HSBC 2003 Annual Report Download - page 278

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
276
Investment properties are valued on an open market value basis at 31 December annually by professional
valuers. Investment properties in Hong Kong, the Macau Special Administrative Region and mainland China,
which represent 57 per cent by value of HSBC’ s investment properties subject to revaluation, were valued by
Chesterton Petty Limited who are members of the Hong Kong Institute of Surveyors. As a result of the
revaluation, the net book value of investment properties has decreased by US$41 million (2002: deficit of
US$36 million). A deficit of US$28 million, net of minority interests of US$13 million, has been debited to
reserves at 31 December 2003.
HSBC Holdings had no investment properties at 31 December 2003 or 2002.
(e) HSBC properties leased to customers
HSBC properties leased to customers, none of which was held by HSBC Holdings, included US$499 million at
31 December 2003 (2002: US$502 million) let under operating leases, net of accumulated depreciation of
US$52 million (2002: US$39 million).
(f) Land and buildings occupied for own activities
2003 2002
US$m US$m
Net book value .......................................................................................................................... 7,902 7,608
(g) Residual values of equipment on operating leases
Included in the net book value of equipment on operating leases are projected residual values at the end of
current lease terms, which will be recovered through re-letting or disposal in the following periods:
2003 2002
US$m US$m
Within 1 year ............................................................................................................................ 1,262 559
Between 1-2 years ..................................................................................................................... 121 1,108
Between 2-5 years ..................................................................................................................... 691 290
More than 5 years ..................................................................................................................... 1,164 715
Total exposure .......................................................................................................................... 3,238 2,672
Residual value risk arises in relation to operating lease transactions to the extent that the values of the leased
assets at the end of the lease terms (the residual values) actually recovered through disposing of or re-letting the
assets at that time, could be different to that projected at the inception of the respective lease. Residual value
exposure is regularly monitored by the business through reviewing the recoverability of the residual value
projected at lease inception. This entails considering the re-lettability and projected disposal proceeds of
operating lease assets at the end of their lease terms. Provision is made to the extent that the carrying values of
leased assets are impaired through residual values not being fully recoverable.