Barclays 2008 Annual Report Download - page 216

Notes to the accounts
For the year ended 31st December 2008
214 Barclays PLC Annual Report 2008 |Find out more at www.barclays.com/annualreport08
10 Tax(continued)
The effective tax rate for the years 2008, 2007 and 2006 is lower than the standard rate of corporation tax in the UK of 28.5% (2007: 30%, 2006: 30%).
The differences are set out below:
2008 2007 2006
£m £m £m
Profit before tax 6,077 7,076 7,136
Tax charge at standard UK corporation tax rate of 28.5% (2007: 30%, 2006: 30%) 1,732 2,123 2,141
Adjustment for prior years (176) (37) 24
Differing overseas tax rates 215 (77) (17)
Non-taxable gains and income (including amounts offset by unrecognised tax losses) (833) (136) (393)
Share-based payments 229 72 27
Deferred tax assets not previously recognised (514) (158) (4)
Change in tax rates (1) 24 4
Other non-allowable expenses 138 170 159
Overall tax charge 790 1,981 1,941
Effective tax rate 13% 28% 27%
The effective rate of tax for 2008, based on profit before tax, was 13% (2007: 28%). The effective tax rate differs from the 2007 effective rate and the UK
corporation tax rate of 28.5% principally due to the Lehman Brothers North American businesses acquisition. Under IFRS the gain on acquisition of
£2,262m is calculated net of deferred tax liabilities included in the acquisition balance sheet and is thus not subject to further tax in calculating the tax
charge for the year. Furthermore, Barclays has tax losses previously unrecognised as a deferred tax asset but capable of sheltering part of this deferred tax
liability. This gives rise to a tax benefit of £492m which, in accordance with IAS 12, is included as a credit within the tax charge for the year. The effective rate
has been adversely impacted by the effect of the fall in the Barclays share price on the deferred tax asset recognised on share awards. In common with prior
years there have been offsetting adjustments relating to different overseas tax rates, disallowable expenditure and non taxable gains and income.
11 Earnings per share
2008 2007 2006
£m £m £m
Profit attributable to equity holders of parent 4,382 4,417 4,571
Dilutive impact of convertible options (24) (25) (30)
Profit attributable to equity holders of parent including dilutive impact of convertible options 4,358 4,392 4,541
2008 2007 2006
million million million
Basic weighted average number of shares in issue 7,389 6,410 6,357
Number of potential ordinary shares 188 177 150
Dilutedweighted average number of shares 7,577 6,587 6,507
ppp
Basic earnings per share 59.3 68.9 71.9
Diluted earnings per share 57.5 66.7 69.8
The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent and the number of basic weighted average
number of shares excluding own shares held in employee benefits trusts and shares held for trading.
The basic and diluted weighted average number of shares in issue in the year ended 31st December 2008 reflects 1,802 million shares issued during the
year and the 2,642 million shares that will be issued following conversion in full of the Mandatorily Convertible Notes, included from the date of issue and
the date the contract was entered into respectively. As a result, the weighted average number of shares in issue in the year ended 31st December 2008
was increased by 1,034 million shares as a result of this increase.
When calculating the diluted earnings per share, the profit attributable to equity holders of the parent is adjusted for the conversion of outstanding
options into shares within Absa Group Limited and Barclays Global Investors UK Holdings Limited. The weighted average number of ordinary shares
excluding own shares held in employee benefit trusts and shares held for trading, is adjusted for the effects of all dilutive potential ordinary shares,
totalling 188 million (2007: 177 million, 2006: 150 million).
Of the total number of employee share options and share awards at 31st December 2008, 64 million were anti-dilutive (2007: nil, 2006: 5 million).
Subsequent to the balance sheet date, the Group continued to make on-market purchases of treasury shares under its various employee share schemes.
No adjustment has been made to earnings per share in respect of these purchases.