Barclays 2015 Annual Report Download - page 335

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38 Investments in associates and joint ventures
Accounting for associates and joint ventures
Barclays applies IAS 28 Investments in Associates and IFRS 11 Joint Arrangements. Associates are entities in which the Group has significant
influence, but not control, over the operating and financial policies. Generally the Group holds more than 20%, but less than 50%, of their voting
shares. Joint ventures are arrangements where the Group has joint control and rights to the net assets of the entity.
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/(loss). The Group ceases to recognise its share of the losses of equity accounted associates when its share of the net
assets and amounts due from the entity have been written off in full, unless it has a contractual or constructive obligation to make good its share
of the losses. 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.
There are no individually significant investments in joint ventures or associates held by Barclays.
2015 2014
Associates
£m
Joint ventures
£m
Total
£m
Associates
£m
Joint ventures
£m
Total
£m
Equity accounted 217 356 573 303 408 711
Held at fair value through profit or loss 77 475 552 307 366 673
Total 294 831 1,125 610 774 1,384
Summarised financial information for the Group’s equity accounted associates and joint ventures is set out below. The amounts shown are the net
income of the investees, not just the Group’s share for the year ended 31 December 2015, 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.
Associates Joint ventures
2015
£m
2014
£m
2015
£m
2014
£m
Profit/(loss) from continuing operations 6 (9) 86 146
Other comprehensive income – 13 (24) (5)
Total comprehensive income 6 4 62 141
Unrecognised shares of the losses of individually immaterial associates and joint ventures were nil (2014: nil).
The Group’s associates and joint ventures are subject to statutory requirements such that they cannot make remittances of dividends or make loan
repayments to Barclays PLC without agreement from the external parties.
The Group’s share of commitments and contingencies of its associates and joint ventures comprised unutilised credit facilities provided to customers
of £1,450m (2014: £1,566m). In addition, the Group has made commitments to finance or otherwise provide resources to its joint ventures and
associates of £177m (2014: £183m).
39 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.
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