HSBC 2012 Annual Report Download - page 474

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
26 – Assets held for sale and other assets / 27 – Trading liabilities / 28 – Financial liabilities at fair value
472
Property, plant and equipment
The property, plant and equipment classified as held for sale is the result of repossession of property that had been
pledged as collateral by customers. Substantially all of these assets are disposed of within 12 months of acquisition.
The majority arose within the North America operating segment.
Investment in Ping An
On 5 December 2012, we entered into an agreement to dispose of our entire 15.57% shareholding in Ping An for
US$9.4bn. The disposal was carried out in two tranches, an initial tranche of 256,694,218 shares representing 3.24%
of Ping An’s issued share capital, then the remaining 976,121,395 shares representing 12.33% of Ping An’s issued
share capital. The selling price for both the tranches was fixed at HK$59 per share.
The first tranche of shares was disposed on 7 December 2012. Following this disposal, HSBC no longer had
significant influence over Ping An and ceased to account for it as an associate. The gain from the disposal of the first
tranche of shares and the gain from the consequent discontinuance of associate accounting for the remaining 12.33%
shareholding in Ping An totalled US$3bn, and was recognised in the income statement. The remaining 12.33%
shareholding was recognised as an available-for-sale investment, measured initially at fair value on the date of
discontinuance of associate accounting, and thereafter carried at fair value with unrealised gains or losses recorded in
other comprehensive income.
The fixing of the sale price gave rise to a contingent forward sale contract, the fair value of which at year end was
based on the difference between the agreed sale price and the market price for the shares, adjusted for an assessment
of the probability of the transaction being completed. The adverse fair value of this contract was US$553m at
31 December 2012, recorded in net trading income.
At 31 December 2012, the fair value of our 12.33% shareholding in Ping An was US$8.2bn included within ‘Assets
held for sale’ above, with US$737m accumulated unrealised gains in other comprehensive income which arose after
the date of the agreement and represent the difference between Ping An’s share price at the year-end and the share
price on the date of recognition as an available-for-sale investment.
The sale of the second tranche was completed on 6 February 2013 where the net impact of the change in fair value of
the contingent forward sale contract to the point of delivery of the shares and the derecognition of the available-for-
sale investment resulted in an income statement gain before tax in 2013 of US$553m.
Loans and advances to customers
Loans and advances to customers held for sale at 31 December 2012 include US personal loan balances of US$3.4bn,
net of impairment allowances.
Other assets
At 31 December
2012 2011
US$m US$m
Bullion ...................................................................................................................................................... 26,508 19,824
Reinsurers’ share of liabilities under insurance contracts (Note 31) ....................................................... 1,407 1,801
Endorsements and acceptances ................................................................................................................. 12,032 11,010
Retirement benefit assets .......................................................................................................................... 2,846 2,497
Other accounts .......................................................................................................................................... 11,923 13,567
54,716 48,699