Barclays 2011 Annual Report Download - page 193

2011
Head Office Functions and Other Operations adjusted loss before tax
increased 46% to £1,106m, principally as a result of a £325m charge
arising from the UK bank levy that came into force during 2011. Profit
before tax improved significantly to £2,709m (2010: loss of £368m),
reflecting own credit gains and gains on debt buy-backs.
Total income improved to £3,504m (2010: £213m). Own credit gains,
increased to £2,708m (2010: £391m) and gains on debt buy-backs of
£1,130m (2010: £nil) were recognised resulting from the retirement of
Tier 1 capital, which will not qualify as Tier 1 capital under Basel 3. This
was partially offset by the non-recurrence in 2011 of £265m income from
currency translation reserves following the repatriation of capital from
overseas operations that was recognised in 2010.
Operating expenses increased to £773m (2010: £579m) principally due to
the UK bank levy of £325m and higher Financial Services Compensation
Scheme (FSCS) costs, partially offset by non recurrence of a 2010
provision of £194m in relation to resolution of the investigation into
Barclays compliance with US economic sanctions. The loss on disposal of
£23m reflects losses from currency translation reserves recognised in the
income statement following the disposal of Barclays Bank Russia.
Total assets increased 33% to £27.8bn due to purchases of government
bonds to support the Group’s hedging and liquidity management activities.
2011
£m
2010
£m
2009
£m
Total income net of insurance claims (excluding own credit and gains on debt buy-backs) (334) (178) (1,136)
Own credit 2,708 391 (1,820)
Gains on debt buy-backs and extinguishments 1,130 – 1,164
Total income net of insurance claims 3,504 213 (1,792)
Credit impairment release/(charge) and other provisions 1 (2) (16)
Net operating income/(loss) 3,505 211 (1,808)
Operating expenses (excluding UK bank levy) (448) (579) (570)
UK bank levy (325) – –
Operating expenses (773) (579) (570)
Share of post-tax results of associates and joint ventures – –1
Profit on disposal of associates and joint ventures (23) – 7
Profit/(loss) before taxa2,709 (368) (2,370)
Adjusted loss before taxb(1,106) (759) (1,721)
Balance Sheet Information and key facts
Total assets £27.8bn £20.9bn £6.4bn
Risk weighted assets £2.4bn £0.6bn £0.9bn
Number of employees (full time equivalent)c1,400 1,400 1,500
2010
Head Office Functions and Other Operations adjusted loss before tax
decreased £962m to a loss of £759m. The results for 2009 reflected a net
gain on debt buy-backs of £1,164m, while 2010 benefited notably from a
significant decrease in the costs of the central funding activity and a
reclassification of profit from the currency translation reserve. Loss before
tax reduced significantly to £368m (2010: loss of £2,370m), primarily due
to own credit gains of £391m (2009: loss of £1,820m).
Net operating income increased to £211m (2009: loss of £1,808m) principally
reflecting own credit movements, significant decrease in the costs of the central
funding activity as the money market dislocations eased and recognition in
the income statement of £265m of profit from the currency translation
reserve, offset by increases in fees for structured capital market activities.
Operating expenses increased to £579m (2009: £570m) principally due
to payment of a £194m settlement to US regulators in resolution of the
investigation into Barclays compliance with US economic sanctions,
partially offset by a reduction in the bank payroll tax charge to £96m
(2009: £225m) and a reduction of £59m in Financial Services
Compensation Scheme charges.
Total assets increased to £20.9bn (2009: £6.4bn), largely due to a £7.4bn
net increase in gilts held for the equity structural hedge and £6.8bn of
covered bonds and other notes.
Head Office Functions and Other Operations
Notes
a The impact of own credit movements in the fair value of structured note issuance of £2,708m (2010: £391m; 2009: loss of £1,820m) is now included within the results of Head Office
Functions and Other Operations, rather than Barclays Capital. This reflects the fact that these fair value movements relate to the credit worthiness of the Group as a whole, rather than
Barclays Capital in particular, and are not included within any assessment of Barclays Capital’s underlying performance. Furthermore, delays to planned changes in accounting standards
will mean own credit movements are likely to continue to be reflected in the income statement for the foreseeable future.
b Adjusted loss before tax excludes the impact of own credit gains of £2,708m (2010: £391m; 2009: loss of £1,820m); gains on debt buybacks of £1,130m (2010: £nil; 2009: £1,164m) and
£23m (2010: £nil; 2009: gain £7m) loss on disposal of subsidiaries associates and joint ventures.
c The number of employees for 2010 has been revised to exclude 100 employees transferred to Africa RBB.
Barclays PLC Annual Report 2011 www.barclays.com/annualreport 191
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