Bayer AG - Annual Report 2006 - Earnings per share from continuing and discontinued operations

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Financial Statements

16. Earnings per share from continuing and discontinued operations

Earnings per share are determined according to IAS 33 (Earnings per Share) by dividing net income by the average number of shares. The number of ordinary shares to be taken into account for this purpose is increased by those issued for the capital increase in July 2006 and the potential shares that would be issued upon exercise of the rights under the mandatory convertible bond issued in April 2006. The financing expenses for the mandatory convertible bond are added back to net income. In computing earings per share, the ordinary shares to be issued upon exercise of the conversion rights from this bond issue are counted along with the already issued shares, so basic and diluted earnings per share are identical. Further information on the capital increase is given in Note [24] and further information on the mandatory convertible bond is given in Note [27].

	2005	2006
€ million
Income after taxes	1,595	1,695
Income attributable to minority interest	(2)	12
Income attributable to Bayer AG stockholders	1,597	1,683
Income from discontinued operations	221	169

Financing expenses for the mandatory convertible bond, net of tax effects	-	72
- Adjusted income after taxes from continuing operations	1,376	1,586
- Adjusted net income	1,597	1,755

Weighted average number of issued ordinary shares	730,341,920	746,456,988
Potential shares to be issued upon conversion of the mandatory convertible bond	-	45,300,595
Adjusted weighted average total number of issued and potential ordinary shares	730,341,920	791,757,583

Basic earnings per share (€)
- from continuing operations	1.88	2.00
- from continuing and discontinued operations	2.19	2.22
Diluted earnings per share (€)
- from continuing operations	1.88	2.00
- from continuing and discontinued operations	2.19	2.22

Under the German Stock Corporation Act, the sum available for payment of the dividend is determined from the balance sheet profit shown in the annual financial statements for Bayer AG prepared in accordance with the German Commercial Code.

The dividend paid for the 2005 fiscal year was €0.95 per share, compared with €0.55 for 2004. The proposed dividend for fiscal 2006 is €1.00 per share. Payment of the proposed dividend is contingent upon approval by the stockholders at the Annual Stockholders’ Meeting and has not been recognized as a liability in the consolidated financial statements of the Bayer Group.

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