Barclays 2008 Annual Report Download - page 156

Directors’ report
Business Review
The Company is required to set out in this report a fair review of the
business of the Group during the financial year ended 31st December
2008 and of the position of the Group at the end of the financial year
and a description of the principal risks and uncertainties facing the Group
(known as a ‘Business Review’). The purpose of the Business Review is
to enable shareholders to assess how the Directors have performed their
duty under section 172 of the Companies Act 2006 (duty to promote the
success of the Company).
The information that fulfils the requirements of the Business Review
can be found in the following sections of the Annual Report:
Pages
– Key performance indicators 6-9
– Financial Review 15-65
– Sustainability 66-68
– Risk factors 70-74
which are incorporated into this report by reference.
Profit Attributable
The profit attributable to equity shareholders of Barclays PLC for the year
amounted to £4,382m, compared with £4,417m in 2007.
Dividends
As announced on 13th October 2008, in the light of the new capital ratios
agreed with the Financial Services Authority (FSA) and in recognition of the
need to maximise capital resources in the current economic climate, the Board
concluded that it would not be appropriate to pay a final dividend for 2008.
The Board intends to resume dividend payments in the second half of 2009,
at which time it is intended to pay dividends quarterly. The interim dividend
for the year ended 31st December 2008 of 11.5p per ordinary share was paid
on 1st October 2008 and the total distribution for 2008 is 11.5p (2007: 34.0p
per ordinary share). The staff shares were re-purchased by the Company
during the year. The dividends for the year have absorbed a total of £915m
(2007: £2,253m).
Share Capital
At the 2008 Annual General Meeting, shareholders approved the creation of
Sterling, Dollar, Euro and Yen preference shares (‘preference shares’) in order
to provide the Group with more flexibility in managing its capital resources.
As at 27th February 2009 (the latest practicable date for inclusion in this
report) no preference shares have been issued.
In order to minimise the dilutive effect on existing shareholders of the
issuance of 336,805,556 ordinary shares in 2007, at the start of 2008 the
Company purchasedinthemarketforcancellation36,150,000of its ordinary
shares of 25p each, at a total cost of £171,923,243 (this was in addition to
the 299,547,510 shares purchased for cancellation in 2007). During 2008 the
Company purchased all of its staff shares in issue, following approval for such
purchase being given at the 2008 Annual General Meeting, at a total cost of
£1,023,054.Asat27thFebruary2009,theCompanyhadanunexpiredauthority
to repurchase shares up to a maximum of 984,960,000 ordinary shares.
The issued ordinary share capital was increased by 1,772m ordinary
shares during 2008. In addition to those issued as a result of the exercise
of options under the Sharesave and Executive Share Option Schemes
during the year, the following share issues took place:
– On 4th July 2008, theCompany issued 168.9 million new ordinary
shares in a firm placing to Sumitomo Mitsui Banking Corporation.
– On 22nd July 2008, the Company issued 1,407.4 million new ordinary
shares following a placing to Qatar Holding LLC, Challenger Universal
Limited (a company representing the beneficialinterests of
His Excellency Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, the chairman
of Qatar Holding LLC, and his family), China Development Bank, Temasek
Holdings (Private) Limited and certain leading institutional shareholders
and other investors, which shares were available for clawback in full
by means of an open offer to existing shareholders. Valid applications
under the open offer were received from qualifying shareholders in
respect of approximately 267 million new ordinary shares in aggregate,
representing 19.0% of the shares offered pursuant to the open offer.
Accordingly, the remaining 1,140.3 million shares were allocated to the
various investors with whom they had been conditionally placed.
– On 18th September 2008, the Company issued 226 million new ordinary
shares to certain institutional investors.
– During the period 27th November 2008 to 31st December 2008,
33,000 ordinary shares were issued following conversion of Mandatorily
Convertible Notes at the option of their holders.
At 31st December 2008 the issued ordinary share capital totalled
8,371,830,617 shares. Ordinary shares represent 100% of the total issued
share capital as at 31st December 2008.
The Company’s Memorandum and Articles of Association, a summary
of which can be found in the Shareholder Information section on pages
315-323, contain the following details, which are incorporated into this
report by reference:
– The structure of the Company’s capital, including the rights and
obligations attaching to each class of shares.
– Restrictions on the transfer of securities in the Company, including
limitations on the holding of securities and requirements to obtain
approvals for a transfer of securities.
– Restrictions on voting rights.
– The powers of the Directors, including in relation to issuing or buying
back shares in accordance with the Companies Act 1985. It will be
proposed at the 2009 AGM that the Directors be granted new
authorities to allot and buy back shares under the Companies Act 1985.
– Rules that the Company has about the appointment and removal
of Directors or amendments to the Company’s Articles of Association.
Employee Benefit Trusts (‘EBTs’) operate in connection with certain of
the Group’s Employee Share Plans (‘Plans’). The Trustees of the EBTs may
exercise all rights attached to the shares in accordance with their fiduciary
duties other than as specifically restricted in the relevant Plan governing
documents. The trustees of the EBTs have informed the Bank that their
normal policy is to abstain from voting in respect of the Barclays shares
held in trust. The trustees of the Sharepurchase EBT may vote in respect
of Barclays shares held in the Sharepurchase EBT, but only at the discretion
of the participants. The trustees will not otherwise vote in respect of
shares held in the Sharepurchase EBT.
Mandatorily Convertible Notes
On 27th November 2008, Barclays Bank PLC issued £4,050m of 9.75%
Mandatorily Convertible Notes (MCNs) maturing on 30th September 2009
to Qatar Holding LLC, Challenger Universal Limited and entities representing
the beneficial interests of HH Sheikh Mansour Bin Zayed Al Nahyan,
a member of the Royal Family of Abu Dhabi and existing institutional
shareholders and other institutional investors. If not converted at the holders’
option beforehand, these instruments mandatorily convert to ordinary shares
of Barclays PLC on 30th June 2009. The conversion price is £1.53276 and,
after taking into account MCNs that were converted on or before 31st
December 2008, will result in the issue of 2,642 million new ordinary shares.
If there is a change of control of Barclays PLC following a takeover bid,
Barclays PLC must (so far as legally possible) use all reasonable endeavours
to cause the corporation which then controls Barclays PLC to execute a
deed poll providing that the holders of the MCNs shall have the right
(during the period ending on 30th June 2009) to convert the MCNs into,
and to receive on a mandatory conversion, as the case may be, the class
and amount of shares and other securities and property receivable upon
such a takeover by the holders of the number of ordinary shares as would
have been issued on conversion of the MCNs had such MCNs been
converted immediately prior to the completion of such takeover.
The issue of new ordinary shares or certain other securities and rights
of the Company, at any time during the period commencing on 27th
November 2008 and ending on the date on which a holder exercises its
optional conversion right or on the mandatory conversion date, at a price
(the ‘Future Placing Price’) lower than the then current conversion price
will (subject to exceptions for ordinary shares issued pursuant to employee
share schemes, under the warrants or as a result of certain corporate
events) result in a downward adjustment to the conversion price (subject
to a minimum conversion price of the then par value per ordinary share
(currently 25 pence)) so that it equals the Future Placing Price. The
conversion price will also be subject to adjustment if the Company
distributes an extraordinary dividend or if certain dilutive events occur,
including bonus issues, rights issues or an adjustment to the nominal
value or redenomination of the ordinary shares.
154 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08