Barclays 2012 Annual Report Download - page 304

39 Investments in associates and joint ventures
Accounting for associates and joint ventures
Barclays applies IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures. Associates are entities in which the Group has
significant influence, but not control, over its operating and financial policies. Generally the Group holds more than 20%, but less than 50%, of
their voting shares. Joint Ventures are entities whose activities are governed by a contractual arrangement between the Group and one or more
parties to share equally in decisions regarding operating and financial policies.
The Group’s investments in associates and joint ventures are initially recorded at cost and increased (or decreased) each year by the Group’s
share of the post-acquisition profit (or loss). In some cases, investments in these entities may be held at fair value through profit or loss, for
example, those held by private equity businesses.
2012
£m
2011
£m
Investment in associates 258 169
Investment in joint ventures 312 258
Total 570 427
Summarised financial information for the Group’s associates and joint ventures is set out below. The amounts shown are assets, liabilities and net
income of the investees, not just the Group’s share, as at and for the year ended 31 December 2012 with the exception of certain undertakings for
which the amounts are based on accounts made up to dates not earlier than three months before the balance sheet date.
2012 2011
Associates
£m
Joint ventures
£m
Associates
£m
Joint ventures
£m
Total assets 3,580 3,740 4,001 3,447
Total liabilities 2,816 3,205 3,603 2,938
Profit after tax 137 168 45 88
The Group’s share of commitments and contingencies of its associates and joint ventures was comprised of unutilised credit facilities provided to
customers of £2,711m (2011: £1,265m). These are included in Note 28.
40 Securitisations
Accounting for securitisations
The Group uses securitisations as a source of finance and a means of risk transfer. Such transactions generally result in the transfer of
contractual cash flows from portfolios of financial assets to holders of issued debt securities.
Securitisations may, depending on the individual arrangement, result in continued recognition of the securitised assets and the recognition of
the debt securities issued in the transaction; lead to partial continued recognition of the assets to the extent of the Group’s continuing
involvement in those assets or to derecognition of the assets and the separate recognition, as assets or liabilities, of any rights and obligations
created or retained in the transfer. Full derecognition only occurs when the Group transfers both its contractual right to receive cash flows from
the financial assets, or retains the contractual rights to receive the cash flows, but assumes a contractual obligation to pay the cash flows to
another party without material delay or reinvestment, and also transfers substantially all the risks and rewards of ownership, including credit
risk, prepayment risk and interest rate risk.
In the course of its normal banking activities, the Group makes transfers of financial assets, either legally (where legal rights to the cash flows from
the asset are passed to the counterparty) or beneficial (where the Group retains the rights to the cash flows but assumes a responsibility to
transfer them to the counterparty). Depending on the nature of the transaction, this may result in derecognition of the assets in their entirety,
partial derecognition or no derecognition of the assets subject to the transfer.
Full derecognition only occurs when the Group transfers both its contractual right to receive cash flows from the financial assets (or retains the
contractual rights to receive the cash flows, but assumes a contractual obligation to pay the cash flows to another party without material delay or
reinvestment) and substantially all the risks and rewards of ownership, including credit risk, prepayment risk and interest rate risk. When an asset
is transferred, in some circumstances, the Group may retain an interest in it (continuing involvement) requiring the Group to repurchase it in
certain circumstances for other than its fair value on that date.
barclays.com/annualreport302 I Barclays PLC Annual Report 2012
Notes to the financial statements
For the year ended 31 December 2012 continued