1/4: HSBC Holdings 1H03 (1/2)
HSBC Holdings PLC
04 August 2003
HSBC Holdings PLC
2003 INTERIM RESULTS - HIGHLIGHTS
* Operating income up 41 per cent to US$18,507 million (US$13,103 million in the
first half of 2002).
On a cash basis (excluding goodwill amortisation):
* Operating profit before provisions up 51 per cent to US$9,017 million
(US$5,957 million in the first half of 2002).
* Pre-tax profit up 26 per cent to US$6,879 million (US$5,458 million in the
first half of 2002).
* Attributable profit up 32 per cent to US$4,873 million (US$3,681 million in
the first half of 2002).
* Return on average invested capital of 14.0 per cent (13.8 per cent in the
first half of 2002).
* Cash earnings per share up 20 per cent to US$0.48 (US$0.40 in the first half
of 2002).
On a reported basis (after goodwill amortisation):
* Operating profit before provisions up 51 per cent to US$8,385 million
(US$5,561 million in the first half of 2002).
* Pre-tax profit up 21 per cent to US$6,112 million (US$5,057 million in the
first half of 2002).
* Attributable profit up 25 per cent to US$4,106 million (US$3,280 million in
the first half of 2002).
* Return on average shareholders' funds of 13.3 per cent (13.7 per cent in the
first half of 2002).
* Basic earnings per share up 17 per cent to US$0.41 (US$0.35 in the first half
of 2002).
Dividend and capital positions:
* First interim dividend of US$0.24 per share; an increase of 17 per cent over
the 2002 first interim dividend.
* Tier 1 capital ratio of 8.5 per cent; total capital ratio of 11.7 per cent.
HSBC HOLDINGS REPORTS PRE-TAX PROFIT OF US$6,112 MILLION
HSBC made a profit on ordinary activities before tax of US$6,112 million, up
US$1,055 million, or 21 per cent, over the same period in 2002. On the same
basis, profit attributable to shareholders was US$4,106 million, an increase of
25 per cent. On a cash basis, profit before tax increased by US$1,421 million,
or 26 per cent, to US$6,879 million in the first half of 2003. Household and
GFBital contributed US$651 million and US$272 million respectively to cash basis
profit before tax. Excluding these acquisitions, and at constant currency, cash
basis profit before tax increased by US$255 million, or 4.5 per cent.
Net interest income of US$11,221 million was US$3,628 million, or 48 per cent,
higher than the same period in 2002, mainly due to the contributions from
Household and GFBital.
Other operating income rose US$1,776 million, or 32 per cent, to US$7,286
million over the same period in 2002. In addition to the contributions from
recent acquisitions, the increase primarily reflected strong growth in wealth
management sales in Asia as well as a strong performance within HSBC Global
Markets.
Operating expenses (excluding goodwill amortisation) of US$9,490 million were
US$2,344 million, or 33 per cent, higher than in the first half of 2002.
Excluding acquisitions and expressed in constant currency, operating expenses
were just over 2 per cent higher.
HSBC's cost:income ratio (excluding goodwill amortisation) was 51.3 per cent in
the first half of 2003 compared with 54.5 per cent for the same period in 2002.
Since becoming a member of the HSBC Group, Household has expensed US$1,539
million in respect of bad and doubtful debts. This accounted for substantially
all of the increase of US$1,659 million in the charge for bad and doubtful
debts, which rose to US$2,374 million compared with US$715 million in the first
half of 2002.
The US$124 million share of operating losses in joint ventures reflected a
provision for the impairment of goodwill allocated to a UK fund management
company acquired in 2000 as part of the CCF acquisition.
Gains on disposal of investments of US$264 million included disposal gains of
US$121 million on the sale of investment debt securities.
The tier 1 capital and total capital ratio for the Group remained strong at 8.5
per cent and 11.7 per cent respectively, at 30 June 2003.
The Group's total assets at 30 June 2003 were US$983 billion, an increase of
US$224 billion, or 30 per cent, since 31 December 2002.
Half-year to Half-year to Half-year to
Figures in US$m 30Jun03 30Jun02 31Dec02
Geographical distribution of results
% % %
Europe 2,380 34.7 2,179 40.0 1,981 39.2
Hong Kong 1,843 26.8 1,900 34.8 1,810 35.8
Rest of Asia-Pacific 753 10.9 670 12.3 623 12.3
North America 1,833 26.6 624 11.3 760 15.0
South America ^ 70 1.0 85 1.6 (119) (2.3)
Profit before tax - cash basis 6,879 100.0 5,458 100.0 5,055 100.0
Goodwill amortisation (767) (401) (462)
Profit before tax 6,112 5,057 4,593
Tax on profit on ordinary
activities (1,554) (1,315) (1,219)
Profit on ordinary activities
after tax 4,558 3,742 3,374
Minority interests (452) (462) (415)
Profit attributable 4,106 3,280 2,959
Profit attributable - cash basis 4,873 3,681 3,421
Distribution of results by line of business ^ ^
% % %
Personal Financial Services 2,082 30.3 1,757 32.2 1,634 32.3
Consumer Finance 649 9.4 - - - -
Commercial Banking 1,647 23.9 1,484 27.2 1,530 30.3
Corporate, Investment
Banking and Markets 2,237 32.5 2,069 37.9 1,827 36.1
Private Banking 268 3.9 249 4.6 164 3.3
Other (4) - (101) (1.9) (100) (2.0)
Profit before tax -
cash basis 6,879 100.0 5,458 100.0 5,055 100.0
Goodwill amortisation (767) (401) (462)
Profit before tax 6,112 5,057 4,593
^ Formerly described as Latin America, which included Group entities in Panama
and Mexico which are now included in North America. Figures for the first half
of 2002 have been restated to reflect this change.
^ ^ The figures for 2002 have been restated to reflect the effect of the
transfer of interest rate risk from the business units to CIBM following the
implementation of a revised funds transfer pricing mechanism in North America.
Comment by Sir John Bond, Group Chairman
HSBC's performance in the first half of 2003 demonstrated remarkable resilience
given that the majority of our business is conducted in countries either in
recession or experiencing slower growth. On a reported basis, we generated a
profit attributable to shareholders of US$4.1 billion, some US$826 million and
25 per cent higher than the first half of 2002. Earnings per share rose by US 6
cents, an increase of 17 per cent. The Board has declared a first interim
dividend of US 24 cents, an increase of 17 per cent over the amount paid at this
stage in 2002. This dividend will be paid on 7 October 2003. The Board has also
announced its intention to pay a second interim dividend of US 12 cents, the
first of the quarterly dividends HSBC will in future be paying. It is planned
for this second interim dividend to be paid on 20 January 2004.
The results for the first half were achieved against a background of uneven
economic activity in most of the world's major economies. There was uncertainty
about the pace and timing of the recovery in the US. The war in Iraq further
dampened business confidence. The outbreak of SARS affected certain industries,
particularly in Asia.
A key feature of our performance was the positive contribution from the new
members of HSBC, Household International in the US and GFBital in Mexico. Driven
in part by their contributions, as well as by impressive results from our Global
Markets business, revenues rose by US$5.4 billion in the period. Operating
profit before provisions and the amortisation of goodwill rose by over US$3.1
billion. Excluding the effect of these acquisitions and at constant exchange
rates, we grew revenues by US$0.5 billion, or 4 per cent, against cost growth of
US$0.24 billion, or 3 per cent.
The improving balance of our earnings and asset mix, both by geographical region
and by line of business, reflects the impact of the acquisitions we have made.
28 per cent of our assets are now located in Asia Pacific, 42 per cent in Europe
and 30 per cent in the Americas. Our investment in systems, in new products, and
in a relentless focus on serving almost 100 million customers around the world
is yielding results. We were delighted to be included, for the first time and
amongst the top 50, in a ranking of the world's 100 most valuable brands
prepared by Interbrand. We made further progress in all lines of business.
Personal Financial Services
* The first half of 2003 was marked by low and declining interest rates. These
encouraged further growth in consumer credit and prompted unprecedented levels
of mortgage refinancing in the UK and US. HSBC gained both market share and
significantly increased fee income. In the UK, our mortgage products remained
highly rated, receiving the 'Best National Bank' award over two, five, and 10
years from What Mortgage magazine. Drawing on our multicultural experience, we
have recently become the first UK bank to launch an Islamic mortgage in the UK.
This followed the successful launch of a similar product in New York last year.
* First Direct's Offset product accounted for more than 25 per cent of HSBC's
mortgage growth in the UK.
* Volatile equity markets discouraged retail investors but structured investment
products remained popular, particularly in Asia. Sales of 'capital protected'
investment funds in the region grew to US$3.5 billion in the period, an increase
of 25 per cent. As many investors continued to prefer liquidity and security
over uncertain growth opportunities, deposits grew by the equivalent of US$3.5
billion or 3 per cent.
* We have made significant investments in giving customers a choice of delivery
channels, and in customer relationship management systems for the staff who
serve them. Such investments are bringing results. In the three years since we
launched personal internet banking, we have achieved 10.9 million registered
users, including 5.8 million added through the Household acquisition.
* While the acquisition of Household approximately doubled our personal internet
banking base, the number of personal customers in our other businesses
registered for internet banking also rose, by 15 per cent in the first half of
2003. Sales through the internet also grew, with over 800,000 products sold in
the first half of 2003. At First Direct in the UK, 23 per cent of product sales
in May 2003 took place over the internet, up from 6 per cent two years ago.
Consumer Finance
* Household's contribution in its first three months as a member of the HSBC
Group was encouraging and in line with our expectations. This was despite the
impact of low growth in the US economy which affected asset growth and credit
quality.
* Household is committed to taking a leadership role in the consumer finance
industry by establishing a benchmark for quality. As a result, Household will
significantly increase its investment in compliance, monitoring and training to
approximately US$150 million during 2003, which is more than double the amount
invested in 2002.
* Most important, stability returned to Household's funding base with its debt
spreads falling below historical levels, reflecting its position within the HSBC
Group. New benchmark issuance during the period demonstrated the increased
breadth and depth of funding support available.
Commercial Banking
* Providing services to small and medium-sized enterprises around the world is a
core strength of HSBC. Our business continues to grow, reflecting our success in
broadening relationships with customers and our concentration on establishing
service quality as our competitive advantage.
* Overall, profitability in commercial banking grew. This reflected HSBC's
leadership in attracting business start-ups, in developing fee-based services
attractive to customers, and in increasing the volume of deposits gathered.
Credit costs remained low. In the UK, changes resulting from the Competition
Commission review cost US$52 million in the first half, in line with our
expectations.
* Also in the UK, HSBC was voted 'Best Small Business Bank' by CIMA (the
Chartered Institute of Management Accountants), received Business Moneyfacts'
2003 award for 'Best Computer Banking Provider', and was 'Best Factoring House'
according to Trade Finance magazine.
* In Hong Kong, HSBC made available additional funds and offered favourable
terms to small businesses which have suffered from the economic impact of SARS.
It is still too soon to predict what the longer term effects of the outbreak
will be on the commercial customer base but every effort is being made to
minimise it.
* We are pleased with the continued progress of our commercial banking
operations in France. This has been enhanced by the acquisition of Banque Hervet
which has taken full opportunity to develop with other HSBC entities a broader
range of trade service products for its predominantly commercial customer base.
* Following the launch of business internet banking in Hong Kong, the US and the
UK last year, we have made online business banking available in 17 more
countries. By the end of June, 15 per cent - or some 300,000 of our business
customers - were banking with us online.
Corporate, Investment Banking and Markets
* The overall performance of our corporate, investment banking and markets
business was excellent and reinforced our position as one of the world's top
tier players in this very important sector. The results reflect our success in
bringing these activities closer together and in pursuing the strategic plan we
adopted in 2002. We have broadened the range of products and services we offer
to our customer base, enhancing the value of the relationships we support.
* Our Global Markets division produced record results as increased customer
sales combined with favourable trading conditions. Historically low interest
rates and a weakening US dollar resulted in strong debt origination activity and
increased sales of our widened product offerings for structured financing and
hedging solutions. In debt capital market activities our rankings and market
share increased in most bond issuance markets whilst for the sixth consecutive
year we achieved the 'Best at Treasury and Risk Management in Asia' Euromoney
award for excellence.
* In corporate and institutional banking, revenue growth was achieved through
increased fees from refinancing activity and credit expansion. However, credit
costs rose due to increased provisioning, mainly for a small number of
relationships in the energy and telecommunications sectors.
* Investment banking fees grew, reflecting our strategic focus on higher margin
financing and advisory business.
* Our asset management businesses performed well, attracting net inflows of
US$10 billion and broadly maintaining profitability in a continuing environment
of low investor appetite for equities.
Private Banking
* The results of our private banking business reflected an improved revenue mix.
We achieved growth in brokerage fees and commissions, sales of structured
products, trust services and safekeeping. There was also a significant increase
in discretionary asset management mandates and client foreign exchange and other
dealing activity.
* Restructuring of the Group's private banking operations continued in order to
improve efficiency. We began the process of combining all four of the private
banks in France to create one of the largest businesses of its kind in the
country.
GFBital
The integration of GFBital in Mexico (acquired in November 2002) progressed
well. Consumer asset growth was strong, particularly as interest rates declined
later in the half year. Co-operation with Household to develop this business is
under way. GFBital is exploring avenues to channel qualifying migrants to
Household as they enter the United States. Household's home city of Chicago has
the second largest Hispanic population in the US.
Household
Completion of the acquisition of Household International on 28 March marked the
most significant change in the shape of HSBC in more than a decade. We were
pleased to complete the transaction within the very demanding timetable
established in November 2002 when it was first announced.
There are significant overlaps in profile between Household's customer base and
elements of HSBC's and the Household business model provides access for credit
to those who would not otherwise enjoy it. The two businesses are being brought
together smoothly and quickly. Both teams are excited about the opportunities to
deploy their respective skills and strengths across broader platforms and, in
the case of Household, in a wider geographical footprint.
Synergies are now being clarified and quantified, and the evidence to date is
encouraging. The most immediate synergies have come from improvements in funding
costs which we now feel confident will exceed US$1 billion per annum, based on
spread improvement achieved to date.
Further synergies will be achieved in card processing, IT contingency
rationalisation, purchasing, call centre co-operation and the shared use of
HSBC's Group Service Centres. These, in addition to the Group-wide application
of Household's credit-scoring and data-mining technology and the consolidation
of certain central administrative functions, should produce synergy benefits
exceeding US$200 million per annum within two years.
In addition, there will be revenue synergies in taking the Household model
overseas and establishing it alongside existing HSBC operations to tap the
growing demand for consumer finance.
Credit Quality
Driven by slower economic growth and rising unemployment in the US and Hong
Kong, personal credit quality showed modest deterioration in the period. The
charge for bad and doubtful debts in the commercial banking sector remained
moderate. In corporate banking, there was evidence of strain in the power and
energy sectors and in telecommunications, as well as in the equipment suppliers
to these industries. The effect of the SARS outbreak was not material in the
first half.
Excluding Household, our bad and doubtful debt charge amounted to an annualised
44 basis points of our loan book, of which approximately two-thirds arose from
personal lending; this was in line with last year's experience.
During the second quarter, Household saw the level of non-performing loans rise
to 3.76 per cent, tracking bankruptcy filings. Annualised charge-offs rose to
4.83 per cent of the book.
Outlook
There are mixed signals in current economic data. The significant easing of
monetary policy around the world is bolstering consumer sentiment, in part
through its positive effect on the housing market. Fiscal deficits are being
recognised as an inevitable consequence of policies aimed at avoiding deflation.
Significant debt reduction and refinancing to lower rates have been achieved on
corporate balance sheets. There has been good progress in corporate
restructuring, particularly in eliminating excess capacity. Sentiment is
improving and there are signs in some industries that the worst may be behind
us. The recent modest rise in merger and acquisition activity is consistent with
this view. Prospects for the rest of 2003 are reasonable though we remain
cautious about the longer term outlook because of structural imbalances in the
world's major economies.
We are positioning HSBC for modest, and uneven, economic recovery. In most
developed markets, we expect revenue growth to remain subdued. We are
concentrating on improving our efficiency to respond to the growing costs of new
regulations and additional taxes in many jurisdictions. Strategically,
therefore, we are building our business in those markets where the demographic
profiles indicate growing consumer demand. We are particularly excited by the
opportunities in the emerging economies of Asia, including India and China, and
in the Middle East, Mexico and Brazil. Perhaps an additional and overlooked new
market opportunity will be provided by the immigrant population of the United
States to which, through Household, we now have access.
Overall, HSBC's ability to generate capital remains strong. We are in an
excellent position to benefit from any upturn in the world economy when it
occurs and to pursue opportunities for growth that may arise. Within our
industry, HSBC's business is uniquely diversified, both geographically and by
line of business. HSBC is in good shape and on course.
Financial Overview
30Jun02 31Dec02 Half-year to 30Jun03
US$m US$m US$m £m HK$m
For the half-year
Cash basis ^
5,458 5,055 Profit before tax 6,879 4,272 53,649
3,681 3,421 Profit attributable 4,873 3,026 38,005
Reported basis
5,057 4,593 Profit before tax 6,112 3,796 47,667
3,280 2,959 Profit attributable 4,106 2,550 32,023
1,929 3,072 Dividends 2,589 1,608 20,192
At period-end
51,178 52,406 Shareholders' funds 70,290 42,525 548,121
55,440 57,430 Capital resources 66,881 40,463 521,538
532,233 548,371 Customer accounts and deposits by banks 623,318 377,107 4,860,634
746,335 759,246 Total assets 982,689 594,527 7,663,009
410,986 430,551 Risk-weighted assets 569,613 344,616 4,441,842
US$ US$ Per share US$ £ HK$
0.40 0.36 Cash earnings ^ 0.48 0.30 3.74
0.35 0.32 Basic earnings 0.41 0.25 3.20
0.35 0.31 Diluted earnings 0.40 0.25 3.12
0.205 0.325 Dividends ^ ^ 0.24 0.15 1.87
5.42 5.53 Net asset value 6.48 3.92 50.53
Share information
9,450 9,481 US$0.50 ordinary shares in issue (million) 10,841
US$109 US$105 Market capitalisation (billion) US$128
£7.55 £6.87 Closing market price per share £7.16
Total shareholder return to 30 June 2003 ^ ^ ^ HSBC Benchmark
- over 1 year 100 96
- since 1 January 1999 167 111
^ Cash based measurements are after excluding the impact of goodwill
amortisation.
^ ^ The first interim dividend of US$0.24 per share is translated at the
closing rate on 30 June 2003 (see page 24).
^ ^ ^ Total shareholder return (TSR) is as defined on page 174 of the Annual
Report and Accounts 2002. HSBC's governing objective is to beat the TSR of its
defined benchmark, with a minimum objective to achieve double TSR over a
five-year period beginning on 1 January 1999.
30Jun02 31Dec02 Half-year to 30Jun03
% % Performance ratios %
On a cash basis ^
13.8 11.8 Return on average invested capital ^ ^ 14.0
21.5 18.3 Return on average net tangible equity ^ ^ ^ 24.5
1.18 1.04 Post-tax return on average tangible assets 1.23
2.11 1.79 Post-tax return on average risk-weighted assets 2.17
On a reported basis
13.7 11.2 Return on average shareholders' funds 13.3
1.04 0.90 Post-tax return on average assets 1.03
1.90 1.58 Post-tax return on average risk-weighted assets 1.86
Efficiency and revenue mix ratios
Cost:income ratio (excluding goodwill
54.5 57.9 amortisation) 51.3
As a percentage of total operating income:
57.9 58.3 - net interest income 60.6
42.1 41.7 - other operating income 39.4
29.4 29.4 - net fees and commissions 25.3
4.9 5.0 - dealing profits 6.8
Capital ratios
9.7 9.0 - tier 1 capital 8.5
13.5 13.3 - total capital 11.7
^ Cash based measurements are after excluding the impact of goodwill
amortisation.
^ ^ Return on invested capital is based on cash-based attributable profit
adjusted for depreciation attributable to revaluation surpluses. Average
invested capital is measured as shareholders' funds after adding back goodwill
amortised and goodwill previously written-off directly to reserves and deducting
property revaluation reserves. This measure broadly reflects invested capital.
^ ^ ^ Cash basis attributable profit divided by average shareholders' funds
after deduction of average purchased goodwill.
Consolidated Profit and Loss Account
30Jun02 31Dec02 Half-year to 30Jun03
US$m US$m US$m £m HK$m
14,229 14,366 Interest receivable 18,206 11,306 141,989
(6,636) (6,499) Interest payable (6,985) (4,338) (54,476)
7,593 7,867 Net interest income 11,221 6,968 87,513
5,510 5,625 Other operating income 7,286 4,525 56,823
13,103 13,492 Operating income 18,507 11,493 144,336
(7,146) (7,808) Operating expenses excluding goodwill (9,490) (5,894) (74,012)
(396) (458) Goodwill amortisation (632) (392) (4,929)
5,561 5,226 Operating profit before provisions 8,385 5,207 65,395
Provisions for bad and doubtful
(715) (606) debts (2,374) (1,474) (18,515)
Provisions for contingent
(3) (36) liabilities and commitments (22) (14) (172)
Loss from foreign currency
(45) (23) redenomination in Argentina (34) (21) (265)
Amounts written off fixed
(139) (185) asset investments (60) (37) (468)
4,659 4,376 Operating profit 5,895 3,661 45,975
(23) (5) Share of operating loss in joint ventures (124) (77) (967)
71 64 Share of operating profit in associates 92 57 718
Gains/(losses) on disposal of:
351 181 - investments 264 164 2,058
(1) (23) - tangible fixed assets (15) (9) (117)
5,057 4,593 Profit on ordinary activities before tax 6,112 3,796 47,667
(1,315) (1,219) Tax on profit on ordinary activities (1,554) (965) (12,119)
3,742 3,374 Profit on ordinary activities after tax 4,558 2,831 35,548
Minority interests:
(278) (227) - equity (261) (162) (2,035)
(184) (188) - non-equity (191) (119) (1,490)
3,280 2,959 Profit attributable to shareholders 4,106 2,550 32,023
(1,929) (3,072) Dividends (2,589) (1,608) (20,192)
1,351 (113) Retained profit/(deficit) for the period 1,517 942 11,831
Consolidated Balance Sheet
At 30Jun02 At 31Dec02 At 30Jun03
US$m US$m US$m £m HK$m
ASSETS
Cash and balances at central
5,561 7,659 banks 9,509 5,753 74,151
Items in the course of
5,894 5,651 collection from other banks 8,706 5,267 67,889
Treasury bills and other
19,255 18,141 eligible bills 21,348 12,916 166,472
Hong Kong SAR
Government certificates
8,986 9,445 of indebtedness 9,977 6,036 77,804
Loans and advances to
100,965 95,496 banks 116,012 70,187 904,662
Loans and advances to
342,057 352,344 customers 503,625 304,693 3,927,268
172,792 175,730 Debt securities 189,991 114,945 1,481,550
8,710 8,213 Equity shares 12,492 7,558 97,413
144 190 Interests in joint ventures 85 51 663
1,042 1,116 Interests in associates 1,177 712 9,178
47 651 Other participating interests 683 413 5,326
15,111 17,163 Intangible fixed assets 26,618 16,104 207,567
13,988 14,181 Tangible fixed assets 14,548 8,802 113,445
44,363 45,884 Other assets 56,785 34,355 442,806
Prepayments and accrued
7,420 7,382 incomes 11,133 6,735 86,815
746,335 759,246 Total assets 982,689 594,527 7,663,009
LIABILITIES
Hong Kong SAR currency
8,986 9,445 notes in circulation 9,977 6,036 77,804
61,455 52,933 Deposits by banks 75,771 45,841 590,862
470,778 495,438 Customer accounts 547,547 331,266 4,269,772
Items in the course of
4,112 4,634 transmission to other banks 5,965 3,609 46,515
28,683 34,965 Debt securities in issue 144,502 87,424 1,126,827
86,642 72,090 Other liabilities 83,874 50,744 654,045
Accruals and deferred
7,707 7,574 income 9,363 5,665 73,013
Provisions for liabilities and
charges
1,181 1,154 - deferred taxation 1,373 831 10,707
3,292 3,683 - other provisions 5,531 3,346 43,131
Subordinated liabilities
3,517 3,540 - undated loan capital 3,559 2,153 27,753
12,199 14,831 - dated loan capital 17,189 10,399 134,040
Minority interests
2,253 2,122 - equity 2,193 1,327 17,101
4,352 4,431 - non-equity 5,555 3,361 43,318
4,725 4,741 Called up share capital 5,421 3,280 42,273
46,453 47,665 Reserves 64,869 39,245 505,848
51,178 52,406 Shareholders' funds 70,290 42,525 548,121
746,335 759,246 Total liabilities 982,689 594,527 7,663,009
Consolidated Cash Flow Statement
Half-year to Half-year to Half-year to
Figures in US$m 30Jun03 30Jun02 31Dec02
Net cash inflow from operating activities 14,391 12,948 3,478
Dividends received from associated undertakings 45 66 48
Returns on investments and servicing of finance:
Interest paid on finance leases and similar hire purchase
contracts (18) (14) (15)
Interest paid on subordinated loan capital (374) (364) (506)
Dividends paid to minority interests - equity (317) (284) (196)
- non-equity (243) (20) (337)
Net cash outflow from returns on investments
and servicing of finance (952) (682) (1,054)
Taxation paid (1,100) (523) (848)
Capital expenditure and financial investments:
Purchase of investment securities (91,237) (66,893) (63,278)
Proceeds from sale and maturities of investment securities 87,730 62,767 59,792
Purchase of tangible fixed assets (657) (756) (967)
Proceeds from sale of tangible fixed assets 259 123 205
Net cash outflow from capital expenditure
and financial investments (3,905) (4,759) (4,248)
Acquisitions and disposals:
Net cash inflow/(outflow) from acquisition of
and increase in stake in subsidiary undertakings (1,151) 20 229
Purchase of interest in associated undertakings
and other participating interests (40) (26) (623)
Proceeds from disposal of associated
undertakings and other participating interests 2 356 -
Net cash inflow/(outflow) from acquisitions
and disposals (1,189) 350 (394)
Equity dividends paid (2,625) (1,844) (1,765)
Net cash inflow/(outflow) before financing 4,665 5,556 (4,783)
Financing:
Issue of ordinary share capital 432 182 155
Issue of preference share capital 1,237 - -
Redemption of preference share capital (208) (50) -
Subordinated loan capital issued 1,274 630 3,475
Subordinated loan capital repaid (492) (637) (1,286)
Net cash inflow from financing 2,243 125 2,344
Increase/(decrease) in cash 6,908 5,681 (2,439)
Other Primary Financial Statements
Statement of total consolidated recognised gains and losses for the half-year to
30Jun02 31Dec02 30Jun03
US$m US$m US$m
Profit for the period attributable to
3,280 2,959 shareholders 4,106
Unrealised deficit on revaluation of investment
properties:
- (22) - subsidiaries (24)
- (1) - associates -
Unrealised deficit on revaluation of land and
buildings (excluding investment properties):
- (297) - subsidiaries (214)
2,432 1,349 Exchange and other movements 2,208
5,712 3,988 Total recognised gains and losses for the period 6,076
Reconciliation of movements in consolidated shareholders' funds for the
half-year to
30Jun02 31Dec02 30Jun03
US$m US$m US$m
3,280 2,959 Profit for the period attributable to shareholders 4,106
(1,929) (3,072) Dividends (2,589)
1,351 (113) 1,517
Other recognised gains and
2,432 1,029 losses relating to the period 1,970
New share capital subscribed,
182 155 net of costs 447
Reserve in respect of
obligations under CCF
(31) (10) share options (17)
Merger reserve on acquisition
- - of Household 13,405
Reserve in respect of obligations
- - under Household share options 112
Reserve in respect of obligations
under Household 8.875 per cent
Adjustable Conversion-Rate Equity
- - Security Units 6
Amounts arising on shares
856 167 issued in lieu of dividends 444
Net addition to shareholders'
4,790 1,228 funds 17,884
Shareholders' funds at
46,388 51,178 beginning of period 52,406
Shareholders' funds at end of
51,178 52,406 period 70,290
This information is provided by RNS
The company news service from the London Stock Exchange
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