LION ASIAPAC LIMITED 
By (Co. Reg. No. 196800586R)
(Incorporated in the Republic of Singapore)
1) EMPHASIS OF MATTER BY AUDITORS ON FINANCIAL STATEMENTS 2) AUDIT ADJUSTMENTS MADE TO THE FULL YEAR RESULTS ANNOUNCEMENT 1. EMPHASIS OF MATTER BY AUDITORS ON FINANCIAL STATEMENTSThe Board of Directors of Lion Asiapac Limited (the "Company") wishes to inform that, pursuant to Rule 704(5) of the Listing Manual of the Singapore Exchange Securities Trading Limited ("SGX-ST Listing Manual"), the independent auditors of the Company, PricewaterhouseCoopers LLP (the "Auditors"), have in their Independent Auditors' Report included an Emphasis of Matter on the financial statements of the Company and its subsidiaries (the "Group") for the year ended 30 June 2013 ("Financial Statements").
Notwithstanding the Emphasis of Matter, the opinion of the Auditors is not qualified.
The Independent Auditors' Report to the shareholders of the Company is reproduced below:
Independent Auditors' Report to the Shareholders of Lion Asiapac Limited
Report on the Financial StatementsWe have audited the accompanying financial statements of Lion Asiapac Limited (the "Company") and its subsidiaries (the "Group") set out on pages 41 to 91, which comprise the consolidated balance sheet of the Group and balance sheet of the Company as at 30 June 2013, and the consolidated statement of comprehensive income, the statement of changes in equity and the statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act (the "Act") and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that
assets are safeguarded against loss from unauthorised use or disposition; and
transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.
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Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and the Company as at 30 June 2013, and of the results, changes in
equity and cash flows of the Group for the year ended on that date.
Emphasis of Matter
We draw attention to Note 3(c) to the consolidated financial statements which describes the uncertainties relating to the carrying amount of land deposits and related transaction costs and accruable late payment penalty charges. Our opinion is not qualified in respect
to this matter.
In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
PricewaterhouseCoopers LLP Public Accountants and Chartered AccountantsSingapore, 27 September 2013
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Note 3(c) to the Financial Statements
3 (c) Carrying amount of land deposits, its related transaction costs and accruable late payment penalty charges
In December 2012, the Group won a tender for land in Yangzhou and proceeded to incorporate a subsidiary, Yangzhou Lion Property Development Co Ltd ("YLPD"), to undertake property development project.
In January 2013, the Group made the first payment of land costs of $17.33 million (RMB84.14 million) to the Yangzhou Municipal State-Owned Land Resource Administration Bureau ("Yangzhou Land Bureau"), and incurred related transaction costs of $1.08 million. The payments were made by the Group's wholly-owned subsidiary Lion Asiapac Management Consultancy (Shanghai) Co Ltd ("LAPS").
YLPD was intended to be incorporated as a sino-foreign joint venture company, to be equally owned by the Group's wholly-owned subsidiaries, LAP Development Pte Ltd ("LAPD") and LAPS. This sino-foreign joint venture company structure was earlier approved by the Yangzhou Economic and Technological Development Management Committee on 1 November 2012.
In February 2013, the Ministry of Commerce of the People's Republic of China ("MOFCOM") directed YLPD be restructured as a wholly-foreign owned enterprise. The Group completed the restructuring of YLPD (wholly-owned by LAPD) and registered YLPD with MOFCOM in May 2013.
As at 30 June 2013, the total cost of the land and related transaction costs amounting to $35.88 million has been recorded as "Other current assets" in Note
14 to the financial statements. The balance payment of the land costs of $17.33 million (RMB84.14 million) and accrued interest charges of $0.14 million (RMB0.66 million) due in March 2013 have not been paid as of the date of these financial statements (Note 19).
Under the land contract with the Yangzhou Land Bureau, there is a late payment penalty charge at 0.1% per day on the balance payment of the land costs. The land contract is subject to cancellation if the delay exceeds 60 days with no refund of the first payment. Accordingly, there is a potential impairment of the first payment of land costs and related transaction costs of $18.41 million and/or contingent liabilities of approximately $3.52 million of accruable late payment penalty charges up to the date of these financial statements.
The Group is in negotiations with the Yangzhou City Government for the waiver of the late payment penalty charges. On 24 September 2013, the Yangzhou Economic and Technological Development Zone Management Committee wrote to the Yangzhou City Government recommending the waiver of the late payment penalty charges. The Group has also obtained legal advice from a China law firm that the likelihood of cancellation of the land contract by the Yangzhou Land Bureau is remote based on the developments of the on-going negotiations.
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Pending the approval of the Yangzhou City Government to waive the late payment penalty charges, the Group has put on hold the payment of the outstanding land cost of $17.33 million and accrued interest of $0.14 million to the Yangzhou Land Bureau. The Group has not accrued for any amount of contingent liabilities relating to the late payment penalty charges.
2. AUDIT ADJUSTMENTS MADE TO THE FULL YEAR RESULTS ANNOUNCEMENT
Pursuant to Rule 704(6) of the SGX-ST Listing Manual, the Directors wish to inform that audit adjustments have been made in the Balance Sheet of the Group as at 30 June
2013. Accordingly, the following items in the 2013 Annual Report ("Annual Report") and the Full Year Financial Statement Announcement dated 21 August 2013 ("Announcement") are presented as follows:
Annual Report S$'000 | Announcement S$'000 | Difference S$'000 | |
Other current assets | 36,090 | 18,621 | 17,469 |
Trade and other payables | 21,885 | 4,416 | 17,469 |
The differences in the above items arise from audit adjustments made for the outstanding land cost of $17.33 million and accrued interest of $0.14 million, as disclosed in the abovementioned Note 3(c) to the Financial Statements.
BY ORDER OF THE BOARD LION ASIAPAC LIMITED
Tan Yen Hui
Company Secretary
Singapore, 27 September 2013
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