Business Context and Reporting Period
This Form 6-K filing by Chunghwa Telecom Co., Ltd. is dated October 12, 2020. The report covers operating results for September 2020 and the nine-month period ending September 30, 2020. It also discloses an amendment to the 2019 Annual Report and a related-party transaction involving a subsidiary.
Key Financial Metrics
September 2020 Performance
- Net Sales: NT$18.87 billion (Year-over-Year increase of 9.99%).
- Operating Costs and Expenses: NT$15.53 billion.
- Operating Income: NT$3.60 billion.
- Income Before Tax: NT$3.66 billion.
- Net Income (Parent Company): NT$2.84 billion.
- Earnings Per Share (EPS): NT$0.37.
Year-to-Date (Jan-Sep 2020) Performance
- Net Sales: NT$148.13 billion (Year-over-Year decrease of 2.73%).
Liquidity and Risk Exposure
- Funds Lent: No funds lent to other parties.
- Guarantees: Accumulated limited amount for subsidiaries is NT$2,809,532 thousand.
- Financial Derivatives: Outstanding forward contracts for non-trading purposes totaled NT$497,269 thousand (combining hedge and non-hedge accounting positions).
Material Changes Versus Prior Period
September 2020 revenue increased significantly compared to September 2019, driven by higher ICT project revenue from completed major projects, increased internet VAS revenue, and data communications revenue. These gains offset declines in handset sales and mobile service revenue. Conversely, operating costs rose due to increased ICT project costs and amortization, partially offset by lower cost of goods sold and interconnection expenses. For the nine-month period, total net sales declined by 2.73% compared to the same period in 2019.
Guidance, Outlook, and Management Commentary
Management noted that operating income, pretax income, and EPS for September 2020 all exceeded the third-quarter guidance previously announced. The filing includes an amendment to the 2019 Annual Report (pages 47, 52, 53, and 58) to correct previously uploaded information. Additionally, a subsidiary, Chunghwa System Integration Co., Ltd., acquired a right-of-use asset (office premises) from the parent company for a total transaction amount of NT$2,391,120, with a lease term from October 1, 2020, to September 30, 2023.
Investor Verification Checklist
- Verify the specific details of the amendment to the 2019 Annual Report to understand the nature of the corrections.
- Confirm the sustainability of the ICT project revenue growth that drove the September 2020 sales increase.
- Review the full text of the amended 2019 Annual Report to assess any impact on historical financial comparisons.
- Monitor the impact of the related-party lease transaction on future operating expenses for the subsidiary.