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SINPHAR Annual Report 2023

Jul 2, 2024

51911_rns_2024-07-02_d106e2e7-8d4f-4228-8716-5836af68f68a.pdf

Annual Report

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Ⅰ. Spokesperson and Deputy Spokesperson

Spokesperson

Deputy Spokesperson

Name: Chih Hsiao Chen Name: Wan Ping Lee Title: Chief Financial Officer Title: Manager, Chairman Office Tel: +886-2-2760-3688 Tel: +886-2-2760-3688 Email: [email protected] Email: [email protected]

Ⅱ. Headquarters, Branch Offices and Factory

Headquarters and Factory

Address: No. 84, Zhongshan Rd., Zhongshan Village, Dongshan Township, Yilan County 269, Taiwan (R.O.C.)

Tel: +886-3-958-1101 Fax: +886-3-958-3040

Taipei Branch Office

Address: 5F., No. 69, Dongxing Rd., Xinyi Dist., Taipei City 110, Taiwan (R.O.C.) Tel: +886-2-2760-3688

Fax: +886-2-2760-9918

Ⅲ. Stock Transfer Agency

Company: SinoPac Securities Address: 3F., No. 17, Bo'ai Rd., Zhongzheng Dist., Taipei City 100, Taiwan (R.O.C.) Tel: +886-2-2381-6288

Website: http://www.sinotrade.com.tw

Ⅳ. Contact Information of the Certified Public Accountants for the Latest Financial Report

Name of Accountants: Ya Quan Zhang and Jin Shu Pan Firm: Crowe (TW) CPAs

Address: 8F., No. 122, Dunhua N. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.) Tel: +886-2-8770-5181

Website: http://www.crowe.com/tw

Ⅴ. Overseas Securities Exchange and the Inquiry Methods for Listed Negotiable Securities

Not applicable.

Ⅵ. Company Website

http://www.sinphar.com.tw

Table of Contents

Page Ⅰ. Letter to Shareholders ................................................................................................................. 1 1.1 2023 Business Report .............................................................................................................. 2 1.2 Business Plan for 2023 ............................................................................................................ 5 1.3 The Impact on Company’s Future Development Strategies Due to Competition, Regulatory Restrictions and Market Changes ............................................................................................ 8 Ⅱ. Company Profile ........................................................................................................................ 9 2.1 Date of Incorporation ............................................................................................................. 9 2.2 Company History ................................................................................................................... 9 Ⅲ. Corporate Governance Report ................................................................................................ 14 3.1 Organizational System .......................................................................................................... 14 3.2 Directors, Supervisors and Management Team Information ................................................ 16 3.3 Remuneration Paid to Directors (Including Independent Directors), Supervisors, and Management Team in the Most Recent Year ........................................................................ 39 3.4 Implementation of Corporate Governance ........................................................................... 45 3.5 Information on CPA Fees ...................................................................................................... 87 3.6 Replacement of CPA ............................................................................................................. 87 3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or an affiliated enterprise ............................................................................. 87 3.8 Transfer and pledge of stock equity by directors, supervisors, managerial officers and holders of 10% or more of company shares .......................................................................... 88 3.9 Information on Relationships among the Top Ten Shareholders .......................................... 90 3.10 Ownership of Shares in Affiliated Enterprises.................................................................... 91 Ⅳ. Company Shares and Fundraising .......................................................................................... 93 4.1 Capital and Shares ................................................................................................................ 93 4.2 Corporate Bonds ................................................................................................................... 101 4.3 Preferred Shares .................................................................................................................... 101 4.4 Global Depository Receipts .................................................................................................. 101 4.5 Employee Stock Options ...................................................................................................... 101

4.6 New Restricted Employee Shares ......................................................................................... 101 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions .................... 101 4.8 Financing Plans and Implementation .................................................................................... 101 Ⅴ. Operational Highlights .............................................................................................................. 102 5.1 Business Activities ................................................................................................................. 102 5.2 Market and Sales Overview ................................................................................................... 118 5.3 Employees’ status from the two most recent fiscal year up to the printing date of this annual report ...................................................................................................................................... 128 5.4 Environmental Protection Expenditure .................................................................................. 128 5.5 Labor Relations ...................................................................................................................... 129 5.6 Information Security Management......................................................................................... 132 5.7 Important Contract ................................................................................................................. 135 Ⅵ. Financial Information .............................................................................................................. 137 6.1 Most Recent Five Years Concise Balance Sheet and Statement of Comprehensive Income ................................................................................................................................... 137 6.2 Most Recent Five Years Financial Analysis .......................................................................... 141 6.3 Audit Committee’s Review Report in the Most Recent Year ............................................... 145 6.4 Consolidated Financial Statements in the Most Recent Year ............................................... 145 6.5 Parent Company Only Financial Statement in the Most Recent Year Audited by CPA ....... 145 6.6 If the Company or Related Companies Experienced Financial Turnover Difficulties up to the Printing Date of this Annual Report ................................................................................ 145 Ⅶ. Review of Financial Status, Performance, and Risk Related Issues .................................. 269 7.1 Analysis of Financial Status ................................................................................................ 269 7.2 Financial Performance......................................................................................................... 271 7.3 Cash Flow ............................................................................................................................ 273 7.4 Major Capital Expenditure Items ........................................................................................ 273 7.5 Cause of the Profit/Loss for Investment in Recent Year and Investment Plans for the Coming Year ........................................................................................................................ 274 7.6 Analysis of Risk Management ............................................................................................ 275 7.7 Other Important Matters ...................................................................................................... 277

Ⅷ. Special Notes .......................................................................................................................... 278 8.1 Summary of Affiliated Company ....................................................................................... 278 8.2 Private Securities in the Most Recent Year and before the Printing Date ......................... 282 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year and before the Printing Date .............................................................................................. 282 8.4 Other Supplementary Information ..................................................................................... 282 Ⅸ. The Matters Impacting Shareholder Equity or Securities Price in Accordance with Subparagraph 2, Paragraph 3, Article 36 in the Securities and Exchange Act in the Most Recent Year and Before the Printing Date .............................................................................. 282

Ⅰ. Letter to Shareholders

Dear Shareholders,

2023 marks the 47th year since Sinphar was founded. The Company has continuously achieved breakthrough innovation, diversified the development of generic drugs, enhanced capabilities in new drugs R&D, and strengthened the strategies and development of natural botanical products. In 2023, the operational performance sustained growth, not only in revenue, but also in the earnings per share (EPS) at NT$2.24, which was the highest record in recent years. This is a result from Sinphar’s commitment to investing in new products, new projects, process and quality management, and digital transformation, and building a foundation with active market channels expansion and strategic alliances.

Because the Company implemented preventative measures and prepared safety stocks, drug shortages that impacted this industry did not affect Sinphar, resulting in a gradual growth of customers and revenue. As Sinphar’s health supplements grows in popularity with the elderly, the Company introduced health products for hypertension, hyperlipidemia, hyperglycemia, and chronic diseases targeting the needs of Taiwan’s growing aging population. “Memoregain Capsules” a TFDA approved antiaging health product, was the top-selling product this year. In addition, in partnership with 1,300 Sinphar Counters and 2,000 pharmacists located in local neighborhoods, six other health foods such as “Potent Plus Soft Capsules” for antifatigue, “Lipucan Capsules” for boosting immunity, and drugs for hypertension, hyperlipidemia and hyperglycemia, are expected to grow in sales. In international business, in addition to the original co-development of drugs and functional food and OEM for other global companies, the Company obtained organic certifications in the United States, Europe, and China, which are beneficial to the future development of natural botanical materials that hold 163 patents in 19 countries.

SynCore is in a better financial state after a capital reduction then a capital increase this year. Years of domestic and overseas new cancer drugs R&D has given SynCore a wealth of knowledge and experience in this field. For operational outlook, SynCore will strategically select international projects in the area of development and agency of global cancers generic drugs, agency of global new drugs for cancers, development of API for cancers and development of new dosage forms and new drugs. If the projects can be successfully completed and commercialized, SynCore will have an extensive comprehensive product line.

In addition to abovementioned development and investments, with giving back to society in mind, Sinphar spends tens of millions of dollars in energy saving and carbon reduction. The Company also participates in charitable activities such as

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organizing the Sinphar Yilan Marathon to promote public healthcare education. In recent years, the public has paid more attention to ESG criteria. The Company dedicates itself to ESG and integrates them in its business strategy that is built-in at the foundation of daily operations.

Looking ahead, Sinphar will continue to uphold the philosophy of “life, health, and technology” to invest in and develop our business. Furthermore, the Company will strengthen vertical integration and establish strategic alliances with other companies to increase synergy of partners and stakeholders. Sinphar hopes to contribute to Taiwan’s pharmaceutical industry and live up to the expectations of shareholders.

Thank you for your trust and support.

Sinphar Pharmaceutical Co., Ltd. Chih Wen Lee, Chairman

1.1 2023 Business Report

1.1.1 2023 Operational Performance

In 2023, Company’s revenue reached NT$2.96 billion, an increase of NT$106.283 million over the previous year. Net profit after taxes was NT$359.776 million, up from 117.32% in 2022. Net profit attributed to the parent company was NT$375.17 million and the earnings per share was NT$2.24, increased by 67.01% and 67.16% respectively from the previous year.

1.1.2 Budget Implementation

This is not applicable because financial forecasting was not disclosed.

1.1.3 Financial and Profitability Analysis

Unit: NT$ thousand

Item Year 2023 2022 Increase
(Decrease)
(%)
Financial
Status		 Revenue 2,962,934 2,856,651 3.72
Gross Profit 1,091,243 1,091,300 (0.01)
Net Profit (Loss) 356,776 164,174 117.32
Net Profit (Loss)-
Parent Company		 375,170 224,644 67.01
Net Loss-
Non-controlling Interest		 (18,394) (60,470) 69.58
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Profitability Net Profit Margin (%) 12.04 5.75 109.39
Earnings Per Share
(NTD)		 2.24 1.34 67.16

1.1.4 Research and Development

A. Research and Development Expenses in Recent Two Years

Unit: NT$ thousand

Unit: NT$ thousand
Year
Item		 2023 2022
R&D Expenses 132,580 272,163
Revenue 2,962,934 2,856,651
% 4.47% 9.53%

B. Main Research and Development Activities in 2023

  • (A) Food: 8 products

  • (B) Cosmetics: 2 products

  • (C) Drugs: 4 products

  • (D) Product Improvement: 58 products

  • (E) 5 Technical Projects

C. Research and Development Progress

Item Category Indication/
Code R&D Progress/Current Situation
Application
1 Botanical
new drugs/
Natural
botanical
materials
Dementia/
Approved for phase II clinical trial by TFDA and U.S. FDA.
Brain Health/
ST01 Preparing for clinical trial.
Vitality/
Acquired the health food certification for anti-aging.
Health food
2 Botanical
new drugs		 Drugs for
Approved for phase II clinical trial by TFDA and U.S. FDA.
ST02 chronic stable
Follow-up development is in progress
angina
3 Botanical
new drugs/
Natural
botanical
materials
Completed Druggability Research Part I and Part II in
Cancer adjuvant
progress.
SF01 treatment agent/
Acquired the health food certification of assisting in
Health food
modulating allergy constitution and immune modulation.
4. Natural
botanical
materials
Completed clinical efficacy trial proving the product has the
GF159 Brain Health function of improving memories, learning abilities, and
sleep quality.
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Item
Category		 Indication/
Code R&D Progress/Current Situation
Application
5 New small
molecular
drugs
Received project funding from MOEA.
Completed phase I clinical trial in Taiwan.
Approved for phase II clinical trial by U.S. FDA.
Head and neck
SB01 Approved for and completed phase II clinical trial by
cancers
TFDA.
The efficacy of drug and dose adjustment is under
discussion.
6 New small
molecular
drugs
Cancer Formulation development before clinical trial.
SB02
treatment Deprescribing is under discussion.
7 Botanical
new drugs
SB03 Genital wart Acquired TFDA drug license to sell drug products in
VEREGEN® (condyloma) specialized channels (hospitals, clinics, and pharmacies).
8 Eye drops
Successful international cooperation with South Korean
Dry age-related
AJU Pharm in granting authorization right to the Company.
SB04 macular
Approved for phase II/III clinical trial by TFDA.
degeneration
Dose adjustment is under discussion
9 Positively
charged
liposome
Approved for the phase III clinical trial by FAMHP and
TGA.
SB05 Triple-negative
Approved for the phase III clinical trial by TFDA.
TNBC breast cancer
Received project funding from MOEA.
Feasibility study is under discussion.
Approved for phase III clinical trial in the U.S., Taiwan,
France, Hungary, South Korea, Russia, and Israel.
Received the grant of A+ Industrial Innovation R&D
Pancreatic Program by MOEA.
SB05PC
cancer Completed final analysis of phase III clinical trial.
Project is under discussion.
Approved for phase III clinical trial by NMPA.
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1.2 Business Plan for 2024

1.2.1 Management Guideline and Marketing Strategies

“Public’s health is the ideal of Sinphar.” Sinphar upholds the philosophy of “life, health, and technology,” and develop drugs, health supplements, and aesthetic medicine products to guard public’s health and quality of life.

Sinphar is paying equal attention to R&D, production, and marketing. Based on the professional research and development, the group combines the resources of the subsidiaries at home and abroad to make a comprehensive one-stop industry chain of R&D, production, packaging supplies and sales.

In recent year, the three major developments of the group are new drugs R&D, natural botanical materials, and drugs. Sinphar develops specific products through efficient production and strengthened quality monitoring. Additionally, the group enters global health market and maximizes value with diverse marketing tools and channels.

Operation and Marketing Strategies in 2024

A. New Drugs Research and Development

  • (A) SynCore Bio’s pipeline is still in progress.

  • (B) Development and agency of global cancers generic drugs, agency of global new drugs for cancers, development of API for cancers and development of new dosage forms and new drugs.

B. Natural Botanical Materials

  • (A) Based on long-term R&D and scientific data from the group, Sinphar combines and develops natural botanical materials that strengthen brain health, muscle energy and immune system and improve sleep quality to create a niche.

  • (B) Develop or introduce unique health supplement/functional food, focus on preventive medicine, accelerate product innovation, and improve various diseases caused by aging population and stress.

  • (C) Develop monopolistic API, in addition to internal-use, Sinphar actively expands the supply markets.

  • (D) Independent research and development of natural materials with patent protected raw materials, control the source of raw materials, in order to develop market-differentiated health supplements.

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  • (E) Develop unique skincare ingredients to actively expand

cosmeceutical market.

C. Drugs

  • (A) Develop preventive and niche products for all ages.

  • (B) Focus on niche generic drug products. Through drug repurposing, develop new indication. The group can shorten development schedule and reduce costs for better NHI price.

  • (C) Diversify product development. Except for self-production, Sinphar also actively collaborates with foreign pharmaceutical companies. Recently, Sinphar introduced gastrointestinal and hypolipidemic drugs from Japan and entered the market successfully. With a growing aging population, Sinphar will further develop drugs for chronic illnesses to expand market share.

  • (D) Expand technical cooperation with global pharmaceutical companies, Sinphar introduces manufacturing technologies in generic drugs to expedite product development.

D. Strengthen Quality System to Lay the Foundation for Sustainable Development

  • (A) Import digital integrated management system and establish routine digital management.

  • (B) Handle abnormal quality with automated report which forward the report to related departments for timely investigation, and start a cross-departmental quality committee to establish improvement measures.

  • (C) Continue to strengthen the manufacturing quality system and corresponding measures of laws.

  • (D) Cooperate with external quality agencies to inspect quality and process of production to strengthen quality management system and quality monitoring.

E. Diversified Marketing and Foreign Business

  • (A) After the steady growth of generic drugs market in Japan, Sinphar also participates in Southern Policy and obtained the GMP certification of food plant and HALAL certification from MUI, actively captures market shares of South East Asia and Islam in Asia.

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  • (B) Using different product strategies between Blue Ocean and Red Ocean to capture hospital and clinic market shares and create better profit structure.

  • (C) In the post-pandemic era, online shopping became one of the most popular consumer sales channels. Sinphar actively expands e-commerce, telemarketing, and experiential marketing with Sinphar Health Park to integrate online and offline sales. This provides consumers with greater convenience in purchasing Sinphar’s health and skincare products.

  • (D) Sinphar can quickly realizes R&D results into products with business-to-business marketing, and further brings brand awareness through advertising and focuses on business-to-consumer marketing.

  • (E) Establish strategic alliances with international companies and to develop global market through the co-development of various kinds of pharmaceuticals.

F. Set up Intelligent Plant to Improve Productivity to Meet Global Demand

  • (A) The plants implemented SAP, MES, and WMS systems. From purchase-sales-inventory management, product manufacturing and control, warehouse management, and to real-time inventory, we reduced cost and improved operation efficiency with computerized management. Complete computerized data meets global market demand and increases international competitiveness.

  • (B) Sinphar spares no expense when investing in the replacement of software and hardware and implement AI for checking production compliance and preventing human error, improving manufacturing efficiency, and monitoring quality. We combine the system with manufacturing automation, and plan to expand it to include logistics and sales and marketing systems.

  • (C) In response to projected increase in customer deliveries, Sinphar plans to build a new automated warehouse, equipped with a computer system that integrates warehouse with manufacturing and increases logistic efficiency.

  • (D) Sinphar simultaneously establishes an information security management system to protect enterprise resource management system, manufacturing execution system and the maintenance of machine room.

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1.2.2 Sales Volume Forecast and Supporting Basis

Drugs and functional food are the main product categories of our Company. The Company and its employees are working together to achieve the sales targets for 2024.

1.3 The Impact on Company’s Future Development Strategies Due to Competition, Regulatory Restrictions and Market Changes

There is a steady growth in healthcare related consumerism as the aging population expands in Taiwan. In order to control the increasing cost of health insurance, the government takes measure to adjust drug prices. However, as the healthcare market continues to grow, the government encourages hospitals or primary medical institutions to use generic drugs resulting in an upward trend in market demand of generic drugs. Yet, domestic pharmaceutical companies are at a disadvantage compared to international pharmaceutical companies due to lack of economic scale and unfair competition of imported drugs. Domestic companies are under stricter regulations and are required to implement PIC/S GMP, which increase the production cost dramatically, and at the same time, NHI has been steadily reducing the drug prices that it covers.

Although we are facing severe challenges in the future, limitless opportunities exist. Sinphar believes in the company philosophy of life, health, and technology, and consistently invests in and improves hardware and software. We introduce talents and technologies, improve quality, develop new products, and focus more on E-commerce and digital marketing. Sinphar aims to be a contributor to Taiwan pharmaceutical industry and reciprocate the support of shareholders.

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Ⅱ. Company Profile

2.1 Date of Incorporation : July 2, 1977

2.2 Company History

1977 Founded on July 2, 1977 with NT$10 million capital.
1980 Started operations on March 1.
1988 Passed GMP inspection and obtained 65 pharmaceutical licenses.
1997 1. Established CanCap Pharmaceutical Ltd. in Canada to facilitate overseas expansion.
2. The Securities & Futures Institute approved the public offering of the Company’s
stock in November and the paid-in capital is NT$316,800,000.
1998 The Company increased capital by retained earnings. The paid-in capital is
NT$339,480,000.
1999 The Company increased capital by retained earnings and capital surplus. The paid-in
capital is NT$390,402,000.
2000 1. Completed 4,900m2 plant expansion and acquired G.M.P. facility certification from
Taiwan Industrial Development Bureau.
2. Stock listed for OTC trading (stock code: 4719) on October 17. The paid-in capital is
NT$433,346,220.
2001 1. The Company’s new anti-cancer drug, Phyxol injection, was approved by the
Department of Health for launching into the market and acquired sales, distribution,
and manufacturing rights in Taiwan, China, and other Far East regions.
2. The Company implemented seasoned equity offering and increased capital by
retained earnings. The paid-in capital is NT$512,346,990.
2002 1. Received approval to invest in Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou)
(Sinphar Tian-Li)
2. The Company used follow-on offering, retained earnings and capital surplus to
increase capital. The paid-in capital is NT$643,087,800.
3. Officially listed on Taiwan Stock Exchange (stock code: 1734) on August 26
(transferred from OTC trading, stock code: 4112). The paid-in capital is
NT$643,087,800.
4. On October 27, grand opening Company-funded Research and Development Center.
2003 1. Passed the ISO9001 quality system certification by the Bureau of Standards,
Metrology and Inspection.
2. The Company increased capital by retained earnings. The paid-in capital is
NT$675,242,200.
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1. The Company implemented cash capital increase in April. The paid-in capital is
NT$775,242,200.
2. Sinphar Tian-Li obtained the GMP drug permit license in May.
2004
3. The Company increased capital by retained earnings. The paid-in capital is
NT$821,756,730.
4. Sinphar Tian-Li acquired Hangzhou Vitrum Healthy Food Co., Ltd.
1. Passed the ISO14001 environmental management system by the Bureau of
Standards, Metrology and Inspection.
2. The Company increased capital by retained earnings in July. The paid-in capital is
2005 NT$879,279,700.
3. Established headquarters in Yilan.
4. The Company implemented cash capital increase in October. The paid-in capital is
NT$979,279,700.
The Company increased capital by retained earnings in September. The paid-in capital
2006
is NT$1,057,622,000.
2007 Established Sinphar Counter in March to actively expand presence in pharmacies.
1. The Company declared to Securities and Futures Bureau, FSC to issue the first
domestic secured convertible bond amounts to NT$350 million in April.
2. In August, signed a Technology Transfer Contract for Exclusive R&D Outcome of
2008
Novel Small Anti-Cancer Drug with the National Health Research Institute, and
jointly established SynCore Biotechnology Co., Ltd. (SynCore Bio) to develop
anti-cancer drugs.
1. Received the BSI OHSAS 18001 certification in February.
2. In September, PIC/S cancer and ophthalmic solution manufacturing plants and R&D
2009
facilities entered validation and trial run phase.
3. The Company passed the ISO 22000 food safety certification in November.
SynCore Bio new drug SB01 was approved by the USFDA and Taiwan Department of
2010
Health for phase Ⅰ clinical trial in July and November.
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1. Passed Taiwan’s Department of Health PIC/S GMP inspection and GMP evaluation
for facility expansion in February.
2. SynCore Bio signed a botanical medicine agreement with MediGene of Germany to
acquire exclusive right to manufacture and sell Veregen® in Taiwan in May.
2011 3. In November, SynCore Bio and U.S. MacuCLEAR signed an agreement pertaining
to authorization of a new AMD drug, which completed phase Ⅰ clinical trial as
approved by U.S. FDA, in Asia and Australia.
4. The Company implemented cash capital increase in December. The paid-in capital is
NT$1,488,511,620.
1. Acquired a pharmaceutical plastic container manufacturing plant and changed the
company name to ZuniMed Biotech Co., Ltd. (ZuniMed Biotech) in February.
2. SynCore Bio’s new AMD drug was approved for phase Ⅱ/Ⅲ clinical trial in the
United States by U.S. FDA in April.
3. SynCore Bio and MediGene signed an agreement to cooperate in co-development of
2012
the new cancer drug (SB05) and conduct phase Ⅲ clinical trial of SB05 in July.
4. In accordance with the Act for The Development of Biotech And New
Pharmaceuticals Industry, the MOHW approved SynCore Bio as a new drug
biotechnology company in September.
5. In November, SynCore Bio changed its name in Chinese.
1. Sinphar Tian-Li signed a New Drug Collaboration Agreement with Kanion
Pharmaceutical in January.
2. SynCore Bio’s new AMD drug was approved for phase Ⅱ/Ⅲ clinical trial in Taiwan
in February.
2013 3. SynCore Bio and MediGene, a German listed company, signed an investment
agreement and acquired manufacturing and marketing rights for global phase Ⅲ
clinical trial on SB05 in May.
4. SynCore Bio, (stock code: 4192) was approved by Taipei Exchange and listed in the
emerging market in August.
1. SynCore Bio’s new drug, SB05, obtained the approval for conducting phase Ⅲ
clinical trial by Belgium and Australia EC in February.
2. The Company implemented cash capital increase in September. The paid-in capital is
2014 NT$1,612,711,750.
3. SynCore Bio (stock code: 4192) was publicly listed on GTSM on October 28.
4. The Company launched its second fully-automated anticancer drugs manufacturing
facility in Yilan headquarters in October.

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  • SynCore Bio and National Taiwan University Hospital setup the Age-related Macular Degeneration Research Center in January. 2. SynCore Bio signed with AJU PHARM Korea a co-development contract for SB04, 2015 eye drops for treating Age-related macular degeneration in May. 3. The Company’s cytotoxic capsule product passed PIC/S GMP inspection by the Department of Health in December. 1. SynCore Bio’s new drug SB05 (EndoTAG-1) was approved for phase Ⅲ clinical trial by Australian and Taiwanese authorities in February. 2. The Company passed the PIC/S GMP inspection by the Department of Health for its cytotoxic agents (coated tablet) in February. 2016 3. The Company passed the PIC/S GMP inspection by the Department of Health for its injections (sterile) in April. 4. The Company increased capital by retained earnings in September. The paid-in capital is NT$1,677,220,220. 1. SynCore Bio received the US and Taiwan clearance of SB05(EndoTAG® -1) to conduct the phase Ⅲ pancreatic cancer clinical trial. 2. Sinphar Migus Phyto-Protein Powder obtained the “blood lipid regulation” 2017 certification approved by the MOHW in July. 3. Sinphar Memoregain Capsules, a supplement derived from Cistanche tubulosa, obtained the “anti-aging” certification approved by the MOHW in September. 1. SB05 (EndoTAG® -1) developed by SynCore Bio was approved by five countries to conduct phase III clinical trial for pancreatic cancer. 2018 2. Sinphar Potent Plus Soft Capsules was certified by the Ministry of Health and Welfare as a nutritional supplement for “anti-fatigue function” in December. 1. Sinphar soft Capsules and Powder production line received the HALAL certification by MUI in January. 2019 2. In June, SynCore Bio’s SB05PC （ EndoTAG® -1 ） was approved by China NMPA to be the first line treatment for pancreatic cancer patients in phase Ⅲ clinical trial. 1. In January, Sinphar Tian-Li signed with Japan ASAHI GODO INC. an exclusive distribution license agreement for patented Protygold® for distribution in Japan. 2020 2. The global phase Ⅲ clinical trial of SynCore Bio’s SB05 pancreatic cancer announced the results of the interim analysis in August. 3. The Company recalled some products in September.

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1. Lanostanes, a substance found in patented Lipucan® , can boost immune system and
relieve allergy and asthma symptoms. This finding was published in Life magazine.
2. Sinphar Tian-Li combined Cistanche Tubulosa extracts and Lipucan® to create a
series of brain-beneficial product and issued patent for “Composition with memory
improving function” from China in October, (Patent No. ZL 2018 1 0691573.1).
2021 3. The Subsidiary, SynCore Bio, announced the phase Ⅲ clinical trial result for the new
drug treating pancreatic cancer, SB05PC(EndoTAG® -1), in October. The primary
efficacy endpoint showed no statistical significance.
4. The Subsidiary, SynCore Bio, was awarded bronze medal in pharmaceutical category
for the “2021 Pharmaceutical Technology Research Development Award” held by
Ministry of Health and Welfare in December.
1. Sinphar Memoregain Capsules was awarded a gold medal in the 2022 Moscow
International Salon of Inventions and Innovative Technologies ARCHIMEDES and
the U.S. special award. Additionally, it was also the silver medal winner in Monde
Selection of International Institute for Quality Selections.
2. Sinphar Memoregain Capsules was awarded Symbol of National Quality in health
2022
food section in September.

3. The testing laboratories passed ISO17025 certification in October.
4. In October, the Company co-hosted the Yilan Marathon with Yilan County.
5. Sinphar Memoregain Capsules was awarded bronze medal in National Healthcare
Quality Award in December. It is the only health food that won this award.
1. Passed the ISO9001:2015 certification and obtained certificate of GMP for health
supplements in July.
2. In August, the Company signed a Term Sheet with a Japan pharmaceutical company
2023 to introduce manufacturing technologies in generic drugs to gain an advantage in
product development.
3. The Company passed the PIC/S GMP inspection by Taiwan Food and Drug
Administration for its coating and packaging of solid dosage forms in October.
Sinphar Potent Plus Soft Capsules was awarded a gold medal and Poland Special
2024 Award in the Moscow International Salon of Inventions and Innovative Technologies
ARCHIMEDES in March 2024.
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Ⅲ. Corporate Governance Report

3.1 Organizational System

3.1.1 Organizational Chart

==> picture [730 x 298] intentionally omitted <==

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3.1.2 Major Corporate Functions

Department Functions
Chairman
Office		 Support the Chairman to plan, design and implement management
system and strategies, and oversee each department to execute and
meet organizational and corporate governance targets. It consists of the
“Secretary Team.”
Audit Office Responsible for revising, auditing, and supervising and managing
internal control system to meet corporate governance requirements.
Chief
Operating
Officer Office		 To optimize benefits for the Company, the Chief Operating Officer
Office guides and coordinates the long-term operating policies and
gives direction on major investments of the Company, There are three
divisions under the Chief Operating Officer Office.
Business Units Team:
Consists of the General Manager of each Business Unit: Sinphar
Taiwan and Sinphar Tian-Li, and they are responsible for each
respective business unit locally in research and development,
production, sales, and management.
International Business Development Team:
Responsible for consolidating products and business resources of
Business Units. This team focuses on developing global business and
marketing the global image of the Company to optimize opportunities
for Business Units. It is also in charge of sourcing international
products, raw materials, and equipment for Business Units.
China Affairs Office:
Responsible for investment and management of affairs in China.
Technology
Management
Office		 The highest management unit responsible for R&D and quality. The
major functions of this Office are: establish and control PIC/S GMP
production protocols, GLP R&D policy, intellectual property, recruiting
legal and patent talents, integrating each Business Unit’s natural
products as food products.
Setup Technology Management Office Information Platform to manage
and track all R&D projects in the Company, Business Units, and
outsourced partners.
This Office consists of Risk Management Team, R&D Team, Legal &
Intellectual Property Team, Information Technology Team, Technology
& Human Resource Team, and Food Supplement Team.
Finance Team Consolidate, supervise, and evaluate accounting, finance, and tax
functions.
  • 15 -

3.2 Directors, Supervisors and Management Team Information

3.2.1 Directors

April 21, 2024 Unit: shares; %

Title Nationality/
Place of
Incorporation		 Name Gender/
Age		 Date
Elected		 Term
(Years)		 Date First
Elected
Shareholding
when Elected
Shareholding
when Elected		 Current
Shareholding		 Current
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
(Education)		 Other Position Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Shares % Title Name Relation
Chi ROC Chih W L Male/ August 3 June 07, 3149791 188 3149791 188 1799725 107 － －



 ‧Bachelor Degree in
Pharmacy,
Kaohsiung Medical
University
‧Director, National
Association of Small
& Medium
Enterprises
‧Director, Taiwan
Research-based
Biopharmaceutical
Manufacturers
Association
‧Director, Institute for
Biotechnology and

‧Director, Xing-Da
Capital Corp.
‧Chairman, ZuniMed
Biotech Co., Ltd.
‧Chairman, SynCore
Biotechnology
Co., Ltd.
‧Chairman,
SUNETIC

Corporate
Director
Representative		 Yi Ta
Lee		 First degree
of kinship
－
arman ... en ee 71-80 03, 2021 1999 ,, . ,, . ,, .
Medicine Industry
‧Director, Taiwan
Cancer Foundation
‧Director, Youngsun
Culture & Education
Foundation
‧Presedent, National
Outstanding SMEs
Award Firendship
Club
‧Director, Research
Center for
Biotechnology and
Medicine Policy

BIOTECH INC
‧Chairman,
UNIVERSAL
NEXT
TECHNOLOGIES
INC
‧Director, Taiwan
Breast Cancer
Foundation
Executive
Assistant,
Chairman’s
Office		 Ju Nee
Yeo		 First degree
of kinship
  • 16 -
Title Nationality/
Place of
Incorporation		 Name Gender/
Age		 Date
Elected		 Term
(Years)		 Date First
Elected
Shareholding
when Elected
Shareholding
when Elected		 Current
Shareholding		 Current
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
(Education)		 Other Position Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Shares % Title Name Relation
Independent
Director		 R.O.C. Ching Lung
Lee		 Male/
71-80		 August
03, 2021		 3 June 29,
2009		 － － － － － － － －


 ‧Ph.D. in Horticulture,
Leibniz University
Hannover
‧Chairperson, Council
of Agriculture,
Executive Yuan
‧Chairman, Taiwan
Fertilizer Co., Ltd.





 ‧Professor, National
Taiwan University
‧Chair Professor,
National Chung
Hsing University
‧National Policy
Advisor to the
President
‧Chairman, BELX
Bio-Pharmaceutical
Co., Ltd.
‧Independent
Director,
VISGENEER INC
‧Independent
Director, Tatung
Company
－		 － － －
Independent
Director		 R.O.C. Yau Yuan Wen Male/
71-80		 August
03, 2021		 3 June 20,
2018		 － － － － － － － －


 ‧Master Degree in
Law, National
Taiwan University
‧Administrative Chief
Judge,
Division-Chief
Judge of Taiwan
High Court
‧Chief Judge, Taiwan
Miaoli District Court

‧Independent
Director, AMIDA
Technology, Inc.		 － － － －
  • 17 -
Title Nationality/
Place of
Incorporation		 Name Gender/
Age		 Date
Elected		 Term
(Years)		 Date First
Elected
Shareholding
when Elected
Shareholding
when Elected		 Current
Shareholding		 Current
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
(Education)		 Other Position Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Shares % Title Name Relation
Independent
Director		 R.O.C. Hsin Yu Chou Female/
41-50		 August
03, 2021		 3 August 03,
2021
－		 － － － － － － －


 ‧Bachelor Degree in
Accounting, Aletheia
University
‧Assistant General
Manager, Crowe
(TW) CPAs
‧Senior Accounting
Manager, Sabrina
Fashion Industrial
Corp.
 ‧Accounting
Manager, Nice
Garden Industrial
Co., Ltd.		 － － － －
Director R.O.C. Hsiu Min Lin Male/
81-90		 August
03, 2021		 3 June 07,
1999		 1,336,876 0.80 1,336,876 0.80 54,288 0.03 － －
 ‧National Ilan
Institute, Agriculture
and Technology
－		 － － － －
Director R.O.C. Hsiu Chi Kuo Male/
71-80		 August
03, 2021		 3 June 07,
1999		 2,064,382 1.23 1,569,382 0.94 437,555 0.26 － －


 ‧Kainan Vocational
High School
‧Chairman, En Yi
Enterprise Co.
‧Director, General
Manager, Glory
Kingdom Corp.

 ‧Chairman, Glory
Nutria Ltd.
‧Chairman, Vit-Gute
Nutrition Ltd.
－		 － － －
  • 18 -
Title Nationality/
Place of
Incorporation		 Name Gender/
Age		 Date
Elected		 Term
(Years)		 Date First
Elected
Shareholding
when Elected
Shareholding
when Elected		 Current
Shareholding		 Current
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
(Education)		 Other Position Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Shares % Title Name Relation
Director R.O.C. Ling Mo Chao Male/
71-80		 August
03, 2021		 3 June 29,
2009		 1,498,547 0.89 1,489,547 0.89 271,000 0.16 － －

 ‧Taichung Municipal
Sha-Lu Industrial
High School
‧Chairman, Giant Goal
Leather MFG. Inc.
 ‧Chairman, Giant
Goal Leather
MFG. Inc.		 － － － －
Director R.O.C. Xing-Da
Capital Corp.		 － August
03, 2021		 3 June 07,
1999		 15,470,464 9.22 15,729,464 9.38 － － － － － － － － － －
Corporate
Director
Representative		 R.O.C. Xing-Da
Capital Corp.
Representative:
Yi Ta Lee
Male/
51-60		 August
03, 2021		 3 June 06,
2012		 640,116 0.38 640,116 0.38 665,361 0.40 － －


 ‧Ph.D. in Chemical
and Biological
Engineering,
University of British
Columbia
‧Director, Taiwan
Research-based
Biopharmaceutical
Manufacturers
Association
‧Supervisory Board
Member, Medigene
AG Germany






 ‧Director, ZuniMed
Biotech Co., Ltd.
‧Vice Chairman,
SynCore
Biotechnology
Co., Ltd.
‧Director, SUNETIC
BIOTECH INC
‧Director, Xing-Da
Capital Corp.
‧Chairman, CanCap
Pharmaceutical
Ltd.
‧Representative,
SynCore
Biotechnology
Europe GmbH
‧Director, Taiwan
Bio Industry
Organization

Chairman		 Chih
Wen
Lee		 First degree
of kinship
－
  • 19 -
Title Nationality/
Place of
Incorporation		 Name Gender/
Age		 Date
Elected		 Term
(Years)		 Date First
Elected
Shareholding
when Elected
Shareholding
when Elected		 Current
Shareholding		 Current
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
(Education)


 Other Position
‧Independent
Director, Bionet
Corp.
‧Director, Research
Center for
Biotechnology and
Medicine Policy
‧Member,
Biotechnology and
Medicine Industry
Research
Committee,
CNAIC		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Shares % Title Name Relation


Executive
Assistant,
Chairman’s
Office		 Ju Nee
Yeo		 First degree
of kinship
Director R.O.C. Jehng Jer Guan
Male/
71-80		 August
03, 2021		 3 August 03,
2021
－		 － － － 13,000 0.01 － －

 ‧Ph.D. in Graduate
Institute for Sun
Yat-Sen Thoughts,
Chinese Culture
University
‧Deputy
Director-general,
National Police
Agency, Ministry of
the Interior		 － － － － －
Director R.O.C. Hung Chih Lin Male/
71-80		 August
03, 2021		 3 August 03,
2021
1,000,128		 0.60 1,000,128 0.60 － － － －
 ‧Bachelor Degree in
Chemical and
Materials
Engineering,
Chinese Culture
University

 ‧Chairman, Daxie
Boutique
Department Store
Co., Ltd.
‧Chairman,
Jian-Sheng Co.,
Ltd.		 － － － －
  • 20 -
Title Nationality/
Place of
Incorporation		 Name Gender/
Age		 Date
Elected		 Term
(Years)		 Date First
Elected
Shareholding
when Elected
Shareholding
when Elected		 Current
Shareholding		 Current
Shareholding		 Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
(Education)		 Other Position Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Executives, Directors or
Supervisors Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Shares % Title Name Relation
Di ROC N Ch Y Male/ August 3 August 03,
999763		 059 999763 059 51095 003 － －

 ‧China Medical
University, Taiwan

 ‧Superintendent,
NENG-CHUN
DIABETES
CLINIC		 General
Manager, China
Affairs Office
Neng
Yin Yu		 Second
degree of
kinship		 －
rector ... eng un u 61-70 03, 2021 2021 , . , . , . ‧President, Taiwanese
Association of
Diabetes Educators
 ‧Honorary President,
Yilan Association
of Diabetes
Supporters
General
Manager,
Subsidiary
company		 Neng
Yu Yu		 Second
degree of
kinship
  • 21 -

April 21, 2024

A. Major Shareholders of the Institutional Shareholders

April 21, 2024
Name of Institutional Shareholders Major Shareholders
Xing-Da Capital Corp. INSIGHT INTERNATIONAL (50.22%),
Ling Fang Kuo (21.86%), Yi Ta Lee
(18.80%),Wan Ping Lee (3.36%),
○ Jing Lee (3.36%), Chih Wen Lee
(2.40%)

(A) Major Shareholders of the Company’s Major Institutional Shareholders

April 21, 2024
Name of Institutional Shareholders Major Shareholders
INSIGHT INTERNATIONAL Yi Ta Lee (100%)

B. Information of Directors

(A) Professional Qualifications of Directors and Independence Analysis of Independent Directors

Criteria
Name
Professional Qualification and
Experiences		 Independence Status Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as an
Independent
Director
Director
Chih Wen Lee		 At least five years of related work
experience in the business of the
Company. Currently serves as the
Chairman of Sinphar Pharmaceutical
Co., Ltd.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ None
Director
Hsiu Min Lin		 At least five years of related work
experience in the business of the
Company.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ None
  • 22 -
Criteria
Name
Professional Qualification and
Experiences		 Independence Status Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as an
Independent
Director
Director
Yi Ta Lee		 At least five years of related work
experience in the business of the
Company.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ 1
Director
Hsiu Chi Kuo		 At least five years of related work
experience in the business of the
Company.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ None
Director
Ling Mo Chao		 At least five years of related work
experience in the business of the
Company.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ None
Director
Jehng Jer Guan		 At least five years of related work
experience in the business of the
Company.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ None
Director
Hung Chih Lin		 At least five years of related work
experience in the business of the
Company.
Not being a person of any conditions
defined in Article 30 of the
Company Act.		 ─ None
Director
Neng Chun Yu		 At least five years of related work
experience in the business of the
Company. Currently serves as the
Superintendent of NENG-CHUN
Diabetes Clinic. Not being a person
of any conditions defined in Article
30 of the Company Act.		 ─ None
  • 23 -
Criteria
Name
Professional Qualification and
Experiences		 Independence Status Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as an
Independent
Director
Independent
Director
Ching Lung Lee		 At least five years of related work
experience in the business of the
Company. Served as the Chairman
of Taiwan Fertilizer Co., Ltd.
Currently serves as the Professor of
National Taiwan University, and
Chair Professor of National Chung
Hsing University. Specialty is
agricultural biotechnology. Not
being a person of any conditions
defined in Article 30 of the
Company Act.		 1. Not an employee of the company or any of its affiliates.
2. Not a director or supervisor of the company or any of its affiliates.
3. Not a natural-person shareholder who holds shares, together with
those held by the person's spouse, minor children, or held by the
person under others' names, in an aggregate of one percent or more
of the total number of issued shares of the company or ranking in
the top 10 in holdings.
4. Not a spouse, relative within the second degree of kinship, or lineal
relative within the third degree of kinship, of a managerial officer
under subparagraph 1 or any of the persons in the preceding two
subparagraphs.
5. Not a director, supervisor, or employee of a corporate shareholder
that directly holds five percent or more of the total number of
issued shares of the company, that ranks among the top five in
shareholdings, or that designates its representative to serve as a
director or supervisor of the company under Article 27, paragraph
1 or 2 of the Company Act.
6. If a majority of the company's director seats or voting shares and
those of any other company are controlled by the same person: not
a director, supervisor, or employee of that other company.
7. If the chairperson, general manager, or person holding an
equivalent position of the company and a person in any of those
positions at another company or institution are the same person or
are spouses: not a director (or governor), supervisor, or employee
of that other company or institution.
8. Not a director, supervisor, officer, or shareholder holding five
percent or more of the shares, of a specified company or institution
that has a financial or business relationship with the company.
9. Not a professional individual who is an owner, partner, director,
supervisor, or managerial officer of a sole proprietorship,
partnership, company, or institution that offers audit services or
offers commercial, legal, financial, or accounting services for
which he/she has received the total remuneration of less than
NT$500,000 over the past two years to the Company or its
affiliate, nor a spouse thereof.
10. Not having a marital relationship or a relative within the second
degree of kinship to any other director of the Company.

2
Independent
Director
Yau Yuan Wen		 At least five years of related work
experience in the business of the
Company. Served as Administrative
to The Chief Judge, Division-Chief
Judge of Taiwan High Court.
Specialty is legal. Not being a person
of any conditions defined in Article
30 of the Company Act.		 1
Independent
Director
Hsin Yu Chou		 At least five years of related work
experience in the business of the
Company. Served as the Finance
Manager and Senior Accounting
Manager of Sabrina Fashion
Industrial Corp. Currently serves as
the accounting manager of Nice
Garden Industrial Co., Ltd. Not
being a person of any conditions
defined in Article 30 of the
Company Act.
None
  • 24 -

(B) Diversity and Independence of Board of Directors

  • a. Diversity of Board of Directors

The Company advocates and respects the diverse policy of Directors to improve corporate governance and promote the sound development of the composition and structure of the Board of Directors. The diverse guideline contributes to enhancing the overall performance of the Company. The members of the Board of Directors are hired based on merit, built up with cross-disciplinary complementary capabilities, and increase the seats of female Directors. According to the demands of operations, business model, and development, to strengthen Board competencies to achieve the goal of corporate governance, the following items are the capabilities the Board of the Company should possess:

  • (a) Basic conditions and values: Gender, age, nationality, and culture.

  • (b) Professional knowledge and abilities

Have the ability to make operational judgments, ability to perform accounting and financial analysis, ability to conduct management administration, ability to conduct crisis management, knowledge of the industry, an international market perspective, ability to lead, ability to make policy decisions, respective industry experiences and relative abilities.

(c) Table of the implementation status of the diverse policy of the members of Board of Directors is as below


Name		 Diverse
Core		 Basic Composition Basic Composition Basic Composition Professional Knowledge and Abilities Knowledge and Abilities Knowledge and Abilities Knowledge and Abilities
Nationality Gender Age
Range		 Term of
Independent
Directors		 Operational
Judgments
Accounting
and
Financial		 Management
Administration		 Lead and
Policy
Decision		 Crisis
Management		 Knowledge
of the
Industry
International
Market
Perspective
Directors Chih
Wen
Lee		 R.O.C. Male 71-80 ─ ─
Hsiu
Min
Lin		 R.O.C. Male 81-90 ─ ─
Hsiu
Chi
Kuo		 R.O.C. Male 71-80 ─ ─
Ling
Mo
Chao		 R.O.C. Male 71-80 ─ ─
Yi Ta
Lee		 R.O.C. Male 51-60 ─ ─
Jehng
Jer
Guan		 R.O.C. Male 71-80 ─ ─ ─ ─
Hung
Chih
Lin		 R.O.C. Male 71-80 ─ ─
Neng
Chun
Yu		 R.O.C. Male 61-70 ─ ─
Independent
Directors		 Ching
Lung
Lee		 R.O.C. Male 71-80 9-12 ─ ─
Yau
Yuan
Wen		 R.O.C. Male 71-80 4-6 ─ ─ ─
Hsin
Yu
Chou		 R.O.C. Female 41-50 1-3 ─ ─
  • 25 -

b. Independence of Board of Directors

The Company currently has 11 members on the Board of Directors, consisting 8 members of Directors and 3 members of Independent Directors (account for 27% of all Directors.) By the end of 2023, all the Independent Directors meet the regulatory requirements related to Independent Directors by the Securities and Futures Bureau, and Financial Supervisory Commission, and none of the Directors or Independent Directors are in violation of Subparagraph 3 and 4, Paragraph 3, Article 26 of the Company Act. The Board of Directors of the Company is independent (Professional Qualifications of Directors and Independence Analysis of Independent Directors is found on page 22). Education, gender, and work experience of each Director are listed in Information on Directors, found on page 16.

  • 26 -

3.2.2 Management Team

April 21, 2024 Unit: shares; % April 21, 2024 Unit: shares; % April 21, 2024 Unit: shares; % April 21, 2024 Unit: shares; %
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
General
Manager		 R.O.C. Yu Liang
Pei
Male		 June 01,
2013		 60,283 0.04 － － － －





 ‧Department of
Mechanical Engineering,
China Junior College of
Technology
‧Medical Representative
Certification
‧Master Degree Credit
Program in Business
Administration, National
Taipei University
‧Sales Assistant Manager,
Sales Manager, Sinphar
Pharmaceutical Co., Ltd.
‧Vice General Manager,
Marketing Dept.,
Sinphar Pharmaceutical
Co., Ltd.
‧Sales Director, Marketing
Center, Sinphar
Pharmaceutical Co., Ltd.





‧Director, ZuniMed
Biotech Co., Ltd.
－		 － － －
  • 27 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Chief R&D
Officer		 R.O.C. Yi Ta
Lee		 Male August 01,
2007
640,116		 0.38 665,361 0.40 － －


 ‧Ph.D. in Chemical and
Biological Engineering,
University of British
Columbia
‧Director, Taiwan
Research-based
Biopharmaceutical
Manufacturers
Association
‧Supervisory Board
Member, Germany
Medigene AG









 ‧Director, ZuniMed
Biotech Co., Ltd.
‧Vice Chairman,
SynCore
Biotechnology
Co., Ltd.
‧Director,
SUNETIC
BIOTECH INC.
‧Director, Xing-Da
Capital Crop.
‧Chairman, CanCap
Pharmaceutical
Ltd.
‧Representative,
SynCore
Biotechnology
Europe GmbH
‧Director, Taiwan
Bio Industry
Organization
‧Independent
Director, Bionet
Corp.
‧Director, Research
Center for
Biotechnology and
Medicine Policy
‧Member,
Biotechnology and
Medicine Industry
Research
Committee,
CNAIC




Executive
Assistant,
Chairman’s
Office		 Ju Nee
Yeo		 Spouse －
  • 28 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
General
Manager,
China Affairs
Office		 R.O.C. Neng Yin
Yu
Male		 January 01,
2003
1,540,944		 0.92 323,688 0.19 － －



 ‧Department of Electronic
Engineering, Xin-Pu
Industrial College
‧Director, Taiwan
Cosmetics Industry
Association
‧Sales Junior Manager,
Sales Assistant Manager,
Sinphar Pharmaceutical
Co., Ltd.
‧Assistant Vice President,
Marketing Dept.,
Sinphar Pharmaceutical
Co., Ltd.


‧Director,
SUNETIC
BIOTECH INC.
‧Director, Hangzhou
Vitrum Healthy
Food Co., Ltd.
‧Director, Hetian
Tianli shasheng
Pharmaceutical
Development Co.,
Ltd.
General
Manager,
Subsidiary
company		 Neng Yu
Yu
Second
degree of
kinship
－
General
Manager,
Subsidiary
company		 R.O.C. Neng Yu
Yu
Male		 February
15, 2008		 592,077 0.35 29,360 0.02 － －




 ‧Department of Finance,
Tamsui Oxford College
‧Master Degree in
Business Administration,
National Taipei
University
‧Supervisor of Accounting
Sector, Assistant
Manager of Factory
Division, Sinphar
Pharmaceutical Co., Ltd.
‧Assistant Manager of
Finance Division,
Manager of Production
Control Division,
Sinphar Pharmaceutical
Co., Ltd.
‧Assistant Vice President,
Supply and Demand of
Production Control
Dept., Sinphar
Pharmaceutical Co., Ltd.




‧General Manager,
ZuniMed Biotech
Co., Ltd.		 General
Manager,
China Affairs
Office
Neng Yin
Yu
Second
degree of
kinship
－
  • 29 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Executive
Assistant,
Chairman’s
Office		 Singapore Ju Nee
Yeo		 Female August 01,
2007
665,361		 0.40 640,116 0.38 － －


 ‧B.Eng., M.Eng., McGill
University
‧General Manager, Vice
General Manager, Sales
& Marketing, CanCap
Pharmaceutical Ltd.
‧Vice General Manager,
Quality Steering Unit,
Sinphar Pharmaceutical
Co., Ltd.		 － Chief R&D
Officer		 Yi Ta
Lee		 Spouse －
General
Manager,
Subsidiary
company		 R.O.C. Chao Jih
Wang
Male		 November
26, 2013
2,000		 － 3,785 － － －



 ‧Ph.D. in Graduate
Institute of Life
Sciences, National
Defense Medical Center
‧Lecturer, Department of
Pharmacy, National
Defense Medical Center
‧Assistant Professor,
National Defense
Medical Center
‧Director, Sinphar Tian-Li
Research and
Development Institute
 ‧Executive Director,
Sinphar Tian-Li
Pharmaceutical
Co., Ltd.
(Hangzhou)
－		 － － －
  • 30 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Vice Chief
R&D Officer		 Canada Jing Jing
Justine
Tang
(Note)
Female		 September
01, 2012
123		 － － － － －





 ‧Research Doctoral of
University of Nancy I,
France (Science)
‧Pediatric Laboratory
Researcher, Nancy
Children's Hospital,
France
‧Pediatrics Lecturer,
Shanghai Second
Medical University
(affiliated to Shanghai
Jiao-tong University)
‧Attending Physician,
Department of
Pediatrics, Central
Hospital of Jing'an
District, Shanghai
‧Department of Pediatrics,
Shanghai Second
Medical University
(affiliated to Shanghai
Jiao-tong University)
‧Assistant Vice President,
R&D Project Unit,
Sinphar Pharmaceutical
Co., Ltd.

－		 － － － －
  • 31 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
General
Manager,
Marketing
Center		 R.O.C. Chang
Long
Chen		 Male January 01,
2008
412		 － － － － －



 ‧General Subjects,
Kuang-Fu High School
‧Department of Business
Administration, Nanya
Institute of Technology
‧Sales Manager, Sales
Assistant Vice President,
Sinphar Pharmaceutical
Co., Ltd.
‧Director, Marketing
Dept., Sinphar
Pharmaceutical Co., Ltd.

－		 － － － －
General
Manager,
Yilan Office		 R.O.C. Chien Ju
Lin
Female		 January 01,
2023
744,380		 0.44 － － － －





 ‧Bachelor Degree in
Chemical Engineering,
Chung Yuan Chiristian
University
‧Junior Manager, Material
R&D Sector
‧Senior Assistant Manager,
Prouction Material
Control R&D Division
‧Manager, Planning of
Packaging Materials
Division
‧Manager, Supply and
Demand Dept.
‧Director, Production
Control Center

－		 － － － －
  • 32 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Vice President,
Marketing
Center
R.O.C.		 Feng
Chin
Chang		 Male January 01,
2017
2,000		 － － － － －



 ‧Bachelor Degree in
Pharmacy, China
Medical University,
Taiwan
‧Master Degree in
Business Management,
Taichung University of
Science and Technology
‧Pass Pharmacist of
Higher Examination
‧Assistant Manager,
Manager, Assistant
General Manager,
Sinphar Pharmaceutical
Co., Ltd.		 － － － － －
  • 33 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Vice General
Manager,
General
Manager
Office		 R.O.C. Hui
Hung
Wang
(Note)		 Male August 16,
2023
－		 － 10,000 0.01 － －






 ‧Bachelor Degree in
Pharmacy, Taipei
Medical University
‧Master Degree in
Business Administration,
University of South
Australia.
‧Sales Manager,
HOLDING DISP. CO.,
LTD.
‧Manager, Research Dept.,
Sinphar Pharmaceutical
Co., Ltd.
‧Assistant Vice President,
Clinical Study Dept.,
Sinphar Pharmaceutical
Co., Ltd.
‧Assistant Vice President,
Chairman Office,
Sinphar Pharmaceutical
Co., Ltd.
‧Project Vice General
Manager, Anticancer
Drugs Dept., SynCore
Biotechnology Co., Ltd.


－		 － － － －
  • 34 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Vice General
Manager,
General
Manager
Office		 R.O.C. Wen
Hsin
Huang
(Note)		 Male August 16,
2023
－		 － － － － －





 ‧Ph.D. in Pharmacy,
University of Texas at
Austin
‧Bachelor and Master
Degree in Pharmacy,
National Defense
Medical Center
‧Pass Pharmacist of
Higher Examination
‧Associate Professor
Researcher, Medical
Research Dept., Show
Chwan Medical Care
System Operations
Center
‧Associate Professor,
School of Pharmacy,
National Defense
Medical Center
‧Vice General Manager,
Drug Development
Dept, SynCore
Biotechnology Co., Ltd.		 － － － － －
Assistant Vice
President,
Dept. of
Planning of
Pharmaceutical
Product
R.O.C.		 Chih
Tsao
Chang		 Male January 01,
2020
887		 － － － － －


 ‧Master Degree in
Graduate Institute of
Pharmacy, National
Defense Medical Center
‧Manager, Chinese Herbal
Medicine R&D Dept.,
Sinphar Pharmaceutical
Co., Ltd.
‧Senior Manager, Dept. of
Planning of
Pharmaceutical Product,
Sinphar Pharmaceutical
Co., Ltd.

－		 － － － －
  • 35 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Assistant Vice
President,
Marketing
Channel Dept.		 R.O.C. Chien
Kuo
Chang		 Male January 01,
2021
2,000		 － － － － －



 ‧Department of
Mechanical Engineering,
Chien Hsin Institute of
Technology
‧Vice General Manager,
Hangzhou Vitrum
Healthy Food Co., Ltd.
‧Assistant Project
Manager, Marketing
Dept.
‧Assistant Manager,
Manager, Marketing
Channel Division of
Business Dept. 3
－		 － － － －
Assistant Vice
President,
Marketing
Dept.		 R.O.C. Wen
Fang
Huang		 Male January 01,
2023
188		 － － － － －




 ‧Bachelor Degree in
Nutrition, Chung Shan
Medical University
‧Junior Manager,
Marketing Division
‧Manager, Health
Supplement Division
‧Manager, Division of
Planning of Health
Supplement
‧Senior Manager,
Marketing Channel
Division		 － － － － －
  • 36 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Assistant Vice
President		 R.O.C. Yi Mei
Lou		 Female December
01, 2006		 153,138 0.09 7,280 － － －


 ‧Department of
International Trade,
Taipei School of
Commerce
‧Manager, Accounting
Division, Sinphar
Pharmaceutical Co., Ltd.
‧Assistant Vice President,
Finance and Accounting
Dept., Sinphar
Pharmaceutical Co., Ltd.


－		 － － － －
Chief Financial
Officer
R.O.C.		 Chih
Hsiao
Chen		 Male August 11,
2015
7,000		 － － － － －




 ‧EMBA, Biotechnology,
Taipei Medical
University
‧Bachelor Degree in
Accounting and
Information Technology,
National Chung Cheng
University
‧Assistant Manager,
Assurance Service, PwC
Taiwan
‧Manager, Finance and
Accounting Dept.,
C.C.P. Contact Probes
Co., Ltd.
‧Manager, Finance and
Accounting Dept.,
Administration Dept.,
Audit Office, Quality
Assurance and Quality
Control Dept./ Executive
Assistant to the
Chairman, Dongguan
C.C.P. Contact Probes
Co., Ltd.


－		 － － － －
  • 37 -
Title Nationality/
Place of
Incorporation		 Name Gender
Date
Elected		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Shareholding by
Nominee
Arrangement		 Experience (Education) Other Position Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Managers Who are Spouses or
within Two Degrees of Kinship		 Remark(s)
(Note)
Shares % Shares % Shares % Title Name Relation
Accounting
Manager		 R.O.C. Li Jung
Hsieh		 Female January 01,
2007
46,680		 0.03 525 － － －

 ‧Department of Business
Administration, Hsing
Wu School of
Commerce
‧Junior Manager, Assistant
Manager, Accounting
Division of Finance and
Accounting Dept.,
Sinphar Pharmaceutical
Co., Ltd.
－		 － － － －

Note: Hui Hung Wang and Wen Hsin Huang have been appointed as Vice General Manager of General Manager Office on August 16, 2023.

Jing Jing Justine Tang, Vice Chief R&D Officer, was retired on September 30, 2023.

3.2.3 Where the General Manager or person of an equivalent post (the highest level manager) and Chairman of the Board of Directors are the same people, spouses, or relatives within the first degree of kinship, the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto must be disclosed

None

  • 38 -

3.3 Remuneration Paid to Directors (Including Independent Directors), Supervisors, and Management Team in the Most Recent Year

3.3.1 Remuneration for Directors and Independent Directors

2023 Unit: thousand shares; NT$ thousand; %

Title Name Remun eration eration Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Rel evant Remuner ation Recei ved by Directo rs Who are Also Employees rs Who are Also Employees rs Who are Also Employees rs Who are Also Employees Ratio of Total
Compensation
(A+B+C+D+E+F+G) to
Net Income (%)		 Ratio of Total
Compensation
(A+B+C+D+E+F+G) to
Net Income (%)		 Remuneration
from ventures
other than
subsidiaries or
from the parent
company
Base Compensation (A)
Severan		 ce Pay (B) Directors
Compensation(C)		 Allow ances (D) Salary, B
Allow		 onuses, and
ances (E)		 Severan ce Pay (F) Employee Compensation (G)
The
company
All companies
in the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements		 The
company
(Note)		 Companies in
the
consolidated
financial
statements
(Note)
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The co		 mpany Companies in the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
Cash
(Note)		 Stock Cash
(Note)		 Stock
Chairman Chih Wen Lee 5,076 6,030 ─ ─ 1,653 1,653 96 96 1.82 2.07 ─ ─ ─ ─ ─ ─ ─ ─ 1.82 2.07 ─
Director Hsiu Min Lin 166 166 ─ ─ 330 330 48 48 0.15 0.15 ─ ─ ─ ─ ─ ─ ─ ─ 0.15 0.15 ─
Director Hsiu Chi Kuo 166 166 ─ ─ 330 330 48 48 0.15 0.15 ─ ─ ─ ─ ─ ─ ─ ─ 0.15 0.15 ─
Director Ling Mo Chao
166		 166 ─ ─ 330 330 48 48 0.15 0.15 ─ ─ ─ ─ ─ ─ ─ ─ 0.15 0.15 ─
Director Xing-Da
Capital Corp.		 ─ ─ ─ ─ 1,080 1,080 ─ ─ 0.29 0.29 ─ ─ ─ ─ ─ ─ ─ ─ 0.29 0.29 ─
Corporate
Director
Representative		 Xing-Da
Capital Corp.
Representative:
Yi Ta Lee
336		 336 ─ ─ ─ ─ 48 48 0.10 0.10 2,594 3,452 ─ ─ 12 ─ 12 ─ 0.80 1.03 ─
Director Hung Chih Lin
166		 166 ─ ─ 330 330 48 48 0.15 0.15 ─ ─ ─ ─ ─ ─ ─ ─ 0.15 0.15 ─
  • 39 -
Title Name Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Relevant Remuneration Received by Directo Relevant Remuneration Received by Directo Relevant Remuneration Received by Directo Relevant Remuneration Received by Directo rs Who are Also Employees rs Who are Also Employees rs Who are Also Employees rs Who are Also Employees Ratio of Total
Compensation
(A+B+C+D+E+F+G) to
Net Income (%)		 Ratio of Total
Compensation
(A+B+C+D+E+F+G) to
Net Income (%)		 Remuneration
from ventures
other than
subsidiaries or
from the parent
company
Base Compensation (A)
Severance Pay (B)		 Directors
Compensation(C)		 Allowances (D) Salary, Bonuses, and
Allowances (E)		 Severance Pay (F) Employee Compensation (G)
The
company		 All companies
in the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements		 The
company
(Note)		 Companies in
the
consolidated
financial
statements
(Note)
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The company		 Companies in the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
Cash
(Note)		 Stock Cash
(Note)		 Stock
Director Jehng Jer Guan
166		 166 ─ ─ 330 330 48 48 0.15 0.15 ─ ─ ─ ─ ─ ─ ─ ─ 0.15 0.15 ─
Director Neng Chun Yu
166		 166 ─ ─ 330 330 48 48 0.15 0..15 ─ ─ ─ ─ ─ ─ ─ ─ 0.15 0.15 ─
Independent
Director		 Ching Lung
Lee		 166 166 ─ ─ 395 395 128 128 0.18 0.18 ─ ─ ─ ─ ─ ─ ─ ─ 0.18 0.18 ─
Independent
Director		 Yau Yuan Wen
166		 166 ─ ─ 395 395 128 128 0.18 0.18 ─ ─ ─ ─ ─ ─ ─ ─ 0.18 0.18 ─
Independent
Director		 Hsin Yu Chou 166 166 ─ ─ 395 395 104 104 0.18 0.18 ─ ─ ─ ─ ─ ─ ─ ─ 0.18 0.18 ─
1. Please descri
directors and
regulation is
2. Except for th		 be the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, a
independent directors is authorized by the Board of Directors to determine the level of payment in the industry at home and abro
reviewed by the Remuneration Committee and approved by the Board of Directors.
e disclosure above, remuneration paid to the Company’s directors for their services to all the companies listed in the financial statem		 nd time input with the amount of remuneration: The
ad. The operating scale and the current scale of the
ents (e.g., serving as a non-employee adviser): None		 Company established Remuneration Committee in 2021. The remuneration of
Company are positively related to operating performance and future risks. The
.

Note: On March 6, 2024, the Board of Directors has passed the resolution of remuneration distribution for directors amounting to NT$5.898 million and for employees

amounting to NT$10.484 million. However, the proposal has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

3.3.2 Remuneration for Supervisors

On August 3, 2021, the Company established the Audit Committee to replace Supervisors.

  • 40 -

3.3.3 Remuneration for General Managers and Vice General Managers

2023 Unit: thousand shares; NT$ thousand; %

Title Name Salary(A) Salary(A) Severance Pay (B) Severance Pay (B) Bonuses and Allowances
(C)		 Bonuses and Allowances
(C)		 Employee Remuneration (D) Employee Remuneration (D) Employee Remuneration (D) Employee Remuneration (D) Ratio of total compensation
(A+B+C+D) to net income (%)		 Ratio of total compensation
(A+B+C+D) to net income (%)		 Remuneration from
ventures other than
subsidiaries or
from the parent
company
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The company		 Companies in
the
consolidated
financial
statements

The company
Companies in the
consolidated
financial
statements
Cash
(Note 1)		 Stock Cash
(Note 1)		 Stock
General Manager Yu Liang
Pei		 2,120 2,120 ─ ─ 1,672 1,672 12 ─ 12 ─ 1.01 1.01 ─
Chief R&D Officer Yi Ta Lee 1,158 1,878 ─ ─ 1,437 1,575 12 ─ 12 ─ 0.69 0.92
General Manager,
China Affairs
Office		 Neng Yin
Yu		 1,229 1,229 ─ ─ 735 735 ─ ─ ─ ─ 0.52 0.52
Executive
Assistant,
Chairman’s Office
Ju Nee Yeo
851		 851 ─ ─ 1,578 1,578 12 ─ 12 ─ 0.65 0.65
General Manager,
Subsidiary
company		 Neng Yu
Yu		 600 2,085 ─ ─ 126 126 ─ ─ ─ ─ 0.19 0.59
General Manager,
Marketing Center		 Chang
Long Chen
1,432		 1,432 ─ ─ 964 964 12 ─ 12 ─ 0.64 0.64
Vice General
Manager,
General Manager
Office		 Wen Hsin
Huang
(Note 2)		 493 1,530 ─ ─ 314 314 12 ─ 12 ─ 0.22 0.49
Vice General
Manager,
General Manager
Office		 Hui Hung
Wang
(Note 2)		 430 1,436 ─ ─ 316 436 12 ─ 12 ─ 0.20 0.50

Note 1: On March 6, 2024, the Board of Directors has passed the resolution of remuneration distribution for employees amounting to NT$10.484 million. However, the proposal has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

Note 2: Wen Hsin Huang and Hui Hung Wang have been appointed as Vice General Manager of General Manager Office on August 16, 2023.

  • 41 -

3.3.4 Managerial Officers with the Top Five Highest Remuneration Amounts

2023 Unit: thousands of shares; NT$ thousands; %

Title Name Salary(A) Salary(A) Severance Pay (B) Severance Pay (B) Bonuses and Allowances
(C)		 Bonuses and Allowances
(C)		 Employee Remuneration (D) Employee Remuneration (D) Employee Remuneration (D) Employee Remuneration (D) Ratio of total compensation
(A+B+C+D) to net income (%)		 Ratio of total compensation
(A+B+C+D) to net income (%)		 Remuneration
from ventures
other than
subsidiaries or
from the parent
company
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The company		 Companies in the
consolidated
financial
statements
The company		 Companies in the
consolidated
financial
statements
Cash
(Note)		 Stock Cash
(Note)		 Stock
General
Manager		 Yu Liang
Pei
2,120		 2,120 ─ ─ 1,672 1,672 12 ─ 12 ─ 1.01 1.01 ─
Chief R&D
Officer		 Yi Ta Lee
1,158		 1,878 ─ ─ 1,437 1,575 12 ─ 12 ─ 0.69 0.92
Executive
Assistant,
Chairman’s
Office		 Ju Nee
Yeo		 851 851 ─ ─ 1,578 1,578 12 ─ 12 ─ 0.65 0.65
General
Manager,
Marketing
Center		 Chang
Long
Chen		 1,432 1,432 ─ ─ 964 964 12 ─ 12 ─ 0.64 0.64
General
Manager,
Subsidiary
company		 Neng Yu
Yu		 600 2,085 ─ ─ 126 126 ─ ─ ─ ─ 0.19 0.59

Note: On March 6, 2024, the Board of Directors has passed the resolution of remuneration distribution for employees amounting to NT$10.484 million. However, the proposal

has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

  • 42 -

Name of the Corporate Managers Distributing Employee Compensation

and the Status of Distribution

2023 Unit: thousand shares; NT$ thousand; %

Title Name Employee
Compensation
-in stock		 Employee
Compensation
-in cash		 Total Ratio of Total
Amount to Net
Income (%)
Corporate
Managers		 General Manager Yu Liang Pei ─ 168
(Note 1)		 168 0.04
Chief R&D Officer Yi Ta Lee
General Manager,
China Affairs Office		 Neng Yin Yu
General Manager,
Subsidiary Company		 Neng Yu Yu
General Manager,
Subsidiary Company		 Chao Jih Wang
General Manager,
Marketing Center		 Chang Long Chen
General Manager,
Yilan Office		 Chien Ju Lin
Vice General Manager,
Marketing Center		 Feng Chin Chang
Vice General Manager,
General Manager Office		 Wen Hsin Huang
(Note 2)
Vice General Manager,
General Manager Office		 Hui Hung Wang
(Note 2)
Assistant Vice President,
Dept. of Planning of
Pharmaceutical Product		 Chih Tsao Chang
Assistant Vice President,
Marketing Channel Dept.
Chien Kuo Chang
Assistant Vice President,
Marketing Dept.		 Wen Fang Huang
Assistant Vice President Yi Mei Lou
Executive Assistant,
Chairman’s Office		 Ju Nee Yeo
Chief Financial Officer Chih Hsiao Chen
Accounting Manager Li Jung Hsieh

Note: 1. On March 6, 2024, the Board of Directors has passed the resolution of remuneration distribution for employees amounting to NT$10.484million. However, the proposal has not been reported and passed at the Shareholders’ Meeting and Remuneration Committee.

  1. Wen Hsin Huang and Hui Hung Wang have been appointed as Vice General Manager of General Manager Office on August 16, 2023.

  2. 43 -

  3. 3.3.5 Analysis of the proportion of total remuneration for Directors, Supervisors, General Managers, and Vice General Managers paid by the Company and the affiliated companies in the consolidated financial statement to the net profit after tax in the individual or parent company only financial statement in the recent two years, also, explain the remuneration policies, standards and combinations, the procedure of determining remuneration, and the relevance of operating performance and future risks

(A) Analysis of the proportion of total remuneration of Directors, Supervisors, General Managers, and Vice General Managers paid by the Company to the net profit after tax in the individual or parent company only financial statement

2023 (%) 2022 (%)
The Company 7.74 11.73
Companies in the
Consolidated
Financial Statement		 9.20 13.20

(B) Directors and Supervisors

The remuneration policies are issued in the Articles of Incorporation and approved by the Remuneration Committee and Shareholders’ Meeting.

When the Directors of the Company perform duties for the Company, regardless profit or loss, the Company shall offer remuneration. The Board of Directors is authorized to determine their remuneration which complies with their participation in the Company’s operation and their contribution and taking into consideration of the industry standards. If the Company earns a profit, it shall offer remuneration in accordance with the regulation in Article 19 of the Articles of Incorporation.

(C) General Managers and Vice General Managers

The policies of the remuneration that the Company offers to the General Managers and Vice General Managers are implemented following the Remuneration Guidelines, which are established by the Remuneration Committee. The remuneration of General Managers and Vice General Managers includes base salary and allowance. Bonuses are determined by considering operation performance and future risks.

  • 44 -

3.4 Implementation of Corporate Governance

3.4.1 Operation of Board of Directors

  • A. There were six 【 A 】 Board Meetings held in 2023. The attendance status of the Directors is recorded in the following table.
Title Name Attendance
in Person
【B】		 By
Proxy		 Attendance
Rate in Person
(%)【B/A】		 Remarks
Chairman Chih Wen Lee 6 ─ 100.00 ─
Director Hsiu Min Lin 6 ─ 100.00 ─
Director Hsiu Chi Kuo 4 2 66.67 ─
Director Ling Mo Chao 5 1 83.33 ─
Corporate
Director
Representative		 Xing-Da Capital
Corp.
Representative:
Yi Ta Lee		 6 ─ 100.00 ─
Director Hung Chih Lin 4 2 66.67 ─
Director Neng Chun Yu 3 3 50.00 ─
Director Jehng Jer Guan 6 ─ 100.00 ─
Independent
Director		 Ching Lung Lee 6 ─ 100.00 ─
Independent
Director		 Yau Yuan Wen 6 ─ 100.00 ─
Independent
Director		 Hsin Yu Chou 6 ─ 100.00 ─
Other mentionable items:
1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion,
all independent directors’ opinions and the Company’s response should be specified:
(1) Matters referred to in Article 14-3 of the Securities and Exchange Act:
The Company has established Audit Committee. The provisions of Article 14-3 of the Securities
Exchange Act are not applicable. For an explanation of the matters listed in Article 14-5 of the
Securities Exchange Act, please refer to page 49 for the information on operation of Audit
Committee.
(2) Other matters involving objections or expressed reservations by independent directors that were
recorded or stated in writing that requires a resolution by the board of directors: None
2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of
motion, cause for avoidance, and voting should be specified:
(1) On June 20, 2023, during the discussion of remuneration distribution for directors and
employees, the Chairman, Chih Wen Lee, the Director, Yi Ta Lee, and the Independent
Directors, ChingLungLee,Yau YuanWen,and Hsin YuChou recused themselves from

  • 45 -

    • the discussion and decision-making to avoid conflict of interest. Through the consultation of the chairperson, Hung Chih Lin, all the attending directors agreed to approve the proposal without objection.

  • (2) On December 12, 2023, during the discussion of distribution of 2023 year-end bonus for managerial officers, the Vice Chairman, Yi Ta Lee recused himself from the discussion and decision-making to avoid conflict of interest. Through the consultation of the chairperson, Chih Wen Lee, all the attending directors agreed to approve the proposal without objection.

  • (3) On December 12, 2023, during the discussion of adjustment to the annual remuneration for managerial officers in 2024, the Vice Chairman, Yi Ta Lee recused himself from the discussion and decision-making to avoid conflict of interest. Through the consultation of the chairperson, Chih Wen Lee, all the attending directors agreed to approve the proposal without the objection.

  • (4) On December 12, 2023, during the discussion of remuneration for directors, members of functional committees, and managerial officers in 2024, the Chairman, Chih Wen Lee, and the Directors, Yi Ta Lee recused themselves from the discussion and decision-making to avoid conflict of interest. Through the consultation of the chairperson, Chih Wen Lee, all the attending directors agreed to approve the proposal without the objection.

  • TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, evaluation scope, evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of Directors, and to fill out “Implementation Status of Board Evaluations”: (Please refer to page 47.)

  • Measures are taken to strengthen the functionality of the Board of Directors and implement status in current and recent years.

  • (1) The Board of Directors of the Company held six Board Meetings in 2023, in accordance with the Rules of Board of Director Meeting stating the regulation of the meeting shall be held in at least once every quarter to make the information known to the public and improve the information transparency.

  • (2) The Company shall announce the relative acts of competent authority, responsibilities, and duties of the members of the Board of Directors and the concept of ethical corporate management.

  • (3) Each Director was invited to actively participate in the course on corporate governance held this year. The course of education training was held in November of 2023. It was attended by Directors as a reference to the implementation of Company policy. Director who cannot participate in that course will attend the course held by Securities and Futures Institute.

  • (4) To improve the information transparency, when holding the Board Meeting, the Company will record the meeting in accordance with the regulation of the Board Meeting, or hold video conference to ensure the information flow is unimpeded.

  • 46 -

B. Implementation Status of Board Evaluation

(A)

(A)
Evaluation Cycle Evaluation Period Evaluation
Scope		 Evaluation
Method		 Evaluation Items
Once a year January 1, 2023
to
December 31, 2023
Board of
Directors,
Individual
Directors,
and
Functional
Committees		 Internal
self-evaluation
by the Board
of Directors
and
self-assessment
by Directors.		 Board performance evaluation:
1. Level of participation in company
operations
2. Improvement of the quality of Board
decisions
3. Board composition and structure
4. Appointment of directors and their
continued advanced study
5. Internal controls
Individual director performance
evaluation:
1. Grasp company targets and missions
2. Understanding of the director's role
and responsibilities
3. Level of participation in company
operations
4. Internal relationship management and
communication
5. Director's specialty and continued
advanced study
6. Internal controls
Functional committee performance
evaluation:
1. Participation in company operations
2. Understanding of the responsibilities of
functional committees
3. Improvement of the decision-making
quality of functional committees
4. Composition of functional committees
and member selection
5. Internal controls

(B) Evaluation Result

The Board of Directors and Functional Committees are working well. In addition to corporate operation, the directors take responsibilities for supervising the compliance with applicable laws and regulations, risk control, etc. The Company will continue to strengthen corporate governance based on the evaluation results from the Board and committees.

The 2023 performance evaluation result was presented at the Board Meeting on March 6, 2024.

  • 47 -

3.4.2 Operation of Audit Committee

A. Audit Committee Members

The Audit Committee is composed of three Independent Directors. The Audit Committee is responsible for assisting the Board of Directors to supervise the Company of the implement on reporting procedure for accounting, auditing, finance and the quality and integrity of financial control. The term of the Committee member is from August 12, 2021 to August 2,

  1. The information on Audit Committee members is as follows:
Title Name Professional Qualification and Experience
Independent
Director		 Ching Lung Lee Please refer to page 24, Professional Qualifications of Directors and
Independence Analysis of Independent Director.
Independent
Director		 Yau Yuan Wen
Independent
Director		 Hsin Yu Chou

B. Main duties of the Audit Committee

  1. Adoption and amendment to the internal control system in accordance with the regulation of Article 14-1 of the Securities and Exchange Act.

  2. Assessment of the effectiveness of the internal control system.

  3. Adopt or amend the procedures for material financial or business activities such as acquisition or disposal of assets, derivatives trading, monetary loans to others, or providing endorsement or guarantees for others, pursuant to the regulations of Article 36-1 of the Securities and Exchange Act.

  4. Matters in which a director is an interested party.

  5. Material asset or derivatives transactions.

  6. Material monetary loaning or endorsement, or provision of guarantees.

  7. Public offering, issuance, or private placement of equity-type securities.

  8. Appointment, dismissal, or compensation of certified public accountants.

  9. Appointment and dismissal of chief finance officer, chief accounting officer, or chief internal auditor.

  10. Annual financial statement and Q2 financial statement.

  11. Any other material matters so required by the Company or the competent authorities.

  12. 48 -

C. Information on Operation of Audit Committee

A total of seven (A) Audit Committee meetings were held in 2023. The attendance of the independent directors was as follows:

Title Name Attendance
in Person
(B)		 By
Proxy		 Attendance Rate
in Person (%)		 Remarks
Independent
Director		 Ching Lung Lee 7 ─ 100.00 ─
Independent
Director		 Yau Yuan Wen 7 ─ 100.00 ─
Independent
Director		 Hsin Yu Chou 7 ─ 100.00 ─
Other mentionable items:
a. If any of the following circumstances occur, the dates of meetings, sessions, contents of
motion, resolutions of the Audit Committee, and the Company’s response to the Audit
Committee’s opinion should be specified.
(a) Matters referred to in Article 14-5 of the Securities and Exchange Act
Date
Session
Motions
Resolutions
of the
Independent
Director
The
Company’s
Response to
the Audit
Committee’s
Opinion
February
21, 2023
The
eleventh
meeting of
the first
committee
1. Internal Audit Report Presented by Chief
Internal Auditor
2. Internal Audit Report in 2022
Agree
Approved
March 17,
2023
The twelfth
meeting of
the first
committee
1. 2022 Business Report and Financial
Statements
2. 2022 Earnings Distribution Table and
Distribution of Cash Dividends
3. Proposal for Statement of Internal Control
System
Agree
Approved
May 5,
2023
The
thirteenth
meeting of
the first
committee
1. 2023 Q1 Financial Statements
2. The Contract Extension of Endorsements
and Guarantees for Subsidiary Company
3. Internal Audit Report Presented by Chief
Internal Auditor
Agree
Approved
June 20,
2023
The
fourteenth
meeting of
the first
committee
1. The Contract Extension of Endorsements
and Guarantees for Subsidiary Company
2. Internal Audit Report Presented by Chief
Internal Auditor
Agree
Approved
  • 49 -
The
1. 2023 Q2 Consolidated Financial
Statements
August 8,
2023
fifteenth
meeting of
the first
2. Proposal for Investment in Subsidiary,
SynCore Biotechnology Co., Ltd.
Agree
Approved
committee
3. Internal Audit Report Presented by Chief
Internal Auditor
November
7, 2023
The
sixteenth
meeting of
the first
committee
1. 2023 Q3 Consolidated Financial
Statements
2. Internal Audit Report Presented by Chief
Internal Auditor
Agree
Approved
1. Proposal for 2024 Plans for Internal Audit
Implementation
2. Amendment to Internal Control System
December
12, 2023
The
seventeenth
meeting of
the first
3. Appointment of CPA of the Company in
2024
4. The Contract Extension of Endorsements
Agree
Approved
committee
and Guarantees of the Subsidiary
Company
5. Internal Audit Report Presented by Chief
Internal Auditor
(b) Other matters which were not approved by the Audit Committee but were approved by
two-thirds or more of all directors
None
b. If there are independent directors’ avoidance of motions in conflict of interest, the directors’
names, contents of motion, cause for avoidance, and voting should be specified: None
c. Communications between the independent directors, the Company's chief internal auditor,
and accountants (e.g., the material items, methods, and results of audits of corporate finance
or operations, etc.)
(a) The chief internal auditor could communicate with Independent Director directly and
there is good communication flow.
(b) In addition to presenting at the Board Meeting to report on audit operations to
Independent Directors and the follow-up reports in accordance with audit deficiencies,
the chief internal auditor shall also report the progress of implementation of the annual
audit plan and present the audit report at the Board Meeting.
(c) The Audit Committee of the Company is composed of all Independent Directors. The
CPAs shall communicate with Audit Committee regularly through meeting at least four
times every year, and present the status of the financial audit of the Company and the
result of the audit.
The CPAs shall also illustrate the update of the Accounting Standards, the adoption of
new audit reports for the listed company’s financial statement and initial identification of
key audit matters, etc.
  • 50 -

3.4.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and the Reasons

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
1. Does the Company establish and disclose the
Corporate Governance Best-Practice Principles
based on “Corporate Governance Best-Practice
Principles for TWSE/TPEx Listed Companies”?		 The Company established the Corporate Governance
Best-Practice Principles which were approved by the Board of
Directors on March 6, 2024. The principles are disclosed on
Company website for the transparency of information.		 None
2. Shareholding structure and shareholders’ rights
(1) Does the company establish an internal operating
procedure to deal with shareholders’ suggestions,
doubts, disputes, and litigations, and implement
these based on the procedure?
(2) Does the company possess the list of its major
shareholders as well as the ultimate owners of
those shares?
(3) Does the company establish and execute the risk
management and firewall system within its
conglomerate structure?

(1) The Company has established the spokesperson system to
deal with all shareholders’ questions and appointed a stock
transfer agent to represent the Company to meet the demand
of shareholders.
(2) The Company collaborates with Securities & Stock Services
Agent for collecting and updating the information of
Directors, Corporate Managers, and the status of major
shareholders holding more than 5% shares.
(3) The Company has implemented the risk evaluations of the
related company and established an appropriate firewall in
accordance with laws.		 None
  • 51 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
(4) Does the company establish internal rules against
insiders trading with undisclosed information?		 (4) The Company has established “Procedures for Handling
Material Inside Information and Prevention of Insider
Trading” which is suitable for the Company’s Directors,
Managers, and Employees, to set up procedures for
handling material inside information and disclosure system
to avoid inappropriate disclosure of information, also
ensure the consistency and correctness of the information
published by the Company.
3. Composition and Responsibilities of the Board of
Directors
(1) Does the Board develop and implement a
diversified policy for the composition of its
members?
(2) Does the company voluntarily establish other
functional committees in addition to the
Remuneration Committee and the Audit
Committee?		 (1) When the Company establishes the composition of the
Board members, member diversification is considered in
various aspects. The Board members are hired based on
merit. Please refer to “Diversity and Independent of Board
of Directors.” (page 22-page 26)
(2) In addition to establishing Remuneration Committee and
Audit Committee as required by law, the Company also
establishes Board-approved regulations for each committee.
The Company setup an ESG Committee on May 10, 2022
to promote ESG development.		 None
  • 52 -
Evaluation Item Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
(3) Does the company establish a standard to measure
the performance of the Board and implement it
annually, and are performance evaluation results
submitted to the Board of Directors and
referenced when determining the remuneration of
individual directors and nominations for
reelection?
(4) Does the company regularly evaluate the
independence of CPAs?
(3) The Company reviews the effectiveness of the Board
regularly, and periodically enhances the level of corporate
governance. Also, the Company has collaborated with a
competent authority to establish the evaluation methods in
the standard of self-evaluation of the Board in November
2019 and implements the performance evaluation of the
Board and functional committee annually. According to
Rules for Performance Evaluation of Board of Directors,
the performance evaluation results shall serve as reference
for selecting or nominating directors.
The 2023 performance evaluation results were completed
and presented at the Board Meeting on March 6, 2024.
Please refer to page 47 of this annual report for the
evaluation results.
(4) The Company evaluates the independence of the CPA
annually, ensuring that they are not stakeholders such as a
director, shareholder, or person paid by the Company. If
there is an appointed matter that the CPA is interested in or
has stakeholders in it, the CPA shall avoid it and submit the
result to the Board. The Board approved that the CPA, Ya
Quan Zhang and Jin Shu Pan still comply with the standard
of the independence evaluation (Table 1) on December 12,
2023, so the appointment continues.
  • 53 -
Evaluation Item Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
4. Does the company appoint a suitable number of
competent personnel and a supervisor responsible
for corporate governance matters (including but not
limited to providing information for directors and
supervisors to perform their functions, assisting
directors and supervisors with compliance,
handling work related to meetings of the board of
directors and the shareholders’ meetings, and
producing minutes of board meetings and
shareholders’ meetings)?		 The Company approved the appointing Yi Mei Lou, the
Assistant General Manager of Chairman Office, as Corporate
Governance Officer on November 8, 2022.
The main duties of Corporate Governance Officer are as
follows:
1. Handle Board and Shareholders’ Meeting matters in
accordance with the law: convene the meeting, provide
agenda and notify the Directors 7 days in advance. Also,
remind Directors about avoidance of motion in conflict of
interest.
2. Prepare Board and Shareholders’ Meeting minutes: complete
the meeting minutes within 20 days after the meeting.
3. Assist Directors in continued training and taking courses:
arrange the courses according to industry characteristic of the
Company and background of Directors.
4. Provide information to Directors for performing their
functions.
Corporate Governance Officer completed the courses held by
Securities and Futures Institute on September 6, 2023 and
September 20, 2023 totaling 6 training hours.		 None
  • 54 -
Evaluation Item Implementation Status Implementation Status Implementation Status Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
5. Does the company establish a communication
channel and build a designated section on its
website for stakeholders (including but not limited
to shareholders, employees, customers, and
suppliers), as well as handle all the issues they care
for in terms of corporate social responsibilities?		 The Company announces financial information and stock affairs
on MOPS and corporate website to establish a communication
channel with investors. The Company’s website has a dedicated
section for stakeholders (e.g. customers, suppliers, public). All
comments may be sent to the Company via e-mail or telephone.		 None
6. Does the company appoint a professional
shareholder service agency to deal with shareholder
affairs?		 The company has appointed
shareholders’ affairs.		 “SinoPac Securities Co., Ltd.” for None
7. Information Disclosure
(1) Does the Company have a corporate website to
disclose both financial standings and the status of
corporate governance?		 (1) The Company website ishttp://www.sinphar.com.tw
,with
an investor relations section where shareholders can easily
find financial and stock related information. Alternatively
the public can search for the Company’s financial and stock
related information on MOPS. The Company Spokesperson
and Deputy Spokesperson communicate to public on behalf
of the Company.		 None
(2) Does the company have other information
disclosure channels (e.g. building an English
website, appointing designated people to handle
information collection and disclosure, creating a
spokesperson system, webcasting investor
conferences)?		 (2) In accordance with the regulation, the Company has
designated a person responsible for collecting information
and disclosing the website. The website is in Chinese,
English, and Simplified Chinese to facilitate timely
disclosure of information to stakeholders. The Company
has a spokesperson and a deputy spokesperson as required
by regulation.
  • 55 -
Evaluation Item Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
(3) Does the company announce and report annual
financial statements within two months after the
end of each fiscal year, and announce and report
Q1, Q2, and Q3 financial statements, as well as
monthly operation results, before the prescribed
time limit?		 (3) The Company currently reports the financial statement and
monthly operational status in accordance with the date
formulated by the regulation of “Business Matters to be
Handled by Issuers of Listed Securities”. At this time, the
Company has not announced and reported the annual
financial statements nor made announcements before the
prescribed period.
8. Is there any other important information to
facilitate a better understanding of the company’s
corporate governance practices (e.g., including but
not limited to employee rights, employee wellness,
investor relations, supplier relations, rights of
stakeholders, directors’ and supervisors’ training
records, the implementation of risk management
policies and risk evaluation measures, the
implementation of customer relations policies, and
purchasing insurance for directors and
supervisors)?		 (1) Employee rights and employee wellness: The Company has
established and announced work rules to meet the relevant
labor acts. Moreover, the Company has established Welfare
Committee and Trade Union to implement employee
benefits programs. For any other relevant information,
please refer to the section on labor relations in this annual
report.
(2) Investor relations, supplier relations, rights of stakeholders:
the Company has built strong long-term relationships with
shareholders and suppliers by providing timely information.
(3) To ensure corporate governance implementation, the
Company arranges for all Directors to attend related
courses, and also updates Directors of any changes to
relevant regulations. In 2023, the Directors completed the
following courses:
(1) Case Study on Management Rights and (2) Insider
Trading Regulation Practice and Case Study held by Taiwan
Corporate Governance Association totaling 6 training hours
(4)Purchasinginsurance for Directors: The Companyhas		 None
  • 56 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies” and Reasons
Yes No Abstract Illustration
purchased insurance for all Directors. This gives Directors
and Supervisors the peace of mind to make difficult
decisions in corporate governance and attracts talents to
become a part of the Board.
9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the
Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures:
In 2023, the Company optimized the company’s website to disclose further information about corporate governance and sustainable development, and
continued to maintain a diverse Board of Directors, which improved information transparency. In 2024, the Company plans to disclose ESG report next year.
For indicators which the Company did not score, the Company will continue to consider the improvement measures.

Table 1. The Standard of CPA’s Independence Evaluation

Table 1. The Standard of CPA’s Independence Evaluation
Evaluation Item Result Independent
1 Whether the CPA and their family member have a direct or significant
indirect financial interest relationship with the Company?		 No Yes
2 Whether the CPA has financing or guarantees with the Company or the
Director of the Company?		 No Yes
3 Whether the CPA has a close business relationship and potential
employment relationship with the Company?		 No Yes
4 Whether the CPA and their audit team members have served as Directors,
Managers, or positions that have a significant influence on audit work in the
Companyatpresent or in the last twoyears?		 No Yes
5 The CPA and their audit members have no business relations that have a
significant influence on the independence of the Company’s Directors,
Supervisors, and Managers.		 No Yes
  • 57 -

3.4.4 The Status of Establishing the Remuneration Committee or Nomination Committee

A. The Information on Remuneration Committee Members

March 31, 2024

Criteria
Name
Position		 Criteria
Name
Position		 Professional
Qualification and
Experience		 Independence Status Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as a
Remuneration
Committee
Member
Convener
and
Independent
Director		 Ching
Lung Lee		 1. Please refer to page 24,
relevant content of
“Independence
Analysis of
Independent
Directors”.
2. The Committee
Member, Fu Hsing
Chang is a CPA. He
possesses an extensive
professional
background in
accounting and
industry experience
and currently serves as
an Associate Professor
in the Department of
Accounting
Information at the
Chihlee University of
Technology.		 (1) Not an employee of the company or any of
its affiliates.
(2) Not a director or supervisor of the
company or any of its affiliates.
(3) Not a shareholder who holds shares,
together with those held by the person's
spouse, minor children, or held by the
person under others' names, in an aggregate
of one percent or more of the total number
of issued shares of the company or ranking
in the top 10 in holdings.
(4) Not a spouse, relative within the second
degree of kinship, or lineal relative within
the third degree of kinship, of a managerial
officer under subparagraph 1 or any of the
persons in the preceding two
subparagraphs.
(5) Not a director, supervisor, or employee of a
corporate shareholder that directly holds
five percent or more of the total number of
issued shares of the company, that ranks
among the top five in shareholdings, or that
designates its representative to serve as a
director or supervisor of the company
under Article 27, paragraph 1 or 2 of the
Company Act.
(6) If a majority of the company's director
seats or voting shares and those of any
other company are controlled by the same
person: not a director, supervisor, or
employee of that other company.
(7) If the chairperson, general manager, or
person holding an equivalent position of
the company and a person in any of those
positions at another company or institution
are the same person or are spouses: not a
director (or governor), supervisor, or
employee of that other company or
institution.
(8)Not a director,supervisor,officer,or		 2
Independent
Director		 Yau Yuan
Wen		 1
Member Fu Hsing
Chang		 3
  • 58 -

shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. 

  - (9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided.

  - (10) Not being a person who is a spouse or within the second degree of kinship with other directors.

  • B. Operation of the Remuneration Committee

  • (A) There are 3 members on the Remuneration Committee.

  • (B) Current Term: From August 12, 2021 to August 2, 2024.

  • (C) Attendance Status

A total of three Remuneration Committee meetings were held in the most recent fiscal year and the average attendance rate is 100%. The qualifications and attendance record of the Remuneration Committee members are as follows:

Title Name Attendance in
Person (B)		 By Proxy Attendance Rate in
Person (%) (B/A)		 Remarks
Convener Ching Lung
Lee		 3 – 100.00 –
Member Yau Yaun
Wen		 3 – 100.00 –
Member Fu Hsing
Chang		 3 – 100.00 –
The Duties of Remuneration Committee:
The Committee shall fulfill the following obligations and report the suggestions to the Board.
1. Establish and periodically review the performance evaluation and remuneration policies,
system, standards, and structure for directors and managerial officers.
2. Periodically evaluate and establish the remuneration for directors and managerial officers.
The Operational Status of the Remuneration Committee:
The information on meetings and motions of the Remuneration Committee are as follows:
  • 59 -

==> picture [476 x 576] intentionally omitted <==

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

The Company’s Response
Remuneration
Motions Resolutions to the Remuneration
Committee
Committee’s Opinion
Proposal for Performance Evaluation of the Board of
The fifth
Directors in 2022
meeting of
the fifth Approved by
Remuneration Distribution for Employees and Directors Approved by all
committee all committee
in 2022 attending Directors
on members
March 17, Proposal for Remuneration for Directors
2023
Remuneration for Directors and Employees in 2023
The sixth
meeting of Remuneration Distribution for Directors in 2022
the fifth Approved by
Approved by all
committee all committee
attending Directors
on members
June 20, Remuneration Distribution for Employees in 2022
2023
The Distribution of Year-end Bonus for Managerial Officers
seventh in 2023
meeting of
Adjustment to Remuneration of Managerial Officers in Approved by
the fifth Approved by all
2024 all committee
committee attending Directors
members
on Proposal for Remuneration for Directors, Members of
December
Functional Committees, and Managerial Officers in
12, 2023
2024
Other mentionable items:
1. If the Board of Directors declines to adopt or modifies a recommendation of the
Remuneration Committee, it should specify the date of the meeting, session, the content of
the motion, resolution by the Board of Directors, and the Company’s response to the
remuneration committee’s opinion (e.g., if the remuneration passed by the Board of Directors
exceeds the recommendation of the Remuneration Committee, the circumstances and cause
for the difference shall be specified)
None
2. Resolutions of the remuneration committee objected to by members or expressed reservations
and recorded or declared in writing, the date of the meeting, session, the content of the
motion, all members’ opinions, and the response to members’ opinion should be specified
None
----- End of picture text -----

C. Operation of the Nomination Committee:

The Company does not establish nomination committee.

  • 60 -

3.4.5 Implementation Status of Sustainable Development and Deviations from the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”

TWSE/TPEx Listed Companies”
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
1. Does the company let the Board authorize and
direct executive-level positions to take charge
of setting up the structure of implementing
sustainable development and establishing an
exclusively (or concurrently) dedicated unit?		 1. On May 10, 2022, the Board established the “ESG Committee”.
The committee focuses on ESG compliance in accordance to
relevant laws and regulations and the Company’s development
strategies. The committee plans to report to the Board quarterly.
2. In accordance to the law, the “ESG Committee” plans to present
to the Board a progress report on ESG every quarter.		 None
2. Does the company assess ESG risks associated
with its operations based on the principle of
materiality, and establish related risk
management policies or strategies?		 1. Each subsidiary company must abide by the applicable laws of
registered location. Because the Company is the largest
company by revenue amongst all related companies, so risk
assessment policies and strategies will be mainly about the
Company.
2. The Company has established risk management strategies based
on local laws and regulations and industry practice. The
illustration of risks and strategies after evaluation is as below:		 None
  • 61 -
Implementation Item Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
Illustration
1. The Company abides by
environmental regulations and
ISO-14001:2015 standards in
environmental protection and
sustainability.
2. The Company implemented
ISO-50001 to reduce carbon gas and
green house gas emission, monitor
water consumption, reduce waste and
recycle, schedule regular maintenance
of boiler to lessen environmental
impact.
3. The Company has wastewater
treatment facilities and water
management system to prevent
contaminants from entering into water,
air and soil.
The Company abides by occupational
safetyand health-related regulations as
Significant
Issue		 Risk
Evaluation
Item		 Illustration
Environment Environmental
Impact and
Management		 1. The Company abides by
environmental regulations and
ISO-14001:2015 standards in
environmental protection and
sustainability.
2. The Company implemented
ISO-50001 to reduce carbon gas and
green house gas emission, monitor
water consumption, reduce waste and
recycle, schedule regular maintenance
of boiler to lessen environmental
impact.
3. The Company has wastewater
treatment facilities and water
management system to prevent
contaminants from entering into water,
air and soil.
Society Occupational
Safety		 The Company abides by occupational
safetyand health-related regulations as
  • 62 -
Implementation Item Implementation Status Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
well as ISO45001 international
standards, and is committed to building a
safe and healthy workplace for its
employees.
Product
Safety		 1. All products are government and EU
RoHS approved and are free of
hazardous substances. To ensure the
quality of customer service, the
Company set up a customer service
hotline and website, and conducts
customer satisfaction survey every
year.
2. The Company participates in the
drug-injury relief system regularly as
required by law.
Corporate
Governance		 Law
Compliance		 1. The Company put in place governance
structure and internal control system to
ensure all employees and the operation
comply with the relevant acts.
2. The Company applies for patent
protection for all products developed
by the Company.
  • 63 -
Implementation Item Implementation Status Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
The function
of the Board		 1. Scheduled annual seminars for
Directors to stay current with the latest
policies and regulations.
2. Purchased directors' and officers'
liability insurance to protect them from
claims which may arise from decisions
and actions taken as part of their
duties.
Stakeholder
Communication
1. To avoid the difference in position
between stakeholders and the
Company, which may lead to operating
or litigation risks, the Company
analyzes important stakeholders issues
annually.
2. The Company has several methods to
communicate with investors directly,
including a dedicated investor e-mail
address that the spokesperson responds
to personally.
  • 64 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
3. Environmental Issues
(1) Does the company establish proper
environmental management systems based on
the characteristics of its industries?
(2) Does the company endeavor to utilize all
resources more efficiently and use renewable
materials which have a low impact on the
environment?
The Company established an environmental management system
according to ISO 14001:2015 and certified by a third party, the
Taiwan Branch of BSI. The certificate is valid from January 20,
2023 to January 19, 2026.
In 2023, specific energy consumption (2,064KLOE) increased by
25.39% compared to 2022 (1,646 KLOE). The increase in specific
energy consumption was due to fewer products produced in each
unit of manufacturing energy. The reduction of productive capacity
was caused by the refurbishment of multiple production lines in
the plant. The Company will continue to monitor and make efforts
to achieve the goal. The goal for the next five years (2022-2026) is
to decrease energy consumption by 5% from 2021 to 2026.
In 2024, the Company will continuous to conduct “Energy saving
improvement plan for steam system” from 2022 which consists of
replacing and inspecting of steam traps and chillers (120RT) with
newer model, and implementing verification and monitoring
energy efficiency.		 None
None
  • 65 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(3) Does the company evaluate the potential risks
and opportunities in climate change with regard
to the present and future of its business, and
take appropriate action to counter climate
change issues?		 1. ESG Committee is in charge of climate change management and
is chaired by the Vice Chairman of the Company. The
Committee will be responsible for managing and supervising
climate change risk management.
2. Considering using the TCFD structure published by FSB as
reference and considering the allocation of Company resources
and industry-specific characteristics, the Company plans to
focus on two major risks: environmental regulations and the
increase in the cost of raw materials.
3. Controls for two major risks are: abide by and research
relevant environmental regulations, invest in new
equipment and production process, and produce certain raw
materials, etc.		 None
  • 66 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(4) Does the company take inventory of its
greenhouse gas emissions, water consumption,
and the total weight of waste in the last two
years, and implement policies on greenhouse
gas reduction, water reduction, or waste
management?		 2022 (Parent Company)
:
Greenhouse Gas–
Direct Emissions: 1,068.41 tons
Indirect Emissions: 8,556.83 tons
Water Consumption–
Raw Water: 145,596 tons
Tap Water: 42,798 tons
Waste–
Hazardous Wastes: 12.99 tons
Non-hazardous Wastes: 204.52 tons
2023 (Parent Company)
:
Greenhouse Gas–
Direct Emissions: 1,140.21 tons
Indirect Emissions: 8,590.65 tons
Water Consumption–
Raw Water: 126,855 tons
Tap Water: 6,147 tons
Waste–
Hazardous Wastes: 15.65 tons
Non-hazardous Wastes: 212.63 tons
1. With eco-efficiencyand sustainable consumption in mind,the		 None
  • 67 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
Company engages in the business operations, R&D, and
production, in accordance with the following goals:
(1) Reduce the resource and energy consumption of products
and services.
(2) Reduce the emission of pollutants, toxic substances, and
waste, and dispose of waste in accordance with the laws.
(3) Increase the recyclability and reusability of raw materials or
products.
(4) Increase durability of products.
(5) Increase the efficacy of products and services.
2. The Company has wastewater treatment facilities and water
management system to prevent contaminants from entering into
water, air and soil.
4. Social Issues
(1) Does the company formulate appropriate
management policies and procedures according
to relevant regulations and the International Bill
of Human Rights?		 1. The Company and its subsidiaries comply with the relevant
regulations of their respective operational locations, and refer to
the “Universal Declaration of Human Rights”, and “Declaration
of Fundamental Principles and Rights at Work” to create a safe
and fair work place and to protect employees’ right.
2. Examples of proposal are summarized below:
(1) The Company is unionized by law. A labor-management is
convened everythree months,or sooner as needed.		 None
  • 68 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(2) Establish “Measures of Prevention, Correction, Complaint
and Punishment of Sexual Harassment” and “Committee
Against Sexual Harassment” to provide a harassment free
workplace.
(3) The Company set up SA8000-certificted J1-01 “Corporate
Social Responsibility Code of Conduct” and regularly
schedules seminars on this subject.
(2) Does the company have reasonable employee
benefits measures (including salaries, leave,
and other benefits), and do business
performance or results reflect on employee
salaries?		 1. According to the Articles of Incorporation, when the Company
has profit in a fiscal year, the Company shall distribute 2% to
8% of the current year's profit as employee remuneration.
Employee benefits include: year-end bonus, holiday bonus,
transportation allowance, travel subsidy, wedding and maternity
cash gift, scholarship, gift or gift certificate for festivals.
2. Diversity and Equality in the Workplace:
In 2023, 43.90% management positions were held by women.
Moreover, the Company established gender-neutral restrooms to
promote gender equality and diversity.
3. The Company provides health check every year to protect
employees’ health.
4. Organize employee welfare committee and labor union to
improve labor-management relations and reach win-win
situation.		 None
  • 69 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(3) Does the company provide a healthy and safe
working environment and organize training on
health and safety for its employees on a regular
basis?		 1. The Company established the Occupational Safety and Health
Management System according to ISO 45001 and the
sustainable verification by a third party, the Subsidiary in
Taiwan of BSI. The certificate is valid from February 10, 2024
to February 10, 2027.
2. The Company targets possible occupational safety and health
problems from working in the factory to provide effective
solutions, and continues to educate employees on the
importance of occupational safety and occupational hazard
prevention.
3. The Company establishes and manages measurable target of
occupational safety and health, and expands to include products
and services related to occupational safety and health.
Working Environment Monitoring
To prevent harm caused by workplace hazardous materials and
provide a safe and healthy environment, the Company conducts
environment monitoring in the workplace twice a year.
To ensure workplace safety, the Company establishes relevant
regulation for emergency preparedness and response. The
emergency drill is held annually and fire safety training is held
semiannually. In 2023, 69 people completed fire drill totaling 8
hours.		 None
  • 70 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
In 2023, zero fire incident, death, and injury resulted from such
incidents. Countermeasures or improvements preventing fire
incidents are as follows:
Fire alarm system: Current systems are older models and difficult
to integrate. The Company will purchase r-type fire alarm control
panel to integrate the fire alarm systems for the entire plant.
Occupational health nurse arranges for an occupational medicine
doctor to provide occupational health services and conduct “Four
Major Plans for Occupational Health” in the factory.
(4) Does the company provide its employees with
career development and training sessions?		 1. The Company has a comprehensive career training system for
all employees, including new employee training, professional
training, managerial training, and annual team building camps,
etc. Employees are encouraged to enroll in continuing education
and learn about Company’s core values.
1,162 people completed career training in 2023 totaling 2,263
hours.
2. During the annual performance meeting, the supervisor will
work with the employee to set up a personalized annual
development plan. The plan may be adjusted through regular
feedbacks to achieve optimal results.		 None
  • 71 -
Implementation Item Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(5) Do the company’s products and services
comply with relevant laws and international
standards in relation to customer health and
safety, customer privacy and marketing and
labeling of products and services, and are
relevant consumer protection and grievance
procedure policies implemented?		 Product labels are printed and affixed on a product in compliance
with the international and Taiwan’s regulations and acts such as
the PIC/S GMP Guide to Good Manufacturing Practice for
Medicinal Products, Pharmaceutical Inspection Convention and
Co-operation Scheme, ISO 22000 food safety management
system, Halal Assurance Management System, certification of
GMP for cosmetics and health supplements, also, accepts the
authentication of the international organization regularly.		 None
(6) Does the company implement supplier
management policies, requiring suppliers to
observe relevant regulations on environmental
protection, occupational safety and health or
labor and human rights? If so, describe the
results.		 1. Supplier management policy set out the requirements for quality
of product and service, delivery date, and pricing. Suppliers need
to comply with environmental protection, safety and health
requirements. The Company and suppliers work together to
enhance corporate social responsibility and create a partnership
for sustainable development.
2. Actual implementation:
(1) The Company evaluates a new supplier, based on product
quality, financial situation, pricing, health and safety, and
environmental protection. The ones who passed the
evaluation.
(2) The Company requires that the approved suppliers are
surveyed annually to ensure compliance with environmental
protection, health and safety, human rights and related
regulations.		 None
  • 72 -
Implementation Item Implementation Status Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(3) The Company re-evaluates suppliers semiannually in
accordance with supplier management policy. Each supplier
is assigned a score, and based on the score, the supplier may
be rewarded
5. Does the company reference internationally
accepted reporting standards or guidelines, and
prepare reports that disclose non-financial
information of the company, such as sustainable
development reports? Do the reports above
obtain assurance from a third-party verification
unit?		 The Company self-requires to meet the highest and strictest
standards set forth by the law; therefore, the Company did not
prepare additional guidelines.		 None
6. Describe the difference, if any, between actual practice and the sustainable development principles, if the company has implemented such principles based
on the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
The Company abides by all relevant regulations, and setup ESG Committee responsible for sustainable development matters on May 10, 2022; therefore,
the Company did not prepare additional guidelines.
7. Other useful information for realizing the implementation status of sustainable development practice
1. Long term sponsor for Yilan High School and Shunan Junior High School football team and the symphonic band at Dongshan Elementary School. In
addition to providing nutritional products, the Company sponsors instruments and awards.
2. The Company adopted the street lights of Zhongshan Village and Wanshan Village in Dongshan Township, Yilan County. The Company also adopted
Renshan trails, together with Sinphar Health Area and Jhong Shan Agriculture Leisure Area become a tourist attraction.
3. Since 2013, the Company continues to sponsor the events of ghost grappling, Lanyang Mazu Cultural Festival and the Mazu Pilgrimage to support
traditional festival.
  • 73 -
Implementation Item Implementation Status Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
4. Donate NTD 5 million over 5 years to Kaohsiung Medical University for students in need of financial assistance. Every year, the Company provides
scholarship for outstanding School of Pharmacy graduates from Kaohsiung Medical University.
5. The Company is dedicated to caring for society and promoting health education on disease prevention by providing long-term sponsorship to various
organizations, including Taiwan Breast Cancer Foundation, Cancer Prevention and Treatment Foundation, Yilan County Dementia Care Services
Association, Spinal Cord Injury Foundation, Taiwan Yilan Association of Diabetes Supporters, Youngsun Education Foundation, and The KMU
Pharmacy Alumni Foundation for Culture and Education.
6. The Company hosts biomedical forums and biotech camps, which act as a platform for medical professionals, academics, biotech experts to exchange and
integrate ideas on current public health concerns, discover novel biomedical thinking, and provide a channel through which the public can communicate
with the medical communicate with the medical community, and cultivate biotech seedling and talents.
7. Since 2015, all 1300 Sinphar Counters across Taiwan participate in the Dementia Friendly Store network developed by Taiwan Alzheimer’s Disease
Association. When in contact with a lost elderly person, a Sinphar Counter member will proactively contact his/her family member or take him/her to a
police station.
8. The Company donates to National Health Research Institutes and Formosa Cancer Foundation. The Company provides an allowance of new drug
development and medical care and extends the choices of first-line treatment for pancreatic cancer to find out the best treatment for patients.
9. The Company participated in anti-drugs charitable activities to help raise public awareness on drug abuse and drug abuse prevention.
10. The Company donated to the Taiwan Oncology Society for cancer research and international cooperation in clinical treatment.
11. Each year, the Company, with the medical volunteers of universities and other charitable organizations, donates medicines and holds free clinics locally
and aboard. The Company has sponsored 8 charitable organizations and thousands in count of drug donation.
12. Sinphar Counters hold 70 “Health Workshop” across Taiwan each year. Over 2500 have participated.
13. The Company holds annual “Sinphar Biomedical Forum” focusing on the care management of encephalopathy, breast cancer prevention, cardiovascular
disease treatment, pancreatic cancer, and dementia prevention. This forum, which attracts nearly 1800 participants, helps to introduce innovative
biomedical thinking.
  • 74 -
Implementation Item Implementation Status Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
14. The Company held the “International Pancreatic Cancer Forum”. Invitees include internationally reknown pancreatic cancer specialists who shared their
expertise and discussed the latest pancreatic cancer treatment. The forum was attended by more than 100 medical professionals and industry personnel
and using media to promote cancer prevention awareness.
15. The Company sponsored Biochemical Technology Education Foundation to increase the visibility of the biochemical education industry in Taiwan
internationally.
16. The Company sponsored medicine for the free clinics setup by Hualian Oral Hygiene Medical Service Corps of the Department of Dentistry of National
Yang-Ming University and Penghu Medical and Social Service Corps of Taipei Medical University and Green Cross Medical Service Corps.
17. The Company sponsored National Taipei University International Volunteer Corps with medicine for free health care service in Nepal, free health care
service in Nan’ao Township, and nutritional supplements to underprivileged indigenous people.
18. During the pandemic, the Company twice donated nutritional supplements and cash to epidemic prevention and health control professional and hospitals
in Yilan.
19. The Company sponsored Yilan county sports teams with nutritional supplements and donated NT$4 million to Yilan Sports Education Foundation.
20. The Company and Yilan County Government jointly organize annual “Sinphar Yilan Marathon” with a sponsorship of NT$8 million.
21. The Company is a long-term participant in the Yilan Green Expo, Children’s Folklore & Folkgame Festival held by the Yilan County government, and
advocates for ecological conservation, sustainable future, and building a better environment for future generations.
22. Sponsor a 6-year financial aid program to students in need of financial assistance from National Taiwan University, Faculty of Pharmacy and offer
internship opportunities.
23. Provide internship for students from Kaohsiung Medical University, Taipei Medical University, National Defense Medical Center, China
Medical University, Chia Nan University of Pharmacy & Science, National Ilan University, National Dong Hwa University, National
Taiwan Ocean University, Yuanpei University of Medical Technology and National Chung Hsing University. Also provide scholarship for
National Defense Medical Center.
24. From 2020 to 2022 sponsored the OutstandingAward for TaitungGengYuan CupJunior Baseball League.
  • 75 -
Implementation Item Implementation Status Implementation Status Implementation Status Deviations from
“Sustainable
Development Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
25. In 2020, the Company set up a “Chiang Ku” Cultural Park, and signed a MOU with Yilan County Government to promote “Chiang Ku”.
26. The Company and Yilan County Dementia Care Services Association jointly organized the event to care for dementia.
27. The Company provided immediate donations and support to the rescue operations for the Turkey earthquake in 2023, the Noto earthquake
and Hualien earthquake in 2024.
  • 76 -

3.4.6 Climate-related Information for TWSE/TPEx-Listed Companies

1. Implementation Status of Climate-related Information

Items Implementation Status Implementation Status Implementation Status Implementation Status Implementation Status
1. Describe the Board of Directors’ and management’s
oversight and governance of climate-related risks and
opportunities.		 The Board established the ESG Committee, which is chaired by the Vice Chairman of the Company.
The committee supervises the Company’s development strategies on this matter and reports to the
Board quarterly and focuses on ESG compliance in accordance to relevant laws and regulations.
2. Describe how the identified climate risks and
opportunities affect business, strategies, and finances of
the Company (in short, mid, long-term).		 Considering the industry-specific characteristics and allocation of Company resources, the Company
plans to focus on: renewable energy related regulations, carbon fee, and imported raw materials.
Period
Risks
Description
Impact
Implementation Status
Short-
term
Renewable
Energy
Development
Act
The power user who has signed
electricity consumption agreements
with the electricity retailing utility
enterprise, the chartered capacity
of no less than 5,000 kW, shall
install on their own or provide
space to install renewable energy
power generation and storage
facilities or purchase electricity
generated from renewable energy
and a certificate.
Increased
operating
costs
The chartered capacity
of the Company is
2,750 kW. Although
the capacity does not
exceed the quota, the
Company will install
renewable energy
devices with 10% of
chartered capacity.
Period Risks Description Impact Implementation Status
Short-
term		 Renewable
Energy
Development
Act		 The power user who has signed
electricity consumption agreements
with the electricity retailing utility
enterprise, the chartered capacity
of no less than 5,000 kW, shall
install on their own or provide
space to install renewable energy
power generation and storage
facilities or purchase electricity
generated from renewable energy
and a certificate.		 Increased
operating
costs		 The chartered capacity
of the Company is
2,750 kW. Although
the capacity does not
exceed the quota, the
Company will install
renewable energy
devices with 10% of
chartered capacity.
  • 77 -
Items Implementation Status Implementation Status
Mid-
term		 Carbon fee In accordance with Climate
Change Response Act, the
government plans to impose
carbon fees in stages. The fees will
be levied if such enterprises’
greenhouse gas emissions exceed
allowances.		 Increase
operating
costs		 To achieve the goals
of greenhouse gas
reduction and GHG
net-zero emission by
2050, the Company
will install renewable
energy devices such as
photovoltaic facilities
or energy storage
equipments.
Mid-
term		 Imported raw
materials		 Due to international situation,
climate change, and the increase in
transportation expenses, these
elements may cause supplier
production capacity reduction and
the increase of shipping time and
transportation cost, even the
delayed delivery date and raw
materials shortage.		 Increase
operating
costs		 The Company absorbs
part of the cost while a
portion of the cost will
be reflected in the
products’ selling price.
3. Describe the financial impact of extreme weather
events and transformative actions.		 Please refer to item 2 and 5.
4. Describe how climate risks identification, assessment,
and management processes are integrated into the
overall risk management system.		 The group has a vertical risk management process based on the levels and unit functions of various
risk issues. From the group, business unit, the legal representative to the plants, based on risk issues
and impacts, the group has established complete climate-related risk management procedures to
maintain operation stability.
  • 78 -
Items Implementation Status
5. If scenario analysis is used to assess resilience to
climate change risks, the scenarios, parameters,
assumptions, analysis factors and major financial
impacts used should be described.		 Data from TCCIP show that under the A1B scenario where the degree of warming is close to
RCP6.0, the number of extreme high temperature days and temperatures are likely to increase.
Although the extreme heat may cause power shortages, the Company has uninterruptible power
system and data backup/recovery measures to avoid operational risks.
6. If there is a transition plan for managing
climate-related risks, describe the content of the plan,
and the indicators and targets used to identify and
manage physical risks and transition risks.		 Complying with the goal of GHG net-zero emission by 2050 and the sustainable development
roadmap announced by FSC, the Company assesses the operational and financial impact of extreme
weather events by identifying climate risks and opportunities. According to the results, the Company
plans to manage climate-related measures, implement actions of energy saving and carbon reduction,
and introduce climate-related international standards. To achieve the goal of becoming a green
supply chain, the Company will invest manpower, material resources, and funds according to the
schedule of the transition plan.
7. If internal carbon pricing is used as a planning tool, the
basis for setting the price should be stated.		 The group has not plan to introduce internal carbon pricing yet.
8. If climate-related targets have been set, the activities
covered, the scope of greenhouse gas emissions, the
planning horizon, and the progress achieved each year
should be specified. If carbon credits or renewable
energy certificates (RECs) are used to achieve relevant
targets, the source and quantity of carbon credits or
RECs tobe offset should be specified.		 The paid-in capital of the Company is under NTD 5 billion. Complying with the sustainable
development roadmap implemented by FSC, the Company will disclose greenhouse gas inventory
information and assurance status according to schedule.
According to FSC rules, the Company completed the planning horizon for greenhouse gas inventory
and assurance on October 27, 2023, and reported it to the Board. The Company will continue to
monitor and verify progress, report the implementation status to the Board quarterly, and set carbon
reduction targets, strategy, and concrete action plan.
9. Greenhouse gas inventory and assurance status and
reduction targets, strategy, and concrete action plan.		 Not applicable.
  • 79 -

3.4.7 Fulfillment of Ethical Corporate Management and Deviations from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”

TWSE/TPEx Listed Companies”
Evaluation Item Implementation Status Deviations from the
“Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
1. Establishment of ethical corporate management policies and
programs
(1) Does the company have a Board-approved ethical corporate
management policy and state in its regulations and external
correspondence the ethical corporate management policy
and practices, as well as the active commitment of the Board
of Directors and management towards enforcement of such
policy?
(2) Does the Company have mechanisms in place to assess the
risk of unethical conduct, and perform regular analysis and
assessment of business activities with higher risk of
unethical conduct within the scope of business? Does the
company implement programs to prevent unethical conduct
based on the above and ensure the programs cover at least
the matters described in Paragraph 2, Article 7 of the Ethical
Corporate Management Best Practice Principles for
TWSE/TPEx Listed Companies?
(3) Does the company provide the operating procedures, code
of conduct, disciplinary actions, and appeal procedures in
the programs above effectively and perform regular reviews
and amendments?

(1) The Company follows the Company Act, Securities and
Exchange Act, related regulations for TWSE/TPEx-Listed
Companies, and commercial acts to implement the basis of
ethical corporate management.
(2) The Company established “Ethical Corporate
Management Best Practice Principles” in March 2015, and
announced them on the company website as a sign of
commitment by the Board and management.
(3) The Company requires that the Directors, Managers, and
employees avoid unethical conduct and not offer and/or
accept bribes. Ensure that Company’s interests are put
before employee’s own interests.The Company offers		 None
  • 80 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from the
“Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
several channels to report unethical conducts to regulatory
affairs or management unit.
2. Fulfill operations integrity policy
(1) Does the company evaluate business partners’ ethical
records and include ethics-related clauses in business
contracts?
(2) Does the company have a unit responsible for ethical
corporate management on a full-time basis under the Board
of Directors which reports the ethical corporate
management policy and programs against unethical conduct
regularly (at least once a year) to the Board of Directors
while overseeing such operations?
(3) Does the company establish policies to prevent conflicts of
interest and provide appropriate communication channels,
and implement them?
(4) Does the company have effective accounting and internal
control systems in place to implement ethical corporate
management? Does the internal audit unit follow the results
of unethical conduct risk assessments and devise audit plans
to audit the systems accordingly to prevent unethical
conduct,or hire outside accountants toperform the audits?


(1) The Company conducts business activities fairly and
equitably and considers the legality of business partners.
(2) Chairman Office is responsible for supervising the
implementation of ethical corporate management policy
and periodically reports to the Board of its findings.
(3) Ethical corporate management is of the foremost
importance to the Company. All employees are required
to follow relevant laws and code of ethics when
conducting business
(4) To protect investors’ interests, the Company has
established internal control system, internal audit system,
and management practices which internal auditors use as
guidelines to verify implementation, and report to the
Board and Audit Committee.		 None
None
None
None
  • 81 -
Evaluation Item Implementation Status Deviations from the
“Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
(5) Does the company regularly hold an internal and external
educational training on operational integrity?		 (5) The Company announces the importance of operational
integrity semiannually during monthly employee
meetings. This 10-15 minutes announcement takes place
two times in Taipei with 170 attendees each time and
twice in Yilan with 210 people in attendance each time.		 None
3. Operation of the integrity channel
(1) Does the company establish both a reward/punishment
system and an integrity hotline? Can the accused be reached
by an appropriate person for a follow-up?
(2) Does the company have in place standard operating
procedures for investigating accusation cases, as well as
follow-up actions and relevant post-investigation
confidentiality measures?
(3) Does the company provide proper whistleblower protection?
(1) The person (“the Coordinator”) receiving an integrity
violation report will keep confidential the content of the
report and the identity of the person filing the report. The
report is sent by the Coordinator directly to the Chairman
Office by email, through company’s website or by post.
The Coordinator shall provide specific information for
follow-up.
(2) The Company will establish the standard for investigating
an integrity violation report and ensure relevant
confidentiality measures, and ensure that the person that
files the report will be protected against retaliatory action.
(3) The Company has whistleblower protection policy.		 None
It will be
implemented as
needed.
None
  • 82 -
Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from the
“Ethical Corporate
Management Best
Practice Principles for
TWSE/TPEx Listed
Companies” and
Reasons
Yes No Abstract Illustration
4. Strengthening information disclosure
(1) Does the company disclose its ethical corporate
management policies and the results of its implementation
on the company’s website and MOPS?		 The Company discloses its ethical corporate management
policies in the investor relations section of the website
http://www.sinphar.com.tw. The public can also search
MOPS for information on ethical corporate management of
the Company.		 None
5. If the company has established ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx
Listed Companies, please describe any discrepancy between the policies and their implementation: None.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies).
(1) To implement the basics of ethical corporate management policies, the Company operates under the Company Act, Securities and Exchange Act,
Businesses Entity Accounting Act, related regulations for TWSE/TPEx Listed Companies, and other laws and decrees concerning business transaction.
(2) The Company has set up the “Management Procedures for Preventing Insider Trading”, which specifies that directors, supervisors, managers, and
employees are not allowed to reveal inside information to others or to inquire about non-public information that is irrelevant to his/her business scope.

3.4.8 Corporate Governance Guidelines and Regulations

  1. MOPS: http://mops.twse.com.tw

  2. Company’s website: www.sinphar.com.tw

3.4.9 Other Important Information Regarding Corporate Governance

MOPS and Company’s website

  • 83 -

3.4.10 Internal Control System Execution Status

  • A. Statement of Internal Control System: Please refer to page 92 of the annual report.

  • B. If the Company appoints accountants to audit the internal control system, shall disclose the audit report: None

  • 3.4.11 During the most recent fiscal year and the current fiscal year up to the date of printing of this annual report, any sanction imposed upon the company or its internal personnel for violation of internal control system provisions and principle deficiencies, punishment may make a great impact on shareholder’s rights and the securities price, the punishment, deficiency, and improvement status shall be de specified: None

  • 3.4.12 Major resolutions of the Shareholders’ Meeting and the Board Meeting during the most fiscal year and the current fiscal year up to the date of printing of this annual report

  • A. Major Resolutions and Implementation Status of the Shareholders’ Meeting

    • (A) 2022 Business Report and Financial Statements

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved.

  • (B) 2022 Earnings Distribution

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved. The ex-dividend date is July 21, 2023, and cash dividend was distributed on August 18, 2023. (Cash dividend NT$1 per share)

  • (C) Proposal for Release of Prohibition on Directors from Participation in Competitive Business

Implementation Status:

The voting rights of the attending shareholders met the standard, and the proposal was approved.

  • 84 -

B. Major resolutions of the Board Meeting

Date Major Resolutions
The first meeting
in 2023
March 17, 2023
1. 2022 Business Report and Financial Statements
2. Proposal for Date and Agenda of 2023 Shareholders’ Meeting
3. 2022 Earnings Distribution Table and Distribution of Cash
Dividends
4. 2022 Remuneration Distribution for Employees and Directors
5. Proposal for Remuneration for Directors
6. Proposal for 2023 Remuneration for Directors and Employees
7. 2023 Procedure for Accepting the Proposals Submitted by
Shareholders
8. Proposal for Statement of Internal Control System
9. Assessment of Capital Reduction in Major Subsidiary, SynCore
Biotechnology Co., Ltd.
10. Proposal for Bank Financing
The second
meeting in 2023
May 5, 2023		 1. 2023 Q1 Consolidated Financial Statements
2. The Contract Extension of Endorsements and Guarantees for
Subsidiary Company
3. Proposal for Bank Financing
The third meeting
in 2023
June 20, 2023		 1. Proposal for Setting the Ex-dividend Date of Cash Distribution
from Retained Earnings in 2023
2. Proposal for Setting the Payment Date of Cash Distribution from
Retained Earnings in 2023
3. Remuneration Distribution for Directors and Employees
4. Endorsements and Guarantees for Subsidiary Company
5. Proposal for Bank Financing
The fourth meeting
in 2023
August 8, 2023
1. 2023 Q2 Consolidated Financial Statements
2. Proposal for Investment in Subsidiary, SynCore Biotechnology
Co., Ltd.
3. Proposal for Bank Financing
The fifth meeting
in 2023
November 7, 2023		 1. 2023 Q3 Consolidated Financial Statements
2. The Appointment of Chief Information Security Officer and
Information Security Personnel
3. Proposal for Bank Financing
  • 85 -
Date Major Resolutions
The sixth meeting
in 2023
December 12, 2023
1. Distribution of Year-end Bonus for Managerial Officers in 2023
2. Adjustment to Remuneration of Managerial Officers in 2024
3. 2024 Business Plan
4. Proposal for Establishing the 2024 Plans for Internal Audit
Implementation
5. Amendment to Internal Control System
6. Appointment of CPA of the Company
7. The Contract Extension of Endorsements and Guarantees for
Subsidiary Company
8. Proposal for Bank Financing
9. Proposal for Remuneration for Directors, Members of Functional
Committees, and Managerial Officers in 2024
The first meeting
in 2024
March 6, 2024
1. 2023 Business Report and Financial Statements
2. Proposal for Date and Agenda of 2024 Shareholders’ Meeting
3. 2023 Earnings Distribution Table and Distribution of Cash
Dividends
4. Proposal for Issuing New Shares through Capitalization of
Retained Earnings
5. Election of Directors
6. Proposal for Release of Prohibition on Directors from Participation
in Competitive Business
7. The period, numbers, and place for accepting the submission of
candidates for directors (including independent directors)
8. 2024 Procedure for Accepting the Proposals Submitted by
Shareholders
9. 2023 Remuneration Distribution for Directors and Employees
10. Remuneration Distribution for Directors and Employees in 2024
11. Proposal for Statement of Internal Control System
12. Establish Corporate Governance Best Practice Principles
13. Amendment to the Rules and Procedures of Board of Directors
Meeting
14. Proposal for Bank Financing

Note: Each ratification and discussion was approved by the attending Directors.

3.4.13 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None

  • 3.4.14 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, General Manager, and Heads of Accounting, Finance, Internal Audit, Corporate Governance, and R&D: None

  • 86 -

3.5 Information on CPA Fees

3.5.1 Amount of Audit Fee and Non-audit Fee and Content of Non-audit Service

Unit: NT$ Unit: NT$ thousand
Accounting
Firm		 Name of CPA Period Covered by
CPA’s Audit		 Audit Fee Non-audit
Fee		 Total Remark
Crowe (TW)
CPAs		 Ya Quan Zhang January 01, 2023-
December 31, 2023		 2,760 335 3,095 Note
Jin Shu Pan January 01, 2023-
December 31, 2023

Note: Application fee for Investment Commission, MOEA: NT$35 thousand

Audit fee for subsidiary: NT$300 thousand

  • A. If the Company has changed Accounting Firm and the amount of audit fee is less than the previous fiscal year, the Company shall report the amount of the audit fee before and after changing and the replacement reason: None

  • B. If the audit fee is reduced by more than 10% compared to the previous year, the amount of reduction, proportion, and reasons shall be disclosed: None

3.6 Replacement of CPA

3.6.1 Regarding the former CPA

Not applicable.

3.6.2 Regarding the successor CPA

Not applicable.

  • 3.6.3 If the former CPA has a different opinion, the successor CPA shall be consulted and obtained the written opinion on the matters to notify the former CPA to respond by letter within 10 days. The Company shall disclose the content of the reply letter from the former CPA

Not applicable.

  • 3.7 The Company’s chairman, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or an affiliated enterprise

None

  • 87 -

3.8 Transfer and pledge of stock equity by directors, supervisors, managerial officers and holders of 10% or more of company shares

3.8.1 Changes in Shareholding of Directors, Supervisors, Managerial Officers, and Major Shareholders

Unit: shares

Unit: shares Unit: shares
Title Name 2023 As of March 31, 2024
Shareholding
Increase
(Decrease)		 Pledged
Shares
Increase
(Decrease)		 Shareholding
Increase
(Decrease)		 Pledged
Shares
Increase
(Decrease)
Chairman Chih Wen Lee ─ ─ ─ ─
Independent Director Ching Lung Lee
─		 ─ ─ ─
Independent Director Yau Yuan Wen ─ ─ ─ ─
Independent Director Hsin Yu Chou ─ ─ ─ ─
Director Hsiu Min Lin ─ ─ ─ ─
Director Hsiu Chih Kuo ─ ─ ─ ─
Director Ling Mo Chao ─ ─ ─ ─
Director Xing-Da Capital
Crop.
209,000		 (3,000,000) 50,000 ─
Corporate Director
Representative and
Chief R&D Officer		 Representative
of Xing-Da
Capital Crop.,
Yi Ta Lee		 ─ ─ ─ ─
Director Jehng Jer Guan ─ ─ ─ ─
Director Hung Chih Lin ─ ─ ─ ─
Director Neng Chun Yu ─ ─ ─ ─
General Manager Yu Liang Pei ─ ─ ─ ─
General Manager,
China Affairs Office		 Neng Yin Yu (9,000) ─ ─ ─
General Manager,
Subsidiary Company		 Neng Yu Yu ─ ─ ─ ─
General Manager,
Subsidiary Company		 Chao Chih
Wang		 ─ ─ ─ ─
  • 88 -
Title Name 2023 2023 As of March 31, 2024 As of March 31, 2024
Shareholding
Increase
(Decrease)		 Pledged
Shares
Increase
(Decrease)		 Shareholding
Increase
(Decrease)		 Pledged
Shares
Increase
(Decrease)
Vice Chief R&D
Officer		 Jing Jing Justine
Tang
(Note)
─		 ─ ─ ─
General Manager,
Marketing Center		 Chang Long
Chen		 ─ ─ ─ ─
General Manager,
Yilan Office		 Chien Ju Lin (13,000) ─ ─ ─
Vice General Manager,
Marketing Center
Feng Chin
Chang		 ─ ─ ─ ─
Vice General Manager,
General Manager
Office
Hui Hung Wang
(Note)
Vice General Manager,
General Manager
Office
Wen Hsin
Huang
(Note)
Assistant Vice
President,
Dept. of Planning of
Pharmaceutical Product
Chih Tsao
Chang		 ─ ─ ─ ─
Assistant Vice
President,
Marketing Channel
Dept.		 Chien Kuo
Chang		 ─ ─ ─ ─
Assistant Vice
President,
Marketing Dept.		 Wen Fang
Huang		 ─ ─ ─ ─
Executive Assistant,
Chairman’s Office		 Ju Nee Yeo ─ ─ ─ ─
Assistant Vice
President,
Chairman’s Office		 Yi Mei Luo ─ ─ ─ ─
Chief Financial Officer
Chih Hsiao
Chen		 ─ ─ ─ ─
Accounting Manager Li Jung Hsieh ─ ─ ─ ─

Note: Hui Hung Wang and Wen Hsin Huang have been appointed as Vice General Manager of General Manager Office on August 16, 2023. Jing Jing Justine Tang, Vice Chief R&D Officer, was retired on September 30, 2023.

  • 89 -

3.8.2 Shares Trading with Related Parties: None 3.8.3 Shares Pledge with Related Parties: None

3.9 Information on Relationships among the Top Ten Shareholders

Relationship among the Top Ten Shareholders

April 21, 2024

Name Current Shareholding Current Shareholding Spouse’s/minor’s
Shareholding		 Spouse’s/minor’s
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Name and Relationship Between
the Company’s Top Ten
Shareholders, or Spouses or
Relatives Within Two Degrees		 Name and Relationship Between
the Company’s Top Ten
Shareholders, or Spouses or
Relatives Within Two Degrees
Remark
Shares % Shares % Shares % Name Relationship
Xing-Da Capital
Corp.		 15,729,464
9.38
─		 ─ ─ ─ ─ ─ ─
Xing-Da Capital
Corp.
Representative:
Ling Fang Kuo		 ─ ─ ─ ─ ─ ─ Chih Wen Lee
Spouse		 ─
Purzer
Pharmaceutical Co.,
Ltd.
6,623,000
3.95
─		 ─ ─ ─ ─ ─ ─
Purzer
Pharmaceutical Co.,
Ltd. Representative:
Chih Hui Lin

─		 ─ ─ ─ ─ ─ ─ ─ ─
Yung Chang Chang
4,073,000
2.43
─		 ─ ─ ─ ─ ─ ─
Chih Wen Lee 3,149,791
1.88
1,799,725
1.07
─		 ─ Ling Fang Kuo
Spouse		 ─
SPDR(R) Index
Shares Funds -
SPDR Portfolio
Emerging Markets
ETF		 1,859,471
1.11
─		 ─ ─ ─ ─ ─ ─
Ling Fang Kuo 1,799,725
1.07
3,149,791		 1.88
─		 ─ Chih Wen Lee
Spouse		 ─
Hsiu Chi Kuo 1,569,382
0.94
437,555
0.26
─		 ─ ─ ─ ─
Neng Yin Yu 1,540,944
0.92
323,688
0.19
─		 ─ ─ ─ ─
Ling Mo Chao 1,489,547
0.89
271,000
0.16
─		 ─ ─ ─ ─
Hsiu Min Lin 1,336,876
0.80
54,288
0.03
─		 ─ ─ ─ ─
  • 90 -

3.10 Ownership of Shares in Affiliated Enterprises

March 31, 2024

Unit: shares; %

3.10 Ownership of Shares in Affiliated Enterprises Shares in Affiliated Enterprises Shares in Affiliated Enterprises March 31, 2024
Unit: shares;%		 March 31, 2024
Unit: shares;%
Affiliated Enterprises Ownership by the Company Direct or Indirect
Ownership by
Directors and
Managers		 Total Ownership
Property Shares % Shares % Shares %
CanCap
Pharmaceutical Ltd.		 Common
Stock		 2,140,000 88.43 ─ ─ 2,140,000 88.43
Preferred
Stock		 51,500 100.00 ─ ─ 51,500 100.00
SUNETIC
BIOTECH INC.		 Common
Stock		 18,854,534 83.47 ─ ─ 18,854,534 83.47
UNIVERSAL NEXT
TECHNOLOGIES
INC.
Common
Stock		 503,845 100.00 ─ ─ 503,845 100.00
ZUNIMED BIOTECH
CO., LTD.		 Common
Stock		 10,300,000 100.00 ─ ─ 10,300,000 100.00
SynCore
Biotechnology Co.,
Ltd.
(Note)		 Common
Stock		 22,597,472 64.26 ─ ─ 22,597,472 64.26
SynCore
Biotechnology Europe
GmbH		 Common
Stock		 ─ ─ 25,000 100.00 25,000 100.00

Note: SynCore Biotechnology Co., Ltd. implemented capital reduction in May 2023. The ownership by the Company is

71,456,000 shares before capital reduction. After capital reduction, the ownership is 19,090,513 shares. SynCore Biotechnology Co., Ltd. implemented capital increase by cash contribution in October 2023. The ownership by the Company is 22,597,472 shares after the capitalization.

  • 91 -

Sinphar Pharmaceutical Co., Ltd.

Statement of Internal Control System

Date: December 31, 2023

The Company states the following with regard to its internal control system during the fiscal year 2023, based on the findings of a self-assessment:

  1. The Company is fully aware that establishing, operating, and maintaining an internal control system is the responsibility of its Board of Directors and management, and such a system has been established. The purposes of the Internal Control System are to provide reasonable assurance for the effectiveness and efficiency of business operation (including profits, operation performance, and safeguard of asset security), the reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws.

  2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in the environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.

  3. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (the “Regulations.”) The internal control system judgment criteria adopted by the Regulations divide internal control system into five elements based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communications, and (5) supervision. Each element further contains several items. Please refer to the Regulations for details.

  4. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.

  5. Based on the findings of the above evaluations, the Company believes that as of December 31, 2023, its internal control system (including its supervision and management of subsidiaries), encompassing internal control for knowledge of the degree of operational effectiveness and efficiency objectives, reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws, is effectively designed and operating, and reasonably assures the achievement of the above-stated objectives.

  6. This statement will become a major part of the content of the Company’s Annual Report and Prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

  7. The statement has been passed by the Board Meeting of the Company held on March 6, 2024. All of the 11 attending Directors agreed with the content of the statement.

Sinphar Pharmaceutical Co., Ltd.

Chairman: Chih Wen Lee

General Manager: Yu Liang Pei

  • 92 -

Ⅳ. Company Shares and Fundraising

4.1 Capital and Shares

4.1.1 Sources of Capital

Unit: NT$; shares

Unit: NT$; Unit: NT$; shares
Month/
Year		 Par
Value
(NT$)		 Authorized Capital Paid-in Capital Remark

Shares		 Amount (NT$)
Shares		 Amount (NT$)
Sources of
Capital		 Capital
Increased
by Assets
Other than
Cash		 Other
Aug.
2006		 10 150,000,000
1,500,000,000
105,762,200		 1,057,622,000
Capital increase
by retained
earnings
NT$78,342,300		 – Note 1
Jun.
2008		 10 150,000,000
1,500,000,000
106,624,200		 1,066,242,000 Share warrant
NT$8,620,000		 – Note 2
Sep.
2008		 10 150,000,000
1,500,000,000
106,893,200		 1,068,932,000 Share warrant
NT$2,690,000		 –
Nov.
2008		 10 150,000,000
1,500,000,000
106,919,200		 1,069,192,000 Share warrant
NT$260,000		 –
May.
2009		 10 150,000,000
1,500,000,000
112,989,488		 1,129,894,880
Share warrant
NT$4,670,000
and convertible
bonds
transformation
NT$56,032,880
–
Sep.
2009		 10 150,000,000
1,500,000,000
114,483,134		 1,144,831,340
Share warrant
NT$1,920,000
and convertible
bonds
transformation
NT$13,016,460		 –
Dec.
2009		 10 150,000,000
1,500,000,000
118,262,536		 1,182,625,360
Share warrant
NT$3,290,000
and convertible
bonds
transformation
NT$34,504,020		 –
Mar.
2010		 10 150,000,000
1,500,000,000
120,950,732		 1,209,507,320
Share warrant
NT$2,130,000
and convertible
bonds
transformation
NT$24,751,960		 –
Jun.
2010		 10 150,000,000 1,500,000,000 120,988,732 1,209,887,320 Share warrant
NT$380,000		 –
Aug.
2010		 10 250,000,000 2,500,000,000 125,223,338 1,252,233,380 Capital increase
by retained
earnings
NT$42,346,060		 – Note 3
  • 93 -
Month/
Year		 Par
Value
(NT$)		 Authorized Capital Authorized Capital Paid-in Capital Paid-in Capital Remark Remark

Shares		 Amount (NT$)
Shares		 Amount (NT$)
Sources of
Capital		 Capital
Increased
by Assets
Other than
Cash		 Other
Sep.
2010		 10 250,000,000 2,500,000,000 127,471,969 1,274,719,690 Share warrant
NT$5,840,000
and convertible
bonds
transformation
NT$16,646,310		 – Note 2
Dec.
2010		 10 250,000,000 2,500,000,000 127,651,162 1,276,511,620 Share warrant
NT$1,270,000
and convertible
bonds
transformation
NT$1,270,000		 –
Mar.
2011		 10 250,000,000 2,500,000,000 127,768,162 1,277,681,620 Share warrant
NT$1,170,000		 –
Jul.
2011		 10 250,000,000 2,500,000,000 127,903,162 1,279,031,620 Share warrant
NT$1,350,000		 –
Oct.
2011		 10 250,000,000 2,500,000,000 128,851,162 1,288,511,620 Share warrant
NT$9,480,000		 – Note 2
Dec.
2011		 10 250,000,000 2,500,000,000 148,851,162 1,488,511,620 Capital increase
by cash
NT$200,000,000
–		 Note 4
Feb.
2012		 10 250,000,000 2,500,000,000 149,174,162 1,491,741,620 Share warrant
NT$3,230,000		 – Note 2
Mar.
2012		 10 250,000,000 2,500,000,000 149,325,162 1,493,251,620 Share warrant
NT$1,510,000		 – Note 2
Jul.
2014		 10 250,000,000 2,500,000,000 161,271,175 1,612,711,750 Capital increase
by retained
earnings
NT$119,460,130		 – Note 5
Jul.
2016		 10 250,000,000 2,500,000,000 167,722,022 1,677,220,220 Capital increase
by retained
earnings
NT$64,508,470		 – Note 6

  • Note 1: The capital increased by retained earnings is NT$78,342,300 in July, 2006. Approved by FSC on July 5, 2006, with No. Financial-Supervisory-Securities-I-0950128602.

  • Note 2: The Company issued 5,000 units of employee stock warrant, a total of 5,000,000 shares was approved by FSC on July 27, 2005, with No. Financial-Supervisory-Securities-I-0940130577. The first Secured Corporate Bond Issue was issued in April, 2006 with 3500 shares for a total of NT$350 million and was approved by FSC on April 11, 2008, with No. Financial-Supervisory-Securities-I-0970013748.

  • Note 3: The capital increased by retained earnings is NT$42,346,060 in June, 2010. Approved by FSC on June 15, 2010, with No. Financial-Supervisory-Securities-I-0990031049.

  • 94 -

  • Note 4: The Company issued new share of NT$200,000,000 for cash capital increase in October, 2011. Approved by FSC on October 28, 2011, with No. Financial-Supervisory-Securities-I-1000050459.

  • Note 5: The Company increased capital by retained earnings and issued new shares for NT$119,460,130. Approved by FSC on July 24, 2014, with No. Financial-Supervisory-Securities-1030027866.

  • Note 6: The Company increased capital by retained earnings and issued new shares of NT$64,508,470 and was declared to FSC.

to FSC.
April 21, 2024 Unit: shares
Share Type Authorized Capital Remark
Issued Shares Un-issued Shares Total Shares
Registered
Common Shares		 167,722,022 82,277,978 250,000,000 –

Note 1: The par value is NT$10 per share.

Information for shelf registration: Not applicable.

4.1.2 Status of Shareholders

April 21, 2024 Unit: shares; people; %

Status
Amount
Government		 Financial
Institutions		 Other Juridical
Persons		 Domestic Natural
Persons		 Foreign
Institutions &
Natural Persons
Total
Number of
Shareholders		 – 5 223 56,788 92 57,108
Shareholding
(shares)		 – 135,637 24,502,522 131,416,801 11,667,062 167,722,022
Percentage – 0.08 14.61 78.35 6.96 100.00

Note: NT$10 per share.

  • 95 -

4.1.3 Shareholding Distribution Status

A. Common Shares

Common Shares
April 21, 2024 Unit: shares; %
Class of Shareholding
(Unit: shares)		 Number of
Shareholders		 Shareholding
(shares)		 Percentage
1-999 39,370
1,403,430
0.84
1,000-5,000 14,549
27,634,664
16.48
5,001-10,000 1,651
12,637,349
7.53
10,001-15,000 493
6,193,263
3.69
15,001-20,000 277
5,129,778
3.06
20,001-30,000 264
6,633,771
3.96
30,001-40,000 115
4,085,827
2.44
40,001-50,000 69
3,180,934
1.90
50,001-100,000 153
11,201,871
6.68
100,001-200,000 78
10,748,915
6.41
200,001-400,000 40
11,721,740
6.99
400,001-600,000 15
7,563,173
4.51
600,001-800,000 10
6,993,689
4.17
800,001-1,000,000 11
10,027,017
5.98
1,000,001 or over 13
42,566,601
25.38
Total 57,108
167,722,022
100.00

B. Preferred Shares: The Company did not issue preferred shares.

  • 96 -

4.1.4 List of Major Shareholders

April 21, 2024 Unit: shares; %

Shareholding
Shareholders’ Name		 Shares Percentage
Xing-Da Capital Crop. 15,729,464 9.38
Purzer Pharmaceutical Co., Ltd. 6,623,000 3.95
Yung Chang Chang 4,073,000 2.43
Chih Wen Lee 3,149,791 1.88
SPDR(R) Index Shares Funds -
SPDR Portfolio Emerging
Markets ETF		 1,859,471 1.11
Ling Fang Kuo 1,799,725 1.07
Hsiu Chi Kuo 1,569,382 0.94
Neng Yin Yu 1,540,944 0.92
Ling Mo Chao 1,489,547 0.89
Hsiu Min Lin 1,336,876 0.80
  • 97 -

4.1.5 Information on Market Price, Net Worth, Earnings, and Dividends per Share in the Most Recent Two Years

Unit: NT$; thousand shares

Unit: NT$; thousand shares
Items Year 2022 2023 January 1,
2024-March 31,
2024
(Note 4)
Market
Price per
share		 Highest Market Price 36.90 41.10 37.35
Lowest Market Price 27.25 30.00 32.10
Average Market Price 29.54 32.85 34.92
Net Worth
per share		 Before Distribution 17.47 18.47 19.22
After Distribution 16.47 Note 6 –
Earnings
per Share		 Weighted Average Shares
(thousand shares)		 167,722 167,722 167,722
Earnings per Share 1.34 2.24 0.66
Dividends
per Share		 Cash Dividends 1.0 (Note 5) 1.0 (Note 6) –
Stock
Dividends		 Dividends from
Retained Earnings		 – 0.8 (Note 6) –

Dividends from
Capital Surplus		 – – –
Accumulated Undistributed
Dividends		 – – –
Return on
Investment		 Price/Earnings Ratio (Note 1) 22.04 14.67 –
Price/Dividend Ratio (Note 2) 29.54 (Note 6) –
Cash Dividend Yield (Note 3) 3.39 (Note 6) –

Note 1: Price/Earnings Ratio = Average Market Price/Earnings per Share.

Note 2: Price/Dividend Ratio = Average Market Price/Cash Dividends per Share.

Note 3: Cash Dividend Yield = Cash Dividends per Share/Average Market Price.

  • Note 4: Net Worth per Share and Earnings per Share shall be filled in the information audited by CPA during the most recent quarter as of the printed date. For other columns, the Company shall fill in the information in the current year as of the printed date.

  • Note 5: The Company distributed cash dividends in 2022 of NT$167.722 million from retained earnings.

  • Note 6: The Company is proposed to distribute cash dividends of NT$167.722 million and stock dividends of NT$134.177 million from retained earnings in 2023.

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4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

If the Company has earnings, after offsetting any loss from prior year and paying all taxes and dues, it shall be set aside 10% as legal reserve. However, when the legal reserve amounts reach or exceed paid-in capital of the Company, it shall not be set aside. The remaining earnings shall be set aside or added to the reversal of special reserve in accordance with regulation. The remaining earnings can be distributed along with prior accumulated unappropriated retained earnings. The Board of Directors will plan for the earnings distribution proposal. The proposal will be discussed at the Shareholders’ Meeting for the distribution of dividend for shareholders. The dividend policy takes into consideration current and future development plans, capital expenditure budget, investment environment, fund demand, domestic and foreign competition and balance the interest of shareholders. The dividend can be distributed as cash or stock in accordance with distributed earnings and it shall not be less than 10% of distributed earnings. Cash dividend shall be no less than 20% of the total dividend.

B. Proposed Distribution of Dividend

The proposal for 2023 Earnings Distribution was passed by the Board Meeting on March 6, 2024. After setting aside legal reserves of NT$36,980,216 and special reserves of NT$15,803,609, the Company allocates cash dividends of NT$167,722,022 and stock dividends of NT$134,177,620 amounting to 13,417,762 shares from retained earnings available for distribution. The cash dividend will be NT$1 per share. The stock dividend will be NT$0.8 per share, approximately 80 shares per thousand shares to issue new shares through capitalization. The proposal has not been discussed at the Shareholders’ Meeting yet.

4.1.7 The impact of the proposed allocation of free shares on the company’s operating and performance and earnings per share

performance and earnings per share performance and earnings per share
Year
Item
2024 (Forecast)
Paid-in Capital at the Beginning of the Period NT$1,677,220,220
Distribution of
Dividend in 2023		 Cash Dividends per Share NT$1
Stock Dividends per Share through Capitalization of
Retained Earnings		 NT$0.8
Stock Dividends per Share through Capitalization of
Capital Surplus		 —
Changes in
Operating
Performance		 Operating Income Note Applicable
(Note 2)
YoY Comparison in Operating Income
Net Income After Tax
YoY Comparison in Net Income After Tax
Earnings per Share
YoY Comparison in Earnings per Share
Annualized Return on Investment
  • 99 -
Pro Forma Earnings
per Share and P/E
Ratio		 If capitalization of
retained earnings is
changed to distribute in
cash.		 Pro Forma Earnings per Share Not Applicable
(Note 2)
Pro Forma Annualized Return
on Investment
If capitalization of
capital surplus is not
conducted.		 Pro Forma Earnings per Share Not Applicable
(Note 2)
Pro Forma Annualized Return
on Investment
If capitalization of
capital surplus are not
conducted or
capitalization of retained
earnings is changed to
distribute in cash.		 Pro Forma Earnings per Share Not Applicable
(Note 2)
Pro Forma Annualized Return
on Investment

Note 1: It has not been discussed at the 2024 Shareholders’ Meeting yet.

Note 2: In accordance with Regulations Governing the Publication of Financial Forecasts of Public

Companies, the Company is not required to disclose financial forecasts for 2024. Therefore, there is no forecasts information for 2024.

4.1.8 Compensation of Employees and Directors

  • A. Information Relating to Compensation of Employees and Directors Stated in the Articles of Incorporation

If the Company has a profit for the reported year, 2%~8% of profit shall be allocated for remuneration for qualified employees, who meet certain criteria, and the method of allocation, in stock or cash, to be decided by the Board. The Company may set aside no more than 5% of profit as the remuneration of Directors. The distribution ratio for the current period will be discussed at the Board Meeting. The proposal for remuneration distribution for employees and directors shall be reported at the Shareholders’ Meeting.

If the Company has accumulated loss, it shall retain the amount for offsetting in advance, and then distribute the compensation of Employees and Directors in accordance with the aforementioned percentage.

  • B. For 2023, the Board decided the estimated percentage of compensation of employees and directors is 3.2% and 1.8%, respectively. The detail of the distribution has not been passed by the Remuneration Committee and the Board yet.

  • C. Status of Remuneration Distribution Approved in the Board of Directors Meeting

  • (1) If the amount of remuneration distributed for employees and directors in cash or stock is different from the estimated amount, the Company shall disclose the variance, reasons and status:

    • The Board passed the resolution of remuneration distribution for Employees and Directors will be NT$10,484,593 and NT$5,897,584 in cash on March 6, 2024. The amount is same as the estimation.

  • (2) The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: None

  • 100 -

D. Status of 2022 Compensation Distribution of Employees and Directors:

Remuneration Distribution in 2022:

Employee Remuneration in cash: NT$9,646,863 Employee Remuneration in stock: NT$0

Directors and Supervisors Remuneration: NT$5,426,360

The amount is same as the amount that approved by the Board.

4.1.9 Buy-back of Treasury Stock

None

4.2. Corporate Bonds

None

4.3 Preferred Shares

None

4.4 Global Depository Receipts

None

4.5 Employee Stock Options

None

4.6 New Restricted Employee Shares

None

4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions

None

4.8 Financing Plans and Implementation

  • 4.8.1 The previous plan of implementation of capital increase, expected progress, and the possible benefit that will be created

None

4.8.2 Plan and Implementation Status

None

  • 101 -

V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

A. Main Areas of Business Operations

C802041 Manufacture of Drugs and Medicines
F108021 Wholesale of Western Pharmaceutical
F208021 Retail Sale of Western Pharmaceutical
C802051 Manufacture of Chinese Medicines
F108011 Wholesale of Traditional Chinese Medicine
CF01011 Medical Devices Manufacturing
F108031 Wholesale of Medical Devices
F208031 Retail Sale of Medical Apparatus
C102010 Manufacture of Dairy Products
C802100 Cosmetics Manufacturing
F108040 Wholesale of Cosmetics
F208040 Retail Sale of Cosmetics
C802060 Veterinary Drug Manufacturing
F107070 Wholesale of Veterinary Drugs
F207070 Retail Sale of Veterinary Drugs
C201010 Feed Manufacturing
F103010 Wholesale of Animal Feeds
F202010 Retail Sale of Feeds
C801110 Fertilizer Manufacturing
F107050 Wholesale of Fertilizer
F207050 Retail Sale of Fertilizer
C106010 Grain Husking, Manufacture of Grain Mill Products,
Starches and Starch Products
C104010 Manufacturing of Sugar Confectionery
C199990 Manufacture of Other Food Products Not Elsewhere
Classified
C802090 Manufacture of Cleaning Preparations
F107030 Wholesale of Cleaning Supplies
F207030 Retail Sale of Cleaning Supplies
C110010 Beverage Manufacturing
F102040 Wholesale of Nonalcoholic Beverages
F102170 Wholesale of Foods and Groceries
F203010 Retail Sale of Food, Grocery, and Beverage
F501030 Beverage Shops
  • 102 -

A102050 Crops Cultivation A101030 Growing of Special Crops A101040 Growing of Edible Fungi F201010 Retail Sale of Agricultural Products C113020 Alcohol Products Semi-Finished Manufacturing F208050 Retail Over-the-counter drugs class B F401010 International Trade J303010 Magazine (Periodical) Publishing IZ99990 Other Industrial and Commercial Services I101090 Food Consulting IC01010 Medicine Inspection IG01010 Biotechnology Services J202010 Industry Innovation and Incubation Services E604010 Machinery Installation EZ05010 Instrument and Meters Installation Engineering F207200 Retail Sale of Chemical Feedstock F107200 Wholesale of Chemical Feedstock F107990 Wholesale of Other Chemical Products F399040 Retail Sale No Storefront ZZ99999 All business activities that are not prohibited or restricted by law, except those that are subject to special approval.

B. Operating Proposition

The products sold by the Company are divided into drugs, functional food, and others. The following table is the sales revenue proportion in 2023.

Unit: NT$ in thousands; %

Unit: NT$ in thousands; %
Product Category Total Sales (%) of Total Sales
Drugs 1,903,980 64.26
Functional Food 948,382 32.01
Others 110,572 3.73
Total 2,962,934 100.00

Note: The above amount is net sales.

C. Main Products and Services

(A) Product Categories

The products of the Company include semi-solid preparations (ointment, gel, cream), solid dosage forms (soft/hard capsule, sugar-coated tablet, film-coated tablet,

  • 103 -

suppository, powder/granules, tablet, gummy), liquid agent (internal/external use), eye drops, injections (parenteral, powder), cosmetics, functional food, natural botanical extracts, and plastic medical containers.

(B) Target Market

  • a. Sell the products directly to medical centers, regional hospitals, district hospitals, group practice centers, clinics, dental clinics, pharmacies, chain pharmacies, and drug stores.

  • b. Sell health supplements and medical cosmetology products to government hospitals, armed forces hospitals, pharmacies, and shopping channels through distributors.

  • c. Commissioned to manufacture products and sell them to direct marketers and American hypermarket.

  • d. Self-operated import and export, and sold products through export distributors or agents.

  • e. Commissioned by specialized marketing companies to manufacture drugs, functional food, cosmetics, and medical devices.

  • f. Sell products directly to consumers through e-commerce platform, telemarketing, and Sinphar Health Park.

D. New Products and Services Development

  • (A) Research and Development Results

  • a. Food: 8 products in 2023

  • b. Cosmetics: 2 products in 2023

  • c. Drugs: 4 products in 2023

  • d. Product Improvement: 58 items in 2023

  • e. Technical Projects: 5 projects in 2023

  • f. Research and Development Status:

Item
Category		 Indication/
Code R&D Progress/Current Situation
Application
1 Botanical
new drugs/
Natural
botanical
materials
Dementia/
Approved for phase II clinical trial by TFDA and U.S. FDA.
Brain Health/
ST01 Preparing for clinical trial.
Vitality/

Acquired the health food certification for anti-aging.
Health food
  • 104 -
Item Category Indication/
Code R&D Progress/Current Situation
Application
2 Botanical new
drugs
Drugs for
Approved for phase II clinical trial by TFDA and U.S. FDA.
ST02 chronic stable
Follow-up development is in progress
angina
3 Botanical
new drugs/
Natural
botanical
materials
Completed Druggability Research Part I and Part II in
Cancer adjuvant
progress.
SF01 treatment agent/
Acquired the health food certification of assisting in

Health food
modulating allergy constitution and immune modulation.
4 Natural
botanical
materials
Completed clinical efficacy trial proving the product has the
GF159 Brain Health function of improving memories, learning abilities, and sleep
quality.
5 New small
molecular
drugs
Received project funding from MOEA.
Completed phase I clinical trial in Taiwan.
Head and neck
SB01 Approved for phase II clinical trial by U.S. FDA.
cancers

Approved for and completed phase II clinical trial by TFDA.
The efficacy of drug and dose adjustment is under discussion.
6 New small
molecular
drugs
Formulation development before clinical trial.
SB02 Cancer treatment
Deprescribing is under discussion.
7 Botanical new
drugs
Genital wart Acquired TFDA drug license to sell drug products in
SB03
VEREGEN® (condyloma) specialized channels (hospitals, clinics, and pharmacies).
8 Eye drops
Successful international cooperation with South Korean AJU
Dry age-related
Pharm in granting authorization right to the Company.
SB04 macular
Approved for phase II/III clinical trial by TFDA.
degeneration
Dose adjustment is under discussion
9 Positively
charged
liposome
Approved for the phase III clinical trial by FAMHP and TGA.
SB05 Triple-negative Approved for the phase III clinical trial by TFDA.
TNBC breast cancer Received project funding from MOEA.

Feasibility study is under discussion.
Approved for phase III clinical trial in the U.S., Taiwan,
France, Hungary, South Korea, Russia, and Israel.
Received the grant of A+ Industrial Innovation R&D Program

by MOEA.
SB05PC Pancreatic cancer
Completed final analysis of phase III clinical trial.
Project is under discussion.
Approved for phase III clinical trial by NMPA.
  • 105 -

5.1.2 Industry Overview

A. Current Status

According to the statistics in The State of World Population 2023 published by UNFPA, the global average life expectancy was 73.5 years, which was an extraordinary increase to 40 years in 1900. In Taiwan, according to the data published by the Ministry of the Interior in 2023, the average life expectancy was 79.9 years, specifically 76.6 years for men and 83.3 years for women. Compare to global average life expectancy, male and female average life expectancy in our country were respectively 6.7 years and 8.6 years higher than the global average. The upward trend in life expectancy is a result of better healthcare, healthier lifestyle, attention to food safety, and an increase in physical activities.

As the aging society brings social and economic challenges, it also creates market opportunities for the pharmaceutical and healthcare industries, such as a growing demand for geriatric medical care and chronic diseases. Additionally, the pharmaceutical industry continues to expand as people seek to prolong their health through consuming drugs and health foods.

According to IQVIA statistics, the scale of the global pharmaceutical market is US$1.4 trillion in 2022, compared to 2021, an increase of nearly 2.0%. It is expected that the scale in 2027 will reach US$1.9 trillion. The global pharmaceutical market has been influenced by individual country’s healthcare insurance system, budgetary concerns and cost controls, and consumers’ budget for out-of-pocket services. Therefore, the market for new drugs and generic drugs and drug price controls will affect future global pharmaceutical market scale. Overall it will be a growing market at a slower pace.

Despite the government controlling the medical expenses through adjusting insurance rates, new policy for copayment, and adjusting NHI drug prices, the pharmaceutical market has maintained steady growth over the years. According to IQVIA, Industrial Information of DCB, and Research Team of ITIS, the market scale of pharmaceuticals in our country in 2022 is NT$213.85 billion, growing 3.5% compared to the preceding year, because several expensive new drugs and new treatments have been included in NHI, and costly new drugs continue to enter copayment market. It is anticipated that with the increasing aging population leading to higher demands for anticancer and chronic disease drugs and treatments, the domestic pharmaceutical market will also be steadily growing.

However, several factors have affected drug price and quantity produced of domestic pharmaceutical companies in recent years, namely, the cost of research and development of

  • 106 -

new drugs, the increase of production cost after implementing PIC/S GMP, competition from imported drugs, the restriction of the New Patent Act, and the drug price survey. These factors caused a decline in revenue and profit.

The total amount of NHI payment has been increasing annually, from NT$553.1 billion in 2013 to NT$809.5 billion in 2022, of which drug payment accounted for 25-30%. Out of the total drug payment, only 25% were to domestic pharmaceutical companies, while the remainder was paid to global pharmaceutical companies. According to the data of IQVIA, the total sales of drugs of the top 20 domestic pharmaceutical companies in Taiwan amounted to NT$133.18 billion in 2022, accounting for about 62.3% of total sales of Taiwan pharmaceutical companies. Among the top 20 pharmaceutical companies, there were 18 global pharmaceutical companies, accounting for 59.0% of the Taiwan pharmaceutical market. And there were only 2 domestic pharmaceutical companies, and their total sales were NT$6.89 billion, accounting for 3.3% of domestic sales.

The pharmaceutical industry is high in capital expenditure, requires advanced technology, and needs skilled professionals. Take the U.S. as an example, developing a new drug may take 10 to12 years and cost US$250 million to US$350 million. Because domestic pharmaceutical companies are smaller than global pharmaceutical companies and the staggering cost of new drug development, most domestic pharmaceutical companies produce generic drugs. In recent years, there is an increasing number of companies becoming involved in new drugs development.

The government implemented PIC/S GMP standard to ensure that Taiwan’s pharmaceutical manufacturing quality is consistent with international standards. So far over 140 companies are PIC/S GMP compliant and many have also passed the EU, the USA, and Japan inspection. Domestic pharmaceutical companies invested billions of dollars (NT$) in software and hardware to meet regulation requirements and remain competitive internationally. On the other hand, imported generic drugs can bypass the PIC/S GMP inspections, do not need to conduct bioequivalence study and are duty-free, thus creating a less advantageous business environment for domestic companies.

In light of unfair competition and NHI drug price suppression, domestic pharmaceutical companies are likely to produce health supplements and cosmetology products in addition to drugs to increase sales revenue. Furthermore, to decrease operational costs, domestic pharmaceutical companies may collaborate with, merge with, or acquire companies overseas.

  • 107 -

B. Industry Development

Biotechnological and pharmaceutical products are closely related to public health, since they are mainly used for treating illnesses and preventive health care, as such, product safety and efficacy are especially important. Economic growth, aging population and world information flow have created a demand for high quality pharmaceutical products and that in turn, is driving a continuous annual revenue growth of the pharmaceutical manufacturing industry.

As the government establishes the “Biotechnology and Pharmaceutical Industries Promotion Office” under the Ministry of Economic Affairs, it is simultaneously promoting the development of pharmaceutical manufacturing industry and gradually setting up a complete database of the pharmaceutical industry. In recent years, there is a worldwide trend on natural products, which leads to a growing demand for Chinese herbal medicine R&D, business opportunities, and government recognition on this market. However, the application of Chinese herbal medicine still needs scientific verification, clinical trial, and patent protection. This will be a subject that the domestic pharmaceutical industry needs to further explore or actively participate in development in the future. At present, both domestic and imported drugs are developing towards the PIC/S GMP standard, and the PIC/S GMP system complies with the specifications of the Pharmaceutical Inspection Convention and Co-operation Scheme, which is practiced currently in the EU, a higher requirement than cGMP. This ensures a spotless plant and quality drugs and protects the employees and the environment against pollution.

C. Relationship with Upstream, Midstream and Downstream Companies

Upstream: Raw material. The raw materials for western medicines include general chemicals, natural plants, animals, minerals, microbial strains, and relevant tissues and cells, etc. Among them, general chemicals are used the most. For traditional Chinese medicine, majority of raw materials are plants, while animals and minerals are in the minority. With advancement in biotechnology, using gene transfer, scientists have obtained many examples of genetically modified animals and plants, so in the future, plants can be directly cultivated or animals can be raised to produce medicines.

Midstream: API manufacturing and Chinese herbal medicinal materials processing. API manufacturer includes organic chemical synthesis, natural product extraction, microbial fermentation, or synthesis post-fermentation, and genetic engineering which generates purification from modified cell fermentation, etc.

  • 108 -

for example, biochip, biologic diagnostic reagents. The processing of Chinese medicinal materials is mainly based on the processing of medicinal plants.

Downstream: Pharmaceutical manufacturing industry mainly combines API with

pharmaceutical adjuvant, such as excipients, disintegrating agents, adhesives, and lubricants etc., and to create products in easy to use dosage forms. The manufacturing process shall comply with PIC/S GMP standards, to ensure the stability of product quality, and conform to the necessary conditions of safety, stabilization, and efficacy. In addition to making Chinese medicine in traditional Chinese medicinal dosage forms such as pill, paste, pellet, and powder etc., more and more manufacturers are producing Chinese medicines in western medicine dosage form. Chinese and western medicines are distributed through hospitals, pharmacies, prescriptions, or indicated by clinic doctors for patients or consumers to use.

D. Product Competition

The products of the Company are divided into categories of drugs, functional foods, and others.

The Company has establish a foothold in the local market with private brands by combining exclusive patented ingredients and technologies to make functional foods and is gradually expanding into international brands. Furthermore, the Company has been receiving orders from global manufacturers and gradually earning global recognition with its high-technology and high-quality products.

In terms of sales channel, domestic pharmaceutical companies have a larger market share in pharmacies and clinics, while global pharmaceutical companies and imported drugs have a larger market share in hospitals because of the hospitals prefer to use imported drugs. The Company maintains a balanced development in clinics, hospitals, and pharmacies for many years. Currently, the Company is focused on R&D, import agents and adjusting marketing strategies, increasing the development of hospitals, concentrating on operations, and managing pharmacy sales channel.

E. Product Trends

The global demand for pharmaceuticals continues to rise throughout a hundred years of pharmaceutical industry development. As the population grows and ages, people become aware of the importance of good health. As a result, more and more people start to exercise, diet, and take health supplements. However, there are still many serious diseases that

  • 109 -

cannot be treated. Therefore, the prospect of new drugs is highly anticipated, and governments of various countries have also begun to list biotechnology new drugs as key development industry.

In recent years, the government actively promotes the biotechnology pharmaceutical industry. Since the approval of Act for the Development of Biotech and New Pharmaceuticals Industry, many companies have obtained the certification under the Act. Relevant policies such as tax benefits, tax credits for R&D investment, and deregulation are incentives for companies to invest in the research and development of biotech. In 2017, the government implemented the “Biomedical Industry Innovation Program”. This included five strategic development directions: updating legislation to foster industry development, improving science park infrastructure to drive the industrial cluster effect, creating an integrated biomedical databases platform, introducing digital/smart technology into the biomedical industry, and strengthening the connection with global markets to improve industrial transition and innovation. In 2021, Executive Yuan passed “Six Core Strategic Industries Plan” built on the foundations of five plus two innovative industries plan, artificial intelligence with the fifth-generation mobile networks to promote precision health industry. Taking the biomedical industry as the core, and the advantages of the medical industry and information and communication technology, the precision health policy aims to improve the health and well-being of people of all ages. As a result, the amendment of the Act for the Development of Biotech and New Pharmaceuticals Industry took effect in 2022. The industry deals in new dosage forms, regenerative medicine, precision medicine, digital medicine, and contract development and manufacture of biotech and pharmaceutical products are included in the scope of preferential measures to support the development of the industry.

Developing biotech and new drugs require a vast sum of fund, technologies, and talents. Although Taiwan has many biotechnology talents, the scale of enterprises is not as large as global pharmaceutical corporations to have an abundance of capital and revenue to acquire new drugs and technologies. Additionally, the gross production value of the domestic medical industry is insufficient to support the development of new drugs.

At the same time, the development process of new drugs is full of uncertainties. Thus, it is still in the embryonic stage. In addition to requiring policy support from the government, we hope that the public is not influenced by the negative news of individual cases that may lead to adverse impact on the industry. With the support of talents, capital markets, and policies in Taiwan, we strive to manufacture world-class new drugs to give back to investors and contribute to human health.

  • 110 -

5.1.3 Technology and R&D Overview

A. Business Technical Level and R&D

(A) Establish core technology

An important strategy for the R&D Center of the Company is “innovation, integration, and talent training”. To establish a core technology platform and develop private-brand products through complete equipment and professional training.

(B) Physical technology and skills

  • a. Continue to develop anticancer drugs and to obtain patent licensing products for chronic disease.

  • b. The Company selects suitable Chinese herbal medicine to cooperate with well-known universities in Europe and North America and research institutions to carry out the combination of production, learning, research and market for the Chinese market.

  • c. The traditional Chinese medicine extracts were successfully developed by the Chinese herbal medicine R&D group of the Company.

(a) Lipucan®

Available in stores and other channels. It has obtained patent protection in several countries, and the health food certification of anti-allergic and immunoregulation approved by the Ministry of Health and Welfare. It is the first product in Taiwan to exclusively master the biotechnology achievements from raw material R&D to production.

(b) TianLife®

This patent protected product is available in stores and other channels and sold in several countries. The raw materials come from Good Agricultural Practices (GAP) compliant organic farms. Memoregain Capsules are made with TianLife® and have obtained patent protection in several countries and health food certification for anti-aging by the Ministry of Health and Welfare. It is the only anti-aging health food awarded both the “25th National Biotechnology and Medicine Care Quality Award” and “Symbol of National Quality”, and won ten awards domestically and abroad.

(c) Protygold®

Walnut Oligopeptide Protygold® is small molecule organic active peptide

  • 111 -

developed by Sinphar Tian-Li. It has nine global/PCT patents, five SCI publications, seven in vivo/in vitro tests, and one IRB approved. It has won the 2019 World Pharmaceutical Raw Materials China Exhibition (CPHI) Herbal Extract Product Innovation Award. This peptide has been proven to enhance memory and learning, and improve sleep quality. This product has been launched in Taiwan.

  • (d) Since its establishment, the subsidiary, SynCore has developed five new drugs under clinical stages (see Table 1), including two anticancer drugs, SB01 and SB02 which are technology transfer from National Health Research Institutes (NHRI). They are now respectively under phase II clinical trials. The drug for external genital wart, SB03 (Veregen® ), from Germany Biotech Company, Medigene, was launched in the fourth quarter of 2013. The drug for age-related macular degeneration, SB04, was a technology transfer from an U.S. company, MacuCLEAR, has been approved by the U.S. FDA for phase II/III clinical trials. Also, in February 2012, it has been approved by the Taiwan TFDA to conduct phase II/III clinical trials. SB05 from Germany Medigene Biotech Company is currently conducting phase III clinical trials of Triple-Negative Breast Cancer and Pancreatic Cancer. SB05PC (EndoTAG® -1), which is targeted to treat Pancreatic Cancer, is conducting phase III clinical trials in eight countries, and completed the final analysis in October 2021 for phase III and second-line clinical trial in seven countries in the U.S., Europe and Asia. The phase III clinical trial of first-line drugs in China has also began to treat patients in February 2022, and the implementation has been successfully launched.

  • (e) Obtain the complete developing rights of the liposome EndoTAG® -1 technology platform.

  • (f) Obtain the global technology developing rights of the ophthalmic device, FloM-S (choroid blood flow meter).

  • 112 -

B. R&D Expenses Invested in the Past Two Years

Unit: NT$ thousand

Unit: NT$ thousand
Year 2023 2022
R&D Expenses 132,580 272,163

C. Successfully Developed Technology and Products

  • (A) Approved bioavailability, bioequivalence (BA and BE), and latest listing or dosage form improved products.

  • a. Sincoxib Capsules: non-steroidal anti-inflammatory drug

  • b. Cynlis Film Coated Tablets: erectile dysfunction drug

  • c. Gefissa Film Coated Tablets: anticancer drug

  • d. LIPOZOL Tablets: hypolipidemic agents

  • e. Chymsum Tablets: gastrointestinal drug

  • f. New Hydrocortisone Cream: anti-inflammatory

  • g. Atropine (0.01%) Eye Drops: near-sightedness prevention

  • (B) Products with health food certification

  • a. Lipucan Capsules: improve allergic conditions, immunoregulation

  • b. High Quality Plus Fish Oil Soft Capsules: modulation of blood lipids

  • c. Steady-Fiber Granules: modulation of blood sugar

  • d. Migus Phyto-Protein Powder: modulation of blood lipids (cholesterol-lowering)

  • e. Memoregain Capsules: antiaging

  • f. Potent Plus Soft Capsules: antifatigue

  • (C) Funtional Food

  • a. Migus: a series of health food based on vegetable protein.

  • b. QH Potent Plus Soft Capsules:

Contains patented active Q10, which could be directly utilized by the body, and contains vitamin B1 to help to maintain heart health.

  • c. Sesame plus E Soft Capsules:

Contains Japanese glutamic acid fermentation (including GABA) which is

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manufactured by patented fermentation technology. The product could help people sleep better and maintain youthfulness and energy level.

  • d. Clever Peptide 2.0 Capsules (Vegetarian Capsules):

Made with Sinphar exclusive material, Protygold, which contains glutamic acid and arginine. The product could help people increase concentration.

  • e. Bitter Melon Peptide plus Capsules:

Made for people who prefer to eat starch but worry about blood sugar levels. The main exclusive formula is BFTOZ, can help manage blood sugar and improve the viability of insulin.

  • f. Sinphar Ganoderma Cordyceps Capsules:

For people who want to strengthen it. The product has the active ingredient, Ganoderma Lucidum, which contains polysaccharide in the effective dose for immunomodulatory health food. The Company uses light environmental stress cultivation technology to produced high concentration of cordycepin. It is the first choice for boosting immune system.

  • g. Relax Sesame Softgel:

This is an exclusive product sold at American warehouse club. The product contains 5 sleep inducing ingredients including casein phosphopeptides, sesamin, vitamin E, fish oil (omega-3), and niacin, which actively help people fall asleep easier and sleep better, relieve stress, fight fatigue, and improve neurological health.

5.1.4 Long-term and Short-term Development

A. Short-term Business Plan

(A) Manufacturing

The Company has established an automated isolated injectable assembly line, and a self-contained solidification excipient production line to provide a more extensive product service and prepare for expanding market.

The Company has implemented ASPROVA (Advanced Planning & Scheduling System), WMS (Warehouse Management System), and RPA (Robotic Process Automation). The automated reminder of these systems help to reduce human error, improve production efficiency and turnover rate, reduce cost, and improve product quality.

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The Company expands quality control manpower, improves employee training, implements personnel review and evaluation, and establishes clear chain of responsibility to strictly implement product quality monitoring.

The Company setup an internal quality committee to discuss each problem relevant to expiration period and packaging specification, and contracts external quality agency to routinely review product quality and process to strengthen quality management system.

(B) Marketing

  • a. Through Sinphar Counters, the Company quickly builds a popular image of “health” and through the establishment of brand differentiation, the Company continues to maintain a relative competitive advantage.

  • b. Internationally: Aim to globalize local brands.

  • Domestically: Aim to work closely with channels, making hospital like clinic, clinic like pharmacy, pharmacy like convenient store.

  • c. Plan sales channel according to different product lines:

As the market shifts due to NHI policy changes and increase health awareness by the public, the Company designs products catering to different markets.

  • d. Continue to expand the number of visitors to Sinphar Health Park, build the brand image with experiential marketing, and educate consumers about Sinphar’s brand value.

  • e. As the shopping habit of consumers shifts to online shopping, the Company expands its focus to business-to-consumer marketing and e-commerce.

(C) Research and Development

  • a. Introduce new technology to improve the effectiveness and accuracy of process control and enhance the reliability of manufacturing.

  • b. Although powder form has the advantage of convenience, the disadvantage is that traditional canned package is not suitable for travel. The Company will develop a new package format for convenience and improve product safety.

  • c. Increase the absorption rate of products for the introduction of active ingredient.

  • d. Introduce detectors and new analytical techniques to shorten the analysis time, improve analysis methods, and shorten the time of product development.

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B. Long-term Business Plan

The long-term business plan is focused on the development of new drugs, anticancer agents, and patented natural products, expanding marketing channels, and establishing product image. The long-term business plans are as below.

(A) Manufacturing

  • a. Comply with the regulations of the Pharmaceutical Inspection Convention and Co-operation Scheme (PIC/S), increase pharmaceutical efficiency and quality, and set up anticancer agent plant to comply with Pharmaceutical Regulations of Japan.

  • b. Introducing MES (Manufacturing Execution System) and SCADA (Supervisory Control and Data Acquisition). Through the improvement of systems, after the production and logistics network, collect a large quantity of data, the operating efficiency could be improved by AI analysis, decision making, and adjustment of production process parameter optimization and production management. Optimize work procedures to improve the quality of the workforce and move forward with the goal of Industry 4.0.

(B) Marketing

  • a. Look for equipment abroad that can provide better production capacity and the latest technology.

  • b. Introduce global brand drugs which have differentiation and clinical value. Expand current product line and increase market share through joint marketing and technology licensing.

  • c. Effectively improve sales management, streamline shipping process and improve competitiveness.

  • d. Through budgeting, target suitable products and marketing campaigns such as media or public relations. At the same time, the Company develops e-commerce with digital marketing to capture specific consumers.

  • e. Establish diversified collaboration directions and items, actively look for global partners. Combine the resource of the logistics center with agent bestsellers can further enhance the depth and breadth of the Company's brand in the world and grasp the market pulse to develop and promote competitive products. The Company can sell different categories of the product of pharmaceuticals, health food and cosmeceutical products in different channels by adopting a division of marketing.

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  • f. The Company introduces, develops, and markets natural products, to create patent protected functional foods that stand out in the market.

  • (C) Research and Development

  • a. Continue to develop anticancer drugs and obtain the patent licensing of products for chronic.

  • b. Continue to develop and apply nanotechnology, and set up the goal of functional food, healthy food, prescription drug, and generic drugs.

  • c. Continue to develop new drugs of Chinese herbal medicine. The existing products are in their respective stage of new drug R&D. In addition to continuing to develop new projects, the existing R&D projects will move toward international R&D.

  • d. Continue to collaborate with R&D center in a related business in Hangzhou to perform R&D projects for China herbal medicine in the long term.

  • e. Continue to apply the advantages of China market and the place of origins of Chinese herbal medicine, select suitable phytonutrients in Chinese herbal medicine to develop drugs and healthy food to conduct clinical trials and effectiveness evaluation to obtain certification.

  • f. Train talents that can coordinate business with multinational clinical trials, application of regulations review, and international licensing to improve the competitiveness of the Company.

  • g. Implement the collaboration of new drugs and international licensing cases to receive the licensing fee to increase revenue.

  • h. Establish a collaborative platform of new drug clinical trials in Taiwan and China to improve the effectiveness of new drug clinical trials.

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5.2 Market and Sales Overview

5.2.1 Market Analysis

[Sales Region]

The Company’s products are sold mainly in Taiwan; products consist of drugs, functional food, medical devices, and cosmetics. The Company is also an original equipment manufacturer for global pharmaceutical companies, multi-national direct marketing companies and exports products to several countries. The subsidiary in China engages in research and development of natural materials and the production and sales of patent protected phytonutrient extracts. The sales region includes China and other countries.

Unit: NT$ thousand; % Unit: NT$ thousand; % Unit: NT$ thousand; % Unit: NT$ thousand; %
Year
Target		 2023 2022
Amount % Amount %
Domestic 2,766,061
93.36
2,551,798
89.33
Export 196,873
6.64
304,853
10.67
Total 2,962,934 100.00
2,856,651		 100.00

Note: The location of the Company or subsidiaries selling product to others shall be the standard of sales region.

[Market Share]

According to the statistics by the Department of Statistics of the Ministry of the Interior until the end of December 2023, the population in our country was about 23.42 million. The population trend was of an aging population. The proportion of the population aged above 65 in 2023 was 18.35%, which was a significant increase compared to 10% in 2006. As a result of the population proportion of middle-aged and elderly adults being relatively higher, the population structure was going to be an aging society. With the advancement in technology and internet communication, health care information has become one of the popular topics. According to the statistics by Biotechnology Development Center in 2023, the output value of the domestic pharmaceutical industry in 2022 is NT$92.23 billion. The proportion of the Company is about 1.98%.

[Supply and Demand Condition and Growth of Future Market]

With an aging society and NHI pharmaceutical purchase policy, the market for drugs and functional food are expected to flourish. The nondrug market continues to experience dramatics growth with the generalization of open chain pharmacies. Market positioning and

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market segmentation of drugs becomes more transparent in the future. The Company’s high quality products with exceptional marketing strategies will give the Company a competitive edge and increase market share.

[Competitive Niche]

  • A. The production scale and management capability of the Company could effectively reduce the production and marketing cost to create the competitive advantage of “cost leader”.

  • B. The Company collaborates with national pharmacies to establish Sinphar Counters, and maintains a relationship with primary care networks in various regions, district hospitals, and regional hospitals. Each medical center continues to develop and cooperate with the distributor to expand the products of the Company for a more flexible marketing strategy.

  • C. Through natural products R&D, the Company has obtained patents in several countries and controlled exclusive technology and materials which could be used in functional food and medical cosmetology products, giving the Company an advantage in differentiation competitiveness.

[Favorable and Unfavorable Factors in the Long Term]

A. Favorable Factors

  • (A) The Company has diversified and comprehensive product lines.

  • a. The categories of products are diversified

The Company develops, manufactures, and sells a comprehensive category of products, and manufactures functional foods for global companies. Product lines include prescription drugs, over-the-counter drugs, cosmetics, functional food, natural botanical extracts, and medical devices.

  • b. Balanced development of drugs and non-drugs

  • (a) Drugs

The Company’s drug products are used for different types of treatments, and has a proprietary manufacturing technology for special soft gelatin capsules. The planned anticancer (for injectable and solids) and eye drop production facilities are certified by domestic and Japanese health authorities. In addition to producing existing drugs, the Company lists prescription drugs for chronic diseases as the key focus for future development. Some factors affecting the upward trend in market growth for out-of-pocket non-prescription drugs are the aging population, changes in lifestyle, availability of health related knowledge.

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(b) Non-drugs

The Company has a unique advantage in its government-certified health food and medical cosmetology products, which are developed with Company R&D exclusive patented raw material. The Company has also successfully developed protein vegan powder nutritional supplements and is the approved manufacturer for several international companies. The Company’s products are exported to other countries around the world. Through horizontal diversification, the Company produces and sells more than one hundred of products. Some products obtained FDA health food permit numbers, such as Memoregain Capsules. These products give the Company a competitive edge over others in the industry.

  • (B) The Company has a complete medical devices and container product line. Specialized containers and medical devices that meet the quality of biotechnology industry are sold to others, while reducing the costs of such items for the Group internally.

  • (C) Exceptional channel marketing and manufacturing collaboration with international manufacturers.

  • (D) Favorable corporate image

  • a. Sinphar Potent Plus Soft Capsules are made with a unique anti-fatigue formula and was awarded the US invention patent certification in March 2020. (Patent No. US10485836B2)

  • b. Niangjia Lipucan® Capsules developed and produced by Sinphar were awarded the “Nutraceutical Innovation Award” from the Health Food Society of Taiwan in May 2020.

  • c. The research results of Sinphar exclusive patented Poria cocos extract (Lipucan® ) have been published in “Life (Basel) in February 2021. 2021 Feb 1;11(2):111” and “Life (Basel). 2021 Apr 21;11(5):372”.

  • d. Sinphar Tian-Li combined Cistanche Tubulosa extracts and Lipucan into a brain-beneficial product and obtained the patent licensing of “a complex with improving memory” from China, allowing the patent portfolio planning of Sinphar plant extracts to expand into new areas and increase intangible assets in April 2021. (Patent No. ZL 2018 1 0691573.1)

  • e. SynCore Bio’s CysLute EX Capsules received both gold awards at America’s Science & Invention Expo and the ⅩⅤ International Warsaw Invention Show in

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November 2021. It’s the only one of the lutein health supplements in Taiwan that received gold awards.

  • f. The subsidiary, SynCore Bio, was awarded bronze medal in pharmaceutical category for the “2021 Pharmaceutical Technology Research Development Award” held by Ministry of Health and Welfare in December of 2021.

  • g. Sinphar “Memoregain Capsules” was awarded a gold medal in the 2022 Moscow International Salon of Inventions and Innovative Technologies ARCHIMEDES and the U.S. special award. Additionally, it was also the silver medal winner in Monde Selection of International Institute for Quality Selections.

  • h. Sinphar “Memoregain Capsules” was awarded Symbol of National Quality in health food section in September 2022.

  • i. Sinphar “Memoregain Capsules” was awarded the 19th The National Brand Yushan Award in October 2022.

  • j. Sinphar “Memoregain Capsules” was awarded bronze medal in National Healthcare Quality Award in December. It’s the only health food that won the award in 2022.

  • k. Sinphar Potent Plus Soft Capsules was awarded a gold medal and the Poland Special Award in Moscow International Salon of Inventions and Innovative Technologies ARCHIMEDES in March 2024.

  • (E) Powerful R&D Team

The R&D Center hires professors, doctorates, masters, experts, and scholars to be an integral part of the R&D team. The team works to meet business demands, strengthens product R&D and improvement, expand product lines, and develop patentable drugs.

B. Unfavorable Factors

  • (A) Unfavorable operating factors are mainly due to the COVID-19 pandemic and global political and economic situation, and volatility to overall domestic pharmaceutical industry caused by changes to NHI policy and pharmacy channel integration. Specifically as follows:

a. Marketing

  • (a) To control the cost of NHI, the government tightened drug price management and made an unreasonable price difference between domestic drugs and imported drugs. Thus the profits of the Company have been reduced.

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  • (b) As the NHI implemented 2nd generation policy and overall economics downturn,

  • along with the changes to pharmacy operational business model, the Company faces an increased product competition.

b. Manufacturing

  • (a) The categories of products are diversified; therefore, production cost management is relatively higher.

  • (b) These factors dramatically boost production and operating costs: the supply chain disruption caused by the pandemic and Russian-Ukrainian War caused the global raw materials and shipping prices to spike and the persistent increase in domestic salary.

  • (c) It is difficult to train technical talents, causing the lack of skilled workers appear hence influence sales revenue.

  • c. Research and Development

Difficulties in hiring and cultivating talents. Need to establish the long term plan.

  • (B) Specific solutions

  • a. Marketing

  • (a) In addition to developing drugs with high added value, the Company continues to develop new over-the-counter drugs to share the market risk of falling NHI drug prices.

  • (b) Add products in the bioequivalence and high added value categories to increase profit.

  • (c) Utilize the production and marketing network of the subsidiary, Sinphar Tian-Li, to obtain the China drug and non-drug license and product export.

  • (d) Utilize global manufacturing and marketing advantage to convert to flexible product development, and focus on increasing sales channel coverage.

  • (e) Promote to increase the number of visitors to Sinphar Health Park:

Tour groups travel to the Company’s Yilan Health Park and attend health related seminars. Pharmacists and nutritionists regularly share information on health and on using drugs safely, at the same time answer questions related to products. The Company builds consumer loyalty with members through the exchange of conversations, new products samples, and lottery draw games.

  • 122 -

(f) Business-to-consumer marketing:

Due to the changing of shopping habit and consumer sales channel, the Company

develops e-commerce and focuses on brand management to meet the demand.

b. Manufacturing

  • (a) Actively modify production line, achieve foreign certifications, and participate in global professional exhibitions for international OEM opportunities.

  • (b) Signed OEM contracts with U.S. and Japanese manufacturers, which is conducive to introducing technology, improve the utilization rate of equipment, and increase sales performance.

  • (c) Look for opportunities to collaborate with upstream manufacturers domestically and aboard to ensure the quality and stability of the upstream source materials. Additionally, increase safety stocks to prevent material shortage or out-of-stock.

  • (d) Implement smart factories, introduce digital integrated management systems, and automatic tracking record interpretation to reduce human error, and create more efficient production lines.

  • c. Research and Development

As a part of the Company’s global business strategy, the Company continuously introduces new concepts, new technologies and new practices in cooperation with European new drug companies to enhance its international research and development capabilities. The R&D Center of the Company controls the core technology and combines the resources of each subsidiary.

  • 123 -

5.2.2 Production Procedures and Important Uses of Main Products

A. Important Uses of Main Products

Main Products Important Uses
Drugs Treat, repair, prevent, relieve, and antagonize the cause of the disease,
injury, and discomfort to help the body recover.
Functional Food Functional food and health supplements were developed for strengthening
the immune system.
Others 1. Products for topical (cuticle, skin, hair) care, to maintain beauty,
cleanliness, protection and etc.
2. Medical devices and containers for assisting, implementing, and
coordinatingwith treatment.

B. Production Procedures of Main Products

(A) Capsule

==> picture [477 x 171] intentionally omitted <==

(B) Liquid

==> picture [490 x 178] intentionally omitted <==

  • 124 -

5.2.3 Supply Status of Main Materials

The raw materials of the Company are purchased domestically and imported. The Company has a close collaboration relationship with domestic suppliers. Foreign materials are mainly imported through traders. There are many alternative suppliers for this industry, and as a result, vendors are not spread out. Vendors are selected according to transaction requirements and the quality of materials supplied. With decentralized sources, the Company has not experience material supply shortage.

5.2.4 Clients Accounting for 10% of Sales (Purchase) or More in the Last Two Years

  • A. Sales: No client accounted for 10% of sales or more in the last two years.

  • B. Purchase: No supplier accounted for 10% of purchase or more in the last two years.

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5.2.5 Production in the Last Two Years

Unit: NT$ thousand

5.2.5 Production in the 5.2.5 Production in the 5.2.5 Production in the Last Two Years Last Two Years Last Two Years Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand
Year
Output
Major Product		 2023 2022
Category Item Unit Capacity Quantity Amount Capacity Quantity Amount
Drug Oral solution L 1,540,000
1,078,609
115,015
1,540,000
860,045
91,657
Solution for
external use		 L 990,000
879,771
145,174
960,000
930,861
150,477
Injection L 2,500
2,083
89,494
2,500
1,463
61,483
Suppository thousand
suppository		 1,000
320
761
3,000
2,256
5,409
Ointment kg 350,000
372,300
254,012
350,000
316,939
217,026
Soft capsule thousand
capsule		 18,000
25,024
26,096
18,000
19,024
20,142
Hard capsule thousand
capsule		 50,000
44,257
33,962
50,000
23,713
19,581
Tablet thousand
tablet		 800,000
995,363
386,274
720,000
738,240
297,302
Granular
powder		 kg 40,000
35,629
85,932
40,000
94,311
103,646
Eye drop L 100,000
53,908
54,679
100,000
78,745
65,460
Other Note ─ ─ 8,096
─		 ─ 8,096
Subtotal Note ─ ─ 1,199,495
─		 ─ 1,040,279
Functional
Food		 Oral solution L 18,000
9,989
2,577
18,000
37,580
10,084
Soft capsule thousand
capsule		 250,000
75,852
191,542
250,000
81,231
195,489
Gummy kg ─ ─ ─ 9,000
1,195
409

Hard capsule		 thousand
capsule		 423,000
45,790
84,944
423,000
37,914
60,454
Tablet thousand
tablet		 700,000
57,470
76,695
700,000
89,331
120,158
Granular
powder		 kg 4,000,000
250,063
201,550
4,000,000
241,237
199,180
Other Note ─ ─ ─ ─ ─ 907
Subtotal Note ─ ─ 557,308
─		 ─ 586,681
Others Subtotal Note ─ ─ 140,671
─		 ─ 141,519
Total ─ ─ 1,897,474
─		 ─ 1,768,479

Note: The units of measure for the major products are different; thus the amount cannot be summed up.

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5.2.6 Sales in the Last Two Years

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand
Year
Sales
Main Product		 2023 2022
Domestic Export Domestic Export
Category Item Unit Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Drug Injection L 2,322
91,732
-		 - 2,065
86,946
-		 -
Tablet thousand
tablet		 937,742
640,223
9,785
13,258
790,689
523,080
20,080
39,657
Hard capsule thousand
capsule		 42,203
50,374
116
766
28,285
37,479
72
279
Soft capsule thousand
capsule		 20,520
36,110
-		 - 21,660
45,928
-		 -
Granular
powder		 kg 26,378
98,814
1
5
34,281
112,957
9,578		 113,619
Eye drop L 65,863
81,638
159
633
70,792
82,801
240
618
Ointment kg 364,883
542,522
2,559
3,853
356,097
509,518
2,370
3,716
Internal
solution		 L 1,038,481
133,883
7,083
1,564
873,700
115,005
5,483
1,077
Solution for
external use		 L 829,338
202,672
4,204
3,557
892,426
212,169
6,237
3,133
Suppository thousand
suppository		 535
1,956
119
420
1,907
7,138
393
1,355
Subtotal Note - 1,879,924
-		 24,056
-		 1,733,021
-		 163,454
Functional
Food		 Internal
solution		 L 11,807
4,108
544
284
10,571
3,758
91
40
Soft Capsule thousand
capsule		 72,912
327,384
47
332
82,420
349,467
14
92
Gummy kg - - - - - - 1,195
474
Tablet thousand
tablet		 53,345
106,316
2,202
3,725
87,195
154,811
2,918
4,903
Hard capsule thousand
capsule		 28,600
215,954
12,216
24,761
25,330
118,258
9,558
15,636
Granular
powder		 kg 67,908
121,911		 162,245 143,607
64,724
92,452		 146,645 120,196
Subtotal Note - 775,673
-		 172,709
-		 718,746
-		 141,341
Others Subtotal Note - 110,464
-		 108
-		 100,031
-		 58
Total - 2,766,061
-		 196,873
-		 2,551,798
-		 304,853
Net Sales 2,962,934 2,856,651

Note: The units of measure for the major products are different; thus the amount cannot be summed up.

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5.3 Employees’ status from the two most recent fiscal year up to the printing date of this annual report

Unit:people;%
As of March
31,2024
62
320
549
931
41.5
10.9
1.4
9.5
57.3
24.4
7.4
Year 2022 2023 As of March
31,2024
Number of
Employees		 Executives 55 62 62
Production Personnel 335 325 320
Other Employees 551 550 549
Total 941 937 931
Average Age 40 40.5 41.5
Average Years of Service 10.4 10.8 10.9
Education (%) Ph.D. 1.5 1.4 1.4
Master 9.4 9.5 9.5
Bachelor’s Degree 55.7 57.0 57.3
Senior High School 24.8 24.5 24.4
Below Senior High
School		 8.6 7.6 7.4

5.4 Environmental Protection Expenditure

5.4.1 Total Losses

Any losses suffered by the Company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in the environmental inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions):

None

5.4.2 Countermeasures and Estimate Amount for Future Environmental Protection

As the result of the incident, the Company established wastewater treatment plant to collect the wastewater (sewage) during production. The Company will submit modification to the permit and the equipment at the same time. The estimated cost of commission for a permit modification is nearly NT$120,000. Each environmental protection equipment has been maintained regularly since its purchase. In addition to complying with government regulations and submitting inspection reports quarterly, the Company tests the equipment aperiodically. The Company will strengthen personnel training, calibrate the instruments, and comply with the updates on environmental regulations.

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5.5 Labor Relations

5.5.1 Employee welfare, advanced studying, training, implementation of the retirement system, collective agreement, and protection of employee rights

  • A. In order to coordinate labor-management relations, promote labor-management cooperation, and improve work efficiency, especially in terms of labor conditions and employee rights, such as hiring, working hours, attendance, leave, rewards and demerits, promotions, etc., in addition to complying with relevant government laws and regulations, the Company pays labor insurance and national health insurance in accordance with the law, and allocates employee welfare funds and retirement reserves, organizes employee welfare committees and retirement reserve supervision committees, and contributes to employee benefits and retirement services as a whole. Labor-management meeting is held at least once every three months to listen to employee feedback and seek solutions, so labor-management relations have always been harmonious.

  • B. To provide employees with financial stability, the Company has complied with the laws: employees who started working on or after July 1, 2005 and the employees who started working before July 1, 2005 that choose the new labor pension system, their pension uses defined contribution plan. The amount of pension allocated by the Company every month shall not be less than six percent of the employee’s salary. For an employee who voluntarily contributes to the pension, the Company shall allocate the pension to the Bureau of Labor Insurance according to the employee’s instructed percentage of salary and deposit the amount in an individual retirement account. For the employee that was employed before July 1, 2005 and chooses to continue using the old labor pension system after July 1, 2005 and the employee that was employed before July 1, 2005 and converted to the new labor pension system after July 1, 2005, the Company shall contribute to the pension based on their years of employment and deposit it to the account of the Department of Trusts, Bank of Taiwan. The pension shall be calculated in accordance with Labor Pension Act and be given to retired employees when they retire. As of December 31, 2023, the estimated allocation of defined benefit plan for the next year is NT$834,000. The foreign subsidiary shall pay for social insurance like healthcare, pension, and retirement every month in accordance with local government regulations.

  • C. Other benefits

  • (a) Employee benefits

In addition to regularly holding events for employees’ to de-stress at work, Employee Benefits Committee provides the following:

a. Insurance: The Company has purchased group accident insurance for employees.

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b. Allowance: Including weddings and funerals, scholarships and grants for

employees’ children, employees’ activities, and travels.

  • c. Bonus and gifts: Providing holiday bonuses, voucher for birthday and Labor Day,

and Moon Festival gift box.

d. Travel aboard: For those employees who work in the office and who work for ten years, twenty years, and thirty years, the Company provides a travel allowance for overseas travel.

  • e. The Company holds a monthly conference and dines together aperiodically. Supervisor may invite new employee to a meal to hear feedback and improve inclusiveness.

  • (b) Education and training system

The Company encourages employees to continue learning and sharing experiences, also improves technical talent development. Course schedule below:

Training Category Training Category Training Category Content of Course
New
Employee
Orientation		 General
Employee		 General
Training		 Occupational safety and health training, Good Manufacturing
Practice (PIC/S GMP concept), administration, and general
regulation of the factory
Professional
Training
Each department provides professional training to new employees
before theybegin working.
Sales
Representative		 General
Training		 Training for occupational safety and health, administration,
salesperson marketing ethics and laws. Visiting and receiving an
introduction to factory

Professional
Training
Sales and marketing course, accounting course, fundamental
pharmacology, introduction to quality certification, health food and
nutritional science, introduction to products, relevant courses of
schedule/ client/product management
Supervisors General
Training		 Occupational safety and health training, PIC/S GMP concept,
personnel administration, general management regulation of plant
area,relevant courses of environmental safety
Training for
Supervisors
Introduction to group and supervisors, personnel system, official
documents handling
On-the-job
Training		 Internal Training Annual training plan for each department (implemented monthly),
trainingbyequipment manufacturer,annual team buildingretreat
External Training Professional training/ announcement/ seminar/ certification course
Supervisors Encourage supervisors to enroll in in-service master’s program
Project Training Large-scale training and law training will be held annually.
  • (c) To protect labor rights and facilitate the communication between labor and

management, the Company has established a company union. This strengthens labor-management relations and facilitates changes to workplace conditions and provides benefits to union members. Matters about flexible working hours, overtime, shift work, and women's night work and overtime are brought up to the union and the Company will implement them after approval.

  • 130 -

  • (d) Over the years, the Company systematically promotes employee health and wellness and provides a healthy workplace. Below are some positive results.

    • ⅰ. Weight loss competition amongst employees

    • ⅱ. The Company establishes a smoking area and encourages employees to quit smoking and has obtained the tobacco control badge by the Bureau of Health Promotion. Also, the Company provides health checks annually to protect employees’ well-being.

    • ⅲ. Continues to promote zero-accident workplace and implement inter-departmental contest for workplace safety awareness.

    • ⅳ. The Company provides recreational facilities such as a gym, a golf driving range, cherry blossom park, crab park, and spirit café. Also, the Company, in partnership with Public Health Bureau, holds walks, provides gift certificates, and sponsors Yilan Marathon to promote employees’ and local residence’s health.

    • ⅴ. Received an award of excellence for breastfeeding room contest by Public Health Bureau, Yilan County.

    • ⅵ. The Company cares about every employee and is a healthy sustainable workplace. The Company was a receiver of the national excellence award of the national excellence award for healthy workplace held by the Health Promotion Administration and Council of Labor Affairs.

  • 5.5.2 Any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to labor disputes (including labor inspection results found in violation of the Labor Standards Act, specifying the disposition dates, disposition reference number, the articles of law violated, and the content of the dispositions)

None

5.5.3 Countermeasures and Estimate Amount for Labor Disputes

There has not been a loss due to labor disputes since the Company’s establishment, and the Company will continue to maintain labor management harmony and a good working environment. The Company has education and training plans to improve the employees’ knowledge and experience as the Company grows.

  • 131 -

5.6 Information Security Management

5.6.1 State the information security risk management framework, the information security policy, the specific management plan, and the resources invested in the information security management, etc.

[Information Security Policy]

To improve information security policy, to strengthen and ensure the security of information, system, device, and communication network, and to reduce the risks of information assets being stolen, improperly used, leaked, tempered with, damaged due to human errors and/or natural disaster. The Company has complied with the requirement of Information Security Management System (ISO 27001) to establish relevant organization, management plan, and notification procedure to ensure the confidentiality, integrity, and availability of information assets.

==> picture [133 x 67] intentionally omitted <==

[Information Security Management Organization]

Information Security Management Committee

Responsible for establishing and implementing the information security management system of the Company.

Department of Information Technology

Responsible for implementing the education and training of information security and announcing information security policy.

Department of Human Resources

In charge of arranging and tracking the implementation of the education and training of information policy.

==> picture [284 x 201] intentionally omitted <==

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

Convener, Deputy
Convener,
Execeutive
Secretary
Information
Security
Management
Committee
Information
Document Control
Security Incident Team Audit Team
Response Team
----- End of picture text -----

  • 132 -

[Information Security Management Program]

Comply with the laws

The relevant acts and regulations of “Information Standard ISO/IEC 27001” shall be

complied with when conducting business.

Establish information security organization

Establish an information security management committee in charge of establishing and implementing the information security management system of the Company.

Implement education and training of information security

Implement education and training of information security related to business to announce information security policy and relevant regulations.

Application of resource

Establish an information security management mechanism that considers information security before utilizing a new service or system, and to optimize the distribution and use of limited resource to prevent danger to system security and resolve key security problems.

Establish physical security monitoring

Establish physical environmental security protective device and maintain it regularly.

Establish authorization management

Clarify the access permission of information systems, internet service, and sensitive information.

Sustainable business operation

Establish a sustainable operation plan of information security and practical exercise for it to ensure the Company can continue to operate after suffering an incident.

Continuous improvement

Formulate and implement an internal audit of information security to implement the

information security management system, and implement corrective and preventive actions for outstanding issues.

Establish information security culture

All personnel have the responsibility to maintain information security and shall comply with the relevant regulations of information security management.

  • 133 -

[Information Security Notification Procedure]

The information security notification procedure of the Company is as below. The notification and treatment of information security cases shall comply with the regulation of the procedure.

==> picture [526 x 297] intentionally omitted <==

[Resources Invested in Information Security Management]

Dedicated personnel

Establish an information security management committee that convenes management

review meeting regularly to assess relevant information security issues.

Relevant certification

The Company obtained the ISO 27001 certificate. There is no significant deficiency in information security auditing.

Education and training

Conduct information security policy announcement for new employees and social engineering drill regularly.

  • 5.6.2 Any losses suffered by the Company in the most recent fiscal year and up to the annual report publication date due to significant information security cases, its possible influences, and countermeasures. If it can’t be reasonably estimated, the factor that can’t be reasonably estimated shall be illustrated.

None

  • 134 -

5.7 Important Contract

Agreement Counterparty Period Major Contents Restrictions
Exclusive License
Agreement		 National Health Research
Institutes		 August 8, 2008 until the
longest term of the
granted patents		 Authorized global development,
sale, and relevant rights of SB01,
SB02.		 None
Exclusive License
Agreement		 Medigene AG Germany May 18, 2011 until 10
years after product
launch		 Authorized the rights of exclusive
manufacturing and sale of
Veregen® in Taiwan. Also,
increased the exclusive license
areas in Asia (excluding China
and South Korea), New Zealand,
and Australia.		 None
Exclusive License
Agreement		 MacuCLEAR Inc. U.S. October 27, 2011 until
the longest term of the
granted patents		 Authorized the rights of exclusive
manufacturing and sale of SB04
in Asia and Australia.		 None
Exclusive License
Agreement		 AJU Pharm South Korea May 27, 2015 until
terminated by mutual
agreement		 Authorized exclusive sales rights
of SB04 in South Korea and the
sole commercialization rights
after products are launched.		 None
Technology and
Intellectual
Property Rights
Transfer
Agreement		 Medigene AG Germany From December 17,
2015		 Obtain complete the technology
platform and technology and
intellectual property rights of
EndoTAG® , including
developing a different indication
of the original item, the new
indication of the new item, and
development rights of the new
technology platform derivative.		 None
Co-development
Agreement		 Y-YBar Switzerland From November 8,
2016		 Co-development of new FLoM-S
technology and its
commercialization.		 None
Topical Ointment
Technical
Cooperation		 Mitsui Pharmaceuticals Inc.
Japan		 From July 15, 1997 Technology provided by Mitsui None
Distribution
Agreement		 Shou Chan Industrial Co.,
Ltd. Macau		 August 18, 2015 until
terminated by mutual
agreement		 Shou Chan Industrial Co., Ltd.
Macau is authorized
non-exclusive distribution rights
of Veregen® in Macau.		 None
Distribution
Agreement		 Watson’s Personal Care
Stores (Taiwan) Co., Limited		 January 1, 2024-
Decemeber 31, 2024		 Selling functional products None
Distribution
Agreement		 President Drugstore Business
Corporation		 January 1 2024-
December 31, 2024		 Selling functional product None
Commission
Agreement		 Company H From March 31, 2018 Commissioned products None
Commission
Agreement		 Company G From April 15, 2018 Commissioned products None
  • 135 -
Agreement Counterparty Period Major Contents Restrictions
Commission
Agreement		 Company E From February 12, 2015 Commissioned products None
Commission
Agreement		 Company D From January 1, 2015 Commissioned products None
Commission
Agreement		 Company A From November 1,
2010		 Commissioned products None
Commission
Agreement		 Takeda Pharmaceuticals
Taiwan Ltd.		 From July 1, 2003 Commissioned products None
Commission
Agreement		 Taiwan Shionogi & Co., Ltd. From February 7, 2012 Commissioned products None
Long-term Loan
Agreement		 Bank of Taiwan Lou Tung
Branch		 October 17, 2023-
October 17, 2025		 Land and construction mortgage
loan		 None
Long-term Loan
Agreement		 Bank of Taiwan Lou Tung
Branch		 October 29, 2013-
October 29, 2028		 Land and construction mortgage
loan		 None
Long-term Loan
Agreement		 Bank of Taiwan Lou Tung
Branch		 July 27, 2020-
July 27, 2027		 Machinery mortgage loan None
Long-term Loan
Agreement		 First Commercial Bank Su'ao
Branch		 December 6,
2011-December 6, 2026		 Land and construction mortgage
loan		 None
Long-term Loan
Agreement		 First Commercial Bank Su'ao
Branch		 December 8, 2023-
December 8, 2025		 Credit and secured loan None
Long-term Loan
Agreement		 Mega International
Commercial Bank Yilan
Branch		 January 30, 2023-
January 29, 2025		 Land and construction mortgage
loan		 None
Long-term Loan
Agreement		 Taiwan Business Bank Co.,
Ltd. Su'ao Branch		 March 28, 2023-
March 28, 2025		 Land and construction mortgage
loan		 None
  • 136 -

Ⅵ. Financial Information

6.1 Most Recent Five Years Concise Balance Sheet and Statement of Comprehensive Income

6.1.1 Condensed Balance Sheet and Composite Income Statement-Based on IFRS

A. Condensed Balance Sheet

Unit: NT$ thousand

Year
Item		 Year
Item		 Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) 2024 as of
March 31
(Note 1)
2019 2020 2021 2022 2023
Current Assets 2,261,999
2,539,635
2,703,349
2,778,451
2,648,605
2,646,740
Property, Plant, and
Equipment		 3,301,829
3,266,623
3,203,902
3,119,747
3,228,305
3,275,862
Intangible Assets 190,353
157,530
117,296
86,983
71,823
68,895
Other Assets 162,343
163,127
196,384
200,010
302,348
351,023
Total Assets 5,916,524
6,126,915
6,220,931
6,185,191
6,251,081
6,342,520
Current
Liabilities		 Before
Distribution
1,155,803
1,329,897
1,534,499
1,445,911
1,204,694
1,191,399
After
Distribution
1,189,348
1,363,441
1,568,043
1,613,633
(Note 2)
–
Non-current
Distribution		 1,557,910
1,653,195
1,609,249
1,522,432
1,648,513
1,628,511
Total
Liabilities		 Before
Distribution
2,713,713
2,983,092
3,143,748
2,968,343
2,853,207
2,819,910
After
Distribution
2,747,258
3,016,636
3,177,292
3,136,065
(Note 2)
–
Equity Attributable to
Owners of the Parent		 2,783,151
2,744,430
2,722,239
2,930,230
3,098,338
3,223,436
Capital Stock 1,677,221
1,677,221
1,677,221
1,677,221
1,677,221
1,677,221
Capital Surplus 959,019
941,391
963,516
929,972
924,140
924,140
Retained
Earnings		 Before
Distribution
275,809
244,809
210,681
444,405
634,148
744,526
After
Distribution
242,264
211,265
177,137
276,683
(Note 2)
–
Other Equity Interest (128,898)
(118,991)
(129,179)
(121,368)
(137,171)
(122,451)
Treasury Stock – – – – – –
Non-controlling
Interest		 419,660
399,393
354,944
286,618
299,536
299,174
Total
Equity		 Before
Distribution
3,202,811
3,143,823
3,077,183
3,216,848
3,397,874
3,522,610
After
Distribution
3,169,266
3,110,279
3,043,639
3,049,126
(Note 2)
–

Note 1: The financial data for 2019-2023 and Q1 in 2024 have been certified or audited by CPA.

Note 2: The proposal for 2023 earnings distribution has not been resolved by Shareholders’ Meeting yet.

  • 137 -

B. Condensed Individual Balance Sheet

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand
Year
Item		 Financial Summary for The Last Five Years (Note 1)
2019 2020 2021 2022 2023
Current Assets 1,425,833
1,481,192
1,644,160
1,994,225
2,037,228
Property, Plant, and
Equipment		 2,109,145
2,062,419
2,065,639
2,020,278
2,279,559
Intangible Assets 39,000
41,162
35,028
28,466
20,711
Other Assets 1,706,103
1,699,279
1,642,520
1,557,252
1,506,337
Total Assets 5,280,081
5,284,052
5,387,347
5,600,221
5,843,835
Current
Liabilities		 Before
Distribution		 983,105
929,263
1,090,824
1,179,327
1,122,906
After
Distribution		 1,016,650
962,807
1,124,368
1,347,049
(Note 2)
Non-current Liabilities 1,513,825
1,610,359
1,574,284
1,490,664
1,622,591
Total
Liabilities		 Before
Distribution		 2,496,930
2,539,622
2,665,108
2,669,991
2,745,497
After
Distribution		 2,530,475
2,573,166
2,698,652
2,837,713
(Note 2)
Equity Attributable to
Owners of the Parent		 2,783,151
2,744,430
2,722,239
2,930,230
3,098,338
Capital Stock 1,677,221
1,677,221
1,677,221
1,677,221
1,677,221
Capital Surplus 959,019
941,391
963,516
929,972
924,140
Retained
Earnings		 Before
Distribution		 275,809
244,809
210,681
444,405
634,148
After
Distribution		 242,264
211,265
177,137
276,683
(Note 2)
Other Equity Interest (128,898)
(118,991)
(129,179)
(121,368)
(137,171)
Treasury Stock – – – – –
Non-controlling Interest – – – – –
Total Equity Before
Distribution		 2,783,151
2,744,430
2,722,239
2,930,230
3,098,338
After
Distribution		 2,749,606
2,710,886
2,688,695
2,762,508
(Note 2)

Note 1: The financial data for 2019-2023 have been certified and audited by CPA.

Note 2: The proposal for 2023 earnings distribution has not been resolved by the Shareholders’ Meeting yet.

  • 138 -

C. Condensed Composite Income Statement-Based on IFRS

Unit: NT$ thousand

Year
Item		 Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) Financial Summary for The Last Five Years (Note 1) 2024 as of
March 31
(Note 1)
2019 2020 2021 2022 2023
Operating Revenue 2,394,589
2,388,452
2,433,516
2,856,651
2,962,934
777,396
Gross Profit 940,845
875,533
888,707
1,091,300
1,091,243
318,523
Operating Income
(Loss)		 (146,970)
(122,197)
(182,770)
197,335
286,056
73,379
Non-operating Income
and Expenses		 60,264
4,424
(1,755)
47,711
19,652
5,608
Income (Loss) Before
Tax		 (86,706)
(117,773)
(184,525)
245,046
305,708
78,987
Net Income (Loss) from
Continuing Operation		 (147,922)
(172,559)
(204,959)
164,174
356,776
104,758
Loss from Discontinued
Operation		 – – – – – –
Net Income (Loss) (147,922)
(172,559)
(204,959)
164,174
356,776
104,758
Other Comprehensive
Income (Income After
Tax)		 (73,687)
9,747
(10,502)
17,830
(23,846)
19,978
Total Comprehensive
Income		 (221,609)
(162,812)
(215,461)
182,004
332,930
124,736
Net Income Attributable
to Owners of the Parent		 13,961
(28,510)
(38,135)
224,644
375,170
110,378
Net Income Attributable
to Non-controlling
Interest		 (161,883)
(144,049)
(166,824)
(60,470)
(18,394)
(5,620)
Comprehensive Income
Attributable to Owners
of the Parent		 (39,242)
(21,093)
(44,316)
241,535
355,631
125,098
Comprehensive Income
Attributable to
Non-controlling Interest		 (182,367)
(141,719)
(171,145)
(59,531)
(22,701)
(362)
Earnings Per Share 0.08
(0.17)
(0.23)
1.34
2.24
0.66

Note 1: The financial data for 2019-2023 and Q1 in 2024 have been certified and audited by CPA.

Note 2: Based on weighted average shares outstanding in each year.

  • 139 -

D. Condensed Composite Individual Income Statement-Based on IFRS

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand Unit: NT$ thousand
Year
Item		 Financial Summary for The Last Five Years (Note 1)
2019 2020 2021 2022 2023
Operating Revenue 2,128,200
2,148,886
2,157,258
2,511,206
2,717,210
Gross Profit 812,010
770,047
765,528
933,995
1,033,016
Operating Income (Loss) 239,985
248,357
227,081
309,609
339,166
Non-operating Income and Expenses (168,204)
(224,472)
(249,635)
(23,217)
(27,905)
Net Income (Loss) Before Tax 71,781
23,885
(22,554)
286,392
311,261
Net Income (Loss) from Continuing
Operation		 13,961
(28,510)
(38,135)
224,644
375,170
Loss from Discontinued Operation –
–
–
–
–
Net Income (Loss) 13,961
(28,510)
(38,135)
224,644
375,170
Other Comprehensive Income
(Income After Tax)		 (53,203)
7,417
(6,181)
16,891
(19,539)
Total Comprehensive Income (39,242)
(21,093)
(44,316)
241,535
355,631
Net Income Attributable to Owners
of the Parent		 13,961
(28,510)
(38,135)
224,644
375,170
Net Income Attributable to
Non-controllingInterest		 –
–
–
–
–
Comprehensive Income Attributable
to Owners of the Parent		 (39,242)
(21,093)
(44,316)
241,535
355,631
Comprehensive Income Attributable
to Non-controllingInterest		 –
–
–
–
–
Earnings Per Share 0.08
(0.17)
(0.23)
1.34
2.24

Note 1: The financial data for 2019-2023 have been certified and audited by CPA.

Note 2: Based on weighted average shares outstanding in each year.

6.1.2 Important Matters Influenced the Consistency of Preceding Financial Statements

None

6.1.3 CPAs’ Opinion from 2019-2023

Year
2019
2020
2021
2022
2023		 Name Accounting Firm Audit Opinion
Qing Chen and Jin Shu Pan Crowe (TW) CPAs Unqualified Opinion
Qing Chen and Jin Shu Pan Crowe (TW) CPAs Unqualified Opinion
Ya Quan Zhang and Jin Shu Pan Crowe (TW) CPAs Unqualified Opinion
Ya Quan Zhang and Jin Shu Pan Crowe (TW) CPAs Unqualified Opinion
Ya Quan Zhang and Jin Shu Pan Crowe (TW) CPAs Unqualified Opinion
  • 140 -

6.2 Most Recent Five Years Financial Analysis

6.2.1 Financial Analysis


Item		 Year Financial Analysis for The Last Five Years Financial Analysis for The Last Five Years Financial Analysis for The Last Five Years Financial Analysis for The Last Five Years Financial Analysis for The Last Five Years 2024 as of
March 31
(Note 1)
2019 2020 2021 2022 2023
Financial
Structure
(%)		 Debt Ratio 45.87
48.69
50.54
47.99
45.64
44.46
The Ratio of
Long-term Capital
to Property, Plant,
and Equipment		 144.18
146.85
146.27
151.91
156.32
157.24
Solvency
(%)		 Current Ratio 195.71
190.96
176.17
192.16
219.86
222.15
Quick Ratio 131.99
125.40
120.42
133.77
143.63
144.02
Interest Earned
Ratio		 -2.75
-3.80
-6.44
9.81
10.07
9.88
Operating
Performance		 Accounts
Receivable
Turnover (times)		 4.05
4.46
4.65
4.47
4.46
4.69
Average Collection
Period		 90.12
81.84
78.49
81.66
81.84
77.83
Inventory Turnover
(times)		 2.76
2.42
2.24
2.46
2.37
2.19

Accounts Payable
Turnover (times)		 5.05
5.04
4.62
4.16
3.84
3.44
Average Days in
Sales		 132.25
150.83
162.95
148.37
154.01
166.67
Property, Plant, and
Equipment
Turnover (times)
0.72
0.73
0.75
0.90
0.93
0.96
Total Assets
Turnover (times)		 0.41
0.40
0.39
0.46
0.48
0.49
Profitability Return on Total
Assets (%)		 -2.19
-2.54
-3.00
3.01
6.17
7.11
Return on
Stockholders’
Equity(%)		 -4.47
-5.44
-6.59
5.22
10.79
12.11
Pre-tax Income to
Paid-in Capital (%)		 -5.17
-7.02
-11.00
14.61
18.23
18.84
Profit Ratio (%) -6.18
-7.22
-8.42
5.75
12.04
13.48
Earnings Per Share
(NTD)		 0.08
-0.17
-0.23
1.34
2.24
0.66
Cash Flow Cash Flow Ratio
(%)		 (Note)
11.01
8.83
29.44
24.60
4.97
Cash Flow
Adequacy Ratio
(%)		 40.45
34.51
39.22
53.35
56.97
72.94
  • 141 -
Cash Reinvestment
Ratio (%)		 -1.48
1.67
1.49
5.51
1.71
0.77
Leverage Operating Leverage
-6.56
-7.82
-5.55
6.48
4.41
4.87
Financial Leverage 0.86
0.83
0.88
1.16
1.13
1.14
Note: The 2019 cash flow statement had a great amount of net cash flow from operating activity, and thus it cannot be
counted and analyzed.
Analysis of financial ratio differences for the last two years:
1. Return on total assets, return on stockholders’ equity, profit ratio, and earnings per share are more than corresponding
period due to the increase in the net income after tax in this period.
2. Pre-tax income to paid-in capital is more than corresponding period due to the increase in the net income before tax in
this period.
3. Cash reinvestment ratio is less than corresponding period due to the decrease in cash flow from operating activities and
the increase in net property, plant, and equipment.
4. Operating leverage is less than corresponding period due to the increase in net operating income in this period.
  • 142 -

Individual Financial Analysis

Individual Financial Analysis
Item Year Financial Analysis for The Last Five Years
2019 2020 2021 2022 2023
Financial
Structure
(%)		 Debt Ratio 47.29 48.06 49.47 47.68 46.98
The Ratio of Long-term
Capital to Property, Plant,
and Equipment		 203.73 211.15 208.00 218.83 207.10
Solvency
(%)		 Current Ratio 145.03 159.39 150.73 169.10 181.42
Quick Ratio 95.85 98.93 96.97 113.84 115.39
Interest Earned Ratio 4.43 2.15 -0.01 12.45 10.69
Operating
Performance		 Accounts Receivable
Turnover (times)		 4.16 4.57 4.61 4.33 4.44
Average Collection Period 87.74 79.87 79.18 84.3 82.21
Inventory Turnover (times) 3.30 2.78 2.52 2.69 2.55
Accounts Turnover
Payable (times)		 4.93 5.01 4.69 4.22 3.69

Average Days in Sales		 110.60 131.29 144.84 135.69 143.14
Property, Plant, and
Equipment Turnover
(times)		 1.01 1.03 1.05 1.23 1.26
Total Assets Turnover
(times)		 0.41 0.41 0.40 0.46 0.47
Profitability Return on Total Assets (%) 0.59 -0.22 -0.38 4.45 7.01
Return on Stockholders’
Equity (%)		 0.49 -1.03 -1.40 7.95 12.45
Pre-tax Income to Paid-in
Capital (%)		 4.28 1.42 -1.34 17.08 18.56
Profit Ratio (%) 0.66 -1.33 -1.77 8.95 13.81
Earnings Per Share (NTD) 0.08 -0.17 -0.23 1.34 2.24
Cash Flow Cash Flow Ratio (%) 29.95 40.05 28.93 39.57 36.73
Cash Flow Adequacy
Ratio (%)		 173.62 181.69 173.79 162.55 127.33
Cash Reinvestment Ratio
(%)		 4.46 6.01 4.96 7.28 3.81
Leverage Operating Leverage 3.34 3.29 3.69 3.22 3.17
Financial Leverage 1.10 1.09 1.11 1.09 1.10
Analysis of financial ratio differences for the last two years:
1. Return on total assets, return on stockholders’ equity, profit ratio, and earnings per share are more than corresponding period due
to the increase in the net income after tax in this period.
2. Cash flow adequacy ratio is less than corresponding period due to the increase in the payments for purchasing fixed assets and
cash dividend distribution.
3. Cash reinvestment ratio is less than corresponding period due to the decrease in cash flow from operating activities and the
increase in net property, plant, and equipment.
  • 143 -

Note 1: The data has been audited by CPA.

  • Note 2: The calculation formulas of the table are as below:

1. Financial Structure

  • (1) Debt ratio = Total liabilities / Total assets

  • (2) Ratio of long-term capital to property, plant and equipment = (Total equity + Non-current liabilities) / Net property, plant and equipment

  • Solvency

  • (1) Current ratio = Current assets / Current liabilities

  • (2) Quick ratio = (Current assets − Inventory − Prepaid expenses) / Current liabilities

  • (3) Interest earned ratio = Net income before tax and interest / Interest expense

  • Operational Performance

  • (1) Accounts receivable turnover (including accounts receivable and notes receivable resulting from the business operation) = Net sales / Average balance of account receivable (including accounts receivable and notes receivable resulting from the business operation)

  • (2) Average collection period = 365 / Accounts receivable turnover

  • (3) Inventory turnover = Cost of goods sold / Average inventory

  • (4) Account payable turnover (including accounts payable and notes payable resulting from the business operation) = Cost of goods sold / Average account payable (including accounts payable and notes payable resulting from the business operation)

  • (5) Average days in sales = 365 / Inventory turnover

  • (6) Property, plant, and equipment turnover = Net sales / Net property, plant, and equipment

  • (7) Total assets turnover = Net sales / Average total assets

  • Profitability

  • (1) Return on total assets = [Net income + Interest expense × (1 − Tax rate)] / Average total assets

  • (2) Return on stockholders’ equity = Net income / Average net shareholders’ equity

  • (3) Profit ratio = Net income / Net sales

  • (4) Earnings per share = (Income attributable to owners of the parent − Preferred stock dividend) / Weighted average stock shares issued

5. Cash Flow

  • (1) Cash flow ratio = Net cash flow from operating activities / Current Liabilities

  • (2) Cash flow adequacy ratio = Net cash flow from operating activities / (Capital expenditure + Inventory increase + Cash dividend) within five years

  • (3) Cash reinvestment ratio = (Net cash flow from operating activities − cash dividend) / (Gross property, plant, equipment + Long-term investment + Other non-current assets + Working capital)

  • Leverage

  • (1) Operating leverage = (Net operating income − Operating variable cost and expense) / Operating income

  • (2) Financial leverage = Operating income / (Operating income − Interest Expense)

  • 144 -

6.3 Audit Committee’s Review Report in the Most Recent Year

Please refer to page 145 of the annual report.

6.4 Consolidated Financial Statements in the Most Recent Year

Please refer to page 146 of the annual report.

6.5 Parent Company Only Financial Statement in the Most Recent Year Audited by CPA

Please refer to page 213 of the annual report.

6.6 If the Company or Related Companies Experienced Financial Turnover Difficulties up to the Printing Date of this Annual Report

None

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2023 Business Report, Financial Statements (including Consolidated Financial Statements), and Proposal for Earnings Distribution. The above-mentioned Financial Statements have been audited by CPAs, Ya Quan Zhang and Jin Shu Pan of Crowe (TW) CPAs and they have issued an audit report. The Business Report, Financial Statements, and Proposal for Earnings Distribution have been audited and determined to be no inappropriateness by the Audit Committee. According to Article 14 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

Sinphar Pharmaceutical Co., Ltd. Audit Committee

Convener: Ching Lung Lee

March 6, 2024

  • 145 -

Sinphar Pharmaceutical Co., Ltd.

Representation Letter

The entities that are required to be included in the combined financial statements of Sinphar Pharmaceutical Co., Ltd. as of and for the year ended December 31, 2023 under the Criteria Governing the Preparation of Affiliation Report, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10 “ Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Sinphar Pharmaceutical Co., Ltd. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

Sinphar Pharmaceutical Co., Ltd.

By

Mr. Chih Wen Lee Chairman

March 6, 2024

  • 146 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders of

Sinphar Pharmaceutical Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Sinphar Pharmaceutical Co., Ltd. and its subsidiaries (the “Group”), which comprise the consolidated balance sheet as of December 31, 2023 and 2022 and the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2023 and 2022, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompany consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2023 and 2022, in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulation Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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 for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2023 are stated as follows:

Cash and Cash Equivalents

As of December 31, 2023, the cash and cash equivalent of the consolidated balance sheet was NT$ 1,074,489 thousand, which represented 17% of the Group’s consolidated total assets. As the Group is still in the research and development phase, it is necessary to maintain sufficient cash and cash equivalent balance to support future research and development costs. However, it is taken as a key audit matters due to cash and cash equivalent is a high-risk item.

  • 147 -

Our key audit procedures in response

Our procedures in relation to cash and cash equivalent included:

  1. Evaluate the design and implementation of internal control related to cash and cash equivalent, performed test count of cash on hand, checked the bank deposit balance with the bank statements, and send bank confirmation letter in accordance with the Auditing Standards No.505. “External confirmation”.

  2. Performed a test audit of the supporting documents for large inflows and outflows of cash and bank deposits, paying attention to changes in cash and bank deposits immediately prior to and after the balance sheet date.

Inventory Valuation

Please refer to Note 4(8.) and 5(2.) in the accompanying consolidated financial statements for related disclosures of the Group’s valuation of inventory accounting policies and critical accounting estimate and assumption.

The Group mainly engages in the production and sales of various types of drugs and food supplements. As the regulations to the pharmaceutical industry cause the cost to increase and meanwhile the selling prices are less likely to be affected as they are covered by the health insurance system. Furthermore, the price of food supplement inventory fluctuates due to market competition and the impacts aroused from advertisements. Management assesses that the net realizable value of inventory involves material judgment. Hence, it is taken as a one of the key audit matters.

Our key audit procedures in response

Our procedures in relation to inventory valuation included:

  1. Understand and evaluate the design and implementation of the internal control in relation to inventory.

  2. Perform inventory counts, to identify if there are any inventories which are obsolete or damaged.

  3. Obtain Inventory aging reports to analyses the changes in inventory age, and check the records of

  4. inventory changes to verify the correctness of inventory.

  5. Evaluate the reasonableness of its inventory valuation policy of unmarketable items and obsolescence, and check the latest inventory sales price to evaluate the reasonableness of the net realizable value of the inventory.

  6. Obtain evaluation documents for subsequent measurement of inventories and assess whether they have been measured in accordance with established accounting policies and review if the management’s disclosure on the evaluation of inventory is presented fairly.

Revenue Recognition

Please refer to Note 4(17.) and 5(2.) in the accompanying consolidated financial statements for related disclosures of the Group’s revenue recognition accounting policies and critical accounting estimate and assumption.

Some products of the Group provide discounts or sales incentives based on the terms of the sales contract. Since the recognition of the revenue is measured on the net basis of the related discounts and incentives, we consider the revenue recognition as a key audit matter.

Our key audit procedures in response

Our procedures in relation to the revenue recognition included:

  1. Evaluate the design and implementation of the internal control in relation to the revenue recognition.

  2. 148 -

  3. Perform sales contract checks to verify whether the records on the recognition of sales revenue agree with the related contract, and evaluate the fairness of the management’s estimated sales discounts and sales incentives.

  4. Assess whether the management’s accounting treatments and disclosure in relation to sales discounts and sales incentives are presented fairly.

Intangible Assets Impairment

Please refer to Note 4(13.) and 5(2.) in the accompanying consolidated financial statements for related disclosures of the Group’s intangible assets impairment accounting policies and critical accounting estimate and assumption.

The accompanying consolidated financial statements for the year ended December 31, 2023 included intangible assets amounted to NT$ 71,823 thousand, which represented 1% of the Group’s consolidated total assets. The intangible assets of the Group are mainly for the patent technology licensing of the "positively charged liposomes EndoTag-1 anti-tumor drugs". The Group will continue to develop new drugs based on these patented technologies. Because the drugs are still under development, no cash inflow can be generated. As of the balance sheet date, the Group considers external and internal information in determining whether the intangible asset is impaired. If any indication of impairment exists, an assessment of the recoverable amount of the asset is required to confirm the impairment of the intangible asset. Since the impairment assessment performed by management involves critical judgement, we consider impairment assessment of intangible asset as a key audit matter.

Our key audit procedures in response

Our procedures in relation to management’s assessment of indicators of impairment included:

  1. Reviewing the assessment of indicators of impairment provided by the management, and discussing with management to evaluate the following items:

  2. (1)The product characteristics, target markets, technical trends, and possible derivative products of research and development projects and the patented technology licensing are still competitive in the marketplace ；

  3. (2)There is no significant delay in the progress of the main research and development projects ；

  4. (3)The total market value of the Group is higher than the net assets as of the balance sheet date.

  5. Evaluating the reasonableness of management’s adoption of the key assumption and sensitivity analysis including the cash-generating units, forecast of cash flows, the possibility for product commercialization and the discount rate.

Other Matter

We have also audited the parent company only financial statements of Sinphar Pharmaceutical Co., Ltd. as of and for the years ended December 31, 2023 and 2022 on which we have issued an unmodified opinion.

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 Regulation Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, 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.

  • 149 -

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 members of the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditors’ 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 auditors' 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 the auditing standards of the Republic of China 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 the auditing standards of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

  4. 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 auditors' 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 auditors' report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieve fair presentation.

  6. 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 direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

  7. 150 -

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 for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ 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.

The engagement partners on the audit resulting in this independent auditors’ report are Ya Quan Zhang and Jin Shu Pan.

Crowe (TW) CPAs Taipei, Taiwan Republic of China

March 6, 2024

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.

  • 151 -

Sinphar Pharmaceutical Co., Ltd and Subsidiaries CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS		 Note %
Amount
December 31,2023		 %
Amount
December 31,2023		 %
Amount
December 31,2022		 %
Amount
December 31,2022
Amount Amount
Cash and cash equivalents
Financial assets at fair value		 6 (1)
6 (2)
6 (3)
6 (4)、6(19)
6 (5)
6 (6)
8
6 (2)
6 (7)
6 (8), 7(3) and 8
6 (9) and 8
6 (10) and 8
6 (24)
6 (11) and 8
6 (19)
6 (12) and 8
6 (12) and 8
6 (13)
6 (24)		 $ 1,074,489
6,660
166,213
477,252
839,194
79,050
5,747
2,648,605
-
22,212
3,228,305
18,574
71,823
170,856
30,855
26,324
33,527
3,602,476
$ 6,251,081
$ 400,000
85,654
162
291,208
336,506
3,087
50,716
37,361
1,204,694
1,494,142
35,552
118,819
1,648,513
2,853,207
1,677,221
924,140
142,979
121,367
369,802
634,148
(137,171)
3,098,338
299,536
3,397,874
$ 6,251,081		 17
-
3
8
13
1
-		 $ 1,237,556
6,660
179,136
506,053
737,013
107,172
4,861
2,778,451
-
24,695
3,119,747
19,562
86,983
52,108
65,075
19,400
19,170
3,406,740
$ 6,185,191
$ 447,000
96,559
558
323,182
426,424
45,407
50,341
56,440
1,445,911
1,415,618
35,978
70,836
1,522,432
2,968,343
1,677,221
929,972
119,606
91,075
233,724
444,405
(121,368)
2,930,230
286,618
3,216,848
$ 6,185,191		 20
-
3
8
12
2
-
45
-
-
51
-
2
1
1
-
-
55
100
7
2
-
5
7
1
1
1
24
23
-
1
24
48
27
15
2
1
4
7
(2)
47
5
52
100
through profit or loss, current
Notes receivable, net
Accounts receivable, net
Inventories
Prepayments
Other current assets
Total current assets 42
NONCURRENT ASSETS
Financial assets at fair value
through profit or loss, non-current
Financial assets at fair value through
other comprehensive income, non-current		 -
-
52
-
1
3
1
-
1
58
100
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Prepayments for equipment
Refundable deposits
Other non-current assets
Total non-current assets
TOTAL
6
1
-
5
5
-
1
1
19
24
1
2
27
46
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans
Current contract liabilities
Notes payable
Accounts payable
Other payable
Current tax liabilities
Long-term loans - current portion
Other current liabilities, others
Total current liabilities
NONCURRENT LIABILITIES
Long-term loans
Net defined benefit liability, non-current
Other non-current liabilities, others
Total non-current liabilities
Total liabilities
27
14
2
2
6
EQUITY ATTRIBUTABLE TO
SHAREHOLDERS OF THE PARENT
Capital stock
Capital surplus
Retained earnings
Appropriated as legal capital reserve		 6 (14)
6 (15)
6 (16)
Appropriated as special capital reserve
Unappropriated retained earnings
Total retained earnings
Others equity interests		 6 (17)
6 (18)		 10
(2)
Total equity attributable to
shareholders of the parent
non-controlling interests
Total equity		 49
5
54
Total liabilites and equity 100

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

  • 152 -

Sinphar Pharmaceutical Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars)

2023 2022
ITEM Note Amount
$ 2,962,934
(1,871,691)
1,091,243
(446,775)
(224,151)
(132,580)
(1,681)
(805,187)
286,056
12,307
34,736
6,320
(33,711)
19,652
305,708
51,068
356,776
(3,736)
(4,933)
(8,669)
(18,186)
3,009
(15,177)
(23,846)
$ 332,930
$ 375,170
(18,394)
$ 356,776
$ 355,631
(22,701)
$ 332,930
$ 2.24
$ 2.23		 % Amount
%
OPERATING REVENUE
OPERATING COSTS
GROSS PROFIT
OPERATING EXPENSES
Selling expenses
Administrative expenses
Research and development expenses
Expected credit impairment loss
Total operating expenses
NET OPERATIONS INCOME
NON-OPERATING INCOME AND EXPENSES
Interest income
Other income
Other gains and losses
Finance costs
Total non-operating income and expenses
INCOME BEFORE INCOME TAX
INCOME TAX (EXPENSE) BENEFIT
PROFIT		 6 (19)
6 (5, 22)
6 (22) and 7 (3)
6(4)
6 (20)
6 (21)
6 (23)
6 (24)
6 (25)
6 (26)		 100
(63)
37
(15)
(8)
(4)
-
(27)
10
-
1
-
(1)
-
10
2
12		 $ 2,856,651
100
(1,765,351)
(62)
1,091,300
38
(408,272)
(14)
(213,063)
(7)
(272,163)
(10)
(467)
-
(893,965)
(31)
197,335
7
5,776
-
48,707
2
21,041
1
(27,813)
(1)
47,711
2
245,046
9
(80,872)
(3)
164,174
6
OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit obligation
Unrealized gain from investments in equity instruments
measured at fair value through other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of
foreign operations		 -
-
-		 9,080
-
(5,340)
-
3,740
-
(1) 16,874
-
Income tax related to components of other comprehensive
income that will be reclassified to profit or loss
Other comprehensive income (loss) for the year,
net of income tax
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR
PROFIT (LOSS) ATTRIBUTABLE TO :
Shareholders of the parent
Non-controlling interests
TOTAL COMPREHENSIVE INCOME
(LOSS) ATTRIBUTABLE TO:
Shareholders of the parent
Non-controlling interests
EARNINGS PER SHARE		 -
(1)
(1)
11
13
(1)
12
12
(1)
11		 (2,784)
-
14,090
-
17,830
-
$ 182,004
6
$ 224,644
8
(60,470)
(2)
$ 164,174
6
$ 241,535
8
(59,531)
(2)
$ 182,004
6
Basic earnings per share
Diluted earnings per share		 $ 1.34
$ 1.34

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

  • 153 -

Sinphar Pharmaceutical Co., Ltd and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(In Thousands of New Taiwan Dollars)
EquityAttributable t o Owners of Parent
Capital Stock Retained Earning $ (91,854)
$ (37,325)
-
-
-
-
Other EquityInterests
Foreign Currency
Translation
Reserve
Unrealized Gain(Loss) on
Financial Assets at Fair
Value Through Other
Comprehensive Income		 Total
ITEM Common Stock Capital Surplus Legal Capital Reserve Special Capital
Reserve		 Unappropriated
Retained Earnings
(Accumulated
Deficit)		 $ (91,854)
-
Foreign Currency
Translation
Reserve		 Non-
Controlling
Interests		 Total Equity
Balance, January 1, 2022 $ 1,677,221 $ 963,516 $ 153,734 $ 91,075 $ (34,128) $ 2,722,239
-		 $ 354,944 $ 3,077,183
Appropriations of earnings
Legal reserve used to offset accumulated deficits - - (34,128) - 34,128 - -
Other changes in capital surplus (33,544)
Stock dividends from capital surplus - (33,544) - - - - - (33,544)
Net profit (loss) in 2022
Other comprehensive income (loss) in 2022, net
of income tax
Total comprehensive income (loss) in 2022		 -
-
-		 -
-
-		 -
-
-		 -
-
-		 224,644
9,080
233,724		 -
11,153
11,153		 -
(3,342)
(3,342)		 224,644
16,891
241,535		 (60,470)
939
(59,531)		 164,174
17,830
182,004
Decrease in non-controlling interests - - - - - - - - (8,795) (8,795)
Balance, December 31, 2022
Appropriations of earnings
Legal reserve appropriated
Special reserve appropriated		 1,677,221
-
-		 929,972
-
-		 119,606
23,373
-		 91,075
-
30,292		 233,724
(23,373)
(30,292)		 (80,701)
-
-		 (40,667)
-
-
-
-
-
-
(3,784)
(3,784)
-
$ (44,451)		 2,930,230
-
-		 286,618
-
-		 3,216,848
-
-
Cash dividends of ordinary share -
-
-
-
-
-
-
$ 1,677,221		 -
-
(5,832)
-
-
-
-
$ 924,140		 -
23,373
-
-
-
-
-
$ 142,979		 -
30,292
-
-
-
-
-
$ 121,367		 (167,722)
(221,387)
(13,969)
375,170
(3,736)
371,434
-
$ 369,802		 -
-
-
-
(12,019)
(12,019)
-
$ (92,720)		 (167,722)
(167,722)
(19,801)
375,170
(19,539)
355,631
-
$ 3,098,338		 -
-
49,844
(18,394)
(4,307)
(22,701)
(14,225)
$ 299,536		 (167,722)
Total appropriations of earnings
Other changes in capital surplus
Changes in ownership interests in subsidiaries
Net profit (loss) in 2023
Other comprehensive loss in 2023, net
of income tax
Total comprehensive income (loss) in 2023
Decrease in non-controlling interests
Balance, December 31, 2023		 (167,722)
30,043
356,776
(23,846)
332,930
(14,225)
$ 3,397,874

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

  • 154 -

Sinphar Pharmaceutical Co., Ltd and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Sinphar Pharmaceutical Co., Ltd and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
ITEM
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
Adjustments for:
Adjustments to reconcile profit (loss)
Depreciation expense
Amortization expense
Expected credit impairment loss
Interest expense
Interest income
Loss (gain) on disposal of property, plant and equipment
Other adjustments to reconcile loss
Changes in operating assets and liabilities:
Notes receivable, net
Accounts receivable, net
Inventories
Prepayments
Other current assets
Contract liabilities
Notes payable
Accounts payable
Other payable
Other current liabilities
Net defined benefit liability
Other operating liabilities
Cash generated from operations		 $ 305,708
$ 245,046
206,727
200,849
36,797
65,865
1,681
467
33,711
27,813
(12,307)
(5,776)
(5,126)
811
(60,370)
-
12,769
(19,138)
27,285
(73,590)
(102,181)
(39,620)
25,232
50,897
(148)
1,320
(10,905)
2,922
(396)
395
(31,974)
121,921
(26,522)
(99,220)
(19,079)
20,571
(4,162)
(5,831)
(1,648)
(1,413)
375,092
494,289
2023
2022
Interest received 12,301
5,751
Interest paid
Income taxes paid		 (33,651)
(27,644)
(57,372)
(47,098)
Net cash generated from operating activities 296,370
425,298
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value
through other comprehensive income
Proceeds from disposal of financial assets at amortised cost
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Acquisition of intangible assets
Increase in other non-current assets
Increase in prepayments for equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term loan
Proceeds from long-term debt
Repayments of long-term debt
Decrease in redundable deposits
Decrease in long-term payables		 (2,450)
(9,676)
-
43,440
(198,725)
(82,166)
6,300
243
(6,924)
7,418
(5,426)
(11,963)
(30,553)
(12,218)
(96,785)
(59,316)
(334,563)
(124,238)
(47,000)
(140,000)
160,000
180,000
(81,101)
(259,065)
(666)
(25)
-
(1,896)
Cash dividends paid
Proceeds from issuing shares by subsidiaries
Change in non-controlling interests		 (167,722)
(33,544)
30,043
-
(14,225)
(8,795)
Net cash generated used in financing activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD		 (120,671)
(263,325)
(4,203)
5,036
(163,067)
42,771
1,237,556
1,194,785
$ 1,074,489
$ 1,237,556

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

  • 155 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

(Amounts in Thousands of New Taiwan Dollars , Unless Specified Otherwise ）

  • 1.GENERAL INFORMATION

Sinphar Pharmaceutical Co., Ltd. (Sinphar) was incorporated in the Republic of China (“R.O.C.”) on July 2, 1977. Sinphar mainly engages in the production, processing and trading of various medicines, Chinese medicines, medical comestic products and nutrients. The main operations of Sinphar and its subsidiaries (collectively as “the Group”) are described in the Note 4(3.). Sinphar is the Group’s ultimate parent company.

The consolidated financial statements are presented in the Group's functional currency, New Taiwan Dollars.

  1. APPROVAL OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 6, 2024.

  1. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

  2. (1) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

New standard, interpretation and amendments endorsed by the FSC and effective from 2023 are as follows:

New Standards,Interpretations and Amendments

Amendments to IAS 1 “Disclosures of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 12“Deferred Tax Related to Assets and
Liabilities Arising from a Single Transaction”
Amendments to IAS 12“International Tax Reform－Pillar
Two Model Rules”		 Effective Date Announced byIASB
January 1, 2023 (Note 1)
January 1, 2023 (Note 2)
January 1, 2023 (Note 3)
(Note 4)

Note 1: An entity shall apply these amendments for annual reporting periods beginning on or after January 1, 2023.

  • Note 2: These amendments apply to changes in accounting estimates and changes in accounting policies that occur during annual reporting periods beginning on or after January 1, 2023.

  • Note 3: An entity shall apply the amendments to transactions that occur on or after the beginning of the earliest comparative period presented. It also, at the beginning of the earliest comparative period presented, recognizes deferred taxes for all temporary differences related to leases and decommissioning obligations and recognizes the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.

  • 156 -

  • Note 4: As a temporary exception under IAS 12, an entity shall not recognize deferred income tax assets and liabilities assoicated with Pillar 2 income tax, nor shall it disclose the related information. However, the entity shall disclose in its financial report that it has already applied this exception. An entity shall apply this part of the amendment retrospectively in accordance with IAS 8 since the date that the amendments were issued (i.e. May 23, 2023). An entity shall apply the remaining disclosure requirements for the annual reporting periods beginning on or after January 1, 2023 and needs not to disclose such information in its interim reports with a reporting date ending before or on December 31, 2023.

  • A.Amendments to IAS 1 “Disclosures of Accounting Policies”

The amendments clarify that an entity shall disclose its material significant accounting policy information if the transaction, other event or condition to which the accounting policy information relates is material in size or nature, or a combination of both, and the accounting policy information that relates to a material transaction, other event or condition is also material to the financial statements. On the other hand, if the transaction, other event or condition to which the accounting policy information relates is immaterial in size or nature, an entity needs not to disclosure the accounting policy information that relates to the immaterial transaction, other event or condition. Additionally, Immaterial accounting policy information that relates to material transactions, other events or conditions need not be disclosed, either. However, an entity’s conclusion that accounting policy information is immaterial does not affect the related disclosure requirements set out in other IFRS Standards.

  • B.Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define accounting estimates as monetary amounts in financial statements that are subject to measurement uncertainty and clarify that a change in measurement techniques or inputs used to develop an accounting estimate is a change in accounting estimates unless the change is due to an error from prior periods.

  • C.Amendments to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

The amendments narrow the exemption extent in paragraphs 15 and 24 of IAS 12 for an entity from recognizing a deferred tax asset or liability in particular circumstances. In particular, the exemption does not apply to a transaction that gives rise to equal taxable and deductible difference at the time of the transaction. At the initial application of the amendments, an entity shall, at the beginning of the earliest comparative period presented, recognise deferred taxes for all deductible and taxable temporary differences associated with (i) lease and (ii) decommissioning liabilities and recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date. An entity shall also apply the amendments transactions that occur on or after the beginning of the earliest comparative period presented. When initially applying the amendments, the information for comparable periods shall be restated.

  • “ － ”

  • D.Amendments to IAS 12 International Tax Reform Pillar Two Model Rules

The amendments stipulates that, as a temporary exception to IAS 12, Group shall neither recognize nor disclose information about deferred income tax assets and liabilities for Pillar Two income tax relating to international tax reform; however, Group shall disclose in its financial reports that it has applied this exception. In addition, Group shall separately disclose its current income tax expenses (benefits) relating to Pillar Two income tax. If the Pillar Two bill has been enacted or has been substantively enacted but has not yet taken effect, Group should disclose qualitative and quantitative information on its exposure to Pillar Two income tax that is known or can be reasonably estimated.

Based on the Group’s assessment, the New IFRSs above have no significant effect on the Group’s financial position and financial performance.

  • 157 -

  • (2) The IFRSs issued by International Accounting Standards Board (IASB) and endorsed by FSC with effective date starting 2024.

New standards, interpretations and amendments endorsed by the FSC and effective from 2024 are as follows:

New Standards, Interpretations and Amendments Effective Date Announced by IASB Amendments to IFRS 16 “Lease Liability in a Sale and January 1, 2024 (Note 1) Leaseback” Amendments to IAS 1 “Classification of Liabilities as Current January 1, 2024 or Non-current” Amendments to IAS 1 “Non-current Liabilities with January 1, 2024 Covenants” Amendments to IAS 7 and IFRS 7 “Supplier finance January 1, 2024 (Note 2) arrangements ”

  • Note 1: The seller-lessee shall apply the amendments retrospectively in accordance with IAS 8 for the sale and leaseback transactions made after the initial application of IFRS 16.

  • Note 2: The amendment provides certain transitional reliefs. When initially appling the amendment, entities are not required to disclose comparative information and interim period information, as well as opening information required by paragraph 44H(b)(ii)-(iii).

  • A.Amendments to IFRS 16 “Lease liability in a sale and leaseback”

The amendment clarifies that for a sale and leaseback transaction, if the transfer of the asset is treated as a sale in accordance with IFRS 15, the liabilities incurred by the seller-lessee due to the leaseback should be treated in accordance with the IFRS 16. Moreover, if any variable lease payments that do not depend on an index or rate are involved, the seller-lessee should still determine and recognize the lease liability arising from such variable payments in a manner that does not recognize gains and losses related to the retained right of use. The difference between the subsequent actual lease payment amount and the reduced carrying amount of the lease liability is recognized in profit or loss.

B.Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that when an entity determines whether a liability is classified as non-current, the entity should assess whether it has the right to defer the settlement for at least twelve months after the reporting period. If the entity has that right on the end of reporting period, that liability must be classified as non-current regardless whether the entity expects whether to exercise the right or not. If the entity must follow certain conditions to have the right to defer the settlement of a liability, the entity must have followed those conditions at the end of reporting period in order to have that right, even if the lender tests the entity’s compliance on a later date.

The aforementioned settlement means transferring cash, other economic resources or the entity’s equity instruments to the counter-party to extinguish the liability. If the terms of the liability give the counterparty an option to extinguish the liability by the entity’s equity instruments, and this option is recognized separately in equity in accordance with IAS 32 “Financial Instruments: Presentation”, then the classification of the liability will not be affected.

  • C.Amendment to IAS 1 “Non-current Liabilities with Covenants”

This amendment further clarifies that only contractual terms that are required to be complied with before the end of the reporting period will affect the classification of the liability at that date. The contractual terms that required to be complied with within 12 months after the reporting period do not affect the classification of liabilities at the reporting date. However, for liabilities classified as noncurrent and must be repaid within 12 months after the reporting period due to potential non-compliance, the relevant facts and circumstances should be disclosed.

  • 158 -

D.Amendments to IAS 7 and IFRS 7 “Supplier finance arrangements”

Supplier financing arrangements involve one or more financing providers making payments to suppliers on behalf of an entity, and the entity agrees to repay the financing providers on the payment date agreed with the suppliers or a later date. The amendments to IAS 7 require an entity to disclose information on its supplier financing arrangements to enable users of financial statements to assess the impact of these arrangements on the entity's liabilities, cash flows and exposure to liquidity. The amendments to IFRS 7 include into its application guidance that when disclosing how an entity manages the liquidity risk of its financial liabilities, it may also consider whether it has obtained or can obtain financing facilities through supplier financing arrangements, and whether these arrangements may cause concentration of liquidity risk.

Based on the Group’s assessment, the application of the New IFRSs above will not have any significant impact on the Group’s financial position and financial performance.

  • (3) The IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed and issued into effect by the FSC.
into effect by the FSC.
New Standards,Interpretations and Amendments Effective Date
Announced byIASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17

Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9－
Comparative Information”
Amendments to IAS 21 “Lack of Exchangeability”
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2025

As of the date, the accompanying consolidated financial statements were authorized for issue, the Group is still evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Group completes the evaluation.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The main accounting policies used in the preparation of the consolidated financial report are explained below. Unless otherwise stated, these policies apply consistently throughout all reporting periods.

  • (1.) Statement of Compliance

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC.

  • (2.) Basis of Preparation the Consolidation Financial Statement

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

    • (A.) The financial assets and liabilities measured at fair value through profit and loss (including derivative financial instruments).

  • 159 -

    • (B.) The financial assets measured at fair value through other comprehensive income.

    • (C.) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

  • B. The preparation of financial statements in compliance with IFRSs endorsed by FSC requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in process of applying the Group’s accounting policies. The areas involving a high degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

  • (3.) Basis of Consolidation

  • A. The basis for the preparation of consolidated financial statements

    • (A.) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are the entities (including structured 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.) All intra-company transactions, balances, and unrealized gains or losses are eliminated in full on consolidation. 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 shareholders of the parent and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

    • (D.) Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control of the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in subsidiaries. Any difference between the amount of the non-controlling interests adjusted and the fair value of the consideration paid or received is recognized 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. That 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 recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized 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.

  • 160 -

B. The subsidiaries included in the consolidated financial statements:

Name of the
Investor

Sinphar
Pharmaceutical
Co., Ltd.
Sinphar
Pharmaceutical
Co., Ltd
Sinphar
Pharmaceutical
Co., Ltd
Sinphar
Pharmaceutical
Co., Ltd
Sinphar
Pharmaceutical
Co., Ltd
SynCore
Biotechnology
Co., Ltd.
SUNETIC
BIOTECH INC.
Sinphar Tian-Li
Pharmaceutical
Co.,
Ltd.(Hangzhou)
Sinphar Tian-Li
Pharmaceutical
Co.,
Ltd.(Hangzhou)		 Name of subsidiaries
CANCAP
PHARMACEUTICAL
LTD.
SUNETIC
BIOTECH INC.
UNIVERSAL NEXT
TECHNOLOGIES
INC.
ZuniMed Biotech Co.,
Ltd.
SynCore
Biotechnology Co.,
Ltd.
SynCore
Biotechnology
Europe GmbH
Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)
Hetian Tianli
shasheng
Pharmaceutical
Development Co., Ltd.
Hangzhou Vitrum
Healthy Food Co.,
Ltd.		 Main Business
Production and
sale of healthy
food
Investment
business
Investment
business
Production and
sale of medical
appliances
New drug and
biotechnology
service
New drug
development and
biotechnology
service
Production and
sales of raw
materials,
pharmaceuticals,
etc.
Scientific
research and
production and
sales of shasheng
Pharmaceutical
Sale of cosmetics
and healthy food		 Percentage of Ownership Percentage of Ownership

31-Dec-23
88.43%
83.47%
100.00%
100.00%
64.26%
(Note)
100.00%
100.00%
91.00%
100.00%		 31-Dec-22
88.43%
83.47%
100.00%
100.00%
62.09%
100.00%
100.00%
91.00%
100.00%

  • Note:(A.) The Subsidiary, SynCore Biotechnology Co., Ltd.’s shareholders held a meeting on May 5, 2023, and resolved to cover deficit by reducing capital by NT$843,325 thousand, writing off 84,332 thousand shares (including privately placed equuity 33,131 thousand shares). The ratio of capital reduced was 73.28%. The registration had been completed on May 31, 2023.

    • (B.) The Subsidiary, SynCore Biotechnology Co., Ltd.’s Board of Directors resolved on August 8, 2023 to raise capital through the issuance of 4,420 thousand ordinary shares. Amount to be issued through the cash capital increase is $NTD150,280 thousand at a subscription price of $NTD34 per share. The registration has been completed, and the Group acquired 3,507 thousand shares.

  • 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 hold the securities issued by the parent company: None

  • 161 -

G. Subsidiaries that have material non-controlling interests to the Group:

Subsidiary

SynCore Biotechnology Co., Ltd.

SUNETIC BIOTECH INC.


Subsidiary		 Proportion of equity and voting rights held
by non-controlling interests
Location
31-Dec-23
30-Dec-22
Taiwan
35.74%
37.91%
Mauritius
16.53%
16.53%

Profit or loss allocated to non-controlling interests
For the Year Ended
December 31,2023
For the Year Ended
December 31,2022
$ (15,474)
$ (71,516)
(2,603)
12,123


(317)
(1,077)
$ (18,394)
$ (60,470)		 Proportion of equity and voting rights held
by non-controlling interests
Location
31-Dec-23
30-Dec-22
Taiwan
35.74%
37.91%
Mauritius
16.53%
16.53%

Profit or loss allocated to non-controlling interests
For the Year Ended
December 31,2023
For the Year Ended
December 31,2022
$ (15,474)
$ (71,516)
(2,603)
12,123


(317)
(1,077)
$ (18,394)
$ (60,470)		 Proportion of equity and voting rights held
by non-controlling interests		 Proportion of equity and voting rights held
by non-controlling interests		 Proportion of equity and voting rights held
by non-controlling interests
31-Dec-23
30-Dec-22
35.74%
37.91%
16.53%
16.53%
loss allocated to non-controlling interests		 30-Dec-22
For the Year Ended
December 31,2023
$ (15,474)

(2,603)

(317)
$ (18,394)
 For the Year Ended
December 31,2022
SynCore Biotech Co., Ltd.
SUNETIC BIOTECH INC.
(Excluing non-controlling interest held
by the subsidiary)
Others
Total		 $ (71,516)
12,123
(1,077)
$ (60,470)
Non-controlling interests Non-controlling interests
Subsidiary
SynCore Biotech Co., Ltd
SUNETIC BIOTECH INC.
(Excluding non-controlling interest
held by the subsidiary)
Others
Total		 31-Dec-23
$ 127,816
161,510
10,210
$ 299,536		 30-Dec-22
$ 94,585
181,325
10,708
$ 286,618

Please refer to Note 13 and Table 4 for information on the subsidiaries’ main business locations and countries of registrations.

Summarized financial information of the subsidiaries:

(a.) Balance Sheet

SynCore Biotechnology Co., Ltd. and Subsidiaries

ITEM
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Equity attributed to：
Sinphar (note 1)
Non-controlling interests
IFRS16 adjustments (note 2)		 31-Dec-23
$ 310,481
67,881
(21,226)
-
$ 357,136
$ 229,834
127,816
(514)
$ 357,136		 31-Dec-22
$ 348,233
88,415
(186,644)
(992)
$ 249,012
$ 154,941
94,585
(514)
$ 249,012

  • 162 -

  • Note 1 ： The rental expenses of property and building as of December 31, 2023 and 2022 were NT $533 thousand and NT $522 thousand, respectively. These transactions between the consolidated companies and the time difference of revenue recognition were eliminated for the preparation of consolidated report.

  • Note 2 ： They were property and building leased from the parent company. Since these were intercompany transactions, the accumulative effects aroused from the first application to IFRS 16 were eliminated for the preparation of the consolidated financial statement.

SUNETIC BIOTECH INC. and Subsidiaries

ITEM
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Equity attributed to：
Sinphar
Non-controlling interests
Non-controlling interests of the
subsidiaries		 31-Dec-23
$ 328,714
748,483
(39,368)
(18,521)
$ 1,019,308
$ 842,572
166,855

9,881
$ 1,019,308		 31-Dec-22
$ 418,420
780,983
(62,780)
(22,343)
$ 1,114,280
$ 921,424
182,472
10,384
$ 1,114,280

(b.) Statements of comprehensive incomes

SynCore Biotechnology Co., Ltd. and Subsidiaries

ITEM

Revenue
Net loss
Other comprehensive loss
Total comprehensive loss
Net loss attributable to：
Sinphar (Note)
Non-controlling interests
Total comprehensive loss
attributable to：
Sinphar (Note)
Non-controlling interests		 For the Year Ended
December31,2023
$ 20,196
$ (38,172)
(2,984)
$ (41,156)
$ (22,698)
(15,474)
$ (38,172)
$ (24,543)
(16,613)
$ (41,156)		 For the Year Ended
December31,2022
$ 15,857
$ (188,666)
(5,242)
$ (193,908)
$ (117,150)
(71,516)
$ (188,666)
$ (120,406)
(73,502)
$ (193,908)

Note ： The rental expenses of property and building for the years ended December 31, 2023 and 2022 were NT $11 thousand and NT $102 thousand, respectively. These transactions between the consolidated companies and the time difference of revenue recognition were eliminated for the preparation of consolidated report.

  • 163 -

SUNETIC BIOTECH INC. and Subsidiaries

For the Year Ended For the Year Ended For the Year Ended
ITEM December 31,2023 December 31,2022
Sales Revenue $ 243,995 $ 328,520
Net Profit $
9,648		 $ 71,464
Net loss attributable to non-
controlling interests (317) (1,077)
Net Profit 9,331 70,387
Other comprehensive income (loss) (18,254) 16,839
Total comprehensive income (loss) $ (8,923) $ 87,226
Net profit (loss) attributable to：
Sinphar $
8,053		 $ 59,651
Non-controlling interests 1,595 11,813
Non-controlling interests of
the subsidiaries (317) (1,077)
$ 9,331 $ 70,387
Total comprehensive income (loss)
attributable to：
Sinphar $
(7,028)		 $ 73,565
Non-controlling interests (1,392) 14,568
Non-controlling interests of
the subsidiaries (503) (907)
$ (8,923) $ 87,226
Statements of Cash Flows
SynCore BiotechnologyCo.,Ltd and Subsidiaries
ITEM 2023 2022
Net cash used in operating activities $
(82,373)		 $ (209,612)
Net cash used in investing activities (778) (1,031)
Net cash generated from (used in)
financing activities 78,675 (73,212)
Effect of exchange rate 27 30
Net decrease in cash and cash
equivalents $ (4,449) $ (283,825)
Dividends paid to non-controlling
interests
 $
-		 $ -

(c.) Statements of Cash Flows

  • 164 -

SUNETIC BIOTECH INC. and Subsidiaries

ITEM
Net cash generated from (used in)
operating activities

Net cash generated from (used in)
investing activities
Net cash used in financing activities
Effect of exchange rate
Net increase (decrease) in cash and
cash equivalents
Dividends paid to non-controlling
interests
 2023
$ (30,123)
(27,465)

(86,182)

(4,271)
$ (148,041)
$ 14,225		 2022
$ 165,768

29,329

(53,197)
5,011
$ 146,911
$ 8,795
  • (4.) Foreign Currencies

A. Foreign currency transaction

Transactions in currencies other than the Group’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated. Except for financial instruments at FVTOCI, financial instruments that are designated as foreign operation net hedge or qualified as cash flow hedge, the retranslation foreign exchange differences are recognized in other comprehensive income. In other cases, the exchange differences are recognized in profit and loss.

B. Translation of foreign operation

For the purpose of preparing consolidated financial statements, the functional currencies of the Group and the foreign entities (including subsidiaries, associates, joint ventures and branches in other countries that use currency different from the currency of the Group) are translated into the presentation currency - the New Taiwan dollar as follows: assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; profits and losses items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation involving the loss of control, joint venture or significant influence over the foreign operation, all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the noncontrolling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

  • 165 -

  • (5.) Classification of Current and Noncurrent Assets and Liabilities

  • A. Assets that meet one of the following criteria are classified as current assets:

    • (A.) Assets that expected to be realized or intended to be sold or used within normal operating cycle;

    • (B.) Assets held primarily for the purpose of trading;

    • (C.) Assets that are expected to be realized within 12 months after the reporting period; and

    • (D.) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle liabilities more than twelve months after the balance sheet date.

Assets that are not classified as current are classified as non-current.

  • B. Liabilities that meet one of the following criteria are classified as current liabilities:

  • (A.) Liabilities expected to be paid off within normal operating cycle;

  • (B.) Liabilities held primarily for the purpose of trading;

  • (C.) Liabilities due to be settled within 12 months after the reporting period (It is still a current liability even if a long-term refinancing or rearrangement of payment agreement is completed after the balance sheet date and before the financial report is approved,); and

  • (D.) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period. 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.

Liabilities that are not classified as current are classified as non-current.

  • (6.) Cash and Cash Equivalent

Cash and cash equivalent includes cash on hand, bank deposit and short-term, highly liquid investment that are readily convertible to know amount of cash and which are subject to an insignificant risk of change in value. Time deposits with original maturities within 1 year from the closing date that meet the definition above and are held for purpose of meeting short-term cash commitments in operations are classified as cash equivalent.

  • (7.) Financial Instruments

Financial assets and financial liabilities are recognized in balance sheets when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

  • A. Financial assets

  • (A.) Measurement category

The Group adopts trade-date accounting to recognize financial assets.

Financial assets are classified as financial assets at FVTPL, financial assets at amortized cost, and equity investments at FVTOCI.

  • 166 -

a. Financial assets at FVTPL

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL including equity investments not designated as at FVTOCI and debt instruments that do not meet the criteria of amortized cost or the FVTOCI.

Financial assets at FVTPL are initially and subsequently measured at fair value, with any gains or losses arising from remeasurement recognized in other gains or losses income. Fair value is determined in the manner described in Note 12(3).

  • b. Equity investment at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

  • c. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

  • (a.) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • (b.) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets measured at amortized cost are measured at carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

  • (a.) Purchased or originated credit-impaired financial assets, for those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

  • (b.) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets, for those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

  • 167 -

  • (B.) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses (“ECL”) on financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime ECL. For other financial assets, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to 12month ECL. If there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to lifetime ECL.

ECL reflects the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group recognizes an impairment loss for aforementioned financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

  • (C.) Derecognition of financial assets

The Group derecognizes a financial asset when one of the following conditions is met:

  • a. The contractual rights to receive the cash flows from the financial asset expire.

  • b. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

  • c. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The difference between the book value and the price of financial assets at amortized cost will be recognized to profit or loss on disposal of the financial assets. The cumulative gain or loss of the investments in equity instruments at FVTOCI will not be reclassified to profit or loss on disposal of the equity investments. Instead, they will be transferred to retained earnings.

B. Financial liabilities

  • (A.) Subsequent measurement

Except for the following, financial liabilities measured at amortized cost are measured using the effective interest rate method after initial recognition.

  • a. Financial liabilities at FVTPL are financial liabilities held for trading or financial liabilities designated upon initial recognition as at FVTPL. Repurchase currently, and the derivative financial instruments unless financial guarantee contract and designated and effective as a hedging instrument, are classified financial liabilities held for trading. The Group designates the financial liabilities upon initial recognition as at FVTPL when the financial liabilities accord to one of the followings:

  • (a.) They are hybrid (combined) contracts containing at least an embedded derivaties and the host contract is an asset not within the scope of IFRS 9; or

  • (b.) Eliminates or significantly reduces measurement or recognition; or

  • (c.) A tool to manage and evaluate its performance on a fair value basis in accordance with a written risk management policy.

  • 168 -

  • b. Financial liabilities at FVTPL are stated at fair value upon initial recognition, related transaction costs and any gain or loss arising on remeasurement are recognized in profit or loss.

  • c. A financial liabilities that designated as financial liabilities measured at FVTPL, which amount of change in fair value resulting from a change in credit risk, is recognized as other comprehensive income, and that will not be reclassified subsequently to profit or loss. The amount of the remaining fair value change in the liability is reported in the profit and loss. However, if the aforementioned accounting treatment triggers or exacerbates the improper accounting ratio, the full profits or losses of the liability are reported in the profit or loss.

  • (B.) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When derecognition of financial liabilities, the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, are recognized in profit or loss.

C. Modification of Financial Instruments

When the contractual cash flows of a financial instrument are renegotiated or modified and the renegotiation or modification does not result in the derecognition of that financial instrument, the Group recalculates the gross carrying amount of the financial asset or the amortized cost of the financial liabilities using the original effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the carrying amount of the modified financial instrument and are amortised over the remaining term of the modified financial instrument. If the renegotiation or modification results in that the derecognition of that financial instrument is required, then the financial instrument is derecognized accordingly.

If the basis for determining the contractual cash flows of a financial asset or financial liability changes resulting from interest rate benchmark reform and the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis, the Group applies the practical expedient to account for that change as a change in effective interest rate. If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Group first applies the practical expedient aforementioned to the changes required by interest rate benchmark reform, and then applies the applicable requirements to any additional changes to which that practical expedient does not apply.

(8.) Inventories

Inventories, under a perpetual system, are measured 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 progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity), excluding 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.

  • 169 -

  • (9.) Agriculture (biological assets and agricultural products)

Agricultural activities are the management of the biological transformation and harvesting of biological assets for sale, conversion into agricultural products or conversion into additional biological assets. Biological assets are measured at fair value less costs of disposal. However, biological assets may be measured at cost less accumulated depreciation if the fair value cannot be obtained from the active market, on the alternative option of the fair value clearly unreliable. Agricultural products harvested from biological assets shall be measured at the fair value less costs to sell.

Gains or losses on initial recognition of biological assets measured at fair value less cost to sell, and gains or losses arising from changes of biological assets in the fair value less cost to sell are included in profit or loss in the period in which they occur.

The agricultural activities of the Group are the cultivation of the parasitic plant Cistanche tubulosa, which is mainly used as raw materials for the finished products of the Group.

  • (10.) Property, Plant and Equipment

  • A. Property, plant and equipment (including bearer plants) are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. For property, plant and equipment under construction, sample produced from testing whether the asset is functioning properly before its intended use are measured at lower of the costs or net realizable value. Proceeds from selling such an item and the cost of the item are recognized in profit or loss.

  • B. Subsequent costs are included in the asset’s carrying amount or recognized 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 reliably measured. The carrying amount of the replaced component is derecognized. All other repairs and maintenance expense are recognized in profit or loss as incurred.

  • C. Except for land, which is not depreciated, other items of property, plant and equipment are measured at cost, the depreciable amount shall be allocated by the straight-line method over its useful life. Depreciation methods, useful lives, and residual values are reviewed at the end of each reporting period. 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 accounting 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: Buildings: 3~55 Years

Machinery: 1~18Years

Transportation: 2~10 Years

Office Equipment: 1~15 Years

Other Equipment(including bearer plants): 1~10 Years

  • D. If an item of property, plant and equipment or any significant component is disposed or there is no future economic benefit flow to the Group, the carrying amount is derecognized in profit and loss. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized in profit and loss.

  • 170 -

(11.) Leases

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. For a contract that contains a lease component and non-lease component, the Group allocates the total contractual consideration to the lease component on the basis of each single lease component price and the summarized price of non-lease components.

(A.)The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.

Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. However, if the ownership of the underlying assets is transferred to the Group by the end of the lease terms or if the costs of right-of-use assets reflect that the Group will exercise a purchase option, the Group depreciates the right-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.

(B.)The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

(12.) Intangible Assets

  • A. Intangible assets acquired separately (with finite useful lives)

Intangible assets acquired from government grants are measured at fair value. Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis as follow.

  • (A.)Computer Software:1~10 Years

(B.)Technology:10~20 Years

  • (C.)License:The duration of patent right and the duration of the contract whichever is shorter

The estimated useful life, residual value, and amortization period and method are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

  • 171 -

  • B. Internally-generated intangible assets - research and development expenditure

  • (A.)Expenditure on research activities is recognized as an expense in the period in which it is incurred except for the goodwill or intangible assets from business combination.

  • (B.)An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following conditions have been demonstrated:

    • a.The technical feasibility of completing the intangible asset so that it will be available for use or sale;

    • b.The intention to complete the intangible asset and use or sell it;

    • c.The ability to use or sell the intangible asset;

d.When the intangible asset could generate probable future economic benefits; 

  - e.The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

  - f.The ability to measure reliably the expenditure attributable to the intangible asset during its development.

  • (C.) Capitalized intangible assets in development phase are stated at cost, less accumulated amortization and accumulated impairment loss. Intangible assets with indefinite useful lives that are not amortizable.

  • (D.) The assessment of intangible assets with indefinite life is reviewed annually to determine whether the useful lives of intangible asset with indefinite life continues to be with indefinite life. If not, the change in useful life from infinite to finite is recorded as change in accounting estimate.

  • C. Disposal of the assets

Any gain or loss arising from the disposal of the assets is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognized in profit or loss.

  • (13.) Impairment of Non-Financial Assets

The Group assesses at the end of reporting period the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized 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 and its value in use. When the indication of impairment loss recognized in prior years for an asset other than goodwill no longer exists, the impairment loss is reversed to the extent of the loss previously recognized in profit or loss.

Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and recognize impairment loss if the carrying amount less than the recoverable amount. Goodwill cannot be reversed in future periods.

(14.) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation from past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date. The discount rate shall be a pre-tax rate that reflect current market assessment of the time value and the risk specific to the liability. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as interest expense. Future operating loss is not recognized as provisions.

  • 172 -

(15.) Employee Benefits

A. Short-term employee benefits

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

B. Pensions

  • (A.) Defined contribution plans

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

  • (B.) Defined benefit plans

    • a. 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 or prior period(s). The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is estimated annually by independent actuaries using the projected unit credit method.

    • b. Remeasurements of defined benefit plans are recognized in other comprehensive income as incurred and are recorded as retained earnings.

    • c. Past-service costs are recognized immediately in profit or loss.

  • C. Employee’s compensation and directors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligations and those amounts can be reliably estimated. Any difference between the amount accrued and the amount actually distributed is accounted for a change in accounting estimate.

  • D. Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognize any related restructuring costs. The benefits expected to be due more than 12 months after balance sheet date should be discounted to the present value.

(16.) Taxation

  • A. Income tax expenses include both current taxes and deferred taxes. Except for expenses related to the items recognized in other comprehensive income or directly in equity, all current and deferred taxes shall be recognized in profit or loss.

  • B. The current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of each reporting period in the countries where the Group 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. According to Income Tax Act in the R.O.C., income tax on unappropriated earnings is expensed in the year the shareholders’ meeting approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.

  • 173 -

  • C. Deferred income 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, and it does not give rise to equal deductible and taxable temporary differences at the time of transaction. Deferred tax is provided on temporary differences arising on investments in subsidiaries, 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 arising from deductible temporary differences, unused loss carry forward and unused tax credits are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period.

  • E. Current income tax assets and liabilities are offset and the net amount reported at the end of the reporting period when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset at the end of the reporting period when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same tax authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

  • F. Tax credit resulting from acquisitions of equipment or technology, research and development expenditures, employee training, and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(17.) Revenue

The Group identifies the contract with the customers, and recognizes revenue when performance obligations are satisfied.

  • A. Revenue from sale of goods

Revenue from the sale of goods is mainly from sale of medical product. When a customer obtains control of promised goods, at which time the goods are delivered to the customer's specific location and performance obligation is satisfied.

  • B. Royalties

Royalties are the rights of using intellectual property in authorized duration. The received royalties are recognized in royalty revenue on a time basis over the period of the authorization.

  • C. Technical service

The Group provides research and development technology test services. Revenue from services is recognized as revenue during the period when services are provided to customers. If the services rendered exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.

  • 174 -

The Group’s estimates of revenue, costs and completion degree are revised with the test situation. Any income and cost increase or decrease caused by the estimated changes will be reflected in profit or loss during the period when the revision situation is known to the management.

(18.) Borrowing costs

The borrowing cost directly attributable to the acquisition, construction or production of a qualified assets, is capitalized as part of the cost of the assets until substantially all necessary activities to reach the intended use or status for sale of the assets have been completed.

To the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

Except for the aforementioned, all other borrowing costs are recognized as profit or loss in the period in which they are incurred.

  • (19.) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants that are deemed as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future costs are recognized in profit or loss in the period in which they are receivable.

(20.) Earnings per Share

The Group discloses the basic and diluted earnings per share attributable to ordinary equity holders of Sinphar. The calculation of basic earnings per share is based on the profit or loss attributable to the ordinary shareholders of Sinphar divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit or loss attributable to ordinary shareholders of Sinphar divided by the weighted-average number of ordinary shares outstanding after adjustment for the effect of all dilutive potential ordinary shares.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, the management is required to make judgments, estimations, and assumptions about the uncertain situation. The estimates and associated assumptions are based on historical experience and other factors considered relevant. Actual results may differ from these estimates.

The Group considers the economic implications of the changes in climates and related governmental policies and regulations, the conflicts between Ukraine and Russia as well as related international sanctions, inflation and volatility in interest rate when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

  • 175 -

In the preparation of the consolidated financial statements, the critical accounting judgments the Group has made and the major sources of estimation and assumption uncertainty are described as follows:

  • A. Critical accounting judgements

Business model assessment for financial assets

The Group determines the business model at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. This assessment involves judgment and consideration of all relevant evidence, such as how the performance of the assets is evaluated, the risks that affect the performance of the assets, and how the managers of the assets are compensated. The Group constantly assess the adequacy of its business model and monitors financial assets measured at amortized cost and debt investments measured at fair value through other comprehensive income. When these assets are derecognized prior to their maturity, the Group reviews the reasons for their disposal and whether the reasons are consistent with the objective of the business for which the assets were held. If the objective of the business for an asset is changed, the classification of the asset is prospectively changed from the reclassification date.

  • B. Critical accounting estimates and assumptions

(A.)Revenue Recognition

Sales revenue, excluding related estimated sales returns, discounts and other similar allowance, is recognized when the control of goods or services is transferred to the customer and the Group satisfies it performance obligation. The Group estimates sales returns and allowance based on historical experience and other known factors. The Group assesses the reasonableness of the estimates periodically.

(B.)Estimated impairment of financial assets

The provision for impairment of accounts receivables, debt investments, and financial guarantee contracts is based on assumptions on default risk and expected loss rates. The Group makes these assumptions and selects inputs for impairment calculation based on the Group’s historical experience and existing market conditions, as well as forward looking information. If the future cash inflows are less than expected, a material impairment loss may arise. Please refer to Note 6(4.)for the assumption and input data.

(C.)Evaluation of inventories

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. 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. The management considers current market and historical experience on sperific future product demand for evaluation basis, and charge of these factors may significantly affect the results.

(D.)The useful life of property, plant and equipment

Property, plant and equipment are amortized on a straight-line basis, and the Group periodically evaluates the useful life and residual value of property, plant and equipment. If there is a significant change in the relevant estimates, it will be adjusted in the current period of the change and in subsequent years.

  • 176 -

(E.)Impairment assessment of tangible and intangible assets (Goodwill excluded)

In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Group is required to make subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific assets groups with consideration of any changes in these estimates based on changes economic conditions or business strategies could result in significant impairment charges or reversal in future years.

(F.)Realisability of deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. If future generated profit less than expected, there would be significant reversed of deferred tax assets recognized as profit and loss when occured.

6. DETAILS OF SIGNIFICANT ACCOUNTS

  • (1.) Cash and Cash Equivalents
Cash and Cash Equivalents
ITEM
Cash on hand
Check deposits
Demand deposits
Cash equivalent
Time deposits
(Investments with original
maturities less than 1 year)
Total		 31-Dec-23
$ 3,835
2,034
708,020
360,600
$ 1,074,489		 31-Dec-22
$ 3,666
2,129
826,370
405,391
$ 1,237,556

  • A. The Group trades with a variety of financial institutions all with high credit quality to disperse credit risk, and the management expects that the probability of counterparty default is remote.

  • B. The cash and cash equivalents were not pledged.

  • (2.) Financial Assets at Fair Value through Profit or Loss

Financial Assets at Fair Value through Profit or Loss
ITEM
Financial assets mandatorily measured at
fair value through profit or loss, current
Beneficiary certificates
Valuation adjustments
Total
Financial assets mandatorily measured at
fair value through profit or loss, non-
current
Overseas unlisted preferred shares
Valuation adjustments
Total		 31-Dec-23

$ 6,475
185
$ 6,660

$ 4,844
(4,844)
$ -		 31-Dec-22
$ 6,475
185
$ 6,660
$ 4,844
(4,844)
$ -

A. The Group invested in the preferred stocks of PHYTOCEUTICA INC., it is not entitled to other rights of ordinary shares, except for that dividends and distribution of residual assets preferred over ordinary shares.

  • 177 -

  • B. As of December 31, 2023 and 2022, the financial assets at fair value through profit or loss was not pledged or held as collateral.

  • C. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.

  • (3.) Notes Receivable, Net

.) Notes Receivable, Net
ITEM 31-Dec-23 31-Dec-22
Notes receivable $ 166,720 $ 179,489
Less: Allowance for impairment loss (507) (353)
$ 166,213 $ 179,136

  • A. As of December 31, 2023 and 2022, the notes receivable were not pledged.

  • B. Please refer to table below for the information about the disclosures on allowance for impairment loss on notes receivable.

  • (4.) Accounts Receivable, Net

ITEM
Accounts receivable
Gross Carrying Amount measured at
amortized cost
Less: Allowance for impairment loss		 31-Dec-23
$ 485,461
(8,209)
$ 477,252		 31-Dec-22
$ 512,746
(6,693)
$ 506,053

  • A. The Group’s average credit terms of accounts receivable were 30 to 210 days, which was determined with factors of customers’ industrial environment, business scales and profitability.

  • B. The accounts receivables were not pledged.

  • C. The Group applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for all notes receivable and accounts receivable. The lifetime expected credit losses on accounts receivables are estimated by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions. According to the past experience of credit loss, there is no significant difference between different customer categories, thus the provision matrix doesn’t further distinguish customer categories, and is set up the expected credit loss ratio by the past due days.

The following table detailed the loss allowance of notes receivables and accounts receivables based on the Group’s provision matrix.

December 31,2023

Not past due
0 to 60 days
61 to 120 days
121 to 180 days
Over 181 days
Total		 Expected Credit
Loss Ratio
0%~1%
5%
30%
50%
100%		 Gross
Carrying
Amount
$ 613,056
31,294
1,274
243
6,314
$ 652,181		 Loss Allowance
(Lifetime ECL)
$ 334
1,565
382
121
6,314
$ 8,716		 Amortized
Cost
$ 612,722
29,729
892
122
-
$ 643,465
  • 178 -
December 31,2022

Not past due
0 to 60 days
61 to 120 days
121 to 180 days
Over 181 days
Total		 Expected Credit
Loss Ratio
0%~1%
5%
30%
50%
100%		 Gross
Carrying
Amount
$ 671,937
11,495
3,915
952
3,936
$ 692,235		 Loss Allowance
(Lifetime ECL)
$ 885
575
1,174
476
3,936
$ 7,046		 Amortized
Cost
$ 671,052
10,920
2,741
476
-
$ 685,189
  • D. The movements of the loss allowances of notes receivable and accounts receivable, including those from related parties, were as follows:
from related parties, were as follows:
Balance on January 1
Add: Recognition of impairment losses
Foreign exchange gains and losses
Balance at December 31		 For the Year Ended
December 31,2023
$ 7,046
1,681
(11)
$ 8,716		 For the Year Ended
December 31,2022
$ 6,536

467
43
$ 7,046

  • E. These amounts were recognized without considering other credit enhancements held by the Group. The Group writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. However, the Group continues to engage in enforcement activity to recover the receivables due. Any recovered amounts are recognized in profit or loss.

  • F. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.

(5.) Inventories

Inventories
ITEM
Merchandise
Finished goods
Work in process
Raw materials
Materials
Total		 31-Dec-23
$ 2,727
298,744
152,418

342,617
42,688
$ 839,194		 31-Dec-22
$ 1,039
268,401
145,492
275,972
46,109
$ 737,013
  • A. Cost of Revenue related to inventories recognized in profit or loss as follows:
ITEM
Cost of Goods Sold
Loss on decline (gain on reversal) in
market value of inventories
Loss on inventory scrapped
Others
Total		 For the Year Ended December31 For the Year Ended December31
2023
$ 1,860,580



(4,898)
16,711

(702)
$ 1,871,691		 2022
$ 1,741,768
8,111
17,325

(1,853)
$ 1,765,351

  • B. No inventories were pledged or held as collateral.

  • 179 -

(6.) Prepayments

Prepayments
ITEM
Payments in Advance
Offset Against Business Tax Payable
Office Supplies
Other Prepayments
Total
Financial Assets at FVTOCI – non-current
ITEM
Equity instruments
Domestic unlisted ordinary shares
Foreign listed shares
Overseas unlisted preferred shares
Subtotal
Valuation adjustments
Total		 31-Dec-23
$ 37,704
34,269
530
6,547
$ 79,050
31-Dec-23
$ 12,126
37,102
36,409
85,637
(63,425)
$ 22,212		 31-Dec-22
$ 49,243
31,427

18,053
8,449
$ 107,172
31-Dec-22
$ 9,676

37,102

36,409

83,187
(58,492)
$ 24,695

  • (7.) Financial Assets at FVTOCI – non-current

  • A. These investments in equity instruments were held for long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believed that recognizing short-term fluctuations from these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

  • B. The financial assets at FVTOCI were not pledged or held as collateral.

  • C. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.

  • (8.) Property, Plant and Equipment

Cost
1-Jan-23
Additions
Disposals
Reclassification
Effect of exchange rate
changes
31-Dec-23
Accumulated depreciation
and Impairment
1-Jan-23
Depreciation
Disposals
Effect of exchange rate
changes
31-Dec-23		 Land
$ 717,584
-
-
-
-
$ 717,584
$ -
-
-
-
$ -		 Buildings
 Machinery Other
Equipment
$ 336,048
20,521

(14,322)
7,932
(737)
$ 349,442
$ 260,387

19,752

(14,026)
(559)
$ 265,554		 Unfinished
Construction
and
Equipments
Pending
Acceptance
$ 72,622
115,721

-
(58,638)
-
$ 129,705
$ -
-

-
-
$ -		 Total
$ 5,743,756
198,695

(30,404)
130,648
(21,785)
$ 6,020,910
$ 2,624,009
206,089
(29,230)

(8,263)
$ 2,792,605
$ 2,926,564

20,667

-

47,303

(16,155)		 $ 1,690,938

41,786

(16,082)

134,051
(4,893)
$ 2,978,379 $ 1,845,800
$ 1,122,935

89,240

-

(5,311)		 $ 1,240,687

97,097

(15,204)
(2,393)
$ 1,206,864 $ 1,320,187
  • 180 -
Cost
1-Jan-22
Additions
Disposals
Reclassification
Effect of exchange rate
changes
31-Dec-22
Accumulated Depreciation
and Impairment
1-Jan-22
Depreciation
Disposals
Effect of exchange rate
changes
31-Dec-22
CarryingAmount
31-Dec-23
31-Dec-22		 Land
$ 717,584
-
-
-
-
$ 717,584
$ -
-
-
-
$ -
$ 717,584
$ 717,584		 Buildings Machinery Other
Equipment
$ 309,851

21,231

(1,354)
5,376

944
$ 336,048
$ 243,113

17,693

(1,253)

834
$ 260,387
$ 83,888
$ 75,661		 Unfinished
Construction
and
Equipments
Pending
Acceptance
$ 66,323
37,271

-
(30,972)

-
$ 72,622
$ -
-

-
-
$ -
$ 129,705
$ 72,622		 Total
$ 5,626,084
88,136

(8,951)
17,284

21,203
$ 5,743,756
$ 2,422,182
200,207

(7,897)
9,517
$ 2,624,009
$ 3,228,305
$ 3,119,747
$ 2,882,399

11,877

(78)

19,777

12,589		 $ 1,649,927

17,757

(7,519)

23,103

7,670
$ 2,926,564 $ 1,690,938
$ 1,031,583

87,941

(27)

3,438		 $ 1,147,486

94,573

(6,617)

5,245
$ 1,122,935 $ 1,240,687
$ 1,771,515 $ 525,613
$ 1,803,629 $ 450,251

  • A. Property, plant and equipment were pledged as collateral for both long-term and short-term loans, please refer to Note 8.

  • B. As of December 31, 2023 and 2022, the Group acquired agricultural lands from non-related parties

for the purpose of plant planning which could not be registered ownership of the Group. The acquisition cost was NT$23,184 thousand, and the land was registered in the name of Shu Fei Yu. To protect the interest of the Group, the mortgage right of the land was registed belong to the Group.

(9.) Right-of-Use Assets

ht-of-Use Assets
ITEM 31-Dec-23
21,715
(3,141)
18,574
Land		 31-Dec-22
Land
Less:Accumulated Depreciation
Net
1-Jan-23
Additions
Effect of exchange rate changes
31-Dec-23		 $ $ 22,122

(2,560)
$ $ 19,562
Cost Accumulated
Depreciation		 CarryingAmount
$ 19,562
(638)
(350)
$ 18,574
  • 181 -
1-Jan-22
Addition
Effect of Exchange Rate Changes
31-Dec-22		 Land
Cost
$ 21,801
-
321
$ 22,122		 Accumulated
Depreciation

$ (1,892)
(642)
(26)
$ (2,560)		 CarryingAmount
$ 19,909
(642)
295
$ 19,562

  • A. The Group signed a contract with the Ministry of Land and Resources of the People's Republic of China, in 2003; the Group acquired the right-of-use of the lands in Yuhang development zone and Ka Zi Na Ke development zone for the purpose of setting up plants and agricultural usage. It was amounted for RMB $7,544 thousand for the right of usage for 50 years.

  • B. The right-of-use assets were pledged as collateral for both long-term and short-term loans, please refer to Note 8.

  • C. As of December 31, 2023, there was no indication that the right-of-use assets were impaired, therefore the Group did not assess impairment.

  • (10.) Intangible Assets

tangible Assets
Cost
1-Jan-23
Additions
Disposals
Reclassification
Effect of foreign currency
exchange difference
31-Dec-23
Accumulated Depreciation and
Impairment
1-Jan-23
Depreciation
Disposals
Effect of foreign currency
exchange difference
31-Dec-23
Cost
1-Jan-22
Additions
Disposals
Effect of foreign currency
exchange difference
31-Dec-22		 Trademarks
$ 2,463
-
-
-
(46)
$ 2,417
$ 2,421
16
-
(46)
$ 2,391
$ 2,427
-
-
36
$ 2,463		 Software
$ 91,839
5,260

(10,516)
223
-
$ 86,806
$ 62,980
13,489

(10,516)
-
$ 65,953
$ 95,831
11,138

(15,130)
-
$ 91,839		 Technology
licenses
$ 347,941
-
-

-

-
$ 347,941
$ 289,859
7,138

-
-
$ 296,997
$ 347,941
-
-

-
$ 347,941		 Total
$ 442,243
5,260

(10,516)
223
(46)
$ 437,164
$ 355,260
20,643

(10,516)
(46)
$ 365,341
$ 446,199
11,138

(15,130)
36
$ 442,243
  • 182 -
Accumulated Depreciation and
Impairment
1-Jan-22
Depreciation
Disposals
Effect of foreign currency
exchange difference
31-Dec-22
Carrying Amount
31-Dec-23
31-Dec-22		 Trademarks
$ 2,369
17
-
35
$ 2,421
$ 26
$ 42		 Software
$ 60,098
18,012

(15,130)
-
$ 62,980
$ 20,853
$ 28,859		 Technology
licenses
$ 266,436
23,423

-
-
$ 289,859
$ 50,944
$ 58,082		 Total
$ 328,903
41,452

(15,130)
35
$ 355,260
$ 71,823
$ 86,983

  • A. The software was pledged as collateral for both long-term loans, please refer to Note 8.

  • B. The aforementioned technology licenses were licensed by the National Health Research Institutes (NHRI) and were acquired from a Germany company “Medigene”. The main purpose of these technologies were to develop new drug for anticancer.

  • (11.) Short-term loans

rt-term loans
Category
Unsecured Loans
Secured loans
Total
Category
Unsecured Loans
Secured loans
Total		 31-Dec-23
Amount
Interest rate
$ 360,000
1.75%~1.95%
40,000
2.04%~2.28%
$ 400,000
31-Dec-22		 Interest rate
Amount
$ 420,000
27,000
$ 447,000		 Interest rate
1.44%~2.32%
1.79%~2.03%

The Group pledged some of its property, plant and equipment as well as other financial assets as collaterals for short-term borrowings. Please refer to Note 8 for more information.

  • (12.) Long-Term Borrowings and Current Portion of long-term borrowings
Items
Secured Loans
Unsecured Loans
Subtotal
Less: current portion
Total
Interest Rate		 31-Dec-23
$ 1,254,858
290,000
1,544,858
(50,716)
$ 1,494,142
1.650%~2.415%		 31-Dec-22
$ 1,205,052
260,907
1,465,959
(50,341)
$ 1,415,618
1.525%~2.283%

Please refer to Note 8 for collaterals pledged for long-term borrowings.

  • 183 -

(13.) Retirement Benefit Plans

Defined contribution plans

  • A. The employee pension plan under the Labor Pension Act of the R.O.C. (the Act) is a defined contribution plan. Pursuant to the plan, the Group and its domestic subsidiaries make monthly contributions of 6% of each individual employee’s salary or wage to employees’ pension accounts. Pension benefits for employees of subsidiaries overseas were provided in accordance with the local regulations. NT$23,746 thousand and NT$21,620 thousand were contributed by the Group for the years ended December 31, 2023 and 2022, respectively.

  • B. Pension benefits for employees of subsidiaries overseas were provided in accordance with the local regulations. NT$7,529 thousand and NT$6,587 thousand were contributed by the Group for years ended December 31, 2023 and 2022, respectively.

Defined benefit plan

The Group and its domestic subsidiaries have defined benefit pension plans in accordance with the Labor Standards Law of the R.O.C. 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 Group contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited in Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. The Group would assess as the balance in the aforementioned labor pension reserve account by the end of each year. If the account balance is not enough to pay the pension to the labors expected to be qualified for retirement in the next year, the Group will make contribution for the deficit by next March. The pension fund is managed by the government’s designated authorities and the Group has no right to influence their investment strategies.

  • A. Amounts recognized in the consolidated balance sheets were as follows:
ITEM 31-Dec-23 31-Dec-23 31-Dec-22
Present value of defined benefit obligations $ 164,129
$ 165,248
(129,270)
Fair value ofplan assets (128,577)
Net defined benefit liability $ 35,552
$ 35,978
  • B. Movements of net defined benefit liabilities were as follows:
B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows: B. Movements of net defined benefit liabilities were as follows:
For the Year Ended December31,2023
Present value of
defined benefit
obligations		 Fair value of plan
asset
Net defined benefit
liability
Fair value of plan
asset		 Net defined benefit
liability
ITEM
BALANCE at JANUARY 1 $ 165,248 $ (129,270) $ 35,978
Service cost:
Current service cost 680 - 680
Interest expense (revenue) 2,118 (1,662) 456
Recognized in profit or loss 2,798 (1,662) 1,136
  • 184 -
For the Year Ended December31, 2023
Present value of Fair value of plan
asset		 Net defined benefit
liability
defined benefit Fair value of plan Net defined benefit
ITEM obligations asset liability
Remeasurement on the net defined
benefit liability:
Return on plan assets - (1,130) (1,130)
Actuarial (gains) losses
Effect of changes in
demographic assumptions
demographic assumptions - - -
Effect of changes in financial
assumptions
assumptions 1,397 - 1,397
Experience adjustments 3,469 - 3,469
Components of defined benefit 4,866 (1,130)
costs recognized in other
4,866 3,736
comprehensive income
Pension fund contribution - (5,298) (5,298)
Paid Pension (8,783) 8,783 -
Balance at December 31 $ 164,129 $ (128,577) $ 35,552
For the Year Ended December31, 2022
Present value of
defined benefit
obligations		 Fair value of plan
asset		 Net defined benefit
liability
Fair value of plan
asset		 Net defined benefit
liability
ITEM
BALANCE at JANUARY 1 $ 171,779 $ (120,890) $ 50,889
Service cost:
Current service cost 1,075 - 1,075
Interest expense(revenue) 1,182 (832) 350
Recognized in profit or loss 2,257 (832) 1,425
Remeasurement on the net defined
benefit liability:
Return onplan assets - (9,475) (9,475)
Actuarial(gains)losses
Effect of changes in
demographic assumptions		 8
(9,474)
Effect of changes in
demographic assumptions 8 -
Effect of changes in financial
assumptions
assumptions (9,474) -
Experience adjustments 9,861 - 9,861
Components of defined benefit 395 (9,475)
costs recognized in other
(9,080)
comprehensive income
Pension fund contribution - (7,256) (7,256)
Paid Pension (9,183) 9,183 -
Balance at December 31 $ 165,248 $ (129,270) $ 35,978
  • 185 -

C. The defined benefit plan as of the year ended 2023 and 2022 were summarized by functions as follows:

For the Year Ended December 31

Operation Costs
Selling Expense
Administrative Expense
Research and Development Expense		 2023
$ 516
354
224
42
$ 1,136		 2022
$ 648
408
293
76
$ 1,425

  • D. Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

  • (A.) Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc. at the discretion of the Bureau of Labor Funds of Ministry of Labor, or under the mandated management. However, under the Labor Standards Law, the rate of return on plan assets shall not be less than the average interest rate on a two-year time deposit published by the local banks.

  • (B.)Interest risk

A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.

  • (C.)Salary risk

The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

  • E. The main actuarial assumptions used were as follows:
in actuarial assumptions used were as follows:
31-Dec-23 31-Dec-22
Discount rate 1.20% 1.30%
Expected rate of salaryincrease 1.50% 1.50%
The weighted average duration of the defined
8 years 9 years
benefit obligation

  • (A.) Assumptions on future mortality experience are set based on the 6th Taiwan Standard Ordinary Experience Mortality Table (TSO).

  • (B.) The sensitivity analysis:

If significant actuarial assumptions change reasonably and all other assumptions are held constant, the present value of the defined benefit obligation may increase(decrease) as below:

elow:
ITEM 31-Dec-23 31-Dec-22
Discount rate $ (3,459)
$ (3,727)
(1,397)
(1,506)
3,571
3,854
1,415
1,526
3,552
3,837
(3,457)
(3,729)
(15)
(26)
15
26
0.25% increase
0.1% increase
0.25% decrease
0.1% decrease
Future salaryincrease rate
0.25% increase
0.25% decrease
Employee turnover rate

110% of the expected employee turnover rate		 (15) (26)
90% of the expected employee turnover rate 15 26
  • 186 -

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated .

  • F. The contribution that the Group expects to make to its defined benefit pension plans in next year is NT$834 thousand.

Other Employees’ benefits were as follows:

r Employees’benefits were as follows: r Employees’benefits were as follows:
ITEM
31-Dec-23
31-Dec-22
Employees benefits payable
$ 10,485 $ 9,647
Compensated absences payable
5,432
5,217
Other employees benefits
16,314
15,029
Total
$ 32,231$ 29,893
l Stock
ovements in the number of Sinphar’s ordinary shares outstanding are as follows:
For the Year Ended December 31,2023
Issued and paid shares
(in thousands)
Issued capital
January 1
167,722 $ 1,677,221
December 31
167,722 $ 1,677,221
For the Year Ended December31,2022
Issued and paid shares
(in thousands)
Issued capital
January 1
167,722 $ 1,677,221
December 31
167,722 $ 1,677,221		 31-Dec-22
$ 9,647
5,217
15,029
$ 29,893
Issued and paid shares
(in thousands)
Issued capital
167,722 $ 1,677,221
167,722 $ 1,677,221
For the Year Ended December31,2022		 Issued capital
$ 1,677,221
$ 1,677,221
Issued and paid shares
(in thousands)
167,722
167,722		 Issued capital
$ 1,677,221
$ 1,677,221
  • (14.) Capital Stock

The movements in the number of Sinphar’s ordinary shares outstanding are as follows:

As of Dec 31, 2023 the Sinphar’s authorized capital amount was NT$2,500,000 thousand, consisting of 250,000 thousand shares of ordinary stocks.

  • (15.) Capital Surplus
ITEM
Additional paid in capital
Additional paid-in capital arising from bond conversion
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Changes in ownership interest in Subsidiaries
Others
Total		 31-Dec-23
$ 422,450
190,611
310,439
-
640
$ 924,140		 31-Dec-22
$ 422,450
190,611
310,439
5,832
640
$ 929,972

Under Sinphar’s Act, the capital surplus generated from excess of the issuance price over the par value of capital stock and donations may be used to offset a deficit; in addition, when Sinphar has no deficit, such capital surplus may be distributed as stock dividends or cash dividends. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed a certain percentage of Sinphar’s paid in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

  • 187 -

(16.) Accumulated Deficit and Dividend Policy

  • A. When allocating the net profits in each fiscal year, Sinphar shall be first utilized for paying taxes, offsetting losses of previous years, and then setting aside the 1) legal capital reserve at 10% of the profits left over, until the accumulated legal capital reverse equals Sinphar’s paid-in capital; 2) special capital reverse in accordance with relevant laws or regulations or as requested by the authorities in charge; and 3) balance left over shall be allocated according to the resolution of the board of directors and the shareholders’ meeting.

  • B. To consider about the economic circumstances, development phase, and future business expansion, dividends will be allocated in consideration of future capital expenditure and cash forecast. However, cash dividends are limited to over 20% of total dividends distributed.

  • C. The appropriation for legal capital reserve shall be made until the reserve equals Sinphar’s paid-in capital. The reserve may be used to offset deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if Sinphar incurs no loss.

  • D. Special Reserve ：

ial Reserve：
ITEMS
Amount when first applied to IFRSs
Amount aroused from other equity interest
Total		 31-Dec-23
$ 37,951
83,416
$ 121,367		 31-Dec-22
$ 37,951
53,124
$ 91,075

  • (A.) In accordance with the regulations, Sinphar 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.

  • (B.) When IFRSs were first adopted, according to the special reserve regulation of Financial Supervisory Commission R.O.C, no. 1010012865 on April 6, 101, If Sinphar subsequently uses, disposes or reclassifies the relevant assets, the proportion originally set aside as the special reserve will be reversed into distributable retained earnings.

  • E. The appropriations of earnings for 2022 had been approved in the meeting of shareholders on June 20, 2023 and the appropriations and dividends per share were as follows:

Appropriation of Earnings Appropriation of Earnings Dividends Per Share(NT$) Dividends Per Share(NT$)
Legal capital reserve $ 23,373 $ -
Special capital reserve 30,292 -
Cash dividends of ordinaryshare 167,722 1
Total $ 221,387

  • F. The resolutions of 2021 deficit compensation have been approved by Sinphar’s shareholders in its meeting held on June 21, 2022. The deficit would be covered with legal capital reserve and distribute cash dividend of NT$0.2 per share, based on the amount NT$33,544 thousand of capital surplus upon issuance.

  • G. The appropriations of earnings for 2023 had been approved in the meeting of the Board of Directors on March 6, 2024 and the appropriations and dividends per share were as follows:

Appropriation of Earnings Appropriation of Earnings Dividends PerShare(NT$) Dividends PerShare(NT$)
Legal capital reserve $ 36,980 $ -
Specialcapital reserve 15,804 -
Cashdividends ofordinary share 167,722 1
Stock dividends of ordinary share 134,178 0.8
Total $ 354,684

The appropriations of earnings for 2023 are to be presented for approval in the shareholders’ meeting which is to be held on June 19, 2024.

  • 188 -

  • H. Information on the resolution of the Board of Directors' and shareholders' meetings regarding the appropriation of earnings is available from the Market Observation Post System on the website of the TWSE.

  • (17.) Others Equity Items

(17.) Others Equity Items (17.) Others Equity Items (17.) Others Equity Items (17.) Others Equity Items
ITEM
Exchange
differences on
translation of
foreign financial
statements
Unrealized Gain (Loss)
on Financial Assets at
Fair Value Through
Other Comprehensive
Income
Total
Balance as at Jan 1, 2023
$ (80,701) $ (40,667) $ (121,368)
Exchange differences on translation of foreign
financial statements
(15,045)
-
(15,045)
Income tax effects
3,009
-
3,009
Unrealized gain on financial assets at FVTOCI
-
(1,922)
(1,922)
Share of other comprehensive income of
associates accounted for using the equity
method
17
(1,862)
(1,845)
Balance as at Dec 31, 2023
$ (92,720) $ (44,451) $ (137,171)
Balance as at Jan 1, 2022
$ (91,854) $ (37,325) $ (129,179)
Exchange differences on translation of foreign
financial statements
13,919
-
13,919
Income tax effects
(2,784)
-
(2,784)
Unrealized gain on financial assets at FVTOCI
-
(68)
(68)
Share of other comprehensive income of
associates accounted for using the equity
method
18
(3,274)
(3,256)
Balance as at Dec, 2022
$ (80,701) $ (40,667) $ (121,368)
18.) Non-controlling Interests
For the Years Ended December 31
ITEMS
2023
2022
Balance at January 1
$ 286,618 $ 354,944
Share attributable to non-controlling interests:
Net loss
(18,394)
(60,470)
Exchange differences arising from the translation of the
translating foreign operations
(3,158)
2,937
Unrealized loss on financial assets at fair value through other
comprehensive income
(1,149)
(1,998)
Changes in ownership interests in Subsidiaries
49,844
-
Decrease in non-controlling interests
(14,225)
(8,795)
Balance at December 31
$ 299,536$ 286,618
(19.) Net Revenue
For the Year Ended December 31
ITEM
2023
2022
Revenue from contracts with customers
Sales revenue
$ 3,309,903 $ 3,192,174
Less: Sales returns and discouts
(346,969)
(335,523)
Total
$ 2,962,934$ 2,856,651		 Total
$ (121,368)

(15,045)

3,009

(1,922)
(1,845)
$ (137,171)
$ (129,179)

13,919

(2,784)

(68)
(3,256)
$ (121,368)
December 31
2022
$ 354,944
(60,470)
2,937
(1,998)
-
(8,795)
$ 286,618
2023
$ 3,309,903
(346,969)
$ 2,962,934		 2022
$ 3,192,174
(335,523)
$ 2,856,651

(18.) Non-controlling Interests

  • 189 -

  • A. Breakdowns of contract revenue

  • (A.) Please refer to Note 14 for geographical and departmental information details.

  • (B.) Revenue was recognized at a specific point of time period when all the obligations were fulfilled.

  • B. Contract Balance

The accounts receivable and contract liabilities in relation to contract revenue were as follows:

ITEM
Accounts Receivable (6(4.))
Contract liabilities-current		 31-Dec-23
$ 477,252
$ 85,654		 31-Dec-22
$ 506,053
$ 96,559

  • (A.) Changes in contract liabilities mainly result from the time difference between the performance obligation satisfied and the customer’s payment.

  • (B.) Revenue from opening contract liabilities - sales of goods recognized as revenue in the current period were as follows:

ere as follows:
Revenue
Amounts from opening contract liabilities - sales of good		 For the Year Ended December 31
2023
$ 82,757		 2022
$ 85,216
  • (20.) Other Incomes
Other Incomes
ITEM
Government grants

Rental income
Others
Total

Other Gains and Losses
ITEM
Net currency exchange gains
Gains (Losses) on disposal of assets
Gains on initial recognition of biological assets and agricultural
product
Others
Total		 For the Year Ended December 31
2023
2022
$ 4,936 $ 12,252
1,880
1,731
27,920
34,724
$ 34,736$ 48,707
For the Year Ended December 31		 2022
$ 12,252

1,731

34,724
$ 48,707
2023
$ 3,787

5,126

2,682

(5,275)
$ 6,320		 2022
$ 21,311

(811)

1,293

(752)
$ 21,041

  • (21.) Other Gains and Losses

  • (22.) Employee Benefits Expense, Depreciation and Amortization

ITEM
Employee benefits expense
Salaries and wages
Labor and health insurance
Pension
Other employee benefits
Depreciation
Amortization
Total		 For the Year Ended December31,2023 Year Ended December31,2023
Cost of revenue
$ 291,704
29,968
16,657
18,450
158,379
5,647
$ 520,805		 Operatingexpenses
$ 340,544
27,571
15,754
25,164
48,348
31,150
$ 488,531		 Total
$ 632,248
57,539
32,411
43,614
206,727
36,797
$ 1,009,336
  • 190 -

For the Year Ended December 31, 2022

ITEM
Employee benefits expense
Salaries and wages
Labor and health insurance
Pension
Other wages
Depreciation
Amortization
Total		 Cost of revenue
$ 274,189
25,476
15,174
16,542
152,313
3,474
$ 487,168		 Operatingexpenses
$ 322,615
24,808
14,458
23,121
48,536
62,391
$ 495,929		 Total
$ 596,804
50,284
29,632
39,663
200,849
65,865
$ 983,097

  • A. Sinphar shall allocate 2~8% and not higher than 5% of annual profits during the period to employees’ compensation and directors’ and supervisors’ remuneration, respectively. If there is a change in the proposed amount after the annual consolidated financial statement are authorized for issue, the difference is recorded as a change in accounting estimate.

  • B. The employees’ compensation and directors’ and supervisors’ remuneration for 2023 and 2022 were approved in the meetings of the Board of Directors on March 6, 2024 and March 17, 2023, respectively. The amounts recognized in the financial reports were as follows:

Amount resolved to be
distributed
Amount recognized in
financial reports
Difference		 2023
Employees’
compensation
Directors’ and
supervisors’
remuneration
$ 10,485 $ 5,898
10,485
5,898
$ -$ -		 2022

Employees’
compensation
Directors’ and
supervisors’
remuneration
$ 9,647 $ 5,426
9,647
5,426
$ - $ -
Employees’
compensation
$ 10,485
10,485
$ -
Employees’
compensation
$ 9,647
9,647
$ -

The above-mentioned compensation was distributed in cash.

  • C. The information about employees’ compensation and directors’ and supervisors’ remuneration of Sinphar as resolved by the meeting of Board of Directors is available from the Market Observation Post System on the website of the TWSE.

(23.) Finance Costs

Finance Costs
ITEM
Interest expense - bank loans
Interest expense - long term payables
Total		 For the Year Ended December 31
2023
$ 33,711
-
$ 33,711		 2022
$ 27,803
10
$ 27,813
  • 191 -

(24.) Income Tax

A. The components of tax expense (benefit):

The components of tax expense (benefit):
For the Year Ended December31
ITEM 2023 2022
Current tax
Current tax expense recognized in the current
year $ (58,109) $
57,707
Adjustments for prior periods 1,833 3,399
Total (56,276) 61,106
Deferred tax
Deffered income tax related to origination and
reversal of temporary differences 5,208 19,766
Income tax expense (benefit) $ (51,068) $ 80,872
Income tax recognized in other comprehensive loss (income):
For the Year Ended December31
ITEM 2023 2022
Currency translation differences $ (3,009) $ 2,784

B. Income tax recognized in other comprehensive loss (income):

C. Reconciliation between income tax expense (benefit) and accounting loss as follows:

ITEM
Profit before income tax
Tax calculated based on profit before tax and
statutory tax rate
Effects from items disallowed by tax regulation
The Income from Income Basic Tax Act
Investment tax credit
Income tax from subsidiaries dividends
No deferred income tax assets have been
recognized
Net change in deferred income tax
Income tax adjustments for prior years
Foreign tax credit
Income tax expense (benefit)		 For the Year Ended December 31 For the Year Ended December 31
2023
$ 305,708
$ 66,877
(85,031)
-
(41,649)
14,365
(12,671)
5,208
1,833
-
$ (51,068)		 2022
$ 245,046
$ 37,861
26,075
3,637
(33,260)
8,881
27,783
10,885
3,399
(4,389)
$ 80,872

The corporate income tax rate for entities subject to the R.O,C, Income Tax Act is 20%, and the tax rate for unappropriated earnings is 5%. The tax rate for subsidiaries in China is 25%. For entities located in other jurisdictions, taxes are calculated using the applicable tax rate for each individual jurisdiction. Under the Act for the Development of Biotech and Pharmaceutical Industry, Sinphar could recognize an investment tax credit within a limit of 20% of the investment price if the investee is applicable to the act.

  • 192 -

D. Deferred income tax assets and liabilities

Deferred tax assets or liabilities arising from temporary differences, operating loss carryforward, and investment tax credits:

investment tax credits:
Deferred income tax asset
Temporary difference
Employee benefits
Sales returns and allowances
Unrealized loss on inventories
Exchange difference on foreign
operations
Others
Operating loss carryforwards
Investment tax credit
Deferred income tax liabilities
Temporary difference
Land value increment tax
Gain on foreign investments accounted
for using the equity method
Others
Deferred income tax asset
Temporary difference
Employee benefits
Sales returns and allowances
Unrealized loss on inventories
Exchange difference on foreign
operations
Others
Investment tax credit
Deferred income tax liabilities
Temporary difference
Land value increment tax
Gain on foreign investments accounted
for using the equity method
Others		 For the Year Ended December 31,2023
Jan-1

$ 3,006
11,264
16,867
20,173
798
-
-
$ 52,108
$ 32,939
1,692
3,521
$ 38,152		 Profit and loss
Other
comprehensive
income
Effect of
exchange
rate changes



$ 257 $ - $ -

(554)
-
-

(5,603)
-
-

-
3,009
-

(10)
-
-

80,000
-
-

41,649
-
-
$ 115,739 $ 3,009 $ -
$ - $ - $ -

51,053
-
-

(702)
-
(54)
$ 50,351 $ - $ (54)
For the Year Ended December 31,2022		 Dec-31

$ 3,263

10,710

11,264

23,182

788

80,000

41,649
$ 170,856
$ 32,939

52,745
2,765
$ 88,449
Jan-1

$ 2,980
12,780
16,429
22,957
1,392
18,337
$ 74,875
$ 32,939
-
5,345
$ 38,284		 Profit and loss

$ 26

(1,516)

438

-

(594)

(18,337)
$ (19,983)
$ -

1,692

(1,909)
$ (217)
Other
comprehensive
income

$ -

-

-

(2,784)

-
-
$ (2,784)
$ -

-
-
$ -		 Effect of
exchange rate
changes

$ -

-
-

-
-

-
$ -
$ -

-

85
$ 85		 Dec-31

$ 3,006

11,264
16,867

20,173
798

-
$ 52,108
$ 32,939

1,692

3,521
$ 38,152

The above-mentioned deferred income tax liabilities were classified as other non-current liabilities.

  • 193 -

E. Unrecognized deferred tax assets:

ITEM
Items not recognized as deferred tax assets:
Loss on investments accounted for using the
equity method
Loss on financial assets evaluation
Unused operating loss carry forward
Others
Total		 31-Dec-23
$ 39,092
969
588,055
8,805
$ 636,921		 31-Dec-22
$ -

969
527,595
9,785
$ 538,349

F. Information of unused loss carried forward:

As of December 31, 2023, operating loss carryforward of subsidiary as follow:

ExpiryYear
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Total		 Remaining
Creditable Amount
225,547
172,275
159,319
257,010
288,492
393,517
388,622
466,157
184,481
804,857
$ 3,340,277		 Tax effect
45,109
34,455
31,864
51,402
57,698
78,704
77,724
93,232
36,896
160,971
$ 668,055

G. The tax authorities have examined income tax return of Sinphar through 2021.

(25.) Other Comprehensive Income (Loss)

G. The tax authorities have examined income tax return of Sinphar
Other Comprehensive Income (Loss)		 through 2021.
ITEM
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit obligation

Unrealized loss on equity instruments at fair value through other
comprehensive income
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method
Unrealized loss on equity instruments at fair value through other
comprehensive income
Subtotal
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method
Exchange differences arising on translation of foreign operations
transferred to profit or loss
Subtotal
Other comprehensive income (loss)		 For the Year Ended December 31,2023
Before tax

$ (3,736)
(1,922)
(3,011)
(8,669)
(18,213)
27
(18,186)
$ (26,855)		 Income tax
expense

$ -

-
-
-

3,009

-
3,009
$ 3,009		 After tax

$ (3,736)

(1,922)

(3,011)

(8,669)

(15,204)

27
(15,177)
$ (23,846)
  • 194 -

For the Year Ended December 31, 2022

ITEM
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit obligation

Unrealized loss on equity instruments at fair value through other
comprehensive income
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method
Unrealized loss on equity instruments at fair value through other
comprehensive income
Subtotal
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations
Share of other comprehensive income of associates and joint ventures
accounted for using the equity method
Exchange differences arising on translation of foreign operations
transferred to profit or loss
Subtotal
Other comprehensive income (loss)		 Before tax

$ 9,080
(68)
(5,272)
3,740
16,844
30
16,874
$ 20,614		 Income tax
benefit

$ -

-
-

-

(2,784)

-

(2,784)
$ (2,784)		 After tax

$ 9,080

(68)

(5,272)

3,740

14,060

30
14,090
$ 17,830

(26.) Earnings per Share

Earnings per Share
ITEM
Basic earnings per share:
Net income attributable to ordinary shareholders of the parent
Weighted average number of shares outstanding for the period (in
thousands)
Basic earnings per share, after tax (Unit: NT$ Per Share)
Diluted earnings per share:
Net income available to ordinary shareholders of the parent
Weighted average number of shares outstanding for the period (in
thousands)
Effect of the dilutive potential ordinary shares
Employees’ compensation (share in thousands)
Weighted average number of shares outstanding for diluted earnings per
share (share in thousand)
Diluted earnings per share, after tax (in dollars)		 For the Year Ended December 31
2023
$ 375,170
167,722
$ 2.24
$ 375,170
167,722
309
168,031
$ 2.23		 2022
$ 224,644

167,722
$ 1.34
$ 224,644

167,722

291

168,013
$ 1.34

If the Group offered to settle the compensation or bonuses paid to employees in shares or cash at the Group’s option, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the calculation of diluted earnings per share if the effect is dilutive. Such dilutive effect of the potential shares is included in the calculation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

  • 195 -

7. TRANSACTIONS WITH RELATED PARTIES

  • (1.) Name of the parent company and the ultimate controlling party

Sinphar is the ultimate controlling party of the Group.

  • (2.) Names of related parties and relationship categories
es of related parties and relationship categories
Names of relatedparties
CANADA BIOTECH
XING-DA CAPITAL CORP.
Shu Fei Yu
Board of Directors, General Manager and Vice
General Manager		 Relatedpartycategories
Other related parties
Other related parties
Other related parties
Key management personnel

(3.) Significant transactions with related parties

All transactions, account balances, incomes and expenses between Sinphar and its subsidiaries (which are related parties of Sinphar) were eliminated upon consolidation. Hence, there were not disclosed items in the note. The transactions with related parties were as follows:

A. Trademarks and royalties

Under an agreement with CANADA BIOTECH, CANADA BIOTECH, the Group owns the right to use its trademark under the condition which the Group pays 0.2%~0.8% of annual gross profit from merchandise sale as royalty each quarter, with the annual sum of payment not less than 36 thousand in Canadian currency. The Group paid the royalties amounted to NT$901 thousand and NT$890 thousand in 2023 and 2022 respectively. The payments were recognized as marketing expense.

B. Others

The Group has successively acquired nearby agricultural land for the plant planning. However, under the current regulations, the ownership of agricultural lands could not be registered under Sinphar. Therefore, the Group has appointed the other related party, Shu Fei Yu, to be the owner the land. Please refer to the property, plant and equipment session in Note 6(8) for more information.

C. Endorsements and guarantees

The Group has signed a drug sales contract with a medical institution. According to the terms of the contract, Xing-da Investment Co., Ltd., another related party, would be the guarantor of the Group.

(4.) Key management compensation

The remuneration to the Board of Directors and main management personnel were as follows:

Salaries and other short-term employee benefits For the Year Ended December 31 For the Year Ended December 31
2023
$ 39,635		 2022
$ 40,545
  • 196 -

8. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

oup’s assets pledged as collateral are as follows:
ITEM
Deposits in banks(classified within other current assets)
Property, plant and equipment, net
Right-of-use assets
Intangible assets
Total		 31-Dec-23
$ 806

1,966,182

14,957

4,919
$ 1,986,864		 31-Dec-22
$ 503

2,014,721

15,765
6,559
$ 2,037,548

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2023 were as follows:

  • (1.) The National Health Research Institutes (NHRI) and the Group entered into an exclusive license contract to transfer a new anticancer drug developing technology to SynCore in August 2008. According to this contract, after the authorized drug approved for commercialization, the Group will pay a certain percentage of net revenue for sales royalty fee, except for the fixed amounted license fee.

  • (2.) MacuCLEAR (an American company) and the Group entered into the technology license contract to obtain the exclusive license of prescription to manufacture and market the new drug for dry age-related macular degeneration in Asia and Australia in November 2011. According to this contract, the Group will pay a certain percentage of sales profit for sales royalty fee.

  • (3.) Medigene (a Germany company) and the Group entered into the agreement for the license of phase Ⅲ clinical trial and collaboration development of the new anticancer drug “EndoTAG-1” (SB05). Based on the business developing strategy, the Group had revised the partial terms and conditions of the agreement with Medigene. The final revised agreement state that the Group obtained the complete rights of the EndoTAG technology platform (including developing the original item (SB05) and its derivative diseases, new item for diseases, new technology platform and new derivatives). The license fee was on a countryby-country basis no more than EUR 4,000 thousands and on the basis of certain percentage of net sales after the new drug (SB05) approved for commercialization.

  • (4.) Capital expenditures committed but not yet incurred are as follows

ITEMS
Property, plant and equipment		 31-Dec-2023
$ 98,564		 31-Dec-2022
$ 61,933

10. SIGNIFICANT LOSSES FROM DISASTERS: None.

  1. SIGNIFICANT EVENTS AFTER REPORTING PERIOD: None.

  2. OTHER INFORMATION

  3. (1) CAPITAL MANAGEMENT

The Group requires significant amount of capital to maintain its research and development expenditure. Accordingly, the Group manages its capital to ensure that it has sufficient and necessary financial resources and plans to fund its working capital needs, capital asset purchase, research and development expenditure, debt service requirement and dividend payments associated with its existing operations over the next 12 months.

  • 197 -

(2) FINANCIAL INSTRUMENTS

  • A. Financial Risk of financial instrument.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group 's risk management objectives are to manage the market risk (including foreign currency risk, interest risk and price risk), credit risk and liquidity risk related to its operating activities. The Group identifies measures and manages the aforementioned risks and mitigates the disadvantage impact on financial performance. The material treasury activities are reviewed by Audit Committees and/or Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

NATURE AND EXTENT OF SIGNIFICANT FINANCIAL RISKS

  • (A)Market risk

  • a. Foreign currency risk

    • (a.) The Group is exposed to the foreign currency risk due to the transaction of sales, purchase and cash denominated in foreign currency other than the Group’s functional currency. These non-functional currencies are USD, RMB, CAD, EUR, JPY and HKD.

    • (b.) Foreign currency exposure and sensitivity analysis


Financial assets
Monetaryitems
USD:NT$
RMB:NT$ EUR:NT$ JPY:NT$ HKD:NT$ CAD:NT$ Non-monetaryitems
EUR:NT$
Financial liabilities
Monetaryitems
USD:NT$
RMB:NT$ EUR:NT$ CAD:NT$		 31-Dec-23 31-Dec-23 31-Dec-23 31-Dec-23
Foreign
Currencies
(In Thousands)
$ 6,491
37,935
65
45,083
134
149
$ 355
$ 595
8,668
62
22		 Exchange
Rate
30.71

4.33

33.98

0.22

3.93

23.20

33.98
30.71

4.33

33.98

23.20		 Carrying
Amount
(In Thousands)
$ 199,298

164,144

2,209

9,792

526

3,452
$ 12,076
$ 18,275

37,509

2,122

519		 Sensitivityanalysis
Extent of
variation
1%

1%
1%
1%
1%
1%
1%

1%

1%
1%
1%		 Impact
on
Profit or loss


$ 1,993
1,641
22
98
5
35

$ -


$ 183
375
21
5		 Impact
on
Equity


$ -

-

-

-

-

-

$ 121


$ -

-

-

-
  • 198 -

31-Dec-22

Financial assets
Monetaryitems
USD:NT$
RMB:NT$ EUR:NT$ JPY:NT$ HKD:NT$ CAD:NT$ Non-monetaryitems
EUR:NT$
Financial liabilities
Monetaryitems
USD:NT$
RMB:NT$ EUR:NT$ JPY:NT$ CAD:NT$		 Foreign
Currencies
(In Thousands)
$ 7,505
54,570
65
65,151
133
134
$ 461
$ 3,396
10,624
548
7,600
58		 Exchange
Rate
30.71

4.41

32.72

0.23

3.94

22.67

32.72
30.71

4.41

32.72

0.23

22.67		 Carrying
Amount
(In Thousands)
$ 230,489

240,544

2,134

15,141

525

3,032
$ 15,087
$ 104,288

46,832

17,938

1,766

1,323		 Sensitivityanalysis Sensitivityanalysis Sensitivityanalysis
Extent of
variation
1%

1%
1%
1%
1%
1%
1%

1%

1%
1%
1%
1%		 Impact
on
Profit or loss
$ 2,305
2,405
21
151
5
30
$ -
$ 1,043
468
179
18
13		 Impact
on
Equity
$ -

-

-

-

-

-
$ 151
$ -

-

-

-

-

If New Taiwan dollar strengthened against the relevant currency and all other variables were held constant, there would be an equal and opposite impact on profit or loss and other equity as of December 31, 2023, and December 31, 2022.

(c.) Since there were varieties of foreign currencies within the Group, the Group disclosed the summarized foreign exchange gains (losses) information of monetary items. The realized and unrealized foreign exchange gains were NT$ 3,787 thousand and NT$ 21,311 thousand for the year ended December 31, 2023 and 2022, respectively.

The Group believes the unrealized exchange gain (loss) of fluctuation risk on foreign currency monetary item is insignificant.

b. Price risk

The Group is exposed to price risk primarily related to its investment in instruments classified as financial assets at FVTPL and financial assets at FVTOCI.

The Group primarily invested in the foreign publicly traded and unlisted stocks and the domestic beneficiary certificates. The instruments prices are affected by the uncertainties of the investment targets’ future value.

Assuming a hypothetical increase/decrease of 1% in prices of the equity instruments at the end of the reporting period, the other comprehensive income for the years ended December 31, 2023 and 2022 would have increased/decreased by NT$ 222 thousand and NT$ 247 thousand, respectively, as they were classified as financial assets at FVTOCI. Assuming a hypothetical increase/decrease of 1% in prices of the domestic beneficiary certificates, the net loss for the years ended December 31, 2023 and 2022 would have increased/decreased by NT$ 67 thousand, respectively, as they were classified as financial assets at FVTPL.

  • 199 -

c. Interest rate risk

The carrying amounts of the Group’s financial assets and financial liabilities exposed to interest rate risk were as follows:

interest rate risk were as follows:
Item
Fair value interest rate risk
Financial assets

Financial liabilities
Net

Cash flow interest rate risk
Financial assets

Financial liabilities
Net		 Carrying Amount
31-Dec-23 31-Dec-22
$ 360,600
-		 $ 405,391

(317)
$ 360,600 $ 405,074
$ 708,020
(1,944,858)		 $ 826,370
(1,912,959)
$ (1,236,838) $ (1,086,589)
  • (a.) Sensitivity analysis: Fair value interest rate risk

The Group did not designate any fixed interest rate financial instruments as fair value through profit or loss and derivatives instruments (interest rate swaps) to hedge its exposures to changes in fair values. As such, changes in interest rate would not affect the net income and the other comprehensive income at the end of the reporting period.

  • (b.) Sensitivity analysis: Cash flow interest rate risk

The Group’s financial instruments at floating interest rate were assets (liabilities) at floating interest rate. Therefore, changes in interest rate would affect the future cash flows. Assuming a hypothetical increase/decrease 1% in interest rates, the net income for the years ended December 31, 2023 and 2022 would increase/decrease by NT$ 12,368 thousand and NT$ 10,866 thousand, respectively.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Group. The Group is exposed to credit risk from operating activities, primarily from account receivables, and from investing activities, primarily from bank deposits, fixed-income investments and other financial instruments. The Group managed the credit risk separately for business related and financial related risk.

a. Business related credit risk:

To maintain the quality of account receivable, the Group has established related credit risk management procedure. The risk assessment of individual customer includes evaluating financial position, internal evaluation, historical trading records and economic circumstance which could affect the payment ability of the customer. The Group may choose to strengthen overall risk management including collection in advance or credit insurance to mitigate the credit risk of certain customers.

b. Financial credit risk:

The financial department of the Group regularly monitors and reviews the credit risk of bank deposit and other financial instruments. The Group mitigates its exposure by selecting counterparties (banks, financial institutions, company organizations and government authorities) with well credit and investment-grade credit ratings. The credit risk is insignificant. The Group has no debt instrument classified as financial assets measured at amortized cost and financial assets at FVTOCI.

  • 200 -

  • (a.) Concentration of credit risk

As of December 31, 2023, and December 31, 2022, accounts receivable from the top 10 customers represent 22.37%, and 24.87% of total accounts receivables of the Group, respectively. The Group believes the concentration risk is insignificant for the remaining accounts receivable.

  • (b.) Expected credit impairment losses measurement

    • ◎Accounts receivable: Simplified approach, please refer to Note 6(3.) and (4).

    • ◎Judgment on whether credit risk increasing significantly:None.

  • (C) Liquidity risk

  • a. Liquidity risk management

The Group’s objective of managing liquidity risk is to maintain sufficient cash and cash equivalents required for operations, high liquidity securities, and bank financing lines for operations, and to ensure that the Group has sufficient financial flexibility.

b. Maturity analysis of financial liabilities

Non-derivative
financial liabilities
Short-term loans
Notes payable
Accounts Payable
Other payable
Long-term
borrowing,
including current
portion
Total		 31-Dec-23

Less than
6 Months

$ 191,000
162
291,208
150,402
25,358
$ 658,130		 6－12 Months
$ 209,000

-

-

31,628

25,358
$ 265,986
1－2 Years

$ -

-

-

-
1,410,716
$ 1,410,716		 2－5 Years
$ -

-

-

-

83,220
$ 83,220
Over
5 Years
$ -

-

-

-

206
$ 206		 Contractual
Cash flows
$ 400,000

162

291,208

182,030
1,544,858
$ 2,418,258		 Carrying
Amount
$ 400,000

162

291,208

182,030

1,544,858
$ 2,418,258
31-Dec-22
Carrying
Amount
$ 447,000

558

323,182

283,286

1,465,959

The Group doesn’t 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.

  • 201 -

B. Categories of financial instruments

The following is the carrying amounts of the financial assets and financial liabilities of the Group at December 31, 2023 and December 31, 2022.

cember 31, 2023 and December 31, 2022.
Financial assets
Financial assets measured at amortized
cost
Cash and cash equivalents
Net, notes and accounts receivable
Refundable deposits
Financial assets at FVTPL – current
Financial assets at FVTPL – non-current
Financial assets at FVTOCI －non-
current
Financial liabilities
Financial liabilities at amortized cost
Short-term loans
Net, notes and accounts payable
Other payable
Long-term loans (Including the current
portion)		 31-Dec-23
$ 1,074,489
643,465
26,324
6,660

-
22,212
400,000
291,370
182,030
1,544,858		 31-Dec-22
$ 1,237,556
685,189
19,400

6,660

-
24,695

447,000

323,740

283,286

1,465,959

  • (3.) Fair value information

  • A. For the fair value of financial instruments that are not measured at fair value, please refer to the Note 12 (3.)B.

Fair value hierarchy definition

Level 1

Fair value measurements of the Level 1 are those derived from quoted prices in active markets for identical financial instruments. An active market is a market in which transactions for identical instrument take place with sufficient frequency and volume to provide public pricing information on an ongoing basis. The foreign publicly traded stocks and the domestic beneficiary certificates invested by the Group were classified as this hierarchy.

Level 2

Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that observable for the instrument, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3

Fair value measurements are those derived from valuation techniques that include inputs for instrument that are not based on observable market data. The Group invested in equity investments without active market included within level 3.

  • B. Financial instruments that are not measured at fair value

The Group considers the carrying amounts of financial instruments that are not measured at fair value, such as cash and cash equivalents, notes and accounts receivables, other financial assets, refundable deposits, notes and accounts payable, approximate their fair values.

  • 202 -

C. Fair value hierarchy information

The Group’s financial instruments measured at fair value were under a recurring basis.

The following table presents the Group’s financial instruments measured at fair value on a recurring basis:

basis:
Items
Asset:
Fair value on a recurringbasis
Financial assets measured at FVTPL
Beneficiary certificates
Foreign unlisted publicly
traded preference share
Financial assets at FVTOCI
Domestic unlisted ordinary shares
Foreign publicly traded stocks
Foreign unlisted publicly
traded preference share
Total
Items
Asset:
Fairvalue on a recurringbasis
Financial assets measured at FVTPL
Beneficiary certificates
Foreign unlisted publicly
traded preference share
Financial assets at FVTOCI
Domestic unlisted ordinary shares
Foreign publicly traded stocks
Foreign unlisted publicly
traded preference share
Total		 31-Dec-23 Total
$ 6,660
-
10,136
12,076
-
$ 28,872
Total
$ 6,660
-
9,608
15,087
-
$ 31,355
Level 1
$ 6,660
-
-
12,076
-
$ 18,736		 Level 2
Level3
$ -
$ -
-
-
-
10,136
-
-
-
-
$ -
$ 10,136
31-Dec-22
Level 1
$ 6,660
-
-
15,087
-
$ 21,747		 Level 2
$ -
-
-
-
-
$ -		 Level3
$ -
-
9,608
-
-
$ 9,608
  • D. Valuation techniques and assumptions used in fair value measurement

(A.) If there is an active market for the financial instruments, the fair value of the financial instruments is measured by using the quoted market prices. The quoted market prices announced by the main market place and the prices of government bonds classified as popular securities announced by Taipei Exchange (TPEx) are deemed as fair value foundation of publicly traded equity instruments and debt instruments with an active market.

If there are timely and frequent quoted prices from the exchange market, the broker, the dealer, industry association, price service organization, or the administrative, and the prices represent actual, frequent, and fair trades, the financial instruments are deemed as with an active market. Otherwise, the market is deemed as not active. In general, huge price gap, price gap apparently expanding, and small trading volume were indicators of a not active market.

  • 203 -

The financial instruments held by the Group with active market quoted prices as their fair value are listed below by characteristics:

  • a. Publicly traded stock: Closing price

  • b. Beneficiary certificates: Net value

  • (B.) Except for the aforementioned financial instruments with active market, the fair value of other financial instruments is measured by valuation technique or quotation of counterparties. The fair value from valuation technique could refer to the fair value of other financial instruments with similar substantial conditions and characteristics, discounted cash flow method and other valuation technique including model with observable market information on balance sheet date (e.g. yield curve of TPEx, quoted interest rate of Reuters commercial Note).

The fair values of non-listed equity investments were Level 3 fair value assets, and determined using the market approach by reference the peer companies valuation, third party quotation, net value and operation status. The significant unobservable input used was discount for lack of marketability. A movement in discount for the lack of marketability would not result in significant changes in the fair values.

  • (C.) The Group considered the credit risk evaluation adjustment for financial instruments and nonfinancial instruments to reflect the credit risk of the counterparty and the credit quality of the Group.

  • (D.) Valuation techniques used in Level 3 fair value Measurement:

The evaluation procedure of the financial instruments belong to Level 3 is verified by the financial department of the Group through verifying the independent source inputs to make sure the evaluation results closing to the market status. To make sure the reasonability of the evaluation results, the financial department verify the independence and reliability of source data, test and renew the input data, model and other necessary inputs.

  • (E.) There were no transfers between different fair value hierarchy for the years ended December 31, 2023 and 2022, respectively.

13. SEPARATELY DISCLOSED ITEMS

  • (1.) Information about significant transactions:

  • A. Financing provided to others: None;

  • B. Endorsements/guarantees provided: Table 1 attached;

  • C. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Please see Table 2 attached;

  • D. Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None;

  • E. Acquisition of individual real estate properties at costs of at least NT $300 million or 20% of the paid-in capital: None;

  • F. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None;

  • G. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;

  • H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;

  • I. Trading in derivative instruments: None;

  • 204 -

  • J. The business relationship between the parent and the subsidiaries and significant transactions between them: Please see Table 3 attached;

  • (2.) Related Information of investees: Please see Table 4 attached;

  • (3.) Information on investments in Mainland China:

  • A. The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 5 attached.

  • B. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: See Table 3 attached.

  • (4.) Information of major shareholder (list of all shareholders with ownership 5% or greater showing the names and the number of shares and percentage of ownership held by each shareholder): Please see Table 6 attached.

14. SEGMENT INFORMATION

  • (1.) For the purpose of management, the chief operating decision-maker, the operation is separated based on business unit and have three reportable segments: Pharmaceuticals, Healthy food, and others. In addition, the Group does not put the asset and liability items into consideration when making an operation decision. Thus, there is no need to disclose the related asset and liability information of the reportable segments.

  • (2.) Segment revenue and result

Net revenue from external customers

egment revenue and result Net revenue from external customers
Pharmaceutical

Healthy food
Others

Total

Pharmaceutical

Healthy food
Others

Total

econciliations of the segments’ income
Income from reportable segments
Loss from other segments
Non-operating incomes and expenses
Income before tax from continuing operation		 2023
$ 1,903,980
948,382

110,572
$ 2,962,934
Segment		 2022
$ 1,896,475
860,087
100,089
$ 2,856,651
operating
2023
$ 355,986
254,780

33,702
$ 644,468
2023
$ 644,468
(358,412)

19,652
$ 305,708		 2022
$ 464,781
195,750
22,497
$ 683,028
2022
$ 683,028

(485,693)

47,711
$ 245,046

  • (3.) Reconciliations of the segments’ income

  • 205 -

(4.) Geographical information

Geographical information
Areas
Sales from external customers:
Taiwan

Mainland China
Vietnam
Indonesia
America
Others
Total
 For the Year Ended December31
2023
$ 2,553,612
211,340
54,417
52,692
-
90,873
$ 2,962,934		 2022
$ 2,344,951

208,056

39,868

44,303

114,723
104,750
$ 2,856,651
  • (5.) Major Customer Information:

For the year ended December 31, 2023 and 2022, the Group does not have customers representing over 10% of net revenue. Therefore, no major customer information was disclosed.

  • 206 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

TABLE 1

Endorsements/Guarantees provided

For the Year Ended December 31, 2023

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

Guaranteed Party Guaranteed Party Limits on
Endorsement/ Amount of Ratio of Maximum Guarantee
No.
(Note 1)		 Endorsement /
Guarantee
Provider		 Name Nature of
relationship
(Note 2)		 Guarantee
Amount
Provided to Each
Guaranteed
Party
(Note 3)		 Maximum
Balance for the
Period		 Ending Balance Amount Actually
Drawn
Endorsement/
Guarantee
Collateralized by
Properties		 Accumulated
Endorsement/
Guarantee to Net
Equity per
Latest Financial
Statements		 Endorsement/
Guarantee
Amount
Allowable
(Note 4)		 Guarantee
Provided by
Parent
Company		 Guarantee
Provided by
A Subsidiary
Provided to
Subsidiaries
in Mainland
China
0 Sinphar
Pharmaceutical
Co.,Ltd.		 ZuniMed
Biotech Co.,
Ltd.		 1 $ 1,239,335 $ 30,000
$ 30,000		 $ 8,000 $ -
0.97%
$ 1,549,169
Y		 － －
0 Sinphar
Pharmaceutical
Co.,Ltd.		 SynCore
Biotechnology
Co.,Ltd.		 1 $ 1,239,335 $ 350,000 $ 250,000 $ - $ -
8.07%
$ 1,549,169
Y		 － －
1 ZuniMed
Biotech Co.,
Ltd.		 Sinphar
Pharmaceutical
Co.,Ltd		 2 $ 37,867 $ 25,000 $ 25,000
$ 25,000
(Note 5)
$ -
26.41%
$ 47,333
－		 Y －

Note 1 ： (1) The issuer fills in “0”. (2) The subsidiaries are numbered in order starting from “1”.

Note 2 ： (1) The endorser/guarantor parent company owns directly and indirectly more the 50% voting shares of the endorsed/guaranteed subs idiary.

(2) The endorsed/guaranteed company owns directly and indirectly more the 50% voting shares of the endorser/guarantor pare nt company. Note 3 ： Maximum endorsement/guarantee amount allowable is 40% of the net worth of the Endorsement/Guarantee Provider.

Note 4 ： Maximum endorsement/guarantee amount allowable is 50% of the net worth of the Endorsement/Guarantee Provider. Note 5 ： It is a supply guarantee for the medical institution.

  • 207 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 2 Marketable Securities Held (Excluding Subsidiaries, Associate and Joint Venture)

As of December 31, 2023

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

Held Company Name Marketable Securities
Type and Name		 Relationship
with Sinphar

Financial Statement Account		 December 31,2023 December 31,2023 December 31,2023 December 31,2023 Note
Shares/Units Carrying
Value		 Percentage
of
Ownership		 Fair Value
Sinphar Pharmaceutical Co., Ltd. PHYTOCEUTICA
INC.(preferred share)		 Investee Financial assets at fair value
throughprofit or loss(Non-Current)		 90,362.00 $ -
-		 $ -
-
Sinphar Pharmaceutical Co., Ltd. Datun Entertainment
Development Co.,Ltd.		 － Financial assets at fair value
through other comprehensive income(Non-Current)		 5.00
10,136
0.42%
10,136
-
SynCore Biotechnology Co., Ltd. Fuh Hwa Money Market － Financial assets at fair value
throughprofit or loss(Current)		 252,743.00
3,617
-
3,738
-
SynCore Biotechnology Co., Ltd. Fuh Hwa You Li Money Market － Financial assets at fair value
throughprofit or loss(Current)		 152,110.90
2,031
-
2,101
-
SynCore Biotechnology Co., Ltd. JPMorgan（Taiwan）Glbl Fd
of Bd Fds Inc		 － Financial assets at fair value
throughprofit or loss(Current)		 90,062.20
1,012
-
1,041
-
SynCore Biotechnology Co., Ltd. MacuCLEAR, INC.
(Preferred Share)		 － Financial assets at fair value
through other comprehensive income(Non-Current)		 95,160.00
-
0.95%
-
-
SynCore Biotechnology Co., Ltd. Medigene
(Common Share)		 － Financial assets at fair value
through other comprehensive income(Non-Current)		 224,934.00
12,076
0.92%
12,076
-
  • 208 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 3

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2023

(Amounts in Thousands of New Taiwan Dollars)

No.
(Note1)		 CompanyName Counter-party Nature of
Relationships
(Note 2)		 Transaction Details Transaction Details Transaction Details Transaction Details
Financial Statements
Item		 Amount Transaction Terms Percentage of
consolidated revenue or
assets%
0 Sinphar Pharmaceutical Co.,Ltd. Sinphar Tian-Li Pharmaceutical Co.,Ltd.(Hangzhou) 1,2 Purchase $ 31,547
Note 4		 -
0 Sinphar Pharmaceutical Co.,Ltd. Sinphar Tian-Li Pharmaceutical Co.,Ltd.(Hangzhou) 1,2 Accounts Payable 19,972
Note 4		 -
0 Sinphar Pharmaceutical Co.,Ltd. ZuniMed Biotech Co.,Ltd. 1,2 Purchases 55,097
Note 4		 2%
0 Sinphar Pharmaceutical Co.,Ltd. ZuniMed Biotech Co.,Ltd. 1,2 Accounts Payable 7,063
Note 4		 -
0 Sinphar Pharmaceutical Co.,Ltd. SynCore BiotechnologyCo.,Ltd. 1,2 Sales Revenue 4,744
Note 4		 -
0 Sinphar Pharmaceutical Co.,Ltd. SynCore BiotechnologyCo.,Ltd. 1,2 Rental Income 10,689 Note 5 -
0 Sinphar Pharmaceutical Co.,Ltd. SynCore BiotechnologyCo.,Ltd. 1,2 Other Income 11,624
－		 -
0 Sinphar Pharmaceutical Co.,Ltd. SynCore BiotechnologyCo.,Ltd. 1,2 Deferred Income 890
－		 -
0 Sinphar Pharmaceutical Co.,Ltd. CANCAP PHARMACEUTICAL LTD. 1,2 Professional Service Fee 8,548
－		 -
1 Sinphar
Tian-Li
Pharmaceutical
Co.,
Ltd.(Hangzhou)
Hetian Tianli shasheng Pharmaceutical Development
Co.,Ltd.		 3 Purchases 41,763
Note 4		 1%
1 Sinphar
Tian-Li
Pharmaceutical
Co.,
Ltd.(Hangzhou)
Hetian Tianli shasheng Pharmaceutical Development
Co.,Ltd.		 3 Accounts Payable 31,714
Note 6		 1%

Note 1 ： Sinphar and its subsidiaries are coded as follows:

  1. Sinphar is coded “0”.

  2. The subsidiaries are coded consecutively beginning from ”1” in the order presented in the table above.

Note 2 ： The relationship with the trader has the following three types:

  1. Parent company to a subsidiary.

  2. Subsidiary to the parent company .

  3. Subsidiary to subsidiary.

  4. Note 3: For the calculation of the ratio of the transaction amount to consolidated revenue or assets, if it is an asset-liability item, it is calculated by the balance at the end of the period in the consolidated assets; if it is a profit and loss item, it is calculated by the cumulative amount in the period as a share of the consolidated revenue.

  5. Note 4 : There is no significant difference of receive (payment) terms and price based on the actual transaction terms from general customers,the receive(payment) term is 30 to 365 days 。

  6. Note 5: The rent is determined by the general rental market price in the nearby areas and the mutual agreements from both parties. The rental income is received monthly according to the contract term.

  7. Note 6: The selling price is determined by mutual agreement and general market price. Prepayment shall be made in advance according to the pre-ordered quantity during the credit period. A new selling price for the exceeded quantity will be negotiated if the actual quantity exceeds the scheduled quantity.

  8. 209 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 4

Name, Location, and Related Information of Investees Over Which Sinphar Exercise Significant Influence (Excluding Information On Investment In Mainland China) as of December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Original Investment Amount Original Investment Amount Balance as of December 31, 2023 Balance as of December 31, 2023 Balance as of December 31, 2023 Net Income
Investor
Company		 Investee Company Location Main Businesses and
Products		 December December Shares Percentage of Carrying
(Losses) of the
 Share of Profits /
Losses of Investee		 Notes
31, 2023 31, 2022 Ownership Value Investee
Sinphar
Pharmaceutical
Co., Ltd.		 CANCAP
PHARMACEUTICAL
LTD.(Ordinary shares)		 Canada Production and sale
of healthy food		 $ 44,605 $ 44,605 2,140,000 88.43% $ - $ 1,139 $ 1,139 Subsidiary
Sinphar
Pharmaceutical
Co., Ltd.		 CANCAP
PHARMACEUTICAL
LTD.(Preference shares)		 Canada Production and sale
of healthy food		 126,247 126,247 51,500 100.00% 2,394
1,139
-		 Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 SUNETIC BIOTECH
INC.		 Mauritius Investment business 745,748 745,748 18,854,534 83.47% 815,584 9,648 (13,146) Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 UNIVERSAL NEXT
TECHNOLOGIES INC.		 British
Virgin
Islands		 Investment business 17,467 17,467 503,845 100.00% 27 (12)
(12)		 Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 ZuniMed Biotech Co.,
Ltd.		 Taiwan Production and sale
of medical
appliances		 109,990 109,990 10,300,000 100.00% 91,199 (1,139)
(461)		 Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 SynCore Biotechnology
Co., Ltd.		 Taiwan Biotechnology
service		 1,864,935 1,745,698 22,597,472 64.26% 229,301 (38,172)
(22,709)		 Subsidiary
SynCore
Biotechnology
Co., Ltd.		 SynCore Biotechnology
Europe GmbH		 Germany New drugs
development and
biotechnology
service		 834 834 25,000 100.00% 737 18 18 Subsidiary

Note1：The shares of profits/losses of investee were calculated based on the financial statements audited by the CPAs. The effect of realized (unrealized) gains and losses have already been considered.

Note2：SynCore Biotechnology Co., Ltd. reduced capital in May, 2023, and the shares held by the Company decreased from 71,456,000 shares to 19,090,513 shares.

Note3：SynCore Biotechnology Co., Ltd. increase capital in October, 2023, and the shares held by the Company increased from 19,090,513 shares to 22,597,472 shares.

  • 210 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 5

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company Main Businesses
and
Products		 Total Amount of
Paid-in Capital
(RMB in
Thousands)		 Total Amount of
Paid-in Capital
(RMB in
Thousands)		 Method of
Investment		 Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2023		 Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2023		 Investment
Flows		 Investment
Flows		 Accumulated
Outflow of
Investment from
Taiwan as of
December 31,2023		 Accumulated
Outflow of
Investment from
Taiwan as of
December 31,2023		 Net Income
(Losses) of
Investee
Company		 Percentage of
Ownership		 Shares of
Profits/Losses
(note 1)		 Carrying
Amount
as of
December 31,
2023		 Accumulated
Inward
Remittance of
Earnings as of
December
31,2023
Outflow Inflow
Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)		 Production and
sales of raw
materials,
pharmaceuticals		 RMB 193,005 Indirect investment in mainland
China by SUNETIC BIOTECH
INC., an 83.47% owned
subsidiary of Sinphar		 $ 645,635
(USD 19,786
thousand)		 -
-
$ 645,635
(USD 19,786
thousand)		 $ 18,987 83.47% $ (5,350) $ 840,728 $ 179,317
Hetian Tianli
shasheng
Pharmaceutical
Development Co.,
Ltd.		 Scientific research
and production and
sales of shasheng
Pharmaceutical		 RMB 10,000 Indirect investment in mainland
China by Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou), a sub-subsidiary
company of which Sinphar holds
83.47% of the total shares		 -
-
-
-
(7,326)		 75.96%
(2,673)		 83,388
-
Hangzhou Vitrum
Healthy Food Co.,
Ltd.		 Sale of healthy
food		 RMB 30,000 Indirect investment in mainland
China by Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou) a sub-subsidiary
company of which Sinphar holds
83.47% of the total shares.		 -
-
-
-
(306)		 83.47%
(255)		 1,526
-
Accumulated Investment in Mainland
China
as of December 31, 2023
(US$in Thousands)		 Investment Amounts Authorized by
Investment Commission, MOEA
(US$ in Thousands)		 Upper Limit on Investment
(Note 3)
652,200
(USD 19,986(Note 2))		 777,487
(USD 25,321)		 1,859,002

Note 1 ： The shares profits/losses of investee were calculated based on the financial statements audited by the R.O.C. CPAs of the parent company.

Note 2 ： The amount included the indirect investment of UNIVERSAL NEXT TECHOLOGY INC to Qinghai Mingxing Bio-Engineering Co., amounting to USD$ 200 thousand, which has already been cancelled by the Investment Board. Note 3 ： According to the regulations of the Investment Commission of the Ministry of Economic Affairs, the upper limit of the cumulative amount of its investment in the mainland is 60% of the net value.

  • 211 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

TABLE 6

Information of major shareholders

December 31, 2023

Shareholders Shares Shares
Total shares owned (In thousands) Ownership Percentage
XING-DA CAPITAL CORP. 15,679 9.34%

Note: The main shareholder information in this table is calculated by Taiwan Depository & Clearing Corporation, using total number of ordinary shares and preferred shares held by the shareholders who have completed Sinphar’s dematerialized securities registration and delivery (including treasury shares) is more than 5% on the last business day at the end of each quarter. As for the difference between capital stock recorded in Sinphar's financial report and the number of shares which Sinphar actually have completed the dematerialized securities registration and delivery, may result from computation basis.

  • 212 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders of

Sinphar Pharmaceutical Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Sinphar Pharmaceutical Co., Ltd. (the “Company”), which comprise the parent company only balance sheet as of December 31, 2023 and 2022 and the parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2023 and 2022, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompany parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31,2023 and 2022, and its financial performance and its cash flows for the years ended December 31, 2023 and 2022, in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulation Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31, 2023 are stated as follows:

Inventory Valuation

Please refer to Note 4(7.) and 5(2.) in the accompanying parent company only financial statements for related disclosures of the Company’s valuation of inventory accounting policies and critical accounting estimate and assumption.

  • 213 -

The Company mainly engages in the production and sales of various types of drugs and food supplements. As the regulations to the pharmaceutical industry cause the cost to increase and meanwhile selling prices are less likely to be affected as they are covered by the health insurance system. Furthermore, the price of food supplement inventory fluctuates due to market competition and the impacts aroused from advertisements. Management assesses that the net realizable value of inventory involves material judgment. Hence, it is taken as a one of the key audit matters.

Our key audit procedures in response

Our procedures in relation to inventory valuation included:

  1. Understand and evaluate the design and implementation of the internal control in relation to inventory.

  2. Perform inventory counts, to identify if there are any inventories which are obsolete or damaged.

  3. Obtain Inventory aging reports to analyses the changes in inventory age, and check the records of inventory changes to verify the correctness of inventory.

  4. Evaluate the reasonableness of its inventory valuation policy of unmarketable items and obsolescence, and check the latest inventory sales price to evaluate the reasonableness of the net realizable value of the inventory.

  5. Obtain evaluation documents for subsequent measurement of inventories and assess whether they have been measured in accordance with established accounting policies and review if the management’s disclosure on the evaluation of inventory is presented fairly.

Revenue Recognition

Please refer to Note 4(16.) and 5(2.) in the accompanying parent company only financial statements for related disclosures of the Company’s revenue recognition accounting policies and critical accounting estimate and assumption.

Some products of the Company provide discounts or sales incentives based on the terms of the sales contract. Since the recognition of the revenue is measured on the net basis of the related discounts and incentives, we consider the revenue recognition as a key audit matter.

Our key audit procedures in response

Our procedures in relation to the revenue recognition included:

  1. Evaluate the design and implementation of the internal control in relation to the revenue recognition.

  2. Perform sales contract checks to verify whether the records on the recognition of sales revenue agree with the related contract, and evaluate the fairness of the management’s estimated sales discounts and sales incentives.

  3. Assess whether the management’s accounting treatments and disclosure in relation to sales discounts and sales incentives are presented fairly.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

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

  • 214 -

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

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 the auditing standards of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with the auditing standards of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the investee accounted for using equity method within the Company to express an opinion on the parent company only financial statements. We are responsible for direction, supervision and performance of the investee audit. We remain solely responsible for our audit opinion.

  7. 215 -

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ 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.

The engagement partners on the audit resulting in this independent auditors’ report are Ya Quan Zhang and Jin Shu Pan.

Crowe (TW) CPAs Taipei, Taiwan The Republic of China

March 6, 2024

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.

  • 216 -

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY BALANCE SHEETS For the years ended December 31, 2023 and 2022

(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS		 Note %
Amount
December 31,2023		 %
Amount
December 31,2023		 Amount
%
December 31,2022		 Amount
%
December 31,2022
Amount Amount
Cash and cash equivalents
Notes receivable, net
Accounts receivable, net
Inventories
Prepayments
Other current assets
Total current assets		 6 (1)
6 (2)
6 (3)、6(17) and 7 (3)
6 (4)
7 (3)
6 (5)
6 (5)
6 (6)
6 (7), 7 (3) and 8
6 (8) and 8
6 (9) and 8
6 (22)		 $ 700,998
163,900
426,002
705,774
35,781
4,773
2,037,228		 12
3
7
12
1
-
35		 $ 703,055
178,825
456,586
615,056
36,598
4,105
1,994,225		 13
3
8
11
1
-
36
NONCURRENT ASSETS
Financial assets at fair value
through profit and loss, non-current
Financial assets at fair value through
other comprehensive income, non-current		 2,394
10,136
1,136,111
2,279,559
111,388
20,711
170,856
19,954
24,736
30,762
3,806,607
$ 5,843,835		 -
-
20
39
2
-
3
-
-
1
65
100		 1,219
9,608
1,161,753
2,020,278
237,961
28,466
52,108
57,626
17,830
19,147
3,605,996
$ 5,600,221		 -
-
21
36
4
1
1
1
-
-
64
100
Investments accounted for using equity method
Property, plant and equipment
Investment property, net
Intangible assets
Deferred tax assets
Prepayments for equipment
Refundable deposits
Other non-current assets
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans
Contract liabilities-current		 6 (10)
6 (17)		 $ 360,000
84,352
302,196
290,614
-
48,490
37,254
1,122,906
1,486,473
35,552
100,566
1,622,591
2,745,497
1,677,221
924,140
142,979
121,367
369,802
634,148
(137,171)
3,098,338
$ 5,843,835		 6
1
5
5
-
1
1
19		 $ 360,000
93,235
313,721
281,867
39,774
48,116
42,614
1,179,327		 6
2
5
5
1
1
1
21
Accounts payable 7 (3)
Other payable
Current tax liabilities
Long-term loans - current portion
Other current liabilities, others
Total current liabilities		 7 (3)
6 (11) and 8
6 (11) and 8
6 (12)
6 (22) and 7(3)
6 (13)
6 (14)
6 (15)
6 (15)
6 (15)
6 (16)
NONCURRENT LIABILITIES
Long-term loans
Net defined benefit liability, non-current
Other non-current liabilities, others		 25
1
2
28
47
29
16
2
2
6
10
(2)
53
100		 1,404,819
35,978
49,867
1,490,664
2,669,991
1,677,221
929,972
119,606
91,075
233,724
444,405
(121,368)
2,930,230
$ 5,600,221		 25
1
1
27
48
30
16
2
2
4
8
(2)
52
100
Total non-current liabilities
Total liabilities
EQUITY
Capital stock
Capital surplus
Retained earnings
Legal capital reserve
Special capital reserve
Unappropriated retained earnings
Total retained earnings
Other Equity
Total equity
TOTAL LIABILITIES AND EQUITY

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

  • 217 -

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2023 and 2022

(In Thousands of New Taiwan Dollars)

2023 2022
ITEM Note Amount
$ 2,717,210
(1,684,194)
1,033,016
(568)
371
1,032,819
(433,725)
(136,083)
(122,146)
(1,699)
(693,653)
339,166
7,516
36,774
(4,892)
(32,114)
(35,189)
(27,905)
311,261
63,909
375,170
(3,736)
(1,922)
(1,862)
(7,520)
(15,045)
17
3,009
(12,019)
(19,539)
$ 355,631		 % Amount %
NET REVENUE
COST OF REVENUE
GROSS PROFIT
Less: Unrealized profit on sales
Add: Realized profit on sales
GROSS PROFIT
OPERATING EXPENSES
Selling expenses
Administrative expenses
Research and development expenses
Expected credit impairment loss
Total operating expenses
NET OPERATIONS INCOME
NON-OPERATING INCOME AND EXPENSES
Interest income
Other income
Other gains and losses
Finance costs
Share of the loss of subsidiaries and associated and joint
ventures accounted for using equity method
Total non-operating income and expenses
INCOME BEFORE INCOME TAX
INCOME TAX (EXPENSE) BENEFIT
PROFIT
OTHER COMPREHENSIVE INCOME (LOSS)		 6 (17) and 7 (3)
6 (4), 6(20) and 7 (3)
6 (20) and 7 (3)
6 (3)
6 (18) and 7 (3)
6 (19) and 7 (3)
6 (21)
6 (6)
6 (22)
6 (23)
6 (24)		 100
(62)
38
-
-
38
(16)
(5)
(4)
-
(25)
13
-
1
-
(1)
(1)
(1)
12
2
14
-
-
-
-
(1)
-
-
(1)
(1)
13		 $ 2,511,206
(1,577,211)
933,995
(371)
1,106
934,730
(390,581)
(121,669)
(111,002)
(1,869)
(625,121)
309,609
1,744
40,226
11,707
(25,007)
(51,887)
(23,217)
286,392
(61,748)
224,644
9,080
(68)
(3,274)
5,738
13,919
18
(2,784)
11,153
16,891
$ 241,535		 100
(63)
37
-
-
37
(16)
(5)
(4)
-
(25)
12
-
2
-
(1)
(2)
(1)
11
(2)
9
-
-
-
-
1
-
-
1
1
10
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit obligation
Unrealized loss from investments in equity instruments measured
at fair value through other comprehensive income
Share of other comprehensive loss of subsidiaries, associates
and joint ventures accounted for using equity method
Items that may be reclassified subsequently to profit or loss:

Exchange differences arising on translation of
foreign operations
Share of other comprehensive income of subsidiaries,
associates and joint ventures accounted for using equity method
Income tax related to components of other comprehensive
income that will be reclassified to profit or loss
Other comprehensive income (loss) for the year, net of income tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
EARNINGS PER SHARE $ 2.24
Basic earnings per share $ 1.34
Diluted earnings per share $ 2.23 $ 1.34

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

  • 218 -

Sinphar Pharmaceutical Co., Ltd.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2023 and 2022

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2023 and 2022
(In Thousands of New Taiwan Dollars)
Capital Stock Retained Earning Other $ (37,325)
-
-
-
(3,342)
(3,342)
(40,667)
-
-
-
-
-
-
(3,784)
(3,784)
$ (44,451)
EquityInterests
Unrealized Gain(Loss) on
Financial Assets at Fair
Value Through Other
Comprehensive Income		 $ 2,722,239
-
(33,544)
224,644
16,891
241,535
2,930,230
-
-
(167,722)
(167,722)
(19,801)
375,170
(19,539)
355,631
Total Equity
ITEM Common Stock Capital Surplus Legal Capital
Reserve		 Special Capital
Reserve		 Unappropriated
Retained Earnings
(Accumulated
Deficit)		 $ (91,854)
-
-
-
11,153
11,153
(80,701)
-
-
-
-
-
-
(12,019)
(12,019)
$ (92,720)
Foreign Currency
Translation
Reserve
Balance, January 1, 2022 $ 1,677,221
-
-
-
-
-
1,677,221
-
-
-
-
-
-
-
-
$ 1,677,221		 $ 963,516
-
(33,544)
-
-
-
929,972
-
-
-
-
(5,832)
-
-
-
924,140		 $ 153,734
(34,128)
-
-
-
-
119,606
23,373
-
-
23,373
-
-
-
-
142,979		 $ 91,075
-
-
-
-
-
91,075
-
30,292
-
30,292
-
-
-
-
121,367		 $ (34,128)
34,128
-
224,644
9,080
233,724
233,724
(23,373)
(30,292)
(167,722)
(221,387)
(13,969)
375,170
(3,736)
371,434
369,802		 $ $
Appropriations of earnings

Legal reserve used to offset accumulated deficits
Other changes in capital surplus
Stock dividends from capital surplus
Net profit in 2022
Other comprehensive income (loss) in 2022, net
of income tax
Total comprehensive income (loss) in 2022
Balance, December 31, 2022
Appropriations of earnings
Legal reserve appropriated
Special reserve appropriated
Cash dividends of ordinary share
Total appropriations of earnings
Other changes in capital surplus
Changes in ownership interests in subsidiaries
Net profit in 2023
Other comprehensive loss in 2023, net
of income tax
Total comprehensive income (loss) in 2023
Balance, December 31, 2023 $ $ $ $ $ $ $ 3,098,338

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

  • 219 -

Sinphar Pharmaceutical Co., Ltd. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2023 and 2022

(In Thousands of New Taiwan Dollars)

For the years ended December 31, 2023 and 2022
Sinphar Pharmaceutical Co., Ltd.
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
(In Thousands of New Taiwan Dollars)
ITEM
CASH FLOWS FROM OPERATING ACTIVITIES		 2023 2022
Income before income tax
Adjustments for:
Depreciation expense (including investment property)
Amortization expense
Expected credit impairment loss
Interest expense
Interest income		 $ 311,261
145,015
29,193
1,699
32,114
(7,516)
35,189
(5,145)
568
(371)
14,771
29,039
(90,718)
817
27
(8,883)
(11,525)
12,250
(5,360)
(4,162)
(19)
478,244
7,516
(32,026)
(41,246)
412,488
(119,237)
(2,450)
(176,243)
5,842
(6,906)
(5,230)
(27,766)
(68,153)
71,824
(328,319)
-
160,000
(77,972)
-
(532)
(167,722)
(86,226)
(2,057)
703,055
$ 700,998		 $ 286,392
139,137
41,207
1,869
25,007
(1,744)
51,887
402
371
(1,106)
(19,675)
(93,154)
(55,333)
(9,889)
(1,958)
928
120,199
36,888
10,678
(5,831)
(1,474)
524,801
1,744
(24,802)
(35,422)
466,321
-
(9,676)
(69,670)
87
7,462
(11,061)
(12,219)
(51,369)
44,405
(102,041)
(80,000)
150,000
(226,888)
(1,895)
(28)
(33,544)
(192,355)
171,925
531,130
$ 703,055
Share of loss of subsidiaries and associates and joint
ventures accounted for using equity method, net
Loss (gain) on disposal of property, plant and equipment
Unrealized profit on sales
Realized profit on sales
Changes in operating assets and liabilities:
Notes receivable, net
Accounts receivable, net
Inventories
Prepayments
Other current assets
Contract liabilities
Accounts payable
Other payable
Other current liabilities
Net defined benefit liability
Other operating liabilities
Cash generated from operations
Interest received
Interest paid
Income taxes paid
Net cash generated from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for using equity method
Acquisition of financial assets at fair value through other
comprehensive income
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Decrease (increase) in refundable deposits
Acquisition of intangible assets
Increase in other non-current assets
Increase in prepayments for equipment
Dividends received
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term loan
Proceeds from long-term debt
Repayments of long-term debt
Decrease in long-term payables
Decrease in refundable deposits
Cash dividends paid
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD

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

  • 220 -

Sinphar Pharmaceutical Co., Ltd.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2023 and 2022

(Amounts in Thousands of New Taiwan Dollars , Unless Specified Otherwise)

1. GENERAL INFORMATION

Sinphar Pharmaceutical Co., Ltd. (the Company or Sinphar) was incorporated in the Republic of China (“R.O.C.”) on July 2, 1977. Sinphar mainly engages in the production, processing and trading of various Western medicines, Chinese medicines, medicinal cosmetics and detergents.

Sinphar’s shares have been listed on the Taipei Exchange since October 17, 2000. On August 26, 2002, Sinphar’s stocks were approved for listing on the Taiwan Stock Exchange. The address of its registered office and principal place of business is No.84, Zhongshan Rd., Dongshan Township, Yilan County, Taiwan.

The parent company only financial statements are presented in the Company’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The accompanying parent company only financial statements were approved by the Company’s board of directors and issued on March 6, 2024.

  1. APPLICATION OF NEW AND REVISED STANDARDS, AMENDMENTS AND INTERPRETATIONS

  2. (1) Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

  3. New standards, interpretations and amendments endorsed by the FSC and effective from 2023 are as follows:

New Standards, Interpretations and Amendments Effective Date Announced by IASB Amendments to IAS 1 “Disclosures of Accounting Policies” January 1, 2023 (Note 1) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 2) Amendments to IAS 12“Deferred Tax Related to Assets and January 1, 2023 (Note 3) Liabilities Arising from a Single Transaction”

“ － Amendments to IAS 12 International Tax Reform Pillar (Note 4) Two Model Rules ”

  • Note 1: An entity shall apply these amendments for annual reporting periods beginning on or after January 1, 2023.

  • Note 2: These amendments apply to changes in accounting estimates and changes in accounting policies that occur during annual reporting periods beginning on or after January 1, 2023.

  • Note 3: An entity shall apply the amendments to transactions that occur on or after the beginning of the earliest comparative period presented. It also, at the beginning of the earliest comparative period presented, recognizes deferred taxes for all temporary differences related to leases and decommissioning obligations and recognizes the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date.

  • 221 -

  • Note 4: As a temporary exception under IAS 12, an entity shall not recognize deferred income tax assets and liabilities assoicated with Pillar 2 income tax, nor shall it disclose the related information. However, the entity shall disclose in its financial report that it has already applied this exception. An entity shall apply this part of the amendment retrospectively in accordance with IAS 8 since the date that the amendments were issued (i.e. May 23, 2023). An entity shall apply the remaining disclosure requirements for the annual reporting periods beginning on or after January 1, 2023 and needs not to disclose such information in its interim reports with a reporting date ending before or on December 31, 2023.

  • A.Amendments to IAS 1 “Disclosures of Accounting Policies”

The amendments clarify that an entity shall disclose its material significant accounting policy information if the transaction, other event or condition to which the accounting policy information relates is material in size or nature, or a combination of both, and the accounting policy information that relates to a material transaction, other event or condition is also material to the financial statements. On the other hand, if the transaction, other event or condition to which the accounting policy information relates is immaterial in size or nature, an entity needs not to disclosure the accounting policy information that relates to the immaterial transaction, other event or condition. Additionally, Immaterial accounting policy information that relates to material transactions, other events or conditions need not be disclosed, either. However, an entity’s conclusion that accounting policy information is immaterial does not affect the related disclosure requirements set out in other IFRS Standards.

  • B.Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define accounting estimates as monetary amounts in financial statements that are subject to measurement uncertainty and clarify that a change in measurement techniques or inputs used to develop an accounting estimate is a change in accounting estimates unless the change is due to an error from prior periods.

  • C.Amendments to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

The amendments narrow the exemption extent in paragraphs 15 and 24 of IAS 12 for an entity from recognizing a deferred tax asset or liability in particular circumstances. In particular, the exemption does not apply to a transaction that gives rise to equal taxable and deductible difference at the time of the transaction. At the initial application of the amendments, an entity shall, at the beginning of the earliest comparative period presented, recognise deferred taxes for all deductible and taxable temporary differences associated with (i) lease and (ii) decommissioning liabilities and recognise the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date. An entity shall also apply the amendments transactions that occur on or after the beginning of the earliest comparative period presented. When initially applying the amendments, the information for comparable periods shall be restated.

  • “ － ”

  • D.Amendments to IAS 12 International Tax Reform Pillar Two Model Rules

The amendments stipulates that, as a temporary exception to IAS 12, Group shall neither recognize nor disclose information about deferred income tax assets and liabilities for Pillar Two income tax relating to international tax reform; however, Group shall disclose in its financial reports that it has applied this exception. In addition, Group shall separately disclose its current income tax expenses (benefits) relating to Pillar Two income tax. If the Pillar Two bill has been enacted or has been substantively enacted but has not yet taken effect, Group should disclose qualitative and quantitative information on its exposure to Pillar Two income tax that is known or can be reasonably estimated.

Based on the Company’s assessment, the New IFRSs above have no significant effect on the Company’s financial position and financial performance.

  • 222 -

  • (2) The IFRSs issued by International Accounting Standards Board (IASB) and endorsed by FSC with effective date starting 2024

New standards, interpretations and amendments endorsed by the FSC and effective from 2024 are as follows:

New standards, interpretations and amendments endorsed by the FSC and effective from 2024 are as follows:
New Standards,Interpretations and Amendments
Amendments to IFRS 16 “Lease Liability in a Sale and
Leaseback”
Amendments to IAS 1 “Classification of Liabilities as Current
or Non-current”
Amendments to IAS 1 “Non-current Liabilities with
Covenants”
Amendments to IAS 7 and IFRS 7 “Supplier finance
arrangements”		 Effective Date Announced byIASB
January 1, 2024 (Note 1)
January 1, 2024
January 1, 2024
January 1, 2024 (Note 2)

  • Note 1: The seller-lessee shall apply the amendments retrospectively in accordance with IAS 8 for the sale and leaseback transactions made after the initial application of IFRS 16.

  • Note 2: The amendment provides certain transitional reliefs. When initially appling the amendment, entities are not required to disclose comparative information and interim period information, as well as opening information required by paragraph 44H(b)(ii)-(iii).

  • A.Amendments to IFRS 16 “Lease liability in a sale and leaseback”

The amendment clarifies that for a sale and leaseback transaction, if the transfer of the asset is treated as a sale in accordance with IFRS 15, the liabilities incurred by the seller-lessee due to the leaseback should be treated in accordance with the IFRS 16. Moreover, if any variable lease payments that do not depend on an index or rate are involved, the seller-lessee should still determine and recognize the lease liability arising from such variable payments in a manner that does not recognize gains and losses related to the retained right of use. The difference between the subsequent actual lease payment amount and the reduced carrying amount of the lease liability is recognized in profit or loss.

B.Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that when an entity determines whether a liability is classified as non-current, the entity should assess whether it has the right to defer the settlement for at least twelve months after the reporting period. If the entity has that right on the end of reporting period, that liability must be classified as non-current regardless whether the entity expects whether to exercise the right or not. If the entity must follow certain conditions to have the right to defer the settlement of a liability, the entity must have followed those conditions at the end of reporting period in order to have that right, even if the lender tests the entity’s compliance on a later date.

The aforementioned settlement means transferring cash, other economic resources or the entity’s equity instruments to the counter-party to extinguish the liability. If the terms of the liability give the counter-party an option to extinguish the liability by the entity’s equity instruments, and this option is recognized separately in equity in accordance with IAS 32 “Financial Instruments: Presentation”, then the classification of the liability will not be affected.

  • C.Amendment to IAS 1 “Non-current Liabilities with Covenants”

This amendment further clarifies that only contractual terms that are required to be complied with before the end of the reporting period will affect the classification of the liability at that date. The contractual terms that required to be complied with within 12 months after the reporting period do not affect the classification of liabilities at the reporting date. However, for liabilities classified as non-current and must be repaid within 12 months after the reporting period due to potential non-compliance, the relevant facts and circumstances should be disclosed.

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D.Amendments to IAS 7 and IFRS 7 “Supplier finance arrangements”

Supplier financing arrangements involve one or more financing providers making payments to suppliers on behalf of an entity, and the entity agrees to repay the financing providers on the payment date agreed with the suppliers or a later date. The amendments to IAS 7 require an entity to disclose information on its supplier financing arrangements to enable users of financial statements to assess the impact of these arrangements on the entity's liabilities, cash flows and exposure to liquidity. The amendments to IFRS 7 include into its application guidance that when disclosing how an entity manages the liquidity risk of its financial liabilities, it may also consider whether it has obtained or can obtain financing facilities through supplier financing arrangements, and whether these arrangements may cause concentration of liquidity risk.

Based on the Company’s assessment, the application of the New IFRSs above will not have any significant impact on the Company’s financial position and financial performance.

  • (3) The IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed and issued into effect by the FSC.
effect by the FSC.
New Standards,Interpretations and Amendments Effective Date
Announced byIASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17

Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9－
Comparative Information”
Amendments to IAS 21 “Lack of Exchangeability”
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2025

As of the date, the accompanying parent company only financial statements were authorized for issue, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The main accounting policies used in the preparation of the parent company only financial statements are explained below. Unless otherwise stated, these policies apply consistently throughout all reporting periods.

  • (1.) Statement of Compliance

The accompanying parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed by the FSC.

  • (2.) Basis of Preparation of the Parent Company Only Financial Statement

  • A. Except for the following items, the accompanying parent company only financial statements have been prepared on the historical cost basis:

    • (A.) The financial assets and liabilities measured at fair value through profit and loss (including derivative financial instruments).

    • (B.) The financial assets measured at fair value through other comprehensive income.

    • (C.) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

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

  • C. The subsidiaries, associates and jointly controlled entities are incorporated in the parent company only financial statements under the equity method.

  • (3.) Foreign Currencies

  • A. Foreign currency transaction

Transactions in currencies other than the Company’s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are not retranslated. Except for financial instruments at FVTOCI, financial instruments that are designated as foreign operation net hedge or qualified as cash flow hedge, the retranslation foreign exchange differences are recognized in other comprehensive income. In other cases, the exchange differences are recognized in profit and loss.

  • B. Translation of foreign operation

For the purpose of preparing parent company only financial statements, the functional currencies of the Company and the foreign entities (including subsidiaries, associates, joint ventures and branches in other countries that use currency different from the currency of the Company) are translated into the presentation currency - the New Taiwan dollar as follows: assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; profits and losses items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation involving the loss of control, joint venture or significant influence over the foreign operation, all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

  • (4.) Classification of Current and Noncurrent Assets and Liabilities

  • A. Assets that meet one of the following criteria are classified as current assets:

    • (A.) Assets expected to be realized or intended to be sold or used within normal operating cycle;

    • (B.) Assets held primarily for the purpose of trading;

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  • (C.) Assets expected to be realized within 12 months after the reporting period; and

  • (D.) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Assets that are not classified as current are classified as non-current.

  • B. Liabilities that meet one of the following criteria are classified as current liabilities:

  • (A.) Liabilities expected to be paid off within normal operating cycle;

  • (B.) Liabilities held primarily for the purpose of trading;

  • (C.) Liabilities due to be settled within 12 months after the reporting period (It is still a current liability even if a long-term refinancing or rearrangement of payment agreement is completed after the balance sheet date and before the financial report is approved,); and

  • (D.) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. 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.

Liabilities that are not classified as current are classified as non-current.

  • (5.) Cash and Cash Equivalent

Cash and cash equivalent includes cash on hand, bank deposit and short-term, highly liquid investment that are readily convertible to know amount of cash and which are subject to an insignificant risk of change in value. Time deposits with original maturities within 1 year from the closing date that meet the definition above and are held for purpose of meeting short-term cash commitments in operations are classified as cash equivalent.

  • (6.) Financial Instruments

Financial assets and financial liabilities are recognized in balance sheets when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

A. Financial assets

  • (A.) Measurement category

The Company adopts trade-date accounting to recognize financial assets.

Financial assets are classified as financial assets at FVTPL, financial assets at amortized cost, and equity investments at FVTOCI.

a. Financial assets at FVTPL

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL including equity investments not designated as at FVTOCI and debt instruments that do not meet the criteria of amortized cost or the FVTOCI.

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Financial assets at FVTPL are initially and subsequently measured at fair value, with any gains or losses arising from remeasurement recognized in other gains or losses income. Fair value is determined in the manner described in Note 12(3).

  • b. Equity investment at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

  • c. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

  • (a.) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • (b.) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets measured at amortized cost are measured at carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

  • (a.) Purchased or originated credit-impaired financial assets, for those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

  • (b.) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets, for those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

  • (B.) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses (“ECL”) on financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime ECL. For other financial assets, when the credit risk on the financial instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to 12-month ECL. If there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to lifetime ECL.

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ECL reflects the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes an impairment loss for aforementioned financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

  • (C.) Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

  • a. The contractual rights to receive the cash flows from the financial asset expire.

  • b. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.

  • c. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The difference between the book value and the price of financial assets at amortized cost will be recognized to profit or loss on disposal of the financial assets. The cumulative gain or loss of the investments in equity instruments at FVTOCI will not be reclassified to profit or loss on disposal of the equity investments. Instead, they will be transferred to retained earnings.

  • B. Financial liabilities

  • (A.) Subsequent measurement

Except for the following, financial liabilities measured at amortized cost are measured using the effective interest rate method after initial recognition.

  • a. Financial liabilities at FVTPL are financial liabilities held for trading or financial liabilities designated upon initial recognition as at FVTPL. Repurchase currently and the derivative financial instruments unless financial guarantee contract and designated and effective as a hedging instrument, are classified financial liabilities held for trading. The Company designates the financial liabilities upon initial recognition as at FVTPL when the financial liabilities accord to one of the followings:

  • (a.) They are hybrid (combined) contracts containing at least an embedded derivaties and the host contract is an asset not within the scope of IFRS 9; or

  • (b.) Eliminates or significantly reduces measurement or recognition; or

  • (c.) A tool to manage and evaluate its performance on a fair value basis in accordance with a written risk management policy.

  • b. Financial liabilities at FVTPL are stated at fair value upon initial recognition, related transaction costs and any gain or loss arising on remeasurement is recognized in profit or loss.

  • c. A financial liabilities that designated as financial liabilities measured at FVTPL, which amount of change in fair value resulting from a change in credit risk, is recognized as other comprehensive income, and that will not be reclassified subsequently to profit or loss. The amount of the remaining fair value change in the liability is reported in the profit and loss. However, if the aforementioned accounting treatment triggers or exacerbates the improper accounting ratio, the full profits or losses of the liability are reported in the profit or loss.

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(B.) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When derecognition of financial liabilities, the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, are recognized in profit or loss.

C. Modification of Financial Instruments

When the contractual cash flows of a financial instrument are renegotiated or modified and the renegotiation or modification does not result in the derecognition of that financial instrument, the Company recalculates the gross carrying amount of the financial asset or the amortized cost of the financial liabilities using the original effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the carrying amount of the modified financial instrument and are amortised over the remaining term of the modified financial instrument. If the renegotiation or modification results in that the derecognition of that financial instrument is required, then the financial instrument is derecognized accordingly.

If the basis for determining the contractual cash flows of a financial asset or financial liability changes resulting from interest rate benchmark reform and the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis, the Company applies the practical expedient to account for that change as a change in effective interest rate. If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Company first applies the practical expedient aforementioned to the changes required by interest rate benchmark reform, and then applies the applicable requirements to any additional changes to which that practical expedient does not apply.

(7.) Inventories

Inventories, under a perpetual system, are measured 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 progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity), excluding 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.

(8.) Investments Accounted for Using Equity Method

Investments in subsidiaries are accounted for using the equity method. A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognized its share in change in the equity of subsidiaries.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying amount of the subsidiary and the fair value of the consideration paid or received is recognized directly in equity.

When the Company’s share of losses of a subsidiary equal or exceed its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

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When the Company loses control of a subsidiary, and retained investment of the former subsidiary is measured at fair value at that date. A gain of loss is recognized in profit or loss and calculated as the difference between 1) the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and 2) the previous carrying amount of the investments in such subsidiary. In addition, the Company shall account for all amount previously recognized in other comprehensive income in relation to the subsidiary on the same basis as would be required if the subsidiary had directly disposed of the related assets and liabilities.

When the Company transacts with its subsidiaries, profits and losses resulting from the transactions with the subsidiaries are recognized in the Company’s parent company only financial statements only to the extent of interest in the subsidiaries that are not owned by the Company.

(9.) Property, Plant and Equipment

  • A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. For property, plant and equipment under construction, sample produced from testing whether the asset is functioning properly before its intended use are measured at lower of the costs or net realizable value. Proceeds from selling such an item and the cost of the item are recognized in profit or loss.

  • B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be reliably measured. The carrying amount of the replaced component is derecognized. All other repairs and maintenance expense are recognized in profit or loss as incurred.

  • C. Except for land, which is not depreciated, other items of property, plant and equipment are measured at cost, the depreciable amount shall be allocated by the straight-line method over its useful life. Depreciation methods, useful lives, and residual values are reviewed at the end of each reporting period. 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 accounting 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:

Buildings: 5~55 Years

Machinery: 1~10 Years

Transportation: 5~8 Years

Office Equipment: 1~15 Years

Other Equipment: 1~10 Years

  • D. If an item of property, plant and equipment or any significant component is disposed or there is no future economic benefit flow to the Company, the carrying amount is derecognized in profit and loss. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized in profit and loss.

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(10.) Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes) and include land held for a currently undetermined future use.

Owned investment properties are initially measured at cost, including transaction costs, and subsequently measured at cost less accumulated depreciation and accumulated impairment loss. All investment properties are depreciated using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(11.) Intangible Assets

  • A. Intangible assets acquired separately (with finite useful lives)

Intangible assets acquired from government grants are measured at fair value. Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis as follow.

  • (A.)Computer Software:1~10 Years

  • (B.)Technology:10 Years

  • (C.)License: The duration of patent right and the duration of the contract whichever is shorter

The estimated useful life, residual value, and amortization period and method are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

  • B. Internally-generated intangible assets - research and development expenditure

  • (A.) Expenditure on research activities is recognized as an expense in the period in which it is incurred except for the goodwill or intangible assets from business combination.

  • (B.) An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following conditions have been demonstrated:

    • a. The technical feasibility of completing the intangible asset so that it will be available for use or sale;

    • b. The intention to complete the intangible asset and use or sell it;

    • c. The ability to use or sell the intangible asset;

    • d. When the intangible asset could generate probable future economic benefits;

    • e. The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

    • f. The ability to measure reliably the expenditure attributable to the intangible asset during its development.

  • (C.) Capitalized intangible assets in development phase are stated at cost, less accumulated amortization and accumulated impairment loss. Intangible assets with indefinite useful lives that are not amortizable.

  • (D.) The assessment of intangible assets with indefinite life is reviewed annually to determine whether the useful lives of intangible asset with indefinite life continues to be with indefinite life. If not, the change in useful life from infinite to finite is recorded as change in accounting estimate.

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C. Disposal of the assets

Any gain or loss arising from the disposal of the assets is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognized in profit or loss.

  • (12.) Impairment of Non-Financial Assets

The Company assesses at the end of reporting period the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized 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 and its value in use. When the indication of impairment loss recognized in prior years for an asset other than goodwill no longer exists, the impairment loss is reversed to the extent of the loss previously recognized in profit or loss.

Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and recognize impairment loss if the carrying amount less than the recoverable amount. Goodwill cannot be reversed in future periods.

(13.) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation from past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date. The discount rate shall be a pre-tax rate that reflect current market assessment of the time value and the risk specific to the liability. Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as interest expense. Future operating loss is not recognized as provisions.

  • (14.) Employee Benefits

  • A. Short-term employee benefits

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

B. Pensions

  • (A.)Defined contribution plans

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

  • (B.) Defined benefit plans

  • a. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current or prior period(s). The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is estimated annually by independent actuaries using the projected unit credit method.

  • b. Remeasurements of defined benefit plans are recognized in other comprehensive income as incurred and are recorded as retained earnings.

  • c. Past-service costs are recognized immediately in profit or loss.

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  • C. Employee’s compensation and directors’ remuneration

  • Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligations and those amounts can be reliably estimated. Any difference between the amount accrued and the amount actually distributed is accounted for a change in accounting estimate.

D. Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognize any related restructuring costs. The benefits expected to be due more than 12 months after balance sheet date should be discounted to the present value.

(15.) Taxation

  • A. Income tax expenses include both current taxes and deferred taxes. Except for expenses related to the items recognized in other comprehensive income or directly in equity, all current and deferred taxes shall be recognized in profit or loss.

  • B. The current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of each reporting period 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. According to Income Tax Act in the R.O.C., income tax on unappropriated earnings is expensed in the year the shareholders’ meeting approved the appropriation of earnings which is the year subsequent to the year the earnings are generated.

  • C. Deferred income 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, and it does not give rise to equal deductible and taxable temporary differences at the time of transaction. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

  • D. Deferred tax assets arising from deductible temporary differences, unused loss carry forward and unused tax credits are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period.

  • E. Current income tax assets and liabilities are offset and the net amount reported at the end of the reporting period when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset at the end of the reporting period when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same tax authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

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  • F. Tax credit resulting from acquisitions of equipment or technology, research and development expenditures, employee training, and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

  • (16.) Revenue

The Company identifies the contract with the customers, and recognizes revenue when performance obligations are satisfied.

  • A. Revenue from sale of goods

Revenue from the sale of goods is mainly from sale of medical product. When a customer obtains control of promised goods, at which time the goods are delivered to the customer's specific location and performance obligation is satisfied.

  • B. Royalties

Royalties are the rights of using intellectual property in authorized duration. The received royalties are recognized in royalty revenue on a time basis over the period of the authorization.

  • C. Technical service

The Company provides research and development technology test services. Revenue from services is recognized as revenue during the period when services are provided to customers. If the services rendered exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.

The Company’s estimates of revenue, costs and completion degree are revised with the test situation. Any income and cost increase or decrease caused by the estimated changes will be reflected in profit or loss during the period when the revision situation is known to the management.

  • (17.) Borrowing costs

The borrowing cost directly attributable to the acquisition, construction or production of a qualified assets, is capitalized as part of the cost of the assets until substantially all necessary activities to reach the intended use or status for sale of the assets have been completed.

To the extent that an entity borrows funds specifically for the purpose of obtaining a qualifying asset, the entity shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings.

Except for the aforementioned, all other borrowing costs are recognized as profit or loss in the period in which they are incurred.

(18.) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.

Government grants that are deemed as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future costs are recognized in profit or loss in the period in which they are receivable.

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(19.) Earnings per Share

The Company discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Compnay. The calculation of basic earnings per share is based on the profit or loss attributable to the ordinary shareholders of the Compnay divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit or loss attributable to ordinary shareholders of the Compnay divided by the weighted-average number of ordinary shares outstanding after adjustment for the effect of all dilutive potential ordinary shares.

  1. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, the management is required to make judgments, estimations, and assumptions about the uncertain situation. The estimates and associated assumptions are based on historical experience and other factors considered relevant. Actual results may differ from these estimates.

The Company considers the economic implications of the changes in climates and related governmental policies and regulations, the conflicts between Ukraine and Russia as well as related international sanctions, inflation and volatility in interest rate when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

In the preparation of the parent company only financial statements, the critical accounting judgments the Company has made and the major sources of estimation and assumption uncertainty are described as follows:

  • A. Critical judgements in applying accounting policies

Business model assessment for financial assets

The Company determines the business model at a level that reflects how companys of financial assets are managed together to achieve a particular business objective. This assessment involves judgment and consideration of all relevant evidence, such as how the performance of the assets is evaluated, the risks that affect the performance of the assets, and how the managers of the assets are compensated. The Company constantly assess the adequacy of its business model and monitors financial assets measured at amortized cost and debt investments measured at fair value through other comprehensive income. When these assets are derecognized prior to their maturity, the Company reviews the reasons for their disposal and whether the reasons are consistent with the objective of the business for which the assets were held. If the objective of the business for an asset is changed, the classification of the asset is prospectively changed from the reclassification date.

  • B. Critical accounting estimates and assumptions

(A.)Revenue Recognition

Sales revenue, excluding related estimated sales returns, discounts and other similar allowance, is recognized when the control of goods or services is transferred to the customer and the Company satisfies it performance obligation. The Company estimates sales returns and allowance based on historical experience and other known factors. The Company assesses the reasonableness of the estimates periodically.

(B.)Estimated impairment of financial assets

The provision for impairment of accounts receivables, debt investments, and financial guarantee contracts is based on assumptions on default risk and expected loss rates. The Company makes these assumptions and selects inputs for impairment calculation based on the Company’s historical experience and existing market conditions, as well as forward looking information. If the future cash inflows are less than expected, a material impairment loss may arise. Please refer to Note 6(5.)for the assumption and input data.

  • 235 -

(C.)Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. The management considers current market and historical experience on sperific future product demand for evaluation basis, and charge of these factors may significantly affect the results.

(D.)The useful life of property, plant and equipment

Property, plant and equipment are amortized on a straight-line basis, and the Company periodically evaluates the useful life and residual value of property, plant and equipment. If there is a significant change in the relevant estimates, it will be adjusted in the current period of the change and in subsequent years.

(E.)Realisability of deferred tax assets

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deferred tax asset can be utilised. If future generated profit less than expected, there would be significant reversed of deferred tax assets recognized as profit and loss when occured.

6. DETAILS OF SIGNIFICANT ACCOUNTS

  • (1.) Cash and Cash Equivalents
ITEM
Cash on hand
Check deposits
Demand deposits
Cash equivalent
Time deposits
(Investments with original
maturities less than 1 year)
Total		 31-Dec-23
$ 1,962
1,832
548,724
148,480
$ 700,998		 31-Dec-22
$ 1,713
1,209
613,469
86,664
$ 703,055
  • A.The Company trades with a variety of financial institutions all with high credit quality to disperse credit risk, and the management expects that the probability of counterparty default is remote.

B.The cash and cash equivalents were not pledged.

  • (2.) Notes Receivable, Net
ITEM
Notes receivable
Less: Allowance for impairment loss		 31-Dec-23
$ 164,407

(507)
$ 163,900		 31-Dec-22
$ 179,178

(353)
$ 178,825

  • A. As of December 31, 2023 and 2022, the notes receivables were not pledged.

  • B. Please refer to table below for the information about the disclosures on allowance for impairment loss for accounts receivable.

  • 236 -

(3.) Accounts Receivable, Net

Accounts Receivable, Net
ITEM 31-Dec-23 31-Dec-22
Accounts receivable
Gross carrying amount measured at
amortized cost		 $ 433,261 $ 462,300
Less: Allowance for impairment loss (7,259) (5,714)
$ 426,002 $ 456,586

  • A. The Company’s average credit terms of accounts receivable were 30 to 120 days, which was determined with factors of customers’ industrial environment, business scales and profitability.

  • B. The accounts receivable were not pledged.

  • C. The Company applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for all notes receivable and accounts receivable. The lifetime expected credit losses on accounts receivables are estimated by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions. According to the past experience of credit loss, there is no significant difference between different customer categories, thus the provision matrix doesn’t further distinguish customer categories, and is set up the expected credit loss ratio by the past due days.

The following table details the loss allowance of note receivables and accounts receivables based on the Company’s provision matrix.

December 31,2023

Not past due
0 to 60 days
61 to 120 days
121 to 180 days
Over 181 days
Total
December 31,2022

Not past due
0 to 60 days
61 to 120 days
121 to 180 days
Over 181 days
Total		 Expected Credit
Loss Ratio
0%~1%
5%
30%
50%
100%
Expected Credit
Loss Ratio
0%~1%
5%
30%
50%
100%		 Gross Carrying
Amount
$ 564,031
26,827
521
223
6,066
$ 597,668
Gross Carrying
Amount
$ 623,321
9,792
3,806
952
3,607
$ 641,478		 Loss Allowance
(Lifetime ECL)
$ 91
1,341
156
112
6,066
$ 7,766
Loss Allowance
(Lifetime ECL)
$ 353
489
1,142
476
3,607
$ 6,067		 Amortized
Cost
$ 563,940
25,486
365
111

-
$ 589,902
Amortized
Cost
$ 622,968

9,303

2,664

476

-
$ 635,411
  • D. The movements of the loss allowances of notes receivable and accounts receivable, including those from related parties, were as follows:
Opening Balance
Add: Impairment loss
Closing Balance		 For the Year Ended December31
2023
2022
$ 6,067
$ 4,198
1,699
1,869
$ 7,766$ 6,067

  • 237 -

  • E. These amounts were recognized without considering other credit enhancements held by the Company. The Company writes off an accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. However, the Company continues to engage in enforcement activity to recover the receivables due. Any recovered amounts are recognized in profit or loss.

  • F. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.

  • (4.) Inventories

Inventories
ITEM 31-Dec-23 31-Dec-22
Merchandise $ 2,727 $ 826
Finished goods 279,322 232,422
Work in process 71,551 83,569
Raw materials 308,813 254,293
Materials 39,902 43,946
Materials and supplies in transit 3,459 -
Total $ 705,774 $ 615,056
  • A. Cost of revenue related to inventories recognized in profit or loss as follows:
ITEM
Cost of goods sold
Loss on decline (gain on reversal) in
market value of inventories
Loss on inventory scrapped
Others
Total		 For the Year Ended December31 For the Year Ended December31
2023
$ 1,701,227
(28,015)
11,268
(286)
$ 1,684,194		 2022
$ 1,559,756
2,188
16,838
(1,571)
$ 1,577,211

  • B. No inventories were pledged or held as collateral.

  • (5.) Financial Assets at Fair Value through profit and loss / other comprehensive income – non-current

ITEM
Financial assets mandatorily measured at fair
value through profit or loss
Overseas unlisted preferred shares
PHYTOCEUTICA INC. CANCAP
PHARMACEUTICAL, LTD.
Less: Accumulated impairments
Total
Financial assets mandatorily measured at fair
value throughother comprehensive income
Domestic unlisted ordinary shares

Less: Valuation adjustments
Total		 31-Dec-23

$ 4,844
2,394
7,238
(4,844)
$ 2,394
$ 12,126
(1,990)
$ 10,136		 31-Dec-22
$ 4,844
1,219
6,063
(4,844)
$ 1,219
$ 9,676
(68)
$ 9,608

  • A. The Company invested in the preferred stocks of PHYTOCEUTICA INC., it is not entitled to other rights of ordinary shares, except for that dividends and distribution of residual assets preferred over ordinary shares.

  • 238 -

  • B. These investments in equity instruments were held for long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI.

  • C. As of December 31, 2023 and 2022, the financial assets at fair value through profit or loss were not pledged or held as collateral.

  • D. Please refer to Note 12 for information about the related credit risk management and the valuation techniques.

  • (6.) Investments Accounted for Using Equity Method

Name of Investee
CANCAP
PHARMACEUTICAL
LTD. (ordinary shares)
SUNETIC BIOTECH
INC.
UJNIVERSAL NEXT
TECHNOLOGIES INC.
ZuniMed Biotech Co.,
Ltd.
SynCore Biotechnology
Co., Ltd.
Total
Add: Transfer into debit
item of financial asset at
FV through PL
FVTPL		 31-Dec-23 31-Dec-23 Carrying
Amount
$ (123,853)

815,584

27

91,199

229,301
1,012,258
123,853
$ 1,136,111		 31-Dec-22 31-Dec-22 Carrying
Amount
$ (125,028)

915,635

39

91,660

154,419
1,036,725
125,028
$ 1,161,753
Original
Investment
Amount
$ 44,605
745,748
17,467
109,990
1,864,935
$ 2,782,745		 Percentage
Of
Ownership
88.43%
83.47%
100.00%
100.00%
64.26%
 Original
Investment
Amount		 Percentage
Of
Ownership

88.43%

83.47%

100.00%

100.00%

62.09%
$ 44,605

745,748

17,467

109,990

1,745,698
$ 2,663,508

  • A. As of December 31, 2023 and 2022, the investment accounted for using equity method for CANCAP PHARMACEUTICAL LTD. has been consistently dealing with operating deficit. This caused the Company to carry a credit balance on the carrying amount of its related long-term investment. The Company also owns the preference shares of the investee, hence the credit balance amounted to NT$123,853 thousand and NT$125,028 thousand were respectively debited as Financial Assets at Fair Value through Profit and Loss.

  • B. The Company received cash dividends from subsidiary SUNETIC BIOTECH. INC. amounted to NT$71,824 thousand and NT$44,405 thousand for the years ended December 31, 2023 and 2022, respectively..

  • C. The Subsidiary, SynCore Biotechnology Co., Ltd.’s shareholders held a meeting on May 5, 2023, and resolved to cover deficit by reducing capital by NT$843,325 thousand, writing off 84,332 thousand shares (including privately placed equuity 33,131 thousand shares). The ratio of capital reduced was 73.28%. The registration had been completed on May 31, 2023.

  • D. The Subsidiary, SynCore Biotechnology Co., Ltd.’s Board of Directors resolved on August 8, 2023 to raise capital through the issuance of 4,420 thousand ordinary shares. Amount to be issued through the cash capital increase is $NTD150,280 thousand at a subscription price of $NTD34 per share. The Company subscribed for NT$119,237 thousand for 3,507 thousand shares. Due to non-proportionate subscription to SynCore’s issuance of new capital share, the Company recognized adjustment to reduce capital surplus and retained earning for NT$ 5,832 thousand and 13,969 thousand, respectively.

  • 239 -

  • E. The stocks of SynCore Biotechnology Co, Ltd are listed for publicly traded. As of December 31, 2023 and 2022, the Company held its shares with market values amounted to NT$784,439 thousand and NT$1,380,084 thousand, respectively and there were 2,169 thousand shares and 17,122 thousand shares, excluded in the computation of the market value due to the regulation about privately placed equity shares with 3 years resell limit.

  • F. The amount of profit and loss and other comprehensive income accounted for using equity method in 2023 and 2022 are calculated based on the financial statements audited by a CPA of the same period.

  • G. Please refer to Note 13 for the information of investments accounted for using equity method.

  • (7.) Property, Plant and Equipment

Cost
1-Jan-23
Additions
Disposals
Reclassification
31-Dec-23
Accumulated
depreciation and
Impairment
1-Jan-23
Depreciation
Disposals
Reclassification
31-Dec-23
Cost
1-Jan-22
Additions
Disposals
Reclassification
31-Dec-22
Accumulated
Depreciation and
Impairment
1-Jan-22
Depreciation
Disposals
31-Dec-22
CarryingAmount
31-Dec-23
31-Dec-22		 Land
$ 487,277
-
-
96,683
$ 583,960
$ -
-
-
-
$ -
$ 487,277
-
-
-
$ 487,277
$ -
-
-
$ -
$ 583,960
$ 487,277		 Buildings
$ 1,939,115
11,422
-
79,204
$ 2,029,741

$ 823,349
60,875
-
9,088
$ 893,312

$ 1,909,362
10,296

-
19,457
$ 1,939,115


$ 764,350
58,999
-
$ 823,349

$ 1,136,429
$ 1,115,766		 Machinery
$ 1,215,351

30,011

(14,289)

119,883
$ 1,350,956


$ 931,520

68,810
(13,592)
-
$ 986,738

$ 1,185,808

9,989
(3,516)

23,070
$ 1,215,351




$ 868,119

66,448

(3,047)
$ 931,520

$ 364,218
$ 283,831		 Other
Equipment
$ 226,606
15,664
(10,056)
3,156
$ 235,370
$ 165,824
14,355
(10,056)
-
$ 170,123
$ 203,381
18,517
(382)
5,090
$ 226,606
$ 154,043
12,143
(362)
$ 165,824
$ 65,247
$ 60,782		 Unfinished
Construction and
Equipments
Pending
Acceptance
$ 72,622
115,721
-
(58,638)
$ 129,705
$ -
-
-

-
$ -
$ 66,323
37,271
-
(30,972)
$ 72,622
$ -
-
-
$ -
$ 129,705
$ 72,622		 Total
$ 3,940,971
172,818

(24,345)
240,288
$ 4,329,732
$ 1,920,693
144,040

(23,648)

9,088
$ 2,050,173
$ 3,852,151
76,073
(3,898)
16,645
$ 3,940,971
$ 1,786,512
137,590
(3,409)
$ 1,920,693
$ 2,279,559
$ 2,020,278

  • 240 -

  • A. The property, plant and equipment were pledged or held as collateral, please refer to Note 8 for details.

  • B. As of December 31, 2023 and 2022, the Company acquired agricultural lands from non-related parties for the purpose of plant planning which could not be registered ownership of the Company. The acquisition cost was NT$23,184 thousand, and the land was registered in the name of Shu Fei Yu. To protect the interest of the Company, the mortgage right of the land was registed belong to the Company.

(8.) Investment Properties

Land Buildings Total
Cost
1-Jan-23 $ 182,880 $ 71,884 $ 254,764
Additions - - -
Reclassification (96,683) (38,003) (134,686)
31-Dec-23 $ 86,197 $ 33,881 $ 120,078
Accumulated depreciation and
impairments
1-Jan-23 $ - $ 16,803 $ 16,803
Depreciation expense - 975 975
Reclassification - (9,088) (9,088)
31-Dec-23 $ - $ 8,690 $ 8,690
Cost
1-Jan-22 $ 182,880 $ 71,884 $ 254,764
Additions - - -
31-Dec-22 $ 182,880 $ 71,884 $ 254,764
Accumulated depreciation and
impairments
1-Jan-22 $ - $ 15,256 $ 15,256
Depreciation expense - 1,547 1,547
31-Dec-22 $ - $ 16,803 $ 16,803
CarryingAmount
31-Dec-23 $ 86,197 $ 25,191 $ 111,388
31-Dec-22 $ 182,880 $ 55,081 $ 237,961
  • A. Rental income from investment properties and direct operating expenses arising from investment property are shown below:
shown below:
Rental income from investment properties

Direct operating expenses arising from the
investment properties that generated rental
income during the period		 For the Year Ended December31
2023
$ 4,737
$ 1,288		 2022
$ 7,404
$ 2,167

B. Investment properties are depreciated on a straight-line basis based on 15~50 years useful lives.

  • C. The investment properties that are not valued by an external independent valuer are valued by the Company’s management using the rental of adjacent area as reference. This was the cash flow approach and belonged to the level 3 fair value measurement. The fair values as at December 31, 2023 and 2022 were amounted to NT$135,375 thousands and NT$338,395 thousands, respectively.

  • D. Information on investment properties pledged to others as collaterals is provided in Note 8.

  • 241 -

(9.) Intangible Assets

ntangible Assets
ITEM
Software
Less: Accumulated amortization and
impairment
Net
1-Jan-23
Additions
Disposals
Reclassification
31-Dec-23		 Dec-31-23
Dec-31-22
$ 86,609 $ 90,855
(65,898)
(62,389)
$ 20,711$ 28,466
Software		 Dec-31-22
$ $ 90,855
(62,389)
$ $ 28,466
Cost
$ 90,855
5,064
(9,533)
223
$ 86,609		 Accumulated
amortization and
impairment
$ (62,389)
(13,042)

9,533

-
$ (65,898)		 Carrying
Amount
$ 28,466

(7,978)
-
223
$ 20,711
1-Jan-22
Additions
Disposals
31-Dec-22		 Software
Cost
$ 94,481
10,236
(13,862)
$ 90,855		 Accumulated
amortization and
impairment
$ (59,453)

(16,798)
13,862
$ (62,389)		 Carrying
Amount
$ 35,028
(6,562)

-
$ 28,466

The software was pledged as collateral for long-term loans, please refer to Note 8.

  • (10.) Short-term loans

31-Dec-23

Category Amount Interest Rate
Unsecured loans $ 360,000 1.75%~1.95%
31-Dec-22
Category Amount Interest Rate
Unsecured loans $ 360,000 1.44%~2.12%
Long-term loans and current portion of long-term liabilities
ITEM 31-Dec-23 31-Dec-22
Secured loans $ 1,244,963 $ 1,192,935
Unsecured loans 290,000 260,000
Subtotal 1,534,963 1,452,935
Less: current portion (48,490) (48,116)
Total $ 1,486,473 $ 1,404,819
Interest Rate 1.650%~2.415% 1.525%~2.283%

(11.) Long-term loans and current portion of long-term liabilities

Please refer to Note 8 for collaterals pledged for long-term borrowings.

(12.) Retirement Benefit Plans

Defined contribution plans

A. The employee pension plan under the Labor Pension Act of the R.O.C. (the Act) is a defined contribution plan. Pursuant to the plan, the Company make monthly contributions of 6% of each individual employee’s salary or wage to employees’ pension accounts.

  • 242 -

  • B. NT$22,000 thousand and NT$19,435 thousand were contributed by the Company for the years ended December 31, 2023 and 2022, respectively.

Defined benefit plan

The Company and its domestic subsidiaries have defined benefit pension plans in accordance with the Labor Standards Law of the R.O.C. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited in Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. The Company would assess as the balance in the aforementioned labor pension reserve account by the end of each year. If the account balance is not enough to pay the pension to the labors expected to be qualified for retirement in the next year, the Company will make contribution for the deficit by next March. The pension fund is managed by the government’s designated authorities and the Company has no right to influence their investment strategies.

A. Amounts recognized in the parent company only balance sheets are as follows:

ITEM 31-Dec-23 31-Dec-23 31-Dec-22 31-Dec-22
Present value of defined
benefit obligations $ 164,129 $ 165,248
Fairvalue ofplan assets (128,577) (129,270)
Net defined benefit liability $ 35,552 $ 35,978
  • B. Movements of net defined benefit liabilities were as follows:
For the Year Ended December31,2023
Present value of Fair value of plan
asset
defined benefit Fair value of plan Net defined benefit
ITEM obligations asset liability
$
165,248		 $ (129,270) $
BALANCE at JANUARY 1
165,248		 35,978
Service cost:
680
Current service cost 680 - 680
Interest expense(revenue) 2,118 (1,662) 456
2,798 (1,662)
Recognized inprofit or loss 2,798 1,136
Remeasurement on the net
defined benefit liability:
Return on plan assets - (1,130) (1,130)
Actuarial (gains) losses
Effect of changes in -
-

demographic assumptions		 - - -
Effect of changes in

financial assumptions		 1,397 - 1,397
Experience adjustments 3,469 - 3,469
Components of defined benefit 4,866 (1,130)
costs recognized in other

comprehensive income		 4,866 3,736
Pension fund contribution - (5,298) (5,298)
Paid Pension (8,783)
8,783 -
Balance at December 31 $ 164,129 $ (128,577) $ 35,552
  • 243 -

For the Year Ended December 31, 2022

For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022 For the Year Ended December31,2022
Present value of Fair value of plan
asset
defined benefit Fair value of plan Net defined benefit
ITEM obligations asset liability
$
171,779		 $ (120,890) $
BALANCE at JANUARY 1
171,779		 50,889
Service cost:
Current service cost 1,075 - 1,075
1,182 (832)
Interest expense(revenue) 1,182 350
2,257 (832)
Recognized inprofit or loss 2,257 1,425
Remeasurement on the net
defined benefit liability:
Return on plan assets - (9,475) (9,475)
Actuarial (gains) losses
Effect of changes in -
-

demographic assumptions		 8 - 8
Effect of changes in
financial assumptions (9,474) (9,474)
-
Experience adjustments 9,861 - 9,861
Components of defined benefit 395 (9,475)
costs recognized in other

comprehensive income		 (9,080)
Pension fund contribution - (7,256) (7,256)
Paid Pension (9,183) 9,183 -
Balance at December 31 $ 165,248 $ (129,270) $ 35,978
C. The defined benefit plan as of t
Operation Costs
Selling Expense
Administrative Expense
Research and Development
Expense		 he year ended 2023 and 2022 were summarized by functions as follows:
31-Dec-23
31-Dec-22
$ 516
$ 648
354
408
224
293
42
76
$ 1,136
$ 1,425
$ 648
408
293
76
$ 1,425
  • D. Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

(A.)Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc. at the discretion of the Bureau of Labor Funds of Ministry of Labor, or under the mandated management. However, under the Labor Standards Law, the rate of return on plan assets shall not be less than the average interest rate on a two-year time deposit published by the local banks.

(B.)Interest risk

A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.

(C.)Salary risk

The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

  • 244 -

E. The main actuarial assumptions used were as follows:


31-Dec-23		 31-Dec-22
Discount rate 1.20% 1.30%
Expected rate of salaryincrease 1.50% 1.50%
The weighted average duration of the
8 years 9 years
defined benefit obligation

  • (A.) Assumptions on future mortality experience are set based on the 6th Taiwan Standard Ordinary Experience Mortality Table (TSO).

  • (B.) The sensitivity analysis:

If significant actuarial assumptions change reasonably and all other assumptions are held constant, the present value of the defined benefit obligation may increase(decrease) as below:

ITEM 31-Dec-23 31-Dec-23 31-Dec-22
Discount rate $ (3,459)
$ (3,727)
(1,397)
(1,506)
3,571
3,854
1,415
1,526
3,552
3,837
(3,457)
(3,729)
(15)
(26)
15
26
0.25% increase
0.1% increase
0.25% decrease
0.1% decrease
Future salaryincrease rate
0.25% increase
0.25% decrease
Employee turnover rate
110% of the expected

employee turnover rate
90% of the expected
employee turnover rate 15 26

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated .

  • F. The contribution that the Company expects to make to its defined benefit pension plans in next year is NT$834 thousand.

Other Employees’ benefits were as follows:

ITEM
Employees benefits payable
Compensated absences payable
Other employees benefits
Total		 31-Dec-23
$ 10,485
5,264
16,314
$ 32,063		 31-Dec-22
$ 9,647
4,846
15,029
$ 29,522
  • (13.) Capital Stock

The movements in the number of the Company's ordinary shares outstanding are as follows:

For the Year Ended December 31, 2023

Issued and paid shares (in thousands) Issued capital January 1 167,722 $ 1,677,221 December 31 167,722 $ 1,677,221

For the Year Ended December 31, 2022

Issued and paid shares
(in thousands)
167,722
167,722		 Issued capital
$ 1,677,221
$ 1,677,221

January 1 December 31

  • 245 -

As of Dec 31, 2023 the Company’s authorized capital amount was NT$2,500,000 thousand, consisting of 250,000 thousand shares of ordinary stocks.

  • (14.) Capital Surplus
Capital Surplus
ITEM
Additional paid in capital
Additional paid-in capital arising from
bond conversion
Difference between consideration and
carrying amount of subsidiaries
acquired or disposed
Changes in ownership interest in
Subsidiaries
Others
Total		 31-Dec-23
$ 422,450
190,611
310,439
-
640
$ 924,140		 31-Dec-22
$ 422,450
190,611
310,439
5,832
640
$ 929,972

Under the Company Act, the capital surplus generated from excess of the issuance price over the par value of capital stock and donations may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as stock dividends or cash dividends. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed a certain percentage of the Compnay’s paid in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(15.) Accumulated Deficit and Dividend Policy

  • A. When allocating the net profits in each fiscal year, Sinphar shall be first utilized for paying taxes, offsetting losses of previous years, and then setting aside the 1) legal capital reserve at 10% of the profits left over, until the accumulated legal capital reverse equals Sinphar’s paid-in capital; 2) special capital reverse in accordance with relevant laws or regulations or as requested by the authorities in charge; and 3) balance left over shall be allocated according to the resolution of the board of directors and the shareholders’ meeting.

  • B. To consider about the economic circumstances, development phase, and future business expansion, dividends will be allocated in consideration of future capital expenditure and cash forecast. However, cash dividends are limited to over 20% of total dividends distributed.

  • C. The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

  • D. Special Reserve ：

ial Reserve：
ITEMS
Amount when first applied to
IFRSs
Amount aroused from other
equity interest
Total		 31-Dec-23
$ 37,951
83,416
$ 121,367		 31-Dec-22
$ 37,951
53,124
$ 91,075

  • (A.) 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.

  • (B.) When IFRSs were first adopted, according to the special reserve regulation of Financial Supervisory Commission R.O.C, no. 1010012865 on April 6, 101, If the company subsequently uses, disposes or reclassifies the relevant assets, the proportion originally set aside as the special reserve will be reversed into distributable retained earnings.

  • 246 -

  • E. The appropriations of earnings for 2022 had been approved by the company’s shareholders in its meeting held on June 20, 2023 and the appropriations and dividends per share were as follows:

Appropriation of Earnings Dividends Per Share(NT$)
$ 23,373
$		 -
30,292
-
167,722 1
$ 221,387

  • F. The resolutions of 2021 deficit compensation have been approved by the company’s shareholders in its meeting held on June 21, 2022. The deficit would be covered with legal capital reserve and distribute cash dividend of NT$0.2 per share, based on the amount NT$33,544 thousand of capital surplus upon issuance.

  • G. The appropriations of earnings for 2023 had been approved in the meeting of the Board of Directors on March 6, 2024 and the appropriations and dividends per share were as follows:

Appropriation of Earnings Dividends Per Share(NT$)
Legal capital reserve $ 36,980
$		 -
Special capital reserve 15,804

-
Cash dividends of ordinaryshare 167,722 1
Stock dividends of ordinaryshare 134,178 0.8
Total $ 354,684

The appropriations of earnings for 2023 are to be presented for approval in the shareholders’ meeting which is to be held on June 19, 2024.

  • H. Information on the resolution of the Board of Directors' and shareholders' meetings regarding the appropriation of earnings is available from the Market Observation Post System on the website of the TWSE.

  • (16.) Others Equity Items

Others Equity Items
ITEM
Balance as at Jan 1, 2023

Exchange differences on translation of foreign
financial statements
Income tax effects
Unrealized gain on financial assets at FVTOCI

Share of other comprehensive income of
associates accounted for using the equity
method
Balance as at Dec 31, 2023
Balance as at Jan 1, 2022
Exchange differences on translation of foreign
financial statements
Income tax effects

Unrealized gain on financial assets at FVTOCI
Share of other comprehensive income of
associates accounted for using the equity
method
Balance as at Dec, 2022		 Exchange
differences on
translation of
foreign financial
statements
$ (80,701)
(15,045)
3,009

-
17
$ (92,720)
$ (91,854)
13,919

(2,784)
-
18
$ (80,701)		 Unrealized Gain
(Loss) on Financial
Assets at Fair Value
Through Other
Comprehensive
Income
$ (40,667)

-

-

(1,922)

(1,862)
$ (44,451)
$ (37,325)

-

-

(68)
(3,274)
$ (40,667)		 Total
$ (121,368)

(15,045)

3,009

(1,922)
(1,845)
$ (137,171)
$ (129,179)

13,919

(2,784)

(68)
(3,256)
$ (121,368)
  • 247 -

(17.) Net Revenue

Net Revenue
ITEM
Revenue from contracts with customers
Net revenue from the sale of goods
Less: Sales returns
Less: Sales discounts
Total		 FortheYear EndedDecember31
2023
$ 3,061,081
(19,757)
(324,114)
$ 2,717,210		 2022
$ 2,846,628
(15,124)
(320,298)
$ 2,511,206

  • A. Breakdowns of contract revenue

  • (A.) Please refer to Note 14 for geographical and departmental information details.

  • (B.) Revenue was recognized at a specific point of time period when all the obligations were fulfilled.

  • B. Contract Balance

The accounts receivable and contract liabilities in relation to contract revenue were as follows:

ITEM
Accounts Receivable (6(3.))
Contract liabilities-current		 31-Dec-23
$ 426,002
$ 84,352		 31-Dec-22
$ 456,586
$ 93,235		 1-Jan-22
$ 365,301
$ 92,307

  • (A.) Changes in contract liabilities mainly result from the time difference between the performance obligation satisfied and the customer’s payment.

  • (B.) Revenue from opening contract liabilities - sales of goods recognized as revenue in the current period were as follows:

as follows:
Revenue
Amounts from opening contract liabilities
- sales of good
Other Income
ITEM
Government grants
Rental income
Others
Total		 For the Year Ended December 31
2023
2022
$ 80,344
$ 84,649
FortheYear EndedDecember31		 2022
$ 84,649
2023
$ 1,371
12,782
22,621
$ 36,774		 2022
$ 828
15,543
23,855
$ 40,266

  • (18.) Other Income

  • (19.) Other Gains and Losses

Other Gains and Losses
ITEM
Net currency exchange gains (losses)
Gains (losses) on disposal of assets
Others
Total		 For the Year Ended December31
2023
$ (3,530)
5,145
(6,507)
$ (4,892)		 2022
$ 15,314
(402)
(3,205)
$ 11,707
  • 248 -

(20.) Employee Benefits Expense, Depreciation and Amortization

ITEM
Employee benefits expense
Salaries and wages
Labor and health insurance
Pension
Remuneration to directors
Other employee benefits
Depreciation
Amortization
Total		 For the Year Ended December 31, 2023 For the Year Ended December 31, 2023 For the Year Ended December 31, 2023
Cost of revenue
$ 258,661
29,035
12,172
-
17,137
115,307
5,647
$ 437,959		 Operating expenses
$ 281,560
23,793
10,964
8,682
20,115
28,733
23,546
$ 397,393		 Total
$ 540,221
52,828
23,136
8,682
37,252
144,040
29,193
$ 835,352
ITEM
Employee benefits expense
Salaries and wages
Labor and health insurance
Pension
Remuneration to directors
Other employee benefits
Depreciation
Amortization
Total		 For the Year Ended December 31, 2022 For the Year Ended December 31, 2022 For the Year Ended December 31, 2022
Cost of revenue
$ 242,959
24,608
11,088
-
15,420
110,227
3,473
$ 407,775		 Operating expenses
$ 253,658
20,627
9,772
8,194
17,046
27,362
37,734
$ 374,393		 Total
$ 496,617
45,235
20,860
8,194
32,466
137,589
41,207
$ 782,168

  • A. As of December 31, 2023, and 2022, the number of employees of the Company were 823 and 775, respectively, the directors who have not served as employees were both 6.

  • B. The average employee benefits expense are NT$ 800 thousand and NT$ 774 thousand in 2023 and 2022, respectively.

  • C. The average salaries and wages are NT$ 661 thousand and NT$ 646 thousand in 2023 and 2022, respectively.

  • D. The adjustment rate of average salaries and wages is 2%.

  • E. Salary Policy

Directors’ remuneration

  • (A) The Company's Articles of Incorporation stipulate that the remuneration for all directors is determined by

  • the board of directors, regardless of operating profit or loss, which would be paid at the usual level of the industry.

  • (B) The Company's Articles of Incorporation stipulate the company shall allocate not higher than 5% of annual profits during the period to directors’ and supervisors’ remuneration.

Executive compensation

The remuneration for the management of the Company is based on the nature of the department, personnel positioning, work performance and business development progress, and is reviewed by the remuneration committee and resolved by the board of directors.

Employees’ compensation

The remuneration of the Company’s employees includes the salary, various allowances, position subsidy additions, overtime wages and various bonuses, as well as the employee remuneration paid by the Company according to the annual profitability. The Company's Articles of Incorporation stipulate the company shall allocate 2%~8% of income before income tax during the period to employees’ compensation.

  • 249 -

  • F. The employees’ compensation and directors’ and supervisors’ remuneration for 2023 and 2022 were approved in the meetings of the Board of Directors on March 6, 2024 and March 17, 2023, respectively. The amounts recognized in the financial reports were as follows:

Amount resolved to be distributed
Amount recognized in financial
reports
Difference		 2023
Employees’
compensation
Directors’ and
supervisors’
remuneration
$ 10,485 $ 5,898
10,485
5,898
$ - $ -		 2022 2022
Employees’
compensation
$ 10,485
10,485
$ -		 Employees’
compensation
$ 9,647
9,647
$ -
Directors’ and
supervisors’
remuneration
$ 5,426
5,426
$ -

The above-mentioned compensation was distributed in cash.

  • G. The information about employees’ compensation and directors’ and supervisors’ remuneration of the company as resolved by the meeting of Board of Directors is available from the Market Observation Post System on the website of the TWSE.

  • (21.) Finance Costs

.) Finance Costs
For the Year Ended December 31
ITEM
2023
2022
Interest expense - bank loans
$ 32,114 $ 24,997
Interest expense - long term payables
-
10
Total
$ 32,114$ 25,007
.) Income Tax
A. The components of tax expense (benefit):
For the Year Ended December31
ITEM
2023
2022
Current tax
Current tax expense recognized in the current year
$ (70,596) $ 39,894
Adjustments for prior periods
777
179
Total
$ (69,819) $ 40,073
Deferred tax
Deferred income tax related to origination and
reversal of temporary differences
5,910
21,675
Income tax expense (benefit)
$ (63,909) $ 61,748
B. Income tax recognized in other comprehensive (income) loss:
For the Year Ended December31
ITEM
2023
2022
Currency translation differences
$ (3,009) $ 2,784		 For the Year Ended December 31
2023
2022
$ 32,114 $ 24,997
-
10
$ 32,114$ 25,007
For the Year Ended December31		 2022
$ 24,997

10
$ 25,007
2022
$ 39,894
179
$ 40,073
21,675
$ 61,748
2023
$ (3,009)		 2022
$ 2,784

  • (22.) Income Tax

  • 250 -

C. Reconciliation between income tax expense (benefit) and accounting loss as follows:

Reconciliation between income tax expense (benefit) and accounting loss as follows: and accounting loss as follows:
ITEM
Profit before income tax
Tax calculated based on profit before tax and
statutory tax rate
Effects from items disallowed by tax regulation
The Income from Income Basic Tax Act
Investment tax credit
Income tax from subsidiaries dividends
Net change in deferred income tax
Income tax adjustments for prior years
Foreign tax credit
Income tax expense (benefit)		 For the Year Ended December 31
2023
$ 311,261
$ 62,252
(105,564)
-
(41,649)
14,365
5,910
777
-
$ (63,909)		 2022
$ 286,392
$ 57,278
16,628
3,637
(33,260)
8,881
12,794
179
(4,389)
$ 61,748

Under the Act for the Development of Biotech and Pharmaceutical Industry, the Company could recognize

an investment tax credit within a limit of 20% of the investment price if the investee is applicable to the act.

D. Deferred income tax assets and liabilities

Deferred tax assets or liabilities arising from temporary differences, operating loss carryforward, and investment tax credits:

investment tax credits:
Deferred income tax asset
Temporary difference
Employee benefits
Sales returns and allowances
Unrealized loss on inventories
Exchange difference on
foreign operations
Others
Operating loss carryforwards
Investment tax credit
Deferred income tax liabilities
Temporary difference
Land value increment tax
Gain on foreign investments
accounted for using the
equity method		 For the Year Ended December 31,2023
Jan-1

$ 3,006

11,264
16,867
20,173
798

-
-
$ 52,108
$ 32,939
1,692
$ 34,631		 Profit and loss

$ 257
(554)
(5,603)
-
(10)
80,000
41,649
$ 115,739
$ -
51,053
$ 51,053		 Other comprehensive
income


$ -

-
-

3,009
-

-

-
$ 3,009
$ -

-
$ -		 Dec-31
$ 3,263

10,710
11,264

23,182
788

80,000

41,649
$ 170,856
$ 32,939
52,745
$ 85,684
  • 251 -
Deferred income tax asset
Temporary difference
Employee benefits
Sales returns and allowances
Unrealized loss on inventories
Exchange difference on
foreign operations
Others
Investment tax credit
Deferred income tax liabilities
Temporary difference
Land value increment tax
Gain on foreign investments
accounted for using the
equity method		 For the Year Ended December 31,2022 For the Year Ended December 31,2022
Jan-1

$ 2,980

12,780
16,429
22,957
1,392
18,337
$ 74,875

$ 32,939
-
$ 32,939		 Profit and loss

$ 26

(1,516)
438

-
(594)

(18,337)
$ (19,983)

$ -

1,692
$ 1,692		 Other comprehensive
income


$ -

-
-
(2,784)
-
-
$ (2,784)
$ -
-
$ -		 Dec-31
$ 3,006

11,264
16,867

20,173
798

-
$ 52,108
$ 32,939

1,692
$ 34,631

The above-mentioned deferred income tax liabilities were classified as other non-current liabilities.

E. Unrecognized deferred tax assets:

Unrecognized deferred tax assets:
ITEMS
Items not recognized as deferred tax assets:
Loss on investments accounted for using the equity
method
Loss on financial assets evaluation
Unused operating loss carry forward		 31-Dec-23
$ 39,092
969
72,151
$ 112,212		 31-Dec-22
$ -
969
-
$ 969
  • F.Information of unused loss carry forward:

As of December 31, 2023, operating loss carryforward as follows:

ExpiryYear
2033

G. The tax authorities have examined income tax return of
.) Other Comprehensive Income (Loss)
ITEM		 Remaining
CreditableAmount
Taxeffect
$ 760,753 $ 152,151
the Company through 2021.
For the Year Ended December 31,2023
Before tax
Income tax
benefit
After tax
$ (3,736) $ - $ (3,736)
(1,922)
-
(1,922)

(1,862)
-
(1,862)
(7,520)
-
(7,520)		 Remaining
CreditableAmount
Taxeffect
$ 760,753 $ 152,151
the Company through 2021.
For the Year Ended December 31,2023
Before tax
Income tax
benefit
After tax
$ (3,736) $ - $ (3,736)
(1,922)
-
(1,922)

(1,862)
-
(1,862)
(7,520)
-
(7,520)		 Remaining
CreditableAmount
Taxeffect
$ 760,753 $ 152,151
the Company through 2021.
For the Year Ended December 31,2023
Before tax
Income tax
benefit
After tax
$ (3,736) $ - $ (3,736)
(1,922)
-
(1,922)

(1,862)
-
(1,862)
(7,520)
-
(7,520)		 Remaining
CreditableAmount
Taxeffect
$ 760,753 $ 152,151
the Company through 2021.
For the Year Ended December 31,2023
Before tax
Income tax
benefit
After tax
$ (3,736) $ - $ (3,736)
(1,922)
-
(1,922)

(1,862)
-
(1,862)
(7,520)
-
(7,520)
Before tax
$ (3,736)
(1,922)
(1,862)
(7,520)		 Income tax
benefit
$ -

-

-
-		 After tax
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit obligation
Unrealized loss on equity instruments at fair value
through other comprehensive income
Share of other comprehensive income of associates
accounted for using the equity method
Unrealized loss on equity instruments at fair value
through other comprehensive income
Subtotal		 $ (3,736)

(1,922)


(1,862)
(7,520)

(23.) Other Comprehensive Income (Loss)

  • 252 -
For the Year Ended For the Year Ended For the Year Ended December December December 31, 2023
Income tax
ITEM Before tax benefit After tax
Items that may be reclassified subsequently to profit or
loss:
Exchange differences arising on translation of foreign
operations (15,045) 3,009 (12,036)
Share of other comprehensive income of associates
accounted for using the equity method
Exchange differences arising on translation of foreign
operations transferred to profit or loss 17 - 17
Subtotal (15,028) 3,009 (12,019)
Other comprehensive income (loss) $ (22,548) $ 3,009 $ (19,539)
For the Year Ended December 31, 2022
Income tax
ITEM Before tax expense After tax
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit obligation $ 9,080 $ - $ 9,080
Unrealized loss on equity instruments at fair value
through other comprehensive income (68) - (68)
Share of other comprehensive income of associates
accounted for using the equity method
Unrealized loss on equity instruments at fair value
through other comprehensive income (3,274) - (3,274)
Subtotal 5,738 - 5,738
Items that may be reclassified subsequently to profit or
loss:
Exchange differences arising on translation of foreign
operations 13,919 (2,784) 11,135
Share of other comprehensive income of associates
accounted for using the equity method
Exchange differences arising on translation of foreign
operations transferred to profit or loss 18 - 18
Subtotal 13,937 (2,784) 11,153
Other comprehensive income (loss) $ 19,675 $ (2,784) $ 16,891
(24.) Earnings per Share
For the Year Ended December 31
ITEM 2023 2022
Basic earnings per share:
Net income attributable to ordinary shareholders of the parent
$		 375,170 $ 224,644
Weighted average number of shares outstanding for the period
(in thousands) 167,722 167,722
Basic earnings per share, after tax (Unit: NT$ Per Share) $ 2.24 $ 1.34
Diluted earnings per share:
Net income available to ordinary shareholders of the parent $ 375,170 $ 224,644
  • 253 -

For the Year Ended December 31

ITEM
Weighted average number of shares outstanding for the period
(in thousands)
Effect of the dilutive potential ordinary shares
Employees’ compensation (share in thousands)
Weighted average number of shares outstanding for diluted
earnings per share (share in thousand)
Diluted earnings per share, after tax (in dollars)		 2023
167,722
309
168,031
$ 2.23		 2022
167,722
291
168,013
$ 1.34

If the Company offered to settle the compensation or bonuses paid to employees in shares or cash at the Company’s option, the Company assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the calculation of diluted earnings per share if the effect is dilutive. Such dilutive effect of the potential shares is included in the calculation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

7. TRANSACTIONS WITH RELATED PARTIES

A. Name of the parent company and the ultimate controlling party

The Company is the ultimate controlling party.

B. Names of related parties and relationship categories

Names of related parties Related party categories SynCore Biotechnology Co., Ltd. Subsidiaries ZuniMed Biotech Co., Ltd. Subsidiaries CANCAP PHARMACEUTICAL LTD. Subsidiaries Sinphar Tian-Li Pharmaceutical Co., Ltd.(Hangzhou) Subsidiaries Board of Directors, General Manager and Vice General Key management personnel Manager CANADA BIOTECH Other related parties Shu Fei Yu Other related parties

  • C. Significant transaction with related parties

  • (A.) Revenue

Revenue
Related party category/Name
Subsidiary/SynCore		 FortheYear EndedDecember31
2023
$ 4,744		 2022
$ 2,267

The prices of sales with related parties were not significantly different from those of sold to third parties, and the payment term is 30-90 days.

  • (B.) Purchases of goods
Purchases of goods
Related party category/Name
Subsidiaries
ZuniMed
Sinphar Tian-Li		 For the Year Ended December31
2023
$ 55,097
31,547
$ 86,644		 2022
$ 63,358
5,058
$ 68,416
  • 254 -

The prices of purchase and commission processing with related parties were not significantly different from those of purchased from third parties, and the payment term is 30-90 days.

  • (C.) Lease arrangement-operating lease

The subsidiary, SynCore, leased buildings from the Company mainly for the use of office and laboratory with lease terms from August 1, 2017 to March 31, 2024. The rental price was determined in accordance with mutual agreement and the payment would be collected monthly. As of the year ended December 31, 2023 and 2022, the rental receivables were NT$1,954 thousand and NT$11,263 thousand, respectively. The rental incomes were NT$10,689 thousand and NT$13,356 thousand in 2023 and 2022, respectively.

(D.) Trademarks and royalties

Under an agreement with CANADA BIOTECH, CANADA BIOTECH, the Company owns the right to use its trademark under the condition which the Company pays 0.2%~0.8% of annual gross profit from merchandise sale as royalty each quarter, with the annual sum of payment not less than 36 thousand in Canadian currency. The Company paid the royalties amounted to NT$901 thousand and NT$890 thousand in 2023 and 2022 respectively. The payments were recognized as marketing expense.

  • (E.) Others

  • a. The Company collected the common general administration fee, research and development cost and other income from its related party in 2023 and 2022. The amounts were described as follows:

Related party category/Name
Subsidiaries
SynCore
Others		 For the Year Ended December31 For the Year Ended December31
2023
$ 11,624
173
$ 11,797		 2022
$ 10,147
49
$ 10,196

The Company entered a sales agency agreement with its Subsidiary, SynCore. The Company would charge a service fee based on the quantity of sales. The service income in 2023 and 2022 were NT$6,057 thousand and NT$5,064 thousand respectively; As of December 31, 2023 and 2022, the advance service incomes were amounted to NT$890 thousand and NT$534 thousand respectively; Deferred credit items as of December 31, 2022 were NT$1,304 thousand. They were recognized as other non-current liabilities.

  • b. For the years ended December 31, 2023 and 2022, the Company paid its subsidiary, CANCAP, service fee amounted to NT$8,548 thousand and NT$8,113 thousand, respectively.

  • c. The Company paid its subsidiaries various related operating expenses in 2023 and 2022. The amounts were described as follows:

described as follows:
Related party category/Name
Subsidiaries
SynCore
 FortheYear EndedDecember31
2023
$ 455
 2022
$ 601

  • d. As of December 31, 2022, the Company paid its subsidiary, SynCore, a compensation for loss on raw material amounted to NT$413 thousand.

  • e. The Company has successively acquired nearby agricultural land for the plant planning. However, under the current regulations, the ownership of agricultural lands could not be registered under the compnay. Therefore, the Company has appointed the other related party, Shu Fei Yu, to be the owner the land. Please refer to the property, plant and equipment session in Note 6(7.) for more information.

  • 255 -

(F.) Receivables from / payables to related parties

Item
Accounts receivable

Other receivables
Accounts payable
Other payables		 Relatedpartycategory/Name
Subsidiary/SynCore

Subsidiary/SynCore
Subsidiary/ZuniMed
Subsidiary/Sinphar Tian-Li
Total
Subsidiary/SynCore
Subsidiary/ZuniMed
Total		 31-Dec-23
$ -
$ 438
$ 7,063

19,972
$ 27,035
$ -

268
$ 268		 31-Dec-22
$ 7
$ 328
$ 9,178

315
$ 9,493
$ 434

-
$ 434

The above-mentioned other receivable was recognized as other current asset.

No endorsement or guarantee was obtained for outstanding receivables from and payables to related parties and no loss allowances were recognized for receivables from related parties for 2023 and 2022.

  • (G.) Endorsements/guarantees obtain
Endorsements/guarantees obtain
Relatedpartycategory/Name
Subsidiary/ZuniMed
Relatedpartycategory/Name
Subsidiary/ZuniMed		 31-Dec-23
Endorsement/Guarantee
received
Used Balance
$ 25,000 $ 25,000
31-Dec-22
Unused
Balance
$ -
Endorsement/Guarantee
received

$ 25,000		 Used Balance
$ 25,000
Unused
Balance
$ -

The above is a supply guarantee of the medical institution.

  • (H.) Endorsements/Guarantees provide
Endorsements/Guarantees provide
Related Party Categories
Subsidiary/SynCore
Subsidiary/ZuniMed
Related PartyCategories
Subsidiary/SynCore
Subsidiary/ZuniMed		 31-Dec-23
Endorsement/Guarantee
provided
Used Balance
$ 250,000 $ -

30,000
8,000
$ 280,000 $ 8,000
31-Dec-22
Unused
Balance
$ 250,000

22,000
$ 272,000
Endorsement/Guarantee
provided

$ 350,000

30,000
$ 380,000		 Used Balance
$ 30,000

5,000
$ 35,000
Unused
Balance
$ 320,000

25,000
$ 345,000

D. Compensation of key management personnel

The remuneration to the Board of Directors and main management personnel were as follows:

ITEM
Salaries and other short-term employee benefits		 For the Year Ended December31 For the Year Ended December31
2023
$ 29,109		 2022
$ 26,373

Please refer to the shareholder meeting’s annual report for the information about the above-mentioned remuneration to board of directors and the main management personnel.

  • 256 -

8. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The Company’s assets pledged as collateral for long-term loans are as follows:

The Company’s assets pledged as collateral for long-term loans are as follows:
ITEM
Property, plant and equipment
Investment properties
Intangible assets
Total		 31-Dec-23
$ 1,255,495

111,388

4,919
$ 1,371,802		 31-Dec-22
$ 1,161,084

237,961

6,559
$ 1,405,604

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

As of December 31, 2023, Capital expenditures committed but not yet incurred are as follows:

ITEM
Property, plant and equipment		 31-Dec-2023
$ 90,520		 31-Dec-2022
$ 58,363

10. SIGNIFICANT LOSSES FROM DISASTERS: None.

  1. SIGNIFICANT EVENTS AFTER REPORTING PERIOD: None.

12. OTHER INFORMATION

(1.) CAPITAL MANAGEMENT

The Company requires significant amount of capital to maintain its research and development expenditure. Accordingly, the Company manages its capital to ensure that it has sufficient and necessary financial resources and plans to fund its working capital needs, capital asset purchase, research and development expenditure, debt service requirement and dividend payments associated with its existing operations over the next 12 months.

  • (2.) FINANCIAL INSTRUMENTS

  • A. Financial Risk of financial instrument.

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company's risk management objectives are to manage the market risk (including foreign currency risk, interest risk and price risk), credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks and mitigates the disadvantage impact on financial performance. The material treasury activities are reviewed by Audit Committees and/or Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

NATURE AND EXTENT OF SIGNIFICANT FINANCIAL RISKS

(A)Market risk

a. Foreign currency risk

  • (a.) The Company is exposed to the foreign currency risk due to the transaction of sales, purchase and cash denominated in foreign currency other than the Company’s functional currency. These non-functional currencies are USD, RMB, JPY and HKD.

  • 257 -

(b.) Foreign currency exposure and sensitivity analysis

Financial assets
Monetaryitems
USD：NT$
CNY：NT$ JPY：NT$ HKD：NT$ Financial liabilities
Monetaryitems
USD：NT$
CNY：NT$		 31-Dec-23 31-Dec-23 31-Dec-23 31-Dec-23
Foreign
Currencies
(In Thousands)
$ 5,545
1,070
44,705
119


$ 280
4,616		 Exchange
Rate
30.7050
4.3270
0.2172
3.9290
30.7050

4.3270		 Carrying
Amount
(In Thousands)
$ 170,269

4,630

9,710

466


$ 8,588

19,972		 Sensitivityanalysis
Extent of
variation
1%

1%

1%

1%



1%

1%		 Impact on
Profit or loss
$ 1,703

46

97

5




$ 86
200		 Impact on
Equity
$ -
-
-
-
$ -

-
Financial assets
Monetaryitems
USD：NT$
CNY：NT$ HKD：NT$ JPY：NT$ Financial liabilities
Monetaryitems
USD：NT$		 31-Dec-22 31-Dec-22 31-Dec-22 31-Dec-22
Foreign
Currencies
(In Thousands)
$ 4,225
1,074
118
64,992
$ 603		 Exchange
Rate

30.7100

4.4080
3.9380
0.2324
30.7100		 Carrying
Amount
(In Thousands)
$ 129,751

4,736

465

15,104
$ 18,522		 Sensitivityanalysis
Extent of
variation
1%

1%

1%

1%

1%
 Impact on
Profit or loss
$ 1,298

47

5

151
$ 185		 Impact on
Equity
$ -
-
-
-
$ -

If New Taiwan dollar strengthened against the relevant currency and all other variables were held constant, there would be an equal and opposite impact on profit or loss and other equity as of December 31, 2023, and December 31, 2022.

  • (c.) Since there were varieties of foreign currencies within the Company, the Company disclosed the summarized foreign exchange gains (losses) information of monetary items. The realized and unrealized foreign exchange gains (losses) were NT$ (3,530) thousand and NT$ 15,314 thousand for the year ended December 31, 2023 and 2022, respectively.

  • (d.) The unrealized exchange gains (losses) of fluctuation risk on foreign currency monetary item is significant. The unrealized foreign exchange gains (losses) were NT$ (765) thousand and NT$ 240 thousand for the year ended December 31, 2023 and 2022, respectively.

b. Price risk

The Company is exposed to price risk primarily related to its investment in instruments classified as financial assets at FVTPL and financial assets at FVTOCI.

  • 258 -

The Company primarily invested in the unlisted stocks. The instruments prices are affected by the uncertainties of the investment targets’ future value.

Assuming a hypothetical increase/decrease of 1% in prices of the equity instruments at the end of the reporting period, the net loss for the years ended December 31, 2023 and 2022 would have increased/decreased by NT$ 24 thousand and NT$ 12 thousand, respectively, as they were classified as financial assets at FVTPL; the other comprehensive income for the years ended December 31, 2023 and 2022 would have increased/decreased by NT$ 101 thousand and NT$ 96 thousand, respectively, as they were classified as financial assets at FVTOCI.

Assuming a hypothetical increase/decrease of 1% in prices of the beneficiary certificate at the end of the reporting period

c. Interest rate risk

The carrying amounts of the Company’s financial assets and financial liabilities exposed to interest rate risk were as follows:

rate risk were as follows:
Item
Fair value interest rate risk
Financial assets

Financial liabilities
Net

Cash flow interest rate risk
Financial assets

Financial liabilities
Net		 CarryingAmount
31-Dec-23
31-Dec-22
$ 148,480 $ 86,664
-
(317)
$ 148,480$ 86,347
$ 548,724 $ 613,469
(1,894,963)
(1,812,935)
$ (1,346,239)
$ (1,199,466)
31-Dec-23
$ 148,480
-
$ 148,480
$ 548,724
(1,894,963)
$ (1,346,239)
  • (a.) Sensitivity analysis: Fair value interest rate risk

The Company did not designate any fixed interest rate financial instruments as fair value through profit or loss and derivatives instruments (interest rate swaps) to hedge its exposures to changes in fair values. As such, changes in interest rate would not affect the net income and the other comprehensive income at the end of the reporting period.

  • (b.) Sensitivity analysis: Cash flow interest rate risk

The Company’s financial instruments at floating interest rate were assets (liabilities) at floating interest rate. Therefore, changes in interest rate would affect the future cash flows. Assuming a hypothetical increase/decrease 1% in interest rates, the net income for the years ended December 31, 2023 and 2022 would increase/decrease by NT$ 13,462 thousand and NT$ 11,995 thousand, respectively.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. The Company is exposed to credit risk from operating activities, primarily from account receivables, and from investing activities, primarily from bank deposits, fixed-income investments and other financial instruments. The Company managed the credit risk separately for business related and financial related risk.

  • 259 -

a. Business related credit risk:

To maintain the quality of account receivable, the Company has established related credit risk management procedure. The risk assessment of individual customer includes evaluating financial position, internal evaluation, historical trading records and economic circumstance which could affect the payment ability of the customer. The Company may choose to strengthen overall risk management including collection in advance or guarantee provided by customers to mitigate the credit risk of certain customers.

b. Financial credit risk:

The financial department of the Company regularly monitors and reviews the credit risk of bank deposit and other financial instruments. The Company mitigates its exposure by selecting counterparties (banks, financial institutions, Company organizations and government authorities) with well credit and investment-grade credit ratings. The credit risk is insignificant. The Company has no debt instrument classified as financial assets measured at amortized cost and financial assse at FVTOCI.

  • (a.) Concentration of credit risk

As of December 31, 2023, and December 31, 2022, accounts receivable from the top 10 customers represent 21.28%, and 24.51% of total accounts receivables of the Company, respectively. The Company believes the concentration risk is insignificant for the remaining accounts receivable.

  • (b.) Expected credit impairment losses measurement

    • Accounts receivable : Simplified approach, please refer to Note 6(3.).

    • Judgment on whether credit risk increasing significantly:None.

  • (C) Liquidity risk

  • a. Liquidity risk management

The Company’s objective of managing liquidity risk is to maintain sufficient cash and cash equivalents required for operations, high liquidity securities, and bank financing lines for operations, and to ensure that the Company has sufficient financial flexibility.

  • b. Maturity analysis of financial liabilities
Non-derivative
financial liabilities
Short-term loans

Accounts payable
Other payables
Long-term borrowing,
including current
portion
Total

Non-derivative
financial liabilities
Short-term loans

Accounts payable
Other payables
Long-term borrowing,
including current
portion
Total
 31-Dec-23
Less than
6 Months
$ 180,000
302,196
117,798
24,245
$ 624,239		 6－12
Months

$ 180,000

-

31,628

24,245
$ 235,873		 1－2 Years
$ -

-

-

1,408,491
$ 1,408,491		 2－5 Years
$ -

-

-

77,982
$ 77,982
31-Dec-22		 Over
5 Years
$ -

-

-

-
$ -		 Contractual
Cash flows
$ 360,000
302,196
149,426
1,534,963
$ 2,346,585		 Carrying
Amount
$ 360,000
302,196
149,426
1,534,963
$ 2,346,585
Less than
6 Months
$ 360,000
313,721
127,905
24,058
$ 825,684		 6－12
Months

$ -

-

23,032

24,058
$ 47,090		 1－2 Years
$ -

-

-

988,115
$ 988,115		 2－5 Years
$ -

-

-

410,093
$ 410,093		 Over
5 Years
$ -

-

-
6,611
$ 6,611		 Contractual
Cash flows
$ 360,000
313,721
150,937
1,452,935
$ 2,277,593		 Carrying
Amount
$ 360,000
313,721
150,937
1,452,935
$ 2,277,593
  • 260 -

The Company doesn’t 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.

B. Categories of financial instruments

The following is the carrying amounts of the financial assets and financial liabilities of the Company at December 31, 2023 and December 31, 2022.

Financial assets
Financial assets measured at amortized cost
Cash and cash equivalents

Notes and accounts receivable (including related parties)
Refundable deposits
Financial assets at FVTPL – non-current
Financial assets at FVTOCI－non-current
Financial liabilities
Financial liabilities measured at amortized cost
Short-term loans
Net, accounts payable (including related parties)
Other payable (including related parties)
Long-term loans (including the current portion)		 31-Dec-23
$ 700,998

589,902
24,736
2,394
10,136


360,000
302,196
149,426
1,534,963		 31-Dec-22
$ 703,055
635,411
17,830

1,219
9,608


360,000
313,721
150,937
1,452,935

  • (3.) Fair value information

  • A. Details of the fair values of the Company’s financial assets and financial liabilities not measured at fair value and investment property measured at cost are provided in Note 12. (3)B and Note 6.(8), respectively.

Level 1

Fair value measurements of the Level 1 are those derived from quoted prices in active markets for identical financial instruments. An active market is a market in which transactions for identical instrument take place with sufficient frequency and volume to provide public pricing information on an ongoing basis.

Level 2

Fair value measurements are those derived from inputs other than quoted prices included within Level 1 that observable for the instrument, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3

Fair value measurements are those derived from valuation techniques that include inputs for instrument that are not based on observable market data. The Company invested in equity investments without active market included within level 3.

B. Financial instruments that are not measured at fair value

The Company considers the carrying amounts of financial instruments that are not measured at fair value, such

as cash and cash equivalents, notes and accounts receivables, refundable deposits, accounts payable, approximate their fair values.

  • C. Fair value hierarchy information

The Company’s financial instruments measured at fair value were under a recurring basis.

  • 261 -

The following table presents the Company’s financial instruments measured at fair value on a recurring basis:

Items
Asset:
Fair value on a recurringbasis
Financial assets measured at FVTPL
Foreign unlisted publicly
traded preference share
Financial assets at FVTOCI
Domestic unlisted ordinary shares
Items
Asset:
Fair value on a recurringbasis
Financial assets measured at FVTPL
Foreign unlisted publicly
traded preference share
Financial assets at FVTOCI
Domestic unlisted ordinary shares		 31-Dec-23 31-Dec-23
Level 1
$ -
$ -		 Level 2
Level3
$ -$ 2,394
$ -
$ 10,136
31-Dec-22		 Total
$ 2,394
$ 10,136
Level 1
$ -
$ -		 Level 2
$ -
$ -		 Level3
$ 1,219
$ 9,608		 Total
$ 1,219
$ 9,608

  • D. Valuation techniques and assumptions used in fair value measurement

  • (A.) If there is an active market for the financial instruments, the fair value of the financial instruments is measured by using the quoted market prices. The quoted market prices announced by the main market place and the prices of government bonds classified as popular securities announced by Taipei Exchange (TPEx) are deemed as fair value foundation of publicly traded equity instruments and debt instruments with an active market.

If there are timely and frequent quoted prices from the exchange market, the broker, the dealer, industry association, price service organization, or the administrative, and the prices represent actual, frequent, and fair trades, the financial instruments are deemed as with an active market. Otherwise, the market is deemed as not active. In general, huge price gap, price gap apparently expanding, and small trading volume were indicators of a not active market.

  • (B.) Except for the aforementioned financial instruments with active market, the fair value of other financial instruments is measured by valuation technique or quotation of counterparties. The fair value from valuation technique could refer to the fair value of other financial instruments with similar substantial conditions and characteristics, discounted cash flow method and other valuation technique including model with observable market information on balance sheet date (e.g. yield curve of TPEx, quoted interest rate of Reuters commercial Note).

The fair values of non-listed equity investments were Level 3 fair value assets, and determined using the market approach by reference the peer companies valuation, third party quotation, net value and operation status. The significant unobservable input used was discount for lack of marketability. A movement in discount for the lack of marketability would not result in significant changes in the fair values.

  • 262 -

  • (C.) The Company considered the credit risk evaluation adjustment for financial instruments and non-financial instruments to reflect the credit risk of the counterparty and the credit quality of the Company.

  • (D.) Valuation techniques used in Level 3 fair value Measurement:

The evaluation procedure of the financial instruments belong to Level 3 is verified by the financial department of the Company through verifying the independent source inputs to make sure the evaluation results closing to the market status. To make sure the reasonability of the evaluation results, the financial department verify the independence and reliability of source data, test and renew the input data, model and other necessary inputs. 

  - (E.) There were no transfers between different fair value hierarchy for the years ended December 31, 2023 and 2022, respectively.

  1. SEPARATELY DISCLOSED ITEMS

  2. (1.) Information about significant transactions:

    • A. Financing provided to others: None;

    • B. Endorsements/guarantees provided: Table 1 attached

    • C. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Please see Table 2 attached;

    • D. Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital: None;

    • E. Acquisition of individual real estate properties at costs of at least NT $300 million or 20% of the paid-in capital: None;

    • F. Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None;

    • G. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;

    • H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;

    • I. Trading in derivative instruments: None;

  3. (2.) Related Information of investees: Please see Table 3 attached;

  4. (3.) Information on investments in Mainland China: Please see Table 4 attached and Table 3 attached;

    • A. The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 4 attached.

    • B. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: See Note 7 & Table 3 attached.

  5. (4.) Information of major shareholder (list of all shareholders with ownership 5% or greater showing the names and the number of shares and percentage of ownership held by each shareholder): Please see Table 5 attached.

14. SEGMENT INFORMATION

Please refer to the consolidated financial statements of Sinphar Pharmaceutical Co., Ltd. and subsidiaries for operating segment information.

  • 263 -

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries

TABLE 1

Endorsements/Guarantees provided

For the Year Ended December 31, 2023

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

Guaranteed Party Guaranteed Party Limits on
Endorsement/ Amount of Ratio of Maximum Guarantee
No.
(Note 1)		 Endorsement /
Guarantee
Provider		 Name Nature of
relationship
(Note 2)		 Guarantee
Amount
Provided to Each
Guaranteed
Party
(Note 3)		 Maximum
Balance for the
Period		 Ending Balance Amount Actually
Drawn
Endorsement/
Guarantee
Collateralized by
Properties		 Accumulated
Endorsement/
Guarantee to Net
Equity per
Latest Financial
Statements		 Endorsement/
Guarantee
Amount
Allowable
(Note 4)		 Guarantee
Provided by
Parent
Company		 Guarantee
Provided by
A Subsidiary
Provided to
Subsidiaries
in Mainland
China
0 Sinphar
Pharmaceutical
Co.,Ltd.		 ZuniMed
Biotech Co.,
Ltd.		 1 $ 1,239,335
$ 30,000
$ 30,000		 $ 8,000 $ -
0.97%
$ 1,549,169
Y		 － －
0 Sinphar
Pharmaceutical
Co.,Ltd.		 SynCore
Biotechnology
Co.,Ltd.		 1 $ 1,239,335
$ 350,000		 $ 250,000 $ - $ -
8.07%
$ 1,549,169
Y		 － －
1 ZuniMed
Biotech Co.,
Ltd.		 Sinphar
Pharmaceutical
Co.,Ltd		 2 $ 37,867
$ 25,000		 $ 25,000
$ 25,000
(Note 5)
$ -
26.41%
$ 47,333
－		 Y －

Note 1 ： (1) The issuer fills in “0”. (2) The subsidiaries are numbered in order starting from “1”.

Note 2 ： (1) The endorser/guarantor parent company owns directly and indirectly more the 50% voting shares of the endorsed/guaranteed subsidiary.

(2) The endorsed/guaranteed company owns directly and indirectly more the 50% voting shares of the endorser/guarantor parent company. Note 3 ： Maximum endorsement/guarantee amount allowable is 40% of the net worth of the Endorsement/Guarantee Provider. Note 4 ： Maximum endorsement/guarantee amount allowable is 50% of the net worth of the Endorsement/Guarantee Provider. Note 5 ： It is a supply guarantee for the medical institution.

  • 264 -

TABLE 2

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 2

Marketable Securities Held (Excluding Subsidiaries, Associate and Joint Venture)

As of December 31, 2023

(Amounts in thousands of New Taiwan Dollars, Unless Specified Otherwise)

Held Company Name Marketable Securities
Type and Name		 Relationship
with Sinphar

Financial Statement Account		 December 31,2023 December 31,2023 December 31,2023 December 31,2023 Note
Shares/Units Carrying
Value		 Percentage
of
Ownership		 Fair Value
Sinphar Pharmaceutical Co., Ltd. PHYTOCEUTICA
INC.(preferred share)		 Investee Financial assets at fair value
throughprofit or loss(Non-Current)		 90,362.00 $ -
-		 $ -
-
Sinphar Pharmaceutical Co., Ltd. Datun Entertainment
Development Co.,Ltd.		 － Financial assets at fair value
through other comprehensive income(Non-Current)		 5.00
10,136
0.42%
10,136
-
SynCore Biotechnology Co., Ltd. Fuh Hwa Money Market － Financial assets at fair value
throughprofit or loss(Current)		 252,743.00
3,617
-
3,738
-
SynCore Biotechnology Co., Ltd. Fuh Hwa You Li Money Market － Financial assets at fair value
throughprofit or loss(Current)		 152,110.90
2,031
-
2,101
-
SynCore Biotechnology Co., Ltd. JPMorgan（Taiwan）Glbl Fd of
Bd Fds Inc
－		 Financial assets at fair value
throughprofit or loss(Current)		 90,062.20
1,012
-
1,041
-
SynCore Biotechnology Co., Ltd. MacuCLEAR, INC.
(Preferred Share)		 － Financial assets at fair value
through other comprehensive income(Non-Current)		 95,160.00
-
0.95%
-
-
SynCore Biotechnology Co., Ltd. Medigene
(Common Share)		 － Financial assets at fair value
through other comprehensive income(Non-Current)		 224,934.00
12,076
0.92%
12,076
-
  • 265 -

TABLE 3

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 3

Name, Location, and Related Information of Investees Over Which Sinphar Exercise Significant Influence (Excluding Information On Investment In Mainland China) as of December 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Original Investment Amount Original Investment Amount Balance as of December 31, 2023 Balance as of December 31, 2023 Balance as of December 31, 2023 Net Income
Investor
Company		 Investee Company Location Main Businesses and
Products		 December December Shares Percentage of Carrying
(Losses) of the
 Share of Profits /
Losses of Investee		 Notes
31, 2023 31, 2022 Ownership Value Investee
Sinphar
Pharmaceutical
Co., Ltd.		 CANCAP
PHARMACEUTICAL
LTD.(Ordinary shares)		 Canada Production and sale
of healthy food		 $ 44,605 $ 44,605 2,140,000 88.43% $ - $ 1,139 $ 1,139 Subsidiary
Sinphar
Pharmaceutical
Co., Ltd.		 CANCAP
PHARMACEUTICAL
LTD.(Preference shares)		 Canada Production and sale
of healthy food		 126,247 126,247 51,500 100.00% 2,394
1,139
-		 Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 SUNETIC BIOTECH
INC.		 Mauritius Investment business 745,748 745,748 18,854,534 83.47% 815,584 9,648 (13,146) Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 UNIVERSAL NEXT
TECHNOLOGIES INC.		 British
Virgin
Islands		 Investment business 17,467 17,467 503,845 100.00% 27 (12)
(12)		 Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 ZuniMed Biotech Co.,
Ltd.		 Taiwan Production and sale
of medical
appliances		 109,990 109,990 10,300,000 100.00% 91,199 (1,139)
(461)		 Subsidiary
Sinphar
Pharmaceutical
Co.,Ltd.		 SynCore Biotechnology
Co., Ltd.		 Taiwan Biotechnology
service		 1,864,935 1,745,698 22,597,472 64.26% 229,301 (38,172)
(22,709)		 Subsidiary
SynCore
Biotechnology
Co., Ltd.		 SynCore Biotechnology
Europe GmbH		 Germany New drugs
development and
biotechnology
service		 834 834 25,000 100.00% 737 18 18 Subsidiary

Note1：The shares of profits/losses of investee were calculated based on the financial statements audited by the CPAs. The effect of realized (unrealized) gains and losses have already been considered.

Note2：SynCore Biotechnology Co., Ltd. reduced capital in May, 2023, and the shares held by the Company decreased from 71,456,000 shares to 19,090,513 shares.

Note3：SynCore Biotechnology Co., Ltd. increase capital in October, 2023, and the shares held by the Company increased from 19,090,513 shares to 22,597,472 shares.

  • 266 -

TABLE 4

Sinphar Pharmaceutical Co., Ltd. and Subsidiaries TABLE 4

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2023

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company Main Businesses
and
Products		 Main Businesses
and
Products		 Total Amount of
Paid-in Capital
(RMB in
Thousands)		 Method of
Investment		 Method of
Investment		 Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2023		 Investment
Flows		 Investment
Flows		 Accumulated
Outflow of
Investment from
Taiwan as of
December 31,2023		 Net Income
(Losses) of
Investee
Company		 Percentage of
Ownership		 Shares of
Profits/Losses
(note 1)		 Carrying
Amount
as of
December 31,
2023		 Accumulated
Inward
Remittance of
Earnings as of
December
31,2023
Outflow Inflow
Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)		 Production and
sales of raw
materials,
pharmaceuticals		 RMB 193,005 Indirect investment in mainland
China by SUNETIC BIOTECH
INC., an 83.47% owned
subsidiary of Sinphar		 $ 645,635
(USD 19,786
thousand)		 -
-
$ 645,635
(USD 19,786
thousand)		 $ 18,987 83.47% $ (5,350) $ 840,728 $ 179,317
Hetian Tianli
shasheng
Pharmaceutical
Development Co.,
Ltd.		 Scientific research
and production and
sales of shasheng
Pharmaceutical		 RMB 10,000 Indirect investment in mainland
China by Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou), a sub-subsidiary
company of which Sinphar holds
83.47% of the total shares		 -
-
-
-
(7,326)		 75.96%
(2,673)		 83,388
-
Hangzhou Vitrum
Healthy Food Co.,
Ltd.		 Sale of healthy
food		 RMB 30,000 Indirect investment in mainland
China by Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou) a sub-subsidiary
company of which Sinphar
holds 83.47% of the total shares.		 -
-
-
-
(306)		 83.47%
(255)		 1,526
-
Upper Limit on Investment
(Note 3)
1,859,002
Accumulated Investment in Mainland
China
as of December 31, 2023
(US$in Thousands)		 Investment Amounts Authorized by
Investment Commission, MOEA
(US$ in Thousands)		 Upper Limit on Investment
(Note 3)
652,200
(USD 19,986(Note 2))		 777,487
(USD 25,321)		 1,859,002

Note 1 ： The shares profits/losses of investee were calculated based on the financial statements audited by the R.O.C. CPAs of the parent company.

Note 2 ： The amount included the indirect investment of UNIVERSAL NEXT TECHOLOGY INC to Qinghai Mingxing Bio-Engineering Co., amounting to USD$ 200 thousand, which has already been cancelled by the Investment Board. Note 3 ： According to the regulations of the Investment Commission of the Ministry of Economic Affairs, the upper limit of the cumulative amount of its investment in the mainland is 60% of the net value.

  • 267 -

Sinphar Pharmaceutical Co., Ltd.

TABLE 5

Information of major shareholders

December 31, 2023

Shareholders Shares Shares
Total shares owned (In thousands) Ownership Percentage
XING-DA CAPITAL CORP. 15,679 9.34%

Note: The main shareholder information in this table is calculated by Taiwan Depository & Clearing Corporation, using total number of ordinary shares and preferred shares held by the shareholders who have completed Sinphar’s dematerialized securities registration and delivery (including treasury shares) is more than 5% on the last business day at the end of each quarter. As for the difference between capital stock recorded in Sinphar's financial report and the number of shares which Sinphar actually have completed the dematerialized securities registration and delivery, may result from computation basis.

  • 268 -

Ⅶ. Review of Financial Status, Performance, and Risk Related Issues

7.1 Analysis of Financial Status

Significant change of assets, liabilities, and shareholder equality and its illustration within two years

Unit: NT$ thousand

two years Unit: NT$ thousand Unit: NT$ thousand
Year
Item		 December 31,
2023		 December 31,
2022		 Difference
Amount %
Current Assets 2,648,605
2,778,451
(129,846)
-4.67%
Property, Plant and
Equipment		 3,228,305
3,119,747
108,558
3.48%
Intangible Assets 71,823
86,983
(15,160)
-17.43%
Other Assets 302,348
200,010
102,338
51.17%
Total Assets 6,251,081
6,185,191
65,890
1.07%
Current Liabilities 1,204,694
1,445,911
(241,217)
-16.68%
Non-current Liabilities 1,648,513
1,522,432
126,081
8.28%
Total Liabilities 2,853,207
2,968,343
(115,136)
-3.88%
Capital Stock 1,677,221
1,677,221
–		 –
Capital Surplus 924,140
929,972
(5,832)
-0.63%
Retained Earnings 634,148
444,405
189,743
42.70%
Other Equity Interest (137,171)
(121,368)
(15,803)
-13.02%
Non-controlling Interest 299,536
286,618
12,918
4.51%
Total Equity 3,397,874
3,216,848
181,026
5.63%
Analysis of changes in financial ratios:
1. The increase in other assets was caused by the allocation of deferred tax assets.
2. The increase in retained earnings was mainly due to the growth of revenue in this period.
  • 269 -

Individual Financial Status:

Significant change of assets, liabilities, and shareholder equity and its illustration within two years

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand
Year
Item		 December 31,
2023		 December 31,
2022		 Difference
Amount %
Current Assets 2,037,228
1,994,225
43,003
2.16%
Property, Plant, and
Equipment		 2,279,559
2,020,278
259,281
12.83%
Intangible Assets 20,711
28,466
(7,755)
-27.24%
Other Assets 1,506,337
1,557,252
(50,915)
-3.27%
Total Assets 5,843,835
5,600,221
243,614
4.35%
Current Liabilities 1,122,906
1,179,327
(56,421)
-4.78%
Non-current Liabilities 1,622,591
1,490,664
131,927
8.85%
Total Liabilities 2,745,497
2,669,991
75,506
2.83%
Capital Stock 1,677,221
1,677,221
–		 –
Capital Surplus 924,140
929,972
(5,832)
-0.63%
Retained Earnings 634,148
444,405
189,743
42.70%
Other Equity Interest (137,171)
(121,368)
(15,803)
-13.02%
Non-controlling Interest – – – –
Total Equity 3,098,338
2,930,230
168,108
5.74%
Analysis of changes in financial ratio:
1. The decrease in intangible assets was caused by amortization.
2. The increase in retained earnings was mainly due to the growth of revenue in this
period.
  • 270 -

7.2 Financial Performance

7.2.1 Comparison and Analysis of Operation Result

Unit: NT$ thousand

Year
Item		 2023 2022 Increase
(Decrease)
Amount		 %
Total Operating Revenue 3,309,903
3,192,174
117,729
3.69%
Decrease: Sales Return and
Allowance		 346,969
335,523
11,446
3.41%
Net Operating Profit 2,962,934
2,856,651
106,283
3.72%
Operating Cost 1,871,691
1,765,351
106,340
6.02%
Gross Profit 1,091,243
1,091,300
(57)
-0.01%
Operating Expenses 805,187
893,965
(88,778)
-9.93%
Operating Income (Loss) 286,056
197,335
88,721
44.96%
Non-operating Income and
Expenses		 19,652
47,711
(28,059)
-58.81%
Net Income (Loss) Before Tax
from Continuing Operations		 305,708
245,046
60,662
24.76%
Income Tax Expenses (Benefit) (51,068)
80,872
(131,940)
-163.15%
Net Income After Tax form
Continuing Operations		 356,776
164,174
192,602
117.32%
Other Comprehensive Income
(Income After Tax)		 (23,846)
17,830
(41,676)
-233.74%
Total Comprehensive Income 332,930
182,004
150,926
82.92%
Analysis of changes in financial ratios:
1. The increase in operating income compared with the same period was mainly due to
the decrease in operating expenses (R&D expenses) in the current period.
2. The decrease in non-operating income and expenses compared with the same period
was mainly due to the decrease in exchange gains and other revenue in the current.
3. Income tax expenses are less than corresponding period due to income tax benefits
recognized in this period.
4. Other comprehensive income (income after tax) is less than the corresponding period
due to exchange differences in translation of foreign financial statements.

7.2.2 Expected Sales Volume in the Coming Year and Its Basis

Not applicable.

7.2.3 Effect of Company’s Future Financial Operation and the Response Action

None

  • 271 -

Individual Financial Performance

A. Comparison and Analysis of Operation Result

Unit: NT$ thousand

Year
Item		 2023 2022 Increase
(Decrease)
Amount		 %
Total Operating Revenue 3,061,081 2,846,628 214,453 7.53%
Decrease: Sales Return and
Allowance		 343,871 335,422 8,449 2.52%
Net Operating Profit 2,717,210 2,511,206 206,004 8.20%
Operating Cost 1,684,194 1,577,211 106,983 6.78%
Gross Profit 1,033,016 933,995 99,021 10.60%
Unrealized Gross Profit from
Sales		 568 371 197 53.10%
Realized Gross Profit from
Sales		 371 1,106 (735) -66.46%
Operating Expenses 693,653 625,121 68,532 10.96%
Operating Profit 339,166 309,609 29,557 9.55%
Non-operating Income and
Expenses		 (27,905) (23,217) (4,688) -20.19%
Net Income Before Tax from
Continuing Operations		 311,261 286,392 24,869 8.68%
Income Tax Expenses
(Benefit)		 (63,909) 61,748 (125,657) -203.50%
Net Income After Tax from
Continuing Operations		 375,170 224,644 150,526 67.01%
Other Comprehensive Income
(Net Income After Tax)		 (19,539) 16,891 (36,430) -215.68%
Total Comprehensive Income
(Loss)		 355,631 241,535 114,096 47.24%
Analysis of changes in financial ratios:
1. The decrease in non-operating income and expenses compared with the same period was mainly due
to the rising interest rate on loans.
2. Income tax expenses are less than corresponding period due to income tax benefits recognized in this
period.
3. Other comprehensive income (income after tax) is less than the corresponding period due to exchange
differences in translation of foreign financial statements.

  • B. Expected Sales Volume in the Coming Year and Its Basis: Not applicable

  • C. Effect of the Company’s Future Financial Operation and the Response: None

  • 272 -

7.3 Cash Flow

Cash Flow Analysis

A. Cash Flow Analysis for the Current Year

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand
Cash balance
-beginning of
period		 Net cash flow
from
operating
activities		 Net cash
flow from
investment
activities		 Net cash
flow from
financing
activities		 Exchange
rate effect on
cash and
cash
equivalents		 Cash balance
(shortage)
-end of
period
Countermeasures for
liquidityshortage
Investment
plans		 Financing
plans
1,237,556 296,370 (334,563) (120,671) (4,203) 1,074,489 ─ ─

Analysis: The changes in cash flow were mainly due to the increase in cash outflow from investment activities and financing activities.

B. Countermeasures and Analysis of Liquidity Shortage

None

C. Cash Flow Analysis for the Coming Year

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand
Cash balance
-beginning of
period		 Net cash flow
from operating
activities		 Net cash
flow from
investment
activities		 Cash
balance
(shortage)
-end of
period		 Countermeasures for
liquidityshortage
Investment
plans		 Financing
plans
1,074,489 326,007 (370,359) 1,030,137 ─ ─
  • (A) Countermeasures and Analysis of Liquidity Shortage

None

7.4 Major Capital Expenditure Items

Unit: NT$ thousand

Unit: NT$ thousand Unit: NT$ thousand
Project Planned Date of
Completion		 Total Capital
Needed		 Expected Capital Expenditure
2024 2025
Sinphar Health
Park		 2025 Q2 100,000 10,000 90,000
Refurbishment of
Plant and
Equipment		 2025 Q4 350,000 300,000 50,000
Total 450,000 310,000 140,000
Expected Benefit Increase production capacity, increase number
of visitors, and business expansion.
  • 273 -

7.5 Cause of the Profit/Loss for Investment in Recent Year and Investment Plans for the Coming Year

7.5.1 Investment Policy in the Most Recent Years

Unit: NT$ thousand

Unit: NT$ thousand
Remark/Item Amount Policy Reasons for
Gains or Loss		 Action Plan Investment
Plan in the
Future
CANCAP
PHARMACEUTICAL
LTD.
1,139		 Assist with
collecting
information on
scientific research		 Global raw
material
sourcing and
pricing
negotiation		 Expand the scope
of raw material
and negotiation of
global material		 Actively
expand
business
ZuniMed Biotech
Co., Ltd.		 (461) Strengthen
medical devices
technology and
acquire assets		 Improve
productivity		 Adjust business
model with focus
on plastic medical
containers		 Actively
expand
business
Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)		 (5,350) Establish
production of
Chinese herbal
medicine extracts
and global market		 Chinese herbal
medicine
development is
in progress on
schedule		 Expand the
production of
Chinese herbal
medicine extracts,
strengthen the
R&D capabilities
of new products,
and expand market
Develop
natural
products
market
Hetian Tianli
shasheng
Pharmaceutical
Development Co.,
Ltd.		 (2,673) Cooperate with
planting base of
Chinese herbal
medicine
development		 Mainly for
planting
demonstration
base and focus
on planting		 Continue to
manage planting
base to ensure the
quality of Chinese
herbal medicine		 Expand the
application
scope based
on the
demand for
planting
Hangzhou Vitrum
Healthy Food Co.,
Ltd.		 (255) Responsible for
selling health food
in China
At the stage of
being developed		 At the stage of
planning and
developing		 Difficult to
register
healthy food
company, so
this company
is retained.
SynCore
Biotechnology Co.,
Ltd.		 (22,709) Research and
development of
drugs		 At drug
development
stage		 Focus on new
drug development,
and search for
global
collaboration
partners
Capital
increase per
operational
demand
  • 274 -
Remark/Item Amount Policy Reasons for
Gains or Loss		 Action Plan Investment
Plan in the
Future
SynCore
Biotechnology
Europe GmbH		 18 R&D of new drug
and biotechnology
services
At the stage of
new drug
development		 Focus on regional
new drug
development and
search for regional
partners
None

7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

Majority of the Company’s products are drugs and functional food. Other than the accounts receivable and payable that was transacted in foreign currency and has been exchanged by the foreign exchange rate and used floating exchange rate, the Company does not hold any financial instrument that is influenced by interest rate and market price. The exchange rate risk is not significant because the Company uses natural hedges to control foreign currency and offset by accounts receivable and payable. When financing, the Company will strive for the prime lending rate to reduce costs. In addition, inflation does not have a significant effect on the Company.

7.6.2 Policies, Main Causes of Gain or Loss, and Future Response Measure with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

The Company has not engaged in the investment activities like high-risk, high-leveraged investments, derivatives, or lending funds to other parties in recent years. Apart from this, there is no other matter.

The Company provides endorsements and guarantees due to the operating demand of the subsidiary. The endorsement and guarantee amount for ZuniMed Biotech Co., Ltd. in this period is NT$30,000,000 and the endorsement and guarantee amount for SynCore Biotechnology Co., Ltd. in this period is NT$250,000,000. The amount respectively accounts for0.97% and 8.07% of the net worth in the financial statement as of December 31, 2023. In addition, for operating demand, the subsidiary, ZuniMed Biotech Co., Ltd. provides endorsement and guarantee to the parent company, Sinphar Pharmaceutical Co., Ltd. The endorsement and guarantee amount is NT$25,000,000 which accounts for 26.41% of the net worth in the financial statement as of December 31, 2023.

  • 275 -

7.6.3 Future Research & Development Projects and Estimated R&D Expenses

The major future R&D projects of the group are generic drugs, natural product extracts, and new drugs development, such as development of new dosage forms and process for cancer drugs, development and agency of API, health supplements, technology of natural product extracts, patented natural products, and improvement projects of products and process. The estimated R&D expenses amount to more than NT$10 billion.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

After the amendment to Regulations for Registration of Medical Products on September 14, 2021, the extension of a drug permit only needs to follow a simplified procedure as stated in Article 73. The Company will apply for license extension according to the expiration of each drug permit license.

7.6.5 Effects of and Response to Changes in Technology (Including Information Security Risk) and the Industry Relating to Corporate Finance and Sales

  • (A) Changes in Industry

From 2022, National Health Insurance Administration reduced the drug price of drugs for three-hypers, such as cardiovascular, nervous system, and systemic anti-infective agents. Our company is not be significantly impacted by this change, as the Company has actively expanded sales of health food and health supplements to reduce the impact of domestic NHI drug price reduction.

  • (B) Changes in Technology (Including Information and Security Risk)

  • The Company continues to implement ISO 27001:2013 and includes server room management into the scope of accreditation; we hold a drill annually to ensure it complied with the estimated recovery time of system and reduced the risks of system interruption due to natural disaster and human error.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management,

and the Company’s Response Measures

Since listing on the stock exchange, the Company is devoted to quality improvement and highly efficient R&D production technology which has had a positive effect

7.6.7 Expected benefit from, Risk Relating to and Response to Merger and Acquisition Plans

None

  • 276 -

7.6.8 Expected Benefits from, Risk Relating to and Response to Factory Expansion Plans

The Company is in the biotechnology pharmaceutical industry which focuses on product validity and safety. Through official accreditation by health institutes of various countries, the Company ensures the validity of the products. The Company adjusts production lines to showcase product advantage and maximize operational profits.

7.6.9 Risks Relating to and Response to Purchase or Sales Concentration

More than 60% of the total operation sales revenue is diversified

7.6.10 Impact, Risks, and Response to Mass Share Transfer of or Change of Directors, Supervisors, or Shareholders Holding More Than 10% of the Company’s Share

There are no Directors or major shareholders holding more than 10% of the

Company’s share or the matters of mass share transfer.

7.6.11 Effect of, Risks Relating to and Response to the Changes in Management Rights

None

7.6.12 Litigation or Non-litigation Matters

None

7.6.13 Other Major Risks

None

7.7 Other Important Matters

None

  • 277 -

Ⅷ. Special Notes

8.1 Summary of Affiliated Company

8.1.1 Consolidated Operational Reports of Affiliated Companies

A. Affiliated Companies Organizational Chart

March 31, 2024

==> picture [735 x 246] intentionally omitted <==

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

Sinphar Pharmaceutical Co., Ltd.
88.43% 64.26% 100.00% 100.00% 83.47%
CANCAP SynCore UNIVERSAL NEXT ZuniMed Biotech Co., SUNETIC BIOTECH INC.
Biotechnology
PHARMACEUTICAL
Co., Ltd. TECHNOLOGIES Ltd.
100.00% LTD.
100.00%
Sinphar Tian-Li Pharmaceutical Co., Ltd. (Hangzhou)
SynCore
Biotechnology
Europe GmbH
91.00% 100.00%
Hetian Tianli shasheng Hangzhou
Pharmaceutical Vitrum Healthy
Development Co., Ltd. Food Co., Ltd.
----- End of picture text -----

B. Company concluded as the existence of the controlling and subordinate relation according to Article 369-3 of Company Act: None

C. According to Article 369-2 of the Company Act, company has a direct control over the management of the personnel, financial or business operation of another company: None

  • 278 -

8.1.2 Information about Affiliated Companies

March 31, 2024
Company Date of
Incorporation		 Address Paid-in Capital
(in thousands)		 Business Activities
CANCAP
PHARMACEUTICAL
LTD.		 July 16, 1997 240-13071 Vanier Place
Richmond, B.C. V6V 2J1
Canada		 CAD7,070 Manufacturing and
sales of functional
food and drugs
UNIVERSAL NEXT
TECHNOLOGIES
INC.		 April 26,
2001		 P.O.BOX 3321, Road
Town, Tortola, British
Virgin Islands		 US$504 Invest in other
regions
SUNETIC BIOTECH
INC.		 December 31,
2001		 3rdFloor, St. James Court,
St. Denis Street, Port
Louis, Republic of
Mauritius		 US$22,589 Invest in other
regions
ZuniMed Biotech
Co., Ltd.		 December 3,
2003		 No. 84, Zhongshan Rd.,
Zhongshan Village,
Dongshan Township,
Yilan County 269, Taiwan
(R.O.C.)		 NT$103,000 Biotechnological
services and
wholesale of
medical devices
Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)		 January 29,
2002		 No. 599, Hungfeng Road,
Yuhang Economic
Development Zone,
Hangzhou City, Zhejiang,
China		 RMB193,005 Manufacturing and
sales of active
pharmaceutical
ingredients
Hetian Tianli
shasheng
Pharmaceutical
Development Co.,
Ltd.		 July 11, 2002 No. 1 Industrial Park,
Yutian County, Xinjiang
Province		 RMB10,000 Research, sales,
processing, planting
of psammophytic
drug and plants
Hangzhou Vitrum
Healthy Food Co.,
Ltd.		 October 20,
2004		 No. 597 Hungfeng
Road, Yuhang
Economic Development
Zone, Hangzhou City,
Zhejiang, China		 RMB30,000 Wholesale and retail
sale of health
supplements
SynCore
Biotechnology Co.,
Ltd.		 August 6,
2008		 No. 84, Zhongshan Rd.,
Zongshan Village,
Dongshan Township,
Yilan County, Taiwan
(R.O.C.)		 NT$351,645 Biotechnological
services, intellectual
property, medicine
inspection
SynCore
Biotechnology Europe
GmbH		 June 22, 2015 Karl-Scharnagl-Ring 5,
80539 München German		 EUR25 New drug R&D and
biotechnological
services
  • 279 -

8.1.3 Shareholders in Common of the Company and Its Affiliates with Deemed

Control and Subordination

None

8.1.4 Directors, Supervisors, and General Manager of Affiliated Company

Unit: shares; % Unit: shares; %
Company Title Name or Representative Shareholding
Shares Share
Percentage
CanCap
Pharmaceutical
Ltd.		 Chairman Sinphar Pharmaceutical Co.,
Ltd. Representative:
Yi Ta Lee
2,140,000
88.43
CanCap
Pharmaceutical
Ltd.		 Director Sinphar Pharmaceutical Co.,
Ltd. Representative:
LoySengYeo
2,140,000
88.43
CanCap
Pharmaceutical
Ltd.		 Director Yi Ta Lee 50,000
2.07
CanCap
Pharmaceutical
Ltd.		 Director and
General
Manager		 Ju Nee Yeo 50,000
2.07
UNIVERSAL
NEXT
TECHNOLOGIES
INC.
Chairman		 Sinphar Pharmaceutical Co.,
Ltd. Representative:
Chih Wen Lee
503,845
100.00
SUNETIC
BIOTECH INC.		 Chairman Sinphar Pharmaceutical Co.,
Ltd. Representative:
Chih Wen Lee
18,854,534
83.47
SUNETIC
BIOTECH INC.		 Director Yi Ta Lee 70,000
0.31
SUNETIC
BIOTECH INC.		 Director Neng Yin Yu 50,000
0.22
SUNETIC
BIOTECH INC.		 Director Chao Jih Wang 20,000
0.09
ZuniMed Biotech
Co., Ltd.		 Chairman Sinphar Pharmaceutical Co.,
Ltd. Representative:
Chih Wen Lee
10,300,000
100.00
Sinphar Tian-Li
Pharmaceutical
Co.,
Ltd.(Hangzhou)		 Executive
Director		 ZuniMed Biotech Co., Ltd.
Representative: Neng Yin Yu		 – 100.00
Sinphar Tian-Li
Pharmaceutical
Co.,
Ltd.(Hangzhou)		 General
Manager		 ZuniMed Biotech Co., Ltd.
Representative:
Chao Jih Wang
–		 100.00
  • 280 -
Company Title Name or Representative Shareholding Shareholding
Shares Share
Percentage
SynCore
Biotechnology
Co.,Ltd.		 Chairman Sinphar Pharmaceutical Co.,
Ltd. Representative:
Chih Wen Lee
22,597,472
64.26
SynCore
Biotechnology
Co.,Ltd.		 Director Sinphar Pharmaceutical Co.,
Ltd. Representative:
WhyJu Chu
22,597,472
64.26
SynCore
Biotechnology
Europe GmbH		 Representative SynCore Biotechnology Co.,
Ltd. Resentative: Yi Ta Lee		 25,000
100.00
Hetian Tianli
shasheng
Pharmaceutical
Development
Co.,Ltd.		 Director and
General
Manager		 Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)
Representative: Neng Yin Yu		 – 91.00
Hangzhou Vitrum
Healthy Food
Co., Ltd.		 Director and
General
Manager		 Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)
Representative: Neng Yin Yu		 – 100.00

8.1.5 Operational Highlights of the Affiliated Company

December 31, 2023 Unit: NT$ thousand

Company Capital Total Assets Total
Liabilities		 Net Worth Net
Revenue		 Operating
Profit		 Current
Profit/Loss
(After Tax)		 EPS/NTD
(After Tax)
Cancap
Pharmaceutical Ltd.		 176,688 4,106 1,383 2,723 8,548 750 1,139 0.47
UNIVERSAL NEXT
TECHNOLOGIES
INC.
17,467		 28 – 28 – (102) (12) (0.02)
ZuniMed Biotech
Co., Ltd.		 103,000 153,020 58,352 94,668 73,067 (581) (1,139) (0.11)
SynCore
Biotechnology Co.,
Ltd.		 351,645 378,362 21,226 357,136 20,196 (45,502) (38,172) (1.19)
SynCore
Biotechnology
Europe GmbH		 834 737 – 737 – – 18 –
SUNETIC
BIOTECH INC.		 765,933 1,009,427 – 1,009,427 – (162) 9,648 0.43
  • 281 -
Company Capital Total Assets Total
Liabilities		 Net Worth Net
Revenue		 Operating
Profit		 Current
Profit/Loss
(After Tax)		 EPS/NTD
(After Tax)
Sinphar Tian-Li
Pharmaceutical Co.,
Ltd.(Hangzhou)		 982,787 1,088,594 81,372 1,007,222 243,898 2,100 18,987 –
Hangzhou Vitrum
Healthy Food Co.,
Ltd.		 152,761 2,514 685 1,829 – (311) (306) –
Hetian Tianli
shasheng
Pharmaceutical
Development Co.,
Ltd.		 50,920 113,228 7,546 105,682 41,860 (11,190) (7,326) –

8.2 Private Securities in the Most Recent Year and before the Printing Date

None

  • 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year and before the Printing Date

None

8.4 Other Supplementary Information

None

  • Ⅸ. The Matters Impacting Shareholder Equity or Securities Price in Accordance with Subparagraph 2, Paragraph 3, Article 36 in the Securities and Exchange Act in the Most Recent Year and Before the Printing Date

None

  • 282 -

Sinphar Pharmaceutical Co., Ltd.

Chairman: Chih Wen Lee

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