Barclays 2005 Annual Report Download - page 284

Barclays PLC
Annual Report 2005
282
Notes to the accounts
For the year ended 31st December 2005
63 Differences between IFRS and US GAAP accounting principles (continued)
(p) Income statement
There are certain differences in the presentation of the income statement between IFRS and US GAAP. Under US GAAP, net interest expense
(2005: £126m, 2004: £219m) relating to trading activities would be shown within net interest income, rather than included in net trading income.
(q) Acquisitions
Information on the acquisition of Absa has been provided in Note 45.
The assets and liabilities of Absa at the date of acquisition under US GAAP are set out in the table below. Details of the total consideration paid are
set out in Note 45 and there is no difference under US GAAP.
Carrying US GAAP Fair value
value pre- fair value under
acquisition adjustments US GAAP
£m £m £m
Assets
Cash and balances at central banks 792 – 792
Trading portfolio assets 2,853 – 2,853
Financial assets designated at fair value 1,646 – 1,646
Derivative financial instruments 1–1
Loans and receivables 26,756 43 26,799
Available for sale financial investments 1,039 19 1,058
Other assets 566 609 1,175
Insurance assets, including unit-linked liabilities 20 – 20
Property, plant and equipment 232 3 235
Total assets 33,905 674 34,579
Liabilities
Customer accounts 26,762 12 26,774
Trading portfolio liabilities 2,561 – 2,561
Derivative financial instruments 90 – 90
Insurance contract liabilities, including unit-linked liabilities 642 (2) 640
Debt securities in issue 481 5 486
Other liabilities 1,260 65 1,325
Deferred tax liabilities 19 156 175
Total liabilities 31,815 236 32,051
Net assets acquired 2,090 438 2,528
Share of net assets acquired 1,627
Goodwill 1,130
The main US GAAP fair value adjustment was the recognition of intangible assets of £625m.
Assuming that the acquisition of Absa occurred on 1st January 2005 (for 2004 on 1st January 2004) the Group would have reported total
income excluding impairment charge and other credit provisions under US GAAP of £18,618m (2004: £14,857m), profit before tax of £4,789m
(2004: £4,648m), net profit for the year of £3,059m (2004: £3,127m) and basic earnings per share of 48.3p (2004: 49.0p). These combined pro
forma figures have not been audited.
With regard to other acquisitions in 2005, no significant differences between IFRS and US GAAP have been identified.
SOP 03-03 addresses accounting for differences between the contractual cash flows and expected cash flows of the loans and debt securities
acquired if those differences are attributable at least in part to a deterioration in credit risk since origination. During the acquisition of Absa £205m of
loans were acquired which fall within the scope of SOP 03-03. The basis of their recognition within the Group balance sheet was at the present value
of expected future cash flows. For loans acquired, the yield at acquisition was £19m and the carrying value at the end of the year was £130m with
an associated £5m charge through the income statement for impairment. No available for sale debt securities fell within the scope of SOP 03-03.