HSBC 2004 Annual Report Download - page 339

337
2004 2003
US$m US$m
Change in accumulated post-retirement benefit obligation
Accumulated post-retirement benefit obligation as at 1 January .................................... 598 326
Service cost .................................................................................................................... 10 5
Interest cost .................................................................................................................... 45 27
Net actuarial loss/(gain) .................................................................................................. 43 (5)
Acquisition of subsidiary ................................................................................................ –251
Benefits paid ..................................................................................................................(41) (27)
Transfers ........................................................................................................................ 137 –
Exchange and other movements ..................................................................................... 20 21
Accumulated post-retirement benefit obligation as at 31 December ............................... 812 598
Change in plan assets
Fair value of plan assets at 1 January ............................................................................. ––
Employer contributions .................................................................................................. 50 27
Investment returns .......................................................................................................... 2–
Benefits paid ..................................................................................................................(41) (27)
Transfers ........................................................................................................................ 73 –
Exchange and other movements ..................................................................................... (5) –
79 –
Funded status of plan
Funded status at 31 December ........................................................................................ (733) (598)
Unrecognised net actuarial (gain)/loss ............................................................................ (4) 15
Unrecognised net transition obligation ........................................................................... 32 45
Accrued post-retirement benefit obligation .................................................................... (705) (538)
Benefits expected to be paid over each of the next five years and in aggregate for the five years thereafter
are:
2005 2006 2007 2008 2009 2010 - 2015
US$m US$m US$m US$m US$m US$m
UK post-retirement scheme .. 12 12 14 15 15 99
Other schemes....................... 34 36 37 38 38 191
Assumed health care cost trend rates have an effect on the amounts reported for health care plans. A one
percentage point change in assumed health care cost trend rates would increase/(decrease) service and
interest costs and the post-retirement benefit obligation as follows:
One per cent
increase
One per cent
decrease
US$m US$m
Effect on total of service and interest cost components .................................................. 5.9 (5.0)
Effect on post-retirement benefit obligation ................................................................... 63.6 (58.2)
In accordance with US GAAP, the accounting for the post-retirement benefit charge assumed a discount rate
of 5.3 per cent (2003: 5.3 per cent) for UK benefits and 7.1 per cent (2003: 6.01 per cent) for non-domestic
benefits, on a weighted average basis. HSBC intends to contribute US$11 million to its principal UK post-
retirement health care scheme and US$47 million to other schemes in 2005. There is no material difference
between the amounts disclosed above and amounts provided for under UK GAAP. Further details of the UK
post-retirement health care expenses under UK GAAP are given in Note 5.
(c) Stock-based compensation
HSBC has adopted SFAS 123 and accounts for share compensation schemes based on their estimated fair values
at date of grant.
The SFAS 123 charge for the fair value of options granted since 1 January 1997 is US$234 million (2003:
US$190 million; 2002: US$240 million). The Executive Share Option Scheme, Group Share Option Plan,
Savings-Related Share Option Plan and Restricted Share Plan fall within the scope of SFAS 123. The disclosures
of options outstanding only relate to those granted from 1995 onwards. An analysis of the movement in the