Barclays 2005 Annual Report Download - page 204

44 Reconciliation of operating profit to net cash flow from operating activities
2005 2004
£m £m
Profit for the year before associates and joint ventures 5,229 4,477
Allowance for impairment 1,571 1,093
Depreciation and amortisation 450 328
Other provisions for liabilities and charges 356 440
Interest paid, including amounts relating to trading activities 20,965 14,464
Interest received, including amounts relating to trading activities (28,915) (21,076)
Net profit on disposal of investments and fixed assets (530) (211)
Retirement benefit obligations 298 263
Net increase in loans and advances to banks and customers (63,177) (42,763)
Net increase in deposits and debt securities in issue 52,982 67,447
Net increase in derivative financial instruments 841 –
Net increase in other assets (3,620) (2,078)
Net increase in trading assets (42,589) (28,686)
Net increase in trading liabilities 9,888 6,925
Net decrease in financial investment 27,129 –
Net decrease in other credit balances (464) –
Other non-cash movements 1,365 (1,206)
Net cash outflow from operating activities (18,221) (583)
45 Acquisitions
The Group was involved in the following acquisitions in 2005:
(a) Absa
On 9th May 2005, Barclays announced the terms of a recommended acquisition of a majority stake in Absa Group Limited (‘Absa’). The acquisition
was subject to a number of conditions, one of which was the approval of the South African Minister of Finance under the Banks Act, 1990, of
South Africa. As part of the Banks Act approval process, Barclays confirmed its long-term commitment to investing in South Africa pursuant to the
acquisition of Absa and its intention to retain a controlling stake. Barclays also acknowledged the importance of maintaining the South African
character of Absa, in which regard the Chairman of Absa, Dr Danie Cronjé, would continue to serve as Chairman and would become a non-
executive Director of Barclays PLC and Barclays Bank PLC and Dr Steve Booysen would remain as Group Chief Executive of Absa. Three Barclays
representatives were appointed to the Absa board. Barclays has consolidated Absa from 27th July 2005 and its results have contributed £335m 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 cumulative option-holding preference shares in Absa. These redeemable preference shares have the same
rights as ordinary shares, including voting rights (amounting to approximately 11% of the aggregate voting rights), save for the rights relating to
dividends, redemption and option liquidation. Each redeemable preference share carries the option to acquire one Absa ordinary share at a
discount to the market price during an option exercise period commencing on 2nd July 2007 and ending on 1st July 2009.
Notes to the accounts
For the year ended 31st December 2005
Barclays PLC
Annual Report 2005
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