08:37 GUANGDONG INV<00270> - Results Announcement (2) B: Earnings per share The calculations of the basic and diluted earnings per share are based on: 2004 2003 HK$'000 HK$'000 Earnings: Net profit attributable to holders of ordinary shares 1,149,699 1,106,721 Add: Interest saving on convertible bonds from date of issue 9,973 218 -------------------------- Earnings for the purpose of diluted earnings per share 1,159,672 1,106,939 =========================== Number of shares: 2004 2003 Weighted average number of ordinary shares in issue 5,438,492,014 5,214,533,083 Effect of Additional Shares to be issued arising from the Acquisition from the date after all necessary conditions have been satisfied 160,389,041 280,500,000 ------------------------------- For the purpose of basic earnings per share 5,598,881,055 5,495,033,083 ============================== Weighted average number of ordinary shares in issue 5,438,492,014 5,214,533,083 Assumed issued at no consideration on deemed exercise of all share options outstanding during the year 124,733,865 151,284,000 Assumed issued on deemed conversion of the convertible bonds into ordinary shares on date of issue 268,801,460 5,891,538 Effect of Additional Shares to be issued arising from the Acquisition from the beginning of year 160,389,041 330,000,000 ------------------------------- For the purpose of diluted earnings per share 5,992,416,380 5,701,708,621 ============================= As part of the consideration for the acquisition of an 81% interest in GH Water Supply (Holdings) Limited ("GH Holdings") in 2000 (the "Acquisition "), the Company is committed to issue 66 million ordinary shares (each such share, an "Additional Share") for each of the five years commencing from 22 December 2000 (the "Earnout Period") to GDH Limited subject to the performance of (Guangdong Yue Gang Water Supply Company Limited) (" WaterCo"), a subsidiary of GH Holdings, meeting the milestones as set out in an earnout agreement between the Company and GDH Limited dated 22 December 2000 (the "Earnout Agreement"). Further details of this obligation are set out in the shareholders' circular of the Company in respect of the Acquisition dated 15 September 2000 (the "Acquisition Circular"). Since WaterCo had already met the performance milestones specified under the Earnout Agreement for the first, second, third, fourth, and fifth years of the Earnout Period in September 2001, March 2002, September 2002, March 2003, and June 2003 respectively, the Company was obliged to issue a total of 330 million Additional Shares to GDH Limited in accordance with the Earnout Agreement. On 27 February 2004 and 21 December 2004, 198,000,000 Additional Shares and 66,000,000 Additional Shares, respectively, were issued to GDH Limited in accordance with the Earnout Agreement. Another 66,000,000 Additional Shares will be issued on 21 December 2005. The effect of the outstanding Additional Shares for the first, second, third, fourth, and fifth years of the Earnout Period has been incorporated in the computation of the basic and diluted earnings per share for the current and prior years. The share options expiring on 6 May 2009 had an anti-dilutive effect on the basic earnings per share and have not been included in the diluted earnings per share calculation for the year ended 31 December 2004. In 2003, the share options that expired on 18 August 2003 and 16 September 2003 had an anti-dilutive effect on the basic earnings per share and had not been included in the diluted earnings per share calculation for the year ended 31 December 2003.