Notes to the accounts

For the year ended 31st December 2007


40 Principal subsidiaries

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Percentage 
of equity 
Country of registration  capital held 
or incorporation  Company name  Nature of business  % 
Botswana Barclays Bank of Botswana Limited Banking 74.9
Egypt Barclays Bank Egypt SAE Banking 100
England Barclays Bank PLC Banking, holding company 100 *
England Barclays Mercantile Business Finance Limited Loans and advances including leases to customers 100 *
England Barclays Global Investors UK Holdings Limited Holding company 94.1
England Barclays Global Investors Limited Investment management 94.1 *
England Barclays Life Assurance Company Limited Life assurance 100
England Barclays Bank Trust Company Limited Banking, securities industries and trust services 100
England Barclays Stockbrokers Limited Stockbroking 100
England Barclays Capital Securities Limited Securities dealing 100
England Barclays Global Investors Pensions Management Limited Investment management 94.1 *
England FIRSTPLUS Financial Group PLC Secured loan provider 100
England Gerrard Investment Management Limited Investment management 100 *
Ghana Barclays Bank of Ghana Limited Banking 100
Ireland Barclays Insurance (Dublin) Limited Insurance provider 100
Ireland Barclays Assurance (Dublin) Limited Insurance provider 100 *
Isle of Man Barclays Private Clients International Limited a Banking 100 *
Japan Barclays Capital Japan Limited Securities dealing 100 *
Jersey Barclays Private Bank & Trust Limited Banking, trust company 100 *
Kenya Barclays Bank of Kenya Limited Banking 68.5
South Africa Absa Group Limited Banking 58.8
Spain Barclays Bank SA Banking 99.7
Switzerland Barclays Bank (Suisse) S.A. Banking and trust services 100 *
USA Barclays Capital Inc. Securities dealing 100 *
USA Barclays Financial Corporation Holding company for US credit card issuer 100 *
USA Barclays Global Investors, National Association Investment management and securities industry 94.1 *
Zimbabwe Barclays Bank of Zimbabwe Limited Banking 67.8 *

In accordance with Section 231(5) of the Companies Act 1985, the above information is provided solely in relation to principal subsidiaries.

The country of registration or incorporation is also the principal area of operation of each of the above subsidiaries. Investments in these subsidiaries are held directly by Barclays Bank PLC except where marked *.

Full information of all subsidiaries will be included in the Annual Return to be filed at Companies House.

Note
a
BBPLC is the beneficial owner of 38.1% of shares and Barclays Holdings (Isle of Man) Limited is the beneficial owner of 61.9% of shares.

41 Other entities

There are a number of entities that do not qualify as subsidiaries under UK Law but which are consolidated when the substance of the relationship between the Group and the entity (usually a Special Purpose Entity (SPE)) indicates that the entity is controlled by the Group. Such entities are deemed to be controlled by the Group when relationships with such entities gives rise to benefits that are in substance no different from those that would arise were the entity a subsidiary.

The consolidation of such entities may be appropriate in a number of situations, but primarily when:

  • – the operating and financial polices of the entity are closely defined from the outset (i.e. it operates on an ‘autopilot’ basis) with such policies being largely determined by the Group;
  • – the Group has rights to obtain the majority of the benefits of the entity and/or retains the majority of the residual or ownership risks related to the entity; or
  • – the activities of the entity are being conducted largely on behalf of the Group according to its specific business objectives.

Such entities are created for a variety of purposes including securitisation, structuring, asset realisation, intermediation and management.

Entities may have a different reporting date from that of the parent of 31st December. Dates may differ for a variety of reasons including local reporting regulations or tax laws. In accordance with our accounting policies, for the purpose of inclusion in the consolidated financial statements of Barclays PLC, entities with different reporting dates are made up until 31st December.

Entities may have restrictions placed on their ability to transfer funds, including payment of dividends and repayment of loans, to their parent entity. Reasons for the restrictions include:

  • – Central bank restrictions relating to local exchange control laws.
  • – Central bank capital adequacy requirements.
  • – Company law restrictions relating to treatment of the entities as going concerns.

Although the Group’s interest in the equity voting rights in certain entities exceeds 50%, or it may have the power to appoint a majority of their Boards of Directors, they are excluded from consolidation because the Group either does not direct the financial and operating policies of these entities, or on the grounds that another entity has a superior economic interest in them. Consequently, these entities are not deemed to be controlled by Barclays.

The table below includes information in relation to such entities as required by the Companies Act 1985, Section 231(5).

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Equity 
Percentage of  share-  Retained 
ordinary share  holders’  profit for 
Country of registration  capital held  funds  the year 
or incorporation  Name  %  £m  £m 
UK  Oak Dedicated Limited  100  (3) 4 
UK  Oak Dedicated Two Limited  100  (3) 2 
UK  Oak Dedicated Three Limited  100  1  1 
UK  Fitzroy Finance Limited  100  –  – 
Cayman Islands  St James Fleet Investments Two Limited  100  2  – 
Cayman Islands  BNY BT NewCo Limited  –  –  – 

Notes to the accounts

For the year ended 31st December 2007


42 Related party transactions and Directors’ remuneration

(a) Related party transactions

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operation decisions, or one other party controls both. The definition includes subsidiaries, associates, joint ventures and the Group’s pension schemes, as well as other persons.

Subsidiaries

Transactions between Barclays PLC and subsidiaries also meet the definition of related party transactions. Where these are eliminated on consolidation, they are not disclosed in the Group financial statements. Transactions between Barclays PLC and its subsidiary, Barclays Bank PLC are fully disclosed directly in its balance sheet and income statement. A list of the Group’s principal subsidiaries is shown in Note .

Associates, joint ventures and other entities

The Group provides banking services to its associates, joint ventures and the Group pension funds (principally the UK Retirement Fund), providing loans, overdrafts, interest and non-interest bearing deposits and current accounts to these entities as well as other services. Group companies, principally within Barclays Global Investors, also provide investment management and custodian services to the Group pension schemes. The Group also provides banking services for unit trusts and investment funds managed by Group companies and are not individually material. All of these transactions are conducted on the same terms as third-party transactions.

Amounts included in the accounts, in aggregate, by category of related party entity are as follows:

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For the year ended and as at 31st December 2007
Pension 
Entities  funds unit 
under  trusts and 
Joint  common  investment 
Associates  ventures  directorships  funds  Total 
£m  £m  £m  £m  £m 
Income statement: 
Interest received  5  75  1  –  81 
Interest paid  (1) (58) (1) –  (60)
Fees received for services rendered (including investment management and 
custody and commissions) 1  34  –  26  61 
Fees paid for services provided  (52) (78) –  –  (130)
Principal transactions  (24) 47  (16) –  7 
Assets: 
Loans and advances to banks and customers  142  886  40  –  1,068 
Derivative transactions  –  4  36  –  40 
Other assets  19  18  –  14  51 
Liabilities: 
Deposits from banks  11  –  –  –  11 
Customer accounts  –  61  33  12  106 
Derivative transactions  –  10  50  –  60 
Other liabilities  4  125  –  –  129 

42 Related party transactions and Directors’ remuneration (continued)

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For the year ended and as at 31st December 2006
Pension 
Entities  funds unit 
under  trusts and 
Joint  common  investment 
Associates  ventures  directorships  funds  Total 
£m  £m  £m  £m  £m 
Income statement: 
Interest received  45  38  –  2  85 
Interest paid  (31) (57) –  –  (88)
Fees received for services rendered (including investment management and 
custody and commissions) 14  7  –  28  49 
Fees paid for services provided  (115) (51) –  (1) (167)
Principal transactions  3  –  (2) –  1 
Assets: 
Loans and advances to banks and customers  784  146  65  –  995 
Derivative transactions  –  –  –  –  – 
Other assets  19  3  –  17  39 
Liabilities: 
Deposits from banks  9  –  –  3  12 
Customer accounts  19  18  5  34  76 
Derivative transactions  –  –  2  –  2 
Other liabilities  13  8  –  –  21 

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For the year ended and as at 31st December 2005
Pension 
Entities  funds unit 
under  trusts and 
Joint  common  investment 
Associates  ventures  directorships  funds  Total 
£m  £m  £m  £m  £m 
Income statement: 
Interest received  23  14  –  –  37 
Interest paid  (37) (45) –  –  (82)
Fees received for services rendered (including investment management and 
custody and commissions) 5  7  –  17  29 
Fees paid for services provided  (120) (34) –  –  (154)
Principal transactions  33  –  –  1  34 
Assets: 
Loans and advances to banks and customers  632  19  –  –  651 
Derivative transactions  36  –  –  –  36 
Other assets  26  1  –  19  46 
Liabilities: 
Deposits from banks  827  –  –  –  827 
Customer accounts  13  22  –  501  536 
Derivative transactions  1  –  –  –  1 
Other liabilities  22  6  –  –  28 

No guarantees, pledges or commitments have been given or received in respect of these transactions in 2007, 2006 or 2005.

There are no leasing transactions between related parties for 2007, 2006 or 2005.

Derivatives transacted on behalf of the Pensions Funds Unit Trusts and Investment Funds amounted to £22m (2006: £1,209m, 2005: £280m).

In 2007 Barclays paid £18m (2006: £19m) of its charitable donations through the Charities Aid Foundation, a registered charitable organisation, in which a Director of the Company is a Trustee.

Notes to the accounts

For the year ended 31st December 2007


42 Related party transactions and Directors’ remuneration (continued)

Key Management Personnel

The Group’s Key Management Personnel, and persons connected with them, are also considered to be related parties for disclosure purposes. Key Management Personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of Barclays PLC (directly or indirectly) and comprise the Directors of Barclays PLC and the Officers of the Group, certain direct reports of the Group Chief Executive and the heads of major business units.

In the ordinary course of business, the Bank makes loans to companies where a Director or other member of Key Management Personnel (or any connected person) is also a Director or other member of Key Management Personnel (or any connected person) of Barclays. These loans are made on substantially the same criteria and terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavourable features.

There were no material related party transactions with companies where a Director or other member of Key Management Personnel (or any connected person) is also a Director or other member of Key Management Personnel (or any connected person) of Barclays.

The Group provides banking services to Directors and other Key Management Personnel and persons connected to them. Transactions during the year and the balances outstanding at 31st December 2007 were as follows:

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Directors, other Key Management
Personnel and connected persons
2007  2006  2005 
£m  £m  £m 
Loans outstanding at 1st January  7.8  7.4  7.8 
Loans issued during the year  2.7  2.7  3.4 
Loan repayments during the year  (3.2) (2.3) (3.2)
Loans outstanding at 31st December  7.3  7.8  8.0 
Interest income earned  0.4  0.3  0.4 

No allowances for impairment were recognised in respect of loans to Directors or other members of Key Management Personnel (or any connected person) in 2007, 2006 or 2005.

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2007  2006  2005 
£m  £m  £m 
Deposits outstanding at 1st January  15.0  4.7  2.5 
Deposits received during the year  114.4  105.2  20.4 
Deposits repaid during the year  (115.0) (94.8) (18.2)
Deposits outstanding at 31st December  14.4  15.1  4.7 
Interest expense on deposits  0.6  0.2  0.1 

Of the loans outstanding above, £nil (2006: £nil, 2005: £0.7m) relates to Directors and other Key Management Personnel (and persons connected to them) that left the Group during the year. Of the deposits outstanding above, £2.8m (2006: £0.1m, 2005: £nil) related to Directors and other Key Management Personnel (and persons connected to them) that left the Group during the year.

All loans are provided on normal commercial terms to Directors and other Key Management Personnel (and persons connected to them), with the exception of £1,540 of loans which are provided to non-Director members of Key Management Personnel on staff preferential interest rates (5%) and £665 of loans which are provided on an interest free basis.

The loans of £1,540 provided at staff preferential rates of interest reflects the amortized principal amount of a home mortgage loan that was provided by Barclays to a non-Director member of key management personnel. The home mortgage loan was granted at a time when Barclays had in place a corporate policy of providing home mortgage loans at preferential rates of interest to all staff members. This policy has since been discontinued by Barclays. These home mortgage loans were made on substantially the same terms, including interest rates and collateral, to all staff members, who applied for such loans. The loans of £665 provided on an interest free basis relate to the granting of loans to one non-Director member of Barclays key management to purchase commuter rail tickets. The commuter rail ticket loans are still provided to all Barclays staff members upon request on the same terms.

42 Related party transactions and Directors’ remuneration (continued)

Remuneration of Directors and other Key Management Personnel

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Directors, other Key Management
Personnel and connected persons
2007  2006  2005 
£m  £m  £m 
Salaries and other short-term benefits  23.7  34.2  32.9 
Pension costs  1.1  0.8  1.1 
Other long-term benefits  9.2  9.3  21.5 
Termination benefits  –  1.4  1.5 
Share-based payments  31.7  27.2  25.3 
Employer social security charges on emoluments  7.8  10.0  10.4 
73.5  82.9  92.7 

(b) Disclosure required by the Companies Act 1985

The following information is presented in accordance with the Companies Act 1985:

Directors’ remuneration
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2007  2006 
£m  £m 
Aggregate emoluments  29.2  32.0 
Gains made on the exercise of share options  0.3  5.5 
Amounts paid under long-term incentive schemes  –  – 
Actual pension contributions to money purchase scheme (2007: one Director, £10,233 and 2006: one Director, £11,414) –  – 
Notional pension contributions to money purchase scheme (2007: no Directors and 2006: no Directors) –  – 
29.5  37.5 

As at 31st December 2007, three Directors were accruing retirement benefits under a defined benefit scheme (2006: four Directors).

Two Directors (Naguib Kheraj and Frits Seegers) agreed to waive their fees as non-executive Directors of Absa Group Limited and Absa Bank Limited. The respective fees for 2007 were ZAR 0.1m (£0.01m) and ZAR 0.5m (£0.03m). The fees for 2006 were ZAR 0.4m (£ 0.03m) for Naguib Kheraj and ZAR 0.1m (£ 0.01m) for Frits Seegers. In both 2006 and 2007 the fees were paid to Barclays.

Directors’ and Officers’ shareholdings and options

The beneficial ownership of the ordinary share capital of Barclays PLC by all Directors and Officers of Barclays PLC (involving 21 persons) and Barclays Bank PLC (involving 22 persons) at 31st December 2007 amounted to 5,774,219 ordinary shares of 25p each (0.09% of the ordinary share capital outstanding) and 5,776,370 ordinary shares of 25p each (0.09% of the ordinary share capital outstanding), respectively.

Executive Directors and Officers of Barclays PLC as a group (involving 10 persons) held, at 31st December 2007, options to purchase 3,097,762 Barclays PLC ordinary shares of 25p each at prices ranging from 373p to 510p under Sharesave and at 397p under the Executive Share Option Scheme and ranging from 326p to 534p under the Incentive Share Option Plan, respectively.

Contracts with Directors (and their connected persons) and Managers

The aggregate amounts outstanding at 31st December 2007 under transactions, arrangements and agreements made by banking companies within the Group for persons who are, or were during the year, Directors of Barclays PLC and persons connected with them, as defined in the Companies Act 2006, and for Managers, within the meaning of the Financial Services and Markets Act 2000, of Barclays Bank PLC were:

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Number of  Number of 
Directors or  connected  Amount 
Managers  persons  £m 
Directors 
Loans  2  5  2.1 
Quasi-loans and credit card accounts  12  18  – 
Managers 
Loans  12  n/a  13.2 
Quasi-loans and credit card accounts  11  n/a  – 

(c) US disclosures

For US disclosure purposes, the aggregate emoluments of all Directors and Officers of Barclays PLC who held office during the year (2007: 22 persons, 2006: 24 persons, 2005: 25 persons) for the year ended 31st December 2007 amounted to £64.6m (2006: £72.1m, 2005: £75.2m). In addition, the aggregate amount set aside for the year ended 31st December 2007, to provide pension benefits for the Directors and Officers amounted to £1.1m (2006: £0.8m, 2005: £0.2m). The aggregate emoluments of all Directors and Officers of Barclays Bank PLC who held office during the year (2007: 23 persons, 2006: 25 persons, 2005: 26 persons) for the year ended 31st December 2007 amounted to £64.9m (2006: £72.2m, 2005: £75.4m). In addition, the aggregate amount set aside by the Bank and its subsidiaries for the year ended 31st December 2007, to provide pension benefits for the Directors and Officers amounted to £1.1m (2006: £0.8m, 2005: £0.2m).

Notes to the accounts

For the year ended 31st December 2007


43 Events after the balance sheet date

On 3rd March 2008, Barclays entered into an agreement with Petropavlovsk Finance (Limited Liability Society) to acquire 100% of the Russian Bank, Expobank, for a consideration of approximately $745m (£373m). The transaction is expected to close in summer 2008 after receipt of appropriate regulatory approvals. Expobank focuses principally on Western Russia, with a substantial presence in Moscow and St Petersburg. Founded in 1994, it has grown rapidly and comprises a blend of retail and commercial banking, operating 32 branches and dealing with a range of corporate and wholesale clients. As at 31st December 2007, Expobank had net assets of $186m (£93m).

44 Share-based payments

The Group operates share schemes for employees throughout the world. The main current schemes are:

Sharesave

Eligible employees in the UK, Spain and Ireland may participate in the Barclays Sharesave scheme. Under this scheme, employees may enter into contracts to save up to £250 per month (Ireland: €320, Spain: €90) and, at the expiry of a fixed term of three, five or seven years (Spain: three years), have the option to use these savings to acquire shares in the Company at a discount, calculated in accordance with the rules of the scheme. The discount is currently 20% of the market price at the date the options are granted. Participants in the scheme have six months from the date of vest in which the option can be exercised.

Sharepurchase

Sharepurchase was introduced in January 2002. It is an HM Revenue & Customs approved all-employee share plan. The plan is open to all eligible UK employees, including executive Directors. Under the plan, participants are able to purchase up to £1,500 worth of Barclays PLC ordinary shares per tax year, which, if kept in trust for five years, can be withdrawn from the plan tax-free. Matching shares were introduced to the scheme during 2005 where the purchase of Barclays shares by the participant are matched equally by the Company up to a value of £600 per tax year. Any shares in the plan will earn dividends in the form of additional shares, which must normally be held by the trustee for three years before being eligible for release.

Executive Share Award Scheme (ESAS)

For certain employees of the Group an element of their annual bonus is in the form of a deferred award of a provisional allocation of Barclays PLC shares under ESAS. The total value of the bonus made to the employee of which ESAS is an element is dependent upon the business unit, Group and individual employee performance. The ESAS element of the annual bonus must normally be held for at least three years. Additional bonus shares are subsequently awarded to recipients of the provisional allocation and vest upon achieving continued service for three and five years from the date of award. ESAS awards are also made to eligible employees for recruitment purposes. All awards are subject to potential forfeit if the individual resigns and commences work with a competitor business.

Performance Share Plan (PSP)

The Performance Share Plan (PSP) was approved by shareholders at the 2005 AGM to replace the ISOP scheme. Performance shares are ‘free’ Barclays shares for which no exercise price is payable and which qualify for dividends. Performance share awards are communicated to participants as an initial allocation. Barclays performance over a three-year period determines the final number of shares that may be released to participants.

Options granted under the following schemes are over subsidiaries of Barclays PLC:

Barclays Global Investors Equity Ownership Plan (BGI EOP)

The Equity Ownership Plan extends to key employees of BGI. The exercise price of the options is determined by the Remuneration Committee of Barclays PLC based on the fair value of BGI as determined by an independent appraiser. The options are granted over shares in Barclays Global Investors UK Holdings Limited, a subsidiary of Barclays Bank PLC. Options are not exercisable until vesting, with a third of the options held generally becoming exercisable at each anniversary of grant. The shareholder has the right to offer to sell the shares to Barclays Bank PLC 355 days following the exercise of the option. Barclays Bank PLC may accept the offer and purchase the shares at the most recently agreed valuation but is under no obligation to do so. Options lapse ten years after grant. The most recently agreed valuation was £106.03 at 30th June 2007.

Absa Group Limited Black Economic Empowerment (BEE) Transaction

On 25th June 2004, Absa shareholders approved the allocation of 73,152,300, redeemable cumulative option-holding Absa preference shares to Batho Bonke Capital Limited. Each redeemable preference share carries the option to acquire one Absa ordinary share. The shares carry the same rights as ordinary shares including voting rights, and receive dividends which are payable semi-annually. Options vest after three years and lapse after five years from the date of issue. Exercise may only occur in lots of 100 and within a price range varying from ZAR48 to ZAR69 (£3.40-£4.89) dependent on the 30-day volume weighted trading price on the JSE Limited. Options are redeemed by Absa on the final exercise date.

44 Share-based payments (continued)

Absa Group Limited Share Incentive Trust (AGLSIT)

In terms of the rules of Absa Group Limited Share Incentive Trust the maximum number of shares which may be issued or transferred and/or in respect of which options may be granted to the participants shall be limited to shares representing 10% of the total number of issued shares. Options are allocated to Absa employees according to the normal Human Resources talent management process. The options issued up to August 2005 had no performance criteria linked to them and vested in equal tranches after three, four and five years respectively. No dividends accrue to the option holder over the period. The options expire after a period of ten years from the issuing date. Options issued since August 2005 have vesting performance criteria associated with them, which require headline earnings per share to exceed an agreed benchmark over a three-year period from July 2005 for the options to vest

Absa Group Limited Share Ownership Trust (AGLSOT)

The Absa Group Limited Share Ownership Trust (AGLSOT) enabled all Absa employees to participate in a one-off offer to purchase 200 redeemable cumulative option-holding preference shares. Each redeemable preference share carries the option to acquire one Absa ordinary share. Options vest after three years and lapse after five years from the date of issue. Exercise may only occur in lots of 100 and within a price range varying from ZAR48 to ZAR69 (£3.40-£4.89) dependent on the 30-day volume weighted trading price on the JSE Limited. Options are redeemed by Absa on the final exercise date.

Absa Group Limited Executive Share Award Scheme (AGLESAS)

For certain employees of Absa an element of their annual bonus is in the form of a deferred award of a provisional allocation of Absa Group Limited shares under Absa ESAS. The total value of the bonus made to the employee of which ESAS is an element is dependent upon the business unit and individual employee performance. The ESAS element of the annual bonus must be held for at least three years. Additional bonus shares are subsequently awarded to recipients of the provisional allocation and vest upon achieving continued service for three and five years from the date of award. All awards are subject to potential forfeit if the individual resigns.

In addition, options remain outstanding under the following closed schemes:

Incentive Share Option Plan (ISOP)

The ISOP was open by invitation to the employees and Directors of Barclays PLC. Options were granted at the market price at the date of grant calculated in accordance with the rules of the plan, and are normally exercisable between three and ten years from that date. The final number of shares over which the option may be exercised is determined by reference to set performance criteria. The number of shares under option represents the maximum possible number that may be exercised. No awards were made under ISOP during 2006 or 2007.

Executive Share Option Scheme (ESOS)

The ESOS is a long-term incentive scheme and was available by invitation to certain senior executives of the Group with grants usually made annually. Options were issued with an exercise price equivalent to the market price at the date of the grant without any discount, calculated in accordance with the rules of the scheme, and are normally exercisable between three and ten years from that date. No further awards are made under ESOS.

Woolwich Executive Share Option Plan (Woolwich ESOP)

Options originally granted over Woolwich PLC shares at market value were exercised in 2001 or exchanged, in accordance with the proposals made under the offer to acquire the Woolwich, for options over Barclays PLC shares. Under the rules of ESOP, the performance conditions attached to the exercise of options were disapplied on acquisition of Woolwich PLC by Barclays. Options lapse ten years after grant.

At the balance sheet date, no options remained outstanding or exercisable in respect of the following closed scheme:

Woolwich Save as You Earn (Woolwich SAYE)

Under this scheme, employees entered into contracts to save up to £250 per month and, at the expiry of a fixed term of three, five, or seven years, have the option to use these savings to acquire the shares in the Company at a discount calculated in accordance with the rules of the scheme. The discount was 20% of the market price at the date the options were granted.

At the balance sheet date the following cash settled schemes operated within the group:

Barclays Africa Share Plan

The Barclays Africa Share Plan grants a number of notional shares and settles in a cash award linked to the Barclays PLC share price. The exercise price of options is equal to the increment of the market price of Barclays shares over the original price on the date of grant. The final number of notional shares over which the option may be exercised is determined by reference to set performance criteria. Awards vest three years from grant and expire four years from that date.

Absa Group Phantom Performance Share Plan (Absa Phantom PSP)

The Absa Phantom PSP was implemented during 2006 to replace the Absa Group Limited Share Incentive Trust (AGLSIT) scheme. Shares are awarded at no cost to participants and the cash paid is equal to the market value of ordinary shares of Absa Group Limited. The performance of Absa over a three-year period determines the final number of notional shares that any cash payment would be based on. Awards vest after three years to the extent that the performance conditions are satisfied.

Notes to the accounts

For the year ended 31st December 2007


44 Share-based payments (continued)

The weighted average fair value per option granted during the year is as follows:

Excel File Download table as excel file
2007  2006 
£  £ 
Sharesave  1.25  1.88 
Sharepurchase  6.84  6.55 
ESAS  6.96  6.73 
PSP  8.03  7.53 
BGI EOP  22.18  21.18 
AGLSIT  3.18  2.70 
AGLESAS  n/a  8.42 

Fair values for Sharesave, PSP , BGI EOP and AGLSIT are calculated at the date of grant using either a Black-Scholes model or Monte Carlo simulation. Sharepurchase, ESAS and AGLESAS are nil cost awards on which the performance conditions are substantially completed at the date of grant. Consequently the fair value of these awards is based on the market value at that date.

As described above, the terms of the ESAS scheme require shares to be held for a set number of years from the date of vest. The calculation of the vest date fair value of such awards includes a reduction for this post-vesting restriction. This discount is determined by calculating how much a willing market participant would rationally pay to remove the restriction using a Black-Scholes option pricing model. The total discount required in 2007 is £66m (2006: £62m, 2005: £36m).

The significant weighted average assumptions used to estimate the fair value of the options granted in 2007 are as follows:

Excel File Download table as excel file
2007 
Sharesave  PSP  BGI EOP  AGLSIT 
Weighted average share price  5.82  7.07  95.33  9.18 
Weighted average exercise price  4.81  –  95.33  7.62 
Expected volatility  25%  25%  20%  30% 
Expected option life  4 years  3 years  4 years  5 years 

The significant weighted average assumptions used to estimate the fair value of the options granted in 2006 are as follows:

Excel File Download table as excel file
2006 
Sharesave  PSP  BGI EOP  AGLSIT 
Weighted average share price  6.20  6.74  81.12  8.92 
Weighted average exercise price  5.11  –  81.12  6.57 
Expected volatility  25%  25%  24%  29% 
Expected option life  4 years  3 years  4 years  5 years 

The significant weighted average assumptions used to estimate the fair value of the options granted in 2005 are as follows:

Excel File Download table as excel file
2005 
Sharesave  PSP  BGI EOP  AGLSIT  ISOP 
Weighted average share price  5.71  5.33  39.09  8.25  5.73 
Weighted average exercise price  4.44  n/a  39.09  8.41  5.66 
Expected volatility  24%  20%  25%  n/a  34% 
Option life  4 years  3 years  4 years  5-8 years  5 years 

Expected volatility and dividend yield on the date of grant have been used as inputs into the respective valuation models for Sharesave and PSP. Expected volatility has been determined using historical volatility of its peers over the expected life of the options for BGI EOP and AGLSIT applies a five-year rolling period.

The yield on UK government bonds with a commensurate life has been used to determine the risk-free discount rate of 5% for all schemes other than AGLSIT. Option life is estimated based upon historical data for the holding period of options between grant and exercise dates. The risk-free rate on the AGLSIT scheme represents the yield, recorded on date of option grant, on South African government zero coupon bond of a term commensurate to the expected life of the option.

44 Share-based payments (continued)

For the purposes of determining the expected life and number of options to vest, historical exercise patterns have been used, together with an assumption that a certain percentage of options will lapse due to leavers.

The assumed dividend yield for Barclays PLC is the average annual dividend yield on the date of grant of 4%. Dividend yield for AGLSIT of 3.5% was based on the average 12-month trailing yield over the year to grant date.

Analysis of the movement in the number and weighted average exercise price of options is set out below:

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Sharesave a Sharepurchase a, d
Number Weighted average Number Weighted average
(000s) ex. price (£) (000s) ex. price (£)
2007  2006  2007  2006  2007  2006  2007  2006 
Outstanding at beginning of year  78,929  85,686  4.22  3.95  2,472  1,126  –  – 
Granted in the year  18,748  17,449  4.81  5.11  1,852  1,561  –  – 
Exercised/released in the year  (18,018) (18,727) 3.70  3.84  (256) (113) –  – 
Less: forfeited in the year  (5,632) (5,479) 4.53  4.11  (244) (102) –  – 
Less: expired in the year  –  –  –  –  –  –  –  – 
Outstanding at end of year  74,027  78,929  4.48  4.22  3,824  2,472  –  – 
Of which exercisable:  2,324  915  3.69  3.87  –  –  –  – 

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ESAS a, d PSP a, d
Number Weighted average Number Weighted average
(000s) ex. price (£) (000s) ex. price (£)
2007  2006  2007  2006  2007  2006  2007  2006 
Outstanding at beginning of year  142,359  121,515  –  –  42,832  20,269  –  – 
Granted in the year  76,064  59,758  –  –  20,331  22,563  –  – 
Exercised/released in the year  (31,036) (33,663) –  –  –  –  –  – 
Less: forfeited in the year  (5,187) (5,251) –  –  –  –  –  – 
Less: expired in the year  –  –  –  –  –  –  –  – 
Outstanding at end of year  182,200  142,359  –  –  63,163  42,832  –  – 
Of which exercisable:  16,587  9,607  –  –  –  –  –  – 

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BGI EOP b Absa BEE c
Number Weighted average Number Weighted average
(000s) ex. price (£) (000s) ex. price (£)
Outstanding at beginning of 
year/acquisition date  6,929  5,442  57.79  25.26  73,152  73,152  3.50-5.03  4.41-6.35 
Granted in the year  2,599  3,973  95.33  81.12  –  –  –  – 
Exercised/released in the year  (1,632) (2,188) 34.99  19.92  –  –  –  – 
Less: forfeited in the year  (394) (298) 59.63  52.66  –  –  –  – 
Less: expired in the year  –  –  –  –  –  –  –  – 
Outstanding at end of year  7,502  6,929  75.66  57.79  73,152  73,152  3.40-3.89  3.50-5.03 
Of which exercisable:  1,556  1,050  47.00  18.99  73,152  –  3.40-3.89  – 

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AGLSIT c AGLSOT c
Number Weighted average Number Weighted average
(000s) ex. price (£) (000s) ex. price (£)
2007  2006  2007  2006  2007  2006  2007  2006 
Outstanding at beginning of 
year/acquisition date  18,778  25,126  3.87  4.38  4,847  5,359  3.50-5.03  4.41-6.35 
Granted in the year  260  586  7.62  6.57  –  –  –  – 
Exercised/released in the year  (4,668) (6,137) 3.60  2.86  (3,592) –  –  – 
Less: forfeited in the year  (752) (797) 5.22  4.12  (309) (512) 3.40-3.89  3.85-5.53 
Less: expired in the year  –  –  –  –  –  –  –  – 
Outstanding at end of year  13,618  18,778  4.81  3.87  946  4,847  3.40-3.89  3.50-5.03 
Of which exercisable:  5,603  5,305  3.25  2.43  946  –  3.40-3.89  – 

Notes
a
Options/award granted over Barclays PLC shares.
b
Options/award granted over Barclays Global Investors UK Holdings Limited shares.
c
Options/award granted over Absa Group Limited shares.
d
Nil cost award.

Notes to the accounts

For the year ended 31st December 2007


44 Share-based payments (continued)

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AGLESAS c, d
Number Weighted average
(000s) ex. price (£)
2007  2006  2007  2006 
Outstanding at beginning of 
year/acquisition date  37  –  –  – 
Granted in the year  –  37  –  – 
Exercised/released in the year  –  –  –  – 
Less: forfeited in the year  –  –  –  – 
Less: expired in the year  –  –  –  – 
Outstanding at end of year  37  37  –  – 
Of which exercisable:  –  –  –  – 

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ISOP a ESOS a
Number Weighted average Number Weighted average
(000s) ex. price (£) (000s) ex. price (£)
2007  2006  2007  2006  2007  2006  2007  2006 
Outstanding at beginning of year  77,507  105,081  4.59  4.46  1,748  2,552  4.14  4.16 
Granted in the year  –  –  –  –  –  –  –  – 
Exercised/released in the year  (9,718) (25,122) 4.35  4.04  (325) (768) 4.20  4.20 
Less: forfeited in the year  (47,240) (2,452) 4.66  4.75  –  (36) –  4.71 
Less: expired in the year  –  –  –  –  –  –  –  – 
Outstanding at end of year  20,549  77,507  4.56  4.59  1,423  1,748  4.13  4.14 
Of which exercisable:  20,238  14,544  4.54  4.29  1,423  1,748  4.13  4.14 

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Woolwich ESOP a Woolwich SAYE a
Number Weighted average Number Weighted average
(000s) ex. price (£) (000s) ex. price (£)
2007  2006  2007  2006  2007  2006  2007  2006 
Outstanding at beginning of year  700  1,260  3.81  3.80  –  3  –  3.32 
Granted in the year  –  –  –  –  –  –  –  – 
Exercised/released in the year  (160) (560) 3.84  3.79  –  (1) –  3.32 
Less: forfeited in the year  –  –  –  –  –  (2) –  3.32 
Less: expired in the year  –  –  –  –  –  –  –  – 
Outstanding at end of year  540  700  3.81  3.81  –  –  –  – 
Of which exercisable:  540  700  3.81  3.81  –  –  –  – 

The table below shows the weighted average share price at the date of exercise/release of shares:

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2007  2006 
£  £ 
Sharesave a   5.72  6.95 
Sharepurchase a, d   6.74  6.59 
ESAS a, d   6.71  6.78 
BGI EOP b   97.06  81.08 
AGLSIT c   9.52  8.81 
ISOP a   7.31  6.75 
ESOS a   7.26  6.64 
Woolwich ESOP a   7.24  6.65 
Woolwich SAYE a   n/a  6.09 

The exercise price range, the weighted average contractual remaining life and number of options outstanding (including those exercisable) at the balance sheet date are as follows:

Notes
a
Options/award granted over Barclays PLC shares.
b
Options/award granted over Barclays Global Investors UK Holdings Limited shares.
c
Options/award granted over Absa Group Limited shares.
d
Nil cost award.