Notes to the consolidated financial statements – analysis of items in the primary statements

1. Segmental analysis	10. Earnings per share	19. Trade and other receivables
2. Other operating income	11. Goodwill	20. Cash and cash equivalents
3. Operating costs	12. Other intangible assets	21. Borrowings
4. Exceptional items, remeasurements and stranded cost recoveries	13. Property, plant and equipment	22. Trade and other payables
5. Pensions and other post-retirement benefits	14. Other non-current assets	23. Other non-current liabilities
6. Finance income and costs	15. Financial and other investments	24. Provisions
7. Taxation	16. Deferred tax assets and liabilities	25. Share capital
8. Discontinued operations	17. Derivative financial instruments	26. Reconciliation of movements in total equity
9. Dividends	18. Inventories and current intangible assets	27. Consolidated cash flow statement

10. Earnings per share

Earnings per ordinary share have been calculated by dividing the profit for the year attributable to equity shareholders of the parent company by the weighted average number of ordinary shares in issue during the year.

Adjusted earnings per share, excluding exceptional items, remeasurements and stranded cost recoveries, are provided to reflect the business performance subtotals used by the Company as described in accounting policy T. For further details of exceptional items, remeasurements and stranded cost recoveries, refer to note 4.

Diluted earnings per share have been calculated by dividing the net profit attributable to ordinary equity shareholders by the diluted weighted average number of ordinary shares outstanding during the year, adjusted to reflect the dilutive effect of the employee share plan.

(a) Basic earnings per share

	Earnings 2008 £m	Earnings per share 2008 pence	Earnings 2007 £m	Earnings per share 2007 pence	Earnings 2006 £m	Earnings per share 2006 pence
Adjusted earnings – continuing operations*	1,253	48.0	1,042	38.3	998	35.2
Exceptional items after taxation	(2)	(0.1)	(41)	(1.5)	(61)	(2.2)
Commodity contract remeasurements after taxation	133	5.1	37	1.3	(38)	(1.3)
Derivative financial instruments remeasurements after taxation	(35)	(1.3)	16	0.6	(11)	(0.4)
Stranded cost recoveries after taxation*	229	8.8	254	9.4	293	10.3
Earnings – continuing operations	1,578	60.5	1,308	48.1	1,181	41.6
Adjusted earnings – discontinued operations	28	1.1	104	3.8	77	2.7
Gain on disposal of operations after taxation	1,582	60.6	–	–	2,605	91.8
Other exceptional items and remeasurements	8	0.3	(18)	(0.6)	(15)	(0.5)
Earnings – discontinued operations	1,618	62.0	86	3.2	2,667	94.0
Earnings	3,196	122.5	1,394	51.3	3,848	135.6

	2008 millions	2007 millions	2006 millions
Weighted average number of shares – basic	2,609	2,719	2,837

*Comparatives have been adjusted to present items on a basis consistent with the current year classification

(b) Diluted earnings per share

	Earnings 2008 £m	Earnings per share 2008 pence	Earnings 2007 £m	Earnings per share 2007 pence	Earnings 2006 £m	Earnings per share 2006 pence
Adjusted diluted earnings – continuing operations*	1,253	47.8	1,042	38.1	998	35.0
Exceptional items after taxation	(2)	(0.1)	(41)	(1.5)	(61)	(2.2)
Commodity contract remeasurements after taxation	133	5.0	37	1.3	(38)	(1.3)
Derivative financial instruments remeasurements after taxation	(35)	(1.3)	16	0.6	(11)	(0.4)
Stranded cost recoveries after taxation*	229	8.7	254	9.3	293	10.3
Diluted earnings – continuing operations	1,578	60.1	1,308	47.8	1,181	41.4
Adjusted diluted earnings – discontinued operations	28	1.1	104	3.8	77	2.7
Gain on disposal of operations after taxation	1,582	60.3	–	–	2,605	91.4
Other exceptional items and remeasurements	8	0.3	(18)	(0.7)	(15)	(0.5)
Diluted earnings – discontinued operations	1,618	61.7	86	3.1	2,667	93.6
Diluted earnings	3,196	121.8	1,394	50.9	3,848	135.0

	2008 millions	2007 millions	2006 millions
Weighted average number of shares – diluted	2,624	2,737	2,851

*Comparatives have been adjusted to present items on a basis consistent with the current year classification

(c) Reconciliation of basic to diluted average number of shares

	2008 millions	2007 millions	2006 millions
Weighted average number of ordinary shares – basic	2,609	2,719	2,837
Effect of dilutive potential ordinary shares – employee share plan	15	18	14
Weighted average number of ordinary shares – diluted	2,624	2,737	2,851

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