Half Yearly Report

LED International Holdings Limited

("LED" or the "Company")

Interim Results

For the six-month period ended 31 December 2011

LED International Holdings Limited (AIM: LED) and its subsidiaries (together the "Group"), the AIM listed specialized LED company, announces its interim results for the six-month period ended 31 December 2011.

Overview

·; Decrease in Revenue to HK$9,958,000 (approximately £810,000) (2010:HK$16,503,000);

·; Reduction in Gross Profit of HK$367,000 (approximately £30,000) (2010:HK$806,000) and increase in Loss Attributable to Shareholders of HK$7,687,000 (approximately £625,000) (2010: HK$6,966,000) as a result of a reduction in operating revenue and increased manufacturing and production costs compounded by wage rises and Renminbi appreciation;

·; Completion of acquisition of Shenzhen Strongbase New Opto-Electronics Technology Co. Ltd. ("Strongbase New").

Post-period end

·; Positive revision to major energy management contract to RMB6,300,000 (approximately £630,000) (a 14.5% increase from the original RMB5,500,000 stated in the announcement of 10 June 2011);

·; Signed letter of intent to form a strategic alliance with Guodian East China New Energy Investment Co., Ltd. and Shanghai Tong Sheng Opto-Electronics Technology Co., Ltd. in Shanghai;

·; Settlement reached in relation to the legal proceedings with WPI International (Hong Kong) Limited.

For further information:

Thomas Li, Executive Chairman,commented: "The Board remains confident in the Group's long-term growth potential and considers that the overall operations of the Group remain sound. The Group endeavours to continue diversifying its sources of revenues and customersin both domestic market in China and overseas."

Notes to Editors:

LED International Holdings Limited and its subsidiaries specialize in the development, manufacture and sale of low-powered LED screens, outdoor signs, lamps, lighting and building illumination; and high-powered/medium-powered LED energy efficient indoor and outdoor lighting products.

Under EMC contracts, LED fits energy saving products to the customer's premises, including lighting and reactance filtering equipment supplied by LED, and subsequent savings made by the customer in its electricity bills are then shared between LED and the customer thereby enabling the LED to generate recurring revenue rather than one-off sales revenue.

For more information, please visit: http://www.led-intl.com

CHAIRMAN'S STATEMENT

LED International Holdings Limited (AIM: LED) and its subsidiaries (together the "Group") specialize in the development, manufacture and sale of low-powered light-emitting diode ("LED") screens, outdoor signs, lamps, lighting and building illumination; and high-powered/medium-powered LED energy efficient indoor and outdoor lighting products. The Board of Directors (the "Board") is pleased to report on the unaudited interim results of the Group for the six-month period ended 31 December 2011.

MARKET REVIEW

An LED is a compound semiconductor device that converts electricity to light. Early LEDs are used as indicator lamps in many devices and modern versions of LEDs are available across the visible, ultraviolet, and infrared wavelengths with high brightness. LEDs are increasingly used for other lighting.

LEDs present many advantages over incandescent light sources including lower energy consumption, longer lifetime, improved robustness, smaller size, and faster switching. LEDs powerful enough for indoor and outdoor lighting are relatively expensive and require more precise current and heat management than compact fluorescent lamp and other lamp sources of comparable output.

The Chinese government has introduced a series of policies and regulations designed to promote, encourage and regulate energy conservation in the country and clearly stated its desire to promote energy conservation in its 12th Five-Year Plan following China's failure to attain its planned targets to cut energy consumption and carbon emission in 2011. On 4 November 2011, the National Development and Reform Commission published a notice to replace gradually the import and sale of incandescent lamps in the People's Republic of China (the "PRC"). Phasing out the incandescent lamps offers a lot of market opportunities for the lighting industry in the PRC. In view of this changing background, the Group aims to become one of the leading energy management service providers in the PRC.

OPERATING REVIEW

Internationally, the business environment picked up slowly from the global financial crisis and the sovereign debt crisis especially in Europe and the US, and, domestically our operation was further impacted by inflation and slowing economic growth throughout the period under review. The Group has expanded its business scope, focused on the domestic market and provided higher value-added products and services in the PRC. Post-period end, the Group has revised the terms of a significant energy management contract from Hotel Novotel Shenzhen Bauhinia and Golden Gala Restaurant based in Shenzhen, the PRC, as announced on 10 June 2011, and proceeded to install energy efficiency products and complete the contract subsequent to the period under review.

The slowing growth in the domestic market and rising costs in the PRC continue to pose the major challenge to the Group during the financial period, and it was made worse by further wage rises and Renminbi appreciation. These factors impacted on the Group's gross margin and resulted in an operating loss for the six-month period ended 31 December 2011.

In responding to the above factors, the Board is continuing to implement measures to diversify sources of revenue and to reduce expenditure, control production costs and expand its customer base in different areas, such as overseas markets, where there is demand for higher value products. The Board considers that the overall Group's operations remain sound.

FINANCIAL REVIEW

Revenue and total comprehensive expense attributable to shareholders of the Company for the six-month period ended 31 December 2011 amounted to HK$9,958,000 (approximately £810,000) (2010: HK$16,503,000) and HK$7,687,000 (approximately £625,000) (2010: HK$6,966,000) respectively. During the six-month period ended 31 December 2011, the Group recorded a reduction in operating revenue by HK$6,545,000 (approximately £532,000) over H1: 2010. The drop in operating revenue was caused mainly by the slowing growth in the domestic market in the PRC. Furthermore, the reduction in gross profit by HK$439,000 (approximately £36,000) from the previous periodswas a result of reduction of operating revenue and the rising manufacturing and production costs compounded by wage rises and Renminbi appreciation.

Operating revenue for the period generated from LED element products mainly supplied to major home appliance manufacturers in the PRC, decreased by HK$6,632,000 (approximately £540,000) from the same period in 2010. The Group strengthened its product quality controls and customer relationships with existing major customers and attempted to diversify these sources of revenue and customers during the financial period. The Group generated operating revenue from LED lighting products of HK$87,000 (approximately £7,000) during the period.

An operating gross margin for LED element products of approximately 3% was achieved during the financial period, 40% lower than 2010, due to rising manufacturing and production costs. The operating gross margin of LED lighting products was approximately 73%.

CONTRACT UPDATE

1. Completion of construction of LED Screen for the North Point Project

The Board announced the completion of construction and official commercial operation on 21 July 2011 of a giant LED display screen (the "LED Screen") at Harbour Grand Hotel, North Point, Hong Kong (the "Hotel").

The Company first announced the development of the LED Screen and outdoor façade lighting (the "Façade") for the Hotel on 23 April 2008 (the "North Point Project"). Due to additional requirements and new specifications from the developer, the construction and hand-over to the developer of the LED Screen was completed on 13 June 2011. Nevertheless, the developer has written to LED claiming that the delay in handing-over the LED Screen constitutes a breach of contract. The Board of LED disputes this and further considers that, in any event, the developer has waived any rights in this regard by accepting the hand-over of the LED Screen on 13 June 2011. The Company remains in discussions with the developer and will provide updated developments at the appropriate time.

The LED Screen is now displayed in a prominent position on the front of the Hotel where it can be viewed from across Victoria Harbour. The completion of the LED Screen marks the end of the first phase of the North Point Project and the beginning of its second phase: the construction of the Façade. The Company is currently testing samples of the LED lights to be used in the Façade and expects to commence the construction of the Façade in the second quarter of 2012.

2. Major energymanagement contract updated

As announced on 10 June 2011, the Company's subsidiary, Strongbase New was awarded a significant energy management contract (the "Original EMC Contract") from Hotel Novotel Shenzhen Bauhinia and Golden Gala Restaurant based in Shenzhen, the PRC (collectively, the "Hotel").

Following a greater understanding of the Hotel's lighting and power consumption systems gained during installation of Strongbase New's LED light bulbs and reactance filtering equipment, the quantity of each type of LED light bulb used has been amended resulting in the Board anticipating greater estimated energy savings. As a result, the projected revenue under the revised energy management contract (the "Revised EMC Contract") is now RMB6,300,000 (approximately £630,000) (a 14.5% increase from the original RMB5,500,000 stated in the announcement of 10 June 2011). The Revised EMC Contract supersedes the Original EMC Contract and all other terms remain unchanged. The term of the Revised EMC Contract runs for 6 years from acceptance by the Hotel the complete installation of energy saving products and the Hotel will pay the agreed split of the energy savings to Strongbase New on a monthly basis.

 CORPORATE RESTRUCTURING

1. Acquisition of subsidiary

On 29 July 2008, the Company entered into an agreement to acquire a 100 per cent. equity interest in Strongbase New, a specialist in LED and LED related products, accessories and appliances. The acquisition was completed on 14 November 2011. Strongbase New has both research and development and manufacturing expertise in relation to LED related products and possesses numerous patents and other intellectual property rights for LED products and LED applications. Its product offering includes LED devices, displays, lighting and appliances. The acquisition of Strongbase New allows the Group to broaden its product offering to include higher specification products for both its domestic markets and international customers. It also provides the Group with access to new intellectual property for further product development.

Furthermore, Strongbase New is being used to develop and expand the Group's existing business in developing LED lighting solutions.

Yanford Limited, a wholly owned subsidiary of Green Pearl Energy Conservation Holdings Limited, obtained from the Chinese government authorities the certificate of approval in relation to the legal ownership title transfer and change of business scope of Strongbase New on 14 November 2011. On 27 June 2011, Strongbase New has successfully reserved the company name registration of "Green Pearl Energy Management Services (Shenzhen) Co., Ltd." ("Green Pearl"). This name reservation expires on 29 May 2012.

As of the date of this report, the Group has taken control over Strongbase New by replacing its board members and intends to change its name to Green Pearl. Moreover, Green Pearl Energy Conservation Holdings Limited is to be used as a corporate vehicle for the new joint venture, the details of which are set out under the heading of Joint Ventures below.

2. Joint Ventures

As announced on 27 September 2011, the Company entered into a new joint venture agreement with one of its existing joint venture partners, Mr. So Hing Chung ("Mr. So"), to develop and expand its existing business in developing LED lighting solutions in the PRC (the "New Joint Venture").

As previously announced on 2 July 2010, the Company had entered into a joint venture agreement with Mr. So and various other joint venture partners to initially expand the Company's existing business in developing LED lighting products (the "Existing Joint Venture"). The Existing Joint Venture has been used to procure a source of supplies from CREE, Inc. at a competitive cost in Hong Kong.

The Board considers that Mr. So possesses significant knowledge, experience and industry contacts in the LED lighting business and the Company wishes to leverage Mr. So's expertise to capitalize on the market opportunities of the energy management contract ("EMC") business model in the PRC. With Mr. So's proactive participation in product designs and contract negotiations, Strongbase New was awarded a significant EMC by Hotel Novotel Shenzhen Bauhinia and Golden Gala Restaurant, as announced on 10 June 2011. Following the growing popularity of the EMC business model among customers, the Company has entered into the New Joint Venture to meet the demand for its energy-saving solutions.

The Company's subsidiary, Green Pearl Energy Conservation Holdings Limited is being used as the corporate vehicle for the New Joint Venture (the "Corporate Vehicle"). The Company has a majority stake (60 per cent.) in the New Joint Venture and, together with Mr. So (40 per cent.), have invested an initial sum of HK$1,000,000 (approximately £82,500) as seed capital for upcoming projects.

Pursuant to the New Joint Venture, the Corporate Vehicle and its subsidiaries have adopted the "Green Pearl" brand name in a corporate renaming exercise. The Company has also carried out a restructuring exercise whereby the beneficial interest in its wholly owned direct subsidiary, Yanford Limited has been transferred to the Corporate Vehicle. As a part of the restructuring exercise, Strongbase New is now owned by the Corporate Vehicle.

The Company has a majority stake of 60 per cent. in both the Existing Joint Venture and the New Joint Venture.

As mentioned above under the heading of Acquisition of subsidiary, the acquisition of Strongbase New was completed on 14 November 2011. The Company has applied to change the name of Strongbase New to Green Pearl by 29 May 2012.

STRATEGIC ALLIANCE

As announced on 5 January 2012, the Company entered into a letter of intent ("LOI") with Guodian East China New Energy Investment Co., Ltd. ("Guodian") and Shanghai Tong Sheng Opto-Electronics Technology Co., Ltd. ("Tong Sheng") to form a joint venture company in Shanghai (the "JV"). The LOI has been approved by China Guodian Corporation, Guodian's ultimate holding company. The JV will be established in order to enter into EMCs in energy saving projects in the PRC. Under the EMC contracts, the JV will fit energy saving products to a customer's premises, including lighting and reactance filtering equipment supplied by the Group, and subsequent savings made by the customer in its electricity bills are then shared between the JV and the customer thereby enabling the JV to generate recurring revenue rather than one-off sales revenue. The Board believes that these EMC contracts will also be capable of generating tradable carbon credits. The initial equity capital of the JV will be RMB5,000,000 (approximately £500,000) and the Company will own 30% of the JV with Guodian owning 40% and Tong Sheng owning the remaining 30%. The Board expects that the JV will be established within 6 months of the date of the LOI and further announcements will be made at the appropriate time.

Guodian is a wholly owned subsidiary of East China Company of China Guodian Corporation. China Guodian Corporation, a Global Fortune 500 corporation, is one of the five largest nationwide power generation groups approved by the State Council of the PRC in the power industry in the PRC. China Guodian Corporation has various operations in nearly 200 power enterprises covering 31 provinces in the PRC. Guodian is the strategic arm of China Guodian Corporation and has been tasked with diversifying China Guodian Corporation's group business into the new energy sector in the PRC.

The JV will use the Group's lighting and reactance filtering energy saving solutions under the EMC business model for enterprises located in Shanghai, Jiangsu Province and Shandong Province over the next three years. Following this, the Board intends that the JV will pursue opportunities in other Provinces in the PRC. The first pre-test of reactance filtering energy saving solution project will be a power plant owned and operated by East China Company of China Guodian Corporation in the Jiangsu Province. Once this has been completed successfully, the Board expects that additional power plants owned by China Guodian Corporation in the PRC will follow. Guodian and Tong Sheng are currently negotiating a number of different indoor and outdoor lighting EMCs and further announcements will be made at the appropriate time. Tong Sheng has arranged the necessary initial bank finance for the JV in order to finance the EMC business model. Whilst they view the JV as an important step for the Group, the Board does not expect that the JV will provide a significant revenue contribution to the Group until the first half of 2013.

In order to finance the Company's contribution in setting up the JV, the Company entered into an unsecured loan arrangement with Mr. Thomas Li, Chairman of the Company, for HK$3,000,000 (approximately RMB2,440,000 or £250,000). The loan will attract interest of 4 per cent. above 3 month LIBOR for HK$s and is repayable by the Company within twelve months of the date of drawdown.

SHARE CAPITAL

On 9 October 2011, the Company placed 12,500,000 new ordinary shares of HK$0.10 each (the "Placing Shares") at a placing price of RMB0.20 (approximately 2.0 pence) per ordinary share, raising RMB2,500,000 (approximately £250,000) (the "Subscription Funds"), further details of which were announced on 11 October 2011. The placing price represented a 321 per cent. premium to the closing mid-market price of 0.475 pence on 7 October 2011, being the last practical date before the placing. The placing proceeds were used to augment the Company's working capital position and assisted in the continued development of the Company's EMC business. On 18 October 2011, the Company received the full Subscription Funds in respect of the Placing Shares.

LOAN FACILITY WITH PING AN BANK COMPANY, LIMITED

As announced on 20 February 2012, Ping An Bank Company, Limited granted a new loan facility of RMB3,000,000 (approximately £300,000) (the "Loan") to the Company's wholly owned subsidiary, Kepu Electronic Technology (Shenzhen) Company, Limited ("Kepu"). The Loan was granted on identical terms to the original loan granted the previous year, further details of which were announced on 24 February 2011 (the "Original Loan"), and used to augment Kepu's working capital position and facilitate its organic growth plans. The Original Loan was repaid in full in accordance with its terms.

The Loan expires twelve months from drawdown and attracts interest at 10 per cent. above the prevailing lending rate per annum determined by the People's Bank of China. Kepu is required to repay the Loan by monthly instalments of RMB50,000 (approximately £5,000) commencing six months from drawdown with the remaining balance (plus accrued interest) payable at the end of the Loan facility. The Loan is secured by a first charge over Rooms 1014-1016, Shen Hua Commercial Building, 2018 Jia Bin Road, Luo Wu, Shenzhen, the PRC (the "Property"), currently occupied and used by Strongbase New.

The Property isowned by the family of Mr. Thomas Li.

BOARD CHANGES

Mr. Stephen Weatherseed was appointed as an additional non-executive Director of the Company post-period end and with effect from 1 March 2012.

DIVIDENDS

The Directors are not recommending payment of a dividend for the period under review and the Board is committed to an ongoing review of the Company's dividend policy.

CURRENT OUTLOOK AND PROSPECTS

Realizing the short-term uncertainties in the global economy, the Group adopts a conservative approach towards its exploration of market opportunities. In light of the sovereign debt crises in Europe and the high unemployment in the US, the Group primarily focuses on the growing domestic EMC market opportunities in the PRC. The Group is also optimistic of exporting its LED lighting products under its brand name "Green Pearl" to Japan. The Board remains cautiously optimistic and confident in the Group's business, market and product penetration with long-term growth potential in the PRC. Furthermore, the Board considers that the overall operations of the Group remain sound. The Group has endeavoured to diversify its sources of revenues and customers in both the domestic market in the PRC and overseas. In view of recent fast and dynamic developments in the markets, the Group will pursue different strategies towards different products and markets for the foreseeable future, as set out below:

1. LED lighting

Following the formation of the New Joint Venture, as set out under the heading of Joint Ventures above, the Group endeavours to develop and expand its existing LED lighting solutions under the EMC business model.

The Group is currently developing and expanding its existing business through the development of LED energy saving lighting solutions by offering a series of LED light bulbs, LED spot lights, LED candle lights, LED par lights, LED tubes and LED panels under its registered trademark of "Green Pearl". The Group is in negotiations with a number of additional potential customers under the EMC business model in the hotel, real estate, education and retail (bookstores, chain stores, petrol stations etc.) sectors and also with state-owned enterprises to supply street lights on a joint basis in some major cities in the PRC. In order to launch the EMC business model more widely, the Group is in negotiations with certain banks, both regional and Chinese, to provide debt financing. Further announcements will be made in relation to this at the appropriate time.

2. Energy efficiency solutions under EMC business model

After the successful application of reactance filtering energy saving solution in our customers' premises, the Group has integrated this with its existing lighting solutions to provide its customers a total energy efficiency solution under the EMC business model. One of the strategic moves that the Group has pursued is to form a strategic alliance with Guodian, the details of which are set out under the heading of Strategic Alliance section above. By streamlining its business process, the Board believes there are prominent opportunities for the Group to become one of the leading EMC service providers in the PRC.

3. Gradual disposal of manufacturing plant

In past years, Kepu has contributed to the Group by facilitating its manufacture and sale (mainly LED display screens and modules) for its major customers' exports of air-conditioners, microwave ovens and refrigerators. These LED elements products are lower value added but are otherwise highly competitive in the market in terms of price and quality. However, owing to the global slowdown of market demand, and accompanied by rising manufacturing costs, the Group has experienced operating losses in these product and market segments for the last two financial years. In light of the Group's shift in focus towards expanding its EMC business model and transforming the Group into an EMC service provider in the PRC, the Board is in discussions with several potential buyers of Kepu. These discussions are still in the early stages and there can be no guarantee that any agreements will be concluded. Further announcements will be made at the appropriate time.

4. Update on WPI legal proceeding

As announced on 23 May 2011, LED International Green Energy Corporation Limited ("LED Green") was served with a writ in the District Court of Hong Kong by WPI International (Hong Kong) Limited ("WPI") for a sum of US$110,260 and damages in relation to an alleged breach of contract for the purchase of 3,000,000 pieces of electronic components. LED Green is a trading arm of the Existing Joint Venture, as explained under the heading of Corporate Restructuring above, in Hong Kong.In order to avoid unnecessary distraction of management time, the Group has reached a settlement agreement with WPI on 29 March 2012 so as to allow the Group to continue to focus on its EMC business model.

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.

Thomas Li

Executive Chairman

LED INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH ENDED 31 DECEMBER 2011

LED INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2011

LED INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH ENDED 31 DECEMBER 2011

LED INTERNATIONAL HOLDINGS LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION

FOR THE SIX-MONTH ENDED 31 DECEMBER 2011

1. GENERAL INFORMATION

LED International Holdings Limited (the "Company") is domiciled and incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance. The addresses of the Company's registered office and principal place of business are Suite 911, 9/F Exchange Tower, 33 Wang Chiu Road, Kowloon Bay, Kowloon.

The principal activities of the Company are investment holding, and specialising in the development, manufacture and sale of low-powered LED screens, outdoor signs, lamps, lighting and building illumination, and high-powered/medium-powered LED energy efficient indoor and outdoor lighting products. The principal activities of its subsidiaries are set out in note 6 to the interim financial information.

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

The interim financial information is presented in Hong Kong dollars ("HK$"), which is the same as the functional currency of the Company, and all values are rounded to the nearest thousand except when otherwise indicated.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

The interim financial information has been prepared in accordance with all applicable International Financial Reporting Standards ("IFRSs"), which collective term includes all applicable individual International Financial Reporting Standards, International Accounting Standards and Interpretations and comply with the AIM Rules issued by the London Stock Exchange. In addition, the interim financial information includes applicable disclosures required by the Hong Kong Companies Ordinance. A summary of the significant accounting policies adopted by the Group is set out below.

(b) Basis of preparation of interim financial information

The interim financial information for the six-month ended 31 December 2011 comprises the Company and its subsidiaries (together referred to as the "Group"). The 2011 interim financial report of the Company has not been audited or reviewed by the Company's auditor.

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

The preparation of interim financial information in conformity with IFRSs requires management to make judgments, 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 judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b) Basis of preparation of interim financial information (continued)

The condensed interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The interim financial information set out above does not constitute statutory accounts. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.

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.

Judgments made by management in the application of IFRSs that have significant effect on the interim financial information and major sources of estimation uncertainty are discussed in Note 19.

 (c) Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

An investment in a subsidiary is consolidated into the interim financial information from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealised profits arising from intra-group transactions are eliminated in full in preparing the interim financial information. Unrealised losses resulting from intra-group transactions are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment.

3. REVENUE

The Group is principally engaged in assembly and manufacturing of LED element products. The revenue recognised for the six-month ended 31 December 2011 and 2010 were as follows:

4. SEGMENT INFORMATION

The operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance.

Products from which reportable segments derive their revenues

The Group's reportable segments under IFRS 8 are as follows:

Operations

• LED display screens

• LED element products

• LED lighting products

Information regarding the above segments in accordance with IFRS 8 is reported below.

Segment revenues and results

The following is an analysis of the Group's revenue and results from operations by reportable segment.

Revenue reported above represents revenue generated from external customers. There were no inter-segment sales during the six-month ended 31 December 2011.

Segment loss represents the loss incurred by each segment without allocation of central administration costs including directors' salaries, finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Segment assets and liabilities

For the purposes of monitoring segment performance and allocating resources between segments:

• Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments; and

• all liabilities are allocated to reportable segments other than current tax liabilities and unallocated liabilities including interest payable, amount due to a director and loan from a director. Liabilities for which reportable segments are jointly liable are allocated in proportion to segment assets.

5. LOSS PER SHARE

The calculation of the basic and diluted loss per share attributable to owners of the Company is based on the following data:

The denominators used are the same as those detailed above for both basic and diluted loss per share.

The diluted loss per share equals the basic loss per share because there were no potentiallydilutive shares.

6. SUBSIDIARIES

The particulars of the subsidiaries at 31 December 2011 are as follows:

7. CASH AND CASH EQUIVALENTS

Cash and bank balances also include an amount of approximately HK$957,000 (30 June 2011: HK$281,000) denominated in Chinese Yuan Renminbi ("RMB"). RMB is not freely convertible into foreign currencies and the remittance of funds out of the Mainland China is subject to exchange restrictions imposed by the PRC government.

8. BORROWINGS

Note:

The bank borrowings of RMB1,500,000 as at 31 December 2011 (equivalent to approximately HK$1,857,000 were repayable within one year. The bank borrowings were interest bearing at the benchmark lending rate of the People's Bank of China and were secured by a charge over the property owned by a key management personnel of a subsidiary.

9. LOAN FROM A DIRECTOR

The amount was unsecured, carried interest at a rate of three month LIBOR plus 4% per annum and repayable on 7 September 2012.

10. SHARE CAPITAL

Authorised and issued share capital

On 12 July 2010, the authorised share capital of the Company was increased from HK$35 million divided into 350 million shares of the Company of HK$0.10 each to HK$70 million divided into 700 million shares of HK$0.10 each.

On 22 July 2010, the board of directors approved to grant 10,000,000 share options. Each option gives the eligible participants the right to subscribe for one ordinary share of the company. The option has been exercised on 15 December 2010 at an exercise price of 1.595 pence with consideration of HK$1,959,138.

On 13 January 2011, the board of directors approved to grant 10,000,000 share options. Each option gives the eligible participants the right to subscribe for one ordinary share of the company. 7,500,000 share options have been exercised during the financial year ended 30 June 2011 at an exercise price of 1.6313 pence with consideration of HK$1,521,636.

12,500,000 Ordinary Shares were issued at a placing price of 0.475 penceper each Ordinary Share in October 2011 for cash. The placing proceeds was used to augment LED's working capital position and assist in the continued development of LED's energy management contract (EMC) model

The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All Ordinary Shares rank equally with regards to the Company's residual assets.

11. SHARE-BASED PAYMENT TRANSACTIONS

The Company's management option agreement is established for the purpose of providing incentives to the directors and the employees of the Group. On 16 October 2006, 13,687,009 share options in aggregate were granted at an exercise price of 10 pence per ordinary share to the Group's management. Pursuant to the management option agreement, the share options shall be exercised as follows: (i) the first third of the shares may be subscribed for following the first anniversary of admission to AIM on 23 October 2006; (ii) the second third of the shares may be subscribed for following the second anniversary of admission to AIM on 23 October 2006; and (iii) the final third of the shares may be subscribed for following the third anniversary of admission to AIM on 23 October 2006.

Under the option agreement entered into with Corporate Synergy Plc dated 16 October 2006, 5,474,802 share options in aggregate were granted to Corporate Synergy Plc in settlement of their corporate finance fees and commissions at an exercise price of 10 pence per ordinary share in respect of the first 2,737,401 shares and at an exercise price of 12.5 pence per ordinary share in respect of the remaining 2,737,401 shares. The options granted shall be exercised in whole or in part at any time in the period of 5 years from the date of admission to AIM on 23 October 2006.

On 18 May 2009, 4,363,539 share options were granted for nil consideration to the Group's management at an exercise price of 10 HK cents per ordinary share. New Management Options shall be exercised in whole or in part at any time in the period from the date of grant on 18 May 2009 to 3 June 2019. The share options have been exercised during the year ended 30 June 2010.

On 3 June 2009, 17,454,158 share options in aggregate were granted for nil consideration to the Group's management at an exercise price of 10 HK cents per ordinary share. New management options shall be exercised in whole or in part at any time in the period from the date of grant on 3 June 2009 to 3 June 2019. The share options have been exercised during the year ended 30 June 2010.

On 22 July 2010, 10,000,000 share options were granted to the Company's management at an exercise price of 1.595 pence per ordinary share. The new management options shall be exercised in whole or in part at any time in the period from the date of grant on 22 July 2010 to 22 July 2015. The share options have been exercised during the six-month ended 31 December 2010.

On 13 January 2011, 10,000,000 share options were granted to the Company's management at an exercise price of 1.6313 pence per ordinary share. The new management options shall be exercised in whole or in part at any time in the period from the date of grant on 13 January 2011 to 12 January 2016. 7,500,000 share options had been exercised during the financial year ended 30 June 2011

The number of shares in respect of which options had been granted and remained outstanding at 31 December 2011 was 4,681,770 (30 June 2011: 11,525,273), representing approximately 1.28% (30 June 2011: 3.3%) of the issued shares of the Company at that date, as follows:

Notes:

(a) Certain share options were lapsed upon the resignation of the directors and the employees of the Group.

(b) The fair value of 13,687,009share options granted on 16 October 2006 was determined by the management to be approximately HK$733,000 with reference to a valuation performed by an independent firm of professional valuers using the Black-Scholes option pricing model. The inputs into the model included the share price of 4.236 pence per share on the date of grant, the exercise price of 10 pence per share, expected volatility of 32.05%, expected option life of 3 to 4 years, no expected dividend and estimated annualized risk free interest rate of 4.99% to 5.06%. The share options lapsed after the expiry date during the period ended 31 December 2011.

(c) The fair value of 2,737,401share options granted on 16 October 2006 with the exercise price of 10 pence was determined by the management to be approximately HK$150,000 with reference to a valuation performed by an independent firm of professional valuers using the Black-Scholes option pricing model. The inputs into the model included the share price of 4.236 pence per share on the date of grant, the exercise price of 10 pence per share, expected volatility of 32.05%, expected option life of 2.5 years, no expected dividend and estimated annualized risk free interest rate of 4.89%. The share options lapsed after the expiry date during the period ended 31 December 2011.

(d) The fair value of 2,737,401share options granted on 16 October 2006 with the exercise price of 12.5 pence was determined by the management to be approximately HK$92,000 with reference to a valuation performed by an independent firm of professional valuers using the Black-Scholes option pricing model. The inputs into the model included the share price of 4.236 pence per share on the date of grant, the exercise price of 12.5 pence per share, expected volatility of 32.05%, expected option life of 2.5 years, no expected dividend and estimated annualized risk free interest rate of 4.89%. The share options lapsed after the expiry date during the period ended 31 December 2011.

(e) The share options granted by the Company during the year ended 30 June 2007 included share options granted to the Group's nominated advisor and broker for services rendered. As the services rendered by the nominated advisor and broker are similar to those rendered by the Group's employees, the nominated advisor and broker is considered as "employees and others providing similar services" under the context of IFRS 2. Accordingly, the fair values of the share options granted to the Group's nominated advisor and broker during the year ended 30 June 2007 were measured on the same basis as those granted to employees as disclosed in note (b) above. The share options lapsed after the expiry date during the period ended 31 December 2011.

(f) The fair value of 4,363,539share options granted on 18 May 2009 was determined by the management to be approximately HK$274,000 with reference to a valuation performed by an independent firm of professional valuers using the Black-Scholes option pricing model. The inputs into the model included the share price of 0.65 pence (approximately 7.735 HK cents) per share on the date of grant, the exercise price of 10 HK cents per share, expected volatility of 125.36%, expected option life of 5.02 years, no expected dividend and estimated annualized risk free interest rate of 2.42%. The 4,363,539 share options exercised during the year ended 30 June 2010 resulted in the issue of 4,363,539 ordinary shares of HK$0.10 each in the share capital of the Company. The weighted average closing price of the shares of the Company immediately before the dates on which the share options were exercised was 1.99 pence. The share options lapsed after the expiry date during the period ended 31 December 2011.

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(g) The fair value of 17,454,158share options granted on 3 June 2009 was determined by the management to be approximately HK$2,368,000 with reference to a valuation performed by an independent firm of professional valuers using the Black-Scholes option pricing model. The inputs into the model included the share price of 1.30 pence (approximately 16.445 HK cents) per share on the date of grant, the exercise price of 10 HK cents per share, expected volatility of 131.16%, expected option life of 5 years, no expected dividend and estimated annualized risk free interest rate of 2.64%. The 15,272,388 share options exercised during the year ended 30 June 2010 resulted in the issue of 15,272,388 ordinary shares of HK$0.10 each in the share capital of the Company. The weighted average closing price of the shares of the Company immediately before the dates on which the share options were exercised was 1.99 pence.

(h) The fair value of 10,000,000share options granted on 22 July 2010 was determined by management to be approximately £159,500 with reference to the market value on the date of grant.

(i) The fair value of 10,000,000share options granted on 13 January 2011 was determined by the management to be approximately HK$1,390,000 with reference to a valuation performed by an independent firm of professional valuers using the Black-Scholes option pricing model. The inputs into the model included the share price of 1.49pence (approximately 21.7 HK cents) per share on the date of grant, the exercise price of 10 HK cents per share, expected volatility of 152.275%, expected option life of 5 years, no expected dividend and estimated annualized risk free interest rate of 1.537%. The 7,500,000share options exercised during the year ended 30 June 2011 resulted in the issue of 7,500.000ordinary shares of HK$0.10 each in the share capital of the Company.

12. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall strategy remained unchanged for the six-month ended 31 December 2011.

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.

The capital structure of the Group consists of net debt (which includes bank overdrafts, bank borrowings, convertible loan notes and loan from a director), cash and bank balances and equity attributable to owners of the Company (comprising issued share capital, share premium, reserves and accumulated losses).

Gearing ratio

The gearing ratio at the end of the reporting period was as follows:

13. FINANCIAL RISK MANAGEMENT

Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Group's business. The Group's exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a) Credit risk

The Group's credit risk is primarily attributable to trade and other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.

In respect of trade receivables, individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customers' past history of making payments when due and current liability to pay, and take into account information specific to the customer as well as pertaining to the economic environment in which the customers operates. Trade receivables are due within 30 to 90 days from the date of billing. Normally, the Group does not obtain collateral from customers.

(a) Credit risk (Continued)

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer rather than the industry or country in which the customers operate and therefore significant considerations of credit risk primarily arise when the Group has significant exposure to individual customers.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet after deducting any impairment allowance. The Group does not provide any guarantees which would expose the Group or the Company to credit risk.

(b) Liquidity risk

The Group's policy is to regularly monitor its current and expected liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

In meeting its current liquidity requirements, the Group has reached the agreements with the key creditors, which would be due within twelve months from the balance sheet date, to reschedule the repayments. In the longer term, the Group has been discussing with prospective investors to obtain new working capital and meet its liquidity requirements.

(c) Interest rate risk

Other than the amount due to a director, the Group has no other significant interest bearing assets and liabilities. The Group's income and operating cash flows are substantially independent of changes in market interest rates.

(d) Foreign currency risk

The Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities are denominated in a functional currency of the operations (i.e. Hong Kong dollars and Chinese Yuan Renminbi). The Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Group monitors its foreign currency exposure closely and considers hedging significant foreign currency exposure should the need arise.

(e) Fair values

The carrying amounts of the Group's financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2010.

14. MATERIAL RELATED PARTY TRANSACTIONS

(a) Key management personnel remuneration

Remuneration for key management personnel of the Group is as follows:

 (b) Other related party transactions

In addition to the transactions and balances disclosed elsewhere in the interim financial information, the Group had the following significant transactions with related parties during the six-month period:

15. COMMITMENTS

(a) Capital commitments outstanding at 31 December 2011 not provided for in the interim financial information were as follows:

(b) At 31 December 2011, the total future minimum lease payments under non-cancellable opening leases are payable as follows:

Operating lease payments represent rentals payable by the subsidiaries for the manufacturing plants and office premises. Leases are negotiated, and rentals fixed, for an average term from one to three years. No arrangements have been entered into for contingent rental payments.

16. CONTINGENT LIABILITIES

From 2006 onwards, the Group's subsidiary, Shenzhen China-LED Photo-Technology Limited ("Shenzhen LED"), qualified as a small-scale VAT taxpayer by Shenzhen Municipal Nanshan District State Tax Bureau under the PRC tax laws and continues to be subject to 6% VAT on its taxable sales revenue. VAT is payable when the right to receive sale proceeds is established when delivery of goods is made to the buyer. The Group has been delaying reporting and paying VAT to the state tax bureau since 2006 and has carried a VAT payable of approximately HK$17,236,000, equivalent to RMB15,177,000 (30 June 2010: HK$17,236,000, equivalent to RMB15,177,000) as at 31 December 2010. According to the tax laws, a penalty may be charged up to a maximum of five times the VAT tax liability plus late payment interest of 0.05% per day on unpaid VAT amounts may be imposed by the state tax bureau. In addition, those persons involved could be severely punished subject to criminal proceedings. In the absence of any reliable information on penalties and/or late payment interest that the state tax bureau may charge against the Group, the directors of the Company are unable to estimate the amounts potentially payable for the late payment of VAT as at 31 December 2011.

17. NON-ADJUSTING POST BALANCE SHEET EVENTS

(a) Join Venture and loan from Director

Subsequent to 31 December 2011, the Company has entered into a letter of intent ("LOI") with Guodian East China New Energy Investment Co., Ltd ("Guodian") and Shanghai Tong Sheng Opto-Electronics Technology Co., Ltd. ("Tong Sheng") to form a joint venture company in Shanghai (the "JV"). The LOI has been approved by China Guodian Corporation, Guodian's ultimate holding company. The JV will be established in order to enter into energy management contracts ("EMC") in energy saving projects in the People's Republic of China (the "PRC"). Under the EMC contracts, the JV will fit energy saving products to the customer's premises, including lighting and reactance filtering equipment supplied by LED, and subsequent savings made by the customer in its electricity bills are then shared between the JV and the customer thereby enabling the JV to generate recurring revenue rather than one-off sales revenue. The Directors believe that these EMC contracts will also be capable of generating tradable carbon credits. The initial equity capital of the JV will be RMB5.0m (approximately £512,000) and LED will own 30% of the JV with Guodian owning 40% and Tong Sheng owning the remaining 30%. The Directors expect that the JV will be established within 6 months and further announcements will be made at the appropriate time.

In order to finance LED's contribution in setting up the JV, the Company has entered into an unsecured loan arrangement with Mr. Thomas Li, Chairman of LED, for HK$3.0m (approximately RMB2.44m or £250,000) (the "Loan"). The Loan will attract interest of 4 per cent. above 3 month LIBOR for HK$s and is repayable by LED within twelve months of the date of drawdown.

18. KEY SOURCES OF ESTIMATION UNCERTAINTY

Note 11 contains information about the assumptions and their risk factors relating to the fair value of share options and warrants granted. Other key sources of estimation uncertainty are as follows:

(a) Impairment of property, plant and equipment and intangible assets

The Group assesses annually whether property, plant and equipment and intangible assets have any indication of impairment in accordance with the relevant accounting policies. If such indication exists, the recoverable amounts of the assets would be determined by reference to value in use and net selling price. Value in use is determined using the discounted cash flow method. Owing to inherent risks associated with estimations in the timing and magnitude of the future cash flows and net selling prices, the estimated recoverable amount of the assets may be different from its actual recoverable amount and profit or loss could be affected by accuracy of the estimations.

(b) Impairment of trade and other receivables

If circumstances indicate that the carrying amount of trade and other receivables may not be recoverable, the assets may be considered impaired and an impairment loss may be recognised. The carrying amounts of trade and other receivables are reviewed periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. The recoverable amount of trade and other receivables is the estimated future cash flows discounted at the current market rate of return of similar assets. The Group uses all readily available information in determining an amount that is a reasonable approximation of the recoverable amount.

(c) Income taxes

The Group is subject to income taxes mainly in the PRC. Significant estimates are required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will affect the income tax provisions in the period in which such determination is made.

 (d) Allowance for slow-moving inventories

An allowance for slow-moving inventories is made based on the ageing and estimated net realisable value of inventories. The assessment of the allowance amount involves judgment and estimates. Where the actual subsequent outcome is different from the original estimate, such difference will affect the carrying value of inventories and any allowance charge or write-back in the period in which the estimate has been changed.

(e) Construction contracts

Revenue and profit recognition on an uncompleted project is dependent on estimating the total outcome of the construction contract, as well as the work done to date. Based on the Group's recent experience and the nature of the construction activity undertaken by the Group, the Group makes estimates of the point at which it considers the work is sufficiently advanced such that the costs to complete and revenue can be reliably estimated. As a result, until this point is reached the amount due to a customer for contract work will not include profit or loss which the Group may eventually realise from the work done to date. In addition, actual outcomes in terms of total cost or revenue may be higher or lower than estimated at the balance sheet date, which would affect the revenue and profit recognised in future years as an adjustment to the amounts recorded to date.

- End of Notes -