Interim Results - Part 2
Barclays PLC
05 August 2005
PART 2
BARCLAYS PLC
ADDITIONAL INFORMATION
Basis of preparation
The Group will adopt the requirements of International Financial Reporting
Standards and International Accounting Standards (collectively IFRS) for the
first time for the purpose of preparing financial statements for the year
ending 31st December 2005.
The Group issued an IFRS Transition Report on 11th May 2005 ('the Transition
Report') that set out the restated 2004 comparatives and 2005 opening
balance sheet and also provided the reconciliations required by IFRS and the
provisional accounting policies expected to be applied in the preparation of
the 2005 financial statements.
As explained in the Transition Report, the next annual financial statements
of the Group will be prepared in accordance with accounting standards issued
by the International Accounting Standards Board and adopted by the European
Union. The financial information in this Interim Results Announcement has
been prepared in accordance with the basis of preparation and provisional
accounting policies included in the Transition Report ('Basis of
Preparation') except for the use of the fair value option as explained
below.
The accounting policies are consistent with those the Group intends to use
in the next annual financial statements. As explained in the Basis of
Preparation contained within the Transition Report there is, however, a
possibility that some changes may be necessary when preparing the full
annual financial statements for the first time in accordance with accounting
standards issued by the International Accounting Standards Board and adopted
by the European Union. The accounting standards and International Financial
Reporting Interpretations Committee (IFRIC) interpretations that will be
applicable, and adopted for use in the European Union at 31st December 2005,
are not known with certainty at the time of preparing this financial
information.
The fair value option
At present, the EU endorsed version of IAS 39 'Financial Instruments:
Recognition and Measurement' does not permit non-trading financial
liabilities to be designated at fair value through profit or loss. However,
it is expected that the recent amendments to IAS 39 will result in the EU
endorsing a revised version of the standard that will permit designations
for both financial assets and liabilities in certain circumstances ('the
fair value option'). The relevant transitional arrangements are expected to
permit designations in accordance with the fair value option to be made as
at 1st January 2005 for companies adopting IFRS from that date. The 2005
interim financial information has been prepared on the basis that the fair
value option has been used in the following circumstances:
a) Financial assets backing insurance contracts and financial assets
backing investment contracts are designated at fair value through profit or
loss because the related liabilities have cash flows that are contractually
based on the performance of the assets or the related liabilities are
insurance contracts whose measurement incorporates current information. Fair
valuing the assets significantly reduces the recognition inconsistencies
that would arise if the financial assets were classified as available for
sale.
b) Financial assets, loans to customers, financial liabilities and
structured notes are designated at fair value through profit or loss where
they contain substantive embedded derivatives or where doing so
significantly reduces measurement inconsistencies that would arise if the
related economic hedging derivatives were treated as held for trading and
the underlying financial instruments were carried at amortised cost.
BARCLAYS PLC
ADDITIONAL INFORMATION
Restatement of 1st January 2005 reconciliation as at 01.01.05 as previously
published for use of the fair value option
The reconciliations for 1st January 2005 and the 2005 opening balance sheet
information provided in the Transition Report have been restated as follows:
As at
01.01.05
As Restatement as
previously for fair value per revised
published option reconciliation
Assets £m £m £m
Cash and balances at central 3,238 - 3,238
banks
Items in the course of
collection from other banks 1,772 - 1,772
Trading portfolio assets 113,241 (3,208) 110,033
Financial assets designated at
fair value:
- held on own account 2,367 7,432 9,799
- held in respect of linked
liabilities to customers under
investment contracts 63,124 - 63,124
Derivative financial 94,340 (129) 94,211
instruments
Loans and advances to banks 25,728 - 25,728
Loans and advances to customers 210,959 (3,700) 207,259
Available for sale financial
investments 48,491 (394) 48,097
Reverse repurchase agreements
and cash collateral on
securities borrowed 139,574 - 139,574
Other assets 3,639 8 3,647
Insurance assets, including
unit-linked assets 109 - 109
Investments in associates and
joint ventures 429 - 429
Goodwill 4,518 - 4,518
Intangible assets 139 - 139
Property, plant and equipment 2,282 - 2,282
Prepayments and accrued income - - -
Deferred tax assets 1,642 (1) 1,641
--------- --------- ---------
Total assets 715,592 8 715,600
--------- --------- ---------
BARCLAYS PLC
ADDITIONAL INFORMATION
Restatement of 1st January 2005 reconciliation as at 01.01.05 as previously
published for use of the fair value option
As at
As Restatement 01.01.05 as
previously for fair value per revised
published option reconciliation
Liabilities £m £m £m
Deposits from banks 74,735 - 74,735
Items in the course of
collection due to other
banks 1,205 - 1,205
Customer accounts 194,488 (10) 194,478
Trading portfolio liabilities 59,114 - 59,114
Financial liabilities designated
at fair value - held on own
account - 5,320 5,320
Liabilities to customers under
investment contracts 64,609 - 64,609
Derivative financial
instruments 95,218 (789) 94,429
Debt securities in issue 80,754 (4,600) 76,154
Repurchase agreements and cash
collateral on securities lent 98,582 - 98,582
Other liabilities 9,859 10 9,869
Accruals and deferred income - - -
Current tax liabilities 621 - 621
Insurance contract liabilities
including unit-linked
liabilities 3,596 - 3,596
Subordinated liabilities:
- Undated loan capital- non
convertible 4,208 - 4,208
- Dated loan
capital-convertible
to preference shares 15 - 15
- Dated loan capital- non
convertible 6,383 - 6,383
Deferred tax liabilities 1,365 32 1,397
Other provisions for 403 - 403
liabilities
Retirement benefit liabilities 1,865 - 1,865
--------- --------- ---------
Total liabilities 697,020 (37) 696,983
--------- --------- ---------
Shareholders' equity
Called up share capital 1,614 - 1,614
Share premium account 5,524 - 5,524
Less: Treasury shares (119) - (119)
Available for sale reserve 314 - 314
Revaluation reserve - - -
Cashflow hedging reserve 302 - 302
Capital redemption reserve 309 - 309
Other capital reserve 617 - 617
Translation reserve (58) - (58)
Retained earnings 6,739 45 6,784
--------- --------- ---------
Shareholders' equity
excluding minority interests 15,242 45 15,287
Minority interests 3,330 - 3,330
--------- --------- ---------
Total shareholders' equity 18,572 45 18,617
--------- --------- ---------
Total liabilities and
shareholders' equity 715,592 8 715,600
--------- --------- ---------
BARCLAYS PLC
ADDITIONAL INFORMATION
Group structure changes from 2004
The presentation of results by business differs from that provided in 2004
in the following respects:
• International Retail and Commercial Banking and Wealth Management
(formerly called Private Clients) are reported as completely separate
business divisions and not aggregated, reflecting changes in management
accountability.
• The results for the Wealth Management - closed life assurance activities
are provided separately from those for the rest of Wealth Management. The
introduction of IFRS requires that the results of the closed life
assurance activities are recorded on a line by line basis rather than the
previous single line presentation. In order that the presentation of the
underlying financial performance of Wealth Management is not distorted, it
is considered appropriate to report the closed life assurance activity
separately.
• The 2004 results of Barclaycard and UK Retail Banking have been restated
to reflect the 2005 change in allocation of branch network costs and
insurance sales between the two divisions. This had the impact of
increasing Barclaycard profit before tax by £59m and reducing UK Banking
profit before tax by the same amount.
• In order to comply with segmental reporting under IFRS, a new Income
Statement has been prepared for 'Head office functions and other
operations'. This information was previously reported in an abbreviated
format.
Acquisitions and disposals
On 1st June 2005, Barclays Asset and Sales Finance ('BASF') acquired a 51%
share and controlling stake in Fiat's Iveco Vehicle Finance Business. The
transaction will expand BASF's commercial vehicle expertise across Europe.
On 30th June 2005, EnterCard, the joint venture between Barclays Bank PLC
and ForeningsSparbanken (also know as Swedbank), which was announced on 4th
February 2005, began operations. Barclays Bank PLC has a 50% economic
interest in the joint venture. EnterCard will provide credit cards in the
Nordic market, initially in Sweden and Norway.
BARCLAYS PLC
ADDITIONAL INFORMATION
Change in accounting estimate
The Group has undertaken a review of the actual useful economic lives of
property, plant and equipment. As a result of this review, the assumed
useful economic lives of the costs of adaptation of freehold and leasehold
property and equipment installed in freehold and leasehold property have
increased from 10 to a range of 10-15 years. The useful economic lives of
fixtures and fittings and other equipment have increased from 5 to a range
of 5-10 years. This change in accounting estimate better reflects historical
experience and has been applied prospectively from 1st January 2005. This
has reduced the depreciation charge for the period to 30th June 2005 by
£15m.
Hedge accounting
The element of ineffectiveness arising on hedges that qualify for hedge
accounting is included in net interest income.
Share capital
The Group manages both its debt and equity capital actively. The Group's
authority to buy back ordinary shares was renewed at the 2005 Annual General
Meeting.
Group share schemes
The independent trustees of the Group's share schemes may make purchases of
Barclays PLC ordinary shares in the market at any time or times following
this announcement of the Group's results for the purposes of those schemes'
current and future requirements. The total number of ordinary shares
purchased would not be material in relation to the issued share capital of
Barclays PLC.
Filings with the SEC
The results will be furnished as a Form 6-K to the US Securities and
Exchange Commission as soon as practicable following the publication of
these results.
Other information
The interim report for the six months to 30th June 2005, including extracts
from this announcement and the independent review report by the auditors,
will be advertised in The Daily Telegraph and the Daily Mail on 6th August
2005. Copies will be available to the public at Barclays registered office
and at its website www.investorrelations.barclays.co.uk.
BARCLAYS PLC
ADDITIONAL INFORMATION
Recent developments
On 9th May, 2005, Barclays announced the terms of an intended recommended
acquisition of a majority stake of up to 60% in Absa Group Limited ('Absa').
The acquisition comprised a scheme of arrangement and a partial offer to
shareholders, which were interconditional. The Board of Directors of Absa
voted unanimously to recommend the acquisition to shareholders. The South
African Minister of Finance approved Barclays application to acquire a
majority stake in Absa, and the acquisition has been endorsed by Absa's
black economic empowerment partner.
The Absa transaction closed on 27th July 2005. At closing, Barclays owned
53.96% of Absa. On 1st August 2005, Barclays acquired a further 14.5 million
shares in Absa taking its ordinary shareholding to 56.1%, which affords
Barclays voting control. The aggregate consideration for the investment in
Absa was R31,087m (approximately £2.6 billion at an exchange rate of 11.96
as at 30th June 2005).
Naguib Kheraj and David Roberts joined the Boards of Absa and Absa Bank Ltd
as non-executive Directors on 27th July 2005. Dominic Bruynseels, Chief
Executive Officer of Barclays Africa and Middle East, joined the Absa Boards
on 27th July 2005, as an executive Director. Dr Danie Cronje, the Chairman
of Absa, will join the Boards of Barclays PLC and Barclays Bank PLC as a
non-executive Director on 1st September 2005.
The Absa transaction was financed from a combination of available resources
and preference share finance. For Absa's financial year-ended 31st March
2005, Absa reported an increase of 23% in profit before tax to R7,633m
(year-ended 31st March 2004: R6,223m) and net assets as at the year-end of
R23,737m.
On 11th July 2005 Barclays announced that it had acquired the wealth
business of ING Securities Bank (France), consisting of ING Ferri and ING
Private Banking on 1st July 2005. At 31st December 2004, the combined
business of ING Ferri and ING Private Banking had net assets of
approximately €10million and assets under management of approximately €2.7
billion.
The Office of Fair Trading (OFT) has been investigating the level of default
charges applied by the credit card industry since October 2003. These are
fees charged when a customer pays late or goes over their credit limit.
Barclaycard, along with other credit card issuers, has been cooperating with
the investigation. The OFT issued a press release on 26th July 2005 stating
that their provisional conclusion was that these fees are excessive and need
to be reduced to be fair. The OFT have given Barclaycard, and seven other
credit card companies, three months to provide suitable undertakings
regarding the basis of future default charges or otherwise to address the
concerns of the OFT. Barclays is considering the impact of the provisional
finding on the credit card industry and Barclaycard, including steps to
mitigate any financial impact for shareholders. Barclays will continue to
work with the OFT to address its concerns over the next three months.
BARCLAYS PLC
NOTES (UNAUDITED)
1. Assets held in respect of linked liabilities to customers under
investment contracts/liabilities arising from investment contracts
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Non-trading financial
instruments fair
valued through profit and
loss
- held in respect of
linked liabilities 69,792 63,124
Cash and bank balances
within the funds 1,816 1,485
-------- --------
71,608 64,609
-------- --------
Liabilities to customers
under investment
contracts 71,608 64,609
-------- --------
This comprises assets under management held on behalf of clients, required
to be recognised on the balance sheet under IAS 39.
2. Derivative financial instruments
The tables set out below analyse the contract or underlying principal and
the fair value of derivative financial instruments held for trading purposes
and for the purposes of managing the Group's structural exposures.
Derivatives are measured at fair value and the resultant profits and losses
from derivatives held for trading purposes are included in net trading
income. Where derivatives are held for risk management purposes and when
transactions meet the criteria specified in IAS 39, the Group applies hedge
accounting as appropriate to the risks being hedged.
As at 30.06.05
Contract Fair value
amount Assets (Liabilities)
Derivatives designated as held for £m £m £m
trading
Foreign exchange derivatives 1,031,529 17,912 (17,174)
Interest rate derivatives 13,362,136 93,435 (91,197)
Credit derivatives 398,126 3,110 (2,897)
Equity and stock index and commodity
derivatives 376,436 18,492 (20,815)
---------- -------- --------
Total derivative assets/
(liabilities) held for trading 15,168,227 132,949 (132,083)
Derivatives designated in hedge
accounting relationships
Derivatives designated as cash flow
hedges 22,839 283 (300)
Derivatives designated as fair value
hedges 38,857 694 (401)
Derivatives designated as hedges of
net investments 313 6 -
---------- -------- --------
Total derivative assets/
(liabilities) held for 62,009 983 (701)
risk management ---------- -------- --------
Total recognised derivative
assets/(liabilities) 15,230,236 133,932 (132,784)
---------- -------- --------
Total derivative notionals at 30th June 2005 have grown from 1st January
2005 due to significant increase in throughput of fixed income derivatives.
This reflects the larger client base and clients increased use of Barclays'
electronic trading platforms in Europe and the US.
BARCLAYS PLC
2. Derivative financial instruments (continued)
The Group's total derivative asset and liability position as presented on
the balance sheet is as follows:
As at 30.06.05
Contract Fair value
Amount Assets (Liabilities)
£m £m £m
Derivative assets/(liabilities)
designated as held for trading 15,168,227 132,949 (132,083)
Derivative assets/(liabilities)
designated in hedge accounting
relationships 62,009 983 (701)
---------- -------- --------
Total recognised derivative
assets/(liabilities) 15,230,236 133,932 (132,784)
---------- -------- --------
As at 01.01.05
Contract Fair value
Amount Assets (Liabilities)
£m £m £m
Derivative assets/(liabilities)
designated as held for trading 12,381,890 92,490 (93,217)
Derivative assets/(liabilities)
designated in hedge accounting
relationships 89,894 1,721 (1,212)
---------- -------- --------
Total recognised derivative
assets/(liabilities) 12,471,784 94,211 (94,429)
---------- -------- --------
BARCLAYS PLC
3. Loans and advances to banks
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
By geographical area
United Kingdom 6,026 5,813 3,949 4,877
Other European Union 11,992 4,274 1,813 5,547
United States 9,180 8,459 7,668 6,067
Rest of the World 8,039 7,206 6,150 7,041
-------- -------- -------- --------
Total non-trading 35,237 25,752 19,580 23,532
Reverse repurchase
agreements1 61,075 59,510
Less: Allowance for
impairment/provision (12) (24) (23) (8)
-------- -------- -------- --------
35,225 25,728 80,632 83,034
-------- -------- -------- --------
The geographic presentation is based on the location of the customer. In
previous publications, the geographic presentation was based on the location
of the office recording the transaction.
Of the total loans and advances to banks, placings with banks were £21.1bn
at 30th June 2005 (31st December 2004: £66.7bn; 30th June 2004: £71.2bn).
Placings with banks have decreased primarily due to the reclassification of
reverse repurchase agreements, in accordance with IAS 39.
1 Reverse repurchase agreements are now disclosed separately on the face of
the balance sheet.
BARCLAYS PLC
4. Loans and advances to customers
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Retail business 109,566 108,506 106,296 100,307
Wholesale business 130,385 101,366 100,497 99,298
-------- -------- -------- --------
Total non-trading 239,951 209,872 206,793 199,605
Reverse repurchase
agreements1 58,304 55,291
Less: Allowances for
impairment/provisions (2,828) (2,613) (2,688) (2,843)
-------- -------- -------- --------
Total loans and advances 237,123 207,259 262,409 252,053
-------- -------- -------- --------
By geographical area
United Kingdom 165,382 148,197 146,248 144,827
Other European Union 35,479 26,350 26,210 24,863
United States 22,588 21,813 20,982 18,062
Rest of the World 16,502 13,512 13,353 11,853
-------- -------- -------- --------
Total non-trading 239,951 209,872 206,793 199,605
Reverse repurchase
agreements1 58,304 55,291
Less: Allowance for
impairment/provisions (2,828) (2,613) (2,688) (2,843)
-------- -------- -------- --------
237,123 207,259 262,409 252,053
-------- -------- -------- --------
By industry
Financial institutions 44,791 36,865 29,148 33,377
Agriculture, forestry and
fishing 2,426 2,247 2,243 2,306
Manufacturing 12,717 9,477 8,422 8,368
Construction 4,478 3,637 3,389 2,697
Property 7,797 5,747 8,577 9,426
Energy and water 4,976 3,194 2,534 3,217
Wholesale and retail
distribution and leisure 13,844 11,897 10,928 10,050
Transport 5,169 3,812 3,461 3,671
Postal and communication 1,164 828 678 581
Business and other
services 28,721 20,924 19,004 15,751
Home loans2 75,435 78,030 77,673 73,284
Other personal 30,287 27,400 25,952 24,167
Overseas customers3 8,973 6,893
Finance lease receivables 8,146 5,814 5,811 5,817
-------- -------- -------- --------
Non-trading 239,951 209,872 206,793 199,605
Reverse repurchase
agreements2 58,304 55,291
Less: Allowance for
impairment/provisions (2,828) (2,613) (2,688) (2,843)
-------- -------- -------- --------
Total loans and advances
to customers 237,123 207,259 262,409 252,053
-------- -------- -------- --------
The geographic presentation of loans and advances is based on the location
of the customer. In previous publications, it was based on the location of
the office recording the transaction.
1 Reverse repurchase agreements are now disclosed separately on the face of
the balance sheet.
2 Excludes commercial property mortgages.
3 Overseas customers are now classified as part of other industry segments.
BARCLAYS PLC
4. Loans and advances to customers (continued)
In 2005, total loans and advances have decreased primarily due to the
reclassification of reverse repurchase agreements, in accordance with IAS
39.
The industry classifications have been prepared at the level of the
borrowing entity. This means that a loan to the subsidiary of a major
corporation is classified by the industry in which that subsidiary operates
even though the parent's predominant business may be a different industry.
BARCLAYS PLC
5. Allowance for impairment on loans and advances/provisions for bad and
doubtful debts
Half-year ended
30.06.05 31.12.04 30.06.04
£m £m £m
At beginning of period1 2,637 2,851 2,946
Acquisitions and disposals 23 21 -
Exchange and other adjustments 33 (8) (25)
Amounts written off (see below) (664) (813) (769)
Recoveries (see below) 98 140 115
Amounts charged against profit (see
below) 713 520 584
-------- -------- --------
At end of period 2,840 2,711 2,851
-------- -------- --------
Amounts written off
United Kingdom (620) (692) (588)
Other European Union (16) (36) (27)
United States (24) (30) (20)
Rest of the World (4) (55) (134)
-------- -------- --------
(664) (813) (769)
-------- -------- --------
Recoveries
United Kingdom 65 121 96
Other European Union 4 - 9
United States 6 8 6
Rest of the World 23 11 4
-------- -------- --------
98 140 115
-------- -------- --------
Impairment/provisions charged against
profit:
New and increased impairment allowances
/provisions
United Kingdom 827 780 578
Other European Union 45 84 47
United States 37 35 50
Rest of the World 36 28 153
-------- -------- --------
945 927 828
-------- -------- --------
Less: Releases of impairment allowance/
provision
United Kingdom (97) (98) (22)
Other European Union (10) (6) (14)
United States (23) (10) (4)
Rest of the World (4) (23) (13)
-------- -------- --------
(134) (137) (53)
-------- -------- --------
Recoveries (98) (140) (115)
-------- -------- --------
Impairment charged against profit/Net
specific
provisions charge 713 650 660
General provision (release)/charge (130) (76)
-------- -------- --------
Net charge to profit2 713 520 584
-------- -------- --------
1 Due to the adoption of IAS 32 and IAS 39 on 1st January 2005 and the
consequent restatement of the impairment allowance, the period end value
at 31st December 2004 does not correspond to the opening value at the
beginning of 2005.
2 This excludes other credit provisions detailed on page 43.
BARCLAYS PLC
5. Allowance for impairment on loans and advances/provisions for bad and
doubtful debts (continued)
As at
30.06.05 31.12.04 30.06.04
Allowance/specific provisions £m £m £m
United Kingdom 2,174 1,683 1,700
Other European Union 282 149 99
United States 149 155 125
Rest of the World 235 160 214
-------- -------- --------
Total allowance/specific provisions 2,840 2,147 2,138
General provisions 564 713
-------- -------- --------
2,840 2,711 2,851
-------- -------- --------
The geographic analysis of provisions shown above is based on the location
of the customer.
A reconciliation of UK GAAP provisions to IFRS impairment allowances is as
follows:
£m
UK GAAP provision as at 31st December 2004 2,711
IFRS interest and fees not recognised (157)
UK GAAP interest in suspense as at 31st December 2004 40
UK GAAP fees in suspense as at 31st December 2004 19
Additional impairment allowances resulting from the application of
revised calculation methodologies at 1st January 2005 24
--------
IFRS impairment allowances as at 1st January 2005 2,637
--------
BARCLAYS PLC
6. Potential credit risk loans
The following tables present an analysis of potential credit risk loans
(non-performing and potential problem loans).
As at
30.06.05 01.01.05 31.12.04 30.06.04
Potential credit risk £m £m £m £m
loans
Summary
Non-accrual loans 2,104 2,052 2,115 2,235
Accruing loans where
there is an expectation
of ultimate write-off
(either partial or full) 1,631 1,484 1,435 1,468
Accruing loans 90 days
overdue, against which no
allowances have been made 613 538 550 610
-------- -------- -------- --------
4,348 4,074 4,100 4,313
Reduced rate loans 23 15 15 10
-------- -------- -------- --------
Total non-performing
loans 4,371 4,089 4,115 4,323
Potential problem loans 731 795 798 884
-------- -------- -------- --------
Total potential credit
risk loans 5,102 4,884 4,913 5,207
-------- -------- -------- --------
Geographical split
Non-accrual loans:
United Kingdom 1,585 1,449 1,509 1,630
Other European Union 140 240 243 135
United States 210 258 258 290
Rest of the World 169 105 105 180
-------- -------- -------- --------
Total 2,104 2,052 2,115 2,235
-------- -------- -------- --------
Accruing loans where there
is an expectation of
ultimate write-off (either
partial or full)
United Kingdom 1,285 1,231 1,188 1,193
Other European Union 165 68 58 91
United States 27 26 26 -
Rest of the World 154 159 163 184
-------- -------- -------- --------
Total 1,631 1,484 1,435 1,468
-------- -------- -------- --------
Accruing loans 90 days
overdue, against which no
allowances have been
made
United Kingdom 576 501 513 583
Other European Union 31 34 34 27
United States 1 1 1 -
Rest of the World 5 2 2 -
-------- -------- -------- --------
Total 613 538 550 610
-------- -------- -------- --------
BARCLAYS PLC
6. Potential credit risk loans (continued)
Half-year ended
30.06.05 01.01.05 31.12.04 30.06.04
Reduced rate loans: £m £m £m £m
United Kingdom - 2 2 10
Other European Union 7 - - -
United States 16 13 13 -
Rest of the World - - - -
-------- -------- -------- --------
Total 23 15 15 10
-------- -------- -------- --------
Total non-performing
loans:
United Kingdom 3,446 3,183 3,212 3,416
Other European Union 343 342 335 253
United States 254 298 298 290
Rest of the World 328 266 270 364
-------- -------- -------- --------
Total 4,371 4,089 4,115 4,323
-------- -------- -------- --------
Potential problem loans:
United Kingdom 561 655 658 588
Other European Union 58 32 32 26
United States 43 27 27 191
Rest of the World 69 81 81 79
-------- -------- -------- --------
Total 731 795 798 884
-------- -------- -------- --------
Total potential credit
risk loans:
United Kingdom 4,007 3,838 3,870 4,004
Other European Union 401 374 367 279
United States 297 325 325 481
Rest of the World 397 347 351 443
-------- -------- -------- --------
Total 5,102 4,884 4,913 5,207
-------- -------- -------- --------
Allowance coverage of % % % %
non-performing loans1:
United Kingdom 63.1 64.2 68.1 68.5
Other European Union 82.2 69.9 60.9 66.0
United States 58.7 53.7 57.0 49.3
Rest of the World 71.6 73.7 70.4 67.9
-------- -------- -------- --------
Total 65.0 64.5 66.9 67.0
-------- -------- -------- --------
Allowance coverage of % % % %
total potential credit
risk loans1:
United Kingdom 54.3 53.2 56.5 58.4
Other European Union 70.3 63.9 55.6 59.9
United States 50.2 49.2 52.3 29.7
Rest of the World 59.2 56.5 54.1 55.8
-------- -------- -------- --------
Total 55.7 54.0 56.0 55.6
-------- -------- -------- --------
1 In 2004, the geographical coverage ratios include an allocation of general
provisions.
BARCLAYS PLC
6. Potential credit risk loans (continued)
Since 1st January 2005, non-performing loans (NPLs) have increased 7% to
£4,371m (1st January 2005: £4,089m). The increase occurred in the retail
businesses with wholesale and corporate NPLs remaining flat. Potential
problem loans (PPLs) decreased 8% from the beginning of the year to £731m
(1st January 2005: £795m). Retail PPLs increased but this was more than
offset by the decline in the level of wholesale and corporate PPLs. The
increase in the Potential Credit Risk Loans (PCRLs) occurred mainly in the
UK.
The value of PCRLs at 31st December 2004 was restated for the adoption of
IFRS on 1st January 2005. This restatement has not been applied to the
numbers for 30th June 2004 and, as a consequence, these numbers are not
comparable with the current values. In addition, due to improved modelling,
PCRLs in the mortgage business have been restated. The restatement has been
applied to the prior periods shown, causing increases of £226m at 30th June
2004 and £172m at 31st December 2004 and at 1st January 2005. This
restatement does not reflect changes in credit quality but arises from the
extension of Group methodology to the mortgage portfolios which were
previously estimated on a different basis.
Coverage of NPLs by the stock of impairment allowances increased to 65.0%
(1st January 2005: 64.5%). Coverage of PCRLs rose to 55.7% (1st January
2005: 54.0%).
7. Available for sale financial investments
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Debt securities 59,227 46,059
Equity securities 848 675
Treasury bills 1,065 1,143
Other eligible bills 3 220
-------- -------- -------- --------
61,143 48,097 - -
-------- -------- -------- --------
As at 1st January 2005, financial instruments have been classified and
measured in accordance with IAS 39. In general, investment securities held
under UK GAAP have been classified as available for sale under IFRS.
BARCLAYS PLC
8. Other assets
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Sundry debtors 2,789 3,042 3,711 3,629
Prepayments 530 415 467 410
Balances arising from
off-balance sheet
instruments 18,174 14,000
Accrued income 172 190 3,563 3,305
-------- -------- -------- --------
3,491 3,647 25,915 21,344
-------- -------- -------- --------
As at 1st January 2005, balances arising from off-balance sheet instruments
were reclassified to derivative financial instruments.
Also from 1st January 2005, accrued income no longer includes accrued
interest, which is included in the loan balances as part of the effective
interest rate calculation.
9. Insurance assets, including unit-linked assets
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Reinsurer's share of
provisions 107 109 109 105
Assets held to cover
linked liabilities 5,870 5,836
Assets held to cover
non-linked liabilities 2,597 2,224
-------- -------- -------- --------
107 109 8,576 8,165
-------- -------- -------- --------
In 2005, investment and insurance contracts are separately accounting for in
accordance with IAS 39 and IFRS 4. At 1st January 2005, this has resulted in
the majority of the assets within the life assurance businesses being
classified as financial assets designated at fair value. These assets are
held both in respect of linked liabilities to customers under investment
contracts and also held on own account. In 2004, assets held to cover linked
liabilities and provision for linked liabilities were aggregated and
reported as insurance assets and insurance contract liabilities.
10. Insurance contract liabilities, including unit-linked liabilities
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Long term business
provision:
- Provision for linked
liabilities 1,434 1,460 5,821 5,722
- Provision for non-unit
linked liabilities 2,098 2,100 2,520 2,186
Provision for claims
outstanding 57 36 36 36
-------- -------- -------- --------
3,589 3,596 8,377 7,944
-------- -------- -------- --------
In 2005, investment and insurance contracts are separately accounted for in
accordance with IAS 39 and IFRS 4. In 2004, assets held to cover linked
liabilities and provision for linked liabilities were aggregated and
reported as insurance assets and insurance contract liabilities.
BARCLAYS PLC
11. Other liabilities
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Obligations under finance
leases payable 338 353 353 352
Balances arising from
off-balance sheet
financial instruments 18,009 12,829
Sundry creditors 5,477 5,021 3,851 3,531
Accruals and deferred
income 3,834 4,495 6,820 5,396
Short positions in
securities 53,903 57,438
-------- -------- -------- --------
9,649 9,869 82,936 79,546
-------- -------- -------- --------
As at 1st January 2005, balances arising from off-balance sheet instruments
were reclassified to derivative financial instruments and short positions in
securities to trading portfolio liabilities.
Also from 1st January 2005, accruals and deferred income no longer includes
accrued interest, which is included in customer balances as part of the
amortised cost.
12. Other provisions for liabilities
As at
30.06.05 01.01.05 31.12.04 30.06.04
£m £m £m £m
Customer loyalty
provisions 12 15
Redundancy and
restructuring 70 97 97 34
Undrawn contractually
committed facilities and
guarantees 48 55 55 85
Onerous contracts 42 39 39 13
Sundry provisions 226 212 213 182
-------- -------- -------- --------
386 403 416 329
-------- -------- -------- --------
As at 1st January 2005, the customer loyalty provision has been reclassified
to other liabilities.
BARCLAYS PLC
13. Legal proceedings
Proceedings have been brought in the United States against a number of
defendants, including Barclays, following the collapse of Enron. In each
case the claims are against groups of defendants. Barclays considers that
the claims against it are without merit and is defending them vigorously. A
court ordered mediation commenced in September 2003 but no material progress
has been made towards a resolution of the litigation. In addition, in
respect of investigations relating to Enron, Barclays is continuing to
provide information in response to enquiries by regulatory and governmental
authorities in the United States and elsewhere. It is not possible to
estimate Barclays possible loss in relation to these matters, nor the effect
that it might have upon operating results in any particular financial
period. Barclays is also currently in negotiations with the staff of the US
Securities and Exchange Commission with respect to a settlement of the
Commission's investigation of transactions between Barclays and Enron.
Barclays does not expect that the amount of any settlement with the
Commission would have a significant adverse effect on its financial position
or operating results.
Barclays is engaged in various other litigation proceedings both in the
United Kingdom and a number of overseas jurisdictions, including the United
States, involving claims by and against it, which arise in the ordinary
course of business. Barclays does not expect the ultimate resolution of any
of the proceedings to which Barclays is party to have a significant adverse
effect on the financial position of the Group.
BARCLAYS PLC
14. Contingent liabilities and commitments
As at
30.06.05 01.01.05 31.12.04 30.06.04
Contingent liabilities £m £m £m £m
Acceptances and
endorsements 271 303 303 530
Assets pledged as
collateral for security 35,703 30,011 30,011 26,334
Other contingent
liabilities 8,503 8,245 8,245 7,800
-------- -------- -------- --------
44,477 38,559 38,559 34,664
-------- -------- -------- --------
Commitments
Standby facilities,
credit lines and other
commitments 163,037 134,051 134,051 119,887
-------- -------- -------- --------
Contingent liabilities increased by 15% (£5.9bn) to £44.5bn (1st January
2005: £38.6bn) due to the increased indemnifications issued by Barclays Bank
PLC to Barclays Global Investors' clients for securities lending activities.
Commitments increased by 22% (£28.9bn) to £163.0bn (1st January 2005:
£134.1bn) primarily as a result of the growth in Barclaycard due to Juniper,
and new facilities in Barclays Capital and UK Business Banking.
BARCLAYS PLC
15. Market risk
Market risk is the risk that the Group's earnings, capital, or ability to
meet its business objectives, will be adversely affected by changes in the
level or volatility of market rates or prices such as interest rates, credit
spreads, foreign exchange rates, equity prices and commodity prices.
Barclays Capital's market risk exposure, as measured by average total Daily
Value at Risk (DVaR), decreased in the first half of 2005 compared to the
first half of 2004. This was mainly due to a reduction in interest rate risk
and an increase in diversification effect.
Total DVaR as at 30th June 2005 was £31.0m (31st December 2004: £31.9m; 30th
June 2004: £26.0m).
Analysis of Barclays Capital's market risk exposures
The daily average, maximum and minimum values of DVaR were calculated as
below:
Half-year ended
30th June 2005
Average High1 Low1
£m £m £m
Interest rate risk 24.1 42.4 15.4
Credit spread risk 23.3 27.9 19.3
Foreign exchange risk 2.9 5.3 1.6
Equities risk 5.2 7.3 3.9
Commodities risk 5.8 7.6 4.5
Diversification effect (30.9) n/a n/a
-------- -------- ---------
Total DVaR 30.4 37.4 25.4
-------- -------- ---------
Half-year ended
31st December 2004
Average High1 Low1
£m £m £m
Interest rate risk 19.7 29.4 15.1
Credit spread risk 20.3 24.1 16.1
Foreign exchange risk 3.1 7.4 1.6
Equities risk 4.3 7.9 2.4
Commodities risk 8.2 14.4 4.5
Diversification effect (24.9) n/a n/a
-------- -------- ---------
Total DVaR 30.7 40.7 24.0
-------- -------- ---------
Half-year ended
30th June 2004
Average High1 Low1
£m £m £m
Interest rate risk 30.5 53.6 19.0
Credit spread risk 25.0 32.9 16.0
Foreign exchange risk 1.8 3.0 0.9
Equities risk 4.1 7.9 2.2
Commodities risk 3.7 7.8 2.2
Diversification effect (27.0) n/a n/a
-------- -------- ---------
Total DVaR 38.1 46.8 25.7
-------- -------- ---------
1 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. Consequently a diversification effect number for the high (and low)
DVaR figures would not be meaningful and it is therefore omitted from the
above table.
BARCLAYS PLC
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED)
Half-year ended
30.06.05 31.12.04 30.06.04
£m £m £m
Available for sale reserve:
Net gains from changes in fair value 112
Amount transferred to profit on
disposal (26)
Cash flow hedging reserve:
Gains from changes in fair value 16
Amount transferred to profit 12
Share of changes in associates' equity (28) (17) -
Currency translation differences
arising during the year 23 (15) (43)
Tax (118) - -
Other 38 16 11
Profit for the period 1,975 1,483 1,818
-------- -------- --------
Total recognised income and expense for
the period 2,004 1,467 1,786
-------- -------- --------
Attributable to:
Shareholders 1,873 1,440 1,766
Minority interest 131 27 20
-------- -------- --------
2,004 1,467 1,786
-------- -------- --------
Tax comprises items taken directly to reserves, including tax on available
for sale reserve and cash flow hedging reserve.
BARCLAYS PLC
SUMMARY CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Half-year ended
30.06.051 31.12.04 30.06.04
£m £m £m
Net cash inflow from operating
activities 17,584 2,384 2,787
Net cash outflow from investing
activities (11,394) (2,702) (4,296)
Net cash inflow from financing
activities 2,526 1,004 1,956
Effect of exchange rate changes on
cash and cash equivalents (539) (165) (305)
-------- -------- --------
Net increase in cash and cash
equivalents 8,177 521 142
Cash and cash equivalents at beginning
of period 21,603 13,996 13,854
-------- -------- --------
Cash and cash equivalents at end of
period 29,780 14,517 13,996
-------- -------- --------
1 The opening cash equivalents balance includes the impacts of adopting IAS
32 and IAS 39 and IFRS 4, which have not been applied to 2004 comparatives,
in accordance with IFRS 1.
BARCLAYS PLC
OTHER INFORMATION
Registered office
1 Churchill Place, London, E14 5HP, England, United Kingdom. Tel: +44 (0) 20
7116 1000. Company number: 48839.
Website
www.barclays.com
Registrar
The Registrar to Barclays PLC, The Causeway, Worthing, West Sussex, BN99
6DA, England, United Kingdom. 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, United States of America 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).
Results timetable
Interim 2005 Ex Dividend date Wednesday 17th August 2005
Interim 2005 Dividend record date Friday 19th August 2005
Interim 2005 Dividend payment date Monday 3rd October 2005
2005 Preliminary results Thursday 9th February 2006
Note that all dates are provisional and subject to change.
For further information please contact:
Investor Relations Media Relations
-------------------- -----------------
Mark Merson/James S Johnson Chris Tucker/Pam Horrell
+44 (0) 20 7116 5752/2927 +44 (0) 20 7116 6223/6132
More information on Barclays, including the 2005 interim results, can be
found on our website at the following address:
www.investorrelations.barclays.co.uk
BARCLAYS PLC
Index of Main Reference Points
Accounting policies 63
Acquisitions and disposals 62
Additional information 59
Associated undertakings and joint ventures 47
Available for sale financial instruments 74
Balance sheet (consolidated) 8, 9
Barclaycard 13, 29
Barclays Capital 12, 21
Barclays Global Investors 23
Basis of preparation 59
Capital demand 53
Capital supply 54
Capital ratios 50, 51
Capital resources 49, 50
Cash flow statement - summary
(consolidated) 81
Changes in accounting estimates 63
Contingent liabilities and commitments 78
Cost:income ratios 10
Derivatives 65
Dividends on ordinary shares 48
Divisional interest income 38
Divisional margins 37
Daily Value at Risk (DVaR) 79
Earnings per ordinary share 48
Economic capital 53
Economic data 3
Economic profit 56
Fair value option 59
Filings with the SEC 63
Financial highlights 3
Group performance ratios 10
Group share schemes 63
Group structure changes from 2004 62
Half-year review 4
Head office functions and other
operations 13, 33
Impairment 43
Income statement (consolidated) 7
Insurance assets 75
Insurance contract liabilities 75
International Retail and Commercial
Banking 13, 31
Legal proceedings 77
Loans and advances to banks 67
Loans and advances to customers 68
Market risk 79
Minority interests 47
Net fee and commission income 39
Net premiums from insurance contracts 41
Net claims and benefits paid on insurance
contracts 42
Net interest income 36
Operating expenses 44
Other assets 75
Other information 82
Other liabilities 76
Other income 41
Other provisions for liabilities 76
Performance summary 2
Performance ratios 3
Potential credit risk loans 72
Principal transactions 40
Profit before tax 7, 14
Profit before tax excluding goodwill
amortisation 67
Recent developments 64
Results by business 11
Results timetable 82
Risk asset ratios 3, 50
Risk Tendency 58
Share capital 63
Staff costs 45
Staff numbers 46
Statement of recognised income and
expense (consolidated) 80
Tax rate 47
Total assets 15, 52
UK Banking 11, 16
UK Business Banking 11, 19
UK Retail Banking 11, 17
Wealth Management 12, 25
Wealth Management-closed life
assurance activities 12, 27
Weighted risk assets 15, 50, 52
This information is provided by RNS
The company news service from the London Stock Exchange
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