Interim Results - Part 1 of 4

Barclays PLC 2 August 2001 PART 1 Barclays PLC Interim Results Announcement 2001 BARCLAYS PLC INTERIM ANNOUNCEMENT OF RESULTS FOR 2001 These results include the contribution of Woolwich plc group from 25th October 2000, following the acquisition of the company. In order to provide a like for like comparison of the Group's performance, pro forma results have also been prepared for the half years to 30th June 2000 and 31st December 2000 assuming that the acquisition of Woolwich plc took place on 1st January 2000. The results of Woolwich plc have been restated using Barclays accounting policies. Other acquisitions and disposals in 2000 have been reflected as if they took place on 1st January 2000 (see page 70). Pro forma comparisons are referred to where applicable. Woolwich plc is the business acquired on 25th October 2000. Woolwich includes Woolwich plc and Barclays Mortgages, the UK mortgages and household insurance operations of Barclays. PAGE Summary 1 Financial highlights 3 Half-year review 4 Key facts (unaudited) 6 Summary of results 7 Consolidated profit and loss account (unaudited) 8 Further analysis of profit and loss account (unaudited) 9 Consolidated balance sheet (unaudited) 10 Financial review 11 Additional information 48 Notes (unaudited) 51 Average balance sheet (unaudited) 62 Consolidated statement of changes in shareholders' funds (unaudited) 64 Statement of total recognised gains and losses (unaudited) 65 Consolidated cashflow statement (unaudited) 66 Barclays PLC and Woolwich plc pro forma disclosure (unaudited) 69 US GAAP data (unaudited) 71 Other information 72 The information in this announcement, which was approved by the Board of Directors on 1st August 2001, does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985 ('the Act'). Statutory accounts for the year ended 31st December 2000, which also included the Group's annual report on Form 20-F to the U.S. Securities and Exchange Commission and which contained an unqualified audit report and did not make any statements under Section 237 of the Act, have been delivered to the Registrar of Companies in accordance with Section 242 of the Act. This document contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act 1995 with respect to certain of the Group's plans and its current goals and expectations relating to its future financial condition and performance; this includes the synergy expectations on page 43 relating to the acquisition of Woolwich plc. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including UK domestic and global economic and business conditions, market related risks such as interest rate and exchange rate, the policies and actions of governmental and regulatory authorities, the impact of competition, and the Group's ability to achieve the estimated synergies relating to the acquisition of Woolwich plc (such as the ability to integrate businesses and IT systems within anticipated timeframes, the ability to cross-sell products and the ability to share data), 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. BARCLAYS PLC, 54 LOMBARD STREET, LONDON EC3P 3AH, TELEPHONE 020 7699 5000 2nd August 2001 BARCLAYS PLC - SUMMARY RESULTS FOR SIX MONTHS TO 30TH JUNE 2001 (UNAUDITED) Pro forma operating results Half-year ended 30.06.01 31.12.00 30.06.00 % Change £m £m £m Operating income* 5,598 5,197 5,051 11 Operating expenses* (2,952) (2,842) (2,776) 6 Provisions for bad and doubtful debts (498) (453) (397) 25 Provisions for contingent liabilities and (2) - 1 - commitments Operating Profit* 2,140 1,904 1,867 15 Profit before tax** 1,923 1,655 1,652 16 * Operating profit shown above assumes that the acquisition of Woolwich plc took place on 1st January 2000 and excludes the restructuring charge, goodwill amortisation, Woolwich fair value adjustments and costs directly associated with the integration of Woolwich plc but includes the results from joint ventures and associated undertakings. ** Profit before tax is on a pro forma basis. For further details see pages 69-70. - Operating profit rose by 15% to £2,140 million (2000: £1,867 million). - Operating income increased by 11% to £5,598 million (2000: £5,051 million). - Operating costs rose by 6% to £2,952 million (2000: £2,776 million). Business as usual costs rose by 1% to £2,321 million (2000: £2,294 million). - Total provisions for bad and doubtful debts rose in line with risk tendency by £101 million to £498 million. On a pro forma basis risk tendency increased from £900m in June 2000 to £1,100 million. Summary information Half-year ended 30.06.01 31.12.00 30.06.00 % Change Profit before tax £1,923m £1,654m £1,842m 4 Earnings per share* 89.8p 81.7p 82.3p 9 Dividend per share 23.0p 38.0p 20.0p 15 Economic profit £722m £610m £819m (12) * Earnings per share is based on the operating profit set out on page 9 and also excludes exceptional items, with the results of Woolwich plc consolidated from the date of acquisition on 25th October 2000. - Economic profit was £722 million (2000: £819 million). Economic profit in the first half of 2000 included £186 million in respect of the sale of the Dial leasing business. Adjusted for this, economic profit rose 14%. - Earnings per share increased to 89.8p (2000: 82.3p). - The post-tax return, based on operating profit, on average shareholders' funds was 21.6% (2000: 27.4%). - The interim dividend increased by 15% to 23.0p (2000: 20.0p). BARCLAYS PLC - SUMMARY - Shareholders' funds were £14.1 billion at 30th June 2001 (31st December 2000: £13.2 billion) and the tier 1 ratio was 7.7% (31st December 2000: 7.2%). The Group's average economic capital requirement was estimated to be around £8.8 billion (31st December 2000: £8.5 billion), excluding goodwill of £4.2 billion, to support its current business requirements and to allow for future growth. - Overall banking margins reduced to 2.99% (2000: 3.17%). The reduction in the Group margin resulted from the acquisition of Woolwich plc. - Personal Financial Services (previously UK Personal Customers) increased operating profit by 59% to £263 million (2000: £165 million). Net fees and commissions grew by 7% as a result of higher levels of fee based current accounts and strong overdraft lending activity. Total costs fell 7%. Strategic investment was mainly directed at the branch network and online services. - Woolwich (which includes Woolwich plc and Barclays Mortgages) operating profit increased to £238 million (2000: £102 million). On a pro forma basis, half year on half year operating profit fell from £275 million to £238 million as a result of a reduced contribution from Barclays Mortgages. On an underlying basis, Woolwich plc operating profit increased by 6%. - Barclays Private Clients (previously Wealth Management) operating profit declined 2% to £331 million (2000: £339 million) although operating profit grew by 7% compared to the second half of 2000. Net interest income growth of 14% to £427 million (2000: £376 million) benefited from increased volumes. This was offset by a comparable decrease in net fees and commissions as a result of reduced stock market deal volumes and depressed market conditions. - Barclaycard operating profit increased by 18% to £275 million (2000: £ 234 million). Net interest income rose by 15% and benefited from continued growth in extended credit balances. Fees and commissions grew 11% as a result of turnover growth and higher account fees. Total costs increased by 6% to £242 million (2000: £229 million). - Business Banking operating profit rose 8% to £608 million (2000: £564 million). Net interest income rose 4% reflecting increased customer lending and deposit balance growth. Fees and commissions increased 8% as a result of higher levels of lending related fees and volume driven growth of foreign exchange related income. - Barclays Africa operating profit increased 19% to £68 million (2000: £57 million). Net interest income rose by 10% as a result of higher lending volumes. Net fees and commissions increased 17% reflecting increased customer numbers and the introduction of a new personal product range. - Barclays Capital increased operating profit by 22% to £377 million (2000: £309 million) as a result of good performances across all activities. Net interest income grew by 23% to £312 million (2000: £253 million) and dealing profits increased by 35% to £569 million (2000: £420 million). - Barclays Global Investors operating profit was maintained at £33 million. Total assets under management decreased to £548 billion (31st December 2000: £550 billion). BARCLAYS PLC FINANCIAL HIGHLIGHTS Half-year ended 30.6.01 31.12.00 30.6.00 RESULTS £m £m £m Net interest income* 3,024 2,691 2,471 Non-interest income 2,574 2,228 2,215 Operating income* 5,598 4,919 4,686 Operating expenses* (2,952) (2,678) (2,525) Provisions for bad and doubtful debts (498) (441) (376) Provisions for contingent liabilities and commitments (2) - 1 (Loss) / income from joint ventures and associated (6) 2 (10) undertakings Operating profit* 2,140 1,802 1,776 Restructuring charge (63) (126) (106) Woolwich integration costs (19) (7) - Woolwich fair value adjustments (16) (6) - Goodwill amortisation (115) (45) (6) Exceptional items (4) 36 178 Profit before tax 1,923 1,654 1,842 Profit attributable to shareholders 1,307 1,153 1,320 Economic profit 722 610 819 BALANCE SHEET Shareholders' funds 14,106 13,187 9,237 Loan capital 7,893 6,370 4,748 Total capital resources 24,009 21,157 14,750 Total assets 363,950 316,190 286,385 Weighted risk assets 154,822 147,040 123,483 PER SHARE p p p Earnings 78.6 74.4 88.9 Earnings (based on operating profit above)* 89.8 81.7 82.3 Dividend 23.0 38.0 20.0 Net asset value 848 794 626 PERFORMANCE RATIO % % % Post-tax return on average shareholders' funds 19.1 21.4 29.6 Post-tax return on average shareholders' funds (based on operating profit above)* 21.6 23.6 27.4 RISK ASSET RATIO % % % Tier 1 7.7 7.2 8.0 Total 12.2 11.0 11.5 GROUP YIELDS, SPREADS & MARGINS % % % Gross yield 6.91 7.14 7.04 Interest spread 2.54 2.59 2.60 Interest margin 2.99 3.05 3.17 EXCHANGE RATES Period end - US$/£ 1.41 1.49 1.51 Average - US$/£ 1.44 1.52 1.57 Period end - Euro / £ 1.66 1.60 1.58 Average - Euro / £ 1.60 1.64 1.64 * Excluding the restructuring charge, goodwill amortisation, Woolwich fair value adjustments and costs directly associated with the integration of Woolwich plc but including the results from joint ventures and associated undertakings. Earnings per share and post-tax return on average shareholders' funds based on this operating profit also exclude exceptional items. BARCLAYS PLC HALF YEAR REVIEW The strategy presented 18 months ago is being executed effectively, and our results are tracking the Group performance goals we set. On a like for like basis our operating profit was up 15% at £2.1bn, driven by increased income of 11% reflecting more activity on behalf of more customers across the Group and by holding cost growth at 6%. That cost growth funded investment in rapidly growing business areas such as Barclays Global Investors and Barclays Capital. At the same time we have continued to bear down on business as usual costs and have now made £388m progress to our target of £ 1.15 billion by the end of 2003. This is reflected in our productivity ratio which has improved from 56% in the first half of 2000 to 53%. These results have been achieved while taking a prudent stance on risk. The trend of growth in personal relative to corporate lending of the past ten years has been accentuated by the Woolwich acquisition. The cumulative effect has been to reduce risk volatility in the Group's loan portfolio. Earnings per share at the operating level rose 9% from 82.3p to 89.8p. The interim dividend is being increased by 15% from 20p to 23p. We are focusing on markets where we have competitive advantage and where we can offer greater value for customers and create more value for shareholders. Less visible externally, but of major importance, the internal transformation of the Group to achieve operational excellence in everything we do, continues at pace. The story of the first half is one of continuing momentum. Commentators express concern about the state of the economy and its effect on banks. Our position remains unchanged; the outlook gives us cause for caution but not alarm. Whatever the outcome, we have achieved our momentum without compromising on our prudent forward looking approach to risk. Highlights of progress during the first half of 2001: - The Woolwich acquisition is proving to be even more valuable than we originally expected, and we are on course to deliver, by end 2003, annual pre-tax synergies of £400 million versus the £240 million we indicated at the time we announced the transaction. - The L&G alliance is still in the early days, but it offers excellent prospects for our customers, and the pace of implementation has been faster than planned. We are now the designated stakeholder pension provider for over 21,000 companies. - We are reinventing our proposition for personal customers to increase convenience, simplicity, value and transparency. - Business Banking continues to build on its high levels of customer satisfaction, providing innovative services and creative use of new technology. - Our wealth management businesses have been integrated into a new unified, integrated global business branded Barclays Private Clients. With over 1 million clients and the strongest brand among the affluent in Europe, it is already one of the leaders in the field. - Barclays Capital extended its activities in the US, Europe and Asia. We are number three in Europe and number eight globally as overall debt arranger. - We are capitalising on the brand, scale and competencies of Barclaycard to extend the product line and drive forward our expansion into Europe. Our strategy is designed to enable us to meet our value goals through organic growth. We have no intention nor, indeed, incentive to pursue consolidation moves that are value destroying. We have good potential for top line revenue growth as well as for further efficiency gains in our existing businesses. While our primary target is organic growth, if a non-organic move demonstrably created value for shareholders and customers, and fitted with our portfolio shape, then we would clearly pursue any such opportunity. Barclays key strengths: - The Barclays brand is well known and respected throughout the world, and is a good passport to new markets. - We have businesses in the US, South America, Asia, Africa and 12 countries in Europe, and have 600 branches outside the UK. - We have a powerful domestic franchise, with one of the most extensive integrated distribution networks anywhere in the world, serving in the UK over 16 million personal customers and some 550,000 business customers. - We have a wide spread of value-creating businesses in both retail and wholesale financial services, insulating us from over-dependence on any single market, customer segment or product set. - In Barclays Capital, Barclaycard, Barclays Private Clients, and BGI, we have businesses of regional and/or global reach that are competitively advantaged and have attractive future growth prospects in Europe and beyond. - We have one of the world's largest and most sophisticated data warehousing and customer information management systems, allowing us to anticipate and meet customer needs and develop offerings tailored to individuals or segments. - We have a superb workforce, giving Barclays and its many customers a quality of energy and intellectual capital across all our businesses that, we believe, is second to none. - Underpinning this is excellence in credit and market risk disciplines that gives us confidence to grow and preserve earnings quality. Barclays is driving forward with the implementation of its growth strategy. We will continue investing heavily in areas with attractive growth prospects, with a particular focus on Europe. We will maintain the pressure on our cost base, giving ourselves thereby the ability to invest and grow. We will maintain the pace of our internal transformation, ensuring the operational rigour and excellence that must underpin all of our objectives. Sir Peter Middleton Matthew W. Barrett Group Chairman Group Chief Executive BARCLAYS PLC KEY FACTS (UNAUDITED) 30.06.01 31.12.00 30.06.00 Number of UK branches 2,120 2,129 1,728 Number of overseas branches 600 624 600 Number of UK Barclays Group ATMs 3,900 3,800 3,200 Employees worldwide 75,800 75,300 70,300 Total customers registered for telephone banking 1.3m 1.2m 1.1m Total customers registered for online banking 2.7m 2.0m 1.1m PERSONAL FINANCIAL SERVICES AND WOOLWICH UK current accounts 9.9m 9.7m 9.4m UK savings accounts 8.6m 8.4m 8.0m Open Plan customers 806,000 544,000 263,000 Total UK mortgage balances £49.3bn £47.5bn £46.1bn BARCLAYS PRIVATE CLIENTS Continental European customers 303,000 313,000 311,000 Total customers funds £94bn £95bn £96bn Stockbrokers - average deal volumes per day 7,000 8,100 8,900 BARCLAYCARD Barclaycard UK customers 8.0m 7.9m 7.8m Customers registered for online services 512,000 388,000 235,000 Retailer relationships 83,000 81,000 81,000 Number of retailer transactions processed 0.6bn 0.7bn 0.5bn Barclaycards issued overseas 1.2m 1.2m 1.1m BUSINESS BANKING Number of Business Banking UK connections - Small business 285,000 287,000 282,000 - Medium business 249,000 251,000 258,000 - Large business 14,000 14,000 14,000 Number of current accounts 762,000 765,000 763,000 Number of Business Premium deposit accounts 252,000 257,000 261,000 Customers registered for online banking/ 252,000 208,000 174,000 BusinessMaster AFRICA Customer numbers 1.5m 1.5m 1.5m BARCLAYS GLOBAL INVESTORS Total assets under management £548bn £550bn £529bn Number of institutional customers 2,400 1,800 1,600 League table 30.06.01 League table 30.06.00 position issuance position issuance value value BARCLAYS CAPITAL Sterling bonds 1st £6.1bn 2nd £3.8bn Syndicated loans (Europe, 1st $18.1bn 1st $35.5bn Middle East, Africa) Syndicated loans (ex USA) 2nd $21.5bn 2nd $38.9bn All syndicated loans 5th $30.2bn 4th $49.0bn All international bonds 10th $44.1bn 11th $25.2bn BARCLAYS PLC SUMMARY OF RESULTS PROFIT BEFORE TAX Half-year ended 30.06.01 31.12.00 30.06.00 £m £m £m Personal Financial Services 263 254 165 Woolwich* 238 128 102 Barclays Private Clients 331 310 339 Barclaycard 275 230 234 Business Banking 608 538 564 Barclays Africa 68 53 57 Barclays Capital 377 266 309 Barclays Global Investors 33 25 34 Other operations (7) 28 (11) Head office functions (46) (30) (17) Operating profit 2,140 1,802 1,776 Restructuring charge (63) (126) (106) Woolwich integration costs (19) (7) - Woolwich fair value adjustments (16) (6) - Goodwill amortisation (115) (45) (6) Exceptional items (4) 36 178 1,923 1,654 1,842 * Comprises the contribution from Woolwich plc since the acquisition on 25th October 2000 and the Barclays mortgage business. TOTAL ASSETS AND WEIGHTED RISK ASSETS Total assets Weighted risk assets 30.06.01 31.12.00 30.6.00 30.06.01 31.12.00 30.06.00 £m £m £m £m £m £m Personal Financial 6,934 6,562 6,304 5,906 5,598 5,530 Services Woolwich 55,962 55,243 18,693 29,397 28,620 9,640 Barclays Private 13,266 13,352 12,735 8,666 8,390 7,730 Clients Barclaycard 9,496 9,805 8,882 9,320 9,623 8,883 Business Banking 44,932 41,364 40,011 45,531 44,017 41,891 Barclays Africa 2,656 2,291 2,345 1,859 1,661 1,602 Barclays Capital 211,547 168,894 182,619 51,237 45,946 45,222 Barclays Global 263 259 255 535 653 653 Investors Other operations 6,301 5,440 6,339 2,371 2,532 2,332 and Head office functions Goodwill 4,198 4,269 188 - - - Retail life-fund assets 8,395 8,711 8,014 - - - 363,950 316,190 286,385 154,822 147,040 123,483 BARCLAYS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED) Half-year ended 30.06.01 31.12.00 30.06.00 £m £m £m Interest receivable 6,940 6,297 5,491 Interest payable (3,936) (3,613) (3,022) Profit on repurchase of loan capital - - 2 Net interest income 3,004 2,684 2,471 Net fees and commissions receivable 1,786 1,767 1,602 Dealing profits 570 262 415 Other operating income 218 199 198 Total non-interest income 2,574 2,228 2,215 Operating income 5,578 4,912 4,686 Administration expenses - staff costs (1,793) (1,613) (1,606) Administration expenses - other (1,088) (1,065) (902) Depreciation and amortisation (264) (177) (129) Operating expenses (3,145) (2,855) (2,637) Operating profit before provisions 2,433 2,057 2,049 Provisions for bad and doubtful debts (498) (441) (376) Provisions for contingent liabilities and commitments (2) - 1 Operating profit 1,933 1,616 1,674 (Loss) / income from joint ventures and associated undertakings (6) 2 (10) Exceptional items (4) 36 178 Profit on ordinary activities before tax 1,923 1,654 1,842 Tax on profit on ordinary activities (548) (456) (488) Profit on ordinary activities after tax 1,375 1,198 1,354 Minority and other interests (equity and non-equity) (68) (45) (34) Profit for the financial year attributable to the members of Barclays PLC 1,307 1,153 1,320 Dividends (383) (632) (295) Profits retained for the period 924 521 1,025 Earnings per ordinary share 78.6p 74.4p 88.9p Earnings per ordinary share before restructuring charge, goodwill amortisation, fair value adjustments, integration costs and exceptional items 89.8p 81.7p 82.3p Dividend per ordinary share: First interim (payable 1st October 2001) 23.0p - 20.0p Second interim - 38.0p - BARCLAYS PLC FURTHER ANALYSIS OF PROFIT AND LOSS ACCOUNT FOR THE HALF YEAR 30TH JUNE 2001(UNAUDITED) Half year ended 30.6.01 31.12.00 30.6.00 £m £m £m Interest receivable 6,968 6,308 5,491 Interest payable (3,944) (3,617) (3,022) Profit on repurchase of loan capital - - 2 Net interest income 3,024 2,691 2,471 Net fees and commissions receivable 1,786 1,767 1,602 Dealing profits 570 262 415 Other operating income 218 199 198 Total non-interest income 2,574 2,228 2,215 Operating income 5,598 4,919 4,686 Administration expenses - staff costs (1,738) (1,533) (1,514) Administration expenses - other (1,062) (1,012) (888) Depreciation and amortisation (152) (133) (123) Operating expenses (2,952) (2,678) (2,525) 2,646 2,241 2,161 Provisions for bad and doubtful debts (498) (441) (376) Provisions for contingent liabilities and (2) - 1 commitments (Loss)/income from joint ventures and associated undertakings (6) 2 (10) Operating profit* 2,140 1,802 1,776 Restructuring charge (63) (126) (106) Woolwich integration costs (19) (7) - Woolwich fair value adjustments** (16) (6) - Goodwill amortisation (115) (45) (6) Exceptional items (4) 36 178 Profit on ordinary activities before tax 1,923 1,654 1,842 * The operating profit shown on page 8 includes the restructuring charge, goodwill amortisation, Woolwich fair value adjustments and costs directly associated with the integration of Woolwich plc but excludes (loss)/income from joint ventures and associated undertakings. ** Woolwich plc fair value adjustment represents £20m net interest charge and £4m of credit to operating expenses. BARCLAYS PLC CONSOLIDATED BALANCE SHEET (UNAUDITED) 30.06.01 31.12.00 30.06.00 Assets: £m £m £m Cash and balances at central banks 1,048 1,243 588 Items in course of collection from other banks 2,935 2,509 2,660 Treasury bills and other eligible bills 7,795 5,564 9,584 Loans and advances to banks - banking 12,149 9,570 9,678 - trading 38,207 26,856 30,607 50,356 36,426 40,285 Loans and advances to customers - banking 141,999 138,423 99,893 - trading 37,268 23,687 34,547 179,267 162,110 134,440 Debt securities 81,524 70,770 61,380 Equity shares 6,739 4,062 9,947 Interests in associated undertakings and joint 91 122 97 ventures Intangible fixed assets - goodwill 4,198 4,269 188 Tangible fixed assets 2,022 2,059 1,731 Other assets 19,580 18,345 17,471 355,555 307,479 278,371 Retail life-fund assets attributable to policyholders 8,395 8,711 8,014 Total assets 363,950 316,190 286,385 Liabilities: Deposits by banks - banking 38,838 32,445 39,624 - trading 29,252 17,311 19,908 68,090 49,756 59,532 Customer accounts - banking 141,258 140,352 112,464 - trading 30,182 18,616 27,875 171,440 158,968 140,339 Debt securities in issue 41,299 31,883 18,388 Items in course of collection due to other banks 1,350 1,176 1,252 Other liabilities 49,367 44,539 44,110 Undated loan capital - convertible to preference 356 335 330 shares Undated loan capital - non-convertible 2,866 2,337 1,475 Dated loan capital - non-convertible 4,671 3,698 2,943 339,439 292,692 268,369 Minority interests and shareholders' funds: Minority interests: equity 104 108 86 Minority and other interests: non-equity 1,906 1,492 679 Called up share capital 1,664 1,662 1,477 Reserves 12,442 11,525 7,760 Shareholders' funds: equity 14,106 13,187 9,237 16,116 14,787 10,002 355,555 307,479 278,371 Retail life-fund liabilities attributable to 8,395 8,711 8,014 policyholders Total liabilities and shareholders' funds 363,950 316,190 286,385 MORE TO FOLLOW

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