SPT - Interim / Quarterly Report 2017

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REVIEW REPORT OF INDEPENDENT ACCOUNTANTS SEPTEMBER 30, 2017 AND 2016

-----------------------------------------------------------------------------------------------------------------------------------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 September 30, 2017 and 2016, and the related consolidated statements of comprehensive income for the three-month and nine-month periods then ended, of changes in equity and of cash flows for the nine-month periods 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 ninemonth periods ended September 30, 2017 and 2016. Total assets of these subsidiaries amounted to $1,069,811 thousand and $2,759,748 thousand, representing 8% and 22% of the related consolidated totals, and total liabilities amounted to $32,868 thousand and $55,354 thousand, representing 1% and 2% of the related consolidated totals, as of September 30, 2017 and 2016, respectively. Total comprehensive loss of these subsidiaries amounted to ($83,021) thousand, ($102,262) thousand, ($234,488) thousand and ($244,872) thousand, constituting (71%), (76%), (69%) and (55%) of the consolidated totals for the three-month and nine-month periods ended September 30, 2017 and 2016, 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.

Lin, Yung-Chih

Independent Accountants

Liu, Tzu-Meng

PricewaterhouseCoopers, Taiwan Republic of China November 3, 2017

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

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

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The consolidated balance sheets as of September 30, 2017 and 2016 are reviewed, not audited)

Assets	Notes	September30,2017 AMOUNT % $ 3,950,339 31 - - 470,231 4 203,189 1 1,829,937 14 155,784 1 - - 6,609,480 51 391,097 3 5,122,070 40 22,795 - 491,291 4 115,297 1 9,863 - 28,831 - 79,037 1 6,260,281 49 $ 12,869,761 100	December31,2016 AMOUNT % $ 3,707,151 29 - - 638,405 5 197,897 2 1,829,710 14 212,212 2 - - 6,585,375 52 364,089 3 5,208,898 41 24,078 - 414,414 3 65,466 - 9,739 - 28,831 - 82,110 1 6,197,625 48 $ 12,783,000 100	September30,2016	September30,2016
		AMOUNT $ 3,950,339 - 470,231 203,189 1,829,937 155,784 - 6,609,480 391,097 5,122,070 22,795 491,291 115,297 9,863 28,831 79,037 6,260,281 $ 12,869,761	AMOUNT $ 3,707,151 - 638,405 197,897 1,829,710 212,212 - 6,585,375 364,089 5,208,898 24,078 414,414 65,466 9,739 28,831 82,110 6,197,625 $ 12,783,000	AMOUNT $ 3,137,413 2,193 614,015 208,221 2,017,941 234,898 46,930 6,261,611 364,089 5,247,836 23,269 430,003 59,500 9,919 28,831 83,461 6,246,908 $ 12,508,519	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1170 Accounts receivable, net 1200 Other receivables 130X Inventory 1410 Prepayments 1476 Other financial assets - current 11XX Total current assets Non-current assets 1543 Financial assets carried at cost - non-current 1600 Property, plant and equipment 1780 Intangible assets 1840 Deferred income tax assets 1915 Prepayments for equipment 1920 Guarantee deposits paid 1980 Other financial assets - non- current 1985 Long-term prepaid rents 15XX Total non-current assets 1XXX Total assets	6(1) 6(2) 6(3) 5(2) and 6(4) 6(5) 6(6)(8)(26) 5(2) and 6(24) 6(6)(26) 8 6(7)				25 - 5 2 16 2 -
					50
					3 42 - 3 1 - - 1
					50
					100

(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 September 30, 2017 and 2016 are reviewed, not audited)

					September30,2017	September30,2017			December31,2016	December31,2016		September30,	2016
	Liabilities and Equity	Notes			AMOUNT	%			AMOUNT	%		AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(9)		$	551,428		4	$	982,705	8	$	955,609	8
2120	Financial liabilities at fair value	6(2)
	through profit or loss - current				799		-		2,822	-		-	-
2150	Notes payable				1,498		-		1,001	-		1,325	-
2170	Accounts payable				160,170		1		69,730	1		129,031	1
2200	Other payables	6(10)(26)			331,136		3		430,020	3		314,237	3
2230	Current income tax liabilities	6(24)			23,675		-		110,911	1		61,926	-
2310	Advance receipts				41,092		1		62,384	-		55,258	-
2320	Long-term liabilities, current	6(11) and 9
	portion				109,163		1		32,120	-		16,230	-
21XX	Total current liabilities				1,218,961	10			1,691,693	13		1,533,616	12
	Non-current liabilities
2540	Long-term borrowings	6(11) and 9			1,228,085		9		770,873	6		795,300	6
2570	Deferred income tax liabilities	6(24)			-		-		877	-		372	-
2640	Net defined benefit liabilities	6(12)			69,711		1		70,053	1		62,691	1
2645	Guarantee deposits received				1,711		-		21,711	-		22,005	-
25XX	Total non-current
	liabilities				1,299,507	10			863,514	7		880,368	7
2XXX	Total liabilities				2,518,468	20			2,555,207	20		2,413,984	19
	Equity attributable to owners of
	parent
	Share capital	6(13)(16)
3110	Share capital - common stock				7,907,392	61			7,603,262	59		7,603,262	61
3200	Capital surplus	6(14)(15)			1,286,206	10			1,275,660	10		1,273,531	10
	Retained earnings	6(13)(16)(
		24)
3310	Legal reserve				526,065		4		460,196	4		460,196	4
3320	Special reserve				22,829		-		22,829	-		22,829	-
3350	Unappropriated retained
	earnings				632,752		5		869,300	7		728,614	6
3400	Other equity interest	6(17)	(		23,951)		- (		3,454)	-		6,103	-
3XXX	Total equity				10,351,293	80			10,227,793	80		10,094,535	81
	Significant contingent liabilities	9
	and unrecognized contract
	commitments
3X2X	Total liabilities and equity			$	12,869,761	100		$	12,783,000	100	$	12,508,519	100

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

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

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

(UNAUDITED)

					Threemonths	Threemonths	ended	ended	September30				Ninemonths ended	Ninemonths ended	Ninemonths ended	Ninemonths ended	September30
					2017				2016				2017				2016
	Items	Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%			AMOUNT	%
4000	Operating revenue	6(18)		$	848,829	100		$	991,624	100		$	2,621,471	100		$	3,028,430	100
5000	Operating costs	6(4)(12)(22)(2
		3) and 9	(		441,384) (	52)(			525,408)(	53) (			1,417,935)(	54) (			1,666,213) (	55)
5900	Net operating margin				407,445	48			466,216	47			1,203,536	46			1,362,217	45
	Operating expenses	6(7)(12)(22)(2
		3), 7 and 9
6100	Selling expenses		(		39,886) (		5) (		40,933) (		4) (		104,451) (		4) (		117,584) (		4)
6200	General and administrative
	expenses		(		131,557) (	15) (			118,636) (	12) (			409,081) (	16) (			370,300) (	12)
6300	Research and development
	expenses		(		84,385) (	10)(			73,175)(		7) (		230,718)(		9) (		216,286) (		7)
6000	Total operating expenses		(		255,828) (	30)(			232,744)(	23) (			744,250)(	29) (			704,170) (	23)
6900	Operating profit				151,617	18			233,472	24			459,286	17			658,047	22
	Non-operating income and
	expenses
7010	Other income	6(3)(19)			9,925		1		9,311		1		31,281		1		30,788		1
7020	Other gains and losses	6(2)(6)(8)(20)
		and 12	(		11,564) (		1) (		24,128) (		3) (		38,907) (		1) (		67,972) (		2)
7050	Finance costs	6(6)(21)(26)	(		23,393) (		3)(		12,004)(		1) (		53,531)(		2) (		23,209) (		1)
7000	Total non-operating
	income and expenses		(		25,032) (		3)(		26,821)(		3) (		61,157)(		2) (		60,393) (		2)
7900	Profit before income tax				126,585	15			206,651	21			398,129	15			597,654	20
7950	Income tax expense	6(24)	(		19,580) (		2)(		41,103)(		4) (		36,580)(		1) (		85,782) (		3)
8200	Profit for the period			$	107,005	13		$	165,548	17		$	361,549	14		$	511,872	17
	Other comprehensive income
	(loss)
	Components of other
	comprehensive income (loss)
	that will be reclassified to profit
	or loss
8361	Financial statements	6(17)
	translation differences of
	foreign operations			$	9,288		1 ($		31,484)(		3) ($		20,497)(		1) ($		62,992) (		2)
8300	Total other comprehensive
	income (loss) for the period			$	9,288		1 ($		31,484) (		3) ($		20,497)(		1) ($		62,992) (		2)
8500	Total comprehensive income for
	the period			$	116,293	14		$	134,064	14		$	341,052	13		$	448,880	15
	Profit attributable to:
8610	Owners of the parent			$	107,005	13		$	165,548	17		$	361,549	14		$	511,872	17
	Comprehensive income
	attributable to:
8710	Owners of the parent			$	116,293	14		$	134,064	14		$	341,052	13		$	448,880	15
	Earnings per share (in dollars)	6(25)
9750	Basic			$		0.14		$		0.21		$		0.46		$		0.65
9850	Diluted			$		0.14		$		0.21		$		0.46		$		0.65

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

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

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

For the nine-month period ended September 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 nine-month period ended September 30, 2016 Other comprehensive loss for the nine-month period ended September 30, 2016 Balance at September 30, 2016 For the nine-month period ended September 30, 2017 Balance at January 1, 2017 Distribution of 2016 net income: Legal reserve Cash dividends Stock dividends Employee stock option compensation cost Net income for the nine-month period ended September 30, 2017 Other comprehensive loss for the nine-month period ended September 30, 2017 Balance at September 30, 2017	Notes		Share capital - common stock		Capital reserve			RetainedEarnings	RetainedEarnings	RetainedEarnings		Otherequity	Total equity
							Legal reserve		Special reserve	Unappropriated retained earnings		Currency translation differences
	6(16) 6(13)(16) 6(14)(15) 6(17) 6(16) 6(13)(16) 6(14)(15) 6(17)		$ 7,310,829 - - 292,433 - - - $ 7,603,262 $ 7,603,262 - - 304,130 - - - $ 7,907,392		$ 1,265,544 - - - 7,987 - - $ 1,273,531 $ 1,275,660 - - - 10,546 - - $ 1,286,206		$ 396,699 63,497 - - - - - $ 460,196 $ 460,196 65,869 - - - - - $ 526,065		$ 22,829 - - - - - - $ 22,829 $ 22,829 - - - - - - $ 22,829	$ 791,997 ( 63,497) ( 219,325) ( 292,433) - 511,872 - $ 728,614 $ 869,300 ( 65,869) ( 228,098) ( 304,130) - 361,549 - $ 632,752	$ 69,095 - - - - - ( 62,992) $ 6,103 ($ 3,454) - - - - - ( 20,497) ($ 23,951)		$ 9,856,993 - ( 219,325) - 7,987 511,872 ( 62,992) $10,094,535 $10,227,793 - ( 228,098) - 10,546 361,549 ( 20,497) $10,351,293

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

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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 tax
Adjustments
Adjustments to reconcile profit (loss)
Gain on valuation of financial assets and liabilities
(Reversal of allowance) provision for doubtful
accounts
Loss on inventory market price decline
Provision for obsolescence of supplies
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
Accounts receivable
Other receivables
Inventory
Prepayments
Changes in operating liabilities
Notes payable
Accounts payable
Other payables
Advance receipts
Net defined benefit liabilities - non-current
Cash inflow generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities

For the nine-month periods ended
September 30,
Notes
2017
2016
$ 398,129
$ 597,654
(
2,023 ) (
2,338 )
6(3)(19)
(
574 )
250
6(4)
69,942
44,469
9,215
8,416
6(6)(22)
320,798
327,235
6(20)
109
545
6(6)(8)(20)
(
81 ) (
721 )
6(22)
6,673
6,785
6(7)
1,371
1,502
6(14)(15)
10,546
7,987
6(19)
(
18,812 ) (
21,899 )
6(21)
53,531
23,209
168,745
252,966
(
4,726 ) (
266 )
(
68,486 )
106,798
45,699
(
74,711 )
497
330
90,440
37,971
(
26,131 ) (
3,702 )
(
21,292 )
11,722
(
342) (
163)
1,033,228
1,324,039
18,246
21,899
(
58,405 ) (
23,209 )
(
204,419) (
193,062)
788,650
1,129,667

(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 in prepayment for equipment
(Increase) decrease in guarantee deposits paid
Increase in other financial assets - non-current
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings
Increase in long-term borrowings
Decrease in long-term borrowings
Decrease in guarantee deposits received
Payment of cash dividents
Net cash flows used in 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 nine-month periods ended
September 30,
Notes
2017
2016
$ -
$ 237,286
(
27,008 ) (
25,182 )
6(26)
(
281,179 ) (
387,017 )
6(6)(21)(26)
(
10,925 ) (
14,245 )
50
556
(
5,625 ) (
7,900 )
(
90,431 ) (
18,585 )
(
124 )
529
-
(
4,097 )
(
415,242 ) (
218,655 )
(
405,468 ) (
746,697 )
570,033
811,530
(
26,914 )
-
(
20,000 ) (
1,392 )
6(16)
(
228,098 ) (
219,325 )
(
110,447 ) (
155,884 )
(
19,773 )
46,588
243,188
801,716
6(1)
3,707,151
2,335,697
6(1)
$ 3,950,339
$ 3,137,413

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

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SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2017 AND 2016

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

(Reviewed, not audited)

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.
(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 reported to the Board of Directors on November 3, 2017.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

New standards, interpretations and amendments as endorsed by FSC effective from 2017 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board (“IASB”)
Investment entities: applying the consolidation exception (amendments to IFRS 10, IFRS 12 and IAS 28) Accounting for acquisition of interests in joint operations (amendments to IFRS 11) IFRS 14, ‘Regulatory deferral accounts’ Disclosure initiative (amendments to IAS 1)	January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board (“IASB”)
Clarification of acceptable methods of depreciation and amortisation (amendments to IAS 16 and IAS 38) Agriculture: bearer plants (amendments to IAS 16 and IAS 41) Defined benefit plans: employee contributions (amendments to IAS 19R) Equity method in separate financial statements (amendments to IAS 27) Recoverable amount disclosures for non-financial assets (amendments to IAS 36) Novation of derivatives and continuation of hedge accounting (amendments to IAS 39) IFRIC 21, ‘Levies’ Improvements to IFRSs 2010-2012 Improvements to IFRSs 2011-2013 Improvements to IFRSs 2012-2014	January 1, 2016 January 1, 2016 July 1, 2014 January 1, 2016 January 1, 2014 January 1, 2014 January 1, 2014 July 1, 2014 July 1, 2014 January 1, 2016

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board
(“IASB”)

Clarification of acceptable methods of depreciation and amortisation
(amendments to IAS 16 and IAS 38)
Agriculture: bearer plants (amendments to IAS 16 and IAS 41)
Defined benefit plans: employee contributions (amendments to IAS
19R)
Equity method in separate financial statements (amendments to IAS
27)
Recoverable amount disclosures for non-financial assets (amendments
to IAS 36)
Novation of derivatives and continuation of hedge accounting
(amendments to IAS 39)
IFRIC 21, ‘Levies’
Improvements to IFRSs 2010-2012
Improvements to IFRSs 2011-2013
Improvements to IFRSs 2012-2014

January 1, 2016
January 1, 2016
July 1, 2014
January 1, 2016
January 1, 2014
January 1, 2014
January 1, 2014
July 1, 2014
July 1, 2014
January 1, 2016

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

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.

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 assets is provided to chief operating decision maker regularly.

(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 as endorsed by the FSC effective from 2018 are as follows:

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New Standards,Interpretations and Amendments	Effective date byIASB
Classification and measurement of share-based payment transactions (amendments to IFRS 2) Applying IFRS 9, ‘Financial instruments’ with IFRS 4, ‘Insurance contracts’ (amendments to IFRS 4) IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Clarifications to IFRS 15, ‘Revenue from contracts with customers’ (amendments to IFRS 15) Disclosure initiative (amendments to IAS 7) Recognition of deferred tax assets for unrealised losses (amendments to IAS 12) Transfers of investment property (amendments to IAS 40) IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS28, ‘Investments in associates and joint ventures’	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2018

New Standards,Interpretations and Amendments

Effective date byIASB

Classification and measurement of share-based payment transactions
(amendments to IFRS 2)
Applying IFRS 9, ‘Financial instruments’ with IFRS 4, ‘Insurance
contracts’ (amendments to IFRS 4)
IFRS 9, ‘Financial instruments’
IFRS 15, ‘Revenue from contracts with customers’
Clarifications to IFRS 15, ‘Revenue from contracts with customers’
(amendments to IFRS 15)
Disclosure initiative (amendments to IAS 7)
Recognition of deferred tax assets for unrealised losses (amendments
to IAS 12)
Transfers of investment property (amendments to IAS 40)
IFRIC 22, ‘Foreign currency transactions and advance consideration’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 1, ‘First-time adoption of International Financial Reporting
Standards’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 12, ‘Disclosure of interests in other entities’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IAS28, ‘Investments in associates and joint ventures’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2018

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

A. 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 or lifetime expected credit losses (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). The Company shall always measure the loss allowance at an amount equal to lifetime expected

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credit losses for trade receivables that do not contain a significant financial component.

B. 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.

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

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

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date byIASB
Prepayment features with negative compensation (amendments to IFRS 9) Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28) IFRS 16, ‘Leases’ IFRS 17, ‘Insurance contracts’ Long-term interests in associates and joint ventures (amendments to IAS 28) IFRIC 23, ‘Uncertainty over income tax treatments’	January 1, 2019 To be determined by IASB January 1, 2019 January 1, 2021 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the

Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

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.

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.

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(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, ‘Critical accounting judgements, estimates and key sources of assumption uncertainty’.

(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.
(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.

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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:

Percentage owned by the Company

		Percentage owned by the Company
Name of Investors	Name of Subsidiaries	Business September 30, December 31, activities 2017 2016 Professional investment 100.00 100.00 Professional investment 100.00 100.00 Research, development and manufacture of API and new drug, etc. 100.00 100.00 Research, development and manufacture of API and new drug, sale produced products, etc. 100.00 100.00 Import, export and sales of API and intermediates, etc. 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. SciAnda (Kunshan) Biochemical Technology, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda Shanghai Biochemical Technology, Ltd.		(Note) (Note) (Note) (Note) (Note)

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Percentage owned by the Company

Percentage owned by the Company
Business Name of Investor Name ofSubsidiaies activities ScinoPharm Taiwan, Ltd. SPT International, Ltd. Professional investment ScinoPharm Taiwan, Ltd. ScinoPharm Singapore Pte Ltd. Professional investment SPT International, Ltd. SciAnda (Kunshan) Biochemical Technology, Ltd. Research, development and manufacture of API and new drug, etc. SPT International, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. Research, development and manufacture of API and new drug, sale produced products, etc. SPT International, Ltd. SciAnda Shanghai Biochemical Technology, Ltd. Import, export and sales of API and intermediates, etc. 100.00 100.00 100.00 100.00 September30,2016 100.00	Note
	(Note) (Note) (Note) (Note) (Note)

Percentage owned by the
Company

Business
Name of Investor
Name ofSubsidiaies
activities
ScinoPharm
Taiwan, Ltd.
SPT International,
Ltd.
Professional
investment
ScinoPharm
Taiwan, Ltd.
ScinoPharm
Singapore
Pte Ltd.
Professional
investment
SPT
International,
Ltd.
SciAnda
(Kunshan)
Biochemical
Technology, Ltd.
Research,
development
and manufacture of
API and new drug,
etc.
SPT
International,
Ltd.
SciAnda
(Changshu)
Pharmaceuticals,
Ltd.
Research,
development
and manufacture of
API and new drug,
sale produced
products, etc.
SPT
International,
Ltd.
SciAnda
Shanghai
Biochemical
Technology, Ltd.
Import, export and
sales of API and
intermediates, etc.
100.00
100.00
100.00
100.00
September30,2016
100.00

Note

(Note)
(Note)
(Note)
(Note)
(Note)

Note: The financial statements of the entity as of and for the nine-month periods ended September 30, 2017 and 2016 were not reviewed by independent accountants as the entity did not meet the definition of significant subsidiary.

The financial statements of certain non-significant subsidiaries were consolidated based on their unreviewed financial statements as of and for the nine-month periods ended September 30, 2017 and 2016. Total assets of these subsidiaries amounted to $1,069,811 and $2,759,748, representing 8% and 22% of the related consolidated totals, and total liabilities amounted to $32,868 and $55,354, representing 1% and 2% of the related consolidated totals, as of September 30, 2017 and 2016, respectively. Total comprehensive loss of these subsidiaries amounted to ($83,021), ($102,262), ($234,488) and ($244,872), constituting (71%), (76%), (69%) and (55%) of the related consolidated totals for the three-month and nine-month periods ended September 30, 2017 and 2016, 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.
(b) When a foreign operation as an associate or joint arrangement 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

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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.

(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:

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(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’.

(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;

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(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 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 derecognises a financial asset when the contractual rights to cash flows from the financial asset expire.

(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

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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. When the cost of inventories exceeds the net realizable value, the amount of any write-down of inventories is recognized as cost of sales during the period; and the amaunt of any reversal of inventory write-down is recognized as a reduction in the cost of sales during the period.

(13) 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 financial year-end 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:

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

(14) 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.

(15) 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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(16) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is 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.
(17) Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

(18) 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.
(19) 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.

(20) Derecognition of financial liabilities

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

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(21) Offsetting financial instruments

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

(22) Employee benefits
A. Short-term employee benefits

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

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the contributions are 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 net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
- ii.Remeasurements arising on defined benefit plans are 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.
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.

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- (23) 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.

(24) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group 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 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.

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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. 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, 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.
(25) 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.

(26) Dividends

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

(27) Revenue recognition
A. Sales of goods

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

B. Sales of services

The Group provides biochemical technology development consultation and processing services. Revenue from rendering services is recognized under the percentage-of-completion method

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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.

(28) 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. CRITICALACCOUNTING 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. As the manufacturing process is long and complex, causing longer materials lead time, in addition, the waiting period for product registration is long, and the timing of customers’ product launch may be deferred, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net 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 changes to the evaluation.
(b) As of September 30, 2017, the carrying amount of inventories was $1,829,937.
B. Realisability of deferred income tax assets
(a) Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be

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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 September 30, 2017, the Group recognised deferred income tax assets amounting to $491,291.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

A. The Group associates with a variety of financial institutions all with high credit quality to dispe 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 as - non-current”) as of September 30, 2017, December 31, 2016 and September 30, 2016 provided in Note 8. FINANCIALASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS September30,2017 December31,2016 September30,2016 Cash: Cash on hand 238 $ 75 $ 99 $ 312,646 516,801 491,333 312,884 516,876 491,432 Cash equivalents: Time deposits 3,337,779 2,904,500 2,427,185 299,676 285,775 218,796 3,637,455 3,190,275 2,645,981 3,950,339 $ 3,707,151 $ 3,137,413 $ Checking accounts and demand deposits Bill under repurchase Items September30,2017 December31,2016 September30,2016 Current items: Financial assets held for trading Non-hedging derivatives - $ - $ 2,193 $ Financial liabilities held for trading Non-hedging derivatives 799 $ 2,822 $ - $	A. The Group associates with a variety of financial institutions all with high credit quality to dispe 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 as - non-current”) as of September 30, 2017, December 31, 2016 and September 30, 2016 provided in Note 8. FINANCIALASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS September30,2017 December31,2016 September30,2016 Cash: Cash on hand 238 $ 75 $ 99 $ 312,646 516,801 491,333 312,884 516,876 491,432 Cash equivalents: Time deposits 3,337,779 2,904,500 2,427,185 299,676 285,775 218,796 3,637,455 3,190,275 2,645,981 3,950,339 $ 3,707,151 $ 3,137,413 $ Checking accounts and demand deposits Bill under repurchase Items September30,2017 December31,2016 September30,2016 Current items: Financial assets held for trading Non-hedging derivatives - $ - $ 2,193 $ Financial liabilities held for trading Non-hedging derivatives 799 $ 2,822 $ - $	September30,2016
Items September30,2017 Current items: Financial assets held for trading Non-hedging derivatives - $ Financial liabilities held for trading Non-hedging derivatives 799 $	December31,2016 S - $ 2,822 $

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 September 30, 2017, December 31, 2016 and September 30, 2016 are provided in Note 8.

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

A. The Group recognized net gain of $205, $7,681, $9,443 and $11,933 on financial assets and iabilities held for trading (listed as ‘Other gains and losses’) for the three-month and nine-month periods ended September 30, 2017 and 2016, respectively.
B. The non-hedging derivative instruments transaction and contract information are as follows (Units

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in thousands of currencies indicated):

in thousands of currencies indicated):
Items Forward foreign exchange contracts Items Forward foreign exchange contracts Items Forward foreign exchange contracts	September30,2017
	Contract Amount USD 6,150 December	Contract Period
		8.2017～11.2017 31,2016
	Contract Amount Contract Period USD 6,940 11.2016～2.2017 September 30,2016	Contract Period
	ContractAmount USD 10,520	ContractPeriod
		8.2016～12.2016

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 September 30, 2017, December 31, 2016 and September 30, 2016.

(3) ACCOUNTS RECEIVABLE, NET

	September 30,2017	September 30,2017	December	31,2016	September 30,2016	September 30,2016
Accounts receivable	$	470,307	$	639,052	$	614,318
Less: Allowance for doubtful
accounts	(	76)	(	647)	(	303)
	$	470,231	$	638,405	$	614,015

A. As of September 30, 2017, December 31, 2016 and September 30, 2016, 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:

For the nine-month periods ended September 30,

2017 Group provision At January 1 647 $ (Reversal) provision for impairment (Note) 574) ( Effect of exchange rate 3 At September 30 76 $	2016
	Group provision
	53 $ 250 -
	303 $

Note: Reversal for impairment listed as “Other income”.

C. The Group’s 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 September 30, 2017, December 31, 2016 and September 30, 2016, the Group does not hold any collateral as security.

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(4) INVENTORIES

NVENTORIES
Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods Raw materials Supplies Work in process Finished goods		September30,2017
	Allowance for Cost market price decline 519,340 $ 119,437) ($ 27,087 1,798) ( 673,708 141,250) ( 1,179,198 306,911) ( 2,399,333 $ 569,396) ($ December31,2016		Bookvalue
			399,903 $ 25,289 532,458 872,287 1,829,937 $
	Allowance for Cost market price decline 377,494 $ 81,670) ($ 14,946 1,097) ( 896,557 125,933) ( 1,041,850 292,437) ( 2,330,847 $ 501,137) ($ September30,2016		Bookvalue
			295,824 $ 13,849 770,624 749,413 1,829,710 $
	Allowance for Cost marketprice decline 399,729 $ 81,897) ($ 13,911 934) ( 810,724 83,504) ( 1,234,186 274,274) ( 2,458,550 $ 440,609) ($		Bookvalue
			317,832 $ 12,977 727,220 959,912 2,017,941 $

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

Cost of goods sold Loss on physical inventory Loss on scrap inventory Under applied manufacturing overhead Provision for inventory market price decline	For the three-monthperiods endedSeptember30,	For the three-monthperiods endedSeptember30,
	2017 282,583 $ 1,955 3 86,576 31,550 402,667 $	2016
		406,530 $ 1,157 - 84,039 28,985
		520,711 $

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For the nine-month periods ended September 30,

	For the nine-monthperiods	endedSeptember30,
Cost of goods sold Loss on physical inventory Loss on scrap inventory Under applied manufacturing overhead Provision for inventory market price decline	2017 1,051,836 $ 6,287 620 207,165 69,942 1,335,850 $	2016
		1,344,463 $ 7,401 - 253,171 44,469
		1,649,504 $

(5) FINANCIALASSETS MEASURED AT COST - NON-CURRENT

	September30,2017	September30,2017	December	31,2016	September30,2016	September30,2016
Unlisted stocks
Tanvex Biologics, Inc.	$	167,673	$	167,673	$	167,673
SYNGEN, INC.		4,620		4,620		4,620
Foresee Pharmaceuticals Co.,
Ltd.		223,424		196,416		196,416
		395,717		368,709		368,709
Less: Accumulated impairment	(	4,620)	(	4,620)	(	4,620)
	$	391,097	$	364,089	$	364,089

A. The Group classified some of its equity investments as available-for-sale financial assets, based on its intention. However, as these stocks are not traded in active market, and there is no sufficient information of similar companies in the same industry, fair value of the investments cannot be measured reliably. Accordingly, the Group classified those stocks as ‘Financial assets measured at cost’.
B. As of September 30, 2017, December 31, 2016 and September 30, 2016, no financial assets measured at cost held by the Group were pledged to others.

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(6) PROPERTY, PLANT AND EQUIPMENT

											Construction	Construction
											in	progress and
											equipment before
			Machinery and		Transportation			Office		Other		acceptance
January 1, 2017		Buildings		equipment		equipment		equipment		equipment		inspection			Total
Cost	$	2,948,766	$	4,853,501	$	28,601	$	213,075	$	154,986	$	1,610,548	$		9,809,477
Accumulated depreciation	(	820,361)	(	3,491,593)	(	22,848)	(	152,407)	(	98,730)		-	(		4,585,939)
Accumulated impairment		-	(	14,640)		-		-		-		-	(		14,640)
	$	2,128,405	$	1,347,268	$	5,753	$	60,668	$	56,256	$	1,610,548		$	5,208,898
For the nine-month period ended
September 30, 2017
At January 1, 2017	$	2,128,405	$	1,347,268	$	5,753	$	60,668	$	56,256	$	1,610,548	$		5,208,898
Additions		179		1,016		-		79		11		222,940			224,225
Reclassified from prepayments
for equipment		-		-		-		-		-		39,867			39,867
Reclassified upon completion		553,757		226,562		-		5,329		2,414	(	788,062)			-
Depreciation charge	(	101,432)	(	186,175)	(	1,801)	(	19,022)	(	12,368)		-	(		320,798)
Disposals－Cost		-	(	16,589)	(	1,262)	(	251)	(	540)		-	(		18,642)
' －Accumulated depreciation		-		16,589		1,174		234		486		-			18,483
Reversal of impairment loss		-		81		-		-		-		-			81
Net currency exchange differences	(	1,190)	(	5,494)	(	37)	(	321)	(	1,242)	(	21,760)	(		30,044)
At September 30, 2017	$	2,579,719	$	1,383,258	$	3,827	$	46,716	$	45,017	$	1,063,533		$	5,122,070

September 30, 2017
Cost	$	3,500,546	$	5,057,478	$	27,141	$	217,038	$	153,803	$	1,063,533	$		10,019,539
Accumulated depreciation	(	920,827)	(	3,659,661)	(	23,314)	(	170,322)	(	108,786)		-	(		4,882,910)
Accumulated impairment		-	(	14,559)		-		-		-		-	(		14,559)
	$	2,579,719	$	1,383,258	$	3,827	$	46,716	$	45,017	$	1,063,533		$	5,122,070

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												Construction
											in progress and
											equipment before
				Machinery	Transportation			Office		Other		acceptance
January 1, 2016		Buildings		equipment		equipment		equipment		equipment		inspection			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 nine-month period ended
September 30, 2016
At January 1	$	1,775,913	$	1,449,296	$	9,013	$	74,125	$	59,321	$	1,803,046	$		5,170,714
Additions		-		-		-		-		-		382,269			382,269
Reclassified from prepayments
for equipment		-		-		-		-		-		117,046			117,046
Reclassified upon completion		2,579		155,790		-		9,424		25,923	(	193,716)			-
Depreciation charge	(	74,072)	(	210,847)	(	2,432)	(	21,085)	(	18,799)		-	(		327,235)
Disposals－Cost		-	(	5,117)	(	405)	(	760)	(	1,238)		-	(		7,520)
' －Accumulated depreciation		-		4,108		405		726		1,180		-			6,419
Reversal of impairment loss		-		721		-		-		-		-			721
Net currency exchange differences	(	27,800)	(	22,097)	(	126)	(	897)	(	3,754)	(	39,904)	(		94,578)
At September 30, 2016	$	1,676,620	$	1,371,854	$	6,455	$	61,533	$	62,633	$	2,068,741		$	5,247,836

September 30, 2016
Cost	$	2,470,567	$	4,812,929	$	28,697	$	207,713	$	156,593	$	2,068,741	$		9,745,240
Accumulated depreciation	(	793,947)	(	3,428,045)	(	22,242)	(	146,180)	(	93,960)		-	(		4,484,374)
Accumulated impairment		-	(	13,030)		-		-		-		-	(		13,030)
	$	1,676,620	$	1,371,854	$	6,455	$	61,533	$	62,633	$	2,068,741		$	5,247,836

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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:

	For	the three-monthperiods	the three-monthperiods	endedSeptember30,
		2017		2016
Amount capitalized	$	66	$	7,646
Interest rate		4.79％～5.00％		3.64％～4.67％
	For	the nine-monthperiods endedSeptember30,
		2017		2016
Amount capitalized	$	10,925	$	14,245
Interest rate		4.35％～5.00％		1.72％～4.67％

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 September 30, 2017, December 31, 2016 and September 30, 2016, the Group has not pledged any property, plant and equipment as collateral.
(7) LONG-TERM PREPAID RENT

==> picture [472 x 32] intentionally omitted <==

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 $462, $515, $1,371 and $1,502 for the three-month and ninemonth periods ended September 30, 2017 and 2016, respectively (listed as “General and administrative expenses”).

(8) IMPAIRMENT OF NON-FINANCIALASSETS

A. For the three-month and nine-month periods ended September 30, 2017 and 2016, the Group －
recognised reversal of impairment loss of $81, $ , $81 and $721, respectively (listed as “Other gains and losses”).
B. The reversal of impairment loss reported by operating segments is as follows:

Segments ScinoPharm Taiwan	Recognized in other Recognized in comprehensive profit or loss income 81 $ - $ For the three-month period ended September30,2017	Recognized in other Recognized in comprehensive profit or loss income - $ - $ For the three-month period ended September30,2016

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	For	the nine-month period	the nine-month period	the nine-month period	ended	For the nine-month period ended	For the nine-month period ended	For the nine-month period ended
			September30,2017				September30,2016
				Recognized	in other			Recognized in other
	Recognized in			comprehensive		Recognized in		comprehensive
Segments	profit		or loss	income		profit or loss		income
ScinoPharm Taiwan	$		81	$	-	$	721	- $
(9)SHORT-TERM BORROWINGS
Type of borrowings		September		30,2017	Interest	rate range		Collateral
Bank loans
Unsecured loans		$		551,428	4.79%～5.00%			None
Type of borrowings		December		31,2016	Interest	rate range		Collateral
Bank loans
Unsecured loans		$		982,705	4.35%～4.44%			None
Type of borrowings		September		30,2016	Interest	rate range		Collateral
Bank loans
Unsecured loans		$		955,609	4.35％~4.44％			None
(10)OTHER PAYABLES
			September30,2017		December		31,2016	September30,2016
Accrued salaries and bonuses			$	124,672	$		151,650	116,291 $
Payables on equipment				21,130			89,009	25,824
Others				185,334			189,361	172,122
			$	331,136	$		430,020	314,237 $
(11)LONG-TERM BORROWINGS
Type of borrowings	Borrowing period September30,2017						Interest rate Collateral
Long-term bank loans	CNY	294,000,000
Secured bank loans	6. 14,		2016～	$	1,337,248		4.85%	Guaranteed by
	6. 14,		2019					the Company
Less: Current portion				(	109,163)
				$	1,228,085
Type of borrowings	Borrowing period December31,2016						Interest rate Collateral
Long-term bank loans	CNY	172,924,000
Secured bank loans	6. 14,		2016～	$	802,993		4.85%	Guaranteed by
	6. 14,		2019					the Company
Less: Current portion				(	32,120)
				$	770,873

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Type of borrowings Borrowing period September 30, 2016 Interest rate Collateral Long-term bank loans CNY 172,924,000 S ecured bank loans 6. 14, 2016～ $ 811,530 4.85% Guaranteed by 6. 14, 2019 the Company Less: Current portion ( 16,230) $ 795,300

(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 fraction of a year equal to or more than nine months shall be counted as one year of service, and any fraction of a year less than nine 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 benifit pension plan of the Company for the three-month and nine-month periods ended September 30, 2017 and 2016 were $658, $749, $1,976 and $2,246, respectively.
(c) As of September 30, 2017, the Company’s expected contributions to the pension plan for the next annual reporting period amounted to $3,120.
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

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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 (SciAnda (Kunshan) Biochemical Technology, Ltd., SciAnda (Changshu) Pharmaceuticals, Ltd., and SciAnda 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 nine-month periods ended September 30, 2017 and 2016, the pension costs recognized under the aforementioned defined contribution pension plans were $8,295, $7,932, $24,650 and $23,893, respectively.

(13) SHARE CAPITAL

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

For the nine-month periods ended September 30,

At January 1 Capitalization of retained earnings At September 30	2017 760,326 30,413 790,739	2016
		731,083 29,243
		760,326

B. 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.
C. On June 26, 2017, the Company’s shareholders adopted a resolution to issue shares of common stock due to capitalization of retained earnings of $304,130 and obtained approval from the SFC. The effective date of capitalization was set on August 18, 2017. After the capitalization mentioned above, the Company’s total authorized capital was $10,000,000 and the paid-in capital was $7,907,392 (790,739 thousand shares) with a par value of $10 (in dollars) per share.
D. As of September 30, 2017, the Company’s authorized capital was $10,000,000 and the paid-in capital was $7,907,392 (790,739 thousand shares) with a par value of $10 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

~35~

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:

Movements on the Company’s	capital reserve are as follows:	capital reserve are as follows:	capital reserve are as follows:
At January 1 Employee stock options compensation cost - Company - Subsidiaries At September 30 At January 1 Employee stock options compensation cost - Company - Subsidiaries At September 30	For the nine-monthperiod endedSeptember30,2017
	Sharepremium Stock options Total 1,233,286 $ 42,374 $ 1,275,660 $ - 10,492 10,492 - 54 54 1,233,286 $ 52,920 $ 1,286,206 $ Forthe six-monthperiod ended September30,2016		Total
			1,275,660 $ 10,492 54
			1,286,206 $
	Sharepremium 1,233,286 $ - - 1,233,286 $	Stock options 32,258 $ 7,836 151 40,245 $	Total
			1,265,544 $ 7,836 151
			1,273,531 $

(15) SHARE-BASED PAYMENT

A. The Company issued 1 million units, 1.5 million units and 1.5 million units of employee stock options on December 3, 2013, November 6, 2015 and October 14, 2016, respectively (the ‘Grant Date’). The exercise price of the options was set at $91.70 (in dollars), $41.65 (in dollars) and $40.55 (in dollars), respectively, 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 September 30, 2017, for the issued 1 million units, 1.5 million units and 1.5 million units of employee stock options, the exercise price was adjusted based on the specific formula to $80.20 (in dollars) per share, $40.00 (in dollars) per share and $39.00 (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 Group recognized compensation costs relating to the employee stock option plan of $3,555, $2,692, $10,546 and $7,987 for the three-month and nine-month periods ended September 30, 2017 and 2016, respectively.

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

For the nine-month period ended September 30, 2017

			September	30,2017	30,2017
				Weighted-average
		Number of options			exercise price
		(in	thousand units)		(indollars)
Options	outstanding at beginning of the period		3,457	$	48.03
Options	forfeited	(	193)		45.84
Options	outstanding at end of the period		3,264		47.57

Options	exercisable at end of the period		486		80.20
			For the nine-month period ended
			September	30,	2016
				Weighted-average
		Number of options			exercise price
		(in	thousand units)		(in dollars)
Options	outstanding at beginning of the period		2,348	$	56.92
Options	forfeited	(	284)		55.47
Options	outstanding at end of the period		2,064		54.90

Options	exercisable at end of the period		425		80.20

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

Grant date 12.3.2013 11.6.2015 10.14.2016 Grant date 12.3.2013 11.6.2015	Expirydate 12.2.2023 11.5.2025 10.13.2026 Expirydate 12.2.2023 11.5.2025	No. of stocks Exercise price (unit in thousands) (in dollars) 648 80.20 $ 1,228 40.00 1,388 39.00 September 30, 2017	December 31, 2016
			No. of stocks Exercise price (unit in thousands) (in dollars) 670 80.20 $ 1,299 40.00 1,488 40.55 No. of stocks Exercise price (unit in thousands) (in dollars) 765 80.20 $ 1,299 40.00 September30,2016

D. The fair value of the Group’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:

~37~

Fair

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

Note: According to daily returns of the Company's stock for the previous year, the annualized volatility is 28.50%, 37.63% and 37.20%, 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 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 $219,325 ($0.30 dollars per share) and $292,433 ($0.40 dollars per share) for the year ended

~38~

December 31, 2016, respectively. During its meeting on June 27, 2017, the Board of Directors proposed for the distribution of dividends from 2016 earnings of $228,098 ($0.30 dollars per share) for cash dividends and $304,130 ($0.40 dollars per share) for stock dividends.

(17) OTHER EQUITY ITEMS

For the nine-month periods ended September 30,

		2017			2016
At January 1	($	3,454)	$		69,095
Currency translation differences - group	(	20,497)	(		62,992)
At September 30	($	23,951)		$	6,103
OPERATING REVENUE
	For the three-monthperiods endedSeptember30,
		2017			2016
Sales revenue	$	775,503	$		962,864
Less: Sales returns		-	(		11,973)
Sales discounts		-	(		153)
Net sales revenue		775,503			950,738
Technical service revenue		64,311			40,886
Royalty revenue		9,015			-
	$	848,829		$	991,624
	For the nine-monthperiods endedSeptember30,
		2017			2016
Sales revenue	$	2,532,768	$		2,977,044
Less: Sales returns	(	186,772)	(		32,419)
Sales discounts		-	(		6,781)
Net sales revenue		2,345,996			2,937,844
Technical service revenue		136,272			90,586
Royalty revenue		139,203			-
	$	2,621,471		$	3,028,430

(18) OPERATING REVENUE

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(19) OTHER INCOME

For the three-month periods ended September 30,

Interest income from bank deposits Reversal for doubtful accounts Others

For the three-monthperiods endedSeptember30,	For the three-monthperiods endedSeptember30,
2017 2016 6,858 $ 6,232 $ 11 - 3,056 3,079 9,925 $ 9,311 $ For the nine-monthperiods endedSeptember30,
2017 18,812 $ 574 11,895 31,281 $	2016 21,899 $ - 8,889 30,788 $

(20) OTHER GAINS AND LOSSES

For the three-month periods ended September 30,

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

Net gain on financial assets/liabilities at fair value through profit or loss

Loss on disposal of property, plant and

equipment

Reversal of impairment loss

Net currency exchange loss Miscellaneous

	2017		2016
$	205	$	7,681
(	96)	(	412)
	81		-
(	6,582)	(	28,652)
(	5,172)	(	2,745)
($	11,564)	($	24,128)
For	the nine-monthperiods ended		September30,
	2017		2016
$	9,443	$	11,933
(	109)	(	545)
	81		721
(	34,592)	(	63,046)
(	13,730)	(	17,035)
($	38,907)	($	67,972)

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(21) FINANCE COSTS

For the three-month periods ended September 30,

Interest expense: Bank loans

Less: Capitalization of qualifying assets

Interest expense:

Bank loans Less: Capitalization of qualifying assets

	2017		2016
$	23,459	$	19,650
(	66)	(	7,646)
$	23,393	$	12,004
For	the nine-monthperiods endedSeptember30,
	2017		2016
$	64,456	$	37,454
(	10,925)	(	14,245)
$	53,531	$	23,209

(22) EXPENSES BY NATURE

For the three-month period ended September 30, 2017

EXPENSES BY NATURE	For the three-monthperiod endedSeptember30,2017	For the three-monthperiod endedSeptember30,2017	mber30,2017
Employee benefit expenses Depreciation Amortization Employee benefit expenses Depreciation Amortization Employee benefit expenses Depreciation Amortization	Operatingcosts Operatingexpenses Total 105,635 $ 90,815 $ 196,450 $ 72,822 32,303 105,125 887 1,416 2,303 179,344 $ 124,534 $ 303,878 $ For the three-monthperiod endedSeptember30,2016		Total
			196,450 $ 105,125 2,303
			303,878 $
	Operatingcosts Operatingexpenses Total 126,990 $ 84,023 $ 211,013 $ 79,670 25,751 105,421 794 118 912 207,454 $ 109,892 $ 317,346 $ For the nine-monthperiod endedSeptember30,2017		Total
			211,013 $ 105,421 912
			317,346 $
	Operatingcosts 332,484 $ 221,541 2,392 556,417 $	Operatingexpenses 289,130 $ 99,257 4,281 392,668 $	Total
			621,614 $ 320,798 6,673
			949,085 $

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For the nine-monthperiod endedSeptember30,2016	For the nine-monthperiod endedSeptember30,2016	For the nine-monthperiod endedSeptember30,2016
Operatingcosts 330,571 $ 248,245 2,408 581,224 $	Operatingexpenses 267,163 $ 78,990 4,377 350,530 $	Total
		597,734 $ 327,235 6,785
		931,754 $

(23) EMPLOYEE BENEFIT EXPENSES

EMPLOYEE BENEFIT EXPENSES
Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses Salaries and wages Labor and health insurance expenses Pension costs Other personnel expenses	For the three-monthperiod endedSeptember30,2017
	Operatingcosts Operatingexpenses Total 88,050 $ 78,051 $ 166,101 $ 7,476 5,066 12,542 5,548 3,405 8,953 4,561 4,293 8,854 105,635 $ 90,815 $ 196,450 $ For the three-monthperiod endedSeptember30,2016		Total
			166,101 $ 12,542 8,953 8,854
			196,450 $
	Operatingcosts Operatingexpenses Total 110,295 $ 71,506 $ 181,801 $ 7,758 5,047 12,805 5,336 3,345 8,681 3,601 4,125 7,726 126,990 $ 84,023 $ 211,013 $ For the nine-monthperiod endedSeptember30,2017		Total
			181,801 $ 12,805 8,681 7,726
			211,013 $
	Operatingcosts Operatingexpenses Total 279,258 $ 250,343 $ 529,601 $ 23,549 15,327 38,876 16,485 10,141 26,626 13,192 13,319 26,511 332,484 $ 289,130 $ 621,614 $ For the nine-monthperiod endedSeptember30,2016		Total
			529,601 $ 38,876 26,626 26,511
			621,614 $
	Operatingcosts 279,480 $ 24,420 16,206 10,465 330,571 $	Operatingexpenses 228,734 $ 15,470 9,933 13,026 267,163 $	Total
			508,214 $ 39,890 26,139 23,491
			597,734 $

~42~

A. According to the Articles of Incorporation of the Company, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees’compensation and directors’ remuneration. The ratio shall not be lower than 2% for employees’ compensation and shall not be higher than 2% for directors’ remuneration.
B. For the three-month and nine-month periods ended September 30, 2017 and 2016, the employees’ compensation was accrued at $12,685, $20,370, $41,299 and $63,448, respectively, while the directors’ remuneration was accrued at $1,926, $2,980, $6,508 and $9,214, respectively. The aforementioned amounts were recognized in salary expenses etc.. 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 2016 was $93,915, which was different from the estimated amount of $93,914 recognized in the 2016 financial statements by $1. Such difference mainly resulted from estimation, and was recognised in profit or loss for 2017.

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.

(24) INCOME TAX

A. Components of income tax expense:

For the three-month periods ended September 30,

		2017		2016
Current income tax:
Income tax in current period	$	43,875	$	47,285
Deferred income tax:
Origination and reversal of temporary
differences	(	24,295)	(	6,182)
Income tax expense	$	19,580	$	41,103

~43~

For the nine-month periods ended September 30,

			2017		2016
Current income tax:
Income tax in current period		$	112,512	$	137,129
10% tax on unappropriated retained earnings			5,446		6,537
(Over) under provision of prior year's income
tax	(		3,624)		2,471
Total current tax			114,334		146,137
Deferred income tax:
Origination and reversal of temporary
differences	(		77,754)	(	60,355)
Income tax expense		$	36,580	$	85,782

B. The Company’s income tax returns through 2015 have been assessed and approved by the Tax Authority, and there were no disputes existing between the Company and the Authority as of November 3, 2017.
C. The Company’s unappropriated retained earnings listed on the balance sheet as of September 30, 2017, December 31, 2016 and September 30, 2016 were all generated after the year 1998.
D. As of September 30, 2017, December 31, 2016 and September 30, 2016, the balance of the Company’s imputation tax credit account was $205,641, $240,971 and $149,994, respectively. The earnings distribution for 2016 and 2015 was approved at the stockholders’ meeting on June 27, 2017 and June 27, 2016, respectively, and the date of dividend distribution was set by the Board of Directors on August 18, 2017 and August 16, 2016, respectively. The creditable tax rate for 2016 and 2015 was 23.81% and 23.04%, respectively.

~44~

(25) EARNINGS PER SHARE (“EPS”)

		For the three-monthperiod endedSeptember30,	For the three-monthperiod endedSeptember30,	2017	2017
			Weighted average number of shares		EPS
	Amount after tax		outstanding (shares in thousands)	(in	dollars)
Basic earnings per share
Profit attributable to ordinary
stockholders of the parent	$	107,005	790,739	$	0.14
Diluted earnings per share
Profit attributable to ordinary
stockholders of the parent	$	107,005	790,739
Assumed conversion of all
dilutive potential ordinary
shares
Employees' stock option		-	53
Employees' compensation		-	1,312
Profit attributable to ordinary
stockholders of the parent
plus assumed conversion of	all
dilutive potential ordinary
shares	$	107,005	792,104	$	0.14
		For the three-monthperiod endedSeptember30,		2016
			Weighted average number of shares		EPS
	Amount after tax		outstanding (shares in thousands)	(in	dollars)
Basic earnings per share
Profit attributable to ordinary
stockholders of the parent	$	165,548	790,739	$	0.21
Diluted earnings per share
Profit attributable to ordinary
stockholders of the parent	$	165,548	790,739
Assumed conversion of all
dilutive potential ordinary
shares
Employees' stock option		-	180
Employees' compensation		-	2,101
Profit attributable to ordinary
stockholders of the parent
plus assumed conversion of	all
dilutive potential ordinary
shares	$	165,548	793,020	$	0.21

~45~

Weighted average number of shares Amount after tax outstanding (shares in thousands) Basic earnings per share Profit attributable to ordinary stockholders of the parent 361,549 $ 790,739 Diluted earnings per share Profit attributable to ordinary stockholders of the parent 361,549 $ 790,739 Assumed conversion of all dilutive potential ordinary shares Employees' stock option - 53 Employees' compensation - 1,934 Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares 361,549 $ 792,726 Weighted average number of shares Amount after tax outstanding (shares in thousands) Basic earnings per share Profit attributable to ordinary stockholders of the parent 511,872 $ 790,739 Diluted earnings per share Profit attributable to ordinary stockholders of the parent 511,872 $ 790,739 Assumed conversion of all dilutive potential ordinary shares Employees' stock option - 180 Employees' compensation - 2,101 Profit attributable to ordinary stockholders of the parent plus assumed conversion of all dilutive potential ordinary shares 511,872 $ 793,020 For the nine-monthperiod endedSeptember30, For the nine-monthperiod endedSeptember30,	For the nine-monthperiod endedSeptember30,	2017
		EPS (in dollars)
		0.46 $
		0.46 $
		2016
		EPS (in dollars)
		0.65 $
		0.65 $

~46~

A.The abovementioned stock options issued in 2013 are anti-dilutive; therefore they were not included in the EPS calculation.
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, 2016.

(26) Supplemental cash flow information

A. Investing activities with partial cash payments

For the nine-month periods ended September 30,

		2017			2016
Purchase of property, plant and	$	224,225	$		382,269
equipment
Add: Beginning balance of payable on
equipment		89,009			44,817
Less: Ending balance of payable on
equipment	(	21,130)	(		25,824)
Capitalization of interest	(	10,925)	(		14,245)
Cash paid for acquisition of property,
plant and equipment	$	281,179		$	387,017

B. Investing activities with no cash flow effects

For the nine-month periods ended September 30,

Prepayments for equipment reclassified to property, plant and equipment	2017 39,867 $	2016
		117,046 $

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

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

(2) Name of related party and relationship

Name of related party Relationship with the Group Uni-President Enterprises Corp. Ultimate parent company

(3) Significant transactions and balances with related parties

Other expenses

For the three-month periods ended September 30,

Management consultancy fees: －Ultimate parent company Uni-President Enterprises Corp.	2017 1,079 $	2016 1,272 $

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For the nine-month periods ended September 30,

Management consultancy fees:

－ Ultimate parent company Uni-President Enterprises Corp.

2017 4,360 $	2016
	4,317 $

(4) Key management compensation

For the three-month periods ended September 30,

Salaries and other short-term employee benefits

For the three-monthperiods endedSeptember30,	ds endedSeptember30,
2017 2016 12,507 $ 16,772 $ For the nine-monthperiods endedSeptember30,	2016
	16,772 $
2017 50,951 $	2016
	49,347 $

8. PLEDGED ASSETS

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

Assets September 30, 2017 December 31, 2016 September 30, 2016 Purpose of collateral Time deposits $ 28,831 $ 28,831 $ 28,831 Customs duty and (Note) performance guarantee

Note: Listed as “Other financial assets - non-current”.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) As of September 30, 2017, December 31, 2016 and September 30, 2016, the Group’s remaining balance due for construction in progress and prepayments for equipment was $182,629, $312,008 and $305,850, respectively.
(2)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 $5,569, $5,789, $16,707 and $17,369 (listed as “Operating costs” and “Operating expenses”) was recognized in profit or loss for the three-month and nine-month periods ended September 30, 2017 and 2016, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

~48~

Within one year Later than one year but not exceeding five years	September30,2017 9,282 $ - 9,282 $	December31,2016 22,276 $ 3,713 25,989 $	September30,2016
			22,276 $ 9,282
			31,558 $

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

SciAnda (Changshu) Pharmaceuticals, Ltd.	Nature S Guarantee for financing amount	eptember 30,2017 December 31,2016 S 1,894,561 $ 1,625,270 $	eptember 30,2016 1,642,550 $

As of September 30, 2017, December 31, 2016 and September 30, 2016, the actual amount drawn down for endorsements and guarantees to subsidiaries was $1,337,248, $802,993 and $811,530, 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.

(2) Financial instruments

A. Fair value information of financial instruments
The Group’s financial instruments which are not measured at fair value (including cash and cash equivalents, accounts receivable, other receivables, other financial assets - current, guarantee deposits paid, other financial assets - non-current, short-term borrowings, notes payable, accounts payable, other payables, long-term borrowings (including current portion) and guarantee deposits received) are 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)The Group’s 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

~49~

as written policies covering specific areas and matters, such as use of 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 and recognized assets and liabilities.
- (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.
- (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:

September30,2017	September30,2017	Book value (NTD)
Foreign currency amount(in thousands) 20,345 $ 307 60 4,940 51 391	Exchange rate 30.26 35.75 4.548 30.26 35.75 4.548
		615,640 $ 10,975 273 149,484 1,823 1,778

~50~

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD EUR:NTD CNY:NTD Financial liabilities Monetary items USD:NTD EUR:NTD CNY:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD EUR:NTD CNY:NTD Financial liabilities Monetary items USD:NTD EUR:NTD	December31,2016	December31,2016	Book value (NTD) 709,371 $ 14,001 2,368 51,020 1,661 2,020 Book value (NTD) 719,336 $ 5,893 5,373 5,927 8,735
	Foreign currency amount(in thousands) Exchange rate 21,996 $ 32.25 413 33.90 510 4.644 1,582 32.25 49 33.90 435 4.644 Foreign currency amount(in thousands) Exchange rate 22,938 $ 31.36 168 35.08 1,145 4.693 189 31.36 249 35.08 September30,2016
		Exchange rate 31.36 35.08 4.693 31.36 35.08

(iv) As of September 30, 2017 and 2016, 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 ninemonth periods ended September 30, 2017 and 2016 would increase/decrease by $19,345 and $35,670, 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 nine-month periods ended September 30, 2017 and 2016 would increase/decrease by $380 and $142, 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 nine-month periods ended September 30, 2017 and 2016 would increase/decrease by $62 and $269, respectively.

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  - (v)Total exchange gain (loss) including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and nine-month periods ended September 30, 2017 and 2016 amounted to ($6,582), ($28,652), ($34,592) and ($63,046), 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 (listed as ‘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
- (i) The Group’s interest rate risk arises from short-term borrowings and long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates.
- (ii)At September 30, 2017 and 2016, if interest rates had been 10% higher/lower with all other variables held constant, post-tax profit for the nine-month periods ended September 30, 2017 and 2016 would have been $822 and $942 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(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 nine-month periods ended September 30, 2017 and 2016.
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.

(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.

~52~

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.
September30,2017 Short-term borrowings Notes payable Accounts payable Other payables Long-term borrowings Guarantee deposits received Forward exchange contracts Non-derivative financial liabilities: Derivate financial liabilites: December31,2016 Short-term borrowings Notes payable Accounts payable Other payables Long-term borrowings Guarantee deposits received Derivative financial liabilities: Forward exchange contracts Non-derivative financial liabilities: September30,2016 Short-term borrowings Notes payable Accounts payable Other payables Long-term borrowings Guarantee deposits received Non-derivative financial liabilities:	Less than 1year 569,086 $ 1,498 160,170 331,136 172,597 - 799 Less than 1year 1,001,072 $ 1,001 69,730 430,020 71,096 21,711 2,822 Less than 1year 981,438 $ 1,325 129,031 314,237 55,859 22,005	Between 1 and 2years	Between 2 More than and5 years 5 years - $ - $ - - - - - - - - - - - - Between 2 More than and5 years 5 years - $ - $ - - - - - - 656,660 - - - - - Between 2 and5 years More than 5 years - $ - $ - - - - - - 753,652 - - -	More than 5 years
		- $ - - - 1,267,219 1,711 - Between 1 and 2years - $ - - - 164,866 - - Between 1 and 2years - $ - - - 102,649 -

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(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 September 30, 2017, December 31, 2016, and September 30, 2016 is as follows:

September30,2017 Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward foreign contracts December31,2016 Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward foreign contracts September30,2016 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Forward foreign contracts	Level 1 - $ Level 1 - $ Level 1 - $	Level 2 799 $ Level 2 2,822 $ Level 2 2,193 $	Level3 - $ Level3 - $ Level3 - $	Total
				799 $
				Total
				2,822 $
				Total
				2,193 $

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.

~54~

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 nine-month periods ended September 30, 2017 and 2016, 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 September 30, 2017, December 31, 2016 and September 30, 2016.

13. SUPPLEMENTARY DISCLOSURES

(According to the current regulatory requirements, the Group is only required to disclose the information for the nine-month period ended September 30, 2017.)

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).
J. Significant inter-company transactions during the reporting periods: Please refer to table 6.
(2) Information on investees

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

~55~

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 9.

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:

is as follows:
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	For the nine-monthperiod ended		September30,2017
	ScinoPharm Taiwan,Ltd. 2,574,131 $ - 2,574,131 13,977 257,637 22 626,985 10,367,719 208,510 598,846	SciAnda (Changshu) Pharmaceuticals Ltd. Others 225,152 $ 6,338 $ 177,860 6,290 47,292 48 189 4,646 69,615 219 53,509 - 223,901) ( 3,563) ( 2,363,279 248,876 111,771 - 2,176,148 480		Total
				2,805,621 $ 184,150 2,621,471 18,812 327,471 53,531 399,521 12,979,874 320,281 2,775,474

~56~

For the nine-month period ended September 30, 2016

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	ScinoPharm SciAnda (Changshu) Taiwan,Ltd. Pharmaceuticals Ltd. 2,957,818 $ 189,156 $ - 118,923 2,957,818 70,233 9,356 2,883 266,005 67,870 11 23,198 816,825 241,300) ( 9,785,633 2,400,966 282,068 126,686 591,923 1,936,981	Others 21,718 $ 21,339 379 9,660 145 - 3,692 387,061 - 1,811	Total
			3,168,692 $ 140,262 3,028,430 21,899 334,020 23,209 579,217 12,573,660 408,754 2,530,715

(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 :

For the nine-month periods ended September 30,

2017 Reportable segments profit before income tax 403,084 $ Other segments (loss) profit before income tax 3,563) ( Internal segments (loss) profit 1,392) ( Profit before income tax 398,129 $	2016
	575,525 $ 3,692 18,437 597,654 $

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

reportable segments and total assets is as	follows:	follows:
	September30,2017			September30,2016
Assets of reportable segments	$	12,730,998	$	12,186,599
Assets of other operating segments		248,876		387,061
Internal segment transaction elimination	(	110,113)	(	65,141)
Total assets	$	12,869,761	$	12,508,519

~57~

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:

	September30,2017	September30,2017		September30,2016
Liabilities of reportable segments	$	2,774,994	$	2,528,904
Liabilities of other operating segments		480		1,811
Internal segment transaction elimination	(	257,006)	(	116,731)
Total liabilities	$	2,518,468	$	2,413,984

~58~

Table 1

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

Loans to others

For the nine-month period ended September 30, 2017

Number	Name	Name of counterparty	Account	Related parties	Maximum balance	Ending balance	Actual amount drawn down	Interest rate	Nature of financial activity (Note 1)	Total transaction amount	Reason for financing	Allowance for doubtful accounts	Assetspledged	Assetspledged	Loan limit per entity (note 2)	Maximum amount available for loan (note 2)	Footnote
													Item	Value
1	SciAnda (Kunshan) Biochemical Technology, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd.	Other receivables	Y	`359,112` `$`	`227,423` `$`	`195,423` `$`	`2.00`	`2`	`-` `$`	Additional operating capital and loan repayment	`-` `$`	`－`	`-` `$`	`420,189` `$`	`420,189` `$`	`－`

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

1.Trading partner.
2.Short-term financing.

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

Note 3: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the consolidated financial statements (CNY:NTD 1:4.548).

Table 1, Page 1

Table 2

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

Provision of endorsements and guarantees to others

For the nine-month period ended September 30, 2017

Number	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party （Note 2）	Maximum outstanding endorsement/ guarantee amount during theperiod	Outstanding endorsement/ guarantee amount at September 30, 2017	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 2）	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor （Note 1）
0	ScinoPharm Taiwan, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd.	`1`	`10,351,293` `$`	`1,904,659` `$`	`1,894,561` `$`	`1,337,248` `$`	`-` `$`	`18.30%`	`10,351,293` `$`	Y	N	Y	`－`

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

1.The endorsed/ guaranteed parent company and its subsidiaries jointly own 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.

The limit of total amount of the Group's endorsement and guarantee is 100% of the Group's net worth.

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

Table 2, Page 1

ScinoPharm Taiwan, Ltd. and Subsidiaries

Expressed in thousands of NTD

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

September 30, 2017

Table 3

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account		As ofSeptember30,2017	As ofSeptember30,2017		Footnote
				Number of shares	Bookvalue	Ownership (%)	Fairvalue
ScinoPharm Taiwan, Ltd.	Stocks: Tanvex Biologics, Inc. SYNGEN, INC. Foresee Pharmaceuticals Co., Ltd.	The Company is a director of Tanvex Biologics, Inc. `－` `－`	Financial assets measured at cost- non-current Financial assets measured at cost- non-current Financial assets measured at cost- non-current	`28,800,000` `245,000` `4,793,828`	`167,673` `$` `-` `223,424`	`17.00%` `7.40%` `5.99%`	`$ -` `-` `-`	`－` `－` `－`

Table 3, Page 1

Table 4

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more For the nine-month period ended September 30, 2017

Purchaser/seller	Counterparty	Relationship with the counterparty			Transaction		Differences in t compared t trans	ransaction terms o third party actions	Notes/account	s receivable(payable)	Footnote
			Purchases(sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
ScinoPharmTaiwan, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd. ScinoPharm Taiwan, Ltd.	Subsidary (SPT International, Ltd.) The Company	Purchases (Sales)	`166,484` `$` `166,484)` `(`	`24%` `(77%)`	Closes its accounts 90 days from the end of each month after acceptance Closes its accounts 90 days from the end of each month after acceptance	`$ -` `-`	`－` `－`	`53,722)` `($` `53,722`	`(27%)` `79%`	`－` `－`

Table 4, Page 1

ScinoPharm Taiwan, Ltd. and Subsidiaries

Table 5

Expressed in thousands of NTD

- Receivables from related parties reaching $100 million or 20% of paid in capital or more

September 30, 2017

Purchaser/seller	Counterparty	Relationship with the counterparty	Balance as at September 30, 2017	Balance as at September 30, 2017	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
			Items	Amount		Amount	Action taken
SciAnda (Kunshan) Biochemical Technology, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd.	An investee company of SPT Interrnationl Ltd. accounted for under the equity method	Other receivables	`195,649` `$`	`－`	`$ -`	`－`	`$ -`	`$ -`

Note : Foreign currencies were translated into New Taiwan Dollars using the following exchanges: Ending balances of receivable and payable and subsequent collections were translated using the exchange rate as at September 30, 2017 (CNY:NTD 1:4.548).

Table 5, Page 1

Table 6

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

- Significant inter company transactions during the reporting period

For the nine-month period ended September 30, 2017

Number (Note 2)	Companyname	Counterparty	Relationship (Note3)		Transaction	Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 4)
0 0 0 1	ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd. SciAnda (Kunshan) Biochemical Technology, Ltd.	SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd.	1 1 1 3	Purchases Accounts payable Endorsements and guarantees Other receivables	`166,484` `$` `53,722)` `(` `1,894,561` `195,649`	Closes its accounts 90 days from the end of each month after acceptance `－` `－` `－`	`6%` `－` `15%` `2%`

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

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

(1) Parent company is ‘0’.

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

Note 3: Relationship between transaction company and counterparty is classified into the following three categories:
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary.

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

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

Note 5: The numbers in the table that involves foreign currencies are expressed in New Taiwan Dollars according to the exchange rate posted on the date of the consolidated financial statements (CNY:NTD 1:4.548).

Table 6, Page 1

ScinoPharm Taiwan, Ltd. and Subsidiaries

Table 7

Expressed in thousands of NTD

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

For the nine-month period ended September 30, 2017

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as at September 30,2017	as at September 30,2017	Net profit (loss) of the investee for the nine-month period ended September 30,2017	Investment income (loss) recognized by the Company for the nine-month period ended September 30,2017	Footnote
				Balance as at September 30,2017	Balance as at December 31,2016	Number of shares	Ownership (%)	Book value
ScinoPharm Taiwan, Ltd. ScinoPharm Taiwan, Ltd.	SPT International, Ltd. ScinoPharm Singapore Pte Ltd.	Tortola, British Virgin Islands Singapore	Professional investment Professional investment	`1,833,304` `$` `-`	`1,833,304` `$` `-`	`60,524,644` `2`	`100.00` `100.00`	`582,342` `$` `79`	`212,612)` `($` `13`	`214,004)` `($` `13`	Subsidary Subsidary

Table 7, Page 1

Information on investments in Mainland China － Basic information

Expressed in thousands of NTD

ScinoPharm Taiwan, Ltd. and Subsidiaries

For the nine-month period ended September 30, 2017

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Table 8
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Investee in Mainland China	Main business activities	Paid-in capital	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2017	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2017	Net income of investee for the nine-month period ended September 30, 2017	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2017 `（`Note 2`）`	Book value of investments in Mainland China as of September 30, 2017	Accumulated amount of investment income remitted back to Taiwan as of September 30, 2017	Footnote
				Remitted to Mainland China	Remitted back to Taiwan
SciAnda (Kunshan) Biochemical Technology, Ltd. SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda Shanghai Biochemical Technology, Ltd. Companyname	Research, development, and manufacture of API and new drugs, etc. Research, development, and manufacture of API and new drugs, sale produced products, etc. Import, export and sales of API and intermediates, etc. Accumulated amount of remittance from Taiwan to Mainland China as of September 30,2017	`121,040` `$` `（`Note 1`）` `1,649,170` `（`Note 1`）` `36,312` `（`Note 1`）` Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	`112,701` `$` `-` `$` `1,649,170` `-` `36,312` `-` Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA (Note 3)		`-` `$` `-` `-`	`112,701` `$` `1,649,170` `36,312`	`2,397)` `($` `209,986)` `(` `62`	`100` `100` `100`	`2,397)` `($` `209,986)` `(` `62`	`420,189` `$` `187,131` `19,719`	`-` `$` `-` `-`	Subsidary Subsidary Subsidary
ScinoPharm Taiwan, Ltd.	`$ 1,835,224`	`1,835,224` `$`	`6,210,776` `$`

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 nine-month period ended September 30, 2017 was based on unreviewed financial statements of investee companies as of and for the nine-month period ended September 30, 2017. 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 1:30.26).

Table 8, Page 1

Table 9

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 nine-month period ended September 30, 2017

Provision of

							Provision of	Provision of
Investee in Mainland China	Sale(purchase)		Propertytransaction		Accounts receivable (payable)		endorsements/guarantees or collaterals			Financing			Others
	Amount	%	Amount	%	Balance at September 30, 2017	%	Balance at September 30, 2017	Purpose	Maximum balance during the nine-month period ended September 30, 2017	Balance at September 30,2017	Interest rate	Interest during the nine-month period ended September 30, 2017
SciAnda (Changshu) Pharmaceuticals, Ltd. SciAnda Shanghai Biochemical Technology, Ltd.	`166,484)` `($` `-`	`(24%)` `-`	`-` `-`	`-` `-`	`53,722)` `($` `-`	`(28%)` `-`	`1,894,561` `$` `-`	Secured financing amount `-`	`-` `-`	`-` `-`	`-` `-`	`-` `-`	Management service revenue $ 9,633 Other receivables of $ 3,488 Management consultancy fee $ 5,343 Other payables of $ 1,774

Table 9, Page 1

AI assistant

SPT — Interim / Quarterly Report 2017

51922_rns_2017-12-28_d226b54e-1ac5-49b6-8ec4-c1ad2e508106.pdf

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

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

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

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

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

SCINOPHARM TAIWAN, LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2017 AND 2016

1. HISTORY AND ORGANIZATION

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

the Group

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

(4) Foreign currency translation

(6) Cash equivalents

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

(8) Receivables

(9) Available-for-sale financial assets

(10) Impairment of financial assets

(11) Derecognition of financial assets

(13) Property, plant and equipment

(14) Intangible assets

(15) Leased assets/ lessee

(16) Impairment of non-financial assets

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

(20) Derecognition of financial liabilities

(21) Offsetting financial instruments

- (23) Employee share based payment

(24) Income tax

(28) Operating segments

5. CRITICALACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

(2) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

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

(3) ACCOUNTS RECEIVABLE, NET

(4) INVENTORIES

(5) FINANCIALASSETS MEASURED AT COST - NON-CURRENT

(6) PROPERTY, PLANT AND EQUIPMENT

(8) IMPAIRMENT OF NON-FINANCIALASSETS

(12) PENSIONS

(13) SHARE CAPITAL

(14) CAPITAL RESERVES

(15) SHARE-BASED PAYMENT

(16) RETAINED EARNINGS

(17) OTHER EQUITY ITEMS

For the nine-month periods ended September 30,

(18) OPERATING REVENUE

(19) OTHER INCOME

For the three-month periods ended September 30,

(20) OTHER GAINS AND LOSSES

For the three-month periods ended September 30,

(21) FINANCE COSTS

For the three-month periods ended September 30,

(22) EXPENSES BY NATURE

(23) EMPLOYEE BENEFIT EXPENSES

(24) INCOME TAX

(25) EARNINGS PER SHARE (“EPS”)

(26) Supplemental cash flow information

7. RELATED PARTY TRANSACTIONS

Other expenses

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

10. SIGNIFICANT DISASTER LOSS: None.

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

12. OTHERS

(1) Capital management

SPT Interim / Quarterly Report 2017