8 Basic and diluted earnings per share

Basic and diluted earnings per share are calculated on the profit on ordinary activities after taxation and on the weighted average number of shares in issue during the year as shown below:

		2004		2003
		Weighted average number of shares m	Profit after taxation £m	Weighted average number of shares m	Profit after taxation Restated £m
Earnings per share	– Basic	488.1	171.5	512.5	140.6
	– Diluted	519.0	179.3	554.0	150.3
Adjusted earnings per share	– Basic	488.1	180.6	512.5	141.7
	– Diluted	519.0	188.4	554.0	151.4

The weighted average number of shares reflects the redemption in June 2002 of the 61/2% Convertible Bonds 2007 and the impact of shares purchased and cancelled. The weighted average number of shares used for calculating diluted earnings per share includes the dilutive effect of convertible bonds, share options and share awards; and totals 30.9m (2003: 41.5m). Diluted earnings per share reflect the £7.8m (2003: £9.7m) post tax profit adjustment arising from assuming the conversion of the 6% Subordinated Irredeemable Convertible Bonds.
Adjusted earnings per share are calculated by excluding the post tax profit adjustment of £9.1m (2003: £1.1m) which is the capital allowance effect of FRS 19 which is not expected to arise, as described in note 22.