HSBC 2012 Annual Report Download - page 504

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
41– Lease commitments / 42 – Special purpose entities
502
At 31 December 2012, future minimum sublease payments of US$14m (2011: US$17m) are expected to be received
under non-cancellable subleases at the balance sheet date.
In 2012, US$1,166m (2011: US$973m; 2010: US$888m) was charged to ‘General and administrative expenses’
in respect of lease and sublease agreements, of which US$1,149m (2011: US$952m; 2010: US$869m) related to
minimum lease payments, US$17m (2011: US$20m; 2010: US$18m) to contingent rents, and US$0.4m (2011:
US$1m; 2010: US$1m) to sublease payments.
The contingent rent represents escalation payments made to landlords for operating, tax and other escalation expenses.
Finance lease receivables
HSBC leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft),
property and general plant and machinery. At the end of lease terms, assets may be sold to third parties or leased for
further terms. Lessees may participate in any sales proceeds achieved. Lease rentals arising during the lease terms
will either be fixed in quantum or be varied to reflect changes in, for example, tax or interest rates. Rentals are
calculated to recover the cost of assets less their residual value, and earn finance income.
At 31 December 2012 At 31 December 2011
Total future
minimum
payments
Unearned
finance
income
Present
value
Total future
minimum
payments
Unearned
finance
income
Present
value
US$m US$m US$m US$m US$m US$m
Lease receivables:
– no later than one year ................ 3,712 (379) 3,333 3,766 (459) 3,307
– later than one year and
no later than five years .............. 8,414 (966) 7,448 8,618 (1,055) 7,563
– later than five years ................... 5,277 (951) 4,326 5,969 (1,204) 4,765
17,403 (2,296) 15,107 18,353 (2,718) 15,635
At 31 December 2012, unguaranteed residual values of US$253m (2011: US$267m) had been accrued, and the
accumulated allowance for uncollectible minimum lease payments receivable amounted to US$3m (2011: US$25m).
No contingent rents were received in 2012 (2011: nil).
42 Special purpose entities
HSBC enters into certain transactions with customers in the ordinary course of business which involve the
establishment of special purpose entities (‘SPE’s) to facilitate or secure customer transactions. HSBC structures that
utilise SPEs are authorised centrally when they are established, to ensure appropriate purpose and governance. The
activities of SPEs administered by HSBC are closely monitored by senior management.
SPEs are assessed for consolidation in accordance with the accounting policy set out in Note 1e.
Total consolidated assets held by SPEs by balance sheet classification
Conduits
Securit-
isations
Money
market
funds
Non-money
market
investment
funds Total
US$bn US$bn US$bn US$bn US$bn
At 31 December 2012
Cash ...................................................................................... 0.6 – – 0.2 0.8
Trading assets ....................................................................... – 0.5 – 1.5 2.0
Financial assets designated at fair value ............................... 0.1 – – 7.4 7.5
Derivatives ............................................................................ – – – 0.2 0.2
Loans and advances to banks ............................................... – 1.5 – – 1.5
Loans and advances to customers ........................................ 11.3 7.0 – – 18.3
Financial investments ........................................................... 25.0 – – – 25.0
Other assets ........................................................................... 1.4 – – 1.6 3.0
38.4 9.0 – 10.9 58.3