Final Results

13th Feb 2009 07:30



13 February 2009

LED International Holdings Limited

Restoration of trading and the publication of Final Results

for the Year Ended 30 June 2008

Restoration of Trading to AIM

The ordinary shares of LED have been restored to trading on the publication of final results for the year ending 30 June 2008 ("accounts"). The ordinary shares of LED were suspended from trading on AIM following the failure to publish the accounts by 31 December 2008.

The accounts are now detailed below.

CHAIRMAN'S STATEMENT

INTRODUCTION

LED International Holdings Limited (the "Company" or "LED International") and its subsidiaries (collectively referred to as the "Group") specialise in the development, manufacture and sale of LED module and other LED products such as LED screens, outdoor signs, lamps, lighting and building illumination. The Board of Directors is pleased to report on the consolidated results of the Group for the financial year ended 30 June 2008.

LATE PUBLICATION OF THE FINAL RESULTS

The Company acknowledges that these accounts should have been published by no later than 31 December 2008. However, due to a number of issues referred to in more detail below, the Board was unable to do so. The Board sincerely apologises to the shareholders for this and has undertaken measures to avoid any similar situations in the future.

The delay of issuing the audited accounts on time derived primarily from the accounting treatment of Shenzhen China LED Photo Technology Limited ("Shenzhen LED"), a subsidiary of the Company under disposal. This is dealt with in a note below and the Board considers that the situation has now been satisfactorily dealt with.

The Board is pleased to inform shareholders that a new Chief Financial Officer has been appointed as part of the Board's drive to strengthen the financial management and control of the Group. Further details are noted below.

Finally, shareholders will note that the independent auditors have qualified the accounts of Shenzhen LED. 

The Board has implemented a number of strengthening measures to the Group's financial controls and operations, including appointment of a firm of independent accounting firm to review the controls systems of all operating subsidiaries, following the problems with Shenzhen LED and is confident that the Company will have and maintain for the future robust standards of corporate governance. 

QUALIFICATION OF INDEPENDENT AUDITOR'S REPORT

As mentioned, independent auditors, Baker Tilly Hong Kong, have qualified the accounts so far as concerns the Company's subsidiary, namely Shenzhen LED. Certain key accounting records and documents, in particular, for the months of July, August and September 2007 cannot be located for audit purpose due to the absence of adequate effective controls over the accounting records arising from high turnover in management and accounting staff of Shenzhen LED and accordingly, they were only unable to ascertain the occurrence and completeness of sales transactions during the year. Accordingly, Shenzhen LED was ring-fenced and its operations closed down on September 2007 with production being transferred elsewhere and no trading by or through Shenzhen LED has been undertaken since then. Nevertheless, Shenzhen LED retains some assets of value which are now redundant to the Group's operations.

The Board has determined that the whole of the issued share capital of Shenzhen LED should be sold subject to the approval of shareholders at the forthcoming Annual General Meeting. A buyer has been found and a preliminary agreement has also been entered into on 11 February 2009. 

Subject to the above, Shenzhen LED recorded turnover of HKD12,117,000 and the cost of sales was HKD12,704,000 a resulting in a net trading loss of HKD587,000. Trade receivables of HKD23,242,000 have been written off. Again, other write-offs have been determined based on valuation by independent valuer.

It should further be mentioned that due to the global economic downturn and deteriorating operating environment in China, many customers of Shenzhen LED who are all located in Southern China are themselves facing serious cash flow problems which, we fear, may adversely affect their ability to continue trading with us. Also the results of outstanding debt recovery for this subsidiary are not satisfactory to date, but the Company will do all it can to recover outstanding debts.

Thus the lack of certain useful information in the accounting records and time to complete certain audit procedures, led the independent auditors with no alternative other than to qualify the accounts before the reporting deadline.

To be clear, the Board has tightened up its corporate and financial governance, including appointment of a firm of independent accounting firm to review the controls systems of all operating subsidiaries, so as to ensure that the Group works more cohesively and that a similar situation will not reoccur.

APPOINTMENT OF NEW CHIEF FINANCIAL OFFICER

Mr Stephen Wing Bun Chan, aged 44, has been appointed as the new Chief Financial Officer of the Group, although he will not become a Board member. He will be in control of a team and will have full responsibility for the financial governance of the Group.

 

Mr Chan was previously finance controller of Avnet Sunrise Ltd, a wholly-owned subsidiary of Avnet Inc, a global fortune 500 companies in the electronics industry, where he performed a number of finance and regulatory based functions. Moreover, he has advised on a number of corporate finance transactions whilst working with Lehman Brown CPA Co., Ltd. 

Mr Chan commenced his accountancy career at Deloitte Touché Tohmatsu and Grant Thornton in Hong Kong. He qualified as a Chartered Public Accountant in Hong Kong and is a member of the Institute of Chartered Accountants of England and Wales. He is also FCCA qualified. He was educated at Hong Kong Baptist University and holds an International Master of Business Administration from the University of South Australia.

OPERATING REVIEW

The global business environment has deteriorated substantially throughout the year under review and, like many other businesses, our operating performance was significantly affected by the general slowdown in China's domestic and export market sales. The Group experienced an increased loss for the year ended 30 June 2008 compared with that of the period ended 30 June 2007. The operating loss is mainly attributable to (i) increased competition at the lower level of the market and weakening customer demand outside China as a result of the global economic slowdown and uncertainty across the entire business environment, (ii) a reduction in orders from the Group's customers in China as a result not only of a general economic slowdown but also the earthquake that took place during the year ended 30 June 2008, and (iii) similar to most of the companies with a production base in China, an increase in production costs of the manufacturing business owing to the appreciation of Renminbi ("RMB") and the increase in overall material costs, labour costs and general overheads.

Despite the above factors and a further matter mentioned below, the Board is continuing to implement measures to diversify sources of revenue and to reduce expenditure, control the production costs and expand the customer base in different areas. The Board of Directors considers that the overall Group's operations remain sound.

With our expertise in the LED sector, we remain confident in the Group's long-term growth potential. We are taking steps to re-site, where possible, the Group's production facilities so as to reduce costs. We are also looking to develop higher value-added LED products, such as the LED traffic lighting business where competition is weak, and to focus on areas where demand will remain strong. One key objective is to further develop our expertise in producing high quality, reliable and innovative LED products and solutions, and we will exploit that expertise in the LED sector to explore business opportunities in the LED related media business. The acquisition of Strongbase noted below is a part of that strategy. China has a comparatively low per capita spending in outdoor advertising and coupled with the PRC's government's determination to maintain domestic consumption in 2009, we believe there are good opportunities for the Company to enter the outdoor media market and to leverage its LED products in this market. Amongst other things, we will utilize our established relationships with media players.

FINANCIAL REVIEW

Turnover and loss attributable to shareholders for the year ended 30 June 2008 amounted to approximately HK$52 million (including both continuing operations and discontinued operation) and HK$50 million respectively. Overall gross margin of 17% was achieved during this period albeit this is lower than prior periods, due to the significant increase in production and operating costs in the PRC as mentioned above, while the significantly increased loss is primarily attributable to the operating loss from the discontinued operation of approximately HK$52.6 million in the current financial year.

In response to the intense market competition in LED products in the PRC, the Group will also strengthen its research and development capabilities to further raise its brand profile to distinguish itself from generic LED product suppliers.

In order to strengthen the Group's internal controls, apart from the appointment of the new CFO as noted above, the financial reporting system is being modified to meet the existing needs of the Group. In future, each key operating subsidiary must shorten the period to provide the up-to-date management reports to the Group's finance and accounting department on a timely basis and the Group's finance and accounting department will increase manpower so as to speed up the review processes, in particular, the collection of overdue receivables and credit controls to customers.

NEW CONTRACTS

During the year, the Group was awarded a contract to supply a giant LED display screen and outdoor façade lighting for a new hotel development in North Point, Hong Kong. The contract is with one of Hong Kong's major property developers and is for the amount of HK$22,582,240 (approx £1.95 million). Due to additional requirements and new specifications from the developers, the project is expected to be completed in March 2009, nine months behind the original completion date of June 2008. Under the terms of the contract, the Group is installing a 790 sq. meter LED screen and an additional 2,500 meter standout lighting façade in a prominent position on the front of hotel. Following the success of this project, we believe the Group's giant outdoor LED screens will become one of the market leaders in Hong Kong and China, using the very latest technology to create the brightest, most vibrant displays. The contract is also an excellent opportunity for the Group to work with a top-tier real estate developer and we believe the installed LED screen will be one of the largest outdoor LED screens in Asia. With our expertise in technology and application, the Group continues to explore and capture new business opportunities and to further enhance its brand name in the sector.

On 12 November 2008, the Group was awarded the renewal of a contract to supply multiple, giant LED display screens to the Shanghai International Formula One Circuit. The Company has signed a two-year leasing agreement with Shanghai JUSS Event Management Co. Limited to provide seven high resolution LED screens commencing from 1 January 2009. The LED screens will be applicable to events including the Sinopec Chinese Grand Prix, scheduled for 19 April 2009, and any other motor sports and tennis events.

ACQUISITION SUBSEQUENT TO THE REPORTING PERIOD

Since the financial year ended 30 June 2008, on 31 July 2008, the Group has acquired a 100 per cent stake in Strongbase New Shenzhen Limited ("New Shenzhen"), a specialist in LED and LED related products, accessories and appliances. New Shenzhen has both R&D and manufacturing expertise in relation to LED related products and possesses numerous patents and other intellectual property for LED products and LED applications. New Shenzhen was formed in 2006 and is based in Longyang, Shenzhen, in the PRC and employs over 40 people. Its product offering includes LED devices, LED displays, LED lighting and LED appliances. It has a strong customer base including GE, Sanyo, Ford Motor and Philips, among other leading companies. The acquisition of New Shenzhen allows the Group to rationalise its production capacity, and to broaden its product offering to include higher specification products for both its domestic markets and international clients. It will also provide the Group with access to new intellectual property for further product development.

FUND RAISING

Subsequent to the balance sheet date, 30 June 2008, the Group issued 29,692,084 New Ordinary Shares of HK$0.1 each to a strategic investor at 1 pence each, raising approximately ￡296,921. This was received by the Company after the balance sheet date. These funds were raised for general working capital and potential investments.

BOARD CHANGES

As referred to above, there was a reshuffle of the Board after the first Annual General Meeting held on 18 February 2008. This change has strengthened the Board and management and has helped to establish a stronger foothold on technical, sales and marketing, as well as financial and corporate management and we believe the Board is ready to drive the Company to future growth and to create value for the shareholders of the Company.

DIVIDEND

The Directors are not recommending payment of a dividend at this stage in the Company's development. It is the management's belief that the cash generated by the business can be more effectively deployed by investing in our operations to ensure the successful execution of the management's strategy, maximising the opportunity to create value for our shareholders. The Board is committed to an ongoing review of the Group's dividend policy.

PROSPECTS

Notwithstanding the global economic downturn and deteriorating operating environment, the Board remains confident in the Group's long-term growth potential and considers that the overall operations of the Group remain sound. Our expertise in the LED sector, as well as our focus on high value added products, can help the Group to focus on the niche markets such as LED based road lighting and variable speed signs for China's highways and road network.

We believe it is a positive indication of our significant progress in the development in higher-end LED products that the Group has recently been selected by the Research Institute of Highway Ministry of Communications, a division of the Chinese Government's Traffic Department, to develop two projects on the use of LED products for road traffic purposes. The first project, the Transportation Industrial Standard of Highway LED Lighting Facilities, is to develop and design the standards for all new highway LED lightning facilities. The second project, the National Standard of Highway LED Variable Speed Limit Sign, will work towards developing and designing new standards for all new LED variable speed limit signs in China. The Projects will not provide income from the sales of LED products initially; however, it is expected that the involvement in the Projects will provide the Company with a strong position to enter markets related to the use of LED products on highways in China.

The selection of the Company by the Chinese authorities is a considerable endorsement for LED International's technology, and we are confident that this will lay the foundation for further joint projects.

APPRECIATION

Finally, on behalf of the Board, I would like to thank our customers, suppliers and shareholders for their continued support of LED International Holdings Limited. I would also like to acknowledge the hard work of the management and all the staff for their contribution and dedication to the Company.

Finally, a copy of the accounts will be sent to shareholders today and they will be made available on www.led-intl.com

Thomas Li Xin Li

Executive Chairman

12 February 2009

For further information:

LED International +852 2810 4470

www.led-intl.com

Dennis Ow, Executive Director

Zimmerman Adams International  +44 (0) 207 060 1760

Dominique Doussot, Jonathan Evans

ICIS  +44 (0) 207 651 8688

Christian Taylor-Wilkinson, Fiona Conroy

Notes to Editors:

LED International and its subsidiaries specialise in the development, manufacture and sale of low powered / low maintenance LED screens and other LED products such as outdoor signs, lamps, lighting and building illumination. The screens are manufactured in a 'building block' format to a specific design, which allows screens to be assembled to suit a customer's size and definition specifications.

This design also ensures that the screens are relatively easy to transport and assemble. Based in Hong Kong, the Company's primary market has been the People's Republic of China ("PRC"), but it has also supplied end products to Macau, Japan and the USA. Part of the Company's strategy in 2007 was to widen its customer base to markets outside PRC.

The Company listed on AIM, a market operated by the London Stock Exchange, on 23 October 2006. For more information, please visit: http://www.led-intl.com.

  LED International Holdings Limited

Consolidated income statement

for the year ended 30 June 2008

(Expressed in Hong Kong dollars)

						1.7.2007 to  30.6.2008		4.7.2006 to  30.6.2007
		Note				HKD'000		HKD'000
Continuing operations
Turnover		4				39,886		-
Cost of sales						(31,716	)	-
Gross profit						8,170		-
Other income						44		13
Waiver of debt						7,303		-
Distribution costs						(  281	)	-
Administrative expenses						( 8,035	)	(6,505	)
Other operating expenses						( 3,059	)	( 1	)
Profit/(loss) from operations						4,142		(6,493	)
Finance costs - interest on bills payable						(  113	)	-
Profit/(loss) before taxation						4,029		(6,493	)
Income tax						( 1,400	)	-
Profit/(loss) for the year/period from continuing operations						2,629		(6,493	)
Discontinued operation
(Loss)/profit for the year/period from discontinued operation				6		(52,572	)	4,213
Loss for the year/period		7				(49,943	)	(  2,280	)
Earnings/(losses) per share
From continuing operations
- Basic (HK cent)						0.0109		(0.0658	)
- Diluted (HK cent)						0.0109		(0.0658	)
From discontinued operation
- Basic (HK cent)						(0.2172	)	0.0427
- Diluted (HK cent)						(0.2172	)	0.0385

LED International Holdings Limited

Consolidated balance sheet as at 30 June 2008

(Expressed in Hong Kong dollars)

		Note		2008 HKD'000		2007 HKD'000
Non-current assets
Property, plant and equipment		9		9,494		34,513
Goodwill				12,621		-
Intangible assets				-		19,273
				22,115		53,786
Current assets
Inventories				9,786		8,060
Trade and other receivables				16,711		54,393
Amounts due from related companies				-		11,962
Cash and cash equivalents		11		321		510
				26,818		74,925
Non-current assets classified as held for sale		6		65,608		-
				92,426		74,925
Current liabilities
Trade and other payables				66,176		69,294
Current taxation				1,481		738
				67,657		70,032
Liabilities directly associated with non-current assets
classified as held for sale		6		22,867		-
				90,524		70,032
Net current assets				1,902		4,893
Net assets				24,017		58,679
CAPITAL AND RESERVES
Share capital				14,846		13,687
Reserves				( 5,950	)	44,992
Amount recognised directly in equity relating to non-current assets held for sale				15,121		-
TOTAL EQUITY				24,017		58,679

Approved and authorised for issue by the board of directors on 12 February 2009.

LED International Holdings Limited

Balance sheet as at 30 June 2008

(Expressed in Hong Kong dollars)

				2008		2007
		Note		HKD'000		HKD'000
Non-current assets
Property, plant and equipment		9		-		22
Investments in subsidiaries				24,234		53,634
				24,234		53,656
Current assets
Other receivables		10		1,268		163
Amounts due from subsidiaries				48,716		47,668
Cash and cash equivalents		11		80		20
				50,064		47,851
Current liabilities
Other payables				51,040		47,817
Net current (liabilities)/assets				( 976	)	34
NET ASSETS				23,258		53,690
CAPITAL AND RESERVES
Share capital				14,846		13,687
Reserves				8,412		40,003
Total equity				23,258		53,690

Approved and authorised for issue by the board of directors on 12 February 2009.

  LED International Holdings Limited

Consolidated cash flow statement

for the year ended 30 June 2008

(Expressed in Hong Kong dollars)

	Note	1.7.2007 to  30.6.2008		4.7.2006 to  30.6.2007
		HKD'000		HKD'000
Operating activities
Profit/(loss) before taxation:
Continuing operations		4,029		(6,493)
Discontinued operation	6	(52,567	)	4,799
		(48,538	)	( 1,694)
Adjustments for:
Interest income		(  3	)	( 21)
Interest expenses		114		-
Depreciation	7(b)	5,889		2,497
Amortisation of intangible assets	7(b)	3,005		1,116
Impairment loss on property, plant and equipment	7(b)	11,377		3,682
Impairment loss on intangible assets	7(b)	2,147		7,212
Loss on disposal of property, plant and equipment	7(b)	44		-
Equity-settled share-based payment expenses		-		975
Operating (loss) / profit before changes in working capital		(25,965	)	13,767
Decrease in inventories		6,764		865
Decrease in trade and other receivables		21,459		22,835
Increase in trade and other payables		71		14,661
Increase in amounts due from related companies		(   599	)	(11,962)
Cash generated from operations		1.766		40,166
Income taxes paid		-		( 27)
Net cash generated from operating activities		1,766,		40,139
Investing activities
Payment for purchase of intangible assets		-		(18,502)
Payment for purchase of property, plant and equipment		( 8,790	)	(12,637)
Net cash received in business combination		102		417
Deposits paid for acquisition of a company		-		(15,419)
Proceeds from disposals of property, plant and equipment		2		1,686
Interest received		3		21
Net cash used in investing activities		( 8,683	)	(44,434)
Financing activities
Proceeds from the issue of shares		4,758		14,856
Issuing costs paid		-		( 9,179)
Interest paid		( 114	)	-
Net cash generated from financing activities		4,644		5,677
Net (decrease)/increase in cash and cash equivalents		( 2,273	)	1,382
Cash and cash equivalents at beginning of year/period	11	510		-
Effect of foreign exchange rate changes		2,192		(872)
Cash and cash equivalents at end of year/period	11	429		510

1 Company information

LED International Holdings Limited (the "company") is a company incorporated and domiciled in Hong Kong and has its registered office and principal place of business located at Room C, 11th Floor, CNT Tower, No. 338 Hennessy Road, Hong Kong.

The principal activity of the company is investment holding. The principal activities of its subsidiaries are set out below. The company and its subsidiaries are hereinafter referred to as the "group".

Details of the subsidiaries at 30 June 2008 are as follows:

Name of company	Place of incorporation/ establishment		Issued and  paid up capital	Ownership interest		Principal activities
				Direct	Indirect
LED International (Far East) Limited	Hong Kong		10,002 ordinary shares of  HKD1 each	100%	-	Investment holding
Shenzhen China - LED Photo-Technology  Limited	PRC		Registered capital RMB50,000,000	-	100%	Assembly and production of LED signboards, LED lighting and lighting engineering
Kepu Electronic Technology  (Shenzhen) Company Limited		PRC	Registered capital RMB6,000,000	-	100%	Manufacturing of LED element products

On 23 October 2006, the company was admitted to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange.

2 Significant accounting policies

(a) Statement of compliance

These financial statements have been prepared in accordance with all applicable International Financial Reporting Standards ("IFRSs"), which collective term includes applicable individual International Financial Reporting Standards ("IFRS"), International Accounting Standards ("IAS") and Interpretations issued by the International Accounting Standards Board ("IASB") that remain in effect and comply with the AIM Rules issued by the London Stock Exchange.

The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current accounting period of the group and the company. Note 3 provides information on the changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the group for the current and prior accounting periods reflected in these financial statements.

(b) Basis of preparation of the financial statements

The consolidated financial statements for the year ended 30 June 2008 comprise the company and its subsidiaries.

The measurement basis used in the preparation of the financial statements is the historical cost basis. 

Non-current assets and disposal group held for sale are stated at the lower of carrying amount and fair value less costs to sell.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

3 Changes in accounting policies

The IASB has issued certain new and revised IFRSs and Interpretations that are first effective or available for early adoption for the current accounting period of the group and the company. 

There have been no significant changes to the accounting policies applied in these financial statements for the year presented as a result of these developments. However, as a result of the adoption of IFRS 7, Financial instruments: Disclosures and the amendment to IAS 1, Presentation of financial statements: Capital disclosures, there have been some additional disclosures provided as follows:

As a result of the adoption of IFRS 7, the financial statements include expanded disclosures about the significance of the group's financial instruments and the nature and extent of risks arising from those instruments, compared with the information previously required to be disclosed by IAS 32, Financial instruments: Disclosure and presentation. These disclosures are provided throughout these financial statements.

The amendment to IAS 1 introduces additional disclosures requirements to provide information about the level of capital and the group's objectives, policies and processes for managing capital.

Both IFRS 7 and the amendment to IAS 1 do not have any material impact on the classification, recognition and measurements of the amounts recognised in the financial statements.

The group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

  4 Turnover

		1.7.2007  to 30.6.2008		4.7.2006  to  30.6.2007
		HKD'000		HKD'000
Continuing operations
Sales of LED element products		39,886		-
Discontinued operations
Sales of LED signboards, LED lighting and lighting engineering (note 6)		12,117		67,413
		52,003		67,413

The principal activities of the group are assembly and manufacturing of LED element products, LED signboards, LED lighting and lighting engineering.

5 Directors' remuneration

Directors' remuneration disclosed pursuant to section 161 of the Hong Kong Companies Ordinance is as follows:

	Directors' fee	Salaries, allowances and benefits in kind	Retirement scheme contributions	Sub-Total	Share- based payments	1.7.2007 to 30.6.2008 Total
	HKD'000	HKD'000	HKD'000	HKD'000	HKD'000	HKD'000
Executive directors
Cragg, Mervyn Russell	-	137	-	137	-	137
Jim, Ka Lok	-	119	-	119	-	119
Lee, Man Bun	-	-	-	-	-	-
Li, Li Xin Thomas	-	-	-	-	-	-
Ow, Kian Jing Dennis	-	380	-	380	-	380
Xiong, Yiwei	-	-	-	-	-	-
Independent non-executive directors
Chau, Hong Ming Peter	-	46	-	46	-	46
Martin, Ian Paul	148	-	-	148	-	148
Miu, Ka Keung Kevin	288	-	-	288	-	288
Shrago, Ivor Colin	-	-	-	-	-	-
	436	682	-	1,118	-	1,118

	Directors' fee	Salaries, allowances and benefits in kind	Retirement scheme contributions	Sub-Total	Share- based payments	4.7.2006 to 30.6.2007 Total
	HKD'000	HKD'000	HKD'000	HKD'000	HKD'000	HKD'000
Executive directors
Cragg, Mervyn Russell	-	1,028	89	1,117	220	1,337
Jim, Ka Lok	-	418	37	455	-	455
Lee, Man Bun	-	160	14	174	-	174
Tian, Zhi Hui Sam	-	108	5	113	146	259
Independent non-executive directors
Chau, Hong Ming Peter	-	766	54	820	147	967
Martin, Ian Paul	216	-	-	216	73	289
Miu, Ka Keung Kevin	216	-	-	216	73	289
	432	2,480	199	3,111	659	3,770

Note:

Share based payments represent the estimated value of share options granted to the directors under the company's share option scheme. The value of these share options is measured according to the group's accounting policy for share-based payment transactions.

6 Discontinued operation

On 12th February 2009, the group entered into a sale and purchase agreement to dispose of its entire interest in a wholly-owned subsidiary, Shenzhen China-LED Photo-Technology Limited ("Shenzhen LED" or the "disposal group"). The consideration is determined by reference to their net asset value as stated in the audited financial statements as at 30 June 2008, prepared under generally accepted accounting principles in the PRC. Accordingly, the assets and liabilities of Shenzhen LED were classified as held for sale as at 30 June 2008 and stated at the lower of the carrying amount and fair value less costs to sell. The disposal is to be completed within six months. The results and cash flows of the discontinued operation included in the consolidated income statement and the consolidated cash flow statement are as follows:

	1.7.2007 to 30.6.2008		4.7.2006 to 30.6.2007
	HKD'000		HKD'000
Revenue - sales of goods (note 4)	12,117		67,413
Cost of sales	(12,704)		(44,904)
Gross (loss) / profit	(  587)		22,509
Other income	831		1,157
Distribution costs	(  775)		( 2,071)
Administrative expenses	(  651)		( 1,519)
Other operating expenses	( 5,225)		( 4,383)
Trade receivables written off	(23,242)		-
Rental receivable written off	(  831)		-
Other receivable written off	( 8,562)		-
Impairment loss on property, plant and equipment	(11,377)		( 3,682)
Impairment loss on intangible assets	( 2,147)		( 7,212)
(Loss)/profit from operations	(52,566)		4,799
Finance costs	(   1)		-
(Loss)/profit before taxation	(52,567)		4,799
Income tax	(  5)		(   586)
(Loss)/profit for the year/period from discontinued operation	(52,572)		4,213
Net cash inflow from operating activities	1,514		19,478
Net cash outflow from investing activities	-		(31,104)
Net cash inflow from financing activities	-		10,384
Net cash inflow/(outflow) from discontinued operation	1,514		( 1,242)

The major classes of assets and liabilities comprising the disposal group classified as held for sale as at 30 June 2008 are as follows:

			HKD'000
Non-current assets classified as held for sale
Property, plant and equipment			21,650
Intangible assets			15,888
Trade and other receivables			14,108
Amount due from related companies			13,854
Cash and cash equivalents			108
Total			65,608
Liabilities directly associated with non-current assets
classified as held for sale
Trade and other payables			4,759
VAT payable			17,286
Current taxation			822
Total			22,867

7 Loss for the year/period

					1.7.2007		4.7.2006
					to		To
					30.6.2008		30.6.2007
					HKD'000		HKD'000
Loss for the year/period is arrived
at after charging:
(a) Staff cost (including directors' remuneration)
Salaries, wages and other benefits					9,597		6,824
Contribution to defined
contribution retirement plan					183		393
Equity-settled share-based
payment expenses					-		733
					9,780		7,950
(b) Other item
Amortisation of intangible assets					3,005		1,116
Auditor's remuneration					908		666
Cost of inventories#					44,420		44,904
Depreciation					5,889		2,497
Exchange losses					1,611		-
Impairment loss on:
- property, plant and equipment					11,377		3,682
- intangible assets					2,147		7,212
Loss on disposals of property,
plant and equipment					44		-
Operating lease charges: minimum lease
payment in respect of
- hire of plant and machinery					-		586
- hire of land and building					857		493
Other receivables written off					8,562		-
Rental receivable written off					831		-
Research and development costs							2,501
Trade receivables written off					23,242		-

Cost of inventories includes HKD5,156,000 (4.7.2006 to 30.6.2007: HKD4,829,000) relating to staff costs, depreciation expenses and operating lease charges, which amount is also included in the respective total amounts disclosed separately above or in note 7(a) for each of these types of expenses.

8 Earnings/(losses) per share

From continuing and discontinued operations

Basic losses per share are calculated by dividing the consolidated loss attributable to equity holders of the company for the year ended 30 June 2008 of HKD49,943,000 (2007: HKD2,280,000) by the weighted average number of shares in issue during the year/period of 242,064,474 shares (2007: 98,579,972 shares).

As there was no potential dilutive share, diluted losses per share equal the basic losses per share in 2007 and 2008.

From continuing operations

Basic earnings per share are calculated by dividing the consolidated profit attributable to equity holders of the company from continuing operations for the year ended 30 June 2008 of HKD2,629,000 (2007: loss of HKD6,493,000) by the weighted average number of shares in issue during the year/period of 242,064,474 shares (2007: 98,578,972 shares).

As there was no potential dilutive share in 2007 and 2008, diluted earnings per share from continuing operations equal the basic earnings per share from continuing operations..

From discontinued operation

Basic losses per share are calculated by dividing the consolidated loss attributable to equity holders of the company from discontinued operations for the year ended 30 June 2008 of HKD52,572,000 (2007: profit of HKD4,213,000) by the weighted average number of shares in issue during the year 242,064,474 shares (2007: 98,578,972 shares). 

As there was no potential dilutive share in 2008, diluted earnings per share from discontinued operation equal the basic earnings per share from discontinued operation.

9 Property, plant and equipment

(a) The group

			Furniture,
			fixtures
	Leasehold	Plant and	and	LED	Motor
	improvements	machinery	equipment	screens	vehicles	Total
	HKD'000	HKD'000	HKD'000	HKD'000	HKD'000	HKD'000
Cost
Acquisition of subsidiaries	85	15,574	123	13,571	-	29,353
Additions	-	12,560	49	28	-	12,637
Disposals	-	( 1,783)	-	-	-	( 1,783)
Exchange difference	1	202	6	179	-	388
At 30 June 2007	86	26,553	178	13,778	-	40,595
At 1 July 2007	86	26,553	178	13,778	-	40,595
Acquisition of a subsidiary	-	2,561	404	-	1,215	4,180
Additions	-	8,640	150	-	-	8,790
Disposals	-	(  653)	( 146)	-	( 313)	( 1,112)
Exchange difference	82	8,068	84	3,895	121	12,250
Reclassified as held for sale	( 168)	(34,339)	( 220)	(17,673)	-	(52,400)
At 30 June 2008	-	10,830	450	-	1,023	12,303
Accumulated depreciation and impairment loss
Charge for the period	46	1,473	22	956	-	2,497
Eliminated upon disposals	-	(   97)	-	-	-	( 97)
Impairment loss	-	1,827	1	1,854	-	3,682
At 30 June 2007	46	3,203	23	2,810	-	6,082
At 1 July 2007	46	3,203	23	2,810	-	6,082
Acquisition of a subsidiary	-	1,184	253	-	489	1,926
Charge for the year	29	3,964	136	1,499	261	5,889
Eliminated upon disposals	-	( 573)	( 138)	-	( 296)	( 1,007)
Impairment loss	-	9,660	-	1,717	-	11,377
Exchange difference	80	6,207	52	2,907	46	9,292
Reclassified as held for sale	( 155)	(21,575)	( 87)	( 8,933)	-	(30,750)
At 30 June 2008	-	2,070	239	-	500	2,809
Carrying value
At 30 June 2008	-	8,760	211	-	523	9,494
At 30 June 2007	40	23,350	155	10,968	-	34,513

In 2008, an impairment loss of HKD11,377,000 was provided for property, plant and equipment of the disposal group, which were measured by reference to their fair value less costs to sell when these assets were classified as held for sale.

In 2007, an impairment loss of HKD3,682,000, representing the write down of certain property, plant and equipment to the recoverable amount, was recognised in profit or loss. The recoverable amount was based on valuations performed by an external and independent valuer in the PRC.

9 Property, plant and equipment (continued)

(b) The company

				Furniture, fixtures and equipment
				HKD'000
Cost
At 30 June 2007 and 1 July 2007				28
Disposals				( 28)
At 30 June 2008				-
Accumulated depreciation
At 30 June 2007 and 1 July 2007				6
Charge for the year				6
Eliminated upon disposals				( 12)
At 30 June 2008				-
Carrying value
At 30 June 2008				-
At 30 June 2007				22

10 Trade and other receivables

	The group		The company
	2008	2007	2008	2007
	HKD'000	HKD'000	HKD'000	HKD'000
Trade debtors and bills receivable	11,373	31,712	-	-
Less: Allowance for doubtful debts (note 10(a))	(   109)	-	-	-
	11,264	31,712	-	-
Deposit for acquisition of a company	-	15,419	-	-
Deposit for development project	12,357	-	-	-
Other debtors, deposits and prepayments	7,198	7,262	1,268	163
	30,819	54,393	1,268	163
Reclassified as held for sale	(14,108)	-	-	-
	16,711	54,393	1,268	163

Included in trade and other receivables is the following amount denominated in a currency other than the company's functional currency to which they relate:

	The group		The company
	2008	2007	2008	2007
	FC'000	FC'000	FC'000	FC'000
Chinese Yuan Renminbi	CNY25,896	CNY53,863	-	-

(a) Impairment of trade debtors and bills receivable

Impairment losses in respect of trade debtors and bills receivable are recorded using an allowance account unless the group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade debtors and bills receivable directly.

The movements in the allowance for doubtful debts during the year, including both specific and collective loss components, arose through acquisition of a subsidiary in July 2007.

The group does not hold any collateral over these balances.

(b) Trade debtors and bills receivable that are not impaired

The ageing analysis of trade debtors and bills receivable that are neither individually nor collectively considered to be impaired are as follows:

	The group
	2008	2007
	HKD'000	HKD'000
Neither past due nor impaired	9,494	5,945
Less than one month past due	1,369	6,490
1 to 3 months past due	353	7,953
Over 3 months past due	48	11,324
	1,770	25,767
	11,264	31,712

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are considered fully recoverable. The group does not hold any collateral over these balances.

11 Cash and cash equivalents

	The group		The company
	2008	2007	2008	2007
	HKD'000	HKD'000	HKD'000	HKD'000
Cash and cash equivalents in the balance sheets	321	510	80	20
Cash and cash equivalents classified as
held for sale	108	-
Cash and cash equivalents in the consolidated
cash flow statement	429	510

Included in cash and cash equivalents is the following amount denominated in a currency other than the company's functional currency to which they relate:

	The group		The company
	2008	2007	2008	2007
	FC'000	FC'000	FC'000	FC'000
Chinese Yuan Renminbi	CNY278	CNY290	-	-

12 Material related party transaction

(a) Key management personnel remuneration

Remuneration for key management personnel of the group, including amounts paid to the company's directors as disclosed in note 5, is as follows:

		1.7.2007	4.7.2006
		To	to
		30.6.2008	30.6.2007
	Note	HKD'000	HKD'000
Short-term employee benefits		1,680	2,912
Equity-settled share-based payment expenses		-	659
Employee retirement benefits		-	199
		1,680	3,770

(b) Other related party transactions

Sales of raw materials and finished goods to - Guangdong Jian Long Da Electro-Optics Science & Technology Co. Limited ("PRC Strong Base")	(i),(v)	415	2,482
- Guangdong Yayi Photo Technology Limited ("Yayi")	(i),(v)	-	1,388
Purchases of raw materials and finished goods
from PRC Strong Base	(ii),(v)	256	13,674
Rental income received from PRC Strong Basey	(iii),(v)	831	928
Assignment of debts to PRC Strong Base	(iv),(v)	-	5,156

Notes:

(i) Sales to related companies are made at similar terms as the group grants to other customers.

(ii) Purchases from a related company are made on similar terms as the group enters into with other suppliers.

(iii) Rental income represents leasing of LED screens to a related company.

(iv) Assignment of debts represents a deposit paid by the group being taken by a related company.

(v) PRC Strong Base and Yayi are related companies of Shenzhen China-LED Photo-Technology Limited by virtue of interest of Mr. Lee Man Bun. The entire registered capital of PRC Strong Base and Yayi are indirectly held by Mr. Lee Man Bun, a substantial shareholder of the company.

ENDFR TTMRTMMIBBML

---

Related Shares:

Led International Holdings