HSBC Holdings plc pt 3/3

HSBC Holdings PLC
30 July 2007

Consolidated Cash Flow Statement

                                                                 Half-year to
                                                   30Jun07       30Jun06        31Dec06
                                                      US$m          US$m           US$m
Cash flows from operating activities
Profit before tax                                   14,159        12,517          9,569

Adjustments for:
- non-cash items included in profit before tax       8,434         5,681          9,275
- change in operating assets                       (65,685)     (106,213)       (67,056)
- change in operating liabilities                  123,248       136,184        101,194
- elimination of exchange differences               (5,871)       (8,203)        (3,911)
- net gain from investing activities                (2,225)         (752)        (1,262)
- share of profits in associates and joint ventures   (623)         (361)          (485)
- dividends received from associates                   146            32             65
- contribution paid to defined benefit pension 
  schemes                                             (970)         (236)          (311)
- tax paid                                          (2,217)       (1,983)        (2,963)

Net cash from operating activities                  68,396        36,666         44,115

Cash flows from investing activities
Purchase of financial investments                 (248,734)     (181,454)      (104,862)
Proceeds from the sale of financial investments    237,481       177,762         96,012
Purchase of property, plant and equipment             (965)         (803)        (1,597)
Proceeds from the sale of property, plant and 
  equipment                                          1,368           915          1,589
Purchase of intangible assets                         (451)         (352)          (500)
Net cash outflow from acquisition of and increase
  in stake of subsidiaries                            (323)           (5)        (1,180)
Net cash inflow from disposal of subsidiaries            -            23             39
Net cash outflow from acquisition of and increase
  in stake of associates                                (9)         (208)          (377)
Proceeds from disposal of associates                     -           319            555

Net cash used in investing activities              (11,633)       (3,803)       (10,321)

Cash flows from financing activities
Issue of ordinary share capital                        116           414            596
Issuance of preference shares                            -           374              -
Net purchases and sales of own shares for 
  market-making purposes                               220          (141)           187
Purchases of own shares to meet share awards
  and share option awards                             (807)         (526)           (49)
Own shares released on vesting of share awards
  and exercise of options                               58           137             36
Subordinated loan capital issued                       563         3,716          2,232
Subordinated loan capital repaid                       (87)         (273)          (630)
Dividends paid to the shareholders of the parent
  company                                           (3,591)       (3,202)        (2,725)
Dividends paid to minority interests                  (460)         (533)          (177)

Net cash used in financing activities               (3,988)          (34)          (530)

Net increase in cash and cash equivalents           52,775        32,829         33,264

Cash and cash equivalents at the beginning of the 
  period                                           215,486       141,307        178,626
Exchange differences in respect of cash and cash 
  equivalents                                        4,023         4,490          3,596

Cash and cash equivalents at the end of the 
  period                                           272,284       178,626        215,486

Additional Information

1. Accounting policies

The accounting policies adopted by HSBC for these interim consolidated financial
statements are consistent with those described on page 304 of the Annual Report
and Accounts 2006.

2. Dividends

The Directors have declared a second interim dividend for 2007 of US$0.17 per
ordinary share, a distribution of approximately US$1,991 million. The second
interim dividend will be payable on 4 October 2007 to holders of ordinary shares
on the Register at the close of business on 17 August 2007. The dividend will be
payable in cash, in US dollars, sterling or Hong Kong dollars, or a combination
of these currencies, at the forward exchange rates quoted by HSBC Bank plc in
London at or about 11:00am on 24 September 2007, and with a scrip dividend
alternative. Particulars of these arrangements will be mailed to shareholders on
or about 29 August 2007, and elections must be received by 19 September 2007. As
this dividend was declared after the balance sheet date, it has not been
included in 'Other liabilities' at 30 June 2007.

The dividend will be payable on shares held through Euroclear France, the
settlement and central depositary system for Euronext Paris, on 4 October 2007
to the holders of record on 17 August 2007. The dividend will be payable in
cash, in euros at the forward exchange rate quoted by HSBC France on 24
September 2007, or as a scrip dividend. Particulars of these arrangements will
be announced through Euronext Paris on 15 August 2007 and 22 August 2007.

The dividend on American Depositary Shares ('ADSs'), each of which represents
five ordinary shares, will be payable on 4 October 2007 to holders of record on
17 August 2007. The dividend of US$0.85 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 24 August 2007. Elections must be received
by the depositary on or before 14 September 2007. Alternatively, the cash
dividend may be invested in additional ADSs for participants in the dividend
reinvestment plan operated by the depositary.

HSBC Holdings plc ordinary shares will be quoted ex-dividend in London, Hong
Kong and Bermuda on 15 August 2007 and in Paris on 20 August 2007. The ADSs will
be quoted ex-dividend in New York on 15 August 2007.
                                       
Dividends to shareholders of the parent company were as follows:

                         Half-year to                       Half-year to                       Half-year to
                              30Jun07                            30Jun06                            31Dec06
                                          Settled                            Settled                            Settled
                      Per                      in        Per                      in        Per                      in
                    share       Total       scrip      share       Total       scrip      share       Total       scrip
                      US$        US$m        US$m        US$        US$m        US$m        US$        US$m        US$m

Dividends declared 
  on ordinary shares
Fourth interim divi-
  dend in respect 
  of previous year  0.360       4,161       2,116      0.310       3,513       1,542          -           -           -
First interim divi-
  dend in respect 
  of current year   0.170       1,986         712      0.150       1,712         248          -           -           -
Second interim 
  dividend in res-
  pect of current
  year                  -           -           -          -           -           -      0.150       1,724         515
Third interim divi-
  dend in respect 
  of current year       -           -           -          -           -           -      0.150       1,730         233

                    0.530       6,147       2,828      0.460       5,225       1,790      0.300       3,454         738

Quarterly dividends 
  on ordinary
  share capital
March dividend      15.50          22                  15.50          22                      -           -
June dividend       15.50          23                  15.50          23                      -           -
September dividend      -           -                      -           -                  15.50          22
December dividend       -           -                      -           -                  15.50          23
                    31.00          45                  31.00          45                  31.00          45

3. Earnings and dividends per ordinary share

                                                                 Half-year to
                                                  30Jun07         30Jun06       31Dec06
                                                      US$             US$           US$

Basic earnings per ordinary share                    0.95            0.78          0.62
Diluted earnings per ordinary share                  0.94            0.77          0.62
Dividends per ordinary share                         0.53            0.46          0.30

Dividend payout ratio^                                 56%             59%           48%

^ Dividends per ordinary share expressed as a percentage of basic earnings per
  share.

Basic earnings per ordinary share was calculated by dividing the earnings of
US$10,850 million by the weighted average number of ordinary shares outstanding,
excluding own shares held, of 11,463 million shares (first half of 2006:
earnings of US$8,684 million and 11,148 million shares; second half of 2006:
earnings of US$7,015 million and 11,272 million shares).

                                                            Half-year to
                                                  30Jun07       30Jun06      31Dec06
                                                     US$m          US$m         US$m
Profit attributable to shareholders
  of the parent company                            10,895         8,729        7,060
Dividend payable on preference shares 
  classified as equity                                (45)          (45)         (45)

Profits attributable to ordinary
  shareholders of the parent company               10,850         8,684        7,015
                                         
Diluted earnings per ordinary share was calculated by dividing the basic
earnings 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 11,518 million shares (first half of 2006: 11,304 million
shares; second half of 2006: 11,336 million shares).

4. Taxation

                                                              Half-year to
                                                   30Jun07     30Jun06      31Dec06
                                                      US$m        US$m         US$m

UK corporation tax charge                              476         536          114
Overseas taxation                                    1,937       2,254        2,298

Current taxation                                     2,413       2,790        2,412
Deferred taxation                                      232         482         (469)

Total charge for taxation                            2,645       3,272        1,943

Effective tax rate                                    18.7%       26.1%        20.3%

HSBC Holdings and its subsidiaries in the United Kingdom provided for UK
corporation tax at 30 per cent (2006: 30 per cent). Overseas tax included Hong
Kong profits tax of US$495 million (first half of 2006: US$387 million; second
half of 2006: US$364 million) provided at the rate of 17.5 per cent (2006: 17.5
per cent) on the profits for the period assessable in Hong Kong. Other overseas
subsidiaries and overseas branches provided for taxation at the appropriate
rates in the countries in which they operate.

Analysis of overall tax expense
                                                         Half-year to
                                                30Jun07         30Jun06     31Dec06
                                                   US$m            US$m        US$m

Taxation at UK corporate tax rate
  of 30 per cent (2006: 30 per cent)              4,248           3,756       2,870

Impact of overseas profits in principal
  locations taxed at different rates               (459)           (187)       (381)
Tax-free gains                                     (157)            (97)       (102)
Adjustments in respect of prior period 
  liabilities                                      (152)             36        (142)
Low income housing credits                          (52)            (55)        (53)
Other items                                        (137)            (36)        (19)
Effect of profits in associate and joint ventures  (185)           (100)       (153)
Effect of previously unrecognised temporary 
  differences                                      (211)            (45)        (77)
Impact of gains arising from dilution of 
  interests in associates                          (250)              -           -

Overall tax charge                                2,645           3,272       1,943

5. Capital resources

                                                  At             At              At
                                             30Jun07        30Jun06         31Dec06
                                                   %              %               %
Capital ratios

Total capital ratio                             13.2           13.4            13.5
Tier 1 capital ratio                             9.3            9.4             9.4

                                                US$m           US$m            US$m
Composition of regulatory capital

Tier 1 capital:
Shareholders' equity                         119,780        101,381         108,352
Minority interests and preference shares       5,668          6,734           7,413
Innovative tier 1 securities                   9,874          9,601           9,932
Less
  Goodwill capitalised and intangible assets (37,547)       (33,992)        (36,489)
  Other regulatory adjustments                  (431)        (1,586)         (1,366)

Total qualifying tier 1 capital               97,344         82,138          87,842

Tier 2:
Reserves arising from revaluation of property
  and unrealised gains in available for sale
  Equities                                     3,653          2,040           2,982
Collective impairment allowances              11,735          9,087          11,077
Perpetual subordinated debt                    3,387          3,665           3,396
Term subordinated debt                        30,901         27,446          30,677
Minority and other interests in tier 2 
  capital                                        425            425             425

Total qualifying tier 2 capital
  before deductions                           50,101         42,663          48,557

Unconsolidated investments^                   (9,883)        (6,441)         (7,512)
Investments in capital of other banks              -         (1,419)         (1,419)
Other deductions                                (520)          (305)           (394)

Total regulatory capital                     137,042        116,636         127,074

Total risk-weighted assets                 1,041,540        872,893         938,678

^ Mainly comprises investments in insurance entities.

The above figures were computed in accordance with the FSA's requirements.

6. Registers of shareholders

The Overseas Branch Register of shareholders in Hong Kong will be closed for one
day, on Friday 17 August 2007. 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 4.00pm on Thursday 16 August 2007
in order to receive the second interim dividend for 2007, which will be payable
on Thursday 4 October 2007. 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 4.00pm on Friday 17 August 2007 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 4.00pm on Friday 17 August 2007 in
order to receive the dividend.

Transfers of American Depositary Shares should be lodged with the depositary by
12 noon on Friday 17 August 2007 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 ended
                                               30Jun07       30Jun06        31Dec06
Closing:                        HK$/US$          7.817         7.767          7.776
                                  £/US$          0.499         0.542          0.509

Average:                        HK$/US$          7.812         7.758          7.769
                                  £/US$          0.508         0.559          0.543

8. Litigation

On 27 July 2007, the UK Office of Fair Trading issued High Court legal proceedings
against a number of UK financial institutions, including HSBC Bank plc, to determine
the legal status and enforceability of certain of the charges applied to their 
personal customers in relation to unauthorised overdrafts (the 'Charges').  The 
proceedings were commenced with the agreement of all parties concerned.  Proceedings
are at a very early stage, and may (if appeals are pursued) take a number of years to
conclude.  A range of outcomes is possible, depending upon the Court's assessment
of each Charge across the period under review. 

HSBC Bank plc considers the Charges to be and to have been valid and enforceable,
and intends strongly to defend its position.  It is impossible at this stage to 
predict accurately the outcome of the litigation or whether the proceedings will 
have any financial impact, and if so the size of that impact but on the basis of 
facts currently available and the advice received the financial impact on HSBC is
not considered to be material.

HSBC is party to legal actions in a number of jurisdictions including the UK, Hong
Kong and the US, arising out of its normal business operations.  HSBC considers that 
none of the actions is regarded as material, and none is expected to result in a 
significant adverse effect on the financial position of HSBC, either individually
or in the aggregate.  Management believes that adequate provisions have been made
in respect of such litigation.  HSBC has not disclosed any contingent liability
associated with these legal actions in aggregate because it is not practicable to 
do so.
 
9. Dealings in HSBC Holdings plc shares

Except for dealings as intermediaries by HSBC Bank plc, HSBC Financial Products
(France) 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 2007.

10. 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 2007 was approved by the Board of Directors on 30 July 2007. The
statutory accounts for the year ended 31 December 2006 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 2007. 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 2007 in the
Interim Report to the shareholders. The full report of its review is included in
the Interim Report 2007 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 HSBC. These
forward-looking statements represent HSBC'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 with the applicable code provisions of the Combined Code on
Corporate Governance issued by the Financial Reporting Council throughout the
six months to 30 June 2007.

HSBC Holdings plc has complied throughout the six months to 30 June 2007 with
the 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.

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 Directors of HSBC Holdings plc are:
S K Green, Baroness Dunn*, Sir Brian Moffat*, M F Geoghegan, Lord Butler*, 
J D Coombe+, R A Fairhead+, D J Flint, W K L Fung*, J W J Hughes-Hallett+, 
Sir Mark Moody-Stuart+, G Morgan+, S W Newton+, S M Robertson+ and Sir Brian Williamson+.

* Non-executive Director
+ Independent non-executive Director

The Group Audit Committee has reviewed the interim results for the six months to
30 June 2007.

13. Interim Report

The Interim Report 2007 will be published on or about Friday 10 August 2007.
Copies may be obtained from Group Communications, 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;
Employee Communications, HSBC - North America, 2700 Sanders Road, Prospect
Heights, Illinois 60070, USA; or from the HSBC Group website - www.hsbc.com.

A Chinese translation of the Interim Report 2007 may be obtained on request from
Computershare Hong Kong Investor Services Limited, Hopewell Centre, Rooms
1806-1807, 18th Floor, 183 Queen's Road East, Wan Chai, Hong Kong.

The Interim Report 2007 will be available on the Stock Exchange of Hong Kong's
website - www.hkex.com.hk.

Custodians or nominees that wish to distribute copies of the Interim Report 2007
to their clients may request copies for collection by writing to Group
Communications at the address given above.

14. Final results for 2007

The results for the year to 31 December 2007 will be announced on Monday 3 March
2008.

15. Proposed interim dividends for 2007

The Board has adopted a policy of paying quarterly interim dividends on the
ordinary shares. 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 third and fourth interim dividends payable on the ordinary
shares in respect of 2007 are:

Third interim dividend for 2007

Announcement                                                  13 November 2007

American Depositary Shares quoted                             20 November 2007
  ex-dividend in New York

Shares quoted ex-dividend in London,                          21 November 2007
  Hong Kong and Bermuda

Record date and closure of Hong Kong                          23 November 2007
  Overseas Branch Register of shareholders
  for one day

Shares quoted ex-dividend in Paris                            26 November 2007

Payment date                                                   16 January 2008

Fourth interim dividend for 2007

Announcement                                                      3 March 2008

American Depositary Shares quoted                                19 March 2008
  ex-dividend in New York

Shares quoted ex-dividend in London,                             19 March 2008
  Hong Kong and Bermuda

Record date and closure of Hong Kong                             25 March 2008
  Overseas Branch Register of shareholders
  for one day

Shares quoted ex-dividend in Paris                               26 March 2008

Payment date                                                        7 May 2008

16. News release

Copies of this news release may be obtained from Group Communications, 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; HSBC France, 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
Richard Beck                           David Hall
Director of Group Communications       Head of Group Public Affairs (Asia)
Telephone: [phone]            Telephone: [phone]

Danielle Neben                         Gareth Hewett
Senior Manager Investor Relations      Senior External Relations Manager
Telephone: [phone]            Telephone: [phone]

Chicago                                Paris
Lisa Sodeika                           Chantal Nedjib
Executive Vice President,              Managing Director, Corporate Communications
Corporate Affairs                      Telephone: [phone]
Telephone: [phone]

Linda Recupero                         Gilberte Lombard
Executive Vice President,              Investor Relations Director
Group Public Affairs                   Telephone: [phone]
Telephone: [phone]

An interview with Michael Geoghegan, Group Chief Executive, and Douglas Flint,
Group Finance Director, is now available in video/audio and text on www.hsbc.com
and www.cantos.com






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