HSBC 2007 Annual Report Download - page 385

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The weighted average share price at the date the share options were exercised was US$18.08 (2006: US$17.64).
At the date of its acquisition in 2000, certain of HSBC France’s subsidiary companies also operated employee share
option plans under which options could be granted over their respective shares. On exercise of certain of these
options, the subsidiary shares are exchanged for HSBC ordinary shares. The total number of HSBC ordinary shares
exchanged under such arrangements in 2007 was 113,240 (2006: 356,491).
HSBC Finance Corporation
Upon acquisition, HSBC Finance share options previously granted were converted to share options over HSBC
ordinary shares of US$0.50 each at a rate of 2.675 HSBC share options (the same ratio as the Exchange Offer for
HSBC Finance) for each HSBC Finance share option. Options granted under HSBC Finance’s own share option
schemes prior to the announcement of the acquisition by HSBC in November 2002 vested as options over HSBC
shares upon acquisition by HSBC. Options granted after the announcement of the acquisition in November 2002 but
prior to its completion on 28 March 2003 generally vest equally over four years and expire ten years from the date of
grant.
Information with respect to share options granted under HSBC Finance’s pre-acquisition scheme is as follows:
2007 2006
Number
Exercise
price Number
Exercise
price
(000’s) US$ (000’s) US$
HSBC Finance share options outstanding
at 1 January ............................................................... 3,126 10.66 6,358 10.66
Exercised in the year ..................................................... (671) 10.66 (3,219) 10.66
Forfeited in the year ...................................................... – 10.66 (13) 10.66
Outstanding and exercisable at 31 December .............. 2,455 10.66 3,126 10.66
The remaining contractual life for options outstanding at the balance sheet date was 4.9 years (2006: 5.9 years). The
weighted average share price at the date the share options were exercised was US$18.08 (2006: US$17.65).
11 Tax expense
2007 2006 2005
US$m US$m US$m
Current tax
UK corporation tax charge – on current year profit ........................................ 1,372 772 663
UK corporation tax charge – adjustments in respect of prior years ................ (46) (122) 29
Overseas tax – on current year profit .............................................................. 3,976 4,600 4,103
Overseas tax – adjustments in respect of prior years ...................................... (97) (48) (110)
5,205 5,202 4,685
Deferred tax
Origination and reversal of temporary differences ......................................... (1,247) (51) 506
Effect of changes in tax rates ........................................................................... (35) – 8
Adjustments in respect of prior years .............................................................. (166) 64 (106)
(1,448) 13 408
Tax expense ..................................................................................................... 3,757 5,215 5,093
The UK corporation tax rate applying to HSBC Holdings and its subsidiaries was 30 per cent (2006: 30 per cent;
2005: 30 per cent). Overseas tax included Hong Kong profits tax of US$1,137 million (2006: US$751 million; 2005:
US$639 million). Subsidiaries in Hong Kong provided for Hong Kong profits tax at the rate of 17.5 per cent (2006:
17.5 per cent; 2005: 17.5 per cent) on the profits for the year assessable in Hong Kong. Other overseas subsidiaries
and overseas branches provided for taxation at the appropriate rates in the countries in which they operate.