directors report and accounts 2006 - Adjusted diluted earnings per share


 Adjusted diluted earnings per share

Adjusted diluted earnings per share

Basic earnings per share for 2006 were 92.08p (2005: 84.34p).

With the distortions that can occur in profit over the years, as well as the potential dilutive effect of employee share schemes, earnings per share is best viewed on the basis of adjusted diluted earnings per share. This removes the impact of exceptional items which are shown as memorandum information in the Group Income Statement. The main items are restructuring costs, loss on impairment of a business and gains on disposal of brands and a joint venture. In addition, the calculation adjusts for certain distortions in net finance costs arising under IFRS in 2005, as well as reflecting the impact of the potential conversion of shares.

On this basis, the earnings per share are 98.12p, a 10 per cent increase over 2005, as the higher net finance costs and minority interests were more than offset by the improvement in profit from operations, the share of associates’ post-tax results, a lower tax rate and the benefit from the share buy-back programme.

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