STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2017 AND 2016

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.

$\ddot{\phantom{0}}$

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 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.

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:

1. 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.
1. 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.
1. Tested whether the basis of inventory aging used in calculating the net realisable value of inventory is consistent with the Group's policy.
1. Validated the net realisable value of inventories and the adequacy of allowance for inventory valuation loss.

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:

1. 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.
1. 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.
1. 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 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.

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

1. 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.
1. 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.
1. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
1. 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.
1. 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.
1. 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.

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

We also provide those charged with governance with 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 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

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.

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.

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

	Assets	Notes	December 31, 2017 AMOUNT		December 31, 2016
	Current assets			%	AMOUNT	$\overline{\%}$
1100	Cash and cash equivalents	6(1)	\$ 1,192,512	19	\$
1110	Financial assets at fair value	6(2)			876,820	14
	through profit or loss - current
1125	Available-for-sale financial assets $3(2)$ , $5(2)$ and $6(3)$		142,331	$\boldsymbol{2}$	215,854	4
	- current		5,801
1150	Notes receivable, net	$6(4)$ and $7$	295,127		6,572
1170	Accounts receivable, net	$6(5)$ and 7		5	319,535	5
1200	Other receivables		572,687	9	645,379	11
130X	Inventories	$6(6)$ and $7$	68,899	$\bf{l}$	10,455
1410	Prepayments	5(2), 6(6)(9)	727,894	11	737,725	12
			91,068	2	81,035	1
1476 1479	Other financial assets - current Other current assets	6(1)	64,520	$\mathbf{1}$	64,500	1
			2,052
11XX	Total current assets		3, 162, 891	50	2,957,875	48
	Non-current assets
1523	Available-for-sale financial assets $5(2)$ and $6(3)$
	- non-current		341,888	5	474,137	8
1543	Financial assets carried at cost -	$3(2)$ , $5(2)$ and $6(7)$
	non-current		149, 192	2	162,072	3
1550	Investments accounted for under	$6(8)$ and 7
	equity method		159,091	3	162,562	3
1600	Property, plant and equipment	$6(9)$ and 8	2,156,720	34	2,090,208	33
1780	Intangible assets	6(10)(11)	119,186	$\overline{c}$	119,776	2
1840	Deferred income tax assets	6(27)	93,961	$\mathbf{1}$	82,870	1
1915	Prepayments for equipment	6(9)	78,092	$\mathbf{1}$	92,576	1
1920	Guarantee deposits paid		33,407	$\mathbf{1}$	15,193
1985	Long-term prepaid rents	6(12)	51,177	$\mathbf{1}$	53,176	1
1990	Other non-current assets	6(9)(16)	28,612		15,395
15XX	Total non-current assets		3,211,326	50	3,267,965	52
$1\mathbf{XXX}$	TOTAL ASSETS		\$ 6,374,217	100	6,225,840 \$	100

(Continued)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

	Liabilities and Equity	Notes	December 31, 2017 AMOUNT	$\overline{\%}$	December 31, 2016 AMOUNT
	Current liabilities					$\overline{\frac{9}{6}}$
2100	Short-term borrowings	$6(13)$ and 8	\$ 520,000	8	\$ 370,486	6
2110	Short-term notes and bills payable 6(14)		200,000	3	200,000	3
2150	Notes payable	$6(9)$ and 7	211,985	3	218,558	4
2170	Accounts payable	7	121,263	2	197,944	3
2200	Other payables	6(9)	370,717	6	529,589	9
2230	Current income tax liabilities	6(27)	95,879	2	33,786	$\mathbf{1}$
2310	Receipts in advance	3(2)	96,514	$\overline{2}$	91,652	1
2320	Current portion of long-term	$6(15)$ and $8$
	borrowings		29,983		4,871
21XX	Total current liabilities		1,646,341	26	1,646,886	27
	Non-current liabilities
2540	Long-term borrowings	$6(15)$ and $8$	187,312	3	47,317	1
2570	Deferred income tax liabilities	6(27)	62,016	$\mathbf{1}$	61,992	$\mathbf{1}$
2640	Net defined benefit liability -	$5(2)$ and $6(16)$
	non-current		270,987	4	267,695	4
2645	Guarantee deposits received		5,376		5,286
25XX	Total non-current liabilities		525,691	8	382,290	6
2XXX	Total liabilities		2,172,032	34	2,029,176	33
	Equity attributable to owners of
	the parent
	Share capital
3110	Common stock	6(17)	1,786,961	28	1,786,961	29
3200	Capital surplus	6(18)(29)	197,212	3	286,763	5
	Retained earnings	6(19)(27)
3310	Legal reserve		548,600	9	514,579	8
3350	Unappropriated retained earnings		982,791	15	844,876	13
3400	Other equity interest	6(3)(8)(20)	156,859	3	286,173	5
31XX	Equity attributable to owners of
	the parent		3,672,423	58	3,719,352	60
36XX	Non-controlling interest	4(3) and 6(29)	529,762	8	477,312	$\overline{7}$
3XXX	Total equity		4,202,185	66	4,196,664	67
	Significant contingent liabilities	9
	and unrecognised contract
	commitments
	Significant events after the	11
	balance sheet date
3X2X	TOTAL LIABILITIES AND
	EQUITY		\$ 6,374,217	100	\$ 6,225,840	100

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

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

						For the years ended December 31,
				$\overline{2017}$		2016
	Items	Notes		AMOUNT	$\%$	AMOUNT	$\%$
4000	Operating revenue	$6(21)$ and 7	\$	3,848,684	$\mathcal{S}$ 100	3,673,801	100
5000	Operating costs	6(6)(10)(16)(25)
		26) and 7		$2,099,686$ ) (	55) (	$2,097,542$ )(	57)
5900	Gross profit			1,748,998	45	1,576,259	43
	Operating expenses	6(9)(10)(12)(16)
		25)(26) and 7
6100	Selling expenses		(	$643, 215$ ) (	$17)$ (	$641, 179$ ) (	17)
6200	General and administrative
	expenses		(	$324,675$ ) (	$8)$ (	$275,828$ ) (	7)
6300	Research and development
	expenses			$239,633$ ) (	$6)$ (	$241,116$ ) (	7)
6000	Total operating expenses			$1,207,523$ (	$31)$ (	$1,158,123$ (	31)
6900	Operating profit			541,475	14	418,136	12
	Non-operating income and
	expenses
7010	Other income	$6(22)$ and 7		91,095	$\mathbf{2}$	100,550	3
7020	Other gains and losses	6(2)(3)(7)(10)(11)
		$(23)$ and 12	€	$69,329$ (	$2)$ (	$22,278$ ) (	1)
7050	Finance costs	6(9)(24)		6,529	$-$ (	3,593)
7060	Share of loss of associates	6(8)
	and joint ventures accounted
	for under equity method			6,500		$31,060$ ) (	1)
7000	Total non-operating
	income and expenses			8,737		43,619	$\mathbf{I}$
7900	Profit before income tax			550,212	14	461,755	13
7950	Income tax expense	6(27)		$116,873$ ) (	$3)$ (	89,947)(	3)
8200	Net income for the year		\$	433,339	\$ 11	371,808	10

(Continued)

$\begin{array}{c} \underline{\text{STANDARD CHEM. \& PHARM. CO., LTD. AND SUBSIDIARIES} \\text{CONSOLIDATED STATED STATEMENTS OF COMREHENSIVE INCOME} \end{array}$ (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

							For the years ended December 31,
				$\overline{2017}$			2016
	Items	Notes		AMOUNT	$\%$		AMOUNT	℅
	Other comprehensive (loss)
	income Components of other
	comprehensive income that
	will not be reclassified to
	profit or loss
8311	Remeasurement of defined	6(16)
	benefit plans		(	16,334)		$\boldsymbol{\mathsf{s}}$	32,284	1
8320	Share of other	6(8)
	comprehensive income (loss)
	of associates and joint
	ventures accounted for under
	equity method			235	- (		271)
8349	Income tax related to components of other	6(27)
	comprehensive income			2,777	- (		5,488)
	Components of other
	comprehensive income that
	will be reclassified to profit or
	loss
8361	Financial statements
	translation differences of
	foreign operations		(	6,878	$-$ (		16,715)
8362	Unrealised (loss) gain on valuation of available-for-	6(3)
	sale financial assets		(	$123,019$ (	4)		52,360	1
8370	Share of other	6(8)
	comprehensive (loss) income
	of associates and joint
	ventures accounted for under
	equity method			1,706)			525
8300	Total other comprehensive		$\overline{3}$	$144,925$ )	4)	\$	62,695	2
8500	(loss) income for the year Total comprehensive income
	for the year		\$	288,414		\$	434,503	$\frac{12}{1}$
	Profit attributable to:
8610	Owners of the parent		\$	363,286	9	\$	340,216	9
8620	Non-controlling interest			70,053	$\frac{2}{11}$		31,592
			\$	433,339		$\frac{\$}{}$	371,808	10
	Total comprehensive income
	attributable to:
8710	Owners of the parent		\$	221,318	5	\$	402,129	11
8720	Non-controlling interest			67,096	$\frac{2}{7}$	$\overline{\$}$	32,374 434,503	1 12
			\$	288,414
	Earnings per share	6(28)
9750	Basic				2.03	$\overline{\mathbf{z}}$		1.90
9850	Diluted		\$ \$		2.03	\$		1.90

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

STANDARD CHEM, & PHARM, CO., LTD, AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

								Equity attributable to owners of the parent
					Capital Surplus				Retained Earnings			Other Equity Interest
			Additional paid-		between proceeds from acquisition subsidiaries and or disposal of Difference	associates and Change in net joint ventures accounted for under equity equity of				Unappropriated	differences of statements translation Financial foreign	(loss) gain on available-for- sale financial Unrealised assets		Total	interest	Non-controlling	Total equity
	Notes	Common stock	in capital		book value	method		Legal reserve		retained earnings	operations
For the year ended December 31, 2016
Difference between proceeds from Balance at January 1, 2016	6(29)	\$1,786,961	322,049	v.	9,958	₩	3,460	479,790 Ģ,	÷	691, 487	15,628 o٩	69	235,290	\$3,544,623	မာ	342,298	3,886,921 49
subsidiaries and book value acquisition or disposal of					40,644									40,644		34,337)	6,307
Appropriations of 2015 earnings: Legal reserve								34,789		34,789) 178,696)
Cash dividends	6(19)
Cash dividends from capital surplus 6(18)			89,348)											178,696) 89,348) 340,216			$\begin{array}{c} 178,696 \ 89,348 \ 371,808 \end{array}$
Net income for the year										340,216						31,592
Other comprehensive income for the year	6(20)									26,658	16,190		51,445	61,913		782	62,695
Change in non-controlling interest Balance at December 31, 2016		1,786,961	232,701		50,602		3,460	514,579		844,876	562 연	ė٩	286.735	3,719,352		477.312 36,977	136,977 4,196,664 اجە
For the year ended December 31.
Balance at January 1, 2017 2017		\$1,786,961	232,701	69	50,602	o٩	3,460	514,579 ÷,	$\ddot{\phantom{1}}$	844,876	€	₩ 562)	286,735	\$3,719,352	↔	477,312	\$4,196,664
Difference between proceeds form	6(29)
subsidiaries and book value acquisition or disposal of					203)									203)			203)
Appropriations of 2016 earnings: Legal reserve								34,021
Cash dividends	6(19)									34,021) 178,696				$\begin{array}{c} 178,696 \ 89,348 \ 363,286 \end{array}$			$\begin{array}{c} 178,696 \ 89,348 \ 433,339 \end{array}$
Cash dividends from capital surplus 6(18)			89,348)													70,053
Net income for the year										363,286
Other comprehensive loss for the	6(20)									12,654)	8,584)		120,730)	141,968)			144,925
Change in non-controlling interest year																2,957	14,646
Balance at December 31, 2017		1,786,961	143,353		50,399		$\frac{3}{2}$	548,600		982,791	9.146 ₩	إجه	166.005	\$3,672,423		529,762	$185$ 4.202,185

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

$\frac{1}{2}$

$\frac{2}{7}$

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

			For the years ended December 31,
	Notes		2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		\$	550,212	\$	461,755
Adjustments
Adjustments to reconcile profit (loss)
Net gain on financial asstes at fair value through profit or loss		(	$369$ ) $($		275)
Impairment loss of financial assets	6(3)(7)(23)		24,180
Provision for doubtful accounts	6(4)(5)				8,568
Reversal of allowance for doubtful accounts	6(4)(5)	(	8,881)
Provision (reversal of allowance) for loss on inventory market	6(6)
price decline			50,467	€	6,317)
Share of loss of associates and joint ventures accounted for	6(8)
under the equity method			6,500		31,060
Gain on disposal of investments	6(23)			(	564)
Depreciation	6(9)(25)		184,016		183,252
Net gain on disposal of property, plant and equipment	6(23)	(	456) (		1,121)
Property, plant and equipment transferred to expenses	6(9)				43
Amortisation	6(10)(25)		9,121		8,380
(Reversal of) impairment loss of non-financial assets	6(10)(11)(23)	€	1,462)		8,263
Amortisation of long-term prepaid rent	6(12)		1,172		1,263
Dividend income	6(22)		$16,693$ ) (		17,247)
Interest income	6(22)		$6,017$ $($		$2,009$ )
Interest expense	6(24)		6,529		3,953
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss - current			73,892		55,659)
Notes receivable			24,809		29,040)
Accounts receivable			81,172		55,092)
Other receivables		(	58,444) (		3,119)
Inventories			$50,495$ ) (		90,010)
Prepayments			10,033)		39,778
Other current assets Other non-current assets			2,052) $1,096$ ) (		1,730)
Changes in operating liabilities
Notes payable			$28,424$ ) (		3,215)
Accounts payable		€ (	76,681)		65,921
Other payables			12,331		14,679
Receipts in advance			4,862	€	13, 145
Net defined benefit liability - non-current			$10,030$ )		154,848
Cash inflow generated from operations			758,130		393,524
Dividends received			16,693		17,247
Interest received			6,017		2,079
Interest paid			6,255)	-0	3,675
Income tax paid			65,847)		103,799
Net cash flows from operating activities			708,738		305,376

(Continued)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

			For the years ended December 31,
	Notes		2017		2016
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of available-for-sale financial assets - current		$($ \$	$1,999$ )	( \$	4,110)
Increase in other financial assets - current		(	20)	€	64,500)
Acquisition of financial assets carried at cost - non-current					131,421)
Proceeds from capital reduction of financial assets carried at cost - 6(7) non-current			700
Acquisition of investments accounted for under the equity method $6(8)$		(	4,500)
Proceeds from disposal of investments accounted for under the equity method					686
Cash paid for acquisition of property, plant and equipment	6(30)	C	222,704)		74,856)
Interest paid for acquisition of property, plant and equipment	6(9)(24)(30)	$\overline{\mathcal{L}}$	797)		267)
Proceeds from disposal of property, plant and equipment			680		2,419
Acquisition of intangible assets	6(10)	€	$7,852$ ) (		2,112)
Increase in prepayments for equipment		€	$155,086$ ) (		100,955)
(Increase) decrease in guarantee deposits paid			18,214)		3,969
Decrease in other financial asstes - non-current					5,383
(Increase) decrease in other non-current assets			12, 121)		936
Net cash flows used in investing activities			421,913)		364,828)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings			149,514		284,363
Increase in short-term notes and bills payable					100,000
Increase in long-term borrowings			170,000		81,486
Redemption of long-term borrowings		(	4,893)		173,666)
Increase (decrease) in guarantee deposit received			90		210)
Payment of cash dividends from capital surplus	6(18)	€	89,348)		89,348)
Payment of cash dividends	6(19)		178,696)		178,696)
(Decrease) increase in non-controlling interests			14,646)		136,977
Net cash flows from financing activities			32,021		160,906
Effects due to changes in exchange rate			3,154)		8,987
Net increase in cash and cash equivalents			315,692		110,441
Cash and cash equivalents at beginning of year	6(1)		876,820		766,379
Cash and cash equivalents at end of year	6(1)	\$	1,192,512	\$	876,820

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

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

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

1. HISTORY AND ORGANISATION

(1) Standard Chem & Pharm. Co., Ltd. (the "Company") was incorporated on June 30, 1967 under the provisions of the Company Act of the Republic of China (R.O.C.) and other regulations. The Company is primarily engaged in the manufacture and sales of Chinese and western medicine, cosmetics, beverage, normal instruments and medical instruments. For the main business activities of the Company's subsidiaries, please refer to Note 4(3).
(2) The Company had been listed on the Taiwan Stock Exchange starting from December 1995.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 20, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC") New standards, interpretations and amendments endorsed by FSC effective from 2017 are as follows:

	Effective date by
	International Accounting
	Standards Board
New Standards, Interpretations and Amendments	("IASB")
Recoverable amount disclosures for non-financial assets	January 1, 2014
(amendments to IAS 36)
Novation of derivatives and continuation of hedge accounting	January 1, 2014
(amendments to IAS 39)
IFRIC 21, 'Levies'	January 1, 2014
Defined benefit plans: employee contributions (amendments to IAS 19)	July 1, 2014
Annual improvements to IFRSs 2010-2012 cycle	July 1, 2014
Annual improvements to IFRSs 2011-2013 cycle	July 1, 2014
Investment entities: applying the consolidation exception	January 1, 2016
(amendments to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations	January 1, 2016
(amendments to IFRS 11)
IFRS 14, 'Regulatory deferral accounts'	January 1, 2016
Disclosure initiative (amendments to IAS 1)	January 1, 2016
Clarification of acceptable methods of depreciation and amortisation	January 1, 2016
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)	January 1, 2016

	Effective date by International Accounting
New Standards, Interpretations and Amendments	Standards Board ("IASB")
Equity method in separate financial statements (amendments to IAS 27) Annual improvements to IFRSs 2012-2014 cycle The above standards and interpretations have no significant impact to the Company and its	January 1, 2016 January 1, 2016
subsidiaries' (collectively referred herein as the "Group") financial condition and financial performance based on the Group's assessment.

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

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

	Effective date by
New Standards, Interpretations and Amendments	IASB
Disclosure initiative (amendments to IAS 7)	January 1, 2017
Recognition of deferred tax assets for unrealised losses	January 1, 2017
(amendments to IAS 12)
Annual improvements to IFRSs 2014-2016 cycle - Amendments to	January 1, 2017
IFRS 12, 'Disclosure of interests in other entities'
Classification and measurement of share-based payment transactions	January 1, 2018
(amendments to IFRS 2)
Applying IFRS 9, 'Financial instruments' with IFRS 4 'Insurance	January 1, 2018
contracts' (amendments to IFRS 4)
IFRS 9, 'Financial instruments'	January 1, 2018
IFRS 15, 'Revenue from contracts with customers'	January 1, 2018
Clarifications to IFRS 15, 'Revenue from contracts with customers'	January 1, 2018
(amendments to IFRS 15)
Transfers of investment property (amendments to IAS 40)	January 1, 2018
IFRIC 22, 'Foreign currency transactions and advance consideration'	January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle - Amendments to	January 1, 2018
IFRS 1, 'First-time adoption of International Financial Reporting
Standards'
Annual improvements to IFRSs 2014-2016 cycle - Amendments to	January 1, 2018
IAS 28, 'Investments in associates and joint ventures'
Except for the following, the above standards and interpretations have no significant impact to t

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

A. Amendments to IAS 7, 'Disclosure initiative'

This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

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

from financing activities.

B. IFRS 9, 'Financial instruments'
(a) Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
(b) The impairment losses of debt instruments are assessed using an 'expected credit loss' approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument 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. IFRS 15, 'Revenue from contracts with customers'

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.

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. When adopting the new standards endorsed by the FSC effective from 2018, the Group will apply the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. Further, the Group expects to adopt IFRS 15 using the modified retrospective approach. The significant effects of applying the new standards as of January 1, 2018 are summarised below:

A. In accordance with IFRS 9, the Group expects to reclassify financial assets carried at cost - non-

current of \$149,192, by increasing financial assets at fair value through profit or loss - current. financial assets at fair value through profit or loss - non-current, and financial assets at fair value through other comprehensive income - non-current in the amounts of \$5,801, \$23,195 and \$120,503, respectively, and increasing retained earnings and decreasing other equity interest in the amounts of \$5,914 and \$11,408, respectively.

B. Under IFRS 15, liabilities in relation to sales contracts are recognised as contract liabilities, but were previously presented as receipts in advance in the balance sheet amounting to \$96,497.
(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:

	Effective date by
New Standards, Interpretations and Amendments	IASB
Prepayment features with negative compensation (amendments to IFRS ₉	January 1, 2019
IFRS 16, 'Leases'	January 1, 2019
IFRIC 23, 'Uncertainty over income tax treatments'	January 1, 2019
Plan amendment, curtailment or settlement (amendments to IAS 19)	January 1, 2019
Long-term interests in associates and joint ventures (amendments to IAS 28)	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019
IFRS 17, 'Insurance contracts'	January 1, 2021
Amendments to IFRS 10 and IAS 28, 'Sale or contribution of assets	To be determined by
between an investor and its associate or joint venture'	IASB

Except for the following, the above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment. The quantitative impact will be disclosed when the assessment is complete.

IFRS 16, 'Leases', replaces IAS 17, 'Leases' and related interpretations and SICs. The standard requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation
A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- (a) Financial assets at fair value through profit or loss.
- (b) Available-for-sale financial assets measured at fair value.
- (c) Defined benefit liabilities recognised based on the net amount of pension fund assets plus present value of defined benefit obligation.
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 judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5. Critical accounting judgements, estimates and key sources of assumption uncertainty.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (a) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group 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. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
- (d) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
- (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. The fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary

are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

	Name	Main business		Ownership (%)
Name of investors	of subsidiaries	activities		December 31, 2017 December 31, 2016 Description
Standard Chem & Standard Pharm. Co., Ltd.	Pharmaceutical Co., Ltd.	Research and development, trading, investment and other business of medical products	100.00	100.00
Standard Chem & Chia Scheng Pharm. Co., Ltd.	Investment Co., Ltd.	General investment	100.00	100.00
Standard Chem & STANDARD Pharm. Co., Ltd.	CHEM. & PHARM. PHILIPPINES, INC.	Import and export of various medical products, medicine, supplements	100.00	100.00
Standard Chem & Inforight Pharm. Co., Ltd.	Technology Co., Ltd.	Wholesale of multi- function printers and information software	100.00	100.00
Standard Chem & Souriree Biotech Pharm. Co., Ltd.	& Pharm. Co., Ltd.	Manufacturing of western medicine and retail and wholesale of various medicine	93.17	93.17

B. Subsidiaries included in the consolidated financial statements:

$\sim$

	Name	Main business	Ownership (%)
Name of investors	of subsidiaries	activities		December 31, 2017 December 31, 2016 Description
Standard Chem & Multipower Pharm. Co., Ltd.	Enterprise Corp.	Import and export of western medicine, nourishment and function food, processing, manufacturing and sale of food	90.45	90.72
Standard Chem & Advpharma Inc. Pharm. Co., Ltd.		Research and development, manufacturing and sale of various medicines	84.58	84.58
Pharm. Co., Ltd.	Standard Chem & Syngen Biotech Co., Ltd.	Research and development, manufacturing and sale of APIs, biopesticide, fertiliser and biochemical nutrition, sale of preventive medicines	47.27	47.27	Note 1
Standard Pharmaceutical Co., Ltd.	Jiangsu Standard Biotech Pharmaceutical Co., Ltd.	Research and development, technical consulting and technical services of medicines	100.00	100.00
Chia Scheng Investment Co., Ltd.	SANTOS BIOTECH INDUSTRIES, INC.	Research and development, trading, investment and other business of medical products	100.00	100.00

	Name	Main business		Ownership (%)
Name of investors	of subsidiaries	activities		December 31, 2017 December 31, 2016 Description
Syngen Biotech Co., Ltd.	SYNGEN BIOTECH INTERNATIONAL SDN. BHD.	Research and development, manufacturing and sale of APIs and biochemical nutrition, sale of preventive medicines	100.00		Note 2
Jiangsu Standard Biotech Pharmaceutical Co., Ltd.	Jiangsu Standard-Dia Biopharma Co., Ltd.	Research and development, manufacturing and sale of various medicines	55.00	55.00

Note 1: In September 2016, the subsidiary, Syngen Biotech Co., Ltd. ("Syngen Biotech"), filed for an initial public offering with Taipei Exchange. As part of the public trading process, the Group allowed its underwriter to exercise the overallotment option, which decreased the Group's ownership percentage in Syngen Biotech down to below 50%. The Group still has the control over Syngen Biotech and accordingly, Syngen Biotech is included in the consolidated financial statements. Please refer to Note 6(29) for the transactions with noncontrolling interest.

Note 2: Newly established company in second quarter of 2017.

C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:
(1) As of December 31, 2017 and 2016, the non-controlling interest amounted to \$529,762 and \$477,312, respectively. The information on non-controlling interest and respective subsidiaries is as follows:

			Non-controlling interest
			December 31, 2016 December 31, 2017
	Principal
Name of	place		Ownership		Ownership
subsidiary	of business	Amount	(%)	Amount	$(\%)$	Description
Syngen Biotech Co.,	Taiwan	\$402,855	52.73%	\$336,038	52.73%

(2) Summarised financial information of the subsidiary, Syngen Biotech Co., Ltd.:

$\Lambda$ Relation sheets

A. Dalance sheets
		December 31, 2017		December 31, 2016
Current assets	\$	561, 814	\$	558, 468
Non-current assets		602, 226		492, 703
Current liabilities		$311,900)$ (		396, 147)
Non-current liabilities		$88, 144)$ (		17, 743)
Total net assets	\$	763, 996	\$	637, 281
B. Statements of comprehensive income
		For the years ended December 31,
		2017		2016
Revenue	$\frac{S}{2}$	955, 647	\$	769, 369
Profit before income tax	\$	184, 651	$\mathbf{\hat{S}}$	114,025
Income tax expense		36,033)		(23, 819)
Net income for the year	\$	148,618	\$	90, 206
Total comprehensive income
for the year	\$	147, 716	\$	90, 100
Comprehensive income attributable to non-controlling
interest	\$	77,891	\$	43, 455
C. Statements of cash flows
	For the years ended December 31,
		2017		2016
Net cash flows provided by
operating activities	\$	160,788	\$	46, 953
Net cash flows used in investing activities		$292, 752)$ (		32, 711)
Net cash flows provided by financing
activities		123,620		120,664
Net exchange differences		140
Net (decrease) increase in cash and		8, 204)		134, 906
cash equivalents
Cash and cash equivalents at		179, 364		44, 458
beginning of the year Cash and cash equivalents at
end of the year	\$	171, 160	\$	179, 364

(4) Foreign currency translation

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in New Taiwan dollars, which is the Company's functional and the Group'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) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within 'other gains and losses'.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- iii. All resulting exchange differences are recognised in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, if the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(5) 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;
(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.
(6) Cash equivalents
A. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
B. Time deposits and repurchase bonds that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.
(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets 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 categorised as financial assets held for trading unless they are designated as hedges.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. Financial assets 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 are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in profit or loss.
(8) Available-for-sale financial assets
A. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
B. On a regular way purchase or sale basis, available-for-sale financial assets are recognised and derecognised using trade date accounting.
C. Available-for-sale financial assets 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. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in 'financial assets carried at cost'.

(9) 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. Accounts receivable 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.

(10) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses. If the cost exceeds net realisable value, valuation loss is accrued and recognised in operating costs. If the net realisable value reverses, valuation is eliminated within credit balance and is recognised as deduction of operating costs.

(11) Impairment of financial assets

A. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
B. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
(a) Significant financial difficulty of the issuer or debtor;
(b) The disappearance of an active market for that financial asset because of financial difficulties;
(c) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(d) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and

indicates that the cost of the investment in the equity instrument may not be recovered;

(e) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(a) Available-for-sale financial assets

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, then 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) Financial assets carried at cost

The amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognised in profit or loss. Impairment loss recognised for this category shall not be reversed subsequently. Impairment loss is recognised by adjusting the carrying amount of the asset through the use of an impairment allowance account.

The amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate, and is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(12) Derecognition of financial assets

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

(13) Operating lease (lessor)

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(14) Investments accounted for under the equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for under the equity method and are initially recognised at cost.
B. The Group's share of its associates' 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 Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate's equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group's ownership percentage of the associate, the Group recognises the Group's share of change in equity of the associate in 'capital surplus' in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group's ownership percentage of the associate but maintains significant influence on the associate, then 'capital surplus' and 'investments accounted for using the equity method' shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group's ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
G. When the Group disposes its investment in an associate and loses significant influence over this

associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

(15) 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 Group 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:

Assets	Useful Life
Buildings (including auxiliary equipment)	$2 \sim 60$ years
Machinery and equipment	$2 \sim 50$ years
Utility equipment	$2 \sim 15$ years
Transportation equipment	$2 \sim 15$ years
Office equipment	$2 \sim 15$ years
Other equipment	$2 \sim 35$ years

(16) Intangible assets

A. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

B. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 to 10 years.

C. Patents

Patents is stated at cost and amortised on a straight-line basis over its estimated useful life of 5 to 20 years.

D. Other intangible assets

Technical skill transfer fee, royalty paid for acquisition of techniques and distribution rights. trademarks and property rights are stated at cost and amortised on a straight-line basis over its estimated useful life of 2 to 10 years.

(17) 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.

(18) Impairment of non-financial assets
A. The Group 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. Except for goodwill, when the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the 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.
B. The recoverable amounts of goodwill has not yet been available for use are evaluated periodically. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
(19) 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.

(20) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(21) 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.

(22) 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
(a) Defined contribution plans

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.

(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds of a currency and term consistent with the currency and term of employment benefit obligations.
ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
iii. Past service costs are recognised immediately in profit or loss
C. Employees' compensation and directors' and supervisors' remuneration
Employees' remuneration and directors' and supervisors' remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the amounts as resolved by the stockholders at their stockholders' meeting and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
$(23)$ Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and 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 10% tax is levied on the Company and its domestic subsidiaries of 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 consolidated 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 Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from research and development expenditures, etc., to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.
(24) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

(25) Dividends

Dividends are recorded in the Company's financial statements in the period in which they are approved 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.

(26) Revenue recognition

A. Sales of goods

The Group manufactures and sells human pharmaceuticals, etc. Revenue is measured at the fair

value of the consideration received or receivable taking into account business 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 delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. Rendering of services

The Group provides processing services. Revenue arising from the rendering of services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably.

(27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group's chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

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

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group'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; and the related information is addressed below:

(1) Critical judgements in applying the Group's accounting policies

Financial assets—impairment of equity investments

The Group follows the guidance of IAS 39 to determine whether a financial asset—equity investment is impaired. This determination requires significant judgement. In making this judgement, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

If the decline of the fair value of an individual equity investment below cost was considered significant or prolonged, the Group would suffer a loss in its financial statements, being the transfer of the accumulated fair value adjustments recognised in other comprehensive income on the impaired available-for-sale financial assets to profit or loss or being the recognition of the impairment loss on the impaired financial assets carried at cost in profit or loss.

(2) Critical accounting estimates and assumptions
A. Evaluation of inventories
- (a) As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the influence of different market demand and expiration date, etc., the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.
- (b) As of December 31, 2017, the carrying amount of inventories was \$727,894.
B. Financial assets—fair value measurement of unlisted stocks without active market
- (a) The fair value of unlisted stocks held by the Group that are not traded in an active market is determined considering those companies' recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgements and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the fair value estimation of the financial instruments fair value information.
- (b) As of December 31, 2017, the carrying amount of unlisted stocks without active market was \$239,045.
C. Calculation of net defined benefit liabilities non-current
- (a) When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.
- (b) As of December 31, 2017, the carrying amount of net defined benefit liabilities non-current was \$270,987.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December 31, 2017		December 31, 2016
Cash:
Revolving funds and petty cash	\$	5,075	\$	4,960
Checking accounts and demand deposits		721,887		585, 732
		726, 962		590, 692
Cash equivalents:
Time deposits		450.521		269, 914
Repurchase bonds		15,029		16, 214
		465, 550		286, 128
	œ	1, 192, 512	ዩ	876, 820

A. The Group associates 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. As of December 31, 2017 and 2016, the carrying amount of more than 3-month time deposits (shown as "Other financial assets – current") was \$64,520 and \$64,500, respectively.

C. As of December 31, 2017 and 2016, the Group has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss - current

	December 31, 2017			December 31, 2016
Financial assets held for trading
Beneficiary certificates	\$	139, 355	-SS	213, 247
Valuation adjustment of financial assets held for trading		2,976		2,607
	\$	142, 331		215, 854

A. The Group recognised net gain (shown as "other gains and losses") of \$628 and \$1,119 for the years ended December 31, 2017 and 2016, respectively.

B. As of December 31, 2017 and 2016, the Group has no financial assets at fair value through profit or loss pledged to others.

(3) Available-for-sale financial assets

	December 31, 2017		December 31, 2016
Current items:
Listed stocks	\$	6.109	\$	4,110
Unlisted stocks		12,000		12,000
		18, 109		16, 110
Valuation adjustment of available-for-sale financial
assets		$308)$ (		9,538)
Accumulated impairment loss of available-for-sale
financial assets		12,000)
	\$	5,801	\$	6,572
Non-current items:
Listed stocks	\$	124, 189	\$	124, 189
Unlisted stocks		50,366		50,366
		174, 555		174, 555
Valuation adjustment of available-for-sale financial
assets		167, 333		299, 582
		341,888	\$	474, 137

A. The Group recognised (\$132,550) and \$52,360 in other comprehensive income for fair value change for the years ended December 31, 2017 and 2016, respectively.

B. The operating performance of the Group's equity investment - Original BioMedicals Co., Ltd. did not meet the original expectation. As the fair value was lower than its initial investment cost, the Group recognised impairment loss of \$12,000 and $$ - (shown as "other gains and losses")$ for the years ended December 31, 2017 and 2016, respectively, including the amount of \$9,531 and $$$ – that was transferred from equity to profit or loss, respectively.

C. As of December 31, 2017 and 2016, the Group has no available-for-sale financial assets pledged to others.

(4) Notes receivable, net

	December 31, 2017 December 31, 2016
Notes receivable		296, 752 \$	321, 561
Less: Allowance for bad debts		1,625	(2, 026)
	\$	295, 127	319, 535

A. The Group has no significant past due but not impaired notes receivable as of December 31, 2017 and 2016.

B. Movement analysis of financial assets that were impaired is as follows:

	For the years ended December 31,
	2017		2016
	Group provision		Group provision
Beginning balance	\$ 2,026	\$	2,910
Provision for impairment			156
Reversal of impairment	401)
Write-offs during the year			1,040)
Ending balance	$1,\,625$	\$	2.026

C. As of December 31, 2017 and 2016, the notes receivable that were neither past due nor impaired have good credit quality.

D. As of December 31, 2017 and 2016, the Group has no notes receivable pledged to others.

(5) Accounts receivable, net


Accounts receivable	579.722	664.028
Less: Allowance for bad debts	7,035	18,649)
	572,687	645, 379

A. The Group has no significant past due but not impaired accounts receivable as of December 31, 2017 and 2016.

B. Movement analysis of financial assets that were impaired is as follows:

	For the years ended December 31,
	2017		2016
	Group provision		Group provision
Beginning balance	\$ 18,649	\$	10, 311
Provision for impairment			8,412
Reversal of impariment	8,480)
Write-offs during the year	3, 134)		74)
Ending balance	7,035	\$	18,649

C. As of December 31, 2017 and 2016, the accounts receivable that were neither past due nor impaired have good credit quality.

D. As of December 31, 2017 and 2016, the Group has no accounts receivable pledged to others.

$(6)$ Inventories

	December 31, 2017
				Allowance for
	Cost			valuation loss		Book value
Merchandise	\$	174, 571	$\left( \text{\$} \right)$	69, 179)	\$	105, 392
Raw materials		260, 299		8,017)		252, 282
Supplies		52, 131		2,926)		49, 205
Work in process		81, 301		5,489)		75, 812
Finished goods		260, 630		15, 427)		245, 203
	\$	828, 932	(\$	101,038)	\$	727,894
	December 31, 2016
				Allowance for
		Cost		valuation loss		Book value
Merchandise	$\mathbf{\hat{S}}$	216, 334	$\left( \text{\$} \right)$	14, 472)	$\mathcal{S}$	201, 862
Raw materials		194,077		5,623)		188, 454
Supplies		51, 144		1,693)		49, 451
Work in process		97, 928		12,084)		85, 844
Finished goods		228, 813		16,699)		212, 114
	\$	788, 296	3)	50,571	\$	737, 725

The cost of inventories recognised as expenses for the year:

	For the years ended December 31,
		2017		2016
Cost of goods sold	S	2, 035, 259	S	2, 024, 561
Loss on scrapped inventories		37,667		23, 360
Provision (reversal of allowance) for loss on		50, 467		6, 317)
inventory market price decline (Note 1)
Gain on physical inventory		$528)$ (		338)
Purchase discounts (Note 2)		62,063)
Under-applied fixed manufacturing overhead		28, 741		21,897
Total operating costs		2,089,543		2, 063, 163

(Note 1) The Group reversed a previous inventory write-down which was accounted for as reduction of operating costs as these inventories were subsequently sold or disposed.

(Note 2) The subsidiary, Multipower Enterprise Corp. (the "Multipower"), was affected by its supplier in France, LNS Lactalis Group, which was polluted by salmonella. Because of this, Multipower decided to discontinue to sell some certain milk powder in advance for food safety. As of December 31, 2017, Multipower accrued loss on inventories and purchase discounts totaling \$62,063 for these inventories informed to be regulated by Food and Drug Administration, and requested compensation to installment collection within one year. As of March 20, 2018, Multipower had collected EUR 1,308 thousand based on mutual agreement.

$(7)$ Financial assets carried at $cost$ - non-current


Unlisted stocks	161, 372	162,072
Accumulated impairment	12,180)
	149, 192	162,072

A. According to the Group's intention, its investment in company stocks should be classified as 'available-for-sale financial assets'. However, as the company stocks are not traded in active market, and sufficient industry information of companies similar to the company or the company's financial information cannot be obtained, the fair value of the investment in company stocks cannot be measured reliably. Accordingly the Group classified those stocks as 'financial assets carried at cost'.
B. The Group's financial assets measured at cost, Der Yang Biotechnology Venture Capital, conducted a capital reduction in August 2017. The Group has reversed 70 thousand shares at the initial investment price of \$700 proportionately.
C. For the years ended December 31, 2017 and 2016, the Group recognised impairment loss of $$12,180$ and $$-,$ respectively, after evaluating the future cash flows for its financial assets carried at cost, Stason Pharmaceuticals, Inc..
D. As of December 31, 2017 and 2016, the Group has no financial asset carried at cost pledged to others.
(8) Investments accounted for under the equity method
A. Movements of investments accounted for under the equity method:

	For the years ended December 31,
	2017	2016
At January 1	\$ 162, 562	\$ 193, 490
Acquisition of investments accounted for under the equity method	4,500
Share of profit or loss of investments accounted for under the equity method	$6, 500$ ) (	31,060)
Disposal of investments accounted for under the equity method		122)
Other equity interest – Actuarial losses of defined benefit plans	235	271)
Other equity interest – Financial statements translation differences of foreign operations	1,706)	525
At December 31	159,091	162, 562

B. Details of investments accounted for under the equity method are as follows:

	December 31, 2017 December 31, 2016
WE CAN MEDICINES CO., LTD.	143, 705	149, 226
CNH TECHNOLOGIES, INC.	10,898	13, 336
Taiwan Biosim, Co., Ltd.	4,488
	159,091	162, 562

C. Associates

(a) The basic information of the associate that is material to the Group is as follows:

		Shareholding ratio
		Principal place December 31, December 31,
Company name	of business	2017	2016
WE CAN MEDICINES CO., LTD.	Taiwan	33.10%	33.10%

(b) The summarised financial information of the associate that is material to the Group is as follows:

i. Balance sheet December 31, 2016 December 31, 2017 Current assets \$ 646,126 $\mathbf{\hat{z}}$ 633,884 Non-current assets 179,950 199,691 Current liabilities 360,378) ( 351,937) Non-current liabilities $31,723)$ ( 30,983) \$ Total net assets 433,975 450,655 \$ \$ Share in associate's net assets 143,646 \$ 149,167 Carrying amount of the associate \$ 143,705 $\mathbf{\hat{S}}$ 149,226

ii. Statement of comprehensive income

	For the years ended December 31,
	2017	2016
Revenue	2,307,016	2,305,504
Net loss for the year	17,391	93,926)
Total comprehensive loss for the year (\$)	16,680	94,743)

(c) As of December 31, 2017 and 2016, the carrying amount of the Group's individually immaterial associates amounted to \$15,386 and \$13,336, respectively. The share in associate's financial performance is as follows:

		For the years ended December 31,
		2017	2016
Net (loss) income for the year		2.081)
Total comprehensive (loss) income for the year	D	2,081)

(d) As of December 31, 2017 and 2016, share of loss of associates and joint ventures accounted for under the equity method are (\$5,756) and (\$31,089), respectively, which was recognised based on the associates' financial statements audited by other independent auditors. As of December 31, 2017 and 2016, the balance of the investment accounted for under the equity method are \$143,705 and \$149,226, respectively.

(e) As of December 31, 2017 and 2016, the Group has no investment accounted for under the equity method pledged to others.

(9) Property, plant and equipment									Construction in
									progress and
				Utility	Transportation		Office	Other	equipment to
	Land	Buildings	Machinery	equipment	equipment		equipment	equipment	be inspected	Total
At January 1, 2017
Cost	515, 143 ↔	\$1,072,326	831, 782 မာ	187,919 ↔	2,750 ↔	↔	21,968	972, 219 €Ð	96,318 ↔	3,700,425 €
Accumulated depreciation		279, 857)	563,036)	127, 011)		1,851)	7,294)	631, 168		1,610,217)
	$5\overline{15,143}$ ఱ	792, 469 ⇔∣	268,746 ఈ∥	60,908 ⇔∥	ادب	↔ 899	14,674	341,051 မာ	96,318 અ∥	2,090,208 S
2017
At January 1	515, 143 ₩	792, 469 ⇔	268,746 ↔	60,908 ↔	↔	چے 899	14,674	341, 051 ⇔	96, 318 ↔	2,090,208 ⇔
Additions-cost		9,684	23,547	1,497			600	35,041	3,506	73,875
Transferred upon completion		89,786	3,866	ı				လ္တ	93,704)
$T$ ransferred – cost (Note 1)		14,662	98,645	ඝ			84	66,002		179, 429
accumulated depreciation Reclassification		I	4,060	J		$\mathfrak l$	1	4,060)	1	I
Depreciation		33,695)	56,501)	9,633)		262)	3,550)	80, 375)		184,016)
Disposals-cost			1,157)	I			280)	11,865)		13, 302)
Disposals-accumulated depreciation	ı	I	1, 124	ı			261	11,693	ı	13,078
Net exchange differences		2,101)	519)			$\left( \frac{1}{2} \right)$	150	68		2,552)
At December 31	$\frac{143}{2}$ 515, ⇔∥	$\frac{870,805}{800}$ ⇔	$\frac{341.811}{1}$ ఱ∣	52,808 ⇔∣	⇔∣	ا⇔ 623	$\frac{939}{ }$	357, 471 ⇔∥	6,120 ↔	2, 156, 720 ⇔∣
At December 31, 2017
Cost	515, 143 €Ą	\$1,184,055	956,022 ↔	189, 452 ⇔	2,721 ⇔	⇔	22, 527	\$1,061,289	6,120 ↔	3,937,329 €Ô
Accumulated depreciation		313, 250)	514, 211	136,644)		2,098	10,588)	703, 818)		1,780,609)
	515, 143 €A	870, 805 چھ	341, 811 မေ	52,808 ↔	⊷	↔ 623	11,939	357, 471 په	6, 120 ⊷	2, 156, 720 وه

$-41$

	Total	3,639,727 ⇔	1, 452, 837)	$\frac{2.186,890}{2}$ ∥⊶		2,186,890 $\Leftrightarrow$	54, 451	47,756	$\mathsf I$		183, 252)	23, 655)	22,357	14,339)	2,090,208 ⇔∥	3,700,425 e	1,610,217	2,090,208 ⇔∥
Construction in equipment to progress and	be inspected	241,646		241, 646		241,646	358	106		145, 577)			I.	ଳ	96,318	96, 318		96,318
		↔		↔		⇔									⊷∥	↔		⇔∣
Other	equipment	935, 681	569,061)	366, 620		366,620	33,780	25,879	780)	623	83,561)	23, 277)	21,985	218)	051 341,	972, 219	631, 168)	341, 051
		⇔		⇔∣		↔									⇔∣	↔		⇔∥
Office	equipment	21, 119	3, 751)	17,368		17,368	696	289	I		3,639)	$\pmb{\mathsf{j}}$		40)	674 14,	21,968	7,294)	14,674
		↔		⊷		چپ									⇔∣	⇔		e۵,
Transportation	equipment	2,849	1,662	187		1,187		$\overline{5}$			282)	$\pmb{\cdot}$		67)	899	2,750	1,851	899
		↔		⇔∣		↔									€⊖∣	↔		eel
Utility	equipment	187, 616	117, 775)	69,841		69,841	474		ı		9,405)	(171)	169		60,908	187,919	127,011)	60,908
		↔		ఱ∥		↔									⇔∣	↔		୫୨∣
	Machinery	781, 342	510, 174)	271,168		271, 168	13,485	21,495		19,402	54,071)	207)	203	2,729)	268,746	831,782	563,036)	268, 746
		↔		⇔∥		↔									∻⊖∥	↔		୫∌∥
	Buildings	954, 331	250, 414)	703, 917		703, 917	5,658	138	780	125, 552	32, 294)		¹	11,282)	792, 469	\$1,072,326	279, 857	792,469
		چھ		⇔Ι		⇔									ക്			ا⇔
	Land	515, 143	L	143 515,		515, 143	$\mathbf{1}$						J		515, 143	515, 143		143 515,
		⇔		ക്ര		€Ą									ക	↔		ا⇔
	At January 1, 2016	Cost	Accumulated depreciation		2016	At January	Additions-cost	Transferred-cost (Note 2)	Reclassification-	Transferred upon completion accumulated depreciation	Depreciation	Disposals-cost	Disposals-accumulated depreciation	Net exchange differences	At December 31	At December 31, 2016 Cost	Accumulated depreciation

$\label{eq:2.1} \frac{1}{\sqrt{2}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{1}{\sqrt{2\pi}}\sum_{i=1}^n\frac{$

$-42-$

(Note 1) Including transfer of \$9,859 from 'inventories'; transfer of \$169,570 from 'prepayment for equipment'.
(Note 2) Including transfer of \$8,138 from 'inventories'; transfer of \$39,767 from 'prepayment for equipment'; transfer of \$106 to 'other non-current assets'; transfer of \$43 to expenses.
A. Amount of borrowing costs capitalised as part of property, plant and equipment and the interest rates for such capitalisation are as follows:

	For the years ended December 31.
	2017	2016
Capitalised interest payments	797	267
Interest rate	$0.84\% \sim 1.45\%$	'9%

B. Information about the property, plant and equipment that were pledged to others as collateral as of December 31, 2017 and 2016 is provided in Note 8 for the pledged assets.
C. The board of directors of Syngen Biotech Co., Ltd., the subsidiary, resolved to purchase part of plant and equipment, located in Southern Taiwan Science Park, from Tuck-More Biotechnology Co., Ltd. on January 14, 2015. The purchase contract was signed on February 16, 2015 for the purchase price of \$253,000 (tax included), starting February 15, 2017 as the settlement date. Under the contract, the Group has obtained the right to use the plant and equipment since 2015 and is classified as buildings and machinery. As of December 31, 2017 and 2016, the unpaid amount was $$ -$ and \$192,057 (shown as 'notes payable' and 'other payables'), respectively.

(10) Intangible assets

		Goodwill		Software		Patent		Others	Total
At January 1, 2017
Cost	\$	70,513	$\mathbf{\$}$	36, 298	$\mathcal{E}$	34, 905	\$	84,044	\$ 225, 760
Accumulated amortisation	(	$248)$ (		$23,053)$ (		$13, 266)$ (		$54, 751)$ (	91, 318)
Accumulated impairment								$15,386$ ) (	15,386)
Net exchange differences				6		714			720
	\$	70, 265	\$	13, 251	$\frac{1}{2}$	22, 353	\$	13, 907	\$ 119, 776
2017
At January 1	\$	70, 265	\$	13, 251	\$	22, 353	\$	13, 907	\$ 119,776
Additions - acquired separately				7,680		158		14	7,852
Amortisation				$4,407)$ (		$3, 212)$ (		$1, 502)$ (	9,121)
Reversal of impairment loss								1,462	1,462
Net exchange differences				8)		775)			783)
At December 31	$\mathbf{\hat{z}}$	70, 265	\$	16,516	\$	18,524	\$	13,881	\$ 119, 186
At December 31, 2017
Cost	$\mathcal{S}$	70,513	$\mathbf{\$}$	43, 978	\$	35,063	$\mathbf{\hat{S}}$	84,058	\$ 233, 612
Accumulated amortisation		$248)$ (		$27,460$ ) (		$16,478$ ) (		$56, 253)$ (	100, 439)
Accumulated impairment							€	$13, 924)$ (	13, 924)
Net exchange differences				2)		61)			63)
	\$	70, 265	\$	16,516	\$	18,524	\$	13,881	\$ 119, 186

$\bar{\lambda}$

		Goodwill		Software		Patent	Others	Total
At January 1, 2016
Cost	\$	70,513	\$	34, 511	\$	34, 585	\$ 84,039	\$ 223, 648
Accumulated amortisation	C	$248)$ (		$19,448)$ (		$9,997$ (	$53, 245)$ (	82, 938)
Accumulated impairment						-	$7,123)$ (	7, 123)
Net exchange differences				2		923		925
	\$	70, 265	\$	15,065	\$	25, 511	\$ 23,671	\$ 134, 512
2016
At January 1	\$	70, 265	$\boldsymbol{\mathcal{S}}$	15,065	$\boldsymbol{\mathcal{S}}$	25, 511	$\mathcal{S}$ 23,671	\$ 134, 512
Additions - acquired separately				1,787		320	5	2, 112
Amortisation				$3,605)$ (		$3,269$ ) (	$1, 506$ ) (	8,380)
Impairment loss							$8, 263)$ (	8,263)
Net exchange differences				4		209)		205)
At December 31	\$	70, 265	\$	13, 251	\$	22, 353	\$ 13,907	\$ 119,776
At December 31, 2016
Cost	\$	70,513	\$	36, 298	$\mathbb{S}$	34, 905	\$ 84,044	\$ 225,760
Accumulated amortisation		$248)$ (		$23,053)$ (		$13, 266)$ (	54,751) $($	91, 318)
Accumulated impairment							15,386) $($	15,386)
Net exchange differences				6		714		720
	\$	70, 265	\$	13, 251	$\frac{1}{2}$	22, 353	\$ 13,907	\$ 119,776

A. No borrowing costs were capitalised as part of intangible assets as of December 31, 2017 and 2016.

B. Details of amortisation on intangible assets are as follows:

		For the years ended December 31,
		2017		2016
Operating costs	\$	3,370	S	2,805
Selling expenses		1,120		986
General and administrative expenses		4.243		4,386
Research and development expenses		388		203
	S	9, 121		8,380

C. The Group applied value in use method when calculating recoverable amount of goodwill and determined the recoverable amount to be greater than the carrying amount; thus, no impairment was identified. Goodwill distributed to cash generating unit according to operating segment is shown below:

December 31, 2017 December 31, 2016 Multipower Enterprise Corp. \$ 70,265 \$ 70,265

D. Impairment information about the intangible assets is provided in Note $6(11)$ for the impairment of non-financial assets.
E. As of December 31, 2017 and 2016, the Group has no intangible assets pledged to others.
(11) Impairment of non-financial assets
A. The Group recognised impairment loss (reversal of impairment loss) (shown as 'other gains and losses') for the years ended December 31, 2017 and 2016 of \$1,462 and (\$8,263), respectively. Details of such losses are as follows:

		For the years ended December 31,
		2017		2016
		Recognised in other		Recognised in other
Impairment loss - royalty	Recognised in profit or loss 1,462	comprehensive income S	Recognised in profit or loss 263) (\$	comprehensive income \$

B. The impairment loss reported by operating segments is as follows:

		For the years ended December 31.
	2017			2016
		Recognised		Recognised
		in other		in other
	Recognised in profit or loss	comprehensive income	Recognised in profit or loss	comprehensive income
Syngen Biotech Co., Ltd.	\$ 1,462		8, 263 `Տ	\$

C. Goodwill is tested annually for impairment. Goodwill is allocated to the Group's cash-generating unit - Multipower Enterprise Corp., identified according to operating segment. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by the cashgenerating unit - Multipower Enterprise Corp.. Cash flow of financial budgets is prepared based on forecasts of growth of future annual revenue, profit and capital expenditure. Management determined budgeted gross margin based on past performance and its expectation of market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the relevant operating segments.
D. The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired for the years ended December 31, 2017 and 2016.

(12) Long-term prepaid rent

		December 31, 2017 December 31, 2016
Land use right		$\$\$$ 51, 177 \, \$ 53, 176
On December 31, 2011, the Group signed a land use right contract amounting to \$59,443

$\bar{z}$

(approximately RMB13,021 thousand) with the People's Republic of China Government for use of the land at Taizhou City, Jiangsu Province, China for a term of 50 years. All rentals had been paid on the contract date. The Group recognised rental expenses (shown as 'operating expenses') of \$1,172 and \$1,263 for the years ended December 31, 2017 and 2016, respectively.

(13) Short-term borrowings

Type of borrowings	December 31, 2017	Interest rate range	Collateral
Unsecured bank borrowings	\$ 345,000	$0.92\% \sim 1.23\%$	None
Secured bank borrowings	175,000	$0.99\% \sim 1.00\%$ Land and buildings
	520,000
Type of borrowings	December 31, 2016	Interest rate range	Collateral
Secured bank borrowings	S 270,000	$0.99\% \sim 1.08\%$ Land and buildings
Unsecured bank borrowings	100, 486	$0.99\% \sim 2.15\%$	None
	370, 486
(14) Short-term notes and bills payable
	December 31, 2017	Interest rate range	Collateral
Commercial paper payable	200,000 \$	$0.50\% \sim 0.62\%$	None
	December 31, 2016	Interest rate range	Collateral
Commercial paper payable	200,000	$0.50\% \sim 0.66\%$	None

The above commercial paper payables are issued and secured by China Bills Finance Corporation and other financing institutions.

(15) Long-term borrowings

$\overline{\phantom{0}}$

Type of borrowings	Maturity date range		December 31, 2017 Interest rate range	Collateral
Unsecured bank borrowings	2019, 10, 17 $\sim$ 2021.05.13	\$ 117, 295	$1.17\% \sim 1.82\%$	None
Secured bank borrowings	2020, 03, 30		1.22%	Buildings. machinery and other
		100,000		equipments
		217, 295
	Less: Current portion of long-term borrowings (	29, 983)
		187, 312

Type of borrowings	Maturity date range			December 31, 2016 Interest rate range	Collateral
Unsecured bank borrowings	2019.10.17 $\sim$ 2021.05.13	\$	52, 188	$1.17\% \sim 1.50\%$	None
	Less: Current portion of long-term borrowings (		4,871)
		3	47, 317

$(16)$ Pensions

A. The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labour Standards Law, covering all regular employees' service years prior to the enforcement of the Labour Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2%~5% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labour pension reserve account by December 31, every year. If the account balances are not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contribution for the deficit by next year. In accordance with defined benefit pension plan, the Company and its domestic subsidiaries disclose the related information as follows:

(a) The amounts recognised in the balance sheet are as follows:

		December 31, 2017	December 31, 2016
Present value of defined benefit obligations	(\$	$480,022)$ (\$	459, 157)
Fair value of plan assets		214, 584	195, 915
	(\$	265, 438)	263, 242)
Net defined benefit liability in the balance sheet (Note 1)	(\$	$270,987)$ (\$)	267, 695)
Net defined benefit asset in the balance sheet (Note 2)		5,549	4.453
		265, 438	263, 242)

(Note 1) Shown as 'net defined benefit liability – non-current'.

(Note 2) Shown as 'other non-current assets'.

(b) Movements in net defined benefit liability are as follows:

		Present value of
		defined benefit		Fair value of		Net defined
		obligations		plan assets		benefit liability
2017
At January 1	(3)	459, 157)	\$	195, 915	$($ \$	263, 242)
Current service cost		5,060)				5,060)
Interest (expense) income		5,714 )		2,499		3, 215 )
		469, 931)		198, 414		271, 517)
Remeasurements:
Return on plan assets				$806)$ (		806)
Change in demographic assumptions	(	668)				668)
Change in financial assumptions		13, 204)				13, 204)
Experience adjustments		1,656)				1,656)
		15,528)		806)		16, 334)
Pension fund contribution				20, 233		20, 233
Paid pension		5,437		3, 257)		2,180
At December 31	$\left( \text{\$} \right)$	480, 022)	\$	214, 584	$\left(\frac{1}{2}\right)$	265, 438 )
		Present value of
		defined benefit		Fair value of		Net defined
		obligations		plan assets		benefit liability
2016
At January 1	$($ \$	507, 884)	\$	61,539	$\left(\frac{6}{5}\right)$	446, 345)
Current service cost		5,825)			C	5,825)
Interest (expense) income		6, 319)		808		5, 511)
		520,028)		62, 347		457, 681)
Remeasurements:
Return on plan assets				$53)$ (		53)
Change in demographic assumptions	$\left($	98)				98)
Change in financial assumptions		26, 976				26,976
Experience adjustments		5, 459				5, 459
		32, 337		53)		32, 284
Pension fund contribution				158, 167		158, 167
Paid pension		28, 534		24, 546 )		3,988
At December 31	$\Im$	459, 157)	S	195, 915	$\$$	263, 242)

(c) The Bank of Taiwan was commissioned to manage the Fund of the Company's and its domestic subsidiaries' defined benefit pension plan in accordance with the Fund's annual investment and utilisation plan and the "Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labour Retirement Fund" (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates. government shall make payment for the deficit after being authorised by the Regulator. The Company and its domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and its domestic subsidiaries are unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2017 and 2016 is given in the Annual Labour Retirement Fund Utilisation Report announced by the government.

(d) The principal actuarial assumptions used were as follows:

	For the years ended December 31,
	2017	2016
Discount rate	$1.00\% \sim 1.25\%$	$1.25\% \sim 1.50\%$
Future salary increases	2.00%	2.00%

Assumptions regarding future mortality rate are estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

		Discount rate				Future salary increases
			Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2017
Effect on present value of defined benefit obligation December 31, 2016	Φ	13,231)	S	13,760	S	13,589	$\left( \mathcal{S}\right)$	13,136)
Effect on present value of defined benefit obligation	′ ው	13,269		13.821	S	13,684 .	(\$	13,206)

The sensitivity analysis above was arrived at based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(e) Expected contributions to the defined benefit pension plan of the Group for the year ending December 31, 2018 amount to \$10,534.

(f) As of December 31, 2017, the weighted average duration of that retirement plan is $11~14$ years. The analysis of timing of the future pension payment was as follows:

Within 1 year	\$ 9,832
2-5 years	78, 285
Over 5 years	441, 178
	\$ 529, 295

B. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the "New Plan") under the Labour Pension Act (the "Act"), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labour Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The Group's subsidiaries, Jiangsu Standard Biotech Pharmaceutical Co., Ltd. and Jiangsu Standard-Dia Biopharma Co., Ltd., in Mainland China are subject to the government sponsored defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People's Republic of China (PRC) are based on a certain percentage of employees' monthly salaries and wages. For the years ended December 31, 2017 and 2016, the contribution rates are from 20% to 29%. Other than the monthly contributions, the Group has no further obligations. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2017 and 2016 were \$32,856 and \$32,327, respectively.

(17) Share capital - common stock

Movements in the number of the Company's ordinary shares outstanding are as follows (in thousands of shares):

	For the years ended December 31,
	2017	2016
Beginning and ending balance	178,696	178,696

As of December 31, 2017, the Company's authorised capital was \$2,000,000, and the paid-in capital was \$1,786,961, consisting of 178,696 thousand shares of ordinary share with a par value of \$10 (in dollars) per share. Shares can be issued several times. All proceeds from shares issued have been collected.

(18) Capital surplus

A. 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. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

B. On June 16, 2017 and June 17, 2016, the stockholders have resolved to distribute cash dividends of \$89,348, (\$0.5 (in dollars) per share) using capital surplus for both years.

(19) Retained earnings

A. In accordance with the Company Act, the Company should use profit after tax to appropriate 10% as legal reserve until the legal reserve equals to the paid-in capital. Within the limit, 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.
B. Under the Company's Articles of Incorporation, as the Company operates in a volatile business environment and is in the stable growth stage, takes into consideration the Company's future capital needs, long-term financial planning and the shareholders' needs for cash inflow, the Company's earnings, if any, are distributed in the following order:
(a) Pay all taxes.
(b) Cover accumulated deficit.
(c) Appropriate 10% as legal reserve.
(d) Appropriate or reverse special reserve in accordance with the regulations.

(e) At least 10% of the remainder and previous unappropriated retained earnings as stockholders' bonus and cash dividends shall account for at least 20% of total dividends distributed. If the cash dividend is below \$0.5 (in dollars) per share, the Company can distribute stock dividends instead of cash dividends under the resolution of the shareholders.

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. As resolved by the shareholders on June 16, 2017 and June 17, 2016, the Company recognised cash dividends distributed to owners amounting to \$178,696 (\$1 (in dollars) per share) for the appropriation of 2016 and 2015 earnings for both years. On March 20, 2018, the Board of Directors proposed for the distribution of dividends from 2017 earnings of \$285,914 (\$1.6 (in dollars) per share).

$(20)$ Other equity

	For the year ended December 31, 2017
				Unrealised gain
				on valuation of
		Currency		available-for-sale
		translation		financial assets		Total
At January 1	$($ \$	562)	\$	286,735	\$	286, 173
Currency translation differences
- Company	(	8,584)			(	8,584)
Valuation adjustment
- Company				$105, 608)$ (		105, 608)
- Subsidiaries				15, 122)		15, 122 )
At December 31	$($ \$	9, 146)	\$	166,005	\$	156,859
				For the year ended December 31, 2016
				Unrealised gain
				on valuation of
		Currency		available-for-sale
		translation		financial assets		Total
At January 1	\$	15,628	\$	235, 290	\$	250, 918
Currency translation differences
- Company		16, 190)			(	16, 190)
Valuation adjustment
- Company				44,063		44,063
- Subsidiaries				7,382		7,382
At December 31	$\ddot{\bm{\theta}}$	562)	\$	286, 735	\$	286, 173
(21) Operating revenue
				For the years ended December 31,
			2017			2016
Sales revenue		\$		\$ 3,800,851		3, 619, 777
Processing revenue				36,702		47,848

Other operating revenue

$\frac{1}{\sqrt{2}}$

$11, 131$

$\frac{1}{2}$

$3, 848, 684$

$6,176$

3, 673, 801

(22) Other income

	For the years ended December 31,
	2017		2016
Dividend income	\$ 16,693	\$	17, 247
Interest income	6,017		2,009
Rental income	3,907 3,063 61, 415 91,095
Research income			28,746
Other income			48,021
			100,550

(23) Other gains and losses

		For the years ended December 31,
		2017	2016
Net currency exchange loss	(\$	$46,437)$ (\$)	14, 511)
Gain on disposal of investments			564
Net gain on financial assets at fair value through profit or loss		628	1,119
Net gain on disposal of property, plant and equipment		456	1, 121
Reversal of impairment loss (impairment loss) on non-financial assets		1,462	8, 263)
Impairment loss on financial assets		24, 180)
Other losses		1,258)	2,308)
	\$	69, 329)	22, 278)

$(24)$ Finance costs



Interest expense:
Bank borrowings		3,860
Less: Capitalisation of qualifying assets	797	267
	6.529	3,593

(25) Expenses by nature

			For the year ended December 31, 2017
	Recognised in			Recognised in
		operating costs operating expenses			Total
Employee benefit expenses	S	385, 770	\$	555, 369	941, 139
Depreciation on property,
plant and equipment		145, 010		39,006	184,016
Amortisation on intangible assets		3,370		5,751	9, 121
		534, 150		600, 126	134, 276

	For the year ended December 31, 2016
		Recognised in		Recognised in
		operating costs		operating expenses	Total
Employee benefit expenses	S	359, 536	S	527, 547	887,083
Depreciation on property,
plant and equipment		140, 765		42, 487	183, 252
Amortisation on intangible assets		2,805		5,575	8,380
	\$	503, 106		575,609	1,078,715

(26) Employee benefit expenses

	For the year ended December 31, 2017
		Recognised in operating costs		Recognised in operating expenses		Total

Wages and salaries	\$	319, 544	\$	474, 753	\$	794, 297
Labour and health insurance expenses		30, 502		38, 277		68,779
Pension costs		18, 285		22,846		41, 131
Other personnel expenses		17, 439		19, 493		36, 932
	\$	385, 770	\$	555, 369	\$	941, 139
				For the year ended December 31, 2016
		Recognised in		Recognised in
		operating costs		operating expenses		Total
Wages and salaries	\$	295, 676	\$	450, 169	\$	745, 845
Labour and health insurance expenses		27, 386		35,821		63, 207
Pension costs		19,881		23, 782		43,663
Other personnel expenses		16, 593		17,775		34, 368
	\$	359, 536	\$	527, 547	\$	887,083

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year (pre-tax profit before deducting 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 be 1%~10% for

employees' compensation and shall not be higher than 3% for directors' and supervisors' remuneration. Employees' compensation will be distributed in the form of shares or cash. Qualification requirements of employees, including the employees of subsidiaries of the company meeting certain specific requirements, are entitled to receive aforementioned stock or cash. The Company may, by a resolution adopted by a majority vote at a meeting of board of directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation distributed in the form of shares or in cash; and in addition thereto a report of such distribution shall be submitted to the shareholders during their meeting.

B. For the years ended December 31, 2017 and 2016, employees' compensation was accrued at \$4,597 and \$4,060, respectively; while directors' and supervisors' remuneration was accrued at \$9,194 and \$8,121, respectively. The aforementioned amounts were recognised in salary expenses that were estimated and accrued based on the distributable net profit of current year calculated by the percentage prescribed under the Company's Articles of Incorporation. As resolved by the Board of Directors on March 20, 2018, the Company will distribute employees' compensation and directors' and supervisors' remuneration of \$4,465 and \$8,930, respectively, and the employees' compensation will be distributed in the form of cash. The employees' compensation and directors' and supervisors' remuneration for 2016 as resolved by the Board of Directors was \$12,234. The difference between the aforementioned amount and the amount of \$12,181 recognised in the 2016 financial statements by \$53, mainly caused by estimation differences, had been adjusted in the profit or loss for 2017. Information about employees' compensation and directors' and supervisors' remuneration of the Company as resolved by the Board of Directors and shareholders will be posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange.

$(27)$ Income tax

A. Income tax expense:
(a) Components of income tax expense:

	For the years ended December 31,
	2017	2016
Current tax:
Current tax on profits for the year	\$ 103, 014	S	54, 131
Additional 10% tax on undistrbuted earnings	21,946		21,853
Under provision of prior year's income tax	203		467
Total current tax	125, 163		76, 451
Deferred tax:
Origination and reversal of temporary differences	8, 290)		13, 496
Total income tax expense	116,873	ς	89, 947

(b) The income tax relating to components of other comprehensive income is as follows:


	2017	2016
Remeasurement of defined benefit obligations		5,488

B. Reconciliation between income tax expense and accounting profit:

$\sim$ $\sim$

	For the years ended December 31,
	2017	2016
Tax calculated based on profit before tax and
statutory tax rate	\$ 116, 504	\$	97, 746
Effect of amounts not allowed to be recognised
under regulations	$19,085$ (		28, 486)
Effect from tax-exempt income	$1,614)$ (		1,004)
Effect from investment tax credits	$821)$ (		629)
Effect from net operating loss carryforward	260)
Additional 10% tax on undistributed earnings	21, 946		21,853
Under provision of prior year's income tax	203		467
Income tax expense	116,873		89, 947

	For the year ended December 31, 2017
						Recognised
						in other
				Recognised in comprehensive
		January 1		profit or loss		income		December 31
Deferred tax assets
Temporary differences:
Bad debts	\$	4,305	$($ \$	1,278)	\$		\$	3,027
Unrealised loss on inventories
from market value decline		7,696	€	1,987)				5,709
Unrealised exchange loss		1,046		5,742				6,788
Investment loss		20,533		4, 118				24,651
Unrealised impairment loss
on intangible asset		2,616	- (	248)				2,368
Unrealised sales discount		2, 221		3,691				5,912
Unused compensated absences		4,359		190				4,549
Unrealised expenses		114	€	114)
Pensions		39,784	€	2,402)		2,777		40, 159
Unrealised loss on scrapped
inventories				798				798
Loss carryforward		196		196)
	\$	82,870	\$	8,314	\$	2,777	\$	93, 961
Deferred tax liabilities
Temporary differences:
Provision for land value
incremental tax	\$	61, 992)	\$		\$		(	61, 992)
Unrealised exchange gain				24)				24 )
	$\mathbf{\$}$	61, 992)	$($ \$	(24)	$\frac{1}{2}$		(\$	62,016)
	\$	20,878	\$	8,290	\$	2,777	\$	31, 945

C. Amounts of deferred tax assets or liabilities as a result of temporary differences and loss carryforward are as follows:

	For the year ended December 31, 2016
						Recognised
						in other
				Recognised in comprehensive
		January 1		profit or loss		income		December 31
Deferred tax assets
Temporary differences:
Bad debts	\$	3,368	\$	937	\$		\$	4,305
Unrealised loss on inventories
from market value decline		8,556	€	860)				7.696
Unrealised exchange loss				1,046				1,046
Investment loss		12, 235		8,298				20,533
Unrealised impairment loss
on intangible asset		1, 211		1,405				2,616
Unrealised sales discount		2,006		215				2, 221
Unused compensated absences		4,202		157				4,359
Unrealised expenses		126	€	12)				114
Pensions		70,786	€	$25, 514)$ (		5,488)		39,784
Loss carryforward		164		32				196
	\$	102, 654	(\$)	14, 296)	$\Im$	5,488)	\$	82,870
Deferred tax liabilities
Temporary differences:
Provision for land value
incremental tax	$($ \$	61, 992)	\$		\$		(3)	61, 992)
Unrealised exchange gain		800)		800
	\$	62,792)	\$	800	\$		(\$	61,992)
	\$	39,862	(3)	13, 496 )	(\$	5,488)	\$	20,878

D. The Company qualifies for "Regulations for Encouraging Manufacturing Enterprises and Technical Service Enterprises in the Newly Emerging, Important and Strategic Industries" and is entitled to the income tax exemption for 5 consecutive years starting from 2015.
E. Expiration dates of loss carryforward and amounts of unrecognised deferred tax assets are as follows:

December 31, 2017
Unrecognised Amount filed /
Year incurred	approved	Unused amount	deferred tax assets	Usable until year
$2008 - 2017$	253, 524 S	246, 263 \$	246, 263 \$	$2018 - 2027$
		December 31, 2016
	Amount filed /		Unrecognised
Year incurred	approved	Unused amount	deferred tax assets	Usable until year
$2006 - 2016$	331, 443 S	311, 394 S	310, 240 \$	$2017 - 2026$

F. The Company's income tax returns through 2014 have been assessed and approved by the Tax Authority. The Company does not have any administrative remedy as of March 20, 2018.
G. With the abolishment of the imputation tax system under the amendments to the Income Tax Act promulgated by the President of the Republic of China in February, 2018, the information on unappropriated retained earnings and the balance of the imputation credit account as of December 31, 2017, as well as the estimated creditable tax rate for the year ended December 31, 2017 is no longer disclosed. Unappropriated retained earnings on December 31, 2016:

	December 31, 2016
Earnings generated in and before 1997	5.177
Earnings generated in and after 1998	839,699
	844, 876

H. As of December 31, 2016, the balance of the imputation tax credit account was \$129,107. As dividends were approved at the shareholders' meeting on June 16, 2017 with the dividend distribution date set on August 8, 2017 by the Board of Directors, the creditable tax rates for the unappropriated retained earnings of 2016 is 18.51%.

(28) Earnings per share

	For the year ended December 31, 2017
			Weighted average
			number of ordinary		Earnings
		Amount	shares outstanding		per share
		after tax	(shares in thousands)		(in dollars)
Basic earnings per share
Profit attributable to ordinary shareholders of the parent	\$	363, 286	178,696	\$	2.03
Diluted earnings per share
Profit attributable to ordinary shareholders of the parent	\$	363, 286	178,696
Assumed conversion of all dilutive potential ordinary shares
Employees' compensation			186
Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive
potential ordinary shares	\$	363, 286	178,882	\$	2.03

	For the year ended December 31, 2016
			Weighted average
			number of ordinary		Earnings
		Amount	shares outstanding		per share
		after tax	(shares in thousands)		(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent	\$	340, 216	178,696	\$	1.90
Diluted earnings per share
Profit attributable to ordinary	\$	340, 216	178,696
shareholders of the parent
Assumed conversion of all dilutive potential ordinary shares
Employees' compensation			209
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares		340, 216	178,905		1.90

(29) Transactions with non-controlling interest

A. In August 2017, the Group disposed its partial shares in the subsidiary, Multipower Enterprise Corp., for a total cash consideration of \$1,256. The carrying amount of investment accounted for under the equity method was \$1,459 at the disposal date. Said transaction resulted in a decrease in the equity attributable to owners of the parent by \$203.
B. In September 2016, the subsidiary, Syngen Biotech Co., Ltd. ("Syngen Biotech"), filed for an initial public offering with Taipei Exchange. As part of the public trading process, the Group partially disposed its shares in Syngen Biotech through public market for a total cash consideration of \$10,259. The carrying amount of investment accounted for under the equity method was \$3,952 at the disposal date. Said transaction resulted in an increase in the equity attributable to owners of the parent by \$6,307.
C. In September 2016, Syngen Biotech increased capital by issuing new shares. The Group did not acquire shares proportionally to its interest. The transaction resulted in an increase and in the equity attributable to owners of the parent by \$34,337 and a decrease in non-controlling interest by \$34,337.
D. Based on the above transactions, the details of changes in the Group's capital surplus due to transactions with non-controlling interest for the years ended December 31, 2017 and 2016 are as follows:


	2017	2016
Effect on acquisition of shares that are not proportionate to its interest	- \$	34,337
Effect on disposal of equity interest in a subsidiary Capital surplus - difference between	(203)	6,307
proceeds and carrying amount from acquisition or disposal of equity interest in a subsidiary	203.	40.644

(30) Supplemental cash flow information

A. Investing activities with partial cash payments:

	For the years ended December 31,
		2017		2016
(a) Purchase of property, plant and equipment	\$	73,875	S	54, 451
Add: Opening balance of notes payable		4, 142		1,444
Opening balance of payable on equipment (shown as "Other payables")		194, 672		25, 985
Opening balance of long-term notes and accounts payable				192, 057
Less: Ending balance of notes payable		$25,993$ (		4, 142)
Ending balance of payable on equipment (shown as "Other payables")		$23, 195$ (		194, 672)
Capitalised interest		797)		267)
Cash paid for acquisition of property, plant and equipment	Ф	222, 704		74, 856

B. Operating and investing activities with no cash flow effects:

	2017	2016
(a) Elimination of allowance for bad debts	3.134
(b) Inventories transferred to property, plant and equipment	9.859	8.138
(c) Prepayment for equipment transferred to property, plant and equipment	169.570	39, 767
(d) Property, plant and equipment transferred to other non-current asset		1 N G

For the years ended December 31,

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties
WE CAN MEDICINES CO., LTD. (WE CAN)
Taiwan Biosim Co., Ltd. (Biosim)
SUN YOU BIOTECH PHARM CO., LTD.
(SUN YOU)
SYN-TECH CHEM & PHARM CO., LTD.
(SYN-TECH)

(2) Significant related party transactions

A. Sales of goods

For the years ended December 31, 2017 2016 Associates $\mathbb{S}$ 106,753 $\boldsymbol{\mathsf{S}}$ 84,996 22,940 15,761 Other related parties \$ 122, 514 \$ 107,936

Associate Associate

Relationship with the Group

The manager of the Company is SUN YOU's corperate director The Company is SYN-TECH's

corperate director

Prices of goods sold to related parties are determined each time when delivering goods. Terms of transactions are similar with those to third parties, which is cash payment in 2 months after billing, or to obtain cheques with a maturity of $4\neg 6$ months upon billing.

B. Purchases of goods

	For the years ended December 31,
	2017		2016
Other related parties		51, 382		56,810

Goods are purchased based on the price lists in force and terms that would be available to regular suppliers. Payment terms are cheques with a maturity of 3~4 months after inspection has passed.

C. Other expenses

	For the years ended December 31,
		2017		2016
Advertising expenses:
Other related parties	\$	608	\$	11,893
Associates				465
	ጦ	612	\$	12, 358
Research and development expenses:
Other related parties	\$	390	\$	1,368
Associates		48		92
		438	Q	1,460

D. Other income

		For the years ended December 31,
		2017	2016
Other related parties

E. Equity transactions

The Group participated in cash capital increase of the associate, Biosim, by investing \$4,500 in July 2017.

F. Ending balance of goods sold

		December 31, 2017	December 31, 2016
Receivables from related parties:
Associates	S	15,819	\$.	9,474
Other related parties		6, 317		18, 450
		22, 136		. 924

The receivables from related parties arise mainly from sale transactions. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties.

G. Ending balance of payment on behalf of others (Shown as 'Other receivables')

	December 31, 2017		December 31, 2016
Receivables from related parties:
Associates	\$	464	S	435
Other related parties				58
		466		493
H. Ending balance of goods purchased
		December 31, 2017		December 31, 2016
Payables to related parties:
Other related parties		14, 876	S	18,682
the contract of the contract of the contract of the contract of the contract of the contract of the contract of		. the contract of the contract of the contract of	---	.

The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

(3) Key management compensation

	For the years ended December 31,
		2017		2016
Salaries and other short-term employee benefits		34, 391		30, 314

8. PLEDGED ASSETS

The Group's assets pledged as collateral are as follows:

	Book value
Pledged asset	December 31, 2017	December 31, 2016	Purposes
Investments accounted for under the equity method (Note 1)	\$ 125, 129	\$ 133, 416	Short-term borrowings
Land (Note 2)	288, 489	288, 489	Short-term and long-term borrowings
Buildings - net (Note 2)	304, 439	176, 336	Short-term and long-term borrowings
Machinery and equipment $-$ net (Note 2)	21,882	9,353	Long-term borrowings
Utility equipment – net (Note 2)		6, 131	Long-term borrowings
Other equipment $-$ net (Note 2)	493	205	Long-term borrowings
	\$ 740, 432	\$ 613, 930

(Note 1) As of December 31, 2017 and 2016, the Group provided 22,980 thousand shares in its subsidiary, Advpharma Inc., as collateral for short-term borrowings for both years with the carrying value of \$125,129 and \$133,416, respectively. The pledged investments accounted for under the equity method have been eliminated during the consolidation.

(Note 2) Shown as "Property, plant and equipment".

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

As of December 31, 2017 and 2016, the Group's significant contingent liabilities and unrecognised contract commitments are as follows:

(1) The balances for contracts that the Group entered into for the purchase of property, plant and equipment, but not yet due were \$95,389 and \$67,362, respectively.
(2) The amounts of the letter of credit that the Group issued but not yet negotiated were \$2,452 and \$7,389, respectively.
(3) A. Endorsements/guarantees for financing within the Group are as follows:

Endorser/guarantor Endorsee/guarantee		December 31, 2017 December 31, 2016
Standard Chem &	Standard Pharmaceutical \$	89,280 \$	96, 750
Pharm. Co., Ltd.	Co., Ltd.

B. As of December 31, 2017 and 2016, the actual endorsement/guarantee amount provided by the

Group for the above subsidiaries were $$89,280$ and $$ -$ , respectively.

(4) The Company has signed a transfer of technical skill contract 'Antiviral drug acyclovir and New transdermal absorption external gel preparation' for 7 years with the National Science Council of R.O.C. and professor You-pu Hu in June 1998. The Company should complete production of all products using the technical skill and consulting provided by professor You-pu Hu within 4 years after the effectivity of the contract. Aside from paying a fixed royalty to National Science Council of R.O.C. and professor You-pu Hu, the Company should pay 5% of the total sales from the product using the technical skill as royalty for technical skill transfer. The Company started to sell the product from April 2000. As of December 31, 2017 and 2016, the royalty for technical skill transfer paid were $$$ - and \$1,300, respectively.
(5) Consumers' Foundation, Chinese Taipei (CFCT) has filed a complaint for DEHP incident against the subsidiary, Syngen Biotech Co., Ltd. (Syngen Biotech), in Banqiao District Court to claim for compensation payment and punitive damages of \$4,201 for customer benefit in March 2012. Taiwan New Taipei District Court has rendered the first ruling of no damage. However, CFCT disagreed with the ruling and will file an appeal. The High Court has handed down the verdict on August 24, 2016 and issued the judgement that Syngen Biotech is not liable to pay any compensation. CFCT claimed to file an appeal on its losing part. Therefore, the case is still pending before Supreme Court.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE

Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Group's applicable income tax rate will be raised from 17% to 20% effective from January 1, 2018. This will increase the Group's deferred tax assets and deferred tax liabilities by \$16,581 and \$4, respectively, which will be adjusted in the first quarter of 2018.

12. OTHERS

(1) Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group 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. Fair value information of financial instruments

The carrying amounts of the Group's financial instruments not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, other financial assets-current, guarantee deposits paid, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable, other payables, long-term borrowings (including current portion) and guarantee deposits received) are approximate to their fair values. The fair value information of financial instruments measured at fair value is provided in Note 12(3) for the fair value estimation for the financial instruments value information.

B. Financial risk management policies
(a) The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial position and financial performance.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group'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.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD, EUR, JPY, and RMB. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
ii. The Group has certain sales and purchases denominated in USD and other foreign currencies. Changes in market exchange rates would affect the fair value. However, the payment and collection periods of asset and liability positions in foreign currencies are close, thus market risk can be offset. The Group does not expect significant interest rate risk.
iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. However, the net investments of foreign operations are strategic investments, thus the Group does not hedge the investments.
iv. The Group's businesses involve some non-functional currency operations (the Company's and certain subsidiaries' functional currency: NTD; other certain subsidiaries' functional currency: USD, PHP and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

			December 31, 2017
	Foreign currency
	amount
	(In thousands)		Exchange rate	Book value
(Foreign currency: functional currency)
Financial assets
Monetary items
USD: NTD	\$	29,810	29.76	\$ 887, 146
EUR: NTD		1, 114	35.57	39,625
JPY: NTD		132, 786	0.2642	35,082
RMB: NTD		6,267	4.5653	28,611
Financial liabilities
Monetary items
USD: NTD		174	29.76	5, 178
EUR: NTD		76	35.57	2,703
JPY: NTD		19, 792	0.2642	5,229
			December 31, 2016
	Foreign currency
	amount
	(In thousands)		Exchange rate	Book value
(Foreign currency: functional currency)
Financial assets
Monetary items
USD: NTD	\$	21, 416	32.25	\$ 690,666
EUR: NTD		2,486	33.90	84, 275
JPY: NTD		85, 921	0.2756	23,680
Financial liabilities
Monetary items
USD: NTD		611	32.25	19,705
EUR: NTD		64	33.90	2, 170

With regard to sensitivity analysis of foreign currency exchange rate risk, if the exchange rates of NTD to all foreign currencies had appreciated/depreciated by 1%, with all other factors remaining constant, the Group's net income for the years ended December 31, 2017 and 2016 would have increased/decreased by \$8,387 and \$6,726, respectively.

v. Total exchange loss, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December

÷.

31, 2017 and 2016 amounted to \$46,437 and \$14,511, respectively.

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group has set various stoploss points to ensure not to be exposed to significant risks. Accordingly, no material market risk was expected.
ii. The Group's investments in equity securities comprise domestic 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 1% with all other variables held constant, net income for the years ended December 31, 2017 and 2016 would have increased/decreased by \$1,394 and \$2,132, 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 \$1,927 and \$1,907, respectively, as a result of gains/losses on equity securities classified as available-for-sale.

Interest rate risk

i. The Group's interest rate risk arises from long-term and short-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the years ended December 31, 2017 and 2016, the Group's borrowings at variable rate were denominated in the NTD.
ii. With regard to sensitivity analysis of interest rate risk, if interest rates on borrowings at that date had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2017 and 2016 would have been \$54 and \$32 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group's credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board of directors. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents and outstanding receivables.
ii. For the years ended December 31, 2017 and 2016, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-

performance by these counterparties.

iii. The Group provides endorsements and guarantees based on the Group's policies and procedures on endorsements and guarantees. The Group only provides endorsement or guarantee for subsidiaries that the Group directly holds more than 50% ownership, or for entities that the Group holds more than 50% ownership, either directly or indirectly, as well as the power to govern the policies. No collateral is requested for the endorsements and guarantees as the Group can control the credit risk of the subsidiary. The maximum credit risk is the guaranteed amount.
iv. The credit quality information of financial assets that are neither past due nor impaired is provided in the statement for each type of financial assets in Note 6.
v. The ageing analysis of financial assets that were past due but not impaired is provided in the statement for each type of financial assets in Note 6.
vi. The individual analysis of financial assets that had been impaired is provided in the statement for each type of financial assets in Note 6.
(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities.
ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.
iii. The Group has the following undrawn borrowing facilities:

	December 31, 2017		December 31, 2016
Floating rate:
Expiring within one year	\$ 633, 749	S.	565, 416
Expiring beyond one year	255,000		395,000
	888, 749		960, 416

iv. The table below analyses the Group's non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date:

	Within	Between 1	Between 2	Over 5
December 31, 2017	1 year	and 2 years	and 5 years	years
Short-term borrowings	\$520, 947	\$	\$	\$
Short-term notes and bills payable	200,000
Notes payable	211,985
Accounts payable	121, 263
Other payables	370, 717
Long-term borrowings	31,689	31,614	158, 137
(including current portion)
Guarantee deposit received		5,376
	Within	Between 1	Between 2	Over 5
December 31, 2016
	1 year	and 2 years	and 5 years	years
Short-term borrowings	\$370,807	\$	\$	\$
Short-term notes and bills payable	200,000
Notes payable	218, 558
Accounts payable	197, 944
Other payables	529, 589
Long-term borrowings	5, 222	4,552	43,667
(including current portion)

v. For non-derivative financial liabilities, the Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.
(3) Fair value estimation of the financial instruments
A. Details of the fair value of the Group's financial assets and financial liabilities not measured at fair value are provided in Note 12(2) for the financial instruments.
B. The table below analyses financial instruments measured at fair value, by valuation method. The different levels 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 takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group's investment in listed stocks, emerging stocks with active market and beneficiary certificates is included.
- 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 Group's investment in partial equity instruments without active market is included.

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 at December 31, 2017 and 2016 is as follows:

December 31, 2017	Level 1	Level 2	Level 3	Total
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Beneficiary certificates	\$142, 331	\$	S	\$142, 331
Available-for-sale financial assets
Equity securities	257,836		89, 853	347,689
	\$400, 167	\$	\$ 89,853	\$490,020
December 31, 2016	Level 1	Level 2	Level 3	Total
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Beneficiary certificates	\$215,854	\$	\$	\$215,854
Available-for-sale financial assets
Equity securities	346, 819		133,890	480,709
	562, 673 \$	\$	133,890 \$	\$696,563

D. The methods and assumptions the Group used to measure fair value are as follows:

(a) The instruments that the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

	Listed stocks	Open-end fund	Non-listed stocks
Market quoted price	Closing price	Net asset value	Latest closing price on
			the balance sheet date

(b) 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. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.
(c) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group's financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group's management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial

instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

E. The trading of the shares of Original BioMedicals Co., Ltd. was suspended by Emerging Stock Market since June 6, 2017. Accordingly, the Group transferred the fair value from Level 1 to Level 2 and recognised full impairment loss in the fourth quarter of 2017. There was no transfer between Level 1 and Level 2 in 2016.
F. The following table presents the changes in Level 3 instruments in 2017 and 2016:

	For the years ended December 31,
	2017		2016
At January 1	133,890		109,847
Recognised in other comprehensive income (Note) (	44, 037)		24,043
At December 31	89, 853	S	133,890

(Note) Shown as "Unrealised gain or loss on valuation of available-for-sale financial assets".

G. For the years ended December 31, 2017 and 2016, there was no transfer from or to Level 3.

H. Financial planning division is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.
I. 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:

	Fair value at		Significant	Range	Relationships of
	December	Valuation	unobservable	(weighted	inputs to fair
	31, 2017	technique	input	average)	value
Non-derivative equity instrument:
Unlisted stocks	\$ 23,051	Market comparable companies	Discount for lack of marketability	20%	The higher the discount for lack of marketability, the lower the fair value
	66,802	Discounted cash flow	Discount rate	1.59%	The higher the discount rate. the lower the fair value
	Fair value at		Significant	Range	Relationships of
	December	Valuation	unobservable	(weighted	inputs to fair
	31, 2016	technique	input	average)	value
Non-derivative equity instrument:
Unlisted stocks	\$ 56, 177	Market comparable companies	Discount for lack of marketability	20%	The higher the discount for lack of marketability, the lower the fair value
	77, 713	Discounted cash flow	Discount rate	1.97%	The higher the discount rate, the lower the fair value

J. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect on profit or loss or on other comprehensive income of financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

				December 31, 2017
				Recognised in profit or loss		Recognised in other comprehensive income
	Input	Change	change	Favourable Unfavourable change	Favourable change	Unfavourable change
Financial assets Equity instrument	Discount for lack of marketability	±10%	$\mathbf{\hat{z}}$	\$	\$ 576	$($ \$ 576)
	Discount rate	±10%	\$	\$	125 \$ 701	125) $($ \$ 701)
					December 31, 2016
				Recognised in profit or loss		Recognised in other comprehensive income
	Input	Change	Favourable change	Unfavourable change	Favourable change	Unfavourable change
Financial assets
Equity instrument	Discount for lack of marketability	±10%	\$	\$	1,394 \$	$($ \$ 1,394)
	Discount rate	±10%	$\frac{8}{5}$	\$	244 \$ 1,638	244) 1,638) (\$

13. SUPPLEMENTARY DISCLOSURES

$\ddot{\phantom{0}}$

(Only 2017 information is disclosed in accordance with the current regulatory requirements.)

(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 year (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 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: None.
H. Receivables from related parties reaching \$100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Significant inter-company transactions during the reporting periods: Please refer to table 4.
(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China
A. Basic information: Please refer to table 6.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions. There is no material change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information during this year.

(2) Measurement of segment information

The chief operating decision maker evaluates the performance of operating segments based on pretax income. Accounting policies applied on the operating segments are consistent with the significant accounting policies applied in the preparation of the consolidated financial statements set out in Note 4.

(3) Information about segment profit or loss, assets and liabilities

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

						For the year ended December 31, 2017
		$\mathop{\mathrm{Term}}$ & Standard (		Syngen Biotech		Multipower
		Pharm. Co., Ltd.		Co., Ltd.		Enterprise Corp.		Others	Total
Segment revenue	↔	2, 410, 610	↔	955, 647	↔	538, 252	↔	↔ 67,978	3,972,487
Revenue from internal customers		8,178		70,501		47		45,077	123,803
Revenue from external customers, net		402, 432 $\mathcal{L}$		885, 146		538, 205		22,901	3, 848, 684
Interest income		4,740		112		180		985	6,017
Depreciation and amortisation		129,330		39,045		7, 124		17,638	193, 137
Interest expense		5,314		1,209				G	6,529
Inter-segment profit (loss) before		432, 658		184,651		67,056		54, 675)	629,690
income tax
Segment assets		755, 668 က်		1, 136, 126		557, 961		924, 462	6,374,217
Segment liabilities		609,140		395,738		148,338		18,816	2, 172, 032
						For the year ended December 31, 2016
		Chem $\&$ Standard		Syngen Biotech		Multipower
		Pharm. Co., Ltd.		Co., Ltd.		Enterprise Corp.		Others	Total
Segment revenue	↔	357, 528 c.,	↔	769,369	↔	587, 387	မာ	↔ 82,012	3,796,296
Revenue from internal customers		5,056		92,560		7,623		17,256	122, 495
Revenue from external customers, net		352, 472 ς,		676,809		579, 764		64,756	3,673,801
Interest income		595		88		273		1,073	2,009
Depreciation and amortisation		133, 018		32, 115		7,745		18,754	191,632
Interest expense		2,688		656		$\frac{310}{2}$		$\widehat{5}$	3,593
Inter-segment profit (loss) before		395,808		114,025		65, 146		68, 489)	506, 490
income tax
Segment assets		593, 745 က်		1,032,965		592, 481		1,006,649	6, 225, 840
Segment liabilities		406, 487		409, 412		196, 107		17, 170	2,029,176

$\mathcal{M}^+$

(4) Reconciliation for segment income (loss), assets and liabilities

A. Sales between segments are carried out at arm's length. The revenue from external customers reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income. A reconciliation of reportable segment income before income tax to the profit before income tax is provided as follows:

		For the years ended December 31,
		2017	2016
Reportable segment income before income tax	S	684, 365	574, 979
Other segments loss before income tax		54,675)	68,489)
Including inter-segment loss		79, 478)	44, 735)
Profit before income tax		550, 212	461, 755

B. The amounts provided to the chief operating decision-maker with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. No reconciliation is needed.

(5) Information on product and service

Revenue from external customers is mainly from manufacturing, research and development, sale and wholesale of various medicine, food and medical products. Details of revenue are as follows:

	For the years ended December 31,
	2017	2016
Revenue from sales of medicine	\$ 2, 156, 888	\$ 2, 044, 806
Revenue from sales of dietary supplement	1, 270, 009	1, 119, 458
Others	421, 787	509, 537
	\$ 3, 848, 684	\$ 3, 673, 801

(6) Geographical information

Geographical information for the years ended December 31, 2017 and 2016 is as follows:

	2017			2016
	Revenue	Non-current	Revenue		Non-current
	(NOTE 1)	asset (NOTE 2)	(NOTE 1)		asset (NOTE 2)
Taiwan	\$ 3, 102, 979	\$ 2, 194, 142	\$ 3,029,273	\$	2, 136, 645
Mainland China	273, 346	202, 389	146, 348		219, 488
Philippines	82, 410		100, 109
South Korea	67, 154		58,879
Vietnam	54,079		31,500
America	46, 388	8,511	43, 388		10,545
Thailand	40, 124		45, 451
Others	182, 204	157	218,853
	\$ 3,848,684	\$ 2, 405, 199	\$ 3, 673, 801	\$	2, 366, 678

(NOTE 1) Revenue is based on where the clients are located.

(NOTE 2) Non-current assets includes property, plant and equipment, intangible assets, prepayments for equipment, long-term prepaid rents and partial other non-current assets.

(7) Major customer information

No single customer accounts for more than 10% of the consolidated operating revenue for the years ended December 31, 2017 and 2016.

STANDARD CHEM & PHARM. CO., LTD. AND SUBSIDIARIES Loans to others

For the year ended December 31, 2017

Table 1

Expressed in thousands of NTD

Note		(Notes 3)		Notes 3)
granted		367,242		317,450
Limit on loans Ceiling on granted to total loans	$\frac{\text{Item}}{5} - \frac{\text{Value}}{3} - \frac{\text{a single party}}{183,621} - \frac{\text{S}}{3}$			317,450

Collateral -
Allowance
Actual amount Interest loan with the for short-term doubtful drawn down rate (Note 1) borrower financing accounts - $\frac{3}{5}$ 89,280 2.5% 2 $\frac{2}{5}$ 8				Operating capital
Amount of

				2.5%
				89,280
balance ≌p Endin				280 జ
related outstanding Maximum	$\frac{\text{balance}}{\text{89,280}} = \frac{\text{(Note 2)}}{\text{S 89,280}}$ balance			89,280

General Is a ledger		$\frac{\text{account}}{\text{Other recipvalues}} \frac{\text{party}}{\text{Yes}}$ \$		Tiangsu Standard Other receivables Yes
			Pharmaceutical Co., Ltd.	Biotech	^o harmaceutical
		Number Creditor Borrower 0 Standard Chem & Standard Pharm Co., Ltd. Pharmaceutical		harmaceutical Standard	Co., Ltd.

Note 1: The code represents the nature of financing activities as follows:

$(1)$ Trading partner.

(2) Short-term financing.

Note 3: Calculation of limit on loans granted to a single party and ceiling on total loans granted: Note 2: The ending balance is the credit limit approved by the Board of Directors.

(1) Limit on loans granted to a single party:

(a) For the companies having business relationship with the Company, limit on loans granted to a single party is the higher value of purchasing and selling during current or latest year on the year of financing.
(b) For sh

(2) Ceiling on total loans granted to a single party:

(a) Ceiling on total loans granted by the Company to single party is 10% of the Company's net assets.

(b) Ceiling on total loans granted by Standard Pharmaceutical Co., Ltd. to single party is 200% of the creditor's net assets.

(3) For short-term financing, ceiling on total loans granted to all direct or indirect wholly-owned domestic and foreign subsidiaries of the Company is not limited to 40% of the creditors' net assets.
Note 4: Foreign curre

STANDARD CHEM & PHARM. CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others

For the year ended December 31, 2017

Table 2

Expressed in thousands of NTD

							B
						Mainland	$\begin{array}{c}\n\text{China} \ \hline\n\text{N}\n\end{array}$
		Provision of Provision of Provision of	endorsements/ endorsements/ endorsements/			company to parent	company
							$\frac{1}{\sqrt{2}}$ subsidiary
	Ceiling on	total amount	$\mathbf{p}$		endonsements/ guarantees by guarantees by guarantees to guarantees parent subsidiary to the party in guarantees	provided $\frac{(Note 1)}{(1,836,212)}$
Ratio of	accumulated	mdorsement/	guarantee	amount to net	asset value of the	endorser/guarantor	company Line	2%
			Amount of	ndorsements/	guarantees	secured with	collateral
					Actual	amount	drawn down	\$89,280
				Outstanding	$endorsement$	guarantee	amount	\$89,280
				outstanding			amount	89,280
		Limit on	endorsements/ Maximum	guarantees	provided for a endorsement/	single party guarantee		734,485 \$
			Party being	endorsed/guaranteed	Relationship	with the	guarantor Company name endorser/guarantor (Note 1)	Subsidiary S
									Tharm. Co., Ltd. Pharmaceutical.	Co., Ltd.
						Endorser/		0 Standard Chem & Standard
							Number

Note 1: Under "Procedures for Provision of Endorsements and Guarantees", the total endorsement and guarantee provided shall not exceed 50% of the Company's net assets;
the amount provided for each counterparty shall not ex

$\ddot{\phantom{0}}$

s of NTD

		Note
Expressed in thousands of N ₁		Fair value	15,029	210,491	66,802	71.571

	As of December 31, 2017	Book value Ownership (%)		0.81% 9.73%	17.71%	10 120/
			15,029	210,491	66,802	ורא בחז

		of shares Number		200,000 2,923,484	3,055,000	こうこう
		ledger account General
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) STANDARD CHEM & PHARM. CO., LTD. AND SUBSIDIARIES December 31, 2017		Relationship with the securities issuer	į	The Company is SYN-TECH CHEM & PHARM Co., Ltd.'s corporate	The Company is HER-SING Co., director	. . . Ltd.'s corporate director $\frac{1}{2}$
		Marketable securities	d Chem & Pharm. Co., Ltd Bonds with repurchase agreement: Mega Bills Finance Co., Ltd	SYN-TECH CHEM & PHARM CO., LTD. Stocks (investment certificate): Original BioMedicals Co., Ltd.	HER-SING CO., LTD.
		Securities held by

	Standard Chem & Pharm. Co., Ltd Bonds with repurchase agreement:				15,029		15,029
	Mega Bills Finance Co., Ltd	t		Ç٩, ı		$\blacksquare$
	Stocks (investment certificate):
	Original BioMedicals Co., Ltd.		ొ	200,000		$0.81\%$
	SYN-TECH CHEM & PHARM CO., LTD.	The Company is SYN-TECH CHEM	₹	2,923,484	210,491	9.73%	210,491
		& PHARM Co., Ltd.'s corporate director
	HER-SING CO., LTD.	The Company is HER-SING Co.,	ⅎ	3,055,000	66,802	17.71%	66,802
		's corporate director $\Xi$
	SUN YOU BIOTECH PHARM CO., LTD.	The manager of the Company is SUN YOU BIOTECH PHARM		2,862,717	21,521	1843%	21,521
		CO., LTD.'s corporate director
	NCKU Venture Capital Co., Ltd.	The Company is NCKU Venture		1,000,000	10,000	4.17%
		Capital Co., Ltd.'s corporate director.
	NTU Innovation & Incubation Co., Ltd.			480,000	4,800	3.76%
	JENKEN BIOSCIENCES, INC.			198,080	1,485	4.16%
	Green Management International Co., Ltd.			70,000	800	5.14%
	Beneficiary certificates:
Chia Scheng Investment Co., Ltd.	Taishin Ta-Chong Money Market Fund		N	368,142	5,199		5,199
	Taishin 1699 Money Market Fund	$\mathbf{I}$	N	50,000	672		672
	Stocks:
	SUN YOU BIOTECH PHARM CO., LTD.	The manager of the Company is SUN		204,107	1,530	1.30%	1,530
		YOU BIOTECH PHARM
		CO., LTD.'s corporate director
	Stason Pharmaceuticals, Inc.			4,000,000	119,240	13.02%
Inforight Technology Co., Ltd.	Capital Money Market Fund Beneficiary certificates:	ı	Ν	121,952	1,956		1,956
Advpharma Inc.	Beneticiary certificates:
	Taiwan Cooperative Bank Money Market		ы	4,000,000	40,406		40,406
	Mega Diamond Money Market Fund Fund	ı	N	3,166,588	39,474		39,474 27,107 16,669
				1,782,508	27,107
	FSITC Taiwan Money Market Fund			1,232,506	16,669
	Eastspring Inv Well Pool Money Market Fund			484,871	4,757		4,757
	Shin Kong Global ETF Fund of Funds		2222	300,000	3,282		3,282
	Eastspring Investments Asian Income
	Mega USD Money Market Fund Balanced Fund A TWD		N	293,229	2,809		2,809

Table 3

						As of December 31, 2017
		Relationship with the	General	Number
Securities held by	Marketable securities	securities issuer	ledger account	of shares		Book value Ownership (%)	Fair value	Note
Advpharma Inc.	YungShin Global Holding Corporation Stocks:	I
	China Chemical & Pharmaceutical Co., Ltd.	I		$\begin{array}{r} 108,000 \ 80,000 \ 577,000 \end{array}$	$4,309$ $1,544$ $1,544$	0.04% 0.03% 1.92%	4392 4324 4344
	SYN-TECH CHEM & PHARM CO., Ltd.	The Company is SYN-TECH CHEM & PHARM Co., Ltd.'s corporate
		director
	Der Yang Biotechnology Venture	I		279,680	2,797	3.70%
	JENKEN BIOSCIENCES, INC. Capital Co., Ltd.	l		19,340	Ŗ	0.43%
Syngen Biotech Co, Ltd.	NCKU Venture Capital Co., Ltd. Stocks:	The Company is NCKU Venture Capital Co., Ltd.'s corporate		,000,000,	10,000	4.17%
		director.

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.
Note 2: The general ledger account is classified into the following five categories:

STANDARD CHEM & PHARM. CO., LTD. AND SUBSIDIARIES Significant inter-company transactions during the reporting period

For the year ended December 31, 2017

Table 4

Expressed in thousands of NTD

Transaction

Number			Relationship				Percentage of consolidated total
(Note 2)	Company name	Counterparty	Note 3)	General ledger account	Amount	Transaction terms	operating revenues or total assets (Note 4)
		Standard Chem & Pharm. Co., Ltd. Standard Pharmaceutical Co., Ltd.		Other receivables	89,466		ě
				Endorsements and guarantee	89,280		Î%
		Souriree Biotech & Pharm. Co., Ltd.		Purchases		30,362 Pay cheques with a maturity of 3~4	L%
						months after inspection had passed
		Syngen Biotech Co., Ltd.		Purchases		64,345 Pay cheques with a maturity of 3~4	2%
						months after inspection had passed
				Notes payable	16,178)		1
	Standard Pharmaceutical Co., Ltd. Jiangsu Standard Biotech			Other receivables	89,509	1	ž
		Pharmaceutical Co., Ltd.

Note 1: As the amounts and counterparties of significant inter-company transactions are the same from the opposite transaction sides, no disclosure is required. Only transactions amounting to more than \$10,000 are disclose

(1) Parent company is '0'.

(2) The subsidiaries are numbered in order starting from '1'.

Note 3: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company. (3) Subsidiary to subsidiary.

Note 4: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on ending balance of transaction to consolidated total assets for balance sheet accounts
and

Note 5: Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2017 as follows: USD: NTD 1:29.76.

$\frac{\text{STANDARD} \text{CHEM} \text{ & } \text{PHARM} \text{ } \text{CO} , \text{LTD} \text{ } \text{AND} \text{ \text{SUBSID} \text{AEES}}$ Information on investees

For the year ended December 31, 2017

Expressed in thousands of NTD

					Initial investment amount		Shares held as at December 31, 2017		Net profit (loss) of	Investment income
				Balance as at	Balance as at				the investee for the	(loss) recognised
				December 31,	December 31,		Ownership		year ended	for the year ended
Investor	Investee	Location	Main business activities	2017	2016	Number of shares	(96)	Book value	December 31, 2017	December 31, 2017	Note
Standard Chem & Pharm. Co., Ltd.	Standard Pharmaceutical Co., Ltd.	Samoa	Research and development, other business of medical trading, investment and	310,283 ↮	310,283 s	10,000,000	100.00	158,725 ø	23,199) (\$ O		23,199) Subsidiary
Standard Chem & Pharm. Co., Ltd.	Chia Scheng Investment Co., Ltd.	Taiwan	General investment products	160,856	160,856	16,103,000	100.00	142,175	13,855) (		13,855) Subsidiary
Standard Chem & Pharm. Co., Ltd.	STANDARD CHEM & PHILIPPINES, INC. PHARM.		various medical products, medicine, supplements Philippines Import and export of	6,762	6,762	192,195	100.00	3.845	620)(		620) Subsidiary
Standard Chem & Pharm. Co., Ltd.	Infonghi Technology Co., 궄	Taiwan	Wholesale of multi-function printers and information software	5,000	5,000	500,000	100.00	4.277 (	$\frac{1}{2}$		11) Subsidiary
Standard Chem & Pharm. Co., Ltd.	Souriree Biotech & Pharm. Co., Ltd	Taiwan	medicine and retail and Manufacturing of western wholesale of vanous medicines	41,549	41,549	5,649,126	93.17	26,233	$1,001$ (		1,086) Subsidiary
Standard Chem & Pharm. Co., Ltd.	Multipower Enterprise Corp.	Taiwan	manufacturing and sale of food Import and export of western medicine, nourishment and function food, processing,	291,803	293,060	19,780,600	90.45	502,682	55,412	51.147	Subsidiary
Standard Chem & Pharm. Co., Ltd.	Advpharma Inc.	Taiwan	Research and development, manufacturing and sale of various medicine	507,332	507,332	50,746,706	84.58	216,322	$5,141)$ (		4,285) Subsidiary (Note 1)
Standard Chem & Pharm. Co., Ltd.	Syngen Biotech Co., Ltd	Taiwan	Research and development, fertiliser and biochemical manufacturing and sale of APIs, biopesticide, preventive medicine nutrition, sale of	122,458	122,458	9,927,146	47.27	344,284	148,618	69,582	Subsidiary (Note 2)

Table 5

				Initial investment amount		Shares held as at December 31, 2017				Net profit (loss) of Investment income
				Balance as at	Balance as at					the investee for the (loss) recognised
				December 31,	December 31,		Ownerslup		year ended	for the year ended
		Location	Main business activities	2017	2016	Number of shares	වි	Book value		December 31, 2017 December 31, 2017	Note
Standard Chem & Investor	WE CAN MEDICINES Investee	Taiwan	Wholesale of various medicine	213,136 s	213,136 G)	10,273,272	33.10	143,705 (\$ G,	17,391) (\$	5,756)
Standard Chem & Pharm. Co., Ltd. Pharm. Co., Ltd.	Taiwan Biosim, Co., Ltd. CO., LID	Taiwan	Research and developmentof various medicine	4,500		450,000	45.00	4,488	26(	$\tilde{c}$
Investment Co., Ltd. Chia Scheng	INDUSTRIES, INC. SANTOS BIOTECH	America	Research and development, other business of medical trading, investment and	96,040	96,040	3,111,500	100.00	13,039	1,475		Subsidiary (Note 3)
Syngen Biotech Co., E	INTERNATIONAL SDN SYNGEN BIOTECH BHD.	Malaysia	Research and development, of APIs and biochemical manufacturing and sale nutrition, sale of products	3,515		500,000	100,00	3,109	546)		Subsidiary (Note 3)
Advpharma Inc.	CHN TECHNOLOGIES INC.		America Inspection of medicine, retail an wholesale of various chemistry preventive medicines	12,208	12,208	100,000	35.60	10,898	2,055)		Subsidiary (Note 3)

Note 1: Including 22,980 thousand shares with amount of \$125,129 are pledged as collateral for short-term borrowings.
Note 2: In September 2016, the subsidiary, Syngen Biotech Co_p, Ltd, ("Syngen"), filed for an initial p

STANDARD CHEM & PHARM. CO., LTD, AND SUBSIDIARIES Information on investments in Mainland China

For the year ended December 31, 2017

Table 6

Expressed in thousands of NTD

	Note	$-Note3$	(Note 3)

investment income remitted back to Taiwan as of December 31, Mainland China as of December 31, Accurrulated amount of	2017

Book value of investments in	December 31, 2017	124,534	31,111

	2017		15,724)
the year ended recognised for income (loss) Investment		$(5, 23, 802)$ \$
		10000
Ownership held to Mainland investee for the the Company (direct or indirect) á			55.00
China as of year ended Net income		$-$ \$ 267,544 (\$ 23,802)	28,590)

from Taiwan (loss) of remittance Accumulated amount of	Remitted to Remitted back December December 31, January 1, 2017 Mainland China to Taiwan 31, 2017

Taiwan to Mainland —— $\frac{\text{December 31, }2017}{\text{u: }2017}$ Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended



Accumulated amount of remittance from	China as of	267,544

		ċ9
	Investment method	(Note 1)	(Note 2)

		267,840	189,811
	Paid-in capital

			manufacturing and sale of
			various medicine
		Investee in Mainland China Main business activities Research and development,	Research and development, technical consulting and technical services of medicine

			Pharmaceutical Co., Ltd.
		Jiangsu Standard Blotech	Biopharma Co., Ltd. liangsu Standard-Dia

Ceiling on investments	in Mainland China	imposed by the	Investment		(Note 4)	2,521,311
Investment amount	approved by the	Investment	Commission of the	Ministry of Economic Commission of MOEA	Affairs (MOEA)	267,840
		Accumulated amount of	remittance from Taiwan to	Maniand China as of	December 31, 2017	267,544
					Company name	Standard Chem & Pharm. Co.,	Ξ

Note 1: Indirect investment in Mainland China through an existing company (Standard Pharmaceutical Co., Ltd.) located in the fittil area.
Note 2: Indirect investment in Mainland China through an existing company (Jiangsu S

AI assistant

S.C.P.C — Audit Report / Information 2017

51900_rns_2017-11-09_e5c01c7d-ead1-4972-86b3-86377d87143b.pdf

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2017 AND 2016

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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 SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

$\begin{array}{c} \underline{\text{STANDARD CHEM. \& PHARM. CO., LTD. AND SUBSIDIARIES} \\text{CONSOLIDATED STATED STATEMENTS OF COMREHENSIVE INCOME} \end{array}$ (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

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

1. HISTORY AND ORGANISATION

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Summarised financial information of the subsidiary, Syngen Biotech Co., Ltd.:

(9) Loans and receivables

(10) Inventories

(11) Impairment of financial assets

(15) Property, plant and equipment

(16) Intangible assets

(22) Employee benefits

A. Sales of goods

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

6. DETAILS OF SIGNIFICANT ACCOUNTS

(3) Available-for-sale financial assets

(4) Notes receivable, net

$(6)$ Inventories

C. Associates

(10) Intangible assets

(12) Long-term prepaid rent

(13) Short-term borrowings

(15) Long-term borrowings

$(16)$ Pensions

(17) Share capital - common stock

(18) Capital surplus

(19) Retained earnings

$(20)$ Other equity

(22) Other income

(23) Other gains and losses

$(24)$ Finance costs

(25) Expenses by nature

(26) Employee benefit expenses

$(27)$ Income tax

(28) Earnings per share

(30) Supplemental cash flow information

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

(2) Significant related party transactions

A. Sales of goods

B. Purchases of goods

C. Other expenses

D. Other income

F. Ending balance of goods sold

G. Ending balance of payment on behalf of others (Shown as 'Other receivables')

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

10. SIGNIFICANT DISASTER LOSS

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE

12. OTHERS

Price risk

Interest rate risk

13. SUPPLEMENTARY DISCLOSURES

14. SEGMENT INFORMATION

(3) Information about segment profit or loss, assets and liabilities

(4) Reconciliation for segment income (loss), assets and liabilities

S.C.P.C Audit Report / Information 2017

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNINGS PER SHARE DATA)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

STANDARD CHEM. & PHARM. CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)