Presentation by Ernst & Young, Adrian Chu - The Asset

Raising Capital for Kazakh
Corporates
Financial Consideration on listing in Hong Kong
and Experience Sharing on Kazakhmys listing in
Hong Kong
30 September 2011

Agenda
► IPO financial deliverables
► Acceptable accounting standards
► Financial disclosures and experience sharing
► Post-listing financial reporting requirements
► Other issues
► Our credentials
Page 2
September 2011

IPO financial deliverables
► Public report / letters
►
►
►
►
Accountants’ report on historical financial information
Letter on profit forecast (if prospectus contains the forecast)
Letter on pro forma financial information (adjusted net tangible assets
and earnings per share)
Review report on any half-yearly or quarterly financial information
published by the listing applicant (as required by the regulations in its
home listing venue) in respect of a period end subsequent to the latest
audited period covered by the accountants’ report
► Private letters
►
►
►
►
Comfort letter on adequacy of working capital
Comfort letter on statement of indebtedness
HKSIR 400 comfort letter (assistance re due diligence on Hong Kong
prospectus)
SAS 72 review and comfort letter (S144A / Regulation S offering)
Page 3
September 2011

Acceptable accounting standards
Accounting standards
Primary
listing
Secondary
listing
► HKFRS or IFRS
► PRC GAAP (for H-share companies only)
► Other acceptable accounting standards (only for
companies also listed outside Hong Kong): US
► Other acceptable accounting standards (only for
companies also listed outside Hong Kong):
Canada, Japan, Singapore, UK
√
√
Reconciliation
to HKFRS or
IFRS
Reconciliation
to HKFRS or
IFRS
√
N/A
No
reconciliation
required
Reconciliation to
HKFRS or IFRS
Note: Applicable to both accountants’ report at listing stage and post-listing financial reports
Page 4
September 2011

Financial disclosures
► Accountants’ reports and periodic financial reports must
normally contain financial information that includes specific
disclosures required under:
►
►
►
HKFRS or IFRS
Hong Kong Listing Rules
Hong Kong Companies Ordinance
► SEHK may waive some or all of the above disclosure
requirements for secondary listing applicants on a case-bycase
basis, taking into account factors including:
►
►
Disclosures required under the laws and rules of the primary
listing venue and the alternative accounting standards adopted
Alternative disclosures with respect to material items to provide
additional information to investors
Page 5
September 2011

Experience Sharing on Kazakhmys Listing
►
►
►
►
►
►
Incorporated and listed in the UK
Historical financial statements were prepared that complies with
disclosure requirements under UK laws and London listing rules
An analysis was performed in comparing the disclosure requirements
under UK laws and London listing rules vs. HK listing rules and
Companies Ordinance
Waivers were obtained to dispense with requirement to disclose
certain specific information required only under Hong Kong listing
rules and Companies Ordinance
Accountants’ report in Hong Kong prospectus contains historical
financial information that complies with disclosure requirements
under UK laws and London listing rules
Similar waiver obtained for periodic financial reports issued after the
Hong Kong listing
Page 6
September 2011

Post-listing financial reporting requirements
Overseas issuers may engage overseas auditors
(i.e., non-Hong Kong auditors)
► The overseas auditor must
►
►
be an independent practicing accountant of good standing
if the overseas issuer maintains a primary listing in Hong Kong
►
►
►
have international name and reputation
be a member of a recognized body of accountants
acceptable to the SEHK
► Acceptable to SEHK if
►
the authority supervising such overseas auditor has cooperation/
communication arrangement with the relevant authorities in Hong
Kong
► SEHK normally accepts overseas auditors for overseas
issuers maintaining a secondary listing in Hong Kong
Page 7
September 2011

Post-listing financial reporting requirements
► Annual results: audited
►
►
Announcement to be released within 3 months after year end
Annual report to be released
►
►
within 4 months after year end
not less than 21 days before annual general meeting (“AGM”)
► Half-yearly results: not required to be audited or reviewed
►
►
Announcement to be released within 2 months after period end
Interim report to be released within 3 months after period end
► Quarterly results: not mandatory for Main Board companies
►
If required by listing venue outside Hong Kong – announcement to
be released simultaneously in Hong Kong
Page 8
September 2011

Other issues
Related party and connected transactions
► Related parties disclosures
►
Disclosure requirements for financial reporting purposes under
HKAS 24 / IAS 24 Related Parties Disclosures
► Connected transactions
►
►
Requirements under Chapter 14A Connected Transactions of
Hong Kong Listing Rules
Definition of connected persons is different from that of related
parties under the above accounting standards: some overlap
Page 9
September 2011

Other issues
►
Group reorganization and listing structure
►
First time adoption of IFRS/HKFRS
►
Acquisition of material subsidiary or business during the track record
period
►
Disclosure of pre-acquisition financial information (audited)
►
Acquisition of business or subsidiary after the track record period
►
Disclosure of three-year financial information (audited)
Page 10
September 2011

Ernst & Young’s credentials
Our credentials in assisting
companies listing in Hong
Kong
Market share of
Hong Kong Main Board listings in 2010
others
69%
Ernst & Young
31%
Note: Calculation based on companies raising funds above US$150
million
Source: Listed company information compiled by Ernst & Young
Ernst & Young is a market leader in assisting companies to list in Hong
Kong. In 2010, we assisted 15 companies that raised funds in excess of
US$150 million to list in Hong Kong. This represented a 31% share of
these IPOs listing on the Main Board, ranking us first by market share.
Our significant IPO clients in recent years include:
►2006: We helped ICBC successfully launch its IPO, which represented
the largest ever IPO at that time in terms of funds raised
►2007: We assisted market leaders in their respective industries with
their IPOs, including Fosun International and BYD Electronic
►2008: We assisted China Railway Construction Corp and CSR
Corporation to list in March and August, respectively
►2009: We assisted 13 companies to list in Hong Kong, including China
Pacific Insurance
►Last year we helped 20 companies to list in Hong Kong, the highest
number of IPOs in recent years
►In this year till July, we assisted another 8 medium size companies
successfully launch their IPOs in Hong Kong. Among all 8 companies,
Milan Station was another big success in terms of oversubscription and
IPO debut performance, it recorded an oversubscription multiple of over
2000 times and increased 66% on debut from its offer price
►Over the past five years, we have helped over 70 enterprises to list in
Hong Kong
Page 11
September 2011

Ernst & Young’s credentials
Selected Ernst & Young IPO clients listing on Hong Kong Main Board
Selected Ernst & Young IPO clients listing on Hong Kong Main Board
2006 2007 2008 2009 2010 2010 (cont’)
Advanced
Semiconductor
Manufacturing
Corporation
China BlueChemical
Computime Group
Embry Holdings
Hunan Nonferrous
Metals Corporation
Industrial and
Commercial Bank of
China
Shanghai Prime
Machinery
Zhaojin Mining Industry
Zhuzhou CSR Times
Electric
# secondary listing
BYD Electronic (Int’l)
Capxon International
Electronic
Centron Telecom Int’l
China Agri-Industries
Eyang Holdings
Fosun Int’l
Franshion Properties
Global Sweeteners
Kingsoft Corporation
KWG Property Holding
Regent Manner Int’l
Xinhua Winshare
Publishing and Media
Tao Heung Holdings
Zhong An Real Estate
A8 Digital Music Holdings
China Railway Construction
Corporation
CSR Corporation
Little Sheep Group
Maoye Int’l Holdings
Xtep Int’l Holdings
Asia Cassava Resources
Holdings
Ausnutria Dairy
Corporation
BBMG Corporation
China Pacific Insurance
China Singyes Solar
Technologies
China South City
China Vanadium Titano-
Magnetite Mining
CPMC Holdings
Shenguan Holdings
Sany Heavy Equipment
Silver Base Group
Wynn Macau
Yuzhou Properties
Biostime
China ITS (Holdings)
China Liansu Group
China SCE Property
China Sanjiang Fine
Chemicals
Chu Kong Petroleum and
Natural Gas Steel Pipe
China Suntien Green
Energy Corporation
CITIC Dameng
Convoy Financial
Evergreen Int’l
Goodbaby Int’l
Int’l Mining Machinery
Leoch Int’l Technology
Magic Holdings Int’l
NVC Lighting Technology
Sijia Group
SITC Int’l Holdings
Springland Int’l
Xinjiang Goldwind
Science & Technology
Zhongsheng Group
2011 (July)
Baofeng Modern Int’l
China Kingstone Mining
Far East Horizon
Milan Station
Newton Resources
China Fiber Optic
Network System
Prince Frog Int’l
Kazakhmys PLC #
Page 12
September 2011

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