Annual Reports & Accounts 2011

14 Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to the equity holders of the Company by the weighted average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as treasury shares (Note 27).

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For the free share awards, options under executive share option plan and performance share plan, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share awards/options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share awards/options.

	2011 USD’000	2010 USD’000
The calculations of earnings per share are based on the following profit and numbers of shares:
Profit for the year	63,290	65,227
Weighted average number of shares for basic earnings per share	238,329,508	215,901,261
Adjustments for:
Assumed exercise of free share awards	–	763,842
Assumed vesting of executive share options	445,443	411,526
Assumed vesting of performance share plan	361,723	140,844
Weighted average number of shares for diluted earnings per share	239,136,674	217,217,473
Weighted average number of shares for basic earnings per share (previously reported)	–	198,987,337
Impact of bonus element of the rights issue	–	16,913,924
Weighted average number of shares for basic earnings per share (revised)	–	215,901,261
Earnings per share:
Basic	26.56c	30.21c
Diluted	26.47c	30.03c

On 19 May 2011, the Company announced a rights issue of three shares for every 10 shares held at a discounted price of 232 pence per share resulting in the issue of 60,083,792 new ordinary shares. The calculation of the weighted average number of ordinary shares for the current year was affected by the issue of the new ordinary shares. The Group has treated the discount element of the rights issue as if it was a bonus issue, using the theoretical ex-rights price of 324 pence per share. The effect of this is to increase the weighted average number of shares reported in the prior year, with a resulting reduction in the reported basic and diluted earnings per share for the previous year. The adjustment factor, to effect the increase in the weighted average number of shares, has been calculated by dividing the share price immediately before the shares were quoted ex-rights (351.3 pence) with the theoretical ex-rights price (323.77 pence), giving an adjustment factor of 1.085. These adjustments to the comparative earnings per share calculations do not impact the previously reported consolidated income statement or consolidated balance sheet.