Section image

Cherries
oil on canvas
22 x 20 in
1981

Penny Machines
oil on canvas
23¾ x 29¾ in
1961

Stack of Books
oil on canvas
30 x 24 in
n.d.

Seven Suckers
oil on canvas
19 x 23 in
1970

Twin Jackpots
oil on canvas
30 x 46 in
1962

Ties
oil on canvas
20 x 26 in
1980

Cake Slices
oil on canvas
20 x 16 in
n.d.

Notes 6-10

For the year ended 31 December 2010

9. Earnings per share

Basic EPS

The calculation of basic reported and headline EPS is as follows:

  2010 2009 2008
Reported earnings1 (£m) 586.0 437.7 439.1
Headline earnings (£m) (note 31) 730.8 550.0 648.3
Average shares used in Basic EPS calculation (m) 1,233.1 1,218.7 1,143.4
Reported EPS 47.5p 35.9p 38.4p
Headline EPS 59.3p 45.1p 56.7p
Note
1
Reported earnings is equivalent to profit for the year attributable to equity holders of the parent.

Diluted EPS

The calculation of diluted reported and headline EPS is set out below:

  2010 2009 2008
Diluted reported earnings (£m) 614.3 437.7 439.9
Diluted headline earnings (£m) 759.0 550.0 649.1
Average shares used in diluted EPS calculation (m) 1,339.0 1,238.2 1,169.6
Diluted reported EPS 45.9p 35.3p 37.6p
Diluted headline EPS 56.7p 44.4p 55.5p

Diluted EPS has been calculated based on the diluted reported and diluted headline earnings amounts above. On 19 May 2009 the Group issued £450 million 5.75% convertible bonds due May 2014. For the year ended 31 December 2010 these convertible bonds were dilutive and earnings were consequently increased by £28.3 million for the purpose of the calculation of diluted earnings. For the year ended 31 December 2009 these convertible bonds were accretive to earnings and therefore excluded from this calculation. For the year ended 31 December 2008 the $150 million 5% Grey convertible bonds were dilutive and earnings were consequently increased by £0.8 million for the purpose of this calculation; these bonds were redeemed on 28 October 2008. In addition, at 31 December 2010, options to purchase 11.6 million ordinary shares (2009: 33.2 million, 2008: 28.0 million) were outstanding, but were excluded from the computation of diluted earnings per share because the exercise prices of these options were greater than the average market price of the Group’s shares and, therefore, their inclusion would have been accretive.

A reconciliation between the shares used in calculating basic and diluted EPS is as follows:

  2010
m
2009
m
2008
m
Average shares used in basic EPS calculation 1,233.1 1,218.7 1,143.4
Dilutive share options outstanding 6.7 2.1 2.9
Other potentially issuable shares 22.7 17.4 16.0
£450 million 5.75% convertible bonds 76.5
$150 million Grey convertible bonds 7.3
Shares used in diluted EPS calculation 1,339.0 1,238.2 1,169.6

At 31 December 2010 there were 1,264,391,221 ordinary shares in issue.