Barclays 2009 Annual Report Download - page 37

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 35
Operating expenses
2009/08
Operating expenses increased 25% (£3,324m) to £16,715m (2008:
£13,391m). The increase was driven by a 38% increase (£2,744m) in staff
costs to £9,948m (2008: £7,204m).
Administrative expenses grew 2% (£98m) to £4,889m (2008:
£4,791m) reflecting the impact of acquisitions made during 2008, the costs
of servicing an expanded distribution network across Global Retail and
Commercial Banking, and expenses relating to the Financial Services
Compensation Scheme.
Operating expenses increased due to a £119m decrease in gains from
sale of property to £29m (2008: £148m) as the Group wound down its sale
and leaseback of freehold property programme.
Amortisation of intangibles increased £171m to £447m (2008: £276m)
primarily related to the intangible assets arising from the acquisition of the
Lehman Brothers North American businesses.
2008/07
Operating expenses increased 11% (£1,295m) to £13,391m
(2007: £12,096m).
Administrative expenses grew 30% (£1,100m) to £4,791m
(2007: £3,691m), reflecting the impact of acquisitions (in particular Lehman
Brothers North American businesses and Goldfish), fees associated with
Group capital raisings, the cost of the Financial Services Compensation
Scheme as well as continued investment in the Global Retail and Commercial
Banking distribution network.
Operating expenses were reduced by gains from the sale of property of
£148m (2007: £267m) as the Group continued the sale and leaseback of
some of its freehold portfolio in 2008.
Amortisation of intangible assets increased 55% (£98m) to
£276m (2007: £178m), primarily related to intangible assets arising
from the acquisition of Lehman Brothers North American businesses.
Goodwill impairment of £112m reflects the full write-down of £74m
relating to EquiFirst and a partial write-down of £37m relating to FirstPlus
following its closure to new business in August 2008.
Staff costs
2009/08
Staff costs increased 38% (£2,744m) to £9,948m (2008: £7,204m) driven
by a 40% increase in salaries and accrued incentive payments, primarily in
Barclays Capital, reflecting the inclusion of the acquired Lehman Brothers
North American businesses and associated net increase of 7,000 employees
in September 2008.
In December 2009, the UK government announced that the Finance
Bill 2010 will introduce a bank payroll tax of 50% applicable to discretionary
bonuses over £25,000 awarded to UK bank employees between
9th December 2009 and 5th April 2010. Draft legislation and further
guidance on its application has been published. Based on this, and in
accordance with IAS 19 – Employee benefits, we have accrued for the
estimated tax payable in respect of employee services provided during
the period. For 2009, £190m has been included within Other Staff Costs
in respect of 2009 cash awards. A further provision of £35m has also
been included in Other Staff Costs in respect of certain prior year awards
being distributed during the tax window, which may fall within the
proposed legislation.
Defined benefit plan pension costs decreased £122m to £33m credit
(2008: cost of £89m) primarily due to the UK Retirement Fund whose
charges decreased as a result of a one-off credit of £371m from the closure
of the final salary scheme to existing members.
2008/07
Staff costs decreased 5% (£407m) to £7,204m (2007: £7,611m). Salaries
and accrued incentive payments fell overall by 8% (£535m) to £5,787m in
2008 (2007: £6,322m), after absorbing increases of £718m relating to in
year hiring and staff from acquisitions. Performance related costs were 48%
lower, driven mainly by Barclays Capital.
Defined benefit plans pension costs decreased 41% (£61m)
to £89m (2007: £150m). This was due to recognition of actuarial gains,
higher expected return on assets and reduction in past service costs partially
offset by higher interest costs and reduction in curtailment credit.
Staff costs 2009 2008 2007
£m £m £m
Salaries and accrued
incentive payments 8,081 5,787 6,322
Social security costs 606 444 480
Pension costs
– defined contribution plans 224 221 119
– defined benefit plans (33) 89 150
Other post retirement benefits 16 19
Other 1,054 662 531
Staff costs 9,948 7,204 7,611
Operating expenses 2009 2008 2007
£m £m £m
Staff costs 9,948 7,204 7,611
Administrative expenses 4,889 4,791 3,691
Depreciation 759 606 453
Impairment charges/(releases)
– property and equipment 33 33 2
– intangible assets 28 (3) 14
– goodwill 1112 –
Operating lease rentals 639 520 414
Gain on property disposals (29) (148) (267)
Amortisation of intangible assets 447 276 178
Operating expenses 16,715 13,391 12,096