JDS - Audit Report / Information 2019

Jourdeness Group Limited and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Jourdeness Group Limited

Opinion

We have audited the accompanying consolidated financial statements of Jourdeness Group Limited and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020, and auditing standards generally accepted in the Republic of China. We conducted our audit of the financial statements for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters in the audit of the Group’s consolidated financial statements for the year ended December 31, 2019 are stated as follows:

- Impairment Assessment of Other Intangible Assets Customer Relationship and Goodwill

The accompanying consolidated financial statements for the year ended December 31, 2019 included customer relationship (classified as other intangible assets) of NT$775,134 thousand and goodwill of NT$522,188 thousand, for a total amount of NT$1,297,322 thousand, which represented 20% of total assets in the consolidated financial statements. The intangible assets of customer relationship and goodwill both resulting from the acquisition of assets and existing operations of beauty stores in mainland China, Taiwan and Malaysia for expanding the cosmetology services and the scale of Group’s operations. In accordance with IAS 36 “Impairment of Assets”, management assesses whether there is any indication that those assets have suffered any impairment loss at the balance sheet date. Determining whether those assets are impaired requires an estimation of the recoverable amount of the cash-generating unit to which those assets have been allocated, and the assumptions suffer from high uncertainty since they are subject to management’s judgments and affected by economic trends. Therefore, the impairment assessment of intangible assets was identified as one of the key audit matters.

Refer to Notes 4, 5, 15, 16 and 29 to the consolidated financial statements for the accounting policies, critical accounting judgments and key sources of estimation uncertainty and details of the information about the impairment of intangible assets of customer relationship and goodwill.

The audit procedures performed in response to the above key audit matter included the following:

We understood and assessed the reasonableness of the identification for impairment of those assets by management.
We evaluated the professional qualification, competency and independence of independent valuers engaged by the management.
We understood the process and basis for the estimation of sales growth rate and profit margin with regard to the future operating prospects of the asset’s cash-generating units.
We consulted our internal experts to assess the reasonableness and appropriateness of assumptions and methods used in the impairment test report provided by the independent valuers.

Revenue Recognition of Beauty and Body Spa Course Services

As of December 31, 2019, the carrying amount of the contract liabilities - current was NT$1,831,738 thousand, which represented 41% of total liabilities in the consolidated financial statements. For the year ended December 31, 2019, the revenue from beauty and body spa course services amounted to NT$1,596,852 thousand, which represented 49% of net revenue in the consolidated financial statements. The Group’s management recognized revenue arising from beauty and body spa course services based on independent actuarial reports. The assumptions of actuarial analyses were made according to the Group’s historical service experience, and the percentage of expected redemption rate of deferred courses was calculated as the number of courses actually rendered to customers relative to the number of courses expected to be rendered to customers, excluding the courses that had incurred refund liability during the effective period. Such underlying assumptions are subject to management’s objective judgments and estimates which are highly uncertain. Therefore, the revenue recognition of beauty and body spa course services was identified as one of the key audit matters.

Refer to Notes 4, 5, 20 and 24 to the consolidated financial statements for the accounting policies, critical accounting judgments and key sources of estimation uncertainty, and details of the information about the recognition of revenue from beauty and body spa course services.

The audit procedures performed in response to the above key audit matter included the following:

We evaluated the professional qualifications, competency and independence of the independent actuaries engaged by the management.
We understood and sample tested the accuracy and completeness of the data used by management in performing actuarial analyses of the expected redemption rate of deferred courses.
We compared the methodologies and significant assumptions, including expected redemption rate and expected aggregate redemption rate of deferred courses, with specific historical data of the Group in order to assess the reasonableness of management’s judgments.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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 the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with statements that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation preludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Chun Chiu and Tzu-Jung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 26, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. 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 independent auditors’ report and consolidated financial statements shall prevail.

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4, 8 and 33) Notes receivable (Notes 4 and 9) Trade receivables (Notes 4 and 9) Trade receivables from related parties (Notes 4, 9 and 32) Other receivables from related parties (Notes 4 and 32) Inventories (Notes 4, 10, 29 and 32) Current tax assets (Notes 4 and 26) Other current assets (Notes 29 and 32) Total current assets NON-CURRENT ASSETS Financial assets at amortized cost - non-current (Notes 4, 8 and 33) Property, plant and equipment (Notes 4, 5, 12, 29, 32 and 33) Right-of-use assets (Notes 3, 4, 13 and 14) Investment properties (Notes 4, 5, 13 and 14) Other intangible assets (Notes 4, 5 ,16 and 29) Goodwill (Notes 4, 5, 15 and 29) Deferred tax assets (Notes 4 and 26) Other non-current assets (Notes 17, 22 and 29) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4, 18, 32 and 33) Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 19) Contract liabilities - current (Notes 4, 20, 24 and 29) Notes payable Trade payables Trade payables to related parties (Note 32) Other payables (Note 21) Other payables to related parties (Note 32) Current tax liabilities (Notes 4 and 26) Lease liabilities - current (Notes 3, 4 and 13) Other current liabilities (Note 32) Total current liabilities NON-CURRENT LIABILITIES Bonds payable (Notes 4 and 19) Long-term borrowings (Notes 4, 18, 32 and 33) Deferred tax liabilities (Notes 4 and 26) Lease liabilities - non-current (Notes 3, 4 and 13) Guarantee deposits Net defined benefit liabilities - non-current (Notes 4 and 22) Total non-current liabilities Total liabilities EQUITY (Notes 4, 19, 23 and 28) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unearned employee benefits Total other equity Total equity TOTAL		2019 Amount % $ 837,860 13 3,045 - 292,740 5 - - 160,235 3 12,845 - 26,922 - 320,245 5 - - 28,985 - 1,682,877 26 253,461 4 1,890,916 29 1,064,135 17 121,700 2 780,908 12 522,188 8 73,095 1 80,650 1 4,787,053 74 $ 6,469,930 100 $ 76,449 1 150 - 1,902,040 29 478 - 28,280 1 686 - 303,627 5 1,677 - 236,540 4 316,455 5 11,364 - 2,877,746 45 729,409 11 - - 115,057 2 689,962 11 36,449 - - - 1,570,877 24 4,448,623 69 609,147 9 654,431 10 165,403 2 48,568 1 770,412 12 984,383 15 (114,897) (2) (111,757 ) (1 ) (226,654 ) (3 ) 2,021,307 31 $ 6,469,930 100		2018
				Amount % $ 1,367,873 23 - - 290,680 5 106 - 175,297 3 - - 2,714 - 265,749 5 9,140 - 84,404 1 2,195,963 37 252,241 4 1,869,399 31 - - 116,942 2 866,108 14 520,514 9 35,707 1 141,907 2 3,802,818 63 $ 5,998,781 100 $ 78,323 1 1,275 - 2,323,381 39 284 - 28,718 1 - - 331,445 6 1,957 - 26,910 - - - 8,743 - 2,801,036 47 719,327 12 400,000 7 182,198 3 - - 33,132 - 8 - 1,334,665 22 4,135,701 69 609,997 10 660,696 11 112,651 2 19,415 - 653,862 11 785,928 13 (48,568) (1) (144,973 ) (2 ) (193,541 ) (3 ) 1,863,080 31 $ 5,998,781 100

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

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 5, 20, 24, 29 and 32) OPERATING COSTS (Notes 4, 10, 25 and 32) GROSS PROFIT OPERATING EXPENSES (Notes 4, 22, 25 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 13, 25 and 32) Other income Other gains and losses Finance costs Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 26) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 22 and 26) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Income tax relating to items that will not be reclassified subsequently to profit or loss		2019 Amount % $ 3,252,265 100 760,502 24 2,491,763 76 1,426,206 44 345,415 10 28,102 1 1,799,723 55 692,040 21 31,430 1 (6,859) - (65,727 ) (2 ) (41,156 ) (1 ) 650,884 20 180,418 6 470,466 14 3,109 - (621 ) - 2,488 -		2018
				Amount % $ 3,108,496 100 721,270 23 2,387,226 77 1,304,351 42 352,828 12 29,356 1 1,686,535 55 700,691 22 35,029 1 (7,960) - (6,999 ) - 20,070 1 720,761 23 193,236 6 527,525 17 (411) - (4 ) - (415 ) - (Continued)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 27) Basic Diluted		2019 Amount % $ (66,329 ) (2 ) (63,841 ) (2 ) $ 406,625 12 $ 8.05 $ 7.15		2018
				Amount % $ (29,153 ) (1 ) (29,568 ) (1 ) $ 497,957 16 $ 9.02 $ 8.85

		$		$

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

(Concluded)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Capital Surplus Share Capital (Note 23) (Notes 4, 19 and 23) BALANCE AT JANUARY 1, 2018 $ 611,547 $ 646,702 Appropriation of 2017 earnings Legal reserve - - Special reserve - - Cash dividends distributed by the Company - - Donations from shareholders - 55 Equity component of convertible bonds issued by the Company - 25,363 Net profit for the year ended December 31, 2018 - - Other comprehensive loss for the year ended December 31, 2018, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2018 - - Issuance of restricted employee shares - - Cancelation of restricted employee shares (1,550 ) (11,424 ) BALANCE AT DECEMBER 31, 2018 609,997 660,696 Appropriation of 2018 earnings Legal reserve - - Special reserve - - Cash dividends distributed by the Company - - Net profit for the year ended December 31, 2019 - - Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2019 - - Issuance of restricted employee shares - - Cancelation of restricted employee shares (850 ) (6,265 ) BALANCE AT DECEMBER 31, 2019 $ 609,147 $ 654,431	Retained Earnings (Note 23) Legal Reserve Special Reserve Unappropriated Earnings $ 94,411 $ 11,317 $ 305,814 18,240 - (18,240) - 8,098 (8,098) - - (152,724) - - - - - - - - 527,525 - - (415 ) - - 527,110 - - - - - - 112,651 19,415 653,862 52,752 - (52,752) - 29,153 (29,153) - - (274,499) - - 470,466 - - 2,488 - - 472,954 - - - - - - $ 165,403 $ 48,568 $ 770,412	Other Equity (Notes	4, 23 and 28) Unearned Employee Benefits $ (186,227) - - - - - - - - 28,280 12,974 (144,973) - - - - - - 26,101 7,115 $ (111,757 )	Total Equity $ 1,464,149 - - (152,724) 55 25,363 527,525 (29,568 ) 497,957 28,280 - 1,863,080 - - (274,499) 470,466 (63,841 ) 406,625 26,101 - $ 2,021,307
		Exchange Differences on Translating Foreign Operations $ (19,415) - - - - - - (29,153 ) (29,153 ) - - (48,568) - - - - (66,329 ) (66,329 ) - - $ (114,897 )

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

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Net gain on fair value changes of financial assets at fair value through profit or loss Finance costs Interest income Compensation costs of employee share options Loss (gain) on disposal of property, plant and equipment Property, plant and equipment transferred to expenses Loss on disposal of intangible assets Loss on lease modification Reversal of write-down of inventories Loss on disposal of inventories Amortization of prepayments for leases Changes in operating assets and liabilities Notes receivable Trade receivables Other receivables Inventories Other current assets Notes payable Trade payables Other payables Contract liabilities Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Purchase of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss Net cash outflows on business combinations Payments for property, plant and equipment	2019 $ 650,884 583,125 109,547 16 (1,148) 65,727 (17,175) 26,101 521 3,860 14 695 (1,602) 6,015 - 106 2,201 (24,208) (52,220) 31,460 194 248 14,524 (527,425) 2,621 (1,101 ) 872,980 15,994 (48,648) (58,431 ) 781,895 (100,269) 86,100 (116,162) 113,025 (26,363) (240,033)	2018 $ 720,761 166,992 102,787 83 - 6,999 (8,891) 28,280 (41) 1,560 - - (3,341) 9,588 6,262 162 2,343 6,549 27,579 (11,760) (10) (1,257) 25,384 (615,697) 1,761 (999 ) 465,094 8,908 (6,992) (37,597 ) 429,413 (311,359) - - - (51,683) (277,196) (Continued)

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JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of property, plant and equipment Increase in refundable deposits Payments for intangible assets Decrease (increase) in other non-current assets Decrease in prepayments for equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Repayments of issuance cost of convertible bonds Proceeds from issuance of convertible bonds Proceeds from long-term borrowings Proceeds from guarantee deposits received Repayment of the principal portion of lease liabilities Dividends paid to owners of the Company Donation from shareholders Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ 3,634 (6,437) (1,686) 2,596 (577 ) (286,172 ) 219,485 (213,465) (3,600) - (400,000) 3,317 (373,320) (274,499) - (1,042,082 ) 16,346 (530,013) 1,367,873 $ 837,860	2018 $ 314 (11,292) (3,579) (1,597) (2,524 ) (658,916 ) 78,323 - - 749,565 - 4,152 - (152,724) 55 679,371 (12,441 ) 437,427 930,446 $ 1,367,873

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

(Concluded)

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JOURDENESS GROUP LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Jourdeness Group Limited (the “Company”) was incorporated in Cayman Islands in June 2010. The Company and its subsidiaries (collectively referred to as the “Group”) are mainly engaged in the beauty and body spa business (except medical cosmetology), manufacturing and sale of cosmetics, business management and consulting services.

The Company’s shares have been listed on the Taiwan Stock Exchange since October 21, 2015.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 26, 2020.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial 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 IFRIC (IFRIC), and Interpretations of SIC (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the 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 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. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

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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 under low-value asset 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 are classified within financing activities; cash payments for the interest portion are classified within operating activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights in mainland China were recognized as prepayments for leases. 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 expects to apply the following practical expedients:

a) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
c) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
d) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 was 4.62%. The difference between the (i) lease liabilities recognized and (ii) 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 Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 The Group as lessor	$ 1,113,953 (1,784 ) $ 1,112,169 $ 1,035,866

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

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

			Adjustments	Adjustments
	As Originally		Arising from
		Stated on		Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Prepayments for leases - current	$	52,053	$	(52,053)	$	-
Prepayments for leases - non-current		72,322		(72,322)		-
Right-of-use assets		-		1,160,241		1,160,241
Total effect on assets	$	124,375	$	1,035,866	$	1,160,241
Lease liabilities - current	$	-	$	291,470	$	291,470
Lease liabilities - non-current		-		744,396		744,396
Total effect on liabilities	$	-	$	1,035,866	$	1,035,866

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2020

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” 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) January 1, 2020 (Note 3)

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 retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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

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

New IFRSs 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” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2021 January 1, 2022

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit assets/liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period, and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

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d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries). When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

Refer to Note 11, Table 7 and Table 8 for detailed information on subsidiaries (including percentages of ownership and main businesses).

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interests in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

f. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purpose of presenting consolidated financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

g. Inventories

Inventories consist of raw materials, supplies, finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

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h. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If a lease term is shorter than the assets’ useful lives, such assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation. Beginning January 1, 2019, investment properties include right-of-use assets and properties if the definition of investment properties is met; before January 1, 2019, investment properties included properties if the definition of investment properties was met. Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.

Beginning January 1, 2019, investment properties acquired through leases were initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made on or before the commencement date, plus initial direct costs incurred and an estimate of costs needed to restore the underlying assets, less any lease incentives received. These investment properties are subsequently measured at cost less accumulated depreciation and accumulated impairment loss and adjusted for any remeasurement of the lease liabilities.

Except for freehold land which is not depreciated, the depreciation of all investment properties are recognized using the straight-line method.

For a transfer of classification from right-of-use assets to investment properties, the deemed cost of an item of property for subsequent accounting is its carrying amount.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

j. Goodwill

Goodwill arising from the acquisition of a business is measured at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

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A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

k. Intangible assets
1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date. Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

l. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cash-generating unit or assets related to contract costs is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset, cash-generating unit or assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss.

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m. Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories:

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 31.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable at amortized cost, trade receivables and other receivables, are measured at amortized cost, which equals the gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than specific days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.
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The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

2) Equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Company’s own equity instruments.

3) Financial liabilities

a) Subsequent measurement

Except for the following situations, all financial liabilities are measured at amortized cost using the effective interest method:

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liabilities are held for trading.

Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses on such financial liabilities are recognized in other gains or losses. Fair value is determined in the manner described in Note 31.

b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

4) Convertible bonds

The component parts of compound instruments (i.e., convertible bonds) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

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On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or upon the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised; in which case, the balance recognized in equity will be transferred to capital surplus - share premiums. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premiums.

Transaction costs that relate to the issuance of the convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

n. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of beauty cosmetics. The main channels of distribution are franchise, directly-managed stores and internet. Sales of beauty cosmetics are recognized as revenue when the goods are delivered to the customer’s specific location. Before the goods are delivered to the customer, the transaction price received is recognized as a contract liability. When the goods have been delivered to the customer, the advance receipts is recognized as revenue.

2) Revenue from the rendering of services

The services revenue comes from beauty and body spa course services, and the Group provides beauty and body spa course services and charges for various courses. At the time of sale, the total amount of income from the beauty and body spa courses will be based on the ratio of number of courses in which customers actually attended to the overall number of courses, advanced receipts are recognized as a contract liability, then reclassified as revenue when services have been provided. At the end of each reporting period, the Group’s management recognized and adjusted beauty and body spa course services revenue based on the actuarial analyses of the Group’s historical service experience and the percentage of expected redemption rate of deferred courses was calculated as the number of courses actually rendered to customers relative to the number of courses expected to be rendered to customers, excluding the courses that had incurred refund liability during the effective period.

o. Leasing

2019

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

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

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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. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) 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, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. 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 from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses 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, 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.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

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p. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

q. Employee benefits
1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost), and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

r. Share-based payment arrangements

Restricted shares for employees granted to employees

The fair value at the grant date of the restricted shares for employees is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in other equity - unearned employee benefits. It is recognized as an expense in full at the grant date if vested immediately.

When restricted shares for employees are issued, other equity - unearned employee benefits is recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees.

At the end of each reporting period, the Group revises its estimate of the number of restricted shares for employees expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - restricted shares for employees.

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s. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Law, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

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5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key Sources of Estimation Uncertainty

a. Beauty and body course services revenue recognition

In principle, the total amount for the total number of the beauty and body spa course advanced receipt from customer is recognized as a contract liability, then reclassified as revenue when service is provided. At the end of each reporting period, the Group needs judgment to assess the assumptions of the actuarial analyses, including the percentage of expected redemption rate of deferred courses calculated as the number of courses actually rendered to customers relative to the number of courses expected to be rendered to customers, excluding the courses that have incurred refund liability during the effective period, in order to adjust the revenue recognized.

b. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The calculation of the value in use requires management to estimate the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

c. Impairment of tangible assets and intangible assets other than goodwill

In assessing the impairment of tangible assets and intangible assets, management evaluates the cash flows and profit or loss of specific group of assets based on management’s objective judgment and industry characteristic. When there are changes in the economic trends or corporate strategies, a material impairment loss may arise.

d. Lessee’s incremental borrowing rates

In determining a lessee’s incremental borrowing rate used in discounting lease payments, a risk-free rate for the same currency and relevant duration is selected as a reference rate, and the lessee’s credit spread adjustments and lease specific adjustments (such as asset type, secured position, etc.) are also taken into account.

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6. CASH AND CASH EQUIVALENTS

December 31 2019 2018 Cash on hand $ 3,644 $ 5,178 Checking accounts and demand deposits 810,539 817,975 Cash equivalents Time deposits 23,677 544,720 $ 837,860 $ 1,367,873 The market rate intervals of cash in bank at the end of the reporting period were as follows: December 31 2019 2018 Bank balance 0.01%-3.10% 0.01%-2.10%		December 31
	2019 2018 0.01%-3.10% 0.01%-2.10%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets - financial bonds Financial liabilities at FVTPL-current Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Put option and redemption option of convertible bonds (Note 19)		December	31
		2019 $ 3,045 $ 150	2018 $ - $ 1,275

8. FINANCIAL ASSETS AT AMORTIZED COST

Current Financial products (a) Time deposits with original maturities of more than 3 months (b) Non-current Restricted time deposits (c) Restricted demand deposits (c)		December 31	December 31
		2019 $ 99,015 193,725 $ 292,740 $ 252,217 1,244 $ 253,461	2018 $ 290,680 - $ 290,680 $ 250,001 2,240 $ 252,241

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a. Financial products were recognized when its subsidiaries, Jourdeness (Guangzhou) Cosmetics Co., Ltd. and Jourdeness (Guangzhou) Cosmetology Enterprise Management Co., Ltd., entered into principal protected interest rate linked investment product with the bank. At the end of the reporting period, outstanding financial products were as follows:

Annual rate of return Maturity date	December 31
	2019 2018 3.45%-3.55% 3.80%-4.10% 2020.02.28- 2020.05.11 2019.01.28- 2019.12.25

The Group’s investment policy was to invest in both short-term financial products and structured deposits with low credit risk. The Group assessed the impact of credit risk on principal and benefits through understanding of the final destination of the funds and the value of collaterals. For the years ended December 31, 2019 and 2018, no impairment loss was recognized for financial products.

b. The interest rate for time deposit with original maturities of more than 3 months was 2.25% per annum as of December 31, 2019.
c. The market interest rates for restricted time deposits and restricted demand deposits were ranging from 0.10% to 1.045% and 0.10% to 0.63% per annum as of December 31, 2019 and 2018.
d. Refer to Note 33 for information relating to investments financial assets at amortized cost pledged as security.

9. NOTES RECEIVABLE AND TRADE RECEIVABLES

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Notes receivable - operating Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Trade receivables from related parties (Note 32)		December 31	December 31
		2019 $ - - $ - $ - $ 160,845 (610 ) $ 160,235 $ 12,845	2018 $ 106 - $ 106 $ 106 $ 175,891 (594 ) $ 175,297 $ -

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The retail sales of the Group to individual consumers were usually settled through cash and credit card. Trade receivables mainly consist of payments due from banks for credit cards. The average credit period of sales of goods for other trade receivables was 90-180 days, and no interest was charged on trade receivables.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation. 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.

The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

December 31, 2019

Not Past Due Less than 90 Days Gross carrying amount $ 159,569 $ 490 Loss allowance (Lifetime ECL) - (14 ) Amortized cost $ 159,569 $ 476 December 31, 2018 Not Past Due Less than 90 Days Gross carrying amount $ 174,999 $ 275 Loss allowance (Lifetime ECL) - (8 ) Amortized cost $ 174,999 $ 267	91 to 180 Days $ 190 (17 ) $ 173 91 to 180 Days $ 32 (3 ) $ 29	181 to 240 Days $ 19 (2 ) $ 17 181 to 240 Days $ 2 - $ 2	Over 241 Days $ 577 (577 ) $ - Over 241 Days $ 583 (583 ) $ -	Total $ 160,845 (610 ) $ 160,235 Total $ 175,891 (594 ) $ 175,297

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Add: Net remeasurement of loss allowance Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 594 16 $ 610	2018 $ 511 83 $ 594

29 -

10. INVENTORIES

Raw materials Work in progress Finished goods Merchandise		December 31	December 31
		2019 $ 124,352 15,956 167,611 12,326 $ 320,245	2018 $ 99,345 10,254 139,308 16,842 $ 265,749

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 were as follows:

Cost of inventories sold Loss on disposal of inventories Inventory write-downs (reversed) Gain on physical inventory	For the Year Ended	For the Year Ended	December 31
		2019 $ 246,896 6,015 (1,602) (669 ) $ 250,640	2018 $ 228,650 9,588 (3,341) (221 ) $ 234,676

11. SUBSIDIARIES

Subsidiaries Included in the Consolidated Financial Statements

Investor
Investee
Nature of Activities
The Company
Bio-Jourdeness International Group Co.,
Ltd. (“Jourdeness International”)
Beauty and body spa business
and manufacture of
cosmetics
The Company
Success United Limited (“Success”)
Investment
The Company
Jourdeness Development Limited
(“J Development”)
Investment
The Company
Bio-Jourdeness Cosmetic Co. (MY) Sdn.
Bhd. (“MY”)
Beauty and body spa business
Success
Jourdeness (Guangzhou) Cosmetics Co.,
Ltd. (“Jourdeness (Guangzhou)
Cosmetics”)
Manufacture of cosmetics and
beauty and body spa
business
J Development
Jourdeness (Guangzhou) Cosmetology
Enterprise Management Co., Ltd.
(“Jourdeness (Guangzhou) Enterprise
Management”)
Consulting services of beauty
and body spa business
Jourdeness (Guangzhou)
Enterprise Management
Changsha Jourdeness Enterprise
Management Consulting Co., Ltd.
(“Changsha Enterprise Management”)
Consulting services of beauty
and body spa business
Jourdeness (Guangzhou)
Enterprise Management
Chengdu Jourdeness Enterprise
Management Consulting Co., Ltd.
(“Chengdu Enterprise Management”)
Consulting services of beauty
and body spa business

Proportion of Ownership
(%)
December 31
2019
2018
Remark
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
a
100.00
100.00
a

30 -

Remarks:

a. Considering the layout of mainland China market, the board of directors of Jourdeness (Guangzhou) Enterprise Management approved the liquidation of Changsha Enterprise Management and Chengdu Enterprise Management on July 5, 2017. At the end of the reporting period, Changsha Enterprise Management had completed the deregistration process. As of March 26, 2020, Chengdu Enterprise Management had not completed the deregistration process.
b. To expand the biotech and medical aesthetic market, the board of directors of Jourdeness International Management approved to establish a 100% owned subsidiary, Jourdenwell Biomed Co., Ltd., on March 6, 2020, and authorized the chairman to set up related matters for establishment with an investment limit of NT$40,000 thousand.

12. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2018 Additions Acquisitions through business combinations (Note 29) Disposals Reclassification Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation Balance at January 1, 2018 Depreciation expenses Acquisitions through business combinations (Note 29) Disposals Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018 Cost Balance at January 1, 2019 Additions Acquisitions through business combinations (Note 29) Disposals Reclassification Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expenses Acquisitions through business combinations (Note 29) Disposals Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019	Freehold Land $ 817,118 - - - - - $ 817,118 $ - - - - - $ - $ 817,118 $ 817,118 - - - - - $ 817,118 $ - - - - - $ - $ 817,118	Buildings $ 797,040 21,066 - (2,658 ) 170,962 (7,545 ) $ 978,865 $ 297,597 53,974 - (2,658 ) (2,667 ) $ 346,246 $ 632,619 $ 978,865 872 - - 4,051 (13,923 ) $ 969,865 $ 346,246 57,051 - - (5,807 ) $ 397,490 $ 572,375	Machinery and Equipment $ 96,853 3,744 - (289 ) - (1,585 ) $ 98,723 $ 61,609 5,925 - (260 ) (1,144 ) $ 66,130 $ 32,593 $ 98,723 2,435 - (42 ) - (2,891 ) $ 98,225 $ 66,130 5,869 - (29 ) (2,183 ) $ 69,787 $ 28,438	Transportation Equipment $ 24,119 3,615 - (942 ) - (432 ) $ 26,360 $ 19,455 1,545 - (728 ) (354 ) $ 19,918 $ 6,442 $ 26,360 6,160 - (14,100 ) - (468 ) $ 17,952 $ 19,918 1,514 - (12,676 ) (194 ) $ 8,562 $ 9,390	Office Equipment $ 166,753 33,569 4,898 (1,563 ) 7,851 (1,530 ) $ 209,978 $ 124,859 30,305 1,977 (1,549 ) (1,131 ) $ 154,461 $ 55,517 $ 209,978 18,411 597 (2,885 ) 3,705 (3,068 ) $ 226,738 $ 154,461 24,601 295 (2,609 ) (2,419 ) $ 174,329 $ 52,409	Other Equipment $ 36,328 222 - (159 ) - (734 ) $ 35,657 $ 24,992 3,296 - (143 ) (565 ) $ 27,580 $ 8,077 $ 35,657 109 - (235 ) - (1,313 ) $ 34,218 $ 27,580 2,416 - (66 ) (1,107 ) $ 28,823 $ 5,395	Leasehold Improvements C $ 293,019 5,811 10,563 - 109,141 (5,242 ) $ 413,292 $ 59,101 71,947 - - (1,538 ) $ 129,510 $ 283,782 $ 413,292 9,808 1,029 - 94,000 (12,122 ) $ 506,007 $ 129,510 91,317 - - (5,026 ) $ 215,801 $ 290,206	onstruction in Progress and Machinery in Transit $ 107,035 216,171 - - (289,899 ) (56 ) $ 33,251 $ - - - - - $ - $ 33,251 $ 33,251 190,369 - (2,273 ) (105,616 ) (146 ) $ 115,585 $ - - - - - $ - $ 115,585	Total $ 2,338,265 284,198 15,461 (5,611 ) (1,945 ) (17,124 )
									$ 2,613,244
									$ 587,613 166,992 1,977 (5,338 ) (7,399 )
									$ 743,845
									$ 1,869,399
									$ 2,613,244 228,164 1,626 (19,535 ) (3,860 ) (33,931 )
									$ 2,785,708
									$ 743,845 182,768 295 (15,380 ) (16,736 )
									$ 894,792
									$ 1,890,916

In response to the demand of operation, the purchase of building located in Panyu District, Guangzhou, China, from key management was resolved by the board of directors of Jourdeness (Guangzhou) Cosmetics on January 22, 2018. The purchase price of the building was RMB16,000 thousand.

No impairment assessment was performed for the years ended December 31, 2019 and 2018, as there were no indications of impairment.

31 -

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

Buildings
Plant buildings and office	10 to 50 years
Others	5 to 10 years
Machinery and equipment	5 to 10 years
Transportation equipment	5 years
Office equipment	3 to 10 years
Other equipment	3 to 10 years
Leasehold improvements	1 to 10 years

Property, plant and equipment pledged as collateral for bank borrowings and performance guarantees were set out in Note 33.

13. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Land	$	69,622
Buildings		983,968
Transportation equipment		10,545
	$	1,064,135
	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	433,513
Depreciation charge for right-of-use assets
Land	$	1,950
Buildings		395,964
Transportation equipment		1,665
	$	399,579
Income from the subleasing of right-of-use assets (presented in other income)	$	1,601

The Group has been subleasing its leasehold office space located in Chengdu and Xiamen to other Companies under operating leases. The related right-of-use assets are presented as investment properties (as set out in Notes 14 and 32). The amounts disclosed above with respect to the right-of-use assets do not include right-of-use assets that meet the definition of investment properties.

32 -

b. Lease liabilities - 2019

	December 31,
	2019
Carrying amounts
Current	$ 316,455
Non-current	$ 689,962
Range of discount rate for lease liabilities was as follows:
	December 31,
	2019
Buildings	1.45%-6.25%
Transportation equipment	1.45%

c. Material lease-in activities and terms

The Group leases certain land, buildings and transportation equipment for the use of offices with lease terms of 2 to 50 years. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

2019
	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	2,300
Total cash outflow for leases	$	(426,682 )

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

Before application of IFRS 16, the Group recognized prepaid lease payments of land use right in mainland China as prepayments for lease. Refer to Notes 3 and 17 for information relating to the reclassification in 2018.

Lease commitments (the Group as a lessee) with lease terms commencing after the balance sheet dates are as follows:

	December 31,
	2019
Lease commitments	$ 46,586

33 -

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years INVESTMENT PROPERTIES Land Right-of-use assets Cost Balance at January 1, 2018 Balance at December 31, 2018 Accumulated depreciation Balance at January 1, 2018 Balance at December 31, 2018 Carrying amounts at December 31, 2018 Cost Balance at January 1, 2019 Transfers from right-of-use assets Effects of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expenses Effects of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019	Land $ 116,942 $ 116,942 $ - $ - $ 116,942 $ 116,942 - - $ 116,942 $ - - - $ - $ 116,942	December 31, 2018 $ 358,515 647,760 107,678 $ 1,113,953 For the Year Ended December 31	December 31, 2018 $ 358,515 647,760 107,678 $ 1,113,953 For the Year Ended December 31
		2019 $ 116,942 4,758 $ 121,700 Right-of-use Assets $ - $ - $ - $ - $ - $ - 5,720 (214 ) $ 5,506 $ - 778 (30 ) $ 748 $ 4,758	2018 $ 116,942 - $ 116,942 Total $ 116,942 $ 116,942 $ - $ - $ 116,942 $ 116,942 5,720 (214 ) $ 122,448 $ - 778 (30 ) $ 748 $ 121,700

14. INVESTMENT PROPERTIES

34 -
a. The Group’s freehold land in Taichung, including the land serial numbers of 0716-0000, 0716-0001, 0717-0000 and 0742-0000, were not for operation and lease in 2019 and 2018. There were no direct operating expenses of investment properties for the years ended in December 31, 2019 and 2018.
b. The fair values of investment properties were $130,997 thousand and $128,549 thousand as of December 31, 2019 and 2018, respectively. The valuation was arrived at by reference to market evidence of transaction price for similar properties.
c. Right-of-use assets included in investment properties are units of office space located in Chengdu and Xiamen and subleased under operating leases to other companies.

The abovementioned investment properties were leased out for 2 to 3 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

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

Year 1 Year 2 Year 3 GOODWILL Cost Balance at January 1 Additional amounts recognized from business combinations occurring during the year (Note 29) Effect of foreign currency exchange differences Balance at December 31 Accumulated impairment losses Balance at January 1 and December 31 Carrying amounts at December 31	December 31, 2019 $ 2,409 2,109 603 $ 5,121 For the Year Ended December 31	December 31, 2019 $ 2,409 2,109 603 $ 5,121 For the Year Ended December 31	December 31, 2019 $ 2,409 2,109 603 $ 5,121 For the Year Ended December 31
		2019 $ 520,514 19,814 (18,140 ) $ 522,188 $ - $ 522,188	2018 $ 445,661 83,048 (8,195 ) $ 520,514 $ - $ 520,514

15. GOODWILL

At the end of the reporting period, the Group assessed the impairment of recoverable amount of goodwill based on value in use, which was calculated using the cash flow projections in the financial budgets and annual discount rate to reflect the relevant specific risk. No impairment loss of goodwill recognized for the years ended December 31, 2019 and 2018.

35 -

The Group obtained an independent valuation reports from external professional valuers for the years ended December 31, 2019 and 2018. According to the report, the Group had adjusted the calculated amount of original accounting treatment and provision since the acquisition date. Refer to Note 29 for detailed information.

16. OTHER INTANGIBLE ASSETS

Cost Balance at January 1, 2018 Additions Acquisitions through business combinations (Note 29) Disposals Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated amortization Balance at January 1, 2018 Amortization expenses Disposals Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018 Cost Balance at January 1, 2019 Additions Acquisitions through business combinations (Note 29) Disposals Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated amortization Balance at January 1, 2019 Amortization expenses Disposals Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019	Computer Software $ 28,458 3,579 - (641) (137 ) $ 31,259 $ 19,561 4,430 (641) (89 ) $ 23,261 $ 7,998 $ 31,259 1,686 - (6,878) (259 ) $ 25,808 $ 23,261 3,834 (6,864) (197 ) $ 20,034 $ 5,774	Customer Relationship $ 936,380 - 116,977 - (17,987 ) $ 1,035,370 $ 82,111 98,357 - (3,208 ) $ 177,260 $ 858,110 $ 1,035,370 - 46,724 - (33,391 ) $ 1,048,703 $ 177,260 105,713 - (9,404 ) $ 273,569 $ 775,134	Total $ 964,838 3,579 116,977 (641) (18,124 ) $ 1,066,629 $ 101,672 102,787 (641) (3,297 ) $ 200,521 $ 866,108 $ 1,066,629 1,686 46,724 (6,878) (33,650 ) $ 1,074,511 $ 200,521 109,547 (6,864) (9,601 ) $ 293,603 $ 780,908

36 -

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Computer software 3 to 10 years Customer relationship 10 years

17. OTHER NON-CURRENT ASSETS

Prepayments for leases Refundable deposits Prepayments for equipment Net defined benefit assets (Note 22) Other		December 31	December 31
		2019 $ - 72,819 3,629 4,202 - $ 80,650	2018 $ 72,322 66,382 3,052 - 151 $ 141,907

Prepayments for leases are payments for land use right located in mainland China. The lease term was 50 years, and it was paid in full at the time of signing the lease contracts. Rent expenses were recognized in the amount of $1,988 thousand for the year ended December 31, 2018.

18. BORROWINGS

a. Short-term borrowings

Secured borrowings Bank loans		December	31
		2019 $ 76,449	2018 $ 78,323

The Group provided its land and buildings as collateral (refer to Note 33), and key management personnel of the Group and Jourdeness International were the joint guarantor (refer to Note 32 and Table 2). The interest rate was 3.60% and 3.99% per annum as of December 31, 2019 and 2018, respectively.

b. Long-term borrowings

Secured borrowings Bank loans		December 31	December 31
		2019 $ -	2018 $ 400,000

The Group provided its land as collateral (refer to Note 33). The borrowing period was from November 14, 2016 to November 14, 2021, and the loan was repaid in advance on April, 19, 2019. The interest rate was 1.45% per annum as of December 31, 2018. The interest expenses were paid monthly from the grant date.

37 -

19. BONDS PAYABLE

Secured domestic convertible bonds Less: Discounts on bonds payable		December 31	December 31
		2019 $ 750,000 (20,591 ) $ 729,409	2018 $ 750,000 (30,673 ) $ 719,327

First Unsecured Domestic Convertible Bonds

As of December 28, 2018, the Company issued 7,500 thousand, 0% NTD denominated unsecured convertible bonds in Taiwan, with an aggregate principal amount of $750,000 thousand.

Each bond entitles the holder to convert it into ordinary shares of the Company at a conversion price of $111. Conversion may occur at any time between March 29, 2019 and December 28, 2021. After the issuance of the convertible bonds, whenever the number of the Company’s ordinary shares increases, including but not limited to capital increase fund by cash (through public offering or private placement), by retained earnings or by capital reserves stock dividends, shares issued for consideration of merger and acquisition, stock split, and capital increase for participation in overseas ADRs other than the new shares issue upon exercise of the conversion or of the securities convertible into or entitled to subscribe ordinary shares or the new shares issue upon employee bonus, the conversion price shall be adjusted in accordance with Article 11 “Rules Governing Issue and Conversion of First Unsecured Domestic Convertible Bonds” (hereinafter referred to as the “Rules”).

In even that the Company issues any kind of securities (including privately placed securities), convertible into ordinary shares or with warrants to subscribe for ordinary shares at a conversion price or exercise price lower than the current market price per share, or issuance of the ordinary shares option which is not resulted from capital increase fund by cash, and the number of the Company’s ordinary shares is reduced due to capital reduction which is not resulted from the treasury stocks cancellation, the conversion price shall be adjusted in accordance with Article 11 “Rules Governing Issue and Conversion of First Unsecured Domestic Convertible Bonds” (hereinafter referred to as the “Rules”).

If the convertible bonds are not converted at maturity, the Company will redeem the convertible bonds at par value in cash as of December 28, 2021.

The conversion price of bonds shall be determined from the decision date to the actual date of issue. In the case of ex-dividend date, it shall be adjusted by the adjustment formula of conversion price. Since the Company applied for ex-dividend in 2019, the conversion price of bonds was adjusted to $106.7 per share in accordance with the Rules.

For the conversion of bonds from the day following three months after the date of issuance up till 40 days before the maturity date, if the closing price of the Company’s ordinary shares at the securities counter trading center exceeded the then convertible bond’s conversion price by more than or equal to 30% for 30 consecutive business days, or if the amount of Company’s outstanding circulating bonds falls below 10% of the total amount of original issuance, the Company may redeem all of the outstanding convertible bonds at par value in cash.

The convertible bonds shall be sold back to the base date of convertible bonds in advance on the maturity date of 2 years after the issuance. Bondholders may notify the Company in writing in accordance with the provisions of the issue and conversion measures to sell back to the Company with the par value of convertible bonds plus interest compensation.

38 -

The convertible bonds contain liability and equity components. The equity component was presented in equity under the heading of capital surplus - options. The effective interest rate of the liability component was 1.39% per annum on initial recognition.

Proceeds from issuance (less transaction costs of $4,035 thousand)

Derivative financial liabilities component
Equity component (less transaction costs allocated to the equity component of $137
thousand)

Liability component at the date of issue (less transaction costs allocated to the liability
component of $3,898 thousand) and at December 31, 2018

The movements of principal debt instruments for 2019 were as follows:
Liability component at January 1, 2019

Interest charged at an effective interest rate of 1.39%

Liability component at December 31, 2019

The movements of derivative financial instruments for 2019 were as follows:
Balance at January 1, 2019
Gain (loss) on fair value changes
Balance at December 31, 2019

$ 745,965
(1,275)

(25,363
)
$ 719,327
$ 719,327
10,028
$ 729,409
$ (1,275)
1,125
$ (150
)

As of December 31, 2019 and 2018, the face value of first unsecured domestic convertible bonds outstanding were both $750,000 thousand.

20. CONTRACT LIABILITIES

Advance receipts of services Advance receipts of products Customer loyalty programs The movements of contract liabilities were as follows: Advance receipts of services Balance at January 1 Acquisitions through business combinations (Note 29) Additions Transferred to revenue Effect of foreign currency exchange differences Balance at December 31 Advance receipts of products Customer loyalty programs Balance at December 31, 2019 and 2018		December 31	December 31
	2019 2018 $ 1,831,738 $ 2,247,520 59,330 75,861 10,972 - $ 1,902,040 $ 2,323,381 For the Year Ended December 31
		2019 $ 2,247,520 74,625 1,073,702 (1,595,568) 31,459 1,831,738 59,330 10,972 $ 1,902,040	2018 $ 2,670,263 201,801 1,207,240 (1,817,974) (13,810 ) 2,247,520 75,861 - $ 2,323,381

39 -

The contract liabilities were the performance obligation of delivering the goods or services to the customers.

On the balance sheet date, subsidiary Jourdeness International’s revenue recognition was based on historical service experience and the percentage of expected redemption rate of deferred courses, the percentage was calculated as the number of courses actually rendered to customers relative to the number of courses expected to be rendered to customers, excluding the courses that had incurred refund liability during the effective period within one year.

The key assumptions of expected aggregate redemption rate of deferred courses used in actuarial analyses were as follows:

The aging of courses 0-1 years 1-2 years 2-3 years 3-4 years 4-5 years 5-6 years 6-7 years 7-8 years 8-9 years 9-10 years Over 10 years	For the Year Ended December 31
	2019 2018 100.00% 100.00% 63.98% 63.18% 55.95% 54.93% 47.36% 46.15% 38.50% 37.15% 29.72% 28.30% 21.40% 20.01% 13.92% 12.70% 7.67% 6.73% 2.95% 2.43% 0.00% 0.00%

On the balance sheet date, subsidiary Jourdeness (Guangzhou) Enterprise Management’s revenue recognition was based on historical service experience and the percentage of expected redemption rate of deferred courses, the percentage was calculated as the number of courses actually rendered to customers relative to the number of courses expected to be rendered to customers.

The key assumptions of expected aggregate redemption rate of deferred courses used in actuarial analyses were as follows:

The aging of courses 0-1 years 1-2 years 2-3 years 3-4 years 4-5 years 5-6 years 6-7 years 7-8 years 8-9 years	For the Year Ended December 31
	2019 2018 71.75% 65.44% 61.48% 50.31% 51.18% 37.10% 41.39% 26.46% 32.47% 18.31% 24.59% 12.28% 17.78% 7.91% 12.02% 4.80% 7.21% 2.61%

On the balance sheet date, subsidiary Jourdeness (Guangzhou) Cosmetics and MY’s revenue recognitions were based on historical service experience and the percentage of expected redemption rate of deferred courses, the percentage was calculated as the number of courses actually rendered to customers relative to the number of courses expected to be rendered to customers, excluding the courses that had incurred refund liability during the effective period within half a year.

40 -

The key assumptions of expected aggregate redemption rate of deferred courses used in actuarial analyses were as follows:

The aging of courses 0-0.5 years 0.5-2 years Over 2 years	For the Year Ended December 31
	2019 2018 100.00% 100.00% 44.19% 49.18% 0.00% 0.00%

21. OTHER PAYABLES

Payables for salaries Payables for levies Payables for employees’ compensation Payables for social security fund and housing provident fund Payables for purchase of equipment Payables for employees’ benefits Payables for acquisition of beauty salons Others		December 31	December 31
		2019 $ 166,500 18,095 10,367 26,382 8,146 5,254 3,658 65,225 $ 303,627	2018 $ 138,909 21,998 17,132 26,754 20,015 22,339 27,995 56,303 $ 331,445

The Group’s subsidiaries in mainland China were required to pay the social security expenses and housing provident fund with a fixed percentage of total monthly salaries and wages in accordance with the “Social Insurance Law of the People’s Republic of China”. In addition, those subsidiaries had accrued the social security expenses and the housing provident fund based on actual monthly salaries and wages on the balance sheets date.

22. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The subsidiary, Jourdeness International, adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed 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 mainland China are members of a state-managed retirement benefit plan operated by the government of mainland China. The subsidiaries were required to contribute 20%-27% of monthly salaries per person to the retirement benefit scheme for the years ended December 31, 2019 and 2018, of which the subsidiaries were responsible for 12%-19% contributions.

41 -

b. Defined benefit plans

The defined benefit plans adopted by the subsidiary, Jourdeness International, in accordance with the Labor Standards Law is operated by the government of the Republic of China (“ROC”). Pension benefits are calculated on the basis of the length of service and average monthly salaries of six months before retirement. The subsidiary contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the subsidiary assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the subsidiary is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the subsidiary has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities (assets)		December	31
		2019 $ 56,012 (60,214 ) $ (4,202 )	2018 $ 56,572 (56,564 ) $ 8

Movements in net defined benefit liabilities (assets) were as follows:

	Present Value		Net	Defined
	of the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Balance at January 1, 2018	$ 53,854	$ (53,258)	$	596
Service cost
Current service cost	168	-		168
Net interest expense (income)	671	(672 )		(1 )
Recognized in profit or loss	839	(672 )		167
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,468)		(1,468)
Actuarial loss - changes in demographic
assumptions	314	-		314
Actuarial loss - changes in financial
assumptions	2,056	-		2,056
Actuarial gain - experience adjustments	(491 )	-		(491 )
Recognized in other comprehensive income	1,879	(1,468 )		411
Contributions from the employer	-	(1,166 )		(1,166 )
Balance at December 31, 2018	$ 56,572	$ (56,564 )	$	8

(Continued)

42 -

	Present Value		Net	Defined
	of the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Balance at January 1, 2019	$ 56,572	$ (56,564 )	$	8
Service cost
Current service cost	171	-		171
Net interest expense (income)	563	(570 )		(7 )
Recognized in profit or loss	734	(570 )		164
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,977)		(1,977)
Actuarial loss - changes in demographic
assumptions	436	-		436
Actuarial loss - changes in financial
assumptions	1,915	-		1,915
Actuarial gain - experience adjustments	(3,483 )	-		(3,483 )
Recognized in other comprehensive income	(1,132 )	(1,977 )		(3,109 )
Contributions from the employer	-	(1,265)		(1,265)
Benefits paid	(162 )	162		-
Balance at December 31, 2019	$ 56,012	$ (60,214 )	$	(4,202 )
			(Concluded)

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic or foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate of a 2-year time deposit with local banks.
2) Interest risk: A decrease in government and corporate bond interest rates will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rates Expected rates of salary increase	December 31
	2019 2018 0.75% 1.00% 2.00% 2.00%

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If possible reasonable changes in each of the significant actuarial assumptions were to occur and all other assumptions were to remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rates 0.25% increase 0.25% decrease Expected rates of salary increase 0.25% increase 0.25% decrease		December	31
		2019 $ (1,934 ) $ 2,026 $ 1,995 $ (1,915 )	2018 $ (2,070 ) $ 2,174 $ 2,146 $ (2,056 )

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year Average duration of the defined benefit obligation		December	31
		2019 $ 1,295 14 years	2018 $ 1,394 14 years

23. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 100,000 $ 1,000,000 60,915 $ 609,147	2018 100,000 $ 1,000,000 61,000 $ 609,997

The holders of issued ordinary shares with a par value of $10 are entitled the right to vote and receive dividends.

The Company canceled 85 thousands and 155 thousands of the employee’s restricted shares for the years ended December 31, 2019 and 2018, respectively, due to staff deployment and resignation.

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b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital* Issuance of ordinary shares Donations May be used to offset a deficit only Issuance of ordinary shares for cash which is reserved for employees May not be used for any purpose Employee restricted shares Employee share options		December 31	December 31
		2019 $ 441,993 5,879 945 180,251 25,363 $ 654,431	2018 $ 441,993 5,879 945 186,516 25,363 $ 660,696

Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).

c. Retained earnings and dividends policy

The shareholders of the Company held their regular meeting on June 25, 2019 and in that meeting, resolved the amendments to the Company’s Articles of Incorporation (the “Articles”). Under the dividends policy as set forth in the amended Articles, as the Company continues to grow and undertakes capital expenditure projects and business expansion, and for a sound financial planning of sustainable development, the Company may distribute dividends to shareholders in the form of cash and/or bonus shares. Shares may be distributed in lieu of the cash amount of any dividend according to the Company’s future expenditure budgets and funding needs. The issue of bonus shares is subject to the resolution of shareholders in their meeting for review and approval. The payment of cash dividend is subject to the resolution of the board of directors in their meeting for review and approval.

Unless otherwise provided in the Applicable Listing Rules, the net profit of the Company for each annual financial year shall be allocated in the following order and proposed by the board of directors to the shareholders in the general meeting for approval:

1) To make provision of the applicable amount of income tax pursuant to applicable tax laws and regulations;
2) To set off accumulated losses of previous years (if any);
3) To set aside ten percent (10%) as legal reserve pursuant to the Applicable listing rules unless the accumulated amount of such legal reserve equals to the total paid-up capital of the Company;
4) To set aside an amount as special reserve pursuant to the Applicable Listing Rules and requirements of the commission; and;
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5) With respect to the earnings available for distribution (i.e., the net profit after the deduction of the items (1) to (4) above plus any previously undistributed cumulative retained earnings), the board of directors may present a proposal to distribute to the shareholders by way of dividends at the annual general meeting for approval pursuant to the Applicable Listing Rules. Dividends may be distributed in the form of cash dividends and/or bonus shares, the Group authorized the distribution of whole or a part of the distributable dividends and bonuses may be paid in cash at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting. According to Cayman Islands laws, the amount of dividends shall be at least ten percent (10%) of net profit after the deduction of items (1) to (4) above. Cash dividends shall comprise a minimum of ten percent (10%) and a maximum of one hundred percent (100%) of the total dividends allocated to shareholders.

Under the dividends policy as set forth in the Articles before the amendments, unless otherwise provided in the Applicable Listing Rules, the net profits of the Company for each annual financial year shall be allocated in the following order and proposed by the board of directors to the shareholders in the general meeting for approval:

1) To make provision of the applicable amount of income tax pursuant to applicable tax laws and regulations;
2) To set off accumulated losses of previous years (if any);
3) To set aside ten percent (10%) as legal reserve pursuant to the Applicable listing rules unless the accumulated amount of such legal reserve equals to the total paid-up capital of the Company;
4) To set aside an amount as special reserve pursuant to the Applicable Listing Rules and requirements of the commission; and;
5) With respect to the earnings available for distribution (i.e., the net profit after the deduction of the items (1) to (4) above plus any previously undistributed cumulative retained earnings), the board of directors may present a proposal to distribute to the shareholders by way of dividends at the annual general meeting for approval pursuant to the Applicable Listing Rules. Dividends may be distributed in the form of cash dividends and/or bonus shares, and, subject to Cayman Islands law, the amount of dividends shall be at least ten percent (10%) of the net profit after the deduction of the items (1) to (4) above. Cash dividends shall comprise a minimum of ten percent (10%) and a maximum of one hundred percent (100%) of the total dividends allocated to shareholders.

For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, refer to employees’ compensation and remuneration of directors in Note 25-f.

An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 issued by the FSC should be appropriated to or reversed from a special reserve by the Company.

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The appropriations of earnings for 2018 and 2017 were approved in the shareholders’ meetings on June 25, 2019 and June 28, 2018, respectively, were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		Appropriation of Earnings	Appropriation of Earnings
		For the Year Ended December 31
		2018 $ 52,752 $ 29,153 $ 274,999 $ 4.5	2017 $ 18,240 $ 8,090 $ 152,724 $ 2.5

The appropriation of earnings for 2019 had been proposed by the Company’s board of directors on March 26, 2020. The appropriation and dividends per share were as follows:

	For the Year	For the Year
		Ended
	December 31,
		2019
Legal reserve	$	47,047
Special reserve	$	66,329
Cash dividends	$	243,659
Cash dividends per share (NT$)	$	4

d. Other equity items

Unearned employee benefit

In the meeting of shareholders on June 23, 2016, the shareholders approved a restricted share plan for employees (refer to Note 28).

Balance at January 1 Cancelation of shares Share-based payment expenses recognized Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (144,973) 7,115 26,101 $ (111,757 )	2018 $ (186,227) 12,974 28,280 $ (144,973 )

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24. NET REVENUE

a. Disaggregation of revenue

Type of goods or services Rendering of beauty and body spa course services Sale of goods Consulting service revenue Royalty revenue Rendering of supporting services Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,596,852 1,567,244 82,624 4,695 843 7 $ 3,252,265	2018 $ 1,820,165 1,255,720 14,301 4,321 12,599 1,390 $ 3,108,496

Refer to Note 4 for information about contract from customer.

b. Contract balances

The changes in the contract liabilities balances primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment (refer to Note 20).

25. NET PROFIT FROM CONTINUING OPERATIONS

a. Other income

Interest income Rental income (Note 13) Government grants Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 17,175 11,604 1,094 1,557 $ 31,430	2018 $ 8,891 7,084 4,560 14,494 $ 35,029

b. Other gains and losses

Net foreign exchange gains Gain on valuation of financial assets/liabilities at FVTPL (Loss) gain on disposal of property, plant and equipment Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 3,914 1,148 (521) (11,400 ) $ (6,859 )	2018 $ 949 - 41 (8,950 ) $ (7,960 )

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c. Finance costs

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2019 $ 49,088 10,082 6,539 18 $ 65,727 For the Year Ended			2018 $ - - 6,999 - $ 6,999 December 31
2019 $ 182,768 399,579 778 109,547 $ 692,672 $ 10,095 573,030 $ 583,125 $ 263 105,602 3,682 $ 109,547 For the Year Ended			2018 $ 166,992 - - 102,787 $ 269,779 $ 9,122 157,870 $ 166,992 $ 444 98,357 3,986 $ 102,787 December 31
	2019 $ 54,792 164 54,956 26,101 1,215,500 $ 1,296,557 $ 492,570 803,987 $ 1,296,557	2018 $ 54,931 167 55,098 28,280 1,122,906 $ 1,206,284 $ 480,613 725,671 $ 1,206,284

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f. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation at rates of no less than 1% and no higher than 5% of net profit before income tax, and accrued remuneration of directors at rates of no higher than 3% of net profit before income tax. The employees’ compensation and the remuneration of directors for the years ended December 31, 2019 and 2018, which were approved by the Company’s board of directors on March 26, 2020 and March 19, 2019, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2019 2018 1% 1% - - For the Year Ended December 31
	2019 2018 $ 5,104 $ 5,294 - -

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

The Group held board of directors’ meeting on March 19, 2020, which resulted in the resolution for actual amounts of the employees’ compensation and remuneration of directors and supervisors paid in 2018 to differ from the amounts recognized in the consolidated financial statements for the year ended December 31, 2018, respectively. The differences were adjusted to profit and loss for the year ended December 31, 2019.

The board of directors decided the allotted amount The amounts recognized in the consolidated financial statements	For the Year Ended December 31, 2018
	Employees’ Compensation Remuneration of Directors $ 5,294 $ - $ 5,324 $ -

There was no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2017.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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26. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. Major components of income tax expense recognized in profit or loss are as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments to deferred tax attributable to changes in tax rates and laws Adjustments for prior years Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 246,086 2,818 33,199 282,103 (64,185) - (37,500 ) (101,685 ) $ 180,418	2018 $ 28,190 9,831 (2,133 ) 35,888 161,029 (1,008) (2,673 ) 157,348 $ 193,236

A reconciliation of accounting profit and income tax expense was as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible expense in determining taxable income Income tax on unappropriated earnings Income tax expense of earnings repatriation of subsidiaries Effect of tax rate changes Adjustments for prior years’ tax Others Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 650,884 $ 165,664 365 2,818 19,562 - (4,301) (3,690 ) $ 180,418	2018 $ 720,761 $ 189,424 1,681 9,831 - (1,008) (4,806) (1,886 ) $ 193,236

In 2017, the applicable corporate income tax rate used by the group entities in the ROC was 17%. However, the Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%, effective in 2018. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings has been reduced from 10% to 5%.

In July 2019, the President of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Group had already deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 31, 2019.

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b. Income tax recognized in other comprehensive income

Deferred tax Effect of tax rate changes Remeasurement of defined benefit plans In respect of the current year Remeasurement on defined benefit plans	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - (621 ) $ (621 )	2018 $ (86) 82 $ (4 )

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2019 $ - $ 236,540	2018 $ 9,140 $ 26,910

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2019

Deferred tax assets Temporary differences Write-down of inventory Deferred revenue Defined benefit obligations Payables for annual leave Payables for employees’ benefits Unrealized exchange losses Right-of-use assets Tax losses Others Deferred tax liabilities Temporary differences Deferred revenue Defined benefit obligations Amortization of prepayments for leases Unrealized exchange gains Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 2,168 $ (327 ) $ - 22,369 (5,831 ) - 1 (1 ) - 5,367 (498 ) - 5,586 (4,220 ) - 216 840 - - 13,284 - - 34,863 - - 148 - $ 35,707 $ 38,258 $ - $ (177,747 ) $ 64,413 $ - - (219 ) (621 ) (4,266 ) (520 ) - (185 ) (242 ) - - (5 ) - $ (182,198 ) $ 63,427 $ (621 )	Exchange Differences $ (38 ) (285 ) - - (51 ) - (496 ) - - $ (870 ) $ 4,150 - 179 6 - $ 4,335	Closing Balance $ 1,803 16,253 - 4,869 1,315 1,056 12,788 34,863 148 $ 73,095 $ (109,184 ) (840 ) (4,607 ) (421 ) (5 ) $ (115,057 )

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For the year ended December 31, 2018

Deferred tax assets Temporary differences Write-down of inventory Deferred revenue Defined benefit obligations Payables for annual leave Payables for employees’ benefits Tax losses Unrealized exchange losses Property, plant and equipment Deferred tax liabilities Temporary differences Deferred revenue Amortization of prepayments for leases Property, plant and equipment	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 2,490 $ (301 ) $ - 31,553 (9,288 ) - 101 (96 ) (4 ) 3,426 1,941 - 5,957 (256 ) - 7,949 (7,940 ) - 623 (407 ) - 66 (67 ) - $ 52,165 $ (16,414 ) $ (4 ) $ (41,073 ) $ (140,217 ) $ - (3,824 ) (530 ) - - (187 ) - $ (44,897 ) $ (140,934 ) $ -	Exchange Differences $ (21 ) 104 - - (115 ) (9 ) - 1 $ (40 ) $ 3,543 88 2 $ 3,633	Closing Balance $ 2,168 22,369 1 5,367 5,586 - 216 - $ 35,707 $ (177,747 ) (4,266 ) (185 ) $ (182,198 )

e. Income tax assessments

The income tax returns of subsidiary Jourdeness International through 2017 have been assessed by the tax authorities.

27. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For	Unit: NT$ Per Share the Year Ended December 31	Unit: NT$ Per Share the Year Ended December 31
		2019 $ 8.05 $ 7.15	2018 $ 9.02 $ 8.85

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net Profit for the Year

Profit for the period Effect of potentially dilutive ordinary shares Interest on convertible bonds Net gain on financial liabilities at FVTPL Earnings used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2019 $ 470,466 10,082 (1,125 ) $ 479,423	2018 $ 527,525 - - $ 527,525

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The weighted average number of ordinary shares outstanding (in thousands of shares) is as follows:

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Employees’ compensation Employees’ restricted shares Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 58,470 7,029 51 1,519 67,069	2018 58,470 - 54 1,116 59,640

If the Group offered to settle the compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

28. SHARE-BASED PAYMENT ARRANGEMENTS

Employee Restricted Shares

In the shareholder’s meeting on June 23, 2016, the shareholders approved a restricted share plan for employees with 2,900 thousand shares. On August 2, 2016, the above transaction was approved by the FSC. The Company issued 2,645 thousands and 110 thousands of the restricted shares on August 30, 2016 and December 28, 2016, respectively. The restrictions on the rights of employees who acquire the restricted shares but have not met the vesting conditions are as follows:

a. The employees cannot sell, pledge, transfer, donate or, in any other way, dispose of these shares.
b. The rights of attendance, proposal, speech and voting in shareholders meetings shall all be executed based on trust contracts signed by employees.
c. During the vesting period, the Company agrees that the restricted employee shares can still receive shares and dividends regardless of whether the employees have achieved the vested conditions.

If an employee fails to meet the vesting conditions, the Company will recall and cancel the restricted shares without compensation.

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The related information was as follows:

Employee Restricted Shares Balance at January 1 Options forfeited Balance at December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 Number of Shares (In Thousands of Shares) 2,530 (85 ) 2,445	2018
		Number of Shares (In Thousands of Shares) 2,685 (155 ) 2,530

Information about outstanding employee restricted shares as of December 31, 2019 was as follows:

		Number of
		Shares
	Grant-date Fair	(In Thousands	Vesting Period
Grant-date	Value (NT$)	of Shares)	(Years)
August 18, 2016	$83.70	2,335	1-10
December 26, 2016	84.20	110	1-10

The calculation of employee restricted shares’ fair value was based on the closing price of the ordinary shares at the grant date.

Compensation costs of share-based payments arrangement recognized were $26,101 thousand and $28,280 thousand for the years ended December 31, 2019 and 2018, respectively.

29. BUSINESS COMBINATIONS

a. Acquisition of assets and operations

For the year ended December 31, 2019

				Proportion of
				Voting Equity
				Interests	Consideration
		Principal Activity	Date of Acquisition	Acquired (%)	Transferred
11	Beauty Salons	Consulting services of	February 2019 to	100	$	2,233
	in mainland	beauty and body spa	December 2019
	China	business

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For the year ended December 31, 2018

			Proportion of
			Voting Equity
			Interests	Consideration
	Principal Activity	Date of Acquisition	Acquired (%)	Transferred
19 Beauty Salons	Consulting services of	January 2018 to	100	$	23,574
in mainland	beauty and body spa	December 2018
China	business
4 Beauty Salons	Consulting services of	September 2018 to	100	$	-
in Taiwan	beauty and body spa	October 2018
	business

In order to expand the Group’s operation and increase various aspects of beauty and body spa services, Jourdeness (Guangzhou) Cosmetics acquired 11 beauty salons in mainland China in 2019, and Jourdeness (Guangzhou) Cosmetics and Jourdeness International acquired 19 and 4 beauty salons in Taiwan in 2017, respectively.

b. Assets acquired and liabilities assumed at the date of acquisition

For the year ended December 31, 2019

Current assets Inventories Non-current assets Property, plant and equipment (Note 12) Other intangible assets (Note 16) Other non-current assets Current liabilities Contract liabilities (Note 20)	Beauty Salons	Beauty Salons
		China $ 6,538 1,331 46,724 2,451 (74,625 ) $ (17,581 )

For the year ended December 31, 2018

Current assets Inventories Non-current assets Property, plant and equipment (Note 12) Other intangible assets (Note 15) Other non-current assets Current liabilities Contract liabilities (Note 20)		Beauty Salons	Beauty Salons
		China $ 9,081 13,484 72,362 2,785 (121,173 ) $ (23,461 )	Taiwan $ - - 44,615 - (80,628 ) $ (36,013 )	Total $ 9,081 13,484 116,977 2,785 (201,801 ) $ (59,474 )

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c. Goodwill recognized on acquisition

Consideration transferred Plus: Fair value of identifiable net liabilities acquired Goodwill recognized on acquisition	Beauty Salons	Beauty Salons	Beauty Salons
	For the Year Ended December 31
		2019 $ 2,233 17,581 $ 19,814	2018 $ 23,574 59,474 $ 83,048

The goodwill recognized in the acquisitions of beauty salons in 2019 and 2018 mainly represents the acquisition premium, consisting of customer relationship and net liabilities due from advance receipts included in the cost of the combinations. Acquisition premium included amounts attributed to the benefits of expected synergies, revenue growth, future market development and the assembled workforces. Except for the recognition of customer relationship as other intangible assets, these benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets.

d. Impact of acquisitions on the results of the Group

The results of the acquirees since the acquisition date included in the consolidated statements of comprehensive income were as follows:

Revenue Profit	Beauty Salons	Beauty Salons	Beauty Salons
	For the Year Ended		December 31
		2019 $ 50,773 $ 531	2018 $ 128,417 $ 49,348

Had these business combinations been in effect at the beginning of the annual reporting period, the Group’s revenue from continuing operations would have been $30,991 thousand and $67,157 thousand for the years ended December 31, 2019 and 2018, respectively; the profit from continuing operations would have been $8,610 thousand and $8,651 thousand for the years ended December 31, 2019 and 2018, respectively. This pro-forma information is for illustrative purposes only and is not necessarily an indication of the revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2019 and 2018, nor is it intended to be a projection of future results.

In determining the pro-forma revenue and profit of the Group had beauty salons been acquired at the beginning of the current reporting period, the management calculated net assets acquired on the basis of the fair values at the initial accounting for the business combination rather than the carrying amounts recognized in the respective pre-acquisition financial statements.

30. CAPITAL MANAGEMENT

In order to set out the appropriate capital structure, the Group manages its capital based on the industry scale, the growth of market and the development of products for determining an appropriate market share, and considers the working capital, business benefits and cash flow generated from the competitive products.

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31. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

December 31, 2019

Financial liabilities Financial liabilities at amortized cost Convertible bonds December 31, 2018 Financial liabilities Financial liabilities at amortized cost Convertible bonds	Carrying Amount $ 729,409 Carrying Amount $ 719,327			Fair Value	Fair Value
			Level 1 $ -	Level 2 Level 3 $ - $ 729,771 Fair Value		Total $ 729,771
			Level 1 $ -	Level 2 $ -	Level 3 $ 719,327	Total $ 719,327

When the Group estimated the fair value of the liabilities component of convertible bonds, it assumed that the convertible bonds would be redeemed on December 28, 2021, and the risk-adjusted discount rates of 1.1072% and 1.2200% as of December 31, 2019 and 2018 were assessed by the borrowing interest rate of similar corporation, respectively.

Except as stated above, the management of the Group believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values or their fair values cannot be reliably measured.

b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2019 Financial assets at FVTPL Financial bonds Financial liabilities at FVTPL Derivatives December 31, 2018 Financial liabilities at FVTPL Derivatives	Level 1 $ 3,045 $ - Level 1 $ -	Level 2 $ - $ - Level 2 $ -	Level 3 $ - $ 150 Level 3 $ 1,275	Total $ 3,045
				$ 150
				Total $ 1,275

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

2019

Financial liabilities Balance at January 1 Recognized in profit or loss (valuation at FVTPL) Additions Repayments Balance at December 31 December 28, 2018 to December 31, 2018 Financial Liabilities Balance at December 31, 2018	Financial Liabilities at FVTPL	Financial Liabilities at FVTPL
	Derivatives $ (1,275) 1,125 - - $ (150 )	Debt Instruments $ - - 113,025 (113,025 ) $ - Financial Liabilities at FVTPL
		Derivatives $ 1,275

3) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair values of the host liability instrument and the conversion option derivative instrument, consisting of put option and redemption option of convertible bonds, were estimated using the Binomial Convertible Bonds Pricing Model. The significant parameters used in the evaluation model were as follows:

Volatility Risk-free rate of interest Risk discount rate Liquidity risk Categories of financial instruments Financial assets Financial assets at FVTPL Financial assets at amortized cost (1) Financial liabilities Financial liabilities at FVTPL Held for trading Financial liabilities at amortized cost (2)	December 31
	2019 2018 30.94% 56.26% 0.4833% 0.5961% 1.1072% 1.2200% 4.10% 15.72% December 31
	2019 2018 $ 3,045 $ - 1,656,882 2,088,911 150 1,275 950,457 1,366,054

c. Categories of financial instruments
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1) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables and other receivables.
2) The balances include financial liabilities at amortized cost, which comprise short-term loans, notes payable, trade payables, other payables (including related parties), refundable deposits, bonds payable and long-term loans.
d. Financial risk management objectives and policies

The operations of the Group are affected by several financial risks, the risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management policy is focused on unpredictable events in the financial markets and seeks to reduce the potentially adverse effects on the Group’s financial position and financial performance.

The risk management work is carried out by the financial management function of the Group in accordance with the policies approved by the board of directors. The Group’s financial management function is responsible for identifying, assessing and evading financial risks by working closely with the Group’s operation management function.

1) Market risk

The Group’s activities exposed it primarily to the market risks of changes in foreign currency exchange rates.

a) Foreign currency risk

The Group is a multinational corporation, which exposed it to the financial risks of changes in foreign currency exchange rates (the main currencies are U.S. dollars and RMB). The relevant foreign currency risk arises from future commercial transactions, financial assets and liabilities denominated in foreign currencies, and net investments in the foreign operation institutions.

The Group holds investments from a number of foreign operating institutions resulting in foreign currency risk on net assets.

The Group’s operations are transacted in several non-functional currencies (the functional currencies of the Company and subsidiaries include the NTD, RMB and MYR), therefore, the Group is affected by the volatility of exchange rates. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 36.

Sensitivity analysis

The Group’s sensitivity analysis mainly focuses on the foreign currency risk of U.S. dollars at the end of the reporting period. Assuming a 3% strengthening/weakening of the functional currency against U.S. dollars, the net income before tax for the year ended December 31, 2019 would have increased/decreased by $310 thousand; the net income before tax for the year ended December 31, 2018 would have increased/decreased by $896 thousand.

In management’s opinion, sensitivity analysis was unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period did not reflect the exposure during the period.

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b) Interest rate risk

The Group was exposed to fair value and cash flow interest rate risk because the Group held both fixed and floating interest rate financial assets and financial liabilities. The Group’s management monitors fluctuations in market interest rate regularly. If it is needed, the management will perform necessary procedures to control significant interest rate risks from fluctuations in market interest rates.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31
	2019 2018 $ 373,634 $ 890,401 1,735,827 719,327 986,533 989,106 76,449 478,323

The Group’s sensitivity analysis is based on the floating interest rates financial assets and financial liabilities at the end of the reporting period. If interest rates had been 0.5% higher/lower and all other variables were held constant, the net income before tax for the years ended December 31, 2019 and 2018 would increase/decrease by $4,550 thousand and $2,554 thousand, respectively.

2) Credit risk

a) Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is required to manage and analyze the credit risk for each of its new customers before granting the payment terms and the delivery conditions in accordance with the internal credit policy. For internal risk control, the Group assesses the credit quality of customers by considering their financial status, past experience and other factors. The limitations of individual risk are set by the board of directors based on internal or external credit ratings and regular monitoring of the use of credit lines.
b) There were no excess credit lines for the years ended December 31, 2019 and 2018, and the management did not expect any significant losses due to the counterparty default on its contractual obligations.
c) The Group transacts with a large number of unrelated customers and, thus, no concentration of credit risk was observed. Credit risk arises from cash and cash equivalents, deposit in banks and trade receivables from customers. In addition, the credit risk is not high because the counterparty of liquidity is the bank with a high credit rating granted by the rating agency.
d) The Group only deals with creditworthy counterparties as a means of mitigating the risk of financial loss. The Group monitors the exposure at default and the credit ratings of its counterparties continuously.
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3) Liquidity risk
a) The Group’s financial control center aggregates the cash flow forecasting performed by each operating entity and monitors the forecast of the Group’s liquidity requirements to ensure that it has sufficient funds to meet operational needs.
b) The remaining cash held by each operating entity is invested in demand deposits and marketable securities when it exceeds the management of working capital. The selected instruments have appropriate maturity dates or sufficient liquidity to meet the above forecast and provide sufficient water level.
c) The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay.

December 31, 2019

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 108,150 Lease liabilities 368,599 Floating interest rate liabilities 76,449 Fixed interest rate liabilities - $ 553,198 Less than 1 Year 1-5 Years Lease liabilities $ 368,599 $ 681,795 December 31, 2018 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 141,072 Floating interest rate liabilities 78,323 Fixed interest rate liabilities - $ 219,395	1-5 Years $ 36,449 681,795 - 729,409 $ 1,447,653 5-10 Years $ 67,588 1-5 Years $ 43,985 400,000 719,327 $ 1,163,312	5+ Years $ - 67,588 - -
		$ 67,588
		10 Years $ - 5+ Years $ - - -
		$ -

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d) Financing facilities

Unsecured bank loan facilities Amount used Amount unused Secured bank loan facilities Amount used Amount unused		December 31	December 31
		2019 $ - 100,000 $ 100,000 $ 426,449 1,212,851 $ 1,639,300	2018 $ - 50,000 $ 50,000 $ 828,323 219,177 $ 1,047,500

32. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

a. Related party name and category

Related Party Name

Related Party Category

Jourdeness Cosmetic., Sdn Bhd. (“Cosmetic”) Jourdeness Canada Enterprises Inc. Jourdenwell Medical Beauty Clinic Co., Ltd.

Related party in substance Related party in substance Related party in substance

(“Jourdenwell”)

Guangzhou Jourdenwell Medical Beauty Clinic Co., Ltd. (“Guangzhou Jourdenwell”)

Wuhan Jourdenwell Medical Beauty Clinic Co., Ltd.

Related party in substance

(“Wuhan Jourdenwell”)

Chengdu Jinniu Jourdenwell Medical Beauty Clinic Co., Ltd. (“Chengdu Jinniu Jourdenwell”) Jourdenwell Chen Sufang Medical Beauty Clinic Co., Ltd. in Siming District, Xiamen (“Jourdenwell in Siming District, Xiamen”) Coswift International Marketing Co., Ltd.)

Chen, Cheng-Hsiung

Chen, Cheng-Tzu

Related party in substance

The chairman of the company is the spouse of the Company’s main management

Key management personnel (chairman of the Company)

Key management personnel (director of the Company)

b. Sales of goods, net revenue from sale of goods

Line Item Related Party Category Sales of goods Related party in substance Consulting service revenue Related party in substance	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 8,587 $ 4,313	2018 $ 24 $ -

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The selling price of the Group to the related parties was negotiated among each other. The payment terms for the related parties were 60 days to 90 days after shipment of goods, and they were similar to those from the third party.

c. Purchases of goods

Related Party Category The chairman of the company is the spouse of the Company’s main management Trade receivables from related parties Related Party Category Related party in substance	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 39,735 December	2018 $ - 31
		2019 $ 12,845	2018 $ -

d. Trade receivables from related parties

The outstanding trade receivables from related parties were unsecured. For the years ended December 31, 2019 and 2018, no impairment loss was recognized for trade receivables from related parties.

e. Other receivables from related parties

Related Party Category/Name Related party in substance Cosmetic Guangzhou Jourdenwell Wuhan Jourdenwell Chengdu Jinniu Jourdenwell		December	31
		2019 $ 1,324 10,012 9,485 6,101 $ 26,922	2018 $ 2,288 426 - - $ 2,714

f. Payables to related parties

Related Party Category The chairman of the company is the spouse of the Company’s main management The outstanding trade payables to related parties are unsecured. Other payables to related parties Related Party Category Related party in substance		December	31
		2019 $ 686 December	2018 $ - 31
		2019 $ 1,677	2018 $ 1,957

g. Other payables to related parties
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h. Other unearned revenue

	December	31
	2019 2018 $ 133 $ - Purchase Price
For the Year Ended December 31
	2019 $ -	2018 $ 72,960

i. Acquisitions of property, plant and equipment
j. Sublease arrangements

Sublease arrangements under operating leases

The Group subleases its right-of-use assets (buildings) to its associate company, Jourdenwell Chen Sufang Medical Beauty Clinic Co., Ltd., in Siming District, Xiamen under operating lease with lease terms of 2 and 3 years. As of December 31, 2019, the gross lease payment received was $5,121 thousand.

Lease arrangements - the Group is lessor

The Group leases out machines to its associate company, Guangzhou Jourdenwell, under operating lease with lease term of 4 years. As of December 31, 2019, the gross lease payment received was $12,772 thousand.

Lease income was as follows:

Related Party Category/Name Related party in substance Guangzhou Jourdenwell Chengdu Jinniu Jourdenwell Jourdenwell in Siming District, Xiamen		December	31
		2019 $ 4,906 707 894 $ 6,507	2018 $ 1,328 - - $ 1,328

k. Endorsements and guarantees

Endorsements and guarantees given by related parties

Related Party Category Key management personnel Amount endorsed Amount utilized (reported as short-term and long-term borrowings)		December 31	December 31
		2019 $ 1,439,500 $ 426,449	2018 $ 747,500 $ 478,323

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l. Compensation of key management personnel

Short-term employee benefits Post-employment benefits Share-based payments	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 23,355 325 7,837 $ 31,517	2018 $ 22,988 325 7,928 $ 31,241

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

33. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral applications as follows:

Buildings Buildings Land Land Financial assets at amortized cost - trust time deposits Financial assets at amortized cost - pledged time deposits Financial assets at amortized cost - reserve bank deposits Financial assets at amortized cost - demand deposits		December 31 2019 2018 Collateral Applications $ 245,995 $ 252,317 Performance bond (a) and (c) 85,865 91,804 Guarantees of bank loans 216,067 216,067 Performance bond (a) and (c) 587,940 587,940 Guarantees of bank loans 175,000 175,000 Performance bond (b) and (c) 77,217 75,001 Performance bond (a) and (c) 324 1,347 Membership installment payment plan 920 893 Property maintenance funds $ 1,389,328 $ 1,400,369
		2019 $ 245,995 85,865 216,067 587,940 175,000 77,217 324 920 $ 1,389,328

a. Subsidiary Jourdeness International entrusts the credit bank to process the collection and payment from the credit card holder’s account. Since the service provided by Jourdeness International is of a pre-receipt nature, the failure of Jourdeness International to satisfy performance obligations will cause losses on the credit card bank. Therefore, Jourdeness International has agreed to provide time deposit as collateral to obtain credit line with credit bank, and the guaranteed amount is $76,000 thousand. In addition, Jourdeness International signed an agreement with National Credit Card Center of the ROC and agreed to obtain a comprehensive credit line by pledging buildings and land as collateral. The credit bank issues a performance statement with a guarantee amount of $350,000 thousand which is the guarantee for the credit card losses caused by Jourdeness International’s promise to pay for the bank’s default.
b. For the purpose of strengthening the protection of consumer rights by Jourdeness International, in addition to the original performance bond, the “Guarantee Trust Deed Agreement” was approved by Jourdeness International’s board of directors on August 28, 2015. The agreement states that Jourdeness International needs to consider the liquidity and the enhancement of the guarantee reserve rate, and be responsible for trust management through the trust management bank, as well as 30% of the advance receipts which are based on the Jourdeness International’s recent audit report deducted by the performance bond as a guarantee reserve have to be remitted to the trust account. If Jourdeness
66 -

International fails to perform its services or goods in accordance with the contract from customer, consumers can obtain relevant rulings through formal channels to ensure their remaining rights.

c. The performance bonds provided by Jourdeness International were $601,000 thousand and $599,000 thousand as of December 31, 2019 and 2018, respectively, which had complied with the commitment guarantee amount as stated in (b) above.

34. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, the capital expenditures that the Group has committed but not incurred are as follows:

Property, plant and equipment		December 31	December 31
		2019 $ 909,471	2018 $ 9,380

35. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

The outbreak of the novel coronavirus pneumonia in January 2020 caused Jourdeness (Guangzhou) Cosmetics Co., Ltd. to temporarily suspend its operations in Wuhan, Hubei Province, Guangzhou, Guangdong, and other regions with severe epidemic situation. Because the stores of Jourdeness (Guangzhou) Cosmetics Co. were concentrated in severely affected areas, its operations would be significantly affected. As of the release date of this consolidated financial statements, 143 stores had resumed operations, which accounted for approximately 80% of direct retail stores in mainland China. Since the Group was unable to assess the situation of epidemic control, it could not reasonably estimate the extent to which the operations and overall industry of Jourdeness (Guangzhou) Cosmetics Co., Ltd. had been affected by the epidemic.

36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2019

		Foreign		Functional
	Currencies			Currencies	Carrying
		(In	Exchange Rate	(In	Amount (In
	Thousands)		(In Dollars)	Thousands)	Thousands)
Financial assets
Monetary items
USD	$	12,665	29.980 (USD:NTD)	$ 383,955	$ 383,955
Financial liabilities
Monetary items
USD		13,050	29.980 (USD:NTD)	391,239	391,239

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December 31, 2018

		Foreign		Functional
	Currencies			Currencies	Carrying
		(In	Exchange Rate	(In	Amount (In
	Thousands)		(In Dollars)	Thousands)	Thousands)
Financial assets
Monetary items
USD	$	7,078	30.715 (USD:NTD)	$ 217,413	$ 217,413
Financial liabilities
Monetary items
USD		8,050	30.715 (USD:NTD)	247,256	247,256

For the years ended December 31, 2019 and 2018, net foreign exchange gains were $3,914 thousand and $949 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

37. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees
1) Financing provided to others (Table 1);
2) Endorsements/guarantees provided (Table 2);
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3);
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) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (Table 4);
6) Disposals 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 amounting to at least NT$100 million or 20% of the paid-in capital (None);
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 5);
9) Trading in derivative instruments (Notes 7 and 19);
10) Intercompany relationships and significant intercompany transactions (Table 6);
11) Information on investees (Table 7).
68 -
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 8).
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (None):
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.
- c) The amount of property transactions and the amount of the resultant gains or losses.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.
- f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services.

38. SEGMENT INFORMATION

Information reported to the chief operating decision maker was based on the types of business units. Business units include Jourdeness International, Jourdeness (Guangzhou) Cosmetics, Jourdeness Enterprise Management and MY.

The operating segments’ accounting policies were similar to the Group as detailed in Note 4. The operating segments’ profit or loss is measured in terms of profit or loss before tax and serves as the basis for assessing performance.

a. Segment revenues and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segments:

For the year ended December 31, 2019

Revenue from external customers Inter-segment revenue Consolidated revenue Segment income Other income Other gains and losses Finance costs Profit before tax	Jourdeness International $ 1,318,104 69,445 $ 1,387,549 $ 160,219	Jourdeness (Guangzhou) Cosmetics $ 1,796,403 10,501 $ 1,806,904 $ 546,802	Jourdeness Enterprise Management $ 31,636 4,225 $ 35,861 $ (9,574 )	MY $ 106,122 - $ 106,122 $ 33,679	Other $ - - $ - $ (39,086 )	Elimination $ - (84,171 ) $ (84,171 ) $ -	Total $ 3,252,265 - $ 3,252,265 $ 692,040 31,430 (6,859 ) (65,727 ) $ 650,884

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For the year ended December 31, 2018

Revenue from external customers Inter-segment revenue Consolidated revenue Segment income Other income Other gains and losses Finance costs Profit before tax	Jourdeness International $ 1,235,421 40,393 $ 1,275,814 $ 95,359	Jourdeness (Guangzhou) Cosmetics $ 1,725,450 11,740 $ 1,737,190 $ 608,162	Jourdeness Enterprise Management $ 34,529 3,597 $ 38,126 $ 4,100	MY $ 113,096 - $ 113,096 $ 46,646	Other $ - - $ - $ (53,576 )	Elimination $ - (55,730 ) $ (55,730 ) $ -	Total $ 3,108,496 - $ 3,108,496 $ 700,691 35,029 (7,960 ) (6,999 ) $ 720,761

The segment revenues were all generated from external customers. All intercompany transactions in 2019 and 2018 have been eliminated on consolidation.

Segment profit represented the profit before tax earned by each segment without interest income, rental revenue, gains or losses on disposal of property, plant and equipment and exchange gains or losses. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Revenue from major products and services: Refer to Note 24.
c. Geographical information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below.

China Taiwan Other	Revenue from External Customers For the Year Ended December 31 2019 2018 $ 1,828,039 $ 1,759,979 1,317,777 1,235,397 106,449 113,120 $ 3,252,265 $ 3,108,496	Revenue from External Customers For the Year Ended December 31 2019 2018 $ 1,828,039 $ 1,759,979 1,317,777 1,235,397 106,449 113,120 $ 3,252,265 $ 3,108,496		Non-current Assets	Non-current Assets
				December 31
		2019 $ 1,828,039 1,317,777 106,449 $ 3,252,265		2019 $ 2,216,111 2,076,312 91,053 $ 4,383,476	2018 $ 1,669,784 1,694,312 84,392 $ 3,448,488

Non-current assets exclude those which are classified as financial instruments and deferred tax assets.

d. Information about major customers

No single customer contributed 10% or more to the Group’s revenue.

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TABLE 1

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 3)	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 2)	Aggregate Financing Limits (Note 2)
													Item	Value
1	Bio-Jourdeness International Group Co., Ltd.	Jourdeness Group Limited	Other receivables from related parties	Yes	$ 314,790 (US$ 10,500 thousand)	$ 314,790 (US$ 10,500 thousand)	$ 314,790 (US$ 10,500 thousand)	-	Short-term financing	$ -	Operating capital	$ -	-	-	$ 597,526	$ 597,526

Note 1: The information of note column is as follows:

a. The Company: 0. b. The subsidiaries are marked in numerical order from 1.

Note 2: The total amount of the financing provided by the Company to others, collectively and to any individual entity shall not exceed 40% of its net worth. The Company’s net worth was calculated as of December 31, 2019.

Note 3: The calculation was based on the spot exchange rate of December 31, 2019.

Note 4: All intercompany transactions have been eliminated on consolidation.

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TABLE 2

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Notes 2 and 3)	Maximum Amount Endorsed/ Guaranteed During the Period (Note 3)	Outstanding Endorsement/ Guarantee at the End of the Period (Note 3)	Actual Borrowing Amount (Note 3)	Amount Endorsed/ Guaranteed by Collateral (Note 3)	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries (Note 4)	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent (Note 4)	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China (Note 4)
		Name	Relationship
1	Bio-Jourdeness International Group Co., Ltd.	Jourdeness Group Limited	Parent	$ 746,951	$ 87,014 (US$ 2,902 thousand)	$ 81,440 (US$ 2,716 thousand)	$ 76,449 (US$ 2,550 thousand)	$ 89,940 (US$ 3,000 thousand)	4.02	$ 1,493,902	N	Y	N
2	Jourdeness (Guangzhou) Cosmetics Co., Ltd.	Jourdeness Group Limited	Parent	756,223	299,800 (US$ 10,000 thousand)	299,800 (US$ 10,000 thousand)	-	-	14.79	1,499,426	N	Y	N

Note 1: The information of note column is as follows:

a. The Company: 0.

b. The subsidiaries are marked in numerical order from 1.

Note 2: The total amount of the guarantee provided by the Company to others, collectively and to any individual entity shall not exceed 100% and 50% of its net worth, respectively. The Company’s net worth was calculated as of December 31, 2019.

Note 3: The calculation was based on the spot exchange rate of December 31, 2019.

Note 4: Endorsement/guarantee given by parent on behalf of subsidiaries marked as “Y”; endorsement/guarantee given by subsidiaries on behalf of parent marked as “Y”; endorsement/guarantee given on behalf of companies in mainland China marked as “Y”.

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TABLE 3

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2019

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

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019	Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Bio-Jourdeness International Group Co., Ltd. Jourdeness (Guangzhou) Cosmetics Co., Ltd. Jourdeness (Guangzhou) Cosmetology Enterprise Management Co., Ltd.	Financial bonds Code is Securities S.A. - Federal Funds 04/09/2029 DTD 04/08/2019 Financial products People’s Profit-Promoting Phase I Wealth Management Commodities of E.Sun Bank Capital Guaranteed E No. 2 Legal Person Extension Product of Industrial and Commercial Bank of China Capital Guaranteed E No. 2 Legal Person Extension Product of Industrial and Commercial Bank of China	- - - -	Financial assets at fair value through profit or loss (FVTPL) - current Financial assets at amortized cost - current Financial assets at amortized cost - current Financial assets at amortized cost - current	1 5,000,000 10,000,000 8,000,000	$ 3,045 21,525 43,050 34,440	- - - -	$ 3,045 21,525 43,050 34,440

Note 1: Marketable securities indicated in the above table refer to stocks, bonds, beneficiary certificates and other derivative securities, as defined in IFRS 9 “Financial Instruments”.

Note 2: The securities presented herein were not pledged as collateral for loans and also not subject to restrictions on use under some agreements.

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TABLE 4

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Property	Event Date	Transaction Amount	Payment Status	Counterparty	Relationship	Information on Previous Title Transfer If Counterparty	Information on Previous Title Transfer If Counterparty	Information on Previous Title Transfer If Counterparty	Is A Related Party	Pricing Reference	Purpose of Acquisition	Other Terms
							Property Owner	Relationship	Transaction Date	Amount
Bio-Jourdeness International Group Co., Ltd.	Exterior wall decoration materials and landscape decoration works of Chiayi Dapumei Biotechnology Park Main building and progress management project of Chiayi Dapumei Biotechnology Park The air conditioning engineering project of Chiayi Dapumei Biotechnology Park	2019.04.01 2019.05.09 2019.08.12	$ 129,990 620,000 620,000	Acceptance according to project progress and monthly settlement payment Acceptance according to project progress and monthly settlement payment Acceptance according to project progress and monthly settlement payment	You Hwong Creative Develop NT Co., Ltd.) Lee Ming Construction Co., Ltd. Poyuan Engineering Co., Ltd.	- - -	Not applicable Not applicable Not applicable	Not applicable Not applicable Not applicable	Not applicable Not applicable Not applicable	Not applicable Not applicable Not applicable	Bidding, price comparison and bargaining Bidding, price comparison and bargaining Bidding, price comparison and bargaining	The exterior engineering project of Chiayi Dapumei Biotechnology Park Main building project of Chiayi Dapumei Biotechnology Park The air conditioning engineering project of Chiayi Dapumei Biotechnology Park	None None None

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TABLE 5

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

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

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

Company Name	Related Party	Relationship	Ending Balance (Note 1)	Turnover Rate		Overdue	Amount Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
Bio-Jourdeness International Group Co., Ltd.	Jourdeness Group Limited	Parent	$ 315,029	-	$ -	-	$ -	Note 1

Note 1: After valuation, it is not necessary to provide allowance for losses.

Note 2: After the end of the reporting period refers to the period from January 1, 2020 to March 26, 2020.

Note 3: All intercompany transactions have been eliminated on consolidation.

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TABLE 6

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

No. (Note 1)	Investee Company	Counterparty	Relationship (Note 2)	Transactions Details	Transactions Details	Transactions Details	Transactions Details
				Financial Statement Accounts	Amount	Transaction Terms	% of Total Sales or Assets (Note 3)
0	Jourdeness Group Limited	Bio-Jourdeness International Group Co., Ltd.	a	Other payables to related parties	$ 315,029	No significant difference to others	5
1	Bio-Jourdeness International Group Co., Ltd.	Jourdeness (Guangzhou) Cosmetic Co., Ltd. Bio-Jourdeness Cosmetic Co. (MY) Sdn. Bhd.	c c	Sales revenue Sales revenue	53,420 13,020	No significant difference to others No significant difference to others	2 -

Note 1: The information about the transactions between the Company and its subsidiaries is marked in the note column as follows:
a. The Company: 0.
b. The subsidiaries are marked in numerical order from 1.

Note 2: Investment types are as follows:

a. The Company to the subsidiaries.
b. The subsidiaries to the Company.
c. Between the subsidiaries.
Note 3: The ratio of transaction amounts to total sales revenue or assets was calculated as follows: (1) Asset or liability: The ratio was calculated based on the ending balance over the total consolidated assets; (2) Income or loss: The ratio was calculated based on the midterm accumulated amounts over the total consolidated sales revenue.

Note 4: All intercompany transactions have been eliminated on consolidation.

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TABLE 7

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Business Content	Original Investment Amount	Original Investment Amount	As of	December 31, 2019	December 31, 2019	Net Income (Loss) of Investee	Share of Profit (Loss)	Note
				December 31, 2019	December 31, 2018	Number of Shares	%	Carrying Amount
The Company	Bio-Jourdeness International Group Co., Ltd. Success United Limited Jourdeness Development Limited Bio-Jourdeness Cosmetic Co. (MY) Sdn. Bhd.	Taiwan Samoa Hong Kong Malaysia	Beauty and body spa business and manufacture of cosmetics Investment Investment Beauty and body spa business	$ 205,000 224,494 32,320 7,857	$ 130,000 224,494 32,320 7,857	20,500,000 6,529,401 1,000,000 1,100,750	100 100 100 100	$ 1,493,816 1,499,721 39,452 78,402	$ 120,183 370,164 (2,043) 21,611	$ 120,183 370,164 (2,043) 21,611	Note Note Note Note

Note: All intercompany transactions have been eliminated on consolidation.

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TABLE 8

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Investee Company	Business Content	Paid-in Capital (Note 1)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2019	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019	Net Income (Loss) of Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 4)	Carrying Amount as of December 31, 2019 (Note 4)	Accumulated Repatriation of Investment Income as of December 31, 2019
						Outflow	Inflow
Jourdeness (Guangzhou) Cosmetics Co., Ltd. Jourdeness (Guangzhou) Cosmetology Enterprise Management Co., Ltd. Chengdu Jourdeness Enterprise Management Consulting Co., Ltd.		Manufacture of cosmetics and beauty and body spa business Consulting services of beauty and body spa business Consulting services of beauty and body spa business	$ 275,851 29,391 Note 4	Note 2 Note 2 Note 2	$ - - -	$ - - -	$ - - -	$ - - -	$ 390,325 (2,043) -	100.00 100.00 100.00	$ 390,325 (2,043) -	$ 1,499,426 39,497 -	$ 195,620 - -
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA (Note 3) $ - $ - $ -
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019	Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA (Note 3)
$ -	$ -		$ -

Note 1: The calculation was based on the spot exchange rate of December 31, 2019.

Note 2: The company indirectly invested in subsidiaries in mainland China by investing via third region.

Note 3: The company was incorporated in Cayman Islands and not restricted to “Guideline Governing the Review of Investment or Technical Cooperation in the Mainland Area.”

Note 4: Chengdu Enterprise Management underwent liquidation procedures and remitted share capital in 2018. As of December 31, 2019, Chengdu Enterprise Management had not completed the deregistration process.

Note 5: The board of directors of Jourdeness (Guangzhou) Cosmetics Co., Ltd. approved the payments of cash dividends amounting to $152,460 thousand (RMB35,000 thousand) and $43,160 thousand (RMB10,000 thousand) on August 27, 2019 and December 11, 2019, respectively, which were remitted to the Company via Success United Limited. The cumulative amount of remittance was $195,620 thousand as of December 31, 2019.
Note 6: All intercompany transactions have been eliminated on consolidation. The basis for investment income (loss) recognition is the financial statements audited and attested by parent company’s CPA in the ROC.
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AI assistant

JDS — Audit Report / Information 2019

52390_rns_2019-11-11_54069cd0-6948-4215-8b08-77b304719338.pdf

Jourdeness Group Limited and Subsidiaries

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

- Impairment Assessment of Other Intangible Assets Customer Relationship and Goodwill

Revenue Recognition of Beauty and Body Spa Course Services

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

JOURDENESS GROUP LIMITED AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

Definition of a lease

The Group as lessee

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

d. Basis of consolidation

e. Business combinations

f. Foreign currencies

g. Inventories

h. Property, plant and equipment

m. Financial instruments

1) Financial assets

3) Financial liabilities

Financial liabilities at FVTPL

n. Revenue recognition

1) The Group as lessor

2) The Group as lessee

2018

p. Borrowing costs

2) Retirement benefits

r. Share-based payment arrangements

Restricted shares for employees granted to employees

s. Taxation

1) Current tax

2) Deferred tax

3) Current and deferred taxes for the year

5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Key Sources of Estimation Uncertainty

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT AMORTIZED COST

9. NOTES RECEIVABLE AND TRADE RECEIVABLES

December 31, 2019

10. INVENTORIES

11. SUBSIDIARIES

Subsidiaries Included in the Consolidated Financial Statements

12. PROPERTY, PLANT AND EQUIPMENT

13. LEASE ARRANGEMENTS

b. Lease liabilities - 2019

14. INVESTMENT PROPERTIES

15. GOODWILL

16. OTHER INTANGIBLE ASSETS

17. OTHER NON-CURRENT ASSETS

18. BORROWINGS

19. BONDS PAYABLE

First Unsecured Domestic Convertible Bonds

20. CONTRACT LIABILITIES

21. OTHER PAYABLES

22. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

b. Defined benefit plans

23. EQUITY

b. Capital surplus

JDS Audit Report / Information 2019