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Accounting policies Earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders by the weighted average number of ordinary shares in issue during the year, excluding shares held by the Company in the Employees’ Share Trust or as treasury shares. Diluted earnings per share Diluted earnings per share is calculated by adjusting the basic earnings per share for the effect of conversion to ordinary shares associated with dilutive potential ordinary shares, which comprise share options and awards granted to employees. Adjusted earnings per share Adjusted earnings per share is a trend measure, which presents the long-term profitability of the Group excluding the impact of specific transactions that management considers affects the Group’s short-term profitability. The Group presents this measure to assist investors in their understanding of trends. Adjusted attributable profit is the numerator used for this measure. The Group has identified the following items as those to be excluded when arriving at adjusted attributable profit: acquisitions and disposals related items including amortisation and impairment of acquisition intangible assets; significant restructuring programmes; significant gains and losses arising from legal disputes and other significant items (including US tax reform) and taxation thereon. |
The calculations of the basic, diluted and adjusted earnings per ordinary share are based on the following attributable profit and numbers of shares:
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2017 |
|
2016 |
|
2015 |
|
|
|
|
|
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$ million |
|
$ million |
|
$ million |
|
|
Earnings |
|
|
|
|
|
|
|
|
|
|
Attributable profit for the year |
|
|
|
767 |
|
784 |
|
410 |
|
|
Adjusted attributable profit (see below) |
|
|
|
826 |
|
735 |
|
761 |
|
Attributable profit is reconciled to adjusted attributable profit as follows:
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|
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2017 |
|
2016 |
|
2015 |
|
|
|
|
Notes |
|
$ million |
|
$ million |
|
$ million |
|
|
Attributable profit for the year |
|
|
|
767 |
|
784 |
|
410 |
|
|
Acquisition-related costs |
|
|
|
(10) |
|
9 |
|
25 |
|
|
Restructuring and rationalisation expenses |
|
3 |
|
– |
|
62 |
|
65 |
|
|
Amortisation and impairment of acquisition intangibles |
|
9 |
|
140 |
|
178 |
|
204 |
|
|
Legal and other1 |
|
|
|
(13) |
|
(20) |
|
187 |
|
|
Profit on disposal of business |
|
21 |
|
– |
|
(326) |
|
– |
|
|
US tax reform |
|
5 |
|
(32) |
|
– |
|
– |
|
|
Taxation on excluded items |
|
5 |
|
(26) |
|
48 |
|
(130) |
|
|
Adjusted attributable profit |
|
|
|
826 |
|
735 |
|
761 |
|
|
1 |
Legal and other credit in 2017 includes $16m within operating profits (refer to Note 2.5), and a $3m charge within other finance costs for unwinding of the discount on the provision for known, anticipated and settled metal-on-metal hip claims. In 2016 the legal and other credit includes $30m within operating profits (refer to Note 2.5), a $5m charge within other finance costs for unwinding of the discount on the provision for known, anticipated and settled metal-on-metal hip claims, and a $5m charge within share of results of associates for expenses incurred by Bioventus for an aborted initial public offering of shares. In 2015, legal and other costs include $190m within operating profit (refer to Note 2.5) and a $3m net interest credit. |
The numerators used for basic and diluted earnings per ordinary share are the same. The denominators used for all categories of earnings for basic and diluted earnings per ordinary share are as follows:
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|
|
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2017 |
|
2016 |
|
2015 |
|
|
Number of shares (millions) |
|
|
|
|
|
|
|
|
|
|
Basic weighted number of shares |
|
|
|
874 |
|
890 |
|
894 |
|
|
Dilutive impact of share options outstanding |
|
|
|
1 |
|
3 |
|
5 |
|
|
Diluted weighted average number of shares |
|
|
|
875 |
|
893 |
|
899 |
|
|
Earnings per ordinary share |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
87.8¢ |
|
88.1¢ |
|
45.9¢ |
|
|
Diluted |
|
|
|
87.7¢ |
|
87.8¢ |
|
45.6¢ |
|
|
Adjusted2 |
|
|
|
94.5¢ |
|
82.6¢ |
|
85.1¢ |
|
|
2 |
Adjusted earnings per share is calculated using the basic weighted number of shares. |