SYN-TECH CHEM. & PHARM. CO., LTD.

Transcription

1 Stock Code:1777 SYN-TECH CHEM. & PHARM. CO., LTD. Handbook for the 2018 Annual Meeting of Shareholders Time: June 20, 2018 Place: No.168, Kai Yuan Rd., Hsin-Ying District, Tinan City

2 Table of Contents I. Procedure 1 II. Agenda 2 i. Report Items 3 ii. Ratification Items 4 iii. Election Items 6 iv. Discussion Items 7 v. Other Motions 8 III. Attachments Business Report 9 2. Supervisors Review Report Independent Auditors Report Financial Statements 18 IV Earning Distribution Table Director(including Independent Director) and Supervisor 24 Candidate List Appendices 1. Shareholding of Directors and Supervisors Information for right of proposal 27

3 I. Procedure SYN-TECH CHEM. & PHARM. CO., LTD. Procedure for the 2018 Annual Meeting of Shareholders 1. Call the Meeting to Order 2. Chairman s Address 3. Report items 4. Ratification Items 5. Election Items 6. Discussion Items 7. Other Motions 8. Adjournment 1

4 II. Agenda SYN-TECH CHEM. & PHARM. CO., LTD. Agenda for the 2018 Annual Meeting of Shareholders 1. Time: 2:00 p.m., on Wednesday, June 20, Place: No.168, Kai Yuan Rd., Hsin-Ying District, Tainan City (SYN-TECH Chem. & Pharm. Co., Ltd. s meeting room) 3. Call the Meeting to Order 4. Chairman s Address 5. Report Items: (1) 2017 Business Report (2) Supervisors Review Report on 2017 Financial Statements (3) 2017 Employees Compensation and Directors & Supervisors Compensation Information 6. Ratification Items: (1) 2017 Business Report and Financial Statements (2) Proposed distribution plan for year 2017 earnings 7. Election Items: Election of Directors and Supervisors 8. Discussion Items: To release newly elected Board of Directors from non-competition restrictions 9. Other Motions 10. Adjournment 2

5 i. Report Items Report No.1: 2017 Business Report. Explanation: The 2017 Business Report is attached as page 9-10 (attachment 1) for details. Report No.2: Supervisors Review Report on 2017 Financial Statements. Explanation: The 2017 Supervisors Review Report is attached as page 11 (attachment 2) for details. Report No.3: 2017 Employees Compensation and Directors & Supervisors Compensation Information. Explanation: The 2017 Pre-tax Income before deduction of the employees and directors & supervisors compensation was NT$78,898,584. Follow the Article 24 in Articles of Incorporation, Employees Compensation payable for year 2017 is NT$830,000. Remunerations payable to directors and supervisors for year 2017 is NT$830,000. The same with the estimated amount payable recorded on book of

6 ii. Ratification Items Proposal 1: (Proposed by the Board of Directors) Adoption of the 2017 Business Report and Financial Statements. Explanation: (1) The Company s 2017 Financial Statements, including the balance sheet, statement of comprehensive income, statement of changes in equity, and statement of cash flows, were audited by independent auditors, Tzu-Yu, Lin and Tzu-Meng, Liu of PricewaterhouseCoopers, Taiwan. Also Business Report and Financial Statements have been approved by the Board of directors and examined by the supervisors. (2) The 2017 Business Report is attached as page 9-10 (attachment 1), independent auditors audit report is attached as page (attachment 3), and the above-mentioned Financial Statements are attached as page (attachment 4) Resolution: Proposal 2: (Proposed by the Board of Directors) Adoption of the Proposal for Distribution of year 2017 earnings. Explanation: (1) The distribution of cash dividend is NT$52,604,213, approximately NT$1.75 per share. The distribution of cash dividends shall be based on share ratio and accounted by dollar and rounded off to the integer, fractional dividend amounts that are less than NT$1 shall be ranked from high to low in value and from old to new in account number, and they shall be adjusted in this order until the total amount of cash dividend distribution is met. Upon the approval of the annual meeting of shareholders, it is proposed that the Board of Directors be authorized to resolve the record date and other relevant issues. (2) In the event that, before the distribution record date, the proposed profit distribution is affected by a buyback of shares or issuance of new shares for 4

7 transferring treasury shares to employees or for equity conversion in connection with domestic convertible corporate bonds or employee stock options, it is proposed that the chairman be authorized to adjust the cash and stock to be distributed to each share based on the number of actual shares outstanding on the record date for distribution. (3) The proposal of 2017 Earning Distribution has been approved by the Board of directors and examined by the supervisors. (4) The 2017 Earning Distribution Table is attached as page 23 (attachment 5) Resolution: 5

8 iii. Election Items Proposal 1: (Proposed by the Board of Directors) Election of Directors and Supervisors. Explanation: (1) The current term for the directors and supervisors will expire on June 15, The election of new Directors and Supervisors is proposed to this Annual Shareholders Meeting. (2) Follow the Articles of Incorporation, five Directors (including two independent directors) and three Supervisors shall be elected. The tenure of newly elected Directors and Supervisors will be three years, commencing from June 20, 2018 to June 19, (3) Follow the Articles of Incorporation, the Directors and Supervisors will be elected by adopting candidates nomination system. The nominated candidates education and professional qualifications, experience and relevant information are attached as page (attachment 6). Resolution: 6

9 iv. Discussion Items Proposal 1: (Proposed by the Board of Directors) To release newly elected Board of Directors from non-competition restrictions. Explanation: (1) The newly elected Directors might operate other businesses with similar business scope with SYN-TECH. Without impeding SYN-TECH s interest and benefit, it is proposed to release that who was appointed by corporation to act as directors from non-competition restrictions. (2) The newly elected Director s other business activities were listed as follow: Title Name Other business and Title Director Director Director Standard Chem. & Pharm. Co., Ltd. Standard Chem. & Pharm. Co., Ltd. : Chen-Ming, Hsiao Pai Shih Da Investment Co., Ltd. : Tzu-Ting, Fan To operate similar business scope with SYN-TECH Chia Scheng Investment Co., Ltd., Director Inforight Technology Co., Ltd., Director AdvPharma, Inc., Director Standard Pharmaceutical Co., Ltd., Director Standard Chem. & Pharm.Phillippines, Inc., Director Jiangsu Standard Biotech Pharmaceutical Co., Ltd., Director Multipower Enterprise Corp., Director Syngen Biotech.Co., Ltd., Director Souriree Biotech & Pharm. Co., Ltd., Director Her-Sing Development Construction Corp., Director WE CAN MEDICINES Co., Ltd., Director NCKU Venture Capital Co., Ltd., Director Taiwan Biosim Co., Ltd., Director Ying-Sheng Investment Co., Ltd., Chairman AdvPharma, Inc., Director CNH Technologies, Inc., Director Standard Chem. & Pharm. Co., Ltd., Director and General Manager Chia Scheng Investment Co., Ltd., Chairman Inforight Technology Co., Ltd., Chairman Standard Pharmaceutical Co., Ltd., Chairman Standard Chem. & Pharm.Phillippines, Inc., Chairman Multipower Enterprise Corp., Chairman Jiangsu Standard Biotech Pharmaceutical Co., Ltd., Chairman Jiangsu Standard-Dia Biopharma Co., Ltd., 7

10 Independent Director Resolution: Chi-Min, Chen Chairman Taiwan Biosim Co., Ltd., Chairman New Nutrition Sources, Chairman Syngen Biotech.Co., Ltd., Director Souriree Biotech & Pharm. Co., Ltd., Director Her-Sing Development Construction Corp., Director Top High Image Corp., Independent Director King s Ground Biotech Co., Ltd., Director Chang Lung Agriculture Co., Ltd., Director v. Other Motions vi. Adjournment 8

11 III. Attachments Attachment 1: SYN-TECH CHEM. & PHARM. CO., LTD Business Report I. Company policies Food and Drug Administration (TFDA) of MOHW became official member of PIC/S. For promoting the drug quality to assure the health of the people. TFDA announced that API implementing Current Good Manufacturing Practice at 22th/Apr/2002. In addition, PIC/S GMP PartⅡ was taking place in 1 st /Jan/2016. All the APIs must meet GMP regulation. Syn-Tech achieved this requirement. Environment protection and energy saving became tendency international consensus. Syn-Tech approved and implemented ISO9001 quality system, ISO14001 and OHSAS18001 continusly. These approvals promoted good images of company. Farther more, Syn-Tech applied for CSR (corporation social responsibility) qualification and approved by certification company. This would help Syn-Tech to create good devotion to the society. II. III. Business operation Syn-Tech follows the philosophy Abide by the original intention to pursue for the best. In the past years, Syn-Tech filed DMF to many countries as well as audited and approved by TFDA, KFDA, USFDA, PMDA Japan, and EDQM. In the spirit of seeking truth from facts, after a firm foundation for strengthening personnel training in a sincere faith of innovation, honesty and development. Producing good quality products for human, developing and towards internationalization for the pursuit of prosperous future. Result of business implementation The company's net operating revenue of year 2017 is NT$ 695 million, compared with 2016 NT$ 767 million, it declined 9.36%; net income for the year is NT$ 60 million, compared with 2016 NT$ 158 million, it declined 62.28%, and most of the domestic API companies have also shown a decline. On the highly competition period, to strive for innovation to restart growth and achieve better results. 9

12 IV. Implementation of operating income and expenses 1. Operating income portion 2017 net operating revenue is NT$ 695 million, compared with 2016 NT$ 767 million, a decline of NT$ 72 million, a decline of 9.36%, mainly affected by the exchange rate of NT dollar. In addition, the client entrusted the cooperation of a product in year 2016, has completed the first stage of development trial production, and increased operating revenue of NT$ 30 million, but there is no such project this year. In the future, this product will continue its second stage of development. Therefore, the operating revenue is reduced this year. 2. Operating Expenses section The operating expenses of 2017 was NT$ 594 million, compared with 2016 NT$ 579 million, an increase of NT$ 15 million, an increase of 2.57%, mainly due to raw material costs, repair costs, and depreciation expense increased, plus sales of the product composition changed. V. Profitability Analysis The company actively expand export markets in the year However, the operating revenue is affected by the exchange rate of NT dollar, plus operating costs increased, and changed in the composition of the product, so the gross profit decreased 32.86% compared with the year Operating expenses reduced due to labor costs, bonus, and repair costs decreased. Comparing with 2016, this year decreased 10.16%. Non-operating income and expenses decreased due to currency exchange loss, the amount decreased % compared with the year In summary, the net income for the year decrease of 62.28% compared with the year VI. The development of research The company's 2017 research and development expense is NT$ 30 million, in addition to the current new product design and development process improvement to the existing products. The company is committed to product research polymorphs and crystalline by establishing screening technology, particle size analysis, and cooperate with TRANSO-PHARM company in German to develop cardiotonics, in able to improve product quality and competitiveness. Actively develop high-level synthesis technology and clinical API with the synthesis of new compounds. Step toward the development of new drugs and enhance the development of the niche. 10

13 Attachment 2: SYN-TECH CHEM. & PHARM. CO., LTD. Supervisors Review Report The Board of Directors has prepared SYN-TECH Chem. & Pharm. Co., Ltd. s 2017 Business report, Financial Statements and allocation of profits. The Financial Statements were audited by independent auditors, Tzu-Yu, Lin and Tzu-Meng, Liu of the CPA firm of PricewaterhouseCoopers, Taiwan. The Business Report and Financial Statements have been reviewed and determined to be correct and accurate by the Supervisors. According to Article 219 of the Company Act, we hereby submit this report. Submitted to: 2018 Annual Shareholders Meeting of SYN-TECH Supervisor: AN FU CORPORATION Yuan-Feng, Kao Supervisor: Shui-Ching, Chen Supervisor: Kuo-Ming, Wu March 23,

14 Attachment 3: REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of SYN-TECH Chem. & Pharm. Co., Ltd. Opinion We have audited the accompanying individual balance sheets of SYN-TECH Chem. & Pharm. Co., Ltd. ( the Company ) as of December 31, 2017 and 2016, and the related individual statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the individual financial statements, including a summary of significant accounting policies. In our opinion, the accompanying individual financial statements present fairly, in all material respects, the individual financial position of the Company as of December 31, 2017 and 2016, and its individual financial performance and its individual cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission. Basis for opinion We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the individual Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the Code ), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 12

15 Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the individual financial statements of the current period. These matters were addressed in the context of our audit of the individual financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters. Evaluation of inventories Description Please refer to Note 4(8) for accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of significant accounting estimations and assumptions relating to evaluation of inventories. As of December 31, 2017, the carrying amount of inventories and allowance for inventory valuation loss are $280,394 thousand and $10,978 thousand, respectively. The Company is primarily engaged in the manufacture and sales of Active Pharmaceutical Ingredients. Due to the influence of market competes sharply, expiration date of medicine, etc., there is a risk in market price decline and obsolescence of inventories. The Company estimates the net realizable value in consideration of the most recent price or replacement cost and evaluates inventories at the lower of cost and net realisable value. Given that the company s inventory amount is significant and many projects, and the evaluation of inventories is subject to management s judgement and the accounting estimations will have significant influence on the inventory values, we consider the evaluation of inventories a key audit matter. How our audit addressed the matter Our audit procedures performed for the above matter are summarised below: 1. Understood the operations and the nature of the industry, assessed the reasonableness of policies on allowance for inventory valuation loss, based on our understanding of the inventory classification and historical information of the selling rate and discount rate, etc., and judged on the appropriateness of expired inventory items. 13

16 2. Tested whether the basis of inventory aging used in calculating the net realisable value of inventory is consistent with the Company s policy. 3. Assessed the effectiveness of the management s inventory control, based on our understanding of the operation of the warehouse management, inspected the annual inventory taking plan and performed our observation. 4. Using randomly selected material numbers to verify the inventory historical information of the selling rate and discount rate, to check the net realisable value assessed by the management. Validated the net realisable value of inventories and the adequacy of allowance for inventory valuation loss. Authenticity of sales revenue Description Please refer to Note 4(21) for accounting policies on revenue recognition. 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 Company s activities. Revenue arising from the sales of goods is recognised when the Company 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 Company is primarily engaged in the manufacturing and sales of Active Pharmaceutical Ingredients. The Company s customers are numerous, including domestic and foreign pharmaceutical companies and trade agents. Since the sales transactions are numerous and need longer period to be verified, we consider the existence of domestic sales revenue in human medicine a key audit matter. How our audit addressed the matter Our audit procedures performed for the above matter are summarised below: 1. Assessed the consistency and effectiveness of sales recognition, taking into consideration customer basic information, customer credit, sales supporting documentation, approval and cash collection procedures. Using randomly selected sample of different customers to evaluate the effectiveness of the internal control of 14

17 the management sales recognition. 2. Selected samples of sales transactions and checked against related supporting documentation, including customer orders, delivery orders, export declaration, customer receipt record, invoice and subsequent cash collection. 3. Tested the supporting documentation and verified the nature of the manual journal entries of sales revenues. Check the relevant supporting documents and reasonableness of the certificate of sales return and allowance issued after the balance sheet date. Responsibilities of management and those charged with governance for the individual financial statements Management is responsible for the preparation and fair presentation of the individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of individual financial statements that are free from material misstatement, whether due to fraud or error. In preparing the individual financial statements, management is responsible for assessing the Company s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance, including supervisors, are responsible for overseeing the Company s financial reporting process. Auditor s responsibilities for the audit of the individual financial statements Our objectives are to obtain reasonable assurance about whether the individual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable 15

18 assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these individual financial statements. As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the individual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the individual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Company to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the individual financial statements, including the disclosures, and whether the individual financial statements 16

19 represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the individual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Independent Accountants Tzu-Yu, Lin Tzu-Meng, Liu PricewaterhouseCoopers, Taiwan Republic of China March 23,

20 Attachment 4: SYN-TECH CHEM. & PHARM. CO.,LTD INDIVIDUAL BALANCE SHEETS (Expressed in thousands of New Taiwan dollars) Current assets December 31, 2017 December 31, 2016 Assets Notes AMOUNT % AMOUNT % Cash and cash equivalents 6(1) $ 136,456 9 $ 353, Financial assets at fair value 6(2) through profit or loss - current 2,886-2,725 - Notes receivable, net 13, ,783 1 Notes receivable - related parties, 7 net 8, ,516 1 Accounts receivable, net 6(3) 77, ,759 6 Accounts receivable - related 7 parties, net 5,872-9,916 1 Other receivables 5,028-5,487 - Inventories 5(2) and 6(4) 269, , Prepayments 13, ,024 3 Other financial assets - current 6(5) and 8 320, Total current assets 852, , Non-current assets Available-for-sale financial assets 6(6) - non-current 16, ,889 1 Property, plant and equipment 6(7) and 8 663, , Intangible assets 1, Deferred income tax assets 6(20) 10,023-13,226 1 Prepayments for equipment 6(7) 11, ,903 2 Guarantee deposits paid Other non-current assets Total non-current assets 702, , Total Assets $ 1,555, $ 1,287, (Continued) 18

21 SYN-TECH CHEM. & PHARM. CO.,LTD INDIVIDUAL BALANCE SHEETS (Expressed in thousands of New Taiwan dollars) December 31, 2017 December 31, 2016 Liabilities and Equity Notes AMOUNT % AMOUNT % Current liabilities Short-term borrowings 6(8) and 8 $ 294, $ 7,606 1 Short-term notes and bills 6(9) payable 90, Notes payable 40, ,452 4 Accounts payable 726-7,585 1 Other payables 45, ,125 5 Current income tax liabilities 6(20) 2,816-15,823 1 Receipts in advance 3(2) 42, ,587 3 Total current liabilities 516, , Non-current liabilities Deferred income tax liabilities 6(20) 13, ,140 1 Net defind benefit liability - 6(10) non-current 29, ,606 4 Total non-current liabilities 43, ,746 5 Total Liabilities 559, , Share capital Common stock 6(11) 300, , Capital surplus 6(12) 314, , Retained earnings 6(13)(20) Legal reserve 117, ,433 8 Special reserve - - 2,143 - Unappropriated retained earnings 264, , Other equity interest 6(6)(14) ( 662 ) - ( 662 ) - Total equity 996, ,027, Significant contingent liabilities 6(22) and 9 and unrecognized contract Total Liabilities and Equity $ 1,555, $ 1,287, The accompanying notes are an integral part of these financial statements. 19

22 SYN-TECH CHEM. & PHARM. CO.,LTD INDIVIDUAL STATEMENTS OF COMPREHENSIVE INCOME (Expressed in thousands of New Taiwan dollars, except earnings per share data) December 31, 2017 December 31, 2016 Items Notes AMOUNT % AMOUNT % Operating revenue 7 $ 694, $ 766, Operating costs 6(4)(10)(18)(19)(22) ( 495,157 ) ( 71) ( 469,143) ( 61) Gross profit 199, , Operating expenses 6(10)(18)(19) Selling expenses ( 28,232 ) ( 4) ( 32,307) ( 4) General & administrative expenses ( 40,077 ) ( 6) ( 43,550) ( 6) Research and development expenses ( 30,035 ) ( 4) ( 33,607) ( 5) Total operating expenses ( 98,344 ) ( 14) ( 109,464) ( 15) Operating profit 101, , Non-operating income and expenses Other income 6(15) 7, ,653 2 Other gains and losses 6(2)(16) and 12 ( 29,667 ) ( 5) ( 6,277) ( 1) Finance costs 6(17) ( 1,825 ) - ( 166) - Total non-operating income and expenses ( 24,245 ) ( 4) 5,210 1 Profit before income tax 77, , Income tax expense 6(20) ( 17,461 ) ( 2) ( 34,923) ( 5) Net income for the year $ 59,778 9 $ 158, Other comprehensive income Items that will not be reclassified subsequently to profit or loss Remeasurement of defined 6(10) benefit plan $ 17,017 2 $ 3,459 1 Income tax related to items that 6(20) will not be reclassified subsequently ( 2,893 ) - ( 588 ) - Items that may be reclassified subsequently to profit or loss Unrealized gain on valuation of 6(6)(14) available-for-sale financial assets - - 2,833 - Income tax related to items that 6(14)(20) may be reclassified subsequently - - ( 482 ) - Total other comprehensive income for the year $ 14,124 2 $ 5,222 1 Total comprehensive income for the year $ 73, $ 163, Earnings per share (in dollars) 6(21) Basic $ 1.99 $ 5.27 Diluted $ 1.99 $ 5.27 The accompanying notes are an integral part of these financial statements. 20

23 SYN-TECH CHEM. & PHARM. CO.,LTD INDIVIDUAL STATEMENTS OF CHANGES IN EQUITY (Expressed in thousands of New Taiwan dollars) Notes Common stock Additional paid-in capital Capital Surplus Retained Earnings Other Equity Unrealized gain Unappropriat on valuation of Stock warrants others Legal reserve Special reserve ed retained earnings available-for-sale financial assets Total equity For the year ended December 31, 2016 Balance at January 1, 2016 $ 300,595 $ 309,923 $ 4,399 $ - $ 85,809 $ 2,143 $ 269,205 ($ 3,013 ) $ 969,061 Expired employee stock warrants - 3,615 ( 4,399 ) Appropriations of 2015 earnings (Note): Legal reserve ,624 - ( 15,624 ) - - Cash dividends 6(13) ( 105,208 ) - ( 105,208 ) Net income for the year , ,466 Other comprehensive income for the year ,871 2,351 5,222 Balance at December 31, 2016 $ 300,595 $ 313,538 $ - $ 784 $ 101,433 $ 2,143 $ 309,710 ( $ 662 ) $ 1,027,541 For the year ended December 31, 2017 Balance at January 1, 2017 $ 300,595 $ 313,538 $ - $ 784 $ 101,433 $ 2,143 $ 309,710 ( $ 662 ) $ 1,027,541 Reversal of special reserve 6(13) ( 2,143 ) 2, Appropriations of 2016 earnings (Note): Legal reserve ,847 - ( 15,847 ) - - Cash dividends 6(13) ( 105,208 ) - ( 105,208 ) Net income for the year ,778-59,778 Other comprehensive income for the year ,124 - ( 14,124 ) Balance at December 31, 2017 $ 300,595 $ 313,538 $ - $ 784 $ 117,280 $ - $ 264,700 ( $ 662 ) $ 996,235 (Note) The employees' compensation were $1,950 and $2,004, and the directors' and supervisors' remuneration were $1,950 and $2,004 in 2015 and 2016, respectively, which had been deducted from net income for the years. The accompanying notes are an integral part of these financial statements. 21

24 SYN-TECH CHEM. & PHARM. CO.,LTD INDIVIDUAL STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 (Expressed in thousands of New Taiwan dollars) Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax for the year $ 77,239 $ 193,389 Adjustments Adjustments to reconcile profit (loss) (Gain) loss on financial assets at fair value through 6(2)(16) profit and loss ( 161 ) 225 Reversal of allowance for inventory market price 6(4) decline ( 2,551 ) ( 47 ) Depreciation 6(7)(18) 50,616 36,424 Net loss on disposal of property, plant and 6(16) equipment Amortization 6(18) Prepayments for equipment transferred to expense Dividend income 6(15) ( 121 ) ( 91 ) Interest income 6(15) ( 4,658 ) ( 1,445 ) Interest expense 6(17) 1, Changes in operating assets and liabilities Changes in operating assets Financial assets held for trading - ( 638 ) Notes receivable ( 3,356 ) ( 1,264 ) Notes receivable - related parties 1, Accounts receivable 3, Accounts receivable - related parties 4, Other receivables ,792 Inventories ( 54,760 ) ( 12,528 ) Prepayments 18,492 ( 3,288 ) Changes in operating liabilities Notes payable ( 4,726 ) 1,432 Accounts payable ( 6,859 ) 7,449 Other payables ( 11,815 ) 9,080 Receipts in advance 1,017 23,799 Net defined benefit liability - non-current ( 4,767 ) ( 14,042 ) Cash inflow generated from operations 66, ,928 Dividend received Interest received 4,166 1,519 Interest paid ( 1,715 ) ( 187 ) Income tax paid ( 30,915 ) ( 37,292 ) Net cash flows from operating activities 38, ,059 CASH FLOWS FROM INVESTING ACTIVITIES Decrease (increase) in other financial assets - current ( 320,274 ) 58,000 Cash paid for acquisition of property, plant and 6(23) equipment ( 131,805 ) ( 113,422 ) Proceeds from disposal of property, plant and equipment - 1,339 Acquisition of intangible assets ( 1,217 ) ( 125 ) Increase in prepayment for equipment ( 74,374 ) ( 72,187 ) Decrease in other non-current assets 754 1,277 Net cash flows used in investing activities ( 526,916 ) ( 125,118 ) CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings 286,799 ( 29,798 ) Increase in short-term notes and bills payable 90,000 - Payment of cash dividends 6(13) ( 105,208 ) ( 105,208 ) Net cash flows from (used in) financing activities 271,591 ( 135,006 ) (Decrease) increase in cash and cash equivalents ( 217,157 ) ( 24,065 ) Cash and cash equivalents at beginning of year 6(1) 353, ,678 Cash and cash equivalents at end of year 6(1) $ 136,456 $ 353,613 The accompanying notes are an integral part of these financial statements. 22

25 Attachment 5: SYN-TECH Chem. & Pharm. Co., Ltd. Earning Distribution Table Year 2017 Item (Unit: NTD) Amount Undistributed earnings from previous period 190,797,981 Add: 2016 adjustment for retained earnings 14,123,934 Add: net profit after tax 59,778,020 Less: 10% legal reserve (5,977,802) Distributable net profit 258,722,133 Distributable items: Dividend to shareholders (Cash dividend NT$1.75 per share) (52,604,213) Undistributed earnings as of the end of the period 206,117,920 Note: Earning distribution for this year shall be based on the distributable profit from year

26 Attachment 6: Director (including Independent Director) and Supervisor Candidate List 1. Pursuant to Article 192, paragraph 1 and Article 216, paragraph 1, any shareholder holding 1% or more of the total outstanding number of share issued by SYN-TECH may submit to SYN-TECH in writing a roster of director (including independent director) and supervisor candidates provided that the total number of candidate so nominated shall not exceed the quota of the director (including independent director) and supervisors to be elected. 2. The acceptance period for candidate nomination for 2018 s election is in between April 14, 2018 to April 23, The candidate list is then published on the Market Observation Post System in accordance with the regulation. 3. During the period, the Board of Directors nominated five Directors (including two independent Directors) and three Supervisors, whose qualifications were examined and proposed to 2018 Shareholders Meeting for election by May 7, 2018 meeting of the Board of Directors. Shareholding Title Director Director Director Name Standard Chem. & Pharm. Co., Ltd. : Chen-Ming, Hsiao Pai Shih Da Investment Co., Ltd. : Tzu-Ting, Fan Chun-Tzer, Tsai Education, Professional Qualifications, and Major Positions Bachelor of Pharmacy, Kaohsiung Medical University Director, Standard Chem. & Pharm. Co., Ltd. General Manager, Syn-Tech Chem. & Pharm. Co., Ltd. Director, Syn-Tech Chem. & Pharm. Co., Ltd. Master of Computer Science, University of California, Los Angeles Director and General Manager, Standard Chem. & Pharm. Co., Ltd. Director, Syn-Tech Chem. & Pharm. Co., Ltd. Bachelor of Pharmacy, Taipei Medical University General Manager, Danitex Biolabs Inc. Director, Syn-Tech Chem. & Pharm. Co., Ltd. information as of April 22, ,923,484 4,145, ,314 24

27 Independent Director Independent Director Supervisor Supervisor Supervisor Eng-Chi, Wang Chi-Min, Chen Shui-Ching, Chen An Fu Corporation: Yuan-Feng, Kao Kuo-Ming, Wu Ph.D. of Pharmacy, Kaohsiung Medical University Professor, Department of Medicinal and Applied Chemistry, Kaohsiung Medical University Director, Tajen University Independent Director, Syn-Tech Chem. & Pharm. Co., Ltd. Ph.D. of Electrical Engineering, National Cheng Kung University Professor, Department of International Business and Trade, Aletheia University Independent Director, Top High Image Corp. Director, King s Ground Biotech Co., Ltd. Independent Director, Syn-Tech Chem. & Pharm. Co., Ltd. Bachelor of Law, National Taiwan University Chairman, Taifiaa Co., Ltd. Supervisor, Syn-Tech Chem. & Pharm. Co., Ltd. Bachelor of Accounting, National Chengchi University Manager, EMAT CPAs & Co. Manager, Solomon & Co., CPAs Vice General Manager, Da Ya Securities Co., Ltd. Supervisor, Standard Chem. & Pharm. Co., Ltd. Supervisor, Syn-Tech Chem. & Pharm. Co., Ltd. EMBA, National Cheng Kung University Accountant, Sunshine & Co., CPAs Supervisor, Syn-Tech Chem. & Pharm. Co., Ltd ,598 1,

28 IV. Appendices Appendix 1: SYN-TECH CHEM. & PHARM. CO., LTD Shareholding of Directors and Supervisors 1. SYN-TECH s total share issued and outstanding: 30,059,550 shares. 2. The whole directors shall at least hold 3,600,000 shares. 3. The whole supervisors shall at least hold 360,000 shares. 4. As of April 22,2018 (book closure date), the shareholding of all directors and supervisors on the shareholders registry was as follows: Title Chairman Director Name Standard Chem. & Pharm. Co., Ltd.: Chen-Ming, Hsiao Pai Shih Da Investment Co., Ltd.: Tzu-Ting, Fan Shares record per register 2,923,484 4,145,902 Director Chun-Tzer, Tsai 413,314 Director Eng-Chi, Wang - Director Chi-Min, Chen - Total 7,482,700 Supervisor AN FU CORPORATION: Yuan-Feng, Kao 1,350 Supervisor Shui-Ching, Chen 786,598 Supervisor Kuo-Ming, Wu - Total 787, The total shareholding of SYN-TECH Directors and Supervisor is in accordance with the minimum shareholding requirement. 26

29 Appendix 2: Information for right of proposal The annual shareholders' meeting, shareholder s proposal process Description : 1. Pursuant to Article 172, paragraph 1, the shareholder held more than one per cent of the stocks can present in writing to the company's annual shareholders' meeting of the case, but with the limit of one item three hundred words. 2. The company received this year shareholder s proposal at shareholders' meeting during 08:00 to 17:00 from April 14 to April 23 year 2018 and has been legally announcement in MOPS. 3. Syn-Tech has not received any shareholder s proposal during this period of time. 27