Earnings per share (EPS)

Earnings per share (EPS)

1. Basic earnings

   • - P/L attributable to ordinary owners of parent. - Adj. After-tax effects of items relating to pref. shares classified as equity: 1. Non-cumulative div = if declared; 2. Cumulative div = irrespective of declaration; 3. Diff on settlement of pref. shares.

2. Basic shares

   • Issue = MV/FV
     • 1. Weight current period; 2. Do not restate comparatives
       • Mandatory convertible instruments: - incl. from date contract entered into.
   • Issue for no value
     • 1. Do not weight current period; 2. Restate comparatives.
       • Rights issue
         • At fair value - weight current period; - do not restate
         • At less than FV - Split no. of shares into for value & bonus portions; - FOR VALUE portion : do as FV normal; - BONUS portion : Do not weight current yr; restate proportionately
   • Combo
     • 1. Weight for value in current period; 2. Restate comparatives proportionately for bonus portion.

3. Diluted eps

   • - ID potential shares; - ID if dilutive ( Determine sequence; Test against control)
   • Adj. basic earnings; after-tax income/expense items which no longer occur due to dilutive
   • 1. Start with basic WANOS; 2. Adj. for all dilutive shares;
   • Contracts settled either in ordinary shares or cash
     • Option of isuer
       • assumed to settle in ordinary shares
     • Option of holder
       • Determine the more dilutive option
     • Convertible debentures
   • Sequence of dilution - frm most dilutive to least dilutive (each issue considered seperate of others

4. Headline earnings (C03/12)

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