Notes to the consolidated financial statements

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 2009 £m	Earnings per share 2009 pence	Earnings 2008* £m	Earnings per share 2008* pence	Earnings 2007 £m	Earnings per share 2007 pence
Adjusted earnings – continuing operations			1,250	50.9	1,247	47.8	1,042	38.3
Exceptional items after taxation			(247)	(10.1)	(2)	(0.1)	(41)	(1.5)
Commodity contract remeasurements after taxation			(266)	(10.8)	133	5.1	37	1.3
Derivative financial instrument remeasurements after taxation			(74)	(3.0)	(35)	(1.3)	16	0.6
Stranded cost recoveries after taxation			256	10.4	229	8.8	254	9.4
Earnings – continuing operations			919	37.4	1,572	60.3	1,308	48.1
Adjusted earnings – discontinued operations			9	0.4	28	1.1	104	3.8
Gain on disposal of operations after taxation			16	0.7	1,582	60.6	–	–
Other exceptional items and remeasurements			–	–	8	0.3	(18)	(0.6)
Earnings – discontinued operations			25	1.1	1,618	62.0	86	3.2
Earnings			944	38.5	3,190	122.3	1,394	51.3
			2009 millions		2008 millions		2007 millions
Weighted average number of shares – basic			2,455		2,609		2,719

*

Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of KeySpan Corporation (see note 28)

(b) Diluted earnings per share

			Earnings 2009 £m	Earnings per share 2009 pence	Earnings 2008* £m	Earnings per share 2008* pence	Earnings 2007 £m	Earnings per share 2007 pence
Adjusted diluted earnings – continuing operations			1,250	50.6	1,247	47.5	1,042	38.1
Exceptional items after taxation			(247)	(10.1)	(2)	(0.1)	(41)	(1.5)
Commodity contract remeasurements after taxation			(266)	(10.8)	133	5.1	37	1.3
Derivative financial instrument remeasurements after taxation			(74)	(3.0)	(35)	(1.3)	16	0.6
Stranded cost recoveries after taxation			256	10.4	229	8.7	254	9.3
Diluted earnings – continuing operations			919	37.1	1,572	59.9	1,308	47.8
Adjusted diluted earnings – discontinued operations			9	0.4	28	1.1	104	3.8
Gain on disposal of operations after taxation			16	0.7	1,582	60.3	–	–
Other exceptional items and remeasurements			–	–	8	0.3	(18)	(0.7)
Diluted earnings – discontinued operations			25	1.1	1,618	61.7	86	3.1
Diluted earnings			944	38.2	3,190	121.6	1,394	50.9
			2009 millions		2008 millions		2007 millions
Weighted average number of shares – diluted			2,472		2,624		2,737

*

Comparatives have been restated for the finalisation of the fair value exercise on the acquisition of KeySpan Corporation (see note 28)

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

		2009 millions	2008 millions	2007 millions
Weighted average number of ordinary shares – basic		2,455	2,609	2,719
Effect of dilutive potential ordinary shares – employee share plan		17	15	18
Weighted average number of ordinary shares – diluted		2,472	2,624	2,737

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