SPT — Interim / Quarterly Report 2016

Nov 14, 2016

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

JUNE 30, 2016 AND 2015

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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 its subsidiaries as of June 30, 2016 and 2015, and the related consolidated statements of comprehensive income for the three-month and six-month period then ended, of changes in equity and of cash flows for the six-month period then ended. 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 non-significant subsidiaries were consolidated based on their unreviewed financial statements as of and for the three-month and six-month periods ended June 30, 2016 and 2015. Total assets of these subsidiaries amounted to $2,838,038 thousand and $2,853,800 thousand, representing 23% and 24% of the related consolidated totals, and total liabilities amounted to $84,788 thousand and $102,521 thousand, representing 3% and 4% of the related consolidated totals, as of June 30, 2016 and 2015, respectively. Total comprehensive income of these subsidiaries amounted to ($108,858) thousand, ($111,089) thousand, ($142,610) thousand and ($177,649) thousand, constituting (74%), (99%), (45%) and (86%) of the consolidated totals for the three-month and six-month periods ended June 30, 2016 and 2015, respectively.

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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 non-significant subsidiaries 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 in order for them to be in conformity with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission of the Republic of China.

Yung-Chih Lin Independent Accountants Ming-Hsieh Lee

PricewaterhouseCoopers, Taiwan Republic of China August 4, 2016

------------------------------------------------------------------------------------------------------------------------------------------------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 review 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 review 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. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2016 and 2015 are reviewed, not audited)

Assets	Notes	June 30, 2016 AMOUNT % $ 2,964,318 24 1,988 - - - 677,566 5 205,291 2 2,061,827 16 166,353 1 121,125 1 6,198,468 49 364,089 3 5,354,715 43 20,557 - 423,787 3 58,316 1 28,831 - 86,658 1 9,910 - 6,346,863 51 $ 12,545,331 100	December 31, 2015 AMOUNT % $ 2,335,697 19 - - - - 867,231 7 207,955 2 2,169,208 18 168,603 1 284,216 2 6,032,910 49 338,907 3 5,170,714 43 22,918 - 372,644 3 157,961 1 24,734 - 90,359 1 10,448 - 6,188,685 51 $ 12,221,595 100	June 30, 2015
		AMOUNT $ 2,964,318 1,988 - 677,566 205,291 2,061,827 166,353 121,125 6,198,468 364,089 5,354,715 20,557 423,787 58,316 28,831 86,658 9,910 6,346,863 $ 12,545,331	AMOUNT $ 2,335,697 - - 867,231 207,955 2,169,208 168,603 284,216 6,032,910 338,907 5,170,714 22,918 372,644 157,961 24,734 90,359 10,448 6,188,685 $ 12,221,595	AMOUNT % $ 2,409,774 20 - - 8,971 - 559,553 5 203,092 2 2,315,406 19 188,232 2 - - 5,685,028 48 338,907 3 5,142,475 43 17,590 - 318,577 3 239,607 2 24,734 - 90,974 1 16,530 - 6,189,394 52 $ 11,874,422 100
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 130X Inventory 1410 Prepayments 1476 Other financial assets - current 11XX Total current assets Non-current assets 1543 Financial assets measured at cost - non-current 1600 Property, plant and equipment 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1980 Other financial assets - non- current 1985 Long-term prepaid rent 1990 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(3) 5(2) and 6(4) 6(5)(17)(2 6) 6(6)(8)(26) 5(2) and 6(24) 6(6)(26) 8 6(7)

(Continued)

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of June 30, 2016 and 2015 are reviewed, not audited)

Liabilities and Equity	Notes	June 30, 2016 AMOUNT % $ 1,460,977 12 - - 24,387 - 140,247 1 488,029 4 101,242 1 28,227 - 5,105 - 2,248,214 18 250,147 2 338 - 62,728 1 26,125 - 339,338 3 2,587,552 21 7,310,829 58 292,433 2 1,270,839 10 460,196 4 22,829 - 563,066 5 37,587 - 9,957,779 79 $ 12,545,331 100	December 31, 2015 AMOUNT % $ 1,702,306 14 145 - 995 - 91,060 - 336,932 3 100,009 1 43,536 - - - 2,274,983 18 - - 3,368 - 62,854 1 23,397 - 89,619 1 2,364,602 19 7,310,829 60 - - 1,265,544 10 396,699 3 22,829 - 791,997 7 69,095 1 9,856,993 81 $ 12,221,595 100	June 30, 2015
		AMOUNT $ 1,460,977 - 24,387 140,247 488,029 101,242 28,227 5,105 2,248,214 250,147 338 62,728 26,125 339,338 2,587,552 7,310,829 292,433 1,270,839 460,196 22,829 563,066 37,587 9,957,779 $ 12,545,331	AMOUNT $ 1,702,306 145 995 91,060 336,932 100,009 43,536 - 2,274,983 - 3,368 62,854 23,397 89,619 2,364,602 7,310,829 - 1,265,544 396,699 22,829 791,997 69,095 9,856,993 $ 12,221,595	AMOUNT % $ 1,489,744 12 523 - 121 - 191,471 1 559,919 5 83,732 1 7,213 - - - 2,332,723 19 - - 624 - 69,185 1 21,656 - 91,465 1 2,424,188 20 7,029,643 59 281,186 3 1,262,008 11 396,699 3 22,829 - 396,358 3 61,511 1 9,450,234 80 $ 11,874,422 100
Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2310 Advance receipts 2320 Long-term liabilities, current portion 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2640 Net defined benefit liabilities 2645 Guarantee deposits received 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Share capital 3110 Share capital - common stock 3150 Stock dividends to be distributed 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Undistributed earnings 3400 Other equity interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments 3X2X Total liabilities and equity	6(9) 6(2) 6(10)(26) and 7 6(24) 6(11) and 9 6(11) and 9 6(24) 6(12) 6(13)(16) 6(14)(15) 6(13)(16)( 24) 6(17) 9

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 4, 2016.

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

(UNAUDITED)

					For the three months	For the three months	For the three months	ended June 30			For the six months ended June 30	For the six months ended June 30	For the six months ended June 30	For the six months ended June 30
					2016			2015			2016			2015
	Items	Notes			AMOUNT	%		AMOUNT	%		AMOUNT	%	AMOUNT		%
4000	Operating revenue	6(18) and 7		$	1,015,050	100	$	963,094	100	$	2,036,806	100	$	1,942,152	100
5000	Operating costs	6(4)(12)(22)(2
		3) and 9	(		550,309) (	54) (		598,274 ) (	62) (		1,140,805) (	56) (		1,232,962) (	63)
5900	Net operating margin				464,741	46		364,820	38		896,001	44		709,190	37
	Operating expenses	6(7)(12)(22)(2
		3), 7 and 9
6100	Selling expenses		(		43,193) (	4) (		39,760 ) (	4) (		76,651) (	4) (		74,464) (	4)
6200	General and administrative
	expenses		(		117,045) (	12) (		117,469 ) (	12) (		251,664) (	12) (		209,555) (	11)
6300	Research and development
	expenses		(		75,308) (	7) (		81,536) (	9) (		143,111) (	7) (		158,065) (	8)
6000	Total operating expenses		(		235,546) (	23) (		238,765) (	25) (		471,426) (	23) (		442,084) (	23)
6900	Operating profit				229,195	23		126,055	13		424,575	21		267,106	14
	Non-operating income and
	expenses
7010	Other income	6(19)			12,592	1		14,303	1		21,477	1		20,318	1
7020	Other gains and losses	6(2)(5)(8)(20)
		and 12	(		38,481) (	4)		93,206	10 (		43,844) (	2)		81,095	4
7050	Finance costs	6(6)(21)(26)	(		3,361)	- (		1,481 )	- (		11,205) (	1) (		2,892)	-
7060	Share of profit of associates
	and joint ventures accounted
	for under equity method				-	-		-	-		-	-		754	-
7000	Total non-operating
	income and expenses		(		29,250) (	3)		106,028	11 (		33,572) (	2)		99,275	5
7900	Profit before income tax				199,945	20		232,083	24		391,003	19		366,381	19
7950	Income tax expense	6(24)	(		25,543) (	3) (		99,887) (	10) (		44,679) (	2) (		121,394) (	6)
8200	Profit for the period			$	174,402	17	$	132,196	14	$	346,324	17	$	244,987	13
	Other comprehensive income
	Items that may be reclassified
	subsequently to profit or loss
8361	Financial statements	6(17)
	translation differences of
	foreign operations		($		27,051) (	2) ($		20,281 ) (	2) ($		31,508) (	2) ($		39,163) (	2)
8300	Other comprehensive loss for
	the period		($		27,051) (	2) ($		20,281) (	2) ($		31,508) (	2) ($		39,163) (	2)
8500	Total comprehensive income for
	the period			$	147,351	15	$	111,915	12	$	314,816	15	$	205,824	11
	Profit attributable to:
8610	Owners of the parent			$	174,402	17	$	132,196	14	$	346,324	17	$	244,987	13
	Comprehensive income
	attributable to:
8710	Owners of the parent			$	147,351	15	$	111,915	12	$	314,816	15	$	205,824	11
	Basic earnings per share(in
	dollars)
9750	Net income	6(25)		$		0.24	$		0.18	$		0.47	$		0.34
	Diluted earnings per share(in
	dollars)
9850	Net income	6(25)		$		0.24	$		0.18	$		0.47	$		0.34

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 4, 2016. ~5~

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

For the six-month period ended June 30, 2015 Balance at January 1, 2015 Distribution of 2014 net income: Legal reserve Cash dividends Stock dividends Employee stock option compensation cost Net income for the six-month period ended June 30, 2015 Other comprehensive loss for the six-month period ended June 30, 2015 Balance at June 30, 2015 For the six-month period ended June 30, 2016 Balance at January 1, 2016 Distribution of 2015 net income: Legal reserve Cash dividends Stock dividends Employee stock option compensation cost Net income for the six-month period ended June 30, 2016 Other comprehensive loss for the six-month period ended June 30, 2016 Balance at June 30, 2016	Notes					Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Other Equity Undistributed earnings Financial statements translation differences of foreign operations Total equity $ 621,563 $ 100,674 $ 9,380,271 ( 48,414 ) - - ( 140,592 ) - ( 140,592 ) ( 281,186 ) - - - - 4,731 244,987 - 244,987 - ( 39,163 ) ( 39,163 ) $ 396,358 $ 61,511 $ 9,450,234 $ 791,997 $ 69,095 $ 9,856,993 ( 63,497 ) - - ( 219,325 ) - ( 219,325 ) ( 292,433 ) - - - - 5,295 346,324 - 346,324 - ( 31,508 ) ( 31,508 ) $ 563,066 $ 37,587 $ 9,957,779
			Capital Share capital - common stock Stock dividends to be distributed $ 7,029,643 $ - - - - - - 281,186 - - - - - - $ 7,029,643 $ 281,186 $ 7,310,829 $ - - - - - - 292,433 - - - - - - $ 7,310,829 $ 292,433			Capital reserves $ 1,257,277 - - - 4,731 - - $ 1,262,008 $ 1,265,544 - - - 5,295 - - $ 1,270,839				Retained Earnings
			Share capital - common stock $ 7,029,643 - - - - - - $ 7,029,643 $ 7,310,829 - - - - - - $ 7,310,829					Legal reserve $ 348,285 48,414 - - - - - $ 396,699 $ 396,699 63,497 - - - - - $ 460,196		Special reserve $ 22,829 - - - - - - $ 22,829 $ 22,829 - - - - - - $ 22,829
	6(10)(16) 6(13)(16) 6(14)(15) 6(17) 6(10)(16) 6(13)(16) 6(14)(15) 6(17)

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 4, 2016.

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments Adjustments to reconcile profit (loss) Gain on valuation of financial assets and liabilities Provision/(reversal) for doubtful accounts Loss on inventory market price decline Provision for obsolescence of supplies Share of profit of associates and joint ventures accounted for under the equity method Gain on disposal of investments accounted for under the equity method Depreciation Loss on disposal of property, plant and equipment Reversal of impairment loss Amortization Amortization of long-term prepaid rent Employee stock option compensation cost Interest income Interest expense Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Other receivables Inventories Prepayments Changes in operating liabilities Notes payable Accounts payable Other payables Advance receipts Net defined benefit liabilities Cash inflow generated from operations Interest received Interest paid Income tax paid Net cash flows from operating activities

For the six-month periods ended June30, Notes 2016 2015 $ 391,003 $ 366,381 ( 2,133 ) ( 3,146 ) 6(3) 123 ( 37 ) 6(4) 15,484 46,851 5,851 1,991 - ( 754 ) 6(5)(20) - ( 95,381 ) 6(6)(22) 221,814 235,223 6(20) 133 603 6(6)(20) ( 721 ) - 6(22) 5,873 5,931 6(7) 987 1,014 6(14)(15) 5,295 4,731 6(19) ( 15,667 ) ( 14,470 ) 6(21) 11,205 2,892 - ( 8,944 ) 189,542 ( 36,526 ) 1,543 ( 3,715 ) 91,897 87,039 ( 3,743 ) ( 40,224 ) 23,392 ( 1,032 ) 49,187 137,658 ( 51,982 ) ( 52,882 ) ( 15,309 ) ( 30,743 ) ( 126 ) 481 923,648 602,941 16,788 14,267 ( 11,205 ) ( 2,892 ) ( 102,884 ) ( 25,579 ) 826,347 588,737

(Continued)

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

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

CASH FLOWS FROM INVESTING ACTIVITIES Decrease in other financial assets-current Increase in financial assets measured at cost - non-current Cash paid for acquisition of property, plant and equipment Interest paid for acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets (Increase) decrease in prepayment for equipment Increase in pledged deposits Decrease in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Increase in long-term borrowings Increase in guarantee deposits received Net cash flows from financing activities Effect of foreign exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For the six-month periods ended June30, Notes 2016 2015 $ 163,091 $ - ( 25,182 ) - 6(26) ( 349,968 ) ( 360,996 ) 6(6)(21)(26) ( 6,599 ) ( 8,368 ) 484 411 ( 2,770 ) ( 323 ) ( 14,408 ) 24,719 ( 4,097 ) - 538 1,089 ( 238,911 ) ( 343,468 ) ( 241,329 ) 212,268 255,252 - 2,728 20,000 16,651 232,268 24,534 4,634 628,621 482,171 6(1) 2,335,697 1,927,603 6(1) $ 2,964,318 $ 2,409,774

The accompanying notes are an integral part of these consolidated financial statements. See review report of independent accountants dated August 4, 2016.

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES 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 Act 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 Active Pharmaceutical Ingredients (“API”), albumin medicines, oligonucleotide medicines, peptide medicines, injections and new small molecule drugs, as well as the provision of related consulting and technical services. The Company’s investment plan for the manufacturing of API 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 authorized for issuance by the Board of Directors on August 4, 2016.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”) None.

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

New standards, interpretations and amendments issued by IASB and included in the IFRSs as endorsed by the FSC effective from 2017:

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Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
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New Standards,Interpretations andAmendments	StandardsBoard
Recoverable amount disclosures for non-financial assets (amendments	January 1, 2014
to IAS 36)
Novation of derivatives and continuation of hedge accounting	January 1, 2014
(amendments to IAS 39)
IFRIC 21, ‘Levies’	January 1, 2014
Defined benefit plans: employee contributions (amendments to IAS	July 1, 2014
19R)
Improvements to IFRSs 2010-2012	July 1, 2014
Improvements to IFRSs 2011-2013	July 1, 2014
Investment entities: applying the consolidation exception (amendments	January 1, 2016
to IFRS 10, IFRS 12 and IAS 28)
Accounting for acquisition of interests in joint operations	January 1, 2016
(amendments to IFRS 11)
IFRS 14, ‘Regulatory deferral accounts’	January 1, 2016
Disclosure initiative (amendments to IAS 1)	January 1, 2016
Clarification of acceptable methods of depreciation and amortisation	January 1, 2016
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)	January 1, 2016
Equity method in separate financial statements (amendments to IAS 27)	January 1, 2016
Improvements to IFRSs 2012-2014	January 1, 2016

Except for the following, the above standards and interpretations have no significant impact to the Company’s and its subsidiaries’ (collectively referred herein as the “Group”) financial condition and operating results based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

A. Amendments to IAS 36, ‘Recoverable amount disclosures for non-financial assets’

The amendments remove the requirement to disclose recoverable amount when a cash generating unit (CGU) contains goodwill or indefinite lived intangible assets but there has been no impairment. When a material impairment loss has been recognised or reversed for an individual asset, including goodwill, or a CGU, it is required to disclose the recoverable amount of the asset or CGU. If the recoverable amount is fair value less costs of disposal, it is required to disclose the level of the fair value hierarchy, the valuation techniques(s) used and key assumptions.

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B. Annual improvements to IFRSs 2010-2012 cycle

IFRS 8, ‘Operating segments’

The standard is amended to require disclosure of judgments made by management in aggregating operating segments. This amendment also clarifies that a reconciliation of the total of the reportable segments’ assets to the entity’s assets is required only when segment asset is provided to chief operating decision maker regularly.

• C. Amendments to IAS 1, ‘Disclosure initiative’

This amendment clarifies the presentation of materiality, aggregation and subtotals, the framework of financial report, and the guide for accounting disclosure.

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

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC effective from 2017:

New Standards,Interpretations andAmendments

Effective date by International Accounting StandardsBoard

Disclosure initiative (amendments to IAS 7) Recognition of deferred tax assets for unrealised losses (amendments to IAS 12) Classification and measurement of share-based payment transactions (amendments to IFRS 2) IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Clarifications to IFRS 15, ‘Revenue from contracts with customers’ IFRS 16, ‘Leases’ Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)

January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2019 To be determined by International Accounting Standards Board

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and operating results based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

• A. Amendments to IAS 7, ‘Disclosure initiative’

This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

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• B. Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised losses’

• These amendments clarify the recognition of deferred tax assets for unrealised losses related to debt instruments measured at fair value, and they clarify several of the general principles underlying the accounting for deferred tax assets. The amendments clarify that a deductible temporary difference exists whenever an asset is measured at fair value and that fair value is below the asset’s tax base. When an entity assesses whether taxable profits will be available against which it can utilise a deductible temporary difference, it considers a deductible temporary difference in combination with all of its other deductible temporary differences unless there are tax law restrictions, and the tax deduction resulting from temporary differences is excluded from estimated future taxable profits.

• C. IFRS 9, ‘Financial instruments’

• (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.

• (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses (‘ECL’) or lifetime ECL (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance).

• D. IFRS 16, ‘Leases’

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

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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

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and IAS 34, ‘Interim Financial Reporting’ as endorsed by the FSC.

(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 less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its 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 structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (b) 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) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

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

• (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as 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 recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

• B. Subsidiaries included in the consolidated financial statements:

Name of Investors	Name ofSubsidiaries	Business activities Professional investment Professional investment Research, development and manufacture of API and new drug, etc. Research, development and manufacture of API and new drug, etc. Import, export and sales of API and intermediates, etc.	June 30, December 31, 2016 2015 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Percentage owned by the Company	Note
ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. SPT International, Ltd. SPT International, Ltd. SPT International, Ltd.	SPT International, Ltd. ScinoPharm Singapore Pte Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd.			(Note) (Note) (Note) (Note) (Note)

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Percentage owned by the Company

			by the Company
Name of Investors	Name ofSubsidiaries	Business activities Professional investment Professional investment Research, development and manufacture of API and new drug, etc. Research, development and manufacture of API and new drug, etc. Import, export and sales of API and intermediates, etc.	June 30,2015 100.00 100.00 100.00 100.00 100.00	Note
ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. SPT International, Ltd. SPT International, Ltd. SPT International, Ltd.	SPT International, Ltd. ScinoPharm Singapore Pte Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd.			(Note) (Note) (Note) (Note) (Note)

Note: The financial statements of the entity as of and for the six-month periods ended June 30, 2016 and 2015 were not reviewed by independent accountants as the entity did not meet the definition of significant subsidiary.

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, 2016 and 2015. Total assets of these subsidiaries amounted to $2,838,038 and $2,853,800, representing 23% and 24% of the related consolidated totals, and total liabilities amounted to $84,788 and $102,521, representing 3% and 4% of the related consolidated totals, as of June 30, 2016 and 2015, respectively. Total comprehensive loss of these subsidiaries amounted to ($108,858), ($111,089), ($142,610) and ($177,649), constituting (74%), (99%), (45%) and (86%) of the related consolidated totals for the three-month and six-month periods ended June 30, 2016 and 2015, respectively.

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

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

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

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(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 remeasured. 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 retranslated 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 recognized 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 recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

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

• B. Translation of foreign operations

• (a) The operating results and financial position of all the group entities, associates and joint arrangements 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 as an associate or joint arrangements 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, if the Group retains partial interest in the former foreign associate or joint arrangements after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangements such transactions should be accounted for as disposal of all interest in these foreign operations.

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

(5) Classification of current and non-current items

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

• (a) Assets arising from operating activities that are expected to be 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.

(6) Cash equivalents

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

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

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(7) Financial assets 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 recognized and derecognized 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) Receivables

• Accounts receivable are 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.

(9) 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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(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 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.

• (b) 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

~19~

amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the 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.

(11) Derecognition of financial assets

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

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

• B. 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.

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

• (12) Inventories

Inventories are stated at the lower of cost and net realizable value. The standard cost method is applied, and 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.

• 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 recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C. 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.

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

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• amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• E. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to 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 appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

are as follows:
Assets Buildings Machinery and equipment Transportation equipment Office equipment Other equipment	Estimated useful lives
	2 ～ 35 years 1 ～ 12 years 2 ～ 6 years 1 ～ 9 years 2 ～ 19 years

(15) Intangible assets

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

(16) Leased assets/ lessee

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

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(17) 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 recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

• (18) 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.

(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) 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 insignificant.

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(21) Derecognition of financial liabilities

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

(22) Offsetting financial instruments

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

(23) Employee benefits

• A. Short-term employee benefits

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

• B. Pensions

• (a) Defined contribution plans

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

• (b) Defined benefit plans

• i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by 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 high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

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

• iii.Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation 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. The related information is disclosed accordingly.

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• C. Employees’ compensation and directors’ remuneration

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

- (24) Employee share based payment

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

(25) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is 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 statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable

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

• F. A deferred tax asset shall be recognized for the carry forward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures, employees’ training costs and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

• 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.

(26) Share capital

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

• (27) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are 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.

(28) 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

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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

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.

• (29) 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 is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical 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. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, and the related information is addressed below:

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

• －

• 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 realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid process technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on

~26~

balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material change to the evaluation.

• (b) As of June 30, 2016, the carrying amount of inventories was $2,061,827.

• B. Realisability of deferred income tax assets

• (a) Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilized. 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, 2016, the Group recognized deferred income tax assets amounting to $423,787.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

Cash: Cash on hand Cash Equivalents: Time deposits Checking accounts and demand deposits Bill under repurchase agreements	June 30,2016 51 $ 394,905 394,956 2,269,670 299,692 2,569,362 2,964,318 $	December31,2015 237 $ 471,545 471,782 1,564,003 299,912 1,863,915 2,335,697 $	June 30,2015
			233 $ 795,268
			795,501
			1,339,859 274,414
			1,614,273
			2,409,774 $

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

• B. Details of the Group’s time deposits pledged to others as collateral (listed as “Other financial assets-non-current”) as of June 30, 2016, December 31, 2015 and June 30, 2015 are provided in Note 8.

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(2) FINANCIAL ASSETS 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	June30,2016 1,988 $ - $	December31,2015 - $ 145 $	June 30,2015
			- $ 523 $

• A. The Group recognized net gain on financial assets and liabilities held for trading amounting to $10, $4,085, $4,252 and $7,960 for the three-month and six-month periods ended June 30, 2016 and 2015, respectively (listed as “Other gains and losses”).

• B. The non-hedging derivative instruments transaction and contract information are as follows:

Items Forward foreign exchange contracts		ContractAmount ContractPeriod USD 9,130,000 5.2016~9.2016 June 30,2016	ContractAmount ContractPeriod USD 9,130,000 5.2016~9.2016 June 30,2016
		ContractAmount
		USD 9,130,000	5.2016~9.2016

Items Forward foreign exchange contracts Items Forward foreign exchange contracts		ContractAmount ContractPeriod USD 5,400,000 11.2015~2.2016 Contract Amount Contract Period USD 9,060,000 5.2015~8.2015 December31,2015 June 30,2015	ContractAmount ContractPeriod USD 5,400,000 11.2015~2.2016 Contract Amount Contract Period USD 9,060,000 5.2015~8.2015 December31,2015 June 30,2015
		ContractAmount
		Contract Amount
		USD 9,060,000	5.2015~8.2015

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

• C. The Group has no financial assets at fair value through profit or loss pledged to others as of June 30, 2016, December 31, 2015 and June 30, 2015.

(3) ACCOUNTS RECEIVABLE, NET

		June 30,2016	December31,2015	December31,2015		June 30,2015
Accounts receivable	$	677,742	$	867,284	$	559,612
Less: Allowance for doubtful
accounts	(	176)	(	53)	(	59)
	$	677,566	$	867,231	$	559,553

• A. As of June 30, 2016, December 31, 2015 and June 30, 2015, 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:

~28~

At January 1 Provision (reversal) for impairment At June 30	2016 2015 Individualprovision Individualprovision 53 $ 96 $ 123 37) ( 176 $ 59 $ For the six-monthperiods endedJune30,

• C. Accounts receivable that were neither past due nor impaired were fully performing in line with the credit standards prescribed based on the counterparties’ industry characteristics, business scale and profitability.

• D. As of June 30, 2016, December 31, 2015 and June 30, 2015, the Group does not hold any collateral as security.

(4) INVENTORIES

as security. NVENTORIES
Raw materials Supplies Work in process Finished goods		June 30,2016
	Allowance for Cost market price decline 460,391 $ 110,822) ($ 13,050 507) ( 803,799 65,536) ( 1,196,211 234,759) ( 2,473,451 $ 411,624) ($		Bookvalue
			349,569 $ 12,543 738,263 961,452
			2,061,827 $

Raw materials Supplies Work in process Finished goods		December31,2015
	Allowance for Cost market price decline 254,846 $ 64,664) ($ 16,340 836) ( 1,116,241 58,672) ( 1,177,921 271,968) ( 2,565,348 $ 396,140) ($		Bookvalue
			190,182 $ 15,504 1,057,569 905,953
			2,169,208 $

Raw materials Supplies Work in process Finished goods		June 30,2015
	Allowance for Cost marketprice decline 533,463 $ 60,408) ($ 6,283 1,562) ( 968,341 60,368) ( 1,181,741 252,084) ( 2,689,828 $ 374,422) ($		Bookvalue
			473,055 $ 4,721 907,973 929,657
			2,315,406 $

~29~

The Group recognized expense and losses of inventories for the period:

For the three-month periods ended June 30,

	Forthe three-monthperiods ended June 30,	riods ended June 30,
Cost of goods sold Loss on physical inventory Loss on production stoppages Under applied manufacturing overhead Provision for inventory market price decline Cost of goods sold Loss on physical inventory Loss on production stoppages Under applied manufacturing overhead Provision for inventory market price decline	2016 2015 427,293 $ 478,585 $ 1,963 1,778 44,907 28,451 34,921 53,420 33,735 31,044 542,819 $ 593,278 $ Forthe six-monthperiods ended June 30,	2015
		478,585 $ 1,778 28,451 53,420 31,044
		593,278 $
	2016 937,933 $ 6,244 86,666 82,466 15,484 1,128,793 $	2015
		1,033,979 $ 2,679 63,040 74,536 46,851
		1,221,085 $

－ － (5) FINANCIAL ASSETS MEASURED AT COST NON CURRENT

		June 30,2016	December31,2015	December31,2015		June 30,2015
Unlisted stocks
Tanvex Biologics, Inc.	$	167,673	$	167,673	$	167,673
SYNGEN, INC.		4,620		4,620		4,620
Foresee Pharmaceuticals, Inc.		-		-		171,234
Foresee Pharmaceuticals, Co., Ltd.		196,416		171,234		-
		368,709		343,527		343,527
Less: Accumulated impairment	(	4,620)	(	4,620)	(	4,620)
	$	364,089	$	338,907	$	338,907

A. Based on the Group’s intention, 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 those stocks as ‘financial assets measured at cost’.

~30~

• B. Foreseeacer Pharmaceuticals, Inc. (hereafter, “ Foreseeacer”), an associate of the Group accounted for under the equity method, entered into a share swap transaction with its controlling shareholder, Foresee Pharmaceuticals, Inc. (hereafter, “ Foresee Cayman”) during the fourth quarter of 2014, whereby Foresee Cayman issued new shares to swap and recall the outstanding shares of Foreseeacer. The Group obtained approval of such transaction during the board of directors ’ meeting on November 7, 2014, and the related share swap was completed on January 15, 2015. After the swap, the Group obtained 5,400 thousand preferred shares of Foresee Cayman, consisting of 6.12% of its outstanding preferred shares. However, Foresee Cayman announced its second phase of re-organization plan (the Phase II Plan) during February 2015, in which, one of its fully owned subsidiaries, Foresee Pharmaceuticals Co., Ltd. （ hereafter, “ Foresee” ） will issue new shares to swap and recall all outstanding shares of Foresee Cayman. After engaging in the swap, the Company obtained 4,072 thousand common shares, consisting of 6.12% of its outstanding common shares. Based on the guidance and accounting policies of the Group, such share swap transaction should be deemed as disposal of associates accounted for under the equity method, and the new investment will be measured at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss. Any amounts previously recognized as capital surplus or as other comprehensive income in relation to the associate are transferred to profit or loss. However, as the Phase II Plan was completed as of June 30, 2015, the uncertainties regarding the fair value of the final share interests received in the swap has been eliminated. The related gain of $95,381 from the share swap transaction has been recognized upon completion of the Phase II Plan. After a comprehensive assessment, the Group does not have the right to exercise significant influence over the investee company, Foresee Cayman, and accordingly, the related share of interest is classified as “available-for-sale financial assets”. In addition, as the shares of Foresee Cayman are not publicly traded in an active market, its fair value cannot be measured reliably. As a result, the Group classified those shares as “financial assets measured at cost”.

• C. As of June 30, 2016, December 31, 2015 and June 30, 2015, no financial assets measured at cost held by the Group were pledged to others.

~31~

(6) PROPERTY, PLANT AND EQUIPMENT

					Machinery and	Machinery and	Transportation	Transportation		Office		Other	Construction	Construction
January 1, 2016			Buildings			equipment		equipment		equipment		equipment		inprogress		Total
Cost		$	2,499,181		$	4,689,690	$	29,690	$	202,695	$	141,302	$	1,803,046	$	9,365,604
Accumulated depreciation	(		723,268)	(		3,226,643)	(	20,677)	(	128,570)	(	81,981)		-	(	4,181,139)
Accumulated impairment			-	(		13,751)		-		-		-		-	(	13,751)
		$	1,775,913		$	1,449,296	$	9,013	$	74,125	$	59,321	$	1,803,046	$	5,170,714
For the six-month period ended June	30, 2016
At January 1, 2016		$	1,775,913		$	1,449,296	$	9,013	$	74,125	$	59,321	$	1,803,046	$	5,170,714
Additions			-			-		-		-		-		340,321		340,321
Reclassified from prepayments
for equipment			-			-		-		-		-		114,053		114,053
Reclassified upon completion			2,586			142,400		-		9,071		24,941	(	178,998)		-
Depreciation charge	(		49,576)	(		143,412)	(	1,748)	(	14,205)	(	12,873)		-	(	221,814)
Disposals－Cost			-	(		2,816)		-	(	162)	(	876)		-	(	3,854)
' －Accumulated
depreciation			-			2,215		-		146		876		-		3,237
Impairment loss			-			721		-		-		-		-		721
Net currency exchange differences	(		13,837)	(		12,007)	(	61)	(	477)	(	2,078)	(	20,203)	(	48,663)
At June 30, 2016		$	1,715,086		$	1,436,397	$	7,204	$	68,498	$	69,311	$	2,058,219	$	5,354,715
June 30, 2016
Cost		$	2,486,270		$	4,814,595	$	29,398	$	209,763	$	160,504	$	2,058,219	$	9,758,749
Accumulated depreciation	(		771,184)	(		3,365,168)	(	22,194)	(	141,265)	(	91,193)		-	(	4,391,004)
Accumulated impairment			-	(		13,030)		-		-		-		-	(	13,030)
		$	1,715,086		$	1,436,397	$	7,204	$	68,498	$	69,311	$	2,058,219	$	5,354,715

~32~

					Machinery and	Machinery and	Transportation	Transportation		Office		Other		Construction	Construction
January 1, 2015			Buildings			equipment		equipment		equipment		equipment			inprogress		Total
Cost		$	2,230,902		$	4,575,686	$	30,389	$	192,813	$	141,186	$		1,685,329	$	8,856,305
Accumulated depreciation	(		633,158)	(		2,958,764)	(	16,896)	(	102,501)	(	62,017)			-	(	3,773,336)
Accumulated impairment			-	(		17,944)		-		-		-			-	(	17,944)
		$	1,597,744		$	1,598,978	$	13,493	$	90,312	$	79,169	$		1,685,329	$	5,065,025
For the six-month period ended June	30, 2015
At January 1, 2015		$	1,597,744		$	1,598,978	$	13,493	$	90,312	$	79,169	$		1,685,329	$	5,065,025
Additions			-			-		-		149		-			325,196		325,345
Reclassified from prepayments
for equipment			147,691			39,355		-		11,743		3,368	(		181,316)		20,841
Depreciation charge	(		43,791)	(		160,710)	(	2,185)	(	16,519)	(	12,018)			-	(	235,223)
Disposals－Cost			-	(		45,739)	(	240)	(	138)	(	35)			-	(	46,152)
' －Accumulated
depreciation			-			44,823		176		121		18			-		45,138
Net currency exchange differences	(		6,576)	(		4,945)	(	110)	(	516)	(	1,731)	(		18,621)	(	32,499)
At June 30, 2015		$	1,695,068		$	1,471,762	$	11,134	$	85,152	$	68,771	$		1,810,588	$	5,142,475
June 30, 2015
Cost		$	2,371,312		$	4,563,848	$	29,905	$	203,250	$	141,377	$		1,810,588	$	9,120,280
Accumulated depreciation	(		676,244)	(		3,074,142)	(	18,771)	(	118,098)	(	72,606)			-	(	3,959,861)
Accumulated impairment			-	(		17,944)		-		-		-			-	(	17,944)
		$	1,695,068		$	1,471,762	$	11,134	$	85,152	$	68,771	$		1,810,588	$	5,142,475

~33~

• A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:

Amount capitalized Interest rate Amount capitalized Interest rate	For the three-month period endedJune30,2016 6,599 $ 1.72%~2.64% For the six-month period endedJune30,2016 6,599 $ 1.72%~2.64%	For the three-month period endedJune30,2015
		7,494 $ 1.16%~2.31% For the six-month period endedJune30,2015
		8,368 $ 1.16%~2.31%

• B. Impairment and reclassification information about the property, plant and equipment is provided in Note 6(8), Impairment of non-financial assets.

• C. As of June 30, 2016, December 31, 2015 and June 30, 2015, the Group has not pledged any property, plant and equipment.

(7) LONG-TERM PREPAID RENT

Long-term prepaid rent	June30,2016 86,658 $	December31,2015 90,359 $	June30,2015
			90,974 $

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 $473, $500, $987 and $1,014 for the three-month and sixmonth periods ended June 30, 2016 and 2015, respectively (listed as “General and administrative expenses”).

(8) IMPAIRMENT OF NON-FINANCIAL ASSETS

• A. The Group recognized impairment loss of non-financial assets amounting to $964 and $721 for the three-month and six-month periods ended June 30, 2016 (listed as “Other gains and losses”). The Group has no impairment loss on non-financial assets for the six-month period ended June 30, 2015.

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

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

Segments	June 30, 2016 June 30, 2016

~34~

(9) SHORT-TERM BORROWINGS

SHORT-TERM BORROWINGS	SHORT-TERM BORROWINGS
OTHER PAYABLES LONG-TERM BORROWINGS Type ofborrowings June 30,2016 Interestraterange Bank loans Unsecured loans 1,460,977 $ 1.44%～4.44% Type ofborrowings December31,2015 Interestraterange Bank loans Unsecured loans 1,702,306 $ 1.18%～4.35% Type ofborrowings June30,2015 Interest rate range Bank loans Unsecured loans 1,489,744 $ 1.17%～2.31% June30,2016 December31,2015 Accrued payroll 83,575 $ 130,958 $ Payables on equipment 28,571 44,817 Cash dividends payable 219,325 - Others 156,558 161,157 488,029 $ 336,932 $ Type of borrowings Borrowing period June30,2016 Interest rate Long-term bank loans Secured bank loans June 14, 2016~ June 14, 2019 255,252 $ 4.85% Less current portion 5,105) ( 250,147 $		Collateral None Collateral None Collateral None June30,2015
		77,968 $ 182,844 140,592 158,515 559,919 $ Collateral Guarantee by Parent
	4.85%

(10) OTHER PAYABLES

(11) LONG-TERM BORROWINGS

(12) PENSIONS

A. (a)The Company has set up a defined benefit pension plan in accordance with the Labor Standards Law, which applies to all regular employees’ service years prior to the enforcement of the Labor Pension Act (the “Act”) on July 1, 2005 and service years thereafter of employees who chose to continue to be covered under the pension scheme of the Labor Standards Law after the enforcement of the Act. In accordance with the Company's retirement plan, an employee may retire when the employee either (i) attains the age of 55 with 15 years of service, (ii) has more than 25 years of service, (iii) has reached the age of 65, or (iv) is incapacitated to work (compulsory retirement). The employees earn two units for each year of service for the first 15 years, and one unit for each additional year thereafter up to a maximum of 45 units. Any

~35~

fraction of a year equal to or more than six months shall be counted as one year of service, and any fraction of a year less than six months shall be counted as half a year. According to the provisions, employees who retired due to their duties shall get additional 20%. Pension payments are based on the number of units earned and the average salary of the last six months prior to retirement. Calculation of average salary is in accordance with the Labor Standards Law of the R.O.C. The Company contributes monthly an amount equal to 2% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contribution for the deficit by end of March next year.

• (b)The pension costs under the aforementioned defined contribution pension plan of the Company for the three-month and six-month periods ended June 30, 2016 and 2015 were $748, $1,002, $1,497 and $2,004, respectively.

• (c)As of June 30, 2016, the Company’s expected contributions to the pension plan for the next annual reporting period amounted to $2,994.

• 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 (ScinoPharm (Kunshan) Biochemical Technology Co., Ltd., ScinoPharm (Changshu) Pharmaceuticals, Ltd., and ScinoPharm (Shanghai) Biochemical Technology, Ltd.) are subject to a government sponsored 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. The other subsidiaries, SPT International, Ltd. and ScinoPharm Singapore Pte Ltd., had no employees. For the three-month and six-month periods ended June 30, 2016 and 2015, the pension costs recognized under the aforementioned defined contribution pension plans were $7,780, $7,376, $15,961 and $15,297, respectively.

~36~

(13) SHARE CAPITAL

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

follows:
At January 1 and June 30	For the six-monthperiods endedJune30,
	2016 731,083	2015
		702,964

• B. On June 23, 2015, the Company’s shareholders adopted a resolution to issue shares of common stock due to capitalization of retained earnings of $281,186 and obtained approval from the SFC. The effective date of capitalization was set on August 14, 2015. After the capitalization mentioned above, the Company’s total authorized capital was $10,000,000 and the paid-in capital was $7,310,829 (731,083 thousand shares) with a par value of $10 (in dollars) per share.

• C. On June 27, 2016, the Company’s shareholders adopted a resolution to issue shares of common stock due to capitalization of retained earnings of $292,433 and obtained approval from the SFC. The effective date of capitalization was set on August 16, 2016. After the capitalization mentioned above, the Company’s total authorized capital was $10,000,000 and the paid-in capital was $7,603,262 (760,326 thousand shares) with a par value of $10 (in dollars) per share.

• D. As of June 30, 2016, the Company’s authorized capital was $10,000,000 and the paid-in capital was $7,310,829 (731,083 thousand shares) with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

(14) CAPITAL RESERVES

• A. Pursuant to the R.O.C. Company Act, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks 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. Movements on the Company’s capital reserve are as follows:

the legal reserve is insufficient. Movements on the Company’s capital reserve are as follows:	rve are as follows:	rve are as follows:	rve are as follows:
Sharepremium Stock options Total At January 1 1,233,286 $ 32,258 $ 1,265,544 $ Employee stock options compensation cost - Company - 5,195 5,195 - Subsidiaries - 100 100 At June 30 1,233,286 $ 37,553 $ 1,270,839 $ Forthe six-monthperiod ended June 30,2016	Forthe six-monthperiod ended June 30,2016
		Stock options 32,258 $ 5,195 100 37,553 $	Total
			1,265,544 $ 5,195 100 1,270,839 $

~37~

Sharepremium Stock options Total At January 1 1,233,286 $ 23,991 $ 1,257,277 $ Employee stock options compensation cost - Company - 4,414 4,414 - Subsidiaries - 317 317 At June 30 1,233,286 $ 28,722 $ 1,262,008 $ Forthe six-monthperiod ended June 30,2015	Forthe six-monthperiod ended June 30,2015	Forthe six-monthperiod ended June 30,2015	Forthe six-monthperiod ended June 30,2015
		Stock options 23,991 $ 4,414 317 28,722 $	Total
			1,257,277 $ 4,414 317
			1,262,008 $

(15) SHARE-BASED PAYMENT

• A. The Company issued 1 million units and 1.5 million units of employee stock options on December 3, 2013 and November 6, 2015, respectively (the ‘Grant Date’). The exercise price of the options was set at $91.70 (in dollars) and $41.65 (in dollars) which was based on the closing market price of the Company's common shares on the Grant Dates. Each option was granted the right to purchase one share of the Company's common stocks. The exercise price is subject to further adjustments when there is change in the number of shares of the Company's common stocks after the Grant Date. (As of June 30, 2016, for the issued 1 million units and 1.5 million units of employee stock options, the exercise price adjusted based on the specific formula was $83.40 (in dollars) per share and $41.65 (in dollars) per share, respectively.) Contract period of the employee stock option plans is 10 years, and options are exercisable in 2 years after the Grant Date. The Company recognized compensation costs relating to the employee stock options plan of $2,662, $2,379, $5,295 and $4,731 for the three-month and six-month periods ended June 30, 2016 and 2015, respectively.

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

Options outstanding at beginning of the period Options granted Options forfeited Options outstanding at end of the period Options exercisable at end of the period	Forthe six-monthperiod ended June 30,2016	Forthe six-monthperiod ended June 30,2016
	Number of options (inthousand units) 2,348 - 243) ( 2,105 425	Weighted-average exercise price (indollars)
		$ 56.92 - 57.80 56.82 83.40

~38~

For the six-month period ended June 30, 2015

Options outstanding at beginning of the period Options granted Options outstanding at end of the period Options exercisable at end of the period	Number of options (inthousand units) 1,000 - 1,000 -	Weighted-average exercise price (indollars)
		$ 86.70 - 86.70 -

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

Grant date 12.3.2013 11.6.2015 Grant date 12.3.2013	No. of stocks Exercise price Expiry date (unitinthousands) (indollars) 12.2.2023 765 83.40 $ 11.5.2025 1,340 41.65 Expiry date 12.2.2023 June 30, 2016	December 31, 2015
		No. of stocks Exercise price (unitinthousands) (indollars) 859 83.40 $ 1,489 41.65 No. of stocks Exercise price (unitinthousands) (indollars) 1,000 86.70 $ June 30, 2015

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

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

• Note: According to daily returns of the Company's stock for the previous year, the annualized volatility is 28.5% and 37.63%, respectively.

(16) RETAINED EARNINGS

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

~39~

is permitted provided that the balance of such reserve exceeds 25% of the Company’s paid-in capital.

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

• C. In accordance with the regulations, the Company shall set aside special reserve for the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings. The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

• D. The Company recognized cash dividends and stock dividends distributed to owners amounting to $140,592 ($0.20 (in dollars) per share) and $281,186 ($0.40 (in dollars) per share) for the year ended December 31, 2015. On June 27, 2016, the Board of Directors during its meeting proposed cash dividends and stock dividends of $219,325 ($0.30 (in dollars) per share) and $292,433 ($0.40 (in dollars) per share) for the year ended December 31, 2015.

(17) OTHER EQUITY ITEMS

OTHER EQUITY ITEMS
		Forthe six-month	periods	ended June 30,
		2016		2015
At January 1	$	69,095	$	100,674
Currency translation differences－group	(	31,508)	(	34,339)
Disposal (Note)		-	(	4,824)
At June 30	$	37,587	$	61,511

Note: The Group lost significant influence in the associate investment after a share swap transaction with the controlling shareholder of the associate. Such share swap transaction was deemed as disposal of associates accounted for under the equity method and amounts previously recognized as other equity items were derecognized accordingly. Please refer to Note 6 (5) for details.

~40~

(18) OPERATING REVENUE

For the three-month periods ended June 30,

Sales revenue Less: Sales returns Sales discounts Technical service revenue

Sales revenue Less: Sales returns Sales discounts Technical service revenue

	2016		2015
$	1,013,284	$	969,411
(	20,446)	(	1,137)
(	6,628)	(	34,220)
	28,840		29,040
$	1,015,050	$	963,094
	Forthe six-month	periods	ended June 30,
	2016		2015
$	2,014,180	$	1,914,740
(	20,446)	(	1,137)
(	6,628)	(	34,287)
	49,700		62,836
$	2,036,806	$	1,942,152

(19) OTHER INCOME

Interest income from bank deposits Others

Interest income from bank deposits Others

For the three-monthperiods endedJune30,	For the three-monthperiods endedJune30,
2016 2015 8,844 $ 10,857 $ 3,748 3,446 12,592 $ 14,303 $ For the six-monthperiods endedJune30,	2015
2016 15,667 $ 5,810 21,477 $	2015
	14,470 $ 5,848 20,318 $

(20) OTHER GAINS AND LOSSES

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

	Forthe three-month	periods	ended June 30,
	2016		2015
$	10	$	4,085
	-		95,381
	964		-
(	75)	(	535)
(	32,534)	(	3,308)
(	6,846)	(	2,417)
($	38,481)	$	93,206

~41~

For the six-month periods ended June 30,

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

		2016			2015
	$		4,252	$		7,960
			-			95,381
			721			-
	(		133)	(		603)
	(		34,394)	(		17,073)
	(		14,290)	(		4,570)
	($		43,844)	$		81,095

(21) FINANCE COSTS

Interest expense: Bank loans Less: capitalization of qualifying assets

	For the three-month	periods	endedJune30,
	2016		2015
$	9,960	$	8,975
(	6,599)	(	7,494)
$	3,361	$	1,481

Interest expense: Bank loans Less: capitalization of qualifying assets

	For the six-month	periods	endedJune30,
	2016		2015
$	17,804	$	11,260
(	6,599)	(	8,368)
$	11,205	$	2,892

(22) EXPENSES BY NATURE

EXPENSES BY NATURE
Employee benefit expenses Depreciation Amortization Employee benefit expenses Depreciation Amortization	Forthe three-monthperiod ended June 30,2016
	Operating costs Operating expenses Total 91,827 $ 88,269 $ 180,096 $ 82,730 26,363 109,093 826 2,595 3,421 175,383 $ 117,227 $ 292,610 $ For the three-monthperiod endedJune30,2015		Total
			180,096 $ 109,093 3,421
			292,610 $
	Operating costs 108,648 $ 90,995 608 200,251 $	Operating expenses 71,597 $ 26,360 2,418 100,375 $	Total
			180,245 $ 117,355 3,026
			300,626 $

~42~

Employee benefit expenses Depreciation Amortization Employee benefit expenses Depreciation Amortization	Forthe six-monthperiod ended June 30,2016	Forthe six-monthperiod ended June 30,2016	Forthe six-monthperiod ended June 30,2016
	Operating costs Operating expenses Total 203,581 $ 183,140 $ 386,721 $ 168,575 53,239 221,814 1,614 4,259 5,873 373,770 $ 240,638 $ 614,408 $ Forthe six-monthperiod ended June 30,2015		Total
			386,721 $ 221,814 5,873
			614,408 $
	Operating costs 221,309 $ 182,891 1,082 405,282 $	Operating expenses 141,703 $ 52,332 4,849 198,884 $	Total
			363,012 $ 235,223 5,931
			604,166 $

(23) EMPLOYEE BENEFIT EXPENSES

EMPLOYEE BENEFIT EXPENSES
Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses	For the three-monthperiod endedJune30,2016
	Operating costs 74,688 $ 8,305 5,307 3,527 91,827 $	Operating expenses 73,679 $ 5,541 3,221 5,828 88,269 $	Total
			148,367 $ 13,846 8,528 9,355
			180,096 $

Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses	Forthe three-monthperiod ended June 30,2015	Forthe three-monthperiod ended June 30,2015	Forthe three-monthperiod ended June 30,2015
	Operating costs 93,024 $ 7,519 5,251 2,854 108,648 $	Operating expenses 61,096 $ 4,911 3,127 2,463 71,597 $	Total
			154,120 $ 12,430 8,378 5,317
			180,245 $

~43~

For the six-month period ended June 30, 2016

Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses	Operating costs 169,185 $ 16,662 10,870 6,864 203,581 $	Operating expenses 157,228 $ 10,423 6,588 8,901 183,140 $	Total
			326,413 $ 27,085 17,458 15,765
			386,721 $

Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses	Forthe six-monthperiod ended June 30,2015	Forthe six-monthperiod ended June 30,2015	Forthe six-monthperiod ended June 30,2015
	Operating costs 187,994 $ 16,371 10,790 6,154 221,309 $	Operating expenses 119,779 $ 9,494 6,511 5,919 141,703 $	Total
			307,773 $ 25,865 17,301 12,073
			363,012 $

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

• B. For the three-month and six-month periods ended June 30, 2016 and 2015, the employees’ compensation was accrued at $22,426, $238, $43,078 and $441, respectively, while the directors’ remuneration was accrued at $3,140, $2,380, $6,234 and $4,411, respectively. The aforementioned amounts were recognized in salary expenses. The expenses recognized for the period were accrued based on the earnings of current year and the percentage specified in the Articles of Incorporation of the Company. The actual amount approved at the Board of Directors’ meeting for employees’ compensation and directors’ remuneration for 2015 was $88,554, which was different from the estimated amount of $78,940 recognized in the 2015 financial statements by $9,614. Such difference was mainly resulted from estimation, and recognized in profit or loss for 2016.

Information about the appropriation of employees’ compensation and directors’ 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.

~44~

(24) INCOME TAX

A. Income tax expense

Components of income tax expense:

OME TAX Income tax expense Components of income tax expense:
	Forthe three-monthperiods ended June 30,
			2016		2015
Current income tax:
Income tax occurred in current period	$		50,653	$	47,154
10% tax on unappropriated retained earnings			6,537		1,214
Under (over) provision of prior year's income			1,011	(	2,683)
tax
Deferred income tax:
Origination and reversal of temporary
differences	(		32,658)		54,202
Income tax expense	$		25,543	$	99,887
		Forthe six-monthperiods ended June 30,
			2016		2015
Current income tax:
Income tax occurred in current period	$		89,844	$	79,591
10% tax on unappropriated retained earnings			6,537		1,214
Under (over) provision of prior year's income			2,471	(	2,683)
tax
Deferred income tax:
Origination and reversal of temporary
differences	(		54,173)		43,272
Income tax expense	$		44,679	$	121,394

• B. The Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority, and there were no disputes existing between the Company and the Authority as of August 4, 2016.

• C. The Company’s unappropriated retained earnings listed on the balance sheet as of June 30, 2016, December 31, 2015 and June 30, 2015 were all generated after the year 1998.

• D. As of June 30, 2016, December 31, 2015 and June 30, 2015, the balance of the Company’s imputation tax credit account was $282,532, $180,052 and $212,387, respectively. The earnings distribution for 2014 was approved at the stockholders’ meeting on June 23, 2015, and the date of dividend distribution was set by the Board of Directors on August 14, 2015. The creditable tax rate for 2014 was 23.48% and the creditable tax rate for 2015 is expected to be 23.04%. 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 2015 shall be adjusted which accounts for the imputation tax credits under the Tax Law before the day of dividend distribution.

~45~

(25) EARNINGS PER SHARE (“EPS”)

EARNINGS PER SHARE (“EPS”)	EARNINGS PER SHARE (“EPS”)	EARNINGS PER SHARE (“EPS”)
Weighted average number of shares EPS Amount aftertax outstanding (sharesinthousands) (indollars) Basic earnings per share Profit attributable to ordinary stockholders of the parent 174,402 $ 731,083 0.24 $ Diluted earnings per share Profit attributable to ordinary stockholders of the parent 174,402 $ 731,083 Assumed conversion of all dilutive potential ordinary shares Employees' stock option - 172 Employees' bonus - 1,028 Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares 174,402 $ 732,283 0.24 $ For the three-monthperiod endedJune30,2016 Weighted average number of shares EPS Amount aftertax outstanding (sharesinthousands) (indollars) Basic earnings per share Profit attributable to ordinary stockholders of the parent 132,196 $ 731,083 0.18 $ Diluted earnings per share Profit attributable to ordinary stockholders of the parent 132,196 $ 731,083 Assumed conversion of all dilutive potential ordinary shares Employees' bonus - 38 Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares 132,196 $ 731,121 0.18 $ For the three-monthperiod endedJune30,2015
	Weighted average number of shares Amount aftertax outstanding (sharesinthousands) 132,196 $ 731,083 132,196 $ 731,083 - 38 132,196 $ 731,121	EPS (indollars)
		0.18 $
		0.18 $

~46~

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' stock option 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 EPS Amount aftertax outstanding (sharesinthousands) (indollars) 346,324 $ 731,083 0.47 $ 346,324 $ 731,083 - 172 - 1,761 346,324 $ 733,016 0.47 $ For the six-monthperiod endedJune30,2016 For the six-monthperiod endedJune30,2015	Weighted average number of shares EPS Amount aftertax outstanding (sharesinthousands) (indollars) 346,324 $ 731,083 0.47 $ 346,324 $ 731,083 - 172 - 1,761 346,324 $ 733,016 0.47 $ For the six-monthperiod endedJune30,2016 For the six-monthperiod endedJune30,2015
	Weighted average number of shares Amount aftertax outstanding (sharesinthousands) 244,987 $ 731,083 244,987 $ 731,083 - 38 244,987 $ 731,121	EPS (indollars)
		0.34 $
		0.34 $

A. The abovementioned stock options issued in 2013 are anti-dilutive; therefore were not included in the EPS calculation.

~47~

• 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, 2014.

• C. On June 27, 2016, the Company’s shareholders adopted a proposal for the distribution of 2015 profit. The effective date of capitalization was set on August 16, 2016. The pro forma information for retroactively adjusted basic and diluted earnings per share is follows (in dollars):

Basic earnings per share Profit attributable to ordinary shareholders Diluted earnings per share Profit attributable to ordinary shareholders Basic earnings per share Profit attributable to ordinary shareholders Diluted earnings per share Profit attributable to ordinary shareholders	For the three-monthperiods endedJune30,	For the three-monthperiods endedJune30,
	2016 2015 0.23 $ 0.17 $ 0.23 $ 0.17 $ Forthe six-monthperiods ended June 30,	2015
		0.17 $
		0.17 $
	2016 0.46 $ 0.45 $	2015
		0.32 $
		0.32 $

(26) Supplemental cash flow information

• A. Investing activities with partial cash payments

				Forthe six-monthperiods	Forthe six-monthperiods	Forthe six-monthperiods	ended June 30,
				2016			2015
a.	Purchase of property, plant and equipment	$		340,321	$		325,345
	Add: Beginning balance of payable on
	equipment (other payables)			44,817			226,863
	Less: Ending balance of payable on
	equipment (other payables)	(		28,571)	(		182,844)
	Capitalization of interest	(		6,599)	(		8,368)
	Cash paid for acquisition of property,
	plant and equipment	$		349,968	$		360,996
				Forthe six-monthperiods			ended June 30,
				2016			2015
b.	Cash dividends distribution		$	219,325		$	140,592
	Less: Ending balance of dividend payable
	(Other payables)	(		219,325)	(		140,592)
	Cash paid for cash dividends distribution		$	-		$	-

~48~

B. Investing activities with no cash flow effects

a. Investment accounted for under the equity method reclassified to financial assets measured at cost b. Prepayments for equipment reclassified to property, plant and equipment	Forthe six-monthperiods ended June 30,	Forthe six-monthperiods ended June 30,
	2016 2015 - $ 171,234 $ Forthe six-monthperiods ended June 30,	2015
		171,234 $
	2016 114,053 $	2015
		20,841 $

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. For names and relationship of other related parties with substantive control, please refer to Note 13(2).

(2) Significant transactions and balances with related parties

A. Sales revenues

ales revenues
Sales of services: －Associates Sales of services: －Associates	2016 2015 - $ 2,396) ($ 2016 2015 - $ - $ Forthe three-monthperiods ended June 30, Forthe six-monthperiods ended June 30,
	2016 - $

The terms of providing technical services to related parties were the same with regular customers. The collection period for related parties was 60 days after sales, which is the same with regular customers.

~49~

B. C.	Management consultancy fees Other payables Management consultancy fees: －Ultimate parent company Management consultancy fees: －Ultimate parent company An entity controlled by key management individuals	2016 2015 1,985 $ 1,595 $ 2016 2015 3,045 $ 2,655 $ Forthe three-monthperiods ended June 30, Forthe six-monthperiods ended June 30, June 30,2016 December31,2015 June 30,2015 - $ 2,231 $ - $	2016 2015 1,985 $ 1,595 $ 2016 2015 3,045 $ 2,655 $ Forthe three-monthperiods ended June 30, Forthe six-monthperiods ended June 30, June 30,2016 December31,2015 June 30,2015 - $ 2,231 $ - $	2016 2015 1,985 $ 1,595 $ 2016 2015 3,045 $ 2,655 $ Forthe three-monthperiods ended June 30, Forthe six-monthperiods ended June 30, June 30,2016 December31,2015 June 30,2015 - $ 2,231 $ - $	2016 2015 1,985 $ 1,595 $ 2016 2015 3,045 $ 2,655 $ Forthe three-monthperiods ended June 30, Forthe six-monthperiods ended June 30, June 30,2016 December31,2015 June 30,2015 - $ 2,231 $ - $	2016 2015 1,985 $ 1,595 $ 2016 2015 3,045 $ 2,655 $ Forthe three-monthperiods ended June 30, Forthe six-monthperiods ended June 30, June 30,2016 December31,2015 June 30,2015 - $ 2,231 $ - $
				2016 3,045 $ December31,2015 2,231 $
			$		$
						- $

(3) Key management compensation

For the three-month periods ended June 30,

	Forthe three-monthperiods ended June 30,	ods ended June 30,
Salaries and other short-term employee benefits Salaries and other short-term employee benefits	2016 2015 22,429 $ 27,961 $ Forthe six-monthperiods ended June 30,	2015
		27,961 $
	2016 32,576 $	2015
		38,320 $

8. PLEDGED ASSETS

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

Assets Time deposits (Note)	June 30,2016 December31,2015 28,831 $ 24,734 $	June 30,2015 Purpose ofcollateral 24,734 $ Customs duty and performance guarantee

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

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

• (1) As of June 30, 2016, December 31, 2015 and June 30, 2015, the Group’s unused letters of credit － －

• amounted to $ , $7,508 and $ , respectively.

• (2) As of June 30, 2016, December 31, 2015 and June 30, 2015, the Group’s remaining balance due for construction in progress and prepayments for equipment was $315,138, $547,190 and $354,402, respectively.

~50~

• (3) The Company entered into a non-cancellable operating lease agreement for the period from June 1, 2011 to February 28, 2018 for the land in Tainan Science Park. The lease period of the lease agreement cannot be over 20 years and is renewable at the end of the lease term. The Company pays monthly rent. If the announced land values, state-owned land rent rate, or other factors change, the monthly rent paid by the Company will be adjusted accordingly on the following month. The Company may have to pay additional rent or get a refund on its last rental payment because of such adjustment. The rent expense of $5,790, $5,323, $11,580, and $10,646 (listed as “operating costs” and “operating expenses”) was recognized in profit or loss for the three-month and six-month periods ended June 30, 2016 and 2015, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Within one year Later than one year but not exceeding five years	June 30,2016 23,159 $ 15,439 38,598 $	December31,2015 21,291 $ 24,840 46,131 $	June 30,2015
			21,291 $ 35,485
			56,776 $

• (4)The amounts of endorsements and guarantees for subsidiaries were as follows:

ScinoPharm (Changshu) Pharmaceuticals, Ltd.	Nature Secure of financing amount	June 30,2016 December31,2015 1,695,750 $ - $	June 30,2015
			- $

As of June 30, 2016, December 31, 2015 and June 30, 2015, the actual amount drawn down for － － endorsements and guarantees to subsidiaries was $255,252, $ and $ , respectively.

10. SIGNIFICANT DISASTER LOSS: None.

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

12. OTHERS

(1) Capital 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 equipment. 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.

~51~

(2) Financial instruments

• A. Fair value information of financial instruments

• Except those in the table below, the Group’s financial instruments which are not measured at fair value (including cash and cash equivalents, notes receivable, accounts receivable, other receivables, other financial assets-current, other financial assets-non-current, short-term borrowings, notes payable, accounts payable, other payables, long-term borrowings (including current portion) and guarantee deposits received) 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.

• B. Financial risk management policies

• (a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. 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 are required to hedge their foreign exchange risk exposure using forward foreign exchange contracts. However, hedge accounting is not applied as transactions did not meet all criteria of hedge accounting. 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: CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~52~

Foreign currency amount (inthousands) Exchangerate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 24,167 $ 32.28 EUR:NTD 281 35.89 CNY:NTD 1,141 4.845 Financial liabilities Monetary items USD:NTD 1,109 32.28 EUR:NTD 159 35.89 June 30,2016 Foreign currency amount (inthousands) Exchangerate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 34,821 $ 32.83 EUR:NTD 1,664 35.88 CNY:NTD 2,723 4.995 Financial liabilities Monetary items USD:NTD 644 32.83 EUR:NTD 16 35.88 December31,2015 Foreign currency amount (inthousands) Exchangerate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 20,585 $ 30.86 CNY:NTD 4,480 4.973 EUR:NTD 21 34.46 Financial liabilities Monetary items USD:NTD 2,963 30.86 EUR:NTD 11 34.46 June 30,2015	Foreign currency amount (inthousands) Exchangerate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 24,167 $ 32.28 EUR:NTD 281 35.89 CNY:NTD 1,141 4.845 Financial liabilities Monetary items USD:NTD 1,109 32.28 EUR:NTD 159 35.89 June 30,2016 Foreign currency amount (inthousands) Exchangerate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 34,821 $ 32.83 EUR:NTD 1,664 35.88 CNY:NTD 2,723 4.995 Financial liabilities Monetary items USD:NTD 644 32.83 EUR:NTD 16 35.88 December31,2015 Foreign currency amount (inthousands) Exchangerate (Foreign currency: functional currency) Financial assets Monetary items USD:NTD 20,585 $ 30.86 CNY:NTD 4,480 4.973 EUR:NTD 21 34.46 Financial liabilities Monetary items USD:NTD 2,963 30.86 EUR:NTD 11 34.46 June 30,2015		June 30,2016	June 30,2016		Book value (NTD) 780,111 $ 10,085 5,528 35,799 5,707 Book value (NTD) 1,143,173 $ 59,704 13,601 21,143 574 Book value (NTD)
				Exchangerate 30.86 4.973 34.46 30.86 34.46
						635,253 $ 22,279 724 91,438 379

~53~

• iv)As of June 30, 2016 and 2015, if the NTD:USD exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the Group’s net profit after tax for the sixmonth periods ended June 30, 2016 and 2015 would increase/decrease by $37,216 and $27,191, respectively. If the NTD:EUR exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the Group’s net profit after tax for the six-month periods ended June 30, 2016 and 2015 would increase/decrease by $219 and $1,114, respectively. If the NTD:CNY exchange rate appreciates/depreciates by 5% with all other factors remaining constant, the Group’s net profit after tax for the six-month periods ended June 30, 2016 and 2015 would increase/decrease by $276 and $17, respectively.

• v)Total exchange loss including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and sixmonth periods ended June 30, 2016 and 2015 amounted to $32,534, $3,308, $34,394 and $17,073, 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-non-current’). 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.

• II. No credit limits were exceeded during the six-month periods ended June 30, 2016 and 2015.

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

~54~

• (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. Nonderivative 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.

cash flows.
June 30,2016 Short-term borrowings Notes payable Accounts payable Other payables Long-term borrowings Guarantee deposits received Non-derivative financial liabilities: December31,2015 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposits received Derivative financial liabilities: Forward exchange contracts Non-derivative financial liabilities:	Less than 1year 1,486,193 $ 24,387 140,247 488,029 17,342 26,125 Less than 1year 1,711,850 $ 995 91,060 336,932 23,397 145	Between 1 and2years - $ - - - 32,373 - Between 1 and2years - $ - - - - -	Between 2 and 5 years - $ - - - 239,753 - Between 2 and 5 years - $ - - - - -	More than 5 years
				- $ - - - - - More than 5 years
				- $ - - - - -

~55~

June 30,2015 Short-term borrowings Notes payable Accounts payable Other payables Guarantee deposits received Derivative financial liabilities: Forward exchange contracts Non-derivative financial liabilities:	Less than 1year 1,497,421 $ 121 191,471 559,919 21,656 523	Between 1 and2years - $ - - - - -	Between 2 and 5 years - $ - - - - -	More than 5 years
				- $ - - - - -

(3) Fair value estimation

• A. Details of the fair value of the Group’s financial assets and liabilities not measured at fair value are provided in Note 12(2) A.

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

• Level 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities. A market is regarded as active if it meets all the following conditions: the items traded in the market are homogeneous; willing buyers and sellers can normally be found at any time; and prices are available to the public.

• 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). The fair value of the Group’s investment in foreign exchange contracts is included in Level 2.

• Level 3: Inputs for the asset or liability that are not based on observable market data.

• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at June 30, 2016, December 31, 2015 and June 30, 2015 is as follows:

June30,2016 Assets: Financial assets at fair value through profit or loss – forward foreign contracts	Level 1 - $	Level 2 1,988 $	Level3 - $	Total
				1,988 $

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December31,2015 Liabilities: Financial liabilities at fair value through profit or loss – forward foreign contracts June30,2015 Liabilities: Financial liabilities at fair value through profit or loss – forward foreign contracts	Level 1 - $ Level 1 - $	Level 2 145 $ Level 2 523 $	Level3 - $ Level3 - $	Total
				145 $
				Total
				523 $

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

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

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

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

• E. For the six-month periods ended June 30, 2016 and 2015, there was no transfer between Level 1 and Level 2.

• F. The Group did not have financial instruments that meet the definition of level 3 instruments as of June 30, 2016, December 31, 2015 and June 30, 2015.

13. SUPPLEMENTARY DISCLOSURES

According to the policies, only the financial information of the investee for the six-month period ended June 30, 2016 is supposed to be disclosed based on the financial statements prepared by the same-period auditors. Instead of the adjustments taking into account the consolidation, the financial information is presented in every consolidated entity.

(1) Significant transactions information

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

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

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

~57~

and joint ventures): Please refer to table 3.

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

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

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

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: None.

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

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

• J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 6.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 7.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 8.

14. SEGMENT INFORMATION

(1) General information

The management of the Group has identified the operating segments based on how the Company’s chief operating decision maker regularly reviews information in order to make decisions. The chief operating decision maker manages the Group’s business from geographical and functional perspectives. Geographically, the Group focuses on its sales business in the U.S., Europe and Asia. In addition, the Group categorized its business units into manufacture, sales, research and development and investment management functions, and combines its segments that meet the disclosure threshold as “Others”.

(2) Segment information

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

~58~

Segment revenue Revenue from internal customers Revenue from external customers Interest income Depreciation and amortization Interest expense Income (loss) from segment before income tax Segment assets Other acquisition of non-current assets Segment liabilities Segment revenue Revenue from internal customers Revenue from external customers Interest income Depreciation and amortization Interest expense Income (loss) from segment before income tax Segment assets Other acquisition of non-current assets Segment liabilities	Forthe six-monthperiod ended June 30,2016	Forthe six-monthperiod ended June 30,2016
	ScinoPharm Taiwan,Ltd. Others Total 2,005,630 $ 106,010 $ 2,111,640 $ - 74,834 74,834 2,005,630 31,176 2,036,806 5,764 9,903 15,667 178,428 49,259 227,687 11 11,194 11,205 430,777 172,203) ( 258,574 10,744,761 2,851,910 13,596,671 243,874 113,625 357,499 786,981 1,814,878 2,601,859 Forthe six-monthperiod ended June 30,2015	Total
	ScinoPharm Taiwan,Ltd. Others 1,920,949 $ 220,130 $ - 198,927 1,920,949 21,203 5,449 9,021 200,575 40,579 14 2,878 306,464 19,483) ( 10,406,528 2,975,569 235,582 90,086 956,294 1,592,264	Total
		2,141,079 $ 198,927 1,942,152 14,470 241,154 2,892 286,981 13,382,097 325,668 2,548,558

(3) Reconciliation for segment

A. The sales between segments were at arms’ length. The external revenues reported to the chief operating decision maker adopt the same measurement basis for revenues in statement of comprehensive income. The reconciliations of pre-tax income between reportable segments and continuing operations were as follows :

continuing operations were as follows:
		Forthe six-monthperiods			ended June 30,
		2016			2015
Reportable segments profit before
income tax	$	430,777		$	306,464
Other segments loss before income tax	(	172,203)	(		19,483)
Internal segments profit		132,429			79,400
Profit before income tax	$	391,003		$	366,381

• B. The amount of total assets provided to the chief operating decision-maker adopts the same

~59~

measurement for assets in the Group's financial statements. A reconciliation of assets of reportable segments and total assets is as follows:

		June30,2016			June30,2015
Assets of reportable segments	$	10,744,761		$	10,406,528
Assets of other operating segments		2,851,910			2,975,569
Internal segment transaction elimination	(	1,051,340)	(		1,507,675)
Total assets	$	12,545,331		$	11,874,422

• C. The amount of total liabilities provided to the chief operating decision-maker adopts the same measurement for liabilities in the Group's financial statements. A reconciliation of liabilities of reportable segments and total liabilities is as follows:

		June30,2016			June30,2015
Liabilities of reportable segments	$	786,981		$	956,294
Liabilities of other operating segments		1,814,879			1,592,264
Internal segment transaction elimination	(	14,308)	(		124,370)
Total liabilities	$	2,587,552		$	2,424,188

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Table 1

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd.

Loans to others

For the six-month period ended June 30, 2016

Allowance for doubtful accounts Actual amount drawn down Interest rate Nature of financial activity (Note 1) Total transaction amount Reason for financing Related parties Number Name Name of counterparty Account Maximum balance Endingbalance	Assetspledged	Loan limit per entity	Maximum amount available for loan	Footnote
	Item Value
1 ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceut- icals, Ltd. Other receivables Y 94,129 $ 89,633 $ 89,633 $ 2.00 2 - $ Additional operating capital - $	－ - $	92,077 $	184,155 $	(Note 2)

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

1.Trading partner.

2.Short-term financing.

Note 2: The maximum amount for total loan is 40% of its net worth; the maximum amount of individual enterprise is as follow: (1) For trading partner: higher of the purchase or sales amount of the most recent year or the current year. (2) For short-term financing: the maximum amount for total loan is 20% of its net worth.

Note 3: The maximum amount for total loan is 40% of its net worth; the maximum amount for short-term financing is 20% of its 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 (RMB:NTD 1:4.845).

Table 1, Page 1

ScinoPharm Taiwan, Ltd. and Subsidiaries

Table 2

Expressed in thousands of NTD

Provision of endorsements and guarantees to others

For the six-month period ended June 30, 2016

	Endorser/	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party	Limit on endorsements/ guarantees provided for a single party	Limit on endorsements/ guarantees provided for a single party	Maximum outstanding endorsement/ guarantee amount as of June 30, 2016	Outstanding endorsement/ guarantee amount at June 30, 2016	Actual amount drawn down	Amount of endorsements/ guarantees secured with	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor	Ceiling on total amount of endorsements/ guarantees provided	Ceiling on total amount of endorsements/ guarantees provided	Ceiling on total amount of endorsements/ guarantees provided	Provision of endorsements/ guarantees by parent company to	Provision of endorsements/ guarantees by subsidiary to parent	Provision of endorsements/ guarantees to the party in Mainland
			Relationship with the endorser/ guarantor
Number	guarantor	Companyname		Note1			Note 2					collateral	company		Note 2		subsidiary	company	China	Footnote
0	ScinoPharm Taiwan, Ltd.	ScinoPharm (Changshu) Pharmaceuticals, Ltd.	1			9,957,779 $			1,695,750 $	1,695,750 $	255,252 $	- $	17.03%	9,957,779 $			Y	N	Y

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

• The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

• Note 2: 1.The limit of total amount of endorsement is 50% of the Company's net worth, for 100% directly or indirectly owned subsidiaries, the maximum amount is 100% of its net worth, for any endorsement or guarantee provided by the Company due to business dealings, the amount of endorsement and guarantees shall be limited to the business dealing amount( higher amount of product purchase or sale amount between the entities). The limit of total amount of the Group's endorsement and guarantee is 100% of the Group's net worth.

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

• Note 3: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the consolidated financial statements (CNY:NTD 1:4.845).

Table 2, Page 1

ScinoPharm Taiwan, Ltd. and Subsidiaries

Table 3

Expressed in thousands of NTD

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

June 30, 2016

Securitiesheld by	Marketable securities	Relationship with the securitiesissuer	General ledgeraccount		As ofJune	30,2016		Footnote
				Number of shares (inthousands)	Bookvalue	Ownership (%)	Fairvalue
ScinoPharm Taiwan, Ltd.	Bill under repurchase agreements: International Bills Finance Co. China Bills Finance Co. Mega Bills Finance Co., Ltd. Stocks: Tanvex Biologics, Inc. Syngen, Inc. Foresee Pharmaceuticals Co., Ltd.	The Company is a director of Tanvex Biologics, Inc.	Cash equivalents Cash equivalents Cash equivalents Financial assets measured at cost- non-current Financial assets measured at cost- non-current Financial assets measured at cost- non-current	- - - 28,800 245 4,358	164,868 $ 99,886 34,938 167,673 - 196,416	- - - 17.00% 7.40% 6.05%	164,868 $ 99,886 34,938 - - -

Table 3, Page 1

Table 4

ScinoPharm Taiwan, Ltd. and Subsidiaries

' - Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company s paid in capital

For the six-month period ended June 30, 2016

Expressed in thousands of NTD

Investor	Marketable securities	General ledger account	Counterparty	Relationship with theinvestor	Balance as at January1,2016	Balance as at January1,2016	Addition	Addition		Disposal	Disposal		Balance as at	June 30,2016
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Bookvalue	Gain (loss) on disposal	Number of shares	Amount
ScinoPharm Taiwan, Ltd.	agreement: International Cash Bills Finance Co. equivalents China Bill Cash Finance Co. equivalents Mega Bills Cash Finance Co. equivalents Bill under repurchase		- - -	- - -	- - -	$ 209,936 89,976 -	- - -	$3,830,907 1,004,069 753,928	- - -	$3,876,338 994,229 719,044	($3,875,975) ( 994,159) ( 718,990)	$ 363 70 54	- - -	$ 164,868 99,886 34,938

Table 4, Page 1

• Significant inter company transactions during the reporting periods For the six-month period ended June 30, 2016

Table 5

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

Number (Note1)	Companyname	Counterparty	Relationship (Note2)			Transaction
				General ledgeraccount	Amount	Transactionterms	Percentage of consolidated total operating revenues ortotalassets (Note 3)
0 0 0 0 0 0 0 1	ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm (Kunshan) Biochemical Technology Co., Ltd.	ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd.	1 1 1 1 1 1 1 3	Purchases Technical service revenue Other receivables Accounts payable Endorsements and guarantees Management consultancy fees Other payables Other receivables	66,196 $ 7,075) ( 6,577 4,293) ( 1,695,750 7,972 2,926) ( 89,633	Closes its accounts 90 days from the end of each month after acceptance	3% 14% 1%

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

(1) 0 . (2) 1 .

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

• (1)Parent company to subsidiary.

• (2)Subsidiary to parent company.

• (3)Subsidiary to subsidiary.

• Note 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.

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 (CNY:NTD 1:4.845).

Table 5, Page 1

Table 6

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

Information on investees

For the six-month period ended June 30, 2016

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares	held as atJune30,2016	held as atJune30,2016	Net profit (loss) of the investee for the six- month period ended June 30,2016	Investment income (loss) recognized by the Company for the six-month period endedJune30,2016	Footnote
				Balance as at June30,2016	Balance as at December31,2015	Number of shares	Ownership (%)	Bookvalue
ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd.	SPT International, Ltd. ScinoPharm Singapore Pte Ltd.	Tortola, British Virgin Islands Singapore	Professional investment Professional investment	1,833,304 $ -	1,833,304 $ -	60,524,644 2	100.00 100.00	1,003,445 $ 62	132,440) ($ 11	111,113) ($ 11	Subsidary Subsidary

Table 6, Page 1

ScinoPharm Taiwan, Ltd. and Subsidiaries

Information on investments in Mainland China

Expressed in thousands of NTD

For the six-month period ended June 30, 2016

Table 7

Investee in			Investment	Accumulated amount of remittance from Taiwan to Mainland China as of January 1,	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the six-month period ended June 30,2016	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the six-month period ended June 30,2016	Accumulated amount of remittance from Taiwan to Mainland China as of June 30,	Net income of investee for the six-month period ended	Ownership held by the Company (direct or	Investment income (loss) recognized by the Company for the three- month period ended June 30, 2016	Investment income (loss) recognized by the Company for the three- month period ended June 30, 2016	Investment income (loss) recognized by the Company for the three- month period ended June 30, 2016	Book value of investments in Mainland China as of June 30,	Accumulated amount of investment income remitted back to Taiwan as of
					Remitted to	Remitted back
Mainland China	Main business activities	Paid-in capital	method	2016	Mainland China	to Taiwan	2016	June 30,2016	indirect)		Note 2		2016	June 30,2016	Footnote
ScinoPharm (Kunshan) Biochemical Technology Co., Ltd. ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd. Companyname	Research, development, and manufacture of API and new drug, etc. Research, development, and manufacture of API and new drug, etc. Import, export and sales of API and intermediates, etc. Accumulated amount of remittance from Taiwan to Mainland China as ofJune 30,2016	129,100 $ Note 1 1,758,988 Note 1 38,730 Note 1 Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)		129,100 $ - $ 1,758,988 - 38,730 - Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA (Note 3)		- $ - -	129,100 $ 1,758,988 38,730	2,504) ($ 129,870) ( 10	100 100 100	2,504) ($ 129,870) ( 10			457,961 $ 553,737 20,760	- $ - -	Subsidary Subsidary Subsidary
ScinoPharm Taiwan, Ltd.	$ 1,957,431	1,957,431 $		5,974,667 $

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

Note 2: The investment income (loss) recognized by the Company for the six-month period ended June 30, 2016 was based on unreviewed financial statements of investee companies as of and for the six-month period ended June 30, 2016. Note 3: The ceiling amount is 60% of the higher of net worth or consolidated net worth.

Note 4: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the consolidated financial statements (USD:NTD 1:32.275).

Table 7, Page 1

Table 8

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

For the six-month period ended June 30, 2016

Provision of

						Provision of	Provision of
Investee in MainlandChina	Sale(purchase)		Propertytransaction	Accounts receivable (payable)		endorsements/guarantees or collaterals			Financing			Others
	Amount	%	Amount %	Balance at June 30,2016	%	Balance at June 30,2016	Purpose	Maximum balance during the six-month period endedJune30,2016	Balance at June 30, 2016	Interest rate	Interest during the six- month period ended June30,2016
ScinoPharm (Changshu) Pharmaceuticals, Ltd. ScinoPharm (Shanghai) Biochemical Technology, Ltd.	($66,196) -	(12%) -	- - - -	($4,293) -	5% -	1,695,750 -	Secured financing amount -	- -	- -	- -	- -	Technical service revenue $ 7,075 Other receivables $ 6,577 Management consultancy fee $ 7,972 Other payables $ 2,926

Table 8, Page 1