12. Earnings per share
| 2007 | 2006 | |||||
|---|---|---|---|---|---|---|
| US$ | Continuing operations | Discontinued operations | Total Group | Continuing operations | Discontinued operations | Total Group |
| Profit for the financial year attributable to equity shareholders of the Company | ||||||
| Basic earnings per share | 4.04 | 1.54 | 5.58 | 3.51 | 0.70 | 4.21 |
| Diluted earnings per share | 3.99 | 1.51 | 5.50 | 3.43 | 0.69 | 4.12 |
| Headline earnings for the financial year(1) |
||||||
| Basic earnings per share | 4.10 | 0.08 | 4.18 | 3.42 | 0.15 | 3.57(2) |
| Diluted earnings per share | 4.04 | 0.08 | 4.12 | 3.34 | 0.15 | 3.49(2) |
| Underlying earnings for the financial year(1) |
||||||
| Basic earnings per share | 4.18 | 0.22 | 4.40 | 3.42 | 0.31 | 3.73 |
| Diluted earnings per share | 4.13 | 0.21 | 4.34 | 3.34 | 0.30 | 3.64 |
(1) Basic and diluted earnings per share are shown based on headline earnings, a Johannesburg Stock Exchange Limited defined performance measure, and underlying earnings, which the directors believe to be a useful additional measure of the Group’s performance. Both earnings measures are further explained below.
(2) Comparatives have been adjusted to comply with revised guidance on headline earnings.
The calculation of the basic and diluted earnings per share is based on the following data:
| 2007 | 2006 | |||||
|---|---|---|---|---|---|---|
| US$ million (unless otherwised stated) |
Continuing operations | Discontinued operations | Total Group | Continuing operations | Discontinued operations | Total Group |
| Earnings | ||||||
| Basic earnings, being profit for the financial year attributable to equity shareholders of the Company | 5,294 | 2,010 | 7,304 | 5,149 | 1,037 | 6,186 |
| Effect of dilutive potential ordinary shares | ||||||
| Interest on convertible bonds (net of tax) | – | – | – | 4 | – | 4 |
| Unwinding of discount on convertible bonds (net of tax) | – | – | – | 3 | – | 3 |
| Diluted earnings | 5,294 | 2,010 | 7,304 | 5,156 | 1,037 | 6,193 |
| Number of shares (million) | ||||||
| Basic number of ordinary shares outstanding(1) | 1,309 | 1,468 | ||||
| Effect of dilutive potential ordinary shares(2) |
||||||
| Share options | 18 | 23 | ||||
| Convertible bonds | – | 13 | ||||
| Diluted number of ordinary shares outstanding(1) | 1,327 | 1,504 | ||||
(1) Basic and diluted number of ordinary shares outstanding represent the weighted average for the year. The average number of ordinary shares in issue excludes the shares held by the employee benefit trusts and other Anglo American shares held by the Group.
(2) Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary shares. All outstanding share options and awards are potentially dilutive and have been included in the calculation of diluted earnings per share. No instruments are anti-dilutive for the year ended 31 December 2007 (2006: nil).
The weighted average number of ordinary shares, and accordingly earnings per share, of the Group have been impacted by the effect of the share buyback programme as well as the Anglo American share consolidation which on 2 July 2007 resulted in 100 existing Anglo American ordinary shares being exchanged for 91 new Anglo American ordinary shares.
‘Underlying earnings’ is an alternative earnings measure, which the directors believe provides a clearer picture of the underlying financial performance of the Group’s operations. Underlying earnings is presented after minority interests and excludes special items and remeasurements (see note 7). Underlying earnings is distinct from ‘Headline earnings’, which is a Johannesburg Stock Exchange Limited defined performance measure.
The calculation of basic and diluted earnings per share for continuing operations, based on headline and underlying earnings for continuing operations, uses the following earnings data:
| Earnings (US$ million) | Basic earnings per share (US$) | |||
|---|---|---|---|---|
| Continuing operations | 2007 | 2006(1) | 2007 | 2006(1) |
| Profit for the financial year attributable to equity shareholders of the Company – continuing operations | 5,294 | 5,149 | 4.04 | 3.51 |
| Operating special items | 196 | 409 | 0.15 | 0.28 |
| Operating special items – tax | (54) | (86) | (0.04) | (0.06) |
| Operating special items – minority interests | – | (1) | – | – |
| Financing special items | – | 4 | – | – |
| Net profit on disposals(2) | (528) | (299) | (0.40) | (0.20) |
| Net profit on disposals – tax | 71 | 8 | 0.05 | – |
| Net profit on disposals – minority interests | (34) | (7) | (0.02) | – |
| Associates’ special items | 418 | (182) | 0.32 | (0.12) |
| Associates’ special items – tax | – | 22 | – | 0.01 |
| Headline earnings for the financial year – continuing operations | 5,363 | 5,017 | 4.10 | 3.42 |
| Operating special items(3) | 55 | 15 | 0.04 | 0.01 |
| Operating special items – tax | (6) | (2) | – | – |
| Operating remeasurements | (5) | (18) | – | (0.01) |
| Operating remeasurements – tax | 1 | – | – | – |
| Financing remeasurements | (29) | (43) | (0.02) | (0.03) |
| Financing remeasurements – tax | 5 | – | – | – |
| Associates’ remeasurements | 7 | (18) | – | (0.01) |
| Associates’ special items(4) | 20 | 34 | 0.01 | 0.02 |
| Associates’ special items – tax | (2) | – | – | – |
| IFRS 2 charges on BBBEE and BEE transactions | 68 | 34 | 0.05 | 0.02 |
| Underlying earnings for the financial year – continuing operations | 5,477 | 5,019 | 4.18 | 3.42 |
(1) Comparatives have been reclassified to comply with revised guidance on headline earnings.
(2) Excluding associated IFRS 2 charges on BBBEE and BEE transactions.
(3) Includes costs associated with proposed sale of Tarmac and restructuring costs.
(4) Includes restructuring costs and legal settlements.
The calculation of basic and diluted earnings per share for discontinued operations, based on headline and underlying earnings for discontinued operations, uses the following earnings data:
| Earnings (US$ million) | Basic earnings per share (US$) | |||
|---|---|---|---|---|
| Discontinued operations | 2007 | 2006 | 2007 | 2006 |
| Profit for the financial year attributable to equity shareholders of the Company – discontinued operations | 2,010 | 1,037 | 1.54 | 0.70 |
| Operating special items | 13 | 100 | 0.01 | 0.07 |
| Operating special items – tax | (2) | (26) | – | (0.02) |
| Operating special items – minority interests | – | (1) | – | – |
| Financing special items | 2 | – | – | – |
| Financing special items – tax | (8) | – | (0.01) | – |
| Net profit on disposals | (2,079) | (903) | (1.59) | (0.62) |
| Net profit on disposals – tax | 165 | 24 | 0.13 | 0.02 |
| Associates’ special items | 1 | (13) | – | – |
| Associates’ special items – tax | 2 | 3 | – | – |
| Headline earnings for the financial year – discontinued operations | 104 | 221 | 0.08 | 0.15 |
| Operating remeasurements | (3) | 362 | – | 0.25 |
| Operating remeasurements – tax | 1 | (42) | – | (0.03) |
| Operating remeasurements – minority interests | – | (159) | – | (0.11) |
| Financing remeasurements | (2) | 39 | – | 0.03 |
| Financing remeasurements – tax | – | 1 | – | – |
| Financing remeasurements – minority interests | – | (21) | – | (0.01) |
| Associates’ remeasurements | 204 | 77 | 0.16 | 0.05 |
| Associates’ remeasurements – tax | (20) | (26) | (0.02) | (0.02) |
| Underlying earnings for the financial year – discontinued operations | 284 | 452 | 0.22 | 0.31 |