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

 

Profit after tax
2014
£m

Earnings per share1
2014
p

Profit after tax
2013
£m

Earnings per share1
2013
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.

Operating profit

998

16.92

883

15.03

Investment and other variances

(13)

(0.22)

13

0.22

Impact of change in UK tax rates

(3)

(0.05)

Earnings per share based on profit attributable to equity holders

985

16.70

893

15.20

(ii) Diluted earnings per share

 

Profit after tax
2014
£m

Number of shares1
2014
m

Earnings per share
2014
p

Profit after tax
2013
£m

Number of shares1
2013
m

Earnings per share
2013
p

1.

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

985

5,897

16.70

893

5,875

15.20

Net shares under options allocable for no further consideration

59

(0.16)

79

(0.20)

Diluted earnings per share

985

5,956

16.54

893

5,954

15.00