Notes to the Accounts For the year ended 31 December 2007
9. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following data:
| Earnings | 2007 | 2006 |
|---|---|---|
| Earnings for basic and diluted earnings per share (£‘000) | 101,734 | 65,447 |
| Number of shares | ||
| Weighted average number of shares used for basic earnings per share (‘000) | 327,528 | 334,744 |
| Dilution effect of share plans (‘000) | 5,353 | 8,888 |
| Diluted weighted average number of shares used for diluted earnings per share (‘000) | 332,881 | 343,632 |
| Basic earnings per share (pence) | 31.1 | 19.6 |
| Diluted earnings per share (pence) | 30.6 | 19.0 |
The above results relate to continuing operations.
Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Employee Benefit Trust and held in the reserve.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. This calculation determines the number of shares that could have been acquired at fair value (determined as the average market price of the Company's shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated in the basic earnings per share is then adjusted to reflect the number of shares deemed to be issued for nil consideration as a result of the potential exercise of existing share options.
The remaining share options that are currently not dilutive and hence excluded from the dilutive earnings per share calculation remain potentially dilutive until they are either exercised or they lapse.
Potential future ordinary share transactions
It remains the Company's intention to use surplus cash to repurchase and cancel its shares.