STANDARD CHEM. & PHARM CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2019 AND 2018

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

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

Opinion

We have audited the accompanying consolidated balance sheets of STANDARD CHEM. & PHARM. CO., LTD. and its subsidiaries (collectively referred herein as the "Group") as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the "Regulations Governing" the Preparation of Financial Reports by Securities Issuers" and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

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

context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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

Valuation of inventories

Description

Refer to Note $4(11)$ 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, 2019, the carrying amount of inventories and allowance for inventory valuation loss are \$945,494 thousand and \$30,865 thousand, respectively.

The Group is primarily engaged in the manufacture and sales of human medicine and dietary supplement. Due to the influence of market demand and short expiration date of medicines, there is a risk of market price decline and obsolescence of inventories. The Group 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 operations of the warehouse management, inspected the annual inventory taking plan and performed our observation.
1. Tested whether the basis of inventory aging used in calculating the net realisable value of inventory is consistent with the Group's policy.
1. Validated the net realisable value of inventories and the adequacy of allowance for inventory valuation loss.

Existence of domestic sales revenue from human medicines and dietary supplements

Description

Refer to Note $4(29)$ 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 Group is primarily engaged in the manufacturing and sales of human medicines and dietary supplements. The Group's sales is mainly domestic-based and its customers are numerous, including hospitals, clinics, pharmacies, food and drug administrations all over the country. Since the sales transactions are numerous and would require a longer period for verification, we consider the existence of domestic sales revenue from human medicines and dietary supplements a key audit matter.

How our audit addressed the matter

We performed the following key audit procedures for the above 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 \$134,573 thousand and \$140,967 thousand, constituting 1.94% and 2.19% of consolidated total assets as of December 31, 2019 and 2018, respectively, and the share of profit or loss of associates and joint ventures accounted for under the equity method was \$1,323 thousand and $(\$2,557)$ thousand, constituting 0.30% and $(0.73\%)$ of consolidated total comprehensive income for the years then ended, respectively. The financial statements of these investee companies were audited by other independent accountants whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included in the consolidated financial statements and information disclosed relative to these investments, is based solely on the reports of other

independent accountants.

Other matter - Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of STANDARD CHEM. & PHARM. CO., LTD. as of and for the years ended December 31, 2019 and 2018.

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

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

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

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

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

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

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

$\mathbf{1}$ . Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
$2.$ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
$3.$ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
$4₁$ Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, 5. including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
1. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope

and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

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

Tien, Chung-Yu

Independent Accountants

Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan Republic of China March 24, 2020

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

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

			December 31, 2019			December 31, 2018
	Assets	Notes	AMOUNT	$\frac{0}{6}$		AMOUNT	℅
	Current assets
1100	Cash and cash equivalents	6(1)	\$ 1,471,902	21	\$	1,254,061	19
1110	Financial assets at fair value through	6(2)
	profit or loss - current		135,816	$\boldsymbol{2}$		145,404	$\overline{2}$
1136	Financial assets at amortised cost -	6(1)
	current		84,450	1		51,080	1
1150	Notes receivable, net	6(4), 7 and 12	207,668	3		235,357	4
1170	Accounts receivable, net	6(4), 7 and 12	684,239	10		677,802	11
1200	Other receivables	$6(5)$ and 7	19,114	1		18,098
1220	Current income tax assets	6(26)	5,352			5,352
130X	Inventories	5(2), 6(5)(7)	914,629	13		793,128	12
1410	Prepayments	3(1)	86,556	$\mathbf{1}$		115,959	$\overline{2}$
1479	Other current assets		4,291			2,743
11XX	Total current assets		3,614,017	52		3,298,984	51
	Non-current assets
1510	Financial assets at fair value through $5(2)$ and $6(2)$
	profit or loss - non-current		15,291			14,078
1517	Financial assets at fair value through $5(2)$ , 6(3) and 7
	other comprehensive income - non-
	current		424,367	6		415,967	7
1550	Investments accounted for under	$3(1)$ , $6(6)$ and 7
	equity method		180,000	3		156,345	3
1600	Property, plant and equipment	$6(7)$ and $8$	2,116,644	31		2,134,253	33
1755	Right-of-use assets	$3(1)$ , $6(8)$ and 7	203,681	3
1780	Intangible assets	6(9)(10)	96,586	1		111,326	2
1840	Deferred income tax assets	6(26)	141,583	2		136,627	2
1915	Prepayments for equipment	6(7)	67,325	1		72,919	1
1920	Guarantee deposits paid		32,915			25,205
1985	Long-term prepaid rents	$3(1)$ and $6(8)$				48,940	1
1990	Other non-current assets	6(7)(14)	35,595	1		24,469
15XX	Total non-current assets		3,313,987	48		3,140,129	49
1XXX	TOTAL ASSETS		\$ 6,928,004	100	\$	6,439,113	100

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

(Continued)

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

			December 31, 2019		December 31, 2018
	Liabilities and Equity	Notes	AMOUNT	$\frac{0}{6}$	AMOUNT	$\overline{\frac{9}{6}}$
	Current liabilities
2100	Short-term borrowings	$6(11)$ and 8	\$ 565,000	8	\$ 485,000	7
2110	Short-term notes and bills payable	6(12)	300,000	4	250,000	4
2130	Contract liabilities - current	6(20)	94,027	1	61,798	1
2150	Notes payable	7	256,779	4	270,850	4
2170	Accounts payable	7	164,797	3	114,816	2
2200	Other payables		371,169	5	361,240	6
2230	Current income tax liabilities	6(26)	47,932	1	81,426	1
2280	Lease liabilities - current	3(1), 6(8) and 7	13,346
2310	Receipts in advance		6		2,371
2320	Current portion of long-term	$6(13)$ and 8
	borrowings				60,029	1
21XX	Total current liabilities		1,813,056	26	1,687,530	26
	Non-current liabilities
2540	Long-term borrowings	$6(13)$ and 8			152,283	3
2570	Deferred income tax liabilities	6(26)	61,992	1	67,981	1
2580	Lease liabilities- non-current	$3(1)$ , $6(8)$ and $7$	144,114	2
2640	Net defined benefit liability - non-	6(14)
	current		244,022	4	271,670	4
2645	Guarantee deposits received		18,399		13,337
25XX	Total non-current liabilities		468,527	7	505,271	8
2XXX	Total liabilities		2,281,583	33	2,192,801	34
	Equity attributable to owners of the
	parent
	Share capital
3110	Common stock	6(15)	1,786,961	26	1,786,961	28
3200	Capital surplus	6(16)(28)	204,514	3	197,315	3
	Retained earnings	$3(1)$ and $6(18)$
3310	Legal reserve		622,365	9	584,929	9.
3350	Unappropriated retained earnings		1,079,851	15	1,022,410	16
3400	Other equity interest	6(3)(6)(19)	70,521	1	89,610	$\mathbf{1}$
31XX	Equity attributable to owners of the
	parent		3,764,212	54	3,681,225	57
36XX	Non-controlling interest	$4(3)$ and $6(28)$	882,209	13	565,087	9
3XXX	Total equity		4,646,421	67	4,246,312	66
	Significant contingent liabilities and	9
	unrecognised contract commitments
3X2X	TOTAL LIABILITIES AND
	EQUITY		\$ 6,928,004	100	6,439,113 \$.	100

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

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

				For the years ended December 31,
				2019			2018
	Items	Notes		AMOUNT	$\%$		AMOUNT	%
4000	Operating revenue	$6(20)$ and 7	\$	3,937,129	100	\$	3,573,093	100
5000	Operating costs	6(5)(8)(9)(14)(17)
		$(24)(25)$ and 7		$2,227,998$ ) (	$57)$ (		$2,028,483$ ) (	57)
5900	Gross profit			1,709,131	43		1,544,610	43
	Operating expenses	6(8)(9)(14)(17)(2
		$4(25)$ and 7
6100	Selling expenses		(	$690, 312$ ) (	17(		$625,483$ ) (	18)
6200	General and administrative
	expenses		(	$283, 246$ ) (	$7)$ (		$295,427$ ) (	8)
6300	Research and development
	expenses		(	$225,765$ ) (	$6)$ (		$224,918$ (	6)
6450	Expected credit gains (losses)	12		6,036	$\overline{\phantom{a}}$		10,524)
6000	Total operating expenses			$1, 193, 287$ ) (	30(		$1,156,352$ )(	32)
6900	Operating profit			515,844	13		388,258	11
	Non-operating income and
	expenses
7010	Other income	$6(5)(21)$ and 7		133,972	3		114,289	3
7020	Other gains and losses	$6(2)(9)(22)$ and
		12	€	$55,287$ ) (	1)		27,317	1
7050	Finance costs	$6(7)(8)(23)$ and 7 (		10,470)	- (		$9,006$ ) (	1)
7060	Share of profit (loss) of	6(6)
	associates and joint ventures
	accounted for under equity
	method			1,751	- (		3,392)
7000	Total non-operating income
	and expenses			69,966	2		129,208	3
7900	Profit before income tax			585,810	15		517,466	14
7950	Income tax expense	6(26)		$115,377$ ) (	$3)$ (		89,530)(	2)
8200	Profit for the year		\$	470,433	12 ^°	$\boldsymbol{\mathcal{S}}$	427,936	12

(Continued)

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

				For the years ended December 31,
				$\overline{2019}$		2018
	Items	Notes		AMOUNT	$\%$	AMOUNT	%
	Other comprehensive (loss)
	income
	Components of other
	comprehensive income that will
	not be reclassified to profit or loss
8311	Remeasurment of defined benefit 6(14)
	plans		$($ \$	7,310	- (\$	$22,804$ ) (	1)
8316	Unrealised losses from	6(3)
	investments in equity
	instruments measured at fair
	value through other
	comprehensive income		(	$14,476$ ) (	$1)$ (	54, 523) (	$_{1}$
8320	Share of other comprehensive	6(6)
	loss of associates and joint
	ventures accounted for using
8349	equity method Income tax related to		$\big($	263)	- (	181)
	components of other	6(26)
	comprehensive income			1,462		2,636
	Components of other
	comprehensive income that will
	be reclassified to profit or loss
8361	Financial statements translation
	differences of foreign operations		(	4,372)	$-$ (	1,044)
8370	Share of other comprehensive	6(6)
	(loss) income of associates and
	joint ventures accounted for
8300	under equity method Total other comprehensive loss			319)		337
	for the year		$($ \$	$25,278$ ) (	$1)(\$$	75,579)	$\overline{2}$
8500	Total comprehensive income for
	the year		\$	445,155	11	352,357	10
	Profit attributable to:
8610	Owners of the parent		\$	376,482	10	\$ 374,359	10
8620	Non-controlling interest			93,951		53,577
			$\overline{\mathcal{L}}$	470,433	$\frac{2}{12}$	$\frac{1}{2}$ 427,936	$\frac{2}{12}$
	Total comprehensive income
	attributable to:
8710	Owners of the parent		\$	351,286	9	298,244 \$	8
8720	Non-controlling interest			93,869	$\overline{2}$ $\overline{11}$	54,113	$\overline{2}$
			\$	445,155		$\overline{\mathcal{L}}$ 352,357	$\overline{10}$
	Earnings per share	6(27)
9750	Basic		$\frac{3}{2}$		2.11		2.09
9850	Diluted		\$		2.10	$\frac{8}{3}$	2.09

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

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

$\frac{268,044}{4,646,421}$ $1,261$ ) 285,914)
15,609) $\begin{array}{r} \n 7,454 \
\hline\n 4,738,858 \
\hline\n 470,433 \
\hline\n 25,778 \
\hline\n 445,155\n \end{array}$ $4,202,185$
$5,495$ $18,136$
$145$ $\frac{427,936}{75,579}$ 4,196,690 $$4,246,312$ Total equity $4.246.31$ $\left| \rule{0pt}{10pt}\right|$ $\ddot{ }$ L $\overline{\phantom{0}}$ $\overline{\phantom{0}}$ 1,315) $\frac{15,609}{565,087}$ 25,190) $\frac{82}{93,869}$ Non-controlling $1,864$ $rac{536}{54,113}$ $\frac{248,443}{882,209}$ $\frac{527,898}{53,577}$ $rac{565.087}{93.951}$ 529,762 565,087 interest L $\overline{\mathbf{v}}$ Ł. $\begin{array}{r} 3,672,423 \ -3,651) \ \hline 3,668,792 \ \hline 374,359 \ 76,115) \end{array}$ $\frac{36.482}{35.196}$ 7.454) 268,044) 298,244 $\frac{4}{3}$ 285,914) 7.054
145 3,681,225 $\frac{1}{2}$ 3,764,212 3.681.225 3,673,771 Total $\bullet$ $\overline{\phantom{0}}$ Unrealised gain or
loss on available-
for-sale financial 166,005)
166,005) assets s, Other Equity Interest
Unrealised gains
or losses from $\frac{55,085}{55,085}$ $\frac{14,398}{2}$ 154.548 comprehensive 99,463 14,398) financial assets measured at fair value through 99,463 99,463 85,065 income other $\bullet$ 9,146) $9,853)$ $\frac{14,544}{$ $\frac{1}{9,146}$ statements
translation
differences of foreign operations $\widehat{\widetilde{\mathbb{F}}}$ $9.853$ $4,691$ $9.853$ $\sqrt{\frac{60}{2}}$ Financial اچا ė Ġ جا! Unappropriated
retained earnings $\frac{7,454}{1,014,956}$ 32.335
- 1.355
- 1.355
- 1.355
- 1.355
- 1.355 $36,329$
$285,914$ 37,436)
268,044) $6.107$ 1,022,410 $$1,022,410$ $\frac{370.375}{ }$ $\frac{1}{2}$ 1.079.851 Equity attributable to owners of the parent Retained Earnings J. $\sim$ $\overline{ }$ 548,600 36,329 584.929 37,436 622,365 548,600 584,929 Legal reserve 636 584. الما $\ddot{q}$ ą, 145 ę $|\mathbb{Z}|$ Others j. equity of
associates and joint ventures
accounted for 3,460 3,460 $\frac{1}{3}$ 3,460 under equity
method 3,460 $.460$ Change in net Capital Surplus Difference
between proceeds
from acquisition
or disposal of
subsidiances and
book value 50,399 50,399 50,453 50,453 $7,054$ 2 $\frac{57,507}{ }$ $\frac{45}{453}$ ٠, Additional paid-in 143,353 143.353 143,353 143,353 143.353 $\frac{143}{2}$ capital J. Common stock \$1,786,961 786,961 $\frac{1.786.961}{2}$ 1,786.961 1,786,961 $\frac{1}{1}$ , 786, 961 Notes $\frac{3(1)}{6(6)}$ and 6(19) 6(16) $6(18)$ 6(19) 6(18) Difference between proceeds from acquisition of 6(28)
subsidiaries and book value Difference between proceeds from acquisition of 6(28)
subsidiaries and book value 6(16) Other comprehensive loss for the year
Total comprehensive income (loss) for the year Total comprehensive income (loss) for the year For the year ended December 31, 2018
Balance at January 1, 2018 For the year ended December 31, 2019
Balance at January 1, 2019 Other comprehensive loss for the year Adjusted balance at January 1, 2018 Adjusted balance at January 1, 2019 Change in non-controlling interest Effect of retrospective application Change in non-controlling interest Effect of retrospective application Appropriations of 2017 earnings: Appropriations of 2018 earnings: Cash dividends payable expired Cash dividends payable expired Balance at December 31, 2019 Balance at December 31, 2018 Profit for the year Cash dividends Profit for the year Cash dividends Legal reserve Legal reserve

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

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

		For the years ended December 31,
	Notes		2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		\$	585,810	\$	517,466
Adjustments
Adjustments to reconcile profit (loss)
Net (gain) loss on financial assets at fair value
through profit or loss		€	1,189)		2,854
Expected credit (gain) loss	12	€	6,036)		10,524
Reversal of allowance for loss on inventory market	6(5)
price decline			$5,221$ ) (		64,952)
Share of (profit) loss of associates and joint ventures	6(6)
accounted for under the equity method			1,751)		3,392
Net loss on disposal of investments accounted for	6(22)
under equity method			4,404
Depreciation	6(7)(8)(24)		205,511		187,911
Net loss on disposal of property, plant and equipment	6(22)		1,385		1,212
Property, plant and equipment transferred to expenses	6(7)(29)		527		107
Amortisation	6(9)(24)		8,613		10,022
Net loss on disposal of intangible assets	6(9)(22)		7,630
Amortisation of long-term prepaid rent	6(8)				1,187
Share-based compensation	6(17)(25)		8,648
Dividend income	6(21)		16,433)	(	10,513)
Interest income	6(21)		$14,299$ ) (		14,339)
Interest expense Changes in operating assets and liabilities	6(23)		10,470		9,006

Changes in operating assets Financial assets at fair value through profit or loss			9.564		880
Notes receivable			27,945		60,968
Accounts receivable			657) (		116,837)
Other receivables			1,269)		52,518
Inventories			126,631)	-6	$6,959$ )
Prepayments			28,023		24,891)
Other current assets			1,548)	-0	691)
Other non-current assets			3,137)	- (	2,081)
Changes in operating liabilities
Contract liabilites - current			32,229	€	34,699)
Notes payable		€	28,613)		80,161
Accounts payable			49,981		6,447)
Other payables			39,265	(	24,320)
Receipts in advance			2,365)		2,354
Net defined benefit liability - non-current			34,958)		$19,666$ )
Cash inflow generated from operations			775,898		614,167
Dividends received			16,433		10,513
Interest received			14,552		12,622
Interest paid			10,590)		8,967)
Income tax paid			158,354)		143,400)
Net cash flows from operating activities			637,939		484,935

(Continued)

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

		For the years ended December 31,
	Notes		2019		2018
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in financial assets at amortised cost -
current		$($ \$	33,370)	\$	13,440
Proceeds from capital reduction of financial assets at fair	$6(2)$ and $12(3)$
value through profit or loss - non-current					8,111
Acquisition of financial assets at fair value through other
comprehensive income - non-current		€	$22,876$ ) (		8,100)
Acquisition of investments accounted for under the equity	6(6)
method			$29,940$ )	- (	490)
Cash paid for aquisition of property, plant and equipment	6(29)		$102, 245$ ) (		112, 130)
Interest paid for acquisition of property, plant and	6(7)(23)(29)
equipment			$113$ ) (		85)
Proceeds from disposal of property, plant and equipment			80		2,528
Acquisition of intangible assets	6(9)		$1,486$ ) (		1,916)
Increase in prepayments for equipment			$75,378$ ) (		$55,312$ )
(Increase) decrease in guarantee deposits paid			7,710)		8,202
Increase in other non-current assets			$21,673$ ) (		6,137)
Decrease in other non-current assets			14,508		12,361
Net cash flows used in investing activities			280,203)		139,528)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings Decrease in short-term borrowings	6(30)		435,000		366,000
Increase in short-term notes and bills payable	6(30) 6(30)		355,000) ( 50,000		401,000)
Payments of lease liabilities	6(30)		14,568)		50,000
Redemption of long-term borrowings	6(30)		$212,312$ ) (		4,983)
Decrease in guarantee deposit received	6(30)		5,062		7,961
Cash dividends payable expired	6(16)		145		49
Cash paid for transaction with non-controlling interests	6(28)	€	18, 136)	€	1,261)
Payments of cash dividends	6(18)		268,044)		285,914)
Increase (decrease) in non-controlling interests			239,795		15,609)
Net cash flows used in financing activities			138,058)		284,757)
Effects due to changes in exchange rate			1,837)		899
Net increase in cash and cash equivalents			217,841		61,549
Cash and cash equivalents at beginning of year	6(1)		1,254,061		1,192,512
Cash and cash equivalents at end of year	6(1)	\$	1,471,902	$\pmb{\mathfrak{z}}$	1,254,061

STANDARD CHEM. & PHARM CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(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. For the main business activities of the Company's subsidiaries, please refer to Note 4(3).

(2) The Company has been listed on the Taiwan Stock Exchange starting from December 1995.

THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 24, 2020.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC") New standards, interpretations and amendments endorsed by FSC effective from 2019 are as follows:

	Effective date by
	International Accounting
	Standards Board
New Standards, Interpretations and Amendments	("IASB")
Amendments to IFRS 9, 'Prepayment features with negative compensation'	January 1, 2019
IFRS 16, 'Leases'	January 1, 2019
Amendments to IAS 19, 'Plan amendent, curtailment or settlement'	January 1, 2019
Amendments to IAS 28, 'Long-term interests in associates and joint ventures'	January 1, 2019
IFRIC 23, 'Uncertainty over income tax treatments'	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 Group's financial condition and financial performance based on the Group's assessment.

A. 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.
B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the 'modified retrospective approach') when applying "IFRSs" effective in 2019 as

endorsed by the FSC. Accordingly, the Group increased 'right-of-use asset' and 'lease liability' by \$221,474 and \$171,154, respectively, and decreased prepaid rent (shown as 'prepayments') by \$1,380 and long-term prepaid rents by \$48,940 with respect to the lease contracts of lessees on January 1, 2019. The Group also decreased 'investments accounted for under the equity method' and 'retained earnings' proportionally to its interest to its associate both by \$7,454, with the effect of retrospective application by its associate.

C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:
(a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.
(b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.
(c) The accounting for operating lease whose period will end before December 31, 2019 as shortterm leases and accordingly, rent expense of \$2,914 was recognised for the year ended December 31, 2019.
(d) The exclusion of initial direct costs for the measurement of 'right-of-use asset'.
(e) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
D. The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate ranging from 0.86% to 1.50%.
E. The Group recognised lease liabilities which had previously been classified as 'operating leases' under the principles of IAS 17, 'Leases'. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

Operating lease commitments disclosed by applying IAS 17 as of	\$ 183,038
December 31, 2018
Less: Short-term leases	5,638)
Low-value assets	513)
Add: Immaterial lease agreement	12, 108
Total lease contracts amount recognised as lease liabilities by applying IFRS 16 on January 1, 2019	188, 995
Incremental borrowing interest rate at the date of initial application	$0.86\% \sim 1.50\%$
Lease liabilities recognised as of January 1, 2019 by applying IFRS 16	171, 154

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

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

	Effective date by
New Standards, Interpretations and Amendments	JASB
Amendments 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
Amendments to IFRS 9, IAS 39 and IFRS 7, 'Interest rate benchmark reform'	January 1, 2020

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

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

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

	Effective date by
New Standards, Interpretations and Amendments	IASB
IFRS 17, 'Insurance contracts'	January 1, 2021
Amendments to IAS 1, 'Classification of liabilities as current or non- current'	January 1, 2022
Amendments to IFRS 10 and IAS 28, 'Sale or contribution of assets between an investor and its associate or joint venture'	To be determined by IASB

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

(a) Financial assets at fair value through profit or loss.
(b) Financial assets at fair value through other comprehensive income.
(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 IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5. Critical accounting judgements, estimates and key sources of assumption uncertainty.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

(a) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. The fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary

should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

	Name	Main business	Ownership (%)
Name of investors	of subsidiaries	activities		December 31, 2019 December 31, 2018 Description
Standard Chem & Pharm. Co., Ltd.	Standard Pharmaceutical Co., Ltd.	Research and development, trading, investment and other business of medical products	100.00	100.00
Standard Chem & Pharm. Co., Ltd.	Chia Scheng Investment Co., Ltd.	General investment	100.00	100.00
Standard Chem & Pharm. Co., Ltd.	STANDARD CHEM. & PHARM. PHILIPPINES, INC.	Import and export of various medical products, medicine, supplements	100.00	100.00
Standard Chem & Pharm. Co., Ltd.	Inforight Technology Co., Ltd.	Wholesale of multi- function printers and information software	100.00	100.00
Standard Chem & Pharm. Co., Ltd.	Souriree Biotech & Pharm. Co., Ltd.	Manufacturing of western medicine and retail and wholesale of various medicine	93.17	93.17
Standard Chem & Pharm. Co., Ltd.	Multipower Enterprise Corp.	Import and export of western medicine, nourishment and function food, processing, manufacturing and sale of food	90.72	90.72

	Name	Main business	Ownership (%)
Name of investors	of subsidiaries	activities		December 31, 2019 December 31, 2018	Description
Standard Chem & Pharm. Co., Ltd.	Advpharma Inc.	Research and development, manufacturing and sale of various medicines	88.61	84.58
Standard Chem & Pharm. Co., Ltd.	Syngen Biotech Co., Ltd.	Research and development, manufacturing and sale of APIs, biopesticide, fertiliser and biochemical nutrition, sale of preventive medicines	46.68	47.27	Note 1
Standard Pharmaceutical Co., Ltd.	Jiangsu Standard Biotech Pharmaceutical Co., Ltd.	Research and development, technical consulting and technical services of medicines	100.00	100.00
Chia Scheng Investment Co., Ltd.	SANTOS BIOTECH INDUSTRIES, INC.	Research and development, trading, investment and other business of medical products		100.00	Note 2
Syngen Biotech Co., Ltd.	SYNGEN BIOTECH INTERNATIONAL SDN. BHD.	Research and development, manufacturing and sale of APIs and biochemical nutrition, sale of preventive medicines	100.00	100.00
Jiangsu Standard Biotech Pharmaceutical Co., Ltd.	Jiangsu Standard-Dia Biopharma Co., Ltd.	Research and development, manufacturing and sale of various medicines	55.00	55.00

Note 1: The subsidiary, Syngen Biotech Co., Ltd. ("Syngen Biotech"), filed for an initial public offering with the Taipei Exchange. As part of the public trading process, the Group allowed its underwriter to exercise the overallotment option, which decreased the Group's ownership percentage in Syngen Biotech down to below 50%. The Group still has control over Syngen Biotech and accordingly, Syngen Biotech was included in the consolidated financial statements.
Note 2: The subsidiary, SANTOS BIOTECH INDUSTTRIES, INC., was liquidated in June 2019. Please refer to Note 6(9) for the information related to Intangible assets.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:
(1) As of December 31, 2019 and 2018, the non-controlling interest amounted to \$882,209 and \$565,087, respectively. The information on non-controlling interest and respective subsidiaries is as follows:

			Non-controlling interest
		December 31, 2019			December 31, 2018
	Principal
Name of	place		Ownership		Ownership
subsidiary	of business	Amount	(%)	Amount	(%)	Description
Syngen Biotech Co., Ltd.	Taiwan	794, 929 \$	53.32%	460, 408	52.73%

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

A. Balance sheets

	December 31, 2019		December 31, 2018
Current assets	\$ 1, 073, 254	S	657,047
Non-current assets	855, 242		644,034
Current liabilities	$292,638)$ (		344, 211)
Non-current liabilities	144, 368)		83,727)
Total net assets	1, 491, 490		873, 143

B. Statements of comprehensive income

				For the years ended December 31,
		2019		2018
Revenue	$\frac{3}{2}$	1, 297, 269	$\frac{3}{2}$	1,080,453
Profit before income tax	\$	240, 255	\$	176, 158
Income tax expense		51,490)		42, 168)
Net income for the year	\$	188, 765	\$	133, 990
Total comprehensive income for the year	\$	188, 930	$\frac{S}{\sqrt{2}}$	133, 692
Comprehensive income attributable to non-controlling interest	\$	97,664	$\boldsymbol{\mathcal{S}}$	70, 496
C. Statements of cash flows
	For the years ended December 31,
		2019		2018
Net cash flows provided by operating activities	\$	255, 236	\$	66,718
Net cash flows used in investing activities	(	$106, 986)$ (		88, 106)
Net cash flows provided by (used in) financing activities		242, 495	- (	20, 984)
Net exchange differences		101		241)
Net increase (decrease) in cash and cash equivalents		390, 846	- (	42, 613)
Cash and cash equivalents at beginning of the year		128, 547		171, 160
Cash and cash equivalents at end of the year	\$	519, 393	\$	128, 547

(4) Foreign currency translation

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

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-

translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within other gains and losses.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- iii. All resulting exchange differences are recognised in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, if the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, if the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be paid off within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be paid off within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(6) Cash equivalents
A. Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
B. Time deposits and repurchase bonds that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.
(7) Financial assets at fair value through profit or loss
A. Financial assets at fair value through profit or loss are financial assets 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 Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(8) Financial assets at amortised cost
A. Financial assets at amortised cost are those that meet all of the following criteria:
- (a) The objective of the Group's business model is achieved by collecting contractual cash flows.
- (b) The assets' contractual cash flows represent solely payments of principal and interest.
B. The Group's time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
(9) 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 Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive.
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 Group measures the financial assets at fair value plus transaction costs. The Group 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 Group and the amount of the dividend can be measured reliably.

(10) Accounts and notes receivable
A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
$(11)$ 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.

(12) Impairment of financial assets

For financial assets at amortised cost, at each reporting date, the Group 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 Group recognises the impairment provision for lifetime ECLs.

(13) Derecognition of financial assets

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

(14) Leasing arrangements (lessor) - operating leases

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.

(15) Investments accounted for using equity method / associates

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

previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.

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

Assets	Useful Life
Buildings (including auxiliary equipment)	$2 \sim 60$ years
Machinery and equipment	$2 \sim 50$ years
Utility equipment	$2 \sim 20$ years
Transportation equipment	$2 \sim 15$ years
Office equipment	$2 \sim 15$ years
Other equipment	$2 \sim 35$ years

(17) Leasing arrangements (lessee) right-of-use assets/lease liabilities (Effective 2019)
A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of fixed payments, less any lease incentive receibable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement

is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability; and
(b) Any lease payments made at or before the commencement date.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset's useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(18) Operating leases (lessee) (Prior to 2019)

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.

(19) Intangible assets

A. Goodwill

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

B. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 to 20 years.

C. Patents

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

D. Other intangible assets

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

(20) Impairment of non-financial assets
A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.
B. The recoverable amounts of goodwill has not yet been available for use are evaluated periodically. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
$(21)$ 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.

(22) 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.
(23) 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.

(24) 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 Group 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 Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
(25) Employee share-based payment
A. For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.
B. For cash capital increase reserved for employee pre-emption arrangement, grant date is determined as the date on which the exercise price and number of shares are agreed by all parties involved.
$(26)$ 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 Company and its domestic subsidiaries of the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from research and development expenditures, etc., to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.
(27) 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.

(28) 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.

(29) Revenue recognition
A. Sales of goods
- (a) The Group manufactures and sells human pharmaceuticals and dietary supplements, 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 Group 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 $4\text{-}6$ 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 Group 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 Group 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 Group'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 Group recognises the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

(30) Operating segments

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

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

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

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

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 Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the influence of different market demand and expiration date, etc., the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.
- (b) As of December 31, 2019, the carrying amount of inventories was \$914,629.
B. Financial assets-fair value measurement of unlisted stocks without active market
- (a) The fair value of unlisted stocks held by the Group that are not traded in an active market is determined considering those companies' recent fund raising activities and technical development status, fair value assessment of other companies of the same type, market conditions and other economic indicators existing on balance sheet date. Any changes in these judgements and estimates will impact the fair value measurement of these unlisted stocks. Please refer to Note 12(3) for the fair value estimation for the financial instruments fair value information.
- (b) As of December 31, 2019, the carrying amount of unlisted stocks without active market was \$131,561.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December 31, 2019	December 31, 2018
Cash:
Revolving funds and petty cash	\$ 6, 111	\$ 5, 123
Checking accounts and demand deposits	877, 325	831, 926
	883, 436	837,049
Cash equivalents:
Time deposits	512,760	401, 231
Repurchase bonds	75, 706	15,781
	588, 466	417,012
	1, 471, 902	\$ 1, 254, 061

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

B. As of December 31, 2019 and 2018, the carrying amount of more than 3-month time deposits (shown as "Financial assets at amortised cost - current") was \$84,450 and \$51,080, respectively.

C. As of December 31, 2019 and 2018, the Company has no cash and cash equivalents pledged to others.

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

		December 31, 2019 December 31, 2018
Current items:
Financial assets mandatorily measured at fair
value through profit or loss
Beneficiary certificates	\$ 128, 195	\$ 137, 418
Listed stocks	4,685	5, 229
Unlisted stocks	12,000	12,000
	144,880	154, 647
Valuation adjustment	9,064)	9, 243)
	135, 816	145, 404
Non-current items:
Financial assets mandatorily measured at fair
value through profit or loss
Emerging stocks	\$ 1,759	\$
Unlisted stocks	19,486	21,042
	21, 245	21,042
Valuation adjustment	5,954)	6,964)
	15, 291	\$ 14,078

A. The Group recognised net gain (loss) (shown as "other gains and losses") of \$948 and (\$740) for

the years ended December 31, 2019 and 2018, respectively.

B. The Group's financial assets at fair value through profit or loss non-current, Der Yang Biotechnology Venture Capital, conducted a capital reduction in July 2018. The Group has reversed 111 thousand shares at the initial investment price of \$1,111 proportionately.
C. The Group'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 700 thousand shares at the initial investment price of \$7,000 proportionately.
D. As of December 31, 2019 and 2018, the Company has no financial assets at fair value through profit or loss pledged to others.
E. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2), 'Financial Instruments'.
December 31, 2019 December 31, 2018 Non-current items: Equity instrument Listed stocks $\mathbf{\hat{S}}$ 140,753 125,664 \$ 196, 997 189, 210 Unlisted stocks 337, 750 \$ 314, 874 $86, 617$ 101,093 Valuation adjustment $\boldsymbol{\mathsf{S}}$ \$ 424, 367 415, 967
(3) Financial assets at fair value through other comprehensive income non-current
A. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. 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 Group was its book value.
B. The Group recognised (\$14,476) and (\$54,523) in other comprehensive income for fair value change for the years ended December 31, 2019 and 2018, respectively.
C. The Group recognised dividend income of \$15,793 and \$9,425 in profit or loss (shown as "other income") in relation to the financial assets at fair value through other comprehensive income for the years ended December 31, 2019 and 2018, respectively.
D. As of December 31, 2019 and 2018, the Group has no financial assets at fair value through other comprehensive income pledged to others.
E. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2), 'Financial Instruments'.

(4) Notes and accounts receivable

	December 31, 2019		December 31, 2018
Notes receivable	\$ 207, 839	S	235, 784
Less: Allowance for bad debts	171)		427)
	207, 668	-S	235, 357
Accounts receivable	\$ 696,506	-S	695, 905
Less: Allowance for bad debts	12, 267)		18, 103)
	684, 239		677, 802

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

	December 31, 2019	December 31, 2018
Notes receivable:
During the credit period	207, 839	\$ 235, 784
Accounts receivable:
During the credit period	\$ 605, 949	\$ 595, 101
Overdue up to 90 days	70,967	76, 492
Overdue 91 to 180 days	18,409	24,066
Overdue 181 to 270 days	477	144
Overdue over 270 days	704	102
	\$ 696,506	\$ 695, 905

The above ageing analysis was based on days overdue.

B. As of December 31, 2019 and 2018, notes and accounts receivable were all from contracts with customers. As of January 1, 2018, the balance of receivables from contracts with customers amounted to \$876,474.
C. 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 Group's notes and accounts receivable was its book value.
D. As of December 31, 2019 and 2018, the Group has no notes and accounts receivable pledged to others.
E. Information relating to credit risk of notes and accounts receivable is provided in Note 12(2), 'Financial instruments'.

(5) Inventories

				December 31, 2019
				Allowance for
		Cost		valuation loss		Book value
Merchandise	$\boldsymbol{\mathcal{S}}$	127, 362	$($ \$	5, 344)	\$	122,018
Raw materials		296, 760		7,640)		289, 120
Supplies		70,624		4,945)		65,679
Work in process		116,759		1, 707)		115,052
Finished goods		333, 989		11, 229)		322, 760
	\$	945, 494	(\$	30, 865)	\$	914, 629
				December 31, 2018
				Allowance for
		Cost		valuation loss		Book value
Merchandise	\$	88,557	(3)	4,032)	- \$	84, 525
Raw materials		284, 920		11,556)		273, 364
Supplies		58,042		2,797)		55, 245
Work in process		90,639		$1,099$ )		89, 540
Finished goods		307,056		16,602)		290, 454
	\$	829, 214	(3)	36,086)	\$	793, 128

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

	For the years ended December 31,
	2019	2018
Cost of goods sold	\$ 2, 157, 917	\$ 1,964,628
Loss on scrapped inventories	67,847	148,889
Reversal of allowance on inventory market
price decline (Note 1)	$5, 221)$ (	64, 952)
Gain on physical inventory	$828)$ (	1,001)
Purchase discount (Note 2)	-	52,673)
Under-applied fixed manufacturing overhead		25, 927
	2, 219, 715	2,020,818

(Note 1) The Group reversed a previous inventory write-down which was accounted for as reduction of operating costs as these items were subsequently sold or disposed.
(Note 2) The subsidiary, Multipower Enterprise Corp. (the "Multipower"), was affected by its supplier in France, LNS Lactalis Group, which was polluted by salmonella. Because of this, Multipower decided to discontinue selling certain milk powder in advance for food safety. As of March 31, 2019, Multipower has recognised all accrued loss on inventories and purchase discounts (corresponding to "other receivables") totaling \$114,736 for these inventories informed to be regulated by Food and Drug

Administration. All affected inventories were scrapped and Multipower requested for compensation to be collected by installment within one year. As of December 31, 2019, Multipower had collected all compensation payment based on mutual agreement. In addition, in January 2019, the supplier had paid EUR 1,641 thousand as compensation for operating loss, which Multipower recognised as indemnity income of \$57,339 (shown as "Other income") for the year ended December 31, 2019.

(6) Investments accounted for under the equity method

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

	For the years ended December 31,
	2019		2018
At January 1 before adjustments	156, 345	S	159,091
Effects of retrospective application	7,454)
At January 1 after adjustments	148,891		159,091
Acquisition of investments accounted for under
the equity method	29, 940		490
Share of profit or loss of investments accounted
for under the equity method	$1,751$ (		3, 392)
Other equity interest – Actuarial losses of
defined benefit plan	$263)$ (		181)
Other equity interest – Financial statements
translation differences of foreign operations	319)		337
At December 31	180,000		156, 345

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

	December 31, 2019	December 31, 2018
WE CAN MEDICINES CO., LTD.	\$ 134, 573	140, 967
CNH TECHNOLOGIES, INC.	12, 375	10, 420
Taiwan Biosim Co., Ltd.	33,052	4,958
	180,000	156, 345

C. Associate:

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

			Shareholding ratio
Company	Principal place		December 31,
name	of business	2019	2018
WE CAN MEDICINES CO., LTD.	Taiwan	33.10%	33.10%

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

	December 31, 2019	December 31, 2018
Current assets	\$ 704, 171	\$ 649, 428
Non-current assets	717,856	170,673
Current liabilities	$556, 972)$ (	365, 287)
Non-current liabilities	458, 489)	29, 110)
Total net assets	406, 566	\$ 425, 704
Share in associate's net assets	134, 573	\$ 140, 908
Carrying amount of the associate	134, 573	\$ 140, 967
ii. Statement of comprehensive income

	For the years ended December 31,
	2019	2018
Revenue	2, 287	\$ 2, 304, 700
Net income (loss) for the year	17 h	726
Total comprehensive income (loss) for the year	3,380

(c) As of December 31, 2019 and 2018, the carrying amount of the Group's individually immaterial associates amounted to \$45,427 and \$15,378, respectively. The share in associate's financial performance is as follows:

	For the years ended December 31,
	2019	2018
Net income (loss) for the year		835)
Total comprehensive income (loss) for the year		835)

D. For the years ended December 31, 2019 and 2018, the details of the Group's equity transactions are provided in Note 7," Related party transactions".

E. As of December 31, 2019 and 2018, the Group has no investment accounted for under the equity method pledged to others.

	Land	Buildings		Machir	IETY	equipment Utility		Transportation equipment		equipment Office		equipment Other		Construction in equipment to progress and be inspected	Total
At January 1, 2019													↔	886	\$4,050,298
Accumulated depreciation $\rm \overline{C}ot$	\$515, 143	\$1,200,339	348, 947)		1,405 \$1,025,378 651	145, 116) 190, 421 ക	↔	278) 2,631 $\sim$	⇔	13,704) 22, 817		754,595 \$1,092,683			1, 916, 045
	\$515,143	↔	851, 392 -	ڝ	973 373	45,305 ⇔	ఈ	353	↔	9,113	↔	338,088	↔	886	253 \$2,134,
2019
At January 1	\$515,143	↔	851, 392	↔	973 373,	45,305 ↔	↔	353	ڝ	$\frac{13}{11}$ တ	ക	338,088	↔	886	\$2, 134, 253
Additions-cost			10,851		163 $\overline{\mathbf{c}}$	2,674		460		2,040		17,325		33, 171	87,684
Transfer-cost (Note 1)			368,003		005 255,	$\overline{8}$	033	781 $\frac{8}{18}$		27,590		596, 616)		824)	89,972
-accumulated					0,707 140		7,903)	(2, 185)		24, 921)		459,079
depreciation			273, 363) 56, 226)		76, 999)		7,642)	158)		155) က်		43, 599)			88,779)
Disposals-cost Depreciation			1,717)		253)		857)			(110)		13, 802			(39) 24,
-accumulated							857			410		13,189			22,574
depreciation	I		4,308) 1,272		665) 6,846				26	$\Xi$		24)		္သြ	5,021
Net exchange differences										10,652	↔	173,640	⊷	33, 198	2, 116, 644 കി
At December 31	\$515,143	⇔∣	895, 904	ఱ	363 $\overline{43}$	50,467 ↔	↔	277 င်္	↔
At December 31, 2019
Cost	\$515,143	\$1,571,452			\$1,292,635	210, 271 ↔	↔	21,799	↔	51,945	မာ	497, 658	↔	33,198	\$4,194,101
Accumulated depreciation			675, 548)		272) ÷ 861	159, 804		15, 522)		41, 293)		324,018			2,077,457
	\$ 51 5, 143	ا⇔	895,904	e⊖l	$\frac{363}{2}$ $\frac{31}{2}$	50,467 ⇔∥	↔	277 نت	لى	10,652	↔	173, 640	⇔l	198 ဆွ	\$2,116,644

(7) Property, plant and equipment

$-40-$

													Construction in
						Utility		Transportation		Office	Other		equipment to progress and
	Land		Buildings		Machinery	equipment		equipment		equipment	equipment		be inspected	Total
At January 1, 2018
Cost	\$515,143		\$1,184,055	↔	956,022	\$189,452	↔	2,721	↔	22, 527	\$1,061,289	703, 818)	6,120 ⊷	1,780,609 \$3,937,329
Accumulated depreciation	\$515, 143	ا⊕	313, 250 870, 805		614, 211 $\Xi$ 341,	136, 644) 52,808 ⇔	↔	098) 623 $\mathfrak{c}$	$\Xi$ e	10,588) 939	⇔	357, 471	6,120 ఈ∥	\$2,156,	720
2018
At January 1	\$515,143	⇔	870, 805	↔	341, 811	52,808 ⇔	↔	623	မာ	11,939	⇔	357, 471	6,120 ↔	\$ 2, 156, 720
Additions-cost			17,362		54,320	2,199				501		30, 455		105,723 886
Transfer upon completion					6,013								6,013
Transfer-cost (Note 2)			2,480		35, 423	ı						29, 259		107	67,055
Reclassification-accumulated
depreciation			2, 298		(151)					23		2,433
Depreciation			33,799)		61,006)	9,476)		263)		3, 213		80, 154)			(87, 911)
Disposals-cost			299)		25,502)	1, 230)		ີລິ				28, 397)			55, 478)
depreciation -accumulated			238		23,531	1,004		50				26,915		l	51,738
Net exchange differences			$3,097$ )		(09					136)		106			3,594)
At December 31	\$515,143	⇔∣	851,392	↔	373,973	45,305 ↔	↔	353	⇔	9,113	↔	338,088	886 မာ၊	134, 253 . અં
At December 31, 2018
Cost	\$515,143		348, 947 \$1, 200, 339	لى	651, 405) 025, 378	145, 116) \$190,421	↔	278) 2,631 $\sim$	↔	13,704) 22, 817	\$1,092,683	754, 595)	မေ	1, 916, 045 \$4,050,298 886
Accumulated depreciation	\$515,143	မာ	851,392	ఈ	373,973	305 $\frac{45}{ }$ اچە	اچھ	353	ఈ∣	9,113	မခ∥	338,088	$\frac{86}{1}$ ↔	\$2,134,253

$rac{1}{7}$

(Note 1) Including transfer of \$10,351 from 'inventories'; transfer of \$80,972 from 'prepayment for equipment'; transfer of \$824 to 'other non-current assets' and transfer of \$527 to expenses.
(Note 2) Including transfer of \$6,677 from 'inventories'; transfer of \$60,485 from 'prepayment for equipment' and transfer of \$107 to expenses.
A. As of December 31, 2019 and 2018, the carrying amount of land, buildings and other equipment held for operating leases are as follows:

	December 31, 2019	December 31, 2018
Land	5, 264	264
Buildings	12.519	094 56.
Other equipment	3,921	578

B. 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, 2019 and 2018 are as follows:

	For the years ended December 31,
	2019		2018
Capitalised interest payments			85
Interest rate		$0.83\% \sim 0.86\%$	92%

C. Information about the property, plant and equipment that were pledged to others as collateral as of December 31, 2019 and 2018 is provided in Note 8, 'pledged assets'.

$(8)$ Leasing arrangements lessee
A. The Group leases various assets including land, buildings and transportation equipment. Rental contracts are typically made for periods of 2 to 50 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

		For the year ended
	December 31, 2019	December 31, 2019
	Carrying amount	Depreciation charge
Land	\$ 181, 444	9,698
Buildings	12,073	6,436
Transportaion equipment	10, 164	598
	\$ 203, 681	16,732

C. For the year ended December 31, 2019, the additions to right-of-use assets was \$1,613.
D. The information on profit and loss accounts relating to lease contracts is as follows:

	For the year ended December 31, 2019
Items affecting profit or loss
Interest expense on lease liabilities	S	2,000
Expense on short-term lease contract		2,914
Expense on leases of low-value assets		710
	S	5,624

E. For the year ended December 31, 2019, the Group's total cash outflow for leases was \$20,192.
F. On December 31, 2011, the Group signed a land use right contract amounting to \$58,857 (approximately RMB13,021 thousand) with the People's Republic of China Government for use of the land at Taizhou City, Jiangsu Province, China for a term of 50 years. All rentals had been paid on the contract date. As of December 31, 2018, the carrying amount of long-term prepaid rents recognised by the Group was \$48,940 while rental expenses (shown as 'operating expenses') of \$1,187 was recognised for the year ended December 31, 2018.
(9) Intangible assets

	Goodwill		Software		Patents	Others		Total
At January 1, 2019
Cost	\$ 70,513	\$	45,894	\$	35,063	\$ 84,058	\$	235, 528
Accumulated amortisation	$248)$ (		$32, 810)$ (		$19,650)$ (	$57, 753)$ (		110, 461)
Accumulated impairment						$13, 924)$ (		13, 924)
Net exchange differences			9)		192			183
	\$ 70, 265	\$	13,075	\$	15,605	\$ 12, 381	\$	111, 326
2019
At January 1	\$ 70, 265	\$	13,075	$\boldsymbol{\mathsf{s}}$	15,605	\$ 12, 381	\$	111,326
Additions - acquired separately			1,486					1,486
Amortisation			$5, 344)$ (		$1,771)$ (	$1,498$ ) (		8,613)
Disposal - cost (Note)					16, 956)			16,956)
- accumulated amortisation					9,326			9,326
Net exchange differences			10)		27			17
At December 31	\$ 70, 265	\$	9,207	\$	6, 231	\$ 10,883	\$	96,586
At December 31, 2019
Cost	\$ 70,513	$\mathbf{\$}$	47,380	\$	18,107	\$ 84,058	\$	220,058
Accumulated amortisation	$248)$ (		$38, 154)$ (		$12,095$ ) (	$59, 251)$ (		109,748)
Accumulated impairment						$13, 924)$ (		13,924)
Net exchange differences			19)		219			200
	\$ 70, 265	\$	9,207	\$	6, 231	\$ 10,883	$\boldsymbol{\$}$	96,586

(Note) The Group's subsidiary, SANTOS BIOTECH INDUSTRIES, INC., had been in the process of liquidation since January, 2019. The carrying amount of intangible assets was set to zero

$\mathcal{L}_{\mathcal{A}}$

and the subsidiary recognised net loss on disposal of intangible assets of \$7,630 (shown as 'other gains and losses'). The SANTOS BIOTECH INDUSTRIES, INC. was liquidated in June, 2019.

		Goodwill	Software	Patents		Others	Total
At January 1, 2018
Cost	\$	70, 513	\$ 43, 978	\$ 35,063	$\mathbf{\hat{S}}$	84,058	\$ 233, 612
Accumulated amortisation		$248)$ (	$27,460$ ) (	$16, 478$ ) (		$56, 253)$ (	100, 439)
Accumulated impairment						$13, 924)$ (	13, 924)
Net exchange differences			2)	61)			63)
	\$	70, 265	\$ 16,516	18,524	\$	13,881	119, 186
2018
At January 1	\$	70, 265	\$ 16,516	\$ 18,524	\$	13,881	\$ 119, 186
Additions - acquired separately			1,916				1,916
Amortisation			$5,350)$ (	$3, 172)$ (		$1, 500)$ (	10,022)
Net exchange differences			7)	253			246
At December 31	S	70, 265	\$ 13,075	\$ 15,605	\$	12,381	\$ 111, 326
At December 31, 2018
Cost	\$	70,513	\$ 45,894	\$ 35,063	\$	84,058	\$ 235, 528
Accumulated amortisation		$248)$ (	$32,810)$ (	$19,650)$ (		$57, 753)$ (	110, 461)
Accumulated impairment						$13, 924)$ (	13, 924)
Net exchange differences			9)	192			183
	\$	70, 265	\$ 13,075	15,605	\$	12,381	111, 326

A. No borrowing costs were capitalised as part of intangible assets for the years ended December 31, 2019 and 2018.

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

	For the years ended December 31,
		2019		2018
Operating costs	\$	4,683	\$	4,679
Selling expenses		1,437		1,367
General and administrative expenses		1,816		3,509
Research and development expenses		677		467
		8.613		10.022

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

		December 31, 2019 December 31, 2018
Multipower Enterprise Corp.		70,265		70, 265

D. Impairment information about the intangible assets is provided in Note $6(10)$ for the impairment of non-financial assets.
E. As of December 31, 2019 and 2018, the Company has no intangible assets pledged to others.
(10) Impairment of non-financial assets
A. Goodwill is tested annually for impairment. Goodwill is allocated to the Group's cash-generating unit - Multipower Enterprise Corp., identified according to operating segment. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by the cashgenerating unit - Multipower Enterprise Corp. Cash flow of financial budgets is prepared based on forecasts of growth of future annual revenue, profit and capital expenditure. Management determined budgeted gross margin based on past performance and its expectation of market development. The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax and reflect specific risks relating to the relevant operating segments.
B. The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired for the years ended December 31, 2019 and 2018.
C. As of December 31, 2019 and 2018, the carrying amount of accumulated impairment of nonfinancial assets are both \$13,924, respectively.

Type of borrowings	December 31, 2019	Interest rate range	Collateral
Unsecured bank borrowings	\$ 340,000	$1.00\% \sim 1.05\%$	None
Bank secured borrowings	225,000	1.00%	Land and buildings
	565,000
Type of borrowings	December 31, 2018	Interest rate range	Collateral

Unsecured bank borrowings	\$ 310,000	$1.00\% \sim 1.50\%$	None
Bank secured borrowings	175,000	1.00%	Land and buildings

(11) Short-term borrowings

For more information regarding interest expenses recognised in profit or loss by the Group for the years ended December 31, 2019 and 2018, please refer to Note 6(23), 'Finance costs'.

(12) Short-term notes and bills payable

	December 31, 2019	Interest rate range	Collateral
Commercial papers payable	300,000	$0.58\% \sim 0.68\%$	None
	December 31, 2018	Interest rate range	Collateral
Commercial papers payable	250,000	$0.64\% \sim 0.66\%$	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 Group for the years ended December 31, 2019 and 2018, please refer to Note 6(23), 'Finance costs'.

(13) Long-term borrowings

Type of borrowings	Maturity date	December 31, 2018	Interest rate	Collateral
Unsecured bank borrowings	2019, 10, 17 $\sim$ 2021.5.13	\$ 112, 312	$1.18\% \sim 1.82\%$	None
Secured bank borrowings	2021, 3, 19	100,000	1.22%	Buildings, machinery and other equipments
		212, 312
	Less: Current portion of long-term borrowings	60,029)
		\$ 152, 283

A. The Group has repaid all outstanding long-term borrowings during 2019.

B. For more information regarding interest expenses recognised in profit or loss by the Group for the years ended December 31, 2019 and 2018, please refer to Note 6(23), 'Finance costs'.

(14) Pensions

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

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

		December 31, 2019	December 31, 2018
Present value of defined benefit obligations	(\$	518, 127 $)$ (\$	507, 119
Fair value of plan assets		284, 872	243, 079
	3	233, 255)	264,040)
Net defined benefit liability in the balance sheet (Note 1)	(3)	$244,022)$ (\$)	271,670)
Net defined benefit asset in the balance sheet (Note 2)		10,767	7,630
	3	$233, 255)$ (\$)	264, 040)

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

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

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

		Present value of
		defined benefit obligation		Fair value of plan assets		Net defined benefit liability
2019
At January 1	(\$	507, 119	-\$	243,079	(	264, 040)
Current service cost		4,896)				4,896)
Interest (expense) income		4,996)		2,409		2,587)
Reversal of past service cost		548				548
		516, 463)		245, 488		270, 975)
Remeasurements:
Return on plan assets				8,602		8,602
Change in demographic
assumptions		10 ₂				10)
Change in financial assumptions (		13, 295)				13, 295)
Experience adjustments		2,607)				2,607)
		15, 912)		8,602		7,310)
Pension fund contribution				45,030		45,030
Paid pension		14, 248		14, 248)
At December 31	3	518, 127)	\$	284, 872	(\$	233, 255)

		Present value of
		defined benefit obligation		Fair value of plan assets		Net defined benefit liability
2018
At January 1	(\$	480, 022)	S	$214,584$ (\$)		265, 438)
Current service cost		5,028)				5,028)
Interest (expense) income		4,779)		2, 191		2,588)
Reversal of past service cost		1,858				1,858
		487, 971)		216, 775		271, 196)
Remeasurements:
Return on plan assets				6,405		6,405
Change in demographic
assumptions		18)				18)
Change in financial assumptions		25, 957)				25,957)
Experience adjustments		3, 234)				3, 234)
		29, 209)		6,405		22,804)
Pension fund contribution				29,960		29,960
Paid pension		10,061		10,061)
At December 31	$\boldsymbol{\mathsf{\$}}$	507, 119)	\$	243,079	(\$	264,040)

(c) The Bank of Taiwan was commissioned to manage the Fund of the Company's and its domestic subsidiaries' defined benefit pension plan in accordance with the Fund's annual investment and utilisation plan and the "Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labour Retirement Fund" (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company and its domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and its domestic subsidiaries are unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The fair value of plan assets as of December 31, 2019 and 2018 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,
	2019	2018
Discount rate	$0.70\% \sim 0.75\%$	1.00%
Future salary increases	$2.00\% \sim 2.50\%$	$2.00\% \sim 2.50\%$

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, 2019
Effect on present value of defined benefit obligation	$($ \$	13, 271)	\$	13,766	S	13, 518	(\$	13, 104)
December 31, 2018
Effect on present value of defined benefit obligation	(\$	3,557	\$	14.083	S	13. 841	(\$	13.396)

The sensitivity analysis above was arrived at based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(e) Expected contributions to the defined benefit pension plan of the Group for the year ended December 31, 2020 amount to \$10,735.
(f) As of December 31, 2019, the weighted average duration of that retirement plan is $9\neg 12$ years. The analysis of timing of the future pension payment was as follows:

Within 1 year	12, 235
2-5 years	91, 252
Over 5 years	453,606
	557,093

B. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the "New Plan") under the Labour Pension Act (the "Act"), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labour Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The Group's subsidiaries, Jiangsu Standard Biotech Pharmaceutical Co., Ltd. and Jiangsu Standard-Dia Biopharma Co., Ltd., in Mainland China are subject to the government sponsored defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People's Republic of China (PRC) are based on a certain percentage of employees' monthly salaries and wages. For the years ended December 31, 2019 and 2018, the contribution rates are from 19% to 30%. Other than the monthly contributions, the Group has no further obligations. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2019 and 2018 were \$37,850 and \$35,335, respectively.

$(15)$ 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.
	2019	2018
Beginning and ending balance	178, 696	178,696

B. As of December 31, 2019, 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.

$(16)$ 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 years ended December 31, 2019 and 2018, pursuant of the Business letter No. 10602420200, the Company reclassified dividends payable of \$145 and \$49, respectively, which was expired and not collected by the shareholders, to capital surplus.
C. For more information regarding changes of capital surplus due to transactions with noncontrolling interest, please refer to Note 6(28), 'Transactions with non-controlling interest'.

(17) Share-based payments

The Group's subsidiary, Syngen Biotech Co., Ltd. ("Syngen Biotech") increased its capital by issuing new shares as resolved by the Board of Directors on July 31, 2019 and granted 400 thousand shares for employee share option at the price of \$120. The grant date was set on September 11, 2019. Syngen recognised compensation costs of \$8,648. The aforementioned fair value of stock options granted on grant date is measured using the Black-Scholes option-pricing model. Relevant information is as follows:

Grant date	2019.9.11
Stock price (in dollars)	S	141.5
Expected dividend yield		1.86%
Expected price volatility		35.17%
Risk-free rate		1.04%
Expected duration (year)		$0.07$ year
Fair value (in dollars per share)	\$	21.62

(18) Retained earnings

A. 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 19, 2019 and June 20, 2018, the Company recognised cash dividends distributed to owners amounting to \$268,044 (\$1.5 (in dollars) per share) and \$285,914 (\$1.6 (in dollars) per share) for the appropriations of 2018 and 2017 earnings, respectively. On March 24, 2020, the Board of Directors proposed for the distribution of dividends from 2019 earnings of \$268,044 (\$1.5 (in dollars) per share).

(19) Other equity

Unrealised gain

on valuation of Currency
translation financial assets Total
At January 1 $($ \$ $\mathbf{\S}$ $\mathbf{\hat{S}}$ 9,853) 99, 463	89,610
Currency translation differences
- Company ( 4,691) (	4,691)
Valuation adjustment
- Company 17, 152	17, 152
- Subsidiaries 31, 550)	31,550)
$\overline{\mathcal{L}}$ At December 31 14,544) 85,065 \$	$\overline{70,521}$
For the year ended December 31, 2018
Unrealised gain
on valuation of Currency
translation financial assets Total
$($ \$ At January 1 before adjustments $\mathcal{S}$ $\mathbf{\$}$ 9,146) 166,005	156,859
Effect of retrospective application
- valuation adjustment $(11, 717)$ (	11, 717)
At January 1 after adjustments 260	260
Adjusted balance at January 1 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

(20) Operating revenue

A. The Group 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, 2019
		Domestic		International		Total
Revenue from sales of medicine	\$	1,776,613	$\boldsymbol{\mathcal{S}}$	320, 692	\$	2,097,305
Revenue from sales of dietary
supplement		1, 199, 859		109,876		1, 309, 735
Revenue from rendering of
services		9, 141				9, 141
Others		273, 052		247,896		520, 948
		3, 258, 665	\$	678, 464	\$	3, 937, 129

	For the year ended December 31, 2018

		Domestic		International		Total
Revenue from sales of medicine	\$	1,665,110	$\mathcal{S}$	414, 933	\$
						2,080,043
Revenue from sales of dietary supplement		917, 370		62, 331
Revenue from rendering of						979, 701
services		24, 193				24, 193
Others		305, 670		183, 486		489, 156

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

				December 31, 2019 December 31, 2018	January 1, 2018
Contract liabilities – sales of medicine	\$	54, 476	-S	40,526	\$ 40.941
Contract liabilities – sales of dietary supplement		37,688		17,858	52.974
Contract liabilities – others		1,863		3,414	2,582
	S	94,027		61,798	96.497

Revenue recognised that was included in the contract liability balance at the beginning of the year ended December 31, 2019 and 2018 were \$57,223 and \$53,260, respectively.

$(21)$ Other income

		For the years ended December 31,
		2019	2018
Dividend income	\$	16, 433	\$	10,513
Interest income		14, 299		14, 339
Rental income		2, 174		6,339
Technology transfer income		11,803		50, 472
Research income		10,061
Indemnity income (Note)		57, 339
Other income		21,863		32, 626
	۰D	133, 972	S	114.289

(Note) Please refer to Note 6(5)," Inventories".

(22) Other gains and losses

	For the years ended December 31,
		2019		2018
Net currency exchange gain (loss)	$($ \$	$28,933$ \$		29,631
Net loss on disposal of investments		4,404)
Net gain (loss) on current financial assets at fair
value through profit or loss		948	- (	740)
Net loss on disposal of property, plant and
equipment		$1,385$ ) (		1, 212)
Net loss on disposal of intangible assets		7,630)
Indemnity loss		11,880)
Other losses		2,003)		362)
	3	55, 287)	\$	27, 317
$(23)$ Finance costs
		For the years ended December 31,
		2019		2018
Interest expense
Bank borrowings	\$	8,583	\$	9,091
Lease liabilities		2,000
		10,583		9,091
Less: Capitalisation of qualifying assets		113)		85)

$\frac{\textcircled{}}{\textcircled{}}$

$10,470$

$\frac{1}{2}$

$9,006$

(24) Expenses by nature

	For the year ended December 31, 2019
	Recognised in operating costs		Recognised in operating expenses		Total
Employee benefit expenses Depreciation Amortisation on intangible assets	\$ 453, 413 154, 181 4,683	\$	595,039 51, 330 3,930	\$	1,048,452 205, 511 8,613 1, 262, 576
	\$ 612, 277	\$	650, 299	\$

		For the year ended December 31, 2018
		Recognised in		Recognised in
		operating costs		operating expenses	Total
Employee benefit expenses	\$	418,012	\$	559,068	\$	977,080
Depreciation		146, 445		41, 466		187, 911
Amortisation on intangible assets		4,679		5, 343		10,022
		569, 136	S	605, 877		1, 175, 013

(25) Employee benefit expenses

	For the year ended December 31, 2019
		Recognised in operating costs		Recognised in operating expenses	Total
Wages and salaries	\$	374,006	\$	499, 307	\$	873, 313
Share-based employee compensation		2,808		5,840		8,648
Labour and health insurance
expenses		36, 209		42,892		79, 101
Pension costs		20, 182		24,603		44,785
Other personnel expenses		20, 208		22, 397		42,605
	\$	453, 413	\$	595,039	\$	1, 048, 452

		For the year ended December 31, 2018
		Recognised in operating costs		Recognised in operating expenses	Total
Wages and salaries	\$	347,007	\$	476, 736	\$	823, 743
Labour and health insurance
expenses		33, 192		40, 139		73, 331
Pension costs		19, 341		21, 752		41,093
Other personnel expenses		18, 472		20, 441		38, 913
	S	418.012	S	559.068	ዴ	977.080

A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year (pre-tax profit before deducting employees' compensation and directors' and supervisors' remuneration), after covering accumulated losses, shall be distributed as employees' compensation and directors' and supervisors' remuneration. The ratio shall be 1%~10% for

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

B. For the years ended December 31, 2019 and 2018, employees' compensation was accrued at \$4,471 and \$4,554, respectively; while directors' and supervisors' remuneration was accrued at \$8,942 and \$9,108, 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 24, 2020, the employees' compensation and directors' and supervisors' remuneration were \$4,536 and \$9,072, respectively, and the employees' compensation will be distributed in the form of cash. The employees' compensation and directors' and supervisors' remuneration for 2018 as resolved by the Board of Directors was \$13,837. The difference between the aforementioned amount and the amount of \$13,662 recognised in the 2018 financial statements by \$175, mainly caused by estimation differences, had been adjusted in the profit or loss for 2019. 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.

$(26)$ Income tax

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

	For the years ended December 31,
	2019	2018
Current tax:
Current tax on profits for the year	\$ 104, 974 \$	117, 127
Tax on undistributed earnings	3,372	11,910
Under (over) provision of prior year's
income tax	16,514	5,442)
	124,860	123, 595
Deferred tax:
Origination and reversal of temporary
differences	$9,483$ ) (	15, 563)
Impact of change in tax rate		18, 502)
	9,483)	34,065)
Total income tax expense	\$ 115, 377 \$	89,530

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

	For the years ended December 31,
	2019	2018
Remeasurement of defined benefit obligation	$1,462)$ (\$)	4,561)
Impact of change in tax rate		1,925
	462	2,636

B. Reconciliation between income tax expense and accounting profit:

	For the years ended December 31, 2019 2018 136,071 124,824 \$ 20, 900) 8,089 $1,971)$ ( 2,529

Tax calculated based on profit before tax and
statutory tax rate	\$
Effect of amount not allowed to recognise under
regulations
Effect from tax-exempt income
Effect from net operating loss carryfoward	$2,045$ (	28,820)
Tax on undistributed earnings	3, 372	11,910
Under (over) provision of prior year's income tax	$16,514$ (	5,442)
Impact of change in tax rate		18, 502)
Effect from realised loss on investments	19, 754)
Income tax expense	115, 377	89,530

	For the year ended December 31, 2019
						Recognised
						in other
						Recognised in comprehensive
		January 1		profit or loss		income		December 31
Deferred tax assets
Temporary differences:
Bad debts	\$	5,071	(	1,102)	\$		\$	3,969
Unrealised loss on inventories
from market value decline		7, 217	- (	1,044)				6,173
Unrealised exchange loss		75		5,435				5,510
Investment loss		32,859		3,816				36,675
Unrealised impairment loss
on intangible assets		2,785						2,785
Unrealised sales return and		4,814		2,780
allowance								7,594
Unused compensated absences		5,842		321				6,163
Pensions		46, 973	€	7,698)		1,462		40,737
Unrealised loss on scrapped
inventories		1,345		40				1,385
Unrealised loss on indemnity				2,376				2,376
Lease expenses				13				13
Unrealised loss on financial
assets through profit or loss		250	€	250)
Deferred investment tax
credits		576		852				1,428
Loss carryforward		28,820		2,045)				26, 775
	\$	136, 627	$\frac{3}{5}$	3,494	\$	1,462	\$	141,583
Deferred tax liabilities
Temporary differences:
Provision for land value
increment tax	$($ \$	61,992)	$\boldsymbol{\mathsf{S}}$		\$		(3)	61,992)
Unrealised exchange gain		5,427)		5, 427
Others		562)		562
	(\$	67,981)	\$	5,989	$\frac{8}{5}$		$$^{\circ}$	61, 992)
	\$	68,646	\$	9,483	\$	1.462	$\boldsymbol{\mathcal{S}}$	79,591

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

	For the year ended December 31, 2018
						Recognised in other
				Recognised in comprehensive
		January 1		profit or loss		income		December 31
Deferred tax assets
Temporary differences:
Bad debts	\$	3,027	\$	2,044	\$		\$	5,071
Unrealised loss on inventories
from market value decline		5,709		1,508				7,217
Unrealised exchange loss		6,788	- (	6, 713)				75
Investment loss		24,651		8,208				32,859
Unrealised impairment loss
on intangible assets		2,368		417				2,785
Unrealised sales allowance		5,912	- (	1,098)				4,814
Unused compensated absences		4,549		1,293				5,842
Pensions		40, 159		4, 178		2,636		46, 973
Unrealised loss on scrapped
inventories		798		547				1,345
Unrealised loss on financial
assets through profit or loss				250				250
Deferred investment tax
credits				576				576
Loss carryforward				28,820				28,820
		\$93,961	\$	40,030	\$	2,636	\$	136,627
Deferred tax liabilities
Temporary differences:
Provision for land value
increment tax		$(\$ 61, 992)$	\$		\$		(3)	61, 992)
Unrealised exchange gain	€	24)	€	5,403)			C	5,427)
Others				562)				562)
		\$62,016	$($ \$	5,965)	\$		(\$	67, 981)
	\$	31,945	\$	34,065	\$	2,636	\$	68,646

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. Expiration dates of loss carryforward and amounts of unrecognised deferred tax assets are as follows:

December 31, 2019
	Amount filed/		Unrecognised
Year incurred	approved	Unused amount	deferred tax assets	Usable until year
$2010 - 2019$	286, 572 \$	277, 722 \$	\$ 143, 849	$2020 - 2029$
		December 31, 2018
	Amount filed/		Unrecognised
Year incurred	approved	Unused amount	deferred tax assets	Usable until year
$2009 - 2018$	328, 042	328, 042 \$	\$ 183, 943	$2019 - 2028$

F. The Company's income tax returns through 2017 have been assessed and approved by the Tax Authority. The Company does not have any administrative remedy as of March 24, 2020.

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

(27) Earnings per share

	For the year ended December 31, 2019
			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 of the parent	\$	376, 482	178,696		2.11
Diluted earnings per share
Profit attributable to ordinary shareholders of the parent	\$	376, 482	178,696
Assumed conversion of all dilutive potential ordinary shares
Employees' compensation			156
Profit attributable to ordinary shareholders of the parent plus assumed conversion of
all dilutive potential ordinary shares		376, 482	178, 852		2.10


	Weighted average
	number of ordinary
	shares outstanding	Earnings per



			2.09








374, 359	178,868		2.09
\$	374, 359 374, 359	178,696 178,696 172	Amount after tax (shares in thousands) share (in dollars)

(28) Transactions with non-controlling interest

A. In January 2018, the Group acquired additional shares of the subsidiary, Syngen Biotech Co., Ltd., for a total cash consideration of \$1,260. The carrying amount of investment accounted for under the equity method was \$1,312 at the acquisition date. Said transaction resulted in an increase in the equity attributable to owners of the parent by \$52.
B. In August 2018, the Group acquired additional shares of the subsidiary, Syngen Biotech Co., Ltd., for a total cash consideration of \$1. The carrying amount of investment accounted for under the equity method was \$3 at the acquisition date. Said transaction resulted in a increase in the equity attributable to owners of the parent by \$2.
C. From May 2019 to August 2019, the Group acquired part of shares of its subsidiary $-$ Advpharma Inc. for a total cash consideration of \$18,136. The carrying amount was \$13,404 at the acquisition date. This transaction resulted in a decrease in the equity attributable to owners of the parent by \$4,732.
D. In October 2019, the subsidiary of the Group, Syngen Biotech Co., Ltd., increased its capital by issuing new shares. The Group did not acquire shares proportionally to its interest. The transaction resulted in an increase in the equity attributable to owners of parent by \$11,786, and a decrease in non-controlling interest by \$11,786.
E. Based on the above transactions, the details of changes in the Group's capital surplus due to transactions with non-controlling interest for the years ended December 31, 2019 and 2018 are as follows:

	For the years ended December 31,
		2019		2018
Effect on acquisition of shares that are not proportionate to its interest	\$	7,054	\$	54
(29) Supplemental cash flow information
A. Investing activities with partial cash payments:
		For the years ended December 31,
		2019		2018
Purchases of property, plant and equipment	$\boldsymbol{\mathsf{\$}}$	87,684	\$	105, 723
Add: Opening balance of notes payable		4,697		25,993
Opening balance of payable on		37,999		23, 195
equipment (shown as "Other payables")
Less: Ending balance of notes payable		$19, 239$ (		4,697)
Ending balance of payable on equipment (shown as "Other payables")		$8,783)$ (		37,999)
Capitalised interest		113)		85)
Cash paid for acquisition of property, plant and equipment	\$	102, 245	\$	112, 130
B. Operating and investing activities with no cash flow effects:
		For the years ended December 31,
		2019		2018
(1) Elimination of allowance for bad debts	\$	56	\$	654
(2) Inventories transferred to property, plant and equipment	\$	10,351	\$	6,677
(3) Prepayments for equipment transferred to
property, plant and equipment	\$	80, 972	\$	60,485
(4) Property, plant and equipment transferred
to other non-current assets	\$	824	\$
(5) Property, plant and equipment transferred to expenses	\$	527	\$	107

(30) Changes in liabilities from financing activities

								Long-term
			Short-term					borrowings		Guarantee
	Short-term		notes and bills			Lease		(including)		deposits
	borrowings		payable			liabilities		current portion)		received		Total
At January 1, 2019 Effect of retrospective	\$ 485,000	S.	250,000		\$			\$ 212, 312		\$ 13, 337	\$	960, 649
application							171, 154					171, 154
Changes in cash flow from
financing activities	80,000			50,000	- (		$14,568$ ) (	212, 312)		5,062	€	91, 818)
Changes in other non-cash items							874					874
At December 31, 2019	\$ 565,000	\$	300,000		\$		157, 460	\$		\$ 18,399	\$	1,040,859
								Long-term
					Short-term			borrowings		Guarantee
		Short-term			notes and bills			(including)		deposits
		borrowings			payable			current portion)		received		Total
At January 1, 2018	\$	520,000	\$		200,000		\$	217, 295	$\boldsymbol{\$}$	5,376	\$	942, 671
Changes in cash flow from
financing activities		35,000)			50,000			4,983)		7,961		17,978
At December 31, 2018		485,000	\$		250,000		\$	212, 312	\$	13,337	\$	960, 649

7. RELATED PARTY TRANSACTIONS
(1) Names of related parties and relationship
Names of related parties	Relationship with the Group
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 (Fan Dao Nan)	Other related party (The corporate director of the Company)
Chen, Wei-Jen	Other related party (The executive of the Company)

(2) Significant related party transactions

A. Sales of goods

	For the years ended December 31,
	2019	2018
Associates	\$ 96,819 S	85, 532
Other related parties	18,696	22, 282
	115, 515	107, 814

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

B. Purchases of goods

	For the years ended December 31,
		2019		2018
Other related parties		64, 937		59, 648

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 Group acquired additional shares of its subsidiary, Advpharma Inc., for \$1,125 from other related parties, Chen, Wei-Jen, in July 2019.
(b) The Group participated in the cash capital increase of the associate, Biosim, by investing \$29,940 in November 2019.
(c) The Group participated in the cash capital increase of the other related party, SUN YOU, by investing \$6,624 in January 2018.

D. Other expenses

	For the years ended December 31,
	2019	2018
Advertisement expenses:
Associates	\$ 2, 195	\$ 95
Other related parties	782	726
	2,977	\$ 821
Research and development expenses:
Other related parties	\$ 102	\$ 1,066
Associates		216
	102	\$ 1,282
Miscellaneous expenses:
Associates	\$ 136	\$ 2,356
Other related parties		37
	\$ 136	\$ 2,393

E. Other income

	For the years ended December 31,
		2018
Other income:
Associates	\$	3, 374	\$	2,519
Other related parties		776		1,290
	ዩ	4,150	\$	3,809
F. Ending balance of goods sold
		December 31, 2019		December 31, 2018
Receivables from related parties:
Associates	\$	18,655	\$	19, 165
Other related parties		9, 179		10,267
		27,834	\$	29, 432

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

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

	December 31, 2019		December 31, 2018
Receivables from related parties:
Associates	\$ 2,812	S	482
Other related parties
	2,815		483
H. Ending balance of goods purchased
	December 31, 2019		December 31, 2018
Payables to related parties:
Other related parties	24, 396	\$	14, 394

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

I. Lease transactions-lessee

(a) The Group leases land from other related party, Fan Dao Nan. Rental contracts are made for the periods from October 1, 2016 to September 30, 2027. Rents are paid quarterly.
(b) On January 1, 2019 (the date of initial application of IFRS 16), the Group increased 'right-ofuse asset' by \$5,247. As of December 31, 2019, the carrying amount of 'right-of-use asset' is \$4,647.
(c) As of December 31, 2019, the carrying amount of lease liability is \$4,674. For the year ended December 31, 2019, the Group recognised interest expense for \$57 (shown as 'Finance costs').

(3) Key management compensation

	For the years ended December 31,
		2019	2018
Salaries and other short-term employee benefits		32,580		30, 912

8. PLEDGED ASSETS

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

Pledged asset	December 31, 2019			December 31, 2018	Purposes
Land (Note)	\$	288, 489	\$	288, 489	Short-term and long-term borrowings
Buildings-net (Note)		289, 793		296, 253	Short-term and long-term borrowings
Machinery and equipment $-net$ (Note)		32, 292		19,920	Long-term borrowings
Other equipment-net (Note)		258		375	Long-term borrowings
	ው	610, 832	ው	605, 037

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

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

As of December 31, 2019 and 2018, the Group's significant contingent liabilities and unrecognised contract commitments are as follows:

(1) The balances for contracts that the Group entered into for the purchase of property, plant and equipment, but not yet due were \$159,059 and \$89,792, respectively.
(2) The amounts of the letter of credit that the Group issued but not yet negotiated were \$1,943 and \$9,542, respectively.
(3) Endorsements/guarantees for financing within the Group are as follows:

Endorsor/guarantor	Endorsee/guarantee	December 31, 2019		December 31, 2018
Standard Chem. &	Standard Pharmaceutical
Pharm. Co., Ltd.	Co., Ltd.		89, 940	92, 160

The actual endorsement/guarantee amount provided by the Group for the above subsidiaries were \$89,940 and \$92,160, respectively.

(4) Consumers' Foundation, Chinese Taipei (CFCT) has filed a complaint for DEHP incident against the subsidiary, Syngen Biotech Co., Ltd. (Syngen Biotech), in Banqiao District Court to claim for compensation payment and punitive damages of \$4,201 for customer benefit in March 2012. Taiwan New Taipei District Court has rendered the first ruling of no damage. However, CFCT disagreed with the ruling and will file an appeal. The High Court has handed down the verdict on August 24, 2016 and issued the judgement that Syngen Biotech is not liable to pay any compensation. CFCT claimed to file an appeal on its losing part. In its judgement dated July 31, 2018, which received on August 15, 2018, the Supreme Court has upheld the decision of the High Court on this case.

(5) In two voluntary recalls in July and August 2018, the Group 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 24, 2020, potential lawsuit related to this event was not identified.
1. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE None.

12. OTHERS

(1) Capital management

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

(2) Financial instruments

A. Financial instruments by category

	December 31, 2019 December 31, 2018
Financial assets
Financial assets at fair value through profit or
loss
Financial assets mandatorily measured at fair
value through profit or loss	\$ 151, 107	\$ 159, 482
Financial assets at fair value through other
comprehensive income
Designation of equity instrument	\$ 424, 367	\$ 415, 967
Financial assets at amortised cost
Cash and cash equivalents	\$ 1, 471, 902	\$ 1, 254, 061
Financial assets at amortised cost	84, 450	51,080
Notes receivable	207, 668	235, 357
Accounts receivable	684, 239	677, 802
Other receivables	19, 114	18,098
Guarantee deposits paid	32, 915	25, 205
	\$ 2,500,288	\$ 2, 261, 603

	December 31, 2019 December 31, 2018
Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings	\$ 565,000	S	485,000
Short-term notes and bills payable	300,000		250,000
Notes payable	256, 779		270,850
Accounts payable	164, 797		114,816
Other payables	371, 169		361, 240
Long-term borrowings (including current
portion)			212, 312
Guarantee deposits received	18, 399		13, 337
	1,676,144	\$	1, 707, 555
Lease liabilities	157, 460	\$

B. Risk management policies

(a) The Group'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 Group, derivative financial instruments may be used to hedge certain risk.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group's operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Group used in various functional currency, primarily with respect to the USD, EUR, JPY and RMB. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
ii. The Group has certain sales and purchases denominated in USD and other foreign currencies. Changes in market exchange rates would affect the fair value. However, the payment and collection periods of asset and liability positions in foreign currencies are close, market risk can be offset. The Group does not expect significant interest rate risk.
iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. However, the net investments of foreign operations are strategic investments, thus the Group does not hedge the investments.

iv. The Group's businesses involve some non-functional currency operations (the Company's

and certain subsidiaries' functional currency: NTD; other certain subsidiaries' functional currency: USD, PHP and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

		December 31, 2019
	Foreign currency amount
	(In thousands)	Exchange rate	Book value
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD: NTD	\$ 32, 375	29.98	\$970,603
EUR: NTD	674	33.59	22,640
JPY: NTD	153, 781	0.276	42, 444
RMB: NTD	33, 539	4.305	144, 385
Financial liabilities
Monetary items
USD: NTD	141	29.98	4, 227
JPY: NTD	4,361	0.276	1,204
		December 31, 2018
	Foreign currency
	amount
	(In thousands)	Exchange rate	Book value
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD: NTD	\$ 28,071	30.72	\$862, 341
EUR: NTD	2,067	35.20	72, 758
JPY: NTD	45, 188	0.2782	12,571
RMB: NTD	16,406	4.472	73, 368
Financial liabilities
Monetary items
USD: NTD	135	30.72	4, 147

With regard to sensitivity analysis of foreign currency exchange rate risk, if the exchange rates of NTD to all foreign currencies had appreciated/depreciated by 1%, with all other factors remaining constant, the Group's net income for the years ended December 31, 2019 and 2018 would have increased/decreased by \$7,391 and \$8,101, respectively.

v. Total exchange (loss) gain, including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2019 and 2018 amounted to (\$28,933) and \$29,631, respectively.

Price risk

i. The Group's equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group's investments in equity securities comprise shares and open-end funds 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, 2019 and 2018 would have increased/decreased by \$1,661 and \$1,757, 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 \$3,377 and \$3,149, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Group's main interest rate risk arises from long-term and short-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During the years ended December 31, 2019 and 2018, the Group's borrowings at variable rate were denominated in the NTD.
ii. With regard to sensitivity analysis of interest rate risk, if interest rates on borrowings at that date had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2019 and 2018 would have been \$84 and \$72 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire company's concern. According to the Group's credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is

regularly monitored.

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, and recourse procedures are initiated. However, the Group will continue executing the recourse procedures to secure their rights.
iv. The Group classifies customer's notes and accounts receivable in accordance with credit rating of customer. The Group applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis. The Group used the forecastability of conditions to adjust historical and timely information to assess the default possibility of notes and accounts receivable, whereby rate ranges from 0.01% to 100% are applied to the provision matrix. Movements in relation to the Group applying the modified approach to provide loss allowance for notes and accounts receivable are as follows:

	For the year ended December 31, 2019
		Notes receivable		Accounts receivable		Total
Beginning balance	\$	427	\$	18, 103	- \$	18,530
Reversal of impairment		$256)$ (		$5,780$ ) (		6,036)
Write-offs during the year				56)		56)
Ending balance	\$	171	\$	12, 267	S	12, 438
	For the year ended December 31, 2018
				Notes receivable Accounts receivable		Total
Beginning balance	\$	$1,625$ \$		7,035	\$	8,660
(Reversal of) provision for impairment		1,198)		11,722		10,524
Write-offs during the year				654)		654)
Ending balance		427	¢	18, 103		18,530

(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities.
ii. Surplus cash held by the Group over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.

iii. The Group has the following undrawn borrowing facilities:

		December 31, 2019	December 31, 2018
Floating rate:
Expiring within one year	8	703, 762	\$	553, 783
Expiring beyond one year		350,000		200,000
		1, 053, 762		753, 783

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

	Within	Between 1	Between 2		Over 5
December 31, 2019	1 year	and 2 years	and 5 years	years
Non-derivative financial liabilities:
Short-term borrowings	\$ 565, 764	\$	\$	\$
Short-term notes and bills payable	300,000
Notes payable	256, 779
Accounts payable	164, 797
Other payables	371, 169
Lease liabilities	15, 515	13,962	33,589		115,619
Guarantee deposits received		18,399
	Within	Between 1	Between 2		Over 5
December 31, 2018	1 year	and 2 years	and 5 years		years
Non-derivative financial liabilities:
Short-term borrowings	\$ 486, 205	\$	\$	\$
Short-term notes and bills payable	250,000
Notes payable	270, 850
Accounts payable	114,816
Other payables	361, 240
Long-term borrowings (including current
portion)	62, 397	101, 147	52, 335
Guarantee deposits received		13, 337

v. For non-derivative financial liabilities, the Group'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: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group'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 Group's investment in partial equity instruments without active market is included.
B. The carrying amounts of the Group's financial instruments not measured at fair value (including cash and cash equivalents, financial assets at amortised cost - current, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable, other payables, lease liabilities, 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, 2019		Level 1	Level 2	Level 3
Recurring fair value measurements
Financial assets at fair value through profit or loss
Equity securities	\$	135, 816	\$	\$	15, 291	\$151, 107
Financial assets at fair value through other comprehensive income
Equity securities		308, 097			116, 270	424, 367
	\$	443, 913	\$		131, 561	575, 474

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	S	145, 404	\$	S	14,078	S	159, 482
Financial assets at fair value
through other comprehensive
income
Equity securities		275, 575			140, 392		415, 967
		420, 979	\$		154, 470		575, 449

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

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

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

(b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the 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 Group's financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group's management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the parent company only balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
E. There was no transfer between Level 1 and Level 2 in 2019 and 2018.
F. The following table presents the changes in Level 3 instruments in 2019 and 2018:

	For the years ended December 31,
		2019		2018
At January 1 before adjustments	\$	154, 470	\$	89,853
Effects of retrospective application				143,698
At January 1 after adjustments		154, 470		233, 551
Purchase		9,546		6,624
Capital reduction and return of shares		$-$		8, 111)
Recognised in profit or loss (Note 1)		$546)$ (		1,006)
Recognised in other comprehensive loss (Note 2)		31,909)		76,588)
At December 31		131, 561	\$	154, 470

(Note 1) Shown as "Other income or loss".

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

G. Except for the use of modified retrospective approach under IFRS 9, for the year ended December 31, 2018, there was no transfer from or to Level 3. For the year ended December 31, 2019, there was no transfer into or out from 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:

				Range
	Fair value at	Valuation	Significant	(weighted)	Relationship of
	December 31, 2019	technique	unobservable input	average)	inputs to fair value
Non-derivative equity instrument:
Unlisted stocks	\$ 131, 561	Market comparable companies	Discount for lack of marketability	30%	The higher the discount for lack of marketability, the lower the fair value
				Range
	Fair value at	Valuation	Significant	(weighted	Relationship of
	December 31, 2018	technique	unobservable input	average)	inputs to fair value
Non-derivative equity instrument:
Unlisted stocks	\$ 154, 470	Market comparable companies	Discount for lack of marketability	30%	The higher the discount for lack of marketability, the lower the fair value

J. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect 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, 2019
				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%	476 \$	$($ \$ 476)	\$ 4,983	(3) 4,983)
					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	$\pm$ 3%	\$ 603	$$^{3}$ 603)	$\mathbb{S}$ 6,017	$$^{3}$ 6,017)

13. SUPPLEMENTARY DISCLOSURES

(Only 2019 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.
1. SEGMENT INFORMATION
(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision-maker that are used to make strategic decisions. There is change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information during this year in accordance with global marketing expansion of the Group.

(2) Measurement of segment information

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

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

The segment information provided to the chief operating decision-maker for the reportable segments

is as follows:

	For the year ended December 31, 2019
		Medicine		Dietary supplement		Others		Total
Segment revenue	\$	2, 137, 862		\$ 1, 378, 776	\$ 550,986		S.	4,067,624
Revenue from internal customers		40, 557)		$69,041)$ (		20,897)		130, 495)
Revenue from external customers, net		2,097,305		1, 309, 735		530,089		3, 937, 129
Inter-segment profit before income tax		383, 186		202, 177		59, 545		644, 908
Segment assets		3, 467, 989		2, 257, 324		1, 202, 691		6,928,004
Segment liabilities		1,502,161		511,816		267,606		2, 281, 583
				For the year ended December 31, 2018
		Medicine		Dietary supplement		Others		Total
Segment revenue	\$	2, 113, 243	\$	1,034,115	\$	534, 461	\$	3,681,819
Revenue from internal customers		$33, 200$ ) (		$54.414)$ (		$21.112)$ (		108.726)

Revenue from internal
customers	33, 200	54, 414)	21, 112)	(108, 726)
Revenue from external
customers, net	2,080,043	979, 701	513, 349	3,573,093
Inter-segment profit before
income tax	389, 529	19,724	57, 196	466, 449
Segment assets	3, 498, 276	1,623,500	1, 317, 337	6, 439, 113
Segment liabilities	1, 419, 196	507, 463	266, 142	2, 192, 801

The effect to the Group with the adoption of IFRS 16 for the year ended December 31, 2019 is shown as follows:

	Medicine	Dietary supplement	Others	Total
Increase in depreciation	4,533	11,032		16,732
Increase in Segment assets	8,098	148.57	47,006	203, 681
Increase in Segment liabilities	069	149, 391		157.460

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

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

	For the years ended December 31,
	2019		2018
Reportable segment income before income tax	\$ 585, 363	S	409, 253
Other segments profit before income tax	59, 545		57, 196
Including inter-segment (loss) profit	59,098)		51,017
Profit before income tax	585, 810		466 517.

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

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

	For the years ended December 31,
		2019	2018
Revenue from sales of medicine	\$	2, 097, 305	2,080,043
Revenue from sales of dietary supplement		1, 309, 735	979, 701
Revenue from rendering of services		9, 141	24, 193
Others		520, 948	489, 156
		3, 937, 129	3, 573, 093

(6) Geographical information

Geographical information for the years ended December 31, 2019 and 2018 is as follows:

	2019				2018
	Revenue		Non-current	Revenue (Note 1)			Non-current
	(Note 1)		asset (Note 2)				asset (Note 2)
Taiwan	\$ 3, 258, 665	\$	2, 334, 633	\$	2,887,016	\$	2, 186, 603
Mainland China	125, 597		172, 952		225, 474		189,956
Philippines	79, 405				40, 399
Vietnam	70,568				103, 777
South Korea	55,045				55,770
Thailand	39, 236				33,089
America	38, 128				31,863		7,603
Egypt	32,709				10,915
Singapore	30, 425				21,700
Others	207, 351		1,479		163,090		115
	\$ 3, 937, 129		2,509,064		3,573,093	\$	2, 384, 277

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

(Note 2) Non-current assets include property, plant and equipment, right-of-use assets, intangible assets, prepayments for equipment, long-term prepaid rents and partial other non-current assets.

(7) Major customer information

Major customer information of the Group (revenue accounted for more than 10% revenue) for the years ended December 31, 2019 and 2018 is as follows:

	For the years ended December 31,
	2019	2018
Company A	410,966	\$ 289, 426

-

- FE- 55.

.

.

Loans to others

For the year ended December 31, 2019

Expressed in thousands of NTD

						(Notes 3)		(Notes 3)

		total loans				235,520		8,410
	Limit on loans Ceiling on	granted to	$\frac{\text{Item } \text{Value}}{\text{Value } \text{S}} = \frac{\text{sample party}}{\text{S}} = \frac{\text{gradient}}{\text{S}} = \frac{\text{Note}}{\text{Nots 3}}$			235,520		4,205

		Collateral				ł		I
Allowance			$\frac{1}{\sqrt{1}}$
	Nature of transactions Reason for			amount Interest Ioan with the for-short-term doubtful rawn-down rate (Note I) borrower financing accounts - 89,940 2.5% 2 5 - Operating-capital \$		- Operating capital		- Operating capital
Amount of

						2.5%		2.5%
	Actual					89,940		4,520
	Ending	balance				89,940		4,520
	Maximum	related outstanding		balance $\frac{(Note 2)}{89,940} \frac{\text{drawn down}}{5}$		89,940		4,520
	ls a
	General	ledger			$\begin{tabular}{c c} Creditor & \multicolumn{2}{c}{\fbox{\small\bf{Crelitor}}}\ \hline 0 & \multicolumn{2}{c}{\fbox{\small\bf{Standard Chem & Standard}}}\ \hline 0 & \multicolumn{2}{c}{\fbox{\small\bf{Standard}}}\ \hline 1) and C_0, Ltd & \multicolumn{2}{c}{\fbox{\small\bf{Plammecutical}}}\ \hline 1) and \ \multicolumn{2}{c}{\fbox{\small\bf{Iiam. Co. Ltd.}}}\ \hline 1) and \ \multicolumn{2}{c}{\fbox{\small\bf{Iiam.}}}\ \hline 1) and \ \multicolumn{2}{c}{\fbox{\small\bf{$			Other receivables Yes
							Co., Ltd.	Standard-Dia	Biopharma Co. ដ
								Jiangsu Standard Jiangsu Biotech Standard	Pharmaceutical Co. Ltd.

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

(1) Trading partner.

(2) Short-term financing.

Note 2: The ending balance is the credit limit approved by the Board of Directors.

Note 3: Calculation of limit on loans granted to a single party and ceiling on total loans granted:

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

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

(d) Limit on loans granted by Jiangsu Standard Biotech Pharmaceutical to a single party is 5% of the creditor's net assets based on the latest audited 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.

(c) Ceiling on total loans granted by Jiangsu Standard Biotech Pharmaceutical to single party is 10% of the creditor's net assets. (b) Ceiling on total loans granted by Standard Pharmaceutical Co., Ltd. to single party is 200% of the oreditor's net assets.

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

Note 4: Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2019 as follows: USD: NTD 1:29.98 and RMB: NTD 1:4.305.

Table 1 page 1

Table 1

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

For the year ended December 31, 2019

Table 2

Expressed in thousands of NTD

							$rac{e}{\Sigma}$
					the party in	Mainland	China
		Provision of Provision of Provision of	endorsements/endorsements/endorsements/	guarantees by guarantees by guarantees to	subsidiary to r	parent	company
					parent	on herduro:	subsidiary
	Ceiling on	total amount	$\sigma$	endorsements/	guarantecs	provided	(Mote 1)	1,882,106
Ratio of	ccumulated	ndorsement	guarantee	amount to net	asset value of the	endorser/guarantor	company	2% 2%
			Amount of	ndorsements/	guarantees	secured with	collateral
					Actual	amount	drawn down	89,940 \$ 89,940
				Outstanding	endorsement	guarantee	amount
			Maximum	outstanding		guarantee	amount	89,940
		Limit on	ndorsements/	guarantees	provided for a endorsement	single party	(Moe I)	$752,842$ \$
			Party being	endorsed/guaranteed	Relationship	with the		unber guarantor Company name endorser/guarantor $\frac{1}{0}$ Standard Chern & Standard Subsidiary S
									Pharm. Co., Ltd. Pharmaceutical.	Co., Ltd.
						Endorser
							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

Expressed in thousands of NTD

STANDARD CHEM & PHARM. CO., LTD. AND SUBSIDIARIES
Holding of marketable securities at the end of the period foot including subsidiaries, associates and loint ventures)

$\frac{1}{2}$

						As of December 31, 2019
		Relationship with the	General	Number
Securities held by	Marketable securities	securities issuer	ledger account	of shares	Book value	Ownership (%)	Fair value	Note
	Standard Chern & Pharm. Co., Ltd. Bonds with repurchase agreement:
	International Bills Finance Corporation			S,	59,960	$\mathbf{I}$	59,960 Ģ,
	Mega Bills Finance Co., Ltd.	J.		1	15,746		15,746
	Stocks (investment certificate):
	Original BioMedicals Co., Ltd.		$\sim$	200,000		0.73%
	NCKU Venture Capital Co., Ltd.	The Company is NCKU Venture	$\sim$	650,000	3,055	4.17%	3,055
		Capital Co., Ltd.'s corporate director.
	NTU Imovation & Incubation Co., Ltd.		ຕ	480,000	4,181		4,181
	TaiwanJ Pharmaceuticals Co., Ltd.			258,133	3,005		3,005
	SYN-TECH CHEM & PHARM CO., LTD.	The Company is SYN-TECH CHEM		3,073,484	254,792	3.76% 0.37% 10.22%	254,792
		& PHARM Co., Ltd.'s corporate
	HER-SING CO., LTD.	The Company is HER-SING Co., director		3,055,000	43,167	17.71%	43,167
		Ltd's corporate director
	SUN YOU BIOTECH PHARM CO., LTD.	The manager of the Company is SUN YOU BIOTECH PHARM		3,378,006	42,833	18.13%	42,833
		CO., LTD.'s director
	Green Management International Co., Ltd.			109,672		5.14%
	Kenda Pharmacentiocal Co., Ltd.			5,000,000	$1,629$ 7,629	19.42%	1,629 7,629
Chia Scheng Investment Co., Ltd.	Beneficiary certificates:
	Taishin Ta-Chong Money Market Fund	$\overline{\phantom{a}}$	מ מ	368,142	5,250	$\mathbf{I}$	5,250
	Taishin 1699 Money Market Fund	$\overline{\phantom{a}}$		50,000	679		679
	Stocks:
	SUN YOU BIOTECH PHARM CO., LTD.	The manager of the Company is SUN YOU BIOTECH PHARM CO., LTD.'s director		240,846	3,054	1.29%	3,054
	Stason Pharmaceuticals, Inc.			4,000,000	17,958	13.02%	17,958
Inforight Technology Co., Ltd.	Beneficiary certificates:
	Capital Money Market Fund	I		121,952	1,975		1,975
Advpharma Inc.	Beneficiary certificates:
	Taiwan Cooperative Bank Money Market	J		2,000,000	20,396		20,396
	Fund
	Mega Diamond Money Market Fund			3,166,588	39,871		39,871
	FSITC Taiwan Money Market Fund			1,782,508	27,385		27,385
	Taishin 1699 Money Market Fund			1,473,047	20,010		20,010
	UPAMC James Bond Money Market Fund			477,020	8,003		8,003
	Shin Kong US Harvest Balanced TWD A		22222	424,967	4,626		4,624 2,995
	Cathay Senior Secured High Yield Bond	$\mathbf{I}$		271,919	2,995

$\ddot{\phantom{a}}$

Table 3

		Relationship with the	General	Number
Securities held by	Marketable securities	securities issuer	ledger account of shares			Book value Ownership (%) Fair value		Note
Advpharma Inc.	Stocks:
	YungShin Global Holding Corporation	1		108,000 \$ 168,568	4,628 1,702	0.04% 3.70%	4,628 1,702
	Der Yang Biotechnology Venture	I
	Capital Co., Ltd.
	TaiwanJ Pharmaceuticals Co., Ltd.			25,203 643,000	293	0.04% 2.14%	293
	SYN-TECH CHEM & PHARM CO., Ltd.	The Company is SYN-TECH CHEM			53,305		53,305
		& PHARM Co., Ltd's corporate
		director
Syngen Biotech Co., Ltd.	Stocks:
	NCKU Venture Capital Co., Ltd.	The Company is NCKU Venture Capital Co., Ltd.'s corporate director.		650,000	3,055	4.17%	3,055

As of December 31, 2019

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

Cash and cash equivalents
Cash and cash equivalents
Financial assets at fair value through profit or loss - current
Timancial assets at fair value through profit or loss - non-current
Financial assets at

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

For the year ended December 31, 2019

Table 4

Expressed in thousands of NTD

Transaction

Number			Relationship				Percentage of consolidated total
(Note 2)	Company name	Counterparty	Note 3)	General ledger account	Amount	Transaction terms	operating revenues or total assets (Note 4)
		Standard Chem & Pharm. Co., Ltd. Standard Pharmaceutical Co., Ltd.		Other receivables	90,127
				Endorsements and guarantee	89,940
		Souriree Biotech & Pharm. Co., Ltd.		Purchases		30,855 Pay cheques with a maturity of 3~4
						months after inspection had passed
		Syngen Biotech Co, Ltd.		Purchases		64,586 Pay cheques with a maturity of 3~4	$2\%$
						months after inspection had passed
				Notes payable	10,824) 90,171
	Standard Pharmaceutical Co., Ltd. Jiangsu Standard Biotech			Other receivables			š
		Pharmaceutical Co., Ltd.

Note 1: As the amounts and counterparties of significant inter-company transections 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 tolal assets, it is computed based on ending balance of transaction to consolidated total assets for balance sheet accounts
and

Note 5: Foreign currencies were translated into New Taiwan Dollars with exchange rate as of December 31, 2019 as follows: USD: NTD 1:29.98.

			Note	18,032) Subsidiary	12,032) Subsidiary	889) Subsidiary	160) Subsidiary	1,088) Subsidiary	374) Subsidiary	Subsidiary	91,189 Subsidiary (Note 1)
Investment income	(loss) recognised	for the year ended								227
Net profit (loss) of	the investee for the	year ended	December 31, 2019 December 31, 2019	$18,032)$ (\$	12,0.22	889) (	$160$ $($	748) (	$431$ )	SO ₃	188,765
			Book value	117,760 (\$	29,072 (	2,191	4,681	25,976 (	374,778	292,089	679,181
		Ownership	ଞ୍ଚ	S 100.00	100.00	100.00	100.00	93.17	90.72	88.61	46.68
Shares held as at December 31, 2019			Number of shares	10,000,000	14,553,000	192,195	500,000	5,649,126	19,840,600	53,164,806	12,651,146
	Balance as at	December 31,	2018	310,283	160,856	6,762	5,000	41,549	293,063	507,332	122,463
Initial investment amount	Balance as at	December 31,	2019	S 310,283 ω,	161,356	6,762	5,000	41,549	293,063	525,468	330,203
			Main business activities	Research and development, other business of medical trading, investment and products	General investmen	various medical products, medicine, supplements Philippines Import and export of	Wholesale of multi-function printers and information software	Manufacturing of western medicine and retail and wholesale of various medicines	manufacturing and sale of food Import and export of western medicine, nourishment and function food, processing,	Research and development, manufacturing and sale of various medicine	Research and development, fertiliser and biochemical manufacturing and sale of APIs, biopesticide, preventive medicine nutrition, sale of
			Location	Samoa	Taiwan		Taiwan	Taiwan	Taiwan	Taiwan	Taiwan
			Investee	Standard Pharmaceutical Co., Ltd.	Chia Scheng Investment Co., Ltd.	STANDARD CHEM. & PHILIPPINES, INC. PHARM.	Inforight Technology Co., 귘	Souriree Biotech & Pharm. Co, Ld	Multipower Enterprise Corp.	Advplarma Inc.	Syngen Biotech Co., Ltd
			Investor	Standard Chem & Plarm Co., Ltd.

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

For the year ended December 31, 2019

Expressed in thousands of NTD

Table 5 page 1

$\frac{1}{2}$

Table 5

Subsidiary (Note 2&4) Subsidiary (Note 2) (Note 2) Note 1,846) December 31, 2019 December 31, 2019 1323 for the year ended the investee for the (loss) recognised 4,176 3,701) 12,552 1,048) 6389 year ended 3,901 33,052 134,573 12.375 Book value S 33.10 Ownership 49.90 100.00 35.60 E Number of stares 1000,000 10,273,272 3,493,000 400,000 213,136 94,629 7322 4,990 13,734 Balance as at December 31, 2018 213,136 \$ 34,930 7322 13,734 December 31. Balance as at 2019 Ù. Taiwan Research and development of various America Inspection of medicine, retail and wholesale of various chemistry Taiwan Wholesale of various medicine Main business activities Research and development, Research and development, other business of medical of APIs and biochemical manufacturing and sale trading, investment and preventive medicine nutrition, sale of products medicine America Malaysia Location INTERNATIONAL SDN Taiwan Biosim, Co., Ltd. CHN TECHNOLOGIES WE CAN MEDICINES INDUSTRIES, INC. SYNGEN BIOTECH SANTOS BIOTECH Investee CO., LTD. BНD. 2 Z Standard Chem & Pharm. Co., Ltd. Investor			Initial investment amount		Shares held as at December 31, 2019		Net profit (loss) of Investment income




	Investment Co., Ltd. Claia Scheng
	Syngen Biotech
	Advpluarma Inc.

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

For the year ended December 31, 2019

Expressed in thousands of NTD

$\overline{\phantom{a}}$

		ete S	$-Mote 3)$		(Mote 3)
investment income remitted back to Taiwan as of Accumulated amount of		2019
Book value of	December 31, Mainland China as of December 31,	2019 December 31, 2019	83,953 \$		16,465
the year ended investments in recognised for income (loss)			$100.00$ (\$18,020) \$		4,847)

Ownership held Investment kq	indirect)				55.00
Net income		$\frac{2019}{20}$			8,942)
to Mainland investee for the the Company China as of year ended (direct or from Taiwan (loss) of remittance Accumulated amount of			$-5$ 269,522 (S 18,020)

December $31, 2019$ Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended	Remitted to Remitted back December December 31,	January 1, 2019 Mainland China to Taiwan 31, 2019	$\cdot$

Taiwan to Mainland - Accumulated amount of remittance from	China as of		269,522

	Investment	method	(Note 1)		(Note 2)
			269,820		182,511


		Main business activities Paid-in capital	Research and development,	technical consulting and technical services of medicine	manufacturing and sale of Research and development, various medicine

		Investee in Mainland China	Jiangsu Standard Biotech	Pharmaceutical Co., Ltd.	Biopharma Co., Ltd. fangsu Standard-Dia

Ceiling on investments in Mainland China	imposed by the	Investment	Ministry of Economic Commission of MOEA	(Note 4)	2,787,853
nvestment amount aproved by the	Investment	Commission of the		Affairs (MOEA)	269,820
	Accumulated amount of	remittance from Taiwan to	Mainland China as of	December 31, 2019	269.522
				Company name	Standard Chem & Pharm. Co

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

AI assistant

S.C.P.C — Audit Report / Information 2019

51900_rns_2019-11-08_b5e8a3bc-251d-4f19-ad87-8fc9b547950f.pdf

STANDARD CHEM. & PHARM CO., LTD. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2019 AND 2018

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 and dietary supplements

Description

How our audit addressed the matter

Other matter-Reference to the audits of other independent accountants

Other matter - Parent company only financial reports

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

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

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

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

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

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

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

STANDARD CHEM. & PHARM CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

1. HISTORY AND ORGANISATION

STATEMENTS AND PROCEDURES FOR AUTHORISATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(3) Basis of consolidation

B. Statements of comprehensive income

(4) Foreign currency translation

(15) Investments accounted for using equity method / associates

(19) Intangible assets

(24) Employee benefits

B. Pensions

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

6. DETAILS OF SIGNIFICANT ACCOUNTS

(4) Notes and accounts receivable

(5) Inventories

(6) Investments accounted for under the equity method

C. Associate:

(13) Long-term borrowings

(14) Pensions

$(16)$ Capital surplus

(17) Share-based payments

(18) Retained earnings

(19) Other equity

(20) Operating revenue

$(21)$ Other income

(22) Other gains and losses

(24) Expenses by nature

(25) Employee benefit expenses

$(26)$ Income tax

(27) Earnings per share

(30) Changes in liabilities from financing activities

C. Equity transactions

D. Other expenses

E. Other income

I. Lease transactions-lessee

(3) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE None.

12. OTHERS

(2) Financial instruments

B. Risk management policies

Price risk

13. SUPPLEMENTARY DISCLOSURES

is as follows:

(6) Geographical information

(7) Major customer information

Loans to others

For the year ended December 31, 2019

More from S.C.P.C

S.C.P.C Audit Report / Information 2019

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

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

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

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