HSBC 2011 Annual Report Download - page 403

401
Overview Operating & Financial Review Corporate Governance Financial Statements Shareholder Information
Operating lease commitments
At 31 December 2011, HSBC was obligated under a number of non-cancellable operating leases for properties, plant
and equipment on which the future minimum lease payments extend over a number of years.
At 31 December 2011 At 31 December 2010
Land and
buildings Equipment
Land and
buildings Equipment
US$m US$m US$m US$m
Future minimum lease payments under non-cancellable
operating leases:
– no later than one year ........................................................... 1,130 18 920 23
– later than one year and no later than five years ................... 2,656 18 2,663 37
– later than five years .............................................................. 2,496 – 2,614 –
6,282 36 6,197 60
At 31 December 2011, future minimum sublease payments of US$17m (2010: US$21m) are expected to be received
under non-cancellable subleases at the balance sheet date.
In 2011, US$973m (2010: US$888m; 2009: US$1,100m) was charged to ‘General and administrative expenses’
in respect of lease and sublease agreements, of which US$952m (2010: US$869m; 2009: US$833m) related to
minimum lease payments, US$20m (2010: US$18m; 2009: US$16m) to contingent rents, and US$1m (2010: US$1m;
2009: US$251m) to sublease payments.
The contingent rent represents escalation payments made to landlords for operating, tax and other escalation expenses.
Finance lease receivables
HSBC leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft),
property and general plant and machinery. At the end of lease terms, assets may be sold to third parties or leased for
further terms. Lessees may participate in any sales proceeds achieved. Lease rentals arising during the lease terms
will either be fixed in quantum or be varied to reflect changes in, for example, tax or interest rates. Rentals are
calculated to recover the cost of assets less their residual value, and earn finance income.
At 31 December 2011 At 31 December 2010
Total future
minimum
payments
Unearned
finance
income
Present
value
Total future
minimum
payments
Unearned
finance
income
Present
value
US$m US$m US$m US$m US$m US$m
Lease receivables:
– no later than one year ................ 3,766 (459) 3,307 3,002 (344) 2,658
– later than one year and
no later than five years .............. 8,618 (1,055) 7,563 8,940 (813) 8,127
– later than five years ................... 5,969 (1,204) 4,765 6,629 (1,462) 5,167
18,353 (2,718) 15,635 18,571 (2,619) 15,952
At 31 December 2011, unguaranteed residual values of US$267m (2010: US$243m) had been accrued, and the
accumulated allowance for uncollectible minimum lease payments receivable amounted to US$25m (2010: US$11m).
No contingent rents were received in 2011 (2010: nil).
43 Special purpose entities
HSBC enters into certain transactions with customers in the ordinary course of business which involve the
establishment of special purpose entities (‘SPE’s) to facilitate or secure customer transactions. HSBC structures that
utilise SPEs are authorised centrally when they are established, to ensure appropriate purpose and governance. The
activities of SPEs administered by HSBC are closely monitored by senior management.
SPEs are assessed for consolidation in accordance with the accounting policy set out in Note 1e.