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Spokesperson
Name/Wei, Tzu-Wen
Title/Deputy General Manager
Tel/(03)397-0761
Email/ir@medfirst.com.tw
Deputy Spokesperson
Name/Wang, Ting-Jui
Title/Assistant Vice President, Shopping Mall Operations Division
Tel/(03)397-0761
Email/ir@medfirst.com.tw
Headquarters, branch office, factory, addresses and telephone numbers
Headquarters of the Group
Address/1F & 2F, No. 94, Fuxing 1st Rd., Guishan Dist., Taoyuan City 33375,
Taiwan
Tel/(03)397-0761
Branch office:None
Stock Transfer Agency
Name / Service Agency, Fubon Securities Co., Ltd
Address/2F, No. 17, Xuchang St., Zhongzheng Dist., Taipei City 10047, Taiwan
Website /www.fubon.com
Tel/ (02)2361-1300
CPA and CPA Firm for recent financial statement
CPA/Hsieh, Ming-Chung, Kuo, Nai-Hua
CPA Firm/Deloitte Touche Tohmatsu CPA Firm
Address/20F., No.100, Songren Rd., Sinyi Dist., Taipei City 11073, Taiwan
Websit/www.deloitte.com.tw
Tel/ (02) 2725-9988
Name of the overseas trading office of listed valuable securities and
the way to inquire into information of valuable overseas securities:
None
Website
www.medfirst.com.tw
Table of Contents I. A LETTER TO THE SHAREHOLDERS .............................................................................. 1
II. COMPANY PROFILE ......................................................................................................... 4
I. Established on ....................................................................................................... 4
II. Company History: ................................................................................................. 4
III. CORPORATE GOVERNANCE .......................................................................................... 6
I. Organization ......................................................................................................... 6
II. Details of Directors, Supervisors, General Manager, Deputy General Managers,
Assistant Vice Presidents, and Heads of Departments and Branches ....................... 9
III. Remuneration of Directors, Supervisors, General Manager, and Deputy General Manager 17
IV. Implementation of Corporate Governance ......................................................... 22
Ⅴ. Information on CPA Professional Fees ................................................................ 62
Ⅵ. Information on the Replacement of the CPA ....................................................... 64
Ⅶ. The Company’s Chairman, General Manager, or Any Managerial Office r in
Charge of Finance or Accounting Matters Who Has Held a Position in the
Accounting Firm of the CPA or an Affiliated Enterprise in the Most Recent
Fiscal Year, Where His or Her Name, Title, and Duration of His or Her Service
at the Accounting Firm of the CPA or at the Affiliated Enterprise Should Be
Disclosed ......................................................................................................... 65
Ⅷ. Transfer of Equity Interests and/or Pledge of or Change to Equity Interests by a
Director, Supervisor, Managerial Officer, or Shareholder with a Stake of More
Than 10 Percent during the Previous Fiscal Year or during the Current Fiscal
Year up to the Date of Printing of the Annual Report ....................................... 65
Ⅸ. Information Regarding the Spouse or Relatives within Two Degrees of Kinship
and Relationship between Any of the Top Ten Shareholders ............................. 67
Ⅹ. The Total Number of Shares and Total Equity Stake Held in Any Single Enterprise
by the Company, Its Directors, Supervisors, and Managers, and Any Other
Companies Controlled Either Directly or Indirectly by the Company ................... 69
Ⅳ. INFORMATION ON ACTIVITIES TO RAISE CAPITAL ...................................................... 70
Ⅰ. Issuance of Capital Stock and Stock Shares .................................................................. 70
(1) Sources of Share Capital.............................................................................................. 70
(2) Composition of Shareholders ...................................................................................... 71
(3) Distribution Profile of Share Ownership .................................................................. 71
(4) List of Key Shareholders ............................................................................................. 72
(5) Net Worth, Earnings, Dividends, and Market Price per Share for the Previous
Two Years ................................................................................................ ………72
(6) Dividend Policy and Execution of the
Company ………………………………………………………. ................................ 73
(7) Effects of the Stock Grants Proposed by the Shareholders at This Time on the
Company’s Business Performance and Surplus of Each Share .................................... 74
(8) Remuneration to Employees, Directors, and Supervisors ...................................... 74
(9) Situations of Repurchasing the Company’s Shares ................................................. 75
Ⅱ. Circumstances for Handling Corporate Bonds .............................................................. 76
Ⅲ. Issuance of Preference Shares ......................................................................................... 77
Ⅳ. Issuance of Global Depositary Receipts (GDR) ........................................................... 77
Ⅴ.Employee Subscription Right Vouchers .......................................................................... 77
Ⅵ. Management of Restricted Stock Awards ....................................................................... 77
Ⅶ.Circumstances of Handling New Issue of Shares due to Merger or Assignee of
Other Corporate Stocks ...................................................................................................... 77
Ⅷ. Circumstances of the Execution of the Funds Application Plan ................................ 77
Ⅴ. OVERVIEW OF OPERATIONS ..................................................................................................... 78
Ⅰ. Business Content ................................................................................................................ 78
Ⅱ. Market and Sales Overview ............................................................................................. 94
Ⅲ. The Number of Employees Employed for the Two (2) Previous Fiscal Years and during the
Current Fiscal Year as of Publication of the Annual Report, Their Average Years of Service,
Average Age, and Education Level (Including the Percentage of Employees at Each Level)
Ⅳ. Information of Environment-oriented Expenditures .................................................. 105
Ⅴ. Labor/Management Relations ........................................................................................ 105
Ⅵ. Important Agreements ..................................................................................................... 107
Ⅵ. FINANCIAL STATUS ..................................................................................................................... 108
I. Condensed Balance Sheet and Statement of Comprehensive Income Information
for the Five (5) Most Recent Fiscal Years and the Names and Audit Opinions of
the Attesting CPA……. ................................................................................................. 108
II. Financial Summary of the Past Five Years ................................................................... 112
III. Supervisors' or Audit Committee's Report on Financial Statements for the Previous Fiscal
Year ...................................................................................................................................... 115
IV. The Financial Statement for the Most Recent Fiscal Year, Including the Auditor's
Report Prepared by an Accountant and the Two-year Comparative Balance Sheet,
the Statement of Comprehensive Income, the Statement of Changes in Equity, the
Cash Flow Chart, and Any Related Footnotes or Attachments ................................ 115
V. Recent Financial Statements and Reports of Independent Accountants of the Parent
Company ............................................................................................................................ 115
VI. If the Company or Its Affiliated Companies Have Experienced Financial
Difficulties in the Previous Fiscal Year or during the Current Fiscal Year as of
the Publication of the Annual Report, the Annual Report Shall Explain How Any
Difficulties Will Affect the Company's Financial Situation .................................... 115
Ⅶ. A REVIEW AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION AND
OPERATIONAL RESULTS, AND A LIST OF RISKS .................................................................. 116
I. Analysis of Financial Status ........................................................................................... 116
Ⅱ. Financial Performance .................................................................................................... 118
Ⅲ. Cash Flow ......................................................................................................................... 120
Ⅳ. Effect upon Financial Operations of Any Major Capital Expenditures during the
Previous Fiscal Year ........................................................................................................ 120
Ⅴ. Investment Policies, Main Reasons for Investment Gains or Losses, and Related
Counter-Measures and Investment Plan for Next Year……………. .................... 121
Ⅵ. Risk Management Assessment during the Previous Fiscal Year or during the
Current Fiscal Year as of the Publication of the Annual Report ............................... 123
Ⅶ. Other Important Matters ................................................................................................. 126
Ⅷ. SPECIAL EVENTS .......................................................................................................................... 127
Ⅰ.Relevant Information on Affiliate Enterprises ............................................................. 127
Ⅱ. The Handling Situation of Private Securities as of the Publication of the Latest
Annual Report ................................................................................................................... 132
Ⅲ. The Company’s Stock Held or Disposed of by Subsidiaries as of the Publication of
the Latest Annual Report ................................................................................................. 132
Ⅳ. Necessary Additional Information ................................................................................ 132
Ⅴ. As of the Publication of the Latest Annual Report, the Matters Prescribed in
Article 36, Paragraph 3, Item 2 of the Securities Exchange Act That Have a
Significant Impact on Shareholder’s Equity or Value of Securities ....................... 133
I
Letter to
Shareholders
I. Letter to Shareholders
In retrospect of developments in Taiwan over the past year, economic growth remained stable,
with the annual growth rate being maintained at more than 3.0% during the first half of 2018.
However, the economic growth in the second half of 2018 slowed down and experienced a sharp
downward turn to around 2%. Therefore, the growth rate of GDP in 2018 reached 1.69%, as
announced by the Directorate General of Budget, Accounting, and Statistics of the Executive Yuan.
However, the economic growth rate (GDP) of 2019 is estimated to drop by 2.85%, while consumer
spending will reveal positive growth, benefited from the impact of tax reform and the salary policy.
As of the end of 2018, MedFirst had established as many as 255 stores in Taiwan and mainland
China. Overall, the annual combined revenue should reach NT$ 4.6 billion, a new historical high.
Of that, the net profit after tax is NT$ 112 million, , and the gross profit remained stable at 31%.
In view of the prospects for 2019, since the aging population has increased significantly across
the Strait, MedFirst will not only make efforts toward the continuous growth of the silver-haired
market, but also actively work with the government to promote long-term care for aging individuals
at their residences. MedFirst will use the community as its core, expanding its service scope to
homes and communities in order to strengthen the quality of life for both caregivers and
care-demanders. By the end of 2018, as many as 4,073 customer cases have received assistance for
their subsidy applications to purchase assistive devices, with the amount reaching NT$21,389,966.
In recent years, MedFirst has actively developed new retail sales and LINE Lohas activities,
adjusted the structure of products through big data analysis, and strengthened the sales of
professional products. Furthermore, it incorporates market demands to jointly develop high
value-added products with suppliers or foundries. MedFirst has also joined a community platform to
connect O2O membership services and activities, accumulate consumer activity data to grasp
customer consumption dynamics, increase product sales channels, and optimize customer services.
In view of the development of a long-term retail layout, MedFirst has invested about NT$1.2
billion to plan new smart logistics and warehousing, which is expected to be launched in the first
quarter of 2020. In addition to improving the efficiency and effectiveness of company logistics, the
plant will introduce energy-saving, environmental protection, automated applications, intelligent
1
I
Letter to
Shareholders
equipment, and operational capability of third-party logistics, in order to help launch growth
momentum for future operations.
This year, MedFirst will continue to optimize the physical and commodity structure of each
store, improve professional service quality, and adjust its store expansion strategy. Therefore, it
anticipates being able to establish long-term and stable links with community residents, rendering
Taiwan’s medical access with better service quality.
I. Operating results in 2018
1. Implementation achievement of operating plan: Unit: NT$ thousands;%
Item(s)/Year 2018 2017 Differences Percentage
Differences %
Operating revenue 4,632,643 4,324,407 308,236 7.13%
Gross profit 1,438,914 1,306,766 132,148 10.11%
Operating income 152,202 113,656 38,546 33.91%
Non-operating revenue
and expenses -3,993 -1,572 -2,421 -154.01%
Income before tax 148,209 112,084 36,125 32.23%
Net income 112,385 88,795 23,590 26.57%
Earnings per share 4.00 3.29 0.71 21.58%
2. Operating performance and profitability analysis
Item(s)/Year 2018 2017
Operatin
g p
erform
ance
Accounts receivable turnover (times) 38.77 40.44
Average collection days (days) 9.41 9.02
Inventory turnover (times) 4.29 4.39
Average payables turnover (times) 3.23 3.37
Average inventory turnover days (days) 85.08 83.14
Real estate property, plant and equipment turnover (times) 3.58 4.42
Total assets turnover (times) 1.54 1.66
Pro
fitability
Return on total assets (%) 3.96 3.77
Return on shareholders’ equity (%) 12.57 11.59
Pre-tax income-to-capital ratio (%) 52.48 39.69
Net income-to-sales ratio (%) 2.43 2.05
Earnings per share (NT$) 4.00 3.29
1. Financial receipts and expenditures
The inflow of net cash in 2018 with annual operation activities was NT$330,221,000; the
outflow of net cash with investment activities was NT$ 139,912,000; and the net outflow
of cash with fund-raising activities was NT$ 87,359,000, totaling an inflow of net cash
2
I
Letter to
Shareholders
incurred as NT$101,487,000 in 2018. Looking toward the future, new stores to be
established through expansion are expected to generate significant revenue growth.
2. Budget Implementation Status
Since the company did not disclose its financial forecast for 2018, the status of budget
implementation does not need to be revealed.
II. Business plan outline for 2019
1. Launch Big Data analytics in healthcare and integrate new retail services
2. Two self-shopping methods and the cooperation of mergers and acquisitions to speed
up the expansion path.
3. The construction of an intelligent logistics center is the logistical foundation for
developing channels.
Finally, thank you for attending and offering your advice, and we hope that everyone can continue
supporting and encouraging our company.
Best wishes to all our shareholders!
MedFirst Healthcare Services, Inc.
Chairman: Chen, Li-Ju
General Manager: Tsai, Te-Chung
3
II COMPANY
PROFILE
II. COMPANY PROFIL
1. Established on: 7th
May 1992
2. Company History: Year Milestones
1990 Dec. MedFirst Medical Devices Enterprise was founded, and the first medical devices retail
store was established
1992 May Founded MedFirst Co., Ltd with NT$5,000,000 capital
1998 Jan. The company name was changed to MedFirst Healthcare Services, Inc.
Jan. The 10th MedFirst retail store was opened
Jan. The commercial automation system and 24-hour customer service hotline were
established
Jul. Capital increased by NT$20,000,000, with total capital reaching NT$25,000,000
1999 Oct. The 20th MedFirst retail store was opened
2000 Dec. Capital increased by NT$30,000,000, with total capital reaching NT$55,000,000
2002 Aug. Obtained ISO9001 certification
Oct. The 50th MedFirst retail store was opened
Nov. MedFirst developed the shopping mall turnkey business model
2003 Jan. The customer relationship management (CRM) system was established
Nov. Capital increased by NT$25,000,000, with total capital reaching NT$80,000,000
2005 Apr. The 100th MedFirst retail store was opened
Dec. The Company was awarded the “Franchise Headquarter Survey Excellence Award”
from the Department of Commerce under the Ministry of Economic Affairs
2006 Jul. Obtained Good Service Practice (GSP) certification
Dec. Awarded the Top GSP Benchmark Enterprise in Taiwan
Dec. Pioneered the industry’s 7-day goods return service
Dec. Developed into the mainland China market and expanded the extensive service
network throughout the Chinese world
Dec. Capital increased by NT$20,000,000, with total capital reaching NT$100,000,000
2008 Nov. Awarded the Outstanding Enterprise Award for the Three-Year Program on the
Adoption of Digital Learning by Franchises
2009 Jan. Capital increased by NT$28,297,000 with a NT$21,703 capital surplus by earnings,
and total capital reaching NT$150,000,000
Dec. Launched and sold products under the MedFirst brand for the first time
2010 Feb. Capital increased by NT$7,016,000, creating a capital surplus by earnings, with total
capital reaching NT$157,016,000
Jun. The 150th MedFirst retail store was opened
Aug. Awarded the Taiwan Superior Brand Award by the Department of Commerce under
the Ministry of Economic Affairs
Sep. Capital increased by NT$3,984,000, creating a capital surplus by earnings, with total
capital reaching NT$161,000,000
2011 Jan. Capital increased by NT$34,000,000, with total capital reaching NT$195,000,000
Aug. Capital increased by NT$11,700,000, creating a capital surplus by earnings, with total
capital reaching NT$206,700,000
Dec. Awarded the Taiwan Superior Commercial Service Brand Award by the Department
of Commerce under the Ministry of Economic Affairs
The 160th MedFirst retail store was opened
4
II COMPANY
PROFILE
Year Milestones
2012 Jan. Invested in and constructed the MedFirst Logistics Centre
May Applied for public offering
Jun. Awarded the Silver Award of the Taiwan Service Industry Survey
Aug. Capital increased by NT$16,000,000, creating a capital surplus by earnings, with total
capital reaching NT$222,700,000
Nov. Awarded the Good Service Practice (GSP) Certified Outstanding Enterprise Award
Dec. MedFirst Air Bed obtained the 2012 Symbol of National Quality (SNQ) certification,
and was awarded the Bronze Medal in the health care equipment/medical equipment
category of the 2012 National Biotechnology Medical Quality Awards
Dec. Officially listed on the emerging stock board on December 21, 2012
2013 Jan. Launched the MedFirst online shopping website
Mar. Officially opened the MedFirst Logistics Center
Jun. Awarded the Gold Award in the Taiwan Service Industry Survey
Sep. The 170th MedFirst retail store was opened
2014 Jan. Passed the Regulations Governing the Implementation of Good Service Practice
(GSP) Certification by the Ministry of Economic Affairs
Apr. Officially listed in the Over-the-Counter market on April 23, 2014
May Capital increased by NT$29,700,000, with total capital reaching NT$252,400,000
2015 Jan. Passed the Regulations Governing the Implementation of Good Service Practice
(GSP) Certification by the Ministry of Economic Affairs
Nov. Officially launched the MedFirst mobile application on November 12, 2015, thus
initiating its mobile commerce and online-to-offline (O2O) integrated services
Dec. LEAD Blood Pressure Monitor was awarded the 2015 Symbol of National Quality
(SNQ) certification
Dec. The 200th retail store opening milestone was reached in both Taiwan and mainland
China
2016 Jul. Awarded the Bronze Award in the Taiwan Service Industry Survey
2017 Feb. The 1st domestic unsecured corporate bond was issued at NT$300 million
Mar. Honor Yahoo! 2017 Golden Store Award and Good Shop
Mar. The 224th
retail store opening milestone was reached in both Taiwan and
mainland China
Mar. Capital increased by NT$30,000,000, with total capital reaching
NT$282,400,000
Apr. The Company’s governance appraisal had good results, ranking in the top 5%
Jun. Acquired ISO9001:2015 certificate
Dec. Best Store Manager of the Year 2017
Dec. Number of stores across the Taiwan Strait reached 243
2018 Jan. Recognized as a “Fine Company” by the Taiwan Federation
Mar. Honor Yahoo! 2018 Golden Store Award and Good Shop
Mar. TCFA 5th "2018 Service Angel Award"
Apr.
Aug.
The Company’s governance appraisal ranks in the top 5%
New Smart Logistics Center starts construction
Dec. Won the Best Store Manager of the Year 2018
Dec. Number of stores across the Taiwan Strait reached 255
2019 Apr.
Apr.
The Company’s governance appraisal ranks in the top 5%
The Intellectual Property Office of the Ministry of Economic Affairs officially
5
II COMPANY
PROFILE
Year Milestones
May
listed the MedFirst trademark as a famous trademark.
Beam raising of the New Smart Logistics Center
6
III CORPORATE
GOVERNANCE
III. CORPORATE GOVERNANCE
I.Organization:
(1) Organizational Chart
1. Organizational Chart
(2) Major Corporate Functions
Department Duties and functions
The Auditing
Office
Responsible for inspecting and evaluating the effectiveness of the Company’s
internal control, as well as drawing up and executing the annual audit plan and
converting it into an audit report, tracking anomalies, and providing
recommendations for improvement.
General Manager
Office
Manages the Company’s overall strategic goals, executes entire business operations and
supervises and coordinates every division and department.
Retail Operations
Division
Formulates and manages retail development strategies.
Responsible for guiding retail stores and coordinating retail operations, ensuring annual
business goals and target profit margins are met.
Shopping Mall
Operations
Division
Handles all shopping mall turnkey-related businesses and implements the co-development
and management of shopping malls.
Mainland China
Operations
Division
Develops, manages and executes business operations in mainland China.
The Shareholders’
Committee
The Board of
Directors
Chairman of
the Board
The Auditing Office
Retail O
peratio
ns
Div
ision
Sh
op
pin
g M
all
Op
eration
s
Div
ision
Main
land
Ch
ina
Op
eration
s
Div
ision
Main
land
Ch
ina
Op
eration
s
Div
ision
Fin
ancial
Man
agem
ent
Div
ision
General
Manager Office
Info
rmatio
n
Man
agem
ent
Div
ision
General
Manager
Op
eation
s
Man
agem
ent
Div
ision
En
gin
eering
Dep
armen
t
Hu
man
Reso
urce
Div
iosn
Audit Committee
Remuneration Committee
7
III CORPORATE
GOVERNANCE
Product Marketing
Division
Plans and executes product development, procurement and brand management
strategies.
Financial
Management
Division
Manages the Company’s overall financing, bank transactions, stock affairs, and short-term,
medium-term and long term financial planning
Handles various accounting and tax affairs and executes budget preparation
Information
Management
Division
Builds, maintains and promotes the planning of information systems and network,
front-stage and back-stage hardware equipment.
Analyzes data on business process reengineering and operations
Uses cloud computing service applications and information innovations and technology.
Operations
Management
Division
Coordinates the operations of the logistic center and monitors service quality
Human Resource
Division
Recruits personnel and manages termination of employees, education and developmental
training, relocation of employees, absenteeism, payroll and other administrative aspects of
human resources
Manages and maintains general affairs and assets
Engineering
Department
Coordinates the investigation and measurement of engineering projects and designs and
monitors construction quality.
Maintains and manages engineering equipment.
8
III CORPORATE
GOVERNANCE
II.Details of Directors, Supervisors, General Manager, Deputy General Manager, Assistant Vice
Presidents, Heads of Departments and Branches (1) Directors and Supervisors:
1.Details of Directors and Supervisors
Stock
(shares)%
Stock
(shares)%
Stock
(shares)%
Stock
(shares)% Title Name Relation
Chairman Taiwan Chen, Li-Ju Female106/
6/143
100/
6/291,832,274 6.49% 1,792,274 6.35% 1,617,884 5.73% - -
Master of Business
Administration,
Yuan Ze University
Master of
Entrepreneurship
Management,
National Cheng Chi
University
<Note 1>
Director
and
General
Manager
Tsai,
Te-
Chung
Spouse
Director
Corporate shareholder Taiwan
Lucktech
Investment
Limited
-106/
6/143
100/
6/299,252,238 32.76% 9,252,238 32.76% - - - - - - - - -
Director
Corporate
representativeTaiwan Tsai, Te-Chung Male
106/
6/143
100/
6/291,657,884 5.87% 1,617,884 5.73% 1,792,274 6.35% - -
Graduate School of
Marketing and
Distribution
Management,
National Kaohsiung
First University of
Science and
Technology; EMBA,
Fudan University
<Note 1> ChairmanChen,
Li-JuSpouse
Director
Corporate
representativeTaiwan Wei, Tzu-Wen Male
106/
6/143
103/
6/2556,228 0.20% 56,228 0.20% 17,426 0.06% - -
Graduate School of
Information Science,
Chung Cheng
Institute of
Technology,
National Defense
University
<Note 1> - - -
Director Taiwan Li, Hung-Hui Male106/
6/143
103/
6/25- - - - - - - -
Ph.D. of Public
Management, Ohio
State University
<Note 1> - - -
Independent Director TaiwanTseng, Sheng-
ChengMale
106/
6/143
101/
7/11- - - - - - - -
Department of
Industrial Design,
Ming Chi Institute of
Technology
<Note 1> - - -
Independent Director Taiwan Yeh, Ching-En Male106/
6/143
101/
7/11- - - - - - - -
Accounting
Department,
National Taipei
College of Business
<Note 1> - - -
Independent Director Taiwan Yang, Shu-Ching Female106/
6/143
101/
7/11- - - - - - - -
Master, Accounting
Department,
National Taiwan
University
Master, Law
Department,
Soochow University
<Note 1> - - -
April 20th 2019;shares
Title
Nationality
or Country
of Origin
Name Sex
Elec
ted
Dat
e
Term
(Years)
Date
of
the
initial
Shareholding Present
【Note 1】Major experiences, other position in the company and other companies
Present Shares held in Major
Educational/Experie
nce
Background
Current
position in
this company
and in
With spouse or 2nd degree
9
III CORPORATE
GOVERNANCE
Name Major Experience
Current position in
this company and in
other company
Chen, Li-Ju Deputy head nurse, internal medicine,
Linco Chang Gung Hospital
Chairman of MedFirst Healthcare Services, Inc.
Chairman of Exactitude Biotech Co., Ltd. (Corporate
Representative)
Director of Taiwan Trim Co., Ltd. (Corporate Representative)
Supervisor of Nanjing MedFirst Healthcare Services, Inc.
(Corporate Representative)
Supervisor of Shanghai MedFirst Healthcare Services, Inc.
(Corporate Representative)
Supervisor of Fujian MedFirst Healthcare Services, Inc.
(Corporate Representative)
Supervisor of Shanghai An gu Medical Equipment Ltd.
(Corporate Representative)
Supervisor of Hangzhou An gu Medical Equipment Ltd.
(Corporate Representative)
Supervisor of Nanjing Beijing First Healthcare Services, Inc.
(Corporate Representative)
Chairman of Exactitude Biotech Co., Ltd(Corporate
Representative)
Chairman of Xingzhou Pharmaceutical Co., Ltd.
(Corporate Representative)
Director of Taiwan TRIM CO.,LTD (Corporate Representative)
Tsai,
Te-Chung Section head of Chang Gung Hospital
General manager & Director of MedFirst Healthcare Services,
Inc.
Chairman of Taiwan Trim Co., Ltd. (Corporate Representative)
Director of Exactitude Biotech Co., Ltd. (Corporate
Representative)
Director of Xingzhou Pharmaceutical Co., Ltd. (Corporate
Representative)
Director of Lead Investment Limited
Executive Director and general manager of Nanjing MedFirst
Healthcare Services, Inc. (Corporate Representative)
Executive Director and general manager of Shanghai MedFirst
Healthcare Services, Inc. (Corporate Representative)
Executive Director and general manager of Fujian MedFirst
Healthcare Services, Inc. (Corporate Representative)
Executive Director and general manager of Shanghai An gu
Medical Equipment Ltd. (Corporate Representative)
Executive Director and general manager of Hangzhou Angu
Medical Equipment Ltd. (Corporate Representative)
Executive Director and general manager of Beijing MedFirst
Healthcare Services, Inc. (Corporate Representative)
Wei,
Tzu-Wen
MedFirst Healthcare Services Company
LimitedStore Associate General Manager
Associate Manager & Director of MedFirst Healthcare
Services, Inc.(Corporate Representative)
Division of MedFirst Healthcare Services,
Inc.
Supervisor of Exactitude Biotech Co., Ltd. (Corporate
Representative)
Assistant Vice President of the Information
Management
Director of Xingzhou Medicine Co., Ltd. (Corporate
Representative)
Division of MedFirst Healthcare Services,
Inc.
Section head of Software Development
Center, MND
10
III CORPORATE
GOVERNANCE
Li, Hung-Hui
Associate dean of College of Management,
Yuan Ze University Director of MedFirst Healthcare Services,Inc.
Dean of Undergraduate School of
Management, Yuan Ze University Supervisor of Richgroup International Media Co., Ltd.
Chief of Management Competency
Development and Research Center, Yuan
Ze University
Chair of MBA in Leadership/Graduate
School of Management, Yuan Ze
University
Chief of Personnel Office, Yuan Ze
University
Member of remuneration committee, Far
Eastern Department Stores Co. Ltd.
Tseng,
Sheng-Cheng
Vice president of Formosa Automobile Co. Independent Director of MedFirst Healthcare Services,Inc.
Engineering Div. Nan Ya Plastics Deputy
Manager
Genral Manager of Battery Technology Depart.
United Renewable Energy Co., Ltd
Director of Ming Chi University of
Technology
Director of Zhaoyang Photoelectric Technology Co., Ltd.
(Corporate Representative)
Director of Xinneng Optoelectronics
Technology Co., Ltd. (Corporate
Representative)
Director of Shengyang Materials Co., Ltd.
(Corporate Representative)
Director of Jiangxi Shengyang Technology
Co., Ltd. (Corporate Representative)
Chairman of Zhongmei Materials Co., Ltd.
(Corporate Representative)
Director and Deputy General Manager of
Solartech Energy Corp
Director of TS Solartech SDN BHD.
(Corporate Representative)
Director of Keguan Energy Technology
Co., Ltd. (Corporate Representative)
Director of Zhongyang Photoelectric Co.,
Ltd. (Corporate Representative)
Director of Huiyang Photoelectric Co., Ltd.
(Corporate Representative)
Director of Solartech Japan Corp.
(Corporate Representative)
Yeh,
Ching-En
General director/general manager of
Practical Taxation Publisher Independent Director of MedFirst Healthcare Services,Inc.
Vice president of KPMG CPA Chairman of Taiwan Thinktank
Consultant of Zonghe United Accounting
Firm Consultant of Pan Harvest CPAs
Director of Zhongzhi Management
Consulting Co., Ltd. Supervisor of Xinhong International Development Co., Ltd.
Yang,
Shu-Ching
7th grade tax auditor, Taipei National
Taxation Administration Independent Director of MedFirst Healthcare Services,Inc.
Auditor of Taxation Agency, MOF Accountant of Crowe Horwath (TW) CPAs
Commissioner of CPA Associations
R.O.C.
Director of Aurlia Corporation
Lecturer in Accounting of
FU JEN CATHOLIC UNIVERSITY
Committee of Ministry of Finance Taxpayer Rights Protection
Advisory
Supervisor of Chinese Tax Research Association
Supervisor of Chinese Tax Agent Association
Supervisor of Taipei Tax Agent Association
11
12
III CORPORATE
GOVERNANCE
2. Major institutional shareholders:
April 20h 2019
Name of Institutional Shareholders
Major Shareholders
Lucktech Investment Limited Chen, Li-Ju (60.09%)
Tsai, Te-Chung (39.91%)
3. Major institutional shareholders of the Company who are legal representatives: not applicable
4. Whether the directors and supervisors have more than five years of work experience and
professional qualifications, and meet the following circumstances: April 20
th 2019
Criteria
Name
Meet One of the Following Professional
Qualification Requirements, with at
Least Five (5) Years Work Experience
Consistent with the situation (Note)
Number of
Other Public
Companies in
Which the
Individual is
also Serving as
an Independent Director
An Instructor
or Higher Position in a
Department of
Commerce, Law, Finance,
Accounting, or
Other
Academic
Department Related to the
Business
Needs of the Company in a
Public or
Private Junior College,
College or University
A Judge, Public
Prosecutor, Attorney, Certified
Public Accountant,
or Other Professional or
Technical Specialist
Who has Passed a
National
Examination and been Awarded a
Certificate in a
Profession that Meets the Needs of
the Business
Has Work
Experience in the Areas
of
Commerce, Law,
Finance, or
Accounting,
or Otherwise
to Meet the Needs of the
Business
1
2
3
4
5
6
7
8
9
10
Chen, Li-Ju - - - - - - - - -
Tsai, Te-Chung
- - - - - - - - - - -
Wei, Tzu-Wen
-
- - - - -
Li, Hung-Hui - - -
Tseng,
Sheng-Cheng - - - Yeh,
Ching-En - - -
Yang, Shu-Ching
- -
Note: Please check“” the corresponding boxes that apply to the directors or supervisors during the two (2) years prior to being
elected or during the term of office.
(1) Not an employee of the Company or any of its affiliates. (2) Not a director or supervisor of the Company or any of its affiliates (does not apply if the person is an independent director of
the Company or its parent company, or any subsidiary established in accordance with the Act and local laws and regulations).
(3) Not a director or supervisor of the Company or any of its affiliated companies (but not applicable in cases where the person is
an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or
indirectly, more than fifty (50) percent of the voting share).
III CORPORATE
GOVERNANCE
(4) Not a spouse or relative within the second degree of kinship, or a lineal relative within the third degree of kinship, of any
persons in the preceding three points.
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds five (5) percent or more of the total
number of outstanding shares of the Company or who holds shares ranking in the top five holdings.
(6) Not a director, supervisor, managerial officer, or shareholder holding five (5) percent or more of the shares of a specific
company or institution that has a financial or business relationship with the Company.
(7) Not a professional individual who is an owner, partner, director, supervisor, or managerial officer of a sole proprietorship,
partnership, company, or institution that provides commercial, legal, financial, accounting or consultation services to the
Company or any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the
Remuneration Committee who exercises powers pursuant to Article 7 of the Regulations Governing the Establishment and
Exercise of Powers of Remuneration Committees of Companies Whose Stock Is Listed on the Taiwan Stock Exchange
(TWSE) or Traded in the Taipei Exchange Market (TPEx)
(8) Not in a marital relationship with, or a relative within the second degree of kinship to any other director of the Company.
(9) Not a person who falls under the specifications defined in Article 30 of the Company Law.
(10) Not a governmental, juridical person or a representative of such person defined in Article 27 of the Company Law.
13
14
III CORPORATE
GOVERNANCE
(1) Details of the General Manager, Deputy General Manager, Assistant Vice Presidents, Heads of
Departments and Branches April 20th 2019
Title Nationality Name Sex Elected
Date
Shareholding
Present
shareholding of
spouse & minor children
Shares held in another’s
name
Major
Educational/
Experience Background
<Note 1>
Current
position
in this
company
and in other
company
With spouse or 2nd
degree relative who are a
superior of the
company
Stock (shares)
% Stock (shares)
% Stock (shares)
% Title
Name
Relation
General Manager
Taiwan Tsai, Te-Chung
Male 85/5/1 1,617,884 5.73%
1,792,274 6.35% - -
Marketing
and
Circulation Managemen
t Institute of
National Kaohsiung
First
University of Science
and Technology,
Master of
Business Administrati
on of Senior
Management, Fudan
University
<Note 1> No No No
Associate General
Manager
Taiwan Wei, Tzu-Wen Male 100/7/18 56,228 0.20
% 17,426 0.06% - -
Graduate
School of Information
Science,
Chung Cheng
Institute of
Technology, National
Defense
University
<Note 1> No No No
Assistant
General
Manager
Taiwan Wang, Ting-
Jui Male 88/7/2 81,649
0.29%
- - - -
Department
of
Information Managemen
t, Yuan Ze
University
<Note 1> No No No
Financial
and
Accounting
Supervisor
Taiwan Kao, Shih-
Lung Male 107/5/4 - - - - - -
National
Taipei University
(NTPU)
Master of Accounting
<Note 1> No No No
<Note 1>Major experiences, other position in the company and other companies
III CORPORATE
GOVERNANCE
April 20th 2019
Name Major Experience Current position in this company and in
other company
Tsai,
Te-Chung
Section head of Linkou Chang Gung
Memorial Hospital
General manager & Director of MedFirst Healthcare Services,
Inc.
Chairman of Taiwan Trim Co., Ltd. (Corporate Representative)
Director of Exactitude Biotech Co., Ltd. (Corporate
Representative)
Director of Lead Investment Limited
Executive Director and general manager of Nanjing
MedFirst Healthcare Services, Inc. (Corporate
Representative)
Executive Director and general manager of Shanghai
MedFirst Healthcare Services, Inc. (Corporate
Representative)
Executive Director and general manager of Fujian
MedFirst Healthcare Services, Inc. (Corporate
Representative)
Executive Director and general manager of Shanghai An
gu Medical Equipment Ltd. (Corporate Representative)
Executive Director and general manager of Hangzhou
Angu Medical Equipment Ltd. (Corporate Representative)
Executive Director and general manager of Beijing
MedFirst Healthcare Services, Inc. (Corporate
Representative)
Wei,
Tzu-Wen
Section head of Software Development
Center, MND
Director (Corporate Representative) and Deputy General
Manager of MedFirst Healthcare Services, Inc.
Assistant Vice President of the Store
Business Division of MedFirst
Healthcare Services, Inc.
Supervisor of Jingzan Bio-tech Co., Ltd. (Corporate
Representative)
Assistant Vice President of the
Commodity Marketing Division of
MedFirst Healthcare Services, Inc.
Director of Xingzhou Medicine Co., Ltd. (Corporate
Representative)
Assistant Vice President of the
Operation Management Division of
MedFirst Healthcare Services, Inc.
Assistant Vice President of the
Information Management Division of
MedFirst Healthcare Services, Inc.
Wang,
Ting-Jui
Program designer of TeamMax
Technology
Director of Exactitude Biotech Co., Ltd. (Corporate
Representative)
Assistant Vice President of MedFirst Healthcare Services,
Inc.
Chairman of Haojie Industrial Co., Ltd. (Corporate
Representative)
Kao,
Shih-Lung
Deloitte & Touche Assistant manager
of Deloitte & Touche
MedFirst Healthcare Services,Inc. Manager of MedFirst
Healthcare Services, Inc.
Assistant manager of Jinwei Industrial
(Shanghai) Co., Ltd. Supervisor of Taiwan TRIM CO.,LTD
15
III CORPORATE
GOVERNANCE
MedFirst Healthcare Services,Inc.
Section chief of MedFirst Healthcare
Services, Inc. Supervisor of Xingzhou Medical Co., Ltd.
16
III CORPORATE
GOVERNANCE
Cash
bon
us a
mo
unt
Sto
ck
bon
us a
mo
unt
Cash
bon
us a
mo
unt
Sto
ck
bon
us a
mo
unt
Chairman Chen, Li-Ju
Director
Corporate
shareholder
Lucktech Investment
Limited
Director
Corporate
shareholder
Tsai, Te-Chung
Director
Corporate
shareholder
Wei, Tzu-Wen
Director Li, Hung-Hui
Independent
DirectorTseng, Sheng-Cheng
Independent
DirectorYeh, Ching-En
Independent
DirectorYang, Shu-Ching
11.99 11.99 -1499 -- - - - 3541 3541 79 79 1499 -335 335 3.43 3.43
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
*Besides disclosure by above chart, the rewards claimed by corporate directors for services at all companies listed on financial statements (such as acting as non-employee counselor):None
Note: The distribution of profits and allocation of remuneration to the employees and directors in 2018 have been duly passed by the Company’s Board of Directors on February 26th 2019.
8087 8087
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
This company All companies
in the financial
reports
Th
is co
mp
an
y
Th
is co
mp
an
y
Director's
remuneration
(C)
professional
fees
(D)
Salary,
bonus,
extraneous
charges, etc.
(E)
Resignation
retirement
pay
(F)
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
Unit: NT$ thousand
Title Name
Remuneration of directors
Proportion of
total amount of
A, B, C and D
in profit after
tax
Relevant Remuneration Received by Employees
Proportion of total
amount of the first
seven items (A, B,
C, D, E, F and G)
in profit after tax
Co
mp
en
satio
n P
aid
to D
irecto
rs from
an
Inv
este
d C
om
pan
y O
ther
than
the C
om
pan
y’s S
ub
sidia
ry
Remuneration
(A)
Resignation
retirement
pay(B)
Employee rewards
(G)
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l
rep
orts
Th
is co
mp
an
y
III.Remuneration of Directors, Supervisors, General Manager and Deputy General Manager
1. Remuneration of Directors (including Independent Directors)
The companyAll companies in the
financial reports(I)The company
All companies in the
financial reports(J)
Under NT$2,000,000
Chen, Li-Ju, Tsai, Te-Chung,
Wei, Tzu-Wen, Li, Hung-
Hui, Yang, Shu-Ching, Tseng,
Sheng-Cheng, Yeh, Ching-En
Chen, Li-Ju、Tsai, Te-
Chung, Wei, Tzu-Wen, Li,
Hung-Hui, Yang, Shu-Ching,
Tseng, Sheng-Cheng, Yeh,
Ching-En
Li, Hung-Hui, Tseng, Sheng-
Cheng, Yeh, Ching-En,
Yang, Shu-Ching
Li, Hung-Hui, Tseng, Sheng-
Cheng, Yeh, Ching-En、
Yang, Shu-Ching
NT$2,000,000(included)~NT$5,000,00
0(excluding)- -
Chen, Li-Ju、Tsai, Te-
Chung, Wei, Tzu-Wen
Chen, Li-Ju、Tsai, Te-
Chung, Wei, Tzu-Wen
NT$5,000,000(included)~NT$10,000,0
00(excluding)- - - -
NT$10,000,000(included)~NT$15,000,
000(excluding)- - - -
NT$15,000,000(included)~NT$30,000,
000(excluding)- - - -
NT$30,000,000(included)~NT$50,000,
000(excluding)- - - -
NT$50,000,000(included)~NT$100,000
,000(excluding)- - - -
NT$100,000,000 or above - - - -
Total 7 7 7 7
Interval of remuneration paid to each
board director of the company
Names of directors
Total amount of remuneration of the first four
items(A+B+C+D)
Total amount of remuneration of the first seven items
(A+B+C+D+E+F+G)
17
III CORPORATE
GOVERNANCE
2. Remuneration of Supervisors
The Company passed the resolution to establish an Audit Committee during the Shareholders’ Meeting of
the 25th June 2014. Remuneration of Supervisors: None.
3. Remuneration of the General Manager, Deputy General Manager
Cash
bon
us a
mo
unt
Sto
ck
bon
us a
mo
unt
Cash
bon
us a
mo
unt
Sto
ck
bon
us a
mo
unt
General
ManagerTsai, Te-Chung
Associate
General
Manager
Wei, Tzu-Wen
Note 1: The distribution of profits and allocation of remuneration to the employees and directors in 2018 have been duly passed by the Company’s Board
of Directors on February 26th 2019.
1,499 0 5.37 5.37 03,143 3,143 79 79 1,344 1,344 1,499 0
All c
om
pan
ies in
the fin
an
cia
l rep
orts(N
ote
5)
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l rep
orts(N
ote
5)
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l rep
orts(N
ote
5)
Th
is co
mp
an
y
All c
om
pan
ies in
the fin
an
cia
l rep
orts(N
ote
5)
This company All companies in
the financial
reports(Note 5)
Unit: NT$ thousand
Title Name
Salary
(A)
(Note 2)
Resignation
retirement pay
(B)
Salary, bonus,
extraneous
charges, etc.(C)
(Note 3)
Employee rewards
(D)
(Note 4)
Proportion of
total amount of
A, B, C and D in
profit after
tax(%)
(Note 8)
Co
mp
en
satio
n P
aid
to D
irecto
rs from
an
Inv
este
d C
om
pan
y O
ther th
an
the
Co
mp
an
y’s S
ub
sidia
ry
(No
te 9
)
Th
is co
mp
an
y
18
III CORPORATE
GOVERNANCE
This company(Note 6)All companies in the
financial reports(Note 7)
Under NT$2,000,000
Tsai, Te-Chung, Tsai, Te-Chung,
Wei, Tzu-Wen Wei, Tzu-Wen
NT$5,000,000(included)~NT$10,000
,000(excluding)- -
NT$10,000,000(included)~NT$15,00
0,000(excluding)- -
NT$15,000,000(included)~NT$30,00
0,000(excluding)- -
NT$30,000,000(included)~NT$50,00
0,000(excluding)- -
NT$50,000,000(included)~NT$100,0
00,000(excluding)- -
NT$100,000,000 or above - -
Total 2 2
Remuneration Interval Table
Interval of remuneration paid to
each Manager of the company
Names of General Manager and Vice President
NT$2,000,000(included)~NT$5,000,
000(excluding)
19
III CORPORATE
GOVERNANCE
4. Name of the Managerial Officers who are Awarded an Employee Bonus and the Allocation of Such
Employee Bonuses: 31st December 2017; Unit: NT$ thousand
Ma
na
ge
ri
al
O
ff
ic
er
Title Name Bonus in Stock Bonus in Cash Total
Ratio of Total
Amount to Net
Income (%)
General Manager Tsai,
Te-Chung
- 1,388 1,388 1.56%
Deputy General
Manager
Wei,
Tzu-Wen
Assistant Vice
President
Wang,
Ting-Jui
Assistant Vice
President
Chen,
Meng-Hung
Assistant Vice
President
Cheng,
Chih-Yuan
Assistant Vice
President
Kao,
Shih-Lung
Note: Assistant Manager Chen, Meng-Hung resigned on May 4, 2018, and did not receive employee remuneration.
(4) Analysis of the Ratio of the Total Remuneration Paid by the Company and by All Companies Included in
the Consolidated Financial Statements for the Two (2) Most Recent Fiscal Years to the Directors,
Supervisors, General Manager and Deputy Manager of the Company to the Net Income after Tax and the
Description of the Policies, Standards, and Structure for the Payment of Remuneration, the Procedures for
Determining Remuneration, and Their Correlation with Business Performance and Exposure to Future
Risks.
1. Analysis of the ratio of the total remuneration paid for the two (2) most recent fiscal years to the
directors, supervisors, general manager and deputy manager of the Company, to the net income after tax:
Unit: NT$ thousand;%
Title
2018 2017
This company All companies in the
financial reports This company
All companies in the
financial reports
Total
remuner
ation
Proportio
n in profit
after tax
Total
remune
ration
Proportion
in profit
after tax
Total
remuner
ation
Proportio
n in profit
after tax
Total
remuner
ation
Proportion
in profit
after tax
Directors 3,876 3.43% 3,876 3.45% 3,006 3.31% 3,006 3.39%
General Manager
and
Deputy General
Manager
6,065 5.37% 6,065 5.40% 5,316 5.86% 5,316 5.99%
Total 9,941 8.80% 9,941 8.85% 8,322 9.17% 8,322 9.37%
2. The compensation policy, standards and procedures for determining compensation and the
connection with operational performance and future risks:
20
III CORPORATE
GOVERNANCE
(1) According to Article 33 of the Articles of Incorporation, when the Company enjoys an
annual profit, it shall appropriate 1%-15% as compensation to employees to be
distributed by stock or cash. The Company may appropriate profits of up to 7% as
compensation to directors upon resolution of the Board of Directors.
(2) According to the regulations of the Company, directors who attend the Board of
Directors’ meeting shall be eligible to claim travel expenses. The salary paid to the
Chairman of the Board, as well as the remuneration and other benefits awarded to the
Board of Directors shall be determined based on their degree of participation in the
Company’s business operations, the value of their contributions and the general
compensation ranges in the industry.
(3) Remuneration paid to the directors and managerial officers of the Company shall be
determined in accordance with the regulations of the Company, and are subject to the level of
contribution made to the Company, the general compensation levels in the industry, and their
positive correlation with business performance. The amount of remuneration is required to be
disclosed in the Company’s annual report by lawto minimize exposure to future risks. (4) The Company established the Remuneration Committee on 23
rd August 2012. The
remuneration of the directors and managerial officers shall be first submitted to the
Remuneration Committee for discussion prior to submission to the Shareholders’
Meeting for resolution.
21
III CORPORATE
GOVERNANCE
IV. Implementation of Corporate Governance
(1) Operations of the Board of directors
Directors and supervisors appeared as observers during the Board of Directors meeting on seven
occasions during 2018(A). The attendance of directors were as follows:
Title
Name
(Note)
Attendance in
Person (B) By Proxy
Attendance Rate (%)
(B/A)(Note)
Remark
Chairman Chen, Li-Ju 7 0 100.00% -
Director
Lucktech Investment
Limited
Representative:
Tsai, Te-Chung
7 0 100.00%
-
Director Lucktech Investment
Limited
Representative:
Wei, Tzu-Wen
7 0 100.00%
-
Director Li, Hung-Hui 7 0 100.00% -
Independent
Director Tseng, Sheng-Cheng 6 1 85.71%
(Note)
Independent
Director Yeh, Ching-En 7 0 100.00%
(Note)
Independent
Director Yang, Shu-Ching 6 1 85.71%
(Note)
Note: In total, sevem Board meetings were hold in 2018, Tseng, Cheng-Cheng, as independent
director, attended by proxy once, and Yang, Shu-Ching, as independent director, attended by proxy
once.
Other notable items:
1. If any of the following situations occurs during a meeting of the Board of Directors, the date,
period, proposal contents, all opinions of the Independent Directors, and the Company's handling
of the such opinions should be explained:
1.1 Matters listed in Item 3 of Article 14 of the Security Exchange Act.
1.2 In addition to the previous matters, other board meeting decisions objected to or reserved by
an Independent Director with a recorded or written statement.
22
III CORPORATE
GOVERNANCE
Meeting date Meeting
stage Contents of agenda
Opposite or
reserved
opinions from
independent
directors
2018/3/23
6th
Meeting of
10th
Board
1.Passed proposal of salaries and rewards for directors and
managers on the 2017 financial statemen
None
2.Passed proposal of the 2017 distribution of rewards for
staff and directors
3. Proposal for the Company's 2017 financial report and
business report.
4.Passed proposal of the 2017 distribution of corporate
surplus
5.Passed the 2017 corporate statement of internal control
system
6. Intended to pass the case of the Company's new logistics
warehouse to purchase automation system equipment.
7. Extension of line of credit for E.Sun Commercial Bank,
Ltd
8. Hua Nan Bank Credit Line Renewal and Endorsement
Guarantee provided by E.Sun Bank to the subsidiary
EXACTITUDE BIOTECH CO., LTD.
9. Extension of line of credit for HUA NAN Commercial
Bank, Ltd
10. The relevant matters of the 2018 Annual General
Meeting of Shareholders convened by the Board of
Directors.
◎Opinions from independent directors:None
◎Corporate dealings with opinions from independent
directors:None
◎Resolution result : Except for the absence of the
following personnel associated with a conflict of interest.
1. Directors with employee status (Tsai, Te-Chung, Wei,
Tzu-Wen) and attending supervisors (Chen,
Meng-Hung, Cheng, Chih-Yuan) should avoid
discussing and resolution on the distribution of
managers' remuneration.
2. President (Chen,Li-Ju) should avoid discussing and
resolution regarding his own salary and rewards.
2018/5/4
7th
Meeting of
10th
Board
1. Finance and Accounting Supervisor Transaction
None
◎Opinions from independent directors:None
◎Corporate dealings with opinions from independent
directors:None
◎Resolution result: Approved by all directors in
attendance.
2018/6/14 8th 1. The base date for the distribution of cash dividends. None
23
III CORPORATE
GOVERNANCE
Meeting of
10th
Board
2. Conversion price adjustment of the unsecured conversion
of the Company’s corporate bond for the first time in
Taiwan
◎Opinions from independent directors: None
◎Corporate dealings with opinions from independent
directors: None
◎Resolution result: Approved by all directors in
attendance.
24
III CORPORATE
GOVERNANCE
Meeting date Meeting
stage Contents of agenda
Opposite or
reserved
opinions from
independent
directors
2018/8/8
9th
Meeting of
10th
Board
1. Replacement of the Company’s Certified Public
Accountant.
None
2. Consolidated financial statement proposal of the
Company in the second quarter of 2018
3. Endorsement Guarantee provided by E.Sun Bank to the
subsidiary Baodean Co., Ltd.
◎ Opinions from independent directors: None
◎Corporate dealings with opinions from independent
directors:None
◎Resolution result: Approved by all directors in
attendance.
2018/8/27
10th
Meeting of
10th
Board
1. Selection of the manufacturer of the Company's new
logistics warehouse construction project.
None
◎Opinions from independent directors: None
◎ Corporate dealings with opinions from independent
directors: None
◎Resolution result: Approved by all directors in
attendance.
2018/11/7
11th
Meeting of
10th
Board
1. 2019 Internal Audit Plan.
None
2. Assessment of Certified Public Accountant's competence
and independence.
3. Replacement of the Company’s Certified Public
Accountant.
4. Consolidated financial statement proposal of the
Company in the third quarter of 2018
◎Opinions from independent directors:None
◎ Corporate dealing with opinions from independent
directors:None
◎Resolution result: Approved by all directors in
attendance.
2018/12/28
12th
Meeting of
10th
Board
1.Director remuneration proposal of the Company for 2019
None
2. Chairman remuneration proposal of the Company for
2019
3.Manager remuneration proposal of the Company for 2019
4. Annual operational plan of the Company 2019
5. Chang Hwa Bank loan limit proposal
6. Far Eastern International -Bank credit line contract
renewal proposal
◎Opinions from independent directors: None
◎ Corporate dealing with opinions from independent
directors:None
25
III CORPORATE
GOVERNANCE
◎ Resolution result:Except for the absence of the following
personnel associated with a conflict of interest
1. Directors with employee status (Tsai, Te-Chung, Wei,
Tzu-Wen) and attending supervisors (Cheng, Chih-Yuan,
Kao, Shih-Lung) should avoid discussing and resolution
on the distribution of directors and managers'
remuneration.
2. President (Chen,Li-Ju) should avoid discussing and
resolutions regarding his own salary and rewards.
2. To ensure that Directors' refrain from interest-related proposals, a list of the directors' names, the
contents of the proposals, the reasons for refraining, and participation in the voting shall all be
stated; if the directors involved in a proposal related to their own interests have already refrained
from the vote, refer to Item 1 above.
3. Evaluation of objectives for strengthening the Board of Directors’ functions during this year and
in recent years (such as setting up the audit committee and improving information transparency)
and their implementation conditions:
3.1 The Company established the Audit Committee on June 25, 2014 to strengthen governance
and improve the operation of the Board of Directors.
3.2 The Company formulated the “Board of Directors' Performance Self-Assessment” in 2015
to promote the function and operation efficiency of the Board of Directors
3.3 To ensure that board members effectively assume their responsibilities, a consensus shall be
reached by convening the Board of Directors. In 2018, seven board meetings were held, and
the important resolutions were disclosed on the investor area of the Company’s website to
improve the transparency of Board information.
3.4 In response to the e-voting policy, the Company’s election of directors shall generally adopt
the candidate nomination system and passed a relevant amendment to the “Rules and
Procedures of Shareholders’ Meetings” in the shareholders’ meeting on June 14, 2017
26
III CORPORATE
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(2) The Audit Committee and the Board of Directors’ Meetings
1. The state of operations of the Audit Committee:
In total, five (A) Audit Committee meetings were held in 2018. The attendance of the
independent directors was as follows:
Title Name Attendance in
Person (B) By
Proxy
Attendance Rate (%)
(B/A) Remark
Independent
Director
Tseng,
Sheng-Cheng
5 0 100.00% -
Independent
Director
Yeh, Ching-En 5 0 100.00% -
Independent
Director
Yang, Shu-Ching 4 1 80.00% -
Note: Five audit committee meetings were held in 2018, and the independent director Yang
Shuqing was entrusted to attend the Audit Committee meetings.
Other notable items:
1. If any of the following situations occurs during a meeting of the Board of Directors, the
date, period, proposal contents, all opinions of the Independent Directors, and the
Company's handling of such opinions should be explained:
1.1 Matters listed in Item 5 of Article 14 of the Security Exchange Act.
1.2 In addition to the previous matters, other board meeting decisions that were not
passed by the Audit Committee but agreed on by more than two-thirds of all
Directors.
Meeting date Meeting
stage Contents of agenda
Opposite or
reserved
opinions from
independent
directors
2018/3/23
5th
Meeting
of 2th
Board
1. passed proposal of 2017 distribution of rewards for staff
and directiors
None
2. passed corporate financial statement and business report
of 2017
3. passed proposal of 2017 sirtribution of corporate surplus
4. passed 2017 corporate statement of internal control
system
5. Intend to pass the case of the company's new logistics
warehouse to purchase automation system equipment.
◎Opinions from independent directors:None
27
III CORPORATE
GOVERNANCE
◎ Corporate dealing with opinions from independent
directors:None
◎Resolution result: Except for the avoidance of the
following relevant personnel due to interest
conflict, it was approved by other attending
members.
1.Directors with employee status (Tsai, Te-Chung, Wei,
Tzu-Wen) and attending supervisors (Chen,
Meng-Hung, Cheng, Chih-Yuan) should avoid
discussion and resolution on the distribution of
managers' remuneration.
2018/5/4
6th
Meeting
of 2th
Board
◎Consolidated financial statement proposal of the
Company in the first quarter of 2018
None
2. Finance and Accounting Supervisor transaction
◎ Opinions from independent directors:None
◎Corporate dealing with opinions from independent
directors:None
◎Resolution result: Approved by all attending members.
2018/8/8
7th
Meeting
of 2th
Board
1. Consolidated financial statement proposal of the
Company in the second quarter of 2018
None
2. Replacement of the company Certified Public
Accountant.
◎Opinions from independent directors:None
◎ Corporate dealing with opinions from independent
directors:None
◎Resolution result: Approved by all attending members.
2018/8/27
8th
Meeting
of 2th
Board
1. The selection of the manufacturer of the company's new
logistics warehouse construction project.
None ◎Opinions from independent directors:None
◎ Corporate dealing with opinions from independent
directors:None
◎Resolution result: Approved by all attending members.
2018/11/7
9th
Meeting
of 2th
Board
1. Consolidated financial statement proposal of the
Company in the third quarter of 2018
None
2. Evaluation of lawfulness and independence of Certified
Public Accountant
3. Replacement of the company Certified Public
Accountant.
◎opinions from independent directors:None
◎Corporate dealing with opinions from independent
directors:None
◎Resolution result: Approved by all attending members.
2. To implement Directors' refraining from interest-related proposals, a list of the directors'
28
III CORPORATE
GOVERNANCE
names, the contents of the proposals, the reasons for refraining, and participation in the
voting shall all be stated: if the directors involved in a proposal related to their own interests
have already refrained from the vote, refer to Item 1 above.
3. Communication condition of Independent Directors with the internal auditing supervisor
and accountant (including the major communication events of the Company’s financial and
business status, as well as the results):
3.1 The Company's internal auditing supervisors shall regularly report internal audit matters
at the Audit Committee meeting, as well as periodically discuss the internal audit
results with Independent Directors by e-mail or telephone. Each committee member
shall properly communicate with the internal audit supervisor.
3.2 The Company’s Visa Accountant attended one Audit Committee meetings in 2018 to
report the results of the audit or review of the financial statements, as well as to
communicate the matters required by the relevant laws and regulations. All committee
members shall properly communicate with the visa accountant.
(3) The operational situation of the company governance and the difference and causes of Governance
Practice Rules on listed companies and OTC companies
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
1. Has the company established
and disclosed governance
practice rules in accordance
with the “Governance Practice
Rules on Listed Companies”?
The company added the “Governance
Practice Rules” on the 15th
June 2016
and disclosed these rules on the
Market Observation Post System and
company website.
Nil.
Ⅱ.The Company’s shareholding composition and shareholders’ equity
29
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
1. Has the Company established
an internal operating procedure
to deal with shareholders’
suggestions, doubts, disputes
and litigations, and
implemented them based on
procedure?
The internal control system / financing
cycle / service operations of the
Company clearly outlined that the
Company shall establish the duties of a
spokesperson and an acting
spokesperson, and the internal stock
affairs unit shall handle shareholders’
suggestions, disputes, etc.
Nil.
2. The Company’s command of
key shareholders and overall
control of substantial
shareholding
Using the services offered by stock
agents, the Company possesses the list
of the major shareholders who control
the Company and the ultimate
controllers from among major
shareholders.
Nil.
3. The Company’s efforts to
establish a control mechanism
and firewall with affiliates:
The Company has formulated and
accordingly implemented the
Regulations Governing the Financial
and Business Operations of
Conglomerates, Specific Companies
and Related Parties, the Rules
Governing the Supervision of
Subsidiaries and Regulations
Governing the Management of Trading
with Related Parties.
Nil.
4. Has the Company established
internal rules against insider
trading of undisclosed
information?
The company has prohibited insiders
from trading securities by way of
using unpublished information as
specified in the “Rules of Prevention
of Insider Trading”.
Article 5 of the “Rules of Prevention of
Insider Trading”: directors, managers
and employees who acknowledge
material information of the company
shall not disclose any such material
information to others. In addition,
insiders are prohibited from trading
securities by way of using unpublished
information.
Nil.
Ⅲ. The composition, responsibilities and powers of the Board of Directors:
1. Has the Board developed and implemented a diversified policy for the composition of its members?
The Board of Directors of the company passed the amendment of the “Procedures for Election of Directors”, adding content specifying that the Board of Directors be more diversified. The amendment was
Nil.
30
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
discussed and approved during the Shareholders’ Meeting of the 29
th
June 2015. The execution status of the provision
to diversify the Board of Directors of the 10
th Board Meeting in 2017
Name Sex Professional
background
Chen, Li-Ju Female
Industry
knowledge,
Management
Tsai,
Te-Chung Male
Leadership
Decision,
Management
Wei, Tzu-Wen Male Electronic
Resources
Li, Hung-Hui Male
Leadership
Decision,
Management
Tseng,
Sheng-Cheng Male
Industry
knowledge,
Leadership
Decision,
Management
Yeh,
Ching-En Male
Finance,
Accounting
Yang,
Shu-Ching Female
Finance
Accounting, Legal
2. Has the company voluntarily established other functional committees in addition to the Remuneration Committee and the Audit Committee?
The Company has established a
Remuneration Committee as required
by law, and has also voluntarily
established an Audit Committee. Each
department shall be responsible for the
rest of the Company’s corporate
governance according to their scope of
duty. However, committees for other
purposes have yet to be established,
whereby the need to establish such
committees shall be evaluated in
future.
Nil.
31
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
3. Has the company established a standard to measure the performance of the Board of Directors, and implemented it on a yearly basis?
The company passed the establishment
of the “Procedures for Evaluation of
the Board of Directors” on the 14th
May 2015. Each director shall fill in
the “Self-Evaluation Questionnaire for
the Evaluation of the Board of
Directors”, and the “Peer-Evaluation
Questionnaire of Board Members” at
the beginning of each year, and the
department responsible for the Board
Meeting shall evaluate the performance
of Board in first half of the year in
accordance with relevant laws with the
participation of business operations.
The performance evaluation of the
Board, the board member evaluation
and the evaluation results of the
responsible department were all
satisfactory without any abnormalities
or issues for concern in 2018. The
evaluation results were reported to the
Board of Directors on the 26th
February 2019.
Nil.
4. Has the Company regularly evaluated the independence of the CPAs?
The Company shall regularly evaluate
the legality and independence of the
visa accountant every year, and the
shareholding unit shall carry out
evaluation pursuant to the "Visa
Accountant Competency Evaluation
Form". The evaluation includes the
following items:
1. Legality: Accountant qualification,
practice registration, legality of
accountant association, visa
qualifications, etc.
2. Independence: Whether he/she
carries out the business of interest,
receive compensation outside the
rules, accept improper business,
disclose business secrets, or has an
interest-sharing relationship
between himself/herself or spouse
and the client.
Nil.
32
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
The evaluation results confirmed that
the accountants appointed by the
Company met the legality and
independence requirements, and the
Board of Directors passed the “Visa
Accountant Competency and
Independence Evaluation Case” on
November 7, 2018.
Ⅳ. Has the listed company
established a full-time or
part-time department or
personnel responsible for
matters related to corporate
governance (including but
not limited to providing
information required by the
directors and supervisors to
execute business operations
and manage matters related
to the Board and
Shareholders’ Meeting in
accordance with relevant
laws, company registration
and recognition of changes,
and preparing the meeting
minutes of Board and
Shareholders’ Meetings)?
Manager Kao, Shih-Lung is
responsible for the Company’s matters
related to corporate governance,
planning the Board of Directors and
Shareholders’ Meetings, and having
relevant qualifications as an
accountant, whose business content
includes to the following:
1. Planning Board of Directors, Audit
Committee, and Shareholders’
Meetings.
2. Provide documents related to
proposals of Board of Directors,
Audit Committee, and Shareholders’
Meetings.
3. For the contents of the various
proposals of the Board of Directors
in 2018, refer to the “Operation
Status of the Board of Directors” in
this annual report.
4. For the contents of the proposals of
the Audit Committee in 2018, refer
to the “Operation Status of the Audit
Committee” in this annual report.
5. For the contents of the various
proposals of the Remuneration
Committee in 2018, refer to the
“Operation Status of the
Remuneration Committee” in this
annual report.
Nil.
33
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
Ⅴ. Has the company established
a communication channel with
interested parties (including,
but not limited to
shareholders, employees,
customers and suppliers, etc.)
and built areas on the
company website for
interested parties and properly
responded to issues regarding
important corporate social
responsibilities concerning
interested parties?
The company has established areas
on our official website
www.medfirst.com.tw for interested
parties to fully disclose issues
concerning interested parties as
communication channels.
The company has an employee
complaint box and hotline providing
employees with a communication
channel for responses.
There are personnel dedicated to
handling all above-mentioned
channels and responding to issues that
are considered important corporate
social responsibilities.
Nil.
Ⅵ. Is there professional stock
affairs agency appointed by
the company for handling
affairs in relation to
Shareholders’ Meetings?
The company has appointed the Stock
Affairs Agency of Fubon Securities Co.
to handle affairs in relation to
Shareholders’ Meetings and other stock
affair services.
Nil.
Ⅶ.Full disclosure of information:
1. The Company uses its website
to fully disclose information
regarding the Company’s
financial and business
standing as well as for
information management.
The investors’ area of our website
www.medfirst.com.tw has financial,
business and corporate
governance-related information.
Nil.
2. Other methods adopted by the
Company to disclose
information (e.g., translation
of websites into English,
appointment of designated
personnel to collect and
disclose information regarding
the Company, processing
commercial presentations, and
appointment of a
spokesperson system, etc.)
The company has established its
official website in both Chinese and
English. Meanwhile, there are
personnel dedicated to handling
information collection and disclosure
as well as regularly updating the
investors’ areas of the website.
The company has appointment
director Chen, Meng-Hung to serve
as spokesperson, director Wang,
Ting-Jui as deputy spokesperson to
speak on behalf of the company and
ensure that information is disclosed
in a timely and correct manner.
The company will have a presentation
and video with information regarding
Nil.
34
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
the Corporate Conference and will
post it on the investors’ zone of the
official website.
Ⅷ. Is there any other important
information for providing a
better understanding of the
Company’s corporate
governance practices
(including, but not limited
to, employees’ rights,
employees’ welfare, investor
relations, supplier relations,
stakeholders’ rights,
directors’ and supervisors’
training records, the
implementation of risk
management policies and
risk evaluation measures,
the implementation of
customer-relations policies,
and purchasing insurance for
directors and supervisors)?
ˇ (1) Employees’ rights:
The Company pays serious attention
to employees’ rights and has
established a working environment
that emphasizes gender equality. The
Company’s Employee Welfare
Committee organizes and coordinates
various welfare matters, and allocates
pension funds in accordance with
relevant laws.
(2) Employees’ welfare:
The Company regularly provides
medical examinations, and
encourages self-development of its
employees through its education and
training system. The Company’s
Labor Management Committee
enables employees to directly express
their opinions and ensures substantial
communication, and has also
established the employee hotline:
885@medfirst.com.tw to provide
employees with the assistance they
require.
(3) Investor relations:
The Company carries out annual
Shareholders’ Meetings in
accordance with the Company Act
and relevant laws, and provides
shareholders with the opportunity to
raise questions and make motions. To
ensure adequate understanding,
participation and decision-making of
the shareholders regarding the
Company’s major agendas, the
Company has disclosed sufficient and
relevant information on the MOPS
and the Company’s official website,
and has established spokesperson and
acting spokesperson positions as well
as hired designated personnel to
manage shareholders’ suggestions,
Nil.
35
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
doubts and disputes.
(4) Supplier relations:
The Company follows its internal
control system and code of ethical
conduct, emphasizes the
reasonableness of purchasing prices
and aims to establish good working
relationships with suppliers.
(5) Stakeholders’ rights:
The Company maintains good
communications with banks,
employees, consumers and suppliers,
and has established the spokesperson
system and customer hotline to
respect and protect the legal rights of
all stakeholders.
(6) Training of directors and
Servisors: The company had arranged for
directors to attend training courses in
accordance with the “Direction for
the Implementation of Continuing
Education for Directors and
Supervisors of TWSE Listed and
TPEx Listed Companies”. The time
requirement of the training courses
were met in 2018. Shareholders Course Name Hours
Chen, Li-Ju 1.Important
agreements before
M&A and keys to
success after M&A,
M&A practice, and
case analysis
2. Discussion on the
Strategy of
Rewarding
Employees and the
Application of Tools
6
Tsai,
Te-Chung
1.Eastern Leader
Lecture - How to
Realize Values
2. Oriental
Leadership Lecture -
The Role and
Function of
Company
Governance in the
Capital Market
3. Oriental
14
36
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
Leadership Lecture -
Corporate
Everlasting
4. Oriental
Leadership Lecture -
Xinnanshan's
Successful
Transformation
Experience
5. Discussion on the
Issues of Human
Resources and M&A
Integration in the
Process of Enterprise
M&A
6. Discussion on the
Strategy of
Rewarding
Employees and the
Application of Tools
Wei,
Tzu-Wen
1. Discussion on the
Issues of Human
Resources and M&A
Integration in the
Process of Enterprise
M&A
2. Discussion on the
Strategy of
Rewarding
Employees and the
Application of Tools
6
Li, Hung-Hui 1. Discussion on the
legal issues of instant
messaging
2. The way for
directors to lead the
Corporate in the
rapid change of
technology
6
Tseng,
Cheng-Cheng
1 Discussion on the
Issues of Human
Resources and M&A
Integration in the
Process of Enterprise
M&A
2. Discussion on the
Strategy of
Rewarding
Employees and the
Application of Tools
6
Yeh, Ching-En 1. Discussion on the
Issues of Human
Resources and M&A
Integration in the
Process of Enterprise
M&A
2. Discussion on the
Strategy of
Rewarding
Employees and the
6
37
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
Application of Tools
Yang,
Shu-Ching
1. Discussion on the
Issues of Human
Resources and M&A
Integration in the
Process of Enterprise
M&A
2. Discussion on the
Strategy of
Rewarding
Employees and the
Application of Tools
6
Implementation of risk management
policies and risk evaluation measures
Major proposals related to the
Company’s major business policies,
investments, endorsements and
guarantees, fund loans and bank
financing are evaluated and analyzed
by the responsible departments, and are
implemented in accordance with the
resolutions by the Board of Directors.
The Company’s Audit Office
formulates and executes the audit plan
for a given fiscal year in accordance
with risk outcomes to implement the
required monitoring mechanisms and
control the execution of various risk
management efforts.
(8)Implementation of customer
relationship policies The Company provides 0800
customer service hotline and
mailboxes where the Company
directly communicates with
customers and handles complaints,
problems and feedback, as well as
reviews and improves on such
matters in the Company’s internal
meetings.
(9) Purchase of insurance for directors
and supervisors The Company has been purchasing
insurance for directors and
supervisors from 2015 onwards.
Ⅸ. Please explain the improvement of conditions, and matters and measures to be reinforced as a priority
according to the corporate governance evaluation results published by the Corporate Governance Center of the
38
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note1) Difference and
Causes of
Governance Practice
Rules on Listed
Companies Yes No Summary
Taiwan Stock Exchange Corporation. (a company not subject to evaluation is exempt)
(I) The improved situation of the fifth corporate governance evaluation:
1. On November 7, 2018, the Board of Directors assessed the independence of Certified Public
Accountant and disclosed the assessment procedures in detail in the annual report.
2. The resolution results of the audit committee on major resolutions and the company's handling
of the opinions of the audit committee are disclosed in the annual report.
3. The opinions of the Company’s independent directors on the major resolutions of the Board of
Directors and the Company's handling of such opinions shall be disclosed in the Annual
Report.※
(II) Priority improvement items and measures for 2019:
1. Internal auditors shall obtain such professional certificates as those for international internal
auditors, international computer auditors, or certified public accountants.
2. Plan ahead for the relevant matters for next year’s shareholders' meeting The shareholders'
meeting is expected to be held before the end of May next year.
3. Set up a functional committee other than statutory.
39
III CORPORATE
GOVERNANCE
(4) Composition, Responsibilities and Operations of the Company’s Remuneration Committee
1. Information on the Remuneration Committee Members
Note1: Please fill in director, independent director or other in status.
Note 2: Put a tick in the appropriate box following the descriptions below of any members who met
the following conditions two years prior to their appointment and during their terms of office:
(1) Not an employee of the company or an employee of an associated party of the company.
(2) Are not directors or supervisors of the company or its affiliated companies. However, an
exception will be made if they are independent directors established in accordance with
the Act or laws of local countries of the company, its parent company and subsidiaries.
(3) Not a natural person shareholder of a company where the person, their spouse or children
hold more than 1% of the outstanding shares, or among the top 10 shareholders or holding
such shares under the title of a third party.
(4) Not a spouse of a relative at the 2nd degree of kinship as stated in the Civil Code, or the
next of kin within the 5th degree of kinship as stated in the Civil Code to any of the
parties mentioned in the previous 3 points.
(5) Not a director, supervisor, employee of a judicial person shareholder holding directly up
to 5% of the total shares connected with Les Enphants or a shareholder holding up to 5%
of the total issued shares.
(6) Not a director, supervisor or manager of a specific corporation or organization in the field
of finance or in a business connected with Les Enphants or a shareholder holding up to
5% of the total issued shares.
(7) Not a professional, sole proprietor, partner, corporation or organization rendering financial,
business or legal services, as a consultant to Les Enphants, or as a proprietor, partner,
director (trustee), manager or spouse thereof.
Title
(Note1)
Condition
Name
Hands-on experience for a minimum of five
years?
Compliance with
independence
(Note2) Number of
companies
where the
person also
acts as an
independent
director
Remarks
文
完
At least a lecturer
from a private or
public college or
university in the
discipline of business,
law, finance,
accounting
or another subject
required by the
Company
Passed the public
examination and
licensed in a special
profession such as a
judge, public
prosecutor, attorney,
accountant or
otherwise as required
by the Company
Required
experience
In business,
law, finance,
accounting
or otherwise
as required
by the
Company
1 2 3 4 5 6 7 8
Independent
director
Tseng,
Sheng-Chen
g
- - 0 -
Independent
director
Yeh,
Ching-En - - 0 -
Independent
director
Yang,
Shu-Ching 0 -
40
III CORPORATE
GOVERNANCE
(8) Do not fall under any circumstance stipulated in Article 30 of the Company Law.
Note 3: Please explain if the director or supervisor is satisfactory pursuant to Paragraph 5 of Article 6
of the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration
Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the
Counter”.
2. Status of the Remuneration Committee
(1) There are 3 members in the Remuneration Committee.
(2) The tenure of office of the members is from the 14th June 2017 to the 13th June 2020. The
Remuneration Committee convened 2 meetings (A) in the previous year (2018). The
qualification and attendance of members are as follows:
Title Name Attendance in
Person (B) By Proxy
Attendance Rate (%)
(B/A) Remark
Convener Tseng, Sheng-Cheng 2 0 100% - Committee
Member Yeh, Ching-En 2 0 100% -
Committee
Member Yang, Shu-Ching 2 0 100% -
Other notable items:
1.If the Board of Directors declines to adopt or modifies a recommendation of the Remuneration
Committee, it should specify the date of the meeting, the session, the content of the motion, the
resolution adopted by the Board of Directors, and the Company’s response to the Remuneration
Committee’s opinion
Meeting date Meeting stage Contents of agenda
Opposite or
reserved
opinions
from
independent
directors
2018/3/23 3th Meeting of
3th Board
1. Salary and remuneration of directors and
managers in the 2017 annual financial
statements
NA
opinions from independent directors:None
◎Corporate dealing with opinions from
independent directors:None
◎Resolution result: Except for the avoidance of
the following relevant personnel due to interest
conflict, it was approved by other attending
members.
1. The Director (Tsai, Te-Chung, Cheng,
Chih-Yuan) should avoid discussion and
resolution on distribution of remuneration for
managing emplovees
2018/12/28 4th Meeting of
3th Board
1. The company's 2019 annual director
remuneration proposal. NA
2. The company's 2019 annual chairman's
41
III CORPORATE
GOVERNANCE
remuneration proposal.
3. The company's 2019 annual manager
remuneration proposal.
◎ Opinions from independent directors:None
◎Corporate dealing with opinions from
independent directors:None
◎Resolution result: Except for the avoidance of
the following relevant personnel
due to interest conflict, it was
approved by other attending
members.
1. The Director (Chen, Li-Ju, Tsai, Te-Chung,
Cheng, Chih-Yuan)should avoid discussion and
resolution on distribution of remuneration for
managing emplovees
2. To implement Directors' refraining from interest-related proposals, a list of the directors' names,
the contents of the proposals, the reasons for refraining, and participation in the voting shall all be
stated: if the directors involved in a proposal related to their own interests have already refrained
from the vote, refer to Item 1 above.
3. Responsibilities of the Remuneration Committee
(1) The Remuneration Committee shall exercise good duty of care as an administrator in
faithfully executing its official powers as listed below, and shall submit recommendations for
deliberation to and by the Board of Directors:
(A) Formulate and regularly review the performance review and remuneration policy, and
the system, standards and structure for directors, supervisors and managerial officers.
(B) Periodically evaluate and create details of the individual remuneration of directors,
supervisors and managerial officers.
(2) When executing the official powers stated in the preceding paragraph, the Remuneration
Committee shall follow the principles listed below:
(A) The Remuneration Committee shall ensure that the Company’s remuneration
arrangements comply with relevant laws to allow the Company to attract talented
personnel.
(B) With regards to the performance assessment and remuneration of directors, supervisors
and managerial officers of the Company, the Remuneration Committee shall refer to
the general salary ranges and levels in the industry and take into consideration the
reasonableness of the correlation between remuneration and individual performance, as
well as the Company’s business performance and exposure to future risks.
(C) The Remuneration Committee shall not produce an incentive for the directors or
managerial officers to engage in activities to increase their remuneration that it exceeds
the risk threshold of the Company.
(D) The Remuneration Committee shall take into consideration the characteristics of the
industry and the nature of the Company’s operations when determining the ratio of
bonus payout based on short-term performance of directors and senior management as
well as the time of payout and changes to remuneration.
42
III CORPORATE
GOVERNANCE
(E) The Remuneration Committee members shall not participate in the discussion of and
voting for individual employee’s remuneration.
(3) “Remuneration” as used in the preceding two paragraphs refers to cash compensation, stock
options, stock bonus, retirement benefits or severance pay, allowances or stipends of any
description, and other substantive incentive measures. Its scope shall be consistent with that
of the remuneration paid to directors, supervisors and managerial officers in accordance with
the Regulations Governing Information to be published in Annual Reports of Public
Companies.
(4) When deliberating the recommendations from the Remuneration Committee, the Board of
Directors shall give comprehensive consideration to matters including the amount of
remuneration, the payment method and the Company’s exposure to future risk.
(5) Should the Board of Directors decline to adopt, or modify, a recommendation of the
Remuneration Committee , the Remuneration Committee shall require the consent of a
majority of the directors in attendance at a meeting attended by two-thirds or more of the
entire board, during which the resolution shall include comprehensive consideration under
the preceding paragraph and shall specifically explain if the remuneration in question
exceeds the recommendation of the Remuneration Committee in any way.
(6) If the remuneration passed by the Board of Directors exceeds the recommendation of the
Remuneration Committee , the circumstances and cause for the declination or modification
shall be specified in the Board of Directors’ meeting minutes, and shall be publicly
announced and reported on the website designated by the competent authority within two (2)
days of the date of passing the resolution by the Board of Directors.
(7) If decision-making and handling of any matter relating to the remuneration of directors and
managerial officers of the Company’s subsidiary is delegated to the Company’s subsidiary
but requires ratification by the Board of Directors of the Company, the Company's
Remuneration Committee shall be asked to make recommendations before the matter is
submitted to the Board of Directors for deliberation.
(5) Corporate Social Responsibility:
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
Ⅰ.Implementation of Corporate Governance
1. Has the Company declared its
corporate social responsibility
policy and examined the results
following implementation?
ˇ The Company has established the
Corporate Social Responsibility Best
Practice Principles. The Company
shall fulfill its corporate social
responsibility in the course of
business operations to meet the
international trend of balancing
business development with
environmental concerns, social
Nil.
43
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
responsibility and corporate
governance.
2. Does the Company provide
educational training on
corporate social responsibility
on a regular basis?
The Company regularly and
sporadically explains the activities
and direction of corporate social
responsibility practices in various
meetings (e.g. operations meetings,
store manager monthly meetings,
and labor management meetings).
Nil.
3. Has the Company established
exclusively (or concurrently)
dedicated first-line managers
authorized by the Board of
Directors to be in charge of
proposing corporate social
responsibility policies and
reporting such policies to the
Board of Directors?
The general manager office of the
company is overall department
responsible for proposing these
policies. The general manager leads
officers from all departments to
propose the annual plan for
corporate social responsibility. The
annual plan includes:
1. Expanding upon the use of green
building materials (engineer
dept.)
2. Improving the quality of indoor
air (engineer dept.)
3. Introducing energy saving
equipment and electronic
countersign system (MIS)
4. Continuous charity donation
(general manager office)
5. Organizing 10 charity activities
(business division)
The report on the implementation
of corporate social
responsibilities (carrying out
corporate governance,
sustainable environmental
development, public welfare
maintenance, information
Nil.
44
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
disclosure reinforcement) was
submitted to the Board of
Directors on the 14th August
2017.
The implementation status is as
follows:
1. Carrying out corporate
governance:
- The company actively complies
with the corporate governance
evaluation promoted by the
Financial Supervisory
Commission. The ranking of
company in the 3rd
evaluation
result was in the top 5%.
2. Sustainable environmental
development:
- The Company uses energy saving
lightbulbs
- The Company recycles racks and
counters
- The Company has introduced an
electronic countersign system
- The Company accepts goods
delivered using a tablet and takes
inventories using machines
- The Company uses low-pollution
electronic pallet trucks and lifts
- The Company places needles,
and waste batteries in appropriate
recycling bins.
3. Maintain public welfare:
- The Company provides a good
working environment
- The Company keeps employees
in a good physical and
psychological health and safety
work environment
- The Company provides rich
45
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
employee welfares and clear
promotion channels
- The Company provides complete
and professional customer
services
- The Company regularly
organizes charity activities, and
provides low-income scholarship
4. Reinforce information
disclosure:
- The Company discloses company
information in the annual report,
MOPS and investors’ zone of the
Company website
The Company simultaneously posts
material information in English and
established the investors’ zone in
English on the website in 2016
4. Has the Company declared a
reasonable salary remuneration
policy, and integrates the
employee performance appraisal
system into the corporate social
responsibility policy, as well as
established an effective reward
and disciplinary system?
The Company has stipulated staff
rules and remuneration policies,
performance incentives, and reward
& penalty standards in order to share
the Company’s profits and allow our
colleagues' salary to grow together
with company operations. In the
second case of the discussion item
of the 13th meeting of the 10th
Board of Directors, Article 33 of
these Articles of Incorporation
stipulates that “If the Company
makes a profit in a year, it should
draw 1% to 15% for the
remuneration of employees”; the
resolution was passed to grant 4% of
the pre-tax net profit, for a total of
NT$6,223,476 for employee
remuneration, in accordance with
the performance assessment system
and corporate social responsibility
Nil.
46
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
policy.
II. Developing a sustainable environment
1. Does the Company endeavor to
more efficiently use all resources
and renewable materials that
have lower impact on the
environment?
To go paperless and enhance
operational efficiency, the Company
has continuously promoted the use
of electronic platforms among
suppliers to make orders and
payments, stock check machines and
tablets for incoming stock
inspections and acceptance,
electronic forms for document
exchange between departments,
electronic receipts at retail stores
nationwide, and reuses recycled
counter shelves in the event retail
stores close down.
Nil.
2. Has the Company established
proper environmental
management systems based on
the characteristics of the industry
in which it is involved?
The Company serves as a medical
devices and supplies distributor and
does not have its own manufacturing
process, hence it does not produce
waste such as waste water or gas
emissions from a production plant,
etc. The Company’s retail stores
have recycling bins to make
recycling more convenient and so
the Company’s environmental
protection efforts have been
positive.
Nil.
3. Does the Company monitor the
impact of climate change on its
operations and conduct
greenhouse gas inspections, as
well as establish company
strategies for energy
conservation and carbon
reduction?
Retail Stores:
1. Timer devices are used in retail
stores to save energy and
automatically adjust the
temperature of air conditioners
and electric fans are also used to
save energy.
2. Products with environmental
protection and energy saving
labels, such as T5 and LED
lightbulbs and light fixtures,
inverter air-conditioners and air
doors are used in new retail
Nil.
47
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
stores.
Warehouse:
1. A thermostatic storage area is
installed with an automatic
rotating door. Roof and walls of
normal temperature areas are
installed with ventilation
equipment where drum fans and
exhausts fans are installed to
allow convection flow to create a
naturally-ventilated environment
to help reduce the power
consumption of air-conditioners
and electric fans.
2. The dormitory shower water
heater uses solar energy
technology to save more energy
and reduce the carbon footprint.
3. Electric forklifts and pallet trucks
are used to prevent pollution
from gas-powered machines.
Maintenance is regularly carried
out on batteries to maintain
charging efficiency and prevent
power loss.
4. Statistics on the total carbon
emissions of the whole store in
the past two years:
Year
Total
carbon
emission
Total
store
quantity
Total store
evaluation
quantity
Average
carbon
emissio
n (tons/
pyeong)
2017 5,017 230 5,991 0.84
2018 4,446 240 5,611 0.79
The Company belongs to the
channel retail industry, and uses
only electricity and tap water, with
no emissions of greenhouse gases
48
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
or waste. The Company's energy
saving and carbon reduction target
is to reduce carbon emissions per
ping of the store by 5% per year.
In 2018, the total carbon emissions
of the Whole Retail Store was
4,446 metric tons. The carbon
emissions calculated by the
average number of pings were
0.79 (metric tons per ping), which
was 5.9% lower than that of 0.84
(metric tons per ping) in 2017.
Therefore, the Company’s energy
saving and carbon reduction target
was reached in 2018.
Ⅲ. Maintaining Social Public Welfare
1. Has the Company created
appropriate management policies
and procedures in accordance
with relevant regulations and the
International Bill of Human
Rights?
The Company abides by relevant
labor laws and international human
rights conventions and has
formulated the “Corporate Social
Responsibility Best Practice
Principles”. These principles are
disclosed on the Company's website
and public information observation
stations, and the Company thus
fulfills its responsibilities for
protecting human rights, such as no
restrictions on gender, race, marital
status, age, height, or weight of the
recruitment target, but instead pays
attention to employment
opportunities for the physically and
mentally handicapped and other
disadvantaged groups, while also
developing complete systems for
appointments, compensation,
training, assessment, promotion, and
welfare in order to protect the
Nil.
49
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
legitimate rights and interests of
employees. Every quarter, a labor
meeting is held to maintain the
two-way communication with
employees.
2. Has the Company established an
employee hotline or grievance
procedure to handle complaints
to help reach an appropriate
solutions?
The Company has established the
Regulations Governing the
Management of Grievances and
Whistleblowing. The Company has
also provided a hotline number,
e-mail address and other channels
for reporting grievances and
whistleblowing, and uses these
procedures to handle matters
accordingly.
Nil.
3. Has the Company provided a
healthy and safe work
environment and does it organize
training on health and safety for
its employees on a regular basis?
1. As the distribution warehouse
uses lifts, pallet trucks, and air
pressure the area can become a
hazardous place so the
distribution warehouse has a fire
inspection and checks equipment
on a weekly basis to ensure the
work environment is safe for all
employees.
2. The business scope of the
company covers retail sale and
mall stores. To ensure safety in
the workplace and implement
disease control, procedures are
followed on a monthly basis to
improve fire prevention
knowledge and the emergency
response of employees.
Meanwhile, pest control
operations are conducted
regularly to provide a good work
environment.
3. Fire equipment checks and fire
drills are carried out on a
Nil.
50
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
semi-annual basis.
4. Health checks for employees are
organized on an annual basis.
5. Fire insurance and public
liability insurance are purchases
for all retail stores and shopping
malls in accordance with the
relevant laws.
6. Door access control, and fire and
carbon dioxide alarms are
installed to provide employees
with a safe and secure work
environment.
4. Has the Company set up a
communication channel with
employees, as well as reasonably
inform employees of any
significant changes in operations
that may have an impact on
them?
The Company regularly or
sporadically discloses information
during store manager monthly
meetings, meetings held within each
department, operations meetings,
labor management meetings,
employee welfare committee
meetings, elite meetings and others
using the Company’s daily real-time
information system as an effective
communication channel to distribute
the Company’s operations policies.
Nil.
5. Has the Company provided its
employees with a plan for their
career development and training
sessions?
The Company provides complete
education and training courses, such
as induction education and training
for new hires, store management
associate training, and store
manager/team leader training and so
on, and conducts on-the-job training
at the Company’s head office/retail
stores, trains employees so they can
develop their professional skills and
provides a high-quality service so
employees are able to acquire new
knowledge, thus ensuring they can
Nil.
51
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
provide high-quality service while
ensuring their own
self-development.
6. Has the Company established
any consumer protection
mechanisms and appeal
procedures regarding research
development, purchasing,
production, operations and
service provision?
The Company has established the
membership management system.
Policies regarding consumer rights
and adherence to guidelines on
personal data protection have been
clearly stated in the membership
application form, and by giving
consent on this form it complies
with the requirements of relevant
laws. Information regarding
promotional activities and customer
service (e.g. rental from location A
but return to location B, purchase
from location A but return to
location B) is also published in
stores, on the official website and
DM, etc. For any customer disputes,
customers may a file complaint
through the customer service hotline
(0800-028-328) or our website.
The relevant internal control system
and regulations for reward and
punishment concerning customer
service have also been established.
Nil.
7. Does the Company advertise and
label its goods and services
according to relevant regulations
and international standards?
The Company carries out product
and service marketing and labeling
in accordance with relevant laws,
and has established a related internal
control system to carry out
necessary controls.
Nil.
8. Has the Company evaluated
records of suppliers’ impact on
the environment and society
before entering into business
partnerships?
The Company pays serious attention
to environmental and social
protection and selects companies
that comply with the ethical
standards of the Company. As of
Nil.
52
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
2016, the Company evaluates the
effect of original equipment
manufacturers (OEMs), with which
the Company has recently
established a new cooperation, on
environmental and social protection,
and shall organize sporadic visits to
these companies to assess their
competence.
9. Do the contracts between the
Company and its major suppliers
include termination clauses
which enter into legal force
should the suppliers breach the
corporate social responsibility
policy and cause significant
impact on the environment and
society?
The company has been requesting
associate suppliers to sign
provisions of corporate social
responsibilities as of 2016. The
company has notified the associate
suppliers via email and reinforced
these controls as well as requested
improvement from those suppliers
whose standards have been lacking.
In the event a supplier violates the
corporate social responsibilities
policies the result of which was a
material impact to the environment
and society, correction of the
violation must be made according to
the contract. Business cooperation is
terminated in severe cases.
Nil.
Ⅳ. Enhancing the Disclosure of Information
1. Does the company disclose
relevant and reliable information
regarding its corporate social
responsibility on its website and
the Market Observation Post
System (MOPS)?
An investor’s area has been
established on the Company’s
official website, and information is
disclosed there regarding the
Company’s corporate social
responsibility as required by law,
such as the Company’s Corporate
Social Responsibility Best Practice
Principles and the status of its
implementation.
Nil.
53
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status(Note) Difference and
Causes of
Corporate Social
Responsibility Yes No Summary(Note)
Ⅴ. If the company has established “practice rules of corporate social responsibilities of listed
companies”, please describe the differences between operations and established rules practiced:
the necessary details have been provided in the table above.
Ⅵ. Other important information to facilitate a better understanding of the Company’s corporate social
responsibility practices:
(1)Environmental Protection:
1. The Company serves as a distributor of medical and healthcare products and does not have
its own manufacturing process, therefore it does not produce waste from a manufacturing
plant. Although the Company has yet to participate in the ISO14001 environmental
management system certification, the Company has obtained the ISO9001 product quality
management system certification.
2. Since 2016, the Company has organized field visits and evaluation on newly-added OEMs
with regards to their implementation of corporate social responsibility so that the Company
can verify the effect of these manufacturers on the environment and society.
(2) Social Participation, Social Contributions, Social Services and Social Welfare:
1. Health Lecture:
The Company holds one or two lectures per month in each store. A total of 18 lectures were
held in 2018. The topics of the lectures are as follows:
(1) Selection of suitable assistive devices
(2) Mom classroom
(3) Professional protective gear lecture
(4) Diabetes diet lecture
(5) Long-term care subsidy lecture
2. Health checks:
The Company and its suppliers collaborated to organize health check activities (e.g. bone
assessments) at various retail stores. A total of 57 events of this nature were held.
3. Care in a hundred communities:
The company has been organizing [neighborhood care, FirstMed around you] activities since
2015, with a total of 146 events held in 2018. The company has taken roots in communities
of all counties and cities, providing care to patients in communities, supporting tools, tests
and health education services.
4. Public welfare:
Positively participate in a variety of activities sponsored by public benefit groups and assist
in exposing the public benefits of DM.
5. Poverty Scholarship:
Poverty Scholarship is established perennially, to help the poverty student receiving the
equal education.
(3) Consumer rights: The company has a 24-hour customer service hotline and special message on our
website. The general manager office is responsible for handling customer complaints.
Ⅶ. A clear statement shall be made below if the corporate social responsibility reports were verified
by external certification institutions: None
54
III CORPORATE
GOVERNANCE
(6) Ethical Corporate Management and Its Implementation
Descriptions
Implementation Status (Note) Difference and
Causes of Ethical
Corporate
Management Yes No Summary
Ⅰ. Establishing Ethical Corporate Management Policies and Solutions
1. Has the Company declared its
ethical corporate management
policies and procedures in its
guidelines and external documents,
as well as received support from the
Board to implement such policies?
The Company has established the
Ethical Corporate Management
Best Practice Principles, which
clearly describe the Company’s
ethical corporate management
policies, practice and
commitment, and can be found on
the Company’s official website
and MOPS.
Nil.
2. Has the Company established
policies to prevent unethical
conduct with clear statements
regarding relevant procedures,
guidelines of conduct, punishment
for violation, process of appeal, and
the commitment to implement these
policies?
The Company’s Ethical Corporate
Management Best Practice
Principles clearly state various
prohibited unethical behavior, the
procedure for whistle-blowing
and the disciplinary system,
which are implemented in the
operations of each department.
Nil.
3. Has the Company established
appropriate precautions against
highly-potential unethical conduct
or listed activities stated in Article
2, Paragraph 7 of the Ethical
Corporate Management
Best-Practice Principles for
TWSE/TPEx Listed Companies?
To carry out business operations
in good faith, the Company has
established an effective
accounting system and internal
control system. Internal auditing
personnel periodically review
compliance of the preceding
systems. No violation was found
in 2018.
Nil.
Ⅱ. Implementing Ethical Corporate Management
1. Has the Company assessed the
ethical record of its business
partners and included ethics-related
clauses in business contracts?
Supply contracts signed by the
Company and its suppliers clearly
state that both parties shall
comply with the principles of
ethical corporate management.
Should these principles be
violated, the violating party shall
be liable for such actions.
Nil.
55
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status (Note) Difference and
Causes of Ethical
Corporate
Management Yes No Summary
2. Has the company organized a
ull-time (or part-time) department
delegates by the Board to promote
ethical management and to
regularly report the status of its
implementation to the Board?
The general manager office is the
department responsible for
promoting ethical management.
It reports the status of its
implementation to the Board on a
yearly basis. The content of the
report to the Board on the 14th
August 2017 was as follows:
1. The Board passed the “rules of
ethical management” on the
20th March 2015.
2. Moral promotion:
a. Promote ethical
management and moral
standards with associate
suppliers and enter into an
agreement of the principles
of good faith with suppliers.
b. Promote the principles and
policies of good faith in
regular or spontaneous
meetings of the company
(operations meetings,
regional manager meetings,
monthly store meetings,
etc.)
3. Reporting system:
a. Establish the “regulations
governing complaints or
reporting”.
b. Set up the reporting hotline
(0800-028-328) and
reporting mailbox
(110@medfirst.com.tw).
c. Conceal the identity of the
informant so people may
report content in
confidence.
d. Conduct an investigation
Nil.
56
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status (Note) Difference and
Causes of Ethical
Corporate
Management Yes No Summary
based on standard
procedures.
4. Fraud management:
No cases of fraud, bribery, or
insider trading were found in
2018.
5. Information disclosure:
a. Disclose the business
culture and ethical
management on the website
– investors’ zone.
b. Disclose the company's
"Code of Integrity" to the
public information
observatory.
The company conducted an
one-hour training program of
integrity management at the
business meeting on August 10,
2018. The theme is "Integrity
Management Principles and
Policies". The total number of
participants in the training is 21;
the company conducted an
one-hour training program of
integrity management at the
monthly meeting of the store on
August 25, 2018. The theme is
"Integrity Management Principles
and Policies". The total number of
participants in the training is 311
(93 in North 1st District, 71 in
North 2nd District, 47 in Central
District, 47 in South 1st District
and 53 in South 2nd District).
3. Has the Company established
policies to prevent conflicts of
interest and provided appropriate
communication channels to
The Company has established the
Regulations Governing the
Management of Grievances and
Whistle-Blowing. The Company
Nil.
57
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status (Note) Difference and
Causes of Ethical
Corporate
Management Yes No Summary
implement such policies? has also provided a hotline
number, an e-mail address and
other communication channels for
reporting grievances and
whistle-blowing, and uses these
procedures to handle matters
accordingly.
4. Has the Company established
effective systems for both
accounting and internal control to
facilitate ethical corporate
management, and are they audited
by either internal auditors or CPAs
on a regular basis?
The Company has established a
comprehensive accounting system
and internal control system in
accordance with relevant laws. In
addition to the internal auditors
regularly carrying out audit
activities in accordance with the
audit plan, CPAs regularly carry
out auditing of the Company’s
internal control system on an
annual basis. No violation of laws
or policies were discovered in
2018.
Nil.
5. Does the Company regularly hold
internal and external educational
training on ethical corporate
management?
The Company regularly or
spontaneously explains the
activities and direction of the
ethical corporate management
principles and policies during
meetings (e.g. operations
meetings, store manager monthly
meetings, and labor management
meetings).
Nil.
Ⅲ. Operating Status of the Whistle-Blowing System of the Company
1. Has company established a
practical reporting and reward
system, a convenient reporting
channel and appointed dedicated
personnel to whom to report?
The Company has established the
Regulations Governing the
Management of Grievances and
Whistleblowing. The Company
has also provided a hotline
number, an e-mail address and
other channels for reporting
grievances and whistle-blowing,
Nil.
58
III CORPORATE
GOVERNANCE
Descriptions
Implementation Status (Note) Difference and
Causes of Ethical
Corporate
Management Yes No Summary
and uses these procedures to
handle matters accordingly. There
were no whistle-blowing cases
discovered in 2018.
2. Has the Company established
standard operating procedures for
confidential reporting and
investigating cases of accusation?
The Company has established the
Regulations Governing the
Management of Grievances and
Whistleblowing, which clearly
states the Company’s standard
operating procedure for
investigations and confidentiality
procedure.
Nil.
3. Has the company taken action to
protect the informant from being
unduly punished due to reports?
The company has established the
“regulations governing
complaints and reports” as well as
the confidentiality procedure
protecting the informant from
being unduly punished.
Nil.
Ⅳ. Enhancing the Disclosure of Information
1. Has the Company disclosed its
ethical corporate management
policies and the results of its
implementation on the Company’s
official website and MOPS?
The Company has set up its own
official website to disclose
information such as the
Company’s corporate culture and
business philosophy, and has also
disclosed the Company’s ethical
corporate management best
practice principles on MOPS.
Nil.
Ⅴ. If the company has established “practice rules of corporate social responsibilities of listed
companies”, please describe the differences between operations and established rules practiced:
necessary details have been provided in the table above.
Ⅵ.Other important information to facilitate a better understanding of the Company’s ethical
corporate management policies (e.g., the review and amendment of the Company’s ethical corporate
management policies): TPEx circulated the letters of JGJZ Document No. 1030029951 dated the
10th
November 2014, JGJZ Document No. 10300361062 dated the 31st December 2014, and
JGJZ Document No. 10400020852 dated the 4th
February 2015, and submitted sections of
Articles of the “Corporate Governance Best Practice Principles for TWSE/TPEx Listed
Companies” and the amendment to the “Sample Template for OO Procedures for Ethical
Management and Guidelines for Conduct”. The company passed the amendment to the
“Principles of Ethical Management” by the Board of Directors on the 20th
March 2015 to meet
regulations and current operations conditions.
59
III CORPORATE
GOVERNANCE
(7) Method of disclosure and inquiries of Corporate Governance Best-Practice Principles:
The Board of Directors passed the “Practice Rules of Corporate Governance” on the 15th June
2016 to implement business practices related to corporate governance.
(8) Other important information that can enhance the understanding of the status of the
implementation in relation to the cooperate governance of the Company:
The ranking of company in the 5rd evaluation result of corporate governance was in the top 5%
( 34 companies made the top 5%) from among 686 TPEx listed companies.
(9) Implementation status of the Company’s internal control system:
1. Internal control declaration: please refer to page 134.
2. Where a CPA has been hired to carry out a special audit of the internal control system, this
must be included in the CPA audit report: none.
(10) For the most recent fiscal year and during the current fiscal year up to the date of printing of
the Annual Report, any sanctions disclosed imposed in accordance with the Company Law or
its internal personnel for violations of the provisions of the internal control system, significant
deficiencies or the status of any efforts made to make improvements: none.
(11) The important resolutions of shareholders and board meeting in recent years and as of the
date of publication:
1. Major resolutions adopted during a Shareholders’ Meeting:
Date of
Meeting Major Resolution Implementation Status
2018/06/14
Approve of proposal concerning
2017 Business Report and
Financial Statements and
profit distribution.
After passing the resolution, the cash dividend
of NT$ 2.6 per share was issued on August 3,
2018, a total of NT$73,424,000.
2. Major Resolutions adopted during a Board of Directors’ Meeting:
Date of
Meeting Major Resolution
2018/3/23
1. Passed the proposal of salary and remuneration of directors and managers
related to the 2017 annual financial.
2. Proposal for the company's 2017 employee remuneration and directors'
remuneration distribution.
3. Proposal for the company's 2017 financial report and business report
4. Proposal for the company's 2017 annual surplus allocation
5. Statement of the company's 2017 internal control system
6. New logistics warehouse automation system equipment purchase
7. E.Sun Bank Credit Line Renewal
8. Endorsement Guarantee provided by E.Sun Bank to the subsidiary
EXACTITUDE BIOTECH CO., LTD.
9. Hua Nan Bank Credit Line Renewal
10.The relevant matters of the 2018 Annual General Meeting of Shareholders
convened by the Board of Directors.
60
III CORPORATE
GOVERNANCE
2018/5/4 1. Finance and Accounting Supervisor transaction
2018/6/14
1. Cash dividend distribution date proposal.
2. Conversion price adjustment of unsecured conversion of the Company’s
corporate bond for the first time in Taiwan
2018/8/8
1. Replacement of the company Certified Public Accountant.
2. Consolidated financial statement of the Company in the second quarter of 2018
3. Endorsement Guarantee provided by E.Sun Bank to the subsidiary Baodean Co.,
Ltd.
2018/8/27 1. The selection of the manufacturer of the company's new logistics warehouse
construction project.
2018/11/7
1. Internal audit plan for 2019
2. Assessment of Certified Public Accountant's competence and independence.
3. Replacement of the company Certified Public Accountant.
4. Consolidated financial statement of the Company in the third quarter of 2018
2018/12/28
1. Director remuneration proposal of the Company for 2018.
2. Chairman remuneration proposal of the Company for 2019.
3. Manager remuneration proposal of the Company for 2019.
4. Annual operational plan of the Company for 2019.
5. The company's 2018 annual internal control system statement
6. Far Eastern Int’l Bank loan amount.
2019/2/26
1. Proposal for the salary and remuneration of directors and managers of the
company in 2018.
2. Proposal for the company's 2018 employee remuneration and directors'
remuneration distribution.
3. The company's 2018 financial report and business report
4. Proposal for the company's 2018 annual surplus allocation
5. The company's 2018 annual internal control system statement
6. Cathay United Bank medium term loan.
7. Cathay United Bank loan amount.
8. Yuanta Bank loan amount.
9. DBS Bank loan amount.
10.Amendment of the Company’s “Articles of Incorporation”.
2019/2/26
11.Amendment of the “Operational Procedures for Acquisition and Disposal of
Assets” of the Company and its subsidiaries.
12.Annual General Meeting of Shareholders convened by the Board of Directors.
61
62
III CORPORATE
GOVERNANCE
(12) In the most recent year and as of the printing date of the Annual Report, if the director or
supervisor has different opinions on the important resolutions passed by the board of directors
and has a record or written statement, the main content: none.
(13) The summary of the resignation of the company's chairman, general manager, accounting
supervisor, financial supervisor, internal audit supervisor and R&D supervisor in the most
recent year and as of the printing date of the Annual Report:
Title
Name
Arrival Date
Leaving Date Reasons for
Resignation or Dismissal
Accounting
and
Finance
Supervisor
Chen,
Meng-Hung
2010/9/27
2018/5/4
Transfer job
Ⅴ.Information on CPA professional fees
Class interval table of information of accountant’s public expenses
Accounting CPA Firm
CPA Period Covered Audit Remark
Deloitte & Touche Chen, Hui-
Ming
Weng,
Po-Jen 2018.01.01-2018.03.31 Due to internal
restructuring of the CPA
Deloitte & Touche Chen, Hui-
Ming
Kuo,
Nai-Hua 2018.04.01-2018.09.30 Due to internal
restructuring of the CPA
Deloitte & Touche Hsieh,
Ming-Chung Kuo,
Nai-Hua 2018.10.01-2018.12.31 -
Unit: NT$ thousand
Item of public expense
Amount class interval
Audit
public
expense
Non-audit
public
expense (Note)
Total
1 Under NTD$ 2,000,000 - - -
2 NTD$ 2,000,000 (included)-NTD$ 4,000,000
-
-
-
3 NTD$ 4,000,000 (included)-NTD$ 6,000,000
4,100 - -
4 NTD$ 6,000,000 (included)-NTD$ 8,000,000
- - -
5 NTD$ 8,000,000 (included)-NTD$ 10,000,000
- - -
6 Above NTD$ 10,000,000 (included) - - -
Note:None
63
III CORPORATE
GOVERNANCE
(1) When the non-audit fees paid to the CPA, to the CPA of the CPA, and to any affiliated
enterprise of the CPA are equivalent to one quarter or more of the audit fees paid to them,
the amounts of both audit and non-audit fees and the details of the non-audit services shall
be disclosed:
CPA Accountants Audit public
expense
Non-audit public expense Period Covered
Audit Remark
System
Design
Business
registration
Human
Resources
Other
(Note) Total
Deloitte &
Touche
Chen,
Hui-Ming
Weng, Po-Jen
4,100 - - - - -
2018.01.01
-2018.03.31 -
Chen,
Hui-Ming
Kuo, Nai-Hua
2018.04.01
-2018.09.30
Hsieh,
Ming-Chung
Kuo, Nai-Hua
2018.10.01
-2018.12.31
Note:None
(2) Changes to the CPA, and the audit fees paid for the fiscal year to which such a change
applies are lower than those for the previous year, the reduction in the amount of audit
fees is calculated: none
(3) Audit fees paid for the current year are lower than those for the previous fiscal year by 15
percent or more: none
64
III CORPORATE
GOVERNANCE
Ⅵ.Information on the replacement of the CPA (1) Regarding the previous CPA
Replacement Date 8th
Aug. 2018/7th
Nov. 2018
Replacement reasons and
explanations Due to internal restructuring of the CPA
State whether the Company
terminated the CPA or the CPA did
not accept the appointment
Party situation
Accountants The Company
Termination of
appointment
Not applicable No longer accepted
(continued)
appointment
Comments and reasons (except for
unqualified issues) in the audit
reports during the previous two (2)
fiscal years
No
Differing opinion from the issuer Yes Accounting principles or
practices
Disclosure of financial
statements
Audit scope or steps
Other
No V
Description
Other Matters Disclosed
(Item 1-4 to 1-7 of Paragraph 6 of
Article 10 of these Rules to be
disclosed)
No
(2) Regarding the successive CPA:
CPA Firm Deloitte & Touche
CPA Chen, Hui-Ming Kuo, Nai-Hua
Date of appointment 2018.08.08(Board resolution date)
CPA Hsieh, Ming-Chung Kuo, Nai-Hua
Date of appointment 2018.11.7 (Board resolution date)
Consultation results and opinions on accounting
treatments or principles with respect to the specified
transactions and the company's financial reports that the
CPA might issue prior to the engagement
None
The successive CPA’s written opinion of disagreement
of the CPA None
III CORPORATE
GOVERNANCE
(3)The preceding CPA’s reply letter to Item 1 and Item 2-3, Paragraph 6, Article 10 of these
Guidelines: none
Ⅶ.The Company’s chairman, general manager, or any managerial officer in charge of finance
or accounting matters who has held a position in the CPA of the CPA or an affiliated
enterprise in the most recent fiscal year, where his or her name, title, and duration of his or
her service at the CPA of the CPA or at the affiliated enterprise should be disclosed: None
Ⅷ. Transfer of equity interests and/or pledge of or change to equity interests by a director,
supervisor, managerial officer, or shareholder with a stake of more than 10 percent during
the previous fiscal year or during the current fiscal year up to the date of printing of the
Annual Report:
(1) Circumstance of changes to the equity of directors, supervisors, managers and substantial
shareholders
Unit:Share
Title Name
2018 Up to now April 20th,
2019
Shares
holding
Increased
(decreased)
shares
Shares
pledging
Increased
(decreased)
shares
Shares
holding
Increased
(decreased)
shares
Shares
pledging
Increased
(decreased)
shares
Chairman Chen, Li-Ju -40,000 - - -
Director Corporate
shareholder, Major
shareholder
Lead
Investment
Limited - - - -
Director Corporate
representative,
General Manager
Tsai,
Te-Chung -40,000 - - -
Director Corporate
representative,
Deputy General
Manager
Wei,
Tzu-Wen - - - -
Directors Li,
Hung-Hui - - - -
Independent
Director Tseng,
Sheng-Che
ng - - - -
Independent
Director Yeh,
Ching-En - - - -
Independent
Director Yang,
Shu-Ching - - - -
Assistant
Vice President
Chen,
Meng-Hung - - -
Assistant
Vice President
Wang,
Ting-Jui - - - -
65
III CORPORATE
GOVERNANCE
Title Name
2018 Up to now April 20th,
2019
Shares
holding
Increased
(decreased)
shares
Shares
pledging
Increased
(decreased)
shares
Shares
holding
Increased
(decreased)
shares
Shares
pledging
Increased
(decreased)
shares
Assistant
Vice President
Cheng,
Chih-Yuan - - - -
Financial and
accounting
supervisor
Kao,
Shih-Lung
Note: Assistant Vice President Cheng, Chih-Yuan resigned the office on 2019/2/1.
(2)Equity transfer information: the counterparty to which the directors, supervisors, managerial
officers and shareholders holding ten (10) percent or more of shares transfer their shares is
a related party: none
(3) Equity pledge information: none
66
III CORPORATE
GOVERNANCE
Ⅸ.Information regarding the spouse or relatives within the second degree of kinship and
relationship between any of the top ten shareholders
April 14th 2019; Unit : Share
Name
Present shareholding
Present shareholding
of spouse & minor
children
Shares held in
another’s
name
Name and Relationship Between the Company’s
Top Ten Shareholders, or Spouses or Relatives
Within the Second Degree of Kinship Remark
Stock
(shares) %
Stock
(shares) %
Stock
(shares) % Title or(Name) Relation
Lead Investment Limited 9,252,238 32.76% - - - - Tsai, Te-Chung Director of Lead Investment
Limited -
Lead Investment Limited
Legal Representative:Tsai,
Te-Chung
1,617,884 5.73% 1,792,274 6.35% - -
Lead Investment Limited
Director of Lead Investment Limited
- Chen, Li-Ju
Spouse of the Director of
Lead Investment Limited
Tsai, Chi-Hsuan Father and son
Tsai, Chi-En Father and son
Lead Investment Limited
Legal Representative:Wei,
Tzu-Wen
56,228 0.20% 17,426 0.06% - - - - -
Tsai, Chi-En 1,828,258 6.47% - - - -
Lead Investment
Limited
Son of the Director of Lead
Investment Limited
- Tsai, Te-Chung Father and son
Chen, Li-Ju Mother and son
Tsai, Chi-Hsuan Brother
Chen, Li-Ju 1,792,274 6.35% 1,617,884 5.73% - -
Lead Investment
Limited
Spouse of the Director of
Lead Investment Limited
- Tsai, Te-Chung Spouse
Tsai, Chi-Hsuan Mother and son
Tsai, Chi-En Mother and son
Tsai, Chi-Hsuan 1,750,489 6.20% - - - -
Lead Investment
Limited
Son of the Director of Lead
Investment Limited
-
Hua Yi Investment Limited
Director of Hua Yi Investment Limited
Tsai, Te-Chung Father and son
Chen, Li-Ju Mother and son
Tsai, Chi-En Brother
Tsai, Te-Chung 1,617,884 5.73% 1,792,274 6.35% - -
Lead Investment
Limited
Director of Lead Investment
Limited
- Chen, Li-Ju
Spouse of the Director of Lead Investment Limited
Tsai, Chi-Hsuan Father and son
Tsai, Chi-En Father and son
Liu, Chih-Kang 966,293 3.42% - - - - - - -
Chen, Yu-Lien 376,328 1.33% - - - -
New County and
Community
Construction and
Investment
Director of New County
and Community
Construction and
Investment
-
Hsueh, Hung-Chun 310,000 1.10% - - - - - -
New County and Community Construction
and Investment
255,000 0.90% - - - - Chen, Yu-Lien
Director of New County
and Community
Construction and Investment
-
67
III CORPORATE
GOVERNANCE
New County and
Community Construction and Investment
Legal Representative:
Chen, Yu-Lien
376,328 1.33% - - - -
New County and
Community
Construction and Investment
Director of New County
and Community
Construction and Investment
-
Hua Yi Investment Limited 199,000 0.70% - - - - Tsai, Chi-Hsuan Director of Hua Yi Investment Limited
-
Hua Yi Investment Limited
Legal Representative:
Tsai, Chi-Hsuan
1,750,489 6.20% - - - -
Lead Investment
Limited
Son of the Director of Lead
Investment Limited
-
Tsai, Te-Chung Father and son
Chen, Li-Ju Mother and son
Tsai, Chi-En Brother
Hua Yi Investment Limited
Director of Hua Yi Investment Limited
68
III CORPORATE
GOVERNANCE
Ⅹ. The total number of shares and total equity stake held in any single enterprise by the
company, its directors and supervisors, managers, and any other companies controlled
either directly or indirectly by the company.
20th
April 2018; Unit: Share; %
Reinvestment business
Investment of this
company
Investment of the
director, supervisor,
manager and directly or
indirectly controlled
business (Note)
Comprehensive investment
Stock(shares) % Stock(shares) % Stock(shares) %
ABOVE ADVANCE
LIMITED 10,898,000 100% - - 10,898,000 100%
CAYMAN MEDFIRST
GROUP LIMITED 10,898,000 100% - - 10,898,000 100%
Nanjing MedFirst Healthcare
Services, Inc. (Note) 100% - - (Note) 100%
Apricot first medical products
Limited by Share Ltd. (Note) 100% - - (Note) 100%
Fujian Medfirst Healthcare
Services, Inc. (Note) 100% - -
(Note) 100%
Shanghai An Gu Medical
Equipment Ltd
(Note) 100% - -
(Note) 100%
Hangzhou Angu Medical
Equipment Ltd.
(Note) 100% - -
(Note) 100%
Beijing MedFirst Healthcare
Services, Inc.
(Note) 100% - -
(Note) 100%
Shandong En Gu Medical
Devices Company Limited
(Note) 100% - -
(Note) 100%
Nanjing Baitang Trading Co.,
Ltd.
(Note) 100% - -
(Note) 100%
Taiwan TRIM CO.,LTD 1,000,000 50% - - 1,000,000 50%
Hsing Chou Healthcare Co.,
Ltd. 8,610,000 90.63% - - 8,610,000 90.63%
Exactitude Biotech Co., Ltd 1,000,000 100% - - 1,000,000 100%
Singleton Pharma Logistics Co.
Ltd 833,000 12% - - 833,000 12%
Baodean Co., Ltd. 926,000 92.60% 926,000 92.60%
Note:These joint ventures are either one hundred (100) percent owned directly by the Company or one hundred (100)
percent owned indirectly by the joint venture company. These companies are private limited companies that have not
issued shares, therefore there are no share percentages.
69
Ⅳ Information
on capital
raising
activities
IV. Information on activities to raise capital
Ⅰ. Issuance of capital stock and stock shares
(1) Sources of share capital
1. capita
Unit: Share; NT$ thousands
Year/Month
Issuing
Price
(NTD)
Authorized
Capital Stock
Issued Capital
Stock Remark
Stock
(shares) Amount
Stock
(shares) Amount
Sources of share
capital
Written-of
f with
property
other than
cash
Other
1992.05 10 500,000 5,000 500,000 5,000 Original capital
NT$5,000,000 NO
1992.5.7
CHIEN-SAN-TZU
No. 228485
1998.07 10 2,500,000 25,000 2,500,000 25,000 Capital increase of
NT$20,000,000 NO
1998.7.27
CHIEN-SAN-TZU
No. 202097
2000.12 10 5,500,000 55,000 5,500,000 55,000 Capital increase of
NT$30,000,000 NO
2000.12.13
JIH-CHING (89)
CHUNG-TZU No.
89541037
2003.11 10 8,000,000 80,000 8,000,000 80,000 Capital increase of
NT$25,000,000 NO
2003.11.13
CHING-SHOU-CHU
NG-TZU No.
09232955540
2006.12 10 10,000,000 100,000 10,000,000 100,000 Capital increase
NT$20,000,000 NO
2006.12.20
CHING-SHOU-CHU
NG-TZU No.
09533328690
2009.01 10 20,000,000 200,000 15,000,000 150,000
Capital increase of
NT$28,297,000
NO
2009.1.9
CHING-SHOU-CHU
NG-TZU No.
09831533600
Capital increase by
earnings of
NT$21,703,000
2010.02 10 20,000,000 200,000 15,701,576 157,016
Capital increase by
earnings of
NT$7,016,000
NO
2010.2.1
CHING-SHOU-CHU
NG-TZU No.
09931625730
2010.09 10 20,000,000 200,000 16,100,000 161,000
Capital increase by
earnings of
NT$3,984,000
NO
2010.9.21
CHING-SHOU-CHU
NG-TZU No.
09932593820
2011.01 10 50,000,000 500,000 19,500,000 195,000 Capital increase of
NT$34,000,000 NO
2011.1.18
CHING-SHOU-CHU
NG-TZU No.
10031565100
2011.08 10 50,000,000 500,000 20,670,000 206,700
Capital increase by
earnings of
NT$11,700,000 NO
2011.8.4
CHING-SHOU-CHU
NG-TZU No.
10032344130
70
Ⅳ Information
on capital
raising
activities
2012.08 10 50,000,000 500,000 22,270,000 222,700
Capital increase by
earnings of
NT$16,000,000
NO
2012.8.28
CHING-SHOU-CHU
NG-TZU No.
10132427530
2014.05 10 50,000,000 500,000 25,240,000 252,400 Capital increase of
NT$29,700,000 NO
2014.5.13
CHING-SHOU-CHU
NG-TZU No.
10333330810
2017.05 10 50,000,000 500,000 28,240,000 282,400 Capital increase of
NT$30,000,000 NO
2017.05.02
FU-CHING-TENG-T
ZU No. 10690831230
2. Type of Shares
Type of
Shares
Authorized Capital Stock Remark
Issued Stock Shares Unlisted Stock Shares Total
Registered
common stock 28,240,000 21,760,000 50,000,000 Listed Stock
3. Information regarding Shelf-Registration and Issuance of Shares: N/A
(2) Composition of shareholders
April 20th
2019; Unit: Share Composition of
shareholders
Number
Governmen
t Agencies
Financial
institutions
Other legal
person Individuals
Foreign
institutions
and
foreigners
Total
Shareholders - - 25 2,491 1 2,517
No. of shares
held -
- 10,458,316 17,771,684 10,000 28,240,000
Shareholding
% -
- 37.03% 62.93% 0.04% 100.00%
(3) Distribution Profile of Share Ownership
1. Common stock
Share value: NT$10 as per the 20th
April 2019; Unit: share
Grouping of shares held No. of
shareholders
No. of shares
held
Shareholding
%
1 ~ 999 355 52,944 0.19%
1,000 ~ 5,000 1,804 3,218,120 11.40%
5,001 ~ 10,000 196 1,448,375 5.13%
10,001 ~ 15,000 62 751,281 2.66%
15,001 ~ 20,000 22 389,585 1.38%
20,001 ~ 30,000 21 481,831 1.71%
30,001 ~ 50,000 16 627,179 2.22%
50,001 ~ 100,000 21 1,481,177 5.25%
100,001 ~ 200,000 11 1,640,744 5.81%
71
Ⅳ Information
on capital
raising
activities
200,001 ~ 400,000 3 941,328 3.33%
400,001 ~ 600,000 0 0 0.00%
600,001 ~ 800,000 0 0 0.00%
800,001 ~ 1,000,000 1 966,293 3.42%
Above 1,000,001 5 16,241,143 57.51%
Total 2,517 28,240,000 100.00%
2. Preferred stocks: none
(4) List of key shareholders
Name, number of shares held and shareholding ratio of the shareholders whose equity proportion
total more than 5% of shares or whose equity proportion is ranked in the top ten:
April 20th
2019; Unit: Share(s)
Shares
Name of key shareholders No. of shares held Shareholding %
Lead Investment Limited 9,252,238 32.76%
Tsai, Chi-En 1,828,258 6.47%
Chen, Li-Ju 1,792,274 6.35%
Tsai, Chi-Hsuan 1,750,489 6.20%
Tsai, Te-Chung 1,617,884 5.73%
Liu, Chih-Kang 966,293 3.42%
Chen, Yu-Lien 376,328 1.33%
Hsueh, Hung-Chun 310,000 1.10%
Lianshou Investment Industrial
Co., Ltd. 255,000 0.90%
Hua Yi Investment Limited 199,000 0.70%
(5) Net Worth, Earnings, Dividends, and market price per share for the previous two years
Unit: NT$
Year
Item 2018 2019
Current year to
March 31st 2018
Market
price per
shares
Maximum 81.5 67.8 65.7
Minimum 61 52.5 53.1
Average 71.20 60.15 59.4
Net worth
per shares
Before distribution 31.06 32.24 -
After distribution 28.46 29.94 -
Surplus of
each share
Weighted average stock
shares
28,240 thousand
shares
28,240 thousand
shares
-
Earnings per Share (EPS) 3.29 4 -
72
Ⅳ Information
on capital
raising
activities
Dividend
of each
share
Cash dividend 2.6(Note1) 2.3(Note1) -
Stock
dividend
- - 0.63 -
- - - -
Cumulative unpaid
dividend - - -
Analysis
of
investment
reward
Price-earnings ratio 21.64 15.04 -
Price-dividend ratio 27.38 26.15 -
Cash dividend yield rate % 3.65 3.82 -
Note: Distribution of earnings by the Company in 2018 has already been passed by the
Board of Directors on the 26rd February 2019, and shall be raised in the 2019 Shareholders’ Meeting for resolution.
(6) Dividend policy and execution of the company
1. Dividend policy adopted in the Company’s Articles of Incorporation
Article 33-1: Where there is profit at the end of the year, the Corporation shall first offset
its losses from previous years and set aside 10% as the legal capital reserve. However, the
Company may not be required to set aside a legal reserve if it has reached the invested
capital of the Company. Remaining profits shall be set aside or reversed for special
reserve. The Board of Directors shall prepare the proposal concerning the appropriation
of net profits for remaining profits incorporated with the accumulative earnings from
previous years, and submit the same to the Shareholders’ Meeting for resolution of the
allocation of dividends and bonuses to shareholders.
Article 35: the dividend policy of the company must align with current and future
development plan. In comprehensive consideration of the investment environment, the
capital plan and domestic and foreign competition, the earnings available for distribution
shall appropriate at least 30% as bonus to shareholders in general. The bonus to
shareholders may be distributed via cash or in the form of stocks, however, the cash
dividend must be at least 10% of the total dividend.
2. Performance situation
The Company’s 2018 surplus distribution scheme was passed by the resolution of the Board
of Directors on the 26rd February 2019 as follows:
Undistributed surplus balance at the beginning of the period 42,708,136
Actual gains and losses included in retained earnings (1,352,720)
Undistributed earnings after adjustment 41,355,416
Net Income 112,950,220
Drawing of 10% statutory surplus reserve (11,295,022)
Current surplus available for distribution (4,988,043)
Distributable surplus of this year 138,022,571
73
74
Ⅳ Information
on capital
raising
activities
Distributable items
Shareholders’ dividend–Cash (NT$ 2.3/ share) (64,952,000)
Shareholders stock dividend (NT$0.63/ Share) (17,791,200)
Distributable surplus of this year 55,279,371
(7) Effects of the stock grants proposed by the shareholders at this time on the company’s
business performance and surplus of each share: none
(8) Remuneration to employees, directors and supervisors
1. Percentage or range of remuneration of employees, directors and supervisors specified in
the Articles of Incorporation:
Article 33: Where there is an annual profit, the company shall appropriate 1%-15% as
compensation to employees to be distributed via stocks or cash upon resolution of the
Board of Directors. The subjects of the distribution may cover the employees of
subsidiaries subject to satisfaction of certain conditions. The company may appropriate
compensation to directors up to 7% of preceding amount of profit upon resolution of the
Board of Directors. The proposal concerning the distribution of compensation to
employees and directors shall be reported during the Shareholders’ Meeting. However,
should the Company make a loss, losses shall be first covered and then compensation to
employees and directors shall be appropriated proportionally over preceding percentages.
2. Accounting treatment on the difference between the estimation basis for the estimation of
remuneration of employees, directors and supervisors, shares calculation basis for
employee remuneration distributed as stocks, the actual distributed amount, and the
estimated amount of the current period:
The estimation of remuneration of employees, directors and supervisors of the Company
in 2018 was calculated as 4% and 2.28% of its tax benefit before deducting the
remuneration of employees, directors and supervisors for the current fiscal year. Should
there be a discrepancy between the estimated figures and the actual amount of distribution,
the discrepancy shall be regarded as a change to the accounting estimates and recorded in
the adjusted accounts of the year of distribution
3. Circumstances of passing the remuneration distribution by the Board of Directors:
The proposal for the distribution of remuneration approved during the Board of Directors’
meeting on the 26rd February 2019 is as follows:
(1) Bonuses distributed in cash or stocks to employees and bonuses distributed to
directors and supervisors as approved by the Board of Directors: the amount of bonus
distributed to employees totaled NT$6,223,000, and NT$3,541,000 to directors and
Ⅳ Information
on capital
raising
activities
supervisor for this period.
(2) Where the Board of Directors has approved the distribution of the Company’s shares
to employees, the ratio of the number of shares distributed to employees to the
increase of capital by earnings: the Board of Directors has yet to decide and approve
the distribution of the Company’s shares to employees.
4. Circumstances of actual distribution of remuneration to employees, directors and
supervisors of the previous year (including the number of shares distributed, the amount,
and share price), any difference between the remuneration of employees, directors and
supervisors acknowledged, and detailed description of changes to the amount, the reason
for changes and handling of the situation:
Information regarding the 2018 actual compensation paid to
employees and directors is as follows: Unit: NT$ Thousands
Distribution
Actual amount of
distribution
approved in the
Shareholders’
Meeting
Original
amount of
distribution
approved by
the Board of
Directors
Difference Reason for
difference
Handling
condition
1. Employee Cash
Bonus 4,828 4,828 0 NO N/A
2. Remuneration
to directors 2,656 2,656 0 NO N/A
(9) Situations of repurchasing of the Company’s shares: none
75
Ⅳ Information
on capital
raising
activities
Ⅱ. Circumstances for handling corporate bonds:
(1) Circumstances for handling corporate bonds:
Type of corporate bond 1st domestic unsecured convertible corporate bond
Issue (management) date 23rd February 2017
Par value NT$100,000
Issue and trading place Domestic
Issuing price 100% Issued in face value
Total NT$300,000 thousand
Interest rate Coupon rate 0%
Deadline 3 years, due on the 23rd March 2020
Guarantee agency N/A
Agent Trust Department, Cathay Commercial Bank
Underwriting agency Cathay Securities Corporation Co., Ltd
Solicitor Handsome Attorneys-at-law
Accountant N/A
Repayment method
Except for conversion or redemption in accordance
with the procedures for conversion, repayment will
be made once in full by cash.
Outstanding principal NT$108,400,000(Note)
Repayment or earlier liquidation provisions
Please refer to Article 19 of the Procedures for
Corporate Bond Issuance and Conversion of the
Company
Restriction provisions None
The name of the credit ranking institution, the
evaluation date, and results of corporate bond
evaluation
N/A
Other rights affiliated-
The amount of common stocks transferred
(exchanged or subscribed) as on the printing
date of the Annual Report
As of the 20th April 2018, no creditor exercised the
right to convert corporate bonds
Other rights affiliated-
Procedures for the Issuance and Conversion
(Exchange or Subscription)
N/A
The effect of procedures for the issuance and
conversion, exchange or subscription, the
issuance conditions of the possible dilution of
equity and current shareholders’ equity
N/A
The name of the escrow agent for the
exchange target N/A
76
77
Ⅳ Information
on capital
raising
activities
Note: The total number of executed sales of these convertible corporate bonds from January 25, 2019 to February 23,
2019 was 1,916. These convertible corporate bonds were not converted by shareholders between February 23, 2017
and April 20, 2019.
(2) Convertible corporate bonds information
Type of corporate bond 1st domestic unsecured convertible corporate bond
Year Item
2017 2018 Current year to 20th April 2019
Market price of convertible
corporate bond
Highest 107.00 106.50 104.00
Lowest 100.75 100.05 100.55
Average 103.47 103.79 101.48
Conversion price (Note 2) (Note 2) (Note 2)
Conversion price as of the
issuance (management) date
and issuance
Issue date: 23rd
February 2017
Conversion price as of issuance: NT$80.2
Obligation to execute conversion
New shares issuance
Note 1 : This convertible corporate bond was not traded between 23rd February 2017 and 20th April 2019
Note 2: The conversion price from 23rd February to 26th March 2017 was NT$ 80.20, and the conversion price
from 27th March to 4th August 2017 was NT$ 78.90. The conversion price from 5th August 2017 to 20th July 2018
was NT$ 75.40, and the conversion price from 21st July 2018 to 20th April 2019 was NT$ 72.40.
(3) Exchange of corporate bonds information: none (4) Common corporate bonds raised and issued through generalized declaration: none
(5) Corporate bonds with warranty information: none
Ⅲ. Issuance of preferred shares : None
Ⅳ. Issuance of Global Depositary Receipts (GDR) : None
Ⅴ.Employee subscription right vouchers : None
Ⅵ. Management of restricted stock awards : None Ⅶ. Circumstances of handling the new issue of shares due to a merger or assignee of other
corporate stocks : None
Ⅷ. Circumstances of the execution of the funds application plan : None
Ⅴ Overview
of
Operations
Ⅴ.Overview of Operations
Ⅰ. Business Content
(1) Business Scope
1. Main Areas of the Company’s Business Operations
The Company is a leading medical supplies chain distribution channel led by a
professional healthcare team in Taiwan. The Company primarily engages in the sale of
medical care, healthcare and biotechnology healthcare products and the provision of related
services and uses “MedFirst” as the brand name for its healthcare chain stores. Furthermore,
the Company is the contractor of retail stores of medical supplies located at various major
hospitals and engages in the management and planning of hospital shopping malls. The
Company has registered the following business areas with the Ministry of Economic Affairs:
1. F102040 Wholesale of Nonalcoholic Beverages 20. F208011 Retail Sale of Chinese Medicine
2. F102170 Wholesale of Food and Grocery 21. F208021 Retail Sale of Drugs and Medicines
3. F104110 Wholesale of Fabric, Clothes, Shoes,
Hats, Umbrellas and Apparel, Clothing
Accessories and Other Textile Products
22. F208031 Retail sale of Medical Equipment
4. F105050 Wholesale of Furniture, Bedclothes
Kitchen Equipment and Fixtures 23. F208040 Retail Sale of Cosmetics
5. F106020 Wholesale of Items for Daily Use 24. F208050 Retail Sale of the Second Type
Patent Medicine
6. F106040 Wholesale of Water Containers
25. F209060 Retail Sales of Stationery, Musical
Instruments and Educational Entertainment
Articles
7. F107030 Wholesale of Cleaning Preparations 26. F301010 Department Stores
8. F108011 Wholesale of Chinese Medicines 27. F399010 Supermarkets
9. F108021 Wholesale of Drugs and Medicines 28. F399040 Retail Business Without Stores
10. F108031 Wholesale of Drugs, Medical Goods 29. F401010 International Trade
11. F108040 Wholesale of Cosmetics 30. F501030 Coffee/Tea Shops and Bars
12. F109070 Wholesale of Stationery, Musical
Instruments and Educational Entertainment
Articles
31. F501060 Restaurants
13. F199990 Other Wholesale Trade 32. F501990 Other Eating and Drinking Places
Not Elsewhere Classified
14. F203010 Retail Sale of Food and Grocery 33. G202010 Parking Garage Business
15. F204110 Retail Sale of Cloths, Clothes, Shoes,
Hat, Umbrella and Apparel, Clothing Accessories
and Other Textile Products
34. H703100 Real Estate Rental and Leasing
16. F205040 Retail Sale of Furniture, Bedclothes,
Kitchen Equipment and Fixtures 35. I103060 Management Consulting Services
78
Ⅴ Overview
of
Operations
2. Proportion of Main Business Areas Unit: NT$ thousand
3. Products and services of the Company
The Company's business model is mainly for the mass sales of medical care, health-care, and
biotechnology health care products. To achieve the company's corporate mission "Health
Manager of Your Family", it is also about to launch more health-related products to provide a
friendly and convenient shopping environment and services.
17. F206020 Retail Sale of Articles for Daily Use 36. I199990 Other Consultancy
18. F206040 Retail Sale of Water Containers 37. JA03010 Laundry Services
19. F207030 Retail Sale of Cleaning Preparations
38. ZZ99999 All business items that are not
prohibited or restricted by law, except those that
are subject to special approval.
Business Area
2017 2018
Amount Proportion Amount Proportion
Medical Care 3,218,137 74.42% 3,466,585 74.83%
Health Care 351,040 8.12% 370,867 8.01%
Biotechnology Health Care 703,281 16.26% 734,730 15.86%
Other 51,949 1.20% 60,461 1.31%
Total 4,324,407 100.00% 4,632,643 100.00%
79
Ⅴ Overview
of
Operations
At present, the Company Primarily offers the following goods and services:
The Company currently offers the following main goods and services:
4. Plan for the development of new products (services)
1. Medical Care
(A) Continue to introduce new technologically developed products based on market
demand and developments including the Xingfu gift (free gift APP) service.
(B) Continue to develop the Company’s own products to meet customer demands based
on MedFirst’s many years of experience.
(C) Service differentiation: Enhance customer satisfaction through value-added services,
such as increasing warranty periods, reducing waiting time for receiving maintenance
support and providing free regular repair services at specific locations.
(D) To enhance the constomer service experience, MedFirst interacts with consumers
through Line and combines member certification to enhance consumer shopping
convenience and multi-digit digital services. (member inquiry, transaction details,
digital coupons, event offers, etc.)
Product
category Product Types
Medical Care
Diabetes care products, respiratory care products, incontinence care
products, wound dressing products, medical equipment and supplies, stoma
care products, special nutrition products, general nutrition products,
rehabilitation care products, pain management products, protective gear,
home healthcare, maternal and child care products
Health care Beauty care products, oral care products, daily supplies, medical books,
cosmetics, food and beverages
Biotechnology
Health care Health food and medical drugs
Others Fresh pre-ordered goods, pre-ordered goods for home appliances,
and packaging operations
80
Ⅴ Overview
of
Operations
2. Healthcare
(A) Increase the development of daily necessities to satisfy consumers’ daily needs with
the goal of establishing a one-stop shopping location.
(B) Increase the development of cosmetics and beauty products based on market trends
(C) Strengthen the development of organic and health foods by making consumers’ health
the primary goal.
3. Biotechnological Healthcare
(A) Expand the health food product line to replenish consumers’ inadequate intake by
responding to market changes and the increase in the number of people who eat out.
(B) Continue to develop various functional health products that target busy working
adults in the metropolitan area in response to customs’ ever-changing daily habits.
4. Laundry washing
(A) Put hospital shopping malls into operation to offer a complete daily life service in
hospitals.
(B) Engage in the management and planning of other types of shopping venues (e.g. in
schools).
(2) Market Overview
(1) Current state and development of the market
A. Macro-environmental factors
As the Company’s industry is deeply connected with national health expenditure
(hereinafter referred to as “NHE”), national income, the national average life
expectancy and other macro-environmental factors, the following graph shows
the changes in NHE trends per capita and the ratio of NHE to GDP in Taiwan, as
well as changes in demographic trends factors in Taiwan:
(A) Changes to NHE per capita and ratio of NHE per capita to GDP per capita in
Taiwan
National Health Expenditure Growth
Source: Ministry of Health and Welfare
7,824
8,732
10,385 10,869
11,274
6.26.7
6.2 6.3 6.3
4.5
-1.4
4.1
2.31.9
-4
-2
0
2
4
6
8
10
-
2,000
4,000
6,000
8,000
10,000
12,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
%
10
0 m
illion
NHE NHE/GDP Annual Growth Rate (%)
81
Ⅴ Overview
of
Operations
National Health Expenditure
Source: Ministry of Health and Welfare
According to Statistics of General Health and Welfare, the average
NHE per capita in 2017 was NT$ 46,606, a 1.0% increase from NT$
46,219 in 2016. As for the proportion of average NHE per capita to GDP
per capita, both have been maintained at 6% or more since 2006,
indicating that the amount that the Taiwanese spend on health care
generally indicates a steadily increasing trend.
(B) Changes to the trend of the national average age in Taiwan
According to the Report on the Population Projection from 2014 to 2061 for the
Republic of China prepared by the National Development Council under Executive Yuan,
the ratio of the population aged 65 and above to the overall population in Taiwan will
increase from 7.1 percent as of 1993 to 14.6 percent in 2018, thus turning Taiwan into a
more-ageing society. The ratio of the population aged 65 and above to the overall
population in Taiwan is estimated to later increase to 20% percent, thus turning Taiwan
into a rapidly-ageing society in 2025. This ratio is estimated to increase further to 41%
percent in 2061. Due to the gradual increase in the proportion of the aging population in
Taiwan, the demand for medical care, and the control and prevention of diseases and
Year
National Health
Expenditure (NHE) NHE per Capita GDP per Capita
NHE/GDP
(%)
GDP
Annual
Growth
Rate (%)
NT$
hundred
millions
Annual
Growth
Rate (%)
NT$
hundred
millions
Annual
Growth
Rate (%)
NT$
hundred
millions
Annual
Growth
Rate (%)
2006 7,824 4.7 34,282 4.3 553,851 4.1 6.2 4.5
2007 8,146 4.1 35,545 3.7 585,016 5.6 6.1 6.1
2008 8,347 2.5 36,294 2.1 571,838 -2.3 6.3 -1.9
2009 8,732 4.6 37,837 4.3 561,636 -1.8 6.7 -1.4
2010 8,893 1.8 38,432 1.6 610,140 8.6 6.3 8.9
2011 9,170 3.1 39,539 2.9 617,078 1.1 6.4 1.4
2012 9,280 1.2 39,877 0.9 631,142 2.3 6.3 2.6
2013 9,679 4.3 41,460 4 652,429 3.4 6.4 3.7
2014 10,079 4.1 43,067 3.9 688,434 5.5 6.3 5.8
2015 10,385 3.0 44,261 2.8 714,774 3.8 6.2 4.1
2016 10,869 4.7 46,219 4.4 729,381 2.0 6.3 1.9
2017 11,274 3.6 46,606 1 742,296 1.7 6.3 1.9
Note: data for each year was compiled and adjusted based on the latest GDP figures.
82
Ⅴ Overview
of
Operations
other healthcare needs is bound to increase. Therefore, expenditure on medical supplies
is simultaneously expected to increase.
The proportion of the population over 65 years old to the total population (%)
Source: The Council for Economic Planning and Development “Taiwan 2014 to 2061
Population Estimates and Projections”
B. Domestic Medical Supply and Pharmaceutical Retail Market
Data given in the “Monthly Report of Commercial Turnover Statistics” prepared
by the Department of Statistics of the Ministry of Economic Affairs shows that
the domestic medical supply and pharmaceutical retail market capitalization in
Taiwan has grown from NT$1,650 hundred million in 2010 to NT$2,107
hundred million in 2018. As of 2016, the amount had increased accounting for
4% of annual growth. However, the financial and European debt crises of 2012
respectively have affected the local economy and domestic market, thus causing
market growth to slow. Overall, the domestic medical supply and pharmaceutical
retail market is growing. As the market includes medical equipment and related
products, this growth trend is expected to drive the growth and development of
the medical equipment industry.
Projection
Ageing Aged Super-aged
65 years old and over
80 years old
and over
85 years old
and over
83
Ⅴ Overview
of
Operations
Domestic Medical Drugs, Cosmetics and Medical Supplies Retail Market Revenue
Source: the “Monthly Report of Commercial Turnover Statistics” issued by the Department of Statistics,
the Ministry of Economic Affairs
C. Medical devices market in mainland China.
The overall medical devices market in mainland China reached US$ 17 billion in
2013, and the average medical devices cost per capita is US$ 12.6. However, the
medical devices market in mainland China is facing a huge demand for devices
due to the country’s large population, as well as the continuous increase per
capita in mainland China and efforts made by the Chinese government to
promote various health policies. Therefore, the overall demand for medical
devices is expected to be increased drastically in the coming years. As the
Chinese government actively promotes policies related to the 12th
Five-year Plan
such as the “12th
Five-Year Medical Device Technology Industry Plan” and the
“12th
Five-Year Health Development Plan”, and has recently implemented New
Medical Reform policies, it will continue to strengthen efforts to improve the
environment and facilities of medical institutions within the country to help
increase health awareness among consumers in mainland China, enhance
consumers’ understanding of and demand for healthcare at home, and drive the
continuous increase in the demand for medical devices and supplies. This market
is estimated to experience steady growth during the next five years.
1,650 1,732 1,732 1,759
1,829 1,883
1,962 2,020
2,107
4.65%4.98%
0.04%
1.50%
4.04%
2.95%
4.16%
2.97%
4.31%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
2010 2011 2012 2013 2014 2015 2016 2017 2018
Turnover (100 million) Annual Growth Rate
84
Ⅴ Overview
of
Operations
Bandages and
dressing Thread
Syringe and
tubes Others Overall M
ark
et C
apit
aliz
atio
n (
NT
$ h
und
red
mil
lio
ns)
Source: BMI Espicom (2014/01); IEK (2014/06)
Pic 1. Medical Supplies and Consumables Market Capitalization in mainland China - 2012
and 2016
Market size of medical consumable products in mainland China in2012~2016
In recent years, more and more medical equipment manufacturers in mainland
China have turned to producing of high-end medical equipment, including
computerized tomography (CT), nuclear magnetic resonance scanners and
digital X-ray equipment.
D. Global medical devices market
According to the IEK research report of the ITRI, the global medical equipment
market in 2017 was US$359.8 billion and will reach US$425.3 billion in 2020,
reflecting a compound growth rate of 5.70% from 2017 to 2020. The annual
compound growth rate of the Asia-Pacific market is 5.74%, which is higher than
the annual compound growth rate of the global medical market, as well as higher
than the 5.71% in Western Europe and 5.73% in the Americas. This situation
suggests that the growth of the Asia-Pacific medical market, which includes
Taiwan and mainland China, can be expected to become the focus of the global
medical equipment industry.
85
Ⅴ Overview
of
Operations
Source: ITRI IEK
E. Biotechnology health food industry
As the global living environment improves and medical technology rapidly
advances, the quality of human life has generally improved, and the average life
expectancy has also increased. However, for many developed or developing
countries, the resulting aging population is accompanied by an increase in the
number of chronically ill patients, which has become a major concern regarding
national medical expenditures and social welfare burden. By promoting and
implementing preventive medicine, people choose adjuvant and alternative
therapies to prevent the occurrence of diseases, especially health care and
functional foods that can increase nutrition, promote health, and delay aging;
such therapies have gradually become favored by health-conscious consumers.
The term ‘functional food’ was created in 1984 and swept across Japan.
Basically, this concept is known as “health food” in Taiwan, “nutritional
supplements” in the U.S., and “health care food” in China. Japan’s Ministry of
Welfare defines food as “food that has a relationship between the physiological
functions of food with specific health care effects proven by using various
analytical methods”.
Currently, Taiwan’s biotechnology and health food primarily focus on products
90 155
741860
1,752
3,598
106 183
8761016
2,071
4,253
5.50%
5.55%
5.60%
5.65%
5.70%
5.75%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
The Middle
East/Africa
Rest of Europe Asia-Pacific Western Europe America Global
2017~2020 Variation tendency of global medical
devices market distribution
2017 2020 CAGR
Unit:%Unit:100 million US dollars
86
Ⅴ Overview
of
Operations
that promote blood lipid regulation, gastro-intestinal improvement, immune
regulation, and liver protection.
(2) Correlation between upstream, midstream and downstream sectors
The Company belongs to the medical supply chain distribution industry. The
upstream sector of the industry involves suppliers of various medical care provisions
and healthcare and biotechnological health food materials and components, including
plastic materials, electronic components, metal manufacturing, biotechnological
health food ingredients, raw materials, and other various materials. Meanwhile, the
downstream sector of the industry consists of manufacturers of medical care and
healthcare products, biotechnological health foods, medical tests and monitoring
equipment (such as electronic sphygmomanometers, clinical thermometers, ear
thermometers, air-testing products and thermostat products), optical medical devices
(such as optical lenses and contact lenses), medical disposables (such as catheters and
consumables used for conducting tests), and all kinds of capsules, tablets and health
drinks. As the Company serves as a distributor in the downstream channel of the
industry, the Company sells and distributes the aforementioned medical supplies and
provides consumers with professional consultation services, thus serving as “the last
stepping stone” in the medical supply industry supply chain. The following diagram
shows the upstream, midstream and downstream channels of the industry in which
the Company function.
87
Ⅴ Overview
of
Operations
(3) Various Product Trends and Competition
Since Taiwan's demographic structure has entered an aging society, long-term
care needs have gradually increased the overall burden on society. Therefore,
MedFirst promotes the concept of self-care, self-paying care, and elderly-elderly care.
Self-paying care and elderly-elderly care refer to:
A. Guiding the elderly to develop self-care ability and prepare themselves now and
for the future
B. Giving the elderly a new life with work value gained
C. Enabling the elderly to not only live long but also live well
D. Encouraging the elderly to socialize with others
E. Have 60-year-olds take care of 70-year-olds so that they can better understand
each other's needs and feelings
Upstream, Midstream and Downstream of the Medical Supplies Industry
Plastic Materials
(e.g. colloidal particles, PP, ABS)
Electronic Components
(e.g. IC, sensors, PCB, resistors,
capacitors, LCD)
Metal Manufacturing
(Various metal components)
Other Materials and
Components
(For example, packing
materials)
Medical Care and Healthcare
Products Manufacturer
Upstream
Various types of medical testing
and medical care devices, optical
medical devices and medical
consumables
Biotechnological Health Food
Ingredients and Raw Materials
(e.g. clam extract, dietary fibre,
Lactobacillus powder and food
processing materials)
Biotechnological Health Food
Manufacturer
Various types of capsules, tablets
and health drinks
Medical Care and Healthcare
Products Manufacturer
Various types of medical testing
and medical care devices, optical
medical devices and medical
consumables
Consumers
Midstream Upstream Downstream
88
Ⅴ Overview
of
Operations
Furthermore, MedFirst will expand its service items to create a big health
platform and provide B2B to B2C services in all aspects as follows:
(4) Competition situation
A. Government Policies
The “Six Key Emerging Industries”, including healthcare, biotechnological
tourism, green energy, quality agriculture, culture and creative arts, and the
“Emerging Smart Industries”, which include cloud computing, smart electric
vehicles, smart green buildings, and invention and patent industrialization are the
key industries to be developed under the Executive Yuan’s industrial policies.
In the field of medical care, the Government's industrial development policy is to
promote the 10-year plan 2.0 for long-term care in response to the population's
"aging", "less children", "health promotion" and "disease management" trends to
establish a comprehensive care model for our community and build a network of
care. In order to foster local aging, Long-Term Care 2.0 provides a wide range of
services from support for families, homes, and communities to residential care,
by providing a universal care service system and centered, care-based
communities, and is expected to enhance the quality of life of those with
long-term care needs and their caregivers.
In the Sixth Chen-Chiang Summit organized by the Taiwan Straits Exchange
Foundation (SEF) and the Association for Relations across the Taiwan Straits
(ARATS) of mainland China, both parties signed of the “Cross-Strait
Cooperation Agreement on Medicine and Public Health Affairs” on 21st
89
Ⅴ Overview
of
Operations
December 2010. In the future, cooperation to develop new drugs and medical
devices will be entered into in accordance with the standards of the International
Council on Harmonization (ICH) and the Global Harmonization Task Force
(GHTF) in order to carry out testing, inspection and registration as well as
develop manufacturing practices by establishing of a common framework as the
goal in accordance with the international standards of Good Laboratory Practice
(GLP), Good Clinical Practice (GCP) and Good Manufacturing Practice (GMP).
The overall goal of this partnership is to allow mutual certification between both
sides and to shorten the market penetration process for of the other enterprise.
For Taiwan’s biotechnological encouraging, this means combining the strengths
of each enterprise and driving mutual cooperation to reach new heights.
B. Growing maturity of consumer needs for healthcare
Research has shown that women are more concerned with their health than men,
with many of them being the main shopper in for their families. Furthermore,
society’s low birth rate trend has led to children’s health being taken more
seriously than ever before. At the same time, baby boomers, who are set to
control most of the global economic power in the future, have a more mature
understanding of preventive medicine than previous generations. The healthcare
needs of these key consumer groups will increase the demand and business
opportunities for healthcare-related products.
C. The upcoming generation that stresses prevention over cure
Unbalanced dietary habits due to fast-paced lifestyles have led to the onset of
many diseases at a younger age. Therefore, consumers have placed greater
emphasis on the concept of prevention over cure. Demand for medical supplies
is no longer exclusive to middle-aged and elderly populations. The consumption
of medical supplies among young adults has continuously increased in recent
years. The customer base of a medical supplies store does not only consist of the
ill or injured. With this preventive medical spending behavior, consumers choose
their own purchase medium based on such considerations as brand,
word-of-mouth advice, convenience and aftersales service. The pre-purchase
expectations of the quality of product and service are greater in this new
generation of consumers than ever before. Therefore, to satisfy the new
90
Ⅴ Overview
of
Operations
generation of consumers, more efforts and consideration must be invested in
every details of services than ever before.
D. Effect of information symmetry on price elasticity
In a highly-competitive industry along with the advancement of information
technology, product information has become more transparent than ever. The
Internet now allows many users to share different types of information in real
time. As a result, consumers have a better understanding of product attributes
and whether certain products are suitable when they buy medical supplies. The
channel that consumers use to purchase the products they need is now also
included in the necessary information that must be collected. In such an
environment, the price of a product is not the only factor that influence the
purchasing decision of the customer. The customer relationship management
(CRM) of the channel distributor and its understanding of consumer behavior
and psychology have become more vital than ever before.
3. Research and development overview AA General Manager Office OK
The Company is a professional medical supply chain distributor but has not yet
established a R&D department; therefore, the Company has no R&D-related expenses.
However, to serve the needs of most consumers, the Company’s Product Marketing
Division is actively involved in the development and implementation of new products,
and planning the Company’s own packaging strategies, marketing strategies and
promotion of distribution channels.
4. Long and short-term business development plans
The Company shall adopt a “Total Solutions” concept as its business strategy, to deliver
value from physical to virtual platforms and from products to services. In addition to
consumer goods, the Company shall further strengthen its professional health
education and consultation services and develop platforms related to health
consultations, including health testing, consultations on grant applications,
door-to-door repair services and other health education related consultation services.
Not only will the Company focus on providing high-quality and professional services,
91
Ⅴ Overview
of
Operations
the Company also aims to create and satisfy needs the customer may not even know
he/she has, rather than simply satisfy the existing ones.
1. Short-term business development plan
A. Online-to-Offline (O2O) integration (virtual and physical integration):
An Economic Daily News article from 30th
August 2015 reported that despite the
rapid development of e-commerce in Taiwan, the ratio of e-commerce sales revenue
to the overall retail sales revenue was estimated to increase from only 5.13% in 2014
to 6.5% by 2020. By investigating the causes of this situation, we determined that
physical channels possess three characteristics that e-commerce cannot replace:
immediacy, service and professionalism. However, with the Internet and mobile
devices becoming increasingly common, the liquidity and openness of information
lowers the imporce of the aforementioned characteristics, resulting in the need to
move toward the development of omni-channel retail services. In addition to
e-commerce platforms that can provide consumers with a more diversified purchase
channel and enhance the immediacy of purchases, the Online-to-Offline (O2O) or
physical and virtual integration model can further extend the service and
professionalism of the sales of medical devices. Furthermore, if the wearability of
products becomes even more popular, the acquisition of information will become
even more real and convenient over time, so that big data analytics can be used to
achieve precise marketing objectives.
Due to technological advances, the number of channels through which customers
purchase products has increased. To ensure the safe use of medical devices and
improve the accessibility of medical devices, the Food and Drug Administration
established a mail-order purchasing channel of low-risk Class I medical devices as of
1st November 2012 and a mail-order purchasing channel of body fat meters and
non-invasive, non-implanted, Class II medical devices that are suitable for use at
home and require no professional instructions or assistance on 2nd
January 2014. The
relevant government department shall assess the potential establishment of such
channels in the future, including purchasing channels for other Class II medical
devices subject to assessment of product features and consumer demands, with the
goal of intensifying market competition.
The online sales of medical devices are moving towards the integration and
connection between consumers in physical and virtual channels, thus solving
immediate home care needs, and will eventually become a future trend. Virtual
channels not only provide online consumers with a greater variety of medical
supplies from which to choose, but also provide remote consumers with
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real-time services. The role of these channels will become even more
comprehensive as they evolve from hospital services to community-based
services, to the point to which they are now heading customized home care
services, thus providing a more comprehensive, immediate and convenient
business model.
B. Value delivery:
Consumers have evolved from being “price-oriented” to “value-oriented”, which
is also referred to as smart consumerism. By either emphasizing low
price-performance ratio or using consumer emotions or customization as the
foundation, the product or service specifications that are expected to be delivered
are professionalism and trust. Based on the current model of purchasing medical
supplies, consumer involvement is still relatively low. However, price is not
consumers’ only consideration when making a purchase, and consumers are
currently searching for platforms that can offer professional health education
services as well as a wider variety of products from which to choose.
Furthermore, developing a comprehensive shopping environment that includes
product display, dedicated checkout, and management of customer traffic flow,
can provide consumers with an excellent shopping experience through
experimental marketing channels.
(2) Long-term business development plan
A. Health management cloud platform:
With various major hospitals promoting remote care and health awareness increasing
among the population, medical devices have gradually evolved from medicinal cures
to preventative medicine, where the foundation of preventive medicine is the
establishment of an integrated health management platform. Data measurement,
integration, and computations are carried out using information to understand and
predict future consumer demands, increase repeat customers, and develop long-term
customer loyalty. The process of a health management service is constructed using
technology, and incorporates data collection, computation, estimation and predictions,
to develop an innovative service business model that actively promotes the health
industry.
Information technology has transformed the traditional medical care model by
incorporating information technology intergration, service model establishment, and
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Ⅴ Overview
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remote care provision. One example of such a transformation is the introduction of
the health promotion industry. Taking diabetes patients as an example, data
measurement, integration, and computations, are carried out using information about
diabetes to understand and predict future consumer demands, increase repeat
customers, and develop long-term customer loyalty.
B. Customized home care:
With the implementation of remote care, medical supply channelsbear an even
greater responsibility. In addition to providing related products for consumers to
purchase, these channels will also lease medical devices and provide consultation
services in the future. Respond to these changing trends not only requires the spatial
segregation, personnel retraining, and efficient traffic flow of products, but also the
facilities to clean and manage leased products and cover the additional costs
associated with leasing business operations.
More importantly, door-to-door service will become more prominent as the
aging population trend continues. House call maintenance, interior decoration,
product repair and daily food deliveries shall test the ability of businesses to integrate
logistics, as well as cash and information flow. When daily living assistance becomes
a daily necessity, customized home care services shall also become mainstream.
Standardized products will no longer satisfy the needs of such customers. The only
way to fulfill these service needs is to provide professional training to the Company’s
sales team so that they have the tools necessary to provide customized products and
services. As for products, the Company shall construct a highly-flexible and
diversified product system that will include a search function for product
specifications, as well as warehouse storage to quickly respond to consumer demand.
In terms of services, the Company shall express due care and concern to understand
customers’ needs, and acquire suitable medical knowledge and professional health
education to fulfill such needs. The Company will only able to maintain its
competitive advantage by offering customized products and services as well as a wide
spectrum of customized home care services.
Ⅱ.Market and Sales Overview (1) Market analysis
(1) Sales areas of main products
The Company’s proportion of domestic sales during previous two (2) fiscal years
exceeded 95% as the medical supplies chain distribution business of the Company focuses
mainly on product sales and provision of services to domestic consumers. Therefore, the
Company’s main sales area is the domestic market.
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Unit: NT$ thousands
(2) Market share
The Company is engaged in the trading of health care products in the chain distribution
channel. According to data from the Taiwan Chain Store Almanac in 2019, the total number of
domestic medical supply chain stores at the end of 2018 was 5,056, whereas the Company had
240 retail stores in 2018, accounting for 4.75% of the total number of domestic medical supply
chain stores within the country. Furthermore, data from the “Monthly Report on Commercial
Revenues” by the Ministry of Economic Affairs showed that the total sales in medical drugs,
medical supplies and cosmetics businesses was NT$210.6 billion in 2018, with the Company’s
sales revenue reported in the 2018 Annual Report totaling NT$4.4398 billion and accounting
for 2.1% of the market share.
(3) Supply and Demand Status and Growth of the Future Market
A. Supply
Since the Company is a downstream channel chain industry in the medical
supplies industry, the output value of its upstream medical equipment
manufacturing industry is used for supply side analysis. According to the
TrendForce report, the global medical equipment market was estimated to be
US$444.2 billion in 2018, and US$577.6 billion in 2023, with an annual
compound growth rate of 5.4%. In response to aging, chronic disease prevention
and disability assisted technology, the global demand for medical equipment
continues to grow. According to the BMI report, the market size of the global
medical equipment industry in 2018 was US$389.9 billion, with an estimated
US$490.2 billion in 2022, reflecting a compound growth rate of 5.9% in
2018-2022. Looking forward to 2019, according to the survey data of the
Industrial Technology International Strategy Development Institute of ITRI on
Taiwan's medical equipment industry, Taiwan's medical equipment output value
in 2019 is estimated to reach NT$120.66 billion, with an increase of 8.2% over
the previous year. Overall, the output value of Taiwan's medical equipment
industry will continue to grow in the future.
Year 2017 2018
Region Amount Proportion Amount Proportion
Domestic 4,194,186 96.99% 4,460,250 96.28%
Export 130,221 3.01% 172,393 3.72%
Total 4,324,407 100.00% 4,632,643 100.00%
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With regard to government policy, due to the improvement of the health
awareness of the Chinese people and the aging and declining population
structure, the demand for care is increasing every day. In order to meet the
sizeable long-term care needs in the future and alleviate significant family care
responsibilities, the Executive Yuan began implementing the Long-Term Care
2.0 program in 2017, in which long-term care services are the focus of
government regulation and assessment. All county and city governments have
actively promoted the Long-Term Care 2.0 policy. Many surrounding industries
have also begun to lay out long-term care related markets, including care
services, home care and community and home rehabilitation.
Online sales of medical equipment have been phased open, and the competition
for channels has also become more open. Currently, online stores can sell
first-class medical equipment, and market competition is becoming increasingly
clear.
B. Demand
(A) Domestic medical supplies market
According to the Ministry of Health and Welfare and the Ministry of the Interior,
Taiwan officially became an "ageing society" in 2018, which means that one out
of seven people is elderly. Faced with a heavy 1:7 burden, MedFirst has been
focusing on the elderly and home care for nearly 30 years. In addition to
providing niche market products, such features as professional care consulting
services, medical knowledge and training for assistive device use have also laid a
gap between companies in the same industry. As the proportion of the elderly
population climbs, the business opportunities for the elderly continue to grow.
According to the “Estimated report on the population of the Republic of China
from 2014 to 2061” prepared by the Economic Development Committee of the
Executive Yuan, the number of elderly people aged 65 and over will increase
from 3,268,000 in 2017 to 7,152,000 in 2061. In the structure of the elderly
population, the proportion of the structural layer of the elderly aged 65 to 74
years old shows a downward trend, while the proportion of the structural layer of
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Ⅴ Overview
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the elderly aged 75 to 85 years old shows an upward trend. The above data
shows that in addition to the long-term increase trend of the population over 65
years old, the increase in the proportion of the population over the age of 75 also
reflects the trend of longevity in the country. The increase in the elderly
population and the increase in the average life expectancy of the national
population will make consumers pay more attention to the health care concept of
“live long, live well and live healthy”, and the demand for medical care, health
care products and bio-tech care products is expected to increase. According to
the statistics of MedFirst's members, members over 60 years old accounted for
26.31%, and 40-60 years old accounted for 49.21%. This shows that the elderly
are a long-term stable customer base of MedFirst, and will help to promote the
growth of the market for the company's industry.
Year
Elderly population aged over 65 (thousand persons)
Total
65-74 years old
young elderly
population
75-84 years old
older elderly
population
Over 85 years old
super elderly
population
2016 3,108 1,782 969 358
2021 3,974 2,513 1,038 423
2031 5,731 3,217 1,957 557
2041 6,815 3,173 2,532 1,110
2051 7,391 3,299 2,539 1,553
2061 7,152 2,829 2,660 1,663
Year Proportion of age distribution (%)
2016 100.0 57.3 31.2 11.5
2021 100.0 63.2 26.1 10.6
2031 100.0 56.1 34.1 9.7
2041 100.0 46.6 37.2 16.3
2051 100.0 44.6 34.4 21.0
2061 100.0 39.6 37.2 23.3
(B) Medical supplies market in mainland China
With the improvement of the living standards of mainland residents and
their awareness of medical care, the demand for medical device products
continues to grow, and the medical device industry has entered a period of
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Ⅴ Overview
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rapid growth. In 2017, compared with the market size of the medical device
industry in mainland China, the per capita medical device expenditure in
mainland China was much lower than that in developed countries. In
developed countries, the per capita medical device costs sere all greater than
$100, and as much as $513 in Switzerland, while the per capita medical
device cost in the mainland was only $6. With the aging population, the
increase in per capita disposable income and the strong support of
government policy, room for growth wil still be ample in the mainland’s
future medical device industry.
(C) Biotechnological health food market
Based on past estimates from Global Industry Analysts and Taiwan
Science and Technology Center, the global market for biotech and health food
products has grown from US$155.9 billion in 2007 to US$243.4 billion in
2015, indicating a compound annual growth rate of 5.7%. The top three
regional markets in the world, which are the United States, Europe, and Japan,
accounted for 86% of the global market for biotech-health food products due
to their high levels of disposable income. Nevertheless, the Asia-Pacific
region is experiencing rapid growth thanks to increasing income, and its
compound growth rate from 2010 to 2015 was about 7-10%, exceeding that of
the global market. The Asian market has continued to show positive growth.
In a recent unofficial market survey, the market size of Taiwan's health
products exceeded NT$100 billion. In 2017, the value of the health food
market reached NT$114.9 billion. Therefore, the future market outlook is very
promising.
(4) Competition Niche
A. Stable customer relations earn customers’ trust
The Company upholds the basic belief of becoming “the health manager for
your family”. The professionalism among the Company’s emplyees is top-quality,
and they use their professionalism and expertise to provide customers with
recommendations and advice, offer more in-depth and detailed services to satisfy
customer’s needs, advance the professional reputation of the “MedFirst” brand,
and enable customers to have a great deal of confidence in the Company
B. Product diversity meets customer demand
The Company has many retail stores throughout Taiwan. The Company’s
medical team provides professional explanations and services related to the wide
variety of products available, thus providing customers with a one-stop shopping
experience. The Company also pioneered the 7-day goods return policy in the
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industry, and offers a variety of products and comprehensive services to customers
to give them peace of mind.
C. Bulk-buying reduces purchasing costs
The Company uses its large market share to control the quality of imported
products and strives to reduce costs associated with delivery to ensure that
customers are well-protected and rewarded with lower-cost goods.
D. Focus on providing medical supplies services and getting the brand to shopping malls
The Company also participates in shopping turnkey projects to provide more
diverse and extensive services that cover various aspects of our daily lives. The
Company plays the role of a family health manager to penetrate deep into every
aspect of daily life with the aim of enhancing the quality of people’s lives
E. Strengthening the position of Taiwan on a global scale
The Company has used its experience developing the market in Taiwan as a
foundation for integrating healthcare professionals into the market in mainland
China to drive the Company’s market share there.
(5) Favorable and unfavorable factors and countermeasures in the long-term development
vision
A. Favorable factors
(A) Our government actively promotes the development of the medical devices
and supplies industry
In May 2013, our government changed the name of the “Diamond Action
Plan for the Takeoff of Biotechnology in Taiwan” to the “Action Plan for
the Takeoff of Taiwan’s Biotechnology Industry” to better meet the needs
of the industry. The adjusted action plan divided the biotechnology
industry into three areas, each with different characteristics, namely
medical drugs, medical devices and supplies, and healthcare management,
and developed measures to promote each area. The aim of the action plan
is to continuously strengthen established systems and the technological
base of each of the three areas in the hopes of driving success in the areas
of medical drugs, and medical devices and supplies, as well as driving
innovation in the healthcare management sector. The action plan solidifies
efforts to train personnel in the biotechnology industry and encourage great
talent in the country to enter the field of biotechnology to serve the
industry and bridge the gap between theory and applications in the field.
Government initiatives for actively promoting the development of the
biotechnology industry, as mentioned above, and listing the medical
devices and supplies as one of the key areas for development shall
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effectively drive this industry’s development, increase market opportunities,
and encourage personnel in the industry to develop more innovative
products.
(B) Increase of national income, the ageing population, and rising
healthcare awareness
As the national income, the proportion of the elderly population and
national average life expectancy continue to increase, people’s awareness of
healthcare has moved toward the concept of “Live Longer, Live Better and
Live Healthier”. Therefore, expenditures on healthcare and preservation,
medical care for patients with chronic and long-term diseases, and other
medical care and prevention services are expected to continuously grow, thus
driving the future growth momentum of the medical supplies market.
(C) The Company is a leading enterprise in the medical supplies chain
distribution industry and shall continue to expand its retail stores and develop
distribution channels
The Company is a leading enterprise in the medical supplies chain
distribution industry in terms of number of retail stores it has, and boasta an
excellent brand image and reputation. The Company owns many retail stores
and shopping malls, with stores being established at strategic locations inside
and around various major hospitals. The shopping malls are operated with the
Company appointed the contractor of the medical supplies sales department of
various major hospitals. The Company shall continue to expand its retail
stores and further developing its distribution channels,as well as its product
portfolio by developing its services in the Taiwanese market. Furthermore, the
Company shall continue to drive efforts to develop its medical supplies
business in mainland China to reap the benefits of economies of scale and
bulk distribution.
(D) Understanding the needs and preferences of customers, developing its own
diverse branded services, and improving customer satisfaction
The Company is a professional medical supplies chain distributor. Due to
the specifications of the industry in which the Company operates, the
Company must first makes contact with consumers to understand their needs
and preferences and then use this information to develop its own products that
can satisfy customer needs. By selling products that better suit for consumers’
needs, the Company will be able to increase customer satisfaction and gain
repeat sales.
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(E) Great loyalty and repeat customers of the brand effectively contribute to
increased sales revenue
The Company’s store personnel employ such methods as inviting
member customers to visit their stores to take advantage of sales promotions
to increase the number of visits to the stores and customers’ loyalty and
repeat-purchases. Currently, more than1.3 million people have joined the
Company’s membership. The Company’s members can use their membership
cards to enjoy various rewards including discounts, cashback from redeeming
bonus points and member’s birthday gifts, which all help encourage
customers to return to the stores. Sales revenue from purchases by members
currently contributes to half of the Company’s total monthly sales revenue.
This figure is constantly increasing, demonstrating the great loyalty and
repeat-visits of member customers of the brand. Sales revenue from our loyal
customers is expected to continue to increase in future and be a driving force
of market growth and the Company’s expansion.
B. Unfavorable factors and countermeasures
(A) Increasingly vague industry boundaries and increasing market competition
Due to the aging population trend in developed countries, business
opportunities to serve the elderly population have a greater potential for future
growth. Furthermore, increasingly vague industry boundaries have led to a
situation where medical supplies are being sold in drug stores and cosmetic
retail stores, as well as on online shopping platforms that sell a wide variety
of other products. Therefore, both the product and price competition shall
become increasingly tough in the future.
Countermeasures:
The Company has been committed to training and developing store personnel
to be equipped with professional expertise, skills and passion for delivering great
service so that they will be able to take the initiative to provide customers with
healthcare services and respond to their medical supply problems with an excellent
service attitude. By offering comprehensive professional services, the Company
can to provide customers with the most comprehensive medical supplies solutions
that will enhance the customer’s recognition, trust and loyalty towards the brand
and the Company.
Furthermore, the Company has established strategic partnerships with
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Ⅴ Overview
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Operations
agents in different regions to understand changing market trends and provide
differentiated services amd price competition strategies, and has applied brand
marketing abilities and all-in-one service solutions to maintain a long-term
stable, and cooperative relationship.
(B) Wide variety of products, wide management span, and difficulty in managing
quality control
The Company upholds the spirit of serving customers while offering a
highly diverse range of products. However, the Company has experienced
difficulties in managing quality across such a wide range of products that
come from a variety of suppliers.
Before importing products to be sold on store shelves, the Company
must strengthen its quality control for products, evaluate and rate suppliers,
and actively carry out preventive measures to control product quality on
behalf of the customers. Should the products suffer defects, the Company
must actively implement trace and recall procedures to prevent customers
from purchasing defective products, thus further enhancing the confidence
customers habe in our brand.
(C) Brand image and reputation in mainland China has not yet won the people
over
The Company has had a presence in mainland China for years due to its
confidence in the country’s market potential. However, consumption habits and
purchasing methods among consumers in mainland China differ from those in
Taiwan. Furthermore, the mainland China market is vast and geographically
scattered. Local competitors in mainland China have a geographical advantages
and a great abundance of capital, so the Company has experienced difficulties in
establishing a brand reputation there. Although business performance has grown
significantly, it has not yet met the Company’s expectations or desired goals.
Countermeasures:
The Company shall use Taiwan’s excellent brand image as a
competitive niche to gradually enter locations with a high purchasing power,
like Shanghai, Nanjing, Xiamen, Hangzhou and Beijing, to serve as the
market entry points and promote the brand. Furthermore, the Company shall
strengthen its product portfolio and retail sales technique, as well as uphold
the Company’s service concept of using “love, care and patience” as well as
“sincerity” to acquire customers’ “satisfaction”, enhance customers’
recognition of the Company’s brand, and further expand into the mainland
China market to help enhance overall business performance.
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(2) Important Applications and the Manufacturing Process of Major Products
1. Applications of Major Products
(2) Product Review and Launch Process
(3) Supply Status of Major Raw Materials
The Company’s major product categories, their respective suppliers and supply status are shown
below. The Company receives a regular supply of products.
(4) List of Major Suppliers and Clients
(1) A list of any suppliers accounting for ten (10) percent or more of the Company's total purchase
amount in either of the two (2) previous fiscal years, the amount bought from each supplier, the
percentage of the total amount of purchases accounted for by each supplier, and an explanation of
the reason for the increase or decreases of the figures:
In 2018, the proportion of purchases of the major suppliers of the Company declined. The main
reason is that the Abbott food safety incident caused a decline in consumers' willingness to
purchase. Therefore, the Company changed to other brand substitute products, but the main
suppliers with more than 10% of the total purchases remained unchanged, and only the proportion
of purchases decreased.
Unit: NT$ thousand
Item
2017 2018 End of the previous season in 2019
(Note 2)
Name
(Note 1) Amount
Occupat
ion of
yearly
net
purchase
(%)
Relat
ionsh
ip
with
issuer
Name
(Note 1) Amount
Occupati
on of
yearly net
purchase(
%)
Relations
hip with
issuer
Name
(Note 1) Amount
Occup
ation
of
yearly
net
purcha
se(%)
Relations
hip with
issuer
1 Abbott 556,229 18.11 No Abbott 429,604 13.05 No Abbott 107,561 12.55 No
2 Other
2,515,630 81.89
Other 2,861,703 86.95
Other 749,455 87.45
purchases
income 3,071,859 100.00
purchase
s income 3,291,307 100.00
purchases
income 857,015 100.00
Note 1: The name of the supplier, the purchase amount, and the proportion of the purchase amount
Product Category Application
1. Medical care
2. Healthcare
3. Biotechnological
health care supplies
4. Others
Products sold at medical supplies chain stores to
provide consumers with medical care, home care and
preventive health options.
Major Product
Category Suppliers Supply Status
Medical Care Abbott, Yuli,Kunyang Normal supply
Healthcare Jingzan, Dachang Normal supply
Biotechnology
Health Care Minshi , Yuli, Tianyi Normal supply
Publish
investment
information on
the official
website
New commodity and market demand survey
Invite
manufacturers to
participate in
investment
conferences
Product
screening
Contract
negotiation
Sell on the shelf
of the store
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Ⅴ Overview
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Operations
of more than 10% of the total purchase amount in the last two years are listed. However,the
contract stipulates that the supplier name cannot be disclosed or that the transaction object is an
individual and not a related person, so it can be presented by code.
(2) A list of clients accounting for ten (10) percent or more of the Company's total amount of
sales in either of the two (2) previous fiscal years, the amounts sold to each client, the
percentage of the total amount of sales accounted for by each client, and an explanation of the
reason for increase or decrease of the figures:
The Company is a professional medical supplies chain distributor that targets regular consumers as
its main customers. Therefore, the Company has not faced a situation in which clients account for
ten (10) percent of the Company’s total amount of sales.
(5) Output volume & value over two (2) years:
The Company is a medical supply chain distributor that focuses on chain development, product
sales, care consultation and drug-use consultation, but does not engage in production or
manufacturing, therefore, the analysis of changes in production volume does not apply.
(6) Sales unit & amount over two (2) years: Unit: NT$ thousand
Note 1: The Company is a composite dealer of medical appliances with numerous products for sale and
inconsistent quantity units. Therefore, quantities are not available
Note2: Other rental income or other operation revenue.
III. The number of employees employed for the two (2) previous fiscal years, and during the
current fiscal year as of the publication of the Annual Report, their average years of service,
average age, and education level (including the percentage of employees at each level)
Unit: person; years of age; year; %
Year 2017 2018
sales unit &
amount Domestic Export Domestic Export
Main Product Unit Amount Unit Amount Unit Amount Unit Amount
Medical care
(Note 1)
3,119,952
( Note 1)
96,868
( Note 1)
3,337,584
( Note 1)
129,001
Healthcare 341,997 10,618 357,066 13,801
Biotechnological
health care
supplies
681,853 21,170 707,389 27,341
Others(Note 2) 50,384 1,565 58,211 2,250
Total 4,194,186 130,221 4,460,250 172,393
Year 2017 2018 Current year to the
20th April 2019
No. of
staff
Internal Staff 169 183 183
Retail Salesperson 950 1053 1,087
Total 1,119 1,236 1,270
Average age 27.68 27.77 27.83
Average Seniority 3.13 3.36 3.36
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IV. Information of environment-oriented expenditures
Describe the loss (including damages or compensation paid) suffered by the Company due
to environmental pollution incidents that occurred during the previous two (2) fiscal years and
during the current fiscal year as of the publication of the Annual Report, the total penalty/fine
amount, and the Company’s future counter-policies (including measures for improvement) and
possible expenses to be incurred (including possible losses if no preventive measures are taken,
and the penalties and estimated damage compensation amount (if reasonable estimation cannot
be made, explain why): none
Ⅴ. Labor/Management Relations
(1) The status of employee welfare, on-the-job training, employee development training,
retirement procedures and implementation, labor-management coordination and the protection
of employee rights and benefits:
1- Employee welfare measures
The Company not only helps employees apply for labor insurance and national health
insurance (NHI), and provides them employee group insurance, but also organizes trips to
foreign countries and provides employees with health checks. In addition to paying empolyees’
salaries, the Company also provides individual performance bonuses, bonuses for outstanding
store managers, recruitment bonuses, birthday gifts, holiday gifts, employee wedding and
funeral subsidies, hospitalization subsidies, disaster aid and emergency relief, group
recreational activity subsidies, childcare subsidies, education scholarships, subsidies for
obtaining professional certifications and employee shopping discounts, totaling up to
NT$1,927,000. Furthermore, the Company distributes quarterly bonuses and year-end bonuses
based on the Company’s earnings.
2- Employees engaging in professional development and training
In terms of employees engaging in professional development and training, an employee is
permitted to submit proposals to undergo external training based on his/her job requirements
or business needs. Subsidies for professional development are distributed after evaluating such
needs. Employees are required to prepare end-of-training reports in order for the Company to
understand the learning process and progress that the employee has made and evaluate how
the training outcomes can be applied to drive the business forward In terms of education and
training, each employee shall involve themselves in personal career development and
promotion plans from the first day on which he or she starts in their position, and shall be
assigned a series of education and training courses, including induction training for new hires,
Year 2017 2018 Current year to the 20th April
2019
Educational
Background
(%)
Ph.D. 0.09% 0.00% 0.00%
Master Degree 5.00% 4.53% 4.96%
Bachelor
Degree
91.51% 93.53% 93.07%
Senior High
School
3.22% 1.78% 1.89%
Below Senior
High School
0.18% 0.16% 0.08%
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future store manager/executive officer training, and store manager/team leader training
amongst others. Furthermore, the Company shall organize on-the-job training at the
Company’s head office or in retail stores with the purpose of coaching professional skills and
enhancing service excellence among employees so that they are equipped with new knowledge
and skills, thus ensuring that employees not only offer the best-quality service to customers,
but also expand their individual career path.
3- Employee retirement system
The Company has set aside retirement funds in accordance with the relevant labor
pension system. Retired employees can enjoy various social security benefits and apply for
pension payments in accordance with the Labor Standards Act. As of 1st July 2005, the
Company has been contributing six (6) percent of the monthly salaries of employees who opt
to participate in the labor pension fund of the Labor Pension Act into their personal pension
accounts at the Bureau of Labor Insurance.
4- Agreement on labor and capital as well as the rights of employees, and maintaining and
measuring their interests:
The Company has established its own work rules, and any problems between employer
and employees shall be handled pursuant to them. Furthermore, the Company has established
an employee complaint hotline, for which the Human Resources department is responsible for
answering calls and immediately handling any employee complaints. The Company organizes
labor management meetings on a quarterly basis. Both employer and employees shall provide
a number of proposals to enhance employee rights in the spirit of cooperation, where mutually
beneficial labor relations take priority.
(2) Any loss suffered by the Company due to labor disputes during the previous two (2) fiscal
years and during the current fiscal year as of the publication of the Annual Report, an estimate
of the losses incurred to date and that may be incurred in the future, and the countermeasures
taken or to be taken. If a reasonable estimation cannot be made, explain why it cannot be made:
the Company has not faced any labor disputes during the fiscal year as of the publication of
the Annual Report.
106
Ⅴ Overview
of
Operations
Ⅵ. Important Agreements
AGREEMENT COUNTERPARTY CONTRACTE
D PERIOD
MAJOR
CONTENTS RESTRICTIONS
Short-term Loan E.SUN BANK 2018.1~2019.1 Short-term
Loan None
Short-term Loan Hua Nan Bank 2018.3~2019.3 Short-term
Loan None
Short-term Loan Chang Hwa Bank 2019.1~2010.1 Short-term
Loan None
Short-term Loan Far Eastern Int’l Bank 2019.1~2010.1 Short-term
Loan None
Short-term Loan DBS Bank 2019.3~2010.2 Short-term
Loan None
Long-term Secured Loan Cathay United Bank 106.1~2010.1 Long-term
Secured Loan None
Long-term Secured Loan Chang Hwa Bank 2019.1~2022.1 Long-term
Secured Loan None
Long-term Loan Far Eastern Int’l Bank 2019.1~2021.1 Long-term
Loan
None (shared with
short-term)
Long-term Loan Yuanta Bank 2019.1~2021.1 Long-term
Loan None
Long-term Loan DBS Bank 2019.3~2021.2 Long-term
Loan
None (shared with
short-term)
107
Ⅵ FINANCIAL
STATUS
Ⅵ.Financial Status
I. Condensed Balance Sheet and Statement of Comprehensive Income Information for the five
(5) most recent fiscal years and the names and audit opinions of the attesting CPA
(1) Condensed Balance Sheet and Statement of Comprehensive Income
1. Condensed Balance Sheet – International Financial Reporting Standards (IFRS)
(Consolidated)
Unit: NT$ thousands
Year
Item Financial Summary for The Past Five Years
2014 2015 2016 2017 2018
Current assets 1,166,539 1,226,312 1,294,321 1,409,872 1,678,802
Real Estate, Plant and
Equipment 456,933 460,080 653,952 1,304,802 1,281,503
Intangible assets 8,518 17,913 14,680 38,202 27,092
Other assets 78,793 70,633 348,252 131,078 138,982
Total assets 1,710,783 1,774,938 2,311,205 2,903,536 3,130,399
Current
liabilities
Before
distribution 802,177 827,439 1,396,910 1,181,007 1,675,657
After
distribution 882,945 928,399 1,487,278 1,254,431 (Note)
Non-current liabilities 276,447 275,811 258,490 845,511 544,186
Total
liabilities
Before
distribution 1,078,624 1,103,250 1,655,400 2,026,518 2,219,843
After
distribution 1,159,392 1,204,210 1,745,768 2,099,942 (Note)
Equity attributable to
shareholders of the
parent company
626,855 667,039 652,063 862,770 895,955
Capital stock 252,400 252,400 252,400 282,400 282,400
Capital surplus 204,900 204,900 204,900 390,115 390,115
Earnings
retained
Before
distribution 163,771 205,046 205,371 205,215 243,388
After
distribution 83,003 104,086 115,003 131,791 (Note)
Other equity interest 5,784 4,693 -10,608 -14,960 -19,948
Treasury stock - - - - -
Non-controlling interest 5,304 4,649 3,742 14,248 14,601
Total equity
Before
distribution 632,159 671,688 655,805 877,018 910,556
After
distribution 551,391 570,728 565,437 803,594 (Note)
Note: As of the print date of this annual report, the Company has not yet held the General Shareholders’ Meeting.
Therefore, the figures after dividend distribution are not disclosed.
108
Ⅵ FINANCIAL
STATUS
(2) Condensed Statement of Comprehensive Income -IFRS (Consolidated)
Unit: NT$ thousands
Year Financial Summary for The Past Five Years
Item 2014 2015 2016 2017 2018
Operating Revenue 3,606,527 3,880,229 4,109,619 4,324,407 4,632,643
Gross Profit 1,117,964 1,184,450 1,250,944 1,306,766 1,438,914
Operating income (loss) 104,746 138,136 106,894 113,656 152,202
Non - operating Revenue
and Expenses 16,116 12,100 18,056 -1,572 -3,993
Income Before Tax 120,862 150,236 124,950 112,084 148,209
Profit from Continuing
Operations 120,862 150,236 124,950 112,084 148,209
Loss from Discontinued
Operations - - - - -
Net income(loss) 96,927 121,193 101,091 88,795 112,385
Other Comprehensive
Income (Income After
Tax)
1,470 -896 -16,014 -4,868 -6,321
Total Comprehensive
Income 98,397 120,297 85,077 83,927 106,064
Net Income Attributable
to Shareholders of the
Parent Company
98,403 121,848 101,998 90,728 112,950
Net Income attributable to
Non-controlling Interest -1,476 -655 -907 -1,933 -565
Comprehensive Income
attributable to
Shareholders of the Parent
Company
99,873 120,952 85,984 85,860 106,969
Comprehensive Income
attributable to
Non-controlling Interest
-1,476 -655 -907 -1,933 -905
Earnings per Share (EPS) 4.04 4.83 4.04 3.29 4.00
109
Ⅵ FINANCIAL
STATUS
(3) Condensed Balance Sheet –IFRS(Individual)
Unit: NT$ thousands
Year
Item
Financial Summary for The Past Five Years
2014 2015 2016 2017 2018
Current assets 1,069,886 1,143,108 1,189,988 1,209,054 1,447,100
Funds & Investment 85,709 72,572 343,408 412,669 392,460
Plant Assets 436,417 442,946 443,900 1,092,565 1,091,801
Intangible assets 8,492 17,899 14,678 8,233 4,376
Other assets 73,944 61,843 275,374 109,864 113,768
Total assets 1,674,448 1,738,368 2,267,348 2,835,084 3,047,736
Current
liabilities
Before distribution 774,021 799,087 1,360,094 1,130,993 1,611,676
After
distribution 854,789 900,047 1,450,462 1,204,417 (Note)
Long-term liabilities 186,346 172,949 158,333 741,251 437,000
Other liabilities 87,226 99,293 96,858 100,070 103,105
Total
liabilities
Before distribution 1,047,593 1,071,329 1,615,285 1,972,314 2,151,781
After
distribution 1,128,361 1,172,289 1,705,653 2,045,738 (Note)
Capital stock 222,700 252,400 252,400 282,400 282,400
Capital surplus 204,900 204,900 204,900 390,115 390,115
Retaining
earnings
Before distribution 163,771 205,046 205,371 205,215 243,388
After
distribution 83,003 104,086 115,003 131,791 (Note)
Unrealized Gain or Loss on
Financial Instruments - - - - -
Other equity interest 5,784 4,693 (10,608) (14,960) (19,948)
Net Loss Unrecognized as Pension
Cost - - - - -
Total
amount of
shareholders
’ equity
Before distribution 626,855 667,039 652,063 862,770 895,955
After
distribution 546,087 566,079 561,695 (Note) (Note)
Note: As of the printing date of the annual report, the company has not held a general meeting of
shareholders, so the post-distribution figures have not been disclosed.
110
Ⅵ FINANCIAL
STATUS
(7) Condensed Statement of Comprehensive Income –IFRS(Individual) Unit: NT$ thousands
Year Item
Financial Summary for The Past Five Years
2014 2015 2016 2017 2018
Operating Revenue 3,516,317 3,760,414 3,975,722 4,184,969 4,439,866
Gross Profit 1,088,987 1,148,914 1,166,648 1,258,930 1,363,200
Operating Income (loss) 117,406 150,782 120,619 134,291 162,026
Non - operating Revenue
and Expenses 3,858 (920) 4,250 (21,069) (16,204)
Income Before Tax 121,264 149,862 124,869 113,222 145,822
Profit from Continuing
Operations 121,264 149,862 124,869 113,222 145,822
Loss from Discontinued
Operations - - - - -
Net income(loss) 98,403 121,848 101,998 90,728 112,950
Other Comprehensive
Income (Income After Tax) 1,470 (896) (16,014) (4,686) (5,981)
Total Comprehensive
Income 99,873 120,952 85,984 85,860 106,969
Net Income Attributable to
Shareholders of the Parent
Company - - - -
Net Income attributable to
Non-controlling Interest - - - -
Comprehensive Income
attributable to Shareholders
of the Parent Company - - - -
Comprehensive Income
attributable to
Non-controlling Interest - - - -
Earnings per Share (EPS) 4.04 4.83 4.04 3.29 4.00
(2) Name of the CPAs and their audit opinion over the five (5) most recent fiscal years
Year Accounting CPA Firm Certified CPA Audit Opinion
2014 Deloitte & Touche Chen, Hui-Ming,Weng, Po-Jen Unqualified opinion
2015 Deloitte & Touche Chen, Hui-Ming,Weng, Po-Jen Unqualified opinion
2016 Deloitte & Touche Chen, Hui-Ming,Weng, Po-Jen Unqualified opinion
2017 Deloitte & Touche Chen, Hui-Ming,Weng, Po-Jen Unqualified opinion
2018 Deloitte & Touche Hsieh, Ming-Chung,
Kuo, Nai-Hua Unqualified opinion
111
Ⅵ FINANCIAL
STATUS
II. Financial Summary of The Past Five Years
(1) Financial Analysis-Based on the IFRS (Consolidated):
Unit: Thousand NTD Year
Item
Financial Summary for The Past Five Years
2014 2015 2016 2017 2018
Financial
structure
(% )
Debt Ratio 63.05 62.16 71.62 69.79 70.91
Ratio of long-term capital to
real estate, plant and
equipment 198.85 205.94 139.81 132.01 113.52
Solvency %
Current ratio 145.42 148.20 92.66 119.38 100.19
Quick ratio 75.39 75.23 42.49 57.58 51.09
Interest earned ratio (times) 38.25 47.99 40.27 10.92 18.19
Operating
performance
Accounts receivable turnover
(times) 93.38 85.29 54.43 40.44 38.77
Average collection days 4 4 7 9.02 9.41
Inventory turnover (times) 5.16 4.82 4.66 4.39 4.29
Accounts payable turnover
(times) 4.23 4.44 3.84 3.37 3.15
Average days of sales 71 76 78 83.14 85.08
Real estate, plant and
equipment turnover (times) 7.73 8.46 7.38 4.42 3.58
Total assets turnover (times) 2.33 2.23 2.01 1.66 1.54
Profitability
Return on total assets (%) 6.44 7.11 5.08 3.77 3.96
Return on stockholders' equity
(%) 19.06 18.59 15.23 11.59 12.57
Pre-tax income to paid-in
capital (%) 47.89 59.52 49.50 39.69 52.48
Net profit ratio (%) 2.69 3.12 2.46 2.05 2.43
Earnings per share (NT$ in
dollars) 4.04 4.83 4.04 3.29 4.00
Cash flow
Cash flow ratio (%) 10.50 17.36 24.04 16.11 19.71
Cash flow adequacy ratio (%) 60.31 66.30 45.68 32.97 73.68
Cash reinvestment ratio (%) -0.35 5.13 18.79 4.9 13.88
Leverage Operating leverage 8.93 6.9 9.33 8.57 7.03
Financial leverage 1.03 1.02 1.03 1.11 1.06
During this period, the turnover rate of accounts receivable was low, mainly due to the increased revenue of the
e-commerce business, and the payment request period was longer.
The proportion of long-term funds in real estate, plant, and equipment decreased, mainly because the real estate
amount increased due to the purchase of logistics warehouses, resulting in a decline in the proportion of long-term
funds for real estate.
The increase in the current ratio was the result of the repayment of short-term borrowings in 2017.
The decreased cash flow ratio and current investment ratio were caused by increased capital expenditures due to land
acquisition in 2017.
112
Ⅵ FINANCIAL
STATUS
(2) Financial Analysis -Based on IFRS (Individual):
Unit: Thousand NTD
Year Financial Summary for The Past Five Years
Item 2014 2015 2016 2017 2018
Financial
structure
(% )
Debt Ratio 62.56 61.63 71.24 69.57 70.60
Ratio of long-term capital to
real estate, plant and
equipment
206.32 212.05 204.38 155.97 122.09
Solvency %
Current ratio 138.22 143.05 87.49 106.9 89.79
Quick ratio 68.19 69.97 37.76 44.5 40.99
Interest earned ratio (times) 38.38 47.96 40.24 11.05 17.91
Operating
performance
Accounts receivable turnover
(times) 90.19 84.5 54.63 40.71 39.99
Average collection days 4 4 7 9 9
Inventory turnover (times) 5.37 4.86 4.68 4.46 4.23
Accounts payable turnover
(times) 4.40 4.43 3.89 3.41 3.49
Average days in sales 68 75 78 82 86
Real estate, plant and
equipment turnover (times) 7.88 8.55 8.97 5.45 4.07
Total assets turnover (times) 2.32 2.2 1.99 1.64 1.51
Profitability
Return on total assets (%) 6.68 7.3 5.22 3.92 4.08
Return on stockholders' equity
(%) 19.53 18.83 15.46 11.98 12.87
Pre-tax income to paid-in
capital (%) 48.04 59.37 49.47 40.09 51.64
Net profit ratio (%) 2.80 3.24 2.57 2.17 2.54
Earnings per share (NT$ in
dollars) 4.04 4.83 4.04 3.29 4.00
Cash flow
Cash flow ratio (%) 11.93 18.26 23.82 14.08 18.62
Cash flow adequacy ratio (%) 55.46 61.95 41.73 27.05 66.68
Cash reinvestment ratio (%) 0.36 5.49 15.35 3.88 12.09
Leverage Operating leverage 7.65 6.21 7.84 6.97 6.30
Financial leverage 1.03 1.02 1.03 1.09 1.06
113
Ⅵ FINANCIAL
STATUS
**The calculation formulae used for financial analysis are as follows:
1. Financial structure
(1) Ratio of liability to asset = total liability / total asset.
(2) Ratio of long-term capital to real estate, plant and equipment = (total equity + non-current liability) / real estate,
plant and equipment net amount.
2. Solvency
(1) Current ratio = current asset / current liability.
(2) Quick ratio = (current asset – inventory – prepaid expenses) / current liability.
(3) Interest earned ratio = net profit before income tax and interest expenses / current interest expenses.
3. Operating ability
(1) Accounts payable (including accounts receivable and notes receivable caused by business) turnover ratio = net
sales / average accounts receivable (including accounts receivable and notes receivable caused by business)
balance.
(2) Average collection days = 365 / accounts payable turnover ratio.
(3) Inventory turnover ratio = sales cost / average inventory.
(4) Accounts payable (including accounts payable and notes payable caused by business) turnover ratio = sales cost /
average accounts payable (including accounts payable and notes payable caused by business) balance.
(5) Average days in sale = 365 / inventory turnover ratio.
(6) Real estate, plant and equipment turnover ratio = net sales / average real estate, plant and equipment net amount.
(7) Total assets turnover ratio = net sales / average total assets.
4. Profitability
(1) Return on assets = (after-tax profit and loss + interest expense × (1 – tax rate)) / average total assets.
(2) Return on equity = after-tax profit and loss / average total equity.
(3) Net profit ratio = after-tax profit and loss / net sales.
(4) Earnings per Share (EPS) = (equity attributable to shareholders of parent company – preference dividend) /
weighted average issued share number. (Note 4)
5. Cash flow
(1) Cash flow ratio = net cash flow of operations activity / current liability.
(2) Net cash flow adequacy ratio = net cash flow of operating activity in recent five years / recent five years (capital
expenditure + inventory increase + cash dividend).
(3) Cash reinvestment ratio = (net cash flow of operating activity - cash dividend) / (real estate, plant and equipment
gross + long-term investment + other non-current asset + working capital). (Note 5)
6. Leverage:
(1) Operating leverage = (net operating revenue – changed Operating costs and expense) / operating profit. (Note 6).
(2) Financial leverage = operating profit / (operating profit – interest expense).
114
Ⅵ FINANCIAL
STATUS
III. Supervisors' or Audit Committee's Report on Financial Statements for the previous fiscal
year: refer to page 135-136
IV. The Financial Statement for the most recent fiscal year, including the Auditor's Report
prepared by an accountant and the Two-year Comparative Balance Sheet, the Statement of
Comprehensive Income, the Statement of Changes in Equity, the Cash Flow Chart, and any
related footnotes or attachments:
refer to pages 137-216
V. Recent Financial Statements and Reports of Independent Accountants of the parent
company:
None
VI. If the Company or any of its affiliats have experienced financial difficulties in the previous
fiscal year or during the current fiscal year up to the publication of the Annual Report, the
Annual Report shall explain how any such difficulties will affect the Company's financial
situation:
None
115
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
Ⅶ. Review and Analysis of the Company's Financial Condition
and Operational Results, and a List of Risks
I. Analysis of Financial Status
The Annual Report shall list the main reasons for any material change to the Company's assets,
liabilities, or equity during the previous 2 fiscal years, and describe the effect thereof as shown
below:
(1) Financial Status – IFRS (Consolidated)
Unit: NT$ thousands ;%
Year
Item 2017 2018
Difference
Amount Amount
Total current assets 1,409,872 1,678,802 268,930 19.07%
Investment under equity 17,870 7,518 (10,352) (57.93%)
Real Estate, Plant and Equipment 1,304,802 1,281,503 (23,299) (1.79%)
Computer software costs 38,202 27,092 (11,110) (29.08%)
Other assets 131,078 138,982 7,904 6.03%
Total assets 2,903,536 3,130,399 226,863 7.81%
Total current liabilities 1,181,007 1,675,657 494,650 41.88%
Long-term liabilities 741,251 437,000 (304,251) (41.05%)
Other liabilities 104,260 107,186 2,926 2.81%
Total liabilities 2,026,518 2,219,843 193,325 9.54%
Capital 282,400 282,400 0.00%
Additional invested capital 390,115 390,115 0.00%
Retained earnings 205,215 243,388 38,173 18.60%
Other Equities (14,960) (19,948) (4,988) 33.34%
Non-controlling interests 14,248 14,601 353 2.48%
Total Equity 877,018 910,556 33,538 3.82%
Reasons for such changes (if the change before and after the period is greater than 20%, and the
amount exceeds NT$10 million):
1. Reduction in investment by the equity method: mainly due to the loss of an investment
company.
2. Reduction in computer software: mainly due to the lack of large purchases in 2018.
3. Increase in current liabilities: mainly due to the reclassification of corporate bonds to current
liabilities.
4. Reduction in long-term liabilities: mainly due to the reclassification of corporate bonds to
current liabilities.
5. Other equity reductions: mainly due to the unrealized profit and loss arising from the
application of IAS39 in 2018.
116
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
(2) Financial Status – IFRS (Individual)
Unit: NT$ thousands
Year
Item 2017 2018
Difference
Increase (decrease)
Amount
%
Total current assets 1,209,054 1,447,100 238,046 19.69%
Investment under equity
method 412,669 392,460 (20,209) (4.90%)
Real Estate, Plant and
Equipment 1,092,565 1,091,801 (764) (0.07%)
Computer software costs 8,233 4,376 (3,857) (46.85%)
Other assets 109,864 113,768 1,205 1.07%
Total assets 2,835,084 3,047,736 212,652 7.50%
Total current liabilities 1,130,993 1,611,676 480,683 42.50%
Long-term liabilities 741,251 437,000 (304,251) (41.05%)
Other liabilities 100,070 103,105 3,035 3.03%
Total liabilities 1,972,314 2,151,781 179,467 9.10%
Capital 282,400 282,400 0 0.00%
Additional invested capital 390,115 390,115 0 0.00%
Retained earnings 205,215 243388 38,173 18.60%
Other Equities -14,960 -19,948 (4,988) 33.34%
Total Equity 862,770 895,955 33,185 3.85%
Reasons behind the changes over the previous two (2) fiscal years (where the difference percentage
exceeds twenty (20) percent and the difference amount exceeds NT$10 million):
1. Reduction in computer software: mainly due to the lack of large purchases in 2018.
2. Increase in current liabilities: mainly due to the reclassification of corporate bonds to current
liabilities.
3. Reduction in long-term liabilities: mainly due to the reclassification of corporate bonds to current
liabilities.
4. Other equity reductions: mainly due to the unrealized profit and loss arising from the application
of IAS39 in 2018.
(3) Effect of major changes to the Company’s financial position in the previous two (2) fiscal years
and related countermeasures:
The changes to the Company’s financial position in the previous two (2) fiscal years have no
significant impact on the Company. Future working capital arising from operational activities and
part of the funds obtained from financial institutions shall sufficiently cover the Company’s
operational needs.
117
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
Ⅱ.Financial Performance
(1) Main reasons behind major changes in operation revenues, operations income, or income
before tax during the previous two (2) fiscal years
1. Comparative Analysis of Operational Performance in the Previous Two (2) Fiscal Years –
IFRS (Consolidated)
Unit: NT$ thousands; %
Year
Item
2017 2018
Increase
(decrease)
Amount
Difference
%
Operations Revenue 4,324,407 4,632,643 308,236 7.13%
Operations costs 3,017,641 3,193,729 176,088 5.84%
Gross Profit 1,306,766 1,438,914 132,148 10.11%
Operations expenses 1,193,110 1,286,712 93,602 7.85%
Net Operations Profit (Loss) 113,656 152,202 38,546 33.91%
Non-Operations Revenue and Expenses (1,572) (3,993) (2,421) 154.01%
Net Profit (Loss) Before Tax 112,084 148,209 36,125 32.23%
Income Tax Benefits (Expenses) (23,289) (35,824) (12,535) 53.82%
Net Profit (Loss) 88,795 112,385 23,590 26.57%
Total Comprehensive Income 83,927 106,064 22,137 26.38%
Reasons behind the changes over the previous two (2) fiscal years (where the difference percentage
exceeds twenty (20) percent and the difference amount exceeds NT$10 million):
1. Increase of net operating income (loss): primarily due to increasing operation revenue and rising profits.
2. Reduction in non-operating income and expenses: mainly due to the loss of related companies that
adopted the equity method to invest.
3. Increase of net income (loss) before tax: primarily due to increasing operation revenue; however, both
the operating and non-operating expenses increased, which caused profits to decline.
4. Increase of net income (loss) after tax: primarily due to increasing operation revenue, while both the
operating expense and non-operating expenses increased, which caused profits to decline.
5. Total comprehensive income: primarily due to increasing operation revenue; however, both the
operating expense and non-operating increased, which caused profits to decline.
118
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
(2) Comparative Analysis of Operations Performance in the Previous Two (2) Fiscal Years – IFRS
(Individual)
Unit: NT$ thousands
Year
Item
2017 2018
Increase
(decrease)
Amount
Difference
%
Operations Revenue 4,184,969 4,439,866 254,897 6.09%
Operations costs 2,926,039 3,076,666 150,627 5.15%
Gross Profit 1,258,930 1,363,200 104,270 8.28%
Operations expenses 1,124,639 1,201,174 76,535 6.81%
Net Operations Profit (Loss) 134,291 162,026 27,735 20.65%
Non- Operations Revenue and Expenses (21,069) (16,204) 4,865 (23.09%)
Net Profit (Loss) Before Tax 113,222 145,822 32,600 28.79%
Income Tax Benefits (Expenses) (22,494) (32,872) (10,378) 46.14%
Net Profit (Loss) 90,728 112,950 22,222 24.49%
Total Comprehensive Income 85,860 106,969 21,109 24.59%
Reasons behind the changes over the previous two (2) fiscal years (where the percentage difference
exceeds twenty (20) percent and the amount difference exceeds NT$10 million):
1.Increase of net operating income (loss): mainly due to the increase in operating income and rising
profits.
2 Increase of non-operating income and expenses: mainly due to the increase in the deposit period.
3. Increase of net income (loss) before tax: mainly because although the operating income has grown, the
operating and non-operating expenses have risen, resulting in a decrease in profit decline.
4. Net (loss) profit increased during the period: mainly because although the operating income has
grown, the operating expenses and non-operating expenses have risen, resulting in a profit decline.
5. Total consolidated profit and loss for the period: mainly because although the operating income has
grown, the operating and non-operating expenses have risen, resulting in a decrease in profit decline.
(2) Sales volume forecast and the basis thereof, and a description of the effect on the
Company's financial operations and the countermeasures to be taken:
The Company’s industry is still in the growth stage, and the Company shall pay attention
said industry’s environment and market trends of the industry, expand the Company’s market
share and enhance profitability. The Company is expected to manage to maintain growth of sales
volume in the years to come.
119
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
Ⅲ.Cash Flow
(1) Cash Flow Analysis for the Previous Fiscal Year
Estimated
Cash and
Cash
Equivalents,
Beginning
of Year
Estimated
Net Cash
Flow from
Operation
Activities
Estimated
Cash
Outflow
(Inflow)
Effect of
Exchange
Rate
Cash
Surplus
(Deficit)
Leverage of Cash
Surplus (Deficit)
Investmen
t Plans
Financing
Plans
528,892 330,221 101,487 (1,463) 630,379 - -
Analysis of change in cash flow in 2018:
(1) Operations activities: net cash inflow 330,221 mainly due to cash income derived from continuous
profit earnings.
(2) Investment activities: net cash outflow of NT$139,912 is mainly due to the increase in
fixed time deposits.
(3)Financing activities: net cash outflow of NT$87,359 is mainly due to repayment of
long-term loans and cash dividends.
(2) Improvement plan for illiquidity: no illiquidity
(3) Cash flow analysis for the coming year:
Estimated
Cash and Cash
Equivalents,
Beginning of
Year
(1)
Estimated Net Cash
Flow from
Operating
Activities (2)
Estimated
Cash
Outflow
(Inflow) (3)
Cash Surplus
(Deficit)
(1)+(2)-(3)
Leverage of Cash Surplus
(Deficit)
Investment
Plans
Financing
Plans
Investment
plan
Financing
plan
630,379 363,243 249,998 743,624 - -
Cash flow analysis for the coming year:
Operations activities: Expected to experience revenue growth, resulting in net cash inflow from
operations activities in 2019
Investment activities: Expected to continuously expand retail stores, purchase fixed assets and acquire
a second logistics center, thus resulting in a net cash outflow in 2019
Financial activities: Expected to increase cash capital due to the acquisition of a second logistics
center, issue corporate bonds and take on long-term loans, thus resulting in a net cash outflow in 2019
Ⅳ. Effect on the financial operations of any major capital expenditures during the previous
fiscal year:None
120
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
Ⅴ. Investment Policies, Main Reasons for Investment Gains or Losses and Related
Counter-Measures, Investment Plan for Next Year
Unit: thousands
Description
Original
investment
amount.
Policy
Main reasons for profits or
losses
Description Improvement scheme
Company
Income
summary(NT$
thousands)
Listed as
investment loss
of current
period(NT$
thousands)
ABOVE
ADVANCE
LIMITED
USD10,898
Is a holding
company of
re-invested
business of
the company
(5,726) (5,726)
Mainly because
scale economy was
not achieved by
number of channels
within re-invested
business in
mainland China
thus operating
performance was
not elevated which
caused the operating
scale of re-invested
business in
mainland China to
be unable to afford
daily operating
expenditures and
losses.
1.A logistics
warehouse was set up
in Shanghai in order
to seek suppliers of
good commodities at
fair prices and reduce
purchase costs.
2.Cooperated and
negotiated with large
national or central
enterprises in the hope
that quality business
locations can be
obtained to expand
channels of new
shops.
CAYMAN
MEDFIRST
GROUP
LIMIED
USD10,898
Is a holding
company of
re-invested
business of
the company
(5,726) (5,726)
Nanjing
MedFirst
Healthcare
Services,
Inc.
USD2,115
RMB1,000
Develop
market of
domestic
demands in
mainland
(100) (100)
Shanghai
MedFirst
Healthcare
Services,
Inc.
USD1,550
RMB50,700
Develop
market of
domestic
demands in
mainland
(5,757) (5,757)
Fujian
MedFirst
Healthcare
Services,
Inc.
USD800
Develop
market of
domestic
demands in
mainland
367 367
Shanghai An
gu Medical
Devices
Company
Limited
RMB2,700
Develop
market of
domestic
demands in
mainland
(2,916) (2,916)
Hangzhou
An gu
Healthcare
Services,
Inc.
RMB1,500
Develop
market of
domestic
demands in
mainland
(2,603) (2,603)
Beijing
MedFirst
Healthcare
Services,
Inc.
RMB2,000
Develop
market of
domestic
demands in
mainland
21 21
121
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
Shandong
En Gu
Medical
Devices
Company
Limited
RMB3,000
Develop
market of
domestic
demands in
mainland
(972) (972)
Nanjing
Baitang
Trading Co.,
Ltd.
RMB450
Develop
market of
domestic
demands in
mainland
(1,163) (640)
Taiwan
Trim Co.,
Ltd.
NTD10,000
Water
Ionizer
Seller
(165) (82)
Mainly because the
business scale at
beginning stage of
corporate operation
was too small to
afford daily
operating
expenditures.
1.Proactively develop
business to bring up
sales numbers and
growth of revenue.
2.Proactively contract
dealers so as to
expand sales
channels.
3.Proactively hold
seminars at companies
and hospitals.
Exactitude
Biotech Co.,
Ltd.
NTD10,000
Medical
Supply
Retailer
391 567
Mainly due to the
logistics service
income.
Continue the
development of new
product.
Xinglitong
Logistics
Co., Ltd.
NTD27,756
Centralized
drug delivery
service for
prescriptions
(25,501) (10,352)
Mainly because it is
still in the business
development stage.
Propose the method of
raising income and
reducing expenditure
to reduce high
expenses
Hsing Chou
Healthcare
Co., Ltd.
NTD86,100
Management
consultancy
services
2,372 686
Mainly because it is
still in the business
development stage.
Stabilize expenditures
of pharmacies and
elevate revenues.
Baodean
Co., Ltd. NTD9,260
Foreign
medical
supplies
brand
distribution
6,638 (374)
Mainly because it is
still in the market
development stage.
Actively expand
business to promote
performance growth
and turnover growth
One-year investment plan:
1.Mainly associated with the expansion of shops in mainland China, which shall be carried out to develop business and
achieve scale merit. Shops in hospitals shall also be done proactively developed.
2.Other re-invested companies shall propose capital increase to the company depending on operating requirements. The
Company shall evaluate such related investment and approval procedures.
122
123
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
Ⅵ. Risk management assessment during the previous fiscal year or during the current fiscal
year as of the publication of the Annual Report
(1) Effects of changes to interest rates, foreign exchange rates and inflation of corporate finance,
and future response measures:
Unit: NT$ thousands
Item
2017 2018
Amount Ratio over
revenue %
Amount Ratio over
revenue %
Interest revenue 1,041 0.02% 1,724 0.04%
Interest expense 11,299 0.26% 11,106 0.24%
Net Exchange Loss
(386) (0.01%) 424 0.01%
(1) Changes to interest rates
The interest incomes of the company and subsidiaries were 1,724,000 and
1,041,000 in 2018 and 2017, accounting for 0.04% and 0.02% of revenue for each
year, respectively. Interest expenses were 11,106,000 and 11,299,000 in 2018 and
2017, accounting for 0.24% and 0.26% of revenue respectively. The percentages of
the annual interest expenses and income over revenue were very small and therefore
were insignificant to the Company’s operations.
The Company has ised funds stably and conservatively, whereby cash is
deposited in banks to acquire a fixed deposit yield. The Company’s finance
department has established and maintained good relationships with banks, and
continuously acquires information regarding changes to interest rates to analyze and
interpret future interest rate trends, thus adjusting interest rates of loans
appropriately. The Company shall accordingly adjust how it uses funds based on
interest rate changes in the future.
(2) Changes to foreign exchange rates
The Company’s recognized losses were NT$424,000 in 2018 and NT$386,000
in 2017, which accounted for 0.28% and 0.34% of the Company’s operational
profits respectively, as well as 0.29% and 0.34% of the Company’s net income
before tax respectively, thus indicating that these percentage values had very impact.
The Company’s sales and purchases of products were mostly quoted in New Taiwan
dollars (NT$), therefore international exchange rate fluctuations have a limited
effect on the Company’s profit and losses.
(3) Inflation
Due to the increase of in material costs in recent years, the overall economic
environment has shown an inflation trend. However, such inflation has not yeat had
an immediate significant impact. Furthermore, the Company will continue to watch
124
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
fluctuations in material market prices, maintain good relationships with suppliers,
and be flexible with regard to adjusting prices in accordance with the cost of its
various suppliers. By doing so, it can prevent any significant impact caused by
inflation.
(2) Policies, primary reasons for gains or losses and future response measures with respect to
high-risk, high-leveraged investments, lending or endorsement guarantees, and derivatives
transactions:
The Company and its subsidiaries carefully evaluate all of its investments and manage
such matters in accordance with the “Procedures for the Acquisition or Disposal of Assets”.
The Company does not engage in any high risk or high leverage investments. The company
has also established the “Procedures for Lending Funds to Others” and the “Procedures for
Endorsements and Guarantees” in accordance with all the stipulations of relevant regulations.
The Company is endorsed as of the publication of this annual report in 2017 and absolutely
holds the subsidiary of Shanghai MedFirst Healthcare Services, Inc. with guarantee provided
in December 2017.
(3) Research and development work to be carried out in the future and further
expenditures expected for research and development work:
The Company is a professional medical supply chain distributor, but has yet to
establish a R&D department. Therefore, the Company has no expenses related to R&D.
If the Company needs to carry out R&D activities due to the developing needs of the
Company, it shall do so only following careful deliberation and consideration as to
whether R&D would fit within the Company as it stands to protect the interests of its
original shareholders.
(4) Effects on financial operations by keys domestic or overseas policies and articles of law
and related counter-measures.
No important policy or changes to laws have affected the finances or businesses of the
Company and its subsidiaries. In addition to collecting and evaluating the effects of
important domestic policies and changes to laws on our finances and businesses in the future,
we will consult relevant professionals in the field to fully comprehend external information
and adopt corresponding measures as appropriate.
(5) Effects on financial operations by new technology and related counter-measures:
The Company continues to understand the changes in the industry and market trends,
pays attention to relevant technology developments and changes, and recognizes consumer
preferences to launch products that meet mass market trends. No major technological
125
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
changes or industrial changes occurred in the 2018 and as of the publication of the Annual
Report and yjus did not significantly affect the Company's financial business.
Respond to influences caused by system exception, the company has established
Regulations of Information Security, and has completed Information Protecting and
controling measures to ensure usefulness, completeness, and confidence of data.
(6) The impact of changes to the corporate image or corporate risk management, and the
Company’s response measures:
The Company has been committed to maintaining corporate image for many years,
developing unique innovative services, such as return and exchange services within 7 days,
product leasing and recycling services, home delivery services, 24-hour customer service
voice line and “Xing Line LOHAS”, and implementing the brand positioning of the “Health
Manager of your family”. It often receives good reviews from customers and positive media
reports, which also has a positive impact on the Company's image. No corporate crisis
management situation has arisen due to changes in the corporate image in 2018 and as of the
publication of the Annual Report.
(7) Expected benefits from, risks related to and responses to merger and acquisition plans:
The Company and its subsidiaries have no plan to acquire another company. However, if
an acquisition plan is created in the future, the Company will consider the impact that such a
merger or acquisition would have on the Company and would strive to take every effort
possible to protect the rights of the original shareholders.
(8) Expected benefits from, risks related to and response to factory expansion plans:
The Company is a professional medical supply chain distributor, the main business of
which consists of selling products through its retail stores. Therefore, the Companyhas no
manufacturing plan or production facilities. The Company shall open new retail stores in
accordance with the Company’s retail store expansion plan, and carry out careful
deliberation with regard to its retail store expansion plan to consider whether the expansion
would work in favor of the Company to protect the interests of its original shareholders.
(9) Risks related to and responses to centralized purchases or sales:
The Company is a professional medical supply chain distributor, the stock of which is
purchased by the Company from local and foreign sources and does not come from one
centralized source. Furthermore, most of the Company’s suppliers have established long-
term partnerships with the Company, where both the suppliers and the Company have signed
sales and purchase agreements. Therefore, no risk arises from purchasing stock from one
centralized source.Furthermore, the Company’s sales target is the general consumer, from
which no further issue arises in terms of purchasing stock from a single centralized supplier.
(10) Effects of, risks related to, and response to large share transfers or changes to shares held
126
Ⅶ A review and analysis of the
company's financial condition and
operational results, and a list of risks
by directors, supervisors, or shareholders with shareholdings of over 10%: none
(11) Effects of, risks related to, and responses to changes in management rights:
As of 14th April 2019, all directors hold between them 39.11% of thetotal shares of
the Company. The Company’s directors and employees have a strong mission to the
Company as they work together to run the Company for the long term. Moreover, the
employees identify with the development direction of the Company, which has thus
maintained good operating performance over the past few years. The Company shall
uphold its firm and steady business philosophy and execute good management decisions
so that operations and profits can continue to increase and grow and to win the
shareholders’ recognition of the work done by the management team. In conclusion, the
Company’s ownership has been relatively stable and the Company has yet to experience a
large quantity of shares being transferred to another party or changing hand that
subsequently upsets Company ownership, bringing with it risks and potentially-damaging
changes (as of the date of publication of the Annual Report).
(12) Matters of litigation or non-litigation:
1. Any final judgments or lawsuits in progress, non-litigious or administrative litigation of
the Company in the previous two years, as of the publication of the Annual Report, the
results of which may have a significant effects on shareholders’ equity or securities price,
facts under dispute, the start date of lawsuits, the main parties involved and current
management status are thus disclosed: none.
2. Major ongoing lawsuits, cases of non-litigation or administrative lawsuits caused by the
Company’s director, supervisor, general manager, actual head, major shareholder who
holds more than 10% of the shares or a subsidiary company of the publication of the
Annual Report, and matters that may have a major effect on shareholder’s equity or
values of securities: none.
3. Occurrence of any event set forth under Article 157 of the Securities and Exchange Act
that involves a company director, supervisor, its general manager, or any major
shareholder with a stake of more than 10% that occurred in the previous two fiscal years
or during the current fiscal year as of the publication of the Annual Report with details of
how the Company is currently handling the matter: none.
(13) Other significant risks and response measures: none
Ⅶ. Other important matters : None.
Ⅷ Special
Events
Ⅷ.Special Events
Ⅰ.Relevant information on affiliate enterprises
(1) Affiliate enterprises consolidated operations report
1. Organizational chart of affiliates
2. Basic Information of Affiliated Companies
December 31th
2018;Unit: thousands
Company Date of
Establishment Address
Invested
Capital
Major Business or
Products
ABOVE ADVANCE
LIMITED 2005/07/28
Vistra Corporate Services
Centre, Ground Floor
NPF Building, Beach
Road, Apia, Samoa
USD 10,898 Investment Holdings
Company
CAYMAN MEDFIRST
GROUP LIMITED 2005/09/27
Floor 4,Willow House, Cricket Square, P O Box 2804, Grand Cayman KY1-1112, Cayman Islands.
USD 10,898 Investment Holdings
Company
Nanjing MedFirst Healthcare Services, Inc.
2006/02/28
No. 5, Room 1506, Block 2, Junlin International Building, Guangzhou Rd, Gulou District, Nanjing City
USD 2,440 Medical Supply
Retailer
Shanghai Angu Medical
Equipment Ltd. (Note 3)
Shanghai MedFirst Healthcare
Services, lnc. (Note 1)
82.81% 81.72% 18.28%
CAYMAN MEDFIRST GROUP
LIMITED
Beijing MedFirst Healthcare
Services, lnc. (Note 5)
Nanjing MedFirst Healthcare
Services, lnc. (Note 6)
Exactitude
Biotech
Co., Ltd.
Fujian
MedFirst
Healthcare
Services, lnc.
100% 100%
New
Zuelling
Co., Ltd.
Taiwan
Trim Co.,
Ltd. (Note
2)
Hsing
Chou
Healthcare
Co., Ltd.
MedFirst Healthcare Services,
lnc.
45.32% 40% 50%
ABOVE ADVANCE LIMITED
100%
100% 5.73% 11.46%
100%
100%
Hangzhou An gu Medical
Equipment Ltd. (Note 4)
100%
127
Ⅷ Special
Events
Company Date of
Establishment Address
Invested
Capital
Major Business or
Products
Shanghai MedFirst Healthcare Services, Inc.
2009/09/11
Room 301, 3rd Floor, Building 9, No. 99, Tianzhou Road, Xuhui District, Shanghai
USD 9,264 Medical Supply
Retailer
Fujian MedFirst Healthcare Services, Inc.
2010/08/19 B1F, No. 123 Xiafei Road, Xinyang Industrial Zone, Haicang District, Xiamen
USD 800 Medical Supply
Retailer
Shanghai An gu Medical Devices Company Limited
2014/10/29 South-5, 10, No. 9506, Humin Road, Xuhui District, Shanghai
RMB 2,700 Medical Supply
Retailer
Hangzhou An gu Healthcare Services, Inc.
2014/11/07
Room 1508, No. 607, Zhongshan North Road, Xiacheng District, Hangzhou
RMB 1,500 Medical Supply
Retailer
Beijing MedFirst Healthcare Services, Inc.
2015/04/13
Room A, Building 2, No. 168, Litang Road, Tianbei Street, Changping District, Beijing
RMB 2,000 Medical Supply
Retailer
Shandong En Gu Medical Devices Company Limited
2018/06/04 1019, Building 2, Digital Technology Center, No. 63 Haier Road, Laoshan District, Qingdao, Shandong
RMB 3,000
Medical Supply Retailer
Nanjing Baitang Trading Co., Ltd.
2018/01/05 Room 1505, Building 2, No. 5, Guangzhou Road, Gulou District, Nanjing
RMB 450 Medical Supply
Retailer
Taiwan TRIM CO.,LTD 2012/04/20 4F, No. 1, Ln. 108, Fuxing 1st Rd., Guishan Dist., Taoyuan City
NTD 20,000
Water Ionizer Seller
EXACTITUDE BIOTECH CO., LTD
2012/05/03 4F, No. 1, Ln. 108, Fuxing 1st Rd., Guishan Dist., Taoyuan City
NTD 10,000
Medical Supply Retailer
Singleton Pharma Logistics Co. Ltd
2013/12/17
12 F, No. 2, Sec. 3, Minquan E. Rd., Zhongshan Dist., Taipei City
NTD 69,390
Centralized Dispensing Service
Hsing Chou Healthcare Co.,
Ltd. 2016/05/25
3 F-1, No. 1, Ln. 108, Fuxing 1st Rd., Wenhua Vil., Guishan Dist., Taoyuan City
NTD 95,000
Management consultancy services
Baodean Co., Ltd. 2017/05/12 3F., No.94, Fusing 1st Rd., Gueishan Dist., Taoyuan City
NTD 10,000
Foreign medical supplies brand distribution
3. Description of the area of business and dealings of the industries covered by the business
operations of all affiliates with a business connection exists with the Company: medical supplies,
healthcare, and biotechnological healthcare retail products
128
Ⅷ Special
Events
4. Directors, Supervisors and Managerial Officers of Affiliated Companies December 31
th 2018;Unit: Shares
Company Title Name or Representative Shareholdings
Share %
ABOVE ADVANCE
LIMITED Director Chen, Li-Ju 10,898,000 100%
CAYMAN MEDFIRST
GROUP LIMITED Director Chen, Li-Ju, Tsai, Te-Chung 10,898,000 100%
Nanjing MedFirst Healthcare
Services, Inc.
Executive Director
Tsai, Te-Chung - 100%
Apricot first medical products
Limited by Share Ltd.
Executive Director
Tsai, Te-Chung - 100%
Fujian MedFirst Healthcare
Services Company Limited
Executive Director
Tsai, Te-Chung - 100%
Shangha En Gu Medical
Devices Company Limited
Executive Director
Tsai, Te-Chung - 100%
Hangzhou En Gu Medical
Devices Company Limited
Executive Director
Tsai, Te-Chung - 100%
Beijing En Gu Medical
Devices Company Limited
Executive Director
Tsai, Te-Chung - 100%
Shandong En Gu Medical
Devices Company Limited Executive Director
Tsai, Te-Chung - 100%
Nanjing Baitang Trading
Co., Ltd. Executive Director
Tsai, Te-Chung - 55%
Taiwan TRIM CO.,LTD
Chairman
Director
Director
Director
Supervisor Supervisor
Representative of MedFirst Healthcare Services, Inc.: Tsai, Te-Chung Representative of MedFirst Healthcare Services, Inc.: Chen, Li-Ju
Representative of Nihon Trim Co., Ltd.: TAHARA NORIO
Representative of Nihon Trim Co., Ltd.: Oda Hiroshiro
Kao, Shih-Lung
Shinkatsu Morisawa
1,000,000 50%
EXACTITUDE BIOTECH
CO., LTD
Chairman
Director
Director
Supervisor
Representative of MedFirst Healthcare Services, Inc.: Chen, Li-Ju
Representative of MedFirst Healthcare Services, Inc.: Tsai, Te-Chung
Representative of MedFirst Healthcare Services, Inc.: Wang, Ting-Jui
Representative of MedFirst Healthcare Services, Inc.: Wei, Tzu-Wen
1,000,000 100%
Singleton Pharma Logistics
Co. Ltd
Chairman
Director
Director
Representative of Durban Development Co.Ltd.: Huang, Yung-Lun Representative of Durban Development Co.Ltd.: Huang, Chun-Fa
2,775,600 40%
129
130
Ⅷ Special
Events
Supervisor Representative of MedFirst Healthcare Services, Inc.:Wei,
Tzu-Wen
Li, Li-Ching
Hsing Chou Healthcare Co.,
Ltd.
Chairman
Director
Director
Supervisor
Representative of MedFirst Healthcare Services, Inc.: Chen, Li-Ju Representative of MedFirst Healthcare Services, Inc.: Tsai, Te-Chung Representative of MedFirst Healthcare Services, Inc.: Wei, Tzu-Wen Kao, Shih-Lung
8,610,000
90.63%
Baodean Co., Ltd.
Chairman
Director
Director
Supervisor
Tsao, Chia-hung
Tu, Ching-Kuo
Wang, Wen-Ping
Lin, Yen-Ling
195,455
19.55%
Ⅷ Special
Events
5. Situations of business operations of each affiliate enterprise
31st December
2018;Unit: NT$ thousands
Company Capital Total Assets Total
Liabilities Net Value
Operating
Income Gross
Profit
Net
Income
Earnings per
Share
(EPS)(NT$)
Net Value (after tax) (after tax)
ABOVE ADVANCE
LIMITED USD 10,898 215,709 207 215,502 0 0 (5,726) -
CAYMAN
MEDFIRST GROUP
LIMITED
USD 10,898 215,709 0 215,709 0 (162) (5,726) -
Nanjing MedFirst
Healthcare Services,
Inc.
USD 2,440 18,990 6,985 12,005 7,283 (1,903) (100) -
Shanghai MedFirst
Healthcare Services,
Inc.
USD 9,294 239,761 23,875 215,886 80,876 (14,769) (5,757) -
Fujian MedFirst
Healthcare Services,
Inc.
USD 800 29,111 6,939 22,172 31,206 248 367 -
Shanghai An gu
Medical Devices
Company Limited
RMB 2,700 9,140 3,276 5,864 18,226 (321) (2,916) -
Hangzhou An gu
Healthcare Services,
Inc.
RMB 1,500 23,026 17,337 5,689 36,304 (1326) (2,603) -
Beijing En Gu
Medical Devices
Company Limited
RMB 2,000 13,328 4,418 8,910 17,543 (164) 21 -
Shandong En Gu
Medical Devices
Company Limited
RMB 3,000 16,420 3,946 12,474 2,889 (979) (972) -
Nanjing Baitang
Trading Co., Ltd. RMB 450 876 1 875 0 (1,278) (1,163) -
Taiwan TRIM
CO.,LTD NTD 20,000 6,008 655 5,353 4,031 (292) (165) (0.08)
EXACTITUDE
BIOTECH CO., LTD NTD 10,000 39,738 29,079 10,659 108,224 616 391 0.39
Singleton Pharma
Logistics Co. Ltd NTD 69,390 100,871 91,209 9,662 164,427 (26,264) (25,501) (3.68)
New Zuelling Co.,
Ltd. NTD 95,000 94,988 111 94,877 4,476 (19) 2,372 0.25
Baodean Co., Ltd. NTD 10,000 55,990 36,016 19,974 116,601 10,037 6,638 6.64
(2) Statement of consolidated financial reports of related enterprises
According to the “Preparation Guidelines for Related Enterprises’ Consolidated
Business Report, Consolidated Financial Statements, and Relationship Report”, the
Company shall be included amoung the companies preparing the consolidated corporate
financial report of the Company in 2018 (from January 1 to December 31, 2018), which is
the same as a company being included in its parent company's consolidated financial report
according to International Financial Reporting Standard No. 10; if relevant information that
a related enterprise’s consolidated financial report is required to reveal has already been
131
Ⅷ Special
Events
disclosed in a previous consolidated financial report of the parent company, then said related
enterprise’s consolidated financial report shall not be prepared separately.
(3) Affiliation Report: None
Ⅱ. The handling situation of private securities as of the publication of the latest Annual
Report: None.
Ⅲ. The Company’s stock held or disposed by subsidiaries as of the publication of the latest
Annual Report:Yes
Ⅳ. Necessary additional information
In accordance with the guidance of the official document issued by TPEx Zheng Gui Shen
Zi # 10301001251 dated 28th
January 2014, the Company proceeded with the following
matters.
(1) “The Company shall not give up on increasing its annual capital in Above Advanced
Limited (hereinafter ‘Above’), Shanghai MedFirst Healthcare Services Limited
(hereinafter ‘Shanghai MedFirst’), Nanjing MedFirst Healthcare Services Limited
(hereinafter ‘Nanjing MedFirst’), Fujian MedFirst Healthcare Services Limited
(hereinafter “Fujian MedFirst”), the Taiwan Trim Company Limited and Exactitude
Biotechnology Company Limited, nor in the Cayman MedFirst Group Limited (hereinafter
‘MedFirst’) in the future. MedFirst shall also not give up on increasing annual capital in
Shanghai MedFirst and Nanjing MedFirst in the future, and Fujian MedFirst shall not give
up on increasing annual capital in Nanjing MedFirst. If any of these companies is required
to either give up on increasing their annual capital investments in the aforementioned
companies or dispose of the aforementioned companies due to strategic alliance
considerations or investors who have obtained approval from the stock exchange, such
matter must be approved during a special Board of Directors meeting.” If these regulations
are amended in the future, the Company shall input and disclose such information on
MOPS, and file a formal notice to TPEx.
(2) TPEx shall request the Company to delegate CPAs or an CPA authorized by TPEx as
necessary. The Company shall carry out professional external inspections in accordance
with the audit scope authorized by TPEx and submit the inspection outcome to TPEx, and
the Company shall bear the related costs.
(3) Retail stores that do not comply with the relevant law related to buildings for business use
shall either complete the relevant procedure for the legal use of buildings or shut down
prior to expiration of the lease.
132
Ⅷ Special
Events
Ⅴ. As of the publication of the latest Annual Report, the matters prescribed in Article 36,
Paragraph 3, Item 2 of the Securities Exchange Act that have a significant impact on
shareholder’s equity or value of securities: None.
133
MedFirst Healthcare Services, Inc.
Internal Control Declaration Date: 26
rd February 2019
I. The Company’s Board of Directors and managerial officers are responsible for the
establishment, implementation, and maintenance of a proper internal control system. Our
internal control system is designed to provide reasonable assurance over the effectiveness and
efficiency of our operations (including profitability, performance, and protection of assets), as
well as the reliability of our financial reporting in accordance with applicable laws and
regulations.
II. An internal control system has certain inherent limitations; no matter how perfectly designed,
an effective internal control system can only provide reasonable assurance of accomplishing its
stated objectives. Furthermore, the effectiveness of an internal control system may be subject
to change due to extenuating circumstances beyond the Company’s control. Nevertheless, our
internal control system consists of self-monitoring mechanisms, and the Company takes
immediate corrective action upon identifying any deficiencies.
III. The Company evaluates its internal control system’s design and operational effectiveness
according to the criteria provided in the Regulations Governing the Establishment of Internal
Control Systems by Public Companies (hereinafter referred to as the “Regulations”). The
criteria adopted by the Regulations identify five key components of managerial internal control:
(1) environment control, (2) risk assessment, (3) activity control, (4) information and
communication, and (5) monitoring.
IV. The Company has evaluated the design and operational effectiveness of its internal control
system according to the aforementioned Regulations.
V. Based on said evaluation’s results, the Company believes that on 31st December 2018, it
maintained an effective internal control system in all material aspects (including the
supervision and management of our subsidiaries) in order to provide reasonable assurance over
our operational effectiveness and efficiency, as well as the reliability of our financial reporting
in accordance with applicable laws and regulations.
VI. This Declaration is an integral part of the Company’s Annual Report and relevant
documentation and shall be made public. Any falsehood, concealment, or other illegality in the
content made public will entail legal liability under Articles 20, 32, 171, and 174 of the
Securities and Exchange Law.
VII. This Declaration was passed by the Board of Directors during the meeting held on 26rd
February 2019, with none (0) of the seven (7) attending directors expressing a dissenting
opinion, and all seven affirming the content of this Declaration.
MedFirst Healthcare Services, Inc.
Chairman: Chen, Li-Ju
General Manager: Tsai, Te-Chung
134
Audit Committee's Review Report
The Audit Committee agrees and the Board of Directors decides the 2018
Financial Statements, Business Report and Profit Distribution Proposal of the
company; the 2018 Financial Statements has been audited by Deloitte & Touche
which was entrusted by the Board of Directors with clean opinion audit report
issued.
The Audit Committee is responsible for supervising the financial reporting
process of the company.
The Certified Public Accountants certificate the 2018 Financial Statements of
the company and communicate the following matters with the Audit Committee:
1. There have been no material audit findings in the audit scope and period
planned by the Certified Public Accountants.
2. The Certified Public Accountants provide the statement that the personnel
regulated by independence in the firm which the Certified Public
Accountants working in have abided by the stipulations about independence
in CPAs professional ethics and there have been no relationships or other
matters which can affect the independence of Certified Public Accountants.
3. After communicating with the Audit Committee, the Certified Public
Accountants decide to disclose the key audit matters communicated about
inventory reduction in the audit report.
The company’s 2018 financial statements, business report, and proposal for the
distribution of earnings, all of which have been approved by the audit committee and
the Board of Directors, have been found to conform with the provisions of the
relevant decrees in accordance with the report of the fourth sub-paragraph of Article
14 of the Securities Exchange Act and the aforementioned reports.
Please Verify
Yours sincerely
2018 Shareholders’ Meeting of MedFirst Healthcare Services, Inc.
Convener of the Audit Committee: Tseng, Sheng-Cheng
February 26, 2019
135
Agreement Report of Audit Committee The Audit Committee agrees and the Board of Directors decides the 2018
Consolidated Financial Statement of the Group and it has been audited by
Deloitte & Touche with clean opinion audit report issued.
The Audit Committee is responsible for supervising the financial reporting
process of the Group.
The Certified Public Accountants certificate the 2018 Consolidated Financial
Statement of the Group and communicate the following matters with the Audit
Committee:
1. There have been no material audit findings in the audit scope and period
planned by the Certified Public Accountants.
2. The Certified Public Accountants provide the statement that the personnel
regulated by independence in the firm which the Certified Public
Accountants working in have abided by the stipulations about independence
in CPAs professional ethics and there have been no relationships or other
matters which can affect the independence of Certified Public Accountants.
3. After communicating with the Audit Committee, the Certified Public
Accountants decide to disclose the key audit matters communicated about
inventory reduction in the audit report.
The Audit Committee agrees and the Board of Directors decides the 2018
Consolidated Financial Statement of the Group conforms to the relevant laws and
reports as above in line with the sub-paragraph of Article 14 of Securities Exchange
Act.
Please Verify
Yours sincerely
2018 Shareholders’ Meeting of MedFirst Healthcare Services, Inc.
Convener of the Audit Committee: Tseng, Sheng-Cheng
February 26, 2019
136
DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES
The companies that are required to be included in the consolidated financial statements of affiliates of
MedFirst Healthcare Services, Inc. for the year ended December 31, 2018, under the Criteria Governing
the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial
Statements of Affiliated Enterprises are the same as the companies required to be included in the
consolidated financial statements of parent and subsidiary companies prepared in conformity with
International Financial Reporting Standards No. 10, “Consolidated Financial Statements.” In addition, the
information required to be disclosed in the consolidated financial statements of affiliates has all been
disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated
financial statements of parent and subsidiary companies. Consequently, MedFirst Healthcare Services,
Inc. and subsidiaries did not prepare a separate set of consolidated financial statements of affiliates.
Very truly yours,
MEDFIRST HEALTHCARE SERVICES, INC.
By
LI-JU CHEN
Chairman
February 26, 2019
137
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders
MedFirst Healthcare Services, Inc.
Opinion
We have audited the accompanying consolidated financial statements of MedFirst Healthcare
Services, Inc. and its subsidiaries (collectively referred to as the “Group”), which comprise the
consolidated balance sheets as of December 31, 2018 and 2017, the consolidated statements of
comprehensive income, changes in equity and cash flows for the years then ended, and the notes to
the consolidated financial statements, including a summary of significant accounting policies
(collectively referred to as the “consolidated financial statements”).
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and
its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with the Regulations Governing the Preparation of Financial Reports by Securities
Issuers, and International Financial Reporting Standards (IFRS), International Accounting
Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued
into effect by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation
of Financial Statements by Certified Public Accountants and auditing standards generally accepted
in the Republic of China. Our responsibilities under those standards are further described in the
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our
report. We are independent of the Group in accordance with The Norm of Professional Ethics for
Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements for the year ended December 31, 2018. These
matters were addressed in the context of our audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
138
Evaluation of Inventory
As of December 31, 2018, the inventory of the Group amounted to $772,684 thousand (net of the
allowance for inventory losses of $12,028 thousand) and represented 25% of the Group’s total
assets, and was deemed material. Refer to Notes 4(g), 5 and 13 to the accompanying consolidated
financial statements for the Group’s accounting policies, sources of estimation uncertainty, and
detailed disclosures for inventory.
The estimation of the allowance for inventory losses includes evaluating the net realizable value of
inventory and its aging condition, which is subject to management’s judgment. In addition, the
balance of inventory held by the Group is material to the consolidated financial statements as a
whole, and since management’s judgment of inventory impairment has a significant degree of
uncertainty, the estimation of the allowance for inventory losses has been identified as a key audit
matter.
Our main audit procedures performed in respect of the above matter included the following:
1. We understood the accounting policy for the assessment of inventory write-downs recognized
by the Group, and evaluated whether the inventory aging and conditions of obsolete
inventories were reviewed in a timely manner by the management and whether the related
write-downs were recognized upon management’s approval.
2. We tested the accuracy of the net realizable value of sampled inventory through tracking its
source documents and recalculating the net realizable value, and sampled and inspected
whether the inventory value was held on a lower of cost or net realizable value basis by
comparing the carrying value to the net realizable value.
3. We obtained the inventory aging report and verified that management’s estimation of the
allowance for inventory losses was in compliance with the Group’s accounting policies.
4. We performed retrospective testing on inventory to verify the reasonableness of the inventory
losses recognized.
Other Matter
We have also audited the parent company only financial statements of MedFirst Healthcare
Services, Inc. as of and for the years ended December 31, 2018 and 2017 on which we have issued
an unmodified opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with the Regulations Governing the Preparation of Financial Reports by
Securities Issuers, and International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)
endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China,
and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’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 Group or to cease operations, or has no realistic alternative but to do so.
139
Those charged with governance, including the audit committee, are responsible for overseeing the
Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards
generally accepted in the Republic of China 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 consolidated financial statements.
As part of an audit in accordance with the auditing standards generally accepted in the Republic of
China, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
1. Identify and assess the risks of material misstatement of the consolidated 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 Group’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 Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ report to the related disclosures in the consolidated 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 auditors’ report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient and appropriate audit evidence regarding the financial information of entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision, and performance of the Group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
140
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 consolidated financial statements for the year
ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our
auditors’ 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.
The engagement partners on the audit resulting in this independent auditors’ report are
Ming-Chung Hsieh and Nai-Hua Kuo.
Deloitte & Touche
Taipei, Taiwan
Republic of China
February 26, 2019
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated
financial position, financial performance and cash flows in accordance with accounting principles
and practices generally accepted in the Republic of China and not those of any other jurisdictions.
The standards, procedures and practices to audit such consolidated financial statements are those
generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying
consolidated financial statements have been translated into English from the original Chinese
version prepared and used in the Republic of China. If there is any conflict between the English
version and the original Chinese version or any difference in the interpretation of the two versions,
the Chinese-language independent auditors’ report and consolidated financial statements shall
prevail.
141
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
ASSETS Amount % Amount %
CURRENT ASSETS
Cash and cash equivalents (Note 6) $ 630,379 20 $ 528,892 18
Financial assets at amortized cost - current (Note 9) 82,000 3 - -
Debt investments with no active market - current (Note 11) - - 7,000 -
Notes receivable 1,353 - 2,989 -
Trade receivables (Note 12) 128,899 4 105,757 4
Trade receivables from related parties (Notes 12 and 36) - - 1,024 -
Other receivables 9,349 - 24,339 1
Current tax assets (Note 28) - - 215 -
Inventories (Note 13) 772,684 25 678,396 24
Prepayments (Note 19) 49,972 2 51,475 2
Other current assets (Note 19) 4,166 - 9,785 -
Total current assets 1,678,802 54 1,409,872 49
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Note 7) 761 - 6,271 -
Financial assets at fair value through other comprehensive income - non-current (Note 8) 13,065 - - -
Available-for-sale financial assets - non-current (Note 10) - - 15,000 1
Financial assets at amortized cost - non-current (Notes 9 and 37) 10,100 - - -
Debt investments with no active market - non-current (Notes 11 and 37) - - 20,730 1
Investments accounted for using the equity method (Note 15) 7,518 - 17,870 1
Property, plant and equipment (Notes 16, 37 and 38) 1,281,503 41 1,304,802 45
Goodwill (Note 17) 12,692 - 12,692 -
Other intangible assets (Note 18) 27,092 1 38,202 1
Deferred tax assets (Note 28) 14,022 1 8,279 -
Prepaid equipment (Notes 19 and 38) 16,535 1 4,227 -
Refundable deposits (Notes 19, 33, 36 and 37) 68,309 2 65,591 2
Total non-current assets 1,451,597 46 1,493,664 51
TOTAL $ 3,130,399 100 $ 2,903,536 100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss - current (Note 7) $ 4,770 - $ 4,530 -
Contract liabilities - current (Note 23) 34,935 1 - -
Notes payable (Note 22) 1,017 - 2,716 -
Trade payables (Note 22) 1,059,521 34 900,215 31
Trade payables to related parties (Notes 22 and 36) 10,107 - 1,611 -
Other payables (Note 23) 238,202 8 220,174 8
Current tax liabilities (Note 28) 27,123 1 11,830 1
Deferred revenue - current (Note 23) - - 7,954 -
Receipts in advance (Note 23) - - 26,636 1
Current portion of long-term borrowings and bonds payable (Notes 20, 21 and 37) 294,173 10 1,532 -
Other current liabilities (Note 23) 5,809 - 3,809 -
Total current liabilities 1,675,657 54 1,181,007 41
NON-CURRENT LIABILITIES
Bonds payable (Note 21) - - 289,190 10
Long-term borrowings (Notes 20 and 37) 437,000 14 452,061 16
Deferred tax liabilities (Note 28) 959 - 821 -
Net defined benefit liabilities - non-current (Note 24) 2,070 - 682 -
Guarantee deposits (Note 23) 104,157 3 102,757 3
Total non-current liabilities 544,186 17 845,511 29
Total liabilities 2,219,843 71 2,026,518 70
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 25)
Share capital - ordinary shares 282,400 9 282,400 10
Capital surplus 390,115 13 390,115 13
Retained earnings
Legal reserve 74,123 2 65,050 2
Special reserve 14,960 1 10,609 -
Unappropriated earnings 154,305 5 129,556 5
Total retained earnings 243,388 8 205,215 7
Other equity (19,948) (1) (14,960) -
Total equity attributable to owners of the Company 895,955 29 862,770 30
NON-CONTROLLING INTERESTS (Note 25) 14,601 - 14,248 -
Total equity 910,556 29 877,018 30
TOTAL $ 3,130,399 100 $ 2,903,536 100
The accompanying notes are an integral part of the consolidated financial statements.
142
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2018 2017
Amount % Amount %
OPERATING REVENUE (Notes 26 and 40) $ 4,632,643 100 $ 4,324,407 100
OPERATING COSTS (Notes 13, 18, 27 and 36) (3,193,729) (69) (3,017,641) (70)
GROSS PROFIT 1,438,914 31 1,306,766 30
OPERATING EXPENSES (Notes 18, 24, 27, 30
and 36)
Selling and marketing expenses (1,007,143) (22) (905,881) (21)
General and administrative expenses (279,569) (6) (287,229) (6)
Total operating expenses (1,286,712) (28) (1,193,110) (27)
PROFIT FROM OPERATIONS 152,202 3 113,656 3
NON-OPERATING INCOME AND EXPENSES
(Notes 27 and 36)
Other income 22,009 - 19,651 -
Other gains and losses (7,027) - (1,742) -
Finance costs (8,623) - (11,299) -
Share of loss of associates and joint ventures (10,352) - (8,182) -
Total non-operating income and expenses (3,993) - (1,572) -
PROFIT BEFORE INCOME TAX 148,209 3 112,084 3
INCOME TAX EXPENSE (Note 28) (35,824) (1) (23,289) (1)
NET PROFIT FOR THE YEAR 112,385 2 88,795 2
OTHER COMPREHENSIVE INCOME (LOSS)
(Note 28)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans (1,804) - (622) -
Unrealized loss on investments in equity
instruments at fair value through other
comprehensive income (1,575) - - -
Income tax relating to items that will not be
reclassified subsequently to profit or loss 451 - 106 -
(2,928) - (516) -
(Continued)
143
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2018 2017
Amount % Amount %
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translating the financial
statements of foreign operations $ (4,833) - $ (5,244) -
Income tax relating to items that may be
reclassified subsequently to profit or loss 1,440 - 892 -
(3,393) - (4,352) -
Other comprehensive loss for the year, net of
income tax (6,321) - (4,868) -
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR $ 106,064 2 $ 83,927 2
NET PROFIT (LOSS) ATTRIBUTABLE TO:
Owners of the Company $ 112,950 2 $ 90,728 2
Non-controlling interests (565) - (1,933) -
$ 112,385 2 $ 88,795 2
TOTAL COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO:
Owners of the Company $ 106,969 2 $ 85,860 2
Non-controlling interests (905) - (1,933) -
$ 106,064 2 $ 83,927 2
EARNINGS PER SHARE (IN NEW TAIWAN
DOLLARS; Note 29)
Basic $ 4.00 $ 3.29
Diluted $ 3.60 $ 3.07
The accompanying notes are an integral part of the consolidated financial statements. (Concluded)
144
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
Equity Attributable to Owners of the Company
Other Equity
Retained Earnings
Exchange
Differences on
Translating the
Financial
Statements of
Unrealized Loss on
Financial Assets at
Fair Value
Through Other
Share Capital Capital Surplus Legal Reserve Special Reserve
Unappropriated
Earnings
Foreign
Operations
Comprehensive
Income Total
Non-controlling
Interests Total Equity
BALANCE AT JANUARY 1, 2017 $ 252,400 $ 204,900 $ 54,850 $ - $ 150,521 $ (10,608) $ - $ 652,063 $ 3,742 $ 655,805
Appropriation of 2016 earnings
Legal reserve - - 10,200 - (10,200) - - - - -
Special reserve - - - 10,609 (10,609) - - - - -
Cash dividends distributed by the Company - - - - (90,368) - - (90,368) - (90,368)
Other changes in capital surplus
Equity components of convertible bonds issued by the
Company - 11,032 - - - - - 11,032 - 11,032
Net profit (loss) for the year ended December 31, 2017 - - - - 90,728 - - 90,728 (1,933) 88,795
Other comprehensive loss for the year ended December 31, 2017,
net of income tax - - - - (516) (4,352) - (4,868) - (4,868)
Total comprehensive income (loss) for the year ended
December 31, 2017 - - - - 90,212 (4,352) - 85,860 (1,933) 83,927
Issuance of ordinary shares for cash 30,000 167,510 - - - - - 197,510 - 197,510
Issuance of ordinary shares under employee share options - 6,673 - - - - - 6,673 - 6,673
Non-controlling interests - - - - - - - - 12,439 12,439
BALANCE AT DECEMBER 31, 2017 282,400 390,115 65,050 10,609 129,556 (14,960) - 862,770 14,248 877,018
Effect of retrospective application - - - - - - (360) (360) - (360)
BALANCE AT JANUARY 1, 2018 AS RESTATED 282,400 390,115 65,050 10,609 129,556 (14,960) (360) 862,410 14,248 876,658
Appropriation of 2017 earnings
Legal reserve - - 9,073 - (9,073) - - - - -
Special reserve - - - 4,351 (4,351) - - - - -
Cash dividends distributed by the Company - - - - (73,424) - - (73,424) - (73,424)
Net profit (loss) for the year ended December 31, 2018 - - - - 112,950 - - 112,950 (565) 112,385
Other comprehensive loss for the year ended December 31, 2018,
net of income tax - - - - (1,353) (3,053) (1,575) (5,981) (340) (6,321)
Total comprehensive income (loss) for the year ended
December 31, 2018 - - - - 111,597 (3,053) (1,575) 106,969 (905) 106,064
Non-controlling interests - - - - - - - - 1,258 1,258
BALANCE AT DECEMBER 31, 2018 $ 282,400 $ 390,115 $ 74,123 $ 14,960 $ 154,305 $ (18,013) $ (1,935) $ 895,955 $ 14,601 $ 910,556
The accompanying notes are an integral part of the consolidated financial statements.
145
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $ 148,209 $ 112,084
Adjustments for:
Depreciation expenses 75,547 67,277
Amortization expenses 12,896 11,142
Expected credit loss reversed on trade receivables (71) -
Impairment loss reversed on trade receivables - (563)
Net loss on fair value changes of financial liabilities designated as at
fair value through profit or loss 5,750 3,210
Finance costs 8,488 11,169
Interest income (1,533) (1,012)
Compensation costs of employee share options - 6,673
Share of loss of associates and joint ventures 10,352 8,182
Loss on disposal of property, plant and equipment 267 1,147
Gain on disposal of associates - (4,783)
Write-downs of inventories 2,222 -
Reversal of write-downs of inventories - (11)
Changes in operating assets and liabilities
Notes receivable 1,636 4,213
Trade receivables (23,071) 9,803
Trade receivables from related parties 1,024 (1,024)
Other receivables 14,991 7,960
Other receivables from related parties - 1,768
Inventories (96,504) (9,858)
Prepayments 1,503 (8,609)
Other current assets 5,619 3,473
Contract liabilities 345 -
Notes payable (1,699) (2,285)
Trade payables 159,306 1,268
Trade payables to related parties 8,496 1,022
Other payables 20,876 1,088
Receipts in advance and deferred revenue - (1,110)
Other current liabilities 2,000 (1,857)
Net defined benefit liabilities - non-current (416) (428)
Cash generated from operations 356,233 219,939
Interest received 1,533 1,012
Interest paid (3,515) (7,004)
Income taxes paid (24,030) (23,693)
Net cash generated from operating activities 330,221 190,254
(Continued)
146
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets measured at cost $ (64,370) $ -
Purchase of debt investments with no active market - (11,000)
Acquisition of subsidiaries - (37,928)
Payments for property, plant and equipment (32,455) (476,857)
Proceeds from disposal of property, plant and equipment 245 658
Increase in refundable deposits (2,718) (2,989)
Payments for intangible assets (1,785) (910)
Increase in prepaid equipment (38,829) (39,107)
Net cash used in investing activities (139,912) (568,133)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term borrowings - (250,000)
Proceeds from issuance of bonds - 297,362
Proceeds from long-term borrowings - 437,000
Repayments of long-term borrowings (16,593) (156,355)
Proceeds from guarantee deposits received 1,400 3,088
Dividends paid to owners of the Company (73,424) (90,368)
Proceeds from issuance of ordinary shares - 197,510
Changes in non-controlling interests 1,258 -
Net cash (used in) generated from financing activities (87,359) 438,237
EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH HELD IN FOREIGN CURRENCIES (1,463) (543)
NET INCREASE IN CASH AND CASH EQUIVALENTS 101,487 59,815
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR 528,892 469,077
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 630,379 $ 528,892
The accompanying notes are an integral part of the consolidated financial statements. (Concluded)
147
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
1. GENERAL INFORMATION
MedFirst Healthcare Services, Inc. (the “Company”) was incorporated in the Republic of China (“ROC”)
on May 7, 1992.
The Company and its subsidiaries (collectively, the “Group”) are mainly engaged in the sale of medical
supplies and the management of malls.
The Company’s shares have been listed on the mainboard of the Taipei Exchange (“TPEx”) since April 23,
2014.
The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan
dollar.
2. APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the Company’s board of directors on February 26,
2019.
3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS
a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports
by Securities Issuers and the International Financial Reporting Standards (IFRS), International
Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC)
(collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission
(FSC)
Except for the following, whenever applied, the initial application of the amendments to the
Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs
endorsed and issued into effect by the FSC would not have any material impact on the Group’s
accounting policies:
1) IFRS 9 “Financial Instruments” and related amendments
IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with
consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards.
IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets
and hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies.
Classification, measurement and impairment of financial assets and financial liabilities
On the basis of the facts and circumstances that existed as of January 1, 2018, the Group has
performed an assessment of the classification of recognized financial assets and has elected not to
restate prior reporting periods.
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The following table shows the original measurement categories and carrying amount under IAS 39
and the new measurement categories and carrying amounts under IFRS 9 for each class of the
Group’s financial assets and financial liabilities as of January 1, 2018.
Measurement Category Carrying Amount
Financial Assets IAS 39 IFRS 9 IAS 39 IFRS 9 Remark
Cash and cash equivalents Loans and receivables Amortized cost $ 528,892 $ 528,892 - Derivatives Held‑ for‑ trading Mandatorily at fair value
through profit or loss (i.e.
FVTPL)
6,271 6,271
Equity securities Available‑ for‑ sale Fair value through other
comprehensive income
(i.e. FVTOCI) - equity instruments
15,000 14,640 b)
Time deposits with
original maturities of more than 3 months
Loans and receivables Amortized cost 7,000 7,000 c)
Time deposits with
original maturities of more than 3 months -
pledged
Loans and receivables Amortized cost 20,730 20,730 c)
Notes receivable, trade receivables (including
related parties) and other receivables
Loans and receivables Amortized cost 134,109 134,109 a)
Refundable deposits Loans and receivables Amortized cost 65,591 65,591 -
Measurement Category Carrying Amount
Financial Liabilities IAS 39 IFRS 9 IAS 39 IFRS 9 Remark Derivatives Held‑ for‑ trading Held‑ for‑ trading $ 4,530 $ 4,530 -
Notes payable, trade
payables (including related parties), other
payables, bonds
payable, long-term borrowings, and
guarantee deposits
Amortized cost Amortized cost 1,970,256 1,970,256 -
Financial Assets
IAS 9
Carrying
Amount
as of
January 1,
2018
Reclassifi-
cations
Remeasure-
ments
IFRS 9
Carrying
Amount
as of
January 1,
2018
Other Equity
Effect on
January 1,
2018 Remark
FVTOCI
Equity instruments $ -
Add: Reclassification from available-for-sale (IAS 39)
-
$ 15,000
$ (360 )
$ 14,640
$ (360 )
b)
$ - $ 15,000 $ (360 ) $ 14,640 $ (360 )
a) Notes receivable, trade receivables (including related parties) and other receivables that were
previously classified as loans and receivables under IAS 39 were classified as at amortized cost
with an assessment of expected credit losses under IFRS 9.
b) The Group elected to designate all its investments in equity securities previously classified as
available-for-sale under IAS 39 as at FVTOCI under IFRS 9, because these investments are not
held for trading.
Investments in unlisted shares previously measured at cost under IAS 39 have been designated
as at FVTOCI under IFRS 9 and were remeasured at fair value. Consequently, a decrease of
$360 thousand was recognized in both financial assets at FVTOCI and other equity - unrealized
gain (loss) on financial assets at FVTOCI on January 1, 2018.
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c) Debt investments previously classified as debt investments with no active market and measured
at amortized cost under IAS 39 were classified as at amortized cost with an assessment of
expected credit losses under IFRS 9, because on January 1, 2018, the contractual cash flows
were solely payments of principal and interest on the principal outstanding and these
investments were held within a business model whose objective is to collect contractual cash
flows.
2) IFRS 15 “Revenue from Contracts with Customers” and related amendments
IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers,
and supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of
revenue-related interpretations. Refer to Note 4 for the related accounting policies.
Under IFRS 15, the net effect of revenue recognized and consideration received and receivable is
recognized as a contract asset or a contract liability. Prior to the application of IFRS 15, receivables
were recognized or deferred revenue was reduced when revenue was recognized for the relevant
contract under IAS 18.
The Group elected only to retrospectively apply IFRS 15 to contracts that were not complete as of
January 1, 2018 and recognize the cumulative effect of the change in retained earnings on January 1,
2018.
The impact on assets, liabilities and equity as of January 1, 2018 from the initial application of IFRS
15 is set out below:
As Originally
Stated
Adjustments
Arising from
Initial
Application Restated
Contract liabilities - current $ - $ 34,590 $ 34,590
Deferred revenue - current 7,954 (7,954) -
Receipts in advance 26,636 (26,636) -
Total effect on liabilities $ 34,590 $ - $ 34,590
3) Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealized Losses”
The amendments clarify that the difference between the carrying amount of the debt instrument
measured at fair value and its tax base gives rise to a temporary difference, even though there are
unrealized losses on that asset, irrespective of whether the Group expects to recover the carrying
amount of the debt instrument by sale or by holding it and collecting contractual cash flows.
In addition, in determining whether to recognize a deferred tax asset, the Group should assess a
deductible temporary difference in combination with all of its other deductible temporary
differences, unless the tax law restricts the utilization of losses as deduction against income of a
specific type, in which case, a deductible temporary difference is assessed in combination only with
other deductible temporary differences of the appropriate type. The amendments also stipulate that,
when determining whether to recognize a deferred tax asset, the estimate of probable future taxable
profit may include some of the Group’s assets for more than their carrying amount if there is
sufficient evidence that it is probable that the Group will achieve the higher amount and that the
estimate for future taxable profit should exclude tax deductions resulting from the reversal of
deductible temporary differences.
Prior to the amendment, in assessing a deferred tax asset, the Group assumed that it will recover the
asset at its carrying amount when estimating probable future taxable profit. The Group applied the
above amendments retrospectively in 2018.
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b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers
and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS),
Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed
by the FSC for application starting from 2019
New, Amended or Revised Standards and Interpretations
(the “New IFRSs”)
Effective Date
Announced by IASB (Note 1)
Annual Improvements to IFRSs 2015-2017 Cycle January 1, 2019
Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”
January 1, 2019 (Note 2)
IFRS 16 “Leases” January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or
Settlement”
January 1, 2019 (Note 3)
Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”
January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments” January 1, 2019
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.
Note 3: The Group shall apply these amendments to plan amendments, curtailments or settlements
occurring on or after January 1, 2019.
1) IFRS 16 “Leases”
IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of
related interpretations.
Definition of a lease
Upon initial application of IFRS 16, the Group will elect to apply the guidance of IFRS 16, in
determining whether contracts are, or contain, a lease, only to contracts entered into (or changed) on
or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will
not be reassessed and will be accounted for in accordance with the transitional provisions under
IFRS 16.
The Group as lessee
Upon initial application of IFRS 16, the Group will recognize right-of-use assets, and lease
liabilities for all leases on the consolidated balance sheets except for those whose payments under
low-value and short-term leases will be recognized as expenses on a straight-line basis. On the
consolidated statements of comprehensive income, the Group will present the depreciation expense
charged on right-of-use assets separately from the interest expense accrued on lease liabilities;
interest is computed using the effective interest method. On the consolidated statements of cash
flows, cash payments for the principal portion of lease liabilities will be classified within financing
activities; cash payments for the interest portion will be classified within operating activities.
Currently, payments under operating lease contracts are recognized as expenses on a straight-line
basis. Cash flows for operating leases are classified within operating activities on the consolidated
statements of cash flows. Leased assets and finance lease payables are recognized for contracts
classified as finance leases.
151
The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial
application of this standard recognized on January 1, 2019. Comparative information will not be
restated.
The Group expects to apply the following practical expedient:
The Group will account for those leases for which the lease term ends on or before December 31,
2019 as short-term leases.
The Group as lessor
Except for sublease transactions, the Group will not make any adjustments for leases in which it is a
lessor and will account for those leases with the application of IFRS 16 starting from January 1,
2019.
The Group subleased its leasehold mall to a third party. Such sublease is classified as an operating
lease under IAS 17. The Group will assess the sublease classification on the basis of the remaining
contractual terms and conditions of the head lease and sublease on January 1, 2019.
Anticipated impact on assets, liabilities and equity
Carrying
Amount as of
December 31,
2018
Adjustments
Arising from
Initial
Application
Adjusted
Carrying
Amount as of
January 1, 2019
Right-of-use assets $ - $ 935,529 $ 935,529
Lease liabilities - current $ - $ 253,407 $ 253,407
Lease liabilities - non-current - 682,122 682,122
Total effect on liabilities $ - $ 935,529 $ 935,529
2) IFRIC 23 “Uncertainty over Income Tax Treatments”
IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Group should
assume that the taxation authority will have full knowledge of all related information when making
related examinations. If the Group concludes that it is probable that the taxation authority will
accept an uncertain tax treatment, the Group should determine the taxable profit, tax bases, unused
tax losses, unused tax credits or tax rates consistently with the tax treatments used or planned to be
used in its income tax filings. If it is not probable that the taxation authority will accept an uncertain
tax treatment, the Group should make estimates using either the most likely amount or the expected
value of the tax treatment, depending on which method the Group expects to better predict the
resolution of the uncertainty. The Group has to reassess its judgments and estimates if facts and
circumstances change.
Upon initial application of IFRIC 23, the Group will recognize the cumulative effect of
retrospective application on retained earnings on January 1, 2019.
Except for the above impacts, as of the date the consolidated financial statements were authorized for
issue, the Group continues assessing other possible impacts that application of the aforementioned
amendments and the related amendments to the Regulations Governing the Preparation of Financial
Reports by Securities Issuers will have on the Group’s financial position and financial performance and
will disclose these other impacts when the assessment is completed.
152
c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
New IFRSs
Effective Date
Announced by IASB (Note 1)
Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 2)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
To be determined by IASB
IFRS 17 “Insurance Contracts” January 1, 2021
Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)
Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on
or after their respective effective dates.
Note 2: The Group shall apply these amendments to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after
January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods
beginning on or after January 1, 2020.
As of the date the consolidated financial statements were authorized for issue, the Group is
continuously assessing the possible impact that the application of other standards and interpretations
will have on the Group’s financial position and financial performance, and will disclose the relevant
impact when the assessment is completed.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued
into effect by the FSC.
b. Basis of preparation
The consolidated financial statements have been prepared on the historical cost basis except for
financial instruments which are measured at fair value.
The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the
fair value measurement inputs are observable and based on the significance of the inputs to the fair
value measurement in its entirety, are described as follows:
1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
153
c. Classification of current and non-current assets and liabilities
Current assets include:
1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting period.
Current liabilities include:
1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least
12 months after the reporting period.
Assets and liabilities that are not classified as current are classified as non-current.
d. Basis of consolidation
Principles for preparing consolidated financial statements
The consolidated financial statements incorporate the financial statements of the Company and the
entities controlled by the Company (i.e. its subsidiaries).
Income and expenses of subsidiaries acquired or disposed of during the period are included in the
consolidated statement of profit or loss and other comprehensive income from the effective date of
acquisition up to the effective dates of disposals, as appropriate.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by the Company.
All intra-group transactions, balances, income and expenses are eliminated in full upon
consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests
having a deficit balance.
Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing
control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. 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 and attributed to the owners of the Company.
See Note 14, Tables 6 and 7 for detailed information of subsidiaries (including percentages of
ownership and main business).
e. Business combinations
Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are
generally recognized in profit or loss as they are incurred.
154
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity
interests in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired
and the liabilities assumed.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
share of the entity’s net assets in the event of liquidation may be initially measured at fair value. Other
types of non-controlling interests are measured at fair value.
Where the consideration the Group transfers in a business combination includes assets or liabilities
resulting from a contingent consideration arrangement, the contingent consideration is measured at its
acquisition-date fair value and considered as part of the consideration transferred in a business
combination. Changes in the fair value of the contingent consideration that qualify as measurement
period adjustments are adjusted retrospectively, with the corresponding adjustments being made against
goodwill or gain on bargain purchase. Measurement period adjustments are adjustments that arise from
additional information obtained during the measurement period about facts and circumstances that
existed as of the acquisition date. The measurement period does not exceed 1 year from the acquisition
date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not
qualify as measurement period adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity and included in capital surplus - options is not
remeasured at the end of the subsequent reporting period and its subsequent settlement is accounted for
within equity and transferred to capital surplus - share premiums. Other contingent consideration is
remeasured at fair value at the end of subsequent reporting period with any gain or loss recognized in
profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in an
acquiree is remeasured to fair value at the acquisition date, and the resulting gain or loss is recognized
in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have
previously been recognized in other comprehensive income are recognized on the same basis as would
be required if those interests were directly disposed of by the Group.
f. Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other
than the entity’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign currencies are retranslated
at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or
translation are recognized in profit or loss in the period in which they arise.
Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair value was determined. Exchange differences arising
from the retranslation of non-monetary items are included in profit or loss for the period except for
exchange differences arising from the retranslation of non-monetary items in respect of which gains and
losses are recognized directly in other comprehensive income; in which cases, the exchange differences
are also recognized directly in other comprehensive income.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction.
155
For the purpose of presenting the consolidated financial statements, the functional currencies of the
Company and the group entities (including subsidiaries in other countries that use currencies which are
different from the currency of the Company) are translated into the presentation currency, the New
Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end
of the reporting period; and income and expense items are translated at the average exchange rates for
the period. The resulting currency translation differences are recognized in other comprehensive income
(attributed to the owners of the Company and non-controlling interests as appropriate).
g. Inventories
Inventories consist of finished goods and are stated at the lower of cost or net realizable value.
Inventory write-downs are made by item, except where it may be appropriate to group similar or related
items. The net realizable value is the estimated selling price of inventories less all estimated costs of
completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost
on the balance sheet date.
h. Investments in associates
An associate is an entity over which the Group has significant influence and which is neither a
subsidiary nor an interest in a joint venture.
The Group uses the equity method to account for its investments in associates.
Under the equity method, investments in an associate are initially recognized at cost and adjusted
thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the
associate. The Group also recognizes the changes in the Group’s share of the equity of associates
attributable to the Group.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable
assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is
included within the carrying amount of the investment and is not amortized. Any excess of the Group’s
share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after
reassessment, is recognized immediately in profit or loss.
When the Group subscribes for additional new shares of an associate at a percentage different from its
existing ownership percentage, the resulting carrying amount of the investment differs from the amount
of the Group’s proportionate interest in the associate. The Group records such a difference as an
adjustment to investments with the corresponding amount charged or credited to capital surplus -
changes in capital surplus from investments in associates accounted for using the equity method. If the
Group’s ownership interest is reduced due to its additional subscription of the new shares of the
associate, the proportionate amount of the gains or losses previously recognized in other comprehensive
income in relation to that associate is reclassified to profit or loss on the same basis as would be
required had the investee had directly disposed of the related assets or liabilities. When the adjustment
should be debited to capital surplus, but the capital surplus recognized from investments accounted for
using the equity method is insufficient, the shortage is debited to retained earnings.
When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which
includes any carrying amount of the investment accounted for using the equity method and long-term
interests that, in substance, form part of the Group’s net investment in the associate), the Group
discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only
to the extent that the Group has incurred legal obligations, or constructive obligations, or made
payments on behalf of that associate.
156
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single
asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is
not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the
investment subsequently increases.
The Group discontinues the use of the equity method from the date on which its investment ceases to be
an associate. Any retained investment is measured at fair value at that date, and the fair value is
regarded as the investment’s fair value on initial recognition as a financial asset. The difference
between the previous carrying amount of the associate attributable to the retained interest and its fair
value is included in the determination of the gain or loss on disposal of the associate. The Group
accounts for all amounts previously recognized in other comprehensive income in relation to that
associate on the same basis as would be required had that associate had directly disposed of the related
assets or liabilities.
When a group entity transacts with its associate, profits and losses resulting from the transactions with
the associate are recognized in the Group’ consolidated financial statements only to the extent that
interests in the associate are not related to the Group.
i. Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation.
Property, plant and equipment in the course of construction are measured at cost less any recognized
impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such
assets are depreciated and classified to the appropriate categories of property, plant and equipment
when completed and ready for their intended use.
Depreciation of property, plant and equipment is recognized using the straight-line method. Each
significant part is depreciated separately. If the lease term of an item of property, plant and equipment is
shorter than its useful life, it is depreciated over the lease term. The estimated useful lives, residual
values and depreciation methods are reviewed at the end of each reporting period, with the effects of
any changes in the estimates accounted for on a prospective basis.
On derecognition of an item of property, plant and equipment, the difference between the sales proceeds
and the carrying amount of the asset is recognized in profit or loss.
j. Goodwill
Goodwill arising from the acquisition of a business is measured at cost as established at the date of
acquisition of the business less accumulated impairment loss.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating
units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to
benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more
frequently when there is an indication that the unit may be impaired, by comparing its carrying amount,
including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a
cash-generating unit was acquired in a business combination during the current annual period, that unit
shall be tested for impairment before the end of the current annual period. If the recoverable amount of
the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit
based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in
profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods.
157
If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within
that unit, the goodwill associated with the operation which is disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal and is measured on the basis of
the relative values of the operation disposed of and the portion of the cash-generating unit retained.
k. Intangible assets
1) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are initially measured at cost
and subsequently measured at cost less accumulated amortization. Amortization is recognized on a
straight-line basis. The estimated useful life, residual value, and amortization method are reviewed
at the end of each reporting period, with the effect of any changes in estimates accounted for on a
prospective basis. Intangible assets with indefinite useful lives that are acquired separately are
measured at cost less accumulated impairment loss.
2) Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognized separately from goodwill are
initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, they are measured on the same basis as intangible assets that are
acquired separately.
3) Derecognition of intangible assets
On derecognition of an intangible asset, the difference between the net disposal proceeds and the
carrying amount of the asset is recognized in profit or loss.
l. Impairment of tangible and intangible assets other than goodwill and assets related to contract cost
At the end of each reporting period, the Group reviews the carrying amounts of its tangible and
intangible assets, excluding goodwill, to determine whether there is any indication that those assets
have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable
amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying
amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting
impairment loss recognized in profit or loss.
Before the Group recognizes an impairment loss from assets related to contract costs, any impairment
loss on inventories, property, plant and equipment and intangible assets related to the contract
applicable under IFRS 15 shall be recognized in accordance with applicable standards. Then,
impairment loss from the assets related to the contract costs is recognized to the extent that the carrying
amount of the assets exceeds the remaining amount of consideration that the Group expects to receive
in exchange for related goods or services less the costs which relate directly to providing those goods or
services and which have not been recognized as expenses. The assets related to the contract costs are
then included in the carrying amount of the cash-generating unit to which they belong for the purpose of
evaluating impairment of that cash-generating unit.
158
When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset,
cash-generating unit or assets related to contract cost is increased to the revised estimate of its
recoverable amount, but only to the extent of the carrying amount that would have been determined had
no impairment loss been recognized for the asset, cash-generating unit or assets related to contract costs
in prior years. A reversal of an impairment loss is recognized in profit or loss.
m. Financial instruments
Financial assets and financial liabilities are recognized when a group entity becomes a party to the
contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than
financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized
immediately in profit or loss.
1) Financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade
date basis
a) Measurement category
2018
Financial assets are classified into the following categories: Financial assets at FVTPL, financial
assets at amortized cost, and investments in equity instruments at FVTOCI.
i. Financial assets at FVTPL
A financial asset is classified as at FVTPL when such a financial asset is mandatorily
classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include
investments in equity instruments which are not designated as at FVTOCI and debt
instruments that do not meet the amortized cost criteria or the FVTOCI criteria.
Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses
arising on remeasurement recognized in profit or loss. The net gain or loss recognized in
profit or loss incorporates any dividend or interest earned on such a financial asset. Fair
value is determined in the manner described in Note 35.
ii. Financial assets at amortized cost
Financial assets that meet the following conditions are subsequently measured at amortized
cost:
The financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
159
Subsequent to initial recognition, financial assets at amortized cost, including cash and cash
equivalents, notes receivable at amortized cost, trade receivables, other receivables and
refundable deposits, are measured at amortized cost, which equals the gross carrying amount
determined using the effective interest method less any impairment loss. Exchange
differences are recognized in profit or loss.
Interest income is calculated by applying the effective interest rate to the gross carrying
amount of such a financial asset, except for:
Purchased or originated credit-impaired financial assets, for which interest income is
calculated by applying the credit-adjusted effective interest rate to the amortized cost of
such financial asset; and
Financial assets that are not credit-impaired on purchase or origination but have
subsequently become credit-impaired, for which interest income is calculated by
applying the effective interest rate to the amortized cost of such financial asset in
subsequent reporting periods.
Cash equivalents include time deposits with original maturities within 3 months from the
date of acquisition, which are highly liquid, readily convertible to a known amount of cash
and are subject to an insignificant risk of changes in value. These cash equivalents are held
for the purpose of meeting short-term cash commitments.
iii. Investments in equity instruments at FVTOCI
On initial recognition, the Group may make an irrevocable election to designate investments
in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the
equity investment is held for trading or if it is contingent consideration recognized by an
acquirer in a business combination.
Investments in equity instruments at FVTOCI are subsequently measured at fair value with
gains and losses arising from changes in fair value recognized in other comprehensive
income and accumulated in other equity. The cumulative gain or loss will not be reclassified
to profit or loss on disposal of the equity investments; instead, it will be transferred to
retained earnings.
Dividends on these investments in equity instruments are recognized in profit or loss when
the Group’s right to receive the dividends is established, unless the dividends clearly
represent a recovery of part of the cost of the investment.
2017
Financial assets are classified into the following categories: Financial assets at FVTPL,
available-for-sale financial assets, and loans and receivables.
i. Financial assets at FVTPL
Financial assets are classified as at FVTPL when such financial assets are held for trading.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss
incorporates any dividends or interest earned on such a financial asset. Fair value is
determined in the manner described in Note 35.
160
ii. Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated as
available-for-sale or are not classified as loans and receivables, held-to-maturity investments
or financial assets at FVTPL.
Available-for-sale financial assets are measured at fair value. Changes in the carrying
amounts of available-for-sale monetary financial assets (relating to changes in foreign
currency exchange rates, interest income calculated using the effective interest method and
dividends on available-for-sale equity investments) are recognized in profit or loss. Other
changes in the carrying amount of available-for-sale financial assets are recognized in other
comprehensive income and will be reclassified to profit or loss when such investments are
disposed of or are determined to be impaired.
Dividends on available-for-sale equity instruments are recognized in profit or loss when the
Group’s right to receive the dividends is established.
iii. Loans and receivables
Loans and receivables (including cash and cash equivalents, debt investments with no active
market, notes receivable, trade receivables, other receivables and refundable deposits) are
measured using the effective interest method at amortized cost less any impairment, except
for short-term receivables when the effect of discounting is immaterial.
Cash equivalents include time deposits with original maturities within 3 months from the
date of acquisition, which are highly liquid, readily convertible to a known amount of cash
and are subject to an insignificant risk of changes in value. These cash equivalents are held
for the purpose of meeting short-term cash commitments.
b) Impairment of financial assets and contract assets
2018
The Group recognizes a loss allowance for expected credit losses on financial assets at
amortized cost (including trade receivables), investments in debt instruments that are measured
at FVTOCI, lease receivables, as well as contract assets.
The Group always recognizes lifetime expected credit loss (i.e. ECLs) for trade receivables and
lease receivables. For all other financial instruments, the Group recognizes lifetime ECLs when
there has been a significant increase in credit risk since initial recognition. If, on the other hand,
the credit risk on a financial instrument has not increased significantly since initial recognition,
the Group measures the loss allowance for that financial instrument at an amount equal to
12-month ECLs.
Expected credit losses reflect the weighted average of credit losses with the respective risks of
default occurring as the weights. Lifetime ECLs represent the expected credit losses that will
result from all possible default events over the expected life of a financial instrument. In
contrast, 12-month ECLs represent the portion of lifetime ECL that is expected to result from
default events on a financial instrument that are possible within 12 months after the reporting
date.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments
with a corresponding adjustment to their carrying amount through a loss allowance account,
except for investments in debt instruments that are measured at FVTOCI, for which the loss
allowance is recognized in other comprehensive income and does not reduce the carrying
amount of such a financial asset.
161
2017
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end
of each reporting period. Financial assets are considered to be impaired when there is objective
evidence, as a result of one or more events that occurred after the initial recognition of such
financial assets, that the estimated future cash flows of the investment have been affected.
Financial assets at amortized cost, such as trade receivables and other receivables, are assessed
for impairment on a collective basis even if they were assessed not to be impaired individually.
Objective evidence of impairment for a portfolio of receivables could include the Group’s past
experience with collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period of 30 days to 45 days, as well as observable changes in
national or local economic conditions that correlate with defaults on receivables.
For a financial asset at amortized cost, the amount of the impairment loss recognized is the
difference between such an asset’s carrying amount and the present value of estimated future
cash flows, discounted at the financial asset’s original effective interest rate.
For a financial assets carried at amortized cost, 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 was recognized, the previously recognized impairment loss is reversed through
profit or loss to the extent that the carrying amount of the investment (at the date on which the
impairment is reversed) does not exceed what the amortized cost would have been had the
impairment not been recognized.
For available-for-sale equity investments, a significant or prolonged decline in the fair value of
the security below its cost is considered to be objective evidence of impairment.
For all other financial assets, objective evidence of impairment could include significant
financial difficulty of the issuer or counterparty, breach of contract such as a default or
delinquency in interest or principal payments, it becoming probable that the borrower will enter
bankruptcy or financial re-organization, or the disappearance of an active market for those
financial assets because of financial difficulties.
When an available-for-sale financial asset is considered to be impaired, cumulative gains or
losses previously recognized in other comprehensive income are reclassified to profit or loss in
the period.
In respect of available-for-sale equity securities, impairment loss previously recognized in profit
or loss is not reversed through profit or loss. Any increase in fair value subsequent to
impairment is recognized in other comprehensive income. In respect of available-for-sale debt
securities, impairment loss is subsequently reversed through profit or loss if an increase in the
fair value of such an investment can be objectively related to an event occurring after the
recognition of the impairment loss.
The carrying amount of a financial asset is reduced by the impairment loss directly for all
financial assets, with the exception of trade receivables and other receivables, where the
carrying amount is reduced through the use of an allowance account. When trade receivables
and other receivables are considered uncollectible, they are written off against the allowance
account. Subsequent recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are recognized in
profit or loss except for uncollectible trade receivables and other receivables that are written off
against the allowance account.
162
c) Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows
from the asset expire or when it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party.
Before 2018, on derecognition of a financial asset in its entirety, the difference between the
asset’s carrying amount and the sum of the consideration received and receivable and the
cumulative gain or loss which had been recognized in other comprehensive income is
recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at
amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of
the consideration received and receivable is recognized in profit or loss. On derecognition of an
investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable and the cumulative gain or loss which
had been recognized in other comprehensive income is recognized in profit or loss. However, on
derecognition of an investment in an equity instrument at FVTOCI, the difference between the
asset’s carrying amount and the sum of the consideration received and receivable is recognized
in profit or loss, and the cumulative gain or loss which had been recognized in other
comprehensive income is transferred directly to retained earnings, without recycling through
profit or loss.
2) Equity instruments
Debt and equity instruments issued by a group entity are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments issued by a group entity are recognized at the proceeds received, net of direct
issue costs.
The repurchase of the Company’s own equity instruments is recognized in and deducted directly
from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or
cancellation of the Company’s own equity instruments.
3) Financial liabilities
a) Subsequent measurement
Except the following situation, all financial liabilities are measured at amortized cost using the
effective interest method:
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when such financial liabilities are held for
trading.
Financial liabilities held for trading are stated at fair value, with any gain or loss arising on
remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss
incorporates any interest or dividend paid on such financial liability.
Fair value is determined in the manner described in Note 35.
163
b) Derecognition of financial liabilities
The difference between the carrying amount of the financial liability derecognized and the
consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognized in profit or loss.
4) Convertible bonds
The component parts of compound instruments (i.e. convertible bonds) issued by the Group are
classified separately as financial liabilities and equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an equity instrument.
On initial recognition, the fair value of the liability component is estimated using the prevailing
market interest rate for similar non-convertible instruments. This amount is recorded as a liability
on an amortized cost basis using the effective interest method until extinguished upon conversion or
upon the instrument’s maturity date. Any embedded derivative liability is measured at fair value.
The conversion option classified as equity is determined by deducting the amount of the liability
component from the fair value of the compound instrument as a whole. This is recognized and
included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the
conversion option classified as equity will remain in equity until the conversion option is exercised;
in which case, the balance recognized in equity will be transferred to capital surplus - share
premium. When the conversion option remains unexercised at maturity, the balance recognized in
equity will be transferred to capital surplus - share premium.
Transaction costs that relate to the issuance of the convertible notes are allocated to the liability and
equity components in proportion to the allocation of the gross proceeds. Transaction costs relating
to the equity component are recognized directly in equity. Transaction costs relating to the liability
component are included in the carrying amount of the liability component.
5) Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest
rate and foreign exchange rate risks, including put option, contingent considerations and convertible
options.
Derivatives are initially recognized at fair value at the date on which the derivative contracts are
entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The resulting gain or loss is recognized in profit or loss immediately unless the derivative is
designated and effective as a hedging instrument; in which event, the timing of the recognition in
profit or loss depends on the nature of the hedge relationship. When the fair value of derivative
financial instruments is positive, the derivative is recognized as a financial asset; when the fair
value of a derivative financial instruments is negative, the derivative is recognized as a financial
liability.
Before 2018, derivatives embedded in non-derivative host contracts were treated as separate
derivatives when they met the definition of a derivative; their risks and characteristics were not
closely related to those of the host contracts; and the contracts were not measured at FVTPL.
Starting from 2018, derivatives embedded in hybrid contracts that contain financial asset hosts that
is within the scope of IFRS 9 are not separated; instead, the classification is determined in
accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts
that are not financial assets that is within the scope of IFRS 9 (e.g. financial liabilities) are treated as
separate derivatives when they meet the definition of a derivative; their risks and characteristics are
not closely related to those of the host contracts; and the host contracts are not measured at FVTPL.
164
n. Revenue recognition
2018
The Group identifies contracts with the customers, allocates the transaction price to the performance
obligations and recognizes revenue when performance obligations are satisfied.
Revenue from sale of goods
Revenue from sale of goods comes from sales of medical supplies. Sales of medical supplies are
recognized as revenue because it is the time when the customer has full discretion over the manner of
distribution and bears the risks of loss or damage. Trade receivables are recognized concurrently.
Under the Customer Loyalty Program, the Group offers vouchers which can be used for future
purchases. The voucher provides a material right to the customer. The transaction price allocated to the
voucher is recognized as a contract liability when collected and will be recognized as revenue when the
voucher is redeemed or has expired.
2017
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced
for estimated customer returns, rebates and other similar allowances. Allowances for sales returns and
liabilities for returns are recognized at the time of sale based on the seller’s reliable estimate of future
returns and based on past experience and other relevant factors.
1) Revenue from the sale of goods
Revenue from the sale of goods is recognized when all the following conditions are satisfied:
a) The Group has transferred to the buyer the significant risks and rewards of ownership of the
goods;
b) The Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;
c) The amount of revenue can be measured reliably;
d) It is probable that the economic benefits associated with the transaction will flow to the Group;
and
e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
The sale of goods that results in award credits for customers under the Group’s award scheme is
accounted for as a multiple element revenue transaction, and the fair value of the consideration
received or receivable is allocated between the goods supplied and the award credits granted. The
consideration allocated to the award credits is measured with reference to their fair value, i.e. the
amount for which the award credits could be sold separately. Such consideration is not recognized
as revenue at the time of the initial sales transaction but is deferred and recognized as revenue when
the award credits are redeemed and the Group’s obligations have been fulfilled.
2) Interest income
Interest income from a financial asset is recognized when it is probable that the economic benefits
will flow to the Group and the amount of income can be measured reliably. Interest income is
accrued on a time basis with reference to the principal outstanding and at the applicable effective
interest rate.
165
o. Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
1) The Group as lessor
Rental income from operating leases is recognized on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added
to the carrying amount of the leased asset and amortized on a straight-line basis over the lease term.
Contingent rents are recognized as income in the period in which they are incurred.
2) The Group as lessee
Operating lease payments are recognized as expenses on a straight-line basis over the lease term.
Contingent rents are recognized as expenses in the period in which they are incurred.
p. Borrowing costs
Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets
are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which
they are incurred.
q. Employee benefits
1) Short-term employee benefits
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related service.
2) Retirement benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when
employees have rendered services entitling them to the contributions.
Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit
retirement benefit plans are determined using the projected unit credit method. Service cost
(including current service cost) and net interest on the net defined benefit liabilities (assets) are
recognized as employee benefits expense in the period in which they occur. Remeasurement,
comprising actuarial gains and losses, and the return on plan assets (excluding interest), is
recognized in other comprehensive income in the period in which it occurs. Remeasurement
recognized in other comprehensive income is reflected immediately in retained earnings and will
not be reclassified to profit or loss.
Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined
benefit plans. Any surplus resulting from this calculation is limited to the present value of any
refunds from the plans or reductions in future contributions to the plans.
166
r. Share-based payment arrangements employee share options
Employee share options granted to employees
The fair value at the grant date of the employee share options is expensed on a straight-line basis over
the vesting period, based on the Group’s best estimates of the number of shares or options that are
expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. It
is recognized as an expense in full at the grant date if vested immediately. The grant date of issued
ordinary shares for cash which are reserved for employees is the date on which the board of directors
approves the transaction.
s. Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1) Current tax
According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided
for as income tax in the year the shareholders approve to retain earnings.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax
provision.
2) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and
liabilities and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax
assets are generally recognized for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary differences
can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments
in subsidiaries and associates, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible temporary differences associated
with such investments and interests are only recognized to the extent that it is probable that there
will be sufficient taxable profits against which to utilize the benefits of the temporary differences
and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also
reviewed at the end of each reporting period and recognized to the to the extent that it has become
probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of the reporting period. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Group expects, at the end of the reporting period, to recover or settle
the carrying amount of its assets and liabilities.
167
3) Current and deferred taxes for the year
Current and deferred taxes are recognized in profit or loss, except when they relate to items that are
recognized in other comprehensive income or directly in equity, in which case, the current and
deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.
5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
In the application of the Group’s accounting policies, management is required to make judgments,
estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised if the revisions affect only that
period or in the period of the revisions and future periods if the revisions affect both current and future
periods.
Write-down of Inventories
The net realizable value of inventories is the estimated selling price in the ordinary course of business less
the estimated costs of completion and disposal. The estimation of the net realizable value is based on
current market conditions and historical experience with product sales of a similar nature. Changes in
market conditions may have a material impact on the estimation of the net realizable value.
6. CASH AND CASH EQUIVALENTS
December 31
2018 2017
Cash on hand $ 27,656 $ 25,271
Checking accounts and demand deposits 578,120 466,698
Cash equivalents
Time deposits with original maturities of less than 3 months 24,603 36,923
$ 630,379 $ 528,892
The market rate intervals of cash in the bank and time deposits at the end of the reporting period were as
follows:
December 31
2018 2017
Bank balance 0.05%-0.30% 0.08%-0.30%
Time deposits 1.10%-2.10% 1.10%-1.76%
168
7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
December 31
2018 2017
Financial assets at FVTPL - non-current
Put options $ 761 $ 6,237
Contingent consideration - 34
$ 761 $ 6,271
Financial liabilities at FVTPL - current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge accounting)
Convertible options (Note 21) $ 4,770 $ 4,530
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME -
2018
Investments in Equity Instruments at FVTOCI
December 31,
2018
Non-current
Domestic investments
Unlisted shares
Ordinary shares - Hao Jie Industrial Co., Ltd. $ 13,065
These investments in equity instruments are not held for trading. Instead, they are held for medium to
long-term strategic purposes. Accordingly, the management elected to designate these investments in equity
instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair
value in profit or loss would not be consistent with the Group’s strategy of holding these investments for
long-term purposes. These investments in equity instruments were classified as available-for-sale under IAS
39. Refer to Notes 3 and 10 for information relating to their reclassification and comparative information
for 2017.
9. FINANCIAL ASSETS AT AMORTIZED COST - 2018
December 31,
2018
Current
Time deposits with original maturities of more than 3 months $ 82,000
Non-current
Time deposits with original maturities of more than 3 months $ 10,100
169
a. The interest rates for time deposits with original maturities of more than 3 months were from 0.07% to
1.065% as at the end of the reporting period. The time deposits were classified as debt investments with
no active market under IAS 39. Refer to Notes 3 and 11 for information relating to their reclassification
and comparative information for 2017.
b. Refer to Note 37 for information relating to investments in financial assets at amortized cost pledged as
security.
10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017
December 31,
2017
Non-current
Domestic investments
Unlisted shares $ 15,000
11. DEBT INVESTMENTS WITH NO ACTIVE MARKET - 2017
December 31,
2017
Current
Time deposits with original maturities of more than 3 months $ 7,000
Non-current
Time deposits with original maturities of more than 3 months $ 20,730
a. As of December 31, 2017, the market interest rate range of the time deposits with original maturities
more than 3 months was 0.07%-1.05%.
b. Refer to Note 37 for information relating to bond investments with no active market pledged as
security.
12. TRADE RECEIVABLES
December 31
2018 2017
At amortized cost
Gross carrying amount $ 128,971 $ 106,924
Less: Allowance for impairment loss (72) (143)
$ 128,899 $ 106,781
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In 2018
The average credit period of trade receivables from shopping malls was between 10 days and 45 days. No
interest was charged on trade receivables. In determining the recoverability of a trade receivable, the Group
considered any change in the credit quality of a trade receivable since the date credit was initially granted to
the end of the reporting period.
The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9,
which permits the use of lifetime expected loss provision for all trade receivables. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience of
the debtor and an analysis of the debtor’s current financial position, adjusted for general economic
conditions of the industry in which the debtors operate and an assessment of both the current as well as the
forecast direction of economic conditions at the reporting date. As the Group’s historical credit loss
experience does not show significantly different loss patterns for different customer segments, the provision
for loss allowance based on past due status is not further distinguished according to the Group’s different
customer base.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe
financial difficulty and there is no realistic prospect of recovery, e.g. For trade receivables that have been
written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due.
Where recoveries are made, these are recognized in profit or loss.
The following table details the loss allowance of trade receivables based on the Group’s provision matrix.
December 31, 2018
Not Past Due 1 to 180 Days Over 180 Days Total
Expected credit loss rate 0% 50% 100% -
Gross carrying amount $ 128,827 $ 144 $ - $ 128,971
Loss allowance (Lifetime ECL) - (72) - (72)
Amortized cost $ 128,827 $ 72 $ - $ 128,899
The movements of the loss allowance of trade receivables were as follows:
2018
Balance at January 1, 2018 per IAS 39 $ 143
Adjustment on initial application of IFRS 9 -
Balance at January 1, 2018 per IFRS 9 143
Less: Net remeasurement of loss allowance (71)
Balance at December 31, 2018 $ 72
In 2017
The Group applied the same credit policy in 2018 and 2017. If there is no specific situation, the Group
recognized an allowance for impairment loss of 100% against all receivables over 180 days because
historical experience was that receivables that are past due beyond 180 days are not recoverable. Allowance
for impairment loss was recognized against trade receivables between 0 and 180 days based on the
estimated irrecoverable amounts determined by reference to the past default experience of the
counterparties and an analysis of their current financial positions.
171
The aging of receivables was as follows:
December 31,
2017
Up to 180 days $ 106,083
181 days and older 841
$ 106,924
The above aging schedule was based on the number of past due days from the invoice date.
The movements of the allowance for doubtful trade receivables were as follows:
Collectively
Assessed for
Impairment
Balance at January 1, 2017 $ 706
Less: Impairment losses reversed (563)
Balance at December 31, 2017 $ 143
13. INVENTORIES
December 31
2018 2017
Finished goods $ 772,684 $ 678,396
The cost of inventories recognized as cost of goods sold for the years ended December 31, 2018 and 2017
was $3,109,407 thousand and $2,937,770 thousand, respectively. The cost of goods sold included reversals
of inventory write-downs of $2,222 thousand and $11 thousand. The reversals of previous write-downs for
the year ended December 31, 2017 resulted from the sale of slow-moving inventory in these periods.
14. SUBSIDIARIES
Subsidiaries Included in the Consolidated Financial Statements
Proportion of
Ownership (%)
December 31
Investor Investee Nature of Activities 2018 2017 Remark
The Company Above Advance Limited Investment holding company 100.00 100.00
MedFirst Healthcare Services,
Inc. (FJ)
Sale of medical supplies 100.00 100.00
MedFirst Healthcare Services,
Inc. (NJ)
Sale of medical supplies 11.46 11.46
Taiwan Trim Co., Ltd. Sale of water Ionizer 50.00 50.00 Exactitude Biotech Co., Ltd. Sale of medical supplies 100.00 100.00
MedFirst Healthcare Services,
Inc. (SH)
Sale of medical supplies 4.84 4.84
Xing Zhou Pharmaceutical Co.,
Ltd.
Management consultancy
service
90.63 90.63 a
Proterann Healthcare Inc. Agent of foreign medical supplies brand
92.60 92.60 b
(Continued)
172
Proportion of
Ownership (%)
December 31
Investor Investee Nature of Activities 2018 2017 Remark
Above Advance Limited Cayman Medfirst Group Limited Investment holding company 100.00 100.00
Cayman Medfirst Group Limited MedFirst Healthcare Services,
Inc. (NJ)
Sale of medical supplies 82.81 82.81
MedFirst Healthcare Services,
Inc. (SH)
Sale of medical supplies 95.16 95.16
MedFirst Healthcare Services, Inc. (FJ) MedFirst Healthcare Services, Inc. (NJ)
Sale of medical supplies 5.73 5.73
MedFirst Healthcare Services,
Inc. (BJ)
Sale of medical supplies 100.00 100.00
MedFirst Healthcare Services, Inc. (SH) MedFirst Materials & Supplies,
Inc. (SH)
Sale of medical supplies 100.00 100.00
ShanDong Medfirst Healthcare Services Trade Ltd.
Sale of medical supplies 100.00 - c
MedFirst Materials & Supplies, Inc. (SH) MedFirst Materials & Supplies,
Inc. (HZ)
Sale of medical supplies 100.00 100.00
MedFirst Materials & Supplies, Inc.
(HZ)
Nanjing Baitang Trading Co.,
Ltd.
Sale of medical supplies 55.00 - d
(Concluded)
Remarks:
a. The Group acquired 4,305 thousand shares of Xing Zhou Pharmaceutical Co., Ltd. in the amount of
$44,043 thousand on July 3, 2017; the Group’s percentage of ownership increased from 45.32% to
90.63%, and subsequently obtained control of the company.
b. The Group acquired 623 thousand shares of Proterann Healthcare, Inc. in the amount of $44,659
thousand (of which $8,330 thousand has not yet been paid, and was accounted for as investment
payables) on August 1, 2017; the Group’s percentage of ownership was 92.6%, and subsequently
obtained control of the company.
c. The Group established ShanDong Medfirst Healthcare Services Trade Ltd. in June 2018, in which the
Group invested RMB3,000 thousand to obtain 100% of the equity of the company.
d. The Group established Nanjing Baitang Trading Co., Ltd. in January 2018, in which the Group invested
RMB2,750 thousand to obtain 55% of its equity. In consideration of the overall strategy and capital
allocation, the Group implemented a capital reduction in December 2018, and shares were refunded in
accordance with the shareholding ratio.
15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Investments in Associates
December 31
2018 2017
Material associates
Singleton Pharma Logistics Co., Ltd. $ 7,518 $ 17,870
Material associates:
Proportion of Ownership and
Voting Rights
December 31
Name of Associate 2018 2017
Singleton Pharma Logistics Co., Ltd. 40% 40%
173
Refer to Table 6 “Information on Investees” for the nature of activities, principal places of business and
countries of incorporation of the associates.
Investments accounted for using the equity method and the share of profit or loss and other comprehensive
income of those investments were calculated based on financial statements which have not been audited.
Management believes there is no material impact on the equity method of accounting or the calculation of
the share of profit or loss and other comprehensive income from the financial statements of Singleton
Pharma Logistics Co., Ltd., of which have not been reviewed.
All the associates are accounted for using the equity method.
Summarized financial information in respect of each of the Group’s material associates is set out below.
The summarized financial information below represents amounts shown in the associates’ financial
statements prepared in accordance with IFRSs adjusted by the Group for equity accounting purposes.
Singleton Pharma Logistics Co., Ltd.
December 31
2018 2017
Current assets $ 84,016 $ 55,392
Non-current assets 16,855 12,942
Current liabilities (86,748) (20,776)
Non-current liabilities (4,461) (12,015)
Equity $ 9,662 $ 35,543
Proportion of the Group’s ownership 40% 40%
Equity attributable to the Group $ 7,518 $ 17,870
Carrying amount $ 7,518 $ 17,870
For the Year Ended December 31
2018 2017
Operating revenue $ 164,427 $ 151,816
Net loss for the year $ (25,501) $ (17,624)
16. PROPERTY, PLANT AND EQUIPMENT
Land Buildings
Storage
Equipment
Leasehold
Improvements
Transportation
Equipment Office Equipment Other Equipment
Property under
Construction Total
Cost
Balance at January 1, 2017 $ 224,259 $ 327,727 $ 20,280 $ 269,133 $ 991 $ 78,394 $ 68,683 $ - $ 989,467
Additions 437,671 962 1 9,942 - 11,222 15,770 - 475,568
Reclassified 187,042 - - 34,432 - 3,924 - - 225,398
Disposals - - - (51,903 ) - (7,095 ) (1,468 ) - (60,466 )
Acquisitions through business combinations - - - 6,343 - 4,772 24,056 -
35,171
Effect of foreign currency
exchange differences - (4,141 ) - (1,001 ) - (396 ) (105 ) -
(5,643 )
Balance at December 31,
2017 $ 848,972 $ 324,548 $ 20,281 $ 266,946 $ 991 $ 90,821 $ 106,936 $ -
$ 1,659,495
Accumulated depreciation
Balance at January 1, 2017 $ - $ 24,137 $ 5,590 $ 213,833 $ 760 $ 52,475 $ 38,720 $ - $ 335,515
Depreciation expenses - 9,154 2,044 28,876 198 12,384 14,621 - 67,277
Disposals - - - (51,210 ) - (6,278 ) (1,173 ) - (58,661 )
Acquisitions through
business combinations - - - 1,907 - 1,744 7,807 -
11,458
Effect of foreign currency
exchange differences - 462 - (949 ) - (352 ) (57 ) -
(896 )
Balance at December 31,
2017 $ - $ 33,753 $ 7,634 $ 192,457 $ 958 $ 59,973 $ 59,918 $ -
$ 354,693
(Continued)
174
Land Buildings
Storage
Equipment
Leasehold
Improvements
Transportation
Equipment Office Equipment Other Equipment
Property under
Construction Total
Carrying amounts at
December 31, 2017 $ 848,972 $ 290,795 $ 12,647 $ 74,489 $ 33 $ 30,848 $ 47,018 $ -
$ 1,304,802
Cost
Balance at January 1, 2018 $ 848,972 $ 324,548 $ 20,281 $ 266,946 $ 991 $ 90,821 $ 106,936 $ - $ 1,659,495
Additions - - 144 7,072 - 10,956 6,219 5,226 29,617
Reclassified - - - 23,874 - 2,647 - - 26,521
Disposals - - - (8,590 ) - (947 ) (1,800 ) - (11,337 )
Effect of foreign currency
exchange differences - (3,592 ) - (112 ) - (69 ) (47 ) -
(3,820 )
Balance at December 31,
2018 $ 848.972 $ 320,956 $ 20,425 $ 289,190 $ 991 $ 103,408 $ 111,308 $ 5,226 $ 1,700,476
Accumulated depreciation
Balance at January 1, 2018 $ - $ 33,753 $ 7,634 $ 192,457 $ 958 $ 59,973 $ 59,918 $ - $ 354,693
Depreciation expenses - 10,470 2,054 35,278 33 12,536 15,176 - 75,547
Disposals - - - (8,346 ) - (911 ) (1,568 ) - (10,825 )
Effect of foreign currency
exchange differences - (327 ) - (40 ) - (42 ) (33 ) -
(442 )
Balance at December 31,
2018 $ - $ 43,896 $ 9,688 $ 219,349 $ 991 $ 71,556 $ 73,493 $ -
$ 418,973
Carrying amounts at
December 31, 2018 $ 848,972 $ 277,060 $ 10,737 $ 69,841 $ - $ 31,852 $ 37,815 $ 5,226
$ 1,281,503
(Concluded)
The above items of property, plant and equipment are depreciated on a straight-line basis over their
estimated useful lives as follows:
Buildings
Main buildings 27-35 years
Others 10-15 years
Storage equipment 2-10 years
Leasehold improvements 1-12 years
Transportation equipment 5 years
Office equipment 1-7 years
Other equipment 1-13 years
Property, plant and equipment pledged as collateral for bank borrowings is set out in Note 37.
17. GOODWILL
For the Year Ended December 31
2018 2017
Cost
Balance at January 1 $ 12,692 $ -
Additional amounts recognized from business combinations
occurring during the year (Note 31) - 12,692
Balance at December 31 $ 12,692 $ 12,692
The Group acquired Xing Zhou Pharmaceutical Co., Ltd. on July 3, 2017 and recognized goodwill of
$8,964 thousand which consisted of the control premium and the expected benefits from the pharmacy
consulting management business.
The Group acquired Proterann Healthcare, Inc. on August 1, 2017 and recognized goodwill of $3,728
thousand which consisted of the expected benefits from obtaining the agency business in foreign medical
supplies.
175
18. OTHER INTANGIBLE ASSETS
Agency Rights
Computer
Software Total
Cost
Balance at January 1, 2017 $ - $ 34,888 $ 34,888
Additions - 910 910
Acquisitions through business combinations 31,138 5,234 36,372
Effect of foreign currency exchange differences - (1) (1)
Balance at December 31, 2017 $ 31,138 $ 41,031 $ 72,169
Accumulated amortization
Balance at January 1, 2017 $ - $ (20,208) $ (20,208)
Amortization expenses (2,477) (8,665) (11,142)
Acquisitions through business combinations - (2,617) (2,617)
Balance at December 31, 2017 $ (2,477) $ (31,490) $ (33,967)
Carrying amount at December 31, 2017 $ 28,661 $ 9,541 $ 38,202
Cost
Balance at January 1, 2018 $ 31,138 $ 41,031 $ 72,169
Additions - 1,785 1,785
Disposals - (53) (53)
Effect of foreign currency exchange differences - 1 1
Balance at December 31, 2018 $ 31,138 $ 42,764 $ 73,902
Accumulated amortization
Balance at January 1, 2018 $ (2,477) $ (31,490) $ (33,967)
Amortization expenses (5,946) (6,950) (12,896)
Disposals - 53 53
Balance at December 31, 2018 $ (8,423) $ (38,387) $ (46,810)
Carrying amount at December 31, 2018 $ 22,715 $ 4,377 $ 27,092
Other intangible assets were amortized on a straight-line basis over their estimated useful lives as follows:
Agency rights 1-6 years
Computer software 1-5 years
176
For the Year Ended December 31
2018 2017
An analysis of depreciation by function
Operating costs $ 1,308 $ 1,308
Selling and marketing expenses - 129
General and administrative expenses 11,588 9,705
$ 12,896 $ 11,142
19. OTHER ASSETS
December 31
2018 2017
Current
Prepaid rent $ 10,618 $ 12,220
Prepayments 7,872 10,459
Other prepayments 8,873 7,446
Offset against business tax payable 22,609 21,350
Temporary payments 2,804 2,800
Others 1,362 6,985
$ 54,138 $ 61,260
Non-current
Prepaid equipment $ 16,535 $ 4,227
Refundable deposits (Note 33) 68,309 65,591
$ 84,844 $ 69,818
Refundable deposits are for operating leases (see Note 37 for the details).
20. BORROWINGS
Long-term Borrowings
December 31
2018 2017
Secured borrowings (Note 37)
Bank loans (a) $ - $ 16,593
Bank loans (b) 437,000 437,000
437,000 453,593
Less: Current portions - (1,532)
Long-term borrowings $ 437,000 $ 452,061
177
a. As of December 31, 2017, the weighted average effective interest rate of the bank loans secured by the
Group’s freehold land and buildings (see Note 37) was 1.34% per annum. The maturity date of the
loans is October 15, 2028, the Group has repaid the loan in advance in June 2018.
b. As of December 31, 2018 and 2017, the weighted average effective interest rate of the bank loans
secured by the Group’s freehold land (see Note 37) was all 1.25% per annum. The maturity date of the
loans is January 23, 2020.
21. BONDS PAYABLE
December 31
2018 2017
Unsecured domestic convertible bonds $ 300,000 $ 300,000
Less: Discount on bonds payable (5,827) (10,810)
294,173 289,190
Less: Current portions (294,173) -
$ - $ 289,190
Unsecured Domestic Convertible Bonds
As of February 23, 2017, the Company issued 3 thousand units of 0%, New Taiwan (NT)
dollar-denominated unsecured convertible bonds in Taiwan, with an aggregate principal amount of
$300,000 thousand.
a. Each bond entitles the holder to convert it into ordinary shares of the Company at a conversion price of
$72.4. Conversion may occur at any time between March 24, 2017 and February 23, 2020.
b. If the bonds have not been converted, they will be redeemed on February 23, 2020 at face value.
c. The holder of the bonds can request the Company to repurchase the bonds at face value with the interest
compensation which is 101.0025% of the face value (actual earning rate 0.5%). The agreed repurchase
day is 2 years since the issued date, which is February 23, 2019.
The convertible bonds contain both liability and equity components. The equity component was presented
in equity under the heading of capital surplus - options. The effective interest rate of the liability component
was 1.71% per annum on initial recognition.
Proceeds from issuance (less transaction costs of $2,540 thousand) $ 296,042
Equity component (less transaction costs allocated to the equity component of $98
thousand) (11,032)
Liability component at the date of issuance (less transaction costs allocated to the
liability component of $2,638 thousand) 285,010
Interest charged at an effective interest rate of 1.71% 4,180
Liability component at December 31, 2017 289,190
Interest charged at an effective interest rate of 1.71% 4,983
Liability component at December 31, 2018 $ 294,173
178
22. NOTES PAYABLE AND TRADE PAYABLES
The average credit period on purchases of certain goods was between 60 days and 120 days. The Group has
financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit
terms.
23. OTHER LIABILITIES
December 31
2018 2017
Current
Other payables
Payables for purchase of equipment $ 11,916 $ 14,754
Payables for salaries or bonuses 72,984 71,160
Payables for remuneration to employees and directors 14,716 11,440
Payables for pension 6,511 5,569
Payables for insurance 10,289 8,956
Payables for rent 1,385 597
Payables for investment 8,330 16,670
Others (business tax, shipping expenses, professional service fees
and advertisement expenses, etc.) 112,071 91,028
$ 238,202 $ 220,174
Contract liabilities $ 34,935 $ -
Deferred revenue (a) - 7,954
Receipts in advance - 26,636
Others 5,809 3,809
$ 40,744 $ 38,399
Non-current
Guarantee deposits (b) $ 104,157 $ 102,757
a. Deferred revenue refers to revenue that has been deferred due to bonus points given to customers that
have not been redeemed and which the Group has not yet fulfilled its performance obligations.
b. Guarantee deposits are mainly refundable deposits received from suppliers.
24. RETIREMENT BENEFIT PLANS
a. Defined contribution plans
The Company, Porterann Healthcare Inc., Xing Zhou Pharmaceutical Co., Ltd. and Taiwan Trim Co.,
Ltd. of the Group adopted a pension plan under the Labor Pension Act (the “LPA”), which is a
state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to
employees’ individual pension accounts at 6% of monthly salaries and wages.
179
b. Defined benefit plans
The defined benefit plans adopted by the Company in accordance with the Labor Standards Law is
operated by the government of the ROC. Pension benefits are calculated on the basis of the length of
service and average monthly salaries of the six months before retirement. The Company contributes
amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension
fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the
committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If
the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees
who conform to retirement requirements in the next year, the Group is required to fund the difference in
one appropriation that should be made before the end of March of the next year. The pension fund is
managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Group has no right to
influence the investment policy and strategy.
The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plan
were as follows:
December 31
2018 2017
Present value of defined benefit obligation $ 16,890 $ 15,393
Fair value of plan assets (14,820) (14,711)
Deficit 2,070 682
Net defined benefit liabilities $ 2,070 $ 682
Movements in net defined benefit liabilities were as follows:
Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Net Defined
Benefit
Liabilities
Balance at January 1, 2017 $ 14,486 $ (13,998) $ 488
Service cost
Current service cost 145 - 145
Net interest expense (income) 261 (259) 2
Recognized in profit or loss 406 (259) 147
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 121 121
Actuarial loss
Changes in financial assumptions 417 - 417
Experience adjustments 84 - 84
Recognized in other comprehensive income 501 121 622
Contributions from the employer - (575) (575)
Balance at December 31, 2017 $ 15,393 $ (14,711) $ 682
(Continued)
180
Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Net Defined
Benefit
Liabilities
Balance at January 1, 2018 $ 15,393 $ (14,711) $ 682
Service cost
Current service cost 149 - 149
Net interest expense (income) 246 (240) 6
Recognized in profit or loss 395 (240) 155
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - (344) (344)
Actuarial loss
Changes in financial assumptions 628 - 628
Experience adjustments 1,520 - 1,520
Recognized in other comprehensive income 2,148 (344) 1,804
Contributions from the employer - (571) (571)
Benefits paid (1,046) 1,046 -
Balance at December 31, 2018 $ 16,890 $ (14,820) $ 2,070
(Concluded)
An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plan
is as follows:
For the Year Ended December 31
2018 2017
General and administrative expenses $ 155 $ 147
Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the
following risks:
1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities,
bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the
mandated management. However, in accordance with relevant regulations, the return generated by
plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the
defined benefit obligation; however, this will be partially offset by an increase in the return on the
plans’ debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the
future salaries of plan participants. As such, an increase in the salary of the plan participants will
increase the present value of the defined benefit obligation.
181
The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as
follows:
December 31
2018 2017
Discount rate(s) 1.35% 1.60%
Expected rate(s) of salary increase 1.50% 1.50%
If possible reasonable change in each of the significant actuarial assumptions will occur and all other
assumptions will remain constant, the present value of the defined benefit obligation would increase
(decrease) as follows:
December 31
2018 2017
Discount rate(s)
0.25% increase $ (628) $ (519)
0.25% decrease $ 659 $ 544
Expected rate(s) of salary increase
1% increase $ 2,811 $ 2,321
1% decrease $ (2,356) $ (1,956)
The sensitivity analysis presented above may not be representative of the actual changes in the present
value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in
isolation of one another as some of the assumptions may be correlated.
December 31
2018 2017
Expected contributions to the plans for the next year $ 571 $ 576
Average duration of the defined benefit obligation 20 years 19 years
25. EQUITY
a. Share capital
Ordinary shares
December 31
2018 2017
Number of shares authorized (in thousands) 50,000 50,000
Shares authorized $ 500,000 $ 500,000
Number of shares issued and fully paid (in thousands) 28,240 28,240
Shares issued $ 282,400 $ 282,400
182
b. Capital surplus
December 31
2018 2017
May be used to offset a deficit, distributed as cash dividends, or
transferred to share capital*
Issuance of ordinary shares $ 377,245 $ 377,245
May be used to offset a deficit only
Others 1,838 1,838
May not be used for any purpose
Equity components of convertible bonds 11,032 11,032
$ 390,115 $ 390,115
* Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit,
such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a
certain percentage of the Company’s capital surplus and once a year).
c. Retained earnings and dividend policy
Under the dividend policy as set forth in the amended Articles, where the Company made a profit in a
fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting
aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in
accordance with the laws and regulations, and then any remaining profit together with any undistributed
retained earnings shall be used by the Company’s board of directors as the basis for proposing a
distribution plan, which should be resolved in the shareholders’ meeting for the distribution of
dividends and bonuses to shareholders. For the policies on distribution of employees’ compensation and
remuneration of directors after amendment, refer to employees’ compensation and remuneration of
directors in Note 27-g.
The Company’s Articles also stipulate a dividend policy that is in line with the current and future
development plans; after comprehensive consideration of the investment environment, financial
planning, domestic and foreign competition and other factors, in principle, at least 30% of the retained
earnings can be distributed as dividends to shareholders, which can be made in the form of cash or
shares, and cash dividends should not be less than 10% of total dividends distributed. However, the type
and ratio of distribution of profits are subject to actual annual earnings and financial condition, which
shall be proposed by the Company’s board of directors and resolved in the shareholders’ meeting.
An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the
Company’s paid-in capital. The legal reserve may be used to offset deficit. If the Company has no
deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be
transferred to capital or distributed in cash.
Items referred to under Rule No. 1010012865, should be appropriated to a special reserve by the
Company.
183
The appropriations of earnings for 2017 and 2016 which were approved in the shareholders’ meetings
on June 14, 2018 and June 14, 2017, respectively, were as follows:
Appropriation of Earnings
Dividends Per Share
(NT$)
For the Year Ended
December 31
For the Year Ended
December 31
2017 2016 2017 2016
Legal reserve $ 9,073 $ 10,200 $ - $ -
Special reserve 4,351 10,609 - -
Cash dividends 73,424 90,368 2.6 3.2
The appropriation of earnings for 2018 are subject to resolution in the shareholders’ meeting to be held
on June 12, 2019.
Appropriation
of Earnings
Dividends Per
Share (NT$)
Legal reserve $ 11,295 $ -
Special reserve 4,988 -
Cash dividends 64,952 2.3
Share dividends 17,791 0.63
The appropriation of earnings for 2018 are subject to resolution in the shareholders’ meeting to be held
on June 12, 2019.
d. Special reserve
For the Year Ended December 31
2018 2017
Balance at January 1 $ 10,609 $ -
Appropriations in respect of
Debits to other equity items 4,351 10,609
Balance at December 31 $ 14,960 $ 10,609
e. Other equity items
1) Exchange differences on translating the financial statements of foreign operations
For the Year Ended December 31
2018 2017
Balance at January 1 $ (14,960) $ (10,608)
Effect of change in tax rate 542 -
Recognized for the year
Exchange differences on translating the financial
statements of foreign operations (3,595) (4,352)
Balance at December 31 $ (18,013) $ (14,960)
184
2) Unrealized loss on financial assets at FVTOCI
For the Year
Ended
December 31,
2018
Balance at January 1 per IAS 39 $ -
Adjustment on initial application of IFRS 9 (360)
Balance at January 1 per IFRS 9 (360)
Recognized for the year
Unrealized loss - equity instruments (1,575)
Balance at December 31 $ (1,935)
f. Non-controlling interests
For the Year Ended December 31
2018 2017
Balance at January 1 $ 14,248 $ 3,742
Share in loss for the year (565) (1,933)
Other comprehensive loss during the year
Exchange difference on translating the financial statements of
foreign entities (340) -
Non-controlling interest arising from acquisition of Xing Zhou
Pharmaceutical Co., Ltd. (see Note 31) - 9,434
Non-controlling interest arising from acquisition of Proterann
Healthcare, Inc. (see Note 31) - 3,005
Non-controlling interest arising from acquisition of Nanjing
Baitang Trading Co., Ltd. 10,414 -
Non-controlling interest reducing from withdrawal of Nanjing
Baitang Trading Co., Ltd. (9,156) -
Balance at December 31 $ 14,601 $ 14,248
26. REVENUE
For the Year Ended December 31
2018 2017
Revenue from contracts with customers
Revenue from sale of goods $ 4,426,595 $ 4,218,386
Revenue from others 206,048 106,021
$ 4,632,643 $ 4,324,407
185
a. Contract balances
December 31,
2018
Trade receivables (Note 12) $ 128,899
Contract liabilities
Sale of goods $ 26,525
Customer loyalty programs 8,410
$ 34,935
b. Disaggregation of revenue
Product
For the Year
Ended
December 31,
2018
Medical care $ 3,348,068
Biotechnology health care 716,916
Health care 358,653
Other products 191
Other revenue 208,815
$ 4,632,643
c. Partially completed contracts
The transaction prices allocated to the performance obligations that are not fully satisfied and the
expected timing for recognition of revenue are as follows.
December 31,
2018
Customer loyalty programs
Before 2020 $ 8,410
27. NET PROFIT
a. Other income
For the Year Ended December 31
2018 2017
Interest income
Bank deposits $ 1,533 $ 1,012
Imputed interest on deposits 194 29
Others 20,282 18,610
$ 22,009 $ 19,651
186
b. Other gains and losses
For the Year Ended December 31
2018 2017
Fair value changes of financial assets and financial liabilities
Financial assets designated as at FVTPL $ (5,510) $ -
Financial liabilities designated as at FVTPL (240) (3,210)
Gain on disposal of associates - 4,783
Net foreign exchange gains (losses) 424 (386)
Loss on disposal of property, plant and equipment (267) (1,147)
Others (1,434) (1,782)
$ (7,027) $ (1,742)
c. Finance costs
For the Year Ended December 31
2018 2017
Interest on bank loans $ 4,873 $ 6,989
Imputed interest on deposits 135 130
Interest on convertible bonds 6,098 4,180
Less: Amounts included in the cost of qualifying assets (2,483) -
$ 8,623 $ 11,299
Information about capitalized interest is as follows:
For the Year Ended December 31
2018 2017
Capitalized interest $ 2,483 $ -
Capitalization rate 1.25%-1.74% -
d. Impairment losses recognized (reversed)
For the Year Ended December 31
2018 2017
Trade receivables $ 71 $ 563
Inventories (included in operating costs) $ (2,222) $ 11
e. Depreciation and amortization
For the Year Ended December 31
2018 2017
An analysis of depreciation by function
Operating costs $ 781 $ 3,464
Operating expenses 74,766 63,813
$ 75,547 $ 67,277
(Continued)
187
For the Year Ended December 31
2018 2017
An analysis of amortization by function
Operating costs $ 1,308 $ 1,308
Operating expenses 11,588 9,834
$ 12,896 $ 11,142
(Concluded)
f. Employee benefits expense
For the Year Ended December 31
2018 2017
Post-employment benefits
Defined contribution plan $ 27,184 $ 22,949
Defined benefit plan (Note 24) 155 147
Share-based payments
Equity-settled - 6,673
Other employee benefits 596,417 536,467
Total employee benefits expense $ 623,756 $ 566,236
An analysis of employee benefits expense by function
Operating costs $ 138 $ 67
Operating expenses 623,618 566,169
$ 623,756 $ 566,236
g. Employees’ compensation and remuneration of directors and supervisors
According to the Articles of Incorporation of the Company, the Company accrued employees’
compensation and remuneration of directors at the rates of 1% to 15% and no higher than 7%,
respectively, of net profit before income tax, employees’ compensation, and remuneration of directors.
The employees’ compensation and the remuneration of directors for the years ended December 31,
2018 and 2017, which were approved by the Company’s board of directors on February 26, 2019 and
March 23, 2018, respectively, are as follows:
Accrual rate
For the Year Ended December 31
2018 2017
Employees’ compensation 4% 4%
Remuneration of directors 2.28% 2.20%
Amount
For the Year Ended December 31
2018 2017
Cash Cash
Employees’ compensation $ 6,223 $ 4,828
Remuneration of directors 3,541 2,656
188
If there is a change in the amounts after the annual consolidated financial statements are authorized for
issue, the differences are recorded as a change in the accounting estimate.
There is no difference between the actual amounts of employees’ compensation and remuneration of
directors paid and the amounts recognized in the consolidated financial statements for the years ended
December 31, 2017 and 2016.
Information on the employees’ compensation and remuneration of directors resolved by the Company’s
board of directors in 2019 and 2018 is available at the Market Observation Post System website of the
Taiwan Stock Exchange.
28. INCOME TAXES
a. Income tax recognized in profit or loss
Major components of income tax expense are as follows:
For the Year Ended December 31
2018 2017
Current tax
In respect of the current year $ 37,229 $ 23,078
Income tax on unappropriated earnings 629 -
Adjustments for prior years 1,680 (33)
39,538 23,045
Deferred tax
In respect of the current year (2,952) 244
Adjustments to deferred tax attributable to changes in tax rates (762) -
(3,714) 244
Income tax expense recognized in profit or loss $ 35,824 $ 23,289
A reconciliation of accounting profit and income tax expenses is as follows:
For the Year Ended December 31
2018 2017
Profit before tax $ 148,209 $ 112,084
Income tax expense calculated at the statutory rate $ 28,362 $ 20,352
Nondeductible expenses in determining taxable income 2,010 21
Income tax on unappropriated earnings 629 -
Unrecognized loss carryforwards 1,007 802
Unrecognized loss deductible temporary differences 2,898 2,147
Effect to tax rate changes (762) -
Adjustments for prior years’ tax 1,680 (33)
Income tax expense recognized in profit or loss $ 35,824 $ 23,289
In 2017, the applicable corporate income tax rate used by the group entities in the ROC was 17%.
However, the Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was
adjusted from 17% to 20%, effective in 2018. In addition, the rate of the corporate surtax applicable to
the 2018 unappropriated earnings will be reduced from 10% to 5%. The applicable tax rate used by
subsidiaries in China is 25%.
189
As the status of the 2019 appropriations of earnings is uncertain, the potential income tax consequences
of the 2018 unappropriated earnings are not reliably determinable.
b. Income tax recognized in other comprehensive income
For the Year Ended December 31
2018 2017
Deferred tax
Effect of change in tax rate $ 632 $ -
In respect of the current period:
Translation of foreign operations 898 892
Remeasurement of defined benefit plans 361 106
Total income tax recognized in other comprehensive income $ 1,891 $ 998
c. Current tax assets and liabilities
December 31
2018 2017
Current tax assets
Tax refund receivable $ - $ 215
Current tax liabilities
Income tax payable $ 27,123 $ 11,830
d. Deferred tax assets and liabilities
The movements of deferred tax assets and deferred tax liabilities are as follows:
For the year ended December 31, 2018
Deferred Tax Assets
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Compre-
hensive
Income
Closing
Balance
Temporary differences
Deferred revenue $ 1,352 $ 330 $ - $ 1,682
Defined benefit obligation 404 (102) 451 753
Payables for annual leave 474 318 - 792
Write-downs of inventory 1,686 654 - 2,340
Exchange gains and losses 36 (36) - -
Exchange differences on
translating the financial
statements of foreign
operations 3,069 - 1,440 4,509
Convertible bonds 710 1,123 - 1,833
Financial liabilities at
FVTPL 546 144 - 690
Financial assets at FVTPL - 1,423 - 1,423
Others 2 (2) - -
$ 8,279 $ 3,852 $ 1,891 $ 14,022
190
Deferred Tax Liabilities
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Compre-
hensive
Income
Closing
Balance
Temporary differences
Exchange gains and losses $ - $ 2 $ - $ 2
Gain or loss on disposal of
associates 821 136 - 957
$ 821 $ 138 $ - $ 959
For the year ended December 31, 2017
Deferred Tax Assets
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Compre-
hensive
Income
Closing
Balance
Temporary differences
Deferred revenue $ 2,180 $ (828) $ - $ 1,352
Defined benefit obligation 371 (73) 106 404
Payables for annual leave 339 135 - 474
Write-downs of inventory 1,550 136 - 1,686
Exchange gains and losses 17 19 - 36
Exchange differences on
translating the financial
statements of foreign
operations 2,177 - 892 3,069
Convertible bonds - 710 - 710
Financial liabilities at
FVTPL - 546 - 546
Others 70 (68) - 2
$ 6,704 $ 577 $ 998 $ 8,279
Deferred Tax Liabilities
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Compre-
hensive
Income
Closing
Balance
Temporary differences
Gain or loss on disposal of
associates $ - $ 821 $ - $ 821
191
e. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have
been recognized in the consolidated balance sheets
December 31
2018 2017
Loss carryforwards $ 42,591 $ 51,457
Deductible temporary differences
Share of profit or loss on investments accounted for using the
equity method $ 139,754 $ 156,980
Financial assets at FVTOCI 1,935 -
Write-downs of inventory 327 428
$ 142,016 $ 157,408
f. Income tax assessments
The income tax returns through 2016 of the Company and subsidiaries in Taiwan have been assessed by
Taiwan’s tax authorities. All other companies prepare their tax returns according to local law.
29. EARNINGS PER SHARE
Unit: NT$ Per Share
For the Year Ended December 31
2018 2017
Basic earnings per share
Basic earnings per share $ 4.00 $ 3.29
Diluted earnings per share
Diluted earnings per share $ 3.60 $ 3.07
The earnings and weighted average number of ordinary shares outstanding used in the computation of
earnings per share are as follows:
Net Profit for the Period
For the Year Ended December 31
2018 2017
Earnings used in the computation of basic earnings per share $ 112,950 $ 90,728
Effect of potentially dilutive ordinary shares:
Interest on convertible bonds (after tax) 3,987 3,469
Earnings used in the computation of diluted earnings per share $ 116,937 $ 94,197
192
Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)
For the Year Ended December 31
2018 2017
Weighted average number of ordinary shares used in the
computation of basic earnings per share 28,240 27,541
Effect of potentially dilutive ordinary shares:
Convertible bonds 4,143 3,096
Employees’ compensation 132 79
Weighted average number of ordinary shares used in the
computation of diluted earnings per share 32,515 30,716
If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed that the
entire amount of the compensation will be settled in shares, and the resulting potential shares were included
in the weighted average number of shares outstanding used in the computation of diluted earnings per share,
as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted
earnings per share until the number of shares to be distributed to employees is resolved in the following
year.
30. SHARE-BASED PAYMENT ARRANGEMENTS
The Group issued ordinary shares for cash in March 2017 and reserved 15% of the shares for employee
share options at the grant date of February 20, 2017; related information about the employee share options
is as follows:
For the Year Ended
December 31, 2017
Number of
Options (In
Thousands)
Weighted-
average
Exercise Price
(NT$)
Balance at January 1 - $ -
Options granted 450 66.67
Options forfeited (124)
Options exercised (326)
Balance at December 31 -
Options exercisable, end of period -
Weighted-average fair value of options granted (NT$) $ 14.83
Compensation costs recognized was $6,673 thousand for the year ended December 31, 2017.
193
31. BUSINESS COMBINATIONS
a. Subsidiaries acquired
Principal Activity Date of Acquisition
Proportion of
Voting Equity
Interests
Acquired (%)
Consideration
Transferred
Xing Zhou
Pharmaceutical
Co., Ltd.
Management
consultancy
services
July 3, 2017 90.63 $ 44,043
Proterann
Healthcare, Inc.
Agent of foreign
medical supplies
brand
August 1, 2017 92.60 $ 44,659
Xing Zhou Pharmaceutical Co., Ltd. and Proterann Healthcare, Inc. were acquired in order to continue
the expansion of the Group’s activities in medical supplies.
b. Considerations transferred
Xing Zhou
Pharmaceutical
Co., Ltd.
Proterann
Healthcare, Inc.
Cash $ 44,043 $ 50,930
Adjustment of contingent consideration arrangements and put
options* - (6,271)
$ 44,043 $ 44,659
* According to the contingent consideration arrangement, which is based on the earnings before
income tax of Proterann Healthcare, Inc. during the period from July 1, 2017 to December 31, 2017
(the “First Period”), if the earnings of the First Period before income tax is more than $4,200
thousand, half of the excess earnings will be added to the adjusted payment of the second period (as
defined in the arrangement) of $8,340 thousand; if the earnings during the First Period before
income tax is lower than $3,800 thousand, half of the deficit in earnings will be deducted from the
adjusted payment of the second period of $8,340 thousand. Based on the gross profit ratio of
Proterann Healthcare, Inc. in 2018, if the gross profit ratio for 2018 is more than 43%, the adjusted
payment of the third period (as defined in the arrangement) will be the payment of the third period
of $8,330 thousand, added to the excess over 43%, and then multiplied by the payment of the third
period; if the gross profit ratio is less than 33%, the adjusted payment of the third period will be the
deficit under 33%, multiplied by the payment of the third period of $8,330 thousand, and then
deducted from the payment of the third period. The estimated fair value of this contingent
obligation at the acquisition date was a gain of $34 thousand.
According to the put option arrangement, if the original dealer repurchases the agent and
distribution rights in Taiwan before December 31, 2020, the adjusted transaction price would be as
follows: If 92.6% of the option holders do not complete settlement, the Group will not pay the rest
of the transaction price in the remaining periods, and the transaction will close; if the original dealer
revokes the agent and distribution rights in Taiwan, the whole payment shall be returned to the
Group without interest. If the original dealer repurchases the agent and distribution rights in Taiwan
from Proterann Healthcare, Inc. and the repurchase amount is lower than the Group’s payment of
the transaction price, the difference between the repurchased amount and the payment shall be
returned to the Group; if the original dealer repurchases the agent and distribution rights in Taiwan
from Proterann Healthcare, Inc. and the repurchased amount is more than the Group’s payment of
194
the transaction price, Proterann Healthcare, Inc. shall return the difference between the repurchased
amount and the payment of the transaction price to the Group. The estimated fair value of this right
at the acquisition date was $6,237 thousand.
c. Assets acquired and liabilities assumed at the acquisition dates
Xing Zhou
Pharmaceutical
Co., Ltd.
Proterann
Healthcare, Inc.
Current assets
Cash and cash equivalents $ 30,345 $ 10,030
Trade receivables - 18,097
Other receivables 25,400 -
Inventories - 7,282
Other current assets 9,825 2,118
Non-current assets
Property, plant and equipment 23,122 591
Intangible assets 2,617 31,138
Other non-current assets 3,184 20
Current liabilities
Trade payables - (17,937)
Other payables (3,393) (5,963)
Current tax liabilities - (573)
Other current payables (954) (1,440)
$ 90,146 $ 43,936
d. Non-controlling interests
The non-controlling interest (a 9.37% ownership interest in Xing Zhou Pharmaceutical Co., Ltd.) was
measured by the proportion of the non-controlling interest to the identifiable net assets.
The non-controlling interest (a 7.4% ownership interest in Proterann Healthcare, Inc.) recognized at the
acquisition date was measured by reference to the fair value of the non-controlling interest and
amounted to $3,005 thousand. This fair value was estimated using the income approach. The key
assumptions used in determining the fair value was a discount rate of 16%. Each asset has different
required rate of return due to its different risks and liquidity, which will be used as a discount rate to
assess the value of the asset.
e. Goodwill recognized on acquisitions
Xing Zhou
Pharmaceutical
Co., Ltd.
Proterann
Healthcare, Inc.
Consideration transferred $ 44,043 $ 44,659
Plus: Previously owned equity of the acquired company 45,633 -
Plus: Non-controlling interests (9.37% in Xing Zhou
Pharmaceutical Co., Ltd.)
9,434 -
Plus: Non-controlling interests (7.4% in Proterann Healthcare,
Inc.)
- 3,005
Less: Fair value of identifiable net assets acquired (90,146) (43,936)
Goodwill recognized on acquisitions $ 8,964 $ 3,728
195
The goodwill recognized in the acquisition of Xing Zhou Pharmaceutical Co., Ltd. and Proterann
Healthcare, Inc. mainly represents the control premium included in the cost of the combination. In
addition, the consideration paid for the combinations effectively included amounts attributed to the
benefits of expected synergies, revenue growth and future market development. These benefits are not
recognized separately from goodwill because they do not meet the recognition criteria for identifiable
intangible assets.
f. Net cash outflow on acquisitions of subsidiaries
Xing Zhou
Pharmaceutical
Co., Ltd. Proterann
Healthcare, Inc.
Consideration paid in cash $ 44,043 $ 50,930
Less: Cash and cash equivalent balances acquired (30,345) (10,030)
Investment payable - (16,670)
$ 13,698 $ 24,230
g. Impact of acquisitions on the results of the Group
The results of the acquirees since the acquisition dates included in the consolidated statements of
comprehensive income are as follows:
Xing Zhou
Pharmaceutical
Co., Ltd. Proterann
Healthcare, Inc.
Revenue $ 4,692 $ 12,436
Loss $ (588) $ (13,354)
Had these business combinations been in effect at the beginning of the annual reporting period, the
Group’s revenue would have been $4,334,445 thousand, and the profit would have been $89,694
thousand for the year ended December 31, 2017. This pro-forma information is for illustrative purposes
only and is not necessarily an indication of the revenue and results of operations of the Group that
actually would have been achieved had the acquisitions been completed on January 1, 2017, nor is it
intended to be a projection of future results.
In determining the pro-forma revenue and profit of the Group had Xing Zhou Pharmaceutical Co., Ltd.
and Proterann Healthcare, Inc. been acquired at the beginning of the current reporting period, the
management already considered the written off transactions between the companies.
32. NON-CASH TRANSACTIONS
For the years ended December 31, 2018 and 2017, the Group entered into the following non-cash investing
and financing activities which were not reflected in the consolidated statement of cash flows:
a. The Group acquired property, plant and equipment with an aggregate fair value of $29,617 thousand
and paid $2,838 thousand, resulting in a decrease in other payables in the same amount. Total net cash
used in acquiring property, plant and equipment was $32,455 thousand for the year ended December 31,
2018 (see Note 16).
196
b. The Group acquired property, plant and equipment with an aggregate fair value of $475,568 thousand
and paid $1,289 thousand, resulting in a decrease in other payables in the same amount. Total net cash
used in acquiring property, plant and equipment was $476,857 thousand for the year ended December
31, 2017 (see Note 16).
c. The Group reclassified the amounts of $26,521 thousand and $225,398 thousand from prepaid
equipment to property, plant and equipment for the years ended December 31, 2018 and 2017,
respectively (see Note 16).
d. The Group reclassified the amounts of $1,532 thousand from long-term borrowings to current portion of
long-term borrowings for the year ended December 31, 2017 (see Note 20).
e. The Group reclassified the amounts of $294,173 thousand from bonds payable to current portion of
bonds payable for the year ended December 31, 2018 (see Note 21).
33. OPERATING LEASE ARRANGEMENTS
Operating leases relate to leases of store spaces with lease terms between 1 and 12 years. The Group does
not have a bargain purchase option to acquire the leased property at the expiration of the lease periods.
The Group paid refundable deposits on operating lease contracts for the period ended December 31, 2018
and 2017 in the amounts of $65,692 thousand and $61,924 thousand, respectively.
The future minimum lease payments under non-cancellable operating lease commitments were as follows:
December 31
2018 2017
Not later than 1 year $ 305,215 $ 229,893
Later than 1 year and not later than 5 years 593,045 445,563
Later than 5 years 91,058 60,847
$ 989,318 $ 736,303
34. CAPITAL MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue as going
concerns while maximizing the return to stakeholders through the optimization of the debt and equity
balance. The Group’s overall strategy remains unchanged from 2012.
The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and
equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and
other equity).
The Group is not subject to any externally imposed capital requirements.
Key management personnel of the Group review the capital structure on a quarterly basis. As part of this
review, the key management personnel consider the cost of capital and the risks associated with each class
of capital. Based on recommendations of the key management personnel, in order to balance the overall
capital structure, the Group may adjust the amount of dividends paid to shareholders, the number of new
shares issued or repurchased, and/or the amount of new debt issued or existing debt redeemed.
197
35. FINANCIAL INSTRUMENTS
a. Fair value of financial instruments that are not measured at fair value
There were no financial assets and financial liabilities where the carrying amounts are significantly
different from the fair values in the consolidated financial statements.
b. Fair value of financial instruments that are measured at fair value on a recurring basis
1) Fair value hierarchy
December 31, 2018
Level 1 Level 2 Level 3 Total
Financial assets at FVTPL
Contingent consideration of
business combinations $ - $ - $ - $ -
Put options - - 761 761
$ - $ - $ 761 $ 761
Financial assets at FVTOCI
Investments in equity
instruments at FVTOCI
Unlisted shares $ - $ - $ 13,065 $ 13,065
Financial liabilities at FVTPL
Redemption of bonds at
maturity $ - $ - $ 4,770 $ 4,770
December 31, 2017
Level 1 Level 2 Level 3 Total
Financial assets at FVTPL
Contingent consideration of
business combinations $ - $ - $ 34 $ 34
Put options - - 6,237 6,237
$ - $ - $ 6,271 $ 6,271
Available-for-sale financial
assets
Equity securities
Unlisted shares $ - $ - $ 15,000 $ 15,000
Financial liabilities at FVTPL
Redemption of bonds at
maturity $ - $ - $ 4,530 $ 4,530
There were no transfers between Levels 1 and 2 in the current and prior periods.
198
2) Reconciliation of Level 3 fair value measurements of financial instruments
For the year ended December 31, 2018
Financial Assets Financial Assets
at FVTOCI
at FVTPL Equity
Derivatives Instruments Total
Financial assets
Balance at January 1, 2018 $ 6,271 $ 14,640 $ 20,911
Recognized in profit or loss (included in
other gains and losses) (5,510) - (5,510)
Recognized in other comprehensive
income (included in unrealized loss on
financial assets at FVTOCI) - (1,575) (1,575)
Balance at December 31, 2018 $ 761 $ 13,065 $ 13,826
Recognized in other gains and losses -
unrealized $ (7,115) $ -
$ (7,115)
Financial
Liabilities
FVTPL
Derivatives
Financial liabilities
Balance at January 1, 2018 $ 4,530
Recognized in profit or loss (included in other gains and losses) 240
Balance at December 31, 2018 $ 4,770
Recognized in other gains and losses - unrealized $ (240)
For the year ended December 31, 2017
Financial Assets
at
Fair Value
Through Profit
or Loss
Available-for-
sale Financial
Assets
Held-for-
trading
Equity
Instruments Total
Financial assets
Balance at January 1, 2017 $ - $ 15,000 $ 15,000
Purchases 6,271 - 6,271
Balance at December 31, 2017 $ 6,271 $ 15,000 $ 21,271
199
Financial
Liabilities at
FVTPL
Held-for-
trading
Financial liabilities
Balance at January 1, 2017 $ -
Recognized in profit or loss (included in other gains and losses)
Unrealized 3,210
Additions 1,320
Balance at December 31, 2017 $ 4,530
Recognized in other gains and losses - unrealized $ (3,210)
3) Valuation techniques and inputs applied for Level 3 fair value measurement
a) The fair values of unlisted equity securities were determined using the market approach based
on the Company’s recent fundraising activities, technological developments, evaluations of
similar companies, market conditions, and other economic indicators.
b) The values of contingent consideration of business combinations and put options were
determined using the income approach. The values of contingent consideration were determined
using the scenario-based method, and the values of put options were determined using the
option pricing method, taking into consideration the impact of the probability of occurrence.
c) Redemption of bonds payable is based on the assumption that the bonds will be redeemed on
February 23, 2020, and the discount rate used is determined with reference to similar
government bonds on the issue date and the holding period, plus the credit risk premium.
c. Categories of financial instruments
December 31
2018 2017
Financial assets
Financial assets at FVTPL $ 761 $ 6,271
Loans and receivables (Note 1) - 756,322
Available-for-sale financial assets - 15,000
Financial assets at amortized cost (Note 2) 930,389 -
Financial assets at FVTOCI 13,065 -
Financial liabilities
Financial liabilities at FVTPL 4,770 4,530
Financial liabilities at amortized cost (Note 3) 2,056,477 1,887,656
Note 1: The balances include loans and receivables measured at amortized cost, which comprise cash
and cash equivalents, debt investments with no active market, notes receivable, trade
receivables, other receivables and refundable deposits.
Note 2: The balances include financial assets measured at amortized cost, which comprise cash and
cash equivalents, debt investments, notes receivable, trade receivables, other receivables and
refundable deposits.
200
Note 3: The balances include financial liabilities measured at amortized cost, which comprise, notes
payable, trade payable, other payable (not including accrued payroll and remuneration to
employees and directors), bonds payable, long-term borrowings, and guarantee deposits.
d. Financial risk management objectives and policies
The Group’s major financial instruments included equity and debt investments, trade receivables, trade
payables, bonds payable and borrowings. The Group’s Corporate Treasury function provides services to
the business, coordinates access to domestic and international financial markets, monitors and manages
the financial risks relating to the operations of the Group through internal risk reports which analyze
exposures by degree and magnitude of risks. These risks include market risk (including foreign
currency risk and interest rate risk), credit risk and liquidity risk.
1) Market risk
a) Foreign currency risk
Several subsidiaries of the Company have foreign currency bank deposits, which exposed the
Group to foreign currency risk. However, the amounts are not significant; thus, foreign currency
risk is insignificant.
b) Interest rate risk
The Group is exposed to interest rate risk because the Group has time deposits, borrowings and
bonds payable at both fixed and floating interest rates.
The carrying amount of the Group’s financial assets and financial liabilities with exposure to
interest rates at the end of the reporting period were as follows.
December 31
2018 2017
Fair value interest rate risk
Financial assets $ 38,703 $ 49,453
Financial liabilities 294,173 289,190
Cash flow interest rate risk
Financial assets 78,000 15,200
Financial liabilities 437,000 453,593
Sensitivity analysis
The sensitivity analysis below was determined based on the Group’s exposure to interest rates
for both derivative and non-derivative instruments at the end of the reporting period. For
floating rate liabilities, the analysis was prepared assuming the amount of each liability
outstanding at the end of the reporting period was outstanding for the whole year. A 1% basis
point increase or decrease was is when reporting interest rate risk internally to key management
personnel and represents management’s assessment of the reasonably possible change in interest
rates.
If interest rates had been 1% basis points higher/lower and all other variables were held constant,
the Group’s post-tax profit for the years ended December 31, 2018 and 2017 would
decrease/increase by $2,872 thousand and $3,639 thousand, respectively, which was mainly
attributable to the Group’s exposure to interest rates on its variable-rate bank borrowings.
201
The Group’s sensitivity to interest rates decreased during the current period mainly due to the
decrease in variable rate debt instruments.
2) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in a financial loss to the Group. The Group’s counterparties are mostly mall contractors with many
years of business relationships, and the Group continues supervision of accounts receivable
balances; thus, the risk of bad debts is not significant.
The Group transacts with a large number of unrelated customers and, thus, no concentration of
credit risk was observed.
Because the main counterparties of liquid funds are banks monitored by regulators in the People’s
Republic of China and the Republic of China, the credit risk is limited.
3) Liquidity risk
The Group manages liquidity risk by monitoring and maintaining a level of cash and cash
equivalents deemed adequate to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and
ensures compliance with loan covenants.
The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2018
and 2017, the Group had available unutilized short-term bank loan facilities set out in (b) below.
a) Liquidity and interest rate risk tables for non-derivative financial liabilities
The following tables detail the Group’s remaining contractual maturities for its non-derivative
financial liabilities with agreed repayment periods. The tables have been drawn up based on the
undiscounted cash flows of financial liabilities from the earliest date on which the Group can be
required to pay. The tables include both interest and principal cash flows. Specifically, bank
loans with a repayment on demand clause were included in the earliest time band regardless of
the probability of the banks choosing to exercise their rights. The maturity dates for other
non-derivative financial liabilities were based on the agreed repayment dates.
To the extent that interest flows are floating rate, the undiscounted amount was derived from the
average interest rate at the end of the reporting period.
December 31, 2018
On Demand
or Less than
1 Month 1-3 Months
3 Months to
1 Year 1-5 Years 5+ Years
Non-interest bearing liabilities $ 559,145 $ 639,206 $ 97,636 $ 11,456 $ 1,061
Variable interest rate liabilities 464 883 4,116 437,464 -
Fixable interest rate liabilities - 300,000 - - -
$ 559,609 $ 940,089 $ 101,752 $ 448,920 $ 1,061
202
December 31, 2017
On Demand
or Less than
1 Month 1-3 Months
3 Months to
1 Year 1-5 Years 5+ Years
Non-interest bearing liabilities $ 447,371 $ 546,020 $ 129,160 $ 7,768 $ 29
Variable interest rate liabilities 610 1,174 5,423 449,261 8,935
Fixable interest rate liabilities - - - 300,000 -
$ 447,981 $ 547,194 $ 134,583 $ 757,029 $ 8,964
b) Financing facilities
December 31
2018 2017
Unsecured bank overdraft facilities:
Amount used $ - $ -
Amount unused 450,000 600,000
$ 450,000 $ 600,000
Secured bank overdraft facilities:
Amount used $ 437,000 $ 627,000
Amount unused - 100,000
$ 437,000 $ 727,000
36. TRANSACTIONS WITH RELATED PARTIES
Balances and transactions between the Company and its subsidiaries, which are related parties of the
Company, have been eliminated on consolidation and are not disclosed in this note. Besides information
disclosed elsewhere in the other notes, details of transactions between the Group and other related parties
are disclosed below.
a. Related party name and category
Related Party Name Related Party Category
Singleton Pharma Logistics Co., Ltd. Associate
LEAD Investment Co. Other related party
Nihon Trim Co., Ltd. Other related party
Tsai, Chi-Hsuan Other related party
Tsai, Chi-En Other related party
b. Purchases of goods
For the Year Ended December 31
Related Party Category 2018 2017
Associate $ 33,009 $ 5,273
Other related party 1,588 761
$ 34,597 $ 6,034
203
The prices of purchases from related parties are mutually agreed prices, and paid for using operating
funds.
c. Receivables from related parties
December 31
Line Items Related Party Category 2018 2017
Trade receivables Other related party $ - $ 1,024
The outstanding trade receivables from related parties are unsecured. For the year ended December 31,
2017, no impairment loss was recognized for trade receivables from related parties.
d. Payables to related parties
December 31
Line Items Related Party Category 2018 2017
Trade payables Associate $ 9,816 $ 1,016
Trade payables Other related party 291 595
$ 10,107 $ 1,611
The outstanding trade payables from related parties are unsecured.
e. Other transactions with related parties
Rent expense
For the Year Ended December 31, 2018
Lease Object Lease Period
Determinat
ion of Rent
Monthly
Rent
Rent
Expense
Other related party Staff dormitory June 21, 2015-
May 20, 2018
Negotiations $ 20 $ 100
May 21, 2018-
May 20, 2021
Negotiations 20 140
Logistics center July 1, 2018-
April 30, 2020
Negotiations 333 1,998
$ 2,238
For the Year Ended December 31, 2017
Lease Object Lease Period
Determinat
ion of Rent
Monthly
Rent
Rent
Expense
Other related party Staff dormitory June 21, 2015-
May 20, 2018
Negotiations $ 20 $ 240
204
Others
For the Year Ended December 31
Line Item Related Party Category 2018 2017
Other income Other related party $ 572 $ 584
December 31
Line Item Related Party Category 2018 2017
Refundable deposits Other related party $ 699 $ -
f. Compensation of key management personnel
For the Year Ended December 31
2018 2017
Short-term employee benefits $ 13,604 $ 14,639
Post-employment benefits 242 314
$ 13,846 $ 14,953
The remuneration of directors and key executives was determined by the remuneration committee based
on the performance of individuals and market trends.
37. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY
The following assets were provided as collateral for bank borrowings, as deposits for rental agreements and
as security for purchase contracts with suppliers.
December 31
2018 2017
Property, plant and equipment
Land $ 848,972 $ 848,972
Buildings 23,855 25,009
Pledged deposits (classified as financial assets at amortized cost) 10,100 -
Pledged deposits (classified as debt investments with no active
market) - 20,730
Refundable deposits 68,309 65,591
$ 951,236 $ 960,302
38. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of
December 31, 2018 and 2017 were as follows:
Unrecognized commitments were as follows:
December 31
2018 2017
Acquisition of property, plant and equipment $ 559,963 $ 6,628
205
39. SEPARATELY DISCLOSED ITEMS
a. Information about significant transactions and investees
1) Financing provided to others. (None)
2) Endorsements/guarantees provided. (Table 1)
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures).
(Table 2)
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20%
of the paid-in capital. (None)
5) Acquisition of individual real estate at cost of at least NT$300 million or 20% of the paid-in capital.
(Table 3)
6) Disposal of individual real estate at a price of at least NT$300 million or 20% of the paid-in capital.
(None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital. (Table 4)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in
capital. (None)
9) Trading in derivative instruments. (Notes 7 and 35)
10) Intercompany relationships and significant intercompany transactions. (Table 5)
11) Information on investees. (Table 6)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business
activities, paid-in capital, method of investment, inward and outward remittance of funds,
ownership percentage, net income of investees, investment income or loss, carrying amount of the
investment at the end of the period, repatriations of investment income, and limit on the amount of
investment in the mainland China area. (Table 7)
2) Any of the following significant transactions with investee companies in mainland China, either
directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or
losses: (None)
a) The amount and percentage of purchases and the balance and percentage of the related payables
at the end of the period.
b) The amount and percentage of sales and the balance and percentage of the related receivables at
the end of the period.
c) The amount of property transactions and the amount of the resultant gains or losses.
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the
end of the period and the purposes.
206
e) The highest balance, the end of period balance, the interest rate range, and total current year
interest with respect to financing of funds.
f) Other transactions that have a material effect on the profit or loss for the year or on the financial
position, such as the rendering or receipt of services.
40. SEGMENT INFORMATION
Information reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance focuses on the types of goods or services delivered or provided.
Specifically, the Group’s reportable segments under IFRS 8 “Operating Segments” were as follows:
Operating Segments in Taiwan and Operating Segments in China.
a. Segment revenues and results
The following was an analysis of the Group’s revenue and results by reportable segments:
China Taiwan Total
For the year ended December 31, 2018
Revenues from external customers $ 172,393 $ 4,460,250 $ 4,632,643
Inter-segment revenue 22,429 212,946 235,375
Eliminations (22,429) (212,946) (235,375)
Consolidated revenue $ 172,393 $ 4,460,250 $ 4,632,643
Segment income (loss) $ (13,063) $ 175,029 $ 161,966
Central administration costs and directors’
salaries (9,764)
Share of loss of associates accounted for
using the equity method (10,352)
Interest income 1,727
Loss on disposal of property, plant and
equipment (267)
Net gain on foreign exchange 424
Loss on valuation of financial instruments (5,750)
Finance costs (8,623)
Miscellaneous income 18,848
Profit before tax $ 148,209
For the year ended December 31, 2017
Revenues from external customers $ 130,221 $ 4,194,186 $ 4,324,407
Inter-segment revenue 13,071 162,871 175,942
Eliminations (13,071) (162,871) (175,942)
Consolidated revenue $ 130,221 $ 4,194,186 $ 4,324,407
(Continued)
207
China Taiwan Total
Segment income (loss) $ (6,572) $ 127,712 $ 121,140
Central administration costs and directors’
salaries (7,484)
Share of loss of associates accounted for
using the equity method (8,182)
Gain recognized on disposal of interests in
former associates 4,783
Interest income 1,041
Loss on disposal of property, plant and
equipment (1,147)
Net exchange loss (386)
Loss on valuation of financial instruments (3,210)
Finance costs (11,299)
Miscellaneous income 16,828
Profit before tax $ 112,084
(Concluded)
Segment profit represents the profit before tax earned by each segment without allocation of central
administration costs and directors’ salaries, share of loss of associates, gains recognized on disposal of
interests in former associates, interest income, gains or losses on disposal of property, plant and
equipment, exchange gains or losses, valuation gains or losses on financial investments, finance costs,
other non-operating profit or loss and income tax expense. This was the measure reported to the chief
operating decision maker for the purpose of resource allocation and assessment of segment
performance.
b. Segment total assets
December 31
2018 2017
Segment assets
China $ 306,490 $ 312,453
Taiwan 2,802,369 2,564,719
Investments in associates accounted for using the equity method 7,518 17,870
Current tax assets - 215
Deferred tax assets 14,022 8,279
Consolidated total assets $ 3,130,399 $ 2,903,536
For the purpose of monitoring segment performance and allocating resources between segments, all
assets were allocated to reportable segments other than interest in associates accounted for using the
equity method and current and deferred tax assets. Goodwill was allocated to reportable segments.
Assets used jointly by reportable segments were allocated on the basis of the revenues earned by
individual reportable segments.
208
TABLE 1
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
ENDORSEMENTS/GUARANTEES PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
No.
(Note 1) Endorser/Guarantor
Endorsee/Guarantee
Limits on
Endorsement/
Guarantee
Given on
Behalf of Each
Party (Note 2)
Maximum
Amount
Endorsed/
Guaranteed
During the
Period
Outstanding
Endorsement/
Guarantee at
the End of the
Period
Actual
Amount
Borrowed
Amount
Endorsed/
Guaranteed by
Collaterals
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity in
Latest
Financial
Statements (%)
Aggregate
Endorsement/
Guarantee
Limit (Note 3)
Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries
Endorsement/
Guarantee
Given by
Subsidiaries on
Behalf of
Parent
Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China
Note Name Relationship
0 MedFirst Healthcare
Services, Inc.
MedFirst Healthcare
Services, Inc. (SH)
A Company in
which the public
company
directly and
indirectly holds
more than 50
percent of the
voting shares
$ 268,787 $ 46,433 $ - $ - $ - - $ 358,382 Y N Y
Exactitute Biotech Co.,
Ltd.
A Company in
which the public
company
directly and
indirectly holds
more than 50
percent of the
voting shares
268,787 20,000 20,000 15,358 - 2.23 358,382 Y N N
Proterann Healthcare Inc. A Company in
which the public
company
directly and
indirectly holds
more than 50
percent of the
voting shares
268,787 80,000 80,000 26,850 - 8.93 358,382 Y N N
Note 1: Representation of numbers in No. column is as follows:
a. Number 0 represents issuer.
b. Investees are numbered starting from 1.
Note 2: Limits on Endorsement/Guarantee Given on Behalf of Each Party: Shall not exceed thirty percent (30%) of net worth MedFirst Healthcare Services, Inc. $895,955 (in thousands) × 30% = $268,787 (in thousands).
Note 3: Aggregate Endorsement/Guarantee Limit: Shall not exceed forty percent (40%) of net worth MedFirst Healthcare Services, Inc. $895,955 (in thousands) × 40% = $358,382 (in thousands).
209
TABLE 2
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Holding Company Name Type and Name of Marketable Securities Relationship with the
Holding Company Financial Statement Account
December 31, 2018
Note Number of
Shares
Carrying
Amount
Percentage of
Ownership (%) Fair Value
MedFirst Healthcare Services, Inc. Domestic unlisted ordinary shares
Hao Jie Industrial Co., Ltd. None Financial assets at fair value
through other
comprehensive income -
non-current
1,500,000 $ 13,065 18.75 $ 13,065
Note 1: Marketable securities in the above table refer to shares, bonds, beneficiary certificates and securities within the scope of IFRS 9 “Financial Instruments”.
Note 2: Refer to Table 6 and Table 7 for information about subsidiaries, associates and joint ventures.
210
TABLE 3
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST $300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Buyer Property Event Date Transaction
Amount Payment Status Counterparty Relationship
Information on Previous Title Transfer If Counterparty is a Related Party Pricing Reference Purpose of Acquisition Other Terms
Property Owner Relationship Transaction Date Amount
MedFirst Healthcare
Services, Inc.
Storage buildings
and equipment.
October 31, 2018 $ 504,880 Payment made
based on terms
of the contract
and progress of
construction
Fu Tai Construction
Co., Ltd
- Not applicable Not applicable Not applicable Not applicable Manufacturer is
shortlisted based
on price
negotiations
Building the logistics
center, in order to
meet the needs of
future operational
development.
-
211
TABLE 4
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
Buyer Related Party Relationship
Transaction Details Abnormal Transaction Notes/Accounts Receivable
(Payable) Note
Purchase/
Sale Amount % to Total Payment Term Unit Price Payment Terms Ending Balance % to Total
MedFirst Healthcare Services, Inc. Exactitude Biotech Co., Ltd. Parent company Purchase $ 105,757 3.44 By operating funds Note 1 By operating funds $ (29,119) (2.83)
Proterann Healthcare Inc. Parent company Purchase 91,107 2.97 By operating funds Note 1 By operating funds (17,348) (1.69)
Note 1: As the products the Company purchased from its subsidiaries are customized products, the products and prices have no basis for comparison.
Note 2: The above transaction has already been written off in the consolidated financial statements.
212
TABLE 5
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars)
No.
(Note 1) Investee Company Counterparty
Relationship
(Note 2)
Transactions Details
Financial Statement
Accounts
Amount
(Note 4) Payment Terms
% to Total
Sales or Assets
(Note 3)
0 The Company Exactitude Biotech Co., Ltd. a Purchase $ 105,757 According to mutually agreed price 2.28
Exactitude Biotech Co., Ltd. a Trade payables 29,119 Paid using operating funds 0.93
Proterann Healthcare, Inc. a Purchase 91,107 According to mutually agreed price 1.97
Proterann Healthcare, Inc. a Trade payables 17,348 Paid using operating funds 0.55
Xing Zhou Pharmaceutical Co., Ltd. a Acquisitions of property,
plant and equipment
12,323 According to mutually agreed price 0.39
Note 1: The Company and its subsidiaries are numbered as follows:
a. Number 0 represents the parent company.
b. Number 1 onwards represents subsidiaries.
Note 2: a. Represents the transactions from parent company to subsidiary.
b. Represents the transactions from subsidiary to parent company.
c. Represents the transactions between subsidiaries.
Note 3: The rate of the intercompany transactions to total sales or assets is calculated by the balance at the end of the period if it belongs to assets or liabilities or the accumulated amount in the interim period if it belongs to sales.
Note 4: Transaction has been written off in the consolidated financial statements.
213
TABLE 6
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
INFORMATION ON INVESTEES
FOR THE YEAR ENDED DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars, U.S. Dollars or shares, Unless Specified Otherwise)
Investor Company Investee Company Location Main Businesses and
Products
Original Investment Amount As of December 31, 2018 Net Income
(Loss) of the
Investee
Share of Profit
(Loss) Note December 31,
2018
December 31,
2017
Number of
Shares %
Carrying
Amount
MedFirst Healthcare
Services, Inc.
Above Advance Limited Samoa Investment $ 351,812
(US$ 10,898)
$ 351,812
(US$ 10,898)
10,898 100.00 $ 215,502
(US$ 7,016)
$ (5,726)
(US$ -190)
$ (5,726)
(US$ -190) Subsidiary
Taiwan Trim Co., Ltd. Taiwan Sale of water ionizer 10,000 10,000 1,000 50.00 2,676 (165) (82) Subsidiary
Exactitude Biotech Co., Ltd. Taiwan Sale of medical supplies 10,000 10,000 1,000 100.00 10,642 391 567 Subsidiary
Xing Zhou Pharmaceutical Co.,
Ltd.
Taiwan Management consultancy
services
86,100 86,100 8,610 90.63 92,500 2,372 686 Subsidiary
Proterann Healthcare, Inc. Taiwan Agent of foreign medical
supplies
9,260 9,260 926 92.60 29,625 6,638 (374) Subsidiary
Singleton Pharma Logistics Co.,
Ltd.
Taiwan Provider of prescription
drugs
27,756 27,756 2,776 40.00 7,518 (25,501) (10,352) Associate
Above Advance Limited Cayman Medfirst Group Limited Cayman Islands Investment US$ 10,898 US$ 10,898 10,898 100.00 215,709
(US$ 7,023)
(5,726)
(US$ -190)
(5,726)
(US$ -190) Second-tier
subsidiary
Note 1: For information of investments in mainland China, refer to Table 7.
Note 2: Besides Singleton Pharma Logistics Co., Ltd., the shareholding of the subsidiaries has been fully written off.
214
TABLE 7
MEDFIRST HEALTHCARE SERVICES, INC. AND SUBSIDIARIES
INFORMATION ON INVESTMENTS IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2018
(In Thousands of New Taiwan Dollars, U.S. Dollars, or Ren Min Bi, Unless Specified Otherwise)
Investee Company Main Businesses
and Products Paid-in Capital
Method of
Investment
(Note 1)
Accumulated
Outward
Remittance for
Investment
from Taiwan as
of January 1,
2018
Remittance of Funds Accumulated
Outward
Remittance for
Investment
from Taiwan as
of
December 31,
2018
Net Income
(Loss) of the
Investee
%
Ownership
of Direct
or Indirect
Investment
Investment
Gain (Loss)
(Note 2)
Carrying
Amount as of
December 31,
2018
Accumulated
Repatriation of
Investment
Income as of
December 31,
2018
Note Outward Inward
MedFirst Healthcare
Services, Inc. (FJ)
Sale of medical
supplies
$ 24,667
(US$ 800)
a $ 24,667
(US$ 800)
$ - $ - $ 24,667
(US$ 800)
$ 367 100 $ 367 $ 22,172 $ -
MedFirst Healthcare
Services, Inc. (SH)
Sale of medical
supplies
299,549
(US$ 9,294)
b 299,549
(US$ 1,550)
(RMB 50,700)
-
- 299,549
(US$ 1,550)
(RMB 50,700)
(5,757) 100 (5,757) 215,886 -
MedFirst Healthcare
Services, Inc. (NJ)
Sale of medical
supplies
72,317
(US$ 2,440)
b 72,317
(US$ 2,115)
(RMB 1,000)
- - 72,317
(US$ 2,115)
(RMB 1,000)
(100) 100 (100)
12,004 -
MedFirst Materials &
Supplies, Inc. (SH)
Sale of medical
supplies
13,965
(RMB 2,700)
(Note 3) - - - - (2,916) 100 (2,916) 5,864 -
MedFirst Materials &
Supplies, Inc. (HZ)
Sale of medical
supplies
7,759
(RMB 1,500)
(Note 4) - - - - (2,603) 100 (2,603) 5,689
MedFirst Healthcare
Services, Inc. (BJ)
Sale of medical
supplies
9,946
(RMB 2,000)
(Note 5) - - - - 21 100 21 8,911
Nanjing Baitang Trading
Co., Ltd.
Sale of medical
supplies
2,407
(RMB 450)
(Note 6) - - - - (1,163) 55 (640) 481 -
ShanDong Medfirst
Healthcare Services Trade
Ltd.
Sale of medical
supplies
13,953
(RMB 3,000)
(Note 7) - - - - (972) 100 (972) 12,474 -
Accumulated Outward Remittance for Investment
in Mainland China as of December 31, 2018
Investment Amounts Authorized by the
Investment Commission, MOEA
Upper Limit on the Amount of Investment
Stipulated by the Investment Commission, MOEA
$ 396,533
(US$ 4,465)
(RMB 51,700)
$ 396,533
(US$ 4,465)
(RMB 51,700)
(Note 8)
(Continued)
215
Note 1: The three methods of investment are as follows:
a. Direct investment.
b. Reinvestment in China through a company located in a third region (Cayman Medfirst Group Limited).
c. Other methods.
Note 2: From the financial statements audited by the certified public accountant of the parent company.
Note 3: With own funds from MedFirst Healthcare Services, Inc. (SH), reinvested RMB2.7 million to the Company.
Note 4: With own funds from MedFirst Materials & Supplies, Inc. (SH), reinvested RMB1.5 million to the Company.
Note 5: With own funds from MedFirst Healthcare Services, Inc. (FJ), reinvested RMB2 million to the Company.
Note 6: With own funds from MedFirst Materials & Supplies, Inc. (HZ), reinvested RMB247,500 to the Company.
Note 7: With own funds from MedFirst Healthcare Services, Inc. (SH), reinvested RMB3 million to the Company.
Note 8: The Company has obtained documents from the Ministry of Economic Affairs which show the operational headquarters are still valid during the period; the investment has no limit according to the regulations of the Investment
Commission of the Ministry of Economic Affairs.
(Concluded)
216
MedFirst Healthcare Services, Inc.
Chairman: Chen, Li-Ju
20th April 2019
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