HSBC Holdings Interim 05 Pt2
HSBC Holdings PLC
01 August 2005
At 30Jun04 At 31Dec04 At 30Jun05
US$m US$m US$m £m HK$m
LIABILITIES AND EQUITY
Liabilities
10,984 11,878 Hong Kong currency notes in circulation 12,196 6,805 94,804
97,327 84,055 Deposits by banks 109,619 61,167 852,178
634,602 693,072 Customer accounts 731,456 408,152 5,686,339
Items in the course of transmission
6,923 5,301 to other banks 9,533 5,319 74,110
49,770 46,460 Trading liabilities 129,500 72,261 1,006,733
Financial liabilities designated at
- - fair value 49,004 27,344 380,957
21,523 34,988 Derivatives 62,101 34,652 482,773
169,404 211,721 Debt securities in issue 188,578 105,227 1,466,005
5,151 6,475 Retirement benefit liabilities 5,727 3,196 44,522
17,943 20,581 Other liabilities 26,169 14,604 203,445
Liabilities to customers under investment
- - contracts 9,416 5,254 73,200
- - Liabilities under insurance contracts issued 12,428 6,935 96,615
Liabilities to policyholders under long-term
16,200 19,190 assurance business - - -
12,046 16,499 Accruals and deferred income 10,421 5,815 81,013
Provisions for liabilities and charges
1,235 1,439 - deferred tax 1,254 700 9,749
2,492 2,636 - other provisions 2,075 1,158 16,131
21,875 26,486 Subordinated liabilities 15,652 8,734 121,679
1,067,475 1,180,781 Total liabilities 1,375,129 767,323 10,690,253
Equity
5,513 5,587 Called up share capital 5,610 3,130 43,612
4,459 4,881 Share premium account 4,952 2,763 38,497
20,659 24,672 Other reserves 24,013 13,399 186,677
46,435 50,382 Retained earnings 52,138 29,093 405,321
77,066 85,522 Total shareholders' equity 86,713 48,385 674,107
12,567 13,675 Minority interests 4,968 2,772 38,621
89,633 99,197 Total equity 91,681 51,157 712,728
1,157,108 1,279,978 Total equity and liabilities 1,466,810 818,480 11,402,981
Consolidated Cash Flow Statement
Half-year to Half-year to Half-year to
30Jun05 30Jun04 31Dec04
US$m US$m US$m
Cash flows from operating activities
Profit before tax 10,640 10,120 8,823
Adjustments for:
Non-cash items included in net profit 870 102 266
Change in operating assets (54,874) (43,108) (80,815)
Change in operating liabilities 73,781 85,238 92,776
Elimination of exchange differences 7,241 (1,355) (7,452)
Net (gain)/loss from investing activities (354) (330) (443)
Share of profits in associates and joint ventures (308) (118) (150)
Dividends received from associates 57 47 80
Tax paid (1,811) (2,124) (1,660)
Net cash from operating activities 35,242 48,472 11,425
Cash flows from investing activities
Purchase of financial investments (91,507) (182,179) (148,738)
Proceeds from the sale of financial investments 82,562 170,358 145,079
Purchase of property, plant and equipment (1,227) (1,125) (1,705)
Proceeds from the sale of property, plant and equipment 340 202 169
Purchase of intangible assets (90) - (108)
Net cash outflow from acquisition of and increase in
stake of subsidiaries - (1,176) (1,255)
Net cash inflow from disposal of subsidiaries 566 - 27
Net cash outflow from acquisition of and increase in
stake of associates (682) (228) (1,894)
Proceeds from disposal of associates 161 151 61
Net cash from investing activities (9,877) (13,997) (8,364)
Cash flows from financing activities
Issue of ordinary share capital 94 86 495
Net purchases and sales of own share for market-making
purposes 27 16 82
Purchases of own shares to meet share awards and
share option awards (288) (429) 84
Own shares released on vesting of share awards and
exercise of options 65 53 106
Increase in non-equity minority interests - 1,480 -
Subordinated loan capital issued 1,928 1,082 4,939
Subordinated loan capital repaid (896) (356) (1,384)
Dividends paid (4,197) (3,057) (1,368)
Dividends paid to minority interests - equity (419) (280) (384)
- non-equity - (321) (227)
Net cash (used in)/from financing activities (3,686) (1,726) 2,343
Net increase in cash and cash equivalents 21,679 32,749 5,404
Cash and cash equivalents at the beginning of the period 160,956 117,558 148,942
Effect of exchange rate changes on cash and
cash equivalents (6,788) (1,365) 6,610
Cash and cash equivalents at the end of the period 175,847 148,942 160,956
Consolidated Statement of Recognised Income and Expense
30Jun04 31Dec04 Half-year to 30Jun05
US$m US$m US$m
Available-for-sale investments:
- - Valuation gains/(losses) taken to equity 62
- - Transferred to profit or loss on disposal or impairment (97)
Cash flow hedges:
- - Gains/(losses) taken to equity (223)
Exchange differences arising on monetary items
that form part of a net investment in a
(834) 4,049 foreign operation (3,400)
(37) (541) Actuarial gain/(loss) on retirement benefits 358
(871) 3,508 (3,300)
Deferred tax on items taken directly to or transferred
11 177 from equity (129)
7,607 6,651 Profit for the period 7,982
6,747 10,336 Total recognised income for the period 4,553
6,159 9,058 Attributable to shareholders 4,239
588 1,278 Attributable to minority interests 314
Additional Information
1. Accounting policies
For all periods up to and including the year ended 31 December 2004, HSBC
prepared its consolidated financial statements in accordance with UK Generally
Accepted Accounting Principles ('UK GAAP'). From 1 January 2005, HSBC is
required to prepare its financial statements in accordance with International
Financial Reporting Standards ('IFRSs') as endorsed by the European Union ('EU').
In HSBC's 2004 IFRS Comparative Financial Information published on 5 July 2005,
as permitted by IFRS 1 'First-time Adoption of International Financial Reporting
Standards', financial instruments and insurance contracts were accounted for
under HSBC's previous accounting policies. HSBC has from 1 January 2005 adopted
full IFRSs and consequently the half-year 2005 results include the effects of
adoption of IAS 32 'Financial Instruments: Disclosure and Presentation', IAS 39
'Financial Instruments: Recognition and Measurement' and IFRS 4 'Insurance
Contracts'.
IFRSs accounting policies applicable to the 5 July 2005 publication mentioned
above and those applicable to HSBC's Interim Report 2005 can be found in Notes 1
and 2 of the Interim Report.
2. Dividend
The Directors have declared a second interim dividend for 2005 of US$0.14 per
ordinary share. The dividend will be payable on 5 October 2005, to shareholders
on the Register at the close of business on 19 August 2005. The dividend will be
payable in cash, in US dollars, sterling or Hong Kong dollars, or a combination
of these currencies, at the exchange rates quoted by HSBC Bank plc in London at
or about 11 am on 26 September 2005, and with a scrip dividend alternative.
Particulars of these arrangements will be mailed to shareholders on or about 31
August 2005, and elections will be required to be made by 21 September 2005.
The dividend will be payable on shares held through Euroclear France, the
settlement and central depositary system for Euronext Paris, on 5 October 2005
to the holders of record on 19 August 2005. The dividend will be payable in
cash, in euros at the exchange rate on 26 September 2005, or as a scrip
dividend. Particulars of these arrangements will be announced through Euronext
Paris on 17 August and 24 August 2005.
The dividend will be payable on American Depositary Shares ('ADSs'), each of
which represents five ordinary shares, on 5 October 2005 to holders of record on
19 August 2005. The dividend of US$0.70 per ADS will be payable in cash in US
dollars or as a scrip dividend of new ADSs. Particulars of these arrangements
will be mailed to holders on or about 26 August 2005, and elections will be
required to be made by 9 September 2005. Alternatively, the cash dividend may be
invested in additional ADSs for participants in the dividend reinvestment plan
operated by the depositary.
The Company's shares will be quoted ex-dividend in London, Hong Kong and Bermuda
on 17 August 2005 and in Paris on 22 August 2005. The ADSs will be quoted
ex-dividend in New York on 17 August 2005.
3. Earnings and dividends per share Half-year to Half-year to Half-year to
Figures in US$ 30Jun05 30Jun04 31Dec04
Basic earnings per share 0.69 0.64 0.55
Diluted earnings per share 0.68 0.63 0.54
Dividends per share 0.41 0.37 0.26
Dividend pay out ratio^ 59% 58% 47%
^ Dividends per share expressed as a percentage of earnings per share.
Basic earnings per ordinary share was calculated by dividing the earnings of
US$7,596 million by the weighted average number of ordinary shares outstanding,
excluding own shares held, of 11,007 million shares (first half of 2004:
earnings of US$6,940 million and 10,860 million shares; second half of 2004:
earnings of US$5,978 million and 10,954 million shares).
Diluted earnings per share was calculated by dividing the basic earnings, which
require no adjustment for the effects of dilutive potential ordinary shares
(including share options outstanding not yet exercised), by the weighted average
number of ordinary shares outstanding, excluding own shares held, plus the
weighted average number of ordinary shares that would be issued on ordinary
conversion of all the dilutive potential ordinary shares of 11,152 million
shares (first half of 2004: 11,005 million shares, second half of 2004: 11,103
million shares).
4. Taxation Half-year to Half-year to Half-year to
Figures in US$m 30Jun05 30Jun04 31Dec04
UK corporation tax charge 340 357 359
Overseas taxation 2,045 1,474 1,382
Current taxation 2,385 1,831 1,741
Deferred taxation 273 682 431
Total charge for taxation 2,658 2,513 2,172
Effective tax rate 25.0% 24.8% 24.6%
The Company and its subsidiary undertakings in the UK provided for UK
corporation tax at 30.0 per cent, the rate for the calendar year 2005 (2004:
30.0 per cent). Overseas tax included Hong Kong profits tax of US$362 million
(first half of 2004: US$353 million, second half of 2004: US$186 million)
provided at the rate of 17.5 per cent (2004: 17.5 per cent) on the profits
assessable in Hong Kong. Other overseas taxation was provided for in the
countries of operation at the appropriate rates of taxation.
At 30 June 2005, there were potential future tax benefits of US$803 million (30
June 2004: US$929 million, 31 December 2004: US$973 million) in respect of
trading losses, allowable expenditure charged to the income statement but not
yet allowed for tax, and capital losses which have not been recognised because
recoverability of the potential benefits is not considered certain.
Analysis of overall tax charge Half-year to Half-year to Half-year to
Figures in US$m 30Jun05 30Jun04 31Dec04
Taxation at UK corporate tax rate
of 30.0% 3,192 3,036 2,647
Impact of differently taxed overseas
profits in principal locations (142) (203) (144)
Tax free gains (76) (38) (26)
Adjustments in respect of prior
period liabilities (45) (107) (122)
Tax deduction of innovative tier 1 capital - (92) (100)
Low income housing credits (53) (48) (47)
Impact of profits from associates
and joint ventures (113) (45) (35)
Other items (105) 10 (1)
Overall tax charge 2,658 2,513 2,172
5. Capital resources At At At
Figures in US$m 30Jun05 30Jun04 31Dec04
Capital ratios (%)
Total capital ratio 12.8 12.4 12.0
Tier 1 capital ratio 8.7 9.3 8.9
Composition of capital
Figures in US$m
Tier 1:
Shareholders' funds 86,713 79,259 86,623
Minority interests 6,180 3,955 4,253
Innovative tier 1 securities 9,629 9,119 10,077
Less: goodwill capitalised and intangible
assets (31,344) (29,376) (31,190)
: other regulatory adjustments ^ (2,052) (2,161) (2,504)
Total qualifying tier 1 capital 69,126 60,796 67,259
Tier 2:
Reserves arising from revaluation of
property and unrealised gains in
AFS equities 1,794 2,281 2,660
Collective impairment allowances 8,905 - -
General provisions - 2,592 2,624
Perpetual subordinated debt 3,678 3,609 3,670
Term subordinated debt 22,101 16,428 21,373
Minority and other interests in tier 2
capital 501 893 519
Total qualifying tier 2 capital 36,979 25,803 30,846
Unconsolidated investments (3,008) (4,426) (6,361)
Investments in other banks (1,146) (934) (799)
Other deductions (229) (164) (165)
Total capital 101,722 81,075 90,780
Total risk-weighted assets 794,834 655,695 759,210
The above figures were computed in accordance with the EU Banking Consolidation
Directive and the FSA policy statement PS05/5 ('Implications of a Changing
Accounting Framework'). The comparative figures as at 30 June 2004 and 31
December 2004 have not been restated to reflect the implementation of IFRSs and
FSA policy statement PS05/5.
^Other regulatory adjustments mainly arise from the implementation of IFRSs in
conjunction with the FSA's policy statement PS05/5.
6. Registers of shareholders
The Overseas Branch Register of shareholders in Hong Kong will be closed for one
day, on Friday 19 August 2005. Any person who has acquired shares registered on
the Hong Kong Branch Register but who has not lodged the share transfer with the
Hong Kong Branch Registrar should do so before 4.00 pm on Thursday 18 August
2005 in order to receive the second interim dividend for 2005, which will be
payable on 5 October 2005. Transfers may not be made to or from the Hong Kong
Overseas Branch Register while that Branch Register is closed.
Any person who has acquired shares registered on the Principal Register in the
United Kingdom but who has not lodged the share transfer with the Principal
Registrar should do so before 4.00 pm on Friday 19 August 2005 in order to
receive the dividend.
Any person who has acquired shares registered on the Overseas Branch Register of
shareholders in Bermuda but who has not lodged the share transfer with the
Bermuda Branch Registrar should do so before 4.00 pm on Friday 19 August 2005 in
order to receive the dividend.
Transfers of American Depositary Shares should be lodged with the depositary by
12 noon on Friday 19 August 2005 in order to receive the dividend.
7. Foreign currency amounts
The sterling and Hong Kong dollar equivalent figures in the consolidated income
statement and balance sheet are for information only. These are translated at
the average rate for the period for the income statement and the closing rate
for the balance sheet as follows:
Period end 30Jun05 30Jun04 31Dec04
Closing : HK$/US$ 7.774 7.800 7.773
£/US$ 0.558 0.551 0.517
Average : HK$/US$ 7.793 7.787 7.789
£/US$ 0.534 0.549 0.546
8. Litigation
HSBC, through a number of its subsidiaries, is named in and is defending legal
actions in various jurisdictions arising from its normal business. None of these
proceedings is regarded as material litigation.
9. Dealings in HSBC Holdings plc shares
Except for market-making and other dealings as intermediaries by HSBC Bank plc,
HSBC CCF Financial Products (France) SNC and The Hongkong and Shanghai Banking
Corporation Limited, which are members of a European Economic Area exchange,
neither the Company nor any subsidiaries has bought, sold or redeemed any
securities of the Company during the six months ended 30 June 2005.
10. Interim Report and statutory accounts
The information in this news release does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985 (the Act). The
Interim Report 2005 was approved by the Board of Directors on 1 August 2005. The
comparative figures for the year ended 31 December 2004 are not the Group's
statutory accounts for that year. These accounts, which were prepared under UK
GAAP, have been delivered to the Registrar of Companies in England and Wales in
accordance with Section 242 of the Act. The auditor has reported on those
accounts. Its report was unqualified and did not contain a statement under
Section 237(2) or (3) of the Act.
This news release does not constitute the unaudited interim consolidated
financial statements which are contained in the Interim Report. The unaudited
interim consolidated financial statements have been reviewed by the company's
auditor, KPMG Audit Plc, in accordance with the guidance contained in Bulletin
1999/4: Review of interim financial information issued by the Auditing Practices
Board. On the basis of its review KPMG Audit Plc was not aware of any material
modifications that should be made to the unaudited interim consolidated
financial statements as presented for the six months ended 30 June 2005 in the
Interim Report to the shareholders. The full report of its review is included in
the Interim Report to the shareholders.
11. Forward-looking statements
This news release contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the Group. These
forward-looking statements represent the Group's expectations or beliefs
concerning future events and involve known and unknown risks and uncertainty
that could cause actual results, performance or events to differ materially from
those expressed or implied in such statements. Certain statements, such as those
that include the words 'potential', 'estimated', and similar expressions or
variations on such expressions may be considered 'forward-looking statements'.
12. Corporate governance
HSBC is committed to high standards of corporate governance. HSBC Holdings plc
has complied throughout the six months to 30 June 2005 with the applicable code
provisions of the Combined Code on Corporate Governance issued by the Financial
Reporting Council. The terms of reference of the Group Audit Committee and the
Remuneration Committee were modified in February 2005 to incorporate certain
provisions set out in the Code on Corporate Governance Practices in Appendix 14
to the Rules Governing the Listing of Securities on the Stock Exchange of Hong
Kong Limited which came into effect on 1 January 2005. HSBC Holdings plc has
complied with all other applicable code provisions of the Code on Corporate
Governance Practices in Appendix 14 to the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited throughout the six months
to 30 June 2005.
The Board of HSBC Holdings plc has adopted a code of conduct for transactions in
HSBC Group securities by Directors that complies with The Model Code in the
Listing Rules of the Financial Services Authority and with The Model Code for
Securities Transactions by Directors of Listed Issuers ('Hong Kong Model Code')
set out in the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited save that The Stock Exchange of Hong Kong has granted
certain waivers from strict compliance with the Hong Kong Model Code, primarily
to take into account accepted practices in the UK, particularly in respect of
employee share plans. Following a specific enquiry, each Director has confirmed
he or she has complied with the code of conduct for transactions in HSBC Group
securities throughout the period.
The members of the Board of Directors of HSBC Holdings plc are:
Sir John Bond, Baroness Dunn*, Sir Brian Moffat+, S K Green, A W Jebson, Lord
Butler+, R K F Ch'ien+, J D Coombe+, R A Fairhead+, D J Flint, W K L Fung+, M F
Geoghegan, S Hintze+, J W J Hughes-Hallett+, Sir John Kemp-Welch+, Sir Mark
Moody-Stuart+, S W Newton+, H Sohmen*, and Sir Brian Williamson+.
* Non-executive Director
+ Independent non-executive Director
The Group Audit Committee has reviewed the Interim Results.
13. Interim Report
The Interim Report 2005 will be mailed to shareholders on or about 12 August
2005. Copies may be obtained from Group Corporate Affairs, HSBC Holdings plc, 8
Canada Square, London E14 5HQ, United Kingdom; Group Public Affairs, The
Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong
Kong; Group Public Affairs, HSBC Bank USA, 452 Fifth Avenue, New York, NY 10018,
USA; CCF, Direction de la Communication, 103 avenue des Champs Elysees, 75419
Paris Cedex 08, France; or from the HSBC Group website - www.hsbc.com.
Chinese translations of the Interim Report may be obtained on request from
Computershare Hong Kong Investor Services Limited, Hopewell Centre, 46th Floor,
183 Queen's Road East, Wan Chai, Hong Kong.
A French translation of the Interim Report may be obtained on request from CCF,
Direction de la Communication, 103 avenue des Champs Elysees, 75419 Paris Cedex
08, France.
The Interim Report will be available on the Stock Exchange of Hong Kong's
website - www.hkex.com.hk.
Custodians or nominees who wish to distribute copies of the Interim Report to
their clients may request copies for collection by writing to Group Corporate
Affairs at the address given above.
14. Final results for 2005
The results for the year to 31 December 2005 will be announced on Monday 6 March
2006.
15. Proposed dividends for 2005
The Board has adopted a policy of paying quarterly dividends. Under this policy
it is intended to have a pattern of three equal interim dividends with a
variable fourth interim dividend. The proposed timetables for the dividends in
respect of 2005 are:
Third interim dividend for 2005
Announcement 7 November 2005
American Depositary Shares quoted ex-dividend in New York 22 November 2005
Shares quoted ex-dividend in London, Hong Kong and Bermuda 23 November 2005
Record date and closure of Hong Kong
Overseas Branch Register of shareholders for one day 25 November 2005
Shares quoted ex-dividend in Paris 28 November 2005
Payment date 19 January 2006
Fourth interim dividend for 2005
Announcement 6 March 2006
Shares quoted ex-dividend in London, Hong Kong and Bermuda;
American Depositary Shares quoted ex-dividend in New York 22 March 2006
Record date and closure of Hong Kong
Overseas Branch Register of shareholders for one day 24 March 2006
Shares quoted ex-dividend in Paris 27 March 2006
Payment date 11 May 2006
16. News release
Copies of this news release may be obtained from Group Corporate Affairs, HSBC
Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; The Hongkong and
Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; HSBC
Bank USA, 452 Fifth Avenue, New York, NY 10018, USA; CCF, Direction de la
Communication, 103 avenue des Champs Elysees, 75419 Paris Cedex 08, France. The
news release will also be available on the HSBC Group website - www.hsbc.com.
17. For further information contact:
London Hong Kong
Michael Broadbent David Hall
Director of Group Corporate Affairs Head of Group Public Affairs (Asia)
Telephone: +44 20 7991 8980 Telephone: +852 2822 1133
Richard Beck Gareth Hewett
Director of Communications and Public Policy Senior External Relations Manager
Telephone: +44 20 7991 0633 Telephone: +852 2822 4929
Patrick McGuinness
Senior Manager Investor Relations
Telephone: +44 20 7992 1938
Chicago Paris
Lisa Sodeika Chantal Nedjib
Executive Vice President, Managing Director, Corporate Communications
Corporate Affairs Telephone: +33 1 40 70 7729
Telephone: +1 847 564 6394
Tom Nicholson Gilberte Lombard
Vice President, Investor Relations Director
Group Public Affairs Telephone: +33 1 40 70 2257
Telephone: +1 847 564 6761
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 22nd November 2024
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