5 Earnings per share.

5 Earnings per share.

Earnings per share is a measure of the portion of the Group’s profit allocated to each outstanding share. It is calculated by dividing net income attributable to ordinary equity holders by the weighted average number of ordinary shares in issue during the year, excluding employee scheme treasury shares. For this purpose, net income is defined as the profit after tax derived from continuing operations.

For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is adjusted to assume conversion of all dilutive potential ordinary shares, such as share options granted to employees. Potential or contingent share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share.

A reconciliation of the earnings and weighted average number of shares used in the calculations is provided below:

(i) Earnings per share

(XLS:) Earnings per share

 

Profit
after tax
2013
£m

Earnings per share1 2013
p

Profit
after tax
20122
£m

Earnings per share1
2012
p

Operating profit

883

15.03

819

14.00

Investment and other variances

13

0.22

(2)

(0.04)

Impact of change in UK tax rates

(3)

(0.05)

(7)

(0.12)

Earnings per share based on profit attributable to equity holders

893

15.20

810

13.84

(ii) Diluted earnings per share

(XLS:) Diluted earnings per share

 

Profit
after tax
2013
£m

Number of shares3
2013
m

Earnings per share
2013
p

Profit
after tax
20122
£m

Number of shares3
2012
m

Earnings per share
2012
p

1.

Earnings per share is calculated by dividing profit after tax derived from continuing operations by the weighted average number of ordinary shares in issue during the year, excluding employee scheme treasury shares.

2.

Profit for the year has been restated to reflect the adoption by the Group of amendments to IAS 19, ‘Employee Benefits’. Further details are contained in Note 1. The impact is to reduce profit for the year by £3m for 2012.

3.

For diluted earnings per share, the weighted average number of ordinary shares in issue, excluding employee scheme treasury shares, is adjusted to assume conversion of all potential ordinary shares, such as share options granted to employees.

Profit attributable to equity holders of the Company

893

5,875

15.20

810

5,851

13.84

Net shares under options allocable for no further consideration

79

(0.20)

99

(0.23)

Diluted earnings per share

893

5,954

15.00

810

5,950

13.61

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