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Notes to the financial statements

12. Earnings per share

US$ 2009 2008
Profit for the financial year attributable to equity shareholders of the Company    
Basic earnings per share 2.02 4.34
Diluted earnings per share 1.98 4.29
Headline earnings for the financial year(1)    
Basic earnings per share 2.46 3.78
Diluted earnings per share 2.40 3.74
Underlying earnings for the financial year(1)    
Basic earnings per share 2.14 4.36
Diluted earnings per share 2.10 4.31
(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:

US$ million (unless otherwise stated) 2009 2008
Earnings
Basic earnings, being profit for the financial year attributable to equity shareholders of the Company
2,425 5,215
Effect of dilutive potential ordinary shares    
Interest paid on convertible bond (net of tax) 32 -
Unwinding of discount on convertible bond (net of tax) 28 -
Diluted earnings 2,485 5,215
Number of shares (million)    
Basic number of ordinary shares outstanding(1) 1,202 1,202
Effect of dilutive potential ordinary shares(2)    
Share options and awards 11 13
Convertible bond 40 -
Diluted number of ordinary shares outstanding(1) 1,253 1,215
(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 shares held by employee benefit trusts and Anglo American plc shares held by Group companies.
(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.

In the year ended 31 December 2009 there were 231,351 share options which were potentially dilutive but have not been included in the calculation of diluted earnings per share because they were anti-dilutive. In the year ended 31 December 2008 no share options were anti-dilutive.

In the year ended 31 December 2008 share buybacks took place which had an impact on the weighted average number of ordinary shares at 31 December 2008.

In April 2009 the Group issued $1.7 billion of senior convertible notes. The senior convertible notes were issued with a coupon of 4%, a conversion price of £18.6370 and unless redeemed, converted or cancelled, will mature in 2014. The Group will have the option to call the senior convertible notes after three years from the issuance date subject to certain conditions.

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, based on Headline and Underlying earnings, uses the following earnings data:

  Earnings
(US$ million)
  Basic earnings per share
(US$)
  2009 2008   2009 2008
Profit for the financial year attributable to equity shareholders of the Company 2,425 5,215   2.02 4.34
Operating special items 1,908 209   1.59 0.17
Operating special items - tax (66) (27)   (0.05) (0.02)
Operating special items - minority interests (100) (1)   (0.08) -
Net profit on disposals (1,612) (1,009)   (1.34) (0.84)
Net profit on disposals - tax 76 47   0.06 0.04
Net profit on disposals - minority interests 66 43   0.05 0.04
Associates' special items 259 67   0.21 0.05
Associates' special items - tax (1) (1)   - -
Associates' special items - minority interests (2) (2)   - -
Headline earnings for the financial year 2,953 4,541   2.46 3.78
Operating special items(1) 367 143   0.30 0.12
Operating special items - tax (41) (15)   (0.03) (0.01)
Operating special items - minority interests (7) -   (0.01) -
Operating remeasurements (638) 779   (0.53) 0.65
Operating remeasurements - tax 207 (252)   0.17 (0.21)
Operating remeasurements - minority interests (2) (135)   - (0.11)
Financing remeasurements 134 (51)   0.11 (0.04)
Financing remeasurements - tax (2) -   - -
Financing remeasurements - minority interests 2 -   - -
Tax special item 107 -   0.09 -
Tax special item - minority interest (32) -   (0.03) -
Tax remeasurements (469) 153   (0.39) 0.12
Tax remeasurements - minority interests 12 (52)   0.01 (0.04)
Associates' special items(2) 72 40   0.06 0.03
Associates' special items - tax (2) (7)   - (0.01)
Associates' special items - minority interests (7) (5)   (0.01) -
Associates' remeasurements (102) 116   (0.08) 0.10
Associates' remeasurements - tax 9 (9)   0.01 (0.01)
Associates' remeasurements - minority interests 8 (9)   0.01 (0.01)
Underlying earnings for the financial year 2,569 5,237   2.14 4.36
(1)
Year ended 31 December 2009 includes costs associated with 'One Anglo' initiatives, restructuring costs, bid defence costs and provisions for onerous contracts (2008: includes costs associated with 'One Anglo' initiatives, restructuring costs and costs associated with proposed sale of Tarmac and provisions for onerous contracts).
(2)
Year ended 31 December 2009 includes restructuring costs and the tax special item (2008: includes restructuring costs and legal settlements).

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Annual Report 2009