Barclays 2009 Annual Report Download - page 76

74 Barclays PLC Annual Report 2009 www.barclays.com/annualreport09
Financial review
Analysis of results by business
continued
Investment Banking and Investment Management
Barclays Global Investors
Barclays Global Investors (BGI), one of the world’s largest asset
managers and a leading global provider of investment management
products and services, was sold to BlackRock, Inc (BlackRock) on
1st December 2009. As a result of the transaction we retain a 19.9%
economic interest in the enlarged BlackRock Group.
Performance
2009/08
Barclays Global Investors profit before tax increased £6,484m to £7,079m
(2008: £595m), including the profit arising from the sale of Barclays Global
Investors to BlackRock. Consideration of £9,501m included 37.567 million
new BlackRock shares valued at £5,294m as at 1st December 2009.
The profit on disposal before tax was £6,331m after deducting amounts
relating to non-controlling interests, transaction costs and a break fee relating
to the termination of CVC Capital Partners’ proposed purchase of the iShares
business. Further information on the disposal is set out below.
Profit before tax excluding the profit on disposal increased 26% to
£748m (2008: £595m) reflecting a recovery on liquidity support of £25m
during 2009 (2008: charge of £263m) and an 18% appreciation in the
average value of the US Dollar against Sterling. The 2009 results included
11 months of discontinued operations compared to 12 months for 2008.
Total income grew 3% (£59m) to £1,903m (2008: £1,844m).
Net fee and commission income declined 8% (£160m) to £1,757m
(2008: £1,917m) largely reflecting 11 months’ activity in the year.
Principal transactions increased £141m to a gain of £98m (2008: £43m
loss) driven by sales of assets excluded from the disposal to BlackRock.
Operating expenses decreased 8% (£95m) to £1,154m (2008:
£1,249m), benefiting from a recovery on liquidity support of £24m during
2009 (2008: charge of £263m), partially offset by exchange rate movements.
The continuing operations of BGI represent residual obligations under the
cash support arrangements and associated liquidity support charges and,
from 1st December 2009, included the Group’s 19.9% ongoing interest in
BlackRock. This investment is accounted for as an available for sale equity
investment, with no dividends being received during 2009. Profit before tax
on continuing operations for 2009 increased by £368m to £22m (2008:
£346m loss) primarily due to lower liquidity support charges.
Total assets as at 31st December 2009 reflect shares to the value of
£5,386m held in BlackRock, with assets from continuing operations as at
31st December 2008 representing residual assets excluded from the disposal
to BlackRock.
Profit on disposal information As at 1st
December
2009
£m
Consideration including hedging gains
– Cash 4,207
– BlackRock shares 5,294
Total consideration 9,501
Net assets disposed (2,051)
CVC fee (106)
Transaction costs (433)
Amounts relating to non-controlling interests (580)
Profit on disposal before tax 6,331