The Group seeks to present a measure of underlying performance that excludes items considered to be non-operating in nature. Underlying profit excludes the net impact of financing costs related to post-retirement benefits as well as unrealised amounts arising from revaluations required by IAS 32 and IAS 39, and includes the realised amounts arising from settled derivative hedging transactions. The calculation of underlying profit and underlying earnings per share is shown below.
Basic earnings per ordinary share of 57.32p (2005 20.11p) are calculated by dividing the profit attributable to ordinary shareholders of £998m (2005 £350m) by 1,741 million (2005 1,740 million) ordinary shares, being the average number of ordinary shares in issue during the period, excluding own shares held under trust, which have been treated as if they had been cancelled.
Diluted earnings per ordinary share of 55.14p (2005 19.31p) are calculated by dividing the profit attributable to ordinary shareholders of £998m (2005 £350m) by 1,810 million (2005 1,813 million) ordinary shares, being 1,741 million (2005 1,740 million) as above, adjusted by the bonus element of share options of 69 million (2005 73 million).
| 2006 | 2005 | ||||
|---|---|---|---|---|---|
| Pence | £m | Pence | £m | ||
| Earnings per ordinary share/Profit attributable to equity holders of the parent | 57.32 | 998 | 20.11 | 350 | |
| Release of transition hedging reserve | (16.60) | (289) | (25.97) | (452) | |
| Realised gains on settled derivative contracts | 21.25 | 370 | 22.76 | 396 | |
| Realised gains carried forward in contract balances | (1.55) | (27) | (1.84) | (32) | |
| Net unrealised fair value changes to derivative contracts | (41.93) | (730) | 19.83 | 345 | |
| Unrealised gains recognised in contract balances | 1.61 | 28 | (2.41) | (42) | |
| Revaluation of trading assets and liabilities | 0.23 | 4 | (4.49) | (78) | |
| Financial RRSPs – foreign exchange differences and changes in forecast payments | (2.24) | (39) | (1.72) | (30) | |
| Net post-retirement scheme financing (income)/costs | (0.17) | (3) | 0.52 | 9 | |
| Related tax effect | 11.89 | 207 | (2.31) | (40) | |
| Underlying earnings per ordinary share/Underlying profit attributable to equity holders of the parent | 29.81 | 519 | 24.48 | 426 | |