S.C.P.C - AGM Information 2018 | FinancialReports.eu

Stock Code: 1720

Standard Chem. & Pharm. Co., Ltd.

Handbook for the 2018 Annual Meeting of Shareholders

MEETING TIME:June 20,2018

----Disclaimer----

THIS IS A TRANSLATION OF THE AGENDA FOR THE 2018 ANNUAL SHAREHOLDERS’ MEETING (“THE AGENDA) OF STANDARD CHEM. & PHARM. CO., LTD (“THE COMPANY”). THE TRANSLATION IS INTEDED FOR REFERENCE ONLY AND NOT FOR OTHER PURPOSE. THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE AGENDA SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETAION OF THE SUBJET MATTER STATED HEREIN.

	Table of Contents
I.	Meeting Procedure	1
II.	Meeting Agenda	2
III.	Company Reports	3
IV.	Proposals	7
V.	Discussions and Election	9
VI.	Question and Motions	11
Attachments
1.	Business Report	12
2.	Independent Auditors’ Report and Financial Statements	15
3.	Director and Supervisor Candidate List	40
4.	Content of Amended Rules of Procedure for Board of Directors	42
	Meeting
Appendices
	Directors’ and Supervisors' Shares Held at Present	46

I. Meeting Procedure

Standard Chem. & Pharm. Co., Ltd.

Procedure for the 2018 Annual Meeting of Shareholders

Calling of the Meeting to Order
Chairperson takes Chair
Introduction
Chairperson Remarks

5. Company Reports

Proposals
Discussions and Election
Question and Motions

9. Adjournment

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II. Meeting Agenda

Agenda of Annual Meeting of Shareholders

Time: 9:00 a.m. on Wednesday, June 20, 2018

Place: Standard Chem. & Pharm. Co., Ltd.’s Conference Hall, No. 154, Kaiyuan Rd., Tuku Village, Sinying District, Tainan City.

Call the Meeting to Order
Chairperson Remarks
Company Reports
(1)2017 Business Report
(2)Supervisors’ Review Report on the 2017 Financial Results
(3)2017 Annual Report on Remuneration of Employees , Directors and Supervisors
(4)The report of amending the Rules of Procedure for Board of Directors Meeting
(5)The Status of Endorsement and Guarantee
(6)The Status of Implementation of Investment in Mainland China
(7)Other Reports
Proposals

(1)Adoption of the 2017 Business Report and Financial Statements

(2)Adoption of the Proposal for Distribution of 2017 Profits

Discussions and Election
(1)Election of Board of Directors and Supervisors
(2)Release of newly elected Board of Directors from non-competition restrictions
Questions and Motions
Adjournments

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III. Company Reports

(1) 2017 Business Reports

The result of overall operation for Standard Chem. & Pharm. Co., Ltd. and its subsidiaries’ (the Group) were summarized as follows:

Net Sales

Due to the effort of the Group, Net Sales for 2017 increased 4.8% in comparison with 2016.

Gross Profit

Due to revenue increase and portfolio adjustment, Gross Profit for 2017 rose by 4.8% in comparison with 2016.

Operating profit

Due to the increase of gross profit and cost control, the Operating profit for 2017 increased 29.5% in comparison with 2016.

Non-operating Income

Due to the Increase of Exchange Loss and Loss of Financial Assets, Non-operating Income in 2017 decreased by 80.0% when compared with 2016.

In summation of the above, Net Profit for 2017 was NT$433 million; representing a 16.5% increase over Net Income of 2016.

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(2) Supervisors’ review report on the 2017 financial statements

Supervisor’s Review Report

To Shareholders:

The Board of Directors has prepared Standard Chem. & Pharm. Co., Ltd. (SCP)’s 2017 Business report, parent and consolidated Financial Statements, and proposal of the surplus earning distribution. The CPA firm of PricewaterhouseCoopers Taiwan was retained to audit SCP’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report and Financial Statements have been reviewed and determined to be correct and accurate by the Supervisor of SCP. According to Article 219 of the Company Act, I hereby submit this report.

Supervisor: Yuan-Feng, Kao

March 20, 2018

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Supervisor’s Review Report

To Shareholders:

Supervisor: Tsuey-Wen Yeh

March 20, 2018

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(3) 2017 Annual Report on Remuneration of Employees, Directors, and Supervisor The resolution was approved by the Board on March 20th, 2018.
i. 2017 Annual Employees’ Remuneration is NT$ 4,465,023, the amount recognized is NT$ 4,596,968. The difference NT$ 131,945 is recognized as a gain in 2018.
ii. 2017 Annual Board’s Remuneration is NT$ 8,930,046, the amounts recognized is NT$9,193,936. The difference NT$ 263,890 is recognized as a gain in 2018.
iii. The above remuneration is distributed in cash.
(4) The report of Amending Rules of Procedure for Board of Directors Meeting The amendment of Rules of Procedure for Board of Directors Meeting has been approved by the Board and examined by the supervisors of the company on Nov. 7th, 2017. (Please refer to page 42-45 Attachment 4 for details.)
(5) The Status of Endorsement and Guarantee
Based on the resolution made by the Board of Directors on April 18[th] , 2012, the endorsements and guarantees provided by SCP to its subsidiary, Standard Pharmaceutical Co., Ltd. (Samoa), have totaled US$3,000,000. By the end of December 2017, US$3,000,000 of the amount was actually used.
(6) The Status of Implementation of Investment in Mainland China
i. SCP invested through Standard Pharmaceutical Co., Ltd. (Samoa) to Jiangsu Standard Biopharm Co., Ltd., a 100% owned subsidiary, located in Taizhou City of Jiangsu province in Mainland China. The total amount to be invested is US$9,000,000; the registered paid-in capital at the end of 2017 was US$9,000,000.
ii. SCP joint ventured through Jiangsu Standard Biopharm Co., Ltd. with a Japanese company to Jiangsu Standard-Dia Biopharm Co., Ltd., a 55% owned subsidiary. The registered paid-in capital at the end of 2017 was US$6,780,000.
(7) Other Reports

In accordance with Article 172-1 of the Company Act, the proposals submitted by shareholders shall be listed; no proposal is submitted in this shareholders’ meeting.

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IV.Proposals

1. Proposed by the Board

Proposal:

Adoption of the 2017 Business Report and Financial Statements.

Explanation:

The 2017 Business Report (please refer to page 12-14) and Financial Statements of SCP (please refer to page 15-39) have been approved by the Board and examined by the supervisors of SCP.

Resolution:

2. Proposed by the Board

Proposal:

Adoption of the Proposal for Distribution of 2017 Profits.

Explanation:

a. Please refer to the 2017 PROFIT DISTRIBUTION TABLE below.
b. The distribution of cash dividends shall be based on the stock register record as shown on the distribution record date. It is proposed to distribute NT$1.6 per share, and the total dividend shall be rounded down to nearest NT$1.00, the remaining fraction will be adjusted by the Chairman of the Board, who is fully authorized by Board of Directors.
c. Subject to approval of the proposed distribution plan by the Shareholders’ Meeting, it is proposed that the Board of Directors be authorized to determine the dividend distribution date in order to make adjustment and distribution for each share based on the number of actual shares outstanding on the distribution date.

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Standard Chem. & Pharm. Co., Ltd. PROFIT DISTRIBUTION TABLE Year 2017

Year 2017
	`(`Unit: NT$)
Item	Amount
After-tax net profit	363,286,230
Less: Legal reserve	(36,328,623)
Less: Adjusted actuarial interest	(12,653,602)
Distributable profit from year 2016	314,304,005
Undistributed earnings from previous period	632,158,456
Accumulated undistributed earnings	946,462,461
Less: Dividend to shareholders (Cash dividend NT$1.60 per share)	(285,913,742)
Undistributed earnings as of the end of the period	660,548,719

Note 1: Earning distribution for this year shall be based on the distributable profit from year 2017

Note 2: Actual cash dividend amount per share shall be calculated based on the stock register record shown on the distribution record date

Resolution:

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V. Discussions and Election

1. Proposed by the Board

Proposal:

Election of members of Board of Directors and Supervisors.

Explanation:

a. The election of new Directors and Supervisors is proposed to this Annual Shareholders’ Meeting due to the expiration of SCP’s current Directors and Supervisors’ tenure on June 15, 2018.
b. Pursuant to SCP’s Article of the Corporate Chapter, five Directors (including two independent directors) and two Supervisors shall be elected. The tenure of newly elected Directors and Supervisors will be three years, commencing from June 20, 2018 to June 19, 2021.
c. The Directors and Supervisors will be elected by adopting candidates’ nomination system pursuant to SCP’s Article of the Corporate Chapter. The nominated candidates education and professional qualifications, experience and relevant information are attached hereto as Attachment 3 on page 40-41.

Election results:

2. Proposed by the Board

Proposal:

Release of newly elected board members from non-competition restrictions.

Explanation:

a. The proposal is conducted pursuant to the Article 209, paragraph 1 of the Company Act.
b. The newly elected Directors might operate other businesses with similar business scope as SCP and act as SCP’s Directors simultaneously. Without impeding SCP’s interest and benefit, it is proposed to release newly elected Directors and those who were appointed by the corporation to act as directors from non-competition restrictions.
c. The newly elected Directors’ other business activities are listed as follow:

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Title	name	Other business and Title
Director	Chin-Tsai, Fan	 AdvPharma, Inc., Chaiman  Fan Dao Nan Foundation Chaiman  Syngen Biotech Co., Ltd., Director  CNH TECHNOLOGIES,INC.,Director
Director	Fan Dao Nan Foundation Representative Tzu-Ting,Fan	 Chia Scheng Investment Co., Ltd. Chaiman  Inforight Technology Co., Ltd. Chaiman  Standard Pharmaceutical Co., Ltd. Chaiman  Standard Chem. & Pharm.Phillippines, Inc. Chaiman  Multipower Enterprise Corp. Chaiman  Jiangsu Standard Biotech Pharmaceutical Co., Ltd. Chaiman  Jiangsu Standard-Dia Biopharma Co., Ltd. Chaiman  Taiwan Biosim Company,Limited. Chaiman  New Nutrition Sources Chaiman  SYN-TECH Cham. & Pharm. Co., Ltd., Director  Syngen Biotech Co., Ltd., Director  Souriree Biotech & Pharm.Co., Ltd Director  HER-SING CO.,LTD. Director
Director	Yuan-Teh Lee	 Aba Medical Group. Chaiman  MICROLIFE CORPORATION Director  KC Uppertech Co., Ltd Director

Resolution:

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VI.Question and Motions VII. Adjournments

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Attachments

Attachment 1:

Standard Chem. & Pharm. Co., Ltd. 2017 Business Report

Company Business Direction

Standard Chem. and Pharm. Co., Ltd. (SCP) has focused its operations on the development and manufacturing of pharmaceuticals. Through vertical integration of its corporate group and development of niche and brand differentiated specialty products, SCP seeks to build a global marketing network. To establish itself as a world-class pharmaceutical manufacturer, SCP strives to expand its presence in the United States, Japan, Europe, and other markets. SCP’s principal objectives for the year 2017 were:

a. Continue to expand R&D investments
b. Develop core technologies
c. Actively expand international operations
d. Strengthen internal management
Implementation Overview

Throughout 2017, SCP continued to invest in drug development, and the R&D expenses for the year was NT$180,985 thousand, which was about 7% of total revenue. To expand international business, besides markets in Japan, China, and Southeast Asian countries, SCP has submitted ANDAs to the US-FDA, bringing our generic formulations to the next stage of the international pharmaceutical market. Strengthening of internal management and operations was evident in proposal improvement, cost reductions, and process improvements of various ongoing projects.

Results of Business Plan Implementation

SCP’s Net Sales for 2017 were NT$2.4 billion, which was an 2.3% increase over 2016. Sales from pharmaceuticals for human-use (NT$2 billion) represented the largest contribution to overall Net Sales at 89.5%. Sales from Active Pharmaceutical Ingredients (NT$116 million) contributed 4.8% overall. Sales of healthy food (NT$88 million) contributed 3.6% overall. Other products, including veterinarian pharmaceuticals, had sales of NT$49 million contributing 2.1% overall.

Due to increased revenue, cost control, and portfolio adjustments, Gross Profit for 2017 increased by 6.7% in comparison with 2016. Operating profit in

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2017 was 17.4% higher than 2016 because of well-controlled operating expenses.

For non-operating income and expense, the profit declined NT$16.54 million because of the increase in exchange losses.

In summation of the above, Net Income for 2017 was NT$363 million; representing a 6.8% increase over Net Income of 2016.

Operation Summary

Unit: NTD thousand

representing a 6.8% increase over 4. Operation Summary	Net Income of 2016. Unit: NTD thousand
Items	Amount
Net Sales	`2,410,610`
Gross Profit	`1,120,033`
Income from Operations	`360,575`
Non-operating Income/Expenses	`72,083`
Income Before Income Tax	`432,658`
Net Income	`363,286`
Basic Earnings per shares (NTD)	`2.03`

Budget Implementation

Unit: NTD thousand

Items	2017 Budget	2017 Actual	Achievement%
Net sales	`2,654,984`	`2,410,610`	`90.8`
Costs	`1,446,966`	`1,290,577`	`89.2`
Gross Profit	`1,208,018`	`1,120,033`	`92.7`
Operating exp.	`848,018`	`759,458`	`89.6`
Income from Operations	`360,000`	`360,575`	`100.2`
Pre-tax income	`477,125`	`363,286`	`76.1`

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6. Profitability Analysis

6. Profitability Analysis
Items	Ratio(%)
Return on Total Assets	`7.03`
Return on Shareholders’ Equity	`9.83`
Operating income/paid-in capital ratio	`20.18`
Gain before tax/paid-in capital ratio	`24.21`
Net Margin	`15.07`
Basic Earnings per share (NTD)	`2.03`

7. Research and Development

SCP’s R&D expenses for 2017 were NT$181 million, and SCP filed 9 pharmaceutical dossiers with the Taiwanese Food and Drug Administration, and received marketing approval for 11 previously submitted pharmaceutical formulations; for health food, 6 applications were submitted and 3 certificates were approved. Internationally, SCP submitted 9 items for review and received 8 marketing authorizations in Southeast Asia; 1 item was submitted in China. Furthermore, in 2017 SCP launched 5 new products; initiated BA/BE studies on 7 products, and received passing results for 7 BA/BE studies. SCP continues its commitment to investment in R&D for new product development.

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Attachment 2:

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of STANDARD CHEM. & PHARM. CO., LTD.

Opinion

We have audited the accompanying parent company only balance sheets of STANDARD CHEM. & PHARM. CO., LTD. (the “Company”) as of December 31, 2017 and 2016, 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, 2017 and 2016, 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 the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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,

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we do not provide a separate opinion on these matters.

Key audit matters of the parent company only financial statements of the current period are as follows:

Evaluation of inventories

Description

Refer to Note 4(8) for accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of significant accounting estimations and assumptions relating to evaluation of inventories, and Note 6(5) for the details of allowance for inventory valuation loss. As of December 31, 2017, the carrying amount of inventories and allowance for inventory valuation loss are $532,438 thousand and $11,889 thousand, respectively.

The Company is primarily engaged in the manufacture and sales of human medicine. Due to the influence of market demand and short expiration date of medicines, etc., there is a risk in market price decline and obsolescence of inventories. The Company evaluates inventories at the lower of cost and net realisable value. The net realisable values of the aged and obsolete inventories are evaluated based on the historical information of the selling price and discount rate.

Given that the evaluation of inventories is subject to management’s judgement and the accounting estimations will have significant influence on the inventory values, we consider the evaluation of inventories a key audit matter.

How our audit addressed the matter

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

Assessed the reasonableness of policies on allowance for inventory valuation loss, based on our understanding of the inventory classification and historical information of the selling price and discount rate, etc.
Assessed the effectiveness of the management’s inventory control, based on our understanding of the operation of the warehouse management, inspected the annual inventory taking plan and performed our observation.
Tested whether the basis of inventory aging used in calculating the net realisable value of inventory is consistent with the Company’s policy.
Validated the net realisable value of inventories and the adequacy of allowance for inventory valuation loss.

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Existence of domestic sales revenue in human medicines

Description

Refer to Note 4(25) for accounting policies on revenue recognition. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities. Revenue arising from the sales of goods is recognised when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity.

The Company is primarily engaged in the manufacturing and sales of human medicines, which amounted to $2,156,971 thousand for the year ended December 31, 2017. The Company’s sales is mainly domestic-based and its customers are numerous, including hospitals, clinics, pharmacies and drug administrations all over the country. Since the sales transactions are numerous and would require a longer period for verification, we consider the existence of domestic sales revenue from human medicines a key audit matter.

How our audit addressed the matter

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

Assessed the consistency and effectiveness of internal control relevant to sales recognition, taking into consideration customer credit, approved records from sales manager on unusual orders and subsequent cash collection procedures.
Assessed the reasonableness of sales price and nature, based on the basic information of the major customers, including the details of chairman and major shareholders, registered address, principal plan of business, capital and main business activities, etc.
Selected samples of sales transactions and checked against related supporting documentation, including unit prices, quantities, reasonableness of sales allowance recognition and subsequent cash collection.

Other matter –Reference to the audits of other independent accountants

We did not audit the financial statements of certain investments accounted for under the equity method. These investments amounted to $143,705 thousand and $149,226 thousand, constituting 2.71% and 2.90% of total assets as of December 31, 2017 and 2016, respectively, and the share of loss and other comprehensive income of associates accounted for under the equity method was ($5,756) thousand and ($31,089) thousand, constituting (2.60%) and (7.73%) of total comprehensive income

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for the years then ended, respectively. The financial statements of these investee companies were audited by other independent accountants whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included in the parent company only financial statements and information disclosed relative to these investments, is based solely on the reports of other independent accountants.

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

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

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 control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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.
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.
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 control 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 of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless 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.

Lin, Tzu-Shu

Independent Accountants

Liu, Tzu-Meng

PricewaterhouseCoopers, Taiwan

Republic of China March 20, 2018

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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STANDARD CHEM. & PHARM. CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets	December 31, 2017 AMOUNT % `$` `729,506` `14` `-` `-` `119,561` `2` `421,739` `8` `3,855` `-` `89,466` `2` `520,549` `10` `30,775` `-` `59,520` `1` `2,052` `-` `1,977,023` `37` `298,814` `6` `17,085` `-` `1,606,736` `30` `1,193,519` `23` `46,659` `1` `19,996` `-` `82,504` `2` `16,285` `-` `28,947` `1` `19,815` `-` `3,330,360` `63` `$` `5,307,383` `100`	December 31, 2016	December 31, 2016
	AMOUNT `$` `729,506` `-` `119,561` `421,739` `3,855` `89,466` `520,549` `30,775` `59,520` `2,052` `1,977,023` `298,814` `17,085` `1,606,736` `1,193,519` `46,659` `19,996` `82,504` `16,285` `28,947` `19,815` `3,330,360` `$` `5,307,383`	AMOUNT `$` `438,306` `2,469` `133,416` `484,330` `6,883` `97,466` `448,633` `39,932` `64,500` `-` `1,715,935` `413,953` `17,085` `1,605,339` `1,170,949` `46,772` `18,863` `73,014` `68,041` `12,477` `6,202` `3,432,695` `$` `5,148,630`	%
Current assets 1100 Cash and cash equivalents 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1210 Other receivables - related parties 130X Inventories 1410 Prepayments 1476 Other financial assets - current 1479 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under the equity method 1600 Property, plant and equipment 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1920 Guarantee deposits paid 1990 Other non-current assets 15XX Total non-current assets 1XXX TOTAL ASSETS			`8` `-` `3` `9` `-` `2` `9` `1` `1` `-`
			`33`
			`8` `-` `31` `23` `1` `1` `2` `1` `-` `-`
			`67`
			`100`

(Continued)

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STANDARD CHEM. & PHARM. CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities and Equity	December 31, 2017 AMOUNT % `$` `470,000` `9` `200,000` `4` `119,631` `2` `26,704` `1` `55,441` `1` `223,326` `4` `62,059` `1` `41,794` `1` `1,198,955` `23` `100,000` `2` `61,992` `1` `268,642` `5` `5,371` `-` `436,005` `8` `1,634,960` `31` `1,786,961` `34` `197,212` `4` `548,600` `10` `982,791` `18` `156,859` `3` `3,672,423` `69` `$` `5,307,383` `100`	December 31, 2016	December 31, 2016
	AMOUNT `$` `470,000` `200,000` `119,631` `26,704` `55,441` `223,326` `62,059` `41,794` `1,198,955` `100,000` `61,992` `268,642` `5,371` `436,005` `1,634,960` `1,786,961` `197,212` `548,600` `982,791` `156,859` `3,672,423` `$` `5,307,383`	AMOUNT `$` `370,000` `200,000` `142,389` `30,021` `72,101` `189,601` `12,966` `49,507` `1,066,585` `30,000` `61,992` `265,415` `5,286` `362,693` `1,429,278` `1,786,961` `286,763` `514,579` `844,876` `286,173` `3,719,352` `$` `5,148,630`	%
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2150 Notes payable 2160 Notes payable - related parties 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2310 Receipts in advance 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2640 Net defined benefit liability - non-current 2645 Guarantee deposits received 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X TOTAL LIABILITIES AND EQUITY			`7` `4` `3` `1` `1` `4` `-` `1`
			`21`
			`1` `1` `5` `-`
			`7`
			`28`
			`35` `5` `10` `16` `6`
			`72`
			`100`

~ 22 ~

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items YearendedDecember31
2017
2016
Notes
AMOUNT
%
AMOUNT
%
$
2,410,610
100
$
2,357,528
100
(
1,290,577 ) (
54) (
1,308,075) (
56)
1,120,033
46
1,049,453
44
(
381,534 ) (
16) (
397,896) (
17)
(
196,939 ) (
8) (
161,460) (
7)
(
180,985 ) (
7) (
182,911) (
7)
(
759,458 ) (
31) (
742,267) (
31)
360,575
15
307,186
13
69,726
3
83,840
3
(
64,234 ) (
3) (
7,729)
-
(
5,314 )
-
(
2,688)
-
71,905
3
15,199
1
72,083
3
88,622
4
432,658
18
395,808
17
(
69,372 ) (
3) (
55,592) (
3)
$
363,286
15
$
340,216
14
($
14,964 ) (
1) $
32,483
2
(
234 )
-
(
303)
-
2,544
-
(
5,522)
-
(
8,584 )
-
(
16,190) (
1)
(
105,608 ) (
4)
44,063
2
(
15,122 ) (
1)
7,382
-
($
141,968 ) (
6) $
61,913
3
$
221,318
9
$
402,129
17
$
2.03
$
1.90
$
2.03
$
1.90

4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development
expenses
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of subsidiaries,
associates and joint ventures
accounted for under the equity
method, net
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Net income for the year
Other comprehensive (loss) income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311
Remeasurement of defined benifit
plan
8330
Share of other comprehensive loss
of associates and joint ventures
accounted for under the equity
method
8349
Income tax related to components
of other comprehensive income
Components of other comprehensive
income that will be reclassified to
profit or loss
8361
Financial statements translation
differences of foreign operations
8362
Unrealised (loss) gain on valuation of
available-for-sale financial assets
8380
Share of other comprehensive (loss)
income of associates and joint
ventures accounted for under the
equity method
8300
Total other comprehensive (loss)
income for the year
8500
Total comprehensive income for the
year
Earnings per share (in dollars)
9750
Basic
9850
Diluted

Items	YearendedDecember31 2017 2016 Notes AMOUNT % AMOUNT % `$` `2,410,610` `100` `$` `2,357,528` `100` `(` `1,290,577 ) (` `54) (` `1,308,075) (` `56)` `1,120,033` `46` `1,049,453` `44` `(` `381,534 ) (` `16) (` `397,896) (` `17)` `(` `196,939 ) (` `8) (` `161,460) (` `7)` `(` `180,985 ) (` `7) (` `182,911) (` `7)` `(` `759,458 ) (` `31) (` `742,267) (` `31)` `360,575` `15` `307,186` `13` `69,726` `3` `83,840` `3` `(` `64,234 ) (` `3) (` `7,729)` `-` `(` `5,314 )` `-` `(` `2,688)` `-` `71,905` `3` `15,199` `1` `72,083` `3` `88,622` `4` `432,658` `18` `395,808` `17` `(` `69,372 ) (` `3) (` `55,592) (` `3)` `$` `363,286` `15` `$` `340,216` `14` `($` `14,964 ) (` `1) $` `32,483` `2` `(` `234 )` `-` `(` `303)` `-` `2,544` `-` `(` `5,522)` `-` `(` `8,584 )` `-` `(` `16,190) (` `1)` `(` `105,608 ) (` `4)` `44,063` `2` `(` `15,122 ) (` `1)` `7,382` `-` `($` `141,968 ) (` `6) $` `61,913` `3` `$` `221,318` `9` `$` `402,129` `17` `$` `2.03` `$` `1.90` `$` `2.03` `$` `1.90`
4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of subsidiaries, associates and joint ventures accounted for under the equity method, net 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Net income for the year Other comprehensive (loss) income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurement of defined benifit plan 8330 Share of other comprehensive loss of associates and joint ventures accounted for under the equity method 8349 Income tax related to components of other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8362 Unrealised (loss) gain on valuation of available-for-sale financial assets 8380 Share of other comprehensive (loss) income of associates and joint ventures accounted for under the equity method 8300 Total other comprehensive (loss) income for the year 8500 Total comprehensive income for the year Earnings per share (in dollars) 9750 Basic 9850 Diluted

~ 23 ~

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

For the year ended December 31, 2016 Balance at January 1, 2016 Difference between proceeds from acquisition or disposal of subsidiaries and book value Appropriations of 2015 earnings (Note): Legal reserve Cash dividends Cash dividends from capital surplus Net income for the year Other comprehensive income for the year Balance at December 31, 2016 For the year ended December 31, 2017 Balance at January 1, 2017 Difference between proceeds from acquisition or disposal of subsidiaries and book value Appropriations of 2016 earnings (Note): Legal reserve Cash dividends Cash dividends from capital surplus Net income for the year Other comprehensive loss for the year Balance at December 31, 2017	Notes		Common stock			Capital Surplus				Retai	ned Earnings		Ot	her	Equity	Total equity
				Additional paid-in capital		Difference between proceeds from acquisition or disposal of subsidiaries and book value		Change in net equity of associates and joint ventures accounted for using the equity method		Legal reserve	Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealised gain on available-for-sale financial assets
			`$ 1,786,961` `-` `-` `-` `-` `-` `-` `$ 1,786,961` `$ 1,786,961` `-` `-` `-` `-` `-` `-` `$ 1,786,961`	`$ 322,049` `-` `-` `-` `(` `89,348` `)` `-` `-` `$ 232,701` `$ 232,701` `-` `-` `-` `(` `89,348` `)` `-` `-` `$ 143,353`	`$` `9,958` `40,644` `-` `-` `-` `-` `-` `$` `50,602` `$` `50,602` `(` `203 )` `-` `-` `-` `-` `-` `$` `50,399`			`$` `3,460` `-` `-` `-` `-` `-` `-` `$` `3,460` `$` `3,460` `-` `-` `-` `-` `-` `-` `$` `3,460`		`$ 479,790` `-` `34,789` `-` `-` `-` `-` `$ 514,579` `$ 514,579` `-` `34,021` `-` `-` `-` `-` `$ 548,600`	`$` `691,487` `-` `(` `34,789 )` `(` `178,696 )` `-` `340,216` `26,658` `$` `844,876` `$` `844,876` `-` `(` `34,021 )` `(` `178,696 )` `-` `363,286` `(` `12,654 )` `$` `982,791`	`$` `15,628` `-` `-` `-` `-` `-` `(` `16,190 )` `($` `562 )` `($` `562 )` `-` `-` `-` `-` `-` `(` `8,584 )` `($` `9,146 )`			`$` `235,290` `-` `-` `-` `-` `-` `51,445` `$` `286,735` `$` `286,735` `-` `-` `-` `-` `-` `(` `120,730 )` `$` `166,005`	`$ 3,544,623` `40,644` `-` `(` `178,696 )` `(` `89,348 )` `340,216` `61,913` `$ 3,719,352` `$ 3,719,352` `(` `203 )` `-` `(` `178,696 )` `(` `89,348 )` `363,286` `(` `141,968 )` `$ 3,672,423`

(Note) The employees' compensation were $4,233 and $4,078, and the directors' and supervisors' remuneration were $8,466 and $8,156 in 2015 and 2016, respectively, which had been deducted from net income for the years.

~ 24 ~

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Impairment loss on financial assets
Provision for doubtful accounts
Reversal of allowance for doubtful accounts
Reversal of allowance for loss on inventory market
price decline
Share of profit of subsidiaries, associates and joint
ventures accounted for under the equity method
Depreciation
Net (gain) loss on disposal of property, plant and
equipment
Amortisation
Dividend income
Interest income
Interest expense
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Changes in operating liabilities
Notes payable
Notes payable - related parties
Accounts payable
Other payables
Receipts in advance
Net defined benefit liability - non-current
Cash inflow generated from operations
Dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities Forthe years endedDecember31,
Notes
2017
2016
$
432,658 $
395,808
12,000
-
-
7,220
(
7,016 )
-
(
6,616 ) (
2,696 )
(
71,905 ) (
15,199 )
124,660
129,005
(
50 )
460
4,670
4,013
(
14,377 ) (
14,853 )
(
7,015 ) (
3,012 )
5,314
2,688
13,628
13,292
69,834 (
14,386 )
3,028 (
1,631 )
530 (
511 )
(
65,300 ) (
35,471 )
9,157
20,820
(
2,052 )
-
(
29,066 )
5,267
(
3,317 ) (
2,662 )
(
16,660 )
9,466
28,902 (
764 )
(
7,713 ) (
13,604 )
(
11,737 ) (
148,916 )
461,557
334,334
63,985
59,495
7,015
3,012
(
5,183 ) (
2,626 )
(
27,225 ) (
78,104 )
500,149
316,111

(Continued)

~ 25 ~

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

				Forthe years endedDecember31,	Forthe years endedDecember31,
	Notes			2017	2016
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in other receivables - related parties			`$`	`7,470` `$`	`1,740`
Decrease (increase) in other financial assets - current				`4,980` `(`	`64,500` `)`
Acquisition of investments accounted for under the equity
method		`(`		`4,500` `)` `(`	`53,669` `)`
Proceeds from disposal of investments accounted for under
the equity method				`1,257`	`10,259`
Cash paid for acquisition of property, plant and equipment		`(`		`24,231` `)` `(`	`51,185` `)`
Interest paid for acquisition of property, plant and
equipment		`(`		`365` `)` `(`	`267` `)`
Proceeds from disposal of property, plant and equipment				`50`	`305`
Acquisition of intangible assets		`(`		`5,803` `)` `(`	`1,630` `)`
Increase in prepayments for equipment		`(`		`59,765` `)` `(`	`80,765` `)`
(Increase) decrease in guarantee deposits paid		`(`		`16,470` `)`	`4,165`
(Increase) decrease in other non-current assets		`(`		`13,613` `)`	`3,760`
Net cash flows used in investing activities		`(`		`110,990` `)` `(`	`231,787` `)`
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings				`100,000`	`290,000`
Increase in short-term notes and bills payable				`-`	`100,000`
Increase in long-term borrowings				`70,000`	`30,000`
Redemption of long-term borrowings				`-` `(`	`100,000` `)`
Increase (decrease) in guarantee deposit received				`85` `(`	`7` `)`
Payment of cash dividends from capital surplus		`(`		`89,348` `)` `(`	`89,348` `)`
Payment of cash dividends		`(`		`178,696` `)` `(`	`178,696` `)`
Net cash flows (used in) from financing activities		`(`		`97,959` `)`	`51,949`
Net increase in cash and cash equivalents				`291,200`	`136,273`
Cash and cash equivalents at beginning of year				`438,306`	`302,033`
Cash and cash equivalents at end of year			`$`	`729,506` `$`	`438,306`

~ 26 ~

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of STANDARD CHEM. & PHARM. CO., LTD.

Opinion

We have audited the accompanying consolidated balance sheets of STANDARD CHEM. & PHARM. CO., LTD. and its subsidiaries (collectively referred herein as the “Group”) as of December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated 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 consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2017 and 2016, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

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 Consolidated Financial Statements section of our report. We are independent of the Group 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 the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial

~ 27 ~

statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters of the consolidated financial statements of the current period are as follows:

Evaluation of inventories

Description

Refer to Note 4(10) for accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of significant accounting estimations and assumptions relating to evaluation of inventories, and Note 6(6) for the details of allowance for inventory valuation loss. As of December 31, 2017, the carrying amount of inventories and allowance for inventory valuation loss are $828,932 thousand and $101,038 thousand, respectively.

The Group is primarily engaged in the manufacture and sales of human medicine and dietary supplement. Due to the influence of market demand and short expiration date of medicines and dietary supplements, etc., there is a risk in market price decline and obsolescence of inventories. The Group evaluates inventories at the lower of cost and net realisable value. The net realisable values of the aged and obsolete inventories are evaluated based on the historical information of the selling price and discount rate.

How our audit addressed the matter

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

Assessed the reasonableness of policies on allowance for inventory valuation loss, based on our understanding of the inventory classification and historical information of the selling price and discount rate, etc.
Assessed the effectiveness of the management’s inventory control, based on our understanding of the operation of the warehouse management, inspected the annual inventory taking plan and performed our observation.
Tested whether the basis of inventory aging used in calculating the net realisable value of inventory is consistent with the Group’s policy.
Validated the net realisable value of inventories and the adequacy of allowance for inventory valuation loss.

~ 28 ~

Existence of domestic sales revenue in human medicines and dietary supplements

Description

Refer to Note 4(26) for accounting policies on revenue recognition. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity.

The Group is primarily engaged in the manufacturing and sales of human medicines and dietary supplements, which amounted to $2,985,169 thousand for the year ended December 31, 2017. The Group’s sales is mainly domestic-based and its customers are numerous, including hospitals, clinics, pharmacies, food and drug administrations all over the country. Since the sales transactions are numerous and would require a longer period for verification, we consider the existence of domestic sales revenue from human medicines and dietary supplements a key audit matter.

How our audit addressed the matter

We performed the following key audit procedures for the above matters:

Assessed the consistency and effectiveness of internal control relevant to sales recognition, taking into consideration customer credit, approved records from sales manager on unusual orders and subsequent cash collection procedures.
Assessed the reasonableness of sales price and nature, based on the basic information of the major customers, including the details of chairman and major shareholders, registered address, principal plan of business, capital and main business activities, etc.
Selected samples of sales transactions and checked against related supporting documentation, including unit prices, quantities, reasonableness of sales allowance recognition and subsequent cash collection.

Other matter –Reference to the audits of other independent accountants

We did not audit the financial statements of certain investments accounted for under the equity method. Those investments amounted to $143,705 thousand and $149,226 thousand, constituting 2.25% and 2.40% of consolidated total assets as of December 31, 2017 and 2016, respectively, and the share of loss and other comprehensive income of associates accounted for under the equity method was ($5,756) thousand and ($31,089) thousand, constituting (2.00%) and (7.16%) of consolidated total comprehensive income for the years then ended, respectively. The financial statements of these investee companies were audited by other independent

~ 29 ~

accountants whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included in the consolidated financial statements and information disclosed relative to these investments, is based solely on the reports of other independent accountants.

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of STANDARD CHEM. & PHARM. CO., LTD. as of and for the years ended December 31, 2017 and 2016.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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 of users taken on the basis of these consolidated financial statements.

~ 30 ~

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

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

~ 31 ~

thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless 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.

Lin, Tzu-Shu

Independent Accountants

Liu, Tzu-Meng

PricewaterhouseCoopers, Taiwan Republic of China March 20, 2018

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

~ 32 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Assets	December 31, 2017 AMOUNT % `$` `1,192,512` `19` `142,331` `2` `5,801` `-` `295,127` `5` `572,687` `9` `68,899` `1` `727,894` `11` `91,068` `2` `64,520` `1` `2,052` `-` `3,162,891` `50` `341,888` `5` `149,192` `2` `159,091` `3` `2,156,720` `34` `119,186` `2` `93,961` `1` `78,092` `1` `33,407` `1` `51,177` `1` `28,612` `-` `3,211,326` `50` `$` `6,374,217` `100`	December 31, 2016	December 31, 2016
	AMOUNT `$` `1,192,512` `142,331` `5,801` `295,127` `572,687` `68,899` `727,894` `91,068` `64,520` `2,052` `3,162,891` `341,888` `149,192` `159,091` `2,156,720` `119,186` `93,961` `78,092` `33,407` `51,177` `28,612` `3,211,326` `$` `6,374,217`	AMOUNT `$` `876,820` `215,854` `6,572` `319,535` `645,379` `10,455` `737,725` `81,035` `64,500` `-` `2,957,875` `474,137` `162,072` `162,562` `2,090,208` `119,776` `82,870` `92,576` `15,193` `53,176` `15,395` `3,267,965` `$` `6,225,840`	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 130X Inventories 1410 Prepayments 1476 Other financial assets - current 1479 Other current assets 11XX Total current assets Non-current assets 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1920 Guarantee deposits paid 1985 Long-term prepaid rents 1990 Other non-current assets 15XX Total non-current assets 1XXX TOTAL ASSETS			`14` `4` `-` `5` `11` `-` `12` `1` `1` `-`
			`48`
			`8` `3` `3` `33` `2` `1` `1` `-` `1` `-`
			`52`
			`100`

(Continued)

~ 33 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Liabilities and Equity	December 31, 2017 AMOUNT % `$` `520,000` `8` `200,000` `3` `211,985` `3` `121,263` `2` `370,717` `6` `95,879` `2` `96,514` `2` `29,983` `-` `1,646,341` `26` `187,312` `3` `62,016` `1` `270,987` `4` `5,376` `-` `525,691` `8` `2,172,032` `34` `1,786,961` `28` `197,212` `3` `548,600` `9` `982,791` `15` `156,859` `3` `3,672,423` `58` `529,762` `8` `4,202,185` `66` `$` `6,374,217` `100`	December 31, 2016	December 31, 2016
	AMOUNT `$` `520,000` `200,000` `211,985` `121,263` `370,717` `95,879` `96,514` `29,983` `1,646,341` `187,312` `62,016` `270,987` `5,376` `525,691` `2,172,032` `1,786,961` `197,212` `548,600` `982,791` `156,859` `3,672,423` `529,762` `4,202,185` `$` `6,374,217`	AMOUNT `$` `370,486` `200,000` `218,558` `197,944` `529,589` `33,786` `91,652` `4,871` `1,646,886` `47,317` `61,992` `267,695` `5,286` `382,290` `2,029,176` `1,786,961` `286,763` `514,579` `844,876` `286,173` `3,719,352` `477,312` `4,196,664` `$` `6,225,840`	%
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2310 Receipts in advance 2320 Current portion of long-term borrowings 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2640 Net defined benefit liability - non-current 2645 Guarantee deposits received 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Share capital 3110 Common stock 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X TOTAL LIABILITIES AND EQUITY			`6` `3` `4` `3` `9` `1` `1` `-`
			`27`
			`1` `1` `4` `-`
			`6`
			`33`
			`29` `5` `8` `13` `5`
			`60` `7`
			`67`
			`100`

~ 34 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items YearendedDecember31
2017
2016
Notes
AMOUNT
%
AMOUNT
%
$
3,848,684
100
$
3,673,801
100
(
2,099,686) (
55) (
2,097,542) (
57)
1,748,998
45
1,576,259
43
(
643,215 ) (
17) (
641,179) (
17)
(
324,675 ) (
8) (
275,828) (
7)
(
239,633) (
6) (
241,116) (
7)
(
1,207,523) (
31) (
1,158,123) (
31)
541,475
14
418,136
12
91,095
2
100,550
3
(
69,329 ) (
2) (
22,278) (
1)
(
6,529 )
- (
3,593)
-
(
6,500)
- (
31,060) (
1)
8,737
-
43,619
1
550,212
14
461,755
13
(
116,873) (
3) (
89,947) (
3)
$
433,339
11
$
371,808
10

Items	YearendedDecember31 2017 2016 Notes AMOUNT % AMOUNT % `$` `3,848,684` `100` `$` `3,673,801` `100` `(` `2,099,686) (` `55) (` `2,097,542) (` `57)` `1,748,998` `45` `1,576,259` `43` `(` `643,215 ) (` `17) (` `641,179) (` `17)` `(` `324,675 ) (` `8) (` `275,828) (` `7)` `(` `239,633) (` `6) (` `241,116) (` `7)` `(` `1,207,523) (` `31) (` `1,158,123) (` `31)` `541,475` `14` `418,136` `12` `91,095` `2` `100,550` `3` `(` `69,329 ) (` `2) (` `22,278) (` `1)` `(` `6,529 )` `- (` `3,593)` `-` `(` `6,500)` `- (` `31,060) (` `1)` `8,737` `-` `43,619` `1` `550,212` `14` `461,755` `13` `(` `116,873) (` `3) (` `89,947) (` `3)` `$` `433,339` `11` `$` `371,808` `10`
4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of loss of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Net income for the year

(Continued)

~ 35 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

Items	YearendedDecember31	YearendedDecember31
	2017	2016
			%
Other comprehensive (loss) income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit plans 8320 Share of other comprehensive income (loss) of associates and joint ventures accounted for under equity method 8349 Income tax related to components of other comprehensive income Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8362 Unrealised (loss) gain on valuation of available-for-sale financial assets 8370 Share of other comprehensive (loss) income of associates and joint ventures accounted for under equity method 8300 Total other comprehensive (loss) income for the year 8500 Total comprehensive income for the year Profit attributable to: 8610 Owners of the parent 8620 Non-controlling interest Total comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share 9750 Basic 9850 Diluted			`1` `-` `-` `-` `1` `-`
			`2`
			`12`
			`9` `1`
			`10`
			`11` `1`
			`12`
			`1.90`
		`$`	`1.90`

~ 36 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

				Equityatt	ributable to owners	ributable to owners	of theparent	of theparent
Common stock		Capital Surplus			Retai		ned Earnings		Other EquityInterest
	Additional paid-in capital		Difference between proceeds from acquisition or disposal of subsidiaries and book value	Change in net equity of associates and joint ventures accounted for under equity method	Legal reserve		Unappropriated retained earnings		Financial statements translation differences of foreign operations	Unrealised (loss) gain on available-for-sa le financial assets
`$ 1,786,961` `-` `-` `-` `-` `-` `-` `-` `$ 1,786,961` `$ 1,786,961` `-` `-` `-` `-` `-` `-` `-` `$ 1,786,961`			`$` `9,958` `40,644` `-` `-` `-` `-` `-` `-`	`$` `3,460` `-` `-` `-` `-` `-` `-` `-`		`$ 479,790` `-` `34,789` `-` `-` `-` `-` `-`	`$` `691,487` `-` `(` `34,789` `(` `178,696` `-` `340,216` `26,658` `-` `$` `844,876` `$` `844,876` `-` `(` `34,021` `(` `178,696` `-` `363,286` `(` `12,654` `-` `$` `982,791`		`$` `15,628` `-` `)` `-` `)` `-` `-` `-` `(` `16,190` `-` `($` `562` `($` `562` `-` `)` `-` `)` `-` `-` `-` `)` `(` `8,584` `-` `($` `9,146`	`$` `235,290` `-` `-` `-` `-` `-` `)` `51,445` `-` `)` `$` `286,735` `)` `$` `286,735` `-` `-` `-` `-` `-` `)` `(` `120,730` `-` `)` `$` `166,005`	`$` `235,290` `-` `-` `-` `-` `-` `51,445` `-`
			`$` `50,602`	`$` `3,460`		`$ 514,579`					`$` `286,735`
				`$` `3,460` `-` `-` `-` `-` `-` `-` `-`		`$ 514,579` `-` `34,021` `-` `-` `-` `-` `-`
				`$` `3,460`		`$ 548,600`		`$` `982,791`			`$` `166,005`

~ 37 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Net gain on financial asstes at fair value through profit or loss
Impairment loss of financial assets
Provision for doubtful accounts
Reversal of allowance for doubtful accounts
Provision (reversal of allowance) for loss on inventory market
price decline
Share of loss of associates and joint ventures accounted for
under the equity method
Gain on disposal of investments
Depreciation
Net gain on disposal of property, plant and equipment
Property, plant and equipment transferred to expenses
Amortisation
(Reversal of) impairment loss of non-financial assets
Amortisation of long-term prepaid rent
Dividend income
Interest income
Interest expense
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss - current
Notes receivable
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Other non-current assets
Changes in operating liabilities
Notes payable
Accounts payable
Other payables
Receipts in advance
Net defined benefit liability - non-current
Cash inflow generated from operations
Dividends received
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities

Notes

(Continued)

~ 38 ~

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets - current
Increase in other financial assets - current
Acquisition of financial assets carried at cost - non-current
Proceeds from capital reduction of financial assets carried at cost -
non-current
Acquisition of investments accounted for under the equity method
Proceeds from disposal of investments accounted for under the
equity method
Cash paid for acquisition of property, plant and equipment
Interest paid for acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Increase in prepayments for equipment
(Increase) decrease in guarantee deposits paid
Decrease in other financial asstes - non-current
(Increase) decrease in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Increase in short-term notes and bills payable
Increase in long-term borrowings
Redemption of long-term borrowings
Increase (decrease) in guarantee deposit received
Payment of cash dividends from capital surplus
Payment of cash dividends
(Decrease) increase in non-controlling interests
Net cash flows from financing activities
Effects due to changes in exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year For theyears ended December 31,
Notes
2017
2016
($
1,999 ) ($
4,110 )
(
20 ) (
64,500 )
- (
131,421 )
700
-
(
4,500 )
-
-
686
(
222,704 ) (
74,856 )
(
797 ) (
267 )
680
2,419
(
7,852 ) (
2,112 )
(
155,086 ) (
100,955 )
(
18,214 )
3,969
-
5,383
(
12,121 )
936
(
421,913 ) (
364,828 )
149,514
284,363
-
100,000
170,000
81,486
(
4,893 ) (
173,666 )
90 (
210 )
(
89,348 ) (
89,348 )
(
178,696 ) (
178,696 )
(
14,646 )
136,977
32,021
160,906
(
3,154 )
8,987
315,692
110,441
876,820
766,379
$
1,192,512 $
876,820

~ 39 ~

Attachment 3:

Director and Supervisor Candidate List

Pursuant to Article 192, paragraph 1 and Article 216, paragraph 1, any shareholder holding 1% or more of the total outstanding number of shares issued by SCP may submit to SCP in writing a roster for director, independent director, and supervisor candidates provided that the total number of candidates so nominated shall not exceed the quota of the director, independent director, and supervisors to be elected.
The acceptance period for candidate nomination for 2018’s election is in between April 13, 2018 to April 23, 2018. The candidate list is then published on the Market Observation Post System in accordance with the regulation.
During the period, the Board of Directors nominated three Directors, two independent Directors, and 2 Supervisors, whose qualifications were examined and proposed to the 2018 Shareholders’ Meeting for election by May 8, 2018 meeting of the Board of Directors.

Title	Name	Education	Experience	Number of Shares Held
Director	Chin-Tsai, Fan	Bachelor of Pharmacy, National Taiwan University	 Chairman, Standard Chem. & Pharm. Co., Ltd.  General Manger, Standard Chem. & Pharm. Co., Ltd.  Chairman of the Board, Taiwan Pharmaceutical Manufacture and Development Association	`20,786,813`
Director	Fan Dao Nan Foundation Representative Tzu-Ting,Fan	Master of Science in Computer Science, University of California	 General Manger, Standard Chem. & Pharm. Co., Ltd.  Representative of Corporate Director, Standard Chem. & Pharm. Co., Ltd.  Representative of Corporate Director, Syn-Tech Chem. & Pharm. Co., Ltd.  Representative of Corporate Director Syngen Biotech Co.,Ltd.	`5,523,881`
Director	Yuan-Teh Lee	Ph.D. in Medical Science, Tokyo Medical College	 Research Fellow in Cardiology, University of Washington at Seattle  Director, Department of Internal Medicine, National Taiwan University Hospital  Emeritus Professor, College of Medicine, National Taiwan	`0`

~ 40 ~

Title	Name	Education	Experience	Number of Shares Held
			University  Director, Standard Chem. & Pharm. Co., Ltd.  Director ,MICROLIFE CORPORATION  Director,KC Uppertech Co.,Ltd
Independent Director	Hwei-Jiung,Wang	PhD in Chemistry, University of Illinois at Urbana Champaign	 Academician of Academia Sinica / 2017 Presidential Science Prize awardee  Vice President of Academia Sinica  Distinguished Research Fellow and Distinguished Visiting Chair, Institute of Biological Chemistry, Academia Sinica  Acting Chief Executive Officer of Operation Center, National Biotechnology Research Park, Academia Sinica  Distinguished Chair Professor, Institute of Biochemistry, National Taiwan University  Distinguished Chair Professor and Member of Chair Professors Recruitment Committee, I-SHOU University	`0`
Independent Director	Lin-Yu, Lee	Bachelor Degree in Economic, Feng Chia University	 Independent Director , Standard Chem. & Pharm. Co., Ltd.  Member of Compensation Committee, Standard Chem. & Pharm. Co.,Ltd.	`0`
Supervisor	Yuan-Feng Kao	Bachelor Degree in Accounting, National Cheng Chi University	 Supervisor, Standard Chem. & Pharm. Co., Ltd.  Representative of Corporate supervisor, Syn-Tech Chem. & Pharm. Co., Ltd.  Vice President, Da Ya Securities Co., Ltd.  Manager,Solomon & Co.,CPAs	`16,182`
Supervisor	Tsuey-Wen, Yeh	Bachelor Degree in Accounting, Shih Chien University	 Supervisor, Standard Chem. & Pharm. Co., Ltd.	`9,094,669`

~ 41 ~

Attachment 4:

Standard Chem. & Pharm. Co., Ltd.

Comparison table for the amendments of Rules of Procedure for Board of Directors before and after revision

Amended Clause	Current Clause	Explanation
Article 12 The matters listed below as they relate to this Corporation shall be raised for discussion at a board meeting: 1. The Corporation's business plan. 2. Annual and semi-annual financial reports, with the exception of semi-annual financial reports that are not required under relevant laws and regulations to be audited and attested by a certified public accountant (CPA). 3. Adoption or amendment of an internal control system and evaluation of the effectiveness of internal control systempursuant to Article 14-1 of the Securities and Exchange Act. 4. Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of any handling procedures for material financial or business transactions, such as the acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others. 5. The offering, issuance, or private placement of equity-type securities. 6. The appointment or discharge of a	Article 12 The matters listed below as they relate to this Corporation shall be raised for discussion at a board meeting: 1. The Corporation's business plan. 2. Annual and semi-annual financial reports, with the exception of semi-annual financial reports that are not required under relevant laws and regulations to be audited and attested by a certified public accountant (CPA). 3. Adoption or amendment of an internal control system pursuant to Article 14-1 of the Securities and Exchange Act. 4. Adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of any handling procedures for material financial or business transactions, such as the acquisition or disposal of assets, derivatives trading, loans of funds to others, and endorsements or guarantees for others. 5. The offering, issuance, or private placement of equity-type securities. 6. The appointment or discharge of a financial, accounting, or internal audit officer.	Revise paragraph 4 of this Article in accordance with the amendments to Article 7 of the “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”

~ 42 ~

Amended Clause	Current Clause	Explanation
financial, accounting, or internal audit officer. 7. A donation to a related party or a major donation to a non-related party, provided that a public-interest donation of disaster relief that is made for a major natural disaster may be submitted to the following board of directors meeting for retroactive recognition. 8. Any matter that, under Article 14-3 of the Securities and Exchange Act or any other law, regulation, or bylaw, must be approved by resolution at a shareholders meeting or board meeting, or any material matter as may be prescribed by the competent authority. The term "related party" in subparagraph 7 of the preceding paragraph means a related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The term "major donation to a non-related party" means an individual donation, or cumulative donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in capital as stated in the CPA-attested financial report for the most recent year. (In the case of a	7. A donation to a related party or a major donation to a non-related party, provided that a public-interest donation of disaster relief that is made for a major natural disaster may be submitted to the following board of directors meeting for retroactive recognition. 8. Any matter that, under Article 14-3 of the Securities and Exchange Act or any other law, regulation, or bylaw, must be approved by resolution at a shareholders meeting or board meeting, or any material matter as may be prescribed by the competent authority. The term "related party" in subparagraph 7 of the preceding paragraph means a related party as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The term "major donation to a non-related party" means an individual donation, or cumulative donations within a 1-year period to a single recipient, at an amount of NTD100 million or more, or at an amount equal to or greater than 1 percent of net operating revenue or 5 percent of paid-in capital as stated in the CPA-attested financial report for the most recent year. (In the case of a foreign issuer whose shares have no par value or a par value other than

~ 43 ~

	Amended Clause		Current Clause	Explanation
	foreign issuer whose shares have no par value or a par value other than NT$10, 2.5 percent of shareholders' equity shall be substituted for the calculation of the amount equal to 5 percent of paid-in capital required under this paragraph.) The term "within a 1-year period" in the preceding paragraph means a period of 1 year calculated retroactively from the date on which the current board of directors meeting is convened. Amounts already submitted to and passed by a resolution of the board are exempted from inclusion in the calculation. At least one independent director shall attend the meeting in person if the company has independent directors; with respect to matters that, under Article 12, paragraph 1, must be approved by resolution at a board meeting, any and all independent directors of this Corporation shall attend the meeting in person or appoint another independent director to attend the meeting as proxy.If an independent director objects to or expresses reservations about such a matter, it shall be recorded in the board meeting minutes; if an independent director intends to express an objection or reservation but is unable to attend the meeting in person, then unless there is a legitimate reason to do otherwise, that		NT$10, 2.5 percent of shareholders' equity shall be substituted for the calculation of the amount equal to 5 percent of paid-in capital required under this paragraph.) The term "within a 1-year period" in the preceding paragraph means a period of 1 year calculated retroactively from the date on which the current board of directors meeting is convened. Amounts already submitted to and passed by a resolution of the board are exempted from inclusion in the calculation. ~~With respect to a matter that, under~~ ~~Article 14-3 of the Securities and~~ ~~Exchange Act, must be approved by~~ ~~resolution at a board meeting, any and~~ ~~all independent directors of this~~ ~~Corporation shall attend the meeting~~ ~~in person or appoint another~~ ~~independent director to attend the~~ ~~meeting as proxy.~~If an independent director objects to or expresses reservations about such a matter, it shall be recorded in the board meeting minutes; if an independent director intends to express an objection or reservation but is unable to attend the meeting in person, then unless there is a legitimate reason to do otherwise, that director shall issue a written opinion in advance, which shall be recorded in the board meeting minutes.

~ 44 ~

Amended Clause	Current Clause	Explanation
director shall issue a written opinion in advance, which shall be recorded in the board meeting minutes.
Article 17 With the exception of matters required to be discussed at a board meeting under Article 12, paragraph 1, the board of directors appoints a party to exercise the powers of the board in accordance with the principles below: 1. Approve all important contracts 2. Assignment of directors and supervisors of joint ventures. 3. Appointment of consultants, lawyers, and other experts. 4. Stipulate scope of authorization pursuant to corporate hierarchical responsibility and related management methods. 5. All matters have been approved by resolution at a shareholders’ meeting or board of directors to provide the authorized the Chairpersons with full power to execute in accordance with relevant law.	Article 17 With the exception of matters required to be discussed at a board meeting under Article 12, paragraph 1, the board of directors appoints a party to exercise the powers of the board in accordance with the principles below: 1. Approve all important contracts 2. Assignment of directors and supervisors of joint ventures. 3. Appointment of consultants, ~~accountants,~~lawyers, and other experts. 4. Stipulate scope of authorization pursuant to corporate hierarchical responsibility and related management methods. 5. All matters have been approved by resolution at a shareholders’ meeting or board of directors to provide the authorized the Chairpersons with full power to execute in accordance with relevant law.	Amended by decree
Article 20 These principles are set on December 27th, 2006 These principles are amended on April 25th, 2008 These principles are amended on December 26th, 2012 These principles are amended on November 7th, 2017	Article 20 These principles are set on December 27th, 2006 These principles are amended on April 25th, 2008 These principles are amended on December 26th, 2012	Added amendment date

~ 45 ~

Appendices

Standard Chem. & Pharm. Co., Ltd. Shareholding of Directors and Supervisors

SCP’s total shares (issued and outstanding): 178,696,089 shares
Minimum shareholding required and record of shareholding by Directors and
Supervisors according to SCP’s share register:

Title	Minimum share required	Shares record per register
Directors	10,721,766	26,310,694
Supervisors	1,072,177	9,110,851

Book closure date: 2018/4/22~2018/6/20

Directors and Supervisors shareholding record table:

Position	Name	Shares per register	Shareholding ratio(%)
Chairman	Chin-Tsai, Fan	20,786,813	11.63
Director	Fan Dao Nan Foundation Representative: Tzu-Ting, Fan	5,523,881	3.09
Director	Yuan-Te, Li	-	-
Independent Director	Chin-Lin, Chou	-	-
Independent Director	Lin-Yu, Li	-	-
Supervisor	Yuan-Feng, Kao	16,182	0.01
Supervisor	Tsuey-Wen, Yeh	9,094,669	5.09
Total		35,421,545	19.82

The total shareholding of SCP Directors and Supervisor is in accordance with the minimum shareholding requirement.

~ 46 ~

AI assistant

S.C.P.C — AGM Information 2018

51900_rns_2018-06-28_9d329fdb-ae62-4cc2-b2aa-a1d72efad2fb.pdf

Standard Chem. & Pharm. Co., Ltd.

Handbook for the 2018 Annual Meeting of Shareholders

MEETING TIME:June 20,2018

Table of Contents

I. Meeting Procedure

Standard Chem. & Pharm. Co., Ltd.

5. Company Reports

9. Adjournment

II. Meeting Agenda

Agenda of Annual Meeting of Shareholders

III. Company Reports

Supervisor’s Review Report

To Shareholders:

Supervisor’s Review Report

To Shareholders:

IV.Proposals

1. Proposed by the Board

Proposal:

Explanation:

Resolution:

2. Proposed by the Board

Proposal:

Explanation:

Standard Chem. & Pharm. Co., Ltd. PROFIT DISTRIBUTION TABLE Year 2017

Resolution:

V. Discussions and Election

1. Proposed by the Board

Proposal:

Explanation:

Election results:

2. Proposed by the Board

Proposal:

Explanation:

Resolution:

VI.Question and Motions VII. Adjournments

Attachments

Attachment 1:

Standard Chem. & Pharm. Co., Ltd. 2017 Business Report

6. Profitability Analysis

7. Research and Development

Attachment 2:

Opinion

Basis for opinion

Key audit matters

Evaluation of inventories

Description

How our audit addressed the matter

Existence of domestic sales revenue in human medicines

Description

How our audit addressed the matter

Other matter –Reference to the audits of other independent accountants

Responsibilities of management and those charged with governance for the

parent company only financial statements

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

STANDARD CHEM. & PHARM. CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

STANDARD CHEM. & PHARM. CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

STANDARD CHEM. & PHARM. CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

Opinion

Basis for opinion

Key audit matters

Evaluation of inventories

Description

How our audit addressed the matter

Existence of domestic sales revenue in human medicines and dietary supplements

Description

How our audit addressed the matter

Other matter –Reference to the audits of other independent accountants

Other matter – Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

S.C.P.C AGM Information 2018