SPT — Audit Report / Information 2019

Nov 12, 2019

SCINOPHARM TAIWAN, LTD.

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS DECEMBER 31, 2019 AND 2018

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REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

Opinion

We have audited the accompanying parent company only balance sheets of ScinoPharm Taiwan, Ltd. (the “Company”) as at December 31, 2019 and 2018, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018, and its financial performance and cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company’s parent company only financial statements of 2019. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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The key audit matters for the parent company only financial statements of the current period are stated as follows:

Cutoff of export revenue

Description

Refer to Note 4(28) to the parent company only financial statements for accounting policy on revenue recognition and Note 6(18) to the parent company only financial statements for accounting items on revenue.

The Company’s sales revenue mainly arises from the manufacture and sales of Active Pharmaceutical Ingredient (“API”), which primarily consists of export sales. The Company recognises export sales revenue based on the terms and conditions of transactions which vary with different customers. As revenue recognition involves manual processes and is material to the financial statements, we consider the cutoff of export revenue a key audit matter.

How our audit addressed the matter

We performed the following key audit procedures in respect of the above key audit matter:

1. Understood and assessed the effectiveness of internal controls over cutoff of sales revenue and tested the effectiveness of internal controls over shipping and billing.

2. Checked the completeness of the export sales details for a certain period around balance sheet date and performed cutoff tests on a random basis, which included checking the terms and conditions of transactions, verifying against supporting documents, and checking whether inventory movements and costs of sales were recognised in the appropriate period.

Inventory valuation

Description

Refer to Note 4(11) for accounting policies on inventory valuation, Note 5(2)1 for the uncertainty of accounting estimates and assumptions applied in inventory valuation, and Note 6(4) for details of inventories. As of December 31, 2019, the balances of inventory and allowance for inventory valuation

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losses were $1,489,137 thousand and $388,442 thousand, respectively.

The Company is primarily engaged in the manufacture and sales of API. As the manufacturing process is relatively complicated and time consuming, materials require longer lead time, the waiting period for product registration is long, and the timing of the product launch may be deferred, there is higher risk of incurring loss on inventory valuation. For inventories sold under normal terms, the Company measures inventories at the lower of cost and net realisable value. For inventories aging over a certain period of time and are individually identified as obsolete inventories, the net realisable value is calculated based on the historical information of inventory turnover. Since the calculation of net realisable value involves subjective judgement and the ending balance of inventory is material to the financial statements, we consider the valuation of inventory a key audit matter.

How our audit addressed the matter

We performed the following key audit procedures in respect of the above key audit matter:

1. Evaluated the reasonableness of provision policies and procedures on allowance for inventory valuation losses, including the historical data of inventory turnover and judgement of obsolete inventory.

2. Verified whether the dates used in the inventory aging reports that the Company applied to value inventories were accurate. Recalculated and evaluated the reasonableness of allowance for inventory valuation losses in order to confirm whether the reported information was in line with the Company’s policies.

3. Selected samples from inventory items by each sequence number to verify its realisable value and to evaluate the reasonableness of allowance for inventory valuation loss.

Responsibilities of management and those charged with governance for the parent

company only financial statements

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

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whether due to fraud or error.

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

Those charged with governance, including audit committee, are responsible for overseeing the Company’s financial reporting process.

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

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

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

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, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

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

2. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

3. 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 achieves fair presentation.

4. Obtain sufficient appropriate audit evidence regarding the financial information of the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

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

Lin, Yung-Chih

Independent Accountants

Liu, Tzu-Meng

PricewaterhouseCoopers, Taiwan Republic of China March 20, 2020

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

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

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SCINOPHARM TAIWAN, LTD. PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2019 Notes AMOUNT % $ 3,020,410 26 6(2) 2,920 - 6(3) and 12 562,856 5 10,118 - 7 5,697 - 6(24) 8,969 - 5(2) and 6(4) 1,100,695 10 107,502 1 4,819,167 42 6(5) 415,210 4 6(6) 1,763,209 16 6(7)(9) 3,192,172 28 3(1) and 6(8) 602,221 5 9,458 - 5(2) and 6(24) 504,946 4 80,441 1 5,244 - 8 29,270 - 6,602,171 58 $ 11,421,338 100 (Continued)	December 31, 2018	December 31, 2018
		AMOUNT $ 4,075,456 409 550,740 15,657 5,625 - 1,243,588 80,273 5,971,748 468,117 745,548 3,387,960 - 8,402 470,322 92,552 903 29,270 5,203,074 $ 11,174,822	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1170 Accounts receivable, net 1200 Other receivables 1210 Other receivables - related parties 1220 Current income tax assets 130X Inventories 1410 Prepayments 11XX Total current assets Non-current assets 1517 Financial assets at fair value through other comprehensive income - non-current 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1920 Guarantee deposits paid 1980 Other financial assets - non-current 15XX Total non-current assets 1XXX Total assets			36 - 5 - - - 11 1
			53
			4 7 31 - - 4 1 - -
			47
			100

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SCINOPHARM TAIWAN, LTD. PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December 31, 2019 Notes AMOUNT % 6(10) $ - - 6(18) 46,789 - 1,353 - 93,643 1 7 45,517 - 6(11) 285,292 3 6(24) - - 3(1) 16,014 - 488,608 4 6(24) 584 - 3(1) 590,020 5 6(12) 82,182 1 - - 672,786 6 1,161,394 10 6(13) 7,907,392 69 6(12)(13)(14)(15) 1,294,605 12 6(5)(16) 612,600 6 22,829 - 490,344 4 6(6)(17) ( 67,826) ( 1) 10,259,944 90 7 and 9 11 $ 11,421,338 100	December 31, 2018	December 31, 2018
		AMOUNT $ 61,694 22,541 1,148 73,739 39,307 293,946 64,853 - 557,228 81 - 76,863 1,618 78,562 635,790 7,907,392 1,292,555 568,302 22,829 708,338 39,616 10,539,032 $ 11,174,822	%
Current liabilities 2100 Short-term borrowings 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2280 Lease liabilities - current 21XX Total current liabilities Non-current liabilities 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2640 Net defined benefit liabilities 2645 Guarantee deposits received 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Share capital - common stock 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity			- - - 1 - 3 1 -
			5
			- - 1 -
			1
			6
			71 11 5 - 6 1
			94
			100

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

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SCINOPHARM TAIWAN, LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

Items

Year ended December 31 2019 2018 Notes AMOUNT % AMOUNT % 6(18) $ 2,813,047 100 $ 3,470,109 100 6(4)(12)(22)(23), 7 and 9 ( 1,677,387) ( 59) ( 1,808,470) ( 52) 1,135,660 41 1,661,639 48 6(12)(22)(23), 7, 9 and 12 ( 160,552) ( 6) ( 151,924) ( 4) ( 446,039) ( 16) ( 449,576) ( 13) ( 206,570) ( 7) ( 295,064) ( 9) ( 202) - 95 - ( 813,363) ( 29) ( 896,469) ( 26) 322,297 12 765,170 22 6(19) and 7 94,836 3 48,546 2 6(2)(9)(20) and 12( 44,362) ( 2) ( 35,377) ( 1) 6(21) ( 8,532) - ( 4,456) - 6(6) ( 117,725) ( 4) ( 306,232) ( 9) ( 75,783) ( 3) ( 297,519) ( 8) 246,514 9 467,651 14 6(24) ( 29,858) ( 1) ( 24,673) ( 1) $ 216,656 8 $ 442,978 13 6(12) ($ 5,936) - ($ 8,328) - 6(5)(17) ( 48,718) ( 2) ( 67,722) ( 2) 6(24) 1,187 - 1,763 - 6(6)(17) ( 56,865) ( 2) ( 21,487) ( 1) ($ 110,332) ( 4) ($ 95,774) ( 3) $ 106,324 4 $ 347,204 10 6(25) $ 0.27 $ 0.56 $ 0.27 $ 0.56

4000 Operating revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Gain on reversal of (expected credit losses) 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of loss of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income (loss) Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Actuarial losses on defined benefit plans 8316 Unrealised losses from equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive loss that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8300 Total other comprehensive loss for the year 8500 Total comprehensive income for the year Earnings per share (in dollars) 9750 Basic 9850 Diluted

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

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SCINOPHARM TAIWAN, LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

For the year ended December 31, 2018 Balance at January 1, 2018 Effect on retrospective application and restatement Balance after restatement on January 1, 2018 Net income for the year ended December 31, 2018 Other comprehensive loss for the year ended December 31, 2018 Total comprehensive income (loss) for the year ended December 31, 2018 Distribution of 2017 net income: Legal reserve Cash dividends Employee stock option compensation cost Disposal of equity instruments at fair value through other comprehensive income Balance at December 31, 2018 For the year ended December 31, 2019 Balance at January 1, 2019 Net income for the year ended December 31, 2019 Other comprehensive loss for the year ended December 31, 2019 Total comprehensive income (loss) for the year ended December 31, 2019 Distribution of 2018 net income: Legal reserve Cash dividends Employee stock option compensation cost Disposal of equity instruments at fair value through other comprehensive income Balance at December 31, 2019	Notes		Share capital - common stock		Capital reserve				Retained Earnings				Other EquityInterest	Other EquityInterest	Other EquityInterest		Total equity
							Legal reserve		Special reserve		Unappropriated earnings		Financial statements translation differences of foreign operations		Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income
	6(17) 6(5)(17) 6(16) 6(14)(15) 6(5)(17) 6(5)(17) 6(16) 6(14)(15) 6(5)(17)		$ 7,907,392 - 7,907,392 - - - - - - - $ 7,907,392 $ 7,907,392 - - - - - - - $ 7,907,392		$ 1,286,872 - 1,286,872 - - - - - 5,683 - $ 1,292,555 $ 1,292,555 - - - - - 2,050 - $ 1,294,605		$ 526,065 - 526,065 - - - 42,237 - - - $ 568,302 $ 568,302 - - - 44,298 - - - $ 612,600		$ 22,829 - 22,829 - - - - - - - $ 22,829 $ 22,829 - - - - - - - $ 22,829		$ 693,832 - 693,832 442,978 ( 6,565 ) 436,413 ( 42,237 ) ( 379,555 ) - ( 115 ) $ 708,338 $ 708,338 216,656 ( 4,749 ) 211,907 ( 44,298 ) ( 387,462 ) - 1,859 $ 490,344		($ 19,765 ) - ( 19,765 ) - ( 21,487 ) ( 21,487 ) - - - - ($ 41,252 ) ($ 41,252 ) - ( 56,865 ) ( 56,865 ) - - - - ($ 98,117 )		$ - 148,475 148,475 - ( 67,722 ) ( 67,722 ) - - - 115 $ 80,868 $ 80,868 - ( 48,718 ) ( 48,718 ) - - - ( 1,859 ) $ 30,291		$ 10,417,225 148,475 10,565,700 442,978 ( 95,774 ) 347,204 - ( 379,555 ) 5,683 - $ 10,539,032 $ 10,539,032 216,656 ( 110,332 ) 106,324 - ( 387,462 ) 2,050 - $ 10,259,944

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

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SCINOPHARM TAIWAN, LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Gain on valuation of financial assets and liabilities (Gain on reversal of) expected credit losses Reversal of allowance for loss on inventory market price decline Provision for obsolescence of supplies Share of loss of subsidiaries, associates and joint ventures accounted for under equity method Depreciation of property, plant and equipment Depreciation of right-of-use assets Property, plant and equipment transferred to loss Gain on disposal of property, plant and equipment (Gain on reversal of) impairment loss Amortisation Prepayments for equipment transferred to loss Employee stock option compensation cost Interest income Interest expense Changes in operating assets and liabilities Changes in operating assets Accounts receivable Other receivables Other receivables - related parties Inventories Prepayments Changes in operating liabilities Contract liabilities - current Notes payable Accounts payable Accounts payable - related parties Other payables Net defined benefit liabilities - non-current Cash inflow generated from operations Interest received Interest paid Income tax paid Net cash flows from operating activities

For the years endedDecember 31, Notes 2019 2018 $ 246,514 $ 467,651 ( 2,511 ) ( 409 ) 12(2) 202 ( 95 ) 6(4) ( 2,590 ) ( 40,832 ) 5,972 7,183 6(6) 117,725 306,232 6(7)(22) 272,707 284,363 6(8)(22) 15,148 - 6(7) 22,726 14,349 6(20) - ( 78 ) 6(7)(9)(20) 707 ( 2,322 ) 6(22) 7,693 5,238 1,967 - 6(14)(15) 2,050 5,683 6(19) ( 28,541 ) ( 20,677 ) 6(21) 8,532 4,456 ( 12,318 ) 16,477 5,481 ( 3,937 ) ( 72 ) ( 3,028 ) 145,483 297,825 ( 33,201 ) 11,988 24,248 ( 825 ) 205 ( 13 ) 19,904 ( 204 ) 6,210 ( 14,621 ) ( 16,561 ) 12,918 ( 617 ) ( 777 ) 807,063 1,346,545 28,599 21,398 ( 9,410 ) ( 3,578 ) ( 136,614 ) ( 123,172 ) 689,638 1,241,193

(Continued)

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SCINOPHARM TAIWAN, LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for under the equity method - subsidiary Cash paid for acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in prepayments for equipment (Increase) decrease in guarantee deposits paid Increase in other financial assets - non-current Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Repayment of the principal portion of lease liabilities Decrease in guarantee deposits received Payment of cash dividends Net cash flows used in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

For the years endedDecember 31, Notes 2019 2018 6(5) $ 4,189 $ 3,733 6(6) ( 1,192,251 ) ( 409,150 ) 6(26) ( 15,925 ) ( 50,033 ) - 78 ( 2,249 ) ( 2,888 ) ( 71,998 ) ( 65,325 ) ( 4,341 ) 326 - ( 439 ) ( 1,282,575 ) ( 523,698 ) 6(27) ( 61,694 ) 61,694 6(27) ( 11,335 ) - 6(27) ( 1,618 ) ( 2 ) 6(16) ( 387,462 ) ( 379,555 ) ( 462,109 ) ( 317,863 ) ( 1,055,046 ) 399,632 6(1) 4,075,456 3,675,824 6(1) $ 3,020,410 $ 4,075,456

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

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SCINOPHARM TAIWAN, LTD.

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

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

1. HISTORY AND ORGANISATION

• (1) ScinoPharm Taiwan, Ltd. (the Company) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.) on November 11, 1997. The Company is primarily engaged in the manufacture of western medicines and other chemical materials, biological technology services, intellectual property rights, international trade and research, development and manufacture of Active Pharmaceutical Ingredients (API), albumin medicines, oligonucleotide medicines, peptide medicines, injections and new small molecule drugs, as well as the provision of related consulting and technical services.

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

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

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE PARENT COMPANY ONLY

• FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These parent company only financial statements were authorised for issuance by the Board of Directors on March 20, 2020.

1. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

2. (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

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

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Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment: IFRS 16, ‘Leases’

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

• B. The Company has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations (collectively referred herein as the “IFRSs”) effective in 2019 as endorsed by the FSC. Accordingly, the Company both increased ‘right-of-use asset’ and ‘lease liability’ by $900,288 with respect to the lease contracts of lessees as of January 1, 2019.

• C. The Company has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:

• i. The use of a single discount rate to a portfolio of leases with reasonably similar characteristics. ii. The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

• iii.The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

• D. The Company calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate of 1.13%.

• E. The Company recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

follows:	follows:
Operating lease commitments disclosed by applying IAS 17 as at December 31, 2018 455,868 $ Add: Adjustments as a result of a different treatment of extension 726,960 Less: Short-term leases 2,397) ( Low-value assets 1,576) ( Total lease contracts amount recognised as lease liabilities by applying IFRS 16 on January 1, 2019 1,178,855 $
Incremental borrowing interest rate at the date of initial application	1.13%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16	900,288 $

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

the Company

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

==> picture [469 x 31] intentionally omitted <==

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Effective date by
New Standards, Interpretations and Amendments IASB
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New Standards, Interpretations and Amendments	Effective date by IASB
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition	January 1, 2020
of Material’
Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark	January 1, 2020
reform’

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

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

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

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments 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 IAS 1, ‘Classification of liabilities as current or non- current’	Effective date by IASB
	To be determined by International Accounting Standards Board January 1, 2021 January 1, 2022

The above standards and interpretations have no significant impact to the Company’s financial

condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

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  - (b) Financial assets at fair value through other comprehensive income.

  - (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

• (3) Foreign currency translation

• Items included in the parent company only financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the “functional currency”). The parent company only financial statements are presented in NTD, which is the Company’s functional and presentation currency.

• A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon retranslation at the balance sheet date are recognised in profit or loss.

• C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are retranslated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• D. All foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within “other gains and losses”.

• (4) Classification of current and non-current items

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

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

  • (b) Assets held mainly for trading purposes;

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  - (c) Assets that are expected to be realised within twelve months from the balance sheet date;

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

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

  • (a) Liabilities that are expected to be paid off within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be paid off within twelve months from the balance sheet date;

  • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

• (5) Cash equivalents

• A. Cash equivalents refer to short-term highly liquid investments that are readily convertible to known amount of cash and subject to an insignificant risk of changes in value.

• B. Time deposits and bills under repurchase agreements that meet the above criteria and are held for the purpose of meeting short-term cash commitment in operations are classified as cash equivalents.

• (6) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

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

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

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• C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value. The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• (8) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (9) Impairment of financial assets

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

• (10) Derecognition of financial assets

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

• (11) Inventories

The standard cost method is applied, and cost is determined using the weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses. When the cost of inventories exceeds the net realisable value the amount of any write-down of inventories is recognised as cost of sales during the period; and the amaunt of any reversal of inventory write-down is recognised as a reduction in the cost of sales during the period.

• (12) Investments accounted for under the equity method - subsidiaries

• A. A subsidiary is an entity where the Company has the right to dominate its finance and operating policies (including special purpose entities), normally the Company owns more than 50% of the voting rights directly or indirectly in that entity. Subsidiaries are accounted for under the equity method in the Company's non-consolidated financial statements.

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• B. Unrealised gains or losses resulting from inter-company transactions with subsidiaries are eliminated. To meet the consistency of accounting policies of the Company, necessary adjustments are made to the accounting policies of the subsidiaries.

• C. After acquisition of subsidiaries, the Company recognises proportionately the share of profit and loss and other comprehensive income in the income statement as part of the Company’s profit and loss and other comprehensive income, respectively. When the share of loss from a subsidiary exceeds the carrying amount of Company’s interest in that subsidiary, the Company continues to recognise its share in the subsidiary's loss proportionately.

• D. According to “Regulations Governing the Preparation of Financial Statements by Securities Issuers”, ‘profit for the year’ and ‘other comprehensive income for the year’ reported in an entity's parent company only statement of comprehensive income, shall equal to ‘profit for the year’ and ‘other comprehensive income’ attributable to owners of the parent reported in that entity’s consolidated statement of comprehensive income. Total equity reported in an entity’s parent company only financial statements, shall equal to equity attributable to owners of parent reported in that entity’s consolidated financial statements.

• (13) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If each component of property, plant and equipment is significant, it is depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

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Assets Estimated useful lives
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Assets	Est	imate	d use	ful lives
Buildings and structures	2	～	35	years
Machinery and equipment	2	～	12	years
Transportation equipment	2	～	5	years
Office equipment	2	～	9	years
Other equipment	2	～	19	years

(14) Intangible assets

Professional skills and computer software, etc. are stated at cost and amortized on a straight-line basis over its estimated useful life of 3 ~ 5 years.

• (15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities (Effective 2019)

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are fixed payments less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost of under the amount of the initial measurement of lease liability. The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

• (16) Operating leases (lessee) (Prior to 2019)

• Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

• (17) Impairment of non-financial assets

• The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss. The increased carrying amount due to reversal should not exceed the depreciated or amortized historical cost if the impairment had not been recognised.

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(18) Borrowings

Borrowings comprise short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(19) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Financial guarantee contracts

• A financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. At initial recognition, the Company measures financial guarantee contracts at fair value and subsequently at the higher of amount of provisions determined by the expected credit losses and the cumulative gains that were previously recognised.

• (21) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract is discharged, cancelled or expires.

• (22) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

• (23) 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 expense in that period when the employees render service.

• B. Pensions

• (a) Defined contribution plan

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

• (b) Defined benefit plan

i.Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet

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in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations. .

     - ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise, and recorded as retained earnings.

• C. Employees’ compensation and directors’ remuneration

  • Employees’ compensation and directors’ remuneration are recognised as expenses and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employees’ compensation is distributed by shares, the Company calculates the number of shares based on the closing market price at the previous day of the board meeting resolution.

• (24) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and nonmarket vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

• (25) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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• 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 statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income 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 income 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 income tax asset is realised or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

• (26) Share capital

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

• (27) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

• (28) Revenue recognition

• A. Sales of goods

  • (a) The Company manufactures and sells API, intermediates, etc. Sales are recognised when control of the products has transferred, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

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• (b) Revenue is recognised based on the price specified in the contract, net of the sales returns and discounts. Accumulated experience is used to estimate and provide for the sales returns and discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Company does not adjust the transaction price to reflect the time value of money.

• (c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• B. Sales of services

• (a) The Company provides technology development and consultation services. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the service rendered up to the end of the reporting period as a proportion of the total services to be provided. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

• (b) The Company’s estimate about revenue, costs and progress towards complete satisfaction of a performance obligation is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management becomes aware of the changes in circumstances.

• C. Incremental costs of obtaining a contract

• Given that the contractual period lasts less than one year, the Company recognises the incremental costs (mainly comprised of sales commissions) of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

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

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

(1) Critical judgments in applying the Company’s accounting policies

None.

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(2) Critical accounting estimates and assumptions

• A. Evaluation of inventories

• (a) As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgments and estimates. As the manufacturing process is long and complex, causing longer materials lead time, the waiting period for product registration is long, and the timing of customers’ product launch may be deferred, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

• (b) As of December 31, 2019, the carrying amount of inventories was $1,100,695.

• B. Realisability of deferred tax assets

• (a) Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred tax assets involves critical accounting judgments and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, and laws and regulations might cause material adjustments to deferred income tax assets.

• (b) As of December 31, 2019, the Company recognised deferred income tax assets amounting to $504,946.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

$504,946. TAILS OF SIGNIFICANT ACCOUNTS CASH AND CASH EQUIVALENTS
Cash: Cash on hand Cash equivalents: Time deposits Checking accounts and demand deposits Bill under repurchase agreements	December31,2019 30 $ 130,132 130,162 2,620,500 269,748 2,890,248 3,020,410 $	December31,2018
		30 $ 161,949
		161,979
		3,633,833 279,644
		3,913,477
		4,075,456 $

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

• B. Details of the Company’s time deposits pledged to others as collateral (listed as ‘Other financial assets - non-current’) as of December 31, 2019 and 2018 are provided in Note 8.

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(2) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

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Items December 31, 2019 December 31, 2018
Current items:
Financial assets mandatorily measured at fair value
through profit or loss
Derivatives $ 2,920 $ 409
Non-current items:
Financial assets mandatorily measured at fair value
through profit or loss
Unlisted stocks $ 4,620 $ 4,620
Valuation adjustment ( 4,620) ( 4,620)
- -
$ $
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• A. The Company recognised net loss of $2,552 and $18,000 on financial assets at fair value through profit or loss (listed as “ Other gains and losses”) for the years ended December 31, 2019 and 2018, respectively.

• B. The Company entered into contracts relating to derivative financial liabilities which were not accounted for under hedge accounting. The information is listed below (Units in thousands of currencies indicated):

Items Forward foreign exchange contracts Items Forward foreign exchange contracts		December 31, 2019
		Contract amount Contract period USD 13,553 10.2019~3.2020 December31,2018
		Contract amount Contract period USD 8,870 11.2018~2.2019

The Company entered into forward foreign contracts to hedge exchange rate risk of operating activities. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

• C. The Company has no financial assets at fair value through profit or loss pledged to others as of December 31, 2019 and 2018.

(3) ACCOUNTS RECEIVABLE, NET

December 31, 2019 and 2018. ACCOUNTS RECEIVABLE, NET
		December	31,2019		December	31,2018
Accounts receivable		$	563,092		$	550,774
Less: Loss allowance	(		236)	(		34)
		$	562,856		$	550,740

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

Not past due Less than 30 days Between 31 to 90 days	December31,2019 December 31, 2018 441,811 $ 516,006 $ 73,342 34,197 47,939 571 563,092 $ 550,774 $

The above ageing analysis is based on past due date.

• B. As of December 31, 2019 and 2018, accounts receivable arose from contracts with customers. As of January 1, 2018, the balance of receivables from contracts with customers amounted to $567,251.

• C. As of December 31, 2019 and 2018, the Company does not hold any collateral as security.

• D. As of December 31, 2019 and 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s accounts receivable is the book value.

• E. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(4) INVENTORIES

INVENTORIES
Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods	Allowance for Cost marketprice decline 325,013 $ 49,694) ($ 24,771 2,152) ( 313,720 59,425) ( 825,633 277,171) ( 1,489,137 $ 388,442) ($ December31,2019 December31,2018	Bookvalue
		275,319 $ 22,619 254,295 548,462
		1,100,695 $
	Allowance for Cost market price decline 251,213 $ 51,813) ($ 35,767 2,731) ( 595,189 101,051) ( 752,451 235,437) ( 1,634,620 $ 391,032) ($	Bookvalue
		199,400 $ 33,036 494,138 517,014
		1,243,588 $

The Company recognised expense and loss of inventories for the year:

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			Forthe years ended	Forthe years ended	Forthe years ended	December31,
			2019			2018
Cost of goods sold		$	1,426,493		$	1,694,254
Loss on inventory scrap			19,529			2,337
Loss on physical inventory			3,170			3,902
Under applied manufacturing overhead			195,925			111,222
Reversal of allowance for inventory
market price decline (Note)	(		2,590)	(		40,832)
Revenue from sale of sraps	(		8,472)			-
Total cost of goods sold		$	1,634,055		$	1,770,883

Note: The Company reversed a previous inventory write-down which was accounted for as reduction of cost of goods sold because certain inventory which were previously provided with allowance were again utilised in production.

(5) FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME-

NON-CURRENT

NON-CURRENT
Items Equity instruments Listed stocks Unlisted stocks Valuation adjustment	December31,2019 217,246 $ 167,673 384,919 30,291 415,210 $	December31,2018
		219,576 $ 167,673
		387,249 80,868
		468,117 $

• A. The Company has elected to classify investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments is the book value as at December 31, 2019 and 2018.

• B. As the change in investment strategies and the underlying share price of investment target is higher than the underwriting price of the over-allotment, the over-allotment shares was fully refunded. The Company sold $4,189 and $3,733 of equity instruments at fair value and resulted in cumulative gain (loss) on disposal of $1,859 and ($115) which was reclassified to retained earnings during the years ended December 31, 2019 and 2018, respectively.

• C. Amounts recognised in other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other		For theyears ended	For theyears ended	December31,
comprehensiveincome		2019		2018
Fair value change recognised in other
comprehensive income	($	48,718)	($	67,722)
Cumulative (gains) losses reclassified to
retained earnings due to derecognition	($	1,859)	$	115

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• D. The Company has no financial assets at fair value through other comprehensive income pledged to others as of December 31, 2019 and 2018.

(6) INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

			Forthe years ended	Forthe years ended	Forthe years ended	December31,
			2019			2018
At January 1		$	745,548		$	664,118
Addition of investments accounted
for using equity method			1,192,251			409,149
Share of profit or loss of investments
accounted for using equity method	(		117,725)	(		306,232)
Changes in other equity items
(Note 6(17))	(		56,865)	(		21,487)
At December 31		$	1,763,209		$	745,548
			December 31, 2019			December31,2018
Subsidiaries:
SPT International, Ltd.		$	1,763,097		$	745,452
ScinoPharm Singapore Pte Ltd.			112			96
		$	1,763,209		$	745,548

• A. For information relating to the Company’s subsidiaries, please refer to Note 4(3), “Basis of consolidation” of the Company and its subsidiaries’ consolidated financial statements for the year ended December 31, 2019.

• B. The share of loss of subsidiaries, associates and joint ventures accounted for under the equity method amounted to ($117,725) and ($306,232) for the years ended December 31, 2019 and 2018, respectively.

• C. As of December 31, 2019 and 2018, the Company does not hold any investment accounted for under the equity method as collateral.

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(7) PROPERTY, PLANT AND EQUIPMENT

														Construction in
														progress and
				Machinery and		Transportation			Office		Other			equipment before
January 1, 2019		Buildings			equipment		equipment		equipment		equipment		acceptance inspection			Total
Cost	$	2,509,751	$		4,496,132	$	18,851	$	161,378	$	3,956	$		1,056,179	$	8,246,247
Accumulated depreciation	(	971,249)	(		3,721,669)	(	17,358)	(	137,439)	(	1,995)			-	(	4,849,710)
Accumulated impairment		-	(		8,577)		-		-		-			-	(	8,577)
	$	1,538,502	$		765,886	$	1,493	$	23,939	$	1,961	$		1,056,179	$	3,387,960
For the year ended December 31, 2019
At January 1	$	1,538,502	$		765,886	$	1,493	$	23,939	$	1,961	$		1,056,179	$	3,387,960
Additions		-			3,029		-		-		-			21,681		24,710
Reclassified from prepayments for equipment		-			-		-		-		-			82,142		82,142
Reclassified upon completion		7,990			87,598		-		21,962		-	(		117,550)		-
Transferred to intangible assets		-			-		-		-		-	(		6,500)	(	6,500)
Transfered to loss (Note)		-			-		-		-		-	(		22,726)	(	22,726)
Depreciation charge	(	106,779)	(		152,577)	(	1,065)	(	12,112)	(	174)			-	(	272,707)
Disposals－Cost		-	(		44,398)		-	(	12,293)		-			-	(	56,691)
' －Accumulated depreciation		-			44,398		-		12,293		-			-		56,691
Impairment loss		-	(		707)		-		-		-			-	(	707)
At December 31	$	1,439,713	$		703,229	$	428	$	33,789	$	1,787	$		1,013,226	$	3,192,172
December 31, 2019
Cost	$	2,517,741	$		4,542,361	$	18,851	$	171,047	$	3,956	$		1,013,226	$	8,267,182
Accumulated depreciation	(	1,078,028)	(		3,829,848)	(	18,423)	(	137,258)	(	2,169)			-	(	5,065,726)
Accumulated impairment		-	(		9,284)		-		-		-			-	(	9,284)
	$	1,439,713	$		703,229	$	428	$	33,789	$	1,787	$		1,013,226	$	3,192,172

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														Construction in
														progress and
				Machinery and		Transportation			Office		Other			equipment before
January 1, 2018		Buildings			equipment		equipment		equipment		equipment		acceptance inspection			Total
Cost	$	2,502,973	$		4,449,039	$	19,177	$	155,359	$	3,956	$		1,059,214	$	8,189,718
Accumulated depreciation	(	863,970)	(		3,563,217)	(	16,728)	(	123,526)	(	1,789)			-	(	4,569,230)
Accumulated impairment		-	(		10,899)		-		-		-			-	(	10,899)
	$	1,639,003	$		874,923	$	2,449	$	31,833	$	2,167	$		1,059,214	$	3,609,589
For the year ended December 31, 2018
At January 1	$	1,639,003	$		874,923	$	2,449	$	31,833	$	2,167	$		1,059,214	$	3,609,589
Additions		-			6,287		-		-		-			29,889		36,176
Reclassified from prepayments
for equipment		-			-		-		-		-			38,585		38,585
Reclassified upon completion		6,778			43,357		733		6,292		-	(		57,160)		-
Transfered to loss (Note)		-			-		-		-		-	(		14,349)	(	14,349)
Depreciation charge	(	107,279)	(		161,003)	(	1,689)	(	14,186)	(	206)			-	(	284,363)
Disposals－Cost		-	(		2,551)	(	1,059)	(	273)		-			-	(	3,883)
' －Accumulated depreciation		-			2,551		1,059		273		-			-		3,883
Reversal of impairment loss		-			2,322		-		-		-			-		2,322
At December 31	$	1,538,502	$		765,886	$	1,493	$	23,939	$	1,961	$		1,056,179	$	3,387,960
December 31, 2018
Cost	$	2,509,751	$		4,496,132	$	18,851	$	161,378	$	3,956	$		1,056,179	$	8,246,247
Accumulated depreciation	(	971,249)	(		3,721,669)	(	17,358)	(	137,439)	(	1,995)			-	(	4,849,710)
Accumulated impairment		-	(		8,577)		-		-		-			-	(	8,577)
	$	1,538,502	$		765,886	$	1,493	$	23,939	$	1,961	$		1,056,179	$	3,387,960

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• Note ： The Company did not accept the customized equipment ordered from the vendor as its format and efficiency did not meet expectations. In April 2019, both parties reached a consensus. The vendor refunded and terminated the purchase of equipment and the Company transfered the balance of the related construction in progress and equipment before acceptance inspection to loss.

• A. The Company has not capitalised any interest for the years ended December 31, 2019 and 2018.

• B. The Company’s property, plant and equipment were owner-occupied for the years ended December 31, 2019 and 2018.

• C. Information about reversal of impairment loss and impairment loss on property, plant and equipment is provided in Note 6(9).

• D. As of December 31, 2019 and 2018, no property, plant and equipment were pledged to others as collateral.

• －

• (8) Leasing arrangements lessee (Effective 2019)

• A. The Company leases land. Rental contracts are typically made for periods of 50 years (including option to extend the leases). Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. Short-term leases with a lease term of 12 months or less pertain to office premises and low-value assets pertain to computers.

• C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

C.	assets pertain to computers. The carrying amount of right-of-use assets and the depreciation charge are as follows:	assets pertain to computers. The carrying amount of right-of-use assets and the depreciation charge are as follows:
D.	The information on profit and loss accounts relating to lease contracts is as follows: December31,2019 For the year ended December 31, 2019 Carrying amount Depreciationcharge Land 602,221 $ 15,148 $ For the year ended December31,2019 Items affecting profit or loss Interest expense on lease liabilities $ 8,510 Expense on short-term lease contracts 2,487 Expense on leases of low-value assets 877
		$ 8,510 2,487 877

• F. For the year ended December 31, 2019, the Company’s total cash outflow for leases were $23,209.

(9) IMPAIRMENT OF NON-FINANCIAL ASSETS

• A. The Company recognised impairment loss for the years ended December 31, 2019 and 2018 in － －

• the amount of $707 and $ , respectively, and reversed the impairment loss amounting to $ and $2,322 for the years ended December 31, 2019 and 2018, respectively (listed as ‘Other gains and losses’) as some of the idle machineries were again utilised in production. For details of accumulated impairment, please refer to Note 6(7).

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B. The (gain on reversal of) impairment loss reported by operating segments are as follows:

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For the years ended December 31,
2019 2018
Recognised in other Recognised in other
Recognised in comprehensive Recognised in comprehensive
Department profit or loss income profit or loss income
ScinoPharm Taiwan $ 707 $ - ($ 2,322) $ -
----- End of picture text -----

(10) SHORT-TERM BORROWINGS

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Type of borrowings December 31, 2019 Interest rate range Collateral
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Type of borrowings	Decem	ber31,2019	Interest rate range	Collateral
Bank loans
Unsecured loans	$	61,694	3.17%～3.31%	None

• A. December 31, 2019: None.

• B. Please refer to Note 6(21) for interest expense recognised in profit or loss for the years ended December 31, 2019 and 2018.

(11) OTHER PAYABLES

December 31, 2019 and 2018. OTHER PAYABLES
Accrued salaries and bonuses Accrued employees' compensation and directors' remuneration Payables on equipment Others	December31,2019 61,630 $ 28,493 28,117 167,052 285,292 $	December31,2018
		63,026 $ 54,605 19,332 156,983
		293,946 $

(12) PENSIONS

A. The Company has set up a defined benefit pension plan in accordance with the Labor Standards Law, which applies to all regular employees’ service years prior to the enforcement of the Labor Pension Act (the “Act”) on July 1, 2005 and service years thereafter of employees who chose to continue 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. According to the provisions, employees who retired due to their duties shall get additional 20%. 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

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wages to the retirement fund deposited with Bank of Taiwan under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned methods to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by the end of March next year.

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

		December	31,2019		December	31,2018
Present value of defined benefit obligations		$	127,729		$	121,105
Fair value of plan assets	(		45,547)	(		44,242)
Net defined benefit liability		$	82,182		$	76,863

(b) Movements in net defined liabilities are as follows:

			Present value of
For the year ended			defined benefit		Fair value of			Net defined
December 31, 2019			obligations		planassets		benefit liability
At January 1		$	121,105	($	44,242)		$	76,863
Current service cost			1,579		-			1,579
Interest expense (income)			1,211	(	442)			769
			123,895	(	44,684)			79,211
Remeasurements:
Return on plan assets			-	(	1,976)	(		1,976)
Change in financial
assumptions			3,927		-			3,927
Experience adjustments			3,985		-			3,985
			7,912	(	1,976)			5,936
Pension fund contribution			-	(	2,965)	(		2,965)
Paid pension	(		4,078)		4,078			-
At December 31		$	127,729	($	45,547)	$		82,182

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			Present value of
For the year ended			defined benefit		Fair value of		Net defined
December 31, 2018			obligations		planassets	benefitliability
At January 1		$	119,272	($	49,960)	$	69,312
Current service cost			1,425		-		1,425
Interest expense (income)			1,431	(	600)		831
			122,128	(	50,560)		71,568
Remeasurements:
Return on plan assets			-	(	1,417)	(	1,417)
Change in financial
assumptions			2,606		-		2,606
Experience adjustments			7,139		-		7,139
			9,745	(	1,417)		8,328
Pension fund contribution			-	(	3,033)	(	3,033)
Paid pension	(		10,768)		10,768		-
At December 31		$	121,105	($	44,242)	$	76,863

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

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

Discount rate Future salary increases	Forthe years endedDecember31,	Forthe years endedDecember31,
	2019 0.70% 3.00%	2018
		1.00%
		3.00%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience according to Taiwan Life Insurance Industry 5[th] Mortality Table for the years ended December 31, 2019 and 2018.

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

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

Discount rate Future salary increases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2019
Effect on present value of
defined benefit obligation ($ 3,284) $ 3,403 $ 3,000 ($ 2,916)
December 31, 2018
Effect on present value of
defined benefit obligation ($ 3,246) $ 3,367 $ 2,991 ($ 2,905)
----- End of picture text -----

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

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

• (e) Expected contributions to the defined benefit pension plan of the Company for 2020 amounted to $2,890.

• (f) As of December 31, 2019, the weighted average duration of that retirement plan is 11 years. The analysis of timing of the future pension payment was as follows:

The analysis of timing of the future pension payment was as follows:
Within 1 year 2～5 years Over 6 years	3,902 $ 22,017 119,194
	145,113 $

• B. Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The net pension costs recognised under the defined contribution plan were $24,621 and $23,798 for the years ended December 31, 2019 and 2018, respectively.

(13) SHARE CAPITAL

• A. Movements in the number of the Company’s ordinary shares outstanding are as follows (in thousands of shares):

thousands of shares):
At January 1 and December 31	For theyears ended December31,
	2019 790,739	2018
		790,739

• B. As of December 31, 2019, the Company’s authorised capital was $10,000,000 and the paid-in capital was $7,907,392 (790,739 thousand shares) with a par value of $10 (in dollars) per share.

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All proceeds from shares issued have been collected.

(14) CAPITAL RESERVE

• A. Pursuant to the R.O.C. Company Act, 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 capitalised 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.

• B. Movements in the Company’s capital reserve are as follows:

At January 1 Employee stock options compensation cost －Company Employee stock options forfeited －Company －Subsidiaries At December 31 At January 1 Employee stock options compensation cost －Company Employee stock options forfeited －Company －Subsidiaries At December 31	Share premium Stockoptions Total 1,237,787 $ 54,768 $ 1,292,555 $ - 2,050 2,050 7,686 7,686) ( - 209 209) ( - 1,245,682 $ 48,923 $ 1,294,605 $ Forthe yearendedDecember31,2019 For the year ended December 31, 2018	Share premium Stockoptions Total 1,237,787 $ 54,768 $ 1,292,555 $ - 2,050 2,050 7,686 7,686) ( - 209 209) ( - 1,245,682 $ 48,923 $ 1,294,605 $ Forthe yearendedDecember31,2019 For the year ended December 31, 2018
	Share premium Stockoptions 1,235,148 $ 51,724 $ - 5,683 2,249 2,249) ( 390 390) ( 1,237,787 $ 54,768 $	Total
		1,286,872 $ 5,683 - -
		1,292,555 $

(15) SHARE-BASED PAYMENT

A. The Company issued 1 million units, 1.5 million units and 1.5 million units of employee stock options on December 3, 2013, November 6, 2015 and October 14, 2016, respectively (the Grant Date). The exercise prices of the options were set at $91.70 (in dollars), $41.65 dollars (in dollars) and $40.55 (in dollars), respectively, which were based on the closing market price of the Company’s common shares on the Grant Date. Each option was granted the right to purchase one share of the Company’s common stocks. The exercise price is subject to further adjustments when there is change in share numbers of the Company’s common stocks after the Grant Date. As of December 31, 2019, for the issued 1 million units, 1.5 million units and 1.5 million units of

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employee stock options, the exercise price was adjusted based on the specific formula to $74.5 (in dollars) per share, $37.2 (in dollars) per share and $37.7 (in dollars) per share, respectively. Contract period of the employee stock option plans is 10 years, and options are exercisable in 2 years after the Grant Date. The Company recognised compensation cost relating to the employee stock options plan of $2,050 and $5,683 for the years ended December 31, 2019 and 2018, respectively.

• B. Details of the share-based payment arrangement are as follows:

			For theyear ended	December31,2019	December31,2019
				Weighted-average
			Number of options		exercise price
			(unitinthousands )		(indollars)
Options	outstanding at beginning of the year		2,725	$	46.08
Options	forfeited	(	520)		46.89
Options	outstanding at end of the year		2,205		45.05
Options	exercisable at end of the year		1,967		45.93
			Forthe yearended	December31,2018
				Weighted-average
			Number of options		exercise price
			(unitinthousands )		(indollars)
Options	outstanding at beginning of the year		3,075	$	46.53
Options	forfeited	(	350)		44.56
Options	outstanding at end of the year		2,725		46.08
Options	exercisable at end of the year		1,908		54.00

• C. The expiry date and exercise prices of the employee stock options outstanding at balance sheet date is as follows:

Grant date 12.3.2013 11.6.2015 10.14.2016	No. of stocks Exercise price No. of stocks Exercise price Expiry date (unitinthousands) (indollars) (unitinthousands) (indollars) 12.2.2023 451 74.50 $ 572 75.90 $ 11.5.2025 802 37.20 1,037 37.90 10.13.2026 952 37.70 1,116 38.40 December31,2019 December31,2018

• D. The fair value of the Company’s employee stock option on Grant Date was evaluated using the combination of Hull & White and the Ritchken trinomial option valuation model. Related information is as follows:

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Stock Type of price arrangement Grant date (in dollars) Employee 12.3.2013 91.70 $ stock options Employee 11.6.2015 41.65 stock options Employee 10.14.2016 40.55 stock options	Exercise price (in dollars) 91.70 $ 41.65 40.55	Price volatility 28.50% (Note) 37.63% (Note) 37.20% (Note)	Fair value Option Expected Interest per unit life dividends rate (in dollars) 10 years 1.5% 1.7145% 26.045 $ 10 years 1.5% 1.2936% 13.799 10 years 1.5% 0.9223% 13.171

Note: According to daily returns of the Company's stock for the previous year, the annualised volatility is 28.50%, 37.63% and 37.20%, respectively.

(16) RETAINED EARNINGS

• A. Pursuant to the amended R.O.C. Company Act, 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 distribution of the reserve is limited to the portion in excess of 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’ dividends 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.

• C. In accordance with the regulations, the Company shall set aside special reserve for 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. The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

~40~

• D. The Company recognised cash dividends distributed to owners amounting to $387,462 ($0.49 (in dollars) per share) and $379,555 ($0.48 (in dollars) per share) for the years ended December 31, 2019 and 2018, respectively. On March 20, 2020, the Board of Directors proposed for the distribution of cash dividends of $213,500 ($0.27 (in dollars) per share) from 2019 earnings.

(17) OTHER EQUITY ITEMS

OTHER EQUITY ITEMS
		Forthe yearendedDecember31,					2019
			Unrealised gain (loss)
	Currency	translation			onvaluation			Total
At January 1	($	41,252)		$	80,868		$	39,616
Revaluation		-	(		48,718)	(		48,718)
Revaluation transferred to retained		-	(		1,859)	(		1,859)
earnings
Currency translation differences
- Group	(	56,865)			-	(		56,865)
At December 31	($	98,117)		$	30,291	($		67,826)
		For the year ended December 31,					2018
			Unrealised gain (loss)
	Currency	translation			onvaluation			Total
At January 1	($	19,765)		$	-	($		19,765)
Effect on retrospective application
and restatement		-			148,475			148,475
Balance after restatement
on January 1	(	19,765)			148,475			128,710
Revaluation		-	(		67,722)	(		67,722)
Revaluation transferred to retained		-			115			115
earnings
Currency translation differences
- Group	(	21,487)			-	(		21,487)
At December 31	($	41,252)		$	80,868		$	39,616

(18) OPERATING REVENUE

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines:

~41~

Injection Technical Other For the year ended API Product Servical Operating December 31, 2019 Revenue Revenue Revenue Revenue Timing of revenue recognition: At a point in time 2,543,599 $ 138,202 $ - $ - $ Over time - - 86,642 44,604 2,543,599 $ 138,202 $ 86,642 $ 44,604 $ Technical Other For the year ended API Servical Operating December31,2018 Revenue Revenue Revenue Timing of revenue recognition: At a point in time 3,328,551 $ - $ - $ $ Over time - 101,888 39,670 3,328,551 $ 101,888 $ 39,670 $ $	Injection Technical Other For the year ended API Product Servical Operating December 31, 2019 Revenue Revenue Revenue Revenue Timing of revenue recognition: At a point in time 2,543,599 $ 138,202 $ - $ - $ Over time - - 86,642 44,604 2,543,599 $ 138,202 $ 86,642 $ 44,604 $ Technical Other For the year ended API Servical Operating December31,2018 Revenue Revenue Revenue Timing of revenue recognition: At a point in time 3,328,551 $ - $ - $ $ Over time - 101,888 39,670 3,328,551 $ 101,888 $ 39,670 $ $	Total
		2,681,801 $ 131,246 2,813,047 $ Total
	$	3,328,551 141,558 3,470,109
	$

• B. The Company has recognised contract liabilities related to the contract revenue from advance customer payment of $46,789, $22,541 and $23,366 on December 31, 2019, December 31, 2018 and January 1, 2018, respectively.

• C. The revenue recognised that was included in the contract liability balance at the beginning of the year amounted to $21,908 and $7,900 for the years ended December 31, 2019 and 2018, respectively.

(19) OTHER INCOME

respectively. OTHER INCOME
Interest income from bank deposits Management service revenue Joint loan guarantee revenue Compensation revenue Government subsidy revenue Others	For the years ended December 31,
	2019 28,541 $ 13,699 2,095 37,999 8,963 3,539 94,836 $	2018
		20,677 $ 9,773 3,346 9,051 - 5,699
		48,546 $

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(20) OTHER GAINS AND LOSSES

Net loss on financial assets/liabilities at fair value through profit or loss Gain on disposal of property, plant and equipment Gain on reversal of ( impairment loss) Net currency exchange (loss) gain Miscellaneous

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For the years ended December 31,
2019 2018
($ 2,552) ($ 18,000)
- 78
( 707) 2,322
( 2,409) 6,399
( 38,694) ( 26,176)
($ 44,362) ($ 35,377)
----- End of picture text -----

(21) FINANCE COSTS

FINANCE COSTS
EXPENSES BY NATURE Interest expense: Bank loans Interest on lease liabilities Employee benefit expenses Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortisation Employee benefit expenses Depreciation of property, plant and equipment Amortisation	2019 2018 22 $ 4,456 $ 8,510 - 8,532 $ 4,456 $ For theyears ended December31, Operating costs Operating expenses Total 359,190 $ 297,196 $ 656,386 $ 181,967 90,740 272,707 - 15,148 15,148 2,407 5,286 7,693 543,564 $ 408,370 $ 951,934 $ Operating costs Operating expenses Total 358,801 $ 316,459 $ 675,260 $ 185,726 98,637 284,363 2,175 3,063 5,238 546,702 $ 418,159 $ 964,861 $ Forthe yearendedDecember31,2018 For the year ended December 31, 2019	For theyears ended December31,
				2018
				4,456 $ -
				4,456 $
	Operating costs 358,801 $ 185,726 2,175 546,702 $		Operating expenses 316,459 $ 98,637 3,063 418,159 $

(22) EXPENSES BY NATURE

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(23) EMPLOYEE BENEFIT EXPENSES

EMPLOYEE BENEFIT EXPENSES
Salaries and wages Labor and health insurance expenses Pension costs Directors’ compensation Other personnel expenses Salaries and wages Labor and health insurance expenses Pension costs Directors’ compensation Other personnel expenses	Operating costs Operating expenses Total 302,591 $ 237,642 $ 540,233 $ 28,587 18,800 47,387 16,188 10,781 26,969 - 14,547 14,547 11,824 15,426 27,250 359,190 $ 297,196 $ 656,386 $ Forthe yearendedDecember31,2019 Operating costs Operatingexpenses Total 305,110 $ 254,576 $ 559,686 $ 26,876 18,672 45,548 15,544 10,510 26,054 - 18,902 18,902 11,271 13,799 25,070 358,801 $ 316,459 $ 675,260 $ Forthe yearendedDecember31,2018
		559,686 $ 45,548 26,054 18,902 25,070
		675,260 $

• A. As of December 31, 2019 and 2018, the Company had 638 and 630 employees, respectively, both including 13 directors who were non-employee directors.

• B. For the years ended December 31, 2019 and 2018, the average employee benefit expense were $1,027 and $1,064, respectively; while the average wages and salaries were $864 and $907, respectively. For the year ended December 31, 2019, the average employee benefit expense decreased by 4.74%

• C. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 2% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.

• D. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $24,651 and $46,765, respectively; while directors’ remuneration was accrued at $3,842 and $7,840, respectively. The aforementioned amounts were recognised in salary expenses. The expenses recognised for each year was accrued based on the earnings of current year and the percentage specified in the Articles of Incorporation of the Company. On March 20, 2020, the Board of Directors resolved to distribute employees’ compensation and directors’ remuneration of $24,651 and $2,942, respectively, and the employees’ compensation will be distributed in the form of cash.

~44~

The actual amount approved at the Board of Directors’ meeting for employees’ compensation and directors’ remuneration for 2018 was the same as the estimated amount recognised in the 2018 financial statements. Information about the appropriation of employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(24) INCOME TAX

A. Income tax expense

• (a) Components of income tax expense:

		Forthe years ended	Forthe years ended	December31,
		2019		2018
Current income tax:
Income tax in the current year	$	63,001	$	138,947
Tax on unappropriated retained earnings		227		84
Over provision of prior year's income tax	(	436)	(	1,256)
Total current tax		62,792		137,775
Deferred income tax:
Origination and reversal of temporary differences	(	32,934)	(	50,485)
Impact of change in tax rate		-	(	62,617)
Total deferred tax	(	32,934)	(	113,102)
Income tax expense	$	29,858	$	24,673

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

		For the years ended	For the years ended	December 31,
		2019		2018
Remeasurement of defined benefit obligations	($	1,187)	($	1,667)
Impact of change in tax rate		-	(	96)
	($	1,187)	($	1,763)

• B. Reconciliation between income tax expense and accounting profit:

			Forthe years ended	Forthe years ended	December	31,
			2019		2018
Income tax at statutory tax rate		$	49,303	$	93,530
Effect of items disallowed by tax regulation	(		17,458)	(		1,856)
Impact of change in tax rate			-	(	62,617)
Effect of investment tax credits	(		1,778)	(		3,212)
Tax on unappropriated retained earnings			227			84
Over provision of prior year's income tax	(		436)	(		1,256)
Income tax expense		$	29,858	$	24,673

~45~

C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows: For the year ended December 31, 2019

						Recognised	Recognised
							in other
				Recognised in		comprehensive
		January1		profit	or loss		income	December31
Deferred tax assets:
Temporary differences
Unrealised loss on inventory
market value decline	$	78,206	($		518)	$	-	$	77,688
Unrealised loss on
components and spare parts
market value decline		-			16,203		-		16,203
Investment loss		354,208			23,545		-		377,753
Technology know-how		12,326	(		4,350)		-		7,976
Pensions		15,373	(		124)		1,187		16,436
Employee benefits - unused
compensated absences		4,812	(		153)		-		4,659
Impairment of assets		1,716			141		-		1,857
Unrealised exchange loss		811			613		-		1,424
Unrealised loss		2,870	(		2,683)		-		187
Rent expense		-			763		-		763
	$	470,322		$	33,437	$	1,187	$	504,946
Deferred tax liabilities:
Temporary differences
Unrealised gain on financial
instruments	($	81)	($		503)	$	-	($	584)
	$	470,241		$	32,934	$	1,187	$	504,362

~46~

Deferred tax assets: Temporary differences Unrealised loss on inventory market value decline Investment loss Technology know-how Pensions Employee benefits - unused compensated absences Impairment of assets Unrealised exchange loss Unrealised equipment loss Deferred tax liabilities: Temporary differences Unrealised gain on financial instruments

Recognised in other Recognised in comprehensive January1 profit or loss income December31 73,417 $ 4,789 $ - $ 78,206 $ 249,018 105,190 - 354,208 14,174 1,848) ( - 12,326 11,783 1,827 1,763 15,373 3,996 816 - 4,812 1,853 137) ( - 1,716 1,135 324) ( - 811 - 2,870 - 2,870 355,376 $ 113,183 $ 1,763 $ 470,322 $ - $ 81) ($ - $ 81) ($ 355,376 $ 113,102 $ 1,763 $ 470,241 $ Forthe yearendedDecember31,2018

• D. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority, and there were no disputes existing between the Company and the Authority as of March 20, 2020.

• E. The amendments to the Income Tax Act were promulgated and became effective on February 7, 2018. Under the amendments, the corporate income tax rate will be raised from 17% to 20% retroactively effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate and recognised in profit or loss or other comprehensive income based on the nature of temporary differences.

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(25) EARNINGS PER SHARE (“EPS”)

Basic earnings per share Profit attributable to ordinary stockholders Diluted earnings per share Profit attributable to ordinary stockholders Assumed conversion of all dilutive potential ordinary shares Employees' stock option Employees' compensation Profit attributable to ordinary stockholders plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary stockholders Diluted earnings per share Profit attributable to ordinary stockholders Assumed conversion of all dilutive potential ordinary shares Employees' stock option Employees' compensation Profit attributable to ordinary stockholders plus assumed conversion of all dilutive potential ordinary shares	Weighted average number of shares outstanding EPS Amount aftertax (sharesinthousands) (indollars) 216,656 $ 790,739 0.27 $ 216,656 $ 790,739 - - - 1,336 216,656 $ 792,075 0.27 $ For theyear ended December31,2019 For theyear ended December31,2018	Weighted average number of shares outstanding EPS Amount aftertax (sharesinthousands) (indollars) 216,656 $ 790,739 0.27 $ 216,656 $ 790,739 - - - 1,336 216,656 $ 792,075 0.27 $ For theyear ended December31,2019 For theyear ended December31,2018	Weighted average number of shares outstanding EPS Amount aftertax (sharesinthousands) (indollars) 216,656 $ 790,739 0.27 $ 216,656 $ 790,739 - - - 1,336 216,656 $ 792,075 0.27 $ For theyear ended December31,2019 For theyear ended December31,2018
	Amount after tax 442,978 $ 442,978 $ - - 442,978 $	Weighted average number of shares outstanding (shares in thousands) 790,739 790,739 - 2,343 793,082	EPS (in dollars)
			0.56 $
			0.56 $

For the years ended December 31, 2019 and 2018, some abovementioned stock options issued are anti-dilutive, therefore they were not included in the EPS calculation.

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(26) SUPPLEMENTAL CASH FLOW INFORMATION

A. Investing activities with partial cash payments

		For the years ended	For the years ended	For the years ended	December 31,
		2019			2018
Purchase of property, plant and equipment		24,710 $		$	36,176
Add: Beginning balance of payable
on equipment		19,332			33,189
Less: Ending balance of payable on
equipment	(	28,117)	(		19,332)
Cash paid for acquisition of property,
plant and equipment		15,925 $		$	50,033

B. Investing activities with no cash flow effects:

Investing activities with no cash flow effects:
(a) Prepayments for equipment reclassified to property, plant and equipment (b) Property, plant and equipment reclassified to intangible assets	For the years ended December 31,
	2019 82,142 $ 6,500 $	2018
		38,585 $
		- $

(27) CHANGES IN LIABILITIES FROM FINANCING ACTIVITIES

									Guarantee	Liabilities from	Liabilities from	Liabilities from
			Short-term			Lease			deposits			financing
			borrowings			liabilities			received		activities-gross
At January 1, 2019		$	61,694		$	-		$	1,618		$	63,312
Effect on retrospective
application and restatement			-			900,288			-			900,288
Changes in cash flow from
financing activities	(		61,694)	(		11,335)	(		1,618)	(		74,647)
Changes in other non-cash
items			-	(		282,919)			-	(		282,919)
At December 31, 2019		$	-		$	606,034		$	-		$	606,034
									Guarantee	Liabilities from
			Short-term			Lease			deposits			financing
			borrowings			liabilities			received		activities-gross
At January 1, 2018		$	-		$	-		$	1,620		$	1,620
Changes in cash flow from
financing activities			61,694			-	(		2)			61,692
At December 31, 2018		$	61,694		$	-		$	1,618		$	63,312

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7. RELATED PARTY TRANSACTIONS

• (1) Parent and ultimate controlling party

The ultimate parent and ultimate controlling party of the Company is Uni-President Enterprises Corp.

• (2) Names of related parties and relationship

Names of related parties Relationship with the Company Uni-President Enterprises Corp. Ultimate parent company SciAnda (Changshu) Pharmaceuticals, Ltd. Subsidary ScinoPharm Singapore Pte Ltd. Subsidary SciAnda Shanghai Biochemical Technology, Subsidary Ltd. SciAnda (Kunshan) Biochemical Technology Subsidary Co., Ltd. President Securities Corp. Associate of ultimate parent company

• (3) Significant transactions and balances with related parties

• A. Purchases

SciAnda (Changshu) Pharmaceuticals, Ltd. Subsidiaries	2019 2018 335,838 $ 193,686 $ 9,873 17,380 345,711 $ 211,066 $ For theyears ended December31,	2019 2018 335,838 $ 193,686 $ 9,873 17,380 345,711 $ 211,066 $ For theyears ended December31,
		193,686 $ 17,380
		211,066 $

The terms of purchases and payment of the Company from related parties were the same with third parties. Payments are made in 90 days after receipt of goods.

• B. Other expenses

Other expenses
Management service fees: －Subsidiaries －Ultimate parent company －Associates of ultimate parent company	Forthe years endedDecember31,
	2019 8,864 $ 6,935 2,091 17,890 $	2018
		9,479 $ 5,138 2,115
		16,732 $

~50~

C. Other revenue

D. E.	Other receivables Accounts payable Management consultancy revenue: －Subsidiaries Joint loan guarantee revenue: －Subsidiaries Subsidiaries SciAnda (Changshu) Pharmaceuticals, Ltd. Subsidiaries	2019 2018 13,699 $ 9,773 $ 2,095 $ 3,346 $ For theyears ended December31, December 31, 2019 December 31, 2018 5,697 $ 5,625 $ December31,2019 December31,2018 43,725 $ 28,821 $ 1,792 10,486 45,517 $ 39,307 $

F. Endorsements and guarantees provided to related parties Details of endorsement and guarantees:

SciAnda (Changshu) Pharmaceuticals, Ltd.	Nature ofsuretyship Financial gurantee	December31,2019 2,063,467 $	December31,2018
			2,499,643 $

As of December 31, 2019 and 2018, the actual drawn amounts, which are guaranteed by the Company to the subsidiaries, were $144,234 and $1,178,503, respectively.

(4) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Share-based payments Post-employment benefits Termination benetfits	2019 2018 42,905 $ 47,693 $ 542 2,794 692 581 1,470 1,746 45,609 $ 52,814 $ Forthe years endedDecember31,
	2019 42,905 $ 542 692 1,470 45,609 $

8. PLEDGED ASSETS

Details of the Company’s assets pledged as collateral are as follows:

Assets Time deposits (Note)	December31,2019 29,270 $	December31,2018 Purpose ofcollateral 29,270 $ Customs duty and performance guarantee	Purpose ofcollateral

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Note: Listed as ‘Other financial assets - non-current’

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

• (1) As of December 31, 2019 and 2018, the Company’s unused letters of credit amounted to $7,707 and $3,571, respectively.

• (2) As of December 31, 2019 and 2018, the Company’s remaining balance due for construction in progress and prepayments for equipment was $18,500 and $73,655, respectively.

• (3) The Company entered into a non-cancellable operating lease agreement for the period from June 1, 2011 to February 28, 2018 for the land in Tainan Science Park, and the new lease agreement has been signed in March covering the period from March 1, 2018 to February 28, 2038. The lease period of the lease agreement cannot be over 20 years and is renewable at the end of the lease term. The Company pays monthly rent. If the announced land values, state-owned land rent rate, or other factors change, the monthly rent paid by the Company will be adjusted accordingly on the following month. The Company may have to pay additional rent or get a refund on its last rental payment because of such adjustment. In addition, the Company entered into operating lease agreement for the office equipment and personal computers for a period of 1~4 years. The rent expense of $35,385 (listed as ‘operating cost’ and ‘operating expense’) was recognised in profit or loss for the year ended December 31, 2018. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

leases are as follows:
Within one year Later than one year but not exceeding five years Later than five years	December 31, 2018
	26,834 $ 95,025 334,009
	455,868 $

• (4) Information about endorsement and guarantee to others is provided in Note 7(3) F.

10. SIGNIFICANT DISASTER LOSS: None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE:

In order to integrate the Group’s resources and improve management efficiency, on November 1, 2019, the Company’s Board of Directors has resolved to conduct an the organisational restructuring through the short form merger of SciAnda (Changshu) Pharmaceuticals, Ltd. and SciAnda (Kunshan) Biochemical Technology, Ltd., with SciAnda (Changshu) Pharmaceuticals, Ltd. as the surviving company, and SciAnda (Kunshan) Biochemical Technology, Ltd. as the dissolved company. The scheduled completion date is subject to approval by the competent authority.

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12. OTHERS

(1) Capital management

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

• (2) Financial instruments

• A. Financial instruments

  • For details of the Company’s financial instruments by category, please refer to Notes 6.

• B. Risk management policies

  • (a)The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk.

  • (b)The Company’s treasury identifies, evaluates and hedges financial risks closely with the Company’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as use of derivative financial instruments and investment of excess liquidity.

  • (c)Information about derivative financial instruments that are used to hedge financial risk are provided in Note 6(2).

• C. Significant financial risks and degrees of financial risks

  • (a) Market risk

    • I. Foreign exchange rate risk

      • (i) The Company operates internationally and is exposed to foreign exchange risk arising from the transations of the Company used in various functional currency, primarily with respect to USD. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities.

      • (ii) To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Company are required to hedge their foreign exchange risk exposure using forward foreign exchange contracts. However, the Company does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2).

      • (iii)The Company’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other subsidiaries’ functional currency: CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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(Foreign currency functional currency) Financial assets Monetary items USD:NTD EUR:NTD CNY:NTD Financial liabilities Monetary items USD:NTD EUR:NTD CNY:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD EUR:NTD CNY:NTD Financial liabilities Monetary items USD:NTD CNY:NTD	Foreign currency amount (inthousands) Exchangerate Book value (NTD) 21,606 $ 29.98 647,748 $ 32 33.59 1,075 85 4.305 366 2,227 29.98 66,765 447 33.59 15,015 479 4.305 2,062 December31,2019 Foreign currency amount (inthousands) Exchangerate Book value (NTD) 26,499 $ 30.715 813,917 $ 50 35.20 1,760 102 4.465 455 3,760 30.715 115,488 505 4.465 2,255 December 31, 2018

• (iv)As of December 31, 2019 and 2018, if the NTD:USD exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the effect on the Company’s net profit after tax for the years ended December 31, 2019 and 2018 would increase/decrease by $23,239 and $27,937, respectively. If the NTD:EUR and NTD:CNY exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the effect on the Company’s net profit after tax for the years ended December 31, 2019 and 2018 is immaterial.

• (v)Total exchange gain (loss) including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2019 and 2018 amounted to ($2,409) and $6,399, respectively.

~54~

II. Price risk

The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio and set stop-loss amounts for these instruments. The Company expects no significant market risk.

III. Cash flow and fair value interest rate risk

• (i)The Company’s main interest rate risk arises from short-term borrowings with variable rates and exposes the Company to cash flow interest rate risk. During the years ended December 31, 2019 and 2018, the Company’s borrowings at variable rate were denominated in USD.

• (ii)The Company’s borrowings are measured at amortised cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.

• (iii)If the borrowing interest rates had increased/decreased by 10% with all other variables held constant, the effect on post-tax profit for the years ended December 31, 2019 and 2018 are immaterial.

(b) Credit risk

• I. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms.

• II. The Company manages their credit risk taking into consideration the entire Company’s concern. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. According to the Company’s credit policy, in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

• III. The Company adopts the following assumption under IFRS 9: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• IV. The Company manages its credit risk, whereby if the contract payments are past due over 180 days based on the terms, there has been impairment.

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• V. The Company classifies customers’ accounts receivable in accordance with credit rating of customer and credit risk on trade. The Company applies the simplified approach using provision matrix to estimate expected credit loss, and use the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

allowance for accounts receivable are	as follows:
		For the years ended			December 31,
		2019			2018
At January 1	$	34		$	129
(Gain on reversal of) expected
credit losses		202	(		95)
At December 31	$	236		$	34

• (c) Liquidity risk

• I. Cash flow forecasting is performed by the Company’s treasury department which monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Company does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.

• II. The Company has undrawn borrowing facilities amounting to $3,058,960 and $3,581,206 as of December 31, 2019 and 2018, respectively.

• III. The following table comprises the Company’s non-derivative financial liabilities and derivative financial liabilities with gross-amount settlement that are grouped by their maturity. Non-derivative financial liabilities are analysed from the balance sheet date to the contract maturity date, and derivative financial liabilities are analysed from the balance sheet date to the expected maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

December31,2019 Notes payable Accounts payable Accounts payable－related parties Other payables Lease liabilities Non-derivative financial liabilities:	Less than 1year 1,353 $ 93,643 45,517 285,292 16,112	Between 1 and2years - $ - - - 16,112	Between 2 and 5 years - $ - - - 48,337	More than 5 years
				- $ - - - 708,937

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==> picture [444 x 30] intentionally omitted <==

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

Between 1 Between 2 More than
December 31, 2018 Less than 1 year and 2 years and 5 years 5 years
----- End of picture text -----

Non-derivative financial
liabilities:
Short-term borrowings	$	61,696	$	-	$	-	$	-
Notes payable		1,148		-		-		-
Accounts payable		73,739		-		-		-
Accounts payable－related		39,307		-		-		-
parties
Other payables		293,946		-		-		-
Guarantee deposits		-		1,618		-		-

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in foreign exchange contracts is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investment in equity investment without active market is included in Level 3.

• B. Financial instruments not measured at fair value

• The carrying amounts of cash and cash equivalents, accounts receivable, other receivables (including related parties), guarantee deposits paid, other financial assets - non-current, shortterm borrowings, notes payable, accounts payable (including related parties), other payables, guarantee deposits received are approximate to their fair values.

• C. The related information of financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities are as follows:

December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Recurring fair value measurements Financial assets at fair value through profit or loss Derivative instruments $ - $ 2,920 $ - $ 2,920 Financial assets at fair value through other comprehensive income - Equity securities $ 271,752 $ $ 143,458 $ 415,210

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==> picture [446 x 138] intentionally omitted <==

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

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

Market quoted price

Listed shares Closing price

• (b)Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

• (c)When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Company adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• (d)Forward foreign exchange contracts are usually valued based on the current forward exchange rate.

• E. Foresee Pharmaceuticals Co., Ltd. has been listed on the Taipei Exchange from June, 2018, therefore, the Company transferred the fair value from Level 2 to Level 1 at the end of the month when the event occurred. For the year ended December 31, 2019, there was no transfer between Level 1 and Level 2.

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F. The following chart is the movement of Level	F. The following chart is the movement of Level	F. The following chart is the movement of Level	3 for the years ended December 31, 2019	3 for the years ended December 31, 2019	3 for the years ended December 31, 2019	3 for the years ended December 31, 2019	and	2018:
			Forthe years ended			December31,
			2019			2018
			Equity instrument			Equity instrument
At January 1		$	200,046		$			-
Effect on retrospective application and
restatement			-			242,355
Balance after restatement on January 1			200,046			242,355
Loss recognised in other comprehensive
income	(		56,588)	(			42,309)
At December 31		$	143,458		$	200,046

• G. The Company’s valuation procedures for fair value measurements is categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently assess to make any other necessary adjustments to the fair value.

• H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Non-derivative equity instrument: Unlisted shares Non-derivative equity instrument: Unlisted shares	Fair value at December31,2019	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fairvalue
	143,458 $ Fair value at December31,2018	Net asset value Valuation technique	Not applicable Significant unobservable input	－ Range (weighted average)	The higher the net asset value, the higher the fair value Relationship of inputs to fairvalue
	200,046 $	Net asset value	Not applicable	－	The higher the net asset value, the higher the fair value

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• I. The Company has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. If the net assets value increased or decreased by 1% for Level 3, however, the effect on other comprehensive income for the years ended December 31, 2019 and 2018 is immaterial.

13. SUPPLEMENTARY DISCLOSURES

According to current regulatory requirements, the Company is only required to disclose the information for the year ended December 31, 2019.

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 4.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: None.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 7.

(3) Information on investments in Mainland China

• A. General information: Please refer to table 8.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 2 and 5.

14. SEGMENT INFORMATION

Not applicable.

~60~

SCINOPHARM TAIWAN, LTD. STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Cash: Cash on hand－New Taiwan dollar Checking accounts Demand deposits－New Taiwan dollar －Foreign Currency Cash Equivalents: Time deposits－New Taiwan dollar Bill under repurchase agreements	Description Including USD$2,891 thousand @29.98 Other foreign currency deposits Due date from January 2, 2020 to December 2, 2020, interest rates at 0.565%~1.065%. Expired by January 3, 2020, interest rate at 0.42%	Amount
		30 $ 731 40,305 86,680 2,416
		130,162
		2,620,500 269,748
		2,890,248
		3,020,410 $

~61~

SCINOPHARM TAIWAN, LTD. STATEMENT OF ACCOUNTS RECEIVABLE, NET DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Client Name Client A Client B Client C Client D Client E Others (individually less than 5%) Less: Loss allowance	Description Amount Accounts receivable 146,650 $ 〞 71,234 〞 64,709 〞 57,136 〞 45,060 〞 178,303 563,092 236) ( 562,856 $	Footnote
		－ － － － － －

~62~

SCINOPHARM TAIWAN, LTD. STATEMENT OF INVENTORIES DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Cost Net realisablevalue Raw materials 325,013 $ 351,985 $ Supplies 24,771 24,461 Work in process 313,720 494,155 Finished goods 825,633 1,221,039 1,489,137 2,091,640 $ Less: Allowance for market price decline 388,442) ( 1,100,695 $ Amount	Footnote
	(Note) 〞 〞 〞

Note: The method of net realisable value is provided in Note 4(11).

~63~

SCINOPHARM TAIWAN, LTD. STATEMENT OF PREPAYMENTS DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Amount Maintenance stocks 127,024 $ Prepaid expenses 35,308 Downpayment for materials 26,089 Others (individual less than 5%) 98 188,519 Less: Allowance for maintenance stocks 81,017) ( 107,502 $	Footnote
	－ － － － －

~64~

SCINOPHARM TAIWAN, LTD.

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Name Tanvex Biologics, Inc. Foresee Pharmaceuticals Co., Ltd.	Number of shares Fairvalue 28,800,000 200,046 $ 4,711,269 268,071 33,511,269 468,117 $ Beginning balance	Number of Number of shares Amount shares Amount - - $ - 56,588) ($ - 6,011 50,000) ( 2,330) ( - 6,011 $ 50,000) ( 58,918) ($ Additions Disposals	Ending balance	Ending balance	Amount 143,458 $ 271,752 415,210	Collateral	Footnote
	Number of shares 28,800,000 4,711,269 33,511,269	Number of shares - - -	Number of shares 28,800,000 4,661,269 33,461,269	Ownership 16.84% 4.65%
						None 〞	－ －

~65~

SCINOPHARM TAIWAN, LTD. FOR THE YEAR ENDED DECEMBER 31, 2019

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD

(Expressed in thousands of New Taiwan Dollars)

Investees	Number of shares (in thousands) Amount 80,525 745,452 $ - 96 80,525 745,548 $ Beginningbalance	Addition	Amount 1,192,251 $ 16 1,192,267 $ s	Number of shares (in thousands) Amount - 174,606) ($ - - - 174,606) ($ Disposals	Endingbalance	Endingbalance	Amount 1,763,097 $ 112 1,763,209 $	Market value or	Total amount 1,823,825 $ 112 1,823,937 $ net assets value	Collateral
	Number of shares (in thousands)	Number of shares (in thousands)		Number of shares (in thousands)	Number of shares (in thousands)	Ownership		Unit Price (in dollars) 15.39 $ 56,261
SPT International, Ltd. ScinoPharm Singapore Pte Ltd.	80,525 - 80,525	38,000 - 38,000		- - -	118,525 -	100.00% 100.00%				None 〞
					118,525

~66~

SCINOPHARM TAIWAN, LTD. STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT - COST FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(7).

~67~

SCINOPHARM TAIWAN, LTD. STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT - ACCUMULATED DEPRECIATION FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(7), the depreciation methods and useful lives are provided in Note 4(13).

~68~

SCINOPHARM TAIWAN, LTD. STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS - COST FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Land	Beginning balance 900,288 $	Additions Decreases - $ 282,919) ($	Ending balance 617,369 $	Footnote
				(Note)

Note: The beginning balance is the effect on retrospective application and restatement of IFRS 16, and the decreases pertain to the remeasurement due to the decrease in rent expense.

~69~

SCINOPHARM TAIWAN, LTD.

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS - ACCUMULATED DEPRECIAITION

FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Land	Beginning balance - $	Additions 15,148 $	Decreases - $	Ending balance 15,148 $	Footnote
					－

~70~

SCINOPHARM TAIWAN, LTD. STATEMENT OF CHANGES IN DEFERRED INCOME TAX ASSETS FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(24).

~71~

SCINOPHARM TAIWAN, LTD. STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

VendorName Description Vendor A Accounts payable Vendor B 〞 Vendor C 〞 TRANS CHIEF CHEMICAL INDUSTRY CO., LTD. 〞 Others (individually less than 5%) 〞	Amount
	13,230 $ 13,142 8,845 8,716 49,710
	93,643 $

~72~

SCINOPHARM TAIWAN, LTD. STATEMENT OF OTHER PAYABLES DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(11).

~73~

SCINOPHARM TAIWAN, LTD. STATEMENT OF LEASE LIABILITIES - NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Land	Description Lease period Discountrate Amount － Due date from March, 2018 to 1.13% 606,034 $ December, 2068 Less: Current portion 16,014) ( 590,020 $

~74~

SCINOPHARM TAIWAN, LTD. STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items API Injection product Less: Sales returns and discounts Technical services Other operating revenue Operating revenue	Quantity Amount 28,244 KG 2,559,467 $ 95,924 package 138,202 15,868) ( 2,681,801 86,642 44,604 2,813,047 $	Footnote
		－ － － － －

~75~

SCINOPHARM TAIWAN, LTD. STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

==> picture [506 x 17] intentionally omitted <==

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

Items Amount
----- End of picture text -----

Items			Amount
Raw materials, beginning of year		$	251,213
Add: Raw materials purchased			568,786
Less: Losses on scrap inventory	(		537)
Losses on physical inventory	(		99)
Transferred to expenses	(		14,261)
Sale of raw materials	(		548)
Raw materials, end of year	(		325,013)
Raw materials used during the year			479,541
Supplies, beginning of year			35,767
Add: Supplies purchased			12,324
Less: Losses on physical inventory	(		2)
Transferred to expenses	(		13,105)
Supplies, end of year	(		24,771)
Supplies used during the year			10,213
Direct labor			157,601
Manufacturing expenses			564,363
Under applied manufacturing overhead	(		195,925)
Manufacturing cost			1,015,793
Work in process, beginning of year			595,189
Add: Work in process purchased			28,385
Less: Losses on inventory scrap	(		6,000)
Losses on physical inventory	(		2,561)
Transferred to expenses	(		6,182)
Sale of work in process	(		94,264)
Work in process, end of year	(		313,720)
Cost of finished goods			1,216,640

~76~

SCINOPHARM TAIWAN, LTD.

STATEMENT OF OPERATING COSTS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items			Amount
Finished goods, beginning of year		$	752,451
Add: Finished goods purchased			242,325
Less: Losses on scrap inventory	(		12,992)
Losses on physical inventory	(		508)
Transferred to expenses	(		40,602)
Finished goods, end of year	(		825,633)
Cost of goods manufactured and sold			1,331,681
Sale of raw materials			548
Sale of work in process			94,264
Cost of goods sold			1,426,493
Losses on scrap inventory			19,529
Losses on physical inventory			3,170
Under applied manufacturing overhead			195,925
Reversal of allowance for inventory market price decline	(		2,590)
Cost of sales			1,642,527
Revenue from sale of scraps	(		8,472)
Technical service cost			43,332
Operating cost		$	1,677,387

~77~

SCINOPHARM TAIWAN, LTD. STATEMENT OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Salaries and wages Repair and maintenance expense Utilities expense Depreciation Others (individually less than 5%)	Amount 148,604 $ 47,981 76,588 176,999 114,191 564,363 $	Footnote
		－ － － － －

~78~

SCINOPHARM TAIWAN, LTD. STATEMENT OF TECHNICAL SERVICE COST FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Salaries and wages Withdrawing inventories and outsourcing research expense Depreciation Research chemicals Repair and maintenance expense Others (individually less than 5%)	Amount 12,574 $ 7,893 4,968 4,497 2,204 11,196 43,332 $	Footnote
		－ － － － － －

~79~

SCINOPHARM TAIWAN, LTD. STATEMENT OF SELLING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Salaries and wages Freight Advertising expense Commission Royalty Outsourcing service fee Others (individually less than 5%)	Amount 48,234 $ 12,894 9,389 25,905 16,001 19,571 28,558 160,552 $	Footnote
		－ － － － － － －

~80~

SCINOPHARM TAIWAN, LTD. STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Salaries and wages Insurance expense Repair and maintenance expense Depreciation Professional service fee Others (individually less than 5%)	Amount 140,646 $ 23,193 27,752 80,840 28,104 145,504 446,039 $	Footnote
		－ － － － － －

~81~

SCINOPHARM TAIWAN, LTD. STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Items Salaries and wages Repair and maintenance expense Depreciation Research expense Others (individually less than 5%)	Amount 63,385 $ 10,841 25,048 73,408 33,888 206,570 $	Footnote
		－ － － － －

~82~

SCINOPHARM TAIWAN, LTD. STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2019

(Expressed in thousands of New Taiwan Dollars)

Please refer to Note 6(22) and 6(23).

~83~

Table 1

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd.

Loans to others

For the year ended December 31, 2019

Number	Name	Name of counterparty	Account	Related parties	Maximum balance	Ending balance	Actual amount drawndown	Interest rate	Nature of financial activity (Note1)	Total transaction amount	Reason for financing	Allowance for doubtful accounts	Assets pledged	Assets pledged	Loan limit per entity (Note2)	Maximum amount available for loan (Note2)	Footnote
													Item	Value
1	SciAnda (Kunshan) Biochemical Technology, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd.	Other receivables	Y	275,242 $	86,110 $	86,110 $	3.0%	2	- $	Additional operating capital and loan repayment	- $	－	- $	420,121 $	420,121 $	－

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

• 1.Trading partner.

2.Short-term financing.

Note 2: (1) For trading partner: the maximum amount for individual trading partner shall not exceed the higher of purchase or sales amount of the most recent year or the current year, the maximum amount for total loan is 20% of its net worth.(2) For short-term financing: the maximum amount for individual is 20% of its net worth, the maximum amount for total loan is 40% of its net worth. If the Company loans to foreign subsidiaries, which the Company holds 100% ownership directly or indirectly, the maximum amount for the subsidiary is 100% of the Company's net worth.

Note 3: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the financial statements (CNY:NTD 1:4.305).

Table 1, Page 1

ScinoPharm Taiwan, Ltd.

Table 2

Expressed in thousands of NTD

Provision of endorsements and guarantees to others

For the year ended December 31, 2019

Number	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party （Note 2）	Maximum outstanding endorsement/ guarantee amount during theyear	Outstanding endorsement/ guarantee amount at December 31, 2019	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 2）	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor （Note 1）
0	ScinoPharm Taiwan, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd.	1	10,259,944 $	5,489,008 $	2,063,467 $	144,234 $	- $	20.11%	10,259,944 $	Y	N	Y	－

Note 1: The following code represents the relationship with the Company:

• 1.A company in which the Company directly and indirectly holds 100% of the voting shares.

• Note 2: 1.The limit of total amount of endorsement is 50% of the Company's net worth, for 100% directly or indirectly owned subsidiaries, the maximum amount is 100% of its net worth. The limit of total amount of the Group's endorsement and guarantee is 100% of the Group's net worth.

• For any endorsement or guarantee provided by the Company due to business dealings, the amount of endorsement or guarantees shall be limited to the business dealing amount of the most recent year or the current year. The business dealing amount is product purchase or sale amount between the entities, whichever is higher.

Note 3: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the financial statements (CNY:NTD 1:4.305 ；USD:NTD 1:29.98).

Table 2, Page 1

ScinoPharm Taiwan, Ltd.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) December 31, 2019

			December 31,	2019
Table 3 Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As of December31,2019		Fairvalue Footnote Expressed in thousands of NTD
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
ScinoPharm Taiwan, Ltd. SciAnda (Kunshan) Biochemical Technology, Ltd.	Stocks: Tanvex Biologics, Inc. Foresee Pharmaceuticals Co., Ltd. SYNGEN, INC. Structured Products: Fubon Bank (China) Co., Ltd. Structured Products	The Company is a director of Tanvex Biologics, Inc. － － －	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - non-current Financial assets at amortised cost - current	28,800,000 4,661,269 245,000 -	143,458 $ 271,752 - 172,220	16.84% 4.65% 7.40% -	143,458 $ 271,752 - -	－ － － －

Table 3, Page 1

Table 4

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd.

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in-capital For the year ended December 31, 2019

Investor	Type of securities	General ledger account	Name of the counterparty	Relationship	Beginnin	gbalance	A	ddition		Dispos	al		Other increa	se(decrease)	Endingb	alance
					Number of shares (in thousands)	Amount	Number of shares (in thousands)	Amount	Number of shares (in thousands)	Saleprice	Bookvalue	Gain on disposal	Number of shares (in thousands)	Amount	Number of shares (in thousands)	Amount
ScinoPharm Taiwan, Ltd. SPT International, Ltd. SciAnda (Kunshan) Biochemical Technology, Ltd.	Stocks: SPT International, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. Structured Products: Fubon Bank (China) Co., Ltd. Structured Products	Investment accounted for under the equity method Investment accounted for under the equity method Financial assets at amortised cost - current	Cash capital increase Cash capital increase －	－ － －	80,525 - -	$ 745,452 363,468 178,615	38,000 - -	$ 1,139,240 1,139,240 710,890	- - -	$ - - 723,754	$ - - 717,940) (	$ - - 5,814	- - -	121,595) ($ 118,495) ( 655	118,525 - -	$ 1,763,097 1,384,213 172,220

Table 4, Page 1

Table 5

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd.

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the year ended December 31, 2019

Purchaser/seller	Counterparty	Relationship with the counterparty			Transaction		trans compared t Differences in t	actions o third party ransaction terms	Notes/account	s receivable(payable)	Footnote
			Purchases(sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
ScinoPharmTaiwan, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd. ScinoPharm Taiwan, Ltd.	Subsidary The Company	Purchases (Sales)	335,838 $ 335,838) (	39% (80%)	Closes its accounts 90 days from the end of each month Closes its accounts 90 days from the end of each month	$ - -	－ －	43,725) ($ 43,725	(31%) 61%	－ －

Table 5, Page 1

Table 6

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd.

- Significant inter company transactions during the reporting period

For the year ended December 31, 2019

Number (Note 2)	Companyname	Counterparty	Relationship (Note3)		Transactions	Transactions
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 4)
0 0 0 1	ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. SciAnda (Kunshan) Biochemical Technology, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd.	1 1 1 3	Purchases Accounts payable Endorsements and guarantees Other receivables	335,838 $ 43,725 2,063,467 86,189	Closes its accounts 90 days from the end of each month － － －	12% － 18% 1%

• Note 1: Significant inter-company transactions during the reporting periods are not disclosed since these were corresponding transactions. Only transactions over NT$10 million are material.

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

• (1) Parent company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

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

• (1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

• (3) Subsidiary to subsidiary.

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

based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 5: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the financial statements (CNY:NTD 1:4.305 ； USD:NTD 1:29.98).

Table 6, Page 1

ScinoPharm Taiwan, Ltd.

Table 7

Expressed in thousands of NTD

Names, locations and other information of investee companies (not including investees in Mainland China)

For the year ended December 31, 2019

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at December 31,2019	as at December 31,2019	Net profit (loss) of the investee for the year ended December 31,2019	Investment income (loss) recognised by the Company for the year ended December 31,2019	Footnote
				Balance as at December 31,2019	Balance as at December 31,2018	Number of shares	Ownership (%)	Book value
ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd.	SPT International, Ltd. ScinoPharm Singapore Pte Ltd.	Tortola, British Virgin Islands Singapore	Professional investment Professional investment	3,553,369 $ -	2,414,129 $ -	118,524,644 2	100.00 100.00	1,763,097 $ 112	118,523) ($ 16	117,741) ($ 16	Subsidiary Subsidiary

Note :Initial investment amount in the table that involves foreign currencies are expressed in New Taiwan Dollars according to exchange rate posted on the date of financial statements (USD: NTD 1:29.98).

Table 7, Page 1

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd.

Information on investments in Mainland China － Basic information

For the year ended December 31, 2019

==> picture [22 x 5] intentionally omitted <==

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

Table 8
----- End of picture text -----

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2019	Amount remitt Mainla Amount r to Taiwan fo Decemb	ed from Taiwan to nd China/ emitted back r the year ended er 31,2019	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2019	Net income of investee for the year ended December 31, 2019	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2019 （Note 2）	Book value of investments in Mainland China as of December 31, 2019	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2019	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
SciAnda (Kunshan) Biochemical Technology, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda Shanghai Biochemical Technology, Ltd. Companyname	Research, development, and manufacture of API and new drugs, etc. Research, development, and manufacture of API and new drugs, sale produced products, etc. Import, export and sales of API and intermediates, etc. Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2019	119,920 $ （Note 1） 3,372,750 （Note 1） 35,976 （Note 1） Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)		111,658 $ - $ 2,233,510 1,139,240 35,976 - Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA(Note 3)		- $ - -	111,658 $ 3,372,750 35,976	13,374 $ 130,862) ( 755) (	100% 100% 100%	13,374 $ 130,862) ( 755) (	420,169 $ 1,384,213 15,956	- $ - -	Subsidary Subsidary Subsidary
ScinoPharm Taiwan, Ltd.	$ 3,557,082	3,557,082 $		6,155,967 $

Note 1: Indirect investment in Mainland China through company set up in a third region, SPT International, Ltd.

Note 2: The investment income (loss) recognized by the Company for the year ended December 31, 2019 was based on audited financial statements of investee companies as of and for the year ended December 31, 2019. Note 3: The ceiling amount is 60% of the higher of net worth or consolidated net worth.

Note 4: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the financial statements (USD:NTD 1:29.98).

Table 8, Page 1