30th Jul 2007 09:15
HSBC Holdings PLC30 July 2007 Consolidated Cash Flow Statement Half-year to 30Jun07 30Jun06 31Dec06 US$m US$m US$mCash flows from operating activitiesProfit before tax 14,159 12,517 9,569 Adjustments for:- non-cash items included in profit before tax 8,434 5,681 9,275- change in operating assets (65,685) (106,213) (67,056)- change in operating liabilities 123,248 136,184 101,194- elimination of exchange differences (5,871) (8,203) (3,911)- net gain from investing activities (2,225) (752) (1,262)- share of profits in associates and joint ventures (623) (361) (485)- dividends received from associates 146 32 65- contribution paid to defined benefit pension schemes (970) (236) (311)- tax paid (2,217) (1,983) (2,963) Net cash from operating activities 68,396 36,666 44,115 Cash flows from investing activitiesPurchase of financial investments (248,734) (181,454) (104,862)Proceeds from the sale of financial investments 237,481 177,762 96,012Purchase of property, plant and equipment (965) (803) (1,597)Proceeds from the sale of property, plant and equipment 1,368 915 1,589Purchase of intangible assets (451) (352) (500)Net cash outflow from acquisition of and increase in stake of subsidiaries (323) (5) (1,180)Net cash inflow from disposal of subsidiaries - 23 39Net cash outflow from acquisition of and increase in stake of associates (9) (208) (377)Proceeds from disposal of associates - 319 555 Net cash used in investing activities (11,633) (3,803) (10,321) Cash flows from financing activitiesIssue of ordinary share capital 116 414 596Issuance of preference shares - 374 -Net purchases and sales of own shares for market-making purposes 220 (141) 187Purchases of own shares to meet share awards and share option awards (807) (526) (49)Own shares released on vesting of share awards and exercise of options 58 137 36Subordinated loan capital issued 563 3,716 2,232Subordinated loan capital repaid (87) (273) (630)Dividends paid to the shareholders of the parent company (3,591) (3,202) (2,725)Dividends paid to minority interests (460) (533) (177) Net cash used in financing activities (3,988) (34) (530) Net increase in cash and cash equivalents 52,775 32,829 33,264 Cash and cash equivalents at the beginning of the period 215,486 141,307 178,626Exchange differences in respect of cash and cash equivalents 4,023 4,490 3,596 Cash and cash equivalents at the end of the period 272,284 178,626 215,486 Additional Information 1. Accounting policies The accounting policies adopted by HSBC for these interim consolidated financialstatements are consistent with those described on page 304 of the Annual Reportand Accounts 2006. 2. Dividends The Directors have declared a second interim dividend for 2007 of US$0.17 perordinary share, a distribution of approximately US$1,991 million. The secondinterim dividend will be payable on 4 October 2007 to holders of ordinary shareson the Register at the close of business on 17 August 2007. The dividend will bepayable in cash, in US dollars, sterling or Hong Kong dollars, or a combinationof these currencies, at the forward exchange rates quoted by HSBC Bank plc inLondon at or about 11:00am on 24 September 2007, and with a scrip dividendalternative. Particulars of these arrangements will be mailed to shareholders onor about 29 August 2007, and elections must be received by 19 September 2007. Asthis dividend was declared after the balance sheet date, it has not beenincluded in 'Other liabilities' at 30 June 2007. The dividend will be payable on shares held through Euroclear France, thesettlement and central depositary system for Euronext Paris, on 4 October 2007to the holders of record on 17 August 2007. The dividend will be payable incash, in euros at the forward exchange rate quoted by HSBC France on 24September 2007, or as a scrip dividend. Particulars of these arrangements willbe announced through Euronext Paris on 15 August 2007 and 22 August 2007. The dividend on American Depositary Shares ('ADSs'), each of which representsfive ordinary shares, will be payable on 4 October 2007 to holders of record on17 August 2007. The dividend of US$0.85 per ADS will be payable in cash in USdollars or as a scrip dividend of new ADSs. Particulars of these arrangementswill be mailed to holders on or about 24 August 2007. Elections must be receivedby the depositary on or before 14 September 2007. Alternatively, the cashdividend may be invested in additional ADSs for participants in the dividendreinvestment plan operated by the depositary. HSBC Holdings plc ordinary shares will be quoted ex-dividend in London, HongKong and Bermuda on 15 August 2007 and in Paris on 20 August 2007. The ADSs willbe quoted ex-dividend in New York on 15 August 2007. Dividends to shareholders of the parent company were as follows: Half-year to Half-year to Half-year to 30Jun07 30Jun06 31Dec06 Settled Settled Settled Per in Per in Per in share Total scrip share Total scrip share Total scrip US$ US$m US$m US$ US$m US$m US$ US$m US$m Dividends declared on ordinary sharesFourth interim divi- dend in respect of previous year 0.360 4,161 2,116 0.310 3,513 1,542 - - -First interim divi- dend in respect of current year 0.170 1,986 712 0.150 1,712 248 - - -Second interim dividend in res- pect of current year - - - - - - 0.150 1,724 515Third interim divi- dend in respect of current year - - - - - - 0.150 1,730 233 0.530 6,147 2,828 0.460 5,225 1,790 0.300 3,454 738 Quarterly dividends on ordinary share capitalMarch dividend 15.50 22 15.50 22 - -June dividend 15.50 23 15.50 23 - -September dividend - - - - 15.50 22December dividend - - - - 15.50 23 31.00 45 31.00 45 31.00 45 3. Earnings and dividends per ordinary share Half-year to 30Jun07 30Jun06 31Dec06 US$ US$ US$ Basic earnings per ordinary share 0.95 0.78 0.62Diluted earnings per ordinary share 0.94 0.77 0.62Dividends per ordinary share 0.53 0.46 0.30 Dividend payout ratio^ 56% 59% 48% ^ Dividends per ordinary share expressed as a percentage of basic earnings per share. Basic earnings per ordinary share was calculated by dividing the earnings ofUS$10,850 million by the weighted average number of ordinary shares outstanding,excluding own shares held, of 11,463 million shares (first half of 2006:earnings of US$8,684 million and 11,148 million shares; second half of 2006:earnings of US$7,015 million and 11,272 million shares). Half-year to 30Jun07 30Jun06 31Dec06 US$m US$m US$mProfit attributable to shareholders of the parent company 10,895 8,729 7,060Dividend payable on preference shares classified as equity (45) (45) (45) Profits attributable to ordinary shareholders of the parent company 10,850 8,684 7,015 Diluted earnings per ordinary share was calculated by dividing the basicearnings by the weighted average number of ordinary shares outstanding,excluding own shares held, plus the weighted average number of ordinary sharesthat would be issued on ordinary conversion of all the dilutive potentialordinary shares of 11,518 million shares (first half of 2006: 11,304 millionshares; second half of 2006: 11,336 million shares). 4. Taxation Half-year to 30Jun07 30Jun06 31Dec06 US$m US$m US$m UK corporation tax charge 476 536 114Overseas taxation 1,937 2,254 2,298 Current taxation 2,413 2,790 2,412Deferred taxation 232 482 (469) Total charge for taxation 2,645 3,272 1,943 Effective tax rate 18.7% 26.1% 20.3% HSBC Holdings and its subsidiaries in the United Kingdom provided for UKcorporation tax at 30 per cent (2006: 30 per cent). Overseas tax included HongKong profits tax of US$495 million (first half of 2006: US$387 million; secondhalf of 2006: US$364 million) provided at the rate of 17.5 per cent (2006: 17.5per cent) on the profits for the period assessable in Hong Kong. Other overseassubsidiaries and overseas branches provided for taxation at the appropriaterates in the countries in which they operate. Analysis of overall tax expense Half-year to 30Jun07 30Jun06 31Dec06 US$m US$m US$m Taxation at UK corporate tax rate of 30 per cent (2006: 30 per cent) 4,248 3,756 2,870 Impact of overseas profits in principal locations taxed at different rates (459) (187) (381)Tax-free gains (157) (97) (102)Adjustments in respect of prior period liabilities (152) 36 (142)Low income housing credits (52) (55) (53)Other items (137) (36) (19)Effect of profits in associate and joint ventures (185) (100) (153)Effect of previously unrecognised temporary differences (211) (45) (77)Impact of gains arising from dilution of interests in associates (250) - - Overall tax charge 2,645 3,272 1,943 5. Capital resources At At At 30Jun07 30Jun06 31Dec06 % % %Capital ratios Total capital ratio 13.2 13.4 13.5Tier 1 capital ratio 9.3 9.4 9.4 US$m US$m US$mComposition of regulatory capital Tier 1 capital:Shareholders' equity 119,780 101,381 108,352Minority interests and preference shares 5,668 6,734 7,413Innovative tier 1 securities 9,874 9,601 9,932Less Goodwill capitalised and intangible assets (37,547) (33,992) (36,489) Other regulatory adjustments (431) (1,586) (1,366) Total qualifying tier 1 capital 97,344 82,138 87,842 Tier 2:Reserves arising from revaluation of property and unrealised gains in available for sale Equities 3,653 2,040 2,982Collective impairment allowances 11,735 9,087 11,077Perpetual subordinated debt 3,387 3,665 3,396Term subordinated debt 30,901 27,446 30,677Minority and other interests in tier 2 capital 425 425 425 Total qualifying tier 2 capital before deductions 50,101 42,663 48,557 Unconsolidated investments^ (9,883) (6,441) (7,512)Investments in capital of other banks - (1,419) (1,419)Other deductions (520) (305) (394) Total regulatory capital 137,042 116,636 127,074 Total risk-weighted assets 1,041,540 872,893 938,678 ^ Mainly comprises investments in insurance entities. The above figures were computed in accordance with the FSA's requirements. 6. Registers of shareholders The Overseas Branch Register of shareholders in Hong Kong will be closed for oneday, on Friday 17 August 2007. Any person who has acquired shares registered onthe Hong Kong Branch Register but who has not lodged the share transfer with theHong Kong Branch Registrar should do so before 4.00pm on Thursday 16 August 2007in order to receive the second interim dividend for 2007, which will be payableon Thursday 4 October 2007. Transfers may not be made to or from the Hong KongOverseas Branch Register while that Branch Register is closed. Any person who has acquired shares registered on the Principal Register in theUnited Kingdom but who has not lodged the share transfer with the PrincipalRegistrar should do so before 4.00pm on Friday 17 August 2007 in order toreceive the dividend. Any person who has acquired shares registered on the Overseas Branch Register ofshareholders in Bermuda but who has not lodged the share transfer with theBermuda Branch Registrar should do so before 4.00pm on Friday 17 August 2007 inorder to receive the dividend. Transfers of American Depositary Shares should be lodged with the depositary by12 noon on Friday 17 August 2007 in order to receive the dividend. 7. Foreign currency amounts The sterling and Hong Kong dollar equivalent figures in the consolidated incomestatement and balance sheet are for information only. These are translated atthe average rate for the period for the income statement and the closing ratefor the balance sheet as follows: Period ended 30Jun07 30Jun06 31Dec06Closing: HK$/US$ 7.817 7.767 7.776 £/US$ 0.499 0.542 0.509 Average: HK$/US$ 7.812 7.758 7.769 £/US$ 0.508 0.559 0.543 8. Litigation On 27 July 2007, the UK Office of Fair Trading issued High Court legal proceedingsagainst a number of UK financial institutions, including HSBC Bank plc, to determinethe legal status and enforceability of certain of the charges applied to their personal customers in relation to unauthorised overdrafts (the 'Charges'). The proceedings were commenced with the agreement of all parties concerned. Proceedingsare at a very early stage, and may (if appeals are pursued) take a number of years toconclude. A range of outcomes is possible, depending upon the Court's assessmentof each Charge across the period under review. HSBC Bank plc considers the Charges to be and to have been valid and enforceable,and intends strongly to defend its position. It is impossible at this stage to predict accurately the outcome of the litigation or whether the proceedings will have any financial impact, and if so the size of that impact but on the basis of facts currently available and the advice received the financial impact on HSBC isnot considered to be material. HSBC is party to legal actions in a number of jurisdictions including the UK, HongKong and the US, arising out of its normal business operations. HSBC considers that none of the actions is regarded as material, and none is expected to result in a significant adverse effect on the financial position of HSBC, either individuallyor in the aggregate. Management believes that adequate provisions have been madein respect of such litigation. HSBC has not disclosed any contingent liabilityassociated with these legal actions in aggregate because it is not practicable to do so. 9. Dealings in HSBC Holdings plc shares Except for dealings as intermediaries by HSBC Bank plc, HSBC Financial Products(France) and The Hongkong and Shanghai Banking Corporation Limited, which aremembers of a European Economic Area exchange, neither the Company nor anysubsidiaries has bought, sold or redeemed any securities of the Company duringthe six months ended 30 June 2007. 10. Statutory accounts The information in this news release does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985 (the Act). TheInterim Report 2007 was approved by the Board of Directors on 30 July 2007. Thestatutory accounts for the year ended 31 December 2006 have been delivered tothe Registrar of Companies in England and Wales in accordance with Section 242of the Act. The auditor has reported on those accounts. Its report wasunqualified and did not contain a statement under Section 237(2) or (3) of theAct. This news release does not constitute the unaudited interim consolidatedfinancial statements which are contained in the Interim Report 2007. Theunaudited interim consolidated financial statements have been reviewed by theCompany's auditor, KPMG Audit Plc, in accordance with the guidance contained inBulletin 1999/4: Review of interim financial information issued by the AuditingPractices Board. On the basis of its review, KPMG Audit Plc was not aware of anymaterial modifications that should be made to the unaudited interim consolidatedfinancial statements as presented for the six months ended 30 June 2007 in theInterim Report to the shareholders. The full report of its review is included inthe Interim Report 2007 to the shareholders. 11. Forward-looking statements This news release contains certain forward-looking statements with respect tothe financial condition, results of operations and business of HSBC. Theseforward-looking statements represent HSBC's expectations or beliefs concerningfuture events and involve known and unknown risks and uncertainty that couldcause actual results, performance or events to differ materially from thoseexpressed or implied in such statements. Certain statements, such as those thatinclude the words 'potential', 'estimated', and similar expressions orvariations on such expressions may be considered 'forward-looking statements'. 12. Corporate governance HSBC is committed to high standards of corporate governance. HSBC Holdings plchas complied with the applicable code provisions of the Combined Code onCorporate Governance issued by the Financial Reporting Council throughout thesix months to 30 June 2007. HSBC Holdings plc has complied throughout the six months to 30 June 2007 withthe applicable code provisions of the Code on Corporate Governance Practices inAppendix 14 to the Rules Governing the Listing of Securities on The StockExchange of Hong Kong Limited. The Board of HSBC Holdings plc has adopted a code of conduct for transactions inHSBC Group securities by Directors that complies with The Model Code in theListing Rules of the Financial Services Authority and with The Model Code forSecurities Transactions by Directors of Listed Issuers ('Hong Kong Model Code')set out in the Rules Governing the Listing of Securities on The Stock Exchangeof Hong Kong Limited save that The Stock Exchange of Hong Kong has grantedcertain waivers from strict compliance with the Hong Kong Model Code, primarilyto take into account accepted practices in the UK, particularly in respect ofemployee share plans. Following a specific enquiry, each Director has confirmedhe or she has complied with the code of conduct for transactions in HSBC Groupsecurities throughout the period. The Directors of HSBC Holdings plc are:S K Green, Baroness Dunn*, Sir Brian Moffat*, M F Geoghegan, Lord Butler*, J D Coombe+, R A Fairhead+, D J Flint, W K L Fung*, J W J Hughes-Hallett+, Sir Mark Moody-Stuart+, G Morgan+, S W Newton+, S M Robertson+ and Sir Brian Williamson+. * Non-executive Director+ Independent non-executive Director The Group Audit Committee has reviewed the interim results for the six months to30 June 2007. 13. Interim Report The Interim Report 2007 will be published on or about Friday 10 August 2007.Copies may be obtained from Group Communications, HSBC Holdings plc, 8 CanadaSquare, London E14 5HQ, United Kingdom; Group Public Affairs, The Hongkong andShanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong;Employee Communications, HSBC - North America, 2700 Sanders Road, ProspectHeights, Illinois 60070, USA; or from the HSBC Group website - www.hsbc.com. A Chinese translation of the Interim Report 2007 may be obtained on request fromComputershare Hong Kong Investor Services Limited, Hopewell Centre, Rooms1806-1807, 18th Floor, 183 Queen's Road East, Wan Chai, Hong Kong. The Interim Report 2007 will be available on the Stock Exchange of Hong Kong'swebsite - www.hkex.com.hk. Custodians or nominees that wish to distribute copies of the Interim Report 2007to their clients may request copies for collection by writing to GroupCommunications at the address given above. 14. Final results for 2007 The results for the year to 31 December 2007 will be announced on Monday 3 March2008. 15. Proposed interim dividends for 2007 The Board has adopted a policy of paying quarterly interim dividends on theordinary shares. Under this policy it is intended to have a pattern of threeequal interim dividends with a variable fourth interim dividend. The proposedtimetables for the third and fourth interim dividends payable on the ordinaryshares in respect of 2007 are: Third interim dividend for 2007 Announcement 13 November 2007 American Depositary Shares quoted 20 November 2007 ex-dividend in New York Shares quoted ex-dividend in London, 21 November 2007 Hong Kong and Bermuda Record date and closure of Hong Kong 23 November 2007 Overseas Branch Register of shareholders for one day Shares quoted ex-dividend in Paris 26 November 2007 Payment date 16 January 2008 Fourth interim dividend for 2007 Announcement 3 March 2008 American Depositary Shares quoted 19 March 2008 ex-dividend in New York Shares quoted ex-dividend in London, 19 March 2008 Hong Kong and Bermuda Record date and closure of Hong Kong 25 March 2008 Overseas Branch Register of shareholders for one day Shares quoted ex-dividend in Paris 26 March 2008 Payment date 7 May 2008 16. News release Copies of this news release may be obtained from Group Communications, HSBCHoldings plc, 8 Canada Square, London E14 5HQ, United Kingdom; The Hongkong andShanghai Banking Corporation Limited, 1 Queen's Road Central, Hong Kong; HSBCBank USA, 452 Fifth Avenue, New York, NY 10018, USA; HSBC France, Direction dela Communication, 103 avenue des Champs Elysees, 75419 Paris Cedex 08, France.The news release will also be available on the HSBC Group website -www.hsbc.com. 17. For further information contact: London Hong KongRichard Beck David HallDirector of Group Communications Head of Group Public Affairs (Asia)Telephone: +44 20 7991 0633 Telephone: +852 2822 1133 Danielle Neben Gareth HewettSenior Manager Investor Relations Senior External Relations ManagerTelephone: +44 20 7992 1938 Telephone: +852 2822 4929 Chicago ParisLisa Sodeika Chantal NedjibExecutive Vice President, Managing Director, Corporate CommunicationsCorporate Affairs Telephone: +33 1 40 70 7729Telephone: +1 847 564 6394 Linda Recupero Gilberte LombardExecutive Vice President, Investor Relations DirectorGroup Public Affairs Telephone: +33 1 40 70 2257Telephone: +1 212 525 3800 An interview with Michael Geoghegan, Group Chief Executive, and Douglas Flint,Group Finance Director, is now available in video/audio and text on www.hsbc.comand www.cantos.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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