# Directors' report

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/LSE_GKP.L_2021/LSE_GKP.L_2021.mmd` · pages 100-106_

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Directors' report

The Directors are pleased to present their report on the affairs of the Group, together with the consolidated financial statements of the Company and auditor's report, for the year ended 31 December 2021. A review of the business is set out in the preceding sections of this annual report and accounts, including the Chairman's statement, Chief Executive Officer's review, Financial review and Operational review, which are incorporated into this report by reference. The Corporate governance report also forms part of this report.

## Results and dividends

The Group's financial results for the year ended 31 December 2021 are set out in the consolidated financial statements.

The Group made a profit after taxation for the year of \(164.6 million (2020: loss of \)47.3 million). The Directors resumed the dividend programme of at least \(25 million per year. During 2021, an ordinary dividend of \)25 million was paid, followed by a special dividend of \(25 million and an interim dividend of \)50 million (2020: no dividends were paid). To date in 2022, an interim dividend of \(50 million has been paid. A further \)65 million interim dividend is expected to be paid on 13 May 2022, based on a record date of 29 April 2022 and ex-dividend date of 28 April 2022. The final $25 million 2021 ordinary dividend will be paid subject to approval at the AGM on 24 June 2022.

## Capital structure

Full details of the authorised and issued share capital, together with movements in the Company's issued share capital during the year, are shown in note 20 to the consolidated financial statements. The business is financed by means of debt (see note 16 to the consolidated financial statements) and external share capital.

## Share rights and restrictions

There are no specific restrictions on the size of a holding or on the transfer of common shares, both of which are governed by the general provisions of the Company's Byelaws and prevailing legislation. The Directors are not aware of any agreements between holders of the Company's common shares that may result in restrictions on the transfer of securities or on voting rights. No person has any special rights of control over the Company's share capital and all issued common shares are fully paid.

Details of the employee share schemes are set out in note 24 to the consolidated financial statements and details of the Directors' awards are included in the Remuneration Committee report.

## Voting rights and Byelaw amendments

The Company's Byelaws may only be revoked or amended by the shareholders of the Company by a resolution passed by a majority of not less than three-quarters of such shareholders as vote in person or, where proxies are allowed, by proxy at a general meeting. Resolutions put to the vote of any general meeting are decided on a show of hands unless a poll is demanded in accordance with the Company's Byelaws.

The Company's Byelaws are available on the Company's website at www.gulfkeystone.com.

## Directors

With regard to the appointment and replacement of Directors, the Company is governed by its Byelaws, the Companies Act (Bermuda) and related legislation. All of the Directors are required to stand for re-election by the shareholders each year at the AGM.

## Directors' indemnities

The Company has made qualifying third-party indemnity provisions for the benefit of its Directors during the year and these remain in force at the date of this report.

## Directors' interests in shares

As at 31 December 2021, the following Directors who held office had interest in the common shares of the Company \( ^{(1)} \) :

• Jon Harris (Chief Executive Officer) – 30,000 common shares;

• Ian Weatherdon (Chief Financial Officer) – 50,112 common shares; and

• Garrett Soden (non-independent Non-Executive Director) – 70,000 common shares.

At the date of this report, the Employee Benefit Trust ("EBT") and Exit Event Trustee held 0.2 million (2020: 0.1 million) common shares of the Company.

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# Directors' report continued

## Significant shareholdings

As at 28 February 2022, being the date of the most recent analysis of the Company's share register, the Company discloses the following significant shareholdings:

<table><tr><td>Shareholder</td><td>Number of common shares</td><td>Percentage of issued share capital</td></tr><tr><td>Lansdowne Partners Austria GmbH</td><td>32,500,000</td><td>15.21</td></tr><tr><td>Van Lanschot Kempen NV</td><td>23,950,695</td><td>11.21</td></tr><tr><td>Mr Gertjan Koomen</td><td>10,068,552</td><td>4.71</td></tr><tr><td>BlackRock Investment Management (UK) Ltd.</td><td>9,290,778</td><td>4.35</td></tr><tr><td>Hargreaves Lansdown Stockbrokers Ltd.</td><td>8,969,330</td><td>4.20</td></tr><tr><td>Interactive Investor</td><td>8,408,999</td><td>3.93</td></tr><tr><td>Dimensional Fund Advisors LP</td><td>8,361,221</td><td>3.91</td></tr><tr><td>InsingerGillissen Bankiers NV</td><td>8,307,232</td><td>3.89</td></tr><tr><td>Acadian Asset Management LLC</td><td>7,490,897</td><td>3.50</td></tr><tr><td>Société Générale</td><td>5,999,762</td><td>2.81</td></tr></table>

The Company's share register analysis was provided by Investor Insight, based on information available at the time of publication.

## Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chairman's statement, the Chief Executive Officer's review, the Operational review and the Management of principal risks and uncertainties. The financial position of the Group at the year end and its cash flows and liquidity position are included in the Financial review.

As at 29 March 2022, the Group had \(182.7 million of cash. The Group continues to closely monitor and manage its liquidity. Cash forecasts are regularly produced and sensitivities run for different scenarios including, but not limited to, change in commodity prices, different production rates from the Shaikan block, cost contingencies, disruptions to revenue receipts, impact of climate change and geopolitical risks on the Group's operations, etc. In the current year, these have included both the Iraqi Supreme Court ruling on 15 February 2022 and export route availability as a result of the evolving sanctions situation due to the Russian invasion of Ukraine, as further described in note 29. The Group's forecasts, taking into account the applicable risks, stress test scenarios and potential mitigating actions, show that it has sufficient financial resources for the twelve months from the date of approval of the 2021 annual reports and accounts.
Based on the analysis performed, the Directors have a reasonable expectation that the Group has adequate resources to continue to operate for the foreseeable future. Thus, the going concern basis of accounting is used to prepare the annual consolidated financial statements.

## Significant agreements – change of control

There are a number of agreements that take effect, alter or terminate upon a change of control of the Group, including the Shaikan PSC and employee share plans. The Directors are not aware of any agreements between the Group and its Directors or employees that provide for compensation for loss of office or employment that occurs because of a takeover bid.

## Auditor

Each of the persons who is a Director at the date of approval of this annual report and accounts confirms that:

• so far as the Director is aware, there is no relevant audit information of which the Group's auditor is unaware; and

- the Director has taken all the steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

On behalf of the Board

## Jon Harris

Chief Executive Officer

29 March 2022

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# Directors' responsibilities statement

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with United Kingdom adopted International Financial Reporting Standards ("IFRSs") and Article 4 of the International Accounting Standards ("IAS") Regulation. Under IAS 1 the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

• make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Bermuda Companies Act 1981. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

## Directors' responsibility statement

We confirm that to the best of our knowledge:

- the financial statements, prepared in accordance with United Kingdom adopted International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole;

- the Strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

- the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 29 March 2022 and is signed on its behalf by:

Jon Harris
Chief Executive Officer
29 March 2022

Ian Weatherdon
Chief Financial Officer
29 March 2022