CAQ Holdings Limited and its controlled entities

ABN 86 091 687 740

Consolidated Annual Financial Report for the Year Ended 31 December 2020

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CONTENTS
Directors’ Report	2
Independent Auditor’s Declaration	14
Independent Audit Report	15
Directors’ Declaration	20
Consolidated Statement of Profit or Loss and
Other Comprehensive Income	21
Consolidated Statement of Financial Position	23
Consolidated Statement of Changes in Equity	24
Consolidated Statement of Cash Flows	25
Notes to the Consolidated Financial Statements	26
Shareholder Information	72
Corporate Governance Statement	74
Corporate Directory	83

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

The Directors present their report of the consolidated entity consisting of CAQ Holdings Limited and the entities it controlled (“ the Group ”) at the end of, or during the financial year ended 31 December 2020.

Directors

The names of the Directors in office at any time during or since the end of the financial year;

Paul Price KC Ong Michael Siu Qian Xu Ching Chung Yuk Cheung Chan Ivan Cheng Kwan Chan Chen Po Chung

Directors were in office for this entire period unless otherwise stated.

Mr Paul Price

Chairman and Non-Executive Director

Mr Price has extensive experience in corporate and commercial matters and has advised national and international clients on capital raising and structuring issues including Corporations Act and ASX Listing Rule compliance and governance issues. Mr Price’s clients span numerous industry sectors, including resources and energy, manufacturing, professional services, industrial and technology. Mr Price has served as a director of a number of ASX listed companies and is a co-founder of corporate advisory firm Trident Capital. Mr Price is a member of the Australian Institute of Company Directors, AMPLA (the Resources and Energy Law Association) and the Association of Mining and Exploration Companies. Mr Price has a Bachelor of Jurisprudence, a Bachelor of Laws and a Masters of Business Administration, all from the University of Western Australia.

Other directorships in Australian listed companies during the past three financial years are as follows: • NTM Gold Limited – Chairman – resigned on 27 July 2019.

Mr KC Ong

Non-Executive Director

Mr Ong is an independent corporate adviser and has extensive experience in corporate advice and financial management, specialising in assisting from small/medium sized businesses and public clients, both international and domestic clients on strategic planning and transactions structuring. KC has assisted startup companies on arranging funding and advisory role. KC is one of the founding director of Symmetry Capital Partners. Mr Ong has a Bachelor of Commerce from Deakin University.

Mr. Ong did not hold any other directorships in Australian listed companies during the past three financial years.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Mr Michael Siu (Mr Siu Kin Wai)

Non-Executive Director

Mr Siu has extensive experience in corporate management in Asia. Mr Siu is an Executive Director and the Chief Executive Officer of Beijing Properties (Holdings) Limited, an Executive Director of MillenMin Ventures Inc. and an Executive Director of Beijing Enterprises Medical and Health Industry Group Limited (SEHK stock code: 2389). Mr Siu is also an independent Non-Executive Director of Agritrade Resources Limited and Oriential Securities International Holdings Limited. In addition to this, Mr Siu is a Director of Brilliant Bright Holdings Limited, who is a controlling shareholder of Beijing Properties (Holdings) Limited.

Mr Siu has a Bachelor’s Degree in Accounting from the City University of Hong Kong and is a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants. Mr Siu is also a member of the Institute of Chartered Accountants in England and Wales.

Mr Siu has not held directorships in any other Australian listed company during the past three financial years.

Mr Qian Xu

Non-Executive Director

Mr Qian has extensive experience in mergers and acquisitions, corporate restructuring and financial management in Asia. Mr Qian is an Executive Director and the Chairman of Beijing Properties (Holdings) Limited, and a Director, general manager and the Chairman of the Beijing Enterprises City Development Group Limited. Mr Qian is also an Executive Director of MillenMin Ventures Inc. (resigned on 26 September 2019) and an Executive Director of Beijing Enterprises Medical and Health Industry Group Limited (resigned on 27 February 2019). In addition to this, Mr Qian is a Director of Brilliant Bright Holdings Limited, who is a controlling shareholder of Beijing Properties (Holdings) Limited.

Mr Qian has a Bachelor’s degree in Economics from the Economics and Management Faculty of the Beijing Industrial University and has an Executive Master of Business Administration degree from Tsinghua University.

Mr Qian has not held directorships in any other Australian listed company during the past three financial years.

Mr Ching Chung

Executive Director and Deputy Chairman

Mr Ching has over 30 years of experience investing, operating and managing companies in Hong Kong and China. The industries which he has been involved with include gambling, mining and property development. Mr Ching has established relationships with the China Government and various other Chinese associations.

Mr Ching has not held directorships in any other Australian listed company during the past three financial years.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Mr Yuk Cheung Chan

Non-Executive Director

Mr Yuk Cheung Chan has extensive experience in management and corporate affairs. Mr Chan is the President of the International Friends of the Chamber of Commerce, the Chairman of the Belt and Road ASEAN Financial Development Committee of China and the Chairman of the Sino-Cambodian Phnom Penh Economic Zone Management Committee. Mr Chan was also a former Director of Beijing Properties (Holdings) Limited.

Mr Chan has not held directorships in any other Australian listed company during the past three financial years.

Mr Ivan Cheng

Non-Executive Director

Mr Cheng has extensive experience in accounting, financial management and company secretarial roles. Mr Cheng is the Company Secretary, Chief Financial Officer and an Executive Director of Beijing Properties (Holdings) Limited, an Executive Director of MillenMin Ventures Inc. In addition to this, Mr Cheng is also the Director of both China Logistics Infrastructures (Holdings) Limited and China Industrial Properties (Holdings) Limited.

Mr Cheng has a Bachelor’s degree in Commerce (majoring in Accounting and Finance) from Curtin University, a Masters of Business Administration from the University of South Australia and a Masters of Corporate Governance from the Hong Kong Polytechnic University.

Mr Cheng is also a fellow member of the Hong Kong Institute of Certified Public Accountants, a fellow member of CPA Australia, a fellow member of The Hong Kong Institute of Chartered Secretaries and a fellow member of The Chartered Governance Institute (formerly known as The Institute of Chartered Secretaries and Administrators).

Mr Cheng has not held directorships in any other Australian listed company during the past three financial years.

Mr Kwan Chan

Non-Executive Director

Mr Kwan Chan has extensive experience in asset management and commercial acquisitions. Mr. Chan is an Executive Director of Wan Kei Group Holdings Limited. In September 2016, Mr Chan received his Diamond Graduate Diploma from the Gemological Institute of America, which brings unique knowledge to the Board. Mr Chan also has a Bachelor’s degree in Law from the University of Leicester and a Bachelor’s degree in Biomedical Sciences from the University of Essex.

Mr Chan has not held directorships in any other Australian listed company during the past three financial years.

Mr Chen Po Chung

Non-Executive Director

Mr Chen is a venture capitalist with a background in the development of business turnaround strategies in Asia. His extensive experience covers the industries of general manufacturing, information technology, finance & banking, and retail & branding. Mr Chen has more than 25 Years of investment experience and was previously a Director with HSBC Private Equity Limited in Hong Kong, managing the investment activities throughout the Greater China Region.

Mr Chen has an MBA degree from National Sun Yat-sen University.

Mr Chen has not held directorships in any other Australian listed company during the past three financial years.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Mr. Mark Maine

Company Secretary

Mr Maine is an experienced company secretary who has previously been a director and a company secretary for a number of ASX listed companies over the past 19 years and the former Executive Chairman of ASX listed company, Peak Resources Limited. He is currently the company secretary of NTM Gold Limited and manages a consultancy business specialising in company secretarial practice, corporate strategy, governance and corporate administration. Mr Maine is a member of CPA Australia and holds a Master’s degree in Commercial Law and a Bachelor’s degree in Accounting from Curtin University, Western Australia.

Principal Activities

The Group’s principal activity includes leasing of an investment property in the Haikou Free Trade Zone in People’s Republic of China (“PRC”) and jewellery trading.

Dividends Paid or Recommended

No dividends were paid during the year and no recommendation is made as to dividends. (2019: Nil)

Commentary on the Results for the Year

The net loss for the year ended 31 December 2020 was $2,182,677 (2019: $2,577,822). The decrease in loss after tax compared to the prior year is mainly attributable to the increase the revenue, increase in change in fair value of investment properties, decrease in director fee and salary, travel costs, administration expenses, purchase and changes in trading stock offset by the increase in expected credit loss and share of loss in an joint venture and associate. Refer to further analysis in the review of operations and changes in state of affairs below.

Review of operations and changes in State of Affairs

Operational

During the year ended 31 December 2020, revenues earned from the Company’s leasing business (net of business tax) amounted to $2,041,952 (2019: $1,256,918). This is mainly attributed to increases in occupancy rates, which climbed to 57% at the end of the year. The Group expects the occupancy rate to maintain an upward trend in year 2021.

During the year, Haikou Peace Base Industry Development Co. Ltd (“HPB”), a wholly owned subsidiary of the Company, entered into an investment agreement with Hainan Tourism Investment Development Company Limited (“HTID”) in relation to the formation of a Company, Hainan Provincial Diamond & Jewelry Co., Ltd in Hainan Province, the PRC. Hainan Provincial Diamond & Jewelry Co., Ltd is owned 45% and 55% by HPB and HTID. Hainan Provincial Diamond & Jewelry Co., Ltd will take a leading role of the development of diamond and jewelry business of the island, including the duty-free development in terms of this industry.

During the year, there was an initial impact on emerging retail operations from COVID19 during the March Quarter. That impact appears to have been only limited and temporary with trading operations having now recovered. On the other hand, HPB’s core leasing operations in Hainan Island have been largely unaffected with the business generating a constant cash revenue during the year. The Company continues to search for new tenants for all areas with a number of contracts under negotiation and expected to convert within the 2021 financial year. Redevelopment work is continuing on the Exhibition Centre with a line of credit of $3,981,726 (RMB20,000,000) having been secured by the title of the Administration Building. (Refer to Note 22 for further details) and scheduled to generate income starting from the second quarter of 2021. The total floor area of the Exhibition Centre is 22,441.96 sqm. After the opening the Exhibition Centre, diamond and jewellery retailers are expected to open outlets which will result in an increase in demand of office areas and warehouse space, thereby benefiting the Group’s associated infrastructure assets.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Likely Developments and Expected Results of Operations

Other than as disclosed else where in the directors’ report, other likely developments in the operations of the Group and then expected results of those operations in future financial years have not been included in this report as the directors believe on reasonable grounds, that the inclusion of such information would be likely to result in unreasonable prejudice to the Company.

Environmental Regulations

The Company’s operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a State or Territory. Based on the Group’s current operations, they are not required to register, nor are they required to report emissions data to the Greenhouse and Energy Data Officer under the National Greenhouse and Energy Reporting Act 2007.

Meetings of Directors

The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended 31 December 2020, and the numbers of meetings attended by each Director were:

			Audit Committee	Audit Committee	Nomination Committee	Nomination Committee	Remuneration	Remuneration
	Directors	Meetings		Meetings		Meetings	Committee	Meetings
	A	B	A	B	A	B	A	B
P Price	3	3	3	3	*	*	*	*
KC Ong	3	3	3	3	*	*	*	*
M Siu	3	3	3	3	*	*	*	*
Q Xu	3	1	*	*	–	–	–	–
C Chung	3	–	*	*	–	–	–	–
YC Chan	3	–	*	*	*	*	*	*
I Cheng	3	3	*	*	*	*	*	*
K Chan	2	3	*	*	*	*	*	*
PC Chen	3	3	3	3	*	*	*	*

Notes

A – Number of meetings held during the time the Director held office during the year.

B – Number of meetings attended.
– Not a member of the relevant committee

The Board of Directors also approved 3 circular resolutions during the year ended 31 December 2020 which were signed by all Directors of the Company.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Share Options

Shares under Option

There are no unissued ordinary shares of CAQ Holdings Limited under option at the date of this report (31 December 2019: nil).

Directors’ Share and Option Holdings

As at the date of this report the interests of the Directors in the shares and options of the Company were:

		Options over
Director	Ordinary Shares	Ordinary Shares
P Price	5,270,666	–
K C Ong	1,487,500	–
M Siu	114,539,393	–
Q Xu	108,628,000	–
C Chung	1,150,000	–
YC Chan	–	–
I Cheng	108,628,000	–
K Chan	72,853,551	–
PC Chen	–	–

Remuneration Report (Audited)

Key Management Personnel

The following persons were key management personnel and specified executives of CAQ Holdings Limited during the financial year:

Paul Price – Non-Executive Director and Chairman (appointed 2 May 2013)

KC Ong – Non-Executive Director (appointed 2 May 2013)

Michael Siu – Non-Executive Director (appointed 20 April 2015)
Qian Xu – Non-Executive Director (appointed 20 April 2015)

Ching Chung – Executive Director and Deputy Chairman (appointed 19 May 2015)

Yuk Cheung Chan – Non-Executive Director (appointed 27 November 2017)

Ivan Cheng – Non-Executive Director (appointed 27 November 2017)

Kwan Chan– Non-Executive Director (appointed 27 November 2017)

Chen Po Chung – Non-Executive Director (appointed 4 June 2019)

Remuneration Philosophy

The performance of the Company depends on the quality of its Directors and other Key Management Personnel and therefore the Company must attract, motivate and retain appropriately qualified industry personnel. The Company embodies the following principles in its remuneration framework:

provide competitive rewards to attract and retain high calibre Directors and other Key Management Personnel;
link executive rewards to shareholder value (by the granting of share options);
link reward with the strategic goals and performance of the Company; and
ensure total remuneration is competitive by market standards.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

Remuneration Governance

The Company has a remuneration committee. The Committee has not used remuneration consultants in determining the remuneration of Key Management Personnel. The compensation of Directors and Key Management Personnel are to be reviewed by the Committee annually. During the year, the members engaged in informal discussions.

The Committee assesses the appropriateness of the nature and amount of remuneration of such persons on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit from retention of high quality Directors and other Key Management Personnel. External advice on remuneration matters is sought whenever the Committee deems it necessary but has not been sought during the reporting period. The remuneration of the Directors and other Key Management Personnel is not dependent on the satisfaction of a performance condition.

The following table shows the gross revenue, results and the share price of the Company at the end of the respective financial years.

	31 December1	31 December	31 December	31 December	31 December	31 December
	2015	2016	2017	2018	2019	2020
	$	$	$	$	$	$
Revenue and other income	81,665	653,389	2,029,144	1,218,166	1,470,387	2,085,458
Net(loss)/profit	(1,323,450)	(2,704,539)	(2,379,817)	(1,852,389)	(2,577,822)	(2,182,677)
Share price	19 cents	14 cents	8 cents	3.8 cents	0.9 cents	2.6 cents

1) the company changed its financial year end from 30 June to 31 December in 2015.

Non-Executive Director Remuneration

The Board seeks to set remuneration of Non-Executive Directors at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is appropriate at this stage of the Group’s operations.

The Directors have resolved that Non-Executive Directors’ fees are $48,000 (31 December 2019: $48,000) per annum for each Non-Executive Director and $72,000 (31 December 2019: $72,000) per annum for the Non-Executive Chairman. In addition, Non-Executive Directors are entitled to be paid reasonable travelling, accommodation and other expenses incurred as a consequence of their attendance at meetings of Directors and otherwise in the execution of their duties as Directors.

The maximum annual aggregate directors’ fee pool limit is $500,000, as approved by Shareholders at the 2017 Annual General Meeting.

Executive Remuneration

Mr Ching Chung is entitled to a remuneration of $222,826 (2019: $221,638) per annum with no other benefits. The Board is in the process of determining an executive remuneration policy. At the date of this report, there is currently no element in that remuneration that is performance based. The service agreement with Mr Ching Chung has a notice period of 1 month.

The table below disclose the remuneration expense recognised for the group’s executive Key Management Personnel.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(A) Summary of amounts paid to Key Management Personnel

The table below discloses the compensation of the Key Management Personnel of the Group during the period.

Year 31 December 2020 Executive Directors C Chung Non-Executive Directors P Price KC Ong M Siu Q Xu YC Chan I Cheng K Chan PC Chen Year 31 December 2019 Executive Directors C Chung Non-Executive Directors P Price KC Ong M Siu Q Xu YC Chan I Cheng K Chan PC Chen(1)	Short-Term Salary & Fees $ 222,826 72,000 48,000 48,000 48,000 48,000 48,000 48,000 48,000 630,826 Short-Term Salary & Fees $ 221,638 72,000 48,000 48,000 48,000 48,000 48,000 48,000 28,000 609,638	Post employment Termination payments Super– annuation $ $ – – – – – – – – – – – – – – – – – – – – Post employment Termination payments Super- annuation $ $ – – – – – – – – – – – – – – – – – – – –	Share-Based Payments Options Shares $ $ – – – – – – – – – – – – – – – – – – – – Share-Based Payments Options Shares $ $ – – – – – – – – – – – – – – – – – – – –	Total Remuneration consisting of options % $ 222,826 – 72,000 – 48,000 – 48,000 – 48,000 – 48,000 – 48,000 – 48,000 – 48,000 – 630,826 – Total Remuneration consisting of options % $ 221,638 – 72,000 – 48,000 – 48,000 – 48,000 – 48,000 – 48,000 – 48,000 – 28,000 – 609,638 –	Outstanding remuneration payable at 31 December 2020 $ 106,891 18,000 12,000 12,000 12,000 12,000 12,000 12,000 12,000
					208,891

					Outstanding remuneration payable at 31 December 2019 $ – – – – – – – – 28,000
					28,000

(1) Appointed on 4 June 2019

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(B) Service agreements

There are service agreements in place in relation for all Directors.

(C) Options holdings of key management personnel

During the year ended 31 December 2020 and to the date of this report, there are no options on issue and therefore no options held by Key Management Personnel.

(D) Shareholdings of key management personnel

The movement during the reporting year in the number of ordinary shares of CAQ Holdings Limited held, directly, indirectly or beneficially, by each key management personnel, including their related parties is as follows:

31 December 2020

Directors P Price1 KC Ong2 M Siu3 Q Xu4 C Chung5 I Cheng6 K Chan7 YC Chan PC Chen	Balance 1 January 2020 5,270,666 1,487,500 114,538,500 108,628,000 1,150,000 108,628,000 72,853,551 – – 412,556,217	Other – – – – – – – – – –	Net Purchased/ (Sold) – – 893 – – – – – – 893	Balance 31 December 2020 5,270,666 1,487,500 114,539,393 108,628,000 1,150,000 108,628,000 72,853,551 – – 412,557,110

1 As at 31 December 2020, 3,586,666 shares were held by Trident Capital Pty Ltd, a company which Mr Price is a Director and Shareholder. 1,487,500 shares were held by Milwal Pty Ltd , a company which Mr Price is a Director and Shareholder. 126,500 shares were held by Joshua Price, Mr Price’s son. 10,000 shares were held by Madeline Price, Mr Price’s daughter. 60,000 shares were held by Elizabeth Price, Mr Price’s wife.

As at 31 December 2019, 3,586,666 shares were held by Trident Capital Pty Ltd, a company which Mr Price is a Director and Shareholder. 1,487,500 share were held by Milwal Pty Ltd , a company which Mr Price is a Director and Shareholder. 126,500 shares were held by Joshua Price, Mr Price’s son. 10,000 shares were held by Madeline Price, Mr Price’s daughter. 60,000 shares were held by Elizabeth Price, Mr Price’s wife.

As at 31 December 2020, 1,487,500 fully paid ordinary shares were held by Mr Ong (2019: 1,487,500).

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(D) Shareholdings of key management personnel (Continued)

3
As at 31 December 2020, 108,628,000 shares were held by Beijing Properties (Holdings) Limited, a company which Mr Siu is a Director. 5,000,000 shares were held by JP Morgan Australia Limited, Mr Siu’s wife’s custodian and 911,393 shares were held by Pershing Australia Nominees Pty Ltd (Phillip Securities (HK) A/C), Mr Siu’s custodian.

As at 31 December 2019, 108,628,000 shares were held by Beijing Properties (Holdings) Limited, a company which Mr Siu is a Director. 5,000,000 shares were held by JP Morgan Australia Limited, Mr Siu’s wife; custodian, and 910,500 shares were held by Pershing Australia Nominees Pty Ltd (Phillip Securities (HK) A/C), Mr Siu’s custodian.

As at 31 December 2020, 108,628,000 shares were held by Beijing Properties (Holdings) Limited, a company which Mr Qian is a Director.

As at 31 December 2019, 108,628,000 shares were held by Beijing Properties (Holdings) Limited, a company which Mr Qian is a Director.

5 As at 31 December 2020, 1,150,000 fully paid ordinary shares were held by Mr Ching (2019: 1,150,000).

6 As at 31 December 2020, 108,628,000 shares were held by Beijing Properties (Holdings) Limited, a company which Mr Cheng is a Director.

As at 31 December 2019, 108,628,000 shares were held by Beijing Properties (Holdings) Limited, a company which Mr Cheng is a Director.

7 As at 31 December 2020, 72,853,551 fully paid ordinary shares were held by Mr Chan (2019: 72,853,551).

(E) Loans to or from key management personnel

On 20 April 2019, the Group entered into an agreement with one of its trading partners under which the Group advanced $734,343 (RMB3,536,026) to the trading partner on 30 April 2019. In accordance with the agreement, the Group appointed Ching Chung, one of the Company’s directors to collect the advance on behalf of the Group within 5 business days on the customer receiving the monies.

On 8 July 2019, 10 July 2019 and 21 August 2019, $47,765 (RMB230,000), $623,024 (RMB3,000,000) and $63,554 (RMB306,026) were remitted to the Group respectively by Ching Chung towards the full settlement of the amount advanced by the Group to the trading partner.

There were no other loans to or from key management personnel during the year or as at 31 December 2020 (31 December 2019: Nil).

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(F) Other transactions with key management personnel

Certain key management personnel, or their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. These entities transacted with the Company in the reporting year.

CAQ Holdings Limited

Legal Fees:

Mr Price is a Director and Shareholder of Price Sierakowski. Price Sierakowski Pty Ltd (“Price Sierakowski”) provide the Company with legal services. For the year ended 31 December 2020, $1,320 (incl GST) was paid to Price Sierakowski (31 December 2019: $3,383 (incl GST)). As at 31 December 2020, $nil (incl GST) was payable to Price Sierakowski (31 December 2019: $nil).

(G) Share-based compensation

The Company has not issued any performance bonus options during the financial year ended 31 December 2020 (31 December 2019: Nil).

(H) Use of remuneration consultants

The Company did not employ the services of remuneration consultants during the financial year.

(I) Voting and comments made at the Company’s 2020 Annual General Meeting

The Company received more than 99.8% of votes, of those shareholders who exercised their right to vote, in favour of the remuneration reports for the 2020 financial period. The Company did not receive any specific feedback at the AGM or throughout the period on its remuneration practices.

This is the end of the Audited Remuneration Report.

Indemnification of Directors and Officers

During the financial year, the Company paid a premium in respect of a contract of insurance insuring the Directors and officers of the Group against certain liabilities specified in the contract. The contract prohibits disclosure of the nature of the liabilities insured and the amount of the premium.

Indemnification of auditors

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young Australia, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

Events occurring after the reporting date

On 15 March 2021, the term of the other loan was extended from November 2021 to November 2022 (Note 22). There have not been any other events that have arisen in the interval between the end of the financial period and the date of this report or any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to materially affect the operations of the Group, the results of those operations or the state of affairs of the Group, in future financial years.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Non-Audit Services

The Directors are satisfied that the provision of non-audit services, is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:

All non-audit services are reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor; and
None of the services undermine the general principles relating to auditor’s independence as set out in APES 110 Code of Ethics for Professional Accountants.

Non-audit services have not been provided by the entity’s auditor, Ernst & Young for the year ended 31 December 2020 (31 December 2019: Nil).

Proceedings on Behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

The Company was not a party to any such proceedings during the period.

Auditors independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included in this Annual Financial Report on page 14.

Signed in accordance with a resolution of the Board of Directors:

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Michael Siu

Director

Dated at Hong Kong this 31st day of March, 2021.

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

Auditor’s Independence Declaration to the Directors of CAQ Holdings Limited

As lead auditor for the audit of the financial report of CAQ Holdings Limited for the financial year ended 31 December 2020, I declare to the best of my knowledge and belief, there have been:

a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b) No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of CAQ Holdings Limited and the entities it controlled during the financial year.

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Ernst & Young

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V L Hoang Partner 31 March 2021

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

MH:DA:CAQ:007

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Ernst & Young Tel: +61 8 9429 2222 11 Mounts Bay Road Fax: +61 8 9429 2436 Perth WA 6000 Australia ey.com/au GPO Box M939 Perth WA 6843

Independent auditor's report to the members of CAQ Holdings Limited

Report on the audit of the financial report

Opinion

We have audited the financial report of CAQ Holdings Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

a) giving a true and fair view of the consolidated financial position of the Group as at 31 December 2020 and of its consolidated financial performance for the year ended on that date; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1(a) in the financial report. These events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. For each matter below, our description of how our audit addressed the matter is provided in that context.

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We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Repor t section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.

Carrying value of investment property

Why significant

Investment property at 31 December 2020 comprised the Group’s property located in Haikou Integrated Free Trade Zone in the People’s Republic of China carried at a fair value of $61,716,745 (see Note 5).

Fair values were determined by the Group at the end of the reporting period with reference to an external independent property valuation and market conditions existing at the reporting date. Changes in fair value are recognised in profit or loss.

We considered this to be a key audit matter as the property valuation is based on certain assumptions, such as capitalisation rates, market rent, occupancy levels, re-leasing and capital expenditure, which are judgmental in nature. Minor changes in certain assumptions can lead to significant changes in the valuation.

Impact of COVID-19 on investment property values

Given the market conditions at balance date, the independent valuer has reported on the basis of the existence of ‘material valuation uncertainty’, noting that less certainty, and a higher degree of caution, should be attached to the valuation than would normally be the case. The disclosures in the financial report provide particularly important information about the assumptions made in the investment property valuation and market conditions at 31 December 2020. The financial report describes the material valuation uncertainty and the impact of the COVID-19 pandemic on the determination of fair value of the investment property and how this has been considered by the directors in the preparation of the financial report at 31 December 2020. Due to the material valuation uncertainty arising from COVID-19 pandemic, the investment property value may change significantly and unexpectedly over a relatively short period of time. We draw attention to Note 5 of the financial report which discloses the material uncertainty and impact of the COVID-19 pandemic as well as the sensitivity of the valuation to changes in key assumptions.

How our audit addressed the key audit matter

Our audit procedures included the following:

Physical inspection of the investment property
Our real estate valuation specialists considered the valuation report provided by the Group’s independent valuation expert including assessing:
(i) The competence, capability and objectivity of the valuation expert
(ii) The appropriateness of the valuation expert’s work by considering the methodology and valuation method adopted. They held discussions with the independent valuer to gain an understanding of the assumptions and estimates used and the valuation methodology applied. This included the impact that COVID19 has had on key assumptions such as the capitalisation, discount or growth rates and future forecast rentals (including tenant occupancy risk from changes in the estimated lease renewals). They also considered the ‘material valuation uncertainty’ disclosure included in independent valuation reports and any other restrictions imposed on the valuation process (if any) and the market conditions at balance date.
Assessed the appropriateness of disclosures included in Note 5 of the financial report, in particular those relating to the material valuation uncertainty of investment property.

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Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information comprises the information included in the Company’s 2020 Annual Report, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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

Auditor's responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

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

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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

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

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors' report for the year ended 31 December 2020.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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In our opinion, the Remuneration Report of CAQ Holdings Limited for the year ended 31 December 2020, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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Ernst & Young

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V L Hoang Partner Perth

31 March 2021

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

MH:DA:CAQ:008

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ DECLARATION FOR THE YEAR ENDED 31 DECEMBER 2020

The Directors of the Group declare that:

The financial statements, comprising the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Cash Flows, Consolidated Statements of Changes in Equity, accompanying notes, are in accordance with the Corporations Act 2001 and:
(a) comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b) give a true and fair view of the financial position as at 31 December 2020 and of the performance for the year ended on that date of the Group.
In the Directors’ opinion, subject to the matters set out in note 1(a), there are reasonable grounds to believe CAQ Holdings Limited and its controlled entities will be able to pay its debts as and when they become due and payable.
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations as required by Section 295A of the Corporations Act for the financial year ended 31 December 2020.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:

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Michael Siu

Director

Dated at Hong Kong this 31st day of March, 2021.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020

Note Rental income Revenue from contracts with customers Revenue 11 Other income 11 Purchase and changes in trading stock Foreign currency gain/(loss) Legal expenses Accounting, auditing fees and consultancy expenses Directors fees and salary Insurance expenses Occupancy costs Travel costs Finance costs Administration expenses Other expenses Depreciation Amortisation Expected credit loss 13 Change in fair value of investment properties 5 Share of losses of a joint venture 6 Share of losses of associate 7 Loss from continuing operations before Income Tax Income tax expense 10 Loss after income tax for the year	Consolidated Year ended 31 December 2020 $ 2,041,952 13,760 2,055,712 29,746 (10,830) (2,825) (93,728) (294,373) (1,527,815) (50,552) (45,328) (350,148) (3,108) (378,770) (95,670) (125,883) (21,629) (742,315) 383,779 (402,444) (18,710) (1,694,891) (487,786) (2,182,677)	Consolidated Year ended 31 December 2019 $ 1,256,918 112,796 1,369,714 100,673 (65,773) (66,689) (69,324) (337,836) (1,591,834) (51,935) (49,737) (412,723) (13,603) (458,024) (162,936) (192,983) (24,492) – – (161,781) – (2,189,283) (388,539) (2,577,822)

The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the accompanying notes.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020

Note Other comprehensive loss Items that may be reclassified to the profit or loss Exchange differences on translation of foreign operations Total comprehensive loss for the year Loss is attributable to: Owners of CAQ Holdings Limited Total comprehensive loss for the year is attributable to: Owners of CAQ Holdings Limited Loss per share attributable to the members of CAQ Holdings Limited Basic and diluted loss per share 24	Consolidated Year ended 31 December 2020 $ (1,605,480) (3,788,157) (2,182,677) (3,788,157) Cents Per Share (0.30)	Consolidated Year ended 31 December 2019 $ (524,888) (3,102,710) (2,577,822) (3,102,710) Cents Per Share (0.36)

The above Consolidated Statement of Profit or Loss and other Comprehensive Income should be read in conjunction with the accompanying notes.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

Notes CURRENT ASSETS Cash and cash equivalents 12 Trade and other receivables 13 Inventory 9 Other current assets Due from a joint venture TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant & equipment 8 Investment property 5 Intangibles Other receivables 13 Investment in a joint venture 6 Investment in an associate 7 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 14 Indirect taxes payable Accruals Borrowings 22 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other payable 14 Borrowings 22 Deferred tax liabilities 10 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 15 Accumulated losses Reserves 16 TOTAL EQUITY	Consolidated 31 December 2020 $ 567,233 178,095 1,205,326 178,799 298,629 2,428,082 189,348 61,716,745 42,975 1,062,195 459,095 878,145 64,348,503 66,776,585 596,432 68,644 467,157 871,201 2,003,434 445,048 1,915,011 2,171,870 4,531,929 6,535,363 60,241,222 74,649,048 (14,906,588) 498,762 60,241,222	Consolidated 31 December 2019 $ 2,424,738 1,059,311 1,250,370 195,491 – 4,929,910 296,957 59,715,430 42,913 807,636 863,636 – 61,726,572 66,656,482 240,582 65,430 103,166 – 409,178 462,125 – 1,755,800 2,217,925 2,627,103 64,029,379 74,649,048 (12,723,911) 2,104,242 64,029,379

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020

Balance at 1.1.2020 Loss for the year Exchange differences on foreign currency translation Total comprehensive loss for the period Balance at 31.12.2020 (Consolidated) Balance at 1.1.2019 Loss for the year Exchange differences on foreign currency translation Total comprehensive loss for the period Balance at 31.12.2019 (Consolidated)	Contributed equity $ 74,649,048 – – – 74,649,048 Contributed equity $ 74,649,048 – – – 74,649,048	Accumulated losses $ (12,723,911) (2,182,677) – (2,182,677) (14,906,588) Accumulated losses $ (10,146,089) (2,577,822) – (2,577,822) (12,723,911)	Foreign Currency Translation Reserve $ 2,104,242 – (1,605,480) (1,605,480) 498,762 Foreign Currency Translation Reserve $ 2,629,130 – (524,888) (524,888) 2,104,242	Total $ 64,029,379 (2,182,677) (1,605,480) (3,788,157) 60,241,222 Total $ 67,132,089 (2,577,822) (524,888) (3,102,710) 64,029,379

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020

Notes CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Receipt of government subsidy Payments to suppliers and employees Finance costs Interest received Net cash outflow from operating activities 23 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of items of property, plant and equipments Payment for intangible assets Investments in joint ventures Investments in associate Advance to a joint venture Payment for construction Advances to trading partner Repayment by director on behalf of trading partner Net cash outflow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Other loan Proceeds from borrowing Net cash inflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year 12	Consolidated 31 December 2020 $ 2,483,723 – (2,605,010) (2,792) 5,413 (118,666) (20,710) (23,565) – (895,888) (326,518) (3,351,572) – – (4,618,253) 796,345 2,098,241 2,894,586 (1,842,333) 2,424,738 (15,172) 567,233	Consolidated 31 December 2019 $ 2,912,396 11,471 (3,506,110) (2,080) 8,477 (575,846) (118,307) (51,114) (1,036,755) – – – 734,343 (734,343) (1,206,176) – – – (1,782,022) 4,318,791 (112,031) 2,424,738

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies

The consolidated financial statements of CAQ Holdings Limited and its subsidiaries (collectively, the Group) for the year ended 31 December 2020 were authorised for issue in accordance with a resolution of the directors on 31 March 2021. CAQ Holdings Limited (the Company or the parent) is a limited company incorporated and domiciled in Australia and whose shares are publicly traded. The registered office is located at CAQ Holdings Limited, Suite 4, 20 Altona Street, West Perth, Western Australia, 6005.

The Group is principally engaged in the leasing of an investment property in the Haikou Free Trade Zone in People’s Republic of China (“PRC”) and jewellery trading.

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, except for the impact of adopting of new accounting standards (see below). The consolidated financial statements are for the consolidated entity consisting of CAQ Holdings Limited and its controlled entities. The consolidated entity is a for-profit entity.

(a) Basis of preparation

This consolidated financial statements are general purpose financial statements that have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations used by the Australian Accounting Standards Board (“AASB”).

Compliance with IFRS

The consolidated financial statements of the Group also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Historical cost convention

These consolidated financial statements have also been prepared a on historical costs basis, except for the investment property that has been measured at fair value.

New Accounting Standards and Interpretations adopted by the Group

The Group applied all new and amended Accounting Standards and Interpretations that were effective as at 1 January 2020, including:

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

Amendments to AASB 3: Definition of a Business

The amendment to AASB 3 clarifies that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Furthermore, it clarified that a business can exist without including all of the inputs and processes needed to create outputs. These amendments had no impact on the consolidated financial statements of the Group but may impact future periods should the Group enter into any business combinations.

Amendments to AASB 7, AASB 9 and AASB 139: Interest Rate Benchmark Reform

The amendments to AASB 9 and AASB 139 Financial Instruments: Recognition and Measurement provide a number of reliefs, which apply to all hedging relationships that are directly affected by interest rate benchmark reform. A hedging relationship is affected if the reform gives rise to uncertainties about the timing and or amount of benchmark-based cash flows of the hedged item or the hedging instrument. These amendments had no impact on the consolidated financial statements of the Group as it does not have any interest rate hedge relationships.

Amendments to AASB 101 and AASB 108: Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”

The amendments clarify that materiality will depend on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. These amendments had no impact on the consolidated financial statements of, nor is there expected to be any future impact to the Group.

Conceptual Framework for Financial Reporting issued on 29 March 2018

The Conceptual Framework is not a standard, and none of the concepts contained therein override the concepts or requirements in any standard. The purpose of the Conceptual Framework is to assist the IASB in developing standards, to help preparers develop consistent accounting policies where there is no applicable standard in place and to assist all parties to understand and interpret the standards. The revised Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

Amendments to AASB 16 Covid-19 Related Rent Concessions

The amendments provide relief to lessees from applying AASB 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a Covid-19 related rent concession from a lessor is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the Covid-19 related rent concession the same way it would account for the change under AASB 16, if the change were not a lease modification. The amendment had no impact on the Group as no the Group did not enter into any Covid-19 related rent concession arrangements with the lessors.

These amendments had no impact on the consolidated financial statements of the Group.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

Going concern

The Group incurred a net loss after tax for the year ended 31 December 2020 of $2,182,677 and experienced net cash outflows from operating activities of $118,666. At 31 December 2020, the Group had net current assets of $424,648.

The ability of the Group to continue as a going concern is dependent on securing additional funding through debt or equity as and when the need arises to continue to fund its planned operational activities and fund working capital.

The financial statements have been prepared on the basis that the entity is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business for the following reasons:

The Group has proven history of successfully raising capital via equity or debt;
The Directors believe that with the current business and working capital management plan, there is sufficient cash available for the Group to continue operating until it can raise sufficient further capital to fund its ongoing activities;
The Directors believe that they will be able to lease out the vacant factory floors and the recently refurbished exhibition centre to generate cash inflows; and
Cash spending can be reduced or slowed below its current rate if required.

In the event that the Company is unable to obtain sufficient funding for ongoing operational requirements, there is material uncertainty whether the Company will continue as a going concern and therefore whether it will realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial statements.

The financial statements does not include any adjustment relating to the recoverability or classification of recorded asset amounts or to the amounts or classification of liabilities that may be necessary should the Company not be able to continue as a going concern.

Critical accounting estimates and judgements

The preparation of consolidated financial statements requires the use of certain critical accounting estimates and judgements. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

The following key judgements and estimates were made in preparing these financial statements:

Construction costs of investment properties

The construction costs of the Haikou Project is based on a draft settlement which is subject to the review and approval of both the Company and the contractors. The Group has recorded all amounts due to the contractors based on its best estimate taking into account advise received from independent engineers and building consultants. Should the settlement result in a higher amount, the Group would have to settle this additional liability.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing (including considering expiry of losses) and the level of future taxable profits, together with future tax planning strategies.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

Critical accounting estimates and judgements (Continued)

Investment properties

The fair value of investment properties is determined by using valuation techniques. For further details of the judgements and assumptions made, see Note 5.

Provision for expected credit losses on receivables

The Group uses a provision matrix to calculate ECLs for receivables. The provision matrix is initially based on the Group’s historical observed default rates. The Group calibrates the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. ECL expense of $742,315 was recognised in the profit or loss for the year ended 31 December 2020 (2019: Nil) (Note 13).

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if, and only if, the Group has:

Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangement(s) with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(b) Basis of consolidation (Continued)

Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When 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 members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, noncontrolling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of CAQ Holdings Limited.

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different from those of segments operating in other economic environments.

(d) Foreign currency translation

(i) Functional and presentation currency

The consolidated financial statements are presented in Australian dollars, which is CAQ Holdings Limited’s functional and presentation currency.

The function currency of the Company’s subsidiaries is as follows:

Name	Functional Currency
CAQ Diamond Network Limited	Hong Kong dollars
CAQ Diamond Network (HK) Limited	Hong Kong dollars
CAQ Finance Limited	Hong Kong dollars
CAQ Finance (HK) Limited	Hong Kong dollars
Rayport Limited	Hong Kong dollars
Peace Base Holdings Limited	Hong Kong dollars
Actual Winner Limited	Hong Kong dollars
Express Linker Limited	Hong Kong dollars
Haikou Peace Base Industry Development Co. Ltd.	Chinese Renminbi

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(d) Foreign currency translation (Continued)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

(iii) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position;
income and expenses for each Statement of Profit or Loss and Other Comprehensive Income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange differences are recognised in profit or loss, as part of the gain or loss on sale where applicable.

(e) Rental income

Rental income arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature.

When the Group provides incentives to its tenants, the cost of incentives is recognised over the lease term, on a straightline basis, as a reduction of rental income.

Service and management charges are recognised in the accounting period in which the services are rendered.

(f) Revenue from contracts with customers

In addition to rental income derived from the Group’s investment property, the Group derives revenue from jewellery trading.

Revenue from contracts with customers is recognised when goods and services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods and services.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(f) Revenue from contracts with customers (Continued)

Sale of diamonds and jewellery

For the sale of diamonds and Jewellery, the Group has concluded that it is the principal in the arrangement as it controls the diamonds before transferring them to the customer. Revenue is recognised at a point in time when control of the diamonds is transferred to the customer. The transaction price is agreed with the customer at the point of sale.

The normal credit term is 30 to 60 days upon delivery.

(g) Interest income

For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). The EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset.

(h) Income tax

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the full liability balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(h) Income tax (Continued)

Deferred tax (Continued)

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognised in profit or loss.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(i) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under AASB 15.

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
Financial assets at fair value through profit or loss

Financial assets at amortised cost (debt instruments)

This is the only category of financial asset that the Group has, which includes trade receivables, deposits and other debtors, and long term other receivables.

The Group measures financial assets at amortised cost if both of the following conditions are met:

The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(i) Financial instruments (Continued)

Financial assets at amortised cost (debt instruments) (Continued)

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position) when:

The rights to receive cash flows from the asset have expired, or
The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(i) Financial instruments (Continued)

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities comprise of only trade and other payables.

Subsequent measurement

All financial liabilities are subsequently measured at amortised cost using the EIR method, unless they meet certain criteria to be classified at fair value through profit or loss in accordance with AASB 9.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

The Group has not designated any financial liabilities as at fair value through profit or loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

(j) Goods and Services tax (“GST”) and Value Added Tax (“VAT”)

Revenues, expenses and assets are recognised net of the amount of GST and VAT except:

when the GST and VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST and VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
receivables and payables, which are stated with the amount of GST and VAT included.

The net amount of GST and VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST and VAT component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST and VAT recoverable from, or payable to, the taxation authority.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(k) Leases

(i) Right of use assets

The Group recognises right of use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right of use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right of use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right of use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term (where the entity does not have a purchase option at the end of the lease term). Right of use assets are subject to impairment.

(ii) Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including insubstance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate of the lessee at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

(iii) Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption (i.e. below US$5,000). Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(k) Leases (Continued)

(iv) Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g. a change in business strategy).

(l) Cash and cash equivalents

Cash and short-term deposits in the Consolidated Statement of Financial Position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.

For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(m) Inventory

Inventories are stated at the lower of cost and net realisable value. Purchase cost of inventory is on a weighted average basis, after deducting any settlement discounts, suppliers rebates and including logistics expenses incurred in bringing inventories to their present location and condition. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(n) Investment Properties

Investment properties include both completed investment properties and investment properties under construction.

Completed investment properties are interests in land and building (including leasehold interest under an operating lease for a property which would other wise meet the definition of an investment property) held to earn rental income and/or capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes (“owner occupied property”). Such investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period. External valuers are involved in determining fair value of investment properties at least annually. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period in which it arise.

Investment properties under construction or development for future use as investment properties are classified as investment properties under construction. Such investment properties are initially measured at cost, including transaction cost. Subsequent to initial recognition, investment properties under construction are carried at cost until either its fair value becomes reliably measurable or construction is completed (whichever is earlier).

(o) Plant and equipment

Plant and equipment are brought to account at cost, less where applicable any accumulated depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of expected net cash flows which will be received from the assets employment and subsequent disposal.

The gain or loss on disposal of all plant and equipment is determined as the difference between the carrying amount of the asset at the time of disposal and the proceeds of disposal, and is included in profit or loss for the year.

The depreciable amount of plant and equipment are depreciated over their useful lives commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

Class of Fixed Asset	Depreciation Rate
Motor vehicles	24%
Equipment	10%-32%
Furniture & Fixtures	33%

(p) Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(p) Impairment of non-financial assets (Continued)

When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cashgenerating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.

(q) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period to get ready for their intended use or sale.

(r) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

(s) Employee benefits

(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(s) Employee benefits (Continued)

(iii) Share-based payments

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation using a Binomial option pricing model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“vesting date”).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired; and (ii) the number of options that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

(t) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(u) Earnings per share

Basic earnings per share is calculated as net profit or loss attributable to shareholders, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to shareholders, adjusted for:

costs of servicing equity (other than dividends) and preference share dividends;
the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(v) Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(w) Fair value measurement

The Group measures investment properties, at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset takes place either:

In the principal market for the asset
In the absence of a principal market, in the most advantageous market for the asset

The principal or the most advantageous market must be accessible by the Group.

The fair value of an asset is measured using the assumptions that market participants would use when pricing the asset, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

The Group obtains independent valuations (from an independent professional qualified valuers who hold a recognised relevant professional qualification and has recent experience in the location and segment of the investment properties valued) at least annually.

Fair-value related disclosures for investment property measured at fair value are disclosed in Note 5.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(x) Investment in associates and joint ventures

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.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group’s investment in its associate and joint venture are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or the joint venture since the acquisition date. Goodwill relating to the associate or the joint venture is included in the carrying amount of the investment and is not tested for impairment separately.

The statement of profit or loss reflects the Group’s share of the results of operations of the associate or the joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate or the joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or the joint venture are eliminated to the extent of the interest in the associate or the joint venture.

The aggregate of the Group’s share of profit or loss of an associate or a joint venture is shown on the face of the statement of profit or loss outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the associate of the joint venture.

The financial statements of the associate or the joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or the joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or the joint venture and its carrying value, and then recognises the loss within ‘Share of profit/(loss) of an associate or ‘Share of profit/(loss) of a joint venture’ in the statement of profit or loss.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or the joint venture upon loss significant influence over the associate or joint control over the joint venture and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 1: Summary of significant accounting policies (Continued)

(y) New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for the year ended 31 December 2020. The Group has reviewed these new accounting standards and interpretations and concluded that adoption of these new accounting standards and interpretations is not expected to have a significant impact on the financial performance and position of the Group.

Note 2: Segment reporting

The Group has two lines of business being property development and retail trading. However, due to the size of the Group’s operations, the chief operating decision maker being the board of directors, reviews the operating results at the consolidated group level. Hence, the operations of the Group represent one operating segment.

Information about products and services

Revenue from contracts with customers (Sale of diamonds and goods) Rental income Revenue Interest received Government grant Others Total other income	2020 $ 13,760 2,041,952 2,055,712 5,413 17,219 7,114 29,746	2019 $ 112,796 1,256,918
		1,369,714

		8,477 11,471 80,725
		100,673

Information about geographical areas

Group’s revenue from external customers (including revenue generated by the joint venture and associate) is generated in Mainland China and Group’s non-current assets are all located in Mainland China

Information about major customers

Revenue from two customers from rental income amounted to $1,117,506 (2019: $348,165). The joint venture and associate do not have major customers.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 3: Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed.

Risk management is carried out by the Board of Directors with assistance from suitably qualified external advisors. The Board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and liquidity risk. Further policies will evolve that are commensurate with the evolution and growth of the Company.

The carrying values of the Group’s financial instruments are as follows:

Financial assets Cash and cash equivalents: – International credit rating AAA to A- A+ to BBB- Cash on hand Trade and other receivables Non-Current Deposits and other debtors Financial liabilities Trade and other payables Borrowings	2020 $ 187,007 370,526 9,700 24,262 591,495 149,315 981,820 2,786,212 3,768,032	2019 $ 20,234 2,307,131 97,373 205,137
		2,629,875
		153,378 702,707 –
		702,707

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 3: Financial risk management (Continued)

The Group’s policy is that no trading in financial instruments shall be undertaken. The main risks arising for the Group are commodity risk, foreign exchange risk, interest rate risk, credit risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

(a) Market risk

(i) Foreign exchange risk
Foreign currency risk is the risk that the value of a financial instrument will fluctuate because of changes in foreign exchanges rates. As a result of its significant investment operations in Mainland China, the Group’s statement of financial position can be affected significantly by movements in the USD, RMB and HKD exchange rate.

The Group’s exposure to foreign currency risk is as follows:

2020 Cash and cash equivalents (in AUD) Net Exposure 2019 Cash and cash equivalents (in AUD) Net Exposure	USD 96,129 96,129 485,944 485,944	RMB 135 135 139 139	HKD 114,186
			114,186

			178,028
			178,028

As 31 December 2020

Foreign currency risk of subsidiary with functional Foreign currency risk of Foreign currency risk of currency subsidiary with functional subsidiary with functional is RMB currency is HKD currency is AUD Bank balance denominated in: HKD RMB USD HKD USD It is estimated that if functional currency has strengthened/weakened against by 5% and the Group’s profit for the period would decrease/increase by approximately (in AUD) 5,168 7 4,803 539 3

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 3: Financial risk management (Continued)

(a) Market risk (Continued)

(i) Foreign exchange risk (Continued)

As 31 December 2019

	Foreign
	currency risk of
	subsidiary
	with functional	Foreign currency risk	of	Foreign currency risk	of
	currency	subsidiary with functional		subsidiary with functional
	is RMB	currency is HKD		currency is AUD
Bank balance denominated in:	HKD	RMB	USD	HKD	USD
It is estimated that if functional currency
has strengthened/weakened against
by 5% and the Group’s profit for the
period would decrease/increase by
approximately (in AUD)	5,650	7	8,863	3,263	15,434

(ii) Cash flow and interest rate risk

The Group is exposed to interest rate risk due to variable interest being earned on its interest-bearing bank accounts.

As at the end of the reporting period, the Group had the following interest-bearing financial instruments:

	31 December	2020	31 December	2019
	Effective		Effective
	interest rate	Balance	interest rate	Balance
		$		$
Financial Assets
Cash and cash equivalents	0.36%	567,233	0.28%	2,424,738
Net exposure to interest rate risk		567,233		2,424,738

The sensitivity analyses below have been determined based on the exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period. A 20 basis point increase or decrease is used when reporting interest rate risk internally to Directors and represents management’s assessment of the possible change in interest rates.

At reporting date, if interest rates had been 20 basis points higher or lower and all other variables were held constant, the Company’s net revenue would increase by $1,134 and decrease by $1,134 respectively (31 December 2019: decrease or increase by $4,849).

There is no exposure to cash flow from interest rate risk in relation to the bank loan as the the interest rate on the bank loan is fixed at 6.5% per annum. The borrowing from other loan is interest free (Refer to Note 22).

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 3: Financial risk management (Continued)

(b) Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions.

Credit risk is managed by the Board.

All cash balances held at banks are recognised financial institutions. There are no formal credit approval processes and risk management in place.

The maximum exposure to credit risk at reporting date is the carrying amount of the financial assets as summarised below. The Group does not hold collateral as security.

Cash and cash equivalents Trade and other receivables	2020 $ 567,233 173,577 740,810	2019 $ 2,424,738 358,515
		2,783,253

For the financial year ended 31 December 2020, financial assets that were neither past due and not impaired amounted to $173,577 (2019: $358,515). Refer to note 13 for details regarding impairment of advance to a supplier.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash balances and access to equity funding.

The Directors monitor the cash-burn rate of the Group on an on-going basis against budget and the maturity profiles of financial assets and liabilities to manage its liquidity risk.

The financial liabilities that the Group had at reporting date were trade payables incurred in the normal course of the business. Trade payables were non-interest bearing and were due within the normal 30-60 days terms of creditor payments. In addition to trade payables, the Group has rental deposits (included in other payables) which are due to be returned to tenants at the end of the lease term. Refer to table on the following page for details.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 3: Financial risk management (Continued)

(c) Liquidity risk (Continued)

The following table sets out the carrying amount of the financial instruments by maturity:

Year ended 31 December 2020

Financial Liabilities: Borrowings Trade and other payable Year ended 31 December 2019 Financial Liabilities: Trade and other payable	less than 3 months $ 34,840 236,219 271,059 less than 3 months $ 34,127 34,127	3 – 6 months $ 72,666 56,568 129,234 3 – 6 months $ 54,199 54,199	6 – 12 months $ 904,051 243,985 1,148,036 6 – 12 months $ 152,256 152,256	over 1 years $ 2,323,715 445,048 2,768,763 over 1 years $ 462,125 462,125	Total contractual cash flows $ 3,335,272 981,820 4,307,092 Total contractual cash flows $ 702,707 702,707

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 4: Controlled entities

The consolidated financial statements include the financial statements of CAQ Holdings Limited and the following wholly owned subsidiaries:

		% Equity	Interest
	Country of	31 December	31 December
Name	Incorporation	2020	2019
CAQ Diamond Network Limited	BVI	100%	100%
CAQ Diamond Network (HK) Limited	Hong Kong	100%	100%
CAQ Finance Limited	BVI	100%	100%
CAQ Finance (HK) Limited	Hong Kong	100%	100%
Rayport Limited	BVI	100%	100%
Peace Base Holdings Limited	Hong Kong	100%	100%
Actual Winner Limited	Hong Kong	100%	100%
Express Linker Limited	Hong Kong	100%	100%
Haikou Peace Base Industry Development Co. Ltd.	China	100%	100%

CAQ Holdings Limited is the ultimate Australian parent entity and ultimate parent of the Group.

Note 5: Investment Properties

Balance as at 1 January Addition for the year Fair value adjustment Foreign exchange adjustment Closing balance as at 31 December	Consolidated 2020 $ 59,715,430 3,394,943 383,779 (1,777,407) 61,716,745	Consolidated 2019 $ 60,196,834 – – (481,404) 59,715,430

The administration block and fourth floor of Warehouse B has been provided as security for Group’s borrowing. Refer to note 22 for further details.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 5: Investment Properties (Continued)

Rental income derived from investment properties (after deduction of business tax and surcharges) Direct operating expenses generating rental income Direct operating expenses that did not generate rental income Profit arising from investment properties carried at fair value	2020 $ 2,041,952 (127,933) (10,591) 1,903,428	2019 $ 1,256,918 (232,799) (51,388) 972,731

Fair value measurements

(i) Fair value hierarchy

This note explains the judgements and estimates made in determining the fair values of the non-financial assets that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Group has classified its financial assets and liabilities into the three levels under the fair value hierarchy in accordance with AASB 13: Fair Value Measurement.

The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:

Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset of liability, either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated based on unobservable market data.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 5: Investment Properties (Continued)

Fair value measurements (Continued)

(i) Fair value hierarchy (Continued)

The following table sets out the Group’s assets that are measured and recognised at fair value in the financial statements.

31 December 2020

Non-financial assets Investment property Total non-financial assets 31 December 2019 Non-financial assets Investment property Total non-financial assets	Level 1 $ – – Level 1 $ – –	Level 2 $ – – Level 2 $ – –	Level 3 $ 61,716,745 61,716,745 Level 3 $ 59,715,430 59,715,430	Total $ 61,716,745
				61,716,745

				Total $ 59,715,430
				59,715,430

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 5: Investment Properties (Continued)

Fair value measurements (Continued)

(i) Fair value hierarchy (Continued)

The best evidence of fair value is current prices in an active market for similar properties. Where such information is not available the directors consider information from a variety of sources including:

current prices in an active market for properties of different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences;
discounted cash flow projections based on reliable estimates of future cash flows; and
capitalised income projections based upon a property’s estimated net market income, and a capitalisation rate derived from an analysis of market evidence.

All resulting fair value estimates for properties are included in level 3.

Investment property valuation assumptions (including impact of the COVID 19 pandemic)

The investment property is located in a newly developed area with a few new industrial and residential development and accordingly, the independent external valuer has valued the investment property at 31 December 2020 by considering both the depreciated replacement cost method and the income approach. As at 31 December 2020 there was significant valuation uncertainty relating to the investment property valuations due to COVID-19 pandemic. This uncertainty affects the ability to reliably determine the key judgements and assumptions used in the property valuation. The key assumptions and estimates used have been impacted by COVID-19 include:

forecast future income supported by the terms of any existing leases, other contracts or external evidence such as current market rents for similar properties adjusted to recognise the COVID-19 impact;
lease assumptions based on current and expected future market conditions after expiry of any current lease; and
the capitalisation rate derived from recent comparable market transactions adjusted for COVID-19 to reflect the uncertainty in the amount and timing of cash flows.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 5: Investment Properties (Continued)

Fair value measurements (Continued)

(i) Fair value hierarchy (Continued)

Due to the valuation uncertainty, the property values may change significantly and unexpectedly over a relatively short period of time. The property valuations have been prepared based on information that is available at 31 December 2020. The table below summarises some of the key inputs used in determining investment property valuations:

				Relationship Between
		Unobservable		Unobservable
	Valuation approach	Inputs	Range of inputs	Inputs and Fair Value
Financial year ended	Income approach	Market rent	RMB23.7 per	The higher rental income,
31 December 2020			sqm per month	the higher the fair value.
		Capitalisation rate	7.5%	Refer below for sensitivity analysis
	Depreciated replacement	Construction cost	RMB3,267 per sqm	The higher construction cost,
	cost approach			the higher the fair value.
		Land value	RMB522 per sqm	The higher land value, the higher
				the fair value.
Financial year ended	Income approach	Market rent	RMB23.9	The higher rental income,
31 December 2019			sqm per month	the higher the fair value.
		Capitalisation rate	8%	Refer below for sensitivity analysis
	Depreciated replacement	Construction cost	RMB2,100 to	The higher construction cost,
	cost approach		RMB3,300 per sqm	the higher the fair value.
		Land value	RMB505	The higher land value,
			per sqm	the higher the fair value.

Changes to key inputs would result in changes to the fair value of investment properties. An increase in capitalisation rate would result in lower fair value, while a decrease in capitalisation rate will result in higher fair value (with all other factors held constant). The capitalisation rate sensitivity analysis is detailed below.

Sensitivity of investment property valuation to changes in capitalisation rates:

Movement in capitalisation rate –100bps –50bps +50bps +100bps	2020 $ 69,680,196 65,698,471 57,735,020 55,744,157	2019 $ 66,873,102 63,192,014 56,443,352 53,580,284

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 5: Investment Properties (Continued)

Fair value measurements (Continued)

(i) Fair value hierarchy (Continued)

There are lease agreements in place with tenants under long-term operating leases with rental payable monthly. Minimum lease payments under the lease agreements not recognised in the financial statements, are receivable as follows:

Within one year Between 1 and 2 years Between 2 and 3 years Between 3 and 4 years Between 4 and 5 years More than 5 year	2020 $ 1,890,455 1,220,765 799,665 608,838 549,376 1,153,617 6,222,116	2019 $ 1,976,022 1,667,801 807,713 784,563 581,381 1,160,147
		6,977,627

The investment properties are leased to tenants under operating leases with rentals payable monthly.

Lease payments for some contracts include a fixed rate of increases over the lease periods. Where considered necessary to reduce credit risk, the group may obtain guarantees for the term of the lease or increase the amount of deposits.

Although the group is exposed to changes in the residual value at the end of the current leases, the group typically enters into new operating leases and therefore will not immediately realise any reduction in residual value at the end of these leases. Expectations about the future residual values are reflected in the fair value of the properties.

Note 6: Interest in a Joint Venture

Investment in Hainan Kingmall International Trading Co., Ltd Total interest in a joint venture Reconciliation of carrying value Opening balance Investment during the period Share of loss Translation difference Closing balance	2020 $ 459,095 459,095 2020 $ 863,636 – (402,444) (2,097) 459,095	2019 $ 863,636
		863,636

		2019 $ – 1,036,755 (161,781) (11,338)
		863,636

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 6: Interest in a Joint Venture (Continued)

Notes:

Particulars of the Group’s sole joint venture are as follows:

				Percentage of
			Ownership
	Place of		interest
	Registration	Registered	attributable	Voting	Profit	Principal
Company name	And business	capital	to the Group	Power	sharing	activities
Hainan Kingmall	PRC/Mainland	$2,073,509	50	50	50	Wholesale and
International	China	(RMB10,000,000)				retail
trading Co., Ltd.

Interest in a joint venture

The Group has a 50% interest in Hainan Kingmall International Trading Co., Ltd, a joint venture involved in the operate on a B2C model within the Haikou Integrated Free Trade Zone. The Group’s interest in Hainan Kingmall International Trading Co., Ltd is accounted for using the equity method in the consolidated financial statements, and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below:

Summarised statement of financial position of Hainan Kingmall International Trading Co., Ltd.

Current assets (including cash and cash equivalents of $140,564 (2019: $458,574)) Non-current assets Current liabilities Non-current liabilities Equity Group’s share in equity – 50% Group’s carrying amount of the investment	2020 $ 1,878,951 1,251,851 (1,605,632) (606,981) 918,189 459,095 459,095	2019 $ 1,530,756 1,308,520 (266,173) (845,832) 1,727,271 863,636 863,636

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 6: Interest in a Joint Venture (Continued)

Interest in a joint venture (Continued)

Summarised statement of profit or loss of Hainan Kingmall International Trading Co., Ltd:

Revenue from contracts with customers Other income Cost of sales Selling expenses Administrative expenses Finance costs Foreign currency gain/(loss) Loss before tax Income tax expenses Loss for the year Total comprehensive loss for the year Group's share of loss for the year	2020 $ 2,211,035 6,794 (1,506,590) (1,163,279) (352,703) (4,762) 4,617 (804,888) – (804,888) (804,888) (402,444)	2019 $ 126,112 625 (69,755) (198,708) (181,668) (168) – (323,562) – (323,562) (323,562) (161,781)

Contingent liabilities

The joint venture did not have contingent liabilities at 31 December 2020 and 2019.

Capital commitments

The joint venture did not have capital commitments at 31 December 2020 and 2019.

Note 7: Interest in an associate

Investment in Hainan Provincial Diamond & Jewelry Co., Ltd Total interest in a joint venture Reconciliation of carrying value Opening balance Investment during the period Share of loss Translation difference Closing balance	2020 $ 878,145 878,145 2020 $ – 895,888 (18,710) 967 878,145

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 7: Interest in an associate (Continued)

Notes:

Particulars of the Group’s sole associate are as follows:

				Percentage of
			Ownership
	Place of		interest
	Registration	Registered	attributable	Voting	Profit	Principal
Company name	And business	capital	to the Group	Power	sharing	activities
Hainan Provincial	PRC/Mainland	$5,972,588	45	45	45	Diamond and
Diamond & Jewelry	China	(RMB30,000,000)*				Jewelry retail
Co., Ltd.

Total registered capital is $5,972,588 (RMB30,000,000) and paid up capital injection is $1,990,863 (RMB10,000,000).

Interest in associate

The Group has a 45% interest in Hainan Provincial Diamond & Jewelry Co., Ltd, an associate was established in August 2020 and involved in the operate on a diamond & Jewelry retail activities. The Group’s interest in Hainan Provincial Diamond & Jewelry Co., Ltd is accounted for using the equity method in the consolidated financial statements, and reconciliation with the carrying amount of the investment in the consolidated financial statements are set out below:

Summarised statement of financial position of Hainan Provincial Diamond & Jewelry Co., Ltd.

Current assets (including cash and cash equivalents of $1,958,924) Non-current assets Current liabilities Equity Group's share in equity – 45% Group's carrying amount of the investment	2020 $ 1,959,724 7,346 (15,637) 1,951,433 878,145 878,145

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 7: Interest in an associate (Continued)

Interest in associate (Continued)

Summarised statement of profit or loss of Hainan Provincial Diamond & Jewelry Co., Ltd:

Other income Administrative expenses Loss before tax Income tax expenses Loss for the year Total comprehensive loss for the year Group's share of loss for the year	2020 $ 934 (42,511) (41,577) – (41,577) (41,577) (18,710)

Contingent liabilities

The associate did not have contingent liabilities at 31 December 2020 and 2019.

Capital commitments

The associate did not have capital commitments at 31 December 2020 and 2019.

Note 8: Property, Plant and Equipment For the year ended 31 December 2020

Gross carrying amount at cost As at 1 January 2020 Additions Exchange differences As at 31 December 2020 Accumulated Depreciation As at 1 January 2020 Charge for the year Exchange differences As at 31 December 2020 Net book value Net book value at 31 December 2020	Motor vehicles $ 407,686 – (10,802) 396,884 (356,875) (10,683) 10,008 (357,550) 39,334	Equipments $ 575,394 20,710 (16,315) 579,789 (484,181) (30,637) 14,411 (500,407) 79,382	Furniture fixtures $ 388,735 – (10,300) 378,435 (233,802) (84,563) 10,562 (307,803) 70,632	Total $ 1,371,815 20,710 (37,417) 1,355,108 (1,074,858) (125,883) 34,981 (1,165,760) 189,348

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 8: Property, Plant and Equipment (Continued)

For the year ended 31 December 2019

Gross carrying amount at cost As at 1 January 2019 Additions Exchange differences As at 31 December 2019 Accumulated Depreciation As at 1 January 2019 Charge for the year Exchange differences As at 31 December 2019 Net book value Net book value at 31 December 2019 Note 9: Inventory CURRENT At cost: – finished goods	Motor vehicles $ 374,325 37,017 (3,656) 407,686 (308,532) (51,735) 3,392 (356,875) 50,811	Equipments $ 548,782 31,565 (4,953) 575,394 (450,699) (37,762) 4,280 (484,181) 91,213	Equipments $ 548,782 31,565 (4,953) 575,394 (450,699) (37,762) 4,280 (484,181) 91,213	Furniture fixtures $ 342,639 49,725 (3,629) 388,735 (133,232) (103,486) 2,916 (233,802) 154,933 2020 $ 1,205,326 1,205,326	Furniture fixtures $ 342,639 49,725 (3,629) 388,735 (133,232) (103,486) 2,916 (233,802) 154,933 2020 $ 1,205,326 1,205,326	Total $ 1,265,746 118,307 (12,238) 1,371,815 (892,463) (192,983) 10,588 (1,074,858) 296,957 2019 $ 1,250,370 1,250,370

				2020 $ 1,205,326 1,205,326

Inventory recognised as expense during the year ended 31 December 2020 and included in cost of sales amounted to $10,830 (2019: $65,733).

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 10: Income Tax

The prima facie income tax expense on the pre-tax accounting loss reconciles to the income tax benefit in the financial statements as follows:

Loss from continuing operations before Income Tax Income tax at Australian corporate tax rate Other assessable amounts Non-deductible expenses Tax effect of lower overseas tax rate Loss attributable to joint venture and associates Movements in unrecognised temporary differences Benefit of tax losses and other temporary differences not previously recognised Tax effect of foreign losses for which no deferred tax asset has been recognised Income tax expense Unrecognised temporary differences: Deferred Tax Assets On income tax account Carry forward tax losses Foreign losses (i) Other Net deferred tax assets not recognised	2020 $ (1,694,891) (1,694,891) (508,467) 418,289 349,392 (61,140) 105,288 303,362 (134,543) 318,967 487,786 2020 $ 63,785 3,112,904 1,456 3,178,145	2019 $ (2,189,283) (2,189,283) (602,052) 375,327 251,796 (51,059) – (25,988) (132,427) 546,954 388,539 2019 $ 188,167 3,669,464 2,670 3,860,301

(i) Tax losses in PRC are only available to be carried forward for 5 years subject to the tax office confirming that the quantum of losses available after review of the tax return lodged. The amount of foreign tax losses reflected above is based on tax return lodged.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 10: Income Tax (Continued)

The taxation benefits of tax losses and timing not brought to account will only be obtained if:

(a) assessable income is derived of a nature and of amount sufficient to enable the benefit from the deductions to be realised;

(b) conditions for deductibility imposed by the law are complied with; and

	2020	2019
	$	$
Deferred Tax Liabilities
Investment property	2,171,870	1,755,800

Note 11: Revenue and Other Income

Revenue from contracts with customers (Sale of diamonds and goods)(Note 1) Rental income Revenue Interest received Government grant(Note 2) Other income Total other income	2020 $ 13,760 2,041,952 2,055,712 5,413 17,219 7,114 29,746	2019 $ 112,796 1,256,918
		1,369,714
		8,477 11,471 80,725
		100,673

Note 1: Revenue from contracts with customers (sale of diamonds and goods) is generated in People’s Republic of China. Revenue is recognised at a point in time when control of the diamonds is transferred to the customer

Note 2: There are no unfulfilled conditions attached to the Government grants at 31 December 2020 (2019: Nil)

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 12: Cash and cash equivalents

(a) Reconciliation of Cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks. Cash at the end of the financial period as shown in the statement of cash flows is reconciled to the related items in the statement of financial position, as follows:

Current Assets Cash at bank and in hand Cash and cash equivalents	2020 $ 567,233 567,233	2019 $ 2,424,738
		2,424,738

The carrying value of cash and cash equivalents approximates fair value.

Cash at bank and on hand balances as at 31 December 2020 includes Chinese Renminbi (“RMB”) denominated equivalent balance of $307,723 (31 December 2019: $1,452,786) which are held with reputable financial institutions in the People’s Republic of China in current accounts.

The Chinese RMB is not freely convertible into foreign currencies. Under the People’s Republic of China (“PRC”) Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for foreign currencies through banks that are authorized to conduct foreign exchange business.

The exchange rate of RMB is determined by the government of the PRC and the remittance of funds out of the PRC is subject to exchange restrictions imposed by the government of the PRC.

(b) Interest Rate Risk Exposure

The Group’s exposure to interest rate risk is discussed in note 3.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 13: Trade and other receivables

Current Trade receivables Deposits and other debtors GST tax and VAT tax from government Advance to supplier Expected credit loss (b) Non-Current Deposits and other debtors VAT tax from government	2020 $ 8,394 15,868 153,833 723,135 (723,135) 178,095 149,315 912,880 1,062,195	2019 $ 188,011 17,126 131,039 723,135 –
		1,059,311

		153,378 654,258
		807,636

(a) Fair value

Carrying value of trade and other receivable approximate fair value.

(b) Expected credit loss

Outstanding customer receivables and contract assets are regularly monitored and an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. Generally, trade receivables are written-off if past due for more than one year and are not subject to enforcement activity. The Group does not hold collateral as security.

On 5 July 2019, the Group had entered into an agreement with one of its trading partners for which an advance payment of $723,135 was made for procurement of diamonds. The agreement was valid for one year to 4 July 2020 with any monies advanced not utilised for purchase of diamonds to be returned to the Group. As at the date of the consolidated financial report, none of the monies advanced have been utilised for purchase of diamond and the monies advanced have not been returned to the Group by the supplier. The amounts advanced are overdue. Accordingly, an expected credit loss provision for the full amount was raised at 31 December 2020. The higher expected credit loss allowance recognised at 31 December 2020 compared to the outstanding balance at 31 December 2019 is due to exchange rate.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 13: Trade and other receivables (Continued)

(b) Expected credit loss (Continued)

Set out below is the movement in the allowance for expected credit losses:

As at 1 January Provision for expected credit losses Foreign exchange movement As at 31 December	2020 $ – 742,315 – 742,315	2019 $ – – –
		–

Note 14: Trade and other payables

Current Trade and other payable Non-Current Other payable	2020 $ 596,432 445,048	2019 $ 240,582

		462,125

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 15: Contributed equity

(a) Ordinary shares Total contributed equity Fully paid ordinary shares carry one vote per share and carry the right to dividends. (b) Movements in ordinary share capital Balance as at 1 January 2019 No movement Closing balance as at 31 December 2019 Balance as at 1 January 2020 No movement Closing balance as at 31 December 2020*	Consolidated 31 December 2020 $ 74,649,048 74,649,048 No. 717,786,281 – 717,786,281 717,786,281 – 717,786,281	Consolidated 31 December 2019 $ 74,649,048 74,649,048 $ 74,649,048 – 74,649,048 74,649,048 – 74,649,048

(b) Movements in ordinary share capital

(c) Share Options

There are no unissued ordinary shares of CAQ Holdings Limited under option as at 31 December 2020 (2019: Nil).

Note 16: Reserves

The foreign currency reserve is used to recognise exchange difference arising form translation of financial statements of foreign operations to Australian dollars.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 17: Related parties

(a) Compensation of Key Management Personnel

Short-term employee benefits	2020 $ 630,826 630,826	2019 $ 609,638
		609,638

At 31 December 2020, directors fees outstanding amounted to $208,891(2019: $28,000).

(b) Other transactions with Key Management Personnel

CAQ Holdings Limited

Legal Fees:

Other transactions

On 30 July 2019, the Group entered into an agreement with joint venture company for rental agreement from 1 Sept 2019 to 31 August 2020 in warehouse A in HPB with RMB18,000 for rental per month include electricity, water supply and management fee. On 5 August 2020, the agreement has been extended from 1 September 2020 to 31 August 2021 under the same terms.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 18: Remuneration of auditors

During the period the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms.

Ernst & Young Australia 1. Audit and other assurance services – auditing and reviewing the financial statements Ernst & Young Hong Kong 1. Audit and other assurance services – auditing and reviewing the financial statements	2020 $ 94,500 88,858 183,358	2019 $ 59,500 84,455
		143,955

Note 19: Contingencies

Contingent liabilities

The Group is in the process of finalising the construction cost of the investment property with the Constructor for work completed in 2016. At the date of this report, an amount of $5.53 million (RMB27.8 million) in respect of variations to work undertaken during the construction of the investment property is under negotiation and the Group has made an advance of $3.34 million (RMB16.8 million) to the Constructor in lieu of the variations claimed. The balance of the claim of $2.31 million (RMB11.6 million) has not been accrued for in these financial statements as the Directors consider that payment for $2.31 million (RMB11.6 million) is remote taking into consideration that work claimed to have been performed by the Constructor cannot be substantiated.

Other than the matters set put above, there are no other contingent liabilities that require disclosure in the financial statements.

Note 20: Commitments

The outstanding capital commitments for the refurbishment work of property is $1,243,788 (equivalent to approximately RMB5,924,800) as at 31 December 2020 (2019: Nil).

Note 21: Events occurring after the reporting date

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 22: Borrowings

Current borrowings Bank loan (Note 1) Other loan (Note 2) Non-current borrowings Bank loan (Note 1) Total borrowings	2020 $ 74,856 796,345 871,201 1,915,011 2,786,212	2019 $ – –
		–
		–
		–

Note 1: During the year, HPB had been granted a banking facility of $3,981,726 (RMB20,000,000) by Bank of Hainan. The facility is secured by the title of the Administration Building with a fair value of $4,146,967 (RMB20,830,000). As at 31 December 2020, HPB had drawn down RMB9,995,000 (equivalent to approximately $1,989,867). According to the loan agreement, the bank loan interest rate is 6.5% per annum, the bank loan has instalment repayments in May and November each year and interest will be repaid each month. The portion of the bank loan to be repaid in the next 12 months has been classified as current with the remaining balance as non-current.
Note 2: During the year, HPB entered into a loan agreement with other party $796,345 (RMB4,000,000). Pursuant to the loan agreement, interest free for one year. The facility is secured by the title over the fourth floor of the Warehouse B with a fair value of $1,952,041 (RMB9,805,000). On 15 March 2021, the loan term was extended to November 2022.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 23: Reconciliation of loss after income tax to net cash flow from operating activities

Operating (loss) after income tax Adjusted for: Fair value gain on investment properties Foreign currency gain/(loss) Depreciation and amortisation Deferred tax expense Share of loss from joint venture Share of loss from associate Provision of credit loss Other (Increase)/decrease in assets – Inventory – Prepayments – Trade and other receivables – VAT Tax Increase/(decrease) in liabilities – Current trade creditors and payables Net cash used in operating activities	2020 $ (2,182,677) (383,779) 2,825 147,512 487,786 402,444 18,710 742,315 9,931 6,671 184,995 (318,362) 762,963 (118,666)	2019 $ (2,577,822) – 66,689 217,475 388,539 161,781 – — 150,076 116,751 528,923 157,600 214,142 (575,846)

Note 24: Loss per share

Basic loss per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year.

The following reflects the income and share data used in the basic loss per share computations:

Loss attributable to ordinary equity holders Weighted average number of ordinary shares used as the denominator in calculating basic profit/(loss) per share Basic and diluted loss per share	Consolidated 31 December 2020 $ (2,182,677) Number 717,786,281 Cents/share (0.30)	Consolidated 31 December 2019 $ (2,577,822) Number 717,786,281 Cents/share (0.36)

There are no potential ordinary shares on issue at 31 December 2020 and 31 December 2019.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Note 25: Dividends

No dividends have been declared or paid during the year. (2019: Nil)

Note 26: Parent entity information

The following information is related to the parent entity, CAQ Holdings Limited, as at 31 December 2020 and 31 December 2019.

Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Contributed equity Accumulated losses Reserves Total equity Loss for the year Other comprehensive loss for the year Total comprehensive loss for the year	2020 $ 39,848 60,615,599 60,655,447 472,245 – 472,245 74,649,048 (14,606,396) 137,550 60,180,202 (3,845,820) – (3,845,820)	2019 $ 521,489 63,732,327 64,253,816 227,794 – 227,794 74,649,048 (10,760,576) 137,550 64,026,022 (1,483,272) – (1,483,272)

Guarantees entered into by the parent entity

The parent entity did not have any guarantees at 31 December 2020 and 2019.

Contingent liabilities

The parent entity did not have contingent liabilities at 31 December 2020 and 2019.

Capital commitments

The parent entity did not have capital commitments at 31 December 2020 and 2019.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

SHAREHOLDER INFORMATION

Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below.

Shareholdings as at 31 December 2020 Substantial shareholders

Name MR XUEHUO ZHANG BEIJING PROPERTIES (HOLDINGS) LIMITED MR KWAN CHAN BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD LI HUI YUN TOTAL Distribution of security holders Category 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 and over	Number of ordinary shares held 124,500,000 108,628,000 72,853,551 69,531,489 66,265,004 52,653,145 50,000,000 544,431,189	Percentage of capital held 17.34 15.13 10.15 9.69 9.23 7.34 6.97 75.85 Number of Holders 351 200 111 98 66 826

Unmarketable parcels

The number of shareholders holding less than a marketable parcel is 682.

There is only one class of share and all ordinary shareholders have equal voting rights.

On-market buyback

There is no current on-market buy-back.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

SHAREHOLDER INFORMATION

Twenty largest shareholders – Ordinary Shares

Name MR XUEHUO ZHANG BEIJING PROPERTIES (HOLDINGS) LIMITED MR KWAN CHAN BNP PARIBAS NOMS PTY LTD CITICORP NOMINEES PTY LIMITED BNP PARIBAS NOMINEES PTY LTD LI HUI YUN JOIN MARVEL LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED ELITE MEDAL LIMITED HOLLYVIEW INTERNATIONAL LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED MR KEONG MING TEE MR HUAN WEI XIAO MS WAH LIH JIUN MASS TALENT FINANCIAL LTD TRIDENT CAPITAL PTY LTD MR SHIWU HE MR DASHUN TANG MR FEI CHAN TOTAL	Number of ordinary shares held 124,500,000 108,628,000 72,853,551 69,531,489 66,265,004 52,653,145 50,000,000 30,000,000 25,623,925 25,000,000 12,102,000 11,132,693 8,400,280 7,255,475 6,225,000 6,000,000 3,586,666 2,500,000 2,500,000 2,100,000 686,857,228	Percentage of capital held 17.34 15.13 10.15 9.69 9.23 7.34 6.97 4.18 3.57 3.48 1.69 1.55 1.17 1.01 0.87 0.84 0.50 0.35 0.35 0.29 95.69

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

The Board is responsible for establishing the Company’s corporate governance framework, they key features of which are set below. In establishing its corporate governance framework, the Board has referred to the 3rd edition of the ASX Corporate Governance Councils’ Corporate Governance Principles and Recommendations.

In accordance with ASX Listing Rule 1.1 Condition 13, the corporate governance statement set out discloses the extent to which the Company intends to follow the recommendations as at the date of reinstatement of the Company’s securities to quotation on ASX. The Company will follow each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company’s corporate governance practices will follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not” reporting regime, where, after due consideration, the Company’s corporate governance practices will not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company will adopt instead of those in the recommendation.

The following governance-related documents can be found on the Company’s website at www.caqholdings.com, under the section marked “Corporate Governance”:

(a) Board Charter;
(b) Board Performance Evaluation Policy;
(c) Code of Conduct;
(d) Audit Committee Charter;
(e) Remuneration and Nomination Committee Charter;
(f) Security Trading Policy;
(g) Continuous Disclosure Policy;
(h) Shareholder Communication and Investor Relations Policy;
(i) Risk Committee Charter;
(j) Risk Management Policy; and
(k) Diversity Policy.

Principle 1: Lay solid foundations for management and oversight Recommendation 1.1

The Company has established the respective roles and responsibilities of its Board and management, and those matters expressly reserved to the Board and those delegated to management, and have documented this in its Board Charter.

The responsibilities of the Board include but are not limited to:

(a) setting and reviewing strategic direction and planning;
(b)
reviewing financial and operational performance;
(c) identifying principal risks and reviewing risk management strategies; and
(d)
considering and reviewing significant capital investments and material transactions.

In exercising its responsibilities, the Board recognises that there are many stakeholders in the operations of the Company, including employees, shareholders, co-ventures, the government and the community.

The Board has delegated responsibility for the business operations of the Company to the Chief Executive Officer (or equivalent) and the management team. The management team, led by the Chief Executive Officer (or equivalent) is accountable to the Board.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 1: Lay solid foundations for management and oversight (Continued)

Recommendation 1.2

The Company undertakes appropriate checks before appointing a person, or putting forward to shareholders a candidate for election as a director and provides shareholders with all material information in its possession relevant to a decision on whether or not to elect a director. The checks which are undertaken, and the information provided to shareholders, are set out in the Company’s Remuneration and Nomination Committee Charter.

Recommendation 1.3

The Company has a written agreement with all the Directors.

The material terms of any employment, service or consultancy agreement the Company, or any of its child entities, has entered into with its Chief Executive Officer, any of its directors, and any other person or entity who is a related party of the Chief Executive Officer or any of its directors will be disclosed in accordance with ASX Listing Rule 3.16.4 (taking into consideration the exclusions from disclosure outlined in that rule).

Recommendation 1.4

The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary is responsible for the application of best practice in corporate governance and also supports the effectiveness of the Board by:

(a) ensuring a good flow of information between the Board, its committees, and Directors;
(b) monitoring policies and procedures of the Board;
(c) advising the Board through the Chairman of corporate governance policies; and
(d) conducting and reporting matters of the Board, including the despatch of Board agendas, briefing papers and minutes.

Recommendation 1.5

The Company has a Diversity Policy, the purpose of which is:

(a) to outline the Company’s commitment to creating a corporate culture that embraces diversity and, in particular, focuses on the composition of its Board and senior management; and
(b) to provide a process for the Board to determine measurable objectives and procedures which the Company will implement and report against to achieve its diversity goals.

The Board intends to set measurable objectives for achieving diversity, specifically including gender diversity, which will be disclosed in the Company’s corporate governance statement for the financial year ended 31 December 2020, and will review the effectiveness and relevance of these measurable objectives on an annual basis.

Recommendation 1.6

The Board will be responsible for evaluating the performance of the Company’s senior executives in accordance with the process disclosed in the Company’s Process for Performance Evaluations, which is currently being developed by the Board.

The Chair will be responsible for evaluating the performance of the Company’s executive directors in accordance with the process disclosed in the Company’s Process for Performance Evaluations, which is currently being developed by the Board. A general performance evaluation was undertaken in the reporting period.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 1: Lay solid foundations for management and oversight (Continued)

Recommendation 1.7

The Chair will be responsible for evaluating the performance of the Board, Board committees and individual directors in accordance with the process disclosed in the Company’s Board performance evaluation policy.

This policy is to ensure:

(a) individual Directors and the Board as a whole work efficiently and effectively in achieving their functions;
(b) the executive Directors and key executives execute the Company’s strategy through the efficient and effective implementation of the business objectives; and
(c) committees to which the Board has delegated responsibilities are performing efficiently and effectively in accordance with the duties and responsibilities set out in the board charter.

This policy will be reviewed annually.

The Company will report on whether an evaluation of the Board, its committees and individual directors has taken place in the relevant reporting period, and whether the process was in accordance with the process disclosed, in each of its corporate governance statements. An assessment was not performed during the financial year.

Principle 2: Structure the board to add value

Recommendation 2.1

The Company has a separate Nomination Committee comprising of Qian Xu and Ching Chung. Ching Chung is an executive director. However, due to his experience, it was considered appropriate for Ching Chung to be on the committee. There were informal discussions held in relation to nomination matters during the year.

The duties of the nomination committee are set out in the Company’s Nomination Committee Charter which is available on the Company’s website.

The Board has adopted a Nomination Committee Charter which describes the role, composition, functions and responsibilities of a Nomination Committee and is disclosed on the Company’s website.

Recommendation 2.2

The mix of skills and diversity which the Board is looking to achieve in its composition is:

(a) a broad range of business experience; and
(b) technical expertise and skills required to discharge duties.

An evaluation was not performed during the financial year.

Recommendation 2.3

The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the Principles and Recommendations.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 2: Structure the board to add value (Continued)

Recommendation 2.3 (Continued)

Currently the Board is structured as follows:

(a) Paul Price (Non-Executive Director and Chairman);
(b) KC Dennis Ong (Non-Executive Director);
(c) Michael Siu (Non-Executive Director);
(d) Qian Xu (Non-Executive Director);
(e) Ching Chung (Executive Director and Deputy Chairman);
(f) Yuk Cheung Chan (Non-Executive Director);
(g) Ivan Cheng (Non-Executive Director); and
(h) Kwan Chan (Non-Executive Director).
(i) Chen Po Chung (Non-Executive Director).

Paul Price was, during the year, a director and shareholder of Trident Capital Pty Ltd, which is a shareholder of the Company and a provider of material professional services, and accordingly, is not considered independent.

Michael Siu, Qian Xu and Ivan Cheng are directors of Beijing Properties (Holdings) Limited, which is a substantial shareholder of the Company, and accordingly, is not considered independent.

Ching Chung is an executive director, and accordingly, is not considered independent.

Kwan Chan is a substantial holder of the Company and accordingly, is not considered independent.

Yuk Cheung Chan is a relative of Kwan Chan and accordingly, is not considered independent.

Recommendation 2.4

Currently, the Board considers that membership weighted towards technical expertise is appropriate at this stage of the Company’s operations. A majority of the Board is not independent.

Recommendation 2.5

As noted above, Paul Price is not an independent Chairman. However, Paul Price is considered to be the most appropriate person to Chair the Board because of his public company experience.

Recommendation 2.6

It is a policy of the Company, that new Directors undergo an induction process in which they are given a full briefing on the Company. Where possible this includes meetings with key executives, tours of the premises, an induction package and presentations.

In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development. Specifically, Directors are provided with the resources and training to address skills gaps where they are identified.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 3: Act ethically and responsibly

Recommendation 3.1

The Company is committed to promoting good corporate conduct grounded by strong ethics and responsibility. The Company has established a Code of Conduct ( Code ), which addresses matters relevant to the Company’s legal and ethical obligations to its stakeholders. It may be amended from time to time by the Board, and is disclosed on the Company’s website.

The Code applies to all Directors, employees, contractors and officers of the Company.

The Code will be formally reviewed by the Board each year.

Principle 4: Safeguard integrity in corporate reporting

Recommendation 4.1

The Company has a separate Audit Committee comprising of Paul Price, KC Ong and Michael Siu.

The Audit Committee is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Audit Committee may otherwise select an external auditor based on criteria relevant to the Company’s business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit Committee.

The Board has adopted an Audit Committee Charter which describes the role, composition, functions and responsibilities of the Audit Committee and is disclosed on the Company’s website.

Recommendation 4.2

Before the Board approves the Company financial statements for each financial period it will receive from the Chief Executive Officer and the Chief Financial Officer or equivalent a declaration that, in their opinion, the financial records of the Company for the relevant financial period have been properly maintained and that the financial statements for the relevant financial period comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and the consolidated entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 4: Safeguard integrity in corporate reporting (Continued)

Recommendation 4.3

Under section 250RA of the Corporations Act, the Company’s auditor is required to attend the Company’s annual general meeting at which the audit report is considered, and if they cannot, they are to arrange to be represented by a person who is a suitably qualified member of the audit team that conducted the audit and is in a position to answer questions about the audit. Each year, the Company will write to the Company’s auditor to inform them of the date of the Company’s annual general meeting. In accordance with section 250S of the Corporations Act, at the Company’s annual general meeting where the Company’s auditor or their representative is at the meeting, the Chair will allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor (or their representative) questions relevant to the conduct of the audit; the preparation and content of the auditor’s report; the accounting policies adopted by the Company in relation to the preparation of the financial statements; and the independence of the auditor in relation to the conduct of the audit. The Chair will also allow a reasonable opportunity for the auditor (or their representative) to answer written questions submitted to the auditor under section 250PA of the Corporations Act.

Principle 5: Make timely and balanced disclosure

Recommendation 5.1

The Company is committed to:

(a) ensuring that shareholders and the market are provided with full and timely information about its activities;
(b) complying with the continuous disclosure obligations contained in the Listing Rules and the applicable sections of the Corporations Act; and
(c) providing equal opportunity for all stakeholders to receive externally available information issued by the Company in a timely manner.

The Company has adopted a Disclosure Policy, which is disclosed on the Company’s website. The Disclosure Policy sets out policies and procedures for the Company’s compliance with its continuous disclosure obligations under the ASX Listing Rules, and addresses financial markets communication, media contact and continuous disclosure issues. It forms part of the Company’s corporate policies and procedures and is available to all staff.

The Company Secretary manages the policy. The policy will develop over time as best practice and regulations change and the Company Secretary will be responsible for communicating any amendments. This policy will be reviewed by the Board annually.

Principle 6: Respect the rights of security holders

Recommendation 6.1

The Company provides information about itself and its governance to investors via its website at www.cellaquaculture.com.au.

The Company is committed to maintaining a Company website with general information about the Company and its operations and information specifically targeted at keeping the Company’s shareholders informed about the Company. In particular, where appropriate, after confirmation of receipt by ASX, the following will be posted to the Company website:

(a) relevant announcements made to the market via ASX;
(b) media releases;
(c) investment updates;
(d) Company presentations and media briefings;
(e) copies of press releases and announcements for the preceding three years; and
(f) copies of annual and half yearly reports including financial statements for the preceding three years.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 6: Respect the rights of security holders (Continued)

Recommendation 6.2

The Company has a Shareholder Communication and Investor Relations Policy which aims to ensure that Shareholders are informed of all major developments of the Company. The policy is disclosed on the Company’s website.

Information is communicated to Shareholders via:

(a) reports to Shareholders;
(b) ASX announcements;
(c) annual general meetings; and
(d) the Company website.

This Shareholder Communication and Investor Relations policy will be formally reviewed by the Board each year. While the Company aims to provide sufficient information to Shareholders about the Company and its activities, it understands that Shareholders may have specific questions and require additional information. To ensure that Shareholders can obtain all relevant information to assist them in exercising their rights as Shareholders, the Company has made available a telephone number and relevant contact details (via the website) for Shareholders to make their enquiries.

Recommendation 6.3

The Board encourages full participation of Shareholders at meetings to ensure a high level of accountability and identification with the Company’s strategies and goals. The Company will use general meetings as a tool to effectively communicate with shareholders and allow shareholders a reasonable opportunity to ask questions of the Board and to otherwise participate in the meeting. The external auditor of the Company is invited attend each Annual General Meeting of the Company and be available to answer shareholder questions about the conduct of the audit and the preparation of the auditor’s report.

Recommendation 6.4

Shareholders are given the option to receive communications from, and send communication to, the Company and its share registry electronically. To ensure that shareholders can obtain all relevant information to assist them in exercising their rights as shareholders, the Company has made available a telephone number and relevant contact details (via the website) for shareholders to make their enquiries.

Principle 7: Recognise and manage risk

Recommendation 7.1

The Company does not have a separate Risk Committee. The Audit Committee is responsible for the oversight of the Company’s risk management and control framework.

When the Board meets as a risk committee is carries out those functions which are delegated to it in the Company’s Risk Committee Charter. Items that are usually required to be discussed by a Risk Committee are marked as separate agenda items at Board meetings when required.

The Board has adopted a Risk Committee Charter which describes the role, composition, functions and responsibilities of the Risk Committee and is disclosed on the Company’s website.

The Board has adopted a Risk Management Policy, which is disclosed on the Company’s website. Under the policy, responsibility and control of risk management is delegated to the appropriate level of management within the Company with the Chief Executive Officer having ultimate responsibility to the Board for the risk management and control framework.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 7: Recognise and manage risk (Continued) Recommendation 7.1 (Continued)

The risk management system covers:

(a) operational risk;
(b) financial reporting;
(c) compliance/regulations; and
(d) system/IT process risk.

A risk management model is also being developed and will provide a framework for systematically understanding and identifying the types of business risks threatening the Company as a whole, or specific business activities within the Company.

Recommendation 7.2

The Board will review the Company’s risk management framework annually to satisfy itself that it continues to be sound, to determine whether there have been any changes in the material business risks the Company faces and to ensure that the Company is operating within the risk appetite set by the Board.

Arrangements put in place by the Board to monitor risk management include, but are not limited to:

(a) monthly reporting to the Board in respect of operations and the financial position of the Company; and
(b) quarterly rolling forecasts prepared;

Recommendation 7.3

The Company does not have an internal audit function. To evaluate and continually improve the effectiveness of the Company’s risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks as outlined in the Company’s Risk Management Policy.

Recommendation 7.4

Given the speculative nature of the Company’s business, it will be subject to general risks and certain specific risks. The Company will identify those economic, environmental and/or social sustainability risks to which it has a material exposure, and disclose how it intends to manage those risks in each of its corporate governance statements.

Principle 8: Remunerate fairly and responsibly

Recommendation 8.1

Items that are usually required to be discussed by a Remuneration Committee are marked as separate agenda items at Board meetings when required. There were informal discussions held in relation to remuneration matters during the year.

The duties of the Remuneration Committee are set out in the Company’s Remuneration and Nomination Committee Charter which is available on the Company’s website

The Board has adopted a Remuneration and Nomination Committee Charter which describes the role, composition, functions and responsibilities of the Remuneration Committee and is disclosed on the Company’s website.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE GOVERNANCE STATEMENT

Principle 8: Remunerate fairly and responsibly (Continued)

Recommendation 8.2

Details of the Company’s policies on remuneration will be set out in the Company’s “Remuneration Report” in each Annual Report published by the Company. This disclosure will include a summary of the Company’s policies regarding the deferral of performance-based remuneration and the reduction, cancellation or clawback of the performance-based remuneration in the event of serious misconduct or a material misstatement in the Company’s financial statements.

Recommendation 8.3

The Company’s Security Trading Policy includes a statement on the Company’s policy on prohibiting participants in the Company’s Performance Rights Plan entering into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the Performance Rights Plan.

Security Trading Policy

In accordance with ASX Listing Rule 12.9, the Company has adopted a trading policy which sets out the following information:

(a) closed periods in which directors, employees and contractors of the Company must not deal in the Company’s securities;
(b) trading in the Company’s securities which is not subject to the Company’s trading policy; and
(c) the procedures for obtaining written clearance for trading in exceptional circumstances.

The Company’s Security Trading Policy is available on the Company’s website.

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

CORPORATE DIRECTORY

Directors

Paul Price KC Ong Michael Siu Qian Xu Ching Chung Yuk Cheung Chan Ivan Cheng Kwan Chan Chen Po Chung

Company Secretary

Mark Maine

Registered Office

CAQ Holdings Limited Suite 4 20 Altona Street West Perth, Western Australia, 6005 Telephone: (61) 9228 8860

Principal Place of Business

CAQ Holdings Limited c/o. Beijing Properties (Holdings) Limited 66/F, Central Plaza 18 Harbour Road Wanchai, Hong Kong Telephone: (852) 2511 6016

Share Registry

Advanced Share Registry Services 150 Stirling Hwy Nedlands WA 6009 Telephone: (08) 9389 8033

Auditors

Ernst & Young 11 Mounts Bay Road Perth WA 6000 Telephone: (08) 9429 2222

Stock Exchange

The Company is listed on the Australian Securities Exchange (Code: CAQ). The Home Exchange is Perth.

Other Information

CAQ Holdings Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

AI assistant

CAQ HOLDINGS LIMITED — Annual Report 2020

64604_rns_2021-03-31_69840cd7-3f97-4bfd-a1ce-10d082f73cdd.pdf

CAQ Holdings Limited and its controlled entities

ABN 86 091 687 740

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Directors

Mr Paul Price

Chairman and Non-Executive Director

Mr KC Ong

Non-Executive Director

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Mr Michael Siu (Mr Siu Kin Wai)

Non-Executive Director

Mr Qian Xu

Non-Executive Director

Mr Ching Chung

Executive Director and Deputy Chairman

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Mr Yuk Cheung Chan

Non-Executive Director

Mr Ivan Cheng

Non-Executive Director

Mr Kwan Chan

Non-Executive Director

Mr Chen Po Chung

Non-Executive Director

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Mr. Mark Maine

Company Secretary

Principal Activities

Dividends Paid or Recommended

Commentary on the Results for the Year

Review of operations and changes in State of Affairs

Operational

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Likely Developments and Expected Results of Operations

Environmental Regulations

Meetings of Directors

Notes

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Share Options

Shares under Option

Directors’ Share and Option Holdings

Remuneration Report (Audited)

Key Management Personnel

Remuneration Philosophy

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

Remuneration Governance

Non-Executive Director Remuneration

Executive Remuneration

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(A) Summary of amounts paid to Key Management Personnel

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(B) Service agreements

(C) Options holdings of key management personnel

(D) Shareholdings of key management personnel

31 December 2020

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(D) Shareholdings of key management personnel (Continued)

CAQ Holdings Limited and its Controlled Entities ABN 86 091 687 740

DIRECTORS’ REPORT

Remuneration Report (Audited) (Continued)

(F) Other transactions with key management personnel

CAQ Holdings Limited

(G) Share-based compensation

CAQ HOLDINGS LIMITED Annual Report 2020