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IFRS Financial Reporting

Section 2300: Earnings per Share

International Accounting Standard 33
Earnings per Share

1. First version of IAS 33
"Earnings Per Share" issued in February 1997

2. Revisions
December 2003: Earnings per Share

[U.S. GAAP Codification Topic]
260 Earnings per Share

3. Dilution
Decreases in earnings per share due to the following:
(1) assumed conversion of convertible instruments
(2) assumed exercise of options and warrants
(3) assumed issuance of shares when conditions are met

4. Antidilution
Increases in earnings per share due to the following:
(1) assumed conversion of convertible instruments
(2) assumed exercise of options and warrants
(3) assumed issuance of shares when conditions are met

5. Basic Earnings per Share
Basic EPS = (1) / (2)
(1) profit or loss attributable to ordinary equity holders of the parent
(2) weighted average number of ordinary shares outstanding
--> (1) = (3) - (4)
(3) profit or loss attributable to the parent
(4) after-tax preference dividends

After-tax preference dividends = (4a) + (4b)
(4a) preference dividends on non-cumulative preference shares declared
(4b) preference dividends on cumulative preference shares
--> for the period, regardless of declaration

6. Diluted Earnings per Share = (5) / (6)
(5) = (1) + (5a) + (5b) + (5c)
(1) profit or loss attributable to ordinary equity holders of the parent
(5a) add back the dividends on DPOS
(5b) add interest on DPOS
(5c) other changes in income or expense due to DPOS

(6) = (2) + (6a)
(2) weighted average number of ordinary shares outstanding
(6a) increase in weighted average number of ordinary shares, if DOPS are converted
DPOS: dilutive potential ordinary shares

7. Potential Ordinary Shares are dilutive, IAS 33.41
--> if the conversion of potential ordinary shares decreases EPS
(1) options
(2) warrants
(3) convertible preference shares
(4) convertible debt
(5) shares issuable if certain conditions are met
(6) contracts that may be settled in ordinary shares
(7) written put options

8. Share increases after the reporting period
--> Events after the reporting period
If the number of ordinary shares increases, between (1) and (2)
--> EPS is calculated using new number of shares
(1) end of the reporting period
(2) date when financial statements are authorised for issue