Setting new standards - Friends Life

FINANCIAL STATEMENTS
IFRS FINANCIAL STATEMENTS
EEV SUPPLEMENTARY INFORMATION
Notes to the consolidated accounts continued
15. Earnings per share
(a) Basic and underlying earnings per share from continuing operations
Earnings per share have been calculated based on the profit after tax and on the underlying profit after tax, attributable to ordinary
shareholders of the parent. The directors consider that the underlying earnings per share figure gives a better indication of operating
performance.
2006 2006 2005 2005
Earnings Per share Earnings Per share
£m pence £m pence
Profit after tax attributable to ordinary shareholders of the parent 276 13.1 132 6.3
Short-term fluctuations in investment return 39 1.8 (102) (4.9)
Variation in value of option on convertible debt - - 9 0.4
Non-recurring items 17 0.8 59 2.8
Amortisation and impairment of acquired intangible assets 133 6.3 203 9.8
Minority interest on items excluded from underlying profit (40) (1.9) (72) (3.4)
Tax credit on items excluded from underlying profit (48) (2.2) (46) (2.2)
Underlying profit after tax attributable to ordinary
shareholders of the parent 377 17.9 183 8.8
(b) Diluted basic earnings per share from continuing operations
2006 2005
Weighted
Weighted
average
average
number of
number of
2006 ordinary 2006 2005 ordinary 2005
Earnings shares Per share Earnings shares Per share
£m millions pence £m millions pence
Profit after tax attributable to ordinary
shareholders of the parent 276 2,111 13.1 132 2,082 6.3
Dilution (c) 16 164 (0.3) - 15 -
Diluted profit after tax attributable to
ordinary shareholders of the parent 292 2,275 12.8 132 2,097 6.3
(c) Dilution
Options over 32,816,922 (2005: 47,707,385) shares are outstanding under the Company’s option schemes as at 31 December 2006. Of
these, 24,239,504 (2005: 32,319,827) options were not dilutive for the period shown because the market price of the Company’s shares
was below the option price or the performance criteria were not met.
There were £283m (2005: £276m) bonds in issue, convertible to ordinary shares at any time on or after 27 December 2005. If all these
bonds were converted at 31 December 2006, 133,640,553 new shares would be issued. This has a dilutive impact on earnings per share
in 2006 (2005: no dilutive impact).
The calculation of diluted earnings per share also includes an allocation of shares in respect of the final earn-out payment for the Lombard
acquisition.
(d) Earnings per share from discontinued operations
Discontinued operations have no impact on profit after tax attributable to equity holders of the parent. Earnings per share from discontinued
operations was £nil in both years.
120 Friends Provident Annual Report & Accounts 2006