IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Chapter 26 / Earnings Per Share (lAS 33)

the parent and for profit or loss attributable to the ordinary equity holders of the parent for each class of ordinary shares with different rights. 4.2 Basic and diluted earnings per share must be presented with equal prominence for all periods presented , even if the amounts are negative. If a discontinued operation is reported , then basic and dilut ed amounts per share for the discontinued operation must be disclosed on the face of the income statement or in the notes. 5. BASIC EARNINGS PER SHARE 5. 1 Basic earnings per share = Net profit or loss attributable to ordinary eguity holder Weighted-average number of ordinary shares outstanding during the period 5.2 Earnings are calculated as • Amounts attributable to the ordinary equity holders in respect of profit or loss from cont inu- ing operations and net profit or loss • After all expenses including taxes and minority interests • After cumulative preference dividend / or period whether declared or not • After noncumulative preference dividend declared/or period • After other adjustment s relating to preference shares (Cumulative preference dividends for the prior periods are ignored. ) Basic Ea rn ings Per Share The number of ordinary shares is the weighted-average number of ordinary shares outstanding during the period. • Number of ordinary shares at the beginn ing of the period are added to the number of shares issued during the period less the number of shares bought back in the period. • Shares issued and bought back are multiplied by a time weighting factor dependent on when the event took place. • Shares are included from the date the consideration is receivable. • Partly paid shares are included as fractional shares to the extent that they are entitled to par– ticipate in dividend s during the period relative to a fully paid ordinary share. To the extent that partly paid shares are not entitled to participate in dividends during the period, they are treated as the equivalent of warrant s or options. • Contingently issuable shares are included when the conditi ons have been satisfied. • Ordinary shares issued as part of a business combination are included from the acquisition date. 5.3 lAS 33 includes guidance on appropriate recognition dates for shares issued in various cir- cumstances (lAS 33, paragraph 2 1). 5.4 An entity may increase or reduce its ordinary shares without a change in its resources. Exam– ples of this are bonus issues, stock dividends, share splits (i.e., where shares are issued for no con– sideration), and reverse share splits (consolidation of shares). In these cases , the weighted-average number of shares is adjusted in line with the transaction as if the even t had occurred at the begin– ning of the period. All periods presented should be adjusted for such events. 5.5 If the bonus issue, stock dividend , and other similar event s occurred after the balance sheet date but before the financial statements are authorized, then the earnings per share calculations should reflect these changes. This applies also to prior periods and to diluted earnings per share. 5.6 Basic and diluted earnings per share are also adjusted for • The effects of errors and adj ustments resulting from changes in accounting policies, ac– counted for retrospectively but not adjusted for • Changes in assumptions used in earnings per share calcul ations or for conversion of potential ordinary shares into ordinary shares (lAS 33, paragraphs 64-65).