Barclays plc - Annual Report 2008 - Financial statements - The Group

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Notes to the accounts For the year ended 31st December 2008 10 Tax (continued) The effective tax rate for the years 2008, 2007 and 2006 is lower than the standard rate of corporation tax in the UK of 28.5% (2007: 30%, 2006: 30%). The differences are set out below: 2008 2007 2006 £m £m £m Profit before tax 6,077 7,076 7,136 Tax charge at standard UK corporation tax rate of 28.5% (2007: 30%, 2006: 30%) 1,732 2,123 2,141 Adjustment for prior years (176) (37) 24 Differing overseas tax rates 215 (77) (17) Non-taxable gains and income (including amounts offset by unrecognised tax losses) (833) (136) (393) Share-based payments 229 72 27 Deferred tax assets not previously recognised (514) (158) (4) Change in tax rates (1) 24 4 Other non-allowable expenses 138 170 159 Overall tax charge 790 1,981 1,941 Effective tax rate 13% 28% 27% The effective rate of tax for 2008, based on profit before tax, was 13% (2007: 28%). The effective tax rate differs from the 2007 effective rate and the UK corporation tax rate of 28.5% principally due to the Lehman Brothers North American businesses acquisition. Under IFRS the gain on acquisition of £2,262m is calculated net of deferred tax liabilities included in the acquisition balance sheet and is thus not subject to further tax in calculating the tax charge for the year. Furthermore, Barclays has tax losses previously unrecognised as a deferred tax asset but capable of sheltering part of this deferred tax liability. This gives rise to a tax benefit of £492m which, in accordance with IAS 12, is included as a credit within the tax charge for the year. The effective rate has been adversely impacted by the effect of the fall in the Barclays share price on the deferred tax asset recognised on share awards. In common with prior years there have been offsetting adjustments relating to different overseas tax rates, disallowable expenditure and non taxable gains and income. 11 Earnings per share 2008 2007 2006 £m £m £m Profit attributable to equity holders of parent 4,382 4,417 4,571 Dilutive impact of convertible options (24) (25) (30) Profit attributable to equity holders of parent including dilutive impact of convertible options 4,358 4,392 4,541 2008 2007 2006 million million million Basic weighted average number of shares in issue 7,389 6,410 6,357 Number of potential ordinary shares 188 177 150 Diluted weighted average number of shares 7,577 6,587 6,507 p p p Basic earnings per share 59.3 68.9 71.9 Diluted earnings per share 57.5 66.7 69.8 The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent and the number of basic weighted average number of shares excluding own shares held in employee benefits trusts and shares held for trading. The basic and diluted weighted average number of shares in issue in the year ended 31st December 2008 reflects 1,802 million shares issued during the year and the 2,642 million shares that will be issued following conversion in full of the Mandatorily Convertible Notes, included from the date of issue and the date the contract was entered into respectively. As a result, the weighted average number of shares in issue in the year ended 31st December 2008 was increased by 1,034 million shares as a result of this increase. When calculating the diluted earnings per share, the profit attributable to equity holders of the parent is adjusted for the conversion of outstanding options into shares within Absa Group Limited and Barclays Global Investors UK Holdings Limited. The weighted average number of ordinary shares excluding own shares held in employee benefit trusts and shares held for trading, is adjusted for the effects of all dilutive potential ordinary shares, totalling 188 million (2007: 177 million, 2006: 150 million). Of the total number of employee share options and share awards at 31st December 2008, 64 million were anti-dilutive (2007: nil, 2006: 5 million). Subsequent to the balance sheet date, the Group continued to make on-market purchases of treasury shares under its various employee share schemes. No adjustment has been made to earnings per share in respect of these purchases. 214 Barclays PLC Annual Report 2008 | Find out more at www.barclays.com/annualreport08
12 Trading portfolio 2008 2007 £m £m Trading portfolio assets Treasury and other eligible bills 4,544 2,094 Debt securities 148,686 152,778 Equity securities 30,535 36,307 Traded loans 1,070 1,780 Commodities 802 732 Trading portfolio assets 185,637 193,691 Trading portfolio liabilities Treasury and other eligible bills (79) (486) Debt securities (44,309) (50,506) Equity securities (14,919) (13,702) Commodities (167) (708) Trading portfolio liabilities (59,474) (65,402) 13 Financial assets designated at fair value Held on own account 2008 2007 £m £m Loans and advances 30,187 23,491 Debt securities 8,628 24,217 Equity securities 6,496 5,376 Other financial assets 9,231 3,545 Financial assets designated at fair value – held on own account 54,542 56,629 The maximum exposure to credit risk on loans and advances designated at fair value at 31st December 2008 was £30,187m (2007: £23,491m). The amount by which related credit derivatives and similar instruments mitigate the exposure to credit risk at 31st December was £2,084m (2007: £2,605m). The net loss attributable to changes in credit risk for loans and advances designated at fair value was £2,550m in 2008 (2007: £401m). The gains on related credit derivatives was £519m for the year (2007: £4m loss). The cumulative net loss attributable to changes in credit risk for loans and advances designated at fair value since initial recognition is £2,149m at 31st December 2008 (2007: £401m). The cumulative change in fair value of related credit derivatives at 31st December 2008 is £523m (2007: £4m). Held in respect of linked liabilities to customers under investment contracts/liabilities arising from investment contracts 2008 2007 £m £m Financial assets designated at fair value held in respect of linked liabilities to customers under investment contracts 66,657 90,851 Cash and bank balances within the portfolio 2,526 1,788 Assets held in respect of linked liabilities to customers under investment contracts 69,183 92,639 3 Financial statements Liabilities to customers under investment contracts (69,183) (92,639) A portion of the Group’s fund management business takes the legal form of investment contracts, under which legal title to the underlying investment is held by the Group, but the inherent risks and rewards in the investments are borne by the investors. In the normal course of business, the Group’s financial interest in such investments is restricted to fees for investment management services. Due to the nature of these contracts, the carrying value of the assets is always the same as the value of the liabilities and any change in the value of the assets results in an equal but opposite change in the value of the amounts due to the policyholders. The Group is therefore not exposed to the financial risks – market risk, credit risk and liquidity risk – inherent in the investments and they are omitted from the disclosures on financial risks in Notes 47 to 49. In the balance sheet, the assets are included as ‘Financial assets designated at fair value – held in respect of linked liabilities to customers under investment contracts’. Cash balances within the portfolio have been included in the Group’s cash balances. The associated obligation to deliver the value of the investments to customers at their fair value on balance sheet date is included as ‘Liabilities to customers under investment contracts’. The increase/decrease in the value arising from the return on the investments and the corresponding increase/decrease in linked liabilities to customers is included in the Other income note in Note 6. Barclays PLC Annual Report 2008 215
Page 1 and 2: Financial statements Presentation o
Page 3 and 4: Independent Auditors’ report Inde
Page 5 and 6: Consolidated accounts Barclays PLC
Page 7 and 8: ) financial assets, loans to custom
Page 9 and 10: 11. Collateral and netting The Grou
Page 11 and 12: 17. Issued debt and equity securiti
Page 13 and 14: 24. Taxes, including deferred taxes
Page 15 and 16: The following IFRIC interpretations
Page 17 and 18: Consolidated balance sheet As at 31
Page 19 and 20: Consolidated cash flow statement Fo
Page 21 and 22: Statement of recognised income and
Page 23 and 24: 4 Principal transactions 2008 2007
Page 25: 9 Administration and general expens
Page 29 and 30: 14 Derivative financial instruments
Page 31 and 32: 16 Available for sale financial inv
Page 33 and 34: 20 Investments in associates and jo
Page 35 and 36: 22 Intangible assets 2008 Internall
Page 37 and 38: 24 Financial liabilities designated
Page 39 and 40: 26 Insurance assets and liabilities
Page 41 and 42: 27 Subordinated liabilities (contin
Page 43 and 44: 27 Subordinated liabilities (contin
Page 45 and 46: 29 Securitisations The Group was pa
Page 47 and 48: 30 Retirement benefit obligations (
Page 53 and 54: 31 Ordinary shares, share premium,
Page 55 and 56: 32 Reserves (continued) Retained ea
Page 57 and 58: 34 Contingent liabilities and commi
Page 59 and 60: 37 Leasing The Group is both lessor
Page 61 and 62: 39 Acquisitions The Group made the
Page 63 and 64: 39 Acquisitions (continued) (c) Exp
Page 65 and 66: 42 Other entities There are a numbe
Page 67 and 68: 43 Related party transactions and D
Page 69 and 70: 43 Related party transactions and D
Page 71 and 72: 45 Share-based payments (continued)
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47 Credit risk (continued) Whilst t
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47 Credit risk (continued) Credit r
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47 Credit risk (continued) Credit r
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47 Credit risk (continued) All loan
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47 Credit risk (continued) Loans an
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47 Credit risk (continued) Renegoti
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47 Credit risk (continued) Reverse
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48 Market risk (continued) To furth
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48 Market risk (continued) Foreign
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49 Liquidity risk (continued) Year-
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49 Liquidity risk (continued) At 31
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50 Fair value of financial instrume
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52 Capital Management (continued) R
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53 Segmental reporting (continued)
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53 Segmental reporting (continued)
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Barclays Bank PLC data Consolidated
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c Principal transactions (continued
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f Other income 2008 2007 2006 £m
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k Called up share capital (continue
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l Reserves Other reserves Available
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Barclays Bank PLC data Financial Da
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Barclays plc - Annual Report 2008 - Financial statements - The Group

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