HSBC 2007 Annual Report Download - page 132

HSBC HOLDINGS PLC
Report of the Directors: Business Review (continued)
Legal proceedings / Financial Review > Introduction
130
US$600 million. To make an estimate of the
potential financial impact at this stage with any
precision is extremely difficult, owing to (among
other things) the complexity of the issues, the
number of permutations of possible outcomes, and
the early stage of the proceedings. In addition, the
assumptions made by HSBC Bank plc may prove to
be incorrect.
Footnotes to the Business Review
The footnotes below refer to the reconciliations of reported and underlying profit before tax, and the analyses of
customer groups and global businesses on pages 16 to 35 and the geographical regions on pages 36 to 125.
1 ‘Currency translation’ is the effect of translating the results of subsidiaries and associates for the previous year at the average rates of
exchange applicable in the current year.
2 ‘Acquisitions, disposals and (in 2007) dilution gains’ comprises the net increment or decrement in profits in the current year (compared
with the previous year) which is attributable to acquisitions or disposals made, or dilution gains, in the current year.
3 ‘Other income’ in this context comprises net trading income (see 5 below), net income from financial instruments designated at fair
value, gains less losses from financial investments, gains arising from dilution of interests in associates, dividend income, net earned
insurance premiums and other operating income less net insurance claims incurred and movement in liabilities to policyholders.
4 Net operating income before loan impairment charges and other credit risk provisions.
5 In the analyses of customer groups and global businesses, net trading income comprises all gains and losses from changes in the fair
value of financial assets and financial liabilities classified as held for trading, together with related external and internal interest income
and interest expense, and dividends received; in the statutory presentation internal interest income and expense are eliminated.
6 Net insurance claims incurred and movement in liabilities to policyholders.
7 Third party only.
8 The main items reported under ‘Other’ are certain property activities, unallocated investment activities including hsbc.com, centrally
held investment companies, movements in the fair value of own debt designated at fair value, and HSBC’s holding company and
financing operations. The results include net interest earned on free capital held centrally and operating costs incurred by the head
office operations in providing stewardship and central management services to HSBC. ‘Other’ also includes the costs incurred by the
Group Service Centres and Shared Service Organisations and associated recoveries.
9 The comparatives have been restated to reflect the current management view.
10 ‘Equities’ includes a total gain of US$107 million from the disposal of HSBC’s investments in Euronext N.V. and the Montreal Exchange
for 2007.
11 HSBC Global Asset Management was formerly known as Group Investment Businesses.
12 ‘Other’ in Global Banking and Markets includes net interest earned on free capital held in the global business not assigned to products.
13 The results of Global Banking and Markets in Europe include gains from principal investments of US$991 million (2006:
US$457 million; 2005: US$610 million).
14 Inter-segment elimination comprises (i) the costs of shared services and Group Service Centres included within ‘Other’ which are
recovered from customer groups, and (ii) the intra-segment funding costs of trading activities undertaken within Global Banking and
Markets. HSBC’s balance sheet management business, reported within Global Banking and Markets, provides funding to the trading
businesses. To report Global Banking and Markets’ ‘Net trading income’ on a fully funded basis, ‘Net interest income’ and ‘Net interest
income/(expense) on trading activities’ are grossed up to reflect internal funding transactions prior to their elimination in the inter-
segment column.
15 France primarily comprises the domestic operations of HSBC France and the Paris branch of HSBC Bank.
16 Trading assets, financial instruments designated at fair value, and financial investments held in Europe, and by Global Banking and
Markets in North America, include financial assets which may be repledged or resold by counterparties.