IAS33 EPS
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EPS DEPS
Full Market Bonus Bonus & Full Rights Issue Convertible
Issue Issue Market Issue Options
Bonds
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A. EPS
1. EPS for the year = Profit for the year/No. of shares
2. Full Market Issue
EPS = Profit after tax/ Weighted average shares
Magic Adventures Inc. earned $1,000,000 for the year ending on December 31st, 20Y9.Magic Adventures
Inc. had 2,000,000 ordinary shares of $1 each in issue at the beginning of the year. The company issued
an additional 500,000 shares at full market value on July 1st, 20Y9.
Date No. of shares Period Total
Weighted Average Shares =
EPS =
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3. Bonus Issue
EPS = Profit after tax/ Weighted average shares
Gadget Corp has a share capital of 10,000,000 $1 equity shares as at 1st Jan 20X3. It makes a bonus issue
of 1 share for every 5 held on 1st July 20X3. The Profit After Tax (PAT) for 20X3 is 6,000,000 and for 20X2
is 5,000,000. What is the EPS (Earnings Per Share) for 20X3?
Date No. of shares Period Total
Weighted Average Shares =
EPS =
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3. Bonus Issue and Market Issue combined Company ABC had 5 million shares in issue on 1st
January 20X6. It issued 3,000,000 shares at market
EPS = Profit after tax/ Weighted average shares value on 1st April 20X6, followed by a 1 for 5
bonus issue on 1st August 20X6, with an additional
i. Find weighted average shares. 1,000,000 shares issued at market value on 1st
ii. Use the bonus fraction till the bonus issue doesn’t November 20X6. The profit for the year ended 31st
take place actually. December 20X6 is $3,500,000. What is the basic
Earnings Per Share (EPS) for the year 20X6?
No. of Bonus
Date shares fraction Period Total
Weighted Average
Shares
EPS =
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3. Rights Issue
EPS = Profit after tax/ Weighted average shares
1. Find TERP (Theoretical Ex-Rights Price).
2. Find the bonus fraction.
3. Apply bonus fraction till rights issue.
The total shares as at 1st Jan 20X7 for WidgetCorp is 5m $1 equity shares, and there is a rights issue on 1st July
20X7 in the ratio of 1:4 at $8/share. The market price of each share is $12. Earnings for the year are $5m.
Date No. of shares Bonus fraction Period Total
Weighted Average Shares
EPS =
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B. DEPS
1. Convertible Bonds
EPS = (Earnings + Notional extra earnings) / (No. of shares + notional extra shares)
Notional profit = Interest saved - Tax on interest saved
Notional shares = Shares due to the conversion of loan note
Lee Cooper issued a convertible loan note of $2m on 1st Jan 20Y1 with a nominal value of $200 for each loan note for
conversion. The loan note has an effective interest rate of 5%. The tax rate is 25%. Conversion into a number of shares
is:
On 31st Dec 20Y5: 150 shares
On 31st Dec 20Y6: 140 shares
On 31st Dec 20Y7: 130 shares
On 31st Dec 20Y8: 125 shares
Lee Cooper already has 4m shares in issue at $1 ordinary shares. Its earnings (PAT) is $3m for 20Y1. What will be the
diluted EPS and EPS for 20Y1?
Notional shares =
Notional Profit =
DEPS =
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B. DEPS
2. OPTIONS
DEPS = PFY/ Outstanding shares + Free shares
Free element = Share issued as option * (MP-Op Price)/MP
Ales had 10 million shares in issue at 1st Jan 2023, but on 31st Dec 2023, there were outstanding options to purchase
2 million ordinary $1 shares at $4/share. The fair value of ordinary shares is $6/share. The earnings for the year are
$3,500,000. What will be diluted EPS for the year 2023?
Free shares = 2,000,000 X ($6-$4)/$6
= 666,667 shares
DEPS = 3,500,000 / 7000000+666667 = 45.7 cents
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