Barclays 2003 Annual Report Download - page 170

Notes to the Accounts
For the Year Ended 31st December 2003
168
54 Related party transactions
a) Subsidiary undertakings
Details of the principal subsidiary undertakings are shown in Note 43. In accordance with FRS 8, transactions or balances between Group entities
that have been eliminated on consolidation are not reported.
b) Associated undertakings and joint ventures
The Group provides certain banking and financial services for associated undertakings and joint ventures. These are conducted on similar terms to
third party transactions and are not material to the Group’s results. Details of lendings to associated undertakings and joint ventures are set out in
Notes 14 and 15.
Edotech Limited, an associated undertaking, provides printing services to the Group. The cost of these services provided in the year was £31.1m
(2002: £24.1m, 2001: £22.9m). At the year end, a balance outstanding of £3.0m was included in sundry creditors (2002: £2.3m).
Intelligent Processing Systems Limited (IPSL) is a joint venture between the Group, Lloyds TSB Bank PLC, HSBC Bank plc and Unisys Limited.
The Bank has outsourced its cheque processing services to IPSL. The cost of these core services to the Barclays Group in the UK provided in the year
was £26.7m (2002: £30.2m, 2001: £30.5m). At the year end, a balance outstanding of £1.7m was included in sundry creditors (2002: £2.2m). In
addition, a further £16.6m was included in prepayments and accrued income (2002: £6.3m).
Gresham Insurance Company Limited (Gresham) became an associated undertaking following the acquisition of Woolwich plc. The arrangement
enables Gresham to underwrite major household insurances provided to customers of the Group. Underwriting payments made to Gresham during
the year were £44.8m (2002: £54.9m, 2001: £53.2m) and balances outstanding of £53.2m (2002: £6.9m) are included in trade creditors.
Global Home Loans Limited (GHL) is an associated undertaking of the Group. Mortgage origination and processing activities are outsourced to GHL
and its subsidiaries. The fees payable to GHL during the year were £100.7m (2002: £57.9m, 2001: £45.6m). At the year end, £11.2m was payable to
GHL (2002: £8.9m).
Gabetti Holding SpA, an associated undertaking, acts as an introducer of mortgage business to Banca Woolwich SpA and received commission of
£5.1m in 2003 (2002: £7.0m, 2001: £7.3m). At the year end, there were no amounts outstanding (2002: £1.0m sundry creditors).
Littlewoods Personal Finance Limited is a joint venture between the Group and Littlewoods PLC. The Group provides a retail financial service to
Littlewoods Personal Finance Limited retail customers and charged £4.4m during 2003 for account servicing, maintenance and development costs
(2002: £1.7m, 2001: £0.8m). During 2003, Littlewoods Personal Finance Limited provided marketing services to the Group for which a fee of £5.1m
was paid (2002: £5.3m, 2001: £2.9m). At 31st December 2003, £0.8m was owed to Littlewoods Personal Finance Limited (2002: £2.2m). There was
no amount outstanding from Littlewoods Personal Finance Limited at that date (2002: £nil).
Xansa Barclaycard Partnership Limited (formerly Barshelfco (No 73) Limited) became a joint venture between the Group and Xansa PLC on
1st February 2002. The company delivers IT services to Barclaycard. The IT service contract has an estimated minimum value of £125m over five
years. The cost of providing these services to Group during the year was £37.2m (2002: £38.5m, 2001: £nil). At 31st December 2003 £1.4m
(2002: £0.6m) was owed to Xansa Barclaycard Partnership Limited.
FirstCaribbean International Bank Limited became an associate of the Group in October 2002 following the combination of the Caribbean retail,
corporate and offshore banking operations of Barclays and Canadian Imperial Bank of Commerce. As part of this transaction, the bank has agreed
to ensure that the pension scheme assets are sufficient to cover the pension fund liabilities of the affected employees. At 31st December 2003, a
provision of £20m (2002: £20m) is held to cover this liability. Barclaycard received management fees of £1.2m (2002: £0.2m) in respect of credit
card services supplied to FirstCaribbean Investment Bank in 2003.
c) Pension funds, unit trusts and investment funds
The Group provides a number of normal current and interest bearing cash accounts to the Group pension funds (principally the UK Retirement Fund,
the 1951 Fund and the Woolwich Pension Fund) in order to 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 are all conducted on similar terms to third party transactions and are not
individually material. In aggregate, amounts included in the accounts are as follows:
2003 2002 2001
£m £m £m
Liabilities of Group – banking facilities 228 87 112
Interest payable – banking facilities 123
Commissions receivable ––6
Fees receivable – investment management and custody 14 12 12
Value of schemes’ investments in pooled funds managed by BGI 13,140 11,866 13,578
Income from pooled funds managed by BGI 10 11 –
Investments in OTC derivatives with other Group companies 200 331 186
Margin loans from other Group companies 152 176 183