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THE INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE PROSPECTUS ESPECIALLY THE RISK FACTORS AT PARA 4.4 BEFORE MAKING ANY INVESTMENT DECISION.
PROSPECTUS
Public Offer of Rated, Listed and Secured Term Finance Certificates (Engro Rupiya Certificates) of PKR 4,000 Million Inclusive of Green Shoe Option of PKR 2,000 million
Instrument Rating AA (Double A) Entity Rating AA (Double A) By The Pakistan Credit Rating Agency Limited (PACRA)
7 9 17 18 23 79 83 90 93 97 98 104 106
Issue Amount Tenor Profit Rate Profit payment frequency Profit Accrual Minimum Investment Denomination of TFC Subscription Period TFC Schedule
October 15, 2010 January 14, 2011 January 31, 2011 February 01, 2011 July 31, 2011 January 31, 2012 July 31, 2012 January 31, 2013 July 31, 2013 January 31, 2014 January 31, 2014 January 31, 2014
Principal Redemption
Security
Trustee Registrar & Transfer Agent Entity Rating Instrument Rating Risk Factors Listing Pre-IPO Underwriting
ADDITIONAL INSTRUCTIONS FOR FOREIGN/NON-RESIDENT INVESTORS 1. In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicants letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of memorandum of association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager/officer in the country of applicants residence. 2. Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistans Foreign Exchange Manual. 2.5. a) b) MINIMUM AMOUNT OF APPLICATIONS AND BASIS OF ALLOTMENT OF TFCs The minimum amount of application for subscription of TFCs is PKR 25,000/Applications for TFCs below the aggregate face value of PKR 25,000/- will not be entertained. Applications for TFCs by the general public, including institutions and individuals, must be made for a minimum of the aggregate face value of PKR 25,000/- or in multiples of PKR 5,000/- for amounts above PkR 25,000/-. Allotment of TFCs will be made on first come first served basis and applications for subscription of TFCs will not be accepted once the target amount of PKR 4,000 million (inclusive of the green-shoe option) is subscribed. In case Bankers to the Issue on any given day accept subscriptions which result in the target amount being exceeded, then all applications in excess of the target amount will be returned to the applicants along with profit at the rate of 14.5% per annum for the number of days for which such applicants are deprived of their money plus a further three (3) days profit at the same rate. Therefore, there will be no oversubscription. In order to ensure that allotment of TFCs is made to the applicants on first come first served basis, the Bankers to the Issue shall mark each Subscription Application with the date and time of their receipt. The applications not marked with date and time of receipt shall be accommodated after all the applications properly marked with date and time are accommodated. Allotment of TFCs shall be subject to scrutiny of applications for subscription.
c)
d)
e)
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TFCs shall be transferred in the manner as provided under the Companies Ordinance, 1984. Transfer of TFCs will be subject to payment of the applicable stamp duty levied by the Provincial Government. Stamp duty on initial issuance will be borne by the Company, while stamp duty on subsequent transfer will be on account of the TFC holders. 2.9.2 Transfer under Book Entry System
TFCs will be declared as eligible security through CDS of CDCPL. Stamp duty on initial issuance will be borne by the Company. TFCs, which are in the CDS, shall subsequently be transferred in accordance with the Central Depositories Act, 1997 and the Central Depository Company of Pakistan Limited Regulations. The transfer fee for all subsequent transfers shall be borne by the TFC holders.
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In case the subscription money received is below the target amount, the shortfall will be met through borrowings either by Engro Corporation Limited or directly by the respective subsidiary. 2.12. REGISTERED INSTRUMENT TFCs will be in registered form and the Company shall maintain or cause to be maintained a register of TFC holders. 2.13. INTEREST OF TFC HOLDERS There is no outstanding TFC issue of the Company as such the question of interest of TFC holders does not arise. 2.14. REDEMPTION OF TFCs A register for TFC holders will be maintained or cause to be maintained by the Company. The register will be closed for a period of 7 days prior to the profit payment date. The company will give a minimum of 14 days notice to the Exchange prior to the Book Closure for Profit payments. Investors can redeem TFCs earlier than maturity by exercising Put option (see para 2.14.2) or the TFCs will redeem as per schedule detailed in para 2.14.1. All payments will be made either through crossed cheque, pay order or direct bank deposit on the basis of option exercised by the applicant in the TFCs Subscription Application. In case of cheque or pay order, the instrument will be dispatched to the mailing address of the registered holder of the TFC. 2.14.1 TFCs held till Maturity For TFCs held till maturity, the TFC holders will not need to physically go to the counters of any specific bank in order to have the TFCs redeemed. All payments will be made either through crossed cheque, pay order or direct bank deposit on the basis of option exercised by the applicant in the TFCs Subscription Application. In case of cheque
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Profit Payment
The redemption schedule for TFCs held till Maturity of an aggregate face value of PKR 25,000 based on profit rate of 14.5% per annum is set out in the table below:
Zakat @ Withholding 2.5% Tax @ 10% 0.13 181.25 0.13 181.21 0.13 181.18 0.13 181.14 0.13 181.11 624.38 181.07 625.00 1,192.69
Total Principal Principal Payment Payment in % Outstanding 1,636.13 0.02% 24,995 1,635.80 0.02% 24,990 1,635.47 0.02% 24,985 1,635.15 0.02% 24,980 1,634.82 0.02% 24,975 25,980.24 99.90% 35,109.17 100.00%
Notes: The above redemption schedule includes deduction of Zakat and Withholding Tax. For applicability of these, please refer to para 2.16 and 2.18 below respectively. The above redemption may be subject to Income Tax. For its applicability, please refer to para 2.17. 2.14.2 Put Option (Early redemption) Investors have the option to pre-maturely redeem the outstanding TFCs anytime from the Date of Investment subject to a service charge of 2% on Outstanding Issue Price, 15 day prior written notice, and in case of partial call option the amount to be redeemed should either be PkR 5,000/- or in multiples thereof. The outstanding amount (Outstanding Issue Price) equal to or less than PkR 5,000/- may be redeemed in full only. Profit will be paid till the date the Company receives the redemption notice. In case of TFCs held in physical form, TFC holders can exercise the Put Option by submitting Redemption Notice directly to the Company or to any of the branches of the following banks: MCB Bank Limited
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Zakat @ Withholding 2.5% Tax @ 10% 0.13 181.25 0.13 181.21 0.13 181.18 0.13 181.14 612.01 90.55 612.51 921.06
Total Principal Principal Payment Payment in % Outstanding 1,636.13 0.02% 24,995 1,635.80 0.02% 24,990 1,635.47 0.02% 24,985 1,635.15 0.02% 24,980 24,683.36 97.92% 32,177.47 98.00%
Notes: The above redemption schedule includes deduction of Zakat and Withholding Tax. For applicability of these, please refer to para 2.16 and 2.18 below, respectively. The above redemption may be subject to Income Tax. For its applicability, please refer to para 2.17. The above redemption schedule includes deduction of a service charge of 2% of the outstanding Issue Price of the TFC. Profit will be paid to the TFC holder till the date the Company receives the redemption notice and will be computed on 365 day year basis. PLEASE NOTE THAT THE ISSUER HAS NO CALL OPTION. 2.14.3 Profit Payments Profit will be paid at a fixed rate of 14.5% per annum from the Date of Investment. To bring all TFCs at par before dispatch or credit, as the case may be, an interim profit payment for the period from the Date of Investment till the Issue Date will be made before the dispatch or credit, as the case may be, of the TFCs after the close of subscription period. From the Issue Date, all subsequent profits will be payable semi-annually in arrears on the outstanding Principal amount. The following table illustrates profit payment for the interim period and for the three years period commencing from the Issue Date: Profit Payment Interim First Second Profit Period Interim Period (Date of Investment till the Issue Date) February 01, 2011 to July 31, 2011 August 01, 2011 to January 31, 2012 Profit Payment Date January 31, 2011 July 31, 2011 January 31, 2012
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REDEMPTION RESERVE In view of the secured nature and good credit rating (AA), the Company is expected to have adequate funds to meet its financial obligations arising from the issue of TFCs. Therefore, no redemption reserve is being created for the redemption of TFCs.
2.16.
DEDUCTION OF ZAKAT Zakat is deductible in case of TFCs held by Muslim citizens of Pakistan, except where a statutory declaration of exemption is filed, and in case of certain non-corporate entities such as Trusts, Funds (subject to being qualified for non-deduction of Zakat in terms of the Zakat and Ushr Ordinance, 1980) etc. Zakat shall be deducted at the time of redemption of the principal amount of the TFCs or on the market value based on the closing rate on KSE on the first day of Ramzan, whichever is lower, at the rate of 2.50% on such dates as the concerned TFC becomes due for redemption in a Zakat year.
2.17.
INCOME TAX Any income derived from the Term Finance Certificates shall be subject to income tax as per the Income Tax Ordinance, 2001. According to this Ordinance, the tax shall be deducted @ 10% of the gross amount of profit paid as per the First Schedule, Part 3, Division 1, Para (a), and shall be deemed to be the final discharge of tax liability on the profit arising to a tax payer other than a company, under subsection 3 of Section 151 of the Income Tax Ordinance, 2001.
2.18.
DEDUCTION OF WITHHOLDING TAX ECL is required to withhold tax, currently at the rate of 10%, from profit payments to all investors except companies and resident individuals whose investment amount is up to PKR 150,000 under Clause 59, part (IV), Second Schedule of Income Tax Ordinance 2001.
2.19.
CAPITAL GAINS TAX Any capital gains derived from the sale of Term Finance Certificates shall be subject to capital gains tax as per the Income Tax Ordinance, 2001.
2.20.
CAPITAL VALUE TAX & WITHOLDING TAX ON SALE/PURCHASE OF TFCs Pursuant to the provisions of Section 233A of the Income Tax Ordinance, 2001 & Capital Value Tax (Finance Act 1989) the following charges are applicable on sale/purchase of securities: 0.02% Capital Value Tax (CVT) will be charged on purchase of all modarba certificates and instruments of redeemable capital as defined in the Companies Ordinance, 1984 0.01% Withholding Tax (WHT) will be charged on sale of all shares, modaraba certificates, and instruments of redeemable capital as defined in the Companies Ordinance, 1984.
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The TFCs will be listed on the Karachi Stock Exchange. JS Global Capital Limited (formerly Jahangir Siddiqui Capital Markets Limited) will act as Market Maker for the issue. The role of the market maker will be to offer bid & ask quotes for the TFCs at a spread of 0.50% and 1.50% in yield, or equivalent price terms, for marketable or non-marketable lots respectively. Price will be determined by market maker in light of prevailing liquidity, interest rates and credit risk on the issuer. Marketable lots are defined as any amount upto PKR 1 million face value with minimum face value of PKR 25,000 and Non-Marketable lots are defined as any amount less than PKR 25,000 face value or more than PKR 1 million face value. Market Maker will trade TFCs which are either available for transfer with CDS or physically in the form of printed certificates. 2.22. DISCLOSURE OF DEFERRED TAXATION
Deferred tax is recognized using the balance sheet method, providing for all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The balance of deferred tax liability for Engro Corporation Limited as at June 30, 2010 is PKR 158 thousand. Break up is as follows: Amounts in 000 PKR (16) PKR 174 PKR 158
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3.1.
COMMISSION TO THE BANKERS TO THE ISSUE A commission at the rate of 0.5% of the amount collected, in respect of accepted applications will be paid to the Bankers to the issue for services to be rendered by them in connection with the public offer.
3.2.
BROKERAGE For the public offer, the Company will pay brokerage to the members of KSE, LSE and ISE at the rate of 0.25% of the value of TFCs actually sold through them.
3.3.
EXPENSES OF THE ISSUE The initial expenses of the issue paid or payable by the Company inclusive of all commissions are estimated to be PKR 249,067,500/-. The details of the expenses of the issue are as follows:
Expenses Category Rate Commission to the Bankers to the Issue 0.50% Promotion by the Bankers to the Issue Brokerage to the members of Stock Exchanges 0.25% Stamp Duty Sindh 0.05% Rating Fee Initial Initial Listing Fee of the Karachi Stock Exchange Processing Fee of the Securities & Exchange Commission of Pakistan Annual Listing Fee of the Karachi Stock Exchange CDCPL Fee Trustee Fee Registrar Fee Printing & Publication Expenses of Prospectus Marketing Legal Expenses Out of Pocket Expenses Total *Represents maximum expenses related to the issue
Amount in PKR 20,000,000 20,000,000 2,000,000 1,200,000 100,000 100,000 50,000 67,500 500,000 50,000 1,500,000 200,000,000 1,000,000 2,500,000 249,067,500
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As per Annual Audited Accounts 2009, total number of shares issued by ECL were 297,942,563. In April 2010, there has been a 10% bonus issue which has increased the total shareholding to 327,736,819 shares. ECL is listed on the Karachi, Lahore and Islamabad stock exchanges and has a total paid-up capital1 of PKR 3,277.37 million where as total market2 capitalization stood at PKR 56,888.56 million. As a testament to ECLs blue chip corporate status, the Company has been a frequent winner of the Corporate Excellence Award of the Management Association of Pakistan as well as the Top 25 Companies Award of the Karachi Stock Exchange. Further, ECLs corporate and social responsibility initiatives have been recognized internationally at various forums.
1 2
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2005* 18,757 2,284 7,541 14,397 6,856 1,529 12.18 30.28 49.31 14.12 11.00 164.45 11.65
*As of 31 December
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20
21
Note: It is stated that all material risk factors with respect to this issue have been disclosed to the best of knowledge and belief and that nothing has been concealed in this respect.
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23
100%
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1.1 The summary of assets, liabilities and shareholders equity of the Company and the Group as at December 31, 2009 were as follows: (Amounts in thousand) The Company Rupees ASSETS Non-Current Assets Property, plant and equipment Biological assets Intangible assets Long term investments Deferred employee compensation expense Long term loans and advances 69,517,512 122,704 12,988,657 2,787 328,907 82,960,567 Current Assets Stores, spares and loose tools Stock-in-trade Trade debts Deferred expense Loans, advances, deposits and prepayments Other receivables Derivative financial instruments Taxes recoverable Short term investments Cash and bank balances 961,117 422,607 2,514,425 87,278 1,469,155 275,714 76,209 536,167 450,857 3,955,342 10,748,871 TOTAL ASSETS 93,709,438 1,451,532 3,819,971 3,536,533 97,492 1,372,425 1,136,265 76,209 1,040,636 512,255 6,880,408 19,923,726 132,105,376 110,503,710 438,873 585,358 499,780 2,969 150,960 112,181,650 The Group
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58,565,354 612,842 891,864 211,785 143,886 60,425,731 3,160,852 1,366,022 810,100 20,600 195,753 740,043 102,099 6,395,469 66,821,200 93,709,438
84,142,153 632,777 20,587 1,687,298 211,785 96,163 86,790,763 9,608,000 1,800,428 2,375,675 18,246 22,961 1,302,766 740,043 102,099 15,970,218 102,760,981 132,105,376
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27
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3,999,846
5,504,260
other
than
for
capital 2,863,584
(iii) Avanceon LP (USA) is obligated under non-cancellable operating leases for computer & office equipment which expire at various dates through 2011. The future lease commitments related to non-cancellable operating leases as of December 31, 2009 are as follows: Rupees Not later than one year Later than one year and not later than five years Later than five years 1,723,490 799,479 398,603 2,921,572
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(Amounts in thousand)
2009
2005
Net sales Cost of sales GROSS PROFIT Selling and distribution Expenses
(1,945,176) 4,986,168
Note: 1. The above figures are as reported in the respective years published financial statements except certain items that have been rearranged for consistency of classification. 2. For earnings per share, refer section 7 of this report.
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Net sales Cost of sales GROSS PROFIT Selling and distribution expenses
(6,215,316) 7,278,856
Share of income from Joint Venture PROFIT BEFORE TAXATION Taxation PROFIT AFTER TAXATION
Attributable to: - Owners of the Company - Minority interest 3,806,918 (88,116) 3,718,802 4,125,754 80,936 4,206,690 2,876,520 (42,732) 2,833,788 2,106,891 31,951 2,138,842 2,278,980 4,803 2,283,783
Note: 1. The above figures are as reported in the respective years published financial statements except certain items that have been rearranged for consistency of classification. 2. For earnings per share, refer section 7 of this report.
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4.2
No financial statements have been audited subsequent to the audit of financial statements for the year ended December 31, 2009. However, we have reviewed the condensed interim financial information (unaudited) for the half year ended June 30, 2010, as stated in section 6 of this report. SIGNIFICANT DISCLOSURES MADE IN THE NOTES TO THE PUBLISHED FINANCIAL STATEMENTS OF THE COMPANY AND THE GROUP FOR THE RELEVANT FINANCIAL YEARS We reproduce below the significant disclosures made in the notes to the financial statements of the Company and the Group for the relevant years ended December 31, 2005 to December 31, 2009:
5.
5.1 5.1.1
Financial statements for the year ended December 31, 2009 Scheme of Arrangement The Board of Directors of the Company in their meeting of April 28, 2009 decided to divide the Company into two companies by separating its fertilizer undertaking from the rest of the undertaking that is to be retained in the Company. In this regard, a wholly owned subsidiary namely Engro Fertilizers Limited was incorporated on June 29, 2009. The division was to be effected through a Scheme of Arrangement under Section 284 to 288 of the Companies Ordinance, 1984 whereby (a) the fertilizer undertaking would be transferred and vested in Engro Fertilizers Limited against the issuance of ordinary shares of Engro Fertilizers Limited to the Company; (b) the retention of the retained undertaking in the Company and the change of the name of the Company to Engro Corporation Limited. Engro Corporation Limited would then become a holding company and oversee the business of new fertilizer subsidiary as well as business of its other existing subsidiaries/associates. The de-merger required the approval of the High Court of Sindh. After obtaining the requisite approvals from the creditors and the shareholders of the Company, the High Court approved the Scheme of Arrangement (Scheme) on December 9, 2009. The Scheme came into effect on January 1, 2010 (Effective Date).
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34
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5.2.1 Investment in subsidiaries The following investments were made in the subsidiary companies during the year: Name of Subsidiary Engro Energy Limited Engro Foods Limited Engro PowerGen Limited Rupees 1,362,275 1,950,000 15,100
During the year, percentage of investment in Engro Polymer and Chemicals Limited decreased from 65.92% to 56.19% while investment in Engro Energy Limited decreased from 100% to 95%. During the year, the Company incorporated a wholly owned subsidiary by the name of Engro PowerGen Limited with the objective to undertake power projects, by investing Rs. 15,100.
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37
38
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During the year, percentage of investment in Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) has decreased from 80% to 65.92% while investment in Engro Innovative Automation (Pvt) limited has increased from 51% to 62.67%. 5.3.2 Significant Event During the third quarter of the financial year, a fire broke out at PNSC Building, Karachi where the Head Offices of the Company and some of its Subsidiaries were located. Immediately following this event the Company and its Subsidiaries whose Head Office were located at PNSC building, launched their Disaster Recovery Plan due to which operational disruption and financial impact resulting from this incident remained minimal. Along with the offices of the Company and of Engro Foods Limited, Engro Energy Limited, Engro Eximp (Private) Limited and Engro Management Service (Private) Limited, the fire also destroyed a substantial portion of their hard copy records related to the financial years 2005, 2006 and the period January 01, 2007 to August 19, 2007 although electronic data remained largely intact due to their Disaster Recovery Plan. The management launched an initiative to recreate significant lost records and was successful in gathering the same in respect of the current reported financial year. Records related to the already reported financial years 2005 and 2006 have not been recreated to date. 5.3.3 Currency options and Forward Exchange Contracts During the first half of the year, the Company purchased currency option contracts having a cost of Rs. 360,485 for tenure of six months to hedge its Euro - Dollar currency exposure of Euros 342,620 representing the anticipated outflows for Urea Expansion Project. On maturity, these contracts were restructured into forward exchange contracts for the remaining balances of commitments in Euros and any realized amounts were netted from the costs of these options included in the balance of hedging reserve. At year end the Company had forward exchange contracts to purchase Euros 297,399 at various maturity dates matching the anticipated payment dates for commitments with respect to Urea Expansion Project. The fair value of these contracts amounted to USD 32,642 at the year end. 5.3.4 Employee Share Option Scheme The Company has announced ownership-based compensation scheme namely Employee Share Option Scheme (ESOS) for executives and senior employees of the Company as per the Guidelines contained in the Public Companies (Employees Stock Option Scheme) Rules, 2001. In accordance with the provisions of the Plan, as approved by shareholders at an Extra Ordinary General Meeting held on August 23, 2007, senior employees who are critical to the business operations will be granted options to purchase ordinary shares at an
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During the year, the Company has incorporated a wholly owned subsidiary by the name of Engro Energy (Private) Limited with the objective to undertake energy related businesses including setting up Independent Power Projects. The Company also acquired 30% shareholding from Asahi Glass Company (AGC) of Japan in December 2006 resulting in the holding of the Company increasing from 50% to 80% in EAPCL which became its subsidiary. This acquisition resulted in a net fair value adjustment (negative goodwill) of Rs. 392,506 out of this amount of Rs. 197,316 pertaining to 50% of equity already held was taken to equity and Rs. 195,190 pertaining to 30% of equity acquired was taken to other income. 5.4.2 Issue of right shares with premium The Company issued 10% right shares at Rs. 80 per share to the shareholders including premium of Rs. 70 per share. The total issue including share premium amounted to Rs. 1,221,309 net of transaction cost on such issue.
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6.
CONDENSED INTERIM FINANCIAL INFORMATION (UNAUDITED) FOR THE HALF YEAR ENDED JUNE 30, 2010 We have reviewed the condensed interim financial information (unaudited) of the Company and the consolidated condensed interim financial information (unaudited) of the Group for the half year ended June 30, 2010 in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. We have issued unqualified review conclusions vide our reports dated July 29, 2010 on the condensed interim financial information of the Company and the Group. However, we have without qualifying our
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conclusion added emphasis of matter paragraphs in our review report on the consolidated condensed interim financial information of the Group, pertaining to: (i) the Companys recognition of the effect of acquisition of taxable losses of a subsidiary company (as more fully explained in section 6.2.6), and (ii) non-recognition of embedded derivative pending response from the Institute of Chartered Accountants of Pakistan and deferment of exchange loss pending final response by the Securities and Exchange Commission of Pakistan on resubmission of the required detailed analysis (as more fully explained in section 6.4.8). A summary of the unaudited assets, liabilities and shareholders equity of the Company and the Group as at June 30, 2010 and their profit and loss account for the half year ended June 30, 2010 are given below:
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44
89,244,281 950,946 20,651 1,075,776 282,633 89,408 91,663,695 11,343,028 2,205,217 5,807,903 19,088 26,814 8,522,003 1,095,962 73,551 29,093,566 120,757,261 152,699,744
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Recovery of penalties imposed by the State Bank of Pakistan Engro Fertilizers Limited (the Subsidiary Company) is contesting the penalty of Rs. 99,936 paid and expensed in 1997, imposed by the State Bank of Pakistan (SBP) for alleged late payment of foreign exchange risk cover fee on long term loans and has filed a suit in the High Court of Sindh. A partial refund of Rs. 62,618 was, however, recovered in 1999 from SBP and the recovery of the balance amount is dependent on the Courts decision.
6.2.4
Arbitration proceedings for recovery of marketing incidentals Engro Fertilizers Limited (the Subsidiary Company) had commenced two separate arbitration proceedings against the Government of Pakistan for non-payment of marketing incidentals relating to the years 1983-84 and 1985-86 respectively. The sole arbitrator in the second case has awarded the Subsidiary Company Rs. 47,800 whereas the award for the earlier years is awaited. The award for the second arbitration has not been recognised due to inherent uncertainties arising from its challenge in the High Court of Sindh.
6.2.5
Project completion support to lenders The Company has extended project completion support to the lenders of Engro Energy Limited for US $ 15,400.
6.2.6
Status of Tax Matters / Assessments Engro Fertilizers Limited (the Subsidiary Company) (i) Group Relief As a result of demerger referred to in section 6.4.1, all pending tax issues of the Fertilizer Undertaking of the Company have been transferred to Engro Fertilizers Limited. Major issues pending before the tax authorities are described below.
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The Avanceon Limited Partnership (USA) is obligated under non-cancellable operating leases for computer & office equipment which expire at various dates. The future lease commitments related to non-cancellable operating leases as of June 30, 2010 are as follows: Rupees Not later than one year Later than one year and not later than five years Later than five years 2,420 1,024 907 4,351
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Unaudited
Share of income from joint venture PROFIT BEFORE TAXATION Taxation - Current - Deferred PROFIT AFTER TAXATION Note: For earnings per share, refer section 7 of this report.
6.4
Significant disclosures made in the notes to the condensed interim financial information (unaudited) of the Company and the Group for the half year ended June 30, 2010. We give below the significant disclosures made in the notes to the condensed interim financial information (unaudited) for the half year ended June 30, 2010:
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17,014,274
Engro Fertilizers Limited in return issued 9,999,993, in addition to existing 7, fully paid ordinary shares of Rs. 10 each plus share premium to the Company as follows:
Rupees 9,999,993 ordinary shares issued to the Company by Engro Fertilizers Limited - cost - share premium
Hedging Reserve As per the Scheme of Arrangement, the hedging reserve and revaluation surplus/reserves as at January 1, 2010 is to be transferred to Engro Fertilizers Limited, whereas only the revaluation surplus/reserves (hedging reserve omitted) is to be deducted by Engro Fertilizers Limited from the net assets so transferred to determine the share premium amount over and above the Rs. 100,000 share capital. Such omission of hedging reserve created a difference of an equivalent amount in the balance sheet. Therefore, this being an inadvertent omission in the Scheme of Arrangement, the management has also included the hedging reserve (negative) in the determination of share premium to eliminate the aforementioned difference. Further, in the opinion of the Companys management, supported by the legal advisor, the need for amendment to the Scheme of Arrangement in respect of such inclusion of hedging reserve does not arise as it does not in any way adversely affect the interest of the shareholders or creditors. 6.4.4 Commencement of operations of Engro Energy Limited During the period, Engro Energy Limited completed construction and testing of its 217.3 MW combine cycle power plant (the Power Plant) and has commenced commercial operations on March 27, 2010. The electricity generated through the Power Plant is transmitted to the National Transmission and Despatch Company (NTDC) under the Power Purchase Agreement (PPA) dated October 26, 2007, valid for a period of 25 years.
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Further, the Company is in the process of transferring part of its holding of 304 million ordinary shares of Rs. 10 each in Engro Energy Limited (EEL) to Engro PowerGen Limited (EPGL), a wholly owned subsidiary of the Company, on account of the Company's overall restructuring of its business to enable all direct subsidiaries to operate as holding companies for their respective lines of business. Initially, the Company was planning to obtain in exchange of the aforementioned transfer an equivalent number of shares of EPGL. However, due to significant cost of issuance of shares, it has now decided that EPGL will issue fewer number of shares to the Company. 6.4.5 Employee share option scheme Engro Corporation Limited Consequent to the demerger, as referred to in section 6.4.1, the employees transferred from the Company to Engro Fertilizers Limited have surrendered their existing share options against which new share options have been granted to them under a new scheme of Engro Fertilizers Limited. Further, consequent to the bonus issue in the current period, the entitlements were increased to 1,983,520 shares from 1,803,200 shares respectively and the exercise price was adjusted to Rs. 186.84 from Rs. 205.52 respectively. These changes have been duly approved by the Securities and Exchange Commission of Pakistan (SECP). Engro Fertilizers Limited As stated above, the employees transferred to Engro Fertilizers Limited and holding share options of the Company have been, on surrender thereof, granted share options under a new Employee Share Option Scheme (the Scheme) of Engro Fertilizers Limited. Under the Scheme, employees have been granted options to purchase 4,937,100 ordinary shares of Engro Fertilizers Limited at an exercise price of Rs. 98 per ordinary share. As per the Scheme, the entitlements and exercise price are subject to adjustments because of issue of right shares and bonus shares. The number of options granted to an employee is the same as the number of options of the Company surrendered by them. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Vesting period for employees who were initially granted options on or before June 30, 2008 in the Company, have started from January 1, 2010 and shall end on
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Fair value of the share options at grant date Share price at grant date Exercise price Annual volatility Risk free rate used Dividend yield
6.4.6
Maintenance Reserve Engro Energy Limited (the Subsidiary Company) In accordance with the Power Purchase Agreement (PPA), Engro Energy Limited (the Subsidiary Company) is required to establish and maintain a separate reserve fund (the Fund) with a depository institution for payment of major maintenance expenses. Any interest income resulting from the depository arrangements of the Fund shall remain in the Fund. Under the PPA, 1/24th of the annual operating and maintenance budget of the Power Plant less fuel expenses is to be deposited into the Fund on each capacity payment date until such reserve equals to nine such deposits. After the second Agreement year and thereafter the Fund may be re-established at such other level that the Subsidiary Company and NTDC mutually agree.
6.4.7
Non-recognition of embedded derivative / exchange loss by Engro Energy Limited (the Subsidiary Company) Sales for the current period included Rs. 2,007,185 in respect of sales made by Engro Energy Limited (the Subsidiary Company) to National Transmission and Despatch Company
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Earnings per share - The Company - The Group 14.08 13.54 16.81 16.36 13.53 12.33 11.45 9.47 10.64 10.44
The earnings per share for the years ended December 31, 2005 to 2008 have been restated to incorporate the effect of issuance of right shares upto December 31, 2009. Accordingly, these do not include the effect of bonus shares issued subsequent to December 31, 2009, as referred to in section 7.2. 7.2 The unaudited earnings per share, basic and diluted, of the Company and the Group for the half year ended June 30, 2010 was Rs. 1.18 and Rs. 10.37 respectively, calculated after taking the effect of the bonus shares issued by the Company during the half year ended June 30, 2010.
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The Board of Directors Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) 7th & 8th Floor, The Harbour Front Building, HC No. 3, Marine Drive, Block 4, Clifton, Karachi 75600, Pakistan Dear Sirs
AUDITORS CERTFICATE ON ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL We have verified from the books of account and records of Engro Corporation Limited (formerly Engro Chemical Pakistan Limited) that the issued, subscribed and paid-up share capital of the Company as at December 31, 2009 was Rs. 2,979,426 thousand comprising of the following:
No. of Shares 185,354,484 112,588,079 Ordinary shares of Rs.10 each fully paid in cash Ordinary shares of Rs. 10 each issued as fully paid bonus shares
297,942,563
2,979,426
MANAGEMENT NOTE As per the unaudited accounts of the Company as at June 30, 2010, the issued, subscribed and paid-up share capital was Rs. 3,277,369 thousand.
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Rupees in thousand Issued, subscribed and paid-up capital Share premium Employee share option compensation reserve Hedging reserve Revaluation reserve on business combination Exchange revaluation reserve General reserve Unappropriated profit 2,979,426 10,550,061 288,258 (609,719) 4,429,240 9,250,972 23,908,812 26,888,238 2,979,426 10,550,061 318,242 (617,000) 114,900 (43,185) 4,429,240 8,387,520 23,139,778 26,119,204
Rupees per share Break-up value per share (before final dividend) 90.25 87.67
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Number of shares Number of ordinary shares in issue (after bonus issue) 327,736,819 327,736,819
Rupees per share Break-up value per share (after final dividend and bonus issue)
80.22
77.88
MANAGEMENT NOTE As per the unaudited accounts of the Company as at June 30, 2010, the break-up values of the ordinary shares of Rs. 10 each of (i) Engro Corporation Limited the Company (formerly Engro Chemical Pakistan Limited) was 82.62; and (ii) the Company and its subsidiaries (the Group) was 86.41.
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Total Value (PkR Million) 1,472.57 2.55 4,141.44 516.55 19.04 11,795.11 591.06
100% 50%
39.58 13.13
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500,000 920,402,667
N.A.
N.A.
N.A 18,538.33
The terms and conditions of the Declaration of Trust and Security Documents are adhered to; and The interests of the TFC holders are safeguarded by taking the actions that it deems necessary (as prescribed by the Declaration of Trust) in the event of any breach of terms and conditions of TFC Instrument and the Declaration of Trust by ECL.
6.3.
THE TRUST DEED The Trust Deed dated September 17, 2010 (Declaration of Trust) executed between the Company and IGI Investment Bank Limited specifies the rights and obligations of the Trustee. In the event of ECL defaulting on any of its obligations under the terms of the Declaration of Trust, the Trustee may enforce ECLs obligations in accordance with the terms of the Trust Deed. The proceeds of any such enforcement shall be distributed to the TFC Holders at the time on a pari passu basis in proportion to the amounts owed to each TFC holder pursuant to the TFCs.
6.4.
EVENTS OF DEFAULT AND SECURITY ENFORCEMENT PROCEDURE The event of default will be governed under Article 8 of the Declaration of Trust executed between the Company and the Trustee to the Issue. It is clarified, however, that in the event of default, the TFC holders acting through the Trustee shall be entitled to initiate legal proceedings against the Company for recovery of the outstanding amount payable under the TFCs. The Obligations shall become immediately due and payable, and the Security shall become immediately enforceable by a declaration of the Trustee, notified to the Issuer, upon the occurrence of an Event of Default.
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ii.
b) default by the Issuer in the performance or observance of or compliance with any of its other material obligations or undertakings under the Declaration of Trust and Deed of Floating Charge; c) an event of default (howsoever described and / or defined) occurs under a Transaction Document; d) any representation or warranty made or deemed to be made or repeated by the Issuer in or pursuant to this Declaration is found to be incorrect and / or misleading in any material respect; e) the Issuer enters into an arrangement for the benefit of its creditors in respect of any Financial Indebtedness; f) the Issuer: i. voluntarily or involuntarily becomes the subject of bankruptcy or insolvency proceedings except for proceedings which are frivolous in nature; and / or elects to become a party to or is subject to any proceedings or procedure under any law for the relief of financially distressed debtors, except for proceedings which are frivolous in nature; and / or is unable or admits in writing its inability to pay its debts as they mature, to the Trustee; and / or a receiver or an administrator is appointed for all or any material part of its assets or business;
ii.
iii.
iv.
g) the Issuer is unable or admits its inability to meet its payment obligations in respect of its Financial Indebtedness as the same fall due, suspends making payments on any of its Financial Indebtedness or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling its Financial Indebtedness or any portion thereof; h) a moratorium is declared in respect of any Financial Indebtedness of the Issuer; i) any corporate action, legal proceedings or other procedure or steps are taken in relation to the suspension of payments, winding-up, dissolution, administration or reorganisation (by
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k) any governmental agency nationalizes, acquires or expropriates (with or without compensation) any material or all the assets of the Issuer including but not restricted to the Secured Assets; l) the Issuer fails to meet any of its material obligations under this Declaration and the same has a Material Adverse Effect;
m) any other event or circumstance arising out of the Issuers negligence or default which results in a Material Adverse Effect; n) any Financial Indebtedness of the Issuer is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (howsoever described); o) any commitment for any Financial Indebtedness of the Issuer is cancelled or suspended by a creditor of the Issuer, as a result of an event of default (however described); p) it is or becomes unlawful for the Issuer to perform any of its material obligations under this Declaration; q) any obligation or obligations of the Issuer under this Declaration or any Transaction Document are not, or cease to be, legal, valid, binding or enforceable and the cessation individually or cumulatively has a Material Adverse Effect; r) the Issuer repudiates this Declaration or evidences an intention to repudiate this Declaration;
s) any Security Document ceases to be in full force and effect or is declared to be void or is repudiated and the conditions resulting in the repudiation are not remedied and / or replacement Security Documents are not executed within a period of fifteen (15) days from the date on which the Security Documents become void and /or are repudiated; t) any court or arbitrator passes a final non-appealable judgment or arbitral award for payment, against the Issuer and the Issuer fails to effect such payment within thirty (30) days from the date on which the obligation to pay arises;
u) the Issuer fails to comply with any law or regulation to which it may be subject and the same has a Material Adverse Effect; v) the Issuer fails to comply with the covenants set out in this Declaration and such failure continues for a period of thirty (30) days from the date of receipt of a notice by the Issuer from the Trustee in respect of the same or from the date on which the Issuer has knowledge of the same, whichever is earlier; w) the Issuer suspends, ceases, or threatens to suspend or cease, to carry on all or a substantial part of its business or to change the nature of its business from that undertaken at the date of this Declaration; x) any event or series of events (whether related or not) occurs which would have a Material Adverse Effect.
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8TH FLOOR, THE HARBOR FRONT BUILDING, HC # 3, MARINE DRIVE, BLOCK 4, CLIFTON, KARACHI, PAKISTAN
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SHAHZADA DAWOOD
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Engro Polymer & Chemicals Limited Engro Vopak Terminal Limited National Management Foundation - Lums Sach International (Private) Limited Engro Powergen Limited Petek (Private) Limited Pebbles (Private) Limited The Dawood Foundation Engro Fertilizers Limited Tenaga Generasi Limited Central Insurance Company Limited Dawood Hercules Chemicals Limited Dawood Corporation (Private) Limited Inbox Business Technologies (Private) Limited Patek (Private) Limited Sach International (Private) Limited Sui Northern Gas Pipelines Limited The Dawood Foundation Pebbles (Private) Limited Tenaga Generasi Limited Dawood Lawrencepur Limited Engro Fertilizers Limited Dewan Drilling Limited Dewan Petroleum (Private) Limited National Clearing Company of Pakistan Limited Al-Meezan Investment Management limited Sindh Engro Coal Mining Company Limited _
SAAD RAJA
ASIF QADIR
31 BELLFIELD AVENUE HARROW, MIDDLESEX HA3 6ST, UK ENGRO POLYMER & CHEMICALS LTD.
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KHALID MANSOOR
7TH FLOOR, THE HARBOR FRONT BUILDING, HC # 3, MARINE DRIVE, BLOCK 4, CLIFTON, KARACHI, PAKISTAN 7TH FLOOR, THE HARBOR FRONT BUILDING, HC # 3, MARINE DRIVE, BLOCK 4, CLIFTON, KARACHI, PAKISTAN
7.2.
PROFILE OF THE CHAIRMAN OF THE BOARD OF DIRECTORS Mr. Hussain Dawood is the Chairman of Engro Corporation Limited, Dawood Hercules Chemicals Limited and the Karachi Education Initiative/Karachi School for Business & Leadership. He is also a Director on the Board of the Pakistan Centre for Philanthropy. Pakistan Business council, Commonwealth business council, Beacon House National University, & Asia house London. He is a global charter Member of the Indus Entrepreneurs and the member of the World Economic Forum in Davos. He is on the honorary council of Italy, In Lahore and was recently conferred the award Ufficiale Ordine al Merito della Repubblica italiana, by the Italian government. As part of social responsibilities, he Chairs the board of the Pakistan Poverty Alleviation fund, one of the largest World bank-financed social funds across the world. Mr.Dawood is an MBA from Kellogg School of
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8.
MISCELLANEOUS INFORMATION
8.1. REGISTERED OFFICE / HEAD OFFICE Engro Corporation Limited th th 7 & 8 Floor, Harbor Front Building Marine Drive, Block 4, Clifton, Karachi Tel: 111 211 211 Fax: 35636741 Website: www.engro.com A.F.Ferguson & Co. Chartered Accountants State Life Building No. 1-C I.I.Chundrigar Road, Karachi Andalib Alavi General Manager Legal & Company Secretary Central Depository Company of Pakistan Limited CDC House, 99-B, Block B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi-74400, Pakistan MCB Bank Limited Standard Chartered Bank (Pakistan) Limited Bank Alfalah Limited NIB Bank Limited United Bank Limited Habib Bank Limited Bank Al Habib Limited Allied Bank Limited JS Bank Limited Askari Bank Limited
8.2. AUDITORS
8.7. 8.7.1
MATERIAL CONTRACTS / DOCUMENTS Deed of Floating Charge dated September 17, 2010 between the Company and IGI Investment Bank Limited; Declaration of Trust Agreement dated September 17, 2010 between the Company and IGI Investment Bank Limited; Credit Rating Report dated August 02, 2010 by PACRA; Clearance letter dated August 18, 2010 from Karachi Stock Exchange;
8.7.2
8.7.3 8.7.4
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The 10% Stock Dividend appearing in 2009 was announced by the Board of Directors on January 22, 2010, for the year ended December 31, 2009, and was capitalized in 2010. 8.12. REVALUATION OF FIXED ASSETS The Company has not reflected any revaluation of fixed assets in their Financial Statements. 813. MEMORANDUM OF ASSOCIATION The Memorandum of Association, inter alia, contains the objects for which the Company was incorporated and the business that the Company is authorized to undertake. A copy of the Memorandum of Association annexed to this Prospectus is being published with all issues hereof except those released as newspaper advertisement. 8.14. VENDORS The Company has no Vendors in terms of Clause 12 of section 1 Part 1 of the Second Schedule of the Ordinance.
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8.16.
INVESTMENT IN ASSOCIATED COMPANIES Investments in associated undertakings as per the unaudited accounts of June 30, 2010, are as follows: Company Engro Polymer & Chemicals Ltd.
Engro Eximp (Pvt) Ltd. Engro Management Services (Pvt) Ltd. Engro Foods Ltd. Engro PowerGen Ltd. Avanceon Ltd. Engro Energy Ltd. Engro Fertilizer Ltd. Engro Vopak Terminal Ltd.
No. of Shares 292,400,000 10,000 250,000 542,300,000 6,010,000 25,066,667 304,000,000 10,000,000 45,000,000 500,000
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d) e)
2) APPLICATION MUST BE MADE ON THE COMMISSIONS APPROVED APPLICATION FORM OR A LEGIBLE PHOTOCOPY THEREOF ON A PAPER OF A4 SIZE WEIGHING ATLEAST 62 GM. 3) Copies of Prospectus and application forms can be obtained from the members of Karachi Stock Exchange (Guarantee) Limited, the Bankers to the Issue and their branches, Engro Corporations website, and the registered office of Engro Corporation Limited. 4) The applicants opting for scripless form of TFCs are required to complete the relevant sections of the application. In accordance with provisions of the Central Depositories Act, 1997 and the CDC Regulations, credit of such TFCs is allowed ONLY in the applicants own CDC Account after the close of subscription. In case of discrepancy between the information provided in the application form and the information already held by CDS, the Company reserves the right to issue TFCs in physical form. 5) Name (s) and address (es) must be written in full block letters, in English and should not be abbreviated. 6) All applications must bear the name and signature of the applicant. In case of difference of signature with the Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) or Passport, both the signatures should be affixed on the application form. 7) APPLICATIONS MADE BY INDIVIDUAL INVESTORS (i) In case of individual investors, an attested photocopy of CNIC (in case of RPs)//Passport (in case of NRPs and FIs) as the case may be, should be enclosed and the number of CNIC/Passport should be written against the name of the applicant. Copy of these documents can be attested by any Federal/Provincial Government Gazetted Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicants residence (ii) Original CNIC/Passport, along with one attested photocopy, must be produced for verification to the banker to the issue at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application. 8) APPLICATIONS MADE BY INSTITUTIONAL INVESTORS (i) Applications made by companies, corporate bodies, mutual funds, provident/pension/gratuity funds/trusts and other legal entities must be accompanied by an attested photocopy of their
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Code 07 08 09 10 11
Name of Banks
Bank AlHabib Limited Allied Bank Limited
JS Bank Limited
Askari Bank Limited Citibank N.A. Pakistan
OVERSEAS BANKERS TO THE ISSUE Code 01 02 03 04 Name of Banks Habib Bank Limited
-
Code 05 06 07 08
Name of Banks
-
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10. Nationality Code Code 001 002 003 004 005 Name of Banks U.S.A U.K U.A.E K.S.A Oman Code 006 007 008 009 010 Name of Banks Iran Bangladesh China Bahrain Other
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Witness 1:
Name:
Signature: _________-Sd-_____________
Name:
Signature: _________-Sd-_____________
Place: Karachi
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1. 2. 3.
The name of the Company is ENGRO CORPORATION LIMITED The Registered Office of the Company will be situated in the Province of Sind. The objects for which the Company is established are: (1) To manufacture, produce, treat, refine, reduce and process all kinds of artificial manures and fertilizers, chemicals and minerals and any products and by-products which may be derived, produced, prepared, developed, compounded, made or manufactured therefrom and any substance obtained by mixing any of the foregoing with other substances (hereinafter all referred to as fertilizers and chemical products) and to purchase or otherwise acquire, sell, supply, market, distribute, exchange or otherwise dispose of, import, export, store, hold, package, transport, use, experiment with, handle, trade, and generally deal in fertilizers and chemical products. To undertake and carry on all type of business related to all aspects of agriculture, agricultural products and equipment including but not limited to farming including without limitation corporate farming, seeds, pesticides and other plant remedies and the food business at each and every stage of production and distribution and to do all such things as are incidental or conductive to the carrying on of such businesses. To undertake, develop or carry on any business or activity relating to telecommunications including fixed and wireless and including telephone, cellular, cable or satellite communication and including of speech, sounds, images, signals and data and materials in all forms, howsoever produced, transmitted, received or processed and to do all or such things as are incidental or conducive to the carrying on of telecommunication related businesses including without limitation manufacturing, marketing and provision of facilities and services subject to any prior approvals required under the law. To undertake, develop or carry on any business or activity related with any form of energy, including, without limitation petroleum, gas and power including electric power, at all stages of exploration, refining, generating, transporting, producing, selling, distributing and supply and to do all or such things as are incidental or conducive to the carrying on of energy, petroleum,
(2)
(3)
(4)
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(6)
(7)
(8)
(9)
(10) to clear, manage, farm, cultivate, irrigate and otherwise work or use any
lands over which the Company has any rights and to dispose of or otherwise deal with any farm or other products, animal or vegetable, of or on any such lands, and to lay out sites for and establish temporary or permanent camps, towns and villages on any such lands and to carry on all or any of the businesses of farmers, dairymen, milk contractors, dairy farmers, millers, seeds-men, nurserymen, dealers in agricultural equipment, growers of and dealers in grain, hay and straw, and purveyours and vendors of dairy products, poultry, animal feeds and provisions of all kinds and to buy, sell and trade in any goods usually traded in any of the above businesses and to carry on any other businesses which may be advantageously carried on by the Company in connection therewith; (11) to own, acquire, construct, establish, install, lay out, improve, maintain, work, manage, operate carry out control, or aid in, contribute or subscribe to the constructions, erection, maintenance and improvement or working of, any roads, ways, tramways, aerodromes and landing fields, docks, wharves, piers, bridges, jetties, breakwaters, dredging facilities, moorings, harbour abutment, viaducts, aqueducts canals, water courses, wells, tanks, storage installation, refineries, pipes, pipelines, conveyors, telegraphs, telephones, wireless, gas works, steam works, electric lighting and power works, power houses, hydroelectric plants, laboratories, factories, mills, foundries, workshops, boilers, machine shops, warehouses, shops, stores, fuel stores,
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(13) to purchase, acquire, take on lease or tenancy, sell dispose of, mortgage or
let any estate or interest in and to take and acquire options over any property, immoveable and moveable, or rights of any kind, and to develop, improve, turn to account, deal with, lease mortgage, sell or otherwise dispose of the same in such manner as may be thought expedient;
(14) to apply for, purchase, or otherwise acquire, and protect and renew in
any part of the world any patents, patent rights, brevets dinvention, trade marks, designs, licences, concessions and the like, conferring any exclusive or non-exclusive or limited right to their use, or any secret or other information as to any invention, process or thing which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to benefit the Company, and to use, exercise, develop, or grant licenses in respect of, or otherwise turn to account the property, rights or information so acquired, and to expend money in experimenting upon, testing or improving any such patents, inventions or rights; (15) to act as Managers, Agents, Registrars, Secretaries, Treasurers, Consultants or Managing Agents of and to provide services to any business or concern that the Company may find convenient or advantageous;
(16) to enter into partnership or any arrangement for sharing profits, union of interest, co-operation, joint adventure, reciprocal concessions, or otherwise with any company, association, firm or person carrying on or engaged in, or about to carry on or engage in, any business or transaction which this Company is authorized to carry on or engage in, or any business or transaction capable of being conducted so as directly or indirectly to benefit the Company, and to lend money to, guarantee the contracts of, or otherwise assist any such company, association, firm or person, and to purchase, take, or otherwise acquire, shares and
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(22) to subscribe for, underwrite, purchase or otherwise acquire and to hold, dispose of and deal in shares, stocks, bonds, debentures, debenture stocks, annuity or other obligations of any other company, person, institution or corporate or governmental body, whether secured or unsecured; (23) to sell, lease, mortgage or otherwise dispose of the property, assets or undertaking or the Company or any part thereof for shares, stock, debentures, or other securities or obligations of any institution, corporate or governmental body, person or company, whether or not having objects altogether or in part similar to those of the Company, or for any other consideration;
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(28) to pay out of the funds of Company all expenses which the Company may lawfully pay with respect to the formation, promotion and registration of the Company or the issue of its capital, including brokerage and commissions for obtaining applications for or taking, placing or underwriting or procuring the underwriting of shares, debentures or other securities of the Company; (29) to pay for any rights or property acquired by the Company and to remunerate any person or company whether by cash payment or by the
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