Annual report and financial statements 2009
Report tools
Notes to the Group financial statements
52 weeks ended 1 February 2009
1 Underlying earnings
The Directors consider that underlying earnings per share measures referred to in the Chairman’s statement, CEO’s review and Financial review provide additional useful information for shareholders on underlying trends and performance. The adjustments are made to reported profit to (a) remove potential income statement volatility within net pension interest; (b) remove profits arising on property transactions since these profits do not form part of the Group’s principal activities; and (c) normalise the tax charge as required.
In the current period, we have used the actual tax charge as the difference between the actual tax charge and a normalised charge is not significant. In the prior period, an effective tax rate of 32% was applied, being an estimated normalised tax rate, since the prior period’s effective tax rate was considerably lower than the prevailing rate due to the reasons set out in note 6.
| 2009 £m |
2008 £m |
|
|---|---|---|
| Profit after tax | 460 | 554 |
| Add back: tax charge for the period1 | 195 | 58 |
| Profit before tax | 655 | 612 |
| Adjustments for: | ||
| – Net pension interest income (note 5)1 | (17) | (17) |
| – Profits arising on property transactions1 | (2) | (32) |
| Underlying earnings before tax | 636 | 563 |
| Taxation (2008: normalised tax rate of 32%)1 | (195) | (180) |
| Underlying earnings after tax charge | 441 | 383 |
Underlying earnings per share (pence) |
||
| – basic (refer to note 7(b)) | 16.67 | 14.38 |
| – diluted (refer to note 7(b)) | 16.45 | 14.29 |
- Adjustments marked 1 equal £19m (2008: £171m) as shown in the reconciliation of earnings disclosed in note 7(b).