Barclays 2005 Annual Report Download - page 113

Barclays PLC
Annual Report 2005 111
3.3
In the wholesale and corporate businesses, excluding Absa impairment
charges of £20m, impairment charges increased to £323m
(2004: £282m). The increase occurred largely in UK Business Banking
and reflected the fact that the 2004 results included a large one-off
recovery of £57m. Underlying impairment charges excluding this
item were broadly flat. Wholesale and corporate impairment charges,
excluding Absa, were 0.21% (2004: 0.25%) 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 by their very nature are subject to exceptional
increases, releases and recoveries from time to time. The presence of
such items means that the movements in the impairment charge from
one period to another will differ from the movement in the underlying
trend. In 2004, the credit loss was reduced by a number of one-off
items, including an exceptional recovery of £57m in UK Business
Banking and a release of mortgage provisions of £40m (2005: release
£10m) in UK Retail Banking.
Share of post-tax results of associates and joint ventures
2005 2004
£m £m
Loss from joint ventures (8) –
Profit from associates 53 56
Share of post-tax results of
associates and joint ventures 45 56
The share of post-tax results of associates and joint ventures fell 20%
(£11m) to £45m (2004: £56m). A stronger underlying performance by
FirstCaribbean in 2005 was more than offset by the impact of a gain in
2004 relating to the sale of shares held in Republic Bank Ltd (Barclays
share £28m). Losses from joint ventures primarily related to Intelligent
Processing Systems Limited, a cheque processing joint venture in the UK.
Tax
The overall tax charge is explained in the following table:
2005 2004
£m £m
Profit before tax 5,280 4,580
Tax charge at average UK corporation
tax rate of 30% (2004: 30%) 1,584 1,374
Prior year adjustments (130) (26)
Differing overseas tax rates (35) (110)
Income not taxable (129) (51)
Share-based payments (12) –
Deferred tax assets not recognised (7) 24
Other non-allowable expenses 214 88
Other items (46) (20)
Overall tax charge 1,439 1,279
Effective tax rate 27% 28%
The charge for the period is based upon a UK corporation tax rate of
30% for the calendar year 2005 (full-year 2004: 30%). The effective
rate of tax for 2005 was 27% (2004: 28%). This is lower than the
standard rate due to the beneficial effects of lower tax on certain
overseas income and certain non-taxable gains. The tax charge for the
year includes £961m (2004: £1,028m) arising in the UK and £478m
(2004: £251m) arising overseas.
IFRS compared with US GAAP
The Group also provides results on the basis of accounting principles
generally accepted in the United States (US GAAP). The impact on net
income and shareholders’ equity of applying US GAAP is set out below.
The individual IFRS/US GAAP adjustments are discussed in Note 63.
Profit attributable to equity holders of the parent
(IFRS)/net income (US GAAP)
2005 2004
£m £m
Barclays PLC Group
Profit attributable to equity holders
of the parent (IFRS)/
Net income (US GAAP)
IFRS 3,447 3,254
US GAAP 2,932 3,032
Barclays Bank PLC Group
Profit attributable to equity holders
of the parent (IFRS)/
Net income (US GAAP)
IFRS 3,695 3,263
US GAAP 3,164 3,137
Shareholders’ equity excluding minority interests
(IFRS)/shareholders’ equity (US GAAP)
2005 2004
£m £m
Barclays PLC Group
Shareholders’ equity excluding
minority interests (IFRS)/Shareholders’
equity (US GAAP)
IFRS 17,426 15,870
US GAAP 18,461 16,953
Barclays Bank PLC Group
Shareholders’ equity excluding
minority interests (IFRS)/Shareholders’
equity (US GAAP)
IFRS 22,665 16,638
US GAAP 23,114 19,594
The Group does not manage its business with regard to reported
trends on a US GAAP basis. Consequently the level of adjustment
from the application of US GAAP in current or past periods is not
necessarily indicative of the magnitude or direction of such adjustment
in subsequent periods.