HSBC 2002 Annual Report Download - page 314

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
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payments and classification of cash flows from hedging transactions’ .
FRS 1 (Revised) defines cash as cash and balances at central banks and advances to banks payable on demand.
Under US GAAP, Cash equivalents are defined as short-term highly liquid investments that are both:
− convertible to known amounts of cash; and
− so near their maturity that they present insignificant risk of changes in value because of fluctuations in
interest rates.
The other principal differences between US and UK GAAP are in respect of classification. Under UK GAAP,
HSBC presents its cash flows by: (a) Operating activities; (b) Dividends received from associates; (c) Returns
on investments and servicing of finance; (d) Taxation; (e) Capital expenditure and financial investments; (f)
Acquisitions and disposals; (g) Equity dividends paid; and (h) Financing. Under US GAAP, only three
categories are required. These are: (a) Operating; (b) Investing; and (c) Financing.
Classification Under Classification Under
Cash Flow FRS 1 (Revised) SFAS No. 95/104
Taxation Taxation Operating activities
Dividends received from associates Dividends received from associates Operating activities
Equity dividends paid Equity dividends paid Financing activities
Non-equity dividends paid and dividends
to minority interests
Returns on investments and servicing of
finance
Financing activities
Capital expenditure and financial
investments
Capital expenditure and financial
investments
Investing activities
Transfers of subsidiary undertakings,
joint ventures and associates
Acquisitions and disposals Investing activities
Net changes in loans and advances
including finance lease payables
Operating activities Investing activities
Net changes in deposits Operating activities Financing activities
Under FRS 1 (Revised), hedges are reported under the same heading as the related assets or liabilities.
For the purposes of the following table, HSBC has defined cash and cash equivalents as the sum of the
following balance sheet categories:
2002 2001 2000
US$m US$m US$m
Cash and balances at central banks......................................... 7,659 6,185 5,006
Items in the course of collection from other banks ................. 5,651 5,775 6,668
Loans and advances to banks repayable on demand ............... 19,211 16,039 19,332
Less:
Items in the course of transmission to other banks ................. (4,634) (3,798) (4,475)
27,887 24,201 26,531