Summary Press Release
Barclays PLC
8 February 2001
PART 1
February 8th, 2001
BARCLAYS PLC
RESULTS FOR YEAR TO 31 DECEMBER 2000
* Operating profit rose 21% to £3,580 million from £2,964 million
* Exceptional items of £214 million, up from a deficit in 1999 of £138
million. This includes sale of Dial and Barclays Property Investment
Management
* Profit before tax up 42% to £3,496 million from £2,455 million
* Business as usual costs savings of £260 million
* Woolwich acquisition expected to lead to pre tax synergies of more
than £400 million per annum by 2004, up from forecast £240 million
* Earnings per share based on operating profit above, up to 163.6p
from 143.6p
* Dividend per share up 16% to 58.0p from 50.0p
* £26.3 million donated to the community
Operating profit shown above includes the results of The Woolwich from 25th
October 2000. It excludes the 1999 and 2000 restructuring charges, goodwill
amortisation and costs directly associated with the integration of The
Woolwich. Earnings per share based on this operating profit also exclude
exceptional items.
Barclays Group Chief Executive, Matthew Barrett commented: -
'2000 has been a good year for Barclays. We began to reap the benefit of past
investments. We expanded the reach and range of our products and services.
We advanced our aim to transform our business and we continued to build the
foundations for future growth and development.
2000 was a year of accomplishment for Barclays but the challenge remains and
we have much more to do if we are to achieve our aspiration of being in the
top quartile amongst the best in class in the global financial services
industry.'
For further information please contact:
Media Relations
Leigh Bruce Chris Tucker
Communications Director PR Director
Tel: 020 7699 2658 Tel: 0207 699 3161
Investor Relations
Ian Roundell
Head of Investor Relations
Tel: 020 7699 2961
Photographs of the Barclays Chief Executive and Finance Director will be
available from www.newscast.co.uk from 1.00pm.
The full results document is available from: www.investor.barclays.com
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 in relation to The Woolwich. 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 rates and exchange
rates, the policies and actions of regulatory authorities, the impact of
competition, and the Group's ability to achieve the estimated synergies
related to the Woolwich (such as the ability to integrate businesses and IT
systems within anticipated timeframes, the ability to and the success of
cross-selling 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.
8th February 2001
BARCLAYS PLC - SUMMARY
RESULTS FOR YEAR TO 31ST DECEMBER 2000
2000 1999
£m £m
Operating profit* 3,580 2,964
Loss from joint ventures and associated undertakings (8) (14)
Restructuring charge (232) (344)
Integration costs (7) -
Goodwill amortisation (51) (13)
Exceptional items 214 (138)
Profit before tax 3,496 2,455
Earnings per share 163.3p 117.5p
Earnings per share (based on operating profit)* 163.6p 143.6p
Dividends per share 58.0p 50.0p
Economic profit 1,492 986
* Operating profit shown above includes the results of The Woolwich
from 25th October 2000. It excludes the 1999 and 2000 restructuring charges,
goodwill amortisation and costs directly associated with the integration of
The Woolwich. Earnings per share and post-tax return on average shareholders'
funds based on this operating profit also exclude exceptional items. Profit
and loss items reported below are on a similar basis.
* Operating profit rose 21% to £3,580 million (1999: £2,964 million).
Earnings per share increased by 14% to 163.6p (1999: 143.6p).
* Total operating income increased by 15% to £9,598 million. Net
interest income increased 11% to £5,155 million and non-interest income
increased 19% to £4,443 million. Excluding the contribution from The
Woolwich, operating income rose by 13%.
* Business as usual costs, excluding The Woolwich, were held at £4,142
million. On the same basis strategic investment expenditure increased by £197
million to £426 million and revenue related costs rose to £518 million from £
300 million.
* Economic profit increased 51% to £1,492 million from £986 million.
* Post-tax return on average shareholders' funds improved to 25.2%
(1999: 25.1%).
* The total dividend increased by 16% with a second interim dividend
of 38p (1999: 32.5p) making 58p per share for the year (1999: 50p).
* Shareholders' funds were £13.2 billion at 31st December 2000 (1999:
£8.5 billion) and the tier 1 ratio was 7.2% (1999: 7.5%). Excluding goodwill,
the Group's economic capital requirement is estimated to be around £8.5
billion to support its current business requirements and to allow for future
growth.
* Retail Financial Services performed strongly with a 30% increase in
operating profit to £1,710 million (1999: £1,312 million). Retail Customers
and Wealth Management profits rose 27% and 22% to £1,124 million and £522
million respectively. The Woolwich's operating profit contribution was £70
million for the last two months of the year following the acquisition. Total
costs were held flat at £2,294 million, excluding two months costs of The
Woolwich of £98 million.
* Barclaycard operating profit increased 4% to £418 million (1999: £
401 million). Net interest income improved by 12% benefiting from continued
strong growth in average UK extended credit balances. Net fees and
commissions increased 9% as a result of growth in UK transaction volumes.
* Corporate Banking operating profit increased 13% to £1,070 million
(1999: £947 million). Net interest income rose by 6% reflecting growth in
average customer lending balances. Net fees and commissions increased by 9%
as a result of growth in lending related fees. Costs excluding strategic
investment fell by 6%.
* Barclays Capital operating profit increased 30% to £403 million
(1999: £311 million) reflecting continued strong performances in both the
Rates and the Credit businesses. The growth in profits was achieved despite
difficult market conditions in the second half of 2000.
* Barclays Global Investors operating profit increased 51% to £65
million (1999: £43 million) in a year of major investments and flat or
declining markets in most parts of the business. Total assets under
management grew to £550 billion (1999: £486 billion).
* Total provisions for bad and doubtful debts rose by £196 million,
or 32%, to £817 million, mainly as a result of higher levels of new and
increased provisions reflecting strong volume growth in Retail Financial
Services and Barclaycard.
* The restructuring charge of £232 million for 2000 primarily relates
to Retail Financial Services, Corporate Banking and Service Provision. The
staff cost charge of £171 million is in respect of 4,800 job reductions, 2,700
of which were achieved in 2000.
* The exceptional profit of £214 million included a £186 million
profit on the sale of the Dial business in June 2000 and £18 million profit on
the sale of Barclays Property Investment Management in October 2000.
* From 1st January 2004, the Group expects to achieve annual pre-tax
synergies of more than £400 million in respect of The Woolwich acquisition.
One off integration costs are expected to be in the order of £200 million.
CHIEF EXECUTIVE'S STATEMENT
2000 has been a good year for Barclays. We began to reap the benefit of past
investments. We expanded the reach and range of our products and services.
We advanced our aim to transform our business and we continued to build the
foundations for future growth and development.
Profit before tax was £3.5 billion, up 42% on last year. Earnings per share
were 163.3 pence and our post tax return on equity 25.1%. The results reflect
revenue growth of 15%, £260 million of productivity gains in business as usual
costs and an almost doubling of strategic expenditure to £426m, demonstrating
a good balance between short-term aims and investment in future growth. This
is reflected in the total dividend pay-out for the year of 58 pence, a 16%
increase over 1999.
This financial performance was achieved against a backdrop of accelerated
transformation of Barclays, achieving benefits for our customers, staff and
shareholders.
In 2000, customers gave us a vote of confidence. We gained new customers
across the Group and did more business than ever before.
We also laid the foundations for ensuring operational excellence in all we do
as we transform from old bank to new bank.
Our total shareholder return for 2000 was 21%, only average in terms of the
international banks we benchmark ourselves against. This is a good result in
absolute terms but not good enough in relative terms. Our ambition is to rank
among the top quartile of our international peers. So we have much to do.
Capitalising on previous investments and developing profitable growth
opportunities
In Retail Financial Services, we acquired new customers, increased business
with existing customers, and expanded customer choice and access. We
maintained our position as the UK's leading internet bank and now have 1.7
million personal and small business customers on-line. Our investment in
managing customer data, which is at the leading edge of technology world-wide,
allowed us to anticipate and respond to customer needs better than ever
before. Products per current account customer rose to 2.3. The numbers are
even more impressive online, where each customer holds on average 2.7
products. We invested £65 million in 2000 in a programme that will upgrade
1,000 branches by the end of March 2001.
Our Wealth Management business put in place a far-reaching transformation
programme to serve this expanding market in the future. It already serves
over one million clients, over half outside the UK, and manages £74bn of
assets on their behalf. For the second consecutive year, Barclays was voted
the top European brand amongst banks in a Time Fortune survey of 2,600
affluent customers. In 2000, significant investment went into building a
leading edge multi-channel distribution platform, which will offer customers
seamless service across electronic and physical channels with real-time
information update.
In Barclaycard, investment in information-based customer management increased
our market share across most areas, including interest earning balances and
number of cards. It launched a range of new tailored card packages and is
growing rapidly in Europe, with over 1.2 million cards issued, 11% of the
total.
In Corporate Banking, our investment in mobile working technology means we can
bring the full resources of Barclays to our business customers directly. We
are also developing a full range of new customer propositions and Barclays
B2B.com will be extending its internet based business service to all our
business customer base.
Barclays Capital, extended its presence and expanded its market share of
capital raising for customers in the loan and bond markets outside the US by
41%, one of the fastest rates of organic growth of any of the top banks. It
now has both the people and the technology to compete with the best.
Barclays Global Investors is developing new marketplaces and customer
segments. It extended its franchise into the retail market through the
successful launch of iShares, which have already attracted £8 billion in
funds.
Across all our businesses, the adoption of stretching value-based goals and
embedding them at every level of the organisation has been critical to
accelerating the pace of transformation. We are becoming ever more innovative
and customer-focused.
Refining our Portfolio
We have also made progress in refining our Group portfolio. In each instance,
we have adopted strategies that are best suited to meeting our business
objectives while ensuring maximum value creation. We are concentrating on the
parts of the value chain where we have a leading competence while developing
new ways of accessing expertise and scale where no such advantage currently
exists. With The Woolwich, we bought a business that brings new customers,
high quality distribution, as well as a strong position in mortgages, a key
point in the financial lives of many customers. Our strategic alliance with
Legal & General meets our objectives in a different way, providing customers
with high quality choices through a value-maximising alliance of two
organisations pooling their strengths. We also created value for shareholders
through the profitable sale of Dial - the contract hire and fleet management
business, which was not core to our future.
We will maintain the same, open-minded attitude to our portfolio going
forward, seeking to find the right solution to each opportunity or challenge,
not the fashionable one.
Delivering Operational Excellence
We maintained a sharp focus on ensuring operational excellence as we continue
to make the transition from old bank to new bank. We made significant
progress on productivity with business as usual costs flat against 1999
despite strong volume growth. On the technology front, we are well on the way
to transforming ourselves for the new economy and we believe that e-enablement
of our internal IT and operations processes has the potential to contribute
tangible cost benefits.
Outlook
A fundamental principle at Barclays is that while we seek to grow our
business, we will not seek growth that deviates from our prudent approach to
asset quality and portfolio balance.
As we press ahead with our strategic agenda during the year there will be
increased evidence of our customer-focused approach transforming everything we
do.
Furthermore we will launch a new proposition from our Wealth Management
business, pursue synergy opportunities across the Group, accelerate our
productivity improvement and continue to invest in our European presence.
The fact that as a Group we are not isolated on these islands or overly
dependent on a narrow range of products, customer segments or markets is a
significant strength of Barclays. Our contribution from non-UK businesses now
exceeds 20%. We intend to expand that proportion.
We have made good progress across the Group in implementing the objectives I
set out a year ago. Our people deserve the credit for the real progress in
our transformation and the good results in 2000. I want to thank them all.
2000 was a year of accomplishment for Barclays. We have made a good start in
implementing our agenda of change, but the challenge remains and we have much
more to do if we are to achieve our aspiration of being in the top quartile
amongst the best in class in the global financial services industry.
Matthew W. Barrett
Group Chief Executive
FINANCIAL HIGHLIGHTS
2000 1999
RESULTS £m £m
Net interest income 5,155 4,627
Non-interest income 4,443 3,746
Operating income 9,598 8,373
Operating expenses* (5,202) (4,787)
Operating profit before provisions* 4,396 3,586
Provisions for bad and doubtful debts (817) (621)
Provisions for contingent liabilities and commitments 1 (1)
Operating profit* 3,580 2,964
Loss from joint ventures and associated undertakings (8) (14)
Restructuring charge (232) (344)
Woolwich integration costs (7) -
Goodwill amortisation (51) (13)
Exceptional items 214 (138)
Profit before tax 3,496 2,455
Profit attributable to shareholders 2,473 1,759
Economic profit 1,492 986
BALANCE SHEET
Shareholders' funds 13,187 8,483
Loan capital 6,370 4,597
Total capital resources 21,157 13,432
Total assets 316,190 254,793
Weighted risk assets 147,040 115,878
PER ORDINARY SHARE p p
Earnings 163.3 117.5
Earnings (based on operating profit*) 163.6 143.6
Dividend 58.0 50.0
Net asset value 794 568
PERFORMANCE RATIOS % %
Post-tax return on average shareholders' funds 25.1 21.2
Post-tax return on average shareholders' funds
(based on operating profit*) 25.2 25.1
RISK ASSET RATIO
Tier 1 7.2 7.5
Total 11.0 11.3
GROUP YIELDS, SPREADS & MARGINS % %
Gross yield 7.09 6.84
Interest spread 2.60 2.88
Interest margin 3.11 3.40
EXCHANGE RATES
Period end - US$/£ 1.49 1.62
Average - US$/£ 1.52 1.62
Period end - EUR/£ 1.60 1.61
Average - EUR/£ 1.64 1.52
* Excluding the 1999 and 2000 restructuring charges, goodwill amortisation
and costs directly associated with the integration of The Woolwich. Earnings
per share and post-tax return on average shareholders' funds based on this
operating profit also exclude exceptional items.
SUMMARY OF RESULTS
PROFIT BEFORE TAX 2000 1999
£m £m
Retail Financial Services 1,710 1,312
Barclaycard 418 401
Corporate Banking 1,070 947
Barclays Capital 403 311
Barclays Global Investors 65 43
Other operations (1) 13
Head office functions (93) (77)
Operating profit* 3,572 2,950
Restructuring charge (232) (344)
Integration costs (7) -
Goodwill amortisation (51) (13)
Exceptional items 214 (138)
3,496 2,455
* Operating profit shown above includes the results of The Woolwich
from 25th October 2000. It excludes the 1999 and 2000 restructuring charges,
goodwill amortisation and costs directly associated with the integration of
The Woolwich but includes loss from joint ventures and associated undertakings
of £8m (1999: £14m).
2000 1999
TOTAL ASSETS £m £m
Retail Financial Services 80,128 41,383
Barclaycard 8,705 7,343
Corporate Banking 52,869 47,422
Barclays Capital 156,869 144,807
Barclays Global Investors 259 232
Other operations and Head office functions 4,380 5,383
Goodwill 4,269 183
Retail life-fund assets attributable to policyholders 8,711 8,040
316,190 254,793
WEIGHTED RISK ASSETS
Retail Financial Services 47,246 26,152
Barclaycard 8,523 7,210
Corporate Banking 54,651 48,218
Barclays Capital 34,431 32,032
Barclays Global Investors 653 456
Other operations 1,536 1,810
147,040 115,878
CONSOLIDATED PROFIT AND LOSS ACCOUNT
2000 1999
£m £m
Interest receivable 11,788 9,320
Interest payable (6,635) (4,696)
Profit on redemption/repurchase of loan capital 2 3
Net interest income 5,155 4,627
Net fees and commissions receivable 3,369 2,932
Dealing profits 677 556
Other operating income 397 258
Total non-interest income 4,443 3,746
Operating income 9,598 8,373
Administration expenses - staff costs (3,219) (3,057)
Administration expenses - other (1,967) (1,807)
Depreciation and amortisation (306) (280)
Operating expenses (5,492) (5,144)
Operating profit before provisions 4,106 3,229
Provisions for bad and doubtful debts (817) (621)
Provisions for contingent liabilities and commitments 1 (1)
Operating profit 3,290 2,607
Loss from joint ventures and associated undertakings (8) (14)
Exceptional items 214 (138)
Profit on ordinary activities before tax 3,496 2,455
Tax on profit on ordinary activities (944) (644)
Profit on ordinary activities after tax 2,552 1,811
Minority interests (equity and non-equity) (79) (52)
Profit for the financial year attributable to the
members of Barclays PLC 2,473 1,759
Dividends (927) (746)
Profit retained for the financial year 1,546 1,013
Earnings per ordinary share 163.3p 117.5p
Earnings per ordinary share before restructuring
charge, goodwill amortisation, integration costs
and exceptional items 163.6p 143.6p
Dividend per ordinary share:
First interim 20.0p 17.5p
Second interim (payable 30 April 2001) 38.0p 32.5p
FURTHER ANALYSIS OF PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST DECEMBER 2000
The
Woolwich
period
from Barclays
Group 25.10.00 PLC Barclays
Results to(excluding PLC
(including 31.12.00 The Year
The Adjustments Woolwich) ended
Woolwich) (a) (b) (c) 31.12.99
£m £m £m £m £m
Interest receivable 11,788 (36) 454 11,370 9,320
Interest payable (6,635) 4 (335) (6,304) (4,696)
Profit on redemption/ -
repurchase
of loan capital 2 - - 2 3
Net interest income 5,155 (32) 119 5,068 4,627
Net fees and commissions 3,369 - 49 3,320 2,932
receivable
Dealing profits 677 - - 677 556
Other operating income 397 - 9 388 258
Total non-interest income 4,443 - 58 4,385 3,746
Operating income 9,598 (32) 177 9,453 8,373
Administration expenses - (3,047) - (42) (3,005) (2,865)
staff costs
Administration expenses - (1,900) - (47) (1,853) (1,655)
other
Depreciation and amortisation (255) 1 (10) (246) (267)
Operating expenses (5,202) 1 (99) (5,104) (4,787)
Operating profit before 4,396 (31) 78 4,349 3,586
provisions
Provisions for bad and (817) - (8) (809) (621)
doubtful debts
Provisions for contingent
liabilities
and commitments 1 - - 1 (1)
Operating profit before
restructuring
charge 3,580 (31) 70 3,541 2,964
Loss from joint ventures and
associated undertakings (8) - - (8) (14)
Restructuring charge (232) - - (232) (344)
Integration costs (7) (7) - - -
Goodwill amortisation (51) (38) - (13) (13)
Exceptional items 214 - - 214 (138)
Profit on ordinary activities 3,496 (76) 70 3,502 2,455
before tax
The table above analyses the results for the year ended 31st December 2000 (as
reported on page 8) into:
(a) adjustments relating to the acquisition of The Woolwich, which
comprise:
* £11m interest receivable, £4m interest payable and £1m depreciation and
amortisation (net £6m) reflecting the amortisation of fair value adjustments;
* £25m interest receivable to imitate the position had The Woolwich not
been purchased i.e. the £2.5bn cash paid could have been used to generate
interest income; and
* £38m goodwill amortisation and £7m integration costs to reflect costs
that would not otherwise have been incurred.
(b) The Woolwich results for the post acquisition period; and
(c) results of Barclays PLC excluding The Woolwich, which are comparable to
the Group results for 1999.
The results shown on page 8 include the 1999 and 2000 restructuring charges,
goodwill amortisation and integration costs within operating expenses. The
table above presents operating expenses excluding these items.
CONSOLIDATED BALANCE SHEET
2000 1999
Assets: £m £m
Cash and balances at central banks 1,243 1,166
Items in course of collection from other banks 2,509 2,492
Treasury bills and other eligible bills 5,564 7,176
Loans and advances to banks - banking 9,570 13,071
- trading 26,856 26,555
36,426 39,626
Loans and advances to customers - banking 138,423 95,006
- trading 23,687 21,562
162,110 116,568
Debt securities 70,770 53,919
Equity shares 4,062 5,604
Interests in joint ventures and associated undertakings 122 106
Intangible fixed assets - goodwill 4,269 183
Tangible fixed assets 2,059 1,800
Other assets 18,345 18,113
307,479 246,753
Retail life-fund assets attributable to policyholders 8,711 8,040
Total assets 316,190 254,793
Liabilities:
Deposits by banks - banking 32,445 26,915
- trading 17,311 17,571
49,756 44,486
Customer accounts - banking 140,352 105,027
- trading 18,616 18,939
158,968 123,966
Debt securities in issue 31,883 23,329
Items in course of collection due to other banks 1,176 1,400
Other liabilities 44,539 40,140
Undated loan capital - convertible to preference shares 335 309
Undated loan capital - non-convertible 2,298 1,440
Dated loan capital - non-convertible 3,737 2,848
292,692 237,918
Minority interests and shareholders' funds:
Minority interests: equity 108 82
Minority interests: non-equity 1,492 270
Called up share capital 1,662 1,495
Reserves 11,525 6,988
Shareholders' funds: equity 13,187 8,483
14,787 8,835
307,479 246,753
Retail life-fund liabilities attributable to policyholders 8,711 8,040
Total liabilities and shareholders' funds 316,190 254,793
KEY FACTS (UNAUDITED)
2000 1999
Number of UK branches 2,129 1,899
Number of overseas branches 624 620
Number of UK Barclays Group ATMs 3,800 3,200
Employees worldwide 75,300 74,300
RETAIL FINANCIAL SERVICES
Retail Customers
Current account customers 8.3m 8.1m
Savings account customers 4.2m 3.8m
Customers registered for telephone banking 1,200,000 1,000,000
Customers registered for on-line banking 1,700,000 500,000
Small business customers 440,000 440,000
Africa - customer deposits £1.6bn £1.6bn
The Woolwich
Open plan customers 544,000 44,000
Total UK mortgage balances £28.5bn £26.3bn
Wealth Management
Continental European customers 313,000 307,000
Total customer funds £74bn £70bn
Stockbrokers - deal volumes per day 8,100 6,600
BARCLAYCARD
Barclaycard UK customers 7.9m 7.5m
Barclaycards issued overseas 1.2m 1.0m
Customers registered for on-line services 388,000 111,000
Retailer relationships 81,000 79,000
Number of retailer transactions processed 1.2bn 1.1bn
CORPORATE BANKING
Number of UK Corporate Banking connections 113,600 112,400
- Mid corporate connections 97,000 96,400
- Larger business connections 14,000 13,800
- Large corporate connections 2,600 2,200
Customers registered for electronic banking 43,000 29,400
Number of current accounts 238,000 231,000
Number of deposit accounts 101,000 102,000
BARCLAYS GLOBAL INVESTORS
Total assets under management £550bn £486bn
Number of institutional clients 1,800 1,500
BARCLAYS CAPITAL 2000 1999
League table Issuance League table Issuance
position value position value
Sterling bonds 1st £12bn 1st £9bn
Syndicated loans (Europe, 1st US$89bn 1st US$43bn
Middle East, Africa)
Syndicated loans (ex USA) 1st US$98bn 2nd US$49bn
All syndicated loans 4th US$116bn 6th US$59bn
All international bonds 11th US$48bn 13th US$36bn
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