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12. Earnings per share

  2008 2007
US$ Continuing operations Discontinued operations Total Group Continuing operations Discontinued operations Total Group
Profit for the financial year attributable to
equity shareholders of the Company
Basic earnings per share 4.34 4.34 4.04 1.54 5.58
Diluted earnings per share 4.29 4.29 3.99 1.51 5.50
Headline earnings for the financial year(1)
Basic earnings per share 3.78 3.78 4.10 0.08 4.18
Diluted earnings per share 3.74 3.74 4.04 0.08 4.12
Underlying earnings for the financial year(1)
Basic earnings per share 4.36 4.36 4.18 0.22 4.40
Diluted earnings per share 4.31 4.31 4.13 0.21 4.34
(1)
Basic and diluted earnings per share are shown based on headline earnings, a Johannesburg stock exchange (JSE Limited) defined performance measure, and underlying earnings, which the directors consider to be a useful additional measure of the Group's performance. Both earnings measures are further explained below.

The calculation of the basic and diluted earnings per share is based on the following data:

  2008 2007
US$ million (unless otherwise stated) Continuing operations Discontinued operations Total Group Continuing operations Discontinued operations Total Group
Basic and diluted earnings
Profit for the financial year attributable to
equity shareholders of the Company
5,215 5,215 5,294 2,010 7,304
Number of shares (million)
Basic number of ordinary shares outstanding(1)     1,202     1,309
Effect of dilutive potential
ordinary shares(2)
Share options and awards     13     18
Diluted number of ordinary
shares outstanding
(1)
    1,215     1,327
(1)
Basic and diluted number of ordinary shares outstanding represent the weighted average for the year. The average number of ordinary shares in issue excludes the shares held by the employee benefit trusts and other Anglo American plc shares held by the Group.
(2)
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary shares. All outstanding share options and awards are potentially dilutive and have been included in the calculation of diluted earnings per share. No instruments are anti-dilutive for the year ended 31 December 2008 (2007: nil).

The weighted average number of ordinary shares, and accordingly earnings per share, of the Group have been impacted by the effect of the share buyback programme as well as the Anglo American share consolidation which on 2 July 2007 resulted in 100 existing Anglo American ordinary shares being exchanged for 91 new Anglo American ordinary shares.

‘Underlying earnings' is an alternative earnings measure which the directors believe provides a clearer picture of the underlying financial performance of the Group's operations. Underlying earnings is presented after minority interests and excludes special items and remeasurements (see note 7). Underlying earnings is distinct from ‘Headline earnings', which is a JSE Limited defined performance measure.

The calculation of basic and diluted earnings per share for continuing operations, based on headline and underlying earnings for continuing operations, uses the following earnings data:

  Earnings (US$ million) Basic earnings per share (US$)
Continuing operations 2008 2007 2008 2007
Profit for the financial year attributable
to equity shareholders of the Company – continuing operations
5,215 5,294 4.34 4.04
Operating special items 209 196 0.17 0.15
Operating special items – tax (27) (54) (0.02) (0.04)
Operating special items – minority interests (1)
Net profit on disposals(1) (1,009) (528) (0.84) (0.40)
Net profit on disposals – tax 47 71 0.04 0.05
Net profit on disposals – minority interests 43 (34) 0.04 (0.02)
Associates' special items 67 418 0.05 0.32
Associates' special items – tax (1)
Associates' special items – minority interests (2)
Headline earnings for the financial year(2) – continuing operations 4,541 5,363 3.78 4.10
Operating special items(3) 143 55 0.12 0.04
Operating special items – tax (15) (6) (0.01)
Operating remeasurements 779 (5) 0.65
Operating remeasurements – tax (252) 1 (0.21)
Operating remeasurements – minority interests (135) (0.11)
Financing remeasurements (51) (29) (0.04) (0.02)
Financing remeasurements – tax 5
Tax remeasurements 153 0.12
Tax remeasurements – minority interests (52) (0.04)
Associates' remeasurements 116 7 0.10
Associates' remeasurements – tax (9) (0.01)
Associates' remeasurements – minority interests (9) (0.01)
Associates' special items(4) 40 20 0.03 0.01
Associates' special items – tax (7) (2) (0.01)
Associates' special items – minority interests (5)
IFRS 2 charges on BBBEE and BEE transactions 68 0.05
Underlying earnings for the financial year –
continuing operations
5,237 5,477 4.36 4.18
Underlying earnings for the financial year –
discontinued operations
284 0.22
Underlying earnings for the financial year –
total Group
5,237 5,761 4.36 4.40
(1)
Excluding associated IFRS 2 charges on BBBEE and BEE transactions.
(2)
Headline earnings for the financial year – total Group was $4,541 million (2007: $5,467 million).
(3)
Year ended 31 December 2008 includes costs associated with ‘One Anglo' initiatives, Tarmac restructuring and proposed sale of Tarmac as well as provisions for onerous leases. Year ended 31 December 2007 includes costs associated with proposed sale of Tarmac.
(4)
Includes restructuring costs and legal settlements.

The calculation of basic and diluted earnings per share for discontinued operations, based on headline and underlying earnings for discontinued operations, uses the following earnings data:



Earnings (US$ million)
Basic earnings per share (US$)
Discontinued operations 2008 2007 2008 2007
Profit for the financial year attributable
to equity shareholders of the Company – discontinued operations 

2,010

1.54
Operating special items 13 0.01
Operating special items – tax (2)
Financing special items 2
Financing special items – tax (8) (0.01)
Net profit on disposals (2,079) (1.59)
Net profit on disposals – tax 165 0.13
Associates' special items 1
Associates' special items – tax 2
Headline earnings for the financial year –
discontinued operations
104 0.08
Operating remeasurements (3)
Operating remeasurements – tax 1
Financing remeasurements (2)
Associates' remeasurements 204 0.16
Associates' remeasurements – tax (20) (0.02)
Underlying earnings for the financial year –
discontinued operations
284 0.22

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