Note 11 - Earnings per share and adjusted profit on ordinary activities before taxation
a) Earnings per share
| Weighted | Weighted | (Loss)/ | (Loss)/ | Weighted | |||||
| Earnings | Profit | average | Earnings | Profit | average | earnings | profit | average | |
| per | for the | number | per | for the | number | per | for the | number | |
| share | year | shares | share | year | shares | share | year | shares | |
| 2004 | 2004 | 2004 | 2003 | 2003 | 2003 | 2002 | 2002 | 2002 | |
| pence | £m | million | pence | £m | million | pence | £m | million | |
 | |||||||||
| Basic, including exceptional | |||||||||
| items and goodwill amortisation | 35.8 | 1,099 | 3,070 | 12.7 | 391 | 3,078 | (11.3) | (321) | 2,832 |
| Exceptional operating items (note 4(a)) | 9.0 | 277 | – | 11.3 | 347 | – | 46.9 | 1,327 | – |
| Exceptional non-operating items (note 4(b)) | (10.4) | (322) | – | 3.2 | 99 | – | (5.5) | (156) | – |
| Exceptional financing charge (note 4(c)) | – | – | – | 1.0 | 31 | – | 5.0 | 142 | – |
| Exceptional tax credit (note 4(d)) | (2.9) | (89) | – | (4.1) | (128) | – | (5.9) | (166) | – |
| Exceptional minority interests (note 4(e)) | – | – | – | 0.9 | 28 | – | (1.8) | (50) | – |
| Goodwill amortisation | 3.2 | 99 | – | 3.3 | 102 | – | 3.4 | 97 | – |
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| Adjusted basic, excluding exceptional | |||||||||
| items and goodwill amortisation | 34.7 | 1,064 | 3,070 | 28.3 | 870 | 3,078 | 30.8 | 873 | 2,832 |
| Dilutive impact of employee share options | (0.1) | – | 7 | (0.1) | – | 10 | (0.2) | – | 21 |
| Dilutive impact of 4.25% Exchangeable Bonds | n/a | n/a | n/a | (0.3) | 22 | 110 | (0.4) | 22 | 110 |
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| Adjusted diluted, excluding exceptional | |||||||||
| items and goodwill amortisation | 34.6 | 1,064 | 3,077 | 27.9 | 892 | 3,198 | 30.2 | 895 | 2,963 |
| Exceptional operating items (note 4(a)) | (9.0) | (277) | – | (10.9) | (347) | – | (44.8) | (1,327) | – |
| Exceptional non-operating items (note 4(b)) | 10.4 | 322 | – | (3.1) | (99) | – | 5.3 | 156 | – |
| Exceptional financing charge (note 4(c)) | – | – | – | (1.0) | (31) | – | (4.8) | (142) | – |
| Exceptional tax credit (note 4(d)) | 2.9 | 89 | – | 4.0 | 128 | – | 5.6 | 166 | – |
| Exceptional minority interest (note 4(e)) | – | – | – | (0.9) | (28) | – | 1.7 | 50 | – |
| Goodwill amortisation | (3.2) | (99) | – | (3.2) | (102) | – | (3.3) | (97) | – |
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| Diluted, including exceptional | |||||||||
| items and goodwill amortisation | 35.7 | 1,099 | 3,077 | 12.8 | 413 | 3,198 | (10.1) | (299) | 2,963 |
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Earnings per ordinary share, excluding exceptional items and goodwill amortisation, are provided in order to reflect the underlying performance of the Group.
In respect of the years ended 31 March 2003 and 31 March 2002, the potential ordinary shares that related to the 4.25% Exchangeable Bonds were dilutive as they decreased earnings from continuing operations. Consequently, the diluted earnings per share were higher than basic earnings per share for these years because of the effect of losses that arose from discontinued operations.
b) Adjusted profit on ordinary activities before taxation
The following table reconciles profit before taxation on ordinary activities to adjusted profit on ordinary activities before taxation. Adjusted profit on ordinary activities before taxation excludes exceptional items and goodwill amortisation and is provided to reflect the underlying pre-tax performance of the Group.
| 2004 | 2003 | 2002 | |
| £m | £m | £m | |
| |||
| Profit/(loss) on ordinary activities before taxation | 1,362 | 667 | (284) |
| Exceptional operating items (note 4(a)) | 277 | 347 | 1,327 |
| Exceptional non-operating items (note 4(b)) | (322) | 99 | (156) |
| Exceptional financing charge (note 4(c)) | – | 31 | 142 |
| Goodwill amortisation | 99 | 102 | 97 |
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| Adjusted profit on ordinary activities before taxation | 1,416 | 1,246 | 1,126 |
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