HSBC 2002 Annual Report Download - page 52

HSBC HOLDINGS PLC
Financial Review (continued)
50
Gains on disposals of investments
Year ended 31 December
Figures in US$m 2002 2001 2000
Gains/(losses) on disposal
of:
- equity investments .............. 226 305 228
- debt securities ..................... 170 170 66
- part of a business ................ –
–
(11)
- other participating interests . 69 4 (11)
- associates............................ 47 257
–
- subsidiaries ......................... 16 21
–
- othe
r
................................... 4(3) 30
532 754 302
Year ended 31 December 2002 compared with
year ended 31 December 2001
During 2002, HSBC made 23 business acquisitions
and completed 20 business disposals.
HSBC’s European results included US$213
million of profits on the sales of securities from
investment portfolios, principally as HSBC adjusted
its exposure to interest rates. CCF also disposed of
its 50 per cent stake in Lixxbail to its joint venture
partner generating a profit of US$39 million.
In the United States, gains were taken in the first
half of the year, on the sales of a number of
mortgage-backed and other debt securities as long-
term portfolios were adjusted to respond to
exposures to interest rates and sovereign credit.
HSBC’s South American results include a gain
of US$38 million on the sale of HSBC’s 6.99 per
cent stake in Banco Santiago S.A.
Year ended 31 December 2001 compared with
year ended 31 December 2000
During 2001, HSBC made 15 business acquisitions
and completed 10 business disposals.
Gains on disposals of investments of US$754
million included a profit of US$200 million on the
sale of HSBC’s stake in British Interactive
Broadcasting (‘BiB’ ) to BSkyB.
HSBC’s European results were bolstered by
gains on the disposal of the stake in Quilter and by
profits in Germany on the sale of the majority stake
in our fledgling internet broker Pulsiv and ERGO.
In Hong Kong HSBC made gains on the sale of
HSBC’s investment in Modern Terminals Limited
and the disposal of our 50 per cent stake in Central
Registration Hong Kong Limited to the other 50 per
cent shareholder, Computershare.
In the United States, HSBC realised significant
gains, substantially in the first half of the year, on
the sale of a number of mortgage-backed and other
debt securities as long-term portfolios were adjusted
to respond to changed economic circumstances,
particularly the potential loss of value from mortgage
refinancing. Similar, but smaller gains were achieved
in other locations.
Taxation
Year ended 31 December
Figures in US$m 2002 2001* 2000 *
UK corporation tax charge 684 416 856
Overseas taxation................. 1,217 1,570 1,468
Joint ventures....................... (6) (13 ) (7 )
Associates............................ 17 26 (1 )
Current taxation 1,912 1,999 2,316
Origination and reversal of
timing differences 615 (176) 89
Effect of decreased tax rate on
opening asset –34
Adjustment in respect of prior
periods 7162
–
Deferred taxation 622 (11) 93
Total charge for taxation...... 2,534 1,988 2,409
Effective taxation (per cent) 26.3 24.9 24.6
Standard UK corporation tax
rate (per cent)..................... 30.0 30.0 30.0
Analysis of overall tax charge
Year ended 31 December
Figures in US$m 2002 2001* 2000 *
Taxation at UK corporate
tax rate of 30.0% (2001:30.0%
2000: 30.0%) ....................... 2,895 2,400 2,932
Impact of differently taxed
overseas profits in principal
locations .................................. (472 ) (616) (498)
Tax free gains ........................... (19 ) (102) (15)
Argentine losses ....................... 87 336
–
Goodwill amortisatio
n
.............. 261 263 172
Prior period adjustments (90 ) (167 ) (48)
Other items (128) (126) (134)
Overall tax charge 2,534 1,988 2,409
* The figures for 2001 and 2000 have been restated to reflect the
adoption of UK Financial Reporting Standard 19 ‘Deferred Tax’,
details of which are set out in Note 1 on pages 195 to 197.
Year ended 31 December 2002 compared with
year ended 31 December 2001
HSBC Holdings and its subsidiary undertakings in
the United Kingdom provided for UK corporation
tax at 30 per cent, the rate for the calendar year 2002
(2001: 30 per cent).
Overseas tax included Hong Kong profits tax of