CCSB - Audit Report / Information 2022

Chunghwa Chemical Synthesis & Biotech

Co., Ltd.

Individual Financial Statements and Independent Auditor’s Report

2022 and 2021 (Stock Code: 1762)

Address: No.1, Dongxing St., Shulin Dist., New Taipei City

Tel: (02)8684-3318

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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Chunghwa Chemical Synthesis & Biotech Co., Ltd.

The 2022 and 2021 Individual Financial Report and Independent Auditor’s Report

			Page / Number /
		Item	Index
I.	Cover		1
II.	Table	of Contents	2 ~ 4
III.	Auditor's Report		5 ~ 9
IV.	Individual Balance Sheet		10 ~ 11
V.	Individual comprehensive income statements		12
VI.	Individual statement of changes in equity		13
VII.	Individual Cash Flow Statement		14
VIII.	Notes	to the individual financial statements	15 ~ 53
	(I)	Company history	15
	(II)	Date On Which And Procedures By Which The Financial Reports Were
		Authorized For Issuance	15
	(III)	Application of New Standards, Amendments and Interpretations	15 ~ 16
	(IV)	Summary of significant accounting policies	16 ~ 24
	(V)	Critical accounting judgments, estimates and key sources of
		assumption uncertainty	24 ~ 25
	(VI)	Summary of significant accounting titles	25 ~ 42
	(VII)	Related party transactions	42 ~ 44
	(VIII)	Collateralized assets	44

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Page / Number /

	Item	Index
	(IX) Significant contingent liabilities and unrecognized contractual
	commitments	44
	(X) Losses due to major disasters	44
	(XI) Major post-balance sheet events	44
	(XII) Other	44 ~ 52
	(XIII) Notes of disclosure	52 ~ 53
	(XIV) Segment information	53
IX.	Significant accounting items statement
	Cash and cash equivalents	List 1
	Accounts receivable - related parties	Note 7
	Inventory	List 2
	Investment changes using the equity method	List 3
	Cost and the changes in accumulated depreciation of real property, plant and
	equipment	Note 6(6)
	Other payable	Note 6(9)
	Statement of long-term borrowings	List 4
	Deferred income tax liabilities	Note 6 (21)
	Operating revenues	List 5
	Operating cost	List 6
	Manufacturing overhead	List 7
	Marketing expenses	List 8
	Administrative expenses	List 9

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Item Research and development expenses Other profits and losses Financial costs Employee benefit expense, depreciation and amortization	Page / Number / Index
	List 10 Note 6(18) Note 6 (19) Note 6 (20)

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Auditor's Report

(2023) Cai-Shen-Bao-Zi No. 22003357 To Chunghwa Chemical Synthesis & Biotech Co., Ltd.,

Audit opinion

We have audited the accompanying proprietary individual balance sheet of Chunghwa Chemical Synthesis & Biotech Co., Ltd. as of December 31, 2022 and 2021 and the related individual statements of income, of changes in shareholders’ equity and of cash flows and Notes to individual financial statement (including significant accounting policies) for the years then ended.

In our opinion, the individual financial statements referred to above present fairly, in all material respects, the financial position of Chunghwa Chemical Synthesis & Biotech Co., Ltd. as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis of an audit opinion

We conducted our audit in accordance with the “Rules Governing the Examination of Financial Statements by Certified Public Accountants” and auditing standards. Our responsibilities under those standards are further described in the responsibilities of auditors for the audit of the separate financial statements. The personnel of the CPA Firm subject to the independence requirement have acted independently from the business operations of Chunghwa Chemical Synthesis & Biotech Co., Ltd. in accordance with the Code of Ethics and with other responsibilities of the Code of Ethics performed. We believe that our audit provides a reasonable basis for our opinion.

Key Audit Matters

The “key audit matters” means that the independent auditor has used their professional judgment to audit the most important matters on the 2022 individual financial statements of Chunghwa Chemical Synthesis & Biotech Co., Ltd.. The key audit matters have been responded to in the process of auditing the individual financial statements as a whole with an audit opinion formed; therefore, the independent auditor does not express an opinion on these matters separately.

The key audit items of the 2022 individual financial report of Chunghwa Chemical Synthesis & Biotech Co., Ltd. are presented below:

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Accounting assessment of inventory valuation

Description of the matter

See Note 4 (11) in the individual financial report for details about the accounting policy on inventory valuation, Note 5 (2) for accounting assessment of inventory valuation and hypothetic uncertainty, and Note 6 (4) for an inventory account description.

Chunghwa Chemical Synthesis & Biotech Ltd. is engaged mainly in the production and sales of active pharmaceutical ingredients. As drug tests grow stricter and drug certificates take longer time to obtain, the risk of inventory loss or obsolescence is higher. Since the inventories involve large amounts of money and large numbers of items that require laborious work by human beings to identify expired or damaged goods, we regard the assessment of allowance to reduce inventory to market as a key audit item.

The responsive auditing process

The corresponding auditing procedures are as follows:

Assess the policy for allowing the Company to reduce inventory to market in accordance with our understanding of the Company's operations and the nature of the industry.
Conduct sampling tests to see if the basis for market prices of net realized value is consistent with the Company's policy. Randomly check the correctness of the selling prices of individual inventory parts and the way net realized value is calculated.
Obtain out-of-date inventory details that are identified by the management, check the related information and verify the account records.

Checking whether the time point of sales income recognition is appropriate

Description of the matter

For the accounting policy on the recognition of income, please refer to Note 4 (25) of the individual financial statement. For information on income accounts, please refer to Note 6 (15) of the individual financial statement. As stated in the accounting policies, the sales revenue is recognized when products are delivered to customers who have discretionary power in channels and prices of products sold and Chunghwa Chemical Synthesis and Biotech has no outstanding performance obligations which may affect customers’ acceptance of products. As exports are the main source of income for Chunghwa Chemical Synthesis & Biotech Co., Ltd., the terms of business agreed upon between the Company and its customers are the basis of income assessment. However, such a process often involves a lot of manpower for verification and may lead to inappropriate income recognition time points. Therefore, we regard the sales income recognition time points as a key audit item.

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The responsive auditing process

The corresponding auditing procedures are as follows:

The Company's internal control on income recognition time points were examined and assessed, while the Company's internal control on sales deadlines was tested to verify the correctness of the income recognition time points.
The execution of sales and income over a certain period before and after the time periods covered in the financial report were examined with the packing lists, customer orders and declaration forms in order to confirm that income was recognized at appropriate periods.

The responsibility of the management and management units to the individual financial statements

The management team is responsible for preparing individual financial statements in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" to present the Company's financial status in an objective way and for necessary internal controls, ensuring that the statements do not contain any false content due to fraudulence or mistakes.

While preparing the individual financial statements, the management’s responsibility also includes assessing the continuing operation of Chunghwa Chemical Synthesis & Biotech Co., Ltd., the disclosure of the relevant matters, and the adoption of the accounting base for continuing operations, unless the management intends to liquidate Chunghwa Chemical Synthesis & Biotech Co., Ltd. or cease business operation, or there is lack of any alternative except for liquidation or suspension.

The governance units (including the Audit Committee) of Chunghwa Chemical Synthesis & Biotech Co., Ltd. are responsible for supervising the financial reporting process.

The responsibilities of the independent auditor to the individual financial statements

The purpose of the independent auditor’s auditing of the individual financial statements is to obtain reasonable assurance about whether the individual financial statements are free of material misstatement arising from fraud or errors and with an audit report issued. Reasonable assurance means a high degree of assurance. However, the audit conducted in accordance with auditing standards of the R.O.C. does not guarantee having any material misstatement in the individual financial statements detected. Material misstatement could arise from fraud or errors. If the misstated amount or aggregated amount is reasonably expected to affect the economic decisions made by the users of the individual financial statements, it is considered significant.

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We used professional judgment and suspicion during the audit in accordance with the auditing standards of the Republic of China. The independent auditor also performs the following tasks:

Identify and evaluate the risk of material misstatement arising from fraud or errors of the individual financial statements; design and implement proper responsive measures to the risk assessed; also, obtain sufficient and adequate audit evidences for forming an audit opinion. The risk of fraud may involve conspiracy, forgery, deliberate omission, false declaration, or violating internal control; therefore, the risk of material misstatement arising from the undetected fraud is higher than that caused by errors.
Obtain necessary understanding on the internal control related to the audit in order to design appropriate audit procedures under the circumstance, but the purpose is not to express an opinion on the effectiveness of the internal control of Chunghwa Chemical Synthesis & Biotech Co., Ltd..
Assess the appropriateness of the accounting policies adopted by the management; also, the reasonableness of the accounting estimates and related disclosures made.
Base on the audit evidence obtained to make conclusions on the suitability of the accounting base for continuing operation base adopted by the management and whether or not the events or circumstances causing significant doubts to the continuing operation ability of Chunghwa Chemical Synthesis & Biotech Co., Ltd. are with significant uncertainties. If the independent auditor believes that such events or circumstances have significant uncertainties, it is necessary to remind the users of the individual financial statements in the audit report to pay attention to the relevant disclosure or to revise the audit opinion when such disclosures are inappropriate. The conclusion of the independent auditor is based on the audit evidence obtained as of the audit report date. However, future events or circumstances may result in the inability of Chunghwa Chemical Synthesis & Biotech Co., Ltd. to continue operating.
Assess the overall expression, structure, and content of the individual financial statements (including the relevant notes) and whether or not the relevant transactions and events in the individual financial statements are presented fairly.
Obtain sufficient and appropriate audit evidence on the financial information of business entities within the Group in order to express an opinion on the individual financial statements. The independent auditor is responsible for guiding, supervising, and implementing the audit of the business entity; also, it is responsible for forming an opinion on the audit of the individual financial statements.

The matters communicated by the independent auditor to the governing unit include the scope and timing of the planned audit, and the significant findings (including the major nonconformities of internal controls identified in the auditing process).

The independent auditor has provided the declaration of independence of the CPA Firm personnel subject to the Code of Ethics to the governing unit; also, it has communicated with

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the governing unit regarding the relationship and other matters (including the relevant protection measures) that may affect the independence of the independent auditor.

The independent auditor has based on the communications with the governing unit to determine the key audit matters to be performed on the 2022 individual financial statements of Chunghwa Chemical Synthesis & Biotech Co., Ltd.. The independent auditor shall state the key audit matters in the audit report except for the specific matters prohibited by law from being disclosed, or, in rare cases; the independent auditor decides not to have specific matters communicated in the audit report since the negative effect of such disclosure can be reasonably expected to be greater than the increase of public interest.

PwC Taiwan

March 29, 2023

Notice to Readers

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

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

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Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual Balance Sheet

December 31, 2022 and 2021

Assets	December31,2022 Additional notes Amount % 6 (1) $ 291,758 6 6 (15) 88 - 6(3) 132 - 6(3) 67,442 2 7 228,050 5 7 12,674 - 6 (4) 819,953 18 16,058 - 1,436,155 31 6 (2) 33,317 1 6 (5) 974,068 21 6 (6) 1,960,513 43 1,632 - 6 (7) 10,700 - 7,533 - 6 (21) 20,135 1 6 (11), 7 and 8 114,621 3 3,122,519 69 $ 4,558,674 100 (Continued next page)	Unit: NTD thousand December31,2021 Amount % $ 175,073 4 - - 480 - 92,213 2 289,204 7 19,806 1 753,850 17 11,626 - 1,342,252 31 26,726 1 1,042,149 24 1,866,067 43 1,951 - 10,700 - 1,803 - 24,480 - 58,564 1 3,032,440 69 $ 4,374,692 100
		Amount $ 175,073 - 480 92,213 289,204 19,806 753,850 11,626 1,342,252 26,726 1,042,149 1,866,067 1,951 10,700 1,803 24,480 58,564 3,032,440 $ 4,374,692
Current assets 1100 Cash and cash equivalents 1140 Contract assets - Current 1150 Notes receivable-net 1170 Net accounts receivable 1180 Account receivables-Related Parties- net 1200 Other receivable 130X Inventory 1410 Prepayments 11XX Total of Current Assets Non-Current assets 1510 Financial assets that are measured at fair value through profit or loss-non-current 1550 Investments accounted for by the equity method 1600 property , plant, and equipment 1755 Right-of-use assets 1760 Real property for investment- net 1780 Intangible assets 1840 Deferred income tax assets 1990 Other current non-assets- other 15XX Total of Non-Current Assets 1XXX Total assets

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Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual Balance Sheet

December 31, 2022 and 2021

Liabilities and equity	December31,2022 Additional notes Amount % 6 (8) $ 100,000 2 6 (15) 51,217 1 1,283 - 143,046 3 6 (9) 259,402 6 49,980 1 1,005 - 3,047 - 608,980 13 6 (10) 500,000 11 6 (21) 256,221 6 640 - 756,861 17 1,365,841 30 6 (12) 775,600 17 6 (13) 334,323 7 6 (14) 273,613 6 183,296 4 1,672,050 37 ( 46,049) ( 1) 3,192,833 70 7 and 9 11 $ 4,558,674 100	Unit: NTD thousand December31,2021 Amount % $ 150,000 3 71,950 1 1,215 - 77,550 2 295,143 7 29,981 1 943 - 2,509 - 629,291 14 600,000 14 250,299 6 1,018 - 851,317 20 1,480,608 34 775,600 18 334,323 8 226,015 5 183,296 4 1,335,088 30 39,762 1 2,894,084 66 $ 4,374,692 100
		Amount $ 150,000 71,950 1,215 77,550 295,143 29,981 943 2,509 629,291 600,000 250,299 1,018 851,317 1,480,608 775,600 334,323 226,015 183,296 1,335,088 39,762 2,894,084 $ 4,374,692
Current liabilities 2100 Shot-term borrowings 2130 Contract liabilities - Current 2150 Payable notes 2170 Accounts payable 2219 Other payable- other 2230 Current Income Tax Liability 2280 Lease liabilities – Current 2399 Other current liabilities- other 21XX Total of current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Lease liabilities – Non-current 25XX Total of non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Ordinary shares capital Capital reserve 3200 Capital reserve Retained earnings 3310 Legal earnings reserve 3320 Special earnings reserve 3350 Undistributed earnings Other equity 3400 Other equity 3XXX Total equity Significant contingent liabilities and unrecognized contractual commitments Major post-balance sheet events 3X2X Total liabilities and equity

Please refer to the notes enclosed in the individual financial reports that are an integral part of the individual financial statements.

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Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual comprehensive income statements January 1 to December 31, 2022 and 2021

Item	Additional notes 6 (15) and 7 6(4)(20) and 7 6 (20) and 7 12 (2) 6 (16) 6(17) and 7 6 (18) 6 (19) 6 (5) 6 (21) 6 (11) 6 (21) 6 (22)	2022
4000 Operating revenues 5000 Operating cost 5900 Operating gross profit Operating expenses 6100 Marketing expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected gain (loss) on credit impairment 6000 Total operating expenses 6900 Operating profit Non-operating revenues and expenses 7100 Interest income 7010 Other revenue 7020 Other profits and losses 7050 Financial costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for under equity method 7000 Total non-operating revenues and expenses 7900 Earnings before tax 7950 Income tax expense 8200 Current period net profit Other comprehensive income (net) Items not re-classified under profit or loss 8311 Defined benefit plan revaluation amount and volume 8330 The proportion of other comprehensive incomes from subsidiaries, associates, and equity joint-ventures accounted for under the equity method – not reclassified as profit and loss 8349 Income tax related to accounts not being reclassified 8310 Total amount of items not reclassified to profit or income Items that may be re-classified subsequently under profit or loss 8361 Exchange differences arising from translating the financial statements of foreign operations 8380 The proportion of other comprehensive incomes from subsidiaries, associates, and equity joint-ventures accounted for under the equity method – may be reclassified as profit and loss 8360 Total amount of items probably reclassified to profit or loss subsequently 8300 Other comprehensive income (net) 8500 Total comprehensive income for the period Earnings per share 9750 Base earnings per share 9850 Diluted earnings per share
		$

Please refer to the notes enclosed in the individual financial reports that are an integral part of the individual financial statements.

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Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual statement of changes in equity January 1 to December 31, 2022 and 2021

Unit: NTD thousand

2021 Balance at January 1, 2021 Current period net profit Current other comprehensive income Total comprehensive income for the period The 2020 appropriation and distribution of earnings: Legal earnings reserve Cash dividend The reinvested company(ies) disposed of equity instruments measured at the fair value through other comprehensive profits and losses Balance at December 31, 2021 2022 Balance at January 1, 2022 Current period net profit Current other comprehensive income Total comprehensive income for the period The 2021 appropriation and distribution of earnings: Legal earnings reserve Cash dividend The reinvested company(ies) disposed of equity instruments measured at the fair value through other comprehensive profits and losses Balance at December 31, 2022	Additional notes		Ordinary shares capital		Capital	Capital	reserve		Retained earnings	Retained earnings	Retained earnings	Retained earnings	Retained earnings	Other equity	Other equity	Other equity	Other equity		Total equity
					Issuance premium		Others		Legal earnings reserve		Special earnings reserve	Undistributed earnings		Exchange differences arising from translating the financial statements of foreign operations		Unrealized valuation gains or losses on financial assets measured at fair value through other comprehensiv e income
	6 (14) 6 (14)		$ 775,600 - - - - - - $ 775,600 $ 775,600 - - - - - - $ 775,600		$ 333,746 - - - - - - $ 333,746 $ 333,746 - - - - - - $ 333,746		$ 577 - - - - - - $ 577 $ 577 - - - - - - $ 577		$ 171,229 - - - 54,786 - - $ 226,015 $ 226,015 - - - 47,598 - - $ 273,613		$ 183,296 - - - - - - $ 183,296 $ 183,296 - - - - - - $ 183,296		$1,030,235 400,778 4,412 405,190 ( 54,786 ) ( 116,340 ) 70,789 $1,335,088 $1,335,088 465,865 15,082 480,947 ( 47,598 ) ( 100,828 ) 4,441 $1,672,050		($ 2,667 ) - ( 1,365 ) ( 1,365 ) - - - ($ 4,032 ) ($ 4,032 ) - 2,539 2,539 - - - ($ 1,493 )		$ 6,386 - 108,197 108,197 - - ( 70,789 ) $ 43,794 $ 43,794 - ( 83,909 ) ( 83,909 ) - - ( 4,441 ) ($ 44,556 )	$2,498,402 400,778 111,244 512,022 - ( 116,340 ) - $2,894,084 $2,894,084 465,865 ( 66,288 ) 399,577 - ( 100,828 ) - $3,192,833

Please refer to the notes enclosed in the individual financial reports that are an integral part of the individual financial statements.

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Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Individual Cash Flow Statement

January 1 to December 31, 2022 and 2021

Unit: NTD thousand

Cash flow from operating activities
Pre-tax profit for the current period
Adjustments
Income, expense, and loss
Depreciation

Amortization

Expected gain (loss) on credit impairment

Interest expenses

Net profit from financial assets and liabilities at
fair value through profit and loss

Interest income

The profit or loss in the subsidiary, affiliated
company and joint ventures recognized under the
equity method

Loss on disposal of property, plant and equipment
Changes in assets/liabilities relating to operating
activities
Net changes in assets relating to operating
activities
De-capitalization refunded monies of financial
assets at fair value through profit or loss

Contract assets
Notes receivable-net
Net accounts receivable
Account receivables-Related Parties- net
Other receivable
Inventory
Prepayments
Net defined benefit assets
Net changes in liabilities relating to operating
activities
Contract liabilities - Current
Payable notes
Accounts payable
Other payable
Other current liabilities-others
Net cash provided by operating activities
Interest received
Dividends received
Interest paid
Income tax paid
Net cash inflow from operating activities
Cash flow from investing activities
Acquisition of investment under the equity method

Costs of property, plant and equipment acquired

Acquisition of Intangible assets
Decrease in refundable deposits
Net cash outflow from investing activities
Cash flow from financing activities
Increase (decrease) in Shot-term borrowings

Proceeds from long-term loan

Re-payments of long-term borrowings

Lease principal repayment

Cash dividend distribution

Net cash inflow (outflow) from financing
activities
Increase in cash and cash equivalents for the current period
Opening balance of cash and cash equivalents
Closing balance of cash and cash equivalents

Additional notes
January 1 to
December 31,2022
January 1 to
December 31,2021
$ 577,635 $ 491,228
6 (20)
166,063
129,286
6 (20)
1,792
1,579
12 (2)
(
18,345 )
18,345
6 (19)
9,697
3,311
6 (2) (18)
(
9,591 ) (
3,270 )
6 (16)
(
4,507 ) (
181 )
6 (5)
(
64,565 ) (
63,408 )
6 (18)
695
-
6 (2)
3,000
9,000
(
88 )
21
348 (
136 )
43,116 (
47,145 )
61,154 (
2,509 )
7,132 (
7,100 )
(
66,103 ) (
272,606 )
(
4,432 ) (
7,494 )
704
1,057
(
20,733 )
68,888
68
-
65,496 (
18,945 )
32,854
27,424
538
211
781,928
327,556
4,507
187
52,879
55,271
(
9,701 ) (
3,188 )
(
84,874 ) (
172,228 )
744,739
207,598
6 (5)
- (
399,961 )
6 (23)
(
374,664 ) (
403,363 )
(
1,520 ) (
2,090 )
-
2,664
(
376,184 ) (
802,750 )
6 (24)
(
50,000 )
150,000
6 (24)
1,600,000
1,200,000
6 (24)
(
1,700,000 ) (
600,000 )
6 (24)
(
1,042 ) (
1,586 )
6 (14)
(
100,828 ) (
116,340 )
(
251,870 )
632,074
116,685
36,922
175,073
138,151
$ 291,758 $ 175,073

Please refer to the notes enclosed in the individual financial reports that are an integral part of the individual financial statements.

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Chunghwa Chemical Synthesis & Biotech Co., Ltd. Notes to the individual financial statements

2022 and 2021

Unit: NTD thousand (Except where otherwise stated)

1. Company history

Chunghwa Chemical Synthesis and Biotech Co., Ltd. (hereinafter referred to as the Company) was established in Taiwan on May 19, 1964. Originally named as China Chemical Synthesis Industry Co., Ltd., the company was renamed to the current name at the shareholder meeting in 2003. The main areas of business of the Company include research, development, manufacturing and sales of active pharmaceutical ingredients. The Company was officially listed in the Taiwan Stock Exchange on December 20, 2010.

2. Date On Which And Procedures By Which The Financial Reports Were Authorized For Issuance

The Board of Directors approved the individual financial statements for publication on March 7, 2023.

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”)

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards approved and announced effective by the Financial Supervisory Commission in 2022.

	The effective date
	announced by the
	International
New releases / amendments / revisions of the Standards and	Accounting Standards
Interpretations	Board
Amendment to International Financial Reporting Standards (IFRS) #3	January 1, 2022
“Index to Conceptual Framework.”
Amendment to International Financial Reporting Standards (IFRS) #16	January 1, 2022
“Real property, factories & equipment: Pricing prior to reach of
anticipated state of use.”
Amendment to International Financial Reporting Standards (IAS) #37	January 1, 2022
“Onerous contracts—the cost of fulfilling the contracts.”
Improvements to IFRS 2018-2020	January 1, 2022

The Company has assessed the aforementioned standards, interpretations, and interpretative announcements and has concluded that they have no material impact on the Company’s financial position and financial performance.

(2) Effect of new issuances of or amendments to IFRS as endorsed by the FSC but not yet adopted by the Company and subsidiaries

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards recognized by the Financial Supervisory Commission in 2023. New releases / amendments / revisions of the Standards and The effective date

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Interpretations announced by the International Accounting Standards Board Amendment to International Financial Reporting Standards (IAS) #1 January 1, 2023 “Disclosure of accounting policies.” Amendment to International Financial Reporting Standards (IAS) #8 January 1, 2023 “Definition of accounting estimate.” Amendment to International Accounting Standard 12 “Deferred Tax January 1, 2023 related to Assets and Liabilities arising from a Single Transaction”

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

The newly released, revised and amended IFRS standards and interpretations by the IASB but not yet recognized by the FSC are summarized as follows: The effective date announced by the New releases / amendments / revisions of the Standards and International Accounting Interpretations Standards Board Amendment to IFRS 10 and IAS 28 “The Assets Sales or Purchase To be determined by the between Investors and Their Affiliates or Joint Ventures” “International Accounting Standards Board (IASB). Amendments to IFRS 16, “Lease Liability in a Sale and Leaseback” January 1, 2024 IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 “Insurance Contracts” January 1, 2023 Amendment to International Financial Reporting Standard 17: "Initial January 1, 2023 Application of IFRS 17 and IFRS 9―Comparative Information" Current or non-current classification of liabilities (Amendments to IAS 1) January 1, 2024 Amendments to IAS 1 “Non-current Liabilities with Covenants” January 1, 2024

4. Summary of significant accounting policies

The principal accounting polices applied in the preparation of these individual financial statements are set out below. These policies have been consistently applied to all the period presented, unless otherwise stated.

(1) Compliance Statement

These individual financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Statements by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs).

(2) Basis of preparation

Except for the following items, these individual statements have been prepared under the historical cost convention:

(1) Financial assets at fair value through other comprehensive Income
(2) The ascertained welfare assets recognized as the net amount of the pension fund assets

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minus the current value of the ascertained welfare obligations.

The preparation of financial statements in conformity with IFRS requires the use of certain critical estimates. It also requires management to exercise its judgment in the process of applying the accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumption and estimates are significant to the individual financial statements are disclosed in Note 5.

- (3) Foreign currency translations

Items included in the individual financial statements of each of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The individual financial statements are presented in New Taiwan Dollars, which is the Company’s functional currency.

Foreign Currency Transactions and Balances
(1) Transactions denominated in foreign currency are translated into a functional currency at the spot exchange rate on the date of the transaction or measurement. Foreign currency differences arising from translating such transactions are recognized in current profit or loss.
(2) The foreign currency asset or liability balances are revaluated based on spot exchange rate of the balance sheet date, and any exchange difference arising from the adjustment is included in the profit and loss for the year.
(3) Non-monetary assets and liabilities denominated in foreign currency 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 recognized in current profit or loss ; Non-monetary assets and liabilities denominated in foreign currency 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 recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currency that are not measured at fair value are translated using the historical exchange rates at the date of the initial transaction.
(4) All foreign exchange gains and losses are presented in the statement of comprehensive income within “Other gains and losses”.
Translation of the financial statements of foreign operations
(1) The operating results and financial position of all the invested entity 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 recognized in other comprehensive income.
(2) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. However, if the Company retains partial interest in the former subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interests in the foreign operation.

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(4) Criteria for distinguishing Current or Non-Current on the Balance Sheet

Assets that meet one of the following criteria are classified as current assets:
(1) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.
(2) Held mainly for the purpose of trading.
(3) Assets that are expected to be realized within twelve months from the balance sheet date.
(4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve month after the balance sheet date.

The Company classifies assets that do not meet any of the above criteria as non-current assets.

Liabilities that meet one of the following criteria are classified as current liabilities:
(1) Liabilities that are expected to be paid off within the normal operating cycle.
(2) Held mainly for the purpose of trading.
(3) Expected to be repaid within 12 months of the balance sheet date
(4) Liabilities for which the repayment date cannot be extended unconditionally to more than 12 months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

The Company classifies liabilities that do not meet any of the above criteria as non-current assets.

(5) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(6) Financial assets at fair value through profit and loss

Refer to the financial assets that are not measured at amortized cost or are measured at fair value through other comprehensive income.
On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
The Company measures financial assets at fair value in initial recognition. The related transaction costs are recognized in profit and loss. These financial assets are subsequently re-measured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
Once the right to receive dividends is confirmed, the Company recognizes the dividend income in profit or loss if the future economic benefits are expected to flow to the entity and the dividend can be measured reliably.

(7) Accounts receivable and notes

Refers to accounts and notes that have been unconditionally charged for the right to exchange the value of the consideration due to the transfer of goods or services.
The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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(8) Impairment of Financial Assets

Financial assets measured at amortized cost, the Company, on each balance sheet date, considers all reasonable and supportable information (including forward-looking ones) and measures the loss allowance based on the 12-month expected credit losses for those that do not have their credit risk increased significantly since initial recognition. For those that have increased significantly since initial recognition, the loss allowance is measured based on the full lifetime expected credit losses. A loss allowance for full lifetime expected credit losses is also required for trade receivables that do not constitute a financing transaction.

(9) The de-recognition of financial assets

A financial asset is derecognized when the Company’s rights to receive cash flows from the financial assets have expired.

(10) The lessor’s lease transaction/business lease

Income from under an operating lease (net of any incentives given to the lessee) are recognized in profit or loss on a straight-line basis over the lease term.

(11) Inventory

Inventories are measured at the lower of cost or net realizable value, and the cost is determined by weighted-average method. The costs of finished and work in process goods include raw materials, direct labor, other direct costs and manufacturing-related expenses, excluding borrowing costs. At the end of year, inventories are evaluated at the lower of cost or net realizable value. The item by item approach is used in applying the lower of cost and net realizable value. The net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.

(12) Investments using the equity method - Subsidiaries and affiliates

Subsidiaries refer to all entities (including structural entities) with the right to direct financial and operational policies. When the company is exposed to changes in rewards with the involvement of the entity or has rights to the said changes in rewards and that the rights of the entity can exert an influence on the rewards, the company is said to have control over the entity.
The unrealized gains and losses resulting from the transactions conducted between the Company and its subsidiaries had been written-off. Subsidiaries’ financial statements are adjusted to align the accounting policies with those of the Company.
The Company recognized the shares of profit and/or loss of subsidiaries after acquisition as the profit and/or loss of the current term, and recognized the shares of profit and/or loss of other consolidated income after acquisition as other consolidated profit and/or loss of the current term. In the event that the shares of losses in a subsidiary recognized by the Company exceed the Company’s equity in that subsidiary, the Company would continually recognize the losses pro rata to the shareholder percentages.
The term “associates” as set forth herein refers to the entities upon which the Company holds significant effect but holds no controlling power, normally as the shares of more than 20% of the voting power held by the Company either directly or indirectly. Over the investment in associates, the Company adopts equity method, recognizing them at cost at the moment of acquisition.

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The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss in the current period, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate (including any other unsecured receivables), the Company does not recognize further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.
When there is equity change in non-profit and loss and other consolidated profit and loss occurring to the affiliated enterprises that do not affect the shareholding of the affiliated enterprises, the Company will have the equity change recognized as “additional paid-in capital” proportionally to the shareholding ratio.
Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the polices adopted by the Company.
When the Company disposes of its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are accounted for on the same basis as direct disposal of related assets or liabilities, that is, profit or loss previously recognized in other comprehensive income are reclassified to profit or loss when related assets or liabilities are disposed of. When the Company loses significant influence over the associate, the aforesaid profit or loss is reclassified from retained earnings to profit or loss. If it still retains significant influence over the associate, then the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
According to Regulations Governing the Preparation of Financial Reports by Securities Issuers, the profit or loss during the period and other comprehensive income presented in standalone financial reports shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners’ equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.

(13) Property , plant, and equipment

Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
Subsequent costs are included in the asset’s carrying amount or recognized as a spate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
The assets’ residual values, useful lives and depreciation methods are reviewed, and

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adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 2 years ~ 60 years Machinery equipment 2 years ~ 20 years Transport equipment 2 years ~ 34 years Other equipment 2 years ~ 40 years

(14) The lessee’s lease transaction-right-of-use assets/lease liabilities.

Lease assets are recognized on the day of the available for use by the Company as right-of-use assets and lease liabilities. If the lease contract is a short-term lease or a lease of an underlying asset with low-value, lease payment is recognized using the straight-line method as an expense during the period of lease based.
The lease liability on the first day of lease is recognized at the present value after unpaid lease payments are converted into cash according to the Company’s incremental borrowing interest rate. Lease payments include fixed payments deducted by any lease incentives received. According to the follow-up interest method and measurements by the amortized cost method, interest incurring during the period of lease is provisioned. In case of changes in the period of lease or lease payments not attributed to contract modifications, the lease liability will be re-evaluated, and the remeasurement will be used to readjust the right-of-use asset.
The right-of-use asset is recognized by cost on the starting day of lease. The costs include:
(1) The original measured amount of lease liability;
(2) Any original direct costs incurred;

The cost model is adopted for subsequent measurements. Either the end of the durability of right-of-use assets or the end of the period of lease incurring earlier will be provisioned as depreciation fees. When re-evaluating lease liability, the right-of-use asset will readjust any remeasurements of lease liability.

(15) Investment property

Investment properties are initially measured at cost and may be subsequently measured using a cost model.

(16) Intangible assets

Based on the acquisition cost as the accounting basis; computer software, patent rights and specialized technology are amortized based on their economic life or contractual term, whichever is shorter.

(17) Losses in non-financial asset

The company estimates recoverable amounts on assets with signs of losses on the balance sheet date, and when the recoverable amount is lower than the book value, then loss is recognized. Recoverable amount refers to an asset’s fair value less the cost of disposal or the useful value, whichever is the higher. Except for goodwill, when the impairment of assets recognized in prior period is non-existent or reduced, the impairment loss should be reversed. However, the increased book value of the asset due to the reversed impairment loss may not exceed the book value net of depreciation or amortization before recognizing impairment loss.

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(18) Loans

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

(19) Notes and accounts payable
Refers to debts incurred as a result of the purchase of raw materials, goods or services and the notes payable due to business and non-business purposes.
The short-term accounts and notes payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(20) De-recognition of financial liabilities
The Company derecognizes a liability when the obligation under the liability specified in the contract is discharged or cancelled or expires.
(21) Financial assets and liabilities written-off against each other

Recognized financial liabilities and assets are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(22) Employee benefits
Short-term employee benefits

Short-term employee benefits are measured at the discounted amount of the benefits expected to be paid in respect of service rendered by employees and are recognized as expenses in the period when the employees render service.

Pension
(1) Defined contribution plan

For defined contribution plans, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized to the extent of a cash refund or a reduction in the future payments.

(2) Defined benefit plan
- A. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) instead.
- B. Re-measurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recoded as retained earnings.
- C. The expense associated with prior service cost is recognized immediately as a Remunerations for employees and directors
Remunerations for employees and directors are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. If the accrued amounts for employees’ compensation

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and remuneration to directors and supervisors are different from the actual distributed amounts, the differences should be recognized based on the accounting for changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(23) Income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with the applicable tax regulations. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the individual financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or 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 income 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 Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted as of the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
Current income tax and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income 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 realize the asset and settle the liability simultaneously.
(24) Dividends
Dividends distributed to shareholders of the Company are recognized in the financial statements when the shareholder meeting resolves to distribute dividends, and the cash dividends are recognized as liabilities.

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(25) Recognition of revenue

Product sales
(1) The Company manufactures and sells API-related products. The sales revenue is recognized when products are delivered to customers who have discretionary power in channels and prices of products sold and the Company has no outstanding performance obligations which may affect customers’ acceptance of products. The delivery of products is considered occurs when the products are shipped to the designated locations and the risks of obsolescence and loss have been transferred to customers who accept the products under sales contracts, or when there is objective evidence showing that all acceptance criteria have been met.
(2) Account receivables are recognized when goods are delivered to customers. Since the Company has unconditional rights to the contract price from that point in time, only the passage of time is required before the payment is due.
Labor revenue
(1) The Company provides commissioned bio drug testing and other related services. Labor service income is recognized as income during the period of financial reporting on services provided to customers. Revenues from fixed price contracts are recognized based of the proportion of services provided in all services provided as of the balance sheet date. The percentage of service completion is based on the proportion of actual costs incurred in the total costs. The customer shall pay contract prices according to the payment time agreed. When services provided by the company exceed the customer’s accounts payable, they are recognized as contract assets; if the customer’s accounts payable exceeds the services provided by the company, they are recognized as contract liability.
(2) The Company’s estimates of revenues, costs, and degree of work completion are subject to amendments as circumstances change. Any increase or decrease in estimated income or cost due to changes in estimates shall be reflected in profit or loss during the period in which the circumstances leading to the amendments are known to management.

5. Critical accounting judgments, estimates and key sources of assumption uncertainty

The preparation of these standalone financial statements requires the management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. The resulting accounting estimates might be different from the related actual results, the judgments and estimates are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Critical accounting judgments, estimates and key sources of assumption uncertainty are explained as follows:

(1) Critical judgments concerning the application of accounting policies

None.

(2) Critical accounting estimates and assumptions

Evaluation of inventory

The Company measures the normal sales of inventories by the lower of cost and net realizable value. For inventories that have existed longer than a certain period of time and are obsolete and damaged, net realizable value of each inventory is identified to be recognized as a loss.

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Therefore, the Company must use its best judgments and estimates to determine the net realizable value of inventory at the balance sheet date. Due to the stricter verification of active pharmaceutical ingredients and the lengthening time required to obtain drug licenses, the disposal of inventory is below expectation, resulting in the loss from inventory depreciation or the higher risk of inventory obsolescence. The Company assesses on the balance sheet date the inventory due to normal wear and tear, obsolescence or without market sales value and reduces the inventory cost to net realizable value. The inventory assessment may experience significant changes due to fluctuations in the net realizable value of future products. As of December 31, 2022, the book balance of the Company’s inventories is NT$819,953.

6. Summary of significant accounting titles

(1) Cash and cash equivalents

Cash on hand and petty cash Checking accounts and demand deposits	December 31, 2022 $ 622 291,136 $ 291,758	December 31, 2021
		$ 511 174,562 $ 175,073

The financial institutions that the Company deals with are with good credit quality; also, the Company deals with a number of financial institutions to diversify credit risk; therefore, the possibility of default is very unlikely.
None of the Company’s cash and cash equivalents pledged to others as collateral.

(2) Financial assets at fair value through profit and loss

Item Non-current items:	December 31, 2022	December 31, 2021

m December 31, 2022 n-current items:	m December 31, 2022 n-current items:	December 31, 2021
Financial assets mandatorily measured at fair value through profit or
loss
China Development Biomedical Venture Capital (limited company)	$ 18,000	$ 21,000
Evaluation adjustment	15,317	5,726
	$ 33,317	$ 26,726

Financial assets at fair value through profit and loss is detailed as follows:

Financial assets mandatorily measured at fair value through profit or loss Equity instruments $	2022 9,591	$	2021 3,270

In April 2022 and March 2021, the Company's investment in financial assets at fair value through profit or loss was reduced and the share capital of NT$3,000 and NT$9,000 was returned, respectively.
(3) Note receivable and accounts receivable

returned, respectively. Note receivable and accounts receivable
Notes receivable	December 31, 2022 $ 132	December 31, 2021
		$ 480

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Less: Allowance for losses	Less: Allowance for losses			-			-
				$ 132	$		480
Accounts receivable				$ 67,690	$		110,806
Less: Allowance for losses			(	248)	(		18,593)
				$ 67,442	$		92,213
1. Aging of accounts receivable		and notes receivable is as follows:
(1) Notes receivable
				December 31, 2022		December 31, 2021
Not overdue				$ 132		$	480
(2) Accounts							receivable
				December 31, 2022		December 31, 2021
Not overdue				$ 67,690		$	92,461
Overdue within 30 days				-			-
Over 90 days				-			18,345
				$ 67,690		$	110,806
The aforementioned aging analysis is			based on the overdue days.
2. The accounts receivables and		bills receivable balance in December 31, 2022 and 2021 were
generated from the client contract. The accounts receivables balance and allowance loss in
the client contract as	of January 1, 2021 amount to NT$64,005 and				NT$248 respectively.
3. While not considering the collaterals or other credit enhancements, the notes and accounts
receivable held by the Company had the			maximum exposure of credit risk				at NT$67,574
and NT$92,693, respectively,		as of December 31, 2022 and 2021.
4. The Company does not hold any collaterals.
5. Please see Note 12 (2) for the		credit risk of the accounts receivable and notes					receivable.
Inventory
				December 31, 2022
		Cost		Price loss allowance		Book value
Raw materials	$	289,037	($ 27,365)			$	261,672
Work in process		168,141	(	427)			167,714
Finished products		439,639	(	49,072)			390,567
	$	896,817	($ 76,864)			$	819,953
				December 31, 2021
		Cost		Price loss allowance		Book value
Raw materials	$	366,960	($ 33,034)			$	333,926
Work in process		71,866	(	471)			71,395
Finished products		396,099	(	47,570)			348,529
	$	834,925	($ 81,075)			$	753,850
The Company’s	current	inventory		cost recognized as			expenses:
				2022			2021
Cost of inventory sold				$ 1,109,196		$	952,599
Loss of price decline of inventory and
obsolescence loss				29,630			28,964

The accounts receivables and bills receivable balance in December 31, 2022 and 2021 were generated from the client contract. The accounts receivables balance and allowance loss in the client contract as of January 1, 2021 amount to NT$64,005 and NT$248 respectively.
While not considering the collaterals or other credit enhancements, the notes and accounts receivable held by the Company had the maximum exposure of credit risk at NT$67,574 and NT$92,693, respectively, as of December 31, 2022 and 2021.

(4) Inventory

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	Proceeds from sale of scraps.			(		3,868)	(	3,019)
					$ 1,134,958		$	978,544
(5)	Investments accounted for by the equity method
					December 31, 2022		December 31, 2021
	Affiliate business:
	China Chemical & Pharmaceutical Co., Ltd.				$	964,937	$	1,032,860
	Subsidiaries:
	PHARMAPORTS, LLC					9,131		9,289
					$	974,068	$	1,042,149
	1. Affiliate business
	(1) The basic information of the Company’s main affiliates is shown as							follows:
	Company name	Main		Ratio of Shareholding				Type of Measurement
		places of business	December 31, 2022			December 31,	2021	affiliation
		operations
	China Chemical	Taiwan	14.11%			14.11%		Affiliate Equity method
	& Pharmaceutical Co., Ltd.							business
	(2) Financial information of the Company’s			major associates is summarized as follows:
	Balance							Sheet
					China Chemical & Pharmaceutical Co., Ltd.
					December 31, 2022		December 31, 2021
	Current assets				$	3,513,703	$	3,193,213
	Non-Current assets					7,569,513		7,988,514
	Current liabilities			(		1,870,078)	(	1,512,912)
	Non-current liabilities			(		1,805,118)	(	1,914,705)
	Total net assets				$	7,408,020	$	7,754,110
	Book value of affiliates				$	964,937	$	1,026,277
	Comprehensive income statement
					China Chemical & Pharmaceutical Co., Ltd.
						2022		2021
	Income				$	3,578,953	$	3,407,463
	Current net profits from continuing				$	491,016	$	517,508
	operations
	Other comprehensive income (net after			(		569,870)		942,413
	tax)
	Total comprehensive income for		the	($		78,854)	$	1,459,921
	period
	Stock dividends collected from affiliates				$	37,848	$	38,977

2. Profit and loss of subsidiaries and associates recognized by using equity method:

China Chemical & Pharmaceutical Co., Ltd. $	2022 51,100 $	2021 50,100

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PHARMAPORTS, LLC	13,465 $ 64,565	13,308 $ 63,408

In 2021, the Company obtained NT$399,961 equity from China Chemical & Pharmaceutical Co., Ltd. in the open market.
The Company’s investment in China Chemical & Pharmaceutical has a public offer of which the fair value were NT$1,398,267 and NT$952,504 as of December 31, 2022 and 2021, respectively.
The Company holds up to 14.11% of the total shares of China Chemical & Pharmaceutical Co., Ltd. as the largest single shareholder. Given the facts that the Company lacks substantial capability to dominate the relevant events as indicated through the participation by other shareholders in that company and the voting powers in major motions, it is judged that the Company does not possess control power but only has influence toward that company.
For information on the Company’s subsidiaries, please refer to Note 4 (3) of 2022 consolidated financial statements.

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(6) Property , plant, and equipment

Land $ 741,400 -	Buildings and structures	Machinery equipment	Transport equipment	Other equipment	Uncompleted construction and equipment pending inspection	Total
	$ 826,107 ( 470,694) $ 355,413 $ 355,413 11,990 - 63,419 ( 38,945) - $ 391,877 $ 900,616 ( 508,739) $ 391,877	$1,414,963 ( 941,651) $ 473,312 $ 473,312 23,779 - 213,113 ( 90,212) - $ 619,992 $1,648,682 ( 1,028,690) $ 619,992	$ 8,121 ( 6,220) $ 1,901 $ 1,901 - - - ( 571) - $ 1,330 $ 8,121 ( 6,791) $ 1,330	$ 608,414 ( 440,816) $ 167,598 $ 167,598 29,005 - 17,446 ( 35,291) ( 695) $ 178,063 $ 638,579 ( 460,516) $ 178,063	$ 126,443 - $ 126,443 $ 126,443 205,299 - ( 303,891) - - $ 27,851 $ 27,851 - $ 27,851	$3,725,448 ( 1,859,381) $1,866,067 $1,866,067 270,073 - ( 9,913) ( 165,019) ( 695) $1,960,513 $3,965,249 ( 2,004,736) $1,960,513
$ 741,400 $ 741,400 - - - - -
$ 741,400 $ 741,400 -
$ 741,400

Note: The term reclassification is an act to transfer out onto “intangible assets” and (operating cost).

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Land $ 741,400 -	Buildings and structures	Machinery equipment	Transport equipment	Other equipment	Uncompleted construction and equipment pending inspection	Total
	$ 674,256 ( 445,441) $ 228,815 $ 228,815 17,727 134,124 ( 25,253) $ 355,413 $ 826,107 ( 470,694) $ 355,413	$1,172,957 ( 888,583) $ 284,374 $ 284,374 14,160 241,528 ( 66,750) $ 473,312 $1,414,963 ( 941,651) $ 473,312	$ 7,448 ( 5,950) $ 1,498 $ 1,498 860 - ( 457) $ 1,901 $ 8,121 ( 6,220) $ 1,901	$ 579,419 ( 408,662) $ 170,757 $ 170,757 17,622 14,463 ( 35,244) $ 167,598 $ 608,414 ( 440,816) $ 167,598	$ 112,289 - $ 112,289 $ 112,289 404,269 ( 390,115) - $ 126,443 $ 126,443 - $ 126,443	$3,287,769 ( 1,748,636) $1,539,133 $1,539,133 454,638 - ( 127,704) $1,866,067 $3,725,448 ( 1,859,381) $1,866,067
$ 741,400
$ 741,400 - - -
$ 741,400
$ 741,400 -
$ 741,400

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(7) Investment property

Investment property
		December 31,		2022	December	31, 2021
Land cost		$ 10,700			$	10,700
1. Rental income and	direct	operating	expenses	of	investment	properties:
			2022		2021
Rental income of investment properties			$	767	$	800
Direct operating expenses	incurred	in
investment properties that	have rental
income in the current period			$	53	$	48

The fair value of investment properties held by the Company for the years ended December 31, 2022 and 2021 was NT$70,305 and NT$70,305, respectively, based on the transaction prices of the adjacent lands.

(8) Shot-term borrowings

The short-term	borrowings of the Company as	of December 31, 2022	and 2021	are as follows:
Loans nature	December 31, 2022	Interest rate collars	Collateral
Bank loan
Credit loan	$ 100,000	1.50%		None
Loans nature	December 31, 2021	Interest rate collars	Collateral
Bank loan
Credit loan	$ 150,000	0.80%～0.83%	None

(9) Other payable

Other payable
Salary and bonus payables Remuneration to employees and directors and supervisors payable Commission payable Equipment payables Repair fees payable Others	December 31, 2022 $ 90,542 60,627 20,769 29,867 6,307 51,290 $ 259,402	December 31, 2021
		$ 74,224 52,390 11,458 94,544 5,643 56,884 $ 295,143

(10)Long-term borrowings Bank loan Credit loan Interest rate collars	December 31, 2022 $ 500,000 1.76~1.79%	December 31, 2021
		$ 600,000 1.13%~1.35%

The one-time repayment of credit loan is due in 2024.

~31~

(11) Pension

(1) The Company has a defined benefit pension plan in accordance with the “Labor Standards Act”, 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. When an employee meets the requirements of retirement, the payment of pension is based on service years and the average salary of the six months prior to retirement, with services within 15 years accumulating 2 basis points per year, and service years beyond 15 years accumulating 1 basis point per year up to a maximum of 45 basis points. The company provisions 5% of total monthly salary to the pension fund in the name of the Pension Supervisory Committee at the Bank of Taiwan. In addition, the Company has the labor pension reserve account balance referred to in the preceding paragraph estimated at the end of each fiscal year. If the account balance is insufficient to pay pension benefit to the employees who qualify for retirement within next year for the pension benefit calculated in the preceding paragraph, the Company will have the spread amount appropriated in a lump sum before the end of March next year.

(2) The amounts recognized in Present value of the defined benefit obligations The fair value of plan assets Net defined benefit assets (Recognized as Other non-current assets)	the balance sheet are as follows: December 31, 2022 December 31, 2021 ($ 105,279) ($ 117,792) 145,401 141,770 $ 40,122 $ 23,978

(3) Changes in net defined benefit assets are as follows:

	The fair value of plan	The fair value of plan	Net defined benefit assets $ 23,978 ( 882) 177 23,273 10,986 3,767 2,096 16,849 - $ 40,122	Net defined benefit
	$	assets 141,770 - 966 142,736 10,986 - - 10,986 8,321) 145,401		assets 23,978 882) 177 23,273 10,986 3,767 2,096 16,849 - 40,122



(
$			$

~32~

Present value of the defined benefit obligations ($ 115,828) ( 1,326) ( 342) ( 117,496) - 3,508 ( 3,804) ( 296) - ($ 117,792)	The fair value of plan	The fair value of plan	Net defined benefit assets $ 23,285 ( 1,326) 74 22,033 2,046 3,508 ( 3,804) 1,750 195 $ 23,978	Net defined benefit
	$	assets 139,113 - 416 139,529 2,046 - - 2,046 195 141,770		assets 23,285 1,326) 74 22,033 2,046 3,508 3,804) 1,750 195 23,978

(
(			(
(

($	$		$

(4) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). For the use of this fund, the minimum earnings distribution every year shall not be for an amount less than the income calculated in accordance with the local bank’s two-year time deposit rate; also, the insufficient fund, if any, should be made up by the National Treasury with the approval of the competent authorities. Since the Company is not entitled to participating in the operation and management of the Fund, the classification of the fair value of plant asset cannot be disclosed in accordance with International Accounting Standards No. 19, paragraph 142. The composition of fair value of plan assets as of December 31, 2022 and 2021 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.
(5) Assumptions for the actuation of pension funds are summarized as follows:

2022 2021
Discounted rate 1.20% 0.70%
Future salary increases rate 2.00% 2.00%
Assumptions regarding future mortality experience are set based on actuarial advice
in accordance with the published statistics and experience in the 6th Taiwan
Standard Ordinary Experience Mortality Table.
The present value of the defined benefit obligations affected by the changes in the
actuarial assumptions is analyzed as follows:

~33~

December 31, 2022 The impact on the present value of the defined benefit obligations December 31, 2021 The impact on the present value of the defined benefit obligations	Discounted rate Increase by 0.25% Decrease by 0.25% ($ 1,804) $ 1,856 ($ 2,132) $ 2,197	Future salary Increase by 0.25% $ 1,837 $ 2,163	Future salary	increases rate Decrease by 0.25% ($ 1,795) ($ 2,110)	increases rate Decrease by 0.25% ($ 1,795) ($ 2,110)
					0.25% 1,795) 2,110)
	($	$		($

The sensitivity analysis above analyzes the impact from changing one of the assumptions while others remain constant. In practice, many changes in assumptions may be mutually interactive. The sensitivity analysis is consistent with the method adopted for calculating the net pension liability on the balance sheet.

     - (6) The Company applied on December 9, 2021 for suspension from appropriation of labor pension reserve. The Company has been approved for suspension from appropriation starting from fiscal year 2022.

  2. (1) The Company has a retirement policy with a defined pension contribution plan regulated in accordance with the “Labor Pension Act” for the employees of Taiwan nationality since July 1, 2005. The Company has established a defined contribution pension plan (the “New Plan”) under the “Labor Pension Act” covering all regular employees. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to an employee’s individual pension account at the Bureau of Labor Insurance. The payment of pension benefits is based on an employee’s individual pension fund account and the cumulative profit in such account, and employees can choose to receive such pension benefits monthly or in one lump sum.

     - (2) The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2022 and 2021 were NT$10,515 and NT$9,639, respectively.

(12) Share capital
As of December 31, 2022, the Company’s authorized capital was NT$1,600,000, consisting of 160,000 thousand shares of ordinary stock, and the paid-in capital was NT$775,600 with a par value of $10 (in dollars) per share. All issued capital of the Company were paid up.
The number of the Company’s outstanding ordinary shares was 77,560 thousand as of 2022 and 2021.
The affiliation of the Company held 21,575 thousand shares and 21,575 thousand shares, respectively of the Company as of December 31, 2022 and 2021.
On May 25, 2022, the Company’s shareholders' meeting adopted a resolution to issue ordinary shares or domestic convertible corporate bonds (including secured or unsecured convertible corporate bonds) through private placement. The board of directors is authorized to decide on the number of shares to be actually issued or converted within the limit of 20% of the total number of ordinary shares issued ( i.e., not exceeding 15,512,000 shares), depending on the capital market conditions.
(13) Capital reserve

According to the Company Act, capital reserves from premium income for issuing shares over

~34~

face values and gift income, not only can offset losses, it can also issue new shares or cash according to the original shareholding when there is no accumulated losses in the company. Further, the Securities and Exchange Act requires that the amount of capital surplus to be capitalized, as above, should not exceed 10% of paid-in capital each year. When the retained earnings of a company is not enough to offset capital losses, the capital reserves cannot be applied.

(14) Retained earnings

According to the Company’s articles of incorporation, the dividend policy considers the Company’s future capital needs and long-term financial planning and meets the shareholders’ demand for cash inflows. The current year’s earning, if any, shall first be used to offset prior years’ operating losses and pay all taxes, and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall also be allocated. If there is still surplus, it can be put together with the accumulated undistributed surplus of the previous year as the surplus available this year for distribution. Part of it can be retained, depending on the Company’s business needs for the year, before being distributed to shareholders. Cash dividends shall not be less than 50% of the shareholder dividend given, but when the cash dividend is calculated to be less than NT$0.1 per share, it can be given in the form of stock dividend.
Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of the legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
(1) 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.
(2) When adopting IFRSs for the first time, refer to Jin-Guan-Zheng-Fa-Zi Document #1010012865 on special reserve. The Company will conduct a reversal of the originally allocated special reserve when using, disposing of or reclassifying assets.
(1) The appropriations of 2021 and 2020 earnings had been resolved at the stockholders’ meeting on May 25, 2022 and July 1, 2021, respectively. Details are summarized below:

below:
2021 Amount Dividends per share ($) Legal earnings reserve $ 47,598 $ Cash dividend 100,828 $ 1.3 $ 148,426 $ (2) The appropriations of 2022 earnings had been proposed March 7, 2023. Details are Legal earnings reserve $ Special earnings reserve Cash dividend $	$	Amount 54,786 116,340
	$	171,126
	$	195,416

~35~

The aforementioned distribution of earnings of 2022 has not been passed in the shareholders’ meeting.

(15) Operating revenues

Revenue from Contracts with Customers	$	2022 2,065,195	$	2021 1,896,625

Segmentation of revenue from contracts with customers

The Company’s revenues are generated from goods and labor services gradually transferred with time and transferred at a specific time. Revenues can be subdivided into the following geographic areas:

ographic areas:
2022 Revenue from contracts with external customers Time point of sales income recognition Revenues recognized at a specific time Revenues gradually recognized with time 2021 Revenue from contracts with external customers Time point of sales income recognition Revenues recognized at a specific time Revenues gradually recognized with time	$	Taiwan 675,779 669,364 6,415 675,779 Taiwan 681,900 677,384 4,516 681,900	United States $ 1,389,416 $ 1,389,416 - $ 1,389,416 United States $ 1,214,725 $ 1,214,725 - $ 1,214,725	Total $ 2,065,195 $ 2,058,780 6,415 $ 2,065,195 Total $ 1,896,625 $ 1,892,109 4,516 $ 1,896,625
	$ $
	$
	$
	$

Contract assets and contract liabilities

(1) The contract assets and contract liabilities of customer contract revenue recognized by the Company are shown as follows: December 31, 2022 December 31, 2021 January 1, 2021

Contract assets Contract assets -Labor services $ 88 $ - $ 21 Contract liabilities: Contract liabilities -Drug sale contracts $ 48,680 $ 68,261 $ 667 -Labor services 2,537 3,689 2,395 $ 51,217 $ 71,950 $ 3,062

(2) The initial contract liabilities arising from sales contracts recognized as revenues in 2021 and 2020 total NT$69,301 and NT$972 respectively.

(16) Interest income

2022 2021 Interest from bank deposits $ 4,507 $ 175

~36~

		6
$	$	181
$	$	2021 12,800 7,648 20,448 2021 - 9,592) 3,270 - 6,322) 2021 3,273 38
$	$
($ (	$ (
$	($
$	$
$	$	3,311

(20) Employee benefit expense, depreciation and amortization

Employee benefit expense, depreciation and amortization:

Functionality Characteristics		2022	2022
	Allocated as operating cost	Employee expenses	Total
Employee benefits expenses
Salaries and wages	$161,293	$200,249	$ 361,542
Labor insurance and national health insurance	13,944	13,909	27,853
Pensionexpenses	4,596	6,624	11,220
Directors' remuneration	-	15,885	15,885
Otheremployee expenses	8,834	12,577	21,411
Depreciation	133,406	32,657	166,063
Amortization	146	1,646	1,792

~37~

Functionality Characteristics		2021	2021
	Allocated as operating cost	Employee expenses	Total
Employee benefits expenses
Salaries and wages	$139,452	$186,838	$ 326,290
Labor insurance and national health insurance	12,155	13,245	25,400
Pensionexpenses	4,188	6,703	10,891
Directors' remuneration	-	12,353	12,353
Otheremployee expenses	9,325	8,862	18,187
Depreciation	97,188	32,098	129,286
Amortization	-	1,579	1,579

Note 1: The number of employees in 2022 and 2021 were 354 and 335 people respectively. Among them, the number of directors not concurrently employees were seven people and six people, respectively.
Note 2. The company is TAIEX listed. Therefore, the following information should be added:
- (1) The average expenditure of employee benefits for 2022 and 2021 were NT$1,216 and NT$1,157 respectively.
- (2) The average expenditure of employee salary for 2022 and 2021 were NT$1,042 and NT$992 respectively.
- (3) Changes in the average employee salary expense adjustment are 5.04%.
- (4) Salary remuneration related policies
  - A. Policy on remuneration toward directors According to the Articles of Association for the company, if the company has earned annual profits, it shall allocate 1% to 15% as employee remuneration and no more than 3% for director remuneration. However, in case of the accumulated losses, certain profits shall first be reserved to cover them. The amount appropriated this time is subject to passing by the Remuneration Committee with a resolution before being submitted to the board of directors for discussion, resolution and enforcement.
  - B. Policy on remuneration toward employees and managerial officers
    - (A)Upon final accounting settlement by the Company in each fiscal year, the earnings, if any, shall be first used to pay tax, make up loss, if any, and to appropriate dividend and reserve. To employees who have committed no fault at all in the entire year, in accordance with “Regulations Governing Year-End Bonus Review,” the Company shall grant a year-end bonus which means a gracious grant for encouragement instead of a consideration for services rendered.
    - (B)In each and every year, the Company will, as well, evaluate whether the salary calls for an adjustment for employees based on the scalar indicators such as the Company’s operating performance, commodity price index, salary level prevalent in the market and whether the salaries paid by the Company to employees are competitive enough in the market.
Remunerations for employees and directors:

~38~

  - (1) According to the articles of incorporation of the Company, a portion of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The percentage shall be 1% to 15% for employees’ compensation and shall not be higher than 3% for directors’ remuneration.

  - (2) A. For the 2022, employees’ compensation was accrued at NT$51,292 while directors’ remuneration was accrued at NT$9,335. The aforementioned amounts were recognized in salary expenses.

     - B. For the 2021, employees’ compensation was accrued at NT$45,777 while directors’ remuneration was accrued at NT$6,613. The aforementioned amounts were recognized in salary expenses.

     - C. The employees’ compensation and directors’ remuneration were estimated and accrued based on 8.04% and 1.46% of profit of current year distributable for the 2022, respectively, with the estimated amount in line with the resolution of the board of directors. The abovementioned employee compensation will be paid in cash.

     - D. The employees’ compensation and directors’ remuneration resolved by the Board of Directors for 2021 were NT$45,777 and NT$6,613, respectively, consistent with the amount recognized in the 2021 financial report.

     - E. Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors and shareholders will be posted in the “Market Observation Post System”.

(21) Income tax
Income tax expense

Income tax 1. Income tax expense
(1) Components of	income		tax		expense:
		2022			2021
Current income tax:
Current income tax	$	97,884	$		92,668
Additional levy on undistributed earnings		4,700			1,980
Underestimation of income tax in previous
years		2,289			1,074
Total Current income tax		104,873			95,722
Deferred income tax:
Origin and reversal of temporary
differences		6,897	(		5,272)
Income tax expense	$	111,770	$		90,450
(2) Income tax amounts relating to other comprehensive profit and loss:
		2022			2021
Defined benefit obligation revaluation
amount and volume	($	3,370)	($		350)
2. Reconciliation between income tax		expense and		accounting profit:
		2022			2021
Income tax derived by applying the statutory	$	115,528	$		98,247
tax rate to pre-tax net profit
Tax-free income by Income Tax Law	(	12,138)	(		10,675)
Impact on income tax from items excluded
according to the tax law		-			12
Realizable changes from deferred income tax
assets	(	112)	(		1,817)
Additional levy on undistributed earnings		4,700			1,980
Underestimation of income tax in previous		2,289			1,074

~39~

	1,503 1,629 111,770 $ 90,450 from temporary differences: 2022 Recognized in the profit or loss Recognized in other comprehensive net loss December 31 ($ 842) $ - $ 15,372 ($ 2,868) - 566 - 811 ( 154) - 89 47 - 1,577 ( 1,094) - 2,286 ( 4,345) - 20,135 ( 2,693) - ( 8,032) 141 ( 3,370) ( 8,025 - - ( 240,164) ( 2,552 ( 3,370) ( 256,221) ($ 6,897) ($ 3,370) ($ 236,086) 2021 Recognized in the profit or loss Recognized in other comprehensive net loss December 31 $ 2,388 $ - $ 16,214 $ 2,868 2,868 179) - 245 776) - 243 41 - 1,530 3,380 - 3,380 7,722 - 24,480	1,503 1,629 111,770 $ 90,450 from temporary differences: 2022 Recognized in the profit or loss Recognized in other comprehensive net loss December 31 ($ 842) $ - $ 15,372 ($ 2,868) - 566 - 811 ( 154) - 89 47 - 1,577 ( 1,094) - 2,286 ( 4,345) - 20,135 ( 2,693) - ( 8,032) 141 ( 3,370) ( 8,025 - - ( 240,164) ( 2,552 ( 3,370) ( 256,221) ($ 6,897) ($ 3,370) ($ 236,086) 2021 Recognized in the profit or loss Recognized in other comprehensive net loss December 31 $ 2,388 $ - $ 16,214 $ 2,868 2,868 179) - 245 776) - 243 41 - 1,530 3,380 - 3,380 7,722 - 24,480
$
		loss $ - - - - - -
	$ 2,388 $ 2,868 179) 776) 41 3,380 7,722

~40~

January 1 Timing difference: - Deferred income tax liabilities: Profit and loss recognized by using equity method ( 2,678) Determined benefit obligation ( 4,657) Reserve for land revaluation increment tax (“LRIT”) ( 240,164) Subtotal ( 247,499) Total ($ 230,741)	2021 Recognized in the profit or loss Recognized in other comprehensive net loss ( 2,661) - 211 ( 350) - - ( 2,450) ( 350) $ 5,272 ($ 350)	Recognized in	Recognized in	Recognized in	December 31 ( 5,339) ( 4,796) ( 240,164) ( 250,299) ($ 225,819)

				loss - ( 350) - ( 350) ($ 350)

The Company's filings of profit-seeking enterprise business income tax returns had been certified by the tax authority up till 2020.

(22) Earnings per share

certified by the tax authority up till 2020. Earnings per share
After-tax amount Base earnings per share Current period net profit $ 465,865 Diluted earnings per share Current period net profit $ 465,865 Effect of dilutive potential ordinary shares: Employees’ compensation - The effect of net profit in the current period to the potential ordinary shares $ 465,865 After-tax amount Base earnings per share Current period net profit $ 400,778 Diluted earnings per share Current period net profit $ 400,778 Effect of dilutive potential ordinary shares: Employees’ compensation - The effect of net profit in the current period to the potential ordinary shares $ 400,778	2022 Weighted average outstanding shares (thousand shares). 77,560 77,560 940 78,500 2021 Weighted average outstanding shares (thousand shares). 77,560 77,560 758 78,318	Earnings per share (NT$) $ 6.01 $ 5.93 Earnings per share (NT$) $ 5.17 $ 5.12




		$

(23) Supplemental cash flow information

Investing activities

partially funded with cash:

~41~

Purchase of property, plant, and equipment $ Add: Opening balance of payable on equipment Prepayments for land and equipment at the end of the period Less: Ending balance of payable on equipment ( Prepayments for land and equipment at the beginning of the period ( Cash Paid for the Period $	Purchase of property, plant, and equipment $ Add: Opening balance of payable on equipment Prepayments for land and equipment at the end of the period Less: Ending balance of payable on equipment ( Prepayments for land and equipment at the beginning of the period ( Cash Paid for the Period $	2022 270,073 94,544 70,000 29,867) 30,086) 374,664	$ (	2021 454,638 13,183 30,086 94,544) -
	$		$	403,363

(24) Changes in liabilities arising from financing activities

2022

			2022
						Total liabilities
						arising from
	Shot-term	Short-term bills	Long-term		Lease	financing
	borrowings	payable	borrowings		liabilities	activities
January 1	$ 150,000	$ -	$ 600,000		$ 1,961	$ 751,961
Addition	2,300,000	369,577	1,600,000		726	4,270,303
Repayment	(2,350,000)	( 369,577)	( 1,700,000)		( 1,042)	( 4,420,619)
December 31	$ 100,000	$-	$ 500,000		$ 1,645	$ 601,645
			2021
						Total liabilities
						arising from
	Shot-term	Short-term bills	Long-term		Lease	financing
	borrowings	payable	borrowings		liabilities	activities
January 1	$ -	$ -	$ -		$ 1,634	$ 1,634
Addition	1,310,000	50,014	1,200,000		1,913	2,561,927
Repayment	(1,160,000)	( 50,014)	( 600,000)	(	1,586)	( 1,811,600)
December 31	$ 150,000	$-	$600,000		$ 1,961	$ 751,961

7. Related party transactions

(1) Name and relationship of related parties

Name PHARMAPORTS, LLC (PPL) China Chemical & Pharmaceutical Co., Ltd. (CCPC) Chunghwa Yuming Healthcare Co., Ltd. (CYH) Tairung Development Co., Ltd. Sino-Japan Chemical Co., Ltd. The Mr. Wang Min-ning Memorial Foundation

Relationship with The Company Subsidiaries

The Company’s main affiliates The Company’s main affiliates The Company’s main affiliates Other related parties Other related parties

(2) Major transactions with related parties

Operating

Product sales: PPL

				revenue
	2022		2021
$	1,389,416	$	1,214,722

~42~

CCPC	39,225 $ 1,428,641	66,516 $ 1,281,238

(1) The transaction price of the Company for related parties is based on the price agreed upon by both parties, which is similar to the sales price for general customers.
(2) The Company’s payment period is 30–120 days (monthly) for non-stakeholders and 60–120 days (monthly) for stakeholders after shipment.
(3) The Company signed a raw material production and sales contract with China Chemical & Pharmaceutical Co., Ltd. in 2016 and renewed the contract in 2019. The Company sold raw materials to the said party at the net cost +30% profit for processing into goods; the Company is entitled to a differential profit ratio of 50% profit from actual sales (China Chemical & Pharmaceutical Co., Ltd. gross profit and the Group’s sales gross profit).

2. Receivable from Account receivable from related parties: PPL CCPC Less: Allowance for losses 3. Other Nature of main transactions PPL Agency collection and payment Management services	related December 31, 2022 $ 219,457 8,639 ( 46) $ 228,050 December 31, 2022 $ 1,790 841 $ 2,631	parties December 31, 2021 $ 265,727 23,523 ( 46) $ 289,204 receivable December 31, 2021 $ 1,280 2,398 $ 3,678

The Company’s business supplies purchased in 2022 and 2021 totaled NT$3,919 and NT$2,959, respectively, and are listed as operating cost and miscellaneous fees.
The Company provided its subsidiaries with product sub-packaging and shipment and consulting services in 2022 and 2021 worth NT$3,549 and NT$6,468, respectively; they are book-kept as other income.
The Company donated NT$1,500 and NT$2,000 respectively to Mr. Min-Ning Wang Foundation, a related party, in 2022 and 2021, respectively, in order to award professionals for engagement in academic research and development.
The Company signed a land purchase contract with its related party, Sino-Japan Chemical Co., Ltd. on December 23, 2022. The transaction price was NT$350,000, which was determined with reference to the appraisal reports of Dawaland and Yeshome Real Estate Appraisers. According to the contract, as of December 31, 2022, the deposit paid was NT$70,000 and the ownership transfer was completed on February 18, 2023.

(3) Remuneration to key management

2022

2021

~43~

Salaries and other short-term employee benefits $ 37,786 $ 37,439 Retirement benefits 441 438 $ 38,227 $ 37,877

8. Collateralized assets

The Company’s assets are used as collateral as follows: Book Value Asset Item December 31, 2022 December 31, 2021 Purpose of guarantee Deposits paid (Recognized as Other non-current assets) $ 4,000 $ 4,000 Tariff guarantee bond

Significant contingent liabilities and unrecognized contractual commitments

(1) Contingencies

None.

(2) Commitments

Capital expenditures that have been signed but not yet incurred December 31, 2022 December 31, 2021 property , plant, and equipment $ 302,592 $ 147,601

10. Losses due to major disasters

None.

11. Major post-balance sheet events

Please refer to Note 6 (14) 4 for a description on distribution of surplus for 2022.

12. Others

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The Company may make adjustments to dividends paid to shareholders, refund capital to shareholders, issue new shares or sell assets to reduce the level of debts in order to maintain or adjust the Company’s capital structure. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including “current and non-current borrowings” as shown in the balance sheet) less cash and cash equivalents. Total capital is calculated as “equity” as shown in the balance sheet plus net debt.

The strategy of the Company in 2022 remained the same as in 2021 to be committed to maintaining a debt to capital ratio below 40%.

~44~

(2) Financial instruments

1.	Types of financial December 31, 2022 Financial assets Financial assets at fair value through profit and loss Financial assets mandatorily measured at fair value through profit or loss $ 33,317 Cash and cash equivalents 291,758 Notes receivable 132 Accounts receivable (including related parties) 295,492 Other receivable 12,674 Deposits paid (Recognized as Other non-current assets) 4,500 $ 637,873 Financial liabilities Financial liability measured at the amortized cost Shot-term borrowings $ 100,000 Payable notes 1,283 Accounts payable 143,046 Other payable 259,402 Long-term borrowings 500,000 Deposits received (Recognized as other non-current liabilities-others and deposits received) 266 $ 1,003,997 Lease liabilities (including current and non-current) $ 1,645	financial December 31, 2022	instrument December 31, 2021 $ 26,726 175,073 480 381,417 19,806 4,500 $ 608,002 $ 150,000 1,215 77,550 295,143 600,000 266 $ 1,124,174 $ 1,961

2. Risk management policies

(1) The Company’s activities expose it to a variety of financial risks, including market risk (exchange rate, interest rate and price), credit risk and liquidity risk. The Company’s overall risk management policy focuses on unpredictable events in the financial market, and the Company seeks to mitigate potential adverse effect on the financial position and performance.

(2) The Company’s Finance Department identifies and assesses financial risks in close collaboration with the Company’s other operating units.

~45~

The nature and extent of significant financial risks
(1) Market risk

Exchange rate risk

A. The Company is a multinational operation and therefore is subject to exchange rate risk arising from transactions between the different currencies, especially in US dollars. The relevant exchange rate risks might come from assets and liabilities that are generated from future operating activities and have been recognized.
B. The Finance Department of the Company conducts hedging for the overall exchange rate risk. Exchange rate risk is measured by highly probable transactions in US dollars. Forward foreign exchange contracts are adopted to reduce the impact of exchange rate fluctuations on expected transactions.

C. The Company’s	operations	involve certain	involve certain	non-functional currencies (the	non-functional currencies (the	non-functional currencies (the	non-functional currencies (the
Company’s functional currency is the New Taiwan dollar (NTD), so it is subject
to the impact of	exchange rate fluctuation. The details of assets and liabilities
denominated in foreign currencies whose values				would	be materially affected by
exchange	rate	fluctuations		are	as		follows:
			December 31, 2022
		Foreign currency				Book value
		(thousand
		dollars)		Exchange rate			(NTD)
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD: NTD		$ 14,616			30.71	$	448,857
Investments accounted for by
the equity method
USD: NTD		$ 297			30.71	$	9,131
Financial liabilities
Monetary items
USD: NTD		$ 3,082			30.71	$	94,648
			December 31, 2021
		Foreign
		currency				Book value
		(thousand
		dollars)		Exchange rate			(NTD)
(Foreign currency: functional
currency)
Financial assets
Monetary items
USD: NTD		$ 15,395	27.68			$	426,134
Investments accounted for by
the equity method
USD: NTD		$ 336 27.68				$	9,289
Financial liabilities
Monetary items
USD: NTD		$ 1,487	27.68			$	41,160

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D. Total exchange gain, including realized and unrealized gains from significant foreign exchange variations on monetary items held by the Company amounted to a gain of NT$56,819 and a loss of NT$9,592 for the 2022 and 2021, respectively.
E. The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:

is	as	as	follows
(Foreign currency: functional currency) Financial assets Monetary items USD: NTD Financial liabilities Monetary items USD: NTD (Foreign currency: functional currency) Financial assets Monetary items USD: NTD Financial liabilities Monetary items USD: NTD	Magnitude		2022 Sensitivity analysis Profit and loss affected Other comprehensive profit and loss affected $ 4,489 $ - $ 946 $ - 2021 Sensitivity analysis Profit and loss affected Other comprehensive profit and loss affected $ 4,261 $ - $ 4,116 $ -
	changes 1% 1% Magnitude
		changes 1% 1%

Price risk

A. The Company’s equity instruments exposed to the price risk are such financial assets held at fair value through profit & loss. To manage the price risk of investment in equity instruments, the Company conducts investment exactly within the limit set by the Company.
B. The Company invests primarily in equity instruments issued by domestic companies. The price of such equity instrument is subject to the uncertainty of the future value of investment target. In case the price of the said equity instrument rises or drops by 10% while the other factors remain unchanged, the after-tax net profit for 2022 and 2021 due to the profit or loss of the equity instrument measured from fair value through profit and loss will increase or decrease by NT$3,332 and NT$2,673 respectively.

Cash flow and fair value interest rate risk

A. The Company’s interest rate risk mainly comes from short-term borrowings issued at floating rates and long-term borrowing, which exposes the Company to cash flow interest rate risk. For 2022 and 2021, the Company’s borrowings issued at floating rates were mainly denominated in New Taiwan dollars.
B. If the interest rates of borrowing NTD increases or decreases by 1%, while all

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other factors remain constant, the net profit after tax for 2022 and 2021 is an increase of NT$4,800 and NT$5,600, respectively, mainly due to the interest expense changes caused by the floating interest rate.

(2) Credit risk
A. Credit risk refers to the risk of financial loss of the Company arising from default by the clients or counterparties of financial instruments under contract obligations, and the defaults are accounts receivable.
B. The management of credit risk is established with a Company perspective. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analyzing 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 Office of the General Manager. The utilization of credit limits is regularly monitored.
C. The Company adopts the above assumption provided by the IFRS 9 that if a contract payment is overdue for more than 90 days in accordance with the agreed payment terms, it is considered a breach of contract.
D. The Company adopts the following assumption provided by the IFRS 9 as a basis for determining whether there is a significant increase in the credit risk of financial instruments after the original recognition:
- If the contract payment is overdue for more than 30 days in accordance with the agreed payment terms, the credit risk of the financial asset is significantly increased since the original recognition.
E. The Company categorizes the accounts receivable from customers based on their nature. The provision matrix and the loss ratio method are adopted as the basis for estimating the expected credit loss.
F. The Company may write off the amount of financial assets that cannot be reasonably expected to be recovered after recourse. However, the Company will still continue the recourse to protect the rights of the claims. For the year ended December 31, 2022 and 2021, the Company has no creditor’s rights that have been written off but are involved in recourse.
G. The Company has included the global economic indicators and signals and estimated the loss allowance for notes receivable and accounts (including the interested parties) based on the loss rates built according to historic and current data. The provision matrix and loss rate as of December 31, 2022 and 2021 are show as follows:

December 31, 2022 Expected rate of loss Not overdue 0.01%~0.15% Overdue within 30 days 0.18%~1.83% Overdue 31 to 60 days 0.19%~1.86% Overdue 61 to 90 days 1.11%~11.14% Overdue 91 10.00%~100.00%	$	Total book value 295,918 - - - - 295,918		Allowance for losses $ 294 - - - - $ 294
	$

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December 31, 2021	Expected rate of loss	Total book value	Total book value	Total book value	Allowance for losses	Allowance for losses
Not overdue	0.02%~0.17%	$	346,246		$	294
Overdue within 30 days	0.21%~2.08%		35,945			-
Overdue 31 to 60 days 0.21%~2.12%				-		-
Overdue 61 to 90 days 0.80%~8.00%				-		-
Overdue 91	10.00%~100.00%		18,345			18,345
		$	400,536		$	18,639
H. The Company adopts a simplified method			in which the loss allowance for the
accounts	receivable	is		shown		below:
					2022
			Notes receivable and			accounts
			(including interested parties)
January 1			$			18,639
Impairment loss reversal			(		18,345)
December 31			$			294
					2021
			Notes receivable and			accounts
			(including interested parties)
January 1			$			294
Impairment loss is recognized						18,345
December 31			$			18,639

The amount recognized above is based on other credit enhancements held, so the unrecognized loss allowance as of December 31, 2022 and 2021 are NT$470 and NT$147. Among the losses recognized (reversed) in 2022 and 2021, the impairment losses recognized (reversed) in accounts receivable arising from customer contracts were NT$(18,345) and NT$18,345, respectively.

(3) Liquidity risk

A. Cash flow forecasting is performed by the operating entities of the Company and aggregated by the Company’s Finance Department. It monitors rolling forecasts of liquidity requirements to ensure the Company has sufficient cash to meet operational needs and maintain sufficient unencumbered loan commitments at all times. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, and compliance with internal balance sheet ratio targets.

B. The Company’s unutilized Maturing in one year or less Mature beyond one year	borrowings are shown as follows: December 31, 2022 December 31, 2021 $ 920,000 $ 920,000 500,000 - $ 1,420,000 $ 920,000

C. The table below analyses the Company’s non-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. The amounts disclosed in the table are the contractual undiscounted cash flows.

~49~

Non-derivative financial liabilities: December 31, 2022 Shot-term borrowings Payable notes Accounts payable Other payable Lease liabilities Long-term borrowings Deposits received (Recognized as other current liabilities-others) Non-derivative financial liabilities:	Within 1 year 1 to 2 years $ 100,000 $ - 1,283 - 143,046 - 259,402 - 1,019 500 8,820 506,170 266 - Within 1 year 1 to 2 years	2 to 5 years $ - - - - 144 - - 2 to 5 years

December 31, 2021 Shot-term borrowings Payable notes Accounts payable Other payable Lease liabilities Long-term borrowings Deposits received (Recognized as other current liabilities-others)
	$ 150,000 $ - 1,215 - 77,550 - 295,143 - 961 772 7,227 606,856 266 -	$ - - - - 253 - -

(3) Fair value information

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: The quotation (unadjusted) of the same assets or liabilities that can be acquired by the company in an active market on 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 Company’s investment in publicly traded or OTC stocks is included.
Level 2: It refers to the directly or indirectly observable input value of asset or liability, except for those quotations included in Level 1.
Level 3: The unobservable inputs of assets or liabilities.
Please refer to Note 6 (7) for the fair value of investment property carried at cost.
Financial instrument not measured at fair value:
Include the book value of cash and cash equivalents, notes receivable, accounts receivable (including the interested parties), other receivable, short-term borrowings, short-term notes payable, Notes payable, accounts payable and other accounts payable as reasonable approximation of fair value.
The related information for 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 is as follows:

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(1)	The Company classifies them information December 31, 2022 Assets Repeatable fair value Financial assets at fair value through profit and loss Equity securities December 31, 2021 Assets Repeatable fair value Financial assets at fair value through profit and loss Equity securities	based on the is Level 1 $- Level 1 $-	nature of assets and liabilities, and the as follows: Level 2 Level 3 Total $- $33,317 $33,317 Level 2 Level 3 Total $- $26,726 $26,726
		$	$

(2) The methods and assumptions adopted by the Company to measure fair value are as follows:
- A. The fair value of other financial instruments is obtained by valuation or reference to quotation from counterparties.
- B. When assessing non-standardized and less complex financial instruments, the Company adopts valuation techniques widely used by other market participants. The parameters used in the valuation models for this type of financial instruments are usually observable market information.
- C. The output of valuation models are estimates, and the valuation techniques may not reflect all factors affecting the financial instruments and non-financial instruments held by the Company. Therefore, the estimates of valuation models will be adjusted according to additional parameters, such as model risk or liquidity risk. Based on the management policies of the Company’s valuation model at fair value and the related control procedures, the management believes that to fairly present the fair value of financial and non-financial instruments in the individual balance sheet, adjusting valuation may be appropriate and necessary. Price information and parameters used in valuation are carefully assessed and they are appropriately adjusted according to the current market conditions.
There were no transfers between Level 1 and 2 in 2022 and 2021.
The following table shows the changes in Level 3 in 2022 and 2021:

January 1 Income recognized in profit or loss (Note) Payment on shares refunded by capital decrease December 31 Note: Other gains and losses listed.	2022 Equity instruments $ 26,726 9,591 ( 3,000) $ 33,317	2021 Equity instruments $ 32,456 3,270 ( 9,000) $ 26,726

There were no transfers in and/or out of Level 3 in 2022 and 2021.

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With respect to the valuation of fair value classified as Level 3, the Finance Department is responsible for the independent verification of fair value of financial instruments. Based on independent information, the valuation results can be closer to the market conditions. The independence and reliability of information and the consistency with other sources, as well as other necessary adjustments to the fair value, can ensure that the results are reasonable.
In addition, the Finance Department develops valuation policies and procedures for fair value of financial instruments and ensure that they comply with the requirements of the International Financial Reporting Standards.
The quantitative and sensitivity analysis of significant and unobservable input of valuation models used for measuring Level 3 fair value is shown as follows:

Shares of venture capital Shares of venture capital	Fair value as of December 31, 2022 Valuation technique Significant unobservable input value Relationship between input value and fair value $ 33,317 Net asset value method Not applicable Not applicable Fair value as of December 31, 2021 Valuation technique Significant unobservable input value Relationship between input value and fair value $ 26,726 Net asset value method Not applicable Not applicable	Relationship between input
		value and fair

The Company conducts careful assessment before determining the valuation model and parameters to be used, and the use of different valuation models or parameters may lead to different valuation results.

13. Notes of disclosure

(1) Information about important transactions

Loans to others: None
Provision of endorsements and guarantees to others: None
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to Table 1.
The cumulative purchase or sale of the same security for an amount exceeding NT$300 million or 20% of paid-in capital: Not applicable.
Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: Pease refer to Table 2.
Disposition of real estate properties amounting to more than NTD300 million or 20% of paid up capital: Not applicable.
Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 3.
Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to Table 4.
Engaged in derivatives trading: None.
Significant inter-company transactions during the reporting periods: Please refer to Table

~52~

5.

(2) Information regarding investees

Names, locations and other information of investee companies (not including investees in China): Please refer to Table 6.

(3) Information regarding investment in the territory of mainland china

Basic information: None.
Significant transactions, either directly or indirectly through a third area, with investee companies in China: None.

(4) Information of major shareholders

Information of major shareholders: Please refer to Table 7.

14. Segment information

Based on IAS 8 and is also disclosed in the consolidated financial report.

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Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

January 1 to December 31, 2022

Attached table 1 Unit: NTD thousand (Except where otherwise stated) At ending Type and name of marketable securities Shareholding Holding company (Note 1) Relationship with the securities issuer Account titles in book Quantity Book value (Note 2) percentage Fair value Remarks Chunghwa Chemical Synthesis & Common shares None Financial assets at fair value 1,800,000 $ 33,317 1.71% $ 33,317 None Biotech Co., Ltd. China Development Biomedical Venture through profit and loss Capital (limited company)

Note 1: Securities as stated in this table are the stocks, bonds, beneficiary certificates and the securities deriving from the above items within the scope of IFRS 9, “Financial Instruments”.

Note 2: Book value is determined based on fair value less accumulated impairment for marketable securities measured at fair value. For those not measured at fair value, the book value is determined based on the acquisition cost or amortized cost less accumulated impairment.

Attached table 1 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Acquisition of real estate reaching $300 million or 20% of paid-in capital or more

January 1 to December 31, 2022

Attached table 2

Unit: NTD thousand

(Except where otherwise stated)

Relation	If	the trading partner is a related party, their previous	Reference basis	Purpose of	Other stipulations
	Owner Chunghwa Chemical Synthetic Industry Co., Ltd. (note 3)	transfer information Relationship with the issuer Transfer date Amount The Bank April 6, 1971 $ 313
				acquisition	of the transaction
			for price Note 1	and usage For the purpose of building additional production lines.
Other related parties					None

Note 1: The price is determined with reference to the appraisal reports issued by Dawaland and Yeshome Real Estate Appraisers. Note 2: The event date refers to the transaction date, payment date, commission date, account transfer date, board resolution date, or other dates when the trade counterparty and trade amount is confirmed, whichever is sooner. Note 3: Formerly known as Chunghwa Chemical Synthetic Industry Co., Ltd., and later renamed as Chunghwa Chemical Synthesis & Biotech Co. Ltd. with the consent of the shareholders' meeting in 2003.

Attached table 2 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Purchase from or sale to related parties for an amount exceeding NT$100 million or 20% of paid-in capital

January 1 to December 31, 2022

Attached table 3

Unit: NTD thousand

(Except where otherwise stated)

							Trading terms different	from general trade
				Transactions			and reasons		Notes and accounts	receivable (payable)
										Percentage of total
					Percentage of total					notes, accounts
Purchase (sale) company	Name of counterparty	Relation	Purchase (sale)	Amount	purchase (sale)	The credit period	Unit price	The credit period	Balance	receivable (payable)	Remarks
Chunghwa Chemical Synthesis	PHARMAPORTS, LLC	Subsidiaries	Sale	$ 1,389,416	67%	Collection period is	The agreed amount of	-	$ 219,457	73%	None
& Biotech Co., Ltd.						60 to 90 days after	the two parties
						delivery.

Note: The disclosure is made by the income and corresponding transactions will not be disclosed additionally.

Attached table 3 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

January 1 to December 31, 2022

Attached table 4 The company booked in the receivables Name of counterparty Relation Chunghwa Chemical Synthesis & Biotech Co., Ltd. PHARMAPORTS, LLC Subsidiaries $ " " "	Receivables from related party 219,457 2,631 (Note)	Overdue Receivables from related parties Turnover rate Amount Disposal Method 5.73 $ - - $ - - -	Unit: NTD thousand (Except where otherwise stated) Receivables amount collected from related parties subsequently Provision for loss allowance 219,457 $ - 2,631 -	Unit: NTD thousand (Except where otherwise stated) Receivables amount collected from related parties subsequently Provision for loss allowance 219,457 $ - 2,631 -
				$ - -

Note: As other receivables.

Attached table 4 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Significant inter-company transactions during the reporting periods

January 1 to December 31, 2022

Attached table 5

Unit: NTD thousand

(Except where otherwise stated)

Code (Note 1) Trader’s name Counterparty 0 Chunghwa Chemical Synthesis & Biotech Co., Ltd. PHARMAPORTS, LLC 0 Chunghwa Chemical Synthesis & Biotech Co., Ltd. PHARMAPORTS, LLC 0 Chunghwa Chemical Synthesis & Biotech Co., Ltd. PHARMAPORTS, LLC 0 Chunghwa Chemical Synthesis & Biotech Co., Ltd. PHARMAPORTS, LLC	Relationship (Note 2) Item 1 Sales revenue $ 1 Accounts receivable 1 Other revenue 1 Other receivable	Amount 1,389,416 219,457 3,549 2,631	Transactions Terms and conditions Note 4 Note 4 Note 4 Note 4	Percentage	of consolidated total

				operating re	venues or total assets
					(Note 3) 66% 5% 0% 0%

Note 1:The information about transactions between parent company and subsidiaries shall be numbered and noted in the following manner in the box of numbers:

(1) Fill in “0” for parent company.
(2) Subsidiaries are numbered from number 1.
Note 2: The relationship with the traders is classified into three categories, which should be specified (the transaction conducted between the parent company and its subsidiaries or between two subsidiaries need not be disclosed in duplication). Such as: if the parent company has the transaction with the subsidiaries disclosed, the subsidiaries need not to have it disclosed in duplication. If one of the two subsidiaries has the transaction disclosed, the other subsidiary needs not to have it disclosed in duplication).
(1) Parent company vs. subsidiaries.
(2) Subsidiaries vs. parent company.
(3) Subsidiaries vs. subsidiaries.
Note 3: For computing the ratio of trade amount to total sales revenue or total assets, if it is for asset and liability account, the computation is based on the ratio of ending balance to total consolidated assets; however, if it is for income and expense account, the computation is based on the ratio of interim cumulative amount to total consolidated revenue.

Note 4: Payment collection terms for sales and service provided to related parties are 60 to 90 days after shipment and provision of service, respectively.

Attached table 5 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Names, locations and other information of investee companies (not including investees in China)

January 1 to December 31, 2022

Attached table 6

Unit: NTD thousand

(Except where otherwise stated)

Investor Name of investee Location Principal business Chunghwa Chemical Synthesis & Biotech Co. Ltd. PHARMAPORTS, LLC U.S. Trading of API drugs $ Chunghwa Chemical Synthesis & Biotech Co. Ltd. China Chemical & Pharmaceutical Co., Ltd. Taiwan Manufacturing and sales of pharmaceuticals and health care products and import of the related medical equipment.	Sum of initial investment Ending shareholding Current period-end The end of last year Quantity Ratio Book value 4,925 $ 4,925 - 98.00% $ 9,131 863,602 863,602 42,053,137 14.11% 964,937	Current period profit / loss of the investee $ 13,740 $ 491,016	Recognized investment Income Remarks 13,465 Subsidiaries 51,100 Affiliate business

Attached table 6 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Information of major shareholders January 1 to December 31, 2022 Attached table 7

Shareholding

Name of main shareholder Number of shares held Shareholding percentage China Chemical & Pharmaceutical Co., Ltd. 21,575,064 27.81

Attached table 7 Page 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Cash and cash equivalents

December 31, 2022

List 1 Item Petty Cash Cash on hand Bank deposits Check deposits Demand deposit - NTD Demand deposit - Foreign currency US$ 5,776,830, at NTD.	Summary a rate of 1 USD = 30.71	Unit: $	NTD thousand Amount 517 105 51,767 61,963 177,406 291,758
		$

Page 1 of List 1

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Inventory

December 31, 2022

List 2

Unit: NTD thousand

Item Raw materials Work in process Finished products Subtotal Less: Allowance for inventory price decline	Summary	$	Amount Remarks Cost Net realizable value 289,037 $ 319,363The replacement cost of raw materials is the net realizable value, and the work in process products and the finished products are evaluated by the net realizable value. 168,141 366,813 439,639 971,763 896,817$ 1,657,939 76,864) 819,953
		(
		$

Page 1 of List 2

List 3 Name Balance, beginning Quantity Amount China Chemical & Pharmaceutical Co., Ltd. 42,053,137 $ 1,032,860 PHARMAPORTS,LLC -9,289 $ 1,042,149	List 3 Name Balance, beginning Quantity Amount China Chemical & Pharmaceutical Co., Ltd. 42,053,137 $ 1,032,860 PHARMAPORTS,LLC -9,289 $ 1,042,149	Chunghwa Chemical Synthesis & Biotech Co., Ltd. Investment changes using the equity method January 1 to December 31, 2022 Increase Decrease Balance, ending Quantity Amount Quantity Amount Quantity Shareholding percentage - $ 58,274 - ($126,197) 42,053,137 14.11% $ -14,873 -( 15,031) - 98.00% $ 73,147 ($141,228) $	Chunghwa Chemical Synthesis & Biotech Co., Ltd. Investment changes using the equity method January 1 to December 31, 2022 Increase Decrease Balance, ending Quantity Amount Quantity Amount Quantity Shareholding percentage - $ 58,274 - ($126,197) 42,053,137 14.11% $ -14,873 -( 15,031) - 98.00% $ 73,147 ($141,228) $

$
		percentage 14.11% 98.00%
$	1,042,149		$

Page 1 of List 3

List 4 Creditor Summary Hua Nan Commercial Bank Credit loan Bank of Taiwan 〃 Chang Hwa Bank 〃	Chunghwa Chemical Synthesis & Biotech Co., Ltd. Statement of long-term borrowings December 31, 2022 Loan amount Agreement Terms $ 300,000 2022.12.28~2024.12.28 100,000 2022.12.21~2024.01.12 100,000 2022.09.28~2024.06.27 $ 500,000	Chunghwa Chemical Synthesis & Biotech Co., Ltd. Statement of long-term borrowings December 31, 2022 Loan amount Agreement Terms $ 300,000 2022.12.28~2024.12.28 100,000 2022.12.21~2024.01.12 100,000 2022.09.28~2024.06.27 $ 500,000	Unit: NTD thous Interest rate Collateral and Mortgage 1.76% None 1.79% 〃 1.76% 〃	Unit: NTD thous Interest rate Collateral and Mortgage 1.76% None 1.79% 〃 1.76% 〃	Unit: NTD thous Interest rate Collateral and Mortgage 1.76% None 1.79% 〃 1.76% 〃
		$
					Mortgage None 〃〃
		$

Unit: NTD thousand

Page 1 of List 4

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Operating revenues

January 1 to December 31, 2022

List 5 Item Biotechnology products Non-biotechnology products Labor revenue Net operating income	Volume 7,493 KG $ 181,902 KG $	Volume 7,493 KG $ 181,902 KG $	Unit: NT Amount Remarks 1,023,985 1,034,795 6,415 2,065,195
		$

Unit: NTD thousand

Page 1 of List 5

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Operating cost January 1 to December 31, 2022

List 6 Item Beginning raw materials Add: Incoming materials delivered for the period Transfer-in of finished products Sales of raw materials Less: Raw materials at the end of period Transferred to R&D expenses Scrapped raw materials Direct material usage Direct labor Manufacturing overhead Manufacturing cost Add: Opening balance of work in process products Transfer-in of finished products Less: Ending balance of work in process products Cost for finished goods Add: Opening balance of finished products Less: Ending balance of finished products Transfer-in of work in process products Raw materials transferred in Transferred to R&D expenses Transferred as labor costs Finished products scrapped Cost of goods sold Less: Loss on inventory falling price (gain from price recovery) Proceeds from sale of scraps. Add: Inventory disposition losses Labor service cost Total operating cost	Summary	( ( ( (	$	Amount 366,960 708,190 947 4,912) 289,037) 3,875) 3,511) 774,762 65,809 452,500 1,293,071 71,866 1,528,243 168,141) 2,725,039 396,099 439,639) 1,528,243) 947) 9,938) 2,845) 30,330) 1,109,196 4,211) 3,868) 33,841 3,965 1,138,923	Unit: NT Remarks

		(
		( ( ( ( ( (
		( (
			$

Unit: NTD thousand

Page 1 of List 6

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Manufacturing overhead January 1 to December 31, 2022

List 7 Item Depreciation Salaries Utilities expenses Garbage and sludge cleaning and transportation fees Consumables Repairs expenses Fuel expenses Other Expenses	Summary	$	Unit: NTD t Amount Remarks 133,406 95,484 51,285 37,793 37,020 19,605 21,898 56,009 The amount of each item did not exceed 5% of this account. 452,500
		$

Unit: NTD thousand

Page 1 of List 7

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Marketing expenses January 1 to December 31, 2022

List 8 Item Commission expense Transportation expenses Salaries Insurance expenses Other Expenses	Summary	$	Unit: NTD tho Amount Remarks 62,621 48,172 17,188 7,820 12,927 The amount of each item did not exceed 5% of this account. 148,728
		$

Unit: NTD thousand

Page 1 of List 8

List 9 Item Salaries Directors' remuneration Professional service expenses Other Expenses	Chunghwa Chemical Synthesis & Biotech Co., Ltd. Administrative expenses January 1 to December 31, 2022 Unit: NTD th Summary Amount Remarks $ 57,379 15,885 13,428 22,621 The amount of each item did not exceed 5% of this account. $ 109,313

Unit: NTD thousand

Page 1 of List 9

List 10 Item Salaries Depreciation Consumables Trial production expense Other Expenses	Chunghwa Chemical Synthesis & Biotech Co., Ltd. Research and development expenses January 1 to December 31, 2022 Unit: NTD t Summary Amount Remarks $ 125,682 28,851 25,587 11,150 54,217 The amount of each item did not exceed 5% of this account. $ 245,487

Unit: NTD thousand

Page 1 of List 10

AI assistant

CCSB — Audit Report / Information 2022

51917_rns_2022-11-11_ea289b53-f0c4-4402-8821-4a09bab825df.pdf

Chunghwa Chemical Synthesis & Biotech

Co., Ltd.

Tel: (02)8684-3318

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

The 2022 and 2021 Individual Financial Report and Independent Auditor’s Report

Table of Contents

Audit opinion

Basis of an audit opinion

Key Audit Matters

Accounting assessment of inventory valuation

Description of the matter

The responsive auditing process

Checking whether the time point of sales income recognition is appropriate

Description of the matter

The responsive auditing process

The responsibility of the management and management units to the individual financial statements

The responsibilities of the independent auditor to the individual financial statements

Notice to Readers

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual Balance Sheet

December 31, 2022 and 2021

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual Balance Sheet

December 31, 2022 and 2021

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual comprehensive income statements January 1 to December 31, 2022 and 2021

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Individual statement of changes in equity January 1 to December 31, 2022 and 2021

Chunghwa Chemical Synthesis & Biotech Co., Ltd.

Individual Cash Flow Statement

January 1 to December 31, 2022 and 2021

Chunghwa Chemical Synthesis & Biotech Co., Ltd. Notes to the individual financial statements

1. Company history

2. Date On Which And Procedures By Which The Financial Reports Were Authorized For Issuance

3. Application of New Standards, Amendments and Interpretations

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

4. Summary of significant accounting policies

(1) Compliance Statement

(2) Basis of preparation

- (3) Foreign currency translations

(5) Cash equivalents

(6) Financial assets at fair value through profit and loss

(7) Accounts receivable and notes

(8) Impairment of Financial Assets

(9) The de-recognition of financial assets

(10) The lessor’s lease transaction/business lease

(11) Inventory

(12) Investments using the equity method - Subsidiaries and affiliates

(13) Property , plant, and equipment

(14) The lessee’s lease transaction-right-of-use assets/lease liabilities.

(15) Investment property

(16) Intangible assets

(17) Losses in non-financial asset

(18) Loans

(23) Income tax

(25) Recognition of revenue

5. Critical accounting judgments, estimates and key sources of assumption uncertainty

(1) Critical judgments concerning the application of accounting policies

(2) Critical accounting estimates and assumptions

Evaluation of inventory

6. Summary of significant accounting titles

(1) Cash and cash equivalents

(2) Financial assets at fair value through profit and loss

(4) Inventory

2. Profit and loss of subsidiaries and associates recognized by using equity method:

(6) Property , plant, and equipment

(7) Investment property

(8) Shot-term borrowings

(9) Other payable

(11) Pension

(14) Retained earnings

(15) Operating revenues

(16) Interest income

(22) Earnings per share

(23) Supplemental cash flow information

(24) Changes in liabilities arising from financing activities

7. Related party transactions

(1) Name and relationship of related parties

(2) Major transactions with related parties

(3) Remuneration to key management

8. Collateralized assets

CCSB Audit Report / Information 2022