HSBC 2001 Annual Report Download - page 133

HSBC HOLDINGS PLC
Report of the Directors
131
Results for 2001
HSBC reported operating profit before provisions
was in line with 2000 at US$10,484 million. HSBCs
profit for the year attributable to shareholders of
HSBC Holdings was US$5,406 million, an 11.4 per
cent return on shareholders funds.
A first interim dividend of US$0.19 per ordinary
share was paid on 9 October 2001. The Directors
have declared a second interim dividend of US$0.29
per ordinary share in lieu of a final dividend, making
a total distribution for the year of US$4,467 million.
The second interim dividend will be payable on 7
May 2002 in cash in United States dollars, or in
sterling or Hong Kong dollars at exchange rates to be
determined on 29 April 2002, with a scrip dividend
alternative. The reserves available for distribution
before accounting for the second interim dividend of
US$2,700 million are US$7,925 million.
Further information about the results is given in
the consolidated profit and loss account on page 160.
Principal activities and business
review
Through its subsidiary and associated undertakings,
HSBC provides a comprehensive range of banking
and related financial services through an
international network of some 7,000 offices in 81
countries and territories in Europe, the Asia-Pacific
region, the Americas, the Middle East and Africa.
Taken together, the five largest customers of HSBC
do not account for more than 2 per cent of HSBCs
income.
On 3 March 2001, HSBC completed the
acquisition of 89.6 per cent of Banque Hervet, a
Paris based specialist commercial and consumer
bank, for 473 million (US$443 million) from the
French Finance Ministry. An additional 8.3 per cent
was acquired in July for 42 million (US$38
million).
On 30 October 2001, HSBC completed the
purchase of Demirbank T.A.S from the Savings
Deposits Insurance Fund in Turkey for US$353
million in cash.
On 29 December 2001, an agreement to acquire
an eight per cent equity stake in the Bank of
Shanghai for RMB517.92 million (US$62.6 million)
was signed.
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 7 to 32.
HSBCs five-year strategy, launched in
December 1998, is designed to focus on shareholder
value. The results of the first three years of the
strategy reflect solid progress in implementing
Managing for Value. HSBC Holdings governing
objective is to exceed the total shareholder return of
a benchmark comprising a peer group of financial
institutions, with a minimum objective of doubling
shareholder return over the five-year period. Total
shareholder return for the first three years was 173
per cent, compared to 125 per cent for the
benchmark (starting point 100 per cent on 31
December 1998). An explanation of the basis of
calculation of total shareholder return can be found
on page 146.
Capital and reserves
The following events occurred during the year:
Scrip dividends
1. 62,155,303 ordinary shares of US$0.50 each
were issued at par on 2 May 2001 to
shareholders who elected to receive new shares
in lieu of the 2000 second interim dividend. The
market value per share used to calculate
shareholders entitlements to new shares was
US$11.8617, being the United States dollar
equivalent of £8.292.
2. 10,766,892 ordinary shares of US$0.50 each
were issued at par on 9 October 2001 to
shareholders who elected to receive new shares
in lieu of the 2001 first interim dividend. The
market value per share used to calculate
shareholders entitlements to new shares was
US$11.9717, being the United States dollar
equivalent of £8.228.
All-Employee share plans
3. 2,312,407 ordinary shares of US$0.50 each were
issued at prices ranging from £1.8060 to
£6.7536 per share in connection with the
exercise of options under the HSBC Holdings
Savings-Related Share Option Plan. Options
over 7,092,927 ordinary shares of US$0.50 each
lapsed.
4. 1,514,682 ordinary shares of US$0.50 each were
issued at prices ranging from £3.2530 to