british american tobacco p.l.c. annual report 2008 - Notes on the accounts: 7 of 31
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DIRECTORS' REPORT: BUSINESS REVIEW
DIRECTORS' REPORT: GOVERNANCE
FINANCIAL STATEMENTS AND OTHER INFORMATION
7 Earnings per share
Basic earnings per share are based on profit for the year attributable to ordinary shareholders of £2,713 million (2008: £2,457 million) and 1,980 million (2008: 1,993 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 1,991 million (2008: 2,005 million) to reflect the potential dilutive effect of employee share schemes.
| 2009 | 2008 | |||||
|---|---|---|---|---|---|---|
| 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 | 2,713 | 1,980 | 137.0 | 2,457 | 1,993 | 123.3 |
| Share options | 11 | (0.7) | 12 | (0.8) | ||
| Diluted earnings per share | 2,713 | 1,991 | 136.3 | 2,457 | 2,005 | 122.5 |
Earnings have been affected by a number of adjusting items, which are described in note 3, note 4, note 5 and note 6. To illustrate the impact of these items, an adjusted earnings per share is shown below.
Adjusted earnings per share calculation
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| Diluted | Basic | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | ||||||
| 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 | 2,713 | 136.3 | 2,457 | 122.5 | 2,713 | 137.0 | 2,457 | 123.3 | |
| Effect of restructuring and integration costs | 3e | 304 | 15.3 | 160 | 8.0 | 304 | 15.4 | 160 | 8.1 |
| Tax and minority interests on restructuring and integration costs | (71) | (3.6) | (38) | (1.9) | (71) | (3.6) | (38) | (1.9) | |
| Effect of Canadian settlement | 3f | 102 | 5.1 | 102 | 5.1 | ||||
| Amortisation of trademarks | 3g | 58 | 2.9 | 24 | 1.2 | 58 | 2.9 | 24 | 1.2 |
| Tax on amortisation of trademarks | (15) | (0.8) | (6) | (0.3) | (15) | (0.8) | (6) | (0.3) | |
| Effect of disposal of businesses and trademarks | 3h | (2) | (0.1) | (141) | (7.0) | (2) | (0.1) | (141) | (7.1) |
| Tax relating to disposal of businesses and trademarks | 1 | 0.1 | 13 | 0.6 | 1 | 0.1 | 13 | 0.7 | |
| Net finance cost adjustment | 4 | 11 | 0.5 | 11 | 0.6 | ||||
| Effect of associates' trademark impairments, restructuring costs, termination of joint venture and health plan credit | 5 | 58 | 2.9 | (13) | (0.6) | 58 | 2.9 | (13) | (0.7) |
| Effect of additional ST income | 5 | (13) | (0.6) | (13) | (0.7) | ||||
| Effect of deferred tax adjustment | 6c | 26 | 1.3 | 26 | 1.3 | ||||
| Adjusted earnings per share | 3,046 | 153.0 | 2,582 | 128.8 | 3,046 | 153.8 | 2,582 | 129.6 | |
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 8/2007 ‘Headline Earnings’, as issued by the South African Institute of Chartered Accountants. Headline earnings per share are calculated as shown below:
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| Diluted | Basic | |||||||
|---|---|---|---|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | |||||
| 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 | 2,713 | 136.3 | 2,457 | 122.5 | 2,713 | 137.0 | 2,457 | 123.3 |
| Effect of impairment of intangibles and property, plant and equipment | 107 | 5.4 | 5 | 0.2 | 107 | 5.5 | 5 | 0.3 |
| Tax and minority interests on impairment of intangibles and property, plant and equipment | (21) | (1.1) | (21) | (1.1) | ||||
| Effect of gains on disposal of property, plant and equipment | (4) | (0.2) | (11) | (0.5) | (4) | (0.2) | (11) | (0.6) |
| Tax and minority interests on gains on disposal of property, plant and equipment | 2 | 0.1 | 2 | 0.1 | ||||
| Effect of disposal of businesses and trademarks | (5) | (0.3) | (149) | (7.4) | (5) | (0.3) | (149) | (7.5) |
| Tax and minority interests on disposal of businesses and trademarks | 1 | 0.1 | 15 | 0.7 | 1 | 0.1 | 15 | 0.8 |
| Effect of gains reclassified from the available-for-sale reserve | (3) | (0.2) | (6) | (0.3) | (3) | (0.2) | (6) | (0.3) |
| Share of associates' trademark impairments and termination of joint venture | 107 | 5.4 | (42) | (2.0) | 107 | 5.4 | (42) | (2.1) |
| Tax and minority interests on share of associates' trademark impairments and termination of joint venture | (42) | (2.1) | 17 | 0.8 | (42) | (2.1) | 17 | 0.8 |
| Headline earnings per share | 2,853 | 143.3 | 2,288 | 114.1 | 2,853 | 144.1 | 2,288 | 114.8 |