Barclays 2003 Annual Report Download

Download and view the complete annual report

Please find the complete 2003 Barclays annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 232

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224
  • 225
  • 226
  • 227
  • 228
  • 229
  • 230
  • 231
  • 232

a
Barclays PLC
2003
Annual Report

Table of contents

  • Page 1
    Barclays PLC Annual Report 2003 a

  • Page 2
    ...'s main financial centres. Worldwide, Barclays has 2,916 branches and employs 74,800 staff. Our mission To be an innovative, customer-focused Group that delivers superb products and services, ensures excellent careers for our people and contributes positively to the communities in which we live and...

  • Page 3
    ... Report on Remuneration Accountability and Audit Presentation of Information Risk Management Section 3 - Results 73 76 82 108 112 114 219 226 Financial Data Business Description Financial Review Other Information Auditors' Reports Consolidated Accounts Barclays PLC Shareholder Information Group...

  • Page 4
    Chairman's Statement Barclays had a successful 2003, delivering strong returns to our shareholders while continuing to invest in our staff, customer products and services, and contributing to the communities in which we work. Market The economic picture was brighter in 2003. The UK economy made ...

  • Page 5
    ... most of PFS, Business Banking and most of UK Premier (previously managed within Barclays Private Clients). This new grouping, led by Roger Davis, will allow us to offer a more integrated service to our UK personal and business customers. Note 1 Peer group for 2003: Abbey, ABN Amro, BBVA, BNP...

  • Page 6
    ..., investment management and offshore banking. We are moving away from a model overly dominated by the domestic market to a global product model which has been successfully implemented in Barclays Capital, BGI and Barclaycard. International Retail and Commercial Banking The fourth strategic priority...

  • Page 7
    ... employees worldwide who have coped with continuous change, done more business with existing customers and acquired new customers. They have delivered improved services across the board to the customers we are privileged to serve. Matthew W. Barrett Group Chief Executive Barclays PLC Annual Report...

  • Page 8
    ... total shareholder return relative to our peer group of UK and international banks. Profit before tax at £3,845 million was up 20%. Return on average shareholders' funds was 17% and the total dividend payout for the year rose 12%. Our capital position remained healthy, with a tier 1 ratio of...

  • Page 9
    ...; the global rights (excluding the UK and Singapore) to use the Manchester United credit card brand for worldwide co-branding and sub-licensing opportunities were acquired in April 2003; and the strategic alliance with the Standard Bank of South Africa that was entered into in August 2003. Business...

  • Page 10
    ... Return Goals 131 Barclays Peer group average FTSE 100 Index £0 £25 £50 2003 marked the end of the four-year goal period that began at the start of 2000. The adoption of stretching and publicly stated goals has had a positive impact in Barclays, creating focus and energy which have helped...

  • Page 11
    ...John Varley Group Deputy Chief Executive Cost:income benchmarking 100 80 60 40 20 0 Cost: income ratio % Barclays 2002 ratio Personal Financial Services Barclays Private Clients Barclaycard Business Banking Barclays Africa Barclays Capital Barclays Global Investors 56 59 65 42 41 2002 Full year top...

  • Page 12
    ... Cash Card account for 55,500 new customers. We co-developed and adopted the Equator Principles to support our commitments to socially and environmentally responsible lending. We achieved an Excellent Environmental Assessment (BREEAM) rating for our new HQ building at 1 Churchill Place, Canary Wharf...

  • Page 13
    ... from which we manage our approach to CSR. A Board Standard on Corporate Social Responsibility is being developed, with progress monitored regularly relative to key risk indicators. In addition, Barclays has formed a Brand and Reputation Committee as a sub-committee of Group Executive Committee. Its...

  • Page 14
    ... 2003, Barclays introduced a new UK employee pension scheme called afterwork. It replaced the existing Retirement Investment Scheme and was designed to give members more certainty around the final value of their pension. It requires employees to contribute 3% of their monthly salary. The Government...

  • Page 15
    ... Certain Trading Activities including Non-Exchange Traded Contracts Derivatives Treasury Asset and Liability Management Management of Other Risks 19 Corporate Governance Report 23 Barclays Report on Remuneration 35 Accountability and Audit 36 Presentation of Information Barclays PLC Annual Report...

  • Page 16
    ...'s Better Regulation Task Force. He is also a non-executive Director of mmO2 plc and a delegate of Oxford University Press. His previous positions include Chairman of IPC Group Limited and Group Managing Director of EMAP plc. He is a member of the Board Remuneration and Board Nominations Committees...

  • Page 17
    ...(age 53) joined Barclays from Bank of Montreal in 2000. He is responsible for Human Resources, Communications, Marketing, Strategy and Planning, Public Policy and Group Property Services as well as the implementation of Value Based Management. He joined the Group Executive Committee in February 2000...

  • Page 18
    ... as Group Finance Director and joined the Board on 1st January 2004. Mr Kheraj had previously held the positions of Chief Executive of Barclays Private Clients, Deputy Chairman of Barclays Global Investors, Global Head of Investment Banking and Global Chief Operating Officer at Barclays Capital. He...

  • Page 19
    ... they should contact The Plan Administrator. Share Capital During the year, Barclays PLC purchased in the market for cancellation 49.4 million of its ordinary shares of 25p at a total cost of £204m as part of its programme of returning excess capital to shareholders. These transactions represented...

  • Page 20
    ...easily identified in Schedule 9. However, by identifying as closely as possible the components required by the Schedule, the trade creditor payment days for Barclays Bank PLC for 2003 were 35 days (2002: 28 days). This is an arithmetical calculation which includes property rentals and payments, and...

  • Page 21
    ... businesses. (c) Ability to command the respect of Board members, shareholders, employees and other key stakeholders. (d) Understanding of the role of Chairman, including an ability to bring a wider view to bear and work harmoniously with the new Group Chief Executive. (e) Knowledge of the global...

  • Page 22
    ... the new Group Chief Executive and other members of the Group executive. In particular, the Board feels that the new management team will continue to develop the business, bringing benefits to shareholders, customers, staff and the communities in which Barclays operates. Senior Independent Director...

  • Page 23
    ...2004. However, the Group has in Sir Brian Jenkins a Deputy Chairman and independent non-executive Director who is available as a point of contact for shareholders if required. The Board annually reviews the independence of its non-executive Directors, taking into account developing best practice and...

  • Page 24
    ...remuneration including policy for executive Directors' and senior executives' remuneration, including bonus payments. The Committee also meets to approve changes to employee benefits schemes and long-term incentive schemes. Further details of the work of the Committee are set out in Barclays Report...

  • Page 25
    ... in such areas as employee reward, pensions and employee communication. In addition, Towers Perrin gave actuarial and other advice to the Barclays UK life assurance companies. The Chairman of the Board, Group Chief Executive and Group Human Resources Director also advise the Committee, but are not...

  • Page 26
    ...a fixed cash sum, payable monthly. The Committee reviews salaries each year as part of the total reward package, recognising market levels and individual contribution. Annual Bonus Including Executive Share Award Scheme (ESAS) The annual bonus for executive Directors is linked to Group economic pro...

  • Page 27
    ...by reference to an executive Director's length of service and pensionable salary or to a money purchase arrangement, depending upon date of hire. Matthew Barrett is not a member of the Group's main pension schemes. A notional fund is accruing on his behalf outside the pension scheme (see page 28 for...

  • Page 28
    ... of each non-executive Director is reviewed annually by the Chairman, and at the end of the initial term. Forward Looking Statement The Committee will keep the existing remuneration arrangements, as detailed in this Report, under review during 2004 and ensure that Barclays reward programmes remain...

  • Page 29
    ... salary for the balance of his 12-month notice period ending 26th February 2004. All other benefits, including pension accrual ceased on 7th August 2003. (f ) Fees to non-executive Directors include an amount of not less than £20,000 which, after tax, is used to buy Barclays PLC ordinary shares...

  • Page 30
    ... of 2.8%) which occurred during the entire year. All pensions are reviewed annually, with a guaranteed increase in line with retail price inï¬,ation, up to a maximum of 5%. (b) Matthew Barrett is not a member of the Group's main pension schemes. A notional fund is accruing on his behalf outside the...

  • Page 31
    .... Market price per share at 31st December 2003 was 498p. The highest and lowest market prices per share during the year were 527p and 311p respectively. Under the Executive Share Award Scheme (ESAS), ISOP and ESOS, nothing was paid by these participants on the grant of options. Barclays PLC Annual...

  • Page 32
    Corporate Governance Barclays Report on Remuneration Executive Directors: shares provisionally allocated and shares under option under Executive Share Award Scheme (ESAS)(a) During 2003 Awarded in Number at respect of 1st January the results 2003 for 2002 Market price at release date £ Number at ...

  • Page 33
    ... of one times the Target Award. (e) John Stewart ceased to be a Director with effect from 27th February 2003. (f ) Market price per share at 31st December 2003 was 498p. The highest and lowest market prices per share during the year were 527p and 311p respectively. Barclays PLC Annual Report 2003...

  • Page 34
    ... Governance Barclays Report on Remuneration Executive Directors: shares under option under Sharesave(a)(b) During 2003 Number held at 1st January 2003 Number at 31st December 2003 Exercise price per share £ Information as at 31st December 2003 Weighted average exercise price £ Market price on...

  • Page 35
    ...were disapplied on acquisition of Woolwich plc by Barclays. Directors: awards under closed Group incentive schemes(a) Number at 1st January 2003 During the year(b) Exercised Lapsed Number at 31st December 2003(c) Exercise price per share £ Market price on exercise date £ Weighted average exercise...

  • Page 36
    ... Governance Barclays Report on Remuneration Directors: interests in ordinary shares of Barclays PLC(a) At 1st January 2003(b) Beneficial Nonbeneficial At 31st December 2003 Beneficial Nonbeneficial Chairman Sir Peter Middleton Executive MW Barrett CJ Lendrum(c) JS Varley(c) Non-executive TDG...

  • Page 37
    ... reviewed within the business areas. Quarterly risk reports are made to the Board covering all risks of Group significance including credit risk, market risk, operational risk, and legal and compliance risk. Regular reports are made to the Board Audit Committee by management, Group Internal...

  • Page 38
    ... public limited company and its name was changed from Barclays Bank International Limited to Barclays Bank PLC. All of the issued ordinary share capital of Barclays Bank PLC is owned by Barclays PLC. The Annual Report for Barclays PLC also contains the consolidated accounts of, and other information...

  • Page 39
    ... by: • the Group's management committees. The main risk and governance committees and their principal risk management and control responsibilities are shown in the risk governance structure chart on page 38. The committees' roles are reviewed and refreshed regularly; • business and regional...

  • Page 40
    ... with risk management Standards. • Reviews reports of the management assurance process over adequacy and effectiveness of internal controls. Group Treasury Committee • Monitors the Group's liquidity and maturity mismatch. • Monitors usage of regulatory and economic capital. • Reviews policy...

  • Page 41
    ... and Other Operations 6% Barclays Africa 2% Barclays Global Investors 1% Average economic capital allocation by risk type during 2003 Credit 67% Business & Operational 9% Property & Equipment 6% Other 5% Market 4% Unallocated (Capital at Group Centre) 9% Barclays PLC Annual Report 2003 39

  • Page 42
    ... Barclays Private Clients - ongoing - closed life assurance activities Barclaycard Business Banking Barclays Africa Barclays Capital Barclays Global Investors Other operations(a) Average economic capital Average historical goodwill Capital held at Group centre(b) Total average shareholders' funds...

  • Page 43
    ... staff - also equipped with analytical tools - who work alongside relationship management teams. Decisions must be referred to the Group Credit Committee if the intended exposures exceed specified limits. Besides loans, the credit risks include those arising from money market, foreign exchange...

  • Page 44
    ... 12 months from the current performing loan portfolio, taking into account its current composition, size and risk characteristics. The actual credit provisions can vary significantly around this value, due to changes in the economic environment or the business conditions in specific sectors or...

  • Page 45
    ... in wholesale businesses, even though they may have some personal customers. In subsequent pages, considerable detail on loans and advances is provided. A principal segmentation is between exposures to banks and to customers as introduced in the next table. Barclays PLC Annual Report 2003 43

  • Page 46
    Risk Management Analysis of Loans and Advances Loans and Advances to Banks Credit exposures to banks for the most part arise in the course of providing services to customers or trading in capital markets for profit. They may be reciprocal in nature. The majority of loans and advances to banks are ...

  • Page 47
    ... these sectors. In the property sector, commercial office space was in excess supply in London and the South East of the United Kingdom. Commentators anticipated higher credit losses in the mortgage market due to an expected decline in house prices. This followed several years of rapid price rises...

  • Page 48
    Risk Management Analysis of Loans and Advances Interest rate sensitivity of loans and advances to customers 2003 Fixed rate £m Variable rate £m Total £m Fixed rate £m 2002 Variable rate £m Total £m At 31st December Banking business: United Kingdom Other European Union United States Rest of ...

  • Page 49
    ... States - banking business At 31st December Financial institutions Agriculture, forestry and fishing Manufacturing Construction Property Energy and water Wholesale and retail distribution and leisure Transport Communications Business and other services Home loans Other personal Overseas customers...

  • Page 50
    Risk Management Analysis of Loans and Advances Maturity analysis of loans and advances to customers Not more than three months £m Over three months but not more than one year £m Over one year but not more than five years £m At 31st December 2003 Banking business: United Kingdom Corporate ...

  • Page 51
    ... exceeds 1% of total Group assets Banks and other Governments financial and official institutions institutions £m £m Commercial industrial and other private sectors £m As % of assets Total £m At 31st December 2003 United States Germany At 31st December 2002 United States Germany France At...

  • Page 52
    ... to the Accounts (page 153). They include guarantees, assets pledged as collateral, acceptances and endorsements. These reï¬,ect contracts entered into on behalf of customers who undertake to compensate the bank for payments made on their behalf. The credit risk exists in that the customers may not...

  • Page 53
    ... rate loans Total non-performing loans A geographical analysis of this table appears on the next page. 2,261 646 669 3,576 575 4 4,155 2,542 611 677 3,830 690 6 4,526 1,923 561 734 3,218 648 5 3,871 1,539 496 623 2,658 713 6 3,377 1,251 436 553 2,240 361 8 2,609 Barclays PLC Annual Report...

  • Page 54
    Risk Management Potential Credit Risk Lendings Non-performing loans Non-accrual loans: United Kingdom Other European Union United States Rest of the World Total Accruing loans where interest is being suspended with or without provisions: United Kingdom Other European Union United States Rest of the...

  • Page 55
    ... the customer, the realisable value of collateral, the Group's position relative to other claimants, the reliability of customer information and the likely cost and duration of the work-out process. These provisions are formally reviewed quarterly and revised as new information becomes available in...

  • Page 56
    Risk Management Provisions for Bad and Doubtful Debts Analysis of the provisions charges for bad and doubtful debts Year ended 31st December 2003 £m 2002 £m 2001 £m 2000 £m 1999 £m Net specific provisions charge/(release) United Kingdom Other European Union United States(a) Rest of the World...

  • Page 57
    ...Analysis of provision balances for bad and doubtful debts As at 31st December 2003 £m 2002 £m 2001 £m 2000 £m 1999 £m Specific provisions United Kingdom Other European Union United States... against South American Corporate Banking exposures booked in the US. Barclays PLC Annual Report 2003 55

  • Page 58
    Risk Management Provisions for Bad and Doubtful Debts Provisions balance ratios As at 31st December 2003 % 2002 % 2001 % 2000 % 1999 % Excluding trading business Provisions balance at end of year as a percentage of loans and advances at end of year: Specific provisions General provisions 1.19 0....

  • Page 59
    ... European Union United States Rest of the World Total specific provisions General provisions 1,856 97 121 159 2,233 795 3,028 1,790 84 257 130 2,261 737 2,998 1,605 89 89 188 1,971 745 2,716 1,343 112 20 118 1,593 760 2,353 1,083 131 23 74 1,311 672 1,983 Barclays PLC Annual Report 2003 57

  • Page 60
    ...£m United Kingdom: Banks and other financial institutions Agriculture, forestry and fishing Manufacturing Construction Property Energy and water Wholesale and retail distribution and leisure Transport Communications Business and other services Home loans Other personal Overseas customers Finance...

  • Page 61
    ... of Woolwich plc, a portfolio consisting predominantly of secured residential mortgage loans needing comparatively low general provisions. Performing loans comprise gross loans and advances less non-performing loans. All non-performing loans are on the banking book. Barclays PLC Annual Report 2003...

  • Page 62
    ... Group's businesses and a central market risk management team. The Group Market Risk Director reports to the Group Financial Risk Director who reports to the Group Risk Director. The Group Risk Oversight Committee allocates a total Daily Value at Risk (DVaR) limit for the Group and delegates the day...

  • Page 63
    ... Barclays Capital, supported by the Global Market Risk Management Unit that operates independently of the trading areas. Daily DVaR utilisation reports are produced across the main business areas and the five main risk factor categories, namely interest rate, credit spread, foreign exchange, equity...

  • Page 64
    ...fit pension scheme risk Barclays maintains a number of defined benefit pension schemes for past and current employees. The ability of the pension fund to meet the projected pension payments is maintained through investments. Market risk arises because the market value of the pension fund assets...

  • Page 65
    ... trading through non-exchange traded contracts. The Group delivers a fully integrated service to clients for base metals, precious metals, energy products (covering US natural gas, oil and oilrelated products) and European power and gas through Barclays Capital. The base and precious metals business...

  • Page 66
    Risk Management Disclosures about Certain Trading Activities including Non-exchange Traded Contracts The following tables analyse the overall fair value of the commodity derivative contracts by movement over time and source of fair value. As at 31st December 2003 this reï¬,ects a gross positive ...

  • Page 67
    ... sale to customers as risk management products is an integral part of the Group's trading activities. These instruments are also used to manage the Group's own exposure to ï¬,uctuations in interest and exchange rates as part of its asset and liability management activities. Barclays Capital manages...

  • Page 68
    ..., funding and funding concentration risks, structural interest rate risks and exchange rate risks. Group Treasury policies are set by the Group Treasury Committee which is chaired by the Group Finance Director. Group policy is to centralise retail asset and liability management within Group Treasury...

  • Page 69
    ... rate transfer price. This leaves residual risk within the business to the extent that wholesale contracts do not replicate the market or customer behaviour. This risk is controlled by limits set by Group Market Risk. International banking operations also incur market interest rate risk. Policies...

  • Page 70
    ... risk management Corporate and retail banking businesses incur foreign exchange risk in the course of providing services to their customers. The part of this risk that arises in UK operations is transferred directly to and managed by Barclays Capital as reported in the previous section. Group Market...

  • Page 71
    ... and maintenance and sponsorship agreements where the Bank has entered into legally binding contracts to purchase products or services over a specified period of time. Other long-term liabilities relate to obligations relating to the Group's main defined benefit pension plans. Amounts are based...

  • Page 72
    ...been developed to allocate capital to business units for both operational and business risks. This risk-based capital provides businesses with incentives to demonstrate implementation of risk reduction practices or policies. The operational risk economic capital methodology includes the modelling of...

  • Page 73
    .... The businesses are advised of their obligations to comply with tax and reporting requirements. Whilst managed centrally, taxation staff are located within the business areas, in the UK and overseas, where this adds to the effectiveness of risk management. Barclays PLC Annual Report 2003 71

  • Page 74
    ... in reserves Consolidated cash ï¬,ow statement Parent company accounts Notes to the accounts 205 SEC Form 20-F Cross Reference and Other Information 207 Glossary 208 Barclays Bank PLC data 217 US GAAP Financial Data 218 Reconciliation of Economic Profit 219 Shareholder Information 219 Dividends...

  • Page 75
    Financial Data Barclays PLC Profit before tax 4,000 3,392 3,000 2,478 2,000 1,000 3,425 3,205 3,845 Post-tax return on average shareholders' funds 30 25 20 15 10 5 21.5 17.4 14.7 16.9 24.8 0 £m 1999 2000 2001 2002 2003 0 % 1999 2000 2001 2002 2003 Earnings per share 60 45 30 15 0 pence 1999 ...

  • Page 76
    ...ordinary share Dividends per ordinary share Dividend cover (times) Attributable profit before tax as a percentage of: average shareholders' funds Attributable profit after tax as a percentage of: average shareholders' funds average total assets (Note (b)) Average United States Dollar exchange rate...

  • Page 77
    ... years, restated where appropriate to accord with the current accounting policies of the Group (see page 114). This information should be read together with, and is qualified by reference to, the accounts and Notes included in this report. (b) For the purposes of this summary, the retail life-fund...

  • Page 78
    ... Services Barclays Private Clients Barclaycard Business Banking Barclays Africa Barclays Capital Barclays Global Investors Personal Financial Services Personal Financial Services (PFS) provides a wide range of products and services to 14 million personal customers throughout the United Kingdom...

  • Page 79
    ... reporting within Barclays Private Clients. Barclays Private Clients works closely with other Group businesses, particularly Personal Financial Services, Business Banking, Barclays Global Investors and Barclays Capital, in order to enhance product development and customer service. Key business...

  • Page 80
    ... banking to the Group's large, medium and small business customers in the United Kingdom. Customers are served by a network of relationship and industry sector specialist managers who provide local access to an extensive range of products and services, as well as offering business information...

  • Page 81
    ... capital markets, structured capital markets, and private equity. Barclays Capital works increasingly with other Group businesses, including Barclays Private Clients, Business Banking and Barclays Global Investors, to provide a more integrated customer service and to develop business opportunities...

  • Page 82
    ... Group's central activities, including Group Executive, Group Finance, Marketing and Communications, Human Resources, Group Strategy and Planning, Internal Audit, Marketing, Legal, Corporate Secretariat, Tax, Compliance and Risk. Central function costs incurred wholly on behalf of the business units...

  • Page 83
    ... where appropriate, been restated to conform with current year classification, and the change in accountancy policies discussed above. Accounting developments in UK GAAP are described on pages 118 to 119 and those under US GAAP are described on pages 183 to 184. Barclays PLC Annual Report 2003 81

  • Page 84
    ... worsening of general economic conditions in the United Kingdom or abroad. Factors such as the liquidity of the global financial markets; the level and volatility of equity prices and interest rates; investor sentiment; inï¬,ation; and the availability and cost of credit could significantly affect...

  • Page 85
    ... of the loan portfolio and risk processes improved. Barclays Private Clients operating profit for the ongoing business decreased 16% to £270m (2002: £323m). Business activity was impacted by significantly lower average equity markets and by lower average interest rates than in 2002. Operating...

  • Page 86
    ... status of the Caribbean business, a change in the currency mix of the portfolio and the general fall in global interest rates. United Kingdom: Barclays Bank PLC base rate London Inter-Bank Offered Rate (LIBOR): three-month sterling three-month eurodollar United States prime rate 3.69 4.00 5.12...

  • Page 87
    ... was largely driven by growth of investment management fees. These resulted from strong net new sales, growth in the sales of higher margin products, good investment performance and the recovery in equity markets towards the year end, which more than compensated for the adverse impact of foreign...

  • Page 88
    ... activities. The foreign exchange income earned on customer transactions by Personal Financial Services, Barclays Private Clients, Barclaycard, Business Banking, Barclays Africa and Barclays Global Investors, both externally and with Barclays Capital, is reported in those business units, within fees...

  • Page 89
    ... a reduction in Barclays Capital. By class of business Personal Financial Services(b) Barclays Private Clients(c) Barclaycard(d) Business Banking(e) Barclays Africa(f ) Barclays Capital Barclays Global Investors Head office functions and other operations(g) Total Group permanent and contract staff...

  • Page 90
    ... Capital (£231m), reï¬,ecting difficult economic conditions in the telecommunications and energy sectors, particularly in the US. Provisions also increased in South American Corporate Banking mainly related to Argentina (£96m). Bad debt provisions declined by 13% in Personal Financial Services...

  • Page 91
    ... general provisions Effect of non-allowable property write-downs and depreciation Net effect of differing tax rates overseas Net effect of overseas losses not available for relief in the United Kingdom Other non-allowable expenses Gains covered by capital losses brought forward Goodwill Other items...

  • Page 92
    ... identifies restructuring costs. A significant part of the new consumer loan business was in the better risk grades. Average savings balances increased 6% to £30.9bn (2002: £29.2bn), after transferring some balances to Barclays Private Clients in the second half of 2003. Excluding the impact of...

  • Page 93
    ... & General life and pensions products have fallen in line with industry trends. Sales of funds and bonds were impacted by reduced customer demand for investment products. Openplan in UK Premier attracted £1.1bn of new mortgage balances together with £1.3bn of additional savings in the year. Income...

  • Page 94
    ... (2002: loss £14m) whilst maintaining significant ongoing investment in the existing businesses and launching into new markets. Income increased by 48% and average extended credit balances rose by 43%. The number of Barclaycard International cards in issue rose to 1.42m (2002: 1.28m). Net interest...

  • Page 95
    ...reï¬,ecting the growth in the balance sheet. Foreign exchange commission income grew due to increased business volumes. Money transmission income fell as a result of the alternative offer made in response to the Competition Commission Inquiry transitional pricing remedy and the targeted migration of...

  • Page 96
    ... by increased provisions, as difficult economic conditions affected specific sectors. Operating income grew 7% to £2,238m (2001: £2,087m) reï¬,ecting the strength of the Barclays Capital business model and continued progress in building the client franchise. Secondary income increased 4% to...

  • Page 97
    ...advanced active business and growth of Global iShares (Exchange Traded Funds). Operating costs in 2002 fell by 1% to £452m (2001: £457m). Increased performance related pay was offset by improved efficiency and the impact of exchange rate translation movements. Barclays PLC Annual Report 2003 95

  • Page 98
    ...balance £m 2001 Interest £m Average rate % Assets Treasury bills and other eligible bills: in offices in the United Kingdom in offices outside the United Kingdom Loans and advances to banks: in offices in the United Kingdom in offices outside the United Kingdom Loans and advances to customers...

  • Page 99
    ...undated loan capital and other subordinated liabilities principally in offices in the United Kingdom Internal funding of trading business Average liabilities of banking business Average liabilities of trading business Total average interest bearing liabilities Interest free customer deposits: in of...

  • Page 100
    Financial Review Average Balance Sheet Changes in net interest income - volume and rate analysis The following tables allocate changes in net interest income between changes in volume and changes in interest rates for the last two years. Volume and rate variances have been calculated on the ...

  • Page 101
    ... (95) (207) Dated and undated loan capital and other subordinated liabilities principally in offices in the United Kingdom Internal funding of trading businesses Total banking business interest payable: in offices in the United Kingdom in offices outside the United Kingdom 39 (202) 81 (116) (35...

  • Page 102
    ... from Barclays PLC Group by £12m (2002: £4m). Capital ratios Capital adequacy and the use of regulatory capital are monitored by the Group, employing techniques based on the guidelines developed by the Basel Committee on Banking Supervision (the Basel Committee) and European Community Directives...

  • Page 103
    ... £m Capital ratios 2003 Barclays PLC Group £m % Barclays Bank PLC Group £m % 2002 Barclays PLC Group £m % Barclays Bank PLC Group £m % Weighted risk assets Banking book on-balance sheet off-balance sheet Associated undertakings and joint ventures Total banking book Trading book Market risks...

  • Page 104
    ... paper and inter-bank funds. Although the types of deposit products offered through offices located outside the UK are broadly similar to those described above, they are tailored to meet the specific requirements of local markets. A further analysis of Deposits by banks and Customer accounts...

  • Page 105
    ... Other government Other public bodies Mortgage-backed securities Corporate issuers Other issuers Equity shares Other securities Debt securities: United Kingdom government Other government Other public bodies Bank and building society certificates of deposit Other issuers Equity shares 565 16,347...

  • Page 106
    ... or groups of customers, current information, and the general economic and environmental factors mentioned above. Further information on credit risk provisioning is set out on page 53. Fair value of financial instruments Some of the Bank's financial instruments are carried at fair value, including...

  • Page 107
    ...actuarial value of the assets and liabilities of the scheme are calculated. This involves modelling their future growth and requires management to make assumptions as to, inter alia, price inï¬,ation, dividend growth, pension increases, earnings growth and return on new investment and employee lives...

  • Page 108
    ... risks and rewards. The Group, in the ordinary course of business, and primarily to facilitate client transactions, has helped establish SPEs in various areas which are described below, along with their UK and US GAAP treatment: Commercial paper conduits The Group provides its clients with access...

  • Page 109
    ... basis and at market terms and prices. The majority of these entities are investment funds that are owned by a large and diversified number of investors. In addition, there are various partnerships, funds and open-ended investment companies that are used by a limited number of independent third...

  • Page 110
    ... and Monetary Union, International Financial Reporting Standards and Supervision and Regulation Economic and Monetary Union Barclays is maintaining a prudent programme to validate and develop further its existing plans relating to the potential membership of European Monetary Union by the UK, and to...

  • Page 111
    ... on the location and expansion of banking business there. The securities and investment management activities conducted in the United States are also subject to a comprehensive scheme of regulation under the US federal securities laws, as enforced by the Securities and Exchange Commission. Barclays...

  • Page 112
    ... worsening of general economic conditions in the United Kingdom or abroad. Factors such as the liquidity of the global financial markets, the level and volatility of equity prices and interest rates, investor sentiment, inï¬,ation, and the availability and cost of credit could significantly affect...

  • Page 113
    ...in customer business. If these strategic plans do not meet with success, the Group's earnings could grow more slowly or decline. Competition The UK and global financial services market remains highly competitive and innovative competition comes both from incumbent players and a steady stream of new...

  • Page 114
    ..., the unaudited part of the Barclays remuneration report, Accountability and Audit, Presentation of information, Risk management, Financial data, Business description and Financial review. We review whether the Corporate governance report reï¬,ects the Company's and Group's compliance with the seven...

  • Page 115
    ...the United States of America. Information relating to the nature and effect of such differences is presented in Note 61 to the consolidated financial statements. PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London, United Kingdom, 11th February 2004 Barclays PLC Annual...

  • Page 116
    ...long-term assurance business and the investment in Barclays Bank PLC in the balance sheet of Barclays PLC. They are prepared in accordance with applicable accounting standards of the UK Accounting Standards Board (ASB) and pronouncements of its Urgent Issues Task Force (UITF) and with the Statements...

  • Page 117
    ... services are performed and when considered recoverable. Income arises from the margins which are achieved through marketmaking and customer business and from changes in market value caused by movements in interest and exchange rates, equity prices and other market variables. Trading positions...

  • Page 118
    ... local regulations and customs. For defined contribution schemes, the pension cost recognised in the profit and loss account represents the contributions payable to the scheme. The majority of UK staff are members of The Barclays Bank UK Retirement Fund (the UK Fund) which comprises four sections...

  • Page 119
    ... use of derivatives and their sale to customers as risk management products is an integral part of the Group's trading activities. Derivatives entered into for trading purposes include swaps, equity derivatives, credit derivatives, commodity derivatives, forward rate agreements, futures, options and...

  • Page 120
    ... observable interest rate products such as deposits, interest rate futures and swaps. In addition, the Group maintains fair value adjustments reï¬,ecting the cost of credit risk (where this is not embedded in the fair value), hedging costs not captured in pricing models, future administration costs...

  • Page 121
    ...' funds of Barclays PLC is set out in Note 61. Accounting Presentation The prior period presentation has, where appropriate, been restated to conform with current year classification. Nature of business Barclays is an international financial services group engaged primarily in banking, investment...

  • Page 122
    ...after tax Minority interests - equity Minority interests - non-equity Profit for the financial year attributable to the members of Barclays PLC Dividends Profit retained for the financial year Basic earnings per 25p ordinary share Diluted earnings per 25p ordinary share 12 12 16 7 3 5 6 6 2,384...

  • Page 123
    Consolidated Accounts Barclays PLC Statement of Total Recognised Gains and Losses Statement of total recognised gains and losses For the year ended 31st December 2003 2003 £m 2002 £m 2001 £m Profit for the financial year attributable to the members of Barclays PLC Exchange rate translation ...

  • Page 124
    ... Assets Cash and balances at central banks Items in course of collection from other banks Treasury bills and other eligible bills Loans and advances to banks - banking - trading Loans and advances to customers - banking - trading Debt securities Equity shares Interests in joint ventures - share of...

  • Page 125
    ... and shareholders' funds Minority interests - equity Called up share capital Share premium account Capital redemption reserve Other capital reserve Revaluation reserve Profit and loss account Shareholders' funds - equity 283 35 1,642 5,417 274 617 24 8,499 37 Retail life-fund liabilities...

  • Page 126
    ...of year Profit and loss account At beginning of year Prior year adjustment At beginning of year as restated Profit retained Exchange rate translation differences Repurchase of ordinary shares Transfer to capital redemption reserve Goodwill written back on disposals Shares issued to employee trusts...

  • Page 127
    ... of FirstCaribbean International Bank Ltd Acquisition of Group undertakings Sale of other Group undertakings Sale of associated undertakings Net cash (outï¬,ow)/inï¬,ow from acquisitions and disposals Equity dividend paid Net cash outï¬,ow before financing Financing: Issue of loan capital and other...

  • Page 128
    ...Investment in Barclays Bank PLC Current assets Amounts falling due within one year: Due from subsidiary undertaking Current liabilities Amounts falling due within one year - dividend Net current assets Assets less current liabilities Capital and reserves Called up share capital Share premium account...

  • Page 129
    ... assurance business Property rentals Dividend income from equity shares Other income 264 73 (33) 15 6 165 490 178 58 (51) 20 7 152 364 158 37 127 30 8 68 428 3 Administrative expenses - staff costs 2003 £m 2002 £m 2001 £m Salaries and accrued incentive payments Social security costs Pension...

  • Page 130
    ...closed to new entrants on 1st October 2003. The Pension Investment Plan (PIP) A defined contribution plan created from 1st July 2001 to provide benefits for certain employees of Barclays Capital. 10% of pay is credited to members' retirement accounts. afterwork Combines a contributory cash balance...

  • Page 131
    ...by US Statement of Financial Accounting Standards (SFAS) No. 132 (revised). Post-retirement benefits Some 11,000 UK and US pensioners are provided with private health care on similar terms to current employees. In addition, 5,000 members of staff and a further 1,000 Barclays Bank PLC pensioners who...

  • Page 132
    ... year (2002: £6m, 2001: £12m). Further assurance services include internal control reviews, attest services not required by statute or regulation and consultation concerning financial accounting and reporting standards. Taxation services include compliance services such as tax return preparation...

  • Page 133
    ..., 2001: £11m charge) on the shareholders' interest in the long-term assurance fund. Included within current tax are prior year adjustments to UK tax of (£3m) (2002: (£12m), 2001: 26m) and overseas tax of £10m (2002: £3m, 2001: £2m). Available overseas tax credits of £197m (2002: £221m, 2001...

  • Page 134
    ... are payable on the staff shares, which carry a fixed dividend of 20% per annum unless no dividend is paid for the year on the ordinary shares. 12 Earnings per 25p ordinary share - Barclays PLC 2003 £m 2002 £m 2001 £m Basic and diluted earnings Basic weighted average number of shares Potential...

  • Page 135
    ...and potential credit risk lendings sections on pages 43 to 59. The geographic analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the US and Japan, is more international in nature and...

  • Page 136
    ... potential credit risk lendings sections on pages 43 to 59. The geographical analysis of the banking business is based on the location of the office from which the lendings are made. The trading business, which is largely carried out in the UK, the US and Japan, is more international in nature and...

  • Page 137
    ... Trust Company Limited. The Group does not own, directly or indirectly, any of the share capital of Millshaw SAMS (No. 1) Limited or its parent companies. The Bank has made an interest bearing subordinated loan to Millshaw SAMS (No. 1) Limited repayable on final redemption of the ï¬,oating rate...

  • Page 138
    ... at beginning of year Acquisitions and disposals Exchange and other adjustments Provision for the year Amounts written off,...) 2,716 2002 £m Provisions at 31st December Specific provisions United Kingdom Other European Union United States Rest of the World General provisions 1,856 97 121 159 ...

  • Page 139
    ... above, £63,629m (2002: £56,290m) were listed on a recognised exchange. These listed debt securities had a market value of £64,230m (2002: £56,991m). See page 103 of the Financial Review for the valuation and maturity analysis of investment securities. Barclays PLC Annual Report 2003 137

  • Page 140
    ...changes in accounting policy on page 118. Of the total equity shares disclosed above, £6,471m (2002: £2,273m) were listed on a recognised exchange. These listed equity securities had a market value of £6,486m (2002: £2,277m). 19 Interests in associated undertakings and joint ventures Associates...

  • Page 141
    ... presented, not Barclays share). 2003 FirstCaribbean International Bank £m Other associates £m Joint ventures £m Total £m Fixed assets Debt and equity securities Loans to banks and customers Other assets Total assets Deposits from banks and customers Other liabilities Shareholders' funds Total...

  • Page 142
    ... The most significant properties are 54 Lombard Street, St Swithins House, Murray House and North and South Colonnade, Canary Wharf, all located in London, together with administrative buildings in Northampton, Knutsford, Coventry and Poole. On 3rd July 2002, Barclays Group disposed of its freehold...

  • Page 143
    ...from the long-term assurance business has been recognised in the year. The principal economic assumptions used in calculating the value of the shareholders' interest were as follows: 2003 % 2002 % Risk discount rate (net of tax) Gross United Kingdom equities returns for unit linked business (net of...

  • Page 144
    ...undertakings and joint ventures. Deposits by banks are mostly over £50,000. A further analysis of deposits by banks is given within the Deposits section on page 102 of the Financial Review. 27 Customer accounts 2003 £m 2002 £m Repayable on demand not more than three months over three months but...

  • Page 145
    ...(2002: £19,490m). Other time deposits in the UK and the US are mostly over £50,000. A further analysis of customer accounts is provided within the Deposits section on page 102 of the Financial Review. 28 Debt securities in issue 2003 £m 2002 £m Bonds and medium-term notes repayable: within one...

  • Page 146
    ...has been calculated on capital gains that might arise on the disposal of Barclays Bank PLC at the amounts at which it is stated. The Directors are of the opinion that the likelihood of any such tax liability arising in the foreseeable future is remote. Tax would become payable only if the investment...

  • Page 147
    ... undertakings and joint ventures. Such earnings form part of the balance sheet value and are therefore included in the deferred tax of subsidiaries. 32 Other provisions for liabilities and charges Employee pension and post-retirement benefit contributions £m Onerous contracts £m Customer loyalty...

  • Page 148
    ... to the Accounts For the Year Ended 31st December 2003 33 Undated loan capital Undated loan capital, issued by the Bank for the development and expansion of the Group's business and to strengthen its capital base comprised: Notes 2003 £m 2002 £m Non-convertible The Bank 6% Callable Perpetual...

  • Page 149
    ..., based on London interbank rates. The Bank is not obliged to make a payment of interest on its Undated Notes and Loans excluding the 9.25% Perpetual Subordinated Bonds if, in the preceding six months, a dividend has not been declared or paid on any class of shares of Barclays PLC or, in certain...

  • Page 150
    ... the Accounts For the Year Ended 31st December 2003 34 Dated loan capital Dated loan capital, issued by the Bank for the development and expansion of the Group's business and to strengthen its capital base, and by Barclays Bank of Botswana Ltd ('BBB') and Barclays Bank Zambia PLC ('Barclays Zambia...

  • Page 151
    ... Notes, the Bank is not obliged to make (i) a payment of interest on any interest payment date unless a dividend is paid on any class of share capital and (ii) a payment of principal until six months after the respective maturity date with respect to such Notes. Barclays PLC Annual Report 2003 149

  • Page 152
    ...4m have not been purchased by Barclays Bank PLC and represent a minority interest in Barclays Global Investors Holdings Limited and the Group. At 31st December 2003, 106m (2002: 127m) options were outstanding under the terms of the SAYE Share Option Scheme, 0.6m (2002: 3.8m) options were outstanding...

  • Page 153
    ... 37, 'Purchases and sales of own shares'. Further information can be found in the changes in accounting policy on page 118. The revaluation reserve of Barclays PLC arises from the revaluation of the investment in Barclays Bank PLC. The decrease in consolidated shareholders' funds of £29m (2002...

  • Page 154
    ... Limited Barclays Capital Securities Limited Barclays Global Investors Pensions Management Limited Woolwich plc FIRSTPLUS Financial Group PLC Woolwich Independent Financial Advisory Services Limited Barclays Private Bank and Trust Limited Barclays Private Clients International Limited Barclays Bank...

  • Page 155
    ... in international banking markets, the Group has a significant concentration of off balance sheet items with financial institutions, as shown in Note 64. For a further description of the nature and management of credit risks and market risks, see pages 41 to 62 of the Risk Management section. UK...

  • Page 156
    ... equity shares Other assets Total assets Liabilities: Deposits by banks Customer accounts Debt securities in issue Other liabilities Loan capital and other subordinated liabilities Minority and other interests and shareholders' funds Internal funding of trading business Total liabilities Off-balance...

  • Page 157
    ...: Deposits by banks 3,348 Customer accounts 109,670 Debt securities in issue 3,180 Other liabilities - Loan capital and other subordinated liabilities 2,565 Minority and other interests and shareholders' funds - Internal funding of trading business (14,966) Total liabilities Off-balance sheet...

  • Page 158
    ...market risk exposures in Barclays Capital as an average for the year and the high and low during the year. Year to 31st December 2003 Average £m High(a) £m Low(a) £m Year to 31st December 2002 Average £m High(a) £m Low(a) £m Interest rate risk Credit spread risk Foreign exchange risk Equities...

  • Page 159
    ... positive fair value £m Average negative fair value £m Foreign exchange derivatives Forward foreign exchange Currency swaps OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded swaps Total Interest rate...

  • Page 160
    ... positive fair value £m Average negative fair value £m Foreign exchange derivatives Forward foreign exchange Currency swaps OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded swaps Total Interest rate...

  • Page 161
    ... £m Year-end negative book value £m Contract or underlying principal amount £m 2002 Year-end positive fair value £m Year-end negative fair value £m Foreign exchange derivatives Forward foreign exchange Currency swaps OTC derivatives Exchange traded futures - bought and sold Total Interest rate...

  • Page 162
    ... Exchange traded swaps Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded swaps Total Credit derivatives Swaps Equity and stock index derivatives...

  • Page 163
    ... Exchange traded swaps Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded swaps Total Credit derivatives Swaps Equity and stock index derivatives...

  • Page 164
    ... amount at which that contract could be exchanged in an arm's-length transaction, calculated at market rates current at the balance sheet date. The totals of positive and negative fair values arising on trading derivatives at the balance sheet date have been netted where the Group has a legal right...

  • Page 165
    ... reverse repurchase agreements) Debt securities Equity shares Derivatives (see analysis in Note 45) London Metal Exchange warrants and other metals trading positions (see Note 23) Liabilities Deposits by Banks and customers accounts (including repurchase agreements) Short positions in securities...

  • Page 166
    ... or pricing models consistent with the methods used for valuing similar instruments used for trading purposes. (c) Within this calculation, the fair value for loans and advances to banks was estimated using discounted cash ï¬,ows, applying either market rates, where practicable, or rates currently...

  • Page 167
    ...) in shareholders' interest in the long-term assurance fund Net (increase)/decrease in accrued interest and deferred income Net profit on disposal of investments and fixed assets Other non-cash movements Net change in items in course of collection Net increase in other credit balances Net increase...

  • Page 168
    ... 2003 49 Sale of Group undertakings during the year Net cash outï¬,ow from formation of FirstCaribbean International Bank Ltd Advances and other accounts Deposits and other borrowings Net assets disposed of Balance transferred to associated undertaking Profit on disposal reï¬,ected in statement of...

  • Page 169
    ... Clydesdale Financial Services Banco Zaragozano Gerrard Management Services Limited 100.0 100.0 100.0 100.0 31st January 2003 19th May 2003 16th July 2003 17th December 2003 Fair value Book value adjustments £m £m Fair value £m Net assets acquired Cash and balances at central banks Loans and...

  • Page 170
    ... facilitate the day to day financial administration of the funds. Group companies, principally Barclays Global Investors, also provide investment management and custodian services. The Group also provides normal banking services for unit trust and investment funds managed by Group companies. These...

  • Page 171
    ... the Directors of Barclays PLC set out below are disclosed in accordance with Part I of Schedule 6 to the Companies Act 1985. 2003 £000 2002 £000 Aggregate emoluments Gains made on the exercise of share options Amounts paid under long-term incentive schemes Notional pension contributions to money...

  • Page 172
    ...the year, Directors of Barclays PLC and persons connected with them and for managers, within the meaning of the Financial Services and Markets Act 2000, of Barclays Bank PLC were: Number of Directors or managers Number of connected persons Amount £000 Directors Quasi-loans and credit card accounts...

  • Page 173
    ...Ocean. Barclays Capital conducts the Group's investment banking business providing corporate, institutional and government clients with financing and risk management products. Barclays Global Investors provides investment management products and services to international institutional clients. Head...

  • Page 174
    ... Clients Barclaycard Business Banking Barclays Africa Barclays Capital Barclays Global Investors Head office functions and other operations 5,285 2,444 2,267 3,251 257 2,392 332 528 16,756 2003 By geographical segments (a) Interest receivable United Kingdom Other European Union United States...

  • Page 175
    ...; Personal Financial Services £6m (2002: £3m, 2001: £4m); Barclays Private Clients £16m (2002: (£8m), 2001: £nil); Barclaycard £2m (2002: (£4m), 2001: (£4m)); Business Banking £3m (2002: (£2m), 2001: (£11m)); Barclays Capital £1m (2002: £1m, 2001: £nil); Barclays Global Investors...

  • Page 176
    ... equities Other equities United Kingdom corporate bonds United Kingdom fixed interest gilts United Kingdom index-linked gilts Property US debt fund US Treasury stock Other overseas bonds and government stock Cash Other (a) Asset transfer following the creation of FirstCaribbean Fair value of scheme...

  • Page 177
    ... the profit and loss account and statement of total recognised gains and losses in respect of pension schemes and post-retirement health care in 2003 were as follows: Analysis of amounts which would have been charged to operating profit Current service cost(a) Past service cost Gains and losses on...

  • Page 178
    ...2002 UK pension schemes £m 18 - - - - 1 1 14 Analysis of movements in pension scheme and post-retirement health care surpluses/(deficits) during 2002 Surplus/(deficit) in the schemes at beginning of year Contributions Current service cost Past service cost Settlements and curtailments Exchange...

  • Page 179
    ... remaining service lives of current employees. For defined contribution schemes the net pension cost recognised in the profit and loss account represents the contributions payable to the scheme, in accordance with SSAP 24. Post-retirement benefits Where appropriate, post-retirement health care...

  • Page 180
    ... GAAP. Freehold and long-leasehold property is depreciated over its estimated useful economic life based on the historical cost. The net present value of the profits inherent in the in-force life and pensions policies of the long-term assurance fund is not recognised by the Group under US GAAP. An...

  • Page 181
    ... the business, but available for sale, which are carried at the fair value with movements in fair value recorded in shareholders' equity, unless any losses constitute an other-than-temporary impairment difference, in which case the change is reï¬,ected in the profit and loss account. Non-marketable...

  • Page 182
    ...open market. Shares purchased by employee benefit trusts are shown as assets where Barclays retains the risks and rewards of ownership. They are carried at cost less impairment. Prior to 1st January 2003, shares held as part of the trading equity operations were shown in equity shares at fair value...

  • Page 183
    ...products offered to institutional pension funds are accounted for as investment products when the substance of the investment is that of managed funds. The assets and related liabilities are excluded from consolidated balance sheet. The legal form of these products is similar to insurance contracts...

  • Page 184
    ... UK GAAP and US GAAP accounting principles (continued) UK GAAP Consolidation Entities should be consolidated when they are under the control of the reporting entity. Under FRS 2 control is the ability to direct the financial and operating policies of the entity with a view to gaining economic...

  • Page 185
    ..., where the fair value is not determined using either observable market prices or models which use market-observable variables as inputs, the unrealised gain or loss at inception on new contracts should not be recognised. Adoption did not have a material effect on the Group's financial condition or...

  • Page 186
    ...in a transfer if those differences are attributable to credit quality. This SOP is effective for loans acquired in accounting periods beginning after 15th December 2004. Barclays is currently assessing the impact of this SOP on its US GAAP reconciliations. International Financial Reporting Standards...

  • Page 187
    ... Shareholders' interest in the long-term assurance fund Provisions for restructuring of business Disposal of investments Extinguishment of liabilities Revaluation of property Business combinations Internal use software Derivatives Fair value of securities Foreign exchange on available for sale...

  • Page 188
    ... clusters of the Group: At beginning of year £m Reallocation between clusters £m Exchange and other £m Additions £m Disposals £m 2003 £m Personal Financial Services Barclays Private Clients Barclaycard Business Banking Barclays Africa Barclays Capital Barclays Global Investors Head office...

  • Page 189
    ...to reduce steadily each year to 5% in 2008 and remain at that level thereafter. For pensioners in schemes in the UK a 5.6% annual rate of increase in the per capita cost of covered medical benefits is assumed. A one percentage point change in assumed health care trend rates would have the following...

  • Page 190
    ... (2002: 5.3%, 2001: 6.0%), rate of compensation increase of 4.1% (2002: 3.75%, 2001: 4.0%), and expected long-term rate of return on plan assets of 6.8% (2002: 6.8%, 2001: 7.5%). Details of the post-retirement health care expense under UK GAAP are given in Note 4 to the accounts. In accordance with...

  • Page 191
    ... of £4m relating to deferred tax (2002: £59m, 2001: £61m). (ii) The valuation allowance relates to the Group's capital losses and unrelieved overseas tax losses. These assets will be recognised in the future when it becomes likely that they will be utilised. Barclays PLC Annual Report 2003 189

  • Page 192
    ...), Save As You Earn (SAYE), Incentive Share Option Plan (ISOP), the BGI Equity Ownership Plan (EOP), the Woolwich Executive Share Option Plan (Woolwich ESOP) and the Woolwich SAYE scheme fall within the scope of SFAS 123. Analysis of the movement in the number and weighted average exercise price of...

  • Page 193
    ... the BGI EOP are calculated at the date of grant using the Black-Scholes model. The significant weighted average assumptions used to estimate the fair value of the options granted in 2003 are as follows: ISOP SAYE BGI EOP(b) Risk-free interest rate Expected life (years) Expected volatility 4.19...

  • Page 194
    ... employees in the UK may participate in the SAYE. Under this Scheme, employees may enter into contracts to save up to £250 per month and, at the expiry of a fixed term of three, five or seven years, have the option to use these savings to acquire shares in the Company at a discount, calculated...

  • Page 195
    ... a fair value of £1,109m (2002: £456m). All long investment securities are classified as being 'available for sale' unless the Group has a clear intention and ability to hold them to maturity. Other debt securities are classified as trading securities (see Note 17). Barclays PLC Annual Report...

  • Page 196
    ... During 2003, 2002 and 2001, the Group has continued its existing programmes to reduce the workforce. Costs under these programmes, in all three years, have primarily been incurred in Personal Financial Services, Barclays Private Clients and Business Banking. In addition, significant costs were...

  • Page 197
    ... exchange gains or losses on currency securities from net income to other comprehensive income. No difference between the Group's UK and US GAAP shareholders' equity arises from this transfer. (o) Derivatives SFAS 133 requires all derivatives to be recorded at fair value. If certain conditions...

  • Page 198
    ... the credit structuring. Multi-seller conduit programmes Barclays creates, administers and provides liquidity and credit enhancements to several commercial paper conduit programmes, primarily in the United States. These conduits provide clients access to liquidity in the commercial paper markets by...

  • Page 199
    ... a majority of the SPE's substantive risks and rewards. (q) Securitisations Credit card securitisations The Group transfers portfolios of credit card receivable assets to Gracechurch Receivables Trustee Limited. Barclaycard Funding PLC, a subsidiary of Barclays Bank, has an equitable interest in the...

  • Page 200
    ... fair values at the date of sale). The Group estimates the fair value of the retained interests by determining the present value of future expected cash ï¬,ows using valuation models that incorporate management's best estimates of key assumptions, which include: (a) the expected prepayment rate...

  • Page 201
    ...(c) Assets on US GAAP balance sheet Notes (a) Delinquent loans are loans 90 days or more past due (b) Net of recoveries during the year (c) Securitised and derecognised from the balance sheet under US GAAP 11,078 (2,508) 8,570 228 (36) 192 438 (52) 386 Barclays PLC Annual Report 2003 199

  • Page 202
    ...loans. It is the Group's policy to seek collateral at the outset equal to 100% to 105% of the loan amount. The level of collateral held is monitored daily and further collateral calls made to bring the level of cash held and the market value of collateral in line with the loan balance. Under certain...

  • Page 203
    ...677m (2002: £6,202m). Additional adjustments arise due to further differences in GAAP, as set out below. In accordance with ARB No. 43, Barclays PLC shares shown for UK GAAP within Other assets in Note 23 have been netted against US GAAP shareholders' equity. Barclays PLC Annual Report 2003 201

  • Page 204
    ... the reported US GAAP figures. Shareholders' funds Original reconciliation item £m Restated Prior year reconciliation adjustment item £m £m 2002 Own shares Total affected reconciling items (59) (59) 4 4 (55) (55) 62 Consolidated statement of cash ï¬,ows Interest paid in the year, including...

  • Page 205
    ... Community Directives, as implemented by the Financial Services Authority (FSA) for supervisory purposes. The FSA regards the risk asset ratio calculation, originally developed by the Basel Committee, as a key supervisory tool and sets individual minimum ratio requirements for banks in the UK...

  • Page 206
    ... on deposits Ratio of earnings to combined fixed charges, preference share dividends and payments made in respect of Reserve Capital Instruments (RCIs) UK GAAP: Excluding interest on deposits Including interest on deposits US GAAP: Excluding interest on deposits Including interest on deposits 1.55...

  • Page 207
    ... with Directors and connected persons and with managers Major Shareholders and Related Party Transactions Presentation of information Directors' report Note 54 Related party transactions Trading market for ordinary shares of Barclays PLC Financial Information Note 11 Dividends - Barclays PLC Note...

  • Page 208
    ... are expressed in pounds Sterling. For the months indicated, the high and low noon buying rates in New York City for cable transfers in pounds Sterling, as certified for customs purposes by the Federal Reserve Bank of New York (the noon buying rate), were: (US Dollars per pound Sterling) 2004...

  • Page 209
    ... Revaluation reserve Share capital Shareholders' funds Share premium account Shares in issue Tangible fixed assets Write-offs US equivalent or brief description Financial statements Issued Net income Ordinary shares, issued and fully paid Tax term equivalent to US tax depreciation allowances Cash...

  • Page 210
    ...Group undertakings Profit on ordinary activities before tax Tax on profit on ordinary activities Profit on ordinary activities after tax Minority interests - equity Profit for the financial year attributable to the members of Barclays Bank PLC Dividends payable to Barclays PLC Dividends payable...

  • Page 211
    Barclays Bank PLC Data Statement of Total Recognised Gains and Losses Statement of total recognised gains and losses For the year ended 31st December 2003 2003 £m 2002 £m 2001 £m Profit for the financial year attributable to the members of Barclays Bank PLC Exchange rate translation ...

  • Page 212
    ... Assets Cash and balances at central banks Items in course of collection from other banks Treasury bills and other eligible bills Loans and advances to banks - banking - trading Loans and advances to customers - banking - trading Debt securities Equity shares Interests in joint ventures - share of...

  • Page 213
    ... to those on pages 214 to 215. Equity shares and shareholders' funds for Barclays Bank PLC differ from Barclays PLC by £12m (2002: £4m). As a result related balances in Note 18, Note 40, Note 45 and Note 59 differ for Barclays Bank PLC by the same amounts. Barclays PLC Annual Report 2003 211

  • Page 214
    Barclays Bank PLC Data Consolidated Statement of Changes in Reserves Consolidated statement of changes in reserves As at 31st December 2003 2003 £m 2002 £m 2001 £m Share premium account At beginning of year Premium arising on shares issued Exchange rate translation differences At end of year ...

  • Page 215
    ...: Interest paid on loan capital and other subordinated liabilities Preference dividends paid Dividends paid to minority shareholders Net cash outï¬,ow from returns on investment and servicing of finance Tax paid Capital expenditure and financial investment: Capital expenditure Sale of property and...

  • Page 216
    Barclays Bank PLC Data Notes to the Accounts (a) Administrative expenses - staff costs 2003 £m 2002 £m 2001 £m Salaries and accrued incentive payments Social security costs Pension costs Post-retirement health care Other staff costs 3,441 278 180 19 377 4,295 3,159 240 (27) 15 370 3,757 3,...

  • Page 217
    ...Barclays Bank PLC Group Goodwill Intangible assets Pensions Post-retirement benefits Leasing - lessor Compensation arrangements Shareholders' interest in the long-term assurance fund Provisions for restructuring of business Extinguishment of liabilities Revaluation of property Internal use software...

  • Page 218
    ... undertakings Loss on sale or restructure of BZW businesses Profit/(loss) on disposal/termination of other Group undertakings Profit before tax Attributable profit Selected balance sheet data Shareholders' funds Dated and undated loan capital Deposits by banks, customer accounts, debt securities...

  • Page 219
    ... information has been translated for convenience at the rate of US$1.78 to £1, the noon buying rate for cable transfers in New York City, payable in pounds Sterling, at 31st December 2003. (b) Net income and shareholders' equity have been adjusted to reï¬,ect significant differences between UK...

  • Page 220
    ...gain on disposal recognised in the statement of total recognised gains and losses Average shareholders' funds including average historical goodwill Post-tax cost of equity Cost of average shareholders' funds including average historical goodwill Economic profit 2,744 265 (7) 7 - 3,009 (4) 3,005 17...

  • Page 221
    ... at the noon buying rates in New York City for cable transfers in pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York (the 'noon buying rate') for the days on which dividends are paid, except for the 2003 final dividend, payable in the UK on 30th April...

  • Page 222
    Shareholder Information Trading Market for Ordinary Shares of Barclays PLC The nominal capital of Barclays PLC is divided into 9,996,000,000 ordinary shares of 25p each (ordinary shares) and 1,000,000 staff shares of £1 each (staff shares). At the close of business on 31st December 2003, 6,562,731...

  • Page 223
    ...Shares held as a percentage Number of of issued shares held ordinary (millions) shares Number Classification of shareholders Personal holders Banks and nominees Other companies Insurance companies Pensions funds Totals Shareholding... 2.61 1.49 87.13 100.00 0.01 Barclays PLC Annual Report 2003 221

  • Page 224
    .... If a dividend is not claimed after 12 years of it becoming payable, it is forfeited and reverts to the Company. The Directors may, with the approval of an ordinary resolution of the Company, offer shareholders the right to chose to receive an allotment of new ordinary shares credited as fully paid...

  • Page 225
    ... persons to hold or vote the Company's ordinary shares other than the limitations that would generally apply to all of the Company's shareholders. Taxation The following is a summary of the principal tax consequences for holders of ordinary shares of Barclays PLC, preference shares of the Bank...

  • Page 226
    ... their personal financial adviser if further information regarding a possible tax liability in respect of their holdings of Barclays PLC shares is required. Stamp duty On the purchase of shares, stamp duty or stamp duty reserve tax at the rate of 0.5% is normally payable on the purchase price of...

  • Page 227
    ... any questions about their investment in Barclays, or about Barclays in general, may write to: Head of Investor Relations Barclays PLC 54 Lombard Street London EC3P 3AH or, in the United States of America, The Corporate Communications Department Barclays Bank PLC 222 Broadway New York, NY 10038, USA...

  • Page 228
    ... Director, Barclays Solutions Graham Brammer Group Property Services Director Toby Broome Director, Service and Supplier Management Leigh Bruce Group Communications Director Mark Carawan Director, Group Internal Audit John Charters Group Non-Financial Risk Director John Cotton Canary Wharf Programme...

  • Page 229
    ... Head of Structured Capital Markets Thomas L Kalaris Global Head of Distribution and Research and Chief Executive, Americas Grant Kvalheim* Global Head of Investment Banking and Credit Products Robert Morrice Chairman and Chief Executive, Asia Pacific Barclays Global Investors 45 Fremont Street San...

  • Page 230
    ... Tanzania Tel: +25 5 22 2129381 Karl Stumke Managing Director Barclays Bank PLC and Barclays Capital, USA 200 Park Avenue New York, NY 10166 USA Tel: +1 212 412 4000 Thomas L Kalaris Chief Executive Barclays Global Investors, N.A. 45 Fremont Street San Francisco, CA 94105 USA Tel: +1 415 597 2000...

  • Page 231
    The paper used throughout this report is produced from Totally Chlorine Free (TCF) pulps. The wood for these is sourced from fully sustainable forests in Finland, Sweden, Portugal, Spain and Brazil. Additionally, the manufacturing mill is certified to ISO 9002 Quality Assurance standard, the ISO ...

  • Page 232
    Barclays PLC Head Office 54 Lombard Street London EC3P 3AH Tel 020 7699 5000 www.barclays.com 9901387