Preliminary results - 12 months ended 31 December 2005
14. Earnings per share
(a) Basic earnings per share
(i) The profit attributable to ordinary shareholders is:
| 2005 £m |
2004 £m |
|
|---|---|---|
| Profit for the year | 1,898 | 1,371 |
| Amount attributable to minority interests | (131) | (96) |
| Cumulative preference dividends for the year | (17) | (17) |
| Coupon payments on direct capital instrument net of tax | (29) | - |
| Profit attributable to ordinary shareholders | 1,721 | 1,258 |
(ii) Basic earnings per share is calculated as follows:
| 2005 | 2004 | ||||||
|---|---|---|---|---|---|---|---|
| Before tax £m |
Net of tax, minorities and preference dividends and DCI appropriation £m |
Per share p |
Before tax £m |
Net of tax, minorities and preference dividends and DCI appropriation £m |
Per share p |
||
| Operating profit attributable to ordinary shareholders from continuing operations | 2,128 | 1,415 | 60.5 | 1,669 | 1,221 | 54.1 | |
| Adjusted for the following: | |||||||
| – Impairment of goodwill | (43) | (43) | (1.8) | (41) | (41) | (1.8) | |
| – Amortisation and net impairment of acquired value of in-force business | (73) | (73) | (3.1) | (85) | (85) | (3.8) | |
| – Amortisation and net impairment of intangibles | (45) | (42) | (1.8) | (7) | (7) | (0.3) | |
| – Financial Services Compensation Scheme and other levies | - | - | - | (49) | (29) | (1.3) | |
| – Short-term fluctuation on return on investments backing general insurance and health business | 517 | 430 | 18.2 | 161 | 195 | 8.7 | |
| – Profit on the disposal of subsidiaries and associates | 153 | 110 | 4.7 | 34 | 34 | 1.5 | |
| – Integration costs | (109) | (76) | (3.2) | - | - | - | |
| – Exceptional costs for termination of operations | - | - | - | (40) | (30) | (1.3) | |
| Profit attributable to ordinary shareholders | 2,528 | 1,721 | 73.5 | 1,642 | 1,258 | 55.8 | |
Earnings per share has been calculated based on the operating profit before impairment of goodwill and other non-operating items, after tax, attributable to ordinary shareholders, as well as on the profit attributable to ordinary shareholders. The directors believe the former earnings per share figures provide a better indication of operating performance. The calculation of basic earnings per share uses a weighted average of 2,340 million (2004: 2,256 million) ordinary shares in issue, after deducting shares owned by the employee share trusts.
The actual number of shares in issue at 31 December 2005 was 2,396 million (2004: 2,282 million).
(b) Diluted earnings per share:
Diluted earnings per share is calculated as follows:
| 2005 | 2004 | ||||||
|---|---|---|---|---|---|---|---|
| Total £m |
Weighted average number of shares £m |
Per share p |
Total £m |
Weighted average number of shares £m |
Per share p |
||
| Profit attributable to equity shareholders | 1,721 | 2,340 | 73.5 | 1,258 | 2,256 | 55.8 | |
| Dilutive effect of share awards and options | - | 20 | (0.6) | - | 18 | (0.5) | |
| Diluted earnings per share | 1,721 | 2,360 | 72.9 | 1,258 | 2,274 | 55.3 | |
Diluted earnings per share on an operating profit attributable to ordinary shareholders is 60.0p (2004: 53.7p).
