Final Results - Year Ended 31 Dec 1999, Part 3

Barclays PLC 15 February 2000 Part 3 ADDITIONAL INFORMATION CHANGES IN REPORTING OF GROUP STRUCTURE IN 1999 Since 1st January 1999, a number of changes have been made to the Group's reporting structure. Major changes, for which comparative figures have been restated as appropriate, are: Retail Financial Services has re-organised the management of its business around customer segments to deliver services and products. For reporting purposes it is organised into Retail Customers, Wealth Management and Barclaycard. Retail Customers and Wealth Management have absorbed the relevant customer segments from the previous business groupings of UK Retail Banking, International Premier, Private, Savings and Investment and Africa and Caribbean, with Barclaycard remaining unaffected. Retail Customers comprises UK Retail Banking (excluding UK Premier), the African business, UK retail mutual funds and Barclays Life. Wealth Management comprises the former International Premier, Private, Savings and Investment business (excluding UK retail mutual funds and Barclays Life), UK Premier and the Caribbean business. The Structured Export Finance business and a number of large corporate assets have been transferred from Barclays Capital to Corporate Banking. Certain internal charges and costs have been re-allocated between Retail Financial Services and Corporate Banking. In addition, Retail Financial Services has revised its presentation of income and costs within its profit and loss account. There is no effect on total Group revenue or costs as a result of these changes. Where appropriate, staff numbers have been restated. Management of central information technology and operations' services for Retail Financial Services, Corporate Banking and Group central functions in the UK has been transferred to Retail Financial Services in the year. Prior periods have been restated accordingly. Head Office functions now include certain costs previously reported in Central Services. In addition, Brand programme costs, previously reported in Head Office functions, are now reported in Central Services. Prior periods have been restated accordingly. ACQUISITIONS AND DISPOSALS In June 1999 the Group increased its holding in Banque du Caire Barclays International (subsequently renamed Cairo Barclays SAE) from 49% to 60%. This entity is now accounted for as a subsidiary. Details of significant disposals in the period are set out under exceptional items on page 20. ACCOUNTING POLICIES A change in accounting policy has arisen from the adoption in 1999 of Financial Reporting Standard 12 'Provisions, Liabilities and Assets' (FRS 12). The Group has a number of vacant leasehold properties where unavoidable costs exceed anticipated income for which a provision is now required under FRS 12. The change in policy has resulted in a prior year adjustment and the profit and loss accounts and balance sheets for previous years have been restated. This has resulted in a net charge to shareholders' funds of £81m as at 1st January 1999 comprising the cumulative impact of prior year reductions in net interest income, net provisions for property costs and associated tax credits. Comparative figures have been restated with the effect that shareholders' funds have been reduced by £63m at 1st January 1998. Profit before tax for the year ended 31st December 1998 has been reduced by £23m. CHANGES IN ACCOUNTING PRESENTATION The classification of certain items of income and costs have been reviewed and £50m has been offset between costs and income to more appropriately reflect the nature of the transactions involved. In view of the amounts involved no restatements have been made. Weighted risk assets of associated companies, reported on a consolidated basis in accordance with supervisory rules, are now included on page 8 in the totals for the business grouping concerned. Previously these were reported in Other operations. Comparatives have been restated. There have been no other changes in accounting presentation from that reflected in the 1998 Annual Report. GROUP SHARE SCHEMES The trustees of the Group's employee benefit trusts may make purchases of Barclays PLC ordinary shares in the market following the announcement of the Group's results in February 2000 for the purposes of the Group's employee share 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. NOTES 1. Loans and advances to banks 1999 1998 £m £m Banking business Loans and advances to banks 13,095 20,357 Less - provisions (24) (41) 13,071 20,316 Trading business 29,585 16,296 Total loans and advances to 42,656 36,612 banks Of the total loans and advances to banks, placings with banks were £39.1bn at 31st December 1999 (1998: £32.8bn). Placings with banks include reverse repos of £29.1bn (1998: £13.9bn). The majority of the placings have a residual maturity of less than one year. 2. Loans and advances to customers 1999 1998 £m £m Banking business Loans subject to non-recourse finance arrangements 333 278 Less: non returnable finance (268) (269) 65 9 Loans and advances to customers 91,320 77,663 Finance lease receivables 5,660 5,776 97,045 83,448 Less - provisions (1,959) (1,902) - interest in suspense (80) (77) 95,006 81,469 Trading business 18,532 14,641 Total loans and advances to 113,538 96,110 customers Of the total loans and advances to customers, reverse repos were £16.9bn at 31st December 1999 (1998: £11.7bn). 3. Provisions for bad and doubtful debts 1999 1998 Credit risk provisions £m £m Provisions at beginning of year 1,862 1,761 Exchange and other adjustments (12) 5 Amounts written off United Kingdom (546) (506) Other European Union (44) (43) United States (40) (7) Rest of the World (21) (9) (651) (565) Recoveries (analysed below) 93 176 Sub-total 1,292 1,377 Provisions charged against profit: New and increased specific provisions United Kingdom 768 751 Other European Union 27 31 United States 45 11 Rest of the World 47 23 887 816 Less: Releases of specific provisions United Kingdom (114) (81) Other European Union (21) (31) United States (7) (8) Rest of the World (15) (15) (157) (135) Less: Recoveries United Kingdom (85) (156) Other European Union (4) (4) United States (4) (13) Rest of the World - (3) (93) (176) Net specific provisions charge 637 505 General provision - release (16) (20) Net credit risk charge to 621 485 profit Provisions at end of year 1,913 1,862 Country risk provisions Provisions at beginning of year 81 89 Exchange and other adjustments (11) 1 Amounts written off (net of - (16) recoveries) Net specific provision releases (2) (13) General provision charge 2 20 Provisions at end of year 70 81 Total provisions at end of year 1,983 1,943 Total provisions for bad and doubtful debts at end of year comprise: 1999 1998 Specific - credit risk £m £m United Kingdom 1,075 928 Other European Union 126 213 United States 23 23 Rest of the World 74 35 1,298 1,199 Specific - country risk 13 16 Total specific provisions 1,311 1,215 General provisions - credit risk 615 663 - country risk 57 65 1,983 1,943 The geographic analysis of provisions shown above is based on location of office. 4. Other assets 1999 1998 £m £m Own shares 5 43 Balances arising from off- balance sheet financial instruments 13,390 13,725 Shareholders' interest in long- 555 530 term assurance fund London Metal Exchange warrants and other metals trading positions 331 457 Sundry debtors 1,629 1,862 Prepayments and accrued income 2,203 2,552 18,113 19,169 'Own shares' represent Barclays PLC shares held in employee benefit trusts that have not been expensed. 5. Other liabilities 1999 1998 £m £m Obligations under finance 140 141 leases payable Balances arising from off- balance sheet financial instruments 13,619 15,849 Short positions in securities 16,813 13,682 Current tax 462 479 Cash receipts from 1,049 - securitisation Sundry creditors 3,036 3,199 Accruals and deferred income 3,290 3,074 Provisions for liabilities and 1,247 1,353 charges Dividend 484 414 40,140 38,191 Cash receipts from securitisation are in respect of a portfolio of investment debt securities which did not qualify for linked presentation under Financial Reporting Standard 5. 6. Potential credit risk lendings The following table presents an analysis of potential credit risk lendings in accordance with the US Securities and Exchange Commission guidelines. Additional categories of disclosure are included, however, to record lendings where interest continues to be accrued and where either interest is being suspended or specific provisions have been raised. Normal US banking practice would be to place such lendings on non-accrual status. The amounts, the geographical presentation of which is based on the location of the office recording the transaction, are stated before deduction of the value of security held, specific provisions carried or interest suspended. Non-performing lendings 1999 1998 £m £m Non-accrual lendings: United Kingdom 1,007 985 Foreign 244 282 Accruing lendings where interest is being suspended: United Kingdom 326 266 Foreign 110 118 Other accruing lendings against which provisions have been made: United Kingdom 423 457 Foreign 130 134 Sub-totals: United Kingdom 1,756 1,708 Foreign 484 534 Accruing lendings 90 days overdue, against which no provisions have been made: United Kingdom 343 309 Foreign 18 19 Reduced rate lendings: United Kingdom 6 7 Foreign 2 - Total non-performing lendings United Kingdom 2,105 2,024 Foreign 504 553 2,609 2,577 UK non-performing lendings increased by £81m due to growth in consumer balances (including credit card receivables). Potential problem lendings: In addition to the above, the following table shows lendings which are current as to payment of principal and interest, but where serious doubt exists as to the ability of the borrower to comply with repayment terms in the near future. 1999 1998 £bn £bn United Kingdom 0.6 0.6 Foreign 0.1 0.1 0.7 0.7 1999 1998 Credit risk provision coverage % % of: - credit risk non-performing 76.4 75.2 lendings - total potential credit risk 60.0 59.4 lendings 1999 1998 Interest forgone on non- £m £m performing lendings: Interest income that would have been recognised under original 165 182 contractual terms Interest income included in (45) (63) profit Interest forgone 120 119 7. Exposure to countries subject to International Monetary Fund liquidity support programmes Amounts outstanding, net of provisions, and commitments to counterparties in countries which make significant use of International Monetary Fund liquidity support programmes were as follows: 1999 1998 Asia £bn £bn Indonesia 0.1 0.1 South Korea 0.4 0.5 Thailand 0.1 0.1 0.6 0.7 Latin America Brazil 0.8 0.9 1.4 1.6 Of the total of £1.4bn, £0.8bn (1998: £1.0bn) was related to banks, £0.4bn (1998: £0.4bn) to governments and £0.2bn (1998: £0.2bn) to other corporate bodies including project finance companies. The total was mainly in respect of loans, off-balance sheet financial instruments and debt securities. Off-balance sheet financial instruments and debt securities are marked to market. The Group has a Brazilian associate, Banco Barclays e Galicia SA, which is equity accounted. At 31st December 1999 the 50% holding was included in the balance sheet at a value of £33m (not included in the figures above). During the year the Group released a general provision of £8m in respect of country transfer risk arising from its business world wide, including exposure in these countries, reducing the total of such provisions to £57m at 31st December 1999. This is in addition to £615m of general provision held against credit risk. 8. European Economic and Monetary Union The euro has been in existence for over twelve months. As expected the introduction of the euro saw a rapid transition in the wholesale markets from trading in national domestic currencies to trading in the euro. The Group's operating infrastructure and euro settlement systems have been working very effectively since the implementation of EMU at the start of 1999. UK Entry to EMU Barclays incurred expenditure of £4m during 1999 across the Group in developing plans for the possibility of the introduction of the euro in the United Kingdom. Given the considerable uncertainty around UK entry to EMU it is not possible to estimate the final overall cost of preparing the Group's systems and operations. Costs in 2000 are likely to be incurred in maintaining a prudent programme to validate and develop further our existing plans and to conduct feasibility studies with selected suppliers and partners. 9. Year 2000 After more than three years of preparation the Barclays Group managed the transition into the Year 2000 with no material disruption to customers, staff or the Group's businesses around the world. Activity during 1999 The principal focus during the year was risk mitigation and contingency planning. The Group also finalised internal testing and correction, and continued to work with other banks and external network providers towards industry readiness of the key clearing, payment and settlement infrastructures in the UK and, where appropriate, overseas. Costs and benefits The total amount spent on the Year 2000 Programme up to 31st December 1999 was £209m (including £15m of capitalised costs) of which £65m was incurred in the year to December 1999. Year 2000 costs include correction, testing, third party assurance and contingency planning. In addition to the successful transition, the Group has benefited from enhanced business resumption plans and contingency arrangements, updated and rationalised systems and coding, and improved inventories of hardware, software and suppliers. 10.Legal proceedings Barclays is party to various legal proceedings, the ultimate resolution of which is not expected to have a material adverse effect on the financial position of the Group. 11. Geographical analysis 1999 1998 Profit before tax £m £m United Kingdom 1,872 1,483 Other European Union 318 241 United States 131 67 Rest of the World 139 104 2,460 1,895 1999 1998 Total assets £m £m United Kingdom 171,772 154,446 Other European Union 17,017 18,490 United States 39,536 24,886 Rest of the World 26,468 21,672 254,793 219,494 12. Contingent liabilities and commitments 1999 1998 Contingent liabilities £m £m Acceptances and endorsements 1,530 1,384 Guarantees and assets pledged as collateral security 12,044 8,784 Other contingent liabilities 5,360 5,069 18,934 15,237 Commitments Standby facilities, credit lines and other commitments 82,479 68,191 13. Off-balance sheet financial instruments, including derivatives The tables set out below analyse the contract or underlying principal amounts of derivative financial instruments held for trading purposes and for the purposes of managing the Group's structural exposures. Foreign exchange derivatives 1999 1998 £m £m Contract or underlying principal amount Forward foreign exchange 225,518 263,958 Currency swaps 88,453 79,447 Other exchange rate related 65,456 101,310 contracts 379,427 444,715 Interest rate derivatives Contract or underlying principal amount Interest rate swaps 975,720 787,486 Forward rate agreements 49,577 99,960 OTC options bought and sold 266,085 222,589 Other interest rate related 72,390 104,003 contracts 1,363,772 1,214,038 Equity, stock index and commodity derivatives Contract or underlying 63,105 51,347 principal amount Other exchange rate related contracts are primarily OTC options. Other interest rate related contracts are primarily exchange traded options and futures. Derivatives entered into as trading transactions, together with any associated hedging thereof, are measured at fair value and the resultant profits and losses are included in dealing profits. The tables below summarise the positive and negative fair values of such derivatives, including an adjustment for netting where the Group has the ability to insist on net settlement which is assured beyond doubt, based on a legal right that would survive the insolvency of the counterparty. Positive fair values 1999 1998 £m £m Foreign exchange derivatives 7,178 9,913 Interest rate derivatives 16,160 20,083 Equity, stock index and 2,872 2,240 commodity derivatives Effect of netting (12,820) (18,511) 13,390 13,725 Negative fair values Foreign exchange derivatives 7,583 12,062 Interest rate derivatives 15,590 19,603 Equity, stock index and 3,266 2,695 commodity derivatives Effect of netting (12,820) (18,511) 13,619 15,849 14. Market risk Market risk is the risk of loss arising from adverse movements in the level or volatility of market prices, which can occur in the interest rate, foreign exchange, equity and commodity markets. It is incurred as a result of both trading and asset/liability management activities. The market risk management policies of the Group are determined by the Group Risk Management Committee, which also determines overall market risk appetite. The Group's policy is that exposure to market risk arising from trading activities is concentrated in Barclays Capital. The Group's banking businesses are also subject to market risk, which arises in relation to non-trading positions, such as capital balances, demand deposits and customer originated transactions and flows. The Group uses a daily 'value at risk' measure as the primary mechanism for controlling market risk. Daily Value at Risk (DVAR) is an estimate, with a confidence level of 98%, of the potential loss which might arise if the current positions were to be held unchanged for one business day. Daily losses exceeding the DVAR figure are likely to occur, on average, only twice in every one hundred business days. Actual outcomes are monitored regularly to test the validity of the assumptions made in the calculation of DVAR. Barclays Capital Trading Activities In Barclays Capital, the formal process for the management of risk is through the Barclays Capital Risk Management Committee. Day-to-day responsibility for market risk lies with the Chief Executive of Barclays Capital, supported by a dedicated global market risk management unit that operates independently of the business areas. In the fourth quarter of 1998, Barclays Capital closed its non-client related proprietary trading businesses and substantially reduced its secondary market corporate bond inventory. The lower risk appetite, with the focus on the major currency fixed income markets, was maintained in the first half of 1999, with DVAR utilisation remaining broadly at the end 1998 level. DVAR utilisation increased in the second half of 1999 due to increased position sizes to take advantage of specific market opportunities and increases in the volatility of key risk factors. Year-end DVAR was £20.2m. The daily average, maximum and minimum values of DVAR were estimated as below. DVAR Twelve months to 31st December 1999 Average High* Low* £m £m £m Interest rate 13.7 30.2 6.2 risk Foreign exchange 2.8 11.7 0.8 risk Equities risk 1.7 3.7 0.6 Commodities risk 1.2 2.2 0.5 Diversification (3.3) effect Total DVAR 16.1 32.5 7.7 * The high (and low) DVAR figures reported for each category did not necessarily occur on the same day as the high (and low) DVAR reported as a whole. A corresponding diversification effect cannot be calculated and is therefore omitted from the above table. During 1999, Barclays Capital adopted historical simulation as the standard method for calculating DVAR, having previously used mainly variance/covariance calculations. The figures provided above are based on daily data for the full year produced using the new method. The decision to change the methodology was based on research which showed that, compared with the previous approach, historical simulation gives better risk aggregation, a more accurate estimate of options risk, and a more realistic assessment of the statistical distribution of low probability extreme losses. The method, along with the market risk management and control infrastructure, has been approved by the Financial Services Authority under the internal models approach for calculating regulatory capital for general market risk. In contrast to the previous method, the new method gives equal weighting to all of the historic data used in the calculation, and therefore does not respond as quickly to changes in market volatility. During periods of low market volatility, the new method therefore gives a higher DVAR estimate than the old method, and vice versa. Market volatility was particularly low at the end of 1999. Although DVAR utilisation as at 31st December 1999 was recorded as £20.2m under the new method, the utilisation under the old method would only have been £11.2m (1998: £12.2m). There is a similar, albeit smaller, impact on average utilisation, which was higher with the new method than the old method. The table below provides comparative data for 1998 and 1999 using the previous approach. DVAR calculated using previous approach Twelve months to Twelve months to 31st December 1999 31st December 1998 Average High* Low* Average High* Low* £m £m £m £m £m £m Interest rate 10.7 28.5 4.8 15.1 36.6 9.5 risk Foreign exchange 1.8 6.9 0.7 5.8 13.9 1.2 risk Equities risk 1.6 3.7 0.6 3.0 7.9 1.3 Commodities risk 1.2 2.2 0.5 1.2 2.9 0.6 Diversification (2.1) (4.2) effect Total DVAR 13.2 31.0 7.7 20.9 43.3 12.2 * The high (and low) DVAR figures reported for each category did not necessarily occur on the same day as the high (and low) DVAR reported as a whole. A corresponding diversification effect cannot be calculated and is therefore omitted from the above table. 15. US GAAP There are some significant differences between accounting practices in the United States (US GAAP) and those in the United Kingdom (UK GAAP). Key figures on a UK GAAP basis and as estimated on a US GAAP basis are: 1999 1999 1998 1998 £m £m £m £m UK GAAP US GAAP UK GAAP US GAAP Net income 1,759 1,695 1,317 1,370 Shareholders' funds 8,483 8,262 7,842 7,781 AVERAGE BALANCE SHEET AND NET INTEREST INCOME 31.12.99 31.12.99 31.12.99 31.12.98 31.12.98 31.12.98 Average Interest Average Average Interest Average Balance Rate Balance Rate Assets £m £m % £m £m % Treasury bills and other eligible bills: in offices in the UK 3,697 175 4.7 2,445 154 6.3 in offices outside the 898 90 10.0 963 103 10.7 UK Loans and advances to banks: in offices in the UK 7,762 361 4.7 10,561 605 5.7 in offices outside the 8,224 442 5.4 11,138 535 4.8 UK Loans and advances to customers: in offices in the UK 68,752 5,549 8.1 62,304 5,757 9.2 in offices outside the 16,154 893 5.5 11,596 863 7.4 UK Lease receivables: in offices in the UK 5,059 346 6.8 5,499 452 8.2 in offices outside the 537 67 12.5 240 21 8.8 UK Debt securities: in offices in the UK 15,256 851 5.6 13,804 910 6.6 in offices outside the 9,928 546 5.5 8,846 552 6.2 UK Average assets of 136,267 9,320 6.8 127,396 9,952 7.8 banking business Average assets of 67,278 3,655 5.4 77,599 3,809 4.9 trading business Total average interest 203,545 12,975 6.4 204,995 13,761 6.7 earning assets Provisions (1,955) (1,847) Non-interest earning 42,526 39,957 assets Total average assets and interest income 244,116 12,975 5.3 243,105 13,761 5.7 Percentage of total average assets in 31.0 29.6 offices outside the UK Average interest earning assets and net interest income: Banking business 136,267 4,630 3.4 127,396 4,352 3.4 Trading business 67,278 (31) - 77,599 (25) - Write-down of leases - - (40) - Discount rate adjustment on (6) - (4) - provisions Profit on redemption/repurchase 3 - 3 - of loan capital Total average interest earning assets and net 203,545 4,596 2.3 204,995 4,286 2.1 interest income Total average interest earning assets related to: Interest income 12,975 6.4 13,761 6.7 Interest expense (8,376) (4.1) (9,434) (4.6) Write-down of leases - - (40) - Discount rate adjustment on (6) - (4) - provisions Profit on redemption/repurchase 3 - 3 - of loan capital 4,596 2.3 4,286 2.1 Notes (i) Loans and advances to customers and banks include all doubtful lendings, including non-accrual lendings. Interest receivable on such lendings has been included to the extent to which either cash payments have been received or interest has been accrued in accordance with the income recognition policy of the Group. (ii) Average balances are based upon daily averages for most UK banking operations and monthly averages elsewhere. (iii) The average balance sheet does not include the retail life-fund assets attributable to policyholders nor the related liabilities. AVERAGE BALANCE SHEET AND NET INTEREST INCOME 31.12.99 31.12.99 31.12.99 31.12.98 31.12.98 31.12.98 Average Interest Average Average Interest Average Balance Rate Balance Rate Liabilities and £m £m % £m £m % shareholders' funds Deposits by banks: in offices in the UK 14,210 479 3.4 17,911 719 4.0 in offices outside the 11,506 460 4.0 11,726 505 4.3 UK Customer accounts - demand accounts: in offices in the UK 12,786 168 1.3 11,072 201 1.8 in offices outside the 1,827 35 1.9 2,088 44 2.1 UK Customer accounts - savings accounts: in offices in the UK 24,517 772 3.1 22,635 1,110 4.9 in offices outside the 1,307 55 4.2 1,120 63 5.6 UK Customer accounts - other time deposits - retail: in offices in the UK 23,998 1,231 5.1 22,703 1,574 6.9 in offices outside the 5,076 234 4.6 5,262 266 5.1 UK Customer accounts - other time deposits - wholesale: in offices in the UK 19,555 848 4.3 17,379 890 5.1 in offices outside the 6,067 306 5.0 5,904 307 5.2 UK Debt securities in issue: in offices in the UK 15,656 777 5.0 14,554 913 6.3 in offices outside the 7,130 379 5.3 6,181 340 5.5 UK Dated and undated loan capital and other subordinated 4,092 263 6.4 3,372 244 7.2 liabilities principally in offices in the UK Internal funding of (29,231) (1,317) 4.5 (32,682) (1,576) 4.8 trading business Average liabilities of 118,496 4,690 4.0 109,225 5,600 5.1 banking business Average liabilities of 71,535 3,686 5.2 79,513 3,834 4.8 trading business Total average interest bearing liabilities 190,031 8,376 4.4 188,738 9,434 5.0 Interest free customer deposits: in offices in the UK 8,677 8,333 in offices outside the 1,597 1,278 UK Other non-interest 35,190 36,652 bearing liabilities Minority interests and shareholders' funds 8,621 8,104 Total average liabilities, 244,116 8,376 3.4 243,105 9,434 3.9 shareholders' funds and interest expense Percentage of total average non-capital liabilities in offices 30.3 30.0 outside the UK CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' FUNDS 1999 1998 £m £m At beginning of year 7,842 7,557 Proceeds of shares issued (net of 214 110 expenses) Exchange rate translation (70) 32 differences Repurchase of ordinary shares* (504) (501) Goodwill written back on disposals 138 10 Shares issued to the QUEST; in relation to share option schemes (154) (67) for staff Other items 4 30 Profit retained 1,013 671 At end of year 8,483 7,842 * Including nominal amount of £28m (1998: £29m). STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 1999 1998 £m £m Profit attributable to the members 1,759 1,317 of Barclays PLC Exchange rate translation (70) 32 differences Other items 4 30 Total recognised gains relating to 1,693 1,379 the period Prior period adjustment (as (81) explained on page 41) Total gains and losses recognised since 31st December 1998 1,612 Historical cost profits and losses There is no material difference between profit before tax and profit retained, as reported, and historical cost profits. SUMMARY CONSOLIDATED CASH FLOW STATEMENT Note 1999 1998 £m £m Net cash inflow/(outflow) from operating activities 1 8,923 (1,337) Dividends received from 5 3 associated undertakings Net cash outflow from returns on investment and servicing (290) (252) of finance Tax paid (636) (547) Net cash (outflow)/inflow from capital expenditure and (7,890) 2,333 financial investment Acquisitions and disposals 242 584 Equity dividend paid (676) (591) Net cash (outflow)/inflow (322) 193 before financing Net cash inflow from 400 264 financing Increase in cash 78 457 NOTE TO CONSOLIDATED CASHFLOW STATEMENT 1. Reconciliation of operating profit to net operating cashflows 1999 1998 £m £m Operating profit 2,598 1,898 Provisions for bad and doubtful 621 492 debts Depreciation and amortisation 276 270 Net decrease in accrued expenditure and prepayments (149) (719) Provisions for contingent liabilities and commitments 1 76 Other provisions for 401 79 liabilities and charges Interest on dated and undated loan capital and other 263 244 subordinated liabilities Associated undertakings - 14 (22) loss/(profit) included Increase in shareholders' interest in the long-term (32) (95) assurance fund Profit on redemption/repurchase (3) (3) of loan capital Net decrease/(increase) in net interest and commission 691 (23) receivable Net profit on disposal of investments and fixed assets (51) (106) Other non-cash movements 7 53 4,637 2,144 Net change in items in transit and items in course of 96 (311) collection Net increase/(decrease) in 560 (4,253) other credit balances Net (increase)/decrease in loans and advances to banks and (23,862) 8,652 customers Net increase/(decrease) in deposits and debt securities in 32,100 (14,958) issue Net (increase)/decrease in (307) 3,215 other assets Net (increase)/decrease in other debt securities and (1,922) 3,642 equity shares Net (increase)/decrease in treasury and other eligible (2,462) 777 bills Other non-cash movements 83 (245) Net cash inflow/(outflow) from 8,923 (1,337) operating activities BARCLAYS PLC OTHER INFORMATION Financial Summary 1999 1998 1997 1996 1995 £m £m £m £m £m Profit before tax 2,460 1,895 1,719 2,293 2,021 Profit after tax 1,811 1,362 1,177 1,677 1,410 Total capital resources 13,432 11,890 10,810 10,608 10,964 P p P p P Earnings per ordinary 117.5 87.2 74.6 103.6 83.8 share Dividends per ordinary 50.0 43.0 37.0 31.5 26.0 share Net asset value per 568 519 494 467 429 ordinary share Dividend cover (times) 2.4 2.0 2.0 3.4 3.2 Risk asset ratios: % % % % % Tier 1 ratio 7.5 7.3 7.2 7.5 7.6 Total ratio 11.3 10.6 9.9 10.3 10.8 Performance ratios Return on average % % % % % shareholders' funds: Pre-tax 29.0 23.6 22.3 31.4 30.1 Post-tax 21.2 16.9 15.2 22.9 20.9 Return on average total assets: Pre-tax 1.0 0.8 0.8 1.3 1.2 Post-tax 0.7 0.5 0.5 0.9 0.8 Return on average weighted risk assets: Pre-tax 2.2 1.7 1.6 2.3 2.3 Post-tax 1.6 1.2 1.1 1.7 1.5 Non interest income/total 44.7 41.4* 46.6** 47.8 47.4 income Operating expenses/total 57.4 65.8 62.9 65.2 69.6 income*** * Excluding the impact of the Finance Act 1998. ** Excluding the impact of the Finance (No 2) Act 1997. *** Excluding the 1999 restructuring charge, the results of the former BZW businesses and the impact of the Finance Act 1998 and the Finance (No 2) Act 1997. The financial information above is extracted from the published accounts for the last five years, restated where appropriate to accord with the current accounting policies of the Group. PROFIT BEFORE TAX 31.12.99 30.6.99 31.12.98 30.6.98 (half-year ended - unaudited) £m £m £m £m Retail Financial Services 897 816 767 710 Corporate Banking* 489 458 447 544 Barclays Capital 138 178 (426) 156 Barclays Global Investors 15 28 23 29 Businesses in Transition** - - 24 24 Other operations 23 (10) (93) (74) Head office functions (47) (30) (40) (32) Goodwill amortisation (7) (6) (6) (6) Provision for litigation - - (76) - settlement*** 1,508 1,434 620 1,351 Restructuring charge 1 (345) - - Exceptional items (19) (119) 5 (4) Former BZW businesses - - (14) (19) Write-down of leases - - - (40) Write-down of fixed asset - - (4) - investments 1,490 970 607 1,288 31.12.99 30.6.99 31.12.98 30.6.98 TOTAL ASSETS £m £m £m £m Retail Financial Services 48,726 45,776 46,197 42,729 Corporate Banking 47,422 46,662 45,341 42,519 Barclays Capital 144,811 135,941 114,706 150,094 Barclays Global Investors 232 199 183 167 Businesses in Transition - - 554 531 Other operations and Head 5,562 5,174 5,428 6,165 office functions Retail life-fund assets attributable to policyholders 8,040 7,513 7,085 6,751 254,793 241,265 219,494 248,956 WEIGHTED RISK ASSETS Retail Financial Services 33,362 31,687 31,546 29,770 Corporate Banking 48,218 47,683 45,869 42,489 Barclays Capital 32,032 31,652 29,344 36,053 Barclays Global Investors 456 297 207 150 Businesses in Transition - - 594 531 Other operations 1,810 2,675 2,240 2,528 115,878 113,994 109,800 111,521 * Figures are stated prior to the write-down of leases. ** Businesses in Transition 1998 profit before tax excludes the residual losses of the former BZW businesses which are shown separately. *** The 1998 provision relates to the settlement of the Atlantic litigation. Consolidated profit and loss account by half-year (unaudited) 31.12.99 30.6.99 31.12.98 30.6.98 £m £m £m £m Interest receivable 4,823 4,497 4,938 5,014 Interest payable (2,477) (2,219) (2,728) (2,876) Write-down of leases - - - (40) Profit on redemption/repurchase of 3 - - 3 loan capital Net interest income 2,349 2,278 2,210 2,101 Net fees and commissions 1,515 1,417 1,429 1,350 receivable Dealing profits 236 325 (230) 197 Other operating income 115 129 168 156 Total non-interest income 1,866 1,871 1,367 1,703 Operating income 4,215 4,149 3,577 3,804 Administration expenses - (1,389) (1,668) (1,425) (1,386) staff costs Administration expenses - (872) (935) (969) (860) other Depreciation and (143) (137) (138) (137) amortisation Operating expenses (2,404) (2,740) (2,532) (2,383) Operating profit before 1,811 1,409 1,045 1,421 provisions Provisions for bad and (301) (320) (363) (129) doubtful debts Provisions for contingent (1) - (76) - liabilities etc Operating profit 1,509 1,089 606 1,292 Exceptional items (19) (119) 5 (4) Write-down of fixed asset - - (4) - investments Profit on ordinary 1,490 970 607 1,288 activities before tax Tax on profit on ordinary (397) (252) (153) (380) activities Profit on ordinary 1,093 718 454 908 activities after tax Minority interests (equity (30) (22) (23) (22) and non-equity) Profit attributable to the members of Barclays PLC 1,063 696 431 886 Dividends (484) (262) (414) (232) Profit retained 579 434 17 654 Earnings per ordinary 71.3 p 46.2 p 28.9 p 58.3 p share Dividends per ordinary 32.5 p 17.5 p 27.5 p 15.5 p share Results by half year for the ongoing business (unaudited) 31.12.99 30.6.99 31.12.98 30.6.98 £m £m £m £m Net interest income 2,349 2,278 2,211 2,142 Net fees and commissions 1,515 1,417 1,431 1,340 receivable Dealing profits 236 325 (225) 198 Other operating income 115 129 165 154 Total non-interest 1,866 1,871 1,371 1,692 income Operating income 4,215 4,149 3,582 3,834 Operating expenses (2,405) (2,395) (2,523) (2,354) Operating profit before 1,810 1,754 1,059 1,480 provisions Provisions for bad and (301) (320) (363) (129) doubtful debts Provisions for contingent liabilities and (1) - (76) - commitments Operating profit 1,508 1,434 620 1,351 Restructuring charge 1 (345) - - Exceptional items (19) (119) 5 (4) Former BZW businesses - - (14) (19) Write-down of leases - - - (40) Write-down of fixed asset - - (4) - investments Profit before tax 1,490 970 607 1,288 The above table presents the consolidated profit and loss account for the ongoing business. The restructuring charge in 1999 and the residual losses relating to the former BZW businesses and the impact of the Finance Act 1998 are shown separately. For further information; please contact: David Allvey Finance Director 020 7699 3564 - Direct Line 020 7699 5000 - Switchboard Ian Roundell Head of Investor Relations 020 7699 2961 - Direct Line Leigh Bruce Director, Corporate Communications 020 7699 2658 - Direct Line More information on Barclays, including the 1999 results, can be found on our website at the following address: http://www.investor.barclays.com

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