Barclays 2011 Annual Report Download - page 270

Notes to the financial statements
For the year ended 31 December 2011 continued
42 Investments in associates and joint ventures
Accounting for associates and joint ventures
Barclays applies IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. Associates are entities in which the Group has significant
influence, but not control, over its operating and financial policies. Generally the Group holds more than 20%, but less than 50%, of their voting
shares. Joint Ventures are entities whose activities are governed by a contractual arrangement between the Group and one or more parties to share
equally in decisions regarding operating and financial policies.
The Group’s investments in associates and joint ventures are initially recorded at cost and increased (or decreased) each year by the Group’s share of
the post acquisition profit (or loss). In some cases, investments in these entities may be held at fair value through profit or loss, for example, those
held by private equity businesses.
2011
£m
2010
£m
Investment in associates 169 261
Investment in joint ventures 258 257
Total 427 518
Summarised financial information for the Group’s associates and joint ventures is set out below. The amounts shown are assets, liabilities and net
income of the investees, not just the Group’s share, as at and for the year ended 31 December 2011 with the exception of certain undertakings for
which the amounts are based on accounts made up to dates not earlier than three months before the balance sheet date.
2011 2010
Associates
£m
Joint
ventures
£m
Associates
£m
Joint
ventures
£m
Total assets 4,001 3,447 4,819 3,452
Total liabilities 3,603 2,938 4,089 3,024
Profit/(loss) after tax 45 88 (167) 93
The Group’s share of commitments and contingencies of its associates and joint ventures was comprised of insurance guarantees of £nil (2010: £nil)
and unutilised credit facilities provided to customers of £1,265m (2010: £1,237m).
43 Securitisations
Accounting for securitisations
The Group uses securitisations as a source of finance and a means of risk transfer. Such transactions generally result in the transfer of contractual
cash flows from portfolios of financial assets to holders of issued debt securities.
Securitisations may, depending on the individual arrangement, result in continued recognition of the securitised assets and the recognition of the
debt securities issued in the transaction; lead to partial continued recognition of the assets to the extent of the Group’s continuing involvement in
those assets or to derecognition of the assets and the separate recognition, as assets or liabilities, of any rights and obligations created or retained in
the transfer. Full derecognition only occurs when the Group transfers both its contractual right to receive cash flows from the financial assets, or
retains the contractual rights to receive the cash flows, but assumes a contractual obligation to pay the cash flows to another party without material
delay or reinvestment, and also transfers substantially all the risks and rewards of ownership, including credit risk, prepayment risk and interest rate
risk.
The Group is party to securitisation transactions for funding purposes, involving its residential mortgage loans, business loans and credit card balances.
In addition, the Group acts as a conduit for commercial paper, whereby it acquires static pools of residential mortgage loans from other lending
institutions for securitisation transactions. In these transactions, the assets, or interests in the assets, or beneficial interests in the cash flows arising
from the assets, are transferred to a special purpose entity, or to a trust which then transfers its beneficial interests to a special purpose entity, which
then issues floating rate debt securities to third-party investors.
268 Barclays PLC Annual Report 2011 www.barclays.com/annualreport