UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
May 2005
Barclays PLC and
Barclays Bank PLC
(Names of Registrants)
54 Lombard Street
London EC3P 3AH
England
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No x
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
--------------------------------------------------------------------------------
This Report is a joint Report on Form 6-K filed by Barclays PLC and Barclays
Bank PLC. All of the issued ordinary share capital of Barclays Bank PLC is
owned by Barclays PLC.
This Report comprises:
Information given to The London Stock Exchange and furnished pursuant to
General Instruction B to the General Instructions to Form 6-K.
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EXHIBIT INDEX
Exhibit Index 1
IFRS Transition Report-Parts 2, 3, 4 - 11 May 2005
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each of
the registrants has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BARCLAYS PLC
(Registrant)
Date: May 11, 2005 By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Deputy Secretary
BARCLAYS BANK PLC
(Registrant)
Date: May 11, 2005 By: /s/ Patrick Gonsalves
----------------------
Patrick Gonsalves
Joint Secretary
Part 2
IFRS
Transition
Report
2004/2005
BARCLAYS PLC
TABLE OF CONTENTS
Section 1 - IFRS Results
Introduction
Consolidated income statement
Consolidated balance sheet
Results by business
Results by nature of income and expense
Analysis of amounts included in the balance sheets
Group performance ratios
Total assets and weighted risk assets
Capital ratios
Additional information
Section 2 - UK GAAP/IFRS reconciliations
Special purpose audit report
Basis of preparation
Provisional accounting policies
Detailed reconciliations
Income statement reconciliations
Balance sheet reconciliations
Differences between UK GAAP and IFRS
Other information
The information in this announcement does not comprise statutory accounts within
the meaning of Section 240 of the Companies Act 1985 (the 'Act'). Statutory
accounts for the year-ended 31st December 2004, which also include certain
information required for the joint Annual Report on Form 20-F of Barclays PLC
and Barclays Bank PLC to the US Securities and Exchange Commission (SEC), have
been delivered to the Registrar of Companies in accordance with Section 242 of
the Act.
This document contains certain forward-looking statements within the meaning of
Section 21E of the US Securities Exchange Act of 1934, as amended, and Section
27A of the US Securities Act of 1933, as amended, with respect to certain of the
Group's plans and its current goals and expectations relating to its future
financial condition and performance. These forward-looking statements can be
identified by the fact that they do not relate only to historical or current
facts. Forward-looking statements sometimes use words such as "anticipate",
"target", "expect", "estimate", "intend", "plan", "goal", "believe", or other
words of similar meaning. By their nature, forward-looking statements involve
risk and uncertainty because they relate to future events and circumstances,
including, but not limited to, the further development of standards and
interpretations under IFRS applicable to past, current and future periods,
evolving practices with regard to the interpretation and application of
standards under IFRS and pending tax elections with regards to certain
subsidiaries, as well as UK domestic and global economic and business
conditions, market related risks such as changes in interest rates and exchange
rates, the policies and actions of governmental and regulatory authorities,
changes in legislation, the outcome of pending and future litigation and the
impact of competition - a number of which factors are beyond the Group's
control. As a result, the Group's actual future results may differ materially
from the plans, goals, and expectations set forth in the Group's forward-looking
statements. Any forward-looking statements made by or on behalf of Barclays
speak only as of the date they are made. Barclays does not undertake to update
forward-looking statements to reflect any changes in Barclays expectations with
regard thereto or any changes in events, conditions or circumstances on which
any such statement is based. The reader should, however, consult any additional
disclosures that Barclays has made or may make in documents it has filed or may
file with the SEC including its most recent Annual Report on Form 20-F.
INTRODUCTION
This Transition Report (the 'Report') sets out the financial results of Barclays
PLC under International Financial Reporting Standards (IFRS) from 1st January
2004. The Report is prepared in accordance with the transitional provisions set
out in IFRS 1, 'First-time Adoption of International Financial Reporting
Standards', and other relevant standards and is based on the application of IFRS
expected to apply as at 31st December 2005.
The Report provides certain restated comparative data in a format based on the
usual presentation layout of Results Announcements. It also summarises the main
policy differences between UK GAAP and IFRS as currently expected to apply and
sets out the Group's provisional accounting policies for the year ending 31st
December 2005.
Whilst the change in accounting standards has no impact on the underlying
economics or risk of the business, the 2004 results under IFRS are different
from the Group's previously provided 2004 results under UK GAAP. Commencing with
reporting for 2005, there will be additional impacts arising from the first-time
application of IAS 32 (Financial Instruments: Disclosure and Presentation), IAS
39 (Financial Instruments: Recognition and Measurement) and IFRS 4 (Insurance
Contracts).
The 2004 results under UK GAAP announced on 11th February 2005 are restated in
this document. These restated 2004 financial results will, subject to possible
changes arising as the application of IFRS develops, form the comparatives that
will be used for 2005 performance discussions, commencing with the Trading
Update on 26th May 2005. However, since the standards relating to financial
instruments and insurance contracts have not been applied to 2004, these
comparatives are significantly different from the numbers to be reported from
1st January 2005.
In this Report all comparisons, unless otherwise stated, are between the
financial results under IFRS and the previously reported UK GAAP data for the
corresponding period or date. Profit comparisons at the divisional level are
based on the analysis of results by business division previously provided in
Results Announcements which excluded goodwill amortisation.
IFRS Results: Income Statement
The 2004 IFRS income statement shows a reduction in profit before tax of GBP23m
from the reported 2004 UK GAAP figure of GBP4,603m. Earnings per share for 2004
on an IFRS basis were 51.0p as against 51.2p under UK GAAP.
The magnitude of the change to total operating income and costs under IFRS in
2004 is principally the result of the requirement to consolidate the insurance
businesses, including life assurance, on a line by line basis rather than the
previous recognition of the change in embedded value and net premium on
insurance underwriting within other operating income. For 2004, this
presentation increased operating income by GBP1,401m and created net claims and
benefits on insurance contracts of GBP1,310m (treated as costs under IFRS) and
added GBP142m to operating expenses.
From 2005 the income statement will be affected by the implementation of IAS 32/
39 including those impacts relating to liability and equity classifications,
hedging, impairment and effective interest calculations. In addition IFRS 4
requires the separation of investment and insurance contracts. To the extent
that such contracts are identified as being of an investment nature they have
been classified accordingly and consequently the amounts payable to customers
will be offset against the income received on underlying assets. Over half of
the life assurance activities of the Group will therefore be accounted for as
investment business in 2005, whereas all is accounted for as insurance business
in 2004.
IFRS Results: Balance Sheet
The balance sheet restatements cover all previously reported balance sheets for
2004 and also the opening balance sheet for 2005, which includes the impacts of
financial instruments and insurance contracts. The aggregate differences between
the UK GAAP balance sheet as at 31st December 2004 and the IFRS balance sheet at
1st January 2005 are significant in terms of the categorisation and magnitude of
balances recorded. Balance sheet assets under IFRS as at 1st January 2005 total
GBP716bn, an increase of GBP193bn over those reported under UK GAAP as at 31st
December 2004, primarily as a result of the application of IAS 32 and 39. The
most significant adjustments in terms of balance sheet totals are:
- The grossing up of previously netted positions (primarily derivative
assets and liabilities subject to master netting agreements, repurchase
contracts and cash collateral balances), amounting to GBP120bn;
- The recognition of balances relating to certain asset management
products offered to institutional pension funds which are required to be
recognised as financial instruments, amounting to GBP65bn; and
- The consolidation of conduit financing vehicles, amounting to GBP12bn.
IFRS Results: Total Shareholders' Equity
Total shareholders' equity (including minority interests) at 1st January 2005 of
GBP18.6bn is GBP0.2bn higher than the combined shareholders' funds and minority
interests under UK GAAP at 31st December 2004.
Excluding minority interests the shareholders' equity under IFRS is GBP15.2bn at
1st January 2005, a reduction of GBP2.2bn compared to shareholders' funds under
UK GAAP at 31st December 2004. At 1st January 2005, retained earnings and other
reserves are GBP2.8bn lower than the profit and loss reserve under UK GAAP at
31st December 2004. This is partially offset by increases to shareholders'
equity which arise from the creation of unrealised reserves relating to
available for sale securities (GBP0.3bn) and cash flow hedges (GBP0.3bn).
The reduction in retained earnings includes the following significant impacts:
- Pensions - the elimination of all UK GAAP pensions entries and
creation of a net deficit for all Group schemes (reduction in retained
earnings of GBP1.8bn);
- UK Life Fund - the move from an Embedded Value accounting treatment to
the Modified Statutory Solvency Basis (total reduction in retained earnings of
GBP0.6bn arising from the insurance businesses); and
- Dividends - under IFRS dividends are recognised when approved by
shareholders, rather than in the period to which they relate (increase in
retained earnings of GBP1.0bn).
- Financial instruments - the re-stating of financial instruments moved
from debt to equity under IFRS, at exchange rates prevailing at the date of
issue, rather than at the exchange rate at 31st December 2004 (reduction in
retained earnings of GBP0.4bn).
Minority interests have increased by GBP2.4bn consequent on the inclusion of
Reserve Capital Instruments (RCIs) and certain other capital instruments
previously recorded as debt.
IFRS Results: Regulatory Capital
The impacts of changes in shareholders' equity are not reflected in changes in
regulatory capital on a strictly equivalent basis. The Financial Services
Authority in the UK ('FSA') which is Barclays' lead regulator has issued policy
statement 05/5 on the interpretation of IFRS related changes which affect the
regulatory capital outcome. We have also sought individual guidance on a number
of areas where the outcome required clarification.
The impact on the Tier 1 Capital ratio as at 1st January 2005 is a reduction
from 7.6% to 7.1%.
The Group's Risk Asset Ratio under IFRS as at 1st January 2005 is 11.9% compared
to 11.5% under UK GAAP as at 31st December 2004. This increase primarily
reflects the Group's ability to include collectively assessed impairment
allowances in Tier 2 capital, replacing the similarly treated UK GAAP general
provisions.
Hedging
While the introduction of IFRS has had little impact on the Group's economic
hedging activities, IAS 39 significantly changes hedge accounting by specifying
the accounting methods and introducing stringent conditions on when hedge
accounting can be applied. IAS 39 sets out three forms of hedge accounting: cash
flow hedge accounting, fair value hedge accounting and hedges of net investments
in overseas entities. All forms of hedge accounting result in hedging
derivatives being carried at fair value in the balance sheet. To the extent that
the hedge is effective, cash flow hedge accounting and hedges of net investments
result in the gains and losses on the hedging instruments being taken initially
to equity and subsequently recycled to the income statement in the same periods
as the hedged items affect profit or loss. Fair value hedge accounting results
in the gain or loss on the hedged item attributable to the hedged risk adjusting
the carrying amount of the hedged item and being recognised immediately in the
income statement. Ineffective elements of hedges are recognised immediately in
the income statement.
IFRS hedge accounting can be contrasted with UK GAAP where hedging derivatives
may be carried at cost and income is recognised on an accruals basis to match
the hedged items. IFRS hedge accounting will not only result in additional asset
and liability amounts being recognised on the balance sheet, but the income
statement will also include more variability due to hedge ineffectiveness and
economic hedges that do not meet the stringent hedge accounting conditions. In
comparison with UK GAAP, cash flow hedge accounting will result in equity
volatility and fair value hedge accounting will result in additional fair value
amounts being included in the balance sheet and additional income statement
volatility.
IFRS hedge accounting has been applied prospectively to all hedges designated
and documented as at 1st January 2005. This results in the creation of an
initial cash flow hedging reserve and the recognition of fair value movements on
items subject to fair value hedge accounting. In addition, qualifying UK GAAP
hedged positions result in adjustments to the carrying amount of financial
assets and liabilities as at 1st January 2005 to reflect this hedging.
Update from December 2004 Analyst and Investor Briefing
In December 2004, the Group provided a briefing to analysts and investors on the
anticipated impact of IFRS. In that briefing, indicative rounded estimates were
given in order to convey the direction and approximate scale of the impacts of
IFRS based broadly on 2003 results. As anticipated, the numbers provided in that
briefing are different from those reflected in the Report due to:
- Market movements;
- Finalisation of 2004 UK GAAP results; and
- Clarification of accounting and regulatory treatments.
The December briefing indicated that, excluding the impacts of the standards on
financial instruments and insurance, the Group's profit before tax would rise
under IFRS by approximately GBP75m. The actual impact on the 2004 income
statement is a GBP23m decline in reported profit before tax. The principal
reason for this difference is that the embedded value result of the closed life
assurance activities under UK GAAP for 2004 was higher than anticipated and
ahead of 2003.
The December briefing also indicated a reduction in shareholders' equity
excluding minority interests of GBP1.3bn. This report indicates a reduction of
GBP2.2bn which is analysed on pages 65 to 79.
Movements since the presentation include:
- A reduction from the impact of re-stating financial instruments moved
from debt to equity under IFRS, at exchange rates prevailing at the date of
issue, rather than at the exchange rate at 31st December 2004;
- An increased negative impact from the IFRS pensions treatment;
- A reduction arising from the clarification of accounting treatments
surrounding certain capital market transactions, which resulted in timing
differences over the recognition of profits; and
- A reduction arising from the application of a revised income profile
to certain loan insurance activities.
In relation to minority interests, the December briefing highlighted an expected
increase of GBP1.6bn arising from the reclassification of Reserve Capital
Instruments from debt to equity. This increase has now risen to GBP2.4bn
reflecting the reclassification of GBP0.4bn of Tier 2 capital as equity and a
further GBP0.4bn from the requirement to translate all of these issues at the
exchange rate prevailing on their date of issue. The instruments are classified
as minority interests because they are issued by a subsidiary.
Implications for 2005
It is expected that the Group's results for 2005 will also reflect the
following:
- Closed life assurance activities - the move to Modified Statutory
Solvency Basis of accounting, which is effectively an accruals basis of
accounting for these activities, should result in less volatility than under
embedded value accounting and a profit before endowment redress costs and tax
of about GBP45m is expected for 2005, similar to the result in 2004 on a
comparable basis;
- IAS 32 and 39 - some of this impact is relatively predictable such as
Effective Interest Rate which is expected to reduce profit before tax by
about GBP60m and which will involve interest-related fees and costs being
included in net interest rather than in fees and commissions. Other
elements are inherently unpredictable, such as: the profit impact from the
continuation of the Group's economic structural hedging position, which
will depend upon the effectiveness of the hedging; and the level of the
impairment allowance, which will be more volatile in response to changes in
the external environment;
- Insurance underwriting - the Group transferred some loan insurance
underwriting activities in house at the beginning of 2005. Under the previous
arrangement the Group recognised sales commissions at the point of sale of the
loan but no underwriting income as the underwriting was carried by third
parties. The new arrangement has long-term economic benefits for the Group but
results in a timing difference in income recognition because the income will
be recognised over the life of the loans. The relevant business lines will
record the sales commission and the underwriting income in line with that
which would apply to a third party arms length agreement. On consolidation, an
adjustment will be made to align the total result with the required insurance
accounting under IFRS. The change is expected to have a negative impact of
about GBP80m on income in 2005; and
- Instruments classified as minority interests - instruments classified
as debt under UK GAAP to minority interests under IFRS with the associated
funding cost moving from interest expense to the minority interest line in the
income statement. The combined impact is an expected increase in profit before
tax of approximately GBP145m. The post tax benefit is offset by an increase in
profit attributable to minority interests of a similar amount.
Group Goals
2004 marked the start of the Group's new four-year goal period covering 2004 to
2007 inclusive. The primary goal is to achieve top quartile Total Shareholder
Return (TSR). The Group continues to believe that achievement of a compound
annual growth rate of 10-13% in economic profit calculated on a consistent basis
over the four-year goal period is likely to be required for the achievement of
the primary goal.
The introduction of IFRS has necessitated a review of the derivation of economic
capital in the calculation of economic profit resulting in items being excluded
which do not represent cash movements in shareholders' equity. Additionally, the
Group has determined that the cost of capital for goodwill carried in relation
to the acquisition of the Woolwich, previously charged at 8.5% should be brought
into line with the Group's overall cost of capital at 9.5%. This has the effect
of reducing economic profit for 2004 by GBP41m. The impact of all of these
changes (set out in detail on pages 36 and 37) and of IFRS on the income
statement, is to decrease economic profit for 2004 from GBP1,885m, as reported
in February 2005, to GBP1,568m as reported here.
Business Performance Reporting
The Group's performance by business division is set out on pages 10 to 21. The
presentation differs from that which was provided in the Annual Report for 2004
in the following respects:
- The Private Clients and International Retail and Commercial Banking
businesses which were formerly aggregated are now reported as distinct
business divisions, reflecting the revised management structure;
- The results for the Private Clients - closed life assurance activities
are provided separately from those for the rest of Private Clients. The
introduction of IFRS requires that the results of the life assurance
activities are recorded on a line by line basis rather than the previous
single line presentation. As a result of this, it is now considered
appropriate to report this activity separately; and
- The 2004 results of Barclaycard and UK Retail Banking have been
restated to reflect the 2005 change in allocation of branch network costs and
insurance sales between the two divisions. This has the impact of increasing
Barclaycard's profit before tax by GBP59m and reducing UK Banking's profit
before tax by the same amount.
Following the line by line consolidation of insurance activities in the income
statement, the cost:income ratios have been redefined as follows:
- The cost:income ratio is defined as operating expenses plus net claims
and benefits compared to total operating income;
- The operating expenses:income less net claims ratio is defined as
operating expenses compared to total operating income less net claims and
benefits on insurance contracts; and
- The operating expenses:net income less net claims ratio is defined as
operating expenses compared to net operating income less net claims and
benefits on insurance contracts.
Further Developments in IFRS Reporting
The information in this document has been prepared on the basis of the
Group's expectation of the standards that will be applicable as at 31st
December 2005. Future Group financial information prepared on the basis of
IFRS may differ from the data contained herein for the following reasons:
- Further standards and interpretations may be issued that are applicable for
2005 reporting or which are applicable to later accounting periods but with
an option to adopt for earlier periods. Specifically we anticipate that the
European Union may enable the adoption of the Exposure Draft (ED)
amendments to IAS 39 covering the use of fair values for non-trading
financial liabilities. If available for use in 2005, the Group would
consider adopting this ED, which would have the effect of increasing
retained earnings by GBP70m at 1st January 2005;
- Different practice may develop with regard to interpretation and
application of the standards; and
- The relevant tax legislation is not final and consequently tax balances
could change as elections are made in respect of a large number of
subsidiaries.
CONSOLIDATED INCOME STATEMENT
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
Continuing operations GBPm GBPm GBPm
Interest income 13,880 7,315 6,565
Interest expense (7,047) (3,815) (3,232)
-------- -------- --------
Net interest income 6,833 3,500 3,333
-------- -------- --------
Fee and commission income 5,560 2,887 2,673
Fee and commission expense (662) (329) (333)
-------- -------- --------
Net fee and commission income 4,898 2,558 2,340
-------- -------- --------
Net trading income 1,487 684 803
Net investment income 1,048 725 323
-------- -------- --------
Principal transactions 2,535 1,409 1,126
Net premiums from insurance contracts 1,042 506 536
Other operating income 110 64 46
-------- -------- --------
Total operating income 15,418 8,037 7,381
Impairment loss on loans and advances and
other credit risk provisions (1,093) (504) (589)
-------- -------- --------
Net operating income 14,325 7,533 6,792
Net claims and benefits on insurance
contracts (1,310) (896) (414)
Operating expenses (8,536) (4,562) (3,974)
Share of results of associates and joint
ventures 56 42 14
Profit on disposal of associates and joint
ventures 45 - 45
-------- -------- --------
Profit before tax 4,580 2,117 2,463
Tax (1,279) (634) (645)
-------- -------- --------
Profit for the year 3,301 1,483 1,818
-------- -------- --------
Profit attributable to minority interests 47 27 20
Profit attributable to shareholders 3,254 1,456 1,798
-------- -------- --------
3,301 1,483 1,818
-------- -------- --------
p p p
Basic earnings per ordinary share 51.0 23.0 28.0
Diluted earnings per ordinary share 50.7 22.8 27.9
CONSOLIDATED BALANCE SHEET
As at
01.01.051 31.12.04 30.06.04 01.01.04
Assets GBPm GBPm GBPm GBPm
Cash and balances at
central banks 3,238 1,753 1,829 1,726
Items in the course of
collection from
other banks 1,772 1,772 2,527 2,006
Treasury bills and other
eligible bills 6,658 6,547 7,177
Trading portfolio assets 113,241
Non-trading financial
instruments fair valued
through profit and loss:
- held on own account 2,367
- held in respect of
linked liabilities to
customers under
investment contracts 63,124
Derivative financial
instruments 94,340
Loans and advances to
banks 25,728 80,632 83,034 66,993
Loans and advances to
customers 210,959 262,409 252,053 230,772
Debt securities 130,311 119,840 99,896
Equity shares 11,399 8,599 7,094
Available for sale
financial investments 48,491
Reverse repurchase
agreements and cash
collateral on securities
borrowed 139,574
Other assets 3,595 25,915 21,344 22,728
Insurance assets,
including unit-linked
assets 153 8,576 8,165 8,274
Investments in
associates and joint
ventures 429 429 442 438
Goodwill 4,518 4,518 4,398 4,393
Intangible assets 139 139 62 64
Property, plant and
equipment 2,282 2,282 2,108 2,123
Deferred tax assets 1,642 1,388 1,383 1,348
-------- -------- -------- --------
Total assets 715,592 538,181 512,331 455,032
-------- -------- -------- --------
1 The figures at 1st January 2005 include the impacts of adopting IAS 32, IAS 39
and IFRS 4 which have not been applied to the 2004 comparatives, in accordance
with IFRS 1.
CONSOLIDATED BALANCE SHEET
As at
01.01.051 31.12.04 30.06.04 01.01.04
Liabilities GBPm GBPm GBPm GBPm
Deposits from banks 74,735 111,024 115,836 94,092
Items in the course of
collection due to
other banks 1,205 1,205 1,442 1,286
Customer accounts 194,488 217,492 206,170 184,796
Trading portfolio
liabilities 59,114
Liabilities to customers
under investment contracts 64,609
Derivative financial
instruments 95,218
Debt securities in issue 80,754 83,842 69,431 61,469
Repurchase agreements
and cash collateral on
securities lent 98,582
Other liabilities 9,859 82,936 79,546 74,068
Current tax liabilities 621 621 697 514
Insurance contract
liabilities, including
unit-linked liabilities 3,596 8,377 7,944 8,023
Subordinated liabilities:
- Undated loan capital - non
convertible 4,208 6,149 6,233 6,310
- Dated loan capital -
convertible to
preference shares 15 15 15 17
- Dated loan capital -
non convertible 6,383 6,113 6,220 6,012
Deferred tax liabilities 1,365 1,362 1,284 1,257
Other provisions for
liabilities 403 416 329 380
Retirement benefit
liabilities 1,865 1,865 2,028 1,885
-------- -------- -------- --------
Total liabilities 697,020 521,417 497,175 440,109
-------- -------- -------- --------
Shareholders' equity
Called up share capital 1,614 1,614 1,613 1,642
Share premium account 5,524 5,524 5,437 5,417
Less: treasury shares (119) (119) (115) (84)
Available for sale reserve 314
Cash flow hedging reserve 302
Capital redemption reserve 309 309 305 274
Other capital reserve 617 617 617 617
Translation reserve (58) (58) (43) -
Retained earnings 6,739 7,983 7,164 6,774
-------- -------- -------- --------
Shareholders' equity excluding
minority interests 15,242 15,870 14,978 14,640
Minority interests 3,330 894 178 283
-------- -------- -------- --------
Total shareholders' equity 18,572 16,764 15,156 14,923
-------- -------- -------- --------
-------- -------- -------- --------
Total liabilities and
shareholders' equity 715,592 538,181 512,331 455,032
-------- -------- -------- --------
1 The figures at 1st January 2005 include the impacts of adopting IAS 32, IAS 39
and IFRS 4 which have not been applied to the 2004 comparatives, in accordance
with IFRS 1.
Results by business
The following section analyses the Group's performance by business.
Profit attributable to shareholders
UK
GAAP
Year- Year-
ended ended Half-year ended
31.12.04 31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
UK Banking 2,415 2,265 1,103 1,162
-------- -------- -------- --------
UK Retail Banking 1,068 963 405 558
UK Business Banking 1,347 1,302 698 604
-------- -------- -------- --------
International Retail and
Commercial Banking 311 293 148 145
Barclaycard 860 843 384 459
Barclays Capital 1,042 1,020 432 588
Barclays Global Investors 347 336 185 151
Private Clients 144 110 46 64
Private Clients-closed life
assurance activities (4) (52) (51) (1)
Head office functions and other
operations (206) (235) (130) (105)
-------- -------- -------- --------
Profit before tax and UK GAAP
goodwill amortisation 4,909 4,580 2,117 2,463
-------- -------- -------- --------
Goodwill amortisation (306) - - -
-------- -------- -------- --------
Profit before tax 4,603 4,580 2,117 2,463
Tax (1,289) (1,279) (634) (645)
-------- -------- -------- --------
Profit for the year 3,314 3,301 1,483 1,818
Profit attributable to minority
interests (46) (47) (27) (20)
-------- -------- -------- --------
Profit attributable to
shareholders 3,268 3,254 1,456 1,798
-------- -------- -------- --------
The presentation of results by business differs from that provided in 2004 in
the following respects:
- International Retail and Commercial Banking and Private Clients are
reported as completely separate business divisions and not aggregated,
reflecting changes in management accountability;
- The results for the Private Clients-closed life assurance activities
are provided separately from those for the rest of Private Clients. The
introduction of IFRS requires that the results of the life assurance
activities are recorded on a line by line basis rather than the previous
single line presentation. In order that the presentation of the underlying
financial performance is not distorted, it is considered appropriate to report
the life assurance activity separately; and
- The 2004 results of Barclaycard and UK Retail Banking have been restated to
reflect the 2005 change in allocation of branch network costs and insurance
sales between the two divisions. This has the impact of increasing
Barclaycard's profit before tax by GBP59m and reducing UK Banking's profit
before tax by the same amount.
The share of results of associates and joint ventures is reported after tax
under IFRS.
Following the line by line consolidation of insurance activities in the income
statement, the cost:income ratios have been redefined as follows:
- The cost:income ratio is defined as operating expenses plus net claims
and benefits compared to total operating income;
- The operating expenses:income less net claims ratio is defined as
operating expenses compared to total operating income less net claims and
benefits on insurance contracts; and
- The operating expenses:net income less net claims ratio is defined as
operating expenses compared to net operating income less net claims and
benefits on insurance contracts.
UK Banking
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 3,477 1,780 1,697
Net fee and commission income 1,936 974 962
-------- -------- --------
Net trading income - - -
Net investment income 5 4 1
-------- -------- --------
Principal transactions 5 4 1
Net premiums from insurance contracts 249 100 149
Other operating income 37 31 6
-------- -------- --------
Total operating income 5,704 2,889 2,815
Impairment loss on loans and advances and
other credit risk provisions (199) (46) (153)
-------- -------- --------
Net operating income 5,505 2,843 2,662
Net claims and benefits on insurance
contracts (46) (20) (26)
Operating expenses (3,241) (1,722) (1,519)
Share of results of associates and joint
ventures 5 2 3
Profit on disposal of associates and joint 42 - 42
ventures -------- -------- --------
Profit before tax 2,265 1,103 1,162
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation (as restated)2,415 1,186 1,229
-------- -------- --------
Cost:income ratio 58% 60% 55%
Operating expenses:income less net claims ratio 57% 60% 54%
Operating expenses:net income less net claims
ratio 59% 61% 58%
Loans and advances to customers (period GBP114.1bn GBP114.1bn GBP109.1bn
end)
Customer accounts (period end) GBP114.8bn GBP114.8bn GBP113.1bn
Total assets GBP119.6bn GBP119.6bn GBP114.4bn
Return on average economic capital 34% 32% 35%
Economic profit 1,158 565 593
The reduction in profit before tax is mainly due to the increased costs
associated with share based payments and pensions, which have also resulted
in an increase in the cost:income ratios. The non-life insurance activities
are presented on separate income statement lines, although the net result is
not changed by the introduction of IFRS.
In 2004, UK Banking announced that it is targeting cost:income ratio
improvements of 2% per annum in 2005, 2006 and 2007. The relevant comparator
for this target is the operating expenses:income less net claims ratio based
on a starting point of 57%.
UK Retail Banking
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 2,059 1,046 1,013
Net fee and commission income 1,123 554 569
-------- -------- --------
Net trading income - - -
Net investment income 1 1 -
-------- -------- --------
Principal transactions 1 1 -
Net premiums from insurance contracts 249 100 149
Other operating income 26 22 4
-------- -------- --------
Total operating income 3,458 1,723 1,735
Impairment loss on loans and advances and
other credit risk provisions (60) 2 (62)
-------- -------- --------
Net operating income 3,398 1,725 1,673
Net claims and benefits on insurance
contracts (46) (20) (26)
Operating expenses (2,433) (1,300) (1,133)
Share of results of associates and joint
ventures 2 - 2
Profit on disposal of associates and
joint ventures 42 - 42
-------- -------- --------
Profit before tax 963 405 558
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation (as
restated) 1,068 468 600
-------- -------- --------
Cost:income ratio 72% 77% 67%
Operating expenses:income less net claims
ratio 71% 76% 66%
Operating expenses:net income less net
claims ratio 73% 76% 69%
Loans and advances to customers (period GBP65.6bn GBP65.6bn GBP64.4bn
end)
Customer accounts (period end) GBP72.4bn GBP72.4bn GBP70.7bn
Total assets GBP68.9bn GBP68.9bn GBP67.3bn
Return on average economic capital 31% 25% 36%
Economic profit 473 183 290
The reduction in profit before tax is mainly due to the increased costs
associated with share based payments and pensions, which have also resulted
in an increase in the cost:income ratios.
UK Business Banking
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 1,418 734 684
Net fee and commission income 813 420 393
-------- -------- --------
Net trading income - - -
Net investment income 4 3 1
-------- -------- --------
Principal transactions 4 3 1
Other operating income 11 9 2
-------- -------- --------
Total operating income 2,246 1,166 1,080
Impairment loss on loans and advances and
other credit risk provisions (139) (48) (91)
-------- -------- --------
Net operating income 2,107 1,118 989
Operating expenses (808) (422) (386)
Share of results of associates and joint
ventures 3 2 1
-------- -------- --------
Profit before tax 1,302 698 604
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation 1,347 718 629
-------- -------- --------
Cost:income ratio 36% 36% 36%
Operating expenses:net income ratio 38% 38% 39%
Loans and advances to customers (period GBP48.5bn GBP48.5bn GBP44.7bn
end)
Customer accounts (period end) GBP42.4bn GBP42.4bn GBP42.4bn
Total assets GBP50.7bn GBP50.7bn GBP47.1bn
Return on average economic capital 37% 38% 35%
Economic profit 685 382 303
The reduction in profit before tax is mainly due to the increased costs
associated with share based payment and pensions, which have also resulted
in an increase in the cost:income ratios.
International Retail and Commercial Banking
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 534 277 257
Net fee and commission income 288 145 143
-------- -------- --------
Net trading income - - -
Net investment Income 135 71 64
-------- -------- --------
Principal transactions 135 71 64
Net premiums from insurance contracts 300 155 145
Other operating income 25 12 13
-------- -------- --------
Total operating income 1,282 660 622
Impairment loss on loans and advances and
other credit risk provisions (31) (12) (19)
-------- -------- --------
Net operating income 1,251 648 603
Net claims and benefits paid on insurance
contracts (390) (208) (182)
Operating expenses (617) (330) (287)
Share of results of associates and joint
ventures 49 38 11
-------- -------- --------
Profit before tax 293 148 145
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation 311 167 144
-------- -------- --------
Cost:income ratio 79% 82% 75%
Operating expenses:income less net claims
ratio 69% 73% 65%
Operating expenses:net income less net
claims ratio 72% 75% 68%
Loans and advances to customers (period GBP20.7bn GBP20.7bn GBP17.6bn
end)
Customer accounts (period end) GBP10.1bn GBP10.1bn GBP9.7bn
Total assets GBP28.4bn GBP28.4bn GBP25.1bn
Return on average economic capital 20% 22% 18%
Economic profit 111 54 57
The reduction in full-year profit before tax is mainly due to the increased
costs associated with share based payments and pensions. The 2004 income
statement presentation under IFRS includes separate line items relating to
the insurance businesses: net premiums from insurance contracts and net
claims and benefits paid on insurance contracts. In addition, investment
income on assets backing insurance policies is separately presented. Under
UK GAAP, the results of the insurance businesses were presented on a net
basis. There is no change in the measurement of the insurance result in
2004. Under IFRS, the share of results of associates and joint ventures is
presented after tax.
In 2005, investment and insurance contracts will be separately accounted for
in accordance with IAS 39 and IFRS 4. This will result in investment income
and premiums and claims relating to investment contracts being presented on
a net basis in other operating income. Therefore, the 2004 figures provided
above will not be directly comparable to the results to be reported in 2005.
Barclaycard
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 1,600 790 810
Net fee and commission income 790 416 374
Net premiums from insurance contracts 22 11 11
-------- -------- --------
Total operating income 2,412 1,217 1,195
Impairment loss on loans and advances and
other credit risk provisions (761) (404) (357)
-------- -------- --------
Net operating income 1,651 813 838
Net claims and benefits on insurance
contracts (5) (3) (2)
Operating expenses (807) (428) (379)
Share of results of associates and joint
ventures 4 2 2
-------- -------- --------
Profit before tax 843 384 459
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation (as restated) 860 444 416
-------- -------- --------
Cost:income ratio 34% 35% 32%
Operating expense:income less net claims
ratio 34% 35% 32%
Operating expenses:net income ratio 49% 53% 45%
Loans and advances to customers (period GBP22.3bn GBP22.3bn GBP20.1bn
end)
Total assets GBP23.1bn GBP23.1bn GBP20.7bn
Return on average economic capital 23% 20% 25%
Economic profit 350 148 202
The reduction in profit before tax reflects the increased costs associated
with share based payments and pensions.
Barclays Capital
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 991 535 456
Net fee and commission income 603 331 272
-------- -------- --------
Net trading income 1,463 679 784
Net investment income 318 132 186
-------- -------- --------
Principal transactions 1,781 811 970
-------- -------- --------
Total operating income 3,375 1,677 1,698
Impairment loss on loans and advances and
other
credit risk provisions (102) (53) (49)
-------- -------- --------
Net operating income 3,273 1,624 1,649
Operating expenses (2,253) (1,192) (1,061)
Share of results of associates and joint - - -
ventures -------- -------- --------
Profit before tax 1,020 432 588
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation 1,042 443 599
-------- -------- --------
Cost:income ratio 67% 71% 62%
Operating expenses:net income ratio 69% 73% 64%
Average net revenue per member of staff
('000) GBP481 GBP221 GBP260
Total assets GBP346.9bn GBP346.9bn GBP330.2bn
Return on average economic capital 35% 32% 38%
Economic profit 521 230 291
The introduction of IFRS has not had a material impact on the 2004 restated
results.
Barclays Global Investors
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
Continuing operations GBPm GBPm GBPm
Net interest income 5 1 4
Net fee and commission income 882 464 418
-------- -------- --------
Net trading income 3 3 -
Net investment income 3 3 -
-------- -------- --------
Principal transactions 6 6 -
Other operating income - (1) 1
-------- -------- --------
Total operating income 893 470 423
Operating expenses (556) (284) (272)
Share of results of associates and joint
ventures (2) (1) (1)
Profit on disposal of associates and
joint 1 - 1
ventures -------- -------- --------
Profit before tax 336 185 151
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation 347 189 158
-------- -------- --------
Cost:income ratio 62% 60% 64%
Average net revenue per member of staff
('000) GBP464 GBP247 GBP217
Total assets GBP0.8bn GBP0.8bn GBP0.7bn
Return on average economic capital 166% 185% 147%
Economic profit 195 108 87
The introduction of IFRS has not had a material impact on the 2004 restated
results.
Private Clients
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income 303 155 148
Net fee and commission income 529 268 261
-------- -------- --------
Net trading income - - -
Net investment income - - -
-------- -------- --------
Principal transactions - - -
Other operating income 7 4 3
-------- -------- --------
Total operating income 839 427 412
Impairment loss on loans and advances and
other
credit risk provisions 1 1 -
-------- -------- --------
Net operating income 840 428 412
Operating expenses (730) (382) (348)
Share of results of associates and joint - - -
ventures
-------- -------- --------
Profit before tax 110 46 64
-------- -------- --------
Memo - UK GAAP profit before tax
excluding goodwill amortisation 144 63 81
-------- -------- --------
Cost:income ratio 87% 89% 84%
Operating expenses:net income ratio 87% 89% 84%
Loans and advances to customers (period GBP4.1bn GBP4.1bn GBP3.6bn
end)
Customer accounts (period end) GBP21.3bn GBP21.3bn GBP20.4bn
Total assets GBP5.0bn GBP5.0bn GBP4.4bn
Return on average economic capital 32% 23% 43%
Economic profit 70 23 47
The reduction in profit before tax is mainly due to the increased costs
associated with pensions and the capitalisation of software, which have also
had the effect of increasing the cost:income ratios.
Private Clients-closed life assurance activities
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Net interest income (53) (33) (20)
Net fee and commission income 51 26 25
-------- -------- --------
Net trading income - - -
Net investment income 596 517 79
-------- -------- --------
Principal transactions 596 517 79
Net premiums from insurance contracts 362 195 167
Other operating income 4 1 3
-------- -------- --------
Total operating income 960 706 254
Net claims and benefits on insurance
contracts (869) (665) (204)
Endowment redress costs (97) (64) (33)
Other operating expenses (46) (28) (18)
-------- -------- --------
Loss before tax (52) (51) (1)
-------- -------- --------
Memo - UK GAAP (loss)/profit before tax
excluding goodwill amortisation (4) 25 (29)
-------- -------- --------
Cost:income ratio 105% 107% 100%
Operating expenses:income less net claims
ratio 157% 224% 102%
Total assets GBP6.4bn GBP6.4bn GBP6.1bn
Return on average economic capital (53)% (117)% 11%
Economic (loss)/profit (77) (79) 2
For the year-ended 31st December 2004, under UK GAAP and using the Embedded
Value basis of accounting, the Private Clients-closed life assurance activities
resulted in a loss of GBP4m. The change in accounting policy to the Modified
Statutory Solvency Basis, which is an accruals basis of accounting, has resulted
in an increase in the loss of GBP48m since the net present value of profits
inherent in the in-force policies is no longer recognised. The tax impact of
this change has also resulted in the economic loss.
In 2005, investment and insurance contracts will be separately accounted for in
accordance with IAS 39 and IFRS 4. This will result in investment income and
premiums and claims relating to investment contracts being presented on a net
basis in other operating income. Therefore, the 2004 figures provided above will
not be directly comparable to the results to be reported in 2005.
Head office functions and other operations
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Head office functions and central items (230) (140) (90)
Transition businesses 7 17 (10)
Restructuring costs (12) (7) (5)
-------- -------- --------
Loss on operating activities before tax (235) (130) (105)
-------- -------- --------
Memo - UK GAAP loss before tax
excluding goodwill amortisation (206) (128) (78)
-------- -------- --------
The increased loss in head office functions and central items is mainly due
to the increased costs associated with share based payments and pensions.
Results by nature of income and expense
Net interest income
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Interest income 13,880 7,315 6,565
Interest expense (7,047) (3,815) (3,232)
-------- -------- --------
6,833 3,500 3,333
-------- -------- --------
The components of net interest income have increased mainly as the result of
the consolidation of additional subsidiaries, including special purpose
entities.
Principal transactions
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
Net trading income
Rates related business 1,141 443 698
Credit related business 346 241 105
-------- -------- --------
1,487 684 803
-------- -------- --------
Net investment income
Gain on disposal of investment securities 199 129 70
Dividend income 17 11 6
Other investment income 832 585 247
-------- -------- --------
1,048 725 323
-------- -------- --------
2,535 1,409 1,126
-------- -------- --------
Other investment income includes income from assets backing insurance
policies in the long term assurance businesses. Under UK GAAP this was
included in income from the long-term assurance business previously included
in other operating income.
Other operating income
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Property rentals 45 27 18
Other income 65 37 28
-------- -------- --------
110 64 46
-------- -------- --------
Other income includes operating lease income, which was previously included
in interest income.
Impairment loss on loans and advances and other credit risk provisions
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
The charge for the period in respect of
impairment for
loans and advances comprises:
- New and increased 1,755 927 828
- Releases (396) (267) (129)
- Recoveries (255) (140) (115)
-------- -------- --------
Total impairment charge for loans and
advances 1,104 520 584
(Release)/charge for the period in
respect of provisions for undrawn
contractually committed facilities and
guarantees provided (11) (16) 5
Charge for the period in respect of
impairment of available for sale
financial investments
-------- -------- --------
Total impairment loss on loans and
advances and other credit risk provisions 1,093 504 589
-------- -------- --------
The total impairment loss on loans and advances and other credit risk
provisions is unchanged for 2004, although the charge in respect of
provisions for undrawn contractually committed facilities and guarantees
provided to customers is presented separately from impairment loss on loans
and advances.
Operating expenses
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Staff costs (refer to page 24) 5,227 2,720 2,507
Administrative expenses 2,766 1,553 1,213
Depreciation 297 156 141
Amortisation of intangible assets 22 13 9
Impairment loss
- Intangible assets 9 5 4
Operating lease rentals 215 115 100
-------- -------- --------
8,536 4,562 3,974
-------- -------- --------
Operating lease rentals were previously netted with income r eceived from the
sub-let of properties and included in other operating income.
Staff costs
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Salaries and accrued incentive payments 4,098 2,124 1,974
Social security costs 339 172 167
Pension costs
- defined contribution plans 92 39 53
- defined benefit plans 235 126 109
Other post retirement benefits 29 16 13
Other 434 243 191
-------- -------- --------
5,227 2,720 2,507
-------- -------- --------
Included in salaries and accrued incentive payments is GBP169m (half-year
ended 31st December 2004: GBP90m; half-year ended 30th June 2004: GBP79m)
resulting from equity settled share based payments.
Staff costs have increased due to the recognition of the additional cost of
share based payments, including Sharesave and Incentive Share Option Plan
(ISOP), and the increase in pension costs under IAS 19.
Share of results of associates and joint ventures
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Profit from associates 56 42 14
Profit from joint ventures - - -
-------- -------- --------
56 42 14
-------- -------- --------
The share of results of associates and joint ventures is reported after tax,
with no amortisation of goodwill and after aligning results with Group IFRS
accounting policies as set on pages 43 to 59.
Earnings per share
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
Profit attributable to the members of
Barclays PLC GBP3,254m GBP1,456m GBP1,798m
Basic weighted average number of shares
(in issue) 6,381m 6,341m 6,421m
Potential ordinary shares1 33m 32m 31m
-------- -------- --------
Diluted weighted average number of shares 6,414m 6,373m 6,452m
-------- -------- --------
p p p
Basic earnings per ordinary share 51.0 23.0 28.0
Diluted earnings per ordinary share 50.7 22.8 27.9
Memo - UK GAAP
Earnings per ordinary share 51.2 24.5 26.7
Fully diluted earnings per ordinary share 51.0 24.4 26.6
1 Potential ordinary shares reflect the dilutive effect of share options
outstanding.
Tax rate
The charge for 2004 is based upon the UK GAAP financial statements and a UK
corporation tax rate of 30% for the calendar year 2004 (2003: 30%).
Analysis of amounts included in the balance sheets
Assets held in respect of linked liabilities to customers under investment
contracts/liabilities to customers under investment contracts
01.01.051
GBPm
Non-trading financial instruments fair valued through profit and
loss
- held in respect of linked liabilities 63,124
Cash and bank balances within the funds 1,485
--------
64,609
--------
--------
Liabilities to customers under investment contracts 64,609
--------
This comprises assets under management held on behalf of clients. Under UK
GAAP the assets were included in assets under management and not included on
the balance sheet.
Derivative financial instruments
The table below analyses the contract or underlying principal amounts and
fair values of derivatives financial instruments held for trading purposes
and for the purposes of risk management.
As at 01.01.051
Gross
Contract Fair Value
Amount Assets Liabilities
GBPm GBPm GBPm
Derivative assets/liabilities held for
trading 12,397,266 92,619 94,006
Derivative assets/liabilities held for
risk 89,894 1,721 1,212
management -------- -------- --------
Total recognised derivative
assets/liabilities 12,487,160 94,340 95,218
-------- -------- --------
From 1st January 2005, amounts previously described as balances from
off-balance sheet financial instruments and included in other assets and
other liabilities have been reclassified to derivative financial instruments
and recognised according to the offset requirements of IFRS. IFRS requires
financial assets and liabilities to be stated on a gross basis unless the
Group has the ability and intention to settle them net. Under master netting
agreements, the Group has the ability, but not the intention, to settle net.
Under UK GAAP, such agreements qualified for net presentation, accordingly,
the derivative balances recognised under IFRS are significantly higher than
those under UK GAAP.
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
Loans and advances
As at
01.01.051 31.12.04 30.06.04 01.01.04
GBPm GBPm GBPm GBPm
-------- -------- -------- --------
Loans and advances to
banks 25,752 80,655 83,042 67,010
Less: impairment
allowance (24) (23) (8) (17)
-------- -------- -------- --------
25,728 80,632 83,034 66,993
-------- -------- -------- --------
-------- -------- -------- --------
Loans and advances to
customers 213,572 265,097 254,896 233,701
Less: impairment
allowance (2,613) (2,688) (2,843) (2,929)
-------- -------- -------- --------
210,959 262,409 252,053 230,772
-------- -------- -------- --------
236,687 343,041 335,087 297,765
-------- -------- -------- --------
The increase in loans and advances to banks and to customers in 2004 mainly
results from the consolidation of additional entities, including special
purpose entities. Loans and advances have decreased at 1st January 2005 due
to the reclassification of trading portfolio assets and reverse repurchase
agreements. These decreases have been partially offset by the increase due
to the presentation on a gross basis of balances that qualified to be
presented on a net basis under UK GAAP.
Impairment allowance
In 2004, the reduction in impairment allowance compared to UK GAAP
provisions for bad and doubtful debts is due to the reclassification of the
provision for undrawn contractually committed facilities and guarantees
provided to other provisions for liabilities. The provision has not been
remeasured, but has been presented in a separate place on the balance sheet.
The total impairment allowance, including provision for undrawn
contractually committed facilities and guarantees, as at 1st January 2005
under IFRS has increased slightly when compared to UK GAAP as a result of
the application of revised calculation methodologies.
A reconciliation of UK GAAP provisions to IFRS impairment allowances is as
follows:
GBPm
UK GAAP provision as at 31st December 2004 2,766
UK GAAP interest in suspense as at 31st December 2004 40
--------
2,806
UK GAAP fees in suspense as at 31st December 2004 19
Additional impairment resulting from the application of
revised
calculation methodologies at 1st January 2005 24
--------
2,849
--------
Impairment allowance on loans and advances to banks 24
Impairment allowance on loans and advances to customers 2,613
Provision for undrawn contractually committed facilities and
guarantees provided 55
Interest and fees not recognised 157
--------
2,849
--------
Interest in suspense is not recognised under IFRS. Interest and fees that
are not expected to be recoverable are not recognised in the income
statement. Interest, representing the unwind of the discount rate applied to
future cashflows included in the impairment allowance calculation, will be
recognised on impaired loans from 2005.
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
Potential credit risk loans
As at
01.01.051 31.12.04 30.06.04 01.01.04
Potential credit risk loans GBPm GBPm GBPm GBPm
Non-accrual loans 2,052 2,115 2,235 2,261
Accruing loans where there
is an expectation of
ultimate write-off
(either partial or full) 1,255 1,334 1,343 1,450
Accruing loans 90 days
overdue, against which
no allowances have been
made 509 521 569 590
Reduced rate loan 15 15 10 4
-------- -------- -------- --------
Total non-performing loans 3,831 3,985 4,157 4,305
Potential problem loans 753 756 824 1,327
-------- -------- -------- --------
Total potential credit
risk loans 4,584 4,741 4,981 5,632
-------- -------- -------- --------
% % % %
Allowance coverage of
non-performing loans 68.8 69.0 69.7 69.6
-------- -------- -------- --------
Allowance coverage of
total potential
credit
risk loans 57.5 58.0 58.1 53.2
-------- -------- -------- --------
The coverage ratios are calculated by dividing the impairment allowance
either by the non-performing loans (NPLs) or the total potential credit risk
loans (PCRLs). The coverage ratios differ from those previously published
for the following reasons:
- Treatment of provisions relating to undrawn contractually
committed facilities and guarantees:
- under UK GAAP provisions for losses on undrawn but committed facilities
(such as loan commitments and guarantees) were included in the
calculation;
- under IAS 37, which became effective from the 1st January 2004, the
equivalent provisions raised against such facilities are excluded.
As a result, coverage ratios are lower than those previously reported.
- Treatment of interest in suspense and income not recognised:
- under UK GAAP, for purposes of the coverage ratio calculation, interest
in suspense was included in the provisions and in the NPLs and PCRLs;
- under IFRS, interest not recognised, by definition, is excluded from
both allowance and NPLs and PCRLs.
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
Potential credit risk loans (continued)
As a result, both NPL and PCRLs coverage ratios will be lower. However, as
this new treatment became effective from 1st January 2005, only the figures
as at 1st January 2005, in the table above, have been affected.
- Change to the underlying impairment allowance balances:
- under IFRS, the 1st January 2005 opening impairment allowance balance is
slightly higher than the 31st December 2004 closing UK GAAP balance due
to the application of revised calculation methodologies.
As a result, the coverage ratios as at 1st January 2005 are slightly higher
than reported as at 31st December 2004 under UK GAAP. This partially offsets
the decreases in the ratios mentioned above.
The overall effect of the changes described above is for coverage ratios to
be marginally lower than previously reported.
Other assets
As at
01.01.051 31.12.04 30.06.04 01.01.04
GBPm GBPm GBPm GBPm
Sundry debtors 2,624 3,711 3,629 3,790
Prepayments 415 467 410 363
Balances arising from
off-balance sheet
financial instruments 18,174 14,000 15,812
Accrued income 556 3,563 3,305 2,763
-------- -------- -------- --------
3,595 25,915 21,344 22,728
-------- -------- -------- --------
In 2004, other assets has reduced mainly due to the recognition of the
shareholders' interest in the long term assurance business in the relevant
lines in the balance sheet and the removal of the pension prepayment under
SSAP 24. This has been partially offset by the recognition of balances
relating to additional consolidated entities and deferred income in respect
of financial guarantees provided to customers.
The reduction in other assets as at 1st January 2005 primarily reflects the
reclassification of balances arising from off balance sheet financial
instruments to derivative financial instruments. From 1st January 2005,
accrued income no longer includes accrued interest, which is included in the
loan balances as part of the effective interest calculation.
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
Other liabilities
As at
01.01.051 31.12.04 30.06.04 01.01.04
GBPm GBPm GBPm GBPm
Obligations under
finance leases payable 353 353 352 110
Balances arising from off
balance sheet
financial instruments 18,009 12,829 14,797
Sundry creditors 4,763 3,851 3,531 4,038
Accruals and deferred
income 4,743 6,820 5,396 5,189
Short positions in
securities 53,903 57,438 49,934
-------- -------- -------- --------
9,859 82,936 79,546 74,068
-------- -------- -------- --------
Current and deferred tax and other provisions for liabilities are no longer
included in other liabilities. These items are presented separately on the
face of the balance sheet. Proposed dividends formerly included within other
liabilities, are not accrued under IFRS.
Other liabilities includes liabilities arising on financial guarantees
provided to customers. In 2005, other liabilities has reduced due to the
reclassification of balances arising from off balance sheet financial
instruments to derivative financial instruments and short positions in
securities to trading portfolio liabilities. This is partly offset by the
inclusion within other liabilities of customer loyalty provisions which have
been reclassified from other provisions for liabilities to other liabilities
and remeasured accordingly. Accruals and deferred income no longer includes
accrued interest, which is included in customer balances as part of the
amortised cost.
Other provisions for liabilities
As at
01.01.051 31.12.04 30.06.04 01.01.04
GBPm GBPm GBPm GBPm
Customer loyalty
provisions 12 15 32
Redundancy and
restructuring 97 97 34 64
Undrawn contractually
committed facilities
and guarantees 55 55 85 82
Onerous leases 39 39 13 23
Sundry provisions 212 213 182 179
-------- -------- -------- --------
403 416 329 380
-------- -------- -------- --------
In 2004, other provisions for liabilities no longer includes provision for
pensions and post retirement benefits, which are presented separately. This
reclassification is partially offset by the inclusion of the provision for
undrawn contractually committed facilities and guarantees of GBP55m as at
31st December 2004 previously reported as part of credit risk provisions.
As at 1st January 2005, the customer loyalty provision has been reclassified
to other liabilities and remeasured accordingly.
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
Capital resources
As at
01.01.051 31.12.04 30.06.04 01.01.04
GBPm GBPm GBPm GBPm
Shareholders' equity
excluding minority
interests 15,242 15,870 14,978 14,640
Minority interests 3,330 894 178 283
-------- -------- -------- --------
Total shareholders'
equity 18,572 16,764 15,156 14,923
Loan capital 10,606 12,277 12,468 12,339
-------- -------- -------- --------
29,178 29,041 27,624 27,262
-------- -------- -------- --------
In 2004, shareholders' equity excluding minority interests has decreased,
primarily reflecting the impact of the recognition of the pension liability
under IAS 19 and the derecognition of the embedded value on the long term
assurance activities. This has been partially offset by the derecognition of
the liability for the final proposed dividend.
As at 1st January 2005, minority interests have increased and loan capital
has decreased primarily due to the reclassification of reserve capital
instruments and certain upper tier 2 instruments from loan capital to
equity. The reclassification of RCIs and certain upper tier 2 instruments,
together with other remeasurements necessitated by IAS 39, has reduced
retained earnings. This reduction is partially offset by the recognition of
the initial cash flow hedging and available for sale reserves.
Group performance ratios
As at
01.01.051 31.12.04 30.06.04 01.01.042
Net asset value per
ordinary share
(excluding minority
interests) 236p 246p 232p 223p
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
% % %
Post-tax return on
average shareholders'
equity (excluding minority
interest) 22.0 19.2 24.6
Cost:income ratios
Cost:income ratios are defined on page 11 and presented below for the Group:
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
% % %
Cost:income ratio 64 68 59
Operating expenses:income less net claims
ratio 61 64 57
Operating expenses:net income less net
claims ratio 66 69 62
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
2 Since IFRS has been applied from 1st January 2004, it is not possible to
determine the average shareholders' equity for this period.
TOTAL ASSETS AND WEIGHTED RISK ASSETS
Total assets
As at
01.01.051 31.12.04 30.06.04 01.01.04
GBPm GBPm GBPm GBPm
UK Banking 128,573 119,561 114,404 110,654
-------- -------- -------- --------
UK Retail Banking 69,064 68,861 67,255 66,720
UK Business Banking 59,509 50,700 47,149 43,934
-------- -------- -------- --------
International Retail and
Commercial Banking 28,715 28,448 25,114 24,389
Barclaycard 22,878 23,059 20,693 20,327
Barclays Capital 454,437 346,901 330,235 279,391
Barclays Global
Investors 61,201 798 711 537
Private Clients 5,050 5,007 4,409 3,840
Private Clients-closed
life
assurance activities 6,551 6,425 6,092 6,226
Head office functions
and other operations2 3,669 3,464 6,275 5,275
Goodwill 4,518 4,518 4,398 4,393
-------- -------- -------- --------
715,592 538,181 512,331 455,032
-------- -------- -------- --------
Weighted risk assets
As at
01.01.051 31.12.04 30.06.04
GBPm GBPm GBPm
UK Banking 91,202 91,913 87,506
-------- -------- --------
UK Retail Banking 36,787 37,111 36,458
UK Business Banking 54,415 54,802 51,048
-------- -------- --------
International Retail and Commercial
Banking 19,386 19,319 17,292
Barclaycard 19,972 20,188 18,404
Barclays Capital 79,548 79,949 72,715
Barclays Global Investors 1,233 1,230 1,004
Private Clients 3,939 4,018 3,632
Head office functions and other
operations 1,944 1,984 2,780
-------- -------- --------
217,224 218,601 203,333
-------- -------- --------
Weighted risk assets for 30th June 2004 and 31st December 2004 have not been
restated but are shown as reported to the Financial Services Authority
(FSA).
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4 which have not been applied to the 2004 comparatives, in
accordance with IFRS 1.
2 Head office functions and other operations includes the Group deferred tax
asset which is not currently allocated by business.
Capital ratios 01.01.051
Weighted risk assets: GBPm
Banking book
On-balance sheet 147,244
Off-balance sheet 26,741
Associated undertakings and joint ventures 3,020
--------
Total banking book 177,005
--------
Trading book
Market risks 22,106
Counterparty and settlement risks 18,113
--------
Total trading book 40,219
--------
Total weighted risk assets 217,224
--------
Capital resources:
Tier 1
Called up share capital 1,614
Eligible reserves 14,886
Minority interests2 2,824
Tier one notes3 920
Less: intangible assets (4,747)
--------
Total qualifying tier 1 capital 15,497
--------
Tier 2
Revaluation reserves 25
Collectively assessed impairment allowances 2,046
Minority Interests 397
Qualifying subordinated liabilities 4
Undated loan capital 3,176
Dated loan capital 5,647
Other 3
--------
Total qualifying tier 2 capital 11,294
--------
Tier 3: short term subordinated liabilities4 286
--------
Less: Supervisory deductions:
Investments not consolidated for supervisory purposes (781)
Other deductions (496)
--------
(1,277)
--------
Total net capital resources 25,800
--------
Tier 1 ratio 7.1%
Risk asset ratio 11.9%
Capital ratios for prior periods have not been restated as these remain as
reported to the FSA. The capital ratios above indicate the impact of IFRS
first time adoption adjustments and have been prepared in accordance with
the FSA's policy statement 05/5.
1 The figures at 1st January 2005 include the impacts of adopting IAS 32,
IAS 39 and IFRS 4.
2 Includes Reserve capital instruments of GBP1,627m.
3 Tier one notes are included in undated loan capital in the consolidated
balance sheet.
4 Subordinated liabilities are included in tiers 2 or 3, subject to limits
laid down in the supervisory requirements.
ADDITIONAL INFORMATION
Economic Capital
Capital Demand
The demand for capital from the Group's businesses via the economic capital
framework is set out below:
Average, as at
31.12.04 30.06.04
GBPm GBPm
UK Banking 4,650 4,450
--------- ---------
UK Retail Banking 2,200 2,150
UK Business Banking 2,450 2,300
--------- ---------
International Retail and Commercial Banking 1,000 1,000
Barclaycard 2,450 2,450
Barclays Capital 2,100 2,050
Barclays Global Investors 150 150
Private Clients 300 300
Private clients-closed life assurance activities 100 100
Head office functions and other operations1 200 200
--------- ---------
Business unit economic capital 10,950 10,700
Capital held at Group centre2 1,400 1,300
--------- ---------
Economic capital requirement (excluding goodwill) 12,200 12,000
Average historic goodwill 5,600 5,550
--------- ---------
Total economic capital requirement 17,950 17,550
--------- ---------
1 Includes Transition Businesses and capital for central function risks.
2 The Group's practice is to maintain an appropriate level of excess
capital, held at Group centre, which is not allocated to business units.
This variance arises as a result of capital management timing and includes
capital held to cover pension contribution risk.
Capital Supply
The supply of capital to support the economic capital framework is set out
below:
Average, as at
31.12.04 30.06.04
GBPm GBPm
Shareholders' equity excluding minority interests
less goodwill 10,450 10,300
Pension liability 1,750 1,700
Cashflow hedge reserve
Available for sale reserve
Preference shares 150 -
--------- ---------
Available funds for economic capital
excluding goodwill 12,350 12,000
Average historic goodwill 5,600 5,550
--------- ---------
Available funds for economic capital 17,950 17,550
--------- ---------
Average ordinary shareholders' equity for
Group economic profit calculation1 17,800 17,550
--------- ---------
Shareholders' equity above has been adjusted as a result of the transition
to IFRS. These changes do not affect the demand from the Group's businesses
for economic capital, but do affect the amount held at Group centre.
The Group has adjusted available funds for economic capital to reflect the
impact of hedging, available for sale securities and pensions. These
adjustments are explained more fully in the following section under economic
profit.
The capital resources to support economic capital comprise shareholders'
equity including preference shares but excluding other minority interests.
1 Average ordinary shareholders' equity for Group economic profit
calculation is the sum of adjusted equity and reserves plus goodwill.
Economic Profit
Year-
ended Half-year ended
31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm
Profit after tax and minority interests 3,254 1,456 1,798
Addback of amortisation charged on
acquired
intangible assets 6 6 -
-------- -------- --------
Profit for economic profit purposes 3,260 1,462 1,798
-------- -------- --------
Average shareholders' equity excluding
minority
interests less goodwill 10,450 10,450 10,300
Add/(deduct): reserve for unrealised
(gains)/losses on effective hedges
Add/(deduct): reserve for unrealised
(gains)/losses on Available for sale
financial instruments
Add: pension fund net deficit 1,750 1,750 1,700
Goodwill and intangible assets arising on
acquisitions 5,600 5,600 5,550
-------- -------- --------
Average shareholders' equity for economic
profit purposes (rounded to the nearest
GBP50m) 17,800 17,800 17,550
-------- -------- --------
Capital charge at 9.5% 1,692 858 834
-------- -------- --------
Economic profit 1,568 604 964
-------- -------- --------
Memo - UK GAAP economic profit 1,885 831 1,054
-------- -------- --------
The economic profit methodology under IFRS will continue to be made up of
two components:
- Profit after tax and minority interests; and
- Capital charge (average shareholders' equity excluding minority
interests multiplied by the Group's cost of equity capital charge).
The Group cost of capital will now be applied at a uniform rate of 9.5%
(previously the Woolwich goodwill component of GBP4,121m was charged at
8.5%).
In general, the impact of IFRS on the Group's financial results will be
reflected in the calculation of economic profit. One example of this is the
treatment of goodwill where the absence of an annual amortisation charge
removes the need for an adjustment to profit after tax and minority
interests for economic profit purposes. In other cases the Group has
determined that the impacts of IFRS should be modified in calculating
economic profit.
- Preference Shares - at the Barclays PLC Group level these shares
are reported as a minority interest. Since they have been issued to improve
the long-term capital base they are included in the funds available to
support economic capital.
The preference shareholders receive a fixed return rather than participating
in the returns available to ordinary shareholders and consequently are
excluded from the calculation of the capital charge. The preference dividend
is reflected in the calculation of the return after tax and minority
interests.
Economic Profit (continued)
- Hedging - to the extent that the Group undertakes the hedging of
future cash flows, shareholders' equity will include gains and losses which
will be offset at the conclusion of the future hedged transaction. Given the
future offset of such gains and losses, they are excluded from shareholders'
equity upon which the capital charge is based.
- Available for sale securities - unrealised gains and losses on
such securities are included in shareholders' equity until disposal or
impairment. Such gains and losses will be excluded from shareholders' equity
for the purposes of calculating the capital charge. Realised gains and
losses and any impairment charge recorded in the income statement will
impact economic profit.
- Pensions - IFRS has required the Group to recognise a deficit with
a consequent reduction in shareholders' equity. This represents a non-cash
reduction in shareholders' equity. For the purposes of deriving the capital
charge, the Group will not deduct the pension deficit from economic capital.
Economic profit generated by business
UK
GAAP IFRS
Year- Year-
ended ended Half-year ended
31.12.04 31.12.04 31.12.04 30.06.04
GBPm GBPm GBPm GBPm
UK Banking 1,271 1,158 565 593
-------- -------- -------- --------
UK Retail Banking 554 473 183 290
UK Business Banking 717 685 382 303
-------- -------- -------- --------
International Retail and
Commercial Banking 127 111 54 57
Barclaycard 362 350 148 202
Barclays Capital 534 521 230 291
Barclays Global Investors 204 195 108 87
Private Clients 102 70 23 47
Private clients-closed life
assurance activities 35 (77) (79) 2
Head office functions and
other operations (149) (146) (138) (8)
-------- -------- -------- --------
2,486 2,182 911 1,271
Historical goodwill (490) (533) (268) (265)
Variance to average
shareholders' equity
(excluding minority
interest) (111) (81) (39) (42)
-------- -------- -------- --------
Economic profit 1,885 1,568 604 964
-------- -------- -------- --------
Part 3
SPECIAL PURPOSE AUDIT REPORT OF PRICEWATERHOUSECOOPERS LLP TO BARCLAYS PLC
('THE COMPANY') ON ITS INTERNATIONAL FINANCIAL REPORTING STANDARDS ('IFRS')
FINANCIAL INFORMATION
We have audited the accompanying consolidated IFRS balance sheets of
Barclays PLC and its subsidiaries ('the Group') as at 1st January 2004 and
31st December 2004, the related consolidated IFRS income statement for the
year ended 31st December 2004, the 1st January 2005 balance sheet and
transition adjustment relating to the adoption of IAS 32, IAS 39 and IFRS 4,
set out on pages 7, 8 and 9 and the associated IFRS 1 reconciliations set
out on pages on 61 to 79 prepared in accordance with the basis of
preparation and the provisional accounting policies set out on pages 40 to
59 (hereinafter referred to as 'the IFRS financial information').
In addition to the above noted opening and year end balance sheets, full
year income statement and associated IFRS reconciliations, included with the
financial information set out on pages 7, 8, 9 and 61 to 79 are the
half-year balance sheet, half-year income statements and associated IFRS
reconciliations. We have not audited the half-year balance sheet, half-year
income statements and associated IFRS reconciliations and these are not
covered by this opinion and do not form part of the above defined IFRS
financial information.
The IFRS financial information has been prepared by the Group as part of its
transition to IFRS and as described on pages 40 to 42 to establish the
financial position, and results of operations of the Group to provide the
comparative financial information expected to be included in the first
complete set of consolidated IFRS financial statements of the Group for the
year ended 31st December 2005.
Respective responsibilities of Directors and PricewaterhouseCoopers LLP
The Directors of the Company are responsible for the preparation of the
consolidated IFRS financial information which has been prepared as part of
the Group's transition to IFRS. Our responsibilities, as independent
auditors, are established in the United Kingdom by the Auditing Practices
Board, our profession's ethical guidance and the terms of our engagement.
Under the terms of engagement we are required to report to you our opinion
as to whether the IFRS financial information has been prepared, in all
material respects, in accordance with the basis of preparation and
provisional accounting policies set out on pages 40 to 59.
This report, including the opinion, has been prepared for, and only for, the
Company for the purposes of assisting with the Group's transition to IFRS
and for no other purpose. To the fullest extent permitted by law, we do not,
in giving this opinion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in
writing.
We read the other information contained in this Transition Report and
consider its implications for our report if we became aware of any apparent
misstatements or material inconsistencies with the above defined IFRS
financial information.
Basis of audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
UK Auditing Practices Board. An audit includes examination, on a test basis,
of evidence relevant to the amounts and disclosures in the IFRS financial
information. It also includes an assessment of the significant estimates and
judgements made by the directors in the preparation of the IFRS financial
information, and of whether the accounting policies are appropriate to the
Group's circumstances and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the IFRS financial
information is free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the IFRS financial
information.
Emphasis of matter
Without qualifying our opinion, we draw your attention to the fact that the
IFRS financial information may require adjustment before its inclusion as
comparative information in the Group's first set of IFRS financial
statements for the year ended 31st December 2005. This is because Standards
currently in issue and adopted by the EU are subject to interpretation
issued from time to time by the International Financial Reporting
Interpretations Committee (IFRIC) and further Standards may be issued by the
International Accounting Standards Board (IASB) that will be adopted for
financial years beginning on or after 1st January 2005.
Additionally, without qualifying our opinion, IFRS is currently being
applied in the United Kingdom and in a large number of other countries
simultaneously for the first time. Furthermore, due to a number of new and
revised Standards included within the body of Standards that comprise IFRS,
there is not yet a significant body of established practice on which to draw
in forming opinions regarding interpretation and application. Accordingly,
practice is continuing to evolve. At this preliminary stage, therefore, the
full financial effect of reporting under IFRS as it will be applied and
reported on in the Group's first IFRS financial statements for the year
ended 31st December 2005 may be subject to change.
Opinion
In our opinion, the accompanying IFRS financial information comprising of
the consolidated IFRS balance sheets as at 1st January 2004 and 31st
December 2004, the related consolidated IFRS income statement for the year
ended 31st December 2004, the 1st January 2005 balance sheet and transition
adjustment relating to the adoption of IAS 32, IAS 39 and IFRS 4, set out on
pages 7, 8 and 9 and the associated IFRS 1 reconciliations set out on pages
on 61 to 79, have been prepared, in all material respects, in accordance
with the basis of preparation and the provisional accounting polices set out
on pages 40 to 59, which describes how IFRS have been applied under IFRS 1,
including the assumptions made by the directors of the Company about the
standards and interpretations expected to be effective, and the policies
expected to be adopted, when they prepare the first complete set of IFRS
financial statements of the Group for the year ended 31st December 2005.
PricewaterhouseCoopers LLP
Chartered Accountants
London
10th May 2005
BARCLAYS PLC
Basis of preparation
First Time Adoption of International Financial Reporting Standards (IFRS)
The Group will adopt the requirements of International Financial Reporting
Standards and International Accounting Standards (collectively, IFRS) for
the first time for the purpose of preparing financial statements for the
year ending 31st December 2005. The standards applied will be those issued
by the International Accounting Standards Board and endorsed (or where there
is a reasonable expectation of endorsement) by the European Union (EU) as at
31st December 2005. In all respects, this is also expected to be in
accordance with IFRS, including the interpretations issued by the
International Financial Reporting Interpretations Committee (IFRIC) as
applicable to Barclays.
With the exception of the fair value option discussed below, the financial
information in this document has been prepared on the basis of the Group's
expectation of the standards that will be applicable as at 31st December
2005.
Further standards and interpretations may be issued that could be applicable
for financial years beginning on or after 1st January 2005 or that are
applicable to later accounting periods but with the option for companies to
adopt for earlier periods. The Group's first annual financial statements
prepared under IFRS may, therefore, be prepared in accordance with different
accounting policies to those used in the preparation of the financial
information in this document. In addition, IFRS is currently being applied
in the European Union and other countries for the first time and contains
many new and revised standards. Therefore practice on which to draw in
applying the standards may develop. At this preliminary stage, before the
Group's first annual financial statements prepared under IFRS are completed,
it should be noted that the financial information in this document could be
subject to change.
In accordance with the transitional provisions set out in IFRS 1,
'First-time Adoption of International Financial Reporting Standards' and
other relevant standards, the Group has applied IFRS expected to be in force
as at 31st December 2005 in its financial reporting with effect from 1st
January 2004, with the exception of the standards relating to financial
instruments and insurance contracts which were applied with effect from 1st
January 2005, as described on page 41. Therefore the impacts of adopting IAS
32, IAS 39 and IFRS 4 are not included in the 2004 comparatives in
accordance with IFRS 1. Previously, the Group followed UK accounting
standards issued by the UK Accounting Standards Board and the pronouncements
of its Urgent Issues Task Force, relevant Statements of Recommended Practice
and the Companies Act, 1985 (collectively, UK GAAP).
At present, the EU-endorsed version of IAS 39 'Financial Instruments:
Recognition and Measurement' does not permit non-trading financial
liabilities to be designated as 'at fair value through profit or loss'.
However, it is expected that proposed amendments to IAS 39 will result in
the EU endorsing a revised version of the standard that would permit such
designation in certain circumstances ('the fair value option'). It is
anticipated that the relevant transitional arrangements would permit
designation as at 1st January 2005 for companies adopting IFRS from that
date. Should this option be available, the Group would consider making use
of the proposals where appropriate. The main area where the option could be
applied is to designate certain issued structured notes containing embedded
derivatives as being measured at fair value through profit or loss. This
would result in an increase estimated to be around GBP70m in opening
shareholders' equity as at 1st January 2005, in comparison to the financial
information included in this document. This increase would reflect the fact
that observable profit arising on structured notes issued before 2005 would
have been recognised in prior periods under IFRS, if the whole instruments
had been measured on a fair value basis, rather than through bifurcating and
measuring the embedded derivatives at fair value.
The Group has used the provisions of IFRS 1 in arriving at appropriate
opening balances for the purposes of these financial statements, as follows:
Goodwill
The Group has not applied IFRS 3, 'Business Combinations' retrospectively to
business combinations prior to the date of transition. The carrying amount
of goodwill in the UK GAAP balance sheet as at 31st December 2003 has
accordingly been brought forward without adjustment.
Property, plant and equipment
The Group has adopted the carrying values of all items of property, plant
and equipment on the date of transition under UK GAAP as their deemed cost,
rather than either reverting to historical cost or carrying out a valuation
at the date of transition as permitted by IFRS 1.
Cumulative foreign currency difference
The Group has brought forward a nil opening balance on the cumulative
foreign currency translation adjustment arising from the re-translation of
foreign operations, which is shown as a separate item in shareholders'
equity at the date of transition in accordance with IAS 21 'The Effects of
Changes in Foreign Exchange Rates'.
Employee benefits
For defined benefit pension schemes and other post retirement benefits, the
Group has recognised all cumulative actuarial gains and losses at the date
of transition.
Derecognition of financial assets and liabilities
The Group has elected not to re-recognise financial assets and liabilities
derecognised before 1st January 2004.
First time application of IFRS relating to financial instruments and
insurance contracts
In addition to the options described above, IFRS 1 also includes specific
transitional provisions for International Accounting Standard 32, 'Financial
Instruments: Disclosure and Presentation', International Accounting Standard
39, 'Financial Instruments: Recognition and Measurement' and International
Financial Reporting Standard 4, 'Insurance Contracts'. The Group has decided
to take advantage of these provisions and therefore has not applied these
standards to the 2004 comparatives. The impact of these standards is
reflected through further adjustments to shareholders' equity as at 1st
January 2005. In the 2004 comparatives, financial instruments and insurance
contracts are included using the measurement bases and the disclosure
requirements of UK GAAP relating to financial instruments and insurance
contracts.
Effects of the transition to IFRS
A description of the differences between UK GAAP and IFRS accounting
policies is set out on pages 80 to 91. Reconciliations of balance sheets
prepared under UK GAAP and IFRS at 1st January 2004, 30th June 2004 and 31st
December 2004 are included on pages 65 to 79. Reconciliations of the profit
and loss account prepared in accordance with UK GAAP and prepared in
accordance with IFRS for the periods ending 30th June 2004 and 31st December
2004 are included on pages 61 to 64. In addition, a reconciliation of the
amount of shareholders' equity at 1st January 2005, before and after the
application of IAS 32, IAS 39 and IFRS 4, and an explanation of the effects
of their application on the opening 2005 balance sheet, is presented on
pages 65 to 70.
Provisional accounting policies expected to be applied from 1st January 2005
and used in the preparation of this document
1. Consolidation
Subsidiaries
The consolidated financial statements combine the financial statements of
Barclays PLC and all its subsidiaries, including certain special purpose
entities where appropriate, made up to 31st December. Entities qualify as
subsidiaries where the Group has the power to exercise control over the
financial and operating policies of the entity. In particular, entities
qualify as subsidiaries where the Group has the power to govern the
financial and operating policies of the entity, generally accompanying a
shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered in assessing whether the Group controls another
entity.
Subsidiaries are consolidated from the date on which control is transferred
to the Group and cease to be consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the purchase of
subsidiaries. The cost of an acquisition is measured at the fair value of
the assets given, equity instruments issued and liabilities incurred or
assumed, plus any costs directly related to the acquisition. The excess of
the cost of an acquisition over the Group's share of the fair value of the
identifiable net assets acquired is recorded as goodwill. See 11 on page 53
for the accounting policy for goodwill. Intra-group transactions and
balances are eliminated on consolidation and consistent accounting policies
are used throughout the Group for the purposes of the consolidation.
Associates and joint ventures
An associate is an entity in which the Group has significant influence, but
not control over, the operating and financial management policy decisions.
This is generally demonstrated by the Group holding in excess of 20%, but no
more than 50%, of the voting rights.
A joint venture is a venture in which the Group has a contractual
arrangement with one or more parties to undertake activities typically,
though not necessarily, through entities which are subject to joint control.
The Group's investment in associates and joint ventures is initially
recorded at cost and increased (or decreased) each year by the Group's share
of the post acquisition net income (or loss), or other movements reflected
directly in the equity of the associated or jointly controlled entity.
Goodwill arising on the acquisition of an associate or joint venture is
included in the cost of the investment (net of any accumulated impairment
loss). When the Group's share of losses in an associate or joint venture
equals or exceeds the recorded interest, including any other unsecured
receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the entity.
The Group's share of the results of associates and joint ventures after tax
is based on financial statements made up to a date not earlier than three
months before the balance sheet date, adjusted to conform with the
accounting polices of the Group. Unrealised gains on transactions are
eliminated to the extent of the Group's interest in the investee. Unrealised
losses are also eliminated unless the transaction provides evidence of
impairment in the asset transferred.
2. Foreign currency translation
The consolidated financial statements are presented in sterling, which is
the functional currency of the parent company.
Items included in the financial statements of each of the Group's entities
are measured using their functional currency, being the currency of the
primary economic environment in which the entity operates.
Foreign currency transactions are translated into the appropriate functional
currency using the exchange rates prevailing at the dates of the
transactions. Balances denominated in foreign currencies are retranslated at
the rate prevailing at the period end. Foreign exchange gains and losses
resulting from the retranslation and settlement of these items are
recognised in the income statement except for qualifying cash flow hedges or
hedges of net investments. See 9 on page 50 for the policies on hedge
accounting.
Non-monetary assets that are measured at fair value are translated using the
exchange rate at the date that the fair value was determined. Exchange
differences on equities and similar non-monetary items held at fair value
through profit or loss, are reported as part of the fair value gain or loss.
Translation differences on equities classified as available-for-sale
financial assets and non-monetary items, are included directly in equity.
For the purposes of translation into the reporting currency, assets,
liabilities and equity of foreign operations are translated at the closing
rate, and items of income and expense are translated into sterling at the
rates prevailing on the dates of the transactions, or average rates of
exchange where these approximate to actual rates.
The exchange differences arising on the translation of a foreign operation
are included in cumulative translation reserves within shareholders' equity
and included in the profit or loss on disposal or partial disposal of the
operation.
Goodwill and fair value adjustments arising on the acquisition of foreign
subsidiaries are maintained in foreign currency, translated at the closing
rate and are included in hedges of net investments where appropriate.
3. Interest, fees and commissions and other income
Interest
Interest income is recognised in interest receivable in the income statement
for all interest-bearing financial instruments classified as held to
maturity, available for sale or other loans and advances using the effective
interest method.
The effective interest method is a method of calculating the amortised cost
of a financial asset or liability (or group of assets and liabilities) and
of allocating the interest income or interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts the
expected future cash payments or receipts through the expected life of the
financial instrument, or when appropriate, a shorter period, to the net
carrying amount of the instrument. The application of the method has the
effect of recognising income (and expense) receivable (or payable) on the
instrument evenly in proportion to the amount outstanding over the period to
maturity or repayment.
In calculating effective interest, the Group estimates cash flows (using
projections based on its experience of customers' behaviour) considering all
contractual terms of the financial instrument but excluding future credit
losses. Fees, including those for early redemption, are included in the
calculation to the extent that they can be measured and are considered to be
an integral part of the effective interest rate. Cash flows arising from the
direct and incremental costs of issuing financial instruments are also taken
into account in the calculation. Where it is not possible to otherwise
estimate reliably the cash flows or the expected life of a financial
instrument, the Group has reference to the payments or receipts specified in
the contract, and the full contractual term.
Fees and commissions
Unless included in the effective interest calculation, fees and commissions
are recognised on an accruals basis when the service has been provided. Fees
and commissions not integral to effective interest arising from negotiating,
or participating in the negotiation of a transaction with a third party,
such as the acquisition of loans, shares or other securities or the purchase
or sale of businesses, are recognised on completion of the underlying
transaction. Portfolio and other management advisory and service fees are
recognised based on the applicable service contracts. Asset management fees
related to investment funds are recognised over the period the service is
provided. The same principle is applied to the recognition of income from
wealth management, financial planning and custody services that are
continuously provided over an extended period of time.
Commitment fees, together with related direct costs, for loan facilities
where draw down is probable are deferred and recognised as an adjustment to
the effective interest on the loan once drawn. Commitment fees in relation
to facilities where draw down is not probable are recognised over the term
of the commitment.
Mortgage indemnity premiums
Mortgage indemnity premiums received are included in the effective interest
rate on the associated loan.
Insurance premiums
Insurance premiums are recognised in the period earned.
Net trading income
Income arises from the margins which are achieved through market making and
customer business and from changes in market value caused by movements in
interest and exchange rates, equity prices and other market variables.
Trading positions are held at fair value and the resulting gains and losses
are included in the income statement, together with interest and dividends
arising from long and short positions.
Lending related fees and commissions payable and incentives
Fees and commissions payable to introducers in respect of obtaining lending
business, where these are direct and incremental costs related to the issue
of a financial instrument, are included in interest income as part of the
effective interest rate.
4. Financial assets and liabilities
The Group classifies its financial assets in the following categories:
financial assets at fair value through profit or loss; loans and
receivables; held to maturity investments and available for sale financial
assets. Management determines the classification of financial assets and
liabilities at initial recognition.
Financial assets at fair value through profit or loss
A financial asset classified in this category is acquired primarily for the
purpose of selling in the short term (held for trading) or if so designated
by management (designated under the fair value option). Derivatives are fair
valued through profit or loss unless they are designated as cash flow hedges
or hedges of net investments. The assets may be either held for trading or
otherwise designated as held at fair value on inception. The assets are
recognised initially at fair value and transaction costs are taken directly
to the income statement. Gains and losses arising from changes in fair value
are included directly in the income statement. The assets are derecognised
when the rights to receive cash flows have expired or the Group has
transferred substantially all the risks and rewards of ownership.
Purchases and sales of investments are recognised on trade date, being the
date on which the Group commits to purchase or sell the asset.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and which are
not classified as available for sale. They arise when the Group provides
money or services directly to a customer with no intention of trading the
loan. Loans and receivables are initially recognised at fair value including
direct and incremental transaction costs. They are subsequently valued at
amortised cost, using the effective interest method (see 3 on page 44). They
are derecognised when the rights to receive cash flows have expired or the
Group has transferred substantially all the risks and rewards of ownership.
Held to maturity
Held to maturity investments are non-derivative financial assets with fixed
or determinable payments that the Group's management has the intention and
ability to hold to maturity. They are initially recognised at fair value
including direct and incremental transaction costs. They are subsequently
valued at amortised cost, using the effective interest method (see 3 on page
44). They are derecognised when the rights to receive cash flows have
expired or the Group has transferred substantially all the risks and rewards
of ownership.
Available for sale
Available for sale investments are non-derivative financial investments that
are designated as available for sale and are not categorised into any of the
other categories described above. They are initially recognised at fair
value including direct and incremental transaction costs. They are
subsequently held at fair value. Gains and losses arising from changes in
fair value are included as a separate component of equity until sale when
the cumulative gain or loss is transferred to the income statement. Interest
determined using the effective interest method (see 3 on page 44),
impairment losses and translation differences on monetary items are
recognised in the income statement. The investments are derecognised when
the rights to receive cash flows have expired or the Group has transferred
substantially all the risks and rewards of ownership.
Where the classification of an asset requires it to be stated at fair value,
this is determined by reference to the quoted bid value in an active market
wherever possible. Where no such active market exists for the particular
asset, the Group uses a valuation technique to arrive at the fair value,
including the use of prices obtained in recent arms' length transactions,
discounted cash flow analysis, option pricing models and other valuation
techniques commonly used by market participants.
Financial liabilities
Financial liabilities are measured at amortised cost, except for trading
liabilities, which are held at fair value through profit or loss. As noted
on page 40, the Group will consider applying the fair value option to
certain financial liabilities when this is permitted.
5. Impairment of financial assets
The Group assesses at each balance sheet date whether there is objective
evidence that a financial asset or a portfolio of financial assets is
impaired. A financial asset or portfolio of financial assets is impaired and
impairment losses are incurred if, and only if, there is objective evidence
of impairment as a result of one or more loss events that occurred after the
initial recognition of the asset and prior to the balance sheet date ('a
loss event') and that loss event or events has had an impact on the
estimated future cash flows of the financial asset or the portfolio that can
be reliably estimated. Objective evidence that a financial asset or a
portfolio is impaired includes observable data that comes to the attention
of the Group about the following loss events:
a) significant financial difficulty of the issuer or obligor;
b) a breach of contract, such as a default or delinquency in interest
or principal payments;
c) the lender, for economic or legal reasons relating to the
borrower's financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider;
d) it becomes probable that the borrower will enter bankruptcy or other
financial reorganisation;
e) the disappearance of an active market for that financial asset
because of financial difficulties; or
f) observable data indicating that there is a measurable decrease in
the estimated future cash flows from a portfolio of financial assets
since the initial recognition of those assets, although the decrease
cannot yet be identified with the individual financial assets in the
portfolio, including:
(i) adverse changes in the payment status of borrowers in the portfolio;
(ii) national or local economic conditions that correlate with defaults on
the assets in the portfolio.
The Group first assesses whether objective evidence of impairment exists
individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually
significant. If the Group determines that no objective evidence of
impairment exists for an individually assessed financial asset, whether
significant or not, it includes the asset in a group of financial assets
with similar credit risk characteristics and collectively assesses them for
impairment. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognised are not included
in a collective assessment of impairment.
For loans and receivables and assets held to maturity, the amount of
impairment loss is measured as the difference between the asset's carrying
amount and the present value of estimated future cash flows discounted at
the asset's original effective interest rate. The amount of the loss is
recognised using an allowance account and the amount of the loss is included
in the income statement.
The calculation of the present value of the estimated future cash flows of a
collateralised financial asset reflect the cash flows that may result from
foreclosure costs for obtaining and selling the collateral, whether or not
foreclosure is probable.
For the purposes of a collective evaluation of impairment, financial assets
are grouped on the basis of similar risk characteristics, taking into
account asset type, industry, geographical location, collateral type,
past-due status and other relevant factors. These characteristics are
relevant to the estimation of future cash flows for groups of such assets by
being indicative of the counterparty's ability to pay all amounts due
according to the contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are collectively
evaluated for impairment are estimated on the basis of the contractual cash
flows of the assets in the group and historical loss experience for assets
with credit risk characteristics similar to those in the group. Historical
loss experience is adjusted on the basis of current observable data to
reflect the effects of current conditions that did not affect the period on
which the historical loss experience is based and to remove the effects of
conditions in the historical period that do not currently exist.
The methodology and assumptions used for estimating future cash flows are
reviewed regularly to reduce any differences between loss estimates and
actual loss experience.
Following impairment, interest income is recognised using the original
effective rate of interest which was used to discount the future cash flows
for the purpose of measuring the impairment loss.
When a loan is uncollectable, it is written off against the related
provision for loan impairment. Such loans are written off after all the
necessary procedures have been completed and the amount of the loss has been
determined. Subsequent recoveries of amounts previously written off decrease
the amount of the provision for loan impairment in the income statement.
If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment loss is
reversed by adjusting the allowance account. The amount of the reversal is
recognised in the income statement.
Assets acquired in exchange for loans and advances in order to achieve an
orderly realisation are accounted for as a disposal of the loan and an
acquisition of an asset. Where control is obtained over an entity as a
result of the transaction, the entity is consolidated. Any further
impairment of the assets or business acquired is treated as an impairment of
the relevant asset or business and not as an impairment of the original
instrument.
In the case of equity instruments classified as available for sale, a
significant or prolonged decline in the fair value of the security below its
cost is considered in determining whether impairment exists. Where such
evidence exists, the cumulative net loss that has been previously recognised
directly in equity is removed from equity and recognised in the income
statement. In the case of debt instruments classified as available for sale,
impairment is assessed based on the same criteria as all other financial
assets. Reversals of impairment of debt securities are recognised in the
income statement. Reversals of impairment of equity shares are not
recognised in the income statement, increases in the fair value of equity
shares after impairment are recognised directly in equity.
6. Sale and repurchase agreements (including stock borrowing and lending)
Investment and other securities may be lent or sold subject to a commitment
to repurchase them (a 'repo'). Such securities are retained on the balance
sheet when substantially all the risks and rewards of ownership remain with
the Group, and the counterparty liability is included separately on the
balance sheet as appropriate.
Similarly, where the Group borrows or purchases securities subject to a
commitment to resell them (a 'reverse repo') but does not acquire the risks
and rewards of ownership, the transactions are treated as collateralised
loans, and the securities are not included in the balance sheet.
The difference between sale and repurchase price is accrued over the life of
the agreements using the effective interest method. Securities lent to
counterparties are also retained in the financial statements.
Securities borrowed are not recognised in the financial statements, unless
these are sold to third parties, at which point the obligation to repurchase
the securities is recorded as a trading liability at fair value and any
subsequent gain or loss included in Net trading income.
7. Securitisation transactions
Certain Group undertakings have issued debt securities or have entered into
funding arrangements with lenders in order to finance specific loans and
advances to customers.
All such financial instruments continue to be held on the Group balance
sheet, and a liability recognised for the proceeds of the funding
transaction, unless:
a) a fully proportional share of all or specifically identified cash flows
are transferred to the lender, in which case, that proportion of the asset
is derecognised;
b) substantially all the risks and returns associated with the financial
instruments have been transferred, in which case, the assets are
derecognised in full; or
c) if a significant portion, but not all, of the risks and rewards have been
transferred, the asset is derecognised entirely if the transferee has the
practical ability to sell the financial asset or recognised only to the
extent of the Group's continuing involvement in the asset.
Transactions undertaken prior to 1st January 2004 that were accounted for on
the basis of linked presentation under UK GAAP have been represented by
separate recognition of the gross assets and the related funding from that
date.
8. Collateral and netting
The Group enters into master netting agreements with counterparties whenever
possible and, when appropriate, obtains collateral. Master agreements
provide that, if an event of default occurs, all outstanding transactions
with the counterparty will fall due and all amounts outstanding will be
settled on a net basis.
Collateral
The Group obtains collateral in respect of customer liabilities where this
is considered appropriate. The collateral normally takes the form of a lien
over the customer's assets and gives the Group a claim on these assets for
both existing and future liabilities.
The Group also receives collateral in the form of cash or securities in
respect of other credit instruments, such as stock borrowing contracts, and
derivative contracts in order to reduce credit risk. Collateral received in
the form of securities is not recorded on the balance sheet. Collateral
received in the form of cash is recorded on the balance sheet with a
corresponding liability or asset. These items are assigned to deposits
received from banks or other counterparties in the case of cash collateral
received, and to loans and advances to banks or customers in the case of
cash collateral paid away. Any interest payable or receivable arising is
recorded as interest payable or interest income respectively.
Netting
Financial assets and liabilities are offset and the net amount reported in
the balance sheet if, and only if, there is a currently enforceable legal
right to set off the recognised amounts and there is an intention to settle
on a net basis, or to realise an asset and settle the liability
simultaneously. This is not generally the case with master agreements, and
the related assets and liabilities are presented gross in the balance sheet.
9. Derivatives and hedge accounting
Derivatives are used to hedge interest rate, exchange rate, commodity, and
equity exposures and exposures to certain indices such as house price
indices and retail price indices related to non-trading positions. In
addition, the use of derivatives and their sale to customers as risk
management products is an integral part of the Group's trading activities.
Derivatives entered into for hedging purposes and for trading purposes
include foreign exchange, interest rate, credit, equity and commodity
derivatives mainly in the form of swaps, forwards, options and combinations
of these instrument types.
Derivatives
Derivatives are measured initially at fair value and subsequently remeasured
to fair value. Fair values are obtained from quoted prices prevailing in
active markets, including recent market transactions, and valuation
techniques, including discounted cash flow models and options pricing models
as appropriate. All derivatives are included in assets when their fair value
is positive, and liabilities when their fair value is negative, unless there
is the legal ability and intention to settle net.
Profits or losses are only recognised on initial recognition of derivatives
when there are observable current market transactions or valuation
techniques are based on observable market inputs.
Embedded derivatives
Some hybrid contracts contain both a derivative and a non-derivative
component. In such cases, the derivative component is termed an embedded
derivative. Where the economic characteristics and risks of embedded
derivatives are not closely related to those of the host contract, and the
hybrid contract itself is not carried at fair value, the embedded derivative
is bifurcated and reported at fair value with gains and losses being
recognised in the income statement.
Hedge accounting
Where derivatives are held for risk management purposes, and when
transactions meet the criteria specified in IAS 39, the Group applies fair
value hedge accounting, cash flow hedge accounting, or hedging of a net
investment in a foreign operation as appropriate to the risks being hedged.
When a financial instrument is designated as a hedge, the Group formally
documents the relationship between the hedging instrument and hedged item as
well as its risk management objectives and its strategy for undertaking the
various hedging transactions. The Group also documents its assessment, both
at hedge inception and on an ongoing basis, of whether the derivatives that
are used in hedging transactions are highly effective in offsetting changes
in fair values or cash flows of hedged items.
The Group discontinues hedge accounting when:
a) it is determined that a derivative is not, or has ceased to be,
highly effective as a hedge;
b) the derivative expires, or is sold, terminated, or exercised;
c) the hedged item matures or is sold or repaid; or
d) a forecast transaction is no longer deemed highly probable.
In certain circumstances, the Group may decide to cease hedge accounting
even though the hedge relationship continues to be highly effective by no
longer designating the financial instrument as a hedge.
To the extent that the changes in the fair value of the hedging derivative
differ from changes in the fair value of the hedged risk in the hedged item;
or the cumulative change in the fair value of the hedging derivative differs
from the cumulative change in the fair value of expected future cash flows
of the hedged item, the hedge is deemed ineffective. The amount of
ineffectiveness, (taking into account the timing of the expected cash flows,
where relevant) provided it is not so great as to disqualify the entire
hedge for hedge accounting, is recorded in the income statement.
Fair value hedge accounting
Changes in fair value of derivatives that qualify and are designated as fair
value hedges are recorded in the income statement, together with changes in
the fair value of the hedged asset or liability that are attributable to the
hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the fair
value hedging adjustment cumulatively made to the carrying value of the
hedged item is, for items carried at amortised cost, amortised over the
period to maturity of the previously designated hedge relationship using the
effective interest method. For available for sale items this fair value
hedging adjustment remains in equity until the hedged item affects profit or
loss.
If the hedged item is sold or repaid, the unamortised fair value adjustment
is recognised immediately in the income statement.
Cash flow hedge accounting
For qualifying cash flow hedges, the fair value gain or loss associated with
the effective portion of the cash flow hedge is recognised initially
directly in shareholders' equity, and recycled to the income statement in
the periods when the hedged item will affect profit or loss. Any ineffective
portion of the gain or loss on the hedging instrument is recognised in the
income statement immediately.
When a hedging instrument expires or is sold, or when a hedge no longer
meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in the income statement. When
a forecast transaction is no longer expected to occur, the cumulative gain
or loss that was recognised in equity is immediately transferred to the
income statement.
Hedges of net investments
Hedges of net investments in foreign operations, including monetary items
that are accounted for as part of the net investment, are accounted for
similarly to cash flow hedges; the effective portion of the gain or loss on
the hedging instrument is recognised directly in equity and the ineffective
portion is recognised immediately in the income statement. The cumulative
gain or loss previously recognised in equity is recognised in the income
statement on the disposal or partial disposal of the foreign operation.
Hedges of net investments may include non-derivative liabilities as well as
derivative financial instruments.
Derivatives that do not qualify for hedge accounting
Derivative contracts entered into as economic hedges that do not qualify for
hedge accounting are held at fair value through profit or loss.
Hedge accounting is not generally applied to credit derivatives that are
purchased to reduce credit risk for large portfolios of originated loans but
is used in specific circumstances where the hedge accounting requirements
are met.
10. Property, plant and equipment
Property and equipment is stated at cost less accumulated depreciation and
provisions for impairment, if any. Additions and subsequent expenditures are
capitalised only to the extent that they enhance the future economic
benefits expected to be derived from the assets.
Depreciation is provided on the depreciable amount of items of property and
equipment on a straightline basis over their estimated useful lives. The
depreciable amount is the gross carrying amount, less the estimated residual
value at the end of its economic life.
The Group generally uses the following annual rates in calculating
depreciation:
Freehold buildings and long-leasehold property 2%
(more than 50 years to run)
Leasehold property Over the remaining
(less than 50 years to run) life of the leases
Costs of adaptation of freehold and leasehold property* 10%
Equipment installed in freehold and leasehold property* 10%
Computers and similar equipment 20-33%
Fixtures and fittings and other equipment 20%
*Where leasehold property has a remaining useful life of less than 10 years,
costs of adaptation and installed equipment are depreciated over the
remaining life of the lease.
Depreciation rates, methods and the residual values underlying the
calculation of depreciation of items of property, plant and equipment are
kept under review to take account of any change in circumstances.
When deciding on depreciation rates and methods, the principal factors that
the Group takes into account are the expected rate of technological
developments and expected market requirements for, and the expected pattern
of usage of, the assets. When reviewing residual values, the Group estimates
the amount that it would currently obtain for the disposal of the asset,
after deducting the estimated cost of disposal if the asset were already of
the age and condition expected at the end of its useful life.
No depreciation is provided on freehold land, although, in common with all
long-lived assets, it is subject to impairment testing, if deemed
appropriate.
11. Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiary and associated entities and
joint ventures, and represents the excess of the fair value of the purchase
consideration and direct costs of making the acquisition, over the fair
value of the Group's share of the assets acquired and the liabilities and
contingent liabilities assumed on the date of the acquisition.
For the purpose of calculating goodwill, fair values of acquired assets,
liabilities and contingent liabilities are determined by reference to market
values or by discounting expected future cash flows to present value. This
discounting is either performed using market rates or by using risk-free
rates and risk adjusted expected future cash flows.
Goodwill is capitalised and reviewed annually for impairment, or more
frequently when there are indications that impairment may have occurred.
Goodwill is allocated to cash-generating units for the purpose of impairment
testing. Goodwill on the acquisitions of associates and joint ventures is
included in the amount of the investments. Gains and losses on the disposal
of an entity include the carrying amount of the goodwill relating to the
entity sold.
Computer software
Computer software is stated at cost, less amortisation and provisions for
impairment, if any.
The identifiable and directly associated external and internal costs of
acquiring and developing software are capitalised where the software is
controlled by the Group, and where it is probable that future economic
benefits that exceed its cost will flow from its use over more than one
year. Costs associated with maintaining software are recognised as an
expense when incurred.
Capitalised computer software is amortised over 3 to 5 years.
12. Impairment of property, plant and equipment and intangible assets
At each balance sheet date, or more frequently where events or changes in
circumstances dictate, property, plant and equipment and intangible assets,
are assessed for indications of impairment. If indications are present,
these assets are subject to an impairment review. Goodwill is subject to an
impairment review as at the balance sheet date each year. The impairment
review comprises a comparison of the carrying amount of the asset with its
recoverable amount: the higher of the asset's or the cash-generating unit's
net selling price and its value in use. Net selling price is calculated by
reference to the amount at which the asset could be disposed of in a binding
sale agreement in an arm's length transaction evidenced by an active market
or recent transactions for similar assets. Value in use is calculated by
discounting the expected future cash flows obtainable as a result of the
asset's continued use, including those resulting from its ultimate disposal,
at a market-based discount rate on a pre-tax basis.
The carrying values of fixed assets and goodwill are written down by the
amount of any impairment and this loss is recognised in the income statement
in the period in which it occurs. A previously recognised impairment loss
relating to a fixed asset may be reversed in part or in full when a change
in circumstances leads to a change in the estimates used to determine the
fixed asset's recoverable amount. The carrying amount of the fixed asset
will only be increased up to the amount that it would have been had the
original impairment not been recognised. Impairment losses on goodwill are
not reversed. For the purpose of conducting impairment reviews,
cash-generating units are the lowest level at which management monitors the
return on investment on assets.
13. Financial guarantees
Financial guarantees are given to banks, financial institutions and other
bodies on behalf of customers to secure loans, overdrafts and other banking
facilities ('facility guarantees'), and to other parties in connection with
the performance of customers under obligations related to contracts, advance
payments made by other parties, tenders, retentions and the payment of
import duties.
Financial guarantees are initially recognised in the financial statements at
fair value on the date that the guarantee was given. Subsequent to initial
recognition, the bank's liabilities under such guarantees are measured at
the higher of the initial measurement, less amortisation calculated to
recognise in the income statement the fee income earned over the period, and
the best estimate of the expenditure required to settle any financial
obligation arising as a result of the guarantees at the balance sheet date.
Any increase in the liability relating to guarantees is taken to the income
statement in Provisions for undrawn contractually committed facilities and
guarantees. Any liability remaining is recognised in the income statement
when the guarantee is discharged, cancelled or expires.
This represents a change in accounting policy from 1st January 2004, from
that applied under UK GAAP and results in financial guarantees being
recognised and measured in accordance with the principles set out in the
proposed amendments to IAS 39 on financial guarantees. This change in policy
has had an immaterial impact on the 2004 income statement and earnings per
share, and has reduced retained earnings by GBP34m as at 1st January 2004.
14. Issued debt and equity securities
Issued financial instruments or their components are classified as
liabilities where the substance of the contractual arrangement results in
the Group having a present obligation to either deliver cash or another
financial asset to the holder, to exchange financial instruments on terms
that are potentially unfavourable or to satisfy the obligation otherwise
than by the exchange of a fixed amount of cash or another financial asset
for a fixed number of equity shares. Issued financial instruments, or their
components, are classified as equity where they meet the definition of
equity and confer on the holder a residual interest in the assets of the
Group. The components of issued financial instruments that contain both
liability and equity elements are accounted for separately with the equity
component being assigned the residual amount after deducting from the
instrument as a whole the amount separately determined as the fair value of
the liability component.
Financial liabilities are carried at amortised cost using the effective
interest method (see 3 above). Derivatives embedded in financial liabilities
are accounted for as set out in 9 above.
Equity instruments, including share capital, are initially recognised at net
proceeds, after deducting transaction costs and any related income tax.
Dividend and other payments to equity holders are deducted from equity, net
of any related income tax.
15. Share capital
Share issue costs
Incremental costs directly attributable to the issue of new shares or
options or the acquisition of a business are shown in equity as a deduction,
net of tax, from the proceeds.
Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in which
they are approved by the Barclays PLC (the Company) shareholders.
Treasury shares
Where the Company or any member of the Group purchases the Company's share
capital, the consideration paid is deducted from shareholders' equity as
treasury shares until they are cancelled. Where such shares are subsequently
sold or reissued, any consideration received is included in shareholders'
equity.
16. Insurance and investment contracts
The Group has allocated its wealth management products into insurance
contracts and investment contracts depending on the level of insurance risk
in the products. The Group has applied IFRS 4, 'Insurance Contracts' to its
insurance contracts. Financial assets and liabilities relating to investment
contracts, and assets backing insurance contracts are classified and
measured as appropriate under IAS 39, 'Financial Instruments: Recognition
and Measurement'. IFRS 4 permits insurance contracts to be accounted for in
accordance with UK GAAP accounting polices. However, from 1st January 2004
the Group has chosen to change its accounting policy in relation to
insurance contracts to use the Modified Statutory Solvency Basis rather than
the Embedded Value basis to account for insurance polices in the UK. This
change will result in insurance contracts and investment contracts being
accounted for on a similar basis and represents the most appropriate
accounting policy in the circumstances. This change in policy has reduced
other operating income by GBP47m in 2004 and has reduced retained earnings
by GBP592m as at 1st January 2004. The impact on earnings per share is
immaterial. Overseas wealth management products have also been allocated
between insurance contracts and investment contracts. Overseas insurance
contract liabilities are measured on an actuarial basis in accordance with
the requirements in the countries concerned and as permitted by IFRS 4.
The significant policies comprising the Modified Statutory Solvency Basis
are as follows:
Claims
Claims and surrenders are accounted for when notified. Maturities on the
policy maturity date and regular withdrawals are accounted for when due.
Long term business provision
The long term business provision is determined by the appointed actuary
following his investigation of the long term fund and is calculated annually
on a statutory solvency basis to comply with UK and other regulatory
requirements. The calculation uses a cash flow method for unit linked
insurance policies for determining mortality and expense reserves. For
conventional policies a gross premium valuation is used.
Reinsurance
Long-term insurance business is ceded to reinsurers under contracts to
transfer part or all of one or more of the following risks: mortality,
investment, persistency and expenses. Such contracts are accounted for as
insurance contracts.
17. Leases
Lessor
Assets leased to customers under agreements which transfer substantially all
the risks and rewards of ownership, with or without ultimate legal title,
are classified as finance leases. When assets are held subject to a finance
lease, the present value of the lease payments, discounted at the rate of
interest implicit in the lease, is recognised as a receivable. The
difference between the total payments receivable under the lease and the
present value of the receivable is recognised as unearned finance income,
which is allocated to accounting periods under the pre-tax net investment
method to reflect a constant periodic rate of return.
Assets leased to customers under agreements which do not transfer
substantially all the risks and rewards of ownership are classified as
operating leases. The leased assets are included within property, plant and
equipment on the Group's balance sheet and depreciation is provided on the
depreciable amount of these assets on a systematic basis over their
estimated useful lives. Lease income is recognised on a straight-line basis
over the period of the lease unless another systematic basis is more
appropriate.
Lessee
Operating lease rentals payable are recognised as an expense in the income
statement on a straight-line basis over the lease term unless another
systematic basis is more appropriate.
18. Employee benefits
The Group provides employees worldwide with post retirement benefits mainly
in the form of pensions. The Group operates a number of pension schemes
which may be funded or unfunded and of a defined contribution or defined
benefit nature. In addition, the Group contributes, according to local law
in the various countries in which it operates, to Governmental and other
plans which have the characteristics of defined contribution plans.
For defined benefit schemes, actuarial valuation of each of the scheme's
obligations using the projected unit credit method and the fair valuation of
each of the scheme's assets are performed annually using consistent
assumptions. The difference between the fair value of the plan assets and
the present value of the defined benefit obligation at the balance sheet
date, together with adjustments for any unrecognised actuarial losses and
past service cost, is recognised as a liability in the balance sheet. An
asset, arising for example, as a result of past over funding or the
performance of the plan investments, is recognised to the extent that it
does not exceed the present value of future contribution holidays or refunds
of contributions.
Cumulative actuarial gains and losses in excess of the greater of 10% of the
assets or 10% of the obligations of the plan are recognised in the income
statement over the remaining average service lives of the employees of the
related plan on a straight-line basis.
For defined contribution schemes, the Group recognises contributions due in
respect of the accounting period in the income statement. Any contributions
unpaid at the balance sheet date are included as a liability.
The Group also provides healthcare to certain retired employees, which are
accrued as a liability in the financial statements over the period of
employment, using a methodology similar to that for defined benefit pension
plans.
Short-term employee benefits, such as salaries, paid absences, and other
benefits, are accounted for on an accruals basis over the period which
employees have provided services in the year. Bonuses are recognised to the
extent that the Group has a present obligation to its employees that can be
measured reliably.
All expenses related to employee benefits are recognised in the income
statement in staff costs, which is included within operating expenses.
19. Share-based payments to employees
The Group engages in equity settled share-based payment transactions in
respect of services received from certain of its employees. The fair value
of the services received is measured by reference to the fair value of the
shares or share options granted on the date of the grant. The cost of the
employee services received in respect of the shares or share options granted
is recognised in the income statement over the period that the services are
received, which is the vesting period. The fair value of the options granted
is determined using option pricing models, which take into account the
exercise price of the option, the current share price, the risk free
interest rate, the expected volatility of the Barclays PLC share price over
the life of the option and other relevant factors. Except for those which
include terms related to market conditions, vesting conditions included in
the terms of the grant are not taken into account in estimating fair value.
Non-market vesting conditions are taken into account by adjusting the number
of shares or share options included in the measurement of the cost of
employee services so that ultimately, the amount recognised in the income
statement reflects the number of vested shares or share options. Where
vesting conditions are related to market conditions, the charges for the
services received are recognised regardless of whether or not the market
related vesting condition is met, provided that the non-market vesting
conditions are met.
20. Provisions
Provisions are recognised for present obligations arising as consequences of
past events where it is more likely than not that a transfer of economic
benefit will be necessary to settle the obligation, and it can be reliably
estimated.
When a leasehold property ceases to be used in the business, provision is
made, where the unavoidable costs of the future obligations relating to the
lease are expected to exceed anticipated rental income. The net costs are
discounted using market rates of interest to reflect the long-term nature of
the cash flows.
Provision is made for the anticipated cost of restructuring, including
redundancy costs, when an obligation exists. An obligation exists when the
Group has a detailed formal plan for restructuring a business and has raised
valid expectations in those affected by the restructuring by starting to
implement the plan or announcing its main features. The provision raised is
normally utilised within nine months.
Contingent liabilities are possible obligations whose existence will be
confirmed only by uncertain future events or present obligations where the
transfer of economic benefit is uncertain or cannot be reliably measured.
Contingent liabilities are not recognised but are disclosed unless they are
remote.
21. Income taxes, including deferred income taxes
Income tax payable on taxable profits ('current tax') is recognised as an
expense in the period in which the profits arise. Income tax recoverable on
tax allowable losses is recognised as an asset only to the extent that it is
regarded as recoverable by offset against current or future taxable profits.
Deferred income tax is provided in full, using the liability method, on
temporary timing differences arising from the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. Deferred income tax is determined using tax rates and
legislation enacted or substantially enacted by the balance sheet date and
are expected to apply when the deferred tax asset is realised or the
deferred tax liability is settled.
Deferred and current tax assets and liabilities are only offset when they
arise in the same tax reporting group and where there is both the legal
right and the intention to settle on a net basis or to realise the asset and
settle the liability simultaneously.
22. Segment reporting
Business segments are distinguishable components of the Group that provide
products or services that are subject to risks and rewards that are
different to those of other business segments. Geographical segments provide
products or services within a particular economic environment that is
subject to different risks and rewards that are different to those of
components operating in other economic environments. Business segments are
the primary reporting segments.
23. Cash and cash equivalents
For the purposes of the cash flow statement, cash comprises cash on hand and
demand deposits, and cash equivalents comprise highly liquid investments
that are convertible into cash with an insignificant risk of changes in
value with original maturities of less than 3 months.
24. Trust activities
The Group commonly acts as trustees and in other fiduciary capacities that
result in the holding or placing of assets on behalf of individuals, trusts,
retirement benefit plans and other institutions. These assets and income
arising thereon are excluded from the financial statements, as they are not
assets of the Group.
DETAILED RECONCILIATIONS
The pages that follow contain detailed reconciliations of UK GAAP to IFRS in
accordance with IFRS 1. The reconciliations contain two columns for each
period as well as the UK GAAP and IFRS results. The reclassify column
includes re-classification and re-analysis of amounts from their UK GAAP
profit and loss account and balance sheet lines to the appropriate IFRS
income statement and balance sheet lines. The remeasure column sets out the
effects of the recognition and measurement changes required by the
transition to IFRS. The remeasure columns are further analysed into the type
of adjustment.
Differences between UK GAAP and IFRS on pages 80 to 91 provide more
information on each type of adjustment and are referenced in the remeasure
analysis.
Income statements
Full-year ended 31st December 2004
Half-year ended 31st December 2004
Half-year ended 30th June 2004
Remeasure analysis
Full-year ended 31st December 2004
Half-year ended 31st December 2004
Half-year ended 30th June 2004
Balance sheets
As at 1st January 2005 - assets
As at 31st December 2004 - assets
As at 30th June 2004 - assets
As at 1st January 2004 - assets
As at 1st January 2005 - liabilities
As at 31st December 2004 - liabilities
As at 30th June 2004 - liabilities
As at 1st January 2004 - liabilities
As at 1st January 2005 - shareholders' equity
As at 31st December 2004 - shareholders' equity
As at 30th June 2004 - shareholders' equity
As at 1st January 2004 - shareholders' equity
Remeasure analysis
As at 1st January 2005 - assets
As at 1st January 2005 - liabilities
As at 1st January 2005 - shareholders' equity
As at 31st December 2004 - assets
As at 31st December 2004 - liabilities
As at 31st December 2004 - shareholders' equity
As at 30th June 2004 - assets
As at 30th June 2004 - liabilities
As at 30th June 2004 - shareholders' equity
As at 1st January 2004 - assets
As at 1st January 2004 - liabilities
As at 1st January 2004 - shareholders' equity
BARCLAYS PLC
Income statement reconciliations for periods ending in 2004.
Full-year ended 31st December 2004
UK GAAP Reclassify Remeasure IFRS
GBPm GBPm GBPm GBPm
Interest income 13,665 - 215 13,880
Interest expense (6,823) - (224) (7,047)
-------- -------- ------ -------
Net interest
income 6,842 - (9) 6,833
-------- -------- ------ -------
Fee and
commission
income 5,672 - (112) 5,560
Fee and
commission
expense (706) - 44 (662)
-------- -------- ------ -------
Net fee and
commission
income 4,966 - (68) 4,898
-------- -------- ------ -------
Dealing profits 1,493 (1,493) - -
Net trading
income - 1,493 (6) 1,487
Net investment
income - 308 740 1,048
-------- -------- ------ -------
Principal - 1,801 734 2,535
transactions
Net premiums
from insurance
contracts - 211 831 1,042
-------- -------- ------ -------
Other operating
income 644 (519) (15) 110
Total operating
income 13,945 - 1,473 15,418
-------- -------- ------ -------
Impairment loss
on loans and
advances and
other credit
risk provisions (1,091) (2) - (1,093)
Provisions for
contingent
liabilities and
commitments (2) 2 - -
-------- -------- ------ -------
Net operating
income 12,852 - 1,473 14,325
-------- -------- ------ -------
Net claims and
benefits on
insurance
contracts - - (1,310) (1,310)
Operating
expenses - (8,350) (186) (8,536)
Administrative
expenses-staff
costs (4,998) 4,998 - -
Administrative
expenses-other (2,758) 2,758 - -
Depreciation and
goodwill
amortisation (594) 594 - -
Share of results
of associates
and
joint ventures 56 (10) 10 56
Exceptional
items 45 (45) - -
Profit on
disposal of
associates and
joint ventures - 45 - 45
-------- -------- ------ -------
Profit before
tax 4,603 (10) (13) 4,580
-------- -------- ------ -------
Tax (1,289) 10 - (1,279)
Dividends (1,538) - 1,538 -
-------- -------- ------ -------
Profit for the
year 1,776 - 1,525 3,301
-------- -------- ------ -------
Profit
attributable to
minority
interests 46 - 1 47
Profit
attributable to
shareholders 1,730 - 1,524 3,254
-------- -------- ------ -------
1,776 - 1,525 3,301
-------- -------- ------ -------
Half-year ended 31st December 2004 Half-year ended 30th June 2004
UK GAAP Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Interest income 7,202 - 113 7,315 6,463 - 102 6,565
Interest expense (3,701) - (114) (3,815) (3,122) - (110) (3,232)
------- ------ ----- ------- -------- ----- ------- -------
Net interest
income 3,501 - (1) 3,500 3,341 - (8) 3,333
------- ------ ----- ------- -------- ----- ------- -------
Fee and commission
income 2,952 - (65) 2,887 2,720 - (47) 2,673
Fee and commission
expense (364) - 35 (329) (342) - 9 (333)
------- ------ ----- ------- -------- ----- ------- -------
Net fee and
commission income 2,588 - (30) 2,558 2,378 - (38) 2,340
------- ------ ----- ------- -------- ----- ------- -------
Dealing profits 687 (687) - - 806 (806) - -
Net trading income - 687 (3) 684 - 806 (3) 803
Net investment
income - 131 594 725 - 177 146 323
------- ------ ----- ------- -------- ----- ------- -------
Principal
transactions - 818 591 1,409 - 983 143 1,126
------- ------ ----- ------- -------- ----- ------- -------
Net premiums from
insurance
contracts - 84 422 506 - 127 409 536
Other operating
income 317 (215) (38) 64 327 (304) 23 46
------- ------ ----- ------- -------- ----- ------- -------
Total operating
income 7,093 - 944 8,037 6,852 - 529 7,381
------- ------ ----- ------- -------- ----- ------- -------
Impairment loss on
loans and advances
and other credit
risk provisions (502) (2) - (504) (589) - - (589)
Provisions for
contingent
liabilities and
commitments (2) 2 - - - - - -
------- ------ ----- ------- -------- ----- ------- -------
Net operating
income 6,589 - 944 7,533 6,263 - 529 6,792
------- ------ ----- ------- -------- ----- ------- -------
Net claims and
benefits on
insurance
contracts - - (896) (896) - - (414) (414)
Operating expenses - (4,439) (123) (4,562) - (3,911) (63) (3,974)
Administrative
expenses-staff
costs (2,601) 2,601 - - (2,397) 2,397 - -
Administrative
expenses-other (1,532) 1,532 - - (1,226) 1,226 - -
Depreciation and
goodwill
amortisation (306) 306 - - (288) 288 - -
Share of results
of associates and
joint ventures 42 (6) 6 42 14 (4) 4 14
Exceptional items - - - - 45 (45) - -
Profit on disposal - - - - - 45 - 45
of associates and
joint ventures
------- ------ ----- ------- -------- ----- ------- -------
Profit before tax 2,192 (6) (69) 2,117 2,411 (4) 56 2,463
------- ------ ----- ------- -------- ----- ------- -------
Tax (614) 6 (26) (634) (675) 4 26 (645)
Dividends (1,010) - 1,010 - (528) - 528 -
------- ------ ----- ------- -------- ----- ------- -------
Profit for the
year 568 - 915 1,483 1,208 - 610 1,818
------- ------ ----- ------- -------- ----- ------- -------
Profit
attributable to
minority interests 26 - 1 27 20 - - 20
Profit
attributable to
shareholders 542 - 914 1,456 1,188 - 610 1,798
------- ------ ----- ------- -------- ----- ------- -------
568 - 915 1,483 1,208 - 610 1,818
------- ------ ----- ------- -------- ----- ------- -------
BARCLAYS PLC
Analysis of remeasure column in income statement reconciliation for
full-year to 31st December 2004.
Full-year 31st December 2004
Consolidation Life Goodwill Share Pensions Intangible Financial Leasing Dividends
assurance based assets guarantees
payments
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Interest income 228 - - - - - 18 (31) -
Interest expense (219) - - - - - - (5) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net interest
income 9 - - - - - 18 (36) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Fee and commission
income (90) - - - - - (17) (5) -
Fee and commission
expense 44 - - - - - - - -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net fee and
commission income (46) - - - - - (17) (5) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Dealing profits - - - - - - - - -
Net trading income (6) - - - - - - - -
Net investment
income 4 717 - - - - - 21 -
------ ------ ---- ----- ----- ------ ------ ---- ------
Principal
transactions (2) 717 - - - - - 21 -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net premiums from
insurance
contracts 151 680 - - - - - - -
Other operating
income 14 (47) - - - - - 18 -
------ ------ ---- ----- ----- ------ ------ ---- ------
Total operating
income 126 1,350 - - - - 1 (2) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Impairment loss on
loans and advances
and other
credit risk
provisions - - - - - - - - -
Provisions for
contingent
liabilities and
commitments - - - - - - - - -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net operating
income 126 1,350 - - - - 1 (2) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net claims and
benefits on
insurance
contracts (51) (1,259) - - - - - - -
Operating expenses (74) (142) 293 (49) (174) (31) - (9) -
Administrative
expenses-staff
costs - - - - - - - - -
Administrative
expenses-other - - - - - - - - -
Depreciation and
goodwill
amortisation - - - - - - - - -
Share of results
of associates and
joint ventures - - 7 - - - - - -
Exceptional items - - - - - - - - -
Profit on disposal
of associates and
joint ventures - - - - - - - - -
------ ------ ---- ----- ----- ------ ------ ---- ------
Profit before tax 1 (51) 300 (49) (174) (31) 1 (11) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Tax - (64) - - 52 9 - 3 -
Dividends - - - - - - - - 1,538
------ ------ ---- ----- ----- ------ ------ ---- ------
Profit for the
year 1 (115) 300 (49) (122) (22) 1 (8) 1,538
------ ------ ---- ----- ----- ------ ------ ---- ------
Profit
attributable to
minority interests 1 - - - - - - - -
Profit
attributable to
shareholders - (115) 300 (49) (122) (22) 1 (8) 1,538
------ ------ ---- ----- ----- ------ ------ ---- ------
1 (115) 300 (49) (122) (22) 1 (8) 1,538
------ ------ ---- ----- ----- ------ ------ ---- ------
Other Total
remeasure
Notes GBPm GBPm
Interest income - 215
Interest expense - (224)
------ -------
Net interest income - (9)
------ -------
Fee and commission income - (112)
Fee and commission expense - 44
------ -------
Net fee and commission
income - (68)
------ -------
Dealing profits - -
Net trading income - (6)
Net investment income (2) 740
------ -------
Principal transactions (2) 734
------ -------
Net premiums from insurance
contracts - 831
Other operating income - (15)
------ -------
Total operating income (2) 1,473
------ -------
Impairment loss on loans
and advances and other
credit risk provisions - -
Provisions for contingent
liabilities and commitments - -
------ -------
Net operating income (2) 1,473
------ -------
Net claims and benefits on
insurance contracts - (1,310)
Operating expenses - (186)
Administrative
expenses-staff costs - -
Administrative
expenses-other - -
Depreciation and goodwill
amortisation - -
Share of results of
associates and joint
ventures 3 10
Exceptional items - -
Profit on disposal of
associates and joint
ventures - -
------ -------
Profit before tax 1 (13)
------ -------
Tax - -
Dividends - 1,538
------ -------
Profit for the year 1 1,525
------ -------
Profit attributable to
minority interests - 1
Profit attributable to
shareholders 1 1,524
------ -------
1 1,525
------ -------
BARCLAYS PLC
Analysis of remeasure column in income statement reconciliation for half-year to
31st December 2004.
Half-year ended 31st December 2004
--------------------------------------------------------------------------
Consoli Life Good Share Pensions Intan Finan Leas Divi
dation Assur will based gible cial ing dends
ance pay assets guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Interest
income 119 - - - - - 10 (16) -
Interest
expense (111) - - - - - - (3) -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net interest
income 8 - - - - - 10 (19) -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Fee and
commission
income (50) - - - - - (12) (3) -
Fee and
commission
expense 35 - - - - - - - -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net fee and
commission
income (15) - - - - - (12) (3) -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Dealing profits - - - - - - - - -
Net trading
income (3) - - - - - - - -
Net investment
income 3 582 - - - - - 11 -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Principal
transactions - 582 - - - - - 11 -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net premiums
from insurance
contracts 61 361 - - - - - - -
Other
operating
income 11 (59) - - - - - 10 -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
operating
income 65 884 - - - - (2) (1) -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Impairment loss on loans
and advances and other
credit risk provisions - - - - - - - - -
Provisions for
contingent liabilities
and commitments - - - - - - - - -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net operating
income 65 884 - - - - (2) (1) -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Net claims and
benefits on
insurance
contracts (23) (873) - - - - - - -
Operating
expenses (37) (91) 147 (32) (84) (22) - (4) -
Administrative
expenses-staff costs - - - - - - - - -
Administrative
expenses-other - - - - - - - - -
Depreciation and
goodwill amortisation - - - - - - - - -
Share of
results of
associates and
joint ventures - - 3 - - - - - -
Exceptional items - - - - - - - - -
Profit on disposal of
associates and joint
ventures - - - - - - - - -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Profit before
tax 5 (80) 150 (32) (84) (22) (2) (5) -
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Tax 4 (64) - - 26 6 1 1 -
Dividends - - - - - - - - 1,010
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Profit for the
year 9 (144) 150 (32) (58) (16) (1) (4) 1,010
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Profit
attributable
to minority
interests 1 - - - - - - - -
Profit
attributable
to
shareholders 8 (144) 150 (32) (58) (16) (1) (4) 1,010
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
9 (144) 150 (32) (58) (16) (1) (4) 1,010
------------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Half-year ended
31st December
2004
------------------
Other Total
remeasure
Notes
GBPm GBPm
-------------------- ------- --------
Interest income - 113
Interest expense - (114)
-------------------- ------- --------
Net interest income - (1)
-------------------- ------- --------
Fee and commission income - (65)
Fee and commission expense - 35
-------------------- ------- --------
Net fee and commission
income - (30)
-------------------- ------- --------
Dealing profits - -
Net trading income - (3)
Net investment income (2) 594
-------------------- ------- --------
Principal transactions (2) 591
-------------------- ------- --------
Net premiums from insurance
contracts - 422
Other operating income - (38)
-------------------- ------- --------
Total operating income (2) 944
-------------------- ------- --------
Impairment loss on loans and
advances and other
credit risk provisions - -
Provisions for contingent
liabilities and
commitments - -
-------------------- ------- --------
Net operating income (2) 944
-------------------- ------- --------
Net claims and benefits on
insurance
contracts - (896)
Operating expenses - (123)
Administrative
expenses-staff costs - -
Administrative
expenses-other - -
Depreciation and goodwill
amortisation - -
Share of results of
associates and joint
ventures 3 6
Exceptional items - -
Profit on disposal of
associates and joint
ventures - -
-------------------- ------- --------
Profit before tax 1 (69)
-------------------- ------- --------
Tax - (26)
Dividends - 1,010
-------------------- ------- --------
Profit for the year 1 915
-------------------- ------- --------
Profit attributable to
minority interests - 1
Profit attributable to
shareholders 1 914
-------------------- ------- --------
1 915
-------------------- ------- --------
BARCLAYS PLC
Analysis of remeasure column in income statement reconciliation for
half-year to 30th June 2004.
Half-year ended 30th June 2004
Consolidation Life Goodwill Share Pensions Intangible Financial Leasing Dividends
assurance based assets guarantees
payments
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Interest income 109 - - - - - 8 (15) -
Interest expense (108) - - - - - - (2) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net interest income 1 - - - - - 8 (17) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Fee and commission
income (40) - - - - - (5) (2) -
Fee and commission
expense 9 - - - - - - - -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net fee and
commission income (31) - - - - - (5) (2) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Dealing profits - - - - - - - - -
Net trading income (3) - - - - - - - -
Net investment income 1 135 - - - - - 10 -
------ ------ ---- ----- ----- ------ ------ ---- ------
Principal
transactions (2) 135 - - - - - 10 -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net premiums from
insurance contracts 90 319 - - - - - - -
Other operating
income 3 12 - - - - - 8 -
------ ------ ---- ----- ----- ------ ------ ---- ------
Total operating
income 61 466 - - - - 3 (1) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Impairment loss on
loans and advances
and other
credit risk
provisions - - - - - - - - -
Provisions for
contingent
liabilities and
commitments - - - - - - - - -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net operating income 61 466 - - - - 3 (1) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Net claims and
benefits on insurance
contracts (28) (386) - - - - - - -
Operating expenses (37) (51) 146 (17) (90) (9) - (5) -
Administrative
expenses-staff costs - - - - - - - - -
Administrative
expenses-other - - - - - - - - -
Depreciation and
goodwill amortisation - - - - - - - - -
Share of results of
associates and joint
ventures - - 4 - - - - - -
Exceptional items - - - - - - - - -
Profit on disposal of
associates and joint
ventures - - - - - - - - -
------ ------ ---- ----- ----- ------ ------ ---- ------
Profit before tax (4) 29 150 (17) (90) (9) 3 (6) -
------ ------ ---- ----- ----- ------ ------ ---- ------
Tax (4) - - - 26 3 (1) 2 -
Dividends - - - - - - - - 528
------ ------ ---- ----- ----- ------ ------ ---- ------
Profit for the year (8) 29 150 (17) (64) (6) 2 (4) 528
------ ------ ---- ----- ----- ------ ------ ---- ------
Profit attributable
to minority interests - - - - - - - - -
Profit attributable
to shareholders (8) 29 150 (17) (64) (6) 2 (4) 528
------ ------ ---- ----- ----- ------ ------ ---- ------
(8) 29 150 (17) (64) (6) 2 (4) 528
------ ------ ---- ----- ----- ------ ------ ---- ------
Other Total
remeasure
Notes GBPm GBPm
Interest income - 102
Interest expense - (110)
------ -------
Net interest income - (8)
------ -------
Fee and commission income - (47)
Fee and commission expense - 9
------ -------
Net fee and commission
income - (38)
------ -------
Dealing profits - -
Net trading income - (3)
Net investment income - 146
------ -------
Principal transactions - 143
------ -------
Net premiums from insurance
contracts - 409
Other operating income - 23
------ -------
Total operating income - 529
------ -------
Impairment loss on loans and
advances and other
credit risk provisions - -
Provisions for contingent
liabilities and commitments - -
------ -------
Net operating income - 529
------ -------
Net claims and benefits on
insurance contracts - (414)
Operating expenses - (63)
Administrative
expenses-staff costs - -
Administrative
expenses-other - -
Depreciation and goodwill
amortisation - -
Share of results of
associates and joint
ventures - 4
Exceptional items - -
Profit on disposal of
associates and joint
ventures - -
------ -------
Profit before tax - 56
------ -------
Tax - 26
Dividends - 528
------ -------
Profit for the year - 610
------ -------
Profit attributable to
minority interests - -
Profit attributable to
shareholders - 610
------ -------
- 610
------ -------
BARCLAYS PLC
Balance sheet - assets reconciliation as at periods from 1st January 2004 -
1st January 2005.
1st January 2005 31st December 2004
IFRS Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
(except
IAS 32/39
& IFRS 4)
ASSETS GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cash and balances
at central banks 1,753 - 1,485 3,238 1,753 - - 1,753
Items in the
course of
collection from
other banks 1,772 - - 1,772 1,772 - - 1,772
Treasury bills and
other
eligible bills 6,658 (6,658) - - 6,658 - - 6,658
Trading portfolio
assets - 112,356 885 113,241 - - - -
Non-trading
financial
instruments fair
valued through
profit and loss:
- held on own
account - - 2,367 2,367 - - - -
- held in respect
of linked
liabilities to
customers under
investment
contracts - - 63,124 63,124 - - - -
Derivative
financial
instruments - 17,958 76,382 94,340 - - - -
Loans and advances
to banks 80,632 (60,804) 5,900 25,728 75,131 - 5,501 80,632
Loans and advances
to customers 262,409 (64,408) 12,958 210,959 254,946 - 7,463 262,409
Debt securities 130,311 (130,311) - - 127,428 - 2,883 130,311
Equity shares 11,399 (11,399) - - 12,166 - (767) 11,399
Available for sale
financial
investments - 46,523 1,968 48,491 - - - -
Reverse repurchase
agreements and
cash collateral on
securities
borrowed - 119,399 20,175 139,574 - - - -
Other assets 25,915 (21,812) (508) 3,595 22,154 5,078 (1,317) 25,915
Insurance assets,
including
unit-linked assets 8,576 (844) (7,579) 153 - 8,378 198 8,576
Investments in
associates and
joint ventures 429 - - 429 409 - 20 429
Goodwill 4,518 - - 4,518 - 4,295 223 4,518
Intangible assets 139 - - 139 4,295 (4,295) 139 139
Property, plant
and equipment 2,282 - - 2,282 1,921 - 361 2,282
Prepayments and
accrued income - - - - 5,078 (5,078) - -
Deferred tax
assets 1,388 - 254 1,642 - - 1,388 1,388
Retail life-fund
assets
attributable to
policyholders - - - - 8,378 (8,378) - -
------- ---------- -------- ------- -------- ------- ------- --------
Total assets 538,181 - 177,411 715,592 522,089 - 16,092 538,181
------- ---------- -------- ------- -------- ------- ------- --------
30th June 2004 1st January 2004
UK GAAP Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
ASSETS GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cash and balances
at central banks 1,829 - - 1,829 1,726 - - 1,726
Items in the
course of
collection from
other banks 2,527 - - 2,527 2,006 - - 2,006
Treasury bills
and other
eligible bills 6,547 - - 6,547 7,177 - - 7,177
Trading portfolio
assets - - - - - - - -
Non-trading
financial
instruments fair
valued through
profit and loss:
- held on own
account - - - - - - - -
- held in respect
of linked
liabilities to
customers under
investment
contracts - - - - - - - -
Derivative
financial
instruments - - - - - - - -
Loans and
advances to banks 76,677 - 6,357 83,034 61,924 - 5,069 66,993
Loans and
advances to
customers 247,073 - 4,980 252,053 226,819 - 3,953 230,772
Debt securities 117,387 - 2,453 119,840 97,393 - 2,503 99,896
Equity shares 9,365 - (766) 8,599 7,859 - (765) 7,094
Available for
sale financial
investments - - - - - - - -
Reverse
repurchase
agreements and
cash collateral
on securities
borrowed - - - - - - - -
Other assets 17,665 4,575 (896) 21,344 19,736 3,921 (929) 22,728
Insurance assets,
including
unit-linked
assets - 7,911 254 8,165 - 8,077 197 8,274
Investments in
associates and
joint ventures 429 - 13 442 428 - 10 438
Goodwill - 4,263 135 4,398 - 4,406 (13) 4,393
Intangible assets 4,263 (4,263) 62 62 4,406 (4,406) 64 64
Property, plant
and equipment 1,746 - 362 2,108 1,790 - 333 2,123
Prepayments and
accrued income 4,575 (4,575) - - 3,921 (3,921) - -
Deferred tax
assets - - 1,383 1,383 - - 1,348 1,348
Retail life-fund
assets
attributable to
policyholders 7,911 (7,911) - - 8,077 (8,077) - -
------- ------- ------- ------- -------- ------- -------- --------
Total assets 497,994 - 14,337 512,331 443,262 - 11,770 455,032
------- ------- ------- ------- -------- ------- -------- --------
BARCLAYS PLC
Balance sheet - liabilities reconciliation as at periods from 1st January 2004 -
1st January 2005.
1st January 2005 31st December 2004
----------------------------------------- --------------------------------------------
IFRS Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
(except
IAS 32/
39
& IFRS 4)
LIABILITIES GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------- ------- -------- ------- ------ ------- -------- ------
Deposits from
banks 111,024 (42,390) 6,101 74,735 111,024 - - 111,024
Items in the
course of
collection due
to other banks 1,205 - - 1,205 1,205 - - 1,205
Customer
accounts 217,492 (34,078) 11,074 194,488 217,718 - (226) 217,492
Trading
portfolio
liabilities - 53,903 5,211 59,114 - - - -
Liabilities to
customers
under
investment
contracts - - 64,609 64,609 - - - -
Derivative
financial
instruments - 18,289 76,929 95,218 - - - -
Debt
securities in
issue 83,842 273 (3,361) 80,754 67,806 - 16,036 83,842
Repurchase
agreements and
cash
collateral on
securities
lent - 78,351 20,231 98,582 - - - -
Other
liabilities 82,936 (74,567) 1,490 9,859 75,981 6,582 373 82,936
Accruals and
deferred
income - - - - 6,582 (6,582) - -
Current tax
liabilities 621 - - 621 584 - 37 621
Insurance
contract
liabilities
including
unit-linked
liabilities 8,377 - (4,781) 3,596 - 8,378 (1) 8,377
Subordinated
liabilities:
- Undated loan
capital-
non
convertible 6,149 98 (2,039) 4,208 6,149 - - 6,149
- Dated loan
capital-conver
tible
to
preference
shares 15 - - 15 15 - - 15
- Dated loan
capital-
non
convertible 6,113 121 149 6,383 6,113 - - 6,113
Deferred tax
liabilities 1,362 - 3 1,365 738 - 624 1,362
Other
provisions for
liabilities 416 - (13) 403 467 - (51) 416
Dividend - - - - 1,011 - (1,011) -
Retirement
benefit
liabilities 1,865 - - 1,865 - - 1,865 1,865
Retail-life
fund
liabilities to
policyholders - - - - 8,378 (8,378) - -
----------------- -------- ------- -------- ------- ------ ------- -------- ------
Total
liabilities 521,417 - 175,603 697,020 503,771 - 17,646 521,417
----------------- -------- ------- -------- ------- ------ ------- -------- ------
30th June 2004 1st January 2004
------------------------------------------- ------------------------------------------
UK GAAP Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
LIABILITIES GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------- -------- -------- -------- -------- -------- -------- -------- --------
Deposits from
banks 115,836 - - 115,836 94,092 - - 94,092
Items in the
course of
collection due
to other banks 1,442 - - 1,442 1,286 - - 1,286
Customer
accounts 206,204 - (34) 206,170 184,868 - (72) 184,796
Trading
portfolio
liabilities - - - - - - - -
Liabilities to - - - - - - - -
customers
under
investment
contracts
Derivative - - - - - - - -
financial
instruments
Debt
securities in
issue 55,280 - 14,151 69,431 49,569 - 11,900 61,469
Repurchase
agreements and
cash
collateral on
securities
lent - - - - - - - -
Other
liabilities 74,262 5,212 72 79,546 69,000 4,983 85 74,068
Accruals and
deferred
income 5,212 (5,212) - - 4,983 (4,983) - -
Current tax
liabilities 680 - 17 697 497 - 17 514
Insurance
contract
liabilities
including
unit-linked
liabilities - 7,911 33 7,944 - 8,077 (54) 8,023
Subordinated
liabilities:
- Undated loan
capital-
non
convertible 6,233 - - 6,233 6,310 - - 6,310
- Dated loan
capital-conver
tible
to
preference
shares 15 - - 15 17 - - 17
- Dated loan
capital-
non
convertible 6,220 - - 6,220 6,012 - - 6,012
Deferred tax
liabilities 665 - 619 1,284 646 - 611 1,257
Other
provisions for
liabilities 393 - (64) 329 369 - 11 380
Dividend 529 - (529) - 879 - (879) -
Retirement
benefit
liabilities - - 2,028 2,028 - - 1,885 1,885
Retail-life
fund
liabilities to
policyholders 7,911 (7,911) - - 8,077 (8,077) - -
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total
liabilities 480,882 - 16,293 497,175 426,605 - 13,504 440,109
-------- -------- -------- -------- -------- -------- -------- -------- --------
BARCLAYS PLC
Balance sheet - shareholders' equity reconciliation as at periods from
1st January 2004 - 1st January 2005.
1st January 2005 31st December 2004
------------------------------------------ --------------------------------------------
IFRS Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
(except
IAS 32/
39
& IFRS 4)
SHAREHOLDERS' GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
EQUITY ------ ----- ------ ------ ----- ----- ------ -----
-------------
Called up
share capital 1,614 - - 1,614 1,614 - - 1,614
Share premium
account 5,524 - - 5,524 5,524 - - 5,524
Less: Treasury
shares (119) - - (119) - (119) - (119)
Available for
sale reserve - - 314 314 - - - -
Revaluation
reserve - - - - 24 (24) - -
Cashflow
hedging
reserve - - 302 302 - - - -
Capital
redemption
reserve 309 - - 309 309 - - 309
Other capital
reserve 617 - - 617 617 - - 617
Translation
reserve (58) - - (58) - (58) - (58)
Retained
earnings 7,983 - (1,244) 6,739 9,329 201 (1,547) 7,983
------------- ------ ----- ------ ------ ----- ----- ------ -----
Shareholders'
equity
excluding
minority
interests 15,870 - (628) 15,242 17,417 - (1,547) 15,870
------------- ------ ----- ------ ------ ----- ----- ------ -----
Minority
interests 894 - 2,436 3,330 901 - (7) 894
------------- ------ ----- ------ ------ ----- ----- ------ -----
Total
shareholders'
equity 16,764 - 1,808 18,572 18,318 - (1,554) 16,764
------------- ------ ----- ------ ------ ----- ----- ------ -----
Total
liabilities
and
shareholders'
equity 538,181 - 177,411 715,592 522,089 - 16,092 538,181
------------- ------ ----- ------ ------ ----- ----- ------ -----
30th June 2004 1st January 2004
--------------------------------------------- ---------------------------------------------
UK GAAP Reclassify Remeasure IFRS UK GAAP Reclassify Remeasure IFRS
SHAREHOLDERS' GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
EQUITY
--------- -------- -------- -------- -------- -------- -------- -------- --------
Called up
share capital 1,613 - - 1,613 1,642 - - 1,642
Share premium
account 5,437 - - 5,437 5,417 - - 5,417
Less:
Treasury
shares - (115) - (115) - (84) - (84)
Available for
sale
reserve - - - - - - - -
Revaluation
reserve 24 (24) - - 24 (24) - -
Cashflow
hedging
reserve - - - - - - - -
Capital
redemption
reserve 305 - - 305 274 - - 274
Other capital
reserve 617 - - 617 617 - - 617
Translation
reserve - (43) - (43) - - - -
Retained
earnings 8,938 182 (1,956) 7,164 8,400 108 (1,734) 6,774
--------- -------- -------- -------- -------- -------- -------- -------- --------
Shareholders'
equity
excluding
minority
interests 16,934 - (1,956) 14,978 16,374 - (1,734) 14,640
--------- -------- -------- -------- -------- -------- -------- -------- --------
Minority
interests 178 - - 178 283 - - 283
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total
shareholders'
equity 17,112 - (1,956) 15,156 16,657 - (1,734) 14,923
--------- -------- -------- -------- -------- -------- -------- -------- --------
Total
liabilities
and
shareholders'
equity 497,994 - 14,337 512,331 443,262 - 11,770 455,032
--------- -------- -------- -------- -------- -------- -------- -------- --------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - assets as at 1st January 2005.
As at 1st January 2005
----------------------------------------------------------------------------------------------------------------
Derivatives, Netting Capital Loan Effective Insurance Derecognition Other Total
financial instruments impairment interest contracts and financial remeasure
instruments liabilities
and hedge
accounting
Notes (n),(o) (p) (q) (r) (s) (t) (u)
ASSETS GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Cash and
balances at
central banks - - - - - 1,485 - - 1,485
Items in the
course of
collection from
other banks - - - - - - - - -
Treasury
bills and other
eligible bills - - - - - - - - -
Trading
portfolio
assets (8) 5,211 - - - - (4,318) - 885
Non-trading
financial
instrument
fair valued
through profit
and loss:
- held on own
account 25 - - - - 2,342 - - 2,367
- held in
respect of
linked
liabilities to
customers
under
investment
contracts - - - - - 63,124 - - 63,124
Derivative
financial
instruments 483 75,899 - - - - - - 76,382
Loans and
advances to
banks - 5,602 - (1) - - 299 - 5,900
Loans and
advances to
customers 39 12,957 1 (23) (16) - - - 12,958
Debt
securities - - - - - - - - -
Equity
securities - - - - - - - - -
Available for
sale financial
investments 819 - - - - 1,149 - - 1,968
Reverse
repurchase
agreements and
cash
collateral on
securities
borrowed - 20,175 - - - - - - 20,175
Other assets (456) 23 - - (54) - (21) - (508)
Insurance
assets,
including
unit-linked
assets - - - - - (7,579) - - (7,579)
Investments in
associates
and joint
ventures - - - - - - - - -
Goodwill - - - - - - - - -
Intangible
assets - - - - - - - - -
Property,
plant and
equipment - - - - - - - - -
Prepayments
and accrued
income - - - - - - - - -
Deferred tax
assets 93 - 2 - 62 - 97 - 254
Retail
life-fund assets
attributable to
policyholders - - - - - - - - -
--------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total assets 995 119,867 3 (24) (8) 60,521 (3,943) - 177,411
--------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - liabilities as at
1st January 2005.
As at 1st January 2005
-------------------------------------------------------------------------------------------------------
Deri Netting Capital Loan Effective Insurance Derecognition Other Total
vatives, instruments impairment interest contracts and financial remeasure
finan liabilities
cial
instru
ments
and hedge
account
ing
Notes (n),(o) (p) (q) (r) (s) (t) (u)
LIABILITIES GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ----- ------ ------ ------ ------- ------ ------ ----- ---------
Deposits from
banks 76 7,726 - - - - (1,701) - 6,101
Items in the
course
of collection
due
to other
banks - - - - - - - - -
Customer
accounts (1,049) 11,420 49 - - 514 140 - 11,074
Trading
portfolio
liabilities - 5,211 - - - - - - 5,211
Liabilities to
customers
under
investment
contracts - - - - - 64,609 - - 64,609
Derivative
financial
instruments 1,546 75,313 - - 77 - (7) - 76,929
Debt
securities in
issue 76 - 10 - 3 - (3,450) - (3,361)
Reverse
repurchase
agreements and
cash
collateral on
securities
lent 56 20,175 - - - - - - 20,231
Other
liabilities 29 22 (4) - 49 78 1,316 - 1,490
Accruals and
deferred income - - - - - - - - -
Current tax
liabilities - - - - - - - - -
Insurance
contract
liabilities
including
unit-linked
liabilities - - - - - (4,781) - - (4,781)
Subordinated
liabilities:
- Undated loan
capital-non
convertible 7 - (2,051) - 5 - - - (2,039)
- Dated loan - - - - - - - - -
capital-
convertible
to preference
shares
- Dated loan
capital-non
convertible 146 - - - 3 - - - 149
Deferred tax
liabilities - - - - - 3 - - 3
Other
provisions for
liabilities - - - - - - (13) - (13)
Dividend - - - - - - - - -
Retirement
benefit
liabilities - - - - - - - - -
Retail-life
fund
liabilities to
policyholders - - - - - - - - -
-------------- ----- ------ ------ ------ ------- ------ ------ ----- ---------
Total
liabilities 887 119,867 (1,996) - 137 60,423 (3,715) - 175,603
-------------- ----- ------ ------ ------ ------- ------ ------ ----- ---------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - shareholders' equity as at 1st
January 2005.
As at 1st January 2005
--------------------------------------------------------------------------------------------------------
Derivatives, Netting Capital Loan Effective Insurance Derecognition Other Total
financial instruments impairment interest contracts and financial re
instruments liabilities measure
and hedge
accounting
Notes (n),(o) (p) (q) (r) (s) (t) (u)
SHAREHOLDERS'
EQUITY GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------ ------ ------ ------ ------ ------ ------ ------ -----
Called up share
capital - - - - - - - - -
Share premium account - - - - - - - - -
Less: Treasury shares - - - - - - - - -
Available for
sale reserve 314 - - - - - - - 314
Revaluation reserve - - - - - - - - -
Cashflow
hedging
reserve 302 - - - - - - - 302
Capital redemption
reserve - - - - - - - - -
Other capital reserve - - - - - - - - -
Translation reserve - - - - - - - - -
Retained
earnings (506) - (439) (24) (145) 98 (228) - (1,244)
--------------- ------ ------ ------ ------ ------ ------ ------ ------ -----
Shareholders'
equity
excluding
minority
interests 110 - (439) (24) (145) 98 (228) - (628)
--------------- ------ ------ ------ ------ ------ ------ ------ ------ -----
Minority
interests (2) - 2,438 - - - - - 2,436
--------------- ------ ------ ------ ------ ------ ------ ------ ------ -----
Total
shareholders'
equity 108 - 1,999 (24) (145) 98 (228) - 1,808
--------------- ------ ------ ------ ------ ------ ------ ------ ------ -----
Total
liabilities
and
shareholders'
equity 995 119,867 3 (24) (8) 60,521 (3,943) - 177,411
--------------- ------ ------ ------ ------ ------ ------ ------ ------ -----
BARCLAYS PLC
Analysis of remeasure column in balance sheet - assets as at 31st December 2004.
As at 31st December 2004
--------------------------------------------------------------------------------------------------------
Consoli Life Goodwill Share Pensions Intangible Financial Leasing Dividends
dation assurance based assets guarantees
payments
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
ASSETS GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ -------
Cash and balances - - - - - - - - -
at central banks
Items in the - - - - - - - - -
course of
collection from
other banks
Treasury bills and - - - - - - - - -
other eligible
bills
Trading portfolio - - - - - - - - -
assets
Non-trading
financial
instruments fair
valued through
profit and loss:
- held on own - - - - - - - - -
account
- held in respect - - - - - - - - -
of linked
liabilities to
customers
under investment
contracts
Derivative - - - - - - - - -
financial
instruments
Loans and
advances to
banks 5,376 125 - - - - - - -
Loans and
advances to
customers 8,026 - - - - - - (618) -
Debt
securities 2,883 - - - - - - - -
Equity shares (768) - - - - - - - -
Available for sale - - - - - - - - -
financial
investments
Reverse repurchase - - - - - - - - -
agreements and
cash
collateral on
securities
borrowed
Other assets 246 (877) - 5 (843) (49) 201 - -
Insurance
assets,
including
unit-linked
assets 41 157 - - - - - - -
Investments in
associates and
joint ventures - - 7 - - - - - -
Goodwill - - 223 - - - - - -
Intangible
assets - - 71 - - 68 - - -
Property,
plant and
equipment - - - - - - - 361 -
Prepayments and - - - - - - - - -
accrued income
Deferred tax
assets 536 - - - 756 - 12 84 -
Retail life-fund - - - - - - - - -
assets
attributable to
policyholders
------------------ ------- ------ ------ ------ ------ ------ ------ ------ -------
Total assets 16,340 (595) 301 5 (87) 19 213 (173) -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ -------
As at 31st December 2004
------------------------
Other Total
remeasure
Notes
ASSETS GBPm GBPm
------------------ ------- ---------
Cash and balances at - -
central banks
Items in the course of - -
collection from other
banks
Treasury bills and other - -
eligible bills
Trading portfolio assets - -
Non-trading financial - -
instruments fair valued
through profit and loss:
- held on own account - -
- held in respect of linked - -
liabilities to customers
under investment
contracts
Derivative financial - -
instruments
Loans and advances to banks - 5,501
Loans and advances to 55 7,463
customers
Debt securities - 2,883
Equity shares 1 (767)
Available for sale - -
financial investments
Reverse repurchase - -
agreements and cash
collateral on securities
borrowed
Other assets - (1,317)
Insurance assets, including - 198
unit-linked assets
Investments in associates 13 20
and joint ventures
Goodwill - 223
Intangible assets - 139
Property, plant and - 361
equipment
Prepayments and accrued - -
income
Deferred tax assets - 1,388
Retail life-fund assets - -
attributable to
policyholders
------------------ ------- ---------
Total assets 69 16,092
------------------ ------- ---------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - liabilities as at 31st December 2004.
As at 31st December 2004
--------------------------------------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Financial Leasing Divi
dation assur will based assets guaran dends
ance pay tees
ments
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
LIABILITIES GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Deposits from - - - - - - - - -
banks
Items in the - - - - - - - - -
course of
collection due to
other banks
Customer
accounts (226) - - - - - - - -
Trading portfolio - - - - - - - - -
liabilities
Liabilities to - - - - - - - - -
customers under
investment
contracts
Derivative - - - - - - - - -
financial
instruments
Debt
securities in
issue 16,036 - - - - - - - -
Repurchase - - - - - - - - -
agreements and
cash collateral on
securities lent
Other
liabilities 90 35 - (22) - - 247 23 -
Accruals and - - - - - - - - -
deferred income
Current tax
liabilities - 37 - - - - - - -
Insurance
contract
liabilities
including
unit
-linked
liabilities 40 (41) - - - - - - -
Subordinated
liabilities:
- Undated loan - - - - - - - - -
capital-non
convertible
- Dated loan - - - - - - - - -
capital-
convertible to
preference
shares
Dated loan - - - - - - - - -
capital-non
convertible
Deferred tax
liabilities 536 82 - - - 6 - - -
Other
provisions for
liabilities 27 - - - (133) - - - -
Dividend - - - - - - - - (1,011)
Retirement
benefit
liabilities - - - - 1,865 - - - -
Retail-life fund - - - - - - - - -
liabilities to
policyholders
----------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
liabilities 16,503 113 - (22) 1,732 6 247 23 (1,011)
----------------- ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 31st December 2004
------------------------
Other Total
remeasure
Notes
LIABILITIES GBPm GBPm
------------------ ----- ---------
Deposits from banks - -
Items in the course of - -
collection due to other
banks
Customer accounts - (226)
Trading portfolio - -
liabilities
Liabilities to customers - -
under investment
contracts
Derivative financial - -
instruments
Debt securities in issue - 16,036
Repurchase agreements and - -
cash collateral on
securities lent
Other liabilities - 373
Accruals and deferred - -
income
Current tax liabilities - 37
Insurance contract
liabilities including - (1)
unit-linked liabilities
Subordinated liabilities:
- Undated loan capital-non - -
convertible
- Dated loan capital- - -
convertible to preference
shares
Dated loan capital-non - -
convertible
Deferred tax liabilities - 624
Other provisions for 55 (51)
liabilities
Dividend - (1,011)
Retirement benefit - 1,865
liabilities
Retail-life fund - -
liabilities to
policyholders
------------------ ----- ---------
Total liabilities 55 17,646
------------------ ----- ---------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - shareholders' equity as at
31st December 2004.
As at 31st December 2004
-------------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
SHAREHOLDERS' EQUITY GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ -----
Called up share - - - - - - - - -
capital
Share premium account - - - - - - - - -
Less: Treasury shares - - - - - - - - -
Available for sale - - - - - - - - -
reserve
Revaluation reserve - - - - - - - - -
Cashflow hedging - - - - - - - - -
reserve
Capital redemption - - - - - - - - -
reserve
Other capital reserve - - - - - - - - -
Translation reserve - - - - - - - - -
Retained
earnings (156) (708) 301 27 (1,819) 13 (34) (196) 1,011
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Shareholders'
equity
excluding
minority
interest (156) (708) 301 27 (1,819) 13 (34) (196) 1,011
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Minority
interest (7) - - - - - - - -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
shareholders'
equity (163) (708) 301 27 (1,819) 13 (34) (196) 1,011
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
liabilities
and
shareholders'
equity 16,340 (595) 301 5 (87) 19 213 (173) -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 31st December 2004
------------------
Other Total
remeasure
Notes
SHAREHOLDERS' EQUITY GBPm GBPm
------------------ ------ ------
Called up share - -
capital
Share premium - -
account
Less: Treasury - -
shares
Available for sale - -
reserve
Revaluation reserve - -
Cashflow hedging - -
reserve
Capital redemption - -
reserve
Other capital - -
reserve
Translation reserve - -
Retained earnings 14 (1,547)
------------------ ------ ------
Shareholders' equity 14 (1,547)
excluding minority
interest
------------------ ------ ------
Minority interest - (7)
------------------ ------ ------
Total shareholders' 14 (1,554)
equity
------------------ ------ ------
Total liabilities and 69 16,092
shareholders' equity
------------------ ------ ------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - assets as at 30th June 2004.
As at 30th June 2004
----------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
ASSETS GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Cash and balances at - - - - - - - - -
central banks
Items in the course of - - - - - - - - -
collection from other
banks
Treasury bills and - - - - - - - - -
other eligible bills
Trading portfolio - - - - - - - - -
assets
Non-trading financial - - - - - - - - -
instruments fair valued
through profit and
loss:
- held on own account - - - - - - - - -
- held in respect of - - - - - - - - -
linked liabilities to
customers
under investment
contracts
Derivative financial - - - - - - - - -
instruments
Loans and
advances to
banks 6,352 5 - - - - - - -
Loans and
advances to
customers 5,504 - - - - - - (609) -
Debt
securities 2,453 - - - - - - - -
Equity shares (769) - - - - - - - -
Available for sale - - - - - - - - -
financial investments
Reverse repurchase - - - - - - - - -
agreements and cash
collateral on
securities borrowed
Other assets 218 (637) - (6) (614) (8) 157 (6) -
Insurance
assets,
including
unit-linked
assets 39 215 - - - - - - -
Investments in
associates and
joint ventures - - 3 - - - - - -
Goodwill - - 135 - - - - - -
Intangible
assets - - 13 - - 49 - - -
Property,
plant and
equipment - - - - - - - 362 -
Prepayments and accrued - - - - - - - - -
income
Deferred tax
assets 553 - - - 732 - 14 84 -
Retail life-fund assets - - - - - - - - -
attributable to
policyholders
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total assets 14,350 (417) 151 (6) 118 41 171 (169) -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 30th June 2004
--------------------
Other Total
remeasure
Notes
ASSETS GBPm GBPm
------------------ ------- --------
Cash and balances at - -
central banks
Items in the course of - -
collection from other
banks
Treasury bills and other - -
eligible bills
Trading portfolio assets - -
Non-trading financial - -
instruments fair valued
through profit and loss:
- held on own account - -
- held in respect of linked - -
liabilities to customers
under investment
contracts
Derivative financial - -
instruments
Loans and advances to banks - 6,357
Loans and advances to 85 4,980
customers
Debt securities - 2,453
Equity shares 3 (766)
Available for sale - -
financial investments
Reverse repurchase - -
agreements and cash
collateral on securities
borrowed
Other assets - (896)
Insurance assets, including - 254
unit-linked assets
Investments in associates 10 13
and joint ventures
Goodwill - 135
Intangible assets - 62
Property, plant and - 362
equipment
Prepayments and accrued - -
income
Deferred tax assets - 1,383
Retail life-fund assets - -
attributable to
policyholders
------------------ ------- --------
Total assets 98 14,337
------------------ ------- --------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - liabilities as at 30th June 2004.
As at 30th June 2004
---------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
LIABILITIES GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Deposits from banks - - - - - - - - -
Items in the course of - - - - - - - - -
collection due to other
banks
Customer
accounts (82) 48 - - - - - - -
Trading portfolio - - - - - - - - -
liabilities
Liabilities to - - - - - - - - -
customers under
investment contracts
Derivative financial - - - - - - - - -
instruments
Debt
securities in
issue 14,151 - - - - - - - -
Repurchase agreements - - - - - - - - -
and cash collateral on
securities lent
Other
liabilities (160) 25 - (17) - - 201 23 -
Accruals and deferred - - - - - - - - -
income
Current tax
liabilities - 17 - - - - - - -
Insurance
contract
liabilities
including
unit
-linked
liabilities 39 (6) - - - - - - -
Subordinated
liabilities:
- Undated loan - - - - - - - - -
capital-non
convertible
- Dated loan - - - - - - - - -
capital-convertible to
preference shares
- Dated loan - - - - - - - - -
capital-non
convertible
Deferred tax
liabilities 566 38 - - - 15 - - -
Other
provisions for
liabilities - - - - (149) - - - -
Dividend - - - - - - - - (529)
Retirement
benefit
liabilities - - - - 2,028 - - - -
Retail-life fund - - - - - - - - -
liabilities to
policyholders
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
liabilities 14,514 122 - (17) 1,879 15 201 23 (529)
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 30th June 2004
------------------
Other Total
remeasure
Notes
LIABILITIES GBPm GBPm
------------------ ------- ---------
Deposits from banks - -
Items in the course of - -
collection due to other
banks
Customer accounts - (34)
Trading portfolio - -
liabilities
Liabilities to customers - -
under investment
contracts
Derivative financial - -
instruments
Debt securities in issue - 14,151
Repurchase agreements and - -
cash collateral on
securities lent
Other liabilities - 72
Accruals and deferred - -
income
Current tax liabilities - 17
Insurance contract
liabilities including - 33
unit-linked liabilities
Subordinated liabilities:
- Undated loan capital-non - -
convertible
- Dated loan - -
capital-convertible to
preference shares
- Dated loan capital-non - -
convertible
Deferred tax liabilities - 619
Other provisions for 85 (64)
liabilities
Dividend - (529)
Retirement benefit - 2,028
liabilities
Retail-life fund - -
liabilities to
policyholders
------------------ ------- ---------
Total liabilities 85 16,293
------------------ ------- ---------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - shareholders' equity as at 30th June 2004.
As at 30th June 2004
---------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
SHAREHOLDERS' EQUITY GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Called up share - - - - - - - - -
capital
Share premium account - - - - - - - - -
Less: Treasury shares - - - - - - - - -
Available for sale - - - - - - - - -
reserve
Revaluation reserve - - - - - - - - -
Cashflow hedging - - - - - - - - -
reserve
Capital redemption - - - - - - - - -
reserve
Other capital reserve - - - - - - - - -
Translation reserve - - - - - - - - -
Retained
earnings (164) (539) 151 11 (1,761) 26 (30) (192) 529
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Shareholders'
equity
excluding
minority
interest (164) (539) 151 11 (1,761) 26 (30) (192) 529
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Minority interest - - - - - - - - -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
shareholders'
equity (164) (539) 151 11 (1,761) 26 (30) (192) 529
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
liabilities
and
shareholders'
equity 14,350 (417) 151 (6) 118 41 171 (169) -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 30th June 2004
------------------
Other Total
remeasure
Notes
SHAREHOLDERS' EQUITY GBPm GBPm
------------------ ------ ---------
Called up share capital - -
Share premium account - -
Less: Treasury shares - -
Available for sale - -
reserve
Revaluation reserve - -
Cashflow hedging reserve - -
Capital redemption - -
reserve
Other capital reserve - -
Translation reserve - -
Retained earnings 13 (1,956)
------------------ ------ ---------
Shareholders' equity 13 (1,956)
excluding minority interest
------------------ ------ ---------
Minority interest - -
------------------ ------ ---------
Total shareholders' equity 13 (1,956)
------------------ ------ ---------
Total liabilities and 98 14,337
shareholders' equity
------------------ ------ ---------
Part 4
BARCLAYS PLC
Analysis of remeasure column in balance sheet - assets as at 1st January 2004.
As at 1st January 2004
----------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
ASSETS GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Cash and balances at - - - - - - - - -
central banks
Items in the course of - - - - - - - - -
collection from other
banks
Treasury bills and - - - - - - - - -
other eligible bills
Trading portfolio - - - - - - - - -
assets
Non-trading financial - - - - - - - - -
instruments fair valued
through profit and
loss:
- held on own account - - - - - - - - -
- held in respect of - - - - - - - - -
linked liabilities to
customers
under investment
contracts
Derivative financial - - - - - - - - -
instruments
Loans and
advances to
banks 5,036 33 - - - - - - -
Loans and
advances to
customers 4,447 - - - - - - (576) -
Debt
securities 2,503 - - - - - - - -
Equity shares (768) - - - - - - - -
Available for sale - - - - - - - - -
financial investments
Reverse repurchase - - - - - - - - -
agreements and cash
collateral on
securities borrowed
Other assets 304 (783) - - (588) - 138 - -
Insurance
assets,
including
unit-linked
assets 40 157 - - - - - - -
Investments in - - - - - - - - -
associates and joint
ventures
Goodwill - - (13) - - - - - -
Intangible
assets - - 14 - - 50 - - -
Property,
plant and
equipment - - - - - - - 333 -
Prepayments and accrued - - - - - - - - -
income
Deferred tax
assets 548 - - - 705 - 14 81 -
Retail life-fund assets - - - - - - - - -
attributable to
policyholders
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total assets 12,110 (593) 1 - 117 50 152 (162) -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 1st January 2004
-------------------
Other Total
remeasure
Notes
ASSETS GBPm GBPm
------------------ ------ --------
Cash and balances at - -
central banks
Items in the course of - -
collection from other
banks
Treasury bills and - -
other eligible bills
Trading portfolio - -
assets
Non-trading financial - -
instruments fair valued
through profit and
loss:
- held on own account - -
- held in respect of - -
linked liabilities to
customers
under investment
contracts
Derivative financial - -
instruments
Loans and advances to - 5,069
banks
Loans and advances to 82 3,953
customers
Debt securities - 2,503
Equity shares 3 (765)
Available for sale - -
financial investments
Reverse repurchase - -
agreements and cash
collateral on
securities borrowed
Other assets - (929)
Insurance assets, - 197
including unit-linked
assets
Investments in 10 10
associates and joint
ventures
Goodwill - (13)
Intangible assets - 64
Property, plant and - 333
equipment
Prepayments and accrued - -
income
Deferred tax assets - 1,348
Retail life-fund assets - -
attributable to
policyholders
------------------ ------ --------
Total assets 95 11,770
------------------ ------ --------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - liabilities as at
1st January 2004.
As at 1st January 2004
----------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
LIABILITIES GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Deposits from banks - - - - - - - - -
Items in the course of - - - - - - - - -
collection due to other
banks
Customer
accounts (72) - - - - - - - -
Trading portfolio - - - - - - - - -
liabilities
Liabilities to - - - - - - - - -
customers under
investment contracts
Derivative financial - - - - - - - - -
instruments
Debt
securities in
issue 11,900 - - - - - - - -
Repurchase agreements - - - - - - - - -
and cash collateral on
securities lent
Other
liabilities (159) 38 - (1) - - 185 26 (4)
Accruals and deferred - - - - - - - - -
income
Current tax
liabilities - 17 - - - - - - -
Insurance
contract
liabilities
including
unit
-linked
liabilities 40 (94) - - - - - - -
Subordinated
liabilities:
Undated loan - - - - - - - - -
capital-non
convertible
- Dated loan capital- - - - - - - - - -
convertible to
preference shares
- Dated loan - - - - - - - - -
capital-non
convertible
Deferred tax
liabilities 558 38 - - - 15 - - -
Other
provisions for
liabilities - - - - (71) - - - -
Dividend - - - - - - - - (879)
Retirement
benefit
liabilities - - - - 1,885 - - - -
Retail-life fund - - - - - - - - -
liabilities to
policyholders
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
liabilities 12,267 (1) - (1) 1,814 15 185 26 (883)
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 1st January 2004
-------------------
Other Total
remeasure
Notes
LIABILITIES GBPm GBPm
------------------ ------- --------
Deposits from banks - -
Items in the course of - -
collection due to other
banks
Customer accounts - (72)
Trading portfolio - -
liabilities
Liabilities to - -
customers under
investment contracts
Derivative financial - -
instruments
Debt securities in - 11,900
issue
Repurchase agreements - -
and cash collateral on
securities lent
Other liabilities - 85
Accruals and deferred - -
income
Current tax liabilities - 17
Insurance contract
liabilities including - (54)
unit-linked liabilities
Subordinated
liabilities:
Undated loan - -
capital-non
convertible
- Dated loan capital- - -
convertible to
preference shares
- Dated loan - -
capital-non
convertible
Deferred tax - 611
liabilities
Other provisions for 82 11
liabilities
Dividend - (879)
Retirement benefit - 1,885
liabilities
Retail-life fund - -
liabilities to
policyholders
------------------ ------- --------
Total liabilities 82 13,504
------------------ ------- --------
BARCLAYS PLC
Analysis of remeasure column in balance sheet - shareholders' equity as at
1st January 2004.
As at 1st January 2004
----------------------------------------------------------------------------
Consoli Life Good Share Pensions Intangible Finan Leas Divi
dation assur will based assets cial ing dends
ance pay guaran
ments tees
Notes (a) (b) (d) (e) (f) (g) (h) (i) (j)
SHAREHOLDERS' EQUITY GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Called up share - - - - - - - - -
capital
Share premium account - - - - - - - - -
Less: Treasury shares - - - - - - - - -
Available for sale - - - - - - - - -
reserve
Revaluation reserve - - - - - - - - -
Cashflow hedging - - - - - - - - -
reserve
Capital redemption - - - - - - - - -
reserve
Other capital reserve - - - - - - - - -
Translation reserve - - - - - - - - -
Retained
earnings (157) (592) 1 1 (1,697) 35 (33) (188) 883
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Shareholders'
equity
excluding
minority
interest (157) (592) 1 1 (1,697) 35 (33) (188) 883
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Minority interest - - - - - - - - -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
shareholders'
equity (157) (592) 1 1 (1,697) 35 (33) (188) 883
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
Total
liabilities
and
shareholders'
equity 12,110 (593) 1 - 117 50 152 (162) -
------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------
As at 1st January 2004
-----------------------
Other Total
remeasure
Notes
SHAREHOLDERS' EQUITY GBPm GBPm
------------------ -------- ----------
Called up share - -
capital
Share premium - -
account
Less: Treasury - -
shares
Available for sale - -
reserve
Revaluation reserve - -
Cashflow hedging - -
reserve
Capital redemption - -
reserve
Other capital - -
reserve
Translation reserve - -
Retained earnings 13 (1,734)
------------------ -------- ----------
Shareholders' equity 13 (1,734)
excluding minority
interest
------------------ -------- ----------
Minority interest - -
------------------ -------- ----------
Total shareholders' 13 (1,734)
equity
------------------ -------- ----------
Total liabilities and 95 11,770
shareholders' equity
------------------ -------- ----------
BARCLAYS PLC
Differences between UK GAAP and IFRS
The significant differences between the Group's UK accounting policies and
IFRS accounting policies summarised below.
UK GAAP IFRS
(a) Consolidation and presentation
The Group financial statements The Group financial statements consolidate
consolidate the assets, the assets, liabilities and the profits and
liabilities and the profits and losses of subsidiaries using the
losses of subsidiaries using the acquisition method. A subsidiary is an
acquisition method. Entities entity which the Group controls, including
which do not qualify as special purpose entities which are in
subsidiaries but which in substance controlled by the Group.
substance give rise to benefits
that are in essence no different
from those that would arise were
the entity a subsidiary, are
included in the consolidated
financial statements.
In accordance with FRS 5, Linked presentation is not available under
securitisation transactions IFRS. Therefore, the gross assets and the
which qualified are accounted related funding are presented separately.
for on the basis of linked
presentation.
(b) Life assurance
In order to reflect the The retail long-term assurance business is
different nature of the consolidated on a line-by-line basis with
shareholders' and policyholders' assets, liabilities and income and
interests in the retail expenditure, whether attributable to
long-term assurance business, shareholders or attributable to
the value of the long-term policyholders, being included in the lines
assurance business attributable that reflect their nature.
to other shareholders is
included in Other assets and the
assets and liabilities
attributable to policyholders
are classified under separate
headings in the consolidated
balance sheet.
The value of the shareholders' In accordance with IFRS from 2005, life
interest in the retail long-term assurance products are divided into
assurance fund represents an investment contracts, which are accounted
estimate of the net present for under IAS 39 and insurance contracts,
value of the profits inherent in which under IFRS 4 continue to be accounted
the in-force policies, embedded for under UK GAAP. The life fund is closed
value accounting. All life to new business and the volume of contracts
assurance products are accounted which fall to be accounted for as insurance
for in the same way; there is no contracts under IFRS is not significant.
distinction between investment Therefore, it was considered more
contracts and insurance appropriate to change the accounting policy
contracts. for insurance contracts to a Modified
Statutory Solvency Basis. This change will
allow the insurance contracts to be
accounted for on a similar basis to
investment contracts from 2005. This change
in policy applies from 1st January 2004 and
the Modified Statutory Solvency Basis has
been applied to all contracts, whether they
will be classified as insurance contracts
or as investment contracts in 2005.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(c) Investments in associated companies and joint ventures
Investments in associated companies Investments in associates and joint
and joint ventures are accounted for ventures are accounted for using the
using the equity method where the equity method where the Group has the
Group has the ability to exert ability to exert significant influence
significant influence and actually or control jointly. Losses are
does so. Where incurred, losses are recognised up to the point where the
recognised in full. investment in the entity or joint
venture has been eliminated, and
subsequent profits only to the extent
that unrecognised cumulative losses
have been made good.
Before using the equity accounting
method, adjustments are made to ensure
that the results of associates and
joint ventures have been prepared
based on Group accounting policies.
The difference between accounts
prepared using UK GAAP policies and
IFRS policies has resulted in a
restatement of the investments in
associates and joint ventures as at
1st January 2004.
(d) Goodwill
Goodwill arising on acquisitions of Goodwill arising on acquisitions of
subsidiaries and associated companies subsidiaries and associates and joint
and joint ventures is capitalised and ventures is capitalised and tested
amortised through the profit and loss annually for impairment.
account on a straight-line basis over
its expected economic life.
Capitalised goodwill is written off
when judged to be impaired. Prior to
1998, goodwill arising on the
acquisition of subsidiaries was
eliminated directly against
reserves.
Amounts recognised in the UK GAAP
balance sheet at 1st January 2004 have
been carried forward without
adjustment into the balance sheet
prepared in accordance with IFRS as
deemed cost after being tested for
impairment. Goodwill previously
written off to reserves in accordance
with UK GAAP has not been reinstated
on the balance sheet. Goodwill
amortised under UK GAAP in 2004 has
been written back in the 2004 IFRS
financial statements.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(e) Share based payment
Where shares are purchased, the An annual charge is made in the
difference between the purchase price income statement for share options
and any contribution made by the and other share based payments based
employee is charged to the profit and on the fair value of options granted
loss account in the period to which it or shares awarded on the date of the
relates. Where shares are issued or grant or award. This charge is spread
options granted, the charge made to over the period the employees'
the profit and loss account is the services are received, which is the
difference between the fair value at vesting period. The fair value of the
the time the award is made and any options granted is determined using
contribution made by the employee. For option pricing models.
these purposes, fair value is equal to
intrinsic value.
(f) Pensions and other post retirement benefits
Pension costs, based on actuarial For defined benefit schemes, an
assumptions, are calculated so as to actuarial valuation of the scheme
allocate the cost of providing obligation and the fair value of the
benefits over the average remaining plan assets are made annually and the
service lives of the employees. difference between fair value of the
plan assets and the present value of
the defined benefit obligation at the
balance sheet date, together with
adjustments for any unrecognised
actuarial losses and past service
cost is recognised as a liability in
the balance sheet.
Cumulative actuarial gains and losses
in excess of the greater of 10% of
the plan assets or 10% of the
obligations of the plan are
recognised in the income statement
over the remaining average service
lives of the employees of the related
plan, on a straight-line basis.
At 1st January 2004, pension assets
and liabilities have been recognised
in full.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(g) Intangible assets other than goodwill
The Group writes off the cost of IFRS requires the capitalisation of both
computer software unless the external and directly related internal
software is required to facilitate costs where the software will result in
the use of new hardware. a directly measurable intangible asset.
Capitalised amounts are included Amounts capitalised are amortised over
with the hardware within Fixed their estimated useful lives. Computer
assets. software is amortised at a rate of
20 - 33% per year.
Where software developed is not integral
to the related hardware, the costs are
classified as an intangible asset.
At 1st January 2004, qualifying amounts
previously written off under UK GAAP
have been recognised as intangible
assets and the 2004 income statement has
been adjusted accordingly.
For acquisitions arising after 1st
January 2004, intangible assets which
are required to be recognised separately
from goodwill in accordance with IFRS 3
have been transferred from goodwill to
intangible assets as at the date of
acquisition.
Intangible assets acquired before 1st
January 2004 have been reclassified from
goodwill to intangible assets.
(h) Financial guarantees
Credit related instruments (other Financial guarantees (other than credit
than credit derivatives) are derivatives) are initially recognised in
treated as contingent liabilities the financial statements at fair value
and these are not shown on the on the date that the guarantee was
balance sheet unless, and until, given. Subsequent to initial
the Group is called upon to make a recognition, the bank's liabilities
payment under the instrument. Fees under such guarantees are measured at
received for providing these the higher of the initial measurement,
instruments are taken to profit less amortisation calculated to
over the life of the instrument and recognise in the income statement the
reflected in fees and commissions fee income earned over the period, and
receivable. the best estimate of the expenditure
required to settle any financial
obligation arising as a result of the
guarantees at the balance sheet date.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(i) Leasing
Group as Lessor Group as Lessor
Assets leased to customers under Assets leased to customers under
agreements which transfer agreements which transfer
substantially all the risks and substantially all the risks and
rewards of ownership other than legal rewards of ownership other than legal
title are classed as finance leases. title are classed as finance leases.
All other leases are classified as All other leases are classified as
operating leases. operating leases.
Amounts due from lessees under finance Amounts due from lessees under
leases are recorded as Loans and finance leases are recorded as Loans
advances to customers at the amount of and advances to customers at the
the Group's net investment in the amount of Group's net investment in
lease. the lease.
Finance lease income is recognised so Finance lease income is recognised so
as to give a constant periodic rate of as to give a constant rate of return
return on the net cash investment in on the net cash investment, without
the lease taking into account tax taking account of tax payments and
payments and receipts associated with receipts ('the pre tax actuarial
the lease. method').
Rental income from operating leases is The assets held for operating leases
recognised on a straight line basis are included within the Group's
over the term of the lease unless property, plant and equipment and
another systematic basis is more depreciated over their useful
appropriate. economic lives. Lease income is
recognised on a straight line basis
over the term of the lease unless
another systematic basis is more
appropriate.
Group as Lessee Group as Lessee
Assets held on finance leases are Assets held on finance leases are
capitalised where the lease transfers capitalised where the lease transfers
the risks and rewards of ownership to the risks and rewards of ownership to
the Group. This is achieved generally the Group. The conditions for
where the lease payments, when capitalisation are the same as UK
discounted at the rate of interest GAAP, except that IFRS requires the
implicit in the lease, constitute land and buildings elements of leases
substantially all, generally not less to be assessed separately to
than 90%, of the fair value of the determine whether the buildings
leased asset at the date of the element should be capitalised. This
inception of the lease, and the has not resulted in any significant
primary lease term equates to the change to the classification or
useful life of the asset. Leases measurement of assets or liabilities
related to land and buildings do not arising from finance leases where the
qualify for capitalisation, since the Group is lessee.
useful life of land is not finite.
Lease incentives are spread over the Lease incentives are spread over the
period to the next rent review. term of the lease.
(j) Dividends
Dividends declared after the period Dividends are recorded in the period
end are recorded in the period to in which they are approved by the
which they relate. Company's shareholders.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(k) Deferred tax
Deferred tax is provided in full for Deferred tax is provided in full
all material timing differences that based on the concept of temporary
have not reversed at the balance sheet differences, including items such as
date. Provision is not made for the revaluation of property and the
specific items which are not expected unremitted earnings of subsidiaries
to result in taxable income in the and associated companies where the
future, namely gains on the revaluation Group is not able to control their
of property and the unremitted earnings distribution policies.
of subsidiary and associated
companies.
(l) Other credit risk provisions
Provision balances for bad and doubtful Provisions raised with respect to
debts include provisions raised with undrawn contractually committed
respect to undrawn contractually facilities and guarantees (other
committed facilities and guarantees. credit risk provisions) are
presented separately from impairment
losses on loans and advances.
In 2004, the other credit risk
provisions have been presented
separately from provision balances
for bad and doubtful debts. However,
the measurement of these provisions
is unchanged from UK GAAP.
(m) Property, plant and equipment
Property, plant and equipment is The carrying value of property,
carried at either original cost or plant and equipment included in the
subsequent valuation, less depreciation UK GAAP balance sheet at 1st January
calculated on the revalued amount where 2004 has been carried forward into
applicable. From 1st January 2000, the IFRS balance sheet without
following the introduction of FRS 15, adjustment as deemed cost.
the revalued book amounts were retained Depreciation is charged in a manner
without subsequent revaluation subject consistent with UK GAAP.
to the requirement to test for
impairment.
Depreciation is charged on the cost or
revalued amounts of freehold and long
leasehold properties over their
estimated economic lives.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
Effects of the application of IAS 32, IAS 39 and IFRS 4
The significant differences between the Group's UK GAAP accounting policies
and IFRS accounting policies applied to the treatment of financial
instruments and insurance contracts, which have been incorporated into the
opening balance sheet as at 1st January 2005, are as follows:
UK GAAP IFRS
(n) Derivatives and hedge accounting
Derivatives used for hedging IAS 39 requires all derivatives to be
purposes are measured on an recorded at fair value. Provided all
accruals basis consistent with the hedge accounting conditions are met and
assets, liabilities, positions or the hedging relationship is deemed to be
future cash flows being hedged. The effective, the derivative may be
gains and losses on these designated as a fair value hedge, cash
instruments (arising from changes flow hedge or hedge of a net investment
in fair value) are not recognised in a foreign operation. The change in
in the profit and loss account value of the fair value hedge is
immediately as they arise. Such recorded in income along with the change
gains are either not recognised in in fair value, relating to the hedged
the balance sheet or are recognised risk, of the hedged asset or liability.
and carried forward. When the The change in value of a cash flow hedge
hedged transaction occurs, the gain is recorded in equity, to the extent it
or loss is recognised in the profit is effective and recycled to income as
and loss account at the same time the hedged cash flows affect the income
as the hedged item. statement. The change in value of a net
investment hedge is recorded in the
translation reserve to the extent the
hedge is effective and only released to
the income statement when the underlying
investment is sold.
Derivatives that are not hedge As at 1st January 2005, all hedging
accounted are recorded at fair derivatives have been recognised at fair
value, with changes in fair value value and adjustments have been made to
recorded in the profit and loss hedged items where fair value hedge
account. accounting will be applied. Hedges have
been designated and documented in
compliance with IFRS and, where
possible, US GAAP with hedge accounting
applied from that date. Where hedges
were in place under UK GAAP that have
not been designated as hedges under
IFRS, adjustments have been made to the
hedged item or equity to reflect the
hedged position as at 31st December
2004.
Products which contain embedded Some hybrid contracts contain both a
derivatives are valued with derivative and a non-derivative
reference to the total product component. In such cases, the derivative
inclusive of the derivative component is termed an embedded
element. derivative. Where the economic
characteristics and risks of the
embedded derivative are not closely
related to those of the host contract,
and the host contract itself is not
carried at fair value, the embedded
derivative is bifurcated and reported at
fair value with gains and losses being
recognised in the income statement.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(n) Derivatives and hedge accounting (continued)
At 1st January 2005, all embedded
derivatives or the whole contracts
containing embedded derivatives have been
included on the balance sheet at fair
value.
(o) Classification and measurement of financial instruments
Financial instruments are IAS 39 requires all financial assets to
generally divided into banking be classified at initial acquisition and
book, which are carried at cost, subsequently measured in accordance with
and trading book, which are the classification:
carried at fair value.
Positions in investment debt
securities and investments in
equity shares are stated at cost
less provision for diminution in
value. Investment securities are
those intended for use on a
continuing basis by the Group.
Classification Measurement basis
Held to maturity Amortised cost less impairment
Loan or receivable Amortised cost less impairment
Available for sale Fair value - gains and losses included in
shareholders' equity until disposal or
impairment
Fair value through Fair value - gains and losses included in the income
profit or loss statement
In addition, any financial asset may be
designated as fair valued through profit
and loss at initial acquisition.
Financial liabilities are classified as
held for trading or are carried at
amortised cost.
Investment securities and equity shares
are generally classified as available for
sale.
The best evidence of the fair value of a
financial instrument at initial
recognition is the transaction price,
unless the fair value of that instrument
is evidenced by comparison with other
observable current market transactions in
the same instrument or is based on a
valuation technique whose variables
include only data from observable
markets.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(o) Classification and measurement of financial instruments (continued)
At 1st January 2005, financial instruments
have been classified and measured in
accordance with IAS 39. In general,
financial instruments included in the
trading book under UK GAAP have been
classified as held for trading, banking book
loans and receivables have been classified
as loans or receivables and investment
securities have been classified as available
for sale.
In addition, the fair value of certain
trading derivatives has been restated to
eliminate any profits recognised that are
not evidenced by reference to data from
observable markets.
(p) Netting
Under FRS 5, items are Financial assets and liabilities are offset
aggregated into a single item and the net amount reported in the balance
where there is a right to sheet if, and only if, there is currently a
insist on net settlement and legally enforceable right to set off the
the debit balance matures no recognised amounts and there is an intention
later than the credit to settle on a net basis at all times, or to
balance. realise an asset and settle the liability
simultaneously.
The application of IFRS has resulted in
certain transactions that qualified for
netting under UK GAAP, being presented on a
gross basis from 1st January 2005. The
primary differences include derivative
assets and liabilities subject to master
netting agreements, repurchase contracts and
cash collateral balances.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(q) Capital instruments
Under FRS 4, capital instruments are Issued financial instruments are
classified as debt if they contain classified as liabilities where the
an obligation, including a substance of the contractual
contingent obligation, to transfer arrangement results in the Group having
economic benefits to another a present obligation to either deliver
party. cash or another financial asset to the
holder. In the absence of such an
obligation, the financial instrument is
classified as equity.
The application of IFRS has resulted in
certain funding instruments that were
included in undated loan capital under
UK GAAP being reclassified as equity
from 1st January 2005. Where the
instruments have been reclassified,
they have been remeasured to net
proceeds at the date of issue and the
subsequent foreign currency movements
have been eliminated.
(r) Loan impairment
Specific provisions are raised when Impairment losses are recognised where
the creditworthiness of a borrower there is evidence of impairment as a
has deteriorated such that the result of one or more loss events that
recovery of the whole or part of an have occurred after initial
outstanding advance is in serious recognition, and where these events
doubt. Specific provisions are have had an impact on the estimated
generally raised on an individual future cash flows of the financial
basis, although specific provisions asset or portfolio of financial assets.
may be raised on a portfolio basis Impairment of loans and receivables is
for homogeneous assets and where measured as the difference between the
statistical techniques are carrying amount and the present value
appropriate. General provisions are of estimated future cash flows
raised to cover losses which are discounted at the financial asset's
judged to be present in loans and original effective interest rate.
advances at the balance sheet date, Impairment is measured individually for
but which have not been specifically assets that are individually
identified as such. significant and on a collective basis
for portfolios with similar risk
characteristics.
If collection of interest is Under IFRS, all impairment allowances
doubtful, it is credited to a are calculated in the same manner and
suspense account and excluded from there is no distinction between general
interest income in the profit and and specific provisions.
loss account. The suspense account
in the balance sheet is netted
against the relevant loan.
The overall change in the total level
of credit impairment is not material.
The application of IFRS has resulted in
re-analysis of UK GAAP general and
specific provisions into IFRS
impairment allowances and the
reallocation of impairment allowances
within the businesses.
Interest on impaired loans is
recognised using the original effective
interest rate, being the rate used to
discount the estimated future cash
flows for the purpose of calculating
impairment.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(s) Effective interest
Interest is recognised in the The effective interest method is a method
income statement as it accrues. of calculating the amortised cost of a
Fee income relating to loans and financial asset or liability (or group of
advances is recognised so as to assets and liabilities) and of allocating
match the cost of providing a the interest income or interest expense
continuing service, together with over the relevant period. The effective
a reasonable profit margin. Where interest rate is the rate that exactly
fees are charged in lieu of discounts the expected future cash
interest, it is recognised as payments or receipts through the expected
interest receivable on a level life of the financial instrument, or when
yield basis over the life of the appropriate, a shorter period, to the net
advance. Costs associated with the carrying amount of the instrument. The
acquisition of financial assets method results in all fees relating to
are either spread over the the origination or settlement of the loan
anticipated life of the loans or that are in the nature of interest and
recognised as incurred, depending all direct and incremental costs
on the nature of the cost. associated with origination being
recognised over the expected life of the
loan. The application of the method has
the effect of recognising income (or
expense) receivable (or payable) on the
instrument evenly in proportion to the
amount outstanding over the period to
maturity or repayment.
(t) Insurance contracts
Certain products offered to From 1st January 2005, life assurance
institutional pension funds are products are divided into investment
accounted for as investment contracts and insurance contracts.
products when the substance of the Investment contracts are accounted for
investment is that of managed under IAS 39 and insurance contracts are
funds. The assets and related accounted for under the Modified
liabilities are excluded from the Statutory Solvency Basis. The income and
consolidated balance sheet in expense and assets and liabilities that
order to reflect this substance. arise on the investment contracts are
presented separately from those arising
under insurance contracts.
Where the legal form of the asset
management products offered to
institutional pension funds is an
insurance contract, the assets and
corresponding liabilities associated with
these products are recorded on the
balance sheet as investment contracts.
BARCLAYS PLC
Differences between UK GAAP and IFRS (continued)
UK GAAP IFRS
(u) Derecognition and financial liabilities
Under FRS 5, a liability is A financial liability is extinguished when
derecognised if an entity's and only when the obligation is discharged,
obligation to transfer cancelled or expires. A financial asset can
economic benefits is be removed from the balance sheet only where
satisfied, removed or is no the derecognition conditions have been met,
longer likely to occur. including a requirement to continue to
recognise financial assets only to the extent
of any continuing involvement in them after
the transfer.
The application of IFRS has resulted in
certain customer accounts being remeasured as
at 1st January 2005 to reflect the entire
legal obligation. In addition, certain
customer loyalty provisions, which meet the
definition of financial liabilities, have
been re-classified from provisions to
financial liabilities and re-measured
accordingly.
Certain securitisation structures that
qualified for linked presentation under UK
GAAP in 2004, and which were presented on a
gross basis under IFRS in 2004, qualified for
derecognition on a 'continuing involvement'
basis under IFRS from 1st January 2005 and
have been substantially removed from the
balance sheet from that date.
BARCLAYS PLC
OTHER INFORMATION
Registered office
54 Lombard Street, London, EC3P 3AH, England, United Kingdom. Tel: +44 (0)20
7699 5000.
Company number: 48839.
With effect from 31st May 2005, the registered office will move to:
1 Churchill Place, London, E14 5HP, England, United Kingdom. Tel: +44 (0)20
7116 1000.
Website
www.barclays.com
Registrar
The Registrar to Barclays PLC, The Causeway, Worthing BN99 6DA. Tel: + 44
(0) 870 609 4535.
Listing
The principal trading market for Barclays PLC ordinary shares is the London
Stock Exchange. Ordinary shares are also listed on the New York Stock
Exchange and the Tokyo Stock Exchange. Trading on the New York Stock
Exchange is in the form of ADSs under the ticker symbol 'BCS'. Each ADS
represents four ordinary shares of 25p each and is evidenced by an ADR. The
ADR depositary is The Bank of New York whose international telephone number
is +1-610-382-7836, whose domestic telephone number is 1-888-BNY-ADRS and
whose address is The Bank of New York, Investor Relations, PO Box 11258,
Church Street Station, New York, NY 10286-1258.
Filings with the SEC
Statutory accounts for the year ended 31st December 2004, which also include
certain information required for the joint Annual Report on Form 20-F of
Barclays PLC and Barclays Bank PLC to the US Securities and Exchange
Commission (SEC), can be obtained from Corporate Communications, Barclays
Bank PLC, 200 Park Avenue, New York, NY 10166 or from the Head of Investor
Relations at Barclays registered office address, shown above. Copies of the
Form 20-F are also available from the Barclays Investor Relations' website
(details below) and from the SEC's website (www.sec.gov).
For further information please contact:
Investor Relations Media Relations
Mark Merson/James S Johnson Pam Horrell/Jo Thethi
+44 (0) 20 7116 5752/2927 +44 (0) 20 7116 6132/6217
More information on Barclays can be found on our website at the following
address:www.investorrelations.barclays.co.uk