd.

   Integrated information and communication solution services for enterprise clients, and intelligent energy network service   $ 177,176       2     $ 177,176     $ —      $ —      $ 177,176     $ —        100     $ —      $ —      $ —        Notes 6 and 9  

Jiangsu Zhenghua Information Technology Company, LLC

   Providing intelligent energy saving solution and intelligent buildings services     189,410       2       142,057       —        —        142,057       —        75       —        —        —        Notes 7 and 9  

Shanghai Taihua Electronic Technology Limited

   Design of printed circuit board and related consultation service     51,233       2       51,233       —        —        51,233       1,119       100       1,119       9,529       —        Notes 8 and 9  

Su Zhou Precision Test Tech. Ltd.

   Assembly processed of circuit board, design of printed circuit board and related consultation service     119,199       2       119,199       —        —        119,199       (17,453 )      100       (17,453 )      151,071       —        Notes 8 and 9  

Shanghai Chief Telecom Co., Ltd.

   Telecommunications and internet service     10,150       1       4,973       —        —        4,973       (23 )      49       (11 )      5,550       9,533       Note 9  

 

Investee

    Accumulated Investment in
Mainland China as of
September 30, 2024		      Investment Amounts
Authorized by Investment
Commission, MOEA		      Upper Limit on Investment
Stipulated by Investment
Commission, MOEA		  

Chunghwa Telecom Co., Ltd. (Note 3)

    $ 319,233      $ 319,233      $ 232,012,560  

Chunghwa Precision Test Tech. Co., Ltd. and its subsidiaries (Note 4)

      170,432        216,185        4,638,645  

CHIEF Telecom Inc. and its subsidiaries (Note 5)

      4,973        4,973        2,136,517  

 

Note 1:    Investments are divided into three categories as follows:
  

a.   Direct investment.

  

b.  Investments through a holding company registered in a third region.

  

c.   Others.

Note 2:    The amounts were calculated based on the investee’s reviewed financial statements.
Note 3:    Chunghwa Telecom Co., Ltd. was calculated based on the consolidated net assets value of Chunghwa Telecom Co., Ltd.
Note 4:    Chunghwa Precision Test Tech. Co., Ltd. and its subsidiaries were calculated based on the consolidated net assets value of Chunghwa Precision Test Tech. Co., Ltd.
Note 5:    CHIEF Telecom Inc. and its subsidiaries were calculated based on the consolidated net assets value of CHIEF Telecom Inc.
Note 6:    Chunghwa Telecom (China) Co., Ltd., a reinvestment through Chunghwa Hsingta Co., Ltd., completed its liquidation in October 2022.
Note 7:    Jiangsu Zhenhua Information Technology Company, LLC., a reinvestment through Chunghwa Hsingta Co., Ltd., completed its liquidation in December 2018.
Note 8:    Shanghai Taihua Electronic Technology Limited and Su Zhou Precision Test Tech. Ltd. were reinvestments through Chunghwa Precision Test Tech. International, Ltd.
Note 9:    The amount was eliminated upon consolidation.

(Concluded)

 

- 89 -

TABLE 7

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS

NINE MONTHS ENDED SEPTEMBER 30, 2024

(Amounts in Thousands of New Taiwan Dollars)

 

 

Year

    No.
(Note 1)		     

Company Name

   

Related Party

   

Nature of
Relationship

(Note 2)

   

Transaction Details

  
  

Financial Statement Account

    Amount
(Note 5)		      Payment Terms
(Note 3)		      % to Total
Sales or Assets
(Note 4)		  

2024

      0       Chunghwa Telecom Co., Ltd.    Senao International Co., Ltd.    a    Accounts receivable    $ 650,610        —         —   
               Accrued custodial receipts      149,327        —         —   
               Accounts payable      1,065,727        —         —   
               Amounts collected for others      172,120        —         —   
               Revenues      2,818,682        —         2  
               Operating costs and expenses      1,161,514        —         1  
         CHIEF Telecom Inc.    a    Revenues      384,214        —         —   
         CHYP Multimedia Marketing & Communications Co., Ltd.    a    Operating costs and expenses      112,548        —         —   
         Chunghwa System Integration Co., Ltd.    a    Accounts payable      394,234        —         —   
               Operating costs and expenses      785,372        —         —   
               Property, plant and equipment      246,760        —         —   
         Donghwa Telecom Co., Ltd.    a    Accounts payable      146,856        —         —   
               Revenues      137,343        —         —   
               Operating costs and expenses      433,151        —         —   
         Honghwa International Co., Ltd.    a    Accounts payable      1,086,102        —         —   
               Revenues      157,504        —         —   
               Operating costs and expenses      5,261,106        —         3  
         CHT Security Co., Ltd.    a    Operating costs and expenses      151,059        —         —   
         International Integrated Systems, Inc.    a    Operating costs and expenses      467,206        —         —   
         Chunghwa Telecom Singapore Pte., Ltd.    a    Accounts payable      205,109        —         —   
               Operating costs and expenses      197,257        —         —   
         Senyoung Insurance Agent Co., Ltd.    a    Revenues      121,037        —         —   
         Chunghwa Telecom Global, Ltd.    a    Revenues      122,489        —         —   
               Operating costs and expenses      218,253        —         —   

 

Note 1:    Significant transactions between the Company and its subsidiaries or among subsidiaries are numbered as follows:
  

a.   “0” for the Company.

  

b.  Subsidiaries are numbered from “1”.

Note 2:    Related party transactions are divided into three categories as follows:
  

a.   The Company to subsidiaries.

  

b.  Subsidiaries to the Company.

  

c.   Subsidiaries to subsidiaries.

Note 3:    Transaction terms with the related parties were determined in accordance with mutual agreements when there were no similar transactions with third parties. Other transactions with related parties were not significantly different from those with third parties.
Note 4:    For assets and liabilities, amount is shown as a percentage to consolidated total assets as of September 30, 2024, while revenues, costs and expenses are shown as a percentage to consolidated revenues for the nine months ended September 30, 2024.
Note 5:    The amount was eliminated upon consolidation.

 

- 90 -

TABLE 8

CHUNGHWA TELECOM CO., LTD.

INFORMATION OF MAJOR STOCKHOLDERS

SEPTEMBER 30, 2024

 

 

Name of Major Stockholders

    Shares  
   Number of Shares      Percentage of
Ownership (%)		  

Ministry of Transportation and Communications

      2,737,718,976        35.29  

 

Note:    This table presents information provided by the Taiwan Depository & Clearing Corporation on stockholders holding greater than 5% of Chunghwa’s dematerialized securities that have completed the process of registration and delivery by book-entry transfer as of the last business day for the current quarter.

 

- 91 -

Exhibit 99.3

Chunghwa Telecom Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2024 and 2023

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions of New Taiwan Dollars)

 

 

     September 30, 2024
(Unaudited)		      December 31, 2023
(Audited)		      September 30, 2023
(Unaudited)		  

ASSETS

      Amount        %        Amount        %        Amount        %  

CURRENT ASSETS

                  

Cash and cash equivalents

    $ 31,215        6      $ 33,824        6      $ 32,005        6  

Financial assets at fair value through profit or loss

      1        —         1        —         —         —   

Contract assets

      7,444        1        6,713        1        6,727        1  

Trade notes and accounts receivable, net

      23,086        5        24,842        5        23,515        5  

Receivables from related parties

      182        —         78        —         111        —   

Inventories

      11,807        2        11,521        2        12,364        2  

Prepayments

      5,933        1        2,840        1        5,556        1  

Other current monetary assets

      14,693        3        20,352        4        12,327        2  

Incremental costs of obtaining contracts

      339        —         211        —         95        —   

Other current assets

      4,223        1        2,822        1        4,205        1  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total current assets

      98,923        19        103,204        20        96,905        18  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NONCURRENT ASSETS

                  

Financial assets at fair value through profit or loss

      1,033        —         1,036        —         1,052        —   

Financial assets at fair value through other comprehensive income

      4,808        1        4,412        1        4,054        1  

Investments accounted for using equity method

      8,558        2        8,252        2        7,018        1  

Contract assets

      4,244        1        3,769        1        3,526        1  

Property, plant and equipment

      283,083        56        292,338        56        287,208        56  

Right-of-use assets

      11,002        2        11,238        2        11,187        2  

Investment properties

      11,642        2        9,805        2        10,147        2  

Intangible assets

      67,858        13        72,727        14        74,277        16  

Deferred income tax assets

      2,055        —         2,099        —         2,109        —   

Incremental costs of obtaining contracts

      1,125        —         939        —         937        —   

Net defined benefit assets

      6,417        2        5,963        1        5,720        1  

Prepayments

      4,144        1        3,330        —         3,175        1  

Other noncurrent assets

      4,543        1        4,629        1        4,686        1  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total noncurrent assets

      410,512        81        420,537        80        415,096        82  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL

    $ 509,435        100      $ 523,741        100      $ 512,001        100  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     September 30, 2024
(Unaudited)		      December 31, 2023
(Audited)		      September 30, 2023
(Unaudited)		  
LIABILITIES AND EQUITY      Amount        %        Amount        %        Amount        %  
CURRENT LIABILITIES                  

Short-term loans

    $ 430        —       $ 585        —       $ 820        —   

Financial liabilities at fair value through profit or loss

      1        —         —         —         2        —   

Hedging financial liabilities

      1        —         —         —         4        —   

Contract liabilities

      16,239        3        14,088        3        14,287        3  

Trade notes and accounts payable

      12,380        3        14,396        3        13,178        3  

Payables to related parties

      196        —         385        —         168        —   

Current tax liabilities

      3,944        1        6,613        1        8,640        2  

Lease liabilities

      3,539        1        3,505        1        3,456        1  

Other payables

      21,693        4        25,257        5        21,150        4  

Provisions

      309        —         337        —         324        —   

Current portion of long-term liabilities

      8,798        2        1,600        —         1,600        —   

Other current liabilities

      1,249        —         984        —         1,026        —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total current liabilities

      68,779        14        67,750        13        64,655        13  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
NONCURRENT LIABILITIES                  

Long-term loans

      1,600        —         —         —         —         —   

Bonds payable

      21,688        4        30,483        6        30,481        6  

Contract liabilities

      7,639        2        7,560        2        7,880        2  

Deferred income taxes liabilities

      2,596        2        2,461        1        2,390        —   

Provisions

      501        —         485        —         481        —   

Lease liabilities

      7,457        1        7,470        1        7,417        2  

Customers’ deposits

      5,115        1        5,309        1        5,199        1  

Net defined benefit liabilities

      2,133        —         2,098        —         2,279        —   

Other noncurrent liabilities

      6,933        1        7,406        1        6,601        1  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total noncurrent liabilities

      55,662        11        63,272        12        62,728        12  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

      124,441        25        131,022        25        127,383        25  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
EQUITY ATTRIBUTABLE TO STOCKHOLDERS OF THE PARENT                  

Common stocks

      77,574        15        77,574        15        77,574        15  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Additional paid-in capital

      150,049        29        149,828        29        149,848        29  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Retained earnings

                  

Legal reserve

      77,574        15        77,574        15        77,574        15  

Special reserve

      2,676        1        2,899        —         2,899        1  

Unappropriated earnings

      64,123        13        72,059        14        64,129        13  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total retained earnings

      144,373        29        152,532        29        144,602        29  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Others

      561        —         353        —         420        —   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total equity attributable to stockholders of the parent

      372,557        73        380,287        73        372,444        73  
NONCONTROLLING INTERESTS      12,437        2        12,432        2        12,174        2  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total equity

      384,994        75        392,719        75        384,618        75  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
TOTAL    $ 509,435        100      $ 523,741        100      $ 512,001        100  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
 

 

- 1 -

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  
     2024      2023      2024      2023  
     Amount     %      Amount     %      Amount     %      Amount     %  

REVENUES

    $ 55,614       100      $ 53,659       100      $ 164,673       100      $ 161,333       100  

OPERATING COSTS

      35,208       63        33,842       63        102,948       63        100,548       62  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

GROSS PROFIT

      20,406       37        19,817       37        61,725       37        60,785       38  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OPERATING EXPENSES

                    

Marketing

      6,294       11        5,874       11        18,416       11        17,150       11  

General and administrative

      1,663       3        1,510       3        4,980       3        4,798       3  

Research and development

      1,067       2        953       2        3,015       2        2,854       2  

Expected credit loss (reversal of credit loss)

      (4 )      —         14       —         76       —         85       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total operating expenses

      9,020       16        8,351       16        26,487       16        24,887       16  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

OTHER INCOME AND EXPENSES

      (9 )      —         (1 )      —         (10 )      —         1       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME FROM OPERATIONS

      11,377       21        11,465       21        35,228       21        35,899       22  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NON-OPERATING INCOME AND EXPENSES

                    

Interest income

      173       —         136       —         568       —         455       —   

Other income

      94       —         76       —         419       —         325       —   

Other gains and losses

      (109 )      —         (70 )      —         (142 )      —         (223 )      —   

Interest expenses

      (86 )      —         (80 )      —         (252 )      —         (233 )      —   

Share of profits of associates and joint ventures accounted for using equity method

      37       —         109       —         74       —         345       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Total non-operating income and expenses

      109       —         171       —         667       —         669       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

INCOME BEFORE INCOME TAX

      11,486       21        11,636       21        35,895       21        36,568       22  

INCOME TAX EXPENSE

      2,686       5        2,745       4        6,343       3        6,585       3  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

NET INCOME

      8,800       16        8,891       17        29,552       18        29,983       19  
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)

                    

Items that will not be reclassified to profit or loss:

                    

Unrealized gain or loss on investments in equity instruments at fair value through other comprehensive income

      (155 )      —         111       —         86       —         548       —   

Gain or loss on hedging instruments subject to basis adjustment

      (1 )      —         (13 )      —         (1 )      —         (16 )      —   

Share of other comprehensive income (loss) of associates and joint ventures

      (1 )      —         —        —         —        —         8       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  
     (157 )      —         98       —         85       —         540       —   
  

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

    

 

 

  

Items that may be reclassified subsequently to profit or loss:

                    

Exchange differences arising from the translation of the foreign operations

      (22 )      —         95       —         115       —         102       —   

(Continued)

 

- 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  
     2024      2023      2024      2023  
     Amount     %      Amount      %      Amount      %      Amount      %  

Share of other comprehensive income of associates and joint ventures

    $ 20       —       $ 4        —       $ 42        —       $ 6        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
     (2 )      —         99        —         157        —         108        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total other comprehensive income (loss), net of income tax

      (159 )      —         197        —         242        —         648        —   
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

TOTAL COMPREHENSIVE INCOME

    $ 8,641       16      $ 9,088        17      $ 29,794        18      $ 30,631        19  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

NET INCOME ATTRIBUTABLE TO

                       

Stockholders of the parent

    $ 8,534       16      $ 8,620        16      $ 28,751        18      $ 29,142        18  

Noncontrolling interests

      266       —         271        1        801        —         841        1  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 8,800       16      $ 8,891        17      $ 29,552        18      $ 29,983        19  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

COMPREHENSIVE INCOME ATTRIBUTABLE TO

                       

Stockholders of the parent

    $ 8,373       16      $ 8,822        16      $ 28,959        18      $ 29,795        18  

Noncontrolling interests

      268       —         266        1        835        —         836        1  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
   $ 8,641       16      $ 9,088        17      $ 29,794        18      $ 30,631        19  
  

 

 

    

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

EARNINGS PER SHARE

                       

Basic

    $ 1.11        $ 1.11         $ 3.71         $ 3.75     
  

 

 

       

 

 

        

 

 

        

 

 

     

Diluted

    $ 1.10        $ 1.11         $ 3.70         $ 3.75     
  

 

 

       

 

 

        

 

 

        

 

 

     

(Concluded)

 

- 3 -

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              
                                        Others                    
                                       

Exchange

Differences

Arising

from the

Translation of

the Foreign
Operations

    

Unrealized

Gain or Loss

on Financial

Assets at
FVOCI

    

Gain or Loss on

Hedging
Instruments

    

Total

Others

    

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, 2023

   $ 77,574     $ 149,844     $ 77,574     $ 3,084     $ 71,268     $ 151,926     $ (111 )    $ (125 )    $ 13     $ (223 )    $ 379,121     $ 12,408     $ 391,529  

Appropriation of 2022 earnings

                          

Special reserve

     —        —        —        (185 )      185       —        —        —        —        —        —        —        —   

Cash dividends distributed by Chunghwa

     —        —        —        —        (36,476 )      (36,476 )      —        —        —        —        (36,476 )      —        (36,476 ) 

Cash dividends distributed by subsidiaries

     —        —        —        —        —        —        —        —        —        —        —        (1,092 )      (1,092 ) 

Unclaimed dividend

     —        2       —        —        —        —        —        —        —        —        2       —        2  

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

     —        1       —        —        —        —        —        —        —        —        1       —        1  

Actual acquisition of interests in subsidiaries

     —        —        —        —        —        —        —        —        —        —        —        —        —   

Net income for the nine months ended September 30, 2023

     —        —        —        —        29,142       29,142       —        —        —        —        29,142       841       29,983  

Other comprehensive income (loss) for the nine months ended September 30, 2023

     —        —        —        —        10       10       109       550       (16 )      643       653       (5 )      648  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the nine months ended September 30, 2023

     —        —        —        —        29,152       29,152       109       550       (16 )      643       29,795       836       30,631  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

     —        1       —        —        —        —        —        —        —        —        1       22       23  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, SEPTEMBER 30, 2023

   $ 77,574     $ 149,848     $ 77,574     $ 2,899     $ 64,129     $ 144,602     $ (2 )    $ 425     $ (3 )    $ 420     $ 372,444     $ 12,174     $ 384,618  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, JANUARY 1, 2024

   $ 77,574     $ 149,828     $ 77,574     $ 2,899     $ 72,059     $ 152,532     $ (168 )    $ 521     $ —      $ 353     $ 380,287     $ 12,432     $ 392,719  

Appropriation of 2023 earnings

                          

Special reserve

     —        —        —        (223 )      223       —        —        —        —        —        —        —        —   

Cash dividends distributed by Chunghwa

     —        —        —        —        (36,910 )      (36,910 )      —        —        —        —        (36,910 )      —        (36,910 ) 

Cash dividends distributed by subsidiaries

     —        —        —        —        —        —        —        —        —        —        —        (898 )      (898 ) 

Payment of unclaimed dividend

     —        —        —        —        —        —        —        —        —        —        —        —        —   

Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method

     —        —        —        —        —        —        —        —        —        —        —        —        —   

Actual disposal of interests in subsidiaries

     —        224       —        —        —        —        —        —        —        —        224       35       259  

Net income for the nine months ended September 30, 2024

     —        —        —        —        28,751       28,751       —        —        —        —        28,751       801       29,552  

Other comprehensive income (loss) for the nine months ended September 30, 2024

     —        —        —        —        —        —        122       87       (1 )      208       208       34       242  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total comprehensive income (loss) for the nine months ended September 30, 2024

     —        —        —        —        28,751       28,751       122       87       (1 )      208       28,959       835       29,794  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Share-based payment transactions of subsidiaries

     —        (3 )      —        —        —        —        —        —        —        —        (3 )      33       30  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

BALANCE, SEPTEMBER 30, 2024

   $ 77,574     $ 150,049     $ 77,574     $ 2,676     $ 64,123     $ 144,373     $ (46)     $ 608     $ (1)     $ 561     $ 372,557     $ 12,437     $ 384,994  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

- 4 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

 

 

     Nine Months Ended September 30  
     2024     2023  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Income before income tax

    $ 35,895     $ 36,568  

Adjustments to reconcile income before income tax to net cash provided by operating activities:

     

Depreciation

      24,658       24,697  

Amortization

      5,021       5,027  

Amortization of incremental costs of obtaining contracts

      671       641  

Expected credit loss

      76       85  

Interest expense

      252       233  

Interest income

      (568 )      (455 ) 

Dividend income

      (240 )      (167 ) 

Compensation cost of share-based payment transactions

      7       7  

Share of profits of associates and joint ventures accounted for using equity method

      (74 )      (345 ) 

Loss (gain) on disposal of property, plant and equipment

      10       (1 ) 

Gain on disposal of financial instruments

      (1 )      —   

Gain on disposal of investments accounted for using equity method

      (61 )      (5 ) 

Provision for impairment loss and obsolescence of inventory

      63       9  

Valuation loss on financial assets and liabilities at fair value through profit or loss, net

      126       84  

Others

      13       3  

Changes in operating assets and liabilities:

     

Decrease (increase) in:

     

Contract assets

      (1,208 )      (1,061 ) 

Trade notes and accounts receivable

      1,707       1,101  

Receivables from related parties

      (104 )      (36 ) 

Inventories

      (349 )      (1,007 ) 

Prepayments

      (2,864 )      (3,216 ) 

Other current monetary assets

      (11 )      (673 ) 

Other current assets

      (1,401 )      (650 ) 

Incremental cost of obtaining contracts

      (985 )      (693 ) 

Increase (decrease) in:

     

Contract liabilities

      2,230       1,103  

Trade notes and accounts payable

      (2,016 )      (3,251 ) 

Payables to related parties

      (189 )      (371 ) 

Other payables

      (1,626 )      (2,623 ) 

Provisions

      (12 )      356  

Other current liabilities

      275       27  

Net defined benefit plans

      (419 )      (460 ) 
  

 

 

    

 

 

  

Cash generated from operations

      58,876       54,927  

(Continued)

 

- 5 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions of New Taiwan Dollars)

(Unaudited)

 

 

     Nine Months Ended September 30  
     2024     2023  

Interests paid

    $ (288 )    $ (270 ) 

Income taxes paid

      (8,831 )      (4,767 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      49,757       49,890  
  

 

 

    

 

 

  

CASH FLOWS FROM INVESTING ACTIVITIES

     

Acquisition of financial assets at fair value through other comprehensive income

      (313 )      (15 ) 

Proceeds from capital reduction of financial assets at fair value through other comprehensive income

      6       —   

Acquisition of financial assets at fair value through profit or loss

      (127 )      (130 ) 

Proceeds from disposal of financial assets at fair value through profit or loss

      4       —   

Proceeds from capital reduction and profit distribution of financial assets at fair value through profit or loss

      3       20  

Acquisition of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      (56,161 )      (35,425 ) 

Proceeds from disposal of time deposits, negotiable certificates of deposit and commercial paper with maturities of more than three months

      61,788       27,639  

Acquisition of investments accounted for using equity method

      (400 )      —   

Acquisition of property, plant and equipment

      (16,016 )      (18,879 ) 

Proceeds from disposal of property, plant and equipment

      10       18  

Acquisition of intangible assets

      (137 )      (115 ) 

Acquisition of investment properties

      —        (48 ) 

Decrease in other noncurrent assets

      82       21  

Increase in prepayments for leases

      (1,043 )      (1,389 ) 

Interests received

      605       457  

Dividends received

      571       249  
  

 

 

    

 

 

  

Net cash used in investing activities

      (11,128 )      (27,597 ) 
  

 

 

    

 

 

  

CASH FLOWS FROM FINANCING ACTIVITIES

     

Proceeds from short-term loans

      720       2,490  

Repayments of short-term loans

      (875 )      (2,392 ) 

Increase (decrease) in customers’ deposits

      (205 )      24  

Payments for the principal of lease liabilities

      (2,924 )      (2,937 ) 

Decrease in other noncurrent liabilities

      (473 )      (125 ) 

Cash dividends paid

      (36,910 )      (36,476 ) 

Acquisition of additional interests in subsidiaries

      —        —   

Partial disposal of interests in subsidiaries without losing control

      259       —   

(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  
     2024     2023  

Cash dividends distributed to noncontrolling interests

    $ (887 )    $ (1,086 ) 

Change in other noncontrolling interests

      23       16  

Unclaimed dividend (payment of unclaimed dividend)

      —        2  
  

 

 

    

 

 

  

Net cash used in financing activities

      (41,272 )      (40,484 ) 
  

 

 

    

 

 

  

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

      34       3  
  

 

 

    

 

 

  

NET DECREASE IN CASH AND CASH EQUIVALENTS

      (2,609 )      (18,188 ) 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

      33,824       50,193  
  

 

 

    

 

 

  

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $ 31,215     $ 32,005  
  

 

 

    

 

 

  

(Concluded)

 

- 7 -

CHUNGHWA TELECOM CO., LTD. AND SUBSIDIARIES

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2024 and 2023

(Unaudited)

 

STATEMENT OF COMPLIANCE

The Company has prepared its consolidated balance sheets as of September 30, 2024 and 2023, the related consolidated statements of comprehensive income for the three months ended September 30, 2024 and 2023, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the nine months ended September 30, 2024 and 2023 in accordance with International Accounting Standards No. 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 -

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