IAS 33.

EARNINGS PER SHARE

EARNINGS PER SHARE
Is a measure of the amount of profits earned b a company for each
ordinary share. Earning are profit after tax and preference dividends.

Definitions
The following definitions are given in IAS 33 and IAS 32:
Ordinary shares – an equity instrument that is subordinate to
all other classes of equity instruments.
Potential ordinary share – a financial instrument or other
contract that may entitle its holder to ordinary shares.
Options, warrants and their equivalents – financial instruments
that give the holder the right to purchase ordinary shares.

Financial instrument – any contract that gives rise to both a

financial asset of one entity and a financial liability or equity instrument of
another entity.

Equity instrument – any contract that evidences a residual interest in

the asset of an entity after deducting all of its liabilities.
Dilutive potential ordinary shares

According to IAS 33, potential ordinary shares should

treated as dilutive when, ad only when, their conversion
to ordinary shares would decrease the net profit per
share from continuing operations.
PRESSENTATION, DISCLOSURE AND OTHER
MATTERS
IAS 33 contains a number of requirements on presentation
and disclosure.

PRESENTATION
Basic and diluted EPS should be presented by an
entity in the statement of profit or loss and other
comprehensive income for each class of ordinary share
that has a different right to share in the net profit or the
period. The basic and diluted EPS figures (basic and/or
diluted) are negative.
 DISCLOSURE

An entity should disclose the following:

A. the amounts use as numerators in calculating basic

and diluted EPS, and reconciliation of hose amounts to
the net profit or loss for the period.

B. the weighted average number of ordinary shares use

as a denominator in calculating basic and diluted EPS,
and a reconciliation of these denominators to each other.
Alternative EPS Figures

An entity may present alternative EPS figures if it wishes . However,

IAS 33 lays out certain rules where this takes place:

A. the weighted average number of shares as calculated under IAS 33

must be used.

B. a reconciliation must be given as necessary between the component of

profit used in the alternative EPS and the line item for profit reported in
the statement of profit or loss and other comprehensive income.

C. basic and diluted EPS must be shown with equal prominence.