CHLITINA HOLDING LIMITED AND SUBSIDIARIES · 2018-12-25 · CHLITINA HOLDING LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND ... $ 820,171 $ 3,767,045 62 $ 749,780

CHLITINA HOLDING LIMITED AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS

JUNE 30, 2018 AND 2017

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying

financial statements have been translated into English from the original Chinese version prepared and used in

the Republic of China. In the event of any discrepancy between the English version and the original Chinese

version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and

financial statements shall prevail.

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REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Chlitina Holding Limited

Introduction

We have reviewed the accompanying consolidated balance sheets of Chlitina Holding Limited and

subsidiaries (the “Group”) as at June 30, 2018 and 2017, and the related consolidated statements of

comprehensive income for the three-month and six-month periods then ended, as well as the

consolidated statements of changes in equity and of cash flows for the six-month periods then ended,

and notes to the consolidated financial statements, including a summary of significant accounting

policies. Management is responsible for the preparation and fair presentation of these consolidated

financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by

Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed

by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these

consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of

Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A

review of consolidated financial statements consists of making inquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit and consequently does not enable us to obtain

assurance that we would become aware of all significant matters that might be identified in an audit.

Accordingly, we do not express an audit opinion.

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Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying

consolidated financial statements do not present fairly, in all material respects, the consolidated financial

position of the Group as at June 30, 2018 and 2017, and of its consolidated financial performance for

the three-month and six-month periods then ended and its consolidated cash flows for the six-month

periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by

Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed

by the Financial Supervisory Commission.

Lin, Chun-Yao Chang, Shu-Chiung

For and on behalf of PricewaterhouseCoopers, Taiwan

August 9, 2018

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

Asset Notes CNY TWD % CNY TWD % CNY TWD %

Current Assets

1100 Cash and cash equivalents 6(1) 820,171$ 3,767,045$ 62 749,780$ 3,422,746$ 63 780,098$ 3,499,519$ 64

1136 Amortised cost of a financial asset - current 6(2) 22,229 102,098 2 - - - - - -

1170 Accounts receivable, net 6(3) 847 3,890 - 310 1,415 - 170 763 -

1180 Accounts receivable-related parties, net 6(3)and7 195 896 - 144 658 - 455 2,041 -

1200 Other receivables 2,304 10,582 - 1,393 6,359 - 14,089 63,203 1

1210 Other receivables-related parties 7 168 772 - 261 1,191 - 220 987 -

130X Inventories 6(4) 113,688 522,169 9 98,658 450,374 8 111,211 498,893 9

1410 Prepayments 7 16,096 73,929 1 20,334 92,825 2 21,970 98,557 2

1476 Other current financial assets 6(1)and8 22,548 103,563 2 45,630 208,300 4 23,292 104,488 2

1479 Other current assets 923 4,239 - 338 1,543 - 275 1,233 -

11XX Total current assets 999,169 4,589,183 76 916,848 4,185,411 77 951,780 4,269,684 78

Non-current assets

1550 Investment accounted for using equity method 6(5) 5,368 24,655 - 6,006 27,417 1 - - -

1600 Property, plant and equipment, net 6(6) 231,318 1,062,444 17 231,575 1,057,140 20 208,781 936,592 17

1780 Intangible assets, net 6(7) 13,252 60,866 1 12,894 58,861 1 14,759 66,209 1

1840 Deferred income tax assets 7,855 36,078 1 8,363 38,177 1 6,226 27,930 1

1990 Other non-current assets 6(6)and7 71,283 327,403 5 5,432 24,798 - 34,169 153,282 3

15XX Total non-current assets 329,076 1,511,446 24 264,270 1,206,393 23 263,935 1,184,013 22

1XXX Total assets 1,328,245$ 6,100,629$ 100 1,181,118$ 5,391,804$ 100 1,215,715$ 5,453,697$ 100

CHLITINA HOLDING LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(The consolidated balance sheets as of June 30, 2018 and 2017 are reviewed, not audited)

(Expressed in thousands dollars)

June 30, 2018

( Adjusted )

June 30, 2017December 31, 2017

- Continued -

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Liabilities and Equity Notes CNY TWD % CNY TWD % CNY TWD %

Current liabilities

2100 Short-term loans 6(8) 147,558$ 677,734$ 11 156,460$ 714,240$ 13 -$ -$ -

2120 Financial liabilities at fair value through profit or loss-current 6(9) - - - - - - 6,761 30,330 1

2130 Current contract liabilities 6(17) 72,965 335,128 5 - - - - - -

2170 Accounts payable 22,047 101,262 2 12,118 55,319 1 10,623 47,655 1

2180 Accounts payable-related parties 7 9,553 43,877 1 3,253 14,851 - 6,855 30,752 1

2219 Other payables 6(10) 219,405 1,007,727 17 96,015 438,309 8 186,447 836,401 15

2220 Other payables-related parties 7 1,393 6,398 - 1,528 6,975 - 1,873 8,402 -

2230 Current income tax liabilities 23,952 110,012 2 15,119 69,018 2 13,195 59,192 1

2310 Advance receipts 70 322 - 72,309 330,091 6 39,125 175,515 3

2321 Long-term liabilities – current portion 6(11) 410 1,883 - 409 1,865 - 194,988 874,718 16

2645 Guarantee deposits 61,861 284,127 5 58,829 268,554 5 55,168 247,483 5

21XX Total current liabilities 559,214 2,568,470 43 416,040 1,899,222 35 515,035 2,310,448 43

Non-current liabilities

2570 Deferred income tax liabilities 1,469 6,747 - 1,439 6,569 - 4,902 21,990 -

2640 Net defined benefit liabilities 917 4,212 - 922 4,210 - 960 4,307 -

25XX Total non-current liabilities 2,386 10,959 - 2,361 10,779 - 5,862 26,297 -

2XXX Total liabilities 561,600 2,579,429 43 418,401 1,910,001 35 520,897 2,336,745 43

Equity attributable to shareholders of the parent

Share Capital 6(14)

3110 Common stock 161,772 794,924 13 161,772 794,924 15 161,772 794,924 14

Capital surplus 6(15)

3200 Capital surplus 271,792 1,351,932 22 294,208 1,456,484 27 294,208 1,456,484 26

Retained earnings 6(16)

3310 Legal reserve 89,826 426,489 7 77,313 368,193 7 77,313 368,193 7

3320 Special Reserve 55,390 258,063 4 - - - - - -

3350 Unappropriated retained earnings 183,945 991,090 16 236,154 1,236,828 23 163,146 905,628 17

Other equity

3410 Financial statements translation differences of foreign operations 17,925 239,580)( 4)( 19,719 258,063)( 5)( 24,828 291,714)( 5)(

3500 Treasury stocks 6(14) 14,005)( 61,718)( 1)( 26,449)( 116,563)( 2)( 26,449)( 116,563)( 2)(

3XXX Total Equity 766,645 3,521,200 57 762,717 3,481,803 65 694,818 3,116,952 57

Significant contingent liabilities and unrecognised contract

commitments9

3X2X Total liabilities and equity 1,328,245$ 6,100,629$ 100 1,181,118$ 5,391,804$ 100 1,215,715$ 5,453,697$ 100

December 31, 2017( Adjusted )

June 30, 2017

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

June 30, 2018


CONSOLIDATED BALANCE SHEETS

(The consolidated balance sheets as of June 30, 2018 and 2017 are reviewed, not audited)


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Items Notes CNY TWD % CNY TWD % CNY TWD % CNY TWD %

4000 Operating revenue 6(17)and7 232,761$ 1,086,601$ 100 173,144$ 764,670$ 100 452,666$ 2,100,054$ 100 331,922$ 1,482,761$ 100

5000 Operating costs6(4)(21)and

742,500)( 198,440)( 18)( 32,460)( 143,476)( 19)( 83,803)( 388,788)( 19)( 60,040)( 268,210)( 18)(

5900 Gross profit 190,261 888,161 82 140,684 621,194 81 368,863 1,711,266 81 271,882 1,214,551 82

Operating expenses 6(21)and7

6100 Selling expenses 74,646)( 348,694)( 32)( 71,558)( 315,980)( 41)( 152,475)( 707,377)( 34)( 138,043)( 616,665)( 42)(

6200 Administrative expenses 32,434)( 151,468)( 14)( 24,954)( 110,078)( 14)( 64,874)( 300,970)( 14)( 50,139)( 223,980)( 15)(

6000 Total operating expenses 107,080)( 500,162)( 46)( 96,512)( 426,058)( 55)( 217,349)( 1,008,347)( 48)( 188,182)( 840,645)( 57)(

6900 Operating profit 83,181 387,999 36 44,172 195,136 26 151,514 702,919 33 83,700 373,906 25

Non-operating income and expenses

7010 Other income 6(18) 3,459 16,676 2 8,842 39,340 5 23,948 111,102 5 11,720 52,356 4

7020 Other gains and losses 6(9)(19) 1,696)( 7,773)( 1)( 695)( 2,551)( - 1,409 6,537 - 10,689)( 47,750)( 3)(

7050 Finance costs 6(20) 988)( 4,611)( - 994)( 4,388)( 1)( 1,885)( 8,745)( - 1,959)( 8,753)( 1)(

7060Share of loss of associates and joint ventures

accounted for under equity method6(5)

235)( 1,102)( - - - - 638)( 2,960)( - - - -

7000 Total non-operating income and expenses 540 3,190 1 7,153 32,401 4 22,834 105,934 5 928)( 4,147)( -

7900 Profit before tax 83,721 391,189 37 51,325 227,537 30 174,348 808,853 38 82,772 369,759 25

7950 Income tax expense 6(22) 24,834)( 115,916)( 11)( 15,470)( 68,503)( 9)( 47,751)( 221,532)( 11)( 26,380)( 117,845)( 8)(

8200 Profit for the period 58,887$ 275,273$ 26 35,855$ 159,034$ 21 126,597$ 587,321$ 27 56,392$ 251,914$ 17

Other comprehensive income(loss)

Components of other comprehensive income

that will be reclassified to profit or loss

8361Financial statement translation differences of

foreign operations 2,006$ 32,061)($ 3)( 1,555)($ 54,450$ 7 1,794)($ 18,483$ 1 1,125)($ 109,908)($ 7)(

8500 Total comprehensive income (loss) for the period 60,893$ 243,212$ 23 34,300$ 213,484 28 124,803$ 605,804$ 28 55,267$ 142,006 10

Earnings per share(in dollars) 6(23)

9750 Basic earnings per share 0.74$ 3.48$ 0.46$ 2.02$ 1.60$ 7.45$ 0.72$ 3.20$

9850 Diluted earnings per share 0.74$ 3.48$ 0.45$ 1.99$ 1.60$ 7.44$ 0.71$ 3.17$


2018

2017

( Adjusted ) 2018

2017

( Adjusted )


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands dollars, except earnings per share data)

(REVIEWED, NOT AUDITED)

Three month ended June 30, Six month ended June 30,

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Notes CNY TWD CNY TWD CNY TWD CNY TWD CNY TWD CNY TWD CNY TWD CNY TWDSix-month ended June 30, 2017 (Adjusted)

Balance at January 1, 2017 $ 161,772 $ 794,924 $ 294,208 $ 1,456,484 $ 60,972 $ 295,114 $ - $ - $ 237,478 $ 1,238,313 $ 25,953 181,806)($ 9,358)($ 43,207)($ $ 771,025 $ 3,559,822

Profit for the period - - - - - - - - 56,392 251,914 - - - - 56,392 251,914

Other comprehensive income(loss) for theperiod - - - - - - - - - - 1,125)( 109,908)( - - 1,125)( 109,908)(

Total omprehensive income(loss) for the - - - - - - - - 56,392 251,914 1,125)( 109,908)( - - 55,267 142,006

Appropriations of 2016 earnings 6(16)

Legal reserve - - - - 16,341 73,079 - - 16,341)( 73,079)( - - - - - -

Cash dividends - - - - - - - - 114,383)( 511,520)( - - - - 114,383)( 511,520)(

Purchase of treasury stocks 6(14) - - - - - - - - - - - - 17,091)( 73,356)( 17,091)( 73,356)(

Balance at June 30, 2017 $ 161,772 $ 794,924 $ 294,208 $ 1,456,484 $ 77,313 $ 368,193 $ - $ - $ 163,146 $ 905,628 $ 24,828 291,714)($ 26,449)($ 116,563)($ $ 694,818 $ 3,116,952

Six-month ended June 30, 2018

Balance at January 1, 2018 $ 161,772 $ 794,924 $ 294,208 $ 1,456,484 $ 77,313 $ 368,193 $ - $ - $ 236,154 $ 1,236,828 $ 19,719 258,063)($ 26,449)($ 116,563)($ $ 762,717 $ 3,481,803

Profit for the period - - - - - - - - 126,597 587,321 - - - - 126,597 587,321

Other comprehensive income(loss) for theperiod - - - - - - - - - - 1,794)( 18,483 - - 1,794)( 18,483

Total omprehensive income(loss) for the - - - - - - - - 126,597 587,321 1,794)( 18,483 - - 124,803 605,804

Appropriations of 2017 earnings 6(16)

Legal reserve - - - - 12,513 58,296 - - 12,513)( 58,296)( - - - - - -

Special Reserve - - - - 55,390 258,063 55,390)( 258,063)( - - - - - -

Cash dividends - - - - - - - - 110,903)( 516,700)( - - - - 110,903)( 516,700)(

Cash dividends from Capital surplus 6(16) - - 25,593)( 119,238)( - - - - - - - - - - 25,593)( 119,238)(

Share-based compensation payment 6(13) - - 3,177 14,686 - - - - - - - - - - 3,177 14,686

Purchase of treasury stocks - - - - - - - - - - - - 12,444 54,845 12,444 54,845

Balance at June 30, 2018 $ 161,772 $ 794,924 $ 271,792 $ 1,351,932 $ 89,826 $ 426,489 $55,390 $258,063 $ 183,945 $ 991,090 $ 17,925 239,580)($ 14,005)($ 61,718)($ $ 766,645 $ 3,521,200

Retained earnings

CHLITINA HOLDING LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands dollars)(REVIEWED, NOT AUDITED)

Equity attributable to shareholders of the parent

Total equity


Common stock Capital surplus Legal reserveUnappropriated retained

earnings

Financial statementtranslation differences of

foreign operations Treasury stocks Special Reserve

Notes CNY TWD CNY TWD

CASH FLOWS FROM OPERATING

ACTIVITIES

Profit before tax 174,348$ 808,853$ 82,772$ 369,759$

Adjustment

Adjustment to reconcile profit (loss)

Depreciation 6(6)(21) 10,715 49,710 9,416 42,063

Amortization 6(7)(21) 1,912 8,870 1,527 6,821

Net gain (loss) on financial 6(9)(19) 2,338)( 10,847)( 1,363 6,089

assets at fair value

through profit or loss

Interest expense 6(20) 1,885 8,745 1,959 8,753

Interest income 6(18) 6,851)( 31,785)( 5,570)( 24,882)(

Compensation cost of share-based payments 6(13) 3,177 14,686 - -

Share of profit of associates and 6(5) 638 2,960 - -

joint venture accounted for

under equity method

Losses on disposal of investments 6(19) - - 1,262 5,708

Losses on disposal of property, 6(19) 84 390 65 290

plant and equipment

Change in operating assets and liabilities

relating to operating activities

Changes in operating assets

Financial assets and liabilities at 2,338 10,847 914 4,083

fair value through profit or loss

Accounts receivable 537)( 2,491)( 342 1,528

Accounts receivable-related parties 51)( 237)( 1,446 6,460

Other receivables 964)( 4,472)( 895 3,998

Other receivables-related parties 93 431 364 1,626

Inventories 15,030)( 69,729)( 11,302)( 50,488)(

Prepayments 4,238 19,661 1,255)( 5,606)(

Other non-current assets 9,963)( 46,221)( - -

Changes in operating liabilities

Accounts payable 9,929 46,064 6,183)( 27,621)(

Accounts payable-related parties 6,300 29,228 2,447 10,931

Other payables 13,106)( 60,803)( 38,613)( 172,492)(

Other payables-related parties 135)( 626)( 81)( 362)(

Advance receipts - - 5,571)( 24,887)(

Current contract liabilities 656 3,043 - -

Guarantee deposits 3,102 14,391 3,621 16,176

Cash provided by operating activities 170,440 790,668 39,818 177,947

Interest paid 1,881)( 8,727)( - -

Income tax paid 38,380)( 178,056)( 37,570)( 167,833)(

Net cash provided by operating activities 130,179 603,885 2,248 10,114



CONSOLIDATED STATEMENTS OF CASH FLOWS


Six-month period ended June

30, 2018

( Adjusted )


30, 2017

- Continued -

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Notes CNY TWD CNY TWD

CASH FLOWS FROM INVESTING

ACTIVITIES

Decrease (increase) in other current financial assets 513$ 2,379$ 170)($ 759)($

Proceeds from disposal of amortised cost of a financial asset 1,236 5,734 - -

Decrease (increase) in other current assets 47)( 218)( 2,468 11,025

6(5)(26) - - 25,000 110,175

Acquisition of property, plant and equipment 6(6) 13,422)( 62,268)( 9,378)( 41,893)(

Proceeds from disposal of property, plant and equipment 70 324 3,218 14,375

Acquisition of subsidiary 6(26) - - 1,945)( 8,725)(

Acquisition of intangible assets 6(7) 192)( 890)( - -

Increase in other non-current assets 55,888)( 259,281)( 1,691)( 7,554)(

Interest received 6,904 32,030 5,465 24,413

Net cash provided by (used in) investing activities 60,826)( 282,190)( 22,967 101,057

CASH FLOWS FROM FINANCING

ACTIVITIES

Decrease in short-term borrowings 6(27) 10,979)( 50,934)( - -

Purchase of treasury stocks 6(14) - - 17,091)( 73,356)(

Treasury stock transferred to employees 6(14) 12,444 54,845 - -

Net cash flows provided by (used in) financing activities 1,465 3,911 17,091)( 73,356)(

Effects due to changes in exchange rates 427)( 18,693 3,544 86,137)(

(Decrease) increase in cash and cash equivalents 70,391 344,299 11,668 48,322)(

Cash and cash equivalents at beginning of period 749,780 3,422,746 768,430 3,547,841

Cash and cash equivalents at end of period 820,171$ 3,767,045$ 780,098$ 3,499,519$


Proceeds from disposal of investments accounted for

under equity method


CONSOLIDATED STATEMENTS OF CASH FLOWS




30, 2018

( Adjusted )


30, 2017

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2018 AND 2017

(Expressed in thousands of dollars, except as otherwise indicated)

(REVIEWED NOT AUDITED)

1. HISTORY AND ORGANIZATION

Chlitina Holding Limited (the “Company”) was incorporated in Cayman Islands on July 3, 2012, as a

corporation limited by shares in accordance with Article 22 of the Company Act of the Cayman Islands.

In order to issue the stock in the Taiwan Stock Exchange, the subsidiaries were reorganised by share

exchange. The Company is a holding company with no corporate income tax that should be imposed

according to the local law and has limited liability. The Company and its subsidiaries (collectively

referred herein as the “Group”) are mainly engaged in the development, manufacture and sale of

cosmetics. On November 27, 2013, the Company was approved and listed on Taiwan Stock Exchange.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported to the Board of Directors on August 9, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting

Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standars, interpretations and amendments endorsed by the FSC effective from 2018 are as

follows:

New Standards, Interpretations and Amendments

Effective date by

International Accounting

Standards Board

Amendments to IFRS 2, ‘Classification and measurement of

share-based payment transactions’

January 1, 2018

Amendments to IFRS 4, ‘Applying IFRS 9 Financial instruments with

IFRS 4 Insurance contracts’

January 1, 2018

IFRS 9, ‘Financial instruments’ January 1, 2018

IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018

Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from

contracts with customers’

January 1, 2018

Amendments to IAS 7, ‘Disclosure initiative’ January 1, 2017

Amendments to IAS 12, ‘Recognition of deferred tax assets for

unrealised losses’

January 1, 2017

Amendments to IAS 40, ‘Transfers of investment property’ January 1, 2018

IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018

Annual improvements to IFRSs 2014-2016 cycle- Amendments to

IFRS 1, ‘First-time adoption of International Financial Reporting

Standards’

January 1, 2018

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Except for the following, the above standards and interpretations have no significant impact to the

Group’s financial condition and financial performance based on the Group’s assessment.

A. IFRS 9, ‘Financial instruments’

(a) Classification of debt instruments is driven by the entity’s business model and the contractual

cash flow characteristics of the financial assets, which would be classified as financial asset at

fair value through profit or loss, financial asset measured at fair value through other

comprehensive income or financial asset measured at amortised cost. Equity instruments

would be classified as financial asset at fair value through profit or loss, unless an entity makes

an irrevocable election at inception to present in other comprehensive income subsequent

changes in the fair value of an investment in an equity instrument that is not held for trading.

(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’

approach. An entity assesses at each balance sheet date whether there has been a significant

increase in credit risk on that instrument since initial recognition to recognise 12-month

expected credit losses or lifetime expected credit losses (interest revenue would be calculated

on the gross carrying amount of the asset before impairment losses occurred); or if the

instrument has objective evidence of impairment, interest revenue after the impairment would

be calculated on the book value of net carrying amount (i.e. net of credit allowance). The

Group shall always measure the loss allowance at an amount equal to lifetime expected credit

losses for trade receivables that do not contain a significant financing component.

(c) The Group has elected not to restate prior period financial statements using the modified

retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018,

please refer to Notes 12(4)B and C.

B. IFRS 15, ‘Revenue from contracts with customers’ and amendments

(a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’,

IAS 18, ‘Revenue’ and relevant interpretations. IFRS 15 includes a set of comprehensive

disclosure requirements that requires an entity to disclose sufficient information to enable

users of financial statements to understand the nature, amount, timing and uncertainty of

revenue and cash flows arising from contracts with customers.

(b) The Group has elected not to restate prior period financial statements and recognised the

cumulative effect of initial application as retained earnings at January 1, 2018, using the

modified retrospective approach under IFRS 15. The significant effects of adopting the

modified transition as of January 1, 2018 are summarised below:

Under IFRS 15, liabilities in relation to sales of goods contracts are recognised as contract

liabilities-current, but were previously presented as advance sales receipts in the balance sheet.

As of January 1, 2018, the balance amounted to CNY $72,239 (TWD＄329,771).

New Standards, Interpretations and Amendments

Effective date by


Standards Board


IFRS 12, ‘Disclosure of interests in other entities’

January 1, 2017


IAS 28, ‘Investments in associates and joint ventures’

January 1, 2018

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(c) Please refer to Note 12(5)C. for other disclosures in relation to the first application of IFRS

15.

C. Amendments to IAS 7, ‘Disclosure initiative’

This amendment requires that an entity shall provide more disclosures related to changes in

liabilities arising from financing activities, including both changes arising from cash flows and

non-cash changes.

The Group expects to provide additional disclosure to explain the changes in liabilities arising

from financing activities.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as

follows:

Except for the following, the above standards and interpretations have no significant impact to the

Group’s financial condition and financial performance based on the Group’s assessment. The

quantitative impact will be disclosed when the assessment is complete.

IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard

requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with

terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors,

which is to classify their leases as either finance leases or operating leases and account for those two

types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

In the first quarter of 2018, the Group has reported to the Board of Directors that the impact of IFRS

16, ‘Leases’ is insignificant to the Group.

Effective date by


New Standards, Interpretations and Amendments Standards Board

Amendments to IFRS 9, ‘Prepayment features with negative

compensation’

January 1, 2019

IFRS 16, ‘Leases’ January 1, 2019

Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019

Amendments to IAS 28, ‘Long-term interests in associates and

joint ventures’

January 1, 2019

IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019

Annual improvements to IFRSs 2015-2017 cycle January 1, 2019

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(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as

endorsed by the FSC are as follows:

The above standards and interpretations have no significant impact to the Group’s financial condition

and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial

statements for the year ended December 31, 2017, except for the compliance statement, basis of

preparations, basis of consolidation and additional policies as set out below. These policies have been

consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the

“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the

International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

B. These consolidated financial statements are to be read in conjunction with the consolidated

financial statements for the year ended December 31, 2017.

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under

the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value through

profit or loss.

(b) Defined benefit liabilities recognised based on the net amount of pension fund assets less

present value of defined benefit obligation.

B. The preparation of financial statements in conformity with International Financial Reporting

Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as

endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain

critical accounting estimates. It also requires management to exercise its judgement in the process

of applying the Group’s accounting policies. The areas involving a higher degree of judgement or

complexity, or areas where assumptions and estimates are significant to the consolidated financial

statements are disclosed in Note 5.

Effective date by


New Standards, Interpretations and Amendments Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of

assets between an investor and its associate or joint venture’

To be determined by


Standards Board

IFRS 17, ‘Insurance contracts’ January 1, 2021

~13~

C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply

modified retrospective approach whereby the cumulative impact of the adoption was recognised

as retained earnings or other equity as of January 1, 2018 and the financial statements for the year

ended December 31, 2017 and for the second quarter of 2017 was not restated. The financial

statements for the year ended December 31, 2017 and for the second quarter of 2017 were prepared

in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting

Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related financial

reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting

policies and detail of significant accounts.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

The basis for preparation of consolidated financial statements are consistent with those of the year

ended December 31, 2017.

B. Subsidiaries included in the consolidated financial statements:

Name of Name of Main business

investor subsidiary activities June 30, 2018 December 31, 2017 June 30, 2017 Description

The Company Chlitina Group

Limited (Chlitina

Group)

Investing 100 100 100

Chlitina Group Chlitina International

Limited (Chlitina

International)


Chlitina Group Chlitina Intelligence

Limited (Chlitina

Intelligence)

Investing 100 100 100 Note 1

Chlitina Group W-Amber

International Limited

(W-Amber

International)


Chlitina Group W-Champion


(W-Champion

International)


Chlitina Group C-Asia International

Limited (C-Asia

International)


Chlitina

International

Hong Kong

Chlitina International

Limited

(Hong Kong Chlitina)

Investing and

trading of

skincare

products

100 100 100

Chlitina

International

Chlitina Marketing

Limited (Chlitina

Marketing)

Investing 100 100 100 Note 2

Chlitina

International

Centre de Recherche

et de Developpement

de CHLITINA

FRANCE EURL

(Chlitina France

EURL)

Research and

development

center

100 100 100

Ownership(%)

~14~



Hong Kong

Chlitina

Chlitina (China)

Trade Limited

(Chlitina China)

Dealer of

skincare

products and

supplementary

health care

products

100 100 100

Hong Kong

Chlitina

Weishuo (Shanghai)

Daily Product

Limited (Weishuo)

Production

and trading

of skincare

products

100 100 100

W-Amber

International

W-Amber Marketing

Limited (W-Amber

Marketing)


W-Amber

Marketing

- - 100

Hong Kong

Chlitina

100 100 -

Hong Kong

W-Amber

Weihu (Shanghai)

Trade Limited

(Weihu Shanghai)

Investing, dealer

of skincare

products and

supplementary

health care

products

100 100 100

Hong Kong

W-Amber

Crystal Asia

(Shanghai) Limited

(Crystal Asia

Shanghai)

Dealer of

skincare

products and

supplementary

health care

products

100 100 100

W-Champion

International

W-Champion

Marketing Limited

(W-Champion

Marketing)


W-Champion

Marketing

- - 100

Hong Kong

Chlitina

100 100 -

Hong Kong

W-Champion

Wuguan (Shanghai)

Trade Limited

(Wuguan Shanghai)

Dealer of

skincare

products and

supplementary

health care

products

100 100 100

C-Asia

International

- - 100

Hong Kong

Chlitina

100 100 -

Ownership(%)

Note 4

Note 5

Note 6

Hong Kong

W-Amber


(Hong Kong

W-Amber)

Investing

Hong Kong

W-Champion


(Hong Kong

W-Champion)

Investing

Hong Kong Crystal

Asia International

Limited (Hong Kong

Crystal Asia)

Investing

~15~

Note 1：Chlitina Intelligence established British Virgin Is. Chlitina Intelligence Limited Taiwan

Branch (Chlitina Intelligence Taiwan Branch) which is primarily engaged in

management of intellectual property.

Note 2：Chlitina Marketing established British Virgin Is. Chlitina Marketing Limited Taiwan

Branch (Chlitina Marketing Taiwan Branch) which is the research and development

center and trading of skincare products.

Note 3：The Group acquired 100% of the share capital of Beijing Aobaojia on April 19, 2017 and

thus includes Beijing Aobaojia as an entity in the consolidated financial statements.

Note 4：In August 2017, W-Amber Marketing transferred 100% equity shares of Hong Kong W-

Amber to Hong Kong Chlitina.

Note 5：In August 2017, W-Champion Marketing transferred 100% equity shares of Hong Kong

W-Champion to Hong Kong Chlitina.

Note 6：In August 2017, C-Asia International transferred 100% equity shares of Hong Kong

Crystal Asia to Hong Kong Chlitina.

C. Subsidiaries not included in the consolidated financial statements: None.

D. Adjustments for subsidiaries with different balance sheet dates: None.

E. Significant restrictions: None.

F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the

currency of the primary economic environment in which the entity operates (the “functional

currency”). Both of the Company’s functional and presentation currency are TWD, however, the

functional currency of the significant operating components of the Group is CNY, thus the

consolidated financial statements are presented in CNY.

A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange

rates prevailing at the dates of the transactions or valuation where items are remeasured.

Foreign exchange gains and losses resulting from the settlement of such transactions are

recognised in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are



Weihu

Shanghai

Shanghai Yuanshuo

Management

Consulting Limited

(Shanghai Yuanshuo)

Enterprise

management

consulting

100 100 100

Shanghai

Yuanshuo

Beijing Aobaojia

Medical Cosmetology

Clinic Limited

(Beijing Aobaojia)

Medical

Cosmetology

Services

100 100 100

Hong Kong

Crystal Asia

Cui Jie (Shanghai)

Trading Co. Ltd.

Dealer of health

food and daily

necessities

100 100 -

Ownership(%)

Note 3

~16~

retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences

arising upon re-translation at the balance sheet date are recognised in profit or loss.

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value

through profit or loss are re-translated at the exchange rates prevailing at the balance sheet

date; their translation differences are recognised in profit or loss. Non-monetary assets and

liabilities denominated in foreign currencies held at fair value through other comprehensive

income are re-translated at the exchange rates prevailing at the balance sheet date; their

translation differences are recognised in other comprehensive income. However, non-

monetary assets and liabilities denominated in foreign currencies that are not measured at fair

value are translated using the historical exchange rates at the dates of the initial transactions.

(d) All foreign exchange gains and losses are presented in the statement of comprehensive income

within ‘other gains and losses’.

B. Translation of foreign operations

The operating results and financial position of all the group entities and associates that have a

functional currency different from the presentation currency are translated into the presentation

currency as follows:

(a) Assets and liabilities for each balance sheet presented are translated at the closing exchange

rate at the date of that balance sheet;

(b) Income and expenses for each statement of comprehensive income are translated at average

exchange rates of that period; and

(c) All resulting exchange differences are recognised in other comprehensive income.

C. On June 30, 2018 and 2017, the spot exchange rates of CNY to TWD were CNY $1=TWD $4.5930

and CNY $1=TWD $4.4860, and the average exchange rates of CNY to TWD were CNY

$1=TWD $4.6393 and CNY $1=TWD $4.4672. On December 31, 2017, the exchange rate of

CNY to TWD was $1 to $4.5650.

(5) Financial assets at fair value through profit or loss

Effective 2018

A. Financial assets at fair value through profit or loss are financial assets that are not measured at

amortised cost or fair value through other comprehensive income.

B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are

recognised and derecognised using trade date accounting.

C. At initial recognition, the Group measures the financial assets at fair value and recognises the

transaction costs in profit or loss. The Group subsequently measures the financial assets at fair

value, and recognises the gain or loss in profit or loss.

D. The Group recognises the dividend income when the right to receive payment is established, future

economic benefits associated with the dividend will flow to the Group and the amount of the

dividend can be measured reliably.

~17~

(6) Financial assets at amortised cost

Effective 2018

A. Financial assets at amortised cost are those that meet all of the following criteria:

(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

(b) The assets’ contractual cash flows represent solely payments of principal and interest.

B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and

derecognised using trade date accounting.

C. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity

period and are measured at initial investment amount as the effect of discounting is immaterial.

(7) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange

for transferred goods or rendered services.

B. The short-term accounts and notes receivable without bearing interest are subsequently measured

at initial invoice amount as the effect of discounting is immaterial.

(8) Impairment of financial assets

For financial assets at amortised cost including accounts receivable that have a significant financing

component, at each reporting date, the Group recognises the impairment provision for 12 months

expected credit losses if there has not been a significant increase in credit risk since initial recognition

or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit

risk has increased since initial recognition after taking into consideration all reasonable and verifiable

information that includes forecasts. On the other hand, for accounts receivable or contract assets that

do not contain a significant financing component, the Group recognises the impairment provision for

lifetime ECLs.

(9) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes

payable are those resulting from operating and non-operating activities.

B. The short-term notes and accounts payable without bearing interest are subsequently measured at

initial invoice amount as the effect of discounting is immaterial.

(10) Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for

the purpose of repurchasing in the short-term. Derivatives are also categorised as financial

liabilities held for trading unless they are designated as hedges.

B. At initial recognition, the Group measures the financial liabilities at fair value. All related

transaction costs are recognised in profit or loss. The Group subsequently measures these

financial liabilities at fair value with any gain or loss recognised in profit or loss.

(11) Employee share-based payment

For the equity-settled share-based payment arrangements, the employee services received are

measured at the fair value of the equity instruments granted at the grant date, and are recognised as

compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value

of the equity instruments granted shall reflect the impact of market vesting conditions and non-

market vesting conditions. Compensation cost is subject to adjustment based on the service

~18~

conditions that are expected to be satisfied and the estimates of the number of equity instruments

that are expected to vest under the non-market vesting conditions at each balance sheet date.

Ultimately, the amount of compensation cost recognised is based on the number of equity

instruments that eventually vest.

(12) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or

loss, except to the extent that it relates to items recognised in other comprehensive income or

items recognised directly in equity, in which cases the tax is recognised in other comprehensive

income or equity.

B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively

enacted at the balance sheet date in the countries where the Company and subsidiaries operate

and generate taxable income. Management periodically evaluates positions taken in tax returns

with respect to situations in accordance with applicable tax regulations. It establishes provisions

where appropriate based on the amounts expected to be paid to the tax authorities.

C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the

consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial

recognition of an asset or liability in a transaction other than a business combination that at the

time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is

provided on temporary differences arising on investments in subsidiaries and associates, except

where the timing of the reversal of the temporary difference is controlled by the Group and it is

probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is

determined using tax rates (and laws) that have been enacted or substantially enacted by the

balance sheet date and are expected to apply when the related deferred tax asset is realised or the

deferred tax liability is settled.

D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit

will be available against which the temporary differences can be utilised. At each balance sheet

date, unrecognised and recognised deferred tax assets are reassessed.

E. Current income tax assets and liabilities are offset and the net amount reported in the balance

sheet when there is a legally enforceable right to offset the recognised amounts and there is an

intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally

enforceable right to offset current tax assets against current tax liabilities and they are levied by

the same taxation authority on either the same entity or different entities that intend to settle on

a net basis or realise the asset and settle the liability simultaneously.

F. If a change in tax rate is enacted or substantively enacted in the interim period, the Group

recognizes the effect of the change immediately in the interim period in which the change occurs.

The effect of the change on items recognized outside profit or loss is recognized in other

comprehensive income or equity while the effect of the change on items recognized in profit or

loss is recognized in profit or loss.

(13) Revenue recognition

A. Sales of goods

(a) The Group manufactures and sells skincare products, health care products and other products.

Sales are recognised when control of the products has transferred, being when the products

are delivered to the customers, the customers has full discretion over the channel and price

~19~

to sell the products, and there is no unfulfilled obligation that could affect the customers’

acceptance of the products. Delivery occurs when the products have been shipped to the

specific location, the risks of obsolescence and loss have been transferred to the customers,

and either the customers have accepted the products in accordance with the sales contract, or

the Group has objective evidence that all criteria for acceptance have been satisfied.

(b) The skincare products and health care products are often sold with volume discounts based

on aggregate sales over a 1-month period. Revenue from these sales is recognised based on

the price specified in the contract, net of the estimated volume discounts and sales discounts

and allowances. The Group calculates sales discounts and allowances based on the actual

sales in current month. Revenue is only recognised to the extent that it is highly probable that

a significant reversal will not occur, and is settled at each reporting date. The sales usually

are made with a credit term of advance receipts before goods shipped to customers, which is

consistent with market practice. As the time interval between the transfer of committed goods

or service and the payment of customer does not exceed one year, the Group does not adjust

the transaction price to reflect the time value of money.

(c) A receivable is recognised when the goods are delivered as this is the point in time that the

consideration is unconditional because only the passage of time is required before the

payment is due.

B. The Group manages franchises and provides employee training services. Revenue from

providing services is recognised in the accounting period in which the services are rendered.

Franchise contract include multiple deliverables that shall be rendered by the Group, such as

store equipment, employee training and others. In most cases, the employee training can be

provided by another party, therefore employee training is accounted for us a separate

performance obligation. The transaction price will be allocated to each performance obligation

based on the stand-alone selling prices. Where these are not directly observable, they are

estimated based on expected cost plus margin. If contracts include the sales of store equipment,

revenue for the store equipment is recognised at a point in time when the store equipment is

delivered, the legal title has passed and the customer has accepted the store equipment.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

UNCERTAINTY

There was no significant change in the reporting period. Please refer to Note 5 in the consolidated


6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

A. As of June 30, 2018, December 31, 2017 and June 30, 2017, the Group’s cash equivalents referred

to fixed rate financial instruments registered by Shanghai Stock Exchange with maturities of 1 to

28 days.

CNY TWD CNY TWD CNY TWD

Cash on hand 414$ 1,901$ 411$ 1,876$ 410$ 1,839$

Demand deposits 461,832 2,121,194 285,562 1,303,591 335,618 1,505,582

Time deposits 20,000 91,860 93,653 427,526 177,245 795,121

Cash equivalents 337,925 1,552,090 370,154 1,689,753 266,825 1,196,977

820,171$ 3,767,045$ 749,780$ 3,422,746$ 780,098$ 3,499,519$

June 30, 2018 December 31, 2017 June 30, 2017

~20~

B. As of June 30, 2018, the Group’s time deposits with maturity term of over three months amounted

to CNY $22,229 (TWD $102,098), which were reclassified as financial assets at amortised cost-

current. As of December 31, 2017 and June 30, 2017, the Group’s time deposits with maturity

term of over three months amounted to CNY $23,465 (TWD $107,116) and CNY $23,292 (TWD

$104,488), respectively, which were reclassified as other financial assets-current.

C. As of June 30, 2018 and December 31, 2017, cash and cash equivalents amounting to CNY

$22,548 (TWD $103,563) and CNY $22,165 (TWD $101,184) were pledged to others as collateral,

and were classified as other financial assets - current. Cash and cash equivalents did not pledged

to others as collateral as of June 30, 2017. Please refer to Note 8 for information on pledged assets.

D. The Group transacts with a variety of financial institutions all with high credit quality to disperse

credit risk, so it expects that the probability of counterparty default is remote.

(2) Financial assets at amortised cost

Effective 2018

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed

below:

B. As at June 30, 2018, without taking into account any collateral held or other credit enhancements,

the maximum exposure to credit risk in respect of the amount that best represents the financial

assets at amortised cost held by the Group was CNY $22,229 (TWD $102,098).

C. The Group has no financial assets at amortised cost pledged to others as collateral.

D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

E. Information on other current financial assets-current for the year ended December 31, 2017 and

for the second quarter of 2017 is provided in Note 12 (4).

(3) Accounts receivable

A. The Group does not hold any collateral as security and has no accounts receivable pledged to

others.

Items CNY TWD

Current items:

Time deposits with maturity term of over

three months 22,229$ 102,098$

June 30, 2018

CNY TWD CNY

Interest income 170$ 793$ 284$

Three months ended June 30, 2018 Six months ended June 30, 2018


Accounts receivable 847$ 3,890$ 310$ 1,415$ 170$ 763$

Accounts receivable-

related parties 195 896 144 658 455 2,041

1,042$ 4,786$ 454$ 2,073$ 625$ 2,804$


~21~

B. As at June 30, 2018, December 31, 2017 and June 30, 2017, without taking into account any

collateral held or other credit enhancements, the maximum exposure to credit risk in respect of

the amount that best represents the Group’s accounts receivable was CNY $1,042 (TWD $4,786),

CNY $454 (TWD $2,073) and CNY $625 (TWD $2,804), respectively.

C. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(4) Inventories

A. For the three months and six months ended June 30, 2018 and 2017, the cost of inventories

recognised as expenses are as follows:


Finished goods 67,390$ 309,522$ 4,764)($ 21,881)($ 62,626$ 287,641$

Work in process 14,180 65,129 1,042)( 4,786)( 13,138 60,343

Raw materials 41,614 191,133 3,690)( 16,948)( 37,924 174,185

123,184$ 565,784$ 9,496)($ 43,615)($ 113,688$ 522,169$


Finished goods 58,958$ 269,143$ 3,793)($ 17,315)($ 55,165$ 251,828$

Work in process 9,535 43,527 248)( 1,132)( 9,287 42,395

Raw materials 42,473 193,889 8,267)( 37,738)( 34,206 156,151

110,966$ 506,559$ 12,308)($ 56,185)($ 98,658$ 450,374$


Finished goods 67,472$ 302,679$ 2,801)($ 12,565)($ 64,671$ 290,114$

Work in process 7,485 33,578 512)( 2,297)( 6,973 31,281

Raw materials 41,099 184,370 1,532)( 6,872)( 39,567 177,498

116,056$ 520,627$ 4,845)($ 21,734)($ 111,211$ 498,893$

June 30, 2018

Allowance for

Cost inventory valuation losses Book value

Allowance for

December 31, 2017

June 30, 2017

Allowance for



CNY TWD CNY TWD

Cost of goods sold 40,233$ 187,898$ 30,613$ 135,212$

Loss on decline in market value 2,267 10,542 1,847 8,264

42,500$ 198,440$ 32,460$ 143,476$

2018 2017

Three months ended June 30,

~22~

B. The Group has no inventories pledged to others.

(5) Investments accounted for using equity method

A. Associates using equity method are all individually immaterial and the Group’s share of the

operating results are summarized below:

B. The Group has no investments accounted for using equity method pledged to others.

C. On March 15, 2017, the Group entered into a contract with non-related party, Sinoexcelsior

Investment Incorporation, to sell all the equity interest in associate, Beijing Yujiachengyue

Investment & Management Limited, for a total price of CNY $37,300 (TWD $164,380).

CNY TWD CNY TWD

Cost of goods sold 80,757$ 374,656$ 58,450$ 261,108$

Loss on decline in market value 3,046 14,132 1,590 7,102

83,803$ 388,788$ 60,040$ 268,210$

Six months ended June 30,

2018 2017


Associates 5,368$ 24,655$ 6,006$ 27,417$ -$ -$


CNY TWD CNY TWD

Loss for the period 235)($ 1,102)($ -$ -$

Other comprehensive loss - - - -

Total comprehensive loss 235)($ 1,102)($ -$ -$

CNY TWD CNY TWD

Loss for the period 638)($ 2,960)($ -$ -$

Other comprehensive loss - - - -

Total comprehensive loss 638)($ 2,960)($ -$ -$

2018 2017



2018 2017

~23~

(6) Property, plant and equipment

(In thousands of CNY)

Buildings Transportation Machinery

Office

and other

Construction

in progress and

equipment

Land and structures equipment equipment equipment to be inspected Total

At January 1, 2018

Cost 23,150$ 212,840$ 4,815$ 13,426$ 70,585$ 4,129$ 328,945$

Accumulated depreciation

and impairment - 42,474)( 3,690)( 5,619)( 45,587)( - 97,370)(

23,150$ 170,366$ 1,125$ 7,807$ 24,998$ 4,129$ 231,575$

2018

Balance at January 1 23,150$ 170,366$ 1,125$ 7,807$ 24,998$ 4,129$ 231,575$

Additions - - 740 30 10,094 2,558 13,422

Disposals - 70)( - 8)( 77)( - 155)(

Reclassifications - 844 - - 1,204 4,681)( 2,633)(

Depreciation charge - 4,881)( 274)( 575)( 4,985)( - 10,715)(

Net exchange differences 138)( - 1 - 39)( - 176)(

Balance at June 30 23,012$ 166,259$ 1,592$ 7,254$ 31,195$ 2,006$ 231,318$

At June 30, 2018

Cost 23,012$ 213,614$ 5,559$ 13,433$ 81,083$ 2,006$ 338,707$


and impairment - 47,355)( 3,967)( 6,179)( 49,888)( - 107,389)(

23,012$ 166,259$ 1,592$ 7,254$ 31,195$ 2,006$ 231,318$

~24~



Office

and other

Construction

in progress and

equipment


At January 1, 2017

Cost 22,893$ 183,727$ 4,815$ 13,134$ 64,720$ 3,154$ 292,443$


and impairment - 33,802)( 3,128)( 4,496)( 39,774)( - 81,200)(

22,893$ 149,925$ 1,687$ 8,638$ 24,946$ 3,154$ 211,243$

2017


Additions - - - 67 6,819 2,492 9,378

Disposals - - - 41)( 3,242)( - 3,283)(

Reclassifications - 13)( - 166 2,894 3,047)( -

Depreciation charge - 4,227)( 311)( 567)( 4,311)( - 9,416)(

Net exchange differences 668 - - - 191 - 859

Balance at June 30 23,561$ 145,685$ 1,376$ 8,263$ 27,297$ 2,599$ 208,781$

At June 30, 2017

Cost 23,561$ 183,714$ 4,815$ 13,313$ 69,268$ 2,599$ 297,270$


and impairment - 38,029)( 3,439)( 5,050)( 41,971)( - 88,489)(

23,561$ 145,685$ 1,376$ 8,263$ 27,297$ 2,599$ 208,781$

~25~

(In thousands of TWD)


Office

and other

Construction

in progress and

equipment


At January 1, 2018

Cost 105,680$ 971,615$ 21,980$ 61,290$ 322,221$ 18,849$ 1,501,635$


and impairment - 193,895)( 16,845)( 25,650)( 208,105)( - 444,495)(

105,680$ 777,720$ 5,135$ 35,640$ 114,116$ 18,849$ 1,057,140$

2018

Balance at January 1 105,680$ 777,720$ 5,135$ 35,640$ 114,116$ 18,849$ 1,057,140$

Additions - - 3,433 139 46,829 11,867 62,268

Disposals - 325)( - 37)( 357)( - 719)(

Reclassifications - 3,917 - - 5,586 21,717)( 12,214)(

Depreciation charge - 22,644)( 1,271)( 2,668)( 23,127)( - 49,710)(

Net exchange differences 14 4,960 15 244 231 215 5,679

Balance at June 30 105,694$ 763,628$ 7,312$ 33,318$ 143,278$ 9,214$ 1,062,444$

At June 30, 2018

Cost 105,694$ 981,130$ 25,532$ 61,698$ 372,414$ 9,214$ 1,555,682$


and impairment - 217,502)( 18,220)( 28,380)( 229,136)( - 493,238)(

105,694$ 763,628$ 7,312$ 33,318$ 143,278$ 9,214$ 1,062,444$

~26~



Office

and other

Construction

in progress and

equipment


At January 1, 2017

Cost 105,696$ 848,268$ 22,231$ 60,640$ 298,813$ 14,562$ 1,350,210$


and impairment - 156,064)( 14,442)( 20,758)( 183,637)( - 374,901)(

105,696$ 692,204$ 7,789$ 39,882$ 115,176$ 14,562$ 975,309$

2017


Additions - - - 299 30,462 11,132 41,893

Disposals - - - 183)( 14,483)( - 14,666)(

Reclassifications - 58)( - 742 12,928 13,612)( -

Depreciation charge - 18,883)( 1,389)( 2,533)( 19,258)( - 42,063)(

Net exchange differences 1)( 19,720)( 227)( 1,139)( 2,371)( 423)( 23,881)(

Balance at June 30 105,695$ 653,543$ 6,173$ 37,068$ 122,454$ 11,659$ 936,592$

At June 30, 2017

Cost 105,695$ 824,141$ 21,600$ 59,722$ 310,736$ 11,659$ 1,333,553$


and impairment - 170,598)( 15,427)( 22,654)( 188,282)( - 396,961)(

105,695$ 653,543$ 6,173$ 37,068$ 122,454$ 11,659$ 936,592$

~27~

A. The Group has entered into an agreement with non-related party to buy a building in Sichuan,

China, on March 17, 2016. The amount of the contract was CNY $27,431 (TWD $136,387), of

which the Group has paid CNY $28,387 (TWD $127,920). The ownership of property was

transferred in October 2017. The property was reclassified from other non-current assets into

property, plant and equipment thereafter.

B. On June 29, 2018, the Group entered into an agreement with the related party, Zhaocang (Shunghai)

Trading Co., Ltd., to acquire the building and parking space located at Huaihai West Road,

Changning district, Shanghai City, which have been recognised as other non-current assets since

the transfer has not been completed. The total amount of the contract is CNY $107,856 (TWD

$500,377) and the Group has paid the amount of CNY $54,678 (TWD $253,668).

(7) Intangible assets

CNY TWD CNY TWD CNY TWD CNY TWD

At January 1

Cost 1,684$ 7,687$ 6,060$ 27,664$ 14,213$ 64,882$ 21,957$ 100,233$

Accumulated amortisation

and impairment - - 303)( 1,383)( 8,760)( 39,989)( 9,063)( 41,372)(

1,684$ 7,687$ 5,757$ 26,281$ 5,453$ 24,893$ 12,894$ 58,861$

Balance at January 1 1,684$ 7,687$ 5,757$ 26,281$ 5,453$ 24,893$ 12,894$ 58,861$

Reclassifications - - - - 2,095 9,719 2,095 9,719

Additions-acquired

separately

- - - - 192 890 192 890

Amortisation charge - - 202)( 937)( 1,710)( 7,933)( 1,912)( 8,870)(

Net exchange differences - 48 - 170 17)( 48 17)( 266

Balance at June 30 1,684$ 7,735$ 5,555$ 25,514$ 6,013$ 27,617$ 13,252$ 60,866$

At June 30

Cost 1,684$ 7,735$ 6,060$ 27,834$ 16,478$ 75,683$ 24,222$ 111,252$


and impairment - - 505)( 2,320)( 10,465)( 48,066)( 10,970)( 50,386)(

1,684$ 7,735$ 5,555$ 25,514$ 6,013$ 27,617$ 13,252$ 60,866$

2018

Goodwill Other TotalLicences

~28~

A. Goodwill is allocated to the Group’s cash-generating units identified according to operating

segment. The recoverable amount of all cash-generating units has been determined based on value-

in-use calculations. These calculations use pre-tax cash flow projections based on financial

budgets approved by the management.

B. Management determined budgeted gross margin based on past performance and its expectations

of market development. The weighted average growth rates used are consistent with the forecasts

included in industry reports. The discount rates used are pre-tax and reflect specific risk relating

to the relevant operating segments.

(8) Short-term borrowings

A. There had no bank borrowings as at June 30, 2017.


At January 1

Cost -$ -$ -$ -$ 14,209$ 65,607$ 14,209$ 65,607$


and impairment - - - - 5,754)( 26,570)( 5,754)( 26,570)(

-$ -$ -$ -$ 8,455$ 39,037$ 8,455$ 39,037$

Balance at January 1 -$ -$ -$ -$ 8,455$ 39,037$ 8,455$ 39,037$

Additions-acquired

through business

combinations

1,684 7,554 6,060 27,185 - - 7,744 34,739

Amortisation charge - - - - 1,527)( 6,821)( 1,527)( 6,821)(

Net exchange differences - - - - 87 746)( 87 746)(

Balance at June 30 1,684$ 7,554$ 6,060$ 27,185$ 7,015$ 31,470$ 14,759$ 66,209$

At June 30

Cost 1,684$ 7,554$ 6,060$ 27,185$ 14,321$ 64,244$ 22,065$ 98,983$


and impairment - - - - 7,306)( 32,774)( 7,306)( 32,774)(

1,684$ 7,554$ 6,060$ 27,185$ 7,015$ 31,470$ 14,759$ 66,209$

2017

Goodwill Other TotalLicences

Interest

Type of borrowings CNY TWD rate range

Bank borrowings

Secured borrowings 112,741$ 517,819$ 2.27%

Unsecured borrowings 34,817 159,915 1.97%

147,558$ 677,734$

Interest

Type of borrowings CNY TWD rate range

Bank borrowings

Secured borrowings 110,830$ 505,939$ 2.27%

Unsecured borrowings 45,630 208,301 1.97%

156,460$ 714,240$

June 30, 2018

December 31, 2017

~29~

B. For the three months and six months ended June 30, 2018, interest expense recognised in profit or

loss amounting to CNY $986 (TWD $4,601) and CNY $1,881 (TWD $8,727), respectively.

C. Please refer to Note 8 for information on pledged assets.

(9) Financial liabilities at fair value through profit or loss

A. The Group recognised net gain of CNY $1,581(TWD $7,358), net loss of CNY $1,319 (TWD

$5,890), net gain of CNY $2,338 (TWD $10,847) and net loss of CNY $1,363 (TWD $6,089) on

financial liabilities held for trading for the three months and six months ended June 30, 2018 and

2017, respectively.

B. Please refer to Note 6(11) for details of derivative financial instrument- corporate bonds (put

option and call option).

(10) Other payables

(11) Bonds payable

A. The terms of the first domestic unsecured convertible bonds issued by the Company in November

2015 are as follows:

(a) The Group issued $900,000, 0% first domestic unsecured convertible bonds. The bonds mature

three years from the issue date (November 13, 2015~ November 13, 2018) and will be

redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei

Exchange on November 13, 2015.

Items

Current items: CNY TWD CNY TWD CNY TWD

Derivative financial

instrument - corporate

bonds (put option and

call option) -$ -$ -$ -$ 6,761$ 30,330$



Dividend payable 136,496$ 635,938$ -$ -$ 114,383$ 511,520$

Tax payable 13,872 63,714 11,849 54,091 8,547 38,344

Other 69,037 308,075 84,166 384,218 63,517 286,537

219,405$ 1,007,727$ 96,015$ 438,309$ 186,447$ 836,401$



Bonds payable 380$ 1,900$ 380$ 1,900$ 180,180$ 900,000$

Less: discount on

bonds payable

4)( 17)( 8)( 35)( 5,636)( 25,282)(

Net exchange

differences 34 - 37 - 20,444 -

410 1,883 409 1,865 194,988 874,718

Less: Corporate

bonds payable

current portion ( 410) ( 1,883) ( 409) ( 1,865) ( 194,988) ( 874,718)

-$ -$ -$ -$ -$ -$


~30~

(b) The bondholders have the right to ask for conversion of the bonds into common shares of the

Company during the period from the date after one month of the bonds issue (December 14,

2015) to 10 days before the maturity date, except for the stop transfer period as specified in

the terms of the bonds or the laws/regulations. The rights and obligations of the new shares

converted from the bonds are the same as the issued and outstanding common shares.

(c) The conversion price of the bonds is set up based on the pricing model in the terms of the

bonds, the conversion price is TWD $288 (in dollars) per share as issuance, and is subject to

adjustments if the condition of the anti-dilution provisions occurs subsequently. The

conversion price amounted to TWD $250.9 (in dollars) per share after the dividends and rights

distribution have been adjusted on July 12, 2018.

(d) The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any

time if the closing price of the Company’s common shares is above the then conversion price

by 30% (including 30%) for 30 consecutive trading days during the period from the date after

one month of the bonds issue (December 14, 2015) to 40 days before the maturity date, the

Company will send a ‘Notice of Withdrawal’ by registered mail to creditor (the effective date

is based on the final date of the period starting from the mail date ) who holds the convertible

bonds, bulletin and send a letter to the Taipei Exchange.

The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any

time if the outstanding balance of the bonds is less than 10% of total initial issue amount during

the period from the date after one months of the bonds issue (December 14, 2015) to 40 days

before the maturity date, the Company will send a ‘Notice of Withdrawal’ by registered mail

to creditor (the effective date is based on the final date of the period starting from the mail

date ) who holds the convertible bonds, bulletin and send a letter to the Taipei Exchange.

(e) The Company set the date after two years of the issuance (November 13, 2017) as the effective

date, at the 40 days before the effective date, the Company shall send a ‘Notice of put option’

by registered mail to creditors, and send a letter to the Taipei Exchange to bulletin the put

option is exercisable. The creditors could inform the Company’s agency in document form to

demand that the Company repurchase bonds at face value and interest premium (2.25% of the

face value after over two years) in 30 days before the effective date.

(f) Under the terms of the bonds, all bonds redeemed, matured and converted are retired and not

to be re-issued; all rights and obligations attached to the bonds are also extinguished.

B. Regarding the issuance of convertible bonds, the equity conversion options amounting to CNY

$7,258 (TWD $37,021) were separated from the liability component and were recognised in

‘capital surplus—share options’ in accordance with IAS 32. The call options and put options

embedded in bonds payable were separated from their host contracts and were recognised in

‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with

IAS 39 because the economic characteristics and risks of the embedded derivatives were not

closely related to those of the host contracts. The effective interest rate of the bonds payable after

such separation was 2.013%.

C. Since the bondholders are entitled to request the Company to redeem the bonds at the agreed price

two years after the bond issuance (November 13, 2017), the Company booked all convertible

bonds as current liability. However, it does not imply that such current liability shall be fully

redeemed within the year. As of June 30, 2018, the Company has redeemed bonds of CNY

$179,800 (TWD $898,100) at face value upon bondholders’ request.

~31~

(12) Pensions

A. (a) Taiwan branches have a defined benefit pension plan in accordance with the Labor Standards

Law, covering all regular employees’ service years prior to the enforcement of the Labor

Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue

to be subject to the pension mechanism under the Law. For employees eligible under Labor

Standards Law, pension benefits are based on the number of units accrued and the average

monthly salaries and wages of the last 6 months prior to retirement.

(b) The pension costs under defined contribution pension plans of the Group for the three months

and six months ended June 30, 2018 and 2017, were both CNY $0 (TWD $0).

B. (a) Effective July 1, 2005, Taiwan branches established a defined contribution pension plan (the

“New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with

R.O.C. nationality. Under the New Plan, Taiwan branches contribute monthly an amount

based on not less than 6% of the employees’ monthly salaries and wages to the employees’

individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid

monthly or in lump sum upon termination of employment.

(b) The subsidiaries in Mainland China have a defined contribution plan. Monthly contributions

to an independent fund administered by the government in accordance with the pension

regulations in the People’s Republic of China (PRC) are based on certain percentage of

employees’ monthly salaries and wages. Other than the monthly contributions, the Group has

no further obligations. The details of defined contribution plans are as follows:

(c) Subsidiary-Hong Kong Chlitina established a compulsory pension program, which allocates

a fixed amount of money for pension benefit, and is managed by an independent trustee based

on Hong Kong employee Act. In addition, according to the regulation of that program, both

employer and employee have to distribute 5% of the employee’s salary, respectively. From

June 2014, the maximum relevant salary per month increased from HKD $25,000 to HKD

$30,000. Other than the monthly contributions, the Group has no further obligations.

(d) The pension costs under defined contribution pension plans of the Group for the three months

and six months ended June 30, 2018 and 2017, were CNY $2,788 (TWD $13,013), CNY

$2,597 (TWD $11,461), CNY $5,349 (TWD $24,816) and CNY $5,144 (TWD $22,980),

respectively.

(13) Share-based payment

A. The Group’s share-based payment arrangements were as follows:

The abovementioned share-based payment arrangements is settled by equity.

Administration Beneficiary Pension appropriation

Each municipal government

in Mainland China

Employees of Chlitina (China)

and its branch, and Weishuo

20%

Type of Quantity granted Vesting

arrangement Grant date (thousands) conditions

Treasury stock

transferred to employees

March 9, 2018 797 Vested immediately

~32~

B. Details of the share-based payment arrangements are as follows:

C. The fair value of stock options granted on March 9, 2018 is measured using the Black-Scholes

option-pricing model. Relevant information is as follows:

Note: Expected price volatility rate was estimated by using the stock prices of the most recent

period with length of this period approximate to the length of the stock options’ expected

life, and the standard deviation of return on the stock during this period.

D. Expenses incurred on share-based payment transactions are shown below:

(14) Share capital

A. As of June 30, 2018, the Company’s authorized capital was TWD $2,000,000, and the paid-in

capital was CNY $161,772 (TWD $794,924) with a par value of TWD $10 (in dollars) per share,

consisting of 79,492 thousand shares of ordinary stock. All proceeds from shares issued have

been collected.

B. Movements in the number of the Company’s ordinary shares (thousand shares) outstanding are

as follows:

No. of options Weighted-average

(thousands) exercise price (NTD)

Options outstanding at January 1 - -$

Options granted 797 146.25

Options exercised 797)( 146.25

Options outstanding at June 30 - -

Options exercisable at June 30 - -$

2018

(TWD)

Type of Grant Stock Exercise

Expected

price

Expected

option life Expected Risk-free Fair value

arrangement date price price volatility (years) dividends interest rate per unit

Treasury

stock

transferred

to employees

March 9, 2018 $ 154 $ 146.25 51.61%~

70.08%

0.0667~

0.3056

0.00% 0.60%~

0.63%

$15.17~

$21.32

CNY TWD CNY TWD

Equity-settled -$ -$ 3,177$ 14,686$


2018 2017

At January 1 78,695 79,192

Purchase of treasury share - 497)(

Treasury shares sold to employees 375 -

At June 30 79,070 78,695

~33~

C. Treasury shares

(a) Reason for share reacquisition and movements in the number of the Company’s treasury

shares are as follows:

(b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as

treasury share should not exceed 10% of the number of the Company’s issued and outstanding

shares and the amount bought back should not exceed the sum of retained earnings, paid-in

capital in excess of par value and realised capital surplus.

(c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged

as collateral and is not entitled to dividends before it is reissued.

(d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the

employees within three years from the reacquisition date and shares not reissued within the

three-year period are to be retired. Treasury shares to enhance the Company’s credit rating

and the stockholders’ equity should be retired within six months of acquisition.

(15) Capital surplus

A summary of the Company’s capital surplus are as follows:

Number of

Name of company Reason for shares

holding the shares reacquisition (in thousand) CNY TWD

The Company To be reissued to employees 422 14,005$ 61,718$

Number of




Number of




June 30, 2018

December 31, 2017

June 30, 2017

CNY TWD CNY TWD CNY TWD CNY TWD CNY TWD

At January 1 289,153$ 1,407,306$ 809$ 3,924$ 15$ 78$ 4,231$ 45,176$ 294,208$ 1,456,484$

Cash dividends

from capital

surplus

25,593)( 119,238)( - - - - - - 25,593)( 119,238)(

Share-based

compensation

payment

- - 3,177 14,686 - - - - 3,177 14,686

Treasury

shares transferred

to employees - - 1,224)( 5,689)( - - 1,224 5,689 - -

At June 30 263,560$ 1,288,068$ 2,762$ 12,921$ 15$ 78$ 5,455$ 50,865$ 271,792$ 1,351,932$

2018

Share premium Employee stock options Stock options Others Total

~34~

(16) Retained earnings

A. The Company’s Articles of Incorporation require that the Company’s net earnings from the

current year shall be used to offset prior years’ deficits, pay income tax, provide 10% as legal

reserve, provide or reverse a special reserve in accordance with applicable laws. After the

abovementioned appropriations, the distribution of the remaining earnings, if any, should be

proposed by the Board of Directors and is subject to the stockholders’ approval.

B. The Company’s business cycle is in the constant growth stage. In consideration of the

Company’s future capital requirements, its long-term financial plan and shareholders’

satisfaction as to cash inflow, the Company’s Articles of Incorporation stipulate that the Board

of Directors may propose 10% or more of the distributable earnings as dividends, of which at

least 10% should be distributed as cash dividends. However, such distribution depends on the

current earnings and the capital condition, and is subject to the approval of stockholders.

C. In accordance with the regulations, the Company shall set aside special reserve from the debit

balance on other equity items at the balance sheet date before distributing earnings. When debit

balance on other equity items is reversed subsequently, the reversed amount could be included

in the distributable earnings.

D. The appropriations of earnings for 2017 and 2016 as resolved by the shareholders at their

meetings on June 5, 2018 and June 28, 2017, respectively, are as follows:

In the distribution of earnings for 2017, cash dividends was distributed at TWD $6.5658 (in

dollars) per share based on the outstanding shares of 78,695,350 shares as of March 8, 2018. If

the cash dividend was distributed based on the total issued shares of 79,492,350 shares, the cash

dividends will be distributed at TWD $6.50 (in dollars) per share.

E. On June 5, 2018, the shareholders during their meeting approved to distribute cash dividends

from capital surplus-additional paid-in capital amounted to CNY $25,593 (TWD $119,238).

Cash dividends was distributed at TWD $1.5152 per share based on the outstanding shares of

78,695,350 shares as of March 8, 2018. If the cash dividend was distributed based on the total

issued shares of 79,492,350 shares, the cash dividends will be distributed at TWD $1.50 (in

dollars) per share.

F. For the information relating to employees’ compensation and directors’ remuneration, please

refer to Note 6(21).

CNY TWD CNY TWD CNY TWD CNY TWD CNY TWD

At January 1

(June 30) 289,153$ 1,407,306$ 809$ 3,924$ 7,258$ 37,021$ 3,012)($ 8,233$ 294,208$ 1,456,484$

2017

Share premium Employee stock options Stock options Others Total

Dividends Dividends

per share per share

(New Taiwan (New Taiwan

CNY TWD dollars) CNY TWD dollars)

Special reserve 55,390$ 258,063$ -$ -$ -$ -$

Legal reserve 12,513 58,296 - 16,341 73,079 -

Cash dividends 110,903 516,700 6.50 114,383 511,520 6.50

Total 178,806$ 833,059$ 6.50$ 130,724$ 584,599$ 6.50$

2017 2016

~35~

(17) Operating revenue

A. Disaggregation of revenue from contracts with customers

The Group’s revenue is disaggregated in the following major product lines:

The Group derives revenue from the transfer of goods at a point in time.

B. Contract liabilities

(a) The Group has recognized the following revenue-related contract liabilities:

(b) Revenue recognized that was included in the contract liability balance at the beginning of the

period

C. Related disclosures for the three months and six months ended June 30, 2017 operating revenue

are provided in Note 12(5) B.

CNY TWD CNY

Revenue from contracts with

customers 232,761$ 1,086,601$ 452,666$


CNY TWD CNY TWD

Net sale of goods 218,917$ 1,022,134$ 431,012$ 1,999,594$

Special affiliate income 12,652 58,894 19,051 88,384

OEM income 84 406 631 2,927 Skincare service from company-

operated salon and other

income 1,108 5,167 1,972 9,149

232,761$ 1,086,601$ 452,666$ 2,100,054$


CNY TWD

Contract liabilities-advance sales receipts

from customers 72,965$ 335,128$

June 30, 2018

CNY TWD CNY TWD

Contract liabilities advance

sales receipts from

customers at the begging

of the period -$ -$ 72,239$ 335,138$


~36~

(18) Other income

(19) Other gains and losses

CNY TWD CNY TWD

Interest income 734$ 3,425$ 2,866$ 12,653$

Interest income from bank deposits 170 793 - -

Interest income from financial

assets measured at amortised

cost

2,337 10,930 - -

Other interest income - 516 5,650 25,240

Government grants revenue 218 1,012 326 1,447

Others 3,459$ 16,676$ 8,842$ 39,340$

CNY TWD CNY TWD

Interest income 1,387$ 6,435$ 5,570$ 24,882$

Interest income from bank deposits 284 1,318 - -

Interest income from financial

assets measured at amortised

cost

5,180 24,032 - -

Other interest income 16,821 78,037 5,650 25,240

Government grants revenue 276 1,280 500 2,234

Others 23,948$ 111,102$ 11,720$ 52,356$


2018 2017


2018 2017

CNY TWD CNY TWD

Losses on disposal of property,

plant and equipment

6)($ 30)($ 55)($ 245)($

Foreign exchange (losses) gains 3,835)( 17,710)( 921 4,584

Net gains (losses) on financial

assets and financial liabilities at


1,581 7,358 1,319)( 5,890)(

Other 564 2,609 242)( 1,000)(

1,696)($ 7,773)($ 695)($ 2,551)($


2018 2017

~37~

(20) Finance cost

(21) Employee benefit expense, depreciation and amortization

CNY TWD CNY TWD

Losses on disposal of property,

plant and equipment

84)($ 390)($ 65)($ 290)($

Losses on disposal of investments - - 1,262)( 5,708)(

Foreign exchange losses 1,149)( 5,331)( 7,559)( 33,768)(

Net gains (losses) on financial

assets and financial liabilities at


2,338 10,847 1,363)( 6,089)(

Other 304 1,411 440)( 1,895)(

1,409$ 6,537$ 10,689)($ 47,750)($


2018 2017

CNY TWD CNY TWD

Interest expense-Convertible bond 2$ 10$ 994$ 4,388$

Interest expense-Bank borrowings 986 4,601 - -

988$ 4,611$ 994$ 4,388$

CNY TWD CNY TWD

Interest expense-Convertible bond 4$ 18$ 1,959$ 8,753$

Interest expense-Bank borrowings 1,881 8,727 - -

1,885$ 8,745$ 1,959$ 8,753$


2018 2017


2018 2017


Employee benefit

expense

Wages and salaries $ 1,526 $ 7,122 $ 28,012 $ 130,749 $ 29,538 $ 137,871

Labour and health

insurance fees

95 444 1,655 7,727 1,750 8,171

Pension costs 163 761 2,625 12,252 2,788 13,013

Other employee

benefit expense

91 425 1,985 9,266 2,076 9,691

Depreciation 270 1,263 5,025 23,468 5,295 24,731

Amortisation 73 341 884 4,128 957 4,469

Three months ended June 30, 2018

Operating costs Operating expenses Total

~38~


Employee benefit

expense


Labour and health

insurance fees

102 449 1,613 7,118 1,715 7,567

Pension costs 164 723 2,433 10,738 2,597 11,461

Other employee

benefit expense

96 423 1,780 7,843 1,876 8,266

Depreciation 326 1,438 4,294 18,935 4,620 20,373

Amortisation 57 251 710 3,133 767 3,384




Employee benefit

expense


Labour and health

insurance fees

186 863 3,268 15,161 3,454 16,024

Pension costs 314 1,457 5,035 23,359 5,349 24,816

Other employee

benefit expense

175 812 3,837 17,801 4,012 18,613

Depreciation 597 2,770 10,118 46,940 10,715 49,710

Amortisation 146 677 1,766 8,193 1,912 8,870


Employee benefit

expense


Labour and health

insurance fees

223 996 3,192 14,259 3,415 15,255

Pension costs 350 1,564 4,794 21,416 5,144 22,980

Other employee

benefit expense

189 844 3,738 16,698 3,927 17,542

Depreciation 651 2,908 8,765 39,155 9,416 42,063

Amortisation 114 509 1,413 6,312 1,527 6,821

Six months ended June 30, 2018




~39~

A. In accordance with the Company’s Articles of Incorporation, the Company should contribute

1%~5% of the profit as employees’ compensation and less than 3% as directors’ remuneration

when there is profit for the year. However, if the Company has accumulated deficits, the profit

should be reserved to offset the deficit. Employees entitled to receive the above mentioned

employees’ compensation, in shares or cash, includes the employees of the subsidiaries of the

Company who meet certain specific requirements.

B. For the three months and six months ended June 30, 2018 and 2017, employees’ compensation

was accrued at CNY $1,284 (TWD $5,999), CNY $784 (TWD $3,475), CNY $2,675 (TWD

$12,410) and CNY $1,266 (TWD $5,655), respectively; directors’ remuneration was accrued at

CNY $642 (TWD $2,999), CNY $392 (TWD $1,738), CNY $1,338 (TWD $6,207) and CNY

$633 (TWD $2,828), respectively. Those were estimated based on the net income before tax

deducted employees’ compensation and directors’ remuneration and then multiply the

distribution ratio as regulated in the Company’s Articles of Incorporation, and recognised as

salary expenses.

The amount of employees’ ended June 30, 2018 and 2017, compensation and directors’

remuneration approved by the Board of Directors on April 20, 2018 were in agreement with those

on the financial statements for the year ended December 31, 2017, and were CNY $2,798 (TWD

$12,608) and CNY $1,399 (TWD $6,304), respectively. Aforementioned employees’

compensation will be distributed in cash, however, the compensation had not been distributed.

C. Information about employees’ compensation and directors’ remuneration of the Company as

resolved at the meeting of Board of Directors will be posted in the “Market Observation Post

System” at the website of the Taiwan Stock Exchange.

(22) Income tax

A. Income tax expense

Components of income tax expense:

CNY TWD CNY TWD

Current tax:

Current tax on profits for the

period

23,260$ 108,620$ 12,275$ 53,978$

Prior year income tax

underestimation 833 3,865 859 3,837

Total current tax 24,093 112,485 13,134 57,815

Deferred tax:

Origination and reversal of

temporary differences

741 3,435 2,336 10,688

Impact of change in tax rate - 4)( - -

Income tax expense 24,834$ 115,916$ 15,470$ 68,503$


2018 2017

~40~

B. Chlitina Marketing Taiwan Branch’s and Chlitina Intelligence Taiwan Branch’s income tax

returns through 2016 have been assessed and approved by the Tax Authority.

C. Under the amendments to the Income Tax Act which was promulgated by the President of the

Republic of China in February, 2018, the applicable income tax rate of the Group’s branch

company in Taiwan was raised from 17% to 20% effective from January 1, 2018. The Group has

assessed the impact of the change in income tax rate.

(23) Earnings per share

CNY TWD CNY TWD

Current tax:

Current tax on profits for the

period

46,380$ 215,171$ 27,737$ 123,907$

Prior year income tax

underestimation 833 3,865 859 3,837

Total current tax 47,213 219,036 28,596 127,744

Deferred tax:

Origination and reversal of

temporary differences

717 3,326 2,216)( 9,899)(

Impact of change in tax rate 179)( 830)( - -

Income tax expense 47,751$ 221,532$ 26,380$ 117,845$


2018 2017

Weighted average

number of ordinary

(In thousand (In thousand shares outstanding

of CNY) of TWD) (share in thousands) (CNY dollars) (TWD dollars)

Basic earnings per share

Profit attributable to

ordinary shareholders

of the parent 58,887$ 275,273$ 79,070 0.74$ 3.48$

Diluted earnings per share



of the parent

58,887$ 275,273$ 79,070

Assumed conversion of all

dilutive potential ordinary

shares

Conversion bonds 2 10 7

Employees’ compensation - - 56



of the parent plus

assumed conversion

of all dilutive potential

ordinary shares 58,889$ 275,283$ 79,133 0.74$ 3.48$


Amount after tax

Earnings per share

~41~

Weighted average

number of ordinary






of the parent 35,855$ 159,034$ 78,695 0.46$ 2.02$




of the parent

35,855$ 159,034$ 78,695



shares

Conversion bonds 994 4,388 3,312




of the parent plus

assumed conversion


ordinary shares 36,849$ 163,422$ 82,089 0.45$ 1.99$


Amount after tax

Earnings per share

Weighted average

number of ordinary






of the parent 126,597$ 587,321$ 78,886 1.60$ 7.45$




of the parent

126,597$ 587,321$ 78,886



shares

Conversion bonds 4 18 7




of the parent plus

assumed conversion


ordinary shares 126,601$ 587,339$ 78,973 1.60$ 7.44$


Amount after tax

Earnings per share

~42~

(24) Operating leases

The Group leases in offices and plant under operating lease agreements. The lease terms are between

1 and 5 years. The Group recognized rental expenses of CNY $8,378 (TWD $39,078), CNY $8,461

(TWD $37,425), CNY $15,228 (TWD $70,647) and CNY $15,170 (TWD $67,767) for the three

months and six months ended June 2018 and 2017, respectively. The future aggregate minimum

lease payments under non-cancellable operating leases are as follows:

Weighted average

number of ordinary






of the parent 56,392$ 251,914$ 78,748 0.72$ 3.20$




of the parent

56,392$ 251,914$ 78,748



shares

Conversion bonds 1,959 8,753 3,312




of the parent plus

assumed conversion


ordinary shares 58,351$ 260,667$ 82,176 0.71$ 3.17$


Amount after tax

Earnings per share


Not later than one year 24,469$ 112,386$ 25,523$ 116,512$ 20,822$ 93,016$

Later than one year

but not later than

five years 29,455 135,287 38,849 177,346 23,794 106,293

53,924$ 247,673$ 64,372$ 293,858$ 44,616$ 199,309$


~43~

(25) Business combinations

A. On April 19, 2017, the Group acquired 100% of the share capital of Beijing Aobaojia for CNY

$6,500 and obtained the control of Beijing Aobaojia, a medical cosmetology clinic operating in

Beijing. As a result of the acquisition, the Group is expected to increase its presence in these

markets.

B. The following table summarises the consideration paid for Beijing Aobaojia and the fair values

of the assets acquired and liabilities assumed at the acquisition date:

C. The operating revenue included in the consolidated statement of comprehensive income since

April 19, 2017 contributed by Beijing Aobaojia was CNY $0 (TWD $0). Beijing Aobaojia also

contributed loss before income tax of CNY $556 (TWD $2,484) over the same period. Had

Beijing Aobaojia been consolidated from January 1, 2017, the consolidated statement of

comprehensive income would show operating revenue of CNY $331,922 (TWD $1,482,761) and

profit before income tax of CNY $82,772 (TWD $369,759).

D. In the end of 2017, the Group obtained the report in relation to the purchase price allocation. The

Group retrospectively adjusted the second quarter of 2017 financial statements based on the

purchase price allocation report. Intangible assets-licenses and deferred tax liabilities would be

increased by CNY $6,060 (TWD $27,185) and CNY $1,515 (TWD $6,796), respectively, and

intangible assets-goodwill would be decreased by CNY $4,545 (TWD $20,389).

(26) Supplemental cash flow information

A. Investing activities with partial cash received

For the six months ended June 30, 2018:None.

CNY TWD

Purchase consideration

Cash paid 6,500$ 29,159$

Fair value of the identifiable assets acquired

and liabilities assumed

Cash 5$ 22$

Other receivables 266 1,194

Licenses 6,060 27,185

Deferred tax liabilities 1,515)( 6,796)(

Total identifiable net assets 4,816$ 21,605$

Goodwill 1,684$ 7,554$

April 19, 2017

CNY TWD

Proceeds from disposal of investments

accounted for using equity method

37,300$ 164,380$

Less: Unreceived payment at end of period 12,300)( 54,205)(

Cash received during the period 25,000$ 110,175$


~44~

B. Financing activities with no cash flow effects

C. Assets and liabilities relating to the control over subsidiaries acquired are as follows:

For the six months ended June 30, 2018: None.

(27) Changes in liabilities from financing activities

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

CNY TWD CNY TWD

Dividends payable 136,496$ 635,938$ 114,383$ 511,520$

June 30, 2018 June 30, 2017

CNY TWD

Cash and cash equivalents 5$ 22$

Other receivables 266 1,194

Goodwill 6,229 27,943

6,500$ 29,159$

Price of subsidiary acquisition 6,500 29,159

Subsidiary cash balance 5)( 22)(

Not yet paid for the acquisition 4,550)( 20,412)(

Net cash inflow 1,945$ 8,725$


CNY NTD

At January 1, 2018 156,460$ 714,240$

Changes in cash flow from financing activities 10,979)( 50,934)(

Impact of changes in foreign exchange rate 2,077 14,428

At June 30, 2018 147,558$ 677,734$

Short-term borrowings

Names of related parties Relationship with the Group

Kelti International Trading Corp. (Kelti International) Other related parties

Kelti (China) Daily Product Co.,Ltd (Kelti China) Other related parties

Healthmate Biotech Co., Ltd. (Healthmate Biotech) Other related parties

Charming Biotech Corp., Ltd (Charming Biotech) Other related parties

Sagittarius Life Science Corp. (Sagittarius Life) Other related parties

Lee, Tsai & Partners Attorneys-at-Law (Lee, Tsai & Partners) Other related parties

Modern Pearl Holdings Limited (Modern Pearl) Other related parties

Jing Yung Gi Co., Ltd (Jing Yung Gi) Other related parties

Shanghai Guangqiao Biosciences Co., Ltd (Guangqiao Biosciences) Other related parties

Mc. Reene Co., Ltd (Mc. Reene) Other related parties

Kelti International (HK) Limited Taiwan Branch Other related parties

Kelti International (HK) Limited Other related parties

~45~

(2) Significant related party transactions and balances

A. Operating revenue:

There were no significant differences in the price between related parties and other customers. The

collection term for related parties is two months. For other customers, advance payment is required.

B. Purchases:

Names of related parties Relationship with the Group

Hunzas Co.,Ltd Other related parties

TI,LI-SHIH Health Corporation Other related parties

Full Blooming Investment Co., Ltd. Other related parties

Shanghai Zhe Mei Technology Training Co., Ltd

(Shanghai Zhe Mei)

Other related parties

Harvest Era Co., Ltd (Harvest Era) Other related parties

Zhaocang (Shanghai) Trading Co., Ltd.(Zhaocang Trading) Other related parties

Shanghai Cheng Yang Trading Co., Ltd Other related parties

SHANGHAI ZHONGYE TRADE CO.,LTD Associates

CNY TWD CNY

Sales of goods and OEM income:


Kelti China 86$ 423$ 351$

Other 70 329 79

156$ 752$ 430$

CNY TWD CNY

Sales of goods and OEM income:


Kelti China 865$ 4,013$ 3,172$

Other 240 1,113 208

1,105$ 5,126$ 3,380$


2018 2017


2018 2017

CNY TWD CNY TWD


Charming Biotech 6,639$ 30,974$ 4,118$ 18,240$

Other 4,478 20,900 5,107 22,648

11,117$ 51,874$ 9,225$ 40,888$


2018 2017

~46~

The purchase price from related parties was based on the mutual agreement, the credit term was

60 days after monthly billings, and there was no significant difference with transactions of non-

related parties.

C. Receivables from related parties:

D. Payables to related parties:

The payables to related parties have no collateral and bear no interest.

E. Prepayments:

F. Property transactions:

CNY TWD CNY TWD


Charming Biotech 12,291$ 57,022$ 6,870$ 30,688$

Other 8,563 39,726 8,118 36,266

20,854$ 96,748$ 14,988$ 66,954$


2018 2017


Accounts receivable:


Kelti China 66$ 303$ 141$ 642$ 416$ 1,865$

Other 129 593 3 16 39 176

195$ 896$ 144$ 658$ 455$ 2,041$

Other receivables:

Other related parties 168$ 772$ 261$ 1,191$ 220$ 987$



Accounts payable:


Charming Biotech 6,223$ 28,582$ 3,068$ 14,005$ 3,049$ 13,677$

Other 3,330 15,295 185 846 3,806 17,075

9,553$ 43,877$ 3,253$ 14,851$ 6,855$ 30,752$

Other payables:


Kelti China 1,243$ 5,709$ 1,313$ 5,994$ 1,716$ 7,697$

Other 150 689 215 981 157 705

1,393$ 6,398$ 1,528$ 6,975$ 1,873$ 8,402$



Other related parties 167$ 767$ 843$ 3,848$ 173$ 776$


~47~

Acquisition of property, plant and equipment

In May, 2018, the Group entered into an agreement to acquire the building and parking space

located at Huaihai West Road, Changning district, Shanghai City from the related party, Zhaocang

Trading, and the amount of the contract is CNY $107,856 (TWD $500,377) which was made based

on the appraisal report issued by Shanghai Shenwei Assets Appraisal Co., Ltd. The Group has paid

the amount of CNY $54,678 (TWD $253,668), and recognised the prepayment as other non-

current assets. As of June 30, 2018, the transfer of the building and parking space has not been

completed.

G. Services expense:

For the services provided by the related parties, price and terms were determined in accordance

with mutual agreements.

H. Lease expense

The lease contracts refer to the market price and normal payment terms.

CNY TWD CNY TWD


Harvest Era -$ -$ 8$ -$

Other 179 838 279 1,208

179$ 838$ 287$ 1,208$

CNY TWD CNY TWD


Harvest Era -$ -$ 610$ 2,724$

Other 422 1,958 999 4,464

422$ 1,958$ 1,609$ 7,188$


2018 2017


2018 2017

CNY TWD CNY TWD


Kelti China 1,086$ 5,073$ 1,372$ 6,074$

Other 1,325 6,187 1,171 5,173

2,411$ 11,260$ 2,543$ 11,247$

CNY TWD CNY TWD


Kelti China 2,222$ 10,308$ 2,320$ 10,363$

Other 2,626 12,183 2,305 10,298

4,848$ 22,491$ 4,625$ 20,661$


2018 2017


2018 2017

~48~

I. Training expense

(3) Key management compensation

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

June 30, 2017：None.

CNY TWD CNY TWD


Shanghai Zhe Mei 2,356$ 10,981$ -$ -$

CNY TWD CNY TWD


Shanghai Zhe Mei 4,009$ 18,599$ -$ -$


2018 2017


2018 2017

CNY TWD CNY TWD

Salaries and other short-term employee

benefits

2,972$ 13,884$ 1,828$ 8,034$

Post-employment benefits 11 52 22 97

2,983$ 13,936$ 1,850$ 8,131$

CNY TWD CNY TWD

Salaries and other short-term employee

benefits

6,108$ 28,337$ 4,196$ 18,744$

Post-employment benefits 26 121 43 192

6,134$ 28,458$ 4,239$ 18,936$


2018 2017


2018 2017

Pledged asset Pledged purpose CNY TWD CNY

Time deposits

(shown as ‘other

current financial

assets’)

Short-term

borrowings

22,548$ 103,563$ 22,165$

Book value

June 30, 2018 December 31, 2017

~49~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

None.

(2) Commitments

A. Capital expenditure:

B. Operating lease agreements: Please see Note 6(24).

C. In June 2017, the Group had signed a donation agreement with Shanghai Tongji University

Education Development Foundation, committing to donate CNY $2,000 every year to reach the

total amount of CNY $10,000 from 2017 to 2022. This donation will be used to help to establish

Shanghai Tongji University and Chlitina Holding Limited Education Foundation to support the

School of Medicine’s recruitment and the School of Economics and Management’s development

of scientific research.

D. In September 2017, the Group had signed a collaboration agreement with Shanghai Tongji

University Lifeng Institute of Regenerative Medicine, committing to pay the research expenses

amounting to CNY $10,000 every year to reach the total amount of CNY $50,000 from 2017 to

2021. The funds of Tongji University Lifeng Institute of Regenerative Medicine will be used to

help the establishment, operations and research expenses of Lifeng Institute of Regenerative

Medicine.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

There was no significant change in the reporting period. Please refer to Note 12 in the consolidated



Contract signed 54,680$ 251,145$ 2,058$ 9,395$ 746$ 3,347$


~50~

(2) Financial instruments

A. Financial instruments by category

B. Financial risk management policies

There was no significant change in the reporting period. Please refer to Note 12 in the

consolidated financial statements for the year ended December 31, 2017.

C. Significant financial risks and degrees of financial risks


Financial assets

Financial assets at amortised

cost

Cash and cash equivalents 820,171$ 3,767,045$ 749,780$ 3,422,746$ 780,098$ 3,499,519$

Financial assets at amortised

cost

22,229 102,098 - - - -

Accounts receivable

(including related parties)

1,042 4,786 454 2,073 625 2,804

Other receivables


2,472 11,354 1,654 7,550 14,309 64,190

Other financial assets 22,548 103,563 45,630 208,300 23,292 104,488

868,462$ 3,988,846$ 797,518$ 3,640,669$ 818,324$ 3,671,001$



Financial liabilities

Financial liabilities at fair value



designated as at fair value


-$ -$ -$ -$ 6,761$ 30,330$

Financial liabilities at

amortised cost

Short-term borrowings 147,558 677,734 156,460 714,240 - -

Accounts payable


31,600 145,139 15,371 70,170 17,478 78,407

Other payables


220,798 1,014,125 97,543 445,284 188,320 844,803

Bonds payable

(including current portion)

410 1,883 409 1,865 194,988 874,718

Guarantee deposits received 61,861 284,127 58,829 268,554 55,168 247,483

462,227$ 2,123,008$ 328,612$ 1,500,113$ 462,715$ 2,075,741$


~51~

(a) Market risk

Foreign exchange risk

A. The Group operates internationally and is exposed to foreign exchange rate risk arising

from the transactions of the Company and its subsidiaries used in various functional

currency, primarily with respect to the USD and CNY. Foreign exchange rate risk arises

from future commercial transactions and recognised assets and liabilities.

B. Management has set up a policy to require group companies to manage their foreign

exchange risk against their functional currency. The group companies are required to

hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate

risk is measured through a forecast of highly probable USD and CNY expenditures.

Natural hedging are adopted to minimise the volatility of the exchange rate affecting cost

of held foreign assets or liabilities.

C. The Group’s businesses involve some non-functional currency operations (the

Company’s and certain subsidiaries’ functional currency: TWD; other certain subsidiaries’

functional currency: CNY, USD and HKD). The information on assets and liabilities

denominated in foreign currencies whose values would be materially affected by the

exchange rate fluctuations is as follows:

Foreign

(Foreign currency: currency amount Exchange

functional currency) (In thousands) rate CNY TWD

June 30, 2018

Financial assets

Monetary items

USD：CNY 2,532$ 6.6318 16,792$ 77,126$

USD：TWD 12,641 30.4600 83,833 385,045

USD：HKD 5,516 7.8485 36,581 168,017

CNY：TWD 8,845 4.5930 8,845 40,625

CNY：USD 4,942 0.1508 4,942 22,699

CNY：HKD 1,824 1.1834 1,824 8,378

EUR：CNY 205 7.7074 1,580 7,257

EUR：USD 154 1.1622 1,187 5,452


Monetary items

USD：CNY 2,579$ 6.6318 17,103$ 78,554$

USD：TWD 22,250 30.4600 147,558 677,734

USD：HKD 344 7.8485 2,281 10,477

~52~

D. The total exchange gains (losses), including realised and unrealised arising from

significant foreign exchange variation on the monetary items held by the Group for the

three months and six months ended June 30, 2018 and 2017, amounted to losses of CNY

$3,835 (TWD $17,710), gains of CNY $921 (TWD $4,584), loss of CNY $1,149 (TWD

$5,331) and loss of CNY $7,559 (TWD $33,768), respectively.

Foreign



December 31, 2017

Financial assets

Monetary items

USD：CNY 3,783$ 6.5192 24,662$ 112,582$

USD：TWD 8,535 29.7600 55,641 254,001

USD：HKD 9,139 7.8172 59,579 271,978

CNY：TWD 15,762 4.5650 15,762 71,954

CNY：USD 4,933 0.1534 4,933 22,519

CNY：HKD 2,721 1.1991 2,721 12,421


Monetary items

USD：CNY 1,719$ 6.5192 11,207$ 51,160$

USD：TWD 24,000 29.7600 156,460 714,240

USD：HKD 508 7.8172 3,312 15,119

Foreign



June 30, 2017

Financial assets

Monetary items

USD：CNY 5,273$ 6.7811 35,757$ 160,406$

USD：TWD 14,434 30.4200 97,878 439,081

USD：HKD 14,782 7.8060 100,238 449,668

CNY：TWD 13,653 4.4860 13,653 61,247

CNY：USD 4,923 0.1475 4,923 22,085

CNY：HKD 2,425 1.1511 2,425 10,879


Monetary items

USD：CNY 1,400$ 6.7811 9,494$ 42,590$

USD：HKD 217 7.8060 1,471 6,599

~53~

E. Analysis of foreign currency market risk arising from significant foreign exchange

variation:

(Foreign currency: Degree of

functional currency) variation CNY TWD CNY TWD

Financial assets

Monetary items

USD：CNY 3% 504$ 2,314$ -$ -$

USD：TWD 3% 2,515 11,551 - -

USD：HKD 3% 1,097 5,041 - -

CNY：TWD 3% 265 1,219 - -

CNY：USD 3% 148 681 - -

CNY：HKD 3% 55 251 - -

EUR：CNY 3% 47 218 - -

EUR：USD 3% 36 164 - -


Monetary items

USD：CNY 3% 513$ 2,357$ -$ -$

USD：TWD 3% 4,427 20,332 - -

USD：HKD 3% 68 314 - -


Sensitivity analysis

Effect on profit or loss comprehensive income

Effect on other

(Foreign currency: Degree of

functional currency) variation CNY TWD CNY TWD

Financial assets

Monetary items

USD：CNY 3% 1,073$ 4,812$ -$ -$

USD：TWD 3% 2,936 13,172 - -

USD：HKD 3% 3,007 13,490 - -

CNY：TWD 3% 410 1,837 - -

CNY：USD 3% 148 663 - -

CNY：HKD 3% 73 326 - -


Monetary items

USD：CNY 3% 285$ 1,278$ -$ -$

USD：HKD 3% 44 198 - -

Sensitivity analysis

Effect on profit or loss comprehensive income


Effect on other

~54~

Price risk

The Group’s equity securities, which are exposed to price risk, are the held financial assets

at fair value through profit or loss. To manage its price risk arising from investments in equity

securities, the Group diversifies its portfolio. Diversification of the portfolio is done in

accordance with the limits set by the Group.

Cash flow and fair value interest rate risk

The Group’s main interest rate risk arises from short-term borrowings with variable rates,

which expose the Group to cash flow interest rate risk. As of June 30, 2018 and December

31, 2017, the Group’s borrowings at variable rate were mainly denominated in US Dollars.

(b) Credit risk

Effective 2018

i. Credit risk refers to the risk of financial loss to the Group arising from default by the

clients or counterparties of financial instruments on the contract obligations. The main

factor is that counterparties could not repay in full the accounts receivable based on the

agreed terms, and the contract cash flows of debt instruments stated at amortised cost.

ii. The Group manages their credit risk taking into consideration the entire group’s concern.

According to the Group’s credit policy, each local entity in the Group is responsible for

managing and analysing the credit risk for each of their new clients before standard

payment and delivery terms and conditions are offered. Internal risk control assesses the

credit quality of the customers, taking into account their financial position, past

experience and other factors. Individual risk limits are set based on internal or external

ratings in accordance with limits set by the Board of Directors. The utilisation of credit

limits is regularly monitored.

iii. The Group adopts the assumptions under IFRS 9, the default occurs when the contract

payments are past due over 90 days.

iv. The Group adopts following assumptions under IFRS 9 to assess whether there has been

a significant increase in credit risk on that instrument since initial recognition:

If the contract payments were past due over 30 days based on the terms, there has been

a significant increase in credit risk on that instrument since initial recognition.

v. The following indicators are used to determine whether the credit impairment of debt

instruments has occurred:

(i) It becomes probable that the issuer will enter bankruptcy or other financial

reorganization due to their financial difficulties;

(ii) The disappearance of an active market for that financial asset because of financial

difficulties;

(iii) Default or delinquency in interest or principal repayments;

(iv) Adverse changes in national or regional economic conditions that are expected to

cause a default.

vi. The Group classifies customers’ accounts receivable in accordance with customer types.

The Group applies the simplified approach to estimate expected credit loss under the

provision matrix basis.

~55~

vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be

recovered, after initiating recourse procedures. However, the Group will continue

executing the recourse procedures to secure their rights. On June 30, 2018, the Group

has no written-off financial assets that are still under recourse procedures.

viii. The Group’s accounts receivable is generated from the customers who have optimal

credit rating, and the expected credit loss rate is 0.03%. As of June 30, 2018, the carrying

amount of accounts receivable (including related-parties) amounted to CNY $1,042

(TWD $4,786). Because the Group expect that the impairment of expected credit is

insignificant, therefore, loss allowance is $0.

ix. For investments in debt instruments at amortised cost, the credit rating levels are

presented below:

The financial assets at amortised cost held by the Group are the time deposits with

maturity term of over three months, and no material issues of credit rating levels incurred.

x. Credit risk information in the second quarter of 2017 and for the year ended December

31, 2017 is provided in Note 12(4).

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated

by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity

requirements to ensure it has sufficient cash to meet operational needs on its mature

liabilities on general and stressful conditions so that the Group approach the risk target

that does not occur the unacceptable losses or breach their reputation.

ii. Surplus cash held by the operating entities over and above balance required for working

capital management are invested in interest bearing demand deposits, time deposits and

marketable securities, choosing instruments with appropriate maturities or sufficient

liquidity to provide sufficient head-room as determined by the above-mentioned

forecasts.

iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled

or gross-settled derivative financial liabilities into relevant maturity groupings based on

the remaining period at the balance sheet date to the contractual maturity date for non-

derivative financial liabilities and to the expected maturity date for derivative financial

liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.


22,229$ 102,098$ -$ -$ -$ -$ 22,229$ 102,098$

Financial

assets at

amortised

cost

Significant increase

June 30, 2018

Lifetime

12 months in credit risk Impairment of credit Total

~56~

Non-derivative

financial liabilities: Between 1

June 30, 2018 Less than 1 year and 2 years Over 2 years

Short-term borrowings 147,558$ -$ -$ Accounts payable


31,600 - -

Other payables


220,798 - -

Guarantee deposits received 61,861 - -

Bonds payable 414 - -

Non-derivative


December 31, 2017 Less than 1 year and 2 years Over 2 years



15,371 - -

Other payables


97,543 - -


Bonds payable 417 - -

Non-derivative



Accounts payable


17,478$ -$ -$

Other payables


188,320 - -


Bonds payable 200,624 - -

Derivative



Financial liabilities at fair

value through profit or loss

6,761$ -$ -$


~57~

iv. The Group does not expect the timing of occurrence of the cash flows estimated through

the maturity date analysis will be significantly earlier, nor expect the actual cash flow

amount will be significantly different.

Non-derivative





145,139 - -

Other payables


1,014,125 - -



Non-derivative


December 31, 2017 Less than 1 year and 2 years Over 2 years



70,170 - -

Other payables


445,284 - -



Non-derivative



Accounts payable


78,407$ -$ -$

Other payables


844,803 - -



Derivative



Financial liabilities at fair

value through profit or loss

30,330$ -$ -$


~58~

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of

financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active where a market

in which transactions for the asset or liability take place with sufficient frequency and

volume to provide pricing information on an ongoing basis. The fair value of the

Group’s investment in listed stocks and beneficiary certificates is included in Level 1.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset

or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

B. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, accounts receivable (including related

parties), other receivables(including related parties), financial assets at amortised cost, other

financial assets, short-term borrowings, accounts payable(including related parties), other

payables(including related parties), bonds payable (current portion) and guarantee deposits

received are approximate to their fair values.

C. The related information of financial and non-financial instruments measured at fair value by level

on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

(a) The related information of natures of the assets and liabilities are as follows:

At June 30, 2018 and December 31, 2017:None.

June 30, 2017 Level 1 Level 2 Level 3 Total

Liabilities

Recurring fair value measurements



Derivative financial instruments -

corporate bonds put option and call option -$ -$ 6,761$ 6,761$


June 30, 2017 Level 1 Level 2 Level 3 Total

Liabilities

Recurring fair value measurements



Derivative financial instruments -

corporate bonds put option and call option -$ -$ 30,330$ 30,330$


~59~

(b) The methods and assumptions the Group used to measure fair value are as follows:

i. The instruments the Group used market quoted prices as their fair values (that is, Level 1)

are listed below by characteristics:

ii For high-complexity financial instruments, the fair value is measured by using self-

developed valuation model based on the valuation method and technique widely used

within the same industry. The valuation model is normally applied to derivative financial

instruments, debt instruments with embedded derivatives or securitised instruments.

Certain inputs used in the valuation model are not observable at market, and the Group

must make reasonable estimates based on its assumptions. The effect of unobservable

inputs to the valuation of financial instruments is provided in Note 12(3)H.

D. For the six months ended June 30, 2018 and 2017, there was no transfer between Level 1 and

Level 2.

E. The following chart is the movement of Level 3 for the six months ended June 30, 2018 and 2017:

F. For the six months ended June 30, 2018 and 2017, there was no transfer into or out from Level

3.

G. Investment segment is in charge of valuation procedures for fair value measurements being

categorised within Level 3, which is to verify independent fair value of financial instruments.

Such assessment is to ensure the valuation results are reasonable by applying independent

information to make results close to current market conditions, confirming the resource of

information is independent, reliable and in line with other resources and represented as the

exercisable price, and frequently calibrating valuation model, updating inputs used to the

valuation model and making any other necessary adjustments to the fair value.

Listed shares Open-end fund

Market quoted price Closing price Net asset value

CNY TWD CNY TWD

At January 1 -$ -$ 4,366)($ 20,160)($

Losses recognised in profit or loss - - 2,277)( 10,170)(

Net exchange difference - - 118)( -

At June 30 -$ -$ 6,761)($ 30,330)($

Movement of unrealised gain or

loss in profit or loss of assets and

liabilities held at balance sheet date -$ -$ 2,277)($ 10,170)($

2018 2017

Derivative instruments Derivative instruments


~60~

H. The following is the qualitative information of significant unobservable inputs and sensitivity

analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair

value measurement:

June 30, 2018 and December 31, 2017: None.

I. The Group has carefully assessed the valuation models and assumptions used to measure fair

value. However, use of different valuation models or assumptions may result in difference

measurement. The following is the effect of profit or loss or of other comprehensive income from

financial assets categorised within Level 3 if the inputs used to valuation models have changed:

June 30, 2018 and December 31, 2017: None.

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

A. Summary of significant accounting policies adopted in 2017 and the second quarter of 2017:

(a) Financial assets at fair value through profit or loss

i. They are financial assets held for trading or financial assets designated as at fair value

through profit or loss on initial recognition. Financial assets are classified in this category

of held for trading if acquired principally for the purpose of selling in the short-term.

Derivatives are also categorized as financial assets held for trading unless they are

designated as hedges.

Significant Range Relationship

Valuation unobservable (weighted of inputs to

technique input average) fair value

CNY TWD

Hybrid instrument:

Convertible

corporate bonds -

put option and

call option

6,761)($ 30,330)($ Binomial

model

Volatility 33.93%~44.97% The higher the

volatility, the

higher the fair

value

Fair value at

June 30, 2017

Favourable Unfavourable Favourable Unfavourable

Input Change change change change change


Hybrid instrument Volatility ±5% 85$ 72)($ -$ -$

June 30, 2017

Recognised in profit or loss comprehensive income

Recognised in other


Favourable Unfavourable Favourable Unfavourable

Input Change change change change change


Hybrid instrument Volatility ±5% 380$ 320)($ -$ -$


June 30, 2017

Recognised in other

Recognised in profit or loss comprehensive income

~61~

ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss

are recognised and derecognised using trade date accounting.

iii. Financial liabilities at fair value through profit or loss are initially recognised at fair value.

Related transaction costs are expensed in profit or loss. These financial liabilities are

subsequently remeasured and stated at fair value, and any changes in the fair value of these

financial liabilities are recognised in profit or loss.

(b) Loans and receivables

Accounts receivable are receivables originated by the entity. They are created by the entity

by selling goods or providing services to customers in the ordinary course of business. They

are recognised initially at fair value and subsequently measured at amortised cost using the

effective interest method, less provision for impairment. However, short-term accounts

receivable without bearing interest are subsequently measured at initial invoice amount as the

effect of discounting is immaterial.

(c) Impairment of financial assets

i. The Group assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired as a result of one or more events

that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event

(or events) has an impact on the estimated future cash flows of the financial asset or group

of financial assets that can be reliably estimated.

ii. The criteria that the Group uses to determine whether there is objective evidence of an

impairment loss is as follows:

(i) Significant financial difficulty of the issuer or debtor;

(ii) A breach of contract, such as a default or delinquency in interest or principal

payments;

(iii) The Group, for economic or legal reasons relating to the borrower’s financial

difficulty, granted the borrower a concession that a lender would not otherwise

consider;

(iv) It becomes probable that the borrower will enter bankruptcy or other financial

reorganisation;

(v) The disappearance of an active market for that financial asset because of financial

difficulties;

(vi) Observable data indicating that there is a measurable decrease in the estimated future

cash flows from a group of financial assets since the initial recognition of those assets,

although the decrease cannot yet be identified with the individual financial asset in

the group, including adverse changes in the payment status of borrowers in the group

or national or local economic conditions that correlate with defaults on the assets in

the group;

(vii) Information about significant changes with an adverse effect that have taken place

in the technology, market, economic or legal environment in which the issuer

operates, and indicates that the cost of the investment in the equity instrument may

not be recovered;

(viii) A significant or prolonged decline in the fair value of an investment in an equity

instrument below its cost.

~62~

iii. When the Group assesses that there has been objective evidence of impairment and an

impairment loss has occurred, the amount of the impairment loss is measured as the

difference between the asset’s carrying amount and the present value of estimated future

cash flows discounted at the financial asset’s original effective interest rate, and is

recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss

decreases and the decrease can be related objectively to an event occurring after the

impairment loss was recognised, the previously recognised impairment loss is reversed

through profit or loss to the extent that the carrying amount of the asset does not exceed

its amortised cost that would have been at the date of reversal had the impairment loss not

been recognised previously. Impairment loss is recognised and reversed by adjusting the

carrying amount of the asset through the use of an impairment allowance account.

B. The reconciliations of carrying amount of financial assets transfered from December 31, 2017,

IAS 39, to January 1, IFRS 9, were as follows:

Under IAS 39, because the cash flows of debt instruments, which were classified as other

financial assets-current amounting to CNY $23,465 (TWD $107,116), meet the condition that it

is intended to settle the principal and interest on the outstanding principal balance, and the Group

has the right to receive cash flows, they were reclassified as "financial assets at amortised cost"

on initial application of IFRS 9.

C. Credit risk information for the year ended December 2017 and the second quarter of 2017 are as

follows:

(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients

or counterparties of financial instruments on the contract obligations. According to the

Group’s credit policy, each local entity in the Group is responsible for managing and

analysing the credit risk for each of their new clients before standard payment and delivery

terms and conditions are offered. Internal risk control assesses the credit quality of the

customers, taking into account their financial position, past experience and other factors.

Credit risk arises from cash and cash equivalents and deposits with banks and financial

institutions, as well as credit exposures to wholesale and retail customers, including

outstanding receivables.

(b) The Group’s treasury department manages the credit risk of bank deposits and other financial

instruments in accordance with the Group’s policies. For the six months ended June 30, 2017,

because the counterparties of the Group are determined by the Group’s internal control

procedures, the counterparties are banks or companies with high credit quality and had no

material issues of overusing the credit line. The management does not expect losses from

counterparty default; thus, there is no significant credit risk.


IAS 39 45,630$ 208,300$ -$ -$ 236,154$ 1,236,828$ Transferred into

and measured at

amortised cost 23,465)( 107,116)( 23,465 107,116 - -

IFRS 9 22,165$ 101,184$ 23,465$ 107,116$ 236,154$ 1,236,828$

Effects

Other financial assets Measured at amortised cost Retained earnings

~63~

(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in

2017

A. The significant accounting policies applied on revenue recognition for the year ended December

31, 2017 and the second quarter of 2017 are set out below.

(a) Sale of goods

i. The Group manufactures and sells skincare products, health food and other products.

Revenue is measured at the fair value of the consideration received or receivable taking

into account of value added tax, rebates and discounts for the sale of goods to external

customers in the ordinary course of the Group’s activities. Revenue arising from the sales

of goods should be recognised when the Group has delivered the goods to the customer,

the amount of sales revenue can be measured reliably and it is probable that the future

economic benefits associated with the transaction will flow to the entity. The delivery of

goods is completed when the significant risks and rewards of ownership have been

transferred to the customer, the Group retains neither continuing managerial involvement

to the degree usually associated with ownership nor effective control over the goods sold,

and the customer has accepted the goods based on the sales contract or there is objective

evidence showing that all acceptance provisions have been satisfied.

ii. The Group manages franchises and provides employee training, skincare salon, OEM, and

other related services. One-off franchise income is recognised upon the newly-opened

stores’ signing of the franchise contract to join the salon channel. The service revenue

from company-operated salon is recognised upon the completion of the services. OEM

income is recognised when processing is completed. Revenue received prior to the

rendition of the services is recognized as advance receipts.

B. The revenue recognised by using above accounting policies for the second quarter of 2017 are as

follows:

CNY TWD CNY TWD

Net sale of goods 165,819$ 732,359$ 317,174$ 1,416,878$

Special affiliate income 5,420 23,977 9,659 43,149

OEM income 325 1,308 2,925 13,067 Skincare service from

company-operated salon

and other income 1,580 7,026 2,164 9,667

173,144$ 764,670$ 331,922$ 1,482,761$


~64~

C. For the six months ended June 30, 2018, the effects and description of current balance sheets

items if the Group continues adopting above accounting policies are as follows:

Under IFRS 15, contract liabilities in relation to the sales contract of products were previously

presented at advance receipts in the balance sheet, and had no effects to the current revenue and

profit.

13. SUPPLEMENTARY DISCLOSURES (1) Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: None.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

and joint ventures): None.

D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or

20% of the Company’s paid-in capital: Please refer to table 2.

E. Acquisition of real estate reaching TWD $300 million or 20% of paid-in capital or more: Please

refer to table 3.

F. Disposal of real estate reaching TWD $300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching TWD $100 million or 20% of

paid-in capital or more: Please refer to table 4.

H. Receivables from related parties reaching TWD $100 million or 20% of paid-in capital or more:

Please refer to table 5.

I. Trading in derivative instruments undertaken during the reporting periods: None.

J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland

China)：Please refer to table 7.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.

B. Significant transactions, either directly or indirectly through a third area, with investee companies

in the Mainland Area: Please refer to table 6.

Balance

sheet items CNY TWD CNY TWD CNY TWD

Advance receipts -$ -$ 72,965$ 335,128$ 72,965)($ 335,128)($

Contract liabilities

-current

72,965 335,128 - - 72,965 335,128

June 30, 2018

Balance by using IFRS 15 accounting polices in accounting policy

Balance by using previous Effects from changes

~65~

14. SEGMENT INFORMATION

(1) General information

The Group is engaged in manufacturing, distributing, and business operations of beauty products

under the brand of Chlitina. For the six months ended June 30, 2018 and 2017, the operating revenue,

net profit and assets of the company-operated salon business were all less than 10% of their

respective totals in the consolidated financial statements. In addition, management considers that

the separate list of direct-operational salon business have no reference value. Hence, the information

on assets, liabilities and capital expenditures were not disclosed.

(2) Measurement of segment information

The reportable operating segment information provided to the Chief Operating Decision-Maker are

operating revenue and profit or loss of the segment.

The Group has only one reportable operating segment, for related information, please refer to

statement of comprehensive income.

(3) Reconciliation for segment income (loss)

The profit and loss before tax of the reportable operating segment provided to the Chief Operating

Decision-Maker was the same with the statement of comprehensive income, so there was no

reconciliation needed.

Item Value

0 Chlitina Holding

Limited

Hong Kong Chlitina


Other

receivables

Yes 560,000$ 560,000$ -$ Lower 10%

of loan

market rate

2 -$ Operating

capital

-$ None -$ 352,120$ 1,408,480$ Note 3, 5

0 Chlitina Holding

Limited

Chlitina (China)

Trade Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 352,120 1,408,480 Note 3, 5

0 Chlitina Holding

Limited

Weishuo (Shanghai)

Daily Product

Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 352,120 1,408,480 Note 3, 5

0 Chlitina Holding

Limited

Weihu (Shanghai)

Trade Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 352,120 1,408,480 Note 3, 5

0 Chlitina Holding

Limited

Hong Kong W-

Amber International

Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 352,120 1,408,480 Note 3, 5

0 Chlitina Holding

Limited

Wuguan (Shanghai)

Trade Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 352,120 1,408,480 Note 3, 5

1 Hong Kong Chlitina


Chlitina (China)

Trade Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 4,105,552 4,105,552 Note 4, 6

1 Hong Kong Chlitina


Weishuo (Shanghai)

Daily Product

Limited

Other

receivables

Yes 560,000 560,000 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 4,105,552 4,105,552 Note 4, 6

2 Chlitina (China)

Trade Limited

Weihu (Shanghai)

Trade Limited

Other

receivables

Yes 232,350 229,650 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 2,404,396 3,404,396 Note 4, 7

2 Chlitina (China)

Trade Limited

Wuguan (Shanghai)

Trade Limited

Other

receivables

Yes 92,940 91,860 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 2,404,396 2,404,396 Note 4, 7

3 Hong Kong W-

Amber International

Limited

Weihu (Shanghai)

Trade Limited

Other

receivables

Yes 23,235 22,965 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 287,891 287,891 Note 4, 8

Allowance

for

bad debt

Collateral

Financing

Limits

for each

borrowing

company

Financing

company's

total

financing

Amount

Limits

Amount

Actually

Drawn

Interest

rate

Nature

of loan

(Note 2)

Transaction

Amounts

Reason

for short-

term

financing

Related

Party


Loans to others


Table 1 Expressed in thousands of TWD

(Except as otherwise indicated)

No.

(Note 1) Creditor Borrower

General

ledger

account Footnote

Maximum

Balance

for the period

Ending

Balance

Table 1, Page 1

Item Value

Allowance

for

bad debt

Collateral

Financing

Limits

for each

borrowing

company

Financing

company's

total

financing

Amount

Limits

Amount

Actually

Drawn

Interest

rate

Nature

of loan

(Note 2)

Transaction

Amounts

Reason

for short-

term

financing

Related

Party


Loans to others


Table 1 Expressed in thousands of TWD


No.

(Note 1) Creditor Borrower

General

ledger

account Footnote

Maximum

Balance

for the period

Ending

Balance

3 Hong Kong W-

Amber International

Limited

Wuguan (Shanghai)

Trade Limited

Other

receivables

Yes 23,235$ 22,965$ -$ Lower 10%

of loan

market rate

2 -$ Operating

capital

-$ None -$ 287,891$ 287,891$ Note 4, 8

4 Weihu (Shanghai)

Trade Limited

Beijing Aobaojia

Medical

Cosemetology Clinic

Limited

Other

receivables

Yes 92,940 91,860 - Lower 10%

of loan

market rate

2 - Operating

capital

- None - 168,236 168,236 Note 4, 9

5 Weishuo (Shanghai)

Daily Product

Limited

Wuguan (Shanghai)

Trade Limited

Other

receivables

Yes 92,940 91,860 45,930 Lower 10%

of loan

market rate

2 - Operating

capital

- None - 1,236,005 1,236,005 Note 4,

10

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: The column of ‘Nature of loan’ shall fill in‘1’as‘Buiness transaction’or‘2’as‘Short-term financing’.

Note 3: The limit on total financing and financing to a single entity shall not be more than 40%, except for inter-company transaction, and 20% of the Company’s stockholders’ equity, respectively. In addition,

if the Board of Directors of a public company has authorized the chairman to loan funds in instalments or in revolving within certain lines to the same counter party, the limit shall not be more than 10% of the Company’s net asset.

Note 4: Based on the Company's guidelines, when the Group directly or indirectly owns 100% of the controlling power, the allowable aggregate of financing provided to others cannot exceed 40% of the Company's stockholders'

equity, the maximum financing provided to an individual counterparty cannot be exceed 100% of the Company's stockholders' equity.

Note 5: The shared line of credit to Hong Kong Chlitina International Limited, Chlitina (China) Trade Limited, Weishuo (Shanghai) Daily Product Limited, Weihu (Shanghai) Trade Limited, Hong Kong W-Amber International

Limited and Wuguan (Shanghai) Trade Limited amounted to TWD$560,000.

Note 6: The shared line of credit to Chlitina (China) Trade Limited and Weishuo (Shanghai) Daily Product Limited amounted to TWD$560,000.

Note 7: Weihu (Shanghai) Trade Limited amounted to CNY$50,000; Wuguan (Shanghai) Trade Limited amounted to CNY$20,000.

Note 8: The shared line of credit to Weihu (Shanghai) Trade Limited and Wuguan (Shanghai) Trade Limited amounted to CNY$5,000.

Note 9: The line of credit to Beijing Aobaojia Medical Cosemetology Clinic Limited amounted to CNY$20,000.

Note 10: The line of credit to Wugan (Shanghai) Trade Limited amounted to CNY$20,000.

Table 1, Page 2

Table 2

Number of

shares Amount

Number of

shares Amount

Number of

shares Selling price Book value

Gain (loss) on

disposal

Number of

shares Amount

Weishuo

(Shanghai) Daily

Product Limited

Southern cash

Zengli money

B

Financial assets at

fair value through

profit or loss-current

- - - -$ 110,000,000 $ 510,323 110,000,000 $ 511,552 $ 510,323 $ 1,229 - -$

Weishuo

(Shanghai) Daily

Product Limited

China

Universal Cash

Express

Money Market

Fund

Financial assets at

fair value through


- - - - 212,710,000 986,826 212,710,000 989,189 986,826 2,363 - -

Chlitina (China)

Trade Limited

Southern cash

Zengli money

B

Financial assets at

fair value through


- - - - 102,500,000 475,528 102,500,000 476,663 475,528 1,135 - -

Chlitina (China)

Trade Limited

ICBCCS

Money Market

Fund

Financial assets at

fair value through


- - - - 300,000,000 1,391,790 300,000,000 1,395,117 1,391,790 3,327 - -

Chlitina (China)

Trade Limited

GF Money

Market Fund B

Financial assets at

fair value through


- - - - 201,870,000 936,535 20,187,000 938,787 936,535 2,252 - -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: The exchange difference of translating to presentation currency was included in book value.

Beginning Balance Acquisition Disposal Ending Balance

Investor

Marketable

securities

（Note1）

General

ledger account Counterparty

Relationship

with

the investor


Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital


Expressed in thousands of TWD


Table 2, Page 1

Table 3

Original owner who

sold the real estate to

the counterparty

Relationship

between the

original owner and

the acquirer

Date of the original

transaction Amount

Chlitina

(China)

Trade Limited

Buildings 2018.5.10 500,377$ 253,668$ Zhaocang

(Shanghai)

Trading

Co., Ltd.

The second

degree of

kinship of the

Company's.

representative

Shanghai Action

Education

Technology CO.,

LTD.

Non-related parties 2016.11.8 470,137$ Real estate

appraisal report

Extension of

office

Based on the

agreement

Note 1: Above stated amounts arose by CNY, and have been exchanged based on the exchange rate.

Note 2: The transfer of the buildings has not been completed, therefore, it was recorded at other non-current assets.

Other

commitments


Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more




Real estate

acquired by

Real

estate

acquired

Date of

the event

Transaction

amount

Status of

payment Counterparty

Relationship

with the

counterparty

If the counterparty is a related party, information as to

the last transaction of the real estate is disclosed below:

Basis or

reference used

in setting the

price

Reason for

acquisition

of real estate

and status of

the real estate

Table 3, Page 1

Table 4

Purchases

(sales) Amount

Percentage of

total purchases

(sales) Credit term Unit price Credit term Balance

Percentage of

total notes/accounts

receivable (payable)

Chlitina (China) Trade

Limited

Weishuo (Shanghai) Daily

Product Limited

Subsidiary Purchases 314,783$ 73% 60 days after

monthly billings

- - 125,815)($ 88% Note 1

British Virgin IS.

Chlitina Intelligence

Limited Taiwan Branch


Limited

Subsidiary Trademark

licences

103,434 100% Note 2 - - 34,248 100% Note 1

Note 1: The transactions have been eliminated upon consolidation.

Note 2: The credit term is 2 months, and the payment should be settled within 60 days after the invoice date.

Notes/accounts receivable (payable)

FootnotePurchaser/seller Counterparty

Relationship with the

counterparty

Transaction

Differences in transaction terms

compared to third party

transactions


Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more




Table 4, Page 1

Table 5

Creditior Counterparty

Relationship

with the

counterparty Ending Balance Turnover rate Amount Action taken

Amount collected

subsequent to the

balance sheet date

Allowance for

bad debt Footnote

Weishuo (Shanghai)

Daily Product Limited

Chlitina (China)

Trade Limited

Subsidiary 125,815$ 5.35 -$ - 54,180$ -$ Note

Note: the transactions were eliminated when preparing the consolidated financial statements.

Overdue receivables


Receivables from related parties reaching NT100 million or 20% of paid-in capital or more




Table 5, Page 1

Table 6

General ledger account Amount Transaction terms

Percentage of consolidated total operating

revenues or total assets (Note 3)

1 Weishuo (Shanghai) Daily Product

Limited


Limited

3 Sales 314,783$ 60 days

after monthly billings

15%


Limited


Limited

3 Accounts receivable 125,815 60 days


2%


Limited

Wuguan (Shanghai) Trade

Limited

3 Other receivable 45,930 Loans 1%

2 British Virgin IS. Chlitina Intelligence



Limited

3 Trademark right income 103,434 In accordance with mutual

agreements

5%

2 British Virgin IS. Chlitina Intelligence



Limited

3 Accounts receivable 34,248 In accordance with mutual

agreements

1%

3 Hong Kong Chlitina International

Limited


Product Limited

3 Sales 39,523 60 days


2%

3 Hong Kong Chlitina International

Limited


Product Limited



0%

4 British Virgin Is. Chlitina Marketing


Hong Kong Chlitina


3 Sales 40,905 60 days


2%

4 British Virgin Is. Chlitina Marketing


Hong Kong Chlitina




0%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to:

(1)Parent company to subsidiary.

(2)Subsidiary to parent company.

(3)Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and

based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: Separate amounts lower than $20,000 are not disclosed, so is its counter transaction.

Transaction


Significant inter-company transactions during the reporting periods




Number

(Note 1) Company name Counterparty Relationship

Table 6, Page 1

Table 7

Balance as at

June 30, 2018

Balance as at

December 31, 2017 Number of shares Ownership (%) Book value

Chlitina Holding

Limited

Chlitina Group Limited British

Virgin IS.

Investing 665,908$ 665,908$ 2,116,707,348 100.00 4,567,945$ 629,004$ 629,004$

Chlitina Group

Limited


Limited

British

Virgin IS.

Investing 511,274 511,274 17,000,001 100.00 4,317,616 568,815 - Note

Chlitina Group

Limited

Chlitina Intelligence Limited British

Virgin IS.

Investing - - 1 100.00 187,301 60,308 - Note

Chlitina Group

Limited

W-Amber International

Limited

British

Virgin IS.

Investing 50,880 50,880 1,150,000 100.00 548 131)( - Note

Chlitina Group

Limited

W-Champion International

Limited

British

Virgin IS.

Investing 34,518 34,518 930,000 100.00 162 88)( - Note

Chlitina Group

Limited

C-Asia International Limited British

Virgin IS.

Investing 920 920 20,000 100.00 311 6 - Note


Limited

Hong Kong Chlitina


Hong Kong Investing and

trading of skincare

products

245,947 245,947 62,150,001 100.00 4,105,552 572,627 - Note


Limited

Chlitina Marketing Limited British

Virgin IS.

Investing, trading

of skincare

products and

research and

development

349,851 349,851 11,622,882 100.00 180,948 3,360)( - Note


Limited

Centre de Recherche et de

Developpement de

CHLITINA FRANCE EURL

France Research and

development

center

188 188 500 100.00 - - - Note

Hong Kong Chilitina


Hong Kong Crystal-Asia


Hong Kong Investing 69,642 69,642 2,300,000 100.00 66,548 2,867)( - Note

Hong Kong Chilitina


Hong Kong W-Champion


Hong Kong Investing 61,865 61,865 2,950,000 100.00 63,727 4,692 - Note

Hong Kong Chilitina


Hong Kong W-Amber


Hong Kong Investing 327,025 327,025 92,800,000 100.00 287,891 24,412)( - Note

Balance as at June 30, 2018

Net profit (loss)

of the investee

Share of profit (loss)

of investee Footnote Investor Investee Location

Main business

activities

Initial investment amount


Information on investees




Table 7, Page 1

Table 7

Balance as at

June 30, 2018

Balance as at

December 31, 2017 Number of shares Ownership (%) Book value

Balance as at June 30, 2018

Net profit (loss)

of the investee

Share of profit (loss)

of investee Footnote Investor Investee Location

Main business

activities

Initial investment amount


Information on investees




W-Champion


W-Champion Marketing

Limited

British

Virgin IS.

Investing 31,783$ 31,783$ 930,000 100.00 162$ 88)($ - Note

W-Amber


W-Amber Marketing

Limited

British

Virgin IS.

Investing 56,280 56,280 1,150,000 100.00 252 43)( - Note

Note: The 'share of profit (loss) of investee' column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary and recognised

investment income (loss) of its investee accounted for under the equity method for this period.

Table 7, Page 2

Table 8

Remitted to

Mainland China

Remitted back

to Taiwan

Chlitina (China)

Trade Limited

Dealer of skincare

products and

health food

255,923$ 2 -$ -$ -$ -$ 552,036$ 100.00 552,036$ 2,404,396$ -$

Weishuo (Shanghai)

Daily Product Limited

Production and

trading of skincare

products

64,207 2 - - - - 50,298 100.00 50,298 1,236,005 -

Weihu (Shanghai)

Trade Limited

Investing, dealer

of skincare and

supplementary

health care products

259,223 2 - - - - 24,689)( 100.00 24,689)( 168,236 -

Crystal Asia

Shanghai Limited

Dealer of skincare

products and

supplementary


6,455 2 - - - - 49)( 100.00 49)( 5,865 -

Wuguan (Shanghai)

Trade Limited

Dealer of skincare

products and

supplementary


64,193 2 - - - - 4,284 100.00 4,284 33,986 -

Shanghai Yuanshuo

Management

Consulting Limited

Enterprise

management

consulting

95,772 2 - - - - 17,176)( 100.00 17,176)( 84,694 -

Beijing Aobaojia

Medical Cosmetology

Clinic Limited

Medical

cosmetology

services

64,139 2 - - - - 10,546)( 100.00 10,546)( 61,409 -

Cui Jei (Shanghai)

Trading Co. Ltd.

Dealer of health

food and daily

necessities

6,055 2 - - - - 59 100.00 59 5,989 -


Information on investments in Mainland China




Accumulated

amount

of investment

income

remitted back

to Taiwan Footnote

Amount remitted from Taiwan to

Mainland China/

Amount remitted back

to Taiwan for the period

Ending balance

of accumulated

amount

of investment

from Taiwan

Investee in Mainland

China

Main business

activities Paid-in capital

Investment

method

（Note 1）

Net income

(loss)

of the

investee

company

Ownership

held by

the

Company

(direct or

indirect)

Investment

income (loss)

（Note 2(2)B）

Book value

as of June

30, 2018

Beginning

balance of

accumulated

amount of

investment from

Taiwan

Table 8, Page 1

Table 8

Remitted to

Mainland China

Remitted back

to Taiwan


Information on investments in Mainland China




Accumulated

amount

of investment

income

remitted back

to Taiwan Footnote

Amount remitted from Taiwan to

Mainland China/

Amount remitted back

to Taiwan for the period

Ending balance

of accumulated

amount

of investment

from Taiwan

Investee in Mainland

China

Main business

activities Paid-in capital

Investment

method

（Note 1）

Net income

(loss)

of the

investee

company

Ownership

held by

the

Company

(direct or

indirect)

Investment

income (loss)

（Note 2(2)B）

Book value

as of June

30, 2018

Beginning

balance of

accumulated

amount of

investment from

Taiwan

SHANGHAI

ZHONGYE TRADE

CO., LTD

Production

and trading

of cosmetics

29,258$ 2 -$ -$ -$ -$ 9,874)($ 30.00 2,960)($ 24,655$ -$

Company name

Ending blance of

Accumulated

remittance from

Taiwan to Mainland

China

Investment

amount authorized

by the Investment

Commission of

the Ministry of

Economic Affairs

(MOEA)

Ceiling on

investments in

Mainland China

imposed by the

Investment

Commission of

MOEA

Not applicable to foreign

issuer.

$ - $ - Note 4

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1)Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.( the investee in the third area is Chlitina Group Limited)

(3) Others

Note 2: In the ‘share of profit (loss)’ column:

(1)It should be indicated if the investee was still in the incorporation arrangements and had not yet any profit during this period.

(2)Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

A.The financial statements that are audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C.

B.The financial statements that are reviewed and attested by R.O.C. parent company’s CPA.

C.Others.

Note 3: The numbers in this table are expressed in New Taiwan Dollars.

Note 4: The Company was primary listing by foreign issuer and was not restricted to the ceiling of investment of investors in Mainland China regulated by Investment Commission, Ministry of Economic Affairs.

Table 8, Page 2

Documents

CHLITINA HOLDING LIMITED AND SUBSIDIARIES · 2018-12-25 · CHLITINA HOLDING LIMITED AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND ... $ 820,171 $ 3,767,045 62 $ 749,780