IFRS Transition Report-Part 4

Barclays PLC 11 May 2005 BARCLAYS PLC Analysis of remeasure column in balance sheet - assets as at 1st January 2004. As at 1st January 2004 ---------------------------------------------------------------------------- Consoli Life Good Share Pensions Intangible Finan Leas Divi dation assur will based assets cial ing dends ance pay guaran ments tees Notes (a) (b) (d) (e) (f) (g) (h) (i) (j) ASSETS £m £m £m £m £m £m £m £m £m ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Cash and balances at - - - - - - - - - central banks Items in the course of - - - - - - - - - collection from other banks Treasury bills and - - - - - - - - - other eligible bills Trading portfolio - - - - - - - - - assets Non-trading financial - - - - - - - - - instruments fair valued through profit and loss: - held on own account - - - - - - - - - - held in respect of - - - - - - - - - linked liabilities to customers under investment contracts Derivative financial - - - - - - - - - instruments Loans and advances to banks 5,036 33 - - - - - - - Loans and advances to customers 4,447 - - - - - - (576) - Debt securities 2,503 - - - - - - - - Equity shares (768) - - - - - - - - Available for sale - - - - - - - - - financial investments Reverse repurchase - - - - - - - - - agreements and cash collateral on securities borrowed Other assets 304 (783) - - (588) - 138 - - Insurance assets, including unit-linked assets 40 157 - - - - - - - Investments in - - - - - - - - - associates and joint ventures Goodwill - - (13) - - - - - - Intangible assets - - 14 - - 50 - - - Property, plant and equipment - - - - - - - 333 - Prepayments and accrued - - - - - - - - - income Deferred tax assets 548 - - - 705 - 14 81 - Retail life-fund assets - - - - - - - - - attributable to policyholders ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Total assets 12,110 (593) 1 - 117 50 152 (162) - ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ As at 1st January 2004 ------------------- Other Total remeasure Notes ASSETS £m £m ------------------ ------ -------- Cash and balances at - - central banks Items in the course of - - collection from other banks Treasury bills and - - other eligible bills Trading portfolio - - assets Non-trading financial - - instruments fair valued through profit and loss: - held on own account - - - held in respect of - - linked liabilities to customers under investment contracts Derivative financial - - instruments Loans and advances to - 5,069 banks Loans and advances to 82 3,953 customers Debt securities - 2,503 Equity shares 3 (765) Available for sale - - financial investments Reverse repurchase - - agreements and cash collateral on securities borrowed Other assets - (929) Insurance assets, - 197 including unit-linked assets Investments in 10 10 associates and joint ventures Goodwill - (13) Intangible assets - 64 Property, plant and - 333 equipment Prepayments and accrued - - income Deferred tax assets - 1,348 Retail life-fund assets - - attributable to policyholders ------------------ ------ -------- Total assets 95 11,770 ------------------ ------ -------- BARCLAYS PLC Analysis of remeasure column in balance sheet - liabilities as at 1st January 2004. As at 1st January 2004 ---------------------------------------------------------------------------- Consoli Life Good Share Pensions Intangible Finan Leas Divi dation assur will based assets cial ing dends ance pay guaran ments tees Notes (a) (b) (d) (e) (f) (g) (h) (i) (j) LIABILITIES £m £m £m £m £m £m £m £m £m ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Deposits from banks - - - - - - - - - Items in the course of - - - - - - - - - collection due to other banks Customer accounts (72) - - - - - - - - Trading portfolio - - - - - - - - - liabilities Liabilities to - - - - - - - - - customers under investment contracts Derivative financial - - - - - - - - - instruments Debt securities in issue 11,900 - - - - - - - - Repurchase agreements - - - - - - - - - and cash collateral on securities lent Other liabilities (159) 38 - (1) - - 185 26 (4) Accruals and deferred - - - - - - - - - income Current tax liabilities - 17 - - - - - - - Insurance contract liabilities including unit -linked liabilities 40 (94) - - - - - - - Subordinated liabilities: Undated loan - - - - - - - - - capital-non convertible - Dated loan capital- - - - - - - - - - convertible to preference shares - Dated loan - - - - - - - - - capital-non convertible Deferred tax liabilities 558 38 - - - 15 - - - Other provisions for liabilities - - - - (71) - - - - Dividend - - - - - - - - (879) Retirement benefit liabilities - - - - 1,885 - - - - Retail-life fund - - - - - - - - - liabilities to policyholders ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Total liabilities 12,267 (1) - (1) 1,814 15 185 26 (883) ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ As at 1st January 2004 ------------------- Other Total remeasure Notes LIABILITIES £m £m ------------------ ------- -------- Deposits from banks - - Items in the course of - - collection due to other banks Customer accounts - (72) Trading portfolio - - liabilities Liabilities to - - customers under investment contracts Derivative financial - - instruments Debt securities in - 11,900 issue Repurchase agreements - - and cash collateral on securities lent Other liabilities - 85 Accruals and deferred - - income Current tax liabilities - 17 Insurance contract liabilities including - (54) unit-linked liabilities Subordinated liabilities: Undated loan - - capital-non convertible - Dated loan capital- - - convertible to preference shares - Dated loan - - capital-non convertible Deferred tax - 611 liabilities Other provisions for 82 11 liabilities Dividend - (879) Retirement benefit - 1,885 liabilities Retail-life fund - - liabilities to policyholders ------------------ ------- -------- Total liabilities 82 13,504 ------------------ ------- -------- BARCLAYS PLC Analysis of remeasure column in balance sheet - shareholders' equity as at 1st January 2004. As at 1st January 2004 ---------------------------------------------------------------------------- Consoli Life Good Share Pensions Intangible Finan Leas Divi dation assur will based assets cial ing dends ance pay guaran ments tees Notes (a) (b) (d) (e) (f) (g) (h) (i) (j) SHAREHOLDERS' EQUITY £m £m £m £m £m £m £m £m £m ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Called up share - - - - - - - - - capital Share premium account - - - - - - - - - Less: Treasury shares - - - - - - - - - Available for sale - - - - - - - - - reserve Revaluation reserve - - - - - - - - - Cashflow hedging - - - - - - - - - reserve Capital redemption - - - - - - - - - reserve Other capital reserve - - - - - - - - - Translation reserve - - - - - - - - - Retained earnings (157) (592) 1 1 (1,697) 35 (33) (188) 883 ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Shareholders' equity excluding minority interest (157) (592) 1 1 (1,697) 35 (33) (188) 883 ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Minority interest - - - - - - - - - ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Total shareholders' equity (157) (592) 1 1 (1,697) 35 (33) (188) 883 ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ Total liabilities and shareholders' equity 12,110 (593) 1 - 117 50 152 (162) - ------------------ ------- ------ ------ ------ ------ ------ ------ ------ ------ As at 1st January 2004 ----------------------- Other Total remeasure Notes SHAREHOLDERS' EQUITY £m £m ------------------ -------- ---------- Called up share - - capital Share premium - - account Less: Treasury - - shares Available for sale - - reserve Revaluation reserve - - Cashflow hedging - - reserve Capital redemption - - reserve Other capital - - reserve Translation reserve - - Retained earnings 13 (1,734) ------------------ -------- ---------- Shareholders' equity 13 (1,734) excluding minority interest ------------------ -------- ---------- Minority interest - - ------------------ -------- ---------- Total shareholders' 13 (1,734) equity ------------------ -------- ---------- Total liabilities and 95 11,770 shareholders' equity ------------------ -------- ---------- BARCLAYS PLC Differences between UK GAAP and IFRS The significant differences between the Group's UK accounting policies and IFRS accounting policies summarised below. UK GAAP IFRS (a) Consolidation and presentation The Group financial statements The Group financial statements consolidate consolidate the assets, the assets, liabilities and the profits and liabilities and the profits and losses of subsidiaries using the losses of subsidiaries using the acquisition method. A subsidiary is an acquisition method. Entities entity which the Group controls, including which do not qualify as special purpose entities which are in subsidiaries but which in substance controlled by the Group. substance give rise to benefits that are in essence no different from those that would arise were the entity a subsidiary, are included in the consolidated financial statements. In accordance with FRS 5, Linked presentation is not available under securitisation transactions IFRS. Therefore, the gross assets and the which qualified are accounted related funding are presented separately. for on the basis of linked presentation. (b) Life assurance In order to reflect the The retail long-term assurance business is different nature of the consolidated on a line-by-line basis with shareholders' and policyholders' assets, liabilities and income and interests in the retail expenditure, whether attributable to long-term assurance business, shareholders or attributable to the value of the long-term policyholders, being included in the lines assurance business attributable that reflect their nature. to other shareholders is included in Other assets and the assets and liabilities attributable to policyholders are classified under separate headings in the consolidated balance sheet. The value of the shareholders' In accordance with IFRS from 2005, life interest in the retail long-term assurance products are divided into assurance fund represents an investment contracts, which are accounted estimate of the net present for under IAS 39 and insurance contracts, value of the profits inherent in which under IFRS 4 continue to be accounted the in-force policies, embedded for under UK GAAP. The life fund is closed value accounting. All life to new business and the volume of contracts assurance products are accounted which fall to be accounted for as insurance for in the same way; there is no contracts under IFRS is not significant. distinction between investment Therefore, it was considered more contracts and insurance appropriate to change the accounting policy contracts. for insurance contracts to a Modified Statutory Solvency Basis. This change will allow the insurance contracts to be accounted for on a similar basis to investment contracts from 2005. This change in policy applies from 1st January 2004 and the Modified Statutory Solvency Basis has been applied to all contracts, whether they will be classified as insurance contracts or as investment contracts in 2005. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (c) Investments in associated companies and joint ventures Investments in associated companies Investments in associates and joint and joint ventures are accounted for ventures are accounted for using the using the equity method where the equity method where the Group has the Group has the ability to exert ability to exert significant influence significant influence and actually or control jointly. Losses are does so. Where incurred, losses are recognised up to the point where the recognised in full. investment in the entity or joint venture has been eliminated, and subsequent profits only to the extent that unrecognised cumulative losses have been made good. Before using the equity accounting method, adjustments are made to ensure that the results of associates and joint ventures have been prepared based on Group accounting policies. The difference between accounts prepared using UK GAAP policies and IFRS policies has resulted in a restatement of the investments in associates and joint ventures as at 1st January 2004. (d) Goodwill Goodwill arising on acquisitions of Goodwill arising on acquisitions of subsidiaries and associated companies subsidiaries and associates and joint and joint ventures is capitalised and ventures is capitalised and tested amortised through the profit and loss annually for impairment. account on a straight-line basis over its expected economic life. Capitalised goodwill is written off when judged to be impaired. Prior to 1998, goodwill arising on the acquisition of subsidiaries was eliminated directly against reserves. Amounts recognised in the UK GAAP balance sheet at 1st January 2004 have been carried forward without adjustment into the balance sheet prepared in accordance with IFRS as deemed cost after being tested for impairment. Goodwill previously written off to reserves in accordance with UK GAAP has not been reinstated on the balance sheet. Goodwill amortised under UK GAAP in 2004 has been written back in the 2004 IFRS financial statements. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (e) Share based payment Where shares are purchased, the An annual charge is made in the difference between the purchase price income statement for share options and any contribution made by the and other share based payments based employee is charged to the profit and on the fair value of options granted loss account in the period to which it or shares awarded on the date of the relates. Where shares are issued or grant or award. This charge is spread options granted, the charge made to over the period the employees' the profit and loss account is the services are received, which is the difference between the fair value at vesting period. The fair value of the the time the award is made and any options granted is determined using contribution made by the employee. For option pricing models. these purposes, fair value is equal to intrinsic value. (f) Pensions and other post retirement benefits Pension costs, based on actuarial For defined benefit schemes, an assumptions, are calculated so as to actuarial valuation of the scheme allocate the cost of providing obligation and the fair value of the benefits over the average remaining plan assets are made annually and the service lives of the employees. difference between fair value of the plan assets and the present value of the defined benefit obligation at the balance sheet date, together with adjustments for any unrecognised actuarial losses and past service cost is recognised as a liability in the balance sheet. Cumulative actuarial gains and losses in excess of the greater of 10% of the plan assets or 10% of the obligations of the plan are recognised in the income statement over the remaining average service lives of the employees of the related plan, on a straight-line basis. At 1st January 2004, pension assets and liabilities have been recognised in full. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (g) Intangible assets other than goodwill The Group writes off the cost of IFRS requires the capitalisation of both computer software unless the external and directly related internal software is required to facilitate costs where the software will result in the use of new hardware. a directly measurable intangible asset. Capitalised amounts are included Amounts capitalised are amortised over with the hardware within Fixed their estimated useful lives. Computer assets. software is amortised at a rate of 20 - 33% per year. Where software developed is not integral to the related hardware, the costs are classified as an intangible asset. At 1st January 2004, qualifying amounts previously written off under UK GAAP have been recognised as intangible assets and the 2004 income statement has been adjusted accordingly. For acquisitions arising after 1st January 2004, intangible assets which are required to be recognised separately from goodwill in accordance with IFRS 3 have been transferred from goodwill to intangible assets as at the date of acquisition. Intangible assets acquired before 1st January 2004 have been reclassified from goodwill to intangible assets. (h) Financial guarantees Credit related instruments (other Financial guarantees (other than credit than credit derivatives) are derivatives) are initially recognised in treated as contingent liabilities the financial statements at fair value and these are not shown on the on the date that the guarantee was balance sheet unless, and until, given. Subsequent to initial the Group is called upon to make a recognition, the bank's liabilities payment under the instrument. Fees under such guarantees are measured at received for providing these the higher of the initial measurement, instruments are taken to profit less amortisation calculated to over the life of the instrument and recognise in the income statement the reflected in fees and commissions fee income earned over the period, and receivable. the best estimate of the expenditure required to settle any financial obligation arising as a result of the guarantees at the balance sheet date. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (i) Leasing Group as Lessor Group as Lessor Assets leased to customers under Assets leased to customers under agreements which transfer agreements which transfer substantially all the risks and substantially all the risks and rewards of ownership other than legal rewards of ownership other than legal title are classed as finance leases. title are classed as finance leases. All other leases are classified as All other leases are classified as operating leases. operating leases. Amounts due from lessees under finance Amounts due from lessees under leases are recorded as Loans and finance leases are recorded as Loans advances to customers at the amount of and advances to customers at the the Group's net investment in the amount of Group's net investment in lease. the lease. Finance lease income is recognised so Finance lease income is recognised so as to give a constant periodic rate of as to give a constant rate of return return on the net cash investment in on the net cash investment, without the lease taking into account tax taking account of tax payments and payments and receipts associated with receipts ('the pre tax actuarial the lease. method'). Rental income from operating leases is The assets held for operating leases recognised on a straight line basis are included within the Group's over the term of the lease unless property, plant and equipment and another systematic basis is more depreciated over their useful appropriate. economic lives. Lease income is recognised on a straight line basis over the term of the lease unless another systematic basis is more appropriate. Group as Lessee Group as Lessee Assets held on finance leases are Assets held on finance leases are capitalised where the lease transfers capitalised where the lease transfers the risks and rewards of ownership to the risks and rewards of ownership to the Group. This is achieved generally the Group. The conditions for where the lease payments, when capitalisation are the same as UK discounted at the rate of interest GAAP, except that IFRS requires the implicit in the lease, constitute land and buildings elements of leases substantially all, generally not less to be assessed separately to than 90%, of the fair value of the determine whether the buildings leased asset at the date of the element should be capitalised. This inception of the lease, and the has not resulted in any significant primary lease term equates to the change to the classification or useful life of the asset. Leases measurement of assets or liabilities related to land and buildings do not arising from finance leases where the qualify for capitalisation, since the Group is lessee. useful life of land is not finite. Lease incentives are spread over the Lease incentives are spread over the period to the next rent review. term of the lease. (j) Dividends Dividends declared after the period Dividends are recorded in the period end are recorded in the period to in which they are approved by the which they relate. Company's shareholders. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (k) Deferred tax Deferred tax is provided in full for Deferred tax is provided in full all material timing differences that based on the concept of temporary have not reversed at the balance sheet differences, including items such as date. Provision is not made for the revaluation of property and the specific items which are not expected unremitted earnings of subsidiaries to result in taxable income in the and associated companies where the future, namely gains on the revaluation Group is not able to control their of property and the unremitted earnings distribution policies. of subsidiary and associated companies. (l) Other credit risk provisions Provision balances for bad and doubtful Provisions raised with respect to debts include provisions raised with undrawn contractually committed respect to undrawn contractually facilities and guarantees (other committed facilities and guarantees. credit risk provisions) are presented separately from impairment losses on loans and advances. In 2004, the other credit risk provisions have been presented separately from provision balances for bad and doubtful debts. However, the measurement of these provisions is unchanged from UK GAAP. (m) Property, plant and equipment Property, plant and equipment is The carrying value of property, carried at either original cost or plant and equipment included in the subsequent valuation, less depreciation UK GAAP balance sheet at 1st January calculated on the revalued amount where 2004 has been carried forward into applicable. From 1st January 2000, the IFRS balance sheet without following the introduction of FRS 15, adjustment as deemed cost. the revalued book amounts were retained Depreciation is charged in a manner without subsequent revaluation subject consistent with UK GAAP. to the requirement to test for impairment. Depreciation is charged on the cost or revalued amounts of freehold and long leasehold properties over their estimated economic lives. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) Effects of the application of IAS 32, IAS 39 and IFRS 4 The significant differences between the Group's UK GAAP accounting policies and IFRS accounting policies applied to the treatment of financial instruments and insurance contracts, which have been incorporated into the opening balance sheet as at 1st January 2005, are as follows: UK GAAP IFRS (n) Derivatives and hedge accounting Derivatives used for hedging IAS 39 requires all derivatives to be purposes are measured on an recorded at fair value. Provided all accruals basis consistent with the hedge accounting conditions are met and assets, liabilities, positions or the hedging relationship is deemed to be future cash flows being hedged. The effective, the derivative may be gains and losses on these designated as a fair value hedge, cash instruments (arising from changes flow hedge or hedge of a net investment in fair value) are not recognised in a foreign operation. The change in in the profit and loss account value of the fair value hedge is immediately as they arise. Such recorded in income along with the change gains are either not recognised in in fair value, relating to the hedged the balance sheet or are recognised risk, of the hedged asset or liability. and carried forward. When the The change in value of a cash flow hedge hedged transaction occurs, the gain is recorded in equity, to the extent it or loss is recognised in the profit is effective and recycled to income as and loss account at the same time the hedged cash flows affect the income as the hedged item. statement. The change in value of a net investment hedge is recorded in the translation reserve to the extent the hedge is effective and only released to the income statement when the underlying investment is sold. Derivatives that are not hedge As at 1st January 2005, all hedging accounted are recorded at fair derivatives have been recognised at fair value, with changes in fair value value and adjustments have been made to recorded in the profit and loss hedged items where fair value hedge account. accounting will be applied. Hedges have been designated and documented in compliance with IFRS and, where possible, US GAAP with hedge accounting applied from that date. Where hedges were in place under UK GAAP that have not been designated as hedges under IFRS, adjustments have been made to the hedged item or equity to reflect the hedged position as at 31st December 2004. Products which contain embedded Some hybrid contracts contain both a derivatives are valued with derivative and a non-derivative reference to the total product component. In such cases, the derivative inclusive of the derivative component is termed an embedded element. derivative. Where the economic characteristics and risks of the embedded derivative are not closely related to those of the host contract, and the host contract itself is not carried at fair value, the embedded derivative is bifurcated and reported at fair value with gains and losses being recognised in the income statement. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (n) Derivatives and hedge accounting (continued) At 1st January 2005, all embedded derivatives or the whole contracts containing embedded derivatives have been included on the balance sheet at fair value. (o) Classification and measurement of financial instruments Financial instruments are IAS 39 requires all financial assets to generally divided into banking be classified at initial acquisition and book, which are carried at cost, subsequently measured in accordance with and trading book, which are the classification: carried at fair value. Positions in investment debt securities and investments in equity shares are stated at cost less provision for diminution in value. Investment securities are those intended for use on a continuing basis by the Group. Classification Measurement basis Held to maturity Amortised cost less impairment Loan or receivable Amortised cost less impairment Available for sale Fair value - gains and losses included in shareholders' equity until disposal or impairment Fair value through Fair value - gains and losses included in the income profit or loss statement In addition, any financial asset may be designated as fair valued through profit and loss at initial acquisition. Financial liabilities are classified as held for trading or are carried at amortised cost. Investment securities and equity shares are generally classified as available for sale. The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument or is based on a valuation technique whose variables include only data from observable markets. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (o) Classification and measurement of financial instruments (continued) At 1st January 2005, financial instruments have been classified and measured in accordance with IAS 39. In general, financial instruments included in the trading book under UK GAAP have been classified as held for trading, banking book loans and receivables have been classified as loans or receivables and investment securities have been classified as available for sale. In addition, the fair value of certain trading derivatives has been restated to eliminate any profits recognised that are not evidenced by reference to data from observable markets. (p) Netting Under FRS 5, items are Financial assets and liabilities are offset aggregated into a single item and the net amount reported in the balance where there is a right to sheet if, and only if, there is currently a insist on net settlement and legally enforceable right to set off the the debit balance matures no recognised amounts and there is an intention later than the credit to settle on a net basis at all times, or to balance. realise an asset and settle the liability simultaneously. The application of IFRS has resulted in certain transactions that qualified for netting under UK GAAP, being presented on a gross basis from 1st January 2005. The primary differences include derivative assets and liabilities subject to master netting agreements, repurchase contracts and cash collateral balances. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (q) Capital instruments Under FRS 4, capital instruments are Issued financial instruments are classified as debt if they contain classified as liabilities where the an obligation, including a substance of the contractual contingent obligation, to transfer arrangement results in the Group having economic benefits to another a present obligation to either deliver party. cash or another financial asset to the holder. In the absence of such an obligation, the financial instrument is classified as equity. The application of IFRS has resulted in certain funding instruments that were included in undated loan capital under UK GAAP being reclassified as equity from 1st January 2005. Where the instruments have been reclassified, they have been remeasured to net proceeds at the date of issue and the subsequent foreign currency movements have been eliminated. (r) Loan impairment Specific provisions are raised when Impairment losses are recognised where the creditworthiness of a borrower there is evidence of impairment as a has deteriorated such that the result of one or more loss events that recovery of the whole or part of an have occurred after initial outstanding advance is in serious recognition, and where these events doubt. Specific provisions are have had an impact on the estimated generally raised on an individual future cash flows of the financial basis, although specific provisions asset or portfolio of financial assets. may be raised on a portfolio basis Impairment of loans and receivables is for homogeneous assets and where measured as the difference between the statistical techniques are carrying amount and the present value appropriate. General provisions are of estimated future cash flows raised to cover losses which are discounted at the financial asset's judged to be present in loans and original effective interest rate. advances at the balance sheet date, Impairment is measured individually for but which have not been specifically assets that are individually identified as such. significant and on a collective basis for portfolios with similar risk characteristics. If collection of interest is Under IFRS, all impairment allowances doubtful, it is credited to a are calculated in the same manner and suspense account and excluded from there is no distinction between general interest income in the profit and and specific provisions. loss account. The suspense account in the balance sheet is netted against the relevant loan. The overall change in the total level of credit impairment is not material. The application of IFRS has resulted in re-analysis of UK GAAP general and specific provisions into IFRS impairment allowances and the reallocation of impairment allowances within the businesses. Interest on impaired loans is recognised using the original effective interest rate, being the rate used to discount the estimated future cash flows for the purpose of calculating impairment. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (s) Effective interest Interest is recognised in the The effective interest method is a method income statement as it accrues. of calculating the amortised cost of a Fee income relating to loans and financial asset or liability (or group of advances is recognised so as to assets and liabilities) and of allocating match the cost of providing a the interest income or interest expense continuing service, together with over the relevant period. The effective a reasonable profit margin. Where interest rate is the rate that exactly fees are charged in lieu of discounts the expected future cash interest, it is recognised as payments or receipts through the expected interest receivable on a level life of the financial instrument, or when yield basis over the life of the appropriate, a shorter period, to the net advance. Costs associated with the carrying amount of the instrument. The acquisition of financial assets method results in all fees relating to are either spread over the the origination or settlement of the loan anticipated life of the loans or that are in the nature of interest and recognised as incurred, depending all direct and incremental costs on the nature of the cost. associated with origination being recognised over the expected life of the loan. The application of the method has the effect of recognising income (or expense) receivable (or payable) on the instrument evenly in proportion to the amount outstanding over the period to maturity or repayment. (t) Insurance contracts Certain products offered to From 1st January 2005, life assurance institutional pension funds are products are divided into investment accounted for as investment contracts and insurance contracts. products when the substance of the Investment contracts are accounted for investment is that of managed under IAS 39 and insurance contracts are funds. The assets and related accounted for under the Modified liabilities are excluded from the Statutory Solvency Basis. The income and consolidated balance sheet in expense and assets and liabilities that order to reflect this substance. arise on the investment contracts are presented separately from those arising under insurance contracts. Where the legal form of the asset management products offered to institutional pension funds is an insurance contract, the assets and corresponding liabilities associated with these products are recorded on the balance sheet as investment contracts. BARCLAYS PLC Differences between UK GAAP and IFRS (continued) UK GAAP IFRS (u) Derecognition and financial liabilities Under FRS 5, a liability is A financial liability is extinguished when derecognised if an entity's and only when the obligation is discharged, obligation to transfer cancelled or expires. A financial asset can economic benefits is be removed from the balance sheet only where satisfied, removed or is no the derecognition conditions have been met, longer likely to occur. including a requirement to continue to recognise financial assets only to the extent of any continuing involvement in them after the transfer. The application of IFRS has resulted in certain customer accounts being remeasured as at 1st January 2005 to reflect the entire legal obligation. In addition, certain customer loyalty provisions, which meet the definition of financial liabilities, have been re-classified from provisions to financial liabilities and re-measured accordingly. Certain securitisation structures that qualified for linked presentation under UK GAAP in 2004, and which were presented on a gross basis under IFRS in 2004, qualified for derecognition on a 'continuing involvement' basis under IFRS from 1st January 2005 and have been substantially removed from the balance sheet from that date. BARCLAYS PLC OTHER INFORMATION Registered office 54 Lombard Street, London, EC3P 3AH, England, United Kingdom. Tel: +44 (0)20 7699 5000. Company number: 48839. With effect from 31st May 2005, the registered office will move to: 1 Churchill Place, London, E14 5HP, England, United Kingdom. Tel: +44 (0)20 7116 1000. Website www.barclays.com Registrar The Registrar to Barclays PLC, The Causeway, Worthing BN99 6DA. Tel: + 44 (0) 870 609 4535. Listing The principal trading market for Barclays PLC ordinary shares is the London Stock Exchange. Ordinary shares are also listed on the New York Stock Exchange and the Tokyo Stock Exchange. Trading on the New York Stock Exchange is in the form of ADSs under the ticker symbol 'BCS'. Each ADS represents four ordinary shares of 25p each and is evidenced by an ADR. The ADR depositary is The Bank of New York whose international telephone number is +1-610-382-7836, whose domestic telephone number is 1-888-BNY-ADRS and whose address is The Bank of New York, Investor Relations, PO Box 11258, Church Street Station, New York, NY 10286-1258. Filings with the SEC Statutory accounts for the year ended 31st December 2004, which also include certain information required for the joint Annual Report on Form 20-F of Barclays PLC and Barclays Bank PLC to the US Securities and Exchange Commission (SEC), can be obtained from Corporate Communications, Barclays Bank PLC, 200 Park Avenue, New York, NY 10166 or from the Head of Investor Relations at Barclays registered office address, shown above. Copies of the Form 20-F are also available from the Barclays Investor Relations' website (details below) and from the SEC's website (www.sec.gov). For further information please contact: Investor Relations Media Relations Mark Merson/James S Johnson Pam Horrell/Jo Thethi +44 (0) 20 7116 5752/2927 +44 (0) 20 7116 6132/6217 More information on Barclays can be found on our website at the following address:www.investorrelations.barclays.co.uk This information is provided by RNS The company news service from the London Stock Exchange

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