RNS Number:1702R
LED International Holdings Ltd
31 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 Holdings
Limited ("LED International" or the "Company") and its subsidiaries (the
"Group") for the financial period from 1 July 2007 to 31 December 2007. The
board is satisfied with the progress the business is making so far and the
results under this interim period reflected a consolidation of the business
activities of the Company under a challenging operating environment during that
interim period. With the successful execution of the business and operating
strategies, the board is now well positioned to create greater value for our
shareholders and to capture the significant growth opportunities in the LED
sector.
I would like to take this opportunity to thank our management team and staff for
their enthusiasm and commitment to the Company so far in this period of
consolidation and evolution. Our performance and results to date are testament
to their continuing efforts and support.
Financial Review
Turnover and profit attributable to shareholders for the half-year ended 31
December 2007 amounted to approximately HK$46.6 million and HK$2.6 million
respectively. Gross profit margin achieved by the Group during this period was
approximately 19.3 per cent that is lower than that of the historical trend
arising from the consolidation and moving of our key production plants in
Shenzhen, the PRC during the financial period. As a result, certain high margin
orders were not taken, leading to the drop of the overall profit margin during
the financial period as compared with that of the corresponding period in 2006.
In addition, the decrease in turnover comparing to the corresponding prior
period in 2006 is further resulted from the delay in completion of a major
contract that has contract sum over HK$22 million with a major real-estate
developer group in Hong Kong. The said contract is originally budgeted to be
completed and booked in this current interim period ended 31 December 2007. In
accordance with the existing progress of the work, the contract is expected to
be substantially completed and the relevant income can be reflected in the
coming half year ending 30 June 2008.
Dividend
The Directors are not recommending payment of an interim dividend at this stage
in the Company's development. It is the management's belief that the cash
generated by the business can be more effectively deployed by investing in our
operations to ensure the successful execution of the management's strategy,
maximising the opportunity to create value for our shareholders. The Board is
committed to the ongoing review of the Company's dividend policy.
Board Changes
To strengthen our capability in sales and marketing, manufacturing, research and
development, finance and accounting, so as to further enhancing our overall
competitiveness and business prospect, there was a reshuffle in our board after
the first annual general meeting held on 18 February 2008. This change has
strengthened the board and management and to establish stronger foothold on
technical, sales and marketing as well as financial management and we believe
the board is ready to drive the Company for future growth and to create value to
the shareholders of the Company.
Prospect
After reshuffle of the board, the Company has well positioned itself for a
business growth and will also dedicate resources to strengthen our product range
and earning base.
The Company has signed a Design and Installation contract ("Contract") with CK
Management Co Ltd., a subsidiary under a Hong Kong major real-estate developer
for an amount of approximately HK$ 22 million.
Under the terms of the Contract, LED International will provide and install LED
screen of 778 square meters and Facade Lighting for a new hotel under
construction in Hong Kong. Design and installation work was commenced in August
2007 and the work is expected to be completed by June 2008.
This is an excellent opportunity for LED International to work with top-tier
real estate developer for such project and after completion we believe the LED
screen we installed will become one of the largest LED screens in Asia. With our
expertise in technology and application, LED International will continue to
explore and capture such business opportunities and to further enhance our brand
name in this sector.
To capitalize on the Company expertise in LED applications, the Company is also
in the process of exploring contracts in the PRC for applying LED to traffic
lighting. We expect this will provide other growth opportunities after the more
popular application of LED in public lighting facilities.
To capitalise on the expertise in LED manufacturing and sales and established
business network as well as to diversify our business geographically, the
Company is discussing other LED projects in Latin America and the Company is
also in discussion with a LED outdoor media business opportunities in China
including LED screens with solid advertising contracts, with a view of growing
this to be one of the major drivers for the business growth.
With all these progress we made, the board believe the Company will achieve a
stronger growth of business and to cement its leading position in the LED
sector.
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
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
55,482,048
Cost of Sales (37,598,078)
(37,594,742)
Gross profit 9,007,784
17,887,306
Other revenue 1,862,632
795,868
Distribution & 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
13,681,428
Taxation (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 Assets
Intangible assets 19,525,131
19,273,125
Property, plant and equipment 35,613,613
34,513,060
Goodwill 7,726,595
-
Total non-current assets 62,865,339
53,786,185
Current Assets
Inventories 6,772,817
8,060,279
Trade receivables 38,219,510
31,711,636
Sundry debtors & prepayments 20,618,496
22,680,949
Amounts due from related companies 14,199,450
11,962,489
Cash and bank balances 2,834,807
510,304
Total current assets 82,645,080
74,925,657
Current Liabilities
Trade payables 6,919,643
1,158,507
Sundry creditors and accrued 51,991,678
49,963,028
expenses
Deposits received 2,722,869
2,464,250
Taxation 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' Equity
Called up share capital 5 14,371,357
13,687,007
Share premium 48,139,094
45,519,305
Capital reserve 103,790
103,790
Share option reserve 975,635
975,635
Exchange reserve 3,995,407
673,999
Accumulated 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 activities
Operating profit 2,619,004
13,649,523
Adjustments for:
Amortisation 498,342
490,701
Depreciation 2,726,346
1,646,497
Operating profit before working 5,843,692
15,786,721
capital change
Inventories 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)
1,108,911
Trade payable (1,359,232)
375,181
Sundry creditors and accrued (833,654)
1,176,597
expenses
Deposits received 258,619
1,776,260
Exchange translation 985,615
1,513,751
Net cash from operating activities 16,228,604
5,121,585
Investing activities
Purchasing of property, plant and (48,804)
(4,084,568)
equipment
Interest received 1,774
31,905
Acquisition of subsidiary (17,161,210)
Net cash used in investing (17,208,240)
(4,052,663)
activities
Financing activities
Proceeds from the issue of new 3,304,139
14,751,501
shares
Expenses 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
6,985,914
equivalents
Cash and cash equivalents at 510,304
68,160
beginning of the period
Cash and cash equivalents at end of 2,834,807
7,054,074
the period
NOTES TO THE INTERIM FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2007
1. INTERIM FINANCIAL INFORMATION
LED International Holdings Limited (the "Company") was incorporated, and is
registered, in Hong Kong under the Hong Kong Companies Ordinance, on 4 July
2006, as a company with limited liability.
On 12 October 2006 the Company raised £500,000 by the issuance of 12,500,000
ordinary shares. On 13 October 2006, the Company acquired the entire share
capital of LED International (Far East) Limited (formerly Hong Bang Technology
(China) Limited, the immediate holding company of Shenzhen China-LED
Photo-Technology Limited, a wholly foreign owned enterprise in the PRC, for the
issuance 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 on
gaining admission to AIM.
For the half-year ended 31 December 2006
In order to better present and understand the financial performance of the
Group, the Directors have accounted for the aforementioned group reconstruction
using merger accounting principles for the half-year ended 31 December 2006.
Accordingly, the results have been prepared to show the position as if the
existing group structure comprising the Company and its three subsidiaries had
been in existence throughout the reporting period ended 31 December 2006. The
results have been compiled by taking the results of the Company and its three
subsidiaries before the group reconstruction and adjusting for the capital
structure of the new group.
These interim financial results for the half-year ended 31 December 2006 have
been prepared in accordance with International Financial Reporting Standards ("
IRFS"). The accounting policies and presentation applied to these financial
statements are consistent with those disclosed in Part IV "Accountants Report on
Shenzhen China - LED Photo Technology Limited" in the Company's admission
document 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 2007
include 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 power
to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when
assessing whether the Group has control. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are
de-consolidated from the date the control ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group for the half-year ended 31 December 2007. The cost of
an acquisition is measured as the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange,
plus costs directly attributable to the acquisition. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group's share of the identifiable net
assets acquired is recorded as goodwill. If the cost of acquisition is less than
the fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement.
Intra-group transactions, balances and unrealised profits on transactions
between group companies are eliminated. Unrealised losses are also eliminated
but considered an impairment indicator of the asset transferred. Accounting
polices of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
In the Company's balance sheet, investments in subsidiaries are stated at cost
less allowance for impairment losses. The results of subsidiaries are accounted
for by the Company on the basis of dividends received and receivable.
These financial statements for the half-year ended 31 December 2006 and 2007 are
unaudited but have been reviewed in accordance with the International Standard
on Review Engagements 2410 issued by the International Auditing Assurance
Standards Board. These interim results do not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985. The
Renminbi is the currency of the primary economic environment in which the group
entities operate (the "functional currency"). Hong Kong Dollar is the currency
in which these financial statements are presented (the "presentation currency").
For financial reporting purposes, these financial statements have been
translated from the functional currency to the presentation currency at the
approximate exchange rates ruling at the balance sheet date. The results of the
foreign operation have been translated at the approximate average rates ruling
during 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 owned
subsidiaries and the details of the principal activities of the wholly owned
subsidiaries are as follows:
Subsidiaries Principal activities
LED International (Far East) Limited (formerly Hong Bang Investment holding
Technology (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 services
provided in the normal course of business, net of discounts, VAT and other sales
related taxes.
3. EARNINGS PER ORDINARY SHARE
Basic and diluted earnings per share figures are based on the following profits
and numbers of shares
For the half year ended 31
December
2007
2006
Basic
HK$
HK$
Profit for the financial period 2,615,541
13,681,428
Number
Number
Weighted 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
Number
Weighted 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 31
December 2006 represents the issued and outstanding shares of the Company
arising from incorporation and issuance relating to group reorganisation at
119,370,065 which have been assumed to have been issued at the beginning of the
reporting period along with shares issued arising from placements made from the
date 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 to
a strategic investor at 3 pence each, raising gross proceeds of £205,305. Taking
into the said new issue of shares on 25 October 2007, the weighted average
number of shares in issue for the half-year ended 31 December 2007 is
141,630,763.
Diluted
Options issued on 23 October 2006 totalling 19,161,811 have been taken into
account in the weighted average number of shares for the diluted earnings per
share calculation.
4. DIVIDEND
The Directors do not propose an interim dividend for the half-year ended 31
December 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 incorporation
Share recognition (b)(i) 90,000
-
Increase in authorized share capital (b)(ii) 199,900,000
19,990
Ordinary 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 incorporation
Share reorganisation (b)(i) 9
-
Issue of new shares (c) 12,500,000
1,250
Issue of new shares (d) 119,370,055
11,937
Issue of new shares (e) 5,000,000
500
Issue of new shares (f) 6,843,503
684
Ordinary 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 authorised
share 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 a
shareholder.
(b) Pursuant to written resolutions dated 10 August 2006,
(i) the authorised and issued share capital of the Company was
reorganised in that one ordinary share of HKD1.00 each was subdivided into 10
ordinary shares of HKD0.10 each; and
(ii) the authorised share capital was increased from HKD100,000 divided into
100,000 ordinary shares of HKD0.10 each to HKD20,000,000 divided into
200,000,000 ordinary shares of HKD0.10 each by the creation of additional
199,900,000 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 each
were allotted and issued to the shareholders of LED International (Far East)
Limited in consideration for transferring the entire share capital in LED
International (Far East) Limited.
(e) On 23 October 2006, 5,000,000 ordinary shares of HKD0.10 each
were 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 HKD0.10
each were issued to a strategic investor at 3 pence each, raising gross proceeds
of £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 during
the relevant period and the balances with related parties as at 31 December 2006
and 2007:-
Strong Base Electronics - Optic Technology Corp
Strong Base Electronics - Optic Technology Corp ("Strongbase") is a related
party by way of common ownership and control. The Group had the following
material transactions with Strongbase during the relevant period and balances
with 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
2,859,856
Sale of materials 370,258
Nil
Rental 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 of
common ownership and control. The Group had the following material transactions
with Yayi during the relevant period and balances with Yayi 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
3,376,454
Purchases 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 an
acquisition agreement to acquire the entire issued share capital of Kepu
Electrionic Technology (Shenzhen) Company Limited ("Kepu") from a third party at
a consideration of RMB30,000,000. Kepu, through its wholly owned subsidiary in
PRC, is principally engaged in manufacturing LED signboards.
In accordance with terms of the acquisition agreement, a payment of
RMB15,000,000 has been made before the balance sheet date and the transaction
was completed on 28th July 2007. As approved by the shareholders in the first
annual general meeting held on 18 February 2008, the balance payment of
RMB15,000,000 is to be made by issue of new shares of the Company after the
balance sheet date.
Contact
Dennis Ow - LED International Holdings Ltd +852 9197 9332
www.led-intl.com
Dominique Doussot/Jonathan Evans - Zimmerman Adams +44 (0)20 7060 1760
International Ltd (Nominated Advisers and Brokers)
This information is provided by RNS
The company news service from the London Stock Exchange
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