KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
F-108
24.
DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
a) Held for trading derivatives
Derivatives used for hedging purposes but which do not meet the qualifying criteria for hedge accounting are
classified as ‘Held for trading derivatives’.
Interest rate cap is an agreement to cap the interest rate on facilities at 2 % when the LIBOR is more than 2
% and equal to or less than 5 %. The interest rate cap matures on 30 June 2014.
The notional amounts of interest rate cap together with the fair value as at 31 December is summarised as
follows:
Held for trading Derivatives
Notional principal value
Fair value
(Negative) /Positive
2012
2011
2012
2011
USD 000’s
USD 000’s
USD 000’s
USD 000’s
- Interest rate cap
50,000
50,000
(484)
(750)
The reduction in the fair value amounting to USD 266 thousand is recognised in the consolidated income
statement.
25.
SHARE-BASED PAYMENTS
At an Extraordinary General Meeting held on 14 October 2008 the shareholders of Kuwait Energy K.S.S.C.
approved the issue of shares for nil consideration to employees in accordance with the employee incentive
scheme (“EIS”) approved by the Board of Directors (“BOD”). Following the restructuring the EIS
obligations have been transferred from Kuwait Energy K.S.S.C. to Kuwait Energy plc. The EIS is available
to specified employees employed at the beginning of the financial year and pro-rated for specified employees
who have joined before 1 October of the financial year. The entitlement of each employee is determined
based on the maximum incentive entitlement decided by the BOD and the weighted average of corporate
performance ratings and individual performance ratings. The share awards vest in a staggered manner of
30%, 30% and 40% after one, two and three years respectively. Any unutilised share awards cannot be
carried forward. If the employee leaves the Group (other than due to exceptional circumstances beyond the
employee’s control) during the vesting period, the unvested shares will be forfeited. If the employee leaves
the Group due to exceptional circumstances beyond the employee’s control during the vesting period, the fair
value of the unvested share awards will be paid in cash. The unvested shares are not entitled to dividends or
bonus shares.
The EIS has concluded and the Group has issued all the vested shares during the year to the employees.
The Group records an expense, based on its best estimate related to the fair value determined by reference to
the fair value of the share awards from independent market sources at the dates of the grant 1 January 2008
(139 fils/share), 1 January 2009 (201 fils/share), 1 January 2010 (201 fils/share) and 1 January 2011 (201
fils/share) on a straight-line basis over the vesting period. During the year 2012, the Company recognised a
net expense of USD 742 thousand (2011: USD 1,229 thousand) including reversal of previously recognised
expenses relating to forfeited shares as the cost of EIS and credited the share-based compensation reserve in
equity.
