Interim Report - 24 of 26

RNS Number : 1403M

HSBC Holdings PLC

12 August 2011

 



Shareholder information

1.. Directors' interests ...........................................	221		9 Interim Management Statement .......................	229
2.. Directors' fees ..................................................	224		10 Final results ......................................................	229
3.. Employee share option plans ............................	224		11 Corporate governance ......................................	229
4.. Notifiable interests in share capital ...................	228		12 Going concern basis ..........................................	230
5.. Dealings in HSBC Holdings shares .....................	228		13 Telephone and online share dealing service ......	230
6.. First interim dividend for 2011 .........................	228		14 Stock symbols ..................................................	230
7.. Second interim dividend for 2011 ......................	228		15 Copies of Interim Report 2011 and shareholder enquiries and communications ..........................	230
8.. Proposed interim dividends for 2011 .................	229

1      Directors' interests

According to the register of Directors' interests maintained by HSBC Holdings pursuant to section 352 of the Securities and Futures Ordinance of Hong Kong, the Directors of HSBC Holdings at 30 June 2011 had the following interests, all beneficial unless otherwise stated, in the shares and loan capital of HSBC and its associated corporations:

Directors' interests

HSBC Holdings ordinary shares of US$0.50

			At 30 June 2011
	At    1 January              2011		Beneficial           owner		Child      under 18     or spouse		Jointly              with        another          person		Trustee		Total      interests1
J D Coombe ...................................	20,341		20,736		-		-		-		20,736
R A Fairhead .................................	21,300		-		-		21,300		-		21,300
D J Flint ........................................	178,681		237,460		-		-		34,4222		271,882
A A Flockhart ...............................	230,112		62,605		-		-		337,461		400,066
S T Gulliver ...................................	2,731,077		2,553,592		177,496		-		-		2,731,088
J W J Hughes-Hallett .....................	39,577		-		-		-		46,9522		46,952
W S H Laidlaw ...............................	30,948		29,877		-		-		1,4162		31,293
I J Mackay ....................................	34,217		104,007		-		-		-		104,007
G Morgan ......................................	81,166		82,742		-		-		-		82,742
Sir Simon Robertson ......................	176,373		8,789		-		-		167,7502		176,539
J L Thornton.................................	10,250		-		10,2503		-		-		10,250
Sir Brian Williamson .....................	37,607		38,338		-		-		-		38,338

1  Details of executive Directors' other interests in ordinary shares arising from the HSBC Holdings savings-related share option plans, the HSBC Share Plan and HSBC Share Plan 2011 are set out on the following pages. At 30 June 2011, the aggregate interests under the Securities and Futures Ordinance of Hong Kong in HSBC Holdings ordinary shares of US$0.50, including interests arising through employee share plans, were: D J Flint - 621,280; A A Flockhart - 1,399,379; S T Gulliver - 4,854,243; and I J Mackay - 440,635. Each Director's total interests represent less than 0.03% of the shares in issue.

2  Non-beneficial.

3  Interest of spouse in 2,050 listed American Depositary Shares ('ADS'), which are categorised as equity derivatives under Part XV of the Securities and Futures Ordinance of Hong Kong. Each ADS represents five HSBC Holdings ordinary shares of US$0.50.

L M L Cha has an interest as beneficial owner in US$300,000 6.5% Subordinated Notes 2036 issued by HSBC Holdings plc, which she has held throughout the period since her appointment on 1 March 2011.

As a director of HSBC France, S T Gulliver has an interest as beneficial owner in one share of €5 in that company (representing less than 0.01% of the shares in issue), which he held throughout the period. He has waived his right to receive dividends on this share and has undertaken to transfer it to HSBC on ceasing to be a director of HSBC France.

Savings-related share option plans, the HSBC Share Plan and the HSBC Share Plan 2011

HSBC Holdings savings-related share option plans

HSBC Holdings ordinary shares of US$0.50

	Date of             award		Exercise            price						Held at          1 Jan           2011		Held at        30 Jun           2011
					Exercisable
					from1		until
D J Flint..........................................	25 Apr 2007		£6.1760		1 Aug 2012		31 Jan 2013		2,650		2,650
A A Flockhart ...............................	29 Apr 2009		£3.3116		1 Aug 2014		31 Jan 2015		4,529		4,529
I J Mackay ....................................	30 Apr 2008		US$11.8824		1 Aug 2011		31 Jan 2012		1,531		1,531

The HSBC Holdings savings-related share option plans are all-employee share plans under which eligible HSBC employees may be granted options to acquire shares. Employees may make contributions of up to £250 (or equivalent) each month over a period of one, three or five years which may be used on the first, third or fifth anniversary of the commencement of the relevant savings contract, at the employee's election, to exercise the options. The plans help align the interests of employees with the creation of shareholder value and, as such, exercise of the options is not subject to any performance conditions. The options were awarded for nil consideration and are exercisable at a 20% discount to the average market value of the ordinary shares on the five business days immediately preceding the invitation date. No options lapsed during the period. There are no performance criteria conditional upon which the outstanding options are exercisable and there have been no variations to the terms and conditions since the awards were made. The market value per ordinary share at 30 June 2011 was £6.18. The highest and lowest market values per share during the period were £7.31 and £6.01. Market value is the middle market closing price derived from the London Stock Exchange Daily Official List on the relevant date. Under the Securities and Futures Ordinance of Hong Kong, the options are categorised as unlisted physically settled equity derivatives.

1  May be advanced to an earlier date in certain circumstances, e.g. retirement.

Awards of Performance Shares

HSBC Share Plan

HSBC Holdings ordinary shares of US$0.50

	Date of           award		Year in             which            awards            vested		Awards          held at            1 Jan              2011		Awards vested during period1,2				Awards          held at          30 Jun              2011
									Monetary
							Number3		value
									£000
D J Flint ....................................	3 Jun 2008	2011	2011		470,596		102,184		662		-
A A Flockhart ...........................	3 Jun 2008	2011	2011		160,474		34,844		226		-
S T Gulliver ...............................	3 Jun 2008	2011	2011		69,917		15,181		98		-

Vesting of these awards of Performance Shares was subject to the achievement of the corporate performance conditions set out on pages 226 to 228 of the Annual Report and Accounts 2010. Interests in awards of Performance Shares are categorised under the Securities and Futures Ordinance of Hong Kong as the interests of a beneficiary of a trust.

1  The performance conditions of the total shareholder return element of the award were partially met and the following part of the awards vested on 4 April 2011, when the market value per share was £6.48: D J Flint, 101,003 shares; A A Flockhart, 34,442 shares; and S T Gulliver, 15,006 shares. The following awards representing the fourth interim dividend for 2010 vested on 5 May 2011 when the market value per share was £6.46: D J Flint, 1,181 shares; A A Flockhart, 402 shares; and S T Gulliver, 175 shares. The market value per share on the date of the award, 3 June 2008, was £8.56. Market value is the middle market closing price derived from the London Stock Exchange Daily Official List on the relevant date.

2  The performance conditions for the earnings per share, the economic profit element and the remaining part of the total shareholder return element of the award were not met and, under the terms of the Plan, the following awards were forfeited on 4 April 2011: D J Flint, 373,193 shares; A A Flockhart, 127,259 shares; and S T Gulliver, 55,445 shares. As a consequence, there was no entitlement to the fourth interim dividend for 2010 on the forfeited shares.

3  Includes additional shares arising from scrip dividends.

Awards of Restricted Shares

HSBC Share Plan

HSBC Holdings ordinary shares of US$0.50

			Year in		Awards		Awards made during period				Awards vested during period				Awards
			which		held at										held at
	Date of		awards		1 Jan				Monetary				Monetary		30 Jun
	award		may vest		2011		Number		value		Number		value		20111
									£000				£000
D J Flint............	1 Mar 2010		2011-20132		316,252		-		-		105,1623		713		216,007
	15 Mar 2011		2011-2014		-		215,3834		1,391		86,1535		557		130,741
A A Flockhart ..	3 Mar 2008		2011		15,572		-		-		15,8756		102		-
	2 Mar 2009		2012		514,960		-		-		-		-		524,970
	1 Mar 2010		2011-20132		305,806		-		-		101,6883		689		208,872
	15 Mar 2011		2011-2014		-		139,0794		898		55,6325		359		84,423
S T Gulliver ......	3 Mar 2008		2009-2011		192,796		-		-		194,2707		1,317		-
	1 Mar 2010		2011-20132		1,355,371		-		-		450,6943		3,056		925,751
	15 Mar 2011		2012-2014		-		800,0008		5,168		-		-		809,360
I J Mackay .......	31 Jul 2007		2009- 20119		47,679		-		-		-		-		48,606
	31 Mar 2008		2011		46,252		-		-		47,15210		302		-
	2 Mar 2009		2012		100,309		-		-		-		-		102,258
	1 Mar 2010		2011-20132		59,262		-		-		19,7063		134		40,477
	15 Mar 2011		2011-2014		-		58,1034		375		23,2415		150		35,269

Vesting of Restricted Share awards is normally subject to the Director remaining an employee on the vesting date. The vesting date may be advanced to an earlier date in certain circumstances, e.g. death or retirement. Under the Securities and Futures Ordinance of Hong Kong, interests in Restricted Share awards granted in 2007 and 2008 are categorised as the interests of a beneficiary of a trust and interests in Restricted Share awards granted in 2009, 2010 and 2011 are categorised as the interests of a beneficial owner.

1   Includes additional shares arising from scrip dividends.

2   33% of the award vests on each of the first and second anniversaries of the date of the award, with the balance vesting on the third anniversary of the date of the award.

3  At the date of vesting, 28 February 2011, the market value per share was £6.78. The market value per share on the date of the award, 1 March 2010, was £6.82. Market value is the middle market closing price derived from the London Stock Exchange Daily Official List on the relevant date.

4   At the date of the award, 15 March 2011, the market value per share was £6.46. The number of shares comprises a deferred award and non-deferred award of Restricted Shares. In respect of the deferred award, 33% vests on each of the first and second anniversaries of the date of the award, with the balance vesting on the third anniversary of the date of the award.

5   The non-deferred award vested immediately on 15 March 2011 and is subject to a 6 month retention period. At the date of vesting, the market value per share was £6.46.

6   15,691 shares vested on 31 March 2011 when the market value per share was £6.41. The market value per share on the date of the award, 3 March 2008, was £7.90. An award of 184 shares representing the fourth interim dividend for 2011 vested on 5 May 2011 when the market value per share was £6.46.

7   At the date of vesting, 28 February 2011, the market value per share was £6.78. The market value per share on the date of the award, 3 March 2008, was £7.90.

8   At the date of the award, 15 March 2011, the market value per share was £6.46. The number of shares comprises a deferred award of Restricted Shares. 33% of the award vests on each of the first and second anniversaries of the date of the award, with the balance vesting on the third anniversary of the date of the award.

9    33% of the award vests on each of the second and third anniversaries of the date of the award, with the balance vesting on the fourth anniversary of the date of the award.

10 46,606 shares vested on 31 March 2011 when the market value per share was £6.41. The market value per share on the date of the award, 31 March 2008, was £8.30. An award of 546 shares representing the fourth interim dividend for 2011 vested on 5 May 2011 when the market value per share was £6.46.

HSBC Share Plan 2011

HSBC Holdings ordinary shares of US$0.50

	Date of           award		Year in             which            awards        may vest		Awards          held at            1 Jan              2011		Awards made during period1				Awards          held at          30 Jun              2011
									Monetary
							Number		value
									£000
A A Flockhart ...........................	23 Jun 2011	2011	2016		-		176,519		1,061		176,519
S T Gulliver ...............................	23 Jun 2011	2011	2016		-		388,044		2,332		388,044
I J Mackay .................................	23 Jun 2011	2011	2016		-		108,487		652		108,487

The Group Performance Share Plan ('GPSP') is the long-term incentive plan under the HSBC Share Plan 2011. Vesting of GPSP awards is normally subject to the Director remaining an employee on the vesting date. Any shares (net of tax) which the Director becomes entitled to on the vesting date are subject to a retention requirement until cessation of employment. Under the Securities and Futures Ordinance of Hong Kong, interests in awards are categorised as the interests of a beneficial owner.

1  Conditional awards of shares made under the GPSP. At the date of award, 23 June 2011, the market value per share was £6.01.

No Directors held any short position as defined in the Securities and Futures Ordinance of Hong Kong in the shares and loan capital of HSBC Holdings and its associated corporations. Save as stated above, none of the Directors had an interest in any shares or debentures of HSBC Holdings or any associated corporation at the beginning or at the end of the period, and none of the Directors or members of their immediate families were awarded or exercised any right to subscribe for any shares or debentures in any HSBC corporation during the period. Since the end of the period, the interests of each of the following Directors have increased by the number of HSBC Holdings ordinary shares shown against their name:

Increase in Directors' interests since 30 June 2011

HSBC Holdings ordinary shares of US$0.50

	Beneficial           owner		Child        under 18      or spouse1		Trustee1
J D Coombe .......................................................................................................	1831		-		-
D J Flint ............................................................................................................	3,1512		-		3033
A A Flockhart ...................................................................................................	7,7664		-		2,974
S T Gulliver .......................................................................................................	15,2985		6		-
W S H Laidlaw....................................................................................................	2631		-		-
I J Mackay.........................................................................................................	1,9995		-		-
G Morgan ..........................................................................................................	7291		-		-
Sir Simon Robertson ..........................................................................................	771		-		-
Sir Brian Williamson .........................................................................................	3381		-		-

1  Scrip dividend.

2  Comprises the automatic reinvestment of dividend income by an Individual Savings Account manager (50 shares), the acquisition of shares in the HSBC Holdings UK Share Incentive Plan through regular monthly contributions (21 shares), the automatic reinvestment of dividend income on shares held in the plan (22 shares) and scrip dividends on Performance Share awards and Restricted Share awards granted under the HSBC Share Plan (3,058 shares).

3  Non-beneficial.

4  Comprises scrip dividend on ordinary shares (551 shares) and on Performance Share awards and Restricted Share awards granted under the HSBC Share Plan (7,215 shares).

5  Scrip dividend on Performance Share awards and Restricted Share awards granted under the HSBC Share Plan.

2     Directors' fees

At the Annual General Meeting in 2011, shareholders approved an increased fee of £95,000 per annum payable to each non-executive Director with effect from 1 January 2011. In addition, the Board approved an increased fee of £45,000 per annum for the senior independent non-executive Director and the following increased fees for service on Board Committees with effect from 1 January 2011:

Board Committee fees

	Chairman		Member
	£000		£000
Group Audit Committee ..............................................................................................................	50		30
Group Risk Committee ................................................................................................................	50		30
Remuneration Committee ...........................................................................................................	50		30
Nomination Committee ..............................................................................................................	40		25
Corporate Sustainability Committee ............................................................................................	40		25

3     Employee share option plans

To help align the interests of employees with those of shareholders, options are granted under all-employee share option plans. The following are particulars of outstanding options, including those held by employees working under employment contracts that are regarded as 'continuous contracts' for the purposes of the Hong Kong Employment Ordinance. The options were granted for nil consideration. No options have been granted to substantial shareholders, suppliers of goods or services, or in excess of the individual limit for each share plan. No options were cancelled by HSBC during the period. Share options may also be granted under the HSBC Share Plan 2011, which replaced the HSBC Share Plan on 27 May 2011, following shareholder approval at the Annual General Meeting. No share options have been granted under this plan.

A summary for each plan of the total number of the options which were awarded, exercised or lapsed during the period is shown in the tables below. Further details required to be disclosed pursuant to Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited are available on our website at www.hsbc.com by selecting 'Investor Relations', then 'Governance' then 'Share Plans', and on the website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk or can be obtained upon request from the Group Company Secretary, 8 Canada Square, London E14 5HQ. Particulars of options held by Directors of HSBC Holdings are set out on page 222.

All-employee share option plans

All employees employed within the Group on the first working day of the year may be granted options to acquire HSBC Holdings ordinary shares under shareholder-approved all-employee share option plans. Options under the plans are usually exercisable after one, three or five years.

The exercise of the options may be advanced to an earlier date in certain circumstances, for example, on retirement, and may be extended in certain circumstances, for example, on the death of a participant, the executors may exercise the options up to six months beyond the normal exercise period. The middle market closing price per HSBC Holdings ordinary share quoted on the London Stock Exchange, as derived from the Daily Official List on 19 April 2011, the day before options were awarded in 2011, was £6.41.

HSBC Holdings Savings-Related Share Option Plan

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price (£)

Exercisable

At           1 Jan

Awarded        during

Exercised        during

Lapsed        during

At        30 Jun

from

to

from

to

from

to

2011

period

period1

period

2011

24 May      2005

20 Apr      2011

3.3116

6.6870

1 Aug     2010

31 Jan     2017

67,737,865

7,742,930

500,322

2,715,360

72,265,113

1  The weighted average closing price of the shares immediately before the dates on which options were exercised was £6.73.

The fair value of options granted in the period under the Plan was US$17m.

HSBC Holdings Savings-Related Share Option Plan: International

HSBC Holdings ordinary shares of US$0.50

Dates of award				Exercise price				Exercisable				At           1 Jan		Awarded        during		Exercised        during		Lapsed        during		At        30 Jun
from		to		from		to		from		to		2011		period		period1		period		2011
24 May      2005		20 Apr      2011		(£) 3.3116		(£) 6.6870		1 Aug     2010		31 Jan     2017		28,660,942		7,557,671		203,621		1,927,545		34,087,447
26 Apr      2006		20 Apr      2011		(US$) 4.8876	(US$) 12.0958			1 Aug     2010		31 Jan     2017		10,899,415		2,189,050		53,538		1,091,500		11,943,427
26 Apr      2006		20 Apr      2011		(€) 3.6361		(€) 9.5912		1 Aug     2010		31 Jan     2017		3,128,508		581,297		702		138,029		3,571,074
26 Apr      2006		20 Apr      2011	(HK$) 37.8797		(HK$) 94.5057			1 Aug     2010		31 Jan     2017		47,428,892		5,127,912		94,411		1,395,499		51,066,894

1  The weighted average closing price of the shares immediately before the dates on which options were exercised was £6.75.

The fair value of options granted in the period under the Plan was US$33m.

Fair values of options granted under all-employee share option plans in 2011, estimated at the date of grant of the share option, are calculated using a Black-Scholes model.

The expected life of options depends on the behaviour of option holders, which is incorporated into the option model on the basis of historic observable data. The fair values calculated are inherently subjective and uncertain due to the assumptions made and the limitations of the model used. The significant weighted average assumptions used to estimate the fair value of the options granted in 2011 were as follows:

	1-year savings-related     share option                  plan		3-year savings-related     share option                plans		5-year savings-related     share option               plans
Risk-free interest rate (%)1 ..........................................................................	0.8		1.7		2.5
Expected life (years)2  ..................................................................................	1		3		5
Expected volatility (%)3 ..............................................................................	25		25		25

1  The risk-free interest rate was determined from the UK gilts zero-coupon yield curve for the HSBC Holdings Savings-Related Share Option Plan. A similar yield curve was used for the HSBC Holdings Savings-Related Share Option Plan: International.

2  Expected life is not a single input parameter but a function of various behavioural assumptions.

3  Expected volatility is estimated by considering historic average HSBC share price volatility and implied volatility for traded options over HSBC shares of similar maturity to those of the employee options.

Expected dividend yield was determined to be 4.5% per annum, in line with consensus analyst forecasts.

Discretionary Share Plans

There have been no awards of discretionary share options under employee share plans since 30 September 2005.

HSBC Holdings Group Share Option Plan¹

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price (£)

Exercisable

At               1 Jan

Exercised             during

Lapsed             during

At             30 Jun

from

to

from

to

from

to

2011

period2

period

2011

23 Apr     2001

20 Apr      2005

6.0216

7.9806

23 Apr    2004

20 Apr     2015

153,189,587

641,241

30,165,926

122,382,420

1  The HSBC Holdings Group Share Option Plan expired on 26 May 2005. No options have been granted under the Plan since that date.

2  The weighted average closing price of the ordinary shares immediately before the dates on which options were exercised was £6.91.

HSBC Share Plan

HSBC Holdings ordinary shares of US$0.50

Date of award

Exercise              price                 (£)

Exercisable

At               1 Jan                2011

Exercised             during             period

Lapsed             during             period

At             30 Jun                2011

from

to

30 Sep 2005

7.9911

30 Sep 2008

30 Sep 2015

86,046

-

-

86,046

Subsidiary company share plans

HSBC Private Bank France

When it was acquired in 2000, HSBC Private Bank France operated employee share option plans under which options could be granted over its shares. No options under the plan have been granted since the acquisition and no further options will be granted under the plan. The following are details of options to acquire shares in HSBC Private Bank France.

HSBC Private Bank France

Shares of €2

Dates of award

Exercise price (€)

Exercisable

At               1 Jan

Exercised            during

Lapsed            during

At             30 Jun

from

to

from

to

from

to

2011

period1

period

20111

15 May       2001

1 Oct       2002

20.80

22.22

15 May      2002

1 Oct      2012

287,100

-

141,525

145,575

1  Following exercise of the options, the HSBC Private Bank France shares are exchangeable for HSBC Holdings ordinary shares in the ratio of 2.099984 HSBC Holdings ordinary shares for each HSBC Private Bank France share. At 30 June 2011, The CCF Employee Benefit Trust 2001 held 989,502 HSBC Holdings ordinary shares which may be exchanged for HSBC Private Bank France shares arising from the exercise of these options.

HSBC Finance

Following the acquisition of HSBC Finance in 2003, all outstanding options and equity-based awards over HSBC Finance common shares were converted into rights to receive HSBC Holdings ordinary shares in the same ratio as the share exchange offer for the acquisition of HSBC Finance (2.675 HSBC Holdings ordinary shares for each HSBC Finance common share) and the exercise prices per share were adjusted accordingly. No further options will be granted under the plans.

The following are details of options and equity-based awards to acquire shares in HSBC Holdings. At 30 June 2011, the HSBC (Household) Employee Benefit Trust 2003 held 2,335,315 HSBC Holdings ordinary shares and 1,445 American Depositary Shares, each of which represents five HSBC Holdings ordinary shares, which may be used to satisfy the exercise of employee share options.

HSBC Finance: 1996 Long-Term Executive Incentive Compensation Plan

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price (US$)

Exercisable

At               1 Jan

Exercised             during

Lapsed             during

At             30 Jun

from

to

from

to

from

to

2011

period

period

2011

12 Nov       2001

20 Nov       2002

9.29

18.62

12 Nov       2002

20 Nov       2012

11,117,826

-

-

11,117,826

HSBC Bank Bermuda

Following the acquisition of HSBC Bank Bermuda in 2004, all outstanding options over HSBC Bank Bermuda shares were converted into rights to receive HSBC Holdings ordinary shares based on the consideration of US$40 for each HSBC Bank Bermuda share and the average closing price of HSBC Holdings ordinary shares, derived from the London Stock Exchange Daily Official List, for the five business days preceding the closing date of the acquisition. No further options will be granted under any of these plans.

All outstanding options over HSBC Bank Bermuda shares vested on completion of the acquisition. The following are details of options to acquire HSBC Holdings ordinary shares. At 30 June 2011, the HSBC (Bank of Bermuda) Employee Benefit Trust 2004 held 2,108,830 HSBC Holdings ordinary shares which may be used to satisfy the exercise of employee share options.

HSBC Bank Bermuda: Executive Share Option Plan 1997

HSBC Holdings ordinary shares of US$0.50

Date of award

Exercise                 price               (US$)

At               1 Jan                2011

Exercised             during             period

Lapsed             during             period

At             30 Jun                2011

Exercisable

from

until

11 Jan 2001

12.44

11 Jan       2002

11 Jan       2011

61,901

-

61,901

-

HSBC Bank Bermuda: Share Option Plan 2000

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price (US$)

Exercisable

At               1 Jan

Exercised             during

Lapsed             during

At             30 Jun

from

to

from

to

from

to

2011

period

period

2011

11 Jan       2001

21 Apr       2003

9.32

15.99

11 Jan      2002

21 Apr      2013

2,250,966

-

802,468

1,448,498

HSBC Bank Bermuda: Directors' Share Option Plan

HSBC Holdings ordinary shares of US$0.50

Dates of award

Exercise price (US$)

Exercisable

At               1 Jan

Exercised             during

Lapsed             during

At             30 Jun

from

to

from

to

from

to

2011

period

period

2011

28 Mar       2001

3 Apr       2003

13.73

13.95

28 Mar       2002

3 Apr       2012

26,166

-

9,285

16,881

4     Notifiable interests in share capital

As at 30 June 2011, the following disclosures of major holdings of voting rights had been received by HSBC Holdings (and have not been subsequently amended or withdrawn) pursuant to the requirements of rule 5 of the FSA Disclosure Rules and Transparency Rules:

·     Legal & General Group Plc gave notice on 9 March 2010 that it had a direct interest on 8 March 2010 in 696,851,431 HSBC Holdings ordinary shares, representing 3.99% of the total voting rights at that date; and

·     BlackRock, Inc. gave notice on 9 December 2009 that on 7 December 2009 it had the following: an indirect interest in HSBC Holdings ordinary shares of 1,142,439,457; qualifying financial instruments with 705,100 voting rights that may be acquired if the instruments are exercised or converted; and financial instruments with similar economic effect to qualifying financial instruments which refer to 234,880 voting rights, each representing 6.56%, 0.0041% and 0.0013% respectively of the total voting rights at that date.

As at 30 June 2011, according to the register maintained by HSBC Holdings pursuant to section 336 of the Securities and Futures Ordinance of Hong Kong:

·      JPMorgan Chase & Co. gave notice on 27 May 2011 that on 24 May 2011 it had the following interests in HSBC Holdings ordinary shares: a long position of 1,226,942,153 shares; a short position of 131,511,811 shares; and a lending pool of 890,915,822 shares, each representing 6.89%, 0.74% and 5.00% respectively of the ordinary shares in issue at that date; and

·      BlackRock, Inc. gave notice on 13 May 2011 that on 11 May 2011 it had the following interests in HSBC Holdings ordinary shares: a long position of 1,060,826,866 shares and a short position of 25,971,269 shares, each representing 5.95% and 0.15% respectively of the ordinary shares in issue at that date.

5     Dealings in HSBC Holdings shares

Except for dealings as intermediaries by HSBC Bank plc and The Hongkong and Shanghai Banking Corporation Limited, which are members of a European Economic Area exchange, neither HSBC Holdings nor any subsidiary undertaking has bought, sold or redeemed any securities of HSBC Holdings during the six months to 30 June 2011.

6     First interim dividend for 2011

The first interim dividend for 2011 of US$0.09 per ordinary share was paid on 6 July 2011.

7     Second interim dividend for 2011

The Directors have declared a second interim dividend for 2011 of US$0.09 per ordinary share. The second interim dividend will be payable on 6 October 2011 to holders of record on 18 August 2011 on the Hong Kong Overseas Branch Register and 19 August 2011 on the Principal Register in the United Kingdom or the Bermuda Overseas Branch Register. The dividend will be payable in cash, 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 11.00 am on 26 September 2011, and with a scrip dividend alternative. Particulars of these arrangements will be sent to shareholders on or about 31 August 2011 and elections must be received by 21 September 2011.

The dividend will be payable on ordinary shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, on 6 October 2011 to the holders of record on 19 August 2011. The dividend will be payable by Euroclear France in cash in euros at the forward exchange rate quoted by HSBC France on 26 September 2011, or as a scrip dividend alternative. Particulars of these arrangements will be announced through Euronext Paris on 16 August and 24 August 2011.

The dividend will be payable on ADSs each of which represents five ordinary shares, on 6 October 2011 to holders of record on 19 August 2011. The dividend of US$0.45 per ADS will be payable by the depositary in cash, in US dollars and with a scrip dividend alternative of new ADSs. Particulars of these arrangements will be mailed to ADS holders on or about 31 August 2011. Elections must be received by the depositary on or before 21 September 2011. Alternatively, the cash dividend may be invested in additional ADSs for participants in the dividend reinvestment plan operated by the depositary.

Ordinary shares will be quoted ex-dividend in London, Hong Kong, Paris and Bermuda on 17 August 2011. The ADSs will be quoted ex-dividend in New York on 17 August 2011.

Any person who has acquired ordinary shares registered on the Hong Kong Overseas Branch Register but who has not lodged the share transfer with the Hong Kong Branch Registrar should do so before 4.00pm on 18 August 2011 in order to receive the dividend.

Any person who has acquired ordinary shares registered on the Principal Register in the United Kingdom or on the Bermuda Overseas Branch Register of shareholders but who has not lodged the share transfer with the Principal Registrar or the Bermuda Overseas Branch Registrar respectively, should do so before 4.00pm on 19 August 2011 in order to receive the dividend.

Removals of ordinary shares may not be made to or from the Hong Kong Overseas Branch Register on 19 August 2011. Accordingly any person who wishes to remove ordinary shares to the Hong Kong Overseas Branch Register must lodge the removal request with the Principal Registrar in the United Kingdom or the Bermuda Branch Registrar by 4.00pm on 17 August 2011; any person who wishes to remove ordinary shares from the Hong Kong Overseas Branch Register must lodge the removal request with the Hong Kong Branch Registrar by 4.00pm on 18 August 2011.

Transfers of ADSs must be lodged with the depositary by 12 noon on 19 August 2011 in order to receive the dividend.

8     Proposed interim dividends for 2011

The Board has adopted a policy of paying quarterly dividends on the ordinary shares. Under this policy it is intended to have an annual pattern of three equal interim dividends with a variable fourth interim dividend. The proposed timetables for dividends payable on the ordinary shares in respect of 2011 that have not yet been declared are:

	Third interim     dividend for 2011		Fourth interim     dividend for 2011
Announcement ..................................................................................................	7 November 2011		27 February 2012
Shares quoted ex-dividend in London, Hong Kong, Paris and Bermuda ................	23 November 2011		14 March 2012
ADSs quoted ex-dividend in New York ...............................................................	23 November 2011		14 March 2012
Record date in Hong Kong .................................................................................	24 November 2011		15 March 2012
Record date in London, New York, Paris and Bermuda1 ......................................	25 November 2011		16 March 2012
Payment date .....................................................................................................	18 January 2012		2 May 2012

1  Removals to and from the Overseas Branch Register of shareholders in Hong Kong will not be permitted on these dates.

9     Interim Management Statement

An Interim Management Statement is expected to be issued on 9 November 2011.

10   Final results

The results for the year to 31 December 2011 are expected to be announced on Monday 27 February 2012.

11   Corporate governance

HSBC is committed to high standards of corporate governance.

HSBC Holdings has complied throughout the six months to 30 June 2011 with the applicable code provisions of the UK Corporate Governance Code issued by the Financial Reporting Council and 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, save that the Group Risk Committee (all the members of which are independent non-executive Directors), which was established in accordance with the recommendations of the Report on Governance in UK banks and other financial industry entities, is responsible for the oversight of internal control (other than internal financial control) and risk management systems (Hong Kong code provisions C.3.3 paragraphs (f), (g) and (h)). If there were no risk committee, these matters would be the responsibility of an audit committee.

The Board of HSBC Holdings has adopted a code of conduct for transactions in HSBC Group securities by Directors. The code of conduct 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 Limited has granted certain waivers from strict compliance with the Hong Kong Model Code. The waivers granted by The Stock Exchange of Hong Kong Limited primarily take into account accepted practices in the UK, particularly in respect of employee share plans. Following specific enquiry, each Director has confirmed that he or she has complied with the code of conduct for transactions in HSBC Group securities throughout the period.

There have been no material changes to the information disclosed in the Annual Report and Accounts 2010 in respect of the number and remuneration of employees, remuneration policies, bonus and share option plans and training schemes save that shareholders approved the HSBC Share Plan 2011 at the 2011 Annual General Meeting.

The biographies of Directors on pages 165 to 170 and part 2 of this Additional Information Section on page 221 include changes during 2011 and the updated information required pursuant to rule 13.51B (1) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

12   Going concern basis

The financial statements are prepared on the going concern basis, as the Directors are satisfied that the Group and parent company have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including projections of future profitability, cash flows and capital resources. Further information relevant to the assessment is provided elsewhere in this Interim Report 2011.

In particular, HSBC's principal activities and strategic direction are described in the Overview section and challenges and uncertainties, as well as HSBC's exposure to credit, liquidity and market risks, are described in the Risk section. Details of capital management and allocation are described in the Capital section.

13   Telephone and online share dealing service

For shareholders on the Principal Register who are resident in the UK, Channel Islands or Isle of Man with a UK, Channel Islands or Isle of Man postal address, and who hold an HSBC Bank personal current account, the HSBC InvestDirect share dealing service is available for buying and selling HSBC Holdings ordinary shares. Details are available from: HSBC InvestDirect, PO Box 1683, Frobisher House, Nelson Gate, Southampton, SO15 9DG, UK telephone : [phone], overseas telephone: + 44 (0) 1226 261090, textphone: 18001 08456 088 877, web: www.hsbc.co.uk/shares.

14   Stock symbols

HSBC Holdings plc ordinary shares of US$0.50 trade under the following stock symbols:

London Stock Exchange                                HSBA

Hong Kong Stock Exchange                        5

New York Stock Exchange (ADS)                HBC

Euronext Paris                                                 HSB

Bermuda Stock Exchange                              HSBC

15   Copies of the Interim Report 2011 and shareholder enquiries and communications

Further copies of the Interim Report 2011 may be obtained from Group Communications, HSBC Holdings plc, 8 Canada Square, London E14 5HQ, United Kingdom; from Group Communications (Asia), The Hongkong and Shanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; from Internal Communications, HSBC - North America, 26525 North Riverwoods Boulevard, Mettawa, Illinois 60045, USA; or from the HSBC website, www.hsbc.com.

Shareholders may at any time choose to receive corporate communications in printed form or to receive a notification of their availability on HSBC's website. To receive future notifications of the availability of a corporate communication on HSBC's website by email, or revoke or amend an instruction to receive such notifications by email, go to www.hsbc.com/ecomms. If you provide an email address to receive electronic communications from HSBC, we will also send notifications of your dividend entitlements by email. If you received a notification of the availability of this document on HSBC's website and would like to receive a printed copy, or if you would like to receive future corporate communications in printed form, please write or send an email to the appropriate Registrars at the address given below. Printed copies will be provided without charge.

Any enquiries relating to your shareholdings on the share register, for example transfers of shares, change of name or address, lost share certificates or dividend cheques, should be sent to the Registrars at the address given below. The Registrars offer an online facility, Investor Centre, which enables shareholders to manage their shareholding electronically.

Principal Register	Hong Kong Overseas Branch Register	Bermuda Overseas Branch Register
Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ United Kingdom Telephone: [phone] Email via website: www.investorcentre.co.uk/contactus Investor Centre: www.computershare.com/investor/uk	Computershare Hong Kong Investor Services Limited Rooms 1712-1716, 17th Floor Hopewell Centre 183 Queen's Road East Hong Kong Telephone: [phone] Email: [e-mail] Investor Centre: www.computershare.com/hk/investors	Investor Relations Team HSBC Bank Bermuda Limited 6 Front Street Hamilton HM 11 Bermuda Telephone: [phone] Email: [e-mail] Investor Centre: www.computershare.com/investor/bm

Any enquiries relating to ADSs should be sent to the depositary, The Bank of New York Mellon, at:

BNY Mellon Shareowner Services PO Box 358516 Pittsburgh PA 15252-8516 USA

Telephone (US): [phone] Telephone (international): 201 680 6825 Email: [e-mail] Website: www.bnymellon.com/shareowner

Any enquiries relating to shares held through Euroclear France, the settlement and central depositary system for Euronext Paris, should be sent to the paying agent:

HSBC France

103 avenue des Champs Elysées

75419 Paris Cedex 08

France

Telephone: [phone]

Email: [e-mail]

Website: www.hsbc.fr

A Chinese translation of this and future documents may be obtained on request from the Registrars. Please also contact the Registrars if you have received a Chinese translation of this document and do not wish to receive such translations in the future.

Persons whose shares are held on their behalf by another person may have been nominated to receive communications from HSBC pursuant to section 146 of the UK Companies Act 2006 ('nominated person'). The main point of contact for a nominated person remains the registered shareholder (for example your stockbroker, investment manager, custodian or other person who manages the investment on your behalf). Any changes or queries relating to a nominated person's personal details and holding (including any administration thereof) must continue to be directed to the registered shareholder and not HSBC's Registrars. The only exception is where HSBC, in exercising one of its powers under the UK Companies Act 2006, writes to a nominated person directly for a response.

Cautionary statement regarding forward-looking statements

This Interim Report 2011 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 uncertainties that could cause actual results, performance or events to differ, in some instances materially, from those expressed or implied in such statements. For example, certain of the market risk disclosures, some of which are only estimates and, therefore, could be materially different from actual results, are dependent on key model characteristics and assumptions and are subject to various limitations. Certain statements that are not historical facts, such as those that include the words 'potential', 'value at risk', 'expects', 'anticipates', 'objective', 'intends', 'seeks', 'plans', 'believes', 'estimates', and similar expressions or variations on such expressions may be considered 'forward-looking statements'.

Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials and in oral statements made by HSBC's Directors, officers or employees to third parties, including financial analysts.

Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement. Forward-looking statements speak only as of the date they are made, and it should not be assumed that they have been revised or updated in the light of new information or future events. Past performance cannot be relied on as a guide to future performance. Trends and factors that are expected to affect HSBC's results of operations are described in the 'Interim Management Report'. A more detailed cautionary statement is given on page 379 of the Annual Report and Accounts 2010.

 

 

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