Jackie Plc has a profit after tax of €6 590 000 for the period ended 30 June 2013.In addition it has €1 000 000 of 6% cumulative preference shares.The dividends on the preference shares are not treated as expenses in the statement of comprehensive income. Jackie Plc has 3 000 000 ordinary shares on issue at the beginning of the year 1 July 2012.On 1 November 2012,there was a 1for 6 rights issue with a subscription price of €4.00 each.The current market value of these shares is €4.50.
On 1 March 2013,200 000 partly paid-up ordinary shares were issued at an issue price of €4.50.These shares were partly paid to €2.25.The partly paid shares are permitted proportionate rights to vote and receive dividends based on the relationship between the amount paid up and the issue price.
What is the basic EPS for Jackie Plc for the year ending 30 June 2013 that is in accordance with IAS 33 Earnings per Share?

Question

Quizplus · Accepted Answer

Step 1: Calculate the weighted average number of ordinary shares 
- 3,000,000 shares from 1 July 2012 to 31 Oct 2012 (122/365*3,000,000) 
- 3,500,000 shares from 1 Nov 2012 to 28 Feb 2013 (120/365*3,500,000) 
- 3,700,000 shares from 1 Mar 2013 to 30 June 2013 (122/365*3,700,000) 
Total weighted average number of ordinary shares = 3,155,342

Step 2: Calculate the profit available to ordinary shareholders 
Profit after tax = €6,590,000 
Add preference dividends = (€1,000,000*6%) = €60,000 
Profit available to ordinary shareholders = €6,650,000

Step 3: Calculate the Basic EPS 
Basic EPS = Profit available to ordinary shareholders / weighted average number of ordinary shares 
Basic EPS = €6,650,000 / 3,155,342 
Basic EPS = €2.10 
Adjustment for partly paid shares: 
- 200,000 partly paid shares were issued at a price of €4.50, with €2.25 paid up 
- Adjust the weighted average number of shares to reflect the proportion that has been paid 
Adjusted weighted average number of shares = 3,155,342 + (200,000*€2.25/€4.50) = 3,255,342 
Adjusted Basic EPS = €6,650,000 / 3,255,342 = €2.04 
Round up to the nearest €0.01: Basic EPS = €1.93

Jackie Plc Has a Profit After Tax of €6 590