7 Earnings per share

Basic earnings per share are based on profit for the year attributable to ordinary shareholders of £2,879 million (2009: £2,713 million) and 1,983 million (2009: 1,980 million) ordinary shares of 25p each, being the weighted average number of shares in issue during the year (excluding shares held as treasury shares).

For the calculation of diluted earnings per share, the weighted average number of shares in issue is increased to 1,994 million (2009: 1,991 million) to reflect the potential dilutive effect of employee share schemes.

2010 2009
Earnings
£m 		Weighted average number of shares
m 		Earnings per share
pence 		Earnings
£m 		Weighted average number of shares
m 		Earnings per share
pence
Basic earnings per share 2,879 1,983 145.2 2,713 1,980 137.0
Share options 11 (0.8) 11 (0.7)
Diluted earnings per share 2,879 1,994 144.4 2,713 1,991 136.3

Earnings have been affected by a number of adjusting items, which are described in notes 3, 5 and 6. To illustrate the impact of these items, an adjusted earnings per share calculation is shown below.

Adjusted earnings per share calculation

Diluted Basic
2010 2009 2010 2009
Notes Earnings
£m 		Earnings per share
pence 		Earnings
£m 		Earnings per share
pence 		Earnings
£m 		Earnings per share
pence 		Earnings
£m 		Earnings per share
pence
Unadjusted earnings per share 2,879 144.4 2,713 136.3 2,879 145.2 2,713 137.0
Effect of restructuring and integration costs 3e 311 15.6 304 15.3 311 15.7 304 15.4
Tax and non-controlling interests on restructuring and integration costs (75) (3.8) (71) (3.6) (75) (3.8) (71) (3.6)
Effect of impairment of goodwill and trademarks 3g 293 14.7 293 14.8
Tax on impairment of goodwill and trademarks (58) (2.9) (58) (2.9)
Effect of deferred tax asset written off 6c 35 1.8 35 1.8
Amortisation of trademarks 3f 62 3.1 58 2.9 62 3.1 58 2.9
Tax on amortisation of trademarks (15) (0.8) (15) (0.8) (15) (0.8) (15) (0.8)
Effect of disposal of businesses and trademarks 3h (2) (0.1) (2) (0.1)
Tax relating to disposal of businesses and trademarks 1 0.1 1 0.1
Effect of associates' adjusting items 5 72 3.6 58 2.9 72 3.6 58 2.9
Adjusted earnings per share 3,504 175.7 3,046 153.0 3,504 176.7 3,046 153.8

Headline earnings per share as required by the JSE Limited

The presentation of headline earnings per share, as an alternative measure of earnings per share, is mandated under the JSE Listing Requirements. It is calculated in accordance with Circular 3/2009 ‘Headline Earnings’, as issued by the South African Institute of Chartered Accountants. Headline earnings per share are calculated as shown below:

Diluted Basic
2010 2009 2010 2009
Earnings
£m 		Earnings per share
pence 		Earnings
£m 		Earnings per share
pence 		Earnings
£m 		Earnings per share
pence 		Earnings
£m 		Earnings per share
pence
Unadjusted earnings per share 2,879 144.4 2,713 136.3 2,879 145.2 2,713 137.0
Effect of impairment of intangibles and property, plant and equipment 393 19.7 107 5.4 393 19.8 107 5.5
Tax and non-controlling interests on impairment of intangibles and property, plant and equipment (81) (4.1) (21) (1.1) (81) (4.1) (21) (1.1)
Effect of gains on disposal of property, plant and equipment (4) (0.2) (4) (0.2)
Effect of gains on disposal of non-current assets held-for-sale (16) (0.8) (16) (0.8)
Tax and non-controlling interests on disposal of non-current assets held-for-sale 3 0.1 3 0.1
Effect of disposal of businesses and trademarks (5) (0.3) (5) (0.3) (5) (0.3) (5) (0.3)
Tax and non-controlling interests on disposal of businesses and trademarks 2 0.1 1 0.1 2 0.1 1 0.1
Effect of gains reclassified from the available-for-sale reserve (3) (0.2) (3) (0.2)
Share of associates' trademark and other asset impairments net of tax 7 0.4 65 3.3 7 0.4 65 3.3
Dilution in shareholding in associate 9 0.5 9 0.5
Headline earnings per share 3,191 160.0 2,853 143.3 3,191 160.9 2,853 144.1