Stock Code :776 Interim Report 2014
CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Mr. Cheng Ting Kong (Chairman) Ms. Yeung So Lai Mr. Leung Ming Ho Mr. Leung Kwok Yin Independent Non-Executive Directors Mr. Fung Tze Wa Mr. Ting Wong Kacee Mr. Tse Ting Kwan AUDIT COMMITTEE Mr. Fung Tze Wa (Chairman) Mr. Ting Wong Kacee Mr. Tse Ting Kwan REMUNERATION COMMITTEE Mr. Ting Wong Kacee (Chairman) Mr. Fung Tze Wa Mr. Tse Ting Kwan NOMINATION COMMITTEE Mr. Tse Ting Kwan (Chairman) Mr. Fung Tze Wa Mr. Ting Wong Kacee COMPANY SECRETARY Mr. Luk Chi Keung AUDITORS RSM Nelson Wheeler 29th Floor Caroline Centre 28 Yun Ping Road Hong Kong 28 29 2014 1
REGISTERED OFFICE Cricket Square, Hutchins Drive P. O. Box 2681 Grand Cayman KY1-1111 Cayman Islands HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG Room 2410-2411, 24/F, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong PRINICPAL BANKERS In Hong Kong: The Hongkong and Shanghai Banking Corporation Limited Cricket Square, Hutchins Drive P. O. Box 2681 Grand Cayman KY1-1111 Cayman Islands 168-200 24 2410 2411 In the PRC: Hua Xia Bank China Merchants Bank Bank of China CAYMAN ISLANDS PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Maples Fund Services (Cayman) Limited PO Box 1093, Boundary Hall, Cricket Square Grand Cayman, KY1-1102 Cayman Islands HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Investor Services Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong STOCK CODE 0776 INVESTOR RELATIONS For other information relating to the Company, please contact Corporate Communications Department website: www.776.hk e-mail: ir@776.hk Maples Fund Services (Cayman) Limited PO Box 1093, Boundary Hall, Cricket Square Grand Cayman, KY1-1102 Cayman Islands 183 22 0776 www.776.hk ir@776.hk 2 JF Household Furnishings Limited Interim Report 2014
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2014 The board (the Board ) of directors (the Directors ) of JF Household Furnishings Limited (the Company ) is pleased to announce the unaudited results of the Company and its subsidiaries (collectively, the Group ) for the six months ended 30 June 2014, together with the unaudited comparative figures for the corresponding period in 2013 as follows: Unaudited Six months ended 30 June 2014 2013 Note REVENUE 72,631 79,995 Cost of goods sold (68,857) (75,389) Gross profit 3,774 4,606 Other income 4 468 208 Distribution costs (398) (297) Administrative expenses (8,755) (12,901) Other operating expenses (230) LOSS FROM OPERATIONS (5,141) (8,384) Finance costs (1,308) (1,288) LOSS BEFORE TAX (6,449) (9,672) Income tax expense 5 LOSS FOR THE PERIOD (6,449) (9,672) Other comprehensive income: Items that may be subsequently reclassified to profit or loss: Exchange differences on translating foreign operations (2,427) 551 Total comprehensive loss for the period (8,876) (9,121) LOSS PER SHARE Basic and diluted (HK cents) 7 (2.52) (4.04) 2014 3
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2014 Unaudited Audited At At 30 June 2014 31 December 2013 Note Non-current assets Property, plant and equipment 8 13,542 13,509 Investment properties 5,400 5,630 Deposits paid for acquisition of long-term assets 105,107 5,107 124,049 24,246 Current assets Inventories 25,231 29,162 Trade receivables 9 14,514 21,914 Due from related companies 5,729 5,062 Deposits, other receivables and prepayments 25,036 6,323 Restricted cash and bank balances 1,080 1,261 Cash and bank balances 57,648 23,390 129,238 87,112 Current liabilities Trade and bills payables 10 11,124 14,165 Other payables and accruals 36,146 33,831 Current tax liabilities 794 Bank borrowings 38,447 35,661 85,717 84,451 NET CURRENT ASSETS 43,521 2,661 TOTAL ASSETS LESS CURRENT LIABILITIES 167,570 26,907 Non-current liabilities Deferred tax liabilities 1,716 1,716 NET ASSETS 165,854 25,191 CAPITAL AND RESERVES Share capital 11 2,872 2,393 Reserves 162,982 22,798 TOTAL EQUITY 165,854 25,191 4 JF Household Furnishings Limited Interim Report 2014
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2014 Six months ended 30 June 2014 2013 Total equity of the Group at 1 January 25,191 50,434 Change in equity during the period: Exchange differences arising on translating on foreign operations (2,427) 551 Loss for the period (6,449) (9,672) Total comprehensive loss for the period (8,876) (9,121) Placement of shares (note 11) 11 479 Share premium arising from placing of shares 149,060 Share premium arising from exercise of warrant subscription rights 96 Total equity of the Group at 30 June 165,854 41,409 2014 5
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2014 Six months ended 30 June 2014 2013 Net cash used in operating activities (14,566) (18,383) Net cash (used in)/generated from investing activities (101,653) 6,265 Net cash generated from/(used in) financing activities 151,017 (3,315) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 34,798 (15,433) CASH AND CASH EQUIVALENTS AT 1 JANUARY 23,390 36,260 EFFECT OF FOREIGN EXCHANGE RATE CHANGES (540) 142 CASH AND CASH EQUIVALENTS AT 30 JUNE 57,648 20,969 ANALYSIS OF CASH AND CASH EQUIVALENTS Cash and bank balances 57,648 20,969 6 JF Household Furnishings Limited Interim Report 2014
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL AND BASIS OF PREPARATION 1. The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands. The address of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The address of its principal place of business is Room 2410-2411, 24/F., China Merchants Tower, Shun Tak Centre, 168-200 Connaught Road Central, Sheung Wan, Hong Kong. The Company s shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the Stock Exchange ). Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands 168-200 24 2410 2411 The Company is an investment holding company. The condensed consolidated financial statements are presented in Hong Kong dollars, which is the Company s functional and presentation currency. The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). 34 16 2. PRINCIPAL ACCOUNTING POLICIES 2. The condensed consolidated financial statements have been prepared on the historical cost basis, except for certain properties and financial instruments, which are measured at fair value, as appropriate. Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2014 are the same as those followed in the preparation of the Group s annual financial statements for the year ended 31 December 2013. Application of a new Interpretation and amendments to Hong Kong Financial Reporting Standards ( HKFRSs ) In the current interim period, the Group has applied, for the first time, the following new Interpretation and amendments to HKFRSs issued by the HKICPA that are relevant for the preparation of the Group s condensed consolidated financial statements: Amendments to HKFRS 10, HKFRS 12 and HKAS 27 Investment Entities; 10 12 27 Amendments to HKAS 32 Offsetting Financial Assets and Financial Liabilities; 32 2014 7
2. PRINCIPAL ACCOUNTING POLICIES (Continued) 2. Amendments to HKAS 36 Recoverable Amount Disclosures for Non-Financial Assets; 36 Amendments to HKAS 39 Novation of Derivatives and Continuation of Hedge Accounting; and 39 HK (IFRIC) Int 21 Levies. 21 The application of the above new Interpretation and amendments to HKFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements. 3. SEGMENT INFORMATION 3. Information reported to the chief executive officer of the Company, being the chief operating decision maker, for the purposes of resource allocation and assessment of segment performance focuses on types of goods delivered. For management purposes, the Group has two reportable segments, stainless steel furnishings and property investment. Information about reportable segment revenue and profit or loss: Stainless steel furnishings Property investment Total Six months ended 30 June 2014 Revenue from external customers 72,533 98 72,631 Intersegment revenue Segment loss (1,633) (144) (1,777) Interest revenue 55 55 Interest expense (1,144) (1,144) Depreciation (1,858) (1,858) Other material non-cash item: Fair value loss on investment property (230) (230) Additions to segment non-current assets 1,886 1,886 8 JF Household Furnishings Limited Interim Report 2014
3. SEGMENT INFORMATION (Continued) 3. Stainless steel furnishings Six months ended 30 June 2013 Revenue from external customers 79,995 Intersegment revenue Segment loss (2,332) Interest revenue 189 Interest expense (1,084) Depreciation (2,224) Additions to segment non-current assets 78 Reconciliation of reportable segment revenue and results: Six months ended 30 June 2014 2013 Revenue Total revenue of reportable segments 72,631 79,995 Elimination of intersegment revenue Consolidated revenue 72,631 79,995 Profit or loss Total loss of reportable segments (1,777) (2,332) Unallocated finance costs (164) (204) Unallocated corporate income 3 3 Unallocated corporate expenses (4,511) (7,139) Consolidated loss for the period (6,449) (9,672) 2014 9
4. OTHER INCOME 4. Six months ended 30 June 2014 2013 Government grants 15 Interest income 58 191 Net exchange gain 409 Others 1 2 468 208 5. INCOME TAX EXPENSE No provision for Hong Kong Profits Tax is required since the Group has no assessable profit for the period. Tax charge on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretations and practices in respect thereof. 6. DIVIDEND No dividends were paid, declared or proposed during the period. The Directors have determined that no dividend will be paid in respect of the interim period (2013: Nil). 7. LOSS PER SHARE The calculation of basic and diluted loss per share is based on the following: 5. 6. 7. Six months ended 30 June 2014 2013 Loss Loss attributable to owners of the Company, used in the basic and diluted loss per share calculation Number of shares (6,449) (9,672) Weighted average number of ordinary shares used in basic and diluted loss per share calculation 255,732,000 239,333,000 The effects of all potential ordinary shares are anti-dilutive for the six months ended 30 June 2014. 10 JF Household Furnishings Limited Interim Report 2014
8. PROPERTY, PLANT AND EQUIPMENT 8. During the six months ended 30 June 2014, the Group had additions to property, plant and equipment in the amount of approximately HK$1,892,000 (2013: approximately HK$78,000). 1,892,000 78,000 9. TRADE RECEIVABLES 9. The Group normally granted customers with credit terms of 30 to 90 days. The aging analysis of the Group s trade receivables, based on the invoice date, and net of allowance, is as of follows: 30 90 30 June 2014 31 December 2013 (audited) 0 30 days 0 30 10,532 17,241 31 60 days 31 60 3,899 4,589 61 90 days 61 90 Over 90 days 90 83 84 Total 14,514 21,914 10. TRADE AND BILLS PAYABLES 10. 30 June 2014 31 December 2013 (audited) Trade payables 11,124 13,760 Bills payables 405 11,124 14,165 2014 11
10. TRADE AND BILLS PAYABLES (Continued) The Group normally obtains credit terms ranging from 30 to 90 days from its suppliers. The aging analysis of the Group s trade payables, based on invoice date, is as follows: 10. 30 90 30 June 2014 31 December 2013 (audited) 0 30 days 0 30 6,800 9,144 31 60 days 31 60 2,644 4,461 61 90 days 61 90 19 81 Over 90 days 90 1,661 74 Total 11,124 13,760 11. SHARE CAPITAL 11. Number of shares Par value Note 000 Authorised: Ordinary shares of HK$0.01 each 0.01 At 1 January 2013 (audited) 500,000 5,000 Additions 4,500,000 45,000 At 31 December 2013 (audited) and 30 June 2014 5,000,000 50,000 Issued and fully paid ordinary shares of HK$0.01 each: 0.01 At 1 January 2013 (audited) 239,289 2,393 Shares issued on exercise of warrants (i) 50 At 31 December 2013 (audited) 239,339 2,393 Placement of shares (ii) 47,867 479 At 30 June 2014 287,206 2,872 Note: (i) During the year ended 31 December 2013, 50,000 ordinary shares of HK$0.01 each were issued in relation to warrants exercised at HK$1.92 for a total consideration of HK$96,000. (i) 1.9250,000 0.0196,000 (ii) On 27 January 2014, the Company raised its fund by way of private placement of 47,867,000 shares of the Company at the placing price of HK$3.14 per share, which raised gross proceeds of approximately HK$150,302,000. (ii) 3.14 47,867,000 150,302,000 12 JF Household Furnishings Limited Interim Report 2014
12. CAPITAL COMMITMENTS 12. The Group s capital commitments at the end of the reporting period are as follows: 30 June 31 December 2014 2013 (audited) Property, plant and equipment Contracted but not provided for 8,158 8,309 13. OPERATING LEASE COMMITMENTS The Group as lessee 13. The Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of leasehold land and buildings which full due as follow: 30 June 31 December 2014 2013 (audited) Within one year 1,941 619 In the second to fifth years, inclusive 1,548 85 3,489 704 The Group as lessor The Group s total future minimum lease payments under noncancellable operating leases are receivables as follows: 30 June 31 December 2014 2013 (audited) Within one year 63,027 2014 13
14. FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value: 14. Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs: unobservable inputs for the asset or liability. The Group s policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer. (a) Disclosure of level in fair value hierarchy at 30 June 2014 and 31 December 2013: (a) Fair value measurements using: Level 3 Description Recurring fair value measurements: Investment property Residential Hong Kong At 30 June 2014 5,400 At 31 December 2013 (audited) 5,630 14 JF Household Furnishings Limited Interim Report 2014
14. FAIR VALUE MEASUREMENTS (Continued) 14. (b) Reconciliation of assets measured at fair value based on level 3: (b) 2014 Description Investment property At 1 January 5,630 Total losses recognised in profit or loss (#) (#) (230) At 30 June 5,400 (#) Include losses for assets held at end of reporting period (#) (230) The total losses recognised in profit or loss including those for assets held at end of reporting period are presented in other operating expenses in the condensed consolidated statement of profit or loss and other comprehensive income. (c) Disclosure of valuation process used by the Group and valuation techniques and inputs used in fair value measurements at 30 June 2014 and 31 December 2013: (c) The Group s financial controller is responsible for the fair value measurements of assets and liabilities required for financial reporting purposes, including level 3 fair value measurements. The financial controller reports directly to the Board for these fair value measurements. Discussions of valuation processes and results are held between the financial controller and the Board at least twice a year. For level 3 fair value measurements, the Group will normally engage external valuation experts with the recognised professional qualifications and recent experience to perform the valuations. Key unobservable inputs used in level 3 fair value measurements are mainly: Inflation (estimated based on private domestic price indices by class published by Rating and Valuation Department of the Government of the Hong Kong Special Administrative Region) Floor level difference (estimated based on actual data) Size difference (estimated based on actual data) 2014 15
14. FAIR VALUE MEASUREMENTS (Continued) 14. (c) (Continued) (c) Level 3 fair value measurements Unobservable Description Valuation technique inputs Range Effect on fair value for increase of inputs Fair value 30 June 2014 Fair value 31 December 2013 (audited) Investment Market comparable Inflation 0.26% 8.56% Increase property approach Floor level difference 1.00% 3.50% Increase Size difference 0.00% 4.09% Increase 5,400 5,630 15. RELATED PARTY TRANSACTIONS 15. In addition to those related party transactions and balances disclosed elsewhere in the condensed financial statements, the Group had the following transactions and balances with related parties during the period: (a) Key management personnel compensation (a) The key management personnel of the Group comprises all Directors. Details of their emoluments were disclosed as follows: Six months ended 30 June 2014 2013 Directors remuneration 432 1,197 16 JF Household Furnishings Limited Interim Report 2014
15. RELATED PARTY TRANSACTIONS (Continued) 15. (b) Transactions with related parties (b) Six months ended 30 June 2014 2013 Rental income (Ningbo JF Furniture Co., Limited) 437 435 Leasing charges paid to (Yuyao Jiefeng Air Conditioning Equipment Co., Limited) 189 292 Processing charges paid to (Ningbo JF Furniture Co., Limited) 263 290 License fees paid to A.C.R. Equipment Supplies Limited 60 60 Rental expenses paid to Senior management 41 41 An executive Director, Mr. Leung Kwok Yin has beneficial interests in above companies. (c) Balance with related parties (c) 30 June 2014 31 December 2013 (audited) (Ningbo JF Furniture Co., Limited) 283 325 JF Household Furnishings (BVI) Limited 4,737 4,737 (Yuyao Jiefeng Air Conditioning Equipment Co., Limited) 709 5,729 5,062 16. EVENT AFTER THE REPORTING PERIOD 16. Subsequent to 22 July 2014, the Group has commenced a negotiation with independent third party in relation to the possible investment in a subsidiary, which hold a luxury hotel with at least 400 guest rooms in Jeju Special Self-governing Province, the Republic of Korea. 400 2014 17
MANAGEMENT DISCUSSION AND ANALYSIS Financial review The Group s turnover for the six months ended 30 June 2014 amounted to approximately HK$72.6 million, representing a decrease of approximately 9.2% over the corresponding period of 2013. The decrease in turnover is due to the European economy has not recovered during the period. 72,600,000 9.2% Gross profit margin of the Group decreased from approximately 5.8% in 2013 to approximately 5.2% for the six months ended 30 June 2014 mainly because of higher raw materials and labour costs. 5.8% 5.2% Other income increased from approximately HK$0.2 million in 2013 to approximately HK$0.5 million for the six months ended 30 June 2014, mainly due to the increase in exchange gains. 200,000 500,000 Distribution costs increased from approximately HK$0.3 million in 2013 to approximately HK$0.4 million for the six months ended 30 June 2014, mainly due to the increase in transportation costs and declaration charge. 300,000 400,000 Administrative expenses decreased from approximately HK$12.9 million in 2013 to approximately HK$8.8 million for the six months ended 30 June 2014, mainly due to decrease in expenses on staff cost and legal and professional fee. 12,900,000 8,800,000 Business Review HOUSEHOLD PRODUCTS BUSINESS The household products business had recorded losses, due to the world was still under threat of economic recession. While the momentum for European and US economy recovery is yet to be restore and the intense competition in the household products markets. The Group s turnover from the household products business for the period was approximately HK$72,533,000 (2013: approximately HK$79,995,000), representing a decrease of 9.3%. The net losses were approximately HK$1,633,000 (2013: approximately HK$2,332,000) 72,533,000 79,995,0009.3% 1,633,0002,332,000 18 JF Household Furnishings Limited Interim Report 2014
PROPERTY INVESTMENT BUSINESS In October 2013, the Group acquired an investment property in Hong Kong for rental income. The Group s turnover from the property investment business for the period was approximately HK$98,000 (2013: nil). The net losses were approximately HK$144,000 (2013: nil). 98,000 144,000 HOTEL BUSINESS Travel industry is expected to growth under macroeconomic condition and economic development in the PRC. It contributed to significant increase in mainland Chinese travelers. In light of the growing prospects of the tourism industry, the Group has focused on investing in quality hotels all over the world. On 31 December 2013, the Group entered into a conditional sale and purchase agreement with to acquire commercial properties situated at Jin Xiu Lan Wan, Economic Development Zone, Fushun City, Liaoning Province. The commercial properties have been reconstructing into a quality hotel and expected to commence business in late of 2014. In order to satisfy the condition precedent of acquisition, a wholly-owned foreign enterprise has been established in the PRC. On 26 February 2014, the Group entered into a non-legally binding memorandum of understanding with in relation to the acquisition of non-residential building which situated at Jin Xiu Lan Wan, Economic Development Zone, Fuhsun City, Liaoning Province, the PRC. Up to present, the Group has been conducting a due diligence investigations and valuation of the building. In July 2014, the Group has commenced a negotiation with independent third party in relation to the possible investment in Jeju Special Self-governing Province, the Republic of Korea, which hold a luxury hotel with at least 400 guest rooms. 400 Outlook The global economic growth is expected to remain challenging in future. Household business will continue to tackle difficulties as they face rising labour costs and intense competition in the PRC. In future, the Group plans to establish a highly reputable hotel management business. We will expand our management team in respect of hotel management by recruiting more experts from this industry and work with other famous hotel management companies. The Group shall continue to put resources to strengthen its branding and position in the hotel business and to explore further quality investment opportunities to enhance shareholders wealth. 2014 19
Liquidity, Financial Resources, Funding and Treasury Policy As at 30 June 2014, the Group had cash and bank balances of approximately HK$57.6 million (as at 31 December 2013: approximately HK$23.4 million) and short term bank borrowings of approximately HK$38.4 million (as at 31 December 2013: approximately HK$35.7 million) respectively. 57,600,000 23,400,000 38,400,000 35,700,000 As at 30 June 2014, the Group had current assets of approximately HK$129.2 million (31 December 2013: HK$87.1 million) and current liabilities of approximately HK$85.7 million (31 December 2013: HK$84.5 million). 129,200,000 87,100,000 85,700,000 84,500,000 Most of the trading transactions, assets and liabilities of the Group were denominated in Renminbi ( RMB ), United States dollars ( USD ) and Hong Kong dollars. Gearing ratio As at 30 June 2014, the Group s gearing ratio, which was derived from the total borrowings to total assets, decreased to 15.2% from that of 32.0% as at 31 December 2013. Capital Structure The share capital of the Company comprises of ordinary shares only. Material Acquisition and Disposal Save as disclosed in this report, the Group did not have any material acquisition and disposal for the six months ended 30 June 2014. Foreign Exchange Exposure All transactions of the Group are denominated in RMB, Hong Kong dollars or USD. 32.0%15.2% Contingent Liabilities As at 30 June 2014, the Group had no material contingent liabilities. Employees and Remuneration Policy As at 30 June 2014, the Group employed approximately 391 staff in the PRC and Hong Kong. The Group s remuneration to employees, including Directors emoluments, amounted to approximately HK$12,426,000 for the period. The Group reviews employee remuneration annually and rewards its employee with reference to the length of services and performance. The Group also grants share options and bonuses to employees of the Group at the discretion of the Directors and based on the financial performance of the Group. 391 12,426,000 20 JF Household Furnishings Limited Interim Report 2014
Event after the reporting period Details of the event after the reporting period of the Group are set out in note 16 to the condensed consolidated financial statements. USE OF PROCEEDS FROM THE PLACING OF SHARES The Company raised its fund by way of private placement of 47,867,000 shares of the Company at the placing price of HK$3.14 per share on 27 January 2014. Net proceeds from the placing of shares amounted to approximately HK$149,506,000 (after deducting the placing commission and legal and professional expenses). Such net proceeds have been used in the following manner: 16 3.14 47,867,000 149,506,000 Amount raised Amount used as at the date of this report General corporate and working capital purpose 149,506 102,934 DIRECTORS INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ITS ASSOCIATED CORPORATIONS As at 30 June 2014, none of the Directors and the chief executives of the Company nor each of their respective associates (as defined under the Listing Rules), had or was deemed to have any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ( SFO ) which (a) were required, to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of the Part XV of the SFO (including interests and short positions which the Directors were taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange. 571 XV (a) XV7 8 (b)352 (c) As at 30 June 2014, none of the Directors have options to subscribe for shares in the Company. 2014 21
SUBSTANTIAL SHAREHOLDERS As at 30 June 2014, the following substantial shareholders had interests or short positions in the shares or the underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO. Other than the interests disclosed below, the Directors were not aware of any other persons who had interests or short positions in the shares or the underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO: 336 336 Name of Substantial Shareholders Number of shares interested in Capacity Approximate Percentage of the total issue Capital of the Company (Note 3) 3 Power Ocean Holdings Limited (Note 1&2) 179,407,488 Beneficial owner 62.46% 1 2 Chau Cheok Wa (Note 1) 179,407,488 Interest through a controlled corporation 62.46% 1 Cheng Ting Kong (Note 2) 179,407,488 Interest through a controlled corporation 62.46% 2 Notes 1. According to the record in the register kept under section 336 of the SFO, Power Ocean Holdings Limited, which 50% of issued share capital is owned by Mr. Chau Cheok Wa and he is therefore deemed to be interested in 179,407,488 shares of the Company. 1. 336 50% 179,407,488 2. According to the record in the register kept under section 336 of the SFO, Power Ocean Holdings Limited, which 50% of issued share capital is owned by Mr. Cheng Ting Kong and he is therefore deemed to be interested in 179,407,488 shares of the Company. 2. 336 50% 179,407,488 3. The percentage has been adjusted based on the total number of shares of the Company in issue as at 30 June 2014 (i.e. 287,206,000 shares). 3. 287,206,000 22 JF Household Furnishings Limited Interim Report 2014
SHARE OPTION AND SHARE OPTION SCHEME The Company s share option scheme (the Scheme ) was adopted pursuant to the shareholder s resolution passed on 26 November 2008. No options granted under the Scheme since its adoption on 26 November 2008 are still outstanding. During the six months ended 30 June 2014, no share option were granted, exercised and lapsed. DIRECTORS INTERESTS IN CONTRACTS No contract of significance to which the Company or any of its subsidiaries or its holding company, was a party and in which a Director had a material interest, whether directly or indirectly, subsisted at the end of the period under review or any time during the period under review save and except for the transactions disclosed as connected and/or related party transactions in accordance with the requirements of the Listing Rules and accounting principles generally accepted in Hong Kong. PURCHASE, SALE OR REDEMPTION OF SHARES Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company s shares for the six months ended 30 June 2014. CORPORATE GOVERNANCE In the opinion of the Directors, save as disclosed below, the Company has complied with the code provisions as set out in the Corporate Governance Code ( CG Code ) set out in Appendix 14 of the Listing Rules throughout the six months ended 30 June 2014. Under the CG Code provision E.1.2, the chairman of the Board should attend the annual general meeting ( AGM ) and invite the chairman of audit, remuneration and nomination committee to attend. However, in the AGM held on 29 May 2014 ( 2014 AGM ), our chairman was unable to attend the meeting as he had to attend to other business commitments. He appointed an executive Director to chair the 2014 AGM on his behalf and answer any question from the shareholders concerning the Company s corporate governance. As provided for in the CG Code provision A.6.7, independent non-executive directors should attend general meetings and develop a balanced understanding of the views of shareholders. The independent non-executive Director and Chairman of Audit Committee was unable to attend the 2014 AGM due to other business commitments. E.1.2 A.6.7 The Company reviews its corporate governance practices from time to time to ensure compliance with the CG Code. 2014 23
AUDIT COMMITTEE The Company has established an Audit Committee with written terms of reference in accordance with the Listing Rules. The primary duties of the Audit Committee are to review the Company s interim and annual reports and accounts and to provide advice and comments thereon to the Board. The Audit Committee is also responsible for reviewing internal control procedures of the Group. The Audit Committee comprises of three independent non-executive Directors, namely Mr. Fung Tze Wa (Chairman), Mr. Ting Wong Kacee and Mr. Tse Ting Kwan. The Audit Committee has reviewed the unaudited condensed financial statements for the six months ended 30 June 2014. CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, as amended from time to time (the Model Code ), set out in Appendix 10 to the Listing Rules as its code of conduct regarding securities transactions of the directors of the Company. On specific enquiries made, all directors have confirmed that they have complied with the required standard as set out in the Model Code during the six months ended 30 June 2014. Employees who are likely to be in possession of unpublished price sensitive information of the Company are also subject to compliance with guidelines on no less exacting terms than the Model Code. APPROVAL OF INTERIM REPORT The interim report were approved and authorised for issue by the Board on 21 August 2014. By order of the Board JF Household Furnishings Limited Cheng Ting Kong Chairman 24 JF Household Furnishings Limited Interim Report 2014
Stock Code :776