Barclays





In Section 1:


Introduction Chairman's Statement Group Chief Executive's Statement Financial Performance Group Finance Director The Leadership Team
	To facilitate a better understanding of the operating profit trends, in the following analysis references to operating profit exclude the impact of the restructuring charge relating to staff displacement and related costs, costs directly associated with the integration of Woolwich plc, Woolwich fair value adjustments and goodwill amortisation. Barclays delivered a resilient performance during 2002 but like the rest of the financial services industry, we felt the impact of 2002's uncompromising economic climate. While return on equity on a statutory basis was 15% and the total dividend payout for the year was up 10%, operating profit, at Ł3,780 million, was 4% lower than in 2001. Income rose 2%. Aggressive cost management helped mitigate the effects of the tougher environment for income growth. We were again able to maintain a positive margin between income growth and cost growth, but not at the levels of recent years. The cost income ratio improved slightly from 54.3% in 2001 to 53.6% in 2002. While these results were sound given the market pressures, they fell short of our recent standards. Solid performance and good growth in many areas of the business, and an increase in customer recruitment and business volumes, were not enough to offset two features of 2002: first the increased provisions on the South American Corporate Banking loan book (the year on year impact was approximately Ł100 million); and second the swing from a positive income contribution of Ł127 million in 2001 to a negative contribution of Ł51 million in 2002 from the closed life funds business. The combination of these factors converted what would have been a 3% operating profit increase into a 4% fall. Barclays sets value based financial goals to stretch performance. The current goal cycle, 2000 to 2003, was 75% elapsed as at the end of 2002. Goals have been an important stimulus of focus and energy for the whole organisation, helping to lift our metabolic rate and drive performance improvements. It is right that goals should be stretching and enduring in nature so, notwithstanding the tough markets of 2002 and the difficult outlook for 2003, the goals which we have set for the period 2000 to 2003 remain unchanged. Total shareholder return The primary goal is to achieve top quartile total shareholder return on a sustained basis, relative to our peer group. Total shareholder return is the sum of share price appreciation and dividends (treated as if re-invested in Barclays shares). The peer group is reviewed annually. In 2002, it comprised Abbey National, ABN Amro, BBVA, BNP Paribas, Citigroup, Deutsche Bank, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and Standard Chartered. It remains unchanged for 2003. We believe that total shareholder return, measured relative to the performance of comparable companies, is the best way of evaluating Barclays performance and measuring value creation for shareholders. At the end of 2002, three years into the period, Barclays remained in the top quartile of its peer group with total shareholder return over the years 2000 to 2002 inclusive of minus 4%. The average return of the peer group over the same period was minus 11%. The total shareholder return goal is supported by three additional goals. They are goals directed at economic profit1, absolute value and costs. 1Economic profit is defined as profit after tax and minority interests plus certain gains (and losses) reported within the statement of total recognised gains and losses where they arise from the Group's business activities and are in respect of transactions with third parties, less a charge for the cost of average shareholders' funds (which included purchased goodwill).	Click to go to each page