HSBC 2008 Annual Report Download - page 440

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Notes 38 and 39
438
2006
Other reserves
Called up share capital
Share premium1
Retained earnings2
Available- for-sale fair value reserve
Cash flow hedging reserve3
Foreign exchange reserve
Share- based payment reserve
Merger reserve4
Total share- holders’ equity
Minority interests3
Total equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
At 1 January .............................................................................. 5,667 6,896 56,223 1,104 233 (284) 1,535 21,058 92,432 5,794 98,226
Shares issued under employee share plans ............................... 40 975 – – – – – – 1,015 – 1,015
Shares issued in lieu of dividends and amounts arising thereon179 (82) 2,528 – – – – – 2,525 – 2,525
Profit for the year ...................................................................... – – 15,789 – – – – – 15,789 1,082 16,871
Dividends to shareholders ........................................................ – – (8,769) – – – – – (8,769) (785) (9,554)
Own shares adjustment ............................................................. – – (529) – – – – – (529) – (529)
Share of changes recognised directly in the equity of
associates or joint ventures .................................................. – – 20 – – – – – 20 – 20
Actuarial gains/(losses) on defined benefit plans .................... – – (92) – – – – – (92) 14 (78)
Exchange differences ............................................................... – – 4,446 89 (8) 26 38 – 4,591 84 4,675
Fair value gains taken to equity ................................................ – – – 1,514 1,560 – – – 3,074 62 3,136
Amounts transferred to the income statement3 ......................... – – – (622) (2,219) – – – (2,841) (22) (2,863)
Impairments taken to the income statement ............................. – – – 21 – – – – 21 – 21
Exercise and lapse of share options and vesting of
share awards ......................................................................... – – 684 – – – (623) – 61 – 61
Cost of share-based payment arrangements ............................. – – – – – – 854 – 854 – 854 Other movements ...................................................................... – – (102) (9) 2 – 345 – 236 (103) 133
Tax on items taken directly to or transferred from equity ....... – – (355) (3) 323 – – – (35) (9) (44) Transfers ................................................................................... – – (4,446) (89) 8 4,565 (38) – – – –
Net increase in minority interest arising on acquisitions,
disposals and capital issuance .............................................. – – – – – – – – – 459 459
At 31 December ........................................................................ 5,786 7,789 65,397 2,005 (101) 4,307 2,111 21,058 108,352 6,576 114,928 Cumulative goodwill amounting to US$5,138 million has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including US$3,469 million charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of US$1,669 million has been charged against retained earnings. 1 Share premium includes the deduction of US$3 million in respect of issuance costs incurred during the year (2007: US$3 million; 2006: US$3 million).
2 Retained earnings include 194,751,829 (US$3,094 million) of own shares held within HSBC’s insurance business, retirement funds for the benefit of policyholders or beneficiaries within employee trusts
for the settlement of shares expected to be delivered under employee share schemes or bonus plans, and the market-making activities in Global Markets (2007: 158, 706,463 (US$2,649 million); 2006:
148,323,102 (US$2,305 million)). 2006 numbers have been restated to conform with the current year’s presentation.
3 Amounts transferred to the income statement in respect of cash flow hedges include US$152 million (2007: US$57 million: 2006: US$479 million) taken to ‘Net interest income’ and US$1,602 million
(2007: US$1,829 million; 2006: US$1,719 million) taken to ‘Net trading income’.
4 Statutory share premium relief under Section 131 of the Companies Act 1985 was taken in respect of the acquisition of HSBC France in 2000 and HSBC Finance in 2003 and the shares issued were
recorded at their nominal value only. The fair value differences of US$8,290 million and US$12,768 million in respect of HSBC France and HSBC Finance, respectively, were recognised as a merger reserve. The merger reserve created on the acquisition of HSBC Finance subsequently became attached to HSBC Overseas Holdings (UK) Limited (‘HOHU’), following a number of inter-group
reorganisations. At 31 December 2008, an amount of US$3,601 million was transferred from this reserve to retained earnings as a result of impairment in HSBC Holdings' investment in HOHU.
5 During April 2008, HSBC Holdings issued US$2,200 million of Perpetual Subordinated Capital Securities (‘Capital Securities’), including US$67 million of issuance costs, which are classified as equity
under IFRSs.