HSBC 2007 Annual Report Download - page 348

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
Notes 1 and 2
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components of the entity that the chief operating decision maker uses to make operating decisions. HSBC
currently presents two sets of segments in accordance with IAS 14, one geographical and one based on customer
groups, which reflect the way the businesses of the Group are managed. HSBC expects to adopt IFRS 8 with
effect from 1 January 2009, and will accordingly present segmental information which reflects the operating
segments used to make operating decisions at that time.
Standards and Interpretations issued by the IASB but not endorsed by the EU
The IASB issued a revised IAS 23 ‘Borrowing Costs’ on 29 March 2007, which is applicable for annual periods
beginning on or after 1 January 2009. The revised standard eliminates the option of recognising borrowing costs
immediately as an expense, to the extent that they are directly attributable to the acquisition, construction or
production of a qualifying asset. HSBC does not expect adoption of the revised standard to have a significant
effect on the consolidated financial statements.
IFRIC 12 ‘Service Concession Arrangements’ (‘IFRIC 12’) was issued on 30 November 2006 and is effective
for annual periods beginning on or after 1 January 2008. IFRIC 12 provides guidance on service concession
arrangements by which a government or other public sector entity grants contracts for the supply of public
services to private sector operators. IFRIC 12 addresses how service concession operators should apply existing
IFRSs to account for the obligations they undertake and the rights they receive in service concession
arrangements. IFRIC 12 is unlikely to have a significant effect on HSBC.
IFRIC 13 ‘Customer Loyalty Programmes’ (‘IFRIC 13’) was issued on 28 June 2007 and is effective for annual
periods beginning on or after 1 July 2008. IFRIC 13 addresses how companies that grant their customers loyalty
award credits (often called ‘points’) when buying goods or services should account for their obligation to
provide free or discounted goods and services, if and when the customers redeem the points. IFRIC 13 requires
companies to allocate some of the proceeds of the initial sale to the award credits and recognise these proceeds
as revenue only when they have fulfilled their obligations to provide goods or services. HSBC is currently
assessing the effect of this interpretation on the consolidated financial statements.
IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction’ (‘IFRIC 14’) was issued on 5 July 2007 and is effective for annual periods beginning on or after
1 January 2008. IFRIC 14 provides guidance regarding the circumstances under which refunds and future
reductions in contributions from a defined benefit plan can be regarded as available to an entity for the purpose
of recognising a net defined benefit asset. Additionally, in jurisdictions where there is both a minimum funding
requirement and restrictions over the amounts that companies can recover from the plan, either as refunds or
reductions in contributions, additional liabilities may need to be recognised. HSBC is currently assessing the
effect of this interpretation on the consolidated financial statements.
A revised IAS 1 ‘Presentation of Financial Statements’, which is applicable for annual periods beginning on or
after 1 January 2009, was issued on 6 September 2007. The revised standard aims to improve users’ ability to
analyse and compare information given in financial statements. Adoption of the revised standard will have no
effect on the results reported in HSBC’s consolidated financial statements but will change the presentation of the
results and financial position of HSBC in certain respects.
The IASB issued an amendment to IFRS 2 ‘Share-based Payment’ on 17 January 2008. The amendment, which
is applicable for annual periods beginning on or after 1 January 2009, clarifies that vesting conditions comprise
only service conditions and performance conditions. It also specifies the accounting treatment for a failure to
meet a non-vesting condition. Adoption of the amendment is unlikely to have a significant effect on HSBC’s
consolidated financial statements.
A revised IFRS 3 ‘Business Combinations’ and an amended IAS 27 ‘Consolidated and Separate Financial
Statements’, were issued on 10 January 2008. The revisions to the standards apply prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual financial reporting
period beginning on or after 1 July 2009. The main changes under the standards are that:
• acquisition-related costs are recognised as expenses in the income statement in the period they are incurred;
• equity interests held prior to control being obtained are remeasured to fair value at the time control is
obtained, and any gain or loss is recognised in the income statement;