Annual Reports & Accounts 2011

25 Related party balances and transactions

Related parties comprise LHL (which owns 33% of the issued share capital of the Company), certain legal shareholders of the Group companies, Directors and key management personnel of the Group. Key Management includes Directors (Executive and Non-Executive) and members of the executive committee. Related parties for the purpose of the parent company financial statements also include subsidiaries owned directly or indirectly and joint ventures. Other than disclosed elsewhere in the financial statements, the Group entered into the following significant transactions during the year with related parties at prices and on terms agreed between the related parties:

	2011 USD’000	2010 USD’000
Key Management compensation	7,465	9,506
Legal and professional services	804	140
Sales to joint ventures	224	–
Purchases from joint ventures	73	–
Sponsorship fees and commissions paid to legal shareholders of subsidiaries (Note 1)	205	143
Key Management compensation comprises:
Salaries and other short-term employee benefits	6,246	7,988
Share-based payments – value of services provided	829	965
Post-employment benefits	390	553
	7,465	9,506

The terms of the employment contracts of Key Management include reciprocal notice period of between six to 12 months.

Due from related parties

	2011 USD’000	2010 USD’000
Group
MIS Arabia Co Ltd (current) (Note 23)	484	–
KSAM2 (non-current)	7,025	–

The balance receivable from KSAM2 represents an interest-free loan amounting to USD 13.2m with no fixed repayment terms. The amortised cost of this loan using an effective interest rate of 9% per annum on the date of business combination amounted to USD 6.6m. During the post-combination period, the Group recognised an interest accretion on this loan amounting to USD 0.3m which is included as part of finance income (Note 12).

Company

	2011 USD’000	2010 USD’000
LIH^	201,865	–
LEL*	6,442	19,144
EBT**	1,388	3,475
Inspec*	244	–
	209,939	22,619

^Represents funds provided in relation with the acquisition of MIS. This amount is repayable on demand and carries an interest at 6% per annum.

*Primarily comprises a receivable in respect of management fees charged by the Company.

**Includes USD 1,193,319 (2010: USD 3,388,744) due in respect of payments made for treasury shares acquired by EBT on behalf of the Group.

Further, the Company has provided performance guarantees on behalf of its subsidiary. These guarantees, issued in the normal course of business, are outstanding at the year end and no outflow of resources embodying economic benefits in relation to these guarantees is expected by the Company.

Dividends paid by the Company include an amount of USD 10m (2010: USD 5.2m) in respect of shares held by Key Management personnel (including those held by the EBT in respect of shares gifted) of which USD 9.7m (2010: USD 5m) was paid to LHL, a company controlled by Steven Lamprell who is a member of Key Management.