TWM - Interim / Quarterly Report 2019

Taiwan Mobile Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 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 (collectively, the “Group”) as of September 30, 2019 and 2018, and the consolidated statements of comprehensive income for the three months and the nine months ended September 30, 2019 and 2018, and the consolidated statement of changes in equity and cash flows for the nine months ended September 30, 2019 and 2018, and the related 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 consolidated financial position of the Group as of September 30, 2019 and 2018, and its consolidated financial performance for the three months and the nine months ended September 30, 2019 and 2018 and its consolidated cash flows for the nine months ended September 30, 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 November 8, 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 30) Financial assets at fair value through profit or loss (Note 30) Financial assets at fair value through other comprehensive income (Note 7) Contract assets (Note 23) Notes and accounts receivable, net (Note 8) Accounts receivable due from related parties (Note 30) Other receivables (Note 30) Inventories (Note 9) Prepayments (Note 30) Assets held for sale Other financial assets (Notes 30 and 31) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income (Note 7) Contract assets (Note 23) Investments accounted for using equity method (Notes 10 and 30) Property, plant and equipment (Note 13) Right-of-use assets (Notes 14 and 30) Investment properties (Note 15) Concessions (Notes 16 and 31) Goodwill (Note 16) Other intangible assets (Note 16) Deferred tax assets Incremental costs of obtaining a contract (Note 23) Other financial assets (Notes 30, 31 and 32) Other non-current assets (Notes 17 and 30) Total non-current assets		September 30, 2019 (Reviewed)		December 31, 2018 (Audited)		September 30, 2018 (Reviewed)
		Amount % $ 13,023,288 8 - - 249,034 - 4,911,308 3 7,585,200 5 155,872 - 2,151,715 2 4,706,877 3 738,341 1 - - 600,461 - 106,576 - 34,228,672 22 2,500 - 4,786,983 3 3,506,891 2 1,640,080 1 36,990,076 23 9,930,778 6 2,978,278 2 38,414,344 24 15,872,595 10 5,548,621 3 805,778 1 2,243,280 2 208,224 - 1,672,806 1 124,601,234 78		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 % $ 5,935,009 4 87,365 - 252,247 - 5,645,634 4 7,669,514 5 128,782 - 1,792,005 1 3,272,541 2 818,268 1 2,571 - 410,161 - 959,692 1 26,973,789 18 - - 4,819,168 3 3,233,184 2 1,400,912 1 39,477,725 27 - - 2,991,627 2 41,286,668 28 15,872,595 11 5,773,880 4 818,450 1 3,266,998 2 130,587 - 1,401,914 1 120,473,708 82

TOTAL $ 158,829,906 100 $ 147,667,028 100 $ 147,447,497 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 18) Short-term notes and bills payable (Note 18) Contract liabilities (Note 23) Notes and accounts payable Accounts payable due to related parties (Note 30) Other payables (Note 30) Current tax liabilities Provisions (Note 20) Lease liabilities (Notes 14, 27 and 30) Advance receipts Long-term liabilities, current portion (Notes 18 and 19) Other current liabilities (Note 30) Total current liabilities NON-CURRENT LIABILITIES Financial liabilities at fair value through profit or loss Contract liabilities (Note 23) Bonds payable (Note 19) Long-term borrowings (Note 18) Provisions (Note 20) Deferred tax liabilities Lease liabilities (Notes 14, 27 and 30) Net defined benefit liabilities Guarantee deposits Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 22) 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 22) Total equity TOTAL		September 30, 2019 (Reviewed)		December 31, 2018 (Audited)		September 30, 2018 (Reviewed)
		Amount % $ 15,670,000 10 1,200,000 1 1,726,286 1 11,897,943 7 180,126 - 8,387,740 5 2,561,672 2 102,327 - 3,525,545 2 119,946 - 4,803,227 3 2,482,571 2 52,657,383 33 - - 47,871 - 17,214,347 11 8,636,924 5 1,448,562 1 960,745 1 6,373,530 4 471,530 - 1,093,515 1 522,124 - 36,769,148 23 89,426,531 56 34,679,531 22 279,910 - 19,110,633 12 28,922,281 18 95,381 - 10,054,123 6 (26,166) - (29,717,344) (18) 63,398,349 40 6,005,026 4 69,403,375 44 $ 158,829,906 100		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 % $ 5,390,773 4 2,398,684 2 1,982,337 1 6,602,305 4 158,444 - 8,998,294 6 2,845,219 2 127,198 - - - 101,165 - 9,803,157 7 2,070,579 1 40,478,155 27 1,960 - 59,648 - 29,199,701 20 8,940,274 6 1,389,787 1 916,004 1 - - 395,711 - 1,003,661 1 585,110 - 42,491,856 29 82,970,011 56 34,208,328 23 191 - 12,299,832 8 27,558,064 19 362,703 - 13,959,072 10 (64,600) - (29,717,344) (20) 58,606,246 40 5,871,240 4 64,477,486 44 $ 147,447,497 100

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)

For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months	Ended September 30
2019	2018	2019	2018
Amount % $ 30,825,915 100 22,691,898 74 8,134,017 26 2,593,839 8 1,307,808 4 70,930 - 3,972,577 12 114,973 - 4,276,413 14 146,986 - (28,175 ) - (141,920 ) - (522) - (23,631) - 4,252,782 14 840,738 3 3,412,044 11 - - (1,143,034 ) (4 ) 269 - (30,624 ) - 5,822 - (1,167,567) (4) $ 2,244,477 7 $ 3,253,393 11 158,651 - $ 3,412,044 11 $ 2,098,701 7 145,776 - $ 2,244,477 7 $ 1.17 $ 1.15	Amount % $ 28,319,973 100 20,179,285 71 8,140,688 29 2,715,117 10 1,224,373 4 116,726 - 4,056,216 14 127,321 - 4,211,793 15 112,130 - (37,123 ) - (152,687 ) - (41) - (77,721) - 4,134,072 15 680,796 3 3,453,276 12 - - 392,201 1 (3,028 ) - (26,794 ) - 2,288 - 364,667 1 $ 3,817,943 13 $ 3,273,365 11 179,911 1 $ 3,453,276 12 $ 3,654,386 13 163,557 - $ 3,817,943 13 $ 1.21 $ 1.16	Amount % $ 90,313,139 100 65,863,707 73 24,449,432 27 7,865,130 9 3,932,546 4 196,059 - 11,993,735 13 374,780 - 12,830,477 14 224,328 - (66,113 ) - (433,638 ) - 11,159 - (264,264) - 12,566,213 14 2,467,685 3 10,098,528 11 - - 71,615 - 8,643 - (13,724 ) - 4,277 - 70,811 - $ 10,169,339 11 $ 9,530,067 11 568,461 - $ 10,098,528 11 $ 9,599,403 11 569,936 - $ 10,169,339 11 $ 3.46 $ 3.39	Amount % $ 87,166,400 100 61,153,521 70 26,012,879 30 8,502,177 10 3,803,663 4 302,196 - 12,608,036 14 490,824 - 13,895,667 16 189,224 - (97,641 ) - (453,098 ) - (7,878) - (369,393) - 13,526,274 16 2,367,946 3 11,158,328 13 18,302 - 239,147 - (12,062 ) - (16,380 ) - (1,236) - 227,771 - $ 11,386,099 13 $ 10,551,603 12 606,725 1 $ 11,158,328 13 $ 10,803,473 12 582,626 1 $ 11,386,099 13 $ 3.88 $ 3.76

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)

BALANCE, JANUARY 1, 2018 Effect of retrospective application ADJUSTED BALANCE, JANUARY 1, 2018 Distribution of 2017 earnings Legal reserve Reversal of special reserve Cash dividends Total distribution of earnings Cash dividends from capital surplus Profit for the nine months ended September 30, 2018 Other comprehensive income (loss) for the nine months ended September 30, 2018 Total comprehensive income (loss) for the nine months ended September 30, 2018 Conversion of convertible bonds to common stock Changes in equity of associates accounted for using equity method Changes in percentage of ownership interests in subsidiaries Cash dividends paid to non-controlling interests of subsidiaries Increase in non-controlling interests BALANCE, SEPTEMBER 30, 2018 BALANCE, JANUARY 1, 2019 Effect of retrospective application ADJUSTED BALANCE, JANUARY 1, 2019 Distribution of 2018 earnings Legal reserve Reversal of special reserve Cash dividends Total distribution of earnings Profit for the nine months ended September 30, 2019 Other comprehensive income (loss) for the nine months ended September 30, 2019 Total comprehensive income (loss) for the nine months ended September 30, 2019 Conversion of convertible bonds to common stock Cash dividends paid to non-controlling interests of subsidiaries BALANCE, SEPTEMBER 30, 2019				Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Total Non-controlling Interests $ 59,631,863 $ 5,879,738 3,418,600 (39) 63,050,463 5,879,699 - - - - (13,610,406) - (13,610,406) - (1,633,249) - 10,551,603 606,725 251,870 (24,099) 10,803,473 582,626 1,944 - 4,368 2,409 (10,347) 12,663 - (616,452) - 10,295 $ 58,606,246 $ 5,871,240 $ 61,881,520 $ 6,112,176 32,605 16,275 61,914,125 6,128,451 - - - - (15,366,223) - (15,366,223) - 9,530,067 568,461 69,336 1,475 9,599,403 569,936 7,251,044 - - (693,361) $ 63,398,349 $ 6,005,026	Total Equity $ 65,511,601 3,418,561 68,930,162 - - (13,610,406) (13,610,406) (1,633,249) 11,158,328 227,771 11,386,099 1,944 6,777 2,316 (616,452) 10,295 $ 64,477,486 $ 67,993,696 48,880 68,042,576 - - (15,366,223) (15,366,223) 10,098,528 70,811 10,169,339 7,251,044 (693,361) $ 69,403,375
	Common Stock $ 34,208,328 - 34,208,328 - - - - - - - - - - - - - $ 34,208,328 $ 34,208,519 - 34,208,519 - - - - - - - 471,012 - $ 34,679,531	Capital Collected in Advance Capital Surplus $ - $ 13,939,278 - - - 13,939,278 - - - - - - - - - (1,633,249) - - - - - - 191 1,753 - 2,397 - (10,347) - - - - $ 191 $ 12,299,832 $ 29,819 $ 12,580,692 - - 29,819 12,580,692 - - - - - - - - - - - - - - 250,091 6,529,941 - - $ 279,910 $ 19,110,633		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 26,138,846 $ 690,034 $ 14,735,424 - - 3,354,181 26,138,846 690,034 18,089,605 1,419,218 - (1,419,218) - (327,331) 327,331 - - (13,610,406) 1,419,218 (327,331) (14,702,293) - - - - - 10,551,603 - - 18,186 - - 10,569,789 - - - - - 1,971 - - - - - - - - - $ 27,558,064 $ 362,703 $ 13,959,072 $ 27,558,064 $ 362,703 $ 16,954,448 - - 32,605 27,558,064 362,703 16,987,053 1,364,217 - (1,364,217) - (267,322) 267,322 - - (15,366,223) 1,364,217 (267,322) (16,463,118) - - 9,530,067 - - 121 - - 9,530,188 - - - - - - $ 28,922,281 $ 95,381 $ 10,054,123	Other Equity Interests Exchange Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Unrealized Gain (Loss) on Available-for- Differences on Translation Comprehensive Income sale Financial Assets Treasury Stock $ (16,499) $ - $ (346,204) $ (29,717,344) - (281,785) 346,204 - (16,499) (281,785) - (29,717,344) - - - - - - - - - - - - - - - - - - - - - - - - (9,080) 242,764 - - (9,080) 242,764 - - - - - - - - - - - - - - - - - - - - - - $ (25,579) $ (39,021) $ - $ (29,717,344) $ (24,398) $ (70,983) $ - $ (29,717,344) - - - - (24,398) (70,983) - (29,717,344) - - - - - - - - - - - - - - - - - - - - (5,002) 74,217 - - (5,002) 74,217 - - - - - - - - - - $ (29,400) $ 3,234 $ - $ (29,717,344)

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 for: Depreciation expense Amortization expense Amortization of incremental costs of obtaining a contract Loss on disposal of property, plant and equipment, net Loss on disposal of intangible assets, net Expected credit loss Finance costs Interest income Dividend income Reversal of impairment loss on property, plant and equipment Share of (profit) 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 Notes and accounts 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 Notes and accounts payable Accounts payable due to related parties Other payables Provisions Advance receipts Other current liabilities Net defined benefit liabilities Other non-current liabilities Cash inflows generated from operating activities Interest received Interest paid Income taxes paid		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 12,566,213 9,723,595 2,582,492 1,950,516 54,305 - 196,059 433,638 (51,096) (117,211) - (11,159) (5,209) 6,990 84,864 264,859 (404,063) (9,962) (123,992) (761,214) (282,081) 810,449 (5,212) (1,247,514) (76,623) 5,140,963 538 (1,231,872) 365 8,024 92,532 (39,350) - 29,549,844 197 (974) (2,210,403)	2018 $ 13,526,274 7,476,500 2,732,310 2,635,125 56,815 128,002 302,196 453,098 (46,610) (83,164) (103,586) 7,878 13,915 1,047 736,265 1,721,226 (11,262) (25,292) (9,419) 1,060,823 (319,888) (763,257) (5,944) (1,734,926) (741,187) (1,386,017) 28,812 (1,521,691) (60,637) 12,313 (87,631) (47,333) (14,808) 23,929,947 911 (930) (1,462,925) (Continued)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

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

Net cash generated from operating activities 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 Acquisition of investments accounted for using equity method Redemption of convertible notes Proceeds from capital return of investments accounted for using equity method Net cash outflow on acquisition of subsidiaries Proceeds from capital return of financial assets at fair value through other comprehensive income 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 Decrease in short-term notes and bills payable Proceeds from issue of bonds Repayments of bonds payable Repayment of long-term borrowings Repayment of the principal portion of lease liabilities Increase in guarantee deposits received Decrease in guarantee deposits received Cash dividends paid (including paid to non-controlling interests) Interest paid Changes in non-controlling interests Net cash used in financing activities		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 27,338,664 (5,109,985) (16,808) (206,165) (200,110) (100,000) 37,146 368 (27,000) - - - - (208,262) 204,232 (152,825) 55,090 46,429 185,379 (5,492,511) 5,400,000 (298,700) - - (2,253,000) (2,824,316) 172,162 (93,114) (16,059,547) (362,330) - (16,318,845)	2018 $ 22,467,003 (6,068,958) - (289,578) (266,363) - 39,462 (6) (20,771) 491,192 31,090 (2,925) 3,149 (244,055) 223,243 (86,107) 2,473,503 46,690 150,645 (3,519,789) (4,279,522) (3,196,783) 14,984,564 (2,900,000) (8,155,042) - 103,409 (79,275) (15,860,099) (261,007) 2,316 (19,641,439) (Continued)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

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

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ (2,730) 5,524,578 7,498,710 $ 13,023,288	2018 $ (2,310) (696,535) 6,631,544 $ 5,935,009

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 NINE MONTHS ENDED SEPTEMBER 30, 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 value-added services.

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. In July 2019, the Board of Directors resolved that TWM would participate in the fifth-generation (“5G”) mobile spectrum auction held by NCC.

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

2. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors approved the consolidated financial statements on November 8, 2019.

3. APPLICATION 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, 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 did 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 lessee 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 was 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

10 -

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

Notes and accounts 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

11 -
b. The IFRSs issued by International Accounting Standards Board (“IASB”) and endorsed by FSC for application starting from 2020.

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2)

Note 1: 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 2: 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.

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

New IFRSs Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts”	Effective Date Announced by IASB (Note)
	January 1, 2020 To be determined by IASB January 1, 2021

Note: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

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.

12 -

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.
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
TWM Venture Co., Ltd.
(TVC)
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. (TPIA)
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

Percentage of Ownership
September 30,
2019
December 31,
2018
September 30,
2018
Note
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
-
-
Note 1
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 2
-
100.00%
100.00%
Note 3
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 2
-
100.00%
100.00%
Note 3
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
Note 2
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
29.53%
29.53%
29.53%
Note 4
100.00%
100.00%
100.00%
-
99.22%
99.22%
99.22%
-

(Continued)

13 -

Investor
Subsidiary
Main Business and
Products

TFNM
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
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
September 30,
2019
December 31,
2018
September 30,
2018
Note
92.38%
92.38%
92.38%
-
0.76%
0.76%
0.76%
-
6.83%
6.83%
6.83%
-
81.99%
81.99%
81.99%
-
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%
85.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
100.00%
100.00%
100.00%
-
93.55%
93.55%
93.55%
-
(Concluded)

Note 1: Set up in September 2019.

Note 2: TCCI, TUI and TID collectively owned 698,752 thousand shares of TWM, representing 19.99% of total outstanding shares as of September 30, 2019.

Note 3: Liquidation procedures were completed in August 2019.

Note 4: The other 70.47% of shares were held under trustee accounts.

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.

14 -

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 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.

15 -

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.

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 occurs.

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Cash on hand and revolving funds	$	152,688	$	156,900	$	161,604
Cash in banks		7,955,311		3,603,620		3,064,389
Time deposits		2,167,192		1,588,020		1,157,439
Government bonds with repurchase rights		2,748,097		2,150,170		1,551,577
	$	13,023,288	$	7,498,710	$	5,935,009

16 -

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Investments in equity instruments-current
Domestic investments
Listed stocks	$	241,260	$	245,607	$	239,086
Foreign investments
Unlisted stocks		7,774		10,125		13,161
	$	249,034	$	255,732	$	252,247
Investments in equity instruments-non-current
Domestic investments
Listed stocks	$	4,078,476	$	3,778,949	$	3,727,723
Unlisted stocks		177,585		181,178		170,953
Foreign investments
Limited partnerships		500,880		775,385		892,616
Unlisted stocks		30,042		28,387		27,876
	$	4,786,983	$	4,763,899	$	4,819,168

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. NOTES AND ACCOUNTS RECEIVABLE, NET

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Notes receivable	$	103,797	$	175,658	$	58,420
Accounts receivable		7,853,328		7,820,249		8,086,374
Less: Allowance for impairment loss		(371,925)		(464,049)		(475,280)
	$	7,585,200	$	7,531,858	$	7,669,514

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.

17 -

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:

September 30, 2019

Not Past Due Gross carrying amount $ 7,284,358 Loss allowance (Lifetime ECL) (54,860) Amortized cost $ 7,229,498 December 31, 2018 Not Past Due Gross carrying amount $ 7,269,513 Loss allowance (Lifetime ECL) (56,022) Amortized cost $ 7,213,491 September 30, 2018 Not past due Gross carrying amount $ 7,401,381 Loss allowance (Lifetime ECL) (56,411) Amortized cost $ 7,344,970	Overdue 1 to 120 days 121 to 365 days Over 365 days $ 480,631 $ 191,796 $ 340 (135,900) (180,825) (340) $ 344,731 $ 10,971 $ - 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 $ 448,708 $ 294,417 $ 288 (143,617) (274,964) (288) $ 305,091 $ 19,453 $ -	Total $ 7,957,125 (371,925) $ 7,585,200 Total $ 7,995,907 (464,049) $ 7,531,858 Total $ 8,144,794 (475,280) $ 7,669,514

18 -

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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 464,049 195,016 31,635 (318,775) $ 371,925	2018 $ 468,474 315,336 14,427 (322,957) $ 475,280

The Group entered into accounts receivable factoring contracts with private institutions and sold those overdue accounts receivable that had been written off. Under the contracts, the Group would no longer assume the risk on the receivables. The related factored accounts receivable information was as follows:

Amount of accounts receivable sold Proceeds of the sale of accounts receivable		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 583,132 $ 35,389	2018 $ 620,643 $ 37,590

9. INVENTORIES

	September 30,	December 31,	September 30,
	2019	2018	2018
Merchandise	$ 4,699,744	$ 3,936,724	$ 3,259,651
Materials for maintenance	7,133	8,939	12,890
	$ 4,706,877	$ 3,945,663	$ 3,272,541

For the three months and the nine months ended September 30, 2019, the cost of goods sold related to the inventories amounted to $15,345,741 thousand and $43,633,227 thousand, respectively, which included the inventory write-down totaling $15,276 thousand and $18,119 thousand, respectively.

For the three months and the nine months ended September 30, 2018, the cost of goods sold related to the inventories amounted to $12,309,216 thousand and $37,281,053 thousand, respectively, which included the inventory write-down totaling $2,962 thousand and $15,083 thousand, respectively.

19 -

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) Mistake Entertainment Co., Ltd. (M.E.) AppWorks Ventures Co., Ltd. (AppWorks)		September 30, 2019 Amount % of Owner- ship $ 711,017 20.00 397,662 17.70 141,419 32.50 124,391 35.00 5,061 14.40 25,530 15.00 235,000 51.00 $ 1,640,080		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		September 30, 2018
						Amount % of Owner- ship $ 711,823 20.00 382,731 17.70 169,586 32.50 123,998 35.00 12,774 14.40 - - - - $ 1,400,912

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 17.7% 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 14.4% 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.

20 -

ADT had resolved December 31, 2018 as the dissolution date. As of September 30, 2019, ADT was still under liquidation procedures.

e. M.E.

In May 2019, TKT acquired 15% equity interests of M.E. TKT has significant influence on M.E. due to its having a seat on M.E.’s board of directors.

f. AppWorks

In September 2019, TWM acquired 51% equity interests of AppWorks. Payments for the investments in AppWorks were made on October 1, 2019. TWM has no control over AppWorks due to its holding less than half number of seats on AppWorks’s board of directors. Therefore, TWM only has significant influence on AppWorks and accounts for its investments in AppWorks as an associate of TWM, under the equity-method of accounting.

11. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

Subsidiary momo	Proportion of Non-controlling Interests’ Ownership and Voting Rights
	September 30, 2019 December 31, 2018 September 30, 2018 54.99% 54.99% 54.99%

For information on the principal place of business and the company’s country of registration, see Table 7.

The summarized financial information of momo and its subsidiaries had taken into account the adjustments to acquisition-date fair value, and reflected the amounts before eliminations of intercompany transactions as follows:

September 30, 2019 Current assets $ 9,766,431 Non-current assets 14,650,617 Current liabilities (9,915,146) Non-current liabilities (1,109,929) Equity $ 13,391,973 Equity attributable to: Owners of the parent $ 9,204,978 Non-controlling interests of momo 4,165,765 Non-controlling interests of momo’s subsidiaries 21,230 $ 13,391,973	December 31, 2018 September 30, 2018 $ 6,168,249 $ 4,576,887 13,531,769 13,539,750 (5,772,994) (4,610,340) (281,454) (275,807) $ 13,645,570 $ 13,230,490 $ 9,318,968 $ 9,131,798 4,305,001 4,076,376 21,601 22,316 $ 13,645,570 $ 13,230,490

21 -

	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2019 2018 $ 35,922,568 $ 29,625,278 $ 974,513 $ 1,036,953 2,891 (43,965) $ 977,404 $ 992,988 $ 438,768 $ 468,674 535,949 572,479 (204) (4,200) $ 974,513 $ 1,036,953 $ 440,184 $ 448,814 537,679 548,221 (459) (4,047) $ 977,404 $ 992,988 For the Nine Months Ended September 30

2019 $ 4,728,601 (195,105) (1,468,158) (889) $ 3,064,449 $ (693,102)		2018 $ 890,682 (630,503) (1,123,422) (541) $ (863,784) $ (616,090)

12. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

In August 2018, momo and its subsidiaries increased the capital of Asian Crown (BVI) to invest in FGE. Due to non-proportional investment in capital increase (Tong-An Investment Co., Ltd. participated in the capital increase), momo’s ownership percentage in Asian Crown (BVI) increased from 76.26% to 81.99%, and HK Fubon Multimedia’s ownership percentage in FGE increased from 91.30% to 93.55%. The above transactions did not result in losing control of FGE, and were therefore considered as equity transactions.

Proceeds from capital injection Increase in non-controlling interests due to equity transaction involving subsidiaries Capital surplus - changes in percentage of equity in subsidiaries	$ 2,316 (12,663) $ (10,347)

22 -

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2019 Additions Reclassification Disposals and retirements Effect of exchange rate changes Balance, September 30, 2019 Accumulated depreciation and impairment Balance, January 1, 2019 Depreciation Reclassification Disposals and retirements Effect of exchange rate changes Balance, September 30, 2019 Carrying amount, January 1, 2019 Carrying amount, September 30, 2019 Cost Balance, January 1, 2018 Additions Reclassification Disposals and retirements Effect of exchange rate changes Balance, September 30, 2018 Accumulated depreciation and impairment Balance, January 1, 2018 Depreciation Reversal of impairment loss Reclassification Disposals and retirements Effect of exchange rate changes Balance, September 30, 2018 Carrying amount, September 30, 2018	Land $ 8,289,085 - 3,593 (18,112 ) - $ 8,274,566 $ 1,662 - - - - $ 1,662 $ 8,287,423 $ 8,272,904 $ 8,250,857 - (35,303 ) (2,784 ) - $ 8,212,770 $ 83,426 - (81,764 ) - - - $ 1,662 $ 8,211,108	Buildings $ 5,672,957 1,116 3,891 (22,599 ) - $ 5,655,365 $ 1,499,982 121,102 1,570 (8,238 ) - $ 1,614,416 $ 4,172,975 $ 4,040,949 $ 5,552,706 12,098 62,828 (1,164 ) - $ 5,626,468 $ 1,369,660 118,162 (21,822 ) (5,568 ) (439 ) - $ 1,459,993 $ 4,166,475	Telecommuni- cations Equipment and Machinery $ 87,623,044 589,048 3,967,978 (1,068,008 ) (1,915) $ 91,110,147 $ 64,521,396 5,900,643 - (1,010,993 ) (1,768) $ 69,409,278 $ 23,101,648 $ 21,700,869 $ 84,505,063 223,384 4,530,434 (2,737,163 ) (2,004) $ 86,519,714 $ 59,427,788 6,357,639 - (1,061 ) (2,655,874 ) (1,723) $ 63,126,769 $ 23,392,945	Others Construction in Progress and Equipment to Be Inspected $ 9,346,834 $ 1,349,217 205,739 4,227,514 99,689 (4,083,218 ) (238,361 ) (38 ) (125) - $ 9,413,776 $ 1,493,475 $ 7,402,137 $ - 766,301 - - - (236,436 ) - (105) - $ 7,931,897 $ - $ 1,944,697 $ 1,349,217 $ 1,481,879 $ 1,493,475 $ 8,924,688 $ 1,766,195 370,868 4,769,563 339,347 (4,952,728 ) (338,046 ) (1,030 ) (131) - $ 9,296,726 $ 1,582,000 $ 6,515,214 $ - 985,743 - - - - - (329,334 ) - (94) - $ 7,171,529 $ - $ 2,125,197 $ 1,582,000	Total $ 112,281,137 5,023,417 (8,067 ) (1,347,118 ) (2,040) $ 115,947,329 $ 73,425,177 6,788,046 1,570 (1,255,667 ) (1,873) $ 78,957,253 $ 38,855,960 $ 36,990,076 $ 108,999,509 5,375,913 (55,422 ) (3,080,187 ) (2,135) $ 111,237,678 $ 67,396,088 7,461,544 (103,586 ) (6,629 ) (2,985,647 ) (1,817) $ 71,759,953 $ 39,477,725

23 -
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

b. The fair values of parts of TWM’s properties (land and buildings) were measured using Level 3 inputs using income approach and comparative approach by HomeBan Appraisers Joint Firm. As the recoverable amount, fair value less cost to sell, is higher than the carrying amount, an impairment loss is reversed to the extent of the impairment losses that have been recognized in previous years. For the nine months ended September 30, 2018, the reversal of impairment loss of $103,586 thousand was included in other gains and losses in the statement of comprehensive income.

14. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

			September 30,	September 30,
				2019
Carrying amounts
Land			$	564,445
Buildings				8,293,831
Telecommunications equipment and machinery				953,746
Others				118,756
			$	9,930,778
	For	the Three	For the Nine
	Months Ended		Months Ended
	September 30,		September 30,
		2019		2019
Additions to right-of-use assets			$	2,939,408
Depreciation charge for right-of-use assets
Land	$	58,608	$	174,609
Buildings		863,438		2,542,418
Telecommunications equipment and machinery		50,792		153,873
Others		16,046		49,439
	$	988,884	$	2,920,339

24 -

b. Lease liabilities - 2019

	September 30,
	2019
Carrying amounts
Current	$ 3,525,545
Non-current	$ 6,373,530
Range of discount rate for lease liabilities was as follows:
	September 30,
	2019
Land	0.82%-1%
Buildings	0.82%-5.44%
Telecommunications equipment and machinery	0.86%-4.38%
Others	0.82%-5.44%

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 of the lease terms ranging from 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 lessors’ consents. The Group can early terminate the arrangements if there are any controversial or other incidental matters that will cause the leasehold assets not being able to meet the purposes of use.

d. Other lease information

Leases, with respect to the Group’s investment properties, under operating lease arrangements are set out in Note 15.

2019

	For	the Three	For the Nine
	Months Ended		Months Ended
	September 30,		September 30,
		2019	2019
Expenses related to short-term leases	$	9,435	$ 45,259
Expenses related to low-value asset leases	$	18,050	$ 53,063
Expenses related to variable lease payments and not included in
the measurement of lease liabilities	$	10,913	$ 30,777
Total cash outflow for leases			$ (3,038,773)

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, no recognition of right-of-use assets and lease liabilities was made for such leases.

As of September 30, 2019, the amount of lease commitments for short-term leases, for which the recognition exemption is applied, is $29,455 thousand.

25 -

2018

Non-cancellable rental payables with respect to operating leases were as follows:

	December 31,	September 30,
	2018	2018
Less than one year	$ 3,440,873	$ 3,426,577
Between one and five years	5,876,088	6,007,801
More than five years	41,277	67,377
	$ 9,358,238	$ 9,501,755

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

The payments of leases and subleases were as follows:

	For	the Three	For the Nine
	Months Ended		Months Ended
	September 30,		September 30,
		2018	2018
Minimum lease payments	$	945,118	$ 2,842,345
Receipts from subleases		(1,805)	(6,694)
	$	943,313	$ 2,835,651

15. 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 by using Level 3 inputs, arising from income approach, comparative approach, and cost approach adopted by a third party real estate appraiser, HomeBan Appraisers Joint Firm. As of September 30, 2019, December 31, 2018 and September 30, 2018, the fair values of investment properties were $6,976,270 thousand, $6,979,581 thousand and $6,804,478 thousand, respectively, and the capitalization rates for the aforementioned financial reporting periods were ranging from 1.32%-5.23%, 1.32%-5.23% and 0.94%-5.23%, respectively.

The amounts of depreciation recognized for the three months and the nine months ended September 30, 2019 and 2018 were $5,068 thousand, $4,999 thousand, $15,210 thousand, and $14,956 thousand, respectively.

26 -

The maturity analysis of lease payments receivable under operating leases of investment properties as of September 30, 2019 was as follows:

			September 30,	September 30,
				2019
Year	1		$ 153,332
Year	2			145,838
Year	3			133,358
Year	4			96,409
Year	5			27,987
Year	6	and thereafter		55,975
			$ 612,899

The Group leases out investment properties under operating leases. The future minimum lease-payment receivables under non-cancellable leases as of December 31 and September 30, 2018 are as follows:

	December 31,	September 30,
	2018	2018
Less than one year	$ 152,807	$ 153,295
Between one and five years	502,272	524,190
More than five years	79,298	83,962
	$ 734,377	$ 761,447

16. INTANGIBLE ASSETS

Cost Balance, January 1, 2019 Addition Disposals and retirements Reclassification Effect of exchange rate changes Balance, September 30, 2019 Accumulated amortization and impairment Balance, January 1, 2019 Amortization Disposals and retirements Effect of exchange rate changes Balance, September 30, 2019 Carrying amount, January 1, 2019 Carrying amount, September 30, 2019 Cost Balance, January 1, 2018 Addition Disposals and retirements Reclassification Effect of exchange rate changes Balance, September 30, 2018 Accumulated amortization and impairment Balance, January 1, 2018 Amortization Disposals and retirements Effect of exchange rate changes Balance, September 30, 2018 Carrying amount, September 30, 2018		Conces	sions Service Concessions $ 8,180,078 - - - - $ 8,180,078 $ 1,031,305 134,040 - - $ 1,165,345 $ 7,148,773 $ 7,014,733 $ 8,180,078 - - - - $ 8,180,078 $ 852,586 134,040 - - $ 986,626 $ 7,193,452	Goodwill $ 15,872,595 - - - - $ 15,872,595 $ - - - - $ - $ 15,872,595 $ 15,872,595 $ 15,845,930 26,665 - - - $ 15,872,595 $ - - - - $ - $ 15,872,595			Othe	r Intangible Asse	ts	Copyrights $ 15,222 8,567 - - - $ 23,789 $ 13,538 9,448 - - $ 22,986 $ 1,684 $ 803 $ - 4,755 - 5,400 - $ 10,155 $ - 4,955 - - $ 4,955 $ 5,200	Total $ 75,572,855 146,616 (138,990 ) 95,856 (317) $ 75,676,020 $ 13,397,210 2,582,492 (138,990 ) (252) $ 15,840,460 $ 62,175,645 $ 59,835,560 $ 85,433,406 259,078 (3,518,128 ) 161,665 (332) $ 82,335,689 $ 20,060,586 2,732,310 (3,390,126 ) (224) $ 19,402,546 $ 62,933,143
		Concession Licenses $ 41,043,375 - - - - $ 41,043,375 $ 7,663,274 1,980,490 - - $ 9,643,764 $ 33,380,101 $ 31,399,611 $ 51,324,375 - (3,427,000 ) - - $ 47,897,375 $ 14,981,287 2,125,254 (3,302,382 ) - $ 13,804,159 $ 34,093,216				Computer Software $ 3,907,630 138,031 (138,990 ) 95,856 (317) $ 4,002,210 $ 3,176,937 356,102 (138,990 ) (252) $ 3,393,797 $ 730,693 $ 608,413 $ 3,529,068 227,658 (91,128 ) 156,265 (332) $ 3,821,531 $ 2,851,117 365,640 (87,744 ) (224) $ 3,128,789 $ 692,742	Customer Relationships $ 2,654,089 - - - - $ 2,654,089 $ 1,510,663 102,300 - - $ 1,612,963 $ 1,143,426 $ 1,041,126 $ 2,654,089 - - - - $ 2,654,089 $ 1,374,263 102,300 - - $ 1,476,563 $ 1,177,526	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 18 - - - $ 2,517,884 $ 1,493 112 - - $ 1,605 $ 2,516,373 $ 2,516,279 $ 2,517,866 - - - - $ 2,517,866 $ 1,333 121 - - $ 1,454 $ 2,516,412

27 -

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. Concession licenses

In June 2018, TWM returned uplink/downlink 5MHz of bandwidth within the 2100MHz band for the 3G spectrum in advance.

b. 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.

c. 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 legal useful lives, which can be extended, the Group regards these assets as intangible assets with indefinite useful lives.

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. (formerly “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.
28 -

d. Goodwill

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

September 30, 2019 Telecommunications service $ 7,238,758 Fixed network service 357,970 Cable television business 3,269,636 Retail business 5,006,231 $ 15,872,595	December 31, 2018 September 30, 2018 $ 7,238,758 $ 7,238,758 357,970 357,970 3,269,636 3,269,636 5,006,231 5,006,231 $ 15,872,595 $ 15,872,595

e. 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 September 30, 2019.

17. OTHER NON-CURRENT ASSETS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Long-term accounts receivable	$	293,960	$	101,740	$	75,094
Refundable deposits		627,818		634,512		629,297
Prepayments for investment		100,000		-		-
Prepayments for equipment		139,599		29,256		186,065
Others		511,429		509,687		511,458
	$	1,672,806	$	1,275,195	$	1,401,914

18. BORROWINGS

a. Short-term borrowings

September 30, 2019 Unsecured loans $ 15,670,000 Annual interest rate 0.65%-0.95%	December 31, 2018 September 30, 2018 $ 10,270,000 $ 5,390,773 0.7%-0.96% 0.7%-5.44%

For the information on endorsements and guarantees, see Note 32(b).

29 -

b. Short-term notes and bills payable

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Short-term notes and bills payable	$	1,200,000	$	1,500,000	$	2,400,000
Less: Discount on short-term notes and bills
payable		-		(1,008)		(1,316)
	$	1,200,000	$	1,498,992	$	2,398,684
Annual interest rate		0.678%	0.788%-0.798%		0.638%-0.658%
Long-term borrowings
	September 30,		December 31,		September 30,
		2019		2018		2018
Unsecured loans	$	6,000,000	$	8,000,000	$	11,000,000
Secured loans		2,940,209		3,192,674		3,243,499
Less: Current portion		(303,285)		(2,303,236)		(5,303,225)
	$	8,636,924	$	8,889,438	$	8,940,274
Annual interest rate:
Unsecured loans	0.72%-0.79%		0.75%-1.07%		0.72%-1.22%
Secured loans		2.0337%		2.0337%		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.

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 31 for details.

30 -

19. BONDS PAYABLE

September 30, 2019 3rd domestic unsecured straight corporate bonds $ 4,499,942 5th domestic unsecured straight corporate bonds 14,988,270 3rd domestic unsecured convertible bonds 2,226,077 Less: Current portion (4,499,942) $ 17,214,347	December 31, 2018 September 30, 2018 $ 4,499,680 $ 8,999,525 14,986,357 14,985,712 9,432,780 9,714,396 (4,499,680) (4,499,932) $ 24,419,137 $ 29,199,701

a. 3rd domestic unsecured straight corporate bonds

On December 20, 2012, TWM issued $9,000,000 thousand of the 3rd seven-year 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 September 30, 2019, the amount of unamortized bond issue cost was $58 thousand. The trustee of bond holders is Hua Nan Commercial Bank.

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

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

b. 4th domestic unsecured straight corporate bonds

On April 25, 2013, TWM issued $5,800,000 thousand of the 4th five-year 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 the 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 September 30, 2019, the amount of unamortized bond issue cost was $11,730 thousand. The trustee of bond holders is Bank of Taiwan.

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

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

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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 $99.9 per share since July 15, 2019. 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 September 30, 2019, the amount of unamortized bond discount was $44,123 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
Convertible bonds converted into common stock

Liability component on September 30, 2018

Liability component on January 1, 2019

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

Liability component on September 30, 2019

$ 9,989,130
(400,564)

(35,961)
9,552,605
163,734

(1,943)
$ 9,714,396
$ 9,432,780
44,299
(7,251,002)
$ 2,226,077

As of September 30, 2019, December 31, 2018 and September 30, 2018, the bondholders had requested to convert the bonds at face values of $7,729,800 thousand, $314,200 thousand and $2,000 thousand, respectively.

32 -

20. PROVISIONS

Restoration
Decommissioning
Warranties
Current
Non-current
Balance, January 1, 2019

Provision

Payment/Reversal

Unwinding of discount

Balance, September 30, 2019

Balance, January 1, 2018

Provision

Payment/Reversal

Unwinding of discount

Balance, September 30, 2018

September 30,
2019
December 31,
2018
September 30,
2018
$ 1,187,488
$ 1,184,823
$ 1,187,282
310,225
268,536
254,745

53,176

67,929

74,958
$ 1,550,889
$ 1,521,288
$ 1,516,985

$ 102,327
$ 120,334
$ 127,198

1,448,562

1,400,954

1,389,787
$ 1,550,889
$ 1,521,288
$ 1,516,985
Restoration
Decom-
missioning
Warranties
Total

$ 1,184,823 $ 268,536 $ 67,929 $ 1,521,288
38,309
37,675
54,918
130,902
(38,810)
(1,714)
(69,671)
(110,195)

3,166

5,728

-

8,894
$ 1,187,488
$ 310,225
$ 53,176
$ 1,550,889
$ 1,208,093 $ 213,372 $ 128,412 $ 1,549,877
42,028
36,720
71,821
150,569
(66,934)
-
(125,275)
(192,209)

4,095

4,653

-

8,748
$ 1,187,282
$ 254,745
$ 74,958
$ 1,516,985

21. 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 provisions, the Group’s contributions to the pension plans amounted to $77,791 thousand and $76,422 thousand for the three months ended September 30, 2019 and 2018, respectively, and $232,076 thousand and $228,845 thousand for the nine months ended September 30, 2019 and 2018, respectively.

b. Defined benefit plan

The Group recognized pension amounts of $1,967 thousand and $1,996 thousand for the three months ended September 30, 2019 and 2018, respectively, and $5,904 thousand and $5,988 thousand for the nine months ended September 30, 2019 and 2018, respectively, by using the actuarially determined pension cost rate.

33 -

22. EQUITY

a. Common stock

As of September 30, 2019, December 31, 2018, and September 30, 2018, TWM’s authorized capital was $60,000,000 thousand and capital issued and outstanding were $34,679,531 thousand, $34,208,519 thousand and $34,208,328 thousand, respectively, divided into 3,467,953 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 September 30, 2019, December 31, 2018, and September 30, 2018, the bondholders of the 3rd domestic unsecured convertible bonds had requested to convert the bonds into 75,111 thousand, 3,001 thousand and 19 thousand common stocks, respectively. TWM recognized 27,991 thousand, 2,982 thousand and 19 thousand of common stocks, respectively, as capital collected in advance, totaling $279,910 thousand, $29,819 thousand and $191 thousand, respectively. TWM would complete the related corporate registrations after the issuance of new stocks on the record date in accordance with the regulations.

b. Capital surplus

September 30,
2019
Additional paid-in capital from convertible
corporate bonds
$ 13,190,698
Treasury stock transactions
5,159,704
Difference between consideration and
carrying amount arising from the disposal
of subsidiaries’ stock
85,965
Changes in equity of subsidiaries
501,215
Convertible bonds payable options
90,936
Changes in equity of associates accounted for
using equity method
48,147
Others

33,968

$ 19,110,633

December 31,
2018
September 30,
2018
$ 6,363,714 $ 6,077,348

5,159,704
5,159,704
85,965
85,965

501,215
501,215

387,979
400,484

48,147
42,164

33,968

32,952
$ 12,580,692
$ 12,299,832

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.

34 -

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 appropriations of earnings for 2018 and 2017 which have been resolved in the AGM on June 12, 2019 and 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 $ 5.54897 $ 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.

35 -

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

(6,883)
-
-
Changes in fair value of
financial assets at FVTOCI

-
14,078
-
Changes in other
comprehensive income (loss)
of associates accounted for
using equity method

1,881
4,910
-
Income tax effect

-

55,229

-

Balance, September 30, 2019
$ (29,400)
$ 3,234
$ -

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

(8,416)
-
-
Changes in fair value of
financial assets at FVTOCI

-
271,627
-

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

(664)
(7,970)
-
Income tax effect

-
(20,893)

-

Balance, September 30, 2018
$ (25,579)
$ (39,021)
$ -

Total
$ (95,381)
(6,883)
14,078
6,791

55,229
$ (26,166)
$(362,703)
64,419
(298,284)
(8,416)
271,627
(8,634)
(20,893)
$ (64,600)

e. Treasury stock

As of September 30, 2019, December 31, 2018 and September 30, 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 $78,260,179 thousand, $74,417,046 thousand and $76,513,300 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.

36 -

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 of defined benefit plans Changes in ownership interests in subsidiaries Cash dividends paid to non-controlling interests of subsidiaries Increase in non-controlling interest Ending balance		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 6,112,176 16,275 6,128,451 568,461 (6,841) 2,308 6,008 - - - (693,361) - $ 6,005,026	2018 $ 5,879,738 (39) 5,879,699 606,725 (7,964) (11,587) (4,694) 2,409 146 12,663 (616,452) 10,295 $ 5,871,240

23. 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 September 30 2019 2018 $ 11,988,429 $ 12,878,147 17,005,817 13,598,615 1,485,483 1,547,668 346,186 295,543 $ 30,825,915 $ 28,319,973		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 11,988,429 17,005,817 1,485,483 346,186 $ 30,825,915		2019 $ 36,399,014 48,393,382 4,498,930 1,021,813 $ 90,313,139	2018 $ 40,613,970 40,995,699 4,654,480 902,251 $ 87,166,400

a. Contract information

Please refer to Note 36 and to Note 4 to the consolidated financial statements for the year ended December 31, 2018.

37 -

b. Contract balances

	September 30,	December 31,	September 30,
	2019	2018	2018
Contract assets
Bundle sales	$ 8,490,267	$ 8,755,126	$ 8,954,737
Less: Allowance for impairment loss	(72,068)	(74,250)	(75,919)
	$ 8,418,199	$ 8,680,876	$ 8,878,818
Current	$ 4,911,308	$ 5,472,357	$ 5,645,634
Non-current	3,506,891	3,208,519	3,233,184
	$ 8,418,199	$ 8,680,876	$ 8,878,818

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

The Group measures the loss allowance for contract assets at an amount equal to lifetime ECLs. The contract assets will be transferred to accounts receivable when the corresponding invoice is billed to the client, and the contract assets have substantially the same risk as the trade receivables. Therefore, the Group concluded that the expected loss rates for trade receivables can be applied to the contract assets.

	September 30,	December 31,	September 30,
	2019	2018	2018
Contract liabilities
Telecommunications and value-added
services	$ 1,040,291	$ 1,235,446	$ 1,188,558
Sales of goods	24,344	141,343	99,818
Cable TV and broadband services	695,596	694,228	729,762
Others	13,926	15,920	23,847
	$ 1,774,157	$ 2,086,937	$ 2,041,985
Current	$ 1,726,286	$ 2,030,793	$ 1,982,337
Non-current	47,871	56,144	59,648
	$ 1,774,157	$ 2,086,937	$ 2,041,985

The changes in balances of contract assets and contract liabilities primarily result from the timing difference between the satisfaction of performance obligation and the payments collected from customers.

c. Assets related to contract costs

	September 30,	December 31,	September 30,
	2019	2018	2018
Incremental costs of obtaining a
contract - non-current	$ 2,243,280	$ 2,946,282	$ 3,266,998

The Group considered the past experience and the default clauses in the sale contracts and believed the commission and the subsidy paid for obtaining a contract are wholly recoverable, therefore, such costs are capitalized. Amortization recognized for the three months ended September 30, 2019 and 2018 were $593,316 thousand and $809,496 thousand, respectively, and for the nine months ended September 30, 2019 and 2018 were $1,950,516 thousand and $2,635,125 thousand, respectively.

38 -

24. NON-OPERATING INCOME AND EXPENSES

a. Other income

Interest income Dividend income Other income b. Other gains and losses, net Loss on disposal of property, plant and equipment, net Loss on disposal of intangible assets, net Valuation gain (loss) on financial assets at FVTPL Valuation gain on financial liabilities at FVTPL Reversal of impairment loss on property, plant and equipment Gain (loss) on foreign exchange Others	For the Three Months Ended September 30 2019 2018 $ 16,826 $ 12,901 110,773 78,083 19,387 21,146 $ 146,986 $ 112,130 For the Three Months Ended September 30 2019 2018 $ (16,768) $ (25,116) - (3,384) (580) 538 - 3,000 - - (10,094) (9,664) (733) (2,497) $ (28,175) $ (37,123)	For the Three Months Ended September 30 2019 2018 $ 16,826 $ 12,901 110,773 78,083 19,387 21,146 $ 146,986 $ 112,130 For the Three Months Ended September 30 2019 2018 $ (16,768) $ (25,116) - (3,384) (580) 538 - 3,000 - - (10,094) (9,664) (733) (2,497) $ (28,175) $ (37,123)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
			2019 2018 $ 51,096 $ 46,610 117,211 83,164 56,021 59,450 $ 224,328 $ 189,224 For the Nine Months Ended September 30
		2019 $ (16,768) - (580) - - (10,094) (733) $ (28,175)		2019 $ (54,305) - 3,390 1,819 - (14,546) (2,471) $ (66,113)	2018 $ (56,815) (128,002) (21,915) 8,000 103,586 2,999 (5,494) $ (97,641)

c. Finance costs

Interest expense Bank loans Corporate bonds Lease liabilities Others Less: Capitalized interest Capitalization rates	For the Three Months Ended September 30 2019 2018 $ 52,094 $ 55,914 58,803 89,122 24,600 - 7,741 9,124 143,238 154,160 (1,318) (1,473) $ 141,920 $ 152,687 1.34% 1.34%	For the Three Months Ended September 30 2019 2018 $ 52,094 $ 55,914 58,803 89,122 24,600 - 7,741 9,124 143,238 154,160 (1,318) (1,473) $ 141,920 $ 152,687 1.34% 1.34%	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 52,094 58,803 24,600 7,741 143,238 (1,318) $ 141,920 1.34%		2019 $ 135,795 196,773 73,408 31,368 437,344 (3,706) $ 433,638 1.34%	2018 $ 186,166 232,980 - 38,653 457,799 (4,701) $ 453,098 1.34%

39 -

25. INCOME TAX

a. Income tax recognized in profit or loss

Current income tax expense Current period Prior years’ adjustment Others Deferred income tax expense Temporary differences Changes in tax rates Income tax expense		For the Three Months Ended September 30 2019 2018 $ 812,556 $ 652,894 1,959 - - (10,198) 814,515 642,696 26,223 38,100 - - 26,223 38,100 $ 840,738 $ 680,796		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 812,556 1,959 - 814,515 26,223 - 26,223 $ 840,738		2019 $ 2,347,933 49,670 (17,079) 2,380,524 87,161 - 87,161 $ 2,467,685	2018 $ 2,312,996 (85,060) (42,451) 2,185,485 180,499 1,962 182,461 $ 2,367,946

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 has been 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 expense (income) Unrealized (gain) loss on financial assets at FVTOCI Changes in tax rates - Remeasurements of defined benefit plans Income tax expense (income)	For the Three Months Ended September 30 2019 2018 $ (2,470) $ 2,087 - - $ (2,470) $ 2,087	For the Three Months Ended September 30 2019 2018 $ (2,470) $ 2,087 - - $ (2,470) $ 2,087	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ (2,470) - $ (2,470)		2019 $ (55,229) - $ (55,229)	2018 $ 20,893 (18,302) $ 2,591

40 -

c. Income tax examinations

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

Company TWM TCC WMT TNH TFN TT&T TCCI TDC TDS TPIA TFNM GFMT GWMT WTVB TUI TID TKT YJCTV MCTV PCTV UCTV GCTV momo FLI FPI FST Bebe Poshe	Year
	2017 2017 2017 2017 2017 2017 2017 2019 (except 2018 not yet examined and assessed) 2017 2017 2016 2017 2017 2017 2017 2017 2017 2016 2017 2016 2016 2016 2017 2017 2017 2017 2017

26. 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 September 30, 2019	For the Three Months Ended September 30, 2019
	Amount After Income Tax Weighted- average Number of Common Stock $ 3,253,393 2,786,849 - 2,683 7,460 33,068 $ 3,260,853 2,822,600	EPS $ 1.17 $ 1.15

41 -

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) 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) 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 September 30, 2018	For the Three Months Ended September 30, 2018
	Amount After Income Tax Weighted- average Number of Common Stock EPS $ 3,273,365 2,722,081$ 1.21 - 3,058 19,381 95,511 $ 3,292,746 2,820,650 $ 1.16 For the Nine Months Ended September 30, 2019
	Amount After Income Tax Weighted- average Number of Common Stock EPS $ 9,530,067 2,754,546$ 3.46 - 3,144 42,480 65,371 $ 9,572,547 2,823,061 $ 3.39 For the Nine Months Ended September 30, 2018
	Amount After Income Tax Weighted- average Number of Common Stock $ 10,551,603 2,722,081 - 3,520 58,263 95,511 $ 10,609,866 2,821,112	EPS $ 3.88 $ 3.76

42 -

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.

27. CASH FLOW INFORMATION

Changes in liabilities arising from financing activities:

For the Nine Months Ended September 30, 2019

Opening Balance Lease liabilities (including current and non-current portions) $ 9,980,846	Cash Flows $ (2,897,338)		Non-cash Changes New Leases Others Closing Balance $ 2,924,220 $ (108,653) $ 9,899,075
			New Leases $ 2,924,220

28. 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.

29. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

September 30, 2019 Financial assets Financial assets at FVTPL (including current and non-current portions) $ 2,500 Financial assets at FVTOCI (including current and non-current portions) 5,036,017 Financial assets measured at amortized cost (including current and non-current portions) (Note 1) 24,646,538 Total $ 29,685,055	December 31, 2018 September 30, 2018 $ 81,474 $ 87,365 5,019,631 5,071,415 18,678,535 16,770,449 $ 23,779,640 $ 21,929,229

43 -

September 30, 2019 Financial liabilities Financial liabilities measured at amortized cost (including current and non-current portions) (Note 2) $ 69,833,028 Financial liabilities at FVTPL - Total $ 69,833,028	December 31, 2018 September 30, 2018 $ 69,992,701 $73,080,403 1,861 1,960 $ 69,994,562 $73,082,363

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, other financial liabilities (classified as other current liabilities), 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)	September 30, 2019 Carrying Amount Fair Value $ 21,714,289 $ 22,082,667	December 31, 2018 Carrying Amount Fair Value $ 28,918,817 $ 29,495,234	September 30, 2018
			Carrying Amount Fair Value $ 33,699,633 $ 34,516,174

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).
44 -

September 30, 2019 Financial assets at FVTPL Equity instruments Limited partnerships 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 $ - $ 4,319,736 - - - $ 4,319,736 $ - Level 1 $ 81,474 $ 4,024,556 - - - $ 4,024,556 $ -	Level 2 $ - $ - - - 7,774 $ 7,774 $ - Level 2 $ - $ - - - 10,125 $ 10,125 $ 1,861	Level 3 $ 2,500 $ - 177,585 500,880 30,042 $ 708,507 $ - Level 3 $ - $ - 181,178 775,385 28,387 $ 984,950 $ -	Total $ 2,500 $ 4,319,736 177,585 500,880 37,816 $ 5,036,017 $ - Total $ 81,474 $ 4,024,556 181,178 775,385 38,512 $ 5,019,631 $ 1,861

45 -

September 30, 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 $ 87,365 $ 3,966,809 - - - $ 3,966,809 $ -	Level 2 $ - $ - - - 13,161 $ 13,161 $ 1,960	Level 3 $ - $ - 170,953 892,616 27,876 $ 1,091,445 $ -	Total $ 87,365 $ 3,966,809 170,953 892,616 41,037 $ 5,071,415 $ 1,960

There was no transfer between the fair value measurements of Levels 1 and 2 for the nine months ended September 30, 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. 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 rates were estimated at 29.6%, 28% and 28% as of September 30, 2019, December 31, 2018 and September 30, 2018, respectively.

46 -

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

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

For the Nine Months Ended September 30, 2019

	Financial Assets	Financial Assets	Financial Assets
	at	FVTPL -	at FVTOCI -
		Equity	Equity
	Instruments		Instruments
Balance at January 1, 2019	$	-	$ 984,950
Additions		2,500	-
Recognized in other comprehensive income (unrealized loss
on financial assets at FVTOCI)		-	(276,443)
Balance at September 30, 2019	$	2,500	$ 708,507

For the Nine Months Ended September 30, 2018

	Financial Assets	Financial Assets	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 (gain on financial assets at
FVTPL)		261		-
Recognized in other comprehensive income (unrealized gain
on financial assets at FVTOCI)		-		138,308
Redemption		(491,192)		-
Capital return		-		(3,149)
Balance at September 30, 2018	$	-	$	1,091,445

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
47 -

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

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.

48 -

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 September 30, 2019, December 31, 2018 and September 30, 2018, the Group had unused bank facilities of $52,491,122 thousand, $58,376,758 thousand and $60,732,991 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.

September 30, 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 September 30, 2018 Unsecured loans Secured loans Short-term notes and bills payable Bonds payable	Contractual Cash Flows Within 1 Year $ 21,764,588 $ 15,734,763 3,193,787 361,957 1,200,004 1,200,004 22,574,020 4,701,180 10,073,738 3,608,086 $ 58,806,137 $ 25,605,990 $ 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 $ 16,506,412 $ 10,460,685 3,581,925 268,479 2,400,000 2,400,000 35,063,300 4,761,480 $ 57,551,637 $ 17,890,644	1-5 Years $ 6,029,825 999,562 - 8,782,840 6,385,303 $ 22,197,530 $ 6,034,010 1,020,143 - 16,249,320 $ 23,303,473 $ 6,045,727 1,032,426 - 21,121,820 $ 28,199,973	More Than 5 Years $ - 1,832,268 - 9,090,000 80,349 $ 11,002,617 $ - 2,116,664 - 9,180,000 $ 11,296,664 $ - 2,281,020 - 9,180,000 $ 11,461,020

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.

49 -

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.

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	September 30, 2019
	Foreign Currencies Exchange Rate New Taiwan Dollars $ 28,133 4.356 $ 122,549 53,841 31.02 1,670,089 1,152 33.87 39,004 163,227 4.356 711,017 17,115 31.02 530,922 1,965 3.956 7,774 121,892 1.021 124,391 20,075 31.02 622,697 185 33.87 6,279 9,809 3.956 38,805 39,580 0.288 11,389

50 -

Foreign currency assets Monetary items RMB USD EUR Non-monetary items RMB USD HKD THB Foreign currency liabilities Monetary items USD EUR Foreign currency assets Monetary items RMB USD EUR Non-monetary items RMB USD HKD THB Foreign currency liabilities Monetary items USD EUR	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 September 30, 2018
	Foreign Currencies Exchange Rate New Taiwan Dollars $ 15,587 4.447 $ 69,316 32,960 30.59 1,008,245 497 35.81 17,814 160,068 4.447 711,823 30,091 30.59 920,492 3,362 3.914 13,161 130,731 0.949 123,998 13,660 30.59 417,860 1,001 35.81 35,836

Please refer to Note 24(b) for the information related to the Group’s realized and unrealized foreign exchange gains (losses) for the three months and the nine months ended September 30, 2019 and 2018, respectively. Due to the variety of foreign currency transactions and functional currencies, the Group could not disclose the foreign exchange gains (losses) for each foreign currency with significant influence.

51 -

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 $57,624 thousand and $32,084 thousand for the nine months ended September 30, 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:

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Fair value interest rate risk
Financial assets	$	5,565,428	$	4,290,492	$	3,111,565
Financial liabilities		45,657,287		33,285,029		37,783,922
Cash flow interest rate risk
Financial assets		8,054,962		3,750,159		3,137,496
Financial liabilities		9,540,209		9,162,674		8,234,271

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 $5,570 thousand and $19,113 thousand for the nine months ended September 30, 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 $125 thousand and $4,368 thousand since the fair value of financial assets at FVTPL decreased for the nine months ended September 30, 2019 and 2018, respectively, and other comprehensive income would have decreased by $251,801 thousand and $253,571 thousand since the fair value of financial assets at FVTOCI decreased for the nine months ended September 30, 2019 and 2018, respectively.

52 -

30. 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 M.E. Associates AppWorks Associates Beijing Global JiuSha Media Technology Co., Ltd. Associates (subsidiary of GHS) Beijing Global Zhiqun Trading Co., Ltd. Associates (subsidiary of GHS) Beijing YueShih JiuSha Media Technology Co., Ltd. Associates (subsidiary of GHS) GHS Trading 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 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 (not a related party since August 2019) Far Eastern Memorial Hospital Other related parties Dai-Ka Ltd. Other related parties

(Continued)

53 -

Nature of Relationship

Related Party

Chen Feng Investment Ltd. Other related parties Chen Yun Co., 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 Key management Chairman, directors, general manager, managers, etc.

(Concluded)

c. Significant transactions with related parties
1) Operating revenue

Associates Other related parties	For the Three Months Ended September 30 2019 2018 $ 15,183 $ 15,073 243,662 237,630 $ 258,845 $ 252,703	For the Three Months Ended September 30 2019 2018 $ 15,183 $ 15,073 243,662 237,630 $ 258,845 $ 252,703	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 15,183 243,662 $ 258,845		2019 $ 60,232 660,656 $ 720,888	2018 $ 53,425 615,058 $ 668,483

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.

2) Purchases

Associates Other related parties	For the Three Months Ended September 30 2019 2018 $ 191,478 $ 98,357 86,450 193,452 $ 277,928 $ 291,809	For the Three Months Ended September 30 2019 2018 $ 191,478 $ 98,357 86,450 193,452 $ 277,928 $ 291,809	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 191,478 86,450 $ 277,928		2019 $ 381,980 295,937 $ 677,917	2018 $ 307,651 671,177 $ 978,828

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.

54 -

3) Receivables due from related parties

	Related Party	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
Account	Categories		2019		2018		2018
Accounts receivable	Associates	$	11,889	$	11,249	$	4,288
Accounts receivable	Other related parties		143,983		126,709		124,494
		$	155,872	$	137,958	$	128,782
Other receivables	Associates	$	109,435	$	113,187	$	93,308
Other receivables	Other related parties		110,254		59,108		45,939
		$	219,689	$	172,295	$	139,247

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

4) Payables due to related parties

	Related Party	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
Account	Categories		2019		2018		2018
Accounts payable	Associates	$	111,406	$	91,266	$	83,211
Accounts payable	Other related parties		68,720		88,322		75,233
		$	180,126	$	179,588	$	158,444
Other payables	Other related parties	$	17,249	$	60,216	$	63,136
5) Prepayments
		September 30,		December 31,		September 30,
		2019		2018			2018
Other related parties		$	29,386	$	15,467	$	33,043

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

	September 30,	December 31,	September 30,
	2019	2018	2018
Other related parties
TFCB	$ 7,150,605	$ 1,284,174	$ 1,231,716
Others	16,864	23,001	89,461
	$ 7,167,469	$ 1,307,175	$ 1,321,177

55 -

7) Cash equivalents

For the Nine Months Ended September 30, 2019

Related Party Target Purchase Price TFCB Government bonds with repurchase rights $ 146,013	Proceeds $ 146,034	Interest Income $ 21

8) Financial assets at FVTPL - current

For the Three Months and the Nine Months Ended September 30, 2019

Related Party Target Purchase Price FSIT Fund $ 100,000	Proceeds $ 84,864

The cumulative losses were $15,136 thousand, and the Group recognized $3,390 thousand as gain for the three months and the nine months ended September 30, 2019.

For the Nine Months Ended September 30, 2018

Related Party Target Purchase Price FSIT Fund $ 100,000	Proceeds $ 88,184

The cumulative loss was $11,816 thousand, and the Group recognized $2,249 thousand as loss for the nine months ended September 30, 2018.

9) Equity purchase transaction

					Shares (In		Unpaid
Related Party	Transaction Date		Target		Thousands)	Amounts
Jamie Lin, President
of TWM	September 2019		AppWorks		387	$	62,000
10) Others
		September 30,		December 31,		September 30,
			2019		2018		2018
Guarantee deposits
Other related parties		$	54,117	$	51,548	$	51,522
Other current liabilities - receipts under
custody
Other related parties		$	105,472	$	69,057	$	50,167

56 -

Operating expenses Other related parties TMF TNHF Fubon Life TFCB Others Other income Other related parties	For the Three Months Ended September 30 2019 2018 $ 4,800 $ 6,000 - - - 36,096 65,293 57,073 33,307 34,058 $ 103,400 $ 133,227 $ 15,308 $ 1,213	For the Three Months Ended September 30 2019 2018 $ 4,800 $ 6,000 - - - 36,096 65,293 57,073 33,307 34,058 $ 103,400 $ 133,227 $ 15,308 $ 1,213	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 4,800 - - 65,293 33,307 $ 103,400 $ 15,308		2019 $ 13,100 5,000 74 193,508 120,859 $ 332,541 $ 15,308	2018 $ 14,420 5,000 106,259 193,914 130,117 $ 449,710 $ 1,213

11) Lease arrangements

Acquisition of right-of-use assets

	For	the Three	For	the Nine
	Months Ended		Months Ended
	September 30,		September 30,
		2019		2019
Other related parties	$	1,731	$	89,995
Lease liabilities (including current and non-current portions)
			September 30,
				2019
Other related parties			$	692,274

Sublease arrangements under finance leases

For the nine months ended September 30, 2019, the Group subleased right-of-use assets to other related parties under finance leases. As of September 30, 2019, the balance of finance lease receivables was $256 thousand. For the three months and the nine months ended September 30, 2019, the Group recognized $21 thousand and $39 thousand, respectively, as income from the subleasing of right-of-use assets.

Interest expenses

	For	the Three	For	the Nine
	Months Ended		Months Ended
	September 30,		September 30,
		2019		2019
Associates	$	5	$	61
Other related parties		1,549		4,784
	$	1,554	$	4,845

57 -

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

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 September 30 2019 2018 $ 59,426 $ 63,664 889 2,228 $ 60,315 $ 65,892	For the Three Months Ended September 30 2019 2018 $ 59,426 $ 63,664 889 2,228 $ 60,315 $ 65,892	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 59,426 889 $ 60,315		2019 $ 202,036 17,591 $ 219,627	2018 $ 221,235 6,867 $ 228,102

31. ASSETS PLEDGED

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

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2019		2018		2018
Other current financial assets	$	168,863	$	160,033	$	143,352
Services concessions		7,014,733		7,148,773		7,193,452
Other non-current financial assets		208,224		131,110		130,587
	$	7,391,820	$	7,439,916	$	7,467,391

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. Unrecognized commitments

	September 30,	December 31,	December 31,	September 30,
	2019		2018	2018
Purchases of property, plant and equipment$ 3,979,264		$	806,935	$ 1,367,932
Purchases of cellular phones	$ 3,749,548	$	1,872,470	$ 4,201,656

As of September 30, 2019, the amount of lease commitments commencing after the balance sheet date was $389,000 thousand.

b. As of September 30, 2019, December 31, 2018 and September 30, 2018, the amounts of endorsements and guarantees provided to group entities were $21,550,000 thousand, $21,550,000 thousand and $21,616,705 thousand, respectively.
c. In accordance with the NCC’s policy and regulations, TWM entered into a contract with First Commercial Bank Co., Ltd., which provided a performance guarantee for advance receipts from prepaid cards and electronic gift certificates, totaling $497,020 thousand and $16,551 thousand, respectively, as of September 30, 2019.
58 -

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 September 30, 2019, the cable television companies had provided $74,735 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 provided a performance guarantee for advance receipts from prepaid bonuses and electronic tickets totaling $112,968 thousand and $33,854 thousand, respectively, as of September 30, 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 September 30, 2019, $660,156 thousand (tax included) of the concession had been paid.

3) Performance guarantee:

As of September 30, 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.

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 August 2015, Far EasTone Telecommunications (“FET”) filed a civil statement of complaint with the Court, in which FET claimed 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. (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)
59 -

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. On May 29, 2019, the judgment dismissed by the Supreme Court was as follows: regarding the portion of the High Court's original judgment on (1) dismissed FET's other appeal, (2) ruled the TWM's payment obligation, and (3) ruled the litigation expenses with respect to above-mentioned two items shall be dismissed, and the Supreme Court remanded the case to the High Court. The case is now under the trial of the High Court.

33. SIGNIFICANT EVENTS AFTER REPORTING PERIOD

a. TWM applied for the participation in the 5G mobile spectrum auction to be held by NCC, and paid $1,000,000 thousand as bid bond in October 2019.
b. In November 2019, the Board of Directors resolved that TWM is going to purchase newly issued common stock of AppWorks Fund III Co., Ltd. through TVC, one of TWM’s subsidiaries, and the investment amount is capped at $600,000 thousand.

34. OTHERS

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

Employee benefits Salary Insurance expenses Pension Others Depreciation Amortization	For the Three Months Ended September 30	For the Three Months Ended September 30
	2019 Classified as Operating Costs Classified as Operating Expenses Total $ 555,454 $ 1,151,468 $ 1,706,922 46,770 102,802 149,572 25,565 52,407 77,972 26,477 67,233 93,710 2,918,046 248,733 3,166,779 759,607 691,012 1,450,619	2018
		Classified as Operating Costs Classified as Operating Expenses Total $ 536,053 $ 1,067,795 $ 1,603,848 43,686 96,795 140,481 24,567 51,274 75,841 25,895 62,687 88,582 2,371,731 84,971 2,456,702 810,979 919,906 1,730,885

Employee benefits Salary Insurance expenses Pension Others Depreciation Amortization	For the Nine Months	Ended September 30
	2019 Classified as Operating Costs Classified as Operating Expenses Total $ 1,664,039 $ 3,486,314 $ 5,150,353 139,846 308,537 448,383 75,593 156,901 232,494 77,589 194,625 272,214 8,971,625 751,970 9,723,595 2,276,598 2,256,410 4,533,008	2018
		Classified as Operating Costs Classified as Operating Expenses Total $ 1,628,246 $ 3,329,605 $ 4,957,851 131,385 292,315 423,700 73,053 154,549 227,602 77,566 196,534 274,100 7,222,068 254,432 7,476,500 2,410,304 2,957,131 5,367,435

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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 $102,984 thousand, $102,711 thousand, $300,488 thousand, and $334,871 thousand, and remuneration to directors were $10,299 thousand, $10,271 thousand, $30,049 thousand, and $33,487 thousand, which were made by applying the rates to the aforementioned profit before income tax, for the three months and the nine months ended September 30, 2019 and 2018, respectively.

If there is a change in the approved amounts after the annual consolidated financial statements are authorized for issue, the difference is 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.

35. 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: Table 4 (attached)
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 5 (attached)
61 -
8) Receivables from related parties of at least NT$100 million or 20% of the paid-in capital: Table 6 (attached)
9) Names, locations and related information of investees on which TWM exercised significant influence: Table 7 (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 8 (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 9 (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 8 (attached)

36. 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.

For the Three Months					Adjustments	Adjustments
Ended September 30,	Telecommuni		Cable			and
2019	-cation	Retail	Television	Others	Eliminations		Total
Operating revenues	$ 17,176,506	$ 12,371,510	$ 1,523,292 $	149,653	$	(395,046)	$ 30,825,915
Operating costs	10,978,647	11,181,313	792,395	86,671		(347,128)	22,691,898
Operating expenses	2,972,035	863,109	191,411	12,626		(66,604)	3,972,577
Net other income and
expenses	112,192	4,614	9,241	-		(11,074)	114,973
Profit	3,338,016	331,702	548,727	50,356		7,612	4,276,413
EBITDA (Note)	6,909,971	512,380	776,649	103,353		(1,858)	8,300,495
For the Three Months					Adjustments
Ended September 30,	Telecommuni		Cable			and
2018	-cation	Retail	Television	Others	Eliminations		Total
Operating revenues	$ 16,835,177	$ 9,811,117	$ 1,584,786 $	144,528	$	(55,635)	$ 28,319,973
Operating costs	10,359,409	8,868,707	895,807	86,354		(30,992)	20,179,285
Operating expenses	3,193,277	694,719	204,002	15,122		(50,904)	4,056,216
Net other income and
expenses	134,897	2,977	15	-		(10,568)	127,321
Profit	3,417,388	250,668	484,992	43,052		15,693	4,211,793
EBITDA (Note)	6,303,374	334,927	798,484	96,273		56,826	7,589,884

62 -

For the Nine Months					Adjustments
Ended September 30,	Telecommuni		Cable		and
2019	-cation	Retail	Television	Others	Eliminations	Total
Operating revenues	$ 50,120,766	$ 35,922,568	$ 4,611,644 $	444,774	$ (786,613)	$ 90,313,139
Operating costs	31,430,202	32,364,100	2,464,430	259,508	(654,533)	65,863,707
Operating expenses	9,107,007	2,438,704	574,393	42,773	(169,142)	11,993,735
Net other income and
expenses	377,258	16,952	11,077	2,710	(33,217)	374,780
Profit	9,960,815	1,136,716	1,583,898	145,203	3,845	12,830,477
EBITDA (Note)	20,862,888	1,622,706	2,370,420	304,215	(23,665)	25,136,564
For the Nine Months					Adjustments
Ended September 30,	Telecommuni		Cable		and
2018	-cation	Retail	Television	Others	Eliminations	Total
Operating revenues	$ 52,533,468	$ 29,625,278	$ 4,770,816 $	432,012	$ (195,174)	$ 87,166,400
Operating costs	31,693,382	26,612,535	2,699,524	257,601	(109,521)	61,153,521
Operating expenses	10,036,361	2,049,986	621,436	44,820	(144,567)	12,608,036
Net other income and
expenses	513,128	8,700	231	-	(31,235)	490,824
Profit	11,316,853	971,457	1,450,087	129,591	27,679	13,895,667
EBITDA (Note)	20,052,105	1,203,977	2,408,095	289,086	151,214	24,104,477

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 Nine Months Ended September 30	For the Nine Months Ended September 30
		2019 $ 87,764,871 2,548,268 $ 90,313,139	2018 $ 84,837,298 2,329,102 $ 87,166,400

63 -

TABLE 1

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

FINANCING EXTENDED TO OTHER PARTIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

(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	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	$ 111,000 200,000	1.09422%-1.09511% 1.39378%	Short-term financing Short-term financing	$ - -	Operation requirements Operation requirements	$ - -	- -	$ - -	$ 36,099,195 36,099,195	$ 36,099,195 36,099,195	Note 2 Note 2
2	WMT	TWM TKT TFNM WTVB	Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes	3,500,000 100,000 3,000,000 600,000	3,500,000 100,000 3,000,000 600,000	2,416,000 - 1,520,000 330,000	1.09367%-1.09511% - 1.09378%-1.09489% 1.09367%-1.09552%	Short-term financing Short-term financing Short-term financing Short-term financing	- - - -	Operation requirements Operation requirements Operation requirements Operation requirements	- - - -	- - - -	- - - -	8,101,728 8,101,728 8,101,728 8,101,728	8,101,728 8,101,728 8,101,728 8,101,728	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	7,600,000 -	1.09378%-1.09511% -	Short-term financing Short-term financing	- -	Operation requirements Operation requirements	- -	- -	- -	23,383,653 23,383,653	23,383,653 23,383,653	Note 2 Note 2
4	YJCTV	TFNM	Other receivables	Yes	140,000	140,000	140,000	1.09456%	Transactions	462,253	-	-	-	-	462,253	462,253	Notes 3 and 4
5	PCTV	TFNM	Other receivables	Yes	520,000	520,000	520,000	1.09456%	Transactions	538,110	-	-	-	-	538,110	538,110	Notes 3 and 4
6	GCTV	TFNM	Other receivables	Yes	250,000	250,000	250,000	1.09456%	Short-term financing	-	Repayment of financing	-	-	-	280,134	280,134	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.

64 -

TABLE 2

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED TO OTHER PARTIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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	$ 8,516,300 50,000	$ - -	33.91 0.08	$ 63,398,349 63,398,349	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.

65 -

TABLE 3

(In Thousands of New Taiwan Dollars)

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES) SEPTEMBER 30, 2019

Investing Company	Marketable Securities Type and Name	Relationship with the Securities Issuer	Financial Statement Account		September 30, 2019	September 30, 2019		Note
				Units/Shares (In Thousands)	Carrying Value	Percentage of Ownership %	Fair Value
TWM TCC WMT 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. Limited Partnerships The Last Thieves, L.P. 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 FVTPL 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	$ 241,260 893,978 30,042 415,544 85,336 90,696 2,500 3,184,498 22,455,637 37,761 45,994,512 9,810,030 - -	0.028 3.45 10 21.67 21.67 5.21 7.14 1.6 5.74 6.67 11.75 2.5 0.33 0.056	$ 241,260 893,978 30,042 415,544 85,336 90,696 2,500 3,184,498 22,455,637 37,761 45,994,512 9,810,030 - -	Note 1 Note 1 Note 1

(Continued)

66 -

Investing Company	Marketable Securities Type and Name	Relationship with the Securities Issuer	Financial Statement Account		September 30, 2019	September 30, 2019		Note
				Units/Shares (In Thousands)	Carrying Value	Percentage of Ownership %	Fair Value
momo	Stock Media Asia Group Holdings Limited We Can Medicines Co., Ltd.	- -	Current financial assets at FVTOCI Non-current financial assets at FVTOCI	43,668 2,400	$ 7,774 49,128	2.04 7.73	$ 7,774 49,128

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

Note 2: For the information on investments in subsidiaries and associates, see Table 7 and Table 9 for details.

(Concluded)

67 -

TABLE 4

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

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

Buyer	Property	Event Date	Transaction Amount	Payment Status	Counterparty	Relationship	Information on Previous Title Transfer If Counterparty			Is A Related Party	Pricing Reference	Purpose of Acquisition	Other Terms
							Property Owner	Relationship	Transaction Date	Amount
momo	Land	July 31, 2019	$ 628,143	The Group has paid $62,814 thousand. The remaining amounts will be settled in accordance with the contract.	Yi Jinn Industrial Co., Ltd.	-	-	-	-	$ -	Determined by the professional appraisal report and market conditions	Set up a southern logistics center for operational needs	None

68 -

TABLE 5

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 NINE MONTHS ENDED SEPTEMBER 30, 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 TPIA TKT TDS TFNM YJCTV PCTV UCTV GCTV MCTV momo	TFN TT&T TKT momo Fubon Ins. TWM TFNM Fubon Life TWM Fubon Ins. TWM Fubon Ins. TFN YJCTV PCTV UCTV GCTV TFNM TFNM TFNM TFNM Dai-Ka Ltd. TWM TPE	Subsidiary Subsidiary Subsidiary Subsidiary Other related party Ultimate parent Fellow subsidiary Other related party Ultimate parent Other related party Ultimate parent Other related party Fellow subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Parent Parent Parent Parent Other related party Ultimate parent Associate	Sale Purchase Purchase Purchase Sale Sale Sale Purchase Sale Sale Sale Sale Sale Sale Purchase Channel leasing fee Channel leasing fee Channel leasing fee Channel leasing fee Royalty for copyright Royalty for copyright Royalty for copyright Royalty for copyright Royalty for copyright Purchase Purchase	$ 260,381 3,393,659 774,196 212,466 600,414 113,710 3,420,835 248,097 110,505 102,840 774,196 132,323 212,466 104,083 110,137 318,334 372,571 165,601 141,955 318,334 372,571 165,601 141,955 118,370 567,036 391,848	1 (Note 2) (Note 2) (Note 2) 1 - 49 (Note 2) 2 1 91 90 92 57 (Note 2) 13 15 7 6 52 54 38 56 51 2 1	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 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 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 Based on contract terms Based on contract terms	- - - - - - - - - - - - - - - Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 - -	- - - - - - - - - - - - - - - Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 - -	$ 14,907 (393,956) (86,101) (65,288) 236,327 27,777 393,956 (14,907) 22,169 14,411 86,101 60,370 65,288 - (22,169) 37,139 - - - (37,139) - - - (52,609) (223,290) (111,406)	- (Note 3) (Note 3) (Note 3) 4 - 41 (Note 3) 2 2 90 88 100 - (Note 3) 17 - - - - - - - 90 3 1	Note 1 Note 1 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.

69 -

TABLE 6

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL SEPTEMBER 30, 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
TWM TCC WMT TFN YJCTV PCTV GCTV momo	momo TWM TFC TWM TFNM WTVB TWM TFNM TFNM TFNM TPE	Subsidiary Parent Subsidiary Parent Subsidiary Subsidiary Ultimate parent Parent Parent Parent Associate	Accounts receivable Other receivables 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	$ 236,327 111,210 200,267 2,426,046 1,525,817 330,901 393,956 7,677,210 4,906 140,484 5,473 521,471 2,356 250,692 99 109,081	6.57 10.59 6.86 7.53 6.76 3.50	$ - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - -	$ 227,134 - - 9,435 104,070 592 328,458 29,536 1,302 140,002 1,579 520,048 622 250,007 99 109,081	$ - - - - - - - - - - - - - - - -

70 -

TABLE 7

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 NINE MONTHS ENDED SEPTEMBER 30, 2019

(In Thousands of New Taiwan Dollars)

Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of September 30, 2019	as of September 30, 2019	Net Income (Loss) of the Investee	Investment Income (Loss)	Note
				September 30, 2019	December 31, 2018	Shares (In Thousands)	Percentage of Ownership %	Carrying Value
TWM TCC WMT TFN TCCI TFNM TKT	TCC WMT TVC TNH AppWorks ADT TFN TT&T TWM Holding TCCI TDC TDS TPIA TFC TFNM GFMT GWMT WTVB momo TUI TFN HK Ltd. TID TKT YJCTV MCTV PCTV UCTV GCTV kbro Media M.E.	Taiwan Taiwan 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	Investment Investment Investment Building and operating Songshan Cultural and Creative Park BOT project Venture capital, investment consulting, and management consulting 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 Livestreaming artists management service, digital media production, and media planning	$ 40,397,288 16,802,000 5,000 1,918,655 235,000 60,000 21,000,000 56,210 347,951 17,285,441 - 25,000 5,000 200,000 5,210,443 16,984 92,189 222,417 8,129,394 22,314,536 - 3,602,782 156,900 2,061,522 510,724 3,261,073 1,986,250 1,221,002 292,500 27,000	$ 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 2,925 3,602,782 129,900 2,061,522 510,724 3,261,073 1,986,250 1,221,002 292,500 -	502,970 42,065 500 191,866 1,275 6,000 2,100,000 2,484 - 154,721 - 2,500 500 20,000 230,921 1,500 8,945 18,177 63,047 400 - 104,712 14,700 33,940 6,248 68,090 169,141 51,733 29,250 460	100 100 100 49.9 51 14.4 100 100 100 100 - 100 100 100 100 100 100 100 45.01 100 - 100 100 100 29.53 100 99.22 92.38 32.5 15	$ 19,729,576 20,254,115 5,000 1,807,489 235,000 5,061 58,460,094 98,347 259,354 30,669,837 - 102,475 47,700 207,101 6,336,224 16,857 97,342 312,809 9,204,978 40,421,705 - 8,626,787 253,376 1,796,447 636,295 3,371,114 1,985,601 1,269,496 141,419 25,530	$ 2,760,613 1,626,058 - 64,566 (28,937) (3,485) 2,652,541 38,876 5,253 666 (596) 7,943 40,409 7,693 1,204,451 (22) 3,030 55,121 974,716 (81) 70 (106) 526 (119,117) 50,586 80,222 14,549 46,560 (47,447) (19,274)	$ 2,761,226 1,626,373 - 35,035 - (3,575) - - - - - - - - - - - - - - - - - - - - - - - -	Note 1 Note 1 Note 1 Note 2 Note 2 Notes 2 and 3 Note 2 Notes 2 and 4 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Notes 2 and 5 Note 2 Notes 2 and 4 Note 2 Note 2 Note 2 Notes 2 and 6 Note 2 Note 2 Note 2 Note 2 Note 2

(Continued)

71 -

Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of September 30, 2019	as of September 30, 2019	Net Income (Loss) of the Investee	Investment Income (Loss)	Note
				September 30, 2019	December 31, 2018	Shares (In Thousands)	Percentage of Ownership %	Carrying Value
GFMT GWMT momo Asian Crown (BVI) Fortune Kingdom Honest Development	UCTV GCTV Asian Crown (BVI) Honest Development FLI FPI FST TPE TVD Shopping Bebe Poshe Fortune Kingdom HK Fubon Multimedia HK Yue Numerous	Taiwan Taiwan British Virgin Islands Samoa Taiwan Taiwan Taiwan Taiwan Thailand Taiwan Samoa Hong Kong Hong Kong	Cable TV service provider Cable TV service provider Investment Investment Life insurance agent Property insurance agent Travel agent Logistics industry Wholesale and retail sales Wholesale of cosmetics Investment Investment Investment	$ 16,218 91,910 885,285 670,448 3,000 3,000 6,000 337,860 123,225 85,000 1,132,789 1,132,789 670,448	$ 16,218 91,910 885,285 670,448 3,000 3,000 6,000 337,860 123,225 85,000 1,132,789 1,132,789 670,448	1,300 3,825 9,735 21,778 500 500 3,000 16,893 24,150 8,500 11,594 11,594 16,600	0.76 6.83 81.99 100 100 100 100 17.7 35 85 100 100 100	$ 15,265 95,848 43,456 781,927 8,876 10,027 44,810 397,662 124,391 77,319 48,462 48,462 781,927	$ 14,549 46,560 3,059 46 (220) 900 5,493 121,877 29,198 (6,361) 3,024 3,024 46	$ - - - - - - - - - - - - -	Note 2 Note 2 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 September 30, 2019.

Note 4: Liquidation procedures were completed in August 2019.

Note 5: Non-controlling interests.

Note 6: 70.47% of stocks are held under trustee accounts.

Note 7: For information on investment in Mainland China, see Table 9 for details.

(Concluded)

72 -

TABLE 8

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019

(In Thousands of New Taiwan Dollars)

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
0	TWM	TFN TPIA momo TFN TFNM TNH TFN WMT TCC TFN TKT momo TFN WMT TT&T TDS TFN TNH	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Notes and accounts receivable, net Notes and accounts receivable, net Notes and accounts receivable, net Other receivables Other receivables Other non-current assets Short-term borrowings Short-term borrowings Short-term borrowings Notes and accounts payable Notes and accounts payable Notes and accounts payable Other payables Other payables Other payables Other payables Lease liabilities - current Lease liabilities - current	$ 15,357 48,169 236,535 30,488 13,459 18,028 7,600,000 2,416,000 111,000 66,872 65,029 25,913 375,967 10,046 86,101 20,228 36,061 111,502	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)

73 -

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
0	TWM	TFN momo TFN TNH YJCTV GCTV TKT TFN TPIA momo TFN TKT TFNM TDS TNH momo TT&T TNH TFN TFN TFN WMT	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1	Other current liabilities Other current liabilities Lease liabilities - non-current Lease liabilities - non-current Lease liabilities - non-current Lease liabilities - non-current Disposal of plant, property and equipment Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs Operating costs Operating expenses Operating expenses Operating expenses Other revenues and expenses, net Finance costs Finance costs	$ 28,180 16,035 42,702 396,560 36,189 17,793 12,499 260,381 83,731 600,414 3,389,832 211,908 14,420 53,190 24,176 77,205 774,356 69,749 31,297 28,097 60,462 21,756	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 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 orgeneral businesspractices	- - - - - - - - - 1% 4% - - - - - 1% - - - - -
1	TCC	TFC	1	Other receivables	200,267	The terms of transaction are determined in accordance with mutual agreements or general business practices	-
							(Continued)

74 -

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
2	WMT	TFNM WTVB TFNM	1 1 1	Other receivables Other receivables Other income	$ 1,525,817 330,901 10,122	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	1% - -
3	momo	FGE FST FGE Bebe Poshe TFNM	1 1 1 1 3	Notes and accounts receivable, net Other receivables Operating revenues Operating costs Operating costs	20,580 17,515 19,672 13,025 47,639	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	TFN	TFNM TFC TFNM momo TT&T	3 3 3 3 3	Notes and accounts receivable, net Operating revenues Operating revenues Operating revenues Operating expenses	22,169 48,580 110,505 15,105 80,501	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	TFNM	YJCTV PCTV YJCTV UCTV GCTV MCTV PCTV YJCTV GCTV	1 1 1 1 1 1 1 1 1	Notes and accounts receivable, net Other receivables Other receivables Other receivables Other receivables Other receivables Short-term borrowings Short-term borrowings Short-term borrowings	40,427 74,219 70,803 24,788 23,550 15,419 520,000 140,000 250,000	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	- - - - - - - - -

(Continued)

75 -

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
5	TFNM	WTVB PCTV YJCTV UCTV GCTV MCTV WTVB PCTV YJCTV UCTV GCTV WTVB	3 1 1 1 1 1 3 1 1 1 1 3	Notes and accounts payable Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating revenues Operating costs Operating costs Operating costs Operating costs Operating costs	$ 49,975 403,951 346,517 165,601 154,530 14,112 10,282 26,149 23,501 17,005 10,951 49,975	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)

76 -

TABLE 9

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 September 30, 2019	Net Income (Loss) of Investee	% Ownership through Direct or Indirect Investment	Investment Income (Loss)	Carrying Value as of September 30, 2019	Accumulated Inward Remittance of Earnings as of September 30, 2019
								Outflow	Inflow
TWMC FGE Haobo GHS	Mobile application development and design Wholesaling Investment Wholesaling		$ 93,060 (USD 3,000) 337,590 (RMB 77,500) 47,916 (RMB 11,000) 217,800 (RMB 50,000)		b b b b	$ 151,126 (USD 4,872) 823,127 (USD 14,000) (RMB 89,267) - -		$ - - - -	$ - - - -	$ 151,126 (USD 4,872) 823,127 (USD 14,000) (RMB 89,267) - -	$ 1,092 3,088 4,426 107,147	100 76.7 100 20	$ 1,092 2,368 4,426 5,467	$ 104,812 32,642 754,483 711,017	$ - - - -

Company		Accumulated Investment in Mainland China as of September 30, 2019		Investment Amounts Authorized by Investment Commission, MOEA			Upper Limit on Investment Authorized by Investment Commission, MOEA
TWM and subsidiaries		$1,640,994 (USD18,872, RMB89,267 and HKD168,539)		$1,640,994 (USD18,872, RMB89,267 and HKD168,539)			$41,642,025

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.

77 -

AI assistant

TWM — Interim / Quarterly Report 2019

52277_rns_2019-11-08_bfd756b0-a2dc-4fc1-8355-f356422811e5.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

TAIWAN MOBILE CO., LTD. AND SUBSIDIARIES

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

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 OF THE CONSOLIDATED FINANCIAL STATEMENTS

3. APPLICATION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

Definition of a lease

The Group as lessee

The Group as lessor

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

Basis of Consolidation

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. NOTES AND ACCOUNTS RECEIVABLE, NET

September 30, 2019

9. INVENTORIES

10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

a. GHS

b. TPE

c. TVD Shopping

d. ADT

e. M.E.

f. AppWorks

11. SUBSIDIARIES WITH MATERIAL NON-CONTROLLING INTERESTS

12. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

13. PROPERTY, PLANT AND EQUIPMENT

14. LEASE ARRANGEMENTS

b. Lease liabilities - 2019

c. Material lease-in activities and terms

d. Other lease information

15. INVESTMENT PROPERTIES

16. INTANGIBLE ASSETS

a. Concession licenses

d. Goodwill

17. OTHER NON-CURRENT ASSETS

18. BORROWINGS

b. Short-term notes and bills payable

1) Unsecured loans

2) Secured loans

19. BONDS PAYABLE

20. PROVISIONS

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

b. Defined benefit plan

22. 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

23. OPERATING REVENUES

TWM Interim / Quarterly Report 2019