CAA Resources : FURTHER ANNOUNCEMENT OF THE AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

April 30, 2021 at 10:58 am EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CAA Resources Limited

優庫資源有限公司 *

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 02112)

FURTHER ANNOUNCEMENT OF THE AUDITED ANNUAL RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Reference is made to the announcement of CAA Resources Limited (the "Company") dated 31 March 2021, in relation to the unaudited annual results for the year ended 31 December 2020 of the Company and its subsidiaries (the "Group") (the "Unaudited Annual Results Announcement"). Terms used herein shall have the same meanings as those defined in the Unaudited Annual Results Announcement unless the context requires otherwise.

AUDITED ANNUAL RESULTS

The Board is pleased to announce that Prism CPA Limited ("Prism"), the auditors of the Company, has completed its audit of the annual results of the Group for the year ended 31 December 2020 in accordance with International Financial Reporting Standards ("IFRS"). The audited annual results for the year ended 31 December 2020 are set out in the full text of the annual report enclosed hereto.

MATERIAL DIFFERENCES BETWEEN UNAUDITED AND AUDITED ANNUAL RESULTS

Since financial information contained in the Unaudited Annual Results Announcement was neither audited nor agreed with Prism CPA Limited as at the date of its publication and subsequent adjustments have been made to such information, shareholders and potential investors of the Company are advised to pay attention to certain differences between the financial information of the unaudited and audited annual results of the Group. Set forth below are principal details and reasons for the material differences in such financial information in accordance with Rule 13.49(3)(ii)(b) of the Listing Rules.

- 1 -

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

	Audited	Unaudited	Difference	Notes
	US$'000	US$'000	US$'000
Revenue	27,855		27,855		-
Cost of sales	(28,426)	(27,945)	(481)	1
Gross loss
(571)	(90)	(481)
Other income	1,756		1,742		14
Selling and distribution expenses	(32)	(32)	-
Administrative and other expenses	(4,247)	(6,759)	2,512		1,2
Impairment loss on financial
assets, net of reversal	(13,335)	(11,972)	(1,363)	3
Reversal of impairment loss on
remeasurement of non-current
assets held for sale	3,612		3,612		-
Finance costs	(17,036)	(17,010)	(26)
Loss before tax
(29,853)	(30,509)	656
Income tax credit	252		252		-
Loss for the year
(29,601)	(30,257)	656
Other comprehensive expense

Exchange differences arising
on translation of financial
statements from functional
currency to presentation currency	139		144		(5)
Fair value change in financial
assets at fair value through other
comprehensive income,
net of tax	(2,990)	(2,645)	(345)	4
Loss on disposal of financial
assets at fair value through other
comprehensive income	(2,046)	-	(2,046)	2
Other comprehensive expense,

net of income tax	(4,897)	(2,501)	(2,396)
Total comprehensive expense for

the year	(34,498)	(32,758)	(1,740)

- 2 -

	Audited	Unaudited	Difference
	US$'000	US$'000	US$'000
Loss for the year attributable to:
Owners of the company	(29,601)	(30,257)	656
Non-controlling interests	-	-	-

	(29,601)	(30,257)	656
Other comprehensive expense

attributable to:
Owners of the company	(4,849)	(2,453)	(2,396)
Non-controlling interests	(48)	(48)	-

	(4,897)	(2,501)	(2,396)
Total comprehensive expense for

the year attributable to:
Owners of the company	(34,450)	(32,710)	(1,740)
Non-controlling interests	(48)	(48)	-

	(34,498)	(32,758)	(1,740)
Basic loss per share:

Owners of the company (US cents)	(1.97)	(2.02)	0.05

- 3 -

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

	Audited	Unaudited		Difference	Notes
	US$'000	US$'000		US$'000
Non-current assets
Property, plant and equipment	1,802		1,802		-
Intangible assets	13,121		13,121		-
Right-of-use assets	35		35		-
Investment in an associate	-	-		-
Financial assets at fair value
through other comprehensive
income	679		1,024	(345)	4
Goodwill	6,841		6,841		-

Total non-current asset	22,478		22,823	(345)
Current assets

Trade receivables	204,120		205,627	(1,507)	3
Deposit, prepayments and other
receivables	8,288		8,145	143		3
Cash and cash equivalents	102		102		-

Total current asset	212,510		213,874	(1,364)
Current liabilities

Trade payables	8,337		8,337		-
Other payables and accruals	25,223		25,218	5
Lease liabilities	21		21		-
Amount due to ultimate holding
company	60,000		60,000		-
Bank and other borrowing	54,683		54,683		-
Notes and bonds	45,786		45,760	26
Income tax payable	3,459		3,459		-

Total current liabilities	197,509		197,478	31
Net current assets
15,001		16,396	(1,395)
Total assets less current liabilities
37,479		39,219	(1,740)

- 4 -

	Audited	Unaudited			Difference
	US$'000	US$'000			US$'000
Non-current liabilities
Lease liabilities	11		11			-
Provision for rehabilitation	525		525			-
Deferred tax liabilities	2,930		2,930			-

Total non-current liabilities	3,466		3,466			-
Net assets
34,013		35,753	(1,740)
Equity

Share capital	1,934		1,934			-
Reserves	32,079		33,819	(1,740)
Equity attributable to owners of the

Company	34,013		35,753	(1,740)
Non-controlling interests	-	-			-
Total equity
34,013		35,753	(1,740)

- 5 -

Notes:

Amounting to approximately US$0.5 million of depreciation is reclassified from administrative and other expenses to cost of sales;
Loss on disposal of financial assets at fair value through other comprehensive income is approximately US$2.0 million included in administrative and other expense are reclassified to consolidated statement of other comprehensive expense;
As a result of recognising increased impairment losses under expected credit loss model, the impairment losses of trade receivables and other receivables are adjusted downward by approximately of US$1.5 million and upward by approximately US$0.1 million respectively accordingly;
Additional fair value loss on the unlisted equity investments as at 31 December 2020 amounted to approximately US$0.3 million is recognised.

Save as disclosed in this announcement and the corresponding adjustments in total, percentages, ratios and comparative figures related to the above material differences, all other information contained in the Unaudited Annual Results Announcement had no material changes.

- 6 -

THE AUDIT COMMITTEE AND REVIEW OF PRELIMINARY ANNOUNCEMENT BY PRISM

The audited annual results of the Company for the year ended 31 December 2020 have been reviewed by the Audit Committee of the Company.

The figures in respect of the Group's consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and the related notes thereto for the year ended 31 December 2020 as set out in this audited preliminary announcement have been agreed by Prism, to the amounts set out in the Group's audited consolidated financial statements for the year. Such work performed by Prism in this respect did not constitute an audit, review or other assurance engagement in accordance with IFRS and consequently no assurance has been expressed by Prism on this announcement.

DISCLAIMER OF OPINION BY THE AUDITOR AND MATERIAL UNCERTAINTIES RELATED TO GOING CONCERN

As set out in the independent auditor's report enclosed in the annual report attached hereto, Prism, the auditor of the Group, did not express an opinion on the consolidated financial statements of the Group for the year ended 31 December 2020 because of the potential interaction of the multiple uncertainties and their possible cumulative effect on the consolidated financial statements as described in the Basis for Disclaimer of Opinion section of the independent auditor's report.

Please refer to the enclosed independent auditor's report for more details.

By order of the Board

CAA Resources Limited

Li Yang

Executive Director

Hong Kong, 30 April 2021

As at the date of this announcement, the executive Directors are Mr. Li Yang, Ms. Li Xiaolan, Mr. Wang Er, and the independent non-executive Directors are Dr. Li Zhongquan and Dr. Wang Ling.

*For identification purpose only

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CONTENTS

Financial and Operating Highlights 2-3 Chairman's Statement 4-5

Management Discussion and Analysis 6-17 Corporate Governance Report 18-30

Environmental, Social and Governance Report 31-49

Profiles of Directors and Senior Management 50-52 Directors' Report 53-64 Independent Auditor's Report 65-69

70-71 Consolidated Statement of Profit or Loss and Other Comprehensive Income

72-73 Consolidated Statement of Financial Position

74-75 Consolidated Statement of Changes in Equity 76-77 Consolidated Statement of Cash Flows

78-171 Notes to Consolidated Financial Statements 172-173 Five Year Summary of Financial Information 174-179 Glossary

180 Corporate Information

FINANCIAL AND OPERATING HIGHLIGHTS

		2020	2019
	Notes	USD'000	USD'000	% Change
Result
Revenue		27,855	1,055,195	-97.4
Loss attributable to owners of the
Company		(29,601)	(57,110)	-48.2
Financial Position
Trade receivables		204,120	217,959	-6.3
Total interest-bearing bank and other
borrowings		54,683	54,683	-
Total interest-bearing notes and bonds		45,786	40,872	+12.0
Trade payables		8,337	10,292	-19.0
Total assets		234,988	276,362	-15.0
Total current assets		212,510	243,976	-12.9
Total current liabilities		197,509	182,270	+8.4
Key Financial Ratios		2020	2019	Difference
Performance
Gross (loss)/profit margin		(2.05)%	1.10%	-3.15%
Net loss margin	1	(106.27)%	(5.41)%	-100.86%
Return on assets	2	(12.60)%	(20.66)%	+8.06%
Liquidity and Gearing
Current ratio	3	1.1	1.3	-0.2
Gearing ratio	4	82.5%	63.2%	+19.3
				percentage
				points
Per share data
Net assets per share (US cents)		2.27	6.03
Basic loss per share (US cents)		(1.97)	(3.81)
Proposed final dividend (US cents)		-	-

2	CAA RESOURCES LIMITED Annual Report 2020

FINANCIAL AND OPERATING HIGHLIGHTS

	2020	2019	Difference
Operating Statistics
Number of crushing line owned and operated as at 31
December	2	2	-
Number of beneficiation line owned and operated as
at 31 December	5	5	-
Actual ore mining volume (Kt) for the year ended 31
December	13.2	583.3	N.A.
Actual ore crushing volume (Mt) for the year ended
31 December	0.01	0.28	N.A.
Actual ore beneficiation volume (Mt) for the year
ended 31 December	0.01	0.20	N.A.
Ore production volume (Kt) for the year ended 31
December	4.8	196.4	N.A.

Notes:

Net loss margin is calculated by dividing loss for the year by revenue.
Return on assets represents the net loss attributable to the owners of the Company as percentage of the average of period-beginning balance and period-ending balance of total assets.
Current ratio is the ratio of total current assets to total current liabilities.
Gearing ratio is calculated based on the Group's net debt divided by total equity plus net debt. Net debt is defined as interest-bearing bank loans and other borrowings, notes and bond and an amount due to the ultimate holding company, net of cash and bank balances and it excludes liabilities incurred for working capital purposes. Equity includes equity attributable to the equity shareholders of the Company and non-controlling interest.

Annual Report 2020 CAA RESOURCES LIMITED

CHAIRMAN'S STATEMENT

Dear Shareholders,

On behalf of the Board of Directors of CAA Resources Limited, I am pleased to present the 2020 annual report to the Shareholders.

In 2020, the global economy was hit hard by the coronavirus ("COVID-19") pandemic. Lockdown measures adopted in various countries led to a large-scale economic shutdown at one point. Unemployment rate soared, and the second-quarter GDP dropped at unprecedented rates in general. Nevertheless, when lockdown measures were lifted as the pandemic subsided, the third-quarter GDP saw a significant rebound following the restart of economic activities. However, the strong comeback of the pandemic forced certain countries to reintroduce lockdown measures, which led to another contraction in economic activities in the fourth quarter. When it comes to making a difficult choice between "safeguarding lives" and "safeguarding people's livelihoods", most countries opted for the latter. Even so, the risks posed by the COVID-19 outbreak has made the recovery of the economy significantly slow.

According to the Global Economy Watch issued by the International Monetary Fund (IMF) in October, the global economy is projected to contract by 4.4% in 2020, which is seven times the decline in 2009, and would be the worst recession since the Great Depression of the 1930s. However, progress with treatment has lifted expectations towards the future outlook, and the positive progress with vaccine research and development has offered hope for an end to the COVID-19 outbreak. IMF predicted that the global economy is expected to return to the 2019 pre-pandemic output levels in 2021. The Organization for Economic Co-operation and Development (OECD) Economic Outlook Report released in early December anticipated that the global economy will contract by 4.2% in 2020, and grow by 4.2% in 2021.

The major mining assets of the Company are located in Malaysia. Malaysia has implemented a nationwide Movement Control Order (MCO) since 18 March 2020: Under the MCO, all governmental and private institutions, except for those providing essential services such as water, electricity and energy, are closed down, and all domestic gatherings, including religious, sports, social and cultural activities, are prohibited; foreigners are banned from entering Malaysia; residents are prohibited from driving more than 10 kilometers away from home, and the only acceptable reason for going out is to buy daily necessities and food. As a result of the above measures, extremely limited mining activity could be carried out at Ibam mine. The mining volume and production volume were 13.2 Kt and 4.8 Kt respectively. On the other hand, the key business suppliers and customers of the Company are mainly located in Singapore, Malaysia, Mainland China and Hong Kong, and the restrictions on the entry of foreigners and the inspection and quarantine measures taken by these countries and regions also made it impossible for the Company's relevant business personnel to carry out and develop trade business normally. As a result, the Company had no income from its own production and trading business during the first eight months of 2020. A small amount of trading business was gradually resumed only in October 2020. In 2020, our revenue amounted to USD27.9 million, representing a decrease of approximately 97.4% from USD1,055.2 million in 2019. Our gross loss amounted to USD0.6 million in 2020, representing a decrease of approximately 105.2% from gross profit of approximately of USD11.6 million in 2019.

4	CAA RESOURCES LIMITED Annual Report 2020

CHAIRMAN'S STATEMENT

The outlook of the world economy in 2021 is not optimistic under the impact of the COVID-19 pandemic. For the purpose of surmounting this challenge and ensuring the Group's long-term sustainable development, we are seeking a third party in a relevant industry to be introduced as a strategic partner of the Group.

Lastly, I would like to take this opportunity to convey our sincere gratitude to the management and our staff for their dedicated work. I would also like to thank our investors, bankers, and business partners for their unfailing trust and support all along.

Li Yang

Chairman and Chief Executive Officer

Hong Kong, 30 April 2021

Annual Report 2020 CAA RESOURCES LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW OF BUSINESS DEVELOPMENT

The Company acts as an investment holding company, and its principal business activities are iron ore exploration, mining, crushing and beneficiation as well as sale of iron ore products and other commodities, and investment holding. There were no significant changes in the nature of the Group's principal activities during the Period. The primary mining asset of the Group is the iron-ore reserves in Ibam Mine, which is located in the State of Pahang, Malaysia.

At the beginning of 2020, COVID-19 broke out and spread globally, disrupting normal production and life order, and severely impacting most industries. The main mining assets of the Company are located in Malaysia. Malaysia implemented operational control directives nationwide since March 18, 2020: All governmental and private institutions, except for those providing essential services such as water, electricity and energy, shall be closed down, and all domestic gatherings, including religious, sports, social and cultural activities, shall be prohibited; foreigners shall be banned from entering Malaysia; residents shall not drive more than 10 kilometers away from home, and the only permission for going out shall be to buy daily necessities and food. These controls led to the suspension of operations at Ibam mine. In addition, the key business suppliers and customers of the Company are mainly located in Singapore, Malaysia, Mainland China and Hong Kong, and the restrictions on the entry of foreigners and the inspection and quarantine measures taken by these countries and regions also made it impossible for the Company's relevant business personnel to carry out and develop trade business normally. As a result, the Company had no income from its own production and trading business in the first eight months of 2020. Small amount of trading business was gradually resumed from October 2020.

The Company has taken timely and active prevention and control measures since the initial stage of the epidemic, in order to ensure the health and safety of all employees, and to accumulate strength for the recovery and development of the Company.

6	CAA RESOURCES LIMITED Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

MARKET REVIEW AND OUTLOOK

Iron ore port stocks continued to fall at the beginning of this year, and the supply remained tight. In particular, in May, as a major iron ore consumer, China's domestic production resumed, steel mills' output rose rapidly, and domestic iron ore demand soared. In addition, the shipment volume of VALE in the first quarter was significantly lower than expected, leading to the intensified contradiction between supply and demand. Iron ore port stocks fell by more than 6 million tons a month in May, sparking a sharp rise in prices.

However, since June, there have been obvious signs of easing the contradiction in quantity. On one hand, with the mitigation of the epidemic, there was a significant increase in shipments of foreign ores in June: Australian iron ore exports to China climbed to a record 46.2 million tons in June, up 7% from

43.18 million tons in May and up 10% from the same month last year. Brazilian iron ore exports to China reached 22.8 million tons in June, up 35% from a year earlier. Persistent high prices have also contributed to a recovery in global supplies, with China's iron ore imports hitting a record high of 547 million tons from January to June. On the other hand, the growth of China's domestic iron ore demand slowed down in June, and the molten iron production had the continuous growth of 18 weeks ended and experienced oscillation at high level in mid-June.

The supply-demand difference amounted to 11.30 million tonnes in the whole year of 2020, among which, nine months remained at the state of de-stocking and presented a phase of tight balance. In respect of the seasonal changes, the supply and demand in the first half of the year were mismatched with negative supply-demand difference, resulting from the supply far less than the demand, while the supply side were improved gradually in the second half. However, the demand increased obviously in the second half of the year after the recovery of the Pandemic, with the supply-demand difference turning from negative to positive, presenting a phase of tight balance in whole year.

Looking forward for the coming year, the fundamental supply and demand of iron ore in 2021 will continue to improve, compared to that of 2020. The average price of the iron ore of the whole year may decline, but increase volume of the overall iron ore supply will be still relatively tight, especially the amount transported to China. Taking into account of the trend of the whole year, combined with the seasonal rules of iron ore supply, the price of iron ore in 2021 may be from high to low, and the bottom will appear in the second and third quarters.

Annual Report 2020 CAA RESOURCES LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS & OPERATIONS REVIEW

Project Ibam operation update

The Group's principal mining site is Project Ibam. Based on the "Independent Technical Report" (see Appendix IV of the Prospectus of the Company for full report), there is approximately 151 Mt of ore resource at a grade higher than or equal to 35%, with an average grade of 46.5% total iron, and it has a mine life expected to be more than 26 years as of 31 December 2012. The Group uses the open- pit mining method to simplify operations and reduce production costs. The Group produces iron ore products through a relatively low cost process which includes ball-milling, magnetic separation process and dewatering. The method is environmentally friendly as it does not require chemical additives and reduces the amount of waste water produced.

As at 31 December 2020, the Group owned 5 beneficiation lines and 2 crushing lines. During the year under Review, the Group focused on commodities trading and only limited mining and production activities were carried out. The annual mining volume and production volume were 13.2 Kt and 4.8 Kt respectively (2019: 583.3 Kt and 196.4 Kt respectively).

The following table indicates the mining volume and production volume of iron ore products produced from Ibam Mine:

	For the year ended	For the year ended
	31 December 2020	31 December 2019	Change
Mining Volume	13.2	Kt	583.3 Kt	-97.7%
Production Volume	4.8	Kt	196.4 Kt	-97.6%

Operating Results

During the year, the COVID-19 outbreak cause disruptions to the Group's trading business and own production before August.

In 2020, the Group recorded revenue of US$27.9 million (2019: US$1,055.2 million), representing a decrease of US$1,027.3 million or 97.4% compared with the same period of the previous year. The sales volume of other commodity decreased by 99.6% to approximately 3.6 Kt (2019: 922 Kt). The sales volume of iron ore products decreased by 99.7% to approximately 4.8 Kt on dry basis (2019: approximately 1,708 Kt). During the year, the average selling price of the Group's iron ore products on dry basis was US$50.0 per tonne (2019: US$96.1 per tonne). Loss for the year decreased by 48.2% to US$29.6 million from US$57.1 million, and losses per share was 1.97 US cents (2019: 3.81 US cents). The decrease was mainly attributable to the effect of group revenue reduction was lower than the decrease in finance cost, impairment loss on financial assets, and impairment loss on remeasurement of non-current assets held for sale.

8	CAA RESOURCES LIMITED Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The Sales analysis for the Group is as follows:

	For the year ended	For the year ended
	31 December 2020	31 December 2019	Change
Sales Revenue	US$27,855,000	US$1,055,195,000	-97.4%
- Iron Ore	US$240,000	US$164,087,000	-99.9%
- Other Commodities	US$27,615,000	US$891,108,000	-96.9%
Sales Volume (dry basis)
- Iron Ore	5,000 tonnes	1,708,000 tonnes	-99.7%
- Other Commodities	4,000 tonnes	922,000 tonnes	-99.6%
- Petroleum products	nil	7,112,000 barrels	-100.0%
Gross (loss) profit	(US$571,000)	US$11,580,000	-104.9%
Gross Profit margin	-2.05%	1.10%	-3.15

FINANCIAL REVIEW

PROFIT AND OTHER COMPREHENSIVE INCOME

Revenue

During the year, the Group's revenue reached approximately US$27.9 million, about 97.4% lower than that recorded in 2019, which was US$1,055.2 million. The significant decrease in revenue was mainly due to a reduction in the supply of goods and iron ore mining and processing operation from regions which has affected the Group's ability to continue the commercial trade and iron ore mining and processing operation as well as scale down of the production since February to August 2020 due to the COVID-19 outbreak.

Cost of sales

During the year ended 31 December 2020, the Group's cost of sales reached approximately US$28.4 million, about 97.3% lower than approximately US$1,043.6 million recorded in 2019. Cost of sales mainly included the cost of purchasing other commodities for trading activities and outsourcing cost of self production. The significant decrease in cost of sales was in line with the decrease in revenue during the period.

Gross (loss) profit

During the year ended 31 December 2020, the Group's gross loss reached approximately US$0.6 million (2019: gross profit of approximately US$11.6 million). The change in gross loss was mainly due to the reduction of sales volume in commercial trade and iron ore mining and processing operation which is due to, among others, the impact of COVID-19.

Annual Report 2020 CAA RESOURCES LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Administrative and other expenses

During the year ended 31 December 2020, the Group's administrative expenses reached approximately US$4.2 million, about 20.8% lower than approximately US$5.3 million recorded in 2019. The decrease was mainly due to decrease in salaries, travelling expenses and other miscellaneous expenses.

Finance costs

During the year ended 31 December 2020, the Group's finance costs reached approximately US$17.0 million, decrease 7.1% from the US$18.3 million recorded in 2019. The decrease was mainly due to the interest decrease on other borrowings. No notional interest expense incurred for shareholder loan from Cosmo Field (the Controlling Shareholder) during the year.

Income tax (credit) expenses

The Group write off US$0.3 million income tax payable during the year which was over provision in previous year (2019: US$0.2 million).

The Group recorded income tax credit of approximately US$0.3 million during the year ended 31 December 2020 and recorded income tax expense of approximately US$0.2 million during the year ended 31 December 2019.

Loss for the year

The loss for the year ended 31 December 2020 was US$29.6 million, about 48.2% lower than approximately US$57.1 million recorded in 2019. The decrease in loss for the year was mainly due to the effect of gross profit in 2019 changing to gross loss in 2020 was lower than the decrease of finance cost, expected credit loss arising from impairment of trade and other receivables, and impairment loss on non-current assets held for sale. The loss in 2020 was mainly attributable to a reduction of the revenue of the Group as a result of the financial difficulties faced by the Group and its clients under the challenging economic environment which is due to, among others, the impact of COVID-19, which is partly set-off by the reversal on impairment loss on remeasurement of non-current assets held for sale in which the Group recorded a gain as compared to a loss in 2019.

Total comprehensive loss for the year

Total comprehensive loss for the year ended 31 December 2020 decreased by 44.6% to approximately USD34.5 million in 2020 from approximately USD62.3 million for the year ended 31 December 2019. The decrease mainly arose from a decrease in fair value of approximately USD3.0 million in respect of the equity investments designated as at fair value through other comprehensive income (2019: USD5.3 million), loss of approximately USD2.0 million on disposal of financial assets at fair value through other comprehensive income (2019: nil), and decrease in loss for the year ended 31 December 2020 by approximately USD27.5 million comparing to the year ended 31 December 2019.

10	CAA RESOURCES LIMITED Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

LIQUIDITY AND CAPITAL RESOURCES

The total equity of the Group as at 31 December 2020 was approximately US$34.0 million (31 December 2019: US$90.5 million). The Group generally finances its operation with internally generated cash flow, interest-bearing bank and other borrowings, and interest- free and security-free shareholder loans from our Controlling Shareholder. Primary uses of funds during the year included payment of operating expenses, repayment of bonds. As at 31 December 2020, current assets of approximately US$212.5 million primarily comprised US$204.1 million of trade receivables, US$8.3 million of prepayments, deposits and other receivables, and US$0.1 million of cash and cash equivalents. Current liabilities of approximately US$197.5 million mainly comprised US$8.3 million of trade payables, US$25.2 million of other payables and accruals, US$60.0 million of amount due to ultimate holding company, US$54.7 million of interest-bearing bank and other borrowings, US$45.8 million of notes and bond payable, and US$3.5 million of tax payable. Current ratio, being total current assets to total current liabilities was 1.1 as at 31 December 2020 (2019: 1.3).

As at 31 December 2020, the Group had certain interest-bearing bank and other borrowings of US$54.7 million in total (2019: US$54.7 million). The bank and other borrowings were mainly used to finance the issuance of letter of credit and working capital of the Group.

Trade receivables

The Group's trade receivables decreased by 6.4% from approximately US$218.0 million as at 31 December 2019 to approximately US$204.1 million as at 31 December 2020, which was mainly due to the increase in expected loss allowance of trade receivables.

Major customers were granted credit on open account basis or allowed to settle by documentary letter of credit. Overdue balances are reviewed regularly by senior management, if any. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

As of 31 December 2020, the Group had made provision of impairment loss amounted to approximately US$25.8 million against overdue trade receivables in accordance with accounting standards, as reviewed by management.

Prepayments, deposits and other receivables

As at 31 December 2020, the Group's prepayments, deposits and other receivables amounted to approximately US$8.3 million (2019: approximately US$7.6 million). The increase was mainly due to the overdue interest receivables from a company.

Trade payables

Trade payables mainly consists of payables to suppliers for purchase of other commodities for trading activities. The Group's trade payables amounted to approximately US$8.3 million as at 31 December 2020 and approximately US$10.3 million as at 31 December 2019. The decrease in trade payables was mainly due to reduce of credit term granted by trade payables.

Annual Report 2020 CAA RESOURCES LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Other payables and accruals

The Group's other payables and accrued expenses were approximately US$25.2 million as at 31 December 2020, representing an increase of approximately 100% from approximately US$12.6 million as at 31 December 2019. The increase was mainly due to increase in interest payable on loans.

Net current assets position

The Group's net current assets decrease during the year, from net current assets of approximately US$61.7 million as at 31 December 2019 to net current assets of approximately US$15.0 million as at 31 December 2020. The decrease was mainly due to an increase of US$12.6 million in other payables and accrued expenses, an increase of approximately US$4.9 million in notes as current liabilities, a decrease of trade receivables of approximately US$13.9 million, and decrease of assets classified as held for sales of approximately US$18.4 million.

Borrowings

As at 31 December 2020, the Group's borrowings consisted mainly of: (i) a loan of approximately US$36.5 million due to a commercial bank; (ii) a loan of approximately US$18.2 million; and (iii) notes and bond amounting to US$45.8 million which included the note with the principal of US$25.3 million and the note with the principal of US$18.0 million, and the bond with the principal of US$2.5 million.

As at 31 December 2020, the Company also owed shareholder loans of US$60.0 million (2019: US$60.0 million) from Cosmo Field (the Controlling Shareholder) which were interest-free and unsecured.

Cash and Cash Equivalents

Cash and cash equivalents of the Group in 2020 was approximately USD0.1 million, which was as much as cash and cash equivalents for 2019.

Detailed cash flow analysis is as follows:
	For the year ended
	31 December
	2020	2019
	USD'000	USD'000
Cash and cash equivalents in the consolidated statement of cash flows
at beginning of year	102	183
Net cash used in operating activities	(1,220)	(8,500)
Net cash generated from investing activities	1,284	1,608
Net cash (used in) generated from financing activities	(51)	6,799
Net increase (decrease) in cash and cash equivalents	13	(93)
Effect of foreign exchange rate changes	(13)	12
Cash and cash equivalents at end of year	102	102

12	CAA RESOURCES LIMITED Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Net cash flows used in operating activities

The Group's net cash flows used in operating activities changed from approximately USD8.5 million for the year ended 31 December 2019 to approximately USD1.2 million for the year ended 31 December 2020. It consists primarily of a pre-tax loss of USD29.9 million and cash outflows mainly due to an increase of approximately USD7.7 million in trade receivables, increase of approximately US$0.9 million in prepayment, deposits and other receivable and an increase of approximately USD11.1 million in trade payables.

Net cash flows generated from investing activities

The Group's net cash flows from investing activities decrease by 18.8%, from inflow of approximately USD1.6 million for the year ended 31 December 2019 to inflow of approximately USD1.3 million for the year ended 31 December 2020. It mainly consists of interest collected of approximately USD1.3 million.

Net cash flows (used in) generated from financing activities

The net cash flows from the Group's financing activities changed from an inflow of approximately USD6.8 million for the year ended 31 December 2019 to an outflow of approximately USD0.1 million for the year ended 31 December 2020. It consists of repayment of bonds and lease liabilities.

LEGAL PROCEEDINGS

The Company was informed by Mr. Li Yang ("Mr. Li"), an executive director, chairman and chief executive officer of the Company that he had received a writ of summons taken out by Oversea-Chinese Banking Corporation Limited ("OCBC") against Mr. Li at the High Court of Hong Kong (the "High Court Action"). The High Court Action was related to a loan (the "OCBC Loan") advanced by OCBC to China Bright Industries Limited, a subsidiary of the Company, in which Mr. Li (as the guarantor) failed to fulfil his obligation as guarantor to settle the amount of HK$308,758,494. The Group has also breached the repayment obligations under the OCBC Loan (the "Breach"), and the Breach will trigger cross-defaults of other borrowings and loans of the Group. For details, please refer to the announcement dated 20 January 2020.

Annual Report 2020 CAA RESOURCES LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

The Company was informed by Mr. Li and by Cosmo Field Holdings Limited ("Cosmo Field"), the controlling shareholder of the Company, that they had received a writ of summons dated 15 May 2020 taken out by Industrial Bank Co., Limited ("Industrial Bank") against Cosmo Field and Mr. Li at the High Court of Hong Kong (the "High Court Action"). The High Court Action was related to a loan (the "Industrial Bank Loan") advanced by Industrial Bank to Cosmo Field, for which Mr. Li was the guarantor. Pursuant to the High Court Action, Industrial Bank brought claim against Cosmo Field and Mr. Li with respect to the default (the "Default") in repayment of the Industrial Bank Loan in the amount of US$45,059,154.85. As at the date of this report, Cosmo Field has pledged 752,000,000 shares (representing 50.13% of all issued shares of the Company) in favour of Industrial Bank as security for the Industrial Bank Loan. Cosmo Field has lent the principal amount of the Industrial Bank Loan being US$40,000,000 ("Shareholder Loan") to the Company as an interest-free loan, and Industrial Bank is entitled to claim against the Company for the repayment of the Shareholder Loan pursuant to the assignment of loan as part of security arrangement for the Industrial Bank Loan whereby Cosmo Field has assigned the rights under the Shareholder Loan to Industrial Bank. The Group believes that the Default will trigger cross-defaults of other borrowings and loans of the Group. The board of the Company is of the view that the Default will cause material adverse effect on the operation of the Group. For details, please refer to the announcement dated 18 May 2020.

The Company became aware that the Creditor (the "Petitioner") has filed a petition (the "Petition") in the matter of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong) from the High Court of The Hong Kong Special Administrative Region (the "High Court") that the Company may be wound up by the High Court on the ground that the Company is unable to pay its debts. The winding up petition will be heard before the High Court at 10:00 a.m. on 5 May 2021. The Petition was filed against the Company for failure to settle the outstanding sum of HK$19,700,000 plus accrued interest and the agreed costs of HK$38,000 and legal costs. The Petitioner is a holder of a bond issued by the Company. The Company will endeavour to negotiate with the Petitioner for an amicable disposal of the Petition out of the court. For details, please refer to the announcement dated 14 February 2020 and 19 March 2021.

On 10 March 2021, the Group filed a claim to the Hong Kong High Court against the customers for breach of contracts in related to sales of goods to customers and outstanding contract sums of approximately US$216,571,000. In the opinion of the directors, since the claim is still pending for court hearing, it is unable to determine the final outcome of the claim.

For details of default in borrowings and material uncertainty in relation to going concern, please refer to the section headed "Discussions on The Company's Going Concern Issue from The Corporate Governance Perspective" in the announcement dated 9 December 2020.

14	CAA RESOURCES LIMITED Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

CHANGE OF AUDITORS

Reference is made to the announcement of the Company dated 14 May 2020 and 29 June 2020 in relation to the change of the auditors of the Group (the "Auditor Announcement(s)"). Prism CPA Limited has been appointed as the Company's auditor with effect from 29 June 2020 and as at the date of this annual report. For details of resignation of Graham Y. H. Chan & Co. and appointment and resignation of ZHONGHUI ANDA CPA Limited, please refer to the Auditor Announcements.

CAPITAL STRUCTURE

The Group is currently funding its capital expenditure through internal funds generated from its operations, bank borrowings, notes and bond issued and loan from Cosmo Field. The Group monitors capital using a gearing ratio, which is net debt divided by total equity plus net debt. Net debt is defined as interest-bearing bank and other borrowings, notes and bond and an amount due to Cosmo Field, net of cash and bank balances and it excludes liabilities incurred for working capital purposes. Equity includes equity attributable to the equity shareholders of the Company and non-controlling interest.

The Group's gearing ratio as at 31 December 2020 was 82.5% (31 December 2019: 63.2%).

The Group continued to conduct its operational business mainly in USD. The Group did not arrange any forward currency contracts for hedging purposes.

FOREIGN CURRENCY RISK

Save as disclosed in notes 7 to the Notes to Consolidated Financial Statements, as at 31 December 2020, the Group had no other foreign currency risk.

INTEREST RATE RISK

Save as disclosed in notes 7 to the Notes to Consolidated Financial Statements, as at 31 December 2020, the Group had no other interest rate risk.

CHARGE ON ASSETS

Save for trade receivables pledged for bank and other borrowing as disclosed in note 37 to the Financial Statements, the Group did not have any pledges on its assets as at 31 December 2020.

EMPLOYEES AND EMOLUMENT POLICIES

The Group values its human resources and recognizes the importance of attracting and retaining qualified staff for its continuing success. As at 31 December 2020, the Group had 19 employees (2019: 39). For the year ended 31 December 2020, total staff cost including Directors' emolument amounted to approximately USD1.1 million (2019: USD1.8 million).

The Group's remuneration policies are in line with prevailing market practices and are determined on the basis of the performance and experience of the individual. The Group has constantly been reviewing the staff remuneration package to ensure it is competitive in the relevant industries.

Annual Report 2020 CAA RESOURCES LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

OTHER INFORMATION

RESOURCE AND RESERVES OF IBAM MINE UNDER JORC CODE AS AT 31 DECEMBER 2020

Mineral resources of the Ibam Mine for ore with iron grade greater than or equal to 35% as at 31 December 2020 (Note):

Classification	Quantity (Mt)	Fe Grade (%)
Measured	108	46.7
Indicated	-	-
Inferred	42	46.6
Total	150	46.6

Ore reserves of the Ibam Mine for ore with iron grade greater than or equal to 35% as at 31 December 2020:

Classification	Quantity (Mt)	Fe Grade (%)
Proved	-	-
Probable	102	44.6

Note: The figures were calculated by the resource and reserves as at 31 December 2013 under the JORC Code (confirmed by Geos Mining Minerals Consultants, Australia which is a specialist independent geological and mineral exploration consultant) less the mining volume since then.

All assumptions and technical parameters set out in the technical report of Geos Mining (the "Independent Technical Adviser") which is prepared under JORC Code as shown in the prospectus of the Company dated 20 June 2013 with respect to the Ibam Mine have not been materially changed and continued to apply to the above disclosed data.

16	CAA RESOURCES LIMITED Annual Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

EXPLORATION, DEVELOPMENT AND MINING PRODUCTION ACTIVITIES

During the year ended 31 December 2020, no exploration and development activities were carried out. The Group did not incur any investment in equipment upgrade during the year ended 31 December 2020.

During the year, mining volume and production volume were recorded 13.2 Kt and 4.8 Kt respectively. Mining activities was not fully resume operations during the year ended 31 December 2020.

CONTRACTUAL OBLIGATIONS

Save as disclosed in note 36 to the Notes to Financial Statements, as at 31 December 2020, the Group had no material contractual obligations to disclose (31 December 2019: nil).

CAPITAL EXPENDITURE

During the year, the Group's total capital expenditure was nil (2019: USD1,000).

SIGNIFICANT ACQUISITIONS, DISPOSALS AND INVESTMENTS

The Group's acquisitions, disposals and investments under planning included (but are not limited to) the projects described in the section "Overview of business development" above. Save as disclosed herein, the Company does not have any future plan for significant acquisition, disposal and investment during the year and as at the date of this report.

RELATED PARTY TRANSACTIONS

Details of the related party transactions as stated in note 38 to the Notes to Financial Statements comprise: (i) an interest-free loans from Cosmo Field, the controlling shareholder of the Company, for the principal amount of USD60 million as at 31 December 2020, all of which are interest-free, security free and fully exempted connected transactions; (ii) compensation of key management personnel of the Group for the amount of USD0.6 million (2019: USD0.8 million); (iii) guarantees provided by Mr. Li Yang (chairman and controlling shareholder), his father and Cosmo Field.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the year, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities.

FINAL DIVIDEND

The Directors did not recommend the payment of any final dividend for the year ended 31 December 2020 (2019: Nil).

Annual Report 2020 CAA RESOURCES LIMITED

CORPORATE GOVERNANCE REPORT

The Board of Directors is committed to maintaining appropriate corporate governance practices to enhance the accountability and transparency of the Company in order to protect Shareholders' interests and to ensure that the Company complies with the latest statutory requirements and professional standards.

The Company has complied with the code provisions set out in CG Code for the year ended 31 December 2020 except for the deviation as disclosed in this corporate governance report.

MODEL CODE FOR DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code as its code of conduct for dealing in securities by the Directors. Having made specific enquiry to all the Directors, all the Directors have confirmed that they had complied with the required standards set out in the Model Code for the year ended 31 December 2020.

BOARD OF DIRECTORS

The Board is responsible for leadership and control of the Company and oversees the Group's businesses, strategic decisions and performance. The Board has delegated to the Chief Executive Officer, and through him, to the senior management the authority and responsibility for the day-to- day management and operation of the Group.

All Directors have carried out their duties in good faith, in compliance with applicable laws and regulations and in the interests of the Company and its Shareholders at all times.

DELEGATION OF MANAGEMENT FUNCTIONS

The Board reserves for its decision all major matters of the Company, including: approval and monitoring of all policy matters, overall strategies and budgets, internal control and risk management systems, material transactions (in particular those that may involve conflict of interests), financial information, appointment of directors and other significant financial and operational matters.

All Directors have full and timely access to all relevant information as well as the advice and services of the company secretary, with a view to ensuring that Board procedures and all applicable laws and regulations are followed. Each Director is able to seek independent professional advice in appropriate circumstances at the Company's expense, upon making request to the Board.

The day-to-day management, administration and operation of the Company are delegated to the Chief Executive Officer and the senior management. The delegated functions and responsibilities are periodically reviewed. Approval has to be obtained from the Board prior to any significant transactions entered into by the aforesaid officers.

18	CAA RESOURCES LIMITED Annual Report 2020

CORPORATE GOVERNANCE REPORT

As at 31 December 2020 and up to the date of this corporate governance report, the Board comprised three executive Directors and two independent non-executive Directors.

Executive Directors

Mr. Li Yang (Chairman and Chief Executive Officer)

Ms. Li Xiaolan

Mr. Wang Er

Independent Non-Executive Directors

Dr. Li Zhongquan

Dr. Wang Ling

The biographical details of the Directors and the relationship among the members of the Board are set out in the section of "Profiles of Directors and Senior Management" on pages 50 to 52 of this annual report. Ms. Li Xiaolan is the younger sister of Mr. Li Yang's father.

The Company has received from each of the independent non-executive Directors an annual confirmation of their independence as required under Rule 3.13 of the Listing Rules. The Company considered all the independent non-executive Directors to be independent.

Each of the independent non-executive Directors has taken up the role as an independent non- executive Director for an initial term of 3 years and is subject to retirement and re-election in accordance with the Articles of Association.

CORPORATE GOVERNANCE FUNCTIONS

The Board is responsible for performing the functions set out in the code provision D.3.1 of the CG Code.

The Board reviewed the Company's corporate governance policies and practices, training and continuing professional development of Directors and senior management, the Company's policies and practices on compliance with legal and regulatory requirements, the compliance with Model Code, and the Company's compliance with the CG Code and disclosure in this corporate governance report.

Annual Report 2020 CAA RESOURCES LIMITED

CORPORATE GOVERNANCE REPORT

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Under CG Code A.2.1 under Appendix 14 to the Listing Rules, the roles of chairman and Chief Executive Officer should be separate and should not be performed by the same individual. The positions of chairman and Chief Executive Officer of the Company are both currently carried on by Mr. Li Yang. The Board considers that the structure currently operated by the Company does not undermine the balance of power and authority between the Board of Directors and the management.

The Board members have considerable experience and qualities which they bring to the Company and the Board, of which Mr. Li Yang can take advantage in fulfilling his duties, and the management is not impaired. Mr. Li Yang has strong client relationships and has the full backing from the Board of Directors and senior management of the Company in fulfilling his obligations as chairman and Chief Executive Officer. The Board believes that having the same person performing the roles of both chairman and Chief Executive Officer can provide the Group with strong and consistent leadership and that, operating in this manner allows for more effective and efficient overall strategic planning of the Group. Further, the decisions of the Board are made collectively by way of voting and therefore the chairman of the Board should not be able to monopolize the voting result.

NON-COMPLIANCE WITH REQUIREMENTS UNDER RULES 3.10(1), 3.10(2)

AND 3.21 OF THE LISTING RULES

Since 8 October 2020, the Company only has two independent non-executive Directors, thus the number of the independent non-executive Directors falls below the minimum number required under Rule 3.10(1) of the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules").

According to Rule 3.10(2) of the Listing Rules, at least one of the independent nonexecutive Directors must have appropriate professional qualifications or accounting or related financial management expertise (the "Qualification"), and following the resignation of Mr. Leung, there would be no independent non-executive Director who has the Qualification as required under Rule 3.10(2) of the Listing Rules.

As a result of the insufficient number of independent non-executive Directors, the Company has also failed to comply with the requirements set out in Rule 3.21 of the Listing Rules with regard to the minimum number of members and the composition of the Audit Committee.

The Company will use its best endeavour to identify suitable candidate(s) to fill up the vacancy of independent non-executive Director and the vacancy on the Audit Committee. However, the Company has not been able to identify suitable candidate within three months from the date of resignation of Mr. Leung as required under Rules 3.11 and 3.23 of the Listing Rules. The Company will make further announcement as and when appropriate.

NON-COMPLIANCE WITH RULE 3.28 OF LISTING RULES

Since 30 July 2020, the position of company secretary of the Company has remained vacant. The Company has not been able to identify suitable candidate within three months from the date of resignation of Mr. Chen as required under rule 3.28 of the Listing Rules. The Company will use its best endeavour to identify suitable candidate(s) to fill up the vacancy and will make further announcement as and when appropriate.

20	CAA RESOURCES LIMITED Annual Report 2020

CORPORATE GOVERNANCE REPORT

CHANGE OF DIRECTOR

Ms. Xu Mijia resigned as executive director on 17 November 2020. Mr. Leung Yiu Cho resigned as independent non-executive director on 8 October 2020.

CROSS-DIRECTORSHIP

The Company confirmed that none of the Directors of the Company held cross-directorship in other companies or bodies during the year and up to the date of this report.

MEETINGS OF THE BOARD

Notices of regular Board meetings are given to all the Directors in accordance with the Articles of Association. Schedules and agenda of each meeting are made available to the Directors in advance. All the Directors are given an opportunity to include matters in the agenda for regular Board meetings. For other Board and committee meetings, notices are given within reasonable times in advance. Minutes of all Board meetings and committee meetings are kept by the company secretary and open for the Directors' inspection. Draft and final version of minutes are circulated to the Directors for their comment and record within a reasonable time after the Board meeting is held.

The attendances at the Board, respective Board committees meetings and the AGM held either in person or through other electronic means of communication for the year ended 31 December 2020 are as follows:

		Audit	Nomination	Remuneration
	Board	Committee	Committee	Committee	AGM/EGM
Executive Directors
Mr. Li Yang	5/5	N.A.	2/2	N.A.	1/1
Ms. Li Xiaolan	5/5	N.A.	N.A.	2/2	1/1
Mr. Wang Er	5/5	N.A.	N.A.	N.A.	1/1
Independent non-executive Directors
Dr. Li Zhongquan	5/5	5/5	2/2	2/2	1/1
Dr. Wang Ling	5/5	5/5	2/2	2/2	1/1

Note: number of meeting attended is shown as numerator and total number of meetings a director eligible to attend and held is shown as denominator.

The Company confirmed that all independent non-executive Directors attended the general meetings either in person or by telephone conference if he was not able to attend the meeting physically.

Annual Report 2020 CAA RESOURCES LIMITED

CORPORATE GOVERNANCE REPORT

COMMITTEES OF THE BOARD

The Board has established the Audit Committee, the Nomination Committee and the Remuneration Committee to oversee particular aspects of the affairs of the Company. Each of these committees is set up with specific written terms of reference in compliance with the CG Code. Each committee is delegated with authorities and duties within its terms of reference. The terms of reference of the Board committees are posted on the Company's website and the Stock Exchange's website and are available to Shareholders upon request.

The majority of the members of each Board committee are independent non-executive Directors and the list of the chairman and members of each Board committee is set out under "Corporate Information" on page 180.

Board committees are provided with sufficient resources to discharge their duties and, upon reasonable request, are able to seek independent professional advice in appropriate circumstances at the Company's expense.

The Company has established the Audit Committee in compliance with Rule 3.21 of the Listing Rules. The primary duties of the Audit Committee are to review and supervise the financial reporting process, internal control and risk management system of the Group, and to make proposals to the Board as to the appointment, re-appointment and removal of the Company's independent auditors and the related remuneration and appointment terms. The Audit Committee has reviewed the accounting standards and practices adopted by the Group and discussed with the management about the internal control and financial reporting matters.

The Company only had two audit committee members as at the date of this announcement, which is not in compliance with Rule 3.10(2) and Rule 3.21 of the Listing Rules.

The Company's and the Group's audited financial statements for the year ended 31 December 2020 have been reviewed by the Audit Committee, who was of the opinion that these statements complied with the applicable accounting standards, the Listing Rules and the legal requirements, and that adequate disclosures had been made. For the year ended 31 December 2020, five committee meetings were held and the attendance records of individual members are set out below:

	Number of meetings
Name of Directors	attended/held
Dr. Wang Ling	5/5
Dr. Li Zhongquan	5/5

22	CAA RESOURCES LIMITED Annual Report 2020

CORPORATE GOVERNANCE REPORT

Remuneration Committee

The Company established a remuneration committee pursuant to a resolution of our Directors passed at a Board meeting on 12 April 2013 with effect upon the Listing. The Remuneration Committee comprises two independent non-executive Directors, namely, Dr. Wang Ling (chairman of the Remuneration Committee), Dr. Li Zhongquan and one executive Director, namely Ms. Li Xiaolan.

The duties of the Remuneration Committee mainly include making recommendations on and approving the remuneration policy and structure and remuneration packages of all Directors and the senior management. The Remuneration Committee is also responsible for establishing transparent procedures for developing such remuneration policy and structure to ensure that no Director or any of his/ her associates will participate in deciding his/her own remuneration, which remuneration will be determined by reference to the performance of the individual and the Company as well as market practice and conditions. The Remuneration Committee would make recommendations to the Board on the Company's policy and structure for all Directors' and senior management remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy.

For the year ended 31 December 2020, two committee meetings were held and the attendance records of individual members are set out below:

	Name of meetings
Number of Directors	attended/held
Dr. Wang Ling	2/2
Dr. Li Zhongquan	2/2
Ms. Li Xiaolan	2/2

It is the Company's policy that the remuneration package of each Director and senior management shall be determined by reference to, inter alia, their duties, responsibilities, experience and qualifications.

Details of remuneration payable to the Directors and senior management by band are set out in note 14 and 15 to the Notes to Financial Statements of this annual report.

Annual Report 2020 CAA RESOURCES LIMITED

CORPORATE GOVERNANCE REPORT

Nomination Committee

The Company established a nomination committee pursuant to a resolution of our Directors passed at a Board meeting on 12 April 2013 with effect upon the Listing. The Nomination Committee comprises one executive Director, namely, Mr. Li Yang (chairman of the Nomination Committee), and two independent non-executive Directors, namely Dr. Wang Ling and Dr. Li Zhongquan. The primary duties of the Nomination Committee include identifying suitable candidates for the Directors and making recommendations to the Board, assessing the structure and composition of the Board, preparing, making recommendations to and supervising the execution of the nominating policy of the Company.

For the year ended 31 December 2019, two committee meetings were held and the attendance records of individual members are set out below:

	Name of meetings
Number of Directors	attended/held
Mr. Li Yang	2/2
Dr. Wang Ling	2/2
Dr. Li Zhongquan	2/2

The Company has received from each of the independent non-executive Directors an annual confirmation of their independence required under Rule 3.13 of the Listing Rules. The Company considered all the independent non-executive Directors to be independent. Besides, the Nomination Committee reviewed the appointment of each Director prior to that Director seeking re-election at the forthcoming AGM and was pleased to recommend the re-election of three eligible Directors to the Board.

The Company has adopted new policy on nomination of Directors to ensure diversity of perspectives of Directors on 1 January 2019. The new policy on nomination requires explicitly that in assessing the suitability of a proposed candidate, merit and potential contributions that such candidate could bring to the Board should take reference on the Company's Board Diversity Policy. Such assessment should include but not limited to gender, age, cultural and educational background, ethnicity, professional experience, independence, skills, knowledge and length of service.

EXTERNAL AUDITOR AND AUDITOR'S REMUNERATION

For the year ended 31 December 2020, the fees paid and payable to Prism CPA Limited in respect of services rendered to the Group amounted to approximately USD108,800.

24	CAA RESOURCES LIMITED Annual Report 2020

CORPORATE GOVERNANCE REPORT

DIRECTORS' AND AUDITOR'S RESPONSIBILITIES FOR THE FINANCIAL STATEMENT

It is the responsibility of the Board to present a balanced, clear and comprehensible assessment of the annual and interim reports, inside information announcements and other financial disclosures required under the Listing Rules, and reports to regulators as well as information required to be disclosed pursuant to applicable statutory requirements, such that they give a true and fair view of the state of affairs of the Group. The Board also confirms that the Company has an effective process for financial reporting and compliance with the Listing Rules.

The Directors acknowledge their responsibility for the preparation of the consolidated financial statements of the Company. In preparing the financial statements for the Year, the Directors have, with sufficient information provided by the senior management for an informed assessment, selected appropriate accounting policies and applied them consistently, made judgements and estimates that are prudent and reasonable, and prepared the financial statements on a going concern basis (as the case may be). Material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern are disclosed in Note 2 to the consolidated financial statements.

In addition, Prism CPA Limited has stated in the independent auditor's report its reporting responsibilities on the Company's consolidated financial statements for the year ended 31 December 2020.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board recognizes its responsibility for maintaining an adequate and sound enterprise risk management and internal control system and through the Audit Committee and, if necessary, an external firm of qualified accountants to provide internal control services, conducts reviews on the effectiveness of these systems at least annually, covering material controls, including financial, operational, compliance and strategic risk control functions. The Board understands that such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

During the year, a Malaysian legal adviser was appointed to provide advice to the Board and the designated compliance officers on an ongoing basis in respect of all relevant Malaysian laws and regulations, including changes to such laws and regulations, which may affect the Group's operations in Malaysia.

During the year the Board, through the Audit Committee, conducted review of both design and implementation effectiveness of the risk management and internal control systems of the Group, covering all material controls, including financial, operational and compliance controls, with a view to ensuring that resources, staff qualifications and experience, training programmes and budget of the Group's accounting, internal audit and financial reporting functions are adequate. In this respect, the Audit Committee communicates any material issues identified to the Board.

Annual Report 2020 CAA RESOURCES LIMITED

CORPORATE GOVERNANCE REPORT

During the year, the audit committee of the Company appointed Fuson Business Advisory Limited (''FBAL"), an external firm of qualified accountants to:

assist in identifying and assessing the risks of the Group through a series of workshops and interviews; and
independently perform internal control review and assess effectiveness of the Group's risk management and internal control systems.

Our Enterprise Risk Management Framework

The Group established its enterprise risk management framework in 2016. While the Board has the overall responsibility to ensure that sound and effective internal controls are maintained, management is responsible for designing and implementing an internal control system to manage all kinds of risks faced by the Group.

Through the risk identification and assessment processes, risks are identified, assessed, prioritized and allocated treatments. Our risk management framework follows the COSO Enterprise Risk Management

Integrated Framework, which allows the Board and management to manage the risks of the Group effectively. The Board receives regular reports through the Audit Committee that oversights risk management and internal audit functions.

Principal Risks

In the year of 2020, no material principal risks were identified by FBAL except for the following two areas of concern were considered to be of medium to high risk:

Risk of reducing business due to economic downturn or political environment

The Company's main business is the mining and sales of iron ore, and its customers are mainly steel plants. Steel production is closely related to the economic and political environment, so the Company's business will also be affected by changes in the economic cycle or political environment. Once the global economy is deteriorating or political factors are uncertain, steel demand may be reduced, which indirectly affects the Company's sales.

On the other hand, China has entered the overall economic downturn cycle in recent years, and the production capacity of products including steel has been surplus. Although China has tried to solve the problem through the "One Belt, One Road" and other plans, the effect is doubtful in the short term.

Actions taken by the Company

To resolve the operational risk as stated above, the Company has developed a well-established written policy to document the internal control procedures. The management will continue to monitor the daily operations. The Company would conduct regular internal control audits and risk assessments by engaging external internal control consultants.

For strategic risk arising from changing global economic and political environment, the management would keep their eyes on any relevant progress or changes in global and economic environment, and maintains a prudent development strategy, actively promotes diversified business development and diversifies income sources.

26	CAA RESOURCES LIMITED Annual Report 2020

CORPORATE GOVERNANCE REPORT

Our Risk Control Mechanism

The Group adopts a "three-layer" corporate governance structure with operational management and controls performed by operations management, coupled with risk management monitoring carried out by the finance and compliance team and independent internal audit outsourced to and conducted by FBAL. The Group maintains a risk register to keep track of all identified major risks of the Group. The risk register provides the Board, the Audit Committee, and management with a profile of its major risks and records management's action taken to mitigate the relevant risks. Each risk is evaluated at least annually based on its likelihood of occurrence and potential impact upon the Group. The risk register is updated by management as the risk owners with addition of new risks and/or removal of existing risks, if applicable, at least annually, after the annual risk evaluation has been performed. This review process can ensure that the Group proactively manages the risks faced by it in the sense that all risk related parties have access to the risk register and are aware of and alert to those risks in their area of responsibility so that they can take follow-up action in an efficient manner.

Our risk management activities are performed by management on an ongoing process. The effectiveness of our risk management framework will be evaluated at least annually, and periodic management meeting is held to update the progress of risk monitoring efforts. Management is committed to ensure that risk management forms part of the daily business operation processes in order to align risk management with corporate goals in an effective manner.

There is currently no internal audit function within the Group. The directors have reviewed the need for an internal audit function and are of the view that in light of the size, nature and complexity of the business of the Group, it would be more cost effective to appoint external independent professionals to perform internal audit function for the Group in order to meet its needs. Nevertheless, the directors will continue to review at least annually the need for an internal audit function.

The Company will continue to engage external independent professionals to review the Group's system of internal controls and risk management annually and further enhance the Group's internal control and risk management systems as appropriate.

The Audit Committee has reviewed the internal control review and the enterprise risks assessment reports. Based on the controls in place as well as the ongoing improvements taken by management, is satisfied that there are effective and adequate internal controls in the Group. The Board is of the view that the Company has complied with the CG Code for the year ended 31 December 2020.

Disclosure of Inside Information

The Group has put in place a set of policy for the disclosure of inside information which sets out the procedures and internal controls for the handling and dissemination of inside information in a timely manner and in compliance with the SFO. The policy and its effectiveness are subject to review on a regular basis.

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CORPORATE GOVERNANCE REPORT

SHAREHOLDERS' RIGHTS

The Board and the management of the Group endeavored to ensure all the Shareholders are treated equally and have their deserved rights. The Board has established the Shareholders' communication policy to maintain an open and effective communication with the Shareholders and to update the Shareholders on relevant information on the Group's business in a timely manner.

To safeguard Shareholder interests and rights, a separate resolution is proposed for each substantially separate issue at Shareholder meetings, including the re-election of individual directors.

All resolutions put forward at Shareholder meetings will be voted on by poll pursuant to the Listing Rules and poll results will be posted on the websites of the Company and of the Stock Exchange after each Shareholder meeting.

Any Shareholder may appoint a proxy or representative to attend the general meeting, and they are entitled to exercise the same voting rights in the meeting.

The notice of AGM is distributed to all Shareholders at least 21 clear days and 20 clear business days prior to the AGM and the accompanying circular also sets out details of each proposed resolution and other relevant information as required under the Listing Rules. The chairman of the AGM exercises his power under the Company's Articles of Association to put each proposed resolution to the vote by way of a poll.

Procedures for convening an Extraordinary General Meeting and Putting Forward Proposals at General Meetings by Shareholders.

Pursuant to Article 58 of the Company's Articles of Association, an extraordinary general meeting shall be called by the Board on the written requisition of any one or more Shareholders of the Company, provided that such Shareholder(s) held at the date of deposit of the requisition not less than one-tenth of the paid up capital of the Company carrying the right of voting at general meetings of the Company. Such meeting shall be called for the transaction of any business specified in the written requisition to the Board or the Secretary of the Company; and shall be held within two months after the deposit of such requisition. If within twenty-one days of such deposit the Board fails to proceed to convene such meeting, the requisitionist(s) himself (themselves) may do so in the same manner, and all reasonable expenses incurred by the requisitionist(s) as a result of the failure of the Board shall be reimbursed to the requisitionist(s) by the Company.

There are no statutory provisions granting the right to Shareholders to put forward or move new resolutions at general meetings under the Companies Law or the Articles of Association of the Company. Shareholders who wish to move a resolution may request the Company to convene a general meeting following the procedures set out in the preceding paragraph.

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COMMUNICATION WITH SHAREHOLDERS

To embrace best corporate governance principles and practice, the Group, as a listed company, emphasizes the importance of maintaining good communication with the Shareholders and investors, so as to increase the Company's transparency and undertaking by the Shareholders. The AGM provides a useful forum for Shareholders to exchange views with the Board, external auditor and the chairman of each of the Board committees attend the general meeting and are pleased to answer Shareholders' enquiries. Furthermore, to foster two-way communication amongst the Company, its Shareholders and potential investors, and to update them abreast of the latest industry updates, corporate communications and the Group's announcements and business development in a timely manner, the Company has a formal channel to respond to enquiries from Shareholders and the public. In the event that a Shareholder wishes to put forward a proposal to the Board, he/she may put forth his/her enquiry in writing to the Hong Kong office of the Company at Unit 2413A, 24/F, Lippo Centre Tower One, 89 Queensway, Admiralty, Hong Kong and the Company will act on the subject matter accordingly. In addition, the Company is committed to maximizing the use of its website at www.caa-resources.com and the website of the Stock Exchange at www.hkexnews.hk as a channel to provide updated information in a timely manner and strengthen the communication with both the Shareholders and the public.

DIVIDEND POLICY

The Company approved and adopted a dividend policy (the "Dividend Policy") effective from 1 January 2019.

The Company endeavours to strike a balance between maintaining sufficient working capital, developing and ensuring smooth running of the business of the Group, and sustainable returns to the shareholders of the Company ("Shareholders").

Under the Dividend Policy, the Company does not propose a pre-determined dividend payout ratio. Dividends may be declared as interim dividends, special dividends or proposed by the Board as final dividend from time to time. Dividends would be paid out of the Company's profits and other distributable reserves subject to the respective laws, rules and regulations of the respective jurisdictions governing the Group companies domiciled and the companies' own constitutions.

According to the Dividend Policy, in deciding whether to propose a dividend and in determining the dividend amount, the Board shall take into account, inter alia, the following factors:

the Group's actual and expected financial and business needs;
the Group's expected working capital requirements and future expansion plans;
the level of the Group's debts to equity ratio, return on equity ratio and the relevant financial covenant;
the restrictions on payments of dividends that may be imposed by the Group's lenders or other third parties, if any;

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CORPORATE GOVERNANCE REPORT

the Group's liquidity position;
the general economic conditions, business cycle of the Group's business and other internal and external factors that may have impact on the business or financial performance and position of the Group;
retained earnings and distributable reserves of the Company; and
other factors that the Board deems relevant and appropriate.

The declaration, payment, and amount of final dividends will be subject to the Board's discretion and the approval of the Shareholders.

The Board shall continue to review the Dividend Policy and reserves the right in its sole and absolute discretion to update, amend and/or modify the Dividend Policy at any time the Board thinks fit.

The Dividend Policy shall in no way constitute a legally binding commitment by the Company that dividends will be paid in any particular amount and/or in no way obligate the Company to declare a dividend at any time or from time to time.

PROCEDURES FOR DIRECTING SHAREHOLDERS' ENQUIRIES TO THE BOARD

Shareholders may at any time send their enquiries and concerns to the Board in writing to the Hong Kong office of the Company whose contact details are as follows:

Unit 2413A, 24/F, Lippo Centre Tower One, 89 Queensway, Admiralty, Hong Kong

CHANGE OF AUDITOR IN LAST THREE YEARS

On 28 February 2018, in the shareholders meeting, the termination of the engagement of Ernst & Young as auditor of the Company and the appointment of Graham H. Y. Chan & Co. as the auditor of the Company were duly approved. For details, please refer to the circular dated 6 February 2018 and the poll results of the extraordinary general meeting held on Wednesday, 28 February 2018. On 14 May 2020, Graham H. Y. Chan & Co. resigned as auditor and ZHONGHUI ANDA CPA Limited was appointed as auditor. On 29 June 2020, ZHONGHUI ANDA CPA Limited resigned as auditor and Prism CPA Limited was appointed as auditor. Save as disclosed above, there was no change of auditor during the past three years.

CHANGES TO CONSTITUTIONAL DOCUMENTS

There was no change in the Company's constitutional documents for the year ended 31 December 2020.

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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

ABOUT THE ESG REPORT

The Company is pleased to present its Environmental, Social and Governance ("ESG") Report (the "Report"). This Report herein focuses on providing an overview of the environmental and social aspects of the Group, and outlines how we seek to continually improve our operational strategy in regard to our environment and society in order to cope with the global standards of sustainability.

During the process of our preparation of this ESG Report, the Group has conducted thorough review and evaluation of the existing policies and practices. The ESG Report covers the period which is consistent with the financial year of our Annual Report of 2020. Unless otherwise stated, this Report covers the data of all operating units of the Group.

Report Scope and Boundary

The ESG Report is prepared in accordance with the selected global, local and industrial standards and best practices, which include, but not limited to, the ESG Reporting Guide as set out in Appendix 27 to the Listing Rules and any applicable accounting and financial reporting standards in Hong Kong.

In order to comply with the disclosure requirement of the "comply or explain" provision, the ESG Report has outlined our overall performance in respect of environmental protection, human resources, operating practice and community involvement for the financial year of 2020.

This ESG Report has been approved by the Board of the Company on 30 April 2021.

Information and Feedbacks

For details in relation to our financial performance during the financial year of 2020, please visit our website or Annual Report. Your feedback and comments are important to us. Please send us an email addressed to enquiry@caamine.com if you have any queries on the ESG Report.

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OUR STAKEHOLDERS

As stakeholders play a crucial role in sustaining the success of our business, we make use of various communication channels to understand and engage our stakeholders. The probable points of concern of the stakeholders and the way of our communication and responses are listed below.

Stakeholders	Possible points of concern
HKEx	Compliance with listing rules, timely
	and accurate announcements.
Government	Compliance with laws and
	regulations, preventing tax evasion,
	and social welfare.
Investors	Corporate governance system,
	business strategies and performance,
	investment returns.

Communication and responses

Meetings, training, workshops, programs, website updates and announcements.

Interaction and visits, government inspections, tax returns and other information.

Organizing briefing sessions and seminars, interviews, shareholders' meetings, issue of financial reports or operation reports for investors, media and analysts.

Media & Public	Corporate governance, environmental	Issue of newsletters on the
	protection, human right.	Company's website.
Suppliers	Payment schedule, and stable	Performance of site visits.
	demand.
Customers	Service quality, service delivery	After-sales services.
	schedule, reasonable prices, service
	value, and personal data protection.

Employees	Rights and benefits of employee
	compensation, training and
	development, work hours, and
	working environment.
Community	Community environment,
	employment opportunities,
	community development, and social
	welfare.

Conducting union activities, training, interview with employees, internal memos, and employee suggestion boxes.

Developing community activities, employee voluntary activities, and community welfare subsidies and donations.

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Materiality Assessment

During the financial year of 2020, the Group conducted a comprehensive materiality assessment on the environmental, social and governance related issues. This involved conducting interviews and/or surveys with internal and external stakeholders to identify areas having the most significant operating, environmental and social impacts towards our business. After integrating the grading results from the stakeholders with the sustainable development goals of the Group, the management of the Group summarized the issues in priority order and prepared the materiality matrix.

High

Importance to stakeholders

Product responsibilities

Use of resources	Health and Safety

Environmental and natural resources

	Anti-corruption
		Employment
Emission	Labour standards	Development and training

Community investment	Supply chain management

Importance to the Group

High

The results of the materiality assessment will be used to guide the Group in formulating future environmental, social and governance plans and objectives, in a bid to creating sustainable value for stakeholders.

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ENVIRONMENTAL

Overview

Our primary business operations include iron ore mining, crushing and beneficiation as well as the sale of iron products in the form of iron ore concentrates and iron ore fines. We sell iron ore products primarily to steel manufacturers and/or their representative purchase agents in China.

Due to the Covid-19 pandemic, our operations were interrupted and the mining and production activities were operated on a limited scale throughout the year of 2020. As such, the annual mining volume and production volume were 13.2 Kt and 4.8 Kt respectively. Due to limited mining activities in the financial year of 2020, the total amounts of emissions of air pollutants and greenhouse gas, use of resources, discharges into water and land, and generation of hazardous and non-hazardous waste were immaterial.

We comply with all relevant laws and regulations that are related to environmental protection in Hong Kong, China and Malaysia that have a significant impact on us, and are actively updating our "Green Policies" in order to incorporate the idea of sustainable development into our Group's day-to-day operations. We strive to manage our physical operations in an efficient and sustainable manner. We continually look for opportunities to improve our performance and corporate strategies to mitigate the adverse impact on the environment caused by our operations.

Compliance and Grievance

During the financial year of 2020, we comply with all relevant environmental laws and regulations that have a significant impact on us, including but not limited to, the Environmental Protection Law in China, and the Environmental Quality Act 1974 of Malaysia. No confirmed non-compliance incidents or grievances were noted by us in relation to environmental issues.

Emissions

The major types of pollutants created during open cut mining, blasting and scale of the mining operation are nitrogen oxides, carbon monoxide and dust. However, since the mining and production activities were operated on a limited scale throughout the year of 2020, the total amount of air emissions is minimal and immaterial, and thus, no data was recorded during the financial year of 2020.

The greenhouse gas ("GHG") emissions resulted mainly from four types of activities of the Group, including, but not limited to, vehicle uses with direct emissions, air-conditioning of the operating units with direct emissions, employees travelling by air with indirect emissions, and mining processes with direct emissions.

Motor vehicles

We own several cars for travelling of our management and picking up our guests or clients. However, transportation is not a material part of our business. Furthermore, all vehicles are under regular maintenance check to ensure fuel consumption efficiency and road safety with a view to keeping carbon dioxide emission from the vehicles at the minimum level.

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Air-conditioning

Employees are encouraged to set offices' air-conditioners at a comfortable temperature and all unused air-conditioners are switched off. The Group has also put reminders at prominent places for employees' awareness of electricity consumption and energy conservation during office hours of business operations.

Travelling by air

In the financial year of 2020, the total number of business air trips by employees was 21 times (2019: 234 times) and the total CO2 emissions were 3,118.77 kg (2019: 34,752.12 kg). Employees are only required to travel by air, when necessary, and, in most of the time, we arranged telephone or video conference calls rather than face-to-face meetings in order to reduce the carbon emissions that are indirectly caused by air travel.

The process of mining

Even though mining and production activities were operated on a limited scale throughout the financial year of 2020, we often fulfill our responsibility to protect, restore and treat the environment by implementing measures to reduce energy consumption and GHG emissions. The measures that we have taken are listed as follows:

The iron ore business minimizes the mining loss rate and dilution rate and maximizes the processing recovery rate by optimizing its mining methods and processing techniques, strengthening the management of on-site operations, and establishing strict technical standards for mining. Technologies are utilized to improve the extraction rate and recovery rate of mining, thus creating less impact on the environment.
In the case of happening of an accident, at the aftermath of the accident, we would investigate and analyze the cause, propose and implement remedial measures, and assess the effectiveness and impacts of the remedial measures on the environment with an aim to prevent any further impact the accident would cause to the environment, and also to avoid the occurrence of the accident.
We use diesel to run all equipment. Diesel consumption has been reduced by using diesel saving equipment. Equipment is required to be turned off when not in use so as to avoid unnecessary emission of pollutants into the air.
Water pool is used for the process of iron ore cleaning. It produces very little or almost no diesel fumes or dust, and thus, less pollutants are emitted into the air.

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Use of Resources

We always endeavor to promote sustainability and aim to cease our resources wastage to provoke detrimental harm to the environment. Various measures have been implemented to attain the goal of efficient use of resources. These measures have been effectively communicated to all levels of staff, ensuring that all employees understand clearly the importance of conserving energy and making full use of the available resources during operations.

Since we focused on commodities trading for the financial year of 2020 and 2019, the consumption of water, electricity and other natural resources is minimal; the measures taken to minimize the usage of resources are stated below.

Water Usage

Water is the key component for the on-site beneficiation process. It is convenient for the Group to source ample amount of natural water from local streams, natural runoff and pumping from a retention pond in the Ibam Mine area. As for the other offices of the Group, due to the nature of the operations, water consumption mainly arises from the daily use of water by the employees at the offices during working hours, and the domestic sewage is directly discharged into municipal sewage pipelines.

As the water bills for offices in Hong Kong and Chengdu, China were included in the rent, while natural water was obtained from local streams in Malaysia, thus we are unable to collect and disclose the relevant data.

Electricity and Energy Usage

Our Hong Kong office's electricity consumption for the financial year of 2020 was approximately at 459 kWh (2019: 12,249 kWh), and the total emission of CO2 was 367.19 kg (2019: 9,799.20 kg), mainly arising from the daily office operations. The following measures are adopted and implemented by us to preserve energy and reduce electricity usage:

Reduce power consumption by using power-saving facilities;
Turn off unused lighting and appliances to reduce energy consumption;
Turn off air conditioning and lights after office hours and in idle rooms; and
Regularly maintain office equipment to ensure efficient operation of office equipment such as air conditioners, computers, lights, and refrigerators, etc.

Only the units of usage of electricity of the Group's Hong Kong office are able to be collected, while in Chengdu, China and Malaysia, the electricity fees were already included in the rent, and thus, we are unable to collect and disclose the relevant data of electricity usage in Chengdu, China and Malaysia.

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Generation of Waste

The solid waste generated mainly arises from the Group's day-to-day operations, including, but not limited to, office-use paper, office waste and waste generated from the mining of iron ores. In order to alleviate the pressure on landfills and promote environmental friendliness within the Group, we have implemented various measures to encourage recycling of office supplies and other materials, thus eliminating the over-consumption of unnecessary materials.

In the financial year of 2020, we complied with all relevant laws and regulations that have a significant impact on us, including, but not limited to, Waste Disposal Ordinance in Hong Kong, Solid Waste and Public Cleansing Management Act 2007 in Malaysia and the Law of China on Prevention and Control of Environmental Pollution by Solid Waste in China. No confirmed material non-compliance incidents or grievances were noted by us in relation to environmental issues.

Furthermore, no chemical or clinical hazardous waste was generated and we did not generate large amount of non-hazardous waste during our daily operations, and therefore, the data of non-hazardous waste was not included in the calculation. Moreover, no packing materials were used for metal products, and thus, no data in this respect is available.

The Environment and Natural Resources

Reduction of printing and paper usage

We require our staff to make full use of office paper before its disposal. Various measures have been incorporated into our business operations, such as adopting the use of environmental-friendly paper and promoting the use of double-sided printing. For any single-sided printing, the relevant paper should be reused under the circumstances that no confidential information was printed on one side of the paper. Moreover, used up ink cartridges were properly recycled so as to avoid the generation of hazardous waste. We will continue to leverage the use of technology for communication with our employees and customers; moving towards an operation of paperless system.

Reduction of waste generated from mining of ore

In order to minimize our impact on the environment and manage the potential risks relating to environmental protection matters, we will conduct reclamation/rehabilitation works, and also recycle and reuse waste water at the ore processing lines and tailing ponds. We occupy part of the land when conducting mining activity. After the activity has been completed, we will restore the land and vegetation.

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Data on Greenhouse Gas Emission
	Unit		Carbon emission (CO2) in kg
	2020	2019	2020	2019
Scope 2
Electricity consumption	459 kWh	12,249 kWh	367.19	9,799.20
Scope 3
Business trips of employees by air	21 times	234 times	3,118.77	34,752.12

Total emission of GHG			3,485.96	44,551.32

SOCIAL

Employment and Labour Practices

Employee engagement has been our core strategy for enhancing productivity and workforce stability. As such, we focus on building a safe and enjoyable working environment for all employees. We have complied with all laws and regulations in relation to employment that have a significant impact on us, including but not limited to, Hong Kong Employment Ordinance, Employment Act 1955 in Malaysia and Labour Law of China.

Compliance and Grievance

During the financial year of 2020 and 2019, no confirmed non-compliance incidents or grievances were noted by the Company in relation to employment aspects.

Employment

We strictly comply with the requirements of the Employment Ordinance, the Minimum Wage Ordinance, the Employees' Compensation Ordinance as well as other relevant laws and regulations which cover employment protection and benefits. We have a set of personnel policy and procedures that set out our standard internal procedures relating to recruitment and promotion, working hours, holidays, equal opportunities, compensation, dismissal, diversity of origins, antidiscrimination and other human resources treatments and benefits of our employees, etc., to provide a set of standardized and adequate guideline on work practice for our employees.

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As at 31 December 2020, the Group had 19 employees (2019: 39), as categorized by employment type, age, gender and geographical locations:

	2020	2019
Number of employees	19	39

By employment type
- Full-time employees	19	39
- Part-time employees	-	-

By age group
- 30 or below	-	-
- 31-50	13	34
- 51 or above	6	5

By gender
- Male	13	24
- Female	6	15

By geographical locations
- Hong Kong	3	3
- China	12	31
- Malaysia	4	5

Equal opportunity

All employees are entitled to equal opportunity in terms of treatment and promotion. In practice, employees can file a complaint or accusation against senior management if he or she is unpleased with how the senior management has treated him or her. The human resources department is responsible for handling these cases. All employees are treated equally and respectfully. It is our aim to let employees work in a friendly and peaceful environment.

In addition, all of our board members are selected based on their professional experience, skills and knowledge irrespective of their gender, age, cultural and educational background and ethnicity.

Anti-discrimination policy

The human resources department is responsible for conducting investigations over reported incidents in regard to discrimination or abuse. If a report of discrimination or abuse is confirmed, we will terminate the relevant employee's employment contract and seek for legal actions against the offender depending on the seriousness of the incident.

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Attract and retain talents

Our remuneration policies are in line with prevailing market practices and are determined on the basis of the competency, qualifications and experience of individual employees. Management has been constantly reviewing the staff remuneration package and employees' promotion opportunities. Adjustments will be made, usually annually, to conform to the market standard in order to retain talents and ensure the offer is competitive as compared to our peers in the industry.

We emphasize the unity and harmony within the working environment. Over the years, our human resources department has contributed numerous efforts in organizing activities to strengthen the bonding of employees within our family. Team building activities and gatherings are organized regularly so as to let our employees maintain their work-life balance, and also help build unity and a harmonious working environment. During the financial year of 2020 and 2019, the employee turnover rate was as follow:

	2020	2019
By age group
- 30 or below	N/A	N/A
- 31-50	52%	19%
- 51 or above	31%	28%

By gender
- Male	34%	14%
- Female	46%	28%

By geographical locations
- Hong Kong	0%	0%
- China	41%	24%
- Malaysia	0%	0%

Welfare and benefits

Employees are entitled to all holidays as stated on the Employment Act, apart from that, employees are also entitled to generous annual leave package, including 1 to 3 days' marriage leave and 1 to 3 days' funeral leave.

Moreover, we continue to uphold the government laws and provide comprehensive support to pregnant female employees. We have a "Support Policy" to show support to all pregnant employees and to ensure that their original job is available to them upon their return from maternity leave. Furthermore, during their pregnancy period, we prohibit any pregnant employees to perform heavy lifting assignments so as to ensure that both the mother and the baby are safe at CAA Resources.

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Health and Safety

We comply with the relevant laws and regulations regarding industrial safety, hygiene and health, and other caring arrangements for employees that have a significant impact on us, including, but not limited to, Occupational Safety and Health Ordinance in Hong Kong and Occupational Safety and Health Act 1994 in Malaysia. Apart from employees' compensation insurance, we provide other fringe benefits to our employees, such as medical cover. Our business operations do not involve any high-risk work activities that could lead to serious industrial events or occupational health problems. During the financial year of 2020 and 2019, no case of injuries was reported and thus no lost day due to work injury.

In addition, we have implemented the following policies to create and maintain a good, comfortable and healthy work environment for our employees:

Keep all emergency exits in the workplace unobstructed;
Provide sufficient lights at workplace;
Prohibit smoking in the workplace; and
Conduct regular safety inspections and fire drill training.

Development and Training

We believe that investing in employees through training will help promote job satisfaction, work motivation and staff loyalty. Different types of training were provided to employees to make sure that all staff can have updated information and enough knowledge and skills to provide quality services to our customers. The Company provided on-the-job training to our employees, and all new joiners received induction training on their first day of employment.

Moreover, employees are encouraged to attend external training seminars and courses that can help them gain updated knowledge with the fast changing business world taken into account. The training seminars and courses include, but not limited to, updates on the Listing Rules, corporate governance, changes and development of relevant laws and regulations, as well as the introduction of financial technologies and strategic investment opportunities. As such, we strive to refresh our employees' knowledge and let them maintain sustainable professional development.

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During the financial year of 2020 and 2019, there are 72 and 72 hours of training received by the employees of the Group.

	2020	2019
Total hours of training received by the employees	72	72

The percentage of employees trained by employee categories
- Management	100%	100%
- Other staff	73%	91%

The percentage of employees trained by gender
- Male	79%	88%
- Female	100%	100%

Average training hours by employee categories
- Management	53	5.1
- Other staff	1.4	1.1

Average training hours by gender
- Male	1.7	1.5
- Female	2.8	2.4

Labour standards

We are committed to complying with the Employment Ordinance in Hong Kong, the PRC Employment Contract Law, the PRC Labour Law, and the Employment Regulations 1957 in Malaysia. Every act of engagement is subject to a stringent internal review process that involves a well-defined monitoring procedure designed to verify a candidate's personal information in order to avoid misrepresentation and any form of child labour.

The practice of forced and child labour is strictly prohibited. If the management discovers that there has been any illegal practice of child or forced labour, we will immediately terminate the employment contract of the relevant executives. During the financial year of 2020 and 2019, all employees are over the age of 18, and have been properly employed in accordance with the requirements of all applicable laws and regulations.

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OPERATING PRACTICES

Supply Chain Management

We aim to provide comprehensive solutions that meet customers' needs and establish a comprehensive vertical supply chain management system through resources integration and supply management. The Group assesses whether suppliers are qualified by considering their locations, transportation methods and means of packaging, and supply history record, and such assessment is carried out at least once every year. We will only work with partners who operate their business in a professional and ethical manner.

The Group's criteria for selecting suppliers are based on fair and clear standards, such as the product quality, post-sale services, prices and payment days and cooperation history, to procure not only most productive but also environmental-friendly resources and products and services with the highest quality. The Group arranges this assessment for suppliers on a regular basis and applies timely treatment for those suppliers who fail in the assessment, such as termination of procurement. We focus on close cooperation with suppliers to reduce the environmental impact of products being manufactured in the production process, and ensure the quality of services provided to our customers.

During the financial year of 2020, we purchased from two suppliers (2019: 6 suppliers). Our suppliers are mainly located in Hong Kong, Malaysia. It is our wish to collaborate with our suppliers in innovation development and application, participation in production process enhancement for the continuous optimization of supply chain capabilities as well as fulfilment of our responsibilities in social and environmental protection.

Product Responsibility

We strictly comply with laws and regulations with regard to product responsibility in Hong Kong, Malaysia and PRC that have a significant impact on us, including, but not limited to, the Consumer Protection Law of China, China's Law of Tort, the Trade Description Ordinance and the Sale of Goods Ordinance in Hong Kong, and the Consumer Protection Act 1999 in Malaysia.

There were no major breaches of the Trade Description Ordinance, nor were we sued for copyright infringement in the financial year of 2020 and 2019. Also, no products have been returned to us by customers due to health and safety issue and no complaints have been received related to our products in that years.

Quality assurance

In order to ensure the quality of our products, we maintain long-term relationship with those qualified suppliers with good reputation. Quality is based on the content of the mineral; and the Group obtains laboratory test results from its suppliers so as to ensure that all products are with high quality.

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Data Protection and Privacy

The Group has security measures in place to provide adequate protection and confidentiality of all corporate data and information. It protects and maintains information confidentiality in its operation. During the year, the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong), the Regulations of the PRC for Safety Protection of Computer Information Systems, Personal Data Protection Act of Malaysia were fully complied with to protect the rights of employees, clients, and business associates.

Anti-corruption

We clearly understand that financial crime can have significant consequences upon our customers and us. Moreover, the community and the economies in which we operate can also be greatly impacted. Therefore, we are highly committed to participating in industry-wide efforts to address the problem of corruption.

We maintain and implement our own anti-money laundering, counter-terrorist financing, antibribery, anti-corruption and anti-fraud practices and procedures. We do not support, nor do we tolerate, any corruption practice and the payment or receipt of bribes for any purpose. We have set out a clear policy to guide our employees' behaviour in this area, and have complied with all relevant laws and regulations that have a significant impact on us, including, but not limited to, Criminal Law of China, Anti-Money Laundering Law of China, the Prevention of Bribery Ordinance in Hong Kong and the Malaysian Anti-Corruption Commission Act 2009.

Our whistleblowing policy provides a dedicated confidential reporting channel for employees and external stakeholders such as customers and suppliers to raise their concerns regarding unethical behaviour, and report malpractice and misconduct. Upon receiving the complaints or whistle-blowing, the Group will carry out inspection and investigation according to the complaint and will collect relevant evidence for verification.

During the financial year of 2020 and 2019, there was no report of any corruption or bribery behavior within the Group.

Community Investment

We deeply understand the importance of giving back to the society. Therefore, we encourage our employees to take part in community services so as to contribute to a more sustainable and harmonious society.

In addition, the Group maintains an open channel of communication with its stakeholders and communities to understand their motivations, goals and needs through continuous conversation in order to achieve the Group's contributions in corporate social responsibility activities.

44	CAA RESOURCES LIMITED Annual Report 2020

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

CONTENT OF INDEX OF ESG REPORTING GUIDE

Subject Areas, Aspects and General Disclosures and KPIs	Section	Pages

Environment

Aspect 1: Emissions	General Disclosure Information on:	Emissions	34
	(a) the policies; and
	(b) compliance with relevant laws and
	regulations that have a significant
	impact on the issuer relating to air and
	greenhouse gas emissions, discharges
	into water and land, and generation of
	hazardous and non-hazardous waste.
	Note: Air emissions include NOx, SOx, and
	other pollutants regulated under national laws
	and regulations. Greenhouse gases include
	carbon dioxide, methane, nitrous oxide,
	hydrofluorocarbons, perfluorocarbons and
	sulphur hexafluoride. Hazardous wastes are
	those defined by national regulations

KPI A1.1	The types of emissions and respective	Emissions	35, 36
	emissions data.
KPI A1.2	Greenhouse gas emissions in total (in tonnes)	Emissions	38
	and, where appropriate, intensity (e.g. per
	unit of production volume, per facility).
	- Scope 1 emissions
	- Scope 2 emissions
	- Scope 3 emissions

KPI A1.3	Total hazardous waste produced (in tonnes)	Emissions	37
	and, where appropriate, intensity (e.g. per
	unit of production volume, per facility).

KPI A1.4	Total non-hazardous waste produced (in	Generation of	37
	tonnes) and, where appropriate, intensity (e.g.	waste
	per unit of production volume, per facility).

KPI A1.6	Description of how hazardous and non-	Generation of	37
	hazardous wastes are handled, and a	waste
	description of reduction target(s) set and steps
	taken to achieve them.

Annual Report 2020 CAA RESOURCES LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Subject Areas, Aspects and General Disclosures and KPIs	Section	Pages

Environment
Aspect A2: Use of	General disclosure Policies on the efficient	Use of	36
Resources	use of resources, including energy, water and	Resources
	other raw materials. Note: Resources may be
	used in production, in storage, transportation,
	in buildings, electronic equipment, etc.

KPI A2.1	Direct and/or indirect energy consumption	Use of	36
	by type (e.g. electricity, gas or oil) in total	Resources
	(kWh in '000s) and intensity (e.g. per unit of
	production volume, per facility).

KPI A2.2	Water consumption in total and intensity (e.g.	Use of	36
	per unit of production volume, per facility).	Resources

KPI A2.3	Description of energy use efficiency target(s)	Use of	36
	set and steps taken to achieve them.	Resources

KPI A2.4	Description of whether there is any issue in	Use of	36
	sourcing water that is fit for purpose, water	Resources
	efficiency target(s) set and steps taken to
	achieve them.

KPI A2.5	Total packaging material used for finished	Use of	37
	products (in tonnes) and, if applicable, with	Resources
	reference to per unit produced.

Aspect A3: The	General Disclosure Policies on minimizing	The Environment	37
Environment and	the issuer's significant impact on the	and Natural
Natural Resources	environment and natural resources.	Resources

KPI A3.1	Description of the significant impacts of	The Environment	37
	activities on the environment and natural	and Natural
	resources and the actions taken to manage	Resources
	them.

46	CAA RESOURCES LIMITED Annual Report 2020

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Subject Areas, Aspects and General Disclosures and KPIs	Section	Pages

Social
Aspect B1:	General Disclosure Information on:	Employment and	38
Employment	(a)	the policies; and	labour practices
	(b)	compliance with relevant laws and
		regulations that have a significant impact
		on the issuer relating to compensation
		and dismissal, recruitment and
		promotion, working hours, rest periods,
		equal opportunity, diversity, anti-
		discrimination, and other benefits and
		welfare.

KPI B1.1	Total workforce by gender, employment type,	Employment and	39
	geographical region and age group.	labour practices

KPI B1.2	Employee turnover rate by gender,	Employment and	40
	employment type, geographical region and	labour practices
	age group.

Aspect B2: Health and	General Disclosure Information on:	Health and	41
Safety	(a)	the policies; and	Safety
	(b)	compliance with relevant laws and
		regulations that have a significant impact
		on the issuer relating to providing a safe
		working environment and protecting
		employees from occupational hazards.

KPI B2.1	Number and rate of work-related fatalities.	Health and	41
			Safety

KPI B2.2	Lost days due to work injury.	Health and	41
			Safety

KPI B2.3	Description of occupational health and safety	Health and	41
	measures adopted, how they are implemented	Safety
	and monitored.

Annual Report 2020 CAA RESOURCES LIMITED

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Subject Areas, Aspects and General Disclosures and KPIs	Section	Pages

Aspect B3:	General Disclosure Policies on improving	Development	41
Development and	employees' knowledge and skills for	and Training
Training	discharging duties at work. Description of
	training activities.

KPI B3.1	The percentage of employees trained by	Development	42
	gender and employee category (e.g. senior	and Training
	management, middle management).

KPI B3.2	The average training hours completed per	Development	42
	employee by gender and employee category.	and Training

Operating Practices

Aspect B4: Labour	General Disclosure Information on:	Labour	42
Standards	(a) the policies; and	Standards
	(b) compliance with relevant laws and
	regulations that have a significant impact
	on the issuer relating to preventing child
	and forced labour.

KPI B4.1	Description of measures to review	Labour	42
	employment practices to avoid child and	Standards
	forced labour.

KPI B4.2	Description of steps taken to eliminate such	Labour	42
	practices when discovered.	Standards

Aspect B5: Supply	General Disclosure Policies on managing	Supply Chain	43
Chain Management	environmental and social risks of the supply	Management
	chain.

KPI B5.1	Number of suppliers by geographical regions.	Supply Chain	43
		Management

KPI B5.2	Description of practices relating to engaging	Supply Chain	43
	suppliers, number of suppliers where the	Management
	practices are being implemented, how they
	are implemented and monitored.

48	CAA RESOURCES LIMITED Annual Report 2020

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

Subject Areas, Aspects and General Disclosures and KPIs	Section	Pages

Operating Practices
Aspect B6: Product	General Disclosure Information on:	Product	43
Responsibility	(a)	the policies; and	Responsibility
	(b) compliance with relevant laws and
		regulations that have a significant impact
		on the issuer relating to health and
		safety, advertising, labelling and privacy
		matters relating to products and service.

KPI B6.1	Percentage of total products sold or shipped	Product	43
	subject to recalls for safety and health	Responsibility
	reasons.

KPI B6.2	Number of products and service related	Product	43
	complaints received and how they are dealt	Responsibility
	with.

KPI B6.4	Description of quality assurance process and	Product	43
	recall procedures.	Responsibility

KPI B6.5	Description of consumer data protection and	Product	44
	privacy policies, how they are implemented	Responsibility
	and monitored.

Aspect B7: Anti-	General Disclosure Information on:	Anti-corruption	44
corruption	(a)	the policies; and
	(b) compliance with relevant laws and
		regulations that have a significant
		impact on the issuer relating to bribery,
		extortion, fraud and money laundering.

KPI B7.1	Number of concluded legal cases regarding	Anti-corruption	44
	corrupt practices brought against the issuer or
	its employees during the reporting period and
	the outcomes of the cases.

KPI B7.2	Description of preventive measures and	Anti-corruption	44
	whistleblowing procedures, how they are
	implemented and monitored.

Aspect B8: Community	General Disclosure Policies on community	Community	44
Investment	engagement to understand the needs of the	Investment
	communities where the issuer operates and to
	ensure its activities take into consideration the
	communities' interests.

Annual Report 2020 CAA RESOURCES LIMITED

PROFILES OF DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS AND SENIOR MANAGEMENT

Executive Directors

Mr. Li Yang, aged 34, was appointed as Director on 25 April 2012 and was redesignated as an executive Director, the chairman and Chief Executive Officer of the Company on 12 April 2013. Mr. Li is the director of Capture Bukit Besi since September 2013, the director of Keen Wise Asia Investment Limited since 27 July 2015, currently the Group's resident key management executive in Malaysia, responsible for the day-to-day business management and supervision of mining production. He is also the chairman of the Nomination Committee.

Mr. Li first joined our Group in December 2009 as our resident representative for our mines in Malaysia. In February 2010, he was appointed as the director of Best Sparkle Development Ltd. Since June 2011, he had since represented our Group in the liaisons with clients and various Malaysian governmental authorities. Apart from managing our business operation in Malaysia, Mr. Li also played a vital role in the Group's business development in the PRC, and was a key figure in procuring our Group's entering into the framework agreement with one of our major customers. Mr. Li was closely involved in our daily mining operation and convened regular meetings to discuss with our resident Directors and the senior management teams, who would provide their professional technical advice. Mr. Li is also responsible for the strategic planning of the Group's ongoing business expansions. Mr. Li is the sole director of Cosmo Field which is the beneficial owner of 843,750,000 Shares of the Company, representing 56.25% of the issued share capital of the Company.

Mr. Li graduated from the College of Business of Eastern New Mexico University in the United States in 2009 with a major degree in business administration. He is the son of Mr. Li Dongming, the founder of the Group, and nephew of Ms. Li Xiaolan.

Mr. Li was involved in legal proceedings, details of which are set out in the section headed "Legal Proceedings" in this annual report.

Ms. Li Xiaolan, aged 56, was appointed as an executive Director and the deputy general manager of the Company on 12 April 2013. She joined our Group in March 2008 and had been appointed as the director of Capture Advantage, Best Sparkle Development Ltd. and 3W Development Limited since August 2010, November 2010 and February 2014 respectively. Ms. Li is currently responsible for the financial management of the Group, and her duty includes enhancing internal control of our financial system, supervising the daily operation of our finance department and controlling the allocation of internal resources. In addition, she is also responsible for reviewing and approving the financials and feasibility of new projects.

Ms. Li has approximately 20 years of experience in accounting. Previously she had been the finance director of Tongxing Group Mining Company (同興集團礦業公司) between January 1997 and October 2003, and the finance director of Chengdu Hande between November 2003 and August 2007.

50	CAA RESOURCES LIMITED Annual Report 2020

PROFILES OF DIRECTORS AND SENIOR MANAGEMENT

Ms. Li obtained a diploma in industrial enterprises operation and management from Sichuan Radio and Television University (四川廣播電視大學) in the PRC in 1986, and her bachelor's degree in accounting from Sichuan University (四川大學) in the PRC in 1992. Ms. Li is the younger sister of Mr. Li Dongming, the founder of the Group, and aunt of Mr. Li Yang.

Mr. Wang Er, aged 65, was appointed as an executive Director and the production supervisor of our Company on 12 April 2013 and was re-elected as an executive Director on May 2019. He had also been appointed as the director of Pacific Mining and Capture Advantage since May 2011 and June 2011 respectively. Mr. Wang has approximately 34 years of experience in the mining industry. Mainly responsible for the daily operation and production of the Group's mines, he is the key on-site person- in-charge of Project Ibam as well as the resident supervisor at the mine site for overall production management and testing of iron ore grading.

Mr. Wang first joined our Group in March 2008 as the resident representative in Malaysia and took part in a number of field trips in search for suitable mining projects in Malaysia. He was also actively involved in the establishment of the Group's warehouse in Kuantan.

Prior to joining the Group, Mr. Wang served as the general manager of Chengdu Hande between November 2003 and December 2006, and was mainly responsible for the preliminary screening of potential investment opportunities in the mining sector. Between March 1998 and October 2003, Mr. Wang was the general manager of Sichuan Guandi Mine (四川官地鐵礦), serving as the key on-siteperson-in-charge of the mining project, and responsible for the construction of mining production lines and arranging staff for the mining operation. Before that, Mr. Wang had also successively served the positions of technician, engineer and deputy manager in the non-ferrous metal department at Sichuan Enterprises Mining Company (四川鄉鎮企業礦業公司).

Mr. Wang graduated from Henan Jiaozuo Mining Institute (河南焦作礦業學院) in the PRC with a major degree in mineral processing in 1998.

Independent Non-executive Directors

Dr. Li Zhongquan, aged 56, was appointed as an independent non-executive Director of the Company on 12 April 2013, mainly responsible for independent supervision and management of the Company. He was the leader in a variety of scientific research projects, including but not limited to the National "Eleventh Five-year" Key Scientific Research Project (國家「十一五」科技重大專項), the National "Ninth Five-year" Projects (國家「九五」項目), "Tenth Five-year" Technology Projects (國家「十五」項目).

Dr. Li obtained his bachelor's degree in science from the department of geology of Nanjing University (南京大學) in 1986 and his master's degree in science from the department of geology of Chengdu University of Technology (成都理工大學) (formerly known as Chengdu Geology College (成都地質學院)) in 1989, and working with Chengdu ever since. Dr. Li then obtained his doctor's degree in engineering from Chengdu University of Technology (成都理工大學) in June 1999, conducted research work subsequently for three years as a post doctorate in Peking University and completed post-doctoral research in Saint Louis University of United States from May 2005 to November 2006.

Annual Report 2020 CAA RESOURCES LIMITED

PROFILES OF DIRECTORS AND SENIOR MANAGEMENT

Dr. Wang Ling, aged 63, was appointed as an independent non-executive Director on 12 April 2013 and was re-elected as independent non-executive Director on May 2019, mainly responsible for the independent supervision of the Company. He is also the chairman of the Remuneration Committee From October 2001 to May 2008, Dr. Wang served as the independent director of Xiwang Foodstuffs Co., Ltd. (西王食品股份有限公司) (stock code: SZ000639, formerly known as Zhuzhou Qingyun Development Co., Ltd. (株洲慶雲發展股份有限公司) and Hunan Ginde Development Co., Ltd. (湖南金德發展股份有限公司)), a company listed on the Shenzhen Stock Exchange. Save as disclosed herein, Dr. Wang is not and has not been a director of any other listed companies in Hong Kong or overseas in the past three years.

Before that, Dr. Wang worked with Changsha Institute of Geotectonics, Chinese Academy of Sciences (中國科學院長沙大地構造研究所) as an associate researcher, researcher and tutor for doctoral candidates successively. Dr. Wang has been a professor and tutor for doctoral candidates of Chengdu University of Technology (成都理工大學) since January 2002. He received the Government Special Allowance awarded by the State Council of China (國務院政府特殊津貼) in 1999 and was recognized as the Leader of Academy and Technology (學術和技術帶頭人) in Sichuan in 2003.

Dr. Wang graduated from Southwest University of Science and Technology (西南科技大學) in the PRC (formerly known as Sichuan Institute of Building Materials (四川建築材料工業學院)) with a bachelor's degree in non-metallic mineral geology and exploration in 1982, and obtained a doctoral degree from Changsha Institute of Geotectonics, Chinese Academy of Sciences (中國科學院長沙大地構造研究所) in 1994. Dr. Wang was a visiting scholar at the department of earth sciences in University of Cambridge from December 1999 to December 2000.

52	CAA RESOURCES LIMITED Annual Report 2020

DIRECTORS' REPORT

The Directors are pleased to present their report and the audited consolidated financial statements of the Group for the year ended 31 December 2020.

PRINCIPAL ACTIVITIES AND BUSINESS REVIEW

The Company acts as an investment holding company. The activities of its principal subsidiaries are iron ore exploration, mining, crushing and beneficiation as well as sale of iron ore products in the form of iron ore concentrates and iron ore fines. Details of the Company's subsidiaries as at 31 December 2020 are set out in note 43 to the Notes to Financial Statements of this annual report.

Further discussion and analysis of these activities as required by Schedule 5 to the Hong Kong Companies Ordinance, including a description of the principal risks and uncertainties facing the Group and an indication of likely future development in the Group's business, can be found in the "Management Discussion and Analysis" set out on pages 6 to 17 of this annual report. This discussion forms part of this directors' report.

ENVIRONMENTAL POLICIES AND PERFORMANCE

The Group recognizes the importance of proper adoption of environmental policies is essential to the attainability of corporate growth. The Group uses the open-pit mining method to simplify operations and reduce production costs. The Group produces iron ore products through a relatively low-cost process which includes ball-milling, magnetic separation process and dewatering. The method is environmentally friendly as it does not require chemical additives and reduces the amount of waste water produced. For more discussion on the Group's environmental, policies and performance, please refer to "Environmental, Social and Governance Report" on pages 31 to 49 of this annual report.

RELATIONSHIPS WITH KEY STAKEHOLDERS

Discussions on the Group's relationships with its employees, customers and suppliers is contained in the section headed "Environmental, Social and Governance Report" on pages 38 to 49 of this report.

Annual Report 2020 CAA RESOURCES LIMITED

DIRECTORS' REPORT

CORPORATE GOVERNANCE

The Company's corporate governance report is set out on page 18 to 30 of this annual report.

FUTURE PLAN

Going forward, the Group will make best endeavours to negotiate with the creditors and the potential investors with a view to debt restructuring.

FINANCIAL KEY PERFORMANCE INDICATOR

Key performance indicators used by the Group are listed on page 2 to 3 of this annual report.

Please refer to the section headed "Financial Review" in the "Management Discussion and Analysis" in this annual report for details.

RESULTS AND DIVIDENDS

The results of the Group for the year ended 31 December 2020 are set out in the consolidated statement of profit or loss and other comprehensive income on page 70 to 71.

No interim dividend was paid during the year (2019: Nil). The Directors do not recommend the

payment of a final dividend for the year ended 31 December 2020 (2019: Nil).

SUMMARY OF FINANCIAL INFORMATION

A five year summary of the consolidated results, assets and liabilities of the Group, as extracted from the audited consolidated financial statements of the Group and the Prospectus, is set out on pages 172 and 173 in this annual report. This summary does not form part of the audited financial statements.

BANK LOANS AND OTHER BORROWINGS

Particulars of bank loans and other borrowings of the Company and the Group, including the interest- free and security-free loan of USD60 million by Cosmo Field Holdings Limited, the Ultimate Parent company of the Company, as at 31 December 2020 are set out in note 30 to the Notes to Financial Statements.

54	CAA RESOURCES LIMITED Annual Report 2020

DIRECTORS' REPORT

NOTES AND BONDS

Details of the notes issued by the Company are set out in note 32 to the Notes to Financial Statements.

PROPERTY, PLANT AND EQUIPMENT

Additions to property, plant and equipment of the Group for the year ended 31 December 2020 was nil (2019: USD1,000). Details of the movements during the year in the Group's property, plant and equipment are set out in note 18 to the Notes to Financial Statements of this annual report.

SHARE CAPITAL

Details of the movements during the year in the issued share capital of the Company are set out in note 35 to the Notes to Financial Statements of this annual report.

PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights under the Company's Articles of Association and there is no restriction against such rights which would oblige the Company to offer new Shares on a pro- rata basis to existing Shareholders.

PURCHASE, SALES OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company's listed securities during the year under review.

CHARITABLE CONTRIBUTIONS

During the year, the Group did not make any charitable contributions (2019: Nil).

MAJOR CUSTOMERS AND SUPPLIERS

During the year, sales to the Group's five largest customers accounted for 100.0% of the Group's total sales for the year ended 31 December 2020 (2019: 98.91%), and sales to its largest customer accounted for 71.55% of the Group's total sales for the year ended 31 December 2020 (2019: 46.71%). Purchases from the Group's five largest suppliers accounted for approximately 100.0% of the total purchases for the year ended 31 December 2020 (2019: 99.0%) and purchases from the largest supplier accounted for approximately 96.65% of total purchases for the year ended 31 December 2020 (2019: 37.0%).

None of the Directors, their associates or any Shareholders of the Company (which, to the best knowledge of the Directors, own more than 5% of the Company's issued share capital) had any interest in the Group's five largest customers and suppliers during the year.

The Board is of the view that the Group has maintained a harmonious business relationship with its major customers and suppliers during the year under review.

Annual Report 2020 CAA RESOURCES LIMITED

DIRECTORS' REPORT

MANAGEMENT CONTRACTS

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year under review.

DIRECTORS

The Directors of the Company during the year and up to the date of this report were:

Executives Directors

Mr. Li Yang

Ms. Li Xiaolan

Mr. Wang Er

Ms. Xu Mijia (resigned on 17 November 2020)

Independent Non-Executive Directors

Mr. Leung Yiu Cho (resigned on 8 October 2020)

Dr. Li Zhongquan

Dr. Wang Ling

In accordance with the Company's Articles of Association, at each AGM, one-third of the Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation provided that every Director shall be subject to retirement at an AGM at least once every three years. A retiring director shall be eligible for re-election. A director appointed to fill a vacancy or as an additional director shall retire at the next following general meeting and shall then be eligible for re-election. In compliance with the provisions of the Articles, Mr. Li Yang, Mr. Wang Er and Dr. Wang Ling shall retire from office by rotation, and, being eligible, offer themselves for re-election at the forthcoming AGM. All other remaining Directors continue in office.

The Company has received annual confirmation of independence from each of the two independent non-executive Directors in accordance with Rule 3.13 of the Listing Rules and considers them to be independent.

DIRECTORS' AND SENIOR MANAGEMENT'S BIOGRAPHIES

Biographical details of the above Directors and senior management are set out in the section headed "Profiles of Directors and Senior Management" on pages 50 to 52 of this annual report.

The Board is of the view that the Group has maintained a harmonious employment relationship with its board members and senior management during the year under review.

56	CAA RESOURCES LIMITED Annual Report 2020

DIRECTORS' REPORT

DIRECTORS' INTERESTS IN CONTRACTS

No Directors had a material interest, either directly or indirectly, in any contract of significance to the business of the Group to which the Company, or any of its holding companies, subsidiaries or fellow subsidiaries was a party for the year ended 31 December 2020.

Cosmo Field Holdings Limited, our controlling shareholder wholly-owned by Mr. Li Yang who is the executive Director, has provided a security-free and interest-free loan of USD60.0 million to the Company.

None of the Directors proposed for re-election at the forthcoming AGM has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

DIRECTORS' INTERESTS IN COMPETING BUSINESS

None of the Directors of the Company had engaged in any business or had any interest in business which competes or may constitutes competition directly or indirectly (within the meaning of the Listing Rules) with the business of the Group for the year ended 31 December 2020.

DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the year were rights to acquire benefits by means of the acquisition of Shares of the Company granted to any Director or their respective spouse or minor children; or were any such rights exercised by them or was the Company, or any of its subsidiaries a party to any arrangement to enable those persons to acquire such rights in any other body corporate.

DIRECTORS' SERVICE CONTRACTS

Each of our executive Directors and independent non-executive Directors has entered into a service contract with the Company.

None of the Directors has entered into any service agreement with the Company which is not determinable within one year without payment of compensation, other than the statutory compensation.

PERMITTED INDEMNITY PROVISION

The Company's Articles of Association provides that every Director shall be indemnified out of the assets of the Company against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses as a result of any act or failure to act in carrying out his/her functions.

The Company has taken out and maintained directors and officers liability insurance since the Listing of the Company which provides appropriate cover for the Directors and directors of the subsidiaries of the Group.

Annual Report 2020 CAA RESOURCES LIMITED

DIRECTORS' REPORT

DIRECTORS' AND CHIEF EXECUTIVE OFFICER'S INTERESTS AND SHORT POSITION IN SHARES AND UNDERLYING SHARES

As at 31 December 2020, the Directors and the Chief Executive Officer of the Company had the following interests and short positions in the Shares, underlying Shares or the debentures of the Company or any of its associated corporations within the meaning of part XV of the SFO, which would have to be notified to the Company and the Stock Exchange pursuant to the provision of Divisions 7 and 8 of Part XV of the SFO (including interests and/or short positions of which they were taken or deemed to have under such provisions of the SFO) and/or required to be entered in the register required to be kept under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code:

Long positions in Shares of the Company:

			Approximate
			percentage of the
		Number of	Company's issued
Name of Director	Nature of Interest	Ordinary Shares	share capital
Li Yang (notes 2 & 3) Interest in controlled corporation	843,750,000 (L)	56.25%

Note:

The letter "L" denotes the Shareholder's long position in the share capital while the letter "S" denotes the Shareholder's short position.
Mr. Li beneficially owns the entire issued share capital of Cosmo Field Holdings Limited ("Cosmo Field"). Therefore, Mr. Li is deemed, or taken to be, interested in all the shares of the Company held by Cosmo Field for the purpose of the SFO. Mr. Li is the sole director of Cosmo Field.
The Company has been notified that Cosmo Field have charged certain shares in favour of third parties as at the Latest Practicable Date:
1. The Company has been notified that 711,000,000 shares ("Shares") of the Company and 41,000,000 Shares which were previously charged by Cosmo Field in favour of Cheer Hope Holdings Limited, have been released on 23 September 2016 and 26 September 2016 respectively. The Company has also been notified that, Cosmo Field has charged 711,000,000 Shares and 41,000,000 Shares (collectively "Charged Shares") in favour of an independent third party institution on 23 September 2016 and 27 September 2016 respectively. The Charged Shares represent approximately 50.13% of the issued share capital of the Company as at the Latest Practicable Date.
2. The Company has been notified that, a deed of release has been executed on 4 January 2018 with respect to the Charged Shares which were previously charged by Cosmo Field in favour of the second priority lender (as set out in the announcement dated 29 December 2016). Cosmo Field has charged the Shares in favour of another secondary priority lender on 4 January 2018.

58	CAA RESOURCES LIMITED Annual Report 2020

DIRECTORS' REPORT

Long position in shares of the associated corporation:

			Approximate
			percentage of
			interest in the
			share capital of
	Nature of associated		the associated
Name of Director	corporation	Nature of Interest	corporation
Li Yang (notes 2 & 3)	Cosmo Field	Beneficial owner	100.00%

Save as disclosed above, as at 31 December 2020, none of the Directors nor the Chief Executive Officers of the Company had any interests or short positions in any Shares, underlying Shares and/ or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest and/or short positions which were taken or deemed to have under such provisions of the SFO), or which were recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or which would have to be notified to the Company and the Stock Exchange pursuant to the Model Code.

Annual Report 2020 CAA RESOURCES LIMITED

DIRECTORS' REPORT

SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS' INTEREST AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES

As at the date of this report, so far as it is known to the Directors, the persons (other than the Directors or Chief Executive Officer of the Company) with interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which would be recorded in the register of the Company required to be kept under section 336 of the SFO or who are directly or indirectly interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstance at general meetings of any member of the Group were as follows:

				Approximate
				percentage of
Substantial Shareholder	Capacity/Nature of interest	Number of Shares	shareholdings
Cosmo Field (notes 2, 3)	Beneficial owner	843,750,000 (L)	56.25 (L)
Ample Professional Limited	Security interest in shares	752,000,000 (L)	50.13%
(note 5)
Huarong International Financial	Interest in controlled	752,000,000	(L)	50.13%
Holdings Limited (note 5)	corporation
中國華融資產管理股份有限公司	Interest in controlled	752,000,000	(L)	50.13%
(note 5)	corporation
Haitong International Financial	Security interest in shares	172,352,000	(L)	11.49%
Products (Singapore) Pte. Ltd.
(note 6)
Haitong International Holdings	Interest in controlled	172,352,000	(L)	11.49%
Limited (note 6)	corporation
Haitong International Securities	Interest in controlled	172,352,000	(L)	11.49%
Group (Singapore) Pte. Ltd.	corporation
(note 6)
Haitong International Securities	Interest in controlled	172,352,000	(L)	11.49%
Group Limited (note 6)	corporation
Haitong Securities Co., Ltd.	Interest in controlled	172,352,000	(L)	11.49%
(note 6)	corporation
Hua Heng (note 4)	Beneficial owner	100,575,000 (L)	6.71% (L)
Yang Jun (note 4)	Interest in controlled	100,575,000	(L)	6.71% (L)
	corporation
Tang Lingyan (note 4)	Interest of a Substantial	100,575,000	(L)	6.71% (L)
	Shareholder's child under
	18 or spouse

60	CAA RESOURCES LIMITED Annual Report 2020

DIRECTORS' REPORT

Note:

The letter "L" denotes the Shareholder's long position in the share capital while the letter "S" denotes the Shareholder's short position.
Mr. Li beneficially owns the entire issued share capital of Cosmo Field Holdings Limited ("Cosmo Field"). Therefore, Mr. Li is deemed, or taken to be, interested in all the shares of the Company held by Cosmo Field for the purpose of the SFO. Mr. Li is the sole director of Cosmo Field.
The Company has been notified that Cosmo Field have charged certain shares in favour of third parties as at the Latest Practicable Date:
1. The Company has been notified that 711,000,000 shares ("Shares") of the Company and 41,000,000 Shares which were previously charged by Cosmo Field in favour of Cheer Hope Holdings Limited, have been released on 23 September 2016 and 26 September 2016 respectively. The Company has also been notified that, Cosmo Field has charged 711,000,000 Shares and 41,000,000 Shares (collectively "Charged Shares") in favour of an independent third party institution on 23 September 2016 and 27 September 2016 respectively. The Charged Shares represent approximately 50.13% of the issued share capital of the Company as at the Latest Practicable Date.
2. The Company has been notified that, a deed of release has been executed on 4 January 2018 with respect to the Charged Shares which were previously charged by Cosmo Field in favour of the second priority lender (as set out in the announcement dated 29 December 2016). Cosmo Field has charged the Shares in favour of another secondary priority lender on 4 January 2018.
Tang Lingyan is the spouse of Mr. Yang Jun. Mr. Yang Jun beneficially owns the entire issued share capital of Hua Heng. Therefore, Tang Lingyan is deemed, or taken to be, interested in all the Shares of the Company held by Hua Heng for the purpose of the SFO. Mr. Yang Jun is the sole director of Hua Heng.
Each of Huarong International Financial Holdings Limited and 中國華融資產管理股份有限公司 is deemed, or taken to be, interested in all the interest held by Ample Professional Limited in the shares of the Company for the purpose of the SFO.
Each of Haitong International Holdings Limited, Haitong International Securities Group (Singapore) Pte. Ltd., Haitong International Securities Group Limited and Haitong Securities Co., Ltd. is deemed, or taken to be, interested in all the interest held by Haitong International Financial Products (Singapore) Pte. Ltd. in the shares of the Company for the purpose of the SFO.

Save as disclosed above, as at the date of this report, no other person had any interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange pursuant to Section 336 of the SFO or, were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote under all circumstances at general meetings of any other member of the Group.

Annual Report 2020 CAA RESOURCES LIMITED

DIRECTORS' REPORT

AUDITORS

REMUNERATION OF THE DIRECTORS

The remuneration of the Directors is determined with reference to the Directors' duties and responsibilities under their employment or service contracts as approved by the Company's Shareholders resolutions in writing on 12 April 2013 before the Listing and the Board under the authority of the shareholders' resolutions passed on 30 April 2014, with the operating results of the Group and performance of the individual taken into account and aligning with market statistics. Details of the remuneration of the Directors are set out in note 14 to the Notes to Financial Statements of this annual report.

RELATED PARTY TRANSACTIONS

Details of the related party transaction are stated in note 38 to the Notes to Financial Statements of this annual report, which comprise of, among others, (1) the interest-free and security-free shareholder loans of USD60,000,000 by Cosmo Field (the controlling shareholder of the Company) to the Company, and provision of guarantee by Mr. Li, his father and his controlled entity with respect to the Company's loans at nil consideration, which are all fully exempt connected transaction under Rule 14A.90 of the Listing Rules; and (2) remuneration payable to the Directors and other key management personnel of the Group.

RETIREMENT BENEFITS SCHEMES

Particulars of the retirement benefits schemes of the Group are set out in notes 4 and 39 to the Notes to Financial Statements.

62	CAA RESOURCES LIMITED Annual Report 2020

DIRECTORS' REPORT

SHARE OPTION SCHEME

The Share Option Scheme was conditionally adopted by the Shareholders by way of written resolution on 12 April 2013 for the purpose of attracting and retaining the best available personnel; providing additional incentive to employees (full-time and part-time), Directors, consultants, advisors, distributors, contractors, suppliers, agents, customers, business partners or service providers of our Group; and to promoting the success of the business of our Group. The terms of the Share Option Scheme are in accordance with the provisions of Chapter 17 of the Listing Rules.

The period of Share Option Scheme commences on 12 April 2013 and will expire at the close of business on the business day immediately preceding the tenth anniversary thereof on 11 April 2023.

The Board may, at its absolute discretion and on such terms as it may think fit, grant any employee (full- time or part-time), director, consultant or advisor of our Group, or any substantial shareholder of our Group, or any distributor, contractor, supplier, agent, customer, business partner or service provider of our Group, options to subscribe at a price calculated for such number of Shares as it may determine in accordance with the terms of the Share Option Scheme.

The basis of eligibility of any participant to the grant of any option shall be determined by the Board (or as the case may be, the independent non-executive Directors) from time to time on the basis of his contribution or potential contribution to the development and growth of our Group.

The subscription price of a Share in respect of any particular option granted under the Share Option Scheme shall be a price solely determined by the Board and notified to a participant and shall be at least the higher of: (i) the closing price of our Shares as stated in the Stock Exchange's daily quotations sheet on the date of grant of the option, which must be a Business Day; (ii) the average of the closing prices of our Shares as stated in the Stock Exchange's daily quotations sheets for the five Business Days immediately preceding the date of grant of the option; and (iii) the nominal value of a Share on the date of grant of the option, provided always that for the purpose of calculating the subscription price, where our Company has been listed on the Stock Exchange for less than five Business Days, the new issue price shall be used as the closing price for any Business Day fallen within the period before listing.

An offer for the grant of options must be accepted within seven days inclusive of the day on which such offer was made. The amount payable by the grantee of an option to our Company on acceptance of the offer for the grant of an option is HK$1.00.

An option may be exercised in accordance with the terms of the Share Option Scheme at any time during a period as the Board may determine which shall not exceed ten years from the date of grant subject to the provisions of early termination thereof.

Annual Report 2020 CAA RESOURCES LIMITED

DIRECTORS' REPORT

The maximum number of unexercised share options currently permitted to be granted under the Company's Scheme is an amount equivalent, upon their exercise, to 10% of the shares of the Company in issue at any time (being 150,000,000 Shares, representing 10% of the total issued shares of the Company as at 31 December 2020). The maximum number of shares issuable under share options to each eligible participant in the Company's Scheme within any 12-month period, is limited to 1% of the shares of the Company in issue at any time. Any further grant of shares options in excess of this limit is subject to shareholders' approval in a general meeting. During the twelve months ended 31 December 2020, the Company may grant options in respect of up to 150,000,000 Shares to the participants under the Share Option Scheme, being 10% of the issued shares of the Company.

No option has lapsed, or has been granted, exercised or cancelled under the Share Option Scheme during the year ended 31 December 2020. Our Group did not have any outstanding share options, warrants, convertible instruments, or similar rights convertible into our Shares as at 31 December 2020.

NON-COMPETITION UNDERTAKING

Each of the executive Directors (collectively the "Covenantors") have entered into a Deed of Non- Competition in favour of the Company (on behalf of itself and the Group) dated 9 June 2013 (the "Deed"). Pursuant to the Deed, each of the Covenantors shall procure that their respective associates shall not directly or indirectly engage in any business in competition with the existing business activity of the Group. Relevant information on the Deed was disclosed in the Prospectus in the section headed "Relationship with Controlling Shareholders".

The Company has received confirmations from the Covenantors of their compliance with the terms of the Deed. The Covenantors declared that they have fully complied with the Deed for the year ended 31 December 2020. The independent non-executive Directors have reviewed on the confirmations from the Covenantors and concluded that the Deed has been complied with and has been effectively enforced.

SUFFICIENCY OF PUBLIC FLOATING

Based on the information that is publicly available to the Company and as far as the Directors are aware, the Company has maintained at least 25% of public float as for the year ended 31 December 2020 and up to the date of this annual report.

On Behalf of the Board of Directors

LI Yang

Chairman and Chief Executive Officer

30 April 2021

64	CAA RESOURCES LIMITED Annual Report 2020

INDEPENDENT AUDITOR'S REPORT

TO THE SHAREHOLDERS OF CAA RESOURCES LIMITED (Incorporated in the Cayman Islands with limited liability)

DISCLAIMER OF OPINION

We were engaged to audit the consolidated financial statements of CAA Resources Limited (the "Company") and its subsidiaries (hereinafter collectively referred to as the "Group") set out on pages 70 to 171, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

We do not express an opinion on the consolidated financial statements of the Group. Because of the potential interaction of the multiple uncertainties and their possible cumulative effect on the consolidated financial statements as described in the Basis for Disclaimer of Opinion section of our report, it is not possible for us to form an opinion on these consolidated financial statements. In all other respects, in our opinion the consolidated financial statements have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR DISCLAIMER OF OPINION

Material Uncertainty Related to the Going Concern

As explained in note 2 to the consolidated financial statements, the Group incurred a net loss attributable to the owners of the Company of approximately US$29,601,000 and had net cash outflows from operating activities of approximately US$1,220,000 during the year ended 31 December 2020. As at the same date, the Group's amount due to ultimate holding company, bank and other borrowings, guarantee notes and bonds amounted to approximately US$160,469,000, while its cash and cash equivalents amount to approximately US$102,000 only.

In addition, as at 31 December 2020, the Group was in default in relation to, inter alia, the principal amount of aggregate amount due to ultimate holding company, bank and other borrowings and guarantee notes totaling approximately US$157,947,000 ("In Default Borrowings") due to the following events of default:- (a) late or overdue payments of principal and interests during the year ended or as at 31 December 2020; and (b) breach of terms and conditions of In Default borrowings not abovementioned during the year ended 31 December 2020. These conditions constituted events of defaults which resulted in cross-default of bonds other than those mentioned above, amount to outstanding principal amount of approximately US$2,522,000 ("Cross-default Borrowings") as at 31 December 2020.

Annual Report 2020 CAA RESOURCES LIMITED

INDEPENDENT AUDITOR'S REPORT

As at 31 December 2020, the Company has a loan from its ultimate holding company, Cosmo Field Holdings Limited ("Cosmo Field") with the outstanding principal of US$40,000,000 (the "Shareholder's Loan") which included in the In Default Borrowings. On 15 May 2020, Mr. Li Yang ("Mr. Li"), the director, chairman and chief executive officer of the Company and Cosmo Field, the ultimate holding company of the Company, received a writ of summons taken out by Industrial Bank Co., Limited ("Industrial Bank") at the High Court of Hong Kong ("High Court Action 1") in relation to a loan advanced by Industrial Bank to Cosmo field (the "Industrial Bank Loan"), for which Mr. Li was the guarantor. Pursuant to the High Court Action 1, Industrial Bank brought claim against Cosmo Field and Mr. Li with respect to the default in repayment of the Industrial Bank Loan in the amount of US$45,059,154 (the "Default on Industrial Bank Loan"). Cosmo Field has pledged 752,000,000 shares (representing 50.13% of all issued shares of the Company) in favour of Industrial Bank as security for the Industrial Bank Loan. Cosmo Field has lent the principal amount of the Industrial Bank Loan being US$40,000,000 (i.e. Shareholder's Loan) to the Company as an interest-free loan, and Industrial Bank is entitled to claim against the Company for the repayment of the Shareholder's Loan pursuant to the assignment of loan as part of security arrangement for the Industrial Bank Loan whereby Cosmo Field has assigned the rights under the Shareholder's Loan to Industrial Bank. The Default on Industrial Bank Loan will trigger cross-defaults of other borrowings and loans of the Group.

As at 31 December 2020, China Bright Industries Limited, a subsidiary of the Company, has a bank borrowings advanced from Oversea-Chinese Bank Corporation Limited ("OCBC") with the outstanding principal of approximately US$36,533,000 ("OCBC loan") which is included in the In Default Borrowings. As set out in the announcement by the Company dated 20 January 2020, Mr. Li, the director, chairman and chief executive officer of the Company, received a writ of summons taken out by OCBC against Mr. Li at the High Court of Hong Kong ("High Court Action 2") in relation to the OCBC loan, in which Mr. Li failed to fulfil his obligation as a guarantor to settle the amount of HK$308,758,494 (the "outstanding amount"). The Group has also breached the repayment obligations under the OCBC loan (the "Breach"), and the Breach will trigger cross defaults of other borrowings and loans of the Group. On 8 January 2021, the High Court of Hong Kong adjudged that Mr. Li shall be obliged to pay OCBC outstanding amount, the accrued interests until the date of payment and other costs related to OCBC.

As at 31 December 2020, the Company, has a bond issued to I-Access Investors Limited ("I-Access") with the outstanding principal of approximately US$2,522,000 in the Cross-default Borrowings. On 4 February 2020, a statutory demand under the Companies (Winding Up and Miscellaneous Provisions) Ordinance ("Statutory Demand") was served on the Company by I-Access to demand the Company to pay the outstanding amount of approximately HK$21,019,178 (equivalent to approximately US$2,690,000) ("I-Access debt") within 21 days after the date of the Statutory Demand for repayment of the I-Access debt. On 8 May 2020, the Company and I-Access entered a terms sheet of extended payment schedule (the "extended payment schedule") and agreed that the Company shall be payable of the I-Access debt with six installments to 22 June 2021. The Group settled first two installments of aggregate amount of HK$300,000 (equivalent to US$38,400) to I-Access subsequently in May and June 2020, but failed to pay the third installment of HK$5,000,000 (equivalent to US$640,000) by the installment due date of 31 July 2020.

66	CAA RESOURCES LIMITED Annual Report 2020

INDEPENDENT AUDITOR'S REPORT

On 1 September 2020, the Company entered the supplement agreement with I-Access of further extended payment schedule of outstanding principal HK$19,700,000 (equivalent to approximately US$2,522,000) with accrued interest and the agreed costs of HK$38,000 (equivalent to approximately US$4,900) and provided the Company shall payable of the I-Access debt for four installments to 29 October 2021. The Company failed to repay the first installment of HK$5,000,000 (equivalent to US$640,000) on 29 January 2021 in the further extended payment schedule. On 2 February 2021, I-Access has filed a petition ("Winding Up Petition") in the matter of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Law of Hong Kong) from the High Court of The Hong Kong Special Administrative Region that the Company may be wound up by the High Court on the ground that the Company is unable to pay its debts. The winding up petition will be heard on 5 May 2021.

Subsequent to the balance sheet date, the Group did not repay certain principal and interest payments in accordance with the scheduled repayment dates of certain loan agreements, including (1) interest of approximately US$21,418,000 relating to certain of the Overdue Borrowings with a total principal amount of approximately US$157,947,000, and (2) principal of approximately US$2,522,000 and interest of approximately US$482,000 relating to the Cross-default Borrowings.

These conditions, together with other matters disclosed in note 2 to the consolidated financial statements, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern.

The directors of the Company have been undertaking measures to improve the Group's liquidity and financial position, and to remediate certain delayed repayments to financial institutions, which are set out in note 2 to the consolidated financial statements. The consolidated financial statements have been prepared on a going concern basis, the validity of which depends on the outcome of these measures, which are subject to multiple uncertainties, including (i) the successful negotiations with the Group's existing lenders for the renewal of or extension for repayment of outstanding In Default borrowings and Cross-default borrowings, including those with overdue principals and interests; (ii) successfully raising additional new sources of financing as and when needed; (iii) successfully reaching a settlement of the High Court Action 1, High Court Action 2 and the Winding Up Petition between the Company and its Creditors; (iv) successful collection of trade receivables and controlling costs and containing capital expenditure so as to generate adequate net cash inflows; (v) successfully managing the impact of the COVID-19 outbreak, as well as any government's stimulus in response, on the Group's operation from time to time and adjusting its sales and marketing strategy for mine sales to generate sufficient cash from its operations; and (vi) the successful maintenance of relationship with the Group's exiting lenders such that no action will be taken by the relevant lenders to demand immediate repayment of the borrowings with interest payment in default, including those with cross-default terms.

Should the Group be unable to operate as a going concern, adjustments would have to be made to write down the carrying amounts of the Group's assets to their net recoverable amounts, to provide for any further liabilities that may arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effects of these adjustments have not been reflected in the consolidated financial statements.

Annual Report 2020 CAA RESOURCES LIMITED

INDEPENDENT AUDITOR'S REPORT

Fundamental Uncertainty Relating to the Recoverability of Certain Trade Receivables

Other than the disclaimer of opinion stated above, we draw attention to the adequacy of the disclosure made in note 24 to the consolidated financial statement which explains that included in the consolidated statement of financial position of the Group as at 31 December 2020 are amounts of approximately US$204,120,000 due from trade debtors. The Group filed separate claims on 10 March 2021 against the trade debtors in the Hong Kong High Court to recover contract sums of approximately US$216,571,000. Since the claims are still pending for court hearing, the directors consider it is unable to determine the final outcome of the claims. Loss allowance for such trade receivables approximately of US$25,231,000 has been made in the consolidated financial statements as at 31 December 2020. We consider that appropriate disclosure regarding this fundamental uncertainly has been adequately disclosed in the consolidated financial statements and our opinion is not qualified on this respect.

RESPONSIBILITIES OF DIRECTORS OF THE COMPANY AND AUDIT COMMITTEE FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors of the Company determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

The Audit Committee are responsible for overseeing the Group's financial reporting process.

68	CAA RESOURCES LIMITED Annual Report 2020

INDEPENDENT AUDITOR'S REPORT

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our responsibility is to conduct an audit of the Group's consolidated financial statements in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and to issue an auditor's report that includes our opinion, solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. However, because of the matter described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these consolidated financial statements.

We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants (the "Code") and we have fulfilled our other ethical responsibilities in accordance with the Code.

The engagement partner on the audit resulting in this independent auditor's report is Mr. Lee Kwok Lun.

Prism CPA Limited

Certified Public Accountants

Lee Kwok Lun

Practising Certificate Number: P06294

Hong Kong

30 April 2021

Annual Report 2020 CAA RESOURCES LIMITED

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

		2020	2019
	Notes	US$'000	US$'000
Revenue	8	27,855	1,055,195
Cost of sales		(28,426)	(1,043,615)
Gross (loss) profit		(571)	11,580
Other income	10	1,756	1,792
Selling and distribution expenses		(32)	(778)
Administrative and other expenses		(4,247)	(5,263)
Impairment loss on financial assets, net of reversal		(13,335)	(14,236)
Reversal of (impairment loss) on remeasurement of non-
current assets held for sale		3,612	(31,636)
Finance costs	11	(17,036)	(18,345)
Loss before taxation		(29,853)	(56,886)
Income tax credit (expenses)	12	252	(223)
Loss for the year	13	(29,601)	(57,109)
Loss for the year attributable to:
Owners of the Company		(29,601)	(57,110)
Non-controlling interests		-	1
		(29,601)	(57,109)

70	CAA RESOURCES LIMITED Annual Report 2020

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

		2020	2019
	Note	US$'000	US$'000
Other comprehensive income (expense)
Items that will not be reclassified subsequently
to profit or loss
Exchange differences arising on translation of
financial statements from functional currency
to presentation currency		139	116
Fair value change in financial assets at fair value through
other comprehensive income, net of income tax		(2,990)	(5,275)
Loss on disposal of financial assets at fair value through
other comprehensive income		(2,046)	-
Other comprehensive expense for the year,
net of income tax		(4,897)	(5,159)
Total comprehensive expense for the year		(34,498)	(62,268)
Total comprehensive (expense) income for the year
attributable to:
Owners of the Company		(34,450)	(62,293)
Non-controlling interests		(48)	25
		(34,498)	(62,268)
Loss per share attributable to the owners
of the Company	17
Basic and diluted (US cents)		(1.97)	(3.81)

Annual Report 2020 CAA RESOURCES LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

		2020	2019
	Notes	US$'000	US$'000
Non-current assets		1,802
Property, plant and equipment	18	2,577
Intangible assets	19	13,121	12,881
Right-of-use assets	20	35	218
Investment in an associate	21	-	-
Financial assets at fair value through		679
other comprehensive income	22	9,992
Goodwill	23	6,841	6,718
Total non-current assets		22,478	32,386
Current assets		204,120
Trade receivables	24	217,959
Deposits, prepayments and other receivables	25	8,288	7,552
Cash and cash equivalents	26	102	102
		212,510	225,613
Non-current assets classified as held for sale	27	-	18,363
Total current assets		212,510	243,976
Current liabilities		8,337
Trade payables	28	10,292
Other payables and accruals	29	25,223	12,622
Lease liabilities	20	21	87
Amount due to ultimate holding company	30	60,000	60,000
Bank and other borrowings	31	54,683	54,683
Notes and bonds	32	45,786	40,872
Income tax payable		3,459	3,714
Total current liabilities		197,509	182,270
Net current assets		15,001	61,706
Total assets less current liabilities		37,479	94,092
Non-current liabilities		11
Lease liabilities	20	167
Provision for rehabilitation	33	525	509
Deferred tax liabilities	34	2,930	2,930
Total non-current liabilities		3,466	3,606
Net assets		34,013	90,486

72	CAA RESOURCES LIMITED Annual Report 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

		2020	2019
	Notes	US$'000	US$'000
Equity
Share capital	35	1,934	1,934
Reserves		32,079	86,814
Equity attributable to owners of the Company		34,013	88,748
Non-controlling interests		-	1,738
Total equity		34,013	90,486

The consolidated financial statements on pages 70 to 171 were approved and authorised for issue by the board of directors on 30 April 2021 and are signed on its behalf by:

Li Yang	Li Xiaolan
Director	Director

Annual Report 2020 CAA RESOURCES LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

				Attributable to owners of the Company

								Retained		Non-
							Exchange	earnings
	Share	Share	Capital	Contributed	Fair value	Other	fluctuation	(accumulated		controlling	Total
	capital	premium	reserve	surplus	reserve	reserve	reserve	losses)	Total	interests	equity
	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000	US$'000
	(note 35)	(note (i))	(note (ii))	(note (iii))	(note (iv))	(note (v))
At 1 January 2019	1,934	47,541	14,956	50	(2,733)	48,287	(4,509)	45,515	151,041	1,713	152,754
Loss for the year	-	-	-	-	-	-	-	(57,110)	(57,110)	1	(57,109)
Other comprehensive
(expense) income
Exchange differences
arising on translation
of financial
statements from
functional currency to
presentation currency	-	-	-	-	-	-	92	-	92	24	116
Fair value change in
financial assets at fair
value through other
comprehensive income,
net of income tax	-	-	-	-	(5,275)	-	-	-	(5,275)	-	(5,275)

Total comprehensive
(expense) income
for the year	-	-	-	-	(5,275)	-	92	(57,110)	(62,293)	25	(62,268)

At 31 December 2019	1,934	47,541	14,956	50	(8,008)	48,287	(4,417)	(11,595)	88,748	1,738	90,486

At 1 January 2020	1,934	47,541	14,956	50	(8,008)	48,287	(4,417)	(11,595)	88,748	1,738	90,486
Loss for the year	-	-	-	-	-	-	-	(29,601)	(29,601)	-	(29,601)
Other comprehensive
income (expense)
Exchange differences
arising on translation
of financial
statements from
functional currency to	-	-	-	-	-	-	187	-	187	(48)	139
presentation currency
Fair value change in
financial assets at fair
value through other
comprehensive income,	-	-	-	-	(2,990)	-	-	-	(2,990)	-	(2,990)
net of income tax
Loss on disposal of
financial assets at fair
value through other	-	-	-	-	(2,046)	-	-	-	(2,046)	-	(2,046)
comprehensive income
Total comprehensive
income (expense)	-	-	-	-	(5,036)	-	187	(29,601)	(34,450)	(48)	(34,498)
for the year
Transfer upon disposal of
financial assets at fair
value through other
comprehensive income	-	-	-	-	8,723	-	-	(8,723)	-	-	-
(note 22)
Acquisition of addition
interests in subsidiaries	-	-	-	-	-	(20,285)	-	-	(20,285)	(1,690)	(21,975)
(note 40)
At 31 December 2020	1,934	47,541	14,956	50	(4,321)	28,002	(4,230)	(49,919)	34,013	-	34,013

74	CAA RESOURCES LIMITED Annual Report 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

Notes:

The amounts of the Group's reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity in the consolidated financial statements.

Share premium
The application of the share premium account is governed by the Companies Law of the Cayman Islands. Under the constitutional documents and the Companies Law of the Cayman Islands, the share premium is distributable as dividend on the condition that the Company is able to pay its debts when they fall due in the ordinary course of business at the time the proposed dividend is to be paid.
Capital reserve
Capital reserve represented: (i) differences arising from acquisition of non-controlling interests and reserve arising from the waiver of debts by the former shareholders of the Company in prior years of USD13,825,000; (ii) the difference between the nominal amount of USD15,000,000 and the fair value of USD13,887,000 of the interest-free loan granted by the ultimate holding company during the year ended 31 December 2015. At origination, the Group calculated its present value using the current market rate for similar instruments, the difference between the loan nominal amount and the present value of USD1,131,000 is treated as equity contribution from the ultimate holding company and credited to the capital reserve account.
Contributed surplus
Contributed surplus represented the difference between the nominal value of shares of the subsidiary acquired pursuant to the Group's reorganisation in preparation for the listing of the Company's shares on the Main Board of The Stock Exchange of Hong Kong Limited and the previous nominal value of the Company's shares issued in exchange therefor.
Fair value reserve
The fair value reserve comprises the cumulative net change in fair value of financial assets at fair value through other comprehensive income at the end of the reporting period and is dealt with in accordance with the accounting policies in note 4.
Other reserve
On 14 December 2018, the Group disposed of 9.12% of its interest in Pacific Mining Resources Sdn. Bhd. ("Pacific Mining") for the Group's subscription of 33.33% issued shares of Pembinaan Sponge Iron Sdn. Bhd. ("Pembinaan Sponge Iron"). The difference approximately of US$48,287,000 between the amount of the adjustment to non- controlling interests and the consideration received arising from the disposal of the 9.12% of the issued shares of a subsidiary of the Group which did not result in loss of control of that subsidiary.
On 13 July 2020, the Group disposed of 33.33% of its interest in Pembinaan Sponge Iron in returned 9.12% interest in Pacific Mining. The difference between the consideration of approximately of US$21,975,000 and the relevant share of the carrying amount of the net assets of Pacific Mining approximately of US$1,690,000, being approximately US$20,285,000 was debited to other reserve. Detail of change in ownership interest in a subsidiary is set out in note 40.

Annual Report 2020 CAA RESOURCES LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

	2020	2019
	US$'000	US$'000
OPERATING ACTIVITIES
Loss before taxation	(29,853)	(56,886)
Adjustments for:
Depreciation of property, plant and equipment	762	801
Depreciation of right-of-use assets	9	238
Amortisation of intangible assets	1	34
(Reversal of) impairment loss on remeasurement of non-current
assets held for sale	(3,612)	31,636
Interests income	(1,284)	(1,609)
Gain on disposal of non-current assets classified as held for sale	(346)	-
Gain on derecognition of right-of-use assets	(37)	-
Finance costs	17,036	18,345
Impairment loss on financial assets, net of reversal	13,335	14,236
Operating cash flows before movements in working capital	(3,989)	6,795
Increase in trade receivables	(7,675)	(25,381)
(Increase) decrease in deposits, prepayments and other receivables	(893)	116
Increase in trade payables	11,056	8,339
Increase in other payables and accruals	284	2,050
Cash used in operations	(1,217)	(8,081)
Income tax paid	(3)	(419)
NET CASH USED IN OPERATING ACTIVITIES	(1,220)	(8,500)

76	CAA RESOURCES LIMITED Annual Report 2020

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2020

	2020	2019
	US$'000	US$'000
INVESTING ACTIVITIES
Interest income	1,284	1,609
Purchase of property, plant and equipment	-	(1)
NET CASH GENERATED FROM INVESTING ACTIVITIES	1,284	1,608
FINANCING ACTIVITIES
Repayment of bonds	(38)	-
Repayment of lease liabilities	(13)	(279)
Interest paid	-	(5,894)
Repayment of bank and other borrowings	-	(4,420)
Repayment of notes	-	(3,000)
New borrowing raised	-	17,920
Proceed on issue of bonds	-	2,472
NET CASH (USED IN) GENERATED FROM FINANCING ACTIVITIES	(51)	6,799
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	13	(93)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR	102	183
Effect of foreign exchange rate changes	(13)	12
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR,
REPRESENTED BY BANK BALANCES AND CASH	102	102

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

1. GENERAL INFORMATION

CAA Resources Limited (the "Company") was incorporated in the Cayman Islands under the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands as an exempted company with limited liability on 25 April 2012 and its shares are listed on the Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 3 July 2013.

The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The address of the principal place of business of the Company is Unit 2413A, 24/F, Tower One, Lippo Centre, 89 Queensway, Admiralty, Hong Kong.

In the opinion of the directors of the Company, the immediate holding company and the ultimate holding company of the Company is Cosmo Field Holdings Limited ("Cosmo Field"), which was incorporated in the British Virgin Islands.

The Company is an investing holding company. Its major operating subsidiaries are mainly engaged in the mining, ore processing, sales of iron ore products and other commodities.

The functional currency of the Company and the subsidiaries incorporated in Hong Kong are United Status dollars ("US$") while that of the subsidiaries established in the People's Republic of China, Malaysia and Singapore are Renminbi ("RMB"), Malaysia Ringgit ("MYR") and Singapore Dollar ("SGD") respectively. For the purpose of presenting the consolidated financial statements, the Company and its subsidiaries (hereinafter collectively referred to as the "Group") adopted US$ as its presentation currency which is the same as the functional currency of the Company.

2. BASIS OF PREPARATION

During the year ended 31 December 2020, the Group incurred a net loss attributable to the Owners of the Company of approximately US$29,601,000 and had net cash outflows from operating activities of approximately US$1,220,000. As at the same date, the Group's amount due to ultimate holding company, bank and other borrowings, guarantee notes and bonds amounted to approximately US$160,469,000 respectively, while its cash and cash equivalents amount to approximately US$102,000 only.

As at 31 December 2020, borrowings whose principal amounts of approximately US$157,947,000 and interest payable amounts of approximately US$21,418,000 ("In Default Borrowings") were overdue. In addition, the Group breached terms and conditions of In Default borrowings during the year ended 31 December 2020. The aforementioned borrowings would be immediately repayable if requested by the lenders.

78	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

2. BASIS OF PREPARATION (continued)

As set out in the announcement by the Company dated 20 January 2020, Mr. Li Yang ("Mr. Li"), the director, chairman and chief executive officer of the Company, received a writ of summons taken out by Oversea-Chinese Banking Corporation Limited ("OCBC") at the High Court (the "High Court") of Hong Kong ("High Court Action 2") in relation to the OCBC loan, in which Mr. Li failed to fulfil his obligation as a guarantor to settle the amount of HK$308,758,494 (the "OCBC outstanding amount"). The Group has also breached the repayment obligations under the OCBC loan (the "Breach"), and the Breach will trigger cross defaults of other borrowings and loans of the Group. On 8 January 2021, the High Court of Hong Kong adjudged that Mr. Li shall be obliged to pay OCBC outstanding amount, the accrued interests until the date of payment and other costs related to OCBC.

As disclosed in note 30, on 15 May 2020, Mr. Li Yang ("Mr. Li"), the director, chairman and chief executive officer of the Company and Cosmo Field, the ultimate holding company of the Company, received a writ of summons taken out by Industrial Bank Co., Limited ("Industrial Bank") at the High Court of Hong Kong ("High Court Action 1") in relation to a loan advanced by Industrial Bank to Cosmo field (the "Industrial Bank Loan"), for which Mr. Li was the guarantor. Pursuant to the High Court Action 1, Industrial Bank brought claim against Cosmo Field and Mr. Li with respect to the default in repayment of the Industrial Bank Loan in the amount of US$45,059,154 (the "Default on Industrial Bank Loan"). Cosmo Field has pledged 752,000,000 shares (representing 50.13% of all issued shares of the Company) in favour of Industrial Bank as security for the Industrial Bank Loan. Cosmo Field has lent the principal amount of the Industrial Bank Loan being US$40,000,000 (i.e. Shareholder's Loan) to the Company as an interest- free loan, and Industrial Bank is entitled to claim against the Company for the repayment of the Shareholder Loan pursuant to the assignment of loan as part of security arrangement for the Industrial Bank Loan whereby Cosmo Field has assigned the rights under the Shareholder Loan to Industrial Bank. The Default on Industrial Bank Loan will trigger cross-defaults of other borrowings and loans of the Group.

As stipulated in the relevant loan and financing agreements in respect of certain borrowings of the Group other than those mentioned above, any default of the Group's borrowings may result in cross-default of these borrowings. As a result of the above default events, the principal amount of borrowings of approximately US$2,522,000 were considered as cross-default ("Cross- default Borrowings"), of which the original contractual repayment dates beyond 31 December 2020 have been reclassified as current liabilities as at 31 December 2019 (note 32). On 8 May 2020, the Company and I-Access entered a terms sheet of extended payment schedule (the "extended payment schedule") and agreed that the Company shall be payable of the I-Access debt with six installments to 22 June 2021. The Group settled first two installments of aggregate amount of HK$300,000 (equivalent to US$38,400) to I-Access subsequently in May and June 2020, but failed to pay the third installment of HK$5,000,000 (equivalent to US$640,000) by the installment due date of 31 July 2020.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

2. BASIS OF PREPARATION (continued)

The Group is in active negotiations with all the lenders in respect of the In Default Borrowings and Cross-default Borrowings for renewal and extension of the relevant borrowings and the Directors are confident that agreements will be reached in due course.

Because of the aforementioned actions taken, management is confident that the lenders of the borrowings in respect of which there were delays in principal and interest repayments will not enforce their rights of requesting for immediate repayment. Management is also confident that lenders of the cross-default borrowings will not exercise their rights of requesting for immediate repayment under the cross-default provisions.

All of the above conditions indicate the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern. Further, the Group's mine sales subsequent to the year end has been significantly affected by the outbreak of Coronavirus Disease 2019 ("COVID-19 outbreak"), which will have an impact on the Group's cash flows.

80	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

2. BASIS OF PREPARATION (continued)

In view of these circumstances, the directors of the Company (the "Directors") have given careful consideration to the future liquidity and performance of the Group and its available sources of financing in assessing whether the Group will have sufficient financial resources to continue as a going concern, and have taken the following measures to mitigate the liquidity pressure and to improve its cash flows:

Cosmo Field, the ultimate holding company has agreed not to demand for any repayment of amount due by the Company of approximately US$60,000,000 as at 31 December 2020 until the Company is in a financial position to do so;
The Group has been actively negotiating with existing lenders for renewal and extension of bank loans and credit facilities;
The Group is also negotiating with various financial institutions and identifying various options for financing the Group's working capital and commitments in the foreseeable future;
In light of the COVID-19 outbreak, the Group is closely monitoring the latest development and will continue to assess the impact of the epidemic, as well as any government's stimulus in response, on the Group's operation from time to time and adjust its sales and marketing strategy for its mine sales to generate sufficient cash from its operations;
The Group has implemented measures to speed up the collection of outstanding trade debts proceeds; and
The Group will continue to take active measures to control administrative costs through various channels including human resources optimisation and management remuneration adjustments and containment of capital expenditures.

The directors have reviewed the Group's cash flow projections prepared by management. The cash flow projections cover a period of not less than twelve months from 31 December 2020. They are of the opinion that, taking into account the abovementioned plans and measures, the Group will have sufficient working capital to finance its operations and to meet its financial obligations as and when they fall due within twelve months from 31 December 2020. Accordingly, the directors are satisfied that it is appropriate to prepare the consolidated financial statements on a going concern basis.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

2. BASIS OF PREPARATION (continued)

Notwithstanding the above, significant uncertainties exist as to whether management of the Company will be able to achieve its plans and measures as described above. Whether the Group will be able to continue as a going concern would depend upon the Group's ability to generate adequate financing and operating cash flows through the following:

Successful negotiations with the lenders for the renewal of or extension for repayments beyond year 2021 for those borrowings that (a) are scheduled for repayment (either based on the original agreements or the existing arrangements) in year 2021; (b) were overdue as at 31 December 2020 because of the Group's failure to repay either the principal or the interests on or before the scheduled repayment dates; and (c) became or might become overdue in year 2021;
Successful raising additional new sources of financing as and when needed;
Successfully reaching a settlement of the High Court Action 1, High Court Action 2 and Winding Up Petition on the Company's forthcoming future;
Successfully collection of outstanding trade receivables and controlling costs and containing capital expenditure so as to generate adequate net cash inflows;
Successful managing the impact of the epidemic, as well as any government's stimulus in response, on the Group's operations from time to time and adjusting its sales and marking strategy to generate sufficient cash from its operations; and
Successful maintenance of relationship with the Group's existing lenders such that no action will be taken by the relevant lenders to demand immediate repayment of the borrowings in default, including those with cross-default terms.

Should the Group fail to achieve the abovementioned plans and measures, it might be unable to continue to operate as a going concern, adjustments would have to be made to restate the values of assets to their estimated recoverable amounts, to provide further liabilities that might arise and to reclassify non-current assets and non-current liabilities as current assets and current liabilities respectively. The effects of these potential adjustments have not been reflected in the consolidated financial statements.

82	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

3. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL

FINANCIAL REPORTING STANDARDS ("IFRSs")

In the current year, the Group has applied the following new and amendments to IFRSs issued by the International Accounting Standards Board (the "IASB") which are effective for the Group's financial year beginning 1 January 2020.

Amendments to IFRS 3	Definition of a Business
Amendments to IAS 1 and IAS 8	Definition of Material
Amendments to IFRS 9, IAS 39 and	Interest Rate Benchmark Reform
IFRS 7
Conceptual Framework for Financial	Revised Conceptual Framework for Financial Reporting
Reporting 2018

The application of other new and amendments to IFRSs in the current year has had no material impact on the Group's financial performance and position for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

New and amendments to IFRSs issued but not yet effective

The Group has not early applied the following new and amendments to IFRSs and interpretation that have been issued but are not yet effective:

IFRS 17	Insurance Contracts3
Amendments to IFRS 16	COVID-19-Related Rent Concessions5

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and Its

	Associate or Joint Venture4
Amendments to IAS 39, IFRS4,	Interest Rate Benchmark Reform - Phase 21
IFRS 7, IFRS 9 and IFRS 16
Amendments to IFRS 3	Reference to the Conceptual Framework2
Amendments to IAS 16	Property, Plant and Equipment - Proceeds before
	Intended Use2
Amendments to IAS 37	Onerous contracts: Cost of fulfilling a contract2
Amendments to IAS 8	Definition of Accounting Estimates3
Amendments to IAS 1	Classification of liabilities as Current or Non-current3
Amendments to IAS 1 and	Disclosure of Accounting Policies3
IFRS Practice Statement 2
Amendments to IFRSs	Annual Improvements to IFRS 2018-2020 cycle2

Effective for annual periods beginning on or after 1 January 2021 Effective for annual periods beginning on or after 1 January 2022 Effective for annual periods beginning on or after 1 January 2023 Effective date not yet been determined

Effective for annual periods beginning on or after 1 June 2020

The directors of the Company anticipate that, the application of the new and amendments to IFRSs will have no material impact on the results and the financial position of the Group.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with IFRSs issued by the IASB. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Company Ordinance.

The consolidated financial statements have been prepared on historical cost basis, except for financial assets at fair value through other comprehensive income certain financial assets that are measured at fair values at the end of each reporting period.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal (or most advantages) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. Details of fair value measurement are explained in the accounting policies set out below.

The principal accounting policies are set out below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries.

Control is achieved where the Group has:

power over the investee;
exposure, or rights, to variable returns from its involvement with the investee; and
the ability to use its power over the investee to affect the amount of the Group's returns.

The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control stated above.

84	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of consolidation (continued)

Consolidation of a subsidiary begins when the Group obtains control of the subsidiary and ceases when the Group loses control of the subsidiary.

Income and expenses of subsidiaries are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss of subsidiaries are attributed to the owners of the Company and to the non- controlling interests. Total comprehensive income of subsidiaries is attributed to owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.

All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group are eliminated in full on consolidation.

Changes in the Group's ownership interests in existing subsidiaries

Changes in the Group's ownership interests in existing subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, it (i) derecognises the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost, (ii) derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them), and (iii) recognises the aggregate of the fair value of the consideration received and the fair value of any retained interest, with any resulting difference being recognised as a gain or loss in profit or loss attributable to the Group. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Business combinations

Business combinations are accounted for by applying the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs incurred to effect a business combination are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value.

Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the Group's previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a gain on bargain purchase.

Non-controlling interests, unless as required by another standards, are measured at acquisition- date fair value except for non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation are measured either at fair value or at the present ownership instruments' proportionate share in the recognised amounts of the acquiree's identifiable net assets on a transaction-by-transaction basis.

Goodwill

Goodwill arising from a business combination is carried at cost less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash- generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

cash-generatingunit (or groups of cash-generating units) to which goodwill has been allocated is tested for impairment annually or more frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, the cash-generating unit (or groups of cash-generating units) to which goodwill has been allocated is tested for impairment before the end of that reporting period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro rata basis based on the carrying amount of each asset in the unit (or groups of cash-generating units). Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.

86	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Goodwill (continued)

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal.

Investment in an associate

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The Group's investments in associates are accounted for in the consolidated financial statements using the equity method, except for the investments classified as held for sale in which case it is accounted for in accordance with IFRS 5 Non-currentAssets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are initially recognised at cost. The Group's share of the profit or loss and changes in the other comprehensive income of the associates are recognised in profit or loss and other comprehensive income respectively after the date of acquisition. If the Group's share of losses of an associate equals or exceeds its interest in the associate, which determined using the equity method together with any long- term interests that, in substance, form part of the Group's net investment in the associate, the Group discontinues recognising its share of further losses. Additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

If an associate uses accounting policies other than those of the Group for like transactions and events in similar circumstances, adjustments are made to make the associate's accounting policies conform to those of the Group when the associate's financial statement are used by the Group in applying the equity method.

An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment, any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets and liabilities of the associate is recognised as goodwill and is included in the carrying amount of the investment.

Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognised in profit or loss in the period in which the investment is acquired.

The requirements of IAS 36 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised to the extent that the recoverable amount of the net investment subsequently increases.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Investment in an associate (continued)

When the investment ceases to be an associate upon the Group losing significant influence over the associate, the Group discontinues to apply equity method and any retained interest is measured at fair value at that date which is regarded as its fair value on initial recognition as a financial asset in accordance with the applicable standard. Any difference between the fair value of any retained interest and any proceeds from disposing of a part interest in the associate and the carrying amount of the investment at the date the equity method was discontinued is recognised in profit or loss. Any amount previously recognised in other comprehensive income in relation to that investment is reclassified to profit or loss or retained earnings on the same basis as it would have been required if the investee had directly disposed of the related assets or liabilities.

When the Group's ownership interest in an associate is reduced, but the Group continues to apply the equity method, the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest is reclassified to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

Gains and losses resulting from transactions between the Group and its associate are recognised in consolidated financial statements only to the extent of unrelated investors' interest in the associate. The Group's share in the associate's gains or losses resulting from these transactions is eliminated.

The Group applies IFRS 9, including the impairment requirements, to long-term interests in an associate or joint venture to which the equity method is not applied and which form part of the net investment in the investee. In applying IFRS 9 to long-term interests, the Group does not take into account adjustments to their carrying amount required by IAS 28 (i.e. adjustments to the carrying amount of long-term interests arising from the allocation of losses of the investee or assessment of impairment in accordance with IAS 28).

Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Such classification requires the asset must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified as held for sale from the time when the investment (or a portion of the investment) is classified as held for sale.

88	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Non-current assets held for sale (continued)

Non-current assets classified as held for sale is measured at the lower of their previous carrying amount and fair value less costs of disposal.

Revenue recognition

Revenue is recognised to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services to a customer. Specifically, the Group uses a five-step approach to recognise revenue:

Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation.

The Group recognised revenue when (or as) a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation is transferred to customers.

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;
the Group's performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
the Group's performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition (continued)

Revenue is measured based on the consideration specified in a contract with a customer, excludes amounts collected on behalf of third parties, discounts and sales related taxes.

The Group recognised revenue from the following major sources:

Sales of Iron Ore products; and
Sales of crude oil and other commodities

Sales of Iron Ore products, crude oil and other commodities

Revenue from sales of Iron Ore products, crude oil and other commodities are recognised at a point in time when the control of the goods is transferred to the customers. Control of the goods is considered transferred to customers at the time of delivery.

A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

Principal versus agent

When another party is involved in providing goods or services to a customer, the Group determines whether the nature of its promise is a performance obligation to provide the specified goods or services itself (i.e. the Group is a principal) or to arrange for those goods or services to be provided by the other party (i.e. the Group is an agent).

The Group is a principal if it controls the specified good or service before that good or service is transferred to a customer.

The Group is an agent if its performance obligation is to arrange for the provision of the specified good or service by another party. In this case, the Group does not control the specified good or service provided by another party before that good or service is transferred to the customer. When the Group acts as an agent, it recognises revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party.

Leasing

Definition of a lease

Under IFRS 16 Leases, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

90	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Leasing (continued)

The Group as lessee

The Group assesses whether a contract is or contains a lease, at inception of the contract or modification date or acquisition date, as appropriate. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less from the commencement date and do not contain a purchase option) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Lease liabilities

At the commencement date, the Group measures lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted by using the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

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

fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

Annual Report 2020 CAA RESOURCES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Leasing (continued)

The Group as lessee (continued)

Lease liabilities (continued)

Lease liability is remeasured (and with a corresponding adjustment to the related right-of-use asset) whenever:

the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using revised discount rate.
the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

Right-of-use assets

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement date and any initial direct costs, less lease incentives received. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, provision is recognised and measured under IAS 37 Provision, Contingent Liabilities and Contingent Assets. The costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. They are depreciated over the shorter period of lease term and useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The Group presents right-of-use assets as a separate line item in the consolidated statement of financial position.

The Group applies IAS 36 Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss.

92	CAA RESOURCES LIMITED Annual Report 2020

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

4. SIGNIFICANT ACCOUNTING POLICIES (continued)

Leasing (continued)

The Group as lessee (continued)

Right-of-use assets (continued)

When the Group obtains ownership of the underlying leased assets at the end of the lease term upon exercising purchase options, the cost of the relevant right-of-use assets and the related accumulated depreciation and impairment loss are transferred to property, plant and equipment.

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate stand-alone price of the non-lease components.

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group has not used this practical expedient for all leases.

Lease modification

The Group accounts for a lease modification as a separate lease if:

the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Annual Report 2020 CAA RESOURCES LIMITED

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CAA Resources Limited published this content on 30 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2021 14:57:03 UTC.

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	1st Jan change	Capi.
GRACE LIFE-TECH HOLDINGS LIMITED	-36.23%	35.73M
PTT OIL AND RETAIL BUSINESS	-15.71%	5.21B
QATAR FUEL COMPANY Q.P.S.C. ("WOQOD")	-10.37%	4.06B
PETRONAS DAGANGAN	-20.05%	3.64B
VIVA ENERGY GROUP LIMITED	-9.46%	3.35B
AMERIGAS PARTNERS, L.P.	+23.40%	3.23B
RUBIS	+23.38%	3.15B
PT AKR CORPORINDO TBK	+6.10%	1.91B
GLOBAL PARTNERS LP	+6.70%	1.55B
WORLD KINECT CORPORATION	+10.62%	1.54B

Grace Life-tech Holdings Limited

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Oil & Gas Refining and Marketing

CAA Resources : FURTHER ANNOUNCEMENT OF THE AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

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