HSBC 2004 Annual Report Download - page 193

HSBC HOLDINGS PLC
Report of the Directors
191
Results for 2004
HSBC reported operating profit before provisions of
US$22,898 million. Profit attributable to
shareholders of HSBC Holdings was
US$11,840 million, a 14.4 per cent return on
shareholders’ funds. The retained profit transferred
to reserves was US$4,539 million.
First, second and third interim dividends, each
of US$0.13 per ordinary share, were paid on 7 July
2004, 6 October 2004 and 20 January 2005
respectively. The Directors have declared a fourth
interim dividend of US$0.27 per ordinary share in
lieu of a final dividend, making a total distribution
for the year of US$7,301 million. The fourth interim
dividend will be payable on 4 May 2005 in cash in
United States dollars, or in sterling or Hong Kong
dollars at exchange rates to be determined on
25 April 2005, with a scrip dividend alternative. The
reserves available for distribution before accounting
for the third and fourth interim dividends of
US$1,444 million and US$2,996 million
respectively are US$10,927 million.
Further information about the results is given in
the consolidated profit and loss account on page 237.
Principal activities and business
review
Through its subsidiary and associated undertakings,
HSBC provides a comprehensive range of banking
and related financial services. HSBC operates
through long-established businesses and has an
international network of over 9,800 offices in
77 countries and territories in Europe; the Asia-
Pacific region, the Americas, the Middle East and
Africa and serves over 110 million customers. Taken
together, the five largest customers of HSBC do not
account for more than one per cent of HSBC’ s
income.
In February 2004, The Bank of Bermuda
Limited was acquired for US$1,224 million.
In April 2004, 15.98 per cent of Industrial Bank
Co. Limited was acquired by Hang Seng Bank
Limited for US$209 million.
In May 2004, 100 per cent of Intesa Bank
Canada was acquired for US$88 million.
In June 2004, 14.62 per cent of UTI Bank
Limited was acquired for US$68 million.
In August 2004, 19.9 per cent of Bank of
Communications Limited was acquired for
US$1,747 million.
In November 2004, 100 per cent of Marks and
Spencer Retail Financial Services Holdings Limited
was acquired for US$1,044 million.
A review of the development of the business of
HSBC undertakings during the year and an
indication of likely future developments are given in
the 'Description of Business' on pages 8 to 19.
Capital and reserves
The following events in relation to the HSBC
Holdings ordinary shares of US$0.50 each occurred
during the year:
Scrip dividends
1. 35,092,117 ordinary shares were issued at par
on 20 January 2004 to shareholders who elected
to receive new shares in lieu of the 2003 second
interim dividend. The market value per share
used to calculate shareholders’ entitlements to
new shares was US$15.1987, being the United
States dollar equivalent of £8.838.
2. 22,984,421 ordinary shares were issued at par
on 5 May 2004 to shareholders who elected to
receive new shares in lieu of the 2003 third
interim dividend. The market value per share
used to calculate shareholders’ entitlements to
new shares was US$15.0552, being the United
States dollar equivalent of £8.16.
3. 52,287,747 ordinary shares were issued at par
on 7 July 2004 to shareholders who elected to
receive new shares in lieu of the 2004 first
interim dividend. The market value per share
used to calculate shareholders’ entitlements to
new shares was US$14.293 being the United
States dollar equivalent of £7.926.
4. 49,677,957 ordinary shares were issued at par
on 6 October 2004 to shareholders who elected
to receive new shares in lieu of the 2004 second
interim dividend. The market value per share
used to calculate shareholders’ entitlements to
new shares was US$15.0141 being the United
States dollar equivalent of £8.307.
All-Employee share plans
5. 28,472,134 ordinary shares were issued at prices
ranging from £5.2212 to £6.7536 per share in
connection with the exercise of options under
the HSBC Holdings savings-related share option
plans. Options over 7,675,359 ordinary shares
lapsed.
6. The HSBC Qualifying Employee Share
Ownership Trust (‘the QUEST’ ) was established
in 1999 to satisfy options exercised by UK