financial analysis of barclays

7/24/2019 financial analysis of barclays

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Financial Analysis of Barclays Plc

[Name of Student]

[Name of Institution]

[Date]


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Barclays Plc 2

Table of Contents

Abstract............................................................................................................................................1

Terms of eference..........................................................................................................................2

Procedures of In!esti"ation.............................................................................................................2Bac#"round of t$e Study.................................................................................................................2

1% Findin"s and Analysis of Information.........................................................................................&

1.1 Barclays Plc S$are$older's (alue..........................................................................................&

1.2 )ain on In!estments...............................................................................................................*

2% Sources of Finance......................................................................................................................+

2.1 Financial ,e!era"e.................................................................................................................+

2.2 Debt to -uity/)earin" atio................................................................................................02.& Total Debt...............................................................................................................................

&% -!aluation of urrent S$are$older's -uity...............................................................................3

&.1 Net Asset (alue 4er S$are......................................................................................................3

&.2 Price/-arnin"s atio of Barclays Plc.....................................................................................3

onclusions......................................................................................................................................5

eferences......................................................................................................................................16

A44endi7........................................................................................................................................11


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Barclays Plc 1

Abstract

T$is 4ur4ose of t$is re4ort is to analyse t$e financials of acom4any listed on FTS-1668 and t$e

c$osen or"ani9ation in t$is re"ard is Barclays Plc. :it$in t$e follo;in" re4ort #ey financial

ratios and benc$mar#s s$all be discussed8 t$at 4ro!ides t$e o!erall "lim4se of t$e financial

$ealt$ of com4any for 4ast fi!e years.


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Barclays Plc 2

Financial Analysis of Barclays Plc.

Terms of Reference

T$is study is based on t$e financial analysis of Barclays Plc for t$e last fi!e year. In basic

financial literature8 t$is re4ort $i"$li"$ts t$e current 4erformance of Barclays Plc and its effort to

deli!er t$e desired tar"ets to its s$are$older. ?ne of t$e ma=oranalyses of t$is re4ort describes t$e

s$are$older's !alue for Barclays Plc. Second 4$ase of t$is re4ort e74lains t$e sources of finance

for Barclays Plc and e!aluation of its lon" term business 4olicies to ac$ie!e its ob=ecti!es. Final

4art of t$e re4ort is based on t$e e!aluation of com4any's s$are$older euity8 by assessin" net

asset !alue and 4rice/earnin"s ratio.

Procedures of Investigation

For t$e 4ur4ose of in!esti"ation8 t$is study utili9es t$e financial information a!ailable in

financial/annual re4orts8 statements and financial analysis re4ort from different bro#era"e $ouse.

T$is 4rocess in!ol!es assessin" t$e documents8 obser!ations and inter!ie;in" com4any's

em4loyee.


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Barclays Plc &

Background of the Study

T$e aim of t$is study is to analyse t$e financial condition of Barclays Plc in t$ree

different 4ers4ecti!es8 s$are$older !alue8 sources of finance and current !aluation of t$e euity.

T$is analysis is based on t$e information released from t$e com4any in t$e form of annual

re4orts8 financial and stoc# inde7es. Barclays Plc 4ro!ides t$ree different financial ser!ices t$at

include8 retail ban#in"8 ;ealt$ mana"ement8 cor4orate and in!estment ban#in" >Barclays Plc8

261*%. All t$e o4erations of Barclays Plc are inte"rated across t$e "lobe. Barclays Plc.;ill

4ro!ide ser!ices to small and lar"e business8 cor4oration and "o!ernment institutes. Business of

Barclays Plc is s4read across t$e ;orld in different mar#et to su44ort customer and clients need.

1) Findings and Analysis of Information

1.1Barclays Plc Shareholders Value

S$are$older :ealt$ S:


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Barclays Plc *

From t$e analysis of Barclays Plc8 it can be obser!ed t$at t$ere is a si"nificant c$an"e

inre!enues and net income of t$e com4any. Net re!enue for F26168 ;as C&2826* million8

;$ic$ is follo;ed by C&&86&& in F 26118 C2+8065 in F 26128 C238*** in F261& and C2+803

in F261*. T$is s$o;s !olatility and o!erall do;n;ard trend in t$e re!enues of t$e com4any.

Similarly t$ere $as been a si"nificant decline in t$e net income of t$e com4any8 i.e. C*8+*5

million in F 2616 and a sudden decline to C3*+ million in F 261*.

For financial year 261*8 com4any's lefto!er re!enue or o4eratin" mar"in is .608

$o;e!er8 net o4eratin" income for first uarter F1+8 is C+.5&+ million. T$is re4resents a

ne"ati!e trend in t$e 4erformance of t$e com4any. -PS 23.1+4% to F 261* >-PS 1.&64%8 t$is

re4resent 01.*+ decline of -PS in 4ast fi!e years. Eo;e!er8 t$e c$an"es in -PS and DPS

re4resent t$e com4any's 4erformance and o!erall mar#et 4erformance>Financials


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Barclays Plc +

>NA(% and net tan"ible assets !alue of t$e s$are also s$o;ed an u4;ard trend in 4ast year8 i.e.

&&4 increase from 2334 in F1*.

) Sources of Finance

.1 Financial "everage

2010 2011 2012 2013 2014

0

5

10

15

20

25

30

35

Financial Leverage (%)

Financial Leverage

Fi"ure 1H Financial ,e!era"e >%

Financial le!era"e is defined as t$e e7tent to ;$ic$ an or"ani9ation uses fi7ed income

securities includin" debt and 4referred euity. A $i"$ de"ree of financial le!era"e results in $i"$

interest 4ayments ;$ic$ $as a ne"ati!e im4act on t$e or"ani9ation's bottom line earnin"s 4er

s$are. As 4er Barclay's ban# is concerned8 t$e com4any $as $i"$ financial le!era"e. In 26168 t$e

financial le!era"e ;as calculated to be 25.25 ;$ic$ decreased to 23.1& in 2611. As 4er t$e

abo!e c$art8 it can be ;itnessed t$at t$e com4any is focusin" to;ards minimi9in" t$e financial


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Barclays Plc 0

le!era"e in order to boost u4 t$eir 4roducti!ity in terms of earnin"s 4er s$are. In t$e year 26128

t$e com4any $ad a total financial le!era"e of 2.31 ;$ic$ furt$er declined to 21.+2 in 261&.


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Barclays Plc

to euity ratio s$o;s t$at t$e com4any is more focused to;ards minimi9in" t$e total debt of t$e

or"ani9ation. After t$e bailout of Barclay's ban# in 26638 t$e mana"ement $as formulated

different strate"ies and 4olicies to minimi9e t$e ne"ati!e im4act of debt on t$e o!erall

4erformance of t$e com4any. In 261&8 t$e com4any ;as re4orted to borro; lar"e amount of

funds from e7ternal sources due to its $am4ered conditions.

T$e "earin" ratio calculated in 261& ;as a44ro7imately 1.*2 ;$ic$ means t$at t$e

com4any is ta#in" $i"$ le!era"e t$us 4ossessin" $i"$ ris# to t$e in!estors and ot$er s$are$olders

of t$e ban# >


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Barclays Plc 3

.( Total #e$t

2010 2011 2012 2013 2014

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000Total Debt

Total Debt

Fi"ure &H Total Debt >SD%

T$e abo!e c$art s$o;s t$e total debt acuired by Barclays ban# from t$e year 2616 to

261*. In 26168 t$e total debt of t$e com4any ;as re4orted to be 1.*billion ;$ic$ ;as furt$er

increased to 1.+billion in 2611. In 26128 t$e com4any reduced its total debt and ;as able to

re4ort a fi"ure of 1.*&billion.


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Barclays Plc 5

()%valuation of urrent Shareholder*s %&uity

&.1 Net Asset (alue 4er S$are

To e74lain t$e net asset !alue 4er s$are of Barclays Plc8 current mar#et 4rice of a s$are is

considered. Net asset !alue >NA(% is calculated by Net assets of t$e com4any di!ided by number

of outstandin" s$ares. Net asset !alue is calculated to reflect t$e current !alue of t$e stoc#. In

case of Barclays Plc8 calculatedNet asset !alue and net tan"ible asset !alue 4er s$are de4icts an

increase to &&4 from F 261*H &&+48 and 2334 F 261*H 23+8 res4ecti!ely. From t$e a!ailable

NA( of 1GF1+8 it can be concluded t$at t$ere is a more c$ance of $i"$er bid 4rice 4er s$ares

by t$e in!estor as NA( of Barclays Plc is relati!ely $i"$er from t$e 4ast fi!e year.

NA(PS J Net Assets / Number of outstandin" S$are

&.2 Price/-arnin"s atio of Barclays Plc

Price to earnin"s ratio de4icts t$e com4any's s$are 4rice to its earnin" 4er s$are. Sim4le

formula is utili9ed to calculate P/- atio8 i.e.


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Barclays Plc 16

J 12.0.

ecent analysis of 4rice to earnin"s ratio >2&rdNo!ember8 261+%8 is 12.3& >Ear"rea!es

,ansdo;n8 261+%. T$is re4resents an increase in t$e earnin"s of Barclays Plc and decline in t$e

current mar#et 4rice 4er s$are. To conclude8 current 4rice/earnin"s ratio is 12.3& ;$ic$ is

$i"$er t$an financial year 261*.

onclusions

To conclude8 t$is re4ort $as identified t$e current financial $ealt$ of t$e Barclays Plc8 and

analysed fe; #ey ratios to 4redict t$e !alue of t$e firm. In t$e 4ast fi!e year analysis it ;as

obser!ed t$at s$are$older's !alue of Barclays Plc8 $as declined and a similar 4attern is obser!ed

in earnin"s 4er s$are.Eo;e!er8 t$e o!erall 4rofits before ta7 increased in 1GF1+8 1* i.e.

C2816*mn. Barclays Plc $as ac$ie!ed si"nificant "ro;t$ in in!estment ban#in" ;it$ & to

C0+mn8 and 2& rise >C25+mn% in t$e ban#in" sector at Africa.

By analysin" t$e sources of finance for Barclays Plc8 it ;as obser!ed t$at com4any is

more focused on reducin" its debt to euity ratio. Eo;e!er8 in F1*8 total debt of Barclays Plc

increase to 1.25billion. Similarly8 NA( and P- ratios are stable and de4ict a substantial "ro;t$

in s$are$olders' !alue. Eo;e!er8 Barclays Plc is not 4erformin" to ac$ie!e its desired tar"ets

and fluctuation in t$e debt is associated ;it$ t$e fact t$at com4any is closin" its o4erations in

se!eral countries to minimi9e its losses.


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Barclays Plc 11


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Barclays Plc 12

References

Barclay's ban# >261*%8 KAnnual e4ortL8 etrie!ed from

$tt4sH//;;;.$ome.barclays/content/dam/barclays4ublic/docs/In!estorelations/Annual

e4orts/A261*/BarclaysMP,MAnnualMe4ortM26261*.4df

Barclays Plc8 >261+% Our company. [?nline]. A!ailable atH

$tt4sH//;;;.$ome.barclays/barclaysin!estorrelations/resultsandre4orts/annual

re4orts.$tml [Accessed 2&rdNo!ember8 261+].

Barclays Plc8 >261+% Guarterly esult [?nline]8 etrie!ed fromH

$tt4sH//;;;.$ome.barclays/content/dam/barclays4ublic/docs/In!estorelations/esultAn

nouncements/261+G1I261+%Fundamentals for Barclays Plc. [?nline]. A!ailable atH

$tt4H//;;;.in!estor"uide.com/stoc#fundamentals.4$4Otic#erJBS [AccessedH 2&

rd

No!ember 261+].


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Barclays Plc 1&


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Barclays Plc 1+

a4ital "ain >loss% 060+ +35 5 2303 22+0

Based u4on data in com4any annual re4orts

Documents

financial analysis of barclays