SPT — Annual Report 2012

May 30, 2013

SCINOPHARM TAIWAN, LTD.

NON-CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2012 AND 2011

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

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Stockholders of ScinoPharm Taiwan, Ltd.

We have audited the accompanying non-consolidated balance sheets of ScinoPharm Taiwan, Ltd. as of December 31, 2012 and 2011, and the related non-consolidated statements of income, of changes in stockholders' equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the “Rules Governing the Examination of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards and rules require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the non-consolidated financial statements referred to above present fairly, in all material respects, the financial position of ScinoPharm Taiwan, Ltd. as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with the "Rules Governing the Preparation of Financial Statements by Securities Issuers" and generally accepted accounting principles in the Republic of China.

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We have also audited the consolidated financial statements of ScinoPharm Taiwan, Ltd. and its subsidiaries (not presented herein) as of and for the years ended December 31, 2012 and 2011. In our report dated March 22, 2013, we expressed a modified unqualified opinion and an unqualified opinion on the 2012 and 2011 financial statements, respectively.

PricewaterhouseCoopers, Taiwan

March 22, 2013

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

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

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SCINOPHARM TAIWAN, LTD.

NON-CONSOLIDATED BALANCE SHEETS

DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

ASSETS

Notes 2012 2011 4(1) $ 2,584,773 $ 3,080,455 4(2) and 10 473 2,066 3 and 4(3) 841,334 843,817 3 3,470 14,524 3 and 5 9,040 4,752 6 - 15,552 4(4) 1,733,533 1,449,852 4(5) 204,762 168,631 4(18) 854 13,974 5,378,239 5,593,623 4(6)(7)(11) 149,555 - 4(6)(7) 1,242,315 1,131,951 6 39,369 23,817 1,431,239 1,155,768 4(8) 1,777,768 1,711,896 3,526,151 3,322,654 11,309 9,007 63,452 57,665 - 14,970 5,030 5,030 5,383,710 5,121,222 ( 2,945,429 )( 2,665,658 ) 570,348 136,222 3,008,629 2,591,786 4(12) - 959 4(9)(11) 1,538 2,026 1,538 2,985 4(10)(11) 6,445 9,849 2,719 2,525 4(18) 100,815 61,779 109,979 74,153 $ 9,929,624 $ 9,418,315

Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Accounts receivable, net Other receivables Other receivables - related parties Other financial assets - current Inventories, net Prepayments Deferred income tax assets - current Total Current Assets Funds and Investments Financial assets carried at cost - non-current Long-term investments accounted for under the equity method Other financial assets - non-current Total Funds and Investments Property, Plant and Equipment Cost Buildings Machinery and equipment Transportation equipment Office equipment Leased assets Other equipment Cost and Revaluation Increments Less: Accumulated depreciation Construction in progress and prepayments for equipment Total Property, Plant and Equipment, Net Intangible Assets Deferred pension costs Other intangible assets Total Intangible Assets Other Assets Idle assets Refundable deposits Deferred income tax assets - non-current Total Other Assets TOTALASSETS

(Continued)

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SCINOPHARM TAIWAN, LTD.

NON-CONSOLIDATED BALANCE SHEETS

DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

LIABILITIESANDSTOCKHOLDERS' EQUITY	Notes 5 4(18) 5 5 4(12) 1, 4(13)(16) 4(13)(14)(15) 4(13)(16) 4(6) 7	2012 $ 1,045 125,220 18,017 169,991 363,042 126,075 2,183 - - 805,573 30,179 - 30,179 835,752 6,499,300 1,233,286 13,691 103,897 1,224,246 19,452 9,093,872 $ 9,929,624	2011
Current Liabilities Notes payable Accounts payable Accounts payable - related parties Income tax payable Accrued expenses Other payables Receipts in advance Capital lease payable - current Other current liabilities Total Current Liabilities Other Liabilities Accrued pension liabilities Guarantee deposits received Total Other Liabilities Total Liabilities Stockholders' Equity Capital Common stock Capital Reserves Additional paid-in capital in excess of par - common stock Capital reserve from stock warrants Retained Earnings Legal reserve Undistributed earnings Other Adjustment to Stockholders' Equity Cumulative translation adjustments Total Stockholders' Equity Commitments TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$ 83 183,521 77,872 112,898 329,855 40,852 16,946 964 19,804
			782,795
			27,709 250
			27,959
			810,754
			6,310,000 1,233,286 13,691 7,962 970,012 72,610
			8,607,561
			$ 9,418,315

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

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SCINOPHARM TAIWAN, LTD.

NON-CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Items

Notes 2012 2011 $ 4,676,959 $ 3,947,294 ( 58,552 ) ( 55,846 ) ( 83,706) ( 5,045) 4,534,701 3,886,403 5 37,497 62,052 4,572,198 3,948,455 4(4)(17) and 5 ( 2,333,778 ) ( 2,038,896 ) ( 13,297) ( 24,405) ( 2,347,075) ( 2,063,301) 2,225,123 1,885,154 4(17) and 5 ( 173,012 ) ( 157,461 ) ( 366,679 ) ( 326,912 ) ( 262,709) ( 256,307) ( 802,400) ( 740,680) 1,422,723 1,144,474 24,111 16,683 - 21,705 4(10)(11) 5,857 1,841 4(2) and 10 13,300 - 5 80,042 40,548 123,310 80,777 ( 29 ) ( 108 ) 4(7) ( 93,167 ) ( 63,550 ) ( 933 ) ( 888 ) ( 43,341 ) - ( 6,796 ) ( 7,394 ) 4(2) and 10 - ( 21,172 ) ( 1,373) ( 8,004) ( 145,639) ( 101,116) 1,400,394 1,124,135 4(18) ( 229,925) ( 164,780) $ 1,170,469 $ 959,355 BeforeTax After Tax BeforeTax After Tax 4(19) $ 2.15 $ 1.80 $ 1.77 $ 1.51 4(19) $ 2.15 $ 1.80 $ 1.77 $ 1.51

Operating Revenue Sales Sales returns Sales discounts Net Sales Technical service revenues Net Operating Revenues Operating Costs Cost of goods sold Cost of technical service Net Operating Costs Gross profit Operating Expenses Sales and marketing expenses General and administrative expenses Research and development expenses Total Operating Expenses Operating income Non-operating Income and Gains Interest income Foreign exchange gain, net Reversal of impairment loss Gain on valuation of financial assets Other non-operating income Total Non-operating Income and Gains Non-operating Expenses Interest expense Investment loss accounted for under the equity method Loss on disposal of property, plant and equipment Foreign exchange loss, net Depreciation on idle assets Loss on valuation of financial assets Other non-operating losses Total Non-operating Expenses and Losses Income before income tax Income tax expense Net Income Basic Earnings Per Share ( in dollars ) Net income Diluted Earnings Per Share ( in dollars ) Net income

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

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SCINOPHARM TAIWAN, LTD. NON-CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31,

(Expressed in thousands of New Taiwan dollars)

2011 Balance at January 1, 2011 Distribution of 2010 net income (Note) Legal reserve Cash dividends Issuance of common stock Employee compensation costs by issuance of common stock Net income for 2011 Cumulative translation adjustment Balance at December 31, 2011 2012 Balance at January 1, 2012 Distribution of 2011 net income (Note) Legal reserve Cash dividends Stock dividends Net income for 2012 Cumulative translation adjustment Balance at December 31, 2012		Common stock		Capital Reserves		Retained	Earnings	Cumulative translation adjustments	Total
						Legal Reserve	Undistributed earnings
		$ 6,100,000 - - 210,000 - - - $ 6,310,000 $ 6,310,000 - - 189,300 - - $ 6,499,300		$ 499,012 - - 747,020 945 - - $ 1,246,977 $ 1,246,977 - - - - - $ 1,246,977		$ - 7,962 - - - - - $ 7,962 $ 7,962 95,935 - - - - $ 103,897	$ 79,619 ( 7,962) ( 61,000) - - 959,355 - $ 970,012 $ 970,012 ( 95,935) ( 631,000) ( 189,300) 1,170,469 - $ 1,224,246	($ 1,359) - - - - - 73,969 $ 72,610 $ 72,610 - - - - ( 53,158) $ 19,452	$ 6,677,272 - ( 61,000) 957,020 945 959,355 73,969 $ 8,607,561 $ 8,607,561 - ( 631,000) - 1,170,469 ( 53,158) $ 9,093,872

(Note) The employees' bonuses were $143 and $1,727, and directors' and supervisors' remuneration were $1,433 and $17,268 in 2010 and 2011, respectively, which had been deducted from net income for the year.

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

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SCINOPHARM TAIWAN, LTD.

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

			2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	1,170,469		$	959,355
Adjustments to reconcile net income to net cash provided by
operating activities
Loss on valuation of financial assets			1,593			5,323
Write-off of allowance for doubtful accounts			-	(		228 )
Reversal of allowance for doubtful accounts	(		4,115 )	(		59 )
Loss on inventory market price decline			41,191			11,055
Provision for obsolescence of supplies			-			6,620
Reversal of allowance for obsolescence of supplies	(		11,009 )			-
Investment loss accounted for under the equity method			93,167			63,550
Depreciation			325,839			332,433
Loss on disposal of property, plant and equipment and idle
assets			933			1,602
Reversal of impairment loss	(		5,857 )	(		1,841 )
Amortization			858			1,049
Realized gain between affiliated companies	(		19,804 )	(		2,273 )
Employee compensation costs through issuance of common
stock			-			945
Effect of exchange rate changes on cash			40,788			23,977
Changes in assets and liabilities
Notes receivable			-			4,866
Accounts receivable			6,598	(		112,508 )
Other receivables			11,054	(		7,829 )
Other receivables - related parties	(		4,288 )	(		260 )
Inventories	(		324,872 )	(		216,576 )
Prepayments	(		25,122 )	(		51,566 )
Deferred income tax assets - current			13,120			19,471
Deferred pension costs			959	(		959 )
Deferred income tax assets - non-current	(		39,036 )			31,074
Notes payable			962	(		3,005 )
Accounts payable	(		58,301 )			70,343
Accounts payable - related parties	(		59,855 )			53,281
Income tax payable			57,093			67,965
Accrued expenses			33,187			39,910
Other payables			72	(		1,051 )
Receipts in advance	(		14,763 )	(		12,562 )
Accrued pension liabilities			2,470			3,264
Net cash provided by operating activities			1,233,331			1,285,366

(Continued)

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SCINOPHARM TAIWAN, LTD.

NON-CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31

(Expressed in thousands of New Taiwan dollars)

			2012			2011
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in time deposits pledged		$	-	($		20,309 )
Increase in long-term investments - subsidiaries	(		406,244 )	(		454,128 )
Proceeds from liquidation of long-term investment			-			3,897
Cash paid for acquisition of property, plant and equipment	(		650,167 )	(		345,866 )
Increase in other intangible assets	(		370 )	(		2,574 )
(Increase) decrease in refundable deposits	(		194 )			292
Net cash used in investing activities	(		1,056,975 )	(		818,688 )
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in guarantee deposits received	(		250 )			-
Cash dividends paid	(		631,000 )	(		61,000 )
Issuance of common stock			-			957,020
Net cash (used in) provided by financing activities	(		631,250 )			896,020
Effect of exchange rate changes on cash	(		40,788 )	(		23,977 )
(Decrease) increase in cash and cash equivalents	(		495,682 )			1,338,721
Cash and cash equivalents at beginning of year			3,080,455			1,741,734
Cash and cash equivalents at end of year		$	2,584,773		$	3,080,455
Supplemental disclosures of cash flow information
1.Interest paid (excluding capitalized interest)		$	29		$	108
2.Income tax paid		$	198,748		$	46,270
Investing activities with partial cash payment
Acquisition of property, plant and equipment		$	734,354		$	330,938
Add: Other payables, beginning of year			37,545			50,592
Capital lease payable, beginning of year			964			2,845
Less: Other payable, end of year	(		122,696 )	(		37,545 )
Capital lease payable, end of year			-	(		964 )
Cash paid for acquisition of property, plant and equipment		$	650,167		$	345,866
Other activities with no cash flow effect
Long-term equity investments accounted for under the equity
method and cumulative translation adjustments transferred to
financial assets carried at cost		$	149,555		$	-

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

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SCINOPHARM TAIWAN, LTD.

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2012 AND 2011

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

• (a)ScinoPharm Taiwan, Ltd. (the Company) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China on November 11, 1997, with a paid-in capital of $675,000. As of December 31, 2012, the Company’s authorized capital was $10,000,000 and the paid-in capital was $6,499,300, consisting of 649,930,000 shares of common stock with a par value of $10 (NT dollars) per share. The Company is engaged in the research and development and manufacture of materials for medicine, as well as the provision of related consulting, technical services and international trade. The Company’s investment plan for the manufacturing of medicine materials was approved by the Industrial Development Bureau of MOEA on May 13, 1998 and complies with the standards of important technical industry application.

• (b)As of December 31, 2012, the Company had approximately 710 employees.

• (c)The common shares of the Company have been listed on the Taiwan Stock Exchange since September 2011.

• (d)Uni-President Enterprises Corp., the Company’s ultimate parent company, holds 37.94% equity interest in the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements are prepared in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and generally accepted accounting principles in the Republic of China. The Company’s significant accounting policies are summarized as follows:

• (1) Foreign currency transactions and translation

• (a)Transactions arising in foreign currencies, except for derivative financial instruments, are translated into functional currency at the exchange rates prevailing at the dates of the transactions. The difference is recognized as foreign exchange gain or loss upon actual receipts and disbursements.

• (b)Monetary assets and liabilities denominated in foreign currencies are translated at the spot exchange rates prevailing at the balance sheet date. Exchange gains or losses are recognized in profit or loss. However, translation exchange gains or losses on intercompany accounts that are in nature, deemed long term is accounted for as a reduction in stockholders’ equity.

• (c)When a gain or loss on a non-monetary item is recognized directly in equity, any exchange component of that gain or loss shall be recognized directly in equity. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss shall be recognized in profit or loss. However, non-monetary items that are measured on a historical cost basis are translated using the exchange rate at the date of the transaction.

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(2) Classification of current and non-current items

• (a)Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (i)Assets arising from operating activities that are expected to be realized or consumed, or are intended to be sold within the normal operating cycle;

• (ii)Assets held mainly for trading purposes;

• (iii)Assets that are expected to be realized within 12 months from the balance sheet date;

• (iv)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than 12 months after the balance sheet date.

• (b)Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (i)Liabilities arising from operating activities that are expected to be paid off within the normal operating cycle;

• (ii)Liabilities arising mainly from trading activities;

• (iii)Liabilities to be paid off within 12 months from the balance sheet date; and

• (iv)Liabilities for which the repayment date cannot be extended unconditionally to more than 12 months after the balance sheet date.

(3) Cash equivalents

• (a)Cash equivalents represent short-term, highly liquid investments that are readily convertible into fixed amounts of cash and which are subject to insignificant risk of changes in value resulting from fluctuations in interest rates.

• (b)The Company’s statement of cash flows is prepared on the basis of cash and cash equivalents.

(4) Financial assets and financial liabilities at fair value through profit or loss

• (a)Equity investments are recognized using trade date accounting. Debt instruments, beneficiary certificates and derivative financial instruments are recognized and derecognized using settlement date accounting. All are recognized initially at fair value.

• (b)These financial instruments are subsequently remeasured and stated at fair value, and the gain or loss is recognized in profit or loss. The fair value of listed stocks, OTC stocks and closed-end mutual funds is based on latest quoted fair prices of the accounting period. The fair value of open-end and balanced mutual funds is based on the net asset value at the balance sheet date.

• (c)For derivatives that do not qualify for hedge accounting, if the derivative is an option, then the transaction is recognized at fair value on the trade date, and if the derivative is not an option, then the transaction is recognized at zero fair value on the trade date.

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• (d)Financial assets and financial liabilities at fair value through profit or loss are classified into asset or liability held for trading and those designated at fair value through profit or loss at inception. Financial assets and financial liabilities are classified as held for trading if acquired principally for the purpose of selling in the short term. Financial assets and financial liabilities designated as at fair value through profit or loss at inception are those that are managed and whose performance is evaluated on a fair value basis, in accordance with a documented Company’s investment strategy. Information about these financial assets and financial liabilities are provided internally on a fair value basis to the Company’s management. The Company’s investment strategy is to invest free cash resources in equity securities or convertible bonds as part of the Company’s long-term capital growth strategy. The Company has designated almost all of its compound debt instruments as financial liabilities at fair value through profit or loss.

• (5) Notes receivable and accounts receivable, other receivables

• (a)Notes receivable and accounts receivable are claims generated from the sale of goods or services. Other receivables are those receivables arising from transactions other than the sale of goods or services. Notes receivable, accounts receivable and other receivables are recognized initially at fair value, and are subsequently measured at amortized cost less impairment using the effective interest method.

• (b)The Company recognizes impairment loss on the financial instruments when there is an objective evidence of impairment. The amount of impairment is the book value less the present value of estimated future cash flows, discounted by original effective interest rate. If, subsequently, an event, directly related to impairment, indicates a decrease in impairment, the impairment loss recognized in prior years shall be recovered. The book value of the financial instruments after recovering the impairment shall not exceed the amortized cost that would have been had no impairment been previously recognized.

• (6) Inventories

The perpetual inventory system is adopted for inventory recognition. The cost is determined using the weighted average method. Allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities. At the end of year, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. When the cost of inventories exceeds the net realizable value, the amount of any write-down of inventories is recognized as cost of sales during the period; and the amount of any reversal of inventory write-down is recognized as a reduction in cost of sales during the period.

• (7) Financial assets carried at cost

• (a)Investment in unquoted equity instruments is recognized or derecognized using trade date accounting, and is stated initially at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.

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• (b)If there is any objective evidence that the financial asset is impaired, the impairment loss is recognized in profit or loss. Such impairment loss shall not be reversed when the fair value of the asset subsequently increases.

• (8) Long term equity investments accounted for under the equity method

• (a)Long-term equity investments in which the Company holds more than 20% of the investee company’s voting shares or has the ability to exercise significant influence on the investee’s operational decisions are accounted for under the equity method. The excess of the initial investment cost over the acquired net asset value of investee is attributable to goodwill.

• (b)Long-term investments in which the Company owns at least 50% of the investee company’s voting rights, or in which the Company has the ability to exercise significant influence, are included in the consolidated financial statements.

• (c)Effective January 1, 2005, investment loss on the non-controlled entities over which the Company has the ability to exercise significant influence is recognized to the extent that the amount of long-term investments in such investees is written down to zero. However, if the Company continues to provide endorsements, guarantees or financial support for such investees, the investment loss is recognized continuously in proportion to the Company’s equity interest in such investees. In the case of controlled entities, the Company recognizes all the losses incurred by such entities that will not be covered by other stockholders. When the operations of such investees become profitable, the profits shall be allocated to the Company to the extent that the amount of losses previously recognized by the Company is fully recovered.

• (d)For foreign innvestments accounted for under the equity method, the Company’s proportionate share for the investee company’s cumulative translation adjustment, resulting from translating the foreign investee company’s financial statements into New Taiwan Dollars, is recognized by the Company and included as “cumulative translation adjustment” under stockholders’ equity.

• (9) Property, plant and equipment and idle assets

• (a)Property, plant and equipment and idle assets are stated at cost. Interest incurred in connection with the acquisition or construction required to bring the asset to the condition and location for its intended use is capitalized. Major renewals, betterments and additions are capitalized and depreciated accordingly. Maintenance and repairs are expensed as incurred.

• (b)Depreciation is determined using the straight-line method over the estimated economic useful lives. The useful lives of major depreciable assets and idle assets are 2-12 years, except for machinery and equipment which is 2-35 years.

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• (c)Idle assets are stated at the lower of book value or net realizable value and are reclassified as other assets. The difference between the book value and net realizable value is recorded as a loss in the current period. Depreciation recognized for the period is recorded as non-operating expenses and losses.

• (d)When an asset is sold or retired, the cost and accumulated depreciation are removed from the respective accounts and any resulting gain or loss on disposal is recorded as non-operating income or loss.

(10) Other intangible assets

Other intangible assets consist of technology know-how and computer software costs which are capitalized and amortized on the straight-line basis over the estimated useful life of 3-10 years.

• (11) Impairment of non-financial assets

The Company recognizes impairment loss when there is indication that the recoverable amount of an asset is less than its carrying amount. The recoverable amount is the higher of the fair value less costs to sell and value in use. When the impairment no longer exists, the impairment loss recognized in prior years shall be recovered.

• (12) Retirement plan and net periodic pension cost

Under the defined benefit pension plan, net periodic pension costs are recognized in accordance with the actuarial calculations. Net periodic pension costs include service cost, interest cost, expected return on plan assets, unrecognized net transition asset (obligation), and amortization of gains or losses on plan assets and prior service cost. Under the defined contribution pension plan, net periodic pension costs are recognized as incurred.

(13) Income tax

• (a)The Company adopted R.O.C. SFAS No. 22, "Accounting for Income Tax", whereby income tax is provided based on accounting income after adjusting for permanent differences, and inter-period and intra-period allocation of income tax was adopted. The tax effects of taxable temporary differences are recorded as deferred tax liabilities; while the tax effects of deductible temporary differences, net operating loss carryforwards and income tax credits are recorded as deferred tax assets. A valuation allowance on deferred tax assets is provided to the extent that it is more likely than not that the tax benefits will not be realized. Deferred tax assets or liabilities are classified into current or non-current items in accordance with the nature of the balance sheet account or the period realization is expected. When a change in the tax laws is enacted, the deferred tax liability or asset is recomputed accordingly in the period of change. The difference between the new amount and the original amount, that is, the effect of changes in the deferred tax liability or asset, is reported as an adjustment to current income tax expense (benefit). Adjustments of prior years' income tax liabilities are included in the current year's income tax expense.

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• (b)The Company adopted R.O.C. SFAS No. 12, “Accounting for Investment Tax Credits”, whereby investment tax credits from the acquisition of machinery and equipment, research and development expenditures and investments in stocks are recognized in the year the related expenditures are incurred.

• (c)In accordance with R.O.C. Income Tax Law, the Company’s undistributed earnings is subject to an additional 10% corporate income tax. The tax is charged to income tax expense after the appropriation of earnings is approved by the stockholders in the following year.

• (d)Effective January 1, 2006, the Company adopted the "Income Basic Tax Act". If the amount of regular income tax is more than or equal to the amount of basic tax, the income tax payable shall be calculated in accordance with the Income Tax Act and other relevant laws. Whereas the amount of regular income tax is less than the amount of basic tax, the income tax payable shall also include the difference between the amount of regular income tax and basic tax, in addition to the amount as calculated in accordance with the "Income Tax Act" and other relevant laws. The balance calculated in accordance with the provisions shall not allow for deductions claimed in regard to investment tax credits granted under the provisions of other laws.

• (14) Share-based payment – Employee compensation plan

• For the grant date of the share-based payment agreements set on or after January 1, 2008, the Company shall measure the services received during the vesting period by reference to the fair value of the equity instruments granted and account for those amounts as payroll expenses during that period.

• (15) Employees’ bonuses and directors’ and supervisors’ remuneration Effective January 1, 2008, pursuant to EITF 96-052 of the Accounting Research and Development Foundation, R.O.C., dated March 16, 2007, “Accounting for Employees’ Bonuses and Directors’ and Supervisors’ Remuneration”, the costs of employees’ bonuses and directors’ and supervisors’ remuneration are accounted for as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and the amounts can be estimated reasonably. However, if the accrued amounts for employees’ bonuses and directors’ and supervisors’ remuneration are different from the actual distributed amounts resolved by the stockholders at the annual stockholders’ meeting subsequently, the differences shall be recognized as gain or loss in the following year. In addition, according to EITF 97-127 of the Accounting Research and Development Foundation, R.O.C., dated March 31, 2008, “Criteria for Listed Companies in Calculating the Number of Shares of Employees’ Stock Bonus”, the Company calculates the number of shares of employees’ stock bonus based on the closing price of the Company's common stock at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.

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(16) Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(17) Revenues, costs and expenses

Revenues are recognized when the earning process is substantially completed and are realized or realizable. Related costs are recognized to match the timing of revenue recognition. Expenses are recorded as incurred.

(18) Settlement date accounting

If an entity recognizes financial assets using settlement date accounting, any change in the fair value of the asset to be received during the period between the trade date and the settlement date is not recognized for assets carried at cost or amortized cost. For financial assets or financial liabilities classified as at fair value through profit or loss, the change in fair value is recognized in profit or loss. For available-for-sale financial assets, the change in fair value is recognized directly in equity.

(19) Operating segments

The segment information reported is consistent with the internal management reports provided to the Company’s chief operating decision maker. The chief operating decision maker is responsible for allocating resources to operating segments and evaluating their performance. The Company discloses the operating segments information in the consolidated financial statements in accordance with R.O.C. SFAS No. 41, “Operating Segments”.

3. CHANGES IN ACCOUNTING PRINCIPLES

• (1) Notes receivable, accounts receivable and other receivables

• Effective January 1, 2011, the Company prospectively adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 34, “Financial Instruments: Recognition and Measurement.” The Company recognizes impairment loss on notes receivable, accounts receivable and other receivables when there is an objective evidence of impairment. This accounting change had no significant effect on the Company’s financial statements as of and for the year ended December 31, 2011.

(2) Operating segments

Effective January 1, 2011, the Company adopted the newly issued SFAS No. 41, “Operating Segments” which supersedes SFAS No. 20, “Segment Reporting.” This accounting change had no significant effect on the net income and earnings per common share for the year ended December 31, 2011.

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4. DETAILS OF SIGNIFICANT ACCOUNTS

1.CASH AND CASH EQUIVALENTS

DETAILS OF SIGNIFICANT ACCOUNTS 1.CASH AND CASH EQUIVALENTS
2.FINANCIALASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS December31,2012 Cash: Cash on hand $ 92 Checking accounts 1,245 Demand deposits 44,392 Time deposits 2,393,288 2,439,017 Cash equivalents: Bills under repurchase agreement 145,756 $ 2,584,773 December 31,2012 Current items: Financial assets held for trading Derivative-Foreign currency forward contracts $ 473	December31,2011
	$ 30 194 50,514 2,969,883
	3,020,621 59,834
	$ 3,080,455
	December 31,2011
	$ 2,066

• (a)The Company recognized a net gain (loss) of $13,300 and ($21,172) for the years ended December 31, 2012 and 2011, respectively.

• (b)The trading items and contract information of derivatives are as follows:

Forward exchange contracts	Contract Contract Amount Period USD14,820,000 2012.11.19～ 2013.2.22 December 31,2012	December 31,2011	December 31,2011
		Contract Contract Amount Period USD 7,323,000 2011.11.25～ 2012.2.17 EUR 1,100,000 2011.11.21～ 2012.1.20	Contract Period

The forward exchange contracts were entered into to hedge the change in exchange rate due to import and export, but not adopting hedge accounting. The fair value was recognized as financial assets held for trading.

3.ACCOUNTS RECEIVABLE, NET

assets held for trading. CCOUNTS RECEIVABLE, NET
	December	31,2012	December	31,2011
Accounts receivable	$	841,359	$	847,957
Less: Allowance for doubtful accounts	(	25)	(	4,140)
	$	841,334	$	843,817

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4. INVENTORIES, NET

NVENTORIES, NET
Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods		December 31,2012
	Cost Allowance 466,556 $ 34,618) ($ 11,319 856) ( 742,616 39,375) ( 751,779 163,888) ( 1,972,270 $ 238,737) ($ December 31,2011		Book Value 431,938 $ 10,463 703,241 587,891 1,733,533 $
	Cost Allowance 450,773 $ 45,596) ($ 10,336 1,167) ( 610,817 30,835) ( 575,472 119,948) ( 1,647,398 $ 197,546) ($		Book Value 405,177 $ 9,169 579,982 455,524 1,449,852 $

Expenses and losses of inventories recognized:

Expenses and losses of inventories recognized:
PREPAYMENTS Cost of inventories sold Loss on inventory market price decline Idle capacity Loss on production stoppage Loss on discarding inventory Loss on physical inventory Cost of goods sold Supplies Prepayment for materials Prepaid expense Less: Allowance for obsolescence of supplies	For theyears ended	2011 1,917,890 $ 11,055 30,261 12,572 66,226 892 2,038,896 $ December 31, December 31,2011
	2012 2,154,985 $ 41,191 36,635 16,468 80,099 4,400 2,333,778 $ December 31,2012 122,850 $ 72,346 38,972 234,168 29,406) ( ( 204,762 $
		106,336 $ 68,865 33,845 209,046 40,415) 168,631 $

5. PREPAYMENTS

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6. FINANCIALASSETS CARRIED AT COST

December 31, 2012 December 31, 2011

Non-current items:
Unlisted stocks
Tanvex Biologics, Inc.	$	149,555	$	-
SYNGEN, INC.		4,620		4,620
		154,175		4,620
Less: Accumulated impairment	(	4,620)	(	4,620)
	$	149,555	$	-

• (a)The above investments were measured at cost since its fair value cannot be measured reliably.

(b)Tanvex Bioloics, Inc. (“Tanvex”) increased its capital on January 19, 2012. The Company did not subscribe to the capital increase proportionately. Accordingly, the Company lost its significant influence in Tanvex as its ownership percentage decreased from 36.36% to 17.02%. The Company then reclassified Tanvex from long-term investment accounted for under the equity method to financial assets carried at cost.

• (c)For details of the accumulated impairment, please refer to Note 4 (11).

7. LONG–TERM INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

• (a)Details of long-term equity investments accounted for under the equity method are set forth below:

below:
Name ofsubsidiaries SPT International, Ltd. ScinoPharm Singapore Pte Ltd. President ScinoPharm (Cayman), Ltd. Tanvex Biologics, Inc.	December31,	Percentage owned 100.00% 100.00% 60.00% - 2012	December31,2011
	1,239,905 $ 5 2,405 - 1,242,315 $ Bookvalue		Percentage owned 957,265 $ 100.00% - 100.00% 2,579 60.00% 172,107 36.36% 1,131,951 $ Bookvalue
				100.00% 100.00% 60.00% 36.36%

• (b)Long-term investment loss accounted for under the equity method were $93,167 and $63,550 for the years ended December 31, 2012 and 2011, respectively. As of and for the years ended December 31, 2012 and 2011, the Company’s long-term investments in the investee companies accounted for under the equity method were measured based on the investees’ financial statements which were audited by independent auditors.

• (c)Please refer to Note 4(6) for the details of long-term investment accounted for under the equity method reclassified to financial assets carried at cost.

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8. PROPERTY, PLANT AND EQUIPMENT, NET

(a)As of December 31, 2012 and 2011, accumulated depreciation of property, plant and equipment are listed as follows:

are listed as follows:
Assets Buildings Machinery and equipment Transportation equipment Office equipment Leased assets Other equipment	December 31,2012 483,338 $ 2,405,784 7,386 43,891 - 5,030 2,945,429 $	December 31,2011
		418,816 $ 2,183,951 6,507 36,384 14,970 5,030
		2,665,658 $

(b)As of December 31, 2012 and 2011, no interest was capitalized in property, plant and equipment.

9. OTHER INTANGIBLE ASSETS

As of December 31, 2012 and 2011, other intangible assets are as follows:

		Technology			Computer
December31,2012		know-how		software costs			Total
Balance at January 1, 2012 Initial cost	$	413,042		$	12,407	$	425,449
Accumulated amortization	(	405,000)	(		10,381)	(	415,381)
Accumulated impairment	(	8,042)			-	(	8,042)
January 1, 2012 net book value		-			2,026		2,026
Addition		-			370		370
Amortization		-	(		858)	(	858)
Balance at December 31, 2012 Initial cost		413,042			12,777		425,819
Accumulated amortization	(	405,000)	(		11,239)	(	416,239)
Accumulated impairment	(	8,042)			-	(	8,042)
December 31, 2012 net book value	$	-		$	1,538	$	1,538
		Technology			Computer
December31,2011		know-how		software costs			Total
Balance at January 1, 2011 Initial cost	$	413,042	$		9,833	$	422,875
Accumulated amortization	(	405,000)	(		9,332)	(	414,332)
Accumulated impairment	(	8,042)			-	(	8,042)
January 1, 2011 net book value		-			501		501
Addition		-			2,574		2,574
Amortization		-	(		1,049)	(	1,049)
Balance at December 31, 2011 Initial cost		413,042			12,407		425,449
Accumulated amortization	(	405,000)	(		10,381)	(	415,381)
Accumulated impairment	(	8,042)			-	(	8,042)
December 31, 2011 net book value	$	-	$		2,026	$	2,026

For details of the accumulated impairment, please refer to Note 4(11).

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10. IDLE ASSETS

Assets Machinery and equipment Less: Accumulated impairment Assets Machinery and equipment Less: Accumulated impairment	December31,2012

For details of the accumulated impairment, please refer to Note 4(11).

11. IMPAIRMENT OF ASSETS

The Company has recognized an accumulated impairment loss of $33,931 and $39,788 as of December 31, 2012 and 2011, respectively. Details are set forth below:

Item Recorded as impairment loss: Financial asset carried at cost-non-current Other intangible assets Idle assets Item Recorded as impairment loss: Financial asset carried at cost-non-current Other intangible assets Idle assets	December31,2012	December31,2012
	Statement of Stockholders’ income equity 4,620 $ - $ 8,042 - 21,269 - 33,931 $ - $ December31,2011	Stockholders’ equity
		- $ - -
		- $
	Statement of income 4,620 $ 8,042 27,126 39,788 $	Stockholders’ equity
		- $ - - - $

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The accumulated impairment summarized by segment is as follows:

Segment The Company Segment The Company	December 31,2012	December 31,2012
	Statement of Stockholders’ income equity 33,931 $ - $ December 31,2011	Stockholders’ equity
		- $
	Statement of income 39,788 $	Stockholders’ equity
		- $

(Note) Certain idle assets have been disposed during the years ended December 31, 2012 and 2011. As such, the reversal of impairment loss of $5,857 and $1,841 were recognized for the years ended December 31, 2012 and 2011, respectively.

12. RETIREMENT PLAN

• (a)The Company has set up a defined benefit pension plan in accordance with the Labor Standards Law, which applies to all regular employees before the enforcement of the Labor Pension Act (the “Act”) on July 1, 2005 and the employees who choose to be covered under the pension scheme of the Labor Standards Law after the enforcement of the Act. In accordance with the Company's retirement plan, an employee may retire when the employee either (i) attains the age of 55 with 15 years of service, (ii) has more than 25 years of service, (iii) has reached the age of 65, or (iv) is incapacitated to work (compulsory retirement).

• The employees earn two units for each year of service for the first 15 years, and one unit for each additional year thereafter up to a maximum of 45 units. Any fraction of a year equal to or more than six months shall be counted as one year of service, and any fraction of a year less than six months shall be counted as half a year. Pension payments are based on the number of units earned and the average salary of the last six months prior to retirement. Calculation of average salary is in accordance with the Labor Standards Law of the R.O.C. The Company contributes monthly an amount equal to 2% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan under the name of the independent retirement fund committee.

• (b) The information relative to the Company's defined benefit pension plan is set forth below: A.The actuarial assumptions used to measure the funded status of the plan are as follows:

Discount rate Rate of increase in compensation levels Expected return on plan assets	2012 1.75% 3.00% 1.75%	2011
		1.90% 3.00% 1.90%

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B.The funded status of the plan at December 31, 2012 and 2011 is as follows:

			2012			2011
Benefit obligation:
Vested benefit obligation	($		2,145)	($		1,751)
Non-vested benefit obligation	(		75,461)	(		70,338)
Accumulated benefit obligation	(		77,606)	(		72,089)
Additional benefit based on future salaries	(		32,915)	(		33,630)
Projected benefit obligation	(		110,521)	(		105,719)
Fair value of plan assets			48,020			44,380
Plan funded status	(		62,501)	(		61,339)
Unrecognized net transition obligation			917			1,223
Unrecognized service cost			862			928
Unrecognized loss on plan assets			30,543			32,438
Minimum pension liability			-	(		959)
Accrued pension liabilities	($		30,179)	($		27,709)
Vested benefit		$	2,145		$	1,751
The net periodic pension cost for the years ended	December 31, 2012 and 2011					consists of t
following:
			2012			2011
Service cost		$	3,453	$		2,704
Interest cost			2,008			1,768
Expected return on plan assets	(		843)	(		774)
Amortization of unrecognized net transition
obligation			306			306
Amortization of unrecognized prior service cost			66			66
Amortization of unrecognized loss on plan
assets			1,682			1,517
Net periodic pension cost		$	6,672		$	5,587

• C.The net periodic pension cost for the years ended December 31, 2012 and 2011 consists of the following:

(3)As a result of the enforcement of the Act, the Company set up a defined contribution pension plan which took effect on July 1, 2005. The local employees are eligible for the defined contribution plan. For employees who choose to be covered under the pension scheme of the Act, the Company contributes monthly an amount of not less than 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. Pensions are paid by monthly installments or in lump sum based on the accumulated balances of the employees’ individual pension accounts. The net pension costs recognized under

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the defined contribution plan for the years ended December 31, 2012 and 2011 were $25,055 and $22,258, respectively.

13. COMMON STOCK AND STOCK DIVIDEND DISTRIBUTABLE

• (a)For the purpose for initial public offering, the Board of Directors during its meeting on August 3, 2011 adopted a resolution to increase capital by issuing common stocks of 21 million shares at a premium price of $46 (in NT dollars) per share. Pursuant to the approval by the Financial Supervisory Commission, Securities and Futures Bureau, the capital increase was effective on September 27, 2011. After the capital increase, the authorized capital was $10,000,000, and paid-in capital was $6,310,000, consisting of 631 million shares with a par value of $10 (in NT dollars) per share.

• (b)The stockholders at their annual stockholders’ meeting on June 13, 2012 adopted a resolution to increase capital through unappropriated retained earnings of $189,300. Pursuant to the approval by the Financial Supervisory Commission, Securities and Futures Bureau, the capital increase was effective on August 16, 2012. After the capital increase, the authorized capital was $10,000,000, and the paid-in capital was $6,499,300, consisting of 649,930 thousand shares with a par value of $10 (in NT dollars) per share.

14. CAPITAL RESERVE

• Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stock and donations shall be exclusively used to cover accumulated deficit or, distribute cash or stocks in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

15. SHARE-BASED PAYMENT – EMPLOYEE COMPENSATION PLAN

The Company adopted a resolution to increase capital by cash, and reserved 2,249 thousand shares for employees granted on September 27, 2011 at a price of $46 (in NT dollars) per share. The amount of employee compensation costs of cash capital increase reserved for employees was $945 for the year ended December 31, 2011.

The employee preemption above is estimated by using the Black-Scholes option-pricing model. The weighted-average parameters used in the estimation of the fair value are as follows:

Expected dividend yield	0%
Expected volatility	36.54%
Risk-free interest rate	0.60%
Expected life	0.14 year
Weighted-average fair value (per share) (in NT dollars)	$0.42

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16. RETAINED EARNINGS

• (a) Pursuant to the amended R.O.C. Company Law, the current year's after-tax earnings should be used initially to cover any accumulated deficit; thereafter 10% of the remaining earnings should be set aside as legal reserve until the balance of legal reserve is equal to that of paid-in capital. The legal reserve shall be exclusively used to cover accumulated deficit, to issue new stocks, or to distribute cash to shareholders in proportion to their share ownership. The use of legal reserve for the issuance of stocks or cash dividends to shareholders in proportion to their share ownership is permitted provided that the balance of such reserve exceeds 25% of the Company’s paid-in capital.

• (b)Since the Company is in a changeable industry environment and the life cycle of the Company is in a stable growth, the appropriation of earnings should consider fund requirements and capital budget to decide how much earnings will be kept or distributed and how much cash dividends will be distributed. According to the Company’s Articles of Incorporation, 10% of the annual net income, after offsetting any loss of prior years and paying all taxes and dues, shall be set aside as legal reserve. The remaining net income and the unappropriated retained earnings from prior years can be distributed in accordance with a resolution passed during a meeting of the Board of Directors and approved at the stockholders' meeting. Of the amount to be distributed by the Company, stockholders’ bonuses shall comprise 50% to 100% of the unappropriated retained earnings, and the percentage of cash dividends shall not be less than 30% of dividends distributed. Directors' and supervisors' remuneration shall comprise 2% and at least 0.2% for employees' bonuses.

• (c)(i)The appropriations of 2011 and 2010 earnings had been resolved at the stockholders' meeting on June 13, 2012 and June 30, 2011, respectively. Details are summarized below:

Legal reserve Cash dividends Stock dividends Directors' and supervisors' remuneration Employees' cash bonus	Dividends per share Amount (in dollars) 95,935 $ 631,000 $ 1.00 189,300 0.30 17,268 1,727 935,230 $ 2011	2010	2010
	Amount 95,935 $ 631,000 189,300 17,268 1,727 935,230 $	Amount 7,962 $ 61,000 - 1,433 143 70,538 $	Dividends per share (in dollars)
			$ 0.10

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• (ii)The appropriations of 2012 earnings had been proposed by the Board of Directors on March 22, 2013. Details are summarized below:

22, 2013. Details are summarized below:
Legal reserve Cash dividends Stock dividends Directors' and supervisors' remuneration Employees' cash bonus	2012
	Amount 117,047 $ 779,916 259,972 21,068 2,107 1,180,110 $	Dividends per share (in dollars)
		$ 1.20 0.40

As of March 22, 2013, the appropriations of 2012 earnings had not been resolved by the stockholders.

• (d)The estimated amounts of employees’ bonus and directors’ and supervisors’ remuneration for the years ended December 31, 2012 and 2011 are $23,180 and $19,029, respectively. The basis of estimates is based on a certain percentage of 2012 and 2011 net income after taking into account the legal reserve and other factors, as prescribed under the Company's Articles of Incorporation. Information on the appropriation of the Company’s employees’ bonus and directors’ and supervisors’ remuneration as resolved by the Board of Directors and approved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange. The actual amounts approved at the stockholders ’ meeting for employees’ bonus and directors ’ and supervisors ’ remuneration for 2011 and 2010 were $19,029 and $2,000, which were different from the estimated amounts recognized in the 2011 and 2010 financial statements by $34 and $424, respectively. Such differences were recognized in profit or loss for the years ended December 31, 2012 and 2011, respectively.

• (e)As of December 31, 2012 and 2011, the balance of unappropriated earnings were as follows:

Unappropriated earnings in and after 1998	December 31,2012 1,224,246 $	December 31,2011
		970,012 $

• (f)As of December 31, 2012 and 2011, the imputation tax credit account balance amounted to $11,793 and $65,847, respectively. The Company distributed unappropriated earnings in 2011 and 2010 as dividends in accordance with the resolution adopted at the stockholders’ meeting on June 13, 2012 and June 30, 2011, respectively, and the date of dividends distribution was on August 16, 2012 and August 1, 2011, respectively. The 2011 and 2010 creditable ratio was 18.47% and 20.48%, respectively. The expected creditable ratio for 2012 is 14.85%. The amount of deductible tax distributable by the Company to its shareholders shall be limited to an amount not exceeding the amount of the imputation tax credit account balance on the date of distribution of the dividends. Accordingly, the actual creditable ratio for the distribution of 2012

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undistributed earnings will be based on the imputation tax credit account balance up to the date of distribution of the dividends.

17. PERSONNEL, DEPRECIATION AND AMORTIZATION EXPENSES

For the years ended December 31, 2012 and 2011, the personnel, depreciation and amortization expenses were as follows:

expenses were as follows:
Personnel expenses Salaries and wages Insurance Pension Others Depreciation Amortization Personnel expenses Salaries and wages Insurance Pension Others Depreciation Amortization		2012
	Operatingcosts $ 396,312 29,002 18,286 10,026 $ 453,626 $ 266,492 $ 135	Operatingexpenses $ 284,607 15,182 13,441 12,470 $ 325,700 $ 52,551 $ 723 2011	Total
			$ 680,919 44,184 31,727 22,496 $ 779,326 $ 319,043 $ 858
	Operatingcosts $ 346,252 24,313 16,242 8,243 $ 395,050 $ 270,778 $ 289	Operatingexpenses $ 253,898 13,739 11,603 11,959 $ 291,199 $ 54,261 $ 760	Total
			$ 600,150 38,052 27,845 20,202 $ 686,249 $ 325,039 $ 1,049

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18. DEFERRED INCOME TAX AND INCOME TAX EXPENSE

(a)Adjustments for corporate income tax expense and income tax payable are as follows:

2012 Income tax at the statutory tax rate 238,067 $ Tax effect of permanent differences 26,512) ( Tax effect of investment tax credits 6,675) ( Tax effect of five-year tax-free project 4,732) ( Under (over) provision of prior year’s income tax 20,335 10% tax on unappropriated earnings 4,312 Tax effect of valuation allowance 5,130 Income tax expense 229,925 Net changes of deferred income tax assets (liabilities) 25,916 (Under) over provision of prior year’s income tax 20,335) ( Unpaid income tax under provision of prior year 21,548 Prepaid income tax 87,063) ( Income tax payable 169,991 $

2011 191,103 $ 10,800 5,050) ( 4,475) ( 318) ( 1,066 28,346) (

164,780 50,545) ( 318 - 1,655) ( 112,898 $

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(b)The details of deferred income tax assets or liabilities resulting from temporary differences and investment tax credits are as follows:

			December	31,	31,	2012			December	31,2011	31,2011
			Amount		Taxeffect				Amount	Taxeffect
Current Items:
Temporary differences
Unrealized decline in value
of inventories		$	238,737	$		40,585		$	197,546	$	33,583
Unrealized obsolescence of
supplies			29,406			4,999			40,415		6,871
Unrealized loss on foreign
currency translation			5,497			934			3,207		545
Unrealized gain on valuation
of financial assets	(		473)	(		80)	(		2,066)	(	351)
Unrealized gain between
affiliated companies			-			-			19,804		3,367
Investment tax credits						-					10,413
						46,438					54,428
Less: Valuation allowance				(		45,584)				(	40,454)
				$		854				$	13,974
Non-Current Items:
Temporary differences
Pension cost		$	30,179	$		5,130		$	26,750	$	4,547
Technology know-how			192,140			32,664			213,892		36,362
Investment loss			349,440			59,405			95,643		16,259
Impairment loss			21,269			3,616			27,126		4,611
				$		100,815				$	61,779

(c)The Company's income tax returns through 2009 have been assessed and approved by the Tax Authority. As of March 22, 2013, there were no disputes existing between the Company and the Tax Authority.

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19. EARNINGS PER COMMON SHARE (“EPS”)

Net income Basic earnings per share Net income of common stockholders Dilutive effect of common stock equivalents: Employees’ bonuses Diluted earnings per share Effect on the net income of common stockholders plus dilutive effect of common stock equivalents				2012
		Before tax Aftertax 1,400,394 $ 1,170,469 $ $1,400,394 $1,170,469 - - $1,400,394 $1,170,469 Amount		Weighted average number of shares outstanding during the year (sharesinthousands) 649,930 31 649,961	EPS(in NT Dollars)
		Before tax 1,400,394 $ $1,400,394 - $1,400,394			Before tax 2.15 $ 2.15 $	Aftertax
						$ 1.80
						$ 1.80

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Net income Basic earnings per share Net income of common stockholders Dilutive effect of common stock equivalents: Employees’ bonuses Diluted earnings per share Effect on the net income of common stockholders plus dilutive effect of common stock equivalents				2011
		Before tax Aftertax 1,124,135 $ 959,355 $ $1,124,135 $ 959,355 - - $1,124,135 $ 959,355 Amount		Weighted average number of shares outstanding during the year (sharesinthousands) 633,989 32 634,021	EPS(in NT Dollars)
		Before tax 1,124,135 $ $1,124,135 - $1,124,135			Before tax 1.77 $ 1.77 $	Aftertax
						1.51 $
						$ 1.51

• (a)The above weighted-average outstanding common shares have been adjusted retroactively in proportion to retained earnings as of December 31, 2011.

• (b)As employees' bonus could be distributed in the form of stock, the diluted EPS computation shall include those estimated shares that would increase from employees' stock bonus issuance in the weighted-average number of common shares outstanding during the reporting year, taking into account the dilutive effects of stock bonus on potential common shares; whereas, basic EPS shall be calculated based on the weighted-average number of common shares outstanding during the reporting year that include the shares of employees’ stock bonus for the appropriation of prior year earnings, which have already been resolved at the stockholders’ meeting held in the reporting year. Since capitalization of employees’ bonus no longer belongs to distribution of stock dividends, the calculation of basic EPS and diluted EPS for all periods presented shall not be adjusted retroactively.

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5. RELATED PARTY TRANSACTIONS

A.Related parties and their relationship with the Company

Name of relatedparties Uni-President Enterprises Corp. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals Ltd. ScinoPharm Shanghai Biochemical Technology, Ltd. President Tokyo Corp. President Securities Corp. Tanvex Biologics Corp. Taiwan Sugar Corp.	Relationship with theCompany
	The Company's ultimate parent company An investee of the Company’s wholly-owned subsidiary, SPT International, Ltd., accounted for under the equity method 〞 〞 An investee of Uni-President Enterprises Corp. accounted for under the equity method 〞 An associate company of Tanvex Biologics, Inc., an investee company carried at cost. A director of the Company

Other related parties did not have material transactions with the Company for the years ended December 31, 2012 and 2011. Please refer to Note 11 for related information. B.Transactions and balances with related parties

(1)Technical service revenues

nsactions and balances with Technical service revenues	related parties
Tanvex Biologics Corp.	Percentage of technical Amount service revenues $ 2,615 7 2012		2011
	Amount $ 2,615	Amount - $	Percentage of technical service revenues
			-

The terms of providing technical services to and receivables from related parties were the same with regular customers. The above related parties close its accounts 60 days from the end of each month.

(2)Purchases

each month. Purchases
ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals Ltd.		Percentage of netpurchases 21 2 23 2012	2011
	Amount 326,510 $ 24,975 $351,485		Amount 292,083 $ - $292,083	Percentage of netpurchases
				22 - 22

The terms of purchases from and payments (wire transfer) to related parties were the same with

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regular suppliers. The above related parties close its accounts 90 days from the end of each month.

(3)Other expenses

(4)	Income from management and technical consultancy 2012 Repair fees: President Tokyo Corp. 2,919 $ Management consultancy fees: Uni-President Enterprises Corp. 3,015 $ Taiwan Sugar Corp. 2,281 5,296 $ Research & Development fees: ScinoPharm (Changshu) Pharmaceuticals Ltd. 8,304 $ ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. 4,412 12,716 $ Rental expense: President Tokyo Corp. 990 $ Other outsourcing services ScinoPharm Shanghai Biochemical 5,396 $ Technology, Ltd. President Securities Corp. 1,484 6,880 $ 2012 ScinoPharm (Changshu) Pharmaceuticals Ltd. 17,148 $ ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. 2,349 19,497 $	2011
		2,829 $
		12 $ 2,180
		2,192 $
		2,747 $ 7,896
		10,643 $
		1,410 $
		- $ 843
		843 $
		2011
	ScinoPharm (Changshu) Pharmaceuticals Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd.
		11,484 $ 8,971 20,455 $

(5)Other receivables

ScinoPharm (Changshu) Pharmaceuticals Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. Others	Amount ％ 8,090 $ 65 924 7 26 - 9,040 $ 72 December 31,2012	Amount ％ 4,727 $ 25 - - 25 - 4,752 $ 25 December 31,2011	Amount ％ 4,727 $ 25 - - 25 - 4,752 $ 25 December 31,2011	Amount ％ 4,727 $ 25 - - 25 - 4,752 $ 25 December 31,2011
	Amount 8,090 $ 924 26 9,040 $	Amount 4,727 $ - 25 4,752 $
				25

(6)Accounts payable

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(7 (8 (9	)Accrued expenses )Capital lease payable Compensation of directors and key ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals Ltd. ScinoPharm Shanghai Biochemical Technology ,Ltd. President Tokyo Corp.	management personnel Amount ％ Amount ％ 16,338 $ 12 77,872 $ 30 1,679 1 - - 18,017 $ 13 77,872 $ 30 December 31,2012 December 31,2011 Amount ％ Amount ％ $ 1,452 - $ - - December 31,2012 December 31,2011 Amount ％ Amount ％ - $ - 964 $ 100 December 31,2012 December 31,2011 2012 2011 27,750 $ 20,466 $ 11,637 11,600 11,319 10,492 21,089 17,325 71,795 $ 59,883 $
	Salaries Bonuses Service execution fees Earnings distribution

(i)Salaries include regular wages, special responsibility allowances, pensions, severance pay, etc.

(ii)Bonuses include various bonuses and rewards.

(iii)Service execution fees include travel allowances, special expenditures, various dorms and vehicles offering, etc.

(iv)Earnings distribution represent directors' and supervisors' remuneration and employees' bonus accrued in current year.

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6. PLEDGED ASSETS

As of December 31, 2012 and 2011, the details of pledged assets for various purposes were as follows:

Assets Time deposits (recorded as 「other financial assets – current」and「other financial assets – non-current」)	December 31,2012 39,369 $	December 31,2011 39,369 $	Purpose of collateral
			Performance guarantee and customs duty

7. CONTINGENT LIABILITIES AND COMMITMENTS

• (a)As of December 31, 2012 and 2011, the unused letters of credit amounted to $8,203 and $42,028, respectively.

• (b)As of December 31, 2012 and 2011, the remaining balance due for construction in progress and prepayments for equipment was $101,248 and $140,180, respectively.

(c)Major agreement

Major agreement
Nature	Partyconcerned	Term	Major content
Land lease Science Park Management 2011.6.1～2018.2.28			The lease term is	less than 20 years.
As of December	31, 2012, the amounts of future rental payments are listed as follows:
				Total rental
	Term of lease contract			payments
2013			$	18,516
2014				18,516
2015				18,516
2016				18,516
2017				18,516
2018 (Present value of $2,864)				3,086
			$	95,666

8. SIGNIFICANT CATASTROPHE: None.

1. SIGNIFICANT SUBSEQUENT EVENT: None.

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10. OTHERS

(1) Fair values of the financial instruments

HERS Fair values of the financial instruments
current Foreign currency forward contracts Financial liabilities with book value equal to fair value Guarantee deposits received Derivative financial instruments Assets Liabilities Non–derivative financial instruments Assets Financial assets with book value equal to fair value Financial assets carried at cost-non- Other financial assets - non-current Refundable deposits		Estimated using Quotations in an a valuation active market method $ - $ 3,438,617 - - - 39,369 - 2,719 - 633,399 - - - 473 December31,2012 Fairvalue		December31,2011
	Bookvalue $ 3,438,617 149,555 39,369 2,719 633,399 - 473		Bookvalue $ 3,959,100 - 23,817 2,525 633,147 250 2,066	Fairvalue
		Quotations in an active market $ - - - - - - -		Quotations in an active market $ - - - - - - -	Estimated using a valuation method
					$ 3,959,100 - 23,817 2,525 633,147 250 2,066

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The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows:

• A.For short-term financial instruments, the fair values were determined based on their carrying amount because of short maturities of the instruments. This was applied to cash and cash equivalents, accounts receivable, other receivables, other financial assets–current, notes and accounts payable, accrued expenses, other payables and capital lease payable–current.

• B.The fair value of other financial assets–non-current and refundable deposits is based on the discounted value of expected future cash inflows, and the discount rate is based on the fixed rate of one year time deposit of the post office at December 31, 2012 and 2011.

• C.The fair value of guarantee deposits received is based on the discounted value of expected future cash flows, and the discount rate is based on the interest rates of similar long-term loans at December 31, 2012 and 2011.

• D.The fair values of derivative financial instruments which include unrealized gains or losses on unsettled contracts were determined based on the amounts to be received or paid assuming the contracts were settled as of the reporting date.

• (2) Significant gains and losses of financial instruments

The Company recognized a loss of $1,593 and $5,323 for the changes in financial assets at fair value through profit or loss for the years ended December 31, 2012 and 2011, respectively.

• (3) Financial risk management and hedging strategy

• The Company adopt a comprehensive control system to identify all risks (including market risk, credit risk, liquidity risk and cash flow risk), which enables the Company to control and measure the market risk, credit risk, liquidity risk and cash flow risk effectively. The target of the market risk management is to appropriately consider the economic environment, competition, and impact of market value risks, to optimize risk exposure, to sustain liquidity, and to manage all the foreseen market risk collectively.

• In order to achieve the target of risk management, the hedge strategies of the Company are concentrated in the market value risk and cash flow risk.

(4) Information of financial risk

A.Market risk

(A)Exchange rate risk

• (a) The Company has set a “stop loss” amount to limit its market risk on forward contracts that are affected by foreign exchange risk.

• (b) The Company’s major import and export transactions are in US dollars. The change in fair value will be caused by foreign exchange rate changes, however, the amounts and periods of the Company’s accounts receivable and accounts payable are the same, so the market risk would be offset.

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• (B)The Company carries on business transactions involving non-functional currency which would be affected by fluctuations in exchange rates. Certain foreign currency denominated assets and liabilities affected by significant fluctuations in exchange rates are shown below:

		December 31,	2012		December 31,	2011
(Foreign currency: functional Foreign currency				Foreign currency
currency)		amount Exchange			amount Exchange
Financial assets	(in	thousands)	rate	(in	thousands)	rate
Monetary items
USD:NTD	$	32,101	29.04	$	27,410	30.28
EUR:NTD		232	38.49		2,354	39.18
GBP:NTD		3	46.83		35	46.77
JPY:NTD		69	0.34		-	-
CNY:NTD		13	4.76		-	-
Long-term investments
accounted for under the equity
method
USD:NTD		46,190	29.04		37,606	30.28
Financial liabilities
Monetary items
USD:NTD		1,310	29.04		5,178	30.28
EUR:NTD		135	38.49		56	39.18

• (C) Interest rate risk

The Company issues debt financial instruments with fixed interest rate. The fair value of debt financial instruments would change due to changes in market interest rate.

• (D) Price risk

The Company is exposed to equity securities price risk because the investments held by the Company are classified either as available-for-sale or at fair value through profit or loss. The Company sets limits to control the transaction volume and stop-loss amount of derivatives to reduce its market risk.

B.Credit risk

• (A)The Company entered into derivative financial instruments with financial institutions with good credit ratings. The possibility of default by those parties is very low. The maximum market value is the carrying amount of derivative financial instruments.

• (B)The Company has lower significant concentrations of credit risk. It has policies in place to ensure that wholesale sales of products are made to customers with an appropriate credit history. The maximum loss to the Company is the book value of accounts receivable.

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C.Liquidity risk

• (A)The available-for-sale financial assets are publicly traded stocks which have active markets and the Company can sell these assets near their fair value. The liquidity risk exposure is low.

• (B)The Company is exposed to a higher liquidity risk since investment securities have no active market. However, the Company has no intention to hold these financial assets for trading and does not expect to sell these financial assets frequently. Therefore, the exposure to liquidity risk would be effectively reduced.

• D.Interest rate change cash flow risk

The Company has no long-term loans at the end of year. Therefore, the Company has no interest rate change cash flow risk.

• (5) Financial statement presentation

Certain accounts in the 2011 financial statements were reclassified to conform with the 2012 financial statement presentation.

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11.ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU

• (1)Related information of significant transactions for the year ended December 31, 2012

• (A) Financing activities with any company or person: None.

• (B) The Company provided endorsements and guarantees to other entities: None.

• (C) The balance of securities held as of December 31, 2012 are summarized as follows (Units in thousands of New Taiwan Dollars or currencies indicated):

Investor	Type andname ofsecurities	Relationship withtheissuer	Accounts (Note) 1 1 2 2 3 3 3 3 3 3		December31,2012	December31,2012	Market value Note 85,794 $ ─ 59,962 ─ - ─ - ─ 1,338,960 ─ 5 ─ 2,405 ─ USD 14,405 ─ USD 30,829 ─ USD 618 ─
				Number of shares (inthousands) - - 28,800 245 43,545 - 102 - - -	Bookvalue 85,794 $ 59,962 149,555 - 1,239,905 5 2,405 USD 14,405 USD 30,829 USD 618	Percentage ofownership - - 17.02% 7.40% 100.00% 100.00% 60.00% 100.00% 100.00% 100.00%
ScinoPharm Taiwan, Ltd. SPT International, Ltd.	Bills under repurchase agreement: Mega Bills Finance Co., Ltd. Taishin International Bank Stock: Tanvex Biologics, Inc. SYNGEN, INC. SPT International, Ltd. ScinoPharm Singapore Pte Ltd. President ScinoPharm (Cayman), Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm Shanghai Biochemical Technology, Ltd.	－ － The Company is a dirctor of Tanvex Biologics, Inc. － An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method by the investor An investee company accounted for under the equity method by the investor An investee company accounted for under the equity method by the investor

• (Note) The code number explanation is as follows:

• Cash equivalents

• Financial assets carried at cost － non-current

• Long-term investments accounted for under the equity method

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• (D)The cumulative buying or selling amount of one specific security exceeding the lower of $100,000 or 20 percent of the contributed capital (Unit in thousands of New Taiwan Dollars or currencies indicated):

					Beginning	balance	balance	Addition	Addition	Addition			Disposal	Disposal	Disposal				Other increase(decrease)	Other increase(decrease)	Other increase(decrease)	Other increase(decrease)	Ending	balance	balance
			Name
		General	of the		Number			Number			Number								Number				Number
	Type of	ledger	counter		of shares			of shares			of shares						Gain (loss)		of shares				of shares
Investor	securities	account	-party	Relationship	(in thousands)		Amount	(in thousands)		Amount	(in thousands)		Sale Price		Book value		on disposal		(in thousands)		Amount		(in thousands)		Amount
ScinoPharm	Bills under repurchase agreement:
Taiwan,	China Trust	Cash
Ltd.	Commercial Bank	equivalents	-	-	-	$	49,846	-	$	602,771	-	$	652,684	($		652,617)	$	67	-	$		-	-	$	-
	International	Cash	-	-	-		9,988	-		501,252	-		511,294	(		511,240)		54	-			-	-		-
	Bills Finance	equivalents
	Corporation
	China Bill	Cash	-	-	-		-	-		661,975	-		662,052	(		661,975)		77	-			-	-		-
	Finance	equivqlents
	Corporation
	Mega Bills	Cash	-	-	-		-	-	2,529,716		-		2,444,207	(	2,443,922)			285	-			-	-		85,794
	Finance Co.,	equivqlents
	Ltd.
	Taishin	Cash	-	-	-		-	-	1,758,198		-		1,698,444	(	1,698,236)			208	-			-	-		59,962
	International	equivalents
	Bank
	Stocks:
	SPT	Long-term	Capital	-	29,825		957,265	13,720		406,243	-		-			-		-	-	(	123,603)		43,545		1,239,905
	International,	investment	Increase
	Ltd.	accounted
		for under the
		equity method
SPT	ScinoPharm	Long-term	Capital	-	-	USD 24,053		-	USD 13,000		-		-			-		-	-	(USD6,224)			-	USD 30,829
International,	(Changshu)	investment	Increase
Ltd.	Pharmaceuticals,	accounted
	Ltd.	for under the
		equity method

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(E) Acquisition of real estate with an amount exceeding $100,000 or 20 percent of the contributed capital (Unit in thousands of New Taiwan Dollars or currencies indicated):

Companyname	Type ofproperty	Transaction date	Transaction amount	Payment	Name of the counterparty	Relationship	Pr	ior transaction of re	lated counterparty	lated counterparty	Price reference	Purpose of Acquisition	Other terms
							Owner	Relationship	Transfer date	Amount
ScinoPharm Taiwan, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd.	Plant Plant (Phase I) Plant (Phase II)	2012.6 2010.4～2012.12 2012.11～2012.12	Approximately $ 1,100,000 CNY 58,758 CNY1,130,000	－ CNY 55,616 CNY 15,372	－ Zhejiang Meiyang International Engineering Design Co., Ltd. etc. Jiangsu Qian Construction Group Co., Ltd.	－ 〞 〞	－ 〞 〞	－ 〞 〞	－ 〞 〞	－ 〞 〞	Negotiation 〞 〞	Building for operation use 〞 〞	None 〞 〞

(F) Disposal of real estate with an amount exceeding $100,000 or 20 percent of the contributed capital : None.

(G) Purchases or sales transactions with related parties amounting to $100,000 or 20 percent of the contributed capital (Unit in thousands of New Taiwan Dollars or currencies indicated):

Companyname	Name of the counterparty	Relationship	Purchases/ (sales)	Descriptionoftransaction	Descriptionoftransaction		Description and reasons for difference in transaction terms compared to non-relatedpartytransactions	Notes or account	s receivable /(payable)	Note
									Percentage of notes or accounts receivable /(payable)
				Amount	Percentage of netpurchases /(sales)	Credit terms
							Unit Price
ScinoPharm Taiwan, Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd.	ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm Taiwan, Ltd.	An investee company of SPT International Ltd. accounted for under the equity method The Company	Purchases (Sales)	326,510 $ (CNY 70,083)	21% (97％)	(Note) 90 days after delivery	- $ -		( 11%) 29%	- -

(Note) Please refer to Note 5 for the terms of purchases.

(H) Receivable from related parties exceeding $100,000 or 20 percent of the contributed capital : None.

• (I) Derivative financial instrument transactions : For the Company’s derivative financial instrument transactions, please refer to Note 4(2).

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(2)Disclosure information of investee company

Related information on investee companies for the year ended December 31, 2012 (Units in thousands of currencies indicated)

Investors Name of investees Address Main Business Currency ScinoPharm Taiwan, SPT International, Ltd. Tortola, British Professional investment TWD Ltd. Virgin Islands ScinoPharm Taiwan, ScinoPharm Singapore Singapore Professional investment TWD Ltd. Pte Ltd. ScinoPharm Taiwan, President ScinoPharm Grand Cayman, Professional investment TWD Ltd. (Cayman), Ltd. Cayman Islands ScinoPharm Taiwan, Tanvex Biologics, Inc. California, U.S.AResearch, biomedical and TWD Ltd. related production, etc. SPT International, ScinoPharm (Kunshan) China Research, development and USD Ltd. Biochemical Technology manufacture of API and Co., Ltd. new drug, etc. SPT International, ScinoPharm (Changshu) China Research, development and USD Ltd. Pharmaceuticals, Ltd. manufacture of API and new drug, etc. SPT International, ScinoPharm Shanghai China Import, export and sales of USD Ltd. Biochemical active pharmaceutical Technology, Ltd. ingredients and intermediates, etc.	Original invest	Original invest	Ending balance of prioryear(Note1) 922,419 $ - 3,541 225,980 3,724 25,000 - ments		Holding status	Bookvalue Currency Amount 1,239,905 $ TWD 91,485) ($ 5 TWD 5 2,405 TWD 118) ( 149,555 TWD 19,898) ( 14,405 USD 3,583 30,829 USD 6,559) ( 618 USD 112) ( Net income (loss) oftheinvestee	Net in ofth	come (loss) einvestee	Income (loss) recognized by the Company	Note
	Ending balance of the current year 1,328,662 $ - 3,541 225,980 3,724 38,000 720	Currency TWD TWD TWD TWD USD USD USD		Shares	Percentage ofownership Currency 100.00 TWD 100.00 TWD 60.00 TWD 17.02 TWD 100.00 USD 100.00 USD 100.00 USD			Amount	Currency Amount (Note2) TWD 88,667) ($ TWD 5 TWD 71) ( TWD 4,434) ( USD - USD - USD -
				43,544,644 2 101,700 28,800,000 - - -						Subsidiary Subsidiary Subsidiary (Note 3) Subsidiary of subsidiary Subsidiary of subsidiary Subsidiary of subsidiary

(Note 1) Ending balance as of December 31, 2011.

(Note 2) According to the related regulations, it is only required to disclose income (loss) of subsidiary recognized by the Company.

(Note 3)Reclassified as financial assets carried at cost in January, 2012.

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(3)Disclosure of information on indirect investments in Mainland China

Related information on investee companies for the year ended December 31, 2012 (Units in thousands of currencies indicated)

(A) The basic information of investments in Mainland China as of December 31, 2012 are as follows:

Name of investee Investment Beginning investment Ending investment in Mainland China Main Business Capital method balancefrom Taiwan Remited Received balancefrom Taiwan ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. Research, development and manufacture of API and new drug, etc. $ 116,160 (Note 1) $ 108,145 - - $ 108,145 ScinoPharm (Changshu) Pharmaceuticals, Ltd. 〞 1,103,520 (Note 1) 726,000 377,520 - 1,103,520 ScinoPharm Shanghai Biochemical Technology, Ltd. Import, export and sales of Active Pharmaceutical Ingredients and intermediates, etc. 20,909 (Note 1) - 20,909 - 20,909 InvestmentAmount The ceiling amount of investment in Mainland China (Units in thousands of New Taiwan Dollars or currencies indicated) Accumulated investment balance from Name ofCompany Taiwan to MainlandChina Amount approved byMOEA ScinoPharm Taiwan, Ltd. 1,277,486 $ 1,496,686 $	Capital	Investment method	Beginning investment balancefrom Taiwan	InvestmentAmount	InvestmentAmount	Ending investment balancefrom Taiwan		Percentage of ownership held by the Company (direct or indirect)	Investment gain (loss) (Note2)	Investment balance as of Accumulated remittance December31,2012	Note
				Remited	Received
								100.00 $104,050 $ 418,321 $ - 100.00 ( 190,473) 895,274 - 100.00 ( 3,252) 17,947 - Ceilingamount of investment in MainlandChina byMOEA(Note3)			－ － －
								5,457,285 $

(B) The ceiling amount of investment in Mainland China (Units in thousands of New Taiwan Dollars or currencies indicated)

(Note 1) Indirect investment in PRC through existing companies located in the third area.

(Note 2) Recognized based on the respective financial statements of the investee companies which were not audited by independent accountants.

(Note 3) The ceiling amount is set as 60% of the net worth.

(Note 4) Foreign currencies were translated into New Taiwan Dollars at exchange rate of $29.04 (US dollars to NT dollars).

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• (C)Significant transactions with investees in Mainland China, directly, indirectly or through companies located in the third region:

• (a)Purchase amount and percentage of net purchases, the ending balance of the respective accounts payable and percentage:

  • (i)Purchases

Purchases
Third region Company's name	Name of investee in Mainland China ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd.	2012
		Amount 326,510 $ 24,975 351,485 $	Percentage of netpurchases
－ －			21 2
			23

Please refer to Note 5 for the terms of purchases.

(ii)Accounts payable

)Accounts payable
Third region Company's name	Name of investee in Mainland China ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd.	December 31,2012
		Amount 16,338 $ 1,679 18,017 $	％
－ －			12 1
			13

• (b)Sales amount and percentage of net sales, the ending balance of respective accounts receivable and percentage: None.

• (c)Property transaction amount and related gain or loss: None.

• (d)Endorsement, guarantee and security’s ending balance and purpose: None.

• (e)Maximum balance, ending balance, range of interest rates and interest expense for financing transactions: None.

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(f)Other events having significant effects on the operating results and financial condition:

Transaction Third region Name of investee description Company'sname in Mainland China Research & － ScinoPharm development (Changshu) fees Pharmaceuticals, Ltd. ScinoPharm (Kunshan) Biochemical Technology, Co., Ltd. Outsourcing － ScinoPharm severice fees Shanghai Biochemical Technology Ltd. Management － ScinoPharm consultancy (Changshu) revenue Pharmaceuticals, Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. Other receivables － ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd.	2012	2012
	8,304 $ 4,412
	12,716 $
	5,396 $
	17,148 $ 2,349
	19,497 $
	December 31,2012
	Amount 8,090 $ 924 9,014 $	％
		65 7
		72

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Transaction description Accrued expense	Third region Company's name －	Name of investee in Mainland China ScinoPharm Shanghai Biochemical Technology, Ltd.	December 31,2012	December 31,2012
			Amount 1,452 $	％
				-

12.SEGMENT INFORMATION

In accordance with SFAS No. 41, “Operating Segments”, the Company has disclosed the operating segments information in the consolidated financial statements.

13.DISCLOSURES RELATING TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)

In accordance with the Rule No. 0990004943 issued by the Financial Supervisory Commission (FSC) on February 2, 2010, the Company has provided the required disclosures relating to the adoption of IFRSs in the consolidated financial statements.

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