31st Mar 2008 12:43
LED International Holdings Ltd31 March 2008 31 March 2008 LED INTERNATIONAL HOLDINGS LIMITED INTERIM RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2007 Introduction I am pleased to report on the interim results of LED International HoldingsLimited ("LED International" or the "Company") and its subsidiaries (the"Group") for the financial period from 1 July 2007 to 31 December 2007. Theboard is satisfied with the progress the business is making so far and theresults under this interim period reflected a consolidation of the businessactivities of the Company under a challenging operating environment during thatinterim period. With the successful execution of the business and operatingstrategies, the board is now well positioned to create greater value for ourshareholders and to capture the significant growth opportunities in the LEDsector. I would like to take this opportunity to thank our management team and staff fortheir enthusiasm and commitment to the Company so far in this period ofconsolidation and evolution. Our performance and results to date are testamentto their continuing efforts and support. Financial Review Turnover and profit attributable to shareholders for the half-year ended 31December 2007 amounted to approximately HK$46.6 million and HK$2.6 millionrespectively. Gross profit margin achieved by the Group during this period wasapproximately 19.3 per cent that is lower than that of the historical trendarising from the consolidation and moving of our key production plants inShenzhen, the PRC during the financial period. As a result, certain high marginorders were not taken, leading to the drop of the overall profit margin duringthe financial period as compared with that of the corresponding period in 2006. In addition, the decrease in turnover comparing to the corresponding priorperiod in 2006 is further resulted from the delay in completion of a majorcontract that has contract sum over HK$22 million with a major real-estatedeveloper group in Hong Kong. The said contract is originally budgeted to becompleted and booked in this current interim period ended 31 December 2007. Inaccordance with the existing progress of the work, the contract is expected tobe substantially completed and the relevant income can be reflected in thecoming half year ending 30 June 2008. Dividend The Directors are not recommending payment of an interim dividend at this stagein the Company's development. It is the management's belief that the cashgenerated by the business can be more effectively deployed by investing in ouroperations to ensure the successful execution of the management's strategy,maximising the opportunity to create value for our shareholders. The Board iscommitted to the ongoing review of the Company's dividend policy. Board Changes To strengthen our capability in sales and marketing, manufacturing, research anddevelopment, finance and accounting, so as to further enhancing our overallcompetitiveness and business prospect, there was a reshuffle in our board afterthe first annual general meeting held on 18 February 2008. This change hasstrengthened the board and management and to establish stronger foothold ontechnical, sales and marketing as well as financial management and we believethe board is ready to drive the Company for future growth and to create value tothe shareholders of the Company. Prospect After reshuffle of the board, the Company has well positioned itself for abusiness growth and will also dedicate resources to strengthen our product rangeand earning base. The Company has signed a Design and Installation contract ("Contract") with CKManagement Co Ltd., a subsidiary under a Hong Kong major real-estate developerfor an amount of approximately HK$ 22 million. Under the terms of the Contract, LED International will provide and install LEDscreen of 778 square meters and Facade Lighting for a new hotel underconstruction in Hong Kong. Design and installation work was commenced in August2007 and the work is expected to be completed by June 2008. This is an excellent opportunity for LED International to work with top-tierreal estate developer for such project and after completion we believe the LEDscreen we installed will become one of the largest LED screens in Asia. With ourexpertise in technology and application, LED International will continue toexplore and capture such business opportunities and to further enhance our brandname in this sector. To capitalize on the Company expertise in LED applications, the Company is alsoin the process of exploring contracts in the PRC for applying LED to trafficlighting. We expect this will provide other growth opportunities after the morepopular application of LED in public lighting facilities. To capitalise on the expertise in LED manufacturing and sales and establishedbusiness network as well as to diversify our business geographically, theCompany is discussing other LED projects in Latin America and the Company isalso in discussion with a LED outdoor media business opportunities in Chinaincluding LED screens with solid advertising contracts, with a view of growingthis to be one of the major drivers for the business growth. With all these progress we made, the board believe the Company will achieve astronger growth of business and to cement its leading position in the LEDsector. Appreciation Finally, on behalf of the Board, I would like to thank our customers, suppliersand shareholders for their continued support of LED International HoldingsLimited. I would also like to acknowledge the hard work of the management andall the staff for their contribution and dedication to the Company. Thomas LiExecutive Chairman Date: 31 March 2008 CONSOLIDATED INCOME STATEMENT For the half year ended 31 December 2007 2006 NOTES HK$ HK$ (Unaudited) (Unaudited) Turnover 2 46,605,862 55,482,048Cost of Sales (37,598,078) (37,594,742) Gross profit 9,007,784 17,887,306 Other revenue 1,862,632 795,868Distribution & expenses (1,001,515) (477,105)Administrative expenses (6,769,014) (2,628,194)Other operating expenses (480,883) (1,874,352) Operating profit 2,619,004 13,649,523 Interest income 1,774 31,905 Profit from ordinary activities 2,620,778 13,681,428Taxation (5,237) - Profit after taxation 2,615,541 13,681,428 Earnings per share in HK$ - basic 3 0.018 0.018 Earnings per share in HK$ - basic 3 0.016 0.104 CONSOLIDATED BALANCE SHEET At 31 December At 30 June 2007 2007 NOTES HK$ HK$ (Unaudited) (Audited) Non-Current AssetsIntangible assets 19,525,131 19,273,125Property, plant and equipment 35,613,613 34,513,060Goodwill 7,726,595 - Total non-current assets 62,865,339 53,786,185 Current AssetsInventories 6,772,817 8,060,279Trade receivables 38,219,510 31,711,636Sundry debtors & prepayments 20,618,496 22,680,949Amounts due from related companies 14,199,450 11,962,489Cash and bank balances 2,834,807 510,304 Total current assets 82,645,080 74,925,657 Current LiabilitiesTrade payables 6,919,643 1,158,507Sundry creditors and accrued 51,991,678 49,963,028expensesDeposits received 2,722,869 2,464,250Taxation liabilities 15,813,981 16,445,565 Total current liabilities 77,448,171 70,031,350 Total assets less liabilities 68,062,248 58,680,492 Shareholders' EquityCalled up share capital 5 14,371,357 13,687,007Share premium 48,139,094 45,519,305Capital reserve 103,790 103,790Share option reserve 975,635 975,635Exchange reserve 3,995,407 673,999Accumulated profits 476,965 (2,279,244) Shareholders' Equity 68,062,248 58,680,492 CONSOLIDATED CASH FLOW STATEMENT For half-year ended 31 December 2007 2006 HK$ HK$ (Unaudited) (Unaudited) Operating activitiesOperating profit 2,619,004 13,649,523Adjustments for:Amortisation 498,342 490,701Depreciation 2,726,346 1,646,497 Operating profit before working 5,843,692 15,786,721capital changeInventories 9,169,837 (8,738,592)Trade receivables (net of taxation 1,705,694 (5,870,741)liabilities)Sundry debtors & prepayments 2,839,635 (2,006,485)Amounts due from related companies (2,381,602) 1,108,911Trade payable (1,359,232) 375,181Sundry creditors and accrued (833,654) 1,176,597expensesDeposits received 258,619 1,776,260Exchange translation 985,615 1,513,751 Net cash from operating activities 16,228,604 5,121,585 Investing activitiesPurchasing of property, plant and (48,804) (4,084,568)equipmentInterest received 1,774 31,905Acquisition of subsidiary (17,161,210)Net cash used in investing (17,208,240) (4,052,663)activities Financing activitiesProceeds from the issue of new 3,304,139 14,751,501sharesExpenses of share issues - (8,834,509) Net cash from financing activities 3,304,139 5,916,992 Increase in cash and cash 2,324,503 6,985,914equivalentsCash and cash equivalents at 510,304 68,160beginning of the period Cash and cash equivalents at end of 2,834,807 7,054,074the period NOTES TO THE INTERIM FINANCIAL INFORMATIONFOR THE SIX MONTHS ENDED 31 DECEMBER 2007 1. INTERIM FINANCIAL INFORMATION LED International Holdings Limited (the "Company") was incorporated, and isregistered, in Hong Kong under the Hong Kong Companies Ordinance, on 4 July2006, as a company with limited liability. On 12 October 2006 the Company raised £500,000 by the issuance of 12,500,000ordinary shares. On 13 October 2006, the Company acquired the entire sharecapital of LED International (Far East) Limited (formerly Hong Bang Technology(China) Limited, the immediate holding company of Shenzhen China-LEDPhoto-Technology Limited, a wholly foreign owned enterprise in the PRC, for theissuance of 119,370,055 ordinary shares. On 23 October 2006, the Company raised£500,000 by the issuance of 5,000,000 ordinary shares through a placement ongaining admission to AIM. For the half-year ended 31 December 2006 In order to better present and understand the financial performance of theGroup, the Directors have accounted for the aforementioned group reconstructionusing merger accounting principles for the half-year ended 31 December 2006.Accordingly, the results have been prepared to show the position as if theexisting group structure comprising the Company and its three subsidiaries hadbeen in existence throughout the reporting period ended 31 December 2006. Theresults have been compiled by taking the results of the Company and its threesubsidiaries before the group reconstruction and adjusting for the capitalstructure of the new group. These interim financial results for the half-year ended 31 December 2006 havebeen prepared in accordance with International Financial Reporting Standards ("IRFS"). The accounting policies and presentation applied to these financialstatements are consistent with those disclosed in Part IV "Accountants Report onShenzhen China - LED Photo Technology Limited" in the Company's admissiondocument dated 17 October 2006 for its proposed placing and admission to AIM. For the half-year ended 31 December 2007 The consolidated financial statements for the half-year ended 31 December 2007include the financial statements of the Company and its subsidiaries (the "Group") made up to 31 December 2007. Subsidiaries are entities over which the Group has control. Control is the powerto govern the financial and operating policies of an entity so as to obtainbenefits from its activities. The existence and effect of potential votingrights that are currently exercisable or convertible are considered whenassessing whether the Group has control. Subsidiaries are fully consolidatedfrom the date on which control is transferred to the Group. They arede-consolidated from the date the control ceases. The purchase method of accounting is used to account for the acquisition ofsubsidiaries by the Group for the half-year ended 31 December 2007. The cost ofan acquisition is measured as the fair value of the assets given, equityinstruments issued and liabilities incurred or assumed at the date of exchange,plus costs directly attributable to the acquisition. Identifiable assetsacquired and liabilities and contingent liabilities assumed in a businesscombination are measured initially at their fair values at the acquisition date,irrespective of the extent of any minority interest. The excess of the cost ofacquisition over the fair value of the Group's share of the identifiable netassets acquired is recorded as goodwill. If the cost of acquisition is less thanthe fair value of the net assets of the subsidiary acquired, the difference isrecognised directly in the income statement. Intra-group transactions, balances and unrealised profits on transactionsbetween group companies are eliminated. Unrealised losses are also eliminatedbut considered an impairment indicator of the asset transferred. Accountingpolices of subsidiaries have been changed where necessary to ensure consistencywith the policies adopted by the Group. In the Company's balance sheet, investments in subsidiaries are stated at costless allowance for impairment losses. The results of subsidiaries are accountedfor by the Company on the basis of dividends received and receivable. These financial statements for the half-year ended 31 December 2006 and 2007 areunaudited but have been reviewed in accordance with the International Standardon Review Engagements 2410 issued by the International Auditing AssuranceStandards Board. These interim results do not constitute statutory financialstatements within the meaning of section 240 of the Companies Act 1985. TheRenminbi is the currency of the primary economic environment in which the groupentities operate (the "functional currency"). Hong Kong Dollar is the currencyin which these financial statements are presented (the "presentation currency").For financial reporting purposes, these financial statements have beentranslated from the functional currency to the presentation currency at theapproximate exchange rates ruling at the balance sheet date. The results of theforeign operation have been translated at the approximate average rates rulingduring the reporting period. 2. TURNOVER The principal activity of the Company is investment holding. As at 31 December 2007, the Company has the following three wholly ownedsubsidiaries and the details of the principal activities of the wholly ownedsubsidiaries are as follows: Subsidiaries Principal activities LED International (Far East) Limited (formerly Hong Bang Investment holdingTechnology (China) Limited) Shenzhen China-LED Photo-Technology Limited Manufacturer of LED related products Kepu Electrionic Technology (Shenzhen) Company Limited Manufacturer of LED related products Turnover represented the revenue received or receivable for goods and servicesprovided in the normal course of business, net of discounts, VAT and other salesrelated taxes. 3. EARNINGS PER ORDINARY SHARE Basic and diluted earnings per share figures are based on the following profitsand numbers of shares For the half year ended 31 December 2007 2006Basic HK$ HK$Profit for the financial period 2,615,541 13,681,428 Number NumberWeighted average number of shares 141,630,763 12,679,848 Diluted HK$ HK$Profit for the financial period 2,615,541 13,681,428 Number NumberWeighted average number of shares 158,560,997 131,481,338 For the half-year ended 31 December 2006 The weighted average number of shares in issue for the half-year ended 31December 2006 represents the issued and outstanding shares of the Companyarising from incorporation and issuance relating to group reorganisation at119,370,065 which have been assumed to have been issued at the beginning of thereporting period along with shares issued arising from placements made from thedate of their issuance. For the half-year ended 31 December 2007 On 25 October 2007, 6,843,503 new ordinary shares of HKD0.10 each were issued toa strategic investor at 3 pence each, raising gross proceeds of £205,305. Takinginto the said new issue of shares on 25 October 2007, the weighted averagenumber of shares in issue for the half-year ended 31 December 2007 is141,630,763. Diluted Options issued on 23 October 2006 totalling 19,161,811 have been taken intoaccount in the weighted average number of shares for the diluted earnings pershare calculation. 4. DIVIDEND The Directors do not propose an interim dividend for the half-year ended 31December 2007 (2006: Nil). 5. SHARE CAPITAL Note Number of shares HKD'000 Authorised: Ordinary shares of HKD1.00 each (a) 10,000 10 at the date of incorporationShare recognition (b)(i) 90,000 -Increase in authorized share capital (b)(ii) 199,900,000 19,990Ordinary shares of HKD0.10 each 200,000,000 20,000 at 31 December 2007 Issued and fully paid:Ordinary shares of HKD1.00 each (a) 1 - at the date of incorporationShare reorganisation (b)(i) 9 -Issue of new shares (c) 12,500,000 1,250Issue of new shares (d) 119,370,055 11,937Issue of new shares (e) 5,000,000 500Issue of new shares (f) 6,843,503 684Ordinary shares of HKD0.10 each 143,713,568 14,371 at 31 December 2007 Note: (a) The Company was incorporated on 4 July 2006 with an authorisedshare capital of HKD10,000 divided into 10,000 ordinary shares of HKD1.00 each.Upon incorporation, one ordinary share was allotted and issued at par to ashareholder. (b) Pursuant to written resolutions dated 10 August 2006, (i) the authorised and issued share capital of the Company wasreorganised in that one ordinary share of HKD1.00 each was subdivided into 10ordinary shares of HKD0.10 each; and (ii) the authorised share capital was increased from HKD100,000 divided into100,000 ordinary shares of HKD0.10 each to HKD20,000,000 divided into200,000,000 ordinary shares of HKD0.10 each by the creation of additional199,900,000 shares of HKD0.10 each. (c) Pursuant to a written resolution dated 12 October 2006,12,500,000 ordinary shares of HKD0.10 each were issued for 4 pence per share. (d) On 13 October 2006, 119,370,055 ordinary shares of HKD0.10 eachwere allotted and issued to the shareholders of LED International (Far East)Limited in consideration for transferring the entire share capital in LEDInternational (Far East) Limited. (e) On 23 October 2006, 5,000,000 ordinary shares of HKD0.10 eachwere issued for 10 pence per share upon the placing of shares on the AIM. (f) On 25 October 2007, 6,843,503 new ordinary shares of HKD0.10each were issued to a strategic investor at 3 pence each, raising gross proceedsof £205,305. The proceeds were used to fund expansion of the business. 6. RELATED PARTY TRANSACTIONS The Group had the following material transactions with related parties duringthe relevant period and the balances with related parties as at 31 December 2006and 2007:- Strong Base Electronics - Optic Technology Corp Strong Base Electronics - Optic Technology Corp ("Strongbase") is a relatedparty by way of common ownership and control. The Group had the followingmaterial transactions with Strongbase during the relevant period and balanceswith Strongbase as at 30 June 2007 and 31 December 2007. For the half year ended 31 December 2007 2006 HK$ HK$ Sale of finished goods Nil 2,859,856Sale of materials 370,258 NilRental income received 712,034 759,556 At 31 December 2007 At 30 June 2007 HK$ HK$ Amount due from Strong base 6,741,473 3,812,058 Guangdong Yayi Photo-Technology Limited Guangdong Yayi Photo Technology Limited ("Yayi") is a related party by way ofcommon ownership and control. The Group had the following material transactionswith Yayi during the relevant period and balances with Yayi as at 30 June 2007and 31 December 2007. For the half year ended 31 December 2007 2006 HK$ HK$ Sale of finished goods Nil 3,376,454Purchases of raw materials & finished goods Nil 14,283,526 At 31 December 2007 At 30 June 2007 HK$ HK$ Amount due from Yayi 7,457,977 8,150,431 7. EVENT AFTER THE BALANCE SHEET DATE On 4th April 2007, LED International (Far East) Limited entered into anacquisition agreement to acquire the entire issued share capital of KepuElectrionic Technology (Shenzhen) Company Limited ("Kepu") from a third party ata consideration of RMB30,000,000. Kepu, through its wholly owned subsidiary inPRC, is principally engaged in manufacturing LED signboards. In accordance with terms of the acquisition agreement, a payment ofRMB15,000,000 has been made before the balance sheet date and the transactionwas completed on 28th July 2007. As approved by the shareholders in the firstannual general meeting held on 18 February 2008, the balance payment ofRMB15,000,000 is to be made by issue of new shares of the Company after thebalance sheet date. Contact Dennis Ow - LED International Holdings Ltd +852 9197 9332 www.led-intl.comDominique Doussot/Jonathan Evans - Zimmerman Adams +44 (0)20 7060 1760International Ltd (Nominated Advisers and Brokers) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Led International Holdings