SPT — Interim / Quarterly Report 2013

Nov 13, 2013

SCINOPHARM TAIWAN, LTD.

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT ACCOUNTANTS JUNE 30, 2013 AND 2012

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

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

We have reviewed the accompanying consolidated balance sheets of ScinoPharm Taiwan, Ltd. and subsidiaries as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, and the related consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, and the consolidated statements of cash flows and of changes in shareholders’ equity for the six-month periods ended June 30, 2013 and 2012. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Except as discussed in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 36, “Review of Financial Statements” in the Republic of China. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical procedures to financial data, and making inquiries of Company personnel responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

As described in Note 4(3), the financial statements of certain subsidiaries were consolidated based on their unreviewed financial statements as of and for the three-month and six-month periods ended June 30, 2013 and 2012. Total assets of these subsidiaries amounted to $2,273,220 thousand and $1,351,303 thousand, representing 19% and 14% of the related consolidated totals, and total liabilities amounted to $936,604 thousand and $216,628 thousand, representing 36% and 14% of the related consolidated totals, as of June 30, 2013 and 2012, respectively. Total comprehensive income of these subsidiaries amounted to ($10,944) thousand, $32,578 thousand, ($4,103) thousand and $84,027 thousand, constituting (3%), 18%, (1%) and 21% of the consolidated total comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, respectively. In addition, as described in Note 6(6) to the consolidated financial statements, the financial statements of certain

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investments accounted for under the equity method were not reviewed by independent accountants. － Investments in these companies amounted to $105,013 thousand and $ as of June 30, 2013 and 2012, respectively, and the related share of loss of associates and joint ventures accounted for under － the equity method amounted to $2,375 thousand, $ , $2,375 thousand and $4,434 thousand for the three-month and six-month periods then ended, respectively. These amounts were based solely on their unreviewed financial statements. We were unable to satisfy ourselves as to the carrying value of the investments or the equities in their earnings by other auditing procedures.

Based on our reviews, except for the effect of such adjustments, if any, as might have been determined to be necessary had the financial statements of certain subsidiaries and investments accounted for under the equity method as of and for the three-month and six-month periods ended June 30, 2013 and 2012 been reviewed by independent accountants as described in the preceding paragraph, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, IAS 34, “Interim Financial Reporting” and IFRS 1, “First-time Adoption of International Financial Reporting Standards” endorsed by the Financial Supervisory Commission of the Republic of China.

PricewaterhouseCoopers, Taiwan Republic of China August 6, 2013

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

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. CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

1100 1110 1150 1170 1200 130X 1410 1470 11XX 1543 1550 1600 1780 1840 1900 15XX 1XXX	Assets	Notes	June 30, 2013 AMOUNT % $ 3,378,997 29 - - 5 - 870,450 7 122,507 1 2,287,864 20 265,455 2 - - 6,925,278 59 167,673 2 105,013 1 3,897,211 33 25,507 - 218,369 2 363,421 3 4,777,194 41 $ 11,702,472 100	December 31, 2012 AMOUNT % $ 3,035,012 30 473 - - - 841,334 8 96,300 1 1,870,275 18 214,261 2 - - 6,057,655 59 167,673 2 - - 3,559,228 34 17,521 - 153,940 1 383,859 4 4,282,221 41 $ 10,339,876 100	June 30, 2012 AMOUNT % $ 2,972,185 30 - - - - 731,995 7 81,212 1 2,021,732 21 110,142 1 - - 5,917,266 60 167,673 2 - - 3,080,453 31 17,170 - 118,040 1 548,408 6 3,931,744 40 $ 9,849,010 100	January 1, 2012	January 1, 2012
			AMOUNT $ 3,378,997 - 5 870,450 122,507 2,287,864 265,455 - 6,925,278 167,673 105,013 3,897,211 25,507 218,369 363,421 4,777,194 $ 11,702,472	AMOUNT $ 3,035,012 473 - 841,334 96,300 1,870,275 214,261 - 6,057,655 167,673 - 3,559,228 17,521 153,940 383,859 4,282,221 $ 10,339,876	AMOUNT $ 2,972,185 - - 731,995 81,212 2,021,732 110,142 - 5,917,266 167,673 - 3,080,453 17,170 118,040 548,408 3,931,744 $ 9,849,010	AMOUNT $ 3,293,681 2,066 - 843,902 47,983 1,465,462 179,883 15,552 5,848,529 - 172,107 2,890,760 13,330 84,394 478,750 3,639,341 $ 9,487,870	%
	Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable, net Other receivables Inventories Prepayments Other current assets Current Assets Non-current assets Financial assets carried at cost - non-current Investments accounted for under equity method Property, plant and equipment Intangible assets Deferred income tax assets Other non-current assets Non-current assets Total assets	6(1) 6(2) 6(3) 5(2) and 6(4) 8 6(5) 6(5)(6) 6(7)(9) and 7 5(2) 6(8) and 8					35 - - 9 1 15 2 -
							62
							- 2 30 - 1 5
							38
							100

(Continued)

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SCINOPHARM TAIWAN, LTD. CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

2100 2120 2150 2170 2200 2230 2300 21XX 2570 2600 25XX 2XXX 3110 3150 3200 3310 3320 3350 3400 31XX 36XX 3XXX	Liabilities and Equity	Notes	June 30, 2013 AMOUNT % $ 755,037 6 1,331 - 332 - 279,096 2 1,239,069 11 174,537 2 77,830 1 2,527,232 22 - - 65,768 - 65,768 - 2,593,000 22 6,499,300 56 259,972 2 1,247,165 11 220,944 2 22,829 - 830,439 7 28,823 - ( 9,109,472 78 - - 9,109,472 78 $ 11,702,472 100	December 31, 2012 AMOUNT % $ 263,676 3 - - 1,045 - 223,074 2 536,155 5 177,539 2 2,183 - 1,203,672 12 - - 65,462 - 65,462 - 1,269,134 12 6,499,300 63 - - 1,246,977 12 103,897 1 22,829 - 1,231,176 12 35,040) - ( 9,069,139 88 1,603 - 9,070,742 88 $ 10,339,876 100	June 30, 2012 AMOUNT % $ - - 897 - 68 - 251,266 3 1,076,709 11 94,231 1 20,797 - 1,443,968 15 189 - 63,447 - 63,636 - 1,507,604 15 6,310,000 64 189,300 2 1,246,977 13 103,897 1 22,829 - 484,238 5 17,532) - 8,339,709 85 1,697 - 8,341,406 85 $ 9,849,010 100	January 1, 2012	January 1, 2012
			AMOUNT $ 755,037 1,331 332 279,096 1,239,069 174,537 77,830 2,527,232 - 65,768 65,768 2,593,000 6,499,300 259,972 1,247,165 220,944 22,829 830,439 28,823 9,109,472 - 9,109,472 $ 11,702,472	AMOUNT $ 263,676 - 1,045 223,074 536,155 177,539 2,183 1,203,672 - 65,462 65,462 1,269,134 6,499,300 - 1,246,977 103,897 22,829 1,231,176 35,040) 9,069,139 1,603 9,070,742 $ 10,339,876	AMOUNT $ - 897 68 251,266 1,076,709 94,231 20,797 1,443,968 189 63,447 63,636 1,507,604 6,310,000 189,300 1,246,977 103,897 22,829 484,238 17,532) 8,339,709 1,697 8,341,406 $ 9,849,010	AMOUNT $ - - 83 299,250 405,808 114,937 37,714 857,792 - 62,989 62,989 920,781 6,310,000 - 1,246,977 7,962 30,419 970,012 - 8,565,370 1,719 8,567,089 $ 9,487,870	%
	Current liabilities Short-term borrowings Financial liabilities at fair value through profit or loss - current Notes payable Accounts payable Other payables Current income tax liabilities Other current liabilities Total Current Liabilities Non-current liabilities Deferred income tax liabilities Other non-current liabilities Total Non-current liabilities Total Liabilities Equity attributable to owners of parent Capital Capital - common stock Dividends to be distributed Capital Reserve Captial surplus Retained Earnings Legal reserve Special reserve Undistributed earnings Other equity interest Other equity interest Equity attributable to owners of the parent Non-controlling interest Total equity Commitments TOTAL LIABILITIES AND STOCKHOLDERS' EOUITY	6(10) 6(2) 6(11) 5(2) and 6(12) 6(13)(15) 6(14)(25) 6(15)(23) 6(16) 9					- - - 3 4 1 1
							9
							- 1
							1
							10
							67 - 13 - - 10 -
							90 -
							90
							100

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 6, 2013.

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SCINOPHARM TAIWAN, LTD. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

					Threemonths ended June 30	Threemonths ended June 30	Threemonths ended June 30	Threemonths ended June 30	Threemonths ended June 30				Six months ended June 30	Six months ended June 30	Six months ended June 30	Six months ended June 30	Six months ended June 30
					2013				2012				2013				2012
	Items	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%			AMOUNT	%
4000	Sales revenue	6(17)		$	1,338,521	100		$	912,803	100		$	2,524,137	100		$	1,884,080	100
5000	Operating costs	6(4)(21)(22)	(		614,235)(	46)(			475,346) (	52)(			1,145,033) (	45)(			923,548)(	49)
5900	Gross Margin				724,286	54			437,457	48			1,379,104	55			960,532	51
	Operating Expenses	6(21)(22) and
		7
6100	Selling expenses		(		49,918) (		4) (		43,159) (		5) (		92,185) (		4) (		95,200) (		5)
6200	General and administrative
	expenses		(		126,007) (		9) (		107,816) (	12) (			255,528) (	10) (			227,360) (	12)
6300	Research and development
	expenses		(		91,580)(		7)(		87,537) (		9)(		186,217) (		7)(		155,536)(		8)
6000	Total Operating Expenses		(		267,505)(	20)(			238,512) (	26)(			533,930) (	21)(			478,096)(	25)
6900	Operating profit				456,781	34			198,945	22			845,174	34			482,436	26
	Non-operating Income and
	Expenses
7010	Other income	6(18)			19,617		1		7,242		1		28,507		1		14,449		1
7020	Other gains and losses	6(2)(19)	(		4,274)		- (		6,631) (		1)		7,129		- (		2,539)		-
7050	Finance costs	6(20)	(		1,588)		- (		8)		- (		3,001)		- (		21)		-
7060	Share of profit/(loss) of	6(6)
	associates and joint ventures
	accounted for under equity
	method		(		2,375)		-		-		- (		2,375)		- (		4,434)(		1)
7000	Total Non-operating
	revenue and expenses				11,380		1		603		-		30,260		1		7,455		-
7900	Income before income tax				468,161	35			199,548	22			875,434	35			489,891	26
7950	Income tax expense	6(23)	(		62,083)(		5)(		23,771) (		3)(		119,192) (		5)(		67,020)(		3)
8200	Net Income			$	406,078	30		$	175,777	19		$	756,242	30		$	422,871	23
	Other comprehensive income
8310	Financial statements translation
	differences of foreign operations			$	23,346		2	$	9,607		1	$	63,863		2 ($		17,532)(		1)
8500	Total other comprehensive
	income for the period			$	429,424	32		$	185,384	20		$	820,105	32		$	405,339	22
	Profit (loss), attributable to:
8610	Owners of the parent			$	406,078	30		$	175,777	19		$	756,198	30		$	422,871	23
8620	Non-controlling interest				-		-		-		-		44		-		-		-
	Net Income			$	406,078	30		$	175,777	19		$	756,242	30		$	422,871	23
	Comprehensive income
	attributable to:
8710	Owners of the parent			$	429,424	32		$	185,384	20		$	820,061	32		$	405,339	22
8720	Non-controlling interest				-		-		-		-		44		-		-		-
	Total comprehensive income
	for the period			$	429,424	32		$	185,384	20		$	820,105	32		$	405,339	22
	Basic Earnings Per Share(in	6(24)
	dollars)
9750	Net Income			$		0.62		$		0.27		$		1.16		$		0.65
	Diluted Earnings Per Share(in	6(24)
	dollars)
9850	Net Income			$		0.62		$		0.27		$		1.16		$		0.65

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 6, 2013.

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SCINOPHARM TAIWAN, LTD. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

For the six-month period ended June 30, 2012 Balance at January 1, 2012 Appropriations of 2011 net income: Provision for legal reserve Distribution of cash dividends Distribution of stock dividends Net income for the six-month period ended June 30, 2012 Other comprehensive loss for the six-month period ended June 30, 2012 Reversal of special reserve Change in non-controlling interest Balance at June 30, 2012 For the six-month period ended June 30, 2013 Balance at January 1, 2013 Appropriations of 2012 net income: Provision for legal reserve Distribution of cash dividends Distribution of stock dividends Net income for the six-month period ended June 30, 2013 Other comprehensive income for the six-month period ended June 30, 2013 Difference between the acquisition or disposal price and carrying amount of subsidiaries Change in non-controlling interest Balance at June 30, 2013					Equityattributable to owners of theparent	Equityattributable to owners of theparent	Equityattributable to owners of theparent	Total $ 8,565,370 - ( 631,000 ) - 422,871 ( 17,532 ) - - $ 8,339,709 $ 9,069,139 - ( 779,916 ) - 756,198 63,863 188 - $ 9,109,472	Non-controlling interest	Total
		Capital Common stock Dividends to be distributed $ 6,310,000 $ - - - - - - 189,300 - - - - - - - - $ 6,310,000 $ 189,300 $ 6,499,300 $ - - - - - - 259,972 - - - - - - - - $ 6,499,300 $ 259,972			Capital Reserves $ 1,246,977 - - - - - - - $ 1,246,977 $ 1,246,977 - - - - - 188 - $1,247,165		Retained Earnings Legal reserve Special reserve Undistributed earnings Currency translation differences $ 7,962 $ 30,419 $ 970,012 $ - 95,935 - ( 95,935 ) - - - ( 631,000 ) - - - ( 189,300 ) - - - 422,871 - - - - ( 17,532 ) - ( 7,590 ) 7,590 - - - - - $ 103,897 $ 22,829 $ 484,238 ($ 17,532 ) $ 103,897 $ 22,829 $ 1,231,176 ($ 35,040 ) 117,047 - ( 117,047 ) - - - ( 779,916 ) - - - ( 259,972 ) - - - 756,198 - - - - 63,863 - - - - - - - - $ 220,944 $ 22,829 $ 830,439 $ 28,823
		Common stock $ 6,310,000 - - - - - - - $ 6,310,000 $ 6,499,300 - - - - - - - $ 6,499,300					Legal reserve Special reserve $ 7,962 $ 30,419 95,935 - - - - - - - - - - ( 7,590 ) - - $ 103,897 $ 22,829 $ 103,897 $ 22,829 117,047 - - - - - - - - - - - - - $ 220,944 $ 22,829
				$ - - - 189,300 - - - - $ 189,300 $ - - - 259,972 - - - - $ 259,972					$ 1,719 - - - - - - ( 22 ) $ 1,697 $ 1,603 - - - 44 - - ( 1,647 ) $ -	$ 8,567,089 - ( 631,000 ) - 422,871 ( 17,532 ) - ( 22 ) $ 8,341,406 $ 9,070,742 - ( 779,916 ) - 756,242 63,863 188 ( 1,647 ) $ 9,109,472

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 6, 2013.

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SCINOPHARM TAIWAN, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

			Forthe six-monthperiods ended June	Forthe six-monthperiods ended June	30,
			2013	2012
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated profit before tax for the period		$	875,434	$	489,891
Adjustments to reconcile net income to net cash provided by
operating activities
Income and expenses having no effect on cash flows
Loss on valuation of financial assets and liabilities			1,804		2,963
Provision for allowance for doubtful accounts			35		-
Reversal of allowance for doubtful accounts			-	(	4,117 )
Loss on inventory market price decline			70,368		47,267
Provision for obsolescence of supplies			2,921		1,859
Share of loss of associates and joint ventures accounted for
under equity method			2,375		4,434
Depreciation			211,163		171,769
Gain on disposal of property, plant and equipment			-	(	632 )
Loss on disposal of property, plant and equipment			1,248		-
Reversal of impairment loss	(		1,106 )	(	2,570 )
Amortization			4,489		2,223
Realized gain between affiliated companies			-	(	19,804 )
Interest expense			3,001		21
Changes in assets/liabilities relating to operating activities
Net changes in assets relating to operating activities
Notes receivable	(		5 )		-
Accounts receivable	(		29,151 )		116,024
Other receivables	(		26,207 )	(	33,229 )
Inventories	(		488,544 )	(	603,218 )
Prepayments	(		54,115 )		67,882
Other current assets			-		15,552
Other non- － current assets refundable deposits	(		566 )	(	1,484 )
Other non- － current assets others	(		1,926 )	(	16,003 )
Net changes in liabilities relating to operating activities
Notes payable	(		713 )	(	15 )
Accounts payable			56,022	(	47,984 )
Other payables	(		59,802 )	(	12,576 )
Other current liabilities			75,647		3,363
Other non- － current liabilities deposits received			-	(	250 )
Other non- － current liabilities others			306		708
Cash provided by generated from operations			642,678		182,074
Interest paid	(		3,001 )		-
Income tax paid	(		183,436)	(	121,183)
Net cash provided by operating activities			456,241		60,891

(Continued)

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SCINOPHARM TAIWAN, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

			Forthe six-monthperiods ended June	Forthe six-monthperiods ended June	Forthe six-monthperiods ended June	30,
			2013		2012
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for under equity method	($		107,388 )	$		-
Cash paid for acquisition of property, plant and equipment	(		299,796 )	(		159,107 )
Proceeds from disposal of property, plant and equipment			8			10,630
Acquisition of intangible assets	(		10,641 )	(		5,032 )
Other non- － current assets prepayments on equipment	(		205,859)	(		218,811)
Net cash used in investing activities	(		623,676)	(		372,320)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans			491,361			-
Decrease in non-controlling interest	(		1,459)	(		22)
Net cash provided by (used in) financing activities			489,902	(		22)
Effect of exchange rate changes on cash			21,518	(		10,045)
Increase (decrease) in cash and cash equivalents			343,985	(		321,496 )
Cash and cash equivalents at beginning of period			3,035,012		3,293,681
Cash and cash equivalents at end of period		$	3,378,997	$	2,972,185
Investing and financing activities with partial cash payments
1.Acquisition of property, plant and equipment		$	282,596	$		211,087
： Add Payables on equipment at beginning of period (shown in
‘other payables’)			122,696			37,555
Capital lease payable, beginning of period (shown in
‘other current liabilities’)			-			964
： Less Payables on equipment at end of period (shown in ‘other
payables’)	(		105,496 )	(		90,011 )
Capital lease payable, end of period (shown in ‘other
current liabilities’)			-	(		488)
Cash paid for acquisition of property, plant and equipment		$	299,796	$		159,107
2.Cash dividends		$	779,916	$		631,000
： Less Cash dividends payable at end of period (shown in ‘other
payables’)	(		779,916)	(		631,000)
Cash dividends distributed		$	-	$		-
Other activities with no cash flow effect
Reclassification of prepayments on equipment to property, plant
and equipment		$	231,098	$		163,351

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 6, 2013.

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SCINOPHARM TAIWAN, LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

1. HISTORY AND ORGANIZATION

• (1) ScinoPharm Taiwan, Ltd. (the Company) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.) on November 11, 1997. The Company and its subsidiaries (collectively referred herein as the “Group”) are 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 materials for medicines, albumin medicines, oligonucleotide medicines, peptide medicines, injections and small molecule drugs, as well as the provision of related consulting and technical services. The Company’s investment plan for the manufacturing of medicine materials was approved by the Industrial Development Bureau of MOEA on May 13, 1998 and complies with the standards of important technical industry application.

• (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 AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

• These consolidated financial statements were authorised for issuance by the Board of Directors on August 6, 2013

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) Not applicable as it is the first-time adoption of IFRSs by the Group this year.

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

• the Group

• IFRS 9, ‘Financial Instruments: Classification and measurement of financial assets’

• A.The International Accounting Standards Board (“IASB”) published IFRS 9, ‘Financial Instruments’, in November, 2009, which will take effect on January 1, 2015 with early application permitted. Although the FSC has endorsed IFRS 9, FSC does not permit early application of IFRS 9 when IFRSs are adopted in R.O.C. in 2013. Instead, enterprises should apply International Accounting Standard No. 39 (“IAS 39”), ‘Financial Instruments: Recognition and Measurement’ reissued in 2009.

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• B. IFRS 9 was issued as the first step to replace IAS 39. IFRS 9 outlines the new classification and measurement requirements for financial instruments, which might affect the accounting treatments for financial instruments of the Group.

• C. The Group has not evaluated the overall effect of the IFRS 9 adoption. However, based on preliminary evaluation, it was noted that the IFRS 9 adoption might have an impact on those instruments classified as ‘available-for-sale financial assets’ held by the Group, as IFRS 9 specifies that the fair value changes in the equity instruments that meet certain criteria may be reported in other comprehensive income, and such amount that has been recognized in other comprehensive income should not be reclassified to profit or loss when such assets are derecognized. The Group did not recognize any gain or loss on debt instruments and on equity instruments in other comprehensive income for the six-month period ended June 30, 2013.

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

• The following are the assessment of new standards, interpretations and amendments issued by IASB that are effective but not yet endorsed by the FSC and have not been adopted by the Group (application of the new standards, interpretations and amendments should follow the regulations of the FSC):

the FSC):
New Standards, Interpretations and Amendments Main Amendments Limited exemption from comparative IFRS 7 disclosures for first-time adopters (amendment to IFRS 1) The amendment provides first-time adopters of IFRSs with the same transition relief that existing IFRS preparer received in IFRS 7, ‘Financial Instruments: Disclosures’ and exempts first-time adopters from providing the additional comparative disclosures. Improvements to IFRSs 2010 Amendments to IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 34 and IFRIC 13. Severe hyperinflation and removal of fixed dates for first-time adopters (amendment to IFRS 1) When an entity’s date of transition to IFRSs is on, or after, the functional currency normalisation date, the entity may elect to measure all assets and liabilities held before the functional currency normalisation date at fair value on the date of transition to IFRSs. First-time adopters are allowed to apply the derecognition requirements in IAS 39, ‘Financial instruments: Recognition and measurement’, prospectively from the date of transition to IFRSs, and they are allowed not to retrospectively recognise related gains on the date of transition to IFRSs.	Effective Date
	July 1, 2010 January 1, 2011 July 1, 2011

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New Standards, Interpretations and Amendments Main Amendments Disclosures - transfers of financial assets (amendment to IFRS 7) The amendment enhances qualitative and quantitative disclosures for all transferred financial assets that are not derecognised and for any continuing involvement in transferred assets, existing at the reporting date. Deferred tax: recovery of underlying assets (amendment to IAS 12) The amendment gives a rebuttable presumption that the carrying amount of investment properties measured at fair value is recovered entirely by sale, unless there exists any evidence that could rebut this presumption. The amendment also replaces SIC 21, ‘Income taxes-recovery of revalued non-depreciable assets’. Presentation of items of other comprehensive income (amendment to IAS 1) The amendment requires profit or loss and other comprehensive income (OCI) to be presented separately in the statement of comprehensive income. Also, the amendment requires entities to separate items presented in OCI into two groups based on whether or not they may be recycled to profit or loss subsequently. Government loans (amendment to IFRS 1) The amendment provides exception to first- time adopters to apply the requirements in IFRS 9, ‘Financial instruments’, and IAS 20, ‘Accounting for government grants and disclosure of government assistance’, prospectively to government loans that exist at the date of transition to IFRS. Improvements to IFRSs 2009- 2011 Amendments to IFRS 1 and IAS 1, IAS 16, IAS 32 and IAS 34. Disclosures-offsetting financial assets and financial liabilities (amendment to IFRS 7) The amendment requires disclosures to include quantitative information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements.

Effective Date

July 1, 2011 January 1, 2012 July 1, 2012 January 1, 2013 January 1, 2013 January 1, 2013

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New Standards, Interpretations and Amendments Main Amendments IFRS 10, ‘Consolidated financial statements’ The standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where it is difficult to assess. IFRS 11, ‘Joint arrangements’ Judgments applied when assessing the types of joint arrangements-joint operations and joint ventures, the entity should assess the contractual rights and obligations instead of the legal form only. The standard also prohibits the proportional consolidation for joint ventures. IFRS 12, ‘Disclosure of interests in other entities’ The standard requires the disclosure of interests in other entities including subsidiaries, joint arrangements, associates and unconsolidated structured entities. Consolidated financial statements, joint arrangements and disclosure of interests in other Entities: Transition guidance (amendments to IFRS 10, IFRS 11 and IFRS 12) The amendment clarifies that the date of initial application is the first day of the annual period in which IFRS 10, 11 and 12 is adopted. IFRS 13, ‘Fair value measurement’ IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs.

Effective Date

January 1, 2013 January 1, 2013 January 1, 2013 January 1, 2013 January 1, 2013

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New Standards, Interpretations and Amendments Main Amendments IAS 19 revised, ‘Employee benefits’ (as amended in 2011) The revised standard eliminates corridor approach and requires actuarial gains and losses to be recognised immediately in other comprehensive income. Past service costs will be recognised immediately in the period incurred. Net interest expense or income, calculated by applying the discount rate to the net defined benefit asset or liability, replace the finance charge and expected return on plan assets. The return of plan assets, excluding net interest expenses, is recognised in other comprehensive income. IAS 27, ‘Separate financial statements’ (as amended in 2011) The standard removes the requirements of consolidated financial statements from IAS 27 and those requirements are addressed in IFRS 10, ‘Consolidated financial statements’. IAS 28, ‘Investments in associates and joint ventures’ (as amended in 2011) As consequential amendments resulting from the issuance of IFRS 11 , ‘Joint arrangements ’, IAS 28 (revised) sets out the requirements for the application of the equity method when accounting for investments in joint ventures. IFRIC 20, ‘Stripping costs in the production phase of a surface mine’ Stripping costs that meet certain criteria should be recognised as the ‘stripping activity asset’. To the extent that the benefit from the stripping activity is realised in the form of inventory produced, the entity shall account for the costs of that stripping activity in accordance with IAS 2, ‘Inventories’. Investment entities (amendments to IFRS 10, IFRS 12 and IAS 27) The amendments define ‘Investment Entities’ and their characteristics. The parent company that meets the definition of investment entities should measure its subsidiaries using fair value through profit of loss instead of consolidating them.

Effective Date

January 1, 2013 January 1, 2013 January 1, 2013 January 1, 2013 January 1, 2014

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New Standards, Interpretations and Amendments Main Amendments Offsetting financial assets and financial liabilities (amendment to IAS 32) The amendment clarifies criterion that an entity ‘currently has a legally enforceable right to set off the recognised amounts’ and gross settlement mechanisms with features that both (i) eliminate credit and liquidity risk and (ii) process receivables and payables in a single settlement process, are effectively equivalent to net settlement; they would therefore satisfy the IAS 32 criterion in these instances. Recoverable amount disclosures for non-financial assets (amendments to IAS 36) The amendments remove the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill or intangible assets with indefinite useful lives that were not impaired. Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) The amendment states that the novation of a hedging instrument would not be considered an expiration or termination giving rise to the discontinuation of hedge accounting when the hedging instrument that is being novated complies with specified criteria. IFRIC 21, ‘Levies’ The interpretation addresses the accounting for levies imposed by governments in accordance with legislation (other than income tax). A liability to pay a levy shall be recognised in accordance with IAS 37, ‘Provisions, contingent liabilities and contingent assets’. Mandatory effective date and transition disclosures (amendment to IFRS 7 and IFRS 9) The mandatory effective date has been postponed to January 1, 2015.

Effective Date

January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2014 January 1, 2015

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New Standards, Interpretations

New Standards, Interpretations
and Amendments Main Amendments IFRS 9, ‘Financial instruments: Classification and measurement of financial liabilities’ IFRS 9 requires gains and losses on financial liabilities designated at fair value through profit or loss to be split into the amount of change in the fair value that is attributable to changes in the credit risk of the liability, which shall be presented in other comprehensive income, and cannot be reclassified to profit or loss when derecognising the liabilities; and all other changes in fair value are recognised in profit or loss. The new guidance allows the recognition of the full amount of change in the fair value in the profit or loss only if there is reasonable evidence showing on initial recognition that the recognition of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch (inconsistency) in profit or loss. (That determination is made at initial recognition and is not reassessed subsequently.)	Effective Date
	January 1, 2015

The Group is assessing the potential impact of the new standards and amendments above and has not yet been able to reliably estimate their impact on the consolidated financial statements.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

• A. These consolidated financial statements are the first second-quarter interim consolidated financial statements prepared by the Group in accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, IAS 34, ‘Interim Financial Reporting’, and IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’, as endorsed by the FSC.

• B. In the preparation of the balance sheet as of January 1, 2012 (the Group’s date of transition to IFRSs (“the opening IFRSs balance sheet”)), the Group has adjusted the amounts that were reported in the consolidated financial statements in accordance with previous R.O.C. GAAP. Please refer to Note 15 for the impact of transitioning from R.O.C. GAAP to the International Financial Reporting Standards, International Accounting Standards, and Interpretations/bulletins as endorsed by the FSC (collectively referred herein as the “IFRSs”) on the Group’s financial

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position, operating results and cash flows.

• C. The consolidated financial statements as of and for the six-month period ended June 30, 2013 should be read together with those as of and for the three-month period ended March 31, 2013.

• (2) Basis of preparation

• A.Except for the following items, these consolidated 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.

  • b) Defined benefit liabilities recognized based on the net amount of pension fund assets plus unrecognized prior period’s service cost and unrecognized actuarial losses, less unrecognized actuarial gains and 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 their judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

• a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies. In general, control is presumed to exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. The existence and effect of potential voting rights that are currently exercisable or convertible have been considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

• b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• c) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.

• d) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss, on the

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same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Business Name of Investor Name of Subsidiary activities ScinoPharm Taiwan, Ltd. SPT International Ltd. Professional investment ScinoPharm Singapore Pte Ltd. Professional investment President ScinoPharm (Cayman), Ltd. Professional investment SPT International Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. Research, development and manufacture of API and new medicine, etc. ScinoPharm (Changshu) Pharmaceuticals, Ltd. Research, development and manufacture of API and new medicine, etc. ScinoPharm (Shanghai) Biochemical Technology, Ltd. Import, export and sales of Active Pharmaceutical Ingredients and intermediates, etc.	June 30, December 31, 2013 2012 Note 100.00 100.00 － 100.00 100.00 － 100.00 60.00 (Note A) 100.00 100.00 － 100.00 100.00 － 100.00 100.00 － Percentage owned by the Company	Note

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Percentage owned by the Company

Name of Business Name of Investor Subsidiary activities ScinoPharm Taiwan, Ltd. SPT International Ltd. Professional investment ScinoPharm Singapore Pte Ltd. Professional investment President ScinoPharm (Cayman), Ltd. Professional investment SPT International Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. Research, development and manufacture of API and new medicine, etc. ScinoPharm (Changshu) Pharmaceuticals, Ltd. Research, development and manufacture of API and new medicine, etc. ScinoPharm (Shanghai) Biochemical Technology, Ltd. Import, export and sales of Active Pharmaceutical Ingredients and intermediates,	June 30, 2012 100.00 100.00 60.00 100.00 100.00 100.00	January 1, 2012 Note 100.00 － 100.00 － 60.00 － 100.00 － 100.00 － － (Note B)

etc.

• (Note A) Jointly owned by the Company and subsidiaries. The remaining 40% non-controlling interest was purchased in April, 2013. The difference between the proceeds from acquisition of the ownership and book value of the ownership, amounting to $188, was included in capital reserve in accordance with related regulations. Relevant information is provided in Note 6(25): transactions with non-controlling interest.

(Note B) New Corporation in the three-month period ended March 31, 2012.

The financial statements of certain subsidiaries were consolidated based on their unaudited or unreviewed financial statements as of and for the three-month and six-month periods ended June 30, 2013 and 2012. Total assets of these subsidiaries amounted to $2,273,220 and $1,351,303, representing 19% and 14% of the related consolidated totals, and total liabilities amounted to $936,604 and $216,628, representing 36% and 14% of the related consolidated totals, as of June 30, 2013 and 2012, respectively. Total comprehensive income of these subsidiaries amounted to ($10,944), $32,578, ($4,103) and $84,027, representing (3%), 18%, (1%) and 21% of the related consolidated totals for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

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• E. Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in NTD, which is the Company’s functional and the Group’s presentation currency.

• A.Foreign currency transactions and balances

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

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

• c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, 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) Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within “interest income or finance costs”. All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within “other gains and losses”.

• B.Translation of foreign operations

• a) The operating results and financial position of all the group entities, associates and jointly controlled entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognized in other comprehensive income.

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• b) When a foreign operation is partially disposed of or sold, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. However, when the Group loses significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

• c) When a foreign operation as an associate or jointly controlled entity is partially disposed of or sold, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, when the Group still retains partial interest in the former foreign associate or jointly controlled entity after losing significant influence over the former foreign associate, or losing joint control of the former jointly controlled entity, such transactions should be accounted for as disposal of all interest in these foreign operations.

• d) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(5) Classification of current and non-current items

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

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

• b) Assets held mainly for trading purposes;

• c) Assets that are expected to be realized 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.

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(6) Cash equivalents

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

(7) Financial assets measured at fair value through profit or loss

• A.Financial assets at fair value through profit or loss are financial assets held for trading or financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges. Financial assets that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

• a) Hybrid (combined) contracts; or

• b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

• c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

• 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.Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.

(8) Available-for-sale financial assets

• A.Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

• B.On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.

• C.Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.

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(9) Loans and receivables

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable that bear no interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(10) Impairment of financial assets

• A.The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

• B.The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:

• a) Significant financial difficulty of the issuer or debtor;

• b) The disappearance of an active market for that financial asset because of financial difficulties;

• c) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

• d) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered; or

• e) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

• a)Financial assets measured at amortized cost

  • The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the

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impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

• b)Financial assets measured at cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset through the use of an impairment allowance account.

• (11) Derecognition of financial assets

The Group derecognises a financial asset when receiving related contractual cash flows from the financial asset. The Group derecognises a financial asset when one of the following conditions is met:

• A. The cash flows from the financial asset have been received.

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

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

• D. The contractual rights to receive cash flows from the financial asset have been transferred; however the Group has not retained control of the financial asset.

• (12) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average cost 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 realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for under the equity method / associates

• A.Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Group’s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss arising through subsequent assessments.

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• B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.

• C. When changes in an associate’s equity that are not recognised in profit or loss or other comprehensive income of the associate and such changes not affecting the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital reserve’ in proportion to its ownership.

• D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital reserve’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital reserve in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to

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profit or loss proportionately.

(14) Property, plant and equipment

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

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

• C. Except for land, other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. 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 necessary, 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:

Buildings 2 ～ 35 years Machinery and equipment 2 ～ 12 years Transportation equipment 2 ～ 6 years Office equipment 3 ～ 7 years Leasehold assets 3 years Other equipment 2 ～ 7 years

(15) Intangible assets

Professional skills, computer software, etc. are stated at cost and amortized on a straight-line basis over its estimated useful life of 3 ~ 10 years.

(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss. Such recovery of impairment loss shall not result to the asset’s carrying amount greater than its amortized cost where no impairment loss was recognized.

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(17) Borrowings

• Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

(18) Notes and accounts payable

• Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. However, short-term accounts payable that bear no interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(19) Financial liabilities at fair value through profit or loss

• A.Financial liabilities at fair value through profit or loss are financial liabilities held for trading or financial liabilities designated as at fair value through profit or loss on initial recognition. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss on initial recognition:

• a) Hybrid (combined) contracts; or

• b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

• c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.

• B.Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.

(20) Derecognition of financial liabilities

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

• B. The Group derecognises an original financial liability and recognises a new financial liability if the terms of an existing financial liability have substantial modifications and such modifications make significant differences (10%) to the original terms. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in profit or loss.

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(21) 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 recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

• (22) Employee benefits

• A. Short-term employee benefits

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

• B.Pensions

• a) Defined contribution plans

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

• b)Defined benefit plans

  • i. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in such corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

  • ii. Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income and presented in retained earnings in the period in which they arise.

  • iii. Past service costs are recognized immediately in profit or loss if vested immediately; if not, the past service costs are amortized on a straight-line basis over the vesting period.

  • iv. Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

• C.Employees’ bonus and directors’ and supervisors’ remuneration

• Employees’ bonus and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’

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bonus and directors’ and supervisors’ remuneration are different from the actual distributed amounts as resolved by the stockholders at their stockholders’ meeting subsequently, the differences should be recognized based on the accounting for changes in estimates. The Group calculates the number of shares of employees’ stock bonus based on the fair value per share at the previous day of the stockholders’ meeting held in the year following the financial reporting year, and after taking into account the effects of ex-rights and ex-dividends.

- (23) Employee share based payment

• A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market 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 recognized is based on the number of equity instruments that eventually vest.

• B.For the cash-settled share-based payment arrangements, the employee services received and the liability incurred are measured at the fair value of the liability to pay for those services, and are recognized as compensation cost and liability over the vesting period. The fair value of the liability shall be remeasured at each balance sheet date until settled at the settlement date, with any changes in fair value recognized in profit or loss.

• (24) Income tax

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

• B.The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C.Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred 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

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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 Group 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 realized or the deferred income tax liability is settled.

• D.Deferred income tax assets are recognized 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, unrecognized and recognized deferred income tax assets are reassessed.

• E.The Group operates in jurisdictions where current tax assets and current tax liabilities are not legally enforceable to be offsetted against each other, As a result, the Group recognizes its deferred income tax assets and liabilities on the gross basis.

• F.Tax preference given for expenditures incurred on acquisitions of equipment or technology, research and development, employees’ training and equity investments is recorded using the income tax credits accounting.

• G.The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

(25) Dividends

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

• (26) Revenue recognition

• A.Sales of goods

The Group manufactures and sells Active Pharmaceutical Ingredients (API), intermediates, etc. Revenue is measured at the fair value of the consideration received or receivable taking into account value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

• B.Sales of services

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The Group provides biochemical technology development consultation and processing services. Revenue from rendering services is recognized under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed by surveys of work performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognized only to the extent that contract costs incurred are likely to be recoverable.

• (27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the General Manager that makes strategic decisions.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgments in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The above information is addressed below:

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

• －

• A.Financial assets impairment of equity investments

  • The Group follows the guidance of IAS 39 to determine whether a financial asset—equity investment is impaired. This determination requires significant judgment. In making this judgment, the Group evaluates, among other factors, the duration and extent to which the fair value of an equity investment is less than its cost and the financial health of and short-term business outlook for the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

• (2)Critical accounting estimates and assumptions

• A.Evaluation of inventories

  • a) As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future.

  • b) As of June 30, 2013, the carrying amount of inventories was $2,287,864.

• B.Impairment assessment of tangible and intangible assets (excluding goodwill)

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The Group assesses impairment based on its subjective judgment and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

• C.Realisability of deferred income 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 income 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 June 30, 2013, the Group recognised deferred income tax assets amounting to $218,369.

• D.Calculation of accrued pension obligations

• a) When calculating the present value of defined pension obligations, the Group must apply judgements and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and expected rate of return on plan assets. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

• b) As of June 30, 2013, the carrying amount of accrued pension obligations was $65,768.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

TAILS OF SIGNIFICANT ACCOUNTS CASH AND CASH EQUIVALENTS
Cash: Cash on hand Checking accounts and demand deposits Time deposits Cash Equivalents: Callable notes Cash and cash equivalents as per consolidated balance sheet and cash flow statement	June 30,2013 324 $ 859,894 2,357,072 3,217,290 161,707 3,378,997 $	December 31,2012
		250 $ 472,413 2,416,593
		2,889,256 145,756
		3,035,012 $

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Cash: Cash on hand Checking accounts and demand deposits Time deposits Cash Equivalents: Callable notes Cash and cash equivalents as per consolidated balance sheet and cash flow statement	June 30,2012 72 $ 308,347 2,653,808 2,962,227 9,958 2,972,185 $	January1,2012
		101 $ 206,142 3,027,604 3,233,847 59,834 3,293,681 $

• A.The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The Group’s maximum exposure to credit risk at balance sheet date is the carrying amount of all cash and cash equivalents.

• B. Details of the Group’s time deposits pledged to others as collateral (listed as “other current assets” and “other non-current assets”) as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 are provided in Note 8.

• (2) FINANCIALASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Items Current items: Financial assets held for trading Non-hedging derivatives Financial liabilities held for trading Non-hedging derivatives Items Current items: Financial assets held for trading Non-hedging derivatives Financial liabilities held for trading Non-hedging derivatives	June 30,2013 - $ 1,331 $ June 30,2012 - $ 897 $	December 31,2012
		473 $ - $ January1,2012
		2,066 $ - $

• A. The Group recognised a net (loss) gain on financial assets and liabilities held for trading amounting to ($2,535) and ($2,630) for the three-month periods ended June 30, 2013 and 2012, respectively, and ($13,620) and $3,980 for the six-month periods ended June 30, 2013 and 2012, respectively (listed as “other gains and losses”).

• B. The counterparties of the Group’s debt instrument investments have good credit quality. The maximum exposure to credit risk at balance sheet date is the carrying amount of financial assets and liabilities at fair value through profit or loss-debt instruments.

• C.The contract information of non-hedging derivative instrument transactions is as follows:

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June 30, 2013 December 31, 2012 Derivative Instruments Contract amount Contract period Contract amount Contract period Forward exchange USD14,840,000 2013.5～2013.8 USD14,820,000 2012.11～2013.2 contracts

Derivative Instruments Forward exchange contracts		Contract amount Contractperiod USD14,840,000 2013.5～2013.8 June 30,2013	Contract amount Contractperiod USD14,820,000 2012.11～2013.2 December 31,2012
Derivative Instruments Forward exchange contracts		Contract amount Contractperiod USD 8,570,000 2012.5～2012.8 EUR 270,000 2012.6～2012.8 June 30,2012	Contract amount Contractperiod USD 7,323,000 2011.11～2012.2 EUR 1,100,000 2011.11～2012.1 January1,2012
		Contract amount USD 8,570,000 EUR 270,000	Contract amount USD 7,323,000 EUR 1,100,000

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

• D.The Group has no financial assets at fair value through profit or loss pledged to others.

• (3) ACCOUNTS RECEIVABLE, NET

ACCOUNTS RECEIVABLE, NET
		June 30,2013	December 31,2012
Accounts receivable	$	870,510	$	841,359
Less: Allowance for doubtful accounts	(	60)	(	25)
	$	870,450	$	841,334
		June 30,2012		January1,2012
Accounts receivable	$	732,018	$	848,042
Less: Allowance for doubtful accounts	(	23)	(	4,140)
	$	731,995	$	843,902

• A. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the Group had no accounts receivable classified as “past due but not impaired”.

• B. Movements on the provision for impairment of accounts receivable are as follows:

At January 1 Provision (reversal for impairment) At June 30	2013 Individualprovision 25 $ 35 60 $	2012
		Individualprovision
		4,140 $ 4,117) ( 23 $

• C.Accounts receivable that were neither past due nor impaired were from customers with good credit quality.

• D. The maximum exposure to credit risk at June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 was the carrying amount of each class of accounts receivable.

• E.The Group does not hold any collateral as security.

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(4) INVENTORIES, NET

June 30, 2013

INVENTORIES, NET	June 30,2013
Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods	Allowance for Cost marketprice decline 523,331 $ 53,061) ($ 25,264 870) ( 962,415 60,444) ( 1,097,288 206,059) ( 2,608,298 $ 320,434) ($ December 31,2012	Book value
		470,270 $ 24,394 901,971 891,229 2,287,864 $ Book value 478,547 $ 19,623 733,264 638,841 1,870,275 $ Book value 613,489 $ 22,724 655,256 730,263 2,021,732 $
	Allowance for Cost marketprice decline 518,604 $ 40,057) ($ 20,480 857) ( 773,779 40,515) ( 806,891 168,050) ( 2,119,754 $ 249,479) ($ June 30,2012
	Allowance for Cost marketprice decline 663,925 $ 50,436) ($ 23,955 1,231) ( 700,129 44,873) ( 893,387 163,124) ( 2,281,396 $ 259,664) ($ January1,2012
	Allowance for Cost marketprice decline 441,619 $ 48,431) ($ 10,353 1,167) ( 614,824 31,685) ( 611,382 131,433) ( 1,678,178 $ 212,716) ($	Book value
		393,188 $ 9,186 583,139 479,949 1,465,462 $

The cost of inventories recognised as expense for the three-month and six-month periods ended June 30, 2013 and 2012 was $612,617, $473,596 and $1,140,066, $916,553, respectively, including $29,626, $37,135 and $70,368, $47,267, respectively, that the Group wrote down from cost to net realizable value accounted for as ‘cost of goods sold’.

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－ － (5) FINANCIALASSETS MEASURED AT COST NON CURRENT

		June 30,2013	December 31,2012	December 31,2012
Unlisted stocks
Tanvex Biologics, Inc.	$	167,673	$	167,673
SYNGEN, INC.		4,620		4,620
		172,293		172,293
Less: Accumulated impairment	(	4,620)	(	4,620)
	$	167,673	$	167,673
		June 30,2012		January1,2012
Unlisted stocks
Tanvex Biologics, Inc.	$	167,673	$	-
SYNGEN, INC.		4,620		4,620
		172,293		4,620
Less: Accumulated impairment	(	4,620)	(	4,620)
	$	167,673	$	-

• A.Based on the Group’s intension, its investment in Tanvex Biologics, Inc. and SYNGEN, INC. should be classified as available-for-sale financial assets. However, as Tanvex Biologics, Inc. and SYNGEN, INC. are not traded in an active market and no sufficient industry information and financial information of similar companies can be obtained, the fair value of the investments in Tanvex Biologics, Inc. and SYNGEN, INC. cannot be measured reliably. Accordingly, the Group classified these stocks as ‘financial assets measured at cost’.

• B. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, no financial assets measured at cost held by the Group were pledged to others.

• C.Tanvex Biologics, Inc. ( “ Tanvex ” ) increased its capital on January 19, 2012. The Company did not subscribe to the capital increase proportionately, resulting to a decrease in ownership percentage from 36.36% to 17.02%. After a comprehensive assessment on various indicators, the Group concluded that it has lost significant influence in Tanvex and accordingly reclassified Tanvex from long-term investment accounted for under the equity method of $167,673 to financial assets measured at cost.

(6) INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

Investee Companies Foreseeacer Pharmaceuticals, Inc. Investee Companies Tanvex Biologics, Inc.	June 30,2013 105,013 $ June 30,2012 - $	December 31,2012
		- $ January1,2012 172,107 $

• A. The Group purchased the shares of Foreseeacer Pharmaceuticals, Inc. in May, 2013 and gained

~35~

significant influence over the investee company and accounts for the investment using the equity method from the acquisition date.

• B. The financial information of the Group’s principal associates is summarized below:

June 30,2013 Foreseeacer Pharmaceuticals, Inc. January1,2012 Tanvex Biologics, Inc.	Assets 138,000 $ 229,998 $	Liabilities 21,856 $ 18,727 $	Profit/ Revenues (Loss) - $ 21,608) ($ - $ 151,691) ($	Ownership Percentage
				15.32% 36.36%

• C. The share of (loss)/profit of associates and joint ventures accounted for under the equity method －

• amounting to $2,375, $ and $2,375, $4,434 for the three-month and six-month periods ended June 30, 2013 and 2012, respectively, were recognized based on the unreviewed financial statements of these investees for the corresponding periods.

• D. Please refer to Note 6(5) for the details of long-term investment accounted for under the equity method reclassified to financial assets carried at cost-non-current.

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(7) PROPERTY, PLANT AND EQUIPMENT

											Construction in progress	Construction in progress
			Machinery and		Transportation			Office				and prepayments
		Buildings		equipment	equipment		equipment			Others		for equipment			Total
January1,2013
Cost	$	2,024,781	$	3,749,060	$	18,421	$	78,758	$	135,980	$	613,004	$		6,620,004
Accumulated depreciation	(	487,046)	(	2,474,962)	(	8,814)	(	45,283)	(	23,402)		-	(		3,039,507)
Accumulated impairment		-	(	21,269)		-		-		-		-	(		21,269)
	$	1,537,735	$	1,252,829	$	9,607	$	33,475	$	112,578	$	613,004	$		3,559,228
Six-month period ended
June 30
At January 1, 2013	$1,537,735		$	1,252,829	$	9,607	$	33,475	$	112,578	$	613,004	$	3,559,228
Additions		-		15,511		-		417		-		266,668			282,596
Disposals－Cost		-	(	48,309)		-	(	172)	(	25)		-	(		48,506)
' －Accumulated
depreciation		-		47,166		-		78		6		-			47,250
Reversal of impairment loss		-		1,106		-		-		-		-			1,106
Reclassification (note)		106,713		505,233		159		29,255	(	11,245)	(	399,017)			231,098
Depreciation charge	(	39,861)	(	149,236)	(	1,413)	(	10,868)	(	9,785)		-	(		211,163)
Net exchange differences		11,747		7,221		261		864		5,269		10,240			35,602
At June 30, 2013	$	1,616,334	$	1,631,521	$	8,614	$	53,049	$	96,798	$	490,895	$		3,897,211
June 30,2013
Cost	$	2,143,531	$	4,229,423	$	18,927	$	114,519	$	125,837	$	490,895	$	7,123,132
Accumulated depreciation	(	527,197)	(	2,577,739)	(	10,313)	(	61,470)	(	29,039)		-	(	3,205,758)
Accumulated impairment		-	(	20,163)		-		-		-		-	(		20,163)
	$	1,616,334	$	1,631,521	$	8,614	$	53,049	$	96,798	$	490,895	$		3,897,211

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																	Construction in progress	Construction in progress
			Machinery and		Transportation					Office		Leased						and prepayments
January1,2012		Buildings		equipment		equipment			equipment				assets			Others		for equipment		Total
Cost	$	1,735,466	$	3,483,347	$		11,930	$		57,991	$		14,970	$		63,793	$	316,664	$	5,684,161
Accumulated depreciation	(	425,680)	(	2,258,997)	(		7,764)	(		36,424)	(		14,970)	(		22,440)		-	(	2,766,275)
Accumulated impairment		-	(	27,126)			-			-			-			-		-	(	27,126)
	$	1,309,786	$	1,197,224		$	4,166		$	21,567		$	-	$		41,353	$	316,664	$	2,890,760
Six-month period ended
June 30
At January 1, 2012	$	1,309,786	$	1,197,224	$		4,166	$		21,567	$		-	$		41,353	$	316,664	$	2,890,760
Additions		-		-			3,839			275			-			530		206,443		211,087
Disposals－Cost	(	4,290)	(	18,744)	(		103)	(		267)			-	(		12,535)		-	(	35,939)
'' －Accumulated
depreciation		1,241		15,903			4			32			-			8,761		-		25,941
Reclassification (note)		36,054		87,488			-			5,203			-			55,323	(	20,717)		163,351
Depreciation charge	(	32,132)	(	128,455)	(		774)	(		4,777)			-	(		5,631)		-	(	171,769)
Reversal of impairment loss		-		2,570			-			-			-			-		-		2,570
Net exchange differences	(	318)	(	532)	(		8)			16			-	(		480)	(	4,226)	(	5,548)
At June 30, 2012	$	1,310,341	$	1,155,454		$	7,124		$	22,049		$	-	$		87,321	$	498,164	$	3,080,453
June 30,2012
Cost	$	1,766,783	$	3,551,277	$		15,637	$		63,219	$		14,970	106,288 $			$	498,164	$	6,016,338
Accumulated depreciation	(	456,442)	(	2,371,267)	(		8,513)	(		41,170)	(		14,970)	(		18,967)		-	(	2,911,329)
Accumulated impairment		-	(	24,556)			-			-			-			-		-	(	24,556)
	$	1,310,341	$	1,155,454		$	7,124		$	22,049		$	-	$		87,321	$	498,164	$	3,080,453

(Note) Reclassified from “prepayment for equipment” under “other non-current assets” and from “other assets” to “office equipment. A. As of and for the six-month periods ended June 30, 2013 and 2012, the Company has not capitalized any interest.

B. Please refer to Note 6 (9) for details of prior years’ impairment provision and reversal of impairment on property, plant and equipment. C.As of June 30, 2013 and 2012, December 31, 2012, and January 1, 2012, no property, plant and equipment were pledged to others as collaterals.

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(8) NON-CURRENT ASSETS

NON-CURRENT ASSETS
Long-term prepaid rent－Land use right (Note) Prepayment for equipment Pledged time deposits Others Long-term prepaid rent－Land use right (Note) Prepayment for equipment Pledged time deposits Others	June 30,2013 93,404 $ 212,296 40,219 17,502 363,421 $ June 30,2012 97,339 $ 401,782 39,369 9,918 548,408 $	December 31,2012
		90,018 $ 237,535 39,369 16,937
		383,859 $
		January1,2012
		100,158 $ 346,322 23,817 8,453
		478,750 $

(Note) In 2008, the Group’s Mainland China subsidiary entered into a land use right contract with the local government relating to the acquisition of the right to use the land located in Changshu, Jiangsu province, with a lease term of 50 years. The subsidiary had prepaid all rental expenses on the contract date, and recognized rental expenses of $489, $489 and $977, $977 for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.

(9) IMPAIRMENT OF NON-FINANCIALASSETS

• A.The Group reversed the impairment loss recognized in prior period amounting to $1,035, $2,570, and $1,106, $2,570 for the three-month and six-month periods ended June 30, 2013 and 2012, respectively, which was recognized in profit or loss for the corresponding periods, as some of the idle machineries were again utilized in production. Details for accumulated impairment please refer to Note 6(7) property, plant and equipment.

• B.The impairment loss reported by operating segments is as follows:

ScinoPharm Taiwan	Recognised in other Recognised in comprehensive profit or loss income 1,035 $ - $ For the three-month period ended June 30,2013	For the three-month period ended June 30,2012	For the three-month period ended June 30,2012
	Recognised in profit or loss 1,035 $	Recognised in profit or loss 2,570 $	Recognised in other comprehensive income - $

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For the six-month period ended For the six-month period ended

(10) (11)

SHORT-TERM BORROWINGS As of June 30, 2012 and January 1, 2012, there were no short-term borrowings. OTHER PAYABLES Recognised in other Recognised in other Recognised in comprehensive Recognised in comprehensive profit or loss income profit or loss income ScinoPharm Taiwan 1,106 $ - $ 2,570 $ - $ June 30,2013 June 30,2012 Type ofborrowings June 30,2013 Interestraterange Collateral Bank loans Unsecured loans 755,037 $ 1.20%～1.31% None Type ofborrowings December31,2012 Interestraterange Collateral Bank loans Unsecured loans 263,676 $ 1.31%～1.35% None

OTHER PAYABLES
Accrued expenses Payables on equipment Cash dividends payable Others Accrued expenses Payables on equipment Cash dividends payable Others	June 30,2013 259,496 $ 105,496 779,916 94,161 1,239,069 $ June 30,2012 278,220 $ 90,011 631,000 77,478 1,076,709 $	December 31,2012
		385,939 $ 122,696 - 27,520 536,155 $ January1,2012
		355,936 $ 37,555 - 12,317 405,808 $

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

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

• a) The amounts recognized in the balance sheets are determined as follows:

		December	31,2012		January1,2012
Present value of funded obligations	$		114,343	$	108,046
Fair value of plan assets	(		48,020)	(	44,380)
			66,323		63,666
Unrecognised past service cost	(		861)	(	927)
Net liability in the balance sheets	$		65,462	$	62,739

• b) The Group recognised pension expenses of $972, $1,170 and $1,943, $2,340 in the statement of comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012, respectively.

• c) As of December 31, 2012 and January 1, 2012, cumulative actuarial losses recognized in －

• other comprehensive income were $1,286 and $ , respectively.

• d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization 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 securitization products, etc.). With regard to the utilization 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. The constitution of fair value of plan assets as of June 30, 2013 and 2012 is given in the Annual Labor Retirement Fund Utilization Report published by the government. Expected return on plan assets was a projection of overall return for the obligations period, which was estimated based on historical returns and by reference to the status of Labor Retirement Fund utilization by the Labor Pension Fund Supervisory Committee and taking into account the effect that the Fund’s 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

~41~

offered by local banks.

e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases Expected return on plan assets	2012 1.50% 3.00% 1.50%	2011
		1.75%
		3.00%
		1.75%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

f) Historical information of experience adjustments was as follows:

Historical information of experience adjustments was as	follows:
		2012
Present value of defined benefit obligations	$	114,343
Fair value of plan assets	(	48,020)
Deficit in the plan Experience adjustments on plan liabilities Experience adjustments on plan assets	$ ($ ($	66,323 5,927) 379)

• g) The Group’s expected contributions to the pension plans for the period from July 1, 2013 to December 31, 2013 were $1,637.

B. As a result of the enforcement of the Act, the Company set up a defined contribution pension plan which took effect on July 1, 2005. The local employees are eligible for the defined contribution plan. For employees who choose to be covered under the pension scheme of the Act, the Company contributes monthly an amount of not less than 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. Pensions are paid by monthly installments or in lump sum based on the accumulated balances of the employees’ individual pension accounts. The subsidiaries in Mainland China are subject to a statutory non-contributory and funded defined contribution plan. In accordance with the related Laws of the People’s Republic of China, the subsidiaries in Mainland China contribute monthly 18% of the employees’ monthly salaries and wages to an independent fund administered by the government. Other than the monthly contributions, these subsidiaries do not have further obligations. For the three-month and six-month periods ended June 30, 2013 and 2012, the pension cost recognized under the aforementioned defined contribution pension plan were $8,338, $8,101 and $16,075, $14,772, respectively.

(13) SHARE CAPITAL

• A. As of June 30, 2013, the Company’s authorized capital was $10,000,000, consisting of 649,930 thousand shares of ordinary stock, and the paid-in capital was $6,499,300 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

• B. Movements in the number of the Company’s ordinary shares outstanding are as follows:

Balance as of January 1 and June 30	2013 649,930	2012 631,000

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(14) CAPITAL RESERVE

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

• B. Movement on capital surplus:

At January 1 At June 30 Difference between the acquisition or disposal price and carrying amount of subsidiaries At January 1 and June 30	For the six-monthperiod ended June 30,2013	For the six-monthperiod ended June 30,2013	For the six-monthperiod ended June 30,2013
	Difference between the acquisition or disposal Share Stock price and carrying premium options amount of subsidiaries Total 1,233,286 $ 13,691 $ - $ 1,246,977 $ - - 188 188 1,233,286 $ 13,691 $ 188 $ 1,247,165 $ For the six-monthperiod ended June 30,2012		Total
	Share premium 1,233,286 $	Difference between the acquisition or disposal Stock price and carrying options amount of subsidiaries 13,691 $ - $	Total
			1,246,977 $

Please refer to Note 6(25) for details of difference between the acquisition or disposal price and carrying amount of subsidiaries.

(15) RETAINED EARNINGS

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

~43~

• 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. Directors' and supervisors' remuneration shall comprise 2% and at least 0.2% for employees' bonuses.

• 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.

• D. For the three-month and six-month periods ended June 30, 2013 and 2012, employees’ bonus and directors’ and supervisors’ remuneration were accrued at $8,042, $3,483 and $14,980, $8,275, respectively, which were estimated based on certain percentages (prescribed by the Company’s Articles of Incorporation) of net profit in the corresponding periods after taking into account the legal reserve and other factors. The employees’ bonus and directors’ and supervisors’ remuneration was resolved to be $23,175 in the 2012 stockholders’ meeting, which was different from the estimated amount recognized in the 2012 financial statements by $5. Such differences were recognized in the 2013 consolidated income statement. Information about the appropriation of employees’ bonus and directors’ and supervisors’ remuneration by the Company as proposed by the Board of Directors and resolved by the stockholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

• E. The Company recognized cash dividends and stock dividends distributed to owners amounting to $631,000 ($1.00 (in dollars) per share) and $189,300 ($0.3 (in dollars) per share) for the year ended December 31, 2012, respectively. On June 21, 2013, the shareholders at the shareholders’ meeting resolved to distribute cash dividends and stock dividends amounting to $779,916 ($1.20 (in dollars) per share) and $259,972 ($0.4 (in dollars) per share), respectively, form the 2012 earnings.

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(16) OTHER EQUITY ITEMS

OTHER EQUITY ITEMS
			2013		2012
At January 1	($		35,040)	$	-
Currency translation differences－group			63,863	(	17,532)
At June 30		$	28,823	($	17,532)
OPERATING REVENUE
		For	the three-monthperiods ended June 30,
			2013		2012
Sales revenue	$		1,348,265	$	905,984
Less: Sales returns	(		6,411)		-
Sales discounts	(		9,028)	(	268)
Technical service revenue			5,695		7,087
	$		1,338,521	$	912,803
		For the six-monthperiods ended June 30,
			2013		2012
Sales revenue	$		2,549,776	$	1,867,033
Less: Sales returns	(		33,604)		-
Sales discounts	(		9,074)	(	268)
Technical service revenue			17,039		17,315
	$		2,524,137	$	1,884,080
OTHER INCOME
	For the three-month			periods	ended June 30,
			2013		2012
Interest income
Bank deposits	$		10,769	$	7,242
Other			8,848		-
	$		19,617	$	7,242
		For the six-monthperiods ended June 30,
			2013		2012
Interest income
Bank deposits	$		19,659	$	14,449
Other			8,848		-
	$		28,507	$	14,449

(17) OPERATING REVENUE

(18) OTHER INCOME

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(19) OTHER GAINS AND LOSSES

OTHER GAINS AND LOSSES
INANCE COSTS Net losses on financial assets/liabilities through profit or loss Net currency exchange gain Gain on disposal of property, plant, and equipment Reversal of impairment loss Miscellaneous Net (losses) gains on financial assets/liabilities through profit or loss Net currency exchange gain (loss) Gain (loss) on disposal of property, plant, and equipment Reversal of impairment loss Miscellaneous nterest expense: Bank loans Amortization of lease payable nterest expense: Bank loans Amortization of lease payable	2013 2012 2,535) ($ 2,630) ($ 13,207 4,068 1,052) ( 673 1,035 2,570 14,929) ( 11,312) ( 4,274) ($ 6,631) ($ For the three-monthperiods ended June 30, 2013 2012 13,620) ($ 3,980 $ 26,488 17,332) ( 1,248) ( 632 1,106 2,570 5,597) ( 7,611 7,129 $ 2,539) ($ For the six-monthperiods ended June 30, 2013 2012 1,588 $ - $ - 8 1,588 $ 8 $ 2013 2012 3,001 $ - $ - 21 3,001 $ 21 $ For the three-monthperiods ended June 30, For the six-monthperiods ended June 30,
	2013 3,001 $ - 3,001 $

(20) FINANCE COSTS

Interest expense: Bank loans Amortization of lease payable

Interest expense:

~46~

(21) EXPENSES BY NATURE

EXPENSES BY NATURE
Employee benefit expense Depreciation Amortization Employee benefit expense Depreciation Amortization	Operatingcost Operatingexpense Total 146,132 $ 116,320 $ 262,452 $ 87,523 21,906 109,429 177 2,176 2,353 233,832 $ 140,402 $ 374,234 $ Operatingcost Operatingexpense Total 279,118 $ 202,018 $ 481,136 $ 168,591 42,572 211,163 345 4,144 4,489 448,054 $ 248,734 $ 696,788 $ For the three-monthperiod ended June 30,2013 For the six-monthperiod ended June 30,2013		For the three-monthperiod ended June 30,2012
			Operatingcost Operatingexpense Total 128,678 $ 81,516 $ 210,194 $ 67,412 17,625 85,037 28 1,106 1,134 196,118 $ 100,247 $ 296,365 $ For the six-monthperiod ended June 30,2012		Total
					210,194 $ 85,037 1,134
					296,365 $
	Operatingcost 279,118 $ 168,591 345 448,054 $	Operatingexpense 202,018 $ 42,572 4,144 248,734 $	Operatingcost 243,647 $ 136,736 57 380,440 $	Operatingexpense 181,287 $ 35,033 2,166 218,486 $	Total
					424,934 $ 171,769 2,223
					598,926 $

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(22) EMPLOYEE BENEFIT EXPENSE

For the three-month periods ended June 30,

MPLOYEE BENEFIT EXPENSE	For the three-monthperiods ended June 30,	ods ended June 30,
Salaries and wages Labor and health insurance Pension costs Other personnel expenses Salaries and wages Labor and health insurance Pension costs Other personnel expenses	2013 2012 227,344 $ 180,083 $ 16,595 11,513 9,310 9,271 9,203 9,327 262,452 $ 210,194 $ For the six-monthperiods ended June 30,	2012
		180,083 $ 11,513 9,271 9,327
		210,194 $
	2013 415,082 $ 29,691 18,018 18,345 481,136 $	2012
		368,486 $ 24,790 17,112 14,546
		424,934 $

(23) INCOME TAX

A. Income tax expense

a) Components of income tax expense:

For the three-month periods ended June 30,

	For the three-monthperiods ended June 30,
Current tax: Current period income tax Under (over) provision of prior year's income tax Total current tax Deferred tax: Temporary differences Income tax expense Current tax: Current period income tax Under (over) provision of prior year's income tax Total current tax Deferred tax: Temporary differences Income tax expense	2013 2012 102,114 $ 72,447 $ 4,768 1,080) ( 106,882 71,367 44,799) ( 47,596) ( 62,083 $ 23,771 $ 2013 2012 178,853 $ 101,557 $ 4,768 1,080) ( 183,621 100,477 64,429) ( 33,457) ( 119,192 $ 67,020 $ For the six-monthperiods ended June 30,
	2013 178,853 $ 4,768 183,621 64,429) ( 119,192 $

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b) Reconciliation between accounting income and taxable income

			For the six-month	periods	periods	ended June 30,
			2013			2012
Income tax at the statutory tax rate		$	180,869		$	92,744
Effect of items that cannot be recognized
according to the laws and regulations	(		64,459)	(		26,593)
10% tax on unappropriated earnings			1,353			4,312
Under (over) provision of prior year’s
income tax			4,768	(		1,080)
Effect of tax exemption	(		3,339)	(		2,363)
Income tax expense		$	119,192		$	67,020

• B.The Company’s income tax returns through 2011 have been assessed and approved by the Tax Authority.

• C. The Group’s unappropriated retained earnings listed on the balance sheet as of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012 were all generated after the year 1998.

• D. As of June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012, the balance of the Company’s imputation tax credit account was $271,778, $11,793, $179,185 and $65,847, respectively. The earnings distribution for 2011 was approved at the stockholders’ meeting on June 13, 2012 and the date of dividend distribution was set on August 16, 2012 by the Board of Directors. The creditable tax rate for 2011 was 18.47%. The estimated creditable tax rate is 21.06% for the year ended December 31, 2012. The Company’s imputation tax credit distributed to the stockholders shall be calculated on the basis of the balance of each stockholder on the date of dividend distribution. As a result, the applicable creditable tax rate for the dividend distributed for the year 2012 shall be adjusted which accounts for the Company different imputation tax credits under the Tax Law before the date of dividend distribution. The accumulated undistributed earnings after 1998 is handled under the amendments of the Tax Law and Securities and Exchange Act.

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(24) EARNINGS PER SHARE (“EPS”)

For the three-month period ended June 30, 2013

	For the three-monthperiod ended June 30,2013	013
Basic earnings per share Profit attributable to ordinary stockholders of the parent Diluted earnings per share Profit attributable to ordinary stockholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary stockholders of the parent Diluted earnings per share Profit attributable to ordinary stockholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Weighted average number of shares outstanding during the period EPS Amount after tax (shares in thousands) (in dollars) 406,078 $ 649,930 0.62 $ 406,078 $ 649,930 - 11 406,078 $ 649,941 0.62 $ For the three-monthperiod ended June 30,2012	EPS (in dollars)
		0.62 $
		0.62 $
	Weighted average number of shares outstanding during the period Amount after tax (shares in thousands) 175,777 $ 649,930 175,777 $ 649,930 - 6 175,777 $ 649,936	EPS (in dollars)
		0.27 $
		0.27 $

~50~

Basic earnings per share Profit attributable to ordinary stockholders of the parent Diluted earnings per share Profit attributable to ordinary stockholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary stockholders of the parent Diluted earnings per share Profit attributable to ordinary stockholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares	For the six-monthperiod ended June 30,2013	For the six-monthperiod ended June 30,2013
	Weighted average number of shares outstanding during the period EPS Amount after tax (shares in thousands) (in dollars) 756,198 $ 649,930 1.16 $ 756,198 $ 649,930 - 21 756,198 $ 649,951 1.16 $ For the six-monthperiod ended June 30,2012	EPS (in dollars)
		1.16 $
		1.16 $
	Weighted average number of shares outstanding during the period Amount after tax (shares in thousands) 422,871 $ 649,930 422,871 $ 649,930 - 14 422,871 $ 649,944	EPS (in dollars)
		0.65 $
		0.65 $

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• A. The appropriation of 2012 earnings was resolved by the shareholders at the shareholders’ meeting on June 21, 2013 and effective date of the capital increase was set on August 15, 2013. Proforma information for retrospectively adjusted basic earnings per share and diluted earnings per share is as follows:

per share is as follows:
Basic earnings per share Net income Diluted earnings per share Net income Basic earnings per share Net income Diluted earnings per share Net income	For the three-month period ended June 30,2013 $ 0.60 $ 0.60 For the six-month period ended June 30,2013 $ 1.12 $ 1.12	For the three-month period ended June 30,2012
		$ 0.26
		$ 0.26
		For the six-month period ended June 30,2012
		$ 0.63
		$ 0.63

• B.The abovementioned weighted average number of ordinary shares outstanding have been adjusted to unappropriated retained earnings as proportional increase in capital for the year ended December 31, 2012.

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

(25) Transactions with non-controlling interest

In April, 2013, the Group purchased additional 40% of outstanding share interests of President ScinoPharm (Cayman), Ltd. The transaction had been settled and the Group paid $1,647. The book value of these shares on the acquisition date was $4,588. This transaction reduced non-controlling interest and increased the equity of owners of the parent by $1,835. The difference between the proceeds for acquisition of the interests and book value of the interests was included in capital reserve.

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	For the three-month period	For the three-month period	For the three-month period		For the six-month period	For the six-month period
			ended June 30,2013			ended June 30,2013
Carrying amount of non-controlling	$		1,835	$		1,835
interest acquired
Consideration paid to non-controlling
interest	(		1,647)	(		1,647)
Capital reserve
Difference between the acquisition or
disposal price and carrying amount of
subsidiaries		$	188		$	188

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

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

(2) Significant transactions and balances with related parties

A.Other expenses:

For the three-month periods ended June 30,

	For the three-monthperiods ended June 30,	ods ended June 30,
Consulting fees: －Ultimate parent company Repairs and maintenance fees: －An entity controlled by key management individuals Management service fees: －The Company’s key management individual Consulting fees: －Ultimate parent company Repairs and maintenance fees: －An entity controlled by key management individuals Management service fees: －The Company’s key management individual	2013 2012 2,090 $ - $ 3,009 $ - $ - $ 1,370 $ For the six-monthperiods ended June 30,	2012
	2013 3,180 $ 3,009 $ - $	2012
		- $ 2,919 $ 1,370 $

~53~

B.Property transactions:

Purchase of property:

For the three-month periods ended June 30,

Purchase of property, plant and equipment:

• － An entity controlled by key management individuals

• Purchase of property, plant and equipment:

• － An entity controlled by key management individuals

For the three-monthperiods ended June 30,	ods ended June 30,
2013 2012 - $ - $ For the six-monthperiods ended June 30,	2012
2013 1,750 $	2012
	- $

(3) Key management compensation

Salaries and other short-term employee benefits

Salaries and other short-term employee benefits

For the three-monthperiods ended June 30,	For the three-monthperiods ended June 30,
2013 2012 31,395 $ 26,104 $ For the six-monthperiods ended June 30,	2012
2013 41,740 $	2012
	35,583 $

8. PLEDGED ASSETS

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

Assets Time deposits (note) Assets Time deposits (note)	June 30,2013 40,219 $ June 30,2012 39,369 $	December 31,2012 39,369 $ January1,2012 39,369 $	Purpose of collateral
			Customs duty and performance guarantee Purpose of collateral
			Customs duty and performance guarantee

Note: Recorded as “other financial assets - current” and “other financial assets - non-current.”

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1)As of June 30, 2013, December 31, 2012, June 30, 2012, and January 1, 2012, the Company and its subsidiaries’ unused letters of credit amounted to $4,659, $8,203, $12,219, and $42,028, respectively.

~54~

• (2)As of June 30, 2013, December 31, 2012, June 30, 2012, and January 1, 2012, the Company and its subsidiaries’ remaining balance due for construction in progress and prepayments for equipment was $679,490, $636,466, $255,126, and $269,993, respectively.

• (3)The Company entered into a non-cancellable operating lease agreement from June 1, 2011 to February 28, 2018 for the land in Tainan Science Park, with the term of lease less than twenty years. The lease agreement is renewable at the end of the lease term. The Company will pay monthly rent starting from the day of rent. If the announced land values, state-owned land rent, or other factors that contribute to different rates change, the monthly rent paid by the Company will be adjusted accordingly on the following month. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

non-cancellable operating leases are as follows:
Not later than one year Later than one year but not later than five years More than five years Not later than one year Later than one year but not later than five years More than five years	June 30,2013 21,291 $ 78,068 - 99,359 $ June 30,2012 18,516 $ 74,064 12,344 104,924 $	December 31,2012
		18,516 $ 74,064 3,086
		95,666 $
		January1,2012
		18,516 $ 74,064 21,602
		114,182 $

10. SIGNIFICANT DISASTER LOSS: None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE: None.

12. OTHERS

(1) Capital risk management

The Group’s objectives on managing capital are to safeguard the Group’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 equipments. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return of capital to shareholders, and issue new shares or sell assets to reduce debts.

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(2) Financial instruments

A.Fair value information of financial instruments

Except those in the table below, the book value of the Group’s cash and cash equivalents, financial assets at fair value through profit or loss and financial instruments measured at amortized cost (including notes receivable, accounts receivable, other receivables, short-term loans, notes payable, accounts payable and other payables) is approximate to their fair value. Please refer to Note 12 (3) for details of fair value information of financial instruments measured at fair value.

Financial assets: Other financial assets (Recorded as “other assets - current” and “other assets - non-current”) Financial liabilities: Other financial liabilities (Recorded “other liabilities - non-current”)	Book value Fair value 57,722 $ 57,722 $ - $ - $ June30,2013	December	Fair value 56,306 $ - $ 31,2012	Book value Fair value 49,287 $ 49,287 $ - $ - $ June30,2012	January1,2012	January1,2012
	Book value 57,722 $ - $	Book value 56,306 $ - $		Book value 49,287 $ - $	Book value 47,803 $ 250 $	Fair value
						47,803 $
						250 $

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• B.Financial risk management policies

• a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.

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

• C.Significant financial risks and degrees of financial risks a)Market risk

  • I.Foreign exchange rate risk

  • i)The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to USD. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.

  • ii)To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group treasury. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency.

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

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Foreign currency amount(in thousands) Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 36,613 $ 30.00 EUR:NTD 269 39.15 Financial liabilities Monetary items USD:NTD 2,708 30.00 Foreign currency amount(in thousands) Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 31,791 $ 29.04 EUR:NTD 232 38.49 Financial liabilities Monetary items USD:NTD 690 29.04 EUR:NTD 135 38.49 Foreign currency amount(in thousands) Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 23,761 $ 29.88 EUR:NTD 563 37.56 Financial liabilities Monetary items USD:NTD 822 29.88 June 30,2013 December 31,2012 June 30,2012		June 30,2013	June 30,2013	Book value (NTD)
				1,098,390 $ 10,531 81,240 Book value (NTD)
				923,211 $ 8,930 20,038 5,196 Book value (NTD)
			Exchange rate 29.88 37.56 29.88
				709,979 $ 21,146 24,561

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Foreign currency amount(in thousands) Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 27,254 $ 30.28 EUR:NTD 2,354 39.18 Financial liabilities Monetary items USD:NTD 2,257 30.28 January1,2012	January1,2012	January1,2012
		Exchange rate 30.28 39.18 30.28	Book value (NTD)
			825,251 $ 92,230 68,342

As of June 30, 2013 and 2012, if the NTD:USD exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the Company’s net profit after tax for the six-month periods ended June 30, 2013 and 2012 would increase/decrease by $50,858 and $34,136, respectively. If the EUR:NTD exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the Company’s net profit after tax for the six-month periods ended June 30, 2013 and 2012 would increase/decrease by $527 and $1,057, respectively.

II.Price risk

The Group has investments classified as financial assets and liabilities at fair value through profit or loss and available-for-sale financial assets (shown in ‘financial assets measured at cost-noncurrent’). Therefore, the Group is exposed to price risk on equity instruments investments. To manage this risk, the Group has set stop-loss amounts for these instruments. The Group expects no significant market risk.

• III.Interest rate risk

• The Group analyses its interest rate exposure on a dynamic basis. Thus, the interest rate of the Group’s liabilities fluctuates accordingly with the market interest rate, creating divergence in the Group’s future cash flow. However, as the Group’s liabilities bear little significance and a small range of interest rate, the Group does not bear significant interest rate risk.

• b)Credit risk

• I.Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing 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 with limits set by the board of directors. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, and outstanding receivables. The Group also transacts with many different banks and financial institutions to diversify risk.

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• II. No credit limits were exceeded during the six-month periods ended June 30, 2013 and 2012.

• III.For more information regarding the Group’s credit ratings on its financial assets, please refer to detailed explanation of financial assets on Note 6.

• c)Liquidity risk

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

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

ndiscounted cash flows.
June 30,2013 Short-term borrowings Notes payable Accounts payable Other payables Forward exchange contracts Non-derivative financial liabilities: Derivative financial liabilities: December 31,2012 Short-term borrowings Notes payable Accounts payable Other payables Non-derivative financial liabilities:	Less than 1year 755,037 $ 332 279,096 1,239,069 1,331 Less than 1year 263,676 $ 1,045 223,074 536,155	Between 1 and 2years - $ - - - - Between 1 and 2years - $ - - -	Between 2 and 5years - $ - - - - Between 2 and 5years - $ - - -	More than 5years
				- $ - - - - More than 5years
				- $ - - -

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June 30,2012 Notes payable Accounts payable Other payables Forward exchange contracts Non-derivative financial liabilities: Derivative financial liabilities: January1,2012 Notes payable Accounts payable Other payables Non-derivative financial liabilities:	Less than 1year 68 $ 251,266 1,076,709 897 Less than 1year 83 $ 299,250 405,808	Between 1 and 2years - $ - - - Between 1 and 2years - $ - -	Between 2 and 5years - $ - - - Between 2 and 5years - $ - -	More than 5years
				- $ - - - More than 5years
				- $ - -

(3) Fair value estimation

• A.The table below analyses financial instruments measured at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). Level 3: Inputs for the asset or liability that are not based on observable market data.

The following table presents the Group’s financial assets and liabilities that are measured at fair value at June 30, 2013, December 31, 2012, June 30, 2012 and January 1, 2012.

June 30,2013 Financial assets: Financial assets measured at cost Financial liabilities: Financial liabilities at fair value through profit or loss - forward foreign contracts	Level 1 - $ - $	Level 2 - $ 1,331 $	Level 3 167,673 $ - $	Total
				167,673 $ 1,331 $

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December 31,2012 Financial assets: Financial assets at fair value through profit or loss - forward foreign contracts Financial assets measured at cost June 30,2012 Financial assets: Financial assets measured at cost Financial liabilities: Financial liabilities at fair value through profit or loss - forward foreign contracts January1,2012 Financial assets: Financial assets at fair value through profit or loss - forward foreign contract	Level 1 - $ - - $ Level 1 - $ - $ Level 1 - $	Level 2 473 $ - 473 $ Level 2 - $ 897 $ Level 2 2,066 $	Level 3 - $ 167,673 167,673 $ Level 3 167,673 $ - $ Level 3 - $	Total
				473 $ 167,673
				168,146 $
				Total
				167,673 $
				897 $
				Total
				2,066 $

• B. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity instruments and debt instruments classified as financial assets/financial liabilities at fair value through profit or loss or available-for-sale financial assets.

• C.The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

• D.If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

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• E.Specific valuation techniques used to value financial instruments include:

• a) Quoted market prices or dealer quotes for similar instruments.

• b) The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.

• c) Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

• F.The following table presents the changes in level 3 instruments for the six-month periods ended June 30, 2013 and 2012:

June 30, 2013 and 2012:
At January 1 Additions At June 30	For the six-monthperiods ended June 30,
	2013 Equitysecurities 167,673 $ - 167,673 $	2012
		Equitysecurities
		- $ 167,673
		167,673 $

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13. ADDITIONAL DISCLOSURES REQUIRED BY THE SECURITIES AND FUTURES BUREAU

• (1) Related information of significant transactions(For the six-month period ended June 30, 2013)

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

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

• C. The balance of securities held as of June 30, 2013 are summarized as follows:

As of June 30, 2013

Investor ScinoPharm Taiwan, Ltd. SPT International, Ltd.	Type and name of securities Bill under repurchase agreements: China Bill Finance Co. International Bills Finance Co. Mega Bills Finance Co., Ltd. Stocks: Tanvex Biologics, Inc. SYNGEN, INC. SPT International, Ltd. ScinoPharm Singapore Pte Ltd. President ScinoPharm (Cayman), Ltd. Foreseeacer Pharmaceuticals, Inc. ScinoPharm (KunShan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd. President ScinoPharm (Cayman), Ltd.	Relationshipwith the issuer － － － The company is a director of Tanvex Biologics, Inc. － An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method An investee company accounted for under the equity method	Accounts(Note) 1 1 1 2 2 3 3 3 3 3 3 3 3	Number of shares (in thousands) - - - 28,800 245 43,545 - 102 3,600 - - - 68	Book value 87,178 $ 44,586 29,943 167,673 - 1,244,197 15 2,393 105,013 441,568 866,421 14,762 1,595	Percentage of ownership - - - 17.00% 7.40% 100.00% 100.00% 60.00% 15.32% 100.00% 100.00% 100.00% 40.00%	Market value	Note
							87,178 $ 44,586 29,943 - - 13,330,023 15 2,393 105,013 441,568 866,421 14,762 1,595	─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─ ─

Note: There are three types of general ledger account which are:

1. Cash equivalents

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1. Financial assets carried at cost – non-current

2. Investment accounted for under the equity method

3. D. The cumulative buying or selling amount of one specific security exceeding the lower of $100,000 or 20 percent of the contributed capital:

Name of the counter party - - - - Cash capital increase	Relationship - - - - -	Beginning	Amount - $ - 85,794 59,962 - balance	Add	Amount 1,176,067 $ 1,564,704 1,830,146 621,777 107,388 iton		Disposal	Gain (loss) on disposal 128 $ 189 248 93 -	Number of shares (inthousands) Amount - - $ - - - - - - - 2,375) ( Other increase (decrease)	Ending ba	lance
		Number of shares (inthousands) - - - - -		Number of shares (inthousands) - - - - 3,600		Number of shares (inthousands) - - - - -	Sale price Bookvalue 1,089,017 $ 1,088,889) ($ 1,520,307 1,520,118) ( 1,886,245 1,885,997) ( 681,832 681,739) ( - -			Number of shares (inthousands) - - - - 3,600	Amount
											87,178 $ 44,586 29,943 - 105,013

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• E. Acquisition of real estate with an amount exceeding $100,000 or 20 percent of the contributed capital:

Company name	Type of property	Transaction date	Payment	Satus of payment	Name of counterparty	Relationship	Pri	or transaction of r	elated counterparty	elated counterparty	Price reference	Purpose of acquisition	Other items
							Owner	Relationship	Transfer date	Amount
ScinoPharm Taiwan, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd.	Plant Plant (Phase I) Plant (Phase II)	2012.06～2013.6 2010.4～2013.6 2012.11～2013.6	Approximately 406,590 $ 360,629 693,541	66,641 $ 341,345 173,815	GEA Lyophil Gmbh etc. Zhejiang Meiyang International Engineering Design Co., Ltd. etc. Jiangsu Qian Construction Group Co., Ltd.	－ 〞 〞	－ 〞 〞	－ 〞 〞	－ 〞 〞	- $ 〞 〞	Negotiation 〞 〞	Building for operation use 〞 〞	－ 〞 〞

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

• G. Purchases or sales transactions with related parties amounting to $100,000 or 20 percent of the contributed capital:

Company name	Counterparty	Relationship		Description of transaction	Description of transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Notes or accounts	receivable/(payable)	Notes
			Purchases/ (sales)	Amount	Percentage of net purchases/ (sales)	Credit terms			Balance	Percentage of total notes or accounts receivable/ (payable)
							Unit price	Credit terms
ScinoPharm Taiwan, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd.	ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm Taiwan, Ltd.	An investee company of SPT International Ltd. accounted for under the equity method The company	Purchases (Sales)	133,855 $ 133,855	15% (99%)	Payable 90 - $ days after acceptance 90 days - after delivery		－ －	- $ -	- -	－ －

• H. Receivables from related parties exceeding $100,000 or 20 percent of the contributed capital: None.

• I. Derivative financial instruments transactions : For the Company’s derivative financial instrument transactions, please refer to Note 6(2).

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• J. Significant inter-company transactions during the six-month period ended June 30, 2013:

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)			Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note3)
0 1 2 3	ScinoPharm Taiwan, Ltd. ScinoPharm (KunShan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd.	ScinoPharm (KunShan) Biochemical Technology Co., Ltd ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd.	1 1 1 2 2 2	Purchases Management consultancy revenue Accounts payable Purchases Management consultancy revenue Other receivables Outsourcing service fee Sales Management consultancy expense Accounts receivable Sales Management and general expenses Other payables Service revenue	$ 29,729 ( 1,092) ( 4,567) 133,855 ( 8,648) 11,770 2,860 ( 29,729) 1,092 4,567 ( 133,855) 8,648 ( 11,770) ( 2,860)	Closes its accounts 90 days from the end of each month － － Closes its accounts 90 days from the end of each month － － － Closes its accounts 90 days from the end of each month － － Closes its accounts 90 days from the end of each month － － －	1% － － 5% － － － (1%) － － (5%) － － －

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Number 0 represents the Company.

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• (2)The consolidated subsidiaries are in order from number 1.

• Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

• (3)The company to the consolidated subsidiary.

• (4)The consolidated subsidiary to the Company.

• (5)The consolidated subsidiary to another consolidated subsidiary.

• Note 3: 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.

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(2) Disclosure information of investee company

Investors	Investees	Address	Main business	Original investments	Original investments		Holdingstat	us	Net profit (loss) of the investee company for the six-month period ended June 30,2013	Income (loss) recognised by the company for the six- month period ended June 30,2013(Note 2)	Note
				Balance as at June 30,2013	Balance as at January 1, 2013 (Note 1)	Shares	Ownership (%)	Book value
ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. SPT International, Ltd. SPT International, Ltd. SPT International, Ltd. SPT International, Ltd.	SPT International, Ltd. ScinoPharm Singapore Pte Ltd. President ScinoPharm (Cayman), Ltd. Foreseeacer Pharmaceuticals, Inc. ScinoPharm (KunShan) Biochemical Technology Co., Ltd ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd. President ScinoPharm (Cayman), Ltd.	Tortola, British Virgin Islands Singapore Grand Cayman, Cayman Islands Grand Cayman, Cayman Islands China China China Grand Cayman, Cayman Islands	Professional investment Professional investment Professional investment Research and development of peptide injectable drugs Research, development, and manufacture of API and new medicine, etc. Research, development, and manufacture of API and new medicine, etc. Import, export and sales of Active Pharmaceutical Ingredients and intermediates, etc. Professional investment	$ 1,328,662 - 3,541 107,388 121,100 1,141,540 21,578 1,647	$ 1,328,662 - 3,541 - 121,100 1,141,540 21,578 -	43,544,644 2 101,700 3,600,000 - - - 67,800	100.00 100.00 60.00 15.32 100.00 100.00 100.00 40.00	$ 1,244,197 15 2,393 105,013 441,568 886,421 14,762 1,595	($ 72,713) 10 ( 20) ( 15,505) 2,824 ( 71,090) ( 3,970) ( 20)	($ 59,483) 10 ( 12) ( 2,375) - - - -	Subsidary Subsidary Subsidary － Subsidary of subsidary Subsidary of subsidary Subsidary of subsidary －

Note 1: Ending balance as of December 31, 2012.

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

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

Related information on investee companies for the six-month period ended June 30, 2013 :

A. The basic information of investments in Mainland China:

Investment amount

Name of investee in China	Main business	Capital	Investment method	Beginning investment balance from Taiwan	Remitted to China	Remitted back to Taiwan	Accumulated amount of remittance from Taiwan to China as of June 30, 2013	Ownership held by the company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30, 2013 (Note 2)	Book value of investments in China as of June 30, 2013	Accumulated remittance as of June 30, 2013	Note
ScinoPharm (KunShan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd.	Research, development, and manufacture of API and new medicine, etc. Research, development, and manufacture of API and new medicine, etc. Import, export and sales of Active Pharmaceutical Ingredients and intermediates, etc.	$ 120,000 1,140,000 21,600	(Note 1) (Note 1) (Note 1)	$ 111,720 1,140,000 21,600	$ - - -	$ - - -	$ 111,720 1,140,000 21,600	100.00 100.00 100.00	2,824 $ ( 71,090) ( 3,970)	$ 441,568 866,421 14,762	$ - - -	－ － －

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B. The ceiling amount of investment in Mainland China:

Name of company	Accumulated amount of remittance from Taiwan to MainlandChina	Investment amount approved by the Investment Commission of the Ministryof Economic Affairs(MOEA)	Ceiling on investment amount in Mainland China imposed by the InvestmentCommission of MOEA(Note3)
ScinoPharm Taiwan, Ltd.	1,319,717 $	1,546,163 $	$ 5,465,683

Note 1: Setting up a company in the third area, which then invested in the investee in Mainland China.

Note 2: The ‘Investment income (loss) recognised by the Company for the six-month period ended June 30, 2013, were based on unreviewed financial statements of investee companies as of and for the six-month period ended June30, 2013.

Note 3: The ceiling amount is 60% of the higher of net worth or combined 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 consolidated financial statements (USD:NTD 1:30.00).

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

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

  • I. Purchases

Third region Company's name － －	Name of investee in Mainland China ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (KunShan) Biochemical Technology Co., Ltd.	For the six-month period ended June 30,2013
		133,855 $ 29,729
		163,584 $

Purchase prices from related parties are the same as that of general suppliers. The method of payment is agreed upon and closes its accounts 90 days from the end of each month, which is also similar to that of general suppliers.

II. Accounts payable

Third region Company's name －	Name of investee in Mainland China ScinoPharm (KunShan) Biochemical Technology Co., Ltd.	June 30,2013
		4,567 $

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

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

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

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

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

Transaction description Outsourcing service fees Management consultancy revenue Management consultancy revenue	Third region company's name － － －	Name of investee in Mainland China ScinoPharm (Shanghai) Biochemical Technology, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (KunShan) Biochemical Technology Co., Ltd	For the six-month period ended June 30,2013
			2,860 $
			8,648 $
			1,092 $

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Third region Name of investee Transaction description company's name in Mainland China June 30, 2013 Other receivables ScinoPharm (Changshu) － Pharmaceuticals, Ltd. $ 11,770

14. SEGMENT INFORMATION

(1) General information

The management of the Company has identified the operating segments based on how the company’s chief operating decision maker regularly reviews information in order to make decisions. There is no significant change in the organization of the Group and basis for segments division and basis for measurement of segments information.

(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

segments is as follows:
Segment revenue Revenue from internal customers Revenue from external customers Income from segment before income tax Segment assets Segment revenue Revenue from internal customers Revenue from external customers Income from segment before income tax Segment assets	For the six-monthperiod ended June	30,2013
	ScinoPharm Taiwan,Ltd. Others 2,521,707 $ 172,376 $ - 169,946 2,521,707 2,430 925,702 123,035) ( 10,770,070 2,290,541 For the six-monthperiod ended June	Total
		2,694,083 $ 169,946 2,524,137 802,667 13,060,611 30,2012
	ScinoPharm Taiwan,Ltd. Others 1,874,770 $ 289,091 $ - 279,781 1,874,770 9,310 508,868 49,941) ( 9,759,567 1,475,638	Total
		2,163,861 $ 279,781 1,884,080 458,927 11,235,205

(3) Reconciliation for segment income (loss)

A reconciliation of adjusted income of reportable segment to profit before tax is provided as follows:

Income of reportable segments Loss of other operating segments Elimination of intersegment transactions Income before income tax	For the six-month period ended June 30,2013 925,702 $ 123,035) ( 72,767 875,434 $	For the six-month period ended June 30,2012 508,868 $ 49,941) ( 30,964 489,891 $

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15. INITIALAPPLICATION OF IFRSs

These consolidated financial statements are the first second-quarter consolidated financial statements prepared by the Group in accordance with the IFRSs. The Group has adjusted the amounts as appropriate that are reported in the previous R.O.C. GAAP consolidated financial statements to those amounts that should be presented under IFRSs in the preparation of the opening IFRS balance sheet. Information about exemptions elected by the Group, exceptions to the retrospective application of IFRSs in relation to initial application of IFRSs, and how it affects the Group’s financial position, operating results and cash flows in transition from R.O.C. GAAP to the IFRSs is set out below:

(1) Exemptions elected by the Group

• A. Share-based payment transactions

• The Group has elected not to apply the requirements in IFRS 2, ‘Share-based Payment’, retrospectively to equity instruments and liabilities that were vested or settled arising from share-based payment transactions prior to the transition date.

• B. Employee benefits

• The Group has elected to recognise all cumulative actuarial gains and losses relating to all employee benefit plans in ‘retained earnings’ at the transition date, and to disclose the information of present value of defined benefit obligation, fair value of plan assets, gain or loss on plan assets and experience adjustments under the requirements of paragraph 120A (P), IAS 19, ‘Employee Benefits’, based on their prospective amounts for financial periods from the transition date.

• C. Cumulative translation differences

• The Group has elected to reset the cumulative translation differences arising on the translation of the financial statements of foreign operations under R.O.C. GAAP to zero at the transition date, and to deal with translation differences arising subsequent to the transition date in accordance with IAS 21, ‘The Effects of Changes in Foreign Exchange Rates’.

• D. Borrowing costs

The Group has elected to apply the transitional provisions in paragraphs 27 and 28 of IAS 23,

  - ‘Borrowing Costs’, amended in 2007 and apply IAS 23 from the transition date.

• E. Transfers of assets from customers

  • The Group has elected to apply the transitional provisions in paragraph 22 of IFRIC 18, ‘Transfers of Assets from Customers’, and apply IFRIC 18 from the transition date.

• (2) Except derecognition of financial assets and financial liabilities, and non-controlling interest to which exceptions to the retrospective application of IFRSs specified in IFRS 1 are not applied as they have no relation with the Group, other exceptions to the retrospective application are set out below:

Accounting estimates

Accounting estimates made under IFRSs on January 1, 2012 are consistent with those made under R.O.C. GAAP on that day.

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• (3) Requirement to reconcile from R.O.C. GAAP to IFRSs at the time of initial application IFRS 1 requires that entity should make reconciliation for equity, comprehensive income and cash flows for the comparative periods. The Group’s initial application of IFRSs has no significant effect on cash flows from operating activities, investing activities and financing activities. Reconciliation for equity and comprehensive income for the comparative periods as to transition from R.O.C. GAAP to IFRSs is shown below:

• A. Reconciliation for equity on January 1, 2012 and December 31, 2012 is provided in the consolidated financial statements as of and for the three-month period ended March 31, 2013.

• B. Reconciliation for equity on June 30, 2012

					Effect of
					transition
					from R.O.C.
		R.O.C.GAAP		GAAP to IFRSs			IFRSs	Remark
Current assets:
Cash and cash equivalents	$	2,972,185	$		-	$	2,972,185	－
Accounts receivable		731,995			-		731,995	－
Other receivables		81,212			-		81,212	－
Inventories		2,021,732			-		2,021,732	－
Prepayment		110,142			-		110,142	－
Total current assets		5,917,266			-		5,917,266
Non-current assets
Financial assets carried at cost		149,555			18,118		167,673	(9)
Property, plant, and equipment		3,474,661	(		394,208)		3,080,453	(1)、(8)
Intangible assets		115,468	(		98,298)		17,170	(2)、(5)
Deferred income tax assets		109,326			8,714		118,040	(4)、(5)
Other non-current assets		56,861			491,547		548,408	(1)、(2)
								(8)
Total non-current assets		3,905,871			25,873		3,931,744
Total assets	$	9,823,137		$	25,873	$	9,849,010

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Financial liabilities at fair value through profit or loss - current Notes payable Accounts payable Other payables Current income tax liabilities Other current liabilities Total current liabilities Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities Capital Capital - common stock Stock dividends to be distributed Capital Reserves Additional paid-in capital in excess of par - common stock Capital reserve from stock warrants Retained earnings Legal reserve Special reserve Undistributed earnings Other equity Currency translation Total equity Total liabilities and equities Current liabilities Non-current liabilities Equity attributable to owners of the parent Non-controlling interest	R.O.C. GAAP 897 $ 68 251,266 1,060,444 94,231 20,986 1,427,892 - 29,413 29,413 1,457,305 6,310,000 189,300 1,233,286 13,691 103,897 - 477,001 36,960 1,697 8,365,832 9,823,137 $	Effect of transition from R.O.C. GAAP to IFRSs IFRSs - $ 897 $ - 68 - 251,266 16,265 1,076,709 - 94,231 189) ( 20,797 16,076 1,443,968 189 189 34,034 63,447 34,223 63,636 50,299 1,507,604 - 6,310,000 - 189,300 - 1,233,286 - 13,691 - 103,897 22,829 22,829 7,237 484,238 54,492) ( 17,532) ( - 1,697 24,426) ( 8,341,406 25,873 $ 9,849,010 $	Remark
			－ － － (4) － (3) (3) (5) － － － － － (7)、(9) (4)、(5) (6)、(7) (9) (6)、(9) －

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• C. Reconciliation for comprehensive income for the year ended December 31, 2012 is provided in the consolidated financial statements as of and for the three-month period ended March 31, 2013.

• D. Reconciliation for comprehensive income for the six-month period ended June 30, 2012

Effect of transition from R.O.C.

			from	R.O.C.
		R.O.C.GAAP	GAAP	to IFRSs			IFRSs	Remark
Sales revenue	$	1,884,080	$	-	$		1,884,080	－
Operating cost	(	923,548)		-	(		923,548)	－
Gross profit		960,532		-			960,532
Operating expenses
Selling expenses	(	95,200)		-	(		95,200)	－
General and administrative expenses	(	226,934)	(	426)	(		227,360)	(4)、(5)
Research and development expenses	(	155,536)		-	(		155,536)	－
Operating profit		482,862	(	426)			482,436
Non-operating revenue and expenses
Other income		14,449		-			14,449	－
Other gains and losses	(	2,539)		-	(		2,539)	－
Finance costs	(	21)		-	(		21)	－
Share of profit / (loss) of associates
and joint ventures accounted for
under the equity method	(	4,434)		-	(		4,434)	－
Profit before income tax		490,317	(	426)			489,891
Income tax expense	(	67,093)		73	(		67,020)	(4)、(5)
Profit for the period		423,224	(	353)			422,871
Other comprehensive income
Currency translation difference		-	(	17,532)	(		17,532)	(10)
Total comprehensive income for the period, net of tax	$	423,224	($	17,885)		$	405,339

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E.Reconciliation for comprehensive income for the three-month period ended June 30, 2012:

R.O.C.GAAP Sales revenue 912,803 $ Operating cost 475,346) ( Gross profit 437,457 Operating expenses Selling expenses 43,159) ( General and administrative expenses 107,616) ( Research and development expenses 87,537) ( Operating profit 199,145 Non-operating revenue and expenses Other income 7,242 Other gains and losses 6,631) ( Finance costs 8) ( Profit before income tax 199,748 Income tax expense 23,805) ( Profit for the period 175,943 Other comprehensive income Currency translation difference - Total comprehensive income for the period, net of tax 175,943 $	Effect of transition from R.O.C. GAAP to IFRSs IFRSs - $ 912,803 $ - 475,346) ( - 437,457 - 43,159) ( 200) ( 107,816) ( - 87,537) ( 200) ( 198,945 - 7,242 - 6,631) ( - 8) ( 200) ( 199,548 34 23,771) ( 166) ( 175,777 9,607 9,607 9,441 $ 185,384 $	Remark
		－ － － (4)、(5) － － － － (4)、(5) (10)

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Increase/decrease in accounts affected

Note	Reasons for reconciliation	Item	June 30,2012	Comprehensive income for the period from April 1 to June 30,2012
(1) (2) (3)	equipment” at the date of transition to IFRSs and increased “Property, plant and equipment”. be treated as long-term prepaid rent. asset or liability as current. In accordance with the “Rules Governing the Preparation of Financial Statements by Securities Issuers”, idle assets are presented in “Other Assets”. The Group reclassified “Idle assets” to “Property, plant and In accordance with current accounting standards in R.O.C., the Group's payments to obtain the land use rights and prepayments for leased lands are presented in “Other intangible assets”. However, in accordance with IAS 17, “Leases”, such long operating lease should In accordance with current accounting standards in R.O.C., a deferred tax asset or liability should, according to the classification of its related asset or liability, be classified as current or non-current. However, a deferred tax asset or liability that is not related to an asset or liability for financial reporting should be classified as current or non-current according to the expected period to realize or settle a deferred tax asset or liability. However, under IAS 1, “Presentation of Financial Statements ” , an entity should not classify a deferred tax	Property, plant and equipment Other non－ current assets Intangible assets Other non－ current assets Other current assets Deferred income tax assets	7,574 $ 7,574) ( 97,339) ( 97,339 189) ( 189	$ - - - - - -

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Note	Reasons for reconciliation	Item	Increase/decrease in accounts affected	Increase/decrease in accounts affected
			June 30,2012	Comprehensive income for the period from April 1 to June 30,2012
(4) (5)	accrued as expenses at the end of the reporting period. The current accounting standards in R.O.C. do not specify the rules on the cost recognition for accumulated unused compensated absences. The Group recognized such costs as expenses upon actual payment. However, IAS 19, “Employee Benefits”, requires that the costs of accumulated unused compensated absences should be A. The discount rate used to calculate pensions shall be determined with reference to the factors specified in R.O.C. SFAS 18, paragraph 23. However, IAS 19, “Employee Benefits”, requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds that match the currency at the end day of the reporting period and duration of its pension plan. B. The Group selected to recognize all unrecognized transitional net benefit obligation and cumulative actuarial gains and losses relating to employee benefits at the date of transition to IFRSs.	Deferred income tax assets Other payables Undistributed earnings Income tax expense Intangible assets Deferred income tax assets Other non－ current liabilities Undistributed earnings General and administrative expenses Income tax expense General and administrative expenses	2,765 $ 16,265 12,320) ( 1,422 242) ( 959) ( 5,949 34,034 29,871) ( 996) ( 169	$ - - - 698 119) ( - - - - 498) ( 85

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Note	Reasons for reconciliation	Item	Increase/decrease in accounts affected	Increase/decrease in accounts affected
			June 30,2012	Comprehensive income for the period from April 1 to June 30,2012
(6) (7) (8)	Exchange Rates. “Retained earnings” account. prepayments should be recognized as “Other assets”. C. In accordance with accounting standards in R.O.C., actuarial pension gain or loss of the Group is recognised in net pension cost of current period using the ‘corridor’ method. However, in accordance with IAS 19, ‘Employee Benefits’, the Group selects to recognize immediately actuarial pension gain or loss in other comprehensive income. The Group selected to reset the cumulative translation differences from foreign operations to zero at the date of transition to IFRSs, in accordance with IAS 21 - The Effects of Changes in Foreign In accordance with the Jin-Guan-Zheng-Fa-Zi Order No.1010012865, dated April 6, 2012, the Group sets aside special reserve on the date of transition to IFRSs and December 31, 2012, as the Group selected to reclassify the transition differences of items 12 and 13 above to The Group purchased fixed assets and made payments in advance. Pursuant to the “ Rules Governing the Preparation of Financial Statements by Securities Issuers”, such prepayments are presented as “ Fixed assets ” . Based on the nature of the transactions, the	Undistributed earnings Other equity interest Special reserve Undistributed earnings Property, plant and equipment Other non－ current assets	72,610 $ 72,610) ( 30,419 30,419) ( 401,782) ( 401,782	$ - - - - - -

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Note	Reasons for reconciliation	Item	Increase/decrease in accounts affected	Increase/decrease in accounts affected
			June 30,2012	Comprehensive income for the period from April 1 to June 30,2012
(9) (10)	No.1010012865, dated April 6, 2012. R.O.C GAAP do not provide any guidance regarding other comprehensive income, and the ending balance of other comprehensive accounts are presented, net of tax, as equity components in the balance sheets. However, under IAS 1, “Presentation of Financial Statements”, an entity shall disclose the amount of income tax relating to each component of other comprehensive income, including reclassification adjustments, either in the statement of comprehensive income or in the notes. The Group lost its significant influence in Tanvex Biologics, Inc. ( “ Tanvex ” ), and reclassified the carrying amount of Tanvex from “ Long-term investment accounted for under the equity method ” amounting to $167,673 and related “ Cumulative translation differences” associated with Tanvex of $18,118 to “Financial assets carried at cost ” . However, as the Group had selected to reset the cumulative translation differences from foreign operations to zero at the date of transition to IFRSs, it increased both “ Financial assets carried at cost” and “Cumulative translation differences” by $18,118 at December 31, 2012. On the same date, the Group reversed proportionately the special reserve back to “ Retained earnings ” by $7,590, in accordance with the Jin-Guan-Zheng-Fa-Zi Order	Financial assets carried at cost－ non－current Special reserve Undistributed earnings Other equity interest Other equity interest	18,118 $ 7,590) ( 7,590 18,118 17,532	$ - - - - 9,607) (

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• F. There is no significant change in the significant adjustment for the consolidated statement of cash flows for the six-month period ended June 30, 2012. Please refer to the consolidated financial statements as of and for the three-month period ended March 31, 2013 for the related information.

• G. The accounting policies and selection of exemptions applied in these interim consolidated financial statements may be different from those applied in the first year-end IFRSs consolidated financial statements due to the issuance of related regulations by regulatory authorities, changes in economic environment, or changes in the evaluation of the impact of application of accounting policies and exemptions by the Group.

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