Skip Links

Menu Links

 

Notes to the Consolidated Financial Statements


< Previous

Next >


9 Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to take account of all dilutive potential ordinary shares and adjusting the profit attributable, if applicable, to account for any tax consequences that might arise from conversion of those shares.

Adjusted

In order to show results from operating activities on a comparable basis, an adjusted earnings per share is presented.

The following items are excluded in the calculation of adjusted earnings:

Other gains and losses represent profits and losses on the sale of subsidiaries, joint ventures, associates and other financial assets that are included within operating profit or represent the profit or loss on sale of a discontinued operation. Such profits and losses are considered to distort the performance in any year.

Amortisation of acquired intangibles is the amortisation of intangible assets acquired through business combinations. The amortisation charge is not considered to be fully reflective of the underlying performance of the Group.

Other net finance income/costs are foreign exchange and other gains and losses that represent short-term fluctuations in market value and foreign exchange movements on transactions and balances that are no longer in a hedge relationship under IFRS. These gains and losses are subject to significant volatility and may not be realised in due course as it is normally the intention to hold these instruments to maturity. The increased volatility has been introduced as a result of adopting IAS 39 'Financial Instruments: Recognition and Measurement' as at 1 January 2005 (see note 34) and through the application of IAS 21 'The Effects of Changes in Foreign Exchange Rates'. Other net finance costs of Group companies are included in finance costs or finance income as appropriate. Other net finance costs of joint ventures and associates are included within the share of results of joint ventures and associates within operating profit.

The related tax and minority interest for the above items is also excluded from adjusted earnings.

The Company's definition of adjusted earnings per share may not be comparable to other similarly titled measures reported by other companies.

9 Earnings per share
All figures in millions 2005 2004 2003
Earnings 624 262 252
Adjustments to exclude profit for the year from discontinued operations:
Profit for the year from discontinued operations (302) (22) (23)
Minority interest share of above - 5 5
Earnings - continuing operations 322 245 234
 
Earnings 624 262 252
Adjustments:
Other gains and losses (40) (9) (6)
Amortisation of acquired intangibles (note 12) 11 5 4
Other net finance costs of associates 2 - -
Profit on sale of discontinued operations (note 3) (306) - -
Other finance income (note 7) (14) - -
Taxation on above items (3) (38) (32)
Minority interest share of above items (2) (1) 1
Adjusted earnings 272 219 219
Amortisation of acquired intangibles (net of taxation and minority interest) (5) (2) (2)
Adjusted earnings including effect of amortisation of acquired intangibles 267 217 217
 
Weighted average number of shares (millions) 797.9 795.6 794.4
Effect of dilutive share options (millions) 1.1 1.1 0.9
Weighted average number of shares (millions) for diluted earnings 799.0 796.7 795.3
Earnings per share from continuing and discontinued operations
Basic 78.2p 32.9p 31.7p
Diluted 78.1p 32.9p 31.7p
Earnings per share from continuing operations
Basic 40.4p 30.8p 29.4p
Diluted 40.3p 30.8p 29.4p
Earnings per share from discontinued operations
Basic 37.8p 2.1p 2.3p
Diluted 37.8p 2.1p 2.3p
Adjusted earnings per share 34.1p 27.5p 27.6p
Adjusted earnings per share including effect of amortisation of acquired
intangibles
33.5p 27.3p 27.3p

back to top