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KUWAIT ENERGY PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2016
45
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.
The 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
2016
Year ended
2015
US$ 000’s
US$ 000’s
Salaries and other short-term benefits
1,521
1,599
Consultancy fees paid to non-executive director
-
24
Post-employment benefits
30
30
1,551
1,653
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 US$ 5.7 million (2015: US$ 6.6 million), until such time as the Deputy CEO is able to sell those shares and
repay the loan to the Company.
During 2016 and 2015, under the arrangement described above, the Deputy CEO was required to purchase 403,225 and
806,451 ordinary shares of the Company at a price of KWD 0.620 per share (totalling US$ 0.8 million and US$ 1.6 million
respectively). 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
Subsequent to 31 December 2016 it became apparent that certain of the security purported to have been granted
pursuant to the Prepayment Agreement (see note 27) was possibly unenforceable. It is therefore possible that the Group
was not in compliance with all the terms of the Prepayment Agreement and ancillary documentation at all times during
2016 and thereafter. These circumstances were promptly disclosed to the lender upon the Group becoming aware of
them. The lender has confirmed in writing that any possible or actual non-compliance with the Prepayment Agreement
regarding this issue has been waived. There is also agreement in principle between the lender and the Group that the
Prepayment Agreement and related security package will be amended to reflect these circumstances, and the parties
have agreed to formally document this agreement by 12 May 2017.
These issues have no impact on the carrying value or classification of the prepayment drawn down as at 31 December
2016 and the Prepayment Agreement continues to operate as originally envisaged on its terms. The Group has complied
with all repayment terms since the inception of the arrangement and as at the date of approval of these consolidated
financial statements US$ 12.4 million of the first drawdown has been settled in kind through delivery of crude oil.