Half Yearly Report

LED International Holdings Limited

(the "Company")

Interim Results

For the six-month period ended 31 December 2013

LED International Holdings Limited (AIM: LED) and its subsidiaries (together the "Group") announces its interim results for the six-month period ended 31 December 2013.

Overview

• Increase in Revenue of HK$10,769,000 (approximately £841,000) over H1 2012 (HK$10,062,000)

• Gross Profit of HK$21,000 (approximately £1,600) (2012: HK$18,000) as a result of increased manufacturing and production costs compounded by wage rises and Renminbi appreciation

• Increase in Loss Attributable to Shareholders of HK$6,057,000 (approximately £473,000) (2012: HK$5,699,000)

For further information:

Notes to Editors:

LED International Holdings Limited and its subsidiaries specialize in the provision of EMC contracts under which the Group installs energy saving products in its customers' premises, including lighting and reactance filtering equipment supplied by the Group, and the subsequent savings made by the customers in their electricity charges are then shared between the Group and the customers thereby enabling the Group to generate recurring revenue rather than one-off sales revenue. Historically, the Group's business has been the development, manufacture and sale of low-powered light-emitting diode ("LED") display screens and modules.

Under EMC contracts, the Group provides energy efficiency solutions, including LED lighting, reactance filtering energy saving and other energy efficiency solutions. Specifically, the Group overhauls its customers' existing lighting and power consumption systems (which are based on traditional lighting technology and power generation equipment) with proprietary LED lighting products, reactance filtering equipment and other solutions provided by the Group. These energy efficiency products are installed in customers' premises. The Group bears all the upfront costs associated with the supply and installation of the energy efficiency solutions and these costs are then recouped by sharing in the monthly energy savings generated by the customers' use of the energy efficiency solutions over the period of the contracts. The Group receives revenue from customers on several different payment terms including on a pre-payment, monthly or quarterly basis.

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

CHAIRMAN'S STATEMENT

LED International Holdings Limited (AIM: LED) (the "Company") and its subsidiaries (together the "Group") specialize in the provision of energy management contract services ("EMC contracts") or energy performance contracting services under which the Group installs energy saving products in its customers' premises, including lighting and reactance filtering equipment supplied by the Group, and the subsequent savings made by customers in their electricity charges are then shared between the Group and the customers thereby enabling the Group to generate recurring revenue rather than one-off sales revenue. Historically, the Group's business has been the development, manufacture and sale of low-powered light-emitting diode ("LED") display screens and modules. The Board of Directors (the "Board") is pleased to report on the interim results of the Group for the period ended 31 December 2013.

MARKET REVIEW

According to its 12th Five-Year Plan (the "Five-Year Plan"), China plans to lower its energy consumption by 16 per cent. and cut its carbon dioxide emission by 17 per cent. by 2015. Against the background of the Chinese government's introduction of a series of policies and regulations designed to promote, encourage and regulate energy conservation within the People's Republic of China (the "PRC"), the Chinese government will continue to build its economic growth on energy sustainability and ecological conservation. This signifies energy savings and conservation, promising opportunities in the energy management market and the Group aims to become one of the leading energy management service providers in the PRC.

OPERATING REVIEW

During the financial period under review, the global economy continued to recover slowly from an unenthusiastic investment and consumption environment following the economic recession in the Euro-zone and the uncertain recovery of the USA. At the same time, China further marked its slowest economic growth since the start of the 21st Century after its implementation of a financial tightening policy during the financial period. This resulted in continued difficult trading conditions for the Group and, domestically, our operation was also burdened by rising inflation, appreciating Renminbi ("RMB") and slowing economic growth within the PRC. These factors impacted on the Group's gross margin and resulted in an operating loss for the financial period ended 31 December 2013.

Over the past few years, the Group has provided EMC services in the PRC. The Group's EMC company ("EMCO") was previously operated through Strongbase New Opto-Electronics Technology Company Limited but recently has been through Shenzhen Green Pearl Energy Management Services Company Limited ("GPEMCO"), a company with a valid and effective EMCO registration with the National Development and Reform Commission. Operating through GPEMCO enables the Group to take advantage of certain favorable policies and terms for the EMC industry within the PRC. In previous periods, the Group secured a number of contracts to support the Group's strategy and mark the commencement of the successful implementation of its energy efficiency solutions under the EMC business model. Further smaller contracts have been signed and additional ones continue to be negotiated, details of which will be announced as appropriate.

The Board continues to drive the Group to secure meaningful revenue from the growing domestic EMC market, as well as implementing measures to reduce overhead expenditure and assessing the future of its manufacturing operations. The Board remains convinced that the Group's overall operations remain sound.

As previously announced on 23 April 2012, at that time media reported that a fire at Harbour Grand Hotel (the "Hotel"), North Point, Hong Kong, may have started at the giant LED display screen (the "LED Screen") supplied by the Company. Prior to the fire incident, the Hotel had inspected the LED Screen, was satisfied with its quality and there was subsequently a formal handover of the LED Screen by the Company to the Hotel on 13 June 2011 with a warranty provided by the Company. To date, the Company has not received any communications from the investigator in relation to this fire.

However, on 25 September 2013 the Company received a letter from an adjudicator alleging that its principal and its principal's insured have suffered substantial losses in the form of property damage, consequential loss and public liability (the "Potential Claim") from the fire. The Company's legal advisor has made repeated requests to the adjudicator to disclose any reports compiled by the Hotel and/or government investigator but, to date, the adjudicator has failed to respond to these requests.

In the absence of any response from the adjudicator, the Directors consider that the Potential Claim is without legal basis or merit and intend to defend any attempts by the adjudicator to seek recourse for the fire from the Company. Further updates will be made at the appropriate time.

FINANCIAL REVIEW

Revenue and loss for the period attributable to shareholders of the Company for the financial period ended 31 December 2013 amounted to HK$10,769,000 (approximately £841,000) (2012: HK$10,062,000) and HK$6,057,000 (approximately £473,000) (2012: HK$5,699,000) respectively. During the financial period ended 31 December 2013, the Group recorded a slight rise in operating revenue by HK$707,000 (approximately £55,000) over 2012. The rise in operating revenue was brought about mainly by general demand for LED element products within the PRC. Furthermore, the Group generated a gross profit in the amount of HK$21,000 (approximately £1,600) for the financial period as a result of strengthening controls over manufacturing and production costs.

Operating revenue for the financial period generated from LED element products mainly supplied to major home appliance manufacturers in the PRC, increased by HK$893,000 (approximately £70,000) from the same period in 2012. 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's operating revenue from EMC contracts decreased by HK$186,000 (approximately £15,000) over 2012.

An operating gross profit for LED element products of approximately 0.20% was attained during the financial period, 0.03% higher than 2012, as a result of lowering manufacturing and production costs. The operating gross margin of EMC contracts was approximately 52.0% (2012: 33.0%) for the financial period.

FORMATION OF GREEN PEARL LEASING (CHINA) COMPANY LIMITED

The Shanghai Municipal Commission of Commerce ("SMCC") granted the Company's Group (the "Group") a highly sought after leasing finance license to enable the Company to provide lease financing to customers. The Company formed a new wholly owned direct subsidiary, Green Pearl Leasing (China) Company Limited ("GP Leasing Co"), in order to carry on this business. GP Leasing Co has been granted approval for the commencement of leasing finance services on 20 August 2013 for an operating period of 30 years.

In accordance with the SMCC's approval document, the Company is obliged to contribute 20 per cent. of GP Leasing Co's registered capital of RMB100 million, to be contributed in US$ (approximately HK$128,680,000 or £10 million), within 3 months from the date of approval by the SMCC. The remaining 80 per cent. of the registered capital must be contributed within 2 years from the date of approval by the SMCC. As announced on 18 November 2013, the Company has applied to the SMCC for an extension of the deadline for the first capital contribution. The Company seeks an extension of this deadline to 30 June 2014. There can be no guarantee as to whether this extension will in fact be granted.

GP Leasing Co was formed as the Directors believe that the Group's EMC business model will be financed substantially by debt capital finance, mainly bank finance for the Group or equipment leasing finance for its customers. The Board believes that equipment leasing finance will become one of the major sources of finance for EMC contracts in the foreseeable future.

FINANCING

Provision and conversion of working capital loan and placing of new ordinary shares

As announced on 16 December 2013, the Company entered into a working capital loan in the sum of RMB6,000,000 (approximately HK$7,720,000 or £600,000) provided by Rubyfield Holdings Limited and Speedy Dragon Holdings Limited (collectively, the "Subscribers") in equal tranches (the "Loan"). The Loan, which is unsecured, is interest free and is repayable on demand.

As further announced on 30 December 2013, the Company completed a conditional placing of new ordinary shares with the Subscribers, raising RMB31 million (approximately HK$39.89 million or £3.09 million) (including fees and expenses) (the "Placing"). The RMB31 million (approximately HK$39.89 million or £3.09 million) shall be satisfied as to the first RMB25 million (approximately HK$32.17 million or £2.50 million) by way of new funds and, as to the balance, by the application of the current outstanding balance of the Loan (currently RMB6.0 million, approximately HK$7,720,000 or £600,000) (the "Conversion"). The net proceeds of the Placing will be used by the Company for general working capital purposes and to provide the necessary capital contribution to GP Leasing Co, the Group's new lease finance company.

On 26 February 2014, the consolidation of every 100 existing authorised issued and unissued ordinary shares of HK$0.10 each in the capital of the Company into 1 new ordinary share of HK$10.00 each in the capital of the Company was approved at the 2013 Annual General Meeting of the Company. Pursuant to the Placing, the Subscribers were to subscribe for 3,875,000 new ordinary shares (the "Placing Shares") at a price of HK$10.29 (being approximately 79.96 pence) per Placing Share (the "Placing Price"). The Conversion was also to take place at the Placing Price.

However, as announced on 26 February 2014, the Subscribers have defaulted in relation to the payment of the subscription funds and accordingly the subscription and loan conversion have not yet completed. The loan conversion is conditional on the completion of the subscription agreement.

As announced on 20 March 2013, the Company continues with its discussions with the Subscribers in relation to the timing of the payment of the subscription funds and, at the same time the Company is also currently considering its legal rights in this respect. In parallel, the Company is evaluating other potential avenues of funding and is in advanced discussions with another party in relation to securing much needed funding. Further announcements will be made at the appropriate time.

The Board is currently evaluating opportunities to raise further equity or debt funding in order to assist the Company in the development of its energy management contract and leasing business model as well as for additional working capital.

BOARD CHANGES

On 15 November 2013, Mr. Harby Janagol resigned as a Non-Executive Director with immediate effect.

DIVIDENDS

The Directors do not recommend the payment of any dividend for the period and the Board is committed to an ongoing review of the Company's dividend policy.

CURRENT OUTLOOK AND PROSPECTS

The Group is focused on the domestic PRC economy and adopts a conservative but proactive approach towards entering into the growing EMC market under the brand name "Green Pearl". Notwithstanding the recent slowdown in China's GDP growth, the Board believes that the Chinese government will implement fiscal and monetary policies to stimulate steady economic growth in the PRC.

The energy saving and environmental protection industry ranks top among the seven strategic emerging industries outlined in the Five-Year Plan. Following the gradual import and sale of incandescent lamps complemented by fiscal subsidies, this presents a tremendous market opportunity for green lighting. In view of rising national power consumption, the Directors believe that measures that the Chinese government has taken to reduce energy consumption and carbon emissions will lead to increasing opportunities for energy saving and carbon reduction products, services and solutions within the PRC.

In addition to the supply of LED lighting and reactance filtering equipment to the domestic PRC market, the Group is also considering the introduction of other energy saving and carbon reduction solutions to carry out its total energy efficiency solution under the EMC business model within the PRC.

The Group is exploring the possible export of its energy saving and carbon reduction products, services and solutions, mainly solar lighting products and solutions, to the emerging markets in the Atlantic and Pacific regions, where potential demand for solar related products and services is prominent.

The Board remains cautiously optimistic and confident in the Group's business, market and products as well as its long-term growth potential in the PRC. Furthermore, the Board considers that the overall operations of the Group remain sound and that the transformation of the Group into an energy management service provider in the PRC is the correct strategy.

Renewal of loan facility with Ping An Bank Company, Limited

As announced on 11 March 2014, post-period end Ping An Bank Company, Limited granted a new loan facility of RMB2,800,000 (approximately HK$3,600,000 or £280,000) (the "New Loan") to the Company's 60% owned subsidiary, Kepu Electronic Technology (Shenzhen) Company, Limited ("Kepu"). The New Loan has been granted on mostly identical terms to the original loan granted on 15 January 2013 (the "Original Loan"), and will be used to augment Kepu's working capital position and facilitate its organic growth plans. The Original Loan was repaid in full by Kepu in accordance with its terms.

The New Loan expires twelve months from drawdown and attracts interest at a 40 per cent. increase to the prevailing lending rate per annum determined by the People's Bank of China (currently 6 per cent. per annum) which is currently 8.4 per cent. per annum. Kepu is required to repay the New Loan by monthly instalments of RMB80,000 (approximately HK$102,000 or £8,000) commencing one month from drawdown with the remaining balance (plus accrued interest) payable at the end of the New Loan facility. The New Loan is secured by a first charge over Rooms 1013-15, Shen Hua Commercial Building, 2018 Jia Bin Road, Luo Wu, Shenzhen, the People's Republic of China owned by a third party, Mr. Lee, together with personal guarantees given by Mr. Fu Wei, the general manager and legal representative of Kepu, and his wife, Ms. Huang Yu Feng.

APPRECIATION

Finally, on behalf of the Board, I would like to thank all of our management team and staff members for their valuable contribution and dedication to the Group. I also express my gratitude to our customers, suppliers and government authorities for their continuous support.

Stephen Weatherseed

Non-Executive Director and Chairman

Hong Kong, 21 March 2014

LED INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2013

LED INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2013

LED INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2013

LED INTERNATIONAL HOLDINGS LIMITED

NOTES TO THE INTERIM FINANCIAL INFORMATION

FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2013

1. GENERAL INFORMATION

LED International Holdings Limited (the "Company") was domiciled and incorporated in Hong Kong with limited liability under the Hong Kong Companies Ordinance. The address of the Company's registered office and principal place of business is Unit A1, 6/F., One Capital Place, 18 Luard Road, Wan Chai, Hong Kong.

The principal activity of the Company is investment holding. The principal activities of the Company's subsidiaries (together with the Company referred to as the "Group") are specialising in the provision of energy management contract services ("EMC contracts") under which the Group installs energy saving products in its customers' premises, including lighting and reactance filtering equipment supplied by the Group, and the subsequent savings made by the customers in their electricity charges are then shared between the Group and the customers thereby enabling the Group to generate recurring revenue rather than one-off sales revenue. Historically, the Group's business has been the development, manufacture and sale of low-powered light-emitting diode ("LED") display screens and modules.

On 20 August 2013, the Company formed a leasing finance company, Green Pearl Leasing (China) Company Limited ("GP Leasing Co"), the Company has yet to contribute the required amount to GP Leasing Co's registered capital, which was required to be contributed in US$ (approximately HK$128,680,000 or £10 million). The Company has applied to the Shanghai Municipal Commission of Commerce for an extension of the deadline for the first capital contribution. The Company seeks an extension of this deadline to 30 June 2014.

On 23 October 2006, the Company was admitted to trading on the AIM Market of the London Stock Exchange.

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

2. BASIS OF PREPARATION

(a) Statement of compliance

The interim financial information has been prepared in accordance with all applicable International Financial Reporting Standards, International Accounting Standards ("IFRSs"), which collective term includes all applicable individual IFRSs, International Accounting Standards and Interpretations issued by the International Accounting Standards Board and the Hong Kong Companies Ordinance.

(b) Basis of preparation of interim financial information

The interim financial information for the six-month period ended 31 December 2013 comprises the Company and its subsidiaries (together referred to as the "Group"). The 2014 interim financial information of the Company has not been audited or reviewed by the Company's independent auditor.

(c) Basis of measurement

The interim financial information has been prepared under the historical cost convention. The measurement bases are fully described in the accounting policies below.

The Group incurred a loss of approximately HK$8,524,000 for the period ended 31 December 2013 and, as of that date, the Group had net current liabilities and net liabilities of approximately HK$55,835,000 and HK$56,859,000 respectively. These conditions indicate the existence of material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern, with a potential consequence that the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.

The management have taken certain measures ("Measures") including to secure further contracts, which the management have assessed to be profitable, negotiate with certain directors to obtain their undertakings not to demand repayments of amounts due to them until there are funds available for repayment, secure new funding from existing shareholders and/or new investors and negotiate with its banker to renew bank facilities of the Group. On 16 December 2013, the first tranche of working capital loan amounting to RMB6,000,000 (equivalent of HK$7,720,000) has been received from the two independent third parties. In the opinion of the directors, based on the successful execution of the measures, the Group will have sufficient cash resources to satisfy its working capital and other financing requirements for the foreseeable future. Accordingly, the directors are of the opinion that it is appropriate to prepare the interim financial information on a going concern basis.

The interim financial information has been prepared on a going concern basis, the validity of which depends upon the ongoing financial support from the Company's substantial shareholder and successful execution of the Group's business plan, attainment of profitable operations and securing of new financing. These include successful securing of further EMC contracts which the management have assessed to be profitable, obtaining of undertakings from certain directors and a former director not to demand repayments of amounts due to them until there are funds available for the repayment and the renewal of bank facilities after the reporting date.

Should the use of the going concern basis in preparing the interim financial information be determined to be inappropriate, adjustments might have to be made to reduce the value of assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities.

(d) Deconsolidation of a subsidiary, Shenzhen China-LED Photo-Technology Limited ("Shenzhen LED")

The Group entered into a preliminary sale and purchase agreement dated 11 February 2009 to dispose of its entire interest in a wholly-owned subsidiary, Shenzhen LED. The assets and liabilities of Shenzhen LED had been reclassified as held for sale as at 30 June 2009 and the results of Shenzhen LED were previously presented under discontinued operation in the financial statements for the year ended 30 June 2009. However, the disposal of Shenzhen LED did not proceed. The sale and purchase agreement dated 11 February 2009 was effectively terminated on 17 April 2010.

Notwithstanding that the Group owned the entire equity interests in Shenzhen LED, Shenzhen LED was no longer regarded as a subsidiary of the Group as the directors of the Company are of the opinion that the control of Shenzhen LED had been lost in the prior year.

The directors of Company considered that Shenzhen LED is not under control by the Company given (i) the Company was unable to obtain any books and records from Shenzhen LED; (ii) the Company had not been provided with any up-to-date financial reports of Shenzhen LED and thus had no information as to the current financial situation of Shenzhen LED and (iii) as the current management of the Group had lost contact with the then management of Shenzhen LED. As a result, the Company expressed a lack of confidence in its ability to properly control and manage Shenzhen LED. In light of this situation, the directors of the Company resolved to deconsolidate Shenzhen LED with the effective date on 17 April 2010.

(e) Use of estimation and judgements

It should be noted that accounting estimates and assumptions are used in preparation of these financial statements. Although these estimates and assumptions are based on management's best knowledge and judgement of current events and actions, actual results may ultimately differ from those estimates and assumptions. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial information, are disclosed in note 4.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Subsidiaries

A subsidiary is an entity over which the Company is able to exercise control. Control is achieved where the Company, directly or indirectly, 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 are presently exercisable are taken into account.

The interim financial information comprises the financial statements of the Company and its subsidiaries. Inter-company transactions and balances between group companies together with unrealised profits are eliminated in full in preparing the interim financial information. Unrealised losses are also eliminated unless the transaction provides evidence of impairment on the asset transferred, in which case the loss is recognised in profit or loss.

The results of subsidiaries acquired of during the period are included in the consolidated statement of comprehensive income from the effective dates of acquisition or up to the effective dates of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

Acquisition of subsidiaries or businesses is accounted for using the acquisition method. The cost of an acquisition is measured at the aggregate of the acquisition-date fair value of assets transferred, liabilities incurred and equity interests issued by the Group, as the acquirer. The identifiable assets acquired and liabilities assumed are principally measured at acquisition-date fair value. The Group's previously held equity interest in the acquiree is re-measured at acquisition-date fair value and the resulting gains or losses are recognised in profit or loss. The Group may elect, on a transaction-by-transaction basis, to measure the non-controlling interest that represent present ownership interests in the subsidiary either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs incurred are expensed.

Subsequent to acquisition, the carrying amount of non-controlling interest that represent present ownership interests in the subsidiary is the amount of those interests at initial recognition plus the non-controlling interest's share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interest having a deficit balance.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In the application of the Group's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may ultimately differ from these estimates.

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

Going concern consideration

The assessment of the going concern assumption involves making a judgement by the directors, at a particular point of time, about the future outcome of events or conditions which are inherently uncertain. The directors consider that the Group has the capability to continue as a going concern and the major events or conditions, which may give rise to business risks, that individually or collectively may cast significant doubt upon the going concern assumption are set out in note 2(c).

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

Impairment of property, plant and equipment

The Group assesses impairment by evaluating conditions specific to the Group that may lead to impairment of the assets. If such condition 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.

Impairment of trade and other receivables

The Group determines impairment losses for bad and doubtful debts resulting from the inability of the customers/debtors to make the required payments. A considerable amount of estimate and judgement is required in assessing the ultimate realisation of these receivables which is based on the ageing of the accounts receivable balance and customer credit-worthiness. If the financial conditions of customers/debtors deteriorate, additional allowance for bad and doubtful debts may be required.

Estimate of current tax and deferred tax

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.

Inventory valuation

In determining the amount of allowance required for obsolete and slow-moving inventories, the Group would assess realisability of the inventories and the Group may make reference to the ageing analysis of the inventories. A considerable amount of judgement and estimates is required in determining such allowance. If conditions which have an impact on the net realisable value of inventories deteriorate, additional allowances may be required.

5. REVENUE

An analysis of the revenue from the Group's principal activities (note 1), which is also the Group's turnover, is as follows:

6. SEGMENT INFORMATION

Operating segment are identified on the basis of internal report about components of the Group that are regularly reviewed by the chief operating decision marker in order to allocate resources to the segment and to assess their performance.

Segment information reported was analysed on the basis of the types of products sold by the Group's operating division (i.e. LED element products, energy management contracts services and leasing services). The Group's reportable segments are as follows:

Operations:

- LED element products

- Energy management contracts services

- Leasing services

Information regarding the above segment is presented 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 periods ended 31 December 2013 and 2012.

Segment loss represents the loss incurred by each segment without allocation of certain administration costs including directors' salaries, finance costs and income tax expense. This is the measure reported to the chief operation 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:

• all assets are allocated to reportable segments other than unallocated assets including amount due from a director. Goodwill is allocated to respective reportable segment. Assets used jointly by reportable segments are allocated on the basis of the revenue earned by individual reportable segments; and

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

7. LOSSES PER SHARE

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

In calculating the diluted losses per share attributable to the owners of the Company for the periods ended 31 December 2013 and 2012, the potential issue of shares arising from the exercise of share options would decrease the losses per share attributable to the owners of the Company and is not taken into account as they have an anti-dilutive effect. Therefore, the diluted losses per share attributable to the owners of the Company for the periods ended 31 December 2013 and 2012 is based on the loss attributable to the owners of the Company of approximately HK$5,688,000 (2012: HK$5,540,000) and on the weighted average of 503,293,492 (2012: 366,238,269) ordinary shares outstanding during the period ended 31 December2013, which are the amounts used in calculating the basic losses per share for the period.

8. INVESTMENTS IN SUBSIDIARIES

The particulars of the subsidiaries at 31 December2013 are as follows:

Notes:

(a) The entire shareholding in Carten has been pledged as security for a loan from a director (note 14).

(b) On 20 August 2013, the Company formed a leasing finance company, Green Pearl Leasing (China) Company Limited ("GP Leasing Co"), the Company has yet to contribute the required amount to GP Leasing Co's registered capital, which was required to be contributed in US$ (approximately £10 million). The Company has applied to the Shanghai Municipal Commission of Commerce for an extension of the deadline for the first capital contribution. The Company seeks an extension of this deadline to 30 June 2014.

9. DEPOSIT PAID FOR ACQUISITION OF A SUBSIDIARY

The amount represented deposit paid for acquisition of a 100% equity interest in Shenzhen Green Pearl Energy Management Services Company Limited as at 31 December 2013.

10. PLEDGED BANK DEPOSIT

The amount represented deposit pledged to a bank to secure banking facilities (note 12(b)) granted to the Group.

11. CASH AND BANK BALANCES

12. BORROWINGS

Notes:

(a) All of the bank borrowings were denominated in RMB. The carrying amounts were equivalent to RMB2,080,000 as at 31 December 2013 (2012: RMB4,830,000) and were bearing interest at 106% to 125% of benchmark lending rate in the PRC per annum (2012: 115% to 130% of benchmark lending rate in PRC per annum). The secured bank borrowings were secured by a charge over the property owned by key management personnel of a subsidiary.

(b) The bank overdrafts were denominated in HK$ and obtained under banking facilities granted to the Group. The bank overdrafts were interest bearing over fixed deposit rate plus 2.25% per annum. The banking facilities were secured by a pledged deposit of approximately HK$10,006,000 (note 10) and the Group is required to ensure that (i) Mr. Stephen Chan to hold directorships of the Company and (ii) Mr. Stephen Chan to hold not less than 20% shareholdings of the Company. On 27 August 2013, the relevant bank revised the banking facilities with requirement (ii) removed.

(c) Including in other borrowings of HK$2,063,000 was denominated in RMB. The carrying amounts were equivalent to RMB1,600,000 as at 31 December 2013 (2012: nil) and were arranged at fixed annual interest rates of 8.4% per annum and repayable within one year. The secured borrowings were secured by a charge over the property owned by key management personnel of a subsidiary.

13. AMOUNTS DUE FROM/TO DIRECTORS / NON-CONTROLLING INTERESTS / A FORMER

DIRECTOR / RELATED PARTIES / SUBSIDIARIES

The amounts due from/to directors/ non-controlling interests/ a former director/ related parties/ subsidiaries are unsecured, interest-free and repayable on demand.

Particulars of amounts due from directors/a former director disclosed pursuant to section 161B of the Hong Kong Companies Ordinance are as follows:

14. LOANS FROM DIRECTORS / A FORMER DIRECTOR

Current liabilities

As at 31 December 2013, a loan from a director of approximately US$1,282,000 (equivalent to HK$10,000,000) to the Group was interest-bearing at rate of 9% per annum and due for repayment within the next twelve months and the interest will be settled in the form of the shares of the Company. The fair value of the liability component and the equity component were determined at inception of the received loan. The fair value of the liability component was calculated using a market interest rate for a similar loan and subsequently measured at amortisation cost. The residual amount, representing the value of the equity as share to be issued, was included in shareholders' equity. The loan is secured by a charged over Green Pearl BVI's entire shareholding in its subsidiary, Carten (note 8(a)).

The loan was due on 26 April 2013 and became immediately repayable on demand. Interest of approximately HK$160,000 was accrued as part of liability component for the period subsequent to the due date up to the reporting date.

As at 31 December 2013, a loan from a former director of approximately HK$600,000 to the Group and the Company was interest-bearing at a rate of three months LIBOR plus 4% per annum and repayable on demand. The loan was originally classified as loan from a director. On 10 October 2012, the director resigned and the loan was then reclassified as loan from a former director.

Non-current liability

In addition, as at 31 December 2013, a loan from a former director of approximately HK$3,379,000 was interest-bearing at the rate of three months LIBOR plus 4% per annum and repayable on 7 September 2014. The loan was originally classified as loan from a director. As mentioned as above, the director resigned and the loan was then classified as loan from a former director.

15. SHARE CAPITAL

16. 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. The following table discloses the movement of share options granted during the periods ended 31 December 2013 and 30 June 2013:

For the period ended 31 December 2013

For the year ended 30 June 2013

Note:

No share options were granted and vested during the periods ended 31 December 2013 and 30 June 2013.

17. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that the Group will be able to continue as going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from the year ended 30 June 2013.

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.

In order to safeguard the Group's ability to continue as a going concern, the Group has adopted certain measures as disclosure in note 2(c).

The capital structure of the Group consists of net debt (which included bank overdrafts, bank borrowings and loans from directors/former director), cash and bank balances and equity attributable to shareholders of the Company (comprising issued share capital, share premium, reserves and accumulated losses and non-controlling interests).

As at 31 December 2013, the Group had net current liabilities and a capital deficiency of approximately HK$55,835,000 and HK$56,859,000 respectively. Details of the consideration of the Group's going concern basis of preparing the interim financial information is provided in note 2(c). 

No gearing ratio was presented as the Group has net liabilities at the end of the reporting period.

18. FINANCIAL INSTRUMENTS

Categories of financial instruments

The carrying amounts of the Group's financial instruments as at 31 December 2013 and 30 June 2012 are as follows:

Financial risk management and objectives

The Group's major financial instruments include derivative financial instruments, trade and other receivables, pledged bank deposit, amount due from a director/a former director, cash and bank balances, trade and other payables, borrowings, amount due to a director, amounts due to non-controlling interests, amount due to a related company and loans from a former director/directors. Details of these financial instruments are disclosed in respective notes. The associated with these financial instruments and the policies on how to mitigate these risks are set out below. These risks include market risk (including foreign currency risk, interest rate risk and other price risks), credit risk and liquidity risk. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

Foreign currency risk management

The Group has minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities and denominated in a functional currency of the operation (i.e. HK$ and RMB). The Group currently does not have a foreign currency hedging policy in respect of foreign currency operation transactions, assets and liabilities. The Group monitors its foreign currency exposure closely and considers hedging significant foreign currency exposure should be the need arise.

Interest rate risk management

The Group's cash flow interest rate risk relates primarily to variables-rate borrowings. The Group's cash flow interest rate risk is mainly concentrated on the fluctuation of the benchmark lending rate of PRC from the Group's RMB bank borrowing. The Group does not use derivative financial instruments to hedge its interest rate risk.

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period. The analysis is prepared assuming the financial instruments outstanding at the end of the reporting period were outstanding for the whole year. A 50 basis points (2012: 50 basis points) increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management's assessment of the reasonably possible change in interest rates.

Other price risks

The Group has minimal exposure to price risk as the Group did not have any listed equity securities investment at 31 December 2013 and 30 June 2013.

Credit risk

Credit risk refers to the risk that the counterparty to a financial instrument would fail to discharge its obligation under the terms of the financial instrument and cause a financial loss to the Group.

In order to minimise the credit risk, management of the Group has delegated a term responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group regularly reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, management of the Group considers that the Group's credit risk is significantly reduced.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework to meet the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by monitoring adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.

Liquidity tables

The following tables detail the Group's and the Company's remaining contractual maturity for its non-derivative financial liabilities based on the agreed repayment terms. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. The tables include both interest and principal cash flows.

Maturities of the financial liabilities of the Group as at 31 December 2013 and 30 June 2013 were as follows:

As at 31 December 2013, the Group had net current liabilities and net liabilities of approximately HK$55,835,000 and HK$56,859,000 respectively. Details of the consideration of the Group's going concern basis of preparing the interim financial information is provided in note 2(c).

On 17 October 2011, the Company and a third party agreed to subscribe for 2,999 and 2,000 ordinary shares of Green Pearl BVI respectively. After the subscription, the equity interest held by the Company has been diluted from 100% to 60% of the enlarged registered capital of Green Pearl BVI. The Company continued to account for the Green Pearl BVI, Green Pearl and Yanford as subsidiaries of the Company and their financial results continued to be consolidated into the interim financial information of the Group.

(a) Partial disposal of Far East and Kepu

On 16 May 2012, Far East has allotted 6,668 ordinary shares to a third party for the consideration of HK$1 and waiver of 19,200,000 shares to be issued in the Company to the third party. After the transaction, the equity interest held by the Company has been diluted from 100% to 60% of the enlarged registered capital of Far East. The Group continued to account for the Far East and Kepu as subsidiaries and their financial results continued to be consolidated into the interim financial information of the Group. The balance of the "shares to be issued" was transferred to accumulated losses in The interim financial information and the difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration received is recognised directly in equity and attributable to owners of the Company.

19. OPERATING LEASES

The Group as lessee

At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows:

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

20. COMMITMENTS

Notes:

(a) On 28 June 2013, one of the Group's subsidiaries entered a Share Transfer Agreement to acquire 100% equity interests of an entity at a cash consideration of RMB1,000,000 and 75,494,024 ordinary shares of the Company. During the year ended 30 June 2013, the Company allotted the shares to the vendor and the shares issued are classified as deposit paid for acquisition of a subsidiary as at 31 December 2013.

(b) On 20 August 2013, the Group formed GP Leasing Co. As at 31 December 2013, the Group has yet to contribute the required amount to GP Leasing Co's registered capital, which was required to be contributed in US$ (approximately HK$128,680,000 or £10 million).

21. CONTINGENT LIABILITIES

(a) From financial year 2006 onward, the Group's former subsidiary, Shenzhen LED, qualified as a small-scale VAT taxpayer by Shenzhen Municipal Nanshan District State Tax Bureau under the PRC tax laws and continued to be subject to 6% VAT on its taxable sales revenues. VAT was payable when the right to receive sales proceeds was established when delivery of goods was made to the buyer. Shenzhen LED had not been paying VAT to the state tax bureau since financial year 2006 and had carried VAT payables of approximately HK$19,275,000, equivalent to RMB15,177,000 as at 31 December 2013 (2012: approximately HK$19,275,000, equivalent to RMB15,177,000). According to the tax laws, a penalty might 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 might 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 might charge against the Group, the directors of the Company were unable to estimate the amount of penalty potentially payables for the late payment of VAT as at 31 December 2013 and 30 June 2013 and considered that the probability of payment for such penalty is remote.

(b) During the period, the Company received letters from an adjudicator stating its principal and principal's insured have suffered a substantial loss arising from a fire at a hotel in Hong Kong. The Company's legal advisor has made requests to the adjudicator to disclose any reports compiled by the Hotel and/or the government investigator but, to date, these requests have not been responded. In the absence of further information, the directors, based on the best information available, do not consider that the Company has obligation relating to the fire and it is not practicable at this stage to make a reliable estimate for any possible loss or expenses arising from this in future. Accordingly, no provision has been made in the interim financial information for this matter.

22. 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 the related parties during the period:

Notes:

(a) Subcontracting income represented the income for subcontract of the operations of Kepu to a holder of non-controlling interest with effect from 1 June 2012 and the terms of the subcontract arrangement are that the holder of non-controlling interest will be entitled to the profits/losses of the subcontracted operations fully for one year from 1 June 2012 in return for annual fee. The contract was completed on 31 May 2013.

(b) Loan interest payable was accrued to a director of the Company and the imputed interests were credited to the liabilities component in respect of the loans from director.

(c) Loan interest payable was accrued to a former director of the Company.

(d) Consultancy fee expense was charged to a non-controlling interest for the provision or consultancy services in relation to the EMC contracts.

(e) During the year ended 30 June 2012, an ex-director of the Company agreed to take up a trade receivable of approximately HK$3,450,000.

The directors of the Company are of the opinion that the above related party transactions were conducted on normal commercial terms and in the ordinary course of business.

Compensation to key management personnel

The remuneration of directors and other members of key management during the period were as follows:

- End of Notes -