HSBC 2009 Annual Report Download - page 7

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Consolidated Financial Statements
The consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings have been
prepared in accordance with International Financial Reporting Standards (‘IFRSs’) as issued by the International
Accounting Standards Board (‘IASB’) and as endorsed by the European Union (‘EU’). EU-endorsed IFRSs may
differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by
the EU. At 31 December 2009, there were no unendorsed standards effective for the year ended 31 December 2009
affecting these consolidated and separate financial statements, and there was no difference between IFRSs endorsed
by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC’s financial
statements for the year ended 31 December 2009 are prepared in accordance with IFRSs as issued by the IASB.
HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major
currency bloc in which HSBC transacts and funds its business. Unless otherwise stated, the information presented in
this document has been prepared in accordance with IFRSs.
When reference to ‘underlying’ or ‘underlying basis’ is made in tables or commentaries, comparative information has
been expressed at constant currency (see page 21), eliminating the impact of fair value movements in respect of credit
spread changes on HSBC’s own debt and adjusting for the effects of acquisitions and disposals. A reconciliation of
reported and underlying profit before tax is presented on page 22.
Footnotes to Financial Highlights
1 Dividends recorded in the financial statements are dividends per ordinary share declared in a year and are not dividends in respect of,
or for, that year. The third interim dividend for 2008 of US$0.18 was paid on 14 January 2009. The fourth interim dividend for 2008 of
US$0.10 was paid on 6 May 2009. First, second and third interim dividends for 2009, each of US$0.08 per ordinary share, were paid
on 8 July 2009, 7 October 2009 and 13 January 2010, respectively. Note 12 on the Financial Statements provides more information on
the dividends declared in 2009. On 1 March 2010 the Directors declared a fourth interim dividend for 2009 of US$0.10 per ordinary
share in lieu of a final dividend, which will be payable to ordinary shareholders on 5 May 2010 in cash in US dollars, or in pounds
sterling or Hong Kong dollars at exchange rates to be determined on 26 April 2010, with a scrip dividend alternative. The reserves
available for distribution at 31 December 2009 were US$34,460 million.
Quarterly dividends of US$15.50 per 6.20 per cent non-cumulative Series A US dollar preference share, equivalent to a dividend of
US$0.3875 per Series A ADS, each of which represents one-fortieth of a Series A dollar preference share, were paid on 16 March 2009,
15 June 2009, 15 September 2009 and 15 December 2009.
Quarterly coupons of 8.125 per cent capital securities of US$0.508 were paid on 15 January 2009, 15 April 2009, 15 July 2009 and
15 October 2009.
2 The definition of return on average invested capital and a reconciliation to the equivalent GAAP measures are set out on page 19.
3 The return on average total shareholders’ equity is defined as profit attributable to shareholders of the parent company divided by
average total shareholders’ equity.
4 The cost efficiency ratio is defined as total operating expenses divided by net operating income before loan impairment charges and
other credit risk provisions.
5 In 2008 an impairment charge of US$10,564 million to fully write off goodwill in Personal Financial Services in North America was
reported in total operating expenses. This amount is excluded from total operating expenses to calculate the ratio.
6 The prices of HSBC Holdings ordinary shares and American Depositary Shares (‘ADS’) have been adjusted for the 5-for-12 rights
issue completed in April 2009.
7 Each ADS represents five ordinary shares.
8 Total shareholder return is defined on page 19.
9 The Financial Times Stock Exchange 100 Index.
10 The Morgan Stanley Capital International World Index.
11 The Morgan Stanley Capital International World Bank Index
12 The calculation of capital resources, capital ratios and risk-weighted assets for 2009 and 2008 is on a Basel II basis. 2005 to 2007
comparatives are on a Basel I basis.
13 Capital resources are total regulatory capital, the calculation of which is set out on page 289.
14 Includes perpetual preferred securities, details of which can be found in Note 32 on the Financial Statements.
15 Net of impairment allowances.
16 The effect of the bonus element of the rights issue (Note 13 on the Financial Statements) has been included within the basic and diluted
earnings per share.
17 The definition of net asset value per share is total shareholders’ equity, less non-cumulative preference shares and capital securities,
divided by the number of ordinary shares in issue.
18 Dividends per ordinary share expressed as a percentage of earnings per ordinary share.