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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2015
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32.
RELATED PARTY TRANSACTIONS
Related parties comprise major shareholders, directors and executive officers of the Group, their families and companies
of which they are the principal owners. Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed in this note.
A restructuring of the Group was undertaken in July 2014 to bring KEC, the parent Company prior to the restructuring in
2011, into the Group. As approved in the 2013 Annual General Meeting of the Company and ratified in the 2014
Extraordinary General Meeting of the Company, shares of KEC have been acquired in 2014 and 2015 from its
shareholders for new ordinary shares of the Company on a 1:1 basis. Further during 2015, the Company repurchased its
own 31.8 million number of shares at a price of Kuwaiti Dinar 0.620 per share from KEC at a book value of USD 72.0
million which are now being directly held as treasury shares (see note 31).
The other
related party transactions and balances included in the Group’s consolidated financial statements are as follows:
a) Compensation of key management personnel:
Key management personnel are considered to be the Board of Directors of the Company.
The remuneration of key management personnel during the year was as follows:
Year ended
2015
Year ended
2014
USD 000’s
USD 000’s
Salaries and other short-term benefits
1,599
1,456
Consultancy fees paid to non-executive director
24
296
Post-employment benefits
30
32
1,653
1,784
b) Agreement to purchase shares
The Deputy CEO of the Group has entered into an agreement with a third party on behalf of the Group to purchase a
specified number of shares of the Company held by that third party. Depending on the outcome of certain future events,
and unless otherwise agreed, the Group may be required to lend the Deputy CEO the purchase price of the shares,
approximately USD 7.1 million (2014: USD 9.2 million), until such time as the Deputy CEO is able to sell those shares
and repay the loan to the Company.
During 2014, under the arrangement described above, the Deputy CEO was required to purchase 792,741 ordinary shares
of the Company at a price of KWD 0.620 per share (totalling USD 1.7 million). The Company lent the Deputy CEO the
funds to complete this transaction. Shareholder approval to buy back these shares from the Deputy CEO was obtained in
October 2014 and the Company now holds these shares as treasury shares (note 21). The loan to the Deputy CEO was
repaid to the Company in the year.
During 2015, under the arrangement described above, the Deputy CEO was required to purchase 806,451 ordinary shares
of the Company at a price of KWD 0.620 per share (totalling USD 1.6 million). The Company lent the Deputy CEO the
funds to complete this transaction until such time as the Deputy CEO is able to sell those shares and repay the loan to the
Company. The Company may (subject to shareholder approval) purchase the shares from the Deputy CEO and hold them
as treasury shares, with the purchase price being used to repay the loan.
33.
SUBSEQUENT EVENTS
a)
Subsequent to the year end, the Group has entered into a farm-out agreement with EGPC to sell a 20% paying (15%
revenue) interest in one of its key oil & gas fields. Under the terms of this agreement, EGPC will settle the
consideration owed for the farm-
out by paying the Group’s share of costs of a major contract with any balance being
payable from cost recovery allocation received when the production commences from this field. This agreement, which
is subject to Board approvals of both parties, the pre-emption process and government approval, will materially reduce
the Group’s contractual payment commitments during 2016 and 2017.
b)
Subsequent to the year end, a request for arbitration has been filed against the Group (pursuant to the ICC Rules of
Arbitration) under which the claimant asserts that it has a right to an increased non-controlling share in one of the
Group’s key oil and gas assets. The arbitration is at a very early stage.
The arbitration tribunal has not yet been
constituted and no substantive written submissions have been filed. We believe that their position will not be
vindicated, and we are firmly committed to vigorously rebutting the claim.
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