Question 1 P&T Energy Group Ltd. ("P&T") is a Hong Kong-based global supplier of electronic leaming products. It is mainly engaged in the design and manufacture of consumer electronic products. P&T's products include corded and cordless telephones and electronic learning solutions. Howard and Matthew are the founder members and executive directors of P&T. Each of them holds 50% of the issued shares. P&T's issued share capital is HKD100 million, which consists of 100,000,000 ordinary shares of HKDI each. The following information is extracted from the audited financial statements of P&T for the years ended 31 December 2021, 2020 and 2019: 2021 2020 2019 HKD million HKD million HKD million Revenue 615 582 560 Cost of sales (570) (555) (535) Gross profit 45 27 25 Other income 9 7 Other operating expenses (6) (6) Administrative expenses (5) (5) Interest and finance costs (5) (6) Profit before tax 39 20 18 Tax expenses (3) (3) Profit for the year/ attributable to shareholders 35 17 15 9 Cashflow 59 30 30 As part of its corporate strategic development to expand its business into the mainland market, P&T is planning to apply for listing on the main board of the Hong Kong Stock Exchange (SEHK) in the third quarter of 2022. It is proposed that P&T will issue 400,000,000 new shares at an offer price of HKD2 per share to the public for subscription by initial public offer. Question 1 (continued) REQUIRED: (a) Analyse whether P&T is qualified for the listing on the Main Board of the SEHK in late 2022, with respect to the following aspects under Ch. 8: (0) Financial requirements per Profit test, Market capitalization / Revenue test, Market and capitalization / Revenue / Cashflow test'. Show your workings. (9 marks) (ii) Operating history and management. (2 marks) (ii) Minimum market capitalization, (2 marks) (iv) Public float. (2 marks) (b) Suppose P&T has appointed one existing independent non-executive director and is considering appointing the following persons to be its independent non-executive directors to comply with the requirements of Listing Rules: (1) Peter is digital marketing specialist. He holds independent non-executive director positions in six other listed companies. (ii) Mary was an accountant and a partner of an accounting firm, which audited P&T's accounts. She resigned from the accounting firm on 31 Aug 2021. Advise P&T separately the feasibility and concern(s) (if any) of appointing Peter and Mary as its additional independent non-executive directors. (10 marks) [Total for Question 1: 25 marks] Question 1 P&T Energy Group Ltd. ("P&T") is a Hong Kong-based global supplier of electronic leaming products. It is mainly engaged in the design and manufacture of consumer electronic products. P&T's products include corded and cordless telephones and electronic learning solutions. Howard and Matthew are the founder members and executive directors of P&T. Each of them holds 50% of the issued shares. P&T's issued share capital is HKD100 million, which consists of 100,000,000 ordinary shares of HKDI each. The following information is extracted from the audited financial statements of P&T for the years ended 31 December 2021, 2020 and 2019: 2021 2020 2019 HKD million HKD million HKD million Revenue 615 582 560 Cost of sales (570) (555) (535) Gross profit 45 27 25 Other income 9 7 Other operating expenses (6) (6) Administrative expenses (5) (5) Interest and finance costs (5) (6) Profit before tax 39 20 18 Tax expenses (3) (3) Profit for the year/ attributable to shareholders 35 17 15 9 Cashflow 59 30 30 As part of its corporate strategic development to expand its business into the mainland market, P&T is planning to apply for listing on the main board of the Hong Kong Stock Exchange (SEHK) in the third quarter of 2022. It is proposed that P&T will issue 400,000,000 new shares at an offer price of HKD2 per share to the public for subscription by initial public offer. Question 1 (continued) REQUIRED: (a) Analyse whether P&T is qualified for the listing on the Main Board of the SEHK in late 2022, with respect to the following aspects under Ch. 8: (0) Financial requirements per Profit test, Market capitalization / Revenue test, Market and capitalization / Revenue / Cashflow test'. Show your workings. (9 marks) (ii) Operating history and management. (2 marks) (ii) Minimum market capitalization, (2 marks) (iv) Public float. (2 marks) (b) Suppose P&T has appointed one existing independent non-executive director and is considering appointing the following persons to be its independent non-executive directors to comply with the requirements of Listing Rules: (1) Peter is digital marketing specialist. He holds independent non-executive director positions in six other listed companies. (ii) Mary was an accountant and a partner of an accounting firm, which audited P&T's accounts. She resigned from the accounting firm on 31 Aug 2021. Advise P&T separately the feasibility and concern(s) (if any) of appointing Peter and Mary as its additional independent non-executive directors. (10 marks) [Total for Question 1: 25 marks]
