26th Apr 2007 11:00
Barclays PLC26 April 2007 BARCLAYS PLC ANNUAL GENERAL MEETING THURSDAY 26 APRIL 2007 CHAIRMAN'S STATEMENT BY MARCUS AGIUS Ladies and gentlemen, good morning and welcome to the Annual General Meeting ofBarclays PLC for 2007. I am very glad to see you all here today and did enjoyspeaking to some of you before the meeting began. Before we get down to the formal business of the meeting, I would like to make afew remarks before asking John Varley to give you a review of the business. Let me start by saying how delighted I am to be hosting my first AGM as Chairmanof this great company and to be reporting to you, on behalf of the board, on theperformance of Barclays in 2006. In doing so, I should recognise the immensecontribution made by my predecessor - and the former Chief Executive of thisbank - Matt Barrett. Under his stewardship, profit before tax almost trebledand shareholder value increased by 119 per cent. I am sure you will agree thatwithout his efforts, our bank wouldn't be in the strong position it is in today. 2006 was a year of significant achievements and Barclays showed great momentumin a number of its strategic priorities. We enjoyed another year of recordfinancial performance with profit before tax up 35 per cent to £7.1 billion andwe declared a final dividend for the year of 20.5 pence a share, making a totalpayout of the year of 31 pence - an increase of 17 per cent. Within our portfolio of businesses, there were outstanding performances fromBarclays Capital and Barclays Global Investors and we experienced strong profitgrowth at Barclays Wealth; UK Retail Banking - which displayed a good turnaround-; UK Business Banking ; and International Retail and CommercialBanking - including Absa. And while overall profits at Barclaycard fell, creditperformance in Barclaycard UK did start to improve in the second half of 2006. We could not have done this without the hard work, dedication, enthusiasm andinnovative spirit of our 123,000 employees. On behalf of the Board and onbehalf of you, the shareholders, I would like to thank them for their part increating value for the owners of this company. We know our employees value where they work. Every year, we carry out anEmployee Opinion Survey and this year, our overall employee engagement scores -which measure the extent to which employees believe in Barclays' goals andvalues - increased yet again. This is important for all of us who own sharesin Barclays, as we all know that an engaged workforce will serve our customersall the better. Let me update you on the Board changes over the past year. On the executiveside, Frits Seegers joined us as Director and Chief Executive of our newlycreated Global Retail and Commercial Banking operation an organisation whichgroups together all our retail banking, business banking and cards businesses togive them a single point of strategic direction and control. This newarrangement mirrors the focus of control we have in our Investment Banking andInvestment Management businesses under Bob Diamond. As a consequence, GaryHoffman -- who was Chairman of UK Banking and of Barclaycard - has now beenappointed as Group Vice Chairman with special responsibility for therelationships with many of our external stakeholders. David Roberts, who wasChief Executive of International Retail and Commercial Banking, left Barclays atthe end of 2006 and I would like to take this opportunity to thank him for hissignificant contribution to the Group over a career with Barclays lasting morethan twenty years. I would also like us to take a moment to thank Naguib Kheraj, the formerBarclays Group Finance Director, who stepped down from the Board at the end oflast month. While Naguib will be with Barclays for a few months longer in anadvisory capacity - and he is playing a key role in relation to our merger withABN AMRO), we should all recognise the outstanding contribution he has made tothe Group in the 10 years he has been with us. I know I am not alone in wishinghim all the very best for the future. Naguib is succeeded as Group FinanceDirector and on the Board by Chris Lucas who joined us on the first of Aprilfrom PricewaterhouseCoopers. Please would you join me in welcoming Chris toBarclays. Turning now to the non-executive side. As announced at the AGM last year,Fulvio Conti, Chief Executive of the Italian energy group Enel SpA, has joinedthe board and we are delighted to have the benefit of his extensiveinternational business experience. Sir David Arculus retired, after nine yearsservice. And Bob Steel resigned, following his appointment as the UnderSecretary of the Treasury for the United States of America. I would now like to make a few remarks about another important measure of ourperformance in 2006: Corporate Responsibility. A key objective of the Board isto lead in social, economic and environmental issues both in thinking and inpractice. We regard this as an integral part of our business strategy and ofour ultimate success. It is embodied by what we call 'responsible banking'.This means making informed, reasoned and ethical decisions in everything we do. Accountability for our success in Corporate Responsibility lies with the BoardVice Chairman, Gary Hoffman. We made significant progress with CorporateResponsibility in 2006, with particular focus on improving access to banking fordisadvantaged people in the UK and Africa, and in environmental management andclimate change. Last month, we achieved carbon neutrality in our UKoperations. We also maintained a very strong position in the key ethicalindices: the Dow Jones Sustainability Index FTSE4Good and the Business in theCommunity Index. You can read more about our achievements in our eighth Corporate Responsibilityreport which is published today, and John Varley will tell you more about thisin just a moment. So, in summary, our performance in 2006 showed we are making great headway inachieving our strategic ambitions to grow your company. I feel very privilegedto have been given the opportunity to act as Chairman of your Company and towork with such excellent executive and non-executive colleagues. Before I hand over to John, who will - of course - expand in more detail aboutour proposed merger with ABN Amro, let me give you my personal perspective asthe relatively newly-arrived Chairman. Barclays is a wonderful Company.Despite, or perhaps because of, its 300 year history Barclays is full of energyand vitality. In every sense playing off the front foot. It has a high levelof ambition and the means to realise it. It also has the self-confidence andthe wit to recognise the proposed merger with ABN Amro for what it is a once ina generation opportunity to take Barclays into the next league and create one ofthe world's best banks with the capability to deliver outstanding performancefor our customers, our employees and our shareholders. CHIEF EXECUTIVE'S STATEMENT BY JOHN VARLEY Thank you Chairman. Good morning ladies and gentlemen. I am going to talk fora little over ten minutes. Then we will show you a video - made by Bob Diamond,Frits Seegers and myself - which talks about Barclays and our ambitions for theGroup. I will of course update you, during my remarks today, on ABN AMRO, but let mestart by talking to you about Barclays strategy and performance during 2006. In a Group as diverse as Barclays you need to be very clear about businesspurpose. And we are clear: we are here to help our customers and clientsachieve their goals. What we do as a bank is important to those we serve. Bythat I mean that if we do it well, or if we don't do it well, it matters. If you're a student looking for a loan to help you through university. Ifyou're a single mother wanting a mortgage. If you're setting up a new businessand you're looking for a start-up loan. If you're saving for your retirement.Or if you're the finance director of an airline wanting to hedge your exposureto fluctuating fuel prices. If you're any of these people, then your bank cancontribute to your success. If we do our job well, then the outcomes are good for our owners, good for ourcustomers, good for our employees, and good for the communities in which we workand live. You've heard me say before that strong economies need strong banks. It's a goodthing for this country, and for the many other countries in which we dobusiness, that Barclays is successful. By being successful we createemployment; we contribute to community life; we pay a lot of tax; and we areable to pay good dividends to our shareholders. A useful way to judge a successful organisation is to look at what it does withits profit. In our case, of the £7bn pre-tax profit we made last year, we'vepaid over £2bn in tax - globally - (and you can imagine the number of schoolsand hospitals and roads that can be built from that amount of money). We paid£1.7bn in dividends, an increase of 17 per cent. (I sometimes hear bankscriticised for making too much money, but I never hear banks criticised forincreasing their dividends!). And we put about £2bn back into the business asinvestment to drive future growth. I'm going to turn to the theme of "responsible banking" in a few minutes, butlet me first talk about strategy. I want Barclays to be one of the handful ofuniversal banks leading the global financial services industry. That industrywill enjoy immense growth around the world over the course of the coming decade- growth driven by customer demand, coupled with powerful forces for change. What are these? It's things like the privatisation of welfare provision (bywhich I mean that the citizens of today will have to be more careful savers.That's because the State will not be able to afford to look after them in theirretirement in the way that it did their parents and their grandparents.) It'sthings like wealth generation and wealth transfer. It's the explosive growthin demand for banking products in the emerging markets - our acquisition of thecontrolling stake two years ago in Absa, the leading retail bank in SouthAfrica, was driven by this. It's the increasing use by companies of the bondmarket to meet their borrowing needs. Or of derivatives to help them managerisks like interest rate volatility or changes in commodity prices. And it'sthings like the demands that will be placed on capital markets to financeinfrastructure development both in developed and developing markets. Add all of these up, and they represent a storm force of demand and volumegrowth in the global financial services industry in the years ahead. Your Board must ensure - in terms of geographical presence, physical footprint,brand and capability - that the alignment between Barclays and the industrialgrowth that I've just described is as close as possible. That, ladies andgentlemen, is how we think of strategy: ensuring that, in a growing industry,Barclays will enjoy disproportionate growth - by being there for its customersand its clients as their needs develop and change and, by consequence,generating higher returns for shareholders over time. We set out on this path several years ago - developing our businesses in theUnited Kingdom, but also increasing rapidly the percentage of our profits thatcomes from outside the United Kingdom, and thereby increasing the Group's rateof growth. When I became Chief Executive three years ago I felt that there was anopportunity for Barclays to grow the business at a far faster rate than we hadbeen able to achieve up to that point. Your Board took the decision then toseek higher growth by diversifying our profits and growing our internationalbusiness. Radically. At the time, we said to ourselves that this would take usfive to ten years. We've made quite good progress so far. Let me illustrate by showing you a slide on screen now. In 2000 the profits ofyour company were £3.4bn. At the time, about 20% of the profits came fromoutside the United Kingdom, and that 20% amounted to almost £650m. Scrollforward to 2006 and you can see that the Group profit of £3.4bn has become£7.1bn. That the 20% non-UK component has become approximately 50%. And thatthe £650m earned outside the UK has become £3.7bn. In other words, we've been able to create a completely different trajectory ofgrowth over the course of the last years by diversifying and by applying ourprinciple of earn, invest and grow to the running of the business - beingprepared to invest strongly in the pursuit of growth; but recognising that you,our owners, expect good short term profit performance meanwhile. Here's another chart that gives you some historical perspective. It shows ourprofits in the first part of the decade and then shows our profit performancesince then. During this period our UK business has been growing strongly. Butwe have added to the rate of Group profit by diversifying our profit baseoutside the UK. Let me explain how the ABN AMRO opportunity fits into this story. The portfolioof businesses of the combined Barclays/ABN AMRO would have excellent alignmentwith the sources of growth in the financial services industry that I described aminute ago. And that portfolio mix, in terms of business and in terms ofgeography, is very close indeed to the ambition and long-term vision that wehave created for the business. The merger of Barclays with ABN AMRO would, in my opinion, get us to the optimalbusiness portfolio a great deal sooner than we could otherwise achieve it.That would set the enlarged Group up for a period of rapid growth in the yearsahead - growth faster than the rates of growth available to the stand-aloneorganisations. ABN AMRO brings about 20m personal customer relationships aroundthe world. It brings hundreds of thousands of corporate relationships. Itbrings excellent exposure in developed markets such as Italy and The Netherlandsand it also brings better exposure than Barclays has in emerging markets such asBrazil, Indonesia, Taiwan and India. I don't want you to think that what is driving our ambitions in the direction ofABN AMRO is the pursuit of size. I regard size as irrelevant. That's becausesize doesn't matter to customers - what matters to customers is capability. And size doesn't matter to shareholders - what matters to you is sustainablegrowth. The ABN AMRO opportunity fits right in the back yard of our strategy. Many of you will have seen yesterday's announcement by a consortium of banksrelating to ABN AMRO. What Barclays offers, and what the consortium offers,stand in stark contrast: on the one hand a decision by the Boards of Barclaysand ABN to build, through merger, one of the best banks in the world - with allthe benefits for customers and clients, for shareholders and for employees thatgo with that; and on the other, the deconstruction, into heaven knows how manyparts, of one of the biggest banks in Europe. It's very clear what ABN AMROwant. And I want ABN, alongside Barclays, to be a founding partner of what willbe one of the great banking enterprises, and great banking stories, of the 21stCentury. Let me return to Barclays. I referred earlier to responsible banking.Responsible banking means making informed, reasoned and ethical decisions about:how we conduct our business; how we treat our employees; and how we behavetowards our customers and clients. As the Chairman said earlier, we havereceived strong ratings in a number of important ethical indices and we areproud of this. But we must ensure that we continue to play a positive part inthe communities in which we operate. For example in the area ofsustainability: how can we contribute to building a more inclusive society byaddressing the acute challenges of financial exclusion. In the UK and in SouthAfrica, we now have over a million basic bank accounts, providing simple bankingservices to people who previously did not have access to the banking system.Absa is providing access to more than two million beneficiaries of social grantpayments, much of this in rural areas where there are no financial services. Inthe UK, we are the largest high street bank supporter of the credit unions,which help to provide sustainable, affordable credit to disadvantaged people. We also have an important part to play in the climate change debate. We look atthis in two ways. The first is our direct environmental footprint, fulfilling,for example, the commitment that we made last year to make our UK operationscarbon neutral. 50% of the energy used across our UK operations is now fromrenewable sources, and we are now well under way with environmental social andethical screening of all our suppliers. And secondly, it is the indirectfootprint through the companies we supply. Which is why we have significantlyupdated our environmental and social guidelines in our lending activity. Iwould say that, in the area of the environment, we've made a reasonable start.But in the years ahead, this will be an area of increasing focus for us. Finally I take this opportunity today of thanking our employees: for theirenergy, their commitment, and their immense contribution to our record resultsin 2006. What we owe them is good leadership. I have two last things to say to you this morning: First: our performance in2007. We have had a good start to the year, with headline profit before tax forthe first quarter 15% ahead of the first quarter of 2006. Excluding gains fromthe sale and lease back of property, profit before tax grew 10% Performance wasparticularly strong at Barclays Capital which had its best quarter ever. Andsecond: We serve customers in intensely competitive environments all around theworld. Barclays is well equipped to compete, and by consequence to grow, toserve, and to generate good returns for you, our owners this year and in theyears ahead. Let me show you now the video I mentioned earlier. Thank you. - END- For further information please contact: Investor Relations Media RelationsMark Merson/James S Johnson Stephen Whitehead/Alistair Smith+44 (0) 20 7116 5752/2927 +44 (0) 20 7116 6060/6132 Forward Looking Statements This document contains certain forward-looking statements within the meaning ofSection 21E of the US Securities Exchange Act of 1934, as amended, and Section27A of the US Securities Act of 1933, as amended, with respect to certain ofBarclays plans and its current goals and expectations relating to its futurefinancial condition and performance and which involve a number of risks anduncertainties. Barclays cautions readers that no forward-looking statement is aguarantee of future performance and that actual results could differ materiallyfrom those contained in the forward-looking statements. These forward-lookingstatements can be identified by the fact that they do not relate only tohistorical or current facts. Forward-looking statements sometimes use words suchas 'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan','goal', 'believe', or other words of similar meaning. Examples offorward-looking statements include, among others, statements regarding theconsummation of the business combination between ABN AMRO and Barclays withinthe expected timeframe and on the expected terms (if at all), the benefits ofthe business combination transaction involving ABN AMRO and Barclays, includingthe achievement of synergy targets, ABN AMRO's and Barclays future financialposition, income growth, impairment charges, business strategy, projected costsand estimates of capital expenditure and revenue benefits, projected levels ofgrowth in the banking and financial markets, the combined group's futurefinancial and operating results, future financial position, projected costs andestimates of capital expenditures, and plans and objectives for futureoperations of Barclays and the combined group and other statements that are nothistorical fact. Any forward-looking statements made by or on behalf ofBarclays speak only as of the date they are made. Barclays does not undertaketo update forward-looking statements to reflect any changes in expectations withregard thereto or any changes in events, conditions or circumstances on whichany such statement is based. The reader should, however, consult any additionaldisclosures that Barclays has made or may make in documents it has filed or mayfile with the SEC. Future SEC Filings and this Filing: Important Information In connection with the proposed business combination transaction between ABNAMRO and Barclays, Barclays expects it will file with the US Securities andExchange Commission ("SEC") a Registration Statement on Form F-4, which willconstitute a prospectus, as well as a Tender Offer Statement on Schedule TO andother relevant materials. In addition, ABN AMRO expects that it will file withthe SEC a Solicitation/Recommendation Statement on Schedule 14D-9 and otherrelevant materials. Such documents, however, are not currently available. INVESTORS ARE URGED TO READ ANY DOCUMENTS REGARDING THE POTENTIAL TRANSACTION IFAND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain a free copy of such filings without charge, atthe SEC's website (http://www.sec.gov) once such documents are filed with theSEC. Copies of such documents may also be obtained from ABN AMRO and Barclayswithout charge, once they are filed with the SEC. This document shall not constitute an offer to buy or sell or the solicitationof an offer to buy or sell any securities in such a proposed transaction, norshall there be any sale of such securities in any jurisdiction in which suchoffer, solicitation or sale would be unlawful prior to registration orqualification under the securities laws of any such jurisdiction. No offering ofsecurities shall be made except by means of a prospectus meeting therequirements of Section 10 of the Securities Act of 1933, as amended. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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