CHC — Audit Report / Information 2018

Nov 13, 2018

CHC HEALTHCARE GROUP

PARENT COMPANY ONLY

FINANCIAL STATEMENTS AND AUDIT REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of CHC Healthcare Group

Opinion

We have audited the accompanying parent company only balance sheets of CHC Healthcare Group (the “Company”) as at December 31, 2018 and 2017, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended, in accordance with the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with this Code. We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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Key audit matters on the parent company only financial statements for the year ended December 31, 2018 were as follows:

Assessment of investments accounted for using equity method

Refer to Note 4(11) for accounting policy on investments accounted for using equity method, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of investments accounted for using equity method, and Note 6(4) for details of investments accounted for using equity method.

As of December 31, 2018, the Company’s subsidiary, Chiu Ho Medical System Co., Ltd. and its subsidiaries (“Chiu Ho Medical System Group”), recognised investments accounted for using equity method and investment income amounting to NT$3,395,576 thousand and NT$109,233 thousand, respectively. Because Chiu Ho Medical System Group’s investments accounted for using equity method constituted 44% of the Company’s total assets as of December 31, 2018, and investment income constituted 40% of the Company’s profit before tax for the year ended December 31, 2018, which are significant to the Company’s financial statements, we identified assessment of investments accounted for using equity method as a key audit matter as well as the key audit matters, impairment assessment of goodwill and property, plant and equipment included in Chiu Ho Medical System Group’s financial statements. The key audit matters in relation to Chiu Ho Medical System Group’s financial statements for the year ended December 31, 2018 are stated as follows:

Impairment assessment of goodwill

Description

As of December 31, 2018, Chiu Ho Medical System Group’s goodwill arising from business combination amounted to NT$150,617 thousand. After identifying the smallest cash generating unit which can generate independent cash flows, Chiu Ho Medical System Group used the recoverable amount of each cash generating unit to assess whether goodwill may be impaired. Since the assumptions that management used to assess whether goodwill is impaired involve subjective judgement and have high uncertainty, we considered the impairment assessment of goodwill as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

A. Obtained an understanding of whether the management identifies the objective evidence of

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goodwill impairment by following the procedure and taking into account certain factors in a consistent manner and confirmed whether the management uses reliable information.

• B. Obtained the report on the valuation of the subsidiary issued by an expert as per the management’s request and performed the following:

• (1) Assessed the independence, objectiveness and competence by reviewing the expert’s qualification.

• (2) Assessed whether the valuation model is reasonable based on our knowledge of the Chiu Ho Medical System Group’s businesses and industry.

• (3) Confirmed whether the expert uses the same future cash flows relative to the budget for the next five years provided by the management.

• (4) Checked whether the comparable assets adopted in appraisal report are consistent with the actual operation.

• (5) Assessed whether the significant assumptions applied by the expert are relevant and reasonable and tested the mathematical accuracy.

Impairment assessment of property, plant and equipment

Description

Some of Chiu Ho Medical System Group’s leasing businesses were not as profitable as expected due to fierce competition in healthcare industry. The Chiu Ho Medical System Group assesses the impairment based on the estimated recoverable amounts of leasing assets (shown as property, plant and equipment) where there is an indication that they are impaired. Given that the calculation of recoverable amounts requires significant accounting estimates relying upon subjective judgement and uncertainty, we consider the impairment assessment of leasehold assets using the cash-generating units as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures on the above key audit matter:

• A. Obtained an understanding of whether the management identifies the objective evidence of impairment by following the procedure and taking into account certain factors in a consistent manner and confirmed whether the management uses reliable information.

• B. Acquired the asset appraisal report issued by an expert as per the management’s request and

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performed the following:

• (1) Assessed the expert’s independence, objectiveness and competence by reviewing the expert’s qualification.

• (2) Assessed whether the valuation method is widely adopted and appropriate based on our knowledge of the Chiu Ho Medical System Group’s businesses and industry.

• (3) Confirmed whether the replacement cost, comparative objects and the assets’ use indicated on the appraisal report truthfully reflect the actual operation.

• (4) Assessed whether the significant assumptions applied by the expert is relevant and reasonable and tested the mathematical accuracy.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, and for such internal controls as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but it is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions

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of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• A. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.

• B. Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls.

• C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• E. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the current period and are therefore the key audit matters. We describe these matters in our report unless the law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

For and on behalf of PricewaterhouseCoopers, Taiwan March 22, 2019

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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CHC HEALTHCARE GROUP PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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December 31, 2018 December 31, 2017
Assets Notes Amount % Amount %
Current assets
1100 Cash and cash equivalents 6(1) $ 50,008 - $ 549,051 8
1110 Financial assets at fair value 6(2)(15)
through profit or loss - current 53,482 1 - -
1180 Accounts receivable - related 7
parties 3,370 - 1,011 -
1200 Other receivables - - 446 -
1210 Other receivables due from 7
related parties 541,975 7 121,223 2
1220 Current tax assets 2,576 - 2,185 -
1410 Prepayments 6,514 - 4,204 -
1470 Other current assets 8 - - 30,000 -
11XX Total current assets 657,925 8 708,120 10
Non-current assets
1510 Financial assets at fair value 6(2)(15)
through profit or loss - non-
current 492 - 660 -
1517 Financial assets at fair value 6(3)
through other comprehensive
income - non-current 14,394 - - -
1523 Available-for-sale financial assets
- non-current - - 62,890 1
1550 Investments accounted for using 6(4)
equity method 7,010,440 90 6,350,651 88
1600 Property, plant and equipment 1,832 - 2,996 -
1840 Deferred tax assets 6(18) 49,516 1 2,172 -
1980 Other financial assets - 8
non-current 57,053 1 53,802 1
1990 Other non-current assets 1,438 - 1,912 -
15XX Total non-current assets 7,135,165 92 6,475,083 90
1XXX Total assets $ 7,793,090 100 $ 7,183,203 100
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CHC HEALTHCARE GROUP PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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December 31, 2018 December 31, 2017
Liabilities and Equity Notes Amount % Amount %
Current liabilities
2100 Short-term borrowings 6(5) $ 180,000 3 $ - -
2150 Notes payable 1,464 - 892 -
2170 Accounts payable - - 31 -
2200 Other payables 20,565 - 7,532 -
2220 Other payables - related parties 7 - - 13,560 -
2300 Other current liabilities 6(6)(7) 929 - 487,502 7
21XX Total current liabilities 202,958 3 509,517 7
Non-current liabilities
2530 Bonds payable 6(6) 1,177,035 15 1,164,693 16
2540 Long-term borrowings 6(7) and 8 1,440,000 18 595,000 9
2570 Deferred tax liabilities 6(18) 734 - 625 -
25XX Total non-current liabilities 2,617,769 33 1,760,318 25
2XXX Total liabilities 2,820,727 36 2,269,835 32
Equity
Share capital 6(10)
3110 Share capital - common stock 1,399,136 18 1,399,136 19
Capital surplus 6(6)(9)(11)
3200 Capital surplus 2,930,253 38 2,927,016 41
Retained earnings 6(12)
3310 Legal reserve 245,206 3 245,206 3
3320 Special reserve 33,211 - 171,995 2
3350 Unappropriated retained earnings 763,134 10 203,226 3
Other equity 6(3)
3400 Other equity ( 363,621) ( 4) ( 33,211) -
3500 Treasury shares 6(10) ( 34,956) ( 1) - -
3XXX Total equity 4,972,363 64 4,913,368 68
Significant contingent liabilities 9
and unrecognised contract
commitments
3X2X Total liabilities and equity $ 7,793,090 100 $ 7,183,203 100
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The accompanying notes are an integral part of these parent company only financial statements.

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CHC HEALTHCARE GROUP

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT FOR EARNINGS (LOSS) PER SHARE AMOUNTS)

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2018 2017
Items Notes Amount % Amount %
4000 Operating revenue 6(13) and 7 $ 435,545 100 $ 326,640 100
5000 Operating costs 6(8)(9)(17) and 7 ( 101,775) ( 23) ( 89,709) ( 28)
5900 Gross profit 333,770 77 236,931 72
Non-operating income and expenses
7010 Other income 6(14) and 7 3,986 1 2,988 1
7020 Other gains and losses 6(2)(15) ( 21,469) ( 5) ( 286,938) ( 88)
7050 Finance costs 6(16) ( 42,188) ( 10) ( 39,643) ( 12)
7000 Total non-operating income and
expenses ( 59,671) ( 14) ( 323,593) ( 99)
7900 Profit (loss) before income tax 274,099 63 ( 86,662) ( 27)
7950 Income tax benefit (expense) 6(18) 49,323 11 ( 33) -
8000 Profit (loss) from continuing operation 323,422 74 ( 86,695) ( 27)
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8316 Unrealised gains (losses) from 6(3)
investments in equity instruments
measured at fair value through other
comprehensive income ( 48,496) ( 11) - -
8330 Share of other comprehensive income of
subsidiary, associates and joint
ventures accounted for using the equity
method, components of other
comprehensive income that will not be
reclassified to profit or loss 5,890 1 - -
Components of other comprehensive
income that will be reclassified to profit
or loss
8361 Financial statements translation
differences of foreign operations ( 8,676) ( 2) ( 8,487) ( 3)
8362 Unrealised gains (losses) on valuation of
available-for-sale financial assets - - 153,996 47
8380 Share of other comprehensive income
(loss) of associates and joint ventures
accounted for using equity method ,
components of other comprehensive
income that will be reclassified to
profit or loss 347 - ( 8,168) ( 2)
8399 Income tax related to components of
other comprehensive income that will
be reclassified to profit or loss ( 2,150) - 1,443 1
8300 Other comprehensive (loss) income for
the year ($ 53,085) ( 12) $ 138,784 43
8500 Total comprehensive income for the year $ 270,337 62 $ 52,089 16
Earnings (loss) per share
9750 Basic earnings (loss) per share $ 2.32 ($ 0.62)
9850 Diluted earnings (loss) per share $ 2.02 ($ 0.62)
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The accompanying notes are an integral part of these parent company only financial statements.

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CHC HEALTHCARE GROUP

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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Capital Reserves Retained Earnings Other Equity Interest
Unrealised gains
Financial (loss) on financial
statements assets at fair value Unrealised gains
translation through other (losses) on
Treasury share Employee share Unappropriated differences of comprehensive available-for-sale
Notes Ordinary share Share premium transactions options Others Legal reserve Special reserve retained earnings foreign operations income financial assets Treasury shares Total equity
2017
Balance at January 1, 2017 $ 1,398,478 $ 2,806,521 $ 173 $ 57,416 $ 27,600 $ 229,313 $ 93,146 $ 526,742 ($ 11,320) $ - ($ 160,675) $ - $ 4,967,394
Loss for the year - - - - - - - ( 86,695) - - - - ( 86,695)
Other comprehensive income (loss) - - - - - - - - ( 7,438) - 146,222 - 138,784
Total comprehensive income (loss) - - - - - - - ( 86,695) ( 7,438) - 146,222 - 52,089
Appropriations of 2016 earnings 6(12)
Legal reserve - - - - - 15,893 - ( 15,893) - - - - -
Special reserve - - - - - - 78,849 ( 78,849) - - - - -
Cash dividends - - - - - - - ( 140,490) - - - - ( 140,490)
Redemption of convertible bonds - 18,765 - - ( 18,765) - - - - - - - -
Conversion of convertible bonds - - - - 30,842 - - - - - - - 30,842
Exercise of employee stock options 6(10) 658 5,104 - ( 3,277) - - - - - - - - 2,485
Compensation cost of employee stock options 6(9) - - - 1,279 - - - - - - - - 1,279
Compensation cost of employee stock options of
subsidiaries - - - 1,358 - - - - - - - - 1,358
Difference between consideration and carrying
amount of subsidiaries acquired or disposed - - - - - - - ( 1,589) - - - - ( 1,589)
Balance at December 31, 2017 $ 1,399,136 $ 2,830,390 $ 173 $ 56,776 $ 39,677 $ 245,206 $ 171,995 $ 203,226 ($ 18,758) $ - ($ 14,453) $ - $ 4,913,368
2018
Balance at January 1, 2018 $ 1,399,136 $ 2,830,390 $ 173 $ 56,776 $ 39,677 $ 245,206 $ 171,995 $ 203,226 ($ 18,758) $ - ($ 14,453) $ - $ 4,913,368
Effects of retrospective application and restatement - - - - - - - 251,607 - ( 291,778) 14,453 - ( 25,718)
Balance at January 1 after adjustments 1,399,136 2,830,390 173 56,776 39,677 245,206 171,995 454,833 ( 18,758) ( 291,778) - - 4,887,650
Profit for the year - - - - - - - 323,422 - - - - 323,422
Other comprehensive loss - - - - - - - - ( 10,479) ( 42,606) - - ( 53,085)
Total comprehensive income (loss) - - - - - - - 323,422 ( 10,479) ( 42,606) - - 270,337
Appropriations of 2017 earnings 6(12)
Cash dividends - - - - - - - ( 153,905) - - - - ( 153,905)
Reversal of special reserve - - - - - - ( 138,784) 138,784 - - - - -
Compensation cost of employee stock options 6(9) - - - 1,207 - - - - - - - - 1,207
Compensation cost of employee stock options of
subsidiaries - - - 2,030 - - - - - - - - 2,030
Expired employee stock warrants - - - ( 7,372) 7,372 - - - - - - - -
Purchase of treasury shares 6(10) - - - - - - - - - - - ( 34,956) ( 34,956)
Balance at December 31, 2018 $ 1,399,136 $ 2,830,390 $ 173 $ 52,641 $ 47,049 $ 245,206 $ 33,211 $ 763,134 ($ 29,237) ($ 334,384) $ - ($ 34,956) $ 4,972,363
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Note: The employees’ compensation were $170 and $0, and the directors’ and supervisors’ remuneration were $4,800 and $0 in 2016 and 2017, respectively, which had been deducted from net income for the years.

The accompanying notes are an integral part of these parent company only financial statements.

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CHC HEALTHCARE GROUP

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before tax Adjustments Adjustments to reconcile profit (loss) Depreciation charge Amortisation expense Net loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Compensation cost of employee stock options Share of profit of associates and joint ventures accounted for using equity method Amortisation of discount on bonds payable Impairment loss on financial assets Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss-current Accounts receivable due from related parties, net Other receivables Prepayments Other non-current assets Changes in operating liabilities Notes payable Accounts payable Other payables Other payables to related parties Other current liabilities Cash (outflow) inflow generated from operations Interest received during the year Dividends received during the year Interest paid during the year Income tax paid Net cash flows (used in) from operating activities

Notes 2018 2017 $ 274,099 ( $ 86,662 ) 6(17) 1,164 1,148 6(17) 583 611 6(2)(15) 21,586 9,242 6(16) 26,333 26,070 6(14) ( 3,984 ) ( 2,980 ) 6(9) 1,207 1,279 6(13) ( 326,425 ) ( 220,080 ) 6(16) 15,855 13,573 6(15) - 277,325 ( 74,900 ) - ( 2,359 ) 1,362 446 ( 13 ) ( 2,310 ) 579 ( 109 ) - 572 ( 574 ) ( 31 ) ( 85 ) 12,891 ( 5,687 ) ( 13,560 ) 13,560 14 ( 167 ) ( 68,928 ) 28,501 3,232 3,133 3,152 157,808 ( 26,191 ) ( 26,042 ) ( 393 ) ( 4,133 ) ( 89,128 ) 159,267

(Continued)

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CHC HEALTHCARE GROUP

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

CASH FLOWS FROM INVESTING ACTIVITIES Increase in other receivable due from related parties Decrease in other current assets Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Increase in other financial assets - non-current Net cash flows (used in) from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Proceeds from issuing bonds Bonds issue cost Repayments of bonds Proceeds from long-term debt Repayments of long-term debt Payment of cash dividends Exercise of employee stock options Payments to acquire treasury shares Net cash flows from financing activities (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2018 2017 ( $ 420,000 ) ( $ 30,000 ) 30,000 70,000 7 ( 739,503 ) ( 259,670 ) 7 376,800 319,000 - ( 233 ) ( 3,251 ) ( 50,000 ) ( 755,954 ) 49,097 6(20) 180,000 - 6(6) - 1,200,000 - ( 6,800 ) ( 320,100 ) ( 693,566 ) 6(20) 1,440,000 - 6(20) ( 765,000 ) ( 85,000 ) 6(12) ( 153,905 ) ( 140,490 ) - 2,485 6(10) ( 34,956 ) - 346,039 276,629 ( 499,043 ) 484,993 549,051 64,058 $ 50,008 $ 549,051

The accompanying notes are an integral part of these parent company only financial statements.

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CHC HEALTHCARE GROUP

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANISATION

CHC Healthcare Group (“CHC” or the “Company”) was establihsed in November 2009. The Company was established for the purpose of enhancing the comprehensive performance in Greater China and implementing organisational restructuring with Chiu Ho Medical System Co., Ltd. and other affliates. The Company was listed on the Taiwan Stock Exchange on October 24, 2012. The Company is primarily engaged in investment in various businesses.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These parent company only financial statements were authorised for issuance by the Board of Directors on March 22, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2018 are as follows:

follows:
New Standards, Interpretations and Amendments Amendments to IFRS 2, ‘Classification and measurement of share- based payment transactions’ Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS 4, Insurance contracts’ IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Amendments to IFRS 15, ‘Clarifications to IFRS 15 Revenue from contracts with customers’ Amendments to IAS 7, ‘Disclosure initiative’ Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’ Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’	Effective date by International Accounting Standards Board
	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018

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New Standards, Interpretations and Amendments Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures

Effective date by International Accounting Standards Board

January 1, 2018 January 1, 2017 January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

• A. IFRS 9, ‘Financial instruments’

• (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.

• (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.

• (c) The Company has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Notes 12(4) B and C.

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

• (a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’, IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

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The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:

Step 1: Identify contracts with customer.

Step 2: Identify separate performance obligations in the contract(s).

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

Step 5: Recognise revenue when the performance obligation is satisfied.

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

• (b) The Company has elected not to restate prior period financial statements and recognised the cumulative effect of initial application as retained earnings at January 1, 2018, using the modified retrospective approach under IFRS 15. The significant effects of adopting the modified transition as of January 1, 2018 are summarised below:

The company’s subsidiary certain sales contracts of medical instruments contain provisions for advance sales receipts, wherein the period between advance collection and the transfer of control of goods is longer than one year. The committed price is adjusted and interest expense is recognised on advance sales receipts if the Company considers that the contract contains a significant financing component under IFRS 15, but is not regulated in previous revenue standards. Due to this difference, retained earnings was reduced by $8,093 and investments accounted for using equity method reduced by $8,093.

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

the Company

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

the Company New standards, interpretations and amendments endorsed by the FSC follows:	effective from 2019 are as
New Standards, Interpretations and Amendments Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	Effective date by International Accounting Standards Board
	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

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Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

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

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

endorsed by the FSC are as follows:
New Standards, Interpretations and Amendments Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	Effective date by International Accounting Standards Board
	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

(2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• (b) Financial assets at fair value through other comprehensive income / Available-for-sale financial assets measured at fair value.

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

• C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was

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recognised as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.

• (3) Foreign currency translation

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

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• (c) All foreign exchange gains and losses are presented in the statement of comprehensive income within “other gains or losses”.

• B. Translation of foreign operations

The operating results and financial position of all the Company entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

• (b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

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

(4) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realised within twelve months from the balance sheet date;

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  - (d) 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 months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (a) Liabilities that are expected to be paid off within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be paid off within twelve months from the balance sheet date;

  • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve 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.

• (5) Cash equivalents

Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and 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 commitment in operations are classified as cash equivalents.

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

Effective 2018

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(7) Financial assets at fair value through other comprehensive income

Effective 2018

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which The Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using settlement date accounting.

• C. At initial recognition, The Company measures the financial assets at fair value plus transaction

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costs. The Company subsequently measures the financial assets at fair value:

The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings. When the equity instruments are derecognised the cumulative gain or loss previously recognised in other comprehensive income is not reclassified from equity to profit or loss. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(8) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) Impairment of financial assets

For financial assets at amortised cost including accounts receivable that have a significant financing component, at each reporting date, the Company recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognises the impairment provision for lifetime ECLs.

(10) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(11) Investments accounted for using equity method – subsidiaries

• A. Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Unrealized gains or losses occurred from the transactions between the Company and subsidiaries have been offset. The accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise loss proportionately to its ownership.

• D. If changes in as do not result in loss control the Company’s shares in subsidiaries (transactions with non-controlling interests) transactions shall be considered as equity transactions, which

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are transactions between owners. Difference of adjustment of non-controlling interests and fair value of the consideration paid or received is recognised directly in equity.

• E. According to “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, profit and other comprehensive income in the parent company only financial statements should be the same as profit and other comprehensive income attributable to shareholders of the parent in the consolidated financial statements, and the equity in the parent company only financial statements should be the same as the equity attributable to shareholders of the parent in the consolidated financial statements.

(12) Property , plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate 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 derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. 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.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. 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 the change.

The estimated useful lives of property, plant and equipment are as follows:

Transportation equipment 5 years Other equipment 2 ~ 5 years

(13) Leased assets/ operating leases (lessee)

Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

(14) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the

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impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(15) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(16) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(17) Convertible bonds

Convertible bonds issued by the Company contain conversion options (that is, the bondholders have the right to convert the bonds into the Company’s common shares by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Company classifies the bonds payable upon issuance as a financial asset, a financial liability or an equity instrument in accordance with the contract terms. They are accounted for as follows:

• A. The embedded call options and put options are recognised initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.

• B. The host contracts of bonds are initially recognised at fair value. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortised in profit or loss as an adjustment to ‘finance costs’ over the period of circulation using the effective interest method.

• C. The embedded conversion options which meet the definition of an equity instrument are initially recognised in ‘capital surplus-share options’ at the residual amount of total issue price less the amount of financial assets or financial liabilities at fair value through profit or loss and bonds payable as stated above. Conversion options are not subsequently remeasured.

• D. Any transaction costs directly attributable to the issuance are allocated to each liability or equity component in proportion to the initial carrying amount of each abovementioned item.

• E. When bondholders exercise conversion options, the liability component of the bonds (including bonds payable and ‘financial assets or financial liabilities at fair value through profit or loss’) shall be remeasured on the conversion date. The issuance cost of converted common shares is

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the total book value of the abovementioned liability component and ‘capital surplus - share options’.

(18) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(19) Offsetting financial instruments

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

(20) Employee benefits

• A. Short-term employee benefits

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

• B. Pensions

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

• C. Employees’ compensation and directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

- (21) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(22) Income tax

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

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or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax 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 and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. 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.

• C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. However, the deferred 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 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 tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

• D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

(23) Treasury share

Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

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(24) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(25) Revenue recognition

• A. Investment revenue

The Company recognises share of profit or loss of subsidiaries and associates generated after acquisition in revenue or cost.

• B. Sales of services

• (a) The Company provides administrative resource and management service to subsidiaries. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. This is determined based on the actual cost spent relative to the total expected cost. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

• (b) The Company’s estimate about revenue, costs and progress towards complete satisfaction of a performance obligation is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.

• (c) Revenue from a service contract in which the Company bills a fixed amount based on the period of service provided is recognised at the amount to which the Company has the right to invoice.

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

UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and 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. The related information is addressed below:

(1) Critical judgements in applying the Company’s accounting policies

Except for the accounting estimations (detailed in (2) below, the management does not make any judgement that significant affect the recognised amounts in parent company only financial statements when applying the Company’s accounting polices.

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• (2) Critical accounting estimates and assumptions

• The Company makes accounting estimates in applying reasonable expectation concerning future events. However, assumptions and estimates may differ from the actual results. 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; and the related information is addressed below: Impairment assessment of investments accounted for using equity method

The Company assesses the impairment of an investment accounted for using equity method as soon as there is any indication that it might have been impaired and its carrying amount cannot be recovered. The Company assesses the recoverable amount of an investment accounted for under the equity method based on the present value of the Company’s share of expected future cash flows of the investee, and analyses the reasonableness of related assumptions.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand Checking accounts Demand deposits Time deposits	December 31, 2018 $ 3 1,464 48,541 - $ 50,008		December 31, 2017 $ 9 892 447,726 100,424 $ 549,051

• A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Company classified restricted cash and cash equivalents pledged to others as other current assets and other non-current financial assets. Please refer to Note 8 for details.

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

Effective 2018

Items Current items: Financial assets mandatorily measured at fair value through profit or loss Listed stocks ( Valuation adjustment Non-current items: Financial assets mandatorily measured at fair value through profit or loss Non-hedging derivatives (Redemption rights to the third domestic issuance of secured convertible corporate bonds) Valuation adjustment	December 31, 2018 $ 74,900 21,418) $ 53,482 $ 292 200 $ 492

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• A. For the year ended December 31, 2018, net loss on financial assets at fair value through profit or loss was ($21,586) shown as ‘other gains and losses’.

• B. Information on financial assets and liabilities at fair value through profit or loss as of December 31, 2017 is provided in Note 12(4).

(3) Financial assets at fair value through other comprehensive income

Effective 2018 Items Non-current items: Listed stocks Swissray Global Healthcare Holding Ltd. Valuation adjustment (	December 31, 2018 $ 340,215 325,821) $ 14,394

• A. The Company recognised ($48,496) in other comprehensive loss for fair value change for the year ended December 31, 2018.

• B. Information on available-for-sale financial assets and financial assets at cost as of December 31, 2017 is provided in Note 12(4).

(4) Investments accounted for using equity method

Chiu Ho Medical System Co., Ltd. Tomorrow Medical System Co., Ltd. Chiu Ho Scientific Co., Ltd. Chiu Ho Biotech Co., Ltd. Ho-Shin Instruments Co., Ltd. Shin-Ho Instruments Co., Ltd. Tong-Lin Instruments Co., Ltd. Hua Lin Instruments Co., Ltd. Hsin Lin Biotech Co., Ltd. E Century Healthcare Corporation J. Ab Beauty Co., Ltd. CHC Healthcare (BVI) Limited	December 31, 2018 $ 3,395,576 522,515 133,829 378,298 - 15,068 497,563 696,442 110,487 838,041 - 422,621 $ 7,010,440	December 31, 2017 $ 2,652,673 481,716 142,610 424,902 31,432 9,095 468,550 795,547 111,930 881,359 2,494 348,343 $ 6,350,651

Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated financial statements as of and for the year ended December 31, 2018.

(5) Short-term borrowings

Type of borrowings Bank borrowings Credit borrowings Interest rate range	December 31, 2018 $ 180,000 1.05%~1.13%	December 31, 2017 $ - -

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For the year ended December 31, 2018, the Company has no collateral pledged for short-term borrowings.

(6) Bonds payable

Bonds payable Less: Discount on bonds payable ( Less: Current portion or exercise of put options (shown as 'other current liabilities’)	December 31, 2018 $ 1,200,000 22,965) ( 1,177,035 - ( $ 1,177,035	December 31, 2017 $ 1,520,100 38,820) 1,481,280 316,587) $ 1,164,693

• A. The terms of the second domestic secured convertible bonds issued by the Company are as follows:

• (a) The Company issued the second domestic secured convertible bonds totalling $1,000,000 with zero coupon rate as approved by the regulatory authority. The bonds mature three years from the issue date (November 10, 2015 ~ November 10, 2018) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on November 10, 2015.

• (b) The bondholders have the right to request Taiwan Depository & Clearing Corporation (“TDCC”) through the security dealers for conversion of the bonds into common shares of the Company during the period from the date after one month of the bonds issue to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

• (c) The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price on the issue date is NT$58.8 (in dollars). On December 21, 2015, July 16, 2016, July 16, 2017, and July 15, 2018, the Company adjusted the conversion price per share to NT $58.4, NT $56.2, NT $54.9, and NT $53.1 (in dollars), respectively, according to the rules described above.

• (d) The bondholders have the right to require the Company to redeem any bonds at the price of the bonds’ face value plus 1% of the face value as interests upon two years from the issue date.

• (e) The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time after the following events occur: (i) the closing price of the Company’s common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after one month of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after one months of the bonds issue to 40 days before the

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maturity date.

• (f) Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

• (g) The Company signed a corporate bond issuance agreement with Chinatrust Commercial Bank. Under the terms of the agreement, the Company will periodically issue a financial assurance letter to Chinatrust Commerical Bank, stating that the financial ratios on the annual and semi-annual consolidated financial statements issued after November 10, 2015, will meet the following requirements:

• a. Current ratio must be 120% or higher.

• b. Debt ratio must equal to or less than 100%.

The Company negationated with Chinatrust Commercial Bank for credit term on Augest 17 2018, They will periodically issue a financial assurance letter to the banks, stating that the financial ratios on the annual and semi-annual consolidated financial statements will meet the following requirements:

• a. Current ratio must be 100% or higher.

• b. Debt ratio must equal to or less than 150%.

• c. Interest coverage ratio must be 3 or higher.

• d. Tangible net assets must be $4,000,000 or higher.

If the Company fails to meet any of the requirements stated above, Chinatrust Commercial Bank will determine whether there has been a breach of contract.

• (h) On November 10, 2017, holders of convertible corporate bonds exercised their redemption rights under the issuance terms, requiring the Company to buy back $679,900 of the aforementioned bonds. The Company incurred a loss of $5,953, which was included in ‘other gains and losses’.

• (i) The convertible bonds matured on November 10, 2018, and were redeemed in the amount of $320,100 by cash. The Company transferred the forfeited stock options $8,835 to capital surplus-forfeited stock options (shown as capital surplus-others).

• B. The terms of the third domestic secured convertible bonds issued by the Company are as follows:

• (a) The Company issued the third domestic secured convertible bonds totalling $1,200,000 with zero coupon rate as approved by the regulatory authority. The bonds mature three years from the issue date (November 2, 2017 ~ November 2, 2020) and will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on November 2, 2017.

• (b) The bondholders have the right to request TDCC through the security dealers for conversion of the bonds into common shares of the Company during the period from the date after three month of the bonds issue to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares

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

• (c) The conversion price of the bonds is set up based on the pricing model in the terms of the bonds, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price on the issue date is NT$42 (in dollars). On July 15, 2018, the Company adjusted the conversion price per share to NT$40.6 (in dollars) according to the rules described above.

• (d) The Company may repurchase all the bonds outstanding in cash at the bonds’ face value at any time after the following events occur: (i) the closing price of the Company’s common shares is above the then conversion price by 30% for 30 consecutive trading days during the period from the date after three months of the bonds issue to 40 days before the maturity date, or (ii) the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after one month of the bonds issue to 40 days before the maturity date.

• (e) Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

• (f) The Company signed a corporate bond issuance agreement with Chinatrust Commercial Bank. Under the terms of the agreement, the Company will periodically issue a financial assurance letter to Chinatrust Commerical Bank, stating that the financial ratios on the annual and semi-annual consolidated financial statements issued after November 2, 2017, will meet the following requirements:

  • a. Current ratio must be 120% or higher.

  • b. Debt ratio must equal to or less than 120%.

  • The Company negationated with Chinatrust Commercial Bank for credit term on August 17, 2018, They will periodically issue a financial assurance letter to the banks, stating that the financial ratios on the annual and semi-annual consolidated financial statements will meet the following requirements:

  • a. Current ratio must be 100% or higher.

  • b. Debt ratio must equal to or less than 150%.

  • c. Interest coverage ratio must be 3 or higher.

  • d. Tangible net assets must be $4,000,000 or higher.

  • If the Company fails to meet any of the requirements stated above, Chinatrust Commercial Bank will determine whether there has been a breach of contract.

• C. Regarding the third issuance of secured convertible bonds, the equity conversion options amounting to $30,842 were separated from the liability component and were recognised in ‘capital surplus - others’ in accordance with IAS 32 as of December 31, 2018, respectively. The call options and put options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets or liabilities at fair value through profit or loss’ in net

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amount in accordance with IAS 39 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The effective interest rates of the bonds payable after such separation ranged between 0.7784%~0.8489%.

• D. Information about corporate bonds that were pledged to others as collateral is provided in Note 8.

- (7) Long term borrowings

Borrowing Type of borrowings period Repayment term Bank borrowings Secured borrowings 2018.11.29~ 2023.11.29 The first day of the repayment of principal is the day after 24 months from the initial date of borrowing. Principal is payable in 7 installments semi-annually Secured borrowings 2015.8.5~ 2018.11.29 Interest is payable monthly, and principal is payable in 7 installments based on an amortised ratio, starting from July 29, 2017 Less: Current portion (shown as 'other current liabilities') Interest rate range	December 31, 2018 $ 1,440,000 - 1,440,000 - ( $ 1,440,000 1.797%	December 31, 2017 $ - 765,000 765,000 170,000) $ 595,000 1.699%

Less: Current portion (shown as 'other current liabilities') Interest rate range

• A. In July 2015, the Company, Chiu Ho Medical System Co., Ltd., and Medlink Healthcare Limited signed a syndicated loan agreement in the amount of $3,300,000 with a group of lenders led by First Commercial Bank and agreed to the following terms:

• (a) Before each credit line expires, the borrower is required to draw down at least 80% of the available credit limit. If this required amount is not fully drawn down, the borrower must pay a fee, equal to 0.15% of the difference between the actual drawdown amount and the required amount, to the agency bank after the expiration of all credit lines. The agency bank will then distribute this fee among the syndicate lenders according to the share of credit risk each lender bears.

• (b) Loan funds must be used for a specified purpose.

• (c) The Company will periodically issue a financial assurance letter to the banks, stating that the financial ratios on the annual and semi-annual consolidated financial statements will meet the following requirements:

  • i. Current ratio must be 100% or higher.

  • ii. Debt ratio must equal to or less than 150%.

  • iii. Interest coverage ratio must be 3 or higher.

  • iv. Tangible net assets must be $3,800,000 or higher.

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If the Company fails to meet any of the requirements stated above, remedial measures, such as capital increase, must be taken to address the issue before the financial reporting date of the next annual or half-year consolidated financial statements. If the issue is resolved with the remedial measures, it is not considered a breach of contract. However, the Company is required to pay a fee, equal to 0.1% of the unpaid principal balance on the audit date, to the agency bank, who will distribute this fee among the syndicate lenders.

The financial ratios derived from the aforementioned consolidated financial statements of the Company meet the requirements specified in the syndicated loan agreement.

• (d) The Company’s direct and/or indirect ownership percentage of Chiu Ho Medical System Co., Ltd., Hua Lin Instruments Co., Ltd., Tong-Lin Instruments Co., Ltd., E Century Healthcare Corporation, Chiu Ho Biotech Co., Ltd. and Chiu Ho Scientific Co., Ltd. must be at least 66.67%, and the Company must maintain control over the operations of these subsidiaries. The shares of the aforementioned subsidiaries necessary to maintain the required minimum ownership percentage cannot be pledged or transferred to a third party, nor can they be placed in a trust.

• (e) The Company’s direct and/or indirect ownership percentage of its investment holding company in Myanmar and Medlink Healthcare Limited must be at least 70%, and the Company must maintain control over the operations of these subsidiaries. The shares of the aforementioned subsidiaries necessary to maintain the required minimum ownership percentage cannot be pledged or transferred to a third party, nor can they be placed in a trust.

• (f) The Company’s direct and/or indirect ownership percentage of Hsing-Yeh Biotechnology Co., Ltd must be 100%, and the Company must maintain control over the operations of the subsidiary. The shares of the aforementioned subsidiary necessary to maintain the required ownership percentage cannot be pledged or transferred to a third party, nor can they be placed in a trust. However, these restrictions do not apply if Hsing-Yeh Biotechnology Co., Ltd. merges with the Company and is dissolved.

If the Company fails to meet this requirement, First Commercial Bank will determine whether there has been a breach of contract and, if necessary, call a meeting with all the syndicate lenders to discuss the matter.

The financial ratios derived from the aforementioned consolidated financial statements of the Company meet the requirements specified in the syndicated loan agreement.

In July 2017, the Company cancelled an unused credit line of $1,600,000, which was part of the syndicated loan agreement led by First Commercial Bank.

In November 2018, the Company fully paid in advance the outstanding principal.

• B In November 2018, the Company and Tomorrow Medical System Co., Ltd. signed a syndicated loan agreement in the amount of $2,440,000 with a group of lenders led by First Commercial Bank and agreed to the following terms:

• (a) If the actual drawn amount is less than 80% of each available borrowing facility, the

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difference shall be imposed at a rate of 0.15% as a commitment fee at the end of the limit on borrowing facilities. The commitment fee shall be paid in full to the lead boank within 5 trading days after the end of the limit on borrowing facilities. Subsequently, the lead bank shall pay the commitment fee to syndicated banks based on its committed ratio.

• (b) Loan funds must be used for a specified purpose.

• (c) The Company will periodically issue a financial assurance letter to the banks, stating that the financial ratios on the annual and semi-annual consolidated financial statements will meet the following requirements:

• i. Current ratio must be 100% or higher.

• ii. Debt ratio must equal to or less than 150%.

• iii. Interest coverage ratio must be 3 or higher.

• iv. Tangible net assets must be $4,000,000 or higher.

• If the Company fails to meet any of the requirements stated above, remedial measures, such as capital increase, must be taken to address the issue before the financial reporting date of the next annual or half-year consolidated financial statements. If the issue is resolved with the remedial measures, it is not considered a breach of contract. However, the Company is required to pay a fee, equal to 0.1% of the unpaid principal balance on the audit date, to the agency bank, who will distribute this fee among the syndicate lenders.

• (d) The Company shall directly/ indirectly hold a 100% equity interest in Tomorrow Medical System Co., Ltd., Hsing-Yeh Biotechnology Co., Ltd., Medlink Healthcare Limited and Chiu Ho Medical System Co., Ltd., and directly/indirectly hold at least a 66.67% equity interest in Hua Lin Instruments Co., Ltd., Tong-Lin Instruments Co., Ltd., E Century Healthcare Corporation, Chiu Ho Biotech Co., Ltd. and Chiu Ho Scientific Co., Ltd., respectively, and the Company has control over those companies’ operations. Above equity interests can not be pledged or transferred to the third party in any assumption or method as well as trust.

If the Company fails to meet this requirement, First Commercial Bank will determine whether there has been a breach of contract and, if necessary, call a meeting with all the syndicate lenders to discuss the matter.

• C. In August 2018, Guangzhou Chiuho Medical System Co., Ltd. entered into a borrowing contract with CTBC Bank Co., Ltd. amounting to RMB 22 million. The Company is required to hold a 100% equity interest directly/indirectly in Guangzhou Chiuho Medical System Co., Ltd. until settlement of the borrowing, or the borrowing will be deemed as matured.

• D. Information about long-term borrowings that were pledged to others as collateral is provided in Note 8.

(8) Pensions

• A. The Company has established a defined contribution pension plan (the “New Plan”) under the

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Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• B. The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2018 and 2017 were $1,853 and $1,917, respectively.

(9) Share-based payment

• A. As of December 31, 2018, the Company’s share-based payment transactions are as follows:

Type of arrangement Employee stock options-101 Employee stock options-106	Grant date 2012.8.31 2018.4.13	Quantity granted (in thousands of shares) 1,280 738	Contract period 7 years 7 years	Vesting conditions
				Note Note

Note: After two years from the grant date, employees are allowed to exercise their stock options according to the vesting schedule and proportion specified in the plan.

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

Stock options Options outstanding at January 1 Options granted Options exercised Options outstanding at December 31 Options exercisable at December 31	2018 No. of options (in thousands Weighted-average exercise price of shares) (in dollars) 333 $ 37.40 738 34.50 - - ( 1,071 34.32 333	2017 No. of options (in thousands Weighted-average exercise price of shares) (in dollars) 341 $ 38.30 - - 8) 37.71 333 37.40 333
		No. of options (in thousands of shares) 341 - 8) 333 333

• C. For the year ended December 31, 2018, no stock options were exercised. For the year ended December 31, 2017, the weighted-average stock price of stock options on exercise dates was NT$41.66 (in dollars).

• D. The expiry date and exercise price of stock options outstanding at balance sheet date are as follows:

follows:
Issue date Expiry approved date 2012.8.31 2019.8.30 2018.4.13 2025.4.12	December 31, 2018 No. o f shares (in thousands Exercise price of shares) (in dollars) 333 36.2 738 33.4	December 31, 2017 No. o f shares (in thousands Exercise price of shares) (in dollars) 333 37.4 - -
		No. o f shares (in thousands of shares) 333 -

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• E. The fair value of stock options is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Relevant information is as follows:
Type of arrangement Grant date Stock price (in dollars) Exercise price (in dollars) Expected price volatility Expected option life Expected dividends Risk-free interest rate Employee stock options-101 2012.8.31 $ 85.06 $ 44.0 40.44% 5.25 years 0% 1.00% (Note 1) (Note 2) Employee stock options-106 2018.4.13 $ 34.50 $ 34.5 30.02% 5.25 years 0% 0.75%	Fair value per unit (in dollars)
	$48.23~ $51.29 $8.46~ $10.91

• Note 1: Estimated using the market approach with necessary adjustments, the price of the common shares of the Company that have no controlling rights and cannot be traded in the open market was NT$85.06 (in dollars) on the grant date.

• Note 2: Expected price volatility is estimated based on the historical stock prices of comparable companies.

• F. Expenses incurred on the Company’s share-based payment transactions are shown below:

Equity-settled	Years ended December 31, 2018 2017 $ 1,207 $ 1,279
	2018 $ 1,207

• G. On July 15, 2018, the exercise prices of employee stock options-101 and employee stock options106 were adjusted to NT$36.2 and NT$33.4 (in dollars), respectively, according to the rules of the employee stock option plan. The adjustment of exercise prices had no significant impact on the fair value of the aforementioned stock options.

(10) Share capital

• A. As of December 31, 2018, the Company’s authorised capital was $2,000,000, consisting of 200 million shares of ordinary stock, and the paid-in capital was $1,399,136 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Employee stock options exercised Shares retired ( At December 31	2018 139,914 - 1,000) 138,914	(In thousands of shares) 2017 139,848 66 - 139,914

• B. For the year ended December 31, 2017, 66,000 common shares were issued as a result of employees exercising their stock options under the stock option plan. All shares had par value of $10 (in dollars), with total capital raised amounting to $658.

• C. Treasury shares

• (a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

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Name of company holding the shares The Company	Reason for reacquisition To be reissued to employees	December 31,2018	December 31,2018
		Number of shares 1,000,000	Carrying amount $ 34,956

• (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.

• (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

• (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(11) Capital surplus

• A. Pursuant to Paragraph 4, Article 30 of the Business Mergers and Acquisitions Act, if a company becomes a wholly-owned subsidiary of another company through a share exchange, its undistributed earnings become part of the capital surplus of the acquiring company (parent company). Therefore, if the increase in the investment holding company’s capital surplus is from the undistributed earnings of the subsidiary before the share exchange, this amount can be distributed as cash dividends or capitalised. Moreover, the proportion that can be capitalised is not subject to the restrictions set forth in Article 8 of the Securities and Exchange Act Enforcement Rules. In addition, according to Tai-Cai-Rong-Yi-Zi No. 0910016280, such increase in capital surplus was not generated by the holding company’s business operations and thus will not affect the remuneration of directors and supervisors and bonuses of employees. As of December 31, 2018, capital surplus that is attributable to the undistributed earnings of Chiu Ho Medical System Co., Ltd. and other associates before share exchanges amounted to $44,390.

• B. Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. However, capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

• C. Please refer to Note 6(9) for information on capital surplus - employee stock options.

(12) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be

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used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve unless legal reserve equals the authorised share capital. Special reserve is then appropriated or reversed in accordance with related regulations. At least 50% of the remainder, if any, and accumulated undistributed earnings from prior years is distributable under the stockholders’ resolution at their meeting as proposed by the Board of Directors.

• B. 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 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.

• C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• D. The proposal on reversal of special reserve and 2017 earnings appropriation and the proposal on 2016 earnings appropriation which were resolved at the shareholders’ meeting on June 11, 2018 and June 13, 2017, respectively, are as follows:

2018 and June 13, 2017, respectively, are as follows:	2018 and June 13, 2017, respectively, are as follows:	2018 and June 13, 2017, respectively, are as follows:
Years ended December 31, 2017 2016 Dividends per Dividends per Amount share (in dollars) Amount share (in dollars) Legal reserve $ - $ 15,893 Special reserve - 78,849 Reversal of special reserve ( 138,784) - Cash dividends 153,905 $ 1.1000 140,490 $ 1.0046 $ 15,121 $ 235,232
	Amount $ 15,893 78,849 - 140,490 $ 235,232
		$ 1.0046

The aforementioned earnings appropriations for the years ended December 31, 2017 and 2016 were in agreement with the amounts resolved by the Board of Directors during its meetings held on March 21, 2018 and March 24, 2017, respectively, and the ex-dividend dates resolved in the same meetings were July 15, 2018 and July 16, 2017, respectively. For more information on the aforementioned earnings appropriations proposed by the Board of Directors and resolved by the shareholders, please go to the Market Observation Post System website maintained by the Taiwan Stock Exchange.

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• E. The appropriations for 2018 as resolved by the Board of Directors on March 22, 2019 are as follows:

follows:
Legal reserve Special reserve Cash dividends	Year ended December 31, 2018 Dividends per Amount share (in dollars) $ 32,342 330,410 250,045 $ 1.8000 $ 612,797
	Amount $ 32,342 330,410 250,045 $ 612,797

• F. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(17).

(13) Operating revenue

Operating revenue
Investment revenue Revenue from customer contracts Timing of revenue recognition-over time - internal customers - management service revenue	Year ended December 31, 2018
	$ 326,425 109,120 $ 435,545

Related disclosures on operating revenue for 2017 are provided in Note 12(5)B.

(14) Other income

Other income
Interest income: Interest income Other interest income Other income	Years ended December 31, 2018 2017 $ 409 $ 637 3,575 2,343 2 8 $ 3,986 $ 2,988
	2018 $ 409 3,575 2 $ 3,986

(15) Other gains and losses

Other gains and losses
	Years	ended	December 31,
	2018		2017
Foreign exchange gains (losses)	$	117	($ 325)
Net losses on financial assets and
liabilities at fair value through profit or loss	( 21,586)		( 9,242)
Impairment loss on financial assets		-	( 277,325)
Other loss		-	( 46)
	($ 21,469)		($ 286,938)

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(16) Finance costs

Finance costs
Interest expense Bank borrowings Convertible bonds Others	Years ended December 31, 2018 2017 $ 14,437 $ 14,438 15,855 13,573 11,896 11,632 $ 42,188 $ 39,643
	2018 $ 14,437 15,855 11,896 $ 42,188

(17) Expenses by nature

Expenses by nature
Employee benefit expense Wages and salaries Employee stock options Labour and health insurance fees Pension costs Directors’ remuneration Other personnel expenses Depreciation charge Amortisation expense	Years ended December 31, 2018 2017 Operating Cost Operating Expense Operating Cost Operating Expense $ 59,120 $ - $ 56,133 $ - 1,207 - 1,279 - 3,839 - 3,937 - 1,853 - 1,917 - 6,273 - 608 - 1,496 - 1,309 - 1,164 - 1,148 - 583 - 611 - $ 75,535 $ - $ 66,942 $ -
	2018 Operating Cost Operating Expense $ 59,120 $ - 1,207 - 3,839 - 1,853 - 6,273 - 1,496 - 1,164 - 583 - $ 75,535 $ -
	Operating Cost $ 59,120 1,207 3,839 1,853 6,273 1,496 1,164 583 $ 75,535	Operating Cost $ 56,133 1,279 3,937 1,917 608 1,309 1,148 611 $ 66,942
			$ - - - - - - - - $ -

As of December 31, 2018 and 2017, the Company had 49 and 51 employees, excluding 5 and 5 directors, respectively.

• A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year (i.e. profit before tax less profit margin before the appropriation of employees’ compensation and directors’ and supervisors’ remuneration), after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 0.05% for employees’ compensation and shall not be higher than 5% for directors’ and supervisors’ remuneration.

The aforementioned employees’ compensation and directors’ and supervisors’ remuneration requires the approval from the majority of the directors attending a board meeting, with more than two thirds of all directors in attendance, and must be reported to the shareholders.

Employees’ compensation is distributed in the form of shares or cash, and the recipients may include employees of affiliates who meet certain conditions. The distribution plan is set by the Chairman.

• B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at $140 and $0, respectively; directors’ and supervisors’ remuneration was accrued at $5,600 and $0, respectively. The aforementioned amounts were recognised in salary expenses.

For the year ended December 31, 2017, the Company did not recognise the employees’

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compensation and directors’ and supervisors’ remuneration due to the net loss.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the meeting of Board of Directors and approved by shareholders at their meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

• (18) Income tax

• A. Income tax (benefit) expense

  • (a) Components of income tax (benefit) expense:

		Years ended December 31,	Years ended December 31,	Years ended December 31,
		2018		2017
Current tax
Current tax on profits for the year	$	-	$	-
Prior year income tax overestimation		-	(	68)
Total current tax		-	(	68)
Deferred tax
Origination and reversal of temporary
differences	(	49,419)		101
Impact of change in tax rate		96			-
Income tax (benefit) expense	($	49,323)	$	33
Reconciliation between income tax expense and accounting profit
		Years ended	December 31,
		2018		2017
Tax calculated based on profit before
tax and statutory tax rate	$	54,820	($	14,732)
Expenses disallowed by tax regulation		8,046		52,229
Tax exempt income by tax regulation	(	59,527)	(	46,731)
Prior year income tax overestimation		-		(68)
Temporary differences not recognised
as deferred tax assets	(	5,758)		9,335
Taxable loss not recognised as deferred
tax assets		630		-
Change in assessment of realisation of
deferred tax assets	(	47,630)		-
Impact of change in tax rate		96		-
Income tax (benefit) expense	($	49,323)	$	33

(b) Reconciliation between income tax expense and accounting profit

	tax assets Change in assessment of realisation of deferred tax assets Impact of change in tax rate Income tax (benefit) expense	630 - ( 47,630) - 96 - ($ 49,323) $ 33
(c)	The income tax (charge)/credit relating	to components of other comprehensive income
	is as follows:
		Years ended December 31,
		2018 2017
	Currency translation differences	($ 2,091) $ 1,443

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• B. Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows:

losses are as follows:
Temporary differences - Deferred tax assets: Unrealised exchange loss Unused compensated absences Currency translation differences Taxable loss Temporary differences - Deferred tax liabilities: Effects of business combination ( Temporary differences - Deferred tax assets: Unrealised exchange loss Unused compensated absences Currency translation differences Temporary differences - Deferred tax liabilities: Effects of business combination (	Year ended December 31, 2018
	January 1 Recognised in profit or loss $ 8 $ 55 174 ( 156) 648 - 830 ( 101) 625) - $ 205 ($ 101)	Recognised in other comprehensive income $ - - 1,443 1,443 - ( $ 1,443

• C. The amounts of deductible temporary differences that were not recognised as deferred tax assets are as follows:

Deductible temporary differences	December 31, 2018 $ 83,505	December 31, 2017 $ 91,227

• D. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.

• E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

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(19) Earnings (loss) per share

Earnings (loss) per share
Year ended December 31, 2018 Amount Weighted average number of ordinary shares outstanding Earnings per share after tax (shares in thousands) (in dollars) Basic earnings per share Profit attributable to ordinary shareholders of the parent $ 323,422 139,651 $ 2.32 Diluted earnings per share Profit attributable to ordinary shareholders of the parent $ 323,422 139,651 Assumed conversion of all dilutive potential ordinary shares Employee stock options (Note) - - Employees’ compensation - 5 Convertible bonds 27,919 34,679 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares $ 351,341 174,335 $ 2.02 Year ended December 31, 2017 Amount Weighted average number of ordinary shares outstanding Loss per share after tax (shares in thousands) (in dollars) Basic loss per share Loss attributable to ordinary shareholders of the parent ($ 86,695) 139,872 ($ 0.62) Diluted loss per share Loss attributable to ordinary shareholders of the parent ($ 86,695) 139,872 Assumed conversion of all dilutive potential ordinary shares Employee stock options (Note) - - Employees’ compensation(Note) - - Convertible bonds(Note) - - Loss attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares ($ 86,695) 139,872 ($ 0.62)	Year ended December 31, 2018
	Amount Weighted average number of ordinary shares outstanding Earnings per share after tax (shares in thousands) (in dollars) $ 323,422 139,651 $ 2.32 $ 323,422 139,651 - - - 5 27,919 34,679 $ 351,341 174,335 $ 2.02 Year ended December 31, 2017
		Weighted average number of ordinary shares outstanding (shares in thousands) 139,872 ( 139,872 - - - 139,872 (	Loss per share (in dollars) $ 0.62) $ 0.62)

Note: Not included due to antidilutive effect.

Because employees’ compensation may be distributed in the form of shares, the calculation of diluted earnings per share assumes that employees’ compensation would be distributed entirely in shares. These dilutive potential common shares are included in the weighted average number of

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outstanding shares when calculating diluted earnings per share. When calculating basic earnings per share, shares issued as part of employees’ compensation are included in the weighted average number of outstanding shares only if the number of such shares have been confirmed and resolved by the shareholders. Shares issued as part of employees’ compensation are not considered bonus shares, therefore no retrospective adjustment is applied when calculating basic and diluted earnings per share.

(20) Changes in liabilities from financing activities

January 1, 2018 Changes in cash flow from financing activities December 31, 2018	Short-term borrowings $ - 180,000 $ 180,000	Long-term borrowings $ 765,000 675,000 $ 1,440,000	Total liabilities from financing activities $ 765,000 855,000 $ 1,620,000

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

The Company’s stock are held by the public, so it has neither an ultimate parent company nor ultimate controlling party.

(2) Names of related parties and relationship

Names of related parties and relationship
Names of related parties Chiu Ho Medical System Co., Ltd Tomorrow Medical System Co., Ltd. Chiu Ho Scientific Co., Ltd. (Note 2) Chiu Ho Biotech Co., Ltd. Ho-Shin Instruments Co., Ltd. (Note 2) Shin-Ho Instruments Co., Ltd. Tong-Lin Instruments Co., Ltd. Hua Lin Instruments Co., Ltd. Hsin Lin Biotech Co., Ltd. E Century Healthcare Corporation J. Ab Beauty Co., Ltd. (Note 1) CHC Healthcare (BVI) Limited Medlink Healthcare Limited Hsing-Yeh Biotechnology Co., Ltd. SenCare Healthcare Company CHC Healthcare (HK) Limited	Relationship with the Company
	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note 1: The shareholders resolved to dissolve the Company’s subsidiary, J. Ab Beauty Co., Ltd., at their meeting on April 20, 2018. Consequently, the Company no longer controls J. Ab Beauty Co., Ltd. thereafter.

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• Note 2: The Company’s subsidiary, Ho-Shin Instruments Co., Ltd., was merged into Chiu Ho Scientific Co., Ltd. on December 12, 2018, and with Chiu Ho Scientific Co., Ltd. as the surviving company. Under the merger, the Company held a 100% equity interest in Chiu Ho Scientific Co., Ltd. As this merger was made in line with the group restructuring, there is no significant impact to the parent company’s shareholder’s equity.

(3) Significant transactions and balances with related parties

A. Management service revenues (shown as ' Service revenue ')

Sales of services Chiu Ho Medical System Co., Ltd. Tomorrow Medical System Co., Ltd. Hua Lin Instruments Co., Ltd. E Century Healthcare Corporation Hsing-Yeh Biotechnology Co., Ltd. Others	Years ended December 31, 2018 2017 $ 39,600 $ 38,400 12,360 11,880 11,880 11,280 13,320 13,320 12,720 12,000 19,240 19,680 $ 109,120 $ 106,560	Years ended December 31, 2018 2017 $ 39,600 $ 38,400 12,360 11,880 11,880 11,280 13,320 13,320 12,720 12,000 19,240 19,680 $ 109,120 $ 106,560
	2018 $ 39,600 12,360 11,880 13,320 12,720 19,240 $ 109,120

Management service revenue is revenue arising from administrative resources, technical consultation on medical practices and management services rendered by the Company to related parties and the prices and payment terms are decided by the both parties.

B. Rent expenses (shown as ' Operating costs ')

Rent expenses (shown as'Operating costs')
Lease objects Lessors Leasing period Land and Buildings Chiu Ho Medical System Co., Ltd. 2018.1.1~2018.12.31 Chiu Ho Scientific Co., Ltd. 2017.1.1~2017.12.31	Years ended December 31,
	2018 $ 1,080 390 $ 1,470	2017
		$ 1,080 480
		$ 1,560

The Company paid rent monthly.

C. Accounts receivable from related parties

Accounts receivable Chiu Ho Medical System Co., Ltd. Hsing-Yeh Biotechnology Co., Ltd.	December 31, 2018 $ 3,370 - $ 3,370	December 31, 2017 $ - 1,011 $ 1,011

• (a) The Company’s accounts receivable were neither past due nor impaired so the counterparties of the Company’s accounts receivable has good credit quality.

• (b) As of December 31, 2018 and 2017, financial assets were not past due.

• (c) As of December 31, 2018 and 2017, the maximum exposure to credit risk of accounts receivable is the carrying amount.

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D. Other receivables due from related parties

• (a) Loans to related parties

Tomorrow Medical System Co., Ltd. Chiu Ho Medical System Co., Ltd. Others Interest income Tomorrow Medical System Co., Ltd. Chiu Ho Scientific Co., Ltd. Others	December 31, 2018 December 31, 2017 $ 301,189 $ 121,223 180,059 - 60,358 - $ 541,606 $ 121,223 Years ended December 31, 2018 2017 $ 2,292 $ 2,203 233 89 1,050 51 $ 3,575 $ 2,343

The loans lent to subsidiaries are repayable within 1 year and the interest rate is at 2% per annum for both years ended December 31, 2018 and 2017.

• (b) Other receivables were reclassified because of the dissolution investees.

E.	Subsidiaries Other payables to related parties Chiu Ho Medical System Co., Ltd. Tomorrow Medical System Co., Ltd. Tong-Lin Instruments Co., Ltd. Hua Lin Instruments Co., Ltd.	December 31, 2018 $ 369 December 31, 2018 $ - - - - $ -		December 31, 2017 $ - December 31, 2017 $ 3,600 6,240 2,280 1,440 $ 13,560

Other payables are returns of management services overpayments from the subsidiaries during the year.

F. Others

• (a) Capital increase of subsidiaries

Company name Chiu Ho Medical System Co., Ltd. Chiu Ho Scientific Co., Ltd. CHC Healthcare (BVI) Limited		Year ended December 31, 2018	Year ended December 31, 2018
	Capital increase price per share (in dollars) $ 10 10 415,127	Total transaction amount $ 637,500 31,431 70,572 $ 739,503	Percentage of ownership before capital increase Percentage of ownership after capital increase 100% 100% 100% 100% 100% 100%

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Year ended December 31, 2017

Company name Chiu Ho Medical System Co., Ltd. Tomorrow Medical System Co., Ltd. J. Ab Beauty Co., Ltd. CHC Healthcare (BVI) Limited	Capital increase price per share (in dollars) $ 10 10 10 433,941	Total transaction amount $ 129,900 50,000 6,000 73,770 $ 259,670	Percentage of ownership before capital increase 100% 100% 64.55% 100%	Percentage of ownership after capital increase
				100% 100% 70% 100%

(b) Proceeds from capital reduction of subsidiaries

Year ended December 31, 2018 Company name Percentage of capital reduction Total transaction amount Chiu Ho Scientific Co., Ltd. 40.32% $ 50,000 Chiu Ho Biotech Co., Ltd. 11.90% 50,000 Ho-Shin Instruments Co., Ltd - - Shin-Ho Instruments Co., Ltd - - Hua Lin Instruments Co., Ltd. 20.11% 140,000 Hsin Lin Biotech Co., Ltd. - - E Century Healthcare Corporation 14.89% 105,000 $ 345,000	Year ended December 31, 2017	Year ended December 31, 2017
	Percentage of capital reduction	Total transaction amount
	- 10.83% 23.47% 83.33% 20.55% 13.04% 4.73%	$ - 51,000 23,000 15,000 180,000 15,000 35,000
		$ 319,000

G. Endorsements and guarantees provided to related parties

(a) As of December 31, 2018 and 2017, the balances of financial guarantees provided by the Company to other subsidiaries as collateral for bank borrowings are as follows. Please refer to 13(1)B for the details.

to 13(1)B for the details.
Chiu Ho Medical System Co., Ltd. Tomorrow Medical System Co., Ltd. Subsidiaries	December 31, 2018 $ 1,917,145 1,460,000 457,099 $ 3,834,244	December 31, 2017 $ 2,774,280 1,110,000 1,340,270
		$ 5,224,550

• (b) In 2018, the Company and its subsidiary, Tomorrow Medical System Co., Ltd., signed a syndicated loan agreement with First Commercial Bank, and the total syndicated loan

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amounted to $2,440,000. This syndicated loan is jointly guaranteed by the Company and the Company’s chairman, Mr. Pei-Lin Lee, and pledged the land and buildings of the subsidiary, Hsing-Yeh Biotechnology Co., Ltd., as a collateral.

• (c) The Company signed a contract for a syndicated borrowing facility with its subsidiaries, Chiu Ho Medical System Co., Ltd., Medlink Healthcare Limited and First Commercial Bank, for a credit line of $3,300,000. It required the Company and the Company’s chairman Mr. Pei-Lin Lee to sign a joint guarantee and the subsidiary, Hsing-Yeh Biotechnology Co., Ltd., to pledge land and buildings as mortgages. In November 2018, the Company fully paid the outstanding principal in advance.

(4) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Share-based payments	Years ended December 31, 2018 2017 $ 31,696 $ 28,089 279 324 343 576 $ 32,318 $ 28,989
	2018 $ 31,696 279 343 $ 32,318

8. PLEDGED ASSETS

The Company’s assets pledged as collateral are as follows:

Asssets Time deposits (shown as ‘other current assets’) Time deposits (shown as ‘other financial assets-non-current’) Reserve account (shown as ‘other financial assets-non-current’)	Book	value December 31, 2017 $ 30,000 50,008 3,794 $ 83,802	Purpose
	December 31, 2018 $ - 50,053 7,000 $ 57,053
			Performance guarantee Performance guarantee Collateral for long-term borrowings

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

Except for significant commitment and guarantees and endorsements provided to related parties in Note 6(6)(7) and 7(3)G, the Company has no other significant commitments and contingencies.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

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

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capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

(2) Financial instruments

• A. Financial instruments by category:

Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Available-for-sale financial assets Available-for-sale financial assets Financial assets at amortised cost Cash and cash equivalents Accounts receivable (including related parties) Other receivables (including related parties) Other financial assets Financial liabilities Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable Other payables (including related parties) Bonds payable (including current portion) Long-term borrowings (including current portion)	December 31, 2018 $ 53,974 $ 14,394 $ - $ 50,008 3,370 541,975 57,445 $ 652,798 $ 180,000 1,464 - 20,565 1,177,035 1,440,000 $ 2,819,064	December 31, 2017 $ 660 $ - $ 62,890 $ 549,051 1,011 121,669 84,194 $ 755,925 $ - 892 31 21,092 1,481,280 765,000 $ 2,268,295

B. Financial risk management policies

• (a) The Company’s activities expose it to a variety of financial risks, including market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial position and financial performance.

• (b) Risk management is carried out by the Company treasury department under policies approved by the Board of Directors. The Company treasury identifies, evaluates and hedges

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financial risks in close co-operation with the Company’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Company conducts business worldwide and imports state-of-the-art medical equipment and supplies from various countries and is therefore exposed to foreign exchange rate risk from multiple foreign currencies, primarily the US dollar. Foreign exchange rate risk arises from net investments in foreign operations.

• ii. The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD Non-monetary items USD:NTD	(Foreign currency: functional currency) Financial assets Monetary items USD:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD Non-monetary items USD:NTD	December 31, 2018 Foreign currency amount Exchange Book value (in thousands) rate (NTD) $ 124 30.72 $ 3,809 December 31, 2017 Foreign currency amount Exchange Book value (in thousands) rate (NTD) $ 129 29.76 $ 3,839 11,705 29.76 348,343	December 31, 2018 Foreign currency amount Exchange Book value (in thousands) rate (NTD) $ 124 30.72 $ 3,809 December 31, 2017 Foreign currency amount Exchange Book value (in thousands) rate (NTD) $ 129 29.76 $ 3,839 11,705 29.76 348,343	Year ended December 31, 2018 Sensitivity analysis Effect on Extent of profit variation or loss 1% $ 38 Year ended December 31, 2017 Sensitivity analysis Effect on Extent of profit variation or loss 1% $ 38
		Foreign currency amount (in thousands) $ 129 11,705	Exchange rate 29.76 29.76
				Extent of variation 1%

• iii. The Company’s unrealised exchange gain (loss) arising from significant foreign exchange variation:

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Year ended December 31, 2018 Unrealised foreign exchange gain (loss) Foreign currency amount(in thousands) Exchange rate Book value (Foreign currency: functional currency) Financial assets Monetary items USD:NTD $ - 30.72 $ 136 Year ended December 31, 2017 Unrealised foreign exchange gain (loss) Foreign currency amount(in thousands) Exchange rate Book value (Foreign currency: functional currency) Financial assets Monetary items USD:NTD $ - 29.76 ($ 325)

Price risk

• i. The Company is exposed to equity price risk from its investments classified on the consolidated balance sheet either as financial assets measured at fair value through profit or loss, financial assets measured at fair value through other comprehensive income or available-for-sale financial assets. The Company is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Company has set stop-loss points and therefore does not expect to incur significant losses from equity price risk.

• ii. The Company’s investments in equity securities comprise domestic and foreign listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by $5,348 and $0, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $1,439 and $6,289, respectively, as a result of other comprehensive income classified as available-for-sale equity investment and equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

• i. The Company’s interest rate risk arises from long-term borrowings. Long-term borrowings issued at variable rates expose the Company to cash flow interest rate risk, which is partially offset by cash and cash equivalents held at variable rates. The Company’s borrowings at variable rates are primarily denominated in NTD.

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• ii. If the borrowing interest rate had increased/decreased by 1% with all other variables held constant, profit, net of tax for the year ended December 31, 2018 and 2017 would have increased/decreased by $14,400 and $7,650, respectively. The main factor is that changes in interests expense result from floating rate borrowings.

• (b) Credit risk

• i. The Company provides endorsements and guarantees based on the Company policies and procedures on endorsements and guarantees, either to subsidiaries. No collateral is requested for the endorsements and guarantees as the Company can control the credit risk of the subsidiary. The maximum credit risk is the guaranteed amount.

• ii. All of the Company’s accounts receivable are from its subsidiaries, no loss allowance for accounts receivable was recognised by the Company.

• iii. On December 31, 2018, the provision matrix is as follows:

  • December 31, 2018 Expected loss rate Total book value Loss allowance Not past due 0% $ 3,370 $ -

• iv. Credit risk information for 2017 is provided in Note 12(4).

• (c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Company’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets.

• ii. 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 expected or contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Less than December 31, 2018 1 year Short-term borrowings $ 180,037 Notes payable 1,464 Accounts payable - Other payables (including related parties) 20,315 Bonds payable and embedded derivative instruments - Long-term borrowings (including current portion) 25,735 Less than	Between 1 and 2 years $ - - - - 1,177,035 97,416 Between 1	Between 2 and 5 years $ - - - - - 1,429,147 Between 2	Over 5 years $ - - - - - - Over

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December 31, 2017 1 year Notes payable $ 892 Accounts payable 31 Other payables (including related parties) 20,985 Bonds payable and embedded derivative instruments 316,587 Long-term borrowings (including current portion) 181,074	and 2 years $ - - - - 178,185	and 5 years $ - - - 1,164,693 427,407	5 years $- - - - -

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market is included in Level 3.

• B. The carrying amount of a financial instrument not measured at fair value is a reasonable approximation of its fair value. Such financial instruments include cash and cash equivalents, accounts receivable (including those from related parties), other receivables (including those from related parties), guarantee deposits paid, other financial assets, short-term borrowings, notes payable, accounts payable (including those to related parties), other payables (including those to related parties), long-term borrowings (including the portion due within one year or one business cycle) and bonds payable.

• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

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(a) The related information of the nature of the assets and liabilities is as follows:

December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Derivative instruments Financial assets at fair value through other comprehensive income Equity securities December 31, 2017 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Derivative instruments Available-for-sale financial assets Equity securities	Level 1 $ 53,482 - 14,394 $ 67,876 Level 1 $ - 62,890 $ 62,890	Level 2 $ - - - $ - Level 2 $ - - $ -	Level 3 $ - 492 - $ 492 Level 3 $ 660 - $ 660	Total $ 53,482 492
				14,394
				$ 68,368 Total $ 660 62,890 $ 63,550

• (b) The methods and assumptions the Company used to measure fair value are as follows:

  • i. Listed stocks are instruments whose fair values are measured using quoted market prices (that is, Level 1). The quoted market prices used for these stocks are the closing prices on the balance sheet date.

  • ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes.

• D. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.

• E. The following chart is the movement of Level 3 for the years ended December 31, 2018 and 2017.

At January 1 Current issue Gains and losses recognised in other comprehensive income ( At December 31	Derivative financial instruments 2018 2017 $ 660 $ - - 292 168) 368 $ 492 $ 660
	2018 $ 660 - 168) $ 492

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• F. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level 3.

• G. Financial accounting department is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions and performing reviews regularly.

• H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Hybrid instrument: Convertible bond Hybrid instrument: Convertible bond	Fair value at December 31, 2018 $ 492 Fair value at December 31, 2017 $ 660	Valuation technique Binomial Model Valuation technique Binomial Model	Significant unobservable input Volatility Discount rate Significant unobservable input Volatility Discount rate	Range (weighted average) 23.27% 0.7839% Range (weighted average) 17.71% 0.8231%	Relationship of inputs to fair value The higher the volatility, the higher the fair value; The higher the discount rate, the lower the fair value Relationship of inputs to fair value The higher the volatility, the higher the fair value; The higher the discount rate, the lower the fair value

• I. The Company has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. For financial assets and financial liabilities classified as Level 3, an increase or decrease in their valuation parameter by 1% would have no material impact on gain or loss and other comprehensive income as at December 31, 2018 and 2017.

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

• A. Summary of significant accounting policies adopted in 2017:

• (a) Financial assets and liabilities at fair value through profit or loss

  • i. It refers to financial assets and liabilities held for trading. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they

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are designated as hedges. Financial assets and liabilities that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

  - (i) Hybrid (combined) contracts; or

  - (ii) They eliminate or significantly reduce a measurement or recognition inconsistency; or

  - (iii) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management practice.

• ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using settlement date accounting.

• iii. Financial assets and liabilities at fair value through profit or loss are initially recognised at fair value. Related transaction costs are expensed in profit or loss. These financial assets and liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets and liabilities are recognised in profit or loss.

• (b) Available-for-sale financial assets

• i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.

• ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognised and derecognised using settlement date accounting.

• iii. They are initially recognised at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in other comprehensive income.

• (c) Loans and receivables

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (e) Impairment of financial assets

• i. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

• ii. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:

  • (i) Significant financial difficulty of the issuer or debtor;

  • (ii) A breach of contract, such as a default or delinquency in interest or principal

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payments;

  - (iii) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

  - (iv) The disappearance of an active market for that financial asset because of financial difficulties;

  - (v) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• iii. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, the amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognised, such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognised in profit or loss shall not be reversed through profit or loss. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

• B. The reconciliation of carrying amount of financial assets transfered from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

IAS 39 Impairment loss adjustment IFRS 9	Available-for-sale-equity Measured at fair value through other comprehensive income-equity $ 62,890 - $ 62,890	Effects	Effects
		Retained earnings $ - 277,325 $ 277,325	Other equity $ - ( 277,325)
			($ 277,325)

Under IAS 39, because the equity instruments, which were classified as available-for-sale financial assets amounting to $62,890, were not held for the purpose of trading, they were reclassified as ‘financial assets at fair value through other comprehensive income (equity instruments)’, and accordingly, retained earnings was increased and other equity interest was decreased in the amounts of $277,325 and $277,325 on initial application of IFRS 9, respectively.

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• C. The significant accounts for the year ended December 31, 2017 are as follows:

• (a) Financial assets at fair value through profit or loss

Items Non-current items: Financial assets held for trading Non-hedging derivatives (Redemption rights to the third domestic issuance of secured convertible corporate bonds) Valuation adjustment of financial assets held for trading	December 31, 2017 $ 292 368 $ 660

For the year ended December 31, 2017, the Company recognised net gains (losses) on financial assets held for trading purposes in the amounts of $368, which were included in “other gains and losses”.

• (b) Available-for-sale financial assets

Available-for-sale financial assets
Items Non-current items: Listed stocks Swissray Global Healthcare Holding Ltd. Accumulated impairment		December 31, 2017 $ 340,215 277,325) $ 62,890
	(

For the year ended December 31, 2017, the Company recognised fair value changes in other comprehensive income in the amount of ($123,329).

For the year ended December 31, 2017, certain investments have been impaired under the Company’s assessment, and the Company recognised and reclassified impairment loss from equity to profit or loss amounting to $277,325, which was listed in ‘Other gains and losses’.

• D. Credit risk information for the year ended December 31, 2017 is as follows:

The credit quality information of financial assets that are neither past due nor impaired, please refer to Note7(3)C.

The Company provides endorsements and guarantees based on the Company’s policies and procedures on endorsements and guarantees, either to subsidiaries. No collateral is requested for the endorsements and guarantees as the Company can control the credit risk of the subsidiary. The maximum credit risk is the guarantee amount.

(4) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in

2017

• A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below.

• (a) Investment revenue

The Company recognises share of profit or loss of subsidiaries and associates generated after acquisition in revenue or cost.

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• (b) Sales of services

• i.The Company provides administrative resource and management service to subsidiaries. The revenue will have to be recognised based on the stage of completion at the balance sheet date when the outcome of services provided can be estimated reliably.

• ii. Revenue recognition must consider the possibility of recovering costs already incurred when the outcome of services provided cannot be reasonably estimated. If incurred costs are not likely to be recovered, no revenue should be recognised, and the incurred costs should still be recognised as expenses in the current period.

• B. The revenues recognised by using above accounting policies for the year ended December 31, 2017 are as follows:

2017 are as follows:
Profit or loss of associate and joint ventures accounted for using equity method Service revenue	Year ended December 31, 2017 $ 220,080 106,560
	$ 326,640

• C. The effects and description of current balance sheet and comprehensive income statement if the Company continues adopting above accounting policies are as follows:

Balance sheet items Investments accounted for using equity method Retained earnings Comprehensive income statement items	Description (1) (1) Description (1) (1)	Year ended December 31, 2018	Year ended December 31, 2018	Year ended December 31, 2018
		Balance by using Balance by using previous Effects from changes in IFRS 15 accounting policies accounting policy $ 7,010,440 $ 7,023,635 ($ 13,195) 763,134 776,329 ( 13,195) Year ended December 31, 2018		Effects from changes in accounting policy
		Balance by using IFRS 15 $ 435,545 323,422	Balance by using previous Effects from changes in accounting policies accounting policy $ 440,648 ($ 5,103) 328,525 ( 5,103)	Effects from changes in accounting policy
Operating revenue Profit for the period

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or

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20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2)(6), and 12(3)(4).

• J. Significant inter-company transactions during the reporting periods: None exceeds 100 million.

(2) Information on investees

• Information of investee companies (not including investees in Mainland China) ： Please refer to table 6.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 7.

• B. Limits on investments in Mainland China: Please refer to table 7.

• C. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None exceeds 100 million.

14. SEGMENT INFORMATION

None.

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CHC Healthcare Group

Expressed in thousands of NTD (Except as otherwise indicated)

Loans to others

For the year ended December 31, 2018

Table 1

No. (Note 1)	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2018	Balance at December 31, 2018	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party (Note 2)	Ceiling on total loans granted (Note 3)	Footnote
													Item Value
0 0 0 0 0 0 0 0 0 0 0 0 0 1 2	The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Chiu Ho Scientific Co., Ltd. Hsing-Yeh Biotechnology Co., Ltd.	Chiu Ho Medical System Co., Ltd. Chiu Ho Scientific Co., Ltd. Shin-Ho Instruments Co., Ltd. Tong-Lin Instruments Co., Ltd. Hua Lin Instruments Co., Ltd. E Century Healthcare Corporation Tomorrow Medical System CO., Ltd. Hsin Lin Biotech Co., Ltd. Chiu Ho Biotech Co., Ltd. Ho-Shin Instruments Co., Ltd. Medlink Healthcare Limited Hsing-Yeh Biotechnology Co., Ltd. Chiu Ho (CHINA) Medical Technology Co., Ltd. High-End Vision Eye Center Yeezen General Hospital	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y	350,000 $ 80,000 10,000 60,000 20,000 40,000 380,000 5,000 10,000 10,000 60,000 80,000 30,960 5,000 155,000	350,000 $ 50,000 - 60,000 15,000 20,000 380,000 - 10,000 - 60,000 80,000 30,715 5,000 148,000	180,000 $ 50,000 - - - - 300,000 - - - - 10,000 - 5,000 148,000	2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2.5% 2.5%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Business transaction Business transaction	- $ - - - - - - - - - - - - 4,736 222,799	Operation Operation Operation Operation Operation Operation Operation Operation Operation Operation Operation Operation Operation - -	- $ - - - - - - - - - - - - - -	None - $ None - None - None - None - None - None - None - None - None - None - None - None - None - None -	497,236 $ 497,236 497,236 497,236 497,236 497,236 497,236 497,236 497,236 497,236 497,236 497,236 497,236 4,736 199,014	1,988,945 $ 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 1,988,945 53,531 398,028

Table 1, Page 1

Maximum

					Maximum
No. (Note 1)	Creditor	Borrower	General ledger account	Is a related party	outstanding balance during the year ended December 31, 2018	Balance at December 31, 2018	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Limit on loans granted to a single party (Note 2)	Ceiling on total loans granted (Note 3)	Footnote
													Item Value
3 4	Medlink Healthcare Limited CHC Healthcare (HK) Limited	Hsing-Yeh Biotechnology Co., Ltd. Chiu Ho (CHINA) Medical Technology Co., Ltd.	Other receivables Other receivables	Y Y	15,000 $ 7,740	- $ 7,679 1,216,394 $	- $ - 693,000 $	2% 2%	Short-term financing Short-term financing	- $ -	Operation Operation	- $ -	None - $ None -	317,527 $ 8,130	635,054 $ 16,260

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: (1) In accordance with the Company's lending policies and procedures, the credit limit for each type of borrower is set as follows:

• A. For borrowers with which the Company has a business relationship, the individual loan amount cannot exceed the total transaction amount with the Company in the most recent year.

• B. For borrowers with short-term financing needs, the individual loan amount cannot exceend 10% of the Company's net assets according to the most recent financial statements.

• (2) In accordance with the lending policies and procedures of the Company's subsidiary, the credit limit for each type of borrower is set as follows:

• A. For borrowers with which the subsidiary has a business relationship, the individual loan amount cannot exceed the total transaction amount with the subsidiary in the most recent year.

• B. The total loan amount granted to a single party cannot exceed 20% of the subsidiary's net assets according to the most recent financial statements.

• Note 3: (1) Limit on total loans granted by the Company: Total loan amount cannot exceed 40% of the Company's net assets according to the most recent financial statements.

• (2) Limit on total loans granted by the Company's subsidiary: Total loan amount cannot exceed 40% of the subsidiary's net assets according to the most recent financial statements.

Table 1, Page 2

CHC Healthcare Group

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Provision of endorsements and guarantees to others

For the year ended December 31, 2018

No. （Note 1）	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party （Note 3）	Maximum outstanding endorsement/ guarantee amount as of December 31,2018	Outstanding endorsement/ guarantee amount at December 31,2018	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 4）	Provision of endorsements/ guarantees by parent company to subsidiary （Note 5）	Provision of endorsements/ guarantees by subsidiary to parent company （Note 5）	Provision of endorsements/ guarantees to the party in Mainland China （Note 5）	Footnote
		Companyname	Relationship with the endorser/ guarantor （Note 2）
0 0 0 0 0 0 0 0 0 1 1 1	The Company The Company The Company The Company The Company The Company The Company The Company The Company Hsing-Yeh Biotechnology Co., Ltd. Hsing-Yeh Biotechnology Co., Ltd. Hsing-Yeh Biotechnology Co., Ltd.	Chiu Ho Medical System Co., Ltd. Tomorrow Medical System CO., Ltd. Chiu Ho Scientific Co., Ltd. Tong-Lin Instruments Co., Ltd. Hua Lin Instruments Co., Ltd. E Century Healthcare Corporation Guangzhou Chiuho Medical System Co.,Ltd. Medlink Healthcare Limited CHC Healthcare (HK) Limited The Company Chiu Ho Medical System Co., Ltd. Tomorrow Medical System Co., Ltd.	2 2 2 2 2 2 3 3 3 4 4 4	9,944,726 $ 9,944,726 9,944,726 9,944,726 9,944,726 9,944,726 9,944,726 9,944,726 9,944,726 1,990,142 1,990,142 1,990,142	2,772,390 $ 1,852,401 251,960 250,000 130,000 120,000 103,268 305,000 245,720 1,189,718 933,474 575,164	1,917,145 $ 1,460,000 251,715 - - 57,000 98,384 50,000 - 828,236 - 575,164	595,822 $ 525,036 67,111 - - 46,261 85,398 40,000 - 828,236 - 225,464	- $ - - - - - - - - 828,236 - 575,164	38.56% 29.36% 5.06% 0.00% 0.00% 1.15% 1.98% 1.01% 0.00% 83.23% 0.00% 57.80%	14,917,089 $ 14,917,089 14,917,089 14,917,089 14,917,089 14,917,089 14,917,089 14,917,089 14,917,089 2,985,213 2,985,213 2,985,213	Y Y Y Y Y Y Y Y Y N N N	N N N N N N N N N Y N N	N N N N N N Y N N N N N

Table 2, Page 1

No. （Note 1）	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party （Note 3）	Maximum outstanding endorsement/ guarantee amount as of December 31,2018	Outstanding endorsement/ guarantee amount at December 31,2018	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 4）	Provision of endorsements/ guarantees by parent company to subsidiary （Note 5）	Provision of endorsements/ guarantees by subsidiary to parent company （Note 5）	Provision of endorsements/ guarantees to the party in Mainland China （Note 5）	Footnote
		Companyname	Relationship with the endorser/ guarantor （Note 2）
1	Hsing-Yeh Biotechnology Co., Ltd.	Medlink Healthcare Limited	4	1,990,142 $	108,444 $	- $ 5,237,644 $	- $ 2,413,328 $	- $	0.00%	2,985,213 $	N	N	N
								1,403,400 $

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories; fill in the number of category each case belongs to:

(1) Having business relationship.

(2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.

• (3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.

• (4) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.

(5) Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.

• (6) Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

(7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

Note 3: (1) In accordance with the Company's policies and procedures on endorsements and guarantees, the endorsement or guarantee amount for a single party cannot exceed 200% of the Company's net assets according to the most recent financial statements.

(2) In accordance with the policies and procedures on endorsements and guarantees provided by the Company's subsidiary, the endorsement or guarantee amount for a single party cannot exceed 200% of the subsidiary's net assets according to the most recent financial statements.

(3) In accordance with the Company's policies and procedures on endorsements and guarantees, the total endorsement or guarantee amount for a single party provided by the Company and its subsidiaries cannot exceed 200% of the Company's net assets according to the most recent financial statements.

Note 4: (1) In accordance with the Company's policies and procedures on endorsements and guarantees, the total endorsement and guarantee amount provided to external parties cannot exceed 300% of the Company's net assets according to the most recent financial statemetns.

(2) In accordance with policies and procedures on endorsements and guarantees provided by Company's subsidiary, the total endorsement and guarantee amount provided to external partines cannot exceed 300% of the subsidiary's net assets according to the most recent financial statements.

(3) In accordance with the Company's policies and procedures on endorsements and guarantees, the total endorsement and guarantee amount provided to external parties by the Company and its subsidiaries cannot exceed 300% of the net assets of the Company according to the most recent financial statements.

Note 5: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

Table 2, Page 2

CHC Healthcare Group

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

December 31, 2018

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Securitiesheld by	Marketable securities	Relationship with the securitiesissuer	General ledgeraccount		As of December31,2018	As of December31,2018		Footnote
				Numberofshares	Bookvalue	Ownership (%)	Fairvalue
The Company The Company Chiu Ho Medical System Co., Ltd. Chiu Ho Medical System Co., Ltd.	Stocks–China Isotope & Radiation Corporation Stocks–Swissray Global Healthcare Holding Ltd. Stocks–Huede Healthtech Co., Ltd. Stocks–AESolution Biomedical Co., Ltd.	- The Company's chairman and the investee's chairman are the same person - The Company's chairman and the investee's chairman are the same person	Financial asset at fair value through profit or loss-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current	880,000 1,988,100 200,000 855,400	53,482 $ 14,394 674 32,163	1.10% 4.67% 7.41% 6.69%	53,482 $ 14,394 674 32,163

Table 3, Page 1

CHC Healthcare Group

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

For the year ended December 31, 2018

Table 4 Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions （Note 1）	Differences in transaction terms compared to third party transactions （Note 1）	Percentage of total notes/accounts Footnote Balance receivable(payable) （Note 2） Notes/accounts receivable(payable) Expressed in thousands of NTD (Except as otherwise indicated)	Percentage of total notes/accounts Footnote Balance receivable(payable) （Note 2） Notes/accounts receivable(payable) Expressed in thousands of NTD (Except as otherwise indicated)	Percentage of total notes/accounts Footnote Balance receivable(payable) （Note 2） Notes/accounts receivable(payable) Expressed in thousands of NTD (Except as otherwise indicated)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Hsing-Yeh Biotechnology Co., Ltd.	Yeezen General Hospital	Substantive related party	Sale of goods	222,800 $	97%	6 months	-	-	240,432 $	81%	Note

Note 1: Sales amount includes rental revenue. Note 2: Notes and accounts receivable include lease payments receivable.

Table 4, Page 1

CHC Healthcare Group

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

December 31, 2018

Table 5 Creditor	Counterparty	Relationship with the counterparty	Balanceasat December 31,2018	Turnover rate	Overduereceivables	Overduereceivables	Amount collected subsequent to the Allowance for balance sheetdate doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)	Amount collected subsequent to the Allowance for balance sheetdate doubtful accounts Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
Hsing-Yeh Biotechnology Co., Ltd.	Yeezen General Hospital	Substantive related party	Notes and accounts receivable (including lease payments receivable): $240,432	0.92	77,985 $	In collection	33,930 $	- $

Table 5,Page 1

Table 6

CHC Healthcare Group

Information on investees

For the year ended December 31, 2018

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shareshe	ldasat December 31,2018	ldasat December 31,2018	Net profit (loss) of the investee for the year endedDecember 31,2018	Investment income (loss) recognised by the Company for the year ended December 31,2018	Footnote
				Balance asat December 31,2018	Balance asat December 31,2017	Numberofshares	Ownership (%)	Bookvalue
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company	Chiu Ho Medical System Co., Ltd. Tomorrow Medical System CO., Ltd. Chiu Ho Scientific Co., Ltd. Chiu Ho Biotech Co., Ltd. Ho-Shin Instruments Co.,Ltd. Shin-Ho Instruments Co., Ltd. Tong-Lin Instruments Co., Ltd. Hua Lin Instruments Co., Ltd. Hsin Lin Biotech Co., Ltd. E Century Healthcare Corporation J. Ab Beauty Co., Ltd.	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	Medical instrument sale, leasing and services Medical instrument sale, leasing and services Ophthalmic equipment sale, leasing and services Medical instrument leasing Medical instrument leasing Medical instrument leasing Medical instrument leasing Medical instrument leasing Medical instrument leasing Medical instrument leasing Medical instrument sale, leasing and services	2,380,988 $ 163,484 151,422 357,182 - 9,171 371,183 521,815 105,929 556,151 -	1,743,488 $ 163,484 115,164 407,182 86,258 9,171 371,183 661,815 105,929 661,151 27,300	299,340,000 43,200,000 9,853,841 37,000,000 - 300,000 40,000,000 55,600,000 10,000,000 60,000,000 -	100.00% 100.00% 100.00% 100.00% - 100.00% 100.00% 100.00% 100.00% 100.00% -	3,395,576 $ 522,515 133,829 378,298 - 15,068 497,563 696,442 110,487 838,041 -	108,424 $ 40,638 11,004 3,375 - 7,250 28,970 40,895 431 57,900 3,037) (	109,233 $ 40,638 11,004 3,396 - 7,250 29,013 40,895 431 57,900 2,126) (	Subsidiary Subsidiary Subsidiary (Note 1) Subsidiary Subsidiary (Note 1) Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary (Note 2)

Table 6, Page 1

Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shareshe	ldasat December 31,2018	ldasat December 31,2018	Net profit (loss) of the investee for the year endedDecember 31,2018	Investment income (loss) recognised by the Company for the year ended December 31,2018	Footnote
				Balance asat December 31,2018	Balance asat December 31,2017	Numberofshares	Ownership (%)	Bookvalue
The Company CHC Healthcare (BVI) Limited Chiu Ho Medical System Co., Ltd. Chiu Ho Medical System Co., Ltd. Medlink Healthcare Limited Hsing-Yeh Biotechnology Co., Ltd.	CHC Healthcare (BVI) Limited CHC Healthcare (HK) Limited Medlink Healthcare Limited SenCare Healthcare Company Hsing-Yeh Biotechnology Co., Ltd CHENG-HSIN Biotechnology Co., Ltd	British Virgin Islands Hong Kong Taiwan Taiwan Taiwan Taiwan	Holdings and indirect investments Medical instrument sale, leasing and services Medical instrument sale Consulting service and elderly residence Medical instrument sale and leasing ; drug sale Medical instrument leasing	522,432 3,987 1,545,300 194,000 1,513,464 12,000	451,860 3,863 1,354,050 - 1,513,464 12,000	940 100,000 154,125,000 19,400,000 93,600,000 1,200,000	100.00% 100.00% 100.00% 65.99% 100.00% 40.00%	422,621 40,534 1,587,637 191,825 1,623,149 1,309	28,791 207 36,981 3,296) ( 43,637 20,619) (	28,791 249 36,981 2,175) ( 39,094 3,867) (	Subsidiary (Note 3) Subsidiary Subsidiary Subsidiary Subsidiary Associate

Note 1: To restructure organisation, Ho-Shin Instruments Co., Ltd. was merged into Chiu Ho Scientific Co., Ltd. , and Chiu Ho Scientific Co., Ltd. was the surviving company. Note 2: On April 20, 2018, the shareholders have resolved to dissolve the company and the Company lost its control over J. Ab Beauty Co., Ltd. on the same day. Note 3: Indirect investment company is organised as a limited liability company

Table 6, Page 2

CHC Healthcare Group

Information on investments in Mainland China

For the year ended December 31, 2018

Table 7 Expressed in thousands of NTD (Except as otherwise indicated) Accumulated Amount remitted from Taiwan Accumulated Investment income Accumulated amount of to Mainland China/ amount Ownership (loss) recognised amount remittance from Amount remitted back of remittance held by by the Company Book value of of investment Taiwan to to Taiwan for the year from Taiwan to Net income of the for the year investments in income Investment Mainland China ended December 31, 2018 Mainland China investee for the Company ended December Mainland China remitted back to Investee in Main business method as of January 1, Remitted to Remitted back as of December 31, year ended (direct or 31, 2018 as of December 31, Taiwan as of Mainland China activities Paid-in capital （ Note 1 ） 2018 Mainland China to Taiwan 2018 December 31, 2018 indirect) （ Note 2 ） 2018 December 31, 2018 Footnote Guangzhou Medical instrument $ 291,925 (2) Indirect $ 219,486 $ 72,439 $ - $ 291,925 $ 1,660 100% $ 1,660 $ 237,824 $ - Chiuho Medical sale, leasing and investment through System Co., Ltd. services CHC(BVI), a whollyowned subsidiary of the Company Chiu Ho Medical instrument 231,765 (2) Indirect 231,765 - - 231,765 19,550 100% 26,882 135,297 - (CHINA) sale, leasing and investment through Medical services CHC(BVI), a whollyTechnology Co., owned subsidiary of Ltd. the Company

Accumulated amount of Investment amount approved Ceiling on remittance from Taiwan by the Investment investments in Mainland China to Mainland China as of Commission of the Ministry of imposed by the Investment Company name December 31, 2018 Economic affairs (MOEA) Commission of MOEA (Note 3) CHC Healthcare (BVI) Limited $ 523,690 $ 675,858 $ 3,080,111

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1) Directly invest in a company in Mainland China..

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.

Note 2: Income (loss) recognised based on financial statements was audited by independent auditors Note 3: Disclosed in accordance with the investment limits set forth in Jin-Shen-Zi No. 09704604680, issued by the Investment Comission of MOEA on August 29, 2008 Note 4: The Company invested in the investees in Mainland China, including Neusoft CHC Medical Service Co., Ltd., Neusoft-CHC Office of Medical Intelligence & Services, Shenyang, and Dalian Neusoft Kangrui Jiuhe Medical Management Co., Ltd. through an existing company in Mainland China. Due to the existing company in Mainland China is a holding company, therefore it shall first submit an application for approval from Investment Commission of the Ministry of Economic Affairs (MOEA) for its reinvestments, but the approval from MOEA are not required for other investments.

Table 7, Page 1

CHC HEALTHCARE GROUP STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 1

Items Cash on hand Checking accounts Demand deposits - NTD Demand deposits - USD (Note) Foreign Currency is expressed in dollars.	Description USD $123,990 (Note), at exchange rate of 30.72	Amount
		$ 3 1,464 44,733 3,808 $ 50,008

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Statement 1, Page 1

CHC HEALTHCARE GROUP

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS-CURRENT DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 2

Name. Equity securities - China Isotope & Radiation Corporation	Summary. Hong Kong-listed stocks	Number of shares (per thousand shares). 880	Face value (Note 1). 1	Total amount $ 74,900	Interest rate -	Acquisition cost $ 74,900	Fair	value. Total amount. $ 53,482	Changes in fair value attributable to credit risk changes. $ -	Note.
							Unit price (Note 2). $ 60.78

Note 1: Expressed in Hong Kong dollars. Note 2: Expressed in New Taiwan dollars.

Statement 2, page 1

CHC HEALTHCARE GROUP

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME-NON-CURRENT YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 3

Name. Swissray Global Healthcare Holding Ltd. Valuation adjustment	Opening balance. Number of shares (per thousand shares) Amount. 6,627 $ 340,215 ( 277,325) $ 62,890	Additions. Reductions. Number of shares (per thousand shares) Amount. Number of shares (per thousand shares) Amount. - $ - ( 4,639) $ - - ( 48,496) $ - ($ 48,496)	Ending balance. Number of shares (per thousand shares) Amount. 1,988 $ 340,215 ( 325,821) $ 14,394	Pledged to others as collateral
	Number of shares (per thousand shares) 6,627	Number of shares (per thousand shares) -	Number of shares (per thousand shares) 1,988
				None

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Statement 3, Page 1

CHC HEALTHCARE GROUP STATEMENT OF INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 4

Name. Investment types. Chiu Ho Medical System Co., Ltd. Ordinary share Tomorrow Medical System CO., Ltd. Ordinary share Chiu Ho Scientific Co., Ltd. Ordinary share Chiu Ho Biotech Co., Ltd. Ordinary share Ho-Shin Instruments Co., Ltd. Ordinary share Shin-Ho Instruments Co., Ltd. Ordinary share Tong-Lin Instruments Co., Ltd. Ordinary share Hua Lin Instruments Co., Ltd. Ordinary share Hsin Lin Biotech Co., Ltd. Ordinary share E Century Healthcare Corporation Ordinary share J. Ab Beauty Co., Ltd. Ordinary share CHC(BVI) Ordinary share	Opening balance. Number of shares (per thousand shares) Amount. 235,590 $2,641,125 43,200 481,625 12,400 141,156 42,000 424,902 7,500 31,432 ,300 9,095 40,000 468,550 69,600 795,547 10,000 111,930 70,500 885,142 2,730 2,494 0.77 331,935 $6,324,933	Additions (Note 1). Number of shares (per thousand shares) Amount. 63,750 $ 754,451 - 40,890 2,454 42,673 - 3,396 - - - 7,250 - 29,013 - 40,895 - 431 - 57,899 - - 0.17 99,362 $1,076,260	Reductions (Note 2). Number of shares (per thousand shares) Amount. - $ - - - ( 5,000) ( 50,000) ( 5,000) ( 50,000) ( 7,500) ( 31,432) - ( 1,277) - - ( 14,000) ( 140,000) - ( 1,874) ( 10,500) ( 105,000) ( 2,730) ( 2,494) -( 8,676) ($ 390,753)	Ending balance. Number of Shares (per thousand shares) Amount. 299,340 $ 3,395,576 43,200 522,515 9,854 133,829 37,000 378,298 - - 300 15,068 40,000 497,563 55,600 696,442 10,000 110,487 60,000 838,041 - - 0.94 422,621 $ 7,010,440	As of December 31, 2018 Ownership (%). 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 70% 100%	Market price or value per share. Price. Total price. - $ 3,404,729 - 522,515 - 133,829 - 378,307 - - - 15,068 - 497,921 - 696,442 - 107,892 - 832,765 - - - 422,621 $ 7,012,089	Pledged to others as collateral.
	Number of shares (per thousand shares) 235,590 43,200 12,400 42,000 7,500 ,300 40,000 69,600 10,000 70,500 2,730 0.77	Number of shares (per thousand shares) 63,750 - 2,454 - - - - - - - - 0.17	Number of shares (per thousand shares)	Number of Shares (per thousand shares)		Price.
			- - ( 5,000) ( 5,000) ( 7,500) - - ( 14,000) - ( 10,500) ( 2,730) -	299,340 43,200 9,854 37,000 - 300 40,000 55,600 10,000 60,000 - 0.94		- - - - - - - - - - - -	None None None None None None None None None None None None

Note 1: Includes investment income arising from investments accounted for using equity method, additional investments, inter-investee reorganisation, employee share options and changes in exchange differences on translation of foreign financial statements.

Note 2: Includes investment loss arising from investments accounted for using equity method, subsidiaries’ cash dividends paid to the parent company, shares returned from reduction in subsidiaries, employee share options, adjustments on unrealized gain or loss on equity instrument at fair value through other comprehensive income, inter-investee reorganisation, dissolution of investees and changes in exchange differences on translation of foreign financial statements.

Statement 4, Page 1

CHC HEALTHCARE GROUP STATEMENT OF BONDS PAYABLE DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 5

Amount . Pledged to Balance at Unamortised others as Bonds name . Trustees . Issuance date Interest rate Total amount Retired amount December 31, 2018 discounts . Carrying value Repayment . collateral . Third domestic Yuanta Please refer to secured convertible Yes Commercial Bank Note 6 (6) bonds 2017.11.2 0% $ 1,200,000 $ - $ 1,200,000 ($ 22,965) $ 1,177,035 - Less: Bonds payable, current portion or exercise of put options (shown as ‘other current liabilities’) $ 1,177,035

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Statement 5, Page 1

CHC HEALTHCARE GROUP STATEMENT OF OPERATING COSTS YEAR ENDED DECEMBER 31, 2018

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Statement 6

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----- Start of picture text -----

Items Amount Notes
Wages and salaries $ 59,120
Directors’ remuneration [ 6,273]
Cost of services 12,191
None of the balances of each remaining
item is greater than 5% of this account
Other expenses 24,191 balance.
$ 101,775
----- End of picture text -----

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Statement 6, Page 1