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64 Carphone Warehouse Group plc Annual Report 2011
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11 EARNINGS PER SHARE
2011 2010
Headline earnings (£m) 67.8 37.4
Statutory earnings (£m) 65.6 218.8
Weighted average number of shares (millions):
Average shares in issue 457.1 457.1
Less average holding by Group ESOT (see note 6) (4.4) (7.8)
For basic earnings per share 452.7 449.3
Dilutive effect of share options 5.7 8.4
Dilutive effect of value enhancement schemes 12.7 –
For diluted earnings per share 471.1 457.7
Basic earnings per share 2011 2010
Headline 15.0p 8.3p
Statutory 14.5p 48.7p
Diluted earnings per share 2011 2010
Headline 14.4p 8.2p
Statutory 13.9p 47.8p
As the Group did not exist during the year ended 31 March 2010 in the form that arose on Demerger, the average actual shares
in issue during this period does not provide a meaningful basis for calculating EPS. EPS has therefore been calculated based on the
average number of Old Carphone Warehouse shares in issue and the shareholding of the Old Carphone Warehouse ESOT in this
year, adjusted for the fact that following the Demerger two shares in Old Carphone Warehouse were replaced with one share in the
Company. Diluted EPS has been calculated based on options held over Old Carphone Warehouse shares and its share price during
the year ended 31 March 2010, adjusted for the two-to-one ratio noted above.
As detailed in note 6, prior to the Demerger, Old Carphone Warehouse introduced the Best Buy Europe VES to provide incentives to
the Group’s senior management. The scheme enables participants to share in any increase in the value of Best Buy Europe above a
defined minimum annual rate of return. The scheme has an initial performance period to July 2013 and a subsequent performance
period to July 2014. It is expected that the scheme will be settled using the Company’s shares. As also detailed in note 6, Best Buy
Europe also introduced a VES in the year ended 31 March 2010. The Group’s obligations in relation to this scheme are also expected
to be met using the Company’s shares.
The ultimate dilutive effect of these schemes cannot yet be determined, as they are both based on future performance, which is as
yet unknown. The potential effect of the schemes has therefore been assessed by calculating the dilution that would have occurred
had they vested during the year, taking an average of the results that would have occurred on each day. The value of the schemes
has been derived from final results for the years ended 31 March 2010 and 31 March 2011 and the Group’s latest financial guidance
for the year to 31 March 2012, as communicated in June 2011.
In order to maintain alignment with shareholders, the Company’s Remuneration Committee has capped the potential dilution
associated with these schemes at 5% of total shares in issue at the vesting date.
There were no shares that could be issued under share option schemes but that are not considered to be dilutive at 31 March 2011
(2010: 5.9m).