TWM - Interim / Quarterly Report 2019

Taiwan Mobile Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Three Months Ended March 31, 2019 and 2018 and Independent Auditors’ Review Report

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Stockholders Taiwan Mobile Co., Ltd.

Introduction

We have reviewed the accompanying consolidated financial statements of Taiwan Mobile Co., Ltd. and its subsidiaries (the “Group”) as of March 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the three months ended March 31, 2019 and 2018, and the notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the 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”. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. 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 financial position of the Group as at March 31, 2019 and 2018, and of its consolidated financial performance and its consolidated cash flows for the three months ended March 31, 2019 and 2018 in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34 “Interim Financial Reporting”.

The engagement partners on the reviews resulting in this independent auditors’ review report are Li-Wen Kuo and Kwan-Chung Lai.

Deloitte & Touche Taipei, Taiwan Republic of China April 30, 2019

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, consolidated results of operations, and consolidated cash flows in accordance with accounting principles and practices generally accepted in Taiwan, the Republic of China (“ROC”) and not those of any other jurisdictions. The standards, procedures and practices to review such financial statements are those generally accepted and applied in Taiwan, the ROC.

For the convenience of readers, the auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in Taiwan, the ROC. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ review report and consolidated financial statements shall prevail.

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 6 and 28) Financial assets at fair value through profit or loss (Note 28) Financial assets at fair value through other comprehensive income (Note 7) Contract assets (Note 22) Accounts and notes receivable, net (Note 8) Accounts receivable due from related parties (Note 28) Other receivables (Note 28) Inventories (Note 9) Prepayments (Note 28) Assets held for sale Other financial assets (Notes 28 and 29) Other current assets (Note 30) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (Note 7) Contract assets (Note 22) Investments accounted for using equity method (Note 10) Property, plant and equipment (Note 12) Right-of-use assets (Notes 13 and 28) Investment properties (Note 14) Concessions (Notes 15 and 29) Goodwill (Note 15) Other intangible assets (Note 15) Deferred tax assets Incremental costs of obtaining a contract (Note 22) Other financial assets (Notes 28, 29 and 30) Other non-current assets (Notes 16 and 28) Total non-current assets		March 31, 2019 (Reviewed)		December 31, 2018 (Audited)		March 31, 2018 (Reviewed)
		Amount % $ 7,838,557 5 85,341 - 252,240 - 5,227,317 3 7,169,624 5 150,200 - 1,881,818 1 3,960,296 3 540,997 - 31,005 - 574,801 - 892,167 1 28,604,363 18 5,036,857 3 3,259,119 2 1,396,519 1 37,669,597 24 9,868,251 6 2,988,234 2 39,824,031 26 15,872,595 10 5,654,598 4 798,579 1 2,660,094 2 147,084 - 1,426,338 1 126,601,896 82		Amount % $ 7,498,710 5 81,474 - 255,732 - 5,472,357 4 7,531,858 5 137,958 - 2,066,105 1 3,945,663 3 584,799 1 - - 576,542 - 917,689 1 29,068,887 20 4,763,899 3 3,208,519 2 1,435,607 1 38,855,960 26 - - 2,999,403 2 40,528,874 27 15,872,595 11 5,774,176 4 806,521 1 2,946,282 2 131,110 - 1,275,195 1 118,598,141 80		Amount % $ 7,663,871 5 698,807 - 269,895 - 6,431,049 4 7,680,021 5 131,138 - 1,264,735 1 3,983,505 3 715,330 1 - - 2,247,950 1 129,385 - 31,215,686 20 4,421,430 3 3,890,682 2 1,462,511 1 40,465,255 26 - - 2,959,073 2 42,919,830 28 15,845,930 10 5,830,518 4 919,631 - 3,920,540 3 113,676 - 1,300,849 1 124,049,925 80

TOTAL $ 155,206,259 100 $ 147,667,028 100 $ 155,265,611 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Short-term notes and bills payable (Note 17) Contract liabilities (Note 22) Accounts and notes payable Accounts payable due to related parties (Note 28) Other payables (Note 28) Current tax liabilities Provisions (Note 19) Lease liabilities (Notes 13 and 28) Advance receipts Long-term liabilities, current portion (Notes 17 and 18) Other current liabilities (Note 28) Total current liabilities NON-CURRENT LIABILITIES Financial liabilities at fair value through profit or loss Contract liabilities (Note 22) Bonds payable (Note 18) Long-term borrowings (Note 17) Provisions (Note 19) Deferred tax liabilities Lease liabilities (Notes 13 and 28) Net defined benefit liabilities Guarantee deposits Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 21) Common stock Capital collected in advance Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Other equity interests Treasury stock Total equity attributable to owners of the parent NON-CONTROLLING INTERESTS (Note 21) Total equity TOTAL		March 31, 2019 (Reviewed)		December 31, 2018 (Audited)		March 31, 2018 (Reviewed)
		Amount % $ 4,800,000 3 3,997,896 3 2,021,941 1 6,892,836 4 141,453 - 7,692,298 5 3,111,989 2 113,491 - 3,407,191 2 110,738 - 4,803,012 3 2,316,277 2 39,409,122 25 - - 52,717 - 23,450,744 15 8,838,598 6 1,420,701 1 932,667 1 6,368,976 4 483,230 - 1,046,326 1 522,195 - 43,116,154 28 82,525,276 53 34,238,338 22 96,905 - 13,473,333 9 27,558,064 18 362,703 - 20,058,026 13 237,884 - (29,717,344) (19) 66,307,909 43 6,373,074 4 72,680,983 47 $ 155,206,259 100		Amount % $ 10,270,000 7 1,498,992 1 2,030,793 1 6,756,980 5 179,588 - 9,581,496 6 2,377,000 2 120,334 - - - 111,250 - 6,802,916 5 2,154,154 1 41,883,503 28 1,861 - 56,144 - 24,419,137 17 8,889,438 6 1,400,954 1 917,261 1 - - 510,880 - 1,013,905 1 580,249 - 37,789,829 26 79,673,332 54 34,208,519 23 29,819 - 12,580,692 9 27,558,064 19 362,703 - 16,954,448 11 (95,381) - (29,717,344) (20) 61,881,520 42 6,112,176 4 67,993,696 46 $ 147,667,028 100		Amount % $ 10,563,466 7 3,098,913 2 2,474,721 2 7,329,480 5 211,551 - 8,509,894 5 2,828,975 2 167,564 - - - 97,990 - 14,603,028 9 2,255,742 1 52,141,324 33 6,961 - 68,423 - 14,171,289 9 12,141,842 8 1,375,808 1 871,504 1 - - 407,569 - 977,243 1 594,949 - 30,615,588 20 82,756,912 53 34,208,328 22 - - 13,939,278 9 26,138,846 17 690,034 - 21,591,123 14 (410,094) - (29,717,344) (19) 66,440,171 43 6,068,528 4 72,508,699 47 $ 155,265,611 100

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

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OPERATING REVENUES (Notes 22, 28 and 34) OPERATING COSTS (Notes 9, 28, 32 and 34) GROSS PROFIT FROM OPERATIONS OPERATING EXPENSES (Notes 28, 32 and 34) Marketing Administrative Expected credit loss Total operating expenses NET OTHER INCOME AND EXPENSES (Note 34) OPERATING INCOME (Note 34) NON-OPERATING INCOME AND EXPENSES Other income (Notes 23 and 28) Other gains and losses, net (Notes 23 and 28) Finance costs (Notes 23 and 28) Share of profit (loss) of associates accounted for using equity method Total non-operating income and expenses PROFIT BEFORE TAX INCOME TAX EXPENSE (Note 24) PROFIT OTHER COMPREHENSIVE INCOME (LOSS) (Notes 21 and 24) Items that will not be reclassified subsequently to profit or loss Remeasurements from defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Share of other comprehensive income (loss) of associates accounted for using equity method Items that may be reclassified subsequently to profit or loss Exchange differences on translation Share of other comprehensive income (loss) of associates accounted for using equity method Other comprehensive income (loss) (after tax) COMPREHENSIVE INCOME PROFIT ATTRIBUTABLE TO: Owners of the parent Non-controlling interests COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the parent Non-controlling interests EARNINGS PER SHARE (Note 25) Basic earnings per share Diluted earnings per share		For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 Amount % $ 29,872,673 100 21,681,212 73 8,191,461 27 2,689,209 9 1,334,972 4 51,658 - 4,075,839 13 112,472 - 4,228,094 14 32,336 - (9,406) - (153,087) - (6,986) - (137,143) - 4,090,951 14 791,977 3 3,298,974 11 - - 324,207 1 5,494 - 24,154 - (3,968) - 349,887 1 $ 3,648,861 12 $ 3,070,973 10 228,001 1 $ 3,298,974 11 $ 3,404,238 11 244,623 1 $ 3,648,861 12 $ 1.13 $ 1.10		2018
				Amount % $ 30,306,319 100 21,381,896 71 8,924,423 29 2,932,363 10 1,299,120 4 101,115 - 4,332,598 14 146,877 1 4,738,702 16 36,010 - (50,234) - (155,754) (1) (4,892) - (174,870) (1) 4,563,832 15 900,501 3 3,663,331 12 18,302 - (123,199) - (331) - 16,375 - (321) - (89,174) - $ 3,574,157 12 $ 3,481,360 11 181,971 1 $ 3,663,331 12 $ 3,387,736 11 186,421 1 $ 3,574,157 12 $ 1.28 $ 1.24

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

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

			Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent		Total Equity $ 65,511,601 3,418,561
Common Stock $ 34,208,328 - 34,208,328 - - - - $ 34,208,328 $ 34,208,519 - 34,208,519 - - - 29,819 $ 34,238,338	Capital Collected in Advance $ - - - - - - - $ - $ 29,819 - 29,819 - - - 67,086 $ 96,905	Capital Surplus $ 13,939,278 - 13,939,278 - - - - $ 13,939,278 $ 12,580,692 - 12,580,692 - - - 892,641 $ 13,473,333	Retained Earnings Special Unappropriated Legal Reserve Reserve Earnings $ 26,138,846 $ 690,034 $ 14,735,424 - - 3,354,181 26,138,846 690,034 18,089,605 - - 3,481,360 - - 18,186 - - 3,499,546 - - 1,972 $ 26,138,846 $ 690,034 $ 21,591,123 $ 27,558,064 $ 362,703 $ 16,954,448 - - 32,605 27,558,064 362,703 16,987,053 - - 3,070,973 - - - - - 3,070,973 - - - $ 27,558,064 $ 362,703 $ 20,058,026	Other Equity Interests Unrealized Gain (Loss) on Financial Assets at Fair Unrealized Value Through Gain (Loss) on Exchange Other Available-for- Differences on Comprehensive sale Financial Translation Income Assets $ (16,499) $ - $ (346,204) - (281,785) 346,204 (16,499) (281,785) - - - - 8,055 (119,865) - 8,055 (119,865) - - - - $ (8,444) $ (401,650) $ - $ (24,398) $ (70,983) $ - - - - (24,398) (70,983) - - - - 10,086 323,179 - 10,086 323,179 - - - - $ (14,312) $ 252,196 $ -	Treasury Stock $ (29,717,344) - (29,717,344) - - - - $ (29,717,344) $ (29,717,344) - (29,717,344) - - - - $ (29,717,344)
			Legal Reserve $ 26,138,846 - 26,138,846 - - - - $ 26,138,846 $ 27,558,064 - 27,558,064 - - - - $ 27,558,064
						68,930,162 3,663,331 (89,174)
						3,574,157
						4,380
						$ 72,508,699
						$ 67,993,696 48,880
						68,042,576 3,298,974 349,887
						3,648,861
						989,546
						$ 72,680,983

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

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Depreciation expense Amortization expense Amortization of incremental costs of obtaining contracts Loss on disposal of property, plant and equipment, net Expected credit loss Finance costs Interest income Share of loss of associates accounted for using equity method Valuation (gain) loss on financial assets and liabilities at fair value through profit or loss Others Changes in operating assets and liabilities Financial assets mandatorily at fair value through profit or loss Contract assets Accounts and notes receivable Accounts receivable due from related parties Other receivables Inventories Prepayments Other current assets Other financial assets Incremental costs of obtaining a contract Contract liabilities Accounts and notes payable Accounts payable due to related parties Other payables Provisions Advance receipts Other current liabilities Other non-current liabilities Net defined benefit liabilities Net cash inflows generated from operating activities Interest received Interest paid Income taxes (paid) refund Net cash generated from operating activities		For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 4,090,951 3,317,845 864,492 703,442 15,967 51,658 153,087 (15,313) 6,986 (5,686) 1,959 - 196,082 328,811 (4,290) 172,046 (14,633) (88,188) 25,651 (2,592) (417,254) (12,279) 135,856 (38,135) (1,152,301) 2,635 2,048 162,123 - (27,650) 8,453,318 183 (328) (8,239) 8,444,934	2018 $ 4,563,832 2,530,897 904,457 903,958 22,131 101,115 155,754 (19,029) 4,892 25,847 (570) 609,083 265,940 201,806 (27,648) 544,780 348,304 (212,181) 11,689 (5,755) (657,302) (240,029) (657,946) 81,919 (1,561,559) (13,899) 13,640 97,305 (4,936) (35,475) 7,951,020 241 (310) 6,491 7,957,442 (Continued)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Acquisition of right-of-use assets Acquisition of intangible assets Increase in prepayments for equipment Increase in prepayments for investment Proceeds from disposal of property, plant and equipment Increase (decrease) in advanced receipts from assets disposals Proceeds from capital return of investments accounted for using equity method Increase in refundable deposits Decrease in refundable deposits Increase in other financial assets Decrease in other financial assets Interest received Dividend received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Increase (decrease) in short-term notes and bills payable Repayment of long-term borrowings Repayment of the principal portion of lease liabilities Increase in guarantee deposits received Decrease in guarantee deposits received Interest paid Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND EQUIVALENTS NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD		For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ (1,882,768) (12,188) (85,637) (50,112) (100,000) 2,847 219 - (70,081) 59,333 (21,874) 11,400 13,499 48,807 (2,086,555) (5,470,000) 2,498,725 (2,051,000) (933,727) 75,652 (44,684) (96,032) (6,021,066) 2,534 339,847 7,498,710 $ 7,838,557	2018 $ (2,574,967) - (127,820) (53,048) - 6,437 (98) 31,090 (95,759) 62,785 (7,189) 575,500 18,277 - (2,164,792) 900,000 (2,496,469) (3,051,000) - 24,254 (25,438) (112,955) (4,761,608) 1,285 1,032,327 6,631,544 $ 7,663,871

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

(Concluded)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. ORGANIZATION AND OPERATIONS

Taiwan Mobile Co., Ltd. (“TWM”) was incorporated in Taiwan, the Republic of China (“ROC”) on February 25, 1997. TWM’s stock was listed on the ROC Over-the-Counter (“OTC”) Securities Exchange (currently known as The Taipei Exchange, TPEx) on September 19, 2000. On August 26, 2002, TWM’s stock was shifted to be listed on the Taiwan Stock Exchange. TWM is mainly engaged in rendering wireless communication service and the sale of mobile phones and accessories, e-books and games.

TWM received a second-generation (“2G”) mobile telecommunications concession operation license issued by the Directorate General of Telecommunications (“DGT”) of the ROC. The license allows TWM to provide services for 15 years from 1997 onwards. The 2G concession license had been renewed by the National Communications Commission (“NCC”) and terminated on June 30, 2017. TWM received a third-generation (“3G”) concession license issued by the DGT in March 2005, and the 3G concession license terminated on December 31, 2018. TWM participated in the fourth-generation (“4G”) mobile spectrum auctions held by NCC for the need of long-term business development and from April 2014 to June 2018 acquired the concession licenses for the mobile broadband spectrum in the 700, 1800 and 2100MHz frequency bands separately, and the aforementioned licenses are valid until December 2030 and December 2033, respectively.

The consolidated financial statements of TWM comprise TWM and its subsidiaries (collectively, the “Group”).

2. APPROVAL DATE AND PROCEDURES OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors approved the consolidated financial statements on April 30, 2019.

3. ADOPTION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

a. Application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), Interpretations of IFRS (“IFRIC”), and Interpretations of IAS (“SIC”) (collectively, the “IFRSs”) endorsed and issued into effect by the ROC Financial Supervisory Commission (“FSC”).

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group’s accounting policies:

IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Please refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Group reassesses whether a contract is, or contains, a lease in accordance with the definition of a lease under IFRS 16. Some contracts, which were previously identified as containing a lease under IAS 17, do not meet the definition of a lease under IFRS 16 and are accounted for in accordance with other standards because the Group does not have the right to direct the use of the identified assets. Contracts that are reassessed as containing a lease are accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments fall under low-value and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities and the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. The difference between the actual payments and the expenses, as adjusted for lease incentives, was recognized as accrued or prepaid expenses. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows.

The Group elected to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information was not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients: The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1%. The difference between the lease liabilities recognized and operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease
commitments on December 31, 2018

Less: Recognition exemption for short-term leases

Less: Recognition exemption for leases of low-value assets

Less: Adjustment of application scope under IFRS 16

Undiscounted amounts on January 1, 2019

Discounted amounts using the incremental borrowing rate on January 1, 2019

Add: Adjustments as a result of a different treatment of extension
Add: Adjustment of application scope under IFRS 16

Lease liabilities recognized on January 1, 2019

$ 9,358,238
(32,099)
(70,201)
(356,676)
$ 8,899,262
$ 8,773,930
135,301
1,071,615
$ 9,980,846

The Group as lessor

Except for sublease transactions, the Group does not make any adjustments for leases in which it is a lessor and accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

The Group subleased its leasehold to a third party. Such sublease was classified as an operating lease under IAS 17. The Group determines the sublease is classified as a finance lease on the basis of the remaining contractual terms and conditions of the head lease and sublease on January 1, 2019, and the Group accounts for the sublease as a new finance lease entered into at that date.

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 was set out as follows:

Carrying
Amount as of
December 31,
2018

Current assets

Accounts and notes receivable, net

(including related parties)
$ 7,669,816
Other receivables

2,066,105
Prepayments

584,799

Non-current assets

Right-of-use assets

-
Deferred tax assets

806,521
Other non-current assets
1,275,195
Total effect on assets

Current liabilities

Other payables
9,581,496
Lease liabilities
-
Advanced receipts
111,250
Non-current liabilities

Deferred tax liabilities
917,261
Lease liabilities
-
Total effect on liabilities

Equity

Unappropriated earnings
16,954,448
Non-controlling interests
6,112,176

Total effect on equity

Adjustments
Arising from
Initial
Application
Adjusted
Carrying
Amount as of
January 1, 2019
$ 14,720 $ 7,684,536
(116)
2,065,989
(129,483)
455,316
10,087,654
10,087,654
(11,596)
794,925

10,454

1,285,649
$ 9,971,633

$ (57,235)
9,524,261
3,368,348
3,368,348
(1,557)
109,693
699
917,960

6,612,498

6,612,498
$ 9,922,753

$ 32,605
16,987,053

16,275

6,128,451

$ 48,880

10 -
b. New IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed and issued into effect by the FSC.

New IFRSs

Effective Date Announced by IASB (Note 1)

Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 2) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)

January 1, 2020 (Note 2) To be determined by IASB

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the following description, the significant accounting policies adopted for the consolidated financial statements are the same as those adopted for the consolidated financial statements for the year ended December 31, 2018.

Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 Interim Financial Reporting endorsed and issued into effect by the FSC. The consolidated financial statements do not include all the information which should be disclosed in the annual consolidated financial statements in accordance with the IFRSs endorsed and issued into effect by the FSC.

Basis of Consolidation

a. The basis of preparing the consolidated financial statements is the same as that of the consolidated financial statements for the year ended December 31, 2018.
11 -

b. The subsidiaries included in the consolidated financial statements were as follows:

Investor
Subsidiary
Main Business and
Products
TWM
Taiwan Cellular Co., Ltd.
(TCC)
Investment
Wealth Media Technology
Co., Ltd. (WMT)
Investment
Taipei New Horizon Co.,
Ltd. (TNH)
Building and operating
Songshan Cultural and
Creative Park BOT
project
TCC
Taiwan Fixed Network
Co., Ltd. (TFN)
Fixed-line service provider
Taiwan Teleservices &
Technologies Co., Ltd.
(TT&T)
Call center service and
telephone marketing
TWM Holding Co., Ltd.
(TWM Holding)
Investment
TCC Investment Co., Ltd.
(TCCI)
Investment
Taiwan Digital
Communications Co.,
Ltd. (TDC)
Mobile phone wholesaling
and TV program
production
Taiwan Digital Service
Co., Ltd. (TDS)
Commissioned
maintenance service
Taihsin Property Insurance
Agent Co., Ltd.
(TPIAC)
Property insurance agent
Tai-Fu Cloud Co., Ltd.
(TFC)
Type II
Telecommunications
Business
WMT
TFN Media Co., Ltd.
(TFNM)
Type II
Telecommunications
Business
Global Forest Media
Technology Co., Ltd.
(GFMT)
Investment
Global Wealth Media
Technology Co., Ltd.
(GWMT)
Investment
Win TV Broadcasting Co.,
Ltd. (WTVB)
TV program provider
momo.com Inc. (momo)
Wholesale and retail sales
TFN
TFN Union Investment
Co., Ltd. (TUI)
Investment
TFN HK Ltd.
Telecommunication
service provider
TWM Holding
TWM Communications
(Beijing) Co., Ltd.
(TWMC)
Mobile application
development and design
TCCI
TCCI Investment and
Development Co., Ltd.
(TID)
Investment
TFNM
Taiwan Kuro Times Co.,
Ltd. (TKT)
Online music service
Yeong Jia Leh Cable TV
Co., Ltd. (YJCTV)
Cable TV service provider
Mangrove Cable TV Co.,
Ltd. (MCTV)
Cable TV service provider
Phoenix Cable TV Co.,
Ltd. (PCTV)
Cable TV service provider
Union Cable TV Co., Ltd.
(UCTV)
Cable TV service provider
Globalview Cable TV Co.,
Ltd. (GCTV)
Cable TV service provider
GFMT
UCTV
Cable TV service provider
GWMT
GCTV
Cable TV service provider
momo
Asian Crown International
Co., Ltd. (Asian Crown
(BVI))
Investment

Percentage of Ownership
March 31,
2019
December 31,
2018
March 31,
2018
Note
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
49.90%
49.90%
49.90%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
Note 1
100.00%
100.00%
100.00%
Note 2
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
45.01%
45.01%
45.01%
-
100.00%
100.00%
100.00%
Note 1
100.00%
100.00%
100.00%
Note 2
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
Note 1
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
29.53%
29.53%
29.53%
Note 3
100.00%
100.00%
100.00%
-
99.22%
99.22%
99.22%
-
92.38%
92.38%
92.38%
-
0.76%
0.76%
0.76%
-
6.83%
6.83%
6.83%
-
81.99%
81.99%
76.26%
Note 4
(Continued)

12 -

Investor
Subsidiary
Main Business and
Products
momo
Honest Development Co.,
Ltd. (Honest
Development)
Investment
Fuli Life Insurance Agent
Co., Ltd. (FLI)
Life insurance agent
Fuli Property Insurance
Agent Co., Ltd. (FPI)
Property insurance agent
Fu Sheng Travel Service
Co., Ltd. (FST)
Travel agent
Bebe Poshe International
Co., Ltd. (Bebe Poshe)
Wholesale of cosmetics
Asian Crown
(BVI)
Fortune Kingdom
Corporation (Fortune
Kingdom)
Investment
Honest
Development
Hongkong Yue Numerous
Investment Co., Ltd.
(HK Yue Numerous)
Investment
Fortune
Kingdom
Hong Kong Fubon
Multimedia Technology
Co., Ltd. (HK Fubon
Multimedia)
Investment
HK Yue
Numerous
Haobo Information
Consulting (Shenzhen)
Co., Ltd. (Haobo)
Investment
HK Fubon
Multimedia
Fubon Gehua (Beijing)
Enterprise Ltd. (FGE)
Wholesaling

Percentage of Ownership
March 31,
2019
December 31,
2018
March 31,
2018
Note
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
85.00%
85.00%
-
Note 5
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
93.55%
93.55%
91.30%
Note 4
(Concluded)

Note 1: TCCI, TUI and TID collectively owned 698,752 thousand shares of TWM representing 20.35% of total outstanding shares as of March 31, 2019.
Note 2: TDC and TFN HK Ltd. are under liquidation procedures.
Note 3: The other 70.47% of shares were held under trustee accounts.
Note 4: In August 2018, momo and its subsidiaries increased the capital of Asian Crown (BVI) to invest in FGE. Due to the non-proportional investment in capital increase, momo’s ownership percentage in Asian Crown (BVI) and in FGE increased.
Note 5: In the third quarter of 2018, momo paid $85,000 thousand in cash to acquire control over Bebe Poshe and included Bebe Poshe in the consolidated financial statements.

c. Subsidiaries excluded from the consolidated financial statements: None.

Leases

2019

At inception of a contract, the Group assesses whether the contract is, or contains, a lease.

a. The Group as lessor

Leases in which the lessee assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

When the Group subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

Under finance leases, the lease payments comprise fixed payments and in-substance fixed payments. The net investment in a lease is measured at the present value of the sum of the lease payments receivable by a lessor and is presented as a finance lease receivable. Finance lease income is allocated

13 -

to the relevant accounting periods so as to reflect a constant, periodic rate of return on the Group’s net investment outstanding in respect of leases.

Lease payments from operating leases are recognized on a straight-line basis over the terms of the relevant leases.

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The entire lease is classified as an operating lease when it is clear that both elements are operating leases.

b. The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date and an estimate of costs needed to restore the underlying assets. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier dates of the end of the useful lives of the right-of-use assets or the end of the lease term.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments and variable lease payments which depend on an index. The lease payments are discounted using the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index are recognized as expenses in the periods in which they are incurred.

2018

Leases in which the lessee assumes substantially all of the risks and rewards of ownership are classified as finance leases. Other leases are operating leases. Receivables collected are periodically recognized as rental income during the lease contract.

Under an operating lease, rental income or lease payments are recognized as income or expense, respectively, on a straight-line basis over the lease term.

Under a finance lease, the proceeds from the lessee should be recognized on a net basis as lease receivable when the Group is the lessor. The finance income is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the receivable.

14 -

Employee Benefits

Defined benefit 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 fiscal year.

Income Tax

Income tax expense represents the sum of the tax currently payable and deferred tax. The interim-period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the profit before tax of the interim-period. When tax rate changes during the interim period, the effect of a change in tax rate resulting from a change in tax law is recognized consistently with the accounting for the transaction itself which gives rise to the tax consequence. The effect of the change in tax rate relating to transactions recognized outside profit or loss is recognized as other comprehensive income in full in the period in which the change in tax rate occurs. The effect of the change in tax rate relating to transactions recognized in profit or loss is included in estimating the average annual income tax rate, and consequently recognized throughout the interim period.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Except for the following description, the same critical accounting judgments and key sources of estimation uncertainty have been followed when preparing these interim consolidated financial statements as those that were applied in the preparation of the consolidated financial statements for the year ended December 31, 2018.

Lease terms - 2019

In determining a lease term, the Group considers all facts and circumstances that create an economic incentive to exercise or not to exercise an option, including any expected changes in facts and circumstances from the commencement date until the exercise date of the option. Main factors considered include contractual terms and conditions for the optional periods, significant leasehold improvements undertaken over the contract term, the importance of the underlying asset to the lessee’s operations, etc. The lease term is reassessed if a significant change in circumstances that are within control of the Group occur.

6. CASH AND CASH EQUIVALENTS

Cash on hand and revolving funds Cash in banks Time deposits Government bonds with repurchase rights	March 31, 2019 December 31, 2018 $ 138,842 $ 156,900 2,847,135 3,603,620 2,330,539 1,588,020 2,522,041 2,150,170 $ 7,838,557 $ 7,498,710	March 31, 2018 $ 69,801 2,416,485 2,960,469 2,217,116 $ 7,663,871

15 -

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments-current Domestic investments Listed stocks Foreign investments Unlisted stocks Investments in equity instruments-non-current Domestic investments Listed stocks Unlisted stocks Foreign investments Limited partnerships Unlisted stocks	March 31, 2019 December 31, 2018 $ 238,000 $ 245,607 14,240 10,125 $ 252,240 $ 255,732 $ 4,329,908 $ 3,778,949 173,923 181,178 503,637 775,385 29,389 28,387 $ 5,036,857 $ 4,763,899	March 31, 2018 $ 245,607 24,288 $ 269,895 $ 3,375,809 176,640 842,386 26,595 $ 4,421,430

These investments in equity instruments are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believed that recognizing short-term fluctuations from these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

8. ACCOUNTS AND NOTES RECEIVABLE, NET

Notes receivable Accounts receivable Less: Allowance for impairment loss	March 31, 2019 $ 140,910 7,448,209 (419,495) $ 7,169,624	December 31, 2018 $ 175,658 7,820,249 (464,049) $ 7,531,858	March 31, 2018 $ 61,630 8,100,388 (481,997)
			$ 7,680,021

The main credit terms range from 30 to 90 days.

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

The Group adopted a policy of dealing with counterparties with considerable scale of operations, certain credit ratings and financial conditions for project business. In addition to examining publicly available financial information and its own historical transaction experience, the Group obtains collateral where necessary to mitigate the risk of loss arising from default. The Group continues to monitor the credit exposure and financial and credit conditions of its counterparties, and spreads the total amount of the transactions among qualified counterparties.

16 -

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

The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses (ECLs). The ECLs on trade receivables are estimated using a provision matrix with reference to past default experiences of the customers and an analysis of the customers’ current financial positions, as well as forward-looking indicators such as the industrial economic conditions. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision matrix does not distinguish customer segments. As a result, the expected credit loss rate is based on the number of past due days of trade receivables.

The Group writes off a trade receivable when there are evidences indicating that the counterparty is in severe financial difficulty and the trade receivable is considered uncollectible. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

Movements of allowance for doubtful notes and accounts receivables by individual and collective assessment were as follows:

March 31, 2019

Not Past Due Gross carrying amount $ 6,914,896 Loss allowance (Lifetime ECL) (53,496) Amortized cost $ 6,861,400 December 31, 2018 Not Past Due Gross carrying amount $ 7,269,513 Loss allowance (Lifetime ECL) (56,022) Amortized cost $ 7,213,491 March 31, 2018 Not Past Due Gross carrying amount $ 7,443,826 Loss allowance (Lifetime ECL) (56,731) Amortized cost $ 7,387,095	Overdue 1 to 120 days 121 to 365 days Over 365 days $ 405,572 $ 262,965 $ 5,686 (111,461) (248,864) (5,674) $ 294,111 $ 14,101 $ 12 Overdue 1 to 120 days 121 to 365 days Over 365 days $ 458,984 $ 261,723 $ 5,687 (154,752) (247,788) (5,487) $ 304,232 $ 13,935 $ 200 Overdue 1 to 120 days 121 to 365 days Over 365 days $ 436,157 $ 281,809 $ 226 (162,034) (263,006) (226) $ 274,123 $ 18,803 $ -	Overdue 1 to 120 days 121 to 365 days Over 365 days $ 405,572 $ 262,965 $ 5,686 (111,461) (248,864) (5,674) $ 294,111 $ 14,101 $ 12 Overdue 1 to 120 days 121 to 365 days Over 365 days $ 458,984 $ 261,723 $ 5,687 (154,752) (247,788) (5,487) $ 304,232 $ 13,935 $ 200 Overdue 1 to 120 days 121 to 365 days Over 365 days $ 436,157 $ 281,809 $ 226 (162,034) (263,006) (226) $ 274,123 $ 18,803 $ -	Total $ 7,589,119 (419,495) $ 7,169,624 Total $ 7,995,907 (464,049) $ 7,531,858 Total $ 8,162,018 (481,997) $ 7,680,021
		1 to 120 days 121 to 365 days $ 458,984 $ 261,723 (154,752) (247,788) $ 304,232 $ 13,935 Overdue
		1 to 120 days 121 to 365 days $ 436,157 $ 281,809 (162,034) (263,006) $ 274,123 $ 18,803

17 -

Expected credit loss rates of the Group for the aforementioned periods were as follows:

	Not Past Due
	and Past Due	Past Due Over
	within 120 Days	120 Days
Telecommunications service	0.02%-85%	65.5%-100%
Retail business and others	below 10%	35%-100%

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

Beginning balance Add: Provision Recovery Less: Write-off Ending balance	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 464,049 52,378 12,853 (109,785) $ 419,495	2018 $ 468,474 102,874 13,636 (102,987) $ 481,997

9. INVENTORIES

Merchandise Materials for maintenance	March 31, 2019 December 31, 2018 $ 3,952,862 $ 3,936,724 7,434 8,939 $ 3,960,296 $ 3,945,663	March 31, 2018 $ 3,971,476 12,029 $ 3,983,505

For the three months ended March 31, 2019 and 2018, the cost of goods sold recognized in consolidated comprehensive income amounted to $14,207,429 thousand and $13,339,868 thousand, respectively, which included the reversal of inventory write-down, totaling $14,361 thousand and $9,379 thousand, respectively.

10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Associates, which were not individually material and were accounted for using equity method, were as follows:

Investee Company Global Home Shopping Co., Ltd. (GHS) Taiwan Pelican Express Co., Ltd. (TPE) kbro Media Co., Ltd. (kbro Media) TVD Shopping Co., Ltd. (TVD Shopping) Alliance Digital Tech Co., Ltd. (ADT)		March 31, 2019 Amount % of Owner- ship $ 727,482 20.00 395,772 17.70 148,914 32.50 118,789 35.00 5,562 14.40 $ 1,396,519		December 31, 2018 Amount % of Owner- ship $ 766,529 20.00 385,706 17.70 154,847 32.50 119,889 35.00 8,636 14.40 $ 1,435,607		March 31, 2018
						Amount % of Owner- ship $ 746,964 20.00 407,499 17.70 177,259 32.50 119,002 35.00 11,787 14.40 $ 1,462,511

18 -

a. GHS

In June 2015, one of momo’s subsidiaries acquired 20% equity interests of GHS.

Due to non-participation in GHS’s capital increase in October 2015, momo’s subsidiary’s percentage of ownership interests in GHS decreased to 18%. In January 2016, momo’s subsidiary’s percentage of ownership interests in GHS increased to 20% due to the acquisition of additional 2% equity interests of GHS.

b. TPE

In August 2012, momo acquired 20% equity interests of TPE.

As of December 2013, momo held 17.70% equity interests of TPE due to its not subscribing for new stock issued by TPE and selling part of its stock when TPE went public. momo still has significant influence on TPE due to its having two seats on TPE’s board of directors.

c. TVD Shopping

In April 2014, momo acquired 35% equity interests of TVD Shopping for THB155,750 thousand.

On November 23, 2017, an extraordinary stockholders’ meeting of TVD Shopping resolved to reduce its capital stock. momo received $31,090 thousand (THB35,000 thousand) as a proportional capital reduction in January 2018.

d. ADT

In November 2013, TWM acquired 19.23% equity interests of ADT.

In 2014, TWM’s percentage of ownership interests in ADT decreased to 13.33% as TWM did not subscribe for any newly issued ADT stock. In December 2016, TWM increased its percentage of ownership interests in ADT to 14.40% by subscribing for new stock issued by ADT. TWM still has significant influence on ADT due to having a seat on ADT’s board of directors.

ADT had resolved was on December 31, 2018 as the dissolution date. As of March 31, 2019, ADT was still under liquidation procedures.

11. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Subsidiary momo	Proportion of Non-controlling Interests’ Ownership and Voting Rights
	March 31, 2019 December 31, 2018 March 31, 2018 54.99% 54.99% 54.99%

For information on the principal place of business and the company’s country of registration, see Table 6.

19 -

momo and its subsidiaries’ summarized financial information below has taken into account the adjustments to acquisition-date fair value, and reflects the amounts before eliminations of intercompany transactions:

March 31, 2019 Current assets $ 6,339,731 Non-current assets 14,205,990 Current liabilities (5,629,214) Non-current liabilities (815,788) Equity $ 14,100,719 Equity attributable to: Owners of the parent $ 9,523,862 Non-controlling interests of momo 4,555,276 Non-controlling interests of momo’s subsidiaries 21,581 $ 14,100,719 Operating revenues Profit Other comprehensive income Comprehensive income Profit (loss) attributable to: Owners of the parent Non-controlling interests of momo Non-controlling interests of momo’s subsidiaries Comprehensive income (loss) attributable to: Owners of the parent Non-controlling interests of momo Non-controlling interests of momo’s subsidiaries Net cash generated from operating activities Net cash generated from (used in) investing activities Net cash generated from (used in) financing activities Effect of exchange rate changes Net increase in cash		December 31, 2018 March 31, 2018 $ 6,168,249 $ 5,329,555 13,531,769 13,561,063 (5,772,994) (4,961,936) (281,454) (268,113) $ 13,645,570 $ 13,660,569 $ 9,318,968 $ 9,340,392 4,305,001 4,331,171 21,601 (10,994) $ 13,645,570 $ 13,660,569 For the Three Months Ended March 31	December 31, 2018 March 31, 2018 $ 6,168,249 $ 5,329,555 13,531,769 13,561,063 (5,772,994) (4,961,936) (281,454) (268,113) $ 13,645,570 $ 13,660,569 $ 9,318,968 $ 9,340,392 4,305,001 4,331,171 21,601 (10,994) $ 13,645,570 $ 13,660,569 For the Three Months Ended March 31
		2019 $ 11,735,627 $ 395,590 30,033 $ 425,623 $ 178,232 217,707 (349) $ 395,590 $ 191,643 234,088 (108) $ 425,623 $ 445,107 6,783 (56,408) 528 $ 396,010	2018 $ 10,183,809 $ 306,963 8,247 $ 315,210 $ 138,880 169,641 (1,558) $ 306,963 $ 142,684 174,286 (1,760) $ 315,210 $ 817,162 (501,246) 325 37 $ 316,278

20 -

12. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2019 Additions Reclassification Disposals and retirements Effect of exchange rate changes Balance, March 31, 2019 Accumulated depreciation and impairment Balance, January 1, 2019 Depreciation Reclassification Disposals and retirements Effect of exchange rate changes Balance, March 31, 2019 Carrying amount, January 1, 2019 Carrying amount, March 31, 2019 Cost Balance, January 1, 2018 Additions Reclassification Disposals and retirements Effect of exchange rate changes Balance, March 31, 2018 Accumulated depreciation and impairment Balance, January 1, 2018 Depreciation Reclassification Disposals and retirements Effect of exchange rate changes Balance, March 31, 2018 Carrying amount, March 31, 2018	Land $ 8,289,085 - (13,842 ) (562 ) - $ 8,274,681 $ 1,662 - - - - $ 1,662 $ 8,287,423 $ 8,273,019 $ 8,250,857 - - - - $ 8,250,857 $ 83,426 - - - - $ 83,426 $ 8,167,431	Buildings Telecommuni- cations Equipment and Machinery $ 5,672,957 $ 87,623,044 1,116 68,977 (17,117 ) 1,115,721 (1,523 ) (256,476 ) - 2,021 $ 5,655,433 $ 88,553,287 $ 1,499,982 $ 64,521,396 40,389 2,022,748 (6,048 ) - (617 ) (240,209 ) - 1,766 $ 1,533,706 $ 66,305,701 $ 4,172,975 $ 23,101,648 $ 4,121,727 $ 22,247,586 $ 5,552,706 $ 84,505,063 6,932 50,799 42,020 1,179,202 - (204,171 ) - 1,490 $ 5,601,658 $ 85,532,383 $ 1,369,660 $ 59,427,788 38,631 2,156,635 - (1,061 ) - (180,970 ) - 1,232 $ 1,408,291 $ 61,403,624 $ 4,193,367 $ 24,128,759	Others Construction in Progress and Equipment to Be Inspected $ 9,346,834 $ 1,349,217 67,099 1,076,857 36,344 (1,157,800 ) (52,505 ) - 132 - $ 9,397,904 $ 1,268,274 $ 7,402,137 $ - 288,107 - - - (51,426 ) - 95 - $ 7,638,913 $ - $ 1,944,697 $ 1,349,217 $ 1,758,991 $ 1,268,274 $ 8,924,688 $ 1,766,195 134,834 1,233,713 197,994 (1,432,253 ) (198,257 ) (215 ) 97 - $ 9,059,356 $ 1,567,440 $ 6,515,214 $ - 330,669 - - - (194,842 ) - 57 - $ 6,651,098 $ - $ 2,408,258 $ 1,567,440	Total $ 112,281,137 1,214,049 (36,694 ) (311,066 ) 2,153 $ 113,149,579 $ 73,425,177 2,351,244 (6,048 ) (292,252 ) 1,861 $ 75,479,982 $ 38,855,960 $ 37,669,597 $ 108,999,509 1,426,278 (13,037 ) (402,643 ) 1,587 $ 110,011,694 $ 67,396,088 2,525,935 (1,061 ) (375,812 ) 1,289 $ 69,546,439 $ 40,465,255

a. The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

Buildings
Primary buildings	20-55 years
Mechanical and electrical equipment	5-15 years
Telecommunications equipment and machinery	2-20 years
Others	2-20 years

21 -

13. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	March 31,	March 31,
		2019
Carrying amounts
Land	$	595,848
Buildings		8,132,951
Telecommunications equipment and machinery		1,066,008
Others		73,444
	$	9,868,251
	For the Three
	Months Ended
	March 31, 2019
Additions to right-of-use assets	$	759,904
Depreciation charge for right-of-use assets
Land	$	57,668
Buildings		835,392
Telecommunications equipment and machinery		51,357
Others		17,110
	$	961,527

b. Lease liabilities - 2019

Carrying amounts Current Non-current Range of discount rate for lease liabilities was as follows: Land Buildings Telecommunications equipment and machinery Others	March 31, 2019 $ 3,407,191 $ 6,368,976 March 31, 2019 0.86%-1% 0.86%-5.44% 0.86%-4.38% 0.86%-5.44%

22 -

c. Material lease-in activities and terms

The Group leases base transceiver stations, machine rooms, stores, offices, warehouses, maintenance centers, telecommunications equipment, etc., with most lease terms of 1 to 6 years. The Group does not have bargain purchase options to acquire the leasehold assets at the end of the lease terms. In addition, the Group is prohibited from subleasing all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Lease arrangements under operating leases for the leasing out of investment properties are set out in Note 14.

2019

	For the Three
	Months Ended
	March 31, 2019
Expenses relating to short-term leases	$ 19,090
Expenses relating to low-value asset leases	$ 17,922
Expenses relating to variable lease payments not included in the measurement of
lease liabilities	$ 9,665
Total cash outflow for leases	$ (1,016,805)

The Group leases certain buildings, which qualify as short-term leases, and certain office equipment and other assets, which qualify as low-value asset leases. The Group has elected to apply the recognition exemption and, thus, not to recognize right-of-use assets and lease liabilities for these leases.

The amount of lease commitments for short-term leases, for which the recognition exemption is applied, is $18,527 thousand.

2018

Non-cancellable rental payables of operating leases were as follows:

December 31, 2018 Less than one year $ 3,440,873 Between one and five years 5,876,088 More than five years 41,277 $ 9,358,238	March 31, 2018 $ 3,158,637 5,342,813 69,808 $ 8,571,258

The Group leases offices, base transceiver stations, machine rooms, stores, maintenance centers, etc., under operating leases. The leases typically run for a period of 1 to 5 years.

23 -

The payments of leases and subleases were as follows:

For the Three Months Ended March 31, 2018

Minimum lease payments Receipts from subleases	$ 948,560 (2,858) $ 945,702

14. INVESTMENT PROPERTIES

The Group leases its properties to others and thus reclassifies them from property, plant and equipment to investment property.

The fair values of investment properties were measured using Level 3 inputs, using income approach, comparative approach, and cost approach by HomeBan Appraisers Joint Firm. As of March 31, 2019, December 31, 2018 and March 31, 2018, the fair values of investment properties were $6,971,613 thousand, $6,979,581 thousand and $6,720,308 thousand, respectively, and the capitalization rates for the aforementioned financial reporting periods were 1.32%-5.23%, 1.32%-5.23% and 0.94%-5.23%, respectively.

The amounts of depreciation recognized for the three months ended March 31, 2019 and 2018 were $5,074 thousand and $4,962 thousand, respectively.

The maturity analysis of lease payments receivable under operating leases of investment properties as of March 31, 2019 was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 and thereafter	March 31, 2019 $ 154,767 150,446 136,950 130,410 45,179 69,968 $ 687,720

The Group leases out investment properties under operating leases. The future minimum lease payment receivables under non-cancellable leases as of December 31 and March 31, 2018 are as follows:

December 31, 2018 Less than one year $ 152,807 Between one and five years 502,272 More than five years 79,298 $ 734,377	March 31, 2018 $ 145,389 543,410 114,699 $ 803,498

24 -

15. INTANGIBLE ASSETS

Cost Balance, January 1, 2019 Addition Disposals and retirements Reclassification Effect of exchange rate changes Balance, March 31, 2019 Accumulated amortization and impairment Balance, January 1, 2019 Amortization Disposals and retirements Effect of exchange rate changes Balance, March 31, 2019 Carrying amount, January 1, 2019 Carrying amount, March 31, 2019 Cost Balance, January 1, 2018 Addition Disposals and retirements Reclassification Effect of exchange rate changes Balance, March 31, 2018 Accumulated amortization and impairment Balance, January 1, 2018 Amortization Disposals and retirements Effect of exchange rate changes Balance, March 31, 2018 Carrying amount, March 31, 2018		Conces	sions Service Concessions $ 8,180,078 - - - - $ 8,180,078 $ 1,031,305 44,680 - - $ 1,075,985 $ 7,148,773 $ 7,104,093 $ 8,180,078 - - - - $ 8,180,078 $ 852,586 44,680 - - $ 897,266 $ 7,282,812	Goodwill $ 15,872,595 - - - - $ 15,872,595 $ - - - - $ - $ 15,872,595 $ 15,872,595 $ 15,845,930 - - - - $ 15,845,930 $ - - - - $ - $ 15,845,930			Othe	r Intangible Asse	ts	Copyrights $ 15,222 2,189 - - - $ 17,411 $ 13,538 3,452 - - $ 16,990 $ 1,684 $ 421 $ - 344 - - - $ 344 $ - - - - $ - $ 344	Total $ 75,572,855 26,855 (129,656 ) 13,110 335 $ 75,483,499 $ 13,397,210 864,492 (129,656 ) 229 $ 14,132,275 $ 62,175,645 $ 61,351,224 $ 85,433,406 78,266 (40,345 ) 49,549 247 $ 85,521,123 $ 20,060,586 904,457 (40,345 ) 147 $ 20,924,845 $ 64,596,278
		Concession Licenses $ 41,043,375 - - - - $ 41,043,375 $ 7,663,274 660,163 - - $ 8,323,437 $ 33,380,101 $ 32,719,938 $ 51,324,375 - - - - $ 51,324,375 $ 14,981,287 706,070 - - $ 15,687,357 $ 35,637,018				Computer Software $ 3,907,630 24,666 (129,656 ) 13,110 335 $ 3,816,085 $ 3,176,937 122,060 (129,656 ) 229 $ 3,169,570 $ 730,693 $ 646,515 $ 3,529,068 77,922 (40,345 ) 49,549 247 $ 3,616,441 $ 2,851,117 119,566 (40,345 ) 147 $ 2,930,485 $ 685,956	Customer Relationships $ 2,654,089 - - - - $ 2,654,089 $ 1,510,663 34,100 - - $ 1,544,763 $ 1,143,426 $ 1,109,326 $ 2,654,089 - - - - $ 2,654,089 $ 1,374,263 34,100 - - $ 1,408,363 $ 1,245,726	Operating Rights $ 1,382,000 - - - - $ 1,382,000 $ - - - - $ - $ 1,382,000 $ 1,382,000 $ 1,382,000 - - - - $ 1,382,000 $ - - - - $ - $ 1,382,000	Trademarks $ 2,517,866 - - - - $ 2,517,866 $ 1,493 37 - - $ 1,530 $ 2,516,373 $ 2,516,336 $ 2,517,866 - - - - $ 2,517,866 $ 1,333 41 - - $ 1,374 $ 2,516,492

The estimated useful lives for the current and comparative periods are as follows:

Concession licenses 14-17 years Service concessions 44-50 years Computer software 2-10 years Customer relationships 20 years Trademarks 10 years Copyrights Amortized over the broadcast period

a. Service concessions

On January 15, 2009, TNH signed a BOT contract with the Department of Cultural Affairs of Taipei City Government. Under the BOT contract, TNH obtained the right to build and operate a development project located at the old Songshan Tobacco Plant. The development concession premium of superficies is amortized on a straight-line basis during the contract period, and the construction costs are amortized on a straight-line basis from the completion date of the construction to the BOT contract expiry date.

b. Customer relationships, operating rights, and trademarks

The Group measures the fair value of acquired assets when acquisitions occur, and identifies the fair value and amortization periods of the intangible assets which conform to materiality and related standards. Although some of the intangible assets such as operating rights and trademarks have a legal useful lives, which can be extended, the Group regards these assets as intangible assets with indefinite useful lives.

25 -
1) On April 17, 2007, TFN, one of TWM’s wholly-owned subsidiaries, acquired more than 50% of the former Taiwan Fixed Network Co., Ltd. (the former “TFN”) through a public tender offer. TWM split the former TFN and its subsidiaries into two cash-generating units, i.e., fixed network service and cable television business. Accordingly, customer relationships and operating rights are identified as major intangible assets.
2) On September 1, 2010, TFNM, one of TWM’s wholly-owned subsidiaries, acquired 55% of TKT. On August 12, 2011, TFNM acquired 45% of TKT. TWM measured the fair value of the acquired net assets and viewed TKT’s wireless services as one cash-generating unit. Accordingly, trademarks and customer relationships are identified as major intangible assets.
3) On July 13, 2011, WMT, one of TWM’s wholly-owned subsidiaries, acquired control over momo. TWM measured the fair value of the acquired assets and viewed momo’s retail business as one cash-generating unit. Accordingly, trademarks are identified as major intangible assets.
c. Goodwill

The carrying amounts of goodwill allocated to the cash-generating units were as follows:

Telecommunications service Fixed network service Cable television business Retail business	March 31, 2019 $ 7,238,758 357,970 3,269,636 5,006,231 $ 15,872,595	December 31, 2018 $ 7,238,758 357,970 3,269,636 5,006,231 $ 15,872,595	March 31, 2018 $ 7,238,758 357,970 3,269,636 4,979,566
			$ 15,845,930

d. Impairment of assets

See Note 16 (e) to the consolidated financial statements for the year ended December 31, 2018 for the related information on impairment of assets. There was no significant evidence indicating impairment of intangible assets as of March 31, 2019.

16. OTHER NON-CURRENT ASSETS

Long-term accounts receivable Refundable deposits Prepayments for investment Prepayments for equipment Others	March 31, 2019 December 31, 2018 $ 113,506 $ 101,740 635,229 634,512 100,000 - 65,423 29,256 512,180 509,687 $ 1,426,338 $ 1,275,195	March 31, 2018 $ 63,649 641,188 - 90,179 505,833 $ 1,300,849

26 -

17. BORROWINGS

a. Short-term borrowings

Unsecured loans Annual interest rate	March 31, 2019 $ 4,800,000 0.7%-0.96%	December 31, 2018 $ 10,270,000 0.7%-0.96%	March 31, 2018 $ 10,563,466 0.6%-5.44%

For the information on endorsements and guarantees, see Note 30 (b).

b. Short-term notes and bills payable

March 31,
2019
December 31,
2018
Short-term notes and bills payable
$ 4,000,000
$ 1,500,000

Less: Discount on short-term notes and bills
payable

(2,104)

(1,008)

$ 3,997,896
$ 1,498,992

Annual interest rate
0.618%-0.648% 0.788%-0.798%
Long-term borrowings
March 31,
2019
December 31,
2018
Unsecured loans
$ 6,000,000 $ 8,000,000
Secured loans
3,141,843
3,192,674
Less: Current portion

(303,245)

(2,303,236)

$ 8,838,598
$ 8,889,438

Annual interest rate:
Unsecured loans
0.72%-0.76%
0.75%-1.07%
Secured loans
2.0337%
2.0337%

March 31,
2018
$ 3,100,000

(1,087)
$ 3,098,913
0.528%-0.76%
March 31,
2018
$ 16,000,000

3,345,141

(7,203,299)
$ 12,141,842
0.72%-1.26%
2.0337%

c. Long-term borrowings
1) Unsecured loans

The Group entered into credit facility agreements with a group of banks for mid-term requirements of operating capital, and the interest is paid periodically. Under certain credit agreements, the loans are treated as revolving credit facilities, and the maturity dates of the loans are based on terms under the agreements. In addition, the expiry date of the repayments is in July 2021, and some credit facilities are subject to financial covenants regarding debt ratios and interest protection multiples during the credit facility period.

27 -

2) Secured loans

TNH entered into a syndicated loan agreement, with respect to the investment under the aforementioned BOT contract. The credit agreement originally signed in 2010 has been early terminated. TNH signed another credit agreement with Bank of Taiwan for a $3,400,000 thousand credit amount and a $65,000 thousand guarantee amount on September 5, 2017. The agreement started from the date of the first drawdown of the loan and would last for 7 years with interest payments made on a monthly basis. In accordance with the loan agreement, the regular financial covenants, e.g. current ratio, equity ratio, and interest protection multiples, must be complied with during the credit facility period. For property under the BOT contract and its superficies that have been pledged as collateral, see Note 29.

18. BONDS PAYABLE

3rd domestic unsecured straight corporate bonds 4th domestic unsecured straight corporate bonds 5th domestic unsecured straight corporate bonds 3rd domestic unsecured convertible bonds Less: Current portion	March 31, 2019 $ 4,499,767 - 14,986,988 8,463,756 (4,499,767) $ 23,450,744	December 31, 2018 $ 4,499,680 - 14,986,357 9,432,780 (4,499,680) $ 24,419,137	March 31, 2018 $ 8,999,147 2,900,000 - 9,671,871 (7,399,729) $ 14,171,289

a. 3rd domestic unsecured straight corporate bonds

On December 20, 2012, TWM issued $9,000,000 thousand of seven-year 3rd domestic unsecured bonds; each bond had a face value of $10,000 thousand and a coupon rate of 1.34% per annum, with simple interest due annually. Repayment will be made in the sixth and seventh years in equal installments, i.e., $4,500,000 thousand. As of March 31, 2019, the amount of unamortized bond issue cost was $233 thousand. The trustee of bond holders is Hua Nan Commercial Bank.

Future repayments of the above-mentioned corporate bonds are as follows:

Year Amount In the fourth quarter of 2019 $ 4,500,000

b. 4th domestic unsecured straight corporate bonds

On April 25, 2013, TWM issued $5,800,000 thousand of five-year 4th domestic unsecured straight corporate bonds, each having a face value of $10,000 thousand and a coupon rate of 1.29% per annum, with simple interest due annually. Repayment will be made in the fourth and fifth years with equal installments, i.e., $2,900,000 thousand. The trustee of bond holders is Hua Nan Commercial Bank.

The above-mentioned corporate bonds were fully liquidated in April 2018.

c. 5th domestic unsecured straight corporate bonds

On April 20, 2018, TWM issued 5th domestic unsecured straight corporate bonds. The bonds included five-year and seven-year bonds, with the principal amount of $6,000,000 thousand and $9,000,000 thousand, each having a face value of $10,000 thousand, and coupon rates of 0.848% and 1% per annum, respectively, with simple interest due annually. Repayment will be made in full at maturity. As of March 31, 2019, the amount of unamortized bond issue cost was $13,012 thousand. The trustee of bond holders is Bank of Taiwan.

28 -

Future repayments of the above-mentioned corporate bonds are as follows:

Year 2023 2025	Amount $ 6,000,000 9,000,000
	$ 15,000,000

d. 3rd domestic unsecured convertible bonds

On November 22, 2016, TWM issued its 3rd domestic five-year unsecured zero-coupon convertible bonds with an aggregate principal amount of $10,000,000 thousand and a par value of $100 thousand per bond certificate. The conversion price was set initially at $116.1 per share. The conversion price should be adjusted according to the prescribed formula and has been adjusted to $104.7 per share since July 16, 2018. Except for the book closure period, bondholders are entitled to convert bonds into TWM’s common stock from December 23, 2016 to November 22, 2021. The trustee of bond holders is Bank of Taiwan.

If the closing price of TWM’s common stock continues being at least 130% of the conversion price then in effect for 30 consecutive trading days or the aggregate outstanding balance of bonds payable is less than 10% of the original issuance amount, TWM has the right to redeem the outstanding bonds payable at par value in cash during the period from one month after the issuance date to the date 40 days prior to the maturity date.

At the end of the third year from the bond issuance date, bondholders have the right to request TWM to redeem the convertible bonds at par value in cash.

The convertible bonds contain both liability and equity components. The equity component was presented in equity under the heading of capital surplus - option. The effective interest rate of the liability component was 0.9149% per annum on initial recognition. As of March 31, 2019, the amount of unamortized bond discount was $207,444 thousand.

Proceeds of the issuance (minus transaction costs $10,870 thousand)

Equity component
Financial liabilities

Liability component at the date of issuance
Interest charged at an effective interest rate

Liability component on March 31, 2018

Liability component on January 1, 2019

Interest charged at an effective interest rate
Convertible bonds converted into common stock

Liability component on March 31, 2019

$ 9,989,130
(400,564)

(35,961)
9,552,605

119,266
$ 9,671,871
$ 9,432,780
20,480

(989,504)
$ 8,463,756

As of March 31, 2019, the bondholders had requested to convert the bonds at face value of $1,328,800 thousand.

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19. PROVISIONS

Restoration Decommissioning Warranties Current Non-current Balance, January 1, 2019 Provision Payment/Reversal Unwinding of discount Balance, March 31, 2019 Balance, January 1, 2018 Provision Payment/Reversal Unwinding of discount Balance, March 31, 2018	Restoration $ 1,184,823 13,756 (12,892) 1,080 $ 1,186,767 $ 1,208,093 13,410 (21,785) 1,376 $ 1,201,094	March 31, 2019 December 31, 2018 $ 1,186,767 $ 1,184,823 283,004 268,536 64,421 67,929 $ 1,534,192 $ 1,521,288 $ 113,491 $ 120,334 1,420,701 1,400,954 $ 1,534,192 $ 1,521,288 Decom- missioning Warranties $ 268,536 $ 67,929 12,558 21,419 - (24,927) 1,910 - $ 283,004 $ 64,421 $ 213,372 $ 128,412 12,240 30,464 - (43,760) 1,550 - $ 227,162 $ 115,116	March 31, 2018 $ 1,201,094 227,162 115,116 $ 1,543,372 $ 167,564 1,375,808 $ 1,543,372 Total $ 1,521,288 47,733 (37,819) 2,990 $ 1,534,192 $ 1,549,877 56,114 (65,545) 2,926 $ 1,543,372
		$
		$
		$

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

Domestic firms of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed and defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. The employees of the Group’s subsidiaries in other countries are participants of state-managed retirement benefit plans operated by local governments. In accordance with the above provision, the Group’s contribution to the pension plan amounted to $77,399 thousand and $76,518 thousand for the three months ended March 31, 2019 and 2018, respectively.

b. Defined benefit plan

The Group recognized pension amount of $1,969 thousand and $1,996 thousand for the three months ended March 31, 2019 and 2018, respectively, by using the actuarially determined pension cost rate.

30 -

21. EQUITY

a. Common stock

As of March 31, 2019, December 31, 2018, and March 31, 2018, TWM’s authorized capital was $60,000,000 thousand and capital issued and outstanding was $34,238,338 thousand, $34,208,519 thousand and $34,208,328 thousand, respectively, divided into 3,423,834 thousand shares, $3,420,852 thousand shares and $3,420,833 thousand shares, respectively, which were all common stocks, at a par value of $10 each.

As of March 31, 2019, the bondholders of 3rd domestic unsecured convertible bonds had requested to convert the bonds into 12,691 thousand common stocks. TWM recognized 9,691 thousand of common stocks as capital collected in advance, totaling $96,905 thousand. TWM would complete the amendment registration after the issuance of new stocks on the record date in accordance with the regulations.

b. Capital surplus

Additional paid-in capital from convertible corporate bonds Treasury stock transactions Difference between consideration and carrying amount arising from the disposal of subsidiaries’ stock Changes in equity of subsidiaries Convertible bonds payable options Changes in equity of associates accounted for using equity method Others	March 31, 2019 $ 7,296,997 5,159,704 85,965 501,215 347,337 48,147 33,968 $ 13,473,333	December 31, 2018 $ 6,363,714 5,159,704 85,965 501,215 387,979 48,147 33,968 $ 12,580,692	March 31, 2018 $ 7,708,764 5,159,704 85,965 511,562 400,564 39,767 32,952 $ 13,939,278

Under the ROC Company Act, capital surplus generated from the excess of the issue price over the par value of capital stock, including the stock issued for new capital, the conversion premium from convertible corporate bonds, the difference between consideration and carrying amount of subsidiaries’ stock acquired or disposed of, and treasury stock transactions, may be applied to make-up accumulated deficit, if any, or be transferred to capital as stock dividends, or be distributed as cash dividends when there is no accumulated deficit, and this transfer is restricted to a certain percentage of the paid-in capital. The capital surplus arising from changes in equity of subsidiaries, changes in equity of associates accounted for using equity method and the overdue unclaimed dividends could also be applied to make-up accumulated deficit, if any. And the other capital surplus cannot be used by any means.

c. Appropriation of earnings and dividend policy

In accordance with the policy, TWM’s profits earned in a fiscal year shall first be set aside to pay the applicable taxes, offset losses, and set aside for legal reserve pursuant to laws and regulations, unless the legal reserve has reached TWM’s total paid-up capital. The remaining profits shall be set aside for special reserve in accordance with laws, regulations, or business requirements. Any further remaining profits plus unappropriated earnings shall be distributed in accordance with the proposal submitted by the Board of Directors for approval at a stockholders’ meeting.

31 -

TWM adopts a dividend distribution policy whereby only surplus profits of TWM shall be distributed to stockholders. That is, after setting aside amounts for retained earnings based on TWM’s capital budget plan, the residual profits shall be distributed as cash dividends. Stock dividends in a particular year shall be capped at no more than 80% of total dividends to be distributed for that year. The amount of the distributable dividends, the forms in which dividends shall be distributed, and the ratio thereof shall depend on the actual profit and cash positions of TWM and shall be approved by resolutions of the Board of Directors, who shall, upon such approval, recommend the same to the stockholders for approval by resolution at the stockholders’ meetings.

The above appropriation of earnings should be resolved in the annual general stockholders’ meeting (“AGM”) held in the following year.

According to the ROC Company Act, a company shall first set aside its earning for legal reserve until it equals the paid-in capital. The legal reserve may offset losses. After offsetting any deficit, the legal reserve may be transferred to capital and distributed as stock dividends or cash dividends for the amount in excess of 25% of the paid-in capital pursuant to a resolution adopted in the stockholders’ meeting.

TWM distributes and reverses special reserve in accordance with Decree No. 1010012865, Decree No. 1010047490, and “The Q&A for special reserve recognition after adopting IFRS” issued by the FSC.

The 2018 and 2017 earnings appropriations having been proposed by the Board of Directors on April 30, 2019 and resolved by the AGM on June 12, 2018, respectively, were as follows:

Appropriation of legal reserve Reversal from special reserve Cash dividends to stockholders	Appropriation of Earnings For Fiscal Year 2018 For Fiscal Year 2017 $ 1,364,217 $ 1,419,218 (267,322) (327,331) 15,366,223 13,610,406	Dividends Per Share (NT$)
		For Fiscal Year 2018 For Fiscal Year 2017 $ 5.6 $ 5

The cash dividends of $5 per share mentioned above have been distributed from unappropriated earnings for 2017. In addition, the AGM resolved another cash appropriation from the capital surplus generated from the excess of the issuance price over the par value of capital stock amounting to $1,633,249 thousand, that is, $0.6 per share. Total appropriations distributed were $5.6 per share for 2017.

TWM’s 2018 earnings appropriation and cash appropriation from the capital surplus are awaiting approval at the AGM on June 12, 2019. Information on appropriations is available on the Market Observation Post System website of the Taiwan Stock Exchange.

32 -

d. Other equity interests

Exchange
Differences on
Translation
Unrealized
Gain (Loss) on
Financial
Assets at
FVTOCI
Unrealized
Gain (Loss) on
Available-for-
sale Financial
Assets

Balance, January 1, 2019
$ (24,398) $ (70,983) $ -

Exchange differences on
translation

11,871
-
-
Changes in fair value of
financial assets at FVTOCI

-
265,965
-
Changes in other
comprehensive income (loss)
of associates accounted for
using equity method

(1,785)
2,473
-
Income tax effect

-

54,741

-

Balance, March 31, 2019
$ (14,312)
$ 252,196
$ -

Balance, January 1, 2018
$ (16,499)
$ -
$ (346,204)

Effect of retrospective
application

-
(281,785)

346,204

Adjusted balance, January 1,
2018

(16,499) (281,785)
-

Exchange differences on
translation

8,149
-
-
Changes in fair value of
FVTOCI - financial asset

-
(119,486)
-

Changes in other
comprehensive income (loss)
of associates accounted for
using equity method

(94)

(379)

-

Balance, March 31, 2018
$ (8,444)
$ (401,650)
$ -

Total
$ (95,381)
11,871
265,965
688

54,741
$ 237,884
$ (362,703)

64,419
(298,284)
8,149
(119,486)

(473)
$ (410,094)

e. Treasury stock

As of March 31, 2019, December 31, 2018 and March 31, 2018, TWM’s stocks held for the investment purposes by TCCI, TUI and TID, which are all wholly-owned by TWM, were 698,752 thousand shares in total, and the market values were $77,910,804 thousand, $74,417,046 thousand and $76,862,676 thousand, respectively. Since TWM’s stocks held by its subsidiaries are regarded as treasury stock, TWM recognized $29,717,344 thousand as treasury stock. For those treasury stock holders, they have the same rights as the other shareholders, except that they are not allowed to subscribe new shares issued by TWM for cash and exercise the voting rights over such treasury stock.

33 -

f. Non-controlling interests

Beginning balance Effect of retrospective application Adjusted beginning balance Portion attributable to non-controlling interests Profit Exchange differences on translation Unrealized gain (loss) on financial asset at FVTOCI Share of other comprehensive income (loss) of associates accounted for using equity method Changes in equity of associates accounted for using equity method Remeasurements from defined benefit plans Ending balance		For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 6,112,176 16,275 6,128,451 228,001 12,283 3,501 838 - - $ 6,373,074	2018 $ 5,879,738 (39) 5,879,699 181,971 8,226 (3,713) (209) 2,408 146 $ 6,068,528

22. OPERATING REVENUES

Revenue from contracts with customers Telecommunications and value-added services Sales revenue Cable TV and broadband services Other operating revenues		For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 12,243,495 15,768,204 1,515,319 345,655 $ 29,872,673	2018 $ 13,747,364 14,735,944 1,555,645 267,366 $ 30,306,319

a. Contract information

Please refer to Note 34 and to Note 4 to the consolidated financial statements for the year ended December 31, 2018.

34 -

b. Contract balances

Contract assets Bundle sales Less: Allowance for impairment loss Current Non-current	March 31, 2019 $ 8,559,044 (72,608) $ 8,486,436 $ 5,227,317 3,259,119 $ 8,486,436	December 31, 2018 $ 8,755,126 (74,250) $ 8,680,876 $ 5,472,357 3,208,519 $ 8,680,876	March 31, 2018 $ 10,410,023 (88,292)
			$ 10,321,731
			$ 6,431,049 3,890,682
			$ 10,321,731

For accounts and notes receivable, please refer to Note 8.

Contract liabilities Telecommunications and value-added services Sales of goods Cable TV and broadband services Others Current Non-current c. Assets related to contract costs Incremental costs of obtaining a contract - non-current	March 31, 2019 December 31, 2018 $ 1,191,285 $ 1,235,446 137,552 141,343 728,193 694,228 17,628 15,920 $ 2,074,658 $ 2,086,937 $ 2,021,941 $ 2,030,793 52,717 56,144 $ 2,074,658 $ 2,086,937 March 31, 2019 December 31, 2018 $ 2,660,094 $ 2,946,282	March 31, 2018 $ 1,628,702 99,939 785,806 28,697 $ 2,543,144 $ 2,474,721 68,423 $ 2,543,144 March 31, 2018 $ 3,920,540

The Group considered the past experience and the default clauses in the sale contracts and believed the commission paid for obtaining a contract is wholly recoverable. Amortization recognized for the three months ended March 31, 2019 and 2018 was $703,442 thousand and $903,958 thousand, respectively.

35 -

23. NON-OPERATING INCOME AND EXPENSES

a. Other income

For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
2019 2018 $ 15,313 $ 19,029 17,023 16,981 $ 32,336 $ 36,010 For the Three Months Ended March 31
2019 2018 $ (15,967) $ (22,131) 3,867 (28,847) 1,819 3,000 1,674 (696) (799) (1,560) $ (9,406) $ (50,234) For the Three Months Ended March 31
	2019 $ 46,917 70,804 24,561 11,984 154,266 (1,179) $ 153,087 1.34%	2018 $ 78,028 61,044 - 18,128 157,200 (1,446) $ 155,754 1.34%

b. Other gains and losses, net

c. Finance costs

36 -

24. INCOME TAX

a. Income tax recognized in profit or loss

Current income tax expense Current period Others Deferred income tax expense Temporary differences Changes in tax rates Income tax expense	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 743,262 (17,079) 726,183 65,794 - 65,794 $ 791,977	2018 $ 874,535 (32,893) 841,642 55,998 2,861 58,859 $ 900,501

The corporate income tax rate was adjusted from 17% to 20% after the amendment of the Income Tax Law in the ROC on January 1, 2018. The effect of such tax rate change on deferred income tax was recognized in profit or loss. In addition, the tax rate applicable to the undistributed portion of earnings to be made in 2018 and thereafter will be reduced from 10% to 5%. Tax rates used by the group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

b. Income tax recognized in other comprehensive income (loss)

Deferred income tax income Unrealized loss on financial assets at FVTOCI Changes in tax rates - Remeasurements from defined benefit plans	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 54,741 - $ 54,741	2018 $ - 18,302 $ 18,302

c. Income tax examinations

The latest years for which income tax returns have been examined and cleared by the tax authorities were as follows:

Company TWM TCC WMT TNH TFN TT&T TCCI TDC	Year
	2016 2017 2017 2017 2017 (except 2016 not yet examined by the tax authorities) 2017 2017 2017

(Continued)

37 -

Company TDS TPIAC TFNM GFMT GWMT WTVB TUI TID TKT YJCTV MCTV PCTV UCTV GCTV momo FLI FPI FST Bebe Poshe	Year
	2017 2017 2016 2017 2017 2017 2017 2017 2017 2016 2017 2016 2016 2016 2017 2017 2017 2017 2017

(Concluded)

25. EARNINGS PER SHARE

Basic EPS Profit attributable to owners of the parent Effect of potential dilutive common stock: Employees’ compensation Convertible bonds Diluted EPS Profit attributable to owners of the parent (adjusted for potential effect of common stock)	For the Three Months Ended March 31, 2019	For the Three Months Ended March 31, 2019
	Amount After Income Tax Weighted- average Number of Common Stock $ 3,070,973 2,728,656 - 2,260 18,661 88,936 $ 3,089,634 2,819,852	EPS $ 1.13 $ 1.10

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Basic EPS Profit attributable to owners of the parent Effect of potential dilutive common stock: Employees’ compensation Convertible bonds Diluted EPS Profit attributable to owners of the parent (adjusted for potential effect of common stock)	For the Three Months Ended March 31, 2018	For the Three Months Ended March 31, 2018
	Amount After Income Tax Weighted- average Number of Common Stock $ 3,481,360 2,722,081 - 2,407 18,795 90,662 $ 3,500,155 2,815,150	EPS $ 1.28 $ 1.24

Since TWM has the discretion to settle the employees’ compensation by cash or stock, TWM should presume that the entire amount of the compensation will be settled in stock, and the potential stock dilution should be included in the weighted-average number of stock outstanding used in the calculation of diluted EPS, provided there is a dilutive effect. Such dilutive effect of the potential stock needs to be included in the calculation of diluted EPS until employees’ compensation is approved in the following year.

26. CAPITAL MANAGEMENT

The Group maintains and manages its capital to meet the minimum paid-in capital required by the competent authority, and to optimize the balance of liabilities and equity in order to maximize shareholders’ return. By periodically reviewing and measuring relative cost, risk, and rate of return to ensure profit and to maintain adequate financial ratios, the Group may adopt various financing approaches to balance its capital structure in order to meet the demands for capital expenditures, working capital, settlements of liabilities, and dividend payments in its normal course of business for the future.

27. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

Financial assets Financial assets at FVTPL Financial assets at FVTOCI (including current and non-current portions) Financial assets measured at amortized cost (including current and non-current portions) (Note 1) Total	March 31, 2019 $ 85,341 5,289,097 18,510,819 $ 23,885,257	December 31, 2018 $ 81,474 5,019,631 18,678,535 $ 23,779,640	March 31, 2018 $ 698,807 4,691,325 30,127,959 $ 35,518,091

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Financial liabilities Financial liabilities measured at amortized cost (including current and non-current portions) (Note 2) Financial liabilities at FVTPL Total	March 31, 2019 $ 62,185,358 - $ 62,185,358	December 31, 2018 $ 69,992,701 1,861 $ 69,994,562	March 31, 2018 $ 72,201,655 6,961 $ 72,208,616

Note 1: The balances comprise cash and cash equivalents, notes and accounts receivable, other receivables, other financial assets and refundable deposits.
Note 2: The balances comprise short-term borrowings, short-term notes and bills payable, payables, bonds payable, long-term borrowings and guarantee deposits.
b. Fair value of financial instruments
1) Financial instruments not at fair value

Except for the table below, the Group considers that the book value of financial assets and liabilities that are not at fair value is close to the fair value, or the fair value cannot be reliably measured.

Financial liabilities Bonds payable (including current portion)	March 31, 2019 Carrying Amount Fair Value $ 27,950,511 $ 28,728,732	December 31, 2018 Carrying Amount Fair Value $ 28,918,817 $ 29,495,234	March 31, 2018
			Carrying Amount Fair Value $ 21,571,018 $ 22,267,890

The fair value of bonds payable is measured by Level 2 inputs, using a volume-weighted-average price on the OTC at the end of the reporting period.

2) Fair value of financial instruments that are measured at fair value on a recurring basis

The table below provides the related analysis of financial instruments at fair value after initial recognition. Based on the extent that fair value can be observed, the fair value measurements are grouped into Levels 1 to 3:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: Inputs for the assets or liabilities are not based on observable market data (unobservable inputs).
40 -

March 31, 2019

Financial assets at FVTPL Beneficiary certificates Financial assets at FVTOCI Equity instruments Domestic listed stocks Domestic unlisted stocks Limited partnerships Foreign unlisted stocks Financial liabilities at FVTPL December 31, 2018 Financial assets at FVTPL Beneficiary certificates Financial assets at FVTOCI Equity instruments Domestic listed stocks Domestic unlisted stocks Limited partnerships Foreign unlisted stocks Financial liabilities at FVTPL	Level 1 $ 85,341 $ 4,567,908 - - - $ 4,567,908 $ - Level 1 $ 81,474 $ 4,024,556 - - - $ 4,024,556 $ -	Level 2 $ - $ - - - 14,240 $ 14,240 $ - Level 2 $ - $ - - - 10,125 $ 10,125 $ 1,861	Level 3 $ - $ - 173,923 503,637 29,389 $ 706,949 $ - Level 3 $ - $ - 181,178 775,385 28,387 $ 984,950 $ -	Total $ 85,341 $ 4,567,908 173,923 503,637 43,629 $ 5,289,097 $ - Total $ 81,474 $ 4,024,556 181,178 775,385 38,512 $ 5,019,631 $ 1,861

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March 31, 2018

Financial assets at FVTPL Beneficiary certificates Hybrid instruments - Convertible Notes Financial assets at FVTOCI Equity instruments Domestic listed stocks Domestic unlisted stocks Limited partnerships Foreign unlisted stocks Financial liabilities at FVTPL	Level 1 $ 217,924 - $ 217,924 $ 3,621,416 - - - $ 3,621,416 $ -	Level 2 $ - - $ - $ - - - 24,288 $ 24,288 $ 6,961	Level 3 $ - 480,883 $ 480,883 $ - 176,640 842,386 26,595 $ 1,045,621 $ -	Total $ 217,924 480,883 $ 698,807 $ 3,621,416 176,640 842,386 50,883 $ 4,691,325 $ 6,961

There was no transfer between the fair value measurements of Levels 1 and 2 for the three months ended March 31, 2019 and 2018.

Valuation techniques and assumptions used in fair value determination

a) The fair value of financial instruments traded in active markets is based on quoted market prices (including stocks and funds of publicly traded companies).
b) Valuation techniques and inputs applied for Level 2 fair value measurement:

For foreign unlisted stocks, the Group takes price fluctuations and risk-free rates into consideration by using the market comparison approach. Call and put options of convertible bonds that adopted binomial tree valuation model were evaluated by the observable closing price of the stocks, volatility, risk-free interest rate, risk discount rate, and liquidity risk at the balance sheet date.

c) Valuation techniques and inputs applied for Level 3 fair value measurement:
i. Hybrid instruments

Convertible notes were redeemed at maturity in May 2018.

The embedded derivatives instruments of convertible notes are evaluated by using binary tree evaluation models to evaluate fair value, considering significant unobservable inputs are historical volatility of stock prices and liquidity discount rate. As of March 31, 2018, the historical volatility of stock prices was estimated at 43.81%, and the liquidity discount rate was estimated at 5.66%. Assuming all other variables are constant, an increase (or decrease) in the historical volatility of stock prices used in isolation would result in an increase (or decrease) in the liquidity discount rate. There is a positive correlation between historical volatility of stock prices and fair value and a negative correlation between liquidity discount

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rate and fair value. As a result, the fair value is affected by historical volatility of stock prices and liquidity discount rate.

ii. Equity instruments

The significant and unobservable input parameter for assessing the unlisted stocks and limited partnerships held by the Group mainly relates to liquidity discount rate. The evaluation of fair value of unlisted stocks is mainly referenced to the same type of companies through the market approach. The fair value of limited partnerships investments was evaluated through the market approach and income approach. The evaluation and assumptions are mainly referenced to related information of comparable market targets and estimated future cash flows. The liquidity discount rate was estimated at 29.6%, 28% and 28% as of March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

3) Reconciliation of Level 3 fair value measurements of financial instruments

For the Three Months Ended March 31, 2019

	Financial Assets
	at FVTOCI -
	Equity
	Instruments
Balance at January 1, 2019	$ 984,950
Recognized in other comprehensive income (unrealized loss
on financial assets at FVTOCI)	(278,001)
Balance at March 31, 2019	$ 706,949

For the Three Months Ended March 31, 2018

	Financial Assets	Financial Assets
	at FVTPL -	at FVTOCI -
	Convertible	Equity
	Notes	Instruments
Balance at January 1, 2018	$ 490,931	$ 956,286
Recognized in profit or loss (loss on financial assets at
FVTPL)	(10,048)	-
Recognized in other comprehensive income (unrealized gain
on financial assets at FVTOCI)	-	89,335
Balance at March 31, 2018	$ 480,883	$1,045,621

c. Financial risk management
1) The Group’s major financial instruments include equity investments, trade receivables, trade payables, short-term notes and bills payable, bonds payable, borrowings, lease liabilities, etc., and the Group is exposed to the following risks due to usage of financial instruments:
- a) Credit risk
- b) Liquidity risk
- c) Market risk

This note presents information concerning the Group’s risk exposure and the Group’s targets, policies and procedures to measure and manage the risks.

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2) Risk management framework
a) Decision-making mechanism

The Board of Directors is the highest supervisory and decision-making body responsible for assessing material risks, designating actions to control these risks, and keeping track of their execution. In addition, the Operations and Management Committee conducts periodic reviews of each business group’s operating target and performance to meet the Group’s guidance and budget.

b) Risk management policies
i. Promote a risk-management-based business model.
ii. Establish a risk management mechanism that can effectively recognize, evaluate, supervise and control risk.

iii. Create a company-wide risk management structure that can limit risk to an acceptable level.

iv. Introduce best risk management practices and continue to seek improvements.
c) Monitoring mechanism

The Internal Audit Office assesses the potential risks that the Group may face and uses this information as a reference for determining its annual audit plan. The Internal Audit Office reports the results and findings of performing such procedures, and follows up the discrepancies, if any, for actions.

3) Credit risk

Credit risk refers to the risk that a counterparty would default on its contractual obligations resulting in financial loss. The maximum credit exposure of the aforementioned financial instruments is equal to their carrying amounts recognized in consolidated balance sheet as of the balance sheet date. The Group has large trade receivables outstanding with its customers. A substantial majority of the Group’s outstanding trade receivables are not covered by collateral or credit insurance. The Group has implemented ongoing measures including enhancing credit assessments and strengthening overall risk management to reduce its credit risk. While the Group 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 Group serves a large number of unrelated consumers, the concentration of credit risk was limited.

4) Liquidity risk

Liquidity risk is the risk that the Group fails to meet the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to manage liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable loss or damage to the Group’s reputation.

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The Group manages and maintains sufficient level of capital to ensure the requirements of paying estimated operating expenditures, including financial obligations on each contract. The Group also monitors its bank credit facilities to ensure that the provisions of loan contracts are all complied with. As of March 31, 2019, December 31, 2018 and March 31, 2018, the Group had unused bank facilities of $65,655,019 thousand, $58,376,758 thousand and $54,328,355 thousand, respectively.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments, but not including the financial liabilities whose carrying amounts approximate contractual cash flows.

March 31, 2019 Unsecured loans Secured loans Short-term notes and bills payable Bonds payable Lease liabilities December 31, 2018 Unsecured loans Secured loans Short-term notes and bills payable Bonds payable March 31, 2018 Unsecured loans Secured loans Short-term notes and bills payable Bonds payable	Contractual Cash Flows Within 1 Year $ 10,879,686 $ 4,849,143 3,436,151 365,048 4,000,000 4,000,000 29,115,900 4,701,180 9,911,902 3,437,559 $ 57,343,639 $ 17,352,930 $ 18,370,540 $ 12,336,530 3,503,401 366,594 1,500,000 1,500,000 30,130,500 4,701,180 $ 53,504,441 $ 18,904,304 $ 26,721,049 $ 17,689,763 3,717,720 270,553 3,100,000 3,100,000 22,118,310 7,558,010 $ 55,657,079 $ 28,618,326	1-5 Years $ 6,030,543 1,015,994 - 15,234,720 6,291,753 $ 28,573,010 $ 6,034,010 1,020,143 - 16,249,320 $ 23,303,473 $ 9,031,286 1,040,724 - 14,560,300 $ 24,632,310	More Than 5 Years $ - 2,055,109 - 9,180,000 182,590 $ 11,417,699 $ - 2,116,664 - 9,180,000 $ 11,296,664 $ - 2,406,443 - - $ 2,406,443

5) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within an acceptable range and to optimize the return.

The Group carefully evaluates each financial instrument transaction involving any risk such as exchange rate risk, interest rate risk, and market price risk in order to decrease potential influences caused by market uncertainty.

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a) Exchange rate risk

The Group mainly operates in Taiwan, except for international roaming services. Most of the operating revenues and expenses are measured in NTD. A small portion of the expenses is paid in USD, EUR, etc.; thus, the Group purchases currency at the spot rate based on the conservative principle in order to hedge exchange rate risk.

The Group’s foreign currency assets and liabilities exposed to significant exchange rate risk were as follows:

Foreign currency assets Monetary items RMB USD EUR Non-monetary items RMB USD HKD THB Foreign currency liabilities Monetary items USD EUR HKD JPY Foreign currency assets Monetary items RMB USD EUR Non-monetary items RMB USD HKD THB Foreign currency liabilities Monetary items USD EUR	March 31, 2019
	Foreign Currencies Exchange Rate New Taiwan Dollars $ 29,123 4.578 $ 133,323 31,295 30.845 965,322 751 34.68 26,047 158,908 4.578 727,482 17,281 30.845 533,026 3,624 3.929 14,240 121,960 0.974 118,789 19,729 30.845 608,559 108 34.68 3,743 12,556 3.929 49,331 49,326 0.28 13,821 December 31, 2018
	Foreign Currencies Exchange Rate New Taiwan Dollars $ 17,207 4.464 $ 76,812 37,052 30.79 1,140,858 609 35.05 21,323 171,713 4.464 766,529 26,105 30.79 803,772 2,576 3.93 10,125 125,776 0.953 119,889 11,702 30.79 360,320 19 35.05 677

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Foreign currency assets Monetary items RMB USD EUR Non-monetary items RMB USD HKD THB Foreign currency liabilities Monetary items RMB USD EUR	March 31, 2018
	Foreign Currencies Exchange Rate New Taiwan Dollars $ 22,056 4.644 $ 102,426 33,731 29.105 981,732 617 35.87 22,124 160,844 4.644 746,964 29,857 29.105 868,981 136,238 3.708 505,171 126,813 0.938 119,002 4,444 4.644 20,638 16,722 29.105 486,694 37 35.87 1,338

The Group’s foreign exchange gains and losses, including realized and unrealized, for the three months ended March 31, 2019 and 2018, were net exchange gain of $1,674 thousand and net exchange loss of $696 thousand, respectively. Due to the variety of functional currencies, the Group could not disclose the foreign exchange gains (losses) for each foreign currency with significant influence.

Sensitivity analysis

The Group’s exchange rate risk comes mainly from conversion gains and losses of accounts denominated in monetary items of foreign currencies. If there had been an unfavorable 5% movement in the levels of foreign exchanges against NTD at the end of the reporting period (with other factors remaining constant at the end of the reporting period and with analyses of the two periods on the same basis), profit would have decreased by $22,462 thousand and $29,881 thousand for the three months ended March 31, 2019 and 2018, respectively.

b) Interest rate risk

The Group issued unsecured corporate bonds and signed facility agreements with banks for locking in medium- and long-term fixed interest rates. In respect of interest payables, the fluctuation of interest rates does not affect the Group significantly.

The carrying amounts of the Group’s financial assets and financial liabilities exposed to interest rate risk were as follows:

		March 31,	December 31,	December 31,	March 31,
		2019		2018	2018
Fair value interest rate risk
Financial assets	$	5,427,534	$	4,290,492 $	7,412,137
Financial liabilities		40,060,818		33,285,029	32,498,060
Cash flow interest rate risk
Financial assets		2,987,472		3,750,159	2,515,431
Financial liabilities		7,141,843		9,162,674	12,408,607

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Sensitivity analysis

The following sensitivity analysis is based on the exposure to interest rate risk of derivative and non-derivative instruments at the end of the reporting period. For floating-rate assets and liabilities, the analysis assumes that the balances of outstanding assets and liabilities at the end of the reporting period have been outstanding for the whole period and that the changes in interest rates are reasonable. If the interest rate had increased by 50 basis points (with other factors remaining constant at the end of the reporting period and with analyses of the two periods on the same basis), profit would have decreased by $5,193 thousand and $12,366 thousand for the three months ended March 31, 2019 and 2018, respectively.

c) Other market price risk

The exposure to equity price risk is mainly due to holding of stocks and beneficiary certificates. The Group manages the risk by maintaining portfolios of investments with different risks and by continuously monitoring the future developments and market trends of investment targets.

Sensitivity analysis

If the prices of equity instruments had decreased by 5% (with other factors remaining constant and with the analyses of the two periods on the same basis), profit would have decreased by $4,267 thousand and $34,940 thousand since the fair value of financial assets at FVTPL decreased for the three months ended March 31, 2019 and 2018, respectively, and other comprehensive income would have decreased by $264,455 thousand and $234,566 thousand since the fair value of financial assets at FVTOCI decreased for the three months ended March 31, 2019 and 2018, respectively.

28. RELATED-PARTY TRANSACTIONS

a. Parent company and ultimate controlling party

TWM is the ultimate controlling party of the Group.

b. Related party name and nature of relationship

Related Party Nature of Relationship GHS Associates TPE Associates kbro Media Associates TVD Shopping Associates ADT Associates Beijing Global JiuSha Media Technology Co., Ltd. Associates (subsidiary of GHS) Beijing YueShih JiuSha Media Technology Co., Ltd. Associates (subsidiary of GHS) Good Image Co., Ltd. Associates (subsidiary of kbro Media) Fubon Life Insurance Co., Ltd. (Fubon Life) Other related parties Fubon Insurance Co., Ltd. (Fubon Ins.) Other related parties Fubon Securities Investment Trust Co., Ltd. (FSIT) Other related parties Fubon Sports & Entertainment Co., Ltd. Other related parties Taipei Fubon Commercial Bank Co., Ltd. (TFCB) Other related parties Fubon Financial Holding Co., Ltd. Other related parties Fubon Life Insurance (HK) Ltd. Other related parties Fubon Securities Co., Ltd. Other related parties

(Continued)

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Nature of Relationship

Related Party

Fubon Futures Co., Ltd. Other related parties Fubon Investment Services Co., Ltd. Other related parties Fubon Marketing Co., Ltd. Other related parties Fu-Sheng Life Insurance Agency Co., Ltd. Other related parties Fu-Sheng General Insurance Agency Co., Ltd. Other related parties Fubon Financial Venture Capital Co., Ltd. Other related parties Fubon Gymnasium Co., Ltd. Other related parties Fubon Asset Management Co., Ltd. Other related parties One Production Film Co., Ltd. Other related parties Fubon Bank (China) Co., Ltd. Other related parties Fubon Land Development Co., Ltd. Other related parties Fubon Property Management Co., Ltd. Other related parties Fubon Real Estate Management Co., Ltd. Other related parties Fubon Hospitality Management Co., Ltd. Other related parties Chung Hsing Constructions Co., Ltd. Other related parties Ming Dong Co., Ltd. Other related parties Fu Yi Health Management Co. Ltd. Other related parties Dao Ying Co., Ltd. Other related parties Fubon Xinji Investment Co., Ltd. Other related parties Mitchiller Media Co., Ltd. Other related parties Dai-Ka Ltd. Other related parties Taiwan Mobile Foundation (TMF) Other related parties Taipei New Horizon Foundation (TNHF) Other related parties Fubon Cultural & Educational Foundation Other related parties Fubon Charity Foundation Other related parties Fubon Art Foundation Other related parties Taipei Fubon Bank Charity Foundation Other related parties Taipei New Horizon Management Agency Other related parties (Concluded)

c. Significant transactions with related parties
1) Operating revenue

Associates Other related parties	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 22,955 190,301 $ 213,256	2018 $ 17,133 178,233 $ 195,366

The Group renders telecommunications, sales, maintenance, lease services, etc., to the related parties. The transaction terms with related parties were not significantly different from those with third parties.

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2) Purchases

For the Three Months Ended March 31

Associates Other related parties	2019 $ 92,339 128,710 $ 221,049	2018 $ 112,376 232,645 $ 345,021

The entities mentioned above provide logistics, copyright, member service costs and other services. The transaction terms with related parties were not significantly different from those with third parties.

3) Receivables due from related parties

Account Related Party Categories Accounts receivable Associates Accounts receivable Other related parties Other receivables Associates Other receivables Other related parties	March 31, 2019 December 31, 2018 $ 5,937 $ 11,249 144,263 126,709 $ 150,200 $ 137,958 $ 102,882 $ 113,187 48,727 59,108 $ 151,609 $ 172,295	March 31, 2018 $ 6,685 124,453 $ 131,138 $ 93,258 31,610 $ 124,868

Receivables from related parties above were not secured with collateral, and no provisions for impairment loss were accrued.

4) Payables due to related parties

Account Related Party Categories Accounts payable Associates Accounts payable Other related parties Other payables Other related parties Prepayments Other related parties Fubon Ins. Others	March 31, 2019 December 31, 2018 $ 82,301 $ 91,266 59,152 88,322 $ 141,453 $ 179,588 $ 44,293 $ 68,150 March 31, 2019 December 31, 2018 $ 46,737 $ 15,467 18,900 - $ 65,637 $ 15,467	March 31, 2018 $ 81,153 130,398 $ 211,551 $ 115,436 March 31, 2018 $ 80,015 4,125
		$ 84,140

5) Prepayments

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6) Bank deposits, time deposits and other financial assets (including current and non-current portions)

Other related parties TFCB Others	March 31, 2019 December 31, 2018 $ 1,567,033 $ 1,284,174 29,014 23,001 $ 1,596,047 $ 1,307,175	March 31, 2018 $ 1,807,437 3,902 $ 1,811,339

7) Cash equivalents

The Group sold the government bonds with repurchase rights, with the purchased amount of $146,013 thousand, to TFCB for $146,034 thousand, and recognized $21 thousand as interest income for the three months ended March 31, 2019.

8) Financial assets at FVTPL - current

The Group sold the beneficiary certificates, with the purchased amount of $100,000 thousand, to FSIT for $88,184 thousand for the three months ended March 31, 2018. The cumulative losses were $11,816 thousand, and the Group recognized $2,249 thousand as loss in the first quarter of 2018.

9) Lease arrangements

Acquisition of right-of-use assets

	For	the Three
	Months Ended
	March 31, 2019
Other related parties	$	8,528
Lease liabilities (including current and non-current portions)
	March 31,
		2019
Associates	$	11,824
Other related parties		718,885
	$	730,709
Interest expenses
	For	the Three
	Months Ended
	March 31, 2019
Associates	$	36
Other related parties		1,593
	$	1,629

The leases are conducted by referring to general market prices, and all the terms and conditions conform to normal business practices.

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10) Others

Guarantee deposits Other related parties Other current liabilities - receipts under custody Other related parties Operating expenses Other related parties TMF TNHF Fubon Life Others	March 31, 2019 $ 49,839 $ 84,873	December 31, 2018 March 31, 2018 $ 51,548 $ 48,489 $ 69,057 $ 17,138 For the Three Months Ended March 31	December 31, 2018 March 31, 2018 $ 51,548 $ 48,489 $ 69,057 $ 17,138 For the Three Months Ended March 31	December 31, 2018 March 31, 2018 $ 51,548 $ 48,489 $ 69,057 $ 17,138 For the Three Months Ended March 31	December 31, 2018 March 31, 2018 $ 51,548 $ 48,489 $ 69,057 $ 17,138 For the Three Months Ended March 31
				2019 $ 3,825 3,000 74 78,135 $ 85,034	2018 $ 3,315 3,000 35,081 96,389 $ 137,785

d. Key management compensation

The amounts of remuneration of directors and key executives were as follows:

Short-term employee benefits Termination and post-employment benefits	For the Three Months Ended March 31	For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 78,552 12,448 $ 91,000	2018 $ 79,123 2,310 $ 81,433

29. ASSETS PLEDGED

The assets pledged as collateral for bank loans, purchases, performance bonds and lawsuits were as follows:

Other current financial assets Services concessions Other non-current financial assets	March 31, 2019 December 31, 2018 $ 157,124 $ 160,033 7,104,093 7,148,773 147,084 131,110 $ 7,408,301 $ 7,439,916	March 31, 2018 $ 1,044,139 7,282,812 113,676 $ 8,440,627

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30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. Unrecognized commitments

Purchases of property, plant and equipment Purchases of cellular phones	March 31, 2019 December 31, 2018 $ 4,878,808 $ 806,935 $ 2,426,323 $ 1,872,470	March 31, 2018 $ 3,244,768 $ 2,906,989

b. As of March 31, 2019, December 31, 2018 and March 31, 2018, the amounts of endorsements and guarantees (provided to group entities) were $21,550,000 thousand, $21,550,000 thousand and $21,619,660 thousand, respectively.
c. In accordance with the NCC’s policy and regulations, TWM entered into a contract with First Commercial Bank Co., Ltd., which provides a performance guarantee for advance receipts from prepaid cards and electronic gift certificates, totaling $578,705 thousand and $20,913 thousand, respectively, as of March 31, 2019.

In accordance with the NCC’s policy and regulations, cable television companies should provide performance bonds based on a certain proportion of the advance receipts from their subscribers. As of March 31, 2019, the cable television companies had provided $74,395 thousand as performance bonds, classified as other non-current financial assets.

In accordance with the Ministry of Economic Affairs’ policy and regulations, momo entered into a contract with First Commercial Bank Co., Ltd., which provides a performance guarantee for advance receipts from prepaid bonuses and electronic tickets totaling $75,271 thousand and $25,390 thousand, respectively, as of March 31, 2019.

d. On January 15, 2009, TNH signed the BOT contract with the Department of Cultural Affairs of Taipei City Government. The primary terms of the contract are summarized as follows:
1) Construction and operating period:

The construction and operating period is 50 years from the day following the signing of the contract.

2) Development concession:

The total initial amount of concession was $1,238,095 thousand (tax excluded). According to the supplemental agreement signed in November 2014, the concession will be paid with additional business tax from the signing date of the supplemental agreement; thus, the concession will be increased by $48,750 thousand. The rest of the concession will be paid over 14 years from fiscal year 2015. As of March 31, 2019, $660,156 thousand (tax included) of the concession had been paid.

3) Performance guarantee:

As of March 31, 2019, TNH had provided a $32,500 thousand performance guarantee regarding the BOT contract.

4) Rental of land:

During the construction period, TNH should pay land value tax (1% of the announced land value) and other expenses.

53 -

During the operating period, TNH should pay 60% of 5% of the announced land value, that is, 3% of the announced land value. According to the supplemental agreement signed in November 2014, the concession will be paid with additional business tax from the date of agreement signing.

e. In May 2015, Far EasTone Telecommunications (“FET”) filed a request for provisional injunction with the Taipei District Court (the “Court”) to prohibit TWM from using a portion of its C1 spectrum block (1715.1-1721.3/1810.1-1816.3 MHz). FET offered a security deposit of $1,048,703 thousand for the Court to bring the requested injunction into effect. The Court granted the request but allowed TWM to provide a counter-security deposit of $927,000 thousand to continue the use of the spectrum block. TWM filed for the counter-security and the use of the C1 spectrum to maintain the status quo, and the counter-security deposit was reclaimed in June 2018. The rights and interests of the subscribers will not be affected. TWM filed a claim in August 2017 to revoke the aforementioned ruling; the revocation was approved by the Taiwan High Court (the “High Court”) in January 2018.

Besides, in August 2015, FET filed a civil statement of complaint with the Court, in which FET claims that (i) TWM shall apply for the return the C4 spectrum block (1748.7-1754.9/1843.7-1849.9 MHz) back to the NCC; (ii) TWM shall not use the C4 spectrum block; (iii) TWM shall not use the C1 spectrum block until TWM’s application for the return of the C4 spectrum block is approved by the NCC; and (iv) TWM shall provide $1,005,800 thousand to FET as compensation. In May 2016, the Court decided against TWM regarding claims (i), (ii), and (iii) of the lawsuit; and the Court decided against FET regarding claim (iv) of the lawsuit. FET offered a security deposit of $320,630 thousand for the provisional execution of claims (i) to (iv). TWM offered a counter-security deposit of $961,913 thousand in order to be exempted from the provisional execution of claims (i) to (iv). In addition, TWM offered a counter-security deposit for the exemption from provisional execution of the sentence, and the counter-security deposit was reclaimed in March 2018. TWM and FET appealed the aforementioned sentences respectively. The judgment dismissed by the High Court were as follows: (1) TWM “shall apply for the return of the C4 spectrum block to the NCC immediately”, “shall not use the C4 spectrum block in any way”, and “TWM shall not use the C1 spectrum block before the C4 spectrum block has been returned to and approved by the NCC”, and (2) the claim stated in section 2(2) below, in which the corresponding portion of FET’s claimed provisional execution and litigation expenses were rejected. 2. (1) For the dismissed portion stated in the above section (1), FET's claim and motion of provisional execution in the first instance were rejected; and (2) for the dismissed portion stated in the above section 1(2), TWM shall pay FET $765,779 thousand, as well as a 5% annual interest payment, for the period starting from September 5, 2015 to the payment date, on $152,584 thousand of the above amount. 3. The rest of FET's appeals were rejected. 4. TWM shall bear half of the litigation expenses in the first and second instances, and FET shall bear the rest. 5. Regarding the portion of the judgment regarding TWM's payment, FET may file a provisional execution with a collateral of $255,260 thousand or a negotiable certificate deposit (NCD) issued by Far Eastern International Bank for the equal amount; and TWM may provide a counter-security of $765,779 thousand to be exempted from the above FET provisional execution. 6. The rest of FET's motions on provisional execution were rejected. TWM and FET appealed the sentence respectively. In addition, FET offered a counter-security deposit for the exemption from provisional execution of the sentence, and obtained $791,867 thousand according to the execution decree in May 2018. The amount was recognized under other current assets by TWM.

FET further filed a provisional injunction in April 2016, in which FET claimed that TWM shall apply for the return of the C4 spectrum block to the NCC immediately and TWM shall not use the C1 and C4 spectrum blocks. The Court declared that after FET has provided a collateral of $143,050 thousand, TWM shall apply for the return of the C4 spectrum block to the NCC, and TWM shall be prohibited from the use of the C4 spectrum block; the remainder of FET’s claims were rejected. TWM may provide a counter-security deposit of $547,119 thousand to be exempted from, or to move for the revocation of, the above FET provisional injunction. TWM provided the counter-security deposit so that TWM would not be required to return the C4 spectrum block and could maintain the status quo of its use of the C4 spectrum block, and the counter-security deposit was reclaimed in March 2018. TWM and FET have filed an appeal against the unfavorable portion of the judgment. After the ruling declared by the High Court, TWM and FET both appealed the judgment to the Supreme Court. The Supreme Court dismissed the aforementioned ruling and remanded the cases to the High Court. The provisional

54 -

injunction and aforementioned appeal filed by FET were rejected by the High Court after the remand ruling. FET re-appealed to the Supreme Court, and the Supreme Court rejected the re-appeal in January 2018; thus, the rejection of the provisional injunction filed by FET was the final judgment.

31. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

In April 2019, the Board of Directors of momo resolved that momo would sign the lease agreement of warehouse with Infomedia Inc., with lease terms of 5 years from July 2019. The anticipated amount of acquired right-of-use assets would be $390,073 thousand.

32. OTHERS

Employee benefits, depreciation, and amortization are summarized as follows:

Employee benefits Salary Insurance expenses Pension Others Depreciation Amortization	For the Three Months Ended March 31	For the Three Months Ended March 31
	2019 Classified as Operating Costs Classified as Operating Expenses Total $ 559,729 $ 1,192,700 $ 1,752,429 46,044 105,421 151,465 24,925 52,589 77,514 25,344 65,172 90,516 3,064,283 253,562 3,317,845 757,649 810,285 1,567,934	2018
		Classified as Operating Costs Classified as Operating Expenses Total $ 561,084 $ 1,132,980 $ 1,694,064 44,490 98,960 143,450 24,680 51,605 76,285 26,216 66,105 92,321 2,446,896 84,001 2,530,897 800,218 1,008,197 1,808,415

Information of employees’ compensation and remuneration of directors

According to TWM’s Articles, the estimated employees’ compensation and remuneration of directors are set at the rates of 1% to 3% and no higher than 0.3%, respectively, of profit before income tax, employees’ compensation, and remuneration of directors. Estimations for employees’ compensation were $96,063 thousand and $110,663 thousand, and remuneration to directors were $9,606 thousand and $11,066 thousand, which were made by applying the rates to the aforementioned profit before income tax, for the three months ended March 31, 2019 and 2018, respectively.

If there is a change in the approved amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in accounting estimate in the next year.

The employees’ compensation and remuneration of directors of 2018 and 2017 shown below were approved by the Board of Directors on January 31, 2019 and February 1, 2018, respectively. The differences with the amounts recognized in the consolidated financial statements have been adjusted in 2019 and 2018, respectively.

Amounts approved by the Board of Directors Amounts recognized in the consolidated financial statements	For the Year Ended December 31	For the Year Ended December 31
	2018 Employees’ Compensation Paid in Cash Remuneration of Directors $ 459,368 $ 45,937 $ 432,341 $ 43,234	2017
		Employees’ Compensation Paid in Cash Remuneration of Directors $ 453,359 $ 45,336 $ 438,728 $ 43,873

Information on the employees’ compensation and remuneration of directors approved by the Board of Directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

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33. ADDITIONAL DISCLOSURES

a. Information on significant transactions and b. Information on investees:
1) Financing extended to other parties: Table 1 (attached)
2) Endorsements/guarantees provided to other parties: Table 2 (attached)
3) Marketable securities held: Table 3 (attached) (excluding investments in subsidiaries and associates)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None
7) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 4 (attached)
8) Receivables from related parties of at least NT$100 million or 20% of the paid-in capital: Table 5 (attached)
9) Names, locations and related information of investees on which TWM exercised significant influence: Table 6 (attached) (excluding information on investment in Mainland China)
10) Trading in derivative instruments: None
11) Business relationships between the parent and the subsidiaries and significant intercompany transactions: Table 7 (attached)
c. Information on investment in Mainland China:
1) The names of investees in Mainland China, the main businesses and products, issued capital, method of investment, information on inflow or outflow of capital, ownership, net income or loss and recognized investment gain or loss, ending balance, amount received as earnings distributions from the investment, and limitation on investment: Table 8 (attached)
2) Significant direct or indirect transactions with the investee companies, the prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in Mainland China on financial reports: Table 7 (attached)
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34. SEGMENT INFORMATION

The Group divides its business into four reportable segments with different market attributes and operation modes. The four segments are described as follows.

Telecommunications: Providing mobile communication services, data mobile services, and fixed-line services.

Retail: Providing online shopping, TV shopping and catalog shopping.

Cable Television: Providing pay TV and cable broadband services.

Others: Business other than telecommunication, retail, and cable television.

					Adjustments	Adjustments
For the Three Months	Telecommuni-		Cable			and
Ended March 31, 2019	cation	Retail	Television	Others	Eliminations		Total
Operating revenues	$ 16,568,562	$ 11,735,627	$ 1,552,498 $	147,418	$	(131,432)	$ 29,872,673
Operating costs	10,319,724	10,513,795	854,307	86,871		(93,485)	21,681,212
Operating expenses	3,144,255	769,600	195,985	15,059		(49,060)	4,075,839
Net other income and
expenses	115,608	1,514	3,948	2,710		(11,308)	112,472
Profit	3,220,191	453,746	506,154	48,198		(195)	4,228,094
EBITDA (Note)	6,914,436	603,224	800,873	101,205		(9,307)	8,410,431
					Adjustments
For the Three Months	Telecommuni-		Cable			and
Ended March 31, 2018	cation	Retail	Television	Others	Eliminations		Total
Operating revenues	$ 18,472,645	$ 10,183,809	$ 1,599,062 $	141,938	$	(91,135)	$ 30,306,319
Operating costs	11,319,951	9,128,917	900,806	87,986		(55,764)	21,381,896
Operating expenses	3,490,157	664,536	209,441	16,483		(48,019)	4,332,598
Net other income and
expenses	153,302	2,610	123	-		(9,158)	146,877
Profit	3,815,839	392,966	488,938	37,469		3,490	4,738,702
EBITDA (Note)	6,765,562	463,800	809,330	90,593		44,771	8,174,056

Note: The Group uses EBITDA (Operating income + Depreciation + Amortization expenses of intangible assets) as the measurement for segment profit and the basis of performance assessment.

Geographical information

The Group’s revenues are generated mostly from domestic business. Overseas revenues are primarily generated from international calls and data services.

Consolidated geographic information for revenues was as follows:

Taiwan, ROC Overseas		For the Three Months Ended March 31	For the Three Months Ended March 31
		2019 $ 29,157,441 715,232 $ 29,872,673	2018 $ 29,516,480 789,839 $ 30,306,319

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TABLE 1

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

FINANCING EXTENDED TO OTHER PARTIES FOR THE THREE MONTHS ENDED MARCH 31, 2019

															(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)

No.	Lending Company	Borrowing Company	Financial Statement Account	Related Parties	Maximum Balance for the Period (Note 1)	Ending Balance (Note 1)	Drawdown Amounts	Interest Rate	Nature of Financing	Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral		Lending Limit for Each Borrowing Company	Lending Company’s Lending Amount Limits	Note
													Item	Value
1	TCC	TWM TFC	Other receivables Other receivables	Yes Yes	$ 400,000 700,000	$ 400,000 700,000	$ 203,000 -	1.09511% -	Short-term financing Short-term financing	$ - -	Operation requirements Operation requirements	$ - -	- -	$ - -	$ 36,544,748 36,544,748	$ 36,544,748 36,544,748	Note 2 Note 2
2	WMT	TWM TKT TFNM WTVB	Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes	3,000,000 100,000 2,880,000 600,000	3,000,000 100,000 2,600,000 600,000	2,868,000 - 900,000 355,000	1.09367%-1.09511% - 1.09489% 1.09422%-1.09522%	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Operation requirements Operation requirements Operation requirements Operation requirements	- - - -	- - - -	- - - -	8,412,969 8,412,969 8,412,969 8,412,969	8,412,969 8,412,969 8,412,969 8,412,969	Note 2 Note 2 Note 2 Note 2
3	TFN	TWM TCC	Other receivables Other receivables	Yes Yes	9,000,000 700,000	9,000,000 700,000	7,150,000 -	1.09378%-1.09511% -	Short-term financing Short-term financing	- -	Operation requirements Operation requirements	- -	- -	- -	23,881,964 23,881,964	23,881,964 23,881,964	Note 2 Note 2
4	YJCTV	TFNM	Other receivables	Yes	140,000	140,000	140,000	1.09456%	Transactions	461,624	-	-	-	-	461,624	461,624	Notes 3 and 4
5	PCTV	TFNM	Other receivables	Yes	520,000	520,000	520,000	1.09456%	Transactions	541,553	-	-	-	-	541,553	541,553	Notes 3 and 4
6	GCTV	TFNM	Other receivables	Yes	250,000	250,000	250,000	1.09456%	Short-term financing	-	Repayment of financing	-	-	-	280,482	280,482	Note 3

Note 1: The maximum balance for the period and the ending balance represent quotas, not actual drawdown.

Note 2: Where funds are loaned for reasons of business dealings and short-term financing needs, the amount of loaned funds shall be limited to 40% of the lending company’s net worth. For short-term financing needs, the aggregate amount of loaned funds shall not exceed 40% of the lending company’s net worth. The individual loan funds shall be limited to the lowest amount of the following items: 1) 40% of the lending company’s net worth; 2) The amount that the lending company invests in the borrowing entities; or 3) An amount equal to (the share portion of the borrowing entities that the lending company invests in) * (the total loaning amounts of the borrowing company). In the event that a lending company directly and indirectly owns 100% of the borrowing company, or the borrowing company directly and indirectly owns 100% of the lending company, the individual lending amount and the aggregate amount of loaned funds shall not exceed 40% of the lending company’s net worth.

Note 3: Where funds are loaned for reasons of business dealings and short-term financing needs, the amount of loaned funds shall be limited to the total amount of business dealings and 40% of the lending company’s net worth. 1) For reasons of business dealings: The individual lending amount and the aggregate amount of loaned funds shall not exceed the amount of business dealings and the total amount of business dealings, respectively. 2) For short-term financing needs: The individual lending amount and the aggregate amount of loaned funds shall not exceed 40% of the lending company’s net worth.

Note 4: Where funds are loaned for reasons of business dealings, the aggregate amount of loans and the maximum amount permitted to a single borrower shall be prescribed within the aggregate amount of business transactions.

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TABLE 2

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED TO OTHER PARTIES FOR THE THREE MONTHS ENDED MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

No.	Company Providing Endorsements/ Guarantees	Receiving Party	Receiving Party	Limits on Endorsements/ Guarantees Amount Provided to Each Entity	Maximum Balance for the Period (Note 1)	Ending Balance (Note 1)	Drawdown Amounts (Note 1)	Amount of Endorsements/ Guarantees Collateralized by Property	Ratio of Accumulated Endorsements/ Guarantees to Net Worth of the Guarantor (Note 1)	Maximum Endorsements/ Guarantees Amount Allowable	Guarantee Provided by Parent Company	Guarantee Provided by a Subsidiary	Guarantee Provided to Subsidiaries in Mainland China	Note
		Name	Nature of Relationship
0	TWM	TFN TKT	Note 2 Note 2	$ 42,000,000 313,800	$ 21,500,000 50,000	$ 21,500,000 50,000	$ 8,504,925 50,000	$ - -	32.42 0.08	$ 66,307,909 66,307,909	Y Y	N N	N N	Notes 3 and 4 Note 3

Note 1: The maximum endorsement/guarantee balance for the period, the ending balance, and the drawdown amounts represent quotas, not actual drawdown.

Note 2: Direct/indirect subsidiary.

Note 3: For 100% directly/indirectly owned subsidiaries, the aggregate endorsement/guarantee amount provided shall not exceed the net worth of TWM, and the upper limit for each subsidiary shall be double the investment amount.

Note 4: Including US$65,000 thousand.

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TABLE 3

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES) MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

Investing Company	Marketable Securities Type and Name	Relationship with the Securities Issuer	Financial Statement Account		March 31, 2019	March 31, 2019		Note
				Units/Shares (Thousands)	Carrying Value	Percentage of Ownership %	Fair Value
TWM TCC TFN TCCI TUI TID TFNM	Stock Chunghwa Telecom Co., Ltd. Asia Pacific Telecom Co., Ltd. Bridge Mobile Pte Ltd. Limited Partnerships Grand Academy Investment, L.P. Starview Heights Investment, L.P. Stock Arcoa Communication Co., Ltd. Stock Taiwan High Speed Rail Corporation Stock TWM Great Taipei Broadband Co., Ltd. Stock TWM Stock TWM Beneficiary Certificates Dragon Tiger Capital Partners Limited - Class B Dragon Tiger Capital Partners Limited - Class C	- - - - - - - TWM - TWM TWM - -	Current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI Non-current financial assets at FVTOCI	2,174 148,255 800 - - 6,998 90,212 200,497 10,000 410,665 87,590 0.2 0.0335	$ 238,000 1,082,262 29,389 354,656 148,981 91,816 3,247,646 22,355,389 37,275 45,789,179 9,766,236 - -	0.028 3.45 10 21.67 21.67 5.21 1.6 5.84 6.67 11.96 2.55 0.33 0.056	$ 238,000 1,082,262 29,389 354,656 148,981 91,816 3,247,646 22,355,389 37,275 45,789,179 9,766,236 - -	Note 1 Note 1

(Continued)

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Investing Company	Marketable Securities Type and Name	Relationship with the Securities Issuer	Financial Statement Account		March 31, 2019	March 31, 2019		Note
				Units/Shares (Thousands)	Carrying Value	Percentage of Ownership %	Fair Value
momo	Beneficiary Certificates Fubon Strategic High Income Fund B Stock Media Asia Group Holdings Limited We Can Medicines Co., Ltd.	Other related party - -	Current financial assets at FVTPL Current financial assets at FVTOCI Non-current financial assets at FVTOCI	9,151 43,668 2,400	$ 85,341 14,240 44,832	- 2.04 7.73	$ 85,341 14,240 44,832

Note 1: Percentage of ownership is the percentage of capital contribution.

Note 2: For the information on investments in subsidiaries and associates, see Table 6 and Table 8 for details.

(Concluded)

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TABLE 4

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE THREE MONTHS ENDED MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase/Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
TWM TFN TT&T TFNM YJCTV PCTV	TFN TT&T TWM TWM YJCTV PCTV TFNM TFNM	Subsidiary Subsidiary Ultimate parent Ultimate parent Subsidiary Subsidiary Parent Parent	Purchase Purchase Sale Sale Channel leasing fee Channel leasing fee Royalty for copyright Royalty for copyright	$ 1,240,542 262,844 1,249,581 262,844 106,341 124,084 106,341 124,084	(Note 2) (Note 2) 52 90 13 15 51 51	Based on contract terms Based on contract terms Based on contract terms Based on contract terms Based on contract terms Based on contract terms Based on contract terms Based on contract terms	- - - - Note 4 Note 4 Note 4 Note 4	- - - - Note 4 Note 4 Note 4 Note 4	$ (461,374) (86,504) 461,374 86,504 - - - -	(Note 3) (Note 3) 47 91 - - - -	Note 1 Note 1

Note 1: Accounts receivable (payable) was the net amount after being offset.

Note 2: Including operating costs and operating expenses.

Note 3: Including accounts payable and other payables.

Note 4: The companies authorized a related party to deal with the copyright fees for cable television. As said account item is the only one, there is no comparable transaction.

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TABLE 5

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Ending Balance	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period	Allowance for Impairment Loss
						Amount	Action Taken
TCC WMT TFN YJCTV PCTV GCTV momo	TWM TWM TFNM WTVB TWM TFNM TFNM TFNM TPE	Parent Parent Subsidiary Subsidiary Ultimate parent Parent Parent Parent Associate	Other receivables Other receivables Other receivables Other receivables Accounts receivable Other receivables Accounts receivable Other receivables Accounts receivable Other receivables Accounts receivable Other receivables Accounts receivable Other receivables	$ 203,390 2,873,955 904,293 355,572 461,374 7,225,408 7,458 140,588 8,469 523,477 3,490 250,693 309 102,630	10.76 5.71 5.60 5.71 4.31	$ - - - - - - - - - - - - - -	- - - - - - - - - - - - - -	$ - 2,873,955 904,293 355,572 389,707 24,391 - - - - - - - 102,630	$ - - - - - - - - - - - - - -

63 -

TABLE 6

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS AND RELATED INFORMATION OF INVESTEES ON WHICH TWM EXERCISED SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) FOR THE THREE MONTHS ENDED MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of March 31, 2019	Balance as of March 31, 2019	Balance as of March 31, 2019	Net Income (Loss) of the Investee	Investment Income (Loss)	Note
				March 31, 2019	December 31, 2018	Shares (Thousands)	Percentage of Ownership %	Carrying Value
TWM TCC WMT TFN TCCI TFNM GFMT GWMT	TCC WMT TNH ADT TFN TT&T TWM Holding TCCI TDC TDS TPIAC TFC TFNM GFMT GWMT WTVB momo TUI TFN HK Ltd. TID TKT YJCTV MCTV PCTV UCTV GCTV kbro Media UCTV GCTV	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	Investment Investment Building and operating Songshan Cultural and Creative Park BOT project Technology development of mobile payment and information processing services Fixed line service provider Call center service and telephone marketing Investment Investment Mobile phone wholesaling and TV program production Commissioned maintenance service Property insurance agent Type II telecommunications business Type II telecommunications business Investment Investment TV program provider Wholesale and retail sales Investment Telecommunications service provider Investment Digital music service Cable TV service provider Cable TV service provider Cable TV service provider Cable TV service provider Cable TV service provider Film distribution, arts and literature service, and entertainment Cable TV service provider Cable TV service provider	$ 40,397,288 16,802,000 1,918,655 60,000 21,000,000 56,210 347,951 17,285,441 112,000 25,000 5,000 200,000 5,210,443 16,984 92,189 222,417 8,129,394 22,314,536 2,924 3,602,782 156,900 2,061,522 510,724 3,261,073 1,986,250 1,221,002 292,500 16,218 91,910	$ 40,397,288 16,802,000 1,918,655 60,000 21,000,000 56,210 347,951 17,285,441 112,000 25,000 5,000 5,000 5,210,443 16,984 92,189 222,417 8,129,394 22,314,536 2,924 3,602,782 129,900 2,061,522 510,724 3,261,073 1,986,250 1,221,002 292,500 16,218 91,910	502,970 42,065 191,866 6,000 2,100,000 2,484 - 154,721 11,200 2,500 500 20,000 230,921 1,500 8,945 18,177 63,047 400 1,300 104,712 14,700 33,940 6,248 68,090 169,141 51,733 29,250 1,300 3,825	100 100 49.9 14.4 100 100 100 100 100 100 100 100 100 100 100 100 45.01 100 100 100 100 100 29.53 100 99.22 92.38 32.5 0.76 6.83	$ 21,171,454 21,032,269 1,784,658 5,562 59,705,872 91,339 259,758 30,543,378 115,212 112,622 40,569 197,612 6,900,689 16,807 97,334 356,834 9,523,862 40,228,698 8,242 8,585,645 255,782 1,874,273 646,426 3,374,331 1,970,197 1,270,299 148,914 15,147 95,907	$ 939,874 558,978 21,014 - 911,678 13,175 1,697 (91) (604) 2,629 12,655 (1,797) 381,136 (71) 924 24,042 395,939 (76) 16 (81) 2,931 (41,290) 15,966 19,141 (976) 14,555 (18,257) (976) 14,555	$ 940,068 559,131 12,204 (3,073) - - - - - - - - - - - - - - - - - - - - - - - - -	Note 1 Note 1 Note 1 Note 2 Note 2 Notes 2 and 3 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Notes 2 and 4 Note 2 Note 2 Note 2 Note 2 Note 2 Notes 2 and 5 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2
											(Continued)

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Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance as of March 31, 2019	Balance as of March 31, 2019	Balance as of March 31, 2019	Net Income (Loss) of the Investee	Investment Income (Loss)	Note
				March 31, 2019	December 31, 2018	Shares (Thousands)	Percentage of Ownership %	Carrying Value
momo Asian Crown (BVI) Fortune Kingdom Honest Development	Asian Crown (BVI) Honest Development FLI FPI FST TPE TVD Shopping Bebe Poshe Fortune Kingdom HK Fubon Multimedia HK Yue Numerous	British Virgin Islands Samoa Taiwan Taiwan Taiwan Taiwan Thailand Taiwan Samoa Hong Kong Hong Kong	Investment Investment Life insurance agent Property insurance agent Travel agent Logistics industry Wholesale and retail sales Wholesale of cosmetics Investment Investment Investment	$ 885,285 670,448 3,000 3,000 6,000 337,860 117,611 85,000 1,132,789 1,132,789 670,448	$ 885,285 670,448 3,000 3,000 6,000 337,860 117,611 85,000 1,132,789 1,132,789 670,448	9,735 21,778 500 500 3,000 16,893 24,150 8,500 11,594 11,594 16,600	81.99 100 100 100 100 17.7 35 85 100 100 100	$ 42,396 805,008 9,343 11,364 50,509 395,772 118,789 81,067 47,241 47,241 805,008	$ (224) (4,849) 33 395 1,974 37,148 10,257 (1,951) (188) (188) (4,849)	$ - - - - - - - - - - -	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2

Note 1: Downstream transactions, upstream transactions, and consolidated unrealized gain or loss with intercompany effect are included.

Note 2: The income/loss of the investee was already included in the income/loss of the investor, and is not presented in this table.

Note 3: Held 1 share on March 31, 2019.

Note 4: Non-controlling interests.

Note 5: 70.47% of stocks are held under trustee accounts.

Note 6: For information on investment in Mainland China, see Table 8 for details.

(Concluded)

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TABLE 7

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE THREE MONTHS ENDED MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

Number	Company Name	Counter-party	Nature of Relationship (Note 1)	Transaction Details	Transaction Details	Transaction Details	Percentage of Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
0	TWM	TFN TPIAC momo TFN TFNM TNH TFN WMT TCC TFN TKT TDS TFNM TFN TT&T TFN TNH TFN momo	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Accounts and notes receivable, net Accounts and notes receivable, net Accounts and notes receivable, net Other receivables Other receivables Other non-current assets Short-term borrowings Short-term borrowings Short-term borrowings Accounts and notes payable Accounts and notes payable Accounts and notes payable Accounts and notes payable Other payables Other payables Lease liabilities - current Lease liabilities - current Other current liabilities Other current liabilities	$ 13,082 37,694 51,726 30,284 42,744 17,918 7,150,000 2,868,000 203,000 62,908 78,894 15,903 11,382 439,976 86,504 31,057 108,205 33,763 12,953	The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices	- - - - - - 5% 2% - - - - - - - - - - -
				(Continued)

66 -

Number	Company Name	Counter-party	Nature of Relationship (Note 1)	Transaction Details	Transaction Details	Transaction Details	Percentage of Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
0	TWM	TFN TNH YJCTV GCTV TFN TPIAC momo TFN TKT TDS TT&T TNH TFN TFN	1 1 1 1 1 1 1 1 1 1 1 1 1 1	Lease liabilities - non-current Lease liabilities - non-current Lease liabilities - non-current Lease liabilities - non-current Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Finance costs	$ 28,136 453,507 40,257 19,837 86,955 25,008 92,254 1,239,412 77,302 18,582 262,844 23,107 10,290 19,020	The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices	- - - - - - - 4% - - 1% - - -
1	WMT	TFNM WTVB	1 1	Other receivables Other receivables	904,293 355,572	The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices	1% -
2	momo	FGE TFNM TFNM	1 3 3	Accounts and notes receivable, net Accounts and notes payable Operating costs	15,375 15,942 16,041	The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices	- - -
3	TFN	TFNM TFNM TT&T	3 3 3	Accounts and notes receivable, net Operating revenues Operating expenses	21,576 35,669 27,998	The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices	- - -
				(Continued)

67 -

Number	Company Name	Counter-party	Nature of Relationship (Note 1)		Transaction Details	Transaction Details	Percentage of Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
4	TFNM	PCTV YJCTV UCTV GCTV MCTV PCTV YJCTV GCTV WTVB PCTV YJCTV UCTV GCTV WTVB	1 1 1 1 1 1 1 1 3 1 1 1 1 1	Other receivables Other receivables Other receivables Other receivables Other receivables Short-term borrowings Short-term borrowings Short-term borrowings Accounts and notes payable Operating revenues Operating revenues Operating revenues Operating revenues Operating costs	$ 38,264 35,971 25,178 23,457 14,801 520,000 140,000 250,000 16,782 134,544 115,736 56,233 51,674 16,782	The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices The terms of transaction are determined in accordance with mutual agreements or general business practices	- - - - - - - - - - - - - -

Note 1: 1. Parent to subsidiary.

Subsidiary to parent.
Between subsidiaries.

Note 2: All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

(Concluded)

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TABLE 8

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE THREE MONTHS ENDED MARCH 31, 2019

(In Thousands of New Taiwan Dollars)

Investee Company Name	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Total Amount of Paid-in Capital	Investment Type (Note)	Accumulated Outflow of Investment from Taiwan as of January 1, 2019	Accumulated Outflow of Investment from Taiwan as of January 1, 2019	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of March 31, 2019	Net Income (Loss) of Investee	% Ownership through Direct or Indirect Investment	Investment Income (Loss)	Carrying Value as of March 31, 2019	Accumulated Inward Remittance of Earnings as of March 31, 2019
								Outflow	Inflow
TWMC FGE Haobo GHS	Mobile application development and design Wholesaling Investment Wholesaling		$ 92,535 (USD 3,000) 354,795 (RMB 77,500) 50,358 (RMB 11,000) 228,900 (RMB 50,000)		b b b b	$ 150,274 (USD 4,872) 840,494 (USD 14,000) (RMB 89,267) - -		$ - - - -	$ - - - -	$ 150,274 (USD 4,872) 840,494 (USD 14,000) (RMB 89,267) - -	$ 366 (248) (4,849) (5,217)	100 76.7 100 20	$ 366 (191) (4,849) (6,043)	$ 108,047 31,716 805,008 727,482	$ - - - -

Company		Accumulated Investment in Mainland China as of March 31, 2019		Investment Amounts Authorized by Investment Commission, MOEA			Upper Limit on Investment Authorized by Investment Commission, MOEA
TWM and subsidiaries		$1,652,958 (USD18,872, RMB89,267 and HKD168,539)		$1,652,958 (USD18,872, RMB89,267 and HKD168,539)			$43,608,590

Note: The investment types are as follows:

a. Direct investment in Mainland China.

b. Indirect investment in Mainland China through a subsidiary in a third place, e.g. TCC and momo.

c. Others.
69 -

AI assistant

TWM — Interim / Quarterly Report 2019

52277_rns_2019-11-08_67c2765c-1699-4679-a2cd-48b6c6e26364.pdf

Taiwan Mobile Co., Ltd. and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Conclusion

Notice to Readers

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

1. ORGANIZATION AND OPERATIONS

2. APPROVAL DATE AND PROCEDURES OF THE CONSOLIDATED FINANCIAL STATEMENTS

3. ADOPTION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

Definition of a lease

The Group as lessee

The Group as lessor

New IFRSs

Effective Date Announced by IASB (Note 1)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Basis of Consolidation

b. The subsidiaries included in the consolidated financial statements were as follows:

c. Subsidiaries excluded from the consolidated financial statements: None.

Leases

2019

a. The Group as lessor

b. The Group as lessee

2018

Employee Benefits

Income Tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Lease terms - 2019

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

8. ACCOUNTS AND NOTES RECEIVABLE, NET

March 31, 2019

9. INVENTORIES

10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

a. GHS

b. TPE

d. ADT

11. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

12. PROPERTY, PLANT AND EQUIPMENT

13. LEASE ARRANGEMENTS

b. Lease liabilities - 2019

c. Material lease-in activities and terms

d. Other lease information

2018

For the Three Months Ended March 31, 2018

14. INVESTMENT PROPERTIES

15. INTANGIBLE ASSETS

a. Service concessions

b. Customer relationships, operating rights, and trademarks

16. OTHER NON-CURRENT ASSETS

17. BORROWINGS

a. Short-term borrowings

2) Secured loans

18. BONDS PAYABLE

19. PROVISIONS

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

b. Defined benefit plan

21. EQUITY

a. Common stock

b. Capital surplus

c. Appropriation of earnings and dividend policy

d. Other equity interests

e. Treasury stock

f. Non-controlling interests

TWM Interim / Quarterly Report 2019