STANDARD CHEM. & PHARM. CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017

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.

$\bar{\mathbf{z}}$

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

Opinion

We have audited the accompanying parent company only balance sheets of STANDARD CHEM. & PHARM. CO., LTD. (the "Company") as of December 31, 2018 and 2017, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

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

Basis for opinion

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

Key audit matters

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

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

Valuation of inventories

Description

Refer to Note $4(9)$ for accounting policies on the valuation of inventories, Note $5(2)$ for the uncertainty of significant accounting estimations and assumptions relating to valuation of inventories, and Note 6(5) for the details of allowance for inventory valuation loss. As of December 31, 2018, the carrying amount of inventories and allowance for inventory valuation loss are \$530,570 thousand and \$20,539 thousand, respectively.

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

Given that the valuation of inventories is subject to uncertainty of assumptions and the accounting estimations will have significant influence on the inventory values, we consider the valuation of inventories a key audit matter.

How our audit addressed the matter

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

1. Assessed the reasonableness of policies on allowance for inventory valuation loss.
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 Company's policy.
1. Validated the net realisable value of inventories and the adequacy of allowance for inventory valuation loss.

Existence of domestic sales revenue from human medicines

Description

Refer to Note 4(26) for accounting policies on revenue recognition. Revenue is recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer's acceptance of the products.

The Company is primarily engaged in the manufacturing and sales of human medicines. The Company's sales is mainly domestic-based and its customers are numerous, including hospitals, clinics, pharmacies and drug administrations all over the country. Since the sales transactions are numerous and would require a longer period for verification, we consider the existence of domestic sales revenue from human medicines a key audit matter.

How our audit addressed the matter

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

1. Assessed the consistency and effectiveness of internal control relevant to sales recognition.
1. Assessed basic information of the major customers, including the details of chairman and major shareholders, registered address, principal place 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, waybill and subsequent cash collection.

Other matter-Reference to the audits of other independent accountants

We did not audit the financial statements of certain investments accounted for under the equity method. These investments amounted to \$140,967 thousand and \$143,705 thousand, constituting 2.65% and 2.71% of total assets as of December 31, 2018 and 2017, respectively, and the share of loss and other comprehensive income of associates accounted for under the equity method was (\$2,557) thousand and (\$5,756) thousand, constituting (0.86%) and (2.60%) of 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 parent company only financial statements and information disclosed relative to these investments, is based solely on the reports of other independent accountants.

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

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

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

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

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

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

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

Identify and assess the risks of material misstatement of the parent company only financial 1. statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures $2.$ that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting $3₁$ 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial 5. statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
1. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that

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

Tien, Chung-Yu

Independent Accountants

Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan Republic of China March 19, 2019

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

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

STANDARD CHEM. & PHARM. CO., LTD.
PARENT COMPANY ONLY BALANCE SHEETS
(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

	Assets	Notes	December 31, 2018		December 31, 2017
	Current assets		AMOUNT	$\overline{\%}$	AMOUNT	℅
1100	Cash and cash equivalents	6(1)	\$ 946,253	18
1150	Notes receivable, net	$6(4)$ , 7 and 12			\$ 729,506	14
1170	Accounts receivable, net	$6(4)$ , 7 and 12	99,779 473,160	2 9	119,561	$\boldsymbol{2}$
1200	Other receivables		18,159		421,739 3,855	8
1210	Other receivables - related parties 7		92,353	2	89,466	$\boldsymbol{2}$
130X	Inventories	$5(2)$ and $6(5)$	510,031	10	520, 549	10
1410	Prepayments		39,032	1	30,775
1476	Other financial assets - current	6(1)	30,720		59,520	1
1479	Other current assets		2,700		2,052
11XX	Total current assets		2,212,187	42	1,977,023	37
	Non-current assets
1510	Financial assets at fair value	$3(1)$ , $5(2)$ and $6(2)$
	through profit or loss - non-
	current		9,198
1517	Financial assets at fair value	$3(1), 5(2), 6(3)$ and 7
	through other comprehensive
	income - non-current		313,760	6
1523	Available-for-sale financial assets 12
	- non-current				298,814	6
1543	Financial assets carried at cost -	$3(1)$ and 12
	non-current				17,085
1550	Investments accounted for under	$3(1)$ , 6(6), 7 and 8
	the equity method		1,442,951	27	1,606,736	30
1600	Property, plant and equipment	$6(7)$ and $8$	1,141,224	22	1,193,519	23
1760	Investment property, net	6(8)	46,546	1	46,659	$\mathbf{1}$
1780	Intangible assets	6(9)	15,263		19,996
1840	Deferred income tax assets	6(24)	98,549	2	82,504	$\overline{2}$
1915	Prepayments for equipment	6(7)	5,715		16,285
1920	Guarantee deposits paid		20,514		28,947	$\mathbf{1}$
1990	Other non-current assets		14,045		19,815
15XX	Total non-current assets		3,107,765	58	3,330,360	63
1XXX	TOTAL ASSETS		\$ 5,319,952	100	\$ 5,307,383	100

(Continued)

$\sim$ $\sim$

STANDARD CHEM. & PHARM. CO., LTD.
PARENT COMPANY ONLY BALANCE SHEETS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

	Liabilities and Equity		December 31, 2018		December 31, 2017
	Current liabilities	Notes	AMOUNT	$\overline{\%}$	AMOUNT	$\overline{\%}$
2100	Short-term borrowings	$6(10)(27)$ and 8	\$ 420,000
2110	Short-term notes and bills payable $6(11)(27)$		250,000	8 5	\$ 470,000	9
2130	Contract liabilities - current	$6(18)$ and 12	40,526	1	200,000	4
2150	Notes payable		122,435	2	119,631
2160	Notes payable - related parties	7	27,563		26,704	2 1
2170	Accounts payable	7	59,794	1	55,441	1
2200	Other payables		222,107	4	223,326	4
2230	Current income tax liabilities	6(24)	54,321	1	62,059	$\mathbf{1}$
2310	Receipts in advance	3(1)	734		41,794	1
2320	Current portion of long-term	6(12)(27)
	borrowings		30,000	1
21XX	Total current liabilities		1,227,480	23	1,198,955	23
	Non-current liabilities
2540	Long-term borrowings	6(12)(27)	70,000	$\overline{a}$	100,000	$\boldsymbol{2}$
2570	Deferred income tax liabilities	6(24)	67,969	$\mathbf{1}$	61.992	1
2640	Net defined benefit liability -	6(13)
	non-current		269,421	5	268,642	5
2645	Guarantee deposits received	6(27)	3,857	۰	5,371
25XX	Total non-current liabilities		411,247	8	436,005	8
2XXX	Total liabilities		1,638,727	31	1,634,960	31
	Equity
	Share capital
3110	Common stock	6(14)	1,786,961	33	1,786,961	34
3200	Capital surplus	6(15)	197,315	4	197,212	4
	Retained earnings	$3(1)$ and $6(16)$
3310	Legal reserve		584,929	11	548,600	10
3350	Unappropriated retained earnings		1,022,410	19	982,791	18
3400	Other equity interest	3(1), 6(3)(6)(13)(17)	89,610	2	156,859	3
3XXX	Total equity		3,681,225	69	3,672,423	69
	Significant contingent liabilities	7 and 9
	and unrecognised contract
	commitments
3X2X	TOTAL LIABILITIES AND
	EQUITY		\$ 5,319,952	100	\$ 5,307,383	100

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

$\underbrace{\texttt{BARENT}\texttt{COMPANY ONLY STATEM. & \texttt{PHARM.}\texttt{CO.,}\texttt{LTD}}{\texttt{COMPREF}\texttt{COMPABW ONLY}\texttt{ONLY STATEMENTS OF COMPREHENSIVE}\texttt{INCOME}}{\texttt{EXPRESSED}\texttt{IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNING PER SHARE DATA}}$

							For the years ended December 31,
				2018			2017
	Items	Notes		AMOUNT	$\%$		AMOUNT	$\%$
4000	Operating revenue	$6(18)$ and $7$	\$	2,385,819	100	\$	2,410,610	100
5000	Operating costs	6(5)(9)(13)(22)(23)
5900	Gross profit	and 7		$1,287,252$ (	$\frac{54}{2}$		1,290,577	54)
	Operating expenses	$6(9)(13)(22)(23)$ and		1,098,567	$\overline{46}$		1,120,033	46

6100	Selling expenses			404,843) (	$17)$ (		381,534) (	16)
6200	General and administrative expenses			$172,471)$ (	$7)$ (		$196,939$ (	8)
6300	Research and development expenses			$156,355$ (	$7)$ (		180,985) (	7)
6450	Expected credit losses	12		5,555)	$\ddot{\phantom{0}}$			$\blacksquare$
6000	Total operating expenses			739,224)	$\overline{31}$		759,458	$\overline{31}$
6900	Operating profit			359,343	15		360,575	$\overline{15}$
7010	Non-operating income and expenses Other income	$6(8)(19)$ and 7
7020	Other gains and losses	$6(2)(20)$ and 12		115,187 31,462	5 1		69,726 $64,234)$ (	3 3)
7050	Finance costs	6(7)(21)	∢	6,960		-6	5,314)
7070	Share of (loss) profit of subsidiaries,	6(6)
	associates and joint ventures
	accounted for under the equity
	method, net			51,071)	$_{2}$		71,905	3
7000	Total non-operating income and expenses
7900	Profit before income tax			88,618 447.961	4 $\overline{19}$		72,083	$\frac{3}{18}$
7950	Income tax expense	6(24)		$73,602)$ (	$\overline{3}$ )		432,658 69,372)	$\overline{3}$ )
8200	Profit for the year		\$	374,359	$\overline{16}$		363,286	$\overline{15}$
	Other comprehensive (loss) income
	Components of other comprehensive
	income that will not be reclassified to
	profit or loss
8311	Remeasurement of defined benifit	6(13)
8316	plan Unrealised gains (losses) from		$\sqrt{3}$	$22,616$ (		$1)$ (\$)	$14,964$ ) (	1)
	investments in equity instruments	6(3)(17)
	measured at fair value through other
	comprehensive income			7,344
8330	Share of other comprehensive loss of $6(6)(17)$
	associates and joint ventures
	accounted for under the equity
8349	method Income tax related to components of $6(24)$		C	$62,551)$ (	$2)$ (		234)
	other comprehensive income			2,415
	Components of other comprehensive						2,544
	income that will be reclassified to
	profit or loss
8361	Financial statements translation	6(6)(17)
	differences of foreign operations		C	707		€	8,584)
8362	Unrealised (loss) gain on valuation of available-for-sale financial assets	$6(17)$ and 12
8380	Share of other comprehensive loss of 6(6)(17)					- (	$105,608$ ) (	4)
	associates and joint ventures
	accounted for under the equity
	method						$15,122)$ (	-1)
8300	Total other comprehensive (loss)
	income for the year		$\overline{\mathbf{3}}$	$\frac{76,115}{ }$ (		$\frac{3}{2}$ (\$	$141,968$ ) (	$\overline{6}$
8500	Total comprehensive income for the
	vear			298,244	13	$\overline{\mathbf{r}}$	221,318	$\overline{2}$
	Earnings per share (in dollars)	6(25)
9750	Basic				2.09			2.03
9850	Diluted		Տ Տ		2.09	$\frac{1}{3}$		2.03

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

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY
CEXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS) STANDARD CHEM, & PHARM. CO., LTD.

$285,914$ ) 203) $76,115$ ) $178,696$ ) $3,631$ ) 141,968) 221,318 89,348 Total equity 3.719,352 363,286 374,359 3,672,423 $59$ 3,681,225 3,672,423 3,668,792 298,244 s, Unrealised gain or
loss on available-
for-sale financial 166,005
166,005) $120,730$ ) $120.730$ 286,735 ï 166,005 assets measured at fair value Unrealised gain or loss
from financial assets comprehensive income Other Equity Interest 55,085) 55,085 154.548 through other 154,548 99,463 ٠, ٠, 9,146) differences of $8.584$ ) 8,584) $\frac{9.85}{9}$ statements translation 562 9,146) $\frac{1}{16}$ $\overline{20}$ ior. operations Financial foreign $\ddot{\mathbf{c}}$ امو e اق retained earnings 12,654) $34,021$ ) Unappropriated $\frac{36,329}{285,914}$ ) 350,632 20,323 363,286 178,696 354,036 844,876 982,791 $1.826$ 990,617 374,359 $.022,410$ 982,791 Retained Earnings Ÿ. Legal reserve \$514.579 16,329 \$584,929 34,021 \$48,600 548,600 \$548,600 ą. $\ddot{ }$ Others using the equity Change in net
equity of associates and joint ventures accounted for 3,460 3,460 3,460 3,460 3,460 method Capital Surplus disposal of
subsidiaries and between the price for acquisition or carrying amount 50,602 203 50,399 Difference 50,453 50.399 Å, 50,399 u $\rightarrow$ Additional paid- $\frac{1}{89,348}$ in capital 232,701 143,353 143,353 143,353 143.353 s, ų. Common stock \$1,786,961 $$1,786,961$ 1,786,961 $$1,786,961$ 1,786,96 Notes 6(17) $6(15)$ 6(16) $6(17)$ 6(16) 6(15) 6(6) $\mathfrak{g}$ (i) 6(6) Total comprehensive income (loss) for the Difference between proceeds from
acquisition or disposal of subsidiaries and Difference between proceeds from
acquisition or disposal of subsidiaries and
book value Total comprehensive income (loss) for the For the year ended December 31, 2017 For the year ended December 31, 2018 Other comprehensive loss for the year Other comprehensive loss for the year Cash dividends from capital surplus Adjusted balance at January 1, 2018 Effects of retrospective application Appropriations of 2016 earnings: Appropriations of 2017 earnings: Cash dividends payable expired Balance at December 31, 2018 Balance at December 31, 2017 Balance at January 1, 2017 Balance at January 1, 2018 Cash dividends Cash dividends Profit for the year Legal reserve Profit for the year Legal reserve book value year year

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

$\frac{2}{7}$

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

					For the years ended December 31,
	Notes		2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		\$	447,961	\$	432,658
Adjustments
Adjustments to reconcile profit (loss)
Net loss on financial assets at fair value through	6(2)(20)
profit and loss			1,147
Impairment loss on financial assets	$6(20)$ and 12				12,000
Expected credit loss	12		5,555
Reversal of allowance for doubtful accounts	12				7,016)
Provision (reversal of allowance) for loss on	6(5)
inventory market price decline			8,650	€	6,616)
Share of profit or loss of subsidiaries, associates	6(6)
and joint ventures accounted for under the
equity method			51,071	(	$71,905$ )
Depreciation	6(7)(8)(22)		122,027		124,660
Net loss (gain) on disposal of property, plant and equipment	6(20)
Amortisation			686	$\overline{\mathcal{L}}$	50)
Dividend income	6(9)(22) 6(19)		5,871		4,670
Interest income	6(19)	$\overline{\phantom{a}}$	9,120) $15,057$ ) (		14,377) 7,015)
Interest expense	6(21)		6,960		5,314
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable			20,084		13,628
Accounts receivable			57,278)		69,834
Other receivables			12,587)		3,028
Other receivables - related parties			7)		530
Inventories			1,868	$\sqrt{ }$	65,300)
Prepayments			8,257)		9,157
Other current assets			$648$ ) (		2,052)
Changes in operating liabilities
Contract liabilities - current		(	415)
Notes payable			9,114		$29,066$ )
Notes payable - related parties			859		3,317)
Accounts payable Other payables			4,353 4,553)		16,660)
Recepits in advance			119)		28,902 7,713)
Net defined benefit liability - non-current			21,837)		11,737)
Cash inflow generated from operations			556,328		461,557
Dividends received	6(6)(19)		58,728		63,985
Interest received			13,340		7,015
Interest paid			6,855)		5,183)
Income tax paid			88,993)		$27,225$ )
Net cash flows from operating activities			$\overline{532,548}$		500,149

(Continued)

$\frac{\text{STANDARD CHEM. & \text{PHARM. CO., LTD.}}{\text{PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS}}{(\text{EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS})}$

			For the years ended December 31,
	Notes		2018		2017
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other receivables - related
parties		$($ \$	2,880)	\$	7,470
Decrease in other financial assets - current			28,800		4,980
Proceeds from capital reduction of financial assets	$6(2)$ and $12(3)$
at fair value through profit and loss - non-current			3,500
Acquisition of financial assets at fair value through	7 and 12(3)
other comprehensive income - non-current		€	6,340)
Acquisition of investments accounted for under the	$6(6)$ and $7$
equity method			$1,751)$ (		4,500)
Proceeds from disposal of investments accounted	6(6)
for under the equity method					1,257
Cash paid for acquisition of property, plant and	6(26)
equipment		(	$36,239$ ) (		24,231)
Interest paid for acquisition of property, plant and	6(7)(21)(26)
equipment			$85)$ (		365)
Proceeds from disposal of property, plant and
equipment Acquisition of intangible assets			99		50
Increase in prepayments for equipment	6(9)		1,138) 26,591)	-6	5,803)
Decrease (increase) in guarantee deposits paid			8,433	-6	59,765) 16,470)
Increase in other non-current assets			6,591)		24,087)
Decrease in other non-current assets			12,361		10,474
Net cash flows used in investing activities			$28,422$ )		110,990)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings	6(27)				100,000
Decrease in short-term borrowings	6(27)		50,000)
Increase in short-term notes and bills payable	6(27)		50,000
Increase in long-term borrowings	6(27)				70,000
(Decrease) increase in guarantee deposit received	6(27)		1,514)		85
Payment of cash dividends from capital surplus	6(15)				89,348)
Cash dividends payable expired	6(15)		49
Payment of cash dividends	6(16)		285,914)		178,696)
Net cash flows used in financing activities			287,379)		97,959)
Net increase in cash and cash equivalents			216,747		291,200
Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	6(1)		729,506		438,306
	6(1)	\$	946,253	\$	729,506

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

STANDARD CHEM. & PHARM. CO., LTD.

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

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

1. HISTORY AND ORGANISATION

(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 manufacturing and sales of Chinese and western medicine, cosmetics, beverage, normal instruments and medical instruments.
(2) The Company has been listed on the Taiwan Stock Exchange starting from December 1995.

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

These parent company only financial statements were authorised for issuance by the Board of Directors on March 19, 2019.

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 2018 are as follows:

	Effective date by
	International Accounting
	Standards Board
New Standards, Interpretations and Amendments	("IASB")
Amendments to IAS 7, 'Disclosure initiative'	January 1, 2017
Amendments to IAS 12, 'Recognition of deferred tax assets for unrealised losses'	January 1, 2017
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, 'Disclosure of interests in other entities'	January 1, 2017
Amendments to IFRS 2, 'Classification and measurement of share-based payment transactions'	January 1, 2018
Amendments to IFRS 4, 'Applying IFRS 9, Financial instruments with IFRS 4, Insurance contracts'	January 1, 2018
IFRS 9, 'Financial instruments'	January 1, 2018
IFRS 15, 'Revenue from contracts with customers'	January 1, 2018
Amendments to IFRS 15, 'Clarifications to IFRS 15, Revenue from contracts with customers'	January 1, 2018
Amendments to IAS 40, 'Transfers of investment property'	January 1, 2018
IFRIC 22, 'Foreign currency transactions and advance consideration'	January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, 'First-time adoption of International Financial Reporting Standards'	January 1, 2018
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, 'Investments in associates and joint ventures'	January 1, 2018

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

A. Amendments to IAS 7, 'Disclosure initiative'

(a) 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.
(b) The Company 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 subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.
(b) The impairment losses of debt instruments are assessed using an 'expected credit loss' approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 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) The Company has elected not to restate the financial statements of the prior period (referred herein as the "modified retrospective approach") under IFRS 9. The significant effects of adopting the modified transition as of January 1, 2018 was to reclassify financial assets carried at cost - non-current of \$17,085, by increasing financial assets at fair value through profit or loss - non-current and financial assets at fair value through other comprehensive income - noncurrent in the amounts of \$13,845 and \$1,262, respectively, whereby decreasing investments accounted for under the equity method of \$1,653 and increasing retained earnings and decreasing other equity interest in the amounts of \$7,826 and \$11,457, respectively.
C. IFRS 15, 'Revenue from contracts with customers' and amendments
(a) IFRS 15, 'Revenue from contracts with customers' replaces IAS 11, 'Construction contracts', IAS 18, 'Revenue' and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

The core principle of IFRS 15, is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which

the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps:

Step 1: Identify contracts with customer.

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

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

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

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

(b) The Company has elected to apply the modified retrospective approach under IFRS 15. The significant effects of adopting the modified transition as of January 1, 2018 was that 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 \$40,941.

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

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

	Effective date by
New Standards, Interpretations and Amendments	IASB
Amendments to IFRS 9, 'Prepayment features with negative compensation'	January 1, 2019
IFRS 16, 'Leases'	January 1, 2019
IFRIC 23, 'Uncertainty over income tax treatments'	January 1, 2019
Amendments to IAS 19, 'Plan amendment, curtailment or settlement'	January 1, 2019
Amendments to IAS 28, 'Long-term interests in associates and joint ventures'	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019

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

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.

The Company expects to recognise the lease contract of lessees in line with IFRS 16. However, the Company intends to apply the modified retrospective approach. On January 1, 2019, it is expected that 'right-of-use asset' and lease liability will be increased by \$11,727 and \$11,513, respectively, and

prepaid rent (shown as 'prepayments') will be decreased by \$214.

(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:

New Standards, Interpretations and Amendments	Effective date by IASB
Amendment to IAS 1 and IAS 8, 'Disclosure Initiative-Definition of Material'	January 1, 2020
Amendments to IFRS 3, 'Definition of a business'	January 1, 2020
IFRS 17, 'Insurance contracts' Amendments to IFRS 10 and IAS 28, 'Sale or contribution of assets between an investor and its associate or joint venture'	January 1, 2021 To be determined by IASB

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:
(a) Financial assets at fair value through profit or loss.
(b) Financial assets at fair value through other comprehensive income/Available for-sale financial assets measured at fair value.
(c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the "IFRSs") requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5. Critical accounting judgements, estimates and key sources of assumption uncertainty.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply

modified retrospective approach whereby the cumulative impact of the adoption was recognised as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 ('IAS 39'), International Accounting Standard 11 ('IAS 11'), International Accounting Standard 18 ('IAS 18') and related financial reporting interpretations. Please refer to Notes 12(4) 'Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017' and Note 12(5) 'Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017' for details of significant accounting policies and details of significant accounts.

(3) Foreign currency translation

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The parent company only financial statements are presented in New Taiwan dollars, which is the Company's functional and presentation currency.

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 re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon retranslation 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 retranslated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
D. All 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.
(4) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities.
(a) Liabilities that are expected to be paid off within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be paid off within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
$(5)$ Cash equivalents
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.
(6) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.
(7) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value:

The changes in fair value of equity investments that were recognised in other comprehensive

income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(8) Accounts and notes receivable

A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) 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.

(10) Impairment of financial assets

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

(11) Derecognition of financial assets

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

(12) Operating lease (Lessor)

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

(13) Investments accounted for using equity method / subsidiaries and associates
A. Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
B. Unrealised profit (loss) occurred from the transactions between the Company and subsidiaries

have been offset. The accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

C. The Company's share of its subsidiaries' post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company's share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership.
D. If changes in the Company's shares in subsidiaries do not result in loss in control (transactions with non-controlling interest), transactions shall be considered as equity transactions, which are transactions between owners. Difference of adjustment of non-controlling interest and fair value of consideration paid or received is recognised in equity.
E. Associates are all entities over which the Company 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.
F. The Company'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 Company's share of losses in an associate equals or exceeds its interest in the associate (including any other unsecured receivables), the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
G. 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 Company's ownership percentage of the associate, the Company recognises the Company's share of change in equity of the associate in 'capital surplus' in proportion to its ownership.
H. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company'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 Company.
I. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company's ownership percentage of the associate but maintains significant influence on the associate, then 'capital surplus' and 'investments accounted for under 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 Company'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.

J. When the Company 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.
K. When the Company 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.
L. Pursuant to the "Regulations Governing the Preparation of Financial Reports by Securities Issuers", profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners' equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation
(14) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors', from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

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

$(15)$ Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 60 years.

(16) Intangible assets

A. Patents

Patents is stated at cost and amortised on a straight-line basis over its estimated useful life of 5 to 10 years.

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.

(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 Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell or value in use. 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 comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(20) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(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 plan

For defined contribution plan, 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 plan
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 Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plan 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 the 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 expenses 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 the stockholders' meeting and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

$(23)$ 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 tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same

taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously

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
(a) The Company manufactures and sells human pharmaceuticals, etc. Revenue is recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer's acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.
(b) Goods are often sold with discounts and allowances based on the price spread given by the National Health Insurance. Revenue is recognised based on the price specified in the contract, net of the estimated sales discounts and allowances, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. Reversal of accounts receivable is recognised for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. The terms of sales transactions are set individually with each clients and usually are made with cash payment in 2 months after billings, or to obtain cheques with a maturity of 4~6 months upon billings. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Company does not adjust the transaction price to reflect the time value of money.
(c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

B. Rendering of services

(a) The Company provides processing services. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed price contracts, revenue is recognised based on the actual service provided to the end of the balance sheet date as a proportion of the total services to be provided.
(b) The Comapny's estimate about revenue, costs and progress towards complete satisfaction of a performance obligation is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.

C. Incremental costs of obtaining a contract

Given that the contractual period lasts less than one year, the Company recognises the incremental costs of obtaining a contract as an expense when incurred although the Company expects to recover those costs.

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

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company's accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Company's accounting policies None.

(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 Company 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 Company 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, 2018, the carrying amount of inventories was $$510,031$ .
B. Financial assets-fair value measurement of unlisted stocks without active market
(a) The fair value of unlisted stocks held by the Company 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 for the financial instruments fair value information.

(b) As of December 31, 2018, the carrying amount of unlisted stocks without active market was \$93,893.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December 31, 2018			December 31, 2017
Cash:
Revolving funds and petty cash	\$	4,223	\$	4,293
Checking accounts and demand deposits		566,780		350, 199
		571,003		354, 492
Cash equivalents:
Time deposits		359, 469		359, 985
Repurchase bonds		15, 781		15,029
		375, 250		375, 014
		946, 253	ዩ	729, 506

A. The Company 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, 2018 and 2017, the carrying amount of more than 3-month time deposits (shown as "Other financial assets-current") was \$30,720 and \$59,520, respectively.

C. As of December 31, 2018 and 2017, the Company has no cash and cash equivalents pledged to others.

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

	December 31, 2018
Current items:
Financial assets mandatorily measured at fair
value through profit or loss
Unlisted stocks	\$ 12,000
Valuation adjustment	12,000)

Non-current items:
Financial assets mandatorily measured at fair
value through profit or loss
Unlisted stocks	\$ 12,786
Valuation adjustment	3,588)
	9, 198

A. The Company recognised net loss (shown as "other gains and losses") of (\$1,147) for the year ended December 31, 2018.

B. The Company's financial assets at fair value through profit or loss non-current, NCKU Venture Capital Co., Ltd., conducted a capital reduction in August 2018. The Company has reversed 350 thousand shares at the initial investment price of \$3,500 proportionately.
C. As of December 31, 2018, the Company has no financial assets at fair value through profit or loss pledged to others.
D. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2), 'Financial Instruments'.
E. Information on financial assets at fair value through profit or loss as of December 31, 2017 is provided in Note 12(4), 'Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017'.

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

	December 31, 2018
Equity instrument:
Listed stocks	\$ 89, 725
Unlisted stocks	55, 509
	145, 234
Valuation adjustment	168, 526
	313,760

A. The Company has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. As at December 31, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Company was its book value.

B. The Company recognised \$7,344 in other comprehensive income for fair value change for the year ended December 31, 2018.
C. As of December 31, 2018, the Company has no financial assets at fair value through other comprehensive income pledged to others.
D. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2), 'Financial Instruments'.
E. Information on available-for sale financial assets and financial assets carried at cost as of December 31, 2017 is provided in Note 12(4), 'Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017'.
(4) Notes and accounts receivable

		December 31, 2018		December 31, 2017
Notes receivable	\$	99, 834	S	119, 918
Less: Allowance for bad debts		55)		357)
		99, 779		119, 561
		December 31, 2018		December 31, 2017
Accounts receivable	S	485, 165	\$	428, 535
Less: Allowance for bad debts		12,005)		6,796)
	\$	473, 160		421, 739

A. The ageing analysis of notes and accounts receivable is as follows:

		December 31, 2017
	December 31, 2018
Notes receivable:
During the credit period	\$	99, 384	\$	119, 326
Overdue up to 270 days				550
Overdue over 270 days				42
	ዩ	99, 384	\$	119,918
Accounts receivable:
During the credit period	\$	399, 446	\$	385,060
Overdue up to 90 days		61,670		27, 303
Overdue 91 to 180 days		24,049		4,864
Overdue 181 to 270 days				6,792
Overdue over 270 days				4,516
	Ф	485, 165	ጥ	428, 535

The above ageing analysis was based on days overdue.

B. Without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company's notes and accounts receivable were its book value.
C. As of December 31, 2018 and 2017, the Company has no notes and accounts receivable pledged to others.
D. Information relating to credit risk of notes and accounts receivable is provided in Note 12(2), 'Financial instruments'.
(5) Inventories

	December 31, 2018
				Allowance for
	Cost		valuation loss		Book value
Merchandise	\$	32,092	$($ \$	165)	\$	31, 927
Raw materials		210,596	€	8, 265)		202, 331
Supplies		29, 350		1,351)		27,999
Work in process		55, 128		950)		54, 178
Finished goods		203, 404		9,808)		193, 596
	\$	530, 570	(\$	20, 539)	\$	510,031
	December 31, 2017
				Allowance for
		Cost		valuation loss		Book value
Merchandise	$\mathbf{\hat{S}}$	55, 150	(3)	349)	\$	54, 801
Raw materials		201,996		5, 224)		196, 772
Supplies		31, 370		1,034)		30, 336
Work in process		47, 338		192)		47, 146
Finished goods		196, 584		5,090)		191, 494
	\$	532, 438	$\overline{\mathcal{L}}$	11,889)	$\frac{3}{2}$	520, 549

A. The cost of inventories recognised as expenses for the year:

		For the years ended December 31,
		2018	2017
Cost of goods sold	S	1, 256, 159	\$ 1, 271, 223
Loss on scrapped inventories		23,020	26, 370
Provision (reversal of allowance) for loss on
inventory market price decline (Note)		$8,650$ (	6,616)
Gain on physical inventory		577)	400)
		1, 287, 252	290, 577

(Note) For the year ended December 31, 2017, the Company reversed a previous inventory writedown which was accounted for as reduction of operating costs as these items were subsequently sold or disposed.

B. The Company recalled heart and hypertension medication for the presence of possible carcinogen in the API manufactured by Zhejiang Huahai Pharmaceutical Co., Ltd. and Zhuhai Rundu Pharmaceutical Co., Ltd. The Company recognised a loss on inventories of \$2,367 related to this event for the year ended December 31, 2018.

(6) Investments accounted for under the equity method

$\sim 10^{-1}$

A. Movements of investments accounted for under the equity method:

$\sim 10^7$

		For the years ended December 31,
		2018		2017
At January 1	\$	1,606,736	\$	1,605,339
Effects on retrospective application		1,653)
At January 1 after adjustments		1,605,083		1,605,339
Acquisition of investments accounted for under
the equity method		1,751		4,500
Disposal of investments accounted for under the
equity method			(	1,257)
Share of profit or loss of investments accounted
for under the equity method		51,071)		71,905
Earnings distribution of investments accounted
for under the equity method		$49,608$ ) (		49,608)
Capital surplus - Difference between
the price for acquisition or disposal of
subsidiaries and carrying amount		54 (		203)
Other equity interest – Financial statements
translation differences of foreign operations	(	$707)$ (		8,584)
Other equity interest - Unrealised gain or loss
on valuation of financial assets		$62,429$ (		15, 122)
Other equity interest - Actuarial losses of
defined benefit plan		122)		234)
At December 31	\$	1, 442, 951	\$	1,606,736
		December 31, 2018		December 31, 2017
Subsidiaries	\$	1, 297, 026	$\mathbf{\hat{z}}$	1, 458, 543
Associates		145, 925		148, 193
	\$	1, 442, 951	\$	1,606,736

	December 31, 2018	December 31, 2017
Standard Pharmaceutical Co., Ltd.	\$ 140,057	\$ 158, 725
Chia Scheng Investment Co., Ltd.	75,530	142, 175
STANDARD CHEM. & PHARM.
PHILIPPINES, INC.	3,032	3,845
Inforight Technology Co., Ltd.	4,841	4, 277
Souriree Biotech & Pharm. Co., Ltd.	27, 157	26, 233
Multipower Enterprise Corp.	375, 152	502, 682
Advpharma Inc.	275, 590	276, 322
Syngen Biotech Co., Ltd.	395, 667	344, 284
WE CAN MEDICINES CO., LTD.	140,967	143, 705
Taiwan Biosim Co., Ltd.	4,958	4,488
	S 1, 442, 951	\$ 1,606,736

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

C. Information on the Company's subsidiaries is provided in Note 4(3) of the Company's 2018 consolidated financial statements.

D. Associate:

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

		Shareholding ratio
Company	Principal place		December 31,
name	of business	2018	2017
WE CAN MEDICINES CO., LTD.	Taiwan	33.10%	33.10%

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

i. Balance sheet

	December 31, 2018	December 31, 2017
Current assets	\$ 649, 428	\$ 646, 126
Non-current assets	170, 673	179, 950
Current liabilities	$365, 287)$ (	360, 378)
Non-current liabilities	29, 110)	31, 723)
Total net assets	425, 704	433, 975
Share in associate's net assets	140, 908	143, 646
Carrying amount of the associate	140, 967	143, 705

ii. Statement of comprehensive income

	For the years ended December 31,
	2018	2017
Revenue	2, 304, 700	2, 307, 016
Net loss for the year	726.	17.391)
Total comprehensive loss for the year		16,680)

(c) As of December 31, 2018 and 2017, the carrying amount of the Company's individually immaterial associates amounted to \$4,958 and \$4,488, respectively. The share in associate's financial performance is as follows:

	For the years ended December 31,
	2018
Net loss for the year
Total comprehensive loss for the year

E. For the years ended December 31, 2018 and 2017, the details of the Company's equity transactions are provided in Note 7, "Related party transactions".

F. As of December 31, 2017, the Company pledged subsidiaries' stocks as collateral. Details are provided in Note 8 for the pledged assets. As of December 31, 2018, the Company has no shares pledged to others.

								Utility		Other
		Land		Buildings		Machinery		equipment		equipment		Total
At January 1, 2018
Cost	ക	314,060	↔	555, 821		630, 825	↔	132,634		883, 102	↔	2,516,442
Accumulated depreciation				208, 051		435, 453		85, 349		594,070		322, 923)
	↔	314,060	ఈ	347,770	÷	195, 372	↔	47,285	↔	289,032	બ્રા	1, 193, 519
2018
At January 1	ఱ	314,060	↔	347,770	↔	195, 372	↔	47,285	↔	289,032	↔	1, 193, 519
Additions-cost				849		5,446				948 26,		243 33,
Transfer from prepayments for		ı
equipment				2,480		16,730				17,951		37, 161
Reclassification-accumulated
depreciation				2,298)		157)				2,455		ı
Depreciation				15,888)		34, 828)		6,583)		64, 615)		(21, 914)
Disposals-cost						20, 541				15,287)		828) 85. က
-accumulated
depreciation						19,777				15,266		35,043
At December 31		314,060	⇔∥	913 32. 33.	ادی	181,799	⊷	40,702	ی	750 271.	€Ą,	141, 224
At December 31, 2018
Cost	ക	314,060	↔	559,150	↔	632, 460	ఈ	132,634	↔	912, 714		2,551,018
Accumulated depreciation				226, 237		450, 661)		91,932		(1964) 640,		409,794)
		314,060	↔	332, 913	⊖⊖∣	181,799	↔	40,702	↔	750 . 271,	↔	, 141, 224

(7) Property, plant and equipment

$-34-$

		Land		Buildings		Machinery		equipment Utility		equipment Other	Construction in equipment to progress and be inspected	Total
At January 1, 2017
Cost	↔	314,060	↔	553, 417	↔	555,687	↔	132, 167	↔	823, 818	↔	\$2,379,149
Accumulated depreciation				192, 011)		402, 915		78,670)		534, 604)		1, 208, 200
	ఈ∣	314,060	ఈ	406 361,	↔	152, 772	↔	497 53,	↔	289, 214	⊖∋	\$1, 170, 949
2017
At January	↔	314,060	↔	361,406	↔	152, 772	۰Ą	53, 497	₩	289, 214	↔	\$1,170,949
Additions-cost				1,689		325 တ		467		24,063	SS ₂	596 35,
Transfer from prepayments for
equipment				715		65,907		J		44,899		111,521
Reclassification-accumulated
depreciation				I		4,060		$\mathbf{I}$		4,060)		I
Transferred upon completion										3 Sa	52)
Depreciation				16,040)		36,692)		6,679)		65, 136)		124, 547)
Disposals-cost				I		94)		í		9,730)		9,824)
-accumulated
depreciation		ţ		I		54				9,730		9,824
At December 31	ఈ	060 314.	⇔∥	347,770	€⊖l	[95, 372]	⇔∥	47,285	⇔∣	$\frac{289.032}{2}$	⊷	519 193, $\frac{1}{3}$
At December 31, 2017
Cost	မာ	314,060	↔	555, 821	↔	630, 825	_୫୫	132,634	မာ	883, 102	ı ↔
Accumulated depreciation				208, 051)		435, 453)		85, 349)		594,070)		$$2, 516, 442$ (1, 322, 923)
	∣⇔	314,060	↔	347,770	اوه	195, 372	ఱ	47,285	↔∣	289,032	⊖⊖	\$1, 193, 519

$-35-$

A. Amount of borrowing costs capitalised as part of property, plant and equipment and the interest rates for such capitalisation for the years ended December 31, 2018 and 2017 are as follows:

	For the years ended December 31.
	2018	2017
Capitalised interest payments		365
Interest rate	92%

B. Information about the property, plant and equipment that were pledged to others as collateral as of December 31, 2018 and 2017 is provided in Note 8.

(8) Investment property, net

		Land	Buildings	Total
At January 1, 2018
Cost	\$	43, 295	\$ 6,776	\$ 50,071
Accumulated depreciation			3,412)	3,412)
	$\frac{1}{2}$	43, 295	\$ 3,364	\$ 46, 659
2018
At January 1	\$	43, 295	\$ 3,364	\$ 46,659
Depreciation			113)	113)
At December 31	\$	43, 295	\$ 3, 251	\$ 46,546
At December 31, 2018
Cost	\$	43, 295	\$ 6,776	\$ 50,071
Accumulated depreciation			3, 525)	3, 525)
	\$	43, 295	\$ 3, 251	\$ 46, 546
		Land	Buildings	Total
At January 1, 2017
Cost	\$	43, 295	\$ 6,776	\$ 50,071
Accumulated depreciation			3, 299)	3, 299
	\$	43, 295	\$ 3,477	\$ 46,772
2017
At January 1	\$	43, 295	\$ 3,477	\$ 46,772
Depreciation			113)	113 )
At December 31	\$	43, 295	\$ 3,364	\$ 46,659
At December 31, 2017
Cost	\$	43, 295	\$ 6,776	\$ 50,071
Accumulated depreciation			3, 412)	3, 412 )
	\$	43, 295	\$ 3,364	\$ 46,659

A. Rental income from investment property (shown as "Other income") and direct operating expenses arising from investment property are as follows:

	For the years ended December 31,
	2018	2017
Rental income from investment property	4.629
Direct operating expenses of
investment properties with
rental income	113
Direct operating expenses of
investment properties without
rental income

B. The fair value of the investment property held by the Company as at December 31, 2018 and 2017 was \$66,678 and \$67,241, respectively, which was valued from the actual real estate price registered on the Department of Land Administration website. The valuation is categorised within Level 2 in the fair value hierarchy.

C. No borrowing costs were capitalised as part of investment property for the years ended December 31, 2018 and 2017.
D. As of December 31, 2018 and 2017, the Company has no investment property pledged to others. (9) Intangible assets

	Patents	Software		Total
At January 1, 2018
Cost	\$ 11,602	\$ 37,778	\$	49, 380
Accumulated amortisation	5,799)	23, 585)		29, 384)
	\$ 5,803	\$ 14, 193	\$	19,996
2018
At January 1	\$ 5,803	\$ 14, 193	Ŝ.	19,996
Additions - acquired separately		1,138		1.138
Amortisation	1,436)	4,435)		5,871)
At December 31	\$ 4,367	\$ 10,896	\$	15, 263
At December 31, 2018
Cost	\$ 11,602	\$ 38, 916	S	50, 518
Accumulated amortisation	7,235)	28,020)		35, 255)
	4,367	10,896	S	15, 263

	Patents	Software		Total
At January 1, 2017
Cost	\$ 11,602	\$ 31, 975	\$	43,577
Accumulated amortisation	4.345)	20, 369)		24, 714)
	\$ 7, 257	11,606	\$	18,863
2017
At January 1	\$ 7,257	\$ 11,606	\$	18,863
$Additions$ - acquired separately		5,803		5,803
Amortisation	1,454)	3, 216		4,670)
At December 31	5,803	14, 193 \$	\$	19,996
At December 31, 2017
Cost	\$ 11,602	\$ 37, 778	\$	49,380
Accumulated amortisation	5,799)	23, 585)		29, 384)
	5,803	14, 193 \$	S	19,996

A. No borrowing costs were capitalised as part of intangible assets for the years ended December 31, 2018 and 2017.

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

	For the years ended December 31,
	2018	2017
Operating costs	\$ 2, 225	\$ 1,029
Selling expenses	1,173	962
General and administrative expenses	2,149	2,375
Research and development expenses	324	304
	5,871	4,670

C. As of December 31, 2018 and 2017, the Company has no intangible assets pledged to others.

(10) Short-term borrowings

Type of borrowings		December 31, 2018	Interest rate range	Collateral
Unsecured bank borrowings	\$	245,000	$1.00\% \sim 1.05\%$	None
Bank secured borrowings		175,000	1.00%	Land and buildings
		420,000

Type of borrowings		December 31, 2017	Interest rate range	Collateral
Unsecured bank borrowings	S	295,000	$0.92\% \sim 1.00\%$	None
Bank secured borrowings		175,000	$0.99\% \sim 1.00\%$	Land and buildings

For more information regarding interest expenses recognised in profit or loss by the Company for the years ended December 31, 2018 and 2017, please refer to Note 6(21), 'Finance costs'.

(11) Short-term notes and bills payable

	December 31, 2018	Interest rate range	Collateral
Commercial papers payable	250,000	$0.64\% \sim 0.66\%$	None

	December 31, 2017	Interest rate range	Collateral
Commercial papers payable	\$ 200,000	$0.50\% \sim 0.62\%$	None

A. The above commercial papers payable are issued and secured by Mega Bills Finance Corporation and other financial institutions.

B. For more information regarding interest expenses recognised in profit or loss by the Company for the years ended December 31, 2018 and 2017, please refer to Note 6(21), 'Finance costs'.

$(12)$ Long-term borrowings

Type of borrowings	Maturity date	December 31, 2018		Interest rate	Collateral
Unsecured bank borrowings	2019.10.17 $\sim$ 2020, 3, 19	\$	100,000	1.18%	None
Less: Current portion of long-term borrowings			30,000 70,000
Type of borrowings	Maturity date		December 31, 2017	Interest rate	Collateral
Unsecured bank borrowings	2019, 10, 17 $\sim$ 2020, 3, 19		100,000	1.17%	None

For more information regarding interest expenses recognised in profit or loss by the Company for the years ended December 31, 2018 and 2017, please refer to Note 6(21), 'Finance costs'.

(13) Pensions

A. The Company has 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 contributes monthly an amount equal to 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 would assess the balance in the aforementioned labour pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March. Related information of pension paid under aforementioned plan is as follows:

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


Present value of defined benefit obligations	( ዩ	$492,483)$ (\$	466, 266)
Fair value of plan assets		223, 062	197, 624
Net defined benefit liability-non-current		$269, 421)$ (\$)	268, 642)

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

	Present value of defined benefit obligation		Fair value of plan assets		Net defined benefit liability
2018
At January 1	$($ \$	$466, 266$ ) \$		197, 624	(3)	268, 642)
Current service cost		4,944)				4, 944)
Interest (expense) income		4,614)		1,978		2,636)
Reversal of past service cost		1,858				1,858
		473, 966)		199,602		274, 364)
Remeasurements:
Return on plan assets				5,962		5,962
Change in demographic
assumptions		9)				9)
Change in financial assumptions (		25, 548)				25,548)
Experience adjustments		3,021)				3,021)
		28, 578)		5,962		22, 616 )
Pension fund contribution				27, 559		27, 559
Paid pension		10,061		10,061)
At December 31	í\$	492, 4 83)	S	223,062	(\$	269, 421)

		Present value of
	defined benefit			Fair value of	Net defined
		obligation		plan assets	benefit liability
2017
At January 1	(\$	446, 950)	- \$	181, 535	(	265, 415)
Current service cost		4,987)				4,987)
Interest (expense) income		5,536)		2, 281		3, 255)
		457, 473)		183,816		273, 657)
Remeasurements:
Return on plan assets				734) (		734)
Change in demographic
assumptions		596)				596)
Change in financial assumptions (		12, 757)				12, 757)
Experience adjustments		877)				877)
		14, 230)		734)		14,964)
Pension fund contribution				17,799		17,799
Paid pension		5, 437		3,257)		2,180
At December 31	S.	466, 266)	\$	197,624	(\$	268, 642)

(c) The Bank of Taiwan was commissioned to manage the Fund of the Company's defined benefit pension plan in accordance with the Fund's annual investment and 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 has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The fair value of plan assets as of December 31, 2018 and 2017 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,
	2018	2017
Discount rate	-00%	-00%
Future salary increases	2.50%	-00%

Assumptions regarding future mortality rate are set 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, 2018
Effect on present value of defined benefit obligation	(\$	13,087)	\$	13, 592	S	13, 356	(\$	12,930)
December 31, 2017
Effect on present value of defined benefit obligation	์ \$ิ	12.781)	S	13.290	S	13.125 (\$		12. 689)

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 Company for the year ended December 31, 2019 will be \$10,286.
(f) As of December 31, 2018, the weighted average duration of that retirement plan is 10 years. The analysis of timing of the future pension payment was as follows:

Within 1 year	14,955 S
2-5 years	81, 845
Over 5 years	441, 533
	538, 333 S

B. Effective July 1, 2005, the Company has 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 contributes 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 pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2018 and 2017 were \$20,451 and \$19,968, respectively.

$(14)$ Share capital common stock
A. Movements in the number of the Company's ordinary shares outstanding are as follows (in thousands of shares):

	For the years ended December 31,
	2018	2017
Beginning and ending balance	178,696	178,696

B. As of December 31, 2018, 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.
$(15)$ 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. For the year ended December 31, 2018, pursuant to the Business letter No. 10602420200 issued by the Ministry of Economic Affairs in September 2017, the Company reclassified dividends payable of \$49, which was expired and not collected by the shareholders, to capital surplus.
C. On June 16, 2017, the shareholders have resolved to distribute cash of \$89,348 (\$ 0.5 (in dollars) per share) using capital surplus.
(16) 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, the Board of Directors takes into consideration the Company's future capital needs, long-term financial planning and 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 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 upon 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 20, 2018 and June 16, 2017, the Company recognised cash dividends distributed to owners amounting to \$285,914 (\$1.6 (in dollars) per share) and \$178,696 (\$1 (in dollars) per share) for the appropriation of 2017 and 2016 earnings, respectively. On March 19, 2019, the Board of Directors proposed for the distribution of dividends from 2018 earnings of \$268,044 (\$1.5 (in dollars) per share).

$(17)$ Other equity

	For the year ended December 31, 2018
	Unrealised gain
		Currency		on valuation of
		translation		financial assets		Total
At January 1	$\Im$	9,146)	\$	166,005	\$	156,859
Effect of retrospective application
- valuation adjustment				$(11, 717)$ (		11, 717)
- reclassify to retained earnings				260		260
Adjusted balance at January 1	$\left(\text{\$}\right)$	9, 146)	\$	154, 548	\$	145, 402
Currency translation differences
- Company		707)				707)
Valuation adjustment
- Company				7, 344		7,344
- Subsidiaries				62, 429)		62, 429)
At December 31		9,853)	\$	99, 463		89,610

	For the year ended December 31, 2017
				Unrealised gain
		Currency		on valuation of
		translation		financial assets		Total
At January 1	$\left( \text{\$} \right)$	562)	\$	286, 735	S	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	ደ	156,859

(18) Operating revenue

A. The Company derives revenue from the transfer of goods at a point in time and of services over time in the following major product categories and geographical regions:

	For the year ended December 31, 2018
	Domestic		International			Total
Revenue from sales of medicine	\$	1,660,424	\$	414, 933	\$	2,075,357
Revenue from sales of dietary
supplement		88, 935				88, 935
Revenue form rendering of
services		3,034				3,034
Others		106, 475		112,018		218, 493
		1,858,868	\$	526, 951		2, 385, 819

B. The Company has recognised the following revenue-related contract liabilities:

	December 31, 2018
Contract liabilities – sales of medicine	40, 526

Revenue recognised that was included in the contract liability balance at the beginning of the year ended December 31, 2018 was \$25,827.

C. For more information regarding operating revenue for the year ended December 31, 2017, please refer to Note 12(5), 'Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017'.

(19) Other income

	For the years ended December 31,
		2018		2017
Dividend income	\$	9.120	\$	14,377
Interest income		15,057		7.015
Rental income		4,629		4,706
Technology transfer income		50, 472
Research income				2,553
Other income		35, 909		41,075
		115, 187	Ф	69,726

(20) Other gains and losses

	For the years ended December 31,
		2018		2017
Net currency exchange gain (loss)	\$	33, 415	- (\$	51,931)
Net (loss) gain on disposal of property, plant and
equipment		686)		50
Net loss on current financial assets at fair value
through profit or loss		1,147)
Impairment loss				12,000)
Other losses		120)		353)
	Ω	31, 462	(\$	64, 234)
$(21)$ Finance costs
		For the years ended December 31,
		2018		2017
Interest expense
Bank borrowings	\$	7,045	\$	5,679
Less: Capitalisation of qualifying assets		85)		365)
		6,960	\$	5, 314

(22) Expenses by nature

	For the year ended December 31, 2018
		Recognised in operating costs		Recognised in operating expenses		Total
Employee benefit expenses	\$	273, 493	$\mathbf{\$}$	352, 122	\$	625, 615
Depreciation on property, plant and
equipment		101, 170		20, 744		121, 914
Amortisation on intangible assets		2, 225		3,646		5,871
		376,888	\$	376, 512	\$	753, 400
				For the year ended December 31, 2017
		Recognised in		Recognised in
		operating costs		operating expenses		Total
Employee benefit expenses	S	264, 645	$\boldsymbol{\mathcal{S}}$	350, 254	\$	614,899
Depreciation on property, plant and
equipment		103, 173		21, 374		124, 547
Amortisation on intangible assets		1,029		3,641		4,670
	\$	368, 847	\$	375, 269	\$	744, 116

(23) Employee benefit expenses

			For the year ended December 31, 2018
	Recognised in operating costs		Recognised in operating expenses		Total
Wages and salaries	\$ 225, 625	\$	292, 737	$\boldsymbol{\mathcal{S}}$	518, 362
Labour and health insurance
expenses	22, 131		24, 520		46, 651
Pension costs	13,428		12,745		26, 173
Director's remuneration			11,779		11,779
Other personnel expenses	12, 309		10, 341		22,650
	\$ 273, 493	$\mathcal{S}$	352, 122	\$	625, 615
			For the year ended December 31, 2017
	Recognised in		Recognised in
	operating costs		operating expenses		Total
Wages and salaries	\$ 218,064	\$	289, 122	\$	507, 186
Labour and health insurance
expenses	21, 118		24, 104		45, 222
Pension costs	13, 523		14,687		28, 210
Director's remuneration			11,971		11,971

Other personnel expenses	11,940		10,370		22, 310

A. As of December 31, 2018 and 2017, the Company had 784 and 783 employees, respectively.

There were 4 non-employee directors for both years.

B. 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.
C. For the years ended December 31, 2018 and 2017, employees' compensation was accrued at \$4,554 and \$4,597, respectively; while directors' and supervisors' remuneration was accrued at \$9,108 and \$9,194, 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 19, 2019, the employees' compensation and directors' and supervisors' remuneration were \$4,612 and \$9,225, respectively, and the employees' compensation will be distributed in the form of cash. The employees' compensation and directors' and supervisors' remuneration for 2017 as resolved by the Board of Directors was \$13,395. The difference between the aforementioned amount and the amount of \$13,791 recognised in the 2017 financial statements by (\$396), mainly caused by estimation differences, had been adjusted in the profit or loss for 2018. 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.

$(24)$ Income tax

$\mathcal{L}$

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

	For the years ended December 31,
		2018		2017
Current tax:
Current tax on profits for the year	\$	83,062	\$	61, 396
Tax on undistributed earnings		2.839		15, 416
Over provision of prior year's income tax		4,646)		494)
		81, 255		76, 318
Deferred tax:
Origination and reversal of temporary
differences		$9,015$ (		6,946)
Impact of change in tax rate		16,668)
		7,653)		6,946)
Income tax expense		73,602		69, 372

$\mathcal{L}^{\text{max}}_{\text{max}}$

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


	2018	2017
Remeasurement of defined benefit obligation	$4,523)$ (\$)	2,544)
Impact of change in tax rate	2, 108
	2, 415)	2.544)

B. Reconciliation between income tax expense and accounting profit:

	For the years ended December 31,
		2018		2017
Tax calculated based on profit before tax and
statutory tax rate	\$	89,592	\$	73, 552
Effect of amount not allowed to recognise under
regulations		$5.014$ (		17,488)
Effect from tax-exempt income		$2,529$ (		1,614)
Tax on undistributed earnings		2.839		15,416
Over provision of prior year's income tax		$4,646$ ) (		494)
Impact of change in tax rate		16,668)
Income tax expense		73,602		69, 372

						a extemporary annormous are no removed. For the year ended December 31, 2018
						Recognised
						in other
				Recognised in		comprehensive
		January 1		profit or loss		income		December 31
Deferred tax assets
Temporary differences:
Bad debts	\$	3,018	\$	1,451	\$		\$	4,469
Unrealised loss on inventories
from market value decline		2,021		2,087				4,108
Unrealised exchange loss		6,788	$\left($	6,788)
Investment loss		24,558		7,826				32, 384
Unrealised sales discount		1,827		2,554				4,381
Unused compensated absences		3,767		952				4,719
Pensions		39,727		4,751		2,415		46,893
Unrealised loss on scrapped
inventories		798		547				1,345
Unrealised loss on financial
assets through profit or loss				250				250
	\$	82, 504	\$	13,630	\$	2, 415	\$	98, 549
Deferred tax liabilities
Temporary differences:
Provision for land value
increment tax	$($ \$	61,992)	\$		\$		$($ \$	61, 992)
Unrealised exchange gain				5,415)				5,415)
Others				562)				562)
	$\mathfrak{B}$	61, 992)	$($ \$	5, 977)	$\frac{6}{5}$		(3)	67, 969)
	\$	20, 512	\$	7,653	\$	2,415	\$	30,580

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

						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	$\mathcal{L}$	4,074	$\left( \text{\$} \right)$	1,056)	\$		\$	3,018
Unrealised loss on inventories
from market value decline		3, 146	- (	1,125)				2,021
Unrealised exchange loss		943		5,845				6,788
Investment loss		20,615		3,943				24, 558
Unrealised sales discount		1,153		674				1,827
Unused compensated absences		3,905		138)				3,767
Pensions		39, 178		1,995)		2,544		39,727
Unrealised loss on scrapped
inventories				798				798
	\$	73,014	\$	6,946	\$	2,544	\$	82, 504
Deferred tax liabilities
Temporary differences:
Provision for land value
increment tax	$\boldsymbol{\vartheta}$	61,992)	\$		$\frac{1}{2}$		(\$	61,992)
	\$	11,022	\$	6,946	$\frac{3}{2}$	2,544	\$	20,512

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 income tax exemption for 5 consecutive years starting from 2015.
E. The Company's income tax returns through 2016 have been assessed and approved by the Tax Authority. The Company does not have any administrative remedy as of March 19, 2019.
F. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company's applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

(25) Earnings per share

		For the year ended December 31, 2018
		Weighted average
		number of ordinary
		shares outstanding	Earnings per
	Amount after tax	(shares in thousands)	share (in dollars)
Basic earnings per share
Profit attributable to ordinary shareholders	$\frac{3}{2}$ 374, 359	178,696	\$ 2.09
Diluted earnings per share
Profit attributable to ordinary shareholders	\$ 374, 359	178,696
Assumed conversion of all dilutive
potential ordinary shares
Employees' compensation		172
Profit attributable to ordinary shareholders plus assumed conversion of all dilutive
potential ordinary shares	$\frac{1}{2}$ 374, 359	178,868	\$ 2.09

		For the year ended December 31, 2017

		Weighted average
		number of ordinary
		shares outstanding	Earnings per
	Amount after tax	(shares in thousands)	share (in dollars)
Basic earnings per share
Profit attributable to ordinary shareholders	$\overline{\mathcal{E}}$ 363, 286	178,696	\$ 2.03
Diluted earnings per share
Profit attributable to ordinary shareholders	\$ 363, 286	178,696
Assumed conversion of all dilutive
potential ordinary shares Employees' compensation		186
Profit attributable to ordinary shareholders
plus assumed conversion of all dilutive potential ordinary shares	363, 286 \$	178,882	\$ 2.03

$\hat{u}$

(26) Supplemental cash flow information

A. Investing activities with partial cash payments:

	For the years ended December 31,
		2018		2017
Purchases of property, plant and equipment	\$	33, 243	\$	35,596
Add: Opening balance of notes payable		6,810		502
Opening balance of payable on
equipment (shown as "Other payables")		8,004		3, 312
Less: Ending balance of notes payable		$500)$ (		6, 810)
Ending balance of payable on equipment
(shown as "Other payables")		$11, 233)$ (		8,004)
Capitalised interest		85)		365)
Cash paid for acquisition of property, plant
and equipment		36, 239		24. 231

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


	2018	2017
(1) Elimination of allowance for bad debts	648	2. 924
(2) Prepayments for equipment transferred to property, plant and equipment	-37. 161	111.521

(27) Changes in liabilities from financing activities

				Long-term
			Short-term	borrowings	Guarantee
		Short-term	notes and bills	(including)	deposits
		borrowings	payable	current portion)	received	Total
At January 1, 2018	\$.	470,000	\$ 200,000	\$ 100,000	\$ 5, 371	\$ 775, 371
Changes in cash flow from
financing activities		50,000	50,000		1,514)	1,514)
At December 31, 2018	\$	420,000	\$ 250,000	100,000	3,857	773, 857

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties	Relationship with the Company
Standard Pharmaceutical Co., Ltd. (Standard P)	Subsidiary
Chia Scheng Investment Co., Ltd. (Chia Scheng)	Subsidiary
STANDARD CHEM. & PHARM. PHILIPPINES, INC. (PHL)	Subsidiary
Inforight Technology Co., Ltd. (Inforight)	Subsidiary
Souriree Biotech & Pharm. Co., Ltd. (Souriree)	Subsidiary
Multipower Enterprise Corp. (Multipower)	Subsidiary
Advpharma Inc. (Adv)	Subsidiary
Syngen Biotech Co., Ltd. (Syngen)	Subsidiary
Jiangsu Standard Biotech Pharmaceutical Co., Ltd. (Jiangsu Standard)	Subsidiary
SANTOS BIOTECH INDUSTRIES, INC. (SANTOS)	Subsidiary
WE CAN MEDICINES CO., LTD. (WE CAN)	Associate
Taiwan Biosim Co., Ltd. (Biosim)	Associate
SUN YOU BIOTECH PHARM CO., LTD. (SUN YOU)	Other related party (The manager of the Company is SUN YOU's corporate director)
SYN-TECH CHEM & PHARM CO., LTD. (SYN-TECH)	Other related party (The Company is SYN-TECH's corporate director)
Fan Dao Nan Foundation	Other related party (The corporate director of the Company)

(2) Significant related party transactions

A. Sales of goods

		For the years ended December 31,
Subsidiaries	2018		2017
	S	4, 473	8, 178
Associates		4,229	5, 179
Other related parties		20,840	14, 308
	S	29, 542	27,665

Prices of goods sold to related parties are determined each time when delivering goods. The payment term of the subsidiaries is to obtain cheques due in 3~4 months. For other related parties, 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 4~6 months upon billing.

B. Purchases of goods

	For the years ended December 31,
Subsidiaries	2018	2017
	\$ 83, 455	94, 707
Other related parties	59,608	51,300
	143, 063	146,007

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. Equity transactions

(a) The Company participated in the cash capital increase of the other related parties, SUN YOU, by investing \$6,184 in January 2018.
(b) The Company participated in cash capital increase of the associate, Biosim, by investing \$4,500 in July 2017.
D. Other expenses

	For the years ended December 31,
		2018	2017
Advertisement expenses:
Subsidiaries	\$	349	\$	664
Associates		95		4
Other related parties		726		608
	\$	1,170	\$	1,276
Research and development expenses:
Subsidiaries	\$	435	\$	1,738
Associates		216		48
Other related parties		1,066		390
	\$	1,717	\$	2,176
Miscellaneous expenses:
Subsidiaries	\$	541	\$	527
Associates		242		22
Other related parties		37		27
	\$	820	\$	576

E. Rental income

			For the years ended December 31,
Leased assets	Rent collection	2018		2017
Subsidiaries Land, Buildings	Monthly	4,600		4.515

F. Other income

	For the years ended December 31.
		2018		2017
Subsidiaries	\$	12,713	\$	3,448
Other related parties		975		701
	ድ	13,688	\$	4, 149
G. Ending balance of goods sold
		December 31, 2018		December 31, 2017
Receivables from related parties:
Subsidiaries	\$	2, 206	\$	2,780
Associates		599		592
Other related parties		9,881		6, 272
	\$	12,686	\$	9,644

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.

H. Ending balance of payment on behalf of others (Shown as 'Other receivables-related parties')

	December 31, 2018		December 31, 2017
Receivables from related parties: Subsidiaries		193		186
I. Ending balance of goods purchased
	December 31, 2018		December 31, 2017
Payables to related parties:
Subsidiaries	\$	21, 551	\$	24,794
Other related parties		14, 368		14,841
		35, 919		39,635

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

J. Financing (Shown as 'Other receivables-related parties')

	For the year ended December 31, 2018
	Date of maximum balance	Maximum balance	Ending balance	Annual rate	Interest income
Standard P	2018.12.31	92, 160 \$	92, 160	2.5%	2,079
			For the year ended December 31, 2017
	Date of	Maximum	Ending	Annual	Interest
	maximum balance	balance	balance	rate	income
Standard P	2017.12.31	89, 280	89, 280	2.5%	275 - 9 -

K. Endorsements and guarantees provided to related parties
	Endorser/ guarantor Endorsee/guarantee December 31, 2018 December 31, 2017				Purpose
The Company	Standard P	92, 160	S.	89.280	Secured borrowings
As of December 31, 2018 and 2017, the actual endorsement/guarantee amount provided by the
	Company for its subsidiary, Standard P, amounted to \$92,160 and \$89,280, respectively.

(3) Key management compensation

	For the years ended December 31,
	2018	2012
Salaries and other short-term employee benefits	20,	20, 862
DI L'OCHR LOCHRO

8. PLEDGED ASSETS

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

Book value
Pledged asset	December 31, 2018			December 31, 2017	Purposes
Investment accounted for under the equity method (Note 1)	\$		\$	125, 129	Short-term borrowings
Land (Note 2)		288, 489		288, 489	Short-term and long-term borrowings
Buildings-net (Note 2)		112, 268		116, 478	Short-term and long-term borrowings
		400, 757		530,096

(Note 1) As of December 31, 2017, the Company provided 22,980 thousand shares in its subsidiary, Advpharma Inc., as collateral for short-term borrowings with the carrying value of \$125,129. As of December 31, 2018, the Company has no shares pledged to others.

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

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

As of December 31, 2018 and 2017, except for the information provided in Note 7 on the related party transactions, the Company's significant contingent liabilities and unrecognised contract commitments are as follows:

(1) The balances for contracts that the Company entered into for the purchase of property, plant and equipment, but not yet due were \$12,405 and \$10,366, respectively.
(2) In two voluntary recalls in July and August 2018, the Company recalled heart and hypertension medication for the presence of possible carcinogen in the API manufactured by Zhejiang Huahai Pharmaceutical Co., Ltd and Zhuhai Rundu Pharmaceutical Co., Ltd. As of March 19, 2019, no potential lawsuits have been identified relative to this event.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE None.

1. OTHERS
$(1)$ Capital management

The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

(2) Financial instruments

A. Financial instruments by category

		December 31, 2018 December 31, 2017
Financial assets
Financial assets at fair value through profit or
loss
Financial assets mandatorily measured at fair
value through profit or loss	\$ 9, 198	\$
Financial assets at fair value through other
comprehensive income
Designation of equity instrument	\$ 313,760	\$
Available-for-sale financial assets
Available-for-sale financial assets			298, 814
Financial assets at cost			17,085
	\$ 313,760	$\boldsymbol{\mathcal{S}}$	315, 899
Financial assets at amortised cost / Loans and
receivables
Cash and cash equivalents	\$ 946, 253	\$	729,506
Notes receivable	99,779		119,561
Accounts receivable	473, 160		421, 739
Other receivables	110,512		93, 321
Other financial assets	30,720		59,520
Guarantee deposits paid	20, 514		28, 947
	\$ 1,680,938	\$	1, 452, 594

			December 31, 2018 December 31, 2017
Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings	\$	420,000	S	470,000
Short-term notes and bills payable		250,000		200,000
Notes payable		149, 998		146, 335
Accounts payable		59,794		55, 441
Other payables		222, 107		223, 326
Long-term borrowings (including current
portion)		100,000		100,000
Guarantee deposits received		3,857		5, 371
	Φ	1, 205, 756	\$	1, 200, 473

B. Financial risk management policies

(a) The Company's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Company, derivative financial instruments may be used to hedge certain risk.
(b) Risk management is carried out by a central treasury department (Company treasury) under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company's operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Company operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company used in various functional currency, primarily with respect to the USD, JPY and RMB. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
ii. The Company 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 Company does not expect significant interest rate risk.
iii. The Company 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 Company does not hedge the investments.
iv. The Company's businesses involve some non-functional currency operations (the

Company's functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

	December 31, 2018
		Foreign currency
		amount
		(In thousands)	Exchange rate	Book value
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD: NTD	\$	29, 904	30.72	\$918,651
JPY: NTD		8,022	0.2782	2,232
RMB: NTD		10, 304	4.472	46,079
Investments accounted
for under the equity method
USD: NTD		4,559	30.72	140,057
PHP: NTD		5, 254	0.5771	3,032
			December 31, 2017
		Foreign currency
		amount
		(In thousands)	Exchange rate	Book value
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD: NTD	\$	28, 946	29.76	\$848,031
JPY: NTD		35, 854	0.2642	9,437
RMB: NTD		1,457	4.565	6,642
Investments accounted
for under the equity method
USD: NTD		5, 333	29.76	158, 725
PHP: NTD		6,526	0.5892	3,845
Financial liabilities
Monetary items
USD: NTD		68	29.76	2,034

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 Company's net income for the years ended December 31, 2018 and 2017 would have increased/decreased by \$8,883 and \$8,508, respectively.

v. Total exchange gain (loss), including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2018 and 2017 amounted to \$33,415 and (\$51,931), respectively.

Price risk

i. The Company's equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
ii. The Company's investments in equity securities comprise shares issued by the domestic companies. 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, post-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by \$248 and \$-, 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 \$1,452 and \$1,501, respectively, as a result of other comprehensive income classified as available-for-sale equity investment and equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Company's main interest rate risk arises from long-term and short-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During the years ended December 31, 2018 and 2017, the Company'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, 2018 and 2017 would have been \$56 and \$44 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 Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Company manages their credit risk taking into consideration the entire company's concern. According to the Company's credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before

standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

iii. In line with credit risk management procedure, payment reminders are sent as the contract payments are past due, whereby the default occurs when the contract payments are past due over certain period of time.
iv. The Company classifies customer's notes and accounts receivable in accordance with credit rating of customer. The Company applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis. The Company used the forecastability of conditions to adjust historical and timely information to assess the default possibility of notes and accounts receivable, whereby rate ranging from 0.05% to 100% are applied to the provision matrix. Movements in relation to the Company applying the modified approach to provide loss allowance for notes and accounts receivable are as follows:

		For the year ended December 31, 2018
	Notes receivable			Accounts receivable	Total
Beginning balance	S	357	\$	6,796	\$	7, 153
(Reversal of) provision
for impairment		302)		5,857		5,555
Write-offs during the year		$\overline{\phantom{0}}$		648		648)
Ending balance		55		$12,\,005$	\$	12,060

v. Credit risk information for 2017 is provided in Note 12(4), 'Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017'.
(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants on any of its borrowing facilities.
ii. Surplus cash held by the Company over and above balance required for working capital management are transferred to the Company treasury. Company 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.

$\sim$

iii. The Company has the following undrawn borrowing facilities:

	December 31, 2018 December 31, 2017
Floating rate:
Expiring within one year	137,520 \$		264,160

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

	Within	Between 1	Between 2	Over 5
December 31, 2018	1 year	and 2 years	and 5 years	years
Short-term borrowings	420,606 \$	\$	\$	\$
Short-term notes and bills payable	250,000
Notes payable	122, 435
Notes payable-related parties	27,563
Accounts payable	59,794
Other payables	222, 107
Long-term borrowings (including current portion)	31, 117	70, 172
Guarantee deposits received		3,857

	Within	Between 1	Between 2	Over 5
December 31, 2017	1 year	and 2 years	and 5 years	years
Short-term borrowings	470, 382 \$	\$	\$	\$
Short-term notes and bills payable	200,000
Notes payable	119,631
Notes payable-related parties	26,704
Accounts payable	55, 441
Other payables	223, 326
Long-term borrowings (including current portion)	1,207	1,099	100, 147
Guarantee deposits received		5, 371

v. For non-derivative financial liabilities, the Company's non-derivative financial liabilities do 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 information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Ouoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company's investment in listed stocks and emerging stocks with active market is included.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly.
Level 3: Unobservable inputs for the asset or liability. The Company's investment in partial equity instruments without active market is included.
B. The carrying amounts of the Company'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.
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 is as follows:

December 31, 2018	Level 1	Level 2	Level 3	Total
Recurring fair value measurements Financial assets at fair value
through profit or loss
Equity securities	\$	\$	\$ 9,198	\$ 9,198
Financial assets at fair value through other comprehensive income
Equity securities	229,065		84,695	313,760
	229, 065	\$	93,893	322, 958
December 31, 2017	Level 1	Level 2	Level 3	Total
Recurring fair value measurements
Available-for-sale financial assets
Equity securities	210, 491	\$	88, 323	298, 814

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

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

	Listed stocks	Unlisted stocks
Market quoted price	Closing price	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 parent company only 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 Company'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 Company'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 in the parent company only 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 the Emerging Stock Market since June 6, 2017, therefore, the Company transferred the fair value from Level 1 to Level 2 and recognised impairment loss in the fourth quarter of 2017. There was no transfer between Level 1 and Level 2 in 2018.
F. The following table presents the changes in Level 3 instruments in 2018 and 2017:

	For the years ended December 31,
	2018			2017
At January 1	\$	88, 323	\$	129,790
Effect of retrospective application		15, 107
Adjusted at January 1		103, 430		129, 790
Purchase		6, 184
Capital reduction and return of shares		3,500)
Recognised in profit or loss (Note 1)		1,147)
Recognised in other comprehensive loss (Note 2)		11,074)		41, 467)
At December 31		93, 893		88, 323

(Note 1) Shown as "Other gains and losses".

(Note 2) Shown as "Unrealised gain or loss on financial assets at fair value through other comprehensive income" or "Unrealised gain or loss of available-for-sale financial assets".

G. Except for the use of modified retrospective approach under IFRS 9, for the years ended December 31, 2018 and 2017, there was no transfer from or to Level 3.
H. Financial segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, 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:

			Significant	Range	Relationship
	Fair value at	Valuation	unobservable	(weighted	of inputs to
	December 31, 2018	technique	input	average)	fair value
Non-derivative equity instrument:
Unlisted stocks	\$ 93,893	Market comparable companies	Discount for lack of marketability	30%	The higher the discount for lack of marketability, the lower the fair value
			Significant	Range	Relationship
	Fair value at	Valuation	unobservable	(weighted)	of inputs to
	December 31, 2017	technique	input	average)	fair value
Non-derivative equity instrument:
Unlisted stocks	\$ 21,521	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

J. The Company 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 of profit or loss or of other comprehensive income from financial assets categorised within Level 3 if the inputs used to valuation models have changed:

					December 31, 2018
						Recognised in profit or loss Recognised in other comprehensive income
			Favourable	Unfavourable	Favourable	Unfavourable
	Input	Change	change	change	change	change
Financial assets
Equity instrument	Discount for lack of marketability	$± 3\%$	\$ 394	( 394)	\$ 3,630	(\$ 3,630)
					December 31, 2017
						Recognised in profit or loss Recognised in other comprehensive income
			Favourable	Unfavourable	Favourable	Unfavourable
	Input	Change	change	change	change	change
Financial assets

rinancial assets Equity instrument	Discount for lack of	$±10\%$	\$.	$\overline{\phantom{m}}$	- \$ -	\$ 538	$\left( \frac{1}{2} \right)$	538)
	marketability Discount rate $\pm 10\%$			$\overline{\phantom{0}}$ $\qquad \qquad \blacksquare$	$\overline{\phantom{0}}$	125 663		125) 663)

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

A. Summary of significant accounting policies adopted for the year ended December 31, 2017:

(a) Available-for-sale financial assets
i. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.
ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognised and derecognised using trade date accounting.
iii. 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'.
(b) Loans and receivables

Accounts receivable are receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. 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.

i. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:
(i) Significant financial difficulty of the issuer or debtor;
(ii) The disappearance of an active market for that financial asset because of financial difficulties:
(iii) 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;
(iv) 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:
(v) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(i) 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.

(ii) Financial assets 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.

(iii) Financial assets at amortised 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 the financial asset's original effective interest rate, and is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

B. For reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, please refer to Note 3(1), 'Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards as endorsed by the Financial Supervisory Commission'.
C. The significant accounts as of December 31, 2017 are as follows:
(a) Available-for-sale financial assets

		December 31, 2017
Current items:
Unlisted stocks	\$	12,000
Accumulated impairment loss of available-for-sale
financial assets		12,000)

Non-current items:
Listed stocks	\$	89, 569
Unlisted stocks		48,526
		138,095
Valuation adjustment of available-for-sale financial assets		160, 719
	Φ	298, 814

i. The Company recognised (\$115,139) in other comprehensive income for fair value change for the year ended December 31, 2017.

ii. As the operating performance of the Company's equity investment Original BioMedicals Co., Ltd. did not meet the original expectation, the fair value was lower than its initial investment cost. Accordingly, the Company recognised impairment loss of \$12,000 (shown as "other gains and losses") for the year ended December 31, 2017, including the amount of \$9,531 that was transferred from equity to profit or loss.
iii. As of December 31, 2017, the Company has no available-for-sale financial assets pledged to others.
(b) Financial assets carried at cost-non-current

Unlisted stocks

December 31, 2017 \$ 17,085

i. According to the Company's intention, its investment in other company stocks should be classified as 'available-for-sale financial assets'. However, as the other company stocks are
not traded in active market, and sufficient industry information of companies similar to the other company or the other company's financial information cannot be obtained, the fair value of the investment in other company stocks cannot be measured reliably. Accordingly, the Company classified those stocks as 'financial assets carried at cost'.
ii. As of December 31, 2017, the Company has no financial assets carried at cost pledged to others.
D. Credit risk information for the year ended December 31, 2017 is as follows:
(a) Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company's credit policy, each local entity in the Company 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.
(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.
(c) The Company provides endorsements and guarantees based on the Company's policies and procedures on endorsements and guarantees. The Company only provides endorsement or guarantee for subsidiaries that the Company directly holds more than 50% ownership, or for entities that the Company 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 Company can control the credit risk of the subsidiary. The maximum credit risk is the guaranteed amount.

(d) Movements of the Company's allowance for doubtful accounts on notes and accounts receivable are as follows:

				For the year ended December 31, 2017
	Notes receivable			Accounts receivable		Total
Beginning balance	\$	130		16,963	\$	17,093
Provision for (reversal of) impairment		227		$7, 243$ ) (		7,016)
Write-offs during the year		$\overline{\phantom{m}}$		2,924)		2,924)
Ending balance		357	,n	796	Ф	153

(e) As of December 31, 2017, the notes and accounts receivable that were neither past due nor impaired have good credit quality
(f) The Company has no significant past due but not impaired notes and accounts receivable as of December 31, 2017.
(g) As of December 31, 2017, the Company has no notes and accounts receivable pledged to others.

(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017

A. The significant accounting policies applied on revenue recognition for the year ended December

31, 2017 are set out below.
(a) Sales of goods

The Company 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 Company's activities. Revenue arising from the sales of goods is recognised when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Company 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 Company provides processing services. Revenue from delivering services is recognised under the percentage-of-completion method when the outcome of services provided can be estimated reliably.

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

Under IFRS 15, liabilities relating to revenue from contracts with customers are recognised as contract liabilities, but were previously presented as advance receipts - sales of products (listed as 'Advance receipts') in the balance sheet. The balance amounted to \$40,526 as of December 31, 2018.

13. SUPPLEMENTARY DISCLOSURES

(Only 2018 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

Not applicable.

$\frac{1}{2}$










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STANDARD CHEM & PHARM.

Loans to others

For the year ended December 31, 2018

Expressed in thousands of NTD

Note Ceiling on total loans granted	(Notes 3) 368,123	(Notes 3) 280,113	(Notes 3) 10,535
Limit on loans	184,061 \$	280,113	5,267
a single party granted to Value	$\mathbf{r}$
Collateral len		I	I
doubtful accounts Allowance ē financing	Operating capital \$	- Operating capital	- Operating capital
with the for short-term Nature of transactions Reason (Note 1) borrower Amount of
loan	$\mathbf{\hat{z}}$	2	2
Interest rate	2.5%	2.5%	2.5%
drawn down amount Actual	92.160 \$ 92.160	92,160	4,696
(Mote 2) balance Ending		92,160	4,696
outstanding Maximum balance	92,160 \$ ω,	92,160	4,696
related party Is a
account General ledger	Other receivables Yes	Jiangsu Standard Other receivables Yes	Other receivables Yes
Borrower	Pharmaceutical Co., Ltd.	Pharmaceutical Co., Ltd. Biotech	Biopharma Co., Standard-Dia Jiangsu Ę	Note 2: The ending balance is the credit limit approved by the Board of Directors. Note 1: The code represents the nature of financing activities as follows:
Creditor	Standard Chem & Standard Pharm. Co., Ltd.	Pharmaceutical Co., Ltd. Standard	Jiangsu Standard Pharmaceutical Co., Ltd. Biotech	(2) Short-term financing. (1) Trading partner.
Number			Ν

(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 short-term financing, limit on loans granted to a single party is 5% of the Company's net assets based on the latest audited consolidated financial statements.

(c) Limit on loans granted by Standard Pharmaceutical Co., Ltd. to a single party is 200% of the creditor's net assets based on the latest audited or reviewed consolidated financial statements.

(d) Limit on loans granted by Jiangsu Standard Biotech Pharmaceutical to a single party is 5% of the creditor's net assess based on the latest andited or reviewed consolidated financial statements. (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 the Company to single party is $10\%$ of the party is $200\%$ of the creditor'

(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' metassets. Note 4: Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2018 as follows: USD: NTD 1:30.72 and RMB: NTD 1:4.472.

Provision of endorsements and guarantees to others STANDARD CHEM & PHARM. CO., LTD.

For the year ended December 31, 2018

Expressed in thousands of NTD

							$rac{e}{\sqrt{2}}$

		Provision of Provision of Provision of	endorsements/ endorsements/ endorsements/

	Ceiling on	total amount	$\sigma$				endorsements/ guarantees by guarantees to guarantees parent subsidiary to the party in provided company to parent Mainland (Note 1) subsidiary company China 5 1,840,613 Y
Ratio of	ccumulated	andorsement/	guarantee	amount to net	asset value of the	endorser/guarantor	$rac{60}{3%}$
			Amount of	ndorsements/	guarantees	secured with	collateral
					Actual	amount	$\frac{d$ mum down $\frac{1}{2}$ 92,160 \$
				Outstanding	endorsement	guarantee		$\frac{1}{3}$ amount $\frac{1}{3}$
				outstanding			amount	92,160
		Limiton	ndorsements/ Maximum	guarantees	provided for a endorsement	single party guarantee		Subsidiary S 736,245 S
			Party being	endorsed/guaranteed	Relationship	with the	guarantor Company name endorser/guarantor (Note 1)
										Co., Ltd.
						Endorser/		0 Standard Chem & Standard	Pharm. Co., Ltd. Phannaceutical.
							Junber

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

Table 2

Endding of marketable securities at the end of the period foot including subsidiaries, associates and joint ventures)
December 31, 2018

Expressed in thousands of NTD

			General			As of December 31, 2018
		Relationship with the	ledger	Number
Securities held by	Marketable securities	securities issuer	account	of shares	Book value	Ownership (%)	Fair value	Note
	Standard Chem & Pharm. Co., Ltd. Bonds with repurchase agreement:
	Mega Bills Finance Co., Ltd.	t		o, T	15,781	$\bullet$	15,781 69
	Stocks (investment certificate);
	Original BioMedicals Co., Ltd.		$\overline{\phantom{0}}$	200,000		0.84%
	SYN-TECH CHEM & PHARM CO., LTD.	The Company is SYN-TECH CHEM & PHARM Co., Ltd.'s corporate	4	2,925,484	229,065	9.73%	229,065
		director
	HER-SING CO., LTD.	The Company is HER-SING Co., Ltd.'s corporate director		3,055,000	41,823	17.71%	41,823
	SUN YOU BIOTECH PHARM CO., LTD.	The manager of the Company is SUN		3,378,006	41,414	18.13%	41,414
		CO., LTD.'s corporate director YOU BIOTECH PHARM
	NCKU Venture Capital Co., Ltd.	Capital Co., Ltd.'s corporate director. The Company is NCKU Venture		650,000	3,328	4.17%	3,328
	NTU Innovation & Incubation Co., Ltd.			480,000	3,562	3.76%	3,562
	JENKEN BIOSCIENCES, INC.			198,080	2,308	4.37%
	Green Management International Co., Ltd.			92,960	1,458	5.14%	2,308 1,458
Chia Scheng Investment Co., Ltd.	Beneficiary certificates:
	Taishin Ta-Chong Money Market Fund	ı		368,142	5,220		5,220
	Taishin 1699 Money Market Fund	J.	$\sim$	50,000	676		676
	Stocks.
	SUN YOU BIOTECH PHARM CO., LTD.	The manager of the Company is SUN YOU BIOTECH PHARM		240,846	2,953	1.29%	2,953
		CO., LTD.'s corporate director
	Stason Pharmaceuticals, Inc.	J	₹	4,000,000	52,744	13.02%	52,744
Inforight Technology Co., Ltd.	Beneficiary certificates:
	Capital Money Market Fund	ı		121,952	1,964		1,964
Advpharma Inc.	Beneficiary certificates:
	Taiwan Cooperative Bank Money Market		N	4,000,000	40,582		40,582
	Fund
	Mega Diamond Money Market Fund		$\sim$	3,166,588	39,652		39,652
	FSITC Taiwan Money Market Fund		2222	,782,508	27,230		27,230
	Eastspring Inv Well Pool Money Market Fund			,084,705	14,735		14,735
	Shin Kong Global ETF Fund of Funds			484,871	4,529
	Eastspring Investments Asian Income			300,000	3,059		4,529 3,059
	Balanced Fund A TWD
	Mega USD Money Market Fund			293,229	2,964		2,964

Table 3

$\frac{1}{2}$

			General			As of December 31, 2018
		Relationship with the	ledger	Number
Securities held by	Marketable securities	securities issuer	account	of shares		Book value Ownership (%)	Fair value	Note
Advpharma Inc.	Stocks:
	TungShin Global Holding Corporation	$\begin{array}{c} \end{array}$		108,000 30,000 594,000	4,250
	Thina Chemical & Pharmaceutical Co., Ltd.				543 46,510	0.04% 0.03% 1.98%	$4,250$ $46,510$ $46,510$
	SYN-TECH CHEM & PHARM CO., Ltd.	The Company is SYN-TECH CHEM
		& PHARM Co., Ltd.'s corporate director
	Der Yang Biotechnology Venture	I		168,568	1,327	370%	1,327
	Capital Co., Ltd. JENKEN BIOSCIENCES, INC.
		I		19,340	25	0.46%	25
Syngen Biotech Co, Ltd.	Stocks:
	NCKU Venture Capital Co., Ltd.	The Company is NCKU Venture Capital Co., Ltd.'s corporate		650,000	3,328	4.17%	3,328
		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 four categories:

Cash and eash equivalents
2. Financial assets at fair value through profit or loss - current
3. Financial assets at fair value through profit or loss - non-current
4. Financial assets at fair value through other compreh

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

For the year ended December 31, 2018

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)
		0 Standard Chem & Pharm. Co., Ltd. Standard Pharmaceutical Co., Ltd.		Other receivables	92352		ž
				Endorsements and guarantee	92,160		ž
		Souriree Biotech & Pharm. Co., Ltd.		Purchases		24,060 Pay cheques with a maturity of 3-4
		Syngen Biotech Co, Ltd.		Purchases		months after inspection had passed 59,395 Pay cheques with a maturity of 3~4	$2\%$
						months after inspection had passed
				Notes payable	16,923)
	Standard Pharmaceutical Co., Ltd. Jiangsu Standard Biotech	Pharmaceutical Co., Ltd.		Other receivables	92,397	ļ	ž

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 Note 2: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is '0'.

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

Note 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 based on accumulated transaction amount for the year to consolidated total operating revenues for statement of comprehensive income accounts.

Note 5: Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2018 as follows: USD: NTD 1:30.72.

Table 4

STANDARD CHEM & PHARM. CO., LTD. Information on investees

For the year ended December 31, 2018

Expressed in thousands of NTD

					Initial investment amount		Shares held as at December 31, 2018			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	2018		2017	Number of shares	દે	Book value	December 31, 2018	December 31, 2018	Note
Standard Chem & Pharm. Co., Ltd.	Standard Pharmaceutical Co., Ltd.	Samoa	Research and development, other business of medical trading, investment and products	v,	ئ 310,283	310,283	10,000,000	100.00	140,057 s,	S	17,461) (\$	17,461) Subsidiary
Standard Chem & Pharm. Co., Ltd.	Chia Scheng Investment Co., Ltd.	Taiwan	General investment		160,856	160,856	16,103,000	100.00	75,530		$1,552$ (	1,552) Subsidiary
Standard Chern & 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	3,032		720)(	720) Subsidiary
Standard Chem & Pharm, Co., Ltd.	Inforight Technology Co., 乌	Taiwan	Wholesale of multi-function printers and information software		5,000	5,000	500,000	100.00	4,841	564		Subsidiary 564
Standard Chem & Pharm. Co., Ltd.	Souriree Biotech & Pharm. Co., Ltd	Taiwan	Manufacturing of western medicine and retail and wholesale of various medicines		41,549	41,549	5,649,126	93.17	27,157	1,802)		Subsidiary 830
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,		293,063	291,803	19,840,600	90.72	375,152	98,435		89,161) Subsidiary
Standard Chern & Pharm. Co., Ltd.	Advpharma Inc.	Taiwan	Research and development, manufacturing and sale of various medicine		507,332	507,332	50,746,706	84.58	275,590	$4,943$ ) (		4,116) Subsidiary
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		122,463	122,462	10,919,971	47.27	395,667	133,990	63,122	Subsidiary (Note 1)

Table 5

			Note			Subsidiary (Note 2)	Subsidiary (Note 2)	Subsidiary Note 2)
	(loss) recognised	for the year ended		2,557)	ຊີ
Net profit (loss) of Investment income	the investee for the	year ended	Book value December 31, 2018 December 31, 2018	7,726) (\$	$\frac{1}{2}$	1,389	1,828)	2,290)
				140,967 (\$	4,958	12,507	4,849	10,420
Shares held as at December 31, 2018		Ownership	E.	S $\frac{310}{3}$	49.90	100.00	100.00	35.60
			Number of shares	10,273,272	499,000	3,126,510	1,000,000	400,000
	Balance as at	December 31,	2017	213,136	4,500	94,193	5,515	13,734
Initial investment amount	Balance as at	December 31,	2018	c 213,136	4,990	94,629	7322	13,734
			Main business activities	Wholesale of various medicine	Research and developmentof various medicine	America Research and development, other business of medical trading, investment and products	Research and development, of APIs and biochemical manufacturing and sale preventive medicine nutrition, sale of	wholesale of various chemistry Inspection of medicine, retail an
			Location	Taiwan	Taiwan		Malaysia	America
			Investee	WE CAN MEDICINES CO., LTD.	Taiwan Biosim, Co., Ltd.	INDUSTRIES, INC. SANTOS BIOTECH	INTERNATIONAL SDN. SYNGEN BIOTECH BHD.	CNH TECHNOLOGIES INC.
			Investor	Standard Chem & Pharm. Co., Ltd.	Standard Chem & Pharm. Co., Ltd.	Investment Co., Ltd. Chia Scheng	Syngen Biotech $Co.$ Ltd	Advpharma Inc.

Note 1: In September 2016, the subsidiary, Syngen Biotech Co., Ltd. ("Syngen"), fied for an initial public offering with Taipei Exchange. As part of the public trading process, the Company allowed its underwriter to exerci

Information on investments in Mainland China STANDARD CHEM & PHARM. CO., LTD. For the year ended December 31, 2018 Accumulated

Expressed in thousands of NTD

	Note	$-$ (Note 3)	(Note 3)
nvestment income remitted back to Taiwan as of Accumulated amount of
Book value of investments in		$105,403$ \$	21,954
recognised for the year ended income (loss)	December 31, Mainland China as of December 31, $2018$ December 31, 2018 2018	$-5$ 276,174 (5 16,934) 100.00 (6934) 5	8,6.0)

by			55.00
Net income Ownership held Investment China as of year ended (direct or			15,727 $\frac{1}{1}$
to Mainland investee for the the Company from Taiwan (loss) of remittance amount of
December 31, $2018$
Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended	China as of Remitted to Remitted back December December 31, indirect) January 1, 2018 Mainland China to Taiwan 31, 2018 2018	نه د ه
aiwan to Mainland of remittance from Accumulated amount		276,174

	Investment method	(Note 1)	(Note 2)
		276,480	189.591

		Research and development, \$ technical consulting and technical services of medicine	manufacturing and sale of Research and development, various medicine
	Investee in Mainland China Main business activities Paid-in capital	Pharmaceutical Co., Ltd. Jiangsu Standard Biotech	Biopharma Co., Ltd. liangsu Standard-Dia

Ceiling on investments in Mainland China	mposed by the	Investment	Ministry of Economic Commission of MOEA	$\frac{4}{2}$	2,547,787 276,480
Investment amount approved by the	Invesiment	Commission of the		Affairs (MOEA)
	commulated amount of	remittance from Taiwan to	Mainland China as of	December 31, 2018	276,174
				Company name	Standard Chem & Pharm. Co.,

Note 1: Indirect investment in Mainland China through an existing company (Standard Pharmaceutical Co., 11d.) located in the third area.
Note 2: Indirect investment in Mainland China through an existing company (Tiargen St

AI assistant

S.C.P.C — Audit Report / Information 2018

51900_rns_2018-11-08_013d6b44-26c5-4176-984b-2f983879c4f7.pdf

STANDARD CHEM. & PHARM. CO., LTD.

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Valuation of inventories

Description

How our audit addressed the matter

Existence of domestic sales revenue from human medicines

Description

How our audit addressed the matter

Other matter-Reference to the audits of other independent accountants

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

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

STANDARD CHEM. & PHARM. CO., LTD.PARENT COMPANY ONLY BALANCE SHEETS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

$\underbrace{\texttt{BARENT}\texttt{COMPANY ONLY STATEM. & \texttt{PHARM.}\texttt{CO.,}\texttt{LTD}}{\texttt{COMPREF}\texttt{COMPABW ONLY}\texttt{ONLY STATEMENTS OF COMPREHENSIVE}\texttt{INCOME}}{\texttt{EXPRESSED}\texttt{IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNING PER SHARE DATA}}$

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

$\frac{\text{STANDARD CHEM. & \text{PHARM. CO., LTD.}}{\text{PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS}}{(\text{EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS})}$

STANDARD CHEM. & PHARM. CO., LTD.

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

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

1. HISTORY AND ORGANISATION

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

(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 2018 are as follows:

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(2) Basis of preparation

(3) Foreign currency translation

(8) Accounts and notes receivable

(9) Inventories

(10) Impairment of financial assets

$(15)$ Investment property

(16) Intangible assets

(17) Operating leases (lessee)

(19) Borrowings

(20) Notes and accounts payable

B. Pensions

$(23)$ Income tax

(24) Share capital

(26) Revenue recognition

B. Rendering of services

C. Incremental costs of obtaining a contract

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

(2) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

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

(6) Investments accounted for under the equity method

ii. Statement of comprehensive income

(11) Short-term notes and bills payable

$(12)$ Long-term borrowings

(13) Pensions

$(17)$ Other equity

(18) Operating revenue

(19) Other income

(20) Other gains and losses

(22) Expenses by nature

(23) Employee benefit expenses

$(24)$ Income tax

(25) Earnings per share

(27) Changes in liabilities from financing activities

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. Equity transactions

E. Rental income

F. Other income

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

10. SIGNIFICANT DISASTER LOSS

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE None.

A. Financial instruments by category

Price risk

Cash flow and fair value interest rate risk

(3) Fair value information

13. SUPPLEMENTARY DISCLOSURES

S.C.P.C Audit Report / Information 2018

STANDARD CHEM. & PHARM. CO., LTD.
PARENT COMPANY ONLY BALANCE SHEETS (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

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