HSBC 2015 Annual Report Download - page 348

Financial Statements (continued)
Footnotes
HSBC HOLDINGS PLC
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Footnotes to the Financial Statements
1 The audited sections of ‘Risk’ on pages 101 to 226, the audited sections of ‘Capital’ on pages 227 to 248 and the audited sections of
‘Directors’ Remuneration Report’ on pages 285 to 321 are also an integral part of these financial statements.
2 During 2015, HSBC Holdings issued $2,450m and €1,000 of Perpetual Subordinated Contingent Convertible Capital Securities, on which
there were $12m of external issuance costs, $25m of intra-group issuance costs and $19m of tax. In 2014, HSBC Holdings issued $2,250m,
$1,500m and €1,500m of Perpetual Subordinated Contingent Convertible Capital Securities, on which there were $13m of external issuance
costs and $33m of intra-group issuance costs.Under IFRSs these issuance costs and tax benefits are classified as equity.
3 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis,
as details cannot be determined without unreasonable expense.
4 Retained earnings include 81,580,180 ($1,604m) of own shares held within HSBC’s Insurance business, retirement funds for the benefit of
policyholders or beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share schemes or
bonus plans, and the market-making activities in Markets (2014: 85,337,430 ($641m); 2013: 85,997,271 ($915m)).
5 At 31 December 2015, our operations in Brazil were classified as held for sale (see Note 23). The cumulative amount of other reserves
attributable to these operations were as follows: available-for-sale fair value reserve debit of $176m, cash flow hedging reserve credit of
$34m and foreign exchange reserve debit of $2.6bn.
6 Cumulative goodwill amounting to $5,138m has been charged against reserves in respect of acquisitions of subsidiaries prior to 1 January
1998, including $3,469m charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of $1,669m has been
charged against retained earnings.
7 Statutory share premium relief under Section 131 of the Companies Act 1985 (the ‘Act’) was taken in respect of the acquisition of HSBC Bank
plc in 1992, HSBC France in 2000 and HSBC Finance Corporation in 2003 and the shares issued were recorded at their nominal value only. In
HSBC’s consolidated financial statements the fair value differences of $8,290m in respect of HSBC France and $12,768m in respect of HSBC
Finance Corporation were recognised in the merger reserve. The merger reserve created on the acquisition of HSBC Finance Corporation
subsequently became attached to HSBC Overseas Holdings (UK) Limited (‘HOHU’), following a number of intra-group reorganisations.
During 2009, pursuant to Section 131 of the Companies Act 1985, statutory share premium relief was taken in respect of the rights issue and
$15,796m was recognised in the merger reserve. The merger reserve includes the deduction of $614m in respect of costs relating to the
rights issue, of which $149m was subsequently transferred to the income statement. Of this $149m, $121m was a loss arising from
accounting for the agreement with the underwriters as a contingent forward contract. The merger reserve excludes the loss of $344m on a
forward foreign exchange contract associated with hedging the proceeds of the rights issue.
8 Retained earnings include 67,881 ($1m) (2014: 179,419 ($3m)) of own shares held to fund employee share plans.
9 Other paid-in capital arises from the exercise and lapse of share options granted to employees of HSBC Holdings subsidiaries.