HSBC 2005 Annual Report Download - page 336

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
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(iii) Employee benefits
HSBC has elected to apply the employee benefits exemption and has, therefore, recognised in equity at
1 January 2004 all cumulative actuarial gains and losses on post-employment benefit plans. Recognising
certain actuarial gains and losses under the alternative ‘corridor approach’ would have reduced liabilities
and increased retained earnings at 1 January 2004. HSBC has not elected to adopt a corridor approach going
forward under IAS 19 ‘Employee Benefits’.
(iv) Cumulative exchange differences
HSBC has set the cumulative exchange differences for all foreign operations to zero at 1 January 2004. The
alternative, a retrospective application of IAS 21 ‘The Effect of Changes in Foreign Exchange Rates’, would
have resulted in a re-allocation between retained earnings and other reserves at 1 January 2004 but would
have had no impact on total equity.
(v) Share-based payment transactions
HSBC has elected to undertake full retrospective application of IFRS 2 ‘Share-based Payment’. The
alternative, excluding share options issued before 7 November 2002 as permitted by IFRS 1, would have
slightly reduced administrative expenses and increased net income in 2004. There would have been no
impact on retained earnings or total equity.
(b) Key impact analysis of IFRSs on the financial results and position at 31 December 2004
HSBC previously prepared its primary financial statements under UK GAAP, which differs in certain significant
respects from IFRSs. For a summary of the principal accounting policies followed for preparing the 2004
comparative information, see Note (g) below.
Reconciliation of previously reported shareholders’ funds under UK GAAP to total shareholders’ equity
under IFRSs at 31 December 2004 and 1 January 2004
At
31 December
2004
At
1 January
2004
US$m US$m
Shareholders’ funds as previously reported under UK GAAP ............................................. 86,623 74,473
Goodwill ............................................................................................................................. 1,869 (22)
88,492 74,451
Retirement benefits ............................................................................................................. (4,470) (3,529)
Dividends ............................................................................................................................ 2,996 2,627
Leases .................................................................................................................................. (503) (402)
Share-based payments ......................................................................................................... 198 211
Software capitalisation ........................................................................................................551518
Property ............................................................................................................................... (1,607) –
Land held under operating leases ......................................................................................... (495) (755)
Other ................................................................................................................................... 42 245
Tax ...................................................................................................................................... 318 382
Total shareholders’ equity under IFRSs .............................................................................. 85,522 73,748