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Barclays PLC
Annual
Report
2005

Table of contents

  • Page 1
    Barclays PLC Annual Report 2005

  • Page 2
    ... well as UK domestic and global economic and business conditions, market related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, progress in the integration of Absa into the Group's business and...

  • Page 3
    ..., invest and protect money for over 25 million customers and clients worldwide. Our business purpose is to help our customers and clients achieve their objectives. Our goal is to deliver top quartile total shareholder return relative to our peers, consistently over time. Contents Section 1 - Review...

  • Page 4
    ... 1st January 2005. Further explanation is provided on page 134. (b) Total income net of insurance claims. (c) Proposed full year dividend per share. Increase in income(b) Rise in profit before tax to £5,280m Earnings per share up 7% Dividend per share(c) up 11% 2 Barclays PLC Annual Report 2005

  • Page 5
    Section 1 Review section 1.1 1.2 1.3 1.4 1.5 Our businesses Chairman's statement Group Chief Executive's review Group Finance Director's review Corporate responsibility page 4 6 8 11 14 Barclays PLC Annual Report 2005 3

  • Page 6
    ... related investment services such as securities lending, cash management and portfolio transition services. In addition, BGI is the global leader in assets and products in the exchange traded funds business, with over 140 funds for institutions and individuals trading in eleven markets globally. BGI...

  • Page 7
    ...of Absa Group Limited's ordinary shares and has voting control. Barclays PLC Annual Report 2005 Total customer funds* Wealth Management serves affluent, high net worth and corporate clients, providing private banking, offshore banking, stockbroking, asset management, financial planning services and...

  • Page 8
    ...'s Report and Accounts and I would like to take the opportunity to thank Roger for all his hard work as Head of our UK Banking business. Four new Directors joined the Board during the year. Bob Diamond, President of Barclays and Chief Executive, Investment Banking and Investment Management, became...

  • Page 9
    ... banks assessed worldwide." Barclays remained the only financial services company in the world to play a role in the Business Leaders' Initiative on Human Rights and we retained our membership of both the Dow Jones Sustainability and FTSE4Good Indices. In terms of environmental management, Barclays...

  • Page 10
    ... Banking presents us with a significant growth opportunity. Our recruitment of customers was good in 2005 - 400,000 new current account holders, 250,000 new savings customers, and over Our strategy Build the best bank in the UK Accelerate growth of global businesses 8 Barclays PLC Annual Report...

  • Page 11
    ... introduce additional service offerings to our customers through collaboration with Barclays Capital, Barclays Global Investors and Barclaycard. Develop retail and commercial banking activities in selected countries outside the UK Enhance operational excellence Barclays PLC Annual Report 2005 9

  • Page 12
    ...is through the development of our global businesses; investment banking, asset management, wealth management and credit cards. In 2005, about 40% of our profits came from outside the United Kingdom. Over time we would like to see this percentage increase. We expect the plans we have for our existing...

  • Page 13
    ... up 12%. Return on average shareholders' equity was 21% and we have increased the total dividend payout 11%. Income(b) rose 23%, an increase which was broadly spread across the Group with most businesses reporting double digit income growth and UK Retail Banking returning to modest top line growth...

  • Page 14
    ... restructuring and investment programmes. Barclaycard profit before tax fell 19% to £687m (2004: £843m) driven by higher levels of impairment in the UK and continued investment in the International business. Income(b) growth of 15% reflected good performances by the UK cards and loans businesses...

  • Page 15
    .... In 2005, we acquired Absa Group Limited without issuing ordinary equity, made a number of other smaller acquisitions, increased weighted risk assets 10% excluding Absa and paid dividends of £1.6bn. Despite this we ended the year with a tier 1 ratio only marginally changed from the level post the...

  • Page 16
    ... Responsible lending Environmental impacts Employee welfare Community investment with the Turnbull Guidance on Internal Control for UK listed companies. A specific standard on Corporate Responsibility underpins our 'Responsible Banking' philosophy. Benchmarking Barclays is a long-standing member of...

  • Page 17
    ... support, including money management advice, training and help to get back to work. We have also continued to work closely with Credit Unions and Community Development Finance Institutions which provide basic lending and saving services. Our Cash Card Account, a basic current account that gives...

  • Page 18
    ... Employers Forum on Disability benchmarking exercise. Community Investment As a responsible bank it is vital to us that we invest in the communities where we operate, and ensure that our funding makes a positive impact. Our community work is based on partnerships: we offer expertise and staff time...

  • Page 19
    ...Officers of Barclays PLC and Barclays Bank PLC Directors' report Corporate governance report Barclays report on remuneration Accountability and audit Presentation of information Risk management Risk factors Risk management and control - overview Credit risk management Loans and advances Other credit...

  • Page 20
    ... Press and is Deputy President of the CBI. Sir David's previous positions include Chairman of Severn Trent plc, Earls Court and Olympia Group Limited and IPC Group Limited and Group Managing Director of EMAP plc. He is a member of the Board HR and Remuneration Committee and the Board Corporate...

  • Page 21
    ...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 joined the Group Executive Committee in March 2003. Before joining Barclays, he was a Managing Director...

  • Page 22
    ...2003 2001 Other officers Appointed to position Jonathan Britton Lawrence Dickinson Patrick Gonsalves Mark Harding Robert Le Blanc Financial Controller Company Secretary Joint Secretary, Barclays Bank PLC General Counsel Risk Director 2006 2002 2002 2003 2004 20 Barclays PLC Annual Report 2005

  • Page 23
    ... to certain losses and liabilities which they may incur (or have incurred) in connection with their duties, powers or office. 2.2 Board Membership The membership of the Boards of Directors of Barclays PLC and Barclays Bank PLC is identical and biographical details of the members are set out on...

  • Page 24
    Directors' report Activities Barclays PLC Group is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The Group operates through branches, offices and subsidiaries in the UK and...

  • Page 25
    ... Date On 1st January 2006, Barclays completed the sale to Absa Group Limited of the Barclays South African branch business. This business consists of the Barclays Capital South African operations and Corporate and Business Banking activities carried out by International Retail and Commercial Banking...

  • Page 26
    ... Vice-Chairman of Goldman Sachs prior to retirement; Dr Danie Cronjé, Chairman of Absa Group Limited, a leading South African bank, joined the Board as a non-executive Director in September 2005, following our successful acquisition of a majority stake in Absa. 24 Barclays PLC Annual Report 2005

  • Page 27
    ... shareholder value through the management of the Group's businesses. It is also responsible for ensuring that management maintain a system of internal control which provides assurance of effective and efficient operations, internal financial controls and compliance with law and regulation. The Board...

  • Page 28
    ... of Directors or the Company Secretary, changes to our capital structure and major acquisitions, mergers, disposals and capital expenditure. The Chairman meets privately with all the non-executive Directors prior to each Board meeting to brief them on the business to be considered and to address any...

  • Page 29
    ... and benefits plans applicable to senior executives and governs employee share schemes. Details of the Committee's role in governing executive Directors' rewards are set out in our Report on Remuneration on pages 31 to 44. The Committee also meets periodically to review strategic HR issues including...

  • Page 30
    ... in-depth reports from the Group's main business areas on their control environment. Financial Reporting We review the Group's annual and interim financial statements, including reviewing the effectiveness of the Group's disclosure controls and procedures and systems of internal control. For the...

  • Page 31
    ... main listing is on the London Stock Exchange, we follow the UK's Combined Code on Corporate Governance (the Code) adopted by the Financial Reporting Council. Key differences between the NYSE Rules and the Code are set out below: Director independence Under the NYSE Rules the majority of the Board...

  • Page 32
    ... exclusive deal on Barclays insurance products to our shareholders, offering special deals on general, motor and travel insurance. Further offers are being considered for 2006. The main methods of communicating with private shareholders are the Annual Report, the Annual Review, the dividend mailings...

  • Page 33
    ... of Barclays Human Resource activities with particular emphasis on talent, remuneration and employee engagement. Leigh Clifford and John Sunderland joined the Committee during 2005. All Committee members are independent non-executive Directors. The Committee meets a minimum of four times a year...

  • Page 34
    ... for executive Directors. Barclays remuneration policy is to: • • • encourage behaviour consistent with Barclays Guiding Principles(b) which leads to excellence and the appropriate balance in: financial performance, governance and controls, customer service, human resource management, brand...

  • Page 35
    ... contribution scheme or Cash allowance in lieu of pension contributions Performance Share Plan To reward the creation of above median, sustained growth in shareholder value Pension To provide market competitive post-retirement benefit • • Deferred cash Monthly Barclays PLC Annual Report...

  • Page 36
    ... base salary in Barclays shares, including shares held on their behalf in ESAS. Base Salary The annual base salaries for the current executive Directors are shown in the table below: Date of previous increase The comparator banks for the 2005 and 2006 awards are: (a) UK Mainland Europe US HBOS...

  • Page 37
    ... have informed the Bank that their normal policy is to abstain in any shareholder voting, in respect of the Barclays shares held in trust. Pensions A pension is normally payable on retirement at contractual retirement date (normally 60) and is calculated either by reference to an executive Director...

  • Page 38
    ...retire from the Board. They are included in the table of Directors' interests in ordinary shares of Barclays PLC on page 44. Non-executive Directors do not receive awards in share schemes for employees, nor do they accrue pension benefits from Barclays for their non-executive services. Non-executive...

  • Page 39
    2005 Annual Remuneration(a) Annual cash bonus £000 Executive Share Award Scheme ESAS(c) 2005 £000 2004 £000 Salary and fees £000 Benefits(b) £000 2005 Total £000 2004 Total £000 Chairman Matthew W Barrett Executive Directors John Varley(d) Robert E Diamond Jr(e) Gary Hoffman(d) Naguib ...

  • Page 40
    ... paid from the final salary section of the pension fund are reviewed annually. Pensions increase by a minimum of the increase in the retail price index (up to a maximum of 5%), subject to the scheme rules. (b) The transfer values have been calculated in a manner consistent with 'Retirement Benefit...

  • Page 41
    ... Share Performance Share Award Share Option Scheme(c) Plan(d) Scheme Incentive Share Option Plan(e) Sharesave Notional Notional value based value based on share on share Change in price of price of notional £5.86(f ) £6.11(g) value £ Total Chairman Matthew W Barrett Executive Directors John...

  • Page 42
    Corporate governance Barclays report on remuneration Executive Directors: shares provisionally allocated and shares under option under Executive Share Award Scheme (ESAS)(a) During 2005 Number at 1st January 2005 Awarded in respect of the results for 2004 Market price at release date £ Market ...

  • Page 43
    ... under the Performance Share Plan (PSP)(a) Initial allocation Maximum shares number granted of shares during under award 2005(b) Number at 1st January 2005 Market price on award date £(c) Performance period(d) Vesting date Number at 31st December 2005 Executive Directors John Varley Robert...

  • Page 44
    Corporate governance Barclays report on remuneration Executive Directors: shares under option under Sharesave(a) During 2005 Number held at 1st January 2005 Number at 31st December 2005 Information as at 31st December 2005 Exercise price per share £ Weighted average exercise price £ Market price ...

  • Page 45
    ...a grant under the BGI EOP in March 2004. He was not a Director of Barclays PLC at that time. The EOP is an option plan, approved by shareholders in 2000. Under the plan, participants receive an option to purchase shares in Barclays Global Investors UK Holdings Limited. The exercise price is based on...

  • Page 46
    ...é held 1,200, 1,200 and 101,577 shares in Absa Group Limited, respectively. (h) As at 1st June 2005, Robert E Diamond Jr also held 100,000 'A' ordinary shares in Barclays Global Investors UK Holdings Limited, which shares were also held as at 31st December 2005. 44 Barclays PLC Annual Report 2005

  • Page 47
    ... reviewed within the business areas. Quarterly risk reports are made to the Board covering risks of Group significance including credit risk, market risk and operational risk, including legal and compliance risk. Regular reports are made to the Board Audit Committee by management, Internal...

  • Page 48
    ... 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 49
    ... profitability of Barclays businesses could be adversely affected by a worsening of general economic conditions in the United Kingdom or globally. Factors such as the liquidity of the global financial markets, the level and volatility of equity prices, interest rates, inflation, investor sentiment...

  • Page 50
    ... is expected to be heard towards the end of 2006. The OFT's investigation in the Visa interchange case is at an earlier stage. The OFT also has a continuing investigation into the level of late and over-limit fees on credit cards. The OFT issued a press release 48 Barclays PLC Annual Report 2005

  • Page 51
    ...managing the risks to which it is exposed. Our risk management is described in the following pages (pages 50 to 77). Please also refer to the cautionary statement concerning forward-looking statements on the inside of the front cover in conjunction with this section. 2.7 Barclays PLC Annual Report...

  • Page 52
    ... of international growth we have achieved within existing businesses like Barclays Capital and BGI. The development across the Group of new products with new clients and in new geographies has provided good diversification. This synergy is strengthened when we can use the risk skills and systems we...

  • Page 53
    ... all aspects of the Group's risk profile. Assess new risk-return opportunities. Advise on optimising the Group's risk profile. Review and challenge risk management practices. Assess Robert Le Blanc Risk Director Control Report Manage and Challenge 2.8 Barclays PLC Annual Report 2005 51

  • Page 54
    ...Group Finance Director Risk Director Risk-Type Heads Business Risk Directors Retail Credit risk Corporate/ Wholesale Credit risk Market risk Operational risk All other risks UK Banking Barclaycard Barclays Capital Wealth Management International Retail and Commercial Banking Barclays Global...

  • Page 55
    Governance Structure at Group Level Board oversight Board Board Audit Committee Board Risk Committee • • Considers the adequacy and effectiveness of the Group Internal Control and Assurance Framework. Reviews reports on control issues of Group level significance. Authority Controls ...

  • Page 56
    ... objectives, including dividend sustainability and preservation of Barclays rating in stress environments. The portfolio is analysed in this way at four representative levels: At 31st December 2005, the Group's expected credit loss in one year was £1,845m (see page 58). The economic capital...

  • Page 57
    ... Group and each of the businesses. Economic capital is fully embedded in the management culture of the Group via risk adjusted performance management (e.g. economic profit), effective targeting of resources to value creating areas, pricing tools, compensation and remuneration schemes and is integral...

  • Page 58
    ...200 250 1,400 4,650 5,250 1,050 2004 2005 Barclays Global Investors Wealth Barclaycard Management International Head office functions Retail and and other Commercial Banking operations(a) Group centre(b) In 2005, the average allocated economic capital of the Group was £14.1bn (2004: £12.4bn...

  • Page 59
    ... Board Audit Committee reviews and approves impairment allowance decisions. Credit Risk Measurement Barclays uses statistical modelling techniques throughout its business in its credit rating systems. These systems assist the Bank in frontline credit decisions on new commitments and in managing the...

  • Page 60
    ... the deteriorating credit conditions in the UK credit card market. RT increased in UK Business Banking due to the growth in the loan book and the acquisition of the Iveco business. International Retail and Commercial Banking RT increased 200% to £195m, reflecting the inclusion of Absa in the...

  • Page 61
    ..., the sale of the loan assets. Credit derivatives are traded for profit and used for managing non-trading credit exposures. Details of these activities may be found in the statistical section (page 85) and Note 15 to the Accounts. The value of assets held as loans and advances to customers that have...

  • Page 62
    ... % Loan balances by internal rating - % of Total 1.2 1.5 1.8 Improving credit quality 100 80 60 40 20 0 2003 UK GAAP 2004(a) 2005 IFRS Rest of the World United States Other European Union Africa UK (See also Table 5 on page 79.) The loans and advances to customers booked through the Group's Absa...

  • Page 63
    ... Barclays largest sectoral exposures are to home loans, other personal and business & other services. These categories are generally comprised of small loans, have low volatility of credit risk outcomes, and are intrinsically highly diversified. The loan-to-value ratios (LTV) on the Group's UK home...

  • Page 64
    ...accounted for as trading losses, rather than credit charges, even though the fall in value causing the loss may be attributable to credit deterioration. Barclays is also exposed to settlement risk in its dealings with other financial institutions. These risks arise, for example, in foreign exchange...

  • Page 65
    ...on the remaining balance of an impaired financial asset (or a group of financial assets) at the effective interest rate for that asset. As a result, interest is credited to the income statement in relation to impaired loans, therefore these loans technically do not fall to be classed as 'non-accrual...

  • Page 66
    ... cash flow calculation are the valuation of all security and collateral and the timing of all asset realisations, after allowing for all attendant costs. This method applies in the Corporate portfolios - Business Banking, Barclays Capital and certain areas within International Retail and Commercial...

  • Page 67
    ... of the impairment allowance, the period end value at 31st December 2004 does not correspond to the opening value at the beginning of 2005 which was restated as £2,637m. Excluding Absa, the increase from the opening to closing balances in 2005 was 10%. (See Table 22 on page 89). An analysis of all...

  • Page 68
    ...general, tends to carry a higher level of coverage than corporate lending. Excluding Absa, coverage of NPLs and PCRLs by the stock of impairment allowances, at 64.8% (2004: 66.9%) and 55.5% (2004: 56.0%) were broadly in line with those reported at 31st December 2004. Write-offs Debts are written off...

  • Page 69
    ... on non-trading positions such as customer assets and liabilities and capital balances. Other market risks Barclays also incurs market risks that do not fit into the above categories. The principal risks of this type are defined benefit pension scheme risk and asset management structural market risk...

  • Page 70
    ... Risk Type ...managed by and reviewed by Market Risk and... Trading risk Barclays Capital • Traded Products Risk Review Committee. Market Risk Director Asset and liability risk Treasury management market risk. Structural interest rate risk. Retail market risk. Overseas treasury market risk...

  • Page 71
    ... Barclays manages client and market activities together. In Barclays Capital, trading risk occurs in both the trading book and the banking book as defined for regulatory purposes. In anticipation of future customer demand, Barclays maintains access to market liquidity by quoting bid and offer prices...

  • Page 72
    ... products, managed variable rate products and the Group's equity. This risk is managed by Treasury, assisted by the Retail Market Risk team. Analysis of Trading Revenue The histograms below show the distribution of daily trading revenue for Barclays Capital in 2005 and 2004. It includes dealing...

  • Page 73
    ... income is affected by a change in asset prices. It affects Barclays Global Investors, International Retail and Commercial Banking, Wealth Management and Barclays Life. The risk is controlled and managed by the respective businesses and the central market risk team. 2.8 Barclays PLC Annual Report...

  • Page 74
    ... an AA credit rating; generate sufficient capital to support asset growth and corporate activity; manage the currency exposure to its overall Sterling Risk Asset Ratio. See page 104 in the Financial Overview for information on the Group's capital position. 72 Barclays PLC Annual Report 2005

  • Page 75
    ... including corporate scandals contributed to a short-term flight to quality in financial markets from which Barclays benefited. An important source of structural liquidity is provided by our core retail deposits in the UK, Europe and Africa, mainly current accounts and savings accounts. Although...

  • Page 76
    ... throughout the Group in business units. They service and support these areas assisting line managers in managing these risks. Business Risk Directors in each business are responsible for overseeing the implementation of and compliance with Group policies. 74 Barclays PLC Annual Report 2005

  • Page 77
    ... including non-exchange traded contracts The Group delivers a fully integrated service to clients for base metals, precious metals, oil and oil related products, power, natural gas and other related commodities. The Group's commodity business continues to expand, as market conditions allow, through...

  • Page 78
    ...commodity and commodity derivative activities are included within dealing profits. Physical commodity positions are held at fair value and reported under Trading Portfolio Assets in Note 13 to the accounts. Total 2005 £m Total 2004(a) £m Fair value of contracts outstanding at the beginning of the...

  • Page 79
    ...derivatives and their 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 fluctuations in interest, exchange rates and commodity and equity prices as part of its asset and liability...

  • Page 80
    ... 2005 £m 2004 £m UK Banking UK Retail Banking UK Business Banking Barclays Capital Wealth Management Barclaycard International Retail and Commercial Banking International Retail and Commercial Banking - excluding Absa International Retail and Commercial Banking - Absa Head office functions and...

  • Page 81
    ... IFRS 4 which became effective from 1st January 2005. Further explanation is provided on page 134. (b) Where a loan is earning a fixed rate of interest on the reporting date, it is included as a fixed rate loan, regardless of the term for which the rate is fixed. Barclays PLC Annual Report 2005 79

  • Page 82
    ...communication Business and other services Home loans(b) Other personal Overseas customers(c) Finance lease receivables Loans and advances to customers in the UK... The 2004 analysis excludes reverse repurchase agreements. Further explanation is provided on page 134. 80 Barclays PLC Annual Report 2005

  • Page 83
    ... water Wholesale and retail distribution and leisure Transport Postal and communication Business and other services Home loans(b) Other personal Overseas customers(c) Finance lease receivables Loans and advances to customers in the United States See note under table 7. 2005 £m 16,229 1 937 32 329...

  • Page 84
    ... effective from 1st January 2005. The 2004 analysis excludes reverse repurchase agreements. Further explanation is provided on page 134. (b) Excludes commercial property mortgages. (c) Overseas customers are now classified as part of other industry segments. 82 Barclays PLC Annual Report 2005

  • Page 85
    ... analysis of loans and advances to customers Over three months but not more than one year £m Over one year but not more than five years £m At 31st December 2005 United Kingdom Corporate lending(b) Other lending to customers in the United Kingdom Total United Kingdom Other European Union United...

  • Page 86
    ... (OTC derivatives) London Metal Exchange warrants and other trading positions Debt securities - held for trading - non-trading Trading portfolio assets Financial assets designated at fair value held on own account Derivative financial instruments Available for sale financial instruments 47...

  • Page 87
    ...15: Notional principal amounts of credit derivatives at 31st December IFRS 2005 £m 2004(a) £m UK GAAP 2003 £m Credit derivatives held or issued for trading purposes(b) Credit derivatives held for risk management purposes Total Table 16: Non-performing loans summary IFRS 2005 £m 2004(a) £m 609...

  • Page 88
    ... loans which are contractually overdue 90 days or more as to principal or interest: United Kingdom Other European Union United States Africa Rest of the World Total Restructured loans: United Kingdom Other European Union United States Africa Rest of the World Total Total non-performing loans: United...

  • Page 89
    ... recognised under the original contractual terms United Kingdom Rest of the World Total 304 52 356 266 52 318 Interest income of approximately £29m (2004: £59m) from such loans was included in profit, of which £20m (2004: £54m) related to domestic lending and the remainder related to foreign...

  • Page 90
    ...United Kingdom Other European Union United States Africa Rest of the World Impairment on loans and advances Impairment on available for sale assets Impairment charge Total net specific provisions charge General provisions (release)/charge Other credit...on page 134. 88 Barclays PLC Annual Report 2005

  • Page 91
    ... 39 and IFRS 4 which became effective from 1st January 2005. Further explanation is provided on page 134. (b) Does not reflect the impairment of available for sale assets or other credit risk provisions in 2005. Barclays PLC Annual Report 2005 89

  • Page 92
    ...charged against profit 160 13 15 16 18 222 217 9 14 4 11 255 95 7 10 1 - 113 88 7 9 1 1 106 106 5 27 1 3 142 IFRS 2005 £m 2004(a) £m 2003 £m UK GAAP 2002 £m 2001 £m New and increased impairment allowance/specific provision charge: United Kingdom Other European Union United States Africa...

  • Page 93
    ... and leisure Transport Postal and communication Business and other services Home loans Other personal Overseas customers(b) Finance lease receivables Overseas Impairment/specific provision charges(c) The category 'other personal' includes credit cards, personal loans and personal overdrafts. 22...

  • Page 94
    ... Construction Property Energy and water Wholesale and retail distribution and leisure Transport Postal and communication Business and other services Home loans Other personal Overseas customers(b) Finance lease receivables Overseas Total See note under table 28. 26 12 181 13 24 18 99 32 2 102...

  • Page 95
    ...leisure Transport Postal and communication Business and other services Home loans Other personal Overseas customers(b) Finance lease receivables Overseas Total See note under table ...134. (b) Overseas customers are now classified as part of other industry segments. Barclays PLC Annual Report 2005 93

  • Page 96
    Risk management Statistical information Table 31: Total impairment allowance/(provision) coverage of non-performing loans IFRS 2005 % 2004(a) % 2003 % UK GAAP 2002 % 2001 % United Kingdom Other European Union United States Africa Rest of the World Total coverage of non-performing loans (Also see ...

  • Page 97
    ... of recognised income and expense Consolidated cash flow statement Parent company accounts Notes to the accounts Barclays Bank PLC data US GAAP financial data Reconciliation of economic profit 3.6 Shareholder information Dividends Trading Market for Ordinary Shares of Barclays PLC Shareholdings at...

  • Page 98
    ... per share Dividends per ordinary share Dividend payout ratio Profit attributable to the equity holders of the parent as a percentage of: average shareholders' equity average total assets Average United States Dollar exchange rate used in preparing the accounts Average euro exchange rate used...

  • Page 99
    ...Basic earnings per share Diluted earnings per share Dividends per ordinary share Dividend payout ratio Attributable profit as a percentage of: average shareholders' funds average total assets Average United States Dollar exchange rate used in preparing the accounts Average euro exchange rate used in...

  • Page 100
    ... for sale investments Reverse repurchase agreements and cash collateral on securities borrowed Insurance assets, including unit-linked assets Property plant and equipment Other assets Total assets Liabilities Deposits and items in the course of collection due to banks Customer accounts Trading and...

  • Page 101
    ... to policyholders Total liabilities and shareholders' equity Weighted risk assets and capital ratios Weighted risk assets Tier 1 ratio Risk asset ratio Selected financial statistics Net asset value per ordinary share Year-end United States Dollar exchange rate used in preparing the accounts Year-end...

  • Page 102
    ... Middle East. International Retail and Commercial Banking excluding Absa works closely with other parts of the Group, including Barclaycard, UK Banking, Barclays Capital and Barclays Global Investors, to leverage synergies from product and service propositions. 100 Barclays PLC Annual Report 2005

  • Page 103
    ... basic bank accounts, mortgages, instalment finance, credit cards, bancassurance products and wealth management services; for commercial and large corporate customers Absa offers customised business solutions. As at 31st December 2005, Barclays owned 56.6% of Absa Group Limited's ordinary shares and...

  • Page 104
    ... 2006 Barclays completed the sale to Absa Group Limited of the Barclays South African branch business. This business consists of the Barclays Capital South African operations and Corporate and Business Banking activities carried out by International Retail and Commercial Banking (South African...

  • Page 105
    ... top quartile total shareholder return (TSR) relative to a peer group of 11 other UK and international financial services institutions. TSR is defined as the value created for shareholders through share price appreciation, plus reinvested dividend payments. In 2004, we announced a new performance...

  • Page 106
    ... financing and risk management solutions to our larger clients from UK Business Banking through Barclays Capital. We are also beginning to apply our skills to Absa's portfolio, particularly in wholesale markets and credit card services. Capital Strength Our capital position and strong credit rating...

  • Page 107
    ... taken into account, for example, the business prospects for 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. The level of the impairment allowance is...

  • Page 108
    ... calculations, the rate of tax was estimated to be 31.6% of operating profit. Further information on intangible assets is set out in Note 28 to the accounts. Retirement Benefit Obligations The Group provides pension plans for employees in most parts of the world. Arrangements for staff retirement...

  • Page 109
    ... as set out on page 146. Total income net of insurance claims £bn 18 16 14 12 10 8 6 4 2 0 17.3 14.1 8.1 6.8 A component of the benefit of free funds included in Group net interest income is the structural hedge which functions to reduce the impact of the volatility of short-term interest rate...

  • Page 110
    ... and Commercial Banking, Barclaycard, Barclays Global Investors and Wealth Management, both externally and with Barclays Capital, is reported in those respective business units, within fee and commission income. The foreign exchange income earned in Barclays Capital is reported within trading income...

  • Page 111
    ... Group's main UK pension schemes. Staff numbers 2005 2004 UK Banking UK Retail Banking UK Business Banking Barclays Capital Barclays Global Investors Wealth Management Barclaycard International Retail and Commercial Banking International Retail and Commercial Banking - ex Absa International Retail...

  • Page 112
    ... of 2,400 staff. UK Banking staff numbers fell by 1,900 to 39,900 (2004: 41,800), reflecting the cost management programme in UK Retail Banking partially offset by an increase in UK Business Banking frontline staff and the inclusion of 200 Iveco Finance staff. Barclays Capital staff numbers rose by...

  • Page 113
    ...25%) of period-end total non-trading loans and advances. Absa's impairment charge of £20m for the five-month period was low in a benign credit environment and also reflected a reduction in the number and value of non-performing loans and a higher level of releases and recoveries. Impairment charges...

  • Page 114
    ... Group's results. UK Banking 2005 £m 2004 £m UK Retail Banking 2005 £m 2004 £m Net interest income Net fee and commission income Net trading income Net investment income Principal transactions Net premiums from insurance contracts Other income Total income Net claims and benefits on insurance...

  • Page 115
    ... growth. Both Larger Business and Medium Business performed well in highly competitive markets and maintained their respective shares of primary banking relationships. In June 2005, UK Business Banking completed the acquisition of a 51% stake in Iveco Finance. Total income increased 12% (£265m...

  • Page 116
    ... office, spread across product, client coverage and distribution. Barclays Global Investors 2005 £m 2004 £m Net interest income Net fee and commission income Net trading income Net investment income Principal transactions Other income Total income Impairment charges and other credit provisions...

  • Page 117
    ... business. Net fee and commission income increased 11% (£60m) to £589m (2004: £529m). The increase was driven principally by sales of investment products to private banking and financial planning clients, stronger equity markets and higher client transaction volumes. 3.3 Barclays PLC Annual...

  • Page 118
    ... review Analysis of results by business Barclaycard 2005 £m 2004 £m Net interest income Net fee and commission income Net premiums from insurance contracts Total income Net claims and benefits on insurance contracts Total income, net of insurance claims Impairment charges and other credit...

  • Page 119
    ... of shares in Republic Bank Limited. Net interest income Net fee and commission income Net trading income Net investment income Principal transactions Net premiums from insurance contracts Other income Total income Net claims and benefits on insurance contracts Total income, net of insurance claims...

  • Page 120
    Financial review Analysis of results by business International Retail and Commercial Banking - Absa Period from 27th July until 31st December 2005 2005 £m Net interest income Net fee and commission income Net trading income Net investment income Principal transactions Net premiums from insurance ...

  • Page 121
    ...: internal fees for structured capital markets activities arranged by Barclays Capital of £67m (2004: £63m); and the fees paid to Barclays Capital for capital raising and risk management advice of £50m (2004: £nil). Previously, capital raising fees were amortised over the life of the capital...

  • Page 122
    ... agreements and cash collateral on securities borrowed - in offices in the United Kingdom 156,292 - in offices outside the United Kingdom 92,407 Trading portfolio assets: - in offices in the United Kingdom 81,607 - in offices outside the United Kingdom 57,452 Total average interest earning assets...

  • Page 123
    ... extent to which either cash payments have been received or interest has been accrued in accordance with the income recognition policy of the Group. (b) Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere. Barclays PLC Annual Report 2005 121

  • Page 124
    ...- in offices in the UK - in offices outside the UK (2,129) (338) (2,467) Financial investments: - in offices in the UK - in offices outside the UK 1,755 467 2,222 External trading assets: - in offices in the UK and - outside the UK (4,971) (2,224) (7,195) Reverse repurchase agreements and cash...

  • Page 125
    ... agreements and cash collateral on securities lent: - in offices in the UK - in offices outside the UK 3,634 2,379 6,013 Trading portfolio liabilities: - in offices in the UK - in offices outside the UK 1,737 1,196 2,933 Internal funding of trading businesses Total interest payable: - in offices...

  • Page 126
    ... purposes. 538 Assets Weighted risk assets 2004 2005 Total assets 2005 £m 2004 £m UK Banking UK Retail Banking UK Business Banking Barclays Capital Barclays Global Investors Wealth Management Wealth Management - closed life assurances activities Barclaycard International Retail and Commercial...

  • Page 127
    ... based on a number of factors including return on economic and regulatory capital. This is conducted as part of the strategic planning review. Capital Resources The Group manages both its debt and equity capital actively. The Group's authority to buy-back equity shares was renewed at the 2005 AGM to...

  • Page 128
    ... 2005 Barclays PLC Group £m Barclays Bank PLC Group £m UK GAAP 2004(a) Barclays PLC Group £m Barclays Bank PLC Group £m Capital ratios Tier 1 ratio Risk asset ratio Weighted risk assets Banking book on-balance sheet off-balance sheet Associates and joint ventures Total banking book Trading book...

  • Page 129
    ... the net capital resources of Barclays PLC Group and Barclays Bank PLC Group at 31st December 2005 arises from the retention by Barclays PLC of dividends paid by Barclays Bank PLC. 3.3 Notes (a) Regulatory capital, weighted risk assets and resultant capital ratios for 2004 are based on UK GAAP and...

  • Page 130
    ...188,122 Commercial Paper Commercial paper is issued by the Group, mainly in the United States, generally in denominations of not less than $100,000, with maturities of up to 270 days. IFRS 2005 £m 2004(a) £m UK GAAP 2003 £m A further analysis of deposits from banks and customer accounts at 2005...

  • Page 131
    ... public bodies Mortgage and asset backed securities Corporate issuers Other issuers Equity shares Investment securities - available for sale Other securities - held for trading Debt securities: United Kingdom government Other government Other mortgage and asset backed securities Bank and building...

  • Page 132
    ... to the accounts. In addition to UK government securities shown above, at 31st December 2005 and 2004 the Group held the following government securities which exceeded 10% of shareholders' equity. 2005 Book value(a) Book value £m £m 2004 Valuation £m United States government securities Japanese...

  • Page 133
    ... investment funds that are owned by a large and diversified number of investors. These funds are not consolidated under either IFRS or US GAAP because the Group does not own either a significant portion of the equity, or the risks and rewards inherent in the assets. 3.3 Barclays PLC Annual Report...

  • Page 134
    ... whether the Board's statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Company's or Group's corporate governance procedures or its risk and control procedures. We read other information contained in the Annual Report and consider whether...

  • Page 135
    ...time Adoption of International Financial Reporting Standards'. Previously, the Group followed the generally accepted principles of the United Kingdom ('UK GAAP'). PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London, United Kingdom 9th March 2006 3.4 Barclays PLC Annual...

  • Page 136
    ... in shareholders' equity at the date of transition in accordance with IAS 21 'The Effects of Changes in Foreign Exchange Rates'. Employee benefits For defined benefit pension schemes and other post-retirement benefits, the Group has recognised all cumulative actuarial gains and losses at the date of...

  • Page 137
    ... which control is transferred to the Group and cease to be consolidated from the date that control ceases. The acquisition method of accounting is used to account for the purchase of subsidiaries. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued...

  • Page 138
    ... 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 are held at fair value and the resulting gains and losses are included in the Income statement, together with interest and dividends...

  • Page 139
    ... valuing the assets through profit and loss significantly reduces the recognition inconsistencies that would arise if the financial assets were classified as available for sale; when the rights to receive cash flows have expired or the Group has transferred substantially all the risks and rewards...

  • Page 140
    ... PLC Accounting policies income statement through dealing profits. Listed securities are valued based on market prices, with long positions at bid and short positions at offer price. Unlisted securities are valued, based on the Directors' estimate, which takes into consideration discounted cash...

  • Page 141
    ... to banks, loans and advances to customers, deposits by banks and customer accounts. The Group aims to earn net interest income and net trading income from these activities, as well as funding its own holdings of securities. The difference between sale and repurchase and purchase and resale prices...

  • Page 142
    ... rate, exchange rate, commodity, and equity exposures and exposures to certain indices such as house price indices and retail price indices related to non-trading positions. In addition, the use of derivatives and their sale to customers as risk management products is an integral part of the Group...

  • Page 143
    ...including positions relating to investments the Group makes outside the UK, are retranslated at the closing rate with any forward premium or discount recognised over the life of the contract in net interest income. Profits and losses related to qualifying hedges, including foreign exchange contracts...

  • Page 144
    Consolidated accounts Barclays PLC Accounting policies described in the section on derivatives used for trading purposes below, prior to being transferred to the trading portfolio. The profit or loss arising from the fair value measurement prior to the transfer to the trading portfolio is included ...

  • Page 145
    ... shares are subsequently sold or reissued, any consideration received is included in shareholders' equity. 22. Insurance contracts and investment contracts The Group offers wealth management, term assurance, annuity, property and payment protection insurance products to customers that take the form...

  • Page 146
    ... The Group provides employees worldwide with post-retirement benefits mainly in the form of pensions. The Group operates a number of pension schemes which may be funded or unfunded and of a defined contribution or defined benefit nature. In addition, the Group contributes, according to local law in...

  • Page 147
    ...The Group also provides health care benefits to certain retired employees, which are accrued as a liability in the financial statements over the period of employment, using a methodology similar to that for defined benefit pensions plans. Short-term employee benefits, such as salaries, paid absences...

  • Page 148
    ... 2005, Barclays Asset and Sales Finance ('BASF') acquired a 51% share and controlling stake in Fiat's Iveco Vehicle Finance Business. The transaction will expand BASF's commercial vehicle expertise. On 30th June 2005, EnterCard, the joint venture between Barclays Bank PLC and FöreningsSparbanken...

  • Page 149
    ... dividend The Board of Directors approved the accounts set out on pages 134 to 283 on 9th March 2006. The accompanying notes form an integral part of the Consolidated Accounts. 11 11 54.4 52.6 9.20 17.40 £m 51.0 49.8 8.25 15.75 £m 1 1 582 1,105 528 1,001 3.5 Barclays PLC Annual Report...

  • Page 150
    ... Loans and advances to banks Loans and advances to customers Debt securities Equity shares Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Insurance assets, including unit-linked assets Investments in associates and joint...

  • Page 151
    ...non-convertible - Dated loan capital - convertible - Dated loan capital - non-convertible Deferred tax liabilities Other provisions for liabilities Retirement benefit liabilities Total liabilities Shareholders' equity Called up share capital Share premium account Available for sale reserve Cash flow...

  • Page 152
    ... 3,861 3,196 47 3,243 n/a n/a n/a Effect of adoption of IAS 32, IAS 39 and IFRS 4 (Note 62) on shareholders equity: Equity holders of the parent Minority interests (583) 2,436 1,853 The accompanying notes form an integral part of the Consolidated Accounts. 150 Barclays PLC Annual Report 2005

  • Page 153
    ... funds and debt securities Issue of equity instruments Repurchase of equity instruments Purchase of treasury shares Sale of treasury shares Net issue of shares to minority interests Net cash from non-recourse financing Net cash from financing activities Net gain on exchange rate changes on cash...

  • Page 154
    ... 309 1,318 8,900 1,614 5,524 309 918 8,365 Total liabilities and shareholders' equity The accompanying notes form an integral part of the Accounts. Matthew W Barrett Chairman John Varley Group Chief Executive Naguib Kheraj Group Finance Director 8,904 8,368 152 Barclays PLC Annual Report 2005

  • Page 155
    ... year Cash and cash equivalents comprise: Cash and balances with central banks (3) 3 - - (4) 4 - - 2,012 2,012 2,138 2,138 (1,612) - (1,612) 400 38 438 (1,413) (699) (2,112) 26 12 38 438 438 38 38 The accompanying notes form an integral part of the Accounts. 3.5 Barclays PLC Annual Report...

  • Page 156
    ...15. 3 Net fee and commission income 2005 £m 2004 £m Fee and commission income Brokerage fees Investment management fees Securities lending Securities trading and investment activity fees Banking and credit related fees and commissions Foreign exchange commission Fee and commission income Fee and...

  • Page 157
    ... in dealings in foreign currencies. Rates, which includes fixed income, foreign exchange, commodities, emerging markets, money markets sales, trading and research, prime services and equity products; Credit, which includes primary and secondary activities for loans and bonds for investment grade...

  • Page 158
    .... Fees for audit services above include all amounts paid to the Group's auditors in their capacity as such. Further assurance services include internal control reviews, attestation services not required by statute or regulation and consultation concerning financial accounting and reporting standards...

  • Page 159
    ... £nil (2004: £nil) arising from cash settled share-based payments. The average number of persons employed by the Group worldwide during the year, excluding agency staff, was 92,800 (2004: 77,000). 10 Tax The charge for tax is based upon the effective UK corporation tax rate of 30% (2004: 30%) and...

  • Page 160
    ... are set out below: 2005 £m 2004 £m ˆ Profit before tax Tax charge at average UK corporation tax rate of 30% (2004: 30%) Adjustment for prior years Differing overseas tax rates Income not taxable Share-based payments Deferred tax assets not recognised Other non-allowable expenses Other...

  • Page 161
    ...bonds Other mortgage and asset backed securities Bank and building society certificates of deposit Other issuers thereof: - Listed - Unlisted Debt securities Equity securities - Listed - Unlisted Equity securities Traded loans London Metal Exchange warrants and other metals trading positions Trading...

  • Page 162
    ...Cash and bank balances within the funds Assets held in respect of linked liabilities to customers under investment contracts Liabilities to customers under investment contracts 83,193 2,008 85,201 (85,201) A portion of the Group's fund management business takes the legal form of insurance policies...

  • Page 163
    ... exchange derivatives Interest rate derivatives Interest rate 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 Interest rate derivatives Credit derivatives Swaps Equity...

  • Page 164
    ... bought Derivatives designated as fair value hedges Derivatives designated as hedges of net investments Currency swaps Derivatives designated as hedges of net investment Derivative assets/(liabilities) held for risk management The Group's total derivative asset and liability position as reported...

  • Page 165
    ... authorities and these amounted to £1,218m at 31st December 2005 (2004: £621m). Information relating to effective interest rates can be found in Note 55. The geographical analysis is based on the location of the customer to which the lendings are made. 3.5 Barclays PLC Annual Report 2005 163

  • Page 166
    ... communication Business and other services Home loans Other personal Finance lease receivables Reverse repurchase agreements Less: Allowance for impairment/provisions (Note 18) Loans and advances to customers ...80,855 27,602 6,938 206,793 58,304 (2,688) 262,409 164 Barclays PLC Annual Report 2005

  • Page 167
    ...communication Business and other services Home loans Other personal Finance lease receivables Loans and advances to customers in the UK Loans and advances to customers outside the UK At 31st December Financial services...920 394 9,784 17,816 2,421 1,387 60,545 3.5 Barclays PLC Annual Report 2005 165

  • Page 168
    ... commercial companies and provides customised finance programmes to help manufacturers, dealers and distributors of assets. During the year, Barclays Mercantile Business Finance Limited, (a wholly owned subsidiary of Barclays Bank PLC and the main operating entity within BASF) acquired a 51% share...

  • Page 169
    ...33) (1,582) 255 1,104 2,711 Allowances for loan impairment represent management's estimate of the losses incurred in the loan portfolios at the balance sheet date. For the retail and small business portfolios, which comprise large numbers of small homogenous assets with similar risk characteristics...

  • Page 170
    ... Investment securities - United Kingdom government - Other government - Other public bodies - Mortgage and asset backed securities - Corporate issuers - Other issuers Investment securities Other debt securities - United Kingdom government - Other government - Other public bodies - Bank and building...

  • Page 171
    ...782m is included in the total above, with the financing reported in Deposits by banks and Debt securities in issue. At 31st December 2004, the Group's net exposure to these investment Debt securities, after taking into account the limited recourse financing, was £1,149m. Barclays PLC holds, as an...

  • Page 172
    ...unrealised losses £m 2005 £m 48,097 1,791 54,556 (50,609) (248) (4) (86) 53,497 Book value £m Debt securities - United Kingdom government - Other government - Other public bodies - Mortgage and asset backed securities - Corporate issuers - Other issuers Total debt securities Equity securities...

  • Page 173
    ...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 transactions, including reverse repurchase agreements and stock borrowing transactions, the Group is allowed to sell or...

  • Page 174
    .... The movement on the deferred tax account is as follows: 2005 £m 2004 £m At beginning of year(a) Income statement charge Equity Available for sale investments Cash flow hedges Share-based payments Other equity movements Acquisitions and disposals Exchange and other adjustments At end of year...

  • Page 175
    ... £m 2004 £m Accelerated tax depreciation Pensions and other retirement benefits Allowance for impairment on loans/provision for bad and doubtful debts Other provisions Tax losses carry forward Available for sale investments Cash flow hedges Share-based payments Other Total 130 39 (1) (133) (20...

  • Page 176
    ...Group's short-term non-life business are £133m (2004: £48m). In 2004, liabilities on products now classified as investment contracts under IAS 39 were reported within insurance liabilities above. In 2005 these are reported in liabilities arising from investment contracts. 174 Barclays PLC Annual...

  • Page 177
    ...part as a unit-linked business, prudent product design, applying strict underwriting criteria, transferring risk to reinsurers, managing claims and establishing prudent reserves. Short-term insurance contracts For payment protection contracts where inability to make payments under a loan contract is...

  • Page 178
    ... benefits insured by geographic location UK Europe Africa Total benefits insured 28,687 5,418 51,821 85,926 (8,697) (2,981) (1,203) (12,881) 19,990 2,437 50,618 73,045 Credit risk For the long-term business, reinsurance programmes are in place to restrict the amount of cover to any single life...

  • Page 179
    25 Insurance assets and liabilities (continued) Capital position statement The Group's total capital resources available for its life insurance businesses were as follows: Available capital resources for life business Total shareholders' equity in the life business Unallocated divisible surplus (UDS...

  • Page 180
    ...which is listed on the Milan stock exchange, is £15m (2004: £10m). The principal associate of Barclays is: Country of incorporation Nature of business Percentage of equity share capital held Date of last audited accounts FirstCaribbean International Bank Barbados Banking 43.7% 31/10/2005 The...

  • Page 181
    ...Financial investments Trading portfolio assets Debt and equity securities Loans to banks and customers Other assets Total assets Deposits from banks and customers Trading portfolio liabilities Other liabilities Shareholders' equity Total liabilities Net income Operating expenses Profit/(loss) before...

  • Page 182
    ... There was no impairment identified in 2005 (2004: £nil). 2005 £m 2004 £m UK Banking Barclays Capital Barclays Global Investors Wealth Management Barclaycard International Retail and Commercial Banking Head office functions and other operations Goodwill 2,824 - 322 629 418 1,814 15 6,022 2,823...

  • Page 183
    .... In all the calculations, the rate of tax was estimated to be 31.6% of operating profit. Impairment charges on internally generated and other software reflect impairment of certain capitalised IT assets following a review of the future economic benefits likely to be generated by them. Barclays had...

  • Page 184
    ... charge for the year attributable to these finance leases at 31st December 2005 was £14m (2004: £5m). 2005 £m 2004 £m Historical cost of property At cost Accumulated depreciation and impairment Net book value 2,257 (1,050) 1,207 2,081 (968) 1,113 182 Barclays PLC Annual Report 2005

  • Page 185
    ...more than five years over five years Deposits from banks By geographical area United Kingdom Other European Union United States Africa Rest of the World Deposits from banks Other time deposits in the UK and United States are mostly over £50,000. The average interest rate during 2005 for deposits by...

  • Page 186
    ...United States Africa Rest of the World Customer accounts In offices in the United Kingdom: Current and Demand accounts - interest free Current and Demand accounts - interest bearing Savings accounts Other time deposits - retail Other time deposits - wholesale Total repayable in offices in the United...

  • Page 187
    ...deferred income included £113m (2004: n/a) in relation to deferred income from investment contracts and £nil (2004: n/a) in relation to deferred income from insurance contracts. Sundry creditors in 2005 includes an amount of £903m in relation to the Absa business. 3.5 Barclays PLC Annual Report...

  • Page 188
    ... 108 40 60 6,149 The Junior Undated Floating Rate Notes (the 'Junior Notes') rank behind the claims against the Bank of depositors and other unsecured unsubordinated creditors and holders of dated loan capital. All other issues of the Bank's undated loan capital rank pari passu with each other and...

  • Page 189
    ... 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 cases, any...

  • Page 190
    ... interest. Any repayments require the prior approval of the Financial Services Authority. All issues of undated loan capital have been made in the eurocurrency market and/or under Rule 144A, and no issues have been registered under the US Securities Act of 1933. 188 Barclays PLC Annual Report 2005

  • Page 191
    36 Dated loan capital Dated loan capital, issued by the Bank for the development and expansion of the Group's business and to strenghten its capital base, by Barclays Bank Spain SA (Barclays Spain), Barclays Bank of Botswana Ltd (BBB) and Barclays Bank Zambia PLC (Barclays Zambia) to enhance their ...

  • Page 192
    ... Group's dated loan capital is secured. The debt obligations of the Bank, Barclays Spain, BBB, Barclays Zambia and Absa rank ahead of the interests of holders of their equity. Dated loan capital of the Bank, Barclays Spain, BBB, Barclays Zambia and Absa has been issued on the basis that the claims...

  • Page 193
    ... issues of dated loan capital by the Bank, Barclays Spain, BBB, Barclays Zambia and Absa, which were made in non-US markets, have not been so registered. With respect to the 7.4% Notes, the Bank is not obliged to make (i) a payment of interest on any interest payment date unless a dividend is paid...

  • Page 194
    ... defined contribution schemes in the UK and overseas. Acquisition of Absa Employees are members of the Absa Group Pension Fund, which has a defined benefit and a defined contribution structure. The defined benefit structure was closed to new entrants on 31st March 1997 with most members transferring...

  • Page 195
    ...Pensions Overseas £m 2004 Post-retirement benefits UK £m Overseas £m Total £m Fair value of plan assets at beginning of the year Expected return on plan assets Employer contribution Settlements Contributions by plan participants Actuarial gain/(loss) Benefits paid Business combinations Exchange...

  • Page 196
    ...UK schemes 2005 % p.a. 2004 % p.a. Overseas schemes 2005 % p.a. 2004 % p.a. Discount rate Expected return on plan assets Rate of increase in salaries Rate of increase for pensions in payment and deferred pensions Initial health care inflation Long-term health care inflation The overseas health care...

  • Page 197
    ... total fair value of Value scheme £m assets United Kingdom equities US equities Other equities United Kingdom corporate bonds United Kingdom fixed interest gilts United Kingdom index-linked gilts Derivatives(a) Property US debt fund US treasury stock Other overseas bonds and government stock Cash...

  • Page 198
    ...Executive Share Option Scheme (ESOS). No awards have been made under this trust since 1999. All awards are in the form of options over Barclays shares. The total number of Barclays shares held in Group employee benefit trusts at 31st December 2005 was 148 million (2004: 115 million). Dividend rights...

  • Page 199
    39 Ordinary shares and share premium (continued) The other current scheme is the BGI Equity Ownership Plan (EOP) which provides for options to be granted to certain management personnel for shares in Barclays Global Investors UK Holdings Limited, a subsidiary of Barclays Bank PLC. Under the terms of...

  • Page 200
    ... on treasury shares/ESOP Dividends paid Purchase/sale of treasury shares Other At 31st December 2005 At 1st January 2004 Repurchase of ordinary shares Shares issued to Quest Profit attributable to equity holders of the parent Equity-settled share schemes Dividends paid Purchase/sale of treasury...

  • Page 201
    ...Barclays PLC (parent company) Capital Retained redemption earnings reserve £m £m Total £m At 1st January 2005 Net profit Dividends paid At 31st December 2005 At 1st January 2004 Repurchase of ordinary shares Transfer to capital redemption reserve Shares issued to 2003 QUEST Net profit Dividends...

  • Page 202
    ... the provision of services such as cash management, information technology, telecommunications maintenance and sponsorship agreements. Capital commitments At 31st December 2005 the commitments for capital expenditure under contract amounted to £1m (2004: £2m). 200 Barclays PLC Annual Report 2005

  • Page 203
    ... is engaged in various other litigation proceedings both in the United Kingdom and a number of overseas jurisdictions, including the United States, involving claims by and against it, which arise in the ordinary course of business. Barclays does not expect the ultimate resolution of any of the...

  • Page 204
    ... to the consolidated profit before tax. As at 31st December 2005, Barclays shareholding was 377,527,453 ordinary shares (56.6%). The acquisition was endorsed by Absa's black economic empowerment partner. Batho Bonke Capital (Proprietary) Limited, and the Absa Share Ownership Trust, hold redeemable...

  • Page 205
    ... assets Liabilities Customer accounts Trading portfolio liabilities Derivative financial instruments Insurance contract liabilities, including unit-linked liabilities Debt securities in issue Other liabilities Deferred tax liabilities Total liabilities Net assets Group share of net assets acquired...

  • Page 206
    ... control of the following entities, none of which was individually material: % Acquired Date Iveco Finance Group ING Securities Bank (France) wealth business Details of the net assets acquired and the consideration paid are set out in aggregate below. 51 100 01/06/05 01/07/05 Fair Carrying value...

  • Page 207
    ... bearing cash accounts to the Group pension funds (principally the UK Retirement Fund) in order to facilitate the day to day financial administration of the funds. Group companies, principally within Barclays Global Investors, also provide investment management and custodian services. The Group also...

  • Page 208
    ... 2004 Pension funds unit trusts and investment funds £m Associates £m Joint ventures £m Total £m Interest received Interest paid Fees received for services rendered (including investment management and custody and commissions) Fees paid for services provided Loans and advances to banks Loans...

  • Page 209
    ...-loans and credit card accounts are provided on normal commercial terms to Directors and other Key Management Personnel (and persons connected to them), with the exception of £5,645 of loans which are provided to non-Director members of Key Management Personnel on staff preferential interest rates...

  • Page 210
    ... 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 Loans Quasi-loans and credit card accounts Managers Loans Quasi-loans and credit card accounts Other information regarding transactions...

  • Page 211
    ... Barclays Capital Japan Limited Barclays Bank Egypt SAE Barclays Bank PLC - ordinary shares Barclays Private Bank Limited Barclays Mercantile Business Finance Limited Barclays Global Investors UK Holdings Limited Barclays Global Investors Limited Barclays Life Assurance Company Limited Barclays Bank...

  • Page 212
    ...(5). Subsidiaries excluded from consolidation Percentage of ordinary share capital held % Equity shareholders' funds £m Retained profit/ (loss) for the year £m Country of registration or incorporation Name UK UK UK USA UK UK Cayman Islands Cayman Islands Oak Dedicated Limited Oak Dedicated Two...

  • Page 213
    ...-year period determines the final number of shares that may be released to participants. Incentive Share Option Plan (ISOP) The ISOP is open by invitation to the employees and Directors of Barclays PLC. Options are granted at the market price at the date of grant calculated in accordance with the...

  • Page 214
    ...closed schemes: Executive Share Option Scheme (ESOS) The ESOS is a long-term incentive scheme and was available by invitation to certain senior executives of the Group with grants usually made annually. Options were issued at the market price at the date of the grant without any discount, calculated...

  • Page 215
    ... 12.74 39.09 11.21 18.52 - 25.26 11.18 9.51 20.11 9.05 12.19 - 12.74 9.67 3.5 Notes (a) Options granted over Barclays PLC shares. (b) Options granted over Barclays Global Investors UK Holdings Limited shares. (c) Nil cost award. Barclays PLC Annual Report 2005 213

  • Page 216
    ... over Barclays PLC shares. (b) Options granted over Barclays Global Investors UK Holdings Limited shares. (c) Options granted over Absa Group Limited shares. (d) Nil cost award. 5.63 5.67 5.69 5.86 42.98 7.59 5.89 5.78 5.61 5.36 - 5.12 5.26 24.35 - 5.20 5.14 4.77 214 Barclays PLC Annual Report...

  • Page 217
    ... - - 87,024 97,176 4,362,014 422,648 1,878,016 164,040 3.5 Notes (a) Options granted over Barclays PLC shares. (b) Options granted over Barclays Global Investors UK Holdings Limited shares. (c) Options granted over Absa Group Limited shares. (d) Nil cost award. Barclays PLC Annual Report 2005 215

  • Page 218
    ...,576 4.20 2,459,094 3.29 240,826 3.92 1,019,612 3.32 2,632 Notes (a) Options granted over Barclays PLC shares. (b) Options granted over Barclays Global Investors UK Holdings Limited shares. (c) Options granted over Absa Group Limited shares. (d) Nil cost award. 216 Barclays PLC Annual Report 2005

  • Page 219
    ... Board Audit Committee reviews and approves impairment allowance decisions. Credit Risk Measurement Barclays uses statistical modelling techniques throughout its businesses in its credit rating systems. These systems assist the bank in front line credit decisions on new commitments and in managing...

  • Page 220
    ... carefully managed. Important factors in assuring liquidity are competitive rates and the maintenance of depositors' confidence. Such confidence is based on a number of factors including the Group's reputation, the strength of earnings and the Group's financial position. 218 Barclays PLC Annual...

  • Page 221
    ...-trading positions such as customer assets and liabilities and capital balances. Other market risks In some instances Barclays also incurs market risks that do not fit into the above categories. The principal risks of this type are defined benefit pension scheme risk and asset management structural...

  • Page 222
    ...For maximum efficiency, client and market activities are managed together. In Barclays Capital, trading risk occurs in both the trading book and the banking book as defined for regulatory purposes (not IFRS). In anticipation of future customer demand, Barclays maintains access to market liquidity by...

  • Page 223
    ... the benefits of risk management are reflected in the financial statements. Hedge accounting techniques used include cash flow hedge accounting and fair value hedge accounting and may involve obtaining hedge accounting with respect to future anticipated transactions. 3.5 Barclays PLC Annual Report...

  • Page 224
    ... in respect of linked liabilities to customers under investment contracts Derivative financial instruments Loans and advances to banks Loans and advances to customers Available for sale financial instruments Reverse repurchase agreements and cash collateral on securities Other assets Total assets...

  • Page 225
    ... of the Group's trading strategies. For these instruments, which are mostly held by Barclays Capital, liquidity and repricing risk is managed through the Daily Value at Risk (DVaR) methodology, see Note 54 for more information. - Retail deposits which are repayable on demand or at short notice form...

  • Page 226
    ... Group's collateral policy differs by line of business and product but is broadly consistent with UK market practice. Netting agreements are made with wholesale counterparties whenever practical and to the extent that such agreements are legally enforceable. Lending in respect of home loans totalled...

  • Page 227
    ... data used for pricing, other fair value adjustments not specifically captured by the model, market data and assumptions or estimates in these are all subject to internal review and approval procedures and consistent application between accounting periods. 3.5 Barclays PLC Annual Report 2005 225

  • Page 228
    ... of loss resulting from changes in exchange rates. Changes in currency rates affect the value of assets and liabilities denominated in foreign currencies and affect earnings reported by the Group's non-UK subsidiaries and may affect revenues from foreign exchange dealing. The Group's objectives and...

  • Page 229
    ... banks Loans and advances to customers Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Total assets Liabilities Deposits from banks Items in the course of collection due to other banks Customer accounts Trading portfolio...

  • Page 230
    ... to customers Debt securities and 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 interests and shareholders' equity Internal funding of trading business Total...

  • Page 231
    ... transactional (or non-structural) positions that would give rise to net currency gains and losses recognised in the profit and loss account. Daily Value at Risk The Daily Value at Risk (DVaR) methodology of estimating potential losses arising from the Group's exposure to market risk is explained in...

  • Page 232
    ... or position has been derecognised or transferred into a trading portfolio, it is restated at fair value and any resultant gains or losses taken directly to the profit and loss account. Gains of £354m and losses of £427m were recognised in the year to 31st December 2004. 230 Barclays PLC Annual...

  • Page 233
    ... Exchange traded futures - bought and sold Total Interest rate derivatives Swaps Forward rate agreements OTC options bought and sold Total OTC derivatives Exchange traded futures - bought and sold Exchange traded options - bought and sold Exchange traded - swaps Total Credit derivatives Swaps Equity...

  • Page 234
    ... the purpose of managing non-trading exposures. Included in the amounts below were £10,295m contract amount of foreign exchange derivatives and £151,957m of interest rate derivatives which were made for asset and liability management purposes with independently managed dealing units of the Group...

  • Page 235
    ... Exchange traded futures - bought and sold 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...

  • Page 236
    ...that contract could be exchanged in an arms-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 of offset with the...

  • Page 237
    ...securities Equity shares Derivatives London Metal Exchange warrants and other metals trading positions Liabilities Deposits by Banks and customers' accounts Debt securities in issue Items in course of collection due to other banks Undated loan capital Dated loan capital Short positions in securities...

  • Page 238
    ... The Group reports the results of its operations through eight business segments: UK Banking, Barclays Capital, Barclays Global Investors, Wealth Management, Wealth Management - closed life assurance activities, Barclaycard, International Retail and Commercial Banking, and Head office functions...

  • Page 239
    ... Management - closed life Wealth assurance Management activities £m £m International Retail and Commercial Barclaycard Banking £m £m Head office functions and other operations £m As at 31st December 2004 Income from external customers, net of insurance claims Inter-segment income Total income...

  • Page 240
    ...The reclassify column includes reclassification and reanalysis of amounts from their UK GAAP profit and loss account and balance sheet lines to the appropriate IFRS income statement and balance sheet lines. The remeasure column sets out the effects of the recognition and measurement changes required...

  • Page 241
    ... commission income Fee and commission expense Net fee and commission income Dealing profits Net trading income Net investment income Principal transactions Net premiums from insurance contracts Other operating income Total operating income Impairment loss on loans and advances and other credit risk...

  • Page 242
    ... commission income Fee and commission expense Net fee and commission income Dealing profits Net trading income Net investment income Principal transactions Net premiums from insurance contracts Other operating income Total operating income Impairment loss on loans and advances and other credit risk...

  • Page 243
    ...Share-based payments (e) £m Pensions (f ) £m Intangible assets (g) £m Financial guarantees (h) £m Leasing (i) £m Dividends (j) £m Total... (163) 44 (119) - (6) 740 734 831 (15) 1,422 - - 1,422 (1,259) (186) - - - 10 - - (13) - 1,538 1,525 1 1,524 1,525 3.5 Barclays PLC Annual Report 2005 241

  • Page 244
    ... Loans and advances to banks Loans and advances to customers Debt securities Equity shares Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Insurance assets, including unit-linked assets Investments in associates and joint...

  • Page 245
    ...4,393 64 2,123 - 1,348 - 455,032 31st December 2004 1st January 2004 UK GAAP £m Reclassify £m Remeasure £m IFRS £m UK GAAP £m Reclassify £m Remeasure £m IFRS £m 111,024 1,205 217,718 - -...514 8,023 6,310 17 6,012 1,257 380 - 1,885 - 440,109 3.5 Barclays PLC Annual Report 2005 243

  • Page 246
    ... agreements and cash collateral on securities borrowed Other assets Insurance assets, including unit-linked assets Investments in associates and joint ventures Goodwill Intangible assets Property, plant and equipment Prepayments and accrued income Deferred tax assets Retail life-fund assets...

  • Page 247
    ...January 2004 UK GAAP £m Reclassify £m Remeasure £m IFRS £m UK GAAP ...Capital instruments (q) £m Loan impairment (r) £m Effective interest (s) £m Insurance contracts (t) £m Derecognition and financial liabilities (u) £m Other £m Total...,419 3.5 Barclays PLC Annual Report 2005 245

  • Page 248
    ... issue Reverse repurchase agreements and cash collateral on securities lent Other liabilities Accruals and deferred income Current tax liabilities Insurance contract liabilities including unit-linked liabilities Subordinated liabilities: - Undated loan capital - non-convertible - Dated loan capital...

  • Page 249
    ...13) - - - 175,566 As at 1st January 2005 Netting (p) £m Capital instruments (q) £m Loan impairment (r) £m Effective interest (s) £m Insurance contracts (t) £m Derecognition and financial liabilities (u) £m Other £m Total remeasure £m 119,867 439) (439) 2,438 1,999 3 24) (24...

  • Page 250
    ... Loans and advances to banks Loans and advances to customers Debt securities Equity shares Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Insurance assets, including unit-linked assets Investments in associates and joint...

  • Page 251
    ...) 198 20 223 139 361 - 1,388 - 16,092 As at 1st January 2004 Share-based payments (e) £m Pensions (f ) £m Intangible assets (g) £m Financial guarantees (h) £m Leasing (i) £m Dividends (j) £m Total remeasure £m Other £m 22 22) 133) - 1,865 - 1,732 6 - - - - 6 247 247 23 23...

  • Page 252
    ... Loans and advances to banks Loans and advances to customers Debt securities Equity shares Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Insurance assets, including unit-linked assets Investments in associates and joint...

  • Page 253
    ... - 14 69 1,547) (1,547) (7) (1,554) 16,092 As at 1st January 2004 Share-based payments (e) £m Pensions (f ) £m Intangible assets (g) £m Financial guarantees (h) £m Leasing (i) £m Dividends (j) £m Total remeasure £m Other £m 588 705 - 117 50 - - - - 50 138 14 - 152 576...

  • Page 254
    ... cash collateral on securities lent Other liabilities Accruals and deferred income Current tax liabilities Insurance contract liabilities including unit-linked liabilities Subordinated liabilities: Undated loan capital - non-convertible - Dated loan capital - convertible to preference shares - Dated...

  • Page 255
    ...17 (54) - - - 611 11 (879) 1,885 - 13,504 As at 1st January 2004 Share-based payments (e) £m Pensions (f ) £m Intangible assets (g) £m Financial guarantees (h) £m Leasing (i) £m Dividends (j) £m Total remeasure £m Other £m 1 1 - 1 - 1,697) (1,697) - (1,697) 117 35 35 - 35 50 33...

  • Page 256
    ... and servicing of finance. Taxation. Capital expenditure and financial investments. Acquisitions and disposals. Equity dividends paid. Management of liquid resources. Financing. Under IFRS, only three categories are required: operating, investing and financing. 254 Barclays PLC Annual Report 2005

  • Page 257
    ...Group controls, including special purpose entities which are in substance controlled by the Group. Linked presentation is not available under IFRS. Therefore, the gross assets and the related funding are presented separately. The retail long-term assurance business is consolidated on a line-by-line...

  • Page 258
    ... post-retirement benefits Pension costs, based on actuarial assumptions, are calculated so as to allocate the cost of providing benefits over the average remaining service lives of the employees. IFRS An annual charge is made in the income statement for share options and other share-based payments...

  • Page 259
    ... as Loans and advances to customers at the amount of the Group's net investment in the lease. Finance lease income is recognised so as to give a constant rate of return on the net cash investment, without taking account of tax payments and receipts ('the pre-tax actuarial method'). The assets held...

  • Page 260
    ... through profit or loss Financial liabilities are classified as held for trading or are carried at amortised cost. In addition, in certain circumstances financial assets and liabilities may be designated as fair valued through profit and loss at initial acquisition. 258 Barclays PLC Annual Report...

  • Page 261
    ... loan capital under UK GAAP being reclassified as equity from 1st January 2005. Where the instruments have been reclassified, they have been remeasured to net proceeds at the date of issue and the subsequent foreign currency movements have been eliminated. 3.5 Barclays PLC Annual Report 2005...

  • Page 262
    ... contracts. Where the legal form of the asset management products offered to institutional pension funds is an insurance contract, the assets and corresponding liabilities associated with these products are recorded on the balance sheet as investment contracts. 260 Barclays PLC Annual Report 2005

  • Page 263
    ... under UK GAAP in 2004, and which were presented on a gross basis under IFRS in 2004, qualified for derecognition on a 'continuing involvement' basis under IFRS from 1st January 2005 and have been substantially removed from the balance sheet from that date. 3.5 Barclays PLC Annual Report 2005...

  • Page 264
    ... the grant to date of payout. Employer payroll taxes on employee stock-based compensation are recognised on exercise date. The disposal of shares from the Group to a minority shareholder, for certain share schemes, is recorded directly in equity. Life assurance Life assurance products that are not...

  • Page 265
    ...133, changes in the value of available for sale debt instruments due to changes in foreign currency exchange rate are carried in shareholders' equity and transferred to income on sale of the instrument. Fee and cost recognition IAS 39 does not consider certain internal costs to be incremental costs...

  • Page 266
    ... income statement. Taxation Profit before tax and the tax charge includes tax at the effective tax rate on certain transactions. Under IFRS the deferred tax asset on share compensation schemes is calculated using the intrinsic value at the exercise date. US GAAP Under FIN 45, only guarantees issued...

  • Page 267
    ...and available for sale categories and are reflected in the profit and loss account. Non-marketable securities held by investment companies are carried at fair value with movements in fair value recorded in net income. Loan origination Fee income relating to the origination of loans is recognised in...

  • Page 268
    ...The Statement of Position 03-03 (SOP 03-03) addresses accounting for differences between the contractual cash flows and cash flows expected to be collected from an investor's initial investment in loans or debt securities acquired in a transfer if those differences are attributable to credit quality...

  • Page 269
    ... Intangible assets Pensions Post-retirement benefits Leasing Compensation arrangements Life assurance Revaluation of property Hedging Derivatives Financial instruments Fair value of securities Foreign exchange on available for sale securities Fee and cost recognition Loan origination Consolidation...

  • Page 270
    ...Debt and equity securities Financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Retail life-fund assets attributable to policyholders Total assets Deposits from banks Items in the course of collection due to other banks Customer accounts Trading...

  • Page 271
    ... to the reportable business clusters of the Group: Reallocation between clusters £m At beginning of year £m Additions £m Exchange and other £m 2005 £m UK Banking Wealth Management International Retail and Commercial Banking Barclaycard Barclays Capital Barclays Global Investors Head office...

  • Page 272
    ... purposes; the UK Retirement Fund (UKRF), Barclays Capital Retirement Plan and Barclays Capital Restoration Plan (Barclays Capital schemes). Together these schemes make up approximately 95% of all the Group's schemes in terms of assets and actuarial liabilities. In 2004, the pension scheme assessed...

  • Page 273
    ... Barclays Capital schemes Actual return on plan assets Employer contribution Plan participants' contributions Benefits paid Exchange and other Fair value of plan assets at end of period Funded status - deficit Unrecognised transition amount Unrecognised net actuarial loss Unrecognised prior service...

  • Page 274
    ... economic and market factors such as inflation, credit spreads and equity risk premiums. The Group is expected to pay contributions of approximately £350m to the UKRF scheme in 2006 and £1m to the Barclays Capital schemes in 2006. Estimated future benefit payments The following benefit payments...

  • Page 275
    ... loss position at 31st December 2005. . Less than 12 months Fair value £m Unrealised losses £m 12 months or more Fair value £m Unrealised losses £m Total Fair value £m Unrealised losses £m Description of securities Other government Mortgage backed securities Corporate issuers Other public...

  • Page 276
    ... in nature. The unrealised losses are due to market movements in interest rates. The credit quality of the bond issuers remains strong with 100% rated as investment grade or higher and the Group has the ability and intent to hold these positions until recovery. Held-to-maturity securities 2005...

  • Page 277
    ... United States. These conduits provide clients access to liquidity in the commercial paper markets by allowing them to sell consumer or trade receivables to the conduit, which then issues commercial paper to investors to fund the purchase. The conduits have sufficient collateral, credit enhancements...

  • Page 278
    ... SPEs to facilitate the recovery of loans in circumstances where the borrower has suffered financial loss. Fund management The Group provides asset management services to a large number of investment entities on an arms-length basis and at market terms and prices. The majority of these entities are...

  • Page 279
    ... 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 cash flows arising from the securitised assets and has issued Loan...

  • Page 280
    ... fees Cash inflow on interests retained/sold - - - 173 4,538 - - 90 3,497 11,151 32 291 810 7,336 22 216 Note (a) Annual percentage credit loss is based only on positions in which expected credit loss is a key assumption in the determination of fair values. 278 Barclays PLC Annual Report...

  • Page 281
    ... loss is based only on positions in which expected credit loss is a key determination of fair values. (b) Delinquent loans are loans 90 days or more past due. (c) Net of recoveries during the year. (d) Securitised and derecognised from the balance sheet under US GAAP. Barclays PLC Annual Report...

  • Page 282
    ... the Consumer Credit Act of 1974, Barclays may be liable to customers to refund payments made for unsatisfactory goods or services or unfulfilled contracts where payment was made through a credit card. The maximum liability that Barclays could have is the total credit limits marked to customers of...

  • Page 283
    ... Receivables and payables in respect of unsettled trades Loans and deposits Repurchase and reverse repurchase agreements Cash collateral held against derivatives Securities lending and borrowing agreements Non-cash collateral on stock lending Total (104,662) (2,491) (8,292) 9,567 n/a n/a n/a 20,581...

  • Page 284
    ...Trading portfolio assets Financial assets designated at fair value Derivative financial instruments Loans and receivables Available for sale financial investments Other assets Insurance assets, including unit-linked liabilities Property, plant and equipment Total assets Liabilities Customer accounts...

  • Page 285
    ...European Community Directives, as implemented by the Financial Services Authority (FSA) for supervisory purposes. The FSA regard 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 286
    ...and Prospects Financial Review Capital and liquidity risk management Directors, Senior Management and Employees Directors and Officers Directors' report Corporate governance report Barclays report on remuneration Accountability and Audit Note 9 Staff costs Note 38 Retirement benefit obligations Note...

  • Page 287
    ...amounts 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) 2006...

  • Page 288
    ...share capital Capital allowances Cash at bank and in hand Class of business Finance lease Freehold Loans and advances Loan capital Net asset value Profit Share capital Share premium account Shares in issue Write-offs US equivalent or brief description Financial statements Issued Net income Ordinary...

  • Page 289
    ... fee and commission income Net trading income Net investment income Principal transactions Net premiums from insurance contracts Other income Total income Net claims and benefits paid on insurance contracts Total income net of insurance claims Impairment charge and other credit provisions Net income...

  • Page 290
    ... Loans and advances to banks Loans and advances to customers Debt securities Equity shares Available for sale financial investments Reverse repurchase agreements and cash collateral on securities borrowed Other assets Insurance assets, including unit-linked assets Investments in associates and joint...

  • Page 291
    ... - Dated loan capital - non-convertible Deferred tax liabilities Other provisions for liabilities Retirement benefit liabilities Total liabilities Shareholders' equity Called up share capital Share premium account Available for sale reserve Cash flow hedging reserve Other shareholders' funds...

  • Page 292
    ...statement of recognised income and expense For the year ended 31st December 2005 £m 2004 £m Available for sale reserve: - Net losses from changes in fair value - Gains transferred to net profit on disposal - Losses transferred to net profit due to fair value hedging Cash flow hedges: - Net losses...

  • Page 293
    ... Dividends paid Proceeds from borrowed funds and debt securities Repayments of borrowed funds and debt securities Issue of equity instruments Net issue of shares to minority interests Net cash from non-recourse financing Net cash from financing activities Net gain on exchange rate changes on cash...

  • Page 294
    ... securities Bank and building society certificates of deposit Other issuers thereof: - Listed - Unlisted Debt securities Equity securities - Listed - Unlisted Equity securities Traded loans London Metal Exchange warrants and other metals trading positions Trading portfolio assets (c) Equity shares...

  • Page 295
    ...Available for sale securities Debt securities - United Kingdom government - Other government - Other public bodies - Mortgage backed securities - Corporate issuers - Other issuers Equity securities Treasury bills and other eligible bills Available for sale financial investments (e) Other liabilities...

  • Page 296
    ...-annually at a rate reset semi-annually equal to the sterling interbank offered rate for six-month sterling deposits. Barclays Bank PLC shall be obliged to pay such dividends if (1) it has profits available for the purpose of distribution under the Companies Act 1985 as at each dividend payment date...

  • Page 297
    ...receive US Dollar non-cumulative cash dividends out of distributable profits of Barclays Bank PLC, semi-annually at a fixed rate of 6.278% per annum until 15th December 2034, and thereafter quarterly at a rate reset quarterly equal to 1.55% per annum above the London interbank offered rate for three...

  • Page 298
    ... its shareholders prior to the relevant dividend payment date, or a dividend paid by Barclays Bank PLC to Barclays PLC or to a wholly owned subsidiary) on any of their respective ordinary shares, other Preference Shares or other share capital or (b) redeem, purchase, reduce or otherwise acquire any...

  • Page 299
    ...fund contributions of £1m made by Barclays PLC to the QUEST to enable the purchase of new Barclays PLC ordinary shares on the exercise of options under the SAYE Share Option Scheme. Dividends paid on Preference Shares amounted to £74m (2004: nil). (k) Reconciliation of operating profit to net cash...

  • Page 300
    ... Intangible assets Pensions Post-retirement benefits Leasing Compensation arrangements Life assurance Revaluation of property Hedging Derivatives Financial instruments Fair value of securities Foreign exchange on available for sale securities Fee and cost recognition Loan origination Consolidation...

  • Page 301
    ... to Derivatives, Fair value of securities, Loan origination and Extinguishment of liabilities are the same as those previously reported. 2005 £m 2004 £m Total assets (US GAAP) of Barclays PLC Group (Note 63) Shares in Barclays PLC - held within Barclays Bank PLC Group Cash and balances at central...

  • Page 302
    ... and other credit provisions (Loss)/profit from associates and joint ventures Exceptional items Profit before tax Attributable profit Selected balance sheet data Total shareholders' equity Dated and undated loan capital Deposits from banks, customer accounts and debt securities in issue Loans and...

  • Page 303
    ... Buying Rate for cable transfers in New York City, payable in Pounds Sterling, at 31st December 2005. (b) Net income, shareholders' equity and total assets for 2005 and 2004 have been adjusted to reflect significant differences between IFRS and US GAAP, as shown on pages 262 to 282 to the accounts...

  • Page 304
    ...' equity for economic profit purposes, includes average historic goodwill, and is adjusted to reflect the impact of hedging, available for sale securities and retirement benefits. (c) The capital charge includes a charge for purchased goodwill and intangible assets. 302 Barclays PLC Annual Report...

  • Page 305
    ... £m UK Banking UK Retail Banking UK Business Banking Barclays Capital Barclays Global Investors Wealth Management Wealth Management - closed life assurance activities Barclaycard International Retail and Commercial Banking International Retail and Commercial Banking - ex Absa International Retail...

  • Page 306
    ... excluded from shareholders' equity for the purposes of calculating the capital charge. Realised gains and losses, foreign exchange translation differences and any impairment charges recorded in the income statement will impact economic profit. Retirement benefits liability - the Group has recorded...

  • Page 307
    ... 0.34 0.64 0.98 Dividends expressed in Dollars are translated 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...

  • Page 308
    Shareholder information The following table shows the high and low sales price for the ordinary shares of 25p during the periods indicated, based on mid-market prices at close of business on the London Stock Exchange and the high and low sale price for ADSs as reported on the NYSE composite tape. ...

  • Page 309
    ... interested as an officer or creditor or shareholder, but only if he owns less than 1% of either the issued equity share capital or of the voting rights of that company; (vii) concerning any superannuation fund or retirement, death or disability benefits scheme or employees' share scheme, so long as...

  • Page 310
    ... law, Barclays PLC and the Bank pay dividends on ordinary shares and preference shares without any deduction or withholding tax in respect of any taxes imposed by the UK government or any UK taxing authority. If the shareholder is a UK resident individual liable to income tax only at the basic rate...

  • Page 311
    ... types of income for the purposes of computing any allowable foreign tax credit. The amount of the dividend distribution includable in income will be the US Dollar value of the pound Sterling payments made, determined at the spot Pound Sterling/US Dollar rate on the date the dividend distribution...

  • Page 312
    ... Barclays in general, may write to the Director, Investor Relations at our head office as follows: Director, Investor Relations Barclays PLC 1 Churchill Place London E14 5HP or, in the United States of America, The Corporate Communications Department Barclays Bank PLC 200 Park Avenue New York, NY...

  • Page 313
    ... Chairman, Barclaycard Angus Grant Finance Director Peter Harvey Chief Executive, UK Business Banking Jim Hytner Group Brand and UK Banking Marketing Director Deanna Oppenheimer Chief Executive, UK Retail Banking International Retail and Commercial Banking 1 Churchill Place London E14 5HP Tel: +44...

  • Page 314
    ...301094 Email: [email protected] Casmiro Francisco Chairman Gerald Jordaan* Managing Director *Executive in the Absa Group Barclays Bank PLC and Barclays Capital, Australia Suite 1, Level 24 400 George Street Sydney, NSW 2000 Australia Tel: +61 2 9220 6000 Nicholas Johnson Chief Executive Officer...

  • Page 315
    ..., NBC House Sokoine Drive, Dar es Salaam Postal address: PO Box 1863 Dar es Salaam, Tanzania Tel: +44 (0)9255 222 110959 Telefax: +44 (0)9255 112887 Email: [email protected] Charles Nyirabo Chairman Christo de Vries* Managing Director * Executive in the Absa Group Barclays PLC Annual Report 2005 313...

  • Page 316
    ...share Economic capital Economic profit Employees equality and diversity involvement Equity shares Fair values of financial instruments Financial data Barclays Bank PLC Barclays PLC Financial highlights Financial overview Glossary (UK/US) Goodwill Group Chief Executive's review Group Finance Director...

  • Page 317
    ... company accounts (Barclays PLC) Pensions directors pension costs Potential credit risk loans Presentation of information Property, plant and equipment Recent developments Related party transactions Remuneration report Results by business Results by nature of income and expense Retirement benefit...

  • Page 318
    316 Barclays PLC Annual Report 2005

  • Page 319

  • Page 320
    ...report are printed on coated paper containing 30% de-inked post-consumer recycled fibre and 70% virgin fibre, of which 30% comes from well-managed...Free (ECF). The papers are produced at mills with ISO 9001, ISO 9002, ISO 14001, EMAS and FSC accreditation. Registered office: 1 Churchill Place, London...