Notes to the accounts

9 Earnings per share

Basic earnings per share are calculated by dividing the profit for the period attributable to equity shareholders of the Parent Company by the average number of ordinary shares in issue during the period.

	Period ended 31 July 2007 £m	Period ended 5 August 2006 £m
Profit/(loss) for the period
– continuing	202.9	(102.7)
– total	1,728.1	24.2
Average number of shares in issue during the period	549,153,733	565,359,484

Diluted earnings per share are calculated by dividing the profit attributable to ordinary shareholders by 556,934,401 (2006: 565,359,484) ordinary shares, being the average number of ordinary shares in issue during the period adjusted by the dilutive effect of share options. At 5 August 2006 options over 4,374,076 shares were not included in the diluted earnings per share calculation because their effect was anti-dilutive for continuing operations.

A reconciliation of basic and headline earnings per share for continuing operations is as follows:

	Period ended 31 July 2007		Period ended 5 August 2006
	£m	EPS (p)	£m	EPS (p)
Profit/(loss) attributable to equity shareholders of the Parent Company	202.9	36.9	(102.7)	(18.2)
Exclude
– exceptional operating items (note 4)	98.2		12.8
– (profit on sale)/impairment of financial asset	(24.0)		325.0
– amortisation of acquired intangible assets	14.8		13.0
– financing gains – charged to administrative expenses	1.5		2.7
– charged to financing	(2.1)		(0.5)

	88.4		353.0
– less tax	(33.3)		(15.4)
	55.1	10.1	337.6	59.7
Headline	258.0	47.0	234.9	41.5
Headline EPS – diluted (p)		46.3		41.5

Smiths Group divisions:
Smiths Detection, Smiths Medical, Smiths Specialty Engineering