Annual Report 2004 The paper used throughout this report is produced from Totally Chlorine Free (TCF) pulps. The wood for these is sourced from fully Registered office: 2004 Annual Report PLC Barclays 54 Lombard Street, London EC3P 3AH sustainable forests in Finland, Sweden, Portugal, Spain and Brazil. Additionally, the manufacturing mill is certified to ISO 9002 Quality Please note with effect from 31st May 2005 Assurance standard, the ISO 14001 Environmental Management our Registered office will move to: standard, and registered with EMAS (the ECO-Management and 1 Churchill Place, London E14 5HP. Audit Scheme). Registered in England. Registered No: 48839 9902966 Barclays PLC This document contains certain forward-looking statements within the meaning legislation, the outcome of pending and future litigation and the impact of of section 21E of the US Securities Exchange Act of 1934, as amended, and competition, a number of which are beyond the Group’s control. As a result, section 27A of the US Securities Act of 1933, as amended, with respect to the Group’s actual future results and developments may differ materially from certain of the Group’s plans and its current goals and expectations relating to its the plans, goals, and expectations expressed or implied in the Group’s forward- future financial condition and performance. The Group may also make forward- looking statements. For a more detailed discussion of some of the factors that looking statements in other written materials, including other documents filed may cause actual future results and developments to differ materially from with or furnished to the SEC. In addition, the Group’s senior management may forward-looking statements, see Risk factors on page 42. Any forward-looking make forward-looking statements orally to analysts, investors, representatives of statements made by or on behalf of the Group speak only as of the date they are the media and others. In particular, among other statements, certain statements made. Barclays does not undertake to update forward-looking statements to in the Financial Review and Business Description with regard to management reflect any changes in the Group’s expectations with regard thereto or any objectives, trends in results of operations, margins, costs, return on equity, risk changes in events, conditions or circumstances on which any such statement is management, and competition are forward-looking in nature. Forward-looking based. The reader should, however, consult any additional disclosures Barclays statements can be identified by the fact that they do not relate only to historical has made or may make in documents it has filed or may file with the SEC. or current facts. Forward-looking statements often use words such as ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, or other words of This document contains information, including statistical data, about certain of similar meaning. By their nature, forward-looking statements involve risk and Barclays markets and its competitive position. Except as otherwise indicated, this uncertainty because they relate to future events and circumstances, including, information is taken or derived from Datastream and other external sources. but not limited to, UK domestic and global economic and business conditions, Barclays cannot guarantee the accuracy of information taken from external market related risks such as changes in interest rates and exchange rates, the sources, or that, in respect of internal estimates, a third party using different policies and actions of governmental and regulatory authorities, changes in methods would obtain the same estimates as Barclays. Barclays PLC Annual Report 2004 Financial highlights •Profit before tax rose 20% to £4,603m. • Earnings per share rose 21% to 51.2p. •Return on equity of 19.2%. • The full year dividend increased by 17% to 24p. “Barclays had a record year in 2004, demonstrating the strength and flexibility of its strategy. A combination of good returns from prior investment and the continued strong pace of investment during 2004 means that we are in good shape to deliver profitable growth in the future.” John Varley, Group Chief Executive Contents Section 1 – Review Section 2 – Impact Section 3 – Results 1 Financial highlights 16 Directors and Officers of 87 Financial data 2 About Barclays Barclays PLC 89 Business description 4 Chairman’s statement 19 Directors’ report 92 Financial review 6Group Chief Executive’s statement 21 Corporate governance report 122 Auditors’ reports 9Group Finance Director’s review 27 Barclays report on remuneration 124 Consolidated accounts Barclays PLC 12 Corporate responsibility 40 Accountability and audit 241 Shareholder information 41 Presentation of information 248 Group senior management and 42 Risk factors principal offices 44 Risk management 1 About Barclays We are a major global financial services 78,000 people, we move, lend, invest provider engaged in retail and commercial and protect money for over 18 million banking, credit cards, investment banking, customers and clients worldwide. wealth management and investment Our primary goal management services. We are one of the To deliver top quartile total shareholder largest financial services companies in the return relative to our peers, consistently world by market capitalisation. Operating over time. in over 60 countries and employing over Profit before tax Regions in which we operate 5,000 4,603 4,000 3,845 3,205 3,000 2,000 1,000 0 £m 2002 2003 2004 Earnings per share 60 51.2 50 42.3 40 33.7 30 20 10 0 pence 2002 2003 2004 For detailed information on where we operate go to www.barclays.com 2 Barclays PLC Annual Report 2004 UK Banking Barclaycard Delivers banking solutions to Barclays UK retail and business Is a multi-brand credit card and consumer lending business banking customers. It offers a range of integrated products and with an increasing international presence, and is one of the services and access to the expertise of other Group businesses leading credit card businesses in Europe. through a variety of channels comprising: the branch network, In the UK, Barclaycard manages the Barclaycard branded credit automated teller machines, telephone banking, online banking cards, Barclays branded consumer loans, mostly Barclayloan, and relationship managers. and also comprises FirstPlus, Clydesdale Financial Services and UK Retail Banking comprises Personal Customers, Mortgages, Monument. Barclaycard Business processes card payments Small Business and UK Premier. It serves some 14 million personal for retailers and merchants and issues cards to corporate customers, 273,000 Premier banking customers and 566,000 customers. Outside the UK, Barclaycard International has Small Business customers, through 2,061 branches. businesses in the United States, Germany, Spain, Greece, Italy, Portugal, Republic of Ireland and across Africa. UK Business Banking provides relationship banking to the Group’s larger and medium business customers in the UK, and has Barclaycard has 15.6 million cards in issue. relationships with 179,000 customers. Barclays Capital Private Clients A leading global investment bank which provides large Serves affluent, high net worth and corporate clients, corporate, institutional and government clients with solutions primarily in the UK and continental Europe, providing to their financing and risk management needs. private banking, offshore banking, stockbroking and asset Activities are primarily divided between two areas: Rates, which management services, as well as financial planning services includes fixed income, foreign exchange, commodities, emerging to a broader customer base. Private Clients includes the markets, money markets sales, trading and research, prime closed life assurance activities. brokerage and equity-related activities; and Credit, which includes Private Clients has over 300,000 affluent and high net worth origination, sales, trading and research relating to loans, debt clients, and includes Barclays Stockbrokers, which is the largest capital markets, structured capital markets, commercial mortgage execution only broker in the UK. backed securities, private equity and large asset leasing. International Barclays Global Investors (BGI) Provides a range of banking services, including current One of the world’s largest asset managers and a leading accounts, savings, investments, mortgages and consumer global provider of investment management products loans to personal and corporate customers across Spain, and services, serving over 2,600 institutional clients in 48 Portugal, France, Italy, the Caribbean, Africa and the countries, with over £700bn assets under management. Middle East. BGI is the global product leader in Exchange Traded Funds In total, International serves 2.2 million customers through (iShares), with over 100 funds available for institutions and 841 international branches in 16 countries. Barclays Spain individuals trading in ten markets worldwide. serves 500,000 customers, and Barclays Africa and Middle East operates through 230 branches and has 1.4 million customer accounts. For further information on business performance see pages 106 to 112 3 Chairman’s statement As the figures show, 2004 was a very successful year for Barclays. 2004 was also a year in which we managed successfully the transition to a new leadership team. John Varley took the reins as Group Chief Executive with effect from 1st September and I succeeded Sir Peter Middleton as Chairman. On