Barclays 2014 Annual Report Download - page 272

270 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Notes to the financial statements
Performance/return
8 Operating expenses
Accounting for staff costs
The Group applies IAS 19 Employee benefits in its accounting for most of the components of staff costs.
Short-term employee benefits – salaries, accrued performance costs and social security are recognised over the period in which the employees
provide the services to which the payments relate.
Performance costs – recognised to the extent that the Group has a present obligation to its employees that can be measured reliably and are
recognised over the period of service that employees are required to work to qualify for the services.
Deferred cash bonus awards and deferred share bonus awards are made to employees to incentivise performance over the vesting period. To
receive payment under an award, employees must provide service over the vesting period, typically three years from the grant date. The period
over which the expense for deferred cash and share bonus awards is recognised is based upon the common understanding between the
employee and the Group and the terms and conditions of the award. The Group considers that it is appropriate to recognise the awards over
the period from the date of grant to the date that the awards vest as this is the period over which the employees understand that they must
provide service in order to receive awards. The table on page 85 details the relevant award dates, payment dates and the period in which the
income statement charge arises for bonuses. No expense has been recognised in 2014 for the deferred bonuses that will be granted in March
2015, as they are dependent upon future performance rather than performance during 2014.
The accounting policies for share based payments, and pensions and other post retirement benefits are included in Note 34 and Note 35
respectively.
2014
£m
2013
£m
2012
£m
Infrastructure costs
Property and equipment 1,570 1,610 1,656
Depreciation of property, plant and equipment 585 647 669
Operating lease rentals 594 645 622
Amortisation of intangible assets 522 480 435
Impairment of property, equipment and intangible assets 172 149 17
Total infrastructure costs 3,443 3,531 3,399
Administration and general costs
Consultancy, legal and professional fees 1,104 1,253 1,182
Subscriptions, publications, stationery and communications 842 869 727
Marketing, advertising and sponsorship 558 583 572
Travel and accommodation 213 307 324
UK bank levy 462 504 345
Goodwill impairment – 79 –
Other administration and general expenses 442 691 546
Total administration and general costs 3,621 4,286 3,696
Staff costs 11,005 12,155 11,467
Provision for PPI and interest rate hedging redress 1,110 2,000 2,450
Provision for ongoing investigations and litigation relating to Foreign Exchange 1,250 – –
Operating expenses 20,429 21,972 21,012
For information on staff costs, refer to pages 84 and 85 of the Remuneration Report.
2014
Operating expenses have reduced by 7% to £20,429m, primarily driven by savings from Transform programmes, including a 5% reduction in
headcount and currency movements, lower charges for PPI and interest rate hedging, reduced IT and infrastructure spend and non-occurrence of
various provisions raised last year. This was partially offset by the charge of £1,250m (2013: £nil) for ongoing investigations and litigation relating
to Foreign Exchange.
The impact of the Transform cost reduction programmes have driven savings across infrastructure and administration costs. Staff costs have
decreased by 9% to £11,005m reflecting a 5% net reduction in headcount and reductions in incentive awards granted.
2013
Operating expenses have increased 5% to £21,972m. This was driven by increased staff costs, increased infrastructure costs due to the Transform
programme, increased consultancy, legal and professional costs to meet new regulatory requirements such as the Dodd-Frank Act and CRD IV, an
increase in the UK bank levy reflecting the increased rate and an increase in impairment in relation to premises restructuring in Europe. Within
other administration and general expenses, increases in provisions for litigation and regulatory penalties were offset by the non-recurrence of the
£290m penalty incurred in 2012 arising from the industry-wide investigation into the setting of inter-bank offered rates.