Glory Flame Holdings Limited — Capital/Financing Update 2016

Nov 11, 2016

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

GLORY FLAME HOLDINGS LIMITED 朝威控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8059)

DISCLOSEABLE TRANSACTION IN RESPECT OF PLACING OF APPROXIMATELY 1.9% SHARES IN JF HOUSEHOLD FURNISHINGS LIMITED

On 11 November 2016 after trading hours, the Vendor (an indirect wholly-owned subsidiary of the Company) entered into the Placing Agreement with the Placing Agent pursuant to which the Placing Agent has agreed to place, on a best efforts basis, an aggregate of up to 5,322,000 shares in JF Household, representing approximately 1.9% of the issued share capital of JF Household as at the date of the Placing Agreement at a price of not less than HK$3.0 per JF Household Share. The net proceeds of the Placing are expected to be approximately HK$15.5 million, upon completion of placing all JF Household Shares.

As the applicable percentage ratios (as defined in Rule 19.07 of the GEM Listing Rules) in respect of the Placing under the Placing Agreement are more than 5% but are less than 25%, the transaction contemplated under the Placing Agreement constitutes a discloseable transaction of the Company under Chapter 19 of the GEM Listing Rules and is subject to the reporting and announcement requirements.

THE PLACING AGREEMENT

Date

11 November 2016

Parties Involved

The Placing Agent and the Vendor

The Placing Agent

The Vendor has appointed the Placing Agent as sole agent to procure purchasers, on a best effort basis, for the JF Household Shares at a Placing Price of not less than HK$3.0 per JF Household Share.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Placing Agent and its ultimate beneficial owners are third parties independent of the Company and its connected person(s) (as defined under the GEM Listing Rules).

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Placees

The Placing Agent will place the JF Household Shares to professional, institutional and/or individual investors who and whose ultimate beneficial owners, to best of the directors’ knowledge, information and belief, having made all reasonable enquiry, are not connected persons of the Company and are third parties independent of, and not connected with, the Company, any Director(s), chief executive(s) or substantial shareholder(s) of the Company or any of its subsidiaries or their respective associates (as defined under the GEM Listing Rules).

Placing Consideration

The Placing Price of not less than HK$3.0 per JF Household share was determined with reference to the prevailing market price of the JF Household Shares and was negotiated on an arm’s length basis between the Vendor and the Placing Agent.

The Placing Agent would receive a Placing commission of 3% of the amount equal to the Placing Price multiplied by the number of JF Household Share(s) which the Placing Agent has successfully procured purchasers for at the end of the Placing Period.

The Directors (including the independent non-executive Directors) consider that the terms of the Placing, including the Placing commission, are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

The net proceeds (after deduction of Placing commission) of the Placing are expected to be approximately HK$15.5 million and will be payable in HK$ on the Closing Date to such bank account in Hong Kong as notified by the Vendor to the Placing Agent.

The JF Household Shares

As at the date of the Placing Agreement, the Vendor held a total of 5,322,000 ordinary shares of JF Household, representing approximately 1.9% of the issued share capital of JF Household.

Rights

The JF Household Shares were sold free from any liens, charges, encumbrances, claims, options and third party rights and together with all rights attaching thereto, including the right to receive all dividends declared, made or paid after the date of the Placing Agreement.

Completion of the Placing

The completion of the Placing shall take place on the Closing Date.

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Termination

The Placing Agent may terminate the Placing Agreement without liability to the Vendor by giving written notice to the Vendor at any time prior to 10:00 a.m. on 31 December 2016, if there occurs any force majeure events (as provided in the Placing Agreement) including, amongst others, any moratorium, suspension or material restriction on trading in shares or securities in general on the Stock Exchange occurs after the date of the Placing Agreement which render the Company or the Placing Agent unable to proceed with the Placing; or the Company commits any material breach of or omits to observe any of its obligations or undertakings under the Placing Agreement which will render the Placing unable to proceed; or the Placing Agent shall become aware of the fact that any of the representations and warranties given in the Placing Agreement was materially untrue or inaccurate, or such untrue representation or warranty will have a material adverse effect on the Placing.

REASONS FOR THE PLACING

The Directors consider that the Placing provides an opportunity for the Company to realise its investment in JF Household and to reallocate its resources to its core business to achieve better return and value to the Company and its shareholders as a whole. The net proceeds from the Placing will be used as general working capital of the Group.

The Directors believe that the Placing Agreement and the Placing are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

INFORMATION ON THE PARTIES TO THE PLACING AGREEMENT

The Company

The Company is an investment holding company. The Company and its subsidiaries is principally engaged in the provision of concrete demolition services in Hong Kong as a subcontractor and trading of light emitting diode light sources for decoration.

The Vendor

The Vendor is an indirect wholly-owned subsidiary of the Company and is principally engaged in trading of LED light sources for decoration.

The Placing Agent

The Placing Agent is a company licensed under the Securities and Futures ordinance (Chapter 571 of the Laws of Hong Kong) to conduct type 1 (dealing in securities) regulated activities.

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JF Household

According to publicly available information, JF Household is principally engaged in manufacturing and sales of stainless steel furnishings and home products and accessories, manufacturing and processing of stainless steel rods and other accessories.

The following financial information is extracted from the financial report of JF Household:

	For the year ended 31 December	For the year ended 31 December
	2015	2014
	(audited)	(audited)
	(HK$)	(HK$)
Revenue	166,290,966	170,373,314
Gross profit	15,249,633	16,446,788
Profit/(loss) before tax	(8,329,849)	(5,880,125)
Profit/(loss) after tax	(10,377,250)	(8,081,467)

GENERAL

Listing Rules Implications

As the applicable percentage ratios (as defined in Rule 19.07 of the Listing Rules) in respect of the Placing under the Placing Agreement are more than 5% but are less than 25%, the transaction contemplated under the Placing Agreement constitutes a discloseable transaction of the Company under Chapter 19 of the Listing Rules and is subject to the reporting and announcement requirements.

Financial Impact of the Placing

The net loss before taxation arising from the Placing is expected to be approximately HK$5.1 million, which represents the consideration of the Placing after deducting (i) the acquisition cost of the JF Household Shares; and (ii) the estimated amount of costs in relation to the Placing. The net loss arising from the Placing will be reflected in the Company’s consolidated statement of profit or loss for the financial year ending 31 December 2016.

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DEFINITIONS

In this announcement, unless the context requires otherwise, the following expressions have the following meanings:

“Board”	the board of Directors of the Company
“Company”	Glory Flame Holdings Limited, a company incorporated in the
	Cayman Islands with limited liability, the shares of which are listed
	on the GEM
“Closing Date”	not later than 31 December 2016 and such date as the Company
	and the Placing Agent may agree at which the Placing shall take
	place pursuant to the completion mechanics as set out in the Placing
	Agreement
“connected person(s)”	has the meaning ascribed thereto in the GEM Listing Rules
“Director(s)”	the director(s) of the Company
“GEM”	the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on the GEM
“Group”	the Company and its subsidiaries from time to time
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“JF Household”	JF Household Furnishings Limited, a company incorporated in the
	Cayman Islands with limited liability and the shares of which are
	listed on Main Board of the Stock Exchange (stock code: 776)
“JF Household Share(s)”	an aggregate of up to 5,322,000 existing ordinary share(s) of HK$0.01
	each in the issued share capital of JF Household benef cially owned by
	the Vendor and to be placed pursuant to the Placing Agreement
“Placing”	the placing of the JF Household Shares pursuant to the terms of the
	Placing Agreement
“Placing Agent”	W. Falcon Asset Management (Asia) Limited
“Placing Agreement”	the placing agreement dated 11 November 2016 and entered into
	between the Vendor and the Placing Agent in relation to the Placing

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“Placing Period” the period commencing immediately after the date of the Placing Agreement and expiring at 10:00 a.m. on 31 December 2016 (or such later time and date as the Vendor and Placing Agent may agree in writing)

“Placing Price” Not less than HK$3.0 per JF Household Share, which shall be agreed by the Vendor and the Placee(s) from time to time in writing

• “Shareholders” holder(s) of the share(s) of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Vendor” Forever Rise Investment Limited, a company incorporated in Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong

• “%” per cent

By order of the Board Glory Flame Holdings Limited Che Xiaoyan Chairman

Hong Kong, 11 November 2016

As at the date of this announcement, the executive Directors are Ms. Che Xiaoyan, Mr. Liu Zhong Ping and Mr. Man Wai Lun; the non-executive Directors are Mr. Zheng Si Rong and Mr. Wong Tik Tung; and the independent non-executive Directors are Mr. Liu Ping, Mr. Chan Kam Wah and Mr. Bai Honghai.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

This announcement will remain on the “Latest Company Announcements” page of the website of the GEM at www.hkgem.com for at least seven days from the date of publication. This announcement will also be published on the website of the Company at www.drillcut.com.hk.

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