Lionhub : Full Year Statutory Accounts - YE 31 December 2018

LIONHUBGROUPLIMITED

ABN 29 119 999 441

FINANCIAL REPORT

FOR THE YEAR ENDED

31 DECEMBER 2018

This Financial Report was authorised for issue by the Directors on 28 March 2019. The Company has the power to amend and re-issue the financial report.

LIONHUB GROUP LIMITED - FINANCIAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2018

TABLE OF CONTENTS
	Page
Directors' report	1
Auditor's independence declaration	6
Consolidated statement of profit or loss and other comprehensive income	7
Consolidated statement of financial position	8
Consolidated statement of changes in equity	9
Consolidated statement of cash flows	10
Notes to the financial statements	11
Note 1: Statement of significant accounting policies	11
Note 2: Going concern	14
Note 3: Segment information	14
Note 4: Revenue and expenses	15
Note 5: Income tax	15
Note 6: Loss per share	15
Note 7: Cash and cash equivalents	16
Note 8: Trade and other receivables	16
Note 9: Other current assets	16
Note 10: Property, plant and equipment	17
Note 11: Intangible assets	18
Note 12: Trade and other payables	20
Note 13: Borrowings	20
Note 14: Convertible Note	20
Note 15: Issued capital	21
Note 16: Options	21
Note 17: Cash flow information	21
Note 18: Auditor's remuneration	21
Note 19: Interest of Key Management Personnel ("KMP")	22
Note 20: Operating leases	22
Note 21: Financial risk management	22
Note 22: Parent information	23
Note 23: Interest in subsidiaries	24
Note 24: Subsequent events	25
Note 25: Related parties	25
Note 26: Contingent Liabilities	25
Directors' declaration	26
Independent auditor's report	27

LIONHUB GROUP LIMITED - FINANCIAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2018

DIRECTORS' REPORT

The directors submit their report for the year ended 31 December 2018.

DIRECTORS

The names and details of the company's directors in office during the financial year and up to the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Mr Choon Keng Kho (Non-Executive Chair) Appointed 24 September 2014

Mr Kho is the Executive Chairman of the Singapore-based Lian Huat Group. He graduated with First Class Honours in BSc (Engineering) from King's College University of London. Mr Kho also holds strong belief in corporate social responsibility and commits the Lian Huat Group and himself to various honourable charity and community works in Singapore and Australia.

Mr Kho is Chair of the Remuneration and Nomination Committee.

Ms Kwee Jee Lee (Non-Executive Director) Appointed 26 November 2013

Ms Lee spent 20 years working in the Singapore Public Sector formulating and overseeing policies in the Ministries of Finance, the Environment and Defence. She also spent a year in IE Singapore promoting Singapore companies and products. Ms Lee has additionally spent 20 years working for large multinational corporations such as GE, Singapore Technologies Pte Ltd and ST Telemedia, focussing on human capital development and building strategic relations for business expansion. She is a Board Member of Land & Homes Group Limited.

Ms Lee is Chairman of the Audit and Risk Committee and Member of the Remuneration and Nomination Committee.

Mr Patrick Chuan Thye Kho (Non-Executive Director) Appointed 24 September 2014 and resigned 7 March 2019

Mr Kho is the Group Managing Director of Lian Huat Group and manages the group's Singapore property development and investment businesses in Australia and China. He graduated in 1988 with a Second Class Upper BA degree from the University of Cambridge. He subsequently obtained an MA from the University of Cambridge in 1991. Mr Kho is also a Chartered Financial Analyst.

Ms Jamie Gee Choo Khoo (Non-Executive Director) Appointed 26 November 2013 and resigned 16 August 2019

Ms Khoo graduated with a MBA from University of Hull, UK and is a fellow member of the Institute of Singapore Chartered Accountants and a Member of Singapore Institute of Directors. Ms Khoo has over 20 years' experience in accounting and corporate finance with extensive experience in corporate funding, investment evaluation, due diligence and corporate structuring.

Mr Kim Huat Koh (Non-Executive Director) Appointed 15 May 2014

Mr Koh has extensive experience as a member on the boards of many private and publicly listed companies, including Singapore and/or Hong Kong-listed Rowsley Ltd, UPP Holdings Ltd, Eagle Brand Holdings Ltd and Hong Kong Fortune Ltd. He was Executive Director of Hong Kong Fortune Ltd in 1994 and retired in May 2013 as Executive Chairman of UPP Ltd.

Mr Koh also has intimate knowledge of China and of property development. He was Head of Singapore's diplomatic mission(s) in Shanghai from 1991 till 1994. He then went on to head up the property businesses for Chia Tai group in China. Chia Tai was then one of the largest foreign investors in China. Its property investments include the commercial downtown of Pudong, Shanghai and other cities. Prior to his retirement last year, he was also a director of Vantage Bay, a company involved in property development in Iskandar Johor.

Mr Koh was a Singapore Government scholar. He graduated from National University of Singapore with a Bachelor of Engineering (civil), 2nd Upper Honours. He spent many years serving the Singapore government in different departments. These included administrative service of Singapore Government, its diplomatic mission in Shanghai and Government of Singapore Investment Corporation (GIC).

Mr Koh is a member of the Audit and Risk Committee.

Ms. Siew Goh (Non-Executive Director) Appointed 27 August 2018

Ms Siew Goh has extensive experience working in regional corporate environment. She has a diverse range of industry skills and experience in the areas of international corporate events management, marketing communication and strategic relations.

Ms Goh was an Associate Director in a Singapore based investment company, Temasek Holdings Limited (one of the biggest sovereign fund managers in the world) and has also spent several years working in Temasek's subsidiaries, Temasek Management Services Pty Ltd and Singapore Technologies Pte Ltd. Ms Goh led a team to plan, organise and manage high profile events in Singapore, Asia and Europe for diplomats and senior regional corporate leaders. Ms Goh is not an independent director.

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LIONHUB GROUP LIMITED - FINANCIAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2018

Company Secretary

Mr. Andrew J. Cooke LLB. (Appointed 1 March 2016)

Mr Cooke has extensive experience in law, corporate finance and as company secretary of ASX listed companies. He is responsible for the company secretarial function including stock exchange and regulatory compliance.

DIRECTORS' MEETINGS

The number of Directors' and committee of Directors' meetings held during the year and each Director's attendance at those meetings is set out in the table below.

Director	Directors'		Audit & Risk		Remuneration and
	Meetings		Committee Meetings		Nomination Committee
					Meetings
	Number	Number	Number	Number	Number	Number
	eligible to	attended	eligible to	attended	eligible to	attended
	attend		attend		attend
Mr Choon Keng Kho	9	9	-	-	1	1
Mr Patrick Chuan Thye Kho	9	9	-	-	-	-
(resigned 7 March 2019)
Ms Kwee Jee Lee	9	9	7	7	1	1
Mr Kim Huat Koh	9	9	7	7	-	-
Ms Jamie Gee Choo Khoo	6	6	7	5	-	-
(resigned 16 August 2018)
Ms Siew Goh	2	2	-	-	-	-
(appointed 27 August 2018)

DIRECTORS' INTERESTS IN SHARES

Shares in LionHub Group Limited in which Directors have a relevant interest at the date of this report were:

Director	Number of Shares	Number of Listed Options
Mr Choon Keng Kho	530,546,154	15,151,132
Mr Patrick Chuan Thye Kho	527,415,032	8,888,888
Ms Kwee Jee Lee	200,000	-
Ms Siew Goh	130,000	-

Lian Keng Enterprises Pte Ltd ("LKE") is the holder of 527,415,032 fully paid Ordinary Shares and 8,888,888 December 2020 Listed Options exercisable at $0.22. Both Mr Choon Keng Kho and Mr Patrick Chuan Thye Kho are Directors and Shareholders of LKE.

DIVIDENDS

No dividends were paid or declared during the year (2017: $Nil). No recommendation for future payment of dividends has been made at the date of this report.

REVIEW OF OPERATIONS AND PRINCIPAL ACTIVITIES

LionHub Group Limited is a real estate development company listed on the Australian Stock Exchange ("ASX"), focusing on technology park developments in China. The Company's aims to provide Australian investors with an early mover advantage in the mainland Chinese property sector.

LionHub's focus is to provide an avenue for investors to exploit the potential offered by technology park developments in China. LionHub currently has one project in the city of Xuancheng in Anhui Province known as the Singapore Xuancheng Technology Park. Anhui Province is located in central China, with a large population of 60 million in an area of 139,600 km2. It lies in the hinterland of the Yangtze Delta, and has significant economic development potential.

The Group's reported net loss amounted to $3,752,000 (2017: Loss of $15,568,000). The Company's revenue for the financial

year ended 31 December 2018 amounted to $1,000 (FY2017: $1,000). Revenue comprised solely of interest income earned on fixed deposits.

Losses from ordinary activities after tax attributable to members amounted to $3,752k as compared with $15,568k in the previous corresponding period. The losses for the year of $3,752k comprised mainly of expenses relating to staff costs, directors' fees, professional fees and other operating expenses. Also included in the loss for the year, was an impairment charge of $989k against the Group's intangible assets following an updated independent impairment valuation of the Xuancheng project, and a further provision for impairment in respect of the Lu'an project which amounted to $787k.

In the previous corresponding period, the loss of $15,568k comprised mainly of expenses relating to the similar operating expenses such as staff costs, directors' fees, marketing and promotion expenses, professional fees, and other operating expenses.

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LIONHUB GROUP LIMITED - FINANCIAL REPORT

FOR THE YEAR ENDED 31 DECEMBER 2018

It also included an impairment charge of A$13m in relation to the termination of Development Rights for the Lu'an project and an impairment charge of $1m in relation to the Xuancheng project.

LU'AN SINGAPORE ECO-PARK

The Company previously held another project in the city of Lu'an in Anhui province known as the Lu'an Singapore Eco-Park. On 19 December 2017 the Company received notice from the Lu'An Development Zone Management Committee purporting to terminate the Company's Investment Agreement with the Lu'an City People's Government and its related entities in respect of the Lu'an Singapore Eco-Park. The Company sought legal advice in respect of this matter and is continuing to negotiate with appropriate authorities to address this situation. The Company also filed a legal action in the Anhui court in March 2018 which is still in progress and pending judgement. As a result of these circumstances the Company made an impairment charge in the previous financial year in the amount of $13m relating to the Lu'an Singapore Eco-Park.

XUANCHENG SINGAPORE TECHNOLOGY PARK

In 2017 the Company (in a joint venture with KSL (XC) Pte Ltd) successfully completed the acquisition of 40 mu (2.67 hectare) of land within the Xuancheng Singapore Technology Park site for industrial development for a total consideration of 4.89 m China Yuan (A$934k). The Company is continuing to pursue planning approvals for the development of this site.

In accordance to the Investment Agreement, the company is to receive a rebate for the land price and the deed tax excluding stamp duty amounting to RMB 5.08m and the Company has made application to the Xuancheng City Economic and Technological Zone Management Committee for the release of this rebate. There have been significant delays in receiving this rebate and Company is still working to seek release of the payment. There has been limited development of the Xuancheng Singapore Technology Park pending resolution of the outstanding rebate payment.

Despite cooling measures that have been implemented by the Chinese government the Chinese property and construction market are expected to remain challenging but stable in 2019.

WORKING CAPITAL

On 24 February 2017, the Company secured a $1 million (Singapore dollar) loan facility from its major shareholder, Lian Keng Enterprises Ltd ("LKE"). To date the company has repaid the principal $57k and interest of $29k to LKE. The interest rate has been adjusted to 5.5% per annum with effect from February 2018.

Throughout the course of 2018 the Company issued a total of 25,840,000 Class A Convertible Notes. The total subscription monies received for the issue of these notes amounted to $1,292k.

SIGNIFICANT EVENTS AFTER THE REPORTING DATE

In January 2019, the Company's lawyers in China advised that legal action regarding the termination notice received in relation to the Lu'an Investment Agreement was still in progress and pending a final verdict from the Anhui court.

Since balance date the Company has issued a further 3,660,000 Class A Convertible Notes and received the subscription monies in the amount of $183k.

On 8 March 2019 the Company announced that Mr. Patrick Kho had resigned as a Director of the Company and on 13 March 2019 the Company announced that Mr. Joseph Bek had resigned as Chief Executive Officer.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group is not subject to any specific environmental regulation in its operations under the law of a State, Territory or the Commonwealth of Australia.

OPTIONS

As at the date of this report there are 21,903,698 Listed Options exercisable on or before 4 December 2020 at 22 cents each. Each Option entitles the holder to one Ordinary Share.

During the year ended 31 December 2018, no fully paid Ordinary Shares were issued on the exercise of options. There have been no unissued shares or interests under option of any controlled entities within the Group during or since reporting date.

No further shares have been issued since year-end and no amounts are unpaid on any of the shares.

Option holders do not have any right, by virtue of the listed option, to participate in any share issue of the Company or any related body corporate. No options were issued to directors and executives as remuneration.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company holds an insurance policy to insure the Directors and Officers of the Company and its controlled entities against liabilities to other persons that may arise from their position. The insurance policy prohibits disclosure of the amount of the premium paid.

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