HSBC Holdings Regulatory News (HSBA)

5 Mar 2007 08:15

HSBC Holdings PLC05 March 2007 Financial Overview 2005 Year ended 31Dec 2006 US$m US$m £m HK$m For the year 20,966 Profit before tax 22,086 11,993 171,586 Profit attributable to shareholders of 15,081 the parent company 15,789 8,573 122,665 7,750 Dividends 8,769 4,762 68,126 At year-end 92,432 Total shareholders' equity 108,352 55,151 842,545 105,449 Capital resources 127,074 64,681 988,127 809,146 Customer accounts and deposits by banks 996,528 507,233 7,749,002 1,501,970 Total assets 1,860,758 947,126 14,469,254 827,164 Risk-weighted assets 938,678 477,787 7,299,160 US$ Per share US$ £ HK$ 1.36 Basic earnings 1.40 0.76 10.88 1.35 Diluted earnings 1.39 0.75 10.80 0.69 Dividends^ 0.76 0.41 5.90 8.03 Net asset value 9.24 4.70 71.85 Share information 11,334m US$0.50 ordinary shares in issue 11,572m US$182bn Market capitalisation US$212bn £9.33 Closing market price per share £9.31 Over 1 Over 3 Over 5 year years years Total shareholder return to 31Dec 2006 ^^ 104.6 122.0 148.4 Benchmarks: FTSE 100 114.4 153.8 141.1 MSCI World 105.8 139.9 122.4 ^ The fourth interim dividend for 2006 of US$0.36 per ordinary share istranslated at the closing rate on 31 December 2006 (see note 11 on page 30).Where required, this dividend will be converted into sterling or Hong Kongdollars at the exchange rates on 30 April 2007 (see note 2 on page 17).Under IFRSs accounting rules, the dividend per share of US$0.76 shown in theaccounts is the total of the dividends declared during 2006. This represents thefourth interim dividend for 2005 and the first, second and third interimdividends for 2006. As the fourth interim dividend for 2006 was declared in 2007it will be reflected in the accounts for 2007.^^ Total shareholder return ('TSR') is as defined in the Annual Report andAccounts 2006. 2005 Year ended 31Dec 2006 Performance ratios (%) 15.9 Return on average invested capital ^ 14.9 16.8 Return on average total shareholders' equity 15.7 1.06 Post-tax return on average total assets 1.00 2.01 Post-tax return on average risk-weighted assets 1.93 Efficiency and revenue mix ratios 51.2 Cost efficiency ratio 51.3 As a percentage of total operating income: 50.8 - Net interest income 49.2 23.4 - Net fee income 24.5 9.5 - Net trading income 11.7 ^ Return on invested capital is based on the profit attributable to ordinaryshareholders. Average invested capital is measured as average totalshareholders' equity after adding back goodwill previously written-off directlyto reserves, deducting average equity preference shares issued by HSBC Holdingsand deducting/(adding) average reserves for unrealised gains/(losses) oneffective cash flow hedges and available-for-sale securities. This measurereflects capital initially invested and subsequent profit. Consolidated Income Statement 31Dec05 Year ended 31Dec06US$m US$m £m HK$m 60,094 Interest income 75,879 41,202 589,504 (28,760) Interest expense (41,393) (22,476) (321,582) 31,334 Net interest income 34,486 18,726 267,922 17,486 Fee income 21,080 11,447 163,771 (3,030) Fee expense (3,898) (2,117) (30,284) 14,456 Net fee income 17,182 9,330 133,487 Trading income excluding net 3,656 interest income 5,619 3,052 43,654 Net interest income on trading 2,208 activities 2,603 1,413 20,223 5,864 Net trading income 8,222 4,465 63,877 Net income from financial instruments 1,034 designated at fair value 657 357 5,104 Gains less losses from financial 692 investments 969 526 7,528 155 Dividend income 340 185 2,641 5,436 Net earned insurance premiums 5,668 3,078 44,035 2,733 Other operating income 2,546 1,381 19,780 61,704 Total operating income 70,070 38,048 544,374 Net insurance claims incurred and movement in (4,067) policyholders' liabilities (4,704) (2,554) (36,546) Net operating income before loan impairment charges and other 57,637 credit risk provisions 65,366 35,494 507,828 Loan impairment charges and other (7,801) credit risk provisions (10,573) (5,741) (82,141) 49,836 Net operating income 54,793 29,753 425,687 (16,145) Employee compensation and benefits (18,500) (10,045) (143,726) (11,183) General and administrative expenses (12,823) (6,963) (99,622) Depreciation and amortisation of property, plant (1,632) and equipment (1,514) (822) (11,762) Amortisation and impairment of (554) intangible assets (716) (389) (5,563) (29,514) Total operating expenses (33,553) (18,219) (260,673) 20,322 Operating profit 21,240 11,534 165,014 Share of profit in associates 644 and joint ventures 846 459 6,572 20,966 Profit before tax 22,086 11,993 171,586 (5,093) Tax expense (5,215) (2,832) (40,515) 15,873 Profit for the year 16,871 9,161 131,071 Profit attributable to shareholders 15,081 of the parent company 15,789 8,573 122,665 Profit attributable to 792 minority interests 1,082 588 8,406 Consolidated Balance Sheet At 31 Dec05 At 31Dec06 US$m US$m £m HK$m ASSETS 13,712 Cash and balances at central banks 12,732 6,481 99,004 Items in the course of collection from 11,300 other banks 14,144 7,199 109,984 12,554 Hong Kong Government certificates of indebtedness 13,165 6,701 102,371 232,909 Trading assets 328,147 167,027 2,551,671 15,046 Financial assets designated at fair value 20,573 10,472 159,976 73,928 Derivatives 103,702 52,784 806,387 125,965 Loans and advances to banks 185,205 94,269 1,440,154 740,002 Loans and advances to customers 868,133 441,880 6,750,602 182,342 Financial investments 204,806 104,246 1,592,571 Interests in associates and joint 7,249 ventures 8,396 4,274 65,287 33,200 Goodwill and intangible assets 37,335 19,004 290,317 15,206 Property, plant and equipment 16,424 8,360 127,713 26,596 Other assets 33,444 17,022 260,061 11,961 Prepayments and accrued income 14,552 7,407 113,156 1,501,970 Total assets 1,860,758 947,126 14,469,254 At 31 Dec05 At 31Dec06 US$m US$m £m HK$m LIABILITIES AND EQUITY Liabilities 12,554 Hong Kong currency notes in circulation 13,165 6,701 102,371 69,727 Deposits by banks 99,694 50,744 775,221 739,419 Customer accounts 896,834 456,489 6,973,781 Items in the course of transmission to 7,022 other banks 12,625 6,426 98,172 174,365 Trading liabilities 226,608 115,343 1,762,104 Financial liabilities designated at 61,829 fair value 70,211 35,737 545,961 74,036 Derivatives 101,478 51,652 789,093 188,072 Debt securities in issue 230,325 117,235 1,791,007 4,869 Retirement benefit liabilities 5,555 2,827 43,196 26,515 Other liabilities 29,824 15,183 231,910 Liabilities under insurance contracts 14,144 issued 17,670 8,994 137,402 12,689 Accruals and deferred income 16,310 8,302 126,827 1,966 Provisions 2,859 1,455 22,232 16,537 Subordinated liabilities 22,672 11,540 176,297 1,403,744 Total liabilities 1,745,830 888,628 13,575,574 Equity 5,667 Called up share capital 5,786 2,945 44,992 6,896 Share premium account 7,789 3,965 60,567 23,646 Other reserves 29,380 14,954 228,459 56,223 Retained earnings 65,397 33,287 508,527 92,432 Total shareholders' equity 108,352 55,151 842,545 5,794 Minority interests 6,576 3,347 51,135 98,226 Total equity 114,928 58,498 893,680 1,501,970 Total equity and liabilities 1,860,758 947,126 14,469,254 Consolidated Statement of Recognised Income and Expense 2005 Year ended 31 December 2006 US$m US$m Available-for-sale investments: (400) - Fair value changes taken to equity 1,582 - Fair value changes transferred to income statement on (240) disposal or impairment (644) Cash flow hedges: (92) - Fair value changes taken to equity 1,554 (106) - Fair value changes transferred to income statement (2,198) Share of changes in equity of associates and 161 joint ventures 20 (4,257) Exchange differences 4,675 (812) Actuarial losses on post-employment benefits (78) (5,746) 4,911 437 Net deferred tax on items taken directly to equity (44) 15,873 Profit for the year 16,871 10,564 Total recognised income and expense for the year 21,738 Effect of change in accounting policy: (8,824) IFRSs transition adjustment at 1 January 2005 - 1,740 21,738 Total recognised income and expense for the year attributable to: 9,912 - Shareholders of the parent company 20,527 652 - Minority interests 1,211 10,564 21,738 Consolidated Cash Flow Statement Year ended 31Dec 2006 2005 US$m US$m Cash flows from operating activitiesProfit before tax 22,086 20,966Adjustments for:Non-cash items included in net profit 14,956 11,404Change in operating assets (173,269) (91,753)Change in operating liabilities 237,378 72,212Elimination of exchange differences (12,114) 2,580Net gain from investing activities (2,014) (692)Share of profits in associates and joint ventures (846) (644)Dividends received from associates 97 114Contribution paid to defined benefit pension obligations (547) (2,547)Tax paid (4,946) (4,619)Net cash from operating activities 80,781 7,021 Cash flows from investing activitiesPurchase of financial investments (286,316) (378,103)Proceeds from the sale of financial investments 273,774 368,696Purchase of property, plant and equipment (2,400) (2,887)Proceeds from the sale of property, plant and equipment 2,504 620Purchase of intangible assets (852) (849)Net cash outflow from acquisition of and increase in stake of subsidiaries (1,185) (1,662) Net cash inflow from disposal of subsidiaries 62 705Net cash outflow from acquisition of and increase in stake of associates (585) (2,569)Proceeds from disposal of associates 874 422Net cash used in investing activities (14,124) (15,627) Cash flows from financing activitiesIssue of ordinary share capital 1,010 690Issue of preference shares 374 1,298Net purchases and sales of own shares for market-making purposes 46 (55)Purchases of own shares to meet share awards and share option awards (575) (766)Own shares released on vesting of share awards and exercise of options 173 277 Subordinated loan capital issued 5,948 2,093Subordinated loan capital repaid (903) (1,121)Dividends paid to the shareholders of the parent company (5,927) (5,935)Dividends paid to minority interests - equity (710) (508) - non-equity - -Net cash (used in)/from financing activities (564) (4,027)Net (decrease)/increase in cash and cash equivalents 66,093 (12,633)Cash and cash equivalents at 1 January 141,307 160,956Exchange differences in respect of cash and cash equivalents 8,086 (7,016)Cash and cash equivalents at 31 December 215,486 141,307 Additional Information 1. Accounting policies The consolidated financial statements of HSBC and the separate financialstatements of HSBC Holdings have been prepared in accordance with InternationalFinancial Reporting Standards ('IFRSs') as endorsed by the EU. EU-endorsed IFRSsmay differ from IFRSs as published by the International Accounting StandardsBoard ('IASB') if, at any point in time, new or amended IFRSs have not beenendorsed by the EU. At 31 December 2006, there were no unendorsed standardseffective for the year ended 31 December 2006 affecting these consolidated andseparate financial statements, and there was no difference in application toHSBC between IFRSs endorsed by the EU and IFRSs issued by the IASB.IFRSs comprise accounting standards issued by the IASB and its predecessor bodyand interpretations issued by the International Financial ReportingInterpretations Committee ('IFRIC') and its predecessor body.IFRSs significant accounting policies applicable to the consolidated and theseparate financial statements of HSBC Holdings can be found in Notes 1 and 2 ofthe Annual Report and Accounts. During 2006, HSBC changed how certain of its geographical segments are managedand their performance assessed. As a result, a new segment, Latin America andthe Caribbean ('Latin America'), was formed from the Group's businessespreviously reported under South America, and those in Mexico and Panama whichhad been previously reported as part of the North America geographical segment.All prior period comparative data have been restated to conform to the currentyear presentation. On 1 January 2006, HSBC adopted 'Amendments to IAS 39 and IFRS 4 - FinancialGuarantee Contracts', 'Amendment to IAS 21 The Effects of Changes in ForeignExchange Rates - Net Investment in a Foreign Operation', and 'Amendment to IAS39 - Cash Flow Hedge Accounting of Forecast Intragroup Transactions'. Theapplication of these amendments had no significant effect on the consolidated orseparate financial statements. On 1 January 2006, HSBC adopted 'IFRIC 7 Applying the Restatement Approach underIAS 29 Financial Reporting in Hyperinflationary Economies', 'IFRIC 8 Scope ofIFRS 2' and 'IFRIC 9 Reassessment of Embedded Derivatives' ahead of theireffective dates. The application of these interpretations had no significanteffect on the consolidated or separate financial statements. 2. Dividends On 5 March 2007, the Directors declared a fourth interim dividend for 2006 ofUS$0.36 per ordinary share, a distribution of US$4,171 million. The dividendwill be payable on 10 May 2007 to holders of ordinary shares on the Register atthe close of business on 23 March 2007. The dividend will be payable in cash, inUS 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 11amon 30 April 2007, and with a scrip dividend alternative. Particulars of thesearrangements will be mailed to shareholders on or about 3 April 2007, andelections will be required to be made by 26 April 2007. As this dividend wasdeclared after the balance sheet date, it has not been included in 'Otherliabilities' at 31 December 2006. The dividend on ordinary shares held through Euroclear France, the settlementand central depositary system for Euronext Paris, will be payable on 10 May 2007to the holders of record on 23 March 2007. The dividend will be payable in cash,in euros at the forward exchange rate quoted by HSBC France on 30 April 2007 oras a scrip dividend. Particulars of these arrangements will be announced throughEuronext Paris on 22 March 2007 and 28 March 2007. The dividend on American Depositary Shares ('ADSs'), each of which representsfive ordinary shares, will be payable on 10 May 2007 to holders of record on 23March 2007. The dividend of US$1.80 per ADS will be payable in cash in USdollars or as a scrip dividend of new ADSs. Particulars of these arrangementswill be mailed to holders on or about 30 March 2007, and elections must bereceived by the depositary by 20 April 2007. Alternatively, the cash dividendmay be invested in additional ADSs for participants in the dividend reinvestmentplan operated by the depositary. The Company's shares will be quoted ex-dividend in London, Hong Kong and Bermudaon 21 March 2007 and in Paris on 26 March 2007. The ADSs will be quotedex-dividend in New York on 21 March 2007. Dividends declared on HSBC Holdings shares during 2006 were as follows: 2006 2005 2004 Settled Settled Settled Per in Per in Per in share Total scrip share Total scrip share Total scrip US$ US$m US$m US$ US$m US$m US$ US$m US$m Dividends declared on ordinary shares Fourth interim dividend in respect of previous year 0.310 3,513 1,542 0.270 3,007 431 - - -First interim dividend in respect of current year 0.150 1,712 248 0.140 1,563 677 0.130 1,425 747Second interim dividend in respect of current year 0.150 1,724 515 0.140 1,574 311 0.130 1,436 746Third interim dividend in respect of current year 0.150 1,730 223 0.140 1,585 392 0.130 1,444 255Third interim dividend in respect of previous year - - - - - - 0.240 2,627 346 0.760 8,679 2,528 0.690 7,729 1,811 0.630 6,932 2,094 Per Per Per share Total share Total share Total US$ US$m US$ US$m US$ US$m Quarterly dividends on preference share capital March dividend 15.50 22 - - - -June dividend 15.50 23 - - - -September dividend 15.50 22 - - - -December dividend 15.50 23 14.29 21 - - 62.00 90 14.29 21 - - On 12 February 2007, the Directors declared a dividend of US$15.50 per 6.20 percent non-cumulative US dollar preference share (Series A dollar preferenceshare), equivalent to a dividend of US$0.3875 per Series A American DepositaryShare, each of which represents one-fortieth of a Series A dollar preferenceshare. The dividend is payable on 15 March 2007 to the holder of record on 1March 2007. This information is provided by RNS The company news service from the London Stock Exchange