Final Results Part 1 of 2

Barclays PLC 13 February 2003 13 February 2003 BARCLAYS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR 2002 The statutory consolidated Profit and Loss account and consolidated Balance Sheet are set out on pages 16 and 17 in the format used in the Group's Annual Report. Barclays believes that the further analysis of the profit and loss account shown on page 18 assists in the understanding of profit trends in the results. PAGE Summary 1 Financial highlights 4 Chairman's statement 5 Group Chief Executive's statement 6 Key facts 9 Group performance management 11 Summary of results 15 Consolidated profit and loss account 16 Consolidated balance sheet 17 Further analysis of profit and loss account 18 Financial review 19 Additional information 55 Notes 58 Consolidated statement of changes in shareholders' funds 69 Statement of total recognised gains and losses 69 Average balance sheet 70 Summary consolidated cashflow statement 72 Other information 73 Index 77 The information in this announcement, which was approved by the Board of Directors on 12th February 2003, does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985 (the 'Act'). Statutory accounts, which are combined with the Group's annual report on Form 20-F to the US Securities and Exchange Commission and which contain an unqualified audit report, will be delivered to the Registrar of Companies in accordance with section 242 of the Companies Act 1985. The 2002 Annual Review and Summary Financial Statement will be posted to shareholders together with the Group's full Annual Report for those shareholders who have requested it. 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, 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 and the impact of competition, a number of which 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 further disclosures that Barclays may make in documents it files with the US Securities and Exchange Commission. BARCLAYS PLC, 54 LOMBARD STREET, LONDON EC3P 3AH, TELEPHONE 020 7699 5000 BARCLAYS PLC - SUMMARY RESULTS FOR YEAR TO 31ST DECEMBER 2002 Operating results* 2002 2001** % change Â£m Â£m Operating income 11,379 11,177 2 Operating expenses (6,104) (6,067) 1 Provisions for bad and doubtful debts of which: (1,484) (1,149) 29 - South American Corporate Banking (132) (36) 267 - other (1,352) (1,113) 21 Operating profit 3,780 3,951 (4) Profit before tax 3,205 3,425 (6) Economic profit 1,237 1,227 1 Earnings per share*** - on a statutory basis 33.7p 36.8p (8) - on an operating profit basis 40.9p 43.2p (5) Dividend per share 18.35p 16.625p 10 Post-tax return on average shareholders' funds*** - on a statutory basis 14.7% 17.4% - on an operating profit basis 17.7% 20.1% Notes * The operating results and summary are based on the consolidated profit and loss account, as defined for statutory purposes and shown on page 16, adjusted for the costs directly associated with the integration of Woolwich plc, Woolwich fair value adjustments, goodwill amortisation and the restructuring charge. A profit and loss account presentation reflecting these adjustments is set out on page 18. ** Comparative figures have been restated as a result of the changes in accounting policy arising from the adoption of FRS 19 'Deferred tax' and the Association of British Insurers guidance on the calculation of income from the long term assurance business. Restatements have also arisen from an accounting presentation change required following the issue of UITF Abstract 33 ' Obligations in capital instruments'. These accounting policy and presentation changes are fully set out on pages 55 and 56. *** Earnings per share and post-tax return on average shareholders' funds on an operating profit basis have been calculated as per Note 1 above, excluding exceptional items and after the 4 for 1 share split on 25th April 2002. A reconciliation to the statutory earnings per share is set out on page 31. 'Barclays delivered a resilient performance in 2002, reflecting aggressive action to mitigate the impact of a rapidly changing external environment. At the same time, we were not at all distracted from advancing our strategy and I can report good progress in our multi-year transformation of the businesses. We are confident that we have in place the portfolio, the business strategies and the leadership talent to deliver benefits for our customers and future growth for our shareholders.' Matthew W. Barrett, Group Chief Executive Financial Summary - Operating income was up 2% to Â£11,379 million (2001: Â£11,177 million), despite an adverse movement of Â£178 million attributable to the impact of the 24% decline in the FTSE 100 Index in 2002 on income from the life assurance funds. - Operating expenses rose by 1% to Â£6,104 million (2001: Â£6,067 million). The cost income ratio improved slightly to 53.6% (2001: 54.3%). - Provisions rose 29% to Â£1,484 million (2001: Â£1,149 million). This comprised Â£132 million (2001: Â£36 million) in respect of South American Corporate Banking and Â£1,352 million (2001: Â£1,113 million) of other provisions. - Operating profit at Â£3,780 million (2001: Â£3,951 million) was 4% lower. The combination of the income movement on the closed life assurance funds and the provisions for South American Corporate Banking converted what would have been a 3% operating profit increase into a 4% decline. - Profit before tax fell 6% to Â£3,205 million (2001: Â£3,425 million). - Post tax return on average shareholders' funds on a statutory basis was 14.7% (2001: 17.4%). - Post tax return on average shareholders' funds on an operating profit basis was 17.7% (2001: 20.1%). - Earnings per share on a statutory profit basis were 33.7p (2001: 36.8p). - Earnings per share on an operating profit basis were 40.9p (2001: 43.2p). - The full year dividend per share increased by 10% to 18.35p (2001: 16.625p). Dividends per share and earnings per share reflect the four for one share split in April 2002. - In 2002, the Group repurchased shares to the value of Â£546 million and distributed Â£727 million through the final dividend for 2001 and Â£419 million through the interim dividend for 2002. - Equity shareholders' funds were Â£15.2 billion at 31st December 2002 (31st December 2001: Â£14.5 billion). The tier 1 ratio strengthened to 8.2% (31st December 2001: 7.8%). The average economic capital (excluding goodwill) to support the Group's ongoing business requirements was approximately Â£10.2 billion (2001: Â£9.2 billion). - Barclays committed Â£32 million in community contributions throughout 2002. This included community activity on a global basis, with support from donations, sponsorships and employee activity. Barclays is proud of its volunteering programme and in 2002 over 20,000 employees worldwide gave their time and skills to their communities. Business Performance Summary - Personal Financial Services increased operating profit by 8% to Â£1,027 million (2001: Â£949 million). Income was up 1% at Â£2,968 million (2001: Â£2,952 million). Costs fell 1% to Â£1,606 million (2001: Â£1,624 million). Provisions were down 13% at Â£334 million (2001: Â£382 million). In mortgages, the share of net new lending in the UK was 8.7% (2001: 7.8%) whilst the number of Openplan customers in the UK grew to nearly 2 million compared to a year end target of 1.5 million. Barclays branded savings achieved a leading market position in new business generation. - Barclays Private Clients operating profit decreased by 44% to Â£333 million (2001: Â£596 million), largely reflecting the impact of the sharp reduction in income from the closed long term assurance funds. Costs increased by Â£29m to Â£944m (2001: Â£915 million) and was attributable to the inclusion of Â£72 million (2001: Â£31 million) of costs relating to the UK regulated sales force that, prior to the implementation of the strategic alliance with Legal & General, were reported within the long term assurance funds. Sales of Legal & General investment products performed relatively well despite poor market sentiment that affected appetite for investment products. The completion in October 2002 of the combination of the Caribbean business with that of the Canadian Imperial Bank of Commerce generated an economic profit of Â£206 million. - Barclaycard increased operating profit by 21% to Â£628 million (2001: Â£520 million) driven by strong income growth of 14% to Â£1,582 million (2001: Â£1,386 million). Excluding the acquisition of Providian UK, income grew 10% and costs 6%. Provisions increased by 7% to Â£402 million (2001: Â£374 million). Average extended credit balances grew 9% to Â£6.5 billion (2001: Â£6.0 billion). In 2002 there was record recruitment of 1,218,000 customers (2001: 763,000). - Business Banking increased operating profit by 15% to Â£1,262 million (2001: Â£1,100 million) reflecting volume growth and the benefits of tight cost management. Income grew by 5% to Â£2,508 million (2001: Â£2,382 million) and costs fell by 4% to Â£1,018 million (2001: Â£1,061million). Provisions increased to Â£226 million (2001: Â£210 million). Average lending balances increased 4% to Â£42.6 billion and average deposit balances increased by 3% to Â£43.9 billion. - Barclays Africa operating profit decreased 19% to Â£105 million (2001: Â£130 million) with the fall being mainly attributable to the situation in Zimbabwe. All businesses, including Zimbabwe, remained profitable in local currencies. - Barclays Capital operating profit fell 10% to Â£593 million (2001: Â£662 million). Income was up 7% to Â£2,239 million (2001: Â£2,087 million), benefiting from increased market share through a broadening business mix and further progress in building the client franchise. Costs fell 1% to Â£1,312 million (2001: Â£1,322 million). A rise in provisions to Â£334 million (2001: Â£103 million) reflected continued difficult economic conditions (particularly in the US), primarily in the telecommunications and energy sectors. In the second half, provisions largely arose from the further deterioration of existing non-performing loans. - Barclays Global Investors operating profit increased 41% to Â£110 million (2001: Â£78 million). Income increased by 5% to Â£550 million (2001: Â£523 million) and costs were down 1% at Â£439 million (2001: Â£444 million). Total assets in the Global iShares (Exchange Traded Funds) business grew by 47% to Â£22 billion. Total assets under management at 31st December 2002 were Â£462 billion (2001: Â£530 billion) inclusive of Â£56 billion of new funds in the year. Progress Against Goals - Barclays primary goal, total shareholder return relative to its peer group, remained top quartile for the three years ended 31st December 2002. Other goals, described below, have been established to support this primary goal. - Cumulative economic profit for the three years ended 31st December 2002 was Â£3.9 billion relative to the goal of Â£4.2 billion. The goal for the period 2000 to 2003 is Â£6.1 billion. - Cumulative cost savings for the three years ended 31st December 2002 were Â£910 million, representing 91% of the Â£1 billion targeted cost savings by the end of 2003. Barclays expects to exceed this cost goal. - For the year ended 31st December 2002, Woolwich integration synergies of Â£231 million were achieved relative to a target of Â£190 million and Barclays remains on track to achieve the pre-tax target synergies of Â£400 million per annum for 2004 onwards. FINANCIAL HIGHLIGHTS 2002 2001** RESULTS* Â£m Â£m Net interest income 6,257 6,001 Non-interest income 5,122 5,176 Operating income 11,379 11,177 Operating expenses (6,104) (6,067) Provisions for bad and doubtful debts (1,484) (1,149) Provisions for contingent liabilities and commitments (1) (1) Loss from joint ventures and associated undertakings (10) (9) Operating profit 3,780 3,951 Restructuring charge (187) (171) Woolwich integration costs (80) (89) Woolwich fair value adjustments (51) (33) Goodwill amortisation (254) (229) Exceptional items (3) (4) Profit before tax 3,205 3,425 Profit attributable to shareholders 2,230 2,446 Economic profit 1,237 1,227 BALANCE SHEET Equity shareholders' funds 15,205 14,485 Loan capital 11,537 9,987 Total capital resources 26,898 24,606 Total assets 403,066 356,612 Weighted risk assets 172,748 158,873 PER ORDINARY SHARE p p Earnings (on a statutory basis) 33.7 36.8 Earnings (on an operating profit basis) 40.9 43.2 Dividend 18.35 16.625 Net asset value 231 217 PERFORMANCE RATIOS % % Post-tax return on average shareholders' funds (on a statutory basis) 14.7 17.4 Post-tax return on average shareholders' funds (on an operating profit basis) 17.7 20.1 CAPITAL RATIOS % % Tier 1 8.2 7.8 Risk asset ratio 12.8 12.5 GROUP YIELDS, SPREADS & MARGINS % % Gross yield 5.35 6.56 Interest spread 2.42 2.50 Interest margin 2.75 2.91 ECONOMIC DATA Period end - US$/Â£ 1.61 1.45 Average - US$/Â£ 1.50 1.44 Period end - â‚¬/Â£ 1.54 1.64 Average - â‚¬/Â£ 1.59 1.61 FTSE 100 - year end 3,940 5,217 Note * Based on the further analysis of the Profit and Loss account as set out on page 18. Note ** Restated for changes in accountancy policy and presentation. See pages 55 and 56. CHAIRMAN'S STATEMENT Barclays delivered a sound performance during 2002, while continuing with the transformation of the business and progressing our longer-term economic development. The year was a curious one. The UK, our key market, once again grew more rapidly than other European countries, though in an increasingly lopsided way, biased toward public and personal consumption. The US recovered from an unusually weak performance in 2001 but, if anything, was even more unbalanced and consumption biased. Continental Europe and Japan were lacklustre. Yet it was a year of great uncertainty about the future combined with extremely competitive business conditions. Financial markets were volatile and in decline in 2002; they remain so in 2003. This is partly the result of the collapse of over excited sentiment stirred up primarily by the dotcom boom. Partly it reflects uncertainty about how the national economic imbalances will unfold, especially with the threat of war in Iraq. Partly it reflects the very competitive and difficult conditions in some sectors. But it also reflects the uncertainty imposed on companies by the changing regulatory background. To take our own business: we have had to deal with 18 different government reviews over the past 3 years. There is a seemingly endless stream of new accounting rules. The capital requirements of the bank will change as a result of Basel II. A whole industry in corporate governance has been created spearheaded by: Sarbanes-Oxley in the United States; the UK government commissioned reports including the Higgs Review of the role and responsibilities of non executive directors, and the Smith Review of the role of audit committees. We see the prospect of plenty more on its way from Brussels. We have increasingly tough 'Know Your Client' rules from the FSA, which long standing customers find oppressive. And we have seen the emergence of price control - from the Competition Commission Inquiry. The sheer volume of this activity takes up management time and resources, which could otherwise be devoted to driving the business forward. It creates uncertainty and inhibits sensible risk taking. And makes it increasingly difficult to explain our business in simple terms to our stakeholders. Barclays sets itself stretching financial objectives to advance the interests of our owners. A return on equity of 15% is very creditable among all these uncertainties and diversions. We set out to be an open company, communicating extensively with our large and small shareholders, both about our financial results and about the way the company is organised and managed. We try to maintain an open dialogue with our customers, and have done much over the past year to improve the way we deal with customer complaints. There are only two certainties about 2003. The first is that we shall have to cope again with the uncertain climate we faced in 2002. The second is that Barclays is well placed thanks to the spread of its business, the quality of its staff and its determination to succeed and seize the opportunities that arise. Sir Peter Middleton Chairman GROUP CHIEF EXECUTIVE'S STATEMENT In the crucible of 2002, in an environment that was much worse than expected, we took further strides to transform Barclays. While we were not immune to the external environment, we took aggressive action to adjust to rapidly changing conditions, which is demonstrated in our resilient performance. Barclays reported operating profit of Â£3,780 million, profit before tax of Â£3,205 million and a return on equity of 15%. That I regard this as a resilient performance, but not more, is an indication of how well the Group has been performing in recent years. Central to our performance during 2002 was a balance between maximising short term results and maintaining momentum in the execution of our strategic agenda. We introduced our four medium term strategic priorities last year: the protection and enhancement of our core UK franchise; the development of businesses that serve global customers and can harvest global or regional economies of scale - the best examples of which are our investment banking and credit card businesses; the deepening of our retail and corporate banking activities in Western Europe; and the extension in the UK and Europe of our wealth management business. 2002 has been a year of sound progress towards meeting our ambitions. I will start my review with our core UK businesses which contributed a 13% increase in profit before tax relative to 2001 and achieved a 4% margin between income growth and cost growth. I will review three areas specifically within the core UK businesses: Personal Financial Services, Business Banking and Barclaycard. First, Personal Financial Services. The transformation continues at pace. It is two years since we completed the acquisition of Woolwich and it was fully integrated into Personal Financial Services during 2002, ahead of schedule. Our market share of net mortgage flow has gone from a combined base of some 6.3% in October 2000 (when we completed the transaction) to 8.7% this year. We launched the Openplan proposition through Barclays channels in April 2002. Openplan brings convenience and cost savings to our customers - and therefore the potential for both higher product penetration and contribution per customer. Early performance is encouraging: in Openplan from Barclays we generated new savings and mortgage balances of Â£13.2 billion; products per customer are running at 4.3 relative to 2.5 outside Openplan. Openplan has also been a material contributor to our improved performance in the savings market where, for the first time, Barclays branded savings were one of the top performers in terms of share of new savings flow during 2002. In the increasingly competitive current account market, I am also pleased to be able to report that we have increased the number of current account holders we serve from 10.1 million in 2001 to 10.5 million in 2002. So as I look at our performance in Personal Financial Services - we have made strong headway across mortgages, Openplan, savings, and current accounts. Personal Financial Services had good momentum in its transformation which positions it for good growth in the future. The second core UK business is Business Banking. Business Banking is our biggest profit generator - Â£1,262 million of operating profit in 2002. It has over half a million small and medium sized business customers. It is a business where relationships are built and maintained by, in our case, 2,400 relationship managers who have extensive sector specific expertise; who are mobile in every sense of the word, spending much of their time at the premises of their customers; where the physical distribution base of the branch network is a vital contributor to customer convenience; and where there are risk management techniques born of years of data and cycles of experience. The industry has learnt much from the experiences of the last decade. In the early nineties, annual write offs as a percentage of the sterling corporate loan book for the British banking industry amounted to 250 basis points. Barclays corporate loan book write offs were 52 basis points in 2002. We have cause to remain cautious about the year ahead but the science of risk management in this part of the industry has advanced hugely, and I believe nowhere more so than at Barclays. Turning now to our third UK franchise, Barclaycard. Operating profit here grew by 21%. Barclaycard is a company known for its customer-centricity, innovation and profitable growth. By way of example, Nectar, the loyalty scheme launched in September 2002 with Barclaycard as a founder member, has at its heart the same philosophy of innovation and convenience that also drives Openplan. In the case of Nectar, customers are offered loyalty points in a way that makes it easy for them to accumulate, and which can be exchanged for a wide range of items which best suit their lifestyle. 11 million active collectors were recruited in the first eight weeks after Nectar was launched. Barclaycard also continued to grow through value-creating non-organic moves. The acquisition of the UK business of Providian in April 2002 was a good example of strategic development by corporate action. Providian brought distinctive and complementary competencies in the credit card environment and half a million new customers with balances of around Â£400 million. Our view is that in no sense is the UK card market mature when one considers that over 70% of the American adult population has a credit card which they use in some 25% of all payments. The equivalent statistics in the United Kingdom are 48% and 4%. You should expect us to continue to allocate strategic resources to this business. Barclaycard International has continued its expansion into Europe with the launch in Italy during 2002. It has issued 1.28m cards in Germany, Spain, Greece, France and Italy. Looking now at our other global businesses, Barclays Capital and Barclays Global Investors. In an extremely difficult environment for investment banks around the world, Barclays Capital delivered one of its best ever performances in 2002, making a return on economic capital of 19%. Our performance in a key league table (the Euromoney Global All Debt Table) indicates clearly that our business model is successful, and that we have been taking market share - in 2002 we rose to 5th position (2001: 8th position). Barclays Capital was the only top ten investment bank to increase debt issuance volumes in 2002, a year when overall volumes in the market were down sharply. This strong overall performance reflected our concentrated approach to the recruitment of business originators, our energetic risk management and our ability to flex our costs to accommodate the tougher income-generating environment. Barclays Capital is a business strongly positioned for medium term growth. I will also say a few words about Barclays Global Investors. I like this business, especially from the point of view of portfolio diversity. Its performance is dominated by fees and commissions, it has its main business in the United States and it is a low utiliser of regulatory capital. It leads the world in index replication and in exchange traded funds and has a growing franchise in active management. Notwithstanding the impact on assets under management of collapsing stock market indices Barclays Global Investors still manages funds of more than Â£460 billion. Operating profits grew 41% during the year. The development of our wealth management business is one of our strategic priorities. Barclays Private Clients serves around one million clients and we manage some Â£85 billion of assets on their behalf. 2002 was a particularly difficult year for the wealth management industry as a whole. Markets, of course, were terrible. The FTSE 100 index fell 24%. Several major competitors have either withdrawn or stood back. What distinguishes the successful from the unsuccessful in this sector is the breadth of their distribution base, their cost to recruit new customers and access to world-class products. Barclays is greatly advantaged in these dimensions, and our development path this year has been characterised by further consolidation of the originating businesses of Barclays Private Clients, the integration of our banking and investment management customer offerings, and the steady escalation of our strategic partnership with Legal & General. In 2002, we continued to build our European retail and commercial banking businesses through organic development. By way of example, we made good strides in growing our Spanish business, enhancing value through capturing profitable market share. The launch of Openplan in Spain is an example of our ability to develop successful products and transport them cross-border. Our market share of net new business in mortgages in Spain increased from 0.5% in 2001 to 5% in 2002 consequent on the introduction of Openplan in which we achieved 4.5 products per customer. Although we continue to seek out value-creating non-organic opportunities in selected European markets, we will continue to be rigorous in applying the disciplines of value based management in analysing potential targets. We will only consider transactions that meet our value based metrics. Lastly, I should touch on outlook. I mentioned earlier that the macro-economic indicators are ambiguous. However, I am on balance a bit more optimistic about 2003 than I was about 2002. We believe that the UK may perform slightly better than it did in 2002. This should provide a relatively stable backdrop against which we can grow our business in the UK. The US entered 2003 in moderately better shape than it entered 2002. However, the Eurozone presents a more subdued picture. Germany faces a series of intractable difficulties and since Germany represents one third of the Eurozone, the Eurozone as a whole is likely to continue to lag behind the UK and US. Japan shows no sign of addressing its difficulties which require structural reform. All this adds up to a UK domestic economy likely to perform well relative to the rest of Europe, but an international economy which, in the aggregate, looks unlikely to be significantly more expansionary than last year. Whatever the out-turn, you can expect us to manage our business aggressively and proactively, adjusting to emerging conditions while powering ahead with our strategy. Overall I therefore remain optimistic about the health of the industry and, in particular, Barclays. Matthew W. Barrett Group Chief Executive KEY FACTS (UNAUDITED) 31.12.02 31.12.01 Number of UK branches 2,080 2,088 Number of overseas branches 499 564 Number of UK ATMs 3,900 3,900 Employees worldwide 74,700 78,600 Total customers registered for online banking 3.9m 3.3m UK OPENPLAN Number of customers with Openplan from Woolwich 1,206,000 960,000 Number of customers with Openplan from Barclays 778,000 10,000 Total UK Openplan savings balances Â£18.5bn Â£7.4bn Total UK Openplan mortgage balances Â£21.2bn Â£8.1bn PERSONAL FINANCIAL SERVICES Number of UK current accounts 10.5m 10.1m Number of UK savings accounts 10.2m 9.0m Total UK mortgage balances Â£58.7bn Â£51.9bn BARCLAYS PRIVATE CLIENTS Total customer funds Â£85bn Â£93bn Number of Iberian Openplan customers 20,000 4,000 Average stockbroking deal volumes per day 6,300 6,400 BARCLAYCARD Number of Barclaycard UK customers 9.7m 8.2m Number of customers registered for online services 1.1m 0.7m Number of retailer relationships 85,000 83,000 Number of retailer transactions processed 1.4bn 1.3bn Number of Barclaycards issued in continental Europe 1.28m 1.25m BUSINESS BANKING Number of Business Banking UK connections 530,000 539,000 Number of current accounts 731,000 748,000 Number of Business Premium deposit accounts 238,000 247,000 Customers registered for online banking/BusinessMaster 288,000 256,000 BARCLAYS AFRICA Number of customers accounts 1.4m 1.5m BARCLAYS GLOBAL INVESTORS Total assets under management Â£462bn Â£530bn Number of institutional clients 2,300 2,000 BARCLAYS CAPITAL 31.12.02 31.12.01 League League table Issuance table Issuance position value position value Sterling bonds 1st Â£13bn 1st Â£11bn Syndicated loans (Europe, Middle East, Africa) 1st $44bn 1st $46bn Syndicated loans (ex USA) 3rd $48bn 2nd $50bn All syndicated loans 5th $67bn 5th $69bn All international bonds 9th $74bn 10th $67bn European all debt 2nd $116bn 4th $90bn Global all debt 5th $162bn 8th $149bn GROUP PERFORMANCE MANAGEMENT Value Based Management Barclays is focused on maximising value for shareholders through the creation and delivery of superior products and services to customers. Barclays uses value based management (VBM) to align management decision making at all levels of the organisation with the objective of maximising value for its shareholders. In applying VBM principles, Barclays has developed a disciplined, fact-based approach to strategy development and business planning, which aims to build sustainable competitive advantage. Individual businesses generate alternative business strategies to facilitate the selection of the most appropriate value-maximising option. Our aim is to achieve profitable growth in all our businesses. A core dimension of the Group's approach to VBM is to set stretching performance goals linked explicitly to maximising shareholder value. Performance Goals Barclays performance goals have been an important stimulus of focus and energy for the whole organisation, helping to lift our metabolic rate and improve performance standards. At the end of 1999, Barclays set a series of performance goals for the period 2000 to 2003. The primary goal was to achieve top quartile total shareholder return (TSR) over time, relative to a peer group of financial services companies that is reviewed annually. TSR is defined as the combination of share price appreciation and dividends (treated as if re-invested in Barclays shares). In 2002, the peer group comprised Abbey National, ABN Amro, BBVA, BNP Paribas, Citigroup, Deutsche Bank, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and Standard Chartered. The peer group is unchanged for 2003. A set of secondary four year goals were developed that, together, would act as enablers in the delivery of the primary TSR goal. The first was an absolute value goal that seeks to convert a hypothetical Â£100 invested in Barclays at the end of 1999 into Â£200 by the end of 2003. At the time of setting the goals, analysis of market relativities indicated that doubling absolute value in four years equated to delivery of top quartile TSR performance. The second supporting goal was to double economic profit over the period. At the time of setting the goals, we believed that delivering this rate of economic profit generation would drive top quartile TSR performance. This goal requires the delivery of Â£6.1bn of cumulative economic profit for 2000 to 2003 inclusive. The third supporting goal was specifically focused on improving cost management. The goal is to reduce the annual run rate of costs by Â£1bn over the four year period to the end of 2003, thereby absorbing the impact of inflation and volume related growth during the period. This was increased by Â£150m with the acquisition of The Woolwich in 2000. Our belief is that to achieve our shareholder value aspirations, we must deliver world class productivity performance. Progress on performance relative to goals As at the end of December 2002, Barclays had met its primary goal of top quartile TSR performance relative to its peer group, was ahead against the cost goal, behind in cumulative economic profit generation and significantly behind on the absolute value goal following three successive years of decline in the FTSE 100 Index. Total Shareholder Return For the three years to the end of December 2002, Barclays was positioned third within its peer group of eleven institutions and therefore was meeting its top quartile TSR performance goal. Absolute Value The total shareholder return on the FTSE 100 Index has declined 39% since the end of 1999. The absolute goal required a hypothetical Â£100 invested in Barclays on 31st December 1999 to be worth Â£168 by the end of 2002. It was, in fact, worth Â£96, a decrease of 4%. An equivalent investment of Â£100 in the peer group was worth Â£89 and an equivalent investment in the FTSE 100 was worth Â£61. Economic Profit The goal required the generation of Â£4.2bn of cumulative economic profit by the end of 2002 as the contribution of the first three years in the four year (2000-2003) cumulative goal of Â£6.1bn. Economic profit for 2002 was Â£1.2bn, which combined with the cumulative Â£2.7bn generated in 2000 and 2001 inclusive, delivered Â£3.9bn of cumulative economic profit. The total target for 2000 to 2003 inclusive is Â£6.1bn. Economic profit is profit after tax and minority interests excluding goodwill amortisation, less a charge for the cost of average shareholders' funds (which includes purchased goodwill). The cost of average shareholders' funds is calculated using the capital asset pricing model. The cost comprises primarily three components: the equity risk premium; the market beta; and the risk free rate. The cost of average shareholders' funds for 2002 included an estimate of the future equity market risk premium of 4.5% and a forward looking market beta (relative risk of Barclays shares compared to the FTSE 100 Index) of 1.2. The Group's cost of average shareholders' funds for 2003 is unchanged from 2002 at 9.5% and includes an estimate of the future equity market risk premium of 5.0% and a forward looking market beta of 1.2. The cost of average shareholders' funds for 2003 includes a lower risk free rate. The breakdown of economic profit performance is shown below: 2002 2001* Â£m Â£m Profit after tax and minority interests 2,490 2,670 (excluding goodwill adjustments net of tax) Gain on disposal recognised in the statement 206 - of total recognised gains and losses** 2,696 2,670 Average shareholders' funds*** 15,812 14,528 Post tax cost of equity 9.5% 10.5% Cost of average shareholders' funds**** (1,459) (1,443) Economic profit***** 1,237 1,227 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. ** Recognised gains and losses are included where they arise from transactions with third parties. *** The difference between the average shareholders' funds of Â£15,146m and that reported above represents cumulative goodwill amortisation charged and goodwill previously written off to reserves. **** The cost includes a charge for purchased goodwill of Â£398m (2001: Â£403m). A post tax cost of equity of 8.5% has been used for goodwill associated with the acquisition of Woolwich plc. ***** Economic profit is defined as profit after tax and minority interests plus certain gains (and losses) reported within the statement of total recognised gains and losses where they arise from the Group's business activities and are in respect of transactions with third parties, less a charge for the cost of average shareholders' funds (which includes purchased goodwill). The table below shows the economic profit generated by each business area, the calculations being based on the associated economic capital allocations. 2002 2001* Â£m Â£m Personal Financial Services 390 331 Barclays Private Clients - operating 129 336 - Caribbean sale** 206 - Barclaycard 270 235 Business Banking 569 474 Barclays Africa 22 44 Barclays Capital 178 244 Barclays Global Investors 56 44 Other operations*** (73) (2) Head office functions (53) (32) Economic profit 1,694 1,674 Goodwill**** (398) (403) Variance to average shareholders' funds (59) (44) Economic profit 1,237 1,227 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. ** See Acquisitions and disposals on page 55. *** Includes South American Corporate Banking. **** Cost of equity charge on purchased goodwill. Cost goal The Group's goal is to reduce the annual run rate of costs by Â£1bn over the four year period to the end of 2003, thereby absorbing the impact of inflation and volume related growth over the period. This goal was increased by Â£150m with the acquisition of The Woolwich in 2000. During 2000 and 2001, Â£545m of savings were achieved. In 2002, a further Â£365m of savings were achieved, creating a cumulative total of Â£910m. With 75% of the four year period elapsed, 91% of the goal had been achieved. At the end of 2002, Â£159m of Woolwich cost synergies had been achieved, exceeding the goal ahead of schedule. We continued to benchmark each of our businesses against the appropriate peer group in financial services to establish top quartile efficiency ratio targets. The Group's cost income ratio improved slightly to 53.6% (2001: 54.3%) SUMMARY OF RESULTS PROFIT BEFORE TAX 2002 2001* Â£m Â£m Personal Financial Services 1,027 949 Barclays Private Clients 333 596 Barclaycard 628 520 Business Banking 1,262 1,100 Barclays Africa 105 130 Barclays Capital 593 662 Barclays Global Investors 110 78 Other operations** (169) (9) Head office functions (109) (75) Operating profit 3,780 3,951 Restructuring charge (187) (171) Woolwich integration costs (80) (89) Woolwich fair value adjustments (51) (33) Goodwill amortisation (254) (229) Exceptional items (3) (4) 3,205 3,425 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. ** Other operations now include South American Corporate Banking activities previously included in Barclays Capital and Business Banking. Prior periods have been restated accordingly. TOTAL ASSETS WEIGHTED RISK ASSETS 2002 2001* 2002 2001 Â£m Â£m Â£m Â£m Personal Financial Services 71,871 64,314 41,100 36,154 Barclays Private Clients** 14,016 13,886 11,713 9,197 Barclaycard 10,669 9,404 10,647 9,467 Business Banking 47,315 44,132 50,449 46,272 Barclays Africa 2,632 2,756 1,892 1,943 Barclays Capital 236,472 201,301 53,496 51,943 Barclays Global Investors 494 308 666 563 Other operations and Head office functions*** 8,379 8,250 2,785 3,334 Goodwill 3,934 4,091 - - Retail life-fund assets 7,284 8,170 - - 403,066 356,612 172,748 158,873 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. ** For 2002 FirstCaribbean is fully consolidated for supervisory purposes. *** Other operations and Head office functions now include total assets of Â£153m (31st December 2001: Â£840m) and weighted risk assets of Â£232m (31st December 2001: Â£850m), related to South American Corporate Banking. CONSOLIDATED PROFIT AND LOSS ACCOUNT 2002 2001 restated Â£m Â£m Interest receivable 12,044 13,458 Interest payable (5,839) (7,492) Net interest income 6,205 5,966 Net fees and commissions receivable 3,925 3,737 Dealing profits 833 1,011 Other operating income 364 428 Total non-interest income 5,122 5,176 Operating income 11,327 11,142 Administration expenses - staff costs (3,755) (3,714) Administration expenses - other (2,312) (2,303) Depreciation and amortisation (557) (537) Operating expenses (6,624) (6,554) Operating profit before provisions 4,703 4,588 Provisions for bad and doubtful debts (1,484) (1,149) Provisions for contingent liabilities and commitments (1) (1) Operating profit 3,218 3,438 Loss from joint ventures and associated undertakings (10) (9) Exceptional items (3) (4) Profit on ordinary activities before tax 3,205 3,425 Tax on profit on ordinary activities (955) (943) Profit on ordinary activities after tax 2,250 2,482 Minority interests (equity and non-equity) (20) (36) Profit for the financial year attributable to 2,230 2,446 The members of Barclays PLC Dividends (1,206) (1,110) Profit retained for the financial year 1,024 1,336 Earnings per ordinary share 33.7p 36.8p Post tax return on average shareholders' funds 14.7% 17.4% Dividend per ordinary share: Interim 6.35p 5.75p Final (Payable 28th April 2003) 12.00p 10.875p CONSOLIDATED BALANCE SHEET 2002 2001 restated Assets: Â£m Â£m Cash and balances at central banks 2,032 1,281 Items in course of collection from other banks 2,335 2,444 Treasury bills and other eligible bills 7,645 7,417 Loans and advances to banks- banking 15,369 12,196 - trading 42,805 35,693 58,174 47,889 Loans and advances to customers - banking 157,222 146,253 - trading 45,176 34,240 202,398 180,493 Debt securities 94,229 78,924 Equity shares 3,133 3,118 Interests in joint ventures and associated undertakings 455 88 Intangible fixed assets - goodwill 3,934 4,091 Tangible fixed assets 1,626 1,958 Other assets 19,821 20,739 395,782 348,442 Retail life-fund assets attributable to policyholders 7,284 8,170 Total assets 403,066 356,612 Liabilities: Deposits by banks - banking 48,751 45,837 - trading 38,683 21,543 87,434 67,380 Customer accounts- banking 144,078 139,863 - trading 27,420 23,984 171,498 163,847 Debt securities in issue 45,885 41,846 Items in course of collection due to other banks 1,416 1,550 Other liabilities 62,651 49,213 Undated loan capital - convertible to preference shares 310 345 Undated loan capital - non-convertible 6,368 4,709 Dated loan capital - convertible to preference shares 11 - Dated loan capital - non-convertible 4,848 4,933 380,421 333,823 Minority interests and shareholders' funds: Minority interests: equity 156 134 Called up share capital 1,645 1,668 Reserves 13,560 12,817 Shareholders' funds: equity 15,205 14,485 15,361 14,619 395,782 348,442 Retail life-fund liabilities attributable to policyholders 7,284 8,170 Total liabilities and shareholders' funds 403,066 356,612 FURTHER ANALYSIS OF PROFIT AND LOSS ACCOUNT 2002 2001 restated Â£m Â£m Interest receivable 12,096 13,513 Interest payable (5,839) (7,512) Net interest income 6,257 6,001 Net fees and commissions receivable 3,925 3,737 Dealing profits 833 1,011 Other operating income 364 428 Total non-interest income 5,122 5,176 Operating income 11,379 11,177 Administration expenses - staff costs (3,630) (3,578) Administration expenses - other (2,171) (2,181) Depreciation (303) (308) Operating expenses (6,104) (6,067) 5,275 5,110 Provisions for bad and doubtful debts (1,484) (1,149) Provisions for contingent liabilities and commitments (1) (1) Loss from joint ventures and associated undertakings (10) (9) Operating profit 3,780 3,951 Restructuring charge (187) (171) Woolwich integration costs (80) (89) Woolwich fair value adjustments (51) (33) Goodwill amortisation (254) (229) Exceptional items (3) (4) Profit on ordinary activities before tax 3,205 3,425 Earnings per ordinary share before restructuring charge, Woolwich 40.9p 43.2p integration costs, Woolwich fair value adjustments, goodwill amortisation and exceptional items Post tax return on average shareholders' funds 17.7% 20.1% (on a consistent basis with earnings per share above) The above results are based on the consolidated profit and loss account shown on page 16 and show operating profit before charging the restructuring charge, costs directly associated with the integration of Woolwich plc, Woolwich fair value adjustments, goodwill amortisation and exceptional items. Barclays believes that identifying operating profit before charging these items assists in the understanding of profit trends in the results. FINANCIAL REVIEW Results by nature of income and expense Net interest income 2002 2001 restated Â£m Â£m Interest receivable 12,044 13,458 Interest payable (5,839) (7,492) 6,205 5,966 Woolwich fair value adjustments 52 35 6,257 6,001 Group net interest income increased by 4% to Â£6,257m, reflecting growth in balances which more than offset a 16 basis point fall in the Group net interest margin to 2.75%. Average interest earning assets increased by 10% to Â£225bn, primarily due to a Â£6bn increase in UK mortgage balances within Personal Financial Services and increases of Â£4bn in holdings of debt securities and Â£5bn of lending to banks in Barclays Capital. Domestic average interest earning assets increased by 8% to Â£152bn (2001: Â£141bn), predominantly driven by the Â£6bn increase in mortgage balances in Personal Financial Services. International average interest earning assets increased by 15% to Â£73bn (2001: Â£64bn), primarily driven by an increase in Barclays Capital wholesale activities. The reduction in the Group net interest margin reflected decreases in both the domestic and international margins. The domestic margin has shown a decrease of 14 basis points reflecting active management of margins across the UK businesses in competitive market conditions, particularly in the mortgage market, and a low interest rate environment. The international margin has fallen by 11 basis points mainly as a result of managing down the higher yielding South American Corporate Banking business and an increase in non performing loans in the US. The benefit of free funds fell 0.08% to 0.33% as a result of the reduction in interest rates. The overall benefit of free funds on a hedged basis rose to 0.55% (2001: 0.53%) reflecting an increase in the effective rate of the hedge more than offsetting the fall in the liability interest rates. Yields, spreads and margins - banking business* 2002 2001 restated Gross yield** % % Group 5.35 6.56 Domestic 5.97 7.10 International 4.06 5.38 Interest spread*** Group 2.42 2.50 Domestic 3.22 3.23 International 0.80 0.91 Interest margin**** Group 2.75 2.91 Domestic 3.61 3.75 International 0.96 1.07 Average UK base rate 4.00 5.12 Notes * Domestic business is conducted primarily in the UK in Sterling. International business is conducted primarily in foreign currencies. In addition to the business carried out by overseas branches and subsidiaries, international business is transacted in the United Kingdom by Barclays Capital. The yields, spreads, and margins shown above exclude non-margin related items including profits and losses on the repurchase of loan capital and the unwinding of the discount on vacant leasehold property provisions. ** Gross yield is the interest rate earned on average interest earning assets. *** Interest spread is the difference between the interest rate earned on average interest earning assets and the interest rate paid on average interest bearing liabilities. **** Interest margin is net interest income as a percentage of average interest earning assets. Average interest earning assets and liabilities - banking business 2002 2001 restated Average interest earning assets Â£m Â£m Group 225,178 205,017 Domestic 151,810 141,087 International 73,368 63,930 Average interest bearing liabilities Group 199,708 184,105 Domestic 130,045 122,422 International 69,663 61,683 Net fees and commissions 2002 2001 restated Â£m Â£m Fees and commissions receivable 4,454 4,202 Less: fees and commissions payable (529) (465) 3,925 3,737 Group net fees and commissions increased by Â£188m (5%) to Â£3,925m, predominantly reflecting increases in Barclaycard and Barclays Capital. In Barclaycard, the impact of replacing annual fees with fees based on account activity was the principal factor fuelling growth in net fees and commissions of 20% to Â£696m (2001: Â£579m). Barclays Capital net fees and commissions increased 19% to Â£463m (2001: Â£389m). This growth was driven by the Credit business with strong performances from primary bonds and structured capital markets. In Business Banking, net fees and commissions increased by 4% to Â£864m (2001: Â£833m). Barclays Private Clients and Barclays Global Investors contributed increases totalling Â£47m. In Barclays Africa, there was a Â£16m reduction principally due to the situation in Zimbabwe. In Personal Financial Services there was a reduction of Â£12m reflecting lower income from independent financial advice. Personal Financial Services, Barclays Private Clients and Business Banking fees and commissions included Â£135m (2001: Â£129m) in respect of foreign exchange income on customer transactions with Barclays Capital. Dealing profits 2002 2001 Â£m Â£m Rates related business 876 823 Credit related business (43) 188 833 1,011 Almost all the Group's dealing profits are generated in Barclays Capital. Dealing profits fell to Â£833m (2001: Â£1,011m). The fall resulted from poor conditions in the credit and equity markets with losses in the credit related financing business and in equity related activities partially offset by strong gains in fixed income and commodities in the Rates business. Total foreign exchange income was Â£496m (2001: Â£490m) and consisted of revenues earned from both retail and wholesale activities. The foreign exchange income earned on customer transactions by Personal Financial Services, Barclays Private Clients, Barclaycard, Business Banking, Barclays Africa and Barclays Global Investors, both externally and with Barclays Capital, is reported in those business units within fees and commissions. Other operating income 2002 2001 restated Â£m Â£m Dividend income from equity shares 7 8 Profits on disposal of investment securities 58 37 Income from the long term assurance business (51) 127 Property rentals 20 30 Premium income on insurance underwriting 178 158 Other income 152 68 364 428 Other operating income decreased by Â£64m (15%) to Â£364m (2001: Â£428m). Virtually all the Group's long term assurance activity is based in the UK. This UK business, which closed to new business following the Legal & General alliance in 2001, was the main contributor to the reported loss of Â£51m for 2002 compared with a profit contribution of Â£127m in 2001. The result mainly reflected the impact of movements in the stockmarkets. The FTSE 100 index declined 24% in 2002. Income from the sale of Legal & General products following the alliance in 2001 is included in net fees and commissions. The cost of redress for customers of Barclays Life and Woolwich Life who have claimed for the misselling of endowment policies was Â£19m for the year (2001: Â£3m). Premium income on insurance underwriting rose by Â£20m to Â£178m as a result of increased payment protection income related to consumer lending activities. Other income increased by Â£84m to Â£152m. An increase of Â£59m resulted from a revision of estimated amounts expected to be repaid on banking liabilities in the light of experience since the Woolwich acquisition in 2000 and to align Woolwich with Barclays practice. The increase also reflects income of Â£39m from a restructuring of the leasing portfolio. Operating expenses The Group manages core costs on the basis of three distinct categories: strategic investment, revenue related and business as usual. In addition, goodwill amortisation, restructuring costs and integration costs are reported separately. Costs are allocated to individual categories based on the following definitions: Strategic investment costs relate to the development costs of an investment project which has either or both of the following features: - it generates or enables new revenue streams or definable growth in a revenue stream; or - it generates or enables reduced costs. Strategic investment costs exclude restructuring costs, integration costs and project operating costs. Revenue related costs are those costs which are directly associated with a corresponding change in revenues or profit. An increase or decrease in revenues or profits will usually lead to an increase or decrease in these costs. Business as usual costs are those costs not classified as strategic investment or revenue related. This category includes operating costs of live strategic projects, other project costs not classified as strategic and volume related costs which are not revenue related. Restructuring costs are those charges associated with the ongoing reorganisation and restructuring of the Group's operations as part of its cost reduction initiatives. Integration costs are in respect of projects and initiatives associated with the acquisition of Woolwich plc and include expenditure to achieve cost savings and revenue synergies. Based on the definitions, the Group's costs are summarised in the following table: Operating expenses 2002 2001 restated Â£m Â£m Business as usual expenses 4,886 4,628 Revenue related costs 730 748 Strategic investment costs 381 551 Acquisitions and disposals in 2002 and 2001 107 140 Operating expenses 6,104 6,067 Restructuring charge 187 171 Goodwill amortisation 254 229 Woolwich integration costs 80 89 Woolwich fair value adjustment (1) (2) 6,624 6,554 Operating expenses before restructuring charge, goodwill amortisation, integration costs and Woolwich fair value adjustments increased 1% to Â£6,104m. Business as usual costs rose by 6% to Â£4,886m, partly reflecting the operating cost consequences of continued investment, particularly in Barclays Capital and Barclaycard. In 2002, costs included Â£72m (2001: Â£31m) associated with the regulated sales force that were previously offset against income from the long term assurance funds in Barclays Private Clients. Business as usual costs in Personal Financial Services, Barclays Private Clients, Business Banking, Barclays Africa and Barclays Global Investors were held broadly flat or reduced. Strategic investment expenditure remained significant at Â£381m (2001: Â£551m). The reduction reflected tight cost control across the Group and the prioritisation of key initiatives. Revenue related costs at Â£730m were Â£18m (2%) lower than in 2001. Increases in Barclays Global Investors were in line with improved performance, but were more than offset by a reduction in Barclays Capital. Administrative Expenses - staff costs 2002 2001 Â£m Â£m Salaries and accrued incentive payments 3,159 3,149 Social security costs 240 243 Pension costs (27) (17) Post-retirement health care 15 - Other staff costs 368 339 3,755 3,714 Included above: Restructuring charge (124) (114) Woolwich integration costs (2) (24) Woolwich fair value adjustment 1 2 Excluding restructuring, integration 3,630 3,578 costs and fair value adjustment 2002 2001 Number of staff at year end:* Personal Financial Services** 29,600 32,100 Barclays Private Clients*** 8,900 11,100 Barclaycard**** 4,700 4,200 Business Banking 9,600 9,800 Barclays Africa***** 7,500 8,000 Barclays Capital 5,500 5,500 Barclays Global Investors 2,100 2,100 Other operations****** 6,300 5,400 Head office functions 500 400 Total Group permanent and contract staff worldwide 74,700 78,600 Temporary and agency staff worldwide 3,700 4,600 Total including temporary and agency staff 78,400 83,200 * Staff numbers are on a full time equivalent basis. United Kingdom permanent and contract staff are 59,000 (31st December 2001: 60,400). ** Included 800 regulated sales force (31st December 2001: 1,100) whose costs, following the strategic alliance with Legal & General in 2001, are included in administrative expenses - staff costs. During 2002, staff numbers in Personal Financial Services decreased by 600 as a result of restructuring. A further 700 staff relating to a mortgage call centre were outsourced to an associated undertaking whilst an additional 1,000 staff were transferred to shared service units reported within Other operations. *** Excludes 200 administrative staff (31st December 2001: 500) whose costs are borne within the long term assurance funds. Staff numbers at 31st December 2001 included 1,600 staff employed by Barclays Caribbean business now part of FirstCaribbean, which is an associated undertaking and whose staff are not included in the table above. A further reduction of 500 resulted from restructuring. **** Staff numbers at 31st December 2002 included 600 arising from the acquisition of the Providian UK credit card business. ***** During 2002, staff numbers in Africa decreased by 400 as a result of restructuring. ****** Staff numbers at 31st December 2002 included 1,000 transferred from Personal Financial Services. Staff costs Staff costs, excluding the restructuring charge together with the integration costs and fair value adjustments arising from the acquisition of Woolwich plc, increased by 1% to Â£3,630m. Salaries and accrued incentive payments were broadly flat. The impact of the annual UK pay award was offset by a reduction in Group staff numbers and in payments to temporary staff. In addition, staff costs included Â£55m (2001: Â£25m) relating to the regulated sales force following the formation of the strategic alliance with Legal & General from August 2001. Increased costs in Barclays Global Investors were in line with improved performance but were more than offset by a reduction in Barclays Capital. Pension costs, calculated in accordance with SSAP 24, included a credit of Â£72m (2001: Â£72m) in respect of the Group's main UK pension schemes. Pension assets at the end of September 2002 were Â£9.5bn (2001: Â£10.7bn). Based on a valuation date of 30th September 2002, there was an actuarial funding surplus of 104% (2001: 110%). Under FRS 17 there would have been a charge of Â£130m in respect of the Group's main UK pension scheme in 2002 and a deficit of Â£1.3bn. This compares with the surplus of Â£544m under SSAP 24 for 2002. Permanent and contract staff numbers fell by 3,900 of which 1,600 were attributable to the treatment of the Caribbean business as an associated undertaking. The implementation of restructuring programmes resulted in a decrease of 2,600. This was primarily in Personal Financial Services, Barclays Private Clients and Barclays Africa, but it was spread across the businesses. A further 1,000 (700 staff outsourced to an associated undertaking) came from outsourcing, mainly of mortgage production administration. This was partly offset by an increase in Barclaycard of 600, mostly attributable to the acquisition of Providian UK and growth in other business areas of 800. The numbers of staff reductions relating to each restructuring programme are as follows: Number of staff who have left during 2002 Current year programme 1,400 Prior year programme 1,200 Total 2,600 The number of staff who were under notice at the end of 2002 was 1,900. The restructuring charge of Â£187m detailed on page 49 relates to the 2002 restructuring programme above. Administrative expenses - other 2002 2001 Â£m Â£m Property and equipment expenses 985 974 Other administrative expenses 1,327 1,329 2,312 2,303 Included above: Restructuring charge (63) (57) Integration costs (78) (65) Excluding restructuring charge and integration costs 2,171 2,181 Administrative expenses - other were broadly flat. Property and equipment expenses were Â£11m higher, reflecting higher external information technology costs. Other administrative expenses reduced by Â£2m. Increased advertising and market promotion expenditure, including costs relating to the launch of Barclaycard Direct, Openplan from Barclays and other campaigns, was offset by reductions in other areas. Depreciation and amortisation 2002 2001 Â£m Â£m Property depreciation 93 105 Equipment depreciation 198 194 Loss on sale of equipment 12 9 303 308 Goodwill amortisation- Woolwich 206 206 - other 48 23 557 537 The increase in other goodwill amortisation results from the acquisition of the Providian UK credit card business and an increase in the goodwill charge for the Group's Brazilian subsidiary, Banco Barclays SA. Provisions for bad and doubtful debts 2002 2001 Â£m Â£m The charge for the year in respect of bad and doubtful debts comprises: Specific provisions New and increased 1,719 1,440 Releases (127) (133) Recoveries (106) (142) 1,486 1,165 General provision release (2) (16) Net charge 1,484 1,149 The net charge for the period in respect of bad and doubtful debts comprises: South American Corporate Banking 132 36 Other 1,352 1,113 Net charge 1,484 1,149 Total provisions for bad and doubtful debts at end of the period comprise: Specific provisions 2,261 1,971 General provisions 737 745 2,998 2,716 The net provisions charge from bad and doubtful debts increased by Â£335m to Â£1,484m. The greater part of this increase occurred in the Barclays Capital (Â£231m) and in the South American Corporate Banking (Â£96m) portfolios. The increase in provisions at Barclays Capital reflected difficult economic conditions, mainly in the telecommunications and energy sectors, particularly in the US. The deterioration in the second half of 2002 was largely in existing non performing loans. The increase in South American Corporate Banking mainly related to Argentina. Business Banking sustained an 8% increase in its bad debt provision charge, broadly in line with expectations. The charge for Barclaycard was Â£402m, 7% higher reflecting the acquisition of Providian UK and the growth in average extended credit balances of 9%. Within Personal Financial Services, the provision charge fell by 13%, reflecting in part improvements in risk management. Loss from joint ventures and associated undertakings 2002 2001 Â£m Â£m Loss from joint ventures (5) (1) Loss from associated undertakings (5) (8) (10) (9) The loss from joint ventures relates primarily to an entity within Personal Financial Services. The loss from associated undertakings includes a loss of Â£9m relating to FirstCaribbean (see page 55) which was due to integration and restructuring costs following the creation of the new enlarged business. It includes Â£1m relating to the amortisation of the goodwill arising on completion of the Caribbean transaction. Exceptional items 2002 2001 Â£m Â£m Profit/(loss) on disposal of Group undertakings 8 (4) Loss on termination of Group activities (11) - (3) (4) The profit on disposal of Group undertakings in 2002 relates primarily to a Â£7m release of provisions in connection with a transaction in previous years which are no longer required. The gross gain on the sale of the US based Americas private banking business was broadly offset by goodwill written off. The net loss on disposal of Group undertakings in 2001 represented losses of Â£19m offset by gains of Â£15m. The net loss included goodwill written off of Â£1m. Tax The charge for the year assumes a UK corporation tax rate of 30% for the year 2002 (2001: 30%). The effective rate of tax is 29.8% (2001: 27.5%). The increase in the rate from last year is primarily due to the absence of tax-free disposals, coupled with a reduction in the payments made to the qualifying employee trust reflecting the reduced share price and a reduction in the benefit generated by the utilisation of overseas losses. Included in the charge is a credit of Â£39m (2001: Â£23m charge) tax on the decrease in shareholders' interest in the long term assurance funds. Earnings per ordinary share Earnings per ordinary share are based upon the results after deducting tax, profit attributable to minority interests and dividends on staff shares. 2002 2001 restated Earnings in year Â£2,230m Â£2,446m Earnings in year before restructuring, integration costs, goodwill Â£2,707m Â£2,876m amortisation, fair value adjustments and exceptional items Weighted average number of ordinary shares in issue 6,626m 6,651m Calculation of adjusted earnings per share pence pence Basic earnings per ordinary share 33.7 36.8 Restructuring charge 2.0 1.8 Integration costs 0.9 0.9 Goodwill amortisation 3.8 3.4 Woolwich fair value adjustments 0.5 0.3 Adjusted earnings per share 40.9 43.2 Dividends on ordinary shares The Board has decided to pay, on 28th April 2003, a final dividend for the year ended 31st December 2002 of 12.0p per ordinary share for shares registered in the books of the Company at the close of business on 28th February 2003. Shareholders who have their dividends paid direct to their bank or building society account will receive a consolidated tax voucher detailing the dividends paid in the 2003/2004 tax year in mid October 2003. For qualifying US and Canadian resident ADR holders, the final dividend of 12.0p per ordinary share becomes 48.0p per ADS (representing four shares). The ADR depositary will mail the dividend on 28th April 2003 to ADR holders on the record on 28th February 2003. For qualifying Japanese shareholders, the final dividend of 12.0p per ordinary share will be distributed in mid-May to shareholders on the record on 28th February 2003. Shareholders may have their dividends reinvested in Barclays PLC shares by participating in the Barclays Dividend Reinvestment Plan. The plan is available to all shareholders, including members of Barclays Sharestore, provided that they do not live in or are subject to the jurisdiction of any country where their participation in the plan would require Barclays or The Plan Administrator to take action to comply with local government or regulatory procedures or any similar formalities. Any shareholder wishing to obtain details and a form to join the plan should contact The Plan Administrator by writing to The Plan Administrator to Barclays, PO Box 82, The Pavilions, Bridgwater Road, Bristol, BS99 7NH or by phoning 0870 702 0196. The completed form should be returned to The Plan Administrator on or before 3rd April 2003 for it to be effective in time for the payment of the final dividend on 28th April 2003. Shareholders who are already in the plan need take no action unless they wish to change their instructions, in which case they should write to The Plan Administrator. Capital resources 2002 2001 restated Â£m Â£m Equity shareholders' funds 15,205 14,485 Minority interests 156 134 15,361 14,619 Loan capital 11,537 9,987 26,898 24,606 Total capital resources increased in the period by Â£2,292m. Equity shareholders' funds increased by Â£720m primarily reflecting profit retentions of Â£1,024m, net proceeds of share issues of Â£87m and the gain on the disposal of the Group's Caribbean business of Â£206m (see page 55) offset by share repurchases of Â£546m and unfavourable exchange rate movements of Â£61m. Loan capital rose by Â£1,550m, reflecting raisings of Â£2,173m. This was offset by redemptions of Â£376m, amortisation of issue expenses of Â£1m and favourable exchange rate movements of Â£246m. Capital ratios Weighted risk assets and capital resources, as defined for supervisory purposes by the Financial Services Authority, comprise: 2002 2001 restated Weighted risk assets: Â£m Â£m Banking book on-balance sheet 128,691 120,113 off-balance sheet 21,999 20,368 Associated undertakings and joint ventures 3,065 499 Total banking book 153,755 140,980 Trading book Market risks 7,988 7,801 Counterparty and settlement risks 11,005 10,092 Total trading book 18,993 17,893 Total weighted risk assets 172,748 158,873 Capital resources: Tier 1 Called up share capital 1,641 1,668 Eligible reserves 13,409 12,775 Minority interests - equity 522 203 Reserve capital instruments* 1,771 1,867 Tier one notes* 1,019 - Less: goodwill (4,158) (4,108) Total qualifying tier 1 capital 14,204 12,405 Tier 2 Revaluation reserves 25 31 General provisions 737 745 Qualifying subordinated liabilities** Undated loan capital 3,854 3,147 Dated loan capital 4,573 4,466 Other*** 2 8 Total qualifying tier 2 capital 9,191 8,397 Tier 3: short term subordinated liabilities** 203 392 Less: Supervisory deductions Investments not consolidated for Supervisory purposes**** (1,288) (1,233) Other deductions (119) (62) Total deductions (1,407) (1,295) Total net capital resources 22,191 19,899 % % Tier 1 ratio 8.2 7.8 Risk asset ratio 12.8 12.5 * Reserve capital instruments and tier one notes are included in undated loan capital in the consolidated balance sheet. ** Subordinated liabilities are included in tiers 2 or 3, subject to limits laid down in the supervisory requirements. Barclays retains significant capacity to raise additional capital within these limits. *** Comprises reserve capital instruments Â£Nil (2001: Â£5m) and revaluation reserves attributable to minorities Â£2m (2001: Â£3m). **** Includes Â£867m (2001: Â£884m) of shareholders' interest in the life fund. Capital ratios have increased as a result of a Â£2.3bn (11%) growth in net capital resources which more than offset the impact of a Â£13.9bn (9%) growth in weighted risk assets. The net impact on the risk asset ratio was an increase of 0.3% and on the tier 1 ratio an increase of 0.4%. Within tier 1 capital, equity shareholders' funds increased by Â£0.6bn (see 'Capital resources' above) and the issues of tier one notes (TONs) added a further Â£1bn. In addition, equity minority interests increased by Â£0.3bn, mainly reflecting the inclusion of capital attributable to other shareholdings in FirstCaribbean which is fully consolidated for supervisory purposes. These gains are partly offset by exchange losses on reserve capital instruments and additional goodwill in FirstCaribbean. Loan capital increased by Â£0.6bn (see 'Capital Resources' above). Within this, capital eligible for inclusion in tier 2 increased by Â£0.8bn and Â£0.2bn of tier 3 capital was repaid. The increase in supervisory deductions relates mainly to equity in other banks that is held by FirstCaribbean. Total assets The Group's balance sheet grew by 13% (Â£46bn) to Â£403bn. Weighted risk assets rose by 9% to Â£173bn. Within Personal Financial Services, total assets grew by 12% to Â£72bn. Weighted risk assets increased by 14% to Â£41bn primarily as a result of strong growth in UK mortgage balances, up 13% to Â£58.7bn (31st December 2001: Â£51.9bn), and good growth in other secured and unsecured lending. Barclays Private Clients total assets of Â£14bn were at a similar level to 2001, with the increase in assets resulting from the growth of Openplan in Spain being offset by the effect of the Caribbean transaction. Weighted risk assets increased by Â£2.5bn reflecting the growth in Openplan assets and the inclusion of 100% of the weighted risk assets of the Caribbean associate, FirstCaribbean International Bank (see Capital Ratios above), which combined the Caribbean businesses of Barclays and Canadian Imperial Bank of Commerce. Within Barclaycard, total assets increased by Â£1.3bn in the year to Â£10.7bn. Weighted risk assets increased by 12% to Â£10.6bn. The increase reflected higher extended credit balances and the inclusion of the Providian UK business. Within Business Banking, total assets grew by 7% to Â£47bn. Weighted risk assets increased by 9% during the same period. Growth was predominantly in lending to larger business customers. Barclays Capital total assets increased by 17% (Â£35bn) to Â£236bn during 2002 due to increases in reverse repo balances and government securities. Reverse repo balances, which are fully collateralised, increased Â£22bn, driven by growth in money markets and prime brokerage. There were also increases in government debt securities within the fixed income business of Â£9bn. Total weighted risk assets increased by only 3% to Â£53bn (2001: Â£52bn), reflecting the higher quality and therefore lower risk weightings associated with reverse repos and government backed securities. Personal Financial Services Personal Financial Services provides a wide range of products and services to 14 million personal customers throughout the United Kingdom, including current accounts, savings, mortgages, consumer loans, general insurance and the provision of independent financial advice. These are available to all customers through integrated channels comprising the branch network, telephone banking and online banking. On 1st January 2002, the Woolwich operations became part of Personal Financial Services in line with integration plans, providing a platform for transformation within the enlarged retail business. Separate brands have been retained to maintain distinctive customer propositions. In April 2002, Openplan was launched fully in the Barclays network. Personal Financial Services works closely with other businesses in the Group, in particular Barclays Private Clients, Barclaycard and Business Banking to provide better customer servicing and to develop cross-selling opportunities. 2002 2001* Â£m Â£m Net interest income 1,892 1,954 Net fees and commissions 794 806 Other operating income 282 192 Operating income 2,968 2,952 Operating costs (1,606) (1,624) Provisions for bad and doubtful debts (334) (382) (Loss)/profit from joint ventures and associated undertakings (1) 3 Operating profit 1,027 949 Restructuring costs (39) (37) Integration costs (70) (76) Fair value adjustments (51) (33) Profit before tax and exceptional items 867 803 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Personal Financial Services operating profit increased 8% (Â£78m) to Â£1,027m (2001: Â£949m). There was a strong focus on managing the risk profile of the business and tight control of costs. There was also significant progress in the change programme that involved major restructuring, investment in infrastructure and improvements to the customer offering. Integration synergies were realised ahead of plan, providing support to this investment and helping the business absorb the impact of a lower interest rate environment. Operating income was up 1% at Â£2,968m (2001: Â£2,952m). Net interest income decreased by 3% (Â£62m) to Â£1,892m (2001: Â£1,954m). Margin pressures, particularly within mortgages, have been actively managed with increased balances mitigating some of the compression. Growth of Openplan, a proposition in which customer retention and product penetration are high, also resulted in some self induced margin pressure. Total UK mortgage balances increased 13%, in line with market growth, to Â£58.7bn (2001: Â£51.9bn). Similarly, Openplan from Barclays attracted a total of Â£2.9bn of mortgage balances, of which over 80% were new to Barclays. Net new lending of Â£6.9bn (2001: Â£4.3bn) represented an increase of 60% and a market share of 8.7% (2001: 7.8%). Significant volume growth was achieved in the first half of the year. Growth slowed in the second half reflecting a tightening of risk policies in uncertain economic conditions and as a response to more aggressive pricing evident in the market. The sharp increase in volume, primarily generated through the Barclays branches and intermediary channels, resulted in a short term drag on profit of Â£53m caused mainly by incentives combined with additional mortgage origination and servicing costs. Despite slower growth in the second half of the year, pipeline mortgage balances at the 31st December 2002 stood at Â£3.1bn (31st December 2001: Â£3.5bn). Average retail savings balances increased 7% to Â£28.8bn (2001: Â£27.0bn). Barclays branded savings balances increased 22%, a leading market position in new business generation. Openplan from Barclays attracted a total of Â£10.3bn of savings balances of which 44% were new to Barclays. Average retail consumer lending balances increased 8% to Â£6.4bn (2001: Â£5.9bn). The volume of lending continued to be managed actively and resulted in growth lower than the market. Ongoing improvements in risk management and lending quality has improved net revenues. Consumer lending margins have increased on the core portfolio during the year. Net fees and commissions decreased 1% (Â£12m) to Â£794m (2001: Â£806m). In difficult market conditions, income from independent financial advice was Â£15m lower. The number of current accounts increased 4% to 10.5 million (2001: 10.1 million), with Additions and Platinum accounts rising 27% to 1.75 million (2001: 1.38 million). Higher fees have been generated through these value added current accounts. Other operating income increased 47% (Â£90m) to Â£282m (2001: Â£192m). The contribution from payment protection income increased strongly (18%) to Â£171m (2001: Â£145m) reflecting consumer lending activities. An increase of Â£59m resulted from a revision of the estimated amounts expected to be repaid on banking liabilities in the light of experience since the Woolwich acquisition in 2000 and to align Woolwich with Barclays practice. Operating costs were down 1% (Â£18m), to Â£1,606m (2001: Â£1,624m), despite significant continued investment in infrastructure and the higher costs associated with increased business volumes. Improved productivity and the implementation of a new organisation design underpinning the business transformation resulted in a reduction in non-customer facing staff of 1,100. The cost income ratio improved to 54% (2001: 55%). Provisions decreased by 13% (Â£48m) to Â£334m (2001: Â£382m) despite growth in lending balances. This primarily reflected the implementation of specific initiatives to improve the overall risk profile of our lending portfolio, particularly in relation to consumer loans and current accounts. Credit quality remained strong with a reduction in potential problem loans. Coverage ratios improved during the second half of the year for both the secured and unsecured portfolios, despite the reduction in provisions. Latest loan to value ratios within the mortgage book averaged 45%. Buy to let balances represented less than 5% of the total mortgage book and the latest loan to value ratios for these loans averaged 57%. Lending criteria for buy to let mortgages were tightened in the second half of the year. The Openplan proposition continued to be highly successful in attracting new customers and retaining existing customers. Fully launched in April 2002, Openplan from Barclays attracted 778,000 customers across the UK (2001: 10,000). Product penetration was 4.3, well above the average of 2.5 outside Openplan. Openplan from The Woolwich customer numbers rose to 1,206,000 (2001: 960,000) and product penetration increased to 3.25 (2001: 3.08). There is evidence that Openplan facilitates the development of a deeper and more enduring customer relationship through higher product penetration and lower attrition rates. Barclays Private Clients Barclays Private Clients serves affluent and high net worth clients, primarily in the UK and continental Europe, providing banking and asset management services. There has been continued progress in the development of an integrated business model during 2002. The focus remained on improving operational efficiency, on the provision of a distinctive customer service and a diverse banking and investment product capability. Barclays Private Clients works closely with other Group businesses, particularly Personal Financial Services and in areas such as offshore banking and UK mass affluent customers. 2002 2001* Â£m Â£m Net interest income 766 829 Net fees and commissions 594 567 Income from long term assurance business (51) 127 Other operating income 14 24 Operating income 1,323 1,547 Operating costs (944) (915) Provisions for bad and doubtful debts (37) (36) Loss from Joint Ventures and Associated Undertakings (9) - Operating profit 333 596 Restructuring costs (44) (34) Integration costs (8) (9) Profit before tax and exceptional items 281 553 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Barclays Private Clients operating profit fell 44% (Â£263m) to Â£333m (2001: Â£596m), with a large part of the decrease attributable to the impact of falling equity markets affecting the income of the closed long term assurance funds. On 11th October 2002, the Caribbean businesses of Barclays and Canadian Imperial Bank of Commerce were combined to form FirstCaribbean International Bank Ltd, generating a one off economic profit of Â£206m. The gain is recognised in the statement of total recognised gains and losses and in the economic profit for the year of Barclays Private Clients. From 11th October 2002, the interest in FirstCaribbean was accounted for as an associated undertaking. Excluding the impact of the closed long term assurance funds and adjusting for the change to the Caribbean business the operating profit decline was 10%. Operating income decreased 14% (Â£224m) to Â£1,323m (2001: Â£1,547m) mainly reflecting the impact of the fall in income from the closed long term assurance funds. Income was resilient in a difficult market environment. Excluding the impact of the closed long term assurance funds, the Caribbean and the change in the presentation of costs associated with the regulated sales force described below, income decreased 3%. Income from long term assurance business was also impacted by the cost of customer redress for endowment policies. Net interest income decreased 8% (Â£63m), to Â£766m (2001: Â£829m). The increased income generated from higher average customer deposits, up 2%, and average loans, up 3%, was offset by margin compression and the effects of lower interest rates. Net fees and commissions increased 5% (Â£27m), to Â£594m (2001: Â£567m). On a comparative basis, this included Â£72m (2001: Â£31m) of commission income associated with the regulated sales force and previously offset against costs and borne within the life assurance fund. Excluding this and the Caribbean income, net fees and commissions decreased by 2% reflecting the impact of market conditions on the appetite for investment products. Average daily deal volumes in UK retail stockbroking were slightly down on 2001, at 6,300 (2001: 6,400). The stockbroking business continued to maintain its leading UK position with a 12% (2001: 11%) market share of retail stockbroking, as measured by retail client orders. Operating costs were up 3% (Â£29m), to Â£944m (2001: Â£915m). Costs were tightly managed and were lower than 2001 when excluding the Â£72m (2001: Â£31m) of costs attributable to the change in treatment of the regulated sales force as detailed above. Headcount was tightly managed with a net reduction of 600 in the year, excluding the impact of the Caribbean transaction. Strategic investment spend at Â£87m, almost 10% of operating costs, was maintained at a level similar to 2001, despite the challenging market environment. Total customer funds, comprising customer deposits and assets under management (including assets now managed by Legal & General under the strategic alliance), fell by Â£8bn to Â£85bn (31st December 2001: Â£93bn). This included a reduction of Â£4bn as a result of the Caribbean transaction and the sale of the US based Americas private banking business to the Royal Bank of Canada in June 2002. Despite the volatile markets, 2002 witnessed a net increase in customer numbers of 1% and higher volumes of business with existing customers. In the UK, regulated product sales volumes increased 43%. Openplan was launched for UK affluent customers, building on the successful launch in Spain in September 2001. In the UK, 95,000 affluent customers joined Openplan, which attracted Â£3.7bn of savings and Â£1.6bn of mortgage balances. In Spain, 36,000 new customers were attracted to the bank in 2002 with 40% of the new customer flow choosing Openplan. In Spain, our market share of net new mortgage business increased to 5.0% in 2002 from 0.5% at the point of launch of Openplan in September 2001. Sales of Legal & General life and pension products were maintained at levels broadly similar to 2001, but sales of funds and bonds were impacted by poor market sentiment for investment products. With the success of the Legal & General strategic alliance in the UK, similar arrangements in France with Axa and Fidelity were established during 2002. Barclaycard Barclaycard is one of the leading credit card businesses in Europe. In addition to its operations in the United Kingdom, it is active in Germany, Spain, Greece, France and Italy. It also operates in Africa. Barclaycard offers a full range of credit card services to individual customers, together with card payment facilities to retailers and other businesses. Barclaycard acquired the credit card business of Providian UK in April 2002. The acquisition was consistent with Barclaycard's strategy of defending and growing its core UK credit card business. In September 2002, Barclaycard launched a new loyalty rewards programme called Nectar in conjunction with Sainsburys, Debenhams and BP. Nectar is now the biggest loyalty scheme in the UK with over 11 million active collectors. During the year, Barclaycard worked with Banca Woolwich to launch a full range of credit cards in Italy, one of Europe's largest credit card markets. 2002 2001* Â£m Â£m Net interest income 886 807 Net fees and commissions 696 579 Operating income 1,582 1,386 Operating costs (552) (489) Provisions for bad and doubtful debts (402) (374) Loss from joint ventures - (3) Operating profit 628 520 Restructuring costs (12) (13) Integration costs (1) (3) Profit before tax and exceptional items 615 504 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Barclaycard's operating profit increased 21% (Â£108m) to Â£628m (2001: Â£520m). Operating income increased 14%. Excluding the impact of the acquisition of Providian UK, the increase was 10%. Net interest income increased 10% (Â£79m) to Â£886m (2001: Â£807m). This was mainly due to good growth in average UK extended credit balances, up 9% to Â£6.5bn (2001: Â£6.0bn), and to continued cardholder rate management coupled with falling interest rates. Period end extended credit balances were 19%, or Â£1.1bn, higher (at Â£7.1bn) than at 31st December 2001, of which Providian UK contributed Â£434m. Recruitment of UK customers reached a record 1,218,000 (2001: 763,000) in the period, up 60%, driven by the continued application of Information Based Customer Management (IBCM) capabilities. Despite strong competition in the market throughout 2002, Barclaycard increased its market share of new cards issued. Net fees and commissions increased 20% (Â£117m) to Â£696m (2001: Â£579m), principally as a result of replacing UK annual fees with fees based on account activity. Operating costs increased 13% (Â£63m) to Â£552m (2001: Â£489m). Excluding Providian UK, costs grew 6%. The cost income ratio was maintained at 35% (2001: 35%). Provisions, which increased 7% (Â£28m) to Â£402m (2001: Â£374m), rose in line with the growth in average extended credit balances and broadly tracked Risk Tendency. The provisions impact of strong customer recruitment was mitigated by a number of new risk management initiatives primarily focused on collections. Barclaycard International businesses recorded an operating loss of Â£13m (2001: loss Â£20m). Operating profits were recorded for the last four months of 2002, delivering profitability ahead of schedule. Income increased 30% and average extended credit balances rose by 29%. Business Banking Business Banking provides relationship banking to the Group's small, medium and large business customers in the United Kingdom. Customers are served by a network of relationship and industry sector specialist managers who provide local access to an extensive range of products and services, as well as offering information and support. Customers are also offered access to business centres in continental Europe and the United States and to the product suite and expertise of other businesses of the Group including Barclays Capital. The Value Aligned Performance Measurement (VAPM) system provides the sales teams with customer level risk adjusted profitability data. This enables business targets and rewards to be aligned with the creation of shareholder value. Improving operational efficiency is also an important point of focus in Business Banking. 2002 2001* Â£m Â£m Net interest income 1,620 1,553 Net fees and commissions 864 833 Other operating income 24 (4) Operating income 2,508 2,382 Operating costs (1,018) (1,061) Provisions for bad and doubtful debts (226) (210) Loss from joint ventures and associated undertakings (2) (11) Operating profit 1,262 1,100 Restructuring costs (42) (49) Integration costs (1) (1) Profit before tax and exceptional items 1,219 1,050 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Business Banking operating profit increased 15% (Â£162m) to Â£1,262m (2001: Â£1,100m), reflecting improved income growth and tight cost management. Net interest income increased 4% (Â£67m) to Â£1,620m (2001: Â£1,553m) partly as a result of increased volumes. Average lending balances increased 4% to Â£42.6bn and average deposit balances increased 3% to Â£43.9bn. Lending margins continued to ease modestly, but stabilised in the second half of the year. Deposit margins improved, reflecting good growth in higher margin products combined with changes in the product mix. Lending growth was concentrated towards large business customers. The strategy for the large business sector is to take advantage of profitable market opportunities and to increase industry focus and expertise within the relationship management teams. Lending volumes to medium business customers showed encouraging signs of growth in the second half of the year, whilst lending to the small business sector continued to be affected by weak economic conditions. The Sales Financing product range remained a high growth area with turnover volume up 57%. The overall lending portfolio remained well diversified by industrial classification. Net fees and commissions increased 4% (Â£31m) to Â£864m (2001: Â£833m). Lending related fees increased strongly and included an increased contribution from leveraged finance. Money transmission income fell as a result of price competition and a reduction in average fee levels due to the migration to more efficient, lower cost, electronic payment mechanisms. Foreign exchange related income was flat despite a reduction in volumes. Other operating income mainly represented income from a restructuring of the leasing portfolio. Operating costs fell 4% (Â£43m) to Â£1,018m (2001: Â£1,061m), reflecting continued management focus on operational cost efficiency. Business as usual costs fell by 1% as a result of a reduction in headcount but also reflected the impact of the discontinuation of the BarclaysB2B customer proposition in the first half of 2002. The cost income ratio improved to 41% (2001: 45%). Provisions increased 8% (Â£16m) to Â£226m (2001: Â£210m), broadly in line with expectations. Conditions in a number of industries were weaker, although the composition of the lending stock and flow by risk grade for end 2002 against end 2001 remained steady. Provisions remained below Risk Tendency. Barclays Africa Barclays Africa provides banking services to personal and corporate customers in North Africa, sub-Saharan Africa and islands in the Indian Ocean. The portfolio comprises banking operations in Botswana, Egypt, Ghana, Kenya, Mauritius, Seychelles, South Africa, Tanzania, Uganda, Zambia and Zimbabwe. In November 2002, Barclays acquired the business of BNPI Mauritius. During the year, significant restructuring initiatives were undertaken to reposition the businesses in the light of challenges posed by the deteriorating economic situation in certain African countries. 2002 2001* Â£m Â£m Net interest income 160 176 Net fees and commissions 114 130 Other operating income 1 6 Operating income 275 312 Operating costs (143) (157) Provisions for bad and doubtful debts (27) (25) Operating profit 105 130 Restructuring costs (16) (7) Profit before tax and exceptional items 89 123 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Operating profit decreased 19% (Â£25m) to Â£105m (2001: Â£130m). This decrease was mainly attributable to the situation in Zimbabwe, where there was a decline in operating profit of Â£14m. All businesses remained profitable in local currencies. Net interest income fell 9% (Â£16m) to Â£160m (2001: Â£176m) primarily attributable to the effects of Zimbabwe. Excluding Zimbabwe, net interest income increased 2% (Â£3m) to Â£151m (2001: Â£148m) reflecting growth in customer balances, with lending up 29% to Â£1.5bn and deposits rising 25% to Â£2.5bn. Net interest margins fell due to the impact of lower interest rates, particularly affecting deposit margins. Net fees and commissions decreased 12% (Â£16m) to Â£114m (2001: Â£130m), mainly due to Zimbabwe. Operating costs declined 9% (Â£14m) to Â£143m (2001: Â£157m) largely as a result of the impact of Zimbabwe. The cost income ratio increased marginally to 52% (2001: 50%) with tight control of costs offsetting increased strategic investment spend. Provisions increased by 8% (Â£2m) to Â£27m (2001: Â£25m). Barclays Capital Barclays Capital conducts the Group's investment banking business. As the Group's principal point of access to the wholesale markets, it provides corporate, institutional and government clients with solutions to their financing and risk management needs. The Barclays Capital business model is distinctive. It focuses on a broad span of financing and risk management services in the interest rate, foreign exchange, commodities and credit markets combined with certain capabilities in equities. Activities are split between two areas: Rates, which includes fixed income, foreign exchange, derivatives, commodities and money markets sales, trading and research, prime brokerage and equities; and, Credit, which includes origination, sales, trading and research relating to loans, debt capital markets and structured capital markets, and private equity. Barclays Capital works increasingly with other Group businesses, including Business Banking and Barclays Global Investors, to provide a more integrated customer service and to develop business opportunities across the Group. During 2002, Barclays Capital maintained its lead position in the European syndicated loan market and in Sterling bonds. Barclays Capital improved its market share in both international bonds and syndicated loans amid lower volumes in both these markets compared to 2001. 2002 2001* Â£m Â£m Net interest income 889 639 Dealing profits 827 1,006 Net fees and commissions 463 389 Other operating income 60 53 Operating income 2,239 2,087 Operating costs (1,312) (1,322) Provisions for bad and doubtful debts (334) (103) Operating profit 593 662 Restructuring costs (12) (7) Profit before tax and exceptional items 581 655 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Operating profit fell 10% to Â£593m (2001: Â£662m), due to increased provisions as the difficult economic conditions affected specific sectors. Operating income grew 7% to Â£2,239m (2001: Â£2,087m). This reflects the underlying strength of the Barclays Capital business model and continued progress in building the client franchise. Weighted risk assets grew only 3% to Â£53bn (2001: Â£52bn). The average daily value at risk (DVaR) remained relatively low at Â£23m (2001: Â£19m). Secondary income, comprising net interest income and dealing profits, primarily arise from market activities including client risk management and financing solutions. The increase to Â£1,716m (2001: Â£1,645m) reflected strong growth in net interest income to Â£889m (2001: Â£639m), in particular from money markets and structured capital markets. Dealing profits fell to Â£827m (2001: Â£1,006m). The fall resulted from poor conditions in the credit and equity markets partially offset by strong gains in fixed income and commodities. Primary income, net fees and commissions, increased to Â£463m (2001: Â£389m). This growth was driven by the Credit business with strong performances from primary bonds and structured capital markets. This reflected both increasing market share and the depth and quality of client relationships. Net fees and commissions included Â£87m (2001: Â£61m) of internal fees for structured capital market activities arranged by Barclays Capital. Operating costs fell 1% to Â£1,312m (2001: Â£1,322m). There was continued strategic investment in product, client coverage and distribution capabilities, offset by focused cost reduction in other areas. Revenue related costs fell in line with performance. Staff costs were maintained at 53% (2001: 53%) of operating income less provisions. Headcount remained flat at 5,500. Provisions increased to Â£334m (2001: Â£103m). The increase reflected continued difficult economic conditions (particularly in the US), primarily in the telecommunications and energy sectors. In the second half, provisions largely arose from the further deterioration of existing non performing loans. Barclays Global Investors Barclays Global Investors is a leading global provider of investment management products and services, offering structured investment strategies including indexing, asset allocation, and risk-controlled active strategies. The investment philosophy focuses on managing all dimensions of performance: return, risk and cost. Asset management is complemented by a range of related financial services including cash management, securities lending and transition management. 2002 2001* Â£m Â£m Net interest income 12 5 Net fees and commissions 538 518 Operating income 550 523 Operating costs (439) (444) Loss from joint ventures (1) (1) Operating profit before tax and exceptional items 110 78 * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. Barclays Global Investors operating profit increased 41% (Â£32m) to Â£110m (2001: Â£78m) reflecting strong asset gathering, a greater proportion of higher margin active funds business, good investment performance across a range of products and ongoing cost management. Fees and commissions increased by 4% (Â£20m) to Â£538m (2001: Â£518m) despite significantly lower stock market levels. Within an increasingly diverse set of business lines, this increase reflected the continued expansion in the advanced active business and growth of Global iShares (Exchange Traded Funds). These more than offset the impact of the decline in the stock market levels and lower securities lending fee spreads (which were the result of a more stable interest rate environment) and the impact of exchange rate translation movements. New business from strong asset gathering coupled with a shift in asset mix towards higher margin active products drove growth in management fees. Performance fees benefited from strong advanced active product investment performance and new assets within incentive contracts. A change in the timing of the recognition of management fees has contributed Â£11m to the growth in fees. 58% of management fees are derived from active asset management. Operating costs of Â£439m were down 1% relative to 2001. Increased performance related pay was offset by improved efficiency and the impact of exchange rate translation movements. The cost income ratio improved to 80% (2001: 85%). Total assets under management decreased 13% (Â£68bn) to Â£462bn (2001: Â£530bn). This was the net result of an increase of Â£56bn attributable to new assets being more than offset by Â£52bn due to exchange rate translation movements and Â£72bn attributable to adverse market movements. Assets under management comprised Â£338bn (73%) of indexed assets, Â£41bn (9%) of managed cash assets and Â£83bn (18%) of active assets. Growth in Global iShares (Exchange Traded Funds) continued to be strong. Global iShares assets grew to Â£22bn, up 47% (2001: Â£15bn). The launch of the first Fixed Income iShares in the US in the third quarter of the year demonstrated the ongoing commitment to market leading innovation. Other operations Property costs include Barclays Group Property Services, which is responsible for the management of the Group's operational premises, property related services and the central administration of certain operational properties. Central services includes certain activities which support the operating business and provide central information technology services. South American Corporate Banking comprises non-core relationships which are now being managed separately with the objective of maximising the recovery from the assets concerned. Within Management of Group capital there are certain central items including residual balances arising from centrally managed transition businesses. The Group maintains hedges with respect to its capital and its current account balances, which are designed both to reduce the impact of short-term interest rate fluctuations on profits and to increase profitability over the interest rate cycle. The hedges increase profitability when average short-term interest rates are lower than average medium-term interest rates and depress profitability when average short-term interest rates are higher than average medium-term interest rates. Earnings on centrally held Group capital are allocated to business groups on the basis of economic capital. 2002 2001* Â£m Â£m Property costs 12 14 Central services (17) (10) South American Corporate Banking (127) (18) Management of Group capital (37) 5 Operating loss (169) (9) Restructuring costs (10) (19) Loss before tax and exceptional items (179) (28) * Comparative figures have been restated as a result of the changes in accounting policy and accounting presentation as set out on pages 55 and 56. The loss in South American Corporate Banking for the full year 2002 of Â£127m (2001: Â£18m) reflected provisions relating to various Latin American exposures primarily in Argentina. The Management of Group capital includes the internal fees charged by Barclays Capital for structured capital markets activities. In 2002, these fees amounted to Â£87m (2001: Â£61m). Head office functions Head office functions comprise all the Group's central costs, including Group Executive, Group Finance, Corporate Communications, Human Resources, Group Strategy and Planning, Internal Audit, Marketing, Legal, Corporate Secretariat, Tax, Compliance and Risk. Costs incurred wholly on behalf of the business units are recharged to them. 2002 2001 Â£m Â£m Operating cost (109) (75) Restructuring costs (12) (5) Total (121) (80) The increase in operating costs of Â£34m primarily reflects increased expenditure relating to marketing and central systems costs. Restructuring charge 2002 2001 Â£m Â£m Staff costs 124 114 Administrative expenses - other 63 57 187 171 The total restructuring charge is Â£187m, with the main elements relating to Business Banking (Â£42m), Barclays Private Clients (Â£44m), Personal Financial Services (Â£39m), Barclays Africa (Â£16m) and Barclaycard (Â£12m). Accrued provisions at 31st December 2002 for restructuring and closure costs amounted to Â£117m (31st December 2001: Â£130m). Expenditure of Â£85m was incurred during the year against provisions raised as at 31st December 2001 and Â£122m in respect of the 2002 programme. Woolwich integration costs 2002 2001 Â£m Â£m Staff costs 2 24 Administration expenses - other 78 65 80 89 Total integration costs in respect of the acquisition of Woolwich plc are expected to be around Â£200m by the end of 2003. Woolwich fair value adjustments Woolwich plc fair value adjustments were calculated at the time of the acquisition as the difference between the fair value and book value of the assets and liabilities acquired. These are amortised in the profit and loss account based on the expected life of the asset or liability concerned. It is expected that these will be substantially amortised by the end of 2005. Woolwich integration synergies 2002 2001 Â£m Â£m Synergies achieved in the year ended 31st December 2002 were as follows: Gross revenue synergies 131 49 Attributable operating costs (59) (22) Net revenue synergies 72 27 Cost savings 104 41 Avoided costs* 55 43 Total pre-tax effect 231 111 * Avoided costs are primarily strategic investment costs which are not required due to the acquisition and integration of Woolwich plc. Pre-tax cost and revenue synergies totalling Â£231m were achieved (2001: Â£111m). The majority of the synergies were realised in Personal Financial Services (Â£195m which includes Â£53m of avoided costs) and Barclays Private Clients (Â£31m). These synergies do not include additional gains, totalling Â£72m, which were of a one-off nature during 2002 (2001: Â£53m). In addition, the Group achieved tax-related savings totalling Â£9m (2001: Â£32m). The Group expects to realise pre-tax synergies of at least Â£400m per annum from 2004 onward. This is represented by pre-tax annual cost savings of Â£150m per annum and pre-tax revenue synergies, net of attributable costs, of Â£250m. Economic Capital Barclays assesses capital adequacy by measuring risk using internal risk assessment methodologies. The Group assigns economic capital primarily within six risk categories. The categories are summarised below: Credit Risk - Using statistical techniques, estimates are made of potential unexpected losses for each segment of the portfolio, relative to the expected level of losses. This unexpected loss level is used to estimate the amount of credit risk economic capital required. Within wholesale and retail businesses, capital allocation is differentiated by segment and customer grade. Off-balance sheet exposures are converted to loan equivalent amounts based on their probability of being drawn, before applying capital factors. Market Risk - Economic capital is primarily estimated using Daily Value at Risk (DVaR) measurements. Where risks are not measured using DVaR, economic capital is estimated based on stress test analysis. Business and Operational Risk - A combined economic capital allocation for operational risk and business risk is derived through an equation including variables such as cost base, historic profit volatility and comparable external benchmarks. Insurance Risk - Economic capital is estimated through benchmark analysis. Fixed Assets - Economic capital is estimated through benchmark analysis. Private Equity - Economic capital is allocated using an equation based on the amount of equity investment and comparable benchmark capitalisation. Barclays estimates the correlation between risk types and calculates a diversification benefit which results in a reduction in allocated economic capital for the Group. The total economic capital required by Barclays, as determined by its internal risk assessment models and after considering the Group's estimated diversification benefits, is compared with available common shareholders' funds to evaluate overall capital utilisation. The Group's practice is to maintain an appropriate level of excess capital held at Group centre, which is not allocated to business units. In light of the Basel II proposals, the Group is currently engaged in a project to review and enhance the economic capital allocation methodologies. Average economic capital by business is set out below: Average economic capital 2002 2001 restated Â£m Â£m Personal Financial Services 2,100 2,200 Barclays Private Clients 850 800 Barclaycard 1,500 1,000 Business Banking 2,750 2,500 Barclays Africa 200 200 Barclays Capital 2,050 1,800 Barclays Global Investors 200 100 Other operations* 550 600 Average economic capital 10,200 9,200 Goodwill 4,700 4,600 Capital held at Group centre** 900 700 Total average shareholders' funds 15,800 14,500 * Includes South American Corporate Banking. ** The capital held at Group centre represents the variance between average economic capital by business and average shareholders' funds. Barclaycard economic capital allocation has increased by Â£500m to Â£1,500m due to continued improvements in methodologies for credit risk quantification, the acquisition of the Providian UK portfolio and growth in Risk Tendency. Barclays Global Investors economic capital allocation has increased by Â£100m to Â£200m due to enhancements in operational risk allocation methodology. Barclays Capital average economic capital has increased by Â£250m due to continued credit migration during 2002 within the international wholesale market and the associated increase in the second half of 2001 being reflected in the full year average for 2002. Business Banking average economic capital has increased by Â£250m primarily due to the increase in the second half of 2001 being reflected in the full year average for 2002 and also reflecting the increase in Risk Tendency during 2002. Risk Tendency As part of its credit risk measurement system, the Group uses a model based methodology to assess the quality of credit across different customer categories. The approach is termed Risk Tendency and applies to all credit exposures in both wholesale and retail sectors, and it provides a statistical estimate of the average losses looking one year ahead based on the current performing loan portfolio. It estimates the average in the range of possible losses from the current performing loan portfolio and as such the actual outcome in any one year is likely to be different. Thus it is not a prediction of specific provisions but it gives management a clear view of the evolution of the quality of the credit portfolio. Risk Tendency reflects the results of a set of model based calculations, the models having been created using historical data. The models are designed to estimate the loss for the current performing loan portfolio, given the current composition and current risk characteristics of the portfolio. Significant variation around this value can occur, due to changes in the economic environment, the credit cycle or in the business conditions in specific sectors or countries that occur during the year. This applies especially in wholesale portfolios where the default of a small number of large exposures can have a significant impact on the outcome. However, for retail portfolios consisting of a very large number of small exposures, the variation from Risk Tendency is usually much smaller. In addition to enhancing the understanding of the average credit quality of the portfolio, Risk Tendency is one of the measures used by the Group to inform a wider range of decisions, for example pricing, provisioning and portfolio management. The models assess the probability of customer default, the probable customer exposure at the time of default and the probable level of loss if default occurs. A consistent approach is used across the organisation. Decision support model outputs are a way of assessing what might happen in the future based on past experience. An increase in the size of the portfolio and/ or a decrease in the credit quality will be highlighted to management by an increase in Risk Tendency. A number of different models are used in the Risk Tendency calculation reflecting the diversity of the portfolio. They are being improved constantly as the Group collects more data and deploys more sophisticated techniques. The Group believes that each change will have a minor impact on the total result but should lead to better estimates over time. Since Risk Tendency is a point in time calculation looking one-year ahead, it does not make any allowance for growth or change in the composition of the loan book after the reporting date nor take account of write-backs and recoveries from specific provisions taken in previous years. In contrast, the provisions process is dynamic where provisions are assessed and allocated throughout the year. Risk Tendency is used when allocating general provisions for the existing portfolio of fully performing credits as at the calculation date. Excluded from this portfolio is the subset of credit exposures relating to non-performing loans against which specific provisions are held. Based upon the composition of the current performing loan portfolio as at 31st December 2002, Risk Tendency is Â£1,375m (30th June 2002: Â£1,300m, 31st December 2001: Â£1,245m). The increase in Risk Tendency over the year is primarily in Barclays Capital (total increase Â£65m), a reflection of the grade migration of a limited number of larger corporate clients, principally in the US, partially offset by some managed exposure reduction in the loan book; and a Â£35m increase in Barclaycard (total increase Â£55m) attributable to the acquisition of the Providian UK credit card business. Risk Tendency in Personal Financial Services has fallen by Â£10m to Â£370m during 2002 as a result of actions taken to improve the asset quality within the book and an improved collection process. 31.12.02 30.06.02 31.12.01 31.12.00 Â£m Â£m Â£m Â£m Personal Financial Services 370 370 380 335 Barclays Private Clients 45 50 45 45 Barclaycard 435 415 380 300 Business Banking 280 260 260 215 Barclays Africa 30 30 30 20 Barclays Capital 210 170 145 115 South American Corporate Banking 5 5 5 - 1,375 1,300 1,245 1,030 ADDITIONAL INFORMATION Group structure changes from 2001 The figures in the business group analyses have been restated to take account of the following changes relative to 2001. The various constituents of the Woolwich business group have been transferred into other Barclays business groups. Woolwich Plan Managers and Unit Trusts have been transferred into Barclays Global Investors, Woolwich Guernsey and Woolwich Life to Barclays Private Clients and the Woolwich credit card business to Barclaycard. The remainder of the Woolwich business is reported within Personal Financial Services. Following a Group review of its South American Corporate Banking activities, a number of non-strategic relationships have been identified within Barclays Capital and Business Banking which did not fit their strategic business models. As a result, a significant number of non-performing lendings, that are not expected to be of long term interest to the Group and which are being managed separately with the objective of maximising the recovery from the assets concerned, are now reported within Other operations. Acquisitions and disposals In April 2002, Barclaycard acquired the Providian UK credit card business at a cost of Â£446m. In October 2002, Barclays and Canadian Imperial Bank of Commerce ('CIBC') completed the combination of their retail, corporate and offshore banking operations in the Caribbean to create FirstCaribbean International Bank ('FirstCaribbean'). Barclays interest in the new entity is being accounted for as an associated undertaking. The transaction resulted in an economic profit for Barclays of Â£206m (recognised in the statement of total recognised gains and losses) consequent on the disposal of a share of its Caribbean operations. The acquisition of a share of CIBC West Indies Holding Limited has generated goodwill in Barclays of Â£131m. The acquisition of BNPI Mauritius was completed in November 2002. Details of disposals which impact the profit and loss account are set out under exceptional items on page 30. Accounting policies A change in accounting policy has arisen from the adoption in 2002 of Financial Reporting Standard 19 'Deferred tax' (FRS 19). Previously, deferred tax was only provided on timing differences where it was considered probable that a liability to tax will crystallise. Following FRS 19, deferred tax is now provided in full in respect of timing differences that have originated but not reversed at the balance sheet date. The change in policy has resulted in a prior year adjustment, and the profit and loss accounts and balance sheets for the previous financial years have been restated. This has resulted in a net credit to shareholders' funds of Â£14m as at 1st January 2002 comprising the cumulative impact of prior year reductions in deferred tax recognised in the profit and loss account and balance sheet. Comparative figures have been restated with the effect that profit after tax for the year to 31st December 2001 has increased by Â£14m. A further change in accounting policy has been made as a result of the Group adopting the recent guidance of the Association of British Insurers on the calculation of income from the long term assurance business. This guidance recommends companies calculating income from the long term assurance business to use actual (i.e. unsmoothed) fund values, rather than smoothing the impact of changes in these values over time. This change in policy has resulted in a net reduction in shareholders' funds of Â£37m as at 1st January 2002, comprising the cumulative impact of the prior year reductions in shareholders' interests in the closed life assurance funds. Profit before tax for the year to 31st December 2001 has been reduced by Â£45m. The Group is currently considering the implications of the recent decision by the ASB to extend the transitional provisions of Financial Reporting Standard 17 'Retirement Benefits' until 2005. There have been no other significant changes to the accounting policies as described in the 2001 Annual report. CHANGES IN ACCOUNTING PRESENTATION Following the issue of UITF Abstract 33, 'Obligations in capital instruments', Reserve Capital Instruments (RCIs) are now treated as forming part of the undated loan capital of the Bank, rather than as Minority interests - non-equity. The coupon on the RCIs is now reported in Interest payable, rather than as Minority non-equity interests. Comparatives have been restated accordingly. Profit after tax for the year to 31st December 2001 has been reduced by Â£97m with no impact on retained profit. Liabilities have been increased and Minority interests have been reduced at 31st December 2001 by Â£1,872m. The prior period presentation has, where appropriate, been restated to conform with current year classification. SHARE CAPITAL Following shareholder approval at the AGM on 25th April 2002, Barclays PLC divided each of its issued and unissued ordinary shares of Â£1 each into four ordinary shares of 25p each. The Group manages both its debt and equity capital actively. The Group's authority to buy back equity was renewed at the 2002 AGM to provide additional flexibility in the management of the Group's capital resources. The Group expects to continue its buyback programme following the publication of these results. A resolution to renew the Group's authority to buy back equity will be presented to shareholders at the 2003 AGM on 24th April 2003. GROUP SHARE SCHEMES The independent trustees of the Group's share schemes may make purchases of Barclays PLC ordinary shares in the market at any time or times following this announcement of the Group's results for the purposes of those schemes' current and future requirements. The total number of ordinary shares purchased would not be material in relation to the issued share capital of Barclays PLC. OTHER INFORMATION The Competition Commission published its report into the provision of banking services to small and medium sized enterprises (SMEs) on 14th March 2002. Barclays Bank PLC and certain other banks have given undertakings to the Secretary of State for Trade and Industry and the Chancellor of the Exchequer regarding the implementation of the transitional pricing remedy contained in the Report. As a result from the 1st January 2003 Barclays now offers each of its SME customers either interest on current accounts or free money transmission services or a choice between the two in accordance with the terms of such undertakings. Also, in October 2002, Barclays agreed certain behavioural remedies with the Secretary of State and the Chancellor and are taking the necessary measures forward. RECENT DEVELOPMENTS On 31st January 2003, Barclays PLC announced the acquisition of Charles Schwab Europe, an execution only retail stockbroker. This information is provided by RNS The company news service from the London Stock Exchange

Companies

Barclays (BARC)

Friday, 26th July 2024

COMPANIES COVERED:

DRX GROW NWG

NatWest Group and Drax both impress investors with half year results, whilst could news from Molten Ventures of disposals, refinancing and a share buyback offer confidence for the wider VC industry?

Full Archive

UK 100

Latest directors dealings

1 day ago Centrica
1 day ago AJ Bell
1 day ago JPMorgan European Discovery Trust
1 day ago JPMorgan European Discovery Trust
1 day ago CVC Income & Growth Limited NPV GBP

All directors dealings today