HSBC 2002 Annual Report Download - page 286

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
284
Associates
Information relating to associates can be found in the ‘Notes on the Financial Statements’ where the following
are disclosed:
− Notes 15 and 16: amounts due from associates;
− Note 22: interests in associates; principal associates and interests in loan capital; and
− Notes 28 and 29: amounts due to associates.
Pension funds
At 31 December 2002, US$9.8 billion (2001: US$12.5 billion) of HSBC pension fund assets were under
management by HSBC companies of which US$1,155 million (2001: US$1,167 million) is included in HSBC’ s
balance sheet under ‘Other assets’ in ‘Long-term assurance assets attributable to policyholders’ . Fees to HSBC
companies in connection with such management amounted to US$23 million (2001: US$27 million). HSBC’ s
pension funds had deposits of US$252 million (2001: US$275 million) with banking subsidiaries within HSBC.
49 UK and Hong Kong accounting requirements
The financial statements have been prepared in accordance with UK accounting requirements; there would be no
material differences had they been prepared in accordance with Hong Kong Accounting Standards, except as set out
below.
The presentation of the cash flow statement is in accordance with Financial Reporting Standard 1 (revised 1996)
‘Cash Flow Statements’ rather than Hong Kong Statement of Standard Accounting Practice 15 ‘Cash Flow
Statements’ .
In accordance with Financial Reporting Standard 11 ‘Impairment of Fixed Assets and Goodwill’ , no charge has been
made in the profit and loss account in respect of those decreases in the valuation of HSBC properties that do not
represent impairments. If HSBC had prepared its financial statements under Hong Kong Statement of Standard
Accounting Practice 17 ‘Property, plant and equipment’ , there would have been a net charge to the profit and loss
account of US$94 million (2001: US$39 million) in respect of valuations below depreciated historical cost (of which
a credit of US$2 million (2001: US$1 million) relates to minority interests).
In accordance with Financial Reporting Standard 19 ‘Deferred Tax’ , HSBC has recognised deferred tax in full on
timing differences between the accounting and taxation treatment of income and expenditure, subject to
recoverability of deferred tax assets. If HSBC had prepared its financial statements in accordance with Hong Kong
Statement of Standard Accounting Practice 12 ‘Income Taxes’ (revised August 2002) it would have recognised
additional deferred tax assets and liabilities, resulting in an increase in reserves at 31 December 2002 of US$119
million (at 31 December 2001*: US$114 million), and an increase in the charge to the profit and loss account in
respect of tax on profit on ordinary activities of US$22 million (2001*: US$188 million).
If HSBC had prepared its financial statements under Hong Kong Statement of Standard Accounting Practice 24
‘Investments in Securities’ , US$1,253 million (2001: US$860 million) would have been credited to reserves in
respect of changes in the fair value of its investment securities.
In accordance with UK Statement of Standard Accounting Practice 17 ‘Post balance sheet events’ , HSBC has
recorded dividends declared after the period end in the period to which they relate. If HSBC had prepared its
financial statements in accordance with Hong Kong Statement of Standard Accounting Practice 9 ‘Events after the
balance sheet date’ , dividends would be recorded in the period in which they are declared and there would have been
an increase in reserves at 31 December 2002 of US$3,069 million (at 31 December 2001: US$2,700 million).
HSBC Holdings has recorded its investment in HSBC undertakings at net asset value, including attributable
goodwill. If HSBC Holdings had prepared its individual financial statements in accordance with Hong Kong
Statement of Standard Accounting Practice 32 ‘Consolidated Financial Statements and Accounting for Investments
in Subsidiaries’ and elected to record its investment in HSBC undertakings at cost, less provisions for any