Barclays 2006 Annual Report Download - page 62

Barclays PLC
Annual Report 2006
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Capital management
Barclays operates a centralised capital management model, considering
both regulatory and economic capital. The capital management
strategy is to continue to maximise shareholder value through
optimising both the level and mix of capital resources in order to:
•Meet the individual capital ratios required by our regulators plus
a prudent buffer.
•Maintain an AA credit rating.
•Generate sufficient capital to support asset growth.
•Manage the currency exposure to its overall Sterling equivalent
capital requirement.
Decisions on the allocation of capital resources are 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 2006
AGM to provide additional flexibility in the management of the Group’s
capital resources.
2006 2005 2004(a)
£m £m £m
Barclays PLC Group
Shareholders’ equity
excluding minority interests 19,799 17,426 15,870
Minority interests 7,591 7,004 894
Shareholders’ equity 27,390 24,430 16,764
Subordinated liabilities 13,786 12,463 12,277
Total capital resources 41,176 36,893 29,041
2006/05
The authorised share capital of Barclays PLC was £2,500m (2005:
£2,500m) comprising 9,996 million (2005: 9,996 million) ordinary
shares of 25p each and 1 million (2005: 1 million) staff shares of
£1 each. Called up share capital comprises 6,535 million (2005: 6,490
million) ordinary shares of 25p each and 1 million (2005: 1 million)
staff shares of £1 each.
Total capital resources increased £4,283m to £41,176m since
31st December 2005.
Shareholders’ equity, excluding minority interests, increased £2,373m
since 31st December 2005. The increase reflected profits attributable to
equity holders of the parent of £4,571m, increases in share capital and
share premium of £179m and other increases in retained reserves of
£412m. Offsetting these movements were dividends paid of £1,771m,
decreases in the available for sale and cash flow hedging reserves of
£93m and £300m respectively, a £594m decrease in the currency
translation reserve and a £31m decrease due to changes in treasury
and Employee Share Ownership Plan shares.
Subordinated liabilities increased £1,323m since 31st December 2005.
The increase reflects capital raisings of £2,493m and interest charges
of £11m; offset by exchange rate movements of £575m, redemptions
of £366m, fair value adjustments of £214m and amortisation of issue
expenses of £26m.
Minority interests increased £587m since 31st December 2005. The
increase primarily reflected the issue by Barclays Bank PLC, during April
2006, of 30,000,000 Preference Shares of US$25 each (US$750m;
£419m) with a 6.625% dividend. In addition, during April 2006, Absa
issued 3,000,000 preference shares of ZAR1,000 per share (£218m).
Financial review
Capital management
Note
(a) 2004 figures do not reflect the applications of IAS 32, and IAS 39 and IFRS 4 which became effective from 1st January 2005.
2005/04
The authorised share capital of Barclays PLC was £2,500m (2004:
£2,500m) comprising 9,996 million (2004: 9,996 million) ordinary
shares of 25p each and 1 million (2004: 1 million) staff shares
of £1 each. Called up share capital comprised 6,490 million
(2004: 6,454 million) ordinary shares of 25p each and 1 million
(2004: 1 million) staff shares of £1 each.
Total capital resources increased £7,852m to £36,893m since 2004.
Shareholders’ equity, excluding minority interests, increased £1,556m
since 2004. The increase primarily reflected the impact of the adoption
of IAS 32, IAS 39 and IFRS 4, profits attributable to equity holders of the
parent of £3,447m, offset by dividends of £1,581m.
Subordinated liabilities rose £186m reflecting capital raisings of £1,283m,
acquisition of Absa Group Limited’s loan capital of £669m, interest
charge of £210m and exchange rate movements of £207m; offset by
redemptions of £464m, fair value adjustments of £43m and amortisation
of issue expenses of £5m, and IFRS adjustments of £1,671m.
Minority interests increased £6,110m since 2004, primarily reflecting:
the purchase of Absa Group Limited (£1,351m), the IFRS
reclassification of £2,493m of certain capital instruments from loan
capital to minority interests and the following issuances of Preference
Shares by Barclays Bank PLC during 2005:
•140,000 Preference Shares of nominal ¤100 each (Principal
amount: ¤1.4bn; £978m) with a 4.75% dividend issued on
15th March 2005.
•100,000 Preference Shares of nominal US$100 each (Principal
amount: US$1bn; £551m) with a 6.278% dividend issued on
8th June 2005.
•75,000 Preference Shares of nominal £100 each (Principal amount:
£750m) with a 6% dividend issued on 22nd June 2005.
Barclays Bank PLC
The capital instruments reclassified under IFRSs and the Preference
Shares issued are included within Shareholders’ equity excluding
minority interests in the Barclays Bank PLC Group.
2006 2005 2004(a)
£m £m £m
Barclays Bank PLC Group
Shareholders’ equity
excluding minority interests 25,421 22,665 16,638
Minority interests 1,685 1,578 211
Shareholders’ equity 27,106 24,243 16,849
Undated loan capital 5,422 4,397 6,149
Dated loan capital 8,364 8,066 6,128
Total capital resources 40,892 36,706 29,126
2006/2005
Capital resources for Barclays Bank PLC Group were £284m lower than
for Barclays PLC Group (2005: £187m lower).
2005/2004
In 2005, capital resources for Barclays Bank PLC Group were £187m
lower than for Barclays PLC Group (2004: £85m higher).