31st Dec 2007 08:15
LED International Holdings Ltd31 December 2007 LED International Holdings Limited Announcement of Annual Results LED International Holdings Limited ("LED" or the "Company") is pleased toannounce its results for the period from 4 July 2006 (date of incorporation) to30 June 2007 (the "Period"). Highlights • The Company and its subsidiaries (the "Group") recorded turnover forthe Period per the audited consolidated financial statements of approximatelyHK$67.4 million. • Gross profit for the Period per the audited consolidated financialstatements was approximately HK$22.5 million and gross profit margin wasapproximately 33.4% in line with historical trend of the Group. The audited results include the results of the Group made up to 30 June 2007.Subsidiaries of the Company are fully consolidated from the date on whichcontrol is transferred to the Group and the purchase method of accounting isused to account for the acquisition of subsidiaries by the Group. As a result,the profit of subsidiaries are only consolidated from the date of completion ofgroup reorganisation, that is, 13 October 2006 to 30 June 2007 rather than from1 July 2007 to 30 June 2007 and therefore the results of the Group do notreflect the performance of the Group prior to its completion of groupreorganisation on 13 October 2006. Set out in the appendix to this announcementare the unaudited proforma consolidated balance sheet and income statement onthe basis they have been prepared in accordance with the pooling-of-interestmethod as if the Group had been in existence at 1st July 2005. Mr. Lee, Executive Chairman said: "I am pleased to report on the results of theGroup for the financial period to 30 June 2007, our first period as a publiccompany, which has proved to be an exciting but challenging period for LEDInternational Holdings Limited. The Company's Admission to the AIM in October2006 has given us the opportunity to access international capital markets andenhance our growing reputation in the commercial marketplace, particularly inAsia and Greater China market, where we see significant growth opportunities todevelop as an international Group and create greater value for our shareholders." The full audited accounts of the Company are available on the Company's websiteat www.led-intl.com and will be posted to shareholders in the next 7 days. Enquiries Mr. Lee Man Bun, Executive Chairman / Allan Wah Leung, CFO LED International +852 3111 6982 Romil Patel +44 20 7448 4400 Justin Lewis +61 3 8637 1540 Blue Oar Securities Plc CHAIRMAN'S STATEMENT Dear Shareholders INTRODUCTION I am pleased to report on the results of the Group for the financial period from4 July 2006 (dated of incorporation) to 30 June 2007, our first period as apublic company, which has proved to be an exciting but challenging period forLED International Holdings Limited ("LED International" or the "Company"). TheCompany's Admission to the AIM of the London Stock Exchange in October 2006 hasgiven us the opportunity to access international capital markets and enhance ourgrowing reputation in the commercial marketplace, particularly in Asia andGreater China market, where we see significant growth opportunities to developas an international Group and create greater value for our shareholders. LED International and its subsidiaries specialise in the development,manufacture and sale of low powered / low maintenance LED screens and other LEDproducts such as outdoor signs, lamps, lighting and building illumination. Thescreens are manufactured in a 'building block' format to a specific design,which allows screens to be assembled to suit a customer's size and definitionspecifications. We have been providing our customers with LED screens and other LED productssuch as signs, lamps, lighting and building illumination in the PRC and, as ourproduct range and skills base have grown, we are increasingly able to expand ourgeographic reach. The acquisition of 100% shareholding in Kepu ElectronicTechnology (Shenzhen) Company Limited has added momentum to our continued growthin the Greater China Region, in particular, the PRC market. Our objectives are to further develop our expertise in producing high quality,reliable and innovative LED products and solutions and to consolidate our salesnetwork throughout the Greater China region. With growing demand in the LEDindustry, both domestically and internationally, we remain confident in theGroup's long-term growth potential. FINANCIAL REVIEW Turnover and loss attributable to shareholders for the period from 4 July 2006(date of incorporation) to 30 June 2007 amounted to approximately HK$67.4million and HK$2.3 million respectively. Gross margin achieved during thisperiod was approximately 33.4 per cent in line with historical trend whilst theloss attributable to shareholders is primarily attributable to increase in otheroperating expenses arising from impairment loss on equipment, plant andmachinery of approximately HK$3.7 million and impairment loss on technologyknow-how of approximately HK$7.2 million. In respond to the intense market competition in LED products, the Group willstrength the research and development capability and brand-name building in LEDproducts, together with the Group's established brand, so as to maintaining acompetitive advantage and an continuing development prospect. Kepu Acquisition The acquisition of Kepu Electronic Technology (Shenzhen) Company Limited("Kepu"), announced on 1 May 2007 has obtained the government approval on 25July 2007. Kepu, equipped with the state-of-the-art production technology, willbring to the Group a strong manufacturing capability and capacity, an expandedLED product range, a broader customer base and adding new territories to theoperations as well as becoming a driver for the business growth going forward.As part of the consideration for acquisition, shares of LED International valuedat RMB 15 million will be issued to the vendor of Kepu, pending for therefreshment of general mandate for new share issue in the coming shareholderannual general meeting. To streamline the manufacturing base with a view toenhancing the production efficiency and to minimize the production cost as wellas to focus on cost-efficient manufacturing, have decided to shift itsmanufacturing facilities to Kepu but given the ample room of production facilityexpansion in Kepu the Group do not expect any significant impact on themanufacturing operations. Fund Raising Subsequent to the balance sheet date, the Group had issued 6,843,503 newordinary shares of HKD0.1 each with a strategic investor at 3 pence each,raising gross proceeds of approximately HK$3.1 million on 25 October 2007. Dividend The Directors are not recommending payment of a dividend at this stage in theCompany's development. It is the management's belief that the cash generated bythe business can be more effectively deployed by investing in our operations toensure the successful execution of the management's strategy, maximising theopportunity to create value for our shareholders. The Board is committed to theongoing review of the Group's dividend policy. Board Changes In view of the competitive operating environment, the Board keeps on reviewingits composition as well as the appointment of key management to strengthen ourcapability in sales and marketing, manufacturing, research and development,finance and accounting, with a view to further enhancing our overallcompetitiveness and business prospect. As a result there were some changes inour board members during the Period and the Board will seek furtheropportunities to strengthening the management team in 2008. In this respect,the current CEO Jim Kalok will not make himself available for re-appointment asa director at the coming annual general meeting and we will make an announcementin due course regarding his replacement. Prospect The Group will continue to invest in research and development so as to supplythe market with value-added, innovative high quality LED products. We will alsodedicate resources to strengthen our product range and customer base. In meetingneeds of different customers, the Group will further invest in research anddevelopment of energy-saving LED light source products in the coming years toenhance the competitiveness and completeness of its product offerings. After operating in a challenging year, the Group will position itself for abusiness growth and its continuous commitment to product innovation; focus onhigher-margin orders, enhancing cost competitiveness will enable it to overcomethe challenges and to maintain business growth. The Group will continue to review and adjust its existing product mix and speedup the process of new products development. In addition, the Company will alsolook for other potential investment opportunities that can enhance the Group'sgrowth momentum in the future including but not limited to further acquisitionopportunities. The Beijing Olympics is scheduled to be held in 2008 and the Shanghai Expo isscheduled to be held in 2010. The various major brands will capture thisopportunity to promote the brands in front of billions of audiences so as toincrease the public awareness of the brand name and one of the most effectivechannels is advertising through LED screen. The Group will capture thisopportunity to expand into LED outdoor media business and this will become oneof the major focus in our business development in 2008. To capitalize theexpertise in LED manufacturing and sales and established business network, theGroup will proactively identify LED outdoor media business opportunities inChina and bring this to be one of the major drivers for business growth. Appreciation Finally, on behalf of the Board, I would like to thank our customers, suppliersand shareholders for their continued support of LED International HoldingsLimited. I would also like to acknowledge the hard work of the management andall the staff for their contribution and dedication to the Group. Lee Man Bun Executive Chairman 29 December 2007 FINANCIAL REVIEW The audited consolidated financial statements include the financial statementsof the Company and its subsidiaries made up to 30 June 2007. Subsidiaries arefully consolidated from the date on which control is transferred to the Groupand the purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. As a result, the profits of subsidiaries are onlyconsolidated from the date of completion of reorganization, that is, 13 October2006 to 30 June 2007 rather than from 1 July 2007 to 30 June 2007. In the financial period from 4 July 2006 (date of incorporation) to June 2007,the Group recorded turnover per the audited consolidated financial statements atapproximately HK$67.4 million. Gross profit for the period per the auditedconsolidated financial statements was approximately HK$22.5 million and grossprofit margin was approximately 33.4% in line with historical trend of theGroup. Other income of approximately HK$1.2 million mainly included rentalincome of approximately HK$1.1 million from Strong Base Electronics OpticsTechnology Corporation, a related party by way of common ownership and control.Operating loss for the period was approximately HK$1.7 million and operatingloss margin was approximately 2.5%, both mainly arising from impairment loss onequipment, plant and machinery of approximately HK$3.7 million and impairmentloss on production technology know-how of approximately HK$7.2 million. Total operating expenses incurred by the Group during the Period wasapproximately HK$25.4 million, including, distribution costs of approximatelyHK$2.1 million, administrative expenses of HK$8 million and other operatingexpenses of approximately HK$15.3 million. These operating expenses were mainlycomprised of depreciation of fixed assets, amortization of intangible assets,research & development costs, wages & salaries (including share option costs),impairment losses on fixed assets and intangible assets and audit fees, totallyamounting to approximately HK$20.5 million (accounting for approximately 80% ofall operating expenses incurred by the Group in the current financial period). Should the audited financial statements include the results of subsidiaries from1 July 2006 to 13 October 2006 under merger accounting method, the recordedturnover be increased by approximately HK$37.7 million and the Group's result bechanged from loss of approximately HK$2.3 million to profit of approximatelyHK$8.5 million. In order to better present the performance of the Group and in consistence withthe presentation in the Admission Document, the income statement of the Group'smajor operating subsidiary, Shenzhen China-LED Photo-Technology Limited ("Shenzhen LED") is summarized as follows: Year ended Year ended 30 June 2007 30 June 2006 HK$'000 HK$'000 Turnover 105,138 101,942Cost of sales (69,230) (68,765)Gross profit 35,908 33,177Other revenue 1,679 1,649Distribution costs (1,675) (1,887)Administrative expenses (3,027) (1,755)Other operating expense (17,302) (3,115)Profit from operations 15,583 28,069Interest income 7 2Profit before taxation 15,590 28,071Taxation (586) -Profit after taxation 15,004 28,071 The significant decrease in profit of Shenzhen LED for the year ended 30 June2007 was due to the significant increase in other operating expenses thatincluded amortization of intangible assets of approximately HK$1.2 million,research and development costs of approximately of HK$3.5 million, impairmentloss on property, plant and equipment of approximately HK$3.7 million andimpairment loss on intangible of approximately of HK$7.2 million. Reconciliation from loss for the Period per the audited consolidated financialstatements of the Group to net profit of Shenzhen LED for the year ended 30 June2007 is as follows: HK$'000Loss for the Period as per the audited consolidated financial statements (2,279)Add: Net profit of Shenzhen LED for the period from 1 July 2006 to 13October 2006 10,791Profit for the year ended 30 June 2007 as if the existing group structure existed on 1 July 2006 8,512Add: Loss of LED International Holdings Limited 6,491Add: Loss of LED International (Far East) Limited 1Net profit of Shenzhen LED for the year ended 30 June 2007 15,004 The Board of Directors does not recommend any payment of a final dividend forthe period from 4 July 2006 (date of incorporation) to 30 June 2007 in order toretain more funds for future business growth and investment. Notwithstanding that the decrease in profitability is also a result of theincrease in once-off expenses that are expected to be not occurred in future,the Group have set clear operational and performance target to maintain thegrowth of our business and the Group is well prepared to address anticipatedexternal challenges LED INTERNATIONAL HOLDINGS LIMITED CONSOLIDATED INCOME STATEMENT FOR THE PERIOD FROM 4TH JULY 2006 (DATE OF INCORPORATION) TO 30TH JUNE 2007 2007 Note HKD'000 Revenue - turnover 6 67,413 Cost of sales (44,904) Gross profit 22,509 Other income 7 1,149 Distribution costs (2,071) Administration expenses (8,024) Other operating expenses (15,278) Operating loss 8 (1,715) Finance income 21 Loss before income tax (1,694) Income tax expense 9 (586) Loss after taxation (2,280) Loss per share 11- Basic (0.0231) - Diluted (0.0208) LED INTERNATIONAL HOLDINGS LIMITED CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE 2007 2007ASSETS Note HKD'000 Non-current assets Intangible assets 12 19,273Property, plant and equipment 13 34,513 53,786 Current assets Inventories 15 8,060Trade receivables 31,712Deposits for acquisition of a company 24 15,419Sundry debtors and prepayments 7,262Amounts due from related companies 16 11,962Cash and cash equivalents 510 74,925 Total assets 128,711 EQUITY AND LIABILITIES Shareholders' equity Share capital 17 13,687 Reserves 18 44,992 58,679 Current liabilities Trade payables 1,159Sundry creditors and accrued expenses 49,777Deposits received 2,464Amounts due to directors 186Taxation liabilities 16,446 70,032 Total equity and liabilities 128,711 . LED INTERNATIONAL HOLDINGS LIMITED COMPANY BALANCE SHEET AS AT 30TH JUNE 2007 2007ASSETS Note HKD'000 Non-current assets Property, plant and equipment 13 22Investment in subsidiaries 14 53,634 53,656 Current assets Prepayments 163Amounts due from subsidiaries 14 47,668Cash and cash equivalents 20 47,851 Total assets 101,507 EQUITY AND LIABILITIES Shareholders' equity Share capital 17 13,687 Reserves 18 40,003 53,690 Current liabilities Sundry creditors and accrued expenses 47,817 Total equity and liabilities 101,507 . LED INTERNATIONAL HOLDINGS LIMITED CONSOLIDATED CASH FLOW STATEMENT FOR THE PERIOD FROM 4TH JULY 2006 (DATE OF INCORPORATION) TO 30TH JUNE 2007 Note 2007 HKD'000Cash flows from operating activitiesLoss before income tax (1,694)Adjustments for: Interest income (21) Depreciation 2,497 Amortisation of intangible assets 1,116 Impairment loss on property, plant and equipment and 10,894intangible assets Share-based payments 976 Operating profit before working capital changes 13,768Movements in working capital elements: Inventories 865 Trade receivables 25,175 Sundry debtors and prepayments (2,340) Trade payables, sundry creditors and accrued expenses 14,475 Amounts due from related companies (11,963)Amounts due to directors 186 Cash generated from operations 40,166PRC taxes paid (27) Net cash generated from operating activities 40,139 Cash flows from investing activitiesPurchase of intangible assets (18,502)Purchase of property, plant and equipment (12,637)Net cash received in business combination 21(a) 417Deposits for acquisition of a company (15,419)Proceeds from disposals of property, plant and equipment 1,686Interest received 21 Net cash used in investing activities (44,434) Cash flows from financing activitiesIssue of shares 14,856Issuing costs (9,179) Net cash generated from financing activities 5,677 Net increase in cash and cash equivalents 1,382 Cash and cash equivalents at beginning of period - Effect of foreign exchange rate changes (872) Cash and cash equivalents at end of period 510 NOTES TO THE FINANCIAL STATEMENTS 1 GENERAL INFORMATION The Company was incorporated in Hong Kong on 4th July 2006 as a limitedliability company under the Hong Kong Companies Ordinance. The registered officeof the Company is located at Rooms 2002-2009, 20th Floor, Edinburgh Tower, TheLandmark, 15 Queen's Road Central, Hong Kong. Its principal place of business islocated at No.1 of Kezhi East Road, Hi-Tech Zone Nanshan, Shenzhen, PRC. The principal activities of the Company and its subsidiaries (hereinaftercollectively referred to as the "Group") are assembly and production of LEDsignboards, LED lighting and lighting engineering. The principal activity of theCompany is investment holding. The principal activities of its subsidiaries areset out in note 14 to the financial statements. On 23rd October 2006, the Company was admitted to trading on the AlternativeInvestment Market ("AIM") of the London Stock Exchange. 2 THE RESTRUCTURING EXERCISE Pursuant to a restructuring exercise to rationalise the structure of the Groupin preparation for the listing of the Company's shares on the AIM, the Companybecame the holding company of the subsidiaries now comprising the Group on 13thOctober 2006. Details of the restructuring exercise are set out in the Company'sadmission documents dated 23rd October 2006. As part of the group restructuring, on 13th October 2006, in consideration forthe shareholders of LED International (Far East) Limited transferring the entireshare capital in LED International (Far East) Limited, the immediate holdingcompany of Shenzhen China-LED Photo-Technology Ltd to the Company, an aggregateof 119,370,055 ordinary shares of HKD0.10 each of the Company were allotted andissued, credited as fully paid. 3 BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE The financial statements have been prepared in accordance with InternationalFinancial Reporting Standards ("IFRSs"), which comprise International FinancialReporting Standards ("IFRS"), International Accounting Standards ("IAS") andInterpretations ("IFRIC"), issued by the International Accounting StandardsBoard and the International Financial Reporting Interpretations Committee. The financial statements have been prepared on the historical cost basis, exceptfor the revaluation of certain financial instruments. The functional currency of the principal company within the Group is Renminbi ("RMB"). However, the financial statements are presented in Hong Kong Dollars ("HKD") in order to conform with that of the Company and all values are rounded tothe nearest thousand except when otherwise indicated. 3 BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE (Continued) Impact of recently issued IFRSs In the current year, the Group has adopted the following new and revised IFRSsthat are relevant to its operations and effective for accounting periodsbeginning on or after 1st July 2006: Amendment to IAS 19 Actuarial gains and losses, group plans and disclosures Amendment to IAS 21 Net investment in a foreign operation Amendment to IAS 39 Fair value option IFRIC 4 Determining whether an arrangement contains a lease IFRIC 8 Scope of IFRS 2 The adoption of the above IFRSs did not result in substantial changes to theGroup's accounting policies. IFRSs issued but not yet effective At the date of approval of these financial statements, the following IFRSs wereissued but not yet effective: Amendment to IAS 1 (Note a) Presentation of financial statements: Added disclosures about an entity's capitalAmendment to IAS 1 (Note b) Presentation of financial statements: Comprehensive revision including requiring a statement of comprehensive incomeAmendment to IAS 23 (Note b) Borrowing costsIFRS 7 (Note a) Financial instruments: DisclosuresIFRS 8 (Note b) Operating segmentsIFRIC 11 (Note c) IFRS 2: Group and treasury share transactionsIFRIC 12 (Note d) Service concession arrangements'IFRIC 13 (Note e) Customer loyalty programmesIFRIC 14 (Note d) IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction Notes: a) effective for annual periods beginning on or after 1st January 2007b) effective for annual periods beginning on or after 1st January 2009c) effective for annual periods beginning on or after 1st March 2007d) effective for annual periods beginning on or after 1st January 2008e) effective for annual periods beginning on or after 1st July 2008 The Directors do not anticipate that the adoption of these IFRSs in futureperiods will have a material impact on the financial statements of the Group. The preparation of financial statements in conformity with IFRSsrequires the use of certain key assumptions and estimates. It also requiresmanagement to exercise its judgements in the process of applying the accountingpolicies. The areas involving critical judgements and areas where assumptionsand estimates are significant to these financial statements are disclosed innote 4 to the financial statements. The significant accounting policies applied in the preparation of thesefinancial statements are set out below. 4 SIGNIFICANT ACCOUNTING POLICIES a) Consolidation The consolidated financial statements include the financial statements of theCompany and its subsidiaries made up to 30th June each year. Subsidiaries are entities over which the Group has control. Control is thepower to govern the financial and operating policies of an entity so as toobtain benefits from its activities. The existence and effect of potentialvoting rights that are currently exercisable or convertible are considered whenassessing whether the Group has control. Subsidiaries are fully consolidatedfrom the date on which control is transferred to the Group. They arede-consolidated from the date the control ceases. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group. The cost of an acquisition is measured as the fairvalue of the assets given, equity instruments issued and liabilities incurred orassumed at the date of exchange, plus costs directly attributable to theacquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at theirfair values at the acquisition date, irrespective of the extent of any minorityinterest. The excess of the cost of acquisition over the fair value of theGroup's share of the identifiable net assets acquired is recorded as goodwill.If the cost of acquisition is less than the fair value of the net assets of thesubsidiary acquired, the difference is recognised directly in the incomestatement. Intra-group transactions, balances and unrealised profits on transactionsbetween group companies are eliminated. Unrealised losses are also eliminatedbut considered an impairment indicator of the asset transferred. Accountingpolices of subsidiaries have been changed where necessary to ensure consistencywith the policies adopted by the Group. In the Company's balance sheet, investments in subsidiaries are stated at costless allowance for impairment losses. The results of subsidiaries are accountedfor by the Company on the basis of dividends received and receivable. b) Intangible assets - production technology know-how The initial costs of acquiring production technology know-how arecapitalised and amortised on the straight-line basis over their expected usefullives of 10 years. This charge is included in other operating expenses. Thecost of renewing production technology know-how is charged to the incomestatement. c) Property, plant and equipment Property, plant and equipment are stated at cost less accumulateddepreciation and impairment losses. Depreciation of property, plant and equipment is calculated, using thestraight-line basis, to write off the cost of each asset less residual valueover its estimated useful life on the following principal annual rates: Leasehold improvements Terms of lease Plant and machinery 10% Furniture, fixtures and equipment 20% LED screens 10% c) Property, plant and equipment (Continued) The residual values, useful lives and depreciation method arereviewed and adjusted, if appropriate, at each balance sheet date. Subsequent expenditure relating to property, plant and equipment that hasalready been recognised is added to the carrying amount of the asset only whenit is probable that future economic benefits and the cost of the item can bemeasured reliably will flow to the enterprise. All other subsequent expenditureis recognised as an expense in the period in which it is incurred. The gain or loss arising from the disposal or retirementof an asset is determined as the difference between the sales proceeds and thecarrying amount of the asset and is recognised in the income statement. d) Goodwill Goodwill arising on the acquisition of subsidiaries represents the excess of thecost of the business combination over the Group's interest in the net fair valueof the acquirees' identifiable assets acquired, and liabilities and contingentliabilities assumed as at the date of acquisition. Goodwill arising on acquisition is recognised in the consolidated balance sheetas an asset, initially measured at cost and subsequently at cost less anyaccumulated impairment losses. The carrying amount of goodwill is reviewed forimpairment annually or more frequently if events or change in circumstancesindicate that the carrying value may be impaired. An excess of the Group's interest in the net fair value of the acquiree'sidentifiable assets, liabilities and contingent liabilities over the cost of abusiness combination is recognised immediately in the consolidated incomestatement. e) Impairment of assets Assets that have an indefinite useful life are not subject toamortisation. Such assets are tested at least annually for impairment and arereviewed for impairment whenever events or changes in circumstances indicatethat the carrying amount may not be recoverable. Assets that are subject toamortisation are reviewed for impairment whenever events or change incircumstances indicate that the carrying amount may not be recoverable in full. An impairment loss is recognised in respect of the amount bywhich an asset's carrying amount exceeds its recoverable amount. Therecoverable amount is the higher of an asset's fair value less costs to sell andvalue in use. Impairment losses are recognised in the income statement exceptwhere the asset is carried at valuation and the impairment loss does not exceedthe revaluation surplus for that same asset, in which case it is treated as arevaluation decrease. An impairment loss is reversed if there has been a change in theestimates used to determine the recoverable amount. A reversal of an impairmentloss is limited to the asset's carrying amount that would have been determinedhad no impairment loss been recognsied in prior years. Reversals of impairmentlosses are credited to the income statement except where the asset is carried atvaluation, in which case the reversal of impairment loss is treated asrevaluation increase. f) Inventories Inventories are stated at the lower of cost and net realisable value. Cost,calculated on the first-in, first-out basis, comprises raw materials, directlabour, other direct costs and an appropriate proportion of all productionoverhead expenditure. Net realisable value is determined on the basis ofanticipated sales proceeds less estimated costs of completion and sellingexpenses. g) Trade and other receivables Trade and other receivables are initially recognised at fair value andthereafter stated at amortised cost less impairment losses for bad and doubtfuldebts, except where the receivables are interest-free loans made to relatedparties without any fixed repayment terms or the effect of discounting would notbe material. In such cases, the receivables are stated at cost less impairmentlosses for bad and doubtful debts. h) Trade and other payables Trade and other payables are initially recognised at fair value and thereafterstated at amortised cost unless the effect of discounting would not be material,in which case they are stated at cost. i) Cash and cash equivalents Cash and cash equivalents represent cash at bank and on hand, demand depositswith banks and other financial institutions, and short-term highly liquidinvestments which are readily convertible into known amounts of cash and subjectto an insignificant risk of changes in value. j) Revenue recognition Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for goods and services provided inthe normal course of business, net of discounts, VAT and other sales relatedtaxes. Rental income is accounted for when the rent falls due under the terms of theunderlying lease agreements. Interest income is accrued on a time basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts though the expected lifeof the financial asset to that asset's net carrying amount. k) Operating leases As a lessee Leases where substantially all the risk and rewards of ownership of assetsremain with the leasing company are accounted for as operating leases. Paymentsmade under operating leases net of any incentives from the leasing company arecharged to the income statement on a straight-line basis over the lease period. As a lessor Rental income, included rentals charged in advances from LED Screens let underoperating leases, is recognised in the income statement on a straight-line basisover the terms of the relevant leases. l) Translation of foreign currencies These financial statements are presented in HKD, which is the Company'sfunctional and presentation currency. Each entity in the Group determines itsown functional currency and items included in the financial statements of eachentity are measured using that functional currency. In preparing the financial statements of the individual entities, transactionsin currencies other than the entity's functional currency (foreign currencies)are recorded at the rates of exchange prevailing on the date of thetransactions. At each balance sheet date, monetary items denominated in foreigncurrencies are retranslated at the rates prevailing on the balance sheet date.Non-monetary items carries at fair value that are denominated in foreigncurrencies are retranslated at the rates prevailing on the date when the fairvalue was determined. Non-monetary items that are measured in terms ofhistorical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on theretranslation of monetary items, are included in the income statement for theperiod. Exchange differences arising on the retranslation of non-monetary itemscarried at fair value are included in the income statement for the period exceptfor differences arising on the retranslation of non-monetary items in respect ofwhich gains and losses are recognised directly in equity. For such non-monetaryitems, any exchange component of that gain or loss is also recognised directlyin equity. For the purpose of presenting consolidated financial statements, the assets andliabilities of the Group's foreign operations are expressed in HKD usingexchange rates prevailing on the balance sheet date. Income and expense itemsare translated at the average exchange rate for the year, unless exchange ratefluctuated significantly during that period, in which case that exchange rate atthe dates of the transactions are used. Exchange differences arising, if any,are classified as equity and transferred to the Group's translation reserve. m) Employee benefits Pension obligations The Group operates a defined contribution retirement benefitsscheme (the "MPF Scheme") under the Mandatory Provident Fund Schemes Ordinance,for those employees who are eligible to participate in the MPF Scheme.Contributions are made based on a percentage of the empoloyees' basic salariesand are charged to the income statements as they become payable in accordancewith the rules of the MPF Scheme. The assets of the MPF scheme are heldseparately from those of the Group in an independently administered fund. TheGroup's employer contributions vest fully with the employees when contributedinto the MPF Scheme. The employees of the Group's subsidiaries which operate in thePeople's Republic of China ("PRC") are required to participate in a centralpension scheme operated by the local municipal government. The subsidiaries arerequired to contribute a certain percentage of the payroll costs to the centralpension scheme. The contributions are charged to the income statement as theybecome payable in accordance with the rules of the central pension scheme. The Group's contributions to the defined contribution retirementscheme are expensed as incurred. Share-based payments The fair value of services received determined by reference to the fairvalue of share options granted at the grant date is expensed over the relevantvesting periods to the income statement, with the corresponding amount creditedto share-based employee compensation reserve within equity. n) Taxation Income tax represents the sum of the current tax and deferred tax. The tax currently payable is based on taxable profit for the period. Taxableprofit differs from profit before tax as reported in the income statementbecause it excludes items of income or expense that are taxable or deductible inother years and it further excludes items that are never taxable or deductible.The Group's liability for current tax is calculated using tax rates that havebeen enacted or substantively enacted by the balance sheet date. Deferred tax is recognised using the balance sheet liability method, providingfor temporary differences between the carrying amounts of assets and liabilitiesfor financial reporting purposes and the amounts used for taxation purposes.Deferred tax is not recognised for the following temporary differences: theinitial recognition of goodwill, the initial recognition of assets orliabilities in a transaction that is not a business combination and that affectsneither accounting nor taxable profit, and differences relating to investmentsin subsidiaries and associates to the extent that they probably will not reversein the foreseeable future. Deferred tax is calculated at the tax rates that areexpected to be applied to the temporary differences when they reverse, based onthe tax rates that have been enacted or substantively enacted by the balancesheet date. Deferred tax is charged or credited to the income statement, exceptwhen it relates to items charged or credited directly to equity, in which casethe deferred tax is also dealt with in equity. n) Taxation (continued) The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax assets and liabilities are offset when there is a legallyenforceable right to set off current tax assets against current tax liabilitiesand when they relate to income taxes levied by the same taxation authority andthe Group intends to settle its current tax assets and liabilities on a netbasis. o) Related parties A party is related to the Group if: i) directly or indirectly through one or moreintermediaries, the party controls, is controlled by, or is under common controlwith, the Group; has an interest in the Group that gives it significantinfluence over the Group, or has joint control over the Group; ii) The party is an associate; iii) The party is a joint venture; iv) The party is a member of the key management personnel of the Company or its parent; v) the party is a close member of the family of any individual referred toin (i) or (iv); vi) the party is an entity that is controlled, jointly controlled orsignificantly influenced by or for which significant voting power in such entityresides with, directly or indirectly, any individual referred to in (iv) or (v);or vii) the party is a post-employment benefit plan for the benefit of employeesof the Group, or of any entity that is a related party of the Group. 5 FINANCIAL RISK MANAGEMENT Save as disclosed elsewhere in the financial statements, the Group'sfinancial activities expose it to a variety of potential financial risks:foreign currency risk, credit risk, liquidity risk and cash flow interest-raterisk. The Group's overall risk management programme focuses on the overallunpredictability of financial markets and seeks to minimise potential adverseeffects on the Group's financial performance. a) Foreign currency risk The Group's monetary assets and transactions are predominately in RMBand HKD. As there is insignificant fluctuation in the exchange rate between RMBand HKD, the Group does not expect any significant exposure to foreign currencyrisk. Conversion of RMB into foreign currencies is subject to PRC ForeignExchange Control Regulations and Administration of Settlements, Sale and Paymentof Foreign Exchange Regulations. b) Credit risk The Group has no significant concentration of credit risk. It has policies inplace to ensure that sales of products are made to customers with appropriatecredit history or in cash. 5 FINANCIAL RISK MANAGEMENT (Continued) c) Liquidity risk The Group has a policy of prudent liquidity risk management, which impliesmaintaining sufficient cash and having in place the availability of sufficientfunding. d) Cash flow interest-rate risk As the Group has no significant interest-bearing assets and liabilities,the Group's cash flow from operating activities are substantially independent ofchanges in market interest rates. e) Fair value The carrying amounts of the financial assets and financial liabilities asreflected in the balance sheets approximate their respective fair values. 6 REVENUE a) Revenue represents the sales of LED signboards, LED lighting andlighting engineering. b) Segment information i)Business segment The Group is principally engaged in the assembly and production of LEDsignboards, LED lighting and lighting engineering. All of the Group's productsare of similar nature and subject to similar risk and returns. Accordingly, theGroup's activities are attributable to a single business segment. ii) Geographical segment The Group's operations are located in Hong Kong and the PRC. Nearly all salesrevenue, assets and capital additions are located in PRC. 7 OTHER INCOME 2007 HKD'000 Rental income 1,099Other income 50 1,149 8 OPERATING LOSS Operating loss is stated after charging the following: 2007 HKD'000 Amortisation of intangible assets 1,116 Auditors' remuneration 666 Cost of inventories sold 42,784 Depreciation 2,497 Staff costs (including directors remuneration)- Salaries, allowance and benefit-in-kind 6,824- Retirement benefit scheme contributions 393- Share-based payments 733 7,950Impairment loss- Property, plant and equipment 3,682- Intangible assets 7,212 10,894 Research and development costs 2,501 Rental charges under operating leases- Land and buildings 493- Plant and machinery 586 1,079 Note: Cost of inventories sold includes approximately HKD4,829,000 relating tostaff costs and depreciation and rental charges which are included in therespective amounts disclosed separately above for each of these types ofexpenses for the financial period ended 30th June 2007. 9 INCOME TAX EXPENSE The amount of income tax expense charged to the consolidated incomestatement represents: 2007 HKD'000 PRC enterprise income tax 586 a) PRC enterprise income tax Subsidiaries operating in the PRC are subject to state and local income tax inthe PRC at their respective tax rates based on the taxable income reported intheir statutory financial statement in accordance with applicable state andlocal income tax laws. Following approval by the charge tax bureau, pursuant to the relevant PRC incometax rules and regulations, being a foreign investment enterprise, ShenzhenChina-LED Photo-Technology Ltd. ("Shenzhen LED") was entitled to exemption fromPRC foreign enterprise income tax for the two years ended 31st December 2006 andis entitled to a 50% reduction from PRC foreign enterprise income tax for thethree years ending 31st December 2009 ("tax holiday"). Shenzhen LED is subject to state and local income taxes in the PRC at standardrates of 12% and 3% respectively in accordance with the PRC foreign enterpriseincome tax law, applicable to wholly owned foreign enterprise. Pursuant to the PRC Enterprise Income Tax Law (the "New Law") passed by theTenth National People's Congress on 16th March 2007, the new PRC income taxrates for domestic and foreign enterprises are unified at 25% effective from 1stJanuary 2008. Under the New Law, entities that are currently entitled topreferential tax rates may continue to enjoy the tax benefits. As detailedmeasures concerning the tax incentives have not been issued by the StateCouncil, the management of the Group is not yet in a position to assess theimpact, if any. The Group will continue to evaluate the impact when moredetailed regulations are announced. b) Hong Kong profits tax No Hong Kong profits tax has been provided as the Group had no assessable profitarising in or derived from Hong Kong. c) Deferred taxation No provision for deferred taxation has been made as there was no materialtemporary differences at the balance sheet date. d) The actual tax expense can be reconciled to the loss before income tax inthe consolidated income statement as follows: 2007 HKD'000 Loss before income tax (961) Notional tax at the applicable tax rate of 7.5% (72)Tax effect of overseas tax rate differences (576)Tax effect of unused tax losses not recognised 1,234 Actual tax expense 586 10 EMPLOYEES AND DIRECTORS 2007 HKD'000 Staff costs (including directors' emoluments) Wages and salaries 6,719 Share-based payments 733 Employee retirement benefits 393 Other employee benefits 105 7,950 2007 Number Average monthly number of people (including directors) employed: - production 40 - selling and distribution 17 - general and administrative 184 241 10 EMPLOYEES AND DIRECTORS (Continued) Provident fund and Salaries Share-based 2007 Fee and bonus other benefit payments Total HKD'000 HKD'000 HKD'000 HKD'000 HKD'000 Directors' emolumentsExecutive Directors Chau, Hong Ming Peter - 710 110 147 967 Cragg, Mervyn Russell - 990 127 220 1,337 Jim, Ka Lok - 408 47 - 455 Lee, Man Bun - 160 14 - 174 Sam Tian - 108 5 146 259 - 2,376 303 513 3,192 Non-executive Directors Martin, Ian Paul 216 - - 73 289 Miu, Ka Keung Kevin 216 - - 73 289 432 - - 146 578 Total 432 2,376 303 659 3,770 11 LOSS PER SHARE 2007 HKD'000 Loss Loss attributable to shareholders used in diluted (2,280) loss per share calculation Weighted average number of shares 2007 Number of shares '000Weighted average number of ordinary shares 98,579 used in basic loss per share calculationEffect of dilutive potential shares in respect of share options 10,817 Weighted average number of ordinary shares 109,396 used in diluted loss per share calculation 12 INTANGIBLE ASSETS Group Technology know-how HKD'000 Cost Acquisition of subsidiaries 8,640Additions 18,502Exchange difference 459 At 30th June 2007 27,601 Accumulated amortisation and impairment lossCharge for the period 1,116Impairment loss 7,212 At 30th June 2007 8,328 Carrying amountAt 30th June 2007 19,273 Impairment of intangible assets In 2007, an impairment loss of HKD7,212,000, representing the write down ofcertain technology know-how to the recoverable amount, has been recognised inthe income statement. The recoverable amount was based on valuations of themarket values performed by an external and independent valuer in the PRC. 13 PROPERTY, PLANT AND EQUIPMENT Group Furniture, fixtures Leasehold Plant and and LED improvements machinery equipment screens Total HKD'000 HKD'000 HKD'000 HKD'000 HKD'000Cost Acquisition of 85 15,574 123 13,571 29,353 subsidiariesAdditions - 12,560 49 28 12,637Disposals - (1,783) - - - (1,783)Exchange difference 1 202 6 179 388 At 30th June 2007 86 26,553 178 13,778 40,595 Accumulated depreciation and impairment lossCharge for the period 46 1,473 22 956 2,497Eliminated upon - (97) - - (97) disposalsImpairment loss - 1,827 1 1,854 3,682 At 30th June 2007 46 3,203 23 2,810 6,082 Net book valueAt 30th June 2007 40 23,350 155 10,968 34,513 Impairment of property, plant and equipment In 2007, an impairment loss of HKD3,682,000, representing the write down ofcertain property, plant and equipment to the recoverable amount, has beenrecognised in the income statement. The recoverable amount was based onvaluations of the market values performed by an external and independent valuerin the PRC. Company Furniture, fixtures and equipment HKD'000CostAdditions and at 30th June 2007 28 Accumulated depreciationCharge for the period and at 30th June 62007 Net book valueAt 30th June 2007 22 14 INVESTMENT IN SUBSIDIARIES 2007 HKD'000 Unlisted investments, at cost 53,634Due from subsidiaries 47,668 101,302 The amounts due from subsidiaries are non-trade in nature, unsecured,interest-free and have no fixed terms of repayment. Details of subsidiaries as at 30th June 2007 are as follows: Percentage of equity Principal interest attributable to activities Place of the Group Name incorporation Directly held:LED International (Far East) Hong Kong 100% InvestmentLimited holding Indirectly held:Shenzhen China-LED PRC 100% Assembly and productionPhoto-Technology Ltd of LED signboards, LED lighting and lighting engineering 15 INVENTORIES 2007 HKD'000Raw materials 690Work in progress 4,944Finished goods 2,426 8,060 16 AMOUNTS DUE FROM RELATED COMPANIES The amounts due from related companies are unsecured and interest free. 17 SHARE CAPITAL Note Number of HKD'000 sharesAuthorised: Ordinary shares of HKD1.00 eachat the date of incorporation (a) 10,000 10Share reorganisation (b)(i) 90,000 -Increase in authorised share capital (b)(ii) 199,900,000 19,990 Ordinary shares of HKD0.10 each 200,000,000 20,000 at 30th June 2007 Issued and fully paid: Ordinary shares of HKD1.00 each at the date of incorporation (a) 1 -Share reorganisation (b)(i) 9 -Issue of new shares (c) 12,500,000 1,250Issue of new shares (d) 119,370,055 11,937Issue of new shares (e) 5,000,000 500 Ordinary shares of HKD0.10 eachat 30th June 2007 136,870,065 13,687 Note: (a) The Company was incorporated on 4th July 2006 with an authorisedshare capital of HKD10,000 divided into 10,000 ordinary shares of HKD1.00 each.Upon incorporation, one ordinary share was allotted and issued at par to ashareholder. (b) Pursuant to written resolutions dated 10th August 2006, (i) the authorised and issued share capital of the Company wasreorganised in that one ordinary share of HKD1.00 each was subdivided into 10ordinary shares of HKD0.10 each; and (ii) The authorised share capital was increased from HKD100,000 dividedinto 100,000 ordinary shares of HKD0.10 each to HKD20,000,000 divided into200,000,000 ordinary shares of HKD0.10 each by the creation of additional199,900,000 shares of HKD0.10 each. (c) Pursuant to a written resolution dated 12th October 2006,12,500,000 ordinary shares of HKD0.10 each were issued for 4 pence per share. (d) On 13th October 2006, 119,370,055 ordinary shares of HKD0.10 eachwere allotted and issued to the shareholders of LED International (Far East)Limited in consideration for transferring the entire share capital in LEDInternational (Far East) Limited. (e) On 23rd October 2006, 5,000,000 ordinary shares of HKD0.10 eachwere issued for 10 pence per share upon the placing of shares on the AIM. 18 RESERVES Group Share Share option Exchange Capital Accumulated premium reserve reserve reserve losses Total HKD'000 HKD'000 HKD'000 HKD'000 HKD'000 HKD'000 Issue of shares for 41,697 - - - - 41,697group restructuringIssue of new shares 13,002 - - 104 - 13,106Issuing costs (9,179) - - - - (9,179)Loss for the period - - - - (2,280) (2,280)Currency translation - - 673 - - 673differencesShare-based payments - 975 - - - 975 At 30th June 2007 45,520 975 673 104 (2,280) 44,992 Company Share Share option Accumulated premium reserve losses Total HKD'000 HKD'000 HKD'000 HKD'000 Issue of shares for 41,697 - - 41,697group restructuringIssue of new shares 13,002 - - 13,002 Issuing costs (9,179) - - (9,179) Share-based payments - 975 - 975Loss for the period - - (6,492) (6,492) At 30th June 2007 45,520 975 (6,492) 40,003 19 SHARE-BASED PAYMENTS Movements in the number of share options outstanding and their related weightedaverage exercise prices attributable to the employees of the Group as granteesof the share option scheme operated by LED International Holdings Limited are asfollows: Weighted Number of average options exercise price (pence) (Note) Granted Employees and directors 10.00 13,687,009 Corporate Synergy Plc 11.25 5,474,802 Outstanding at 30th June 2007 10.36 19,161,811 Exercisable at 30th June 2007 11.25 5,474,802 The above share options outstanding as at 30th June 2007 have the followingremaining contractual lives and exercise prices: Number of Weighted options averageExercise price outstanding remaining (pence) (Note) contractual life 10.00 16,424,410 4.3 12.50 2,737,401 4.3 Outstanding at 30th June 2007 19,161,811 4.3 Notes: a) Number of options represents the number of ordinary shares in LEDInternational Holdings Limited into which the options are exercisable. b) The Company's management option agreement is established for the purposeof providing incentives to the directors and employees of the Group. On 16thOctober 2006, 13,687,009 share options were granted at an exercise price of 10pence per share to the Group's management. The share option can be exercised asfollows: the first third at the first anniversary of Admission; the second thirdafter the second anniversary of Admission; and the final third after the thirdanniversary of Admission. c) Under the CS Option Agreement entered into with Corporate Synergy Plcdated 16th October 2006, 5,474,802 share options were granted to CorporateSynergy Plc in settlement of their corporate finance fees and commissions at anexercise price of 10 pence in respect of the first 2,737,401 shares and at anexercise price of 12.5 pence in respect of the remaining 2,737,401 shares. Theoptions granted can be exercised in whole or in part at any time in the 5 yearsfollowing Admission on 23rd October 2006. d) At 30th June 2007, the number of shares in respect of which options hadbeen granted and remained outstanding under the option agreements was19,161,811, representing approximately 14% of the issued shares of the Companyat that date. 20 COMMITMENTS a) Operating lease commitments At 30th June 2007, the Group's total future minimum lease payments undernon-cancellable operating leases were as follows: 2007 HKD'000 Within one year 525In the second to fifth years inclusive 299 824 Operating lease payments represent rental payable by the Group for certain ofmanufacturing plants and office premises. Leases are negotiated, and rentalsfixed, for an average term from one to three years. b) Operating lease arrangements At 30th June 2007, the Group's total future minimum lease payments undernon-cancellable operating leases were as follows: 2007 HKD'000 Within one year 774 Operating lease income represents rental receivable by the Group for LEDscreens. Leases are negotiated, and rentals fixed, for an average term of threeyears. 21 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (a) Acquisition of subsidiaries On 13th October 2006, the Group acquired the entire issued and paid-up sharecapital of LED International (Far East) Limited, the immediate holding companyof Shenzhen China-LED Photo-Technology Ltd, satisfied by way of issue of sharesof the Company pursuant to the restructuring exercise as set in note 2. Thistransaction has been accounted for by the purchase method of accounting. Thefair values of the identifiable assets and liabilities of the subsidiariesacquired have no significant differences from their respective carrying amounts.The net assets acquired in the transaction are as follows: Acquiree's consolidated carrying amount and fair value HKD'000 Net assets acquired:Property, plant and equipment 29,353Intangible assets 8,640Inventories 8,809Trade receivables 56,145Sundry debtors and prepayments 289Bank and cash balance 417Trade payables (1,069)Sundry creditors and accrued expenses (37,815)Amount due to holding company (2)Taxation liabilities (11,133) Total consideration 53,634 Satisfied by: Fair value of ordinary shares issued 53,634 Analysis of the net cash inflow on acquisition of subsidiariesas follows: HKD'000 Purchase consideration satisfied by cash -Cash acquired 417 Net cash inflow on acquisition of subsidiaries 417 LED International (Far East) Limited and its subsidiary Shenzhen China-LEDPhoto-Technology Ltd contributed approximately HKD67,413,000 and HKD4,212,000 tothe Group's revenue and profit respectively for the period from the date ofacquisition to the balance sheet date. (b) Major non-cash transactions On 13th October 2006, 119,370,055 ordinary shares of HKD0.10 each were issued tothe shareholders of the LED International (Far East) Limited in exchange for100% holding of LED International (Far East) Limited. 22 RELATED PARTY TRANSACTIONS (a) Save as disclosed elsewhere in the financial statements, theGroup had the following significant related party transactions during theperiod: 2007 HKD'000 Sales of finished goods to: Guangdong Jian Long Da Electro-Optics Science & Technology Co. Ltd ("PRC Strong Base") 2,482 Guangdong Yayi Photo Technology Limited ("Yayi") 1,388 3,870Purchases of raw materials and finished goods from: Guangdong Jian Long Da Electro-Optics Science & Technology Co. Ltd ("PRC Strong Base") 13,674 Rental income received from: Guangdong Jian Long Da Electro-Optics Science & Technology Co. Ltd ("PRC Strong Base") 928 Assignment of debts to: Guangdong Jian Long Da Electro-Optics Science & Technology Co. Ltd ("PRC Strong Base") 5,156 Note: The purchases were charged at prices and terms comparablewith those charged to and contracted with independent third parties. PRC Strong Base and Yayi are related companies of Shenzhen China-LEDPhoto-Technology Ltd by virtue of Mr. Lee Man Bun's interest. The entireregistered share capital of PRC Strong Base and Yayi are indirectly held by Mr.Lee Man Bun, a director of the Company. (b) At 30th June 2007, the Group had following amounts due fromrelated companies: 2007 HKD'000 Guangdong Jian Long Da Electro- Optics Science & 8,133 Technology Co. Ltd ("PRC Strong Base")Guangdong Yayi Photo Technology Limited ("Yayi") 3,829 11,962 The amounts due from related companies were of trade nature. (c) Compensation of key management personnel 2007 HKD'000 Wages and salaries 2,912 Share-based payments 659 Employee retirement benefits 199 3,770 The Directors are of the opinion that the related party transactionswere conducted in the ordinary course of business. 23 CAPITAL COMMITMENTS At 30th June 2007, the Group had capital expenditure commitment in respect ofacquisition of a company as follows: 2007 HKD'000 Acquisition of a company Contracted but not provided for 15,419 24 EVENT AFTER THE BALANCE SHEET DATE On 4th April 2007, LED International (Far East) Limited entered into anacquisition agreement to acquire the entire issued share capital of KepuElectronic Technology (Shenzhen) Company Limited ("Kepu") from a third party ata consideration of RMB30,000,000. Kepu, through its wholly owned subsidiary inPRC, is principally engaged in manufacturing LED signboards. In accordance with terms of the acquisition agreement, a payment ofRMB15,000,000 has been made at the balance sheet date and the transaction wascompleted on 28th July 2007. The balance payment of RMB15,000,000 is to be madeby issue of new shares of the Company. 25 COMPARATIVE FIGURES The Company was incorporated on 4th July 2006 (date of incorporation) andaudited financial statements have not previously been prepared. Accordingly,there are no comparative figures. 26 APPROVAL OF THE FINANCIAL STATEMENTS The financial statements were approved and authorised for issue by the Board ofDirectors on 29th December 2007. APPENDIX The audited results include the results of the Group made up to 30 June 2007.Subsidiaries of the Company are fully consolidated from the date on whichcontrol is transferred to the Group and the purchase method of accounting isused to account for the acquisition of subsidiaries by the Group. As a result,the profit of subsidiaries are only consolidated from the date of completion ofgroup reorganisation, that is, 13 October 2006 to 30 June 2007 rather than from1 July 2007 to 30 June 2007 and therefore the results of the Group do notreflect the performance of the Group prior to its completion of groupreorganisation on 13 October 2006. Set out below are the unaudited proformaconsolidated balance sheet and income statement on the basis they have beenprepared in accordance with the pooling-of-interest method as if the Group hadbeen in existence at 1st July 2005. UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEET AS AT 30TH JUNE 2007 2007 2006 HKD'000 HKD'000ASSETSNon-current assetsIntangible assets 19,273 8,574Property, plant and equipment 34,513 28,812 53,786 37,386 Current assets Inventories 8,060 2,199 Trade receivables 31,712 31,130Sundry debtors and prepayments 22,681 373 Amounts due from related companies 11,962 14,657Cash and bank balances 510 65 74,925 48,424 Total assets 128,711 85,810 EQUITY AND LIABILITIES Shareholders' equity Proforma shareholders' equity - 74,647 Share capital 13,687 -Reserves 44,992 - 58,679 74,647 Current liabilitiesTrade payables 1,159 372Sundry creditors and accrued expenses 49,777 967Deposits received 2,464 758 Amounts due to directors 186 185Taxation liabilities 16,446 8,881 70,032 11,163 Total equity and liabilities 128,711 85,810 Note: The unaudited proforma consolidated balance sheet and income statementhave been prepared in accordance with the pooling-of-interest method as if theGroup had been in existence at 1st July 2005. UNAUDITED PROFORMA CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 30TH JUNE 2007 2007 2006 HKD'000 HKD'000 Sales 105,138 101,942 Cost of sales (69,230) (68,765) Gross profit 35,908 33,177 Other income 1,629 1,649 Distribution costs (1,675) (1,887)Administrative expenses (9,532) (1,755)Other operating expenses (17,304) (3,115) Operating profit 9,026 28,069Finance income 72 2 Profit before income tax 9,098 28,071Income tax expense (586) - Profit after taxation 8,512 28,071 Note: The unaudited proforma consolidated balance sheet and income statementhave been prepared in accordance with the pooling-of-interest method as if theGroup had been in existence at 1st July 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Led International Holdings