EVAAIR — Annual Report 2021

Dec 30, 2021

Stock Code:2618

EVA AIRWAYS CORP.

Parent-Company-Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No. 376, Sec. 1, Hsin-nan Road, Luchu Dist., Taoyuan City, Taiwan Telephone: 886-3-351-5151

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Parent-Company-Only Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Significant contingent liabilities and unrecognized commitments (10) Losses due to major disasters (11) Subsequent events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in Mainland China (d) Major shareholders (14) Segment information 9. List of major account titles

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of EVA Airways Corp.:

Opinion

We have audited the parent-company-only financial statements of EVA Airways Corp. (“the Company”), which comprise the balance sheets as of December 31, 2021 and 2020, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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 financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

• －

• 1. Contract liabilities mileage redemption revenue

Please refer to note 4(q) “Revenue recognition”, note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty”, and note 6(v) “Revenue from contracts with customers” of the financial statements.

Description of key audit matter:

The member who joins the “Infinity MileageLands” (“the Program”) can earn mileage by flying any of the Company’s flights or through other consumption. Contract liabilities will be converted into revenues when the member actually redeems the mileage or it is expected that the right is probable not to be redeemed.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

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The Company maintains information technology systems in order to calculate its mileage redemption revenue. And the Company also uses the systems to estimate the unit fair value of the mileage. Therefore, the － cut off test of contract liabilities mileage redemption revenue is one of the key judgmental areas for our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: testing the design and implementation of the relevant controls over the mileage redemption revenue systems related to the Program; engaging the internal specialist to assess the quantity of the mileage, fair value of the redemption of the Program and the historical redemption probability of the Program to examine the unit fair value of the mileage for verifying the accuracy of recognition of the － contract liabilities mileage redemption revenue.

1. Impairment of long-term non-financial assets

Please refer to note 4(n) “Impairment of non-financial assets ”, note 5 “Significant accounting assumptions and judgments, and major sources of estimation uncertainty”, and note 6(j) “Property, plant and equipment” of the financial statements.

Description of key audit matter:

The Company periodically assesses for any indication of impairment on its long-term non-financial assets. If any indication thereof exists with long-term non-financial assets, the Company should estimate the recoverable amount for the assets’ cash-generating unit. The calculation for the assets’ cash-generating unit involved several assumptions and estimations made by the management. Therefore, the impairment test of long-term non-financial assets is one of the key judgmental areas for our audit.

How the matter was addressed in our audit:

Our principal audit procedures included: assessing the method used in measuring the recoverable amount, which is provided by the management of the Company, including evaluating the appropriateness of assumption and estimation on major parameters, such as the forecast of cash flow and discount rate; comparing with the historical accuracy of judgments, including inspecting the amount of forecast of cash flow in prior year and with reference to actual cash flow to evaluate the appropriateness of the assumptions, as well as performing the sensitivity analysis on major assumption.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’ s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

As part of an audit in accordance with 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 financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the 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 the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion of the Company.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period 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 Chia-Chien Tang and Yen-Ta Su.

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KPMG

Taipei, Taiwan (Republic of China) March 14, 2022

Notes to Readers

The accompanying parent-company-only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the 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 parent-company-only financial statements are those generally accepted and applied in the Republic of China.

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EVA AIRWAYS CORP.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

2021.12.31 Assets Amount % Current assets: 1100 Cash and cash equivalents (note 6(a)) $ 39,563,910 13 1110 Financial assets at fair value through profit or loss－current (note 6(b)) 1,390,560 1 1150 Notes receivable, net (note 6(d)) 5,313 - 1160 Notes receivable－related parties (notes 6(d) and 7) - - 1170 Accounts receivable, net (note 6(d)) 8,583,578 3 1180 Accounts receivable－related parties (notes 6(d) and 7) 124,231 - 1220 Current tax assets 163,322 - 130x Inventories (note 6(f)) 1,169,678 - 1460 Non-current assets or disposal group classified as held for sale, net (note 6(g)) 37,437 - 1470 Other current assets (notes 6(e), 6(n) and 7) 521,508 - Total current assets 51,559,537 17 Non-current assets: 1510 Financial assets at fair value through profit or loss－non-current (notes 6(b) and 6(o)) 21,612 - 1517 Financial assets at fair value through other comprehensive income －non-current (note 6(b)) 4,012,426 1 1550 Investments accounted for using equity method (notes 6(h), 6(i) and 7) 11,886,824 4 1600 Property, plant and equipment (notes 6(j), 7, 8 and 9) 120,601,224 41 1755 Right-of-use assets (notes 6(k), 6(q) and 7) 91,484,672 31 1760 Investment property, net (notes 6(l) and 7) 671,490 - 1780 Intangible assets (note 6(m)) 414,396 - 1840 Deferred tax assets (note 6(s)) 3,885,261 1 1900 Other non-current assets (notes 6(c), 6(n), 7, 8 and 9) 13,681,169 5 Total non-current assets 246,659,074 83 Total assets $ 298,218,611 100	2020.12.31 Amount % 31,075,156 11 1,687,508 1 473 - 840 - 5,411,920 2 116,671 - 164,302 - 1,307,117 - 852,175 - 586,932 - 41,203,094 14 2,793 - 2,955,447 1 13,637,927 5 115,493,154 38 106,547,708 35 - - 547,836 - 4,890,891 2 16,958,059 5 261,033,815 86 302,236,909 100 Liabilities and Equity Current liabilities: 2126 Financial liabilities for hedging－current (notes 6(c), 6(p) and 7) 2130 Contract liabilities－current (note 6(v)) 2160 Notes payable－related parties (note 7) 2170 Notes and accounts payable 2180 Accounts payable－related parties (note 7) 2200 Other payables (notes 6(w) and 7) 2230 Current tax liabilities 2260 Liabilities related to non-current assets or disposal group classified as held for sale (note 6(g)) 2280 Lease liabilities－current (notes 6(p) and 7) 2320 Current portion of long-term liabilities (notes 6(o) and 8) 2399 Other current liabilities (note 6(q)) Total current liabilities Non-current liabilities: 2511 Financial liabilities for hedging－non-current (notes 6(c), 6(p) and 7) 2527 Contract liabilities－non-current (note 6(v)) 2530 Bonds payable (note 6(o)) 2540 Long-term borrowings (notes 6(o) and 8) 2570 Deferred tax liabilities (note 6(s)) 2580 Lease liabilities－non-current (notes 6(p) and 7) 2640 Net defined benefit liabilities－non-current (note 6(r)) 2670 Other non-current liabilities (note 6(q)) Total non-current liabilities Total liabilities Equity (notes 6(b), 6(c), 6(i), 6(o), 6(r), 6(s) and 6(t)): 3110 Ordinary share 3140 Advanced receipts for share capital 3200 Capital surplus 3300 Retained earnings 3400 Other equity interest Total equity Total liabilities and equity		2021.12.31		2020.12.31
			Amount %		Amount %
		11,664,825 4 5,036,826 2 826 - 4,215,941 1 875,457 - 6,573,854 2 576,279 - - - 140,705 - 11,524,808 4 2,115,410 1 42,724,931 14 63,305,090 21 1,054,975 - 3,871,341 1 77,089,487 26 1,914,661 1 323,618 - 2,656,872 1 19,620,359 7 169,836,403 57 212,561,334 71 51,385,387 17 480,312 - 10,678,743 4 14,503,880 5 8,608,955 3 85,657,277 29 $ 298,218,611 100			11,564,988 4 4,510,802 2 - - 2,490,358 1 835,267 - 4,300,632 1 433,564 - 1,142 - 164,820 - 16,437,386 6 512,303 - 41,251,262 14 77,067,827 26 2,517,482 1 3,082,941 1 80,075,379 26 1,624,345 1 417,564 - 3,001,003 1 22,401,718 7 190,188,259 63 231,439,521 77 48,535,695 16 - - 7,985,673 3 7,827,138 2 6,448,882 2 70,797,388 23 302,236,909 100

See accompanying notes to parent-company-only financial statements.

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EVA AIRWAYS CORP.

Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, except Earnings Per Share)

2021 Amount % 4000 Operating revenue (notes 6(v) and 7) $ 95,331,905 100 5000 Operating costs (notes 6(c), 6(e), 6(f), 6(j), 6(k), 6(p), 6(r), 6(w) and 7) (77,641,840) (81) 5900 Gross profit from operations 17,690,065 19 6000 Operating expenses (notes 6(d), 6(e), 6(j), 6(k), 6(l), 6(m), 6(p), 6(r), 6(w) and 7) (8,094,394) (9) 6900 Net operating income (loss) 9,595,671 10 7000 Non-operating income and expenses (notes 6(c), 6(h), 6(p), 6(q), 6(x) and 7): 7010 Other income 261,143 - 7020 Other gains and losses 969,442 1 7050 Finance costs (3,798,154) (4) 7375 Share of profit of subsidiaries and associates accounted for using equity method 670,817 1 Total non-operating income and expenses (1,896,752) (2) 7900 Profit (loss) before tax 7,698,919 8 7950 Income tax benefit (expenses) (note 6(s)) (1,090,423) (1) Profit (loss) 6,608,496 7 8300 Other comprehensive income (notes 6(c), 6(h), 6(r) , 6(s) and 6(t)): 8310 Components of other comprehensive income that will not be reclassified to profit or loss: 8311 Remeasurements of defined benefit plans (92,753) - 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 1,295,690 1 8317 Gains (losses) on hedging instrument that will not be reclassified to profit or loss - - 8330 Share of other comprehensive income of subsidiaries and associates accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 21,407 - 8349 Income tax benefit (expenses) related to components of other comprehensive income that will not be reclassified to profit or loss 18,305 - Total components of other comprehensive income that will not be reclassified to profit or loss 1,242,649 1 8360 Components of other comprehensive income that will be reclassified to profit or loss: 8361 Exchange differences on translation of foreign financial statements (27,324) - 8368 Gains (losses) on hedging instrument 1,275,943 1 8380 Share of other comprehensive income of subsidiaries and associates accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss (18,167) - 8399 Income tax benefit (expenses) related to components of other comprehensive income that will be reclassified to profit or loss (255,189) - Total components of other comprehensive income that will be reclassified to profit or loss 975,263 1 8300 Other comprehensive income, net of tax 2,217,912 2 8500 Total comprehensive income $ 8,826,408 9 Earnings per share (note 6(u)) 9750 Basic earnings per share (in New Taiwan Dollars) $ 1.31 9850 Diluted earnings per share (in New Taiwan Dollars) $ 1.29

2020 Amount % 79,602,529 100 (73,088,704) (92) 6,513,825 8 (8,367,989) (10) (1,854,164) (2) 345,924 1 1,084,895 1 (4,789,246) (6) 796,307 1 (2,562,120) (3) (4,416,284) (5) 1,054,645 1 (3,361,639) (4) 312,233 - 373,942 1 11,643 - 52,428 - (65,207) - 685,039 1 (37,217) - 4,212,122 5 (33,256) - (842,424) (1) 3,299,225 4 3,984,264 5 622,625 1 (0.69) (0.69)

See accompanying notes to parent-company-only financial statements.

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EVA AIRWAYS CORP.

Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance on January 1, 2020 Appropriation of prior year’s earnings: Legal reserve appropriated Cash dividends of ordinary share Due to recognition of equity component of convertible bonds issued Loss Other comprehensive income Total comprehensive income Balance on December 31, 2020 Due to donated assets received Due to recognition of equity component of convertible bonds issued Profit Other comprehensive income Total comprehensive income Conversion of convertible bonds Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in equity of associates accounted for using equity method Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance on December 31, 2021	Ordinary share $ 48,535,695 - - - - - - 48,535,695 - - - - - 2,849,692 - - - $ 51,385,387	Advance receipts for share capital - - - - - - - - - - - - - 480,312 - - - 480,312	Capital surplus		R	etained earnings			Other equity interest	Other equity interest	Total 2,749,539 - - - - 3,699,343 3,699,343 6,448,882 - - - 2,321,402 2,321,402 - - 10,407 (171,736) 8,608,955	Total equity
				Legal reserve		Unappropriated retained earnings	Total 12,117,248 - (1,213,392) - (3,361,639) 284,921 (3,076,718) 7,827,138 - - 6,608,496 (103,490) 6,505,006 - - - 171,736 14,503,880	Exchange differences on translation of foreign financial statements (42,773) - - - - (70,473) (70,473) (113,246) - - - (45,491) (45,491) - - 10,407 - (148,330)	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income 722,495 - - - - 390,804 390,804 1,113,299 - - - 1,346,139 1,346,139 - - - (171,736) 2,287,702	Gains (losses) on hedging instruments 2,069,817 - - - - 3,379,012 3,379,012 5,448,829 - - - 1,020,754 1,020,754 - - - - 6,469,583
			7,849,700 - - 135,973 - -	2,221,732 352,270 - - - -		9,895,516 (352,270) (1,213,392) - (3,361,639) 284,921 (3,076,718) 5,253,136 - - 6,608,496 (103,490) 6,505,006 - - - 171,736 11,929,878						71,252,182 - (1,213,392) 135,973 (3,361,639) 3,984,264
			-	-								622,625
			7,985,673 34,729 255,744 - -	2,574,002 - - - -								70,797,388 34,729 255,744 6,608,496 2,217,912
			-	-								8,826,408
			625,328 1,777,956 (687) -	- - - -								3,955,332 1,777,956 9,720 -
			10,678,743	2,574,002								85,657,277

See accompanying notes to parent-company-only financial statements.

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EVA AIRWAYS CORP.

Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit (loss) before tax Adjustments: Adjustments to reconcile profit (loss): Expected credit loss (gain) Depreciation expense Amortization expense Net gains on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries and associates accounted for using equity method Losses (gains) on disposal of property, plant and equipment Gains on disposal of non-current assets classified as held for sale Unrealized foreign exchange gains Others Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Notes receivable, net Notes receivable－related parties Accounts receivable, net Accounts receivable－related parties Inventories Other current assets Total changes in operating assets Changes in operating liabilities: Contract liabilities Notes payable－related parties Notes and accounts payable Accounts payable－related parties Other payables Other current liabilities Net defined benefit liabilities－non-current Other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Income taxes paid Net cash flows from (used in) operating activities		2021 7,698,919 (25,000) 26,460,014 213,310 (42,655) 3,798,154 (121,241) (139,902) (670,817) 24,521 (11,484) (1,533,477) (157,474) 27,793,949 (4,840) 840 (3,146,658) (7,560) 59,018 67,356 (3,031,844) (936,483) 826 1,725,583 40,190 2,279,017 (1,816,779) (436,884) 3,011 858,481 (2,173,363) 25,620,586 33,319,505 (230,518) 33,088,987	2020 (4,416,284) (30,000) 25,763,420 240,530 (20,873) 4,789,246 (208,793) (137,131) (796,307) (39,699) (141,369) (1,261,623) (68,465) 28,088,936 841,814 187,563 133,865 207,251 91,968 162,743 1,625,204 (16,012,310) - (2,237,619) (846,240) (3,695,984) (4,545,862) (791,619) 19,857 (28,109,777) (26,484,573) 1,604,363 (2,811,921) (358,902) (3,170,823)
	$

See accompanying notes to parent-company-only financial statements.

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EVA AIRWAYS CORP.

Statements of Cash Flows (continued)

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) investing activities: Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Proceeds from disposal of non-current assets classified as held for sale Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease in other non-current assets Increase in prepayments for business facilities Interest received Dividends received Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Proceeds from issuance of bonds payable Repayments of bonds payable Proceeds from long-term borrowings Repayments of long-term borrowings Payments of lease liabilities Increase (decrease) in other non-current liabilities Cash dividends paid Disposal of ownership interests in subsidiaries (without losing control) Interest paid Other financing activities Net cash flows used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

See accompanying notes to parent-company-only financial statements.

8

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

EVA Airways Corp (the “ Company” ) was incorporated on April 7, 1989, as a corporation limited by shares under special permission of the Republic of China (R.O.C.) Ministry of Transportation and Communications. The address of the Company’ s registered office is No. 376, Sec. 1, Hsin-nan Road, Luchu Dist., Taoyuan City, Taiwan.

The Company’s business activities are

• (a) civil aviation transportation and general aviation business;

• (b) Wholesale and retail sale of medical devices;

• (c) to carry out any business which is not forbidden or restricted by the applicable laws and regulations, excluding those requiring licensing.

(2) Approval date and procedures of the financial statements

The parent-company-only financial statements were authorized for issue by the Company’ s Board of Directors as of March 14, 2022.

(3) New standards, amendments and interpretations adopted

• (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• ●Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “ Interest Rate Benchmark Reform—Phase 2”

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from April 1, 2021:

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

• (b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

(Continued)

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EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

• (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The following new and amended standards, which may be relevant to the Company, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

Content of amendment Effective date per IASB The key amendments to IAS 1 include: ●requiring companies to disclose their material accounting policies rather than their significant accounting policies; ●clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves immaterial and as such need not be disclosed; and ●clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material to a company’ s financial statements. January 1, 2023 The amendments introduce a new definition for accounting estimates: clarifying that they are monetary amounts in the financial statements that are subject to measurement uncertainty. The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set out by an accounting policy. January 1, 2023 The amendments narrowed the scope of the recognition exemption so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. January 1, 2023

The Company is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and financial performance. The results thereof will be disclosed when the Company completes its evaluation.

(Continued)

10

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The Company does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “ Insurance Contracts” and amendments to IFRS 17

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

(4) Summary of significant accounting policies

The significant accounting policies have been applied consistently to all periods presented in these financial statements, except when otherwise indicated. The significant accounting policies presented in the parent-company-only financial statements are summarized as follows:

• (a) Statement of compliance

These parent-company-only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”).

• (b) Basis of preparation

• (i) Basis of measurement

The parent-company-only financial statements have been prepared on a historical cost basis except for the following material items in the balance sheets:

• 1) Financial instruments at fair value through profit or loss are measured at fair value;

• 2) Financial assets at fair value through other comprehensive income are measured at fair value;

• 3) Hedging financial instruments are measured at fair value; and

• 4) The net defined benefit liabilities are recognized as the present value of the defined benefit obligation, less, the fair value of plan assets.

• (ii) Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entity operates. The parent-company-only financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency. All financial information presented in TWD has been rounded to the nearest thousand.

(Continued)

11

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(c) Foreign currency

• (i) Foreign currency transactions

Transactions in foreign currencies are translated into the respective functional currencies of the Company at the exchange rates of the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate of that date. The foreign currency gains or losses on monetary items is the difference between the amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and the payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the reporting date.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate of the date the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of transactions.

Foreign currency differences arising from retranslation are recognized in profit or loss, except for the following differences which are recognized in other comprehensive income that arise from the retranslation：

• 1) an investment in equity securities designated as at fair value through other comprehensive income;

• 2) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or

• 3) qualifying cash flow hedges to the extent that the hedges are effective.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to New Taiwan Dollars (which was expressed in reporting currency) at the exchange rates of the reporting date. The income and expenses of foreign operations are translated to New Taiwan Dollars (which was expressed in reporting currency) at average rate. Foreign currency differences are recognized in other comprehensive income.

When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to noncontrolling interest. When the Company disposes of only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely predicted in the foreseeable future, the foreign currency gains and losses arising from such items are considered as a part of investment in the foreign operation and are recognized in other comprehensive income.

(Continued)

12

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (d) Classification of current and non-current assets and liabilities

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

• (i) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;

• (ii) It holds the asset primarily for the purpose of trading;

• (iii) It expects to realize the asset within twelve months after the reporting date; or

• (iv) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

• (i) It expects to settle the liability in its normal operating cycle;

• (ii) It holds the liability primarily for the purpose of trading;

• (iii) The liability is due to be settled within twelve months after the reporting date; or

• (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issuance of equity instruments that do not affect its classification.

• (e) Cash and cash equivalents

Cash comprises cash on hand and cash in bank. Cash equivalents are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments. Time deposits, in conformity with the aforementioned definition, that are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes, and that are subject to an insignificant risk of changes in their fair value are recognized as cash equivalents.

• (f) Financial instruments

• (i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Financial assets are classified into the following categories: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL).

The Company shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

(Continued)

13

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• 1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

• 2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses, and impairment losses, deriving from debt investments are recognized in profit or loss; whereas dividends deriving from equity investments are recognized as income in profit or loss, unless the dividend income clearly represents a recovery of part of the cost of the investment. Other net gains and losses of financial assets measured at FVOCI are recognized in OCI. On derecognition, gains and losses accumulated in OCI of debt investments are reclassified to profit or loss. However, gains and losses accumulated in OCI of equity investments are reclassified to retained earnings instead of profit or loss.

Dividend income derived from equity investments is recognized on the date that the Company’s right to receive payment is established.

(Continued)

14

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which take into account any dividend and interest income, are recognized in profit or loss.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

• 4) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivables, refundable deposits, other financial assets, etc).

The Company measures loss allowances at an amount equal to lifetime expected credit losses (ECLs), except for the following which are measured as 12-month ECLs:

• debt securities that are determined to have low credit risk at the reporting date; and

• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables is always measured at an amount equal to lifetime ECLs.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both qualitative and quantitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forwardlooking information.

(Continued)

15

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Company considers a financial asset to be in default when the financial asset is more than 365 days past due or the borrower is unlikely to pay its credit obligations to the Company in full.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

• significant financial difficulty of the borrower or issuer;

• a breach of contract such as a default or being more than 60 days past due;

• the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;

• it is probable that the borrower will enter bankruptcy or other financial reorganization; or

• the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Company recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

(Continued)

16

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• 5) Derecognition of financial assets

Financial assets are derecognized when the contractual rights to the cash flows from the assets expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Company enters into transactions whereby it transfers assets recognized in its statement of balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

• (ii) Financial liabilities and equity instruments

• 1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

• 2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received less the direct cost of issuing.

• 3) Compound financial instruments

Compound financial instruments issued by the Company comprise convertible bonds that can be converted to share capital at the option of the holder when the number of shares to be issued is fixed.

The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have any equity conversion option. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.

Interest and gain or loss related to the financial liabilities are recognized in profit or loss, and are included in non-operating income and expenses.

On conversion, the financial liability is reclassified to equity, and no gain or loss is recognized.

(Continued)

17

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in other gains and losses under non-operating income and expenses.

• 6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when, the Company has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

• (iii) Derivative financial instruments and hedge accounting

The Company holds derivative financial instruments to hedge its foreign currency and fuel price exposures. Derivatives are initially measured at fair value. Any attributable transaction costs thereof are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss in the statement of comprehensive income. When a derivative is designated as, and effective for, a hedging instrument, its timing of recognition in profit or loss is determined based on the nature of the hedging relationship. When the fair value of a derivative instrument is positive, it is classified as a financial asset, whereas when the fair value is negative, it is classified as a financial liability.

The Company designates its hedging instruments, including derivatives, embedded derivatives, and non-derivative instruments for a hedge of a foreign currency risk, as a fair value hedge, cash flow hedge, or hedge of a net investment in a foreign operation. Foreign exchange risks of firm commitments are treated as fair value hedges.

(Continued)

18

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

An initial designated hedging relationship, the Company documents the risk management objectives and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged items and hedging instrument are expected to offset each other.

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and － accumulated in “other equity gains (losses) on hedging instruments”. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.

When the hedged item is recognized in profit or loss, the amount accumulated in equity and retained in other comprehensive income is reclassified to profit or loss in the same period or in the periods during which the hedged item affects the profit or loss, and is presented in the same accounting item with the hedged item recognized in the statement of comprehensive income. However, for a cash flow hedge of a forecast transaction recognized as a nonfinancial asset or － liability, the amount accumulated in “other equity gains (losses) on hedging instruments” and retained in other comprehensive income is reclassified as the initial cost of the nonfinancial asset or liability.

The Company prospectively discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised.

(g) Inventories

Inventories are measured at the lower of cost or net realizable value. The cost of inventories is based on the weighted-average method, and includes expenditure incurred in acquiring the inventories, and other costs incurred in bringing them to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less the selling expenses.

• (h) Non-current assets or disposal group classified as held for sale

Non-current assets or disposal groups comprising assets and liabilities that are highly probable to be recovered primarily through sale rather than through continuing use, are reclassified as held for sale. Immediately before classification as held for sale , the assets, or components of a disposal group, are remeasured in accordance with the Company’s accounting policies. Thereafter, generally, the assets or disposal groups are measured at the lower of their carrying amount or fair value less costs to sell.

Once classified as held for sale, property, plant and equipment and investment property are no longer depreciated.

(Continued)

19

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(i) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The financial statements include the Company’s share of the profit or loss and other comprehensive income of equity-accounted investees, after adjustments to align the accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Unrealized profits resulting from transactions between the Company and an associate are eliminated to the extent of the Company’s interests in the associate. Unrealized losses on transactions with an associate are eliminated in the same way, except to the extent that the underlying asset is impaired.

When the Company’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(j) Investment in subsidiaries

When preparing the parent-company-only financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of profit or loss and other comprehensive income of the subsidiary as well as the distribution received. The Company also recognized its share in the changes in the equity of subsidiaries.

Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within equity.

(k) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition. Subsequent to initial recognition, investment properties are measured at initial acquisition cost less any subsequent accumulated depreciation. Depreciation methods, useful lives and residual values are in accordance with the policy of property, plant and equipment. Cost includes expenditure that is directly attributable to the acquisition of the investment property and any other costs directly attributable to bringing the investment property to a working condition for its intended use, and capitalized borrowing costs.

(Continued)

20

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

When the use of an investment property changes such that it is reclassified as property, plant and equipment, its book value at the date of reclassification becomes its cost for subsequent accounting.

• (l) Property, plant and equipment

• (i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset. Cost also includes transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and the depreciation method of the significant part of an item of property, plant and equipment are the same as the useful life and depreciation method of another significant part of that same item.

The gain or loss arising from the disposal of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as other gains and losses.

• (ii) Major inspection and overhaul cost

Major inspection and overhaul expenditures of self-owned and leased aircraft are capitalized as costs of aircraft and leased assets by components, and are depreciated using the straight-line method over the estimated useful life of the overhaul. Costs of designated inspections to be performed at the end of the lease term of leased aircraft are estimated and depreciated using the straight-line method over the lease term.

• (iii) Subsequent cost

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred.

(iv) Depreciation

The depreciable amount of an asset is determined after deducting its residual value, and it shall be allocated on a systematic basis over the asset’ s useful life. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss.

(Continued)

21

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

• 1) Land has unlimited useful life and therefore is not depreciated.

• 2) Building and structures:

Main Buildings 20 to 55 years Others 5 to 15 years 3) Machinery and equipment: Electro-mechanical equipment 3 to 18 years Others 1 to 18 years 4) Aircraft: Airframes 15 to 18 years Aircraft cabins 12 years Engines 15 to 18 years

• 5) Leased improvements are depreciated over the shorter of the lease term or the estimated useful life.

Depreciation methods, useful lives, and residual values are reviewed at each fiscal year-end date. If expectations differ from the previous estimates, the change is accounted for as a change in an accounting estimate.

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment purpose.

(m) Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

(Continued)

22

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• －

• fixed payments, including in-substance fixed payments;

• － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• － amounts expected to be payable under a residual value guarantee; and

• － payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured using the effective interest method. It is remeasured when:

• －

• there is a change in future lease payments arising from the change in an index or rate;

• － there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee;

• － there is a change in the assessment on whether it will have the option to exercise a purchase of the underlying asset;

• － there is a change in the assessment on lease term as to whether it will be extended or terminated; and

• －

• the modifications of the lease underlying asset, scope or other terms.

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Company presents right-of-use assets that do not meet the definition of investment property and lease liabilities as a separate line item respectively in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for shortterm leases and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(Continued)

23

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

For sale-and-leaseback transactions, the Company applies the requirements for determining when a performance obligation is satisfied in IFRS 15 to determine whether the transfer of an asset is accounted for as a sale of the asset. If the transfer of an asset satisfies the requirement of IFRS 15 to be accounted for as a sale of the asset, the Company measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Company recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. If the transfer of an asset does not satisfy the requirement of IFRS 15 to be accounted for as a sale of the asset, the Company will continue to recognize the transferred asset and shall recognize the financial liability equal to the transfer proceeds.

As a practical expedient, the Company elects not to assess all rent concessions that meets all the following conditions are lease modifications or not:

• －

• the rent concessions occurring as a direct consequence of the COVID-19 pandemic;

• － the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

• － any reduction in lease payments affects only payments originally due on or before June 30, 2022; and

• － there is no substantive change to other terms and conditions of the lease.

In accordance with the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

• (ii) As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS 15 to allocate the consideration in the contract.

The Company recognizes lease payments received under operating leases as income over the lease term as part of income.

(Continued)

24

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(n) Impairment of non-financial assets

The Company measures whether impairment occurred in non-financial assets (except for inventories and deferred tax assets), at each reporting date, and estimates their recoverable amount. If it is not possible to determine the recoverable amount (fair value less costs to sell and value in use) for an individual asset, then the Company will have to determine the recoverable amount for the asset’s cash-generating unit.

The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss.

The Company should assess at each reporting date whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’ s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of previously recognized impairment loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount net of depreciation or amortization that would have been determined if no impairment loss had been recognized.

(o) Provision

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance costs.

The estimated recovery costs are incurred through the lease of aircraft. The Company’s restoration obligations are based on necessary maintenance expenses under the lease contracts of the aircraft, in which the Company expects all of the maintenance expenses to be reimbursed when the Company returns back all its rented aircraft. The amounts are estimated by gauging the maintenance experiences of similar types of aircraft, the actual maintenance expenses in the past, and the historical information on the usage of the aircraft.

(p) Intangible assets

Intangible assets that are acquired by the Company are measured at cost less accumulated amortization and any accumulated impairment losses. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

(Continued)

25

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The amortization amount is the cost of an asset less its residual value. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of 3~5 years of intangible assets, other than goodwill and intangible assets with indefinite useful lives, from the date that they are available for use.

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

• (q) Revenue recognition

• (i) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’ s main types of revenue are explained below.

• 1) Aviation transportation revenue

Ticket sales for passengers and cargo are recorded as unearned revenue. They are included in contract liabilities, and recognized as revenue when service is provided.

• 2) Customer loyalty program

The Company has a customer loyalty program, whereby, customers are awarded rights of accumulating mileages during their flights, and the fair value of the consideration received or receivable in respect of initial sale is allocated between the rights of accumulated mileages and the other components of the sale. The amount allocated to rights of accumulated mileages is estimated by the fair value of the redeemable part of the customer loyalty program and by reference to past experience of probability of redemption. Thus, the corresponding fair value is estimated and deferred, and service revenues will not be recognized until the rights have been redeemed and obligations are fulfilled. Also, contract liabilities will be converted into revenues when it is expected that the rights are probable not to be redeemed.

• 3) Sale of goods

The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the utility of the product, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

Accounts receivable are recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

(Continued)

26

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• 4) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(r) Government grants

The Company recognizes an unconditional government grant related COVID-19 as reduction of expenses when the grant becomes receivable. Grants that compensate the Company for expenses or losses incurred are recognized in profit or loss in the periods in which the expenses or losses are recognized.

(s) Employee benefits

• (i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’ s net obligation in respect of the defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The discount rate is the yield at the reporting date on market yields of government bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Company. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities.

When the benefits of a plan are improved the expense of the increased benefit relating to past service by employees is recognized immediately in profit or loss.

Remeasurements of the net defined benefit liability (asset), which comprise (1) actuarial gains and losses, (2) the return on plan assets (excluding interest) and (3) the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Company recognizes the amounts in retained earnings.

(Continued)

27

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The Company recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment or settlement comprises any resulting change in the fair value of plan assets, any change in the present value of the defined benefit obligation.

• (iii) Short-term employee benefits

Short-term employee benefit obligations are accrued when the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee. A liability is recognized when the obligation can be estimated reliably.

• (t) Income taxes

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be recognized for the exceptions below:

• (i) Assets and liabilities that are initially recognized but are not related to a business combination and have no effect on net income or taxable gains (losses) during the transaction.

• (ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse.

• (iii) Initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

• (i) The Company has the legal right to settle tax assets and liabilities on a net basis; and

• (ii) the taxing of deferred tax assets and liabilities fulfills one of the scenarios below:

• 1) levied by the same taxing authority; or

• 2) levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.

(Continued)

28

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

A deferred tax asset should be recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated at each reporting date, and adjusted based on the probability that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

(u) Earnings per share (EPS)

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary equity holders of the Company. The calculation of basic earnings per share is based on the profit or loss attributable to the ordinary equity holders of the Company divided by the weighted-average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit or loss attributable to ordinary equity holders of the Company, divided by the weightedaverage number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, such as convertible bonds and employee compensation.

(v) Operating segment

The Company discloses the operating segment information in the consolidated financial statements. Therefore, the Company does not disclose the operating segment information in the parent-companyonly financial statements.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

The preparation of the parent-company-only financial statements requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Management continues to monitor the accounting estimates and assumptions. Management recognizes any changes in the accounting estimates during the period and the impact of the changes in the accounting estimates in the next year.

There is no information about critical judgments in the parent-company-only financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next year is as follow. Those assumptions and estimations have been updated to reflect the impact of COVID-19 pandemic:

－ (a) Contract liabilities mileage redemption revenue

For the rights of accumulated mileages that are estimated by using the fair value of the redeemable part of the customer loyalty program and, the reference to past experience of probability of redemption; please refer to note 4(q) for further details on related matter. Changes in fair value per － mileage or redemption rate may have a material impact on the contract liabilities mileage － redemption revenue. Also, contract liabilities mileage redemption revenue will be converted into revenues when the member actually redeems the mileage or it is expected that the rights are probable － not to be redeemed; please refer to note 6(v) for estimation of contract liabilities mileage redemption revenue.

(Continued)

29

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(b) Impairment of long-term non-financial assets

During the process of impairment assessment, the Company relies on subjective judgment to determine the individual cash flows of a specific group of assets, useful lives and estimates future gains and losses according to the usage of assets and business characteristics; please refer to note 4(n) for further details on related matter. Alteration of estimates from any change in economic conditions or business strategy may lead to impairment loss in the future; please refer to note 6(j) for further description of the key assumptions used to determine the recoverable amount.

The accounting policy and disclosure of the Company include measuring the financial assets and financial liabilities at fair value. The accounting department of the Company uses information of external information to make the evaluation result agreeable to the market status and to ensure that the data resources are independent, reliable and consistent with the other resources. The accounting department of the Company regularly revises the evaluation models and the input parameters, makes retrospective review and makes essential adjustments to ensure that the evaluation results is reasonable.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

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

– Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

– Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in notes 6(g), 6(l) and 6(y).

(6) Explanation of significant accounts

(a) Cash and cash equivalents

Cash on hand Cash in bank	2021.12.31 $ 74,843 39,489,067 $ 39,563,910	2020.12.31
		81,063 30,994,093
		31,075,156

Refer to note 6(y) for the interest rate risk and sensitivity analysis of the financial assets and liabilities of the Company.

(Continued)

30

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(b) Financial assets

• (i) Financial assets at fair value through profit or loss

Financial assets mandatorily measured at fair value through profit or loss: Money market funds Convertible bonds with embedded derivatives	2021.12.31 $ 1,390,560 21,612 $ 1,412,172	2020.12.31 1,687,508 2,793
		1,690,301

The derivative financial instruments arose from the issuance of convertible bonds of the Company were stated in note 6(o).

• (ii) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income: Publicly traded stocks Non-publicly traded stocks	2021.12.31 $ 3,384,443 627,983 $ 4,012,426	2020.12.31
		1,228,481 1,726,966
		2,955,447

The Company designated the investments shown above as equity securities as at fair value through other comprehensive income because these equity securities represent those investments that the Company intends to hold for long-term for strategic purposes.

During the year 2021, the Company has sold its equity securities as at fair value through other comprehensive income. The shares sold had a fair value of $238,711. And the Company recognized a gain of $171,736, which was accounted for as other equity. The gain has been transferred to retained earnings. There was no such transaction for the year ended December 31, 2020.

(iii) For credit risk and market risk, please refer to note 6(y).

• (iv) The aforementioned financial assets were not pledged.

• (c) Financial instruments used for hedging

The details of financial liabilities for hedging were as follows:

Financial liabilities for hedging: Foreign currency component of non-derivative lease liabilities Current Non-current	2021.12.31 $ 74,969,915 $ 11,664,825 63,305,090 $ 74,969,915	2020.12.31
		88,632,815
		11,564,988 77,067,827
		88,632,815

(Continued)

31

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (i) The foreign currency component of non-derivative lease liabilities

The Company uses the foreign currency component of lease liabilities to hedge foreign currency risk on the cash inflow from operating revenue with a highly probable forecast transaction. As of December 31, 2021 and 2020, the cash flow hedged items and nonderivative financial hedging instruments were as follows:

Hedged item Foreign currency of operating revenue	Hedging instrument	Lease liabilities of assigned hedging instrument	Lease liabilities of assigned hedging instrument	Period when cash flows are expected to occur Period when profit or loss is affected 2020~2032 2020~2032
		2021.12.31 $ 74,969,915	2020.12.31
	Foreign currency of lease liabilities		88,632,815

• (ii) Fuel price swaps and option agreements

The Company needs fuel for operating. However, cash flow risk will occur if the future cash flows for fuel fluctuate due to the floating market prices. The Company evaluates the risk as significant, and thus, hedges the risk by signing fuel price swaps and option agreements. There were no unexpired fuel price swaps and option agreements held by the Company as of December 31, 2021 and 2020.

(iii) Forward exchange contracts

The Company’ s strategy is to use the forward exchange contracts to hedge its estimated foreign currency exposure in respect of forecasted purchases transactions. When actual purchase occurs, the amount accumulated in gains (losses) on the effective portion of cash flow hedge under other equity interest will be reclassified to non-current assets in the same period. The terms of forward foreign exchange contract are coordinated with the hedged item. There were no unexpired forward exchange contracts held by the Company as of December 31, 2021 and 2020.

• (iv) The details arising from cash flow hedges for the years ended December 31, 2021 and 2020, were as follows:

	Account Item		2021	2020
Recognized in other comprehensive income during the period		$	1,275,943	4,223,765
Reclassification from equity	to increase (decrease) in operating costs
for the period		$	-	1,523,195
Reclassification from equity	to increase (decrease) other non-current
assets for the period		$	-	21,902
Reclassification from equity	to exchange losses (gains) for the period	$	(1,290,079)	(561,963)
Ineffective portion of forward exchange hedge recognized in profit or loss $			-	2,574

There was no ineffective portion of unsettled cash flow hedge recognized in profit or loss.

(Continued)

32

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(d) Notes and accounts receivable

Notes receivable (including related parties) Accounts receivable (including related parties) Less: allowance for impairment	2021.12.31 $ 5,313 8,717,948 (10,139) $ 8,713,122	2020.12.31 1,313 5,583,167 (54,576) 5,529,904

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, notes and accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward-looking information. The loss allowance provision was determined as follows:

Not overdue Overdue within 30 days Overdue 31~60 days Overdue over 60 days but less than one year Overdue more than one year Not overdue Overdue within 30 days Overdue 31~60 days Overdue over 60 days but less than one year Overdue more than one year	2021.12.31	2021.12.31
	Notes and accounts receivable (including related parties) carrying amount Weighted- average loss rate $ 8,707,953 - 7,705 32.91% 1,339 100% 291 100% 5,973 100% $ 8,723,261 2020.12.31		Loss allowance provision
			- 2,536 1,339 291 5,973
			10,139
	Notes and accounts receivable (including related parties) carrying amount $ 5,555,301 4,060 - 7,266 17,853 $ 5,584,480	Weighted- average loss rate 0.46% 100% - 100% 100%	Loss allowance provision
			25,397 4,060 - 7,266 17,853
			54,576

(Continued)

33

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

The movements in the allowance for notes and accounts receivable were as follow:

Balance on January 1 Impairment losses recognized (reversed) Amounts written off Balance on December 31	2021 $ 54,576 (25,000) (19,437) $ 10,139	2020 85,241 (30,000) (665) 54,576

The aforementioned notes and accounts receivable were not pledged. Other credit risk information please refer to note 6(y).

(e) Other receivables

Other receivables
Other receivables－related parties Others Less: allowance for impairment	2021.12.31 $ 166,943 95,210 - $ 262,153	2020.12.31
		226,715 108,086 -
		334,801

For the years ended December 31, 2021 and 2020, the Company was awarded government grants amounting to $1,392,300 and $1,025,826, respectively, due to COVID-19 pandemic. The grants that compensated the Company for expenses or losses incurred were recognized in profit or loss in the periods in which the expenses or losses were recognized. As of December 31, 2021 and 2020, the receivables related to the abovementioned grant amounted to $67,799 and $67,040, respectively.

There were no change on the movements in the allowance for impairment of other receivables for the years ended December 31, 2021 and 2020.

The aforementioned other receivables were not pledged. Other credit risk information please refer to note 6(y).

(f) Inventories

• (i) The components were as follows:

2021.12.31 Aircraft spare parts $ 158,363 Consumables for use and merchandise for in-flight sales 985,044 Fuel for aircraft and others 26,271 $ 1,169,678	2020.12.31
	144,243 1,143,990 18,884
	1,307,117

(Continued)

34

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (ii) Except for cost of goods sold and inventories recognized as expenses, the gains or losses which were recognized as operating costs were as follows:

Losses on (gain on reversal) valuation of inventories and obsolescence	2021 $ (233,888)	2020 (166,259)

The aforementioned gains on reversal valuation of inventories were due to the disposal of inventories which had been recognized as loss on valuation.

As of December 31, 2021 and 2020, these inventories were not pledged.

(g) Non-current assets or disposal group classified as held for sale

A part of the office building in Los Angeles was presented as non-current assets or disposal group classified as held for sale following the expectation of the Company’s management to sell part of the building. The efforts to sell the disposal group have commenced, and sales are expected to be completed within one year. As of December 31, 2021 and 2020, the non-current assets or disposal group classified as held for sale comprised assets and liabilities were as follows:

Property, plant and equipment Other payables	2021.12.31 $ 37,437 $ -	2020.12.31
		852,175
		1,142

As of December 31, 2021 and 2020, the non-recurring fair value measurements for non-current assets or disposal group classified as held for sale of $48,039 and $1,012,756, respectively (before costs to sell amounted to $2,627 and $52,373, respectively) have been categorized as a Level 2 fair value based on the observable inputs with settled deals.

• (h) Investments accounted for using equity method

The components were as follows:

Subsidiaries Associates	2021.12.31 $ 11,751,694 135,130 $ 11,886,824	2020.12.31
		13,482,020 155,907
		13,637,927

(i) Subsidiaries

Please see the consolidated financial statements for the year ended December 31, 2021.

(ii) Associates

Summary of financial information for the individually insignificant investments in associates accounted for using equity method was as follows. The aforementioned financial information was included in the parent-company-only financial statements of the Company.

(Continued)

35

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

Attributable to the Company: Profit (loss) Other comprehensive income Comprehensive income	2021 $ (8,746) (2,527) $ (11,273)	2020 (3,788) 2,215 (1,573)

• (iii) Pledged

As of December 31, 2021 and 2020, the investments accounted for using equity method were not pledged.

(i) Changes in a parent’s ownership interest in subsidiaries

In order to prepare for the listing of the subsidiary, Evergreen Aviation Technologies Corp., (hereinafter refer to as EGAT), and comply with the “Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings”, the release of the shares of EGAT held by the Company was resolved in the shareholders’ meeting of the Company on July 16, 2021. The shares shall be subscribed preferentially by all shareholders of the Company on the basis of the percentage of shareholdings, and the number of shares of subscription not fully been subscribed by shareholders of the Company shall be purchased by the specific person's designated by the Chairman. The subscription price, which was referred to the reasonable opinion issued by the professional institution, was set at $62~$63 per share.

For the year ended December 31, 2021, the Company has disposed of 51,204 thousand shares of EGAT with a total selling price of $3,202,602. Therefore, the Company recognized a gain of $1,794,534, which was accounted for capital surplus. Since the above transaction, the Company’s shareholding percentage in EGAT has decreased from 79.42% to 64.90%.

Besides, as of February 2022, the Company has finished the collection and delivered the shares. For the two months ended February 28, 2022, the share payment was $1,431,839, and the accumulated disposal profit was $802,578, which was accounted for capital surplus.

On November 18, 2020, a resolution was approved during the Board meeting of EGAT for a capital reduction of 300,000 thousand shares amounting to $3,000,000, wherein EGAT would refund cash to its shareholders thereafter. The Company received the amount of $2,382,515 in cash according to the shareholding percentage of EGAT on December 10, 2020 (the date of capital reduction).

(Continued)

36

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(j) Property, plant and equipment

The movements of the Company’s property, plant and equipment were as follows:

Cost: Beginning balance as of January 1, 2021 Additions Disposals Reclassification (Note) Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Additions Disposals Reclassification (Note) Balance as of December 31, 2020 Accumulated depreciation: Beginning balance as of January 1, 2021 Depreciation expense Disposals Reclassification (Note) Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Depreciation expense Disposals Reclassification (Note) Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020 Balance as of January 1, 2020	Land $ 2,872,685 - - 3,036 $ 2,875,721 $ 2,928,537 - - (55,852) $ 2,872,685 $ - - - - $ - $ - - - - $ - $ 2,875,721 $ 2,872,685 $ 2,928,537	Building and structures 7,997,985 - - 31,105 8,029,090 7,349,285 39,891 - 608,809 7,997,985 3,498,984 263,245 - - 3,762,229 3,248,501 250,483 - - 3,498,984 4,266,861 4,499,001 4,100,784	Machinery and equipment 20,179,622 810,736 (836,705) 836,653 20,990,306 19,958,880 879,298 (1,011,770) 353,214 20,179,622 10,377,451 1,394,829 (797,100) (392,443) 10,582,737 9,933,133 1,410,441 (960,323) (5,800) 10,377,451 10,407,569 9,802,171 10,025,747	Leased improvements	Aircraft 145,549,912 8,609,786 - 5,153,235 159,312,933 141,170,870 3,136,511 - 1,242,531 145,549,912 47,815,225 8,894,970 - - 56,710,195 39,167,828 8,647,397 - - 47,815,225 102,602,738 97,734,687 102,003,042	Unfinished construction - - - - - 815,865 2,655 - (818,520) - - - - - - - - - - - - - 815,865	Total 178,249,774 9,420,747 (882,752) 6,024,029
				1,649,570 225 (46,047) - 1,603,748 1,706,178 4,903 (80,055) 18,544 1,649,570 1,064,960 136,274 (45,821) - 1,155,413 967,469 177,667 (80,055) (121) 1,064,960 448,335 584,610 738,709
							192,811,798
							173,929,615 4,063,258 (1,091,825) 1,348,726
							178,249,774
							62,756,620 10,689,318 (842,921) (392,443)
							72,210,574
							53,316,931 10,485,988 (1,040,378) (5,921)
							62,756,620
							120,601,224
							115,493,154
							120,612,684

Note: Reclassifications are mainly the transfers of property, plant and equipment to operating costs, operating expenses and prepayments for business facilities being reclassified to property, plant and equipment.

(i) Leased aircraft

The estimated recovery costs incurred by leasing aircraft are recognized as right-of-use assets, please refer to note 6(k). The related restoration obligations are recognized as other current liabilities and other non-current liabilities and are amortized using interest method. Refer to note 6(q) for the movements of restoration obligations.

(Continued)

37

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (ii) Impairment test

According to IAS 36 “ Impairment of assets” , the Company periodically assesses for any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. When evaluating the recoverable amount of the CGU, the pre-tax discount rate is used to estimate the future cash flow. After performing the impairment test, the recoverable amount for the CGU turned out to be higher than its carry amounts. Therefore, there is no impairment loss to be recognized at December 31, 2021 and 2020.

The recoverable amounts of CGU were evaluated, and the critical assumptions used for this evaluation were as follows:

• 1) The cash flow period of twelve years, which was estimated on the basis of previous experience, actual operating result and management-approved financial budget.

• 2) The estimated operating revenue, operating costs, and operating expenses based on the future operation plan, taking into consideration the changes and business competitions within the industry.

• 3) For the years ended December 31, 2021 and 2020, the estimate discount rates are 3.17% and 3.28%, respectively.

(iii) Pledge

As of December 31, 2021 and 2020, the Company’s property, plant and equipment were used as pledge for long-term borrowings and lines of credit, and they are disclosed in note 8.

• (iv) For the years ended December 31, 2021 and 2020, the Company capitalized the interest expenses amounted to $122,584 and $123,111, respectively. The ranges of the monthly interest rate used for capitalization calculation were 0.07% and 0.07%~0.10%, respectively.

• (k) Right-of-use assets

The movements in the Company’s leases on land, building and structures, as well as aircraft, were as follow:

Cost: Beginning balance as of January 1, 2021 Additions Decrease Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Additions Decrease Balance as of December 31, 2020	Land $ 382,335 - - $ 382,335 $ 382,335 - - $ 382,335	Building and structures 1,435,486 244,499 (8,929) 1,671,056 1,186,803 328,431 (79,748) 1,435,486	Aircraft 140,729,381 405,703 - 141,135,084 131,719,814 9,009,567 - 140,729,381	Machinery and equipment 88,848 25,747 (21,448) 93,147 68,879 24,940 (4,971) 88,848	Total 142,636,050 675,949 (30,377) 143,281,622 133,357,831 9,362,938 (84,719) 142,636,050

(Continued)

38

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Accumulated depreciation: Beginning balance as of January 1, 2021 Depreciation expense Decrease Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Depreciation expense Decrease Balance as of December 31, 2020 Carrying amount: Balance as of December 31, 2021 Balance as of December 31, 2020 Balance as of January 1, 2020	Land $ 50,835 26,938 - $ 77,773 $ 23,897 26,938 - $ 50,835 $ 304,562 $ 331,500 $ 358,438	Building and structures 752,298 395,617 (8,258) 1,139,657 401,494 425,416 (74,612) 752,298 531,399 683,188 785,309	Aircraft 35,238,630 15,288,242 - 50,526,872 20,441,125 14,797,505 - 35,238,630 90,608,212 105,490,751 111,278,689	Machinery and equipment 46,579 24,769 (18,700) 52,648 23,628 27,573 (4,622) 46,579 40,499 42,269 45,251	Total 36,088,342 15,735,566 (26,958) 51,796,950 20,890,144 15,277,432 (79,234) 36,088,342 91,484,672 106,547,708 112,467,687

(l) Investment property

The movements of the Company’s investment property were as follows:

Cost: Beginning balance as of January 1, 2021 Transfer from non-current assets classified as held for sale Transfer to non-current assets classified as held for sale Balance as of December 31, 2021 Accumulated depreciation: Balance at January 1, 2021 Depreciation expense Transfer to non-current assets classified as held for sale Balance at December 31, 2021 Carrying amounts: Balance as of December 31, 2021 Balance as of January 1, 2021 Fair value: Balance as of December 31, 2021 Balance as of January 1, 2021	Land $ - 86,159 (4,507) $ 81,652 $ - - - $ - $ 81,652 $ -	Building and structures Total - - 657,898 744,057 (34,430) (38,937) 623,468 705,120 - - 35,130 35,130 (1,500) (1,500) 33,630 33,630 589,838 671,490 - - $ 847,998 $ -

The fair value of investment properties was based on a valuation by a qualified independent appraiser who has recent valuation experience within the location and category of the investment property being valued. The inputs of levels of fair value hierarchy in determining the fair value had been classified to Level 3.

(Continued)

39

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

As of December 31, 2021, the Company’s investment property was not pledged.

There was no such transaction for the year ended December 31, 2020.

(m) Intangible assets

The movements of the Company’s intangible assets were as follows:

Cost: Beginning balance as of January 1, 2021 Additions Disposals Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Additions Disposals Balance as of December 31, 2020 Accumulated amortization: Beginning balance as of January 1, 2021 Amortization expense Disposals Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Amortization expense Disposals Balance as of December 31, 2020 Carrying amounts: Balance as of December 31, 2021 Balance as of December 31, 2020 Balance as of January 1, 2020

Computer software $ 1,067,204 79,870 (325,208) $ 821,866 $ 1,094,113 146,211 (173,120) $ 1,067,204 $ 519,368 213,310 (325,208) $ 407,470 $ 451,958 240,530 (173,120) $ 519,368 $ 414,396 $ 547,836 $ 642,155

(i) Amortization

For the years ended December 31, 2021 and 2020, the amortization of intangible assets is included under operating expenses in the statements of comprehensive income.

(Continued)

40

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(ii) Pledge

The aforementioned intangible assets were not pledged.

• (n) Other current assets and other non-current assets

The details of the Company’s other current assets were as follows:

Prepaid expense Other receivables (including related parties) Others Total	2021.12.31 $ 196,229 262,153 63,126 $ 521,508	2020.12.31
		191,188 334,801 60,943
		586,932

The details of the Company’s other non-current assets were as follows:

Prepayments for business facilities Refundable deposits Pledged time deposits Total	2021.12.31 $ 12,295,948 1,068,224 316,997 $ 13,681,169	2020.12.31
		15,512,012 1,053,257 392,790
		16,958,059

(o) Long-term borrowings and bonds payable

The details, conditions and terms of the Company’s long-term borrowings and bonds payable were as follows:

as follows:
			2021.12.31
	Currency	Interest rate	Maturity date		Amount
Unsecured convertible bonds	TWD	-	2026/09/01	$	3,871,341
Less: Current portion (included in current portion		of long-term liabilities)			-
Total				$	3,871,341
Unsecured loans	TWD	0.93%~1.20%	2022/03/21~2026/12/14	$	34,106,250
Secured loans	TWD	0.97%~1.18%	2024/07/28~2032/11/24		54,508,045
Subtotal					88,614,295
Less: Current portion					(11,524,808)
Total				$	77,089,487

(Continued)

41

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

		2020.12.31	2020.12.31
	Currency	Interest rate	Maturity date		Amount
Secured bonds payable	TWD	1.07%	2021/12/29	$	4,250,000
Unsecured convertible bonds	TWD	-	2022/10/27~2025/10/21		3,082,941
Subtotal					7,332,941
Less: Current portion (included	in current portion	of long-term liabilities)			(4,250,000)
Total				$	3,082,941
Unsecured loans	TWD	0.90%~1.27%	2021/01/26~2025/12/21	$	35,306,667
Secured loans	TWD	0.97%~1.37%	2021/02/03~2032/11/24		56,956,098
Subtotal					92,262,765
Less: Current portion					(12,187,386)
Total				$	80,075,379

The details of convertible bonds were as follows:

2021.12.31 Total convertible bonds issued $ 15,000,000 Less: Unamortized discounted bonds payable (206,459) Cumulative converted amount (4,602,900) Cumulative put/call amount (6,319,300) Convertible bonds issued balance $ 3,871,341 Embedded derivatives－put/call options (included in financial assets/(liabilities) at fair value through profit or loss) $ 21,612 Equity components－conversion options (included in capital surplus－share options) $ 572,289

2020.12.31 10,000,000 (149,959) (451,100) (6,316,000) 3,082,941 2,793 512,921

－ Please refer to note 6(x) for the valuation loss/profit of embedded derivatives put/call options, which were recognized in net gains/losses on financial assets and liabilities at fair value through profit or loss, and the related interest expenses for the convertible bonds.

On October 27, 2017, the Company issued the third unsecured domestic convertible bonds amounting to $7,000,000 and was measured at an initial effective rate of 1.23%. The major terms are as follows:

• (i) Total issue amount: TWD7,000,000

• (ii) Issue price: At par value 100.2%.

• (iii) Maturity date: Five years, with the maturity date on October 27, 2022.

• (iv) Coupon rate: 0%.

• (v) Conversion target: Ordinary shares of the Company.

(Continued)

42

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (vi) Conversion price: The price determination day was October 19, 2017; the conversion price shall be the simple arithmetical average closing price of the ordinary shares of the Company for either one, three or five business days before the pricing date (exclusive), multiplied by the premium ratio of 104.24% (rounded off to the 1st decimal place). If the ex-dividend or the exrights date happens before the pricing date, the closing price which was adopted to calculate the conversion price should be adjusted for the distribution of stock dividends or cash dividends; and if the ex-dividend or the ex-rights date happens between the conversion price determination date and the actual issuance date, the conversion price should be modified by the conversion price adjustment formula. As of December 31, 2020, the conversion price was $13.4.

• (vii) Conversion period: The bondholder can convert its bonds into shares at any time between 3 months after the issuance date and the day before the maturity day, except for the following:

• 1) The closing period in accordance with the applicable laws;

• 2) The period that starts from the fifteen business days prior to the date of record for determination wherein the shareholders are entitled to receive the distributions or rights to subscribe for new shares in a capital increase for cash, and ends on the date of record for the distribution of the rights/benefits;

• 3) The period starts from the date of record of the capital decrease and ends one day prior to the reissuance of the trading of shares after the capital decrease.

• (viii) Repurchase at the option of the bondholders (put option of the bondholders): Bondholders have the option to notify the Company of their request for bond redemption within 40 days prior to the third anniversary of the issuance date, and the Company should redeem the bonds at 100% of the par value within 5 business days following such date.

• (ix) Redemption at the option of the Company (call option of the Company): If the closing price of shares for each of 30 consecutive trading days is at least 130% of the conversion price between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem all the outstanding bonds at their principal amount.

If the amount outstanding of bonds is less than 10% of the principal amount between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem the outstanding bonds at their principal amount.

• (x) Others: As of December 31, 2021 and 2020, the third unsecured domestic convertible bonds, with the face values of $682,200 and $451,100, had been converted into 48,075 and 30,829 thousand ordinary shares, respectively; put/call amounting to $6,317,800 and $6,316,000, respectively. The Company exercised redemption rights and terminated OTC trading of the third domestic unsecured convertible bonds in August 2021.

(Continued)

43

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

On October 21, 2020, the Company issued the fourth unsecured domestic convertible bonds amounting to $3,000,000 and was measured at an initial effective rate of 1.04%. The major terms are as follows:

• (i) Total issue amount: TWD3,000,000

• (ii) Issue price: At par value

• (iii) Maturity date: Five years, with the maturity date on October 21, 2025.

• (iv) Coupon rate: 0%.

• (v) Conversion target: Ordinary shares of the Company.

• (vi) Conversion price: The price determination day was October 13, 2020; the conversion price shall be the simple arithmetical average closing price of the ordinary shares of the Company for either one, three or five business days before the pricing date (exclusive), multiplied by the premium ratio of 104% (rounded off to the 1st decimal place). If the ex-dividend or the exrights date happens before the pricing date, the closing price which was adopted to calculate the conversion price should be adjusted for the distribution of stock dividends or cash dividends; and if the ex-dividend or the ex-rights date happens between the conversion price determination date and the actual issuance date, the conversion price should be modified by the conversion price adjustment formula. As of December 31, 2020, the conversion price was $11.2.

• (vii) Conversion period: The bondholder can convert its bonds into shares at any time between 3 months after the issuance date and the day before the maturity day, except for the following:

• 1) The closing period in accordance with the applicable laws;

• 2) The period that starts from the fifteen business days prior to the date of record for determination wherein the shareholders are entitled to receive the distributions or rights to subscribe for new shares in a capital increase for cash, and ends on the date of record for the distribution of the rights/benefits;

• 3) The period starts from the date of record of the capital decrease and ends one day prior to the reissuance of the trading of shares after the capital decrease;

• 4) The period from the date of the suspension of the conversion in respect of the change of par value of the Issuer's shares to one day prior to the first trading date of shares reissued after the change of par value.

• (viii) Repurchase at the option of the bondholders (put option of the bondholders): Bondholders have the option to notify the Company of their request for bond redemption within 40 days prior to the third anniversary of the issuance date, and the Company should redeem the bonds at 100.75% of the par value within 5 business days following such date.

(Continued)

44

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (ix) Redemption at the option of the Company (call option of the Company): If the closing price of shares for each of 30 consecutive trading days is at least 130% of the conversion price between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem all the outstanding bonds at their principal amount.

If the amount outstanding of bonds is less than 10% of the principal amount between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem the outstanding bonds at their principal amount.

• (x) Others: As of December 31, 2021 and 2020, the forth unsecured domestic convertible bonds, with the face values of $2,998,500 and $0, had been converted into 267,723 and 0 thousand ordinary shares, respectively; call amounting to $1,500 and $0, respectively. The Company exercised redemption rights and terminated OTC trading of the forth domestic unsecured convertible bonds in August 2021.

On September 1, 2021, the Company issued the fifth unsecured domestic convertible bonds amounting to $5,000,000 and was measured at an initial effective rate of 1.12%. The major terms are as follows:

• (i) Total issue amount: TWD5,000,000

• (ii) Issue price: At par value

• (iii) Maturity date: Five years, with the maturity date on September 1, 2026.

• (iv) Coupon rate: 0%.

• (v) Conversion target: Ordinary shares of the Company.

• (vi) Conversion price: The record date of conversion price was on August 24, 2021; the conversion price shall be the simple arithmetical average closing price of the ordinary shares of the Company for either one, three or five business days before the pricing date (exclusive), multiplied by the premium ratio of 104% (rounded off to the 1st decimal place). If the exdividend or the ex-right date happens before the pricing date, the closing price which was adopted to calculate the conversion price should be adjusted for the distribution of stock dividends or cash dividends; and if the ex-dividend or the ex-rights date happens between the conversion price determination date and the actual issuance date, the conversion price should be modified by the conversion price adjustment formula. As of December 31, 2021, the conversion price was $19.2. In addition, the fifth unsecured domestic convertible bonds, with the face value of $922,200, had been converted into 48,031 thousand ordinary shares.

• (vii) Conversion period: The bondholders can convert their bonds into shares at any time between 3 months after the issuance date and the day before the maturity day, except for the following:

• 1) The closing period in accordance with the applicable laws;

• 2) The period that starts from the fifteen business days prior to the date of record for determination wherein the shareholders are entitled to receive the distributions or rights to subscribe for new shares in a capital increase for cash, and ends on the date of record for the distribution of the rights/benefits;

• 3) The period starts from the date of record of the capital decrease and ends one day prior to the reissuance of the trading of shares after the capital decrease;

(Continued)

45

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• 4) The period from the date of the suspension of the conversion in respect of the change of par value of the Issuer's shares to one day prior to the first trading date of shares reissued after the change of par value.

• (viii) Resell at the option of the bondholders (put option of the bondholders): Bondholders have the option to notify the Company of their request for bond redemption within 40 days prior to the third anniversary of the issuance date, and the Company should redeem the bonds at 100.75% of the par value within 5 business days following such date.

• (ix) Redemption at the option of the Company (call option of the Company): If the closing price of shares for each of 30 consecutive trading days is at least 130% of the conversion price between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem all the outstanding bonds at their principal amount.

If the amount outstanding of bonds is less than 10% of the principal amount between the 3 months after the share issuance date and the 40th day before the maturity date, the Company may redeem the outstanding bonds at their principal amount.

As of December 31, 2021, the details of the future repayment periods and amounts of the Company’s long-term borrowings and bonds payable were as follows:

Year due		Amount
2022.1.1~2022.12.31	$	11,524,808
2023.1.1~2026.12.31		63,864,381
2027.1.1 and thereafter		17,096,447
	$	92,485,636

Information on the Company’s exposure to interest rate risk and liquidity risk is disclosed in note 6(y).

(i) Pledge for borrowings

The pledge for borrowings is disclosed in note 8.

• (ii) Unused lines of credit

As of December 31, 2021 and 2020 the unused credit lines for short-term and long-term borrowings amounted to $11,115,970 and $5,193,027, respectively.

• (iii) Guarantee from the government for loans

As of December 31, 2021 and 2020, the Company applied to different financial institutions for its project loans amounting to $29,660,000 and $20,000,000, respectively, which were guaranteed by the government in accordance with the“Regulations on Relief and Revitalization Measures for Industries and Enterprises Affected by Severe Pneumonia with Novel Pathogens” endorsed by the Ministry of Transportation and Communications and by the Ministry of Economic Affairs, wherein the credit lines of $23,310,000 and $20,000,000, respectively, had been used. The guarantee loans shall be repaid within two to five years from their initial withdrawal. Among them, an application for an extension of two more years for the guarantee loans endorsed by the Ministry of Transportation and Communications had been filed.

(Continued)

46

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(p) Lease liabilities

The components of lease liabilities were as follow:

Financial liabilities for hedging－current $ Financial liabilities for hedging－non-current $ Lease liabilities－current $ Lease liabilities－non-current $	2021.12.31 11,664,825 63,305,090 140,705 323,618	2020.12.31
		11,564,988
		77,067,827
		164,820
		417,564

For the maturity analysis, please refer to note 6(y).

The amounts recognized in profit or loss were as follows:

2021 Interest on lease liabilities $ 2,213,057 Variable lease payments not included in the measurement of lease liabilities $ 9,249 Expenses relating to short-term leases $ 79,345 Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets $ 1,164 COVID-19-related rent concessions $ 170,964 The amounts recognized in the statement of cash flows were as follows: 2021 Total cash outflow for leases $ 13,613,116	2020
	3,107,395 12,042 94,697 995 145,556 2020
	15,160,279

The Company leases land, building and structures as well as aircraft for its office space and operating needs. The leases of building and structures typically run for a period of 1 to 10 years, and of aircraft for 12 years. The Company’s lease contracts include an option to renew the lease for an additional period of the same duration after the end of the contract term or extension options. These leases are negotiated and monitored by the local management, and accordingly, contain a wide range of different terms and conditions. The extension options held are exercisable only by the Company and not by the lessors, in which the leases are not reasonably certain to be used as an optional extended lease term. Payments associated with the optional period are not included within lease liabilities.

The Company also leases its offices and vehicles equipment with lease terms ranging from 1 to 5 years. These leases are short-term leases or leases of low-value items. The Company has elected not to recognize its right-of-use assets and lease liabilities for these leases.

(Continued)

47

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(q) Restoration obligations

The movements of the restoration obligations were as follows:

Beginning balance as of January 1 Additions Decreases Effect of exchange rate changes Balance as of December 31	2021 $ 21,900,283 1,231,449 (1,561,746) (243,400) $ 21,326,586	2020 19,807,987 3,060,238 (265,678) (702,264) 21,900,283

The estimated recovery costs are incurred through the lease of aircraft. The Company’s restoration obligations are based on necessary maintenance expenses under the lease contracts of the aircraft, in which the Company expects all of the maintenance expenses to be reimbursed when the Company returns back all its rented aircraft. The amounts are estimated by gauging the maintenance experiences of similar types of aircraft, the actual maintenance expenses in the past, and the historical information on the usage of the aircraft. The Company’ s restoration obligations are included in other current liabilities and other non-current liabilities.

(r) Employee benefits

(i) Defined benefit plans

The movements in the present value of the defined benefit obligations and the fair value of plan assets were as follows:

Total present value of defined benefit obligations Fair value of plan assets Recognized liabilities of net defined benefit obligations	2021.12.31 $ 8,660,467 (6,003,595) $ 2,656,872	2020.12.31 8,742,471 (5,741,468) 3,001,003

The Company makes defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Act) entitle a retired employee to receive retirement payment calculated by the units based on years of service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor. Minimum earnings on such funds shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company’s labor pension reserve account balance in Bank of Taiwan amounted to $5,923,815 as of December 31, 2021. The utilization of the labor pension fund assets, including the asset allocation and yield of the fund. Please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(Continued)

48

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

• 2) Movements in present value of the defined benefit obligations

The movements in present value of the defined benefit obligations were as follows:

Defined benefit obligations as of January 1 Benefits paid by the plan Current service costs and interest Net remeasurements of defined benefit liabilities －Experience adjustments －Actuarial losses (gains) arising from changes in demographic assumptions －Actuarial losses (gains) arising from changes in financial assumptions Defined benefit obligations as of December 31 3) Movements in the fair value of the defined benefit	2021 $ 8,742,471 (468,818) 232,146 (182,795) 147,388 190,075 $ 8,660,467 plan assets	2020 9,150,217 (517,050) 278,840 (441,670) - 272,134
		8,742,471

The movements in the fair value of the defined benefit plan assets were as follows:

Fair value of plan assets as of January 1 Contributions from plan participants Benefits paid by the plan Expected return on plan assets Net remeasurements of defined benefit liabilities －Return on plan assets (excluding the amounts included in net interest expense) Fair value of plan assets as of December 31 4) Expenses recognized in profit or loss	2021 $ 5,741,468 600,395 (436,755) 36,572 61,915 $ 6,003,595	2020 5,045,361 968,698 (467,295) 52,007 142,697
		5,741,468

The expenses recognized in profit or loss were as follows:

Current services costs Net interest on the net defined benefit liabilities Operating costs Operating expenses	2021 $ 178,814 16,760 $ 195,574 $ 161,692 33,882 $ 195,574	2020 189,367 37,466
		226,833
		178,059 48,774
		226,833

(Continued)

49

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• 5) The remeasurements of the net defined benefit liabilities recognized in other comprehensive income (before tax)

The Company’s remeasurements of the net defined benefit liabilities recognized in other comprehensive income were as follows:

Accumulated losses as of January 1 Gains (losses) recognized during the period Accumulated losses as of December 31	2021 $ (4,158,434) (92,753) $ (4,251,187)	2020
		(4,470,667) 312,233
		(4,158,434)

• 6) Actuarial assumptions

The rate applied in calculating the present value of defined benefit obligations at the reporting date was as follows:

Discount rate Future salary increases	2021.12.31 2020.12.31 0.625% 0.625% 1.14%~5.14% 1.04%~4.25%

The Company expects to make contributions of $591,003 to the defined benefit plans in the next year starting from December 31, 2021.

The weighted average of the defined benefit plans is 12.13 years.

• 7) Sensitivity analysis

The changes in main actuarial assumptions might have an impact on the present value of the defined benefit obligations:

Discount rate (0.25%) Future salary increases (0.25%)	Effects to the defined	benefit obligations
	Favorable 2021.12.31 2020.12.31 184,518 188,165 173,217 177,195	Unfavorable
	2021.12.31 184,518 173,217	2021.12.31 2020.12.31 190,957 194,690 178,257 182,279

There is no change in other assumptions when performing the abovementioned sensitivity analysis. In practice, assumptions may be interactive with each other. The method used on sensitivity analysis is consistent with the calculation on the net defined benefit liabilities.

The method and assumptions used on current sensitivity analysis are the same as those of the prior year.

(Continued)

50

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(ii) Defined contribution plans

The Company set aside 6% of each employee’ s monthly wages to contribute to the labor pension personal accounts at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. The Company set aside a fixed amount to contribute to the Bureau of Labor Insurance without the payment of additional legal or constructive obligations.

The Company set aside $492,464 and $489,739 as pension costs under the defined contribution plans in 2021 and 2020, respectively. Payment was made to the Bureau of Labor Insurance.

(s) Income tax

(i) The components of estimated income tax benefit (expenses) were as follows:

Current tax benefit (expenses) Deferred tax benefit (expenses) Income tax benefit (expenses)	2021 $ (31,361) (1,059,062) $ (1,090,423)	2020
		206,959 847,686
		1,054,645

• (ii) The amounts of income tax benefit (expenses) recognized in other comprehensive income were as follows:

2021 Components of other comprehensive income that will not be reclassified to profit or loss: Remeasurements of defined benefit plans $ 18,550 Unrealized gains or losses from investments in equity instruments measured at fair value through other comprehensive income (245) Gains or losses on hedging instruments - $ 18,305 Components of other comprehensive income that will be reclassified to profit or loss: Gains or losses on hedging instruments $ (255,189)	2020
	(62,447) (431) (2,329)
	(65,207)
	(842,424)

(Continued)

51

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Reconciliations of income tax benefit (expenses) and profit (loss) before tax were as follows:

Profit (loss) before tax Income tax using the Company’s domestic tax rate Exempt income Changes in unrecognized deductible temporary differences Loss carry-forward unavailable deduction Income basic tax Others Total	2021 $ 7,698,919 $ (1,539,784) 438,534 - - (184,794) 195,621 $ (1,090,423)	2020 (4,416,284) 883,257 397,102 219,000 (389,183) - (55,531) 1,054,645

• (iii) Deferred tax assets and liabilities

• 1) Unrecognized deferred tax assets and liabilities

The Company’s unrecognized deferred tax assets were as follows:

Unrecognized deferred tax assets: Investment loss of foreign operations accounted for using equity method Restoration obligations Total	2021.12.31 $ 50,046 101,781 $ 151,827	2020.12.31
		41,935 109,892
		151,827

According to the R.O.C. Income Tax Act., the net loss as assessed by the tax authorities can be carry forward for use as a deduction from taxable income over a period of ten years. As of December 31, 2021, the Company’ s loss carry-forward recognized and unrecognized as deferred tax assets and the expiry year were as follows:

Filing year 2020	Recognized un-deducted loss $ 241,297	Unrecognized un-deducted loss -	Total Expiry year 241,297 2030

The Company has no unrecognized deferred tax liabilities as of December 31, 2021 and 2020.

(Continued)

52

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

2) Recognized deferred tax assets and liabilities

The movements in the balances of deferred tax assets and liabilities were as follows:

Loss carryforwards Deferred tax assets: Beginning balance as of January 1, 2021 $ 1,100,632 Recognized in profit or loss (1,052,373) Recognized in other comprehensive income - Balance as of December 31, 2021 $ 48,259 Beginning balance as of January 1, 2020 $ - Recognized in profit or loss 1,100,632 Recognized in other comprehensive income - Balance as of December 31, 2020 $ 1,100,632	Loss carryforwards	Loss on valuation of inventories	Defined benefit plans	Restoration obligations	Mileage revenue	Expense payable	Others	Total
		129,744 (53,292) - 76,452 190,773 (61,029) - 129,744	617,479 (85,664) 18,550 550,365 836,439 (156,513) (62,447) 617,479	2,101,600 219,381 - 2,320,981 1,465,919 635,681 - 2,101,600	734,218 (45,888) - 688,330 808,832 (74,614) - 734,218	24,138 2,838 - 26,976 198,618 (174,480) - 24,138	183,080 (9,182) - 173,898 460,056 (276,976) - 183,080	4,890,891 (1,024,180 18,550
								3,885,261
								3,960,637 992,701 (62,447
								4,890,891

Deferred tax liabilities: Beginning balance as of January 1, 2021 Recognized in profit or loss Recognized in other comprehensive income Balance as of December 31, 2021 Beginning balance as of January 1, 2020 Recognized in profit or loss Recognized in other comprehensive income Balance as of December 31, 2020	Unrealized foreign exchange gains $ 1,558,003 26,373 255,189 $ 1,839,565 $ 547,780 160,313 849,910 $ 1,558,003	Investment gains of foreign operations accounted for using equity method 62,757 8,509 - 71,266 78,055 (15,298) - 62,757	Others 3,585 - 245 3,830 8,311 - (4,726) 3,585	Total
				1,624,345 34,882 255,434
				1,914,661
				634,146 145,015 845,184
				1,624,345

(iv) The Company’s income tax returns for all years through 2019 were assessed by the local tax authorities.

(t) Capital and other equity

As of December 31, 2021 and 2020, the numbers of authorized ordinary shares of both 7,000,000 thousand shares had a par value of $10 per share. The total value of the authorized ordinary shares amounted to both $70,000,000, of which $51,385,387 and $48,535,695, respectively, were issued.

(i) Ordinary shares

For the year ended December 31, 2021, convertible bonds issued by the Company amounting to $3,330,004, were converted into 333,000 thousand shares of ordinary shares. Part of the conversion of convertible bonds was recorded as advance receipts for share capital amounting to $480,312 because the registration process has yet to be completed. There was no such transaction for the year ended December 31, 2020.

(Continued)

53

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(ii) Capital surplus

The details of capital surplus were as follows:

Cash subscription in excess of par value of shares Stock options granted to employees Additional paid-in capital from bond conversion Additional paid-in capital from conversion option Changes in equity of associates accounted for using equity method Difference between actual acquiring or disposing subsidiary’s equity and carrying amount Due to donated assets received	2021.12.31 $ 5,118,825 697,600 2,383,289 572,289 3,070 1,868,941 34,729 $ 10,678,743	2020.12.31
		5,118,825 697,600 1,561,585 512,921 3,757 90,985 -
		7,985,673

In accordance with R.O.C. Company Act, realized capital surplus can only be reclassified as share capital or distributed as cash dividends after offsetting losses. The aforementioned capital surplus included share premiums and donation gains. In accordance with the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the amount of capital surplus to be reclassified under share capital shall not exceed 10% of the actual share capital amount.

(iii) Retained earnings

According to the Company’s Articles of Incorporation, if the Company reports a surplus at the year end, after clearing taxes, the Company shall first offset accumulated losses (if any), then set aside 10% of the balance as the statutory surplus reserve, and set aside or reverse special surplus reserve per the provisions. After that, the Board of Directors shall propose a surplus distribution plan of the balance plus the retained earnings accrued from prior years, submit the distribution plan to the shareholders’ meeting for approval, and then distribute it. The dividends can be distributed wholly or partly in cash only after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the shareholders’ meeting.

Where the special surplus reserve set aside in the preceding paragraph belongs to a part not fully set aside accrued from prior years, the same amount thereof shall be set aside for the special surplus reserve from the retained earnings accrued from prior years. If the special surplus reserve is still insufficient, the amount from the net income after taxes for the current period plus the items other than the net income after taxes for the current period shall be included in the amount of the retained earnings for the current period to be set aside for such a purpose.

The dividends may be distributed either in full in cash, or in the combination of cash and stocks, however the cash dividends shall not be less than 10% of the total amount of dividends.

(Continued)

54

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

1) Legal reserve

If a company has no accumulated deficit, it may, as per Article 240 and 241 of the Company Act, distribute its legal reserve, in whole or in part, for the portion in excess of 25% of the paid-in capital, by issuing new shares or cash to its original shareholders in proportion to the number of shares being held by each of them. The distribution can be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors; and in addition thereto, a report of such distribution shall be submitted to the shareholders’ meeting for approval.

2) Special reserve

In accordance with Decree No. 1090150022 issued by the FSC on March 31, 2021, during the earnings distribution, with respect to the book net amount of other deductions from equity for the current period, an equivalent amount of special reserve shall be allocated from the amount of the current-period after-tax net profit, plus items other than current-period after-tax net profit, that are included in the undistributed earnings of the current period. If there remains any insufficiency, it shall be allocated from the undistributed earnings of the previous period. Similarly, a portion of undistributed priorperiod earnings shall be reclassified as a special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. If there remains any insufficiency, allocate it from the amount of the current-period after-tax net profit, plus items other than current-period after-tax net profit, that are included in the undistributed earnings of the period. Amounts of subsequent reversals pertaining to the net reduction of other equity shall qualify for additional distributions.

3) Earnings distribution

The appropriation of 2021 earnings was approved at the Board meeting on March 14, 2022. The cash dividends were amounting to $3,163,333, and the dividend per share is $0.6.

Based on the corporate sustainability principle, a resolution was passed during the shareholders’ meeting on July 16, 2021, in which the Company retained all its distributable earnings for future operation needs. Therefore, the Company did not appropriate retained earnings.

The appropriation of 2019 earnings was approved at the Board meeting on March 19, 2020. The cash dividends were amounting to $1,213,392, and the dividend per share is $0.25.

(Continued)

55

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(iv) Other equity interest (net of taxes)

Exchange differences on translation of foreign financial statements Balance as of January 1, 2021 $ (113,246) Exchange differences on translation of foreign financial statements (27,324) Exchange differences on associates accounted for using equity method (18,167) Disposal of shares in subsidiary 10,407 Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income - Disposal of investments in equity instruments designated at fair value through other comprehensive income reclassified to retained earning - Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income, subsidiaries accounted for using equity method - Changes in fair value of hedging instrument - Changes in fair value of hedging instrument reclassified to profit or loss - Balance as of December 31, 2021 $ (148,330) Balance as of January 1, 2020 $ (42,773) Exchange differences on translation of foreign financial statements (37,217) Exchange differences on associates accounted for using equity method (33,256) Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income - Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income, subsidiaries accounted for using equity method - Changes in fair value of hedging instrument - Changes in fair value of hedging instrument reclassified to profit or loss/ other non-current assets - Balance as of December 31, 2020 $ (113,246)	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Gains (losses) on hedging instruments 5,448,829 - - - - - - 2,052,818 (1,032,064) 6,469,583 2,069,817 - - - - 2,590,446 788,566 5,448,829	Total 6,448,882 (27,324) (18,167) 10,407 1,295,445 (171,736) 50,694 2,052,818 (1,032,064)
	1,113,299 - - - 1,295,445 (171,736) 50,694 - - 2,287,702 722,495 - - 373,511 17,293 - - 1,113,299
			8,608,955
			2,749,539 (37,217) (33,256) 373,511 17,293 2,590,446 788,566 6,448,882

(Continued)

56

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(u) Earnings per share (“EPS”)

The calculation of earnings per share is based on the profit (loss) attributable to the ordinary equity holders of the Company. The Company’s earnings per share were calculated as follows:

Basic earnings per share: Profit attributable to ordinary equity holders Diluted earnings per share: Profit attributable to ordinary equity holders Effect of the potentially dilutive ordinary shares Effect of employee compensation Effect of conversion of convertible bonds Profit attributable to ordinary equity holders after adjusting the potential dilutive ordinary shares Basic earnings per share: Loss attributable to ordinary equity holders Diluted earnings per share: Loss attributable to ordinary equity holders		2021 Weighted-average number of shares outstanding during the period (thousand shares) Earnings per share (in dollars) 5,047,217 $ 1.31 5,047,217 16,214 70,989 5,134,420 $ 1.29 2020 Weighted-average number of shares outstanding during the period (thousand shares) Earnings per share (in dollars) 4,853,569 $ (0.69) 4,853,569 $ (0.69)
	Amount net of tax $ 6,608,496 $ 6,608,496 $ - (10,742) $ 6,597,754
	Amount net of tax $ (3,361,639) $ (3,361,639)

As of December 31, 2020, 4,249 thousand shares of employee compensation and 70,074 thousand shares of conversion of all convertible bonds have an anti-dilutive effect, and hence they are not included in the calculation of the weighted average number of shares (diluted).

(Continued)

57

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(v) Revenue from contracts with customers

(i) Disaggregation of revenue Primary geographical markets: Taiwan $ Asia Europe North America Others $ Major products / services lines: Aviation transportation revenue $ Others $ (ii) Contract balances 2021.12.31 Contract liabilities-tickets services, customer loyalty programs and others $ 6,091,801		2021 27,207,726 56,140,959 1,601,576 10,124,248 257,396 95,331,905 92,935,069 2,396,836 95,331,905 2020.12.31 7,028,284	2020
			22,431,993 39,013,200 3,096,538 14,615,024 445,774
			79,602,529
			74,523,726 5,078,803
			79,602,529
			2020.1.1 23,040,594

The amounts of revenue recognized for the years ended December 31, 2021 and 2020 that were included in the contract liabilities balances at the beginning of the period were $1,607,940 and $11,194,108, respectively.

The contract liabilities primarily relate to deferred recognition of revenue relating to ticket services and customer loyalty programs, for which revenue is recognized when the ticket sales for passengers and award points are redeemed or when they expire.

The major change in the balance of contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. Other significant changes during the period are as follows:

Changes in an estimate of the transaction price

(Continued)

58

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (iii)Transaction price allocated to the remaining performance obligations

As of December 31, 2021 and 2020, the amounts allocated to the customer loyalty program were $3,441,652 and $3,671,091, respectively. These will be recognized as revenue as the customer loyalty program points are redeemed or when they expire, which are expected to occur over the next three years.

All consideration from contracts with customers is included in the transaction price presented above.

• (w) Remuneration to employees and directors

According to the Company’s Articles of Incorporation, once the Company incurs profit in a fiscal year, a minimum of 1% will be distributed as employees’ remuneration and a maximum of 2% will be allotted for directors’ remuneration. However, if the Company has accumulated losses, the earnings shall first be offset against any deficit.

The definition of annual earnings, as described in the above-mentioned paragraph, is the Company’s profit before tax, excluding the amount of the employees’ remuneration, and the directors’ remuneration.

For the years ended December 31, 2021 and 2020, the Company accrued and recognized its employees’ remuneration of $453,180 and $0, respectively, and the directors’ remuneration of $9,118 and $0, respectively. These remunerations were included in the operating costs and operating expenses.

The differences between the actual distributed amounts as determined by the Board of Directors and those recognized in the financial statements, if any, shall be accounted for as changes in accounting estimates and recognized in profit or loss in the following year.

There was no difference between the actual distributed amounts as determined by the Board of Directors and those recognized in the Company’s parent-company-only financial statements of the years ended December 31, 2021 and 2020. The related information can be found on Market Observation Post System website.

• (x) Non-operating income and expenses

• (i) Other income

Dividend income Interest income Interest income from bank deposits Other interest Total interest income	2021 $ 139,902 121,068 173 121,241 $ 261,143	2020
		137,131 208,185 608
		208,793
		345,924

(Continued)

59

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

(ii) Other gains and losses

Gains (losses) on disposal of property, plant and equipment Foreign exchange gains (losses) Gains (losses) on financial assets (liabilities) at fair value through profit or loss Losses on financial liabilities measured at amortized cost Gains on disposal of non-current assets classified as held for sale Others gains and losses (iii) Finance costs Interest expense Bank borrowings Bonds Payable Lease liabilities Others Less: capitalized interest	2021 $ (24,521) 878,405 42,655 (89) 11,484 61,508 $ 969,442 2021 $ 741,398 73,277 2,213,057 893,006 (122,584) $ 3,798,154	2020 39,699 893,725 20,873 (153,800) 141,369 143,029 1,084,895 2020 742,651 161,101 3,107,395 901,210 (123,111) 4,789,246

(y) Financial instruments

• (i) Credit risk

1) Credit risk exposure

The maximum exposure to credit risk is mainly from the carrying amount of financial assets.

2) Circumstances of concentration of credit risk

Accounts receivable were due from many customers and regional distributions were decentralized. Therefore, there was no concentration of credit risk. In order to reduce the credit risk of accounts receivable, the Company continually evaluates each customer’s financial situation and requires customers to be a member of IATA clearing house. Otherwise, the customer will have to provide bank guarantees or collaterals.

(Continued)

60

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

3) Credit risk of receivables

For credit risk exposure of notes and accounts receivable, please refer to note 6(d). Other financial assets at amortized cost includes other receivables and time deposits. For the details on loss allowance, please refer to notes 6(e) and 6(n).

All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. Regarding how the financial instruments are considered to have low credit risk, please refer to note 4(f).

(ii) Liquidity risk

The following were the contractual maturities of financial liabilities, including estimated interest payments:

Carrying amount As of December 31, 2021 Non-derivative financial liabilities Long-term borrowings (including current portion of long-term liabilities) $ 88,614,295 Bonds payable 3,871,341 Lease liabilities and financial liabilities for hedging 75,434,238 Notes and accounts payable (including related parties) 5,092,224 Other payables (including related parties) 6,573,854 Total $ 179,585,952 As of December 31, 2020 Non-derivative financial liabilities Long-term borrowings (including current portion of long-term liabilities) $ 92,262,765 Bonds payable 7,332,941 Lease liabilities and financial liabilities for hedging 89,215,199 Notes and accounts payable (including related parties) 3,325,625 Other payables (including related parties) 4,300,632 Liabilities related to non-current assets or disposal group classified as held for sale 1,142 Total $ 196,438,304	Contractual cash flows 91,734,651 4,077,800 81,665,285 5,092,224 6,573,854 189,143,814 95,670,927 7,528,375 97,673,508 3,325,625 4,300,632 1,142 208,500,209	Within 1 year 12,432,978 - 13,570,551 5,092,224 6,573,854 37,669,607 13,135,221 4,295,475 13,880,134 3,325,625 4,300,632 1,142 38,938,229	1-5 years 61,837,608 4,077,800 45,145,591 - - 111,060,999 58,580,998 3,232,900 50,137,458 - - - 111,951,356	Over 5 years
				17,464,065 - 22,949,143 - -
				40,413,208
				23,954,708 - 33,655,916 - - -
				57,610,624

The Company is not expecting that the cash flows including the maturity analysis could occur significantly earlier or at significantly different amounts.

(Continued)

61

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(iii) Currency risk

1) Exposure to currency risk

The Company’s significant exposure to foreign currency risk was as follows:

Financial assets Monetary items USD EUR JPY HKD CNY Non-monetary items USD IDR Financial liabilities Monetary items USD EUR JPY HKD CNY		2021.12.31		Foreign Currency $ 517,860 3,249 639,281 221,429 279,418 $ 39,668 7,687,425 $ 3,602,897 5,855 1,414,638 36,069 141,168	2020.12.31
	Foreign Currency	Exchange rate TWD 27.68 24,579,850 31.32 37,896 0.2405 208,551 3.5490 1,047,720 4.3440 1,399,871 $ 27,273,888 27.68 1,101,457 0.0020 18,453 $ 1,119,910 27.68 92,710,983 31.32 190,052 0.2405 345,897 3.5490 97,938 4.3440 626,896 $ 93,971,766	TWD		Exchange rate TWD 28.48 14,748,657 35.02 113,770 0.2763 176,633 3.6730 813,307 4.3770 1,223,012 $ 17,075,379 28.48 1,129,732 0.0020 15,375 $ 1,145,107 28.48 102,610,508 35.02 205,040 0.2763 390,864 3.6730 132,482 4.3770 617,892 $ 103,956,786	TWD
	$ 888,000 1,210 867,157 295,216 322,254 $ 39,793 9,226,508 $ 3,349,385 6,068 1,438,243 27,596 144,313		24,579,850 37,896 208,551 1,047,720 1,399,871			14,748,657 113,770 176,633 813,307 1,223,012

2) Sensitivity analysis

The Company’ s monetary items exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, notes receivable and accounts receivable (including related parties), refundable deposits (included in other non-current assets), notes and accounts payable (including related parties), other payables (including related parties), lease liabilities and restoration obligations (included in other current liabilities and other non-current liabilities) that are denominated in foreign currency. A strengthening (weakening) of 1% of the TWD against the USD, EUR, JPY, HKD and CNY as of December 31, 2021 and 2020, would have changed the profit (loss) before tax by $81,786 and $16,289, and the equity by $748,765 and $885,103 due to cash flow hedges, respectively. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2021 and 2020.

(Continued)

62

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

Due to the variety of the Company’ s functional currency, the Company discloses its exchange gains and losses of monetary items collectively. For the years ended December 31, 2021 and 2020, the Company’ s foreign exchange gains (losses), net (including realized and unrealized of monetary items) amounted to $878,405 and $893,725, respectively.

(iv) Interest rate risk

The interest rate exposure of the Company’s financial liabilities are illustrated in note 6(z) liquidity risk.

The following sensitivity analysis is based on the exposure to interest rate risk of the nonderivative financial instruments on the reporting date. For variable-rate instruments, the sensitivity analysis assumes the variable-rate liabilities are outstanding for the whole year on the reporting date. The Company’s internal department reported the increases/decreases in the interest rates and the exposure to changes in interest rates by 1% to the Company’ s key management so as to allow key management to assess the reasonableness of the changes in the interest rates.

If the interest rate increases (decreases) by 1% with all other variable factors that remain constant, the profit (loss) before tax of the Company would have changed $886,143 and $917,628 for the years ended December 31, 2021 and 2020, respectively due to the Company’s floating-interest borrowings.

(v) Other market price risk

If the price of the equity securities changes, and it is on the same basis for both years and assumes that all other variables remain the same, the impact on comprehensive income will be as follows:

Price of the equity securities at the reporting date	2021	Profit (losses) - -	2020	2020
	Other Comprehensive Income, net of tax $ 200,341 $ (200,341)		Other Comprehensive Income, net of tax 147,505 (147,505)	Profit (losses)
increase 5% decrease 5%				-
				-

• (vi) Fair value

• 1) Categories and fair values of financial instruments

The fair value of financial assets and liabilities at fair value through profit or loss, financial instruments used for hedging, and financial assets at fair value through other comprehensive income is measured on a recurring basis. The carrying amount and fair value of the Company’ s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

(Continued)

63

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Carrying amount Financial assets at fair value through profit or loss Money market funds $ 1,390,560 Convertible bonds with embedded derivatives 21,612 Subtotal 1,412,172 Financial assets at fair value through other comprehensive income Publicly traded stock 3,384,443 Non-publicly traded stock 627,983 Subtotal 4,012,426 Financial assets measured at amortized cost Cash and cash equivalents 39,563,910 Notes and accounts receivable, and other receivables (including related parties) 8,975,275 Other non-current assets 1,385,221 Subtotal 49,924,406 Total $ 55,349,004 Financial liabilities for hedging－non-derivatives $ 74,969,915 Financial liabilities measured at amortized cost Long-term borrowings (including current portion of long-term liabilities) 88,614,295 Bonds payable 3,871,341 Lease liabilities 464,323 Notes and accounts payable (including related parties) 5,092,224 Other payables (including related parties) 6,573,854 Subtotal 104,616,037 Total $ 179,585,952 Carrying amount Financial assets at fair value through profit or loss Money market funds $ 1,687,508 Convertible bonds with embedded derivatives 2,793 Subtotal 1,690,301 Financial assets at fair value through other comprehensive income Publicly traded stock 1,228,481 Non-publicly traded stock 1,726,966 Subtotal 2,955,447 Financial assets measured at amortized cost Cash and cash equivalents 31,075,156 Notes and accounts receivable, and other receivables (including related parties) 5,864,705 Other non-current assets 1,446,047 Subtotal 38,385,908 Total $ 43,031,656			2021.12.31	2021.12.31
		Level 1 1,390,560 - 1,390,560 3,384,443 - 3,384,443 - - - - 4,775,003 - - - - - - - -	Fair value
			Level 2 - 21,612 21,612 - - - - - - - 21,612 - 88,614,295 3,842,511 - - - 92,456,806 92,456,806 2020.12.31	Level 3 - - - - 627,983 627,983 - - - - 627,983 - - - - - - - -	Total 1,390,560 21,612
					1,412,172
					3,384,443 627,983
					4,012,426
					- - -
					-
					5,424,598
					-
					88,614,295 3,842,511 - - -
					92,456,806
					92,456,806
		Level 1 1,687,508 - 1,687,508 1,228,481 - 1,228,481 - - - - 2,915,989	Fair value
			Level 2 - 2,793 2,793 - - - - - - - 2,793	Level 3 - - - - 1,726,966 1,726,966 - - - - 1,726,966	Total 1,687,508 2,793
					1,690,301
					1,228,481 1,726,966
					2,955,447
					- - -
					-
					4,645,748

(Continued)

64

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

Financial liabilities for hedging－non-derivative Financial liabilities measured at amortized cost Long-term borrowings (including current portion of long-term liabilities) Bonds payable Lease liabilities Notes and accounts payable (including related parties) Other payables (including related parties) Liabilities related to non-current assets or disposal group classified as held for sale Subtotal Total			2020.12.31	2020.12.31
	Carrying amount $ 88,632,815 92,262,765 7,332,941 582,384 3,325,625 4,300,632 1,142 107,805,489 $ 196,438,304	Level 1 - - - - - - - - -	Fair value
			Level 2 - 92,264,702 7,389,131 - - - - 99,653,833 99,653,833	Level 3 - - - - - - - - -	Total -
					92,264,702 7,389,131 - - - -
					99,653,833
					99,653,833

• 2) Valuation techniques and assumptions used in fair value determination

• a) Non-derivative financial instruments

The fair value of financial instruments traded in an active market is based on the quoted market prices. The quotations, which is published by the main exchange center or that which was deemed to be a public bond by the Treasury Bureau of Central Bank, is included in the fair value of the listed securities instruments and the debt instruments in active markets with open bid.

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument. Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

For financial instruments traded in active markets, their fair values are listed below by types and attributes:

• The stocks of publicly traded companies are financial assets which are traded in active markets under standard terms and conditions. The fair value of the abovementioned stocks is based on quoted market prices.

Measurements of fair value of financial instruments without an active market are based on a valuation technique. Fair value measured by a valuation technique can be extrapolated from the fair value of similar financial instruments, the discounted cash flow method, or other valuation technique.

(Continued)

65

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

For financial instruments not traded in active markets, their fair values are listed below by types and attributes:

• Equity instruments with no quoted market prices: the Company takes the quote market prices and the price-book ratios of similar publicly traded companies into consideration by using the market comparison approach. The estimates had been adjusted by the depreciation from lack of market liquidity.

• b) Derivative financial instruments

Measurement of the fair value of derivative instruments is based on the valuation techniques generally accepted by market participants such as the discounted cash flow and option pricing models. Fair value of forward currency is usually determined by the forward currency exchange rate.

• 3) Transfers between Level 1 and Level 3

The Company hold an investment in equity shares of Evergreen Steel Corporation, which was classified as fair value through other comprehensive income. As of December 31, 2021 and 2020, the fair values amounted to $2,101,089 and $1,194,565, respectively. The fair value of the investment was previously categorized as Level 3 as of December 31, 2020 because the shares were not listed on an exchange and there were no recent observable arm’ s length transactions in the shares. In April 2021, Evergreen Steel Corporation list its shares on the exchange, and currently, they were actively traded in the market. Since the equity shares currently have a published price quotation in an active market, the fair value measurement was transfer from Level 3 to Level 1 of the fair value hierarchy. For year ended December 31, 2020, the fair value hierarchy levels of financial instruments were not transferred.

• 4)

• Movements in fair value measurements of financial assets in Level 3

The following table shows the reconciliation from the beginning balance to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

Balance as of January 1, 2021 Total gains or losses: Recognized in other comprehensive income Transfer out Balance as of December 31, 2021 Balance as of January 1, 2020 Total gains or losses: Recognized in other comprehensive income Balance as of December 31, 2020	Fair value through other comprehensive income Unquoted equity instruments $ 1,726,966 270,545 (1,369,528) $ 627,983 $ 1,568,986 157,980 $ 1,726,966

(Continued)

66

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The amounts of total gains or losses for the periods were recognized in unrealized gains (losses) from financial assets measured at fair value through other comprehensive income. As of December 31, 2021 and 2020, the assets which were still held by the Company were as follows:

Other comprehensive income (including in unrealized gains (losses) on financial assets measured at fair value through other comprehensive income)	2021 2020 $ 95,582 157,980

• 5) Quantitative information about the significant unobservable inputs used in the fair value measurements categorized within Level 3

The Company classified a partial of its financial assets at fair value through other comprehensive income investment in equity securities that do not have a quoted market price in an active market as Level 3 of the fair value hierarchy.

Most of the fair value measurements categorized within Level 3 use the significant unobservable inputs. The significant unobservable inputs are independent to each other.

The significant unobservable inputs were as follows:

Items Financial assets at fair value through other comprehensive income	Valuation techniques Market approach— relevant information generated by publicly companies	Significant unobservable inputs Relationship between significant unobservable inputs and fair value � Price-book ratio (as of December 31, 2021 and 2020 were 0.87~3.39 and 0.80~3.46, respectively) � Market liquidity discount rate (as of December 31, 2021 and 2020 were 80% of market price) � The higher the price-book ratio, the higher the fair value � The higher the market liquidity discount rate, the lower the fair value

• 6) Sensitivity analysis for fair value measurements categorized within Level 3 of the fair value hierarchy

The fair value measurements of the Company’ s financial instruments are reasonable. However, changes in the use of valuation models or valuation variables may affect the estimations. As of December 31, 2021 and 2020, for fair value measurements in Level 3, a fluctuation in the valuation variable by 5% would have the following effects:

Inputs Price-book ratio Market liquidity discount rate	Increase (decrease) 5% 5%	Effects of changes in fair value on other comprehensive income	Effects of changes in fair value on other comprehensive income
		Favorable 2021.12.31 2020.12.31 27,868 87,822 27,868 87,822	Unfavorable
		2021.12.31 27,868 27,868	2021.12.31 2020.12.31 (34,001) (84,196 (34,001) (84,196

(Continued)

67

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the inter-relationships with another input.

• (z) Management of financial risk

• (i) The Company is exposed to the nature and extent of the risks arising from financial instruments as below:

  • 1) Credit risk

  • 2) Liquidity risk

  • 3) Market risk

Detailed information about exposure risk arising from the aforementioned risk and the Company’s objective, policies and process for managing risks have been stated below. Further quantitative disclosures have been disclosed as notes to the financial statements.

• (ii) Risk management framework

The Company’s Board of Directors has responsibility for the oversight of the risk management framework. The Company’s inter-department management and committee, which consists of managers from all departments, is responsible for monitoring the Company’s risk management policies and reports regularly to the Board of Directors on its activities.

The Company’ s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The inter-department management and committee are reviewed regularly to reflect change in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company’s Audit Committee oversees how management monitors compliance with the Company’ s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Company. The Company’s Audit Committee is assisted in its oversight role by the internal auditor. The internal auditor reviews the risk controls and procedures, and reports the results on a regular or irregular basis to the Audit Committee.

• (iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to financial instruments fails to meet its contractual obligations and arises principally from the Company’s receivables from customers and investments in securities.

(Continued)

68

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

1) Notes and accounts receivable

The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer. In accordance with the Company’s credit policy, each customer is analyzed individually for creditworthiness, and is required to be a member of IATA clearing house. Otherwise, the customer will have to provide bank guarantees or collaterals before its credit terms and credit limit are offered. Credit limit is offered to each customer as the limit of transactions and is reviewed regularly.

The transaction amount of the majority of the Company’s customers is not significant, leading to an insignificant influence of loss from credit risk arising from single customer on the Company. The Company set up the forward-looking “expected credit loss” model to reflect the estimated impairment loss of notes and accounts receivable.

2) Investments

The credit risk exposure in the bank deposits, fixed income investments and other equity instruments are measured and monitored by the Company’s finance department. Since the Company’s transactions are with external parties with good credit standing, highly rated financial institutions, publicly traded stock companies and unlisted companies with good reputation, there are no non-compliance issues and therefore no significant credit risk.

3) Guarantees

As of December 31, 2021, the Company did not provide endorsements and guarantees.

(iv) Liquidity risk

Liquidity risk is a risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company approach to managing liquidity risk is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’ s reputation.

The Company’ s finance department monitors the needs for cash flows, and plans optional return from investments of idle capital. The Company aims to maintain the level of its cash and cash equivalents at an amount to cope with expected cash outflows on operation, including meeting its financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices that will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(Continued)

69

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company, primarily the TWD. The currencies used in these transactions are principally denominated in TWD, CNY, EUR, USD, and JPY.

The Company hedges its cash and cash equivalents, trade receivables from sales, trade payables to purchase and leases payments for aircraft denominated in a foreign currency. When necessary, the Company uses forward exchange contracts to hedge its currency risk. The financial department proactively collects information of currency to monitor the trend of currency rate and keeps connection with the foreign currency department of banks to collect the market information for securing the currency risk.

The Company determines the existence of an economic relationship between the hedging instruments and hedged item based on the currency, amount and timing of their respective cash flows. The Company assesses whether the derivative designated in each hedging relationship is expected to be and has been effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. For hedging foreign currency risk on the cash flow of aviation transportation with a highly probable forecast transaction, the foreign currency risk component of a non-derivative financial asset or a non-derivative financial liability may be designated as a hedging instrument provided.

In these hedge relationships, the main sources of ineffectiveness are：

• the effect of the counterparty and the Company’s own credit risk on the fair value of the forward foreign exchange contracts, which is not reflected in the change in the fair value of the hedged cash flows attributable to the change in exchange rates; and

• changes in the timing of the hedged transactions.

2) Interest rate risk

The Company adopts a policy of ensuring that its exposure to changes in interest rates on borrowings is on a fixed-rate basis, taking into account assets with exposure to changes in interest rates. This is achieved partly by entering into fixed-rate instruments and partly by borrowing at a floating rate and using interest rate swaps as hedges of variability in cash flows attributable to movements in interest rates.

The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, reprising dates and maturities and the notional or par amounts. The Company assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.

(Continued)

70

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

In these hedge relationships, the main sources of ineffectiveness are：

• the effect of the counterparty and the Company’s own credit risk on the fair value of the swaps which is not reflected in the change in the fair value of the hedged cash flows attributable to the change in interest rates; and

• differences in reprising dates between the swaps and the borrowings.

• 3) Other market price risk

The Company is exposed to equity price risk due to the investments in equity securities. This is a strategic investment and is not held for trading. The management of the Company monitors the combination of equity securities and open-market funds in its investment portfolio based on cash flow requirements. Material investments within the portfolio are managed on an individual basis, and all buy-and-sell decisions are approved by the Board of Directors.

• (aa) Capital management

The Board of Directors’ policy is to maintain a strong capital base to maintain the confidence of investors, creditors, and the market and to sustain future development of the business. The Board of Directors monitors the level of dividends to ordinary equity holders as well as future operation of the business.

The capital structure of the Company consists of net debt and equity. The net debt from the balance sheet is derived from the total borrowings less cash and cash equivalents. The total capital includes equity (ordinary share, capital surplus, retained earnings and other equity) and net debt.

As of December 31, 2021, there were no changes in the Company’s approach to capital management.

• (ab) Financing activities not affecting current cash flow

The Company’s financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

Bonds payable Long-term borrowings Lease liabilities and financial liabilities for hedging Total liabilities from financing activities Bonds payable Long-term borrowings Lease liabilities and financial liabilities for hedging Total liabilities from financing activities	2021.1.1 $ 7,332,941 92,262,765 89,215,199 $ 188,810,905 2020.1.1 $ 14,825,180 68,368,174 99,011,363 $ 182,204,717	Cash flows 741,710 (3,648,636) (13,523,358) (16,430,284) Cash flows (7,570,984) 23,891,530 (15,052,545) 1,268,001	Non-cash changes Interest expense Foreign exchange movement 28,168 - 166 - 2,213,057 (1,290,079) 2,241,391 (1,290,079) Non-cash changes	Non-cash changes Interest expense Foreign exchange movement 28,168 - 166 - 2,213,057 (1,290,079) 2,241,391 (1,290,079) Non-cash changes	Other (4,231,478) - (1,180,581) (5,412,059) Other 8,227 - 2,710,949 2,719,176	2021.12.31 3,871,341 88,614,295 75,434,238
						167,919,874
						2020.12.31 7,332,941 92,262,765 89,215,199
			Interest expense 70,518 3,061 3,107,395 3,180,974	Foreign exchange movement - - (561,963) (561,963)
						188,810,905

(Continued)

71

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(7) Related-party transactions

• (a) Names and relationship with the Company

The followings are the Company’s subsidiaries and entities that have transactions with the Company during the periods covered in the financial statements.

Names of related parties Relationship with the Company Evergreen Aviation Technologies Corp. The Company’s subsidiary Evergreen Airline Services Corp. The Company’s subsidiary Evergreen Sky Catering Corp. The Company’s subsidiary Evergreen Air Cargo Services Corp. The Company’s subsidiary Hsiang Li Investment Corp. The Company’s subsidiary Sky Castle Investment Ltd. The Company’s subsidiary Evergreen Airways Service (Macau) Ltd. The Company’s subsidiary PT Perdana Andalan Air Service The Company’s subsidiary EVA Flight Training Academy The Company’s subsidiary GE Evergreen Engine Services Corp. Associates Evergreen Security Corp. Associates EverFun Travel Services Corp. Associates Arport Air Cargo Terminal (Xiamen) Co., Ltd. Associates Arport Air Cargo Service (Xiamen) Co., Ltd. Associates Evergreen International S.A. Other related parties Evergreen International Corp. Other related parties Evergreen Marine Corp. (Taiwan) Ltd. Other related parties Evergreen International Storage & Transport Corp. Other related parties Evergreen Logistics Corp. Other related parties UNI Airways Corp. Other related parties Ever Accord Construction Corp. Other related parties Evergreen Steel Corp. Other related parties Evergreen Shipping Agency (Europe) GMBH SP. Other related parties Z O.O. Ever Shine (Shenzhen) Enterprise Management Other related parties Consulting Co., Ltd. Ever Shine (Shanghai) Enterprise Management Other related parties Consulting Co., Ltd. Evergreen Shipping Agency (Japan) Corporation Other related parties Evergreen Insurance Company Limited Other related parties Chang Yung-Fa Foundation Other related parties Chang Yung-Fa Charity Foundation Other related parties

(Continued)

72

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

Names of related parties	Relationship with the Company
Shun An Enterprise Corporation	Other related parties
Central Reinsurance Corporation	Other related parties
Taiwan Terminal Services Corporation Ltd.	Other related parties
Trade-Van Information Services Co.	Other related parties
Chung Hwa Express Corp.	Other related parties
Hsin Yung Enterprise Corporation	Other related parties
Super Max Engineering Enterprise Co., Ltd.	Other related parties
Ever Ecove Corporation	Other related parties
The management who's title is above Executive	The Company’ s key management personnel
Vice President

• (b) Significant transactions with related parties

• (i) Operating revenue

Significant sales to related parties of the Company were as follows:

Subsidiaries Associates Other related parties	2021 $ 54,381 5,033 1,402,341 $ 1,461,755	2020
		61,475 7,069 1,799,539
		1,868,083

Related parties leased aircraft from the Company. The rental is charged by actual flight hours and recorded under operating revenue.

The Company provided aviation transportation services. The transportation services and ticket prices provided to related party, which is travel agency, were the same as those provided to general travel agencies. The Company received collateralized notes for receivables from aforementioned related party. No expected credit loss was required after the assessment by the management.

The prices for sales to related parties are not materially different from those of the third-parties sales. The payment terms are within 1~3 months, which do not materially differ from those of third-party transactions. Besides aforementioned collateralized notes, receivables from related parties were uncollateralized, and no expected credit loss was required after the assessment by the management.

(Continued)

73

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(ii) Operating costs

Significant operating costs from transactions with related parties were as follows:

Subsidiaries Associates Other related parties	2021 $ 4,691,349 25,118 213,661 $ 4,930,128	2020
		5,149,343 24,230 309,599
		5,483,172

The prices for purchases from related parties transactions are not materially different from those of the third-party vendors. The payment terms are within 1~3 months, which do not materially differ from those of third-party transactions.

• (iii) Operating expenses

Significant operating expenses from transactions with related parties were as follows:

Subsidiaries Associates Other related parties	2021 $ 175,664 65,310 152,503 $ 393,477	2020
		149,217 100,702 170,913
		420,832

The prices for related parties transactions are not materially different from those of the thirdparty vendors. The payment terms are within 1~3 months, which do not materially differ from those of third-party transactions.

• (iv) Property transaction

• 1) Purchases of property, plant and equipment

The prices of property, plant and equipment purchased from related parties were summarized as follows:

Associates Other related parties	2021 $ 4 1,405 $ 1,409	2020
		3,153 12,038
		15,191

• 2) Disposals of property, plant and equipment

The disposals of property, plant and equipment to related parties were summarized as follows:

Subsidiaries	2021	2021	2020 Disposal price Gain from disposal 1,596 914 (Continued)	2020 Disposal price Gain from disposal 1,596 914 (Continued)
	Disposal price $ 435	Gain from disposal		Gain from disposal
		435		914
				(Continued)

74

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

3) Disposals of other assets

Relationship with the Company Other related parties The Company's key management personnel	Object Shares Shares	Number of shares 50,000 247,231	Disposal price Gain/Loss from Disposal 3,100 (Note) 15,328 (Note)

Note: In order to prepare for the listing of the subsidiary, EGAT, the Company disposed the shares of EGAT to other related parties and the key management personnel in 2021. Gains from disposal of the above transaction were recognized under capital surplus. There was no such transaction for the year ended December 31, 2020. The release of EGAT's shares, please refer to note 6(i).

(v) Leases

The Company rented its offices from other related enterprise. For the years ended December 31, 2021 and 2020, the Company recognized the amount of $1,671 and $2,046, respectively, as interest expense. As of December 31, 2021 and 2020, the balance of lease liabilities amounted to $88,891 and $65,590, respectively.

(vi) Receivables from related parties

Receivables from related parties of the Company were as follows:

Account Class of related parties Notes receivables EverFun Travel Services Corp. Accounts receivable Subsidiaries Accounts receivable Associates Accounts receivable Other related parties Subtotal Other receivables Subsidiaries Other related parties Other receivables UNI Airways Corp. Other receivables Evergreen Insurance Company Limited Other receivables Other related parties Subtotal Total	2021.12.31 $ - 5,961 2 118,268 124,231 9,039 130,292 27,602 10 166,943 $ 291,174	2020.12.31
		840 3,827 2,209 110,635
		117,511
		6,173 138,028 82,470 44
		226,715
		344,226

(Continued)

75

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

• (vii) Payables to related parties

Payables to related parties of the Company were as follows:

Account Notes payable Accounts payable Accounts payable Accounts payable Accounts payable Subtotal Other payables Other payables Other payables Subtotal Total	Class of related parties	2021.12.31 $ 826 465,506 388,215 6,466 15,270 876,283 44,914 10,181 37,810 92,905 $ 969,188	2020.12.31
	Trade-Van Information Services Co. Subsidiaries Evergreen Aviation Technologies Corp. Other Subsidiaries Associates Other related parties Subsidiaries Associates Other related parties		- 471,879 346,787 6,397 10,204
			835,267
			51,199 12,388 46,175
			109,762
			945,029

(c) Key management personnel compensation

Key management personnel compensation comprised the following:

Short-term employee benefits Post-employment benefits	2021 $ 71,871 2,090 $ 73,961	2020
		61,165 3,148
		64,313

(8) Pledged assets

The carrying amounts of the pledged assets were as follows:

Pledged assets Object Property, plant, and equipment Long-term borrowings Time deposit－included in other non-current assets Letters of credit and contract performance guarantees	Object	2021.12.31 $ 79,394,889 316,997 $ 79,711,886	2020.12.31
			80,117,104 392,790
			80,509,894

(Continued)

76

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

(9) Significant contingent liabilities and unrecognized commitments

• (a) Significant contingent liabilities: None.

• (b) Significant commitments:

• (i) In November 2015, the Company entered into aircraft purchase contracts with Boeing Company for eighteen Boeing 787-10 aircraft. In August 2020, the Company made amendments to the contracts and changed seven Boeing 787-10 aircraft (not yet delivered) into four Boeing 787-9 aircraft and three Boeing 777 freighters at a price of US$6,444,000. As of December 31, 2021, eleven Boeing aircraft had not yet been delivered by Boeing Company. The Company has partially prepaid the price of $10,678,815, which was included in other noncurrent assets.

• (ii) Unused letters of credit for the Company were as follows:

Unused letters of credit	2021.12.31 $ 2,078,001	2020.12.31
		2,216,261

(10) Losses due to major disasters: None.

(11) Subsequent events: None.

(12) Other

(a) A summary of personnel expenses, depreciation and amortization expenses, by function, is as follows:

follows:
By function By item	2021			2020
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Personnel expenses Salaries Labor and health insurance Pension Remuneration of directors Others Depreciation (Note) Amortization	7,529,044 454,010 442,851 - 1,227,059 25,449,544 -	4,441,094 316,384 245,187 18,502 421,748 823,177 213,310	11,970,138 770,394 688,038 18,502 1,648,807 26,272,721 213,310	6,936,025 447,590 452,176 - 1,651,465 24,742,607 -	4,247,404 327,241 264,396 9,682 463,185 858,929 240,530	11,183,429 774,831 716,572 9,682 2,114,650 25,601,536 240,530

• Note: For the years ended December 31, 2021 and 2020, the depreciation expenses recognized were $26,460,014 and $25,763,420, respectively, less deferred gains of $16,329 and $16,328, respectively, and subsidy and rent concession of $170,964 and $145,556, respectively.

(Continued)

77

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (b) COVID-19 outbreak since early 2020 has brought about additional uncertainties in the Company’s operating environment at each destination around the globe and has impacted the Company’ s operations, including cancellation or restriction of flights. Facing the impact of the pandemic, the Company continuously reviews its flight status, implements flight suspensions and raises the daily utilization rates of its freighters, in order to maximize its operating revenue. Meanwhile, the Company simplified its service and selling process, reduced personnel cost, postponed unnecessary capital expenditures, as well as performed other cost-controlling activities. The Company has applied for operating and interest subsidies from the government. Notably, the Company has received a government bailout loan amounting to $29.66 billion. In addition, the Company has also acquired additional loans from banks, and will raise fund timely from capital market, in order to meet the future demand of working capital.

• (c) As of December 31, 2021 and 2020, the additional information for employee numbers and employee benefits were as follows:

Employee numbers Directors numbers without serving concurrently as employee Average employee benefits Average employee salaries Average adjustment rate of employee salaries Supervisor’s remuneration

• (d) The information of the Company’s salary and remuneration policy (including directors, managers and employees) are as follow:

• (i) The principle of remuneration policy

The Company’ s remuneration policy is determined by the natures of each position, the Company’ s operating performance, industry average, economic variables, government regulations as well as future operating risks, and is formulated based on the principles of fairness, reasonableness, balance, and incentives. There is no issue on age, gender, race, religion, political stance, marital status, union affiliation etc.

(ii) Remuneration policy

The Company determines the job title based on the organizational structure, business categories and job natures. It considers internal and external factors according to each position, except for the positions of chairman and vice chairman, to set upper and lower limits as the salary assessment standard for each position.

(Continued)

78

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (iii) Remuneration portfolios of directors and managers

The directors’ remuneration is stipulated according to the Company’s articles of incorporation, authorizing the Board of Directors to determine the remuneration by its participation and contribution, as well as that of other company’s data. The remuneration of managers is handled in accordance with the "Payment Regulation of Managers" of the Company. The remuneration of directors and managers are stipulated by Remuneration Committee of the Company and should be approved by Board of Directors. The bonus would be considered and distributed based on the operation results of the Company and each individual performance.

• (iv) Remuneration composition of employees

Fixed remuneration :

The employees’ fixed remuneration, including salary and allowances, is based on the Company’s salary structure standard for each position; also, the employees salary raise will be based on their working performance assessment and the Company’ s overall annual salary policy.

Variable remuneration :

• 1) Year-end bonus : In order to motivate employees, year-end bonus is distributed based on each year’s operating performance and employee contribution.

• 2) Employee remuneration : According to the Company’s articles of incorporation, if the Company incurs profit in a fiscal year, the earnings shall first be used to offset against any deficit, then, a portion of the remainder, if any, will be distributed as employee remuneration.

(13) Other disclosures

• (a) Information on significant transactions

The followings were the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for the year ended December 31, 2021:

• (i) Financings provided: None.

• (ii) Guarantee and Endorsement provided: None.

• (iii) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures): Please see Table 1 attached.

• (iv) Accumulated buying/selling of the same marketable securities for which the dollar amount at least $300 million or 20% of paid-in capital: Please see Table 2 attached.

• (v) Acquisition of real estate for which the dollar amount at least $300 million or 20% of paid-in capital: None.

(Continued)

79

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

• (vi) Disposition of real estate for which the dollar amount at least $300 million or 20% of paid-in capital: None.

• (vii) Total purchases from or sales to related parties with the dollar amount at least $100 million or 20% of paid-in capital: Please see Table 3 attached.

• (viii) Accounts receivable from related parties for which the dollar amount at least $100 million or 20% of paid-in capital: Please see Table 4 attached.

• (ix) Derivative transactions: Please refer to note 6(c) for related information.

• (b) Information on investees:

The followings are the information on investees for the year ended December 31, 2021 (excluding investees in Mainland China): Please see Table 5 attached.

• (c) Information on investment in Mainland China: Please see Table 6 attached.

• (d) Major shareholders:

(in shares)

Shareholding Shareholder’s Name	Shares	Percentage
Evergreen Marine Corp.(Taiwan)Ltd.	776,541,111	% 14.97
Evergreen International Corp.	549,262,304	% 10.59
Falcon Investment Services Ltd.	480,386,482	% 9.26

(14) Segment information

Please refer to the consolidated financial statements for the year ended December 31, 2021.

(Continued)

80

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Table 1 Marketable Securities Held (excluding investments in subsidiaries, associates and joint ventures) (December 31, 2021)

(in shares)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2021	December 31, 2021		Notes
				Shares/Units	Book value	Percentage of ownership	Fair value
The Company 〃 〃 〃 Evergreen Air Cargo Services Corp. 〃 〃 The Company 〃 〃 〃 〃 〃 〃 Evergreen Airline Services Corp. 〃 Hsiang Li Investment Corp. Evergreen Airways Service (Macau) Ltd.	Jih Sun Money Market Fund FSITC Taiwan Money Market Fund FSITC Money Market Fund Taishin 1699 Money Market Fund Mega Diamond Money Market Fund UPAMC James Bond Money Market Fund Eastspring Investments Well Pool Money Market Fund Shares of Everest Investment Holdings Ltd. Shares of Trade-Van Information Services Co. Shares of Central Reinsurance Corporation Shares of UNI Airways Corp. Shares of Evergreen Steel Corp. Shares of Chung Hwa Express Corp. Star Alliance Services Gmbh Shares of Evergreen Marine Corp.(Taiwan) Ltd. Shares of Evergreen International Storage & Transport Corp. Shares of Central Reinsurance Corporation Shares of Air Macau Co., Ltd.	None None None None None None None None Other related party Other related party Other related party Other related party Other related party None Other related party Other related party Other related party None	Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through profit or loss－current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current Financial assets at fair value through other comprehensive income－non-current	45,187,711 12,995,958 2,564,182 3,666,549 9,195,459 9,038,306 899,487 231,580 8,502,418 28,630,008 37,606,277 38,201,625 1,000,000 1 557,349 158,800 2,740,542 500	677,233 201,065 462,109 50,153 116,576 152,497 12,359 1,671,992 21,459 434,474 848,880 559,205 2,101,089 40,780 6,539 79,422 4,653 81,257 68 4,177,826	- - - - - - - 2.11 5.67 4.85 9.98 9.10 10.00 4.55 0.01 0.01 0.46 0.0024	677,233 201,065 462,109 50,153 116,576 152,497 12,359 1,671,992 21,459 434,474 848,880 559,205 2,101,089 40,780 6,539 79,422 4,653 81,257 68 4,177,826

(Continued)

81

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Table 2 Accumulated buying/selling of the same marketable securities for which the dollar amount at least $300 million or 20% of paid-in capital (December 31, 2021)

(in shares)

(Decemb	er 31, 2021)	er 31, 2021)													(in shares)	(in shares)
Company Name	Marketable Securities Type and Name		Financial Statement Account	Counter-party	Relationship with the Company	Beginning Balance		Acquisition		Disposal					Ending Balance
						Shares/ Units	Amount	Shares/ Units	Amount	Shares/ Units	Amount	Book value	Gain/ Loss on Disposal (Note 1)	Other adjustments (Note 2)	Shares/ Units	Amount
The Company	Equity	Evergreen Aviation Technologies Corp.	Investments accounted for using equity method	Shareholders or Specific person	-	7,744,694	-	-	51,204,000	3,202,602	1,415,534	1,794,534	162,282	228,985,241	6,166,878	-

Note 1: Gain and loss is recognized under capital surplus.

Note 2: Exchange differences on subsidiaries and associates accounted for using equity method, share of profit or loss of subsidiaries accounted for using equity method and remeasurements of the defined benefit plans, etc.

(Continued)

82

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

Table 3 Total purchases from or sales to related parties with the dollar amount at least $100 million or 20% of paid-in capital (December 31, 2021)

(December 31, 20	21)
Company Name	Related Party	Relationship	Transaction Details				Abnormal	Transaction	Notes/Accounts Receivable (Payable)		Notes
			Purchases/Sales	Amount	Percentage of Total Purchases/Sales	Payment Terms	Unit Price	Payment Terms	Balance	Percentage of Total Accounts/ Notes Receivable (Payable)
The Company 〃 〃 〃 〃 〃 Evergreen Airline Services Corp. 〃 Evergreen Aviation Technologies Corp. 〃 〃 Evergreen Sky Catering Corp. Evergreen Air Cargo Services Corp.	UNI Airways Corp. Evergreen Logistics Corp. Evergreen Airline Services Corp. Evergreen Sky Catering Corp. Evergreen Aviation Technologies Corp. Evergreen Air Cargo Services Corp. The Company UNI Airways Corp. The Company GE Evergreen Engine Services Corp. UNI Airways Corp. The Company The Company	Other related party Other related party The company's subsidiary The company's subsidiary The company's subsidiary The company's subsidiary Parent company Other related party Parent company Associate Other related party Parent company Parent company	Sales Sales Purchases Purchases Purchases Purchases Sales Sales Sales Sales Sales Sales Sales	952,900 440,906 1,337,183 285,727 2,748,524 405,861 1,337,183 143,114 2,749,445 415,577 317,198 285,727 405,861	1.00 0.46 1.72 0.37 3.54 0.52 80.34 8.60 28.59 4.32 3.30 45.41 24.21	60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 60 days 30 days 60 days 60 days 60 days	- - - - - - - - - - - - -		117,524 - (277,393) (34,401) (465,506) (71,356) 287,342 26,173 466,359 48,890 94,340 41,491 75,365	1.35 - 5.45 0.68 9.14 1.40 84.22 7.67 28.52 2.99 5.77 39.53 40.87

(Continued)

83

EVA AIRWAYS CORP. Notes to the Parent-Company-Only Financial Statements

Table 4 Accounts receivable from related parties for which the dollar amount at least $100 million or 20% of paid-in capital (December 31, 2021)

(December 31, 2021)
Company Name	Related Party	Relationship	Balance of Receivables from Related Party	Turnover Rate	Past - due Receivables from Related Party		Amounts Received in Subsequent Period	Allowances for Impairment Loss
					Amount	Action taken
The Company Evergreen Airline Services Corp. Evergreen Aviation Technologies Corp.	UNI Airways Corp. The Company The Company	Other related party Parent company Parent company	247,816 302,954 467,401	(Note) 4.85 5.84	- - -		247,816 302,954 467,401	- - -

Note: Accounts receivable and revenue were not directly correlated because of the particular industry characteristics, and therefore, the turnover rate was not applicable.

(Continued)

84

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Table 5 Information on investees (excluding investees in Mainland China)

(For the year ended December 31, 2021)

(in shares)

Name of investor	Name of investee	Location	Main Businesses and Products	Initial Investment Amount	Initial Investment Amount	Ending Balance	Ending Balance	Ending Balance	Net Income (Losses) of Investee	Share of Profit (Losses) of Investee	Notes
				December 31, 2021	December 31, 2020	Shares	Ratio of Shares	Book Value
The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company The Company Evergreen Aviation Technologies Corp. Evergreen Aviation Technologies Corp. Evergreen Aviation Technologies Corp. Evergreen Airways Service (Macau) Ltd.	Sky Castle Investment Ltd. Evergreen Airways Service (Macau) Ltd. PT Perdana Andalan Air Service EVA Flight Training Academy Evergreen Aviation Technologies Corp. Evergreen Airline Services Corp. Evergreen Sky Catering Corp. Evergreen Air Cargo Services Corp. Hsiang Li Investment Corp. Evergreen Security Corp. EverFun Travel Services Corp. GE Evergreen Engine Services Corp. Spirit Evergreen Aftermarket Solutions Co., Ltd. Ever Superior Technologies Corporation Menzies Macau Airport Services Ltd.	Maystar Chambers, P.O. Box 3269, Apia, Samoa 398 Alameda Dr. Carlos D' Assumpcao.Edif CNAC 3 Andar K-M Macau 10/F, Gedung Mega Plaza Jl. H.R Rasuna Said Kav. C-3 Jakarta 12920 Indonesia 3745 Whitehead Street Mather, CA, 95655, USA No.6 Hangzhan S.Rd., Dayuan Dist., Taiwan Taoyuan Int'L Airport, Taoyuan City, Taiwan No.608 Hangzhan N.Rd., Taiwan Taoyuan Int'L Airport, Dayuan Dist., Taoyuan City, Taiwan No.3, Hangqin N. Rd., Dayuan Dist., Taoyuan City, Taiwan No.8-1, Hangqin N. Rd., Dayuan Dist., Taoyuan City, Taiwan 1F, No. 117, Sec. 2, Chang An E. Rd., Taipei 104 Taiwan 4-5F., No. 111, Songjiang Rd., Zhongshan Dist., Taipei City 104, Taiwan 3F., No. 100, Sec. 2, Chang An E. Rd., Zhongshan Dist., Taipei City 104, Taiwan(R.O.C) No.8 Hangzhan S.Rd., Taiwan Taoyuan Int'L Airport, Dayuan Dist., Taoyuan City, Taiwan 3F., No. 528, Sec. 1, Chenggong Rd., Guanyin Dist., Taoyuan City, Taiwan 2F., No. 528, Sec. 1, Chenggong Rd., Guanyin Dist., Taoyuan City, Taiwan Airport Logistic Business Center Room 52 Macau International Airport Avenida do Aeroporto, Taipa, Macau	Investment business Investment business Traveling agency Flight training school Maintenance, manufacturing, processing and sales of aircraft, engine and parts Aviation ground service The provision of in-flight meals in sky catering and the sales of food Air cargo entrepot Investment business Security services Traveling agency Maintenance, manufacturing, and sales of aircraft, engine and engine components Maintenance, manufacturing, and sales of aircraft, engine and components Metal surface chemical treatment business Ground handling	179,173 327 5,086 932,050 - 111,181 498,000 740,348 448,280 25,000 55,061 2,032,845 13,695 63,000 8,032	179,173 327 5,086 932,050 - 111,181 498,000 740,348 448,280 25,000 55,061 2,032,845 - - 8,032	5,500,000 None 40,800 10,000,000 228,985,241 36,183,106 76,557,790 72,750,000 2,680,000 6,336,000 4,164,226 203,284,545 1,369,516 6,300,000 None	% 100.00 % 99.00 % 51.00 % 100.00 % 64.90 % 56.33 % 49.80 % 60.625 % 100.00 % 31.25 % 26.48 % 49.00 % 49.00 % 35.00 % 20.00	397,397 101,544 18,453 602,516 6,166,878 911,086 1,844,479 1,617,763 91,578 113,084 22,046 1,511,715 12,314 58,420 95,804	32,142 20,490 3,564 (40,554) 880,785 22,392 (509,462) 338,677 3,293 35,223 (74,597) 85,094 (2,819) (13,087) 105,543	32,142 20,286 1,818 (40,554) 698,354 12,613 (253,712) 205,323 3,293 11,007 (19,753) 41,696 (1,381) (4,581) 21,109	(Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 2) (Note 2) (Note 3) (Note 3) (Note 3) (Note 3)

Note1: List of subsidiaries of the Company. Note2: Investments were accounted for using equity method. Note3: Investments of subsidiaries of the Company were accounted for using equity method.

(Continued)

85

EVA AIRWAYS CORP.

Notes to the Parent-Company-Only Financial Statements

Table 6 Information on investment in Mainland China

(December 31, 2021)

1. Information on Investment in Mainland China:

Investee Company	Main Business and Products	Total Amount of Paid-in Capital (CNY in Thousands)	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2021	Investme	nt Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2021	Net Income (Losses) of Investee	Direct/Indirect Shareholding (%) by the Company	Share of Profits/Losses (Note 2)	Carrying Amount as of December 31, 2021	Accumulated Inward Remittance of Earnings as of December 31, 2021
					Outflow	Inflow
Arport Air Cargo Terminal (Xiamen) Co., Ltd. Arport Air Cargo Service (Xiamen) Co., Ltd.	Forwarding and storage of air cargo Forwarding and storage of air cargo, truck freight transportation, other transportation auxiliary industry	CNY 254,480 CNY 14,000	2 2	138,784 61,418	- -	- -	138,784 61,418	130,704 102,780	14.00 % 14.00 %	18,299 14,389	258,837 137,562	106,670 58,498

(Note 1) Ways to Invest in Mainland China:

• 1.Investment in Mainland China companies by remittance through a third region.

• 2.Investment in Mainland China companies through a company invested and established in a third region.

• 3.Investment in Mainland China companies through an existing company established in a third region.

• 4.Direct investment in Mainland China.

• 5.Other methods of investing in Mainland China. EX：Entrusted investment.

• (Note 2) The financial statements of the investee company were audited by the global accounting firm in a cooperation with R.O.C. accounting firm. The Company recognized share of profit of associates accounted for using equity method by how many shares the Company holds.

• (Note 3) The investment in Shanghai Airlines Cargo Intl.Co., Ltd was authorized by the Investment Commission. The amount of investment was $748,721 (USD23,361 thousand dollars). Shanghai Airlines Cargo Intl.Co., Ltd has completed liquidation process in July, 2014.

(Note 4) The investment in China Cargo Airlines Co., Ltd was authorized by the Investment Commission. The amount of investment was $1,453,728 (USD50,337 thousand dollars). China Cargo Airlines Co.,Ltd has completed shares transfer in January, 2016

2. Limitation on investment in Mainland China:

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2021 (USD in Thousands)	Investment Amounts Authorized by Investment Commission, MOEA (Note) (USD in Thousands)	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
NTD 2,402,651 (USD 79,781 )	NTD 2,456,862 (USD 80,562 )	55,624,414

Note：Investment amounts in Mainland China were translated to TWD at the exchange rates of the dates of the remittance;

investment amounts authorized by Investment Commission, MOEA were translated to TWD at the exchange rates of the dates of the authorization.

1. Significant transactions：None.

86

EVA AIRWAYS CORP.

Statement of cash and cash equivalents

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

	Item		Amount
Cash on hand		$	12
Petty cash			74,831
Demand deposit			3,217,786
Check deposit			104,183
Time deposit (Note)			36,167,098
Total		$	39,563,910

Note: the period of time deposit was 1~3 months; the range of interest rate was 0.22%~2.8%.

－ Statement of financial assets at fair value through profit or loss current and non-current

(Expressed in Thousands of New Taiwan Dollars/Units)

(1) Money Market Fund

Name of financial instrument Description Jih Sun Money Market Fund Monetary Market Fund／ Issued by Jih Sun Securities Investment Trust Co.,Ltd. FSITC Taiwan Money Market Fund Monetary Market Fund／ Issued by First Securities Investment Trust Co., Ltd. FSITC Money Market Fund Monetary Market Fund／ Issued byFirst Securities Investment Trust Co., Ltd. Taishin 1699 Money Market Fund Monetary Market Fund／ Issued by Taishin Securities Investment Trust Co.,Ltd.			Book Value		Total amount 677,233 201,065 462,109 50,153 1,390,560	Fair value	Fair value
	Units 45,188 12,996 2,564 3,667	Unit price (dollar)	Acquisition cost $ 670,416 200,000 460,023 50,000 $ 1,380,439	Gains on valuation 6,817 1,065 2,086 153 10,121		Unit price (dollar) 14.99 15.47 180.22 13.68	Total amount 677,233 201,065 462,109 50,153
		14.84 15.39 179.40 13.64
							1,390,560

(2) Others

Name of financial instruments

Convertible bonds with embedded derivatives

		Amount
	$	21,612

87

EVA AIRWAYS CORP.

Statement of accounts receivable

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

	Item		Amount
A Company		$	1,827
B Company			1,785
C Company			1,701
Total		$	5,313

Statement of accounts receivable

Item		Amount
Others (Note 1)	$	8,593,717
Less: allowance for impairment		(10,139)
Total	$	8,583,578

Note 1: The amount of individual client included in others did not exceed 5% of the account balance.

88

EVA AIRWAYS CORP.

Statement of inventories

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Aircraft spare parts Consumables for use and merchandise for in-flight sales Fuel for aircraft and others Subtotal Less: Loss on valuation of inventories Total	Cost $ 931,962 1,073,591 26,271 2,031,824 (862,146) $ 1,169,678		Net realizable value
			328,063 985,044 26,271 1,339,378

Statement of other current assets

Items Prepaid expenses: Tax overpaid retained for offsetting the future tax payable Prepaid tax Others Subtotal Other current assets－others: Receivables for payment on behalf of others Others Subtotal Other receivables: Other receivable－related parties Others Subtotal Total	Amount
	$ 37,278 19,096 139,855 196,229 $ 49,068 14,058 63,126 $ 166,943 95,210 262,153 $ 521,508

89

EVA AIRWAYS CORP.

Statement of changes in financial assets at fair value through － other comprehensive income non-current

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars/ Shares)

Name of financial instrument Share Share Share Share Share Share Share	Description Everest Investment Holdings Ltd. Trade-Van Information Services Co. Central Reinsurance Corporation UNI Airways Corp. Evergreen Steel Corp. Chung Hwa Express Corp. Star Alliance Services Gmbh	Beginning balance Share Fair value Note 1 $ 19,702 8,502 429,372 35,203 799,109 37,606 470,830 38,202 1,194,565 1,000 34,800 - 7,069 $ 2,955,447	Addition Share Amount - - - - - - - - - - - - - - -	Decrease Unrealized gains (losses) from financial assets measured at fair value through other comprehensive Share Amount income - - 1,757 - - 5,102 (6,573) (238,711) 288,482 - - 88,375 - - 906,524 - - 5,980 - - (530) (238,711) 1,295,690	Ending balance Share Fair value Collateral Note 1 21,459 None 8,502 434,474 None 28,630 848,880 None 37,606 559,205 None 38,202 2,101,089 None 1,000 40,780 None - 6,539 None 4,012,426	Ending balance Share Fair value Collateral Note 1 21,459 None 8,502 434,474 None 28,630 848,880 None 37,606 559,205 None 38,202 2,101,089 None 1,000 40,780 None - 6,539 None 4,012,426
		Share Note 1 8,502 35,203 37,606 38,202 1,000 -	Share - - - - - - -	Share - - (6,573) - - - -	Share
					Note 1 8,502 28,630 37,606 38,202 1,000 -

Note 1: Including 211 thousand shares of common stock and 21 thousand shares of preferred stock.

90

EVA AIRWAYS CORP.

Statement of changes in investments accounted for using the equity method

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars/ Shares)

Name	Beginning balance	Beginning balance	A	d	dition	De	c	rease		Exchange differences on translation of investee’s financial statement	Unrealized gains (losses) on financial instrument	Unrealized gains (losses) on financial instrument		Capital surplus		Remeasurements of the net defined benefit plans		Ending balance	Ending balance		Marke net ass	t price or ets value Amount Collateral 397,397 None 101,544 None 18,453 None 602,516 None 6,314,340 None 911,086 None 1,844,479 None 1,617,763 None 91,578 None 113,084 None 22,046 None
																		Amount	Share holdings (%)	Shares	Unit price
Sky Castle Investment. Ltd. Evergreen Airways Service (Macau) Ltd. PT Perdana Andalan Air Service EVA Flight Training Academy Evergreen Aviation Technologies Corp. (Note 1) Evergreen Airline Services Corp. Evergreen Sky Catering Corp. Evergreen Air Cargo Services Corp. Hsiang Li Investment Corp. Evergreen Security Corp. EverFun Travel Service Corp. (Note 2) Total	Shares	Amount	Shares		Amount	Shares		Amount
	5,500 No issue 41 10,000 280,189 36,183 76,558 72,750 2,680 6,336 5,505	$ 369,047 99,521 15,375 661,164 7,744,694 870,451 2,098,549 1,551,997 71,222 114,257 41,650 $ 13,637,927	- - - - - - - - - - -		32,142 20,286 1,818 - 710,151 12,613 - 205,323 3,293 11,007 - 996,633	- - - - (51,204) - - - - - (1,341)		- (11,702) - (40,554) (4,043,169) - (253,712) (130,950) (1,984) (9,504) (19,753) (4,511,328)		(3,792) (5,438) - (18,094) (7,760) - - - - - - (35,084)		- (1,123) - - - 32,770 - - 19,047 - - 50,694		- - - - 1,777,269 - - - - - - 1,777,269		- - 1,260 - (14,307) (4,748) (358) (8,607) - (2,676) 149 (29,287)		397,397 101,544 18,453 602,516 6,166,878 911,086 1,844,479 1,617,763 91,578 113,084 22,046 11,886,824	100 99 51 100 64.90 56.33 49.80 60.625 100 31.25 26.48	5,500 No issue 41 10,000 228,985 36,183 76,558 72,750 2,680 6,336 4,164	- - - - - - - - - - -

Note 1: The release of the shares of EGAT held by the Company was resolved in the shareholders’ meeting of the Company on July 16, 2021. Please refers to Financial Statement Note 6 (i).

Note 2: On July,2021, a resolution was approved during the shareholder's meeting of EverFun Travel Service Corp. for the capital reduction for cover accumulated deficits. The Company reduced 1,341 thousand shares of EverFun Travel Service Corp..

91

EVA AIRWAYS CORP.

Statement of accounts payable

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item E Company F Company G Company Others (Note 1)	Amount
	$ 748,778 644,861 440,590 2,381,712 $ 4,215,941

Note 1: The amount of individual vendor included in others did not exceed 5% of the account balance.

Statement of other payables

Item Airport fee payable Salary and wage payable Other maintenance payable Others (Note 1) Total	Amount
	$ 684,889 1,122,983 2,891,303 1,874,679 $ 6,573,854

Note 1: The amount of each item in others did not exceed 5% of the account balance.

92

EVA AIRWAYS CORP.

－ Statement of contract liablities current and

other current liabilities

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Contract liablities－current: Deferred ticket services, customer loyalty program and others Other current liabilities: Restoration obligations Others Total	Amount
	$ 5,036,826 $ 2,069,286 46,124 $ 2,115,410

Statement of bonds payable

The fifth convertible bond Less: Current portion	Issue Date 2021/09	Repayment method Loan principal repay on the 5th year at expiry date.	Total issue 2021.12.31 5,000,000 $ 3,871,341 - $ 3,871,341

93

EVA AIRWAYS CORP.

Statement of long-term borrowings (1)

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Bank Mortgage loan: Land construction mortgage loan Bank of Taiwan Land construction mortgage loan KGI Bank Subtotal Aircraft mortgage loan Hua Nan Commercial Bank Aircraft mortgage loan Bank of Taiwan Aircraft mortgage loan Mega International Commercial Bank Aircraft mortgage loan Chang Hwa Commercial Bank Aircraft mortgage loan Hua Nan Commercial Bank Aircraft mortgage loan Bank of Taiwan Aircraft mortgage loan Cathay United Bank Aircraft mortgage loan Mega International Commercial Bank Aircraft mortgage loan E.SUN Bank Aircraft mortgage loan Bank of Taiwan Aircraft mortgage loan Chang Hwa Commercial Bank Aircraft mortgage loan Taiwan Business Bank Aircraft mortgage loan Bank of Taiwan Aircraft mortgage loan Bank of Taiwan Aircraft mortgage loan Yuanta Commercial Bank Aircraft mortgage loan Hua Nan Commercial Bank Aircraft mortgage loan Sunny Bank Aircraft mortgage loan Chang Hwa Commercial Bank Aircraft mortgage loan Bank of Taiwan Aircraft mortgage loan Mega International Commercial Bank Aircraft mortgage loan Land Bank of Taiwan Subtotal	Interest 1.10%~1.10% 1.08%~1.08% 1.18%~1.18% 1.12%~1.13% 1.18%~1.18% 1.18%~1.18% 1.18%~1.18% 1.12%~1.13% 1.02%~1.02% 1.03%~1.03% 0.97%~0.97% 1.10%~1.10% 1.08%~1.08% 1.03%~1.03% 1.00%~1.00% 1.00%~1.00% 1.00%~1.00% 1.00%~1.00% 1.10%~1.10% 1.08%~1.08% 1.15%~1.15% 1.15%~1.15% 1.15%~1.15%	Period 2020/09/26~2027/09/26 2020/12/31~2027/12/31 2014/05/21~2026/05/21 2014/06/25~2026/06/25 2015/03/27~2027/03/27 2015/09/30~2027/09/30 2015/10/27~2027/10/27 2016/08/30~2028/08/30 2017/09/22~2029/09/22 2017/12/28~2029/12/28 2018/02/23~2030/02/23 2018/06/29~2030/06/29 2018/12/11~2030/12/11 2019/01/30~2031/01/30 2019/06/25~2031/06/25 2019/08/15~2031/08/15 2019/09/25~2031/09/25 2019/12/27~2031/12/27 2020/07/29~2024/07/28 2020/11/24~2032/11/24 2020/12/17~2025/12/17 2021/02/26~2026/02/26 2021/03/08~2026/03/08	Amount	Amount
			$ 5,250,000 1,674,000 6,924,000 1,554,750 1,494,750 1,369,608 1,957,000 1,979,500 2,864,750 2,121,800 2,116,667 2,833,333 2,648,458 3,084,750 3,166,667 3,144,262 2,714,167 2,954,167 2,913,333 1,000,000 3,046,083 1,120,000 1,500,000 2,000,000 47,584,045
				6,924,000
				1,554,750 1,494,750 1,369,608 1,957,000 1,979,500 2,864,750 2,121,800 2,116,667 2,833,333 2,648,458 3,084,750 3,166,667 3,144,262 2,714,167 2,954,167 2,913,333 1,000,000 3,046,083 1,120,000 1,500,000 2,000,000
				47,584,045

94

EVA AIRWAYS CORP.

Statement of long-term borrowings (2)

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Bank Medium and long- term credit loan Mega International Commercial Bank Cathay United Bank Far Eastern Int’l Bank Bank of Taiwan Bank SinoPac Bank of Kaohsiung The Export-Import Bank of Republic of China Agricultural Bank of Taiwan DBS Bank (Taiwan) Ltd. Bank of Communications Co., Ltd Bank of China Limited Chang Hwa Commercial Bank O-Bank First Commercial Bank Bank of Taiwan and other bank group (Note 1) Hua Nan Commercial Bank The Export-Import Bank of Republic of China Bank of Taiwan Mega International Commercial Bank Land Bank of Taiwan CTBC Bank Co., Ltd First Commercial Bank Bank of Taiwan and other bank group (Note 1) Subtotal Total Less: Current portion Total	Interest 1.03%~1.03% 0.98%~0.98% 1.07%~1.12% 1.03%~1.03% 0.98%~0.98% 1.08%~1.08% 0.96%~0.96% 0.96%~0.96% 0.93%~0.93% 0.93%~0.93% 0.98%~0.98% 1.03%~1.03% 0.96%~0.96% 0.94%~0.94% 1.05%~1.16% 1.18%~1.18% 1.14%~1.14% 1.15%~1.20% 1.20%~1.20% 1.20%~1.20% 1.10%~1.10% 1.10%~1.10% 1.00%~1.00%	Period 2017/08/25~2022/08/25 2017/09/19~2022/09/19 2018/03/30~2023/03/30 2018/08/14~2023/08/14 2018/09/28~2023/09/28 2018/11/09~2023/11/09 2019/03/21~2022/03/21 2019/07/23~2024/07/23 2019/11/18~2022/11/18 2019/11/22~2022/11/22 2019/12/05~2022/12/05 2020/01/30~2025/01/30 2020/03/13~2025/03/13 2020/03/23~2023/03/23 2020/06/30~2024/06/30 2020/09/18~2025/09/18 2020/09/21~2023/09/21 2020/12/21~2025/12/21 2021/03/04~2026/03/04 2021/03/12~2026/03/12 2021/05/03~2026/05/03 2021/12/14~2026/12/14 2021/12/23~2023/12/23	Amount $ 200,000 125,000 187,500 400,000 218,750 220,000 100,000 375,000 500,000 1,200,000 200,000 1,000,000 420,000 450,000 20,000,000 1,000,000 400,000 800,000 1,000,000 1,000,000 310,000 1,000,000 3,000,000 34,106,250 88,614,295 (11,524,808) $ 77,089,487

Note 1: Syndicated Loan by Bank of Taiwan and other 9 banks.

95

EVA AIRWAYS CORP.

－ Statement of contract liabilities non-current and

other non-current liabilities

December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item － Contract liabilities non-current: Customer loyalty program Other non-current liabilities: Restoration obligations Others Total

	Amount
$	1,054,975
$	19,257,300
	363,059
$	19,620,359

Statement of lease liabilities

Item Land Building and structures Aircraft Machinery and equipment Total	Lease term 1 to 17 years 1 to 9 years 1 to 11 years 1 to 5 years	Discount rate Ending balance 1.15%~1.21% $ 317,252 1.13%~3.30% 520,629 1.25%~3.32% 74,556,556 1.15%~3.30% 39,801 $ 75,434,238

Note: The statement of lease liabilities were disclosed in note 6(p).

96

EVA AIRWAYS CORP.

Statement of operating revenue

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Operating revenue: Revenue from passenger services Revenue from cargo services Others Total	Amount
	$ 7,754,282 85,180,787 2,396,836 $ 95,331,905

Statement of operating costs

Item Cost of air freight services Airport and transportation operating costs Traveler service costs Maintenance costs Others Total	Amount
	$ 54,450,902 8,483,030 3,823,787 10,058,205 825,916 $ 77,641,840

97

EVA AIRWAYS CORP.

Statement of operating expenses

For the year ended December 31, 2021

(Expressed in Thousands of New Taiwan Dollars)

Item Salary expense Depreciation expense Insurance expense Others (Note 1) Total	Amount
	$ 4,440,712 823,177 432,107 2,398,398 $ 8,094,394

Note 1: The amount of each item in others does not exceed 5% of the account balance.

Financial liabilities for hedging were disclosed in note 6(c).

－ － － Statement of notes receivable related parties, accounts receivable related parties, other receivables related － － － parties, notes payable related parties, accounts payable related parties and other payables related parties were disclosed in notes 6(d), 6(e) ,7 and 13.

Statement of non-current assets or disposal group classified as held for sale, net was disclosed in note 6(g).

Statement of changes in property, plant and equipment was disclosed in note 6(j).

Statement of changes in right-of-use assets was disclosed in note 6(k).

Statement of changes in investment property was disclosed in note 6(l).

Statement of changes in intangible assets was disclosed in note 6(m).

Statement of other non-current assets was disclosed in note 6(n).

Statement of changes in restoration obligations was disclosed in note 6(q).

Statement of net defined benefit liabilities- non-current was disclosed in note 6(r).

Statement of deferred tax assets and liabilities was disclosed in note 6(s).

Statement of other income was disclosed in note 6(x).

Statement of other gains and losses was disclosed in note 6(x).

Statement of finance costs was disclosed in note 6(x).